Economic Times select articles (5-8 June)

Reset Nuclear Power Clock
The new government must review India's nuclear energy policy . It is also a major issue in financial terms.

Building a nuclear capacity of about 50,000 MW in the next 15 years will cost $150-200 billion. But the momentum generated on the nuclear front during UPA-I rule has been steadily dissipating since then.

UPA-I saw the successful negotiation of the hard-fought Indo-US nuclear deal and consequent lifting of nuclear sanctions against India. The deal opened the door for importing uranium and commissioning large foreign-built reactors. Buoyed, the government announced ambitious plans for expanding nuclear power, targeting 20,000 MW by 2020 and a whopping 50,000 MW by 2030.

There was a rapid movement towards this goal soon after the deal was signed. Significant quantities of uranium were imported and initial understanding was reached with reactor builders in Russia, the US and France to build six reactors each.

However, subsequently , plans for buying foreign-built reactors started running into obstacles and, now, progress has slowed to a crawl.

There were three major causes behind this.
1. The first, no fault of our government, was the disaster at Fukushima, whose reactor explosions triggered universal public concern over reactor safety and energised an ti-nuclear activists. While the government managed to overcome the protests against the first Kudankulam reactor, its commissioning got delayed and future reactors are likely to generate similar protests.

2. The second impediment has been the nuclear liability Act, discussed by Parliament under the shadow of the 25th anniversary of the Bhopal chemical tragedy . The Act allowed reactor operators, who must first pay damages to victims, to subsequently sue reactor suppliers. That sounds fair enough, but this being not an international practice, led to consternation among potential reactor builders. Our government then tried to allay their concerns by introducing more supplier-friendly working rules for implementation of the Act. Nevertheless, final agreements to build the reactors are still to be completed, let alone construction.

3. The third factor is the steep rise in the cost of reactor construction.
So we must undertake a comprehensive review of our own plans.

1. France, the US and Russia had all been showed keen interest in building reactors for us even before the deal was complete. Today , five years after the deal was signed and sealed, none of them has finalised a commercial agreement. Some estimate is needed on when actual construction is likely to start on any foreign-built reactor. We are not referring to the Kudankulam reactors, which were drawn up long before the deal.

2. Second are our energy targets. Certainly , construction won't start on any of them within the next year. That implies six or more years of lag before any power flows out of any of them, taking us up to 2020. By then, we were supposed to have achieved 20,000 MW of nuclear capacity . As things stand, we will not reach even 10,000 MW by then, including Kudankulam 2 and additional indigenous reactors. That would only be 3-4% of the total generation capacity at that time. We must face this fact. Similarly , the bigger target of 50,000 MW is much farther away than 2050.

The new government must announce updated, realistic targets. Otherwise, the old targets remain unretracted, misleading planners and undercutting the credibility of the nuclear establishment.

3. What will be the price of electricity from these projects? Estimates differ widely between supporters and opponents of nuclear energy . The government should commission an independent estimate by neutral experts of the provisional price per me gawatt of electricity from these bilateral reactor projects. If the price is much higher than from other sources, some of the funds envisaged for imported reactors should be diverted to indigenous reactors or to solar, wind and hydropower.
4. With uranium easily available through imports, further investments in a parallel closed-cycle thorium route must be reassessed.

5. Finally, we need to address safety concerns. Fukushima and Chernobyl notwithstanding, no objective comparison has shown that reactors are more unsafe than many other forms of modern technology . But this has to be explained to people living near reactors.

MANUFACTURING Agenda for Manufacturing Micro Enterprises
The world of MSMEs is highly polarised. Of the 11.5 million manufacturing MSMEs (4th Census), 99% are MEs and less than 1% are SMEs. Also, 91% of the units are unregistered. Interestingly, the pain points that constrain the growth prospects of MEs and SMEs are not similar on many occasions.
One prime issue that cripples MEs is access to formal finance. The major obstacles are registration of units, availability of small value loan at competitive rates and efforts of formal finance to reach MEs. MEs which started business either from home or rented premises, often end up operating from non-industrial land — almost a no-no as per banking norms. This requires policy intervention in supporting them in seamless conversion or relocation, if in cluster. Relocation needs to be done for the entire value chain, not just the industry in question. Special allocation of land must exist for this in a time bound manner.
A large number of MEs have a need for loans of less than Rs. 5 lakhs in one go. Such small value loans are not an attractive business scenario for some banks. Here, NBFCs can be supported to create various combo products for the ME clusters there, so that loan disbursement is fast. Also, NBFCs may be allowed to disburse subsidies given by ministries. Simultaneously, banks may be given targets not only with respect to value, but also to the number of non-repetitive-ME loans.
Role of pollution control boards is regulatory. Pollution control equipments are costly. There is also no approved vendor for pollution control equipment. Some desired interventions are
(a) supporting MEs in reaching the pollution norms gradually in a time bound manner, rather than frightening them away
(b) incentivising research for creating affordable pollution control equipment and
(c) creating a list of approved vendors for sourcing pollution control equipment/techniques.
Most MEs are not even aware of scores of labour laws, leave aside the intricacies and confusions.
While simplification is the solution, immediate support is needed for providing
(a) legal education and counselling in each of the industrial townships, starting with locations having more than 10 ME clusters and
(b) creating an incentive mechanism for MEs who cater to these norms.
95% of MEs are proprietary/partnerships and are mostly one-person shows. They need affordable and quality business development service providers (BDSPs). At present, BDSPs who are useful are mostly not affordable. Availability of labour is a prime issue. While some of it is due to growth in real wages via MGNREGA, MEs, particularly unregistered ones who have the lowest capacity to pay, took the worst hit.
Taking the clue, there has been a trend for mechanisation. With passing years, this may lead to deskilling of labour, for whom it will be a point of no return, leading to further rise in labour costs. MGNREGA must be linked to providing employment incentives for industrial skilled work. The situation also needs creating or transferring ME friendly technology on a war footing, if we want to touch the planned target in manufacturing value added.
Also of importance is the means of communication. Most support schemes are available in English and are too complex. Simpler versions may be made available in Hindi and vernaculars. Adequate budgetary arrangements are also needed to take care of rising applications through this process. Not least is the need for clearance in a fortnight and ensuring that the cost of availing support should not be costlier than the quantum of support itself.
Cluster-level product based industry associations can help achieve these goals, if they are strengthened by creating a strong secretariat along with necessary infrastructure. They will also be the one-stop shop for putting forward the voice of MEs to ensure these achievements.
New Foreign Trade Policy to Give More Thrust to Services Exports

Officials said the department of commerce is expected to expand the scope of the Serve for India Scheme (SFIS) in the new policy by making duty credit scrips tradable.

Exporters are given credits for exports that can be used for payment of inputs used in imports.
These credits go waste if an exporter does not use imported inputs. But if the credits are made tradable, the exporter can monetise these incentives by selling them in the open market.

“We want to make SFIS scrips tradable. Hotels are using it since they can import liquor and other things, tour operators import cars and vehicles, but what about others? The scheme is not of any use to them. If you are not able to use it, one must be allowed to sell it,” a commerce department official said on condition of anonymity.

SFIS is the only incentive available to services exporters. Under the scheme, duty credit scrips equivalent to 10% of free foreign exchange earned are issued.

But since it is on an actual user basis, not many services exporters other than hotels and tour operator are able to utilise the benefit. Making it tradable will help exporters from other sectors like education, healthcare, consultancy and real estate that do not import much.

If the commerce department has its way, SFIS scrips may even be made adjustable against 12% service tax. The department may also increase the overall amount of the scheme. “The scrips should be used to pay service tax and the amount should be increased. The SFIS scrips should be allowed to adjust 12% service tax,” said the official quoted earlier.

FM to Meet Industy Today for Pre-Budget Consultations

Three UPA Legacies Govt is Worried About

The Need for Environmental Governance

WHAT ARE THE THREATS TO THE INDIAN ENVIRONMENT?
The main threat to the Indian environment comes from the rapid change in lifestyles and the increase in urbanization, industrial growth and consequent need for power, minerals, ports and transportation. A major concern is that global models of development that are at times inappropriate for India are being brought in. A good example would be the Bt technology for food and the rapid replacement of Indian seed varieties and farmers' independence. The loss of wild bio-diversity is also a major threat.
Protected areas are a good strategy but by no means sufficient. Many species are intricately connected with what happens outside protected areas and strategies to conserve this need to be rapidly put in place.

Land, which is a critical resource is perhaps the most neglected and taken for granted. In some of our most fertile regions we build factories and try to improve farm productivity in land which is otherwise poor. The threat is the loss of fertile land. The loss of green cover especially on the hill sides further adds to soil erosion which will be very difficult to replace. Similarly, water is the lifeline of our country.
Climate change threatens the monsoon pattern. Any change in the water cycle would be quite disastrous. Water, both on surface and ground water is being polluted and aquifers are rapidly deteriorating.
WHAT ARE IMMEDIATE STEPS THAT NEED TO BE TAKEN FOR BIO-DIVERSITY CONSERVATION?
Protection of indigenous crop varieties is important. India is the home to several of plants and animals that it has domesticated and preserved over thousands of years. Special characteristics appropriate for India and the particular environment have led to many varieties such as over 20 breeds of cows or the 2000 plus varieties of brinjals. Use of Bt technologies in varieties which are indigenous to India is very dangerous and the precautionary principal needs to be followed.
Without adequate regulatory mechanisms in place or clarity as to whose liability it is, allowing field trials is not a wise step.

Urgent and new strategies are required for the protection of bio-diversity outside of protected areas. In many cases traditional corridors where animals moved have been blocked not only causing human-animal conflict but also major accidents. Birds like the Harriers, which migrate to grasslands in India but feed in cotton fields around the protected area, are under threat. One needs a multi stakeholder collaboration to develop a conservation strategy. There are good examples of this and the government needs to support such efforts.

Traditionally much of India's biodiversity was also linked with livelihood and craft traditions. With the erosion of bio-diversity the impact has been on both these. Crafts person have often switched to chemicals or other substitutes. Such non-agricultural plant material needs to be carefully put into a system of sustainable use and consumption. The same is true of other areas such as traditional fishing. The threat of industrialized operations not only destroys the fish stock but also kills local traditions and destroys local livelihoods.
An initiative on sustainable use of biodiversity has been taken and needs to be made into a full fledged program.

Key species which are under threat need individual strategies as the threat or reason for decline in each case is different. In many cases such as protecting the Tiger, Elephant or Rhino, an effective conservation strategy might suddenly collapse as a result of new threats and new technologies. These need to be monitored and new solutions found. In many other cases such as the Gangetic Dolphin, the success of the specie is also the success of the efforts to clean the Ganga. This requires careful strategy and public support.

Ultimately in a democracy it is only as a result of wide public support and awareness that conservation will be possible. India has been able to protect its bio-diversity to a large extent due to the deeply entrenched belief system and practices. But these are rapidly changing.
We need to bring more understanding and reach out to the young. The proposed national nature camping program wherein every child who goes to school will attend at least one certified Nature Education Camp is a step in that direction. Programmes such as these will need the necessary resource to make them possible. The Science Express Biodiversity Special which took a biodiversity exhibition around the country on a train is another example.
WHAT, ACCORDING TO YOU, WILL BE THE NEW GOVERNMENT'S ENVIRONMENTAL POLICY?
What is the policy of the government of India? In the past I have often been asked this question at international forums.
Unfortunately, there was never a single answer to such a question but multiple ones. Each ministry would have its own policy often contradicting another. The key to success lies in being able to blend environmental concerns with development, and to develop a sustainable development pathway for this country. The new government, with its clear and strong leadership, will be better able to bring a common vision on sustainable development to all the ministries and end what often looked like a set of disjointed policies made by individual ministries. Key areas which need to be addressed include agriculture, energy, urbanization, mining, water supply and the use of schemes such as the MGNREGA. While it is too early to say what the precise view of the new government will be on individual environmental issues, the pronouncement and the actions and new initiatives at co-ordination have been positive signs.

India's legislation has shown a lot of foresight in many areas. However, there has been a major gap between legislation and implementation. The current government's emphasis on better delivery, more transparency and speed will go a long way in ensuring that the environmental initiatives taken actually lead to protection of the environment. The current government seems likely to improve the quality of implementation in the field.