A transformed global economic landscape

The investment and export-led growth model that marked the emergence, successively, of the east Asian, south-east Asian and Chinese economies, is being questioned in the light of developments since the global financial and economic crisis (hereafter called the Crisis) that erupted in 2007-08 but whose consequences continue to alter the international economic landscape. This crisis was unprecedented in that it arose at the very epicentre of the world market, the nerve centre of the world financial networks and comprising the most advanced, affluent and influential countries. These countries, had collectively evolved the legal infrastructure, set the standards and norms underlying international trade and investment and dominated the global economic architecture over the past two centuries or more. Such entrenched systems take a long time to change but change may be accelerated by unexpected and far-reaching crises.

The emergence of east Asian, south-east Asian and Chinese economies, took place in a global economic landscape dominated by the mature economies of the trans-Atlantic zone. It is also the post-World War II expanding markets in this zone, joined subsequently by Japan, and the flow of capital and technology from the zone which made the investment and export-led growth model a viable choice for the emerging economies. These countries also enjoyed a high rate of domestic savings, relatively cheap but increasingly skilled labour and local entrepreneurship supported by the state. Although this is debatable, some analysts argue that having relatively authoritarian regimes in these emerging countries at least during the initial period of high growth would have also helped. For most of the post World War II period, world trade has risen at a rate twice as fast as global gross domestic product (GDP) growth, as barriers to trade flows have progressively diminished. There has also been a remarkable increase in capital flows emanating from the developed countries, which have promoted and enabled export-led growth in developing countries. Typically, foreign investment has involved the setting up of local processing or manufacturing units for generating exports back to the home country or other markets. The setting up of complex regional and global supply chains by international multinational companies, has reinforced this trend.

Although a latecomer, India has, since its economic reform and liberalisation programme began in the early 1990s, shifted its stress to investment and exports as key drivers of growth. This enabled the Indian economy to gravitate to a much higher growth trajectory almost double of the pre-reform years. The country has been less successful in integrating itself into value supply chains and this has become a major constraint on its exports. It remains a mostly domestic demand-driven economy.

So what has changed since the Crisis and what are some of the enduring features of the emerging global economic landscape?

The Crisis has transformed and is still transforming the global economic architecture. Some of the earlier trends are being reinforced, such as the shift of global economic activity from the trans-Atlantic to the trans-Pacific, both in terms of proportion of global trade but also investment flows. What has not changed much is the continuing domination of the global financial markets by the West, which continues to mediate even the flows generated by emerging countries. Neither has there been much change in the West determining the legal norms, standards and regulatory frameworks, which govern inter-state economic activity. More importantly, the West, but in particular the United States, continues to be the chief source and repository of innovative technologies. As growth becomes increasingly driven by technology and knowledge in general, the West will continue to enjoy pole position in the global economy. These factors will change at a slower pace unless there is a virtual collapse of Western economies but this is unlikely. These enduring factors need to be kept in mind as we try and fashion an appropriate economic strategy for India.

There are several changes that are apparent and will have significant impact on India. According to the World Trade Organization (WTO), trade grew by six per cent per annum between 1990-2008 while world GDP grew by about three per cent per annum. Since 2008, this long-term trend has been broken as global trade has been rising at the same rate or even slower than global GDP. The trade slowdown is visible even in China. The recent devaluation of the Chinese yuan has been triggered by the fear of losing markets in a diminishing market. India's exports have declined over seven consecutive months. They have remained flat at about $300 billion a year over the past four years. Even services' exports have remained sluggish. It is unlikely that the target of $900 billion for goods and services exports will be reached by 2019, since it would require 15 per cent growth year-on-year from now. Rising exports are not likely to emerge as a significant growth driver in the near future without major policy interventions. The importance of the domestic market as a growth driver may even increase in salience.

The story is similar with respect to cross-border capital flows, which have yet to pick up from the steep decline in the post-Crisis period. While India has been a modest recipient of foreign direct investment and international portfolio investment, we are witnessing more Indian firms investing outside the country than foreign firms investing in India. This, too, goes against the east Asian model.

China's emergence as a top-ranking exporter of goods in the past three decades and more was associated with a remarkably favourable international economic environment up until the Crisis. There was an open and expanding market for its goods in the major advanced markets and a sustained flow of external capital to enable investment-led growth. The international economic environment post-Crisis is no longer as benign and India today confronts a relatively stagnant but much more competitive global market.

In the post World War II period, the overall trend was towards creating an open, transparent and rule-based multilateral trade regime. In the early years, the differentiation between developed and developing countries was taken as a basic principle, with relatively greater responsibilities and commitments falling on the former. However, since at least the Uruguay Round in the early 1990s, the focus began to shift towards reciprocity as the guiding principle and the exclusive focus on goods trade and tariff regimes also began to give way to, including services and some non-tariff provisions, as part of what is now the WTO regime. Furthermore, the basic principle of Single Undertaking, that is, all parts of the trade regime must be accepted by WTO members with no partial agreements, has also been diluted. Even among WTO members there are plurilateral initiatives underway such as the Trade in Services Agreement (TISA) and the Information Technology Agreement-2 . India's non-participation in these sectoral regimes requires a careful rethink. The WTO permits limited bilateral and regional free trade arrangements despite the latter diminishing its role as the premier multilateral forum for universal rule setting . It is becoming increasingly a forum for settling trade disputes. This trend began before the Crisis. It is being reinforced post-Crisis. Despite its commitment to the WTO and multilateral processes, India itself has concluded bilateral and regional trade agreements. It has also conceded the inclusion of services and a few other areas in its Comprehensive Partnership agreements with a select group of countries. Acknowledging this trend and evolving a coordinated strategy to deal with it has become an urgent necessity.

The global trade regime has been moving away from a focus on tariffs and border measures to behind the border issues, in particular, standards, regulations and norms relating to labour, health, intellectual property rights and the environment. Keeping some of these issues out of the WTO has not led to their exclusion from bilateral and regional trade agreements. It is the tariff prism through which India continues to frame trade related issues and this influences its negotiating strategies. India has joined bilateral or regional trade agreements for defensive objectives, mainly to defend market share or to preventing trade diversion rather than as instruments to promote trade and investment. Business in India has itself not been an active player in shaping negotiations on Free Trade Agreements (FTA) because of this defensive mindset. Indian negotiators achieved success in phasing out textile quotas in a 10-year time frame, but the textile industry in India made no effort to use the transition period to upgrade the technological standards and scale of operations to be able to compete in a highly competitive market. An opportunity created by negotiators was lost by lack of follow-up.

Trai’s net neutrality challenge

Ram Sewak Sharma, the new chairperson of the Telecom Regulatory Authority of India (Trai), assumed office on August 10. He comes to lead the statutory body at a key moment in India’s telecommunications sector. The issues that confront him—net neutrality, Voice over Internet Protocol (VoIP) services, call drops, spectrum and licensing—are nuanced and linked, and the choices neither binary nor trivial. They will affect current and future users of voice and data services as well as mobile telecom operators, who are India’s main internet service providers (ISPs). Sharma’s success will depend on his ability to steer Trai to adopt a robust and yet open approach on contentious issues.

Net neutrality has been in the headlines and will be Trai’s priority. Its ongoing consultations on the subject have attracted widespread comment and criticism. There have been heated discussions about the fate of ‘free’ telephony and messaging services like Skype and WhatsApp, respectively. There is raging controversy over Zero Rating, the practice of ISPs allowing their subscribers to access selected websites without incurring data charges. These include Airtel Zero and Facebook’s Internet.org. In the former, Airtel teams up with other companies, typically e-commerce, to offer toll-free access to their web services. In the latter, Facebook partners operators to provide similarly ‘free’ access to over 100 websites—sometimes customised for low bandwidth networks.

The new chairperson faces an unenviable task of protecting Trai’s credibility and stature, as it finalises its recommendations on the subject to the Department of Telecommunications (DoT). In an unprecedented move, DoT has sought and obtained an additional set of recommendations from a specially constituted internal committee. This committee’s report curiously proposes different rules for domestic and international Skype calls. It finds Airtel Zero acceptable, but is concerned about Internet.org. The government says it will take a final call after if receives recommendations. Trai will need to provide a more consistent approach based on its own mandate.

Trai’s primary responsibility is telecom infrastructure, not content (whether on the internet or elsewhere). Importantly, its counterparts in the UK, the US and several other countries deal with both content and carriage. A key purpose of the Trai Act is to “protect the interests of service providers and consumers of the telecom sector, to promote and ensure orderly growth of the telecom sector.” Trai has a mandate to “take measures to facilitate competition and promote efficiency in the operation of telecommunication services” and ensure “efficient management of available spectrum.” It cannot carry out its responsibilities effectively without sound economic analysis.

Freedom of communications, or expression, is a precious right, but it is not, however, Trai’s remit.

Trai does not have the luxury of looking at net neutrality in a standalone fashion. It can only do so within its own legal mandate. For example, it can address the broad goals of net neutrality by preventing market abuse and by promoting robust competition at every level—between players, technologies, platforms, services, business models, etc. It can also prevent exploitative tariffs for access to any web content through its comprehensive powers on tariffs. However, the mandate to help expand access and to promote efficient use of spectrum can sometimes clash with the goal of strict net neutrality.

In India, net neutrality is inextricably linked to the availability of spectrum since the network is predominantly wireless. Operators in India lack spectrum to support the increasing use of VoIP which consumes higher bandwidth than voice calls. They have a fraction of spectrum holdings of their international counterparts. The problem is exacerbated by ad hoc allocation of spectrum leading to its widespread fragmentation in 3G, 4G in bands (e.g. 1800). As Parag Kar has shown (goo.gl/UbgeB0), you cannot solve the problem by simply deploying 3G/4G networks and abandoning 2G, since majority of users depend on 2G for voice services. VoIP on wireless networks, therefore, poses a major technical challenge. Indeed, even the US and EU rules on net neutrality require that ISPs do not allow their own VoIP services to affect general broadband access. In the circumstances, Trai could be better off identifying which kind of prioritisation is acceptable and which is not.

It would be counterproductive to bar VoIP services or to impose levies on them. The services are widely popular and a veritable incentive to access the internet and subscribe to an ISP. Trai with a mandate to expand access cannot justify steps to discourage internet usage when there is a desperate need to encourage it.

On the other hand, a regulatory regime that professes to be technology-neutral cannot justify imposing different burdens on functionally similar services such as fixed, mobile or IP telephony. For instance, telecom operators paid over $3 billion in levies to the government last year. This excludes the cost of spectrum, equipment and operating expenses. No mature regulatory regime has such differential levies. Note that internet telephony has hardly featured in international debates about net neutrality. Trai must recognise that unorthodox regulatory and licensing regime has complicated net neutrality in India. The only consistent approach is to remove existing regulatory burdens on all telephony services. Trai will need to recommend—suo motu if necessary—effective ways to remove such anomalies and manage broadband spectrum better.

Fortunately, Zero Rating sits well within Trai’s mandate as well as current practices relating to consumer tariffs. It promotes internet usage, allows companies to innovate service offerings and encourages investment in networks. It is also in line with Trai’s 15-year-old practice of holding back or forbearing from exercising its powers to set consumer tariffs and relying on markets to prevent abuse. Zero Rating, as the former Trai chairperson pointed out, is not illegal. An economic regulator has little basis to treat Zero Rating as market abuse when none of the over 10 active ISPs has even 25% market share, unlike, say, in the US or the UK where some companies dominate the ISP market. A doctrinaire approach to Zero Rating, therefore, risks missing several aspects of direct relevance and value to India’s users.

Trai is an expert sector-specific regulatory body. It should resist attempts to trivialise its role into bland yes/no decisions. Its challenge is to recommend a sound, nuanced and credible approach to net neutrality.

Death penalty 'constitutionally unsustainable': Law Commission

Death penalty, even in rarest of rare cases, is "constitutionally unsustainable", the Law Commission said today as it recommended "swift" abolition of capital punishment except in terror cases, noting it does not serve as a deterrent any more than life imprisonment.

"After many lengthy and detailed deliberations, it is the view of the Law Commission that the administration of death penalty even within the restrictive environment of 'rarest of rare' doctrine is constitutionally unsustainable.

"Continued administration of death penalty asks very difficult constitutional questions...these questions relate to the miscarriage of justice, errors, as well as the plight of the poor and disenfranchised in the criminal justice system," a report by the Law Commission said.

The recommendation by the 9-member panel was, however, not unanimous, with one full-time member and two government representatives dissenting and supporting retention of capital punishment.

In its last report, the 20th Law Commission said there is a need to debate as to how to bring about the "abolition of death penalty in all respects in the very near future, soonest."

While supporting death for those convicted in terror cases and for waging war against the country, the report, 'The death Penalty' said that although there is no valid penological justification for treating terrorism differently from other crimes, concern is often raised that abolition of capital punishment for terror-related offences and waging war will affect national security.

One of three full-time members Justice (retd) Usha Mehra and both the ex-officio members -- Law secretary P K Malhotra and Legislative Secretary Sanjay Singh gave their dissenting notes.

The Law Commission comprises a Chairman, three full-time members, two ex-officio members who represent the government, and three part-time members. The panel, while refusing to recommend any single model for abolishing death penalty, said "the options are many -- from moratorium to a full-fledged abolition bill. The Law Commission does not wish to commit to a particular approach in abolition. All it says is that such a method for abolition should be compatible with the fundamental value of achieving swift and irreversible, absolute abolition."

Justice Mehra said, "Recommending blanket abolition of death sentence or moratorium on death penalty in heinous crimes is not an appropriate course particularly keeping in view the circumstances prevailing in our country."

Registering his dissent, Law Secretary Malhotra said Parliament in its wisdom has prescribed death penalty only in heinous crimes. "The need of the hour is to retain it...We have a vibrant judiciary which is respected world-over. We should have faith in the wisdom of our judges that they will exercise this power only in deserving cases for which the law is well laid down in various judgments..."

Legislative Secretary Sanjay Singh maintained the panel should not recommend something which has the effect of preventing the state from making any law in the interest of the sovereignty and integrity of the country.

However, supporting abolition of capital punishment by a majority, the panel said in the last decade, the Supreme Court has on numerous occasions expressed concern over arbitrary handing down of death sentence.

"The Court has noted that it is difficult to distinguish cases where death penalty has been imposed from those where the alternative of life imprisonment has been applied."
Dwelling on the issue of clemency, the report said the exercise of mercy powers under Articles 72 and 161 of the Constitution "have failed in acting as the final safeguard against miscarriage of justice in the imposition of the death sentence."

It said the apex court has repeatedly pointed out gaps and illegalities in how the executive has discharged its mercy powers. "When even exercise of mercy powers is sometimes vitiated by gross procedural violations and non-application of mind, capital punishment becomes indefensible.

"Safeguards in the law have failed in providing a constitutionally secure environment for administration of this irrevocable punishment," the report said.

GST, by other means

A full-fledged GST will take time in the present political environment. But the Union government can begin by transforming its own indirect taxes into a GST at the manufacturing stage.

The initiative to reform the multiple production and consumption taxes at the Union and state levels into a dual goods and services tax (GST) has run into rough weather once again. The reform has been on the agenda for a considerable period of time. Several deadlines were announced and missed. With the Constitution (122nd Amendment) Bill not getting passed in Parliament, this seems to be yet another case of the missed deadline.

The experience on the GST reform throws up three important concerns. First, in a major reform involving the Union government, 29 states and two Union territories with legislatures, it would be unrealistic to expect a “flawless” GST. The modified bill has shortcomings, both in its coverage and in the retention of the tax on inter-state transactions. This is only the beginning of a series of compromises that may have to be made when the issue of structure and operational details are discussed in the GST Council. Second, the extent of productivity gains will depend on the structure that will ultimately be adopted. Optimistic projections about its gains, particularly in relation to growth, without knowing the structure of the tax, could lead to disappointments later. Finally, it is highly unlikely that the reform can be operationalised by April 2016. Besides passing the bill in Parliament and getting half the states to ratify it, there are a number of issues on which the GST Council will have to take decisions. Going by past experience, this is not likely to be smooth.

The interesting question is, can the Union government, by itself, transform its domestic indirect taxes into a GST at the manufacturing stage by April 2016, without having to amend the Constitution? This could also provide a clear roadmap for making a full-fledged transition to the GST as and when the constitutional hurdle is cleared. Further, it can be a major motivator for states to move on the reform path.

The GST is an important reform for improving competitiveness in Indian manufacturing. However, the extent of productivity gains will depend on the structure and operational details of the levy that will eventually emerge. There are some shortcomings in the present bill and the most important of these relates to the 1 per cent tax on inter-state transactions. In fact, this goes against the GST’s fundamental principle of making the tax destination-based and ensuring seamless transactions across the country. The exclusion of motor spirit and high-speed diesel will add to the cascading. With almost 30-35 per cent of sales tax being collected from motor spirit and high-speed diesel, states are hesitant. One solution is to include them in the GST, but have a separate excise tax or carbon tax. Similarly, in the case of alcoholic products, the international experience is to include them in the GST and have a separate “sin” tax on them.

The bill provides only a minimalist framework and leaves the structure and operational details to the GST Council. This implies that the entire gamut of issues relating to the structure and operation of the levy has to be negotiated and decided on by the council. These include the taxes to be subsumed, the list of goods and services to be exempted, thresholds for Central GST and state GST, structure of rates, place of supply rules, arrangements for special category states, harmonised tax laws and the date of including the tax on petroleum products, alcohol and tobacco products, operational details of the tax administration, including the GST network, and dates for discontinuing the tax on inter-state sale of goods and services. In each case, the interests of the negotiating parties are not always similar. Decisions have to be taken by voting in the council. With the Union government having two-thirds of the vote, no decision can be carried without its approval, even if it is desired by all the state governments. The important issue is, the GST that will eventually emerge out of compromises will have a number of infirmities.

There has been considerable debate on the structure of rates for the proposed GST. The bill has left the issue to be settled by the GST Council. The council will have to consider the revenue-neutral rate of tax estimated by an expert body. Gains to the economy will depend on having a broad base and low rate. When two rates are levied for Central and state GST, the standard rate is bound to be higher than when a single rate is applied. Whatever is the rate structure recommended by the committee under the chief economic advisor, the Empowered Committee of State Finance Ministers will have to take a final call. It would be inappropriate to fix the maximum rate in the Constitution because this is an executive decision. However, while taking a decision in the council, the Union government may agree to have the standard rate at 10 per cent for both Central and state GST, even if the revenue-neutral estimate is higher, which means the Centre will have to compensate for any shortfall in revenue collection. Since most revenue-neutral estimates do not take into account improvement in compliance, this is a calculated risk the government will have to take. Furthermore, linking GST registration numbers with the income tax PAN in the GST network could substantially increase revenue collection from income tax.

There are questions about the feasibility of introducing the tax by April 2016. Given the number of hurdles, the Centre can partially fulfil its promise of introducing the GST by transforming its own domestic indirect taxes into the GST at the manufacturing stage. This can be achieved by working out a common threshold for excise duty and service tax, rationalising the excise duty by making all rates ad valorem, converging and unifying the rates into two — one for items of common consumption and the other, a standard rate to be applied to all remaining goods and services — and providing input tax credit for goods against services and vice versa. Even at present, the tax credit mechanism exists for goods and services. Rationalisation along these lines will substantially simplify the system and transform the Central indirect taxes into a GST at the manufacturing stage. This, in fact, was the recommendation of the expert group on the taxation of services in 2001 and can be accomplished without going through a constitutional amendment. Even as introducing a full-fledged GST is likely to take time, this reform will help in its eventual introduction. This can be accomplished by April 2016 and the finance minister can legitimately claim that, under the constraints placed on him, he has brought about reform in Central indirect taxes.

Transforming the prevailing domestic indirect taxes into a destination-based GST is surely an important reform. In the given political environment, however, it may be better to approach the reform as a process and not an event.

Rangarajan is former chairman of the Economic Advisory Council to the Prime Minister and former governor, RBI. Rao was member, Fourteenth Finance Commission and is emeritus professor, NIPFP.

India, US stronger with cooperation

We face a formidable set of international challenges, from the freedom of access to shared maritime and air routes, humanitarian crises in an increasingly interconnected world, and the continuing threat from non-state actors and extremist groups. Moreover, as India rises and becomes more influential, a stable and just international system becomes more important for its prosperity than ever before. Maintaining and expanding this global order will require our collective efforts and our resolve. As I have said before, when India and the United States cooperate, we are stronger together.

This idea of "stronger together" is not new to India - one could argue that it was in fact developed in India. I am sure that many of you are familiar with the stories of thePanchatantra, which some scholars argue influencedAesop's Fables. These amazing stories provide life lessons to children, but also offer sound advice to sophisticated strategic thinkers. One story, which I have recounted to my kids, is "The Winning of Friends" from Book II of the Panchatantra.

This story, as you know, is about a unique group of friends - a deer, turtle, mouse, and crow. When they are alone, they are vulnerable to all sorts of threats. However, when they work together, they are able to combine their skills and overcome adversity. I firmly believe that by working together and harnessing our unique strengths, the United States and India will be able to address many of the challenges that both of our countries and the world face.

In our 2015 US-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region, signed during President Obama's recent January visit, we stressed working "together to promote the shared values that have made our countries great". And the Declaration of Friendship, also from January, builds upon these long-standing values and specifically references our mutual respect for "an open, just, sustainable, and inclusive rule-based global order".

Our key strategic planning documents of the past year, in particular, envisage an essential role for US/India cooperation at all levels. Take, for example, this passage in the 2015 US National Security Strategy: "In south Asia, we continue to strengthen our strategic and economic partnership with India. As the world's largest democracies, we share inherent values and mutual interests that form the cornerstone of our cooperation, particularly in the areas of security, energy, and the environment. We support India's role as a regional provider of security and its expanded participation in critical regional institutions. We see a strategic convergence with India's Act East policy and our continued implementation of the re-balance to Asia and the Pacific."

Fundamental to our readiness to respond to future crises are our regular engagements, including bilateral and joint exercises, International Military Education & Training (IMET), subject matter expert exchanges, and national agreements. Our success in these endeavours will have profound, positive effects for the entire world and will help ensure our mutual prosperity. I'm pleased that joint US and Indian defence exercises and training continue to set a very high bar. We are jointly preparing the military leaders of tomorrow and ensuring their respective units are the best equipped and best trained. We have moved to a phase in our defence relationship where we discuss and explore jointness of operations and interoperability. We are building a premier defence partnership for the future.

In the US-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region, both of our countries affirmed that our belief in regional prosperity depends on ensuring freedom of navigation and over flight throughout the region, especially in the South China Sea. This affirmation is relevant because the world is connected by shared spaces - the skies, space, rivers and oceans, and cyberspace - that enable and promote the free flow of people, goods, services, and ideas.

For example, in today's dynamic and globally connected world, a deeper understanding of the maritime domain and the readiness to protect critical trade routes has never been more important. The United States and India have been increasing cooperation in these areas over the past several years. For example, our Exercise MALABAR 2015 is to be the most complex naval exercise we've executed together, with a US Carrier Strike Group, a submarine, and a P-8 exercising together with an Indian destroyer, frigate, oiler, and its own P-8.

Through the Joint Working Group for Aircraft Carrier Technology, we have also forged a path that seeks to cooperatively improve India's burgeoning aircraft carrier development programme and develop its carrier aviation expertise. This programme is one of the success stories borne of our Defence Technology and Trade Initiative, and is also symbolic of how far US-India defence cooperation has advanced as it wasn't too long ago that the American aircraft carrier was a symbol that divided the US from India. Today it is a topic of cooperation that has brought us closer together.

We recently did an exchange on air defence where our two air forces brought together their experts to share best practices and ideas on defending critical areas like the skies over our national capitals. It is through training and exercising together that we can practice these and other shared tactics, to hone our skills. The Indian Air Force participating in RED FLAG this coming April is the perfect environment for this and we welcome their return after a six-year hiatus.

The United States and India have committed to making counter-terrorism cooperation a key component of our bilateral relationship. In recent years, the United States has led a global coalition to degrade, disrupt and dismantle terrorist groups like Al Qaeda and ISIL. President Obama and Prime Minister Modi have also called for eliminating terrorist safe havens and infrastructure, disrupting terrorist networks and their financing, and stopping their cross-border movement. Our leaders have also affirmed the need for joint and concerted efforts to disrupt and degrade entities such as LeT, Jaish-e-Mohammad, D Company and the Haqqani Network, and agreed to continue ongoing efforts through the Homeland Security Dialogue and the US-India Joint Working Group on Counterterrorism.

We are also working on efforts to improve cooperation on UN terrorist designations and expand the sharing of information on known or suspected terrorists no matter where they may be located. Our counterterrorism cooperation can become a model for the region and potentially for the world, and it is another factor that makes me genuinely optimistic about our future defense and security partnership together.

Green Highways: An Initiative Towards Sustainable Development

Green Highways: An Initiative Towards Sustainable Development

Special Feature For Highway projects to be environmentally sustainable, it is necessary that the natural resources lost in the process of Highway construction are restored in one way or the other. This requires that ecological needs are taken into consideration from the stage of project planning and designing to its execution. The Highways developed as green corridors not only sustain biodiversity and regenerate natural habitat but also benefit all stakeholders, from road users to local communities and spur eco-friendly economic growth and development. The NDA Government has given a deep thought to this aspect and the Ministry of Road Transport & Highways has framed Green Highways (Plantation, Transplantation, Beautification & Maintenance) Policy-2015. The vision is to developeco-friendly National Highways with participation of the community, farmers, NGOs, private   sector,   institutions,  government agencies and  the  Forest  Department.   India has a total 46.99 lakh kms of road length and out of which over 96214 kms are National Highways, accounting 2% of total road length. The Highways carry about 40% of the traffic load. The Ministry has decided to develop all of existing National Highways and 40,000 kms of additional roads in the next few years as Green Highways.   The objective is to reduce the impacts of air pollution and dust as trees and shrubs along the Highways act as naturalsink for air pollutants and arrest soil erosion at the embankment slopes. Plants along highway median strips and along the edges reduce the glare of oncoming vehicles which sometimes become cause of accidents. The community involvement in tree plantation directly benefits local people by generating employment. The Panchayats, NGOs and other Self Help Groups (SHGs) will be involved in the process of planting and maintenance. The plant species selected will be region specific depending on local conditions such as rainfall, climate type of soil etc. For example at some places soil conditions may suit for plantation of Jamun or mango trees while at other places plants and grasses can be grown to derive biomass. Wherever possible, transplantation of existing trees will be given preference while widening the roads. The policy aims at changing the whole process for the avenue plantation and landscape improvement. Earlier, the land needed for these activities was not considered during the Detailed Project report (DPR) stage. Now the new policy has recommended that the requirement of land for tree plantation should be included in the Land Acquisition Plans prepared by the DPR consultants. This move will help in pre-planning of the plantation activities and the space required for the same, so that there is a systematic plan before the construction of National Highways. One percent of the civil cost of the road projects will be for developing green corridors. In the new policy, the provisions about the responsibilities attached have also been clearly defined. Now it will be the responsibility of the planting agency to ensure that the condition of the site is good enough for the successful establishment of grasses. The planting agency is required to supervise all field operations like preparation of surface, sowing of seeds or saplings and quality of planting material used. The monitoring of the plantation status has been included as an integral part of the policy. The Monitoring Agency willmonitor progress of planting and status of plantations on continuous basis. This agency shall carry out the site visit forfield verification in respect of survival, growth and size of plantation and maintenance of the same. The monitoring Agency will conduct performance audit of executing agencies  for  various  projects  on  an  Annual  basis  and  award of  new contracts to the agencies will be decided based on their past performance. The plantations and its maintenance may be taken up through outsourcing   following   bidding   process   as per   standard   protocol   of procurement of Ministry of Road Transport & Highways (MoRTH) and its agencies for the stretch/ROW not declared as protected forest under Forest Conservation (Act) 1980.  The MoRTH/NHAI will appoint the authorised agency for empanelment of Plantation Agencies. Only empaneled agencies will be allowed to bid for planting work on the National Highways. The new policy has given a new insight to the process of development. It gives answer to the question whether the development process is putting our environment and natural resources into danger.  Such initiatives taken by the Government indicate that the process of development is not exclusive of environment protection. The development can be sustainable when systematic and conscious decisions are taken. The policy when implemented in letter and spirit will result into India being a “Nation with Natural Highways”. It will address the issues that lie in the “road of development” and pave “a journey towards sustainable development”. It is the onus of the communities involved in the path of development that they also participate in the process of protection of nature. The Government can frame policies, provide standards, but success of projects depends on strong monitoring which is not possible without active community participation and community ownership.

Power sector lights up; LED bulbs in vogue

Power sector lights up; LED bulbs in vogue

-                                                                        LED bulbs are slowly but steadily making inroads  in middle class families. Special stalls were pitched recently in the government offices complex  in New Delhi and people, flaunted ID proof and latest power bill, to purchase LED bulbs at a highly subsidised price. “For us LED bulbs is simple mathematics. They save money on power bill ,and it should be made freely available in markets if the government is serious in energy conservation”, saidRamadheen, a staff member in one of the offices in nearby buildings while watching brisk sale of bulbs.  Informatively, 77 crore incandescent bulbs were sold in 2013-14 which if replaced by LEDs will result in reduction of 20,000 MW load and energy savings of 100 billion kWh (Kilowatt hour) every year. Total saving in electricity bills of consumers will be Rs 40,000 crore every year, considering average tariff of  Rs 4 per kWh. Average reduction of electricity bill of consumers is pegged at Rs160-400 per year per LED ( light emitting diode).     Prime Minister Narendra Modi had launched LED based home and street lighting programme on January 5 this year. The plan envisages to cover 100 cities by March next year and balance by March 2019, targeting 77crore ordinary bulbs and 3.5 crore conventional street lights. There are 3.5 crore street lights in the country with a load of 3,400 MW which can be reduced to 1,400 MW by replacing conventional lights with LED based street lights which could lead to saving of about 9,000 million units annually worth Rs 5,500 crore to municipalities annually. Now 100 cities have been taken up for coverage under street lighting programme(SLP) and domestic LightingProgramme (DELP). According to official sources, the action plan has been drawn after deliberations with all stakeholders and a set of concrete activities to enhance the energy savings from the current level of 6 per cent to 10 per cent by 2018, implying doubling of the energy savings from about 60 billion kWh in 2014 to 122 billion kWh in 2018. Mr Narendra Modi, launching the programme, described the LED bulb as a “Prakash Path–way to light.”     The scheme for LED bulb distribution is part of the domestic efficient lighting programme in Delhi; and a National Programme for LED-based Home and Street Lighting. Coming in the way were high price of LED, insufficient availability and lack of awareness. The service model devised stipulates there is no need for upfront capital investments by ULBs( urban local bodies ).The cost  recovery will be done in installments over seven years for ULBs  and 8-12 months for domestic consumers.   As many as 186 cities have been enrolled in the DELP programme. Work has been completed in some places in Andhra Pradesh (Guntur,  Anantpur, Srikakulam, West Godavari) and Puducherry. About one crore LEDs have been distributed. Distribution is in progress in Delhi, Jaipur, Ajmer, Jodhpur, Thane, Mulund, Bhandup, Ratnagiri, Kanpur and Varanasi. Agreements with 63 cities were signed in Andhra Pradesh, Rajasthan, Uttar Pradesh and Delhi NCR and agreements with 68 more (Maharashtra, UP, AP and Himachal Pradesh) are in final stages. The  government  plans to distribute 15 crore LEDs by March 2016. Officials say 302 ULBS have enrolled in theprogramme.     Work in six ULBs –Vizag, Jhalawar, Mt Abu, Pushkar, Neelimarna and Agartala has been completed with 2,07,00 street lights replacement. Installation is in progress in 88 ULBs in Delhi, Rajasthan and AP to replace 9.3lakh lights. Agreements with 90 municipalities is under finalisation and 15 lakh LEDs will be installed by March next year. Amid LED bulbs replacing ordinary bulbs and CFLs, officials giving overall power scenario, say  powergeneration growth was highest this year in 20 years – 8.4%, coal production growth most in 23 years – 8.3%, and solar capacity increased by 42%.     Officials say the accelerated pace of energy savings would be achieved by a mixture of aggressive policy and regulatory actions, market based interventions and enhanced outreach. The main areas of focus would be Buildings, Led lighting, appliances, energy intensive industries and agriculture.    EESL (Energy Efficiency Services Limited),a joint venture company of PSUs of power ministry has been designated as the implementing agency for both the programmes- DELP and Street lights. It has an authorized share capital of Rs 500 crore. On financial position, officials said EESL discussions were underway for Rs.3,000crores credit  with Asian Development Bank, German funding agency KfW and Japan Industrial Cooperation Agency besides Rs. 700 crore line of credit available from KfW and AfD. The equity base of EESL, which has been increased from Rs 90 crore to Rs 500 crore, will be enhanced to Rs 1,000 crore, they added.      EESL has implemented about 92,000 street light retrofit project in Vizag and it will reduce energy consumption by 50 per cent in the Greater Vizag Municipal Corporation (GVMC) this year in comparison to last year. Officials say the entire upfront capital of Rs 64 crore has been invested by EESL and will be recovered over a period of seven years. The municipality will pay EESL a sum of Rs 18.5 crore while its overall costs  saving would be Rs 31 crore annually.     Elaborating the service model of DELP, officials said the plan enables households to procure LED lights at an affordable price of Rs.10 each and the balance on easy instalments from their electricity bill. DELP is under implementation in Andhra Pradesh, Delhi NCR, Rajasthan and Uttar Pradesh. In markets, the LED lights cost Rs 300- Rs 400 but EESL is charging Rs 95-Rs 105 and it is less than the savings of one year.      Officials say the prices were reduced from Rs 310 per bulb in January 2014 to Rs 73 in June this year. Large scale and transparent procurement, say officials,has led to sharp decline in LED bulbs prices. For street lights, prices have come down from Rs.137 per watt  to Rs.85 per watt. The programme is delivering energy savings of 400 m kWh in Puducherry and AP as per the online monitoring installed by EESL.     On the emerging scenario, Power Minister Piyush Goyal says a slew of measures were taken to ensure 24x7 power supply round the year. Steps are under way to amend the electricity bill. The proposed amendments seek to end the monopoly of power distribution companies by segregating the carriage (distribution sector/network) from the content (electricity supply business) in the power sector by introducing multiple supply licensees so as to bring in further competition and efficiency in the distribution sector by giving choice to the consumers.     Mr Goyal said the several “foundational initiatives” had been taken up to realise Mr Modi’s vision of 24x7 affordable power for all. Officials say during last one year, many milestones accomplished include, lowest ever power deficit in India’s history – 3.6%, highest ever power capacity addition – 22,566 MW,  maximum increase in transmission line capacity – 22,100 circuit kms, most ever addition in sub-station capacity – 66,554 MVA and highest ever coal production increase by Coal India – 32 million tonnes.     Corruption, the officials said, was bridled with Rs 3.35 lakh crores of potential revenue going to coal-bearing states especially in eastern India through transparent coal e-auctions and allotments, over the lifespan of mines. They say E-auctions have set the basis for transparent and “honest” allocation of natural resources. LED bulb price also reduced by 74% due to transparent procurement (Rs. 310 in Feb 2014 to Rs. 73 in June 2015).     Future plans launched include more than five-fold increase in renewable energy capacity to 175,000 MW by 2022 (Organised Renewables Financing Conference, RE-Invest 2015 which attracted commitments of 273,000 MW) and five new UMPPs (ultra mega power projects) in plug-n-play mode(total 20,000 MW).        Other aims are reduction in peak load shortages through revival of stranded gas based power plants through transparent e-bidding, Rs 1.09 lakh crore investment in sub-transmission and distribution through Deen DayalUpadhyay Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS) and Rs. 1 lakhcrore of new transmission projects to be bid out in the current year.Clean energy will be prioritised with 25 solar parks of about 100 MW each planned and a Rs 38,000 crore green energy corridor being set up to transmit renewable energy.    Highlighting the government’s focus on development of backward regions, the officials said investment of Rs 9,865 crore was approved for upgrading power systems in eight North Eastern states (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura). They said transmission line was approved with investment of Rs 26,000 crore to evacuate power to southern region from western region.     Officials say to promote energy conservation through LED, action plan envisages higher involvement of states, with thrust on places of tourism, religious and heritage sites and involvement of private sector. On the lighting industry capacity to meet demands, officials say domestic industry can manufacture 3.2 crore LED bulbs every month, and street light production is about two lakh per month for major players. Numbers of lighting manufacturers have increased from 27 in March this year to 68 in May. Increase in domestic demand will encourage LED chip manufacturers to set up facilities in India.     In the agriculture sector too, the demand side management (DSM) is scaling up. Finalisation of projects in Karnataka and AP have been completed successfully. Project area in AP has been identified with 3,600 pumps with segregated feeders and commercial deployment of solar agriculture pumps is also being examined. MoU is being signed between EESL and CPWD for implementation in 1,000 government buildings across the country. Other MoUs in the pipeline are between Railways and EESL to implement efficiency measures in buildings and stations, among others.