The PPP way to growth

While big-ticket reforms are held up, let’s address infra concerns

Again a goodread from The Hindu's Businessline, an excellent newspaper for policy making articles.

That the Narendra Modi government ran into a wall of Opposition in Parliament in trying to push reform legislation in coal and insurance is unfortunate Even so, ordinances cannot institutionalise a new model of governance; at best, they may only signal to a restive industry that the Centre means business and buy some time to cobble up a consensus in Parliament. But even if such a consensus on amending laws on land acquisition, labour, mining and the financial sector takes time in coming, there are enough areas where supply side constraints can be eased without breaking into so much as a sweat. One of these is allowing for renegotiation in new PPP projects, if not in existing ones. The 3P India initiative, announced by Finance Minister Arun Jaitley in the Budget, marks a salutary attempt to address “weaknesses of the PPP framework, the rigidities in contractual arrangements, the need to develop more nuanced models of contracting, and speedy dispute redressal”. This process needs to be cranked up for the over 900 PPP infrastructure projects in the fray, involving a credit exposure of nearly ₹9 trillion.

In this context, the recent RBI circular extending the so-called 5:25 scheme to existing infrastructure projects is to be welcomed. These projects can now get finance over 25 years, with the banks being allowed to refinance or sell out their loans every five years. This is a way out of the stressed assets logjam that has frozen up both the supply and demand for credit. The growth of bank credit to infrastructure sectors fell from 45 per cent in 2011-12 to 18 per cent in 2013-14 and has been trending downward since. Banks cannot lend beyond a tenure of 10 to 12 years due to their asset profile, and this impacts both the viability of the loan and the costing/pricing of projects such as roads and metros, among others. The India Infrastructure Finance Company, set up in 2006 to overcome the asset-liability mismatch, does not seem to have made enough headway.

However, as the Finance Minister observed, finance is only one of the problems weighing down PPPs. Contracts need to be renegotiated when macroeconomic shocks overturn earlier assumptions. To ward off allegations of crony capitalism or litigation from bidders who lose out in the first stage, it is important to create a credible institutional mechanism. This is precisely what 3P India should set out to do, besides thinking up innovative financial instruments and concession agreements. It could ease up exit conditions, so that promoters can use the freed up capital for other projects. Pricing should combine public purpose considerations with those of risk and efficiency. Pushing big ticket reforms is no cakewalk in a raucous polity such as ours. Yet, a robust PPP framework can make a difference in cranking up investment and growth.

Hydro power potential in South Asia

Himalayan rivers offer immense potential to the power sector in South Asia. China has been building huge dams on Bramhaputra river. India needs to form a coalition with its neighbouring countries like Nepal,Bhutan,Bangladesh and even Pakistan to tap the potential of these rivers as far as power generation is concerned. This region is so blessed by water and sun, if the hydropower potential and solar power potential is harnessed, we would not required to sign and nuclear power treaty with any nation in the world. All we need to do is get our act together and expedite the projects.

Here I share a good read on The Economist on the hydro power potential in the Himalayan region.

South Asia’s hydro-politics

Leverage federal structure for critical reforms

           If at all any reform which the current dispensation at the centre will find it difficult to roll out it is Labour Reforms. The centre will have to bear tremendous labour pains while introducing such reforms. But one good thing which has happened is, individual state governments are ready to tweak the labour reforms in their respective states as per their political will and risk appetite. Fortunately, in case of Rajasthan, the president too has given assent to the bill and new labour laws are applicable in the state. India has a decisive and strong PM, but India too needs decisive and action oriented chief ministers. The centre is a mere facilitator, while the actual implementation happens at the state level. Here is a good read from livemint, on how the federal structure of the county can be exploited for such contentious issues. Based on the political appetite of the state, laws can be changed and implemented well. This approach will at least encourage half of the states in the country to go for a change and overhaul in their policies, for growth can be achieve only in coordination with the state governments....

                              Labor Laws reform at state level

New subsidy regime | The HinduBusinessline opinion, a good read

The Centre has adopted a pragmatic approach to cooking gas subsidies

The reintroduction of the direct benefits transfer scheme for the supply of cooking gas, after its withdrawal in March this year, is a welcome signal that subsidy targeting is back on the policy agenda. Unlike its UPA avatar, cash transfers will now be based on LPG consumers providing their bank account numbers, rather than Aadhaar numbers, to distributors. The change in approach is a way of addressing the Supreme Court ruling in March prohibiting Aadhaar from being made compulsory in the implementation of welfare schemes. The Centre has also drawn up a scheme to make an advance deposit in bank accounts in an apparent bid to offset the hardship of coughing up the market rate that poorer customers may face while making their first purchase under the new scheme. Those without a unique identification number may switch to Aadhaar-based bank accounts once enrolled. The modified DBT scheme is a further indication that the Modi government will use Aadhaar as a vehicle for the delivery of benefits and subsidies. Already, 60 per cent of the population has an Aadhaar number and, hopefully, it is only a matter of time that such things as LPG distribution and other welfare programmes become UID-driven. The reservations expressed by the Home Ministry about a full roll-out of Aadhaar have been thankfully overcome.

The reasons for this pragmatism are not far to seek. Through better targeting, Aadhaar-based transfers can reduce subsidies by about ₹50,000 crore (about 20 per cent of the overall subsidy bill) without hurting the poor and needy. Of this, the saving on LPG subsidy, which ran up a bill of over ₹46,000 crore last year, could be between ₹6,500 and ₹10,000 crore. The LPG savings will result from bogus consumers being weeded out, a cap on the subsidy amount (most LPG users are middle-class and above, anyway) and conservation efforts, leading to lower imports. It is estimated that a quarter of the LPG connections in Karnataka and a fifth in Andhra Pradesh are bogus. The first round of DBT brought down the diversion of subsidised cylinders for commercial purposes: subsidised cylinders accounted for about three-fourth of total LPG usage last year, against four-fifths in 2011-12.

However, this is only the beginning. It is necessary to promote the shift away from inefficient cooking fuels such as firewood to LPG in rural areas. To this end, the subsidy should be gradually diverted from the well-to-do sections, who account for at least 60 per cent of all LPG users. The Jan Dhan scheme and post office network can come in handy. Above all, it is necessary to have foolproof systems. Consumers’ reservations over sharing their bank account number with their distributors — pointed out by the Dhande committee report on LPG reforms this May — should be addressed. The stakeholders should come up with credible solutions. We cannot afford a second derailment of DBT.

Source: TheHinduBusinessLine

All you wanted to know about Shale Oil

In an unexpected stroke of good luck for you, me and the country, the price of crude oil has fallen from $115 a barrel in June all the way down to $84. This has meant cheaper petrol and diesel, and a lower subsidy bill for the Government. One big factor responsible for this price fall is the unexpected increase in oil produced from shale in the US.

What is it?

Shale oil is essentially crude oil but an unconventional one at that. While the conventional fuel is usually found in porous rocks such as sandstone, shale oil is trapped in shale rock formations that are not easily permeable and hence is tougher to tap. So though its existence has been known for long, shale oil wasn’t being extracted in large quantities.

But technological advancements — horizontal drilling and fracturing (fracking) — introduced and honed since the early part of the century have enabled shale oil exploration and production on an industrial scale.

Most of the action in shale oil so far has been in the US where explorers have struck copious quantities of the black gold. It has not been smooth sailing though. Environmentalists and local communities have been up in arms against the pollution caused to land and water bodies by the chemicals used in the fracking process.

Nevertheless, shale oil produced in the country has grown by leaps and bounds over the years. So the dependence of the US — the largest oil consumer in the world — on imported crude oil has fallen sharply. And this has added to the weakness of global crude oil price in recent months.

Conventional crude oil producers such as Saudi Arabia have been cutting prices to maintain their market share and to drive some of the high cost shale oil producers out of action.

But whether this will have the desired effect remains to be seen — technological improvements are expected to push down the cost of shale oil production.

Also, while Saudi Arabia might have the financial muscle to sustain low prices for quite some time, other conventional producers such as Venezuela and Nigeria may likely find it difficult to hold out.

Why is it important?

Shale oil has the potential to be a massive game-changer in global energy supply and pricing — with enormous geopolitical implications. It’s not just the US; countries such as Russia, China and Argentina are also believed to have vast stores of shale oil. India too is taking baby steps to find and explore its shale assets potential.

Progress in other nations has been quite slow so far. But there’s no saying when the inflection point will be reached. If production continues to expand, countries such as the US could start exporting oil in a few years.

Why should I care?

For starters, more shale oil means lower petrol and diesel prices. So you spend less on travel.

Cheaper crude oil also reduces India’s current account deficit and subsidy bill and will also give a boost to the country’s GDP — that means more and better-paying jobs, and more profitable businesses. But shale oil production in India in the future could also mean more environmental challenges. So the right trade-off needs to be made.

Source: BusinessLine

Labor Reforms....

The Prime Minister’s assault on red tape can make a real difference

The much awaited labour reforms necessary for mass manufacturing in India were initiated by Prime Minister Modi on October 15. Any efforts to rationalise labour rules, around 250 of them at the Central and State levels, is a welcome step for industry.

The two key areas of reform are ‘unified labour and industrial portal’ and ‘labour inspection scheme’. Introduction of the labour identification number (LIN) and putting inspection on a unified portal will help bring transparency in the use of labour rules.

The Prime Minister’s efforts to raise the minimum wage ceiling from ₹6,500 to ₹15,000 and to ensure EPF and the pension scheme for vulnerable groups are also laudable.

Overall it’s the first big step that’s been taken at the Central level to reform one of the most complicated issues in the post-reforms era. However, much more needs to be done to put together a system that is not biased against either employers or employees.

Further, the system should create an environment for productive employment with reasonable safety nets.

It’s been well established that China’s flexible and business friendly labour laws have ensured continued investments in Chinese manufacturing, unlike in India where restrictive labour laws have been a cause of concern for investors. Though the Indian labour force has been much more disciplined and cooperative in the post-reforms period leading to a decrease in the number of strikes, lockouts, mandays lost and so on, the large number of labour rules and the process of enforcement by inspectors scares investors, at least on paper.

Restrictive approach

India’s labour laws are restrictive in nature and hurt investments in the manufacturing sector. The Industrial Disputes Act (1947) has rigid provisions such as compulsory and prior government approval in the case of layoffs, retrenchment and closure of industrial establishments employing more than 100 workers. This clause applies even when there is a good reason to shut shop, or worker productivity is seriously low.

The Contract Labour (Regulation and Abolition) Act (1970) states that if the job content or nature of work of employees needs to be changed, 21 days’ notice must be given. The changes also require the consent of the employees, and this can be tricky.

While the right of workers to associate is important, the Trade Union Act (1926) provides for the creation of trade unions where even outsiders can be office-bearers. This hurts investor faith and restricts economic growth.

Rigid labour laws discourage firms from trying to introduce new technology, requiring some workers to be retrenched. This deters FDI because of the fear that it would not be possible to dismiss unproductive workers or to downsize during a downturn. Hence getting FDI into export-oriented labour-intensive sectors in India has not been fully achieved.

In contrast, China has succeeded in attracting FDI to export-oriented labour-intensive manufacturing, in part because of flexible labour laws such as the contract labour system implemented in 1995. Whereas in India, employers have taken to hiring workers on contract outside the institutional and legislative ambit, resulting in informalisation of the labour market. This hampers worker well-being.

Reforms initiatives

To undo the malady in India’s labour market, some changes have recently been initiated in the three acts that largely govern India’s labour market: the Factories Act (1948), the Labour Laws Act (1988) and the Apprenticeship Act (1961). Amendments to some restrictive provisions of all these acts have been cleared by the Cabinet and are set to be tabled in Parliament. Key changes proposed include dropping the punitive clause that calls for the imprisonment of company directors who fail to implement the Apprenticeship Act of 1961.

The Government is also going to do away with a proposed amendment to the Act that would mandate employers to absorb at least half of its apprentices in regular jobs.

In order to provide flexibility to managers and employers, the amendment to the Factories Act includes doubling the provision of overtime from 50 hours a quarter to 100 hours in some cases and from 75 hours to 125 hours in others involving work of public interest. This is seen by some as being anti-labour as it imposes greater working hours without ensuring their security and welfare.

However, the penalty for violating the Act has been increased so as to deter exploitation. Increasing the working hours might also have to do with low worker productivity in India.

However, even as productivity issues should be addressed in part by bringing in quality FDI, it is important that maximum-hour protection is strictly enforced so as to prevent worker exploitation.

The norms for the employment of women in certain industry segments have been relaxed. The number of days that an employee needs to work to be eligible for benefits like leave with pay has been reduced to 90 from 240.

The amendments to Labour Laws Act, 1988 meanwhile, will allow companies to hire more people without having to fulfil weighty labour law requirements as it is proposed that companies with 10-40 employees will be exempt from having to furnish and file returns on various aspects. This will help avoid procedural delays, a feature of doing business in India.

Rajasthan shows the way

With the finance minister encouraging States to bring in appropriate labour reforms, Rajasthan has gone the Chinese way. Henceforth, it will be easier for firms there to adopt hire and fire policies. The Rajasthan government’s labour reforms are manifold. For one, industrial establishments employing up to 300 workers are now allowed to retrench employees without seeking the prior permission of the Government.

In addition, the threshold of the number of employees required for the purpose of applicability of the Factories Act has been increased from 10 to 20 (in electricity-powered factories) and from 20 to 40 (in factories without power). This is expected to reduce bureaucratic delays.

Finally, membership of 30 per cent of the total workforce needs to be recorded for a union to obtain recognition, up from 15 per cent, a move that will halt productivity losses out of politically motivated petty strikes.

The reality is that manufacturing has to grow to absorb millions of semi-skilled young Indians, a difficult task without rationalising labour reforms. Overall, it seems Modi is on the right track.

Source: BusinessLine

Solarizing the nation is the only way forward

This article is in continuation to my blog on policy making. Here I am listing a few goodreads about how the government is going ahead on solar policy. As I had mentioned earlier, India has the potential of about 400-700GW of solar energy. But a decent target of 50GW over 10 years can make wonders in this sector. On the one hand it is good idea to augment the solar capacity in India, but we need to keep in mind that most of the solar panels are imported, thereby adding to our import bill and a soaring CAD. India needs to substantially invest in R&D as far as solar energy is concerned, because this does not include any natural resource constraint. A lot of research is going on in the world on solar energy and India should take lead here in providing latest technologies and not just be a the receiving end. Its is my firm belief that a solarizing revolution can take us on the path of energy security in years to come. Below are a few reads which should convince us that the government is serious about it and is taking some steps.

Welcome push to solar

Small rooftop solar plants to create 3.25 lakh jobs in 10 years

Ministry targets 1 lakh MW from renewables in 5 years

Sun shines on solar stocks as Govt promises PSU order

Structural imbalance in Indian economy

         As per a newspaper report, India is poised to become a $2 trillion economy by FY15 even if it grows at 5%. The growth rate for Q1 FY15 has been 5.7% and the RBI estimated growth rate for FY15 is 5.5%. So we can be sure of crossing this milestone by March 2015. Psychologically, it is an important milestone to cross. However, if your dive into the numbers then you will find that the per capita income has not increased drastically. If you look at the chart below, several imbalances can be found in our economy. 

Although 50% of our population depends on agriculture, the share of agriculture is a meagre 18%. Services contribute a lot to our GDP, a whopping 50%. When Modi was the CM of Gujarat, he had trifurcated the economic structure on 3 pillars namely, Agriculture(33%), Services(33%) and Manufacturing(33%). The same model needs to be replicated at national level. Given the kind of human capital we have, liberalising the labour reforms, land acquisition and environment laws together can help the government raise the GDP by 2% in 3 years. All of these coupled with financial sector reforms, GST, augmented infrastructure capacity in terms in roads,freight corridors and ports can further help the government raise the GDP by 2%. The point I am trying to make is, focusing on the sectors which involve heavy manufacturing activities can help the government spread the base of the economy. For eg. there are about 15 cities where Metro rail projects are in several phases of execution. Currently, the tracts, via ducts, pre cast cement blocks, signalling system equipments and finally the trains, all are imported. Why can't we set a standard for all the trains, signalling system, pre cast ducts and indigenously produce them in our country? This will help in saving our import bill and simultaneously increase the manufacturing activity. Every job created in manufacturing sector creates 5 more direct and indirect jobs.Service sector is such a sector which can be sandwiched between Agriculture and Manufacturing, for both these sectors required IT support, marketing,advertisement and other allied activities. In next 3 years, the government needs to focus on labour liberalization and execution of those liberalized reforms coupled with financial sector reforms. This process will be excruciatingly painful and give a lot of labour pains, but in the end it will deliver a beautiful baby... 

Image Source: Livemint

Indo-Japan Relationship

Even before Narendra Modi became prime minister, he has had 2 visits to Japan in his capacity as Chief Minister. Of all its investments in India, Japan has highest investment in Gujarat. The new smart city plan in Dholera, Gujarat is going to be a home for all Japanese investments in the state. I remember having a very casual discussion with one of my managers at Oracle in early 2014, about what would be diplomatic ramifications of Narendra Modi as prime minister; and I had then told that the biggest beneficiary of his foreign policy would be Japan. Having said that, his recent trip to Japan has been a phenomenal success which even his staunchest critics have had to agree. If he gets the same momentum going, then I think India shall rise and the LION will gain enough strength to stand up to the DRAGON. 

Below is one of the article which I recently read on The Diplomat, on Indo Japan relations and its ramifications on Indo-Sino relations and how he needs to do a balancing act, keeping "MindPeace" ..... :)

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If photo-ops are considered to be vital part of conveying messages in diplomacy then the image of India’s Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe hugging each other last week should go down as a defining moment in India-Japan relations. Traditionally, the Japanese are not known to be demonstrative or even to encourage physical contact but if the enthusiastic reception accorded to Modi during his five-day trip to Japan – his first bilateral trip outside the Indian sub-continent – is any indication, New Delhi and Tokyo are all set to transform geo-politics in Asia.

The two prime ministers, also close personal friends, not only discussed a wide range of bilateral issues during an unusually long trip but also worked towards building a counterweight to an increasingly assertive China. Although the only reference – and an oblique one at that – to China came from Modi, the joint statement was dominated by plans to cooperate on security issues that will have far-reaching implications in Asia. “Everywhere around us, we see an 18th-century expansionist mind-set: encroaching on another country, intruding in others’ waters, invading other countries and capturing territory,” Modi told his Japanese audience without mentioning China.

Even the joint statement by the two countries spoke about regional tensions and steps that they intend to take to control the situation. It said, in parts: “The two Prime Ministers affirmed their shared belief that at a time of growing turmoil, tensions and transitions in the world, a closer and stronger strategic partnership between India and Japan is indispensable for a prosperous future for their two countries and for advancing peace, stability and prosperity in the world, in particular, in the inter-connected Asia, Pacific and Indian Ocean Regions. Prime Minister Abe briefed Prime Minister Modi on Japan’s policy of ‘Proactive Contribution to Peace’ and Japan’s Cabinet Decision on development of seamless security legislation. Prime Minister Modi supported Japan’s initiative to contribute to peace and stability of the region and the world.”

The joint statement was labeled “Tokyo Declaration for India – Japan Special Strategic and Global Partnership,” a fact that would not have gone unnoticed in Beijing. While the fine print of various agreements will be known in due course, the larger message of Modi’s visit is loud and clear: For the first time India is willing to throw its lot in with Japan, a known U.S. ally. So far, New Delhi has refrained from an overt alliance with the U.S. but it has accepted a need to have closer defense cooperation with both Tokyo and Washington. One early manifestation of this was the recent trilateral naval cooperation Exercise Malabar held off the Japan coast in June. This was a significant departure from the recent past. Since 2007, Japan had kept away from Exercise Malabar after Beijing had protested in the wake of a five-nation exercise in the Indian Ocean. But under Abe’s leadership, Japan is turning many of its defensive policies on their head. The easing of Japan’s defense exports rules will allow Japanese defense firms to participate in India’s huge weapons market. An amphibious military aircraft is likely to be one of the first exports to India. A civil nuclear deal is also progressing well, although much against Modi’s wishes it could not be clinched during his visit. However, Japan’s commitment to invest around $34 billion in India’s key infrastructure projects over the next five years will boost the India-Japan partnership further.

Officially, there was no reaction by China but Modi’s breakthrough visit was certainly keenly watched in Chinese official media, where it drew some pointed comment. Global Times, the hardline voice of the Chinese establishment in China had two strident back-to-back editorials on the Modi-Abe tango. In the first, the paper commented: “The increasing intimacy between Tokyo and New Delhi will bring at most psychological comfort to the two countries. What is involved in China-India relations denotes much more than the display of the blossoming personal friendship between Modi and Abe. After all, Japan is located far from India. Abe’s harangue on the Indo-Pacific concept makes Indians comfortable. It is South Asia where New Delhi has to make its presence felt. However, China is a neighbour it can’t move away from. Sino-Indian ties can in no way be counterbalanced by the Japan-India friendship.” The second one attacked Japan directly in an editorial titled, ‘Tokyo lost the war, and must accept defeat,’ threatening Japan openly: “What we need is a rational Japan that behaves itself and stops serving as a pawn of the US to sabotage China’s strategic interests. We need to crush Japan’s will to constrain a rising Beijing and only in this way can Sino-Japanese friendship garner a fresh, solid foundation.”

It is instructive to note that Chinese criticism so far is muted as far as India is concerned. The reason is clear. In less than a fortnight after Modi ended his successful Japan trip, Chinese President Xi Jingping is expected in India. Xi has an ambitious agenda for his visit. China wants to take full advantage of a pro-business regime under the new prime minister and raise bilateral trade beyond 100 billion dollars. Economic partnerships apart, China would want to keep its negotiations on the contentious border issue going, if only to keep India interested since India is now being wooed by the world. The U.S. has already sent three of its cabinet secretaries to India, all before Modi has even visited America. That visit is due in late September, where he will hold a summit meeting with President Barack Obama. Clearly, Washington wants to reboot ties with New Delhi after a downslide in relationship over the past four years. Australian Prime Minister Tony Abbott has left for Mumbai and New Delhi, and is expecting to sign a deal to supply uranium to India. Canberra has already indicated it wants much closer defense cooperation with India.

Modi’s foreign minister Sushma Swaraj has toured Vietnam – one of several of China’s neighbors that have territorial disputes with Beijing – and Bangladesh to re-establish India’s primacy in the region. The prime minister has himself decided to reach out to smaller but important nations in the Indian sub-continent by visiting Bhutan and Nepal, the two Himalayan countries wedged between India and China. His decision to call off talks with Pakistan also shows he is prepared to make a departure from conventional practice. Clearly, Modi is the international flavor of the season. His challenge will, however, be to balance competing interests between the U.S., Japan and China even as he pursues an independent Indian foreign policy based on national interest.

Interlinking rivers in India

The articles which I am sharing are part of my Political and Economic thinking. I came across an article in The Hindu Business-line, the news paper which I follow exclusively for policy making literature.

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“Atalji's dream of linking rivers is our dream as well. This can strengthen the efforts of our hardworking farmers,” tweeted Narendra Modi soon after an election campaign speech in Bihar in April.

The river linking project, which the National Water Development Agency (NWDA) calls inter-basin transfer of water, is designed to ease water shortages in western and southern India, while mitigating the impact of recurrent floods in the eastern parts of the Ganga basin.

“One of the most effective ways to increase the irrigation potential to improve foodgrain production, mitigate floods and droughts and reduce regional imbalances in the availability of water is the Inter Basin Water Transfer from surplus rivers to deficit areas. The Brahmaputra and the Ganga, particularly their northern tributaries; the Mahanadi, the Godavari, and the west-flowing rivers originating from the Western Ghats are found to be surplus in water resources,” NWDA says on its Website.

At its completion, the country will have 30 river links, 3,000 storage structures, a canal network stretching almost 15,000 km and can generate 34 GW of hydroelectric power, create some 87 million acres of irrigated land, and transfer 174 trillion litres of water a year. The initial cost of the project is estimated to be at ₹5.6 lakh crore, while around 580,000 people face the threat of displacement.

The plan

Under the National Perspective Plan (NPP) prepared by the Ministry of Water Resources, the NWDA has identified 14 links under the Himalayan Component and 16 links under the Peninsular Rivers Component. Out of these, feasibility reports for 14 links under the Peninsular Component and two links under the Himalayan Component have been prepared.

According to the NPP, the Himalayan Rivers Development Project envisages construction of storage reservoirs on the main Ganga and the Brahmaputra and their principal tributaries in India and Nepal, along with an inter-linking canal system to transfer surplus flow of the eastern tributaries of the Ganga to the West. It will also link the main Brahmaputra with the Ganga.

The Peninsular Rivers Development Component is divided into four major parts: interlinking of Mahanadi-Godavari-Krishna-Cauvery rivers and building storages at potential sites in these basins, interlinking West-flowing rivers north of Mumbai and south of the Tapi, interlinking of Ken-Chambal, and diversion of other West-flowing rivers. 

Bringing States on board

To implement the project successfully, the Government will have to convince States to come on board, as water is a State subject.

Andhra Pradesh, Chhattisgarh, Karnataka, Kerala, Maharashtra, Madhya Pradesh, Odisha, Puducherry, Rajasthan, Tamil Nadu and Uttar Pradesh are the major States to benefit from the project. Several States have supported the plan, while some others have raised concerns. Chief Ministers of both Andhra Pradesh and Tamil Nadu have been urging the Centre to take up the 14 links under the peninsular component. Kerala, however, is worried about the proposed Pamba-Achankovil-Vaippar link.

The first steps

One of the initial tasks before the Government is to address the Supreme Court verdict of February 2014 on the interlinking of rivers. The court had directed the Government to create an appropriate body to plan, construct, and implement the massive project, starting with the Ken-Betwa link.

The two phases of the Ken-Betwa link project, involving Madhya Pradesh and Uttar Pradesh, are estimated to cost ₹11,676 crore. A detailed project report for both the phases has been submitted to the two State Governments. According to this report, a total of 11,723 ha of land could be submerged if this project is executed. This includes more than 5,000 ha of forest land belonging to the Panna Tiger Reserve. It will also affect 10,163 people belonging to 2,529 families in 22 villages.

“Together, both the phases of the Ken-Betwa Link project envisage 7.35 lakh ha of irrigation, 78 MW of hydropower and would provide drinking water to 15.07 lakh people,” said S Masood Husain, Director-General, NWDA. Other priority links are Parbati-Kalisindh-Chambal, Damanganga-Pinjal, Par-Tapi-Narmada, and Godavari (Polavaram)-Krishna (Vijayawada).

Of these, the detailed report for the Damanganga-Pinjal link is ready with the Centre. The report has already been submitted to the Governments of Maharashtra and Gujarat. “If implemented, this project can address Mumbai’s water problem to a great extent at least till 2040,” Husain added.

The downside to linking

However, the projects have already invited criticism from various political parties. In fact, those who were evicted for the construction of the Bhakra and the Pong dams, two of the oldest in India, have still not been fully rehabilitated.

“Environmentalists, hydrologists and economists around the world have expressed deep concerns at the irreversible damage that this sort of a mega project can do to the country’s environment and our water resources. Massive civil works will be involved, lakhs of people will be uprooted and vast sums of money will be required,” Congress leader and MP Karan Singh said.

The CPI (M) has also questioned the move. The party’s MP KN Balagopal said the Central Government’s plan is politically-motivated, giving the example of theParambikkulam-Aliayar project (in Kerala).” Farmers of Palakkad district have to hold protests during the crop season to get water from the project released. The proposed Pamba-Achankovil-Vaippar link will be a disaster for a riparian zone like Kerala, he says.

Failed attempts

The Government defends the project, saying the idea of river-linking is not new in India. In 1972, then Union Irrigation Minister KL Rao mooted the first major proposal to interlink the water basins. The 2,640-km-long Ganga-Cauvery link was the main component in the proposal. But Rao’s estimate of ₹12,500 crore was considered “grossly under-estimated and economically prohibitive.” In 1977, during the Moraji Desai Government, Captain Dinshaw J Dastur, an engineer, proposed the construction of two canals – the first for the Himalayan rivers and the second to cover the central and southern parts. A host of experts opined that his project was infeasible.

However, both the Government and the NWDA are now confident of implementing the project at the national level. The NWDA lists a number of initiatives such as the Periyar Project, the Parambikulam-Aliyar, Kurnool-Cudappah Canal, the Telugu Ganga Project, and the Ravi-Beas-Sutlej-Indira Gandhi Nahar Project as examples of successful execution of river linking.

“If we can build storage reservoirs on these (surplus) rivers and connect them to other parts of the country, regional imbalances could be reduced significantly and lot of benefits by way of additional irrigation, domestic and industrial water supply, hydropower generation, and navigational facilities would accrue,” it adds.

Disruptive Potential of Solar Power, a McKinsey Report

I have been a big proponent of harnessing India's solar potential. It is believed that India's solar energy potential varies from 300GW to 700GW. India's current electricity capacity stands around 200GW. Even if we set a target of achieving 50GW of Solar power generation in next 10 years, it can make wonders for our country thereby protecting environment and also giving a boost to Modiji's energy security dream.

Here's a report by McKinsey which describes the potential of solar energy and how the world is responding to it...

Disruptive Potential of Solar

And I hope, even if half of the above target is achieved before 2019 polls, Modiji would have a new slogan "We have SOLARIZED the nation", a slap on the face of the people who accuse him of polarizing.. :)