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The row over Bt Brinjal, a genetically modified version of the plant, provoked the government into imposing a moratorium on the commercial cultivation of the plant in India.  The debate has revolved around issues of economic efficacy, human health, consumer choice and farmers’ rights. Jairam Ramesh, the Minister of State for Environment and Forests, made public his views on the subject, a gist of which is given below:

  • The Genetic Engineering Approvals Committee (GEAC) report recommended commercial cultivation of Bt Brinjal but qualified it by stating that since the issue has important policy implications at the national level, the government should take a final view on the matter.
  • Most of the state governments have expressed concern and have sought to ban the use of Bt Brinjal, or all GM crops.
  • Pesticides have harmful effect on human health and Bt technology is one way of reducing pesticide use.  However, other routes such as non-pesticide pest management can be explored.  For example, about 6 lakh farmers in Andhra Pradesh practice non-pesticide pest management over an area of about 20 lakh acres.
  • Safety is a concern since the kind of tests that have been done is not specific or stringent enough to detect toxins.  Also, tests have only been carried out by the developers of the product, Maharashtra Hybrid Seeds Company Ltd. (Mahyco).  (The results of the biosafety tests are available on the GEAC website).
  • There is no large-scale public funded biotechnology effort toward agriculture, which could compete with Mahyco.  Monsanto is the main producer of Bt Brinjal, and Mahyco is owned to the extent of 26% by Monsanto.
  • While two government owned agricultural universities -- University of Agricultural Sciences, Dharwad and Tamil Nadu Agricultural University (TNAU), Coimbatore – have produced Bt Brinjal along with Mahyco, doubts have been raised about how Bt related research in these universities have been funded.
  • There are apprehensions that there will be diversity loss in the variety of Brinjal if Bt Brinjal is introduced, and this fear cannot be glossed over.
  • While Bt Cotton and Bt Brinjal are not comparable, the introduction of Bt Cotton in India has made India the second largest grower of cotton in the world.  Over 90% of cotton farmers in India cultivate Bt Cotton.  Many farmers support Bt Cotton on economic grounds but some did express doubts.
  • The Central Institute of Cotton Research, Nagpur has developed a Bt cotton variety (Bikaneri Nerma) whose seeds can be kept by farmers for planting during the next season.  The Director of the Institute while expressing support for Bt Brinjal has mentioned that resistance development is a serious issue.  Therefore, more tests that are well-designed, widely-accepted and independently conducted are necessary.
  • The GEAC process has been questioned by  Dr P.M. Bhargava, the Supreme Court nominee on GEAC.  He opposed the recommendation on the ground that all necessary tests had not been carried out before coming to a decision.  The 2006 committee of the GEAC had asked for several tests to be conducted which were not taken into account by the second expert committee.  All GEAC reports (including additional tests) of tests conducted with regard to Bt Brinjal are in the public domain.
  • There is some evidence that the GEAC not followed global regulatory norms of which India is a party.  For example, the Cartagena Protocol on Biosafety, Rio Declaration on Environment and Development etc.
  • Some international scientists have raised doubts about Bt Brinjal and the way the tests were conducted.
  • Many Indian scientists have supported commercialization of Bt Brinjal such as Dr G. Padmanabhan of the Indian Institute of Science; Dr Deepak Pental, Vice Chancellor of Delhi University; and Dr Raj Bhatnagar of the International Centre for Genetic Engineering and Biotechnology, New Delhi.  However, even they have mentioned the need for a statutory body with regulatory powers and R&D capabilities to govern all aspects of GM crops.
  • The Indian Council of Agricultural research and a number of farmer’s groups have come out in support of the move to introduce Bt Brinjal.

In order to understand the process followed by GEAC before giving the green signal to Bt Brinjal, we have made a timeline in which the plant was approved and the bodies involved in the process.

2000-2005 Scientific tests carried out by Mahyco on Bt Brinjal
2006 Mahyco submits bio-safety data to GEAC (regulatory body under the Ministry of Environment and Forests). Seeks permission for large scale trials.
  Supreme Court stops ongoing field trials of GM crops due to a PIL filed by civil society representatives.
2007 The expert committee 1 set up by GEAC, submits its report.  Recommends seven more studies on bio-safety be repeated for reconfirmation of data generated during confined multi-location trials but approves large scale trials.
  Supreme Court lifts ban on GM crop field trials subject to conditions such as isolation distance etc.
  As per GEAC direction, Indian Institute of Vegetable Research (IIVR) takes up the responsibility of large scale trails of Mahyco's Bt Brinjal trials at 10 research institutions across the country in 2007 and 11 in 2008.
2009 Jan: IIVR submits the results of the large scale trails. Due to concerns raised by several stakeholders, GEAC constitutes another expert committee to look into adequacy of biosafety data generated as well as the concerns raised by all stakeholders.
  Oct 8: Expert-committee 2 submits its report. States benefits of Bt Brinjal far outweigh the perceived and projected risks.
  Oct 14: GEAC approves the environmental release of Bt Brinjal containing the event EE1 (with one dissent note from P.M. Bhargava).
  Oct 15: Jairam Ramesh announces a nationwide consultation in January and February of 2010 pending a final decision on this issue.
2010 Jan 13 to Feb 6: Public meetings were organized on the Bt Brinjal issue. The summary of the consultations is available on the Ministry’s website.
  Many states announce ban on commercial cultivation of Bt Brinjal including Uttarakhand, Himachal Pradesh and Karnataka.
  Feb 9: Jairam Ramesh decides to halt the commercialization of Bt Brinjal.

India is one of the fastest growing aviation markets in the world.  Its domestic traffic makes up 69% of the total airline traffic in South Asia.  India’s airport capacity is expected to handle 1 billion trips annually by 2023. The Ministry of Civil Aviation is responsible for formulating national aviation policies and programmes.  Today, Lok Sabha will discuss and vote upon the budget of the Ministry of Civil Aviation. In light of this, we discuss key issues with the aviation sector in India. 

The aviation sector came under severe financial stress during the Covid-19 pandemic. After air travel was suspended in March 2020, airline operators in India reported losses worth more than Rs 19,500 crore while airports reported losses worth more than Rs 5,120 crore. However, several airline companies were under financial stress before the pandemic affected passenger travel. For instance, in the past 15 years, seventeen airlines have exited the market.  Out of those, two airlines, Air Odisha Aviation Pvt Ltd and Deccan Charters Pvt Ltd exited the market in 2020.  Air India has been reporting consistent losses over the past four years. All other major private airlines in India such as Indigo and Spice Jet faced losses in 2018-19.  

Figure 1: Operating profit/loss of major airlines in India (in Rs crore)

 image

Note: Vistara Airlines commenced operations in 2015, while Air Asia began in 2014; Negative values indicate operating loss.
Source: Unstarred Question 1812 answered on August 4, 2021, and Unstarred Question 1127 answered on September 21, 2020; Rajya Sabha; PRS.

Sale of Air India

Air India has accounted for the biggest expenditure head of the Ministry of Civil Aviation since 2011-12.  Between 2009-10 and 2020-21, the government spent Rs 1,22,542 crore on Air India through budgeted allocations.  In October 2021, the sale of Air India to Talace Ltd., which is a subsidiary of Tata Sons Pvt Ltd, was approved.  The bid for Air India was finalised at Rs 18,000 crore.  

Up to January 2020, Air India had accumulated debt worth Rs 60,000 crore.  The central government is repaying this debt in the financial year 2021-22.  After the finalisation of the sale, the government allocated roughly Rs 71,000 crore for expenses related to Air India. 

In addition to loan repayment, in 2021-22, the government will provide Air India with a fresh loan (Rs 4,500 crore) and grants (Rs 1,944 crore) to recover from the shock of Covid-19.  To pay for the medical benefits of retired employees of Air India, a recurring expense of Rs 165 crore will be borne by the central government each year.   

In 2022-23, Rs 9,260 crore is allocated towards servicing the debt of AIAHL (see Table 1). AIAHL is a Special Purpose Vehicle (SPV) formed by the government to hold the assets and liabilities of Air India while the process of its sale takes place. 

Table 1: Breakdown of expenditure on Air India (in Rs crore)

Major Head

2020-21 Actual

2021-22 RE

2022-23 BE

% change from 2021-22 RE to 2022-23 BE

Equity infusion in AIAHL

-

62,057

-

-100%

Debt servicing of AIAHL

2,184

2,217

9,260

318%

Medical benefit to retired employees

-

165

165

0%

Loans to AI

-

4,500

-

-100%

Grants for cash losses during Covid-19

-

1,944

-

-100%

Total

2,184

70,883

9,425

-87%

           

Note: BE – Budget Estimate; RE – Revised Estimate; AAI: Airports Authority of India; AIAHL – Air India Asset Holding Limited; AI – Air India. Percentage change is from RE 2021-22 to BE 2022-23. 
Source: Demands for Grants 2022-23, Ministry of Civil Aviation; PRS.

Privatisation of Airports

Airports Authority of India (AAI) is responsible for creating, upgrading, maintaining and managing civil aviation infrastructure in the country.   As on June 23, 2020, it operates and manages 137 airports in the country.   Domestic air traffic has more than doubled from around 61 million passengers in 2013-14 to around 137 million in 2019-20.  International passenger traffic has grown from 47 million in 2013-14 to around 67 million in 2019-20, registering a growth of over 6% per annum.  As a result, airports in India are witnessing rising levels of congestion.  Most major airports are operating at 85% to 120% of their handling capacity.   In response to this, the government has decided to privatise some airports to address the problem of congestion.  

AAI has leased out eight of its airports through Public Private Partnership (PPP) for operation, management and development on long term lease basis.  Six of these airports namely, Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram, and Mangaluru have been leased out to M/s Adani Enterprises Limited (AEL) for 50 years (under PPP).  The ownership of these airports remains with AAI and the operations will be back with AAI after the concession period is over.  The Standing Committee on Transport (2021) had noted that the government expects to have 24 PPP airports by 2024.  

Figure 2: Allocation towards AAI (in Rs crore)

image

Note: BE – Budget Estimate; RE – Revised Estimate; AAI – Airports Authority of India; IEBR – Internal and Extra-Budgetary Resources;
Source: Demand for Grant documents, Ministry of Civil Aviation; PRS. 

The Committee also noted a structural issue in the way airport concessions are given.  As of now, entities that bid the highest amount are given the rights to operate an airport.  This leads them to pass on the high charge to airline operators.  This system does not consider the actual cost of the services and leads to an arbitrary increase in the cost of airline operators.  The Ministry sees the role of AAI in future policy issues to include providing high quality, safe and customer-oriented airport and air navigation services.  In 2022-23, the government has allocated Rs 150 crore to AAI, which is almost ten times higher than the budget estimates of 2021-22. 

Regional Connectivity Scheme (RCS-UDAN)

The top 15 airports in the country account for about 83% of the total passenger traffic.  These airports are also close to their saturation limit, and hence the Ministry notes that there is a need to add more Tier-II and Tier-III cities to the aviation network.  The Regional Connectivity Scheme was introduced in 2016 to stimulate regional air connectivity and make air travel affordable to the masses.  The budget for this scheme is Rs 4,500 crore over five years from 2016-17 to 2021-22.   As of December 16, 2021, 46% of this amount has been released.  In 2022-23, the scheme has been allocated Rs 601 crore, which is 60% lower than the revised estimates of 2021-22 (Rs 994 crore).  

Under the scheme, airline operators are incentivised to operate on under-served routes by providing them with viability gap funding and airport fee waivers.  AAI, which is the implementing agency of this scheme, has sanctioned 948 routes to boost regional connectivity.  As of January 31, 2022, 43% of these routes have been operationalised.  As per the Ministry, lack of availability of land and creation of regional infrastructure has led to delays in the scheme.  Issues with obtaining licenses and unsustainable operation of awarded routes also contribute to the delay.  As per the Ministry, these issues, along with the setback faced due to the pandemic acted as major obstacles for the effective utilisation of funds.

Figure 3: Expenditure on Regional Connectivity Scheme (in Rs crore)

image
 Note: BE – Budget Estimate; RE – Revised Estimate; 
 Source: Demand for Grants documents, Ministry of Civil Aviation; PRS.

Potential of air cargo 

The Standing Committee on Transport (2021) had noted India’s cargo industry’s huge potential with respect to its geographical location, its growing economy, and its growth in domestic and international trade in the last decade.  In 2019-20, all Indian airports together handled 3.33 million metric tonnes (MMT) of freight.  This is much lower than the cargo handled by Hong Kong (4.5 MMT), Memphis (4.8 MMT), and Shanghai (3.7 MMT), which are the top three airports in terms of the volume of freight handled.  The Standing Committee on Transport (2021) has noted inadequate infrastructure as a major bottleneck in developing the country’s air cargo sector.  To reduce such bottleneck, it recommended the Ministry to establish dedicated cargo airports, and automate air cargo procedures and information systems to streamline redundant processes.   

The Committee has also highlighted that the Open Sky Policy enables foreign cargo carriers to freely operate cargo services to and from any airports in India having customs/immigration facilities.  They account for 90-95% of the total international cargo carried to and from the country.  On the other hand, Indian air cargo operators face discriminatory practices and regulatory impediments for operating international cargo flights in foreign countries.  The Committee urged the Ministry to provide a level-playing field for Indian air cargo operators and to ensure equal opportunities for them.  The Ministry revised the Open Sky Policy in December 2020.   Under the revised policy, the operations of foreign ad hoc and pure non-scheduled freighter charter service flights have been restricted to six airports - Bengaluru, Chennai, Delhi, Kolkata, Hyderabad, and Mumbai. 

Rising cost of Aviation Turbine Fuel

The cost of Aviation Turbine Fuel (ATF) forms around 40% of the total operating cost of airlines and impacts their financial viability.  ATF prices have been consistently rising over the past years, placing stress on the balance sheets of airline companies.  As per recent news reports, airfares are expected to rise as the conflict between Russia and Ukraine is making ATF costlier.

ATF attracts VAT which is variable across states and does not have a provision for input tax credit.  High rates of aviation fuel coupled with high VAT rates are adversely affecting airline companies.

Table 2: Expenditure on ATF by airlines over the years (in Rs crore)

Year

National Carriers

Private Domestic Airlines

2016-17

         7,286 

       10,506 

2017-18

         8,563 

       13,596 

2018-19

       11,788 

       20,662 

2019-20

       11,103 

       23,354 

2020-21

         3,047 

         7,452 

Source: Unstarred Question 2581, Rajya Sabha; PRS. 

The Ministry, in January 2020,  has reduced the tax burden on ATF by eliminating fuel throughput charges that were levied by airport operators at all airports across India.  Central excise on ATF was reduced from 14% to 11% w.e.f. October 11, 2018.  State governments have also reduced VAT/Sales Tax on ATF drawn on RCS airports to 1% or less for 10 years.  For non-RCS-UDAN operations, various state governments have reduced VAT/Sales Tax on ATF to within 5%.  The Standing Committee on Transport (2021) has recommended ATF to be included within the ambit of GST and that applicable GST should not exceed 12% on ATF with full Input Tax Credit. 

For more details, please refer to the Demand for Grants Analysis of the Ministry of Civil Aviation, 2022-23.