Political Mirror: Budget 2013-14

Allow me to assert at the outset that this budget is far more visionary than it actually looks. I will try not getting into a debate of any kind; to ensure beforehand I have no intentions of rating this budget as “Good, bad or ugly”. Having made my intentions clear, it makes for an interesting discussion on how this budget is a smart move, considering 2014 (Read: elections) is just a stone’s throw away.

Our economy has taken a hit from the cold winds of the west; investments have been low, supplemented by zooming inflation that has resulted in lowest rate of GDP growth we have seen in the last decade or so. If that was not all UPA had little support from RBI, and rightly so taking inflation into account. It was a clear stand from RBI- tackle inflation, and until then let’s not think about tinkering with bank rates.

Amid such hullabaloo arrived the budget session, and the ball was in PC’s (Read: Palaniappan Chidambaram) court. There was little margin for error and it seems PC endorsed the view- “when it gets complicated, stick to the basics”.

Deficit management and reinstating fiscal discipline were at the top of PC’s agenda. PC assured fiscal deficit (total expenditure-{revenue receipts + recoveries of loan + other receipts}) shall be restricted to 5.3% of GDP this year, further declaring 4.8% as next year’s target. Spontaneous question now is- how credible is this target? Well PC managed to bring down fiscal deficit this year to 5.3% where most analysts claimed that it would be impossible to slip below 5.8%. On face value it seems PC has played a masterstroke by imposing a 10% surcharge (temporary) on taxable income of over Rs 1 Cr. 4.8% target looks more than pragmatic. New tax is estimated to raise Rs 18,000 Cr.

Applauding the robustness of capital market regulations, PC has simplified norms for foreign institutional investors (FIIs) at entry level. Foreign direct investment will further act as a life saver and a supplement in tackling the widening gap between exports and imports. It shall help restore our current account deficit to acceptable standards.

While we are still unaware of the effectiveness of effective revenue deficit (revenue deficit-grants for creation of capital assets), on papers it definitely slipped to 3.3% of revenue deficit (revenue expenditure-revenue receipts) to 1.8% as effective revenue deficit. Thanks to the troubleshooter Mr. Mukherjee who introduced this all together new term in Indian economy.

The above measures are clearly in the direction of netting inflation by the end of this year. If we see closely fiscal deficit, revenue deficit and current account deficit have direct association with inflation. Inflation moves in the same direction as these deficits on the parallel path, and this budget’s impact might just start to show up as 2014 arrives.

Discussed measures shall help bring down inflation; in return UPA will have RBI’s support with liberal bank rates inducing a better investment environment providing much needed fuel for GDP growth. However, intentions have been made clear for a better investment environment by providing 15% allowance for investments over Rs 100 Cr.

Having discussed the core economic side and its possible effects, PC had something in store as a women’s bank to woo women and not to forget the “Nirbhaya fund”, Rs 90000 Cr. Allocation to food security bill is being considered as a welcome move, smokers have a higher price tag on their addiction while luxury cars may now have an elevated snob appeal (apologies if I sound diplomatically incorrect). These measures will surely hit the bull’s eye of social target.

As expected mobile phones will cost more, which now more or less draws a vertical curve on the demand graph considering mobile phones are a necessity these days.

While the debates are on over how good, bad or ugly this budget is, UPA clearly has a sorted out path leading them to 2014. The major economic crack of inflation and inadequate investment which has been dampening growth has been looked into, and social buttons have been turned on at the right time. These measures might just restore our economy in time and come the monsoon session, PC will be ready with the GST (goods and services tax) turbo-booster, which is expected to change the face of India’s supply chain.

Build up to Rio de Janeiro +20

“Sometimes the best way to deliver a punch is to step back”. We will here step back to pre Rio 1992, a relook at The Earth Summit and the Millennium Development Goals. This will allow us the much needed room and momentum for Rio+20, so that come June 20, 2012 and we deliver the hardest punch possible.

Background

The foundations for the Rio process were laid in 1972, when 113 nations gathered for the Stockholm Conference on the Human Environment, the first global environmental meeting. In 1983, the United Nations created the World Commission on Environment and Development. Four years later its landmark report, Our Common Future, warned that people had to change many of the ways they did business and lived or the world would face unacceptable levels of human suffering and environmental damage.

In 1989, the United Nations began planning a Conference on Environment and Development to spell out how to achieve sustainable development. For two years, experts from around the world hammered out difficult agreements along the road to Rio. The international negotiating system was opened up as never before. Thousands of people from non-governmental organizations, businesses, education, women’s groups, indigenous groups and others contributed to the Rio process.

The Earth Summit 1992, Rio

It was by far the largest ever meeting of world leaders, who gathered during the United Nations conference on Environment and Development. It was attended by senior officials of 179 countries. They were joined by hundreds of officials from United Nations organizations, municipal governments, business, scientific, non-government and other groups.

The 1992 forum held a series of meetings and seminars on public issues of environment and development with participants from 166 countries. The proceedings were there to see and read for the whole world.

Rio 1992, The Agenda

It was in The Earth Summit, 1992 leaders of the world formally realised that focus solely on economic growth was not a wise way to go ahead. With shrinking resources, we cannot afford to miss out on social progress and sustaining the environment.

The agenda for 1992 summit was spread to four sections:-

1. SOCIAL AND ECONOMIC DIMENSIONS

a) Accelerating Sustainable Development 

b) Combating Poverty

c) Changing Consumption Patterns

d) Population and Sustainability

e) Protecting and Promoting Human Health

f) Sustainable Human Settlements

g) Making Decisions for Sustainable Development

2. CONSERVATION AND MANAGEMENT OF RESOURCES

a) Protecting The Atmosphere

b) Managing Land Sustainability

c) Combating Deforestation

d) Combating Desertification and Drought

e) Sustainable Mountain Development

f) Sustainable Agriculture and Rural Development

g) Conservation of Biological Diversity

h) Management of Biotechnology

i) Protecting and Managing The Oceans

j) Protecting and Managing Fresh Water

k) Safer Use of Toxic Chemicals

l) Managing Hazardous Waste

m) Managing Solid Waste and Sewage

n) Managing Radio Active Waste

3. STRENGTHENING THE ROLE OF MAJOR GROUPS

a) Women In Sustainable Development

b) Children and Youth In Sustainable Development

c) Role of Indigenous People

d) Partnership With NGO’s

e) Local Authorities

f) Workers and Trade Unions

g) Business and Industry

h) Science and Technology

i) Strengthening The Role of Farmers

4. MEANS OF IMPLEMENTATION

a) Financing Sustainable Development

b) Technology Transfer

c) Science For Sustainable Development

d) Education, Training and Public Awareness

e) Creating Capacity For Sustainable Development

f) Organising For Sustainable Development

g) International Law

h) Information For Decision Making

With the above set of agenda, we started off towards a sustainable future. However, it is for ourselves to decide that in this journey how many miles we have travelled.

Millennium Development Goals, the 8 MDG’s (India)

The Millennium Development Goals (MDGs) are eight goals to be achieved by 2015 that respond to the world's main development challenges, the focus being the human dimension. The MDGs are drawn from the actions and targets contained in the Millennium Declaration that was adopted by 189 nations-and signed by 147 heads of state and governments during the UN Millennium Summit in September 2000.

Now, we take a look at the all the goals which covers MDG

1.   Eradicate extreme poverty and hunger

• The absolute number of poor in the country has declined from about 320 million (36% of total population) in 1993‐94 to about 301 million (27.6% of total population) in 2004‐ 05. At this rate of decline, the country is expected to have a burden of about 279 millions of people (22.1%) living below the poverty line in the year 2015

• 21 of 35 States/UTs are going to be early achiever of PHR targets of halving their 1990 poverty levels. 4 States/UTs are either on track or slightly slow at achieving the target. 7 States/UTs are relatively slow in progress

• Going at the present pace of change, India is likely to have 40.23% children below 3 years Underweight in 2015 against target proportion of 26.8%

2. Achieving universal primary education

• India has already attained cent percent gross enrolment ratio5 (GER) in primary grades of schooling for both boys and girls. GER stands at 114.42 for boys and 107.84 for girls in the year 2006‐07

• The NER estimated from this trend works out to be about 75 % for 1990 and is about 96% for 2008. The NER for girls in primary schools tends to have sharper rise compared to that for boys and at this rate of increase is likely to have reached 100% mark by now

Despite all this, India is expected to achieve MDG-2 well before 2015. This highlight the loophole in the way the MDG-2 is defined, which only talk of  "ensuring that all boys and girls complete a full course of primary schooling," but makes no mention of the level of learning to be achieved by students completing primary schooling.

3. Promote gender equality and empower women

• Trends show gender parity in primary and secondary levels of educations can be attained by 2015

• Share of women in wage employment in the non-agricultural sector is likely to reach only 24% by 2015

4. Reduce child mortality

• Under‐Five mortality, going by the present trend, can come down to nearly 70 per thousand live births by 2015 against the target of 42 per thousand live births

• Early neo-natal deaths constitute as high as 51.6 % of total number of infant deaths in 2007

5. Improve maternal health

• MMR has registered a 36% decline between 1997 and 2006 as compared to 25% decline in the preceding eight years

• Coverage of deliveries attended by skilled personnel is likely to reach 62% by 2015

6. Combat HIV/AIDS, Malaria and TB

The total no. of HIV/AIDS infected population in India is supposed to be 23.9 lakh (2009). Of all HIV infections, 39 percent (9.3 lakhs) are among women. The four high prevalence states of India (Andhra Pradesh–5 lakhs, Maharashtra–4.2 lakhs, Karnataka2.5 lakhs, Tamil Nadu–1.5 lakhs) account for 55 percent of all HIV infections in the country.

Around 40% of India's population is infected with bacteria that cause tuberculosis. The majority however are dormant TB carriers. What's most worrying is that almost 70% of TB patients are aged between 15 and 54 years. While two-thirds are male, TB takes a disproportionately larger toll among young females, with more than 50% of female cases occurring before 34 years of age.

7. Ensure Environmental Sustainability

• By 2025, per capita availability of water is likely to slip below 1000 cubic metres

• India’s forest cover increased in year 2005-07 by 728 sq.km

• 95% of India’s energy comes from fossil fuels

8. Develop Global Partnership For development

Developing countries struggle to compete against developed countries because of the world's unfair trade rules which allow developed countries to heavily subsidise their industries and Corporations as well as placing high tariffs on the exports from developing countries. Internationally, India has a sufficient range of products and adequate safeguard mechanisms to protect the interests of its farmers, assuming appropriate and effective   domestic   policy.

The Road Ahead

On 20th of June our policy makers need to be very cautious, what has happened and what might happen we all are quite familiar with, there is no point talking about it again. We would rather prefer to hear about the immediate policy changes and most importantly would like to see them getting implemented.

Let us hope that Rio+20 pack a punch and does not become another Durban debate where nobody was the winner. Our policy makers need to be very cautious and take a calculated approach. “Sometimes the best way to deliver a punch is to step back…but step back too far and you aren’t fighting at all”.

Credit: Mr. Vivek Yadav and Ms. Sudha Sah, for the report on MGD in India.

Shifting “Energy Production” Burden

It is indeed no big secret that energy requirements in India are taking a steep path. There is pressure created from the staggering growth of our country and not to forget the growing population as well. Time is such that it demands a shift of burden of energy production to much cheaper and eco friendlier technology. Although India is the 5^th largest producer of wind energy, there is still requirement for further developments. On the other hand scarce resources and carbon emission are adding fuel to the problem of energy production. Greater reliance on renewable technology offers huge socio, economic and environmental benefits. India at no way lacking in potential, here’s a proof of that

	Technical potential (MW)	Installed capacity (MW)
Grid connected
Bio power (agro-residues)	40000	866
Wind power	48000	11807
Small hydro power (up to 25MW )	15000	2735
Large hydro power (larger than 25MW)	150000	36836
Co generation BAGASSE	5000	1334
Waste to energy	2700	65
Total grid connected	260700	53680
Distributed generation
Bio-power co generation		122
Bio mass gasifier		47
Waste to energy		2
Solar PV power		1
Agro generators/hybrid system		232
Total distributed renewable		405

Source: WEC 2009, Mercados, 2010.

Shifting trend shows positive signs

Solar- The landscape for solar innovation is wide open in India. If PM is to be quoted “India will develop solar energy as a source of abundant energy to power our economy and to transform the lives of our people”.

Domestic firms such as Bharat Heavy Electricals Limited, Central Electronics Limited, Rajasthan Electronics and Instruments Limited, Moser Baer PV Technologies, Tata BP Solar India, Signet Solar and Astonfield Renewable Resources dominate the solar market in India.

Above example clearly demonstrate Indian innovation progress in energy sector. Such developments are based upon smart policies and their adaptation in production process and distribution. With new players entering the solar energy market it is a huge burden divider. It is estimated that as many as 600 companies are involved in the solar panel market globally, with as many as 60 new companies joining each year since 2000.

Bio fuels- A jatropha project led by Indian Railways could lead to 44,000 jobs for Indian farmer. With 5,000 diesel locomotives consuming over 580 million gallons (2 billion liters) of high-speed diesel annually, they anticipate saving between 29 to 116 million gallons (110 to 440 million liters) depending on the proportion of biodiesel used. The Railways intend to use land they already own along existing tracks, and have identified about 356,000 acres (44,000 hectares) out of a possible 1.5 million acres (190,000 hectares) for use. Estimates on the yields that can be expected from jatropha or karanj cultivation vary from a low of 1 ton of biodiesel per acre to 2.5 tons per acre (0.4 tons to 1 ton per hectare). However, cultivation practices and economies of processing needs to be strengthened before large scale commercialization are possible. 

Nuclear- India presently has 17 nuclear power plants with a total generation capacity of 4,120 MW. These have been operating at much less than potential, it’s not surprising that the World Energy Outlook 2007 estimated India’s generating capacity from nuclear energy would reach only 17,000 MW by 2030. Nuclear policy revision and patenting of innovations is required to cater the demand of energy in future.

Wind- Indian Company Suzlon is the largest wind energy company in Asia and the third largest in the world. Major orders in recent years have included customers like Horizon Wind (400 MW) based in Texas, PPM energy (400 MW) based in Portland, Oregon and Edison Mission Group (630 MW) based in Irvine California. The U.S. accounts for over 50% of suzlon’s global sales.

Impact

Such is the market of renewable energy in India is that if Economic Times article is to be believed, it says the market for clean energy in India is growing and such projects are estimated to have attracted private investments of around USD 4 billion in 2010. Foreign investments are a huge tool to strengthen any economy and India is gaining from such investments.

These innovations and trend is a positive sign and will contribute immensely to safeguard our degrading environment, conserving natural resources, providing employment and most importantly bridging the gap between demand and supply of energy, which in turn will lead to reduced prices also.

Inclusive Growth: A Challenging Opportunity

Inclusive growth means the pace as well as the pattern of the economic growth. Either pace or pattern alone cannot portray itself as inclusive growth. Inclusive growth is a loud call and need of the hour. In our hurriedly growing economy, mid way point we’ve realised that, are the economic paybacks shared equally? Does everyone have equal access to them?

Here comes the challenging opportunity, for the government, businessmen, service sector and broadly every citizen. The dare of creating ample amount of opportunities to the poor, backward class and for the population which is fighting to get electricity, struggling for access to water, one who needs to travel 100 km to see the doctor if he/she gets sick. It is to be noted that in developing economies, more than half of the total work force of 2.6 billion is employed in the informal sector (in India the population is 92% of workforce) with unfavourable working condition. Unemployment especially in youths is in the range of 40 % to 70%, with close to 1 billion people suffering from malnutrition, 2.7 billion people not having access to proper sanitation and clean drinking water, around 125 million children not going to school. The above does clearly indicate that a certain section of society have been deprived of the opportunities in sharing the fruit of growth.

Growth is important, but higher economic growth rate does not, by themselves bring inclusiveness or reducing inequalities. This is something to be noted by the policy makers. The current plan is to increase spending on health care, education, skill development, and infrastructure which is something which leads to inclusive growth. The challenge for govt. is that, whether they are able to prevent leakages of their investments or not. Certainly and sadly though they are unable to prevent leakages of funds, which in return is dismantling the whole structure of policies and expected outcomes. The goals set by MDG’s for 2015, which will provide inclusive growth is off track. All the goals are lagging behind which surely indicates the lacklustre delivery system.

It is for the private sector as well to look for inclusive growth. It will widen their market. Producing cost effective products will lead to expansion of sales. There were only 5.07 million telephone users in 1991, and today in 2011 the no. of mobile phone subscribers are 851.70 million. It is for the simple fact that a mobile phone is available at as cheap as RS 700. It has empowered a large section of society, infused communication for all and has increased connectivity. Many more products like mobile phones are required. There is a huge market. Moving on to a contrasting example, only 38% of scheduled commercial banks are located in rural areas and only 40% of the total population in country has bank accounts. Private sector needs to come up with new innovative ideas which are a huge opportunity for them.

India must look at some alarming indicators. Agriculture in India employs 57% of the total population which in turn contributes to only 16% of the total GDP. Problems of agricultural sector must be seriously addressed in order to attain inclusive growth. Agricultural sector is acutely suffering from land and water management, research and technology deficit, market deficit, skill deficit and so on. The solutions to these problems will benefit the 57% workforce which is visibly a huge section of society in India.

 Health and education delivery system needs to be strengthened to fight regional, social and gender disparities. It will initiate spending on health and education.

Regional disparities must be taken into consideration, Punjab boasts of per capita income of RS 16,679 where as Bihar has per capita income of RS 3557. Regional development policies need to be implemented with an efficient workforce to reduce the gap.

Rapid degradation of land, water and other natural resources must draw an effortless attention; it will require a change in consumption pattern from each level i.e. personal and public.

Inclusive growth is a challenge which needs to be faced now, ignoring it can be fatal. Inclusive growth does not necessarily lead to slowing down economic growth but what inclusive growth demands is strengthening of our socio, economic and political system for better distribution of our achievements. Wide disparities are definitely a challenge to deal with, at the same time it is an opportunity for everyone to tackle with the challenge and turn it to gold dust.

Please visit this link, AIMA summit on the above topic in New Delhi  http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=ETNEW&BaseHref=ETD/2011/09/29&PageLabel=11&ForceGif=true&EntityId=Ar01100&ViewMode=HTML