Opinion
Saarc silver lining for energy
18 May 2010 |
Dr Leena Srivastava
| Financial Chronicle
The South Asian Association for Regional Cooperation (Saarc) recently celebrated 25 years of its establishment and came out with a fitting declaration titled "Towards a Green and Happy South Asia". Several exciting initiatives have been identified in this declaration, which also recognised the need to focus on people-centric development and the concept of Gross National Happiness, as opposed to Gross Domestic Product (GDP), which has been pursued by Bhutan. Framing this in the context of the fairly impressive rates of economic growth that several countries of the region have been experiencing, resulting in an attractive regional average growth rate, and the overall theme of the summit around climate change ensured that this silver jubilee edition of Saarc was truly reflective of the concept of sustainable development.
The Thimpu Statement on Climate Change recognised the need for formulating mitigation and adaptation strategies at various levels and also recognised the win-win opportunities that existed around cooperative regional initiatives to address the challenges of climate change. The summit declaration simultaneously recognised the need for enhanced cooperation in the energy sector in order to facilitate energy trade and the development of renewable energy sources (including hydropower) as well as conventional energy forms. So, how can this agenda be taken forward? Do we need to differentiate clearly between the opportunities for trade vis-a-vis the opportunities for cooperation?
Variations in resource endowment and energy consumption pattern among the Saarc member states theoretically create opportunities for energy trade among them. However, the only tradable resource surpluses that can be identified are the rich hydro resources in Nepal, Bhutan and the northeastern regions of India, which are somewhat isolated from the rest of India because of the geographical positioning of Bangladesh. Electricity generated from hydro sources is not only low-carbon but also relatively cheaper. The challenge, however, for regional cooperation around this resource would be the expectation of magnanimity on India's part -- to allow the use of its territory to wheel electricity from this source to other countries when India itself suffers from huge power shortages!
The other sources of low-carbon energy that may be abundant in the region would be primarily solar energy as well as biomass. While both these energy forms could meet local energy demands in a decentralised form, solar energy could also contribute to the centralised electricity grid through largescale capacities that can be developed, as is being planned in India under the National Solar Mission. However, it is difficult to visualise regional electricity trade centred around these resources in the short or medium term due to their higher costs. What may be an option is to set up an electricity-trading platform that would allow the countries of the region to trade in any surpluses that may exist during time of day or over the year (seasons).
With no other energy resource surpluses, Saarc may well have to limit itself to regional cooperation either in the form of sharing of non-energy resources (such as human, technical or financial resources), or a joint procurement of energy from outside the region -- all member states are either dependent on crude oil import or petroleum product import to meet their domestic demand! Such 'soft' opportunities too could go a long way in building the necessary environment of trust that is sorely needed among the countries of the Saarc region. Additionally, given the scale of differences that exist in the energy markets of the region, yet another set of opportunities for regional cooperation could exist around shared energy infrastructure - be they power plants, refineries or energy import infrastructure. Smaller member states could buy stakes in large energy generation/import facilities and earn proportional rights to the energy therefrom benefiting from economies of scale and technological progress.
Energy demand in the region is expected to grow at a rapid pace with substantial investments required in building requisite energy related infrastructure. According to an estimate, Bangladesh requires an investment in the range of $5-6 billion over the next 10 years for power sector development. The International Energy Agency estimates the investment cost of meeting the projected increase in generating capacity, transmission and distribution in India to be around $680 billion till 2030. Nepal's combined investment need for generation and transmission for the next 10 years is estimated at $1.22 billion. If the countries of the region are to develop along optimal low-carbon energy paths, and not lock themselves into soon-to-be-obsolete infrastructure, it is imperative that they take a long-term integrated view of energy cooperation development and exploit all possible opportunities for both trade and cooperation. Not the least of their challenges, and opportunities for cooperation, would be to provide clean energy access to the vast majority of their population!
Energy future remix
11 May 2010 |
Dr R K Pachauri
| The Asian Age
The American media is providing a great deal of attention to the oil spill which has taken place in the Gulf of Mexico, and it is evident that in respect of the impacts of this major environmental disaster the worst is not yet over. In fact, according to latest reports, not only is there thus far a complete failure to stop the flow of oil from the offshore well which has resulted in this problem, but much of the oil floating on the surface of the sea has yet to hit the coastline. The clean-up of this disaster would take several months according to informed estimates, and the loss in economic and ecological terms would be incalculable. The sight of birds dying slowly because their bodies and feathers have been covered by oil is not only a tragedy in terms of the species affected, but is also an indicator of how human activity is adversely affecting the ecosystems of this planet.
Governor Arnold Schwarzenegger of California has come out openly expressing opposition to drilling for oil and gas in offshore areas. The world has certainly been heavily dependent on consumption of hydrocarbons to run the economic engine of human society since industrialisation began, but we need to look at several factors that should influence our decision in favour of a distinctly different energy future. The reality is that the search for hydrocarbons will take us further and further away from established sources and into areas that are going to prove increasingly fragile. The symbolic sitting of a Russian flag at the North Pole is only an indicator of the fierce competition that we would witness over possible reserves of hydrocarbons in the Arctic region in the years ahead.
If we look at the projections of the International Energy Agency over the past five years they have changed downwards, leading analysts to believe that perhaps anything beyond a hundred million barrels a day of oil production is now going to be an impossible achievement. This figure is much lower than what was forecast just a few years ago - 115 million barrels a day.
There is no getting away from the fact that the world will have to move to a very different energy future from what we have assumed till very recently. Decision-makers should not ignore the fact that it was just three years ago that oil prices had increased to a level of $147. Further economic recovery worldwide is going to increase the demand for oil and natural gas to levels that would exert immense upward pressure on hydrocarbon prices very soon in the future. All of this should really convince decision-makers in governments and businesses to substantially step up research and development efforts and financial allocations by which not only do we improve the efficiency of energy use across the entire chain, but also bring about the development of viable and sustainable energy technologies essentially based on renewable sources.
Those countries which have read the writing on the wall are moving purposefully in creating technological solutions which would bring about a major shift in the world energy supply mix. It is now well known that China, for instance, is investing heavily in building its renewable energy supply capacity, and would clearly reach a position of comparative advantage that would not only help them in expanding supply in China itself, but also provide access to the growing global market which is likely to emerge under any set of scenarios that can be foreseen at this point of time. It is pertinent that Chinese Premier Wen Jiabao, while addressing a meeting of the State Council on May 5, 2010, to discuss issues of conserving energy and cutting emissions, emphasised the fact that China needs to make much larger efforts to cut emissions and conserve energy to meet their targets as set in the 11th five year plan. According to this plan, China will cut its per unit gross domestic product energy consumption by 20 per cent compared with the 2005 level by the end of 2010.
Another nation which has not deviated from its green growth strategy despite unfavourable economic conditions in the last two years is South Korea. In that country the green growth plan, which has been in place for over three years now, clearly targets a substantial increase in supply of green energy and in finding a share of the global market on the basis of projections made right up to 2030. The experience of Germany has also been largely favourable, not only in terms of expanding the physical supply of renewable energy, but also in generating new industry, creating employment and economic opportunities which did not exist earlier, given Germany\'s dependence on imports of energy.
Another impressive project which is been pursued vigorously now is the \"desert tech\" project which will essentially generate power in North Africa using solar energy and transmit electricity to Europe. Undoubtedly, there would be strategic opportunities from such developments because Western Europe, which relies heavily on gas from Russia, would be able to diversify its sources of supply.
The South Asian Association for Regional Cooperation (SAARC) nations met in Thimpu, Bhutan, earlier this month with climate change as the main theme of the meeting. While the declaration at the end of the summit has identified some useful directions, it is critically important for the countries of this region to embark on a programme of collaboration that would make the best use of technological opportunities and exploitation of economies of scale. For instance, the desert region of Sindh in Pakistan and Rajasthan in India have great similarities on the basis of which large-scale solar-based power could be generated to supply to a substantial area of Pakistan and a large part of western and northern India.
There are enormous benefits in exercising a vision that not only deals with the problem of pollution from conventional fossil fuel-based energy systems but also creating a base of technological cooperation that would bring this region a level of cohesion which has been missing thus far. New sources of energy could bring the nations of SAARC together, while showing the way to the rest of the world.
Challenge of higher education
05 May 2010 |
Dr Leena Srivastava
| Financial Chronicle
In his recent visit to Australia in early April, HRD minister Kapil Sibal did a sterling job of laying out the magnitude of the challenge that India faces in increasing its gross enrollment ratio (GER) from the present 12.4 per cent to 30 per cent by 2020 (GER in developed countries is over 70%) -an increase that would need approximately 800 new universities (nearly double the existing number) and about 35,000 -40,000 new colleges. He was also absolutely on the mark when he argued that the global community should, in its own interest of both access to a well-qualified pool of human resources as well as to avoid the social conflicts arising from a possible failure from doing so, invest in educating Indians. In laying out these statistics, Sibal was conveying India\'s seriousness about its invitation to foreign universities to invest in India. More power to him.
However, the key challenges in India are two. One relates to the poor quality of academic performance in the country and the other to the huge gap identified above. The poor quality of the existing institutions -out of 17,000 colleges and 317 universities in 2006, only 30 per cent and 50 per cent, respectively, have some quality assessment undertaken and only 97 colleges and 9 universities of these have been identified as those having potential for excellence -speaks volumes of what is ailing our education system. The most obvious issues relate to the lack of incentives for teaching as a profession (India has a student, teacher ratio of 26:1, which is double that of Brazil and China), lack of investments in higher education (0.37 per cent of GDP compared with well over 1 per cent in the developed world) and the lack of incentives for pursuing doctoral studies that has become a self-limiting factor for a future pool of university teachers! Only about 25 per cent of the teaching staff in colleges in India have PhD degrees.
In a booming economy, the past few months notwithstanding, the question that jumps out at you is -why would anybody want to do a PhD in India? It would take anywhere between 4-7 years to finish a PhD, your success rate is probably less than 50 per cent, the likelihood of finding a committed and qualified supervisor is slim and the market for PhDs is still limited to either the academic sector or academic institutions. So after going through all this stress and time-investment, a PhD candidate in India would start at a salary level that would be a fraction of what he/she may have earned as a post-graduate joining the corporate world -and all these years invested would not even count towards the qualifying criteria for a professorial position when the same years invested in the pursuit of knowledge without getting a PhD degree would! Inviting foreign universities to set shop in India is, prima facie, an essential but not a sufficient step in the direction of both improving quality as well as reducing the demand gap. Looked at from a reputed foreign university\'s perspective what is it that is attractive about this offer?
They would need to first of all step into an unknown and notoriously unstable policy environment in India. Second, they are highly unlikely to dilute their brand by associating with any educational institution apart from those that have been identified as having the `potential for excellence\'.Third, why would these institutions give up/share their prized faculty members? And, from the point of view of the faculty members themselves, why would they work in India for a salary that may be a fraction of what they would earn internationally -not to speak of the respect they command from their current affiliations.
So, where would that leave India? We may, at least till the medium term, concentrate on quality improvement in the top-rung institutions bringing them closer to international standards. But this would not help the millions that are competing hopelessly for the very limited number of seats in these same institutions. We may be able to attract back the very few altruistically oriented NRI/foreign faculty members but there is no guaranteeing the quality of all such faculty members. To say that any international faculty is superior to our homegrown faculty would be an insult to these brave academics. Not to speak of the tremendous churn that could be created if the terms of employment for foreign faculty were to be any different from those for the Indian faculty.
Sibal cannot be envied his task. The goals that are being set are ambitious. However, it is extremely important that this challenge is addressed in a holistic manner. The finance ministry and other ministries need to align themselves towards these goals. Adequate financial resources need to be provided for both education and research and a liberal environment created in which to pursue research.
Today, both the academic as well as the research institutions are languishing and unless special efforts are made to reinvigorate them through proper incentives and recognition, India stands to lose the limited but hard-earned capacity it has developed since Independence.
India’s lethargy in energy sector
21 Apr 2010 |
Dr Leena Srivastava
| Financial Chronicle
The Indian sub-continent is reeling under an unusually hot summer combined with a complete lack of rainfall due to certain weather conditions. The national capital region (NCR) too has been experiencing temperature levels thÂat are 8 - 9oC above normal for this time of the year. As such, it is no surprise that due to increased space conditioning load on the system, the demand for electricity has been higher than expected. However, should we not plan for some uncertainties in weather conditions, be it relating to an increase in demand arising from temperature abnormalities or a reduction in supplies because of rainfall patterns? Why is it that on every occasion, when we are faced with severe power crises, we seek to find excuses in such vagaries of nature?
This Earth Day, salute the heroes
18 Apr 2010 |
Dr R K Pachauri
| The Asian Age
The world will be celebrating Earth Day for the 40th time on April 22 this year. Many people may have forgotten the visionary leadership that brought about Earth Day celebration on April 22 each year. The founder of Earth Day is the late US Senator Gaylord Nelson, one of the greatest champions of environment, not only in the US but worldwide. As a person concerned with the welfare of human society he took proactive positions on environmental issues, of course, but also held hearings, for instance, on the safety of combined oral contraceptive pills. As a result of these hearings, side-effect disclosures became a requirement for the pill in patient\'s interest, which represented the first such disclosure for a pharmaceutical drug.
Senator Nelson, who announced his plans for Earth Day in 1969, later wrote that the germination of the idea for an Earth Day goes back to November 1962 when he decided to bring environment into political limelight, once and for all. That was when he enlisted the support of Attorney General Robert Kennedy and even persuaded President John F Kennedy to go on a national conservation tour. President Kennedy did so in a five-day, 11-state conservation tour in September 1963. However, this did not bring the environment into the limelight as Senator Nelson had intended, but it did represent the initial genesis of Earth Day.
The announcement of Earth Day came during Nelson\'s address in Seattle in September 1969 to a gathering known those days as \"Teach-in\". He said he felt the need to organise a huge grassroots protest over what was happening to our environment. He announced this by marking a day for Earth Day in spring of 1970.
This was the first time that the office of a US Senator was energised to work on the environment over the next several months. Senator Gaylord Nelson also showed his genius for mobilising human talent by getting a young student from Harvard University, Denis Hayes, to take on the responsibility of coordinating the very first Earth Day in 1970.
It is not unusual for institutions and practices to continue without regard for the memory of individuals who are behind them. For instance, another great hero of recent times is Rachel Carson who, as a young woman, battled the forces of status quo alone and intensely in bringing to the attention of public and politicians the danger of excessive reliance on chemicals, pesticides and insecticides which were poisoning our ecosystem with widespread and long-term implications of a serious nature.
A large number of corporate organisations and leaders of business viciously attacked Rachel Carson in her time, but the world today knows that her warnings were valid and visionary. This unsung hero should have had the world celebrating her centenary in 2007. Sadly, we didn\'t remember her that year, when she would have been 100 years old. Senator Gaylord Nelson\'s centenary will fall on June 4, 2016. This would be the eve of World Environment Day that year, and I hope the world will not forget him on that occasion.
The reason why I am emphasising personalities over the movement to reduce environmental pollution is because we need to be reminded of the human spirit that moves revolutionary ideas in a visible manner, as Senator Gaylord Nelson did through the celebration of Earth Day.
Lives such as his are a source of enormous inspiration to young and old alike and certainly for those who are still children and whose future can be darkened by the continuing neglect of the environment and the earth\'s precious ecosystems. Hence, on Earth Day 2010 it is important for us to be reminded of the original founder of this celebration, Senator Gaylord Nelson, and to convey a tribute to Denis Hayes who is now 66 years old and very much the torchbearer of Senator Nelson\'s legacy and his passion for protecting the environment.
The 40th anniversary of Earth Day is particularly relevant because the time for action is now certainly at hand, even if long overdue. In the case of climate change, for instance, the Intergovernmental Panel on Climate Change\'s Fourth Assessment Report has clearly assessed that if we wish to limit future temperature increase to between 2.0-2.4oC, global emissions will have to peak no later than 2015. The Copenhagen Accord has laid down a ceiling of 2oC as the temperature increase that the world must target. If this goal is to be converted into serious intent, then emissions of greenhouse gases have to be reduced with a sense of urgency.
Earth Day 2010 clearly provides us with an opportunity to give substance to such a desire, and support actions by the public, particularly where no other option exists.
In other words, the time has come to move on, and Earth Day this year must represent a distinct departure from those which were celebrated in previous years. It is not enough to merely highlight problems today, but to actually take in hand measures that would help solve those problems.
In India each day brings several reminders of the major damage that we have done to our ecosystems and the problems we encounter with polluted air, water and soil. Let all Indians, at least, come up with specific measures and affirm their resolve to implement action on this year\'s Earth Day.
It is becoming increasingly obvious that the problem of pollution afflicting this planet would require action not only on the part of national governments but, more importantly, communities at the grassroots level. This is why action must begin in earnest on Earth Day, this 22nd of April, 2010.
The environment conundrum
06 Apr 2010 |
Dr Leena Srivastava
| Financial Chronicle
For far too long, the protection of the environment has been viewed as a necessary evil and a regulatory requirement that needed to be circumvented in order to carry on with the more \"important\" activities involving economic growth. A large number of studies have been undertaken in the past few decades on strengthening the environmental clearance processes and enforcing environmental compliance. However, at the end of all such efforts the common lament reflected the failure of implementation.
The introduction of the public interest litigation (PIL) in the early 1980s was possibly a turning point for environmental protection with the early cases of success coming in the mid-1980s itself when mining operations in Uttar Pradesh were halted due to their adverse impact on the environment. However, it was the highly publicised case of M C Mehta vs the Union of India in 2001 around the issue of vehicular air pollution, resulting in the direction that all commercial vehicles switch to CNG, which brought the power of the issue (environment) and the instrument (PIL) to the fore.
In the command-and-control regime under which environmental impact assessments were undertaken and clearances provided, it was no surprise that allegations of corruption and compromise flew thick and fast. Things started coming to a head when the policies designed to fast-track investments and infrastructure development collided with the extremely slow-moving and alleged corruption ridden process of environmental approvals. Rumblings about the environment being a barrier to development have gathered momentum over the past few years culminating in a loud, public and embarrassing spat between several infrastructure ministries of the government of India and the ministry of environment and forests.
So, how does this resolve itself? Obviously the minister, Jairam Ramesh, is right when he says the environment ministry cannot just be a rubber stamp for the purposes of clearance. We fervently hope not. However, the ministry does need to streamline and accelerate its decision-making processes – a commitment that the minister made when he first assumed office. Several measures have been identified time and again for improving the effectiveness of the system – measures that are merely awaiting a commitment. High on the list is a system that would ensure that the consultants undertaking environmental impact assessments on behalf of project proponents are certified and graded on a periodic basis, with their grading reflecting their performance on previous assignments. Equally important, from a confidence building point of view, is to ensure that the conditions on which environmental clearances are provided are implemented and monitored effectively. Another key area of weakness that can be easily addressed related to the public hearing process. Several studies have shown the perfunctory treatment that this essential element of an environment impact assessment process receives and the consequent delays that arise due to public protests.
As such, while the environment minister is admirably fulfilling his duties towards the sector for which he has the charge, he has to demonstrate the scientific basis of his ministry’s actions and not let it be perceived as being unnecessarily obstructionist or viewed with suspicion. Going beyond current controversies relating to environmental clearances, ensuring environmental compliance on an ongoing basis will go a long way in enhancing the credibility of this institution. A recent PhD thesis from a student, Ritu Paliwal, at the Teri University, clearly brings out the lacunae in the existing systems and also brings out starkly the extremely low costs of non-compliance (penalties) as compared to the costs that have to be incurred by industry for complying with the provisions of the environmental management plans. Paliwal observes the lack of a clearly defined rationale in arriving at a value for penalties in the Indian system. On the basis of her literature survey, she identifies the key elements defining a penalty value to include beyond the statutory compliance penalty, a value that reflects the benefit accruing to industry from non-compliance as well as a reflection of the gravity of offence committed. Unless appropriate penalty systems are defined with proper escalation clauses, while at the same time addressing the issue of technical and managerial capacities of state pollution control boards, the ethos of indifference may continue.
India is poised to significantly internalise environmental considerations into development processes. The ministry of environment and forests must urgently and constructively engage with the development process to ensure this transition to sustainable development. The ministry should draw inspiration from the finding that India’s regulations and processes are at par, and in some case better, than those in the developed world. Where we fail in this sector, as in several other sectors of the economy, is in the implementation.
Testing social responsibilities
23 Mar 2010 |
Dr Leena Srivastava
| Financial Chronicle
The invitation to be a part of the jury of the sustainable development trophies of the EdF (Electricite de France) Group came as a surprise. The invitation letter mentioned that the sustainable development trophies is an internal competition held throughout the group with an aim to promoting the employees\' involvement in sustainability initiatives around five major issues.
These issues are: Care for customers and local communities, climate change, energy efficiency, environmental protection and biodiversity and social responsibilities.
Arriving in Paris on the March 19 to actually assess submissions on this competition was an even more surprising and an extremely pleasant experience.
The EdF group comprises at least six business verticals and employs a work force of over 160,000 people, with a major concentration across various countries in Europe.
On the final jury day, a shortlist of 50 projects (from a total of 538 submissions from across the group) were put up to nine different committees for selecting two projects from each committee as the winners - totalling to about 18 winning projects.
Each jury comprised between six and eight members making a total of approximately 60 jury members drawn from the senior management of various group companies and other international members such as myself. Each team presenting their submissions had two members who spent 40 minutes with the jury committee in an extremely well choreographed process - complete with power point presentations and a well documented compilation of all submissions - which was a delight to participate in.
The above statistics and detailing of the process is merely to give the readers of this column an idea of the scale and commitment of the EdF group to internalising and encouraging the sustainability considerations within the organisation, both at an individual level as well as at the company level.
As the presentations began, it was clear that several of the submissions gave due consideration to the triple bottom line considerations in sustainable business design strategies, that is, environment, business and social impacts. The range of innovative and out-of-box initiatives that tied the different pillars of sustainability together, across both developing and developed countries, served as an eye opener.
One project worked with local communities to extend support to those struggling with debt and fuel poverty while at the same time promoting energy efficiency and reducing the dues for the utility company.
Another developed a partnership with a well known charitable organisation in order to leverage their services to provide support to vulnerable customers during back-out periods - thereby demonstrating great sensitivity and greatly enhancing the positive reputational impact for the company amongst its customers.
Many more such examples could be cited. The crux of the experience, however, is that not only are these initiatives replicable across the group but these innovative opportunities to integrate a business into the communities they operate in could possibly never have been sighted from the top - these had to be initiated driven from the grassroots level within the organisation.
The ministry of corporate affairs has issued voluntary guidelines for corporate social responsibility (CSR) for India\'s businesses.
This is a very encouraging document that provides a lot of room for businesses to define their own CSR implementation strategies in their own operating contexts. The EdF example illustrates how such CSR initiatives can, and probably must, go beyond companies to the employees within the company.
Also positive about the guidelines is an explicit recognition of corporate social responsibility within the company as well as CSR towards the society in which a business is embedded.
The important take-away from the above experience is that the specific amounts to be earmarked for CSR activities as per the guidelines can either be seen as money that needs to be spent to be in compliance with government guidelines or as a means for encouraging innovation and bringing about societal transformations towards sustainability.
Finally, it needs to be noted that the winners of the above competition are not given cash prizes or freebies of any kind. They are, instead, encouraged and facilitated in taking their message and learning across and outside the organisation through films (in which the team is the cast), participation in conferences/seminars and invited lectures!
Gross National Happiness
19 Mar 2010 |
Dr R K Pachauri
| The Asian Age
The kingdom of Bhutan has been espousing the concept of Gross National Happiness (GNH) as opposed to the Gross Domestic Product (GDP) which is followed by every other nation and society across the globe. Given the negative externalities that a number of economic activities are now known to impose on the society, the need for devising a new measure of economic progress and a more comprehensive definition of the human condition becomes imperative. The concept of GNH is certainly not easy to translate into practical application, because happiness itself is a very subjective measure, which the state cannot possibly come to grips with. But it is necessary for a new set of values to be accepted, on the basis of which the measurement of economic progress would shift from mere production and consumption of goods and services to a set of variables that are more aligned to happiness and satisfaction of human society.
In case of Bhutan, state policy has been very conscious of the need to preserve the country\'s natural resources and more importantly preserving the culture of Bhutanese society. Culture and tradition are intangible assets that are difficult to measure, but clearly have a major role to play in creating a sense of pride and social cohesion that a society exhibits. This is not to say that culture and tradition are always positive factors in creating human happiness, because at different stages during human history and in different places, culture and tradition have sometimes proved harmful in respect of factors such as gender inequality; discrimination on the basis of caste, creed or religion; and even practices like sati, which cannot be defended on any rational or ethical grounds. But the world today is afflicted with the spread of monoculture. Thomas Friedman, the Pulitzer prize-winning columnist and author, has rightly pointed out the downside of too many \"Americans\" on this planet. If everyone across the globe was to consume goods and services at the same level and on the same pattern as citizens of the US, we would probably strip the earth of its key natural resources, much as locusts devour an entire crop waiting to be harvested. GNH cannot rest on a culture of unbridled consumption, because that would be totally unsustainable.
Bringing about a shift to a more sustainable measure of economic well being, quite apart from the question of metrics, is really an issue related to attitudes and values. The appeal that the concept of GNH provides would be relevant only if this becomes the guiding principle defining the attitudes of society at large. If this were to happen, then possibly every human being would ask a question on how his or her actions would affect the level of happiness in that society. At the practical level, this could take the form of ensuring that no dumping of waste takes place in a public place or in observing traffic rules while driving on the road. In other words, GNH if imbibed by everyone in a society would create possibly a new ethos that respects the need to avoid actions which impact negatively on the welfare of others. Such a direction or approach would certainly not be smooth and devoid of tension. In case of Bhutan, for instance, the state has thus far maintained very successful and strict control over the number and quality of tourists allowed in that country. However, now that Bhutan has democracy and elected governments at all levels the question is whether the desire to make quick and easy money may lead to a dilution of existing tourism policy.
The contrast with Bhutan tourism policy is seen starkly in the laissez faire approach followed in most of our hill stations in this country. The result is that a hill station like Shimla that had a certain level of elegance and social order has now been converted essentially into a large sprawling slum. Much the same has happened to other hill stations like Mussoorie, Nainital and to a certain extent even Ooty. The desire to make a quick buck leads to violation of existing regulations, where they have been instituted, and certainly prevents effective regulations being put in place where they do not exist. The result is that civic services do not match up to the large pressure put on them by both permanent as well as floating populations in these locations, and as a result, therefore, quality of life suffers to the detriment of all.
With the rate at which urbanisation is taking place in India, the involvement of local citizenry in the governance of towns and cities becomes an important pre-requisite, and decision-making, therefore, needs to become inclusive in every respect. Pride in one\'s own habitat and the desire to preserve all that is good and pristine would only come from active involvement in decision-making by citizens and stakeholders in a particular location. All of this means that maintenance of environmental quality requires firstly a shift in values that would emphasise happiness in a larger social sense as opposed to consumption of more and more goods and services, irrespective of their harmful social impacts and a certain level of involvement on the part of the local community in environmental decision-making. Perhaps, the example of Bhutan, a country with a very small population, would be relevant even for a country like India with a large and expanding population. After all Indian society has traditionally practised some form of GNH, which we should not relinquish at this stage of our development. If anything, the time is ripe for us to draw this concept into the mainstream of economic policy as a substitute for gradual replacement of the measures of the GDP.
Inclusive growth, the CSR way
10 Mar 2010 |
Dr Leena Srivastava
| Financial Chronicle
Prime minister Manmohan Singh asserted a few years ago that inclusive economic development was a national goal. To his credit, a number of government programmes have since been initiated that imbibe the spirit of inclusiveness - the most popular among them being the National Rural Employment Guarantee Scheme. What is interesting, however, is to see the corporate social responsibility voluntary guidelines coming out of the ministry of corporate affairs in December 2009. To quote Salman Khurshid, minister of state for corporate affairs \"... the corporate sector is also standing in the midst of a sustainability crisis that poses a threat to the very existence of business. What we have before us is a crossroad where one path leads us to inclusive growth and the other may lead to an unsustainable future. ... the business sector also needs to take the responsibility of exhibiting socially responsible business practices that ensure the distribution of wealth and well-being of the communities in which the business operates.\" This is indeed a very commendable approach.
On the other hand, we have a rapidly evolving set of public-private partnership models wherein the government is assuming onto itself the responsibility of the vexed process of land acquisition and environmental clearances so as to attract large scale investments into a range of sectors. In the process, corporate entities have been provided with an escape route wherein they can wash their hands off the process of land acquisition and the resettlement and rehabilitation of people affected by these projects. Where does that leave the people affected by such projects? Can they ever be assured of a reasonable compensation? Mamta Banerjee has been credited with singlehandedly nixing the land acquisition bill objecting to even 30 per cent of the land acquisition needed for a project being facilitated by the government. Her stance is that private promoters should acquire 100 per cent of the land needed for a project.
The Posco project in Orissa is one of the high profile projects, which faces this responsibility trap. Posco, a South Korean company, is interested in setting up a large integrated steel plant that requires acquisition of 4,000 acres and involves displacement of an estimated 2,000 families. Irrespective of whose responsibility land acquisition was, or of the extent of encroachment that may exist on the land, the reality is that Posco has committed time and effort and some investments into the project. It is today five years behind schedule on the project. Given the project investment cost of Rs 55,000 crore, back-of-the-envelope calculations would yield an opportunity cost of a one year delay in project implementation, assuming a modest return on investment of 10 per cent, to be about
Rs 5,500 crore. This single year opportunity cost would be a few hundred times larger than the cost the company would have to incur for a one-time reasonable settlement with the affected families. What prevents companies from taking a longer-term holistic perspective on the issue?
What is also obvious from a review of such cases is the huge trust deficit that exists between project-affected people and companies and, unfortunately, also the local administration. What should be the role of the government, at its various levels, in the cases of land acquisition? Should the local government (district administration) be mandated to be primarily and exclusively responsible for the welfare of local communities, while the state and national governments push for investments so essential for development? Should the resettlement and rehabilitation policies of the various state governments be clearly recognised as the minimum guidelines to protect societal interests? Who, under the corporate affairs ministry’s CSR norms, would be responsible for ensuring that companies do \"not engage in business practices that are abusive, unfair, corrupt or anti-competitive\"?
While these tangles are being resolved, the voluntary CSR guidelines seem to apply largely to post-establishment activities of a company. CSR as it is practiced today defines our understanding of the concept. But why should resettlement and rehabilitation activities not form part of CSR? How do we coordinate across the various ministries dealing with these inter-linked subjects to get a coordinated approach to inclusive development as it revolves around the corporate sector?
Opt for integrated energy pricing
26 Feb 2010 |
Dr Leena Srivastava
| Financial Chronicle
The expert group report on pricing of petroleum products put out in early February 2010 called for a \"viable long-term strategy for pricing major petroleum products\". Recognising the fact that oil imports are increasing and that oil prices are \"generally expected to rise\" the group has recommended that \"domestic prices of petroleum products have to reflect the international prices\". This, they say, must be done to \"limit the fiscal burden on government and keep the domestic oil industry financially healthy and competitive\". The group then recommended that both diesel and petrol prices must be market determined both at the refinery gate and the retail level.
Cut now to the issue of bio-fuels - the vision and goals of the national policy on bio-fuels, put out towards the end of 2009, when paraphrased, are to reduce dependence on petrol and diesel thereby contributing to India\'s energy security while at the same time contributing to climate change mitigation and environmentally sustainable development.
This would obviously contribute to keeping ecosystems and populations healthy. The important proviso, of course, being that the \"accelerated development and promotion of the cultivation of bio-fuel\" plantations would be done in an environmentally sustainable manner. The policy calls for an indicative target of 20 per cent blending of bio-fuels - both by bio-diesel and bio-ethanol, by 2017, with bio-ethanol already being made mandatory.
The sugar industry has apparently quoted a price of Rs 27 per litre for ethanol to the oil marketing companies and they have asked for this price to be locked for a period of three years to remove uncertainties in revenue. However, it appears that this particular demand of the sugar industry would not be accepted by the government due to expectations that international ethanol prices may drop. Note that India allows duty-free imports of ethanol. The question that arises that while on the one hand, India is concerned about its oil import dependency and vulnerability relating to international oil markets, on the other hand, it is willing to expose itself to the vagaries of the international ethanol market. If the objective of bio-fuel blending with transport fuels is to reduce vulnerability to international oil prices in the short and long run, it would obviously make sense to peg the domestic price of ethanol and bio-diesel to the refinery gate prices of diesel and petrol and not to the movement of international ethanol prices. On the other hand, with more countries looking at the option of bio-fuel blending with petro-fuels, it can also be expected that international prices of ethanol will align themselves more closely with international oil prices. The refinery gate price of petrol is ~ 31 per litre at an international crude price of $75/bbl, which makes the ethanol price at Rs 27 attractive even if oil prices were to drop to about $70/bbl (which is unlikely).
The question also is - why should the price of bio-fuels not be market determined as in the case of petro-fuels? If the policy on bio-fuels is stable and has a long-term vision, as it seems to have, then the minimum demand for ethanol is established. What the regulatory system may then need to specify is a floor price for bio-fuels so as to lend some stability in price expectations to farmers but leave the cap to be determined by the demand-supply situation.
It is another matter that suspicions are high that the decision of ethanol blending was driven largely as a support measure for the sugar industry. And whether sugarcane production in India is environmentally sustainable in all the regions where it is grown or is it a function of the distortion in input prices of water and electricity and the support price provided to sugarcane are possibly matters of a separate debate. We would then be entering into the very tricky area of agricultural pricing. However, what the above factors highlight are the huge distortions that we have created in the pricing system in the energy sector and the challenges of sending the right signals for a sustainable development of this sector.