What is National Coal Index (NCI)?

The Ministry of Coal has launched the sixth round of commercial coal mines’ auction for 141 coal mines.

What is the news?

• As per the provisions of the tender document, the Performance Bank Guarantee (PBG) to be submitted for each successfully auctioned coal mine is to be revised annually based on the National Coal Index (NCI).

What is National Coal Index (NCI)?

• Ministry of Coal has started commercial auction of coal mines on revenue share basis.
• In order to arrive at the revenue share based on market prices of coal, one National Coal Index (NCI) is conceptualized.
• The NCI is a price index which reflects the change of price level of coal on a particular month relative to the fixed base year.
• The base year for the NCI is FY 2017-18.
• NCI is a price index combining the prices of coal from all the sales channels- Notified Prices, Auction Prices and Import Prices.
• It is released every month.

Components of NCI

• The concept and design of the Index as well as the Representative Prices have been developed by the Indian Statistical Institute, Kolkata.
• NCI is composed of a set of five sub-indices: three for Non-Coking Coal and two for Coking Coal.
• The three sub-indices for Non-Coking Coal are combined to arrive at the Index for Non-Coking Coal and the two sub-indices for Coking Coal are combined to arrive at the Index for Coking Coal.
• Thus, indices are separate for Non-coking and Coking Coal.
• As per the grade of coal pertaining to a mine, the appropriate sub-index is used to arrive at the revenue share.

Implementation of NCI

• The amount of revenue share per tonne of coal produced from auctioned blocks would be arrived at using the NCI by means of a defined formula.
• The Index is meant to encompass all transactions of raw coal in the Indian market.
• This includes coking and non-coking of various grades transacted in the regulated (power and fertilizer) and non-regulated sectors.
• Washed coal and coal products are not included.

RBI proposed Loan loss provision

The Reserve Bank of India (RBI) published a discussion paper on “loan loss provision”, proposing a framework for adopting an expected loss (EL)-based approach for provisioning by banks in case of loan defaults. The RBI’s proposal is based on the premise that the present “incurred loss”-based approach for provision by banks is inadequate, and there is a need to shift to the “expected credit loss” regime in order to avoid any systemic issues.

What is loan-loss provision?

1. The RBI defines a loan loss provision as an expense that banks set aside for defaulted loans.
2. Banks set aside a portion of the expected loan repayments from all loans in their portfolio to cover the losses either completely or partially.
3. In the event of a loss, instead of taking a loss in its cash flows, the bank can use its loan loss reserves to cover the loss.
4. Since the bank does not expect all loans to become impaired, there is usually enough in the loan loss reserves to cover the full loss for any one or a small number of loans when needed.
5. An increase in the balance of reserves is called loan loss provision. The level of loan loss provision is determined based on the level expected to protect the safety and soundness of the bank.

What are the benefits of this approach?

1. The forward-looking expected credit losses approach will further enhance the resilience of the banking system in line with globally accepted norms.
2. It is likely to result in excess provisions as compared to shortfall in provisions as seen in the incurred loss approach, RBI said in the discussion paper.

What is the problem with the incurred loss-based approach?

1. The incurred loss approach requires banks to provide for losses that have already occurred or been incurred.
2. The delay in recognising expected losses under an “incurred loss” approach was found to exacerbate the downswing during the financial crisis of 2007-09.
3. Faced with a systemic increase in defaults, the delay in recognising loan losses resulted in banks having to make higher levels of provisions which ate into the capital maintained precisely at a time when banks needed to shore up their capital. This affected banks’ resilience and posed systemic risks.

RBI’s report on state govt. Budgets

The Reserve Bank of India released its report on state government budgets for 2022-23. The report outlines how state government finances, which had come under severe stress in 2020-21 because of the slowdown in the economy due to the pandemic, have improved in the years thereafter. State governments account for a lion’s share of general government spending (central government and states), with capital expenditure by states exceeding that of the central government. Thus, state budgets are of critical importance.

Several areas of concern:

Debt-to-GDP ratio:

1. The state debt-to-GDP ratio remains uncomfortably high. As per the report, the debt-to-GDP ratio has fallen from 31.1 per cent in 2020-21 – a year when states had struggled to manage the economic fallout of the pandemic to 29.5 per cent in 2022-23.
2. To put it in perspective, the Fiscal Responsibility and Budget Management review committee, headed by N K Singh, had recommended a debt-to-GDP ratio of 20 per cent for states.
3. A high debt-deficit burden leaves little room for states to manoeuvre when faced with the next economic shock, states may have to pay more to service their obligations.
4. As per the report, interest payments by states rose to 2 per cent of GDP in 2020-21, up from 1.7 per cent in 2017-18. States expect this to come down to 1.8 per cent in 2022-23.
5. There is marked variation across states. Punjab, Tamil Nadu, Haryana and West Bengal have the highest interest payments to revenue receipts ratio.
6. This implies that in these states, interest payments account for a sizable portion of the states’ revenues, leaving them with less room to spend on other areas of priority such as health or education.

Contingent liabilities

1. State governments have also seen a significant expansion in their contingent liabilities. It refers to the obligations of a state government to repay the principal and interest payments in case a state-owned entity defaults on a loan.
2. As per the report, the guarantees issued by state governments have risen from Rs 3.12 lakh crore or 2 per cent of GDP in 2017 to Rs 7.4 lakh crore or 3.7 per cent of GDP.
3. The disaggregated data shows that the states of Andhra Pradesh, Telangana and Uttar Pradesh have the most guarantees outstanding at the end of March 2021.
4. The perilous state of state-owned power distribution companies or discoms also has adverse implications for state finances.

Old Pension Scheme

1. New risks have emerged with some states now opting to return to the old pension scheme.
2. This will have adverse implications for state finances. States already allocate a significant portion of their own tax revenues towards pension — in 2020-21, Rs 3.86 lakh crore was allocated towards pension.
3. Shifting back to the old pension scheme will only end up increasing pension liabilities, leaving even less room for more productive spending.

SC order against Google a landmark decision

In a major setback to Google, the Supreme Court refused to stay the Competition Commission of India’s (CCI) fine of Rs 1337 crore on the tech giant. The company had sought a stay on the fine through an appeal with the National Company Law Appellate Tribunal (NCLAT) which the SC court refused to address.

More about the news:

The fine was imposed on Google by the regulating agency over its anti-competitive policy related to Android smartphones that restricted other players from entering the Indian market.

How do decisions benefit the Indian industry?

1. It marks a very critical step towards India breaking free from the digital slavery Google has perpetuated on Indians for the last 15 years.
2. It is the right moment for all Indians – consumers, media, app developers, OEMs, industry and government – to come together to create our own indigenous Aatma Nirbhar ecosystem that gives India its rightful place at the forefront of the world, independent of foreign big tech monopolies.
3. Due to Google’s anti-competitive practices,people are unable to use MapmyIndia’s Mappls app, which offers far better maps, navigation and safety features than Google Maps.
4. It will be a watershed moment in India’s digital history.This decision will usher in a cataclysmic change in the Indian smartphone ecosystem and further improve and enhance digital penetration in our country.

Impact of the decision:

1. The CCI order upheld by SC will aid Android in staying true to its mission of providing an open source, free, software away from Google’s restriction.

How it will provide more scope for Indian players:

2. The CCIs wide ranging remedies go beyond Europe and will force Google to change the way it does business.
3. It will open markets for Google’s competitors, who have long been marginalised by the tech behemoth’s vice-like grip over the Android ecosystem.
4. India as a market offers an unprecedented untapped user base, which makes these remedies even more effective.

Google arguments:

1. Google said,it will lead to devices getting expensive in India. It also highlighted how the proliferation of unchecked apps may cause a threat to users and national security.
2. Google had also argued in its blog that the CCI order which asks it to allow different versions of Android would potentially cause more damage.

Designation of ‘global terrorist’

Pakistan-based Abdul Rehman Makki, the deputy chief of the terror outfit Lashkar-e-Taiba, has been blacklisted as a global terrorist by the United Nations. He is the brother-in-law of Hafiz Saeed, the founder of Lashkar-e-Taiba. The UN Security Council’s 1267 Al Qaeda Sanctions Committee added 68-year-old Makki to its list of designated terrorists on 16 January 2023, after China withdrew its hold on a joint proposal by India and the US. Individuals and entities in the list are subject to the assets freeze, travel ban, and arms embargo.

Who is Abdul Rehman Makki?

1. Makki was mainly known for his proximity to Hafiz Saeed, until the latter was jailed in 2019 for 35 years. He continues to front for him now, as he had in the past when the LeT/Jamat-ud-Dawa (JuD) leader, listed by the UN Security Council as a terrorist after the 2008 Mumbai attacks, went in and out of house arrest.
2. The sanctions committee said that while Makki has held his leadership positions within LeT and JUD, the LeT has been responsible for or had involvement in prominent attacks, including the Red Fort Attack in which six terrorists stormed the Red Fort on 22 December 2000, and opened indiscriminate fire on the security forces present.
3. Makki too uses the title of Hafiz, an honorific for someone who has memorised the Quran, as well as the title of Naib Emir of JuD.
4. At one such rally in 2010, two years after the Mumbai attacks, Makki threatened “rivers of blood” in India for not handing over Kashmir to Pakistan and threatened to seize it by force.

What is the 1267 Al Qaeda Sanctions Committee?

1. The committee is part of the UN Security Council and its job is to implement international sanctions against terrorists.
2. The Al Qaeda committee was established as the Al-Qaida and Taliban Sanctions Committee on 15 October 1999, after Security Council Resolution 1267 designated al-Qaeda and the Taliban as terrorist bodies. In 2011, a separate committee was formed for the Taliban.
3. Resolution 1267 was adopted under Chapter VII of the United Nations Charter and requires all UN member states to “freeze the assets of, prevent the entry into or transit through their territories by, and prevent the direct or indirect supply, sale and transfer of arms and military equipment to any individual or entity associated with Al-Qaida, Osama bin Laden and/or the Taliban as designated by the Committee.”

Hyderabad Selected To Host WEF Center For The Fourth Industrial Revolution

Recently, the World Economic Forum (WEF) has chosen Hyderabad for establishing its Center for the Fourth Industrial Revolution focused on healthcare and life sciences.

The C4IR Telangana will be an autonomous, non-profit organization and the only such of World Economic Forum in India with a thematic focus on healthcare and life sciences.

About C4IR Telangana

C4IR Telangana will be the 18th centre to join WEF’s Fourth Industrial Revolution (4IR) network that spans four continents. With the centre, Telangana is poised to become an important node in the global network of 4IR centres.

Significance

• The centre will promote, advance, and quicken the development and uptake of more modern technologies, such as genomics, individualised medicine, and healthcare manufacturing, with an emphasis on how life sciences and technology interact locally and globally.
• In addition to the government’s progressive industrial policies, it will make use of the state’s strengths, including its large talent pool, world-class infrastructure, and cluster-based approach.
• The new Center will be crucial in modernising the local, global, and healthcare industries and enhancing patient access and outcomes.
• It would hasten innovation in service and product delivery across the whole Indian healthcare sector.

What is 4th Industrial Revolution (4IR)?

• The 4th Industrial Revolution (4IR) is a fusion of advances in artificial intelligence (AI), the Internet of Things (IoT), robotics, genetic engineering, quantum computing, and more.
• It is the driving force behind a variety of goods and services that are quickly turning into necessities for modern life.

How 4th Industrial Revolution (4IR) will be critical for India?

• Financial: Industry 4.0 technologies would not only be game-changers but also aid in the economic revival by 2025, enabling businesses to improve India’s financial standing in the post-COVID era.
• The application of AI to “digital inclusion” in India is anticipated to have a knock-on effect on economic growth and prosperity.
• International nucleus: Block chain, big data analytics, the Internet of Things (IoT), advanced manufacturing, quantum computing, and artificial intelligence (AI) are among the cutting-edge technologies that are expected to provide India the chance to carve itself out as a “International nucleus” in the near future.
• Economy: According to analysts, artificial intelligence (AI) would contribute over $957 billion to the Indian economy by 2035, and more than $500 billion and roughly 20 million jobs by 2025.
• In addition to building a data-driven society through cutting-edge technologies that offers limitless opportunities to empower individuals, improve society, and increase the ease of doing business.
• India has a remarkable opportunity to be a significant contributor to 4th Industrial Revolution (4IR) driven solutions that can further transform agriculture, healthcare, manufacturing, education, and skilling.

Steps taken by India

• In November 2020, the Modern Coach Factory (MCF) at Raebareli, Uttar Pradesh, rolled out smart railway coaches that are fitted with a battery of sensors to provide a comfortable experience to passengers.
• The sensors use a variety of technologies, including CCTV cameras with facial recognition software, to monitor odour levels in restrooms, check that doors are securely locked, prevent fires from starting, and halt unauthorised travel.
• The Smart Advanced Manufacturing and Rapid Transformation Hub (SAMARTH) programme, which brings together manufacturers, vendors, and customers to increase their awareness of 4IR technologies, was introduced by the Union Ministry of Heavy Industries in May 2020.
• In her address introducing the 2022 budget, Union Finance Minister unveiled a number of new 4IR-driven initiatives, including Drone Shakti, to support new businesses that will make it easier to deploy drones.
• India even has a 4IR centre run by WEF in Mumbai that collaborates closely with a number of state governments.
• The Fourth Industrial Revolution for Sustainable Transformation (FIRST) Cancer Care model, developed by the Center, would leverage 4IR technology to improve healthcare for cancer patients.

Challenges

• Job losses: Losing a job is the immediate concern, especially in the unorganised sector. There are also concerns that as India moves forward with 4IR, many white-collar employment across industries would be replaced by machines and technology.
• Indian Railways personnel have already begun to demonstrate against the installation of ticket vending machines in stations and the automation of track maintenance in general.
• The demand for the jobs that are currently in high demand to implement 4IR, such as artificial intelligence engineers, data scientists, and robot maintenance workers, will likewise decline as technologies develop, according to experts.
• Safety: Other important questions like safety, morality, and the immediate and long-term socioeconomic impact remain unaddressed in addition to the issue of unemployment.
• For instance, in January 2022, there were significant delays for flights within the US.
• Fears of interference between the 5G wireless technology’s C band and the altimeters used by aircraft for navigation, particularly during airport landings, led to this.
• In the US, several airlines abruptly raised safety concerns with government authorities.
• 5G technology (and later 6G) is one of the engines that will propel the 4IR forward
• Additionally, the risks to human health and the environment posed by 5G have not been fully addressed.

Steps need to be taken

• Coordination:India need coordinated action. To define a mission for maximising the use of the technologies of the Fourth Industrial Revolution, the central government can take into consideration a collaborative platform between ministries, state governments, and industry bodies.
• It will need to establish a long-term ecology for professional development.
• Collaboration with like Minded countries: India may work with the US, Germany, and EU.
• Skills and capacity building.

Conclusion

• India will have great chances to skip over many developmental stages as a result of the Fourth Industrial Revolution, hastening its transition to a developed economy.
• The Fourth Industrial Revolution is levelling in many ways.
• The same technologies that are employed in the developed world will also be utilised in India.
• In the West, technologies like robots, AI, and IoT are revolutionising industries, and they are poised to do the same in India.

SAMARTH Udyog Bharat 4.0 (Smart Advanced Manufacturing and Rapid Transformation Hub) SAMARTH Udyog Bharat 4.0 project is initiated by Ministry of Heavy Industries. Vision: To facilitate and create eco system for propagation of Industry 4.0 set of technologies in every Indian manufacturing by 2025, be it MNC, large, medium or small scale Indian company.