Need for India and CLMV countries to promote greater connectivity and economic integration with Regional Value Chains:

Need for India and CLMV countries to promote greater connectivity and economic integration with Regional Value Chains: Nirmala Sitharaman

According to Smt. Nirmala Sitharaman, Minister of State for Commerce & Industry (IC), Government of India “The trade links and ties between India and the CLMV countries can be much better, and the two governing principles, connectivity and economic integration with regional value chains are crucial.” The Minister was delivering the Keynote Address at the 3rd India – CLMV Business Conclave being organized by the Confederation of Indian Industry (CII) in collaboration with the Ministry of Commerce and Industry, Government of India, at Chennai today. The conference focused on the topic,” India – CLMV Economic Integration: Developing Regional Value Chains.”

“India’s trade with the CLMV countries is over 11,000 million USD and there is immense potential.” The tri-lateral highway, connectivity in the North East, port connectivity improvement and the Act East policy are moves in that direction. The External Affairs study proves that there’s a huge potential of about 100billion USD dollars of additional export.

The Minister stated that there was a need for Indian banks to establish their branches overseas and the proposal of a Project development fund, an important instrument to handhold manufacturing units in the CLMV countries and duty free tariffs. While globally FDIs are falling, last year India had 38% growth in FDI, which shows the investors’ confidence in India. She also added that with the world economy falling, it will depend on CMLV countries and India for revival.

Mr. Sun Chanthol, Senior Minister, Minister of Commerce, Kingdom of Cambodia said, “It’s important to network and share best-practices and strengthen businesses ties between the countries. The trade investment between India and the ASEAN countries is crucial since the CLMV countries cover 32% of the ASEAN region and has a huge market for Indian products and with a 165 million strong population. This will attract considerable amount of FDI from India. It has an open investment regime and does not discriminate between foreign and local investors. It is investing heavily into its transport infrastructure.”

Mr. Somchinth Inthamith, Vice Minister of Industry and Commerce, Lao PDR, said, “ The investment between Laos and India is still insignificant. We are working on policy level changes in laws and regulations and open sky policies to facilitate trade. CLMV and India should work together to strengthen the strategic partnership to reduce the poverty. We are committed to make Laos a preferred destination.”

Mr. Pwint San, Deputy Minister, Ministry of Commerce, Myanmar, said, “Myanmar is trying to improve the trade policies and create attractive and investor-friendly policies. A new foreign investment law has been passed to attract more investors and the mass investment potential lies in the economic partnerships.”

“We are stepping up our stand in business collaborations and diplomatic cooperation between the CLMV countries and India. Knowledge sharing, simplifying laws and policies should be encouraged between countries to address commercial challenges.”

Mr. Nguyen Cam Tu, Deputy Minister, Ministry of Industry and Trade, Vietnam, said, ”We welcome India’s economic integration with the CLMV countries. India and CLMV need to strengthen economic integration through connectivity, infrastructure, and trade facilitations.We also aim to focus on the added advantage from sectors such as seafood, manufacturing, engineering, automobiles and chemicals.

In his address, Mr. Ravi Capoor, Joint Secretary, Department of Commerce, Ministry of Commerce and Industry, Government of India stated that “The Ministry of Commerce has taken a huge step to launch the CLMV fund and is looking at large investments in these regions. We see problems in connectivity, banking, actual physical movement of people in trade and business collaborations. We are also looking at physical land connectivity to the CLMV countries through the North-East region.”

Ms. Shobana Kamineni, Vice-President, CII, and Executive Vice Chairperson, Apollo Hospitals Enterprise Limited, said, “Every business has opportunities to thrive and it would be a threat if we do not make use of the opportunities as growth elements. CLMV countries have been going on a major transformation inward and outward. We should aim to follow best-practices to enhance productivity in Agriculture, mining and minerals, oil and gas, infrastructure, Service sector (manpower, training, skilled-resources), SMEs, and opportunities for smaller business to engage and grow.

Earlier in his welcome address, Mr. Chandrajit Banerjee, Director General,CII stated that “This conference comes at an opportune time, with a slew of reforms announced by the Government of India. I firmly believe that India needs to deepen the relationship with the CLMV countries in sectors such as agriculture, mining, healthcare, and energy (hydro and solar energy).” He added that through this trade and business expansion millions of job opportunities will be opened up.

Kerala as the First Total Primary Education attained State in India

Remarks by Vice President of India, Shri M. Hamid Ansari, at the function for Declaration of Kerala as the First Total Primary Education attained State in India at Kerala University, Thruvananthapuram

The Vice President of India, Shri M. Hamid Ansari has said that the impressive march of Kerala on the education and various other socio-economic fronts has been due to the constructive and combative roots of its historical background. Addressing a function at the Kerala University in Thruvananthapuram today for ‘Declaration of Kerala as the First Total Primary Education attained State in India’, Shri M. Hamid Ansari said the remarkable performance of Kerala on the various socio-economic indicators are a testimony to the transformative nature of mass education. You have set a model for the rest of the country to follow, he added.

Following is the text of the Vice President’s address on the occasion:

“Many years ago distinguished anthropologist Bill McKibben had described the spread of education as the most important factor in the making of a new Kerala.

The impressive march of Kerala on the education and various other socio-economic fronts has been due to what Nobel laureate Amartya Sen has called “the constructive and combative roots of its historical background”. The constructive roots are Kerala's indigenous intellectual history and the impact of its global exposure. The latter has resulted in a tolerant pluralism in the State, brought about by opening its doors to other peoples and cultures, because the host society remains alive to learning from other traditions, and other ways of living. The former was a result of the historically pro-education outlook in Kerala. As far back as the year 1817, Rani Gouri Parvathi Bai of Travancore had issued a royal proclamation that said:

“The State should defray the entire cost of the education of its people in order that there might be no backwardness in the spread of enlightenment amongst them….”

This was the precursor to the unleashing of progressive forces against backwardness, superstition, conservatism and casteism in Kerala. The contribution of religious reformers such as Sree Narayana Guru, the Nair Service Society, the Muslim Educational Society (MES) and of the Christian missionaries to the expansion of educational facilities in Kerala also helped in inculcating and sustaining the spread of education as a social movement.

The progressive aspect was manifest in the opposition to caste inequalities, which took a pro-mass education form. Kerala's politics, especially after the 1950s, continued in the same leitmotif of combating social inequalities through public activism and spread of education. The response was, to paraphrase Amartya Sen, dialectical- the spread of education helped overcome the traditional inequalities of caste, class, and gender, just as the removal of these inequalities contributed to the spread of education.

The spread of education in Kerala has led to enhancement of individual freedom and capacity for asserting one’s rights such as for better healthcare, demands for more public services and monitoring their delivery, a better climate for gender equity, and above all, much faster reduction in income poverty than in many other States of India.

The remarkable performance of Kerala on the various socio-economic indicators, which approximate more those of the developed countries than developing ones, are a testimony to the transformative nature of mass education.

Government of India data indicates that Kerala was the best performing state in terms of the Decadal growth of population at 4.9 per cent and had a sex ratio 1084, the best among Indian States. Infant Mortality rate (IMR) was the lowest in Kerala at 12, against the Indian average of 40. Kerala had a birth rate of 14.7 compared to the Indian average of 21.4.

These figures have their root in the literacy statistics. The total literacy rate in Kerala was, according to the 2011 census, 93.9% compared to a national average of 74. The female literacy in the State was 92% against the Indian average of 65.5. The high literacy rate has an impact on some other aspects as well. The percentage of households availing banking services, for example was 74.2 in Kerala compared to a national figure of 58.7. Similarly, the percentage of households with toilets, something that the central government has been pushing strongly under the Swacch Bharat Abhiyan, in Kerala was 95.2 compared to India’s average of 46.8%.

I believe that the date today is as historic for Kerala as was 18th April 1991, the day Kerala was declared to be a Fully Literate State.

Today, Kerala adds another feather to her educational cap. The state is marking the successful culmination of its ‘Athulyam’ programme aimed at ensuring Total Primary Education in the State - equivalent to Std IV of formal education. This was the fructification of the continuing efforts under the Total Literacy Campaign through the well planned and executed post -literacy activities and the Continuing Education Programme by the Kerala State Literacy Mission Authority under the Government of Kerala.

The Programme was launched with the support of local self-Government institutions in the year 2014-15. This Programme mainly targeted the adult learners between the ages of 15 and 50 years who were denied primary education for social and economic reasons beyond their control. Interested learners, even if they were above the age of 50, were also enrolled. The continuing education centres spread all over the state under the local self-Government Institutions with the cooperation of various government departments and voluntary organisations formed the spearhead of this programme.

I am informed that some 2,40,804 learners were identified out of which 2,05,913 learners were brought to the classes after the outreach programmes. Classes were arranged for six months for the teaching and learning with the help of text books specifically prepared for this purpose. The State level examination of this remarkable project was conducted on 7th June 2015, where 2,02,862 candidates were declared successful.

What is also remarkable about the project is that it was completed using limited resources. The project also relied heavily on the participation of volunteers and the Panchayati Raj institutions. The object lesson is that when well motivated, the civil society and the local governance structures are able to deliver remarkable results at the grassroots.

The formal external evaluation of the programme has been conducted by the State Resource Centre of the Ministry of Human Resource Development, Government of India. The findings of the report estimate that the programme was successfully implemented fulfilling all the aims and objectives as envisaged in the project prepared by the Kerala State Literacy Mission Authority for this purpose.

It is, therefore, with great pleasure that I declare Kerala as the first Total Primary Education Achieved State in the country.

This remarkable educational achievement is a result of the enlightened political leadership of Kerala, the dedication of its public functionaries and motivated volunteers as well as the dynamism of the people of Kerala who have come to value the importance of education. I congratulate all those who were involved in the success of this programme and the people of Kerala at this remarkable achievement.

You have set a model for the rest of the country to follow.”

India joining the International Energy Agency – Ocean Energy Systems

Cabinet approves India joining the International Energy Agency – Ocean Energy Systems

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has given its approval for India becoming a member country of the International Energy Agency - Ocean Energy Systems (IEA-OES) by signing the Implementing Agreement (IA). The nodal agency for the membership would be Earth System Science Organisation - National Institute of Ocean Technology (ESSO-NIOT) under the Ministry of Earth Sciences.

By becoming a member of the IEA-OES, India will have access to advanced R&D teams and technologies across the world. India will partner in developing test protocols along with other countries. This will help in testing Indian prototypes as per international requirements and norms. Joint cooperative programs with institutes of member countries could be taken up. India's own research projects with specific targets can be taken up in conjunction with other countries.

Background:

The long coastline of India and severe power deficit in the country, warrant the study of ocean renewable energies. Vagaries of the sea makes harnessing ocean energy a technological challenge. In the Indian context designing of scaled up ocean energy devices (including wave, currents and tidal) and their techno-commercial viability needs to be undertaken. Tropical countries have high sea surface temperatures and hence Ocean Thermal Energy Conversion (OTEC) is a good option for countries like India. NIOT, an autonomous research institute under the Ministry of Earth Sciences, is working in the area of ocean energy and desalination.

The IEA is an inter-governmental organization with a broad role of promoting alternate energy sources (including renewable energy), rational energy policies and multinational energy technology co¬operation and acts as energy policy advisor to 29 member countries. The OES, launched in 2001, is an intergovernmental collaboration between countries, which operates under framework established by the International Energy Agency. This initiative is to advance research, development and demonstration of technologies to harness energy from all forms of ocean renewable resources, as well as for other uses, such as desalination etc. through international cooperation and information exchange.

‘Pradhan Mantri Fasal Bima Yojana’ - a path breaking scheme for farmers’

Cabinet approves New Crop Insurance Scheme – Pradhan Mantri Fasal Bima Yojana – A boost to the farming sector

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi today has approved the ‘Pradhan Mantri Fasal Bima Yojana’ - a path breaking scheme for farmers’ welfare.

The highlights of this scheme are as under:

i)               There will be a uniform premium of only 2% to be paid by farmers for all Kharif crops and 1.5% for all Rabi crops. In case of annual commercial and horticultural crops, the premium to be paid by farmers will be only 5%. The premium rates to be paid by farmers are very low and balance premium will be paid by the Government to provide full insured amount to the farmers against crop loss on account of natural calamities.

ii)             There is no upper limit on Government subsidy. Even if balance premium is 90%, it will be borne by the Government.

iii)           Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers. This capping was done to limit Government outgo on the premium subsidy. This capping has now been removed and farmers will get claim against full sum insured without any reduction.

iv)           The use of technology will be encouraged to a great extent. Smart phones will be used to capture and upload data of crop cutting to reduce the delays in claim payment to farmers. Remote sensing will be used to reduce the number of crop cutting experiments.

The new Crop Insurance Scheme is in line with One Nation – One Scheme theme.  It incorporates the best features of all previous schemes and at the same time, all previous shortcomings/weaknesses have been removed.

Balancing fairness and efficiency

One common criticism of economics is that it focuses too much on efficiency, and not enough on things like equality, fairness and the welfare of future generations. In the extreme version of the criticism, the focus on efficiency is a deliberate plot to keep resources in the hands of the wealthy.

The economic definition of efficiency—also called Pareto efficiency, after the Italian economist Vilfredo Pareto—is easy to understand. Basically, it’s just the same thing as gross domestic product. The more things we produce—including goods like TVs and cars, but also services like insurance and back massages—the fewer resources we are wasting. Perfect efficiency—called Pareto optimality—is a situation in which the economy is so efficient that it’s impossible to give one person more without taking something away from someone else. In other words, perfect efficiency is a world where there really is no free lunch.

Economists focus on efficiency for several reasons. The first is probably historical. As historian Adam Tooze notes in his book The Deluge, government attention to economic statistics increased dramatically after World War I. The US, with its massive economic output, had tipped the scales decisively in favour of the Allies, so total output was believed to be an indication of warfighting strength. That logic seemed to repeat itself in World War II, and again in the Cold War, in which the US is widely believed to have outspent the Soviet Union. Greater economic efficiency probably means a more militarily powerful nation.

The second reason economists focus on efficiency is that it’s clear and unambiguous. Human welfare, on the other hand, is tricky to define. Should we care about people’s ability to fulfil their desires, or their emotional happiness? Should we value each member of society equally, or should we place more emphasis on the poorest and most disadvantaged? What is “fairness”, and how should it factor into our economic calculus? Economists usually shy away from taking a stand on these difficult philosophical questions, and stick to thinking about what will boost GDP.

The critics, however, make some good points. The most obvious flaw in the efficiency concept is the question of time— by producing more today, we leave fewer resources for our descendants. A policy that is Pareto optimal today may be robbing from our unborn grandchildren. Thus, static efficiency, or efficiency in the present, isn’t always the same as dynamic efficiency. Economists must take a stand on which one they care about when the two are in conflict.

I also believe that economists are dodging responsibility when they ignore the hard questions of human welfare. After all, a world in which one person owns all the output and everyone else starves to death is technically Pareto optimal, since saving the masses from starvation would require making the monopolist worse off. That’s not the kind of world any of us want to live in.

But the critics of efficiency tend to overreach. First, economic growth usually does enrich the poor as well as the rich. Even the past few decades of global growth, which have seen inequality increase in rich nations, have produced huge gains for the world’s poor, and reduced global inequality in the bargain.

Second, efficiency really does capture how many economic arrangements are simply suboptimal. New policies and institutions really can make things better for everybody.

The real strength of the efficiency concept is that it focuses on gradual improvement. Instead of trying to radically reorganize society from the ground up, efficiency focuses on finding institutional or policy tweaks that make everyone just a little better off.

So far, I think that history has shown that gradual reform is the best way to improve the world. So no, the efficiency concept isn’t perfect, and economists should also think deeply about things like fairness and welfare. But we shouldn’t give up on our quest for a more efficient world

7,000 new industrial training institutes (ITIs)

The Prime Minister’s Office has directed skills ministry officials to open within one year 7,000 new industrial training institutes (ITIs), or nearly half the number of all existing ITIs opened in India across six decades, two officials aware of the development said.

The government’s objective is to double the capacity of India’s 13,105 ITIs, which now collectively train 1.86 million students in skills related to fabrication, electronics and automobile industries. Expanding the capacity of these institutes—set up to create foot soldiers especially for the manufacturing sector—is critical to boost domestic manufacturing and provide jobs for millions of youngsters joining India’s workforce every year.

The first of the two officials, who termed it “a huge target,” said it was fixed at a meeting between officials from the Prime Minister’s Office and the ministry of skill development and entrepreneurship in the fourth week of December. “But the skills ministry has to achieve it as it has come from the top,” he said, requesting anonymity.

Given the steep target, the skills ministry is exploring the possibility of offering soft loans to private players to open ITIs as the government cannot open 7,000 institutes on its own, the official added. Ministries will also persuade companies operating in their respective areas to adopt old ITIs or open new ones. The issue also came up at a skill conclave with industries in Mumbai on Tuesday.

If the soft loan proposal takes final shape, the ministry may get higher funds in the Union budget. In the previous budget, the ministry got Rs.1,500 crore but for an individual scheme called Pradhan Mantri Kaushal Vikas Yojana.

ITIs were earlier under the labour ministry and they have (since April 2015) been transferred to the skills ministry.

Skill development minister Rajiv Pratap Rudy confirmed the development, but did not reveal more details. “We are ready to accelerate the pace in capacity-building. Looking at the skills mission, we have to do something different to achieve a huge target,” Rudy said.

The government’s push for ITIs came out in two posts by the PMO’s Twitter handle on Tuesday, citing Modi. “Parents are proud if their child is a graduate but is it the same when a child went to an ITI? Such a mindset needs to change... They say 21st century is our century, but how do we make it India’s century? By giving an impetus to skill development,” the tweets read.

A second official said opening even 1,150 institutes in 2015 was considered a big achievement by the ministry, voicing concerns on meeting the steep target. He too declined to be named. The official also said authorities were in touch with some private education providers under the All India Council for Technical Education (AICTE) for exploring the possibility of opening ITIs. He, however, agreed that the move is in conflict with the current mindset that skill development should be asset-light.

According to data collated by the National Skill Development Agency (NSDA)—part of the skills ministry —21 departments and ministries trained 7.6 million people in 2014-15, as against a target of 10.5 million. In other words, central ministries and departments fulfilled 72% of their target in the last fiscal, almost identical to the figure notched by the previous government in 2012-13. The NSDA has been tabulating skill training outcomes for the last four years.

In fact, in the last four years, central government ministries and departments together missed the skill development target thrice—in 2011-12, 2012-13 and 2014-15. This failure does not augur well for a country that aims to impart skills some 500 million people by 2022, the second government official cited above said.

G. Raj Narayan, managing director of Radel Group, a Karnataka-based defence and aerospace ancillary firm said India’s small and medium enterprises are facing a job-ready manpower shortage and it needs government handholding both in terms of finance and skills. He said authorities need to fix the existing ITIs and their quality issues first before expanding numbers. “Capacity expansion is required, but the quality of a large number of existing institutions needs urgent attention,”said Narayan.

Needed, a national fibre optic network

It must be implemented in a manner that keeps the absorptive capacity of target regions in mind

Information and communication technology (ICT) has been shown to be a powerful facilitator for meeting the Millennium Development Goals. This supports the rationale for the roll-out of Internet access as an enabler of development. However, the provision of basic services using ICT is dependent on the availability of other complementary inputs. This means the decision on the level of a particular ICT service to be provided cannot be made without reference to the presence of those other inputs. The build-out of networks far in advance of the absorptive capacity of a region would therefore appear to be wasteful.

However, in an academic paper titled Universal Service Obligation in the Age of Broadband published in The Information Society, one of the authors establishes two criteria that could be used to support the build-out of networks in advance of the ability of target populations to use them. The first is “time to build”. If ICT infrastructure takes a long time to deploy, then the project needs to be initiated in anticipation of future absorptive capability. While wireless broadband is amenable to relatively rapid build-out, taking a fibre optic network from the last viable point (for example, the district headquarters) to the village can take two to three years.

The second is “technological discontinuity”. The capabilities of the technologies used for providing access develop in a discontinuous, step-wise manner. Each step represents discontinuous jumps in access speed per dollar of investment. At a certain point, rural areas must switch from lower to higher technologies due to the constraint of download speeds. The earlier they do so, the lower the total capital costs of connectivity.

While the optimization of an existing network requires little time to build and represents low technological discontinuity, the build-out of an optical fibre network involves high time to build as well as a high level of technological discontinuity. A fibre optic network is a “durable” solution in the sense that once deployed, it would take care of rural connectivity needs for many years to come, (although last-mile access would continue to be wireless). For these reasons, a case can be made for the government to get involved in the deployment of a national optical fibre network.

Who should pay for the fibre optic network? Recall that the fundamental driving force for government intervention stems from the role of connectivity as an enabler of development. Hence, the government’s financial obligation needs to be limited to the level of connectivity required to enable the provision of the requisite amount of developmental goods. The levels of provision of services implied by high-speed connectivity (especially through a fibre optic network) are so high that one may question the necessity of governments paying for the entire network. After all, these levels of development may not be a consumption norm or a systemic necessity in the society in question. As an example, governments do not normally place an emphasis on creating super-specialty hospitals in rural areas.

The degree of production and demand externalities that accrue after threshold penetration levels are reached may also not justify the expense. Therefore, the cost should be shared between the public and private sector with the public sector paying for the basic level of connectivity required to provide development inputs and to internalize the positive impact arising from demand and supply externalities. The calculation of this level would depend on commercial and technical factors, and may not be amenable to an elegant analytical solution. Yet, the point remains that the liability of the government needs to be limited.

However, the lack of a business case for deployment in the vast majority of target geographies, and the thorny business environment, make it difficult for the private sector to bear the initial investment. Therefore, the government should pay for the upfront costs of building the network and collect a revenue share for a specified number of years.

In parallel with the fibre optic project, a wireless network closely aligned with complementary inputs and the absorptive capacity of the target population should be rolled out to provide basic necessities immediately and prepare the population for the coming of the fibre optic network. Superimposing lofty urban wireless standards on these interim rural networks in the cause of parity would be profligate and short-sighted.

The option of using a build-own-operate-transfer model for building the national optical fibre network is not recommended on account of the operating challenges of rural networks, the low ability to pay, and the uncertainty regarding the availability of complementary inputs that would trigger a virtuous cycle of usage. The operating competence of the private sector should be leveraged by tendering projects for building and maintenance through a reverse auction process.

The national optical fibre network should be divided into a number of state-level projects in order to secure the buy-in of state governments, crucial for obtaining right-of-way permissions. Vertical integration of the private infrastructure operator and the service provider should be permitted in order to strengthen the business case and trigger operational efficiencies. A phase-wise roll-out should be planned: the universal service need not be a uniform service. First, the economically well-off subset of the 250,000 gram panchayats should be targeted. After demonstrating success in these clusters and incorporating lessons learnt, further roll-out should take place.

The aim is to create a humming optical fibre network, not a white elephant.