Monday, July 30, 2018

Foreign Investors back India’s Electric vehicle push https://t.co/HCVK3TDt9N https://t.co/eWUP1mwNGl


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Foreign Investors back India’s Electric vehicle push

The Swiss engineering company ABB is poised to expand into India’s electric vehicle charging market by harnessing its strong foothold in the solar energy market to create a clean charging ecosystem for the country. According to the company, 50% of the solar energy passes through ABB inverters. The company has already installed a charging station at the NITI Aayog office, which is capable of charging an electric vehicle (EV) in 30 mins. The company locally manufactures

Bengaluru manufacturing unit has the capability of producing the necessary charging equipment and fast charging solutions are provided by the company in other countries. The company awaits government directives on various aspects of e-mobility like charging standards.

The Government of India does plan to electrify 30% of all vehicles by 2030. Although a formal EV policy has not been formulated at the national level, individual states are gradually adopting these in order to become electric vehicle friendly by reducing registration charges and creating supporting infrastructure vis-à-vis charging areas etc. Telangana has now become the fourth state after Karnataka, Maharashtra and Andhra Pradesh to have its own EV policy. The policy is mainly aimed at making the state EV vehicle friendly by measures such as reducing registration charges. It also aims at creating charging areas and basic infrastructure.

Even the private sector has shown interest in EVs with the motivation to create a clean ecosystem. Ola, with its Mission Electric programme, plans to have one million electric vehicles on its platform by 2021. It plans to introduce 10,000 EVs, mainly e-rickshaws, over the next 12 months. The company is working with state governments and hopes to have a robust business model ready, after an extensive period of testing.

Other companies like Suzuki, Toshiba and Denzo plan to produce lithium ion batteries for EVs in India. Currently, they are mostly imported from China. Lithium-ion batteries account for 50% of the cost of an electric vehicle and making them is relatively more expensive than the batteries for traditional cars. Thus, local production of lithium ion batteries will be a welcome move for a clean energy ecosystem in India.

As a way forward, India must make the switch to EVs and creating a clean energy ecosystem. According to a NITI Aayog and Rocky Mountain Institute report, India can save 64% of anticipated passenger road-based mobility-related energy demand and 37% of carbon emissions in 2030 by pursuing a shared, electric, and connected mobility future. This will also mean saving around INR 3.9 lakh crores in 2030, if the price of crude oil is taken as US$52 per barrel. The report further states that India’s massive IT industry can be mobilised to serve the needs of the new ecosystem by creating new employment opportunities and boosting foreign investments and the larger economy. Flagship schemes of the Government of India like Digital India and Make in India have already boosted entrepreneurship and will be beneficial for the economy.

Thus, India has the all the makings to successfully switch to EVs and create a cleaner and greener energy ecosystem in the near future.

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Friday, July 27, 2018

Renewable Energy: Developing Economies Dominate the Global Landscape https://t.co/K1G8E49Z3P https://t.co/9dUDFQtLDe


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My Poor MP https://t.co/MYzWWXPk42 https://t.co/pMJVfZlDmj


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Renewable Energy: Developing Economies Dominate the Global Landscape

The BRICS and other developing economies are the driving force when it comes to weaning the world off fossil fuels, according to a recent UN report (link: http://fs-unep-centre.org/sites/default/files/publications/gtr2018v2.pdf)

Global new investment in renewable energy: developed vs. developing countries, 2004-2017, $BNON 2016, $BN

2015 began the trend and by 2017, the developing countries clearly established their leadership with 63% of global renewable energy investment.  The big three – China, India and Brazil attracted more than 50% of the total global annual investment in renewable energy last year. In comparison, developed economies cumulatively contributed 37%. China, the undisputed leader, alone claimed 45% of the total global investment.

 

In dollar terms, the total investments in renewables in developing economies totalled $177.1 billion, which reflected a 20% increase from 2016. These figures disguise the corresponding drop in prices of renewable energy thereby making the progress of the developing economies even more impressive.

 

India was the fourth largest renewable energy investment destination in 2017, after China and the US with a total of $10.9 billion. However, that reflected an almost 21% drop in renewable investments year on year and experts suggest India needs substantially more investments to achieve PM Modi’s ambitious goals for the country.

The list below shows the top 10 countries with regards to renewable energy investment in 2017.

New investment in renewable energy by top 10 countries and asset class, 2017, and growth on 2016, $BN

Europe with a 36% drop in renewable energy investments, thanks to the UK investment in renewables dwindling down to $7.6 billion (a drop of 65%) and Germany losing 35% of its investment to $10.4 billion, was the key reasons why developed economies fared badly in 2017. Yet, both those countries retained their position within the top 10 while France and Belgium dropped out of the leader’s board.

 

Considering the European Union along with the US and China are the three top emitters (over 50%) of CO2 in the atmosphere, at some point, the EU needs to start taking the onus of controlling emissions rather than impose restrictions on the other countries.

 

“If your time to you
Is worth savin’
Then you better start swimmin’
Or you’ll sink like a stone
For the times they are a-changin’.” Bob Dylan 1963

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My Poor MP

 

Everyone has views on who to vote for… but who do we really vote for?

Siddharth Jhawar

 

Imagine applying for a job in which your odds of selection were 1 in 2 million. However, once you got in, you realize that what your job description says and what your bosses expect from you are essentially different roles. Your clients are suspicious and cynical of your day-to-day activities, and some of them loathe you. Compensation is quite poor, you would get paid better elsewhere, and, in fact, you may have to bear your office expenses too. All this while, many other people want your job and so you try hard to keep it. Welcome to the life of an Indian Member of Parliament!

As the Modi government comfortably sailed through the motion of no-confidence, India’s democratic machinery is gearing towards general elections in 2019. While there is no dearth of views on who to vote for, or who to vote against, it is worth understanding what that vote means. The 2014 election was more presidential than parliamentary, given how people voted for a Modi Sarkar. So, one major impact of our vote is that it indirectly chooses the central government. However, our direct vote goes to elect our Member of Parliament or MP, who will then solve our bijli-sadak-paani problems, create jobs, improve healthcare, promote business, open education institutes, improve law and order and the list can go on. That is precisely the problem!

It is not unreasonable for ambitious citizens of a historically deprived society to have such expectations. It is also the role of the state to provide utilities. The issue is, however, that the MP is neither equipped nor in-charge to fix these problems.

The first parliaments in 12th century Europe were intended to be councils to “talk” (parlamentum in Latin means talk), judge and later help the monarch in legislation. Over centuries, as democracy made parliaments more representative, MPs typically started representing different geographic areas of the country. However, while their rights and responsibilities remained around representing, discussing, and legislating, the expectations from their constituents changed. When citizens need basic amenities, they have been trained to turn to their local raja, the MP.

Our democratic setup and constitution has clear divisions of executive and legislative responsibilities. An MP is well equipped to raise important issues in Parliament, keep the executive branch transparent through questions, and at least on paper, decide how to vote on a Bill. But really, that does not matter to their ordinary voters who have not had running water since the last two days. The executive powers mostly rest in, as the saying goes, “desh mein PM, rajya mein CM, aur jila mein DM” (PM in the country, CM in the state, and DM in the district). While the Central Government is the ultimate authority on issues of national importance (national security, macroeconomic stability, direct taxation, etc.), it is the State Government which is more empowered to deal with issues closer to the people’s day-to-day needs (law and order, health, local government, etc.). This division of responsibility increased further when the 14th Finance Commission recommended more money to be devolved from the Centre to the States, with the reasoning that states were better placed to deal with regional and local issues.

Who holds power in the Indian democracy is a very interesting subject, one which can be discussed at length. One measure of power is having the financial resources to implement. Ultimately most of the money allocated to state and central government schemes flows down to the third most important person of the executive hierarchy, the DM! District Magistrates / Collectors and their mammoth administrative machinery is eventually responsible to spend the money and implement government projects. Thus, if your MP wants to improve local education, they can “recommend” steps to the DM, on which the DM has a great amount of discretion. And while we are on the issue of money, readers outside the Government system would be shocked to know that a Municipality councilor, a Mukhiya, or an MLA is much better placed to provide you with civic amenities than an MP is. But an MP is given funds, right? As always, the devil is in the detail. An MP gets INR 5 crore per year under the MP Local Area Development Scheme (MP LADS), and when spread over 25 lakh people in a constituency, this boils down to a princely sum of INR 20 per person annually. Contrary to this, MLAs get INR 3-5 crores for 4-6 lakh people, the number changing with states, but implying a discretionary spending power of ~5x. It is almost embarrassing to realize that MPs are not even provided with enough expenses to make their offices function or live a semi-decent life, which may not be the only factors, but surely end up being important contributors to the corruption prevalent in our lawmakers.

What power do they have then? Money is one form, but clearly MPs don’t have it. Another form of power is the ability to reward or punish employees, which can be leveraged to push one’s policies. This form of power keeps the bureaucracy’s steel frame intact, since a bureaucrat knows that their superior can decide their next posting. An MP, however, has virtually no say in deciding any postings within the setup. While they can make some nominations to committees and supervise the district’s administration performance, their tangible authority is minimal. A truly astute MP uses an intangible source of power – that of his or her stature. Just like the Queen of England can boost a cause by attending a dinner in its support, an MP can raise issues in the media and in the Parliament, bringing them under the limelight. Through the respect, and fear, which they command as public representatives, they can request, lobby, threaten, bully, and coax the concerned authority to pay heed to their recommendation. This, in the author’s humble view, is the only true power which directly rests in the senior-most elected representative in our democracy.

The intention of the article is not to sympathize with MPs, but instead, to point out this structural flaw in our democracy and administration. Without being mindful of the helplessness and challenges which our representatives face, we, the normal citizens, would neither be able to reasonably evaluate our MPs nor be able to approach the relevant authority to demand our civic amenities. NGOs and government machinery should create awareness and educate the voting public around the roles and responsibilities of our various representatives, and who should be approached for what. The intelligent voters should understand the role of their MP and what to expect or not to expect from them. In the longer term, as our democracy becomes more mature and robust, lawmakers should have relatively more autonomy to vote on bills based on their own conscience or their electorate’s benefit, instead of blindly voting along party lines. This would increase their representative power in the Parliament and bring decision-making closer to voters. On a structural level, the bureaucratic machinery should gradually become more answerable to the directly elected representatives of people. The MP LADS should be allocated more funds, which of course, should be subject to the highest levels of scrutiny.

In 2019, when your local MP candidate promises bijli-sadak-paani, be the smart citizen and ask, “Par Netaji, yeh karoge kaise”?

 

 

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Tuesday, July 24, 2018

India Outbound Investment

Investments abroad not only stimulate economic symbiosis between India and the host nation, but also help in strengthening the Rupee, directly involving the ordinary citizens of the nation. Overseas Direct Investment (ODI) also enhance exchange of technology, skills, generate employment, and utilise raw materials in India and the host countries. Most importantly, ODI gives India access to global markets, integrating the Indian economy to the rest of the world and making a global footprint for the nation.

According to the RBI data, the ODI for the past three years are given below.

As the chart above shows, FDI investments are divided into three categories : Equity, loans and guarantee issued. Most of the investment goes into guarantees, followed by equity and lastly loans. A very small amount of guarantees are actually invoked, so when the flow of dollars is concerned, equity and loans are relevant.

Main Sectors for Investment

From the RBI data for the last 3 years, it is quite clear that manufacturing has attracted the most attention from Indian investors followed by the finance and service sector. India has a service based economy. Even the FDI to India is IT sector, which is again a service based area. Hence Indian investors have to look abroad for investments in the manufacturing sector.

Top Countries for ODI

In the past 3 years the top countries for ODI have been Mauritius, Singapore, USA, UAE, Netherlands. According to the India Brand Equity Foundation (IBEF), these countries have high tax benefits, especially Mauritius, Singapore and Netherlands, which makes them the top ODI countries. Mauritius and Singapore are interestingly the top two countries with FDI in India are Mauritius and Singapore.

In this year’s budget speech, the Finance Minister Arun Jaitley has expressed that the government wishes to bring an integrated and coherent ODI policy. The Hindu reports that such measures could help MNC’s go beyond Merger and acquisitions and open up and extensive global market. If such measures do take place, this would be a huge boost for the corporates and the Indian economy.



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India Outbound Investment https://t.co/dueEPqkGui https://t.co/xQPZUdlKm4


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An Overview of M&A deals in India https://t.co/GzirEcFXs7 https://t.co/nCTTYKAPsL


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RAMANUJAN: TRAILBLAZER IN EDUCATION https://t.co/c6JW0MPEVH https://t.co/AK3lDDgV70


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M&A Deals steady in the Indian Auto Sector https://t.co/qdjfYaaRGW https://t.co/9wF1a8Zpkz


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An Overview of M&A deals in India

There have been several major Mergers & Acquisitions (M&As) deals in India in recent times with a surge in consolidations and big-ticket transactions. 2016 was significant has there were transactions worth USD 72.4 billion across nearly 1500 deals that marked a 44% year-on-year increase in values and broke the 2007 record of $67 billion. This was driven by a growth in domestic consumption, before the impact of demonetization, which helped in the increase of both domestic and cross-border deals. The major focus during this period was in core sectors like energy, natural resources, telecoms, pharmaceuticals and healthcare.

2017 was an even bigger success as M&A values rose to $ 77.6 billion, with a marked increase in value by 53.3% and volume of deals rising by 2.5%. Political stability and economic reforms helped propel the steady growth.

 

In 2018, the period from January to March witnessed 118 deals worth $18 billion. This was much greater in comparison with the same quarter in 2017.

As of May 2018, a record-breaking figure of $25 billion has been achieved due to the remarkable $16 billion Walmart-Flipkart deal. Walmart buying Flipkart, Schneider and Temasek buying L&T electricals has heavily boosted this trend of the return of foreign buyers.

Following this event, the total values over the past 5 months’ worth of deals has swelled up to $68 billion, with 204 transactions. Both inbound activity and domestic consolidation deals have been the highest in the past decade, thus seemingly providing a recovery from the disruptive effects of GST and demonetization. Among the big-ticket deals, 10 conformed to the under the billion-dollar category. Start-up companies led the way.

The momentum of the first half of 2018 is expected to continue during the rest of the year. A sharp deceleration akin to the one witnessed in the second half of 2011 had been anticipated but has not yet surfaced prominently. Large private equity investors who have already witnessed several cycles of elections are likely to stay afloat and in turn will possibly attract foreign strategic buyers who might be interested in acquiring Indian assets. Further, equity valuations have been found to trend in the middle range and this provides an important incentive in deal-making.

This has led to the negation of the expectation that large-scale deals would suffer major setbacks with the upcoming general elections stirring up major economic changes, leading to the economy losing its pace in the face of corporate valuations. Thus, 2018 may turn out to be brilliantly prospective in terms of Mergers and Acquisitions.



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RAMANUJAN: TRAILBLAZER IN EDUCATION

Srinivasa Ramanujan, arguably India’s greatest mathematician, had but one year of college education and was largely self-taught. Born on December 22, 1887 in the South Indian town of Erode in Tamil Nadu, Ramanujan began his single-minded devotion to mathematics when he borrowed Carr’s Synopsis of Elementary Results in Pure Mathematics from the local government college library. Shortly thereafter, Ramanujan passed the matriculation exam from the University of Madras with a first class and entered the Government College at Kumbakonam. But, being totally absorbed in mathematics, he would not study any other subject thus leading to his failure to obtain a college degree.  

What Ramanujan went on to do later was unimaginable in the colonial days of the country. He made contact with the famous Cambridge mathematician G.H. Hardy who, quite certain that Ramanujan was nothing short of a mathematical genius, asked him to come to London. After a little persuasion from E.H. Neville, Ramanujan finally went to London, thus overcoming the fear of losing his Brahmin identity upon crossing the sea to a foreign land,  a prevalent social stigma at that time. This paved the way for thousands of Indians to follow suit in later years.


With Hardy, Ramanujan laid down some key concepts for 20th and even 21st century mathematics. Together they developed mathematical techniques like the circle method, which has helped tackle tricky mathematical problems like the Waring’s conjecture and Goldbach Conjecture. Their work also paved the way for a new branch of mathematics called probabilistic number theory.


When Hardy rated his contemporary mathematicians on the basis of pure talent, on a scale of 100, he gave himself a score of 25, Littlewood a score of 30, the great German mathematician D. Hubert 80, and Ramanujan 100.


Though it might be difficult to grasp the sheer brilliance of Ramanujan because of the highly advanced field of work he was working in, what is remarkable about him is his cultural legacy. He was an icon who in the midst of the British colonial period signified the respectability that his people deserved from their colonial rulers.

On Ramanujan’s birth centenary in 1987, Nobel prize winning astrophysicist Subhramanyam Chandrashekhar said that Ramanujan’s act of going to England and being respected and celebrated by his own oppressors filled him with a sense of joy and pride. He further added that the fact that Ramanujan grew up in an intellectually and scientifically restricted environment and could still go on to be regarded as one of the greatest mathematicians of the century was a source of immense hope for young and aspiring Indian men and women. Pursuing science and education became priorities in order to fulfil the dreams of the yet to be independent India.

 

Ramanujan is probably India’s most celebrated scientific figure. At least five films have been made on his life. Only when all of Ramanujan’s theorems are proved and his work thoroughly understood can a definitive measure of his influence be made. Till then, Ramanujan continues to amaze us as the man who, in a  life-span of 32 years, seems to have known the infinity.

 



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M&A Deals steady in the Indian Auto Sector

The Indian automotive industry is one of the largest in the world, accounting for 7.1% of the country’s GDP. It has been increasing rapidly and is expected to become the 4th largest manufacturer in the world by 2020, behind only China, U.S. and Japan. Due to the attempts to reduce carbon footprints by governments across the world, the global automobile industry is going through major technological disruptions vis-à-vis introduction of electric vehicles (EV), digitization, vehicle connectivity, changing consumer preferences and business models. Thus, the major drivers of the landscape of M&As in the Indian automotive sector are overseas expansion and technological disruptions.

India has successfully remained steadily buoyant with the announcement of 18 transactions worth $500 million in 2018, as reported by Grant Thorton and Automotive Component Manufacturers Association of India. The year 2017 witnessed 13 deals alone in this sector, while in 2018, 4 deals were signed within the first 3 months itself. The Indian industry appears to have chosen the inorganic route i.e. procuring new assets through M&As thus causing vast expansions in the business sales. This helps in maintaining balance between the investments for the present growth cycles and remain prepared for anticipated market disruptions in the near future.

The eagerness of Indian companies acquiring counterparts abroad is driven by their high profits due to the rise in domestic sales and gaining access to new markets and customers. Unlike component makers in the developed countries, their domestic sales seem to have been unaffected by the major shift to towards electric vehicles. Overseas acquisitions have reached a record-high, especially in the developed markets with Motherson Sumi Systems Ltd acquiring Reydel Automotive Holdings for $201 million and Precision Camshafts Ltd (based in Maharashtra) acquiring German MFT Motoren and Fahrzeugtechnik GmbH.

However, in order to keep up with the plethora of technological disruptions, the Indian auto component industry is accelerating investments in technology development and acquisitions. The Indian Government is also continually pushing the industry to opt for the development of electric vehicles and achieve higher electric vehicle production. Lower emission standards are also being targeted to combat the problem of air pollution. Further, in the evolving auto tech landscape, an increasing number of startups are adding to different segments of the value chain. However, the government’s recent decision to increase the GST on hybrid vehicles is unfavorable considering its vision to have all emission-free vehicles on the road by 2030.

A critical area of concern for manufacturers is R&D for building the technological capabilities for software and hardware integration. Addressing skill gaps for new technologies and products via training, certifications and industry-academia interaction is another challenge. Addressing these would entail increasing global footprints and improving the existing industry perception by embracing globalization, creating an in-house global culture and developing customizable/integrated rather than cookie-cutter solutions.

Thus, future M&As among the automotive component manufacturers will be largely governed by the intent to access electronics knowledge, expertise and technology, establish technical collaborations and attract capital for local manufacturing. A conducive policy environment and clear roadmap must be provided by the government to industry stakeholders in order to boost industry confidence, prioritize resources and develop alternative fuels. Given that the Indian automotive industry is deemed to remain highly optimistic and well-afloat with increasing number of valuable deals, there is no better time for innovating and establishing resilience and capacity at the global stage.



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Thursday, July 19, 2018

Exploring US and Singapore’s FDI in India https://t.co/TX48XrHySk https://t.co/o9iprgkCuM


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The Chhattisgarh Food and Nutrition Act: A lesson in policy innovation https://t.co/vHegYpNNxa https://t.co/QW1ZockOsq


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Exploring US and Singapore’s FDI in India

India broke its two-year streak of rising in FDI rankings by slipping from the 8th to 11th position in the AT Kearney FDI Confidence Index. According to the report, demonetisation and the introduction of GST has fundamentally impacted the scenario of FDI in India by deterring investors in the short-term. In the first two years of the NDA government, schemes such as Make in India and Digital India pumped in a large amount of cash into the manufacturing and service sectors of the country. But investors are now wary because of the downturn of the Indian economy, changes in American and the tectonic changes in financial markets due to Brexit.


Out of a list of around 40 countries that have investments in India, two of the major countries with a sizeable share in the total annual FDI is United States of America and Singapore. Based on the data provided by the Department of Industrial Policy and Promotion, Government of India, as of March 2018, the graph below shows the amounts of FDI received (in US dollars) from the two countries and compares it against the total FDI received in the last 3 fiscal years.

Singapore ranks 2nd on the list of countries with FDI in India. In 2017, India signed a new tax treaty with Singapore, which prevents double taxation and also gives a host of benefits to entities with commercial operations in India. These same benefits have been applied to Mauritius and hence, Singapore might be a tax haven like Mauritius.

The treaty has also helped Indian entrepreneurs make Singapore a testing ground for Information Technology, social media and gaming applications. They are using Singapore as a testing site because the people of the city state are more tech savvy.

Additionally, Indian entrepreneurs are able to find funding for their brand new ideas far more easily from venture capitalists or even the government in Singapore, than in India. For example, Flipkart is an Indian company but it is registered in Singapore.    

The United States of America ranks 7th on the countries with FDI in India. The United States has primarily been interested in the service sector. The erstwhile Obama administration oversaw a 500% increase in FDI from USA in 2015 and 2016. But the story has changed quite a lot now. The Trump administration’s tax reforms prioritise investments in the domestic country and the rising interest rates in the US means that capital is not as easily available now as it is used to be.  

Efforts are underway to change that scenario. The Indian Consul General in Chicago, Neeta Bhushan, recently tried to woo investors from the American Midwest by citing opportunities in Punjab, Madhya Pradesh, Andhra Pradesh and Telangana.
In conclusion, notwithstanding the declining FDI growth, Singapore still remains one of the best countries with bilateral tax treaties that ease the complexity of setting up and doing businesses. Singapore’s unique position of being a global trade hub offers other exclusive perks of having low import duties, which make it a top attraction for commerce and finance in general. The story of FDI from the USA however is one of uncertainty. Improving bilateral trade relations and boosting its FDI is dependant not only on dealing with domestic issues but also requires diplomacy to put India on the map for the seemingly coveted foreign dollars.



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The Chhattisgarh Food and Nutrition Act: A lesson in policy innovation

In a country where social welfare schemes are often plagued with chronic corruption, poor governance and lax implementation, Chhattisgarh’s food security model is a beacon for the resolution of a grave socio-economic issue using policy innovation. According to state provisions, entitlements are provided either under the state or federal law, depending on whichever is greater.

● In 2007, the Chhattisgarh government expanded coverage under the public distribution system with the Mukhyamantri Khadyanna Sahayata Yojana.  

● It encapsulates the right to food items at subsidized prices under 3 categories: antyodaya, priority and general households

i) nutritional support to pregnant/lactating mothers

ii) nutritional support to children and students living in hostels/ashrams

iii) prevention and management of child malnutrition

● The Food Security scheme was launched in February 2008. The 3.5 million people enrolled in the scheme were entitled to INR 35 kg of rice at 1NR 3 per kg.

● In 2012, the Chhattisgarh Food and Nutrition Security Act was launched to cover almost 90% of the state’s population with cheap food grains.

● Pulses and iodized salt are also provided to vulnerable households and families of construction workers and landless labourers.

● The national public distribution system (PDS) entitles only 33% of the households in Chhattisgarh to free grain from the central government.

● The enactment of the national food law would entail that 78% of the households would be entitled to 22.5 kgs of cheap grains.

Under the 2012 Act, the entitlements are provided to each household and the woman is considered the head of the household. Special entitlements are provided to children, pregnant and lactating mothers, migrants, homeless, destitute as well as those affected by disasters. The ration shops were de-privatized and the management of the PDS outlets was given to female self-help groups, in addition to other community-based organizations like gram panchayats and cooperative societies. Thus, the community organizations replaced the private entities for the last mile delivery in the public distribution. Moreover, all the shops that were allocated to female self-help groups and gram panchayats were given interest-free loans of INR 75,000. In this manner, gender and socio-economic concerns have been taken into account in Chhattisgarh’s conception of food security.

In order to curtail any leakages or diversions of the food supplies, yellow government and private trucks directly deliver the food items to the doorsteps of the ration shops, thereby ensuring that they are stocked on a timely basis. Financial viability of the ration shops is ensured by paying higher commissions to the shop owners and gram panchayats.

The Chhattisgarh state government has also been a pioneer in the adoption of digital technology for the effective delivery of food supplies. In 2007, the entire PDS was computerized in order to strictly monitor the movement and levels stocks/inventories across all the shops and warehouses in the states. To address the issue of forgeries, the ration cards were also computerized with only centrally printed ration cards being distributed to the beneficiaries. A toll-free telephone helpline was also set up and the community was involved in the monitoring process to ensure transparency.

Thus, a government that is ideologically deemed “conservative” has actually taken progressive measures to conceptualize an elaborate food security model, underpinned by seemingly liberal ideals. The Chhattisgarh food security model truly exemplifies the motif of inclusive development or “sabka sath sabka vikas.” The  Chhattisgarh CM’s commitment (in conversation with Dr. Raman Singh) to ending hunger, achieving food security and improved nutrition is reflected Sustainable Development Goal 2 that aims to end all forms of hunger and malnutrition by 2030 by making sure that everyone has access to sufficient nutritious food all year round.



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Wednesday, July 18, 2018

UK-India tech corridor gets its first dedicated investment fund

The UK-India tech corridor has always been vibrant. Undeniably, over the past 2-3 years, the connection between the two technology and innovation ecosystems has grown considerably, given the backing from the highest levels of government with formal commitments to help tech entrepreneurs from both countries. The focus in relation to improving ties between the tech entrepreneurial networks in UK and India has been, in general, on knowledge transfer, staff secondments, and cross-border mentoring associations.

 

Despite the increased support and stress on collaboration, and the steady improvement in India’s ‘Ease of Doing Business’ rankings, most UK-based startups (including those developing cutting-edge technologies) consider entering the Indian market and setting operations here as an extremely expensive (and intimidating) exercise.

 

The challenges to effective cross-border collaboration are wide-ranging: from regulatory and legal issues to the protection of IP and finding the right mentors and partners, the prospect of navigating the Indian regulatory regime and startup ecosystem without trusted insight and expertise is daunting.

 

Any tech-based startup looking to enter India would want its mentor-partners to have “skin in the game” – against this backdrop, the launch of the first cross-border investment fund focused on opening India’s markets for UK’s world-class tech startups is a game-changer, both for startups looking to enter the world’s fastest growing largest economy, and for the entrepreneurial ecosystem in India looking at exploring collaborative partnerships with cutting-edge tech startups from the UK.

 

Earlier this month, Ascension Ventures, a London-based early-stage venture capital firm, announced a joint venture with Unicorn India Ventures (UIV) to launch the first cross-border and evergreen UK-India Enterprise Investment Scheme (EIS) Fund. Named the Unicorn Ascension EIS Fund (UAF), it aims to leverage the EIS tax relief wrapper to enable investments into UK-based technology start-ups that are looking to expand into the Indian market.

 

An Enterprise Investment Scheme or EIS is a tax relief scheme offered by the UK Government through which investors can avail income tax relief for their investments into small UK-based companies. The Unicorn Ascension EIS Fund aims to leverage this scheme’s benefits and Ascension’s track record and expertise in order to manage downside risks, while these companies exploring entry into the Indian market.

 

The Fund aims to raise up to £5 million annually (INR 45 crore), and make investments at the pre-series A Stage across 6-8 UK-based startups (every year) building products and services relevant to the Indian market.

 

According to Bhaskar Majumdar, a Partner at Unicorn Ascension EIS Fund, the Fund, even though sector-agnostic, will focus on revenue-generating startups with new digitisation models in transportation, fintech, and clean energy. The startups that will receive investments can expect to be supported by local businesses in both countries.

“The fund presents a double benefit, where the EIS tax reliefs afforded to UK investors can significantly reduce their capital at risk, whilst the India angle offers a unique exposure to one of the largest and fastest growing economies in the world,” said Jean de Fougerolles, partner of the new UAF Fund and Founder of Ascension Ventures. Setting a goal to make 6-8 deals annually, the UAF intends to co-invest approximately one-third of the investment amount, with the remaining supplemented by angel investors and other VCs. Applications will open soon and first capital deployments are expected to be made from September.

 

UAF eventually aims to become the Fund of choice for the expansion efforts of pre-series A tech UK-based startups in India, the Partners said.

 

Within the UK-India corridor, the Fund will help unlock significant synergies between high-tech products and services that emerge from the UK and the multiple opportunities underlining the digital revolution underway in India. Importantly, a strong portfolio of companies will be built based on their ability to expand in India.

 

Definitely a pioneering move and a win-win for both countries and their respective innovation ecosystems!  The startups not only attract investments but, more importantly, experienced and well-regarded partners who can help them successfully navigate through the complex Indian ecosystem.

 



source https://www.indiaoutbound.org/uk-india-tech-corridor-gets-its-first-dedicated-investment-fund/
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India’s changing poverty narrative

The phrase ‘India is a poor country’ is an ubiquitous statement that most Indians have heard. This statement might have been true in 2016 when India had 125 million people living below the poverty line. However, India also has the fastest reduction in poverty rate (Brookings Report by Bill and Melinda Gates Foundation). The graph below is based on data taken from the World Poverty Clock, a web tool of the World Data Lab.

According to this graph, India is no longer has the largest number of poor people, as Nigeria is. I think we should take a moment to realise what an achievement this is. In 1997, 42% of India’s population was living in extreme poverty. Currently, that figure stands at 22% according to the Indian government and 23.6% according to the World Bank.  

 What does this mean?

Surjit Bhalla, senior India analyst, The Observatory Group, a New York-based macro policy advisory group, is of the opinion that the Brookings Report released by the Bill and Melinda Gates foundation might be overly pessimistic for us as the report is based on data taken from 2011-12. In anticipation of data from NSSO 2017-18, Bhalla believes that India is probably doing much better than what the graph above shows. He is of the opinion that since India is no longer a poor country, a lower middle income poverty line must be adopted. Simply put, the Purchasing Power Parity (PPP) should be changed from $1.9 to $3.2, according to the World Bank classification of poor and lower middle income respectively. A PPP of $3.2 is 68% higher than the poverty line value currently being used by the Government of India. In other words, a third of the population would just plummet from lower middle income to poor if the definition of poverty is changed.

This idea might seem strange and incomprehensible but one of the major problems about calculating poverty is that multiple methods can be used that yield differing results and can hence substantially change  conceptions of people’s needs. However, this does not change the fact that overall, India is reducing the number of people below poverty line.

 

How did we do this?

According the 2017 Voluntary National Review Report on Implementation of SDGs, the Mahatma Gandhi National Rural Employment Guarantee Act is seen as a key scheme which has generated 2 billion person days of employment for unskilled rural labourers with women and disabled being the most benefitted from this.  Other schemes like the Pradhan Mantri Jan Dhan Yojana has ensured other social security services to be properly implemented. The Right to Education Act of 2014 and its status of a Fundamental right has helped getting free access to education for a lot of the underprivileged children and has attracted them away from child labour and improve their socio economic conditions. There are numerous other plans like the Prime Minister Housing scheme, National Rural Drinking Water Program, Pradhan Mantri Ujjwala Yojana, etc have been instrumental in improving the condition of the poor.

So it’s all sunshine and rainbows?

The short answer would be, no. Between January 1, 2016—when implementation of internationally agreed Sustainable Development Goals (SDGs) began—and July 2018,  83 million people have escaped extreme poverty. Assuming a linear trajectory, we should have already reduced the number of people in extreme poverty by 120 million, if extreme poverty were to fall to zero by 2030. This implies that we need to put in more effort to stay on track of SDG 1. i.e. no poverty.

In a multi-layer and complex society like India, poverty needs to be understood from a multi-dimensional perspective. The World Bank criteria measures “extreme” poverty based on the criterion of income while the multi-dimensional poverty index or MPI measures “acute” levels of poverty. It is premised upon the overlapping deprivation of basic needs i.e. health, education and living standards. In 2016, India had the second highest multidimensional poverty after Afghanistan. Since then, the government welfare schemes mentioned above have helped tackle India’s MPI by effectively targeting resources and policies.

Looking to the Future

Great strides have been made to reduce extreme levels of poverty in India however, in order to achieve Goal 1 of the SDGs by 2030, it is vital that in the fight against poverty, the urgent issues that need to be resolved are identified based on measurement and interpretation of appropriate data and results. This will entail the judicious use of  available resources so that every rupee spent has maximum impact on development.



source https://www.indiaoutbound.org/indias-changing-poverty-narrative/
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Tuesday, July 17, 2018

India and Mongolia’s Strategic Alliances

In June 2018, Mongolia launched the construction of its first oil refinery, costing $1.35 billion, to meet all its demands for LPG, diesel, gasoline and avian fuel. Funded largely by India, this project was under discussion since 1997 and is now scheduled for completion in late 2022. The financing of this refinery is part of a billion-dollar credit line agreement between the Export-Import Bank of India and Mongolia, established during PM Modi’s visit to Mongolia in 2015.

 

In 2017, Mongolia imported 1.5 million tonnes of oil products (comprising 18% of all of Mongolia’s imports), almost all of which were from Russia. While concerns over the economic viability of the domestic oil refinery due to the heavy regulation of fuel prices do exist, its strategic importance cannot be denied. The refinery has been designed to stabilize fuel and commodity prices and halt Mongolia’s dependence on Russia, by diversifying its sources of energy imports. The refinery will process Mongolia’s own crude oil at 1.5 million tonnes per year or about 30,000 barrels per day. A 10% boost in Mongolia’s GDP is also expected.

 

This development is relevant within the context of India-Mongolia relations. Mongolia has historically been India’s closest allies as a counterweight, spiritual and strategic partner, despite being a satellite Soviet state and India’s distant neighbour.

Diplomatic relations between the two countries was first established on December 24, 1955. India championed Mongolia’s UN (United Nations) and NAM (Non-Alignment Movement) membership in 1961 and 1991 respectively.

 

Significantly, in 1971, India had to indulge in a lot of diplomatic battles and lobbying for Bangladesh’s international recognition as an independent country. Only Mongolia and Bhutan co-sponsored New Delhi’s UN resolution in 1972, post which Pakistan cut off diplomatic ties with Mongolia. In February 1973, the Joint Indo-Mongol Declaration was signed as a unanimous promulgation of 8 basic principles guiding Indian-Mongolian relations.

 

Mongolia supports India’s desired permanent membership of the reformed and expanded UN’s Security Council. India and Mongolia have declared their support for each other for the non-permanent seats in the for 2021-22 and 2023-24 respectively. In 1961, the India-Mongolian Agreement on Cultural Cooperation was signed to facilitate cooperation in education. For example, 21 volumes of Indian classical literature were translated into Mongolian language. This has been consequently renewed for 3-year periods since 2003.

 

More recently, Narendra Modi was the first Indian PM to visit Mongolia, in May 2015, marking the 60th anniversary of diplomatic relations. A USD 20 million line of credit was announced for the setting up of a “Centre of Excellence for IT, Communication & Outsourcing”, named after former PM Atal Bihari Vajpayee in Ulaanbaatar. Its construction is likely to start this year. Moreover, a Working Group for cooperation has been set up between the Department of Atomic Energy and the Nuclear Energy Agency of Mongolia.

 

As External Affairs Minister Sushma Swaraj said, Mongolia is increasingly being recognized as an important ally in India’s growth story. Mutual agreement to remove any institutional and logistic impediments, in order to boost tourism, trade, connectivity, public-private partnership and defense networks, is reflected in the likelihood of direct flights between India and Mongolia, new scholarships for Mongolian students etc. Thus, collaboration between India and Mongolia is extending beyond literary exchanges and a shared cultural heritage based on Buddhism.

 

In the larger Asian context, China accounts for 70% of Mongolia’s trade, including sale of crude oil. In 2016, Mongolia faced an economic blockade on the supply of essential commodities by China for hosting Dalai Lama during a religious visit. In order to reduce its dependence on its neighbors, Mongolia is keen to attract investments in different sectors like mining to utilize its largely untapped resources and mineral reserves.

 

So, in addition to the economic and diplomatic partnership upon various ongoing development projects, renewed regional, bilateral and international collaboration between India and Mongolia will also help counter Russian and Chinese influence vis-à-vis multiple global challenges like insurgency/terrorism and issues of economic interest. The surge in India’s ties with Mongolia under PM Modi’s leadership is an integral part of India’s Act East policy and the recent developments reflect renewed strategic efforts to promote peace, stability and prosperity in the region.

 



source https://www.indiaoutbound.org/india-and-mongolias-strategic-alliances/
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Wednesday, July 11, 2018

Leadership; India vs Singapore, Lee Kuan Yew vs Narendra Modi

Having been born in Kolkata, India and raised in Singapore, I am fortunate enough to call both places my home. Though it may seem counter intuitive to much of the world, India and Singapore have more in common than people might think.

India and Singapore have an unsuspecting similarity in the field of politics. Both countries are led by a Westminster style of government with a clear demarcation between the three branches. Both countries have democratic elections. Yet, the perception is quite different. Indian governments are oft associated with corruption while the Singaporean government has been known for its strong-armed structure. But at its heart, Indian and Singaporean politics have had charismatic and iconic leaders that are almost synonymous with the governments that they lead.

Lee Kuan Yew is considered to be the Father of Singapore. He was the first Prime Minister of the countries and undoubtedly one of the most influential politicians in Asia. PM Lee was instrumental in powering Singapore to become a first-world hub from its humble roots as an underdeveloped fishing village. After securing Singapore’s independence, PM Lee worked tirelessly to make Singapore one of the most developed and impressive countries in the world. Capitalising on Singapore’s geographic position, PM Lee helped Singapore to become one of the world’s busiest ports. PM Lee also realised the flaw in relying on the armies of other countries having experienced the horrors of the Japanese Occupation once the British Army could not repel the Japanese forces. As a result, he oversaw the implementation of a sovereign army through conscription. Over time, conscription extended to cover the police force as well as civil defence.

Perhaps PM Lee’s most impressive accomplishment was the way he went about establishing Singapore’s identity despite the remains of British influence. By creating a legal system specifically tailored for Singapore’s needs, PM Lee’s autochthonous efforts resulted in the creation of the Court of Appeal, which replaced the Privy Council as the highest court in Singapore. And so, began the era of Singapore’s legal independence.

Present day Singapore has perhaps the strictest set of laws of any country. This ensures that crime rates in Singapore are at a global low while deterring negative influences from neighbouring countries such as the Golden Triangle (Laos, Cambodia, and Thailand), which is a drug trafficking hub. Yet, amidst all this, the late Lee Kuan Yew’s indelible impression on Singapore remains a distinct element in the country’s fabric.

Lee Kuan Yew’s strong-armed governance has created one of the safest and well-developed countries in the world today. North-west of the Little Red Dot, elements of Lee Kuan Yew’s style of leadership still shone in my home country of India.

Enter Narendra Modi. A polarising figure to say the least, Prime Minister Narendra Modi has taken the Indian political field by storm since his appointment in 2014.

PM Modi has gone to great lengths to re-establish India as an Asian powerhouse alongside China. By integrating India’s foreign policy, PM Modi has ensured that India has fostered stronger ties with foreign allies while keeping the ever-present threat from their neighbours, especially Pakistan, at bay. Under his leadership, India went from the “Look East” to “Act East” policy and today, India is undoubtedly a player in the ASEAN economy. With the development of North East India as a strategic hub to connect South Asia with South East Asia and the ASEAN countries, the bi-lateral trade between ASEAN and India would possibly be in many multiples of the recent $71 billion annual trade recorded in 2018.

Not only in economy, despite the challenges of military procurement, India under Prime Minister Modi is recognised as a key defence force in the Asia – Pacific region from Japan, to Australia to Singapore and Vietnam to name a few. The nomenclature change of the US Pacific Command to “Indo-Pacific Command”, while ceremonial, is backed by the core Asia-Pacific partnership in naval exercises.

Narendra Modi has always been a person with superb political dexterity. During certain times, this confidence is criticised while during others, it may be necessary. Narendra Modi has managed to address several of India’s pressing issues that originated under the previous government. PM Modi has succeeded in bringing down and boosting the inflation and growth rates respectively. In addition, the goods and services tax (GST) has helped states generate higher revenues for their various needs.

PM Modi has made several bold and controversial decisions as well, such as the demonetisation policy to crack down on the reserves of ‘black money’ from illicit transactions. Though the move was subject to criticism amongst middle class citizens, PM Modi’s expedited thought-to-action process was considered to be a page out of Lee Kuan Yew’s playbook.

Indeed, Narendra Modi has acted in the footsteps of Lee Kuan Yew many a time during his tenure as the Prime Minister. PM Modi has exhibited Lee Kuan Yew’s penchant for exercising control over media to contain the disruptions that they often result in. However, this approach has been lauded and criticised both by citizens as well as globally.

As is so often the case, there is more than what meets the eye when it comes to the political pedigree of India and Singapore. As PM Modi continues to lead the country with no foreseeable opposition, it will be interesting to see if more such similarities come to light in the coming years.

 



source https://www.indiaoutbound.org/leadership-india-vs-singapore-lee-kuan-yew-vs-narendra-modi/
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