Fiscal reforms are needed to support economic growth: Report

Higher public spending now would make it longer before India returns to the 65% “suitable” ballpark 

India has two key priorities for 2016—preserving hard won macro stability and reviving growth. Macro stability can mean different things at different times.
With the current account deficit comfortably under control, all eyes are turning towards the other indicator of stability, fiscal deficit and public debt, said a recent HSBC report, India’s troublesome twins: How to raise economic growth while lowering government debt.
On the growth front, with private investment largely absent from the scene and prospect for exports unexciting, government spending may need to lend a helping hand. The problem here is that while on good days the twin objectives of higher growth and lower public debt can fall into a virtuous cycle, on a bad day, any one of them derailing can drag down the other.
India’s public debt ratio has risen from 65.5% of gross domestic product (GDP) in financial year (FY) 2013-14 to 67% in FY15 and is likely to rise further in FY16, thanks to falling inflation and lacklustre growth.
Higher public spending now would make it longer before India returns to the 65% “suitable” ballpark. But more importantly, if unexpected macro shocks strike during this period, debt ratios could remain “unsuitable” for the foreseeable future.

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This risk is worth worrying about because macro shocks in the form of lower-than-expected growth, another bout of disinflation and higher interest rates can easily arise in today’s world. In particular, the risk of higher interest rates needs special mention. The 10-year government bond yield has remained stubbornly high over 2015. Among other things, it depends on the demand and supply mismatch in the government bond market, which may get exacerbated in 2016, partly due to pressures from Ujwal DISCOM Assurance Yojana (UDAY) bonds. In short, efforts to support growth by increasing government spending could put pressure on interest rates and exacerbate public debt ratios.
Fiscal reforms needed
So is there a way out for a government that wants to support growth via higher public spending and yet maintain macro stability? There indeed is. If the government is able to undertake a few important fiscal reforms, it can generate enough funds over a short period of time to finance the extra spending.
Food and fertilizer subsidy reforms: Unlike oil subsidy, these have not seen any significant rationalisation. Using the unique identity, Aadhaar platform, in the delivery of these subsidies and moving from product to cash subsidies will not just bring fiscal savings, but also growth gains if the savings are used to finance government investment.
Government stake sales: There are large gains to be had by outlining a clear roadmap for disinvestments and allowing independent market experts to decide on timing. SUUTI (Specified Undertaking of UTI) sales alone can provide 0.35% of GDP worth of funds, and lowering government ownership across other companies can provide a further boost. Over the last few years, there has been a dismal below expected 0.2% of GDP in disinvestment receipts, which can be easily notched up.
Tax revenue improvements: Removing concessional rates and special exemptions from excise and custom duties would not only reduce market distortions, but also add to the tax kitty. Strengthening tax administration by plugging gaps in collection or reporting procedures, strengthening data-warehousing infrastructure, increasing manpower and fast tracking tax disputes are potential reforms.
These reforms alone can provide an extra 0.4% of GDP worth of resources each year for the next few years. Using these savings to nudge up public investment will not only help keep debt levels in check, but also make the economy more resilient in the face of macro shocks. It would provide those extra funds to boost public investment without having an adverse impact on interest rates. And finally it will allow the government to stick to its fiscal consolidation path.
This may be the only way to get onto the virtuous cycle of higher growth and macro stability.
Edited excerpts from HSBC’s report, India’s troublesome twins: How to raise economic growth while lowering government debt.

NFSA coverage in all the States by April 2016

NFSA coverage in all the States by April 2016

100 % digitisation of ration cardsto be achieved soon, online grievance redressal introduced in all 36 States/Uts

 Procurement policy modified to provide benefits of MSP to more paddy farmers, huge procurement made during current Kharif season

 Sustained efforts bring the cane price arrears down to Rs. 2,700 crore

New consumer protection Act and New BIS Bill likely enacted this year to boost consumer protection and quality culture in the country

            The Government has achieved significant mile stones in the reforms of PDS by making it more transparent and leak proof during last 19 months. Number of States providing Rs 2/kg wheat and Rs3/kg rice has increased to 25 from 11 during last year and it is likely to be implemented in all the states by 1^st April. This was stated by Shri Ram Vilas Paswan, Minister of Consumer Affairs, Food and Public Distribution while briefing the media about programmes, policies and future road map of his Ministries here today.

            Shri Paswan said that digitisation of ration cards is one of the important components for making PDS leak proof, 97% cards across the country have been digitised, and soon 100 % will be digitised.  All the 36 States/UTs have online system for redressal of PDS grievances now.  Direct Cash Transfer of food subsidy to the beneficiaries started in Chandigarh and Puducherry in September this year.

            The Minister said that based on the recommendations of High Level Committee on restructuring of FCI, procurement policy for paddy modified to ensure reach of MSP operations to more farmers. As a result huge paddy procurement has been made during Kharif season. The Government also provided relief to the farmers during the year by relaxing procurement norms for their crops affected with the unprecedented rains and hailstorms.

            Shri Ram Vilas Paswan said that farmers’ interest and welfare is very high priority for the Government, this is the reason the Government is making sustained efforts to facilitate payment of sugarcane arrears. Due to these efforts arrears came down from Rs. 21,000 cr as to 2,700 cr as on 12.1.2016 for the sugar season of 2014-15.

            Highlights of other initiatives taken by Ministry Of Consumer Affairs, Food and Public Distribution as briefed by the Minister are:

NFSA implementation likely in all the States/UTs

·         At the end of one year after National Food Security Act, 2013 (NFSA) came into force, i.e, upto July, 2014, implementation of the Act had started in 11 States/UTs. Since then, 14 more States/UTs have joined NFSA and the total number of States/UTs now implementing the Act is 25.  By April it is likely to be implemented in all remaining States /UTs.

·          In order to check leakage and diversions and to facilitate Direct Cash Transfer of food subsidy to the beneficiaries, Government has notified “Cash Transfer of Food Subsidy Rules, 2015” on 21.08.2015 under the NFSA.  These rules provide that DBT scheme will be implemented in a State/UT with the consent of the concerned State Government/UT Administration. Under the scheme, in lieu of foodgrains subsidy component will be credited directly into the bank accounts of beneficiaries who will be free to buy foodgrains from anywhere in the market.The scheme has been launched in Chandigarh and Puducherry in September, 2015. Dadra and Nagar Haveli, is also in full readiness for implementation of this pilot cash transfer/ DBT scheme.

·         The Central Government also decided to share 50% (75%  in the case of Hilly and difficult areas) of the cost of handling & transportation of foodgrains incurred by the states and the dealers’ margin so that it is not passed on to the beneficiaries and they get coarse grains Rs1/kg, wheat at Rs2/kg and rice at Rs 3/kg

·         To ensure that beneficiaries of the National Food Security Act get entitled foodgrains positively, rules for payment of food security allowance to the beneficiary in the case of non-delivery of foodgrains notified in January, 2015.

·         In order to provide nutritional security to the economically vulnerable sections of society and to have better targeting of “other welfare schemes’ for poor, a Committee of Ministers set up under the chairmanship of Minister for Consumer Affairs, Food and Public Distribution not only decided continuation of foodgrain allocation for Other Welfare Schemes but also recommended for providing milk and eggs – pulses etc. under the schemes.

Improving foodgrain management

Sustained effortshave resulted in significant reforms in TPDS. As a result

·                  Out of 24 crore 99 lakh 95 thousand 458 cards in the country, 24 crore 17 lakh 32 thousand 202 cards have been digitised, which shows 97 % achievement, soon it will be 100%.

·                   Over 10.10crore ration cards have been seeded with Aadhaar,

·                  Online allocation of foodgrains implemented in19 states/UTs.

·                  61,904 FPS automated by installing ‘Point of Sale’device. By March this year about 2 lakh FPS will have this device.

·                  Toll free help lines installed in 32 States/UTs.

·                  Online grievance redressal implemented in all 36 States/UTs

·                  Transparency portal to display all operations of TPDS launched in 27 States/UTs

Relief to farmers

In order to give relief to the farmers affected by the unprecedented rains & hailstorms this year, Government relaxed Quality norms for the wheat procurement.  The Central Government also decided to reimburse amount of value cut on such relaxation to the State Government so that farmers get full Minimum Support Price (MSP) even for shrivelled and broken wheat grains or grains having lustre loss. Such a farmer’s centric step has been taken for the first time by any Central Government.Government agencies procured 280.88 lakh MT wheat during RMS 2015-16, providing a saviour for the farmers affected by rains and hailstorms.  

·            In a bid to increase reach of minimum support price (MSP) operations to more farmers and increase procurement of paddy, the procurement policy has been modified and private firms have been allowed to procure paddy from farmers in a cluster, identified by the respective state government in the states of Assam, Bihar, Eastern Uttar Pradesh, Jharkhand and West Bengal. These states lack necessary infrastructure and experience in large scale procurement operations and the Food Corporation of India (FCI), too, does not have a robust procurement mechanism which often forces farmers to go for distress sale. Private firms would deliver custom milled rice (CMR) at the FCI or state government-owned agency godowns.

·            There is huge increase in procurement of paddy in the current Kharif Marketing Season (KMS), which begun on 1st October, 2015. The total quantity of paddy procured in terms of rice till date is 224.80 lakh MT, which was only 174.04 lakh MT till this date during the previous KMS.

·            For creation of 1.5 LMT Buffer Stock of Pulses, FCI started procurement pulses from farmers at market price or MSP whichever is higher. FCI has targeted the procurement of 20,000 MT of Arhar, 2,500 MT of Urad (Total 22,500 MT) during Kharif Marketing Season 2015-16. Similarly, target has been fixed for procurement of 40,000 MT Chana and 10,000 MT of Masur (Total 50,000 MT) during Rabi Marketing Season 2015-16.

·            The drop in international prices of imported oils was affecting the prices of domestically produced edible oils consequent upon which farmers’ interests were affected. Department of Food and Public Distribution had recommended an increase in the import duty. Accordingly, the import duty on Crude oils has been increased from existing 7.5% to 12.5% and the import duty on refined oils from existing 15% to 20%. on 17.09.2015.

Reforms in FCI

·            To bring all operations of FCI Godowns online and to check reported leakage, “Depot Online” system initiated in 30 sensitive depots. Depot Online System will be rolled out in all the FCI-Owned Depots by May this year and in all other hired depots by year end.

·            The FCI has been asked to take up construction modern silos for storage of total 100 lakh MT capacity at different locations in the country under PPP mode which will help in maintaining the quality of foodgrains, minimize losses and ensure rapid bulk movement of foodgrains.

Time bound construction plan is:

2015-16- completion of 5 LMT capacity,

2016-17-completion of 15 LMT capacity,

2017-18- completion of 30 LMT capacity

2018-19- completion of 30 LMT capacity

2019-20- completion of 20 LMT capacity

·            The Government of India approved sale of wheat and rice available in central pool above the stocking norms in the beginning the quarter of 2015-16 under Open Market Sale Scheme (OMSS), 44.81 lakh MT of wheat and 0.73 lakh MT of Grade-A rice has been sold up to 2^nd January 2016. 

·            Despite 2014 and 2015 having been monsoon deficit years, due to robust procurement arrangement made by FCI, there is more than adequate foodgrain stock available with the Government under Central Pool. As on 1st January, 2016, there is 237.88 lakh MT of issuable wheat stock under Central Pool. The FCI is also stepping up Open Market Sale of wheat at reasonable rates to check inflation and also to provide supplies to the private flour mills and trade. Similarly, on 1st January, 2016 there is a stock of 126.89 lakh MT of rice under Central Pool, which is 50.79 lakh MT more than stocking norms. This excess quantity of rice will help in meeting any contingencies arising due to monsoon deficit or natural calamities in near future. 

·            Besides 12 States/UTs already under Decentralised Procurement, Telangana became a new DCP State this year for procurement of rice. Andhra Pradesh & Punjab have also adopted this system partially during 2014-15 to improve the efficiency of foodgrains procurement and distribution operations.

·            Adequate supply of foodgrains made using multi-modal transport in North Eastern States despite disruption in rail route due to gauge conversion from Lumding to Badarpur. 80,000MT foodgrains moved through roads every month besides creating additional storage of 20,000 MT in the region. Foodgrains also inducted into Tripura via riverine route passing through Bangladesh.

·            1, 03,636 MTs of Rice moved from Andhra Pradesh to Kerala for the first time through riverine/coastal movement.

·            Government revised the buffer norms in January, 2015 for better management of foodgrain storage. During 2015-16 both storage and transit losses have been reduced to (-) 0.03% due to storage gain in wheat and 0.39% against MoU target of 0.15% and 0.42% respectively.

·            Storage capacity for central pool stocks of food grains increased to 796.08 lakh MT. New godowns having capacity of 10 lakh MT under Private Entrepreneur Guarantee Scheme (PEG) constructed in 20 States. Besides this storage capacity of 62,650 MT in North East under Plan Scheme and 1.78 lakh MT in 12 States added through CWC.

·            610.50 lakh MT of foodgrains were allocated to States/UTs for distribution under TPDS and other Welfare Schemes during 2015-16 (upto 18.01.2016).   

·            The Central Warehousing Corporation (CWC) also achieved all time high turnover of Rs. 1562 crore in 2014-15.

·            A transformation plan for the Warehousing Development and Regulatory Authority (WDRA) has been initiated to streamline the warehousing sector. The work on for creation of IT platform and rewriting of rules and procedures has been initiated.

Steps taken to liquidate cane price arrears of farmers

The Government took several measures to facilitate payment of cane price arrears by infusing liquidity into the sector.

·              A scheme for extending soft loans to the extent of Rs. 6000 crore to the sugar industry was notified on 23.6.2015. Rs 4152crore have been disbursed under the scheme. The government also extended period by one year for achieving eligibility under the soft loan scheme and decided to bear the interest subvention cost to the extent of Rs. 600 crore for the extended period. 

·            Direct Subsidy to farmers, Government decided to pay a production linked subsidy of Rs 4.50 per quintal cane in 2015-16 season, to sugar mills to offset the cost of cane and facilitate timely payment of cane price dues of farmers for sugar season 2015-16. A notification in this regard issued on 2.12.2015. Funds released under the scheme shall be directly credited into farmers’ accounts.

·            The export incentive on raw sugar has been increased from Rs 3200/MT to Rs. 4000/MT. Funds have been allocated to support 14 lac MT (LMT) of raw sugar exports as against 7.5 LMT achieved last year. In September 2015 Government also announced quotas for mills and co-operatives for mandatory exports of four million tonne of sugar in 2015-16.

·            The Government has enhanced import duty on sugar from 25% to 40% to discourage imports. Also, to prevent leakages of sugar in the domestic markets, the export obligation period has been reduced from 18 months to 6 months under the Advanced Authorization Scheme.

·            Blending targets under Ethanol Blending Programme scaled up from 5% to 10%.

·            Remunerative prices for Ethanol supplied for blending have been substantially increased and excise duty on ethanol supplied for blending in the next sugar season has been waived. As a result, the supplies of ethanol for blending have increased from about 32 crore liters per year to 83 crore liters per annum. It is also noteworthy that the sugar industry is now active in the Ethanol Blending Program, by supplying 6.82 cr ltrs of ethanol to Oil Marketing Companies during the current sugar season (since October, 2015) as against mere 1.92 cr ltrs supplied during the corresponding period in the last season. Furthermore, the contracted quantity under EBP is at an unprecedented 120 cr ltrs in the current season which a historic high. 

·            As a result of  these sustained efforts, the cane price arrears which were Rs. 21,000 crore in peak in April 2015 in sugar season of 2014-15 have came down to Rs. 2,700 crore as on 12.1.2016.

New provisions to promote quality of consumer products and services

·            In order to ensure quality of products and services for common consumer, the Government introduced Bureau of Indian Standards Bill, 2015 in Parliament to replace 29 years- old BIS Act. The new Bill has been approved by the Lok Sabha. In the new Bill provisions have been made for simpler self-certification mechanism, mandatory hallmarking, and product recall and product liability for better compliance to standards.

·            To improve “ ease of doing business”, simplified conformity assessment schemes, including self- certification and market surveillance instead of inspectors visiting factories introduced, thereby ending the inspector raj on standards.

·            New provisions proposed will promote harmonious development of standardisation activities, enabling GoI to bring mandatory certifications regime for goods or service considered vital from viewpoint of health, safety, environment, and prevention of deceptive practices. Provision to prevent import of below par products, providing mandatory hallmarking of precious metal articles, increased scope of conformity assessment, and enhancement of penalties and implication are the important provisions in the Act. The new Bill has also made increased penal provisions for better and more effective compliance and compounding of offence for violations 

·            New Bill provides for recall, including product liability of products not conforming to relevant Indian Standards

·            Registration for manufacturers of electronic products to safeguard consumer / industry against sub-standard imports provided.

·            Under the Swacch Bharat Abhiyan, steps taken to formulate/upgrade standards on potable water, street food and garbage disposal.

Boost to consumer protection 

·            Consumer Protection Bill 2015 that seeks to simplify and strengthen consumer grievance redressal procedure introduced in the Parliament this year. Setting up of a Central Protection Authority which will have powers to recall products and initiate class suit against defaulting companies, including e-retailers proposed. E-filing and time bound admission of complaints in consumer courts is another important provision made in the Bill.

The Government adopted six points joint action plan for consumer awareness and protection. This will include:

(i) Jointly developing and implementing industry standard for grievance redressal 
(ii) All Members of the Industry Associations to partner with the National Consumer Helpline and State Consumer Helplines 

(iii) Launching of joint awareness campaigns 

(iv) Earmarking of CSR funds for consumer welfare activities 

(v) Developing a self-regulation code

(vi) Action against fake, sub-standard, counterfeit products 

It would be launched on the World Consumer rights day on March 15 this year.

·            Joint campaign organised with Heath, Financial Services and other departments for greater consumer awareness.  During the year the Department of Consumer Affairs intensified its multimedia campaign under the banner of Jago Grahak Jago, with special emphasis on rural area.

·            An Inter-Ministerial Monitoring Committee constituted for key sectors that matters to consumers viz Agriculture, Food, Healthcare, Housing, Financial Services and Transport, to facilitate policy coherence and coordinated action on consumer.

·            To tackle the menace of misleading advertisement, a dedicated portalwww.gama.gov launched. It enables consumers to register their grievances against misleading advertisements in six key sectors viz. food and agriculture, heath, education, real estate, transport and financial services. The complaints lodged are taken up with the relevant authorities or the sector regulators and the consumer is informed after the action taken.

·            To provide a host of consumer services under one roof, GrahakSuvidhaKendras launched in six locations: Ahmadabad, Bangalore, Jaipur, Kolkata, Patna and Delhi on March 18, 2015. Such centres will be set up in every State in a phased manner.  They will provide guidance to consumers regarding consumer laws, rights of the consumers, procedure of approaching Consumer Courts and various other consumer related issues including quality assurance and safety of products.

Measures to ensure availability of Essential food items at reasonable prices

In order to ensure availability of essential food items at reasonable prices the Government took flowing decisions recently:

·            Advance action plan drawn to ensure availability of Essential Commodities and weekly monitoring meeting of an inter-ministerial committee chaired by the Secretary Consumer Affairs.

·            Decision taken to procure 1.50 lakh MT of pulses for creating buffer stock. Decision to import of 10,000 MT pulses already taken.

·            MSP increased for kharif pulse by Rs 275 per qtl for Tur&Urad, and by Rs 250 per qtl for Moong.

·            Ban on export of all pulses, except Kabuli Chana; and Organic Pulses & lentils up to 10,000 MTs. Zero import duty on pulses extended upto Sept,2016.

·            Zero import duty extended till 30^th September 2016.

·            States/UTs empowered to impose stock limits, on Onions and Pulses to check hoarding and black marketing under EC Act, 1955.

·            Other edible oil in branded consumer pack of up to 5 kgs is permitted with MEP of USD 900 per MT w.e.f. 6.2.2015 

The environmental costs of subsidies

The environmental costs of subsidies
It’s time to look at the deleterious environmental impact of subsidies so as to attain correct pricing of resources

A few days before Delhi’s odd-even rule—a road rationing scheme in which odd- and even-numbered cars were allowed to ply on roads on alternate days—was to be implemented, Delhi deputy chief minister Manish Sisodia appeared on a television channel to answer questions on the rule. During the show, Sisodia admitted that the idea to give a subsidy on diesel for farmers who use diesel-run pump-sets to irrigate their fields has led to a damaging impact on the environment. The number of cars running on subsidized diesel has multiplied over the years and contributed to the deteriorating air quality.

I use the word “admitted” despite knowing that Sisodia’s was not the brain behind the genesis of diesel subsidy. But at the same time, Sisodia and his party have been extremely reckless in showering subsidies to win political constituencies. If Sisodia were currently a politician in rural India, he would have naturally supported the subsidy on diesel.

This problem has now been solved. The lowering of oil prices has allowed India to eliminate the subsidy on diesel. But actually, the bigger problem is not yet solved—the one of the political economy and the mindsets it engenders.

Consider, for example, the electricity sector. Most Indian states provide electricity at very cheap rates. The finances of distribution companies in many of these states are entirely wrecked. To improve the situation, the Union government has recently announced a number of measures under the UDAY (Ujwal Discom Assurance Yojana) scheme, which won’t be successful unless the underlying causes—low tariffs, power thefts, large subsidy bills—are addressed.

Those who haven’t seen it first-hand should watch the movie Katiyabaaz, based in Kanpur, to get a glimpse of the political economy which sustains large-scale power theft in many parts of India. The majority of farmers receive electricity either free or at dirt cheap rates. Non-payment seldom invites punishment. Low power tariffs, subsidized diesel and the provision of minimum support price for certain water-intensive crops have together led to unrestrained exploitation of groundwater.

There are more examples. Any hike in passenger tariffs by the Indian Railways, for instance, is followed by an uproar by the opposition parties. In a one-of-a-kind episode, former railway minister Dinesh Trivedi had to step down days after presenting his maiden railway budget because his own Trinamool Congress party was unhappy with the absolutely minimal tariff hikes he had proposed.

Since passenger trains don’t earn enough, they are cross-subsidized by revenues from freight trains. The freight tariffs, as a result, are high and uncompetitive, which in turn has caused business to move to roads. This not just makes it difficult to sustain the cross-subsidy mechanism, but diversion of traffic to road also leads to increase in pollution. As current railway minister Suresh Prabhu said while presenting the budget for 2015-16: “The energy consumption is about 75-90% less for freight traffic when compared to road. The carbon dioxide emission is about 80% less than road.”

The traditional opposition to subsidies has come from the proponents of free markets. Subsidies distort markets and lead to inefficient outcomes—thus goes their indefatigable argument. But these examples show that subsidies also cause significant environmental damage.

This is interesting since, in India, there is a significant overlap between people who advocate subsidies in the name of the poor and those who fight for the protection of the environment. The latter movement has, so far, largely restricted itself to exposing the collusion between the state and big corporations. It is time they began looking at the deleterious environmental impact of subsidies. If they do so, it will be a victory for correct pricing of resources, if not for free markets and free-marketeers

Solar power: truth versus hype

Solar power: truth versus hype
There are hidden costs to India’s ambitious solar energy programme and serious doubts about its feasibility
Before the Paris climate summit, India had pledged to increase its share of non-fossil fuels to 40% of the total power generation capacity by 2032. India has an ambitious plan to add 100 gigawatts (GW) of solar power by 2022. Keeping in mind India’s high import dependence and chronic energy poverty, it is imperative that solar energy should be given impetus. The tariff for solar power has fallen from Rs.18 per unit a few years ago to an unprecedented level of below Rs.5 per unit—a big step in promoting clean energy. However, one must look critically at the reasons behind the massive cost reduction of solar cells and modules, along with the techno-economic feasibility of India’s solar ambitions.

Unfortunately, the reduction in the cost of solar power is not the result of a technological breakthrough in terms of enhanced conversion efficiency, but due to the dumping of cheap imported solar cells and modules by foreign cell manufacturers who enjoy massive state subsidies to practise predatory pricing and, thereby, destroy the domestic solar industry. High import dependence on solar cells and modules has its own ramifications on India’s energy security. While solar power developers in India are bidding aggressively, they are not leaving enough room for cost escalation. The contract for solar power doesn’t include a tariff revision provision. Though solar power projects do not involve any cost associated with fuel, their pricing projections are exposed to risks related to foreign exchange fluctuations and equipment replacement costs.

Further, a massive injection of solar power of the scale envisaged may perturb grid stability. Solar farms, unlike coal and nuclear power plants, cannot deliver the same amount of continuous electricity. To maintain grid frequency, grid operators must be able to predict precisely what the solar energy input at any given hour will be. But such an exact prediction every time is impossible. A small error in judgment will trigger frequency fluctuations and, thereby, instability in the grid. Moreover, India needs to have massive backup power plants and a delicate balance between base and peak load power plants when power from solar energy would not be available.

Massive land requirements to erect solar panels amplify the issues further. A 1 megawatt (MW) solar photovoltaic (PV) power plant should require around 2.5 acres. However, owing to the fact that large ground-mounted solar PV farms require space for other accessories, the total land required for a 1 MW of solar PV power plant would be around 4 acres. So investment in solar power must provide for a mammoth hidden cost.

Even from the environmental standpoint, while solar power plants involve much lower carbon emissions over their lifecycle than coal-based plants, solar power is not entirely clean. Manufacturing a PV solar cell requires huge amount of energy, starting from the mining of quartz sand to coating the cell with ethylene-vinyl acetate—most often derived from the burning of dirty fossil fuels. While there is no carbon emission associated with the generation of electricity from solar energy, there are emissions associated with various stages of the PV lifecycle, including the extraction of raw materials, production of materials, module manufacture, and system and plant component manufacture. All these cast serious doubt on the feasibility of India’s ambitious solar energy programme.

Germany’s solar experience

India must learn from Germany’s experiment with an ambitious solar energy programme. In Germany, the high rate of returns on solar projects encouraged huge investment for around 38GW though solar power, contributing just 6% of the total electricity demand in 2014 (according to Germany’s federal ministry for economic affairs and energy). Solar power is still the least efficient among Germany’s other renewable energy technologies, but 50% of total green energy subsides go to solar power. To address unaffordable and unreliable solar power, which increases power tariff and government subsidies, Germany renewed its focus on renewable technologies. According to Bloomberg, German utilities have started using lignite, a cheap and inferior coal with low heat content that spews more greenhouse gases than any other fossil fuels, for power generation.

The New York Times also reported on 8 April 2014 that key German industries have repeatedly expressed concern that the rapid and costly expansion of renewables could undermine the strength of the country’s industrial base, ultimately putting 800,000 jobs at risk. High usage of solar and other renewable energies is also causing instability to Germany’s electric grid, which prompted industrial consumers to purchase generators and other emergency backup systems to protect equipment from being damaged during disruptions.

Road ahead

India must explore all supply options, which include conventional and renewable energies like solar, wind, small hydro and biomass, to bridge the burgeoning demand-supply gap.

The focus should be on cleaner coal technologies along with nuclear power for India’s base load power generation. Cleaner coal technologies like super and ultra-supercritical combustion as well as coal-to-gas have the capability to minimize the emission of greenhouse gases from thermal plants due to their higher thermal efficiency. Domestic coal should be our major source in order to make energy affordable.

It is also important to accelerate India’s three-stage nuclear programmes so that we can utilize our vast thorium reserves to produce electricity at stage three. The renewed interest in nuclear energy in advanced economies like the US, France and Germany provides an important signal of its viability and safety.

Energy conservation and energy efficiency improvements have a significant potential to reduce energy consumption, which has a direct bearing on emission reduction at lower cost.

'Nairobi Package'

Ex-post-facto approval on the approach adopted by India at the Tenth Ministerial Conference of the WTO held in Nairobi, Kenya during 15-19 December 2015

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has given its ex-post facto approval for the approach adopted by India at the Tenth Ministerial Conference of the WTO held in Nairobi, Kenya during 15-19 December 2015.

Background

The outcomes of the Conference, referred to as the 'Nairobi Package' include Ministerial Decisions on agriculture, cotton and issues related to least developed countries (LDCs). These cover a Special Safeguard Mechanism (SSM) for developing countries, public stockholding for food security purposes, a commitment to abolish export subsidies for farm exports and measures related to cotton. Decisions were also made regarding preferential treatment to LDCs in the area of services and the criteria for determining whether exports from LDCs may benefit from trade preferences. A Ministerial Declaration was also adopted.

In the run-up to the Nairobi Conference, it became clear that the Conference would determine the future of the Doha Round of trade negotiations. While the Round is very important for greater integration of developing countries in the global trading system, a few developed countries were strongly opposed to the continuation of the Doha Development Agenda (DDA). India took the stand that the DDA must continue after the Nairobi Conference and no new issues must be introduced into the WTO agenda until the DDA has been completed. The Nairobi Ministerial Declaration acknowledges that members "have different views" on how to address the future of the Doha Round negotiations but noted the "strong commitment of all Members to advance negotiations on the remaining Doha issues."

In view of the reluctance of developed countries to agree to continue the Doha Development Agenda post-Nairobi, India negotiated and secured a re-affirmative Ministerial Decision on Public Stockholding for Food Security Purposes honouring both the Bali Ministerial and General Council Decisions. The decision commits Members to engage constructively in finding a permanent solution to this issue.

Similarly, India negotiated a Ministerial Decision on another very important issue which recognizes that developing countries will have the right to have recourse to an agricultural Special Safeguard Mechanism (SSM) as envisaged in the Doha mandate. Members will continue to negotiate the mechanism in dedicated sessions of the Committee on Agriculture in Special Session. The WTO General Council has been mandated to regularly review the progress of these negotiations. This is a crucial decision in view of the differing views about the future of the Doha Round.

Members also agreed to the elimination of agricultural export subsidies subject to the preservation of special and differential treatment for developing countries such as a longer phase-out period for transportation and marketing subsidies for exporting agricultural products. The Ministerial Decision also contains disciplines to ensure that other export policies are not used as a disguised form of subsidies. These disciplines include terms to. limit the benefits of financing support to agriculture exporters, rules on state enterprises engaging in agriculture trade, and disciplines to ensure that food aid does not negatively affect domestic production. Developing countries have been given a longer time to implement these rules.

Another Ministerial decision extends the relevant provision to prevent 'evergreening' of patents in the pharmaceuticals sector. This decision would help in maintaining affordable as well as accessible supply of generic medicines.

India supported outcomes on issues of interest to LDCs including enhanced preferential rules of origin for LDCs and preferential treatment for LDC services providers. India already provides substantial preferences in these areas to LDCs.

Another area under negotiation in Nairobi dealt with the rules on fisheries subsidies. Like India, several other countries had strong reservations on this issue due to the lack of clarity. This was in tune with India's position. There was no outcome in this area of the negotiations. A group of 53 WTO members, including both developed and developing countries, also agreed on a timetable for implementing a deal to eliminate tariffs on 201 Information Technology products. Duty-free market access to the markets of the members eliminating tariffs on these products will be available to all WTO members. Though not a party to the Agreement, its benefits will also be available to India.

PSLV-C31 Successfully Launches India's Fifth Navigation Satellite IRNSS-1E

PSLV-C31 Successfully Launches India's Fifth Navigation Satellite IRNSS-1E

ISRO's Polar Satellite Launch Vehicle, PSLV-C31, successfully launched the 1425 kg IRNSS-1E, the fifth satellite in the Indian Regional Navigation Satellite System (IRNSS) today morning (January 20, 2016) from Satish Dhawan Space Centre SHAR, Sriharikota. This is the thirty second consecutively successful mission of PSLV and the eleventh in its 'XL' configuration.

After the PSLV-C31 lift-off at 0931 hrs (9:31 am) IST from the Second Launch Pad with the ignition of the first stage, the subsequent important flight events, namely, strap-on ignitions and separations, first stage separation, second stage ignition, heat-shield separation, second stage separation, third stage ignition and separation, fourth stage ignition and satellite injection, took place as planned. After a flight of about 18 minutes 43 seconds, IRNSS-1E Satellite was injected to an elliptical orbit of 282.4 km X 20,655.3 km inclined at an angle of 19.21 degree to the equator (very close to the intended orbit) and successfully separated from the PSLV fourth stage. After injection, the solar panels of IRNSS-1E were deployed automatically. ISRO's Master Control Facility (at Hassan, Karnataka) took over the control of the satellite. In the coming days, four orbit manoeuvres will be conducted from Master Control Facility to position the satellite in the Geosynchronous Orbit at 111.75 deg East longitude with 28.1 deg inclination.

IRNSS-1E is the fifth of the seven satellites constituting the space segment of the Indian Regional Navigation Satellite System. IRNSS-1A, 1B, 1C and ID, the first four satellites of the constellation, were successfully launched by PSLV on July 02, 2013, April 04, 2014, October 16, 2014 and March 28, 2015 respectively. All the four satellites are functioning satisfactorily from their designated orbital positions.

IRNSS is an independent regional navigation satellite system designed to provide position information in the Indian region and 1500 km around the Indian mainland. IRNSS would provide two types of services, namely, Standard Positioning Services (SPS) - provided to all users - and Restricted Services (RS), provided to authorised users.

A number of ground stations responsible for the generation and transmission of navigation parameters, satellite ranging and monitoring, etc., have been established in eighteen locations across the country. In the coming months, the remaining two satellites of this constellation, namely, IRNSS-1F and IG, are scheduled to be launched by PSLV, thereby completing the entire IRNSS constellation

The case for going universal

Maternity entitlements are an important policy tool for encouraging better maternal health. This is why we need to do away with conditionality in cash transfer schemes

Since the National Food Security Act (NFSA) was passed in 2013, policy circles have been buzzing with talk of reforms in the public distribution system (PDS). Less well appreciated is the NFSA’s potential to call attention to, and help address, poor maternal nutrition — an aspect of food security that is extremely important for health, well-being, and productivity.

Indian women are unhealthily thin when they begin pregnancy — the 2013-2014 Rapid Survey on Children finds that a little less than half of the women aged 15-18 are underweight. Further, women gain too little weight during pregnancy to nurture healthy babies. Maternal nutrition is so poor that Indian women actually weigh less at the end of pregnancy than sub-Saharan African women do at the beginning. As a result, India’s neonatal mortality rate is high, birth weight is low, and far too many children suffer the consequences of being undernourished in the womb.

The NFSA legislates a “maternity benefit of not less than Rs. 6,000” to “every pregnant and lactating mother.” Unfortunately, except for laudable efforts in Odisha and Tamil Nadu, and a small pilot programme called the Indira Gandhi Matritva Sahyog Yojana (IGMSY) which is active in only 53 of India’s 676 districts, maternity entitlements have not been implemented.

Government’s role

Maternity entitlements would be a good idea even if they weren’t already written into law. The health of future Indians depends on women gaining more weight during pregnancy. Maternity entitlements could be used to purchase vegetables, fruits, dairy products, eggs, or meat, which are essential for healthy pregnancies but are not distributed through existing programmes.

The government should put new emphasis on educating women and their families about weight gain during pregnancy. It should combat the common, though false, notion that women should eat less, not more, during pregnancy. It should talk to people about the fact that pregnant women are often treated poorly by their own families; they are expected to work hard and eat little. Despite clear difficulties of addressing entrenched gender and age hierarchies with government action, maternity entitlements are a good way to signal to families just how important a time pregnancy really is.

Last September, the Supreme Court issued a notice to the Centre about non-implementation of maternity entitlements. A representative of the Ministry of Women and Child Development (MWCD) responded in late October. The response suggests that if the Finance Ministry allocates funds for maternity entitlements (the Finance Ministry has, at present, allocated funding only for the 53 IGMSY districts), the MWCD would expand IGSMY in its current form. There are several reasons why this is a bad idea.

IGMSY is a conditional cash transfer, which means that mothers only receive benefits if they meet certain requirements. Recipients must register pregnancies with a village health worker, receive ante-natal check-ups, take iron-folic acid supplements, receive immunisation, attend infant-feeding counselling sessions, breastfeed for six months, and begin complementary foods at six months. These are steps to raising healthy children, but making them conditions for receiving benefits makes little sense.

Conditional cash transfers have been successful in Latin America, where health systems are well-developed. In India, though, major deficiencies in the provision of health services mean that conditional transfers will not work similarly. Conditional transfers solve demand problems, but India chiefly faces supply problems. Conditions that have to do with mothers’ behaviour rather than participation in services are nearly impossible to verify. Verifying behaviour which occurs in private, at home, constitutes an undue burden on health workers. Further, the need to document the fact that conditions have been met invites corruption: many health workers demand to be paid for producing paperwork that “verifies” the unverifiable.

Universalise entitlements

Although the NFSA clearly legislates a universal entitlement, IGSMY, which MWCD proposes to expand, restricts benefits to the first two births. This position appears to be based on the ill-conceived notion that universal transfers increase fertility.

Certainly, people respond to incentives. But a Rs. 6,000 transfer is not large enough to persuade parents to raise a child they don’t want. Children are expensive: the 2011 India Human Development Survey found that parents spend an average of Rs. 4,207 per year educating each 5-18-year-old child, not to mention what they spend on food, clothing, and medicines.

Some recent research, casually cited in media reports, claims that Janani Suraksha Yojana (JSY) incentives for institutional birth have slowed fertility decline. The basis of this claim is that between 2001 and 2008, fertility decline was slower in States with high JSY incentives than in those with low incentives. This argument, however, overlooks the fact that NFHS data show that this pattern was applicable even before JSY was launched.

No social-scientific evidence supports the idea that families would be motivated to raise another child by JSY incentives of Rs. 1,400, or maternity entitlements of Rs. 6,000. Regrettably, social biases may be at play when government officials baulk at universal entitlements: the Centre for Equity Studies finds that restricting participation to the first two births would disproportionately exclude mothers from poor and minority backgrounds.

Maternity entitlements are an important policy tool for encouraging better maternal health. But a well-designed programme would not merely scale up the IGMSY. It would be, as the law already requires, a universal programme, and it would do away with conditionality in favour of educating families about the importance of investing in healthy pregnancies.