Greenvissage explains, Why is OPEC reducing oil production?
Once again, the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, the world’s largest oil-producing countries, have collectively decided to cut oil production by 2 million barrels per day, the largest cut since the beginning of COVID-19 pandemic. This would mean that oil production would be reduced and therefore, a short supply of petroleum products. However, the demand for the same isn’t declining, and therefore, many people chasing less quantity would mean a price rise. Globally, inflation is already at its peak and if oil prices go up further, it would mean more inflation. So why is OPEC+ doing the opposite of what it should be doing? Well, OPEC was established in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, and later expanded to include 8 more countries. Recently, 11 other major oil-producing countries including Russia have also joined as allies to form OPEC+. The OPEC+ accounts for roughly 40 per cent of the world’s crude oil and 80 per cent of the globe’s oil reserves, according to 2018 estimates. The economy of most of these countries heavily relies on the supply of oil. Therefore, OPEC was formed to coordinate and unify the petroleum policies and ensure the stabilisation of oil markets. However, it has been alleged that OPEC behaves more like a cartel, to control the supply of oil, and thereby, its price in the world market. After Russia invaded Ukraine, the prices of oil skyrocketed, benefitting these countries heavily. However, since then, the prices have been dropping sharply due to fears of a recession in Europe and reduced demands from China. Therefore, to make sure that the oil prices return to their high levels, the OPEC+ members have reduced the supply, to create an artificial short supply and thereby, protect their profits through increased prices. Within the group, only the United Arab Emirates (UAE) and Kuwait have expressed concern over reducing supply, as they had earlier announced an increase in oil output capacity after pressure from the United States. For the general public and the industrialists, the prices of petroleum products are set to rise further globally and with the same general inflation as well.
Greenvissage explains, What is NavIC and why is the Indian Government looking to replace GPS?
The use of the Global Positioning System (GPS) has become pretty common these days. From industrial use to food delivery apps, for navigation by humans to self-driving cars, GPS has become an essential part of our lives – it’s always ON on our devices, and we aren’t even looking into it. Most people think that GPS is a common technology available to all, however, to the surprise of many, GPS isn’t a publicly owned service – it is owned by the United States Department of Defense which developed it and was kind enough to allow global public usage of the same. GPS is not the only system available as Russia has its Global Navigation Satellite System (GLONASS), China has the BeiDou Navigation system and the European Union uses Galileo. India too has developed a similar system known as Navigation with Indian Constellation (NavIC) which operates using eight satellites floating in the earth’s orbit and sending electronic magnetic signals through space. Unlike GPS which gives precise locations up to 20-30 metres, NavIC gives more positional accuracy up to 5 metres as it sends two bands of electromagnetic signals where the second signal helps to provide more precision. The reason why GPS is more popular is that it is a global system providing details of navigation on the entire globe while NavIC is a regional navigation system and is limited to Indian landmass. Besides, NavIC has been operational for only four years, now. However, the Indian government is pushing to make NavIC mandatory in phones from January 2023 which means NavIC could soon be in everyone’s pocket. Mobile phone companies are not much happy with the decision as it would mean developing new chips, new antennas and radio components compatible with the NavIC system, and also the one-year timeline to adjust isn’t reasonable. The Government has its reasons to promote NavIC instead of GPS. The NavIC project was approved in 2006 because, during the Kargil War 1999, the global navigation satellite systems could have helped India in the war, however, the United States declined to provide the same. Adopting the NavIC system would reduce India’s dependency on the United States and further the goal of Aatmanirbhar Bharat.
Greenvissage explains, How did the PM Kisan Yojana turn into a 4,000 crore scam?
In February 2019, right before the General Elections, the government launched a new scheme called ‘PM Kisan Samman Nidhi Yojana (PM Kisan)’ to support farmers and offload some of their financial burdens. Under this heavily publicized scheme, the farmers are eligible to receive INR 6,000 per year, directly into their bank accounts. The direct credit into the bank account meant no middlemen, no bribery and no other hassles for the farmers in receiving what they were eligible to receive. For eligibility and distribution, a system was developed where farmers could self-register and the state officials were asked to validate the data. However, the news of fake farmers began to emerge rather quickly and the Government found various dubious entries in the database. Following an investigation, the Government found that the state of Uttar Pradesh had 21 lakh fake farmers, Assam had 8.35 lakh fake farmers who siphoned off INR 558 crores, Tamil Nadu had 6.97 lakh fake farmers who siphoned off INR 321 crores and Karnataka had 4 lakh fake farmers who siphoned off INR 440 crores. The scamsters used publicly available Aadhar numbers and created fake Aadhar cards to open bank accounts. Thereafter, they self-registered on the PM Kisan portal with dubious land record details, and surprisingly, the registrations were approved. Shockingly, the names of Lord Hanuman, actor Riteish Deshmukh, and ISI spy Mehboob Rajpoot were also used for registering the fake farmers and the officials couldn’t spot the anomaly or rather were paid to turn a blind eye. The officials were given daily targets for registration (since the elections were around the corner, and huge numbers were important) and therefore, the officials didn’t dive into details and kept hitting the daily target. Further, in Assam, the farmers were also permitted to only provide bank details as a unique ID, instead of Aadhar. So, people smartly opened multiple bank accounts and received the money multiple times. In some cases, the Government has also found that people had hacked into the system and registered themselves as Government officials, and thereafter, approved the fake profiles registered. As a result, an estimated INR 4,000 crores of taxpayers’ money landed in the wrong hands, instead of those who were eligible to receive it.
Greenvissage explains, Why are banks levying heavy fees on rent payments through credit cards?
Apps like Cred, PayTM and NoBroker have become popular for paying rent in recent times, as they allow paying rent using credit cards. When you pay rent through these apps, using a credit card, the apps charge anywhere between 1-2% extra as facilitation charges which it, in turn, pays to the banks and payment gateways. Usually, people may opt for other means instead of paying extra, some people have found it worth paying. This is because credit cards offer exciting cashback, reward points and benefits. Also, there are annual spending requirements to avoid annual charges and thus, paying rent through credit card, also helps towards the same. Not to forget, credit cards offer a 30-45 days free credit period for the funds. The rent payment apps are also offering further incentives to promote such transactions. So, it is beneficial enough for the credit card holder, even if they have to pay 1-2% extra. However, recently, HDFC Bank has levied several restrictions on rewards points earned for such rent transactions and RBL Bank has restricted the number of such transactions allowed through the credit card. ICICI Bank has gone a step further to charge a 1% fee on all rental payments. The restrictions and fees have surprised credit cardholders as the banks are already earning enough on these transactions through the MDR charges (Merchant Discount Rate). However, there are some caveats here. A credit card was originally designed to incentivize consumers to spend more while transacting with merchants such as shops, stores, websites, e-commerce portals, etc. However, when people are paying rent using a credit card, they are not transacting with a merchant, but instead with a landlord. And this is something that banks aren’t comfortable with. You might be aware that withdrawing money from an ATM using a credit card carries about 3% extra charges, without any grace period and reward points. Banks realise that you desperately need the money and hence, the cash withdrawal using a credit card. Therefore, such cash advances are treated like personal loans. However, when paying rent on these apps, using a credit card, people are still withdrawing cash, but in a roundabout manner, without the restrictions and charges. Someone can simply pretend to be a landlord, receive the payment, withdraw the cash using a debit card and hand it over back to you. So, a credit card becomes a free personal loan for 30-45 days. Since the platforms don’t ask for a rental agreement, it’s all a pretty cakewalk. Banks have now finally woken up to these risks and therefore, the restrictions. Soon most banks will also follow the lead and levy heavy charges to ensure such transactions aren’t worth doing or at least earn the bank decent fees from such transactions.
