Multi-Lateral New Development Bank to Aid India

Multi-Lateral New Development Bank to Aid India

                                                                                  

New Development Bank (NDB) is the first Multi-lateral Development Bank established by developing countries and emerging economies – Brazil, Russia, India, China and South Africa (BRICS) – in accordance with the agreement on New Development Bank signed on 15^th July, 2014 in Fortaleza, Brazil. The NDB members represent 42 percent of world population, 27 percent of the global surface area and accounting for over 20% of the Global GDP (Figure 1).

Figure 1: NDB members represent 42 percent of world population, 27% of the surface area and account for over 20 percent of global GDP.

The NDB was established aiming to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, complementing the existing efforts of multilateral and regional fi­nancial institutions for global growth and development. The five member nations – Brazil, Russia, India, China and South Africa – have an equal shareholding in the NDB (Figure 2).

Figure 2: Shareholding Structure of New Development Bank

The NDB has an initial authorized capital of USD 100 billion and initial subscribed capital of USD 50 billion of which USD 10 billion will be paid-in capital (Figure 3). The initial subscribed capital is equally distributed amongst the founding members.

Figure 3: Capital of New Development Bank

The NDB intends to be fast, flexible and efficient, without sacrificing quality. The Bank strives for having a short loan-processing time, aiming to design, negotiate, review and approve loans within a period of 6 months. Insofar as procurement policies and environmental and social standards are concerned, the NDB will, whenever possible, rely on country systems.

The NDB received an “AAA” institutional rating from China Chengxin Credit Rating and China Lianhe Credit Rating and commenced engagement with international rating agencies. In July 2016, the NDB issued its debut a green financial bond in the China onshore interbank bond market. The size of the issue is RMB 3 billion (USD 449 million). The bond has a five-year term and nominal interest rate of 3.07%.

The NDB is building-up partnerships with multilateral and national development banks, which will allow it to tap into the expertise of established development institutions, strengthen its capacity to assess and implement projects as well as assist the Bank in increasing capillarity of its operations. The NDB has signed Memoranda of Understanding with World Bank and Asian Development Bank as well as leading commercial banks from the NDB member states.

Projects in India

            During the first year of work, the Board of Directors of the NDB approved a wide range of operational, financial and HR policies that took into account good practices adopted by other multilateral and national development institutions.

In 2016, the NDB Board of Directors has approved seven projects, of which two are in India, for a total of over USD 1.5 billion, in the areas of renewable and green energy, and transportation. All projects are coherent with the Bank's mandate of supporting infrastructure projects, with more than 75% of projects dedicated to sustainable infrastructure, mainly renewable energy generation.

The seven approved projects will support the creation of about 1500 MW of Renewable Energy capacity and are estimated to result in the reduction of greenhouse gas emissions by over 4 million tons per year.

The two projects in India target up-gradation of major district roads in Madhya Pradesh and Renewable Energy generation. The Madhya Pradesh Roads project will provide US$ 350 million sovereign loan to the Government of India for upgrading approximately 1500 km of major District roads in the State. The project would result in reconstruction and rehabilitation of 1,500 km of roads with focus on all-weather road availability and improved road maintenance and asset management. The project fosters inclusive economic growth through increased incomes as a result of improved connectivity and access to markets for interior regions of the state. The signing of the loan agreement for this project is likely to happen soon. The loan will be provided for 20 years with a grace period of 5 years.

The Second Project financed by the New Development Bank (NDB) in India will lead to generation of about 500 MW Renewable Energy thereby preventing generation of 815,000 tonne CO₂ per annum. USD 250 million sovereign guaranteed loans will be given to Canara Bank in three tranches under this project.

The Second Annual Meeting of the Board of Governors of NDB is now scheduled to be held in Delhi from 31^st March to 2^nd April, 2017 in which both Finance Minister & Vice Finance Minister of China, Vice Finance Minister of Russia, Secretary of International Affairs, Ministry of Finance of Brazil and DDG, Ministry of Finance of South Africa have confirmed their participation among others. During the three day Annual Meeting of Board of Governors, many Memorandum of Understanding (MOUs) with Multi-lateral Development Banks will also be signed among others.

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Bangladesh and India’s terrorism problem

Bangladesh and India’s terrorism problem
While Bangladesh has cracked down, the West Bengal government’s failure to act is worsening the situation
With Bangladesh Prime Minister Sheikh Hasina finally making her long-awaited state visit to India next week, there is already much discussion about how the bilateral relationship can be taken to the next level. Some have suggested focusing on the development of the Bay of Bengal region; others have urged that seemingly intractable diplomatic challenges such as the Teesta river water-sharing agreement be resolved first. There have also been reports of a defence deal as well as agreements to boost trade, transit and energy security. Surprisingly, the issue of radical Islamist terror, which has been gaining ground not just in Bangladesh but also in West Bengal, has received limited attention, even though counter-terrorism has been one of the biggest success stories of the bilateral relationship.

For many years, New Delhi’s primary concern with Dhaka was anti-India elements using Bangladeshi territory as a safe haven. On the one hand, militants from the North-East took advantage of the porous border to slip away from Indian security agencies. On the other, there were radical Islamist groups such as Harkat-ul-Jihad al-Islami Bangladesh (HuJI-B) and Jamaat-ul-Mujahideen Bangladesh (JMB) that sought to foment trouble in both countries.

The first decade of this century was a particularly bad decade since Khaleda Zia, with her less-than-favourable view of India, and her Islamist allies allowed malcontents to flourish. It was not until August 2005, when the JMB triggered some 500 bombs in all but one district of Bangladesh within half an hour, that Khaleda Zia changed tack. However, the situation only changed in any meaningful way when Sheikh Hasina returned to power in 2009. She immediately cracked down on Islamist militancy and assured New Delhi that Bangladeshi territory would no longer support anti-India activities.

But now the tables seem to have turned. Many of those who were feeling the heat in Bangladesh found refuge in West Bengal, where they have regrouped and reorganized themselves into a relatively potent force, as was evident in the 2014 accidental blast in Burdwan, which literally blew the lid off the JMB’s extensive network in Bengal. The JMB has had a presence in Bengal for more than a decade and has carried out subversive activities in this country before; but the Burdwan blast exposed for the first time a conspiracy to dislodge the government in Bangladesh being plotted in India.

Notably, the JMB and its ilk have benefited in no small measure from the benign gaze of West Bengal chief minister Mamata Banerjee, who has chosen to curry favour with Islamic hardliners. Such myopic politics not only brings no significant benefits to her voters in the long run but also erodes the national interest and, in this case, threatens national security.

On the Bangladeshi side too, the situation has been complicated by a new wave of violent religious polarization—which has also swept terror groups such as Al-Qaeda and the Islamic State into the fray. This wave rose with the 2013 Shahbagh protest movement, when the Sheikh Hasina government’s decision to execute war criminals from 1971 was met with virulent opposition from the Jamaat-e-Islami (JeI). At the time, the latter was the country’s largest religious-political party (it has since been derecognized as a political party), and its leadership found itself facing the hangman’s noose.

The public support for secularism and progressive values has seemingly galvanized hardline elements, resulting in this recent surge of Islamist militancy wherein secular bloggers and activists as well as foreign citizens have been targeted. As Animesh Roul from the New Delhi-based Society for the Study of Peace and Conflict notes for the counter-terror centre at the US’ West Point military academy: “Jamaat-ul-Mujahideen Bangladesh (JMB) and Harkat-ul-Jihad al-Islami Bangladesh (HuJI-B), both of which trace their lineage to JeI, have become increasingly militant and energized. New groups have also emerged such as Ansar al-Islam, which has acted as the Bangladeshi wing of al-QaRs.ida in the Indian Subcontinent (AQIS), and Jund al-Tawheed wal Khilafah (JTK), whose loyalties lie with the Islamic State, making Bangladesh a new field of competition for the global jihadist powerhouses.”

This competition seems to have already spilled over into India. Earlier this month, Idris Ali, a suspect in the Dhaka café attack, was arrested from Kolkata. Previously, the Birbhum-born Islamic State sympathizer Abu Musa had told the National Investigation Agency (NIA) that the Dhaka attack masterminds had travelled to India, stayed in Kolkata and met with him in Malda. Musa was arrested last year and a chargesheet filed by the NIA in December mentions his plans to carry out lone wolf attacks as well as underlines his links to JMB militant Abu Suleiman and former Indian Mujahideen militant Shafi Armar, a Bhatkal native who has been fighting in Syria with the Islamic State.

Clearly, Bangladesh and India (particularly in West Bengal) are facing similar threats. The difference is that while the former has gone on the offensive with raids and crackdowns across the country, in West Bengal, the government refuses to even acknowledge the threat. Earlier this week, after The Times Of India reported that Dhaka had informed Delhi of a threefold increase in infiltration into India by HuJI and JMB militants, state officials in Bengal dismissed the report as scare-mongering by the Centre. Presumably, such an assessment is driven by domestic political compulsions but that doesn’t help anybody’s case.

What should India and Bangladesh do to cooperate on terror?

GST: anti-profiteering measures necessary?

GST: anti-profiteering measures necessary?
Competition and an open market place is the best tool for keeping prices in check
The anti-profiteering clause under the GST is meant to 'reassure' that there would not be any significant rise in prices or inflation consequent to the implementation of Goods and Services Tax,

One of the key features of the revised draft model goods and services tax (GST) law (released in November 2016) is a provision enabling the Central government to constitute an authority to monitor the prices businesses charge for goods and services in the lead-up to, and following the introduction of, GST. If established, the authority will examine whether any reduction in a business’ cost base, or in the tax rate on goods and services as a result of the introduction of GST, is passed on to consumers in the form of appropriately reduced prices.

No mention is made as to who will undertake this task, how it will be undertaken, when it will commence, when it will end, and why it is necessary to add an additional compliance burden on Indian businesses already struggling to keep pace with the preparation for the introduction of a GST, even if it is delayed by three months or so to July 2017. Given that the model GST law has not yet been enacted, it is not likely that an authority will be constituted or appointed soon. With the GST due to commence next year, one must ask, “Why bother with anti-profiteering provisions at all?”

Overseas experience indicates that anti-profiteering provisions are only effective if there is a significant lead-in time to allow the relevant authority to educate consumers and businesses as to their respective rights and obligations. It is this education process that has the greatest impact on consumer confidence and business behaviour.

Once the tax commences, the prices set by businesses should be commensurate with the relevant market sensitivities, expectations and acceptance. If it is possible that an Indian business can set a market price without regard to consumer sentiment, the time to influence that market power is before the tax commences, not after. With such a short “lead-in” time before the GST commences, the authorities have little or no time to exert any such influence. To cite an Australian expression, once the GST has commenced, “the horse has bolted”. Australia was the first country to enact similar provisions when it replaced a series of inefficient taxes with a GST in July 2000. The Australian Competition and Consumer Commission (ACCC) was charged with the responsibility of monitoring prices 12 months before the commencement of GST. In August 1999, it was noted by the chairman of the ACCC that “any well-informed, competitive market operating in a climate of low inflation and good corporate citizenship will ensure that the vast majority of businesses will act fairly”.

Is it not a reasonable expectation that in a dynamic and competitive market such as India, market forces will ensure that any reduction in an Indian business’ cost base will flow through to lower prices?

Assuming the anti-profiteering provisions remain, the ACCC road map is instructive. Firstly, the ACCC’s focus was on educating consumers and businesses. This included the publication of pricing guidelines, communication strategies for different market segments and “hot lines” for consumers and businesses to get advice. Education was supported by extensive and sophisticated monitoring of prices leading up to the introduction of GST and in the months immediately following. The fall back was enforcement where there was blatant exploitation and profiteering (only 11 businesses were prosecuted in total).

Malaysia also introduced an anti-profiteering provision, along with the introduction of GST in April 2015. However, it led to widespread litigation and was found to be administratively difficult to implement.

There are several implementation challenges in enforcing such a provision. The government will need to come up with detailed guidelines on the mechanism for computation of benefit and administration. For example, whether the profit has to be computed at the product level or the entity level. Do we do this analysis for each of the costs or only the major costs? Also, what if businesses increase the prices before the implementation of GST, in anticipation of the benefit that would accrue?

From a business perspective, exploiting customers is not a viable business strategy. Being caught out exploiting customers is fatal. Ultimately, it is competition and an open marketplace that is the best tool for keeping prices in check. India has a competitive, open and growing market. Both Indian businesses and consumers are well placed to enjoy the benefits of GST, without government price monitoring.

From an administrative perspective, the short GST implementation time frame means that enforcement is likely to be the only viable approach to administering these provisions. Once the GST has commenced, businesses and advisers would have moved on, but not so the authorities responsible for administering the provisions. Litigation and damage to unfortunate and unsuspecting businesses will inevitably follow with little or no impact on prices.

India has made an important economic decision—to introduce a GST and repeal a number of inefficient taxes. Let’s hope the Central and state governments start focusing on making it easier for businesses to comply with the GST rather than imposing another compliance regime which adds nothing to the economy and detracts from the benefits of moving to a GST.

What is the special category status #ukpcsinterview

What is the special category status
#ukpcsinterview

What is SCS?

The Constitution does not include any provision for categorisation of any State in India as a Special Category Status (SCS) State. But, recognising that some regions in the country were historically disadvantaged in contrast to others, Central plan assistance to SCS States has been granted in the past by the erstwhile Planning Commission body, National Development Council (NDC). The NDC granted this status based on a number of features of the States which included: hilly and difficult terrain, low population density or the presence of sizeable tribal population, strategic location along international borders, economic and infrastructural backwardness and non-viable nature of State finances.

What kind of assistance do SCS States receive?

The SCS States used to receive block grants based on the Gadgil-Mukherjee formula, which effectively allowed for nearly 30 per cent of the Total Central Assistance to be transferred to SCS States as late as 2009-10.

Following the constitution of the NITI Aayog (after the dissolution of the Planning Commission) and the recommendations of the Fourteenth Finance Commission (FFC), Central plan assistance to SCS States has been subsumed in an increased devolution of the divisible pool to all States (from 32% in the 13th FC recommendations to 42%) and do not any longer appear in plan expenditure. The FFC also recommended variables such as “forest cover” to be included in devolution, with a weightage of 7.5 in the criteria and which could benefit north-eastern States that were previously given SCS assistance. Besides, assistance to Centrally Sponsored Schemes for SCS States was given with 90% Central share and 10% State share.

What other States are seeking SCS status?

Apart from Andhra Pradesh which is in the news lately, Bihar and Odisha had recently demanded SCS status but they have not been granted the same as they did not meet the criteria.

What is the basis of A.P.’s claim for SCS status?

Following the bifurcation of A.P., Andhra lost a large volume of its revenue due to Hyderabad remaining the capital of Telangana. In a debate in the Rajya Sabha on the A.P. Reorganisation Act on February 20, 2014, then Prime Minister Manmohan Singh had said that SCS would be “extended to the successor State of Andhra Pradesh ... for a period of five years.” This oral submission by the then PM has been the basis for A.P.’s claim to the status.

What has been the Centre’s response?

In a reply to a TDP MP’s question in Parliament on this claim, then Minister of State for Finance Jayant Sinha had said in April 2016 that the Centre had no proposal to modify the criteria for SCS status. And that the increased devolution as recommended by the FFC (which included revenue deficit grants following the bifurcation) is already flowing to the State

India’s Path to Green Fuels

India’s Path to Green Fuels

The increasing consumption of oil is directly linked to atmospheric pollution, and the health impact of the deteriorating ambient air quality linked to combustion of fuels is of serious concern in urban areas worldwide.

The Government of India has taken several policy measures and significant interventions to reduce vehicular emissions and improve fuel efficiency.  India has followed the regulatory pathway for fuel quality and vehicle emissions standards termed as Bharat Stage (BS). The transition has been in phases, considering the time and money that is required at the refinery end and in terms of vehicle production.

·      India’s fuel quality standards have been gradually tightened since the mid-1990s. The fuel upgradation programme took off with notification of vehicular emission norms for new vehicles in 1991.

·      The emission norms were revised in 1996. Low-lead gasoline was introduced in 1994 in the four metros, Delhi, Mumbai, Kolkata and Chennai.

·      On Feb 1, 2000, unleaded gasoline was mandated nationwide.

·      BS 2000 (Euro I equivalent, Bharat Stage I) vehicle emission norms were introduced for new vehicles from April 2000.

·      Bharat Stage II (Euro II equivalent) emission norms for new cars were introduced in Delhi from the year 2000 and extended to the other three metro cities in the year 2001.

·      The emission norms for CNG and LPG vehicles were notified in the year 2000 and 2001, respectively. BS-III was implemented in phases during 2005-2010.

·      The current BS-IV fuel with 50 ppm (parts per million) sulphur was introduced in the year 2010 and it was to cover the entire country by 1-4-2017.

·      In 2016, the Govt. of India decided to meet international best practices by leapfrogging directly from BS-IV to BS-VI norms by skipping BS-V altogether by 1st April, 2020.

·      As the technology for BS V is not very different, it was rightly decided to go straight to BS VI grade fuels from BS IV.

·      As part of its focus on clean energy, the Ministry of Petroleum & Natural Gas is actively promoting city gas distribution networks and connecting major cities with “green highways,” which will have vehicles running on CNG and LNG with adequate re-fuelling stations.

·      Lakhs of households are getting the benefits of piped natural gas (PNG) supplies.

·      27.5 lakh vehicles in the country are benefiting from availability of CNG.

·      So far, 80 cities / districts of 19 States/UTs have been covered for development of PNG/CNG network.

Record Capacity Addition of Wind Power of 5400MW in Last Fiscal

Record Capacity Addition of Wind Power of 5400MW in Last Fiscal

Ministry of New and Renewable Energy (MNRE) has set another record in the wind power capacity addition  by adding over 5400 MW in 2016-17 against the target of 4000 MW.  This year’s achievement surpassed the previous higher capacity addition of 3.423 MW achieved in the previous year.

The leading States in the wind power capacity addition during 2016-17 are Andhra Pradesh 2190 MW, followed by Gujarat 1275 MW and Karnataka 882 MW. In addition Madhya Pradesh, Rajasthan, Tamil Nadu, Maharashtra ,Telangana and Kerala have reported 357 MW, 288 MW, 262 MW, 118 MW , 23 MW and 8 MW wind power capacity addition respectively during 2016-17. These figures are tentative. 

During 2016-17 MNRE has taken various policy initiatives in the wind energy sector that includes Introduction of Bidding in Wind Energy Sector, Re -powering Policy, Draft Wind-Solar Hybrid Policy, New Guidelines for Development of Wind Power Projects, etc.

First in India: Chenani-Nashri tunnel in J-K to provide fresh air to commuters

The Chenani-Nashri tunnel on the Jammu-Srinagar national highway, which Prime Minister Narendra Modi will dedicate to the nation on Sunday, is India’s first and the world’s sixth tunnel to have transverse ventilation system, providing fresh air to passengers.

“This tunnel is the India’s first and the world’s sixth road tunnel with a transverse ventilation system enabled by ABB drives and controlled by ABB software,” an official of the ABB said on the eve of inauguration of the 9-km-long tunnel.

ABB is a global leader in industrial technology and operates in approximately 100 countries, including India, according to its official website.

Location of the Chenani-Nashri tunnel. (PTI)

The official said ventilation systems, for such long tunnels, are essential to maintain clean air, permissible carbon dioxide levels and expel harmful vehicle emissions.

“To ensure smooth travel and safety of commuters, the ABB has designed, engineered and supplied low harmonics variable speed drive (VSD) system for tunnel ventilation,” he said.

The VSDs and motors are installed at the North (Nashri) and South (Chenani) portals for air supply and exhaust.

“These VSDs are also equipped with inbuilt redundancy to ensure minimum downtime,” the official added.

The tunnel, constructed at a cost of Rs 2,519 crore, will reduce the distance between Jammu and Srinagar -- the twin state capitals -- by 30 km, while ensuring safe and swift passage for commuters, even in adverse weather conditions.

The ventilation system in the Chenani-Nashri tunnel, the longest highway tunnel in Asia, will ensure that passengers have access to fresh air as they drive through it, he said.

“This is a proud moment for us. We are providing the muscles and lungs for this critical new tunnel,” said Sanjeev Sharma, CEO and managing director of ABB India.

The Chenani-Nashri tunnel’s safety controls were developed by ABB in India, for effectively mitigating any fire emergencies, he said.

The tunnel, at an altitude of 1,200 metres, is a part of the National Highway Authority of India’s (NHAI) project between Jammu and Srinagar, along national highway 44.

Technologically, this is one of the most advanced road tunnels built in the country, surmounting challenges of terrain and distance, Sharma said.

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Imran Beigh, a 36-year-old Jammu-based budding infrastructure businessman, and his team built half of the 9.2-km Nashri tunnel on the Jammu-Srinagar national highway in a short span of two years.

* The Union Minister of State in PMO Jitendra Singh has said the tunnel will save fuel worth nearly Rs 99 crores a year i.e, fuel worth Rs 27 lakh is likely to be saved per day.

*The tunnel will reduce the travel time between the two state capitals of Jammu and Srinagar by two hours. The distance from Chenani and Nashri will now be 10.9 km (between two ends of the tunnel), instead of the existing 41 km.

*The tunnel, constructed at a cost of Rs. 2,519 crore, will ensure a safe and swift passage for commuters, even in adverse weather conditions.

*The Chenani-Nashri tunnel is among the longest highway tunnels in Asia.

*The Chenani-Nashri tunnel is India's first and the world's sixth tunnel to have transverse ventilation system, providing fresh air to passengers.

*The ventilation system of this tunnel is enabled by ABB drives and controlled by ABB software. ABB is the global leader in industrial technology and operates in approximately 100 countries, including India, according to its official website.

*The tunnel, at an altitude of 1,200 meters, is a part of National Highway Authority of India's (NHAI's) project between Jammu and Srinagar, along the National Highway 44.

*The two tubes of the tunnel are internally connected through 29 cross-passages (each after a gap of 300 meters) and the escape tunnel will be used exclusively by pedestrians.

*A control room will monitor the movement of the vehicles and come to immediate rescue in case of emergency.