Daily News Analysis 23 and 24 July 2023 (The Hindu)

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Here are the topics covered for 23 and 24 July 2023: How India Can Effectively Tame Inflation: A Balanced Approach, The Ethanol Impetus: India\’s Diversified Approach to Blending, Rising Bad Loans and Loan Write-Offs in India\’s Banking Sector: A Persistent Concern, Greece Battles Wildfires Amid Intense Heatwave, CERT-In Warns Against \’Akira\’ Ransomware Attack.

Table of Contents


  1. How India Can Effectively Tame Inflation: A Balanced Approach
  2. The Ethanol Impetus: India\’s Diversified Approach to Blending
  3. Rising Bad Loans and Loan Write-Offs in India\’s Banking Sector: A Persistent Concern

Prelims facts and basics

  1. Greece Battles Wildfires Amid Intense Heatwave
  2. CERT-In Warns Against \’Akira\’ Ransomware Attack

How India Can Effectively Tame Inflation: A Balanced Approach

\"How \"How



  • India\’s June Consumer Price Index (CPI) inflation figure of 4.8% raises concerns for both the RBI and the government, especially with the erratic monsoon adding to inflationary risks.
  • The government\’s knee-jerk reaction of imposing export bans and stocking limits on rice and wheat is counterproductive and detrimental to the agricultural sector and international trade.
  • To effectively tame inflation, India should adopt a more balanced and proactive approach by utilizing import policies and market interventions.


The Pitfalls of Export Bans and Stocking Limits

  1. Policymakers are relying on outdated instruments from the 1960s, which have proven ineffective in curbing inflation in wheat and rice prices.
  2. Such bans on exports hurt the international market and the African countries most, as India is a major player in the global rice trade.
  3. These measures contradict the agricultural marketing reforms that were intended to be achieved through the now-withdrawn farm laws.
  4. The government\’s free rice and wheat distribution under the PM Garib Kalyan Yojana make the extreme steps of export bans and stocking limits unnecessary and unhelpful.


A Better Approach: Import Policy and Market Intervention

  1. Reduce the import duty on wheat from 40% to 10% and unload excess rice stocks in the open market at competitive prices.
  2. Revising the weight of food and beverages in the CPI basket is necessary to better reflect changing consumption patterns and avoid overestimating CPI inflation.
  3. Consider Engel\’s law, which suggests that as per capita income rises, people spend less on food.
  4. Use import policies liberally for food products to stabilize prices and ensure adequate supply in the domestic market.


Addressing Specific Inflationary Concerns

  1. Milk and Milk Products: Reduce import duties on skimmed milk powder (SMP) and butter to 10% to offset rising feed costs and disease-induced stagnation in milk production.
  2. Pulses: Import tur from countries like Mozambique, Malawi, and Myanmar to counter lower acreage and production due to adverse weather conditions caused by El Nino.
  3. Abolish the minimum import price for yellow peas to stabilize pulses prices, as it is the cheapest pulse and can act as an anchor.


The Need for Accountability and Processing

  1. Hold Operation Green accountable for stabilizing value chains and prices of tomatoes, onions, and potatoes (TOP).
  2. In the medium term, process 10 to 15% of these items to mitigate price fluctuations and supply shortages.


Understanding Inflation: Causes and Impact



  1. Inflation is a sustained increase in the general price level of goods and services over time, leading to a decrease in the purchasing power of money.
  2. It is influenced by various factors and has significant implications for individuals, businesses, and the overall economy.


Causes of Inflation

  1. Demand-Pull Inflation: Occurs when aggregate demand exceeds aggregate supply, leading to higher prices.
  2. Cost-Push Inflation: Caused by increased production costs, such as wages, raw materials, or energy prices.
  3. Monetary Inflation: Arises from excessive money supply growth, often due to central bank policies.


Impact on Economy

  1. Reduced Purchasing Power: Consumers can buy fewer goods and services with the same amount of money.
  2. Uncertainty: Inflation erodes the value of future income and savings, leading to economic uncertainty.
  3. Impact on Investments: Inflation can affect investment returns and asset prices.
  4. Central Bank Intervention: Central banks use monetary policy to control inflation and stabilize the economy.

The Ethanol Impetus: India\’s Diversified Approach to Blending




  1. India\’s ethanol production program has made significant strides in the past five years, increasing blending rates with petrol to 11.75%.
  2. The government\’s differential pricing policy for ethanol has been instrumental in driving this growth.


Evolution of Ethanol Feedstocks

  1. Initially, ethanol production relied on cane molasses, but it has diversified to include rice, damaged grains, maize, millets, and more.
  2. Ethanol yields from grains are higher than from molasses, but the process takes longer.


Year-Round Production and Feedstock Flexibility

  1. Some sugar companies have adopted multi-feed distilleries, allowing them to operate year-round using various feedstocks.
  2. Flexibility in feedstocks reduces supply fluctuations and price volatility.


Differential Pricing Policy

  1. The Modi government introduced higher prices for ethanol produced from B-heavy molasses and sugarcane juice/syrup to compensate mills for reduced sugar production.
  2. This policy incentivized ethanol production, leading to a significant increase in blending rates.


Byproduct Benefits and Environmental Impact

  1. Modern distilleries employ Multi Effect Evaporator (MEE) units to handle liquid effluent (spent wash) responsibly.
  2. Concentrated spent wash is used as boiler fuel, while the ash from the incineration boiler contains valuable potash used as fertilizer.
  3. Distillers\’ dried grain with solubles (DDGS) from grain distilleries is sold as animal feed.


Potential for Economic Growth

  1. Incorporating new feedstocks for ethanol production can create additional demand for grains, benefiting farmers and supporting economic growth in states like Uttar Pradesh and Bihar.


Current Challenges and Future Outlook

  1. El Niño-induced monsoon uncertainties may put pressure on domestic availability of cereals and sugar.
  2. The government\’s focus on the ethanol blending program remains strong despite challenges.

Ethanol: A Renewable Fuel with Multiple Applications



Definition and Composition

  1. Ethanol is a type of alcohol that is chemically known as ethyl alcohol or grain alcohol (C2H5OH).
  2. It is a clear, colorless, and flammable liquid with a distinctive odor.



  1. Ethanol is produced through fermentation, a natural process where yeast or bacteria convert sugars into ethanol and carbon dioxide.
  2. Common sources of sugars for ethanol production include sugarcane, corn, wheat, rice, barley, and other grains.


Renewable Fuel

  1. Ethanol is considered a renewable fuel because it is derived from plants, which can be grown and harvested repeatedly.
  2. It offers an alternative to fossil fuels, reducing greenhouse gas emissions and promoting sustainability.


Use as a Biofuel

  1. Ethanol is commonly used as a biofuel, blended with gasoline to create ethanol-gasoline blends.
  2. Ethanol blending in gasoline reduces the consumption of fossil fuels, lowers emissions, and enhances octane levels.


Ethanol Blending

  • Many countries, including India, promote ethanol blending with petrol to reduce dependence on imported fossil fuels.
  • Ethanol blending rates vary by country and are typically expressed as a percentage (e.g., E10, E15, E85).


Industrial Applications

  1. Ethanol has numerous industrial applications, including as a solvent in the production of paints, perfumes, and personal care products.
  2. It is also used as an antiseptic, disinfectant, and preservative in the pharmaceutical industry.

Rising Bad Loans and Loan Write-Offs in India\’s Banking Sector: A Persistent Concern




  1. The Reserve Bank of India (RBI) reported that banks in India wrote off bad loans worth Rs 2.09 lakh crore ($25.50 billion) during the fiscal year ending March 2023.
  2. This brings the total loan write-offs by the banking sector to Rs 10.57 lakh crore ($129 billion) in the last five years.
  3. The write-offs helped banks reduce gross non-performing assets (GNPA) to a 10-year low of 3.9% of advances in March 2023.


High Defaulted Loans

  1. Despite the write-offs, defaulted loans (including write-offs) amount to around Rs 10.32 lakh crore.
  2. Including write-offs, the total NPA ratio would have been 7.47% of advances, higher than the reported 3.9%.
  3. Banks have recovered only 18.60% of the written-off loans during the last three years.


Loan Write-Off Process

  1. When a loan is written off, it is removed from the bank\’s asset book due to low chances of recovery.
  2. Banks continue efforts to recover these loans even after write-offs.
  3. Write-offs are carried out against provisions made for such loans, and once recovered, the provisions flow back into the profit and loss account of banks.


Public Sector Banks Lead in Write-Offs

  1. Public sector banks accounted for nearly 62.45% of the total loan write-offs in the last three years.
  2. Big banks like State Bank of India, Punjab National Bank, Union Bank, Central Bank of India, and Bank of Baroda reported significant reductions in NPAs due to write-offs.


Recovery Process Challenges

  1. Recovery from written-off loans, especially from wilful defaulters and shady promoters, can be a time-consuming process.
  2. RBI guidance allows banks to make credit-related decisions based on their commercial assessment and prudential norms.


Need for Transparency

  1. Some experts criticize the lack of transparency in the write-off process and advocate for better reporting of written-off amounts.
  2. Loan write-offs should be used sparingly during crises and must be declared with clear policies and accountability.


Future Outlook

  1. The RBI\’s Financial Stability Report predicts that if the macroeconomic environment worsens, the GNPA ratio may rise to 4.1% or 5.1%, depending on the severity of stress scenarios.

Understanding Bad Loans and Loan Write-Offs in India\’s Banking Sector



Bad Loans:

  1. Bad loans, also known as non-performing assets (NPAs), are loans that borrowers have defaulted on, failing to make principal or interest payments for 90 days or more.
  2. They pose a significant risk to banks\’ financial health as they impact profitability and capital adequacy.


Loan Write-Offs:

  1. Loan write-offs occur when banks remove bad loans from their books as unrecoverable debts.
  2. Writing off a loan doesn\’t mean the bank gives up on the recovery process; it continues to try to recover the amount.


In Short:

  1. Bad loans refer to loans on which borrowers have defaulted for 90 days or more, posing risks to banks.
  2. Loan write-offs involve banks removing bad loans from their books as unrecoverable debts.
  3. Writing off a loan doesn\’t mean giving up on recovery; banks continue their efforts to recover the amount.

Greece Battles Wildfires Amid Intense Heatwave



Wildfires on Greek Island Rhodes and Wider Athens Area:

  1. A wildfire on the island of Rhodes and another in the wider Athens area have been raging for five days, causing significant damage and forcing evacuations.
  2. Firefighters, aided by air water bombers and reinforcements from Cyprus, France, Israel, and Italy, are attempting to control the blazes.


Heatwave Hits Greece:

  1. Greece is experiencing another heatwave, with temperatures expected to reach 45 degrees Celsius (113 degrees Fahrenheit) on the weekend.
  2. The extreme heat has exacerbated the wildfire situation, making firefighting efforts more challenging.


Greek Island Rhodes:

  1. Rhodes is a beautiful Greek island located in the Aegean Sea.
  2. It is the largest of the Dodecanese islands and is known for its stunning beaches, ancient ruins, and charming old town.

Heatwave Definition and Conditions



  1. A heatwave is a period of unusually high temperatures, exceeding the normal maximum temperature during the summer season.
  2. Heatwaves in Greece typically occur between March and June.
  3. Severe heatwave conditions are declared if the temperature increases by 5°C to 6°C when the normal maximum temperature is less than or equal to 40°C, or by 4°C to 5°C when the normal maximum temperature is above 40°C.
  4. Additionally, a temperature of 45°C or higher is considered severe heatwave regardless of the normal maximum temperature.

CERT-In Warns Against \’Akira\’ Ransomware Attack



Akira Ransomware Overview:

  1. Akira is a dangerous Internet ransomware virus that targets Windows and Linux-based systems.
  2. It steals vital personal information from victims and encrypts their data, leading to extortion of money.


Stealing Vital Personal Information:

  1. Akira\’s main objective is to steal sensitive data, including financial records and personal identification details, from its victims.
  2. Attackers leverage this information to extort money from the victims.


Double Extortion Tactics:

  1. Akira ransomware uses double extortion tactics to compel victims to pay the ransom.
  2. First, it encrypts the victim\’s data, making it inaccessible.
  3. Then, the attackers threaten to release the stolen data on their dark web blog if the ransom is not paid.


Targeting Windows and Linux-Based Systems:

Akira is not limited to a specific operating system; it targets both Windows and Linux-based systems, making it a potent threat.


Access through VPN Services:

  1. The ransomware group behind Akira accesses victim environments through VPN services.
  2. Lack of multi-factor authentication can make users vulnerable to such attacks.


Motive of Akira Ransomware:

  1. The primary motive of Akira ransomware is financial gain.
  2. The attackers seek to extort money from victims in exchange for restoring access to their systems and sensitive information.

Ransomware Defined:

  1. Ransomware is malicious software that blocks users from accessing their data and systems until a ransom is paid to the attackers.
  2. It causes disruptions and financial losses, affecting individuals and organizations alike.
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