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Burning issue for India’s Forest Issue: Himalayan forest in Himachal Pradesh and Uttarakhand caught fire and nearly 10000 forest personnel and 2 Indian Air Force helicopter are fighting the blaze. What are the reasons for wildfire?

Natural Factors:

• Forest fire in India is an annual occurrence, both in peninsular and Himalayan forest. The fire season usually begins in February and continue till rainy season. A report prepared by the National Institute of Disaster Management, said that half of India’s forests are prone to fires. 43% were prone to occasional fires and 5% to frequent fires.

• According to some experts’ climate change and global warming are also responsible for increasing frequency of the forest fire in India and all over the world. Experts also argue that last year’s El-Nino and two consecutive droughts further exacerbated the problem.

Manmade factors:

• According to Forest Survey of India, more than 95% of wildfires in India are man-made. Even in the present case three people have been arrested for causing fires by burning dry chir leaves.

• People burn leaves and grass in order to get better growth of grass the following year.

• They also burn the needles of the chir pine, which form a slippery carpet on the ground.

• Similarly, in the Terai region, honey collectors often start fires to drive away bees.

Is there any benefit to be had from periodic forest fire?

• According to some environment experts’ wildfires are sometimes a natural process, and help forests by promoting flowering, branching and seedling establishment.

• Fires that are limited to the surface may help in the natural regeneration of forests.

• The heating of the soil may result in helpful microbial activity, and hasten decaying processes that are useful for the vegetation.

Solutions:

• Government should involve rural communities in preventing wildfire and preparing for the future. Because some studies have highlighted effective intervention of community-led ‘van panchayats’ (forest councils) in preventing fires.

• Progress can be made also by providing environmental education to local residents and officials.

• Use of biomass alternatives, including cooking gas, has had a beneficial impact on fire risk, and this must be expanded.

• Clearing of ecologically important natural oak forests can be reduced by tapping the plantation sector, which could give preference to growing useful fodder and timber trees.

Current Affairs SYNERGY

Date: 3rd May 2016

GS – 3: Conservation, environmental pollution and degradation, environmental impact assessment.

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• Saving what remains of old forests that were mostly cleared during British rule, is crucial for the health of the Western Himalayas.

• Steps should be taken to stop the havoc wrought by man-made fires, and compensate those affected.

(Source: The Indian Express + The Hindu; Editorial, In News)

Everybody loves a good quota Issue: Gujarat government has promulgated an ordinance to provide 10% reservation to economically backward in upper caste (to those having income less than 6 lakhs per annum).

Problem in data on income:

• According to various sources of data like Income Tax Department, Indian Human Development Survey, NSSO data etc.- the percentage of household having more than 6 lakhs annual income cannot be more than 5%.

• So, if the same policy is of reservation is applied at national level only a miniscule minority will be out of reserved quotas.

• Collection of correct income data is very difficult in our country. The problem is further complicated by changing demographic attributes and level of income.

• It is important to understand that the demand for reservation is not coming from the lower strata of the population, but, demand is being raised by educated youth of well off families.

Actual reasons for agitation and demand for reservation:

• More and more number of students getting graduation and masters degrees but due to poor quality of education youth are not able to get the job or are opting low paid jobs.

• Salaries in private sector are not at par with the government sector.

• Faulty implementation of reservation policy, particularly for the OBC classification, makes little sense and leaves room for powerful lobbies to unite around demands for inclusion.

Solution:

• Periodic recertification of reserved categories and subsequent exclusion from the reserved categories.

• Indian reservation policy is being implemented based on 1931 census data. We must proper caste based data to reform the reservation policy.

(Source: The Hindu – Editorial)

Beijing unveils doctrine to counter U.S. ‘Pivot’ News: During foreign ministerial Conference on Interaction and Confidence Building Measures in Asia (CICA), China invited Asian countries to join Beijing in framing a security governance model with “Asian features”.

Why new security model for Asia:

• According to China, the “Pivot to Asia” or “rebalance” doctrine of the Obama administration has failed to achieve its objectives

• China asserted that “the launch of the Asia-Pacific Rebalance strategy by the U.S. did not bring Asia peace, but only uncertainty.”

GS – 2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation

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• China thinks that a U.S.-led alliance system is not the right option to safeguard the peace and stability of Asia. Instead, a system of security governance with Asian features, as suggested by China, will be best for Asian development.

• According to China the new security governance will be based on ‘Asian Feature’ including openness and inclusiveness, and not exclusivity.

Maritime Issue:

• Tensions between the U.S and China have spiked, after the Chinese responded to the “Pivot to Asia” with fresh activism in the South China Sea including construction of artificial islands within waters claimed and controlled by Beijing.

• Washington has dubbed the growing Chinese assertion as a danger to “freedom of navigation”, which could hamper the 5.3-trillion-dollar trade that passes through the South China Sea.

China says that an Asian homegrown solution is the best way to resolve South China Sea disputes, rather than interference by “outside”.

Bit Coin – Working of virtual currency News: An Australian, Craig Wright outs himself as Stoshi Nakamoto, the creator of the virtual currency bitcoin.

What is bitcoin?

Bitcoin is a concept of virtual currency introduced in 2009 which was first launched by a pseudonymous developer, Satoshi Nakamoto. Also known as Crypto-currency. It can be traded for other currencies.

While normal currencies are traded by banks, Bitcoins are kept on a ledger which is maintained and updated by any user of Bitcoin- just like Wikipedia.

How does bitcoin work?

• The concept of Bitcoin is all digitalized and hence for those who wish to invest in it, need to have a mobile application called Bitcoin Wallet which is available on Google Play and other online Play Stores.

• One can also download computer program which provides the users with a personalized Bitcoin wallet in which he can easily receive and send Bitcoins.

• Bitcoin has has a public ledger called “block chain.” This ledger contains every transaction that has been processed so far in terms of Bitcoins.

What is Bitcoin ‘mining’?

• While sending the Bitcoin, each transaction is protected by digital signatures corresponding to the sending addresses.

• That allows all the users to have control. over sending Bitcoins from their Bitcoin addresses. This is process is known as “mining.”

Why does Bitcoin have a bad reputation?

• Since, through Bitcoin, all the transactions are done anonymously, there are a lot of drug dealing activities which occur with the help of bitcoins.

• A online drug website called Silk Road in USA was dealing in illegal drug trade using bitcoins.

• There are just few people who use bitcoin as currency; most of the people use this as an investment. So it can be used for money laundering.

(Source: Indian Express – In News)

GS – 3: Awareness in the fields of IT, Space, Computers, robotics, nano-technology, bio-technology and issues relating to intellectual property rights.

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History of Italian Marine case

(Source: The Hindu – In News)

New mining law to spur cement, steel M&As News: On Monday, 02/05/2016, the Rajya Sabha passed The Mines and Minerals (Development and Regulation) Amendment Bill, 2016. Now its only one step away, after President’s signature, this bill will become an act.

This bill is replacing the Mines and Minerals (Development and Regulation) Amendment Act, 2015.

BACKGROUND:

Earlier, the Mines and Minerals (Development and Regulation) Amendment Act, 2015 permitted transfer of mining leases only for auctioned mines. This was silent on captive mining licenses handed out in the past on the recommendation of screening committee, that discouraged deals among companies.

ADVANTAGES OF THE BILL:

• The new legislation will make mergers and acquisitions of steel and cement companies easier. where assets are stressed, the assets will shift from the books of stressed groups to better-off balance sheets.

• The amendment enables transfer of captive mines that are won through an auction. This eliminates uncertainty that held up mergers and acquisitions of resource-based companies earlier, and permits distressed metal and cement producers to sell their production units along with the mines

• It will help alleviate a bad-loan crisis of commercial banks which have heavy exposure to steel and cement companies.

• There will be no bar on transfer of mining leases.

• The companies acquiring the cement units will now have raw material security as they can access limestone mines belonging to the acquisition targets.

GS – 2: Important International institutions, agencies and fora- their structure, mandate

CAPTIVE COAL MINING:

It is a policy used to develop coal resources in India. A block is an area from which the government has granted permission in the form of a mining license to mine coal. The term "captive" infers being locked up. In the sense of a policy, it is a mandatory allocation of resources.

The intent of the captive coal mining policy is to allocate a specific block to a specific need for the country. Captive mining was used to supply the iron and steel production in 1976, then for power generation in 1993 and finally coal gasification and liquidification in 2007. End user companies (allocatee) can get blocks developed through an associated state run mining company. Independent mining companies are eligible for a captive block provided the company has commitments to sell coal to approved end users.

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• In cases where the companies have mortgaged these licenses, the lenders will be able to transfer the license to a potential buyer, which will help creditors to recover some of their dues.

(Source: HT mint, The Business Standard – In News)

Core sector expands 6.4% in March to 16-month high

News: The output of eight crucial infrastructure sectors jumped to a 16-month high of 6.4% in March due to double digit growth in refinery products, fertilizer, cement and electricity.

CORE SECTORS:

The eight infrastructure sectors that make up the core sector index –

Coal, Crude oil, Natural Gas, Refinery Products, Fertilisers, Steel, Cement and Electricity.

Together have a 38% weightage in the Index of Industrial Production (IIP).

Index of Industrial Production (IIP):

The Index of Industrial Production (IIP) is an index for India which details out the growth of various sectors in an economy such as mining, electricity and manufacturing. The all India IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period. It is compiled and published monthly by the Central Statistical Organisation (CSO) six

weeks after the reference month ends.

The level of the Index of Industrial Production (IIP) is an abstract number, the magnitude of which represents the status of production in the industrial sector for a given period of time as compared to a reference period of time. The base year was at one time fixed at 1993–94 so that year was assigned an index level of 100. The current base year is 2004–2005.

SOME RELATED FACTS:

• This March growth is followed a growth of 5.7 per cent in February.

• Electricity generation has a growth of 11.3 %.

• The fertilizer sector grew up 23% in March, up from 16.3 % in February.

• Cement sector was slower in March, 11.9%. While in February it was 13.5%.

• Coal sector slowed to 1.7 % compared to 3.8 % in February.

• Steel production bounced back in March, rising at 3.4 per cent after the 0.5 per cent contraction seen in the previous month.

• Crude oil fell by 5.1 per cent, the fall was more than double for natural gas, which contracted by 10.5 per cent. The industries continue to be hit by falling international crude oil prices coupled with subdued domestic and international demand.

• While oil production has cumulatively declined by 1.4 per cent in the 2015-16 financial year, the decline has been highest among all industries, for natural gas at 4.2 per cent.

But the comparison of March 2014 and March 2016 data tell that the index grew 5.6% in March 2016.

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Divestment: More than just revenue News: NITI Aayog, the official think tank, was supposed to place its recommendations on divesting the government’s stake in public sector units (PSU), and strategic sale of sick units by April-end.

This will be an important one as it will play an integral role in changing the Union government’s perspective towards PSUs.

BACKGROUND:

• The process of divestment was formalized only after the Divestment Commission was set up in 1996 to examine and suggest withdrawal from non-strategic sectors.

• The department of divestment was formed in December 1999, which later was made the ministry of disinvestment in September 2001. In May 2004, it was shifted to the ministry of finance as one of the departments under it.

SOME MEASURES TO MODIFY DISINVESTMENT POLICY:

• To define the priority sectors for government based on its strategic interest,

• Financial returns can not be sole reason for investment in PSUs. The key role of a PSU is to maintain competition in the sector and limit excessive monopoly.

• Government ownership is required for sectors with strategic relevance such as defence, natural resources, etc. The government should, therefore, exit non-strategic sectors such as hotels, soaps, airlines, travel agencies and the manufacture and sale of alcohol.

• Instead of creating PSUs in non-priority sectors, the government should look into strengthening the regulatory framework that ensures efficient market conditions. Regulation should be extended to both public and private entities.

(Source: HT Mint – In News)

ABOUT DISINVESTMENT:

• Disinvestment can also be defined as the action of an organisation (or government) selling or liquidating an asset or subsidiary. It is also referred to as 'divestment' or 'divestiture.' In most contexts, disinvestment typically refers to sale from the government, partly or fully, of a government-owned enterprise.

• Divestment in India is a by-product of the economic reforms initiated in 1991. However, over the years, the policy of divestment has increasingly become a tool to raise resources to cover the fiscal deficit with little focus on market discipline or strategic objective.

Divestment is an important aspect for improving the structure of incentives and accountability of PSUs in India. It is the approach towards divestment that defines the incentive for any PSU to run efficiently. An ad-hoc approach towards divestment only reduces the incentive for the firm’s managers to make significant investment in the enterprise. Therefore, it is essential for PSUs that divestment is not limited to raising revenues.