Caution in buying Russian cruide

This week the Wall Street Journal and the New York Times both reported on India emerging as a major buyer of Russian oil.

Background of rising fuel prices due to Ukraine crisis

A significant fallout of Russia’s invasion of Ukraine has been the rising cost of petroleum.

In response to the invasion, Western countries, including the United States and Europe, have imposed an array of sanctions against Russia.

Reduced purchases from Russia: Europe and the United States have seen the price of oil steadily rise after they reduced their purchases from Russia.

For now, Russia has been able to mitigate the impact of sanctions by selling crude, oil and coal at reasonable prices in greater volumes to newer bulk buyers like India, to combat Europe trying to wean itself off Russian crude.

Why India increased purchase of Russian oil

India has chosen a different route.

Cope with rising fuel prices: We are the third-largest importer and consumer of oil in the world and have increased our purchase of Russian oil to cope with rising oil prices elsewhere.

We are also refining crude oil or turning it into products like jet fuel and diesel and selling it to Europe and other nations.

Curb inflation: Importing Russian crude also helps us curb inflation that has been made worse by rising fuel prices.

Halting the fall of the rupee: Procuring discounted Russian oil is an effort by the government to bring down prices and halt the decline in the value of the Indian rupee.

India’s behaviour is governed by our best interest, which is the most important element of any astute foreign and economic policy.

Issues with purchasing oil from Russia

The European Union has announced a ban against insuring ships carrying Russian oil, to commence this December.

Insurance ban: Countries like India, China and Turkey that are increasing their oil purchases from Russia have six months to find a work-around to the insurance ban by using non-European insurance companies.

European companies own most of the ships carrying Russian oil to India.

These insurance sanctions will impact the companies that own these ships as well.

Dependence for batteries: Apart from geopolitical changes in the world indicating the rise of China, there is a major change: Electric vehicles and electric batteries substituting for non-renewable resources like petroleum and diesel.

India cannot afford to be dependent on an unhindered supply of electric batteries from China, given geopolitical considerations and border disputes between the two nations.

J&K to host G-20 meeting

The Jammu and Kashmir administration has constituted a committee to coordinate with the delegates of G-20 countries scheduled to participate in a meeting to be held in the Union Territory (UT) next year.

Why such move?

The participation of the delegates from G-20 countries will be a major boost to the efforts of the Centre to project the situation in J&K as normal.

This is especially after J&K’s special constitutional position was ended in 2019.

What is G-20?

Formed in 1999, the G20 is an international forum of the governments and central bank governors from 20 major economies.

Collectively, the G20 economies account for around 85 percent of the Gross World Product (GWP), 80 percent of world trade.

To tackle the problems or address issues that plague the world, the heads of governments of the G20 nations periodically participate in summits.

In addition to it, the group also hosts separate meetings of the finance ministers and foreign ministers.

The G20 has no permanent staff of its own and its chairmanship rotates annually between nations divided into regional groupings.

Aims and objectives

The Group was formed with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.

The forum aims to pre-empt the balance of payments problems and turmoil on financial markets by improved coordination of monetary, fiscal, and financial policies.

It seeks to address issues that go beyond the responsibilities of any one organization.

Members of G20

The members of the G20 consist of 19 individual countries plus the European Union (EU).

The 19 member countries of the forum are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom and the United States.

The European Union is represented by the European Commission and by the European Central Bank.

Its significance

G20 is a major international grouping that brings together 19 of the world’s major economies and the European Union.

Its members account for more than 80% of global GDP, 75% of trade and 60% of population.

India and G20

India has been a member of the G20 since its inception in 1999.

Eco-Sensitive Zones (ESZ)

Farmers in Kerala continue to protest across several high ranges of the state against the Supreme Court’s recent order to establish 1-km Eco-Sensitive Zones around all protected areas, wildlife sanctuaries, and national parks.

What are the Eco-sensitive Zones (ESZs)?

Eco-Sensitive Zones (ESZs) or Ecologically Fragile Areas (EFAs) are areas notified by the MoEFCC around Protected Areas, National Parks and Wildlife Sanctuaries.

The purpose of declaring ESZs is to create some kind of “shock absorbers” to the protected areas by regulating and managing the activities around such areas.

They also act as a transition zone from areas of high protection to areas involving lesser protection.

How are they demarcated?

The Environment (Protection) Act, 1986 does NOT mention the word “Eco-Sensitive Zones”.

However, Section 3(2)(v) of the Act, says that Central Government can restrict areas in which any industries, operations or processes or class of industries, operations or processes shall be carried out or shall not, subject to certain safeguards.

Besides Rule 5(1) of the Environment (Protection) Rules, 1986 states that central government can prohibit or restrict the location of industries and carrying on certain operations or processes on the basis of certain considerations.

The same criteria have been used by the government to declare No Development Zones (NDZs).

Defining its boundaries

An ESZ could go up to 10 kilometres around a protected area as provided in the Wildlife Conservation Strategy, 2002.

Moreover, in the case where sensitive corridors, connectivity and ecologically important patches, crucial for landscape linkage, are beyond 10 km width, these should be included in the ESZs.

Further, even in the context of a particular Protected Area, the distribution of an area of ESZ and the extent of regulation may not be uniform all around and it could be of variable width and extent.

Activities Permitted and Prohibited

Permitted: Ongoing agricultural or horticultural practices, rainwater harvesting, organic farming, use of renewable energy sources, and adoption of green technology for all activities.

Prohibited: Commercial mining, saw mills, industries causing pollution (air, water, soil, noise etc), the establishment of major hydroelectric projects (HEP), commercial use of wood, Tourism activities like hot-air balloons over the National Park, discharge of effluents or any solid waste or production of hazardous substances.

Under regulation: Felling of trees, the establishment of hotels and resorts, commercial use of natural water, erection of electrical cables, drastic change of agriculture system, e.g. adoption of heavy technology, pesticides etc, widening of roads.