30 November 2015

Women Entrepreneurship Development Programme

Women Entrepreneurship Development Programme

The Ministry is implementing schemes for imparting training and to promote women entrepreneurship by setting up micro, small and medium enterprises in the rural and urban areas of the country through Khadi & Village Industries Commission (KVIC) and Coir Board.

KVIC conducts skill development and Entrepreneurship Development Programme (EDP), to encourage participation of women, KVIC offers free training to women under skill development programme.

Ministry of Micro, Small and Medium Enterprises (MSME) is implementing Prime Minister’s Employment Generation Programme (PMEGP), a major credit-linked subsidy scheme since 2008-09, to promote and set up micro, small and medium enterprises and to generate employment in rural and urban areas of the country. The maximum cost of the project under PMEGP scheme is Rs.25.00 lakhs for manufacturing sector units and Rs.10.00 lakhs for units under service sector. Under the scheme the women entrepreneurs are provided 25% and 35% subsidies for the project set up in urban and rural areas respectively. For women beneficiaries, own contribution is only 5% of the project cost while for general category it is 10%.  All the entrepreneurs including women are eligible for 2 weeks Entrepreneurship Development Programme (EDP) after the sanction of their projects from banks for financial assistance to setup their unit and also imparting training under EDP. The State-wise funds allocated for the year 2015-16 including women is:

Setting up of NIMZs

Setting up of NIMZs
Government has granted “in-principle” approval to a total of 20 National Investment and Manufacturing Zones (NIMZs). Of these, 12 NIMZs are located outside the Delhi-Mumbai Industrial Corridor (DMIC) region. These are:

(i) Nagpur in Maharashtra;
(ii) Tumkur in Karnataka;
(iii) Chittoor in Andhra Pradesh;
(iv) Prakasam in Andhra Pradesh;
(v) Medak in Telangana;
(vi) Kolar in Karnataka;
(vii) Bidar in Karnataka;
(viii) Gulbarga in Karnataka;
(ix) Jajpur in Odisha;
(x) Ramanathapuram in Tamil Nadu;
(xi) Auraiya in Uttar Pradesh; and
(xii) Jhanshi in Uttar Pradesh.

Out of these NIMZs, the Government has granted final approval to the NIMZ at Prakasam in Andhra Pradesh on 6th October, 2015

Under phase-I of the DMIC project, 8 Investment Regions have also been accorded ‘in-principle’ approval of Government for setting up as NIMZs as per guidelines approved by the Cabinet. These are:

i. Ahmedabad-Dholera Investment Region, Gujarat
ii. Shendra-Bidkin Industrial Park city near Aurangabad, Maharashtra
iii. Manesar-Bawal Investment Region, Haryana
iv. Khushkhera-Bhiwadi-Neemrana Investment Region, Rajasthan
v. Pithampur-Dhar-Mhow Investment Region, Madhya Pradesh
vi. Dadri-Noida-Ghaziabad Investment Region, Uttar Pradesh
vii. Dighi Port Industrial Area, Maharashtra ; and
viii. Jodhpur-Pali-Marwar Region in Rajasthan

The Government of India has approved a fund of Rs. 17,500 crores as a Revolving Corpus for development of trunk infrastructure in the DMIC region. The Government of Japan has announced their financial support for DMIC project to an extent of US$ 4.5 billion in the first phase for projects with Japanese participation through a mix of Japan International Cooperation Agency (JICA) and Japan Bank for International Cooperation (JBIC) lending.

Apart from twenty NIMZs which have been accorded “in-principle” approval and in which one has been accorded final approval, the Government has received three more proposals for setting up of NIMZ outside the Delhi-Mumbai Industrial Corridor region from Government of Gujarat (Two) and Government of Tamil Nadu (One). The concerned State Governments have been requested for further clarifications/ details about these proposals.

FDI in E-Commerce Sector

FDI in E-Commerce Sector
As per the extant FDI policy, FDI up to 100% under the automatic route is permitted in companies engaged in e-commerce provided that such companies would engage only in Business to Business (B2B) e-commerce. Further, it has been decided an entity will be permitted to undertake retail trading through e-commerce under the following circumstances:

(i) A manufacturer is permitted to sell its products manufactured in India through e-commerce retail.

(ii) A single brand retail trading entity operating through brick and mortar stores, is permitted to undertake retail trading through e-commerce.

(iii) An Indian manufacturer is permitted to sell its own single brand products through e-commerce retail. Indian manufacturer would be the investee company, which is the owner of the Indian brand and which in manufactures in India, in of value, at least 70% of its products in house, and sources, at most 30% from Indian manufacturers.

The Government, with a view to simplify and liberalise FDI policy and to ensure that India remains increasingly attractive and investor-friendly investment destination, undertakes stakeholders consultations with concerned Ministries/ Departments, Apex Industries Chambers and other organizations. Consultations, in this regard, were held with the stakeholders including States and industry representatives.

India’s Ranking in Global Innovation Index

India’s Ranking in Global Innovation Index

            “The Global Innovation Index” (GII) is a publication brought out by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO) as co-publishers, and their Knowledge Partners. The Confederation of Indian Industry (CII) was their knowledge partner from India for the year 2015. India’s position in the GII rankings during current year and last three years is as under:
India’s Ranking
The Global Innovation Index (GII) 2015 covers 141 economies around the world and uses 79 indicators across a range of themes. The rankings are based on data collected during earlier years and thus do not truly reflect the status in the country in 2015. For example, the data for India’s overall R&D spending pertains to the year 2010, and the significant amount of spending done by Industry and Government on R&D in last 5 years has not been captured and does not get reflected in the ranking. The GII Report itself states that there are certain areas where data could not be captured because of the non-availability of standard international indicators, and even if some of these areas have produced good innovation advantage for a country like India, it does not translate into ranking.  At the same time, the Report states that India still needs to implement substantial reforms in its innovation policy in order to further improve its innovation performance.
            Though India’s ranking for the year 2015 stands at 81 as against 76 in 2014, this is not a true reflection of the status in the country in 2015. The Report itself identifies India as the top economy in GII rankings in Central and Southern Asia and also as one of the middle income group countries which is narrowing the gap in the innovation quality due to improved quality in higher education institutions. The GII 2015 report states that over the years, India has developed a stable foundation for scientific, technological, and business education by setting up centers of excellence such as the Indian Institutes of Science (IISC), the Indian Institutes of Technology (IITs), and the Indian Institutes of Management (IIMs). The Report further notes that the strength of scholarly publications from India has been a key proponent for driving innovation capacity. The Report acknowledges that India has leapfrogged, leaving others in its category behind, in areas like mobile networks, information technology, and broadband. This revolution in communications has affected a pace of knowledge creation and dissemination in the economy that is unprecedented in Indian history. It has helped to transform innovation-driven entrepreneurship from the point of aspiration to the point of reality for the people of India.
                        The Government has taken various measures for promotion and growth of scientific research in the country. These measures include successive increase in plan allocations for Scientific Departments, setting up of new institutions for science education and research, creation of centres of excellence for research and facilities in emerging and frontline S&T areas in academic and national institutes, establishment of new and attractive fellowships for both research students and scientists, recent substantial revision of fellowships for research students, strengthening infrastructure for Research and Development (R&D) in universities, encouraging public-private R&D partnerships, recognition of R&D units and national awards for outstanding R&D for industries and setting up of Technology Business Incubators and Innovation and Entrepreneurship Development Centers.
The GII: 2015 also recognizes the strides being made by India in this regard. The report states, inter alia, that Government of India has “established an aligned Ministry for Skill Development and Entrepreneurship. This is a step forward. With the intervention of the government and the private sector, the level of innovation in Indian industry is also growing and more and more Indian SMEs are coming forward to invest in collaborative R&D.” Citing an example, the report further states that public-private partnership platforms such as the Global Innovation and Technology Alliance, a not-for-profit organization, are opening up opportunities for Indian companies to join with their foreign counterparts and develop products and technology through joint R&D programmes. The report also acknowledges that “In India’s most recent Union budget presented in February 2015, the government placed considerable emphasis on rapid development in the SME sector by addressing the funding issue. It has created a fund of Rs. 20,000 crore with a credit guarantee of Rs. 3,000 crore for entrepreneurs in this sector. In addition, it set aside Rs. 1,000 crore for a Techno-Financial, Incubation and Facilitation Programme to support all aspects of start-up businesses, and other self-employment activities, particularly in technology-driven areas. The Ministry of Micro, Small & Medium Enterprises has launched Intellectual Property Facilitation Centres in different parts of the country with the aim of creating an intellectual property culture within SMEs by looking at protection, capacity building, information services, and counselling and advisory services regarding IPR.”

“The Global Initiative of Academic Networks” (GIAN)

Union Minister of Human Resource Development, Smt. Smriti Irani Launches “The Global Initiative of Academic Networks” (GIAN)
“The Global Initiative of Academic Networks” (GIAN) programme was formally launched by the Union Minister for Human Resource Development, Smt. Smriti Zubin Irani today, at the IIT Gandhi Nagar. While speaking at Launch of GIAN, HRD Minister said that this initiative, GIAN brings into practice the belief of 'Vasudhaiv Kutumbakam'. Inspired by the vision of the Prime Minister and responding to his wish to ensure early implementation to facilitate the needs of institutions, faculty and students to embrace new knowledge frontiers. The fact that this vision of the Prime Minister has translated into action within a time span of just one year is a reflection of the team work between the Ministry of Human Resource Development and the institutions of higher learning. She said, “While our Hon Prime Minister Shri Narendra Modi has given the clarion call of Make In India, GIAN is our effort to tell the world "Come, Teach In India".

The Global Initiative of Academic Networks (GIAN) is a new and catalytic programme of the Ministry of Human Resource Development, one with potentially far reaching impact. It is intended to enlarge and deepen the interface of India’s institutions of higher learning and globally recognised institutions of academic eminence. Over the next year or so, faculty from highly rated institutions abroad will visit India, interact and partner with their counterparts and with students, and deliver specialised courses.

The two courses - one at IIT Gandhinagar and the other at IIT Kharagpur – launched today would be the first in setting the trend and tenor of the programme, two eminent academicians began their courses - 3D Digitization for Cultural Heritage, delivered by Professor Marco Callieri, Visual Computing Lab, ISTI-CNR, Italy at the IIT Gandhi Nagar, and another course at IIT Kharagpur by Professor Nico Verdonschot, faculty of the Radboud University Medical Center Nijmege, University of Twente, Netherlands on Orthopaedic Biomechanics: Implants and Biomaterials.

In the weeks and months to come, the academic interface will enlarge, and increasingly enable international academic collaboration. Most importantly, the GIAN programme offers a basis and a platform for a long-term cooperation.

From abroad, faculty from 38 countries are presently scheduled to deliver courses, including 46 academics from the USA, 9 from the UK, 6 each from Germany and Australia, and 2 from Israel. The list of countries includes Russia, Japan, Singapore, Sweden, Switzerland, Portrugal, Netherlands, Malaysia and South Korea. This remarkable array of academicians will span 13 disciplines and 352 courses to be taught in 68 national institutions.

The courses vary in duration from 1 week to 3 weeks depending on the subject and are free for students from the host institution, at nominal charges for others and webcast live as well. Webcasting will allow students across the country to benefit, in real time, providing access to high quality educational content. To encourage and make possible continued access to course content and delivery, it would be placed on the website of the concerned institution.

These lectures would be made available later to the students across the country through the SWAYAM, the MOOCs platform and the National Digital Library. A web portal (gian.iitkgp.ac.in) has been designed by IIT Kharagpur to allow electronic registration and online assessment.

The Minister for Education, Government of Gujarat Sri Bhupendrasinh Chudasama was present on the occasion, along with a large number of stakeholders of the education sector, including specialists, teachers and students.

Speech by the President of India, Shri Pranab Mukherjee at the presentation of dr. APJ Abdul Kalam IGNITE Awards

Speech by the President of India, Shri Pranab Mukherjee at the presentation of dr. APJ Abdul Kalam IGNITE Awards
I am happy to be amidst you today in this prestigious institute which has excelled in higher education and provided leadership for the management and business education in the country. The fusion of excellence and relevance in this campus, which has been exhibited through the creative and innovative ideas of young children from all over the country, makes this institute magnetically charged with ideas and energies.

2. At the outset, I would like to congratulate the young award winners whose creative ideas and innovations are at display at the exhibition organized by National Innovation Foundation. It is heartening to see so many creative young minds tackling some of the challenges faced by our society at such a young age. This certainly augurs well for the future of our country.

Ladies and Gentlemen,

3. Indian Institute of Management, Ahmedabad has had an illustrious history. It has excelled in academics and given the best of the management talent to India and to the whole world. Today, you can find the alumni of IIM-Ahmedabad working in corporates, governments, public services and in many other areas. The alumni of this institute have expanded the brand IIM-Ahmedabad globally. Today, I call upon the faculty, students, and alumni of IIM-Ahmedabad to continue to engage with creative minds from industry, business, entrepreneurs, society leaders and with those who work at the grassroots. The Institute must continue to address the pressing issues confronting today’s society. It must strive to be a beacon of knowledge, nurture other institutions with generous mentorship, and maintain a culture that blends the drive for excellence and performance with the spirit of collaboration and compassion.

4. IIM-Ahmedabad has been committed to supporting innovation and entrepreneurship. The Institute’s Center for Innovation Incubation and Entrepreneurship has been doing path-breaking work in strengthening the ecosystem of innovation in Ahmedabad, Pune, Jaipur, and other cities all over India. I understand this institute is launching a course focused on entrepreneurship in its PGP curriculum. This programme offers scholarships to students and encourage them in pursuing entrepreneurial dreams early in their careers. Elective courses such as Shodh Yatraand Rural Immersion Module encourage students to experience how innovation is sparked at the grassroots and among the underprivileged. These kinds of innovative programmes will help in realizing the entrepreneurial goals identified through "Start-up India, Stand-up India” initiative.

5. National Innovation Foundation and IIM-Ahmedabad, has given a global identity to the Indian model of social innovation. An appreciable effort has been made by various student clubs for community outreach activities. One of the intended objectives of this community outreach has been to learn from the disadvantaged section of the society and also to encourage them to dream bigger. I would encourage the Institute to continue investing energy and resources in nurturing innovations that accelerate the nation’s economic progress and create a sustainable inclusive society.

6. Recognizing the centrality of innovation to economic and social progress, President’s Secretariat has taken a number of initiatives to bring inclusive innovations to the center stage of country’s consciousness. Innovation scholars, writers, artists, inspired teachers and students from central institutions are being invited to stay at the Rashtrapati Bhavan for a period of two weeks. These In-Residence Programmes are aimed to celebrate the spirit of innovation and creativity and to recognize and learn from the success stories of the individuals who have contributed to the cause of society and the nation in their own way.

7. Innovation is key to economic development and reflects the maturity of a nation and society to respond to the emerging needs and challenges. Innovation is a continuous process and needs to be nurtured at each and every step. Realizing the importance of innovation in the life of a nation and society, Rashtrapati Bhavan has started the tradition of hosting the Festival of Innovations. The first Festival of Innovations was held in Rashtrapati Bhavan during March, 2015 in collaboration with the National Innovation Foundation. This Festival endeavored to link grassroots innovators with innovative minds at different levels in diverse fields. The second Festival of Innovations will be held in March, 2016. I take this opportunity to invite the participants who are here today, to participate in the Festival of Innovations and take your ideas to a global level.

8. Innovation, higher education and industry need to be closely networked for maximum benefit of the society. Any innovation happening either at the grassroots level or in the higher educational institutions must be linked to the industry for commercialization of the innovation. For this, as the Visitor of 114 central institutions, I have been asking the institutions to establish strong industry-academic inter-linkages. This is one of the ways to readily bring the innovations in the market. For this to happen, I have been encouraging the institutes of higher learning to collaborate with the institutes and industry within India and abroad for creating a conducive ecosystem for nurturing innovation and research. In the recently held Visitor’s Conference at Rashtrapati Bhavan, the Indian academic institutions concluded 43 MoUs with the industry in diverse fields. I hope that these kinds of industry-academia collaborations will help the academic institutions in aligning their activities with the needs of the industry and society.

Ladies and Gentlemen,

9. I am told that National Innovation Foundation received over 28,000 submissions for the Dr. APJ Abdul Kalam IGNITE Competition, 2015 from all the States and Union Territories of the country. It is a great tribute by the children of our country to late Dr. APJ Abdul Kalam, recipient of Bharat Ratna and former President of India. The renaming of Award in the memory of Dr. Kalam is a fitting tribute to him, who always ignited the young minds through his visionary leadership and creative ideas. I compliment the National Innovation Foundation for this initiative.

10. Today, I visited the innovation exhibition and found lots of ideas and innovations which can address the needs of developing society, particularly the elderly people and weaker sections of the society. The children have proved that innovative spirits can dispel any amount of inertia and replace it with exciting new possibilities. I am very optimistic about our future when I see the younger generation which does not want to live indefinitely with unsolved problems. Innovations from creative youngsters are the best examples of "Samvedna se srijansheelta” (innovation from compassion or empathy). India is a country of 1.2 billion creative minds. The constructive use of these billions of minds can free the Indian society from many of the problems which we are facing today. It is for each one of us as an individual to make a commitment and to dedicate oneself for solving the problems of society and country.

Ladies and Gentlemen,

11. IIM-Ahmedabad is a world class institution and a leader in the field of management education. I am happy that IIM-Ahmedabad is mentoring IIM-Nagpur to create a new leader in the field of management education. Today, this institute has taken a leadership role in making suggestions for improving higher education system in India and for nurturing innovation ecosystem. The suggestions made today here show the commitment of this institute in two very important and critical drivers of the economy – higher education and innovation. I will always look forward to see the leadership flowing from this great institute in the areas of work relevant to governance, public policy, innovation, higher education and entrepreneurship.

12. I once again compliment all the young award winners and hope that they will continue to keep thinking creatively and ensuring an inclusive and innovative future for our country. I wish you all a great future and hope that you will spare no effort in contributing towards inclusive development of India.

Remarks by Prime Minister Shri Narendra Modi At the Launch of the International Solar Alliance COP 21, Paris, 30 November 2015

Remarks by Prime Minister Shri Narendra Modi At the Launch of the International Solar Alliance COP 21, Paris, 30 November 2015

President Hollande, Excellencies, industry leaders

Let me begin by once again expressing solidarity with the people of France; And, our deepest admiration being such an outstanding host to the world in a difficult moment.

To my long cherished dream of an international alliance of solar-rich countries, President Hollande responded with keen interest and immediate and full offer of support.

This is the inaugural day of a defining global conference on climate change.

For his support at every step, and his decision to co-chair the launch, I am deeply grateful.

Just as positive was his response to the idea of a book of quotations on Nature from the world to remind us all of our timeless wisdom. I am honoured to co-author the preface with him.

Since ancient times, different civilizations have given a special place to Sun. In the Indian tradition, Sun is the source of all forms of energy. As Rig Veda says, Sun God is the Soul of all beings, moving and non-moving. Many in India begin their day with a prayer to the Sun.

Today, when the energy sources and excesses of our industrial age have put our planet in peril, the world must turn to Sun to power our future.

As the developing world lift billions of people into prosperity, our hope for a sustainable planet rests on a bold global initiative.

It will mean advanced countries leaving enough carbon space for developing countries to grow. That is natural climate justice.

It also means a growth path with lighter carbon footprint.

So, convergence between economy, ecology and energy should define our future.

The vast majority of humanity is blessed with generous sunlight round the year. Yet, many are also without any source of power.

This is why this alliance is so important.

We want to bring solar energy into our lives and homes, by making it cheaper, more reliable and easier to connect to grid.

We will collaborate on research and innovation. We will share knowledge and exchange best practices.

We will cooperate on training and building institutions. We will discuss regulatory issues and promote common standards.

We will attract investments in the solar sector, encourage joint ventures and develop innovative financing mechanisms.

We will partner with other international initiatives on renewable energy.

There is already a revolution in solar energy. Technology is evolving, costs are coming down and grid connectivity is improving.

It is making the dream of universal access to clean energy become more real.

India has a capacity of 4GW and we have set a target of adding 100 GW of solar power by 2022. By the end of next year, we would have added another 12 GW.

I am delighted with the industry response. As you put clean energy within the reach of all, it will create unlimited economic opportunities that will be the foundation of the new economy of this century.

This is an alliance that brings together developed and developing countries, governments and industries, laboratories and institutions, in a common enterprise.

India will be pleased to host this initiative at the premises of our National Institute of Solar Energy. We will provide land and contribute approximately 30 million U.S. dollars to build the Secretariat infrastructure.

We will support operations for five years, and together we will raise long terms funds to achieve our prescribed goals.

This day is the sunrise of new hope – not just for clean energy, but for villages and homes still in darkness; and for our mornings and evenings filled with a clear view of the glory of the sun.

Li-fi 100 times faster than wi-fi'

A new method of delivering data, which uses the visible spectrum rather than radio waves, has been tested in a working office.
Li-fi can deliver internet access 100 times faster than traditional wi-fi, offering speeds of up to 1Gbps (gigabit per second).
It requires a light source, such as a standard LED bulb, an internet connection and a photo detector.
It was tested this week by Estonian start-up Velmenni, in Tallinn.
Velmenni used a li-fi-enabled light bulb to transmit data at speeds of 1Gbps. Laboratory tests have shown theoretical speeds of up to 224Gbps.
It was tested in an office, to allow workers to access the internet and in an industrial space, where it provided a smart lighting solution.
Speaking to the International Business Times, chief executive Deepak Solanki said that the technology could reach consumers "within three to four years".
How li-fi sends data
The term li-fi was first coined by Prof Harald Haas from Edinburgh University, who demonstrated the technology at a Ted (Technology, Entertainment and Design) conference in 2011.
His talk, which has now been watched nearly two million times, showed an LED lamp streaming video.
Prof Haas described a future when billions of light bulbs could become wireless hotspots.
One of the big advantages of li-fi is the fact that, unlike wi-fi, it does not interfere with other radio signals, so could be utilised on aircraft and in other places where interference is an issue.
While the spectrum for radio waves is in short supply, the visible light spectrum is 10,000 times larger, meaning it is unlikely to run out any time soon.
But the technology also has its drawbacks - most notably the fact that it cannot be deployed outdoors in direct sunlight, because that would interfere with its signal.
Neither can the technology travel through walls so initial use is likely to be limited to places where it can be used to supplement wi-fi networks, such as in congested urban areas or places where wi-fi is not safe, such as hospitals.

Is the India vs Bharat trope passé? The divergence between the fortunes of India and Bharat has been a recurring theme not just in economics but in many a Bollywood movie

Is the India vs Bharat trope passé?

The divergence between the fortunes of India and Bharat has been a recurring theme not just in economics but in many a Bollywood movie
The urban-rural divide in India is a cliché. The divergence between the fortunes of India and Bharat has been a recurring theme not just in economics but in many a Bollywood movie. Could it be that we are moving away from this rather glib urban-rural dichotomy? It would appear so from a recent World Bank research paper, Cities, Catchment Areas and Prosperity in India, by Yue Li and Martin Rama.
Development is not necessarily a process where all urban centres grow faster than rural. Instead, the centres of growth are usually clusters and agglomerations where skills, knowledge, infrastructure, networks and money converge. These are the areas of highest productivity in the country.
Of course, it’s well-known that location is an important driver of labour productivity. Why else do people migrate from rural Bihar to work in Mumbai and Delhi? What is interesting about the paper is its finding that as far as labour productivity is concerned, “the performance of large rural areas and that of small urban areas resemble closely, challenging the conventional view of a rural-urban divide.”
The paper maps the spatial productivity patterns across the country by classifying centres into four types: top locations, their catchment areas, average places and bottom locations. The top locations are the 100 places with the biggest location effects. An example of a location effect is an average Indian household moving from a small rural area in the Malkangiri district of Odisha to Gurgaon, which, the paper says, would see its nominal household expenditure per capita increase 3.6 times. The seven large urban areas that qualify as top locations are, in descending order, Mumbai, Bengaluru, Faridabad, Thane, Kolkata, Surat and Delhi.
What’s remarkable, though, is that some small cities are among the top locations, while some large cities are not. The study also finds that top locations and their catchment areas include many high-performing rural places. Conversely, large urban areas such as Agra, Kanpur, Varanasi and Patna have location effects below the Indian average. A vast majority of the bottom locations are bunched together in the middle of India, crossing the states of Madhya Pradesh, Chhattisgarh and Odisha. A number of bottom locations can also be found in Uttar Pradesh and Bihar. Interestingly, most of them are not rural but small urban areas.
Taking the catchment areas into account, the study identifies 17 clusters in the country. These clusters are spread across several districts and even states. For example, the cluster of Mumbai, Surat and Thane encompasses nine districts in Gujarat and Maharashtra; the cluster of Ahmadabad covers seven districts in Gujarat; and the cluster of Bengaluru includes five districts in Karnataka and Tamil Nadu.
Within the 17 clusters, there are 12 large urban areas, 91 small urban areas, 45 large rural areas and 67 small rural areas. In other words, what matters for development is not so much whether the area is urban or rural, but whether it forms part of a cluster. Location, location, location, as they say in realty, is what counts for productivity as well.
The authors underline the point by mentioning that more than 10% of the rural population lives in one of India’s 17 clusters, compared with about 18% in its 218 bottom locations. Nevertheless, it’s a fact that top locations and catchment areas have both significantly lower employment shares in agriculture and significantly higher shares in manufacture. They also have higher educational attainment at both secondary and tertiary levels and better access to infrastructure and services. These are, rather obviously, factors that set apart India’s most productive areas from the rest of the country.
The paper also highlights that road density increases from bottom locations to top locations and top locations register significantly higher road density than any other tier. In other words, the lesson is: build the roads and the firms will follow. Indeed, that is precisely what is happening. High costs in cities have led to firms converting their land into lucrative real estate while shifting their factories into those parts of the hinterland that are well-connected. In recent years, manufacturing has been moving into rural areas.
It follows from all this that the current government’s single-minded emphasis on road building, therefore, is the right one, as is the work being done on the North-South and East-West freight corridors. As a paper by Urmila Chatterjee, Rinku Murgai, and Martín Rama in theEconomic & Political Weekly pointed out earlier this year, in an economy that is transforming rapidly both economically and spatially, the rural-urban divide is becoming blurred. Perhaps a more fruitful way to look at the Indian economy is in terms of growth clusters and how to extend them.

The numbers behind climate change

The numbers behind climate change

Climate change has a long history. Scientists have been warning about rising temperatures and carbon dioxide levels since the 1960s. However, it took a couple of decades before governments started moving. The Intergovernmental Panel on Climate Change (IPCC) was set up in 1988, and two years later, further international cooperation materialized at the Rio Earth Summit, when the United Nations Framework Convention on Climate Change(UNFCCC) was established to stabilize greenhouse gases. Here’s a look at the numbers that explain the politics of climate change and what countries have promised so far.

Why the Ambedkar legacy really matters

Why the Ambedkar legacy really matters
More important than tactically quoting him is to understand the Ambedkarite project
One of the welcome features of the parliamentary debates on the Constitution last week was the centrality given to the ideas of B.R. Ambedkar. We also saw the sorry spectacle of various political parties trying hard to claim him as one of their own. Such attempts to forcefully fit Ambedkar into a straitjacket does injustice to a complex thinker, undoubtedly the most scholarly political leader India has ever had.
Ambedkar wrote on various issues for over four decades, with utter intellectual honesty. A quick look at his oeuvre reveals an astonishing range. He wrote on why India needed to adopt the gold standard, on the exchange rate of the Indian rupee with the British pound, the evolution of provincial finance, the origins of the pernicious caste system, economic modernization as the ultimate solution to farmer distress, what needs to be done to annihilate caste, how to protect the rights of the oppressed, searing critiques of M.K. Gandhi, attacks on the Hindu orthodoxy, why the creation of Pakistan would be good for India, the nature of the Constitution, the need for linguistic states and the humane message of the Buddha. His range included economics, political philosophy, anthropology, history, religion and law.
The current fashion is to selectively quote from Ambedkar to make limited sparring points, as a result of which he is being claimed by the Hindutva camp, the Congress, the free market crowd, the Lohiaites and the Communist Left. His grammar of anarchy speech, made on the day the constituent assembly met on 26 November 1949 to adopt the draft Constitution, is a favourite these days. Far more important than tactically quoting Ambedkar is to understand the bigger Ambedkarite project, which has unfortunately not kept pace with his growing posthumous popularity.
Ambedkar himself often spoke about his intellectual debt to the philosopher John Dewey, who was his mentor at Columbia University. Many of the constant themes in Ambedkar’s varied writings spring from the school of pragmatic philosophy that Dewey was a distinguished member of. The pragmatists championed the cause of individual liberty, they welcomed modernity, they had a disdain for metaphysics, their politics was moderate, and they argued that truth is not an objective category, so any idea must be judged by whether it works or not when put into practice.
But perhaps the most significant idea or at least the most relevant for our times, from Dewey that one can find in Ambedkar is democracy as a way of sharing a common life with other human beings. Democracy is thus not just about periodic elections but a way of living. One core idea is that human beings are not only shaped by social institutions but also shape them in return, but the latter is possible only if there is an aware citizenry that has had the benefit of good education and equal rights. Ambedkar brilliantly adapted these insights from the pragmatic philosophers to develop his critiques of the caste system, his ideas about the Indian nation and his views on the requisites of a robust democracy.
It is easy to selectively quote Ambedkar. He wrote like a libertarian economist in defence of the gold standard in his early career. He led labour unions for the time when he flirted with what he described as state socialism. He attacked Hindu society but had hard truths to share about the reality of Muslim politics in undivided India. He was the moving spirit of the Constitution but once threatened to burn it in a fit of anger. He wanted India to have a strong centre though he warned about the threat of dominance by the Hindi states.
Picking and choosing quotes while ignoring the larger Ambedkarite project is an easy sport that too many indulge in these days. That Ambedkarite project is about individual liberty, the end of the caste system, social democracy, a democratic public culture, the embrace of modernity, pragmatism, constitutional methods and education for an enlightened citizenry.
Can any political party claim Ambedkar as its own?

The cost of redistributing wealth

The cost of redistributing wealth
Should we just redistribute all the wealth until everyone has an equal amount?
’d like to explain how most modern economists think about wealth redistribution. If you discuss welfare, taxes or inequality with an economist, you are bound to run into a concept called the equity-efficiency tradeoff. It’s the idea that there’s a fundamental tradeoff between the size of the economic pie and the equal distribution of said pie.
Suppose you’re a really rich person. You have $50 billion in wealth, though it fluctuates day to day depending on the financial markets. But even if the markets take a tumble, you will still have enough to buy almost anything you want.
Now suppose some hacker comes and steals $10,000 out of one of your brokerage accounts. The difference it would make in your purchasing power would be negligible. Now suppose that hacker, in the tradition of Robin Hood, decided to give the stolen $10,000 to a poor man in a slum in Baltimore. That $10,000 is probably as much as the poor guy earns in a year. Suddenly, his yearly salary is doubled and his risk of having to sleep in a homeless shelter is dramatically reduced.
This difference in the marginal value of wealth—the value of each additional dollar—is a key part of modern economics. It underlies our theory of risk and our theories of labour and leisure. But it also has implications for what we think of as human welfare—the total well-being of the species, or the nation. A given number of dollars creates more well-being in the hands of the poor than in the hands of the rich.
So, should we just redistribute all the wealth until everyone has an equal amount? Even if you think that doing so would be morally acceptable, you would have good reason for caution. Although rich people might not notice one or two random thefts from their bank accounts, they will most definitely notice the systematic appropriation of their wealth by the government. That systematic appropriation, of course, is called taxation.
When you tax people, you usually cause them to reduce the amount that they do the thing that is subject to the tax. That’s not always true—if you tax people’s labour, they may work less because of the decreased value of an hour of work, or they may work more because they are poorer than they were before. But in general, taxation reduces economic activity. Taxing investment reduces investment, and taxing consumption reduces consumption.
Anyway, the basic message is that the more the government tries to shift income around, the less total income there is to distribute.
This is sometimes known colloquially as “Okun’s bucket”, after economist Arthur Okun, who once likened redistribution to moving wealth from one person to another with a leaky bucket.
Modern empirical techniques have allowed economists to get a better idea of how big the leaks are in the bucket. For example, a recent paper by Nathaniel Hendren looks at the earned income tax credit, food stamps and housing vouchers. He finds that for every dollar redistributed from rich to poor with those programmes, anywhere from 34 cents to 56 cents leaks out and is lost.
This is how economists think when they consider redistribution programmes like the ones mentioned above. They don’t normally consider moral questions, like whether it’s ethical for the government to confiscate one person’s income in order to give it to another. When they do attempt to wade into the moral side of things, the result is often ham-handed and awkward.
Thus, economists typically leave questions of justice to the philosophers and politicians. Mostly, they focus on trying to quantify the tradeoff between equality and efficiency. That may seem a bit heartless, but to many economists, it feels like the most objective way to approach questions of redistribution. Bloomberg

india introduces injectable polio vaccine in routine immunization

india introduces injectable polio vaccine in routine immunization
Babies getting their third dose of oral polio vaccine (OPV) will now also be administered an injection with inactivated polio vaccine (IPV), as part of India’s efforts to boost its polio immunization programme. IPV and OPV together can provide additional protection to a child.
India was certified polio-free on 27 March 2014, but the immunization programme continues in the country since two of its neighbours remain polio-endemic and due to the threat of vaccine-derived polio.
In the first phase, the injection will be introduced in six states: Assam, Bihar, Uttar Pradesh, Gujarat, Madhya Pradesh and Punjab.
“The last polio case was reported in India in 2011. But the risk is still there with the virus being active in Pakistan and Afghanistan. Hence, we are introducing IPV for double protection against polio,” said Union minister for health and family welfare J.P. Nadda, at an event to launch the vaccine. “By 2016 April, we will switch from trivalent to bivalent vaccine. We have to ensure that core and support systems work, along with a robust cold chain system and improved routine immunization,” added Nadda.
Trivalent vaccines protect against three strains of the polio virus while the bivalent variety protects against two. Immunization programmes the world over are switching to the bivalent vaccine since the third strain has been eradicated, and the trivalent vaccine could theoretically re-introduce it.
There are challenges that come with the introduction of the vaccine. IPV is an expensive vaccine and each dose costs around Rs.120 and unlike OPV, the IPV which is an injectable vaccine can only be given by trained health workers at vaccination sites. There are also issues of vaccine availability which the health ministry is trying to resolve.
“IPV is a key step towards global endgame strategy. It is a tough task to convince a population to continue with OPV after a country is declared polio-free and even harder to introduce IPV on top of that,” said Louis George Arsenault, country representative India, Unicef. “A lot of people doubted India could get polio-free, but it happened. We now look forward to a transition from OPV to IPV. If India can do it, so can the world,” he added.
IPV is not a new vaccine and was first used in 1955. Thirty countries have already introduced IPV in their national immunization schedule, while 126 countries including India will introduce IPV soon.

29 November 2015

A vaccine boost to India’s polio fight

The launch of the inactivated polio vaccine injection marks a shift in addressing vaccine derived poliovirus cases.

After nearly five polio-free years, and with the launch of the inactivated polio vaccine (IPV) injection in the national immunisation programme tomorrow (November 30), India will be pushing for “endgame polio”.
The injectable vaccine, which uses killed polio viruses, will be used alongside the oral polio vaccine (OPV).
For now, immunisation using IPV will be restricted to Bihar, Chhattisgarh, Gujarat, Madhya Pradesh, Uttar Pradesh and West Bengal. In the first quarter of 2016, it will be expanded to the other Northern and Northeastern States and in the second quarter, will encompass the four southern States and Maharashtra. “Immunisation using IPV injection is in a reverse order, with the well performing States getting it last,” said virologist Dr. Jacob John, formerly with the Christian Medical College, Vellore.
R. Prasad
Though cheap and easy to administer, OPV HAS an inherent safety issue —in rare cases, live viruses used in a weakened form can turn virulent, spread within communities and cause polio in unprotected children. In 2011, such a scenario caused seven vaccine-derived poliovirus (VDPV) cases in India.
IPV aims to prevent vaccine caused polio cases, where viruses used in OPV cause flaccid paralysis. Till date, India, like many other countries, has been relying on an OPV campaign-style programme several times a year to keep the naturally-occurring wild polioviruses at bay.
All three strains of the poliovirus (type 1, type 2 and type 3) are used in OPV. Of these, type 2 is responsible for more than 95 per cent of VDPV cases. Ironically, type 2 wild poliovirus had been eradicated since 1999. Since then, all type 2 cases have been caused solely by vaccine polioviruses.
The move also marks a shift in addressing vaccine-derived poliovirus cases, with the Global Polio Eradication Initiative removing the type 2 strain globally from OPVs.
To begin with, one dose of IPV will be administered along with the third dose of OPV and DPT to children who are 14 weeks old. Even after being immunised with IPV, it is essential that all children are immunised with OPV every time it is offered. IPV when used in combination with OPV can quickly boost immunity against poliovirus and offer double protection.
“One dose of IPV will prime the immune system and the immune response will be quicker whenever OPV or IPV is given subsequently”, said Dr. Pankaj Bhatnagar, Technical Officer of the WHO India National Polio Surveillance Project, New Delhi.
There is a scientific reason for choosing 14 weeks for IPV immunisation. “When IPV is given to children at 14 weeks and later, nearly 70 per cent of them will develop antibodies against polio viruses. It will be around 30 per cent if given to children younger than 14 weeks”, he said.
The switch from OPV with all three strains to only two strains (type 1 and type 3) will happen towards the end of April 2016. “India will make a switch from a trivalent [containing all three virus strains] to a bivalent [containing only two strains] on April 24,” Dr. John said.
“There are a risk when this switch is made,” he warned. “Vaccine-derived type 2 will spread silently and cannot be stopped and children will continue to shed type 2 strain for 4-6 weeks after the last OPV dose. [A] new crop of children who do not get the trivalent oral polio vaccine can get exposed to [the] type 2 strain shed by vaccinated children,” he said.
It is to minimise this that the Global Polio Eradication Initiative requires all countries using the three-strain to introduce at least one dose of the injectable vaccine before making the switch.
“We will be building the immunity of the community against type 2 through IPV and OPV immunisation so that at the time of switching from trivalent to bivalent OPV there will be no risk,” said Dr. Pradeep Haldar, Deputy Commissioner – Immunisation, Ministry of Health and Family Welfare, Government of India.
Since the injectable vaccine contains all three strains in a killed form, it cannot cause vaccine-derived poliovirus. Superior safety apart, IPV has other advantages. Nearly 60 per cent who receive IPV will develop immunity when compared with/to the 10 to 30 per cent when OPV is used.
The higher the injectable polio vaccine coverage, the lower the risk. Hence, routine immunisation coverage in States like Uttar Pradesh and Bihar must be stepped up for IPV to become effective.
“In the beginning of this year only 64 per cent of children were fully immunised. It will reach 82 per cent by the March 2016. Of the 9 million children who were not fully immunised, 40 per cent have already been covered and another 10 per cent will be covered by March 2016,” said Prof. Ramanan Laxminarayan, Vice President — Research and Policy at the Delhi-based Public Health Foundation of India. He established the Immunization Technical Support Unit that supports the immunisation programme of the Ministry of Health and Family Welfare.
India imports inactivated polio vaccine injections at a cost of $2 per dose. Since wild polioviruses are the raw material for IPV, no Indian manufacturer is allowed to make IPV in India. Companies now using biosafety level 3 facilities for IPV manufacturing will move to biosafety level 4 once wild polio is eradicated globally. After that all, OPV will be discontinued and IPV will remain the mainstay.

Wondering what’s COP21, ADP? Here’s a glossary for U.N. climate talks

Wondering what’s COP21, ADP? Here’s a glossary for U.N. climate talks


It sounds like English. Yet to the untrained ear the language used in the U.N. climate talks is about as comprehensible as Klingon.
Sometimes you wonder whether the negotiators are trying on purpose to make a simple idea sound more complex than it is. But it’s also a matter of international law.
Many delegations have teams of lawyers that analyse every syllable for potential hidden meanings. Before everyone’s comfortable with the wording of a concept or idea, it’s often turned into an acronym.
Here’s the list:
COP 21: No, the three letters have nothing to do with the Danish capital, Copenhagen, where one of the most famous, or perhaps infamous, climate conferences was held in 2009. COP stands for Conference of the Parties, referring to the countries that have signed up to the 1992 United Nations Framework Convention on Climate Change. The COP in Paris is the 21st such conference.
UNFCCC: To sound like an insider, pronounce this U-N-F-triple-C. Or just say “the framework convention.”
INDC: This acronym first appeared in the U.N. climate talks in Warsaw in 2013. It stands for Intended Nationally Determined Contribution and refers to the climate pledges that countries have made ahead of the Paris conference. Every word has legal implications indicating that the INDC isn’t a binding promise. The pledges are “intended,” not set in stone, and they are “nationally determined,” not imposed from the outside.
ADP: This is perhaps the most useful abbreviation in the talks, considering the time it takes to read out the full name of The Ad Hoc Working Group on the Durban Platform for Enhanced Action. The ADP is a subsidiary body created in Durban, South Africa, in 2011 for negotiations on the universal climate agreement that’s supposed to be adopted in Paris. The Paris conference will deal with other things as well, like pre-2020 ambition.
PRE-2020 AMBITION: This refers to actions taken by countries to limit greenhouse gas emissions before the Paris agreement would take effect in 2020. This part of the discussions is meant to remind big polluters that the Paris deal doesn’t mean they’re off the hook for another five years.
CBDR: This acronym lies at the core of the most difficult issue left to resolve in Paris. The principle of “Common But Differentiated Responsibilities” is enshrined in the 1992 framework convention. It recognises that countries in different stages of development have different obligations in dealing with climate change. Until recently it’s been implemented as a strict division between rich and poor countries, where only the former are obliged to reduce their emissions. The U.S. and other developed countries want to scrap that firewall in the new deal, while many developing countries including India insist that it live on in some form.
REDD-PLUS: It refers to efforts to protect forests, which when destroyed release carbon into the air, contributing to climate change. REDD stands for Reducing Emissions from Deforestation and Forest Degradation. The plus sign was added in 2010 to indicate that three more elements had been inserted into the discussions — conservation of forest carbon stocks, sustainable management of forests and enhancement of forest carbon stocks.

2015 set to be ‘hottest year on record’, says UN

2015 set to be ‘hottest year on record’, says UN
The U.N. weather agency has said that 2015 will be the hottest year on record and 2016 could be even hotter.
Due to a combination of a strong El Nino and human-induced global warming.
The El Nino weather pattern, marked by warming sea-surface temperatures in the Pacific Ocean, also causes extremes such as scorching weather and flooding. Meteorologists expect El Nino to peak between October and January and to be one of the strongest on record.
Other notable observations made:
Global average surface temperatures in 2015 are likely to reach the symbolic and significant milestone of 1° Celsius above the pre-industrial era. A preliminary estimate based on data from January to October showed that the global average surface temperature for 2015 was around 0.73 °C above the 1961-1990 average of 14.0°C, and approximately 1°C above the pre-industrial 1880-1899 period.
The years 2011-2015 have also been the hottest five year period on record, with temperatures about 0.57 °C (1.01 degrees Fahrenheit) above the 1961-1990 reference period. Global ocean temperatures were unprecedented during the period, and several land areas — including the continental United States, Australia, Europe, South America and Russia — broke previous temperature records by large margins.
Next year may yet be even warmer, since levels of greenhouse gases in the atmosphere have risen to a new record every year for the past 30 years, and the El Niũo phenomenon is likely to continue into 2016

Climate Change Finance, Analysis of a Recent OECD Report: Some Credible Facts Needed

Climate Change Finance, Analysis of a Recent OECD Report:
Some Credible Facts Needed
India raises the issue on a roadmap for USD 100 billion in climate change financing a year by 2020 and calls for more credible, accurate, and verifiable numbers on the true size of the mobilization of climate change finance commitments and flows from developed to developing countries: Shaktikanta Das, Secretary, DEA
During the recent Lima World Bank/IMF meetings, India had raised the issue on a roadmap for USD 100 billion in climate change financing a year by 2020. This is stated by ShriShaktikanta Das, Secretary, Department of Economic Affairs (DEA), Ministry of Financein his ‘Foreward’ to the Discussion Paper entitled “Climate Change Finance, Analysis of a Recent OECD Report: Some Credible Facts Needed” prepared by the Climate Change Finance Unit, Department of Economic Affairs, Ministry of Finance, Government of India. The Discussion/Review Paper is also attached here with for ready reference and record.
Shri Das has further stated in his aforesaid ‘Foreward’that India had also raised questions on the correctness of the recent OECD report---which claimed that significant progress had already been made. Secretary, Department of Economic Affairshas also stated that in the conclusion of their Review of OECD report, our Climate Change Finance Unit, Department of Economic Affairs, Ministry of Finance and its experts have mentioned that the OECD report appears to have overstated progress. The attached Discussion/Review paper suggests that much more work has to be done. Shri Das further mentioned that we need to establish more credible, accurate, and verifiable numbers on the true size of the mobilization of climate change finance commitments and flows from developed to developing countries.

26 November 2015

Every election is presidential

Every election is presidential


Elections are not won and lost due to major shifts in the core vote. It is the ‘non-core’ voter and the first generation voter, with no firm loyalty to aparty, who defines the final outcome.

Actor Shatrughan Sinha summed it up correctly when he said that it was a victory of the Bihari over the bahari (outsider) in the elections to the Bihar legislature. But, then, most State Assembly elections over the past two decades and more have been contests between local alternatives. The days of national leaders overpowering regional ones in State elections are long gone. Some recent exceptions prove the rule.
Sanjaya Baru
It is surprising, therefore, that Bharatiya Janata Party president Amit Shah and Prime Minister Narendra Modi chose to ignore this fact — that elections in parliamentary India have become presidential. After all, Mr. Modi’s own victory in Gujarat and New Delhi symbolised this reality.
Belated recognition
It appeared that there was a belated recognition of this shift in political sentiment when the BJP national leadership named Kiran Bedi the candidate for Delhi Chief Minister against Arvind Kejriwal. Her defeat only underscored the importance of credible local candidates. Mr. Kejriwal’s victory was his, not that of his party. Even a political scientist and psephologist like Yogendra Yadav did not want to concede this reality when he challenged the bossism of Mr. Kejriwal. But Mr. Kejriwal ran a presidential campaign to win an essentially mayoral election.
More than development or the caste and communal loyalties of voters, or the simple arithmetic of pre-election alliances, the Bihar verdict was shaped by the fact that the voters had to make a choice between local leaders and no one else in particular. Regional and caste-based parties may have initially been voted to power on the strength of their ideology and manifesto, but their fortunes have become increasingly linked to the popularity of their leaders.
True, the core support of any political party is composed of its loyalists, of those who share the party’s ideology and programme. But elections are not won and lost on the basis of the size of the core. It is the swing vote — the accretion to the core — that makes all the difference.
In 2009, while loyalists of the BJP and the Sonia Congress might have voted for their party of choice, the floating voter took a call on who he or she wished to see as the Prime Minister of India — Manmohan Singh or Lal Krishna Advani. Both the BJP and the Congress went into that election having named their prime ministerial candidates. The votes that made a difference were cast in favour of Dr. Singh.
In 2014, the voter opted for Narendra Modi over Rahul Gandhi. Both national parties ran presidential campaigns, seeking votes for their chosen or perceived candidate for the top job. What has been happening at the national level over the past decade and more has been happening at the State level for some time now, cutting across parties and States. Consider the record.
In the 2004 Lok Sabha elections, the victory of the Congress was defined by the impressive gains it made in Andhra Pradesh under the leadership of the late Y.S. Rajasekhara Reddy. It was Dr. Reddy’s sustained grassroots campaign that unseated the Telugu Desam supremo, Nara Chandrababu Naidu, and gave the Congress a decisive edge over the BJP. The National Democratic Alliance led by Atal Bihari Vajpayee lost also because in Tamil Nadu the Congress ally, M. Karunanidhi, ousted J. Jayalalithaa. Dr. Reddy repeated his performance in 2009 with his highly personalised campaign and helped Dr. Singh return to power.
In most other States where the Congress won the elections, the vote was as much for its chief ministerial candidate as it was for the party — Oommen Chandy in Kerala, Tarun Gogoi in Assam, Shiela Dikshit in Delhi and Siddaramaiah in Karnataka. The Karnataka voter punished the BJP because of B.S. Yeddyurappa’s tenure and rewarded Mr. Siddaramaiah.
All regional or caste-based parties have long approached the voter in the name of the leader. Which is at least one reason all of them have become family controlled parties. The phenomenon of ‘dynasty’ in Indian politics began with Indira Gandhi’s personalised campaign of 1980, managed by her younger son Sanjay. The natural consequence was the feudal succession that was staged after her death when Rajiv Gandhi was made party leader and Prime Minister. The leader’s family slowly took possession of the party.
Regional and caste-based parties may have initially been voted to power on the strength of their ideology and manifesto, but their fortunes have become increasingly linked to the popularity of their leaders.
In his recently published memoir, The Chinar Leaves, Indira loyalist Makhan Lal Fotedar reminds us that even as late as in the early 1980s, party leaders such as R. Venkataraman, P.V. Narasimha Rao, Pranab Mukherjee and even Madhavrao Scindia were viewed as potential prime ministerial candidates. Once the family domination of the Indian National Congress was complete, regional parties followed suit.
Thus, the Dravida Munnetra Kazhagam transformed itself from being a normal, ideology-based party to a party dominated by the leader’s family. The All India Anna Dravida Munnetra Kazhagam and the Telugu Desam Party, as indeed the many Congress breakaway groups, began as ‘leader-oriented’ parties rather than cadre-based parties. The Lohia Socialists of the north imitated these examples. Coming to power on the strength of an ideology and in pursuit of a cause, they all became ‘leader’ oriented.
Even in ideology-based parties like the BJP and the CPI(M), elections have been fought in the name of the leader with a mass appeal. In 1998 and 1999, the BJP’s Lok Sabha campaign revolved around the personality of Mr. Vajpayee. The turning point came, as BJP observers pointed out at the time, when the crowds came to hear only Mr. Vajpayee speak and thinned out when Mr. Advani rose to speak.
In Gujarat, Mr. Modi became the BJP’s face, as did Vasundhara Raje Scindia in Rajasthan, Shivraj Singh Chouhan in Madhya Pradesh and Raman Singh in Chhattisgarh. Mr. Modi’s attempt to secure control of his party in these States has been refuted by the assertion of State leaders. Mr. Modi’s success in Maharashtra and Haryana in ‘nominating’ State Chief Ministers after the elections were fought in the name of the party, a la Indira Gandhi and Rajiv Gandhi, may have encouraged him to overreach in Delhi. He failed to learn the lesson in time for Bihar.
The experience of the Left only underscores the point. In West Bengal, the CPI(M) was made invincible by the personality of the late Jyoti Basu. It was only when a dynamo like Mamata Banerjee arrived on the scene, and Basu was followed by a less charismatic figure, that the CPI(M) lost power. In Kerala, the victory of the Left Front in 2006 was defined by the personality of ‘Comrade VS.’ It remains to be seen what alternative the Left will present in West Bengal and Kerala to the popular incumbents — Mamata Banerjee and Oommen Chandy — in next year’s elections.
Many political analysts made the point in the 2012 State elections in Uttar Pradesh that the Congress would have repeated, or even improved upon, its 2009 Lok Sabha performance had the voters been given the choice of electing Rahul Gandhi their Chief Minister. In many ways, Mr. Modi repeated in Bihar the mistake Rahul made in U.P. — seeking votes for a party rather than an individual.
‘Winners’ preferred

Bihar shows that the era of centrally nominated Chief Ministers is over. Even national parties have to pick ‘winners’ now as CMs. Going forward, therefore, the Congress ought to know that victory in Assam would depend on whether the voters in Assam want more of Mr. Gogoi or would like to see him go.
All this is not to suggest that party loyalties and ideology do not matter. Of course, they do for a large majority of voters who remain loyal to their party. That forms a party’s core support base. But elections are not won and lost due to major shifts in the core. It is the ‘non-core’ voter and the first generation voter, with no firm loyalty to a party, who defines the final outcome.
The ‘floating’ voter opted for Manmohan Singh in 2009 and for Narendra Modi in 2014. The challenge for the prime ministerial candidates of 2019 will be to retain the loyalty of the core constituency while gaining new voters — both from rivals and from first generation voters. It is a race in which Mr. Modi still remains leagues ahead of all potential rivals, and there are so many of them among the self-made CMs around the country!

A well-functioning insolvency resolution framework is fundamental for dealing with business failures

From non-performing to performing

A well-functioning insolvency resolution framework is fundamental for dealing with business failures 

A well-functioning insolvency resolution framework is fundamental for dealing with business failures

The ministry of finance recently released the draft Insolvency and Bankruptcy Code (IBC), proposed by the Bankruptcy Law Reforms Committee. The government of India greeted this bill as among its biggest and most crucial reforms. To a person unconnected with finance, it may be unclear why this is important or what ails the current framework. A well-functioning insolvency resolution framework is fundamental for dealing with business failures that inevitably occur in any economy. Additionally, an effective insolvency resolution process is one tool, among others, for banks and other creditors to address low recovery rates.

This is particularly relevant for India where economic growth is contingent upon the financial health of the banking sector. Banks in India face acute problems of asset quality. Perceiving that laws did not sufficiently empower secured creditors to activate recovery by seizing security, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, were enacted to facilitate the enforcement of security by banks and financial institutions.

Asset reconstruction companies were constituted under SARFAESI to buy bad debts from banks and recover from defaulters. Domestic banks also have recourse to corporate debt restructuring and joint lenders forum mechanism to resolve stress in consortium loans.

None of these initiatives seems to have helped. Gross non-performing assets (NPAs) as percentage of total advances went up from 3.4% in March 2013 to 4.45% in March 2015. The picture is grimmer when volume of restructured assets is also considered in stressed advances. As a percentage of total advances, overall stressed advances increased from 9.2% to 10.9% between 2013 and 2015. Average recovery rate for secured debt is as low as 20%. One factor responsible for all this is a weak legal framework for resolving failure. Once debts go bad, creditors’ ability to realize value is predicated on a robust insolvency resolution mechanism.

Accumulation of bad debts in bank balance sheets has systemic risk implications for the entire economy. As capital gets tied up in provisioning for bad debts, banks get inhibited from extending fresh credit, slowing down the real sector. Absence of a well-functioning insolvency framework that protects creditors’ rights also thwarts the development of alternative lenders, such as corporate bond market. There are admittedly other issues systemic to the banking system and capital market that compound these problems. However, an insolvency law focused on preserving viable businesses as going concerns and liquidating unviable ones is the cornerstone of a mature financial system and India urgently needs one.

Aparna Ravi highlights in a paper titled The Indian insolvency regime in practice—an analysis of insolvency and debt recovery proceedings that the current framework in India is highly fragmented with decisions frequently stayed or overturned by judicial forums having overlapping jurisdiction. There is no clarity on whether the right of secured creditors initiating recovery under SARFAESI will prevail, or unsecured creditors initiating winding-up under the Companies Act or the company triggering proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985, (SICA).

Substantive issues exist with even initiation of insolvency resolution or the process of winding up. SICA is triggered when more than half a company’s net worth has eroded. Board for Industrial & Financial Reconstruction (BIFR) and the high courts are reluctant to liquidate unviable companies. Ironically, the trigger for winding up a company is too low. The default is Rs.500. Courts, therefore, do a full hearing on merits at admission stage itself, limiting efficacy. Creditors, especially non-banks, do not have access to a mechanism to assess the viability of an enterprise and address the problem, without the threat of other proceedings initiated by the debtor or other creditors torpedoing them. Even when proceedings are triggered, debtor’s existing management retains control, thereby creating the risk of asset stripping.

Under SARFAESI, creditors are empowered to take over management of a company but only that part of the company connected to the secured asset. Since potential liability to creditors is high, this is rarely invoked. There is no corresponding provision for non-banks. There is also no linearity of proceedings. Under SICA, even if BIFR recommends liquidation, a reference is made to the high court, which would re-examine the recommendation and might even reverse it.

With the proposed IBC, the labyrinth of extant Indian laws dealing with corporate insolvency are being replaced by a single comprehensive law that (a) empowers all creditors—secured, unsecured, financial and operational to trigger resolution, (b) enables the resolution process to start at the earliest sign of financial distress, (c) provides a single forum overseeing all insolvency and liquidation proceedings, (d) enables a calm period where other proceedings do not derail existing ones, (e) replaces existing management during insolvency proceedings while keeping the enterprise as a going concern, (f) offers a finite time limit within which debtor’s viability can be assessed and (g) under bankruptcy, lays out a linear liquidation mechanism.

The proposed framework strengthens creditors, without discrimination. While this will not necessarily be a magic bullet that will make the mass of NPAs vanish from bank balance sheets, it can facilitate better recovery and faster closure of troubled assets. IBC will prevent new loans from getting added to existing stock of NPAs. It will aid development of alternative debt securities, spread the risk of corporate failure across larger sets of creditors, and lead to the double benefit of lower systemic risk as well as deeper debt finance for a rapidly growing economy of entrepreneurs.

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