PIB Summary- 19th July, 2021 | PIB (Press Information Bureau) Summary - UPSC PDF Download

National Logistics Excellence Awards

Context: Government launched National Logistics Excellence Awards.

About the National Logistics Excellence Awards

• The awards have been launched with a view to draw focus towards the logistics sector.
• The awards are in two categories, the first group includes logistics infrastructure/service providers and second one is for various user industries.
• The awards will highlight best practices including consolidation, process standardisation, technological upgrade, digital transformations, and sustainable practices.
• For user industries, the awards will showcase efforts towards supply chain transformation, supplier ecosystem development, skill development, automation, and other similar endeavours.
• The awards will also be an opportunity to laud the extraordinary measures organisations have taken to address the deficiencies exposed by the COVID-19 pandemic including last-mile delivery start-ups, development of cold storage facilities, effective transportation of oxygen, and uninterrupted supply of essential goods and services to the needy.
• Organisations will be invited to submit entries via the Ministry of Commerce and Industry website.
  • Shortlisted entrants will present their case to a National Jury panel, which will decide the winners.
  • The panel will be chaired by the Special Secretary, Logistics Division, and will comprise senior representatives from line ministries, logistics and supply chain experts from leading academic and research institutions, and CXO-level professionals from user-industries and service providers.
  • Winners will be announced in October 2021.

Background

• While the Indian logistics sector has been growing at a CAGR of 10.5%, reaching approximately USD 215 billion in value in 2020, there are systemic, interconnected problems that must be addressed to enhance its efficiency.
• Comprehensive logistics costs amount to almost 14% of India’s GDP.
• Closing India’s competitiveness gap vis-à-vis the global average of 8 percent would make the Indian logistics sector advanced, organised and efficient, on par with global peers.

Startup India Showcase Platform

Context: 104 startups from different sectors have currently on-boarded on the Startup India Showcase Platform.

About the Startup India Showcase Platform

• Startup India Showcase is an online discovery platform for the most promising startups of the country.
• It is an online platform to exhibit the finest startups of the country that have been handpicked through various DPIIT and Startup India programs.
• All DPIIT-recognized startups under Startup India are eligible to apply for the Showcase. Startups can apply on the Startup India website by filling a form, uploading their pitch deck, and catalogue.
  • An apex committee constituted by the DPIIT selects the startups for showcase on the portal.
• Features of the portal
  • Visibility: Each startup has a profile page with detailed pitch about their product, innovation, and USP in forms of Videos and PDF links.
  • Networking: It can act as a networking portal offering various social and digital connect opportunities.
  • Discovery: It can act as an online discovery platform for startups.
  • Star Repository: It is an all-star repository as the platform contains startups that have already proved their capabilities via different means (winning competitions, selling on GeM, etc.), they will also be a potential priority choice for government and corporate buyers, facilitating their business growth.
• Showcased startups get various benefits such as potential investments, potential customers/businesses, get more visibility and recognition, get access to government projects and fundraising opportunities from relevant investors.

Bad Bank Launched

Context: Bad Bank launched for stressed assets as a measure to clean up bank books.

Details

• The bad bank was announced in the Union Budget. It has been named the National Asset Reconstruction Company Limited (NARCL).
• The new entity was created in collaboration with both public and private sector banks.
• NARCL will take over identified bad loans of lenders

A Bad Bank houses Bad loans or Non-Performing Assets (NPA). The idea of Bad Bank was implemented in countries like Sweden, Finland, France, Germany, Indonesia etc. Even with Bad Bank structure, the Non-Performing Assets (NPA) losses do not go away. It needs to be shared between investors, taxpayers of these banks in general and those of the bad bank.
The bad bank will manage Non-Performing Assets in suitable ways, some may be liquidated, others may be restructured, etc. In the meantime, it would work towards suitably disposing of the toxic assets. This concept has been successfully implemented in many western European countries post the 2007 financial crisis like Ireland, Sweden, France etc.

Recent Proposal of Bad Banks by Indian Banking Association (IBA)

Indian Banking Association (IBA) has submitted a proposal to both the Government and the Reserve Bank of India (RBI) to set up a ‘Bad Bank.’
As per IBA estimates the ‘Bad Bank’ would require approximately Rs 10,000 crore of capital initially. The exact quantum of capital and amount of bad loans to be housed in the proposed ‘Bad Bank’ would only be finalised after discussions with the Government and Reserve Bank of India (RBI).

Bad Bank – Origin of Concept

The concept of a bad bank was pioneered at the Pittsburgh-headquartered Mellon Bank in 1988. Bad Bank would set up as a separate entity that would buy the Non-Performing Asset from other banks to free up their books for fresh lending. It is focused on the task of recovery.
A bank may accumulate a large portfolio of debts or other financial instruments which unexpectedly become at risk of partial or full default. A large volume of non-performing assets usually make it difficult for the bank to raise capital, for example through sales of bonds.
In these circumstances, the bank may wish to segregate its “good” assets from its “bad” assets through the creation of a bad bank.

How Does ‘Bad Bank’ Work?

1. Banks will be able to demarcate their assets into good assets and toxic or bad assets.
2. Good assets are ones in which loans are repaid as per schedule, and defaulted ones are classified as toxic assets or bad assets.
3. Toxic assets can be removed from Banks books and transferred to Bad Bank which has the sole purpose of aiding the recovery of risky assets.
4. Hence the banks will clean up and reduce their exposure to risky assets.
5. Bad Bank will absorb all the toxic assets of banks at a price below the book value of these loans.

What is the Need for a Bad Bank?

Investors would see large NPA’s as a sign of Banks ill-health or financial weakness. If the NPA’s are high, then the Bank loses its ability to borrow, lend or conduct business.

Bad Bank Structure – IBA Proposal

The ‘Bad Bank’ will be a 2 tiered structure.
Tier 1:

1. There will be an Asset Reconstruction Company (ARC) backed by the Government which would buy bad loans from banks and issue Security Receipts to the Banks.
2. As per RBI guidelines, ARC will hold Security Receipts of 15%.
3. Banks will get 15% of the cash and will hold 85% of Security Receipts. Hence it is called 15:85 structure.

Tier 2:

1. There will be an Asset Management Company (AMC).
2. AMC would be run by public and private bodies which includes banks as well.
3. Turnaround professionals.

Past Debates on Bad Banks 

The idea of Bad Bank is not new. Currently, this is in the news due to the problem caused by COVID-19. Earlier the topic of Bad Bank was a matter of debate in the banking and finance circles when former Interim Finance Minister Piyush Goyal had put forward the idea when a committee headed by Sunil Mehta was formed to study the feasibility of National Asset Reconstruction Company. Even in 2017 Economic Survey had mooted the idea by suggesting the creation of Public Sector Asset Rehabilitation Agency (PARA). Even former RBI governor Raghuram Rajan had started a debate on Bad Banks in 2015 as a possible solution to the problems of Non Performing Assets.

Forex reserves

Context: India emerges as 5th largest forex reserves holder in the world as of June 25, 2021.

Details

• With India’s forex reserves at $608.99 billion as of June 25, 2021 stood, India has emerged as the fifth largest foreign exchange reserves holder in the world after China, Japan, Switzerland and Russia.
• India’s foreign exchange reserves position is comfortable in terms of import cover of more than 18 months and provides cushion against unforeseen external shocks.
• The RBI takes regular steps for diversification of forex reserves by scaling up operations in forex swap and repo markets, acquisition of gold and exploring new markets/products, while adhering to safety and liquidity standards.
• Variation in India’s forex reserves is primarily the outcome of:
  • RBI’s intervention in the foreign exchange market to smoothen exchange rate volatility
  • Valuation changes due to the movement of US dollar against other international currencies in the reserve basket
  • Movement in gold prices
  • Interest earnings from deployment of foreign currency assets
  • Inflow of aid receipts
• In 2020-21, India’s balance of payments recorded surplus in both current account and capital account which contributed to the increase in foreign exchange reserves during the year.
• Besides exports and imports of goods and services, the overall stability of the external sector depends on other components of balance of payments including remittances (transfers), income in the current account, the size of net capital flows and external debt.

Tax exemption to ameliorate stress due to COVID-19

Context: The Government has decided to provide income tax exemption to the amount received by a taxpayer for medical treatment from an employer or from any person for treatment of COVID-19 during the financial year 2019-20 and subsequent years.

Details

• The aim of this exemption is to provide relief to taxpayers who suffered on account of COVID-19 and had to incur sum for medical treatment of COVID-19 after taking help from employer or any person.
• In order to provide relief to the family members of taxpayers who have lost their lives due to COVID-19, the Government has decided that income-tax exemption shall be provided to ex-gratia payment received by family members of a person from the employer of such person or from other person on the death of the person on account of COVID-19 during FY 2019-20 and subsequent years.
• The exemption shall be allowed without any limit for the amount received from the employer and the exemption shall be limited to Rs. 10 lakh in aggregate for the amount received from any other persons.

Dairy Investment Accelerator

Context: Government sets up Dairy Investment Accelerator.

About the Dairy Investment Accelerator

• The Dairy Investment Accelerator has been set up by the Department of Animal Husbandry & Dairying (DAHD), Government of India under its Investment Facilitation Cell.
• The aim is to provide dedicated focus towards promoting & facilitating investments in the Indian dairy sector.
• This Investment Accelerator is a cross functional team constituted to serve as the interface with investors. It shall provide support across the investment cycle:
  • Offering specific inputs for evaluation of investment opportunities
  • Addressing queries about application to govt. schemes
  • Connecting with strategic partners
  • Providing on-ground assistance with state departments & relevant authorities
• The Dairy Investment Accelerator will also work with DAHD to organize a series of events with global & local industry participants and one-on-one discussions with the investors to understand their perspectives, facilitate direct interactions with government officials and connect with other players in the industry.
• Dairy Investment Accelerator is also generating awareness among investors about the Animal Husbandry Infrastructure Development Fund (AHIDF).
  • AHIDF is one of the flagship schemes by DAHD whereby a Rs. 15,000 crore fund has been setup for offering financial support to entrepreneurs, private companies, MSME, Farmers Producers Organizations (FPOs), and Section 8 companies.
  • Eligible entities can avail the benefits of the scheme to set up new units or expand existing units in areas of dairy processing, meat processing & Animal Feed Plant.
  • The benefits available are:
    • 3% interest subvention on loans
    • 2-year moratorium with 6-year repayment period
    • INR 750 Cr credit guarantee

Related Information

• India is the largest milk producer contributing 23% of global milk production.
• It is the single largest agricultural commodity contributing 5% of the national economy and employing 80 million+ farmers directly.

Green National Highway Corridor Project

Context: The Government had signed loan agreement with the World Bank to develop Green National Highway Corridors (GNHCP).

Details

• The Ministry of Road Transport and Highways (MoRTH) had launched a National Green Highways Mission (NGHM) following the promulgation of ‘Green Highways Policy’ in September 2015.
• The Green National Highways Corridor Projects (GNHCP) supports the implementation of the NGHM and the provision of green and safe transport.
• The development objective of Green National Highways Corridor Project is to demonstrate safe and green National Highway corridors in selected States and enhance the institutional capacity of the Ministry of Road Transport and Highways in mainstreaming safety and green technologies.
• The National Highways of India carry about 40% of road traffic. However, several sections of these highways have inadequate capacity, weak drainage structures and black spots prone to accidents.

E-100 Pilot Project

Context: E-100 Pilot Project launched.

About the E-100 Pilot Project

• The E-100 Pilot Project was launched in Pune on the occasion of World Environment Day (5 June).
• The project aims to set up a network for production and distribution of ethanol across the nation.

Ethanol Blended Petrol (EBP) Programme

The Ethanol Blended Petrol Programme was launched in 2003 with an aim to promote the use of renewable and environmentally friendly fuels and reduce India’s import dependence for energy security.

• Starting with 5% blending, the government has set a target of 10% ethanol blending by 2022 and 20% blending (E20) by 2030.
• The programme is implemented in accordance with the National Policy on Biofuels.
• Under this programme, oil marketing companies (OMCs) will procure ethanol from domestic sources at prices fixed by the government.
• Till 2018, only sugarcane was used to derive ethanol. Now, the government has extended the ambit of the scheme to include foodgrains like maize, bajra, fruit and vegetable waste, etc. to produce ethanol.
  • This move helps farmers gain additional income by selling the extra produce and also broadens the base for ethanol production in the country.

What is Ethanol Blending?
An ethanol blend is defined as a blended motor fuel containing ethyl alcohol that is at least 99% pure, derived from agricultural products, and blended exclusively with petrol.

Ethanol is one of the principal biofuels, which is naturally produced by the fermentation of sugars by yeasts or via petrochemical processes such as ethylene hydration. It has medical applications as an antiseptic and disinfectant. It is used as a chemical solvent and in the synthesis of organic compounds, apart from being an alternative fuel source.

Benefits of ethanol blending

• The auto fuels we commonly use are mainly derived from the slow geological process of fossilisation, which is why they are also known as fossil fuels. Ethanol in comparison is a biofuel, that is, it is primarily derived from processing organic matter (hence, it is a biofuel). In India, ethanol is largely derived from sugarcane via a fermentation process.
• Since it is a plant-based fuel, ethanol is considered renewable.
• Since ethanol is high in oxygen content, engines using ethanol blends combust fuel more thoroughly reducing vehicular emissions. Hence, this process will also help reduce the country’s carbon footprint.
• Mixing 20 percent ethanol in petrol can potentially reduce the auto fuel import bill by a yearly $4 billion, or Rs 30,000 crore. 
• Another major benefit of ethanol blending is the extra income it gives to farmers. Ethanol is derived from sugarcane and also foodgrains. Hence, farmers can earn extra income by selling their surplus produce to ethanol blend manufacturers.

Impact of E20 as a Fuel
(i) Impact on Environment

• The use of E20 as fuel reduces carbon monoxide emissions by 50% in two-wheelers and 30% in four-wheeler vehicles.
• Hydrocarbon emissions also reduce compared to unblended petrol.
• Ethanol blending can thus reduce emissions in vehicles.

(ii) Impact on Consumers

• The fuel efficiency of vehicles will reduce by:
• 6-7% for 4 wheelers designed for E0 and calibrated for E10
• 3-4% for 2 wheelers designed for E0 and calibrated for E10
• 1-2% for 4 wheelers designed for E10 and calibrated for E20
• However, with improvements in engines, the loss in fuel efficiency can be minimised.

(iii) Impact on Vehicle Manufacturer

• Engines and components will need to be tested and calibrated with E20 as fuel.
• No major change in the assembly line is required.
• Vendors need to be developed for the procurement of additional components compatible with E20.

Ethanol Production
The Department of Food and Public Distribution (DFPD) is the nodal department for the promotion of fuel grade ethanol producing distilleries in the country. The Government has allowed ethanol production/procurement from sugarcane-based raw materials viz. C & B heavy molasses, sugarcane juice sugar sugar syrup, surplus rice with Food Corporation of India (FCI) and maize.
The supply of ethanol under the EBP Programme has increased from 38 crore litres during 2013-14 to 173 crore litres during 2019-20 resulting in an increase in blend percentage from 1.53% to 5.00% respectively. 

Challenges in Ethanol Blending Programme

Although promising, the ethanol blending programme faces several challenges and concerns. Some of them are discussed below.

• Availability of sufficient feedstock on a sustainable basis: Current regulations in the country allow production of ethanol from sugarcane, sugar, molasses, maize and damaged foodgrains unfit for human consumption. Further, surplus rice with FCI is also allowed. Some states have demanded that rice procured by state governments be allowed for ethanol production. However, there is the issue of diverting foodgrains from human consumption to ethanol production when hunger and malnutrition are still problems faced by many in the country.
• Production Facilities: Ethanol production facilities have to be augmented if the goals of 20% blending by 2030 are to be achieved. Currently, ethanol production is largely confined to the sugar producing states. Sugar mills, which are the key domestic suppliers of bio-ethanol to OMCs, were able to supply only 57.6% of the total demand. The mills also do not have enough financial stability to invest in biofuel plants.
• Price uncertainty: The prices of both ethanol and sugarcane are fixed by the government leading to concerns among investors regarding the price of bioethanol.
• Availability of Ethanol: Ethanol is not equally available all over the country. This leads to an increase in transportation and logistics costs. Moreover, handling and storage of ethanol are also risky as it is a highly flammable liquid.
• Challenge for vehicle manufacturers: Vehicle manufacturers must work with vendors to develop automobile parts compatible with ethanol. They should work on engine optimisation for higher ethanol blends. 
• Environmental clearances: Currently, ethanol production plants/distilleries fall under the “Red category” and require environmental clearance under the Air and Water Acts for new and expansion projects. This often takes a long time leading to delays.