Major Policy Initiatives, Programmes/Schemes Announced and Achievements Made with Regard to the Ministry of Finance in Last Seven Months

Nutritional intake grows in India’

However, the data says the implications are unclear

Per capita calorie intake in India grew marginally for the first time in 30 years, new official data shows, and protein intake grew for the first time in over a decade.

The National Sample Survey Office’s (NSSO) 2011-12 data on Nutritional Intake was released earlier this week. The data shows that per capita calorie consumption rose to 2099 kilocalories per day in rural areas and 2058 kilocalories per day in urban areas. Both numbers are still below a Planning Commission benchmark of 2,400 kilocalories per day.

But the proportion of acutely under-nourished people seems to be declining; the proportion of Indians who get less than 80 per cent of the recommended nutritional intake has declined to under one in five in rural areas.

The implications of this change are, however, unclear. For one, India’s most developed states have the lowest average calorie consumption, pointing to the fact that higher calorie intake may not be a direct predictor of well-being. While Kerala, Tamil Nadu and Maharashtra saw slight increases in their per capita calorie consumption between 2009-10 and 2011-12, the number fell in rural Gujarat.

Karnataka’s per capita income is nearly twice that of Jharkhand, but both have nearly the same average calorie consumption in rural areas. Calorie consumption does rise steadily with family incomes, however, in both rural and urban India. The top five per cent of rural Indians consume double the calories as the bottom five per cent.

Several experts The Hindu spoke to were unwilling to comment on the new data, because the implications of calorie consumption has been fiercely disputed by economists over the last few years.

Economists Angus Deaton and Jean Dreze noted in a 2009 Economic and Political Weekly article that calorie intake had declined in a period of rising incomes, and a possible explanation could be lower levels of physical activity.

These possible explanations apart, the Indian population undoubtedly suffered from severe nutritional deficits, they said, of this “puzzle”.

The share of cereals in total calorie intake has steadily declined, the data shows, and is down to just over 60 per cent in rural Indian and 50 per cent in rural India. The share of meats and dairy has grown only slightly, while the share of oils and fats has grown sharply.

While protein intake has grown on average, there are mixed trends among States. Protein intake fell in Bihar, Gujarat, Haryana and Rajasthan, but rose in Kerala, Andhra Pradesh and Tamil Nadu.

Isro puts up a great show India is the first Asian country and Isro is the fourth space agency to send a satellite to Mars

The year 2014 was extraordinary in the history of the Indian space and science programme, say officials of the Indian Space Research Organisation (Isro). The year will be remembered not for the number of rockets or satelliteslaunched by Isro, but the technical maturity it obtained after several years of hard work.

India's premier space research organisation has become the sixth agency to join an elite league with the successful Mars Mission, after the US, Russia, Japan, China and France.

Isro also proved its cost efficient technologies. For instance, its Mars mission cost only a fourth of NASA's, which means more countries will turn towards India to place their satellites.

Isro has mastered different space technologies: inter-planetary, flight testing of the cryogenic engine and testing its heaviest rocket for stability during flight (which will be the first major step towards a human space mission).

The application of satellites for human welfare has also been quite impressive. For instance, INSAT-3D, which became operational in January this year, played an important role in tracking Cyclone Hudhud which hit the east coast of India in October. During Cyclone Phailin, which also hit the east coast at the same time last year, images from Kalpana played a vital role.

"The year 2014 was an excellent year on the technological and other fronts," said K Radhakrishnan, chairman, Isro.

The new government's support was also fully extended with the budget for space research increased by 50 per cent to $1 billion during this financial year, though this is low compared to other countries.

The year started with the successful launch of the GSLV (geosynchronous satellite launch vehicle) rocket powered by an indigenously developed cryogenic engine. This was followed by the launch of two navigational satellites.

In June, Isro launched PSLV C23, carrying Spot-7 (French Earth Observation Satellite along with four passenger satellites), which was witnessed by Prime Minister Narendra Modi. He asked Isro to develop satellites India could gift to SAARC countries. During his Myanmar visit Modi announced that the services of the SAARC satellite would be extended to that country too. This will be benefit Myanmar in the fields of health, telemedicine and long-distance education.

The much celebrated event this year was the insertion of the Mars Orbiter on September 24, 2014. The event made the world turn its attention towards India, which is the first country to successfully carry out such a mission in its maiden attempt.

The $74 million mission is the cheapest so far. NASA's Mars Atmosphere and Volatile Evolution (MAVEN), which reached Mars on September 21, cost $617 million.

India is the first Asian country and Isro is the fourth space agency to send a satellite to the Mars. European, US and Russian probes have managed to orbit or land on the planet, but only after several attempts, while China is yet to make any inroads.

The year concluded with the launch of GSAT-16, a communication satellite, and the successful testing of GSLV Mark III, mainly for launching heavy satellites. India pays over Rs 500 crore to Ariane to launch communication satellites. If GSLV Mark III comes into play, India can save this money.

Isro has been chosen for this year's Indira Gandhi prize for peace. It has been chosen for strengthening international cooperation in peaceful uses of outer space.

Radhakrishnan said India would launch five foreign satellites next year, including three from the UK, and would be completing the seven satellite constellation for India's own navigation system. These apart, the GSAT-6 and GSAT-15 communication satellites and Astrosat will also be launched.

Isro has 188 transponders, automatic receivers and transmitters of communication signals, and GSAT-16 will add another 48. In 2015, the GSAT-15 satellite will add 24 transponders.

The construction of the second vehicle assembly building at Sriharikota in Andhra Pradesh will increase the number of launches from the second launch pad. "A study on the third launch pad is under way. We have to take into consideration the kind of launch vehicles and other future rockets to be developed while building the third launch pad," Radhakrishnan said.

Isro also said it would continue to work on the second moon mission 'Chandrayaan 2'. "In this area of scientific exploration, we have of course the 'Chandrayaan 2', with the Indian lander and the Indian rover, which are to be put in place in another three years' time," Radhakrishnan said.

According to him, "what we are now looking for is a major scientific mission and, when that can happen will depend upon the mission, could be in 2018 or 2020."\\

Ordinance gives Irda more teeth

The insurance ordinance promulgated by the President gives more teeth to the insurance regulator, the Insurance Regulatory and Development Authority (IRDA). As per a release by the finance ministry, the newly ordained ordinance gives IRDA room to enhance regulations in areas of solvency, investments and keep a strict vigil on the expenses and commissions given out to middlemen and agents.

"The ordinance will also substantially enhance penalty provisions to ensure compliance with insurance laws by companies, which is essential to uphold the consumer interest," said a release by the ministry.

The ordinance was approved by the Cabinet and signed by the President to enhance the foreign equity cap from 26 per cent to 49 per cent with proper safeguards on control of the insurance companies by the Indian entities.

Laying the foundation for take-off

What are the reforms needed in 2015 to help achieve eight per cent-plus growth?

During 2014 India's prospects have improved somewhat.Inflation is declining steeply, fiscal and external imbalances are lower, and India appears to be in a better position to handle global volatility. While much remains to be done, sentiment about India has changed, reforms are on the anvil and the macro situation has been stabilised. The platform for transformation is being laid.

With inflation declining more rapidly than was anticipated - due to declining global commodity prices - the focus must shift to accelerating growth. Increasing the growth rate to the six per cent-plus in 2015 that the finance minister is predicting should not be that difficult. India's incremental capital output ratio (ICOR), which measures the return on capital invested, has risen sharply from around four in the period 2004-2009 to over six in the last five years. Reducing the ICOR to around five by quicker decision-making to complete projects, and better coordination among ministries and PSUs to improve capacity itself would do this without even an increase in India's investment rate. But India needs to raise itself to a much higher eight per cent-plus growth path. For this, reducing the ICOR is not enough; the overall investment rate must rise - with an increase in both public and private investment.

In the medium term, a good GST will help raise the tax intake as it helps widen the tax base. But, as international experience shows, this takes three to four years. What to do in the interim? How to raise public investment without compromising the fisc is the key question that must confront the finance minister. We don't need more PSU investment - that is a path towards uncompetitive growth. One solution is to put in place a much more ambitious disinvestment programme with the revenues raised earmarked for public goods investment. With lower international fuel prices a special levy to finance an accelerated transport investment programme would be another option. Finally, special infrastructure bonds could be raised for smart cities and the power sector. All these options should be on the front burner.

For reviving private investment the PM's "Make in India" campaign has the right ring to it. With India's manufactured exports forming less than 1.5 per cent of global manufactured exports India could easily expect to double its global share if it were to become more competitive. China's share is over 15 per cent of global manufactured exports - some ten times India's share. So the room for growth in exports even in a sluggish global market remains huge. India does not need to choose between producing for the domestic market or for exports. Competitive industries - such as car parts, motorcycles, engineering goods, gems and jewellery - produce for both the export and domestic markets. Make for India is a subset of Make in India, not a substitute for it.

Much of what is needed for a successful "Make in India" lies in more competitiveness through structural and micro reforms - factor market reforms, better infrastructure and ease of doing business. This will bring in the FDI and domestic private investment for a major growth push like we saw in the 1990s. The GST that the finance minister is spearheading will also stabilise our finances and create a larger domestic market more attractive for foreign and domestic investors.

But India also does need to rethink its exchange rate and macroeconomic policy for a successful "Make in India" campaign. India has always erred on the side of a more overvalued rupee. The RBI's latest calculations of movements in the real exchange rate using the new CPI index show that the rupee was seriously overvalued by over 20 per cent between July 2009 and July 2013. It was during this period that the economy slowed sharply, the CAD rose alarmingly and eventually the rupee corrected sharply, first overshooting to almost Rs 70 to the dollar but eventually settling around Rs 60. Since then the rupee again appreciated in real terms as domestic inflation remained well above world inflation. The rupee is once again correcting to more realistic levels of Rs 64-65 to the dollar.

For a "Make in India" campaign India needs more FDI and less FII. The latter helps keep the rupee high, hurts exports and encourages imports. India has been obsessed with a strong-rupee policy as if it signifies a strong economy. The East Asian countries - especially China - have instead followed for a long time a policy of keeping their currencies undervalued by anywhere from 10-30 per cent. A strong rupee is also seen as necessary for lower inflation. But as we have seen, inflation has much more to do with commodity cycles, food policy and high fiscal deficits - not the exchange rate. There remains however a strong corporate, banking and importer lobby for a "strong" not a weaker rupee. This will have to change to make our macro policy consistent with the structural and micro reforms for Make in India.

The new body that the PM promised on August 15 on the ramparts of the Red Fort to replace the dead-end Planning Commission must now be brought out to take such campaigns and reforms forward. Why not call it a National Transformation Commission to signal the many transformations India needs over the next decade and a half to help reap our demographic dividend and emerge as the globe's third largest economy by 2030? Let us lay the foundations for that in 2015.

Asia's democratic arc

It is in the context of Asia's growing strategic competition that we need to view the importance of Narendra Modi's Act East Policy, Shinzo Abe's victory in Japan's elections and President Obama's forthcoming visit

The India-US-Japan trilateral meeting was convened on December 20, 2014 after a long hiatus. While this official-level engagement did not make media headlines, the re-initiation of this forum is a significant response to the changing security dynamic in Asia.

Asia today stands at a crossroads. It is increasingly becoming the locus of economic power but is also witnessing major geopolitical realignments, growing strategic competition and destabilising unilateral assertions based on unsettled historical differences.

The absence of regional security architecture to mediate these complex trends is Asia’s single-most pressing concern. There are several constraints that impede progress. To begin with, there is a clash of normative systems among states. Power elites in a few select countries foster a false dichotomy between universal and Asian values. The desire for hegemonic dominance suppresses the region’s inherent multipolarity. And there are divergent notions of geographically limited regionalism versus balanced and inclusive architecture.

Europe’s experience of building economic and security structures during the intense polarisation of the Cold War hardly fits in today’s Asia.

In spite of the region’s multiple contradictions, there has been some expectation since 2005 that theEast Asia Summit (EAS) process anchored by Asean will eventually evolve into a leaders-led regional security forum, not least because it encompasses all relevant and consequential actors within its ambit. However, hopes are fast receding for “Asean centrality”-based architecture even as regional disequilibrium accelerates. Existing Asean-led forums remain uncoordinated and limited to non-traditional security issues. Talk of “multiple overlapping” institutions, equating partial with inclusive frameworks, only serves to marginalise the EAS further.

In the absence of a regional organisation to address security issues, traditional rivalries and realignments dot the East Asian landscape. Russia and China have converged to forge an energy partnership and have deepened defence ties. South Korea, nominally an ally of the US, is now economically aligned with China and has made common cause with Beijing against Japan in Northeast Asia. China’s economic leverage has effectively neutralised Asean. This trend has significantly enlarged the strategic space for China, whose grey zone actions and territorial assertions have triggered “hedging” impulses among regional powers in the first place.

Meanwhile, the US appears unlikely to accommodate China’s shortcut to great power status by conceding the latter’s dominance in the western Pacific, but anxieties about US resolve will persist, with or without a sustained US commitment to its “rebalance” strategy. At the same time, US-sponsored economic arrangements (TPP) can adversely impact Asean-led attempts at economic integration (RCEP). The US is being perceived as falling short of innovative ideas and credible contributions to redress the Asian power imbalance.

It is in this context that we need to view the importance of PM Narendra Modi’s Act East Policy, the resounding victory of PM Shinzo Abe in snap elections in Japan and the forthcoming visit of President Barack Obama. India’s choice of Mr Abe and Mr Obama as chief guests for consecutive Republic Days sends out a message that will resonate across Asia.

Mr Abe’s renewed mandate promises to alter the political landscape not only in Japan but also in “broader Asia”. He has pledged to restore Japan’s economic vitality, amend its pacifist constitution and make “proactive contributions” to regional peace and stability. Even relatively limited legislative changes lifting restrictions in the domain of collective self defence will have a significant impact on power equations in Asia, as will Mr Abe’s continued engagement of Southeast Asian countries and his strong advocacy of Indo-Pacific strategies.  

There are striking similarities between Mr Abe’s approach and the attention devoted by his Indian counterpart Mr Modi to strengthening transformative partnerships with like-minded countries in the Asia Pacific.

In the course of recent summit meetings, Prime Minister Narendra Modi has signalled his intention to revive India’s historical role across the Asia Pacific, from forging new strategic ties to scaled-up contributions to the regional power equilibrium. In his own words, since he assumed office “no region has seen more intense engagement on India’s part than the Asia Pacific — because we understand how deeply our future is linked to this region”. He has urged regional powers to buttress economic integration and growing prosperity with strong regional institutions that underpin peace and stability by ensuring universal respect for international law and global norms.

President Obama’s unprecedented second state visit to India next month provides another opportunity to revive the strategic drivers of India-US relations. Operationalising civil nuclear cooperation as well as the defence technology and trade initiative is an important priority for both countries. India and the US need to remove irritants to their growing economic relations and renew their defence cooperation framework with a more comprehensive ten-year agreement covering maritime security across the Indo-Pacific, defence exchanges and defence industrial ties.

Against this backdrop, the India-US-Japan dialogue held last week delivered substantive outcomes, from initiatives for regional economic connectivity to advancing shared security interests. With greater momentum behind both India-Japan and India-US components, comfort levels have grown. Trilateral interactions are to be intensified in the margins of regional meetings. This engagement must now be sustained and, eventually, raised to the ministerial level.

While there are nodes of convergence in the strategic outlooks of India, Japan and the US, all three countries will face considerable endogenous challenges: defence cooperation for Japan, fragmented attention and diminishing capacity for the US and hesitation about special partnerships for India. It is, therefore, important for the three to invest as much in each other’s economic growth and prosperity as in meeting security challenges. If the leading democratic powers in the Asia Pacific can step up their economic reinforcement and synchronise their defence and security ties, this would constitute a major stepping stone for bringing about a favourable balance of power in the region. That in turn can uplift Asean’s flagging self-confidence and create the basis for a balanced multipolar security architecture for Asia.

Indian e-commerce to hit $100 bn value by 2019: Assocham

Study conducted with PwC pegs 35% CAGR for industry over next 5 yearsThe Indian e-commerce industry is likely to clock a compounded annual growth rate (CAGR) of 35 per cent and cross the $100-billion mark in value over the next five years, a study conducted by Associated Chambers of Commerce and Industry of India (Assocham) along with PricewaterhouseCoopers (PwC) has said. According to the study, the Indian e-commerce industry is valued at $17 billion now.

Continuing on the strong growth momentum of 2014, the e-commerce industry is estimated to see a 67 per cent increase in the average annual spending on online purchases per individual in 2015, to Rs 10,000 from Rs 6,000 in 2014, the study said.

Additionally, with improvement in infrastructure such as logistics, broadband and internet-ready devices, there is likely to be a significant increase in the number of consumers making purchases online, the study said. It estimates around 65 million consumers in India to buy online in 2015, as against around 40 million in 2014.

“With nearly one-third of internet users already making purchases online, the e-commerce growth will rely more on increased spending from existing buyers than first-time online buyers,” the study titled 'Evolution of e-commerce in India - Creating the bricks behind the clicks' said.

While there have been concerns over steep discounting by e-tailers, the study said, these flash sales and daily deals have played a major role in contributing to the growth of e-commerce. The increasing adoption of smartphones and tablet consumers has also aided to the e-commerce growth.

“The steady growth in the number of web shoppers also is helping to boost e-commerce sales,” the report said. “Many consumers will prefer the web to bricks-and-mortar retailers in large part because of online deals, about 52 per cent of shoppers said they made purchases online rather than in stores because online retailers offered better deals.”

Among popular shopping categories, the study showed that apparel sales capture the biggest share of Indian e-commerce retail, along with computer and consumer electronics. The two categories are likely to continue fueling the market in the future as well.In 2015, computer and consumer electronics and apparel and accessories are together estimated to account for 42 per cent of total retail e-commerce sales, as against 39 per cent now, it said.

Travel and tourism are also fast growing segments with as much as 75 per cent of the total industry having migrated to online commerce. Among other things, a major portion of services such as air, train, bus, movie ticket bookings, hotel reservation and tour packages have moved to the internet.

The report added that between 2017 and 2020, the e-commerce industry could spend around 2-6 per cent of the revenue on warehousing and sortation centers, which would translate to $450-900 million.

“The industry is expected to spend an additional $500-1,000 million in the same period on logistics functions, leading to a cumulative spend of $950-1,900 million till 2017-2020,” the study said.

On the employment front, the report estimated the e-commerce industry to employ an additional 100,000 people in warehousing and logistics, over the around 25,000 persons working in the segment currently.