Syllabus subtopic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Prelims and Mains focus: About the govt.’s move and its significance; about disinvestment and its types; India’s Coal sector

News: The Union cabinet on Wednesday approved opening up of coal mining and further disinvestments. It also extended the validity period of mining lease clearances ending in 2020 by two years.

Context: Govt.’s move comes at a time when the window for fossil fuels is rapidly closing, and the global energy landscape evolving, with fundamental changes to the investment culture amid growing climate concerns.

Background

It comes against the backdrop of India’s gross domestic product growth decelerating to a six-and-a-half-year-low of 4.5% in the September quarter amid slowing domestic and external demand.

About the govt.’s move and its significance

• In an attempt to attract investments in coal mining, the Cabinet approved the promulgation of Mineral Laws (Amendment) Ordinance 2020.
• Under the Ordinance, requirement of previous approval in cases where allocation of blocks was made by Centre has been dispensed with to speed up the process of implementation of projects and ease of doing business.
• The ordinance allows coal mining by any company present in sectors other than steel and power, and does away with the captive end-use criteria.
• While the move will help create an efficient energy market, usher in competition and reduce coal imports, it may also bring an end to state-run Coal India Ltd’s (CIL) monopoly.
• The move will also help India gain access to sophisticated technology for underground mining used by global miners.

India’s Coal Sector

• Despite having the world’s fourth largest coal reserves, India imported 235 million tonnes (mt) of coal last year, of which 135mt valued at Rs.171,000 crore could have been met from domestic reserves.

• The Centre has set a mining target of 1.5 billion tonnes of coal by 2020. Of this, 1 billion tonnes was to be from CIL and 500 million tonnes from non-CIL sources, in line with the government’s push to raise natural resources production to kickstart economic growth. This has now been revised down to 1 billion tonnes of coal by 2023-24.

• The government has been progressively liberalizing the coal sector over the last several months to attract new investments, and getting rid of this archaic end-use restriction was a key step. It is expected that the government will also address other procedural issues that add to time delays and upfront cost of developing a mine.

Govt.’s decisions on disinvestment

• As part of the NDA government’s disinvestment agenda, the Cabinet Committee on Economic Affairs gave ‘in-principle’ approval for strategic disinvestment of equity shareholding of Minerals & Metals Trading Corp. Ltd (49.78%), National Mineral Development Corp. Ltd (10.10%), MECON (0.68%), Bharat Heavy Electricals Ltd (0.68%) and two Odisha state government units—Industrial Promotion and Investment Corporation of Odisha Ltd (IPICOL) (12.00%) and Odisha Mining Corp. (OMC) (20.47%) in Neelachal Ispat Nigam Ltd.

• The government has set an ambitious disinvestment target of Rs.1.05 trillion for FY20, of which it has managed to garner only Rs.17,364 crore so far.

What does the term ‘disinvestment’ mean?

• The term 'disinvestment' literally means the opposite of investment. Disinvestment is the process of reducing the share of government in public sector undertakings (PSUs). It is the sale of shares of the government in these companies to financial institutions, employees or the public at large.
• In disinvestment, also called divestment, there is no change in the management of PSUs from the public to private hands as the government still holds majority equity (51 percent). Even when the government's share falls below 51 percent, the rest of the equity may be sold in such a way that no one institution or individual holds enough stake to take control of the management.
• Disinvestment is primarily a money-raising exercise. The proceeds of disinvestment are treated as non-debt creating capital receipts. Though the government can technically hold a stake less than 51 percent and still be the largest shareholder in PSUs, it was not done on a large scale. This is because a PSU ceases to be a public sector company post such exercise.

Types of Disinvestment

Disinvestment of a minority stake in PSUs can be done in the following ways:

1. Initial Public Offering (IPO): an offer of shares by an unlisted PSU to the public for the first time.
2. Follow-on Public Offering (FPO): also known as Further Public Offering, it's an offer of shares by a listed PSU.
3. Offer for sale (OFS): shares of a PSU are auctioned on the platform provided by the stock exchange. This mode has been used extensively by the government since 2012.
4. Institutional Placement Programme (IPP): under this, only selected financial institutions are allowed to participate and the government stake is offered to only such institutions. E.g., mutual funds, insurance, and pension funds such as LIC etc.
5. CPSE Exchange Traded Fund (ETF): Through this route, the government can divest its stake in various PSUs across diverse sectors through a single offering. This mechanism allows the government to monetize its shareholding in those PSUs which form part of the ETF basket.
6. Cross-holdings: in this method, one listed PSU takes up the government stake in another listed PSU.

Disinvestment of a majority stake in PSUs:

• Strategic sale: it is the sale of a substantial portion of government shareholding, 50 percent or higher, in a PSU, along with the transfer of management control.

• Privatization: it's a type of strategic sale in which the government divests its entire shareholding, along with the transfer of management control, to a private entity.

Rising oil prices may hit Budget math

Syllabus subtopic: Effect of policies and politics of developed and developing countries on India's interests, Indian diaspora.

Prelims and Mains focus: on the geopolitical tensions between U.S. and Iran and their impact on India’s economy

News: The prices of crude oil constituting the Indian basket has been increasing since October and is likely to exceed $70 a barrel this month on escalating U.S.­ Iran tensions.

Background

• Major General Qassem Soleimani, the Iranian Revolutionary Guards commander, was recently killed in a US strike at Baghdad International Airport. He was the long-serving head of Iran’s Quds (“Jerusalem”) Force and has been seen as a deadly adversary by America and its allies.

• Rising oil prices had already led to an increase in the prices of petrol and diesel by about 54 paise a litre and 83 paise a litre respectively since January 1, 2020. The Indian basket of crude oil was pegged at $59.70 per barrel in October 2019, rising to $62.54 per barrel in November and to $65.52 in December. It is currently hovering around $70 per barrel.

What is the reason behind this increase in oil prices?

• The price of benchmark Brent oil went up to $71.75 per barrel after Iran retaliated against the U.S. by attacking the latter’s bases in Iraq, but softened to $67.50 a barrel after Iran said that it did not want to further escalate the tensions.

Impact on India’s economy

• Higher crude oil prices is ‘bad news’ for the Indian economy that imports over 85% of its crude oil requirements.

• Higher crude oil prices will be bad for Inida’s current account deficit and it will further tighten our fiscal situation.

• Further, divestment of oil PSUs will become difficult due to higher crude oil prices.

• Rising crude oil prices could impact corporate earnings of several sectors, including auto and oil marketing companies, according to analysts.

Syllabus subtopic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Prelims and Mains focus: about the guidelines issued by MHA, significance of data preservation; about the 24/7 network

News: The Union Home Ministry (MHA) has said that before seeking information about a person’s e­mail account hosted on servers in foreign countries, investigating agencies will have to establish that it is linked to a crime.

Background

• Most intermediaries and social media platforms such as Facebook, WhatsApp, Google, Yahoo!, Twitter and YouTube have their servers outside India.
• The Centre introduced the Personal Data Protection Bill, 2019 in the Lok Sabha last month that seeks to provide for protection of personal data of individuals and establishes a Data Protection Authority for it.

Guidelines issued by the MHA

• The Ministry said it was not enough to show that the accused had an e­mail account as “the account must have something to do with the crime being investigated” and it was “the lowest legal standard required of all investigative processes”.

• The Ministry issued revised guidelines to streamline the process of seeking legal assistance from foreign countries in criminal matters, issuing directives on drafting and processing letters rogatory, mutual legal assistance requests and service of summons, notices and other judicial documents.

• In the guidelines issued to the States and other agencies, the Ministry stressed “data preservation” as it was the key to the investigation of cyber­offences and those involving digital evidence.

• The Ministry said the G­8 countries’ 24/7 Network was one such channel that could be used to place request for preserving data in real time.

• The requested country has to be informed about the time period for which the data is required. Such period shall be consented by the requested country.

• The transferred data shall be kept for no longer than the period required for the purpose for which it has been received and shall be returned to the requested country or deleted at the end of the period specified.”

Importance of Data Preservation

• Accessing the Internet through an Internet Service Provider (ISP) creates important records and other information such as customer records, connection information and stored data. This is very important evidence to prove the guilt intention of the accused.
• Since this type of evidence can disappear quickly, it is of paramount importance to get the data preserved expeditiously through appropriate channels. The request may be sent to the service provider or to the CBI — the contact point in respect of G­8 24/7 Network.

About the G­8 24/7 Network

• The G­8 network allows law enforcement agencies to make urgent preservation requests of the digital data before it perishes.
• The network, established among the G8 nations in 1997, has since grown to 55 member countries, all of which have dedicated cyber crime investigators who can respond to fast-moving cases at a moment’s notice—often with the ability to “fast freeze” e-mail traffic and other stored electronic data, which can preserve a crook’s otherwise fleeting digital footprint.

China, and Pakistan navies deploy submarines in the strategic Arabian Sea

Syllabus subtopic: India and its neighbourhood - relations.

Prelims and Mains focus: about the exercise; Gwadar and Chabahar ports; China incursions in India’s neighbourhood and their implications

News: Navies of China and Pakistan, holding nine-day exercises in the Arabian Sea to enhance their all-weather strategic partnership, have for the first-time deployed submarines, providing a rare major exposure to the Chinese navy in the region.

About Pakistan-China Joint maritime exercise

• The joint maritime exercises began on Monday in the North Arabian Sea, regarded strategically significant for China which is now developing Pakistan's deep water Gwadar port there.
• The joint exercises are expected to be the first of many to come, as China and Pakistan have now developed a series of joint exercises covering the navy, army and air force.
• The exercise is also the first between China and Pakistan that will feature anti-submarine and submarine rescue training, indicating a high-level of strategic mutual trust.

About Gwadar port

• Gwadar is being connected through the over USD 60 billion China Pakistan Economic Corridor (CPEC) to China's Xinjiang province, providing a key land route for China to access the warm waters of the Arabian Sea. India has objected to China over the CPEC as it is being laid through Pakistan-occupied Kashmir (PoK).

• The Gwadar is also located close to Iran's Chabahar Port being jointly developed by Iran, India and Afghanistan to ensure a trade corridor for Indian exports to Afghanistan.

Strategic importance of Arabian Sea for India

• The Arabian Sea region is strategically important for India as major ports including Kandla, Okha, Mumbai, Nhava Sheva (Navi Mumbai), Mormugão, New Mangalore, and Kochi are located there.

• The Arabian Sea provides entry to the Indian Ocean where China currently has built a logistics base at Djibouti in the Horn of Africa.

What’s next in the U.S.­Iran conflict?

Syllabus subtopic: Effect of policies and politics of developed and developing countries on India's interests, Indian diaspora.

Prelims and Mains focus: on the escalation in US-Iran tensions and its geopolitical implications

News: Five days after Major General Qassem Soleimani, the Qods Force chief, was killed in a U.S. air strike outside Baghdad airport, Iran on Wednesday launched ballistic missile attacks at American troops in two military bases in Iraq.

What did the attack achieve?

• President Donald Trump has said that there were no American casualties in the attacks on the Erbil and al-Asad bases and the damage caused was minimal. However, the strike is still a pivotal moment in the U.S.-­Iran tensions as this is the first time Iran is launching a direct attack on U.S. troops and owning it up.

• Practically, these are acts of war. First, the U.S. took out an Iranian military leader in a third country and now Iran has struck U.S. troops. Javad Zarif, the Iranian Foreign Minister, said, “Iran took and concluded proportionate measures in self­defence under Article 51 of the UN Charter targeting base from which the cowardly armed attack against our citizens and senior officials were launched.” The Article allows states to take action in self­defence when they are under attack. Mr. Zariff has added that Iran doesn’t seek “escalation or war, but will defend ourself against any aggression”.

Was the attack imminent?

• The Iranian response was expected. The call for revenge was reverberating throughout the funeral processions of Soleimani. A mosque in the Shia holy city of Qom in Iran had unfurled a red flag indicating that war was coming.

• Kataib Hezbollah, a unit in the Popular Mobilisation Forces (PMF), the umbrella organisation of Iraqi Shia militias that Soleimani helped build, had asked Iraqi forces to stay away from the bases that house American soldiers, indicating that U.S. troops in Iraq could be targeted.

• Iran has launched a calculated, limited strike that doesn’t cause much damage to the Americans but yet makes good on its pledge for revenge. It was an escalating step, but not yet an all­out war.

• By hitting the U.S. base in Erbil, the capital of Iraqi Kurdistan, Iran may also be sending a message to Washington. Erbil houses not just American soldiers but also a large American consulate.

• The U.S. has deep ties with the Iraqi Kurdistan and it would like to keep some U.S. troops in the autonomous region even if its forces are forced to pull back from the rest of Iraq. It’s to be noted that most Kurdish lawmakers had boycotted Sunday’s Iraqi Parliament session, in which lawmakers passed a resolution to expel American troops from the country.

• For the U.S., some troops in Iraq are necessary to retain its presence in Syria. So Iran’s message could be that ‘you’re not safe in Erbil’.

So what are the possible scenarios?

• President Trump has already indicated that he’s backing away from further conflicts with Iran. In a televised speech from the White House, he said Iran appears to be standing down, and urged European countries as well as Russia and China to break away from the nuclear deal and negotiate a new one. He has also threatened to slap Iran with more sanctions. But despite his message of de-escalation, the risks of further conflicts still remain.

• The Supreme Leader Ayatollah Ali Khamenei has hinted that more actions will follow to force the U.S. to retreat from West Asia (read Iraq and Syria).

• The Revolutionary Guard’s commander Hossein Salami threatened on Wednesday before a mourning crowd in Kerman, Solaimani’s hometown, that Iran would set ablaze “the place the U.S. loves”, in a reference to Israel.

• Iran could target U.S. troops inside Iraq through its proxies such as the Badr Brigade and Kataib Hezbollah as it did before the killing of Soleimani. That could drag the U.S. into a deeper conflict. Also, the Shia militias in the region operate with relative autonomy. Infuriated by the loss of their commander, they could act without authorisation from Tehran against U.S. troops in Iraq, which could trigger a harsher response from the U.S. against Iran, dragging both countries into war.

All these suggest that West Asia remains on the brink.