ECONOMIC DEVELOPMENTS

1. WHAT IS A CIRCUIT BREAKER IN TRADING?

TAGS: PRELIMS PERSPECTIVE- GS-III-ECONOMY

Recently after the Hindenburg revelations, many of the Adani Group companies’ stocks have hit the lower circuits in subsequent trading sessions.

About Circuit breaker:

• The Securities and Exchange Board of India (SEBI) implemented index-based market-wide circuit breakers in June 2001.
• Circuit breakers are triggered to prevent markets from crashing due to a panic-induced sale of stocks.
• This can occur for a variety of reasons, leading to stockholders in the market believing that their stocks are overvalued. As a result, they engage in a sell-off.
• Circuit breakers temporarily halt trading, thereby halting the sell-off.
• Circuit-breakers effectively limit how much a stock’s value can fall in a single day/trading session, resulting in a more stable market overall.

How do these work?

• This index-based market-wide circuit breaker system applies at three stages of the index movement, at 10, 15 and 20 per cent.
• When triggered, these circuit breakers bring about a coordinated trading halt in all equity and equity derivative markets nationwide.

Criticism of Circuit Breakers

• Some analysts believe that circuit breakers are disruptive and keep the market artificially volatile because they cause orders to build at the limit level and decrease liquidity.
• Critics of circuit breakers argue that if the market were allowed to move freely, without any halts, they would settle into a more consistent equilibrium.

2. SENIOR CITIZEN SAVINGS SCHEME (SCSS)

TAGS: PRELIMS PERSPECTIVE- GS-III-ECONOMY

THE CONTEXT: The maximum investment limit for the Senior Citizen Savings Scheme (SCSS) has been increased from Rs 15 lakh to Rs 30 lakh in Budget 2023.

THE EXPLANATION:

About Senior Citizen Savings Scheme (SCSS):

• SCSS was launched with the main aim of providing senior citizens in India a regular income after they attain the age of 60 years old.

Who is eligible?

• Indian citizens above the age of 60 years.
• Retirees in the age bracket of 55-60 years who have opted for Voluntary Retirement Scheme (VRS) or Superannuation.
• Retired defence personnel above 50 years and below 60 years of age.
• Maturity: It has a maturity period of five years. But, a depositor can extend one’s maturity period for another three years.
• Number of accounts: Individuals are allowed to operate more than one account by themselves or open a joint account with their spouse.
• Deposit Limits: Eligible investors can make a lump sum deposit
• Minimum Deposit– Rs. 1,000 (and in multiples thereof)
• Maximum Deposit– Rs. 15 Lakh or the amount received on retirement, whichever is lower(Increased to Rs 30 lakh in Budget 2023).
• Interest Payment: Under SCSS, the interest amount is paid to the accountholders quarterly.
• Premature withdrawal: After one year of opening the account, premature withdrawal is allowed.
• Deposits in SCSS qualify for deduction u/s 80-C of Income Tax Act.

3. WHAT IS EXPORT-IMPORT BANK OF INDIA (EXIM BANK)?

TAGS: PRELIMS PERSPECTIVE- GS-III-ECONOMY

THE CONTEXT: Union Finance Minister recently announced the setting up of a subsidiary of EXIM Bank and data embassies at GIFT City in Gujarat.

THE EXPLANATION:

About EXIM Bank:

• It is the premier export finance institution of the country.
• It was established by the Government of India, under the Export-Import Bank of India Act, 1981
• EXIM Bank wholly owned by the Government of India.

Services:

• EXIM Bank provides financial assistance to exporters and importers.
• It extends Lines of Credit (LOCs) to overseas financial institutions, regional development banks, sovereign governments and other entities overseas, to enable buyers in those countries to import developmental and infrastructure projects, equipment, goods and services from India, on deferred credit terms.
• It functions as the principal financial institution for coordinating the work of institutions engaged in financing export and import of goods and services with a view to promoting the country’s international trade.

Structure:

• The operations of the Bank are governed by a Board of Directors.
• The Board of Directors consists of a chairman, a managing director, two deputy managing directors; one director each nominated by the Reserve Bank of India; IDBI Bank Ltd. and ECGC Ltd.; and not more than 12 directors nominated by the Central Government.

VALUE ADDITION:

Gujarat International Finance Tec-City (GIFT City):

• Location: It is located in the state of Gujarat, between Ahmedabad and Gandhinagar, on the bank of river Sabarmati.
• The GIFT city is built on 886 acres and has a multi-service Special Economic Zone (SEZ).
• It is home to India’s first International Financial Services Centre(IFSC) and also has Domestic Tariff Area (DTA)
• It aims to be a ‘smart city’ for India’s growing finance and technology sectors.
• It is being developed as a well-planned and technology-enabled smart city having world-class commercial, residential and social facilities of global standards.

4. WHAT IS URBAN INFRASTRUCTURE DEVELOPMENT FUND (UIDF)?

TAGS: PRELIMS PERSPECTIVE- GS-III-ECONOMY

THE CONTEXT: Finance Minister recently announced that government will set up an Urban Infrastructure Development Fund (UIDF) of Rs 10,000 crore per year for creating infrastructure in Tier-2 and Tier-3 cities.

THE EXPLANATION:

About Urban Infrastructure Development Fund (UIDF):

• UIDF will be established through the use of priority sector lending shortfall.
• Purpose: The fund will be used by public agencies to create urban infrastructure in tier-2 and tier-3 cities.
• It will be managed by the National Housing Bank.
• It will be established on the lines of the Rural Infrastructure Development Fund (RIDF).
• States will be encouraged to leverage resources from the grants of the 15th Finance Commission, as well as existing schemes, to adopt appropriate user charges while accessing the UIDF.

What are tier-2 and tier-3 cities?

• Cities with a population in the range of 50,000 to 100,000 are classified as tier 2 cities, while those with a population of 20,000 to 50,000 are classified as tier 3 cities.

What is Rural Infrastructure Development Fund (RIDF)?

• The RIDF was set up by the Government in 1995-96 for financing ongoing rural Infrastructure projects.
• The Fund is maintained by the National Bank for Agriculture and Rural Development (NABARD).
• Contribution: Domestic commercial banks contribute to the Fund to the extent of their shortfall in stipulated priority sector lending to agriculture.
• Main Objective: To provide loans to State Governments and State-owned corporations to enable them to complete ongoing rural infrastructure projects.
• Repayment period: Loan to be repaid in equal annual instalments within seven years from the date of withdrawal, including a grace period of two years.

PRELIMS PERSPECTIVE

5. INDIAN MILITARY JOINT TRAINING EXERCISE TRISHAKTI PRAHAR

TAGS: PRELIMS PERSPECTIVE

THE CONTEXT: The Indian Defense Forces conducted firepower exercises called the “TRISHAKTI PRAHAR” to synergize the firepower assets and to orchestrate a battle. The exercise is important to keep the forces ready for battle.  The exercise was conducted by the Indian Air Force, CAPF, and the Indian Army. It was a firepower exercise.

THE EXPLANATION:

About Trishakti Prahar

• The main objective of Trishakti Prahar was to refresh battling skills
• All the latest defense equipment was used during the exercise. This includes helicopters, infantry combat vehicles, new-generation equipment, mortars, artillery guns, etc.
• Equipment made as a part of AtmaNirbhar Bharat Abhiyan was also used in the exercise
• Forces moved and rehearsed across the regions of North Bengal
• The Indian Army checks if the troops are in battle preparedness through these exercises
• Reviewed by Eastern Command
• The eastern command officer Lt Gen RP Kaltia reviewed the exercise. The eastern command is based in Kolkata and is one of the six commands of the Indian Army.

Where was the exercise held?

• Teesta Field Firing Ranges. It is near Siliguri. The Siliguri is strategically important to India. This narrow 20 to 30-km-wide passage touches Bangladesh in the south and Bhutan in the north. If this passage is closed, the Indian mainland will lose its contact with the northeastern states. For this reason, the Siliguri corridor is important to India.

THE CONTEXT: Joshimath located on the slopes of the Himalayas is the gateway to famous pilgrimage sites like Badrinath, Hemkund Sahib is facing land subsidence and it is feared that not only this town, but many settlements around could be in danger of being wiped out. People are being evacuated and governments are looking desperately for safe ground where they could be shifted temporarily. In this context, let’s analyse how this disaster took place, the reasons behind it, and what should be done to avoid worsening the situation.

DETAILS OF THE DEVELOPMENT OF THE CALAMITY

WHAT IS HAPPENING IN JOSHIMATH?

• The warnings about the dangers in Joshimath town have been repeatedly echoed for several years and the cracks started appearing long back.
• The problem began 14-15 months back in November 2021, when residents began complaining of the cracks in areas like Gandhinagar, Suneel, Manohar Bagh, Singdhar and Marwari.
• Joshimath with 25,000 residents, has around 4,500 buildings spread over 2.5 sq km is one of the six tehsils (blocks) in Uttarakhand’s Chamoli district. It was all quiet and business as usual in the city until the last few months of 2022 when forces of nature began to push back, and residents began to protest.
• In midnight of January 2 and 3, 2023 residents of the town woke up to see cracks in several houses at Singhdhar in the Joshimath town of Uttarakhand and cracks in their roads had increased in size and with an escalated subsidence rate, massive cracks appeared in around 678 identified houses, and others are to follow.
• Secretary of Disaster Management told that new cracks had developed, and new water sources have emerged in places. More than 800 buildings have developed cracks, and authorities have been demolishing the unsafe ones. However, no lives were lost in these incidents.
• A team from Central Building Research Institute (CBRI), Roorkee has started to check the land subsidence in Joshimath by conducting a door-to-door survey of the condition and has also installed a gauge meter at houses where severe cracks have been reported.
• CP Rajendran, a geoscientist, warned that subsidence will continue until a new lower level is reached.

FINDINGS BY ISRO

• Satellite images of Joshimath released by the Indian Space Research Organisation (ISRO) show that the Himalayan town sank at a rapid pace of 5.4 cm in just 12 days between December 27 2022 and January 8, 2023 triggered by possible subsidence.
• Even a preliminary report by ISRO’s National Remote Sensing Centre (NRSC), which has since been taken off its website, said the land subsidence was slow between April and November 2022, during which Joshimath had sunk by 8.9 cm.

IMMEDIATE RESPONSE BY UTTARAKHAND AND CENTRAL GOVERNMENT

RESPONSE BY UTTARAKHAND GOVERNMENT

●        Chief Minister of Uttarakhand state said that the subsidence affected around 25% of the town’s area.

●        The State Cabinet approved an amount of Rs 45 crore as relief for the affected families.

●        Cabinet cleared a proposal to waive the electricity bill of all those affected for six months starting from November 2022, besides approving a proposal for providing employment under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) to two members of each of the affected families.

●        Affected people will be provided with Rs 950 daily for accommodation and Rs 450 shall be given for food.

●        The cabinet also cleared a proposal to prepare a final package proposal and send the same to the union government within a week.

RESPONSE BY CENTRAL GOVERNMENT

●        The Central Government declared Joshimath as a ”landslide-subsidence zone” and asked experts to prepare short and long-term plans on what to do.

●        The cabinet approved the proposal for a geological survey to be conducted in the affected areas. Also, for assessing carrying capacity in hill stations in different phases.

●        The Prime Minister’s Office said the safety of the people is the priority and asked the state government to establish clear and continuous communication with the residents.

WHY IS JOSHIMATH SINKING?

Accelerated anthropogenic activities and climate change pose a grave danger to the Himalayan ecosystem. There are both causes, natural and human-made as follows:

GEOGRAPHICAL PHYSIOLOGY

●        The Himalayas are a very fragile ecosystem. Most parts of Uttarakhand are either located in seismic zone V or IV, prone to earthquakes.

●        Joshimath was always vulnerable to earthquakes as the region falls in seismic zone V.

●        The town sits on the intersection of the Main Central Thrust 1, 2, and 3, the intra-crustal fault lines, where the Indian Plate has been pushed under the Eurasian Plate along the Himalayas.

LAND SUBSIDENCE

●        Joshimath is hit by a geological phenomenon known as land subsidence, which is a gradual settling, or sinking of the surface due to the removal of water, oil, natural gas, or mineral resources from the ground.

●        According to the US-based National Ocean Services, subsidence is also triggered by natural events such as earthquakes, soil compaction, erosion, sinkhole formation, and an infusion of water to fine soils.

●        The land subsidence was also triggered by an incessant spell of rain in the region in the last few years, which deposited more water on the surface.

CLIMATE CHANGE

●        Climate change is further worsening the matter, with more extreme weather events as the temperature of Uttarakhand will increase by more than 2-degree Celsius.

●        The way climate change is manifesting in some of the hill states of India is unprecedented. For example, 2021 and 2022 have been years of disaster for Uttarakhand as Chamoli disaster (2021) caused by retreating Himalayan glaciers and associated melt along with unstable slopes triggered landslides by rainfall during monsoon or by induced seismicity in the region.

DRAINAGE ISSUE

●        Joshimath does not have a proper drainage system, so “water percolation has decreased the cohesive strength of the rocks over time. This has resulted in landslides, triggering cracks in the houses.

●        Also, the natural drainage system got blocked due to the NTPC’s Tapovan Vishnugad Hydro project in Chamoli.

WEAKENING OF SOIL

●        Joshimath was built on the debris of a landslide triggered by an earthquake and is located in a tremor-prone zone. It frequently witnesses landslides, which have weakened the soil.

●        Due to the unavailability of solid rocks underneath, the water seeped into the soil and loosened it from within.

●        With the top surface of the soil already gone due to intense construction, the region has remained on the edge.

UNSTABLE FOUNDATION

●        Every structure needs a strong foundation, but Joshimath, has none as it was built on the rocks settling down which got stabilized and are sitting on a glacial moraine and thus is not suitable for construction.

●        The debris has angular sediments, which are worse than river-deposited sediments. These sediments have voids, making them extremely unstable, geologically.

●        When burdened with heavy construction in the region, this unstable foundation began caving by centimetres.

RAMPANT CONSTRUCTION

●        In the last several decades a boom in construction has made this region extremely vulnerable and susceptible to deformation.

●        Back in 1976, a government report had called for restrictions on heavy construction work in Joshimath, saying that it should only be allowed after examining the “load-bearing capacity of the soil”.

●        Rampant construction, especially of projects like roads and dams, that use explosives, drilling and extensive digging, have weakened the slopes.

●        Projects like Chardham and Hydropower projects Tapovan are a few examples.

• Joshimath is a classic case of all these factors working together to create a recipe for disaster.
• The geological developments underway in Joshimath should be a case study for every town planner working in the hills. The factors at play in Joshimath are also found in other cities such as Nainital, Champawat, and Uttarkashi.

RELATED STUDIES/EXPERT’S VIEW

●        Dehradun-based Wadia Institute of Himalayan Geology: Its report points out that Joshimath – a town 2,000 metres above sea level – has always been vulnerable because it sits atop the debris of an old landslide. This has failed to stop a building spree in recent years, with poorly planned construction destabilising the soil and choking underground water channels, so that water has accumulated under the foundations. It predicted that there might be eventual collapse of the entire city if drainage system not well maintained and wastewater from days usage flows through improper drains.

●        Mishra Committee, 1976: It points out that the township of Joshimath falls in zone V of the seismic zonation map of India and is particularly vulnerable to landslides and is at the highest risk zone for an earthquake.

●        Geologist Navin Juyal as a member of the supreme court-appointed high-powered committee reviewed char dham project, suggested that the road must not be built unless a geotechnical feasibility study is done which was allowed for construction without scientific reports.

●        Uttarakhand State Disaster Management Authority (USDMA): It published a report that mainly blamed ill-planned construction in the town as an important reason behind land sinking. The report also pointed out that the inadequate drainage and wastewater disposal systems had exacerbated the problem.

ROAD PROJECTS: CHAR DHAM YATRA AND HELANG-MARWARI BYPASS ROAD

●        Federal government’s Char Dham road project which aims to widen existing roads connecting four Hindu pilgrimage sites is being blamed by experts for rapid rise in construction activities in the area.

●        Under-construction 6-km-long Helang-Marwari bypass road, built by the Border Roads Organisation (BRO), falls under the contentious 825 km Char Dham road expansion project in Uttarakhand, is yet another project that is believed to have exacerbated the problem.

●        The widening of the road was not just a big contributor, but also led to more and more hotels springing up in and around Joshimath.

●        Dr. Bahadur Singh Kotila of Kumaon University said that the roads in the geologically sensitive region should have been seven metres wide, but the government widened the roads to 12 metres, which led to more and more cleaning of the hills.

●        This made the already ecologically sensitive region highly vulnerable to landslides as the top layer was cleaned for the road construction.

●        Tunnelling for Char Dham railways is envisaged at a massive scale, and without environmental impact assessment which are mandated steps for damage control, led to disasters.

HYDROPOWER PROJECT TAPOVAN VISHNUGAD

●        Ongoing Tapovan Vishnugad hydro by government owned NTPC Limited is of 4×130 megawatt is tunnelling through the fragile ecosystem leading to damage to the historic, cultural town of Joshimath.

●        This is a run-of-the-river electricity generation project that entails boring a 12-kilometre tunnel through the hillside and channeling the water of the Dhauli Ganga river through the tunnel to generate electricity.

●        The tunnel of Tapovan-Vishnugad hydel project is located right beneath Joshimath. Big boring machines were brought for its construction which have been stuck in the ground for the past two decades. Tons of explosives are used on a daily basis for the tunnel’s construction.

●        A tunnel boring machine employed for excavating it punctured a water bearing strata some 3km inward left bank of alaknanda and the aquifer discharge was about 60-70 million liters daily.

●        NTPC has denied allegations, saying that the tunnel does not pass under Joshimath town and should not be considered responsible for the disaster. But it does pass through the same aquifer that is below Joshimath.

IMPACT OF THE LAND SUBSIDENCE

The problem of land subsidence is neither new, nor sudden. It emerged decades ago, after which a committee, the MC Mishra Committee, was formed in 1976 to assess the reasons behind it. It is the oldest report exploring land subsidence in Joshimath, warned against excavating the slopes, and removing boulders by digging or using explosives.

Loss of Lives: Land subsidence can lead to irreversible loss of lives and cause loss of human resource with psychological damage.

• Loss of Livelihoods: Because of land subsidence there is loss of livelihoods of a major population, causing economic pressure on the society and country. Also, as locals depend on tourism for their economy which has been affected by disaster will impact their livelihoods.
• Damage of Property and Infrastructure: The effects of land subsidence can be settlement of the upper clay layer leading to damage of infrastructure (roads, bridges) and flooding due to ineffective drainage systems of the city.

Apart from direct change, there are few indirect impacts as follows:

• Change in land gradient: It can impact drainage systems and sewer lines that follow underground.
• Change in gradient of streams or drains: There can be indirect effects such as a change in gradient of streams or drains which is permanent and cannot be reversed.
• Cause earthquake: The lines of weakness in the layers can also be activated and this may cause earthquakes in the area.

CHALLENGES RELATED TO THE CALAMITY

• Infrastructure issues: Rampant infrastructure development happening in a fragile ecosystem like Himalayas is another challenge that is not happening according to prescribed scientific measures and its regulation is a major task.
• Electricity issue: With the stalling of hydro project Tapovan, there will be another issue of providing electricity to the locals and can cause major disruption in day-to-day activities of people’s lives.
• Identification of vulnerable people: There is a major challenge related to rehabilitation of the affected people by calamity is identification of vulnerable people as there is no such proper survey or data that has been taken so far.
• Tourism: There are a number of tourists visiting the Chardham and places as bugyals, heritage sites as wedding destinations which need to be regulated so that it does not put pressure on the hilly areas.
• Problem of sustainable development: Balancing between development activities while sustaining the environment is a major challenge for the government and society.
• Security issues: The location of Indo China border strategic road to Indo Tibetan border is another major challenge while addressing the issue.

THE WAY FORWARD

• REGULATION OF CONSTRUCTION ACTIVITIES: Regulation of construction activities falls on central and state governments such as stalling of NTPC projects and Chardham all-weather road needs immediate action.
• COMPENSATION AND REHABILITATION: There is immediate need for adequate compensation and rehabilitation to all affected people within a set time frame that includes compensation, food, shelter and other basic facilities and participation of local representatives.
• DECLARE ESZ: As a first step to mitigating future hazards, the upper catchment of the rivers from the glacier lines must be declared as Ecologically Sensitive Zones (ESZ) on the same lines as Bhagirathi ESZ and prohibit massive projects, regulate others and promote conservation project.
• MANAGING DRAINAGE SYSTEM: There is a need to construct proper drainage and sewage systems and install concrete cement blocks to check erosion.
• STRONG CLIMATE ACTION: There is a need to form some strong rules and regulations and forced and timely implementation of these rules.
• SUSTAINABLE TOURISM: A report titled ‘Uttarakhand Action Plan for Climate Change 2020’ states that regulation of tourism is an essential next step and sustainable tourism is a must for preserving the ecosystem.
• COLLABORATION AND CONSULTATION: There is a need for collaboration and consultation among Government, civil bodies, and citizens to set out parameters such as rock strength assessment which are needed for developing new cities.

THE CONCLUSION: Nature has its own way of claiming its own recourse and Joshimath calamity is an example in this case. To avoid such more calamity there is a need for balance between environment and development projects by streamlining the process of environment and forest clearances which can be positive for the surroundings in terms of groundwater recharge, flourishing of flora and fauna and mitigation of such disasters.

MAINS QUESTIONS

1. Joshimath disaster can be an eye-opener for the unsustainable development in hilly areas. Analyse.
2. Explain the causes and impacts of land subsidence. How climate change and anthropogenic activities are reinforcing it.