Wednesday, February 18, 2015

Solar Power

Being a tropic and Subtropic country ,where solar insolation received is capable to provide cost effectiveness to Solar tech, it is imperative for India to focus on Solar mission , and fulfil task of 2022 100GW,. With Neighbour China target to reach 7Gw every years , India cannot afford to loose this battle . For it to Succeed it need to focus 3 major areas and do the required efforts to fulfil it
1 Speed - In 7 years to touch 100GW mark , that is capacity to be doubled every one and half year. Requires govt swift policies, Advanced price/ tariffs acknowledgment ,Low interest debt finance or Equity finance , green Bonds issued recently by Yes banks , Green bank from National clean energy fund can be used .
~Land which is 3-4% of total cost , Gujrat //KA initiative of Lease bank, raj 25 lease, Mp stamp duty exemption can be used to Encourage entrepreneurs
2Scale - with Such ambitious target , it requires Use of roof top projects, Solar projects spread on wetland via canister, Net metering German policy , Micro grid or decentralised electricity , Solar lantern instead of Kerosene Subsidy .Green corridors of Gujrat and TN can be extended.
3 Skill - With NSDA ,and recent records from 2011 -2014 24k jobs were created , Such can increase to 1.3 million jobs both full time and part time . Also efficient use of land Like in recent canal top project in gujrat can serve as Encouragement for Skill development
green bank, Exchange swap , Easy exit policies , renewable purchase obligation , can help in boosting the Investment. For every 3 Gw , 1 Bn import of Solar is required this could be minimised by R&D , improving domestic competitiveness, reducing import dependence. Large government procurement order For instance similar to LED procurement& distribution Scheme in Delhi and Deen dayal yojana caused to decrease price to 120 from 400 rupees.
~Banks shall be encouraged for Solar finance , and People in area of greater Solar insolation shall be motivated to use it .


Capitalism is characterized by an economic system where means of productions are owned by private firms where goods and services are distributed according to price mechanics rather than govt price controls and there is no intervention on the market by the government.
Capitalist society believes that capitalism expands material well being and technologies.
The reason behind the "economic development" behind Capitalist economy are: 
1. Efficiency : Because of incentives, market pressure, the firms always keep on increasing their efficacy by cutting costs and avoid waste.
2. The market pressure makes firms work hard and be innovative. This increases GDP and improves living standards.
But sometimes that comes with a cost
1. monopoly/monopsony : If monopoly is achieved by a firm in a capitalist economy it will take advantage of its power to fix high prices, low wages to labors, etc.
2. ignorance of social benefits : profit maximizing capitalist firms ignore negative externalities like pollution from production etc.
3. Booms and bust cycles : Capitalist economies are vulnerable to recessions and that causes mass unemployment.
4. Inherited wealth : Wealth can be passed to future generations. This inherited wealth causes wealth inequality and it is a curse to "equality of opportunities"
5.These inequalities cause social divisions.
6. increases the gap between rich and poor.
Capitalist economy helps economic development a lot. in fact, presently there is no suitable alternative to that. But there should be proper government intervention and people friendly economic policies in important fields like health care, transport, education, defense, etc.

Silk Road Economic Belt

The "Silk Road Economic Belt" is a Chinese initiative to integrate
economies of Asia and Europe along the Eurasian corridor with Chinese economy; through
the development of transport infrastructure and communication networks involving
railways, roads & fiber optics highways that would connect South Asia,
South East Asia, Central Asia and Europe along an integrated land corridor.
realize Chinese aspirations of playing an enhanced role
at regional and global levels.
First step towards establishing Chinese hegemony at
regional and global levels; instead of US $ or Euro, the local currencies &
Renminbi to be dominant means of economic deals.
development: of Chinese
hinterland particularly Xinjiang province which is seeing a lot of ethnic
violence arising out of social problems like poverty, unemployment,
backwardness etc.
Economic Growth: enhanced connectivity will boost China's
trade with entire Eurasian continent; Chinese overcapacity in construction
materials will be utilized; efficiency improves.
Enhanced Regional & Global clout: China hopes to
gain closer cultural and political ties with countries along the silk Road.
Counter US: policy of "Pivot of Asia" and its
trans-pacific partnership agreement which try to contain China and consolidate
American hegemony.
showcase a softer side of China & gain an upper
hand over regional powers such as India & Japan.
implications for India:
Chinese influence in Indian neighbours such as Nepal,
Bhutan may increase.
encircling India via land corridor just like string of
pearls in Indian Ocean.
India's clout at regional level might be reduced.
Economic: if India participates in
the initiative then
its trade might be boosted with Eurasian economies.
China may fund infrastructure development in India too.
Conclusion: the need for India is to balance security concerns with economic
benefits to be derived; particularly in the context of Chinese assertiveness.

A flawed approach to food security

Within months of assuming office, the BJP-led National Democratic Alliance government set up a High Level Committee (HLC) in August 2014 to restructure, reorient and reform the Food Corporation of India (FCI). The eight-member HLC was chaired by senior BJP leader, Shanta Kumar, and included prominent economist Ashok Gulati. On January 22, 2015, the HLC submitted its report to the government and made its recommendations public.
In the short run, the committee recommends that the National Food Security Act (NFSA) 2013 be curtailed. In particular, the NFSA entails providing subsidised food to about 67 per cent of the population, and the committee recommends that the coverage be brought down to 40 per cent. In the medium run, the committee recommends that the current public distribution system (PDS) be replaced by a cash transfer system. This will mean that the state will no longer have to be responsible for distributing food to vulnerable sections of the population. Hence, the state will no longer need to procure food from farmers, and store it. Since the current system of procurement, storage and transportation is primarily managed by the FCI, the medium term vision of the HLC implies that the FCI can, in due course, be folded up.
The overall thrust of the HLC’s recommendations, if implemented, would whittle down the operation of the FCI in the short run and completely dismantle it in the medium run. The HLC has advanced two broad set of arguments as justifications for its recommendations. Critical scrutiny shows that both are fallacious.
Changed situation
The first set of arguments of the HLC relates to changes in the situation in the country as regards food production and consumption since the crisis period of the mid-1960s. Today, India produces more food grains than it consumes, even exporting substantial amounts to the world market. It has a large public stockholding of food grains and is comfortably placed as regards foreign exchange reserves. All this is in stark contrast to the situation in the mid-1960s. Moreover, consumption patterns of households have displayed a shift away from cereals. This changed situation, in the opinion of the HLC, calls for a change in the role of the FCI.
The HLC, however, has ignored the fact that India continues to be plagued by large scale hunger and malnutrition. Data from the National Sample Survey (NSS) shows that in 2009-10 the vast majority of the population was consuming less than the 2010 Indian Council of Medical Research calorie norms. If we look at trends over time, the same data also shows that average calorie and protein intake have declined over the past few decades. Evidence on more direct measures of under-nutrition – like the proportion of underweight and stunted children – are equally grim.
Fulfilling its objectives
Given these well known facts and trends on hunger and malnutrition, it seems foolhardy to use the fact of a changed production situation in the domestic economy to argue for the dismantling the FCI. A more sensible route would be to use increased domestic production to directly address the problems of hunger and malnutrition. In this strategy, the FCI is bound to play a more rather than less important role.
The second set of arguments given by the HLC as justification relate to the claim that the FCI has not been fulfilling its three key objectives in recent years: providing price support to farmers, delivering food through the PDS, and reducing volatility of food prices (and addressing food security) through public stockholding. According to the HLC, failure to meet the objective of providing price support is shown by the fact that in 2012-13 only six per cent of agricultural households sold any food grains to procurement agencies. Failure on the PDS front is attested by massive leakages from the system. Food grains rotting in FCI warehouses highlight the failure of the system of public stockholding.
The fact that only six per cent of agricultural households sold paddy or rice to any procurement agency in 2012-13 is really striking. The Situation Assessment Survey of Agricultural Households conducted by the National Sample Survey Organisation during the 70th Round (2013) of the NSS – the data source that allowed the HLC to compute the figure of six per cent – shows why. The NSS data reveals that the vast majority of agricultural households were not aware of the existence of minimum support price (MSP), and an even larger proportion were not aware of procurement agencies (about 80 per cent for paddy and 70 per cent for wheat). Of the households that were aware of MSP but did not sell to procurement agencies, a large proportion did so for lack of procurement infrastructure at the local level. Moreover, if we go back 10 years and look at data from the previous (and first) Situation Assessment Survey of Farmers in 2003, we see a large variation across States in awareness of MSP, with Haryana, Kerala, Punjab and Tamil Nadu showing high awareness.
One can see that the reason for low use of procurement is lack of information. The other reason is lack of enabling infrastructure at the local level. States which have managed to put such infrastructure in place and disseminate information about procurement saw greater participation. Thus, the HLC’s conclusion that the procurement system is not working is misleading.
The second claim of the HLC is that the PDS is a failure because of massive leakage. But, what do we know about the extent of leakage, its spatial and temporal patterns?
The existing literature on PDS in India has highlighted three important patterns. First, there is a secular decline in leakage over the past decade. Second, there is a large variation in the extent of leakage across states with some States like Andhra Pradesh, Himachal Pradesh, Karnataka, Kerala and Tamil Nadu consistently reporting low leakage. Third, and more interestingly, many States like Bihar, Assam, Chhattisgarh, Jharkhand and Uttarakhand, have improved considerably over time with respect to leakage from the PDS. The conclusion that would be consistent with the findings of this literature is not that the system needs to be dismantled but that the strategies adopted by successful states are replicated in the other States.
The third claim of the HLC is that the FCI has ended up with excess stocks of food grains. Since storage of food grains is costly, it represents a waste of resources that could have been used elsewhere and in more productive ways. We agree with this and would go further to argue that excessive stocks of food grains on the one hand, and prevalence of widespread hunger and malnutrition on the other immediately call for an expansion of the PDS operations.
To sum up, neither the changed situation with respect to domestic food production nor the functioning of the FCI with respect to meeting its key objectives lends credence to the argument that the FCI, and with it the whole food management system, needs to be curtailed.

(Deepankar Basu is assistant professor in the Department of Economics, University of Massachusetts Amherst, U.S., and Debarshi Das is associate professor in the Department of Humanities & Social Sciences, Indian Institute of Technology, Guwahati.)

A social role for NITI Aayog

NITI Aayog has had its first meeting with the economic experts. This was crucial since the government is trying to revive economic growth. The economy has experienced slow growth in spite of the revised national income data that has indicated faster growth. Industry, exports and so on, have shown tepid growth in recent years. The National Democratic Alliance’s electoral promise of an economic turnaround seems elusive in spite of its accelerating “reforms” by liberalising foreign direct investment (FDI) flows and land acquisition policies to signal its pro-corporate sector and big business inclinations.
Contradictory views
The budget is first a macroeconomic exercise and then a micro one catering to sectors of the economy. Two contradictory macroeconomic views are emerging from the government and its policy advisers. This is similar to the policy dilemma that the United Progressive Alliance faced earlier. The first view is to have a larger fiscal deficit so as to boost demand. The other view is to cut the fiscal deficit to keep the credit rating agencies (proxy for financial interests) happy so as to prevent a downgrade of the economy.
The Finance Minister favours the latter view and argues that a fiscal deficit imposes a burden on future generations who will have to repay the debt. This conservative view assumes that resources are constrained, so if the government spends more, the private sector has less to spend. But that cannot be true when the economy has spare capacity and can produce more. Increased government expenditures then boost the economy and lead to more investments via the accelerator. If increased spending is financed by increased direct taxation, that is even better. This is feasible in India since direct taxes are around 7 per cent of GDP which is low when compared to most other countries. But a government trying to signal its pro-business inclination would not wish to raise direct taxes like income, corporation and wealth taxes.
Actually, tax rates need not be raised but only the concessions given in taxes (these are called tax expenditures and amount to 4.5 per cent of GDP) need to be curtailed to get more resources. But this may also be seen as anti-business. The other possibility is to tap the black economy (more than 50 per cent of GDP, according to me.) This requires political will which is not yet visible. The business community, the largest generator of black incomes, would see this also as anti business — it has been opposing introduction of general anti avoidance rules (GAAR). Even if the economy grows faster due to the reduction of the size of the black economy and businessmen gain, they fear it since a bird in the hand is worth two in the bush.
The NITI Aayog meeting does not seem to have considered these deeper issues. Advice was sought from former bureaucrats, journalists, industry lobbyists and academics. Media reports suggest a lack of coherence in the discussion or in the advice given. Some of the invitees had been present in the Finance Ministry pre-budget meeting last month. So, what was the point of the meeting now when it did not lead to clarity on long-term issues? Further, the time for incorporation of policies in the budget is over since most of it would have been formulated by now. It may have been better to circulate for comments a discussion paper on the Indian economy’s slowdown and its global interlinkages.
Dilemma with global echoes
India’s current economic dilemma has global roots. The eurozone, Japan and Russia are in trouble, the Chinese economy has slowed down and the U.S. economy is the only big one that has improved. In such a scenario, increasing exports in a big way would be difficult. Declining commodity prices (like that of petroleum goods) signal a weakening global economy. Uncertainty is deepened by the arc of instability due to failing states, from Afghanistan, Syria, Iraq, Libya, Nigeria to East Africa. The war in Ukraine and the rise of IS are compounding the problem.
Greece threatens the economic stability of the eurozone. The new government there is defying the dictates from the world of finance and has promised to end the austerity regime hoisted on the people of Greece. The Greek Prime Minister is telling the European powers that the economic rules of integration of the weaker economies of Europe into the eurozone need change. He is arguing that a substantial portion of the debt resulting from the earlier wrong policies needs to be written off. The other troubled economies of Europe — Portugal, Spain and Italy — are under increasing political pressure to follow Greece’s example.
U.S. President Barack Obama has proposed increasing taxation of the rich while giving more to the middle classes to reverse the growing inequity there. This move not only has a political strategy underlying it but also economic reasons that favour it. Given the Republican domination in the legislature and their conservative inclinations, it is unlikely that this proposal would be accepted any time soon. But, other countries would be forced to think about the idea, especially in the context of the developments in Greece.
In 2011, Mr. Warren Buffett gave a call to tax the rich more not only for the sake of equity but also to tackle the global economic crisis. This call was picked up in Europe with 16 of the wealthiest French urging their government to tax them more. Fifty wealthy Germans backed this petition. In Italy, the chief of Ferrari also lent support.
Inequity has grown in most countries since the mid-1970s following the domination of global financial capital over policies — spearheaded by the World Bank and the International Monetary Fund (IMF). These policies have not only marginalised other sectors of the economy but also promoted bubble economies that are prone to periodic collapse as it happened beginning 2007 and from which the world economy has yet to fully recover.
These policies promoted shadow banking and all manner of opaque financial instruments that created economic instability. A casino economy emerged with speculation leading to a fictitious boost in paper wealth, promoting a false sense of well-being among individuals and increased consumption by them. As inequality increased dramatically, and there was the marginalisation of the vast majority, there followed the “Occupy Wall Street movement”, termed as the “99% v the 1%” and which also popularised the term, “Main street versus Wall street”.
For people policies
Events in Greece and Mr. Obama’s suggestion suggest that the time has come to end the domination of finance capital over the rest of society. Policy space has to be recaptured from the world of finance by the democratic forces so that policies favouring the people can be initiated.
The dilemma currently facing Indian policymakers reflects these global trends. India’s rightward drift started with the Emergency in 1975 when Sanjay Gandhi marginalised the left of Centre thinking in the Indira Gandhi government. The trend continued during the Janata regime and thereafter under the Indira Gandhi government which had to approach the IMF for adjustment in 1980. Rajiv Gandhi, under considerable influence of the liberalisers, pushed this tendency faster. With the New Economic Policies in 1991 and the emergence of the World Trade Organization (WTO) in 1995, there was a paradigm change, with the policies of finance capital becoming entrenched.
For India, which remains very poor and very unequal, policies based on the interest of finance capital and a narrow section of society can only spell disaster. These policies push markets and technology-based solutions which marginalise the individual. The underlying idea is that if making democracy work is difficult, substitute it with technology. Those lacking faith in democracy and social institutions are (in the name of the poor) pushing an autocratic agenda based on greater use of technology. The hard work of creating and nurturing institutions that can deliver to the people and strengthen democracy is sought to be circumvented. So, one of the key proposals today is to push Goods and Services Tax (GST) even if it does not suit the needs of the vast unorganised sectors of our economy and benefits the MNCs and big business. The hard work of making taxation simple and effective and shifting to direct taxes is hardly on the agenda. Creating a large number of jobs is secondary to cash transfers, bullet trains for the elite and smart cities for the upwardly mobile.
The flyovers of Delhi were built to ensure smooth traffic flow but now have speed bumps to slow down vehicles and which leads to jams. The technological solution failed because the institutional design of management of urban traffic is flawed and that is because policymakers did not go deeper into the problem in their urge to provide quick fix technological solutions. The NITI Aayog could throw light on such long-term issues (with solutions that are not just economic or technological but also social and political) of strengthening democracy, building institutions, regaining policy space and so on.

(Arun Kumar is the author of Indian Economy since Independence: Persisting Colonial Disruption. )

The menace of plastic waste

If there is one type of municipal solid waste that has become ubiquitous in India and most developing countries, and largely seen along the shores and waterways of many developed countries, it is plastic waste. Much of it is not recycled, and ends up in landfills or as litter on land, in waterways and the ocean. For the first time, researchers have estimated the amount of plastic that makes its way into the oceans. While the estimate of eight million tonnes of plastic being dumped into the oceans by 192 coastal countries in 2010 may appear staggeringly high, in reality the quantity would be many times more. Besides estimating the total quantity, a paper published recently in the journal Science has identified the top 20 countries that have dumped the most plastic waste into the oceans. At twelfth position, India is one of the worst performers. It has dumped up to 0.24 million tonnes of plastic into the ocean every year; the amount of mismanaged plastic waste per year is 0.6 million tonnes. In the case of China, the No. 1 polluter, the coastal population sends up to 3.53 million tonnes of plastic waste into the oceans each year. Besides the 11 Asian and South East Asian countries, the U.S. figures in the list.

A study published in December 2014 estimated the quantity of plastic floating in the ocean at nearly 270,000 tonnes. This is but a fraction of the total that finds its way into the oceans. Other studies suggest that the surface of the water is not its final resting place. Alarmingly, an unknown quantity of degraded plastic in the form of particles enters the food chain. Besides affecting marine life, plastic that gets into the food chain has serious health implications for humans. With the latest study estimating that the annual input into the oceans is set to double by 2025, there is an urgent need to tackle the problem. A two-pronged approach has to be adopted by the worst polluters to reduce per capita plastic waste generation and cut the amount of mismanaged waste by employing better waste management practices. Recycling is the best available way to tackle the waste, though it is not the ideal solution. India, which hardly recycles plastic waste, has its task cut out. It dumps a huge quantity into the ocean although it generates a relatively small amount of this waste per person — 3 per cent of 0.34 kg per person a day of all solid waste generated. The huge population offsets the advantage of low plastic consumption in the country. Cutting down on the use of plastic should also begin in earnest, and the first item that has to be targeted is the single-use plastic bag. The Union government recently refused to ban the manufacture of single-use plastic bags; the least it could do to reduce consumption is to make such bags expensive, employing the same rationale that has been applied for tobacco products that are taxed heavily to reduce consumption.