The need to look beyond the Pay Commission

When more than 2.3 million people rushed to apply for just 368 positions for the job of a peon in the Uttar Pradesh government recently, including some with professional qualifications, it was widely seen as an indication of joblessness in the country. While it is correct that the economy has not been able to generate enough quality jobs for a growing workforce, it is also true that the government offers much higher wages, as well as perks, that are not available in most cases in the private sector. The rush to apply for government jobs is thus more a reflection of a massive wage premium at the lower levels of the labour market than sluggish job creation.

The Seventh Pay Commission, which submitted its report last week, has made such jobs even more attractive. Among the terms of reference before the commission was to design a “framework for an emoluments structure linked with the need to attract the most suitable talent to government service, promote efficiency, accountability and responsibility in the work culture, and foster excellence in the public governance…” It missed the opportunity to do something about this.

India needs to build state capacity to meet the challenges of the new century. It needs to replace the file pushers and file carriers who multiplied during the socialist era with an efficient civil service that knows how to regulate a modern economy, provide public goods, and manage a welfare system that needs better human capital. Governance is becoming increasingly complex, and the government needs to attract suitable talent to respond to the challenges of the 21st century.

However, the commission did not significantly deviate from the past in “principles of pay determination” and, as a consequence, it is unlikely that civil administration will change either. The commission, as has been the practice in the past, relied on need-based wage calculation. Clearly, the quality of output is not relevant in the exercise.

Based on the norms decided by 15th Indian Labour Conference in 1957, along with some supplements, the minimum wage was arrived at, and the difference with existing pay was adjusted across the board accordingly. Senior officers who shoulder maximum responsibility, and should be compensated adequately in the commission’s view, have been given a slightly higher index for adjustment.

A study conducted by the Indian Institute of Management, Ahmedabad, for the commission showed salaries in the private sector are much smaller at the lower level compared with government jobs, and that it is at the higher level where the government falls short in compensating employees.

However, the recommendation ignores this reality. The minimum wage recommended is more than double that of the going rate in the market, and since the structure of the government is bottom-heavy, it will continue to significantly overpay an average employee with practically no incentive to perform. In fact, the commission in its report said issues of productivity and efficiency should be looked at administratively.

To be sure, several committees and two administrative reforms commissions have looked into various aspects of civil administration in the past, but not much has changed over the years.

Taxpayers are periodically given a higher wage bill to settle, with no material difference in the quality of service from the government. This needs to change.

The nature of challenges and complexity of governance demands greater flexibility in hiring and wage setting. Today, there is no mechanism where high-performing individuals can be rewarded and non-performers can be reprimanded on a regular basis.

The commission has recommended that non-performers be “phased out after 20 years”, meaning annual increment be stopped for people who don’t meet the benchmark for assured career progression. Even if implemented, it is unlikely to have any impact.

Perhaps, it is time to debate the kind of changes required in civil administration, which has remained broadly what the country inherited from its colonial ruler.

Is civil administration in India equipped to tackle increasing complexities of governance?

Panel calls for standard GST rate of 23-25%

India moved a step closer to introducing the goods and services tax (GST), the nation’s biggest tax reform, after a panel proposed that the standard revenue-neutral GST rate could be in the range of 23-25%.

These calculations, drawn up by the National Institute of Public Finance and Policy (NIPFP), provide an important input into the deliberations of the panel headed by chief economic advisor Arvind Subramanian that
is looking into what should be the revenue-neutral rate under GST.

Its recommendations will be placed before the empowered group of state finance ministers. The Subramanian committee’s suggestions are expected to also take into account the government’s political compulsions; it would prefer to avoid high GST rates.

A revenue-neutral rate means no revenue loss to the centre or the states.

This rate could be in the range of 18-19% if there is only a single GST rate, according to the institute’s calculations. However, if goods and services are taxed at different rates as proposed at present, the standard GST rate will be in the range of 23-25%, according to a person familiar with the development who declined to be named.

The lower and upper bounds of both estimates are based on the assumption of a central sales tax rate of 2% and 4%, respectively.

According to the current design of the GST agreed between the centre and the states, goods are likely to be taxed at three different rates—a special rate for precious metals, a lower merit rate for some important goods as well as a standard rate that will be applicable on most goods.

Earlier, in November 2014, a rate of around 27% (state GST at 13.91% and central GST at 12.77%) was considered too high by both the government and industry with finance minister Arun Jaitley reiterating in May this year the government’s intention to bring in a more moderate rate.

The empowered committee of state finance ministers had asked the NIPFP to rework the GST rate last year.

Tax experts underplayed the latest proposal.

“It is still only an NIPFP report, and like the previous time does not arrive at a politically and economically satisfactory number,” said Satya Poddar, partner, tax and regulatory, policy advisory, at consultancy firm EY. “The key will be the recommendations of the Subramanian committee that will soon submit its report.”

“There is a thought process among certain sections that there could be a single GST rate structure provided the tax rate was 12% or below. But for this, exemptions will have to be kept at a minimum, especially in services,” he said.

A GST is expected to remove barriers across states and integrate the country into a common market, thus reducing business costs and boosting government revenue. The indirect tax would replace existing levies such as excise duty, service tax and value-added tax. However, a moderate GST rate is considered key for the successful implementation of GST as an exorbitant rate may encourage tax evasion.

A moderate rate will be politically more acceptable than a revenue-neutral rate. The government had set up a committee in June under Subramanian to arrive at GST rates by factoring in the economic growth rate, tax compliance levels and the GST taxpayer base. This committee is expected to submit its report soon.

The final rate will be decided by the GST council—a representative body of the centre and states that will be set up after the constitutional amendment bill for GST’s passage gets Parliament’s nod. The amendment bill is awaiting the Rajya Sabha’s approval where the ruling alliance is in a minority.

The government had planned to implement the GST from 1 April 2016, but may now be forced to push the rollout to the beginning of any month in 2016-17.

“The standard rate should ideally be around 20%,” said R. Muralidharan, senior director at Deloitte in India, another consultancy. “Most other countries have a GST rate of less than 20% and it is important that India’s GST rate is also around these levels to ensure that we remain competitive.”

The idea of a single GST rate structure was proposed in 2010, but was shelved after opposition from the states, Muralidharan said.

ISRO working on 4-D, 5-D imaging technology: scientist

The Indian Space Research Organisation (ISRO) is working on 4-D and 5-D imaging technology.

Disclosing this after inaugurating the 6{+t}{+h}International Conference on Health GIS here on Friday, distinguished scientist and professor at ISRO, A. Sivathanu Pillai said work on 4-D and 5-D imaging technology was part of the space agency’s engagement with “hyperspectral imaging,” which is a new and emerging area in Geographic Information System (GIS).

“Using the satellite, we are trying to process and view the five-dimensional images,” said Dr. Pillai, who is also the former Managing Director of BrahMoS Aerospace, Ministry of Defence.

Pointing out that 4-D and 5-D imaging technology would be coming out in a big way, Dr. Pillai said researchers, doctors and students would soon be able to use the most advanced GIS tool for welfare activities.

He appealed to institutions and others to make use of the valuable spatial data available at ISRO facilities for preventing epidemics and improving healthcare.

Dr. Pillai, who recalled how the images of coconut trees in Kerala, obtained from remote sensing satellites, helped tackle the spread of a viral disease a few decades ago, pointed out that spatial data patterns can be used for public health interventions in a cost-effective manner.

Healthcare and prevention of diseases can be better addressed if all relevant data and analyses are provided in GIS maps through an institutionalised arrangement involving the government agencies.

Vice-Chancellor of JSS University B. Suresh referred to the recent rains in Chennai and said GIS could be used to address a possible outbreak of post-flood epidemic. The breeding space for diseases can be identified through GIS and necessary healthcare measures can be taken.

The theme of the international conference on GIS organised by JSS University in association with Asian Institute of Technology, Bangkok and Khon Kean University, Bangkok, is “Geo ICT for Epidemic Control and Healthcare.”

It is part of the space agency’s engagement with ‘ hyperspectral imaging’

The sun shines on India's Aditya

India's solar mission will study the Sun's outermost layers — the corona and the chromosphere — and collect data about coronal mass ejection

After a seven year long wait, Aditya, India’s first dedicated scientific mission to study the sun is likely to get a go-ahead from the Prime Minister’s Office (PMO) this week. The ambitious solar mission will study the sun’s outer most layers, the corona and the chromosphere, collect data about coronal mass ejection and more, which will also yield information for space weather prediction.

The project costs approximately Rs 400 crores and is a joint venture between ISRO and physicists from Indian Institute of Astrophysics, Bengaluru; Inter University Centre for Astronomy and Astrophysics, Pune; Tata Institute of Fundamental Research, Mumbai, and other institutes.

Though the project was conceptualised in 2008 itself, it has since morphed and grown and is now awaiting clearance with the government. It now aims to put a heavy satellite into what is called a halo orbit around the L1 point between the Sun and the Earth. This point is at a distance of about 1.5 million km from the earth. With the excitement about the Mars Orbiter Mission yet to settle down, this could be the next most complicated feat that ISRO has carried out till date.

In a three-body problem such as this – with the earth and sun engaged in an elliptical orbit and a relatively very light, call it massless in comparison, satellite being placed in between – there are five so-called lagrangian points in space where the light, third body — in our case, the satellite — may be placed so that it can maintain its position with respect to the two others. One of these is the L1 point, which is about 1.5 million km from the earth.

A halo orbit would be a circular orbit around the L1 point. The satellite will have to use its own power (spend energy) to remain in position within in this orbit without losing its way. Such orbits have not been attempted too often.

Studying the corona

Among the suite of instruments in the payload would be a solar coronagraph. “A combination of imaging and spectroscopy in multi-wavelength will enhance our understanding of the solar atmosphere. It will provide high time cadence sharp images of the solar chromosphere and the corona in the emission lines. These images will be used to study the highly dynamic nature of the solar corona including the small-scale coronal loops and large-scale Coronal Mass Ejections,” said Dipankar Banerjee, physicist from IIA, who is part of this project. The corona is the outermost layer of the Sun and the chromosphere is the second inner layer. Data such as this can help us understand the corona and solar wind, which is a spewing of charged particles into space, at speeds as high as 900 km/s and at about 1 million degrees Celsius temperature, affecting the environment there.

Just like on earth, environment in space changes due to happenings in the sun, such as solar storms (flares). This is known as space weather. Dibyendu Nandi, Head of Center of Excellence in Space Sciences, IISER, Kolkata, describes it so: “Solar storms and space weather affect satellite operations. They may interfere with electronic circuitry of satellites and also, through enhanced drag (friction effects), impact satellite mission lifetimes. They also impact the positional accuracy of satellites and thus impact GPS navigational networks. Space weather also impacts telecommunications, satellite TV broadcasts which are dependent on satellite-based transmission.”

Dr Nandi works in building models that can predict space weather. Hopeful about Aditya’s contribution to this, he remarks “The data from Aditya mission will be immensely helpful in discriminating between different models for the origin of solar storms and also for constraining how the storms evolve and what path they take through the interplanetary space from the Sun to the Earth. The forecasting models we are building will therefore be complemented by the Aditya observations.”

At the moment, there are models and calculations made by NASA which Indian scientists use to maintain their satellites. Now, there is a possibility of Indians developing their own space weather prediction models. 

 

Govt looks to promote sustainable fishery on Ganges basin According to the National Fisheries Development Board, inland fishery is growing in a big way in Chattisgarh, Jharkhand, Assam and Meghalaya

Promoting sustainable fishery on the Ganges basin, one of the largest in the world, is the need of the hour, Agriculture Minister Radha Mohan Singh said today on the occasion of the World Fisheries Day.

He also emphasised on shifting focus from fishery in coastal states to inland resources in order to increase India's overall fish production from the current level of over 10 million tonnes and export earnings of Rs 33,441 crore.

"India is second after China in fish production in the world. However, there are potential areas where production can be strengthened further. There are opportunities to promote fishery beyond coastal states. There is scope to promote sustainable fishery on the Ganges basis," Singh said at an event organised to commemorate the World Fisheries Day.

Inland fishery can be developed on the river basin of the Ganga, which flows from the Himalayas through different cities and towns, he suggested.

Although India has inland fishery resources for a fish production of 15 million tonnes, the actual production was 6.58 million tonnes in 2014-15, he added.

Minister of State for Agriculture Sanjeev Kumar Balyan, Animal Husbandry and Fishery Department Secretary Ashok Kumar Angurana and ICAR Director General S Ayyappan spoke about promoting inland fishery and adoption of good management practices for higher production.

According to the National Fisheries Development Board, inland fishery is growing in a big way in Chattisgarh, Jharkhand, Assam and Meghalaya.

On growth potential of the fishery sector, Singh further said India's fish production, currently growing at 5 per cent, can increase to 8 per cent by harnessing opportunities in the inland fishery sector.

"It is expected that a growth rate of about 8 per cent can be achieved in the land sector. Future demand for fish and fishery products has to be mostly sourced from acquaculture and culture-based capture fisheries at reservoirs," he said.

Keeping in view the growth potential of the sector, Singh said the Centre has merged all the existing schemes and has proposed to formulate an umbrella one called 'Blue Revolution: Integrated Development and Management of Fisheries' with an outlay of Rs 3,000 crore.

This umbrella scheme will cover inland fisheries, acquaculture, marine fisheries, including deep sea fishing and other activities undertaken by the National Fisheries Development Board, towards realising the Blue Revolution, he said.

Stating that the government aims to harness all possibilities for intensive and integrated development of the fishery sector, Singh said, "Providing nutritious food and gainful employment are the foremost challenges in the country today. Through fisheries, these requirements can be fulfilled."

He said the government is providing required financial support to farmers, fishermen and entrepreneurs connected with fisheries through various ongoing schemes.

RIL tanks up on biofuels to cut emissions

In this last of a 5-part series, we look at Reliance Industries and the steps it is taking to reduce its carbon footprint

 

On October 16, Mukesh Ambani and chief executives officers of nine other oil and gas companies declared to be part of a joint commitment to reduce global warming by two degrees. Under Oil and Gas Climate Initiative, 10 of the world’s largest oil and gas companies — which provide a fifth of all oil and gas production and supply, 10 per cent of the world’s energy — said they would make significant investments in natural gas, carbon capture and storage, renewable energy, and low greenhouse gas (GHG) research and development.

Reliance Industries Ltd (RIL) has projects ranging from roof-top solar photovoltaic projects and biogas generation projects to carrying out wind resource assessment for exploring possibility of installation of wind turbines. In its own business of fuel, it is experimenting with bio products. RIL's Reliance Life Sciences division has grown jatropha by itself and with inter-crops with horticulture and medicinal crops, developed high-yielding composite varieties of jatropha. RIL has commissioned a 6,500-tonnes-a-year pilot plant for biodiesel production and developed second-generation processes for production of bioethanol and biobutanol. “Research and development of biofuels are carried out at the Dhirubhai Ambani Life Sciences Center in Navi Mumbai. Agronomy activities are carried out at research farms in Kakinada, Raviguntapalli, Gandhar, and Nagothane,” says the company.

RIL did not reply to an e-mail. Reliance Life Sciences works with farmers, directly and through non-government organisations, to promote cultivation of jatropha and other crops for biodiesel. Based on lessons from a pilot project in the Nizamabad district in Andhra Pradesh, Reliance Life Sciences is working with farmers in 14 districts across Khammam and Nizamabad in Andhra Pradesh; Nanded, Parbhani and Hingoli in Maharashtra; Bilaspur and Bastar in Chhattisgarh; Junagarh and Vyara in Gujarat; and Dewas, Shajapur, Chhindwara, Seoni, and Mandla in Madhya Pradesh.

The company is using agri-residue to produce hydrocarbons. “Agri-residue is often burnt to quickly clear fields. Our technology provides a better alternative by enabling efficient conversion of this waste agri-residue into products such as kerosene,” the company said.

Research and development efforts in the areas of improvement of productivity of biofuels per unit area and production of clean energy and chemicals using renewable raw materials are closer to commercialisation. These efforts have a potential to produce significantly large quantities of clean fuels and chemicals. Through its ‘algae to biocrude’, it is aiming to establish a green platform.

TAPPING INTO MOTHER NATURE Following clean development mechanism projects at RIL are registered at UNFCCC

Jamnagar Reduction in steam consumption in stripper re-boiler through process optimisation Hazira Energy efficiency through steam optimisation Vadodara Energy efficiency through heat recovery Barabanki Biomass-based process steam generation Dahej Demand-side energy conservation and reduction Patalganga Demand-side energy-efficiency projects Allahabad Improvement in energy-efficiency of steam generation and power consumption

RIL says the firm has built capacity to develop clean development mechanism projects, and obtain registration and issuance of the same in the form of certified emission reductions from the United Nations Framework Convention on Climate Change.

NTPC takes big strides in renewable energy

For NTPC, that has often faced barbs for having a fourth of India's coal power generation capacity of 169,118 Mw, venturing into green space is a calculated move

 

 

NTPC Ltd figures among the world's top 10 coal-based power generators but in less than two years it will have an impressive portfolio of 1,000 Mw of green energy, too. It is already one of the top green power generators among the conventional power companies in the country, and soon enough will turn out to be a classic case of a "polluting" company becoming "cleaner".

Some 110 Mw of solar power generation places it next to Reliance Power that has around 185 Mw renewable energy capacity with Tata Power (read Part IV of the series) topping the list in this category. Being a government-controlled entity, most of this change is driven by directives from the Centre. It is obligated to facilitate addition of another 10,000 Mw of clean power in the next five years. For NTPC, that has often faced barbs for having a fourth of India's coal power generation capacity of 169,118 Mw, venturing into green space is a calculated move.

Though a request for an official interaction with NTPC's officiating chairman on the company's green business did not get any response, its former chairman Arup Roy Choudhary says it helps "the political dispensation of the country to tell the global audience that our biggest power producer is also into solar energy". Roy Choudhary headed the company for five years starting August 2010, a period which coincided with the Union government's focus on solar power programmes.

The diplomatic gain in climate negotiations is, however, not the only trigger. Choudhary says branching into renewable is also part of the company's social commitment. Besides, it synergises the company's target with the global requirements on diversifying into greener energy sources.

As a country, India could have done more of hydro but "we started late and now you cannot add hydropower because of rehabilitation and resettlement (R&R) issues," he says. With a growing population and pressure on land and river resources increasing, land acquisition is a major issue for hydro projects.

In NTPC's case, the company has only 800-Mw of Kol Dam project in Himachal Pradesh. Only small hydro projects with combined capacity of 8 Mw are being planned. Hydro projects below 25 Mw are counted in the renewable energy portfolio of companies.

Business strategy also demands expansion into renewable energy since it is faster to set up green capacity. The construction period for solar projects is a few months only and since they are modular, capacity can be added faster. "It is also easier to get clearances for land and environment for these projects. Besides, there is easy availability of funding," says N K Sharma, chief executive officer of NTPC Vidyut Vyapar Nigam Ltd (NVVNL), a wholly-owned power trading subsidiary of NTPC.

NVVNL performs a crucial function in the sale of solar power in the country. It bundles such power bought at a current average rate of about Rs 10.5 a unit (kilowatt per hour) with coal-based power resulting in a bundled tariff of about Rs 4.5 a unit. Through this mechanism devised in 2010, it is currently bundling some 723 Mw of solar power. NTPC, on its own, will also be bundling 500 Mw from 10 projects to be set up at Ghani Solar Park in Andhra Pradesh under the National Solar Mission. The average tariff for 500 Mw will be Rs 4.63 per unit of electricity. NTPC has the government approval to use cheap power of Rs 1 per unit from its Singrauli coal plant in Uttar Pradesh with solar power.

According to Sharma, bundling of power has three-fold advantage. It brings down the cost of power, ensures continuous availability of electricity despite the unreliability factor in green power and eliminates the need to subsidise through generation based incentives or viability gap funding.

Under NTPC's business plan, about 1,000 Mw capacity addition will be based on renewable resources by 2017. NTPC has already commissioned 110 Mw solar photo voltaic (PV) projects and another 15 Mw solar PV and 8 Mw Singrauli small hydro projects are under implementation. Besides, a geothermal project at Tattapani is also being developed under an agreement with the Chhattisgarh government. Since geothermal energy is derived from the heat under the Earth - which could range from shallow ground to hot water and hot rock found beneath the surface, or deeper to the very high temperatures of molten rock called magma - it is considered a clean source for power generation.

Besides grid-connected green generation, emphasis is also on off-grid decentralised power supply. The company has 16 such projects with a combined capacity of 340 kilowatt that reach out 2,280 households in four states.

The company wants to have 28 per cent of installed capacity coming from non-fossil sources by 2032 from less than one per cent now. Still, renewable portfolio, in general, will not be a challenge to coal-based generation. "Green energy will be a significant part of any conventional energy company's portfolio. It has yet not reached that stage (of being a challenge) since issues relating to availability of renewable power round the clock with storage technology still being expensive remain unresolved. There has to be a mix but the gap will be huge for some time," says Sharma.

The availability and cost factors, however, would not obviate the need to be conscious of adding to green portfolio and factoring it into corporate growth plans.

Increased use of natural gas for power generation and supercritical technology for coal-based generation will also help the company reduce its carbon footprint.