Lets look at some of the issues first. (I have already discussed electricity separately)
1. A typical Indian trucker is using lousy roads, is harassed by the police on every few hundred kilometers, and pays about Rs 80,000 (2000 USD) in bribes annually. Eventually, this adds to the cost of Indian goods in international markets, and also hampers the ability to deliver goods in a timely manner.
2. India’s largest container port, Jawaharlal Nehru Port Trust (JNPT), has a waiting period of up to 10 days. Port of Singapore, in comparison, took just about half a day. For the size of our coastline, we have very few ports of the size and capacity that are necessary to fuel growth.
3. Indian Railways run at a snails pace. A typical freight trains runs at 20-30 KMPH, and the average speed of the "Super Fast" Rajdhani and Shatabdi trains is only about 80KMPH.
Solutions:
1. Harmonize the taxes at the national level (VAT/GST type system), so that there is no need for a state level taxes, and hence the scope for harassment of truck drivers.
2. Invest in ports, privatize all major ports.
3. Invest in railways with a view to increase the speed.
Tuesday 21 July 2009
10 Social Equality
India has become a land of Disparities. Our relatively developed bigger cities are full of slums. A State like Maharastra, home to industrial cities of Mumbai and Pune, also has a huge number of poor farmers in the Vidarbha region. Eastern UP is lagging behind western UP and so on. To top it all up, since VP Singh played the Mandal card, casteism has increased in society and is being blatantly abused.
We Indians are so prone to "premature triumphalism" that we start self-congratulating ourselves at the smallest of achievements. We have become so accustomed to seeing poverty all around us that we have become blind and insensitive to it. (It takes a Danny Boyle to create the Slumdog Millionaire!)
The recent anti-north Indian violence in Mumbai, and the growing frequency and audacity of Naxalite attacks in central/eastern India should alert us to the dangers of growing disparities. Unless poorer people find a way to channel their anger in a constructive manner, we could have a fertile ground for breeding regionalists, secessionists and other form of rebellion.
But, what is the solution to this? Why should a progressive industrial state bear a burden of hinterland and badly ruled states within India?
I think we need to look at the model of welfare states in Europe. Clearly, India, as a developing country cannot sustain the high level of personal taxation as prevalent in Europe. But, could we have a basic level of welfare to keep people out of total poverty, and be provided some basic services?
1. Poverty Alleviation: What does it cost to support the 30% of our brethren, living in absolute poverty ? Thats about 300 Million people, perhaps about 75 Million Households. If we just give each household 1 dollar a day, and let them do what they want with it, it would cost 27,375,000,000 dollars annually. (about 28 billion). Thats not too high, compared to the general level of government expenditure in any case, which has been done inefficiently in the past. (our recent budgets have been to the tune of around 200 B Dollars).
Once we have a unique ID system, we could also have a "smartcard" that is automatically and electronically credited every month, and could be used in shops etc. This is infinitely less wasteful then having layers of corrupt government officers distributing welfare money to the poor.
2. Social Reforms: Lets face it, our society has been full of ills like caste system, status of women and so on. Can we do something now so that these ills disappear from the face of earth in the next few generations?
Maybe, Encourage Interfaith, Inter-caste, and intra-regional marriages. Obviously, this is a private affair, and state has got no business to interfere in it. However, a person who marries outside his or her community is in fact doing a good deed in terms of promoting national integration. Such people usually face a social stigma, which can be offset by the state. Perhaps government can pay a "marriage gift" to such couples?
All caste based organizations need to be discouraged. (Just Ban them on grounds of being discriminatory?). If we take the other steps to fix the other root causes and provide general welfare to ALL poor, there should be no need of any affirmative action that is caste based.
We Indians are so prone to "premature triumphalism" that we start self-congratulating ourselves at the smallest of achievements. We have become so accustomed to seeing poverty all around us that we have become blind and insensitive to it. (It takes a Danny Boyle to create the Slumdog Millionaire!)
The recent anti-north Indian violence in Mumbai, and the growing frequency and audacity of Naxalite attacks in central/eastern India should alert us to the dangers of growing disparities. Unless poorer people find a way to channel their anger in a constructive manner, we could have a fertile ground for breeding regionalists, secessionists and other form of rebellion.
But, what is the solution to this? Why should a progressive industrial state bear a burden of hinterland and badly ruled states within India?
I think we need to look at the model of welfare states in Europe. Clearly, India, as a developing country cannot sustain the high level of personal taxation as prevalent in Europe. But, could we have a basic level of welfare to keep people out of total poverty, and be provided some basic services?
1. Poverty Alleviation: What does it cost to support the 30% of our brethren, living in absolute poverty ? Thats about 300 Million people, perhaps about 75 Million Households. If we just give each household 1 dollar a day, and let them do what they want with it, it would cost 27,375,000,000 dollars annually. (about 28 billion). Thats not too high, compared to the general level of government expenditure in any case, which has been done inefficiently in the past. (our recent budgets have been to the tune of around 200 B Dollars).
Once we have a unique ID system, we could also have a "smartcard" that is automatically and electronically credited every month, and could be used in shops etc. This is infinitely less wasteful then having layers of corrupt government officers distributing welfare money to the poor.
2. Social Reforms: Lets face it, our society has been full of ills like caste system, status of women and so on. Can we do something now so that these ills disappear from the face of earth in the next few generations?
Maybe, Encourage Interfaith, Inter-caste, and intra-regional marriages. Obviously, this is a private affair, and state has got no business to interfere in it. However, a person who marries outside his or her community is in fact doing a good deed in terms of promoting national integration. Such people usually face a social stigma, which can be offset by the state. Perhaps government can pay a "marriage gift" to such couples?
All caste based organizations need to be discouraged. (Just Ban them on grounds of being discriminatory?). If we take the other steps to fix the other root causes and provide general welfare to ALL poor, there should be no need of any affirmative action that is caste based.
Monday 20 July 2009
9 Energy Security
Some 400 Million Indians still dont have access to regular electricity. Electricity demand outstrips supply by about 15-20% in India. On top of that, losses due to theft are unusually high at 30-45%, causing an annual loss of about Rs 20,000 Crores (1 Crore = 10 million) to the state Electricity companies.
To grow at a reasonable pace, India needs a high level of investments to increase the generating capacity. However, it is the transmission and distribution systems which need to be totally overhauled. State run companies have contributed to a large amount of corruption, and have overall, failed the consumer.
But, would allowing a free hand to the market not make it more expensive for the urban consumer?
Yes, it will. But, would an urban consumer prefer to pay less on unreliable power, and then invest significant amount on small generators/battery units, or prefer higher tariffs for a reliable power supply? Evidence suggests that its latter.
But, this is just one part of the story. We still need to cover the rural consumer. It is this segment where participation of private sector will not be easy to develop. Logistically, it would be difficult for any private company to keep a distribution network running for remote villages, and not charge them a surplus for it. Politically, this section of consumers may not be as willing as the urban consumers to actually pay more for better service.
Studies indicate that transmission cost to rural areas can be three times the generation cost. A recent exercise based on Gujarat Electricity Board data has put the true cost of delivery to rural areas at Rs 9 per kWh (kilowatt hour). When the infrastructure cost is computed along with hours of delivery, the total cost can actually be as high as Rs 19 per kWh.
The Govt. of India recently announced a Rs 40,000 Crore project for rural electrification of 115,000 villages through conventional grid.
One interesting way for developing it might lie with the usage of small and clean sources of power - like Solar/Wind powered generators. Policy support could be in the form of compelling the grid to buy any surplus generated out of such small scale power sources. India is home to one of the most abundant solar resources in the world, with 3 million square kilometers of tropical and subtropical land and an average of 250-300 clear sunny days a year.
Perhaps, every village panchayat (the local body) can be given some money (say 300,000) to buy/build a solar/wind/small hydro powered system generating about 1 kilowatt of power supply for local needs (e.g. community TV, some bulbs, one water pump, etc). This could generate a lot of demand for the suppliers of such products, whose prices might come down by achieving more scale. The maintainance and running costs of solar power are minimal.
This is just a hypothetical scenario to illustrate the point - not all villages may have a perennial shortage of electricity. Not all may have a potential for developing such renewable sources. However, if you take this to be the case for all 600,000 villages of India - The total investment required (Rs 18,000 Crores) is no more than the annual losses suffered by the state electricity boards! (Note: 1KW power is clearly insufficient to power an entire village, actual requirement might be 10 times that or more, I am merely using this as an example to illustrate the point.)
Such a solution is cleaner for the environment, requires lesser investment in transmission and distribution, and makes the villagers the stakeholders for their own power needs. They themselves protect and maintain their system in a fair way so as to gain from it.
To grow at a reasonable pace, India needs a high level of investments to increase the generating capacity. However, it is the transmission and distribution systems which need to be totally overhauled. State run companies have contributed to a large amount of corruption, and have overall, failed the consumer.
But, would allowing a free hand to the market not make it more expensive for the urban consumer?
Yes, it will. But, would an urban consumer prefer to pay less on unreliable power, and then invest significant amount on small generators/battery units, or prefer higher tariffs for a reliable power supply? Evidence suggests that its latter.
But, this is just one part of the story. We still need to cover the rural consumer. It is this segment where participation of private sector will not be easy to develop. Logistically, it would be difficult for any private company to keep a distribution network running for remote villages, and not charge them a surplus for it. Politically, this section of consumers may not be as willing as the urban consumers to actually pay more for better service.
Studies indicate that transmission cost to rural areas can be three times the generation cost. A recent exercise based on Gujarat Electricity Board data has put the true cost of delivery to rural areas at Rs 9 per kWh (kilowatt hour). When the infrastructure cost is computed along with hours of delivery, the total cost can actually be as high as Rs 19 per kWh.
The Govt. of India recently announced a Rs 40,000 Crore project for rural electrification of 115,000 villages through conventional grid.
One interesting way for developing it might lie with the usage of small and clean sources of power - like Solar/Wind powered generators. Policy support could be in the form of compelling the grid to buy any surplus generated out of such small scale power sources. India is home to one of the most abundant solar resources in the world, with 3 million square kilometers of tropical and subtropical land and an average of 250-300 clear sunny days a year.
Perhaps, every village panchayat (the local body) can be given some money (say 300,000) to buy/build a solar/wind/small hydro powered system generating about 1 kilowatt of power supply for local needs (e.g. community TV, some bulbs, one water pump, etc). This could generate a lot of demand for the suppliers of such products, whose prices might come down by achieving more scale. The maintainance and running costs of solar power are minimal.
This is just a hypothetical scenario to illustrate the point - not all villages may have a perennial shortage of electricity. Not all may have a potential for developing such renewable sources. However, if you take this to be the case for all 600,000 villages of India - The total investment required (Rs 18,000 Crores) is no more than the annual losses suffered by the state electricity boards! (Note: 1KW power is clearly insufficient to power an entire village, actual requirement might be 10 times that or more, I am merely using this as an example to illustrate the point.)
Such a solution is cleaner for the environment, requires lesser investment in transmission and distribution, and makes the villagers the stakeholders for their own power needs. They themselves protect and maintain their system in a fair way so as to gain from it.
Wednesday 15 July 2009
8 Urban Planning
Indian cities today are a prime example of haphazard, unplanned growth. The local planning bodies and councils are hotbeds for corruption. Local governments are weak, and have little say or budgets to play with. We have millions of people living in "illegal" slums and other unauthorized housing developments. One reality of modernizing India is that our cities are amongst the ugliest in the world.
In many cases, large number of "planned" and approved dwellings have cropped up, without adequate provisions for the traffic and connecting roads, schools, parks and other such public spaces. In some cities, there is a strong nexus between the developers and politicians. IAS officers, who have no professional qualifications in Urban Planning, take major decisions in various local bodies. PWD has a very corrupt way of developing public buildings and roads.
1. We basically have one qualified urban planner per 100,000 urbanites, and these people are not in a decision making roles they deserve to be in. Further, the quality of our manpower in this field does not compare very well with the international levels.
2. We need to have a system where only professionally qualified people are given the decision making planning roles in the urban bodies. Further, number of such professionals needs to be increased at least ten-fold, i.e., one planner per 10,000 people.
3. With the RTI act, we need to make the tender process more transparent, and have more involvement from the civic society. Further, we need local residents to have more say in an appraisal process for the technocrats. (e.g. we could have a system so that if >50% of the residents show dissatisfaction with the quality of a recently constructed road, the engineer/contractor in charge of the project automatically get investigated). Similarly, contracts for other civic work could be allocated/renewed based on a direct appraisal by the people.
4. Cities should develop master plans for projected growths in next few decades, and develop zones in accordance with the international standards.
5. For instance, waste collection for cities can be done more enthusiastically, if the people doing it were really interested in getting more waste processed. If, for example, all the rag-pickers of Mumbai were to form a co-operative organization, which had a facility to process waste using some more advanced machinery, and then take all the things such as paper, plastic and metal which could be salvaged to earn money, and leave all the bio-degradable waste to be recycled to create biogas or fertilizer, it is likely to work more effectively than the waste collection services run by the BMC (Greater Mumbai's Municipal Council).
Housing for Urban Poor
Urban Poor constitute about 25% of total urban population, and the absolute numbers are expected to be around 80 million (Source UNDP) , or roughly 20 M households. Poorly planned urbanization has meant that they live in slums. If proper urban planning is done, and land acquired for housing for the poor, then it is the question of achieving the goal of providing a bare minimum level of a dwelling unit with water and electricity supply, and proper sewage to these households at the lowest possible cost. The preparatory investment required to do so, is of course huge, but we immediately see the dividends in terms of better sanitation (less disease), more revenue from regularized electricity supplies etc.
If the government can subsidize and encourage investments in cheaper housing technology, (recycling old shipping containers, bamboo or plastics based prefab materials, or whatever), and we can get cost of a house down to 100,000 rupees, we would need to spend about 2 Trillion Rupees (40 Billion Dollars).
Think about it, its do-able.
A one-off investment that erases the blots from our urban scenery, and some continued investment (with hopefully better urban planning in the future) , for creating such new houses as per the future needs.
In many cases, large number of "planned" and approved dwellings have cropped up, without adequate provisions for the traffic and connecting roads, schools, parks and other such public spaces. In some cities, there is a strong nexus between the developers and politicians. IAS officers, who have no professional qualifications in Urban Planning, take major decisions in various local bodies. PWD has a very corrupt way of developing public buildings and roads.
1. We basically have one qualified urban planner per 100,000 urbanites, and these people are not in a decision making roles they deserve to be in. Further, the quality of our manpower in this field does not compare very well with the international levels.
2. We need to have a system where only professionally qualified people are given the decision making planning roles in the urban bodies. Further, number of such professionals needs to be increased at least ten-fold, i.e., one planner per 10,000 people.
3. With the RTI act, we need to make the tender process more transparent, and have more involvement from the civic society. Further, we need local residents to have more say in an appraisal process for the technocrats. (e.g. we could have a system so that if >50% of the residents show dissatisfaction with the quality of a recently constructed road, the engineer/contractor in charge of the project automatically get investigated). Similarly, contracts for other civic work could be allocated/renewed based on a direct appraisal by the people.
4. Cities should develop master plans for projected growths in next few decades, and develop zones in accordance with the international standards.
5. For instance, waste collection for cities can be done more enthusiastically, if the people doing it were really interested in getting more waste processed. If, for example, all the rag-pickers of Mumbai were to form a co-operative organization, which had a facility to process waste using some more advanced machinery, and then take all the things such as paper, plastic and metal which could be salvaged to earn money, and leave all the bio-degradable waste to be recycled to create biogas or fertilizer, it is likely to work more effectively than the waste collection services run by the BMC (Greater Mumbai's Municipal Council).
Housing for Urban Poor
Urban Poor constitute about 25% of total urban population, and the absolute numbers are expected to be around 80 million (Source UNDP) , or roughly 20 M households. Poorly planned urbanization has meant that they live in slums. If proper urban planning is done, and land acquired for housing for the poor, then it is the question of achieving the goal of providing a bare minimum level of a dwelling unit with water and electricity supply, and proper sewage to these households at the lowest possible cost. The preparatory investment required to do so, is of course huge, but we immediately see the dividends in terms of better sanitation (less disease), more revenue from regularized electricity supplies etc.
If the government can subsidize and encourage investments in cheaper housing technology, (recycling old shipping containers, bamboo or plastics based prefab materials, or whatever), and we can get cost of a house down to 100,000 rupees, we would need to spend about 2 Trillion Rupees (40 Billion Dollars).
Think about it, its do-able.
A one-off investment that erases the blots from our urban scenery, and some continued investment (with hopefully better urban planning in the future) , for creating such new houses as per the future needs.
7 Agricultural Markets
Roughly 60% of India’s households depend on agriculture.
Any reform which improves efficiency and liquidity of the agricultural commodities markets will improve the lives of the largest chunk of Indian populations.
Since the Sixties, the agri commodity markets have had a very high level of Government intervention. While the intentions of some of these actions might have been honorable and good, (and at other times populist), they have failed to achieve the desired goals. Agriculture today is the most repressed sector of Indian economy, burdened by the red-tape and restrictions at every level. A large number of farmers have been committing suicide recently.
Restrictions and ceiling on land ownerships have resulted in very small and unsustainable farms. Additionally, lack of an efficient distribution system, and transport infrastructure means that farmers are compelled to grow basic foodgrains to feed their families, even when inefficient, rather than perhaps growing a cash crop and then buying the foodgrains, had they been cheaply available in the remote villages.
How can we change things?
0. Improve water management (see Item 6) - too many farmers in India are dependent upon the monsoon.
1. Reduce the role of the government.
2. Liberalise the markets fully, encouraging various derivative products to reduce risks. This will also encourage more investments in storage facilities, to benefit from the calendar spreads of spot and future prices, thus reducing the large amount of wastage.
3. Government should merely play the role of a regulator in the market, keeping a tab on bad market practices.
4. Use IT/Telecom solutions to provide maximum information and price transparency to the farmers.
5. Encourage private investment in retail sector - this shall promote more efficiency in the supply chain.
Any reform which improves efficiency and liquidity of the agricultural commodities markets will improve the lives of the largest chunk of Indian populations.
Since the Sixties, the agri commodity markets have had a very high level of Government intervention. While the intentions of some of these actions might have been honorable and good, (and at other times populist), they have failed to achieve the desired goals. Agriculture today is the most repressed sector of Indian economy, burdened by the red-tape and restrictions at every level. A large number of farmers have been committing suicide recently.
Restrictions and ceiling on land ownerships have resulted in very small and unsustainable farms. Additionally, lack of an efficient distribution system, and transport infrastructure means that farmers are compelled to grow basic foodgrains to feed their families, even when inefficient, rather than perhaps growing a cash crop and then buying the foodgrains, had they been cheaply available in the remote villages.
How can we change things?
0. Improve water management (see Item 6) - too many farmers in India are dependent upon the monsoon.
1. Reduce the role of the government.
2. Liberalise the markets fully, encouraging various derivative products to reduce risks. This will also encourage more investments in storage facilities, to benefit from the calendar spreads of spot and future prices, thus reducing the large amount of wastage.
3. Government should merely play the role of a regulator in the market, keeping a tab on bad market practices.
4. Use IT/Telecom solutions to provide maximum information and price transparency to the farmers.
5. Encourage private investment in retail sector - this shall promote more efficiency in the supply chain.
6. Water Management
As I type this, there are floods in Assam, and there's a drought in some other parts of India.
And this seems to happen every year.
India has seasonal rains, 60% of the population is dependent on Agriculture, and that largely depends on the Monsoons.
We have already seen serious intra-state disputes between Tamil Nadu and Karnataka over Kaveri water. With growing population, water will become a more precious commodity in near future, and this would only grow and potentially constitute a serious threat to national security if we continue to neglect it.
Now, I am not necessarily talking about grand man-made rivers or canals running all the way from Assam and North Bihar to Rajasthan and Gujrat. (These could also be considered, but after careful ecological impact studies).
At least we could address the issue of the same place facing water shortages and then floods within a span of a few months? (E.g. Mumbai, till late Jun 2009 was facing water shortages, and got flooded after the monsoons arrived)
Why cannot we invest a small amount in local storage solutions to at least deal with that?
(Added Aug 2009) - Now, we simultaneously have both floods in North Bihar, and Draught in the south parts of the same state!
Bihar's plain is divided into two unequal halves by the river Ganga that flows through the middle from the west to the east into the Bay of Bengal. The topography of the state slopes from north to the south and the monsoon rains flood all the eight rivers of the north Bihar that flows down from Nepal to meet the Ganges in the south. As a result 15 districts in north and central Bihar remains water logged. The floods affect about 56.5 per cent people of the state every year. If North Bihar remains under the grip of floods, south and central Bihar falls under the rain shadow area. There are 10-12 districts that face draught like situation due to inadequate rains. The draught and rain creates water management challenges and needs to be addressed for agricultural development of the state.
Clearly, there has to be a solution to this annual ritual? If our capable engineers can build a large storage for the excess water in the north of the state, and then a canal to pump it to the south, and maybe to other nearby states such as MP, West Bengal, Jharkhand and Chhatisgarh
And this seems to happen every year.
India has seasonal rains, 60% of the population is dependent on Agriculture, and that largely depends on the Monsoons.
We have already seen serious intra-state disputes between Tamil Nadu and Karnataka over Kaveri water. With growing population, water will become a more precious commodity in near future, and this would only grow and potentially constitute a serious threat to national security if we continue to neglect it.
Now, I am not necessarily talking about grand man-made rivers or canals running all the way from Assam and North Bihar to Rajasthan and Gujrat. (These could also be considered, but after careful ecological impact studies).
At least we could address the issue of the same place facing water shortages and then floods within a span of a few months? (E.g. Mumbai, till late Jun 2009 was facing water shortages, and got flooded after the monsoons arrived)
Why cannot we invest a small amount in local storage solutions to at least deal with that?
(Added Aug 2009) - Now, we simultaneously have both floods in North Bihar, and Draught in the south parts of the same state!
Bihar's plain is divided into two unequal halves by the river Ganga that flows through the middle from the west to the east into the Bay of Bengal. The topography of the state slopes from north to the south and the monsoon rains flood all the eight rivers of the north Bihar that flows down from Nepal to meet the Ganges in the south. As a result 15 districts in north and central Bihar remains water logged. The floods affect about 56.5 per cent people of the state every year. If North Bihar remains under the grip of floods, south and central Bihar falls under the rain shadow area. There are 10-12 districts that face draught like situation due to inadequate rains. The draught and rain creates water management challenges and needs to be addressed for agricultural development of the state.
Clearly, there has to be a solution to this annual ritual? If our capable engineers can build a large storage for the excess water in the north of the state, and then a canal to pump it to the south, and maybe to other nearby states such as MP, West Bengal, Jharkhand and Chhatisgarh
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