- PLI: Centre’s nod for 33 API applications
- Space Agencies Review Ties(INDIA-JAPAN)
- Govt. owning a bad bank is more capital efficient
- Plea in SC seeks release of over 150 Rohingya in Jammu
- Fugaku world's most powerful Supercomputer.
PLI: Centre’s nod for 33 API applications
#GS-2 #GS-3 #POLICIES AND INTERVENTION
Why in news
- The government has approved 33 applications with a committed investment of ₹5,082.65 crore under the production linked incentive scheme for active pharmaceutical ingredients.
Promotion of domestic manufacturing
- Setting up of these plants will make the country self-reliant to a large extent in respect of these bulk drugs.
- The Department of Pharmaceuticals had unveiled a PLI scheme for the promotion of domestic manufacturing in four different target segments with a total outlay of 6,940 crore for the period 2020-21 to 2029-30.
PLI Scheme for IT Hardware and Pharmaceuticals
- Recently, the Union Cabinet has cleared Production-Linked incentive (PLI) schemes for pharmaceuticals and IT hardware, including laptops, which would cost the government as much as Rs. 22,350 crore.
- Earlier, the government had announced the PLI scheme for medical devices, mobile phones and specified active pharmaceutical ingredients, with a proposed outlay of Rs. 51,311 crore.
What is PLI Scheme
- It aims to give companies incentives on incremental sales from products manufactured in domestic units.
- It invites foreign companies to set units in India, however, it also aims to encourage local companies to set up or expand existing manufacturing units.
- Pharmaceutical Sector
- The Rs. 6,940-crore PLI scheme implemented in 2020 focuses on the critical bulk drugs, whereas this scheme is likely to focus on other types of bulk drugs.
- It intends to give incentives between 2020-21 and 2028-29 (9 years).
- Drug manufacturers applying for the scheme will have to be registered in India and will be placed into one of three categories based on their Global Manufacturing Revenue (GMR).
Categories of Drugs Targeted by the Scheme
● First Category
○ It includes biopharmaceuticals, complex generics, patented and orphan drugs, often expensive for which India relies a lot on multinational drug makers.
● Second Category
○ It comprises Active Pharmaceutical Ingredients (APIs), Key Starting Materials (KSMs) and Drug Intermediates (DIs).
● Third Category
○ It includes other critical repurposed, auto-immune, anti-cancer, anti-diabetic, anti-retroviral, anti-infective and cardiovascular drugs as well as in-vitro diagnostic devices and drugs not manufactured in India.
● For First and Second Category
10% of incremental sales value for the first four year of the scheme, followed by 8% for the fifth year and 6% for the sixth year of production under the scheme.
● For Third Category
○ 5% of incremental sales value for the first four years, 4% for the fifth year and 3% for the sixth year.
Benefits of PLI in Pharmaceuticals
● Reduced Dependency on China
- India‟s capabilities in APIs have reduced over the years, mostly due to cheaper alternatives from China.
- The pharmaceutical industry here is currently dependent on the bordering country for nearly 70% of the bulk drugs it imports.
● Enhance Exports
- The Indian pharmaceutical industry is the third-largest globally in terms of the volume term of production and is worth USD 40 billion in value.
- The country contributes 3.5% of total drugs and medicines exported globally.
Active pharmaceutical ingredients
- Every medicine is made up of two main ingredients - the chemically active APIs and chemically inactive, excipients, which is a substance that delivers the effect of APIs to one‟s system.
- API is a chemical compound that is the most important raw material to produce a finished medicine.
- In medicine, API produces the intended effects to cure the disease. For instance, Paracetamol is the API for Crocin and it is the API paracetamol that gives relief from body ache and fever.
- Fixed-dose combination drugs use multiple APIs, while single-dose drugs like Crocin use just one API.
How India lost its API market to China?
- During the early 90s, India was self-reliant in manufacturing APIs.
- However, with the rise of China as a producer of API, it captured the Indian market with cheaper products and it eventually led to high economies of scale for China.
- China created a low-cost API manufacturing industry.
- The industry was backed by the low cost of capital followed by aggressive government funding models, tax incentives. Their cost of operation is one-fourth of India‟s cost. Even the cost of finance in China is 6-7 per cent against India’s 13-14 per cent.
- So, due to low-profit margins and non-lucrative industry, Indian pharma companies over the years stopped manufacturing APIs.
Space Agencies Review Ties(INDIA-JAPAN)
#GS-3 #BILATERAL TIES #SPACE TECHNOLOGY
- Proposition was agreed during a bilateral meeting between the Indian Space Research Organisation (ISRO) and the Japan Aerospace Exploration Agency (JAXA) held virtually.
- Indian and Japanese space agencies reviewed cooperation in earth observation, lunar cooperation and satellite navigation, and also agreed to explore opportunities for cooperation in “space situational awareness and professional exchange programme”.
A Joint lunar polar exploration (LUPEX) mission
- Both agencies signed an Implementing Arrangement for collaborative activities on rice crop area and air quality monitoring using satellite data.
- India and Japan are already working on a joint lunar polar exploration (LUPEX) mission and the two space agencies have been working on the mission that aims to send a lander and rover to the Moon‟s south pole around 2024.
- Early this month, India and Italy decided to explore opportunities in earth observation, space science and robotic and human exploration.
- Last month, India and Australia signed an amendment to the MoU which will build on the Comprehensive Strategic Partnership.
- Both countries are also in discussions for Australia to host vital tracking infrastructure to support the Gaganyaan manned space flight mission.
Draft Spacecom Policy and India's Space Sector
- Recently, the Union government has permitted for the reforms in the space sector by allowing private players' participation, the Indian Space Research Organisation (ISRO) has released the draft of a new Spacecom Policy 2020.
- The policy will regulate the commercial use of satellites, orbital slots, and ground stations for communication needs.
- The policy also details how private players can get authorization for setting up new communication satellites and ground stations.
The Spacecom Policy - 2020
- It enables the activities of space based communications under five major statements.
- Spacecom Policy-2020 states that the Government of India shall:
- Adopt measures to monitor and authorize use of space assets for communication to or from Indian territory.
- Ensure protection of space assets already put in place and adopt measures to bring in more space assets under the administrative control for enhancing ability to utilize space based communication for national needs.
- Promote increased participation of commercial Indian industry to provide space based communications both within the country and outside.
- Concentrate on realization of space based communication systems for addressing the requirements that cannot be effectively, affordably and reliably satisfied by the commercial Indian industry either because of national security concerns or economic factors.
- Provide a timely and responsive regulatory environment for the commercial Indian industry to establish and operate space based communication systems.
Coordination with Other Space Agencies
● NASA-ISRO Synthetic Aperture Radar Mission (NISAR): NASA's first global Search And Rescue (SAR) mission, in partnership with ISRO, providing data for studying hazards, changes in glaciers and ice sheets, and global environmental.
● TRISHNA: ISRO, and the French space agency CNES have partnered in developing advanced upgradation satellites like TRISHNA to monitor the water cycle to help in finding out proper ways to utilize it.
● Gaganyaan project: The four Indian astronauts training in Russia for the Gaganyaan project - India‟s first manned space mission.
● Lunar Polar Exploration Mission (LUPEX): Collaboration between ISRO and Japan Aerospace Exploration Agency (JAXA) to have a combined mission, to send a lunar rover and lander to explore the south pole region of the Moon in 2024.
● Duchifat 3: Last year, a small remote sensing satellite weighing 2.3 kilogram, built by students in Israel, was part of the nine commercial satellites launched by ISRO along with its own earth observation satellite.
Govt. owning bad bank is more capital efficient
#GS-3 #ECONOMY # BANKING SYSTEM.
why in news
Despite of confusing reports about the control of the proposed bad bank, a brokerage has called for government ownership, saying state-funding was more capital efficient apart from speeding up implementation and also lowering the credit costs for the banks.
Beneficiaries of the proposed bad bank
- The government owning the proposed bad bank would not only be more capital efficient but also not impact the fiscal numbers, as otherwise, it would have to keep on recapitalising the state-owned lenders as they would be the biggest beneficiaries of the proposed bad bank.
- Again, such a setup could lower the credit charge on banks to a fifth in the worst-case scenario from the 100% now.
- As of March 2020, the gross non-performing loans of banks stood at 2.8% or ₹2,89,500 crore, which is 1.3% of the GDP.
- This would go up to 13.5% by this September, a two-decade high, given the impact of the pandemic on the companies and banks, according to the Reserve Bank of India.
Proposal of Bad Bank
- As a result of the Covid-19 pandemic induced economic slowdown, the commercial banks are about to witness the spike in NPAs, or bad loans.
- To deal with it, Reserve Bank of India (RBI) Governor is considering the proposal for the creation of a bad bank.
- A bad bank is an asset reconstruction company (ARC), involved in management and recovery of bad loans or NPAs of other banks.
- Generally, these Banks are initially funded by the government and gradually, banks and other investors start to co-invest in them.
Functions of Bad banks
- Commercial and Public Sector Banks (PSBs) sell their NPAs to the bad bank.
- The bad bank manages the NPAs/bad loans and finally recovers the money over time.
- The takeover of bad loans is normally below the book value of them.
- These banks are not involved in activities like lending and taking deposits.
- For example, consider a steel plant‟s loan with SBI, turned into an NPA. Bad bank purchases this NPA from the SBI. After that, the bad bank appoints domain experts to manage the assets of the plant with an aim to maximize revenues and cut losses.
- This is called reconstruction and increases the economic value of the plant.
- When the bad bank sells this plant, it will recover more money.
- The first bad bank was created in 1988 by the US-based Mellon Bank.
- After that, a similar concept has been implemented in other countries including Finland, Sweden, France and Germany.
Concept of Bad bank in India
- The Economic Survey 2016-17 had suggested setting up of a centralised Public Sector Asset Rehabilitation Agency (PARA) to take charge of the largest, most difficult cases, and make politically tough decisions to reduce debt. But no steps have been initiated so far to set up PARA.
- Later, in 2018, the Sunil Mehta committee had recommended an Asset Management Company-led resolution approach for loans over 500 crore. This proposal too, has remained only on paper.
- The need to set up a bad bank assumes importance in the context of macro stress tests for credit risks conducted by RBI showing that the gross non-performing asset (GNPA) ratio of Scheduled Commercial Banks (SCBs) may increase from 7.5 per cent in September 2020 to 13.5 per cent by September 2021 under the baseline scenario.
- If the macro economic environment deteriorates, the ratio may escalate to 14.8 per cent under the severe stress scenario.
- These projections are indicative of the possible economic impairment latent in banks‟ portfolios, according to RBI‟s latest Financial Stability Report (FSR).
Challenges associated with bad banks
- The major challenge associated with the Bad bank‟s establishment is regarding what kind of loans will be taken over by bad banks, and at what cost?
- This is aggravated when the commercial banks were reluctant in the past for haircuts.
- If a PSB accept the NPA sale at lower price to Bad Bank then that loss is incurred by that PSB (I.e., the government)
- The stake of government in Bad bank is criticised for political influence in decision making.
- Especially when the majority of the NPAs are associated with the Public Sector Unit.
- The establishment of bad banks may not incentivise banks to focus on the quality of credit provided, monitor loans, and protect against ever-greening of loans.
- Banks might perform lending activities in the mindset that there is a system in place for recovering the loans.
- Larger systemic issues will not be addressed. A bad bank does not address the structural weaknesses in public sector banks such as management etc.
For these reasons, many economists including the former RBI Governor opposed the establishment of Bad Bank in India.
Solutions AND WAY FORWARD
- Laying out a clear road map for Bad Bank is crucial. Government can address the issue in the upcoming budget session.
- Exploring the models suggested by former RBI Deputy Governor, Viral Acharya. He suggested two types of Bad banks. The possibility of these two models can be explored before setting up of Bad Bank. The models were:
○ Private Asset Management Company (PAMC) - This model is suitable for stressed sectors where the assets are likely to have an economic value in the short run, with moderate levels of debt forgiveness.
○ National Asset Management Company (NAMC) - This is for the sectors where the NPA problem is in excess capacity and also of economically unviable assets in the short to medium terms.
- The government can roll out the Bad Bank for the PAMC to instil public confidence and assess the performance of Bad banks and later can extended to NAMC category.
- K V Kamath Committee also suggested to set up Bad bank to revive sectors such as Trade, Textile, NBFCs, Steel and construction, etc.
Plea in SC seeks release of over 150 Rohingya in Jammu
#GS-2 #IR #POLITY #ETHNIC GROUPS
Recently In News
- The application was filed by a member of the Rohingya community.
- An application was filed in the Supreme Court seeking an urgent intervention to release and protect over 150 Rohingya refugees reportedly „detained‟ in Jammu.
He is already a petitioner in the Supreme Court against the deportation of refugees who had fled from religious persecution and violence in their native Myanmar.
Detained in a sub-jail in Jammu
- His application was based on reports in The Hindu and other media outlets that Rohingya members had been detained in a sub-jail in Jammu.
- This follows the Union Minister‟s statements two months ago that the Rohingya [identified as Muslim refugees by the government] would not be able to secure citizenship.
- These refugees have been illegally detained and jailed in the Jammu sub-jail, which has been converted into a holding centre with the IGP (Jammu) stating that they face deportation back to Myanmar following verification by their embassy.
- News reports started coming in around March 7, 2021 regarding the nearly 150-170 Rohingya refugees in Jammu being detained.
- Disturbing reports from the Rohingya families have come in that subsequent to a biometric verification of Rohingya refugees undertaken by the Jammu and Kashmir administration, some people never returned to the camps from the verification but were detained and jailed by the police.
- It quoted from a report detailing how “panic has gripped this already marginalised refugee community in Jammu after the verification drive and disappearance of family members”.
Threat to India's national security
- India maintains that Rohingyas are a threat to its national security and have links with international terror groups.
- India has so far refused to exert any pressure on Myanmar for taking the Rohingyas back and giving them recognition as the citizens of Myanmar.
- The Rohingya people are stateless, Indo-Aryan ethnic group who reside in Rakhine State, Myanmar.
- There were an estimated 1 million Rohingya living in Myanmar before the 2016–17 crisis. An estimated 625,000 refugees from Rakhine, Myanmar, had crossed the border into Bangladesh since August 2017. The majority are Muslim while a minority are Hindu.
- They are described by the United Nations (UN) as one of the most persecuted minorities in the world.
- The Rohingya population is denied citizenship under the 1982 Myanmar nationality law.
- They have denied the Rohingya the possibility of acquiring a nationality.
- Although Rohingya history in the region can be traced back to the 8th century, Myanmar law does not recognize the ethnic minority as one of the eight national indigenous races.
- The flow of Rohingya from Myanmar intensified in 2017 and the coast near the Bangladeshi city of Cox‟s Bazar was taken over by refugee settlements.
- In June 2015, the Bangladesh government suggested resettling Rohingya refugees on the Bhasan Char island under its Ashrayan Project.
- Recently the Bangladesh government is moving these refugees to an isolated island known as Bhasan Char which is located 21 miles (34 kilometers) from the mainland
International Provisions to Protect the Rights of Rohingyas
- International Covenant on Civil and Political Rights (ICCPR): Even though the refugees are foreigners in the country of asylum, by virtue of Article 2 of the ICCPR, 1966, they could enjoy the same fundamental rights and freedoms as nationals.
- The right to equality before the law, equal protection of the law and non-discrimination which form a cornerstone of international human rights laws call for banning discrimination against refugees based on their status as such.
- The 1951 Refugee Convention : The core principle of the convention is non-refoulement, which asserts that a refuge.
Fugaku worlds most powerful Supercomputer.
The world’s most powerful supercomputer Fugaku has now been fully developed in Japan. The machine is now available for research use.
- Japanese scientific research institute RIKEN and Fujitsu started the development 6 years ago with an aim to make the device core of Japan’s computing infrastructure.
- In April 2020, it was also tested particularly in projects to combat the COVID-19 pandemic.
- Now, Fugaku is fully open and available for shared use.
- That is why Japan’s Research Organization for Information Science and Technology (RIST) has selected 74 projects that will use the supercomputer in FY2021.
- RIST has asked for proposals of new projects in several categories and invited researchers who are interested to apply.
- Fugaku will be used with an aim to achieve research results that helps in building a long-lived and healthy society, disaster mitigation, and better energy use.
- The ultimate goal is to establish the government’s vision of an ultra-smart Society 5.0.
- Fugaku has topped the Top500 list, a supercomputer benchmark index, for two consecutive years.
- The computer has 100 times the application performance of K supercomputer and is developed to implement high-resolution, long-duration, and large-scale simulations.
- A portion of Fugaku’s research is also dedicated to COVID-19 related projects. The computer is not only built for scientific researches but also to help build the “Society 5.0”.