Russia to supply 12 nuclear reactors to India

Indian Prime Minister Narendra Modi and Russian President Vladimir Putin got straight down to talks on Thursday on boosting nuclear and defence cooperation at a summit aimed at reviving an old friendship that has faded over the years.

Putin's one-day visit to India comes at a time when Russia is at odds with the West over Ukraine, and its economy is stalling as oil prices tumble to their lowest in five years.

The tension over Ukraine intruded on the choreographed visit when it emerged that the leader of Crimea, the former Ukrainian territory annexed by Russia, had travelled with Putin to India for unofficial talks to enhance trade.

India does not support Western sanctions against Russia, but the Crimean leader's presence may prove an irritant before US President Barack Obama visits India next month.

Modi, elected by a landslide six months ago, is expected to give Obama a far more lavish reception as chief guest of India's Republic Day celebrations than Thursday's formal summitry.

Yet Moscow's eye has wandered too since its Soviet-era romance with New Delhi. Bilateral trade, at $10 billion, is now one-ninth of that between Russia and China - the focus of Putin's pivot away from an increasingly critical Europe.

"Russia is a tried and trusted friend - a country that has helped us in times of trouble," an Indian official told Reuters. "But that friendship hasn't delivered in terms of its economic potential."

The two leaders presided over the signing of a "vision" document setting out a roadmap for cooperation over an extended period, with the most ambitious area nuclear energy.

Russia's state-owned Rosatom said that under an agreement signed on Thursday it would supply 12 nuclear energy reactors for India over 20 years.

A 1,000-megawatt reactor is operating at the Russian-built Kudankulam power station in south India, with a second due onstream in 2015. Putin had been pushing for Rosatom to increase the number of reactors it could supply to as many as 25.

Indian officials say a total of six reactors will be built at Kudankulam, with a further six to follow at a site that has not yet been determined.

Other strategic deals were expected to cover oil exploration and supply, infrastructure and an increase in direct diamond sales to India by Russian state monopoly Alrosa.

On defence, the two sides will seek to move ahead with long-delayed projects to develop a joint fifth-generation fighter jet and a multi-role transport aircraft.

A spokesman for India's foreign minister said he was not officially aware of Crimean leader Sergey Aksyonov's visit.

Gul Kripalani, a Mumbai businessman who met the Crimean leader at a New Delhi hotel as head of the Indian-Crimean Partnership, told Reuters the talks were unofficial and Aksyonov had "happened to be on the flight with His Excellency President Putin".

Western countries imposed sanctions against Russia over the annexation of Crimea in February and the Kremlin's support for an uprising by pro-Russian rebels in eastern Ukraine.

Politics, priorities and policies

If the government pursues three politically inspired goals - more jobs, less inflation and better public services - it will also likely have made good economic policy

It is all too easy for any government, especially a new Union government, to get caught up in the daily firefighting of the myriad issues that arise in Parliament, the media, foreign affairs, politics and administration. As Harold Macmillan, a justly famed British prime minister of the late 1950s and early 1960s, reportedly replied when asked what were the dominant policy themes of his prime minister-ship, "Events, dear boy, events!" In order to avoid this predicament in India's economic realm, it is important for the new Modi government to keep asking itself the question: what are the key economic policy goals the government has to pursue effectively to enhance its chances of re-election four and a half years from now? Based on past experience in India and other democracies, the answer seems pretty clear: more jobs, less inflation and better public services. Interestingly, if this troika of politically inspired goals is successfully pursued, it is also likely to have satisfied most of the canons of good economic policy. Let me say a few words on the latter two goals, before turning to first objective of job growth.

Inflation
The rise in consumer prices at around 10 per cent a year over the six years (2008-2013) was a major factor behind the United Progressive Alliance (UPA) government's dismal electoral performance in the national elections of April-May 2014. The rate of increase has abated in the current year (down to 5.5 per cent by October), thanks to a combination of policies, a fortuitous decline in international commodity prices and the persistence of weak economic activity. International commodity prices of oil, some metals and agricultural products are expected to stay soft for a year or two and are unlikely to repeat the "super-cycle" of the past decade. The revival of domestic economic activity is likely to be gradual and should not spark another inflationary boutprovided our monetary and fiscal policies are kept prudent, increases in minimum support prices for agriculture are held moderate (as in the past year), excess public food stocking is avoided and infrastructural bottlenecks are increasingly relieved. With these policies, and some good luck, inflation should not be a "killer" in the next election.

Publicly provided goods and services

 

 

The truth is that in our federal polity the bulk of public services are provided by state and local governments. This is true of basic law and order, local roads, property records and transactions, water, sanitation and waste disposal (where available!), electricity distribution, primary and secondary education and health, and so on. The big exceptions, where the central government plays a major role, include national highways, railways, tertiary education and health, and, of course, the major subsidy-intensive schemes relating to public foodgrain distribution, fuel subsidies, fertiliser subsidies and rural employment guarantee.

In the coming years, the new government will have to work hard to revive the flagging national highways programme, vastly improve railway freight and passenger services and railway safety, as well as the quality and viability of tertiary education and health. Each of these is a major area requiring serious institutional and regulatory reform. But perhaps the biggest potential for reaping the economic and political dividends of good policy lies in reforming the mostly failing systems of major subsidies for foodgrain, fuel and fertilisers. The rapid expansion of the Aadhaar footprint and the growing, countrywide penetration of bank accounts (recently accelerated by the Jan Dhan programme) offers the scope for transforming these hugely costly, badly targeted, leaky and corruption-ridden major subsidy schemes into much superior direct cash transfer systems. The experiment has already begun with cooking gas cylinders. Hopefully, it will spread to kerosene, foodgrain and fertilisers soon. There will be sector-specific challenges in each, but surely worth overcoming.

Employment
Jobs! Jobs! Jobs! This, the biggest politico-economic challenge for the Modi government, is also the area in which timely, reliable data are scarcest. The latest National Sample Survey (68th round) for employment is for 2011-12. It shows that India's labour force was nearly 500 million in January 2012, of which somewhere between two to six per cent were unemployed (depending on definition). Over half this labour force was self-employed (exceeding 40 per cent even in urban areas), less than a fifth (and less than a tenth in rural areas) was regular wage/salary employees and 30 per cent was casual labour. Although open unemployment was low, so were incomes, with regular wage employees averaging just under Rs 400 a day and casual labour getting Rs 170 in urban areas and Rs 140 in rural areas (with females typically earning more than 30 per cent less than males). Since economic growth in the past three years has been slow and industrial production stagnant, the rates of unemployment and underemployment are almost certainly higher today, with little or no improvement in wage rates. Demographic projections indicate that there are about 10 million new job seekers each year in a context of slow employment growth and extreme scarcity of well-paid, regular jobs. The critical importance of rapid job growth is obvious.

Asian and global development experience underlines the essential role of high economic growth and especially rapid expansion of labour-intensive manufacturing and construction sectors in generating jobs. "Make in India" is certainly the right motto. But to convert slogan to reality we need:

• Significant amendments to the new land acquisition Act;
   
• Urgent broadening and deepening of the recent Rajasthan labour law reforms to the national level;
  (these two key reforms entail reversal of hugely anti-development and anti-employment bequests of the Gandhi ladies, Indira and Sonia)
   
• More effective and market-responsive programmes for skill development;
   
• Fixing the big infrastructure bottlenecks, especially in energy and transport;
   
• Speedy roll-out of the goods and services tax, to integrate India's market;
   
• Substantially greater transparency and stability in the tax and regulatory environment;
   
• Major improvements in the governance and performance of public sector banks (why not privatise a few?);
   
• And a well-managed, competitive exchange rate of the rupee.

Without rapid progress on this agenda, it is difficult to see how job growth can come anywhere near the requirements of the nation's aspiring job seekers and this government's natural desire to get re-elected in 2019. To the extent political strength cannot be marshalled for effective reforms, to that extent the ruling party's chances of success in the hustings in future will decline.

Establishment of Solar Cities

Establishment of Solar Cities

The Ministry of New and Renewable Energy (MNRE) is implementing a programme on ‘Development of Solar Cities’. This was stated by Shri. Piyush Goyal, Minister of State (I/C) for Power, Coal & New and Renewable Energy in a written reply to a question in the Lok Sabha today.  60  existing cities are planned to be developed as solar cities. 55 solar cities have already been taken up so far. The State/UT-wise list of the Cities identified for developing as Solar Cities is given below:- List of Solar Cities proposed, State/UT-wise SL. No State Cities for which in-principle approval given 1 Andhra Pradesh Vijaywada Mahbubnagar* 2 Assam Guwahati Jorhat 3 Arunachal Pradesh Itanagar 4 Chandigarh Chandigarh 5 Chhattisgarh Bilaspur Raipur 6 Gujarat  Rajkot Gandhinagar Surat 7 Goa Panji City 8 Haryana Gurgaon Faridabad 9 Himachal Pradesh Shimla Hamirpur 10 Karnataka Mysore Hubli-Dharwad 11 Kerala Thiruvananthapuram* Kochi* 12 Maharashtra Nagpur Thane Kalyan-Dombivli Aurangabad Nanded Shirdi 13 Madhya Pradesh Indore Gwalior Bhopal* Rewa 14 Manipur Imphal 15 Mizoram Aizawl 16 Nagaland Kohima Dimapur 17 Delhi New Delhi (NDMC area) 18 Orissa Bhubaneswar 19 Punjab Amritsar Ludhiana SAS Nagar (Mohali) 20 Rajasthan Ajmer Jaipur* Jodhpur 21 Tamil Nadu Coimbatore 22 Tripura Agartala 23 Uttarakhand Dehradun Haridwar & Rishikesh Chamoli –Gopeshwar 24 Uttar Pradesh Agra Moradabad Allahabad 25 West Bengal Howrah Madhyamgram New Town Kolkata 26 Jammu & Kashmir Leh* 27 Puducherry Puducherry * In-principle approval given only.

Extension of financial assistance for setting up food processing units in North Eastern States during XII Plan

The Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister Shri Narendra Modi, has approved the inclusion of all North Eastern States for setting up food processing units within the Sub scheme of the Horticulture Mission for North East & Himalayan States (HMNEH) of the Integrated Mission for Development of Horticulture (MIDH). North Eastern States, which are horticulturally rich, will be able to take up projects on food processing industries, thus enabling better shelf life and value addition of produce. The programme for setting up food processing units will cover all States in the North East and the Himalayan Region of the country. The total expenditure of Rs. 16,840 crore has been envisaged for implementing MIDH during the XII Plan. This includes Rs. 15,794 crore as Government of India share out of which Rs. 3000 crore is for the HMNEH sub scheme. Expenditure on setting up food processing units in the North Eastern States will be met within this provision. Background: MIDH was launched during 2014-15 by subsuming six ongoing schemes of the Department of Agriculture & Cooperation on horticulture development viz. three Centrally Sponsored Schemes of the National Horticulture Mission (NHM), Horticulture Mission for North East & Himalayan States (HMNEH), National Bamboo Mission (NBM), and three Central Sector Schemes viz. National Horticulture Board (NHB), Coconut Development Board (CDB) and Central Institute for Horticulture CCIH) Nagaland. The interventions under MIDH include production and productivity improvement programmes along with infrastructure development for post harvest management, food processing and markets. While launching MIDH, food processing component was included only in the Himalayan States of Himachal Pradesh, Jammu & Kashmir and Uttarakhand, within HMNEH. This was on the presumption that funds earmarked by the Ministry of Food Processing Industries (MOFPI) for setting up food processing units in North Eastern States will be available for the purpose. However, the scheme of MOFPI on Technology Upgradation, under which funds were released to the North Eastern States for setting up food processing units, was discontinued with effect from 2014-15. It has therefore been decided to include the North Eastern States for availing assistance for setting up food processing units within the ambit of MIDH.

Interest subvention to Public Sector Banks, Private Sector Banks, Cooperative Banks, RRBs, NABARD for providing short term crop loan to farmers

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval to the following: 1. To continue interest subvention to Public Sector Banks (PSBs), Private Sector Banks, Regional Rural Banks (RRBs), Cooperatives Banks and National Bank for Agriculture and Rural Development (NABARD) to enable them to provide short-term crop loans up to Rs.3 lakh to farmers at 7 per annum during the year 2014-15. 2. To provide additional interest subvention of 3 percent per annum to those farmers who repay on time, that is within one year of disbursement of their short-term crop loans taken during the year 2014-15. 3. To permit the release of Rs. 18,583 crore as interest subvention for 2014-15 of which Rs. 4399 crore subvention to NABARD for refinance to Cooperatives Banks and RRBs and Rs.14,184 crore to Public Sector Banks, Private Sector Banks, RRBs and Cooperative Banks for subvention on their own funds. 4. To provide interest subvention to small and marginal farmers having Kisan Credit Cards for loan against negotiable warehouse receipts for post harvest at 7 percent per annum. interest for a period of six months that is at the same rates as applicable for crop loans as given in the para (1) above. 5. To permit the release of Rs. 321 crore as interest subvention to small and marginal farmers having Kisan Credit Cards against negotiable warehouse receipts, for post-harvest. 6. To provide relief to farmers affected by natural calamities, the interest subvention of two percent will continue to be available to banks for the first year on the restructured amount. Such restructured loans may attract normal rate of interest from the second year onwards as per the policy laid down by the RBI. Background The Government of India has since 2006-07 been subsidizing short-term crop loans to farmers in order to ensure the availability of crop loans to farmers for loans upto Rs.three lakh at seven percent per annum. This interest subvention scheme has been further continued for 2014-15 for PSBs, Private Sector Banks, RRBs and Cooperative Banks. In the year 2009-10, an additional subvention of 1 percent was provided to farmers who repay their loans on time. This has been increased from 2 percent in 2010-11 to 3 percent in 2011-12, 2012-13 and 2013-14. Thus, the effective rate of interest for such prompt-payee farmers is four percent. Banks have been consistently meeting the target set for agriculture credit flow in the past years. For the year 2014-15, the target for agricultural credit flow has been raised to Rs.8,00,000 crore from Rs. 7,00,000 crore in the year 2013-14.

Implementation of scheme for development of Solar Parks and Ultra Mega Solar Power Projects

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today approved the scheme for setting up 25 solar parks each with a capacity of 500 MW and above and Ultra Mega Solar Power Projects in various parts of the country where large chunks of land can be spared for this purpose. These parks will be able to accommodate over 20,000 MW of solar power projects. The Solar Parks/ Ultra Mega Solar Power Projects will be set up during five years that is from 2014-15 to 2018-19 and will require Central Government financial support of Rs.4050 crore.  Smaller parks in Himalayan and other hilly States where contiguous land may be difficult to acquire in view of the difficult terrain, will also be considered. The solar parks will be developed in collaboration with State Governments and their agencies. The choice of implementing agency for developing and maintaining the park is left to the State Government. The States, applying under the scheme, will have to designate an agency for the development of the solar park. The State Government will first nominate the implementing agency for the solar park and also identify the land for the proposed solar park. It will then send a proposal to the Ministry of New and Renewable Energy (MNRE) for approval along with (or later) the name of the implementing agency. The implementing agency may be sanctioned a grant of upto Rs.25 Lakh for preparing a Detailed Project Report (DPR) of the Solar Park, conducting surveys, etc. The DPR must be prepared in 60 days. Thereafter, application may be made by the implementing agency to SECI for the grant of up to Rs. 20 lakhs/MW or 30 percent of the project cost including Grid-connectivity cost, whichever is lower. The approved grant will be released by Solar Energy Corporation of India (SECI) as per milestones prescribed in the scheme. All the States and Union Territories are eligible for benefitting under the scheme.  Solar parks will enable development of solar power in remote areas where land is inexpensive. As the transmission system will be developed for the entire park, developers will not have to set up their own transmission lines. This will not only save money but will also avoid damaging the landscape of the area as only limited transmission lines would be laid. Developers would be able to set up projects very fast as they will not have to get statutory and other clearances.  India will emerge as a major solar power producing country as nowhere in the world are solar parks being developed on such a large scale. Background: The Finance Minister, while presenting Budget for the year 2014-15, had amongst other things announced that the new and renewable energy deserves a very high priority and proposed to take up Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, and Laddakh in Jammu & Kashmir for which he had set aside a sum of Rs. 500 crore in the Budget.  The scheme for development of Solar Parks and Ultra Mega Soiar Power Projects has been conceived on the lines of the "Charanka Solar Park" in Gujarat which is a first-of-its-kind large scale Solar Park in India with contiguous developed land and transmission connectivity.

Hope to touch USD 100 bn trade with ASEAN by 2015

Hope to touch USD 100 bn trade with ASEAN by 2015: Nirmala Sitharaman Need to establish regional value chains to sustain long-term economic relationship: Rajeev Kher

The Minister of State (Independent Charge) for Commerce & Industry Smt. Nirmala Sitharaman today said that “in 2009, the Free Trade Agreement (FTA) on goods had been signed (with ASEAN) and because of that and through that trade between ASEAN and India have been reaching about USD 80 billion level. We hope by 2015 it will touch USD 100 billion and get doubled by 2022. So there is lot of work, there is a lot of scope.” Delivering the keynote address at the 2nd India – CLMV Business Conclave, here today, the Minister said that India-CLMV (Cambodia, Laos, Myanmar and Vietnam) trade was concentrated in only a few items and there was tremendous scope to deepen and widen the trade basket. The Minister mentioned that several sectors hold potential for trade and investment between India and the CLMV countries. These included skill development, agricultural products, manufacturing, project exports, energy among others. Smt. Sitharaman said that now “India’s Look East Policy has become very sharp focussed and it is “Act East” Policy.” She said that there is a need of “greater and accelerated engagement across the globe with East Asia.” The Minister stressed that “we are very keen to open up the north-east part of India; open up the economy, improve on its connectivity with the rest of the East and therefore look at India’s North-East as threshold to our Act East Policy.” The Minister said that “Commerce, Culture and Connectivity” are the three pillars of India’s engagement with the CLMV countries. The Minister said that “it is imperative that India deepens its trade and investment with the four countries. Currently, 70-80% of India-CLMV trade is centred around only a few products. I think there is a scope to expand the basket and bring in more commodities and manufactured goods into it.” She also pointed that “the Government of India has accorded high priority to economic engagements with the four countries, and is working towards establishing seamless physical connectivity with the region.” Robust physical connectivity through road, rail and sea links will enable businesses on both sides to leverage the opportunities created by the India-ASEAN FTA in Goods. The FTA in Services and Investment will come into force with effect from 1st July, 2015. Seamless connectivity will spur people-to-people contacts and tourism, create new enterprises and millions of jobs for people in the region, especially when the economic corridors along the India-CLMV road and rail lines would be completely fully developed,” said the Minister. In his address, Shri Rajeev Kher, Commerce Secretary stated that India’s trade with the CLMV region amounted to USD 13 billion in 2013-14. Much of that trade, he observed, was with Vietnam. He felt that there was tremendous scope to expand trade relations with the other countries in the region. Mr. Kher highlighted the need to establish regional and sub-regional value chains in order to maintain and sustain long-term economic relationship with the region. He stated that India industry could partner with businesses in the CLMV countries to reach out to newer markets. He felt that by joining forces, Indian and CLMV industry could take advantage of the trade agreement architecture that the CLMV countries have to access newer markets.