AAPI: October 2018

DELHI, 20th October 2018

Index of this Newsletter

INDIA

INDIA & THE WORLD

21.1. A new twist in global politics
21.2. World Bank bars several Indian companies for corrupt practices
22.1. Gita Gopinath appointed IMF chief economist
22.2. Accenture will continue to hire significantly in India: CEO Pierre Nanterme
23.1. The RCEP is a must for India
23.2. US tells India it has more resources to counter BRI
24.1. India moves up to 28th rank in govt e-payment adoption: Survey
24.2. We need positive change to know what’s possible: Max Roser
25.1. The backlash against China is growing
25.2. Commerce Minister Announces Fast Track Mechanism to Promote Russian Investments in India

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DELHI, 20th October 2018

NEWSLETTER, 20-X-2018

INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

1.1. Ayushman Bharat: An IV drip for healthcare in India

Livemint, 25 Sep. 2018, Deepti Bhaskaran

If Ayushman Bharat Pradhan Mantri Jan Arogya Yojana is backed by funds and intent, the state-sponsored insurance scheme has the potential to reform healthcare in India

New Delhi: When Amit Kumar, a daily wage labourer who lives in a small town called Indri in Haryana, welcomed his first-born three years ago, he received a bill of around ₹ 1.5 lakh from the private hospital. His wife Mausami had developed some complications and needed to be operated on. Unable to pay that kind of money, Kumar turned to a money lender. He is repaying that debt to this day. “I pay some ₹ 2,000 every month and I have no idea when this debt will get over. But at that time, it was the only way out,” said Kumar.

So imagine Kumar’s surprise when he visited the billing section of the Kalpana Chawla Government Medical College and Hospital after the birth of his second child in August 2018. The bill: a mere ₹35 for the birth certificate of his baby girl, who they named Karishma (miracle) because the family was able to access healthcare in time and with no financial burden.

Kumar and Mausami were the beneficiaries of the all-new Ayushman Bharat. The scheme was officially launched this week, but in the month of August, Haryana had pilot tested the scheme. PMJAY promises to insure nearly 40% (about 50 crore people) of India’s population that’s underprivileged. This makes PMJAY one of the largest state sponsored health insurance schemes. And one that is being closely watched—its fate could potentially change the face of healthcare in India.

Ayushman Bharat is an entitlement-based scheme that targets India’s poor as identified by latest SECC data

Ayushman Bharat is an entitlement-based scheme that targets India’s poor as identified by latest Socio-Economic Caste Census (SECC) data. Individuals can walk into any empanelled hospital that can process cashless payments. Once identified by the database, the beneficiary is considered insured. PMJAY offers a sum insured of ₹ 5 lakh per family for secondary care (which doesn’t involve a super specialist) as well as tertiary care (which does). For the beneficiaries, this is a free scheme.

The insurance cost is shared by the centre and the state mostly in the ratio of 60:40. PMJAY is portable, which means the beneficiary can avail treatment in any of the states that has implemented the scheme. Empanelled hospitals agree to the packaged rates under PMJAY—there are about 1,400 packaged rates for various medical procedures under the scheme. These packaged rates also mention the number of average days of hospitalization for a medical procedure and supporting documents that are needed. “These rates are flexible, but once fixed hospitals can’t change it and under no circumstances can they charge the beneficiary,” said Indu Bhushan, chief executive of Ayushman Bharat-PMJAY (see interview). The scheme also has prescribed a daily limit for medical management.

State-led health insurance

For the government, Ayushman Bharat is an attempt at creating purchasing capacity among the poor. There are two ways of tackling the problem of affordable healthcare. It’s either by financing services to keep price affordable or by financing the paying capacity of people. The first idea hasn’t worked as more than 70% of the healthcare is concentrated in the private sector. “It’s a known fact that government facilities suffers from acute shortage of human resources so the old school model of government-run clinics hasn’t worked. It was against this backdrop that Rashtriya Swasthya Bima Yojana (RSBY) was designed,” said a public policy professor, who didn’t want to be named.

However, RSBY (which preceded PMJAY) got plagued by a host of issues. “The cover of ₹ 30,000 was found to be low and many states started introducing their own scheme with a higher cover and it covered tertiary care as well,” said Malti Jaswal, former chief operating officer of Health Insurance TPA of India Ltd, who now is consulting on Ayushman Bharat.

But what broke the back of RSBY was the huge instances of fraud. “What went wrong was there was immense amount of collusion to generate fake bills. Health insurance companies found this to be a bleeding proposition and some refused to pay,” said the professor.

Moreover, healthcare experts have argued that for state sponsored insurance to work, it’s important to place emphasis on public health and create healthcare regulations. Conceptually, it is better to invest in preventive healthcare than on curative insurance.

However, according to Jaswal, the process can go hand in hand. “This is being done parallel to PMJAY as the government is establishing wellness centres that will focus on primary, preventive and promotive healthcare through public facilities,” she said.

Is PMJAY the answer?

In the absence of healthcare regulations, some believe that PMJAY will meet with little success. But for others, the sheer magnitude of the scheme will herald much needed health insurance regulations. Indeed, the architecture of PMJAY inspires hope. “For the first time we have seen the focus on national pricing for health services, standardized protocols and coding. It has led to the creation of an independent body (National Health Agency) that will coordinate and improve the scheme over time, through investments in a robust IT infrastructure,” said Nachiket Mor, country director (India) at Bill and Melinda Gates Foundation.

“If successful, this can well be replicated for the remaining 60% of the population on a contribution basis. The scheme also gives incentives to hospitals that get accredited for quality,” he added.

The challenges

The immediate challenge is to get the private sector to participate. Ayushman Bharat, at present, has about 8,500 hospitals empanelled, and this includes public hospitals as well. According to experts, there are about 30,000-40,000 eligible hospitals in the country.

The lack of proper hospitals in smaller towns and few empanelled hospitals, can lead to unhappy experiences. For Kumar, for instance, this has already played out. He went back to Kalpana Chawla hospital a month later only to find out that he had a long line of patients to negotiate. “My life depends on daily wages, so I can’t spend an entire day at the hospital only for consultation. Even if the services are free, I lose out on my daily income,” he said. While PMJAY creates demand, it will need to provide supply—for that to happen, the private sector will have to rise to the occasion.

This may not happen immediately, but eventually. “There is no dearth of medical infrastructure, but the problem is functionality of this infrastructure and the fact that it’s concentrated in the metropolis. PMJAY is addressing this problem by creating demand,” said Dr Sabahat Azim, chief executive officer at Glocal Healthcare. Glocal runs a chain of ten multispecialty hospitals with focus on acute care and 250 digital dispensaries.

“In fact the packaged rates are reasonable if you look at the scale of PMJAY, so I suspect in about three years you will see expansion of healthcare. But for this to happen it’s important hospitals are paid on time and premiums are sustainable because underbidding means insurers will refuse to pay,” he added. Glocal has empanelled two of its hospitals for now.

The potential of reform

The scheme has three important takeaways for the health insurance sector in terms of coverage, pricing and service levels. PMJAY covers all instances of hospitalization, even if it’s on account of a pre-existing ailment. A retail health insurance policy, apart from a list of exclusions, has leakages built-in in the form of what’s not payable. These can constitute up to 8-10% of the hospital bill.

Ayushman Bharat not only provides a comprehensive cover, but its sheer size can pull the pricing down. The incurred claims ratio—ratio of claims paid to premiums received—for retail segment is well below 100% indicating an overcharge by the insurer. “PMJAY has a time barred system of enrolment and approval. In retail, delays mar the cashless system,” adds Kapil Mehta, co-founder, SecureNow Insurance Brokers Pvt Ltd.

Whether Ayushman Bharat will succeed will get clearer once the rubber meets the road. But for now, PMJAY has certainly brought a glimmer of hope.

1.2. Why economic freedom is important in India

Livemint, 26 Sep. 2018

There is a strong correlation between it and well-being, economic and otherwise

The release of the Cato Institute and Fraser Institute’s annual Economic Freedom of the World (EFW) report this week is a touch ironic. It comes days after a great deal of ink has been spilt on the tenth anniversary of Lehman Brothers’ collapse. The global financial crisis that followed turned capitalism and free markets into four-letter words for many. The report is a timely reminder of their continued importance in a country like India.

There is a strong correlation between economic freedom and well-being. The EFW report finds that “Nations in the top quartile of economic freedom had an average per capita GDP [gross domestic product] of $40,376 in 2016, compared to $5,649 for bottom quartile nations” in terms of purchasing power parity in constant 2011 US dollar terms. Here’s the important bit: In the top quartile, the average income of the poorest 10% was almost seven times the average income of the poorest 10% in the bottom quartile. Besides, there is a gulf of almost two decades in life expectancy of the nations in the top and bottom quartiles. Political and civil liberties and gender equality levels show similar divergence.

At its core, such freedom is about an individual’s ability to act as a free economic agent making voluntary decisions and choices. The greatest enemy to this is poverty. Economic agency for the poor is a shabby thing. Their choices are too constrained for it to have much substance. India has made more progress against this kind of grinding poverty in the quarter century and change since liberalization started widening the scope of citizens’ economic choices than in all the prior decades. By 2022, the number of Indians living in extreme poverty is expected to drop to 20 million, according to the Brookings Institution. This is startling progress seeing where India stood at the turn of the century.

Unsurprisingly, the EFW index reflects this, with the caveat that rankings and scores are crude means of pinning down such changes. India’s overall ranking has dropped from 83 in 1990, when it stood on the cusp of liberalization, to 96 in 2016. This is due to expansion in the number of countries the index looks at, as well as the progress made by them. In terms of summary scores, though, India has made appreciable progress on some fronts—from the government vacating space for the private sector in various industries to monetary policy with the Reserve Bank of India adopting an inflation-targeting regime in 2015.

On too many fronts, however, it has stagnated. The EFW’s conception of small government reflects a hard-nosed approach that can be reductive here, particularly in the context of a country like India. An efficient government—one that draws down its intervention where it is distortionary and goes big where it needs to—is a better goal. The Indian state has made the wrong call too often. Judicial and law and order capacity, for instance, continue to lag. So do labour market regulations.

The index’s transfer and subsidies category is particularly illustrative. India’s score has barely budged between 1990 and 2016. Little wonder; while a trend towards direct benefits transfers is making subsidy regimes more efficient, the logic of the underlying policy decisions remains ruinous. The RBI, for instance, has noted on multiple instances that farm loan waivers don’t work. They don’t improve farm productivity, they reduce formal farm credit and they cause fiscal slippage. Yet, multiple state governments have gone big on this over the past couple of years. Meanwhile, they—and the Centre—refuse to step back when it comes to everything from stocking limits to export restrictions and monopoly procurement, although doing so would make their waiver munificence unnecessary.

On property rights, likewise—the backbone of a market economy—the scores indicate insufficient progress. That said, the United Progressive Alliance government’s National Land Records Modernization Programme, which the National Democratic Alliance government has folded into its Digital India push, is a move in the right direction. Indeed, state governments are doing some of the most interesting work here from Karnataka’s Bhoomi Project to Rajasthan’s Urban Land (Certification of Titles) Act, 2016. And the Andhra Pradesh government’s push to use blockchain technology for preventing property fraud has perhaps the most potential of the lot.

The EFW report notes that support for free markets has been dipping across the world from well before the financial crisis—since their late 20th century heyday, in fact. This is not particularly surprising. When the benefits of an economic system become baked into it, they can be hard to see. The missteps, meanwhile—from declining labour shares of income to the threat of increasing monopoly power—have come increasingly into prominence. They should be addressed, certainly. But the Indian experience shows how foolish it would be to underestimate the importance of free markets and the economic freedoms they underwrite.

2.1. Statesman, saint, aberrant householder

Livemint, 22 Sep.2018, Rihan Najbit

Having been shadowed by the spirit of Gandhi throughout his career, historian Ramachandra Guha settles accounts with the leader in his latest book

If there is something one can take away from author-historian Ramachandra Guha’s second biographical volume, Gandhi: The Years That Changed The World (1914-1948), it is that men — especially men of significance — are not made alone. They are carefully brought into being by a cast of supporting, often obscure, characters who rarely get written about in history textbooks. Through the biography, Guha gently displaces the notion that Mohandas Karamchand Gandhi could have been who he was without the relationships that nurtured as well as challenged him.

With the 150th birth anniversary of the father of the nation around the corner, Guha explains what makes Gandhi such a compelling figure for a biographer in modern India. “Gandhi has such an extraordinary influence on our political and social life. In books that I wrote on different subjects, he kept popping up over and over again, so I thought I must settle my accounts with him,” he tells BLink in an interview in New Delhi.

“But it’s not just that — what makes him so interesting is that he worked across three continents, he did a lot of extraordinary and peculiar experiments on himself, he had a great capacity for friendship, he was an eloquent and direct writer; and just look at the canvas of that life — all those years set against such tumultuous historical events,” Guha (60) says.

In the book, the Padma Bhushan awardee describes being “stalked by the shadow (and the substance)” of Gandhi throughout his illustrious career. His book India After Gandhi: The History of the World’s Largest Democracy won the Sahitya Akademi Award in 2011. His extensive scholarship on the history of environmentalism in India was marked by figures who drew on Gandhian ideals of how much one ought to consume and how one may articulate resistance. Even his books on the social history of cricket — something Gandhi wouldn’t ordinarily be associated with — found the leader’s name being repeatedly invoked.

And yet, there was a time when Guha was unsure about embarking on the project. It was, after all, not easy to write two hefty volumes about a man on whom reams and reams had already been printed. “I was inhibited from writing on Gandhi for a long time because I thought there are already so many books on this subject. Is there anything new I could say?”

Evidently, yes.

Person of Interest

In July 1914, Gandhi — described by Guha as “lawyer, editor, food faddist, activist and prisoner [and] the unquestioned leader of the small Indian community in South Africa” — began his voyage to India and, indeed, towards his own destiny as one of the most towering political figures of the 20th century.

Guha’s latest book begins with this homeward journey. Written as a sequel to his earlier book Gandhi Before India (2013), which expanded on Gandhi’s childhood in Rajkot and early law career in London, as well as his two decades in South Africa, the new volume focuses on the making of the ‘Mahatma’ alongside the making of the Indian nation.

The preface mentions that the book “tracks Gandhi’s arguments in the fields of politics, social reform, religious relations, and self improvement”, sourced from over 60 archival collections from across the world as well as a vast tranche of biographical material that is informally referred to as the Pyarelal Papers. Pyarelal Nayar had started out in the 1920s as assistant to Mahadev Desai, Gandhi’s secretary, and took over Desai’s position after the latter’s death in 1942.

Over three decades, Nayar compiled a few hundred boxes of valuable archival material. This cache of documents was transferred to the Nehru Memorial Museum and Library in New Delhi, and a substantial part of it was made available for consultation for the first time in 2012. Guha was the first Gandhi biographer to have accessed them.

Making history

Explaining in detail how Gandhi has been constructed as a biographical subject over the decades, Guha says, “Biographers must not rely exclusively on what their subjects say. What did people say about him, what did they say directly to him, what were the controversies he engaged in?” Likening a biography to a novel, he states, “It’s not just about the subject — but about a cast of characters.”

Guha points out that historians had largely confined themselves to the Collected Works of Mahatma Gandhi, compiled by eminent scholar Krishnaswami Swaminathan and his team of editors from 1958-94. The Collected Works, spanning 100 volumes, is an exhaustive assemblage of Gandhi’s words — in the form of his letters, articles, petitions and speeches.

“But when I was writing Gandhi Before India, I found letters written to Gandhi in the National Gandhi Museum in Delhi. These letters were unpublished, even though Gandhi’s responses were in the Collected Works. But if you’re reading his published letters, you need to know what people were writing to him about, what the context of his response was,” says Guha.

So he drew on several scattered sources of documentation — for instance, he found personal letters belonging to Hermann Kallenbach, Gandhi’s closest associate in South Africa, in Israel.

He also expanded his enquiry to include another important, yet neglected archival source — newspapers. Analysing the coverage of the events Gandhi was associated with, such as the Salt March (1930) and his Poona Fast (1932), in both pro- and anti-Congress newspapers, yielded important perspectives about how Gandhi was received and how he was framed as a leader of national standing.

When the Pyarelal Papers were made available, Guha was able to flesh out the context of every relationship Gandhi ever had, as well as understand the larger motivations behind his programmes and protests. “You get a fuller, deeper and richer sense of the different dimensions of his life than you would get if you only read the Collected Works,” he says.

Arguments with Ambedkar

The book reflects the breadth as well as depth of the painstaking research that underpins it. A tome of over 1,100 pages, the narrative spans not just Gandhi’s life but also the lives of those who were tied to him in one way or another. In the chapter ‘Arguments with Ambedkar’, Guha describes in engrossing detail the developments leading up to the signing of the contentious Poona Pact in 1932, which blocked the proposal to create separate electorates for Depressed Classes. The Pact proved to be among the ideological battlegrounds between Gandhi and the other titan of the time — BR Ambedkar. Gandhi began a fast-unto-death to protest separate electorates since, according to him, “if [the untouchables] were ever to rise, it will not be by reservation of seats but will be by the strenuous work of Hindu reformers in their midst”.

As Gandhi’s health began to deteriorate, Ambedkar felt the pressure to reach a consensus. The question of separate electorates was modified to the number of seats reserved for the Depressed Classes in the central and provincial legislatures. At the end of it, Ambedkar is quoted as saying, “I believe it is no exaggeration for me to say that no man a few days ago was placed in a greater dilemma than I was.”

“I think that Gandhi and Ambedkar are complementary as seen from the 21st century. In their lifetime, they were adversaries, even rivals. The Gandhi-Ambedkar relationship is absolutely central in my book, and I have documented it systematically, as it occurred, without any retrospective judgement,” Guha says.

Cast of characters

When asked if there was any surprising discovery in the tranche of documents he went through for months, Guha says, “It’s the small details that surprised me. For instance, it’s through these papers that I realised how close Gandhi was to Mahadev Desai. I would say that if there was a death that hurt Gandhi, it was Mahadev’s.”

Desai — though referred to as Gandhi’s secretary — performed a role far more invaluable. Guha quotes Gandhi as telling Desai, “If you became bed-ridden, I would have to wind up three-fourths of my activities.”

“Mahadev was basically Gandhi’s conscience. He enabled Gandhi to become what he was,” says Guha. The chapter ‘A Bereavement And A Fast’ movingly recreates the sweeping grief that clouded the freedom movement in the wake of Desai’s sudden death. Over 300 condolence telegrams and letters flooded in from across the country.

Other aspects of Gandhi’s long and extraordinary life come under Guha’s microscope. In the chapter ‘The Strangest Experiment’, he examines Gandhi’s obsession with brahmacharya or celibacy. “Why did he think his sexual control was a precondition to Hindu-Muslim unity? It’s bizarre. It’s a leap of faith! I’d say it was a mark of his vanity,” Guha says with a laugh. The chapter details Gandhi’s quest to conquer sexual desire, which convinced him to ask his grand-niece Manu to join him in his bed, much to the objection of many of his disciples as well as luminaries such as JB Kripalani and Sardar Vallabhbhai Patel. But Gandhi persisted with the experiment in order to demonstrate that “men and women could so purify themselves in mind and spirit that they could share a bed without either being put to shame”.

Even otherwise, Gandhi — as far as being a father and a husband goes — has been documented to be less than perfect. The book cites Desai, who was closer to him than his own children: “To be with a saint in heaven is bliss and glory, but to be with a saint on earth is a different story.”

“In many ways he was a typical Hindu patriarch of his time. He could be a harsh and unforgiving father; he imposed his will on his wife. This is true of many famous people: their families have paid the price,” Guha says.

Of his four sons, Gandhi had a relatively healthy relationship only with his youngest, Devdas. “And even there, Gandhi says to Devdas — you have to make up for the failures of the others. I mean, what an unfeeling thing to say to a son,” Guha exclaims.

Nevertheless, Guha says, “In the book, I have tried to integrate all of this. I have tried to give space to each facet of his life without any one facet overwhelming the narrative. You have to take the life as a whole, in all its complexity .”

The book concludes with Gandhi’s assassination and the epilogue attempts to summarise the magnitude of his influence. “Gandhi doesn’t belong to India alone. He is the one figure after the Buddha who has a truly global reach,” Guha concludes.

2.2. India's story compelling evidence that openness in services contributes to growth: report

PTI, Oct. 01, 2018

Washington: India's economic reforms and growth story offer compelling evidence that openness in services contributes to long run growth performance, the IMF, World Bank and WTO said in a joint report Sunday.

India's reforms in the 1990s brought more openness, better regulation and greater investment, allowing Indian manufacturing firms to source services from a range of domestic and foreign providers operating in a more competitive environment, the report said.

The report -- 'Reinvigorating Trade and Inclusive Growth' -- was released by the International Monetary Fund (IMF), World Bank and World Trade Organization.

Manufacturers' access to better, more reliable, and more diverse business services enhanced firms' ability to invest in new opportunities and technologies, to concentrate production in fewer locations, to efficiently manage inventories, and to coordinate decisions with suppliers and customers, it said.

Referring to a 2016 study, the report said procompetitive reforms in banking, insurance, telecommunications and transport boosted the productivity of both foreign and locally-owned manufacturing firms.

Other empirical studies reinforce these findings, but also stress the importance of well-designed reforms accompanied by sound domestic regulation, said the report, asserting that India provides "compelling evidence that openness in services contributes to long run growth performance".

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

3.1. Govt approves new telecom policy, eyes $100 bn investments, 4 mn new jobs

PTI, Sep. 27, 2018

New Delhi: The government expects to attract USD 100 billion in investments and generate four million jobs in the telecom sector as it Wednesday approved a new policy for the industry.

The policy also envisages 50 Mbps of broadband connectivity to every citizen in five years.

"Cabinet has approved National Digital Communications Policy today," Telecom Minister Manoj Sinha said Wednesday.

He said things have very rapidly evolved in the telecom sector and hence new policy has been made to address emerging technology areas like 5G, Internet of Things and machine to machine communication.

The minister said the government wants to focus on socio-economic growth of the country with the help of the telecom sector instead of seeing it as source of revenue generation.

The NDCP proposes to adopt "Optimal Pricing of Spectrum" to ensure sustainable and affordable access to digital communications. High spectrum price and related charges have been the main concern of the telecom services segment, which is reeling under a debt of around Rs 7.8 lakh crore.

Some of the objectives of the NDCP 2018 include providing broadband access to all, creating 40 lakh new jobs, and increasing India's ranking in the global ICT Index to 50th spot.

"We also expect GDP contribution of telecom sector, which has been around 6 per cent, to grow to 8 per cent... and expect USD 100 billion investment to come in," he said.

The global average of telecom sector contribution to GDP is 4.5 per cent. The sector at present contributes around 6.5 per cent to India's GDP.

The government expects to decide on most of the promises made under NDCP 2018 in a year, Sinha said.

"We will decide on most of the things in a year," Sinha said in response to a query on by when the government will be ready with a roadmap.

The last national telecom policy was issued in 2012.

"We have also changed the name of Telecom Commission to Digital Communication Commission. We will work inclusion of other ministry representatives into it," Sinha said.

The minister said the policy has been formulated after it was felt that a "consumer-centric and application-driven policy" be brought in. The vision, Sinha said, is to have robust communication infrastructure and broadband for all.

The policy promises to promote domestic telecom products and equipment manufacturing with preference to indigenous manufacturers and encourage participation of technology start-ups in the sector.

Industry body COAI said the implementation of NDCP 2018 will have a positive, long-term impact on the sector. It also hoped that the DoT will closely monitor the timely implementation of this policy so that the industry can recuperate from the deepening financial stress.

"Thus, the most important and urgent requirement is to restore the financial health of the sector for which the Policy document envisages the reduction in levies and ease of doing business," COAI Director General Rajan S Mathews said.

This will help the industry in achieving the goals of and fulfilling the objectives outlined in the policy, he said.

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

3.2. Structural defects in the financial system and real economy

Livemint, 4 Oct. 2018, Indira Rajaraman

Posting higher tariffs on imports will do nothing at all save perhaps afford some transient fiscal relief; for the economy to soar, the structural constraints must be recognized and removed

The default jolts from the Infrastructure Leasing and Financial Services (IL&FS) conglomerate continue to reverberate through the system. As immediately implied by the unusual statement jointly issued by the Reserve Bank of India (RBI) and the State Bank of India (SBI) on Sunday, 23 September, to soothe the markets, IL&FS is too connected to fail.

This episode happened just when the tanking rupee seemed to be stabilizing, just when a current account deficit (CAD) projected at 2.4 % of gross domestic product (GDP) for the current year had been talked through as not unduly threatening, given the size of external reserves, and just when the flight of footloose jewellers from Default Street looked to be tapering off.

Credit rating agencies had lagged behind bond market participants on evaluating IL&FS debt instruments. The capital market regulator, Securities and Exchange Board of India (SEBI), actually held a meeting with rating agencies, urging them to take cognizance of bond spreads. Further complicating the problem is that the parent holding company, of what is a large unwieldy group of subsidiaries, is not listed and, therefore, not subject to SEBI disclosure requirements.

However, three of the subsidiaries are listed, and they have notably not defaulted so far. The regulatory gaze of the RBI is confined to non-banking financial companies (NBFCs) taking deposits from the general public, in which category neither the holding company nor its subsidiaries belong. The holding company is registered with the RBI as a core investment company (CIC), and one of the subsidiaries as a systemically important, non-deposit taking NBFC (ND-SI-NBFC), but any regulation going with these categories is administered at best with a light touch.

While we pick up the pieces, it is fruitful to look at what the episode reveals about the structural defects in the Indian financial system, which underlie rating and regulatory failure.

The first of these is the oft-mentioned feature of the group, that it had marquee names on its masthead. Although the erstwhile IL&FS board was completely replaced by the government on 1 October, the larger structural problem remains in other companies, other boards. Marquee names are a huge problem in India, because they hold on tenaciously to their positions, and call for surrender in a hierarchy.

Marquee names on boards are a huge problem in India, because they hold on tenaciously to their positions, and call for surrender in a hierarchy

There are very sharp youngsters in the financial sector, who I suspect are restrained from standing up to stalwarts at the top of their reporting hierarchy. This may not be an Indian so much as an Asian shortcoming. There is the well documented case of Korean Air disasters in the late 1990s, where the co-pilot could not presume to correct the pilot’s error even when he knew they would all die from it.

The further problem with marquee names is that simply having them on a company board relaxes due diligence procedures among lenders. Cozy rating, cozy diligence and cozy lending are not a matter of related parties alone (although that too), but of the signalling power of a name or names on the masthead of a borrowing entity.

The second defect is the peculiarly Indian phenomenon of seemingly privately-owned entities, in which substantial stakes are held by the public sector. With this, the private entity transfers risk to the public exchequer, and engages in far riskier behaviour than if the capital being played with was entirely privately-owned. Large equity stakes in IL&FS were held by the Life Insurance Corporation (LIC, the publicly owned insurance behemoth) and public sector banks such as SBI and Central Bank of India, alongside private investors, both foreign (Orix Corporation and the Abu Dhabi Investment Authority) and domestic (Housing Development Finance Corporation). Although the annual reports of SBI and LIC may report equity exposure to other entities in some corner, there is now a desperate need for this information to be given in a centrally collated place.

The reporting requirements under the Fiscal Responsibility and Budget Management (FRBM) Act of the central government do not call for information on equity contributions and lending by cash-rich publicly-owned parastatals such as the LIC. Nor, needless to say, does it carry this information on public sector banks. If this information were given in a matrix array as part of the Union budget documents, in terms of both the stock of equity held in other (public and private) commercial enterprises, as well as the flow addition in the reporting year, we would have, for the first time, some sense of the financial stakes of the public sector as a whole in private companies like IL&FS.

The third defect in the system is the widely-known phenomenon of delays in payments from government departments to companies for work executed or products supplied. In the particular case at hand, the National Highways Authority of India (NHAI, an autonomous agency of the Union government) was in default of payments due to IL&FS for works executed. The amount claimed is in dispute and the arbitrator is expected to mandate only a fraction of the claim as actually due. This is a dispute between a fully publicly funded entity (NHAI) and a company to which the public sector has sizeable equity and debt exposure.

FRBM legislation at both central and state levels has gone seriously astray. The key words in the legislation—responsibility and management—have been interpreted to mean just deficit or public debt targets. FRBM legislation does not carry any provision whatsoever for protection of budget provisions as passed in the demands for grants by the Parliament. All expenditure flows are necessarily tranched, but there are no clear dates for tranches due, and no provisions for penalties if due dates are crossed by a certain permissible number of days. When payments are due, and a department or autonomous undertaking like NHAI has itself not received the funds with which to pay an outside contracted supplier like IL&FS, the usual procedure is to find fault with the quality of work done or goods supplied. If the work was indeed substandard, the penalties leviable should in principle have been laid down in the contract, such that the sums owed in both directions are known clearly in advance. Had there been a fully specified contract of that kind in place, there would have been no cause for delay in the payments due.

This latest financial jolt came in the face of a widening external CAD, which has raised issues about the structural defects in the real economy. On the balance of trade, there is finally some econometric evidence presented in the latest annual report of the RBI for 2017-18 that disruptions in domestic supply chains following demonetization did indeed result in a surge in imports replacing domestic industrial inputs.

The report terms this phenomenon ‘reverse import substitution’, as this is the reverse of the import substitution that we tried to do during the socialist era. The exercise, in an extremely painstaking way, isolates the impact of demonetization amid the whole host of overall macroeconomic factors, including exchange rates and domestic price conditions, which together determine the ratio of imported to domestic industrial inputs.

The regression results show that there was indeed a sizeable and statistically significant ramp up in imports of industrial inputs during a defined post-demonetisation period. It also finds that post-goods and services tax (GST), from October 2017 to May 2018, there was a decline in import intensity, although a much smaller effect, suggesting that the earlier import thrust had not been fully reversed by May 2018.

What is more worrying than the demonetization impact, which could in principle be entirely reversed, is the coefficient of a term in the estimated equation showing the ratio of imported inputs going up in response to growth in domestic industrial output more generally. This is about the demand for industrial inputs skewing more in the direction of imports than domestic supply (not the same as the income elasticity of demand of imports in aggregate, which throws together imports of final goods and inputs into the same pot). The report attributes this to “constraints on domestic availability”.

It is, however, not entirely clear whether the study covers all industrial inputs or just raw material inputs. If the latter, then constraints on domestic production of iron ore would be an example of an explicit domestic constraint (whether imposed by the judiciary or the executive). But if it extends also to produced inputs like steel, a “domestic availability constraint” suggests that it is just much easier for an industrial unit to import than to get delivery on a domestic order. That is a far more serious and debilitating phenomenon, pointing as it does to widening trade deficits going forward, since supply constraints cripple export growth as well.

This is consistent with recent work by Pranjul Bhandari in which she finds that aggregating across exports of goods and services, domestic constraints accounted for half of the decline in export performance over 2014-18 and much more in goods alone.

A more recent overlay, in the form of the failure of the GST machinery to adequately refund tax credits to exporters, can be treated in principle as a transitory factor. Even if GST gets its house fully in order, and exporters receive their refunds in time, there remains an abundance of structural factors limiting export growth.

The flip side is that the Indian economy can soar if structural constraints in both financial and real sectors are removed. The need of the hour is to recognize and remove them. Posting higher tariffs on imports will achieve nothing at all, other than maybe to afford some transient fiscal relief.

Indira Rajaraman is an economist.

4.1. World university rankings: A record 49 from India among the best in the world

Livemint, Sep. 27, 2018

New Delhi: Led by Indian Institute of Science (IISc) in Bangalore, India has a record 49 institutions among the best universities in the world, according to the Times Higher Education (THE) World University Rankings 2019 published Wednesday.

While IISc remained the top school from the country, the Indian list saw some fresh names including the newly established Indian Institute of Technology in Indore (IIT Indore) making an impressive debut in the global rankings. However, all Indian institutes are outside the top 200 global list that was topped by Oxford University.

While IISc was kept in the 250-300 ranking cohort, IIT Indore made its debut with a presence in the 351-400 best universities group ahead of established IITs in Delhi, Madras and Mumbai.

IIT Bombay with a global ranking in the 401-500 group is the third best from India and has slipped in the latest ranking by 50 places when compared with its previous ranking. IIT Roorkee, however, improved its ranking by 100 places to be clubbed in the same group as IIT Bombay. After the top 200 list, THE does not assign individual rankings to universities but club them in groups.

Pradeep Mathur, director of IIT Indore said his institute has been focusing on research by investing in research facilities, providing incentives for publications and patents, and recruiting committed researchers.

India increases its presence again, claiming 49 places this year, up from 42—the fifth best-represented nation in the world. The country is the most-represented country in the table when nations with representatives in the top 200 are excluded, Phil Baty, editorial director of Global Rankings for THE said in an email.

Interestingly, two private institutes—Karnataka-based Jagadguru Sri Shivarathreeswara University now renamed as JSS Academy of Higher Education and Research, and Tamil Nadu-based Amrita University have made the most progress in the 2019 rankings among Indian institutes.

Besides, three new IITs and two Indian Institute of Science Education and Research (IISER) have found a place among the top 1,000 universities in the world. This in a way reduces apprehension about whether new institutes established by government will be able be catch up with their old peers.

“India’s bursting with innovation and ambition—the nation has serious potential to grow into a leading player in global higher education. But while it increases its presence again in this year’s table, the majority of its universities remain immobile or in decline, struggling against increased global competition—particularly from east Asia,” Baty said.

“Sustained investment, a continued drive to attract leading global talent, and a strengthened international outlook will be key to boosting its global reputation and research influence. Its current higher education reforms could be key to helping institutions progress,” he added.

Globally, Oxford claims first position for a third consecutive year followed by Cambridge and Stanford University. The Massachusetts Institute of Technology (MIT) rises one place to number four but the California Institute of Technology drops two places to number five.

Tsinghua University of China is the new number one school in Asia replacing National University of Singapore.

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

4.2. The most influential judgments in Supreme Court’s history

Livemint, 18 Sep. 2018, Sriharsha Devulapalli and Vishnu Padmanabhan

The Maneka Gandhi vs Union of India verdict has been cited 215 times by other apex court judgments, followed by State of Haryana vs Bhajan Lal

New Delhi: These are tumultuous times for the Supreme Court (SC). Earlier this year, four judges openly questioned the Chief Justice in an unprecedented rebellion. More recently, the government raised questions about judge representation at the apex court. Yet, amid all this, the Supreme Court has delivered judgments with profound implications for the Indian society.

In India’s common law system, judgments are critical for setting a precedent that serves as the foundation for delivering justice. The Delhi lieutenant governor and Section 377 verdicts will undoubtedly go down in history as landmark judgments and influence several future cases. But what are the most influential cases currently?

To answer this, Mint examined all of the 50,000-plus Supreme Court’s judgments from IndianKanoon.org. We preferred Indian Kanoon to the Supreme Court’s official website because the Supreme Court website has several missing judgments, including notable cases such as the Indra Sawhney vs Union of India judgement delivered in 1992. Indian Kanoon has a more comprehensive database and is widely considered by legal scholars as one of the best resources on India’s legal system. According to Aparna Chandra, professor at the National Law University Delhi, Indian Kanoon is the “first stop for legal researchers”.

Our data shows that Supreme Court judgments are a complex web—70% of all judgments have been cited by at least one other judgment. Within this network, the simplest way to assess importance is to look at how many times a judgment has been cited by other Supreme Court judgments.

Using this citation count, India’s most influential judgment is the verdict in Maneka Gandhi vs Union of India. In 1977, the passport of Maneka Gandhi (the current women and child development minister) was impounded by the ruling Janata Party government. In response, she filed a petition in the Supreme Court challenging the government’s order. While the court did not reverse the government order, the observations in their judgment had far-reaching ramifications. The seven-judge bench asserted the right to personal liberty as enshrined in Article 21 of the Constitution, making it an important precedent for cases related to fundamental rights. Since then, it has been cited 215 times by other Supreme Court judgements (chart 1).

The judgment was also important because it was part of a significant change in the Supreme Court’s approach to justice. “The Maneka Gandhi case epitomized the shift in legal jurisprudence in the late 1970s, with the Supreme Court taking on a more active role and trying to assert its legitimacy after the Emergency,” said Chandra. The Supreme Court came in for strident criticism for failing to defend liberties and constitutional values during the Emergency.

The longest judgment ever delivered by the Supreme Court, Kesavananda Bharati vs state of Kerala, is the third-most cited case (with 155 citations) in the history of the apex court. In a 417,000-word tome, the judgment established the Supreme Court’s authority over the Constitution and prevented Parliament from altering its ‘basic structure’. In her book, 10 Judgments that Changed India, Zia Mody credits this judgment for “protecting the Indian state from collapsing like many of its South Asian counterparts, whether through totalitarian rule, military coups or other extra-constitutional means”.

Supreme Court judgments also influence judgments delivered at lower levels of the judiciary. Including citations from lower courts generates a significantly different list (chart 2). On this metric, the most cited judgment is the 2012 judgment in Gian Singh vs state of Punjab (cited 10,067 times). In the event of a settlement, the judgment provides the framework for high courts to decide which proceedings cannot be quashed (such as serious and heinous offences) and which proceedings can be. As a result, it is frequently cited by high courts when settlement issues crop up.

More generally, judgments like this are crucial for lower courts who invoke them when dealing with important procedural issues (such as settlement, bail and FIR registration).

“At high courts and lower courts, the precedent set by the Supreme Court is crucial for dealing with procedural issues. This is why certain judgments, such as Gian Singh, are repeatedly cited,” said Akshay Sapra, a lawyer practicing at the Delhi high court and partner at Ardent Legal (Advocates & Solicitors).

Beyond influential cases, our analysis also reveal influential personalities. As the Supreme Court is the custodian of the Constitution, we scanned the text of all judgments to see which of the Constitution’s architects are cited the most (chart 3).

Unsurprisingly, B.R. Ambedkar, the chairman of the drafting committee, tops the list with 243 mentions, far exceeding the next influencer, constitutional advisor B.N. Rau, with 67 mentions.

Ambedkar’s influence has not waned over time: 26% of his mentions have come in the past four years. Along with India’s political class, India’s highest court seems to be re-discovering the wisdom in Ambedkar’s words.

This is the first of a two-part data journalism series on the Supreme Court. The second part will examine the Supreme Court’s workload and the pending backlog of cases.

5.1. Life lessons from India’s science startups

LiveMint, 19 Sep. Siddarth Pai & Dinesh Goel

Startups focused on scientific and technological innovation are on the uptick. It’s time private industry and money stepped up to the plate

Bengaluru: Popular wisdom has it that India has always had an abundance of trained talent but has been a laggard nation when it comes to product innovation. This is especially true with innovation that is based on science and technology. We have largely been an importer of new and innovative products and solutions, and have, at best, been only somewhat successful in creating cheaper substitutes of products that were invented outside the country, through reverse engineering an innovative drug or product for the local market.

The basics of economics tell us that it takes labour, capital, and access to efficient markets for a business to innovate new products. While talent has never been in short supply, India has lacked the capital allocation as well as the soft infrastructure for efficient markets that are required for innovation to germinate and thrive. It’s no surprise then that a fair number of our talented scientists and technologists look to emigrate so that they can work in environments that provide both sufficient capital and the necessary market infrastructure for innovation. Indian immigrants in countries like the US have been large contributors to the scientific and technological innovations that impact the world today.

Thanks to innovations in telecommunications technology, Indians can now have their work brought to them rather than having to travel to the work. This has in large part contributed to the boom in Information Technology (IT) and Business Process Management (BPM) outsourcing that we have witnessed over the last two decades. The capital and the market infrastructure still lie abroad; all that we have been able to do is to export the skills of our labour force without having each member of the workforce board an airplane. IT and BPM services exported from India over the last 25 years have now grown to a staggering $200Bn per year.

This labour export has declined in its rate of growth over the last few years, mainly due to restrictive trade practices around the world and due to the automation of many IT and BPM services which now do not need human intervention. This shift has forced Indian IT services companies to embark on a journey to build (or buy) technology products to continue to stay relevant in the world economy. Their progress has at best been slow and unsteady. While there are some select examples of successful software products made in India, largely in the core banking and finance world, these remain few and far between.

Today’s market forces that create disproportionate economic growth and value have shifted to deep scientific and technological innovations. Such a shift is evident in the companies that make it to the top of the list by market capitalization in the world today. The storied product innovation at Apple Inc has allowed it to cross $1 trillion in market capitalization. Alphabet (Google’s parent company), Amazon and Microsoft have all relied on Artificial Intelligence, Data Mining, and Cloud Services in order to stay relevant and highly valued. These companies at the top are giant tech companies—many of them just about 20 years old. Meanwhile, as these innovators have made this trek to the top, a long-standing industrial giant like General Electric has recently vacated its spot in the Dow Jones Index and is struggling to stay afloat.

I is for innovation

Our romantic view of technological or scientific innovation shows a Bill Gates or a Steve Jobs or indeed a Steven Hawking toiling away in a garage in the Bay Area or in a motorized wheelchair at an English university. This view of a sudden light bulb of inspiration going off in an inventor’s head is puerile. We have billions of smartphones in use today, but they aren’t in our hands because Jobs toiled upwards through the night while his companions slept. It took many other researchers and product development specialists, government support for research and development—and, importantly, private sector support for cutting edge technology with investors willing to stake their money to produce the marvel of a miniature computer that many of us hold in our hands today.

And, let us not forget that continued incremental advances are needed in order to produce breakthrough technologies. Today’s smartphone is almost unrecognizable when compared to the clunky miniature ones that came out in the early years.

A further nuance in the world of scientific and technological innovation is the stark difference in the types of problems scientists are trying to solve. Some of their work falls in the realm of the “Exact Sciences” which includes innovation in such disciplines as mechanics, fluid dynamics, optics, and deep learning and artificial intelligence technologies. The other work falls in the realm of the “Life Sciences” or “Bio Sciences” which includes innovations in disciplines such as bio-chemistry, cellular biology, drug discovery and the like.

This nuance was made patent by Dr. C.V. Natraj, until recently a senior research scientist at Unilever and now a member of the Society of Innovation and Development (SID) at the Indian Institute of Science (IISc). Dr. Natraj made the point by categorizing these disciplines into two different categories of innovation—one the complex, and second, the complicated. A complex innovation is a breakthrough in a process where a given set of inputs do not produce a predictable output. The human body is such a complex process. By contrast, a complicated innovation is one that provides a breakthrough where a set of inputs can produce a predictable output. An example of a complicated mechanism is a motor car, a spaceship, or an MRI machine, whereas a complex innovation is more likely to spawn a new drug or bio-chemical breakthrough.

Risk and return

In a recent letter to shareholders, Jeff Bezos talks of the role of a corporation in taking risks in order to invent and innovate. In his letter he says “we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins.”

China saw this massive return yielding innovation boom coming. China, the world’s top manufacturing outsourcing destination, once wanted to compete with India to become the world’s top outsourced services nation. It has jettisoned this quest and has focused its efforts towards deep innovation instead of trying to catch up with India on the global IT services industry.

It would seem then, that the basics behind creating an economy based on scientific and technological innovation requires four primary inputs, all working in concert with one another:

The talent (which India has aplenty)
Support from the government in creating both the soft and hard infrastructure in order to facilitate an innovative economy (India’s government is now getting a lot more active)
Support from corporations
Support from finance, the life-blood of risk taking

So, where is India today and what lies ahead?

The India story

India has long ranked low when it comes to original research and innovations that are game-changing in nature. It produces only a quarter of the research papers that China (now ranked second after the US) produces. In a count of highly cited research papers between 2012-2016, India had 989, US 15,000 and China 7,213.

But the number of citations is only one isolated metric when it comes to understanding the impact that research can have. In 2016-17, just one US company (Qualcomm Inc) filed 1,840 patent applications; more than twice the total applications filed by the top laboratories in India (50 labs under the Defence Research and Development Organization, 40 labs of Indian Institute of Science, 23 Indian Institutes of Technology and 6 research facilities under the Indian Space Research Organization).

The Indian government has woken up to this fact and in recent years, has supported fast growth in the science and technology startup ecosystem by setting up several incubators and accelerators. High quality talent tries its hand at entrepreneurship and there is generous financial support from the government for the commercialization of scientific research.

India now ranks third among global startup ecosystems with more than 5,000 startups with over 1,000 new additions in 2017 alone. And it is projected to have 10,000+ startups by 2020. Meanwhile, there is a high level of venture capital activity in sectors outside pure technological or scientific innovation. Venture funding is now a crowded space, and at last count, over 450 distinct Alternate Investment Funds (or AIFs) have been registered with the Securities and Exchange Board of India (SEBI). These firms have raised committed capital of ₹1.65 trillion as of 31 March 2018 and have deployed ₹61,400 crore from this corpus. Unfortunately, however, very few of these AIFs focus on deep scientific or technological research. Most have been set up to pursue consumer internet, e-commerce, aggregation plays and consumer-services oriented business models.

However, recent analyses indicate that startups focused on areas that are directly linked to scientific and technological innovation are on the uptick. For instance, over 1,000 ventures were set up between 2012-16 just in the biotech sector. The sector has created more than 3,000 entrepreneurs, one-third of whom are women. The health-tech sector has seen capital deployment grow from $62 million in 2010 to as much as $333 million in 2017.

Times are changing

There has never been a more exciting time for India’s Artificial Intelligence (AI) and deep tech startup ecosystem. The AI industry in India is currently estimated to be $180 million in revenues with about 30,000 AI professionals in India. Startups are also playing a key role in transforming agriculture, which still accounts for at least half of India’s workforce, but only about 13% of the GDP. New fronts are opening up in terms of precision farming, hydroponics and the usage of drones.

Despite this growth, save some small exceptions, corporations have yet to truly support the country’s research and innovation bases. There is little sizable investment in research and development, and very few strategic buys where an Indian company buys out a firm solely for its patents and Intellectual Property (IP). Neither is there a concerted effort by Indian industrial houses to truly support research at Indian academic institutions, or to fund startups that may one day greatly contribute to their bottom line. This is made starkly evident by the fact that the people who run incubators have to go after corporations to access their “Corporate Social Responsibility” or CSR monies rather than their investment monies.

Ask CS Murali, chairman of SID at IISc, which currently incubates about 22 startups. SID is now already working on a plan to open a research park at its Bengaluru campus in the next three years that will scale up its current incubation capacity tenfold. All of these startups qualify as deep science/tech given the cutting-edge patentable solutions they are creating. SID also adds a criterion that impacts a startup firm’s selection into the incubator—the firm should have potential for social impact. For example, one of SID’s startups, Open Water, converts any contaminated water (not just tap water) into potable water using a novel technological process that does not rely on filters and membranes or reverse osmosis, as most of today’s available solutions do.

We have a responsibility to add to the scientific and technology eco-system that the government is trying to create. It is time that private industry and money in the hands of venture capitalists and private equity funds stepped up to the plate. Their participation is sorely needed for India to join the leaders in the post-industrial world. We risk getting left behind if they don’t. As a wag once said, “there has never been a time of greater promise or peril.”

*****

Spectrum of tech startups: healthcare to space tech

Pathshodh: Originated from SID at IISc, Bangalore, PathShodh has developed a novel, miniaturized biosensor device that monitors diabetes and helps in early detection of chronic kidney diseases. This is a venture that has leveraged government grants for its progress.
Vyome Biosciences: One of the few companies in the bio sciences space that has raised rounds of venture capital funding. It has emerged as one of the promising biotechnology startups, backed by an adroit clinical expert team.
Bellatrix Aerospace: This SID (IISc) incubated company is working on advanced satellite propulsion systems. The firm fosters technologies in electric propulsion, new generation propellants and propellant chemistry, including the use of water as a fuel.
Tonbo imaging: This company builds unique imaging technology that allows users to interpret the environment around them. Its multi-sensor imaging products/systems are useful for military, security, transportation safety and industrial inspection applications.

Siddharth Pai and Dinesh Goel are partners at Siana Capital, a venture fund management company focused on deep science and tech in India.

5.2. India’s worth as an investment destination

Livemint, 8 Oct. 2018, Anushree Sinha and Saurabh Bnadyopadhyay

The N-SIPI index provides a useful ground-level view of the business environment in various states

The efforts towards improving the business climate started some years ago and deepened when the government’s flagship initiatives, Make in India and Start-Up India, took centre stage. The department of industrial promotion and policy (DIPP) had rolled out the Business Reform Action Plan in 2015. India subsequently leapfrogged a commendable 30 places to get placed amongst the top 100 countries, according to the World Bank’s Doing Business2018 report. But have we arrived where we should?

The National Council of Applied Economic Research designed an index in 2016 using six metrics—land, labour, infrastructure, economic climate, political stability and governance. This was intended to give a granular picture of the investment climate. This state investment potential index (N-SIPI) incorporated the perceptions of entrepreneurs, based on survey of industrial units. In the third edition, N-SIPI 2018, feedback on the goods and services tax (GST)—the most important initiative on unifying India into a massive common market—was added. The survey covered 1,049 units in 20 states and Delhi, ranking them on their investment potential based on the six major metrics. Interestingly, the rankings are broadly consistent with another study on the performance of states in terms of their service delivery performance . Such comparisons suggest that the N-SIPI rankings based on perceptions and secondary data are reasonably robust.

There is also merit in recognising the strength of the states on individual metrics. For example, land by itself is a critical issue and is perceived to be complex because of the maze of regulations. However, strikingly, most states found no difficulty in acquiring land for industrial use except five: Bihar, Jharkhand, Karnataka, Maharashtra and Odisha. In these states, the percentage of respondents facing difficulties ranged from a little less than 30% to a little over 70%.

Unlike land, perception on labour constraints had wide differences across the states. States like Jharkhand, Karnataka, Himachal Pradesh and Assam were at one extreme, with more than 40% of the respondents expressing concern regarding the availability of skilled labour. Meanwhile, companies located in Gujarat, Haryana, Uttar Pradesh and West Bengal had more favourable views. Respondents have also shown major variation in perception of labour quality. Haryana and Gujarat continue to be viewed as the best states in this regard.

In another surprise, labour relations are not seen to be a problem for nearly 66% of the respondents across the states. Very diverse states such as Haryana, West Bengal and Gujarat were the best performers here, while Karnataka, Telangana and Andhra Pradesh have noted moderate to severe constraints. Labour laws have been a constraining factor in Maharashtra, Karnataka, Madhya Pradesh and Chhattisgarh. And while Gujarat reported no problems, Chhattisgarh reported severe problema.

Power is a critical component of infrastructure that supports industrial advancement. The survey found that power availability was relatively good, with no significant difficulty faced by 78% of respondents on an average. States such as Chhattisgarh, Haryana, Punjab and Karnataka reported an excellent supply of power, while states that lagged behind included Uttarakhand, Jharkhand and West Bengal. With respect to water availability, the situation looked best in the case of Himachal Pradesh, Karnataka and Haryana. Surprisingly, despite being a coastal state, nearly one-fifth of the severely constrained firms belonged to Maharashtra, while Uttarakhand emerged as the most severely water-constrained state. The performance of states concerning road and rail connectivity was not an issue with over two-thirds of the surveyed firms while a little over one-fifth shared a moderate concern on the issue. Yet again, Haryana, Himachal Pradesh, Karnataka, Kerala and Rajasthan did very well, while a developed state like Telangana was ranked lowest in the perception of good road and rail connectivity in the state.

The perception on industrial policy is critically important to promote efficiency and productivity. A well-designed industrial policy percolates through different levers, such as special support to a select group of industries, establishment of special economic zones to attract foreign participation or investment, privatization of public sector units, and promoting public-private ventures. Here, a high proportion of positive responses came from Uttarakhand, Haryana, Gujarat and West Bengal. On the other hand, Karnataka, Chhattisgarh and Maharashtra appeared to be the poorest players in this regard.

GST was introduced in July 2017, and N-SIPI 2018 found that more than 40% of firms faced moderate to severe difficulty and 43% did not perceive any impact of the GST policy at all. This negatively impacted business operations severely, according to 17% of the firms. Unexpectedly, Bihar emerged as the most GST-friendly state followed by Gujarat, while firms from Madhya Pradesh, Kerala, Himachal Pradesh, Andhra Pradesh, Telangana, Uttarakhand and Tamil Nadu faced significantly negative impact. Of these, the worst hit was Andhra Pradesh, with 58% of respondents crying foul. On the related aspect of e-way bills, the majority of the respondents reported the impact being positive. The impact is remarkably good for Jharkhand (77%), followed by West Bengal and Bihar, while there is no perceived impact in Telangana, Maharashtra and Gujarat.

The findings demonstrate that states have to work hard to even remain where they are as the rankings are relative, competitive and in flux. They also show that learning lessons from other states is a good way forward.

Anushree Sinha and Saurabh Bandyopadhyay are, respectively, senior fellow and associate fellow, NCAER.

- AGRICULTURE, FISHING & RURAL DEVELOPMENT

6.1. TAFE goes national with its tractor-sharing platform

BusinessLine, 21 Sep. 2018

Tractors and Farm Equipment Ltd (TAFE), the country’s second largest tractor maker, has announced the national expansion of its farmer-to-farmer tractor sharing platform initiative – JFarm Services and the supporting app.

The JFarm Services platform leverages technology to provide free-of-cost access to the platform for the rental of farm mechanisation solutions and will offer an opportunity to build a viable rural entrepreneurship model while augmenting farm productivity and income of small and marginal farmers.

‘Farmer to farmer’

Farmers who own small parcels of land across India can now hire modern farm equipment for their farm productivity needs.

Farmers looking to rent out their existing tractors and farm equipment are linked directly to farmers seeking to hire them at no extra cost. ‘Farmer-to-Farmer model’ (F2F) of JFarm Services app enables them to contact farmer entrepreneurs, negotiate rental prices and fulfil their requirements.

“The nationwide launch of JFarm Services as a CSR initiative is aligned to TAFE’s vision of cultivating the world and our commitment to the economic well-being of Indian farmers,” Mallika Srinivasan, Chairman & CEO – TAFE, said in a statement.

“With this launch, we aim to touch millions of farmers who have no access to farm mechanisation and modern technology while accelerating the progress towards the Prime Minister’s vision of doubling farm incomes by 2022,” she said.

Farmers can hire equipment via the JFarm Services App or by contacting the toll-free helpline 1800-4-200-100 or the local Custom Hiring Centres. Farmers who don’t own smart or feature phones can use the toll-free helpline. The platform also provides periodic updates on local weather, market, agri-news and mandi prices without any fee.

TAFE is collaborating with various State governments such as Bihar, Odisha, Andhra Pradesh, Karnataka, Tamil Nadu and Assam to roll out the JFarm services platform. JFarm Services initial pilot roll-out covered Madhya Pradesh, Rajasthan, Gujarat and Uttar Pradesh, directly benefitting around 60,000 users resulting in over 1,00,000 orders, adding up to about 250,000 hours in hired farm machinery usage.

6.2. GE Healthcare to partner 100 outfits to skill 1 lakh youth

BusinessLine, 10 Aug. 2018, Swathi Moorthi

GE Healthcare will collaborate with some 100 skill partners across India to train over one lakh youth for the healthcare industry.

The company is also looking to expand operations in Africa and ASEAN countries.

Partnerships

Terri Bresenham, President and CEO, Sustainable Healthcare Solutions, GE Healthcare, said the company has partnered with 24 organisations across India, including Tata Trust, to train youth. So far, over 1,000 people have been trained as technicians in various functions such as X-ray, operations theatre and ultrasound and all have found jobs.

The initiative took shape two years ago to bridge the skill gap in the healthcare sector, mainly in tier II and III cities. GE Healthcare is the knowledge and technical partner that will train the staff of the skill partner. Tata Trust helps with the financing by providing interest-free loans that can be repaid a year after the student graduates.

Growing numbers

Sharmila Anand, Managing Director of Santosh Education and Healthcare Pvt Ltd, a social enterprise and skill partner for GE in Chennai, said the enrolment has doubled and the organisation is seeing more students from rural areas. “Earlier we had to send our trainer to smaller villages. But now things are slowly changing,” she said.

Anand said the training, which focusses mostly on women, makes a difference as they are able to provide for their families with the guarantee of 100 per cent placements. “They earn a minimum salary of ₹13,000 a month,” she added.

These are the kind of impact the company is hoping to achieve in India and for that changes in policy are important.

“For such changes to happen we need to have women as decision-makers, but they barely make up 30 per cent the higher level,” Bresenham said.

7.1. Amazon India eyes more than 50 FCs in 13 states by year end

PTI, Sep. 19, 2018

Bengaluru: E-commerce giant Amazon India will end 2018 with more than 50 Fulfilment Centres in 13 states across the country with a combined storage space of close to 20 million cubic feet,a senior company executive said Tuesday.

Amazon's largest Fulfilment Centre in Karnataka was opened near Attibele on the Karnataka-Tamil Nadu border, close to Bengaluru Tuesday, with a view to enhancing customer experience ahead of the festive season.

The centre is one of the five announced for 2018, company Vice President (Customer Fulfilment) Akhil Saxena told reporters.

Saxena said the facility would hire 2,000 contractual positions over the next year.

"There are several hundred people working outside the facility as delivery associates," he said.

Spread over around 350,000 square feet with close to two million cubic feet of storage space, the centre would enable faster delivery to customers in the region, he said.

With this infrastructure, Amazon has increased its storage capacity by more than one and half times since last year in Karnataka.

The company now has close to 3.5 million cubic feet of storage space in the state.

"The fulfilment centres are present in 13 states and Amazon has 15 'Prime Now' nodes," he added.

Saxena said there are four such centres in Karnataka and more than 200 Amazon Logistics Stations, besides close to 25 logistics core stations.

Besides this, there are 350 Service Partner nodes in 320 cities across the country and more than 60 in Karnataka alone.

Saxenna said there are close to 17,500 'I Have Space' stores in 225 cities and close to 2,000 in Karnataka, which would enable sellers use the local infrastructure, save capital and help them grow.

He also said the centre at Attibele would cater to customer demand for products in categories such as Smartphones, Consumer Electronics, Appliances, Fashion and Consumables (FMCG).

Saxena said millions of products are currently available for immediate shipping through Amazon's network of such centres in India.

"This selection will only increase with the expanding FC footprint and benefit sellers and customers alike,"he said.

Saxena said the company's customers and the Amazon mobile shopping app have access to over 170 million products across hundreds of categories.

It would also provide support to the local economy by enabling the growth of ancillary businesses such as packaging, transportation, logistics, and hospitality across the state, he said.

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

7.2. Birla group sells ‘More’ chain to Amazon-Samara

BusinessLine, 20 Sep. 2018, Priyanka Panit

Deal estimated at ₹4,500 crore; ends retail dream of Kumar Mangalam Birla

Kumar Mangalam Birla’s dream of making it big in the retail segment has ended with Aditya Birla Group selling off its struggling supermarket chain — More — to US online retail giant Amazon and Indian private equity firm Samara Alternative Investment Fund.

While the deal size has not been disclosed, market experts are pegging it at about ₹4,500 crore, making it one of the biggest deals in the offline food and grocery segment.

Birla had launched the venture in 2007 with plans to set up a network of 1,000 stores. But just over a decade later, Aditya Birla’s retail ambition has been abandoned owing to competition from e-commerce players. According to company insiders, the lack of a long-term strategy also hindered growth for Aditya Birla Retail, which reported a loss of ₹644 crore in FY17.

With debt climbing to ₹ 6,573 crore for the retail venture, Aditya Group has been trying to sell More for the past few years.

Under the deal signed on Wednesday, Witzig Advisory Services Pvt Ltd, owned by Indian private equity firm Samara Alternative Investment Fund, is the lead buyer with 51 per cent stake; Amazon has acquired 49 per cent. Amazon has also acquired a substantial stake in More’s back-end company RKN Retail, according to sources. Amazon declined to comment.

More, formed in 2007 with the acquisition of South India’s retail chain Trinethra, is India’s fourth-largest food and grocery chain with over 500 stores. It competes with other affordable retail chain networks such as Reliance Retail, DMart and Future Group.

The deal frees the Aditya Birla Group to focus on other key businesses including cement, finance, telecom, and metals.

Group Chairman Kumar Mangalam Birla, in a mail to his top management, a copy of which BusinessLine has seen, said, “ ...ABRL needs a strong balance sheet and large investments. Keeping in mind the Group’s other allocations and priorities and ABRL’s need, I believe that at this stage, it serves the best interest of the business to opt for an external investor.” The existing management would continue to drive the business, he said.

Experts view this deal as a great exit for the Aditya Birla Group. It also signals a consolidation in the $400-billion food and grocery sector. Other players in the segment are Godrej Natures Basket, Star Bazaar and online players such as BigBasket and Grofers.

Arvind Singhal, founder of retail consultancy firm Technopak, said, “The deal frees up equity for Aditya Birla and also poses a threat to other small retailers, given Amazon’s interest in food and grocery.”

Amazon India has been ramping up its food and grocery business with Now and Pantry and might use More’s offline channel to retail its private labels and also use the network to serve as a pickup and delivery point for its customers, said Devangshu Dutta, founder of retail consulting firm Third EyeSight.

“This deal can’t be treated as a watershed moment in the retail segment at the moment but can lead to a consolidation in mid term given the number of regional and smaller players and entry of newer brands in the market,” Dutta said adding that More’s large customer base would help Amazon get insights into the purchase behaviour in the smaller towns, where More’s store are present.

8.1. Indian, Chinese businessmen discuss about export of Indian oil seeds meals to China

PTI, Sep. 20, 2018

Beijing: Indian and Chinese businessmen on Wednesday jointly discussed opportunities for the export of Indian oilseed meals to China, the world's major consumer and important importer of the oil meals, a senior official said.

Led by the NAFED Managing Director Sanjeev Kumar Chadha, a 20-member Indian delegation, including 18 Indian oil meal exporters, participated in a seminar and discussed about the export possibilities of with the Chinese importers organised by the Indian Embassy today, an official statement said here.

The Indian delegations interaction with more than 120 representatives of around 80 Chinese import houses, an Indian Embassy press release said.

The event was organised in partnership with China Chamber of Commerce of Foodstuffs, Native Produce and Animal By Products (CFNA) and China Feed Industry Association (CFIA).

India is a major producer of best quality rapeseed meal, soya meal and all such other meals. China is a major consumer and important importer of oil meals in the world.

Indian Ambassador to China Gautam Bambawale held a detailed discussion with the Indian delegation and explained them about the current level of economic commercial engagement and need to have major push from Indian industry to boost Indian exports with cost competitiveness, quality and timely delivery, the statement said.

Prashant Lokhande, Counsellor (Economic and Commerce) said that Indian oil meals are Non-Genetically Modified and hence is very high in quality and demand.

In last five months of this year, India exported more than 1.1 million tons of oil meals to South Korea, Vietnam and Thailand, registering a growth of 21 per cent year on year, the statement said.

Rong Weidong, Vice Chairman of CFNA who spoke at the meeting called upon Chinese importers to make full utilisation of presence of Indian exporters and try to sign contracts today itself.

The seminar was followed by buyer seller meet in which the businesses from both sides had in-depth interactions covering price, quality and delivery commitment, the press release said.

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

8.2. Government plans to double edible oil production by 2022 to cut import dependence

Business Standard, Sep. 25, 2018

Mumbai: The central government has prepared a five-year schedule to double India's edible oil production and reduce import dependence, through expansion in sowing area and yield.

At a recent rabi conference, the ministry of agriculture revealed the plan to take annual production to 13.69 million tonnes (mt) by 2022, as against the current 7.31 mt.

Several such roadmaps were drawn in the past, too, but the momentum did not continue. Sustained increase in consumption against stagnating production widened India's import dependence to 67 per cent for 2016-17, with an estimated demand of 24.5 mt.

"Despite notable performance in domestic production of the nine annual crops (compound annual growth rate of 3.89 per cent), it could not match the galloping rate of per capita demand (around six per cent) due to enhanced per capita consumption (19 kg edible oil per annum), driven by increase in population and enhanced per capita income. The production of nine annual oilseed crops (primary source) has been targeted at 45.64 mt, from which availability of vegetable oils would be about 13.69 mt by 2022," said a senior official from the ministry.

Total vegetable oil import was around 14 mt, worth Rs 730 billion, during oil year (October 1 to September 30) 2016-17. This was 67 per cent of the 24.5-mt consumption.

Annual cultivation was on about 26.7 million hectares, around 70 per cent of which was rain-fed. The area has seen a deceleration in general due to relatively lower profitability as against competing crops like maize, cotton or chickpea.

Total vegetable oil requirement by 2022 is estimated at 33.2 mt, assuming per capita consumption of about 22 kg per person a year, from 19 kg during 2015-16. Of the increased consumption, the government aims to meet half from domestic sources.

"This is possible through horizontal and vertical growth in production to achieve doubling of farmers' income by 2022. This means the area under oilseed production and yield should go up through changes in farm practices, including advanced seeds and farm mechanisation. Castor farmers have already shown their ability to double their income, using intercropping with groundnut," says B V Mehta, executive director, the Solvent Extractors' Association.

To achieve this, the government has proposed certain measures, besides incentives to farmers under various agricultural missions.

Considering an increased availability of vegetable oil from secondary sources, viz coconut, cottonseed, rice bran and others of forest origin, to 5.22 mt by 2022, from 3.58 mt now, total availability from domestic sources is estimated at 17 mt by then.

With this, India's import dependence is set to decline by 15 per cent by 2022, from the existing 67 per cent, and the import burden of Rs 150 billion is also set to decline in the coming four years.

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

9.1. Govt panel recommends radical overhaul of farming ecosystem

Livemint, 20 Sep. 2018, Savantan Bera

Panel on doubling farm incomes proposes shifting from supply-led to demand-led production system

New Delhi: The government should undertake a radical overhaul of the agriculture ecosystem by moving from a supply-push production system to a demand-led one, according to a committee set up by the centre to recommend strategies to double farmer incomes by 2022.

The agriculture ministry should also set up an “empowered committee” to operationalize and monitor progress of doubling of farm income strategies, the panel recommended in its report submitted to the ministry on Monday, a copy of which has been reviewed by Mint.

The recommendations come against the backdrop of large-scale unrest among farmers, which have already led to multiple demonstrations across India, and the promise by the Bharatiya Janata Party (BJP)-led Union ministry of doubling farm incomes by 2022.

The interministerial committee, headed by the additional secretary in the agriculture ministry, Ashok Dalwai, had been set up in April 2016. The panel has since then submitted 13 volumes of draft recommendations on different aspects, from marketing and post-harvest management to the role of science and risk management, and clarified that the goal is not to double nominal but real or inflation-adjusted farm incomes between 2015-16 and 2022-23.

“It is time to recognize agriculture in India as an enterprise” which calls for “optimal scale of operations”, the committee said in its final report. To bypass challenges posed by small farm sizes, it suggested land pooling, aggregation of farmers’ produce by creating village-level producer companies, use of contract farming, and engagement of professional service providers to whom a group of farmers can outsource day-to-day operations of their farms, from pest management to irrigation.

The service area can be a few hundred or thousand acres outsourced by a group of farmers against payment or entering into a service contract, the report said.

The report also suggested the reorganization of production systems through the adoption of a market-led crop geometry that will entail a shift in emphasis from common cereals such as rice and wheat to nutri-cereals, from producing carbs to proteins, and field crops to dairy, livestock and fisheries.

Water management should be assigned the highest priority by bringing in 2-2.5 million hectares under micro irrigation every year and promoting agro-climatic based cropping systems, the panel said.

On marketing, the committee suggested moving from the “farm to fork” approach to a “fork to farm” strategy and adopting a new market architecture comprising rural markets and private warehouses that are outside the ambit of restrictive state marketing laws. Farmers who often resort to distress sales should be enabled to hold on to their produce through instruments like negotiable warehouse receipts, it said.

The committee suggested the establishment of an institutional mechanism for price and demand forecasting, and adoption of “an import-export duty structure... to the advantage of farmers”, to address market risks related to prices.

It has also asked the centre to set up an “empowered committee” headed by a senior officer in the agriculture ministry for effective coordination among different departments and ministries to ensure quick implementation of its recommendations.

Experts have said that the government’s target of doubling farm incomes is unlikely to succeed as growth in agriculture gross domestic product has averaged just 2.5% in the past four years.

However, a member of the committee who did not want to be named, said “We must understand that there is an inverse relationship between growth in production and growth in incomes.... The strategies put out by us seek to capture the optimal value of farmers’ produce rather than blindly increase production growth.”

9.2. Farmers’ manifesto seeks vote for millets

BusinessLine, Oct. 2, K.V. Kurmanath

Document asks parties to offer ‘bonus’ for producing eco-friendly, nutritious crops

With political parties gearing up for the election year and setting up manifesto committees, millet farmers and non-governmental organisations working in drylands have come up with a ‘Manifesto for Millets’, listing out a set of demands to promote dryland crops.

Though the manifesto, released here, will initially be targeted at the political parties in Telangana (which is going for early polls), it will be released nationwide a few months later.

The manifesto asks political parties to come out with an affirmative plan of action. “Every millet farmer should be given a string of incentives to grow millets. The incentives could include a bonus for producing nutritious crops, a bonus for the water saved in irrigation by growing millets and one for hosting climate resilient crops,” PV Satheesh, Director of Deccan Development Society, told BusinessLine.

The measures would together cost about ₹10,000 an acre, he said, adding: “The government can extend this support as long as the farmer grows millets.”

Rain-fed areas such as Telangana have historically grown millets, he observed.

“But wrong policies have led us to pursue low-nutrition and high-water intake crops such as rice in recent years,” he said.

While appreciating the government’s efforts to offer good grade rice at a low price, he felt these would help only in the short run. “But, in the long run, offering millets to ration card holders would help,” he said.

He further said millets need to be introduced in anganwadis and mid-day meals to help women and children in rural areas address the challenge of malnutrition.

Organic farming

The manifesto notes that millet farmers follow organic farming, which helps check the contamination of soil, water and food by the use of chemicals.

It wants the government to implement the National Food Security Act, which recommends the inclusion of at least 7 kg of millets per ration card.

“In Telangana, we have done a disservice to our malnutritioned population by ignoring this recommendation. It is time we brought in a strong correction in our food policy,” it says.

10.1. FDI in food processing touches USD 1-bn mark this year: Badal

PTI, Sep. 26, 2018

New Delhi: The foreign direct investment (FDI) in the food processing sector has already touched the USD 1-billion mark so far this year, Food Processing Minister Harsimrat Kaur Badal said Tuesday.

"When we took over the government in 2014, FDI in the food processing sector used to be USD 500 million every year. This year, we touched USD 1-billion mark. This is a tip of the iceberg, we have to go a long way," Badal said addressing the CII event on post harvest and logistics.

According to official data, FDI in the food processing sector was USD 904.9 million in the 2017-18 fiscal, while it stood at USD 727.22 million, USD 505.88 million and USD 515.86 million in 2016-17, 2015-16 and 2014-15, respectively.

The FDI in multi-brand retail was allowed keeping in mind the need to boost food processing level and provide an alternative market to farmers to sell their produce, she said.

The focus was to see retailers directly procure farm produce from farmers. "I am happy to see companies like Metro and Walmart are keen to tie up directly with farmers."

About USD 14 billion that was committed during the World Food India 2017 for next few years, the minister said, "I am happy to share that 70 per cent of the projects have already started the grounding."

This will help grow the processing levels and reduce food wastage which is estimated to be Rs 1 lakh crore per year, she said.

Talking about domestic investment, National Rainfed Area Authority (NREA) CEO Ashok Dalwai said, "We have seen that the captive investment in agriculture, which is pre-requisite for any kind of accelerated growth, has not really happened through the corporate sector."

While the private investments have largely been through farmers themselves, the corporate sector which should have played a greater role has not really done so, he said.

Dalwai said the corporate sector cannot be blamed as the government -- which should have been the trigger in bringing the investment in the private sector -- has not tailored the policy that suits its requirement.

Also, there has been captive investment in industry and services sector since liberalisation in 1991.

"Agriculture, which is the primary economic activity and in a way it is the economic sector which generates the demand for services and industry sectors, was not subjected to the liberalisation. But in the last four years, the emphasise has been on bringing in reforms in the sector and make it a private sector enterprise," Dalwai said.

The government has been focusing on post harvest management and logistics, he added.

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

10.2. Indian agriculture’s problem of scale

Livemint, Oct. 04 2018

Loan waivers and electricity subsidies are band-aids at best; a deeper transformation is needed

The past few days have neatly summed up the scale and nature of the challenges facing India’s agriculture sector. First, the provisional agriculture census 2015-16 showed that landholdings have continued their decades-long trend of fragmentation, leading to a further rise in the proportion of small and marginal farmers. Then, 30,000 farmers, who had started their march from Uttarakhand last month, reached the national capital on Tuesday, demanding various relief measures. As a real world demonstration of the challenges posed by farm fragmentation, it could not have been better timed.

When the census, carried out every five years, started in 1970-71, it had reported that India had 71 million landholdings. These have more than doubled now to 146 million. Over 86% of cultivated farmland is held by small and marginal farmers who own less than two hectares, while only 0.57% farmers hold 10 hectares or more. Consequently, the average size of operational holdings has more than halved since the first census—from 2.28 hectares to 1.08 hectares.

Farmers consigned to subsistence farming by this fragmentation—that is, the vast majority of them—are unable to generate enough surplus for the investment needed to improve productivity. This is widely accepted. But the policy approach to the problem depends on how the specifics are diagnosed.

In his famous 1962 The Economic Weekly (later renamed to the Economic and Political Weekly) article, “An aspect of Indian agriculture”, Amartya Sen had argued that small farms have higher per-acre output. A number of economists in the 1960s and 1970s drew similar conclusions. Ramesh Chand, P.A. Lakshmi Prasanna and Aruna Singh had presented an intriguing update of this argument in 2011 in Farm size and productivity: Understanding the strengths of smallholders and improving their livelihoods. Cobbling together data from the National Sample Survey Organisation, agriculture census and the Union ministry of agriculture’s input survey, they found that the inverse relationship between farm size and per-hectare agricultural productivity still holds.

But this is misleading if taken at face value. The productivity argument is contingent on a number of factors--from soil quality to the level of farming technology adopted. And as Sen, with a sting in his article’s tail, had pointed out, “the factor that makes the crucial difference is not size as such, which is incidental, but the system of farming, whether it is wage-based or family-based.”

Andrew D. Foster and Mark R. Rosensweig backed this up last year, studying village-level survey data on farms to find that productivity actually follows a U-shaped distribution curve. While intermediate sized farms, which have to spend resources on wage labour are less productive than small farms, which get by on family labour, farms larger than a certain threshold are more productive than even the most productive small farms. The landowners have the necessary resources for economies of scale to kick in.

This has several policy implications. Promoting cooperative farming, for instance, will allow small and marginal farmers to take the advantage of their family labour. Corporate farming, meanwhile, could allow economies of scale to kick in at lower thresholds. The trickiest issue is improving land-man ratio. Urban growth with economic opportunities that will attract rural migrants is one way. But the evidence of the past few decades shows that India’s urban areas are ill-equipped to deal with the inflow.

The rise of the proportion of non-farm income in small and marginal farmers’ earnings points to the other possibility. Rural construction and industrialization are important supplementary sources of income. In a NITI Aayog paper last year, Ramesh Chand, S.K. Srivastava and Jaspal Singh pointed out that while these sectors have seen considerable growth, rural industrial employment hasn’t budged in the past few decades. Solving this puzzle could help move rural workers to more productive sectors full time, while simultaneously boosting per-capita farm productivity. This could have useful secondary effects as well. Rising wages due to more productive non-farm rural employment could make larger and more mechanized farms the increasingly more efficient option.

The exact policy mix will vary from state to state. Crop and landholding patterns vary widely, after all. Nagaland, with an average operational land holding size of 5.06 hectares, will need a very different approach from Kerala which averages 0.18 hectares. But they—and every other state—have one thing in common. Loan waivers and electricity subsidies are band-aids at best. A deeper transformation is needed.

- Industry, Manufacture

11.1. We are local, globally, says GE’s Kieran Murphy

BusinessLine, 8 Oct. 2018, P.T. Jyothi Datta and Venkatesh Ganesh

“We are local, globally,” says Kieran Murphy, Global President and CEO of GE Healthcare, on the increasing shift towards localisation across the world.

Responding to a query on the campaigns for Brexit, ‘America First’ and ‘Make in India’, Murphy said that the company had a local presence in China, Europe and the United States, for example, making them a local multinational.“We live in a world that’s volatile,” he said, referring to trade related tariff barriers and added, “We have to cope with that.”

Murphy was appointed as global President and CEO of GE Healthcare last June, replacing John Flannery who was elevated as global CEO and Chairman GE.

Earlier this month , Flannery was abruptly replaced as GE chairman and CEO by Larry Culp.

Murphy’s mandate includes the spin out of GE Healthcare as a separate company in 2019. The $20 billion global healthcare entity had $3.4 billion in profit last year, accounting for 15.8 per cent of the conglomerate’s total sales.

Murphy was speaking at the Jack Welch Technology Centre in Bangalore on Monday, his first visit after taking over as global chief of the healthcare company.

Speaking at the same interaction, Nalinikanth Gollagunta, President and CEO, GE Healthcare, South Asia, stated that investments will continue in India, even as GE Healthcare is set to be become a standalone company next year. “We haven’t seen a change in the language and investments will happen,” he said, without giving a number on the investments. GE has invested $120 million in India in the last ten years.

Making for India

As a part of its localisation efforts, Gollagunta compared MRI or CT scan machines sold in India which have 30 per cent smaller footprint to accommodate in space constrained hospitals, consumes 28 per cent lesser electricity, which continues to be an issue in many places.

The company is also banking on AI to help in improving its processes. For example, when a patient is about to undergo a scan, which can last from 45-60 minutes, a considerable portion of time is additionally spent on the posture of a patient to get an accurate result. Through AI we can cut down on manual interventions as the machine will mark the exact spot where a person should be situated, which in turn helps in more scans thereby generating more revenues, said Gollagunta.

AI can also be used for developing an automated systems that can analyse chest X-Rays and flag-off the possibility of tuberculosis.

GE is taking these steps as it sees competition from Japanese and European companies in top end machines and low cost Chinese companies at the entry level.

11.2. E-commerce makes way for other sectors in Indian unicorn list

Livemint, 2 Oct. 2018, Mihir Dalal and Anirban Sen

So far in 2018, five start-ups have entered India’s unicorn club, and only one of them is in commerce

Bengaluru: The pecking order of unicorns, start-ups that are valued at $1 billion and above, is changing rapidly with online retailers making way for start-ups in other sectors, even as they achieve unicorn status in record time. Year to date, five new companies have entered India’s unicorn club—Swiggy, PolicyBazaar, Freshdesk, Udaan and Oyo. Except PolicyBazaar and Freshdesk, all the others were founded after 2014. Udaan, a marketplace for businesses, was launched in late 2016, taking less than two years to become a unicorn.

Earlier this year, the largest Indian internet start-up, Flipkart, was acquired by Walmart. Currently, Paytm is India’s most valuable start-up, valued at $10-12 billion.

The introduction of 4G services by Reliance Jio Infocomm Ltd in 2016 led to an explosion of mobile connectivity with greater speed and consistency, opening up a larger market of consumers for internet start-ups.

“The reason why start-ups are taking less time to scale up is because we now have a much larger market than we did four years ago—from 200 million internet users in 2014, we now have nearly 500 million users,” said Ritesh Banglani, partner at Stellaris Venture Partners. “In that period, there has also been an evolution of internet users and the group of users who started using the internet back in 2014-15 are now more regular transacting consumers, who order a complex variety of products and services online. Ten years ago, we barely had a couple of companies that had a user base of more than 1 million. Now, there are more than a dozen such companies,” he said.

Banglani expects companies to grow faster. Apart from the accelerated speed of growth, new entrants to the unicorn club show that business models other than e-commerce are finding favour with investors.

Only one out of the five— Udaan—is a commerce platform. Earlier, the unicorn club was dominated by e-commerce firms such as Flipkart, Snapdeal and ShopClues. Now, as the internet boom goes mainstream, sectors such as food and groceries delivery, financial technology and content are attracting massive amounts of capital. Several other start-ups such as BigBasket, ShareChat, BookMyShow and Rivigo might become unicorns over the next few quarters, investors said. This follows a dry spell of two years that began in early 2016, during which only two start-ups entered the unicorn club.

“Unlike 2014-15, when e-commerce was the hottest sector, the market is much more broad-based now,” said Anand Lunia, founder of early stage investment fund India Quotient. “What we’re seeing is a maturity of internet consumers and, more importantly, the kind of transactions that are taking place now. They’ve moved on from the days of heavily discounted e-commerce to other platforms where they are spending significantly, without being incentivized by crazy discounts. So, the order has changed because of this consumer maturity.”

12.1. With integrated textile operations, ‘trade war is advantage India’

BusinessLine, 17 Sep. 2018.

Welspun Group — the $2.7- billion conglomerate with interest in home textiles, line pipe manufacturing and infrastructure — is banking on its recent innovation, Hygrocotton, to drive growth in textiles. The fabric, made of the patented Hygrocotton, is soft, absorbent and maintains its softness after every wash. It also helps regulate the temperature of the fabric, keeping it cool in summer and warm in winter. Dipali Goenka, Joint Managing Director, Welspun India, spoke to BusinessLine on the company’s growth plans. Excerpts:

What is the impact of the global trade war on textile exports?

India has a great business potential for home textiles in the ongoing trade war because we are not only the largest producer of cotton, but also the largest exporter. India’s strength in cotton is going to be far higher than others. The Centre’s policy supporting exports should further help textile companies re-establish themselves. The integrated operation is a big advantage for textile companies.

There is a duty levied on textile exports from India to the US but it is not big when compared with that on shipments from China. Earlier, China used to provide subsidies and calibrate currency to support exports. It also had the advantage of cheap manpower, which is slowly fading. However, I would add that nobody can live without China. They have put up massive capacity in each of the sectors. It will take many years for the US to build capacity that can match China’s. The way we are heading towards protectionism in the US and the UK, the biggest challenge is we cannot live without one another. If India has advantage in cotton textile, nobody can match China in polyester.

Does Bangladesh still enjoy trade concessions in textile exports to the US?

I believe the US has withdrawn the trade concession given to Bangladesh. The advantage for Bangladesh is that they have a stronger currency and lower labour cost. The concern they had was in terms of compliance, high power cost and single port infrastructure. Their core strength was in garments largely due to low labour cost. The complete integration from weaving to spinning to final product is India’s advantage. The integration is the core in home textiles.

What is the impact of the rupee depreciation on textile exports?

The impact of depreciation comes in a package as textiles is more commodity driven. The crude has touched $86 and already people are talking of it reaching $100. Cotton prices have hit ₹48,000 as India is at the fag end of the cotton season. The high support price set for the next year (starting October) is going to put more pressure. We import about 10-20 per cent of high quality cotton. Being a major exporter we are able to somewhat offsetthe higher cost.

Any progress on your investments in innovation?

We have filed patent applications for 30 products. Of these, 12 have been granted patent. We believe Hygrocotton and Wel-Trak have good scope. Welspun’s Hygrocotton itself is a $200-million brand and growing strongly. We launched Wel-Trak about a year and a half back to track the source of the fibre. It is a sort of the advent of the blockchain technology. Our innovation revolves around consumer needs. We have 4.2-million data points on consumers’ views on what they are looking for and try to fulfil their needs through our products.

How do you plan to grow in the domestic market?

India will be the next growth driver for home textiles. Products made of Hygrocotton itself has seen a 25 per cent growth. The appetite for differentiated products in India is growing with discerning consumers who are looking at value not in terms of price but quality. We have a set a ₹1,000-crore revenue target in India and our journey has just begun. We set up a new team to focus on the domestic market.

According to recent studies, the poverty level in India is expected to reduce by six per cent by 2022 and there will be elevation of tier-III cities to tier-II and so on. This will throw up a good opportunity for our products. We may have a few experience stores of our own, but sales will be largely driven by mom-and-pop stores, large retail chains and e-commerce.

12.2. India exported handcrafted goods worth Rs 1.36 lakh cr in past 4 years: Irani

PTI, Oct. 09, 2018

New Delhi: The country exported handcrafted goods worth Rs 1.36 lakh crore in the past four years, Union Minister Smriti Irani said Monday.

Addressing a Handloom Business Meet here, the textiles minister spoke about the significance of attaching the tourism industry to the rich crafts heritage through concepts like home-stays to propagate the legacy through youngsters.

She said such a move could also generate additional income for weavers.

"Most of our studies show that in a weaving community, it is the youngsters who are leaving because they see no expansive opportunities," she said.

She urged social networking giant Facebook to get involved in the endeavour.

"If Facebook cab help highlight in each artisan community that you have trained, this aspect, and connect them to the travel and tours, adventurists, I think that will also work," Irani said while participating in a panel discussion in the presence of Ankhi Das, Public Policy Director, Central and South Asia, Facebook.

"In our country in the past four years we have exported handcrafted goods worth to the tune of Rs 1.36 lakh crore, she informed, highlighting the sector's potential.

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

13.1. TVS Motor rides into Mexican market with local partner

BusinessLine, 19 Sep. 2018

In a move that will help grow its global sales, leading two- and three-wheeler maker TVS Motor Company, on Wednesday, announced its foray into the Mexican market.

It has entered into a partnership with Torino Motors, a leading distributor in the Mexican region.

With over 40 years of experience in the region, Torino Motors — a subsidiary of Groupo Autofin — specialises in automobile and retail finance, according to a press statement.

Distribution network

“We are delighted to partner with a reputed, well-known company such as Torino Motors, who comes with over 40 years of experience in Mexico. Their insights will allow us to personalise our offerings to suit the customers of Mexico and their vast network of distribution will ensure maximum reach in the country,” said R Dilip, Senior Vice-President – International Business, TVS Motor Company.

In the first year of the association, Torino Motors will work with TVS Motor to open 40 exclusive stores in the country for the distribution of two-wheelers.

“We are delighted to be the bridge between TVS Motor’s superior offerings and our esteemed customers in the country. The range of offerings provided by the company are very well-suited for the local Mexican commuter and terrain. We are confident that this association will be very successful,” said Jorge Garcia, Chief Executive Officer, Torino Motors.

Following this association, Torino Motors will distribute a wide range of TVS Motor Company two-wheeler offerings including motorcycle range TVS Apache RTR, scooters WEGO and NTORQ 125 among others.

Export markets

TVS Motor Company has been selling its two and three wheelers across 60 countries. The Chennai-headquartered company is the second largest two-wheeler exporter from India after Bajaj Auto.

During the first month period of this fiscal, the company exported about 25,700 scooters (16,200 units last year same period) and 2.37 lakh motorcycles (1.71 lakh units) to various countries.

13.2. 857 Start-ups and 1234 MSMEs registered on GeM in the ongoing National Mission

Press Information Bureau, Oct. 04, 2018

The National Mission on GeM was launched by Union Minister of Commerce & Industry and Civil Aviation, Suresh Prabhu, on 5th of September 2018. Twenty States and UTs joined the Mission which aims at creating awareness about GeM, train buyers and sellers, get them registered on GeM and increase the procurement through GeM. This drive has been taken up for the promotion of inclusiveness of all sections of categories of sellers and service providers, highlighting and communicating the value addition in joining GeM, achieving cashless, contactless and paperless transactions, increasing overall efficiency and maximising ease of availability of goods and services.

During this awareness period, a buyer registration drive has been launched for on-boarding and increasing procurement by Central, State and local agencies on GeM and a vendor registration drive for on-boarding additional categories and populating the available ones on GeM with more vendors. Central Ministries, States and their agencies, including local offices, have been tasked with sharing a list of key vendors for registering on GeM and its reach has moved from a Central and State Headquarter level to Sub- district and local body level.

Seven percent more sellers have listed their products in September 2018, total of 857 Start-ups have been registered on GeM, 1234 MSME sellers have been registered on GeM and 834 new organizations on-boarded. MSME sellers have been awarded 40,000 orders worth «Á¢Ä?«Á¢Ä?«Á¢Ä??? 551 crore, transaction volumes of FY 17-18 (3.78 lacs) have been achieved in less than 6 months in FY 18-19 (4.31 lakh), 121 new sub categories have been added on the GeM platform, 100 new sub categories got populated giving a wider choice to buyers and 92 new subcategories saw transactions.

The ongoing National Mission has led to an average saving of 25% across categories.

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

14.1. Tata Hitachi eyes 10% market share in backhoe loader segment

BusinessLine, 25 Sep. 2018, V. Sajeev Kumar

Riding on the comfort of the country’s infrastructure development, Tata Hitachi—the JV between Tata Motors and Hitachi Construction Machinery—is looking at a 10 per cent share in the backhoe loader market.

“The main demand for the equipment is driven by road development followed by agriculture, irrigation purpose and mining. The market for construction equipments are erratic and it depends on the government investments. Right now, the market is progressing at a fast pace, thanks to the investments made by the Centre and state governments for infrastructure purpose,” Sandeep Singh, Managing Director, Tata Hitachi said.

Speaking to BusinessLine on the sidelines of the launch of the company’s new backhoe loader Tata Hitachi Shinrai in Kerala, Singh said the size of the market for both backhoe loader and excavator put together is $5 billion and is growing at 15-20 per cent. With the streamlining of GST this year, he pointed out that the challenge is now on the rise in material cost like steel, consumer durables like oil, filter, rubber materials etc. The fluctuations in rupee is also adding to the production cost, which rose by 10-12 per cent.

Singh said that there was shortage of manpower and that Tata Hitachi has undertaken several initiatives to provide training to technicians through tie-ups with many ITIs in the country.

The company has three manufacturing facilities at Jamshedpur in Jharkhand, Dharwad in Karnataka and Kharagpur in West Bengal.

14.2. Tata Motors on a major drive to tap ‘big domestic’ market

BusinessLine, 8 Oct. 2018, Varun Agarwal

Car maker looks to launch 10-15 models in three years

After hitting rock bottom three years ago, Tata Motors is bouncing back as a major domestic car manufacturer with its turnaround strategy starting to show results.

Tata Motors, which has been hit by losses in its luxury subsidiary Jaguar Land Rover, is trying to focus aggressively on the Indian market where it sees massive growth opportunities despite adverse market conditions.

Turnaround 2.0 strategy

Early this year, the company initiated a Turnaround 2.0 strategy to enable its passenger vehicle business to be “self-funding and profitable”, build confidence and acceptability for its portfolio from old and new buyers, and in-turn look at gaining market share.

In just nine months, the results are speaking for itself. While the industry has grown barely 9 per cent this year, Tata Motors has recorded a 37 per cent growth in sales. Demand for its new vehicles has played a big role in that shift. But that’s only the tip of the iceberg, according to Mayank Pareek, President of Passenger Vehicle Business Unit at Tata Motors.

“Three years back, our domestic passenger car market share was just about 3 per cent. It is now at about 7-8 per cent. We want that every customer who buys a car to at least consider us. So far, we were not even in the consideration stage. At least that’s changes and people are buying our cars,” Pareek said. However, he feels that there’s still a long way to go for the Tata group company.

“The fact remains that we are better than what we were before. But the fact also is that there are still a small player. So, I don’t want to lose the spirit of hunting dogs. We need to be energised and humble but with a fighting spirit. Our 6.8 per cent market share is still very small, although it has improved from our all time low of three per cent. But it is still a long time to go,” Pareek said.

Tata Motors is not just looking at improving its sales but also achieving a profitable growth.

Advantage of JLR arm

While the industry is reeling under increasing costs, caused primarily from falling rupee, and rising commodity prices, Tata Motors is taking advantage of its JLR subsidiary to become a net forex earner, which means the company only benefits if the rupee falls. But that’s only an external factor.

Internally, the company is hitting on costs like never before, trying to renegotiate supplier contracts, and improving efficiencies at every point.

“The cost saving we are doing this year is six times that of what we’ve ever done,” Pareek said. “We divided each element cost. We created what we call 24 vehicle modular teams) in our factories. There is a very focussed cost reduction that’s still going on for each of the teams. We’re already ahead of our annual targets. We are also working towards improving efficiencies. How do you get more out of the same plants and improve capex efficiencies and how do you improve efficiency of buying from suppliers,” Pareek said.

While refusing to give out the company’s internal sales targets, Pareek said he expects every new buyer to at least consider buying Tata cars soon. And new launches will help the company achieve that.

In the next three years, the company is looking at launching as many has 10-15 new models based on two new architectures, Alpha and Omega, which will be revealed early next year.

The new launches will help Tata Motors fill gaps in its product portfolio and compete aggressively in the market.

15.1. Indian Railways plans high-speed elevated corridor across Kerala

Livemint, 4 Oct. 2018, Jyotika Sood

The proposal for the ₹50,000 crore pan-state rail corridor project is expected to be placed before the cabinet next year

New Delhi: In a major infrastructure boost, Indian Railways is working on a dedicated pan-Kerala elevated railway corridor to be built at a cost of ₹50,000 crore. The 500-km corridor from Kasargod to Thiruvananthapuram will connect the state’s northern and southern regions.

“Kerala is a small state and with limited land resources. It has been decided to make an elevated pan-state corridor that connects Kasargod in the north with Thiruvananthapuram in the south.

The project will be funded by a development agency such as the Asian Development Bank (ADB) and Japanese International Cooperation Agency (JICA), and talks are on. It would be a high-speed corridor, which would connect major cities with suburbs in 30 minutes so that people can use it for local travel too,” said a senior railway official on condition of anonymity.

This would be the most expensive state corridor project undertaken by Indian Railways other than the $13 bn Jammu-Udhampur-Katra-Quazigund-Baramulla link, a 345-km railway line. The Kerala rail corridor proposal is expected to be placed before the cabinet next year for its consent. According to the plan of the railways, the corridor will be used to run semi-high speed trains, which travel at a speed of 100-150km per hour, as it would be elevated with no obstructions.

The railway official said Kerala is already on the national carrier’s radar for a makeover. The city of Ernakulam is already getting a makeover under the railway station re-development programme, with the National Buildings Construction Corp. Ltd (NBCC) slated to undertake the project with the aim of completing it by 2022.

Indian Railways has lagged in investing in Kerala over the years, mainly because of high land costs. In the last decade, the state has seen an investment of only around ₹6,000 crore from the national carrier. An average of only ₹350 crore was invested in the state annually during 2007-2014. The amount rose substantially after 2015-16 when it hit over ₹1,000 crore every year. In 2018-19, the state was given around ₹900 crore by Indian Railways. However, the money has been mainly used for upgrading and maintaining existing railway lines.

15.2. NBCC eyes 25% jump in order book to Rs 1 lakh cr ($13,6 bn); revenue, profit may grow by 30-40% in coming yrs

PTI, Oct. 05, 2018

New Delhi: State-owned NBCC Ltd's order book will rise by 25 per cent to touch Rs 1 lakh crore by the end of this fiscal and the company is expecting 30-40 per cent growth in revenue as well as profit in coming years, its CMD Anoop Kumar Mittal said Thursday.

NBCC, which is under the administrative control of the Ministry of Housing and Urban Affairs, is present in three main segments -- project management consultancy (PMC), real estate development and EPC contracting.

"About 90 per cent of our revenues come from PMC business and rest 10 per cent from real estate and EPC contracting," Mittal told reporters here. The press conference was held at redevelopment project at Kidwai Nagar in South Delhi.

NBCC's CMD said the company's current order book is worth Rs 80,000 crore and the same would touch Rs 1 lakh crore by March 2019.

Mittal said the company expects to grow at a CAGR of 30-40 per cent in topline as well as bottomline in the coming years. The company's total income stood at around Rs 7,100 crore last fiscal.

Elaborating about projects bagged by the company, he said the NBCC has been appointed as land management agency by the government to manage, maintain and protect land assets of sick/loss-making public sector enterprises.

The company has got 'in-principle' approval from Air India to monetise the airline's two prime properties located at Vasant Vihar and Baba Kharag Singh Marg in the national capital.

"There is 30 acres land in Vasant Vihar and 3.5 acres at Baba Kharag Singh Marg. We will develop housing and commercial projects on these land parcels. The units will be sold in the market and the sales revenue will be utilised to develop the projects," Miittal said.

The public sector unit is also redeveloping 10 railway stations at the project cost of Rs 4,000 crore on self-revenue model. It has initiated work on Gomti Nagar railway station at Lucknow and is looking to add four more stations namely Goa, Tirupati and Puducherry by the fiscal end.

To boost housing supply, NBCC would soon develop one lakh affordable housing projects on the lands of sick PSUs across the country. It is working as land management agency for 10 CPSEs and has identified one-two land parcels to develop affordable housing.

Mittal highlighted that the NBCC has revamped Purana Quila (Old Fort), and would soon start work on Red Fort and Qutub Minar as part of its initiative to conserve, develop and maintenance of heritage properties.

With an endeavour to refurbish the magnificent edifice, NBCC adopted Purana Qila under Ministry of Tourism's 'Adopt a heritage' scheme and executed the task utilising its CSR funds.

In collaboration with ASI, NBCC worked out a comprehensive plan to restore the Old Fort, transforming the acropolis into a quintessential reception for tourists from across the globe.

"The execution of the exemplary project was implemented in three phases that commenced with basic conserving and restoring activities, deepening of the lake, revamping and extending the museum, renovating the parking facilities and finally excavating and improving the visual appeal of the structure," NBCC said in a statement Wednesday.

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

- SERVICES (Education, Healthcare, IT, R&D, Tourism, etc.)

16.1. HCL Tech to invest Rs 750 crore in Andhra Pradesh, create 7,500 jobs

PTI. Oct. 08, 2018

New Delhi: IT services major HCL Technologies will invest Rs 750 crore to set up two facilities in Andhra Pradesh that will help create 7,500 jobs in 10 years.

According to an official statement, HCL is setting up its operations in Andhra Pradesh in two phases.

In the first phase, the Noida-based company will invest Rs 400 crore to build a R&D centre in Kesarapalli village in Gannavaram. The facility is expected to accommodate more than 4,000 IT professionals, it said.

The phase-I will commence with the foundation stone laying ceremony on October 8 and is expected to be completed in seven years' time, employing more than 4,000 IT professionals, the statement added.

The phase II will be taken up later in Amaravati, the new capital of Andhra Pradesh in a campus of 20 acres.

The investment for this phase is expected to be Rs 350 crore and will include about 3,500 IT professionals in five years' time.

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

16.2. Metro Cash and Carry to digitise 5 lakh stores in the next 3-5 years

Livemint, Sep. 24, 2018

New Delhi: German wholesaler retailer Metro Cash and Carry Pvt. Ltd plans to digitize over five lakh kirana stores in India in the next three to five years as a part of its ongoing digitization and omnichannel strategy, a top company executive has said. The wholesaler retailer is aggressively focusing on the business to business (B2B) segment by offering modern fixtures, point of sale terminals and marketing tools to kiranas with the aim of increasing customer traction alongside boosting modernization of its traders and retailers businesses.

“We are looking for growth through both through physical store expansion as well as e-commerce omnichannel players. The focus is on the omnichannel strategy and digitization of kirana stores. The stores need to look much better and inviting, and we want to transform them into self-service stores,” Arvind Mediratta, managing director and chief executive officer, Metro Cash and Carry, told Mint in an interview. “It is an ongoing journey, and we cannot do this in a year because there are 12 million kirana stores, including those in rural areas.”

Metro has partnered with EasyPay that provides the point of sales devices for kirana stores to track daily purchases, sales, inventory and customer details like modern retailers. It claims to have already set up 500 of such terminals and plans to reach all of its 30 lakh registered businesses.

Mediratta did not disclose the budget for the digitization process and the expected returns for the Indian arm of German Metro AG from the exercise. “This will help kirana stores with around 35-40% of revenue if topline (sales) remain the same, however kiranas will have to spend anywhere between ₹ 50,000 and ₹ 2,00,000 for such installations,” Mediratta added.

Last year, Metro Cash and Carry collaborated with technology provider Snapbizz and worked with 100 retailers in Bengaluru, Hyderabad and Delhi to digitize their businesses by giving them free hardware and software worth ₹ 32,000 each, Mint reported in April.

Metro is also providing working capital loans and will play on pricing to double its share of wallet.

“The big play is happening over kiranas and we are partnering with suppliers to sell them at 10-15% lower than MRP and pass the benefit it on the consumers to compete with the D Marts of the world,” said Mediratta, who believes that is the way to survive in the competitive industry.

Last year, Metro launched OPD (order processing, payment, collection and delivery), its version of an omnichannel strategy to reach as many small business owners.

“We want to give them horsepower to compete through softer things like modern stores, digitization, top-on inventory, getting them loans. But if you don’t give them competitive pricing nobody will come and buy from you,” Mediratta added.

The Dusseldolf, Germany-based company competes with Walmart Inc., which in India is also planning to scale up its kirana store programme called Mera Kirana that helps small family-owned grocery stores modernize, Mint reported in June. Both peers are sending out sales team and ramping up hiring to reach to kiranas and work directly with them.

Mint also reported in February that Metro plans to aggressively promote its own brand label to hotels, restaurants and cafés (HoReCa) industry with the target of doubling its revenues. Mediratta told Mint it will look to target 15% of revenue over the next three years from own brand label from the current 4.5% and will also push the products through these kirana stores in due course of time.

Metro is also expected to open its 27th store in Ghaziabad before the end of September and has revised its target of opening 50 stores by 2020 to focus on quality and the omnichannel strategy.

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

17.1. Record offers at campus placements in TN

BusinessLine, 19 Sep. 2018, Raja Simhan

Microsoft has made record offers to students this year in campus placements at top colleges in Tamil Nadu. It has offered a cost to company (CTC) package of ₹39 lakh each to 14 students at Vellore Institute of Technology (VIT) and to one at SRM Institute of Science and Technology.

At VIT, Microsoft created a record this year by the highest offer of ₹39 lakh. The previous record offer was ₹29 lakh by DeShaw last year, V Samuel Rajkumar, Director (Placement and Training), VIT, told BusinessLine.

Consultancy firm Deloitte recruited 191 students with a CTC of ₹6.5 lakh; followed by Wipro Design (160 offers with ₹6.5 lakh); TCS Digital (82 offers with CTC of ₹7 lakh) and Bank of America (108 offers with CTC of ₹6 lakh), he said.

‘Positive season’

Sriram S Padmanabhan, Director — Career Centre, SRM, said, it has been “a very encouraging and positive season” this year. So far, 85 companies have come for campus placement, which is being held for those students graduating in 2019. The campus placement will go on till May next year, he said.

After ‘super dream’ (offering CTC of over ₹10 lakh) and ‘dream’ (offer of ₹5 to 10 lakh) companies, the mass recruiters — Tata Consultancy Services, Cognizant Technology Solutions, Infosys and Wipro — have started their campus recruitment.

“Sastra University drenched in job rain as 1,433 job offers rolled out by four IT majors during a 10-day recruitment mela,” S Vaidhyasubrama-niam, Dean — Planning and Development, Sastra University, Thanjavur, said in a tweet.

TCS tops with maximum offers, followed by Cognizant, Infosys and Wipro. About 400 job offers were made by niche product companies, he said.

17.2. Cisco launches digitisation products for SMBs in TN

BusinessLine, 3 Oct. 2018

Cisco launched the ‘START’ product in Coimbatore to accelerate digitisation of SMBs in this part of the country.

The product, according to Sudhir Nayar, Managing Director, Commercial Sales, Cisco (India and SAARC), has been specifically designed to help SMBs build their digital foundation and become globally competitive.

“It was launched last year and we have during the past 12 months on-boarded over 5,000 new SMB customers. The product has been further modified to make it simple and affordable,” he added.

Tamil Nadu houses close to 2.18 lakh SMBs and studies reveal that around 70 per cent of them continue to work offline.

While rising adoption of mobile devices and improved connectivity are accelerating the growth of the SMBs here, they face the challenge in accessing the right technology, lack of skill sets coupled with high entry cost that limit their ability to scale and seize opportunities. The product aims to make it easy for SMBs and mid-market customers to embrace digitisation by providing them access to a suite of simple, secure and smart enterprise-class technologies, specifically tailored to suit their needs, he added.

Cisco India is working with 30,000 SMBs at present. It is looking at a three-fold increase in adoption level in two years. “We are adding 20 new customers every day, working with 3000+ partners.” he added.

18.1. Ajay Singh: The turnaround man

Livemint, 21 Sep. 2018, Rhik Kundu

The SpiceJet chairman talks to Mint about his Cornell days, making India a global aviation hub, and the need for synergy between private and public sectors

A meeting with SpiceJet’s chairman Ajay Singh, the “turnaround man” of Indian aviation, takes weeks to materialize. And finally, when we meet on a muggy monsoon day in Delhi, it comes at a time when domestic carriers are being hammered by high jet fuel prices, a weaker rupee, and intense competition that forces them to keep fares low.

“The aviation sector is under pressure,” says Singh, 52, as he settles down at Mister Chai, a cafe at New Delhi’s ShangriLa Eros Hotel. “But, there are a few positives.”

Singh, who is credited with turning around SpiceJet from the verge of closure in 2015, prefers to see positives in every challenging situation. “The inherent demand is still strong,” he says, helping himself to sandwiches from the plate in front of him.

He explains there is a possibility of raising fares in the near future, which would, in turn, increase airlines’ yields. “Also, the government is more than willing to look into the problems of the sector and frame policies to bring down costs.” In his opinion, this was not the case earlier.

SpiceJet, headquartered in Gurugram, is India’s fourth largest airline in terms of passengers carried. In July, SpiceJet recorded the highest passenger load factor—a measurement of airlines’ capacity utilization—among domestic carriers, for the 40th month in a row.

The airline started off as an air taxi service founded by industrialist S.K. Modi in 1984. In 1993, it pivoted to a passenger airline and was renamed ModiLuft when it partnered with Lufthansa. The German airline provided pilots and trained ModiLuft’s Indian staff including pilots, cabin crew and mechanics. ModiLuft ceased operations in 1996.

It was acquired by Singh and other investors a decade later and renamed SpiceJet. Singh wanted to position SpiceJet as an airline that could offer a rich flying experience at low fares. The idea, he says, was to have 100 airplanes, each named after a spice. Today, SpiceJet has over 100 aircraft, all named after spices found in the subcontinent, like Ginger, Garlic and Pepper. “We didn’t imagine then that we would operate with such a large fleet at some point and would have to name so many planes,” Singh says.

Singh says his initial stake in SpiceJet was around 20%, which came down to about 5-6% in June 2010 when media baron Kalanithi Maran acquired a 37.7% stake. Subsequently, he sold his remaining shareholding. When he returned to run the airline in January 2015, buying the stake from Maran’s Sun Group, it was debt-ridden and on the verge of closure. Friends advised him to stay away, but Singh had a strong feeling that there was a possibility of a turnaround. “There was still great potential in aviation, and oil prices were coming down,” he says. “I thought nobody would blame us if the airline died but if it succeeded, we would have stories to tell our grandchildren.”

Under the Marans, in 2014, SpiceJet had to ground planes, as lessors, oil retailers, and staff were not paid in time. For the fiscal year ended March 2014, SpiceJet’s net loss stood at ₹1,003 crore compared with a net loss of ₹191 crore in the preceding financial year. The stock, which had been trading close to ₹80 a share, fell to ₹15 a share during 2014. The airline ended 2014-15 with a loss of ₹687 crore, and a debt of ₹1,240 crore. Then, things changed. Global fuel prices tanked and a low-cost execution strategy worked. Singh had achieved a turnaround.

And it was a sustained one, at least till very recently. Last month, the company reported its first loss in 14 quarters, owing to higher expenses, a weak rupee, foreign currency losses and a one-time expense for provisioning on account of an arbitration award. Net loss for the quarter ended 30 June stood at ₹38 crore compared with a profit of ₹175 crore in the year-ago period.

*****

Singh was born in Delhi to businessman Vijinder Singh and his wife Kalpana. The family lived on Barakhamba Road and had interests in real estate and fashion accessories. Singh went to St Columba’s School where he excelled in studies and sports. He played cricket, table tennis and also captained the school football team. He went on to study textile engineering at the Indian Institute of Technology (IIT), Delhi (1984-88), and followed it with a master’s in business administration (MBA) from Cornell University.

It was in the US that Singh started taking a keen interest in the functioning of government and policy-making. As the president of the India Association at Cornell, he took part in many discussions on events back in India.

“We discussed, like arm-chair politicians, what India needed to do and why things were going wrong back home,” Singh recalls fondly. “There was a feeling that if educated people like us don’t go back to India and do something, things wouldn’t change.”

Singh returned home in 1992 and joined the family business. “But, I was still very interested in working for the government, where I thought I could make a difference,” he says.

Opportunity came knocking while Singh was studying law at Delhi University in 1996. Bharatiya Janata Party (BJP) leader and then Delhi transport minister Rajendra Gupta, his neighbour from Barakhamba Road, tapped him for the city’s transport corporation board. Singh was asked to formulate a plan to turn around the bankrupt corporation with 40,000 employees. Over the next two and half years, he urged the corporation to buy more buses, expanding its fleet from 300 to over 5,000 buses which, in turn, increased revenue. He also roped in buses from private operators.

“We looked at global models for public transportation and tried to do things a little differently to make public transport a success,” Singh says.

He got a chance to put his policymaking theories into practice when, in the late 1990s, he met BJP politician Pramod Mahajan, with whom he forged a close friendship and working relationship.

In 1998, when Mahajan became information and broadcasting minister, he brought on Singh as officer on special duty (OSD), where he played a key role in revamping Doordarshan, and launching DD Sports and DD News.

“I was very interested in politics. I studied how the White House functioned, and had some ideas on how the PMO (Prime Minister’s Office) should function,” Singh says.

One of his key suggestions was putting in place a national policy for telecom and information technology. When Mahajan assumed charge of the telecom portfolio in 2001, Singh helped in drafting the National Telecom Policy and the Information Technology Act. He also played an important role in advising the ministry to reduce the cost of mobile telephony.

“Mr Mahajan was smart… He would push bureaucrats into delivering. And he gave a lot of freedom, if one had new ideas,” says Singh.

It was under Mahajan’s stint that the state-owned BSNL ventured into mobile business and invested heavily in fibre infrastructure. The incoming charges on mobile calls were also dropped. But the BJP-led coalition lost the 2004 general election and “suddenly, I was out of job,” Singh says. (But he remained close to the BJP and is credited with coining the popular “Ab Ki Baar, Modi Sarkar” slogan ahead of the 2014 election.)

It was during this time that Singh decided to get back into business. His first big investment was of ₹5 crore in the remnants of ModiLuft (renamed Royal Airways by then) in October 2004. The revamped airline was called SpiceJet.

*****

Today, SpiceJet operates on short-haul international destinations such as Dubai, Colombo, Bangkok and Kabul. It plans to fly to several new countries in the next few quarters as well as start low-cost, long-haul flights, Singh says, without divulging details. He wants India to become a global aviation hub.

“Airlines have a larger role to play in future. It is not only domestic connectivity; Indian carriers will have to focus on international connectivity as well,” Singh says. “We can’t have a situation where two-thirds of international connectivity (from India) is being done on networks of foreign carriers. We can never create an aviation hub in our country otherwise.”

Singh feels effective communication is necessary to bridge the inevitable gap between the private sector and government. “More dialogue needs to take place between private and public sectors, and there need to be more joint policies. Mr (Atal Bihari) Vajpayee had spoken about it in the 1990s and formed various committees to realize this. It is fructifying now and where it is not, initiative needs to be taken from both sides,” Singh says.

There have been unintended consequences, he says, giving the example of taxes on the aviation sector. While the government now understands that aviation shouldn’t be taxed as a luxury sector, the higher tax structure resulted in private airlines becoming more cost-efficient, putting them at par with their global peers. Passenger growth of 20% per year is among the best in the world, Singh says.

“If we get a level playing field, we can give all of them a run for their money,” Singh says. “We need to build our own international carrier, our own hubs, because it is clear that there is demand.”

18.2. With stagnant domestic yield, IndiGo bets on West Asia

Livemint, 1 Oct. 2018, Rhik Kundu

IndiGo operates 60 daily return flights to West Asia, in addition to 4 daily return flights each to Sharjah, Muscat

Mumbai: InterGlobe Aviation-promoted budget carrier IndiGo, which had recently announced the launch of its first daily flight between Amritsar and Dubai from October, is betting big on the Middle East market.

“We believe that the Middle East market still has a lot of potential for us,” said IndiGo’s chief commercial officer William Boulter. “And we are expanding our reach within the Gulf to include immediately Abu Dhabi and Kuwait, and then other destinations in the future.”

IndiGo, the market leader in India in terms of the number passengers, currently operates 60 daily return flights to the Middle East, including 13 flights to and from Dubai, and eight flights to and from Doha, besides four daily return flights to Sharjah and Muscat. From October, IndiGo will fly 64 return flights to the Middle East daily.

The airline’s Middle East move follows stagnant domestic yield on the back of a falling rupee, increasing fuel price and a competitive market preventing it from raising fares.

About 15% of IndiGo’s total capacity is dedicated to international operations. “A majority of our international capacity is Gulf-based. Roughly about 12% of our total capacity is deployed there (on Middle East routes),” Boulter added.

At present, IndiGo operates a fleet of over 180 aircraft. “We see the Middle East as having some potential for us. It is a natural extension to our domestic flying, using the same aircraft type .”

“We fly with the lowest cost per available seat kilometre, among anyone. So, we are confident that the new flights will be profitable additions to our operations,” said Boulter.

IndiGo also plans to start flights to London’s Gatwick airport this winter.

The international market, especially the Middle East, has a much better spread than the domestic market, said an analyst with a foreign brokerage, requesting anonymity. “Also, with the rise in oil prices, Middle East economies are recovering, so airlines like IndiGo will definitely be able to generate good yields in these markets.”

“Recently, we were granted some slots at London’s Gatwick airport. So, we will potentially use the slots this winter though we haven’t finalized the plans yet,” Boulter said.

IndiGo will fly to London using its Airbus 321 LR aircraft it takes delivery in November.

“We will not be able to go non-stop to London. We will have to make a haul,” Boulter added.

Besides Middle East, IndiGo flies to Kathmandu, Singapore, Colombo and Bangkok. Financial Express had earlier this month reported that IndiGo has plans to start flights to Yangon (Myanmar), Istanbul (Turkey), and Riyadh (Saudi Arabia) in the coming months.

IndiGo’s co-founder Rahul Bhatia had during the first quarter earnings call on 30 July said that the airline will also continue to reconnect international destinations to additional cities in India and also open up new destinations internationally.

“With our existing fleet and the new A321neos that is expected to start getting delivered towards the end of this year IndiGo will have the capability to reach to cities in China, Middle East and Southeast Asia,” he had said.

IndiGo, which had 41.9% of domestic market share in August, carried 4.75 million passengers during the month.

19.1. India continues to be world's largest BPM base, generated US$ 32.5 bn revenue: Nasscom

PTI, Oct. 05, 2018

New Delhi: body Nasscom Thursday said India continues to be the largest BPM (business process management) base in the world, generating close to USD 32.5 billion in revenue with an employee strength of 1.2 million.

The Indian BPM industry is estimated to now account for over 37 per cent share in global sourcing and is witnessing a 1.7X revenue growth. This is set to grow from USD 154 billion to a projected USD 167 billion in FY18, an increase of almost 8 per cent, Nasscom said in a statement.

"As digital technologies reshape businesses, this industry with its foundation in domain and process expertise, is increasingly innovating to emerge as the hub for digital solutions. Up skilling for digital, acquiring competencies through acquisitions or partnerships, building platforms and products, and leveraging centers of excellence in new technologies are some of the key priorities of companies in the BPM industry," Nasscom Vice-Chairman and WNS CEO Keshav R Murugesh said.

Nasscom, which hosted its BPM Strategy Summit 2018 in Bengaluru, highlighted that the industry is taking advantage of emerging technologies such as Robotic process automation (RPA), artificial intelligence (AI), digital communications, Internet of Things (IoT), cognitive computing and more, to improve profitability, collaboration and competitiveness.

"The major row over data privacy needs to be addressed and compliance with the European Union's GDPR (General Data Protection Regulation) as a regulatory requirement. Adoption of technologies like Blockchain and AI have shown how security, speed, and operational efficiencies can be enhanced," the statement said.

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

19.2. NYSE- listed IT giant DXC sets up its first global analytics unit in India

Business Standard, Oct. 01, 2018

Bengaluru: As it bets heavily on big data and analytics, IT services giant DXC Technology has turned its attention to India, looking to leverage the skill set that the country offers in this emerging area of technology.

The NYSE-listed company has chosen India as first location globally to set up its first Analytics Migration Factory, while two more are expected to come up in Poland and The Philippines by the end of the current calendar.

"Big data requires deep domain knowledge and India provides this talent pool in plenty," said Samson David, Managing Director (India) of DXC Technology.

"We will be hiring people from campuses, apart from the lateral route for the factory. A significant number of our employees are also being reskilled."

DXC was formed in 2017 from the merger of Computer Sciences Corporation (CSC) and the enterprises services business of Hewlett Packard Enterprise (HPE). The company is the second largest end-to-end IT services provider in the world after Accenture, with revenues of $24.55 billion (in 2018) and a global headcount of around 150,000.

The Analytics Migration Factory that has been set up in Bengaluru will support Microsoft Azure. The company said it would provide advanced artificial intelligence and machine learning capabilities to enterprises for development, delivery and support services, which are designed for analytics workload migration solutions to Azure.

"Today, a massive amount of data is being generated, which is unstructured. It needs to be analysed for actionable insights. These insights will lead to new monetisation options and new business models," said David.

"In this perspective, this is a strategic bet for us. We believe this is an industry-changing thing because, here, we are talking about the combination of cloud and analytics along with scale," he added.

Data analytics is one of the growing domains in the digital services space, given this tool helps enterprises to improve operational efficiency, apart from taking smart business decisions through predictive analytics.

Commenting on the collaboration, Sashikumar Sreedharan, MD (enterprise commercial business) of Microsoft India said the combination of cloud and analytics would be a game changer. "It's just not the cloud. It's the private cloud which is the game changer. Due to rising competition, enterprises are increasingly looking at building up a fair amount of control (on their data)," said Sreedharan.

Falling revenue in the IT industry from traditional or legacy business is prompting IT services firms to invest more in various domains of digital technology. Apart from setting up centres specially dedicated to data analytics, artificial technology, machine learning and Internet of Things (IoT) among others, they are also acquiring companies to build up digital capabilities.

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

20.1. Delhi airport gets Airport Service Quality award

PTI, Sep. 18, 2018

New Delhi: The Indira Gandhi International Airport in the national capital has won an award for "becoming the world's number one airport in the highest category of handling over 40 million passengers per annum".

The airport has bagged the Airport Service Quality (ASQ) Award 2017, aerodrome operator DIAL said in a release Monday.

The award was given by the Airports Council International (ACI).

"For IGI Airport, 2017 has been a remarkable year with 63.5 million passengers and surpassing Changi, Incheon and Bangkok airports in terms of passenger growth.

"Delhi Airport is now the seventh busiest airports in Asia and among the top 20 busiest airports across the world," the release said.

DIAL is a consortium led by the GMR Group. Other stakeholders are the Airports Authority of India (AAI) and Germany's Fraport.

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

20.2. Uber Elevate is not just for the Ambanis; it’s for the common man’

BusinessLine, 19 Sep. 2018, Varun Aggarwal

Uber’s ambitions for the Indian market are reaching the skies, quite literally, as the cab aggregator is planning to test its flying taxis Uber Elevate in the country. Eric Allison, Global CEO at Uber Aviation Program, who recently met Prime Minister Narendra Modi, is hopeful that India will use its innovation to drive down costs for flying taxis and make them as affordable as road taxis. In an interview with BusinessLine, he talked about the company’s plans to partner with local developers and even consider local manufacturing for these flying cars. Excerpts:

Existing helicopter services are already facing permit issues. How will you manage operations with an entirely new type of aircraft?

It begins with starting to work with regulators as soon as possible. We think that early conversations are critical as aviation is a highly-regulated industry and there’s no way around that. You have to work with regulators. The next important aspect is that we are introducing a new type of technology that has benefits that helicopters don’t have. The noise and safety profile are quite different.

And, we are not making an elitist product. We want to make something that is accessible to a wide number of people. Even if it starts out at a higher price point, we want to aggressively drive down the price so that it becomes more and more accessible to people.

Uber Elevate is not only for the Ambanis of the world. It is for the people who take an Uber everyday. All our analysis projects that we will be able to get this at an affordable price. And actually in pretty short time.

You can’t just have a regulator working on a new type of air traffic management solution because you’re flying at a different attitude compared to any other mode of transport. So who will create that infrastructure and who will be able to manage it?

We are actually building out our own air traffic management infrastructure for these vehicles. We will manage our network and then interface our network management service in a non interfering way, with the air traffic control system.

In the US, we are working with the Air Traffic Organization and we’re actually doing some experiments in the Dallas-Fort Worth area, which is one of our launch markets in the US. We have an agreement with NASA, where we’re experimenting together to demonstrate, in a simulated environment, that the type of operations we’re proposing to do with Uber don’t cause any problems for commercial aviation.

On the infrastructure side, we’ll be looking to partner with some premier real estate players in India.

Whether it is Mumbai, Delhi or Bengaluru, we will be looking for a partner for skyports.

Will these be skyports be built independently or on top of existing infrastructure?

A lot of real estate developers we’ve talked to are interested in dual use, or multi-use, options.

So, multi-use developments where you go shopping and have food become attractive. And you can almost view the skyport as an amenity, a mixed use development.

Multiplexes or malls or even the public transit — we would be interested in being co-located with. You can imagine taking a Mumbai local train and then rising to the top (of the station) taking Uber (air taxi) to somewhere else.

Uber Elevate costs $1.8 per mile, which may work for markets like the US and Japan. But it is still expensive for India if you’re looking at mass market adoption....

Those figures are all in the US context. We have not yet taken those models and adapted them to an Indian context, which is one of the things we will be doing in the next few months. Those costs will go down significantly just the way our rides business did. UberX here costs less than what it costs in the US.

We actually think there’s a huge potential to make something that’s extremely competitive in the Indian market and then expand from there to be able to make something that is even more compelling for the other markets where we take them to.

So, we think that’s the big advantage that India has — to develop something that could be quite magical as we scale it up.

If we were to develop a manufacturing partner here, that’s conceivable because a lot of manufacturing happens here, both on the aerospace and car side.

Flying autonomous cars is technically easier driving them, given the relatively less number of variables there. Why is it then taking longer to develop?

It is easier technologically but it is harder from a regulatory standpoint. That is why we think the right thing to do is to start with pilots. There’s also a social acceptance angle to it that I think we don’t fully understand yet. Our intuition is that starting with pilots is the right way to go.

We think the fastest way to go is to have pilots and then we will develop autonomy in parallel with the pilot flights and eventually down the road, we’ll have a hybrid fleet.

INDIA AND THE WORLD

21.1. A new twist in global politics

Livemint, 27 Sep. 2018, Harsh V. Pant

US foreign policy is steadily renouncing multilateralism while China is stepping into its shoes

Only US President Donald Trump can stand at the biggest multilateral platform, which was built to help nations shed their nationalistic impulses, and call upon the international community to reject globalism and embrace patriotism, in his speech at the United National General Assembly (UNGA). Trump underlined his visceral dislike of multilateral institutions by arguing that “America is governed by Americans,” and that the US rejects “the ideology of globalism and we embrace the doctrine of patriotism.” By doing this, Trump once again returned to the theme of his last UNGA speech: the primacy of national sovereignty in international relations. His speech was also a response to the UN Secretary General António Guterres’ recent warning that “multilateralism is under attack from many directions,” pushing the international community to “press for a renewed commitment to a rules based order and to the United Nations.”

Though Trump’s speech echoed much of what he had said last year at the UNGA, his target this time was Iran, not North Korea. Threatening to “totally destroy” North Korea last year, Trump had derided Kim Jong-un as the “Rocket Man” who was “on a suicide mission for himself and for his regime.” This year, he thanked the North Korean dictator for his “courage, and for the steps he has taken” and trained his guns at Iran, describing the Iranian regime as “brutal” and “corrupt.” Reminiscent of George W. Bush’s remarks before the 2003 US invasion of Iraq, Trump thundered, “We cannot allow the world’s leading sponsor of terrorism to possess the planet’s most dangerous weapons.” The Iranian President, Hasan Rouhani responded by mocking Trump’s North Korea outreach as “photo op diplomacy” and by asking the US to come back to the negotiating table by returning to UN Security Council resolution 2231, which codified the JCPOA.

Trump has challenged the global order at multiple levels: initiating trade disputes with close allies, challenging traditional alliances in the West, withdrawing the US from global agreements such as the Paris climate accord and the JCPOA, pulling out of the global compact on migration, and threatening to try International Criminal Court prosecutors if they pursue US nationals. Washington has cut hundreds of millions of dollars in financial assistance to Palestinian refugees, hoping that the move would compel Palestinian President Mahmoud Abbas to participate in US-led peace talks with Israel.

The US foreign policy has been overhauled but it is simplistic to boil this all down to the Trump factor alone. As policy commentator Robert Kagan suggests, the world “may have to start facing the fact that what we’re seeing today is not a spasm but a new direction in American foreign policy, or rather a return to older traditions—the kind that kept us on the sidelines while fascism and militarism almost conquered the world.”

The Trump administration’s distancing itself from multilateralism is beginning to have an impact at the UN whereas a rising China is making its presence felt in multiple ways. Beijing is beginning to shape global discourse ever so subtly, and in the process, challenging the American-led global order. China has already emerged as a key player in the UN peacekeeping effort, contributing around 10.25% of the total UN peacekeeping budget, and providing more peacekeeping troops than the other four permanent members of the security council combined since 2012. China will be spending around $1 billion on peacekeeping over the next five years and trained more than 8,000 People’s Liberation Army troops to serve as standby militia for UN peacekeeping operations.

America’s withdrawal from bodies such as the UN Human Rights Council and the UNESCO is also opening up new possibilities for Beijing. Jettisoning its earlier approach of ignoring organisations which do not gel with its values, China now seeks to proactively engage these institutions so as to shape their agenda. For example, it is now working actively in the UN Human Rights Council seeking a cut in UN budgets on human rights issues and changing its normative vocabulary.

In his inaugural address to the UN general Assembly, the then US President Harry Truman had suggested that it symbolized “the abandonment by the United States of a policy of isolation.” Today, the US President is proclaiming “the success of the United Nations depends upon the independent strength of its members,” pledging to revive the “principle of sovereignty.”

Indian strategic thinking has evolved over the last several decades deeply suspicious of American multilateralism and a strong proponent of preserving the nation’s sovereignty. Both the Left and the Right in India have done a lot of sloganeering on this issue, berating the US, and making common cause with Russia and China to challenge the American global order. America’s talk of multilateralism was viewed as a ploy to dilute Indian’s sovereign rights by stealth. It is a sign of the treacherous nature of the times in which we live that many in India are befuddled when the US is speaking a language that India should be rather comfortable with. We are berating the US today for not standing up for the same multilateral order which we so despised.

The trouble for New Delhi is that the order which Beijing might be building will challenge Indian interests in more fundamental ways than the American-led global order ever did.

Harsh V. Pant is a professor of International Relations at King’s College London.

21.2. World Bank bars several Indian companies for corrupt practices

BusinessLine/ PTI, 5 Oct. 2018

78 companies and individuals have been debarred from its various projects

Several Indian companies and a few individuals from the country have been barred by the World Bank from its various projects across the globe, the multilateral lending agency said in its first report on its efforts to fight corruption and safeguard donor resources.

The World bank Group Sanctions System Annual Report for the year 2018 said Olive Health Care and Jay Modi from India have been debarred from for their fraudulent and corrupt practices. They were working on a World Bank project in Bangladesh.

While Olive Health has been debarred for 10 years and six months, Modi has been debarred for seven years and six months, the report said. In all 78 companies and individuals have been debarred by the World Bank.

The inaugural report, the bank said, is the result of efforts by the Integrity Vice Presidency (INT), the Office of Suspension and Debarment (OSD) and the Sanctions Board to prepare a joint overview of the Bank Group Sanctions System and its activities over the past year.

India-based Angelique International Limited has been debarred by the World Bank for four years and six months for their fraudulent and corrupt practices. The company had a World Bank project in Ethiopia and Nepal. Family Care from India too has been debarred by the World Bank for four years on similar grounds. They had projects in Argentina and Bangladesh.

For fraudulent practices, Madhucon Projects Ltd from India has been debarred by the World Bank for two years. It had World Bank projects in India. R KD Construction Pvt Ltd has been debarred for one year and six months for the same reason. It has projects in India.

Among other Indian companies debarred by the World Bank for less than a year are Tatve Global Environment Pvt Ltd, SMEC (India) Pvt Ltd, and Macleods Pharmaceuticals Ltd.

In addition to the 78 debarments, five firms were sanctioned with conditional non-debarment, which means they remain eligible to participate in World Bank-financed projects but will be debarred if they do not meet certain agreed-upon conditions.

Each of the sanctions related to a finding that the firm or individual engaged in one of the institution’s five sanctionable practices — fraud, corruption, collusion, coercion or obstruction — while participating in a Bank Group-funded project, the bank said. The institution also recognised 73 cross-debarments from other multilateral development banks.

In addition to evaluating allegations of fraud and corruption, INT works to prevent corruption in ongoing Bank Group projects. INT staff identified and worked to mitigate integrity risks in 390 projects, steps that made progress in safeguarding the equivalent of USD 2.2 billion in project commitments, it said.

22.1. Gita Gopinath appointed IMF chief economist

Livemint, 1 Oct. 2018, Asit Ranjan Mishra

Gita Gopinath succeeds Maurice Obstfeld, who had in July announced that he would retire at the end of 2018

New Delhi: Indian-origin economist Gita Gopinath was appointed the chief economist of the International Monetary Fund (IMF) on Monday, becoming only the second Indian after Raghuram Rajan to hold the prestigious post.

Rajan held the post from 2003 to 2006 before he joined the finance ministry as chief economic adviser and later the governor of the Reserve Bank of India (RBI).

Gopinath, 46, succeeds Maurice “Maury” Obstfeld. Gopinath currently serves as the John Zwaanstra Professor of International Studies and Economics at Harvard University.

“Gita is one of the world’s outstanding economists, with impeccable academic credentials, a proven track record of intellectual leadership, and extensive international experience,” IMF managing director Christine Lagarde said in a statement. “All this makes her exceptionally well-placed to lead our research department at this important juncture. I am delighted to name such a talented figure as our Chief Economist,” she added.

Former chief statistician of India Pronab Sen said Gopinath is a great choice. “She understands central banking unlike most previous chief economists at the IMF.” Sen said she could well follow Rajan’s path to Mint Street. “It certainly makes her a candidate for the top job at RBI,” Sen added.

Gopinath had earlier served as the economic adviser to Kerala chief minister Pinarayi Vijayan.

Gopinath is co-editor of the American Economic Review and co-director of the International Finance and Macroeconomics Program at the National Bureau of Economic Research. She is co-editor of the current Handbook of International Economics with former IMF economic counsellor Kenneth Rogoff. She has authored some 40 research articles on exchange rates, trade and investment, international financial crises, monetary policy, debt, and emerging market crises.

Gopinath is a US citizen and an overseas citizen of India. She received her PhD in economics from Princeton University in 2001 after earning a BA from the University of Delhi and MA from both the Delhi School of Economics and University of Washington. She joined the University of Chicago in 2001 as an assistant professor before moving to Harvard in 2005. She became a tenured professor there in 2010.

22.2. Accenture will continue to hire significantly in India: CEO Pierre Nanterme

Business Standard, Oct. 01, 2018

Mumbai: As global consulting and IT services giant Accenture continues to establish itself as a leading player in the digital segment, company’s Chief Executive Officer (CEO) Pierre Nanterme said India would continue to play a critical role in delivering the 'new' services.

‘New’ business for Accenture includes digital, Cloud, and security services, which account for around 60 per cent of the NYSE-listed company's overall revenues, making it by far the leader in this space.

“And we continue to hire significantly on, let's call it, the offshore, especially in India. It’s not true that onshore is all new (services) and offshore is core legacy. Everybody who would visit Accenture in India would be blown away by the quality of the people and their rotation to the New,” Nanterme said during an earnings call with analysts to discuss the financial number of the quarter ended August 31 (Q4). He said the strong growth in the Q1 had also pushed recruitment in large onshore markets, including the US, Germany, and Japan.

Accenture — considered as one of the top-most employers in India among the global technology services companies — is believed to have over 150,000 workers in India, next to IBM.

In the August quarter, the firm delivered better-than-expected financial numbers, pointing towards a robust demand environment, especially for the digital solutions and services. In the current quarter, it beat the Street estimates with revenues growing at 11 per cent QoQ in constant currency term.

While Accenture beat its own guidance (almost $100 million above their guidance), the noticeable factor was the growth of almost 10 per cent in organic revenue even as the company continued with its aggressive acquisition strategy. Except for financial services, all of Accenture’s verticals have shown strong growth with consulting growing at 12 per cent and outsourcing business growing at 9 per cent.

“New (digital, Cloud, and security services) bookings were $10.8 billion for the quarter, reflecting our second-highest bookings on record. Consulting bookings were $6.1 billion, representing an all-time high and a book-to-bill of 1.1, and our outsourcing bookings were $4.7 billion with a book-to-bill of 1.0," said David P Rowland, CFO, Accenture, during the earnings call. New services contributed more than 60 per cent to the firm's total revenues in Q4FY18.

For the full fiscal year, the company delivered nearly $43 billion in new bookings, which represents 12 per cent growth in local currency. Rowland said the company received double-digit bookings growth in strategy, and consulting, and systems integration with strong demand for intelligent platform services and services.

A report by Kotak Institutional Equities noted that Accenture guided for 5-8 per cent revenue growth in FY19, a surprisingly modest guidance after a strong exit and 7-10 per cent c/c revenue growth guidance in Q1FY19. The guidance implies acquisition contribution of 1.5 per cent, which is 1 per cent lower than the previous year. Accenture has an outlay of $1.5 billion for inorganic initiatives. It has guided for 10-30 basis points expansion in FY19 Ebit margin.

“Factors aiding Accenture’s growth include participation in the full lifecycle of clients’ digital journey through its consulting, design, and full spectrum of digital competencies that is strong across verticals and geos. This full spectrum of competencies becomes important in an environment of constant disruption and changes ensuring Accenture participates early in every element of change and is in sharp contrast to participation in late-cycle opportunities for technology-focused companies,” said Kanwaljeet Saluja, research analyst, Kotak Institutional Equities.

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

23.1. The RCEP is a must for India

Livemint, 19 Sep. 2018, Rajeev Kher

This is particularly so in light of the ongoing trade war and the way in which it will affect the nature and direction of global trade flows

India must remain within the Regional Comprehensive Economic Partnership (RCEP), a group of 16 nations negotiating a trade agreement. Indian industry is wary of the potentially adverse impact of preferential Chinese imports. But this is the only chance of securing a rules-based framework with China.

The multilateral trading system—most conducive to the interests of a developing country—is likely to remain comatose. This is compelling trading nations to resort to regional trade agreements to expand their markets. The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) will become effective, sans the US, after the requisite ratifications. Thus, between these two agreements, 26 trading nations would have implemented preferential arrangements, potentially at the cost of India. India’s exports have been stagnating for some years now. It has not concluded a significant trade agreement in a decade.

The ongoing trade war has already created turbulence and uncertainty in global markets. This is bound to affect the nature and direction of global trade flows. Modern production networks stretch across manufacturing economies and trade agreements are important institutional mechanisms to facilitate countries’ access to such value chains. India must look for opportunities to hook into them.

The India-China economic relationship should be seasoned with realism in these turbulent times, when geopolitics is transitioning. India must, therefore, establish a more in-depth understanding with its neighbour on economic issues as they unfold over the next decade or so. China’s average industrial tariff is 8.5%—by no means low. The preferential tariff framework can give India better access to the Chinese market. Further, the opaque and discriminatory regulatory framework in China needs to be addressed for which a plurilateral framework, where several others have similar concerns, is better than a bilateral framework.

India’s reform agenda pervades all spheres of the economy. Positive developments have been reported in trade facilitation, ease of doing business, helped along by systemic reforms such as the goods and services tax, strengthening and expansion of infrastructure and greater focus on technology facilitation. Today, only globally competitive industries can survive. Reliance on government largesse is neither possible nor desirable from a sustainability perspective. Therefore, a shakeout and repositioning is imminent.

Having been threatened by US unilateralism, China should be more amenable to calls of cooperation and understand India’s predicament. India also has leverage in the form of its potential market size. It must, therefore, negotiate with greater confidence and craftsmanship and not be swayed by the threats of its partners. India’s exclusion from RCEP will cost others heavily. The stage for negotiations at the diplomatic level seems to have passed. Some critical parts of such deals can only be concluded at the highest political levels. Some straight-talking with the major proponents is overdue.

Most frontline trading nations now negotiate deeper trade agreements, which involve multiple layers of trade engagement such as non-tariff ecosystems, regulatory frameworks and even some so-called non-trade issues. Most of our agreements are shallow and relatively less rigourous on non-tariff issues. It must be underlined that these negotiations are not simple. Most of the time, India’s approach to trade negotiations has been typified by a defensive stance. This is because of the huge diversity in our economic and industrial architecture and consequent complexity in our positions. While some sectors continue to seek government support to cover their inefficiencies, some potential winners will need support.

India can ask for a long-term tiered approach to tariff reduction/elimination. It can seek front-loading of concessions from a trading partner like China. It can specifically pick those tariff lines where it has greater interest to integrate into regional value chains in the list of front-loaded items. India should negotiate annexes to the main agreement on sectoral regulatory frameworks and processes/protocols. The idea is to not only agree on concession schedules but to also freeze processes and regulatory rules for assured transparency.

Further, India can also ask for the establishment of a regular mechanism for settling access-related issues and a dispute settlement framework within the agreement. A large part of Chinese economic activity is conducted via state-owned enterprises, creating discrimination and opacity.

India must implement an extensive programme on technical regulations based on international standards. This will facilitate access to partner markets and protect domestic industry from cheap imports. A stronger framework for intellectual property law enforcement is also desirable.

This discussion will be incomplete if the value of services-related market access is not acknowledged, but we need to underplay our excessive focus on disciplines for movement of natural persons. Regional demography and continued focus on domestic services reforms will position us to take advantage of regional demands. Therefore, we should build an evolutionary architecture to be reviewed periodically.

Last but not least, industry must create a B-team of sectoral experts to support government negotiators. If negotiated well, the RCEP has the potential to be a game-changer for India.

Rajeev Kher is distinguished fellow, RIS, and former commerce secretary.

23.2. US tells India it has more resources to counter BRI

Livemint, 9 Oct. 2018, Elizabeth Rocha

OPIC’s David Bohigian outlines law that makes more US funds available for global projects

New Delhi: A key US official on Tuesday briefed officials in India’s finance and external affairs ministries on key provisions of the newly passed American Build Act which seeks to make available more resources to the US government to counter China’s ambitious Belt and Road Initiative (BRI).

David Bohigian, executive vice president of the Overseas Private Investment Corporation (OPIC) concluded his five-day visit to India on Tuesday with meetings at India’s finance and foreign ministries outlining significant features of the new Act signed into law by US President Donald Trump on Friday.

“One message that we have is that the US development finance institution now has expanded capital” totalling $60 billion, up from the earlier $23 billion available to it, Bohigian told reporters in New Delhi. “We will also be able to invest in equity for the first time,” he said.

At a conference on the US Indo-Pacific strategy in Washington in July, US Secretary of State Mike Pompeo announced $113 million in new technology, energy and infrastructure initiatives in emerging Asia—a sum analysts had then described as “underwhelming” given that China had announced plans to invest $126 billion in a bid to build a network of land and sea links with South-East Asia, Central Asia, the Middle East, Europe and Africa. Defending the US move, American officials had then said that the US strategy does not aim to compete directly with China’s BRI, but rather to offer a more sustainable alternative by encouraging private-sector investment.

India has concerns over BRI as a part of it passes through the section of Kashmir occupied by Pakistan-

This is against the backdrop of the Chinese mega infrastructure venture stoking apprehensions across the world—either because of the perceived inability of countries to handle outsized debts to China, or because some Beijing-funded infrastructure projects do not appear likely to justify their price tag.

India too has concerns over BRI primarily because a strand of it—the China-Pakistan Economic Corridor passes—through the section of Kashmir that is under Pakistani administration.

Last week, after the passage of the Build Act, Ray W. Washburne, president and chief executive officer of the OPIC, had in a statement said that the Act “recognizes that private sector-led investment is essential to economic growth and development and offers a financially-sound alternative to the state-directed initiatives pursued by China that have left many developing countries deep in debt.”

On Tuesday, Bohigian said OPIC was a “key component” of the US Indo-Pacific strategy, adding that his current visit to India and previous trips to Europe and Asia were to reinforce the Indo-Pacific strategy.

“I do think its important to draw a contrast and make sure that policymakers do have alternatives,” he said referring to China’s financing methods for infrastructure. “It’s important to have competition and when that competition has a level playing field, we win,” he added.

US businesses had invested almost $ 1 trillion dollars in the Indo-Pacific region last year alone, Bohigian said adding “I think that is important to think about not just state-directed investment but channelized from private sector, from what the OPIC does.”

24.1. India moves up to 28th rank in govt e-payment adoption: Survey

PTI, Oct. 04, 2018

Mumbai: India's overall ranking on the government's adoption of e-payments has moved up to 28th in 2018, from 36th in 2011, but it needs to do more on digital infrastructure access and socio-economic factors, a survey said Wednesday.

The country is taking "rapid strides" in advancing government e-payments capabilities and is is one of the top- performing countries in terms of citizen-to-government (C2G), business-to-government (B2G) and government-to-business (G2B) transactions, the survey by The Economist Intelligence Unit commissioned by payments company Visa said.

The country holds the top ranking on B2G and G2B, and comes third on C2G jointly with Argentina.

Norway leads the pack in the 73-country ranking, followed by France and Denmark.

The 73-country survey, which was last conducted in 2011, looks at availability of government electronic transaction services and the underlying environment of mechanisms that support digitisation for all transactions in a market, such as policy and infrastructure.

"(India) could further improve its standing by focusing on expanding access to digital infrastructure, investing in socio-economic development, and promoting a healthy, competitive market," the survey said.

India is at the 58th place for digital infrastructure and lags significantly in the development of digital infrastructure and socio-economic conditions, according to the survey.

"Substantial pockets of communities" lack reliable access to the Internet, it said, acknowledging the government efforts to deepen penetration.

The same is also the case with payment acceptance infrastructure, where the country lags behind despite the government efforts.

India is placed 60th among the 73 countries surveyed on socio-economic development, which underscores the need to focus efforts on building awareness for digital payments, as well as its citizens' and businesses' engagement with Internet-enabled services, it said.

The country was also found to be lacking in the policy context, at the 40th rank, the survey said, specifically pointing out that work on protecting intellectual property rights can improve the ranking.

Foreign firms also face restrictions ability to access funding from domestic sources, which could create another barrier to entry, it said.

The survey said while the country has done well on financial inclusion, its overall performance in inclusiveness dropped due to a lack of government integration of the informal economy.

Without mentioning the specifics, the survey also said that the government incentives on digital payments adoption is restricted to certain specific types of digital payment methods, which limits its efficacy.

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

24.2. We need positive change to know what’s possible: Max Roser

Livemint, 9 Oct. 2018, Sunaina Kumar

Oxford University economist Max Roser says the world needs to be told things are improving, though there are also huge challenges

New York: Max Roser belongs to what may be called the Hans Rosling school of fact-based optimism. Rosling, a Swedish professor who achieved rock star status, is the author of Factfulness, the bestseller from this year that proves that our world may, in fact, be changing for the better, based entirely on data. Roser, 35, is an economist at Oxford University and founder of Our World in Data, an online resource that uses data on long-term social and economic trends to track global progress.

Our World in Data shows positive trends in health, education and standards of living, and is based on Rosling’s argument that such knowledge should be both accessible and easy to consume. In Roser’s telling, data sometimes turns into anecdotal stories. In an entry on global poverty, he cites the example of Nathan Rothschild, the richest man in the world when he died in 1836 of an infection that can today be treated with antibiotics sold for less than a couple of cents. Only the very poorest people in the world would die in the way that the richest man of the 19th century died, an indication of how difficult it is to judge and compare levels of prosperity and poverty.

Roser is quite clear about how he sees the world—we are less violent and more tolerant; we are leading healthier lives, and are better fed, and poverty around the world is declining rapidly. Last year, he tweeted, “Newspapers could have had the headline ‘Number of people in extreme poverty fell by 137,000 since yesterday’ every day in the last 25 years.” This has now become one an oft-quoted statistic to demonstrate reduction in global poverty.

This is relevant to India. The World Bank defines extreme poverty as those living on less than $1.90 a day. Recent data from different agencies in the world indicate how India has swiftly reduced extreme poverty over the past 30 years. Extreme poverty is a low bar and much more remains to be done though. Roser was recently in New York for Goalkeepers, an annual event hosted by the Bill & Melinda Gates Foundation, where he was recognized for his work as a social innovator. Mint caught up with him on the sidelines of the conference.

There is some amount of scepticism around the idea of positive data, since the assumption is it can hinder us from focusing on intractable problems. What’s your take?

If we don’t tell both aspects at the same time—that things are improving but there are also huge challenges and huge injustices in the world today—then, you would be making a big mistake. We can’t solely focus on the optimism story. I think that would be dangerous too. I think, overall, a lot of people are aware of the injustices and the big problems that the world is facing. But it’s often surprising to people if you give them the perspective of slow improvements over time, because that’s what many of us are less aware of. I’m trying to do both—that things are improving, but we’re also still facing some big problems.

Let’s look at India’s figures on poverty reduction. Absolute poverty may have come down, but there are still so many people who are living just a little above the extremely low poverty line. How does one address that?

We have this very low poverty line of just $1.90 per day as the definition for extreme poverty. And surely, someone who lives just above 1.90 dollar is still poor and the journey definitely isn’t over once we have lifted people just above the poverty line. Someone who earns five dollars or ten dollars is still living in poverty I would think. But it makes sense for global comparisons—to find out where the poorest people on the planet are.

What would you say is the value of focusing on positive trends, based on the work that you’ve done?

I think the value is that it shows that change is possible. I think too many people have this idea of the world as a place of stagnation at best, or probably a place where things are just getting worse. If we don’t show that things are changing, and in a positive direction, we don’t have the perspective of what’s possible. At the most fundamental level, that’s probably true for everyone. If you don’t know that you could make a difference with your work, who would start getting into any work. I think the mechanism that is at play is a very similar one, at a personal level or at a global level. You’ve got to see positive change to get engaged in something.

In a country like India, data collection is a huge challenge. Enough data is not recorded, which can then influence policy. How do you get past that, and do you think the scenario is changing?

Data collection is a big issue. It’s also a bigger issue probably in a country like India. If we’re talking about poverty, for example, we have basically two sources for the data. One is to start at the individual level and ask households, through surveys, what food did they consume in the last month, where did they spend their money. From these particular surveys, we aggregate the numbers. Then, we have this other starting point of aggregate production in the entire country. We have to bring these two aspects together, the individual level and the total economy level.

But things are changing slowly. Some new and exciting methods like using satellite imagery are catching on. For example, in India, there were a couple of studies that used night-time lights as a measurement of what’s happening to people’s incomes and living standards. As incomes grow, people have the opportunity to switch on lights at night and you have light on the streets at night and you use that change which is actually visible and available easily to understand what’s happening to economies.

Do you think data collection will improve with digitization and the spread of technology in India and other countries? What are some big challenges that remain?

I don’t think it’s clear that we are going to improve much. Sure, there are some new ways of getting data, like satellite images. A lot of conversation is happening around big data, where we use the data of people accessing social media. It’s basically data this is collected accidentally—people who reveal some information by accessing Facebook or other social media—which we can use to make sense of what’s happening to the population. Surely, we should learn something from that. It has the benefit of giving us a very up-to-date picture of what’s happening in a place since getting national-level statistics sometimes takes a couple of years to aggregate. The global poverty figures that we currently have for 2018 is 2015 data.

Big data surely has an advantage in getting us more up-to-date information, but then I think we won’t get around the fact that we will still need to actually go from household to household conducting surveys on a representative sample of the population. Because, obviously, the population that is using social media is a particular subgroup.

But people are becoming increasingly disinterested in household surveys.

Surveys will remain the crux of data collection for the foreseeable future, but we know that survey response rates are very low and that people turn down requests from statistical officers. I think it’s also important to make the point that data is important and that you’re contributing to vital information by agreeing to take part in surveys. We do have this particular problem, which is possibly also true in some parts of India, that as people get richer, they are less likely to respond to surveys. They may be working outside the household and, hence, also may not available in the house. There are several reasons why people are less responsive once they get richer and that might be one of the reasons why, in India, we have this discrepancy between what’s reported in the household survey data and what’s reported by the aggregate statistics. The survey response rate might be falling as people’s incomes are growing.

From the time you started your project, have you seen any difference in the quality of data that you can collect as technology also improves?

I think it’s slowly happening. In responses through surveys that are conducted with mobile phones for instance, we see some changes. There are interesting questions being asked in an effort to try and understand how satisfied people are with their lives; which particular activities are linked to greater satisfaction in people’s lives. Individually, we are often surprisingly bad at predicting what makes us happy. So, there are these techniques where people use their mobile phone and they are asked at random times during the day to report how happy they are with their day and what they’re doing. That is something which would have been impossible to even think of ten years ago. But now, we can understand in real time during the day what people do in their lives and how it affects their life satisfaction.

What is the most surprising data point or fact that you think you’ve come across in your work?

It’s been a journey full of surprises, obviously. But one thing that I didn’t understand before I really got into this is to rewind the changes that we’ve seen in the countries that are rich today in order to see how similar they were to the changes we are witnessing in the countries that are catching up today. We have this idea, or I had this idea, that the rich part of the world had been rich for a really long time; that people had been well-off and healthy and well-nourished. And that there’s been a poor part of the world, where people are poor and malnourished and sick; and this split in the world has been around for a long time and will be around for a long time. But looking at data, specially at more historical data, showed me that the places that are rich today actually left poverty and poor health behind quite recently. I was very surprised at how fast and how recent the positive changes around the world are in a lot of different aspects.

What insights from data make you the most optimistic and what make you pessimistic about the world?

If we look at education levels of older generations, we see that literacy rates were very low and if we look at the same data source for the younger generation, then we see how much the world has already changed. The fact that a more educated, younger generation is going to take over in ten, twenty years, I mean, basically, from today onwards, I think that is something that should make us all more optimistic. And what makes me pessimistic is probably the state of the environment. There are some aspects on which we’ve achieved a lot. The action on ozone layer has been very successful, for example, but clearly, on most other environmental concerns, we haven’t made much progress and things are getting worse. It’s a deep concern that data continues to show that CO2 levels are rising fast in the world.

Sunaina Kumar is an independent journalist based out of Delhi. She was invited to the Goalkeepers conference by the Bill & Melinda Gates Foundation.

25.1. The backlash against China is growing

Livemint, 4 Oct. 2018, Brahma Chellaney

Mahathir Mahathir’s warnings against ‘a new version of colonialism’ stood out for their boldness, they reflect a broader pushback against China’s mercantilist trade, investment, and lending practices

On a recent official visit to China, Malaysian Prime Minister Mahathir Mohamad criticized his host country’s use of major infrastructure projects—and difficult-to-repay loans—to assert its influence over smaller countries. While Mahathir’s warnings in Beijing against “a new version of colonialism” stood out for their boldness, they reflect a broader pushback against China’s mercantilist trade, investment, and lending practices.

Since 2013, under the umbrella of its “Belt and Road Initiative”, China has been funding and implementing large infrastructure projects in countries around the world, in order to help align their interests with its own, gain a political foothold in strategic locations, and export its industrial surpluses. By keeping bidding on BRI projects closed and opaque, China often massively inflates their value, leaving countries struggling to repay their debts.

Once countries become ensnared in China’s debt traps, they can end up being forced into even worse deals to compensate their creditor for lack of repayment. Most notably, last December, Sri Lanka was compelled to transfer the Chinese-built strategic port of Hambantota to China on a 99-year, colonial-style lease, because it could longer afford its debt payments.

Sri Lanka’s experience was a wake-up call for other countries with outsize debts to China. Fearing that they, too, could lose strategic assets, they are now attempting to scrap, scale back, or renegotiate their deals. Mahathir, who previously cleared the way for Chinese investment in Malaysia, ended his trip to Beijing by canceling Chinese projects worth almost $23 billion.

Countries as diverse as Bangladesh, Hungary, and Tanzania have also canceled or scaled back BRI projects. Myanmar, hoping to secure needed infrastructure without becoming caught up in a Chinese debt trap, has used the threat of cancellation to negotiate a reduction in the cost of its planned Kyaukpyu port from $7.3 billion to $1.3 billion.

Even China’s closest partners are now wary of the BRI. In Pakistan, which has long worked with China to contain India and is the largest recipient of BRI financing, the new government has sought to review or renegotiate projects in response to a worsening debt crisis. In Cambodia, fears of effectively becoming a Chinese colony are on the rise.

The backlash against China can be seen elsewhere, too. The recent annual Pacific Islands Forum meeting was one of the most contentious in its history. Chinese policies in the region, together with the Chinese delegation leader’s behaviour at the event itself, drove the president of Nauru—the world’s smallest republic, with just 11,000 inhabitants—to condemn China’s “arrogant” presence in the South Pacific. China cannot, he declared, “dictate things to us.”

When it comes to trade, US President Donald Trump’s escalating trade war with China is grabbing headlines, but Trump is far from alone in criticizing China. With policies ranging from export subsidies and non-tariff barriers to intellectual property piracy and tilting the domestic market in favour of Chinese companies, China represents, in the words of Harvard’s Graham Allison, the “most protectionist, mercantilist, and predatory major economy in the world.”

As the largest merchandise exporter in the world, China is many countries’ biggest trading partner. Beijing has leveraged this role by employing trade to punish those that refuse to toe its line, including by imposing import bans on specific products, halting strategic exports (such as rare-earth minerals), cutting off tourism from China, and encouraging domestic consumer boycotts or protests against foreign businesses.

The fact is that China has grown strong and rich by flouting international trade rules. But now its chickens are coming home to roost, with a growing number of countries imposing anti-dumping or punitive duties on Chinese goods. And as countries worry about China bending them to its will by luring them into debt traps, it is no longer smooth sailing for the BRI.

Beyond Trump’s tariffs, the European Union has filed a complaint with the World Trade Organization (WTO) about China’s practices of forcing technology transfer as a condition of market access. China’s export subsidies and other trade-distorting practices are set to encounter greater international resistance. Under WTO rules, countries may impose tariffs on subsidized goods from overseas that harm domestic industries.

Now, Chinese President Xi Jinping finds himself not only defending the BRI, his signature foreign-policy initiative, but also confronting domestic criticism, however muted, for flaunting China’s global ambitions and thereby inviting a US-led international backlash.

International trade has afforded China enormous benefits, enabling the country to become the world’s second-largest economy, while lifting hundreds of millions of people out of poverty. The country cannot afford to lose those benefits to an international backlash against its unfair trade and investment practices.

China’s reliance on large trade surpluses and foreign-exchange reserves to fund the expansion of its global footprint makes it all the more vulnerable to the current pushback. In fact, even if China shifts its strategy and adheres to international rules, its trade surplus and foreign-currency reserves will be affected. In short, whichever path it chooses, China’s free ride could be coming to an end.

Brahma Chellaney is professor of strategic studies at the New Delhi-based Centre for Policy Research.

25.2. Commerce Minister Announces Fast Track Mechanism to Promote Russian Investments in India

Press Information Bureau, Oct. 08, 2018

New Delhi: Union Minister of Commerce & Industry and Civil Aviation, Suresh Prabhu, announced the setting up of a fast track, single-window mechanism for Russian companies to be helmed by Secretary, Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry. The Minister was addressing the India – Russia Business Summit organized by DIPP, Invest India and Confederation of Indian Industry (CII) in New Delhi today. The Minister stated that this mechanism would be in addition to the Russia Desk that had been set up earlier to promote Russian investment in India.

Suresh Prabhu informed that work on the International North-South Transport Corridor was underway and signing of a Free Trade Agreement (FTA) with Eurasian Economic Union (EaEU), soon, will create a huge market which will benefit all the countries of the region and also promote inter-regional partnerships between the states of India and the regions of Russia.

Commerce Minister further said that there is an opportunity for India and Russia to collaborate in all fields like hydrocarbons, gold and diamond, timber, pharma, agriculture, power generation, aviation, railways and logistics.

Minister for Economic Development of Russia, Mr. Maxim Oreshkin, said that Russia is preparing a strategy to increase economic cooperation with India. He said that Russia is looking at investment protection and avoidance of double taxation agreement with India besides trade in national currencies.

Making the economic partnership a strong pillar of bilateral relationship is a key priority for both governments. In December 2014, the leaders of the two countries set a target of USD 30 billion bilateral trade by 2025.

This is the largest Russian business delegation to accompany Russian President, Vladimir Putin, on his two-day visit to India.

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

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Thursday 18 October 2018

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