EDITORIALS & ARTICLES
10th January 2021
Looking for lithium toehold, India finds a small deposit in Karnataka
- Recently, the Atomic Minerals Directorate for Exploration and Research (AMD), an arm of the Department of Atomic Energy, has shown the presence of 1,600 tonnes of lithium resources in the igneous rocks of the Marlagalla-Allapatna region of Karnataka’s Mandya district.
- The find in Mandya is extremely small in quantitative terms, but it is an initial success in the attempt to domestically mine the silver-white metal by way of hard-rock extraction of the ore.
- India has initiated a concerted domestic exploration push for the alkali metal, a vital ingredient of the lithium-ion rechargeable batteries that power electric vehicles (EVs), laptops and mobile phones.
- AMD is carrying out surface and sub-surface exploration for lithium in potential geological domains of the country. India currently imports all its lithium needs.
- The domestic exploration push, which also includes exploratory work to extract lithium from the brine pools of Rajasthan and Gujarat and the mica belts of Odisha and Chhattisgarh, comes at a time when India has stepped up its economic offensive against China, a major source of lithium-ion energy storage products being imported into the country.
- The Marlagalla-Allapatna area, along the Nagamangala Schist Belt, which exposes mineralized complex pegmatites (igneous rocks), is seen as among the most promising geological domains for potential exploration for lithium and other rare metals.
- There are, however, two caveats. First, the new find is categorized as “inferred”, one of the three categories into which mineral resources are subdivided, in order of increasing geological confidence.
- The ‘inferred’ mineral resource is the part of a resource for which quantity, grade and mineral content are estimated only with a low level of confidence based on information gathered from locations such as outcrops, trenches, pits, workings, and drill holes that may be of limited or uncertain quality, and also of lower reliability.
- Second, the lithium find is comparatively small, considering the size of the proven reserves in Bolivia (21 million tonnes), Argentina (17 million tonnes), Australia (6.3 million tonnes), and China (4.5 million tonnes).
LITHIUM IN INDIA
- Lithium can be extracted in different ways, depending on the type of the deposit – it is generally done either through solar evaporation of large brine pools or by hard-rock extraction of the ore.
- In India, alongside the rock mining at Mandya, there is some potential for recovering lithium from the brines of Sambhar and Pachpadra in Rajasthan, and Rann of Kachchh in Gujarat.
- The major mica belts in Rajasthan, Bihar, and Andhra Pradesh, and the pegmatite belts in Odisha and Chhattisgarh apart from Karnataka, are the other potential geological domains.
INDIA-ARGENTINA INITIATIVE :
- In the middle of 2020, India, through a newly-floated state-owned company, had signed an agreement with an Argentinian firm to jointly prospect lithium in the South American country that has the third largest reserves of the metal in the world.
- The new company, Khanij Bidesh India Ltd, was incorporated in August 2019 by three state-owned companies, NALCO, Hindustan Copper, and Mineral Exploration Ltd, with the specific mandate to acquire strategic mineral assets such as lithium and cobalt abroad. The company is learnt to be also exploring options in Chile and Bolivia.
- India is seen as a late mover in attempts to enter the lithium value chain, coming at a time when EVs are predicted to be a sector ripe for disruption.
- 2021 is likely to be an inflection point for battery technology – with several potential improvements to the li-ion technology, and alternatives to this tried-and-tested formulation in advanced stages of commercialisation.
- Over 165 crore lithium batteries are estimated to have been imported into India between 2016-17 and 2019-20 (up to November 30, 2019), at an estimated import bill of upwards of $3.3 billion.
Government looks at ‘expenditure’ budget to aid higher growth
The Union Finance Ministry is of the view that higher spending at the stage of uptick in the economy will give a bigger push to growth. This growth is better than what most economists estimated post easing of lockdown restrictions.
- In a pandemic year, the government restricted additional spending to less than 1.5 percent of the GDP but it will expand its spending in financial year 2021-22.
- It will be more an ‘expenditure Budget’ than a revenue Budget; after consultations with various stakeholders.
- The areas where the ministry of Finance is keen to increase spending are healthcare and construction-related activities, be it infrastructure or housing.
- Public spending in these activities have a huge trickle down effect, and benefit many industries from cement to steel besides creating durable jobs.
- High spending will mean high growth, and this itself will be an antidote to bring deficit down.
- With the GDP expected to post a negative growth of 7.7 percent in 2020-21, the government expects a strong rebound next financial year. But even a 14 percent in 2021-22 (over 2020-21), would mean a growth rate of not more than 5.5 percent over 2019-20.
- While the combined debt of the Centre and states as a percentage of GDP stood at 72 percent last year, it is expected to touch 85 percent given the shrinking of the GDP this year, and higher government borrowings.
- It is in this backdrop that the Finance Ministry may announce making debt-GDP ratio as the primary target for fiscal policy, and provide a new glide path for reducing debt levels.
- The Revised Estimate for fiscal deficit for the current financial year may be around 6.5 percent of GDP.
- In making projections for next year, the government may budget only normal increases in departmental and ministerial allocations given that capacities to spend cannot improve suddenly
- Towards this end, the Finance Ministry is also considering a review of the Fiscal Responsibility and Budget Management Act in line with the recommendations of the NK Singh panel, which suggested that the debt-GDP ratio (as opposed to fiscal deficit) be taken as the primary target for fiscal policy.
Under the amended FRBM Act, the government was expected to reduce its fiscal deficit to 3 percent of GDP in 2020-21.
- But while presenting the Budget, Finance Ministry had invoked the escape clause for having deviated from the target for 2019-20 and 2020-21 to the extent of 0.5 percent of GDP; the Budget Estimate of fiscal deficit for 2020-21 was 3.5 percent of GDP.
KEYNES MODEL
- British economist John Maynard Keynes had argued that free markets cannot be relied upon to fuel GDP growth when there is a recession as India and the world witnessed in 2020 following the Covid-19 pandemic.
- In 2020, consumer confidence hit a new low, and they avoided discretionary spending; this led to a demand collapse, forcing firms to stop investing. In depressing times like these, Keynes said only government intervention through higher spending can revive demand and restore stability.
J&K: Heavy snowfall declared state-specific natural calamity
To expedite disbursement of relief and ex-gratia for damage caused by snowfall, Jammu and Kashmir’s Lieutenant Governor declared ‘Heavy Snowfall’ as a state-specific natural calamity under the State Disaster Response Force (SDRF) norms.
- Earlier, ‘Heavy Snowfall’ did not figure in the list of Natural Calamities under SDRF norms, due to which disbursement of relief and ex-gratia for damage due to heavy snowfall was not possible for the districts’ disaster management authorities.
- Now, processing of ex-gratia relief under SDRF will become faster, thereby giving huge relief to the affected people living in snowbound areas.
STATE DISASTER RESPONSE FUND (SDRF):
- It has been constituted by each state under the provisions of the Disaster Management act 2005.
- It was constituted based on the recommendations of the 13th Finance Commission.
- Heads: The state executive committee headed by the Chief Secretary is authorized to decide on all matters relating to the financing of the relief expenditure from the SDRF.
- Funding: The government of India contributes 75% and 90% of the total yearly allocation of SDRF to general states and special category states respectively.
- Disaster (s) covered under SDRF: Cyclone, drought, earthquake, fire, flood, tsunami, hailstorm, landslide, avalanche, cloudburst, pest attack, frost and cold waves.
Q3 private investment in manufacturing jumps 102%
- A continued rise in private investments in the third quarter (Q3) of 2020-21, led by a 102% surge in manufacturing investments, helped India register a healthy 10.3% increase in fresh project spending in Q3 over the previous quarter.
- The Q3 project investment numbers suggest a reversal from recent years’ trend of government capital expenditure propping up the economy while the private sector remained reluctant to invest due to flat consumer demand and weak balance sheets.
- However, new capital expenditure proposals from the government collapsed between October and December 2020, as funding constraints began to pinch the States, dragging their new project investments down nearly 25% from the previous quarter.
- The sequential increase registered in fresh projects by the private sector of 102.5% in the second quarter, and 36.5% in the third quarter, indicates willingness of private promoters to undertake capacity building in the future.
Relax detention norms to prevent drop-outs, says govt
According to an Education Ministry, schools must relax detention norms in order to prevent drop-outs in a year when COVID-19 has disrupted the teaching and learning process.
- Guidelines have been prepared “in order to ensure that school-going children have access to education with quality and equity and to minimize the impact of the pandemic on school education across the country”.
- he Ministry directed the States to conduct comprehensive door-to-door surveys to identify children out of school and migrant students and prepare an action plan to prevent increased drop-outs, lower enrolments, loss of learning and deterioration in the gains made in providing universal access, quality and equity in recent years.
- Schools shut down in mid-March 2020, just before the COVID-19 lockdown. Some States have started reopening physical classes for high school students over the last two months, but most of India’s 25 crore students have spent the last 10 months at home.
- While some have access to online classes, the majority are learning from televised classes, WhatsApp teaching, and learning on their own.
- Globally, the United Nations had estimated that almost 24 million school-age children are at risk of dropping out from the educational system due to COVID-19 this year.
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