General Studies - 3 (Mains Practice Questions)

Analyze the functioning of PDS in India and bring out its limitations.

India’s public distribution system to some extent  has helped in reduction of  rural poverty. Evaluate the performance of PDS and analyze what ails it. (250 Words)

What do you think has been the impact of Targeted Public  Distribution System in India on food security for the poor? Justify your answer.(200 Words)

Evaluate the track record of land reform in India in its various aspects, bringing out inter state differences. How would you interpret this record? (250 Words)

Analyze the impact of MGNREGA on rural and urban wages and rural migration. (200 Words)

“The APMC Act, designed to protect farmers from the vagaries of the market, has been turned on its head to enrich traders and harm farmers.” Critically comment. (250 Words)

What is malnutrition and undernourishment? Why is India according to some reports, in spite of surplus food grain production, home to a large number of stunted, wasted and underweight children in the world?  Explain. (300 Words)

“The continuing tragedy is that the Indian system is not able to deliver the ‘surplus’ food grain to the hungry.” Comment. (200 Words)

“Over two thirds of the crop land of the United States is devoted to feed crops and only slightly over one-fifth to food crops.” Discuss the implications of the above statement. Explain with reasons why the conditions are totally different in India. (250 Words)

“Food security bill is a populist, but much-needed legislation, enacted without laying the foreign policy foundations for its continued existence.” Examine. (200 Words)

“In India, the fragmented and unreliable supply chain corrodes the profitability of food processing sector and makes it unattractive for large investments.” Critically comment. (250 Words)

“Crops in their centres of origin and diversity often have a deep cultural significance that can easily get lost when utilitarian issues dominate the discourse”. Examine the statement in the backdrop of the controversy over allowing  field trials of Bt transgenics in certain food crops in India.

 “In India, the fragmented and unreliable supply chain corrodes the profitability of food processing sector and makes it unattractive for large investments.” Critically comment. (250 Words)

“Infrastructure is India’s biggest supply chain challenge.” Comment.(200 Words)

Critically examine the impact of New Industrial policy initiated in 1991 in India. (150 Words)

“The Reserve Bank of India’s (RBI) decision not to prohibit corporate/industrial houses from applying (unlike in 1994 and 2001) for banking licences threatens to take us back to the days before bank nationalisation.” What is the ‘threat’  involved in giving new bank licences to corporate/industrial houses? Comment. (200 Words)

Examine how ‘smart grids’ can be a solution to India’s power woes. (200 Words)
Examine in what ‘unique’ ways  India’s Civil Liability for Nuclear Damages Act, 2010 (the Act) deals with supplier liability? Also throw light on how the present act impacts nuclear commerce. (250 Words)

Monthly Assignment January 2014

Please attempt the following questions and submit the answers by 31st January 2014.

1. “During the Eleventh Plan period, India slipped from 127th rank to 134 rank in the HDI rankings despite the ‘inclusive growth’ strategy adopted during the period. ” Critically comment. (250 Words)
2. “The Monterrey Consensus of the International Conference on Financing for Development  places the mobilization of domestic financial resources for development at the centre of the pursuit of economic growth, poverty eradication and sustainable development.”  Examine the role of banks in resource mobilization in India.  (250 Words)
3. “ The talk of financial inclusion and inclusive growth is meaningless in the absence of a mass movement for economic democracy.” Critically comment. (200 Words)
4. “Crops in their centres of origin and diversity often have a deep cultural significance that can easily get lost when utilitarian issues dominate the discourse”. Examine the statement in the backdrop of the controversy over allowing  field trials of Bt transgenics in certain food crops in India." (250 words)
5. Write a note on National Mission on Micro Irrigation (150 Words)
6. “The APMC Act, designed to protect farmers from the vagaries of the market, has been turned on its head to enrich traders and harm farmers.” Critically comment. (250 Words)
7. “ GSLV launch is dubbed as a game changer given the critical urgency of its success for future Indian space odysseys.” Comment. (250 Words)
8. “Since 2011, when the Tamil Northern Alliance won a decisive local elections in Sri Lanka’s North, the disillusionment of the people in the region has only grown larger with the Sri Lankan government.” Critically comment.  (250 Words)
9. Examine the critical issues in higher education sector in India and how the 12th Five Year plan seeks to address them.  (250 Words)
10. Evaluate the evolving economic relationship between India and  Bangladesh . (250 Words)

Assignment for December 2013

The below listed questions need to be answered them by 29 Dec 2013 as comments under this post. Any confusions or doubts can be taken up as group discussion. 

1. Identify the major obstacles in the smooth functioning of Parliamentary democracy in India.(250 Words)

2. “while economic growth is an important boon for enhancing living conditions, its reach depends greatly on what we do with the fruits of growth.” Comment. (250 Words)

3.Discuss the major extra constitutional factors influencing the working of federal polity in India. (250 words)

4.How does depreciating Rupee affect the CAD and Fiscal deficit? Explain. (250 Words)

5.Highlight the nature of the land reforms still needed in the country.(250 Words)

6.How is agricultural price policy is determined in India? Does the process take note of agricultural subsidies? (200  Words)

7. What do you understand by the term ‘Rule of Law’? How does the constitution of India seeks to establish it?

India's food conundrum and WTO

This year's ministerial conference of WTO at Bali has been in news lately with India has been at its centre stage.The terms like AoA, product specific support , de-minimis level formed the part of daily headlines of leading national or international dailies.

Amidst the cacophony of dissenting voices that lead to WTO ministerial lets try to deconstruct the whole scenario in a piecemeal approach.

To the uninitiated the mjnisterial conference of WTO is its topmost decision making body and it meets every two years.This year's ministerial(9th) was at Bali, Indonesia.

As i write this article a good news ,that India has been able to get the deal at Bali to defend it subsidies is coming in, but we'll focus on it later on.For now we will focus our attention on the contentious issues wrt India and its case of defending subsidies at WTO.

Lets clear some basic terms at the start to facilitate a greater understanding of the issues discussed here.

1).AoA -Agreement on Agriculture or AoA as it is known popularly was negotiated Uruguay round of GATT(General Agreement on Tariffs and Trade)in 1988 and it came into force with commencing of WTO from 1st Jan 1995.It may be noted here that GATT was a preceding body of WTO i.e. it was established in 1948 & after Marrakesh Agreement WTO came into existence in its place.

2).Subsidies under AoA :

Type of subsidies under AoA are as follows ,

(a).Amber Box - These are the measures or subsidies that have a trade distorting effect at international level like the MSP india gives to its farmers fall under Amber box while the funding govt does for training and research in agriculture or likewise are not deemed to be as Amber box category but Green box .The amber box subsidies or measures if exceed their limit, invite penalities .

(b).Green Box - These measures or subsidies are those which do not have a trade distorting effect and are protected from legal challenges.

(c).Blue Box - These subsidies or measure have no limits .

Now,under AoA a minimun threshold has been kept beyond which if domestic support measures that which dont fall into any of the above exempt category of subsidies ,invite penalities.

(3).De-minimis - The threshold level of domestic support measures( that dont fall into any of above exempt category of subsidies ).This level is 5% for developed countries and 10% for.developing countries.

(4).Agrregate measurement of support( AMS) : The reduction commitments are calculated in terms of AMS .The product specific and non-product specific support are calculated as a single figure.In case of members with no reduction commitmments (Currently 30 countries have reduction committments at WTO under AoA)they are required to maintain their domestic support that doesnt fall into any of above exempt categories of amber,green or blue under relevant product-specific and non-product specific de-minimis levels.

Now lets move ahead with the main issue .

Issue :Countries like US and EU or simply developed countries are pushing developing countries like India to cut down on their trade distorting subsidies in agricultral sector.On the other hand G33 countries lead by India are demanding a continual of these subsidies citing reasons of food security and livelihood of poor farmers.

Another major issue that involves india and developed countries ( & WTO too) is its food bill or National Food Security Act(NFSA) as it is known popularly that guarantees 67% of population a quantity of 5kg/person per month at cheap prices of Re. 2-3 resp.

The matter of NFSA deals purely with India but its implications are to be felt at a global scale.As such this issue set the stage for a clash of interests at Bali.If India could take care of its food bill being not in violation of AoA at WTO then the incidental issue of food subsidies for developing countries would be automatically taken care of(As per latest news from Bali India has been successfull in that ).

To implement NFSA successfully would mean India would require 62million tonne of foodgrain in a year so as to give its 82 crore people 5kg of foodgrain per person in a month.For that increased rate of procurement India would have to increase its MSP to incentivise farmers to produce more foodgrain and in the process the subsidy levels will breach the de-minimis levels of 10% agreed to in AoA by India.

Although if procurement is done at current market price then no subsidy will be involved  but procurement at MSP entails subsidies from govt therefore according to AoA the above difference in the acquisition price i.e. procurement price and the ERP(External Reference Price -it is the world price notified by India in the 90s)will be accounted under "domestic support" which is a part of Amber Box measures.In other words,AoA implies that procurement price should be at market price (and not be higher then market price) & should not exceed the world price (Predetermined by ERP)

Concerns of developed countriee and EU wrt India's NFSA :

1).Developed countries fear that India's stockpiling of grains would first soar prices in international market & later on cheap exports will affect farmers' interests worldwide.

2).A case may also arise when monsoon is deficient in India & then India would have to  import grains to support NFSA .This would lead to soaring of global prices.India hence will start exporting inflation to poor countries like BDesh,Nigeria,Indonesia if imports swell during a drought year.

3).Some developed nations that are big commodity exporters believe that India's large stocks of wheat and rice could lead India to dump those in global markets.Also the giving away of foodgrains at cheap throwaway prices would lower local prices & damage demand for their products in one of the world's biggest market i.e. India

What developing countries and G33 say ,

Developing countries including India blame developed countries and EU that they have moved their trade distorting subsidies( or measures) from Amber Box to Green Box ,thereby concealing them & protecting them from legal challenges at WTO.

They also claim that the way de-minimis is calculated (I would show by example how de-minimis is calculated)is also outdated and flawed based on ERP prevailing during 1986-88.The rates have shot up 650% since then.

G33 argues that the illogical way the trade-distorting domestic subsidy is calculated means developing countries are in danger of reaching or exceeding the permissible limits.What matters is how high the govt administered prices i.e. MSP are compared to ERP of 1986-88.and not how much it spends in totality.Eg :-ERP notified by India is Rs.3.52/kg for.paddy while.current year's MSPis Rs.19.65/Kg.This implies an untenable subsidy of over Rs.16/Kg.

US & EU want India to sign a trade facilitaion agreement (trade facilitation looks at how procedures and controls governing the movement of goods across national borders can be improved to reduce associated cost burdens and maximise efficiency while safeguarding legitimate regulatory objectives ).

They also offered a peace clause .Under this clause the trade distorting  subsidies of developing countries in case they rise past de-minimis would not be legally challenged in WTO for a period of 4yrs i.e. till 11th ministerial.

What India can do to ward of concerns of Developed countries ?

1).Continually increasing farm productivity ,maintain consistently high stockpiles of wheat and rice (dont let them rot) which means increased investment in irrigation & creating efficient supply chains .India's food production dropeed from 250 million tonnes in 2011-12 to 250 million tonnes in 2012-13 because of poor rains.

2).Reducing dependence on monsoons and improving agricultural infrastructure is critical in curbing import distortions during drought year.

Challenge before India is to defend its national obligations while giving due credence to policy externalities (consequences of policy that extend beyond policymakers' domain) that may arise during implementation of NFSA.

Calculation for de-minimis

>First we need to calculate AMS

Below example is for wheat

All the figures and values are assumed in below example .

-MSP or procurement price or acquisition price or intervention price =Rs.1920

-Fixed ERP(World Market Price)= Rs.300

-Domestic production of wheat =2,000,000

-Total value of Wheat production =1920*2,000,000 = Rs.3840,000,000

-Wheat AMS would then be calculated as per formula ,

AMS =(MSP-ERP)*Total Domestic production =(1920-300)*2,000,000

         =1620*2,000,000=3240,000,000

Now for de-minimis ,

de-minimis is 5% of total value of production (for developed country it is 5% and for developing countries it is 10%)

          =5*3840,000,000/100= Rs.192,000,000

Hence in above case.,

         AMS1 > de-minimis

Note :.In actuality Current Total AMS is calculated .

Current total AMS =AMS1+AMS2+AMS3 . . . . .

Here AMS1 is for wheat,AMS2 is for rice & AMS3 is for paddy and so on .

Also is to be noted that in above calculation only those AMS ' are taken which have exceeded the threshold of de-minimis so if AMS1 in case of wheat is within de-minimis then it will not be included in final calculation of Current Total AMS

A Healthy population is a fundamental ingredient of Inclusive Development

Universal access to quality health care is not just a social imperative; it is a necessary condition for economic progress and prosperity. For any country to develop it is necessary for the population of the country to be healthy so that they work towards the growth and inclusive development of  the country. With a population of just over 1 billion, of which about 300 million live below the poverty line, India is the largest democracy in the world and one of the most important countries in terms of meeting global development goals. India’s GDP had a steady and consistent growth since independence. The various infrastructural sectors have had a tremendous growth.

But even after 60 long decades of independence we have not been able to achieve a significant level of nutrition and health amongst the population. Inequity and poverty are the root causes of ill health. Access to quality health services on an affordable and equitable basis in many parts of the country remains an unfulfilled aspiration. Disparity in health care is interpreted as compromise in 'Right to Life.' It is imperative to define 'essential health care,' which should be made available to all citizens to facilitate inclusivity in health care. The suggested methods for this include optimal utilization of public resources and increasing public spending on health care. Capacity building through training, especially training of paramedical personnel, is proposed as an essential ingredient, to reduce cost, especially in tertiary care. Another aspect which is considered very important is improvement in delivery system of health care. Increasing the role of 'family physician' in health care delivery system will improve preventive care and reduce cost of tertiary care. These observations underlie the relevance and role of Primary health care as a key to deliver inclusive health care. The advantages of a primary health care model for health service delivery are greater access to needed services; better quality of care; a greater focus on prevention; early management of health problems; and cumulative improvements in health and lower morbidity as a result of primary health care delivery.

Though India has obtained self-sufficiency in food grain production and a major success in PDS and AAY schemes but still we have a major war to fight when nutritional needs are concerned. According to some figures, around 40 per cent of children under the age of five years are malnourished and nearly half of all pregnant women aged between 15 and 49 years suffer from anemia. Nutrition is crucial for fulfillment of basic human rights and forms the foundation for meaningful human existence with decreased susceptibility to infection, related morbidity, disability and mortality, better learning capacities and adult productivity. Poor learning outcomes in our schools are also partly because of the low level of nutrition. To improve the situation Government has initiated several schemes for school going children like Midday meal and also providing iron folic supplements to children.

Again I would stress the importance of improving purchasing power for the economically weaker sections so that the cover of PDS and several other food security schemes is much larger than what we have today. Innovations in the sectors of Food and supplies are the need of the hour. PPP might give a breakthrough in this field as it will boost the level of service and also will reduce the overrun time of schemes. 

Information Infrastructure

Our era is defined by technology. The potential to provide common people access to better education, healthcare and basic services like banking is possibly the most exciting transformative feature of technology. However, even though India has proved its mettle in the information technology domain the country's performance at providing computing technology and internet access to its citizens has been tardy.

All the BRIC countries had low single digit PC penetration in the early 2000's but since then PC penetration in China, Brazil and Russia has grown to 40%+ while India is still at around 10%.

The individual usage sub-index is proof of this where India is at an appalling 117th rank, while China ranks 82nd. Why is it that while business and the government become assiduous adopters of technology, individual penetration and usage of ICT remains limited?

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A strong information infrastructure is a great lever of socio-economic development because it improves delivery and access to public services and strengthens democracy by giving citizens a platform to participate. But it can only happen in a meaningful way when government, industry and policy makers embrace it as a national agenda.

A broader understanding of the pivotal role of information infrastructure in national development is now emerging amongst policy makers in the country. The government's vision of one e-literate member per household is the right one for India, and to make it happen, we need a strong public private partnership across four main areas.

The first is the building of information superhighways or broadband networks, second, the availability of a broad spectrum of devices, third, locally relevant content and services and fourth, widespread digital literacy and empowerment of citizens.

There is some progress, but it's too fragmented to have real impact. While some states and government departments are moving towards e-governance models and increasing emphasis on ICT as a means to tackle our biggest challenges like job creation transparency in delivery of government services, the ability to scale the best known methods is lacking.

We need to think national and that's not easy in India given the range of diversity we deal with. As part of the National Optic Fiber Network, the government aims to provide broadband connectivity to India's 250,000 panchayats by 2014 and, as per reports, with the deployment of 3G, 4G and BWA India could have 36 crore mobile broadband connections by 2016.

This is a game changing plan. We need to drive availability of a plethora of computing devices. In a country as complex as ours, we must be guarded about making any sweeping assumptions about consumer preference and behavior related to personal computing devices ranging from the smartphone, tablet to the humble PC.

An exciting multi-device play is emerging in India with a healthy balance of creation and consumption devices. The need of the hour is to overcome the debate of which is 'the device' for every Indian and have a concerted focus on making these devices accessible, affordable and easy to use.

Public-Private Partnership Model to Boost Infrastructure Development

Public Private Partnerships (PPPs) is an effective tool for bringing private sector efficiencies in creation of economic and social infrastructure assets and for delivery of quality public services. The extent of private sector participation in creation of infrastructure, especially through PPP, has shown a promising increase in the recent years. As on January 2012, there were 881 PPP projects with Total Project Cost of Rs. 543,045 crore as compared to over 700 projects with TPC of Rs.371,239 crore by March 2011. These projects are at different stages of implementation i.e. under bidding, construction and operational stages. The broad sectors encouraged under the PPP framework are Highways, Railways, Ports, Airports, Power and Urban Infrastructure etc.

PPP Projects Approved by the PPPAC

The appraisal mechanism for the PPP projects has been streamlined to ensure speedy appraisal of projects, eliminate delays, adopt international best practices and have uniformity in appraisal mechanism and guidelines. The appraisal mechanism notified includes setting up of the Public Private Partnership Appraisal Committee (PPPAC) responsible for the appraisal of PPP projects in the Central Sector. Since its constitution in January 2006, PPPAC has granted approval to 223 projects, with a total project cost of Rs. 212,819.50 crore.

Standardized bidding and contractual documents have been  notified. These include model Request for Qualification (RFQ); Request for Proposal (RFP) and RFP for technical consultants; Model Concession Agreements (MCAs) for different sectors including Highways (both National and State Highways), Ports, Urban Transport (Metro), Power sectors and Manuals of Standards & Specifications have been developed and standardized. Further, Project Sponsors are encouraged toward projects through a transparent open competitive bidding process, which leads to greater transparency and consistency to the bid process and terms of contract.

                                  

Sectoral Distribution of PPP Projects

           The maximum number of PPP projects have been undertaken in the Road sector with 447 projects, constituting 51.6% of the total projects.  This was followed by Urban Development sector with 177 projects (22.4%), Energy sector with 77 projects (8.9%),  Ports with 62 projects (7.2%) and the Tourism sector with 55 projects (6.4%).  225 projects have been completed whereas 410 are under various stages of construction and 184 under bidding stage and the remaining in other various stages. State-wise, Karnataka had the maximum of 105 projects with total cost of Rs. 44,459.85 crore under PPP followed by Andhra Pradesh 98 projects with project cost of Rs. 67,696.31 crore, Madhya Pradesh 86 projects  (Rs. 14,928.7 crore), Maharashtra 76 projects (Rs. 45,916.34 crore), Gujarat 72 projects (Rs. 45,315.02 crore), Rajasthan 65 projects (Rs. 16,479.5 crores), Tamil Nadu 50 projects (Rs. 21,491.04 crores), Haryana 35 projects (Rs. 67,840.57 crore), West Bengal 34 projects (Rs. 6,849.8 crore) and Orissa (Rs. 22,652.88 crore), Kerala (Rs. 22,281.54 crores) and Punjab (Rs. 4,653.7 crores) with  32 projects each.

Viability Gap Funding Scheme

A unique characteristic of infrastructure projects is that the positive externalities caused by projects cannot be captured by project revenues alone. Hence, a project may be economically essential but commercially unviable. Such projects, which are marginally viable or unviable, can be made financially attractive through a grant. Viability Gap Funding (VGF) Scheme was devised for Financial Support to PPPs in Infrastructure. It provides VGF support to PPP projects up to 20 per cent of the Total Project Cost (TPC). So far, 131 projects have been granted approval with TPC of Rs. 67,237.47 crore and VGF support of Rs. 13,077.28 crore. An amount of Rs. 617.00 crore has been disbursed as Viability Gap Funding (VGF) under the Scheme for Financial Support to PPPs in Infrastructure.

The following sub-sectors have been included in the list of sectors eligible for VGF support under the Scheme for Financial Support to Public Private Partnerships (PPPs) in Infrastructure i.e. Viability Gap Funding Scheme.

·         “Capital investment in the creation of modern storage capacity including cold chains and post-harvest storage” vide Department of Economic Affairs (DEA) Notification dated March 17, 2011.

·         “Education, health and skill development, without annuity provision” vide DEA Notification dated May 4, 2011.

·         “Infrastructure projects in Special Economic Zones and internal infrastructure in National Invest and Manufacturing Zones” vide Notification dated February 2, 2012.

·         “Oil/Gas/Liquefied Natural Gas (LNG) storage facility (includes city gas distribution network); Oil and Gas pipelines (includes city gas distribution network); Irrigation (dams, channels, embankments etc.); Telecommunications (fixed Network) (includes optic fibre/wire/cable networks which provide broadband/internet); Telecommunication towers; Terminal markets; Common infrastructure in agriculture markets; and Soil testing laborites” vide Notification dated May 24, 2012.

Scope of Viability Gap Funding (VGF) scheme to support PPP projects in infrastructure has also been extended to attract private investment. The Delhi Mumbai Industrial Corridor (DMIC) is being developed on either side along the alignment of the Western Dedicated Rail Freight Corridor with Central assistance of Rs. 18,500 crore spread over a period of 5 years.

Projects Approved under India Infrastructure Project Development Fund (IIPDF)

The IIPDF assists projects that closely support the best practices in PPP project identification and preparation. The IIPDF supports up to 75% of the project development expenses. So far, 51 projects have been approved with an IIPDF assistance of Rs. 64.51 crore.

National PPP Capacity Building Programme

To intensify and deepen the capacity building of public functionaries at the State and municipal level and to integrate the capacity building programme on PPPs in the ongoing programmes at the State level, a comprehensive National PPP Capacity Building Programme has been developed by Department of Economic Affairs (DEA), which has been rolled out at the State level in collaboration with KfW German Development Bank. Under it, eight different programmes have been conducted and 155 Trainers of Trainers (ToTs) have been covered. 15 States and two Central Training Institutes viz. Indian Maritime University and Lal Bahadur Shastri National Academy of Administration have rolled out training programmes on PPPs and have trained over 700 public functionaries who deal with PPPs in their domain.

National PPP Policy and Rules

Pursuant to the announcement by the Finance Minister in the Budget Speech for the year 2011-12 to come up with a “Comprehensive Policy on PPPs, DEAhas prepared the draft ‘National Public Private Partnership Policy’ which is under finalization. Further, pursuant to the recommendations of the Committee on Public Procurement, and to ensure that the PPP projects are procured and implemented by following laid down process and observing principles of transparency, competitive bid process, affordability and value for money, the draft ‘PPP Rules’ have been prepared. These are undergoing extensive consultation process at the Central and State Governments level before their finalization.

           

 Online Database

An online database on PPP projects www.pppindiadatabase.com  and the website www.pppinindia.com in the country have been developed. The purpose of the website is to provide comprehensive and current information on the status and extent of PPP initiatives in India at the central, state and sectoral level. The potential use of PPPs in e-governance, health and education sectors remains largely untapped across India as a whole, though of late there have been some activities shaping in these sectors.

GOVERNMENT INITIATIVES TO PROMOTE PPP

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The Union Finance Minister in his Budget Speech for 2007-08 announced in the Parliament the setting up of a Revolving Fund with a corpus Rs. 100 crore to accelerate the process of project preparation. To fulfil the commitment, Department of Economic Affairs has notified the Guidelines for India Infrastructure Project Development Fund Scheme to provide financial support for quality project development activities to the States and the Central Ministries through ‘India Infrastructure Project Development Fund (IIPDF)’ Scheme. Public Private Partnerships (PPPs) are being encouraged by Government of India as the preferred mode for execution and operation of infrastructure projects.

Several initiatives have been taken by the Central Government to promote PPPs. These include streamlining and standardising the process of appraisal and approval of PPP projects in the Central sector through setting up of the PPP Appraisal Committee (PPPAC); providing Viability Gap Funding (VGF) to projects under the Scheme for Financial Support to PPPs in Infrastructure; setting up India Infrastructure Finance Company Ltd (IIFCL) as a Special Purpose Vehicle (SPV) to meet the long term financing requirements of potential investors; and facilitating dissemination of information on PPPs as well as capacity building of officers of Central Ministries and State Governments to develop, appraise and execute PPP projects. The overall response to PPP as the preferred mode for the implementation of infrastructure is encouraging.

Project development has been identified as a critical area of attention to enable creation of a shelf of bankable Public Private Partnership projects that can be bid out. Accordingly, the Department of Economic Affairs (DEA) has embarked on a technical assistance programme, which provides the selected State Governments with in-house consultants to manage the process for project development. Fourteen states have indicated their requirement to avail of this technical assistance programme.

The IIPDF Scheme aims to put in place a mechanism to fund potential Public Private Partnership projects’ project development expenses including cost of engaging consultants and transaction advisor, thus increasing the quality and quantity of successful PPPs and allowing informed decision making by the Government based on good quality feasibility reports. The IIPDF Scheme will assist projects that closely support the best practices in PPP project identification and preparation.

The salient features of the Scheme are:

• IIPDF will be available to the Sponsoring Authorities for PPP projects for the purpose of meeting the project development costs including expenses incurred by the Sponsoring Authority in respect of feasibility studies, environment impact studies, financial structuring, legal reviews and development of project documentation including concession agreement, commercial assessment studies grading of projects.

• IIPDF would finance an appropriate portion of the cost of consultants and transactions advisors on a PPP project where such consultants and transaction advisors are appointed by the Sponsoring Authority either from amongst the transaction advisers empanelled by Department of Economic Affairs or through a transparent system of procurement under a contract for services.

• IIPDF will not finance the expenses incurred by the Sponsoring Authority on its own staff.

• Sponsoring Authority will create and empower a PPP Cell to undertake PPP project development activities and larger policy and regulatory issues to enlarge the number of PPP projects in Sponsoring Authorities’ shelf.

• IIPDF will be a grant and will ordinarily fund upto 75% of the project development expenses. On successful completion of the bidding process, the project development expenditure would be recovered from the successful bidder.

• In case of failure of bid, the assistance would be recovered and Sponsoring Authority would be liable to refund the amount of assistance received. Balance 25% will be co-funded by Sponsoring Authority. Assistance from IIPDF would be released after the share of the Sponsoring Authority has been released.

• The IIPDF would be on budgetary outlay of Ministry of Finance, Government of India. This would be supplemented through budgetary support by the Ministry of finance.

• The IIPDF would be administered by Empowered Institution under Ministry of Finance with Additional Secretary as Chairperson and Members from Department of Expenditure, Planning Commission, Joint Secretary dealing with the subject in line Ministry and Joint Secretary, DEA.

• Empowered Institution will select projects for which project development costs will be funded, set the terms and conditions under which the fund would be provided and recovered and set milestones for disbursing and recovering the fund.

With the facilitative environment being created by Finance Minister as well as the availability of funds through various Government schemes, PPPs in India are creating a robust enabling framework to catalyse infrastructure development in the country. 

Indian energy sector: an overview

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Energy has been universally recognized as one of the most important inputs for economic growth and human development. There is a strong two-way relationship between economic development and energy consumption. On one hand, growth of an economy, with its global competitiveness, hinges on the availability of cost-effective and environmentally benign energy sources, and on the other hand, the level of economic development has been observed to be reliant on the energy demand.
Energy intensity (Table E.1g) is an indicator to show how efficiently energy is used in the economy. The energy intensity of India is over twice that of the matured economies, which are represented by the OECD (Organization of Economic Co-operation and Development) member countries. India’s energy intensity is also much higher than the emerging economies—the Asian countries, which include the ASEAN member countries as well as China. However, since 1999, India’s energy intensity has been decreasing and is expected to continue to decrease. 

The indicator of energy–GDP (gross domestic product) elasticity, that is, the ratio of growth rate of energy to the growth rate GDP, captures both the structure of the economy as well as the efficiency. The energy–GDP elasticity during 1953–2001 has been above unity. However, the elasticity for primary commercial energy consumption for 1991–2000 was less than unity (Planning Commission 2002). This could be attributed to several factors, some of them being demographic shifts from rural to urban areas, structural economic changes towards lesser energy industry, impressive growth of services, improvement in efficiency of energy use, and inter-fuel substitution. 

The energy sector in India has been receiving high priority in the planning process. The total outlay on energy in the Tenth Five-year Plan has been projected to be 4.03 trillion rupees at 2001/02 prices, which is 26.7% of the total outlay. An increase of 84.2% is projected over the Ninth Five-year Plan in terms of the total plan outlay on energy sector. The Government of India in the mid-term review of the Tenth Plan recognized the fact that under-performance of the energy sector can be a major constraint in delivering a growth rate of 8% GDP during the plan period. It has, therefore, called for acceleration of the reforms process and adoption of an integrated energy policy.

In the recent years, the government has rightly recognized the energy security concerns of the nation and more importance is being placed on energy independence. On the eve of the 59th Independence Day (on 14 August 2005), the President of India emphasized that energy independence has to be the nation’s first and highest priority, and India must be determined to achieve this within the next 25 years.

Demand and supply scenario

In the recent years, India’s energy consumption has been increasing at one of the fastest rates in the world due to population growth and economic development. Primary commercial energy demand grew at the rate of six per cent between 1981 and 2001 (Planning Commission 2002). India ranks fifth in the world in terms of primary energy consumption , accounting for about 3.5% of the world commercial energy demand in the year 2003. Despite the overall increase in energy demand, per capita energy consumption in India is still very low compared to other developing countries.

India is well-endowed with both exhaustible and renewable energy resources. Coal, oil, and natural gas are the three primary commercial energy sources. India’s energy policy, till the end of the 1980s, was mainly based on availability of indigenous resources. Coal was by far the largest source of energy. However, India’s primary energy mix has been changing over a period of time.

Despite increasing dependency on commercial fuels, a sizeable quantum of energy requirements (40% of total energy requirement), especially in the rural household sector, is met by non-commercial energy sources, which include fuelwood, crop residue, and animal waste, including human and draught animal power. However, other forms of commercial energy of a much higher quality and efficiency are steadily replacing the traditional energy resources being consumed in the rural sector.
Resource augmentation and growth in energy supply has not kept pace with increasing demand and, therefore, India continues to face serious energy shortages. This has led to increased reliance on imports to meet the energy demand.

Coal 

India now ranks third amongst the coal producing countries in the world. Being the most abundant fossil fuel in India till date, it continues to be one of the most important sources for meeting the domestic energy needs. It accounts for 55% of the country’s total energy supplies.
Through sustained increase in investment, production of coal increased from about 70 MT (million tonnes) (MoC 2005) in early 1970s to 382 MT in 2004/05. Most of the coal production in India comes from open pit mines contributing to over 81% of the total production while underground mining accounts for rest of the national output (MoC 2005). Despite this increase in production, the existing demand exceeds the supply. India currently faces coal shortage of 23.96 MT. This shortage is likely to be met through imports mainly by steel, power, and cement sector (MoC 2005). India exports insignificant quantity of coal to the neighbouring countries. The traditional buyers of Indian coal are Bangladesh, Bhutan, and Nepal.
The development of core infrastructure sectors like power, steel, and cement are dependent on coal. About 75% of the coal in the country is consumed in the power sector (MoC 2005).

Power

Access to affordable and reliable electricity is critical to a country’s growth and prosperity. The country has made significant progress towards the augmentation of its power infrastructure. In absolute terms, the installed power capacity has increased from only 1713 MW (megawatts) as on 31 December 1950 to 118 419 MW as on March 2005 (CEA 2005). The all India gross electricity generation, excluding that from the captive generating plants, was 5107 GWh (gigawatt-hours) in 1950 and increased to 565 102 GWh in 2003/04 (CEA 2005).
Energy requirement increased from 390 BkWh (billion kilowatt-hours) during 1995/96 to 591 BkWh (energy) by the year 2004/05, and peak demand increased from 61 GW (gigawatts) to 88 GW over the same time period. The country experienced energy shortage of 7.3% and peak shortage of 11.7% during 2003/04. Though, the growth in electricity consumption over the past decade has been slower than the GDP’s growth, this increase could be due to high growth of the service sector and efficient use of electricity.
Per capita electricity consumption rose from merely 15.6 kWh (kilowatt-hours) in 1950 to 592 kWh in 2003/04 (CEA 2005). However, it is a matter of concern that per capita consumption of electricity is among the lowest in the world. Moreover, poor quality of power supply and frequent power cuts and shortages impose a heavy burden on India’s fast-growing trade and industry.

Oil and natural gas

The latest estimates indicate that India has around 0.4% of the world’s proven reserves of crude oil. The production of crude oil in the country has increased from 6.82 MT in 1970/71 to 33.38 MT in 2003/04 (MoPNG 2004b). The production of natural gas increased from 1.4 BCM (billion cubic metres) to 31.96 BCM during the same period. The quantity of crude oil imported increased from 11.66 MT during 1970/71 to 81 MT by 2003/04. Besides, imports of other petroleum products increased from 1 MT to 7.3 MT during the same period. The exports of petroleum products went up from around 0.5 MT during 1970/71 to 14 MT by 2003/04. The refining capacity, as on 1 April 2004, was 125.97 MTPA (million tonnes per annum). The production of petroleum products increased from 5.7 MT during 1970/71 to 110 MT in 2003/04.

India’s consumption of natural gas has risen faster than any other fuel in the recent years. Natural gas demand has been growing at the rate of about 6.5% during the last 10 years. Industries such as power generation, fertilizer, and petrochemical production are shifting towards natural gas. India’s natural gas consumption has been met entirely through domestic production in the past. However, in the last 4/5 years, there has been a huge unmet demand of natural gas in the country, mainly required for the core sectors of the economy. To bridge this gap, apart from encouraging domestic production, the import of LNG (liquefied natural gas) is being considered as one of the possible solutions for India’s expected gas shortages. Several LNG terminals have been planned in the country. Two LNG terminals have already been commissioned: (1) Petronet LNG Terminal of 5 MTPA (million tonnes per annum) at Dahej, and (2) LNG import terminal at Hazira. In addition, an in-principle agreement has been reached with Iran for import of 5 MTPA of LNG.

Renewable energy sources

Renewable energy sources offer viable option to address the energy security concerns of a country. Today, India has one of the highest potentials for the effective use of renewable energy. India is the world’s fifth largest producer of wind power after Denmark, Germany, Spain, and the USA. There is a significant potential in India for generation of power from renewable energy sources—, small hydro, biomass, and solar energy. The country has an estimated SHP (small-hydro power) potential of about 15 000 MW. Installed combined electricity generation capacity of hydro and wind has increased from 19 194 MW in 1991/92 to 31 995 MW in 2003/04, with a compound growth rate of 4.35% during this period (MoF 2005). Other renewable energy technologies, including solar photovoltaic, solar thermal, small hydro, and biomass power are also spreading. Greater reliance on renewable energy sources offers enormous economic, social, and environmental benefits.

The potential for power production from captive and field-based biomass resources, using technologies for distributed power generation, is currently assessed at 19 500 MW including 3500 MW of exportable surplus power from bagasse-based cogeneration in sugar mills (MNES 2005).

Future scenario

Increasing pressure of population and increasing use of energy in different sectors of the economy is an area of concern for India. With a targeted GDP growth rate of 8% during the Tenth Five-year Plan, the energy demand is expected to grow at 5.2%. Driven by the rising population, expanding economy, and a quest for improved quality of life, the total primary energy consumption is expected to about 412 MTOE (million tonnes oil equivalent) and 554 MTOE in the terminal years of the Tenth and Eleventh Plans, respectively (Planning Commission 1999). 

The International Energy Outlook 2005 (EIA 2005b) projects India’s gas consumption to grow at an average annual rate of 5.1%, thereby reaching 2.8 trillion cubic feet by 2025 with the share of electric power sector being of 71% by that time. Coal consumption is expected to increase to 315 MT over the forecast period. In India, slightly less than 60% of the projected growth in coal consumption is attributed to the increased demand of coal in the electricity sector while the industrial sector accounts for most of the remaining increase. The use of coal for electricity generation in India is expected to increase by 2.2% per annum during 2002–25, thus requiring an additional 59 000 MW of coal-fired capacity. Oil demand in India is expected to increase by 3.5% per annum during the same time.

It is quite apparent that coal will continue to be the predominant form of energy in future. However, imports of petroleum and gas would continue to increase substantially in absolute terms, involving a large energy import bill. There is, therefore, an urgent need to conserve energy and reduce energy requirements by demand-side management and by adopting more efficient technologies in all sectors.

Renewable Energy an Important Source

Electricity is one of the prime requirements for any country to develop. Without it, infrastructural bottlenecks accentuate, causing hurdles in growth across the board. Industries, Agriculture, services and in fact every walk of life need electricity to move forward. With this in view, India has been making all efforts to generate as much electricity as possible from different sources. These include Hydro, thermal, nuclear and even non conventional sources like solar and wind energy.

           

 The country is facing acute power shortage and its per capita consumption is one of the lowest. 75 % of the electricity is generated by burning coal and natural gas. If we continue to bank on our coal reserves so heavily these are estimated to last just for another 40 years. Besides, burning of coal raises environmental issues which should be avoided to the extent we can. Twin challenges of power and clean environment have to be met squarely.

It is in this backdrop that the government of India has made energy generation through non-conventional sources one of its top priorities. Creation of a separate Ministry of new and renewable energy is a testimony to this effort.  Because of these efforts generation from renewable sources of energy has trebled since 2005 from 5 to 15 GW. By 2022 it should reach 40 GW. According to an estimate, Potential of power generation through renewable sources of energy in the country is 150 GW. A lot more needs to be done therefore.

As of now, electricity generation from renewable sources of energy is only 3.5%. It is likely to increase to 10% by 2022.

 Jawaharlal Nehru National Solar Mission, launched on the 11th January, 2010 by the Prime Minister Dr. Manmohan Singh is a major initiative in the field of giving a boost to utilisation of non-conventional sources of energy. The Mission has set the ambitious target of deploying 20,000 MW of grid connected solar power by 2022 . It is aimed at reducing the cost of solar power generation in the country through long term policy; large scale deployment goals; aggressive R&D; and domestic production of critical raw materials, components and products. The  Mission will create an enabling policy framework to achieve this objective and make India a global leader in solar energy.

The 11th Five Year Plan witnessed an impressive progress in research and development and deployment in renewable energy sector. Ministry of new and renewable energy has sponsored 169 R&D projects in the area of solar energy, bio-energy and hydrogen and fuel cells with a total outlay of about Rs.525 crore. Renewables contributed to nearly 14,660 MW power during the 11th Plan and they will become more important in future.

The Ministry is providing subsidy of 30% of the benchmark cost  of the solar photovoltaic (SPV) systems. It is also providing subsidy  for installing solar lanterns, home lights and small capacity PV plants  through NABARD, Regional Rural Banks and other Commercial Banks.  Banks also extend credit facility to the beneficiaries at usual commercial rates to meet the rest of the cost. Upto 31st March, 2012 over nine lakh five thousand  solar lanterns, eight lakh sixty two thousand  solar home lights and about eight thousand  solar water pumping systems have been installed in the country. During 2011-12, the  Ministry sanctioned a project for installation of standalone SPV power plants aggregating to 8740 kWp capacity in 4115 schools and 9 examination centers. During the current financial year,  a project for installation of 560 SPV water pumping systems in six districts of Bihar has been sanctioned. A Plan has also been prepared for increased exploitation of various renewable energy sources in the country during the 12th Plan .

The 12th Plan proposals envisage 29,800 MW grid-interactive and 3267 MW off-grid power generation capacity addition from various renewable energy sources and deployment of 7 lakh biogas plants, 35 lakh cook stoves, 8.5 lakh solar cookers and 80.5 lakh solar thermal energy systems in the country.

Twenty  million solar lighting systems and 20 million sq. solar thermal collector area is envisaged by 2022.

Efforts are also on to promote wind power through private sector investment by providing fiscal and promotional incentives such as concessional import duty on certain components of wind electric generators and excise duty exemption to manufacturers. 10 years tax holiday on income generated from wind power projects is also available.  Besides, loans for installing windmills are available from Indian Renewable Energy Development Agency (IREDA) and other Financial Institutions. Technical support  is provided by the Centre for Wind Energy Technology (C-WET), Chennai.  The Government had announced a Generation Based Incentive (GBI) during 11th Plan period. Efforts are being made to continue the GBI scheme in 12th Plan.

National Tariff Policy was amended mandating State discoms to have a solar RPO of 0.25% by 2013reaching  3% by 2022. The Government has already implemented a scheme to procure 1000 MW of solar power and supplying it to State discoms after bundling with equivalent capacity of thermal power.

Even generation of power from garbage and municipal solid waste is also being given due attention. The 16 megawatt project installed at Okhla in New Delhi is the only such project in operation in the country. The project, commissioned in May this year, has so far generated about 24 million units (kWh) of electricity. Projects on energy from municipal solid wastes (MSW) are being taken up by the Municipal Corporations in public private partnership mode by tying up with selected private companies.

The need to  tap new and renewable sources of energy to meet energy requirements of the country  and protect the environment from greenhouse gases can hardly be overemphasised. Fortunately, there is abundance of solar energy available in most parts of the country. Ladakh, for instance has bright sunshine for 300 out of 360 days a year. No wonder it is one of the focus areas of the ministry in exploiting solar energy. What matters is to tap it for electricity generation or for other useful purposes. To make it affordable and cost effective, sincere efforts have to be made and suitable policies formulated. A total of around 1000 MW capacity solar power plants have been installed in the country in last two years and if this trend continues, the country will indeed achieve the target of 20000 MW by 2022. Alongside, due attention has to be paid to provide quality product and service  to develop confidence among the users.

The National Food Security Ordinance – Highlights

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The National Food Security Ordinance is a historic initiative for ensuring food and nutritional security to the people. It gives right to the people to receive adequate quantity of foodgrains at affordable prices. The Food Security Bill has special focus on the needs of poorest of the poor, women and children. In case of non-supply of foodgrains now people will get Food Security Allowance. The bill provides for grievance redressal mechanism and penalty for non compliance by public servant or authority. Other features of the Ordinance are as follows.

Coverage of two thirds population to get highly susidized foodgrains

            Upto 75% of the rural population and upto 50% of the urban population will have uniform entitlement of 5 kgfoodgrains per month at highly subsidized prices of Rs. 3, Rs. 2, Rs. 1 per kg. for rice, wheat, coarse grains respectively .It will entitle about two thirds of our 1.2 billion population to subsidised foodgrains under the Targeted Public Distribution System (TPDS.

 Poorest of the poor continue to get 35 kg per household

            The poorest of poor households would continue to receive 35 Kg foodgrains per household per month underAntyodaya  Anna Yajna  at subsidized prices of Rs 3, Rs 2 and Rs 1. It is also proposed to protect the existing allocation of foodgrains to the States/Uts, subject to it being restricted to average annual offtake during last three years.

Eligible households to be identified by the States

           

            Corresponding to the coverage of 75% rural and 50 % of urban population at all India level, State wise coverage will be determined by the Central Government. The work of identification of eligible households is left to the States/UTs, which may frame their own criteria or use Social Economic and Caste Census data, if they so desire.

Special focus on nutritional support to women and children

            There is a special focus on nutritional support to women and children. Pregnant women and lactating mothers, besides being entitled to nutritious meals as per the prescribed nutritional norms will also receive maternity benefit of at least of Rs. 6000/-. Children in the age group of 6 months to 14 years will be entitled to take home ration or hot cooked food as per prescribed nutritional norms.

Food Security Allowance in case of non supply of foodgrains

            The Central Government will provide funds to States/UTs in case of short supply of food grains from Central pool, In case of non-supply of food grains or meals to entitled persons, the concerned State/UT Governments will be required to provide such food security allowance as may be prescribed by the Central Government to the beneficiaries.

States to get assistance for intra-State transportation and handling of foodgrains

            In order to address the concern of the States regarding additional financial burden, Central Government will provide assistance to the States towards cost of intra-State transportation, handling of foodgrains and FPS dealers’ margin, for which norms will be developed. This will ensure timely transportation and efficient handling of foodgrains.

Reforms for doorstep delivery of foodgrains

            The Bill also contains provisions for reforms in PDS through doorstep delivery of foodgrains, application of information and communication technology (ICT) including end to end computerisation, leveraging ‘Aadhaar’ for unique identification of beneficiaries, diversification of commodities under TPDS etc for effective implementation of the FoodSecurity Act. Some of these reforms are already underway.

Women Empowerment-- Eldest women will be Head of the household

            Eldest woman of eighteen years of age or above will be head of the household for issue of ration card, and if not available, the eldest male member is to be the head of the household.

Grievance redressal mechanism at district level

             There will be state and district level redressal mechanism with designated officers.  The States will be allowed to use the existing machinery for District Grievance Redressal Officer (DGRO), State Food Commission, if they so desire, to save expenditure on establishment of new redressal set up. Redressal mechanism may also include call centers, helpline etc.

Social audits and vigilance committees to ensure transparency and accountability

             Provisions have also been made for disclosure of records relating to PDS, social audits and setting up of Vigilance Committees in order to ensure transparency and accountability.

Penalty for non compliance

            The Bill provides for penalty to be imposed on public servants or authority, if found guilty of failing to comply with the relief recommended by the District Grievance Redressal Officer (DGRO).

Expenditure

At the proposed coverage of entitlement, total estimated annual foodgrains requirement is 612.3 lakh tons and corresponding estimated food subsidy for 2013-14 costs is about  Rs.1,24,724 crore.