Current Affairs Focus Class| IAS

INDIAN ECONOMY

MAY 2022 TO JUNE 2022

IMPORTANCE OF CURRENT AFFAIRS- PRELIMS
IMPORTANCE OF CURRENT AFFAIRS- MAINS
Last 2-3 Mains Exams
140

120

100

80

60

40

20

0
GS -I GS-II GS-III
 PRELIMS: INDIAN ECONOMY
UPSC Syllabus: Economic and Social Development – Sustainable Development, Poverty, Inclusion,
Demographics, Social Sector initiatives, etc.
PILLAR LIST OF CHAPTERS
Pillar 1: Banking 1. RBI. 2. Structure of Banking 3. Monetary Policy
and Finance 4. Financial Inclusion. 5. Capital Market 6. Money Market
7. Terms related to Banking 8. Inflation 9. Insurance sector
Pillar 2: Public 10. Taxation System in India
Finance
Pillar 3: External 11. Balance of Payments (BoP)
Sector
Pillar 4: 12. IMF 13. World Bank 14. WTO. 15. Important Organizations in news
International
Institutions
Pillar 5: 16. Agriculture 17. Industry 18. Services. 19. Infrastructure. 20. Planning in India
Government
Initiatives/Policies 21. PSUs in India. 22. LPG Reforms. 23. Inclusive Growth- Poverty, Unemployment, Indices etc.
Pillar 6: Core 24. Calculation of National Income
Concepts 25. Core Concepts from NCERT Textbooks- Sectors of Economy, Micro-economic concepts etc.
 INDIAN ECONOMY: PRELIMS
27.5
22.5
17.5
12.5
7.5
2.5
Prelims 2016 Prelims 2017 Prelims 2018 Prelims 2019 Prelims 2020 Prelims 2021 Prelims 2022

Banking 5 6 7 5 6 8 6
and Fi-
nance
Interna- 11 5 5 4 2 1 2
tional
Trade/
Institu-
tions/
Index
Govern- 8 8 5 10 9 1 3
ment
Schemes
/ Poli-
cies/ Ini-
tiatives
External 1 1 0 5 5 2 3
Sector
Taxation 3 2 3 0 1 2 3
Core 0 0 4 3 0 1 1
Concepts
 INDIAN ECONOMY: MAINS
137.5
112.5
87.5
62.5
37.5
12.5
Mains 2017 Mains 2018 Mains 2019 Mains 2020 Mains 2021
Agriculture + Land Re- 50 60 60 50 50
forms + Food Processing
+ PDS
Inclusive Growth + Bank- 35 25 25 20 25
ing and Finance
Budgeting and Taxation 15 10 25 15 10
Industrial Policy + Em- 15 15 0 0 0
ployment + External Sec-
tor
Infrastructure and In- 10 0 0 30 15
vestment
 Structure of Current Affairs Classes

Discussion of Important Current Affairs Articles

Chosen from multiple Theme based Prelims and Mains
sources Discussion Perspective

Testing through Practice Questions

Prelims based MCQs Mains Questions and Model Answers

Revision of Current Affairs

Mind Maps of Articles in PPT Exam curated short notes in PDFs.
DISCOM REFORMS: NEED, INITIATIVES AND
STRATEGIES NEEDED
 DISCOM REFORMS: NEED, INITIATIVES AND
STRATEGIES NEEDED
Syllabus
GS Paper III: Indian Economy; Infrastructure

Prelims Mains
• Overview of Electricity Sector: • DISCOM REFORMS: Need, Initiatives
• Share of different Sources in Installed
and Strategies needed
Capacity
• Achievements in Renewable Energy
• Initiatives for Reforms in DISCOMs
 DISCOM REFORMS: NEED, INITIATIVES AND STRATEGIES NEEDED

Prelims MCQ No.1 Prelims MCQ No.2

Consider the following sources of Electricity Consider the following statements related to present status
Generation in India: of Renewable energy in India:
1. Thermal Power 1. Tamil Nadu is the largest producer of Wind Energy in
2. Wind Power India.
3. Solar Power 2. Rajasthan is the largest producer of Solar Energy in
4. Large Hydropower India.
3. The share of Solar energy in the installed power
Arrange the following in the descending order of capacity is higher than that of wind energy.
their share in the installed power capacity:
(a) 1, 2, 3, 4 Which among the statements given above is/are correct?
(b) 1, 3, 2, 4 (a) 1 and 2 only
(c) 1, 4, 3, 2 (b) 2 and 3 only
(d) 1, 3, 4, 2 (c) 1 and 3 only
(d) 1, 2 and 3
 DISCOM REFORMS: NEED, INITIATIVES AND STRATEGIES NEEDED

Prelims MCQ No.3 Prelims MCQ No. 4

With respect to Renewable Purchase Obligation (RPO) Consider the following statements:
policy, consider the following statements: 1. Karnataka has the highest installed capacity of Solar
power in India.
1. The RPO policy requires DISCOMs to purchase 2. India’s largest floating solar power plant has been
certain percentage of electricity from various installed in Telangana.
renewable energy sources, including Ocean Energy.
Which among the statements given above is/are correct?
2. The annual targets under the RPO is set by the (a) 1 only
Central Electricity Regulatory Commission (CERC). (b) 2 only
(c) Both 1 and 2
Which among the statements given above is/are (d) Neither 1 nor 2
correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
 DISCOM REFORMS: NEED, INITIATIVES AND STRATEGIES NEEDED

Prelims MCQ No. 5 Prelims MCQ No. 6

With respect to Saubhagya Scheme, consider the
following statements:
1. This scheme provides free electricity throughout
the year to the identified poor families.
2. This scheme is implemented by the state-owned
DISCOMs in the respective states.
Which among the statements given above is/are
correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Which among the following is/are the objectives of the
Reforms based Results linked Revamped Distribution Scheme?
1. Reduce Aggregate Technical and Commercial losses (AT&C)
2. Eliminate the gap between Average Cost of Supply (ACS)
and Average Revenue Realized (ARR)
3. Eliminate subsidies given to Farmers and households.
4. Privatization of loss making State-owned DISCOMs.
Select the correct answer using the code given below:
(a) 1 only
(b) 1 and 2 only
(c) 1, 2 and 3 only
(d) 1, 2, 3 and 4
 DISCOM REFORMS: NEED, INITIATIVES AND STRATEGIES NEEDED
Mains Questions for Practice
1. The power distribution continues to be the weakest link in the supply chain of the power sector. In the light of this
statement, discuss various constraints and challenges faced by DISCOMs in India. ( 15 Marks, 250 Words) (Challenges)

2. The distribution sector has been the Achilles’ heel of the power sector. What are the major reforms introduced by the
Government to reform the power distribution sector. ( 10 Marks, 150 Words) (Initiatives)

3. The Electricity distribution sector is in dire need of major overhaul. In the light of this statement, discuss major
reforms which must be introduced to improve the financial viability of DISCOMs (Strategies)

4. Do you think Privatization of DISCOMs would help us achieve their financial and operational turn around? Give
arguments in support of your answer. ( 15 Marks, 250 Words) (Privatization of DISCOMs)
 Share of Different Sources in Installed Share of Different Sectors in
Capacity Installed Capacity
2%
12%
24%

50%
28%
59%

26%

Thermal Renewable
Large Hydropower Nuclear Power Centre State Private Sector
 Share of Different Renewable Energy Sources (in MW)
60,000

50,000

40,000

30,000
57,000
46,000
20,000 40,000

10,000

10,000
4,800
0 477
r r d s er gy
la e in as r
So ow W om ow e
rop Bi op En
d d r to
y y te
H lH as
rge al W
La Sm
 Progress and Achievements in Renewable energy sector
• India stands 4th in RE power capacity, 4th in Wind power, and 5th in Solar Power capacity.
• Total Installed Capacity of Renewable energy (including large hydropower above 25 MW): 1.5 lakh MW
• Share of Renewable energy (including large hydropower above 25 MW) in total installed capacity: 40%
• Top 3 States in Installed Wind Power: Tamil Nadu, Gujarat and Maharashtra
• Top 3 States in Installed Solar Power: Karnataka, Rajasthan and Tamil Nadu

Prelims 2022
Consider the following statements :
1. Gujarat has the largest solar park in India
2. Kerala has a fully solar powered International
Airport
3. Goa has the largest floating solar photovoltaic
project in India.

Which of the statements given above is/are correct?

(a) 1 and 2
(b) 2 only
(c) 1 and 3
(d) 3 only
 Factsheet on Electricity Sector
Total Installed Power Capacity • 4 Lakh MW (3RD Largest Producer of Electricity)
• Share of Different sources: Thermal (58.5%), Renewable Energy (28%), Large
Hydropower (12%), Nuclear Power (1.5%)
Energy Poverty in India • 18% of World’s population but access to only 6% of World’s energy
• Per Capita Energy consumption: 1/3 of global average.
• Need to increase per capita energy consumption by 4 times
• SDG 7: Access to Affordable, Clean and Sustainable Energy
Status of DISCOMs High Aggregate Technical and Commercial Losses (AT&C): 22%. Global Average: 8% (USA:
6%, China: 5%)
Total Losses: Rs 75,000 Crores (2020-21); Rs 90,000 Crores (2021-22)
Dues of more than 1.23 lakh crores to be paid to power generation companies
Present Status for Renewable Total Installed Capacity: 1.5 lakh MW (40%)
Energy 250% Increase in Installed capacity between 2014 to 2021.
4th in Renewable energy, 4th in Wind energy, 5th in Solar Energy.
 Important Case Studies
Privatization of DISCOMs- • Privatisation of the Delhi Vidyut Board in 2002
Benefits • Power distribution in Delhi is handled mainly by BSES Rajdhani Power, BSES Yamuna
Power and Tata Power Delhi Distribution (TPDDL).
• Reduction in AT&C losses from 55% (2002) to 8% (2022) leading to total savings of Rs 1.2
lakh crores.
• Other cities which have adopted privatisation: Mumbai, Ahmedabad and Surat.
Privatization of DISCOMs- • Odisha was the first state in India to privatise its discoms in 1999.
Problems • However, it was not successful and ultimately the distribution licenses were revoked.
Bhiwandi Franchisee Model • Private party has no ownership over the distribution grid assets.
• Private party manages billing and revenue collection mainly.
• Maharashtra Government is thinking of replicating this model in other cities.
Present Status of State-owned DISCOMs
 Privatisation of DISCOMs

Points in Favor: Points against

• Ensure higher efficiencies in power distribution.
• Reduce AT&C losses due to higher billing and collection
efficiencies, better transmission infra etc. For example,
AT&C losses in Delhi has come down to just 8% as
against National average of 22%.
• Timely payments to power generating companies would
encourage higher investment in power generation.
• Loss of the welfarist nature of state-owned discoms that
sustain the residential and agriculture sectors on
subsidised tariff.
• Poor Financial viability of private DISCOMs
• Loss of the ability to serve the poor and the vulnerable
• Loss of jobs of DISCOM employees
• Inability to reduce energy poverty

Privatization of DISCOMs- Mixed bag.

Successful in Delhi- Large Urban Area, Higher share of Middle-Class population, Marginal Agriculture sector.
Failure in Odisha- Large Rural Areas, Electricity to Agriculture sector, lower population density.

No ”One Size Fits all approach”. Different models in different states depending upon the consumer mix and geography- Private
DISCOMS, Franchise Model or state owned DISCOMs.
 Power Theft Poor Billing and Collection Long term PPAs: Fixed and Variable
Efficiency Cost Higher Dependence on States:
Higher Fiscal Deficit

Higher AT&C losses: Higher Gap between

Average Cost of Supply (ACS) and Average Higher NPAs of Banks
Revenue Realized (ARR) Problems
Monopoly; Lack of Choice to
Transmission Political Interference in Customers
losses fixing Tariffs- Cross-
Subsidization DISCOMs in India Operational Reforms:
• Long term PPAs to be
ECA, 2003: Creation of SERCs and CERC; Open complemented by short-
Access Policy etc. term and medium term
Strategies
power procurement
needed •
Privatization of Universal Metering
DISCOMs: Odisha, Reforms based • Installation of Pre-paid
Initiatives Results linked
Delhi, Mumbai, meters
Ahmedabad etc. Revamped Power
Distribution Scheme
Franchise Model: Bhiwandi, De-licensing Structural Reforms Regulatory Reforms:
Maharashtra of • Different Models of Distribution based upon • Independence and Autonomy to SERC
Distribution; consumer mix and geography- State-owned; • Cost-reflective Tariffs to end Cross-
Retail Choice Franchise and Private owned subsidisation
to Customers • Retail choice for Consumers by delicensing
Distribution
The distribution sector has been the Achilles’ heel of the power sector. What are the major reforms introduced by the
Government to reform the power distribution sector. ( 10 Marks, 150 Words).

Introduction
India has made rapid strides in power sector. However, DISCOMs incur huge losses (Rs 75,000 crores), which in turn reduces
their ability to pay dues to power generating companies and repay loans to Banks leading to negative domino effect.
The distribution sector has been the Achilles’ heel of the power sector. What are the major reforms introduced by the
Government to reform the power distribution sector. ( 10 Marks, 150 Words).

Body
The Government has introduced number of reforms to address the structural, operational and managerial inefficiencies of the
DISCOMs.
Electricity Amendment Act, 2003:
Established Central Electricity Regulatory Commissions (CERCs) and State Electricity Regulatory Commission (SERCs).
Open access policy
Deen Dayal Upadhyaya Gram Jyoti Yojana: Focuses on feeder separation.
UDAY Scheme: Financial turnaround through States taking over 75% of DISCOM debt
Reforms based Results linked Revamped Power Distribution Scheme: Conditional financial assistance to DISCOMs on meeting
criteria such as reduction in AT&C losses.
Private Participation in DISCOMs through (a) Franchise Model (Bhiwandi, Maharashtra) and (b) Privatisation of DISCOMs (Delhi,
Ahmedabad, Odisha etc.)
Competition in the distribution sector and providing Retail Choice to Consumers (Budget 2021-22)

Conclusion
The distribution sector is a key to realize Government’s goals such as 24X7 Power, Make in India, Aatma Nirbhar Bharat etc.
Hence, the Electricity amendment Bill 2022 is a step in the right direction.
The power distribution continues to be the weakest link in the supply chain of the power sector. In the light of this statement,
discuss various constraints and challenges faced by DISCOMs in India.

India has made rapid strides in power sector. It is the 3 rd largest producer of electricity and almost every citizen has access to grid
electricity. However, the sector still faces significant challenges. Most Discoms incur heavy losses ( around Rs 75,000 crores) due
to structural, operational and managerial inefficiencies.
The power distribution continues to be the weakest link in the supply chain of the power sector. In the light of this statement,
discuss various constraints and challenges faced by DISCOMs in India.

The Government has taken measures such as UDAY Scheme, Electricity Amendment Act, 2003, Open Access policy etc. to bring
about financial and operational turnaround of DISCOMs. However, these initiatives have failed on account of the following:

Lack of Independence and Autonomy of the SERCs set up under EC Act, 2003. The political populism in fixing electricity tariffs
has led to cross-subsidization; higher losses; hurt domestic manufacturing and led to poor revenue realization.

Higher AT&C losses: Higher gap between average cost of supply (ACS) and the average revenue realised (ARR) due to
Transmission losses, Commercial losses (Power theft, absence of metering, inefficiencies in bill collection etc.)
Global average: 8% ( USA- 6%; China- 8%); India: 22%; Total losses: Rs 75,000 ( FY 2021-22)

Non-payment of Dues to Thermal power plants: Power procurement accounts for almost 80% of expenditure of discoms.
Discoms have oversubscribed to expensive and long-term thermal PPAs based on incorrect estimates of power demand. The
fixed costs of the excess capacity must be paid, even when no power is generated. Non-payment of dues has hindered the
investment in power generation, particularly, Renewable energy sector.

Higher dependence on States: The poor financial position of DISCOMs leads to their higher dependence on state governments
leading to higher Fiscal deficit of the states.

Monopolisation: Presently, DISCOMs enjoy monopoly in distribution of electricity leading to absence of competition, higher
inefficiencies and poor service delivery.
The power distribution continues to be the weakest link in the supply chain of the power sector. In the light of this statement,
discuss various constraints and challenges faced by DISCOMs in India.

The distribution sector is a key to realize Government’s ambitious goals such as 24X7 Power, Make in India, Aatma Nirbhar Bharat
etc. Going forward, there is a need to bring about reforms such as Privatization of DISCOMs, Retail choice to consumers, lower
AT&C losses etc. The Draft Electricity Amendment Bill, 2020 and newly launched Revamped Power sector scheme are steps in the
right direction.
 DISCOM REFORMS: NEED, INITIATIVES AND
STRATEGIESOBLIGATION
RENEWABLE PURCHASE NEEDED (RPO) POLICY

Prelims
Details about RPO Policy
 DISCOM REFORMS: NEED, INITIATIVES AND
STRATEGIESOBLIGATION
RENEWABLE PURCHASE NEEDED (RPO) POLICY

Prelims MCQ No. 7 Prelims MCQ No. 8

With respect to Renewable Purchase Obligation (RPO)
policy, consider the following statements:
1. The RPO policy requires DISCOMs to purchase certain
percentage of electricity from various renewable energy
sources, including Ocean Energy.
2. The annual targets under the RPO is set by the Central
Electricity Regulatory Commission (CERC).
Which among the following sources of Renewable energy
come under the policy of Renewable Purchase Obligation
(RPO) in India?
1. Small Nuclear Power Plants
2. Small Hydro-power Projects (less than 25 MW)
3. Large Hydro-power projects (More than 25 MW)
4. Ocean Energy

Which among the statements given above is/are correct? Select the correct answer using the code given below:
(a) 1 only (a) 2 only
(b) 2 only (b) 1 and 4 only
(c) Both 1 and 2 (b) 1, 2 and 4 only
(d) Neither 1 nor 2 (c) 2, 3 and 4 only