PERSPECTIVE: CURRENT AFFAIRS TARGET 2022

CO-OPERATIVE SOCIETIES

Introduction

 A cooperative is an autonomous association of persons united voluntarily

to meet their common economic, social and cultural needs and
aspirations through a jointly-owned and democratically controlled.
 Profitability while important is preceded by the needs of the members
and the wider interest of the community.
 The Co-operative Society is formed for the mutual benefit of all the
members.
 When they work together, they will have better bargaining power for
buying and selling raw materials and agricultural output respectively.
 A cooperative is a different form of organisation — it is neither a private
company nor a public company; it is also not a capitalist or a conventional
state owned socialist set-up.

Gandhi’s views on cooperatives:

Cooperation according to Gandhiji was necessary for creation of a socialistic

society and complete decentralization of power. He was of the opinion that
cooperatives were one of the important means to empower people.

While Gandhi was not against capitalism, once he said, that the industrial
activities should be divided into two classes:
1. One to be taken-up on cooperative lines for the benefit of the 90 percent
of the population of India. Any industry based on agricultural produce
such as cotton, sugar, oil seed, wheat etc. should be on a cooperative basis
so that the producers could secure the best value for their output.
2. Other sectors, which do not exploit the weaker section of the society,
should be left to the capitalists.

Background

CONSTITUTIONAL PROVISION FOR CO-OPERATIVE SOCIETIES

1. The 97th Constitutional Amendment Act (2011) gave constitutional
status and protection to the co-operative societies.
2. Fundamental right Article 19 (1) (c) as ‘Right to form cooperatives.’
3. Directive Principle of State Policy Article 43-B “The state shall
endeavour to promote voluntary formation, democratic control,
autonomous functioning and professional management of cooperative
societies”.
4. Part IX-B “The Co-operative Societies” (Articles 243-ZH to 243-ZT).
5. State List State Subject under entry No.32 (7th schedule) of the of the
Constitution of India
 PERSPECTIVE: CURRENT AFFAIRS TARGET 2022

OTHER LAWS
The Government of India enacted the Multi-State Co-operative Societies Act in
2002 and National Policy for Cooperatives was also formulated in 2002 to
provide support for promotion and development of cooperatives as
autonomous, independent and democratic organizations so that they can
play their due role in the socio-economic development of the country.

TYPES OF COOPERATIVE SOCIETIES

Following are some of the types of cooperative societies:
1. Consumer Cooperative Society: Consumer cooperative societies are
formed with the objective of protecting the consumer interests.
Individuals who wish to purchase products at reasonable rates most
likely join consumer cooperative societies. In such type of societies, there
are no middlemen involved, the product is purchased directly from
the producer and sold to consumers.
2. Producer Cooperative Society: Producer cooperative societies are
formed with the objective of protecting the interests of small
producers. These cooperatives help producers in maintaining their
profit and also to assist producers in procuring items that will be
helpful in production of goods and services.
By definition, cooperatives are organisations formed at the grassroots
level by people to harness the power of collective bargaining towards a
common goal. In agriculture, cooperative dairies, sugar mills, spinning
mills etc are formed with the pooled resources of farmers who wish to
process their produce. The country has 1,94,195 cooperative dairy
societies and 330 cooperative sugar mill operations these cooperative
sugar mills account for 35% of the sugar produced in the country

Credit Cooperative Society: These cooperative societies are set up with the
objective of helping people by providing credit facilities. They provide loans
at a minimal rate of interest and flexible repayment tenure to its members and
protect them against high rates of interest that are charged by private money
lenders.
In banking and finance, cooperative institutions are spread across rural and
urban areas. Village-level primary agricultural credit societies (PACSs) formed
by farmer associations are the best example of grassroots-level credit flow.
These societies anticipate the credit demand of a village and make the demand to
the district central cooperative banks (DCCBs). State cooperative banks sit at the
apex of the rural cooperative lending structure. Given that PACSs are a collective
of farmers, they have much more bargaining powers than an individual farmer
pleading his case at a commercial bank.

Housing Cooperative Society: Housing cooperative societies are formed with

the objective of providing housing facilities to the members of the society.
This proves to be beneficial for the lower income groups as it allows them to
avail housing benefits at a very affordable price.
 PERSPECTIVE: CURRENT AFFAIRS TARGET 2022

Marketing Cooperative Society: These societies are formed with the objective
of providing small producers a platform to sell their products at affordable prices
and also eliminate middlemen from the chain, thus ensuring adequate profits.

Case study: BIGGEST SUCCESS OF COOPERATIVES IN INDIA

In 1946, Tribhuvandas Patel, a Gandhian and a follower of Sardar Vallabhbhai

Patel, led some Kheda district dairy farmers to strike against the Greater Bombay
Milk Scheme (GBMS), which used to refuse to take their milk in the winter,
because there was a surplus. The farmers succeeded, with political backing, in
getting GBMS to accept their milk year-round. They quickly formed a co-
operative, the Anand Milk Union Ltd (Amul) with 246 members and recruited a
US-trained dairy engineer, Verghese Kurien, to be their manager.

Amul grew quickly and Kurien realised that strikes could only go thus far. The
solution to the natural periodicity of milk production lay in processing the excess
milk in the flush (winter) season into milk powder and butter (milk fat). These
could be recombined in the lean season to ensure a year-round even supply of
milk.

Kurien managed to get a UNICEF grant for a plant of economic size. The Amul
dairy was established in 1956. Kurien also realised that more money could be
made by selling some milk fat as table butter and the recombined milk could be
leaner. New co-operative dairies had come up in neighbouring Mahesana and
Banaskantha districts on the lines of Amul. Kurien roped them in a similar plan
of activities. The rest, as they say, is history. So the first pillar of success
behind cooperatives is to tie together micro-level production, economic
scale processing and large-scale marketing with a brand.

Milk cooperatives empowered women: Meanwhile, something quite

revolutionary was happening in dairying households. Traditionally, women
looked after the buffaloes and took the milk to the collecting station. They also
started receiving weekly payments for the milk delivered. We can only imagine
the impact this would have had seven decades ago. Terms like gender equality
 PERSPECTIVE: CURRENT AFFAIRS TARGET 2022

and self-help groups were yet to be coined, but they were in action in Gujarat’s
dairying villages. This became the second pillar of the development of the
milk economy.

Milk cooperatives provided a boost to rural non-farm income and

improved the bargaining power of milk producers vis-à-vis the private
procurers, this became the third pillar of development of milk economy:
Farmers had regular, dependable and often sizeable cash income supplementing
their periodic and uncertain crop incomes, they could see dairying as an
enterprise, and not a subsistence or default occupation.

The market power asymmetry was effectively countered by co-operatives, which

were large enough to enjoy economies of scale through the use of technology.
Their concern moved from remunerative prices to their stability, value-addition
and surplus generation for all. Administrative interventions such as support
prices or monopoly procurement are not required since farmers (milk producer
organisations) can powerfully lobby to protect their interests.

COMPOSITION

 The state legislature may make provisions for the incorporation,

regulation and winding-up of co-operative societies based on the
principles of voluntary formation, democratic member control, member
economic participation and autonomous functioning.
 The board shall consist of such a number of directors as may be provided
by the state legislature. But, the maximum number of directors of a co-
operative society shall not exceed twenty-one.

IMPORTANCE OF CO-OPERATIVE SOCIETIES

 Cooperative Society play a vital role in ensuring the nation’s progress by

helping the poor, illiterate and unskilled people to form union with
principle of mutual assistance to achieve their common socio-economic
goal.
 Penetrating into remote places where state and private sectors could face
trouble to do much.
 It provides strategic inputs for the agricultural-sector; consumer societies
meet their consumption requirements at concessional rates.
 It provides agricultural credits and funds where state and private sectors
have not been able to do very much.
 Agricultural marketing societies enable farmers to benefit from increased
bargaining strength by removing intermediaries, they help farmers to
have a direct interaction with the consumer. E.g. – NAFED
 Co-operative societies are helping in building up infrastructure like
storage godowns including cold storages, rural roads and in providing
facilities like irrigation, electricity, transport and health.
 PERSPECTIVE: CURRENT AFFAIRS TARGET 2022

 It reduces the bureaucratic intricacies of political factions and ensures a

conducive environment for flourishing agriculture and allied activities.
 Co-operative movements help in promoting unity and cohesion among
the members. It is an institution of mutual help and sharing.
 In a country divided on social basis, Co-operative Society also helps in
blurring the gap between various social cleavages of the country.
 Encourage the values and spirit of self-help, democracy, equality, and
solidarity.
 Cooperative members believe in the ethical values of honesty, openness,
and social responsibility and caring for others.

CHALLENGES OF COOPERATIVE SOCIETIES

 Co-operative movement in India lacks spontaneity in the sense that they

have not grown in a top down manner led by people themselves. This has
resulted in a situation where many of the cooperatives suffer from
inability to ensure active membership, lack of member
communication and awareness building measures.
 Serious inadequacies in governance including that related to boards’
roles and responsibilities alongwith politicisation of cooperatives:
often member of cooperatives who became inactive as producers
continued to be office bearers in cooperatives. For example: in
Maharshtra, a member, who in course of time stopped providing any
sugar cane to the factory, was nevertheless allowed to vote in the society
and become an office bearer, if elected. The ability to attract state funds to
the cooperative was the principal qualification of a board member. This
was how politicisation of the cooperatives evolved. Due to these issues
nearly 60% of the sugar cooperatives in Maharashtra are now in a
moribund state.
 Regional heterogenity in flourishing of cooperatives – the growth of
cooperatives in India has been extremely hetrogeneous. For example in
the dairy sector, though India is the world’s biggest producer of milk,
even in the dairy sector cooperatives have flourished in gujarat and
maharshtra region whereas large portions of north, central and north-
east India have not witnessed a cooperative based increase in milk
production.
 Inadequacies in the working and regulation of cooperative banks are
higher than those of commercial banks: many cooperative banks and
their directors have been found indulging in wrongdoings and frauds wrt
lending activities which has at times threatened the interest of depositors
with these banks. For example In the case of PMC Bank failure of 2020, as
per RBI, there are three problems — major financial irregularities, failure
of internal control and systems, and underreporting of exposures. PMC
Bank has extended 73% of its assets to HDIL, which defaulted on its loans
and that created a panicky situation for depositors.
 Lack of efforts for capital formation particularly that concerning to
enhancing member equity and thus member stake.
 PERSPECTIVE: CURRENT AFFAIRS TARGET 2022

 Lack of cost competitiveness arising out of issues such as overstaffing,

and overall competitiveness due to entry of MNCs in Indian market.

NEW MINISTRY ANNOUNCED TO STRENGTHEN COOPERATIVE

MOVEMENT IN INDIA

Recently, a separate ‘Ministry of Co-operation’ has been created by the Central

Government for realizing the vision of ‘Sahkar se Samriddhi’ (Prosperity
through Cooperation) and to give a new push to the cooperative movement.

Significance of Ministry of Co-operation:

 It will provide a separate administrative, legal and policy framework
for strengthening the cooperative movement in the country.
 The cooperative structure has managed to flourish and leave its mark
only in a handful of states like Maharashtra, Gujarat, Karnataka.
Cooperative institutions get capital from the Centre, either as equity or as
working capital, for which the state governments stand guarantee. This
formula had seen most of the funds coming to a few states such as
Maharashtra, Gujarat, Karnataka while other states failed to keep up.
 Over the years, the cooperative sector has witnessed drying out of
funding, under the new Ministry, the cooperative structure would be able
to get a new lease of life.
 It will help deepen Co-operatives as a true people-based movement
reaching upto the grassroots.
 It will work to streamline processes for ‘Ease of doing Business’ for co-
operatives and enable development of Multi-State Co-operatives
(MSCS).

97th AMENDMENT ACT, 2011

1. The Constitution (97th Amendment) Act, 2011 added a new Part IXB
right after Part IXA (Municipals) regarding the cooperatives working in
India.
2. The word “cooperatives” was added after “unions and associations” in
Article 19(1)(c) under Part III of the Constitution. This enables all the
citizens to form cooperatives by giving it the status of fundamental right
of citizens.
3. A new Article 43B was added in the Directive Principles of State Policy
(Part IV) regarding the “promotion of cooperative societies”.
4. The idea was to empower Parliament to frame laws for cooperative
societies that function across States (multi-State cooperative
societies) and State legislatures to make laws for all other cooperative
societies falling under their jurisdiction.
5. The Amendment set out basic rules such as:
- A maximum of 21 directors in a society,
 PERSPECTIVE: CURRENT AFFAIRS TARGET 2022

- A fixed term of five years for elected members,

- A six-month cap on the time limit for which a society’s board of
directors can be kept under supersession or suspension, and
- Reservation of one seat for the Scheduled Castes or the Scheduled Tribes,
and two seats for women on the board of every cooperative society, that
is, every society that has members from these sections.

Challenges in working of cooperatives: Reasons for the

introduction of 97th AMENDMENT ACT 2011

Cooperative sector has shown weaknesses in safeguarding the interests of the

members and fulfilment of objects for which these institutions were established
i.e for securing social and economic justice and equitable distribution of the
fruits of development.

1. It has been experienced that in spite of considerable expansion of co-

operatives, their performance in qualitative terms has not been up to
the desired level.
2. The Central Government was committed to ensure that the co-
operative societies in the country function in a democratic,
professional, autonomous and economically sound.
3. On many instances, elections have been postponed indefinitely and
nominated office bearers or administrators have remained in-charge of
these institutions for a long time. This dilutes the accountability.
4. A large number of cooperatives have no access to paid up capital
support from the state/central governments and are entirely dependent
on shareholder capital. This lack of availability of capital limits the reach
and functioning of cooperatives.
5. Inadequate professionalism in management in many of the co-
operative institutions has led to poor services and low productivity.
6. To keep the co-operatives free from unnecessary outside
interferences and also to ensure their autonomous organisational set up
and their democratic functioning.

Supreme Court verdict in Rajendra N Shah Vs.

Union Of India & Anr. (2013)

The recent Supreme Court verdict in Rajendra N Shah Vs. Union Of India & Anr.
(2013) striking down a part of the 97th Constitution Amendment, insofar as
it dealt with cooperative societies under the domain of the States, has
brought the focus on the extent to which the Centre can seek to lay down policy
for the functioning of cooperative societies.

- The correctness of the erstwhile United Progressive Alliance

government’s move to amend the Constitution to provide a reformist
framework for the functioning of cooperatives is in question.
 PERSPECTIVE: CURRENT AFFAIRS TARGET 2022

What now survives in the 97th Amendment?

- The Amendment added the words “or cooperative societies” to Article
19(1)(c) of the Constitution to expand the fundamental right to form
associations or unions to cover cooperative societies too.
- It also added a ‘Directive Principle’ through Article 43B, which says:
“The State shall endeavour to promote voluntary formation,
autonomous functioning, democratic control and professional
management of cooperative societies.”
- These clauses remain undisturbed. In line with the Supreme Court’s
judgment, Part IXB dealing with cooperative societies will survive, but
only with reference to multi-State societies.

How does the ruling affect Cooperation Ministry?

- The Ministry of Cooperation was formed recently, apparently with a
view to giving a fillip to the cooperative movement and reforming the
functioning of cooperative societies.
- Until now, the subject was dealt with by the Agriculture Ministry. It
administered the Multi-State Cooperative Societies Act, 2002.
- The new Ministry will continue this work. For now, it will not be in a
position to compel States to bring their cooperative laws in
conformity with the Centre’s vision.
- Regarding the fate of the constitutional framework for all cooperative
societies in the country, the Centre has the option of re-enacting the
Amendment with a two-thirds majority in Parliament and obtaining
ratification by 50% of the State legislatures.

WAY FORWARD

To secure the autonomy, independence and progress of the cooperatives,

the following steps should be taken:
1. The road ahead to doubling farmers income is by increasing the food
processing of agricultural produce, this must ideally be done through
farmer cooperatives.
2. In urban areas the new ministry of cooperatives must seek to
promote the creation of housing cooperatives to meet the need of
affordable housing.
3. States should provide funds/capital to cooperatives to assist in
expansion of their activities.
4. Enable cooperatives to raise capital from the market: The ministry of
cooperatives should simplify rules so that cooperatives can register their
enterprises under the companies act so that they can tap the capital
market.
5. Encouraging democratic participation by members, developing effective
leadership who can even influence policy formulation by government
favourable to cooperatives.
 PERSPECTIVES: CURRENT AFFAIRS TARGET 2022

Primary Health Care & Community Health: The Twin Pillars of Universal
Health Care

 The country’s frontline health workers or ASHAs (accredited social health

activists) were one of the six recipients of the WHO’s Global Health Leaders
Award 2022 which recognizes leadership, contribution to the advance of global
health and commitment to regional health issues.

Primary Healthcare for All: Alma Ata Declaration 1978: Healthcare For All
The Alma-Ata Declaration defined health as a state of complete physical, mental and
social well-being and not mere absence of diseases. This definition of health along
with the concepts of primary health care formed the two core principles of this
declaration.
It recognised health as a human right – and to attain the same, several social and
economic sectors in addition to the health sector need to be actively involved and
show results.
The Declaration identified education, nutrition, clean water, sanitation, mother
and child health, immunisation, access to treatment and availability of
essential medicines as eight important components of PHC, which will enable us
to achieve Health for All by 2000.
 PERSPECTIVES: CURRENT AFFAIRS TARGET 2022

Essential Principles of the PHC approach: The four essential principles of the
PHC approach are:

Principles of Primary Health Care

1. Equity
2. Community Participation
3. Intersectoral Coordination
4. Appropriate Technology
Equity/Equitable Distribution
The first key principle in primary health care strategy is equity or equitable
distribution of health services. Health services must be shared equally by all people
irrespective of their ability to pay and all (rich or poor, urban or rural) must have
access to health services. Currently health services are mainly in towns and
inaccessibility to majority of population in the developing world.
Community Participation
Overall responsibility is of the State. The involvement of individuals, families, and
communities in promotion of their own health and welfare is an essential ingredient of
primary health care. PHC coverage cannot be achieved without the involvement
of community in planning, implementation and maintenance of health services.
Intersectoral Coordination
Declaration of Alma –Ata states that PHC involves in addition to the health sector all
related sectors and aspects of national and community development, in particular
education, agriculture, animal husbandry, food, industry, education, housing, public
works and communication.
To achieve cooperation, planning at country level is required to involve all sectors.
Appropriate Technology
Technology that is scientifically sound, adaptable to the local needs, and acceptable
to those who apply it and those for whom it is used and can be maintained by the
people themselves with the resources of the community and country can afford.

Key Data: Inadequate funding for Primary Health care

National Health Policy 2017 states that about 67% of the health budget should go
to primary care; the same thing was recommended by the 15th Finance
Commission, however this has not happened and the principal vehicle for primary
 PERSPECTIVES: CURRENT AFFAIRS TARGET 2022

care, which is the National Health Mission, has still received only about 42% of the
whole overall health budget, down from 48%.
Who are ASHA workers?
 ASHA workers are volunteers from within the community who are trained to
provide information and aid people in accessing benefits of various
healthcare schemes of the government.
 The role of these community health volunteers under the National Rural Health
Mission (NRHM) was first established in 2005.
 They act as a bridge connecting marginalized communities with facilities such
as primary health centers, sub-centers and district hospitals.

Genesis & Evolution

 In 1975, a WHO monograph titled ‘Health by the people’ and then in 1978, an
international conference on primary health care in Alma Ata (in the then
USSR and now in Kazakhstan), gave emphasis for countries recruiting
community health workers to strengthen primary health-care services that were
participatory and people centric.
 Soon after, many countries launched community health worker programmes
under different names.
 India launched the ASHA programme in 2005-06 as part of the National Rural
Health Mission.
 The biggest inspiration for designing the ASHA programme came from the
Mitanin (meaning ‘a female friend’ in Chhattisgarhi) initiative of Chhattisgarh,
which had started in May 2002.
 The core of the ASHA programme has been an intention to build the capacity of
community members in taking care of their own health and being partners in
health services.
 Each of these women-only volunteers work with a population of nearly 1,000
people in rural and 2,000 people in urban areas, with flexibility for local
adjustments.

Qualifications for ASHA Workers

 ASHAs are primarily married, widowed, or divorced women between the ages
of 25 and 45 years from within the community.
 They must have good communication and leadership skills; should be literate
with formal education up to Class 8, as per the programme guidelines.

How many ASHAs are there across the country?

 The aim is to have one ASHA for every 1,000 persons or per habitation in hilly,
tribal or other sparsely populated areas.
 There are around 10.4 lakh ASHA workers across the country, with the
largest workforces in states with high populations – Uttar Pradesh (1.63
lakh), Bihar (89,437), and Madhya Pradesh (77,531).
 Goa is the only state with no such workers, as per the latest National Health
Mission data available from September 2019.
 PERSPECTIVES: CURRENT AFFAIRS TARGET 2022

What do ASHA workers do?

 They go door-to-door in their designated areas creating awareness about

basic nutrition, hygiene practices, and the health services available.
 They focus primarily on ensuring that pregnant women undergo ante-natal
check-up, maintain nutrition during pregnancy, deliver at a healthcare
facility, and provide post-birth training on breast-feeding and
complementary nutrition of children.
 They also counsel women about contraceptives and sexually transmitted
infections.
 ASHA workers are also tasked with ensuring and motivating children to get
immunized.
 Other than mother and child care, ASHA workers also provide medicines daily
to TB patients under directly observed treatment of the national
programme.
 They are also tasked with screening for infections like malaria during the season.
 They also provide basic medicines and therapies to people under their jurisdiction
such as oral rehydration solution, chloroquine for malaria, iron folic acid
tablets to prevent anemia etc.
 Now, they also get people tested and get their reports for non-communicable
diseases.
 The health volunteers are also tasked with informing their respective primary
health center about any births or deaths in their designated areas.
 PERSPECTIVES: CURRENT AFFAIRS TARGET 2022

How much are ASHA workers paid?

 Since they are considered “volunteers/activists”, governments are not
obligated to pay them a salary. And, most states don’t.
 Their income depends on incentives under various schemes that are provided
when they, for example, ensure an institutional delivery or when they get a
child immunized.
 All this adds up to only between Rs 6,000 to Rs 8,000 a month.
 Her work is so tailored that it does not interfere with her normal livelihood.

Success of the ASHAs

 It is a programme that has done well across the country.
 In a way, it became a programme that allowed a local woman to develop into
a skilled health worker.
 Overall, it created a new cadre of incrementally skilled local health workers who
were paid based on performance.
 The ASHAs are widely respected as they brought basic health services to the
doorstep of households.
 Since then, ASHA continues to enjoy the confidence of the community.

Challenges to ASHAs
 The ASHAs faced a range of challenges: Where to stay in a hospital? How to
manage mobility? How to tackle safety issues?
 There have been challenges with regard to the performance-based
compensation. In many states, the payout is low, and often delayed.
 It has a problem of responsibility and accountability without fair compensation.
 There is a strong argument to grant permanence to some of these positions
with a reasonable compensation as sustaining motivation.
 Ideally, an ASHA should be able to make more than the salary of a government
employee, with opportunities for moving up the skill ladder in the formal primary
health care system as an ANM/ GNM or a Public Health Nurse.

Way Forward
 The incremental development of a local resident woman is an important
factor in human resource engagement in community-linked sectors.
 It is equally important to ensure that compensation for performance is timely
and adequate.
 Upgrading skill sets and providing easy access to credit and finance will
ensure a sustainable opportunity to earn a respectable living while serving the
community.
 Strengthening access to health insurance, credit for consumption and livelihood
needs at reasonable rates, and coverage under pro-poor public welfare programs
will contribute to ASHAs emerging as even stronger agents of change.
 PERSPECTIVES: CURRENT AFFAIRS TARGET 2022

Sample Question: It is often argued, “Electrification of transport can

transform our future”. In the light of the above statement, discuss the key
issues and the steps needed to transform the transport sector.

National Electric Mobility Mission Plan (NEMMP)

Under NEMMP the government is targeting to achieve 6-7 million sales of

electric and hybrid vehicles in India by 2020. NEMMP aims to achieve national
energy security by promoting hybrid and electric vehicles in the country.

NEMM intends to allow hybrid and electric vehicles to become the first choice for
the purchasers so that these vehicles can replace the conventional vehicles and
thus reduce liquid fuel consumption in the country from the automobile sector.

National Electric Mobility Mission is a composite scheme using different

policy-levers such as:
 Demand side incentives to facilitate the acquisition of hybrid/electric
vehicles.
 Promoting R&D in technology including battery technology, power
electronics, motors, systems integration, battery management system,
testing infrastructure, and ensuring industry participation in the same.
 Promoting charging infrastructure.
 Supply side incentives.
 Encouraging retro-fitment of on-road vehicles its hybrid kit.

Under NEMMP 2020, Government has launched in India (FAME India) scheme to
promote manufacturing of electric and hybrid vehicle technology.

FAME Scheme

FAME India Scheme [Faster Adoption and Manufacturing of (Hybrid &) Electric
Vehicles in India] was launched in 2015 with the objective to support
hybrid/electric vehicles market development and manufacturing ecosystem. The
scheme has 4 focus areas i.e. Technology Development, Demand Creation, Pilot
Projects and Charging Infrastructure.

Two phases of the scheme:

Phase I: 2015 - 2019
Phase II: April, 2019- 31st March, 2022
 Emphasis on electrification of the public transportation that includes
shared transport.
 This phase aims to support, through subsidies
- In 3-Wheel (W) and 4-Wheel (W) segment incentives will be
applicable mainly to vehicles used for public transport or registered
for commercial purposes.
 PERSPECTIVES: CURRENT AFFAIRS TARGET 2022

- In the 2-Wheel (W) segment, the focus will be on the private vehicles.

To encourage advanced technologies, the benefits of incentives will be extended

to only those vehicles which are fitted with advanced batteries like a Lithium
Ion battery and other new technology batteries.

The scheme proposes for establishment of charging infrastructure, whereby

about 2700 charging stations will be established.

For availability of at least one charging station in a grid of 3 km x 3 km.

On such highways, charging stations will be established on both sides of the road
at an interval of about 25 km each.

Potential benefits of enabling a transition to electric vehicles: The

arguments in favour of a shift towards electric vehicles are straightforward,
arising largely as a response to the challenges of pollution and energy security.

Tackling air pollution due to vehicular emissions: India has 21 of the world’s
30 cities with the worst air pollution as per data from IQAir AirVisual’s 2019
World Air Quality Report. And much of the pollution load can be traced to
vehicular emissions. As such, the adoption of electric vehicles will reduce overall
emissions and also help meet the targets under the Paris agreement.

Lowering the oil import bill: Such a shift would also help lower the country’s
dependence on oil imports. A NITI Aayog report had earlier pegged the savings
in the oil import bill at Rs 1.2 lakh crore (assuming crude at $70 per litre).

Challenges in promoting adoption of electric vehicles:

Electric car sales have grown from just over 2,000 units in 2008 to over 10 lakh
in 2017, with China accounting for more than half. The market share of electric
cars is around 39% in Norway. Indian market share of electric cars is a meagre
0.06%, this is due to:

1. Lack of adequate charging infrastructure: The government, over the

years has been pushing for transition to electric vehicles, yet the
penetration is less than 1% of the total auto sales in India, as
manufacturers are reluctant to invest in EV technologies due to lack of
charging infrastructure. There are around 650 charging stations across
the country, significantly less than over 3 lakh points in China.
2. Import dependence for batteries and minerals: Need raw material
access: Yet another challenge in India is the growing dependence on raw
material for battery production to meet the growing demand for battery
storage. This is likely to push India to another import spiral. Experts point
out that metals, including lithium, manganese, cobalt, nickel and graphite,
form 40 per cent of the value of batteries and are not locally available.
These are largely available in China, Latin America and Africa and might
require access to new mines and new trade agreements.
 PERSPECTIVES: CURRENT AFFAIRS TARGET 2022

3. Lack of a clear and strong policy roadmap: While the union govt has
come up with FAME scheme since 2015 and has been periodically
extending it to grant subsidies for EV’s, much more needs to be done to
provide both fiscal and non fiscal incentives for a long term period.

Way forward:

1. Strong and long term policy push: Countries that have pushed this
disruptive technology have set clear and enforceable targets.In 2017,
Norway’s parliament set a non-binding goal to ensure that all cars sold
should be zero emissions by 2025. The UK and Germany plan to do this by
2030, and France by 2040. In India, the government has set a target of 30
per cent vehicles becoming EV by 2030.
While India has rightly launched the National Electricity Mobility Mission
Plan (NEMMP), stronger policy push is required to achieve the
objectives/targets set. For example, China zero emission vehicle mandate
requires every vehicle manufacturer and importer to ensure that 10-12
per cent sales are e-vehicles by 2019-20.

2. Need state-level action plans: Transformation is possible if state

governments get involved. Karnataka, Andhra Pradesh, Telengana, Delhi
and West Bengal are among the leading states framing EV policies. Under
the EV Policy 2020 of Delhi, the Delhi government would also provide a
subsidy of up to ₹30,000 on the purchase of two-wheelers, autorickshaws,
e-rickshaws, freight vehicles, each, and of ₹1.5 lakh on cars.
These would be in addition to the incentives under the Central
government’s ‘FAME India’ Phase 2.
The Delhi government would also officer low interest rates for the
purchase of electric commercial vehicles, waive off registration fees and
road tax on newly registered electric vehicles and aim to create a network
of charging stations in the city.

3. Providing Fiscal and non fiscal incentives to promote electric vehicle

ownership: Citing global examples of China and Norway, the economic
survey 2019 had indicated at the need for more incentives from the
government including exemption from VAT, tax incentives on import and
purchase of EVs, waiver of toll and ferry fees, free parking, etc.
To achieve its target, Norway has been giving tax incentives for fully
electric vehicles, which make them cheaper to buy compared to similar
internal combustion (IC) engine models. Norway also taxes IC engine cars
more heavily than most European countries.

The Norway government lets electric cars run on bus lanes, while toll
roads are free for them. Parking lots offer a free charge, and new charging
stations are continuously being built on the nation’s highways — a mix of
regular charging stations and fast-chargers. At the moment, Norway has
10,000 publicly available charging points.
 PERSPECTIVES: CURRENT AFFAIRS TARGET 2022

4. Creating the charging infrastructure at the scale required to

facilitate its large-scale adoption. Affordable and convenient charging
will, after all, increase the segment’s attractiveness for consumers. In
USA, for instance, President-elect Joe Biden has pledged to build 5,00,000
new EV charging stations. Private players therefore need to work with
discoms to set up charging stations.

5. Link EV strategy with public transport: India’s pathway to electric

mobility will be different from advanced markets that are car-centric.
India’s win-win strategy will come from incentives and subsidies linked
with EV-based public transport—buses, para transit, feeders to metro,
shared mobility, school buses and large fleet of delivery vehicles.
Additionally, two-wheelers, a very polluting segment, are yet another
target of large-scale EV deployment.

6. Need affordable strategies for battery management and charging:

India needs more affordable strategies for charging and battery
management. The cost of batteries dominates the total cost of EVs. India
stands to gain from plummeting battery costs that has already dropped by
40 per cent since 2010, but the costs are still high. There is, therefore,
growing interest in battery swapping that delinks battery ownership from
vehicle ownership and reduces the ownership cost of vehicles. This
reduces the high initial capital cost and the recurring cost of battery
replacement.

Need to work towards promoting adoption of swappable battery

technology: Swappable battery technology allows for batteries to be
smaller, lighter and more efficient; thereby making the overall cost of
vehicles affordable,

7. Win consumer confidence: Scale is possible if the customer base can be

expanded. India requires massive outreach to win clientele for the EV
ecosystem. They are rightly concerned about range, lack of charging
facilities, battery replacement costs, limited range of products in the
market and high capital costs.