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  • Foreign Policy Watch: India-Russia

    Energy cooperation as the backbone of India-Russia ties

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Context

    With its abundant energy sources and appetite for trade diversification, Russia could be an ultimate long-term partner of India as it tries to diversify its trade relations.

    Energy partnership

    • Indian Prime Minister in a virtual address at 6th Eastern Economic Forum (EEF) in Russia’s Vladivostok said that “India-Russia energy partnership can help bring stability to the global energy market.”
    • Indian and Russian Energy Ministers announced that the countries’ companies have been pushing for greater cooperation in the oil and gas sector beyond the U.S.$32 billion already invested in joint projects.
    • India’s Minister for Petroleum and Natural Gas Hardeep Singh Puri referred to Russia as the largest investor in India’s energy sector.
    • One of the examples of cooperation between the two countries in energy transformation is the joint venture between India’s Reliance Industries Ltd. and Russia’s Sibur, the country’s largest petrochemicals producer.
    • Apart from accounting for most of the Indian butyl rubber market, Reliance Sibur Elastomers exports its products to Asia, Europe, the United States, Brazil and other countries.
    • A few years ago, Rosneft invested U.S.$12.9 billion in India’s second-largest private oil refiner, Essar Oil, renamed Nayara Energy, marking it one of the most significant foreign investments in years.
    • Partnership in renewable: In efforts to transition to green energy, India has recently achieved a significant milestone of completing the countrywide installation of 100 gigawatts of total installed renewable energy capacity, excluding large hydro.
    • A recent Deloitte report has forecasted that India could gain U.S.$11 trillion in economic value over the next 50 years by limiting rising global temperatures and realising its potential to ‘export decarbonization’.
    • Unknowns of climate change and threats of a new pandemic suggest that the country should accelerate its energy transition. Russia, one of the key global players across the energy market, could emerge as an indispensable partner for such a transition.
    • Partnership in nuclear energy: Russian companies have been involved in the construction of six nuclear reactors in the Kudankulam nuclear power project at Tamil Nadu.
    • India and Russia secure the potential of designing a nuclear reactor specifically for developing countries, which is a promising area of cooperation.
    • India’s nuclear power generation capacity of 6,780 MW may increase to 22,480 MW by 2031, contributing to the country’s efforts to turn to green energy.

    Way forward

    • In September, almost all of Russia’s major energy companies were interested in projects in India, Russia’s Energy Minister said at the Vladivostok forum in September, adding that he sees prospects for energy cooperation in all areas.
    • However, the current bilateral exchange rate needs to accelerate for India to grasp its potential from energy transformation.

    Conclusion

    To meet its growing energy demand and succeed in green transformation, India needs approximately U.S.$500 billion of investments in wind and solar infrastructure, grid expansion, and storage to reach the 450 GW capacity target by 2030. Therefore, more efforts are needed to expand cooperation with such partners as Russia.

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  • Important Judgements In News

    Analysing the Supreme Court’s Pegasus order

    op-ed snap | Polity | Mains Paper 2: Executive & Judiciary

    Context

    The Supreme Court of India has appointed a committee presided by Justice (Retd.) R V Raveendran to inquire into the Pegasus revelations.

    Terms of reference

    • The court’s terms of reference include queries on, “What steps/actions have been taken by the Union of India after reports were published in the year 2019 about hacking of WhatsApp accounts”, and, “Whether any Pegasus suite of spyware was acquired by the Union of India, or any State Government, or any central or state agency for use against the citizens of India”.
    • The constitution of this committee marks an important step towards accountability for the victims and the larger public on the use of Pegasus.

    Significance of the committee on Pegasus issue

    1) Transparency and disclosure

    • The order of the court constituting the committee attains significance for three clear reasons.
    • The first is the court’s continuing insistence on transparency and disclosure by the Union government.
    • The only filing made in court by the government was a limited affidavit, containing short paragraphs of generalised denials and the sole annexure of a statement by the Minister for Electronics and IT before Parliament.
    • Immediately, the Supreme Court pointed out that these are inadequate and provided further time.

    2) The SC’s approach towards national security

    • The second reason is the Supreme Court’s firm approach towards the national security submissions by the Union government.
    • The court correctly applied the settled convention on legal pleadings and affidavits by asking the government to, “necessarily plead and prove the facts which indicate that the information sought must be kept secret as their divulgence would affect national security concerns.”
    • The second aspect of the national security argument is how the court balances it with the fundamental right to privacy.
    • Here, drawing from the framework of the K S Puttaswamy judgment the court specifically states that, “national security cannot be the bugbear that the judiciary shies away from, by virtue of its mere mentioning” and, “mere invocation of national security by the State does not render the Court a mute spectator”.
    • These are significant observations that, when followed as precedent, will bolster confidence in constitutional adjudications especially when courts demand evidence on arguments of “national security” to avoid generalised statements made to evade accountability.

    3)  Rejection of the suggestion by the Solicitor-General to constitute a government committee of experts

    • The court correctly notes that even though the Pegasus revelations were first made on November 1, 2019, there has been little movement on any official inquiry.
    • It also records the genuine apprehension of the petitioners, many of whom are victims of Pegasus, that since the sale of this malware can only be made to governments, they fear the involvement of state agencies.

    Challenges

    • These include the functioning of the committee and the cooperation of government witnesses, the publication of the report so as to ensure public confidence and, ultimately, the directions and remedy provided by the Supreme Court.

    Conclusion

    Hence, the constitution of this committee provides hope. At the same time, any honest assessment should consider the more challenging tasks ahead.

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  • Right To Privacy

    Supreme Court forms committee to examine Pegasus allegations

    | Polity | Mains Paper 2: Executive & Judiciary

    The Supreme Court has appointed an independent expert technical committee overseen by a former apex court judge, Justice R.V. Raveendran, to examine allegations that the government used Israeli spyware, Pegasus, to snoop on its own citizens.

    Why need a committee?

    • Decisions in cases seeking enforcement of fundamental rights are based on facts.
    • The task of determining these facts, when they are disputed or unknown, are often assigned to committees, which act as an agent of the court.
    • Such committees or fact-finding teams can summon individuals, prepare ground reports, and inform the court.
    • The Pegasus case involves technical questions, and requires extensive fact-finding for the court to determine whether fundamental rights were violated, and to pass suitable orders.

    Functions of the committee:

    What is Pegasus?

    • All spyware do what the name suggests — they spy on people through their phones.
    • Pegasus works by sending an exploit link, and if the target user clicks on the link, the malware or the code that allows the surveillance is installed on the user’s phone.
    • A presumably newer version of the malware does not even require a target user to click a link.
    • Once Pegasus is installed, the attacker has complete access to the target user’s phone.

    Why in news?

    • The three-judge bench, headed by CJI N V Ramana rejected the government’s plea to let it constitute an expert panel to investigate the issue.

    What did the SC rule?

    • The SC order broadly addresses three issues that have been flagged in the Pegasus row:
    1. Citizen’s right to privacy (Article 21)
    2. Judicial review when the executive invokes national security (Article 13, Article 32)

    (Article 13: declares that any law which contravenes any of the provisions of the part of Funda­mental Rights shall be void.

    Articles 32 and 226 entrusts the roles of the protector and guarantor of fundamental rights to the Supreme and High Courts.)

    1. Implications of surveillance on free speech

    [A] Upholding Right to Privacy

    • The Court, pointing to its own judgment in K S Puttaswamy Case (2017) has said that “right to privacy (under Article 21) is as sacrosanct as human existence.
    • It is inalienable to human dignity and autonomy.
    • While agreeing that it is not an absolute right, the Court has said any restrictions “must necessarily pass constitutional scrutiny”.
    • Any surveillance or snooping done on an individual by the state or any outside agency is an infringement of that person’s right to privacy.
    • Hence, any violation of that right by the state, even in national interest, has to follow procedures established by the law.

    [B] Linking surveillance and censorship

    • The Court has also drawn a link between:
    1. Surveillance, especially the knowledge that one is under the threat of being spied on”, and
    2. Censorship, particularly self-censorship, to reflect on the potential chilling effect that snooping techniques may have
    • The chilling effect surveillance can produce, is an assault on the vital public-watchdog role of the press, which may undermine the ability of the press to provide accurate and reliable information.

    [C] Constituting a panel

    • The Court has constituted a panel of experts under former SC judge Justice R V Raveendran.
    • It has sharply defined the questions it needs to ask and find answers to: Was any Pegasus suite of spyware acquired by the central or any state government for use against the citizens of India.
    • It would inquire under what law, rule, guidelines, protocol or lawful procedure was such deployment made.
    • These are vital questions at the heart of a citizen’s basic rights.

    Significance of the Judgement

    • The order is a strong rebuttal of the government’s specious and self-serving use of national security.
    • The Court has ruled that the state does not get a free pass every time the spectre of ‘national security’ is raised.
    • This also means “no omnibus prohibition can be called for against judicial review” if the matter impinges on national security.

     

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  • AIIB & The Changing World Order

    APVAX Initiative

    | Economics | Mains Paper 3: Inclusive Growth & Issues

    The Government of India has applied for loans from the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) to procure as many as 667 million doses of COVID-19 vaccines under the APVAX initiative.

    Try this question from CSP 2019

    Q.With reference to Asian Infrastructure Investment Bank (AIIB), consider the following statements:

    1. AIIB has more than 80 member nations.
    2. India is the largest shareholder in AIIB.
    3. AIIB does not have any members from outside Asia.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

     

    Post your answers here.

    APVAX Initiative

    • The ADB is expected to lend $1.5 billion and the AIIB around $500 million for the vaccine purchase by India.
    • It which has been made under the ADB’s Asia Pacific Vaccine Access Facility (APVAX) initiative.
    • Launched in December 2020, APVAX offers “rapid and equitable support to its developing member countries as they procure and deliver effective and safe COVID-19 vaccines”.
    • The Beijing-headquartered AIIB will co-finance the vaccine procurement.

    About Asian Development Bank (ADB)

    • The ADB is a regional development bank established on 19 December 1966.
    • It is headquartered in the Ortigas Center located in the city of Mandaluyong, Metro Manila, Philippines.
    • From 31 members at its establishment, ADB now has 68 members.
    • The ADB was modelled closely on the World Bank, and has a similar weighted voting system where votes are distributed in proportion with members’ capital subscriptions.
    • ADB is an official United Nations Observer.
    • As of 31 December 2020, Japan and the UN each holds the largest proportion of shares at 15.571%.
    • China holds 6.429%, India holds 6.317%, and Australia holds 5.773%.

    Asian Infrastructure Investment Bank (AIIB)

    • The AIIB is a multilateral development bank that aims to improve economic and social outcomes in Asia.
    • The bank was proposed by China in 2013 and the initiative was launched at a ceremony in Beijing in October 2014.
    • The bank currently has 103 members, including 16 prospective members from around the world.
    • The starting capital of the bank was US$100 billion, equivalent to 2⁄3 of the capital of the Asian Development Bank and about half that of the World Bank.
    • It received the highest credit ratings from the three biggest rating agencies in the world, and is seen as a potential rival to the World Bank and IMF.

    AIIB and India

    • So far, the AIIB has approved loans for 28 projects in India amounting to $6.7 billion, more than for any other member of the multilateral bank.
    • India is the second-largest shareholder after China in the bank, which does not count the U.S. and Japan among its members.

     

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  • Citizenship and Related Issues

    Unified Database of Birth and Death

    | Indian Society | Mains Paper 1: Population & Associated Issues

    The Centre has proposed amendments to a 1969 law that will enable it to “maintain the database of registered birth and deaths at the national level”.

    Registration of Births and Deaths Act (RBD), 1969

    • The registration of births, deaths and stillbirths are compulsory under the provisions of RBD Act in all parts of the Country.
    • The normal period of 21 days (from the date of occurrence) has been prescribed for reporting the birth, death and stillbirth events.

    Why need amendment?

    • The database may be used to update the Population Register and the electoral register, and Aadhaar, ration card, passport and driving licence databases after the amendment.
    • Presently, the registration of births and deaths is done by the local registrar appointed by States.

    What are the proposed amendments?

    Ans. Unified Database of Birth and Death

    • It is proposed that the Chief Registrar (appointed by the States) would maintain a unified database at the State level.
    • It would then integrate it with the data at the “national level,” maintained by the Registrar General of India (RGI).
    • The amendments will imply that the Centre will be a parallel repository of data.

    Significance of the database

    • It would help update:
    1. Population Register prepared under the Citizenship Act, 1955;
    2. Electoral registers or electoral rolls prepared under the Representation of the People Act, 1951
    3. Aadhaar database prepared under the Aadhaar Act, 2016;
    4. Ration card database prepared under the National Food Security Act, 2013;
    5. Passport database prepared under the Passport Act; and
    6. Driving licence database under the Motor Vehicles (Amendment) Act, 2019, and
    7. Other databases at the national level are subject to provisons of Section 17 (1) of the RBD Act, 1969

     

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  • Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

    Krishi UDAN 2.0 Scheme

    PIBSchemes | Agriculture | Mains Paper 3: Transport & Marketing Of Agricultural Produce

    The Union Minister of Civil Aviation has launched Krishi UDAN 2.0.

    Krishi UDAN 2.0

    • The scheme proposes to facilitating and incentivizing movement of Agri-produce by air transportation.
    • It lays out the vision of improving value realization through better integration and optimization of Agri-harvesting and air transportation.
    • It works by contributing to Agri-value chain sustainability and resilience under different and dynamic conditions.
    • It will be implemented at 53 airports across the country mainly focusing on Northeast and tribal regions and is likely to benefit farmer, freight forwarders and Airlines.

    Key highlights of the scheme

    • Facilitating and incentivizing movement of Agri-produce by air transportation: Full waiver of Landing, Parking, TNLC and RNFC charges for Indian freighters and P2C at selected Airports. Primarily, focusing on NER, Hilly, and tribal regions.
    • Strengthening cargo-related infrastructure at airports and off airports: Facilitating the development of a hub and spoke model and a freight grid.
    • Concessions sought from other bodies: Seek support and encourage States to reduce Sales Tax to 1% on aviation fuels for freighters / P2C aircraft as extended in UDAN flights.
    • Resources-Pooling through establishing Convergence mechanism: Collaboration with other government departments and regulatory bodies.
    • Technological convergence: Development of E-KUSHAL (Krishi UDAN for Sustainable Holistic Agri-Logistics).

    What is E-KAUSHAL?

    • It is a platform to be developed to facilitate information dissemination to all the stakeholders.
    • This will be a single platform that will provide relevant information at the same time will also assist in coordination, monitoring and evaluation of the scheme.
    • Furthermore, integration of E-KUSHAL with the National Agriculture Market (e-NAM) is proposed.

    Airports under the scheme

    Proposed timeline Locations
    2021 – 2022 Agartala, Srinagar, Dibrugarh, Dimapur, Hubballi, Imphal, Jorhat, Lilabari, Lucknow, Silchar, Tezpur, Tirupati, Tuticorin
    2022 – 2023 Ahmedabad, Bhavnagar, Jharsuguda, Kozhikode, Mysuru, Puducherry, Rajkot, Vijayawada
    2023 – 2024 Agra, Darbhanga, Gaya, Gwalior, Pakyong, Pantnagar, Shillong, Shimla, Udaipur, Vadodara
    2024 – 2025 Holangi, Salem

    7 focus routes & products

    Routes Products
    Amritsar – Dubai Babycorn
    Darbhanga – Rest of India Lichis
    Sikkim – Rest of India Organic produce
    Chennai, Vizag, Kolkata – Far East Seafood
    Agartala – Delhi & Dubai Pineapple
    Dibrugarh – Delhi & Dubai Mandarin & Oranges
    Guwahati  – Hong Kong Pulses, fruits & vegetables

     

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  • Cyber Security – CERTs, Policy, etc

    [pib] CERT-In authorized as CVE Numbering Authority (CNA)

    PIB | Security Issues | Mains Paper 3: Cyber Security

    CERT-In has partnered with the Common Vulnerabilities and Exposures (CVE) Program and has been authorized as a CVE Numbering Authority (CNA) for vulnerabilities impacting all products designed, developed and manufactured in India.

    What is CVE Program?

    • CVE is an international, community-based effort and relies on the community to discover vulnerabilities.
    • The vulnerabilities are discovered then assigned and published to the CVE List.
    • Information technology and cybersecurity professionals use CVE Records to ensure they are discussing the same issue, and to coordinate their efforts to prioritize and address the vulnerabilities.
    • Partners publish CVE Records to communicate consistent descriptions of vulnerabilities.

    Mission of the Program

    • The mission of the CVE Program is to identify, define, and catalog publicly disclosed cybersecurity vulnerabilities.
    • The vulnerabilities are discovered then assigned and published by organizations from around the world that have partnered with the CVE Program.

    Who are the CNAs?

    • CNAs are organizations responsible for the regular assignment of CVE IDs to vulnerabilities, and for creating and publishing information about the Vulnerability in the associated CVE Record.
    • The CVE List is built by CVE Numbering Authorities (CNAs).
    • Every CVE Record added to the list is assigned by a CNA.
    • The CVE Records published in the catalog enable program stakeholders to rapidly discover and correlate vulnerability information used to protect systems against attacks.
    • Each CNA has a specific Scope of responsibility for vulnerability identification and publishing.

    Back2Basics: Indian Computer Emergency Response Team (CERT-IN)

    • CERT-IN is an office within the Ministry of Electronics and Information Technology.
    • It is the nodal agency to deal with cyber security threats like hacking and phishing. It strengthens the security-related defense of the Indian Internet domain.
    • It was formed in 2004 by the Government of India under the Information Technology Act, 2000 Section (70B) under the Ministry of Communications and Information Technology.

     

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  • Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

    Preparing for outbreaks

    op-ed snap | Governance | Mains Paper 2: Health & Education

    Context

    Prime Minister Narendra Modi launched the Ayushman Bharat Health Infrastructure Mission, one of the largest pan-India schemes for strengthening healthcare infrastructure, in his parliamentary constituency Varanasi in Uttar Pradesh.

    Aims of Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (ABHIM) and how it seeks to achieve it

    • This was launched with an outlay of ₹64,180 crore over a period of five years.
    •  In addition to the National Health Mission, this scheme will work towards strengthening public health institutions and governance capacities for wide-ranging diagnostics and treatment, including critical care services.
    • The latter goal would be met with the establishment of critical care hospital blocks in 12 central institutions such as the All India Institute of Medical Sciences, and in government medical colleges and district hospitals in 602 districts.
    • Laboratories and their preparedness: The government will be establishing integrated district public health labs in 730 districts to provide comprehensive laboratory services.
    • Research: ABHIM will focus on supporting research on COVID-19 and other infectious diseases, including biomedical research to generate evidence to inform short-term and medium-term responses to such pandemics.
    • One health approach: The government also aims to develop a core capacity to deliver the ‘one health’ approach to prevent, detect, and respond to infectious disease outbreaks in humans and animals.
    • Surveillance labs: A network of surveillance labs will be developed at the block, district, regional and national levels for detecting, investigating, preventing, and combating health emergencies and outbreaks.
    • Local capacities in urban areas: A major highlight of the current pandemic has been the requirement of local capacities in urban areas.
    • The services from the existing urban primary health centres will be expanded to smaller units – Ayushman Bharat Urban Health and Wellness Centres and polyclinics or specialist clinics.

    Conclusion

    The Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (ABHIM) is another addition to the arsenal we have to prepare for such oubreaks in the future.

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  • Climate Change Negotiations – UNFCCC, COP, Other Conventions and Protocols

    Why India shouldn’t sign on to net zero

    op-ed snap | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    Context

    The recent report of the Intergovernmental Panel on Climate Change made it clear that limiting the increase in the world’s average temperature from pre-industrial levels to those agreed in the Paris Agreement requires global cumulative emissions of carbon dioxide to be capped at the global carbon budget.

    Understanding why reaching net zero by itself is irrelevant to forestalling dangerous warming

    • The promise of when you will turn off the tap does not guarantee that you will draw only a specified quantity of water.
    • The top three emitters of the world — China, the U.S. and the European Union — even after taking account of their net zero commitments and their enhanced emission reduction commitments for 2030, will emit more than 500 billion tonnes of carbon dioxide before net zero.
    • These three alone will exceed the limit of about 500 billion tonnes from 2020 onwards, for even odds of keeping global temperature increase below 1.5°C.

    Issues with ‘net zero’ target

    • Neither the Paris Agreement nor climate science requires that net zero be reached individually by countries by 2050, the former requiring only global achievement of this goal “in the second half of the century”.
    • Claims that the world “must” reach specific goals by 2030 or 2050 are the product of specific economic models for climate action.
    • They front-load emission reduction requirements on developing countries, despite their already low emissions, to allow the developed world to backload its own, buying time for its own transition.
    • These stringent limits on future cumulative emissions post 2020, amounting to less than a fifth of the total global carbon budget, is the result of its considerable over-appropriation in the past by the global North.
    • Promises of net zero in their current form perpetuate this hugely disproportionate appropriation of a global commons, while continuing to place humanity in harm’s way.

    Suggestions for India

    • India is responsible for no more than 4.37% cumulative emissions of carbon dioxide since the pre-industrial era, even though it is home to more than a sixth of humanity.
    • India’s per capita emissions are less than half the world average, less than one-eighth of the U.S.’s.
    • For India to declare net zero now is to accede to the further over-appropriation of the global carbon budget by a few.
    • India’s contribution to global emissions, in both stock and flow, is so disproportionately low that any sacrifice on its part can do nothing to save the world.
    • India, in enlightened self-interest, must now stake its claim to a fair share of the global carbon budget.
    • Technology transfer and financial support, together with “negative emissions”, if the latter succeeds, can compensate for the loss of the past.
    • Such a claim by India provides it greater, and much-needed long-term options.
    • It enables the responsible use of coal, its major fossil fuel resource, and oil and gas, to bootstrap itself out of lower-middle-income economy status and eradicate poverty, hunger and malnutrition for good.
    • India’s resource-strapped small industries sector needs expansion and modernisation.
    • The agriculture sector, the second-largest source of greenhouse gas emissions for India after energy, needs to double its productivity and farmers’ incomes and build resilience.
    •  Infrastructure for climate resilience in general is critical to future adaptation to climate change.
    • All of these will require at least the limited fossil fuel resources made available through a fair share of the carbon budget.

    Conclusion

    Without restriction of their future cumulative emissions by the big emitters, to their fair share of the global carbon budget, and the corresponding temperature target that they correspond to made clear, India cannot sign on to net zero.

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  • Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

    What to do about the heavy cost of doing business in India

    op-ed snap | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth,Indian Economy

    Context

    The controversy over Ease of the Doing Business (EoDB) notwithstanding, India must now sharpen its focus on the Cost of Doing Business (CoDB).

    Cost of Doing Business in India

    • India has made considerable progress on EoDB rankings since 2016.
    • While the Centre’s focus on EoDB has been commendable, several state governments have also made efforts to improve business conditions.
    •  India must now sharpen its focus on the Cost of Doing Business (CoDB).
    • India lags behind other countries in terms of CoDB on several counts.

    Two key factors influencing CoDB — energy costs and regulatory overload

    • High fuel costs: Diesel prices in India are 20.8 per cent higher than those in China, 39.3 per cent higher than in the US, 72.5 per cent higher than Bangladesh and 67.8 per cent higher than in Vietnam.
    • This is largely because of heavy taxation — total taxes on diesel account for over 130 per cent of the base price in India.
    • High power costs: In the case of electricity, prices for businesses in India were higher by around 7-12 per cent vis-à-vis those in the US, Bangladesh or China and by as much as 35-50 per cent as compared to those in South Korea or Vietnam prior to the recent coal/energy crisis.
    • Coal, which accounts for more than 70 per cent of electricity generation in India, is also pricier vis-à-vis other countries leading to higher electricity prices.
    • Like in the case of the petroleum sector, government levies account for nearly half of the prices paid by coal consumers.
    • And coal producers cannot claim input tax credit because electricity is not under GST.
    • Further, coal freight costs are amongst the highest in the world as high freight rates are used to cross-subsidise passenger fares by the railways.
    • Regulatory overload: Outsized regulatory levels also pose a significant burden on businesses.
    • A Teamlease report highlights that a small manufacturing company with just one plant and up to 500 employees is regulated by more than 750 compliances, 60 Acts and 23 licences and regulations.
    • A mid-sized manufacturing company with six plants spread across different states is regulated by more than 5,500 compliances, 135 Acts and 98 licences and registrations.
    •  Keeping track of such a large number of regulations along with the changes thereof, imposes huge operational and financial costs on businesses, particularly the MSME segment.

    Way forward

    • Including fuels under GST would lower costs for businesses owing to input tax credit even if taxation levels continue to remain high.
    • Cleaning up the power distribution sector, which is largely state-controlled, could potentially lower electricity prices for businesses.
    • Fiscal incentives by the Centre: A majority of the compliances stem from the states and reducing this burden would require a significant push on states to act on this front.
    • The Centre could leverage the “carrot and stick” framework — using fiscal incentives to nudge the states to act and disincentivise them from maintaining the status quo.

    Consider the question “What are the factors affecting the cost of doing business in India? Suggest the measures to reduce it.”

    Conclusion

    The Government must prioritise reducing the cost of energy and compliances for businesses rather than focusing on de jure measures to boost ease of doing business. These will boost India’s manufacturing competitiveness significantly and further increase formalisation in the economy.

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