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The Indian economy is now on “autopilot” mode and will grow steadily in the range of 6.5-7% till 2030, even without further reforms, Chief Economic Adviser (CEA) V. Anantha Nageswaran asserted, adding that the initial assessment of 7.2% GDP growth for 2022-23 could be an underestimate.
Noting that the economy had been prone to ‘overheating’ after three-four years of strong growth over the past three decades, the CEA said the sound economic policies of recent years meant that India could now grow for a longer period of “seven or 10 or 15 years like China did between 1979 and 2008” without “running into overheating problems”.
While the 7.2% GDP growth estimate for last year was higher than what many expected, Mr. Nageswaran said he was confident that the number would be even higher by the time the final estimates for 2022-23 come in January 2026.
That is the momentum in the economy that we are witnessing that even 7.2% will turn out to be an underestimate and not an overestimate of growth last year.
Between now and 2030, based on what we have done so far without even assuming that further reforms will be done, I can say that we have the potential to grow steadily between 6.5-7% and if we add the additional reforms on skilling, factor market reforms, we can go up to 7-7.5%, and possibly even 8%.
Himachal not to relent; tussle with Punjab over British-era Shanan project set to escalate (Page no. 4)
(GS Paper 3, Economy)
As the tussle between Punjab and Himachal Pradesh continues over the 99-year-old lease of the British-era Shanan Hydropower Project situated in Himachal Pradesh’s Jogindernagar, the Himachal Pradesh government has yet again made it clear that it will not relent.
The project is presently under the control of the Punjab government, and its lease will expire in March 2024. The Himachal Pradesh government has announced that it will not renew or extend the lease period, and wants the project to be handed over to it before the expiry of the lease period.
However, the Punjab government is in no mood to do so, asserting its readiness to take legal recourse, if needed, to retain the project.
Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu said he had urged Union Power Minister R.K. Singh, who was on a visit to the State, to complete the process for the time-bound transfer of Shanan Hydroelectric Project to Himachal Pradesh, among other issues.
I have apprised the Union Minister about all the issues related to ownership of the Shanan hydel project and also about its lease period which is expiring in March 2024.
I apprised him that the ownership rights of the Shanan project do not rest with the Punjab government as it was only given on lease to the Punjab government, adding that the Union Minister had assured that he would address all the issues in a time-bound manner.
Editorial
The necessity of electricity distribution companies (Page no. 6)
(GS Paper 3, Economy)
The Electricity Act 2003 provided the framework for the dismantling of the State Electricity Boards and the separation of generation, transmission and distribution into separate companies.
Electricity generation was delicensed, while transmission and distribution remained licenced and regulated activities. Promoting competition, protecting consumer interests, and the supply of electricity to all were key objectives of the legislation.
Under the new regime, a competitive industry structure in generation has evolved. The share of private investment in the creation of new generating capacity has increased rapidly.
Competitive procurement through long-term power purchase agreements (PPAs) grew and prices discovered through the market turned out to be lower than anticipated under the earlier cost-plus dispensation for determining tariffs.
The impressive growth in renewable power is entirely the result of private investment. Tariff-based bids for the supply of electricity to distribution companies (Discoms) has been the key to the extraordinary success of the National Solar Mission. Further, India now has one of the cheapest rates for solar power supply in the world.
When the contours of the new law were being discussed, the introduction of full deregulation and competition (like in the United Kingdom in the early 1990s) was advocated by those who believed that we should adopt the latest ‘reforms’ from the West.
In the U.K., a mandatory power pool had been created where all generators submitted bids for the next day, indicating the quantity they could supply along with the price. These bids were stacked in ascending order of price.
The price with the quantity at which the total demand indicated by the suppliers would be met became the pool price for electricity. This mimicked the intersection of the supply and demand curves to get the market price.
Full retail competition had also been introduced and consumers could choose from among several suppliers who had emerged to serve the market.
Though these reform ideas had a strong constituency (including Enron), these were found to be unsuitable for India.
A pragmatic approach, for better India-Nepal ties (Page no. 6)
(GS Paper 2, International Relation)
Despite daunting challenges to Nepal’s democracy, governance and stability and seemingly intractable bilateral irritants, the Prime Ministers of Nepal and India have shown that a pragmatic approach and mutual sensitivity can re-energise bilateral relations.
The Prime Minister of Nepal, Pushpa Kamal Dahal Prachanda’s first bilateral visit to India since assuming office in the current term is notable in this sense.
Driven by challenges presented by the post-COVID-19 world, current realities as well as huge opportunities, India and Nepal were able to review the entire spectrum of the bilateral agenda covering political, economic, trade, energy, security and developmental cooperation.
Prachanda deserves credit for this. He is in a weak position at home as leader of only the third largest party in Parliament, well behind K.P. Oli and Sher Bahadur Deuba, who are waiting to take over from him, not to speak of leaders from smaller parties who are being wooed by the Opposition to cause political instability.
Prachanda has shown political courage and probably shrewdly calculated the costs of paying heed to the spectrum of political noises warning him not to be soft and to extract solutions to irritants such as the 1950 Treaty, border differences, and India’s reluctance to receive the report of the Eminent Persons Group (EPG) set up by the two governments.
Instead, he seems to have listened to the few voices of reason and moderation, and to focus on opportunities to building a better future.
News
Railways renews push for safety training among staff (Page no. 9)
(GS Paper 3, Infrastructure)
In a bid to ensure smooth and safe movement of trains, the Indian Railways has introduced a system of periodic counselling for Train Managers and Section Controllers on their duties and responsibilities.
The move comes days after the devastating train accident involving the Shalimar-Chennai Coromandel Express, Yeshwantpur-Howrah Express and a goods train at Bahanaga Bazar railway station in Balasore Division of South Eastern Railway on June 2 which left 288 passengers dead and more than 900 injured.
While the exercise of providing counselling to Station Masters and Pointsmen is already in place in all zones, the Railway Board on wrote to General Managers of all Zonal Railways to treat the matter as “most urgent” and launch a regular programme for train running staff on “specific safety and movement issues.
As part of the programme, the safety advisory said a senior Train Manager and Section Controller with adequate knowledge of best practices in safe train operations be nominated as the resource person to train other colleagues for enhancing alertness and proper compliance to other responsibilities during normal and abnormal situations.
In a related development, the Madurai Division of the Southern Railway has banned the use of smart watches by Loco Running Staff while on duty. In a circular, the Senior Divisional Electrical Engineer Ravikumaran Nair said that “the usage of smart watch by Loco Running Staff is banned on footplate with immediate effect.
In a recent check, he said a Loco Pilot on duty was frequently looking at his smart watch as it often turned on with alerts. This was observed when the train was being operated at a speed of 110 kmph.
On further study of the features available on smart watches, it is understood that a smart watch can replicate the calls coming from the phones connected through bluetooth.
It is obvious that a Running Staff’s attention can be diverted by a smart watch if the same is connected from another mobile phone, which is hidden from him/her. The above situation is more dangerous.
World
‘Russia-China ties offer global stability’ (Page no. 11)
(GS Paper 2, International Relation)
Russian armed forces Chief of Staff Valery Gerasimov, said his country’s strong military partnership with China provides stability around the world with his Chinese counterpart, Liu Zhenli.
Mr. Gerasimov, commander of Russia’s military operations in Ukraine, made the remark during a videoconference. The coordination of Russian and Chinese efforts on the international stage has a stabilising effect on the global situation.
I am convinced today’s meetings will help us continue to strengthen the strategic Russia-China defence partnership. Joint Russian and Chinese military exercises should remain “an important axis” of this partnership.
Chinese President Xi Jinping visited Moscow in March and declared relations between the countries were entering a new era.