AAPI: February 2018

LISBON, 20th February 2018

Index of this Newsletter

INDIA

INDIA & THE WORLD

21.1. Why not zero-rate exports?
21.2. External sector prospects promising with export growth, world trade rising
22. 50 years of Beatles in India: How George Harrison brought Indian classical music
23. WEF: India Inc pitches for ‘statesman’ position for India
24. Africa’s delayed arrival
25. American chicken legs set to walk into India

* * *

LISBON, 20th February 2018

NEWSLETTER, 20-II-2018

INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

1.1. Budget 2018: World's largest government-funded health care programme

PTI, Feb. 02, 2018

New Delhi: The Centre today announced the world's largest government-funded health care programme, aimed at benefiting 10 crore poor families by providing coverage of up to Rs 5 lakh per family per year for secondary and tertiary care hospitalisation.

The National Health Protection Scheme, announced by Finance Minister Arun Jaitley in his Budget for 2018- 19, will cover approximately 50 crore people.

Jaitley announced two major initiatives -- the National Health Protection Scheme and the move to bring health care system closer to the homes through 1.5 lakh health and wellness centres, as part of the 'Ayushman Bharat' programme aimed at making path breaking interventions to address health holistically, in the primary, secondary and tertiary care system.

The two "far-reaching" initiatives under Ayushman Bharat will build a New India 2022 and ensure enhanced productivity, well-being and avert wage loss and impoverishment, he said.

"These schemes will also generate lakhs of jobs, particularly for women. The government is steadily but surely progressing towards the goal of Universal Health Coverage," he said.

Presenting his fifth straight budget in the Lok Sabha, Jaitley said the government will set up 24 new government medical colleges and hospitals by upgrading existing district hospitals in the country.

Noting that only a "swasth Bharat" (healthy India) can be a "samriddha Bharat" (prosperous India), Jaitley said India cannot realise its demographic dividend without its citizens being healthy.

The budget allocation for the Health Ministry for 2018-19 is Rs 52,800.00 crore in comparison to last year's allocation of Rs 47,352.51 crore, an increase of 5,448 crore or about 11.5 per cent. The revised allocation for 2017-2018 was Rs 51,550.85.

The allocation in the last budget had seen an increase of 27.76 per cent from 2016-17.

The allocation for the Department of Health Research for 2018-19 was raised to Rs 1,800.00 crore from the last budget's allocation of Rs 1,500.00 crore, an increase of Rs 300 crore.

The Finance Minister said that the estimated budgetary expenditure on health, education and social protection for 2018-19 is Rs 1.38 lakh crore against the estimated expenditure of Rs 1.22 lakh crore in 2017-18.

A top official of the health ministry said that an allocation of Rs 2,000 crore has been given to Rashtriya Swasthya Bima Yojna (RSBY) through which the the money for the National Health Protection Scheme will be initially channelised.

For strengthening the health system under the National Rural Health Mission (NRHM), an allocation of Rs 9,752.82 crore has been made.

Under the flexible pool for non communicable diseases, injury and trauma, an allocation of Rs 1,004.67 crore has been made.

While an allocation of Rs 452.25 crore has been made for the upgradation of state government medical colleges (PG seats) at the district hospitals, Rs 794.07 crore has been allocated for strengthening of government medical colleges (UG seats) and the central government health institutions.

Jaitley also committed Rs 1,200 crore for the National Health Policy, 2017, under which 1.5 lakh health and wellness centres will bring health care system closer to the homes of people.

The government also decided to allocate an additional Rs 600 crore to provide nutritional support to all tuberculosis patients at the rate of Rs 500 per 10-month cycle till the duration of the treatment.

Jaitley said that the budget is guided by the mission to strengthen agriculture, rural development, health, education, employment, MSME and infrastructure sectors.

After the budget, Health Minister J P Nadda tweeted, "I thank Hon' PM @narendramodi ji & FM @arunjaitley ji for giving us a visionary budget with specific focus on Agriculture, employment generation, better healthcare and infrastructure development. #NewIndiaBudget".

"Modi Government has launched a flagship National Health Protection Scheme in #NewIndiaBudget to cover 10 crore poor & vulnerable families, this is approximately 50 crore beneficiaries by providing upto Rs 5 lakh per family per year for medical reimbursements. #Budget2018," he said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

1.2. A pressing need for a national urban policy

Livemint, 12 Feb. 2018, Sunita Sanghi and Devashish Dhar

Urbanization in the 21st century is a complex affair with many stakeholders—and it requires a holistic framework

India is in the midst of a major urbanization boom. As per Census 2011, 377 million Indians comprising 31.1% of the total population lived in urban areas. This is estimated to have risen to 420 million in 2015 (UN-Habitat “World Cities Report 2016”). India’s level of urbanization is lower than its peer group of developing countries: China (45%), Indonesia (54%), Mexico (78%) and Brazil (87%). Going ahead, by 2030, India’s urban population is projected to increase to 600 million. However, this positive trend is also accompanied by its own unique set of issues. Indian cities face challenges in terms of deficits in infrastructure, governance and sustainability. With rapid urbanization, these problems are going to aggravate, and can cumulatively pose a challenge to India’s growth trajectory.

Keeping in mind the above challenges, the government launched the Atal Mission for Rejuvenation and Urban Transformation (Amrut)) as a step towards harnessing the agglomeration economies of the urban centres and making cities engines of growth. The mission lays emphasis on creating infrastructure, improving service delivery, making cities smarter for improved livelihood and providing for faster and integrated mobility. It envisages convergence across various initiatives such as Amrut, Smart Cities, Hriday (National Heritage City Development and Augmentation Yojana), Pradhan Mantri Awas Yojana and Swachh Bharat.

The intent is matched with a corresponding mobilization of resources. For 2018-19, the government increased the budget for the housing and urban affairs ministry by 2.8%, to Rs41,765 crore. The centre has also formulated separate policies for urban sanitation, transport, transit-oriented development and also a national mission on sustainable habitat, each with a specific mandate and vision.

But what is truly required is a comprehensive framework that takes a holistic approach to the interrelated challenges that have an impact on the growth of cities. Sustainable urban development needs to be led by the central government working closely with state and local governments.

To address this, India needs to develop its own national urban policy (NUP) as an instrument for applying a coherent set of interventions in relation to the future growth of cities, in partnership with all stakeholders. Globally, around one-third of countries have a NUP in place.

First, such a policy will outline and highlight the importance and objectives of cities. We need to update our definition of urban areas, understand the importance of cities and what we can achieve through urbanization with responsive infrastructure. India needs to fine-tune this vision in light of the aspirations of citizens, state capabilities, historical legacy, cultural context and present economic situation.

Once the vision is outlined, this national framework will also highlight the key enablers, cross-cutting principles, desired outputs and eventual outcomes. All these ingredients will further direct the policy discourse towards urban issues—which, unfortunately, have remained on the back burner for the major part of independent India’s history.

Second, urbanization in India is a complex issue, with the majority of city-related issues being state subjects. States would have to take the lead in order to make cities vibrant economic centres. However, there is a need to build adequate capacities at the state/urban local bodies level to prepare cities for future challenges. The NUP would set the common minimum agenda, involving participation of all stakeholders.

For instance, the Australian national urban policy document identifies objectives of productivity, sustainability, livability and governance as key agenda drivers for its cities. In India, such agenda setting would encourage programmes and policies to be integrated and aim at operationalizing the spirit of the 74th Amendment. The importance of such a common minimum agenda cannot be overstated. It is required to get the entire ecology of urban-related stakeholders on the same page as a starting point.

Third, the world of the 21st century is substantially more complex than the traditional urban world of the 20th century when citizens, government and civil society were, to a large extent, the only stakeholders. The present urban scenario has new stakeholders who are more connected than ever.

Upping the complexity, they may also not be physically located in the cities of operation. Various aggregators like Uber and Amazon; distance learning universities; the active participation of non-resident Indians; service aggregators such as UrbanClap present a complex web of interdependent and interconnected stakeholders. A NUP framework would recognize all these stakeholders and prevent cities from seeing through these participants. Once their presence is acknowledged, states and cities would be better placed to develop the right processes and systems to utilize the potential of these stakeholders.

A NUP will provide a framework for states, which would be encouraged and nudged to adopt a state version of this policy. This should have network effects that would change and define the paradigm of urban development in 21st century India. This is a prerequisite, obviously, for leveraging urbanization to the fullest extent and with the greatest efficiency. Addressing India’s current urban woes without such a stepping stone, on the other hand, will be considerably more difficult.

Sunita Sanghi and Devashish Dhar are, respectively, senior adviser and public policy specialist at NITI Aayog. Views expressed are personal.

2.1. Affordable 186,777 Houses Sanctioned for Urban Poor Under Pmay (Urban)

Press Information Bureau, Feb. 09, 2018

Rs.11,169 cr investment approved with central assistance of rs.2,797 cr Haryana gets 53,290 houses, Tamil Nadu-40,623, Karnataka-32,656, Gujarat-15,584, Maharashtra-12,123, Bihar-11,411, Kerala-9,461, Uttarakhand-6,226, Odisha-5,133

New Delhi: Ministry of Housing & UrbanAffairshas approved the construction of 1,86,777more affordable houses for the benefit of urban poor under Pradhan Mantri Awas Yojana (Urban) with an investment of Rs.11,169crwith central assistance of Rs. 2,797 cr. The approval was given in the 30th meeting of the Central Sanctioning and Monitoring Committee in its meeting held here yesterday.

Haryana has been sanctioned 53,290 houses in 38 cities and towns with an investment of Rs.4,322cr with central assistance of Rs.799 cr. Tamil Nadu got 40,623 houses in 65 cities and towns with an investment of Rs.2,314cr and central assistance of Rs.609 cr. Karnataka has been sanctioned 32,656 affordable houses in 95 cities with an investment of Rs.1,461cr and central assistance of Rs.490 cr.Gujarat has been sanctioned 15,584 houses in 45 cities and towns with an investment of Rs. 946cr with central assistance of Rs.234 cr.

Maharashtra has been sanctioned 12,123 houses in 13 cities and towns with an investment of Rs.868cr with central assistance of Rs.182 cr. Kerala has been sanctioned 9,461 houses in 52 cities with an investment of Rs.284 cr. with central assistance of Rs.142 crores.Uttarakhand has been sanctioned 6,226 houses in 57 cities and towns with an investment of Rs.258 cr. with central assistance of Rs.93 cr. Orissa got 5,133 houses in 26 cities and towns with an investment of Rs.156 cr. with central assistance of Rs.77 cr.

The approval accorded was for construction of 1,08,095 new houses under the Beneficiary Led Construction (BLC) component of PMAY (Urban), building, 26,672 in Tamil Nadu, 16,630 in Karnataka, 13,663 houses in Haryana, 11,411 in Bihar,9,461 in Kerala, 8,768 in Gujarat, 7,088 in Maharashtra, 5,698 in Uttarakhand and 5,133 houses in OdishaA total 36,056 in Haryana, 16,026 in Karnataka, 13,951 in Tamil Nadu, 6,246 in Gujarat, 5,035 in Maharashtra, 528 in Uttarakhand -under Affordable Housing in Partnership (AHP) component.

With the above proposed houses, cumulative houses under PMAY(U) would become 37,83,392 after final approval from CSMC. Further after subsuming projects of RAY scheme the total number of houses being funded under PMAY(Urban) would be 39,25,240 houses.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

2.2. Wind power tariffs stay near record low of Rs2.44/unit in SECI auction

Livemint, 15 Feb. 2018, Utpal Bhaskar

Torrent Power, ReNew Power, Green Infra and Inox Wind bid Rs2.44 per kWh each to win contracts in SECI’s wind power auction

The latest wind power auction conducted by Solar Energy Corporation of India (SECI) underscores growing investor interest in wind energy projects as costs of turbine generators decline amid a favourable policy environment. Graphic: Paras Jain/Mint

New Delhi: India’s wind power tariffs remained near a record low in an auction conducted by the state-run Solar Energy Corporation of India (SECI) which ended late Tuesday evening, a person aware of the development said.

Bidders quoted wind power tariffs as low as Rs2.44 per unit for 2 gigawatts (GW) of wind power contracts, the person said, requesting anonymity, adding that this was India’s largest wind capacity auction.

Torrent Power Ltd, ReNew Power Ventures Pvt. Ltd, Green Infra Wind Energy Ltd and Inox Wind Infrastructure Services Ltd bid Rs2.44 per kilowatt hour (kWh) each to win contracts for 499.80 megawatts (MW), 400MW, 300MW and 200MW, respectively. Adani Green Energy (MP) Ltd, Saudi Arabia’s Alfanar and Betam Wind Energy Pvt. Ltd bid Rs2.45 per unit to win contracts for 250MW, 300MW and 50.2MW, respectively.

The latest auction underscores growing investor interest in wind energy projects as costs of turbine generators decline amid a favourable policy environment. Wind power tariffs had plummeted to a record low Rs2.43 per kWh at an auction conducted by state-run Gujarat Urja Vikas Nigam Ltd in December, beating the record low solar tariff of Rs2.44 per unit registered in May.

“Discovery of low wind tariffs is a function of the existing policy, regulatory, market, technological, financial and demand context, along with the bidding structure that the procurer provides,” said Sambitosh Mohapatra, partner, advisory, power and utilities, PwC India. “Investors have their own risk return appetite and strategic intent for a particular bid.”

Torrent Power’s 499.80MW contract win is the highest among all bidders in the auction, the company said in a statement.

Queries emailed to spokespersons for ReNew Power, Inox Wind and Adani Group on Wednesday morning remained unanswered. Alfanar and Betam Wind couldn’t be reached for comments.

A spokesperson for Singapore-based Sembcorp Industries Ltd, which owns Green Infra, said in an emailed response that with this 300MW contract, “Sembcorp has secured approximately 800MW from Indian central wind auctions, the largest among industry participants”.

Renewable power will help India meet its electricity demand as well as reduce pollution.

It will also help the country meet its ambitious clean energy target of 175GW by 2022.

The aggressive bids in the latest auction come at a time when concerns have been expressed over some states looking to renege on their offtake commitments for projects awarded at a comparatively higher tariff. This concern was flagged in the Economic Survey presented last month. The survey said that India’s quest for low clean energy tariffs “possibly contributed” to demands for renegotiation of the already signed power purchase agreements. This, in turn, may result in legal battles and banks becoming wary of lending to such projects, the survey cautioned.

Tuesday’s tariffs are lower than the average rate of power generated by coal-fuelled projects of India’s largest power generation utility, NTPC Ltd, at Rs3.20 per unit. The price gap between electricity generated from thermal, solar and wind projects has been bridged as costs of solar modules and wind turbine generators declined by 80% and 20%, respectively, over the past five years.

While solar power tariffs rose to Rs2.65 per kWh at an auction conducted by the Gujarat government in September, last December’s auctions conducted by Solar Energy Corp. threw up winning bids of Rs2.47 and Rs2.48 per unit.

India has lined up an ambitious plan to award 23GW wind power contracts by March 2020. While 100GW of the government’s targeted renewable energy capacity is to come from solar projects by 2022, 60GW is expected to be generated from wind power plants.

3.1. Decentralized urban management

Livemint, 14 Feb. 2018, Rahul Matthan

All it needs is for us to let go of our preconceptions about how our cities should be managed, and embrace a decentralized future

When electricity first began to be used in the US, generating systems were built in order to power and illuminate mines, factories and other commercial establishments. These were “private” power plants built on site to meet the specific energy requirements of a business. In those days, only the very wealthy could afford to have their homes powered by electricity.

There was no standardization across all the various companies manufacturing these private generators. As a result, every power plant operated at different voltages or at distinct rates of oscillation depending on whether they were DC or AC systems.

In the 1890s, Chicago alone was home to 40 different electric companies, each offering power at 100 to 2,000 volts with their own system of wires crisscrossing overhead across town.

It was only when America’s first large-scale power plant was built at the Niagara Falls that thought was given to standardizing the output. After considerable debate, it was finally determined that the power generated by the Niagara Falls station would be transmitted over point-to-point high-tension wires using a two-phase alternating current.

The town of Buffalo transformed itself to accept the power being transmitted by the Niagara Falls station, conforming all electricity outlets to the new standards. It was immediately transformed into a hub for manufacturing, becoming the first place in the US to profitably manufacture aluminium and as a result was instrumental in ushering in the automobile age. Thanks to the success of Buffalo, the centralized power generation model was adopted widely and eventually became the basis for electricity supply and distribution the world over.

Today, the world runs on centralized electricity grids made up of large power- generating stations from which electricity is transmitted across large distances using point-to-point high-voltage wires and further distributed within towns and cities using networked lower-voltage delivery systems, standardized at 110 or 220 volts.

Of late, this model has begun to come under pressure. Thanks to the falling cost of renewable energy, there’s been a growth in rooftop solar installations that are capable of contributing power to the grid after meeting household requirements. At the same time, our consumption patterns have changed as rapid urbanization and the increased use of new technology has begun to place new demands on the grid.

All of this has affected our traditional patterns of supply and demand and is exerting new pressures on our creaking infrastructure. The century-old system that was designed to operate in a command and control environment is struggling to cope with the peaks and troughs of distributed demand and supply.

It is becoming increasingly evident that we will need a new model to deal with our energy future—a model that will need to encompass localized power generation coupled with energy storage solutions that will allow energy to be smartly wheeled across mini-grids established in small neighbourhoods. It will call for the deployment of smart meters and Internet of Things devices to better manage consumption by accurately predicting peak loads. To do that it will need to shrug off our dependence on a centralized grid and embrace decentralization.

The challenge of decentralization and distributed management is affecting other utilities as well. Urban water supply has always been centrally managed, supplied to our homes and offices from reservoirs through a network of underground pipes. In most cities in India, these pipes are over a century old.

Given the rapid pace of urbanization, they are falling apart under the pressure of coping with the demands of modern cities. As a result, residents in most Indian municipalities receive intermittent water supply— sometimes only once every few days.

This has forced them to take matters into their own hands, digging bore wells to directly tap into ground water to meet their requirements. Thanks to poorly coordinated ground water extraction, our water tables have begun to dry up—a phenomenon that will inevitably have long- term consequences.

As our urban aquifers dry up, we have begun to rely on water tankers, further exacerbating the problem by extending it to the outskirts of our cities.

Here too, there is merit in finding distributed data-driven solutions. By systematically deploying smart water meters and sensors, it should be possible to dynamically assess water consumption patterns at different times of the day and year. Satellite data and ground sensors should be able to give us insights into the availability of groundwater. When coupled with global positioning system-enabled tanker fleets, this should make it possible for us to efficiently move water from areas with abundant supply to those that need it.

If we can intelligently gather information about our urban water requirements, we should be able to correlate that with availability, dramatically improving efficiencies to the point where we should be able to meet our demand from the available supply.

Inasmuch as our utilities were built on a command and control style of administration, their future lies in distributed management. The internet of things and abundance of a variety of sensors makes this possible in the here and now.

All it needs is for us to let go of our preconceptions about how our cities should be managed, and embrace a decentralized future.

Rahul Matthan is a partner at Trilegal. Ex Machina is a column on technology, law and everything in between. His Twitter handle is @matthan.

3.2. Environment Ministry takes up new plan for rejuvenation of major river water systems

Press Information Bureau, Jan. 25, 2018

New Delhi: Union Environment Ministry has taken up a new strategy for conservation and rejuvenation of major river water systems. The new strategy takes into account the entire river basin, which is contributing its flow to the particular river stretch for conservation. The decision was taken at a meeting chaired by Union Minister for Environment, Forest and Climate Change, Science & Technology, Dr. Harsh Vardhan, in New Delhi today.

“The present strategy for conservation of rivers is limited only to tackling pollution load from domestic wastewater and regulation of industrial pollution,” Dr. Harsh Vardhan said. “The new approach is a holistic one for rejuvenation of rivers, wherein water management and environment management are taken together for implementation to restore the lost ecology of the polluted stretches of the rivers”, he added.

Dr. Harsh Vardhan also took a decision to call a meeting of all five states at the earliest and work out an implementation plan for Ganga river basin at the earliest and also rope in the resources from CAMPA fund. The Central Pollution Control Board had identified 302 river stretches on 275 rivers in the country as polluted, based on Bio-Chemical Oxygen Demand, a critical parameter of water quality.

The Minister said that a tentative action plan has been drawn up, “To begin with, we need to try it out on a few stretches in the country covering sub-basin or catchment area of river”, Dr. Harsh Vardhan stated. He pointed out that independent institutions like IITs will be entrusted with the study for preparation and finalisation of river basin management and rejuvenation plan for nine selected stretches.

Since sewage into the selected river stretches is the most significant polluter, projects to treat it will be taken up immediately. Dr. Harsh Vardhan emphasized that under the conservation plans, sewage treatment will be made mandatory along the identified stretches. Since enforcement of provisions of the Water Act and Environment (Protection) Act comes under the local bodies in respective states, the Environment Ministry plans to set up a sewage management system with private participation.

Some of the other actions include watershed management, construction of small check-dams along the catchment area, scientific assessment of quantum of environmental flow in each stretch, rejuvenation of lakes and wetlands along the river basin and protection of floodplains from encroachment.

A detailed presentation on DPR on Forestry Interventions for Ganga was made by Director, Forest Research Institute. Appreciating the efforts of the FRI, Dr. Harsh Vardhan said that it is a comprehensive document covering all aspects of forestry interventions required, including past and present status of Ganga river and its environmental peculiarities. The project report prepared by FRI for Catchment area Treatment of Ganga river covers five states – Uttarakhand, Uttar Pradesh, Bihar, Jharkhand and West Bengal has an estimated cost of Rs. 2500 crore approximately. The need of the hour is to prepare a project for the catchments of all important rivers of the country and implement the same over a period of next 10 years. The ultimate mission is to make all the rivers clean and ensure adequate water in the river to flow.

The meeting was attended by Director General (Forest) and Special Secretary, Dr. Siddhant Das, Additional Secretary, MoEF&CC, Shri A.K Mehta and other senior officers of the Ministry.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

4.1. Economic Survey

BusinessLine, 29 Jan. 2018, Remya Nair

The Economic Survey, first to be presented after India rolled out GST in July 2017, says that over 10 million taxpayers have been registered under the new tax regime

New Delhi: India’s indirect taxpayer base has increased by more than 50% with the implementation of the goods and services tax (GST), the formal sector is bigger than currently estimated and the country’s internal trade is around 60% of gross domestic product (GDP), the Economic Survey for 2017-18 said, basing its findings on data and trends from GST.

The Economic Survey is the first to be presented after India rolled out GST last July.

More than 10 million taxpayers have registered under GST, as against 6.5 million registered under the old tax regime, but after discounting for multiple counting. With the tax registration, return filing and tax payment process completely online under GST, policymakers have a new database to look for trends about firms and consumers.

Further, the direct taxpayer base has increased by around 1.8 million due to demonetization and GST, the Survey said.

The Survey estimates the size of the formal sector—firms either offering a social security net or registered under GST—is 13% of total firms in the private non-farm sector but accounts for 93% of total turnover.

The Survey estimates that only 0.6% of the firms can be categorized as hard core formal sector—those that are registered under GST and provide a social security net to employees. These firms, however, account for 38% of total turnover, 87% of exports, and 63% of the GST liability. On the other hand, 87% of firms, representing 21% of total turnover, are purely informal, outside both the tax and social security nets, the survey said. Around 12% of firms, accounting for 41% of turnover, 13% of exports, and 37% of tax liabilities are in the tax net but not the social security net.

It points out that the formal sector, especially formal, non-farm payroll firms, is substantially greater than currently believed.

“Formality defined in terms of social security provision yields an estimate of formal sector payroll of about 31% of the non-agricultural work force; formality defined in terms of being part of the GST net suggests a formal sector payroll share of 53%,” the Survey said.

N.R. Bhanumurthy, a professor at the National Institute of Public Finance and Policy, said GST is a powerful tool to increase the size of the formal sector. “GST should increase tax buoyancy both on direct and indirect tax side. However, we should be careful while drawing conclusions from this preliminary data as we are yet to complete one full year of GST,” he said.

The Survey notes that the distribution of the GST base among states is closely linked to the size of their economies, allaying fears of major producing states such as Gujarat, Maharashtra and Tamil Nadu that the shift to GST will undermine their tax base.

State-wise share of the GST base shows Maharashtra has the highest share of taxpayer base at 16%, followed by Tamil Nadu at 10%, Karnataka at 9%, Uttar Pradesh at 7% and Gujarat at 6%.

Also, a profile of the new filers shows the bulk of transactions—nearly two-third—are business-to-business transactions and exports, and only 17% are business-to-consumer transactions

Further, voluntary compliance has seen a surge with about 1.7 million registrants who were below the threshold limit and, hence, not required to register registering under GST. With state-wise export classification now possible, the Survey says new data on global exports of states suggests a strong correlation between export performance and states’ standard of living.

4.2. The economic challenges of 2018

Livemint, 19 Jan. 2018, Niranjan Rajadhyaksha

The economic stability that has been achieved after the run on the rupee in mid-2013 does not seem to be at risk — for now

Take a look around. Global crude oil prices have climbed to around $70 a barrel. This is higher than what most Indian policy makers seem to have assumed in their models. US interest rates have also begun to tighten. The yield on the two-year US treasury note is now at its highest level since September 2008, the month when Lehman Brothers collapsed. The yield curve has become steeper on expectations of higher inflation. The underlying reason for higher oil prices and US bond yields is that the global economy is in the midst of its best synchronized expansion since 2011.

The Indian data is also very different from what it was six months ago. Economic growth has recovered from the depths it plunged to after the demonetisation shock. Most forecasters expect the Indian economy to accelerate further in 2018. Consumer price inflation has been climbing every month since it touched a low in June, and the latest number is close to the higher end of the acceptable range. Headline inflation has increased by 3.67 percentage points in the six months since June 2017.

The trade deficit is also widening, with oil being the most important contributor but other factors such as higher imports of gold and consumer electronics also playing a part. And finance minister Arun Jaitley will announce the final budget of the Narendra Modi government on 1 February; it seems very likely that the fiscal deficit will be slightly higher than target.

The decline in global oil prices boosted the net incomes of Indians, though the Modi government quite sensibly decided to use the windfall to reduce its fiscal deficit rather than leave it in the hands of consumers. The process could reverse in case oil prices continue to go up.

Is all this a cause for worry? The economic stability that has been achieved after the run on the rupee in mid- 2013 does not seem to be at risk—for now.

Consider the example of inflation. The recent rise can at least partly be explained by the low base of the corresponding months a year ago, and it is likely that monthly inflation will remain elevated till June. It would be sensible to look at the average inflation for the year rather than the noisy monthly data, especially in these times when the economy was hit by two successive policy shocks. So, the December 2017 inflation number (5.21%) is not a reason for sharp interest rate hikes just as the June 2017 number (1.54%) was not a reason for a sharp reduction in interest rates. An inflation-targeting central bank would normally look past temporary blips as long as underlying inflation expectations are stable.

Untangling the effects of higher global oil prices on Indian economic growth is not an easy task. There are two research papers that are worth highlighting here.

First, a working paper published by the International Monetary Fund in December 2016, The Differential Effects Of Oil Demand And Supply Shocks On The Global Economy, shows that a lot depends on whether movements in global oil prices are dominated by changes in demand or changes in supply. The economic consequences of the two are quite different from each other in the case of an oil importer such as India.

A surge in oil prices driven by supply constraints typically hurts economic activity over a long period of time. The impact is quite different in case the increase in oil prices is primarily because of higher demand. Oil importers typically experience a temporary increase in output as well as higher inflation over the longer term. In other words, a lot depends on whether the current increase in global oil prices is being driven by higher demand or lower supply (though the shale revolution makes the former a more likely candidate).

Second, Harvard University economist Gita Gopinath showed in a 2007 paper that she wrote with Mark Aguiar that emerging markets such as India have more volatile economic growth than the developed economies. In other words, the business cycles in emerging markets are different from those in the developed economies. The two economists show how “shocks to trend growth are the primary source of fluctuations in these markets as opposed to transitory fluctuations around the trend”. One of the factors they explicitly focus on is countercyclical current accounts. The gist of the argument is to be found in the second half of the title itself: Emerging Market Business Cycles: The Cycle Is The Trend.

India is nowhere near the dangerous place it was in 2013, in terms of the standard indicators of economic stability such as the fiscal deficit, the current account deficit and consumer inflation. Yet, the year ahead is likely to see some deterioration in public finances, a larger current account deficit that needs to be funded with capital inflows and higher inflation as the output gap closes. Indian macroeconomic policy always gets complicated when global oil prices increase steeply.

The economy in 2018 will thus look very different from the one in 2017. And all this at a time when potential growth could have slipped to as low as 6.7%, as credit rating agency Fitch recently estimated. In other words, the Indian economy could begin to heat up quickly—with higher inflation and a bigger trade deficit as the main signals—unless private sector investment picks up soon to increase productive capacity.

The coming quarters will thus test the macroeconomic policy framework that has been in place since the end of 2013.

Niranjan Rajadhyaksha is executive editor of Mint.

5.1. Ladies Involve yourself in Money management of family, irrespective one works or not

MINT, Feb. 2018

The auditorium was packed. Girls were sitting on the floor in the aisles. I was visiting Banasthali University, 75 km south of Jaipur, to speak to the postgraduate management and journalism students. About 250 curious pairs of eyes were bright with anticipation and I was hoping that I don’t let them down.

For those who don’t know, a quick update on this unique university. The journey of how this university came to be is quite a story. In 1927, the Jaipur state secretary in the home and foreign department, Pandit Hiralal Shastri, left his powerful job to relocate to a remote village (then) called Banthali to work on rural reconstruction. His friends said he’d gone half mad to do this. Who gives up power, prestige and money like this? But he moved himself and his family to the village. One day he found his 11-year-old daughter, Shanta, teaching the village kids under a tree. Sometime later she asked him for a room so that she could teach them without fear of storms or wild animals. He told her—you build the bricks and I will build the room.

He forgot about the story thinking that the child will move on to other things. Three months later she showed him 300 handmade bricks she and the village kids had made. I saw one of the bricks that the

institution has preserved. To touch the brick made by a determined young lady almost a 100 years ago was surreal. Shastri built that room and decided to give his daughter the best education he could manage.

Music and martial art classes were organized. There is a painting of young Shanta in a sari, wielding a lathi and practising in one of the preserved rooms. When you remember that this was in rural Rajasthan in the 1920s when girls were married off as soon as they could be, the image of the lathi-wielding girls just adds to the amazement.

But Shastri’s dream was shattered when the child died of a fever at age 12. He was devastated and the story goes that he did not come out of his room for days. His wife, with no formal education, then counselled him and asked him why he didn’t do something to educate other Shantas? He was moved by the idea and decided to start a girls’ residential school in the village. People then said he’d gone fully mad. Who would send their daughters to school and that too in this remote area? Well, 90 years later Banasthali Vidyapith is the world’s largest residential university for girls with over 16,000 students studying from elementary school to postgraduate courses. It was fantastic to see six small aircraft in a hangar in their fully licenced aviation school. The university boasts of a stable with 70 horses for the girls, a state-of-the-art robotics lab where the young women learn the internet of things, an incubation centre that hopes to produce women entrepreneurs and postgraduate programmes ranging from philosophy to pharmacy.

When I got the invitation from the University to speak to the girls, I chose to talk about money management for one key reason. These postgraduate girls were about to enter one of the toughest phases of their lives. The ages between 25 to 35 are particularly difficult for women who work outside the home. The career is still new and needs attention. Both marriage and kids usually come around this time for most Indian women. Trying to keep it all together is not easy and to hand over at least that one job to the man—of money management— seems like a no-brainer. But this decision can backfire in some cases, because handing over control of money is letting go of power within the household. The ability to manage money is a second-order problem,

we need to first solve the first-order problem of the social superstructure in which most of India lives, with men firmly in control of the money and assets. More than the technique of managing money, women must first understand why they need to take charge. They must unlearn the subtle social messaging about managing money being a man’s job. If women can fly planes, they can surely manage their money.

A good way to build that understanding is to read books and a part of my reading list for them included two must-have books. The first, Own It: Leadership Lessons from Women Who Do by Aparna Jain must be required reading for women who will be a part of the corporate life soon. In fact, when I read out a passage from Aparna’s book about a woman who earns Rs35 lakh a year and hands over the money to the husband, needs his permission to buy a pair of chappals and needs to be back home by 8 pm to make hot chappatis for the family and therefore can’t stay back for work, the indignation and horror in the room was palpable. The second book is Who, Me Poor? How India’s Youth are Living in Urban Poverty to Make it Big by Gayatri Jayaraman, who documents the price of peer pressure in India’s big cities, specially on first-time migrants from smaller towns. Lack of a practical financial education holds back most young people from using the money judiciously when they start earning. For women, this lack of training and understanding can be devastating in situations of domestic disharmony, control within the marital home, in situations of a divorce or death. Being in control of your financial life is a central part of the push towards gender equality. I hope that the young women of Banasthali (and all other young women about to join the workforce) will fly high on this metric as well.

- AGRICULTURE, FISHING & RURAL DEVELOPMENT

6.1. Killing farming through subsidies

BusinessLine, 29 Jan. 2018, Rajalakshmi Nirmal

Price and procurement support has resulted in excess focus on water-intensive crops resulting in depletion of ground water

One takeaway from the Survey is that over the years, the powers in charge have ruined the farm sector with wrong policies. While populist measures such as hike in MSP, power subsidy and higher farm credit have won votes, they have not done any good to farmers. Sample these numbers from the Survey:

The real agricultural growth since 1960 has averaged about 2.8 per cent.

The amount of credit extended to farmers has gone up from ₹4.1 lakh crore in 2009-10 to ₹9.46 lakh crore in 2016-17. But, much of this has gone towards short term credit shows RBI data because of interest subvention. The share of long-term loans as a percentage of total loans has declined from 75 per cent in 1990-91 to 39 per cent in 2011-12.

In 2017-18, a total of ₹20,339 crore was set aside to meet obligations arising from interest subvention being provided to the farmers, adds the Survey.

Over the past 30 years, India has seen a 13 per cent decline in the water table, with depletion in North India, the most alarming. Crop diversification has declined sharply in Chhattisgarh, Haryana, Madhya Pradesh, Odisha, Punjab and Uttar Pradesh. The index of crop diversification (where the value ranges between 0 and 1 and higher the value greater the diversification) for Odisha has declined from 0.740 in 1994-95 to 0.340 in 2014-15. For Punjab, it dropped from 0.71 to 0.65 and for Haryana from 0.83 to 0.77. While Odisha’s case can be attributed to excess rains that it received, the case of Punjab and Haryana is purely a consequence of the price and procurement support.

Rice and wheat obsession

Between 1983-84 and 2015-16, India has seen area under rice go up from 31 per cent to 35 per cent and share of wheat moving higher from 18.8 per cent to 25 per cent.

In Punjab, wheat and paddy cover 83 per cent of the cultivable area of the State.

The obsession for wheat and rice cultivation over years is explained by reasons including availability of better price support, quality seeds and availability of advanced technology and research.

The increase in minimum support price (MSP) in the case of rice and wheat have been very sharp in the last decade. While in 1990s, the increase in MSP every year in these two crops was just about ₹20-40/quintal, in the last 10 years it was about ₹50-150/quintal.

Rice and wheat aside, in recent years, cash crops — sugar cane and cotton, too have taken a larger share of the land to better price incentives (FRP in sugarcane).

There is a problem with such a skewed agriculture. All the crops that are grown excessively today — rice (for producing 1 kg of rice about 3,000-5000 litres of water is required), sugar cane (1,500-3,000 litres) and cotton (7,000-29,000 litres), are all water-intensive.

With 50 per cent of agriculture in India still dependant on irrigation, it can’t afford spending a good portion of its water on just two/three crops.

If the regime of subsidised power and price supports continue, then, one can’t check the irresponsible use of water or sowing in select crops. In many arid areas of the country including north-Karnataka and central- Maharashtra and Telangana, there is large-scale sowing of sugarcane and cotton using water from borewells. The subsidised power from state governments has resulted in reckless use of water, as is the urea subsidy which has resulted in overuse of urea and deterioration in soil quality.

While the government has recently started encouraging crop diversification in States including Punjab and Haryana, it needs to be holistic. It is not enough to train farmers on sowing of coarse cereals, but, also encouraging consumption of these among general public. If there no takers for these coarse cereals when they come to the market, all the efforts to bring crop diversification, may go waste.

6.2. Centre failed to deliver on its promises, say farmers’ groups

Livemint, 30 Jan. 2018, Sayantan Bera

While trade policy is skewed against farmers, rural schemes lag behind targets, say the organizations

New Delhi: The Union government has overlooked the specter of rural distress and gone back on its promises to ensure remunerative returns to farmers, several farmer organizations claimed on Tuesday while releasing a paper on the state of Indian agriculture, ahead of the Union budget.

Titled Green Paper on Farmers, Farming and Rural Economy 2018, the document analyzed available data to argue that the government-announced support prices did not cover the cost of cultivation for several crops and that the trade policy was skewed against the farmer, even as flagship government schemes for rural India lagged behind targets.

The paper was jointly released by farmer organizations Jai Kisan Andolan and Rythu Swaraj Vedika, and agriculture policy advocacy group Alliance for Sustainable and Holistic Agriculture.

“This government not only went back on its electoral promise of announcing minimum support prices (MSPs) at 50% over costs, but also prevented states from announcing bonuses to farmers above centre-determined MSPs,” said Yogendra Yadav, farm activist and member of Jai Kisan Andolan.

“The data shows that actual public investments in agriculture have declined in the past four years... the just released Economic Survey also acknowledged that farmers are forced to sell below costs and agriculture revenues (a proxy for farm incomes) has been stagnant in the last four years,” Yadav added.

Data analysed by the report showed that for seven crops across categories like pulses, oilseeds and coarse grains, MSPs were below the comprehensive costs of cultivation between 2014-15 and 2017-18. For 17 crops, the net returns at MSP were significantly lower during the four years of National Democratic Alliance government, compared to the last term of the United Progressive Alliance government (2009-2014).

Farmers have no expectations from Budget 2018

“Agriculture contributed just 8.3% to the overall non-performing assets of banks which is a reflection of the farmers’ discipline in repaying loans despite adversities,” the report said, adding, “the current government is more eager to bail out industry than farmers.”

“The centre has relegated the responsibility of announcing debt waiver on states and recent waiver packages implemented in Uttar Pradesh, Maharashtra and Punjab shows poor progress,” said Kiran Vissa, founder member of the Rythu Swaraj Vedika.

Tracking the progress of flagship irrigation schemes, the report said that only four out of the 23 large irrigation projects targeted for completion by March 2017 were fully complete by December 2017. On the flagship crop insurance scheme, the report said that insurance companies made windfall profits due to low claims to payment ratio of 55%, while in several districts, high actuarial premiums between 30% to 58% (of sum insured) was charged by these companies.

Despite the importance of the livestock sector for small farmers and India being the largest producer of milk, budgetary allocations for the sector as a proportion of the overall agriculture budget fell in the past four years, the report said, adding that the government’s attempts at regulating livestock trade severely affected farmers. The centre has set a goal to double farmer incomes by 2022, but farm incomes are either stagnant or falling when inflation is taken into account, at a time when incomes of organized sector employees will see a substantive raise following implementation of the recommendations of the Seventh Pay Commission, the report said, urging the government to establish a statutory farmers’ income commission to ensure basic living incomes for agricultural households.

From the upcoming budget, the farmer organizations also demanded a revamp of price support policies, a comprehensive debt waiver package, a disaster mitigation fund, a credit guarantee fund for tenant farmers and doubling funds for irrigation schemes in rain-fed areas.

7.1. Jaitley’s given us a blueprint for the future

BusinessLine, 1 Feb. 2018 Sanjiv Goenka

The focus on infra, agri will power long-term growth, and benefit the less-privileged too

Finance Minister Arun Jaitley has taken care that the budget reflects the values and aspirations of the people and, at the same time, becomes a blueprint for the future. Alongside, it ensures high growth and will benefit the less-privileged sections of society.

The minister has taken care that the budget contains seeds of growth which will endure over time. The budget lays emphasis on agriculture, infrastructure, employment and exports. These are the weak points in the current economic situation.

Agriculture and infrastructure are at the core of this budget. Jaitley has given utmost attention to the problems of farmers and has provided for measures such as cluster models and organic agriculture, which would improve value addition in agriculture, and for pricing of products through new institutional systems such as gramin markets, agro-processing and mega food parks, as also maintaining MSP at 1.5 times the market rate.

The focus on infrastructure was critical as it will create jobs, ease business and reduce cost of delivery. The additional investment in rail and roads and development of smart cities will create demand for industry and enhance growth of manufacturing, which is already in recovery mode. The economy has recovered from the temporary impacts of demonetisation and improper implementation of GST. Industrial growth has picked up and was the fastest in the last five years. The growth of the formal sector, which accounts for about 34 per cent of non-agricultural workforce, is vital to divert unemployed labour to quality jobs in small and large industries.

The finance minister has, therefore, given special consideration to MSMEs, which are important employment generators, by extending the coverage to companies with turnover of ₹250 crore and supplementing EPF with a 12 per cent contribution.

It has been the experience of every fast-growing economy that it has to be supported by exports. The budget has addressed this need and facilitated exports particularly in intensive industries such as textiles, processed food, and leather and footwear, in which India has an advantage

This is extremely important because the rupee has hardened against the dollar due to inflow of FII funds and can come in the way of export expansion.

The expenditure side of the budget is in tune with the needs but there is a revenue shortfall. Consequently, the fiscal deficit, due to changes in the economic situation, went out of hand this year and will not be within the earlier target in spite of the increase in disinvestment.

The writer is chairman of the RP-Sanjiv Goenka group

7.2. McDonald’s franchisee Hardcastle plans to add 25-30 outlets this year

BusinessLine, 15 Feb. 2018

McDonald’s West and South India’s master franchisee Hardcastle Restaurants Pvt Ltd will add 25-30 outlets this year, which will be a combination of regular McDonald outlets and the high-end ‘Experience of the Future’ restaurant.

An investment of ₹100 crore will go into launching new outlets in the West and South and refurbishing existing ones. Seema Arora Nambiar, Senior Vice President – Strategy, Innovation & Capability, told BusinessLine that the company is evaluating more cities for opening ‘Experience of the Future’ outlets.

There are currently 10 ‘Experience of the Future’ outlets, which are heavy on technology with service and looks of international standards — five each in Bengaluru and Mumbai. The ₹764-crore Westlife Enterprises, that owns Hardcastle Restaurants, has 271 outlets, with 109 in the South.

Nutritious products

The franchisee is also focussing on bringing out wholesome and nutritious products with local flavours and ingredients for the health-conscious consumers. The company’s product development team works with its supply chain providers for innovative products for the Indian market.

It launched ‘Rice Fiesta’, which combines ingredients like Basmati rice, Indian spices and vegetables with international flavours. Currently the product is available only in 16 McDonald’s outlets in Chennai.

Rice meal

There are plans to launch it across the South and West in the coming years. Nambiar said: “We are still working on perfecting the flavour of the rice meal before rolling it out to other markets.”

The rice meal was piloted in Bengaluru, Chennai, Pune and Mumbai for the past two years before it was launched officially in Chennai last month.

8.1. Jyothy Labs to ride on ayurveda wave

BusinessLine, 21 Jan. 2018, Purvita Chatterjee

FMCG major Jyothy Laboratories is targeting revenues of ₹500 crore by 2021 from its ayurvedic and naturals portfolio where it has brands like Margo toilet soap and Neem toothpaste.

Both the brands have been a part of the acquired Henkel’s portfolio and have been pegged as the fastest growing brands in the domestic company’s kitty.

“Margo and Neem are the two ayurvedic brands in our portfolio that came to us from Henkel as part of its seven brands. Since the naturals/ayurveda wave has caught up with the FMCG industry, we would be building up this business further with a target to reach ₹500 crore of business by 2021,’’ said K Ulhas Kamath, Joint Managing Director, Jyothy Labs.

In fact, during the third quarter, Margo recorded the highest growth at 44 per cent with the toilet soap being pitted against established national brands. Its non-traditional markets contributed to the bulk of its growth during the quarter, while its traditional markets like West Bengal and Tamil Nadu saw its growth rates dip from 50 per cent to 30 per cent.

Margo toilet soap brand has a turnover of ₹175 crore and there are extensions like facewash and handwash that have been planned.

“We have already reformulated the original toilet soap of Margo and it has been growing even in its non- traditional markets by 30 per cent,’’ added Kamath.

Even Neem toothpaste, which has restricted presence in the East and South, is now being pushed to have a national presence and there are plans to export the brand to countries in South-East Asia.

“We added Neem as one of the seven brands from Henkel’s portfolio and currently it has a turnover of ₹30 crore. Neem would also get exported and enter new markets like Malaysia,’’ said Kamath.

Recently, German multinational Henkel decided not to exercise its option to acquire stake in Jyothy Labs as had been envisaged in the past. However, the domestic FMCG company will continue to build Henkel’s brands in the country with the exception of its Fa brand of deos.

“We acquired seven brands from Henkel of which Pril and Fa will continue to be the two licensed brands,’’ he said.

Jyothy Labs will be building on the dishwash liquid brand of Pril which has been growing at 15 per cent with a turnover of ₹150 crore.

However, it has decided to sideline the deo brand of Fa. “Fa is a stagnant brand and while it has revenues of about ₹22 crore, we would not spend in its advertisement,’’ he said.

Jyothy Labs reported a net revenue of ₹431.2 crore for the quarter ended December 31, up by 15.9 per cent from the corresponding quarter. Net profit was up by 59.3 per cent and stood at ₹32.9 crore against ₹20.7 crore.

8.2. India's edible oil market crossed Rs 1.3 trillion mark in 2017: Research

Business Standard, Feb. 07, 2018

New Delhi: Health-conscious Indians are driving the sale of branded edible oil, ditching ‘loose oil’ sold by the neighbourhood grocery store.

According to data from market research firm Euromonitor International, the edible oil category, which had overtaken dairy to become the largest packaged food segment a few years ago, grew 25.6 per cent to cross the Rs 1.3 trillion mark in 2017. This is the first time any packaged food category has crossed the Rs 1.3 trillion mark.

Diary was the second largest with Rs 1.2 trillion, 16.5 per cent higher than 2016.

The packaged food market, including rice, pasta and noodles, stood at around Rs 378 billion last year, growing 23.6 per cent year on year, thanks to the downside risks associated with these kinds of foods.

In fact, edible oil formed over 30 per cent of the Rs 4.34 trillion packaged foods market in India, compared to the 8.8 per cent share held by rice, pasta and noodles.

“Growth is primarily coming from new consumers, who are shifting from loose to packaged oils”, said Atul Chaturvedi, chief executive officer, Adani Wilmar, the company that sells a number of edible oil brands.

“Packaged oil sales are growing at 2.5 times the rate of overall edible oil consumption in India.

Increasing awareness for safe products, the food law administration restricting loose product sale and the crackdown by the government on unfair trade practices aided this growth,” said Deoki Muchhal, managing director of Cargill’s food business in India.

According to Euromonitor, the rice, pasta and noodles category will grow faster than others till 2022 with a 12 per cent cumulative average growth rate, followed by breakfast cereals (10.6 per cent). Edible oil, though, is expected to maintain a healthy rate of 9 per cent.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

9.1. Focus on doubling farmers’ household income’

BusinessLine, 21 Jan. 2018, Rutam Vora

A faculty at the Institute of Rural Management, Anand (IRMA) and newly appointed Director of the Institute, Hitesh Bhatt, is a person on a mission to turnaround the fortunes of the institute, which has been the backbone of the rural management ecosystem in the country. It is aiming to play a crucial role in addressing the rural livelihood and resource management. Bhatt tells BusinessLine that the road ahead is clearly charted for IRMA and IRMAns, whose role will be crucial in coming days as Indian farming undergoes stressful days amid pricing challenge.

Excerpts:

India has been facing farm distress for many years now. What do you think is the cause and what measures do you suggest to help farmers?

Farmers in India have a low resource base – about 67 per cent or two-thirds of our farmers own around one acre of land. Most of the input prices are increasing but output prices are not rising, leading to distress.

The MSP is one of the many mechanisms to prevent fall in prices of output, but owing to fiscal and storage constraints, it is not possible to purchase all the output by the government.

Warehouse receipt financing – hedging in the commodity futures introduced to help the farmers – is facing operational issues and hence it has not really helped the farmers.

But initiatives such as eNAM (electronic National Agriculture Market) —connecting the farmers with the traders — are good that need to be operationalised on a larger scale to help farmers get better prices for their produce by eliminating the intermediaries. Diversifying the farm and farm-based activities would also help to address the issue of farm distress. This can be done by developing allied activities such as cattle rearing, poultry, hatchery, piggery or even investing in fruit orchards.

Apparently, all these policies end up helping large holding farmers more as compared to the ones who are marginal and distressed.

Some critics and agri-economists have questioned the government’s target of doubling the farm income by 2022. What is your take on it?

It is erroneous to say ‘doubling the income of a farmer in the next few years’. Instead, we should focus on doubling a farmer’s household income in the next few years and that is possible. We have to identify the bottlenecks or constraints that come in the way of this and remove them systematically. Making the value chains shorter (from farm to consumer) can increase the monetary returns of farmers.

We must also realise that what works in one State may not work in another and what works in one district of a State may not work in another. The goal can be achieved if we look at the rural development sector from a managerial perspective.

What role do you see IRMA playing in the sustenance of the rural economy?

If you look at Gujarat’s milk co-operative model, you will find that it is self-sustainable. If we can replicate something similar to it, in terms of people coming together for a cause, our model will become sustainable. Collective action to achieve scale like Amul had demonstrated that higher percentage of consumer rupee can be given back to the farmers. IRMA has been working on this theme since its inception in 1979.

Several IRMAns have joined co-operatives and Farmers’ Producer Organisations (FPOs) which essentially try to achieve scale to remove some of the intermediaries in the chain to increase farmers’ income. This happens by way of aggregation at the production level in villages and institutional innovations such as encouraging marginal farmers to develop co-operatives or FPOs – who, in turn, will have better negotiation power at the last point in the value chain.

9.2. How government can double farmer incomes

Livemint, 24 Jan. 2018

Farmers need structural reforms, crop diversification and greater public investment rather than subsidies and price support Indian agriculture has been relatively untouched by the structural reforms that lifted incomes in other parts of the economy. Low farm productivity meant that governments tried to improve the lot of farmers through price policy. The problem is that engineering a shift in the terms of trade through higher support prices usually leads to generalized inflation—and that is precisely what happened during the tenure of the two governments led by Manmohan Singh.

The Narendra Modi government faces a dilemma right now. The collapse of food prices has hurt farmer incomes. Ramesh Chand of the NITI Aayog has estimated that real incomes of farmers have come down by 1.36% a year over the past five years. Pushing up prices could endanger the recent macroeconomic stability— but no democratic government can ignore the obvious pain in rural areas. This is why the focus has to shift to reforms that lift farm productivity.

A recent report by the Ashok Dalwai committee on doubling farmers’ incomes thus deserves attention. The solutions can be categorized into four broad areas: land, access to markets, increase in productivity and diversification towards high-yield crops and non-farm activities.

Starting with land, it is well known that land holdings in India are small and fragmented, 86% of them being smaller than 2 hectares. Holdings are too small for the use of modern implements, farmers have to rely on informal sources of lending and are subject to the vagaries of the weather and volatile prices for their produce. Small farmers, who are already very poor, are forced to bear more risk than they would like.

At the same time, various studies reveal that at any time, 5-10% of the arable land is left fallow because the adverse possession laws discourage leasing. Even when they are leased out, it is usually an oral lease that does not give the lessee legal protection, preventing him from accessing formal credit and discouraging investment in the farm.

The Union government has framed the model agricultural land lease law, 2016 and the draft model contract farming law, 2018 to mitigate these problems by allowing absentee landowners to lease out land without fear of losing title. Similarly, contract farming should help farmers as the sponsoring companies can shield them from their post-harvest anxiety about prices, while farmers can benefit from pooled purchases of inputs at affordable prices and access to machinery and knowledge provided by the sponsoring company.

The key point is that farmers do not have to be experts at growing crops and predicting prices. They should be free to take on either, neither or both of these roles. Indeed, just 1.2% of rural youth aspire to work in agriculture, according to the 2017 Annual Survey of Education Report (Aser) by Pratham. Apart from the limited employment opportunities outside farming, the restrictions on leasing and selling arable land make it difficult for farmers to exit agriculture.

Coming to access to markets, agricultural produce market committees (APMCs) have perpetuated monopolistic intermediaries. The Ashok Dalwai committee notes that farmers’ share in the market price is low, and generally varies from 15-40%. Given the resistance to the model APMC law of 2003, the Union government has introduced a model agricultural produce and livestock marketing (APLM) law, 2017 that is intended to replace the existing APMC Act, and allow a single market within a state, freeing farmers to trade at private wholesale markets, allowing them to sell directly to bulk buyers, and promoting trading on the electronic national agriculture market (eNAM).

Even the international trade policy is used to favour consumers. When prices increase, import tariffs are reduced in order to increase supply while the minimum export price is used to restrict or ban the export of a commodity in reaction to its rising prices for the consumer. These short-term adjustments in tariffs disrupt any planning or relationship building in international trade, adding to the already existing risks and uncertainties. The committee’s report bats for a stable trade regime, structured on predetermined signals that will allow stakeholders to predict the change in policy with the crop forecasts.

Third, productivity of crops in India is low compared to global standards and there is large variation across states, primarily explained by access to irrigation facilities and adoption of improved technology. The per- hectare productivity for all crops in irrigated regions is Rs56, 510, compared to Rs35,352 for rain-fed areas. For marginal farmers, raising productivity is likely the single most important factor if incomes of this group are to be doubled. This requires public investment in irrigation, seeds, fertilizers and other technology. However, successive governments have preferred to give subsidies rather than invest in rural infrastructure.

Finally, diversification is crucial if farmers’ incomes have to increase. This is because the average productivity of high-value crops, like vegetables and fruits, is more than Rs1.4 lakh per hectare, compared to Rs.40,000 for staple crops.

Most of the above reforms are the domain of state governments which often protect the interests of large farmers. NITI Aayog has argued for bringing agriculture into the concurrent list so that the Union government can ensure a national market for agricultural products—that may not be a bad idea.

10.1. Accelerated Irrigation Benefits Programme: Funding in the Last Two Years

Press Information Bureau, Feb. 09, 2018

New Delhi: During 2016-17, ninety nine ongoing Major and Medium Irrigation Projects under Accelerated Irrigation Benefits Programme(AIBP) (Including 26 projects of Maharashtra) having potential of 76.03 lakh ha. (8.51 lakh ha. in Maharashtra), have been identified in consultation with states, for completion in phases by December, 2019 along with their Command Area Development & Water Management (CADWM) works.

The water resources projects including their canal system are planned, funded, executed and maintained by the State Governments as per their own resources and priority. In order to supplement their efforts the Ministry of Water Resources, River Development and Ganga Rejuvenation (MoWR, RD & GR) provides financial assistance to State Governments to encourage sustainable development and efficient management of water resources through various schemes such as Accelerated Irrigation Benefits Programme (AIBP) etc. under Pradhan Mantri Krishi Sinchayee Yojana (PMKSY).

For completion of these projects in a mission mode, funding mechanism through NABARD has been approved by the Government for both Central and State share. Details of Central Assistance (CA) released/sanctioned and State share provided during 2016-17 & 2017-18 (so far) are as under:

As reported by concerned State Governments, AIBP works of 18 projects (including 4 projects of Maharashtra) have been completed/almost completed. Further, Central Assistance of Rs. 2514 cr. has been released for Polavaram Project during 2016-17 and Rs. 979.36 cr. during 2017-18. CA of another Rs. 1020.64 cr. has been sanctioned for this project during 2017-18.

This information was given by Union Minister of State for Water Resources, River Development and Ganga Rejuvenation and Parliamentary Affairs Shri Arjun Ram Meghwal in a written reply in Lok Sabha today.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

10.2. ISRO sets up 473 Village Resource Centres for rural development through satellite technology

Press Information Bureau, Feb. 08, 2018

New Delhi: To demonstrate the potential of satellite technology for development of rural areas, ISRO established Village Resource Centres (VRCs) on a pilot scale, in association with selected NGOs, Trusts and State Government Departments.

VRCs have provided various space technology enabled services such as tele-healthcare, tele-education, natural resources information, advisories related to agriculture, career guidance to rural students, skill development and vocational training etc.

About Rs 18 crores was spent for establishing 473 VRCs.

This was stated by the Union Minister of State (Independent Charge) of the Ministry of Development of North Eastern Region (DoNER), MoS PMO, Personnel, Public Grievances & Pensions, Atomic Dr Jitendra Singh in a written reply to a question in the Lok Sabha today.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

- INDUSTRY, MANUFACTURE

11.1. GM aims to ramp up component exports from India

BusinessLine, 28 Jan. 2018

American auto major General Motors is looking to ramp up component exports from India even as it continues to add new global markets for vehicle shipments from the country, a company official said. The company, which has stopped selling cars in the Indian market, recently started exporting Beat Notchback to Costa Rica. “Apart from this addition, we also plan on expanding the component exports in 2018,” a General Motors India spokesperson told PTI.

The company currently exports body panels and engines to Vietnam and Cambodia. The official, however, declined to specify the markets that the company plans to target for components exports.

Elaborating on the vehicle exports from India, the spokesperson said that the company is focused on ensuring that it produces high-quality vehicles for export markets. “Our exports have tripled over the past year and we are very pleased with the acceptance of our products in the export markets,” the official said.

In 2017, GM ranked 5th in India in terms of passenger vehicle exports. Its hatchback Beat was the highest exported passenger vehicle from India.

Dealership issues

When asked about settlement of issues related to dealerships, the spokesperson said the company has been able to settle all dealer sales agreements as of December, 31,2017. “GM India worked directly with its dealers to ensure a smooth transition to the Chevrolet Authorided Service Operation (ASO) network and in this process we have settled the closure of all dealer sales agreements by December 31, 2017,” the spokesperson said.

Last year various company dealers had protested on account of inadequate compensation packages being offered to them. On availability of service and spare parts for its vehicles in India, the official said the company has a network of 175 ASOs in operation across key locations in the country. “We continue to operate every function that supports all the aspects of operations of our ASO network; these include the technical assistance centre, field engineers, training organisations and the field team,” the spokesperson said.

The company is also maintaining a dedicated customer assistance centre to support its customers, the spokesperson added. “In addition, we continue to operate parts procurement, warehousing and distribution to ensure smooth parts supply for Chevrolet vehicles in India,” the official said.

Based on current planning the automaker is taking all measures to ensure availability of spare parts, generally in the market for at least 10 years, the official added. Last year in May, General Motors announced stopping selling its vehicles in India. It now exports vehicles manufactured at its Talegoaon plant in Maharashtra.

11.2. Hyundai to pump in USD 1 bn in India by 2020

PTI, Jan. 31, 2018

New Delhi: South Korean auto major Hyundai plans to invest over USD 1 billion (around Rs 6,300 crore) in India in the next three years on new products, development of powertrain and setting up of a new office building.

The company, which operates here through its wholly-owned arm Hyundai Motor India Ltd (HMIL), plans to launch an electric vehicle next year and is also gearing up for the possible comeback of its popular model Santro around Diwali this year.

HMIL has lined up nine products to be introduced between 2018 and 2020.

"Our total investment till 2020 will be over USD 1 billion," HMIL Managing Director and CEO Y K Koo told PTI in an interview here.

He further said, "The investments will be on nine new products to be launched between this year and 2020, powertrain development and setting up of our new office building in Gurugram," he said.

Elaborating on the new products to be introduced, he said, "Two will be completely new models, one will be an electric vehicle, two facelifts and four will be full model changes of existing products."

Electric vehicle

Commenting on the company's foray into electric vehicles (EV), Koo said, "Our first EV in India will be launched next year. At the moment we are yet to finalise whether it will be the Ioniq EV sedan or the full electric version of SUV Kona."

Currently, the company is doing a market study on customer preference which would help in deciding which model to launch.

In the meantime, he said the company is awaiting clarity from the government in the form of an EV policy so that it can plan the road ahead keeping in view the 2030 target of 40 per cent of all personal vehicles being EVs.

"We will import our first EV as CKD (completely knocked down) units and assemble at our Chennai plant. Later on, depending on market response, we will consider manufacturing here in India but that will take time," Koo said.

Stressing on the need for government support for EVs, he said the current GST rate of 12 per cent must be reduced to 5 per cent in order help popularise the eco-friendly technology.

With battery being an important component for success of EVs in India, Koo said HMIL is keeping the option open of partnering with local firms for sourcing of electric vehicle battery, besides considering other alternatives like importing from China or South Korea.

Possible return of Santro brand

Koo said among the two completely new products its plans to launch, one is a compact family oriented car codenamed AH2.

When asked if it would be launched as 'Santro', Koo said that "is a possibility" but the company is yet to take a final call on the matter.

"It would be launched near Diwali this year. So we will take a final call on the Santro badge at around that time.

However, I must admit that we are under a lot of pressure from dealers, customers and market to bring back the Santro brand," he added.

If Santro had continued in the market, he said this year would have marked completion of 20 years of the model in India. The car was launched in the country in September 1998.

Sharing details about the product, he said the hatchback would be wider and taller than the i10 model. The car will be powered by a petrol engine with options for factory-fitted CNG engines. It will also have automated and manual transmission options.

Koo also said HMIL is preparing for the introduction of its compact SUV codenamed Qxi sometime next year. The vehicle will be powered by a 1-litre turbocharged petrol engine.

Production plans

On plans to set up a new manufacturing plant in the country, Koo said the company can manage with the current facility till the next three years.

He added that with exports to some big markets like Algeria not doing well, more units from the Chennai plant could be adjusted for the domestic market.

"We can increase the current production capacity at Chennai plant to 7.13 lakh units. Even with domestic market growing at 7-8 per cent, with flexible production at the plant, we can manage by 2020," Koo said.

He, however, declined to comment when asked if HMIL would use group firm Kia's upcoming plant in Andhra Pradesh.

The company, which is completing 20 years in the Indian market, sold 6.78 lakh units last year in the country with a market share of around 16.5 per cent in the passenger vehicle segment.

"We would like to have a market share of around 17 per in the domestic market by 2020," Koo said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

12. Logistics hub to turn Assam’s Jogighopa into India’s new gateway to South-East Asia

Livemint, 14 Feb. 2018, Jyotika Sood

The road ministry project to develop a multimodal logistics park in Jogighopa is backed by the Asian Development Bank

The multimodal logistics park at Jogighopa will include railway sidings, container terminals, warehousing, non- cargo processing, a truck terminal, support infrastructure and equipment. Graphic: Mint

New Delhi: Jogighopa, a small town in Assam, is set to become India’s gateway to South-East Asia as well as the rest of the North-East with the road ministry gearing up to develop a multimodal logistics park (MMLP) there with road, rail, waterways and air transport facilities.

The development includes railway sidings, container terminals, warehousing, non-cargo processing, a truck terminal, common facilities, support infrastructure and equipment.

A special purpose vehicle, backed by the Asian Development Bank (ADB), will be created to execute the project, which will be executed in two phases—Phase I of around Rs155.46 crore and Rs115.88 crore for Phase II.

“Recent developments, like the announcement of the Northeast Economic Corridor under the Bharatmala programme of the road ministry and the signing of the MoU (memorandum of understanding) between India and Bangladesh for developing the Dalu-Tura-Goalpara-Gelephu multimodal trade route strengthen Jogighopa’s case for MMLP,” a senior government official said on condition of anonymity.

He added that under the project, all four types of transportation—road, rail, air and waterways—will be available.

The project is one of the key focus areas of road minister Nitin Gadkari. The road ministry has shortlisted 35 MMLPs across India, of which four are being executed in collaboration with ADB.

The current transit corridors from mainland India to the North-East region pass through an area known as the “Chicken’s Neck”—a narrow tract of land in India between the borders with Bangladesh, Nepal and Bhutan. Since it is close to these borders and cannot be expanded, the North-East region requires an alternative route for providing connectivity to the rest of India—a route with adequate expansion potential. The Indo- Bangladesh road route, along with the National Waterways-2 , provides such an option.

According to the draft report on the Jogighopa MMLP accessed by Mint, freight demand in terms of volume is projected to grow at a compound annual growth rate (CAGR) of 5.93% from 11.96 million metric tonnes (MMT) in FY17 to 33.74MMT in FY35. The total container market is projected to grow from 4,808 TEUs (twenty-food equivalent units) in FY17 to 7,925 TEUs in FY35—a CAGR of 2.82%.

The move comes at a time when India’s neighbours are gearing up for trade. For example, Bangladesh’s development of the Khulna-Dhaka-Sylhet Economic Corridor and the Banglabandha-Dhaka-Chittagong-Cox’s Bazar Economic Corridor—to promote industrial development in the region. These initiatives are expected to drive freight movement in the region and facilitate trade between India and Bangladesh, and between Bangladesh and Bhutan through India.

Since last year the government has started prioritizing the logistics sector by granting it infrastructure status and anticipates major investments in it. The Logistic Performance Index published by the World Bank shows India jumping 19 spots in the global ranking from 54 in 2014 to 35 in 2016.

Stakeholders welcomed the government plans.

“North-East is one of the regions which has played a pivotal role in terms of logistics connectivity with the international and national corridors of India. We believe Asean’s (Association of Southeast Asian Nations) strong bond with the North-East region will act as a mascot for the entire region and for the rest of the businesses in India,” said Chander Agarwal, managing director of logistic company TCI Express.

The decision is significant because of the sustained “Act East” policy of the National Democratic Alliance (NDA), along with the development message of the ruling Bharatiya Janata Party which has managed to form governments along with alliance partners in Assam, Arunachal Pradesh, Manipur and Sikkim. The party is hoping to play a decisive role in the upcoming assembly elections in Tripura and Meghalaya. The political importance of the North-East is also significant because the eight states together have 25 Lok Sabha seats. The BJP is also making inroads in Tripura which has been led by Left Front governments for the last 25 years. The party is contesting assembly elections, scheduled to be held on 18 February, as the direct challenger to the Left Front in the state.

13.1. Enercon readies biggest wind turbines for India

BusinessLine, 28 Jan. 2018, M. Ramesh

For its second innings in India, German wind turbine manufacturer Enercon plans to bring in machines that will be the biggest to be sold in the country.

The firm’s Chief Risk Officer, Wolfgang Juilfs, told BusinessLine on Sunday that the company has started offering machines of rated capacity of 3.5MW. It is developing suppliers for the machines, which will come in two versions — one with blades that will sweep a circle of 138 metrrs and the other 126 metres.

The height of the tower on top of which the turbines would be placed will depend upon the site, but it could be as high as 131 metres, in which case the tower will be a hybrid of a concrete structure and tubular steel, Juilfs said.

He said wind energy companies could participate in competitive bids now if the projects need to be commissioned by 2019-20end. Enercon will be ready with its machines by then. These, then, will be the biggest wind turbines to be sold in India.

The Indian market is dominated by machines of a nominal capacity of around 2MW and 120 metre high. The only other company to have a 3MW machine is another German company, Nordex.

Asked if Enercon’s upper-end machine was appropriate for the Indian market, Ralph Tobergte, who looks after Business Development at Enercon, said that since the company was joining a party of entrenched players, it had to do something different. Juilfs said the proposed machines will be competitive.

Indeed, some in the industry believe that big machines could present challenges in terms of logistics.

Enercon GmBH was among the earliest players in the Indian wind market. The company, which was founded and is owned by Aloys Wobben, a wind technologist of global repute, came to India in 1994.

For 12 years, Enercon India, the joint venture of Enercon GmbH and the Mehra family with Yogesh Mehra as the Managing Director and Enercon machines were ubiquitous in India alongside Vestas, the Danish wind turbine manufacturer.

Trouble broke out between the partners in 2006. There were a number of contentious issues, but primarily the Mehra family accused Enercon GmbH of denying it technology, starving it of components supplies in order to emasculate the Indian arm with a view to take full control.

On its part, Enercon accused the Mehras of stealing technology and siphoning off funds. The legal battle is still on.

Wind energy tariff

Juilfs said that Enercon expected wind energy tariffs in India to go up. In the 500 MW Gujarat auctions that happened in December 2017, the least quoted tariff was ₹2.43 a kWhr, by a company backed by the PE fund, Actis.

Some in the industry consider the tariff suicidal and born out of desperation to win orders. Juilfs said that tariffs will go up to around ₹2.70 in the next auctions, and rise further beyond that.

13.2. EV 2.0 will deliver ranges up to 400 km with same battery size’

Livemint, 4 Feb. 2018, S. Ronendra Singh

Mahindra Electric, the electric vehicle (EV) arm of the multi-billion Mahindra & Mahindra Group, has been struggling and waiting for electrification of cars on the Indian roads. It got some excitement when Road and Transport Minister Nitin Gadkari had some tough talk at an event saying by 2030, India should achieve 100 per cent e-mobility. But, all-talks-no-implementation cannot help an industry to grow. There are a lot of loopholes in the draft notes, which need to be explored. In an e-mail interview with BusinessLine, Mahesh Babu, Chief Executive Officer, Mahindra Electric, shares more about the company’s plans ahead for electric mobility.

Excerpts:

What are your thoughts on the current scenario of EV market?

The mobility scenario across the globe is changing. Rapid urbanisation and changing lifestyle of millennial population are forcing a rethink on mobility.

Pollution has reached such alarming levels that countries and cities have started to experiment with out-of-the- box solutions. While electric vehicles have been there for long, perhaps, technology has finally reached a stage where we can consider it as a viable option. With the current trends, EVs will very soon be comparable to ICE (internal combustion engine) vehicles in terms of costs. Electricity prices, on the other hand, have been more or less stable. What’s more, the electricity production mix of the world is also moving towards renewable and cleaner sources. India, no doubt, will play a very important role on this front, one with the most ambitious plans to go all electric.

Are you satisfied with the policy?

Lot of naysayers are there who are against the government's decision to make EVs on Indian roads mandatory by 2030.

Mahindra and Mahindra’s consistent investment in EVs is backed by our belief in clean and sustainable mobility solutions.

An electric future is in line with our philosophy of ‘Rise’ and will positively transform lives for the better.

The NITI Aayog report lays out a clear roadmap to achieve this. This shift is going to create a new paradigm of mobility with improvements acrossmanufacturing, suppliers, jobs, environment and so on.

It’s been long since Mahindra acquired Reva, but there aren’t many products from the Mahindra-Reva (now Mahindra Electric) stable apart from a few models. Will there be fresh/ all-new products, other than electric versions of Scorpio/ XUV that the company plans to offer?

At present, Mahindra Electric has the widest range of EVs in India, with products across both personal and commercial segments.

We have the all-electric hatchback e2oPlus, the electric sedan eVerito and the commercial vehicle eSupro, both in cargo and passenger forms.

Recently, we also announced the roadmap to our future: EV 2.0. Under this strategy, we are looking to develop and launch products to cover two broad segments – one of mass transportation and the other of high performance vehicles.

On the passenger segment front, we would first look at electrifying some of the existing products from the Mahindra stable.

We would also work with different stakeholders to develop vehicles for the luxury segment.

Pininfarina is one such company and there are many such opportunities for collaboration. We will announce any joint launch or activity as and when it is formalised.

“But, even after doing so much, why was Mahindra behind getting government tender (EESL) and Tata Motors won a majority number? Why is the delivery to EESL order so slow?”

The EESL tender is one of the largest for EVs across the world. M&M participated along with other players, but with a product which was much superior.

The eVerito is above 4-metre and had a range which was much higher than the tender specifications, and hence, the resultant quote that we submitted.

Even so, we were proud to be ready with the vehicle specs in line with the requirements and to be the first to deliver on the order, on time and way ahead of the others.

We are now looking forward to supply vehicles in the second phase of the EESL order.

Since EESL is facing some operational issues to deliver vehicles to its internal customers, the delivery of the phase one vehicles has been phased out.

So, are you satisfied with the sales numbers of the current portfolio?

The present isn’t the right time to evaluate the EV industry on the number of sales. The current penetration of EVs in the country is less than 1 per cent.

The entire industry is still in its nascent stages, but is aggressively moving towards a future where EVs would be how transportation is defined. We believe that the country is moving in the right direction and that we would be able to see a substantial growth in a decade.

When do you think the ecosystem for EVs take place in India and what are the challenges ... pricing, range, infrastructure etc?

In various countries, it has taken anywhere between 3 and 5 years for an EV ecosystem to develop from the time that the industry experiences an initial push from the government.

With the continued effort of the industry and the government, we are hopeful that the same will also hold true for India.

At present, the challenges of perceived high price, low range, poor infrastructure etc., stand true, and are something that the industry and government are jointly working on.

Lowering technology cost, battery chemistry improvements, and volume increase in sales will have an impact on the total cost of ownership of EVs -- they will become much more affordable. In addition, technologies are being developed to extend range, with minimal impact on price of the technology. As far as infrastructure is concerned, various stakeholders are showing interest and are working towards setting up a reliable and extensive charging system.

All these challenges are just for the present, with accelerated adoption of EVs, the entire ecosystem will be in place sooner than we expect.

But, many say the government's current subsidies are not enough to make EVs affordable. Can you make EVs which are affordable to common man (under ₹4 lakh) and yet give longer range, say 300 km per charge?

If we consider battery cost in specific, it accounts for close to 40 per cent of the vehicle cost and the current trends show that it has come down by more than 50 per cent compared to that in 2010 and is expected to decrease even further.

We recently inaugurated the first-ever EV innovation centre of the country, in Bengaluru, where we intend to develop superior technology and also work on reducing cost of technology.

In parallel, we are working on improving our manufacturing system so that costs can be brought down by close to 20 per cent over the next five years.

What kind of localisation or innovation is working for the EVs?

We have been consistently investing in our electric vehicle business over the past year.

Nearly 60 per cent of parts in our current products are locally procured. The imports are mainly confined to battery cells.

When can we see a much improved battery for electric vehicles which will dispel any range anxiety?

Battery technology is at a stage where we can easily provide a range of up to 200 km, depending on the size of the vehicle and space to carry batteries.

Having said that, there is always a trade-off with cost. Higher battery power simply translates into higher costs. And hence, we have to be careful while making range-related decisions.

The next generation of battery technology that we are working on under EV 2.0 will be able to deliver ranges up to 400 km with the same battery size. We are expecting this to be available by 2019-20.

Do you think all the RTOs support the registration of electric vehicles? Is Mahindra facing a roadblock in any State/city?

EVs as a concept is new for everyone in India, including RTOs. We did face a few initial challenges in some parts of the country, but thorough discussions on the specifics of EVs helped resolve them.

Our teams helped the various State RTOs understand the need for EVs, the technical aspects and the benefits.

We are hopeful that this work will benefit the entire industry and with the initial roadblocks now tackled, it will positively push EV adoption.

14. Rs 26 billion (~$400million) special package likely for leather and footwear industry

Business Standard, Jan. 31, 2018

Chennai: A Rs 26 billion (Rs 2,600 crore) special package for the leather and footwear industry is expected to be announced in Chennai on Wednesday, by Union Minister for Commerce and Industry Suresh Prabhu. Announcing the 33rd edition of India International Leather, which will kick start here tomorrow, Mukhtarul Amin, Chairman of the Fair, said, “Commerce Minister Suresh Prabhu will be launching the Rs 26 billion special package for the leather and footwear industry, while inaugurating the Fair tomorrow evening”.

The package would generate around 300,000 jobs, Amin claimed.

The Council for Leather Exports is working on various programmes to utilise the Rs 26 billion grant given by the Central Government within the stipulated period of three years.

The special incentive package will be for human resource development, setting up of mega leather, footwear and accessory clusters, integrated development of the leather sector, leather technology, innovation and environment protection, and promotion of Indian brands abroad.

Amin said the industry is now looking at adding new geographies by focusing on US and Russia, two big markets for leather products.

The Council also engaged consultants in the US to promote Indian leather products in that country and arrange meetings with potential buyers.

“The Bangladesh leather industry has become a major threat for Indian exporters, owing to cash incentives provided by its government and the availability of cheap labour in that country. Further, leather goods from Bangladesh are not subjected to duty by importing countries,” he added.

According to the Council for Leather Exports, the Indian industry is estimated at $17.66 billion and exports accounted for around $5.67 billion during 2016-17.

About 475 companies from India and abroad are participating in the leather fair, Amin said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

15.1. Torrent Pharma acquires US-based generic, OTC player Bio-Pharm

BusinessLine, 18 Jan. 2018

Torrent Pharmaceuticals Ltd on Thursday announced the acquisition of the US-based generic pharmaceuticals and OTC company, Bio-Pharm, Inc. (BPI) triggering the first M&A this year in the domestic pharma sector.

The company did not disclose the deal size.

The latest acquisition comes after Torrent completed ₹3,600-crore acquisition of branded business of Unichem Laboratories Ltd for India and Nepal markets, including its Sikkim manufacturing facility last month. Established in 1992 and based in Levittown Pennsylvania, US, BPI has a proven track record in research and development and manufacturing of oral solutions, suspensions and suppositories.

“This acquisition is an important step for increasing Torrent’s presence in the United States, is consistent with our strategy of dosage form diversification, and provides us with new capabilities including manufacturing and R&D presence in the US," Torrent Pharma stated in a statement announcing the acquisition.

BPI's US FDA registered facility has manufacturing capabilities for controlled substances which can be manufactured in the US only as per government guidelines (DEA Schedule II-V).

To date, BPI has 10 approved ANDAs, 10 ANDAs under review at the FDA for itself and its partners and has an additional 17 products under development.

Torrent plans further investments to expand the BPI facilities including R&D capabilities and will increase the number of product filings from BPI.

Having annual revenues of over ₹5,800 crore, Torrent Pharma is the flagship company of the ₹18,300 crore Torrent Group. The company, led by Executive Chairman, Samir Mehta, has been on an aggressive expansion spree fuelling the consolidation in the Indian pharma space.

Earlier in 2017, Torrent Pharma had acquired two hormone brands in women healthcare — Regestrone and Pregachieve for India market from Swiss major Novartis AG in May 2017.

In June 2016, Torrent Pharma had acquired USFDA-approved API unit in Vizag from Hyderabad-based Glochem Industries Ltd.

15.2. India Pharma & India Medical Device 2018: Affordable and Quality Healthcare

Press Information Bureau, Feb. 15, 2018

India’s biggest Global Conference on Pharma Industry and Medical Devices to begin in Bengaluru on 15th February With the theme, ‘Driving NextGen Pharmaceuticals’, the event would be a positive step towards the development of Future Drugs: Shri Ananthkumar Shri Ananthkumar to hold Roundtable of Pharma and Medical Devices CEOs to discuss Government policy and Challenges facing the Industry World Health Organization to hold workshop on ‘Regulatory System Strengthening and Prequalification’

New Delhi: The Department of Pharmaceuticals (DoP), Ministry of Chemicals and Fertilizers, along with Federation of Indian Chambers of Commerce & Industry (FICCI), is organizing ‘India Pharma & India Medical Device 2018’, with the theme - ‘Affordable and Quality Healthcare’, the 3rd International exhibition and conference on Pharmaceutical & Medical Device sector from 15th-17th February, 2018 in Bengaluru.

Union Minister for Chemicals & Fertilizers, Shri Ananthkumar will inaugurate the three-day event and address the distinguished gathering in the presence of dignitaries such as Union Minister for Health and Family Welfare, Shri J.P. Nadda, Chief Minister of Karnataka, Shri Siddaramaiah and Shri Mansukh L. Mandaviya, Minister of State for Chemicals & Fertilizers and Road Transport & Highways, Shipping, Government of India. Shri Ananthkumar said that “With the theme, ‘Driving NextGen Pharmaceuticals’, the event would be a positive step towards the development of Future Drugs i.e. Biologics and will catalyze the overall growth of the Pharmaceuticals Sector in India”. The Minister added that the 3rd edition of the event will be beneficial for all stakeholders and in the coming years the event would grow to be the largest exhibition in Asia in the Pharmaceutical Sector.

India Pharma & India Medical Device 2018 will see a roundtable of pharma and medical devices CEOs with Shri Ananthkumar, to discuss Government policy and challenges facing the Industry. The event will bring key stakeholders of the pharma and medical devices sectors under one roof, with hundreds of delegates including 50 Hosted Delegates from other Nations. Over 300 companies and 50 startups will showcase their products at the grand exhibition. The event will also see more than 90 eminent industry leaders speak at various sessions lined over three days.

More than 20 international drug and device regulators will participate in a meet with Indian regulators. Ministerial delegations from CIS and BIMSTEC countries will also attend the event. A key highlight of India Pharma & India Medical Device 2018 is a workshop by World Health Organization on ‘Regulatory System Strengthening and Prequalification’. A conference will also be organized by NASSCOM on ‘Digital Transformation through Innovation in Pharmaceutical, Medical Devices and Healthcare Industries’. India Pharma & India Medical Device Awards will be announced to honor excellence and innovation in the field of pharmaceuticals and medical devices. For three days, the event will host Technical sessions build around themes like Discovering Innovative Medicines in India; Making India a Part of Global Supply Chain in Medical Devices; Opportunities, Challenges and Regulatory Requirements in the Development of Biologics; Opportunities & Challenges for Stem cells & Regenerative Medicine; Emerging Global Trends in Self Care and Relevance of OTC Regulatory Framework for Indian Public Healthcare System; a Sub-sectoral Approach to Make in India; and Moving towards API Self Sufficiency.

The Social Media links for the events are as follows:

India Pharma 2018: HASHTAG: #INDIAPHARMA

Website: www.indiapharmaexpo.in (for LIVE WEBCAST of Sessions open for Media)

Facebook: https://www.facebook.com/indiapharma2018

Twitter: https://twitter.com/indiapharma2018

Instagram: https://www.instagram.com/indiapharma2018/

India Medical Device 2018: HASHTAG: #INDIAMEDICALDEVICE

Website: www.indiamediexpo.in (for LIVE WEBCAST of Sessions open for Media)

Facebook: https://www.facebook.com/indiamedicaldevice/

Twitter: https://twitter.com/Indiamedical18

Instagram: https://www.instagram.com/indiamedical18/

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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16. All the drama, in short

BusinessLine, 9 Feb. 2018, Payel Majajumdar Upreti

Short films are popping up everywhere on social media, allowing you to watch them anytime, anywhere. Notching up millions of views, they’ve made the film industry sit up and take notice. And women producers and writers are hogging much of this space Sa Re Ga MaCarvaan plays on the radio in an old-style house, the kind where potted plants line the balcony in a neat row, and the mistress of the house glides from one room another on her umpteen chores — a romantic image of domestic bliss, tinged with nostalgia, is how the film Pressure Cooker lets its audience in. But all is not well and, soon, the cracks in this idyll become apparent.

To break the sweet melody of the radio there are two irritants at hand: Pallavi Joshi’s husband, who calls out to her repeatedly in a plaintive voice, in between chanting his morning mantras, and a pressure cooker, whose piercing whistles drown out the radio anchor’s mellow morning voice. Joshi is clearly irritated, her mood in contrast to the anchor’s sweet commentary. “Kya hai (What is it)?” she screams back at her husband from the kitchen, but the latter will not reply and merely continues to call out to her.

Heena D’Souza, the director of Pressure Cooker, is also the director of the production house Hamaara Movies. “We wanted to locate the film in a time where home appliances meant a lot to families, which would take care of them and use them for decades. We wanted to utilise that as a metaphor in the film,” she says. Set in the mid-’90s, the film does just that.

Short films like Pressure Cooker are everywhere on social media — they pop up as suggestions on YouTube, and are shared on Facebook and Twitter as 10-20 minute episodes that can be watched anytime, anywhere. Some of them, notching up millions of views, are making the industry sit up and take notice. Interestingly, many of them have women-oriented narratives, and women directors and producers backing them. Says Mansi Jain, director of Chhuri, a film starring Tisca Chopra and Anurag Kashyap, “A lot of the film production houses that are funding short films are hungry for scripts that tell women-oriented narratives, so it is a good time to be a woman storyteller in the industry.”

Chutney, with over 120 million views on YouTube, is directed by Jyoti Kapur Das. From benign, the plot rapidly turns sinister. Tisca Chopra, in dentures and prosthetics, plays a demure-on-the-outside but sharp-as-a-razor- at-home housewife. Her husband, played by Adil Hussain, is having an affair with the young Rasika Duggal. Playing a person from rural Ghaziabad still adjusting to city life, Chopra shines in the film.

Much like feature-length films, the shorts, too, largely centre on the themes of interpersonal relationships, marriage and infidelity, power dynamics, and the unfair bits of life. However, without the weight of audience expectations, or restrictions imposed by the star system, the medium offers elbow room to experiment. The fact that women filmmakers, producers and screenwriters are hogging much of this space is telling enough. But what is an even bigger highlight for D’Souza is the fact that big studios are backing these films, and even the big stars want to be a part of them.

Anurag Kashyap, Radhika Apte, Nawazuddin Siddiqui, Konkona Sen, Rajkummar Rao and Neeraj Ghaywan are among the leading names associated with shorts in some capacity or the other. “I don’t think such films are a novelty any more, as they have been around for sometime, but the digital media provides the much- needed space for audiences to access such films,” D’Souza says. Jain agrees, “With so many powerhouses coming forward and supporting these films, there is no reason for anyone with a story to not try and make their film any more. In some ways, it is even better than in the western countries, where people depend on crowdfunded campaigns on Indiegogo or Kickstarter, or self-finance their films.” She contends that while some A-list actors may still not have a finger in this pie, others such as Priyanka Chopra, Neha Dhupia and Swara Bhaskar have already jumped into the fray.

Migration, a short written by Zoya Akhtar and directed by Mira Nair, is a public service feature on AIDS awareness. With Raima Sen, Sameera Reddy, Shiney Ahuja and Irrfan Khan in the cast, the film captures the poignancy of the migrant’s day-to-day life. At one end, we have a bored housewife searching for some meaning in life and, at the other end, we have Ahuja, who travels to the city to work as a mason, leaving his wife behind in the village. Playing Sameera Reddy’s husband, Irrfan has a secret affair with a man played by Arjun Mathur.

A common thread running through these films are the complexities peculiar to modern-day marriages, and couples negotiating equations and commitments in a post-feminist world. In Chhuri, a comedy with Tisca Chopra and Kashyap in lead roles, the wife goes to the house of her philanderer-husband’s love interest and tries to broker a deal — “you keep him for two days in a week, but he stays at home for the rest... how’s Tuesday and Saturday?” Quick comes the reply, “Tuesdays I have yoga class, and dance class on Saturday.” Throughout this exchange, the husband remains hidden inside a cupboard, as both women hammer out the details of how much they wanted (or did not want) him around. After all, you see at the beginning of the film how Chopra runs around to arrange breakfast for the entire family, while her husband just sneaks in for a half- bite, doesn’t interact with anyone and leaves... little wonder then that being with him can seem such a chore. Pressure Cooker, on the other hand, does not write off Indian marriages yet. It, instead, leaves you with a message: ‘Just because something old isn’t working any more, doesn’t mean one needs to replace it. One can simply mend it’. Just like Pallavi Joshi manages to repair her pressure cooker successfully, it gives us hope that her marriage, too, can overcome the rough patches.

Similar to short stories in print, short films often bank on the element of surprise. The Affair, directed by Hardik Mehta, takes us to Mumbai’s Marine Drive, an oasis for couples in search of privacy and space in a city that never sleeps. As the film progresses, we see a couple meet and embrace in public, and we assume that it is an illicit rendezvous conducted in the anonymity afforded by the sheer number of other couples present there. However, the story takes a surprising twist (spoiler alert) — there’s a fight between them and we see them leave separately, only to meet again at the home they share as a married couple with their two children and parents. The need for even married couples to meet in secret is an unsaid truth in cities such as Mumbai.

Lift, a film made by Ida Ali, filmmaker Imtiaaz Ali’s daughter, is about a burgeoning love story between a young boy and girl who live in the same building. Shot entirely in the building’s lift, the film is 500 Days of Summer- esque in its treatment of its characters. As time goes on, the couple graduate from getting to know each other, to falling in love, and then falling out of it. Through it all, the lift is an unchanging element in their life, a space where they see each other on a regular basis, whether they like it or not. Ali said, “There are so many intriguing conversations I hear in a lift. So many stories I witness. So I wanted to work around the idea of a lift. Adding the love story gave the film a relatable aspect. I liked the rhythmic opening and shutting of the lift... it gave the film a flow.”

Khaaney Mey Kya Hai, a short that has garnered over five million views, has a mother and daughter conversing in innuendos, about the great honeymoon experience the latter has just returned from. While the mother admonishes her over her frankness (again, in innuendos related to food), the daughter tries to explain that there is nothing wrong in enjoying sex, and the older woman should try it as well!

Neeraj Ghaywan’s Juice, with over two million views on YouTube, is set on a very hot day, when a party is in progress at a house. While Mrs Singh (Shefali Shah), as she is referred to throughout the film, cooks and cleans and serves, the men sit around debating self-importantly on something inconsequential. The debates are interspersed with jokes about their wives — “harmless banter”, as far as the men are concerned, but pinching comments as seen by the women.

Alongside throwing light on the unfair segregation of household chores and responsibilities, the film also highlights the unequal division of resources — Mrs Singh fills the air-cooler with water for the men sitting around chatting and then enters the hot kitchen to make food for them. The women guests, too, are relegated to the hot kitchen, where they discuss pregnancies, and affairs.

In pinpointing the skewed gender realities in a household, the film’s screenplay starkly echoes the realities of the women who work behind the screen in showbiz and find the industry an unfair place. As Kapur Das explains, “It is very hard, as a woman with no connections, to make it in this industry. Honestly, it is tough for guys as well, but people are just not ready to back women. The film industry is completely volatile, and there is no knowing what the audience is going to like, so who is to decide, anyway, what will work? In such a situation, women in general get very little time in the sun.” The short film, by being independent in nature, makes room for stories that serve as critiques and question gender imbalance.

D’Souza, however, cautions that with the growing viability of short films, and with big studios increasingly getting involved, the independent nature of this format is potentially threatened. “Say, it has taken my film ₹4 lakh to be made, but another studio-backed film has a budget of ₹20 crore. How is it possible to have similar films with such a huge difference in budgets?” Big promotional budgets cannot really guarantee a hit film in the digital world, even as some of the most popular films may not have any marketing budgets to speak of.

Kapur Das shared her experience on Chutney, “Tisca Chopra had been performing a Bhisham Sahni story as a monologue, from which we took inspiration for the film. Avneesh Mishra worked with us for the script. No one could obviously predict that Chutney would be such a hit — it has crossed 120 million views right now. The truth is that all the views are organic, and I would call it a fluke. I’m not saying it’s a bad film, it’s a decent film, but who knows why the audience has liked this one so much and not some of the other films out there?” Chutney received a Filmfare award in Comedy in 2017, while Chhuri got a nomination in 2018.

One glaring difference between the screenplays for feature-length films and short films is that the former are largely aspirational, while the latter attempt to be more relatable. While the big stars have begun to act in shorts, it is more common to see new faces, irrespective of whether the director is a big name or not. The casting tends to be more body-positive, and women have meatier roles. The plots are more open to discussing taboo subjects, especially since the digital space is much less monitored compared to the big screen. Reiterating that the short film is not a new phenomenon, D’Souza says it has only become more viable of late and has seen the entry of more professionals. “The production house that I’m in-house director for has been making shorts for ten years, and has more than 200 short films in its kitty.” Moreover, she refuses to see shorts merely as a stepping stone for filmmakers aiming to make feature-length films. “A lot of audiences are dedicated watchers of short films, and the length affords space for the kind of experimentation that a regular film wouldn’t offer.”

Shorts also offer people who aren’t professional screenwriters a chance to try their hand at it. As a result, there is a lot of diversity that the traditional industry usually lacks. Apart from their release on the internet, there are several film festivals dedicated to shorts. Even the mainstream Mumbai International Film Festival, Dharamshala International Film Festival and International Film Festival of India all have a shorts category. Explaining a crucial difference in work approach, Kapur Das says, “Some people in the film industry use their short film as a showreel — but the truth is that it is a completely different ballgame from a feature film. Every film student has to compulsarily direct a short film as part of her/his course, but that doesn’t mean they’re ready to direct a feature, right?”

17. Biofuels: an opportunity for India

Livemint, 13 Feb. 2018, Vijay Chibber

A ready solution to north India’s pollution problem is biofuel-driven buses, which can be easily deployed at short notice

India is often berated for being late in planning and solving our social, economic and infrastructure issues. This results in the country moving from one crisis to another—we start the summer with water shortage issues, during the monsoon we cannot handle the rains, change in seasons cause a health crisis with a spike in the incidence of viral diseases and during the winter we are plagued with high levels of pollution. The general tendency is to look for a solution in long-term planning and investment rather than short-term stop-gap arrangements, even when technologically sustainable and efficient policy alternatives exist.

A glaring and current problem is the pollution plaguing the entire north Indian plains. The short-term solution for this issue exists in the quick and scaled-out expansion of biofuel-powered public transport across the country. Imagine bringing down pollution levels by up to 90% in carbon emissions by public transport vehicles, eliminating stubble burning by farmers, instead increasing their incomes, reducing our foreign trade deficit and adding nearly a million jobs (during a period when no jobs especially blue-collar one’s are being added) by the Central and state government’s deciding on one major policy initiative—reduce taxes on biofuel-driven buses and trucks— available today.

The government appears to have put all its eggs in only one basket by making a major announcement to incentivize and go all-electric by 2030. First, this is a very aggressive goal for a middle-income country like India and second, even assuming that this were to happen, do we all need to suffer the ill-effects of pollution for another 12 years?

India’s transport policy needs to prioritize renewable vehicular fuels for large transport; e-mobility alone will not achieve the ambition of creating a sustainable transport sector.

A ready solution is available in the form of biofuel-driven buses, which can be easily deployed at a short notice for all public transport purposes within cities and even for inter-city travel. Imagine being able to use 170 million tonnes of agricultural waste out of the 800 million tonnes generated to be used for ethanol production in the current situation. This could easily be ramped up to 250 million tonnes per year, to produce between 31-47 billion litres of ethanol by 2020, a radical increase from the current production of 2 billion litres. This will lead to a huge reduction in stubble burning because of an economic incentive available to remove and give the crop waste to biofuel plants.

Further, sewage treatment plants (STPs) hold a lot of promise. India generates around 70 billion litres of waste water every day, which is expected to double in the next 15 years according to the McKinsey Global Institute. By building biogas generation and upgrading facilities at the STP sites, the output can potentially substitute 350 million litres of diesel, 2.3 gigawatt hours of natural gas fired power and over 8 million LPG cylinders of 14.2kg each.

If all efforts are made to substitute diesel fuel, India could replace over 40% of the projected demand for diesel in 2020. Another way to look at this is that the energy generated from biofuels is equivalent to 340 million barrels of oil or over $22 billion (assuming a landed price of $65 per barrel). Considering that in the first quarter India had a current account deficit of $14.3 billion, we could wipe out almost a third of our current account deficit.

According to a Bloomberg New Energy Finance study Next-Generation Ethanol: What’s In It For India?, the increase in ethanol production alone has the potential to create over 700,000 jobs when targeting only the base potential. States with a combination of high agricultural activity and large fuel consumption like Maharasthra, Punjab and Uttar Pradesh would be the best positioned to exploit this opportunity.

We have started with some encouraging pilots for biofuel-driven buses in cities like Nagpur, where the government has allowed special purpose vehicles to own and operate these buses along with the plants and the depots required to fuel the buses. However, the economic viability of placing more orders and scaling up such pilot projects would only happen if a rational tax policy is implemented.

We need measures which are available today and at affordable costs. This one measure of pushing for biofuel buses for public transport within a specific timeline like 2020, would help transform our public transport services, improve the health of our citizens, provide economic impetus and create jobs. Surely a win-win proposition at a fraction of the cost associated with the subsidy-driven push being planned for E-mobility. When sustainability focused countries like Sweden and a developing country like Brazil have used ethanol in a big way to achieve their environmental and economic objectives, India must make efforts to scale up technology alternatives.

It is a good time for policymakers to review and align policy intent with available options to enable achieving the stated objectives of building a sustainable transport sector with varied clean fuel solutions for various vehicles—from large buses to scooters. With a holistic approach, which includes the full potential of biofuels for vehicles, we will be able to achieve our dream of creating an environmentally and economically sustainable transport sector.

Vijay Chibber is former secretary, ministry of road transport and highways.

18. Promoting cruise Tourism in the Country

Press Information Bureau, Feb. 09, 2018

New Delhi: In order to promote cruise tourism in the country the Government has exempted cruise tourists arriving with e-visa from the requirement of biometric enrolment for the major ports of Mumbai, Cochin, Chennai, Mormugao and New Mangalore for a period of three years till 31st December, 2020.

The Government has also taken steps for customer-friendly and hassle-free immigration regime for cruise passengers such as implementation of e-visa and e-Landing cards at the five ports.

The Standard Operating Procedures (SOPs) to handle cruise vessels and cruise passengers have been revised in November, 2017 in consultation with the stakeholders and have been implemented at the five major ports which receive cruise vessels. The revised SOPs inter alia provide for submission of documents/data electronically, seamless entry and exit processes with Access Control & RFID for vehicles and persons and simplified Port Health Organization clearance procedure. It further provides for e-Landing card for shore excursion, doing away with face to face checks except at the first of entry and last port of exist and allowing carrying of valid photo I-card for Indian cruise passengers on domestic leg instead of the passport.

The Government also proposes to upgrade the Cruise Terminal at Mumbai Port and construct a new terminal at Cochin Port at cost of Rs. 197 crore and Rs 25.72 crore respectively. The proposed projects are slated to be completed by August, 2019 and February, 2020 respectively.

This information was given by Union Minister of State for Shipping and Finance Shri Pon. Radhakrishnan in a written reply in Lok Sabha today.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

19. Major airlines jump on Udan 2 bandwagon

Business Standard, Jan. 25, 2018

New Delhi: Major scheduled airlines stole the show in the second round of bidding for the regional connectivity scheme, winning 41 out of 67 bids. Fifteen operators will operate on 502 routes and connect 70 airports and heliports, most of which are not well connected by airlines now. Operators include IndiGo, SpiceJet, Jet Airways, Alliance Air and Pawan Hans.

Major scheduled airlines stole the show in the second round of bidding for the regional connectivity scheme, winning 41 out of 67 bids.

Fifteen operators will operate on 502 routes and connect 70 airports and heliports, most of which are not well connected by airlines now. Operators include IndiGo, SpiceJet, Jet Airways, state-owned Alliance Air, and helicopter company Pawan Hans. Alliance Air won four bids and Pawan Hans 11.

“The biggest outcome of this round of bidding is that UDAN is slowly moving towards becoming a scheme that is not dependent on subsidy and one that attracts airlines without zero viability gap funding,” said Minister of State for Civil Aviation Jayant Sinha.

Among the states, Uttarakhand was the biggest beneficiary with 15 of its remote airports being connected. Northeastern states like Arunachal Pradesh and Assam will have eight and five of their unserved airports connected.

Civil Aviation Secretary Rajiv Nayan Choubey said the government had prioritised connectivity in remote areas, especially in the north-eastern region and hill states. “As most of these places lack airfields, we made the scheme attractive for helicopters. The result is that we have many airports from remote regions being connected,” he said. Kargil, famous for the India-Pakistan war in 1999, will be connected with Srinagar for the first time. Other remote places like Pasighat, Tezu(ArunachalPradesh), Jiribam, Moreh (Manipur), Pakyong (Sikkim) will also be connected.

SpiceJet said it saw business potential in the scheme. “We see tremendous potential in the routes that we have been awarded today and look forward to beginning operations very soon,” said Ajay Singh, chairman and managing director, SpiceJet.

The Udan scheme offers 50 per cent subsidy to airlines on these routes, route monopoly for three years and a host of other concessions at landing airports. It expects the airlines to cap fares at ~2,500 a seat an hour on regional flights. The government imposes a levy of ~5,000 per flight on key metro routes, which translates into around ~50 per passenger.

The increase in participation by airlines put the civil aviation ministry in a fix as it faces a viability gap funding shortage. Choubey said there would be no increase in levy. “The finance ministry has permitted the Airports Authority of India to set aside ~2.5 billion from the dividend it pays to the government, it will be sufficient,” he said. The total requirement for the second round of UDAN was ~6.2 billion.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

20. Employees make $1-b bid to buy Tata Tele’s fixed-line business

BusinessLine, 25 Jan. 2018, Raghuvir Srinivasan

In what could be the biggest management buyout ever in India, a group of employees of Tata Teleservices Ltd (TTSL), led by Mukund Govind Rajan, Chief Ethics Officer, Tata Sons, has pitched for buying out the Tatas from the company.

The bid, understood to be a little over $1 billion, is backed by a consortium of PE investors led by bulge- bracket PE firm, TPG Capital, and includes a major pension fund, according to sources in TTSL who wished to remain anonymous.

Tata Sons reached an agreement with Airtel to merge TTSL’s consumer mobile business with Airtel in October last year. TTSL is now left with the fibre and enterprise businesses.

Mukund Rajan was the Managing Director of TTSL from 2008 to 2010 and has also served on the board of Tata Communications Ltd (TCL), which has also expressed interest in acquiring TTSL.

Fears of job losses

It is understood that fears of job losses prompted senior, long-serving employees of TTSL to band together and approach Mukund Rajan to spearhead the offer. So, one of the two promises that the MBO team has made is that it will retain all jobs.

The second is that it will honour all partnership agreements that TTSL now has with TCL. The latter was concerned over the fate of the agreements that prompted it to consider a bid for TTSL. An MBO, if it indeed goes through, will be a first for the Tata group. It is understood that Tata Sons Chairman N Chandrasekharan is not averse to trying out new ideas in his endeavour to streamline the group and consolidate its businesses. Decision likely next month N Srinath, Managing Director of TTSL, is understood to have told employees in a townhall last week that a decision on the sale would be made by mid-February, at the latest. According to an analyst tracking the Tata group, it would be difficult for TTSL’s board to overlook the MBO offer, especially because it promises to protect jobs, something the Tatas have always prided themselves on.

The $1 billion-plus offer may also be difficult to reject as Chandrasekharan has promised to backstop all money owed to lenders by TTSL and the deal with Airtel for the mobile business does not result in any cash inflow, analysts said.

Sources in TTSL pointed out that the offer would bring fresh money into the company and the country while the TCL bid will only result in money passing from one hand to another for the Tata group.

Asked for its reaction, Tata Tele’s spokesperson said that responses would be given by Tata Sons; the latter’s spokesperson said that they had no comment. Mukund Rajan refused to comment.

INDIA & THE WORLD

21.1. Why not zero-rate exports?

Livemint, 24 Jan. 2018, Ajit Ranade

For India to realize its full export potential, and to increase its share of manufacturing in the economy, to create industrial jobs on a large scale, much needs to be done

India’s merchandise exports grew at 12% per annum for the period April to December in this fiscal year. This is a decent pace considering that until the middle of 2016, exports had been contracting for more than 18 months in a row. But the sobering fact is that even with 12% growth this year, the total annual exports achieved as of April 2018 will be lower than the corresponding number in April 2014. In four years, despite our relentless focus on manufacturing, on the ease of doing business, competitiveness and foreign direct investment, the total increment in exports is less than zero.

One can offer many explanations such as global shrinkage of trade (but India’s loss of share was disproportionate); or the impact of falling commodity prices (crude fell by 60%, and one-fifth of India’s exports are petrol and diesel); increased protectionism in the era of Donald Trump; more recent disruptions caused by demonetisation and the goods and services tax, or GST (upsetting small, medium and informal enterprises in the value chain). Other reasons are the domestic handicap of higher infrastructure and logistic costs and the burden of taxation. These latter factors are captured in India’s competitiveness, which has improved its its global ranking. One other factor is India’s virtual absence in global value chains (GVCs). The iPhone travels through multiple stages across countries and assembly lines before being sold as “made in China”. Each step in that value chain is an “export” earning for the respective country, however small it may be. What is true of phones and electronics is also true of textiles and machinery. As India negotiates further trade liberalization with 15 other countries in a mega deal called the Regional Comprehensive Economic Partnership (RCEP), it will demonstrate greater willingness to embrace GVCs.

Note that the GVC concept is contradictory to our earlier stance of insisting that free trade agreement should entail substantial value addition in the partner country, and not just a minuscule GVC increment. International trade is much more between internal departments of the same company located in different countries, than between nation states. Unfortunately, trade statistics still continue to measure inter-nation trade, without discounting how much of that is simply intra-firm trade.

These reasons might partly explain the lacklustre export performance. It becomes even more worrisome when we compare it to East Asian peers like Thailand, Malaysia or South Korea. These countries do not export petrol and diesel, nor are their exports dominated by minerals and ore or primary products. Even with the uncertainty caused by neighbouring North Korea’s nuclear stance, the southern neighbour clocked high export growth. This is also the year when the global economy is experiencing synchronized growth and boom, with the International Monetary Fund revising many forecasts upwards. India’s exports have traditionally responded strongly to improvements in global economy outlook, but so far the indications are not strong enough. Surprisingly, most of the Fortune 500 companies have a presence in India, and many have manufacturing facilities. They are not here simply doing tariff jumping, to be able to cater to the domestic market. Many firms, most notably in automotive and chemicals, use India as a manufacturing hub to export in the region and globally. If they have found India attractive to invest, why are manufacturing exports not more robust? India also has a limited window to capture the space being vacated by China in labour-intensive manufacturing. These too are not relocating to India as fast as they move to, say, Vietnam, Bangladesh or even Sri Lanka. But India has the scale.

One particular factor which can be addressed immediately is the burden of inter-state or integrated GST (IGST). One of the cardinal principles of trade is that you do not export taxes. The GST reform in India moved all indirect taxes to a consumption type, destination-based tax system, with input credit based on invoices. For within-states consumption, there is central GST (CGST) and state GST (SGST). For inter-state sale where consumption is outside the state which is supplying (or producing) the good or service, the applicable tax is CGST and IGST. For exports, since consumption is outside the country, it will and should not be taxed as per the cardinal principle. It should be zero-rated, i.e. a GST rate of zero, and all input tax credits are paid to the exporter. Imports have to pay GST since consumption occurs in India. Unfortunately, in its current design, exporters pay IGST and then apply for a refund. Since refunds can be delayed by as much as six months, that cost of capital which is locked up, is a non-reimbursed cost. With wafer-thin margins of profit, this cost of delay can wipe out the exporter. The GST council gave some relief, by substituting a bank guarantee or letter of credit in lieu of actual payment of IGST by exporters. This is a poor substitute, and bank charges will continue to apply. There is also a discussion of a digital wallet, or tradable IGST credits. All this is band aid. We must do away with IGST and zero-rate all exports. In a well-argued policy paper, Vijay Kelkar and V. Bhaskar argue for a cleaner IGST mechanism to not just give exporters a level playing field, but also make inter-state commerce simpler.

For India to realize its full export potential, and to increase its share of manufacturing in the economy, to create industrial jobs on a large scale, much needs to be done. This includes fiscal incentives for exports, appropriate exchange rate management, improved logistics and infrastructure, and so on. But zero-rating of IGST on exports of goods and services is an urgent priority.

Ajit Ranade is chief economist at Aditya Birla Group.

21.2. External sector prospects promising with export growth, world trade rising

BusinessLine, 29 Jan. 2018, Amiti Sen

With India’s export growth picking up sharply in recent months and world trade expected to grow at 4.2 per cent and 4 per cent in 2017 and 2018, respectively, from 2.4 per cent a year before, prospects for the country’s external sector seem bright, the Economic Survey has projected.

Addressing the current account vulnerability, though, requires raising the trajectory of export growth. “Here, an important lesson is the need for macroeconomic policy to support the development strategy,” the Survey said. Supportive policies such as GST, logistics and trade facilitation policies of the government could help improve prospects further, it added.

Logistic issues

Agreeing with the Survey’s suggestion on improving logistics and trade facilitation policies, the Engineering Export Promotion Council (EEPC) pointed out that logistic problems lead to high costs and impact the competitiveness of Indian products in the international market.

“The measures suggested in the Economic Survey like faster clearance for setting up of container freight stations , introduction of high end scanning equipment, online track and trace system would go a long way in improving India’s Logistic Index further,” said Ravi Sehgal, Chairman, EEPC.

Echoing the woes of exporters on the issue of non-reimbursement of embedded taxes, the Survey proposed that the GST Council should conduct a comprehensive review of embedded taxes arising from products left outside the GST (petroleum and electricity) and those that arise from the GST itself. “This review should lead to an expeditious elimination of these embedded export taxes, which could provide an important boost to India’s manufacturing exports,” it said.

According to exporters body FIEO, increased duty draw back rates (rates for reimbursing input taxes on exported products) which included embedded taxes need to be announced soon to help exporters gain back their competitiveness.

Manufacturing exports

Exuding optimism for the future, the Survey said the behaviour of manufacturing exports and imports in the second and third quarters of this fiscal year had started to reverse. “The re-acceleration of export growth to 13.6 per cent in the third quarter of 2017-18 and deceleration of import growth to 13.1 per cent , in line with global trends, suggest that the demonetisation and GST effects are receding. Services export and private remittances are also rebounding,” the Survey observed.

India‘s balance of payments situation, which has been benign and comfortable since 2013-14, continued to be so in the first half of 2017-18, despite some rise in the Current Account Deficit (CAD) in the first quarter, with a relatively lower CAD in the second quarter.

22. 50 years of Beatles in India: How George Harrison brought Indian classical music to Western pop

Livemint, 19 Jan. 2018, Dipankar de Sarkar

Indian spiritualism and music were like a magnet for George Harrison and their involvement in his own music abated not one bit post The Beatles

Much before The Beatles, there was Ravi Shankar, and long before him, there was Indian classical music. But for the six billion people of this planet who happen not to be Indian, the three seemed to magically appear together in a moment of celestial, psychedelic epiphany in the 1960s. This reading is rubbish, of course, but perceptions have a way of edging out facts.

There are many more players in the sequence of events that was to culminate with Indian classical music bursting on to the world stage with Western pop: the “quiet Beatle” George Harrison, American folk rocker David Crosby (of The Byrds and, later, Crosby, Stills, Nash and Young), the musicians of the Asian Music Circuit in the UK and what Harrison would no doubt call destiny.

Harrison’s interest in Indian music began accidentally, in April 1965, on the sets of The Beatles’ film Help! , which had a sequence filmed in an Indian restaurant in London with Indian musicians playing Indian instruments, including a sitar. “George was looking at them,” according to John Lennon in the documentary The Beatles Anthology. The film’s music composer, Ken Thorne, used an Indian ensemble of sitar, flute, tabla, ghunghroo, tanpura and possibly a dilruba and surbahar to play a Beatles medley called Another Hard Day’s Night. The piece was not particularly well played, but it was appropriate to the occasion. And it got Harrison interested in the sitar.

The instrument—synonymous with Indian classical music—made its second appearance for The Beatles with Norwegian Wood (This Bird Has Flown), a Lennon-McCartney song that features in the Rubber Soul album. Just using the sitar immediately lends this wistful tune an Indian feel and depth that seems not a bit out of place. The album was released in December 1965 and Norwegian Wood was to become, quite possibly, the first Western pop song with the sitar in it.

How it happened is a story of cultural cross-fertilization of the kind that was rare back in 1965.

Lennon started writing the song in January-February of that year, according to Ian Macdonald’s Revolution In The Head.

On 15 August 1965, The Beatles began a tour of the US at the height of Beatlemania. By the time they had begun the tour, Harrison had already received a full introduction to the music and sitar playing of Ravi Shankar, courtesy of Crosby during a UK tour of The Byrds in early August, 1965. Crosby and legendary Byrds guitarist Roger McGuinn had been listening to Ravi Shankar back in the US. Recounting the interaction at the age of 75, at a concert in New Jersey in May 2017, Crosby said he had a Ravi Shankar album in his suitcase and he gave it to Harrison, which, “had... repercussions”.

“He liked it, he liked it a lot. So then he went to India and in India he ran into a teacher, a guru, that he liked a lot.” This, of course, was Maharishi Mahesh Yogi. Crosby, however, wanted to advise caution—“because I’m a little cynical”. The outcome was a song called Laughing, the outstanding cautionary tale in his first solo album, If I Could Only Remember My Name.

If the intention was to moderate Harrison’s enthusiasm, Crosby had failed. Indian spiritualism and music were like a magnet for Harrison and their involvement in his own music abated not one bit post The Beatles.

His exposure to Indian instruments on the sets of Help! sparked off a lifelong passion for Indian music, as well as a close friendship with Ravi Shankar, who considered the Beatle his younger brother. After Help! and the US tour, Harrison bought a sitar from a shop on Oxford Street in London in September and it may have been this instrument that we hear him playing on Norwegian Wood, although not with any elegance. The song was recorded in October 1965, which wouldn’t have given Harrison much time to practise. But he had certainly created a bit of music history.

One of the first to pick up the sitar after Norwegian Wood was Brian Jones of the Rolling Stones in the band’s furious rock paean to depression, Paint It Black, which is now associated with a generation’s disenchantment with materialism and war. The song was released in May 1966, a month after The Beatles recorded Harrison’s Love You To, his first ‘Indian’, for their album Revolver.

The song follows a Hindustani classical structure—a slow alaap introduction, followed by the main tune (gat) in madhya laya or a middling tempo and ending with a jhala-like quick-tempo fadeout on the sitar. The song is without doubt a path-breaker in its uncompromising adherence to a form of music that was alien to Western pop.

The sitar played on the track is wonderfully confident and accomplished but views differ on who played the instrument. Peter Lavezzolli, in his book The Dawn Of Indian Music In The West, thinks it’s Harrison, but MacDonald writes, “For the recording, players form the North London Asian Music Circle were hired, including an uncredited sitarist who played most of what was once attributed to Harrison.” Most certainly, the playing is of a standard that an untutored musician—even a talented one like Harrison—would have found hard to produce. The tabla was played by Anil Bhagwat.

An Indian Summer now lit up the Swinging Sixties. The song was recorded in April 1966 and two months later Harrison finally got to meet Ravi Shankar. The Indian, already a legend, was in Bath for a performance with the violinist Yehudi Menuhin. They met: Ravi Shankar was decidedly undecided about Harrison, who may have been just another long-haired pop musician in the eyes of the Indian. “It is strange to see pop musicians with sitars. I was confused at first. It had so little to do with our classical music. When George Harrison came to me, I didn’t know what to think,” says Ravi Shankar in Raga, a 1971 documentary about the sitarist. “But I found he really wanted to learn. I never thought our meeting would cause such an explosion, that Indian music would suddenly appear on the pop scene.”

Harrison now started taking lessons from Ravi Shankar, which led to the flowering of an extraordinary period of musical collaboration between The Beatles (Lennon too was an ardent admirer of Indian music—just listen to Tomorrow Never Knows or Across The Universe) and Indian classical music. The pinnacle of this beautiful partnership came with Harrison’s song Within You Without You in The Beatles’ most famous album, the iconic Sgt Pepper’s Lonely Hearts Club Band.

Harrison bought a sitar from a shop on Oxford Street in London and it may have been this instrument that we hear him playing on ‘Norwegian Wood’, although not with any elegance.

Recorded over March and April 1967, Harrison wrote the song on a harmonium (which seemed so entirely appropriate by now) at the home of his bassist friend Klaus Voorman. Having received tuitions from Ravi Shankar, the Beatle played the sitar on this track—and gave a superb performance. The song itself is ambitiously Indian, cruising between the 4/4 of a teentaal and 5/4 of the jhaptaal, with Indian musicians on the dilruba, swarmandal, tabla and tanpura, and an 11-member Western orchestra on violins and cellos.

As much as its music, the song stands out for its lyrics, a meditation on Indian philosophy—the refrain “And life flows on within you and without you” stresses the impermanence of life with its play on the word “without”. Trashed at the time by insular critics, Within You Without You remains the most complete and accomplished piece of Indian music-inspired Western pop more than 50 years after the album’s release.

What then is the legacy of this extraordinary musical collaboration between The Beatles and Indian music? Quite possibly, there would have been no Ananda Shankar (Ravi Shankar’s nephew) playing Jumpin’ Jack Flash and Light My Fire on the sitar on an album (Ananda Shankar) that became an underground dance classic in 1990s London. But individuals can only push history—not create it. Undoubtedly, Indian classical music would have reached and overwhelmed Western audiences with or without Ravi Shankar and Harrison, so extraordinary is its depth, power and richness. And as to the influence of The Beatles on Indian music, if you listen carefully you’ll find John, Paul, George and Ringo behind every rock-y Bollywood song you’ve ever heard or are likely to hear.

23. WEF: India Inc pitches for ‘statesman’ position for India

PTI, 22 Jan. 2018

This is the largest ever Indian presence in the 48 year history of WEF summit with more than 130 Indian CEOs are present along with over 2,000 business leaders and 70 heads of states and governments

As the world leaders await to hear Prime Minister Narendra Modi’s vision for India’s engagment with the world, Indian CEOs today made a strong pitch for a statesman like position for the country to counter the protectionism and domestic rhetoric likely to be presented by countries like the US.

Eminent banker Uday Kotak, a Davos veteran who has been attending the World Economic Forum Annual Meeting in this Swiss ski resort town for years, said India needs to understand the subtle difference between sales and marketing, and presents the India story accordingly while positioning itself in the role of a statesman.

Spicejet CEO Ajay Singh, who has himself steered a major turnaround in a sector like aviation, said India has a great story to tell at Davos and there can be no one better than Prime Minister Modi to tell this story.

Top banker Chanda Kochhar of ICICI Bank, who has also been regular here, said Indian economy is seeing broad-based improvement across several sectors and is on track for a robust growth that can be tapped by one and all.

Speaking to PTI, a number of Indian CEOs present here said the global community is waiting to hear from Prime Minister Modi and his speech is generating even more interest because the US president is also likely to come later at this summit with his America First pitch and how he has lowered the corporate tax rates and made the American corporations to bring back jobs and profits from abroad to the US. Modi will deliver the keynote speech at the plenary session of the WEF tomorrow.

Before his departure from India, Modi had said he will share his vision for India’s future engagements with international community in Davos, and will seek “serious attention” of world leaders on existing and emerging challenges to the contemporary global systems. “The existing and emerging challenges to the contemporary international system and global governance architecture deserve serious attention of leaders, governments, policy makers, corporates and civil societies around the world,” he tweeted.

“I look forward to my first visit to the World Economic Forum at Davos, at the invitation of India’s good friend and Founder of the WEF, Professor Klaus Schwab,” he said, while describing the theme of the Forum, ‘Creating a Shared Future in a Fractured World’ as “both thoughtful and apt”.

The comments assume significance as several leaders are expected to talk about various risks facing the world, including those from economic protectionism and differences between various world powers. The Summit is also being attended by German Chancellor Angela Merkel, French President Emannuel Macron and UK Prime Minister Theresa May, among other leaders.

Spicejet’s Singh said Modi has a great story to tell about significant reforms undertaken in India and even a greater story about 1.4 billion Indians, a young population and a massive market for the world. “When we saw Chinese premier Xi Jinping here last year, there was a lot of focus on China and its natural there would be a lot of focus on India this time,” Singh said. Singh said he and all other Indian CEOs are already seeing overflowing meeting requests and there is certainly a lot of interest in India this time.

In the largest ever Indian presence in the 48 year history of WEF summit in this Swiss ski resort town, more than 130 Indian CEOs are present along with over 2,000 business leaders and 70 heads of states and governments. Besides, several other leaders from politics, business, academia, art, culture and civil society are also present for the event which opens today and will close on Friday.

Pitching for a nuanced message here at WEF to present India as an open economy that cares for the interest of domestic as well as global audience, Kotak said that “we need to position ourselves at this forum as a statesman and not just a salesman.” He also said it is a very big opportunity for India to demonstrate the new India we are building.

Kochhar said Indian economy is seeing broad-based improvement across all sectors and should clock 7 per cent growth in the second half of the current fiscal. She also said reforms have fast tracked the process of digitisation and formalisation of Indian economy and the country is on track to again attain the fastest growth rate in the world.

24. Africa’s delayed arrival

Livemint, 8 Feb. 2018, Kaushik Basu

The challenges are daunting but it seems that Africa’s moment may have arrived at last

The African Development Bank (AfDB) has just published its African Economic Outlook for 2018. This year’s revamped publication—shorter than usual, analytically well-structured, and written in lucid prose, without hyperbole—in some ways mirrors Africa’s own transformation, as it raises hopes that we may at last be witnessing the continent’s long-promised economic arrival.

Africa’s rise has been a long time coming. In the 1960s, hopes were high. The remarkable leaders of the independence generation—such as Ghana’s Kwame Nkrumah and Kenya’s Jomo Kenyatta—received advice from the world’s top economists. The Caribbean-born Nobel laureate Arthur Lewis became Nkrumah’s chief economic adviser.

In India, we read about these leaders’ friendship with our own post-independence prime minister, Jawaharlal Nehru, and the hope for a new dawn for all emerging economies. And many emerging economies did indeed take off. In the late 1960s, some East-Asian economies surged ahead. Beginning in the early 1980s, China began its decades-long rise. And, from the early 1990s, India’s economy also began to grow robustly, with annual rates reaching the 9% range by 2005.

But Africa remained stagnant, mired in poverty. Ironically, it was the continent’s resource wealth that hampered economic progress, as it fuelled conflicts among governments and insurgents eager to control it. The resulting political instability attracted outsiders keen to exploit governments’ weakness. As the Indian poet and Nobel laureate Rabindranath Tagore put it in his 1936 poem Ode To Africa, which played on perceptions about who is civilized, the continent fell prey to civilization’s barbaric greed as the colonists arrived, manacles in hand/Claws sharper by far than any of your wolves.

Finally, at the turn of the 21st century, things began to change for Africa. A few dynamic leaders, democratic stirrings, and emerging regional cooperation led to a decline in poverty and a pickup in growth. Commodity exporters faced a setback around 2014, when prices plummeted. But this turned out to be a blessing in disguise, because it forced countries to diversify their economies and increase production—factors that supported renewed growth.

According to the AfDB report, Africa’s 54 economies grew by 2.2% in 2016, on average, and 3.6% in 2017. In 2018, the AfDB predicts, average growth will accelerate to 4.1%, while the World Bank expects Ghana to grow by 8.3%, Ethiopia by 8.2%, and Senegal by 6.9%, placing these countries among the world’s fastest-growing economies. And these figures are not wishful thinking: in 2016, Ethiopia’s GDP grew by 7.6%.

Of course, serious challenges remain. South Africa, the continent’s strongest economy, is now facing the difficult task of tackling its deep-rooted corruption. Many African countries need to find ways to create more employment—and fast. The share of the working-age population is rising faster in Africa than in any other region. This “demographic dividend” has immense potential. But if job creation stalls, the unemployed or under-employed are likely to become frustrated—a recipe for conflict.

Consider the case of Tanzania. Thanks to President John Magufuli’s effort to mobilize more domestic revenue to support increased development spending, the economy is doing well. But, with roughly 800,000 individuals entering the labour force each year, Tanzania needs much more working capital, better infrastructure, and educational reform aimed at ensuring that workers have the skills, resources, and opportunities to secure decent jobs.

The same is true of Ethiopia. In the last couple of decades, the country has made great strides in export-led growth, supported by a growing industrial sector and large investments from China. Now, it is poised to take over as the economic powerhouse of East Africa. Yet the urban youth unemployment rate stands at 23.3%. Left unchecked, this situation could easily end up fuelling ethnic conflict and political turmoil.

Another related challenge concerns resource mobilization: Countries need funds to invest in infrastructure, human capital, and the creation of trade and digital links within and beyond Africa. The AfDB report estimates that for infrastructure investment alone, the continent needs some $170 billion per year, which is $100 billion more than is currently available. As it stands, Africa receives a total of about $60 billion in foreign direct investment each year.

To close the gap, African governments must attract more money. That will require establishing effective regulatory structures that facilitate long-term borrowing and repayment, while ensuring that lenders do not exploit borrowers, as has occurred everywhere from rural India to the US mortgage market.

The challenges are daunting, to say the least. But there are lessons that African countries can learn from one another. For example, Ghana’s smooth transfer of power after the December 2016 election set a positive democratic example. Nigeria’s Lagos State and Tanzania have done a good job of mobilizing internal resources for development. Add to that the emergence of an indigenous intelligentsia in the region, exemplified by organizations like the AfDB, and it seems that Africa’s moment may have arrived at last.

Kaushik Basu is former chief economist of the World Bank and professor of economics at Cornell University.

25. American chicken legs set to walk into India

BusinessLine, 15 Feb. Amiti Sen

The final hurdle in the way of import of cheap chicken legs and other poultry items from the US into India may have finally been removed. The government has made changes in the health certification requirement for imported poultry items from the US in line with the suggestions made by the country and the stage is now set for imports.

“The Department for Animal Husbandry and Fisheries has resolved the health certification issue for poultry with the USFDA. The US poultry industry could start exporting to India soon. Hopefully, Washington will now consider the WTO dispute to be over,” a government official told BusinessLine.

Domestic industry to suffer

The latest changes made in the health certification requirement could now lead to the Indian poultry industry’s worst fear come true — that of facing the stiff challenge of competing with cheap chicken legs from the US. According to industry estimates, the US could potentially take away 40 per cent of the market of domestic breeders, who produce 3.5 million tonnes of chicken annually.

WTO ruling

The US had challenged the stringent restrictions on imports of poultry that India had in place on poultry imports, ostensibly to check the spread of avian influenza or bird flu, at the WTO. In 2015, New Delhi lost the case and the WTO ruled that the import restrictions were unscientific and should be removed.

India then made two rounds of changes in its rules on health restrictions to comply to DSB’s ruling and take care of specific concerns raised by the US. The US, however, remained dissatisfied with the changes and sought damages.

“The US wanted that the health certification requirement should be modified to recognise the disease control system in the country and their systems approach so that their industry could export without fear of rejection by Indian authorities,” the official said.

Since minor modifications are done in health certifications to take care of country-specific requirement, the Animal Husbandry Department made the modifications sought by the USFDA.

Restriction on imports?

While the Commerce Ministry is concerned about the implications of the move on the domestic poultry industry, officials say that restrictions on imports, if any, have to be applied based strictly on OIE guidelines (globally accepted guidelines on health and sanitary requirements).

The government, together with the poultry industry, is examining issues such as the long-periods of deep- freezing of dressed chicken done in the US and the genetically modified feed given to the chicken to see if imports could be restricted on such genuine health concerns.

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AAPI

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– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

- AGRICULTURE, FISHING & RURAL DEVELOPMENT

- INDUSTRY, MANUFACTURE

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