Saturday, April 16, 2016

Rapid pace of Rural Electrification of 18,452 villages

In months that I have been tracking this particular news it is heartening to know that an entire team of Power Ministry is working extremely hard to ensure no village remains without electricity. The PM Modi had announced all remaining 18,452 villages to get electricity in 1000 days since Aug 2014.

Since then the pace at which this is being achieved is unprecedented in the history of independent India. There are several villages where electricity was only dreamt of. To see an electric pole or wires transmitting electricity was a distant dream. As of April 2016 - 7,146 villages are electrified. The govt is extremely serious about this issue and this can be just gauged by the fact that the Power Minister - Piyush Goyal has opened a real Android/iphone app to track this and has made public all the field engineers in charge of every village so that they could be contacted right away for any issues. The dashboard keeps getting updated as the implementation progresses.

However, electrification doesn't mean 24 hour electricity.  The intention is once you have the grid to every village - it is only a matter of time that the grid can be supplied with uninterrupted electricity. If one looks at the progress the government has  - 1) Already achieved annual goal of 5000MW of Solar energy 2) Reduced Coal import by Rs.28,000 Crore because of record coal production through transparent mechanism. 3) ensured that 66 out of 100 coal plants had no coal at all before 2014 - but no plant today faces any coal shortage.

There are villages that are also provided electricity through renewable sources and are currently off grid.

In short, until 2014 because of the coal scam during the UPA II government electricity generation through coal was drastically reduced; mining coal came to a halt; country was importing high amount of coal causing enough load on fiscal deficit. These no longer exist. On the contrary, India has stopped coal imports this year completely (Source)

Should India celebrate then? No, it is too soon. If we don't see electricity cuts for 2 successive years we would have achieved something unthinkable since Independence.

Here's a reality check of 7000 villages being electrified on NDTV. Interestingly, 85% of villages in UP are now electrified.

There are numerous such success stories on how life is changing for these villages where electricity is reached

In Saharanpur there was no electricity since independence. It is amazing to see how life has changed for people now. Here's the article published in Navbharat times

The eastern states - Bihar, Odisha, Arunachal Pradesh, Jharkhand, Assam - are having the highest number of unelectrified villages after Uttar Pradesh in the north. The key to electrification is how quickly government can electrify these.

Earlier, a village was considered electrified if its public places and 10% of its households have electricity. This criteria has been now changed and the new field officers - Gram Vidyut Abhiyantas (GVA) verifying that the entire village is electrified. The approach is to not use state government's data alone, which is found to be error prone. These GVA's update the dashboard and make it public to everyone as they notice the progress.

"Hindu"(Source) newspaper reported that these GVA's numbers show discrepancy as well - but out of 7000 villages only 30 could not be guaranteed as "electrified" even though dashboard shows it. This is still a very low error rate compared to 7000 villages.

There cannot be any iota of doubt with the fact that the government is so serious about bringing in the transformation of lives by electrifying villages.  The target now is 3074 villages to be electrified through off grid mainly because of geographic barriers and 438 villages by the state governments themselves. If this pace continues surely within a year all villages will be electrified.

Building the infrastructure to supply electricity is one good thing, however, the best thing that can happen is round the clock electricity without any load shedding. Is the government really doing enough on this? The answer is mixed bag. However, if the electricity generation supply surpasses the demand it will be a breakthrough.

Sunday, January 3, 2016

Top 12 Initiatives/Policies from the government that has had positive impact on common people

Since the Modi government came to power in 2014 it has been facing relentless criticism for good and bad reasons. No government is perfect and healthy criticism is always needed. After Rahul Gandhi made a statement that Modi govt is that of "Suit boot ki Sarakar" - I began to introspect if this is indeed true.  The irony is that it is the same suit boot (industries and corporates) stand to benefit the least from the government's policies so far. Industries, corporates and small start ups are waiting for drastic reforms in ease of doing business that hasn't happened. 

So, does this mean the government has done something in other non-corporate sectors? The answer is "Yes". There are several initiatives and policies whose implementation has to begun to show concrete results. I list just some of them that has had an impact on the common people. This is in no particular order of preference.

1) MUDRA Yojana - (Micro Units Development Refinance Agency) - a scheme to promote entrepreneurs, especially, in the lower strata of the society.  The government will provide financial assistance and proper guidance in setting up a company or a business whose proposal is accepted by the banks. The lending amount is 50,000 (SHISHU), 50k-5 lakh (KISHOR),  5-10 lakh (TARUN). The objective is not just to finance these budding entrepreneurs, but also guide them from a technical stand point and help them in registration and official set up of the business venture. Once a proposal is accepted MUDRA scheme will finance from banks, financial institutions (Non-banking) and micro financial institutions. Close to 44,000 crore rupees have been sanctioned so far under this Yojana. Even though the pace of the growth is not as expected the initiative has helped nearly 66 lakh people, mainly women, who are able to run their own small company. The PM himself made a mention of a lady in Madhya Pradesh (source) who is now able to make wallets and supply to her village and district because of Mudra Yojana.

MUDRA is good only for selected people who have had no access to capital. This cannot be used for agricultural or corporate needs. Start ups that can fuel more jobs are kept out of MUDRA. This is where a similar scheme must exist to propel economic growth,

2) Direct Benefit Transfer of LPG (PAHAL) - This scheme is quite popular where the beneficiaries pay market price for LPG cylinder and get the difference of market and subsidized price in bank accounts.  This is one of the most transparent ways in which LPG has reached the intended beneficiary. Recently, "1906" helpline number was launched (24*7) for customers be able to lodge complaints, talk to all 3 major oil marketing companies that distribute LPG. is a dedicated website only for this scheme and one can see how the scheme has benefited 14.79 crore beneficies.

3) Pradhan Mantri Jeevan Jyoti Beema Yojana - under which you get Rs 2 lakh accidental life insurance cover for Rs.330 per year which is so cheap. Never before in India has insurance penetration been so high. 2.8 crore members are beneficiaries of this Yojana. 

4) Atal Pension Yojana - under which after retirement age a person is entitled to get a guaranteed amount ranging anywhere between Rs.1000-Rs 5000 per month. Although the amount is too small, it can only act as some sort of additional income to the beneficiary. For more, read here at This amount is hardly enough to sustain a life, but it is better than getting nothing from the government.

5) Sukanya Samriddhi Yojana: The father/mother of a girl child can open a bank account in India under this and deposit amount (amount restrictions apply) where 9.25% annual interest rate is added every year. This is a phenomenal scheme available  to all Indian citizens by which they can save money for the girl child. Close to a million accounts have been opened so far.

6) Self- attestation scheme for all government services - The existing non-sense notarized attestation mechanism was the order of the day and citizens were harassed in this regard. The government passed an order that self attestation is sufficient on all the copies of the documents while applying for a service. The applicant must provide the originals only at the time of delivery of service. Even though Center has passed this order, all states have to ratify the decision. As of now most states have accepted this. 

7) Abolition of interviews for Class III and IV Central and state government jobs. These jobs are those of peons, clerks, junior engineers and many more in central and state government offices. Most of the vacancies were being filled by bribing selected officials. Now, interview has been banned and some form of aptitude test has been replaced in most positions. This is a huge step since it can curb corruption. The meritorious were kept out of the system (source). Only time will tell if this has turned out to be efficient. The intricate details of this new test is not yet known. 

8) Huge job opportunities for people of Bihar because of 2 locomotive plants - US company GE and French company Alstom together won the bid for building train locomotives in Madhepura in Bihar. This is 100% FDI in Railways and they will manufacture 1,000 locomotives of 4,500 hp and 6,000 hp, to be supplied annually over 10 years and 800 locomotives of 12,000 hp to be supplied over 10 years (source) respectively. This is the largest investment of this kind in Railways. This is a win-win situation for Indian Railways and people as Railways will get some best practices in the design of locomotives while people will get employment.

9) Several initiatives in Indian Railways - I had written a separate blog regarding this that can be read here 

10) Indian Railways has partnered with several food chains like Haldrirams, MTR, Food panda and now wants to promote Self Help Groups whose ownership is held by women(here). These SHG's give employment so many women whose lives depend upon their culinary skills. By giving them a market Indian Railways has created a win-win situation for both customers and SHG's.

11) EPF Withdrawl made easier - Until now if one had to switch jobs or move to different places an EPF account had to be every where and this created confusion for lakhs of employees. In addition to this the employee had to get employer's signature to do the same. The government passed an order that the EPF account once opened will be with the employee forever irrespective of job or place switch and that the employee doesn't require the consent of the employer (source). 

12) All NCERT + CBSE Text books from Class 1 to 12 have now been made online and available via Mobile app (source) for free. The app is called E-Pathshala.

Our PM is not someone who will give into vote banks. He has a vision and strategy that none of the contemporary politicians have. He is working round the clock with no break. However, any strategy that doesn't take into account the pulse of the people can boomerang in the long term. He needs to be cognizant of this. Art of adaptation is an art in itself. Our PM will have to adapt himself and change his strategy in 2016 to make sure the performance accelerates.

Thursday, November 19, 2015

Bihar Results - pre-cursor to BJP's Lok Sabha defeat in 2019?

When the Bihar results were to be announced on Nov 8th I was very positive that a) Nitish would get maximum seats b)Lalu Yadav would get close to 30 out of 100 seats and c) Congress may bag 10 seats leading to the formation of JD(U) government. However, the result was a clean sweep for JD(U) and a humiliating defeat for the Modi led BJP. The internet and social media is flooded with their own endless loop of analysis and counter analysis as to what went wrong and what caused BJP this embarrassing defeat. 

One fact that is beyond debate is that the BJP did not project a good state leader and was campaigning the same way like the Congress does. This is the second time that BJP did not project any face and chose to contest in the name of the PM. It was pretty much looking like Congress campaigning in the name of the Gandhi family. BJP is not Congress and should not have treaded that path. The purpose of writing this article is not to elaborate on the election defeat, but to visualize its national implications.

The larger impact of the election is that anti-BJP forces have strengthened themselves. The biggest irony of national politics in India is that BJP has more enemies than friends, whereas Congress has more friends than enemies. When BJP ascends, all forces move towards Congress and when Congress descends, all forces attempt to form the Third front which collapses even before it is made. At this point in time, Nitish is that trump card that the third front could use in 2019 Lok Sabha election. It is very much possible that Congress may support Nitish with the sole aim to defeat BJP. Bihar election results has only emboldened the determination of all regional parties opposed to BJP to come together and stand with or without Congress. These regional parties control a huge chunk of numbers in Rajya Sabha making it harder for the government to get bills passed.

Let's understand that these very parties existed in 2014 too. However, it was one leader, one determined person who led to an unbelievable and unimaginable electoral victory and that was our PM. Our PM is still 9th most powerful person in the world, the only Executive head (India) who is controlling the government with strength never before seen (after 1980) and has an unmatched vision and strategy to implement sea changing governing policies. Yet the pace of governance is slow and is not matching up to the expectations. The PM cannot allow the opposition to dominate in 2019. The only way he can do this is completely change the narrative through some ground breaking results to see. 

At this point it is very clear that the Parliament will not be allowed to function and the PM will be stopped on all of his bills. The crucial GST bill, Land Acquisition Bill, Labor Reforms is surely out of reach till the next Lok Sabha election. While the PM has to initiate a dialogue with the opposition he also has to venture outside Parliament to do several wonders. Examples - building houses for all, decreasing the infant mortality rate, ensuring electrification of all villages, inter linking of rivers, bringing back black money, modernizing railway stations, generating a second green revolution, ensuring Jan Dhan Bank Accounts to get all subsidies eliminating middle men. These should be the focus of the PM. 

Not focusing on social issues has always costed BJP very dearly in Lok Sabha elections. It is very easy for the opposition to raise these issues and create a negative atmosphere and shift the voters away from voting again for the PM.  It does appear that this is becoming the narrative on which all regional parties (opposed to the BJP) will campaign in 2019. Nitish could be that clean face that will be projected as the possible PM candidate and several swaths of Eastern India will vote for him. An aspect that cannot be ignored is that despite the pitch for governance and progress, people may not align with the PM and this is where his communication skills may defeat him even though he will use it to the fullest extent. 

Rahul Gandhi still is no match for the PM. The only person who can even credibly challenge the PM is Nitish Kumar. Personally, I don't consider Nitish any match to the PM at the national level. The PM must seize this defeat and convert every attempt by the opposition to derail him into an opportunity to bounce back. If this doesn't happen 2019 will be a reflection of Bihar 2015.

2019 must also not be 2004 where a government that changed the face of India into a hub of growth suddenly disappeared because voters were disenchanted and voted them out. The PM cannot solely campaign on the basis of economic growth and job creation. Rural India won't understand this and large sections of urban India won't appreciate this and vote. No Indian PM has ever been rel-elected only on the basis of economic growth results.

The uniqueness of our PM is that he was able to usher in agricultural growth through scientific technologies while balancing the industrial growth in his state as a CM. This unique trait needs to be demonstrated at the national level. Three years is still a long time in Indian politics. The journey though appears to be dark inside Parliament and bright outside.

Sunday, October 4, 2015

The Prime Minister's Homework

When PM Modi concluded the US visit recently it was aptly clear that the businesses and companies in Silicon Valley wanted the government to accelerate ease of doing business if they wish to penetrate their businesses in India. It was not as if the PM did not know about this, but still wanted to go ahead and invite them to invest and get committed support for Digital India. He wanted to showcase the fact that there are several start ups that have done wonders like Ola, Flipkart, Zomato and also get a hands on look at the start up culture in Silicon Valley. He also wanted to show case several changes in the ease of business rules in the first year of office.

The initiative and the reach out to Silicon Valley is really good and commendable. However, there are 2 important parameters on which he can unilaterally ensure India's economic rise. The reasons to choose these 2 parameters are 1) They are the most critical parameters 2) The government is seriously doing work but not that at the pace the world expects 3) These are extremely tough to be meet in a 5 year term.

Electricity Generation:

Unless electricity is generated it cannot be distributed and power cuts be stopped. Last year when the Coal Bill was passed it allowed coal production to happen in the most transparent manner in decades. However, the production is not enough to keep up with the demand. 60% of our electricity needs come from Coal and if this is disrupted it disrupts the electricity generation. Water accounted for 17% of electricity in 2013 and now it is reduced to 15%. The reason for this is the number of projects announced have not event taken off. The dams and reservoir projects are very tough to become reality. The push in the direction of increasing solar energy contribution is picking up pace. As of now renewable energy is accounting to 14% (up from 12% in 2013) (Source).  The cost of solar panels have drasticlly come down and India is flooded with Chinese goods. The cost of solar energy has reached the lowest ever known price in India. It is between Rs.4-Rs.5 per kWh (Coal is Rs.3.50 kWh). This has pushed several projects to be kicked off since the resources and time required to set up is very minimal compared to hydro projects.

However, if the solar energy is not ramped up the goal of achieving 100GW by 2022 will only appear to be a distant dream. This simply implies that every year starting 2015 - 14.28 GW must be produced each year. As of Oct 1st 2015 India has achieved 4.2 GW and that is 10GW short. Next year we hope this substantially increases. However, this pace can only be accelerated if the government comes up with rooftop solar policy so that each house contributes to electricity generation through solar energy.

Rajasthan has now solar parks covering 25,000 acres (Source). Modi has the record of building the largest solar park in Asia as the Chief Minister of Gujarat. We hope that we also build largest cluster of solar parks in Asia. As of date both Gujarat and Rajasthan are accounting more than 60% of electricity due to solar energy.

(Solar parks in Rajasthan and Gujarat)

As of now 18,000 villages are to be electrified yet, cities and villages and cities (including the national capital) that do have electricity have inconsistent power supply and face huge power cuts. So, the challenge before the PM is that while the generation of electricity is picking up pace how do you solve the issue of transmission losses? How will you also solve the state electricity boards' mounting losses which amount to Rs.2,00,000 crore? Various states have various policies and some are more rampant in giving power subsidies than others. These ad hoc policies have led to losses in almost every state barring Gujarat.

Will the PM through the recently launched Deen Dayal Upadhyay Gram Jyoti Yojana be able to achieve what he did in Gujarat? These are questions whose answers are the most essential part of any success today. Our future hinges on these solutions. If anyone can do it it is him and there are several people who voted him solely because of this character he has exhibited.

This is an area that doesn't require legislations or the support of other parties. This is purely achieved through execution. In the 2015 Independence Day Speech he stated he gave officials 1000 days to ensure electricity reaches the missing 18,000 villages. However, the goal to be measured is not just that but also the extent to which our capacity addition has taken place (to meet the demand). 

Every firm that wants to do business in India requires electricity and it is not smooth sailing unless this goal is met.

Ease of Business Ranking:

The World Bank uses 10 parameters to decide which country is easiest to do business in. These parameters and the ranking of India is below (Source).

The good points where India is in top 20 is "protection of minority investor" and "getting credit for a project". Apart from this it scores very bad in all other 8 parameters taking it to the position of 142 out of 189 countries.

Each parameter can be explained in depth and be analyzed directly from World Bank Analysis document (Source). In short it takes anywhere from 26 to 28 days to start a business with number of procedures to get it started being very high. The time to get land and required permits is so high that people don't tend to use straight and honest procedures, but use shortcuts to do the same. In addition to this on an average 33 tax payments, 243 hours of tax filing is spent by firms. These cumbersome, complicated procedures have irked the foreign businesses. It is common sense as to why the various companies in Silicon Valley like to invest but want the PM to ease the rules.

From the track record of one year in office it is appearing that the government has initiated several measures in ease of business. They removed Minimum Alternate Tax that was imposed on firms that were investing in India having no base in India. The fact that the new Companies Act allowed a company to borrow money from its directors is helping companies to pump in money. However, it is no where close to what is expected from the PM (based on his experience in Gujarat). Hence, it is very challenging for the government to achieve the task of being in the top 50 of ease of doing business.

Here are some interesting changes in the past 1 year (as published in Times of India - Source)

Now, it is paramount that the PM does a serious turnaround in these 2 parameters. He is the only hope and the man with a proven track record of these two. I hope that 3 years down the lane there is obiturary to these complex processes. 

Monday, August 10, 2015

Modi govt in a tactical retreat or policy defeat mode on Land Bill?

The early part of the 2nd year in Modi government has gotten enough attention to the controversy on Sushma Swaraj and the Vyapam scam in Madhya Pradesh. The scam in Madhya Pradesh is undoubtedly one of those that needs a thorough investigation and thanks to an active media (TV, facebook, twitter, internet) that CBI is now investigating the matter.  The PM is not connected to the scam. At the same time the one that involves Sushma Swaraj is that of impropriety. The government should investigate and let Swaraj come clean.

The real casualty of this matter is the Parliament session and the important bills that need to get passed in order to uplift the infrastructure scenario in the country. The Land Acquisition bill which the government thought of getting it passed has not happened. It tried all its means in a constitutional manner but it simply doesn't seem to work out. A joint parliament session is ruled out because the bill has to be defeated in one of the houses. The Congress party clearly has not allowed the bill to even be tabled in the Parliament for it to be defeated. The regional parties and some of BJP's own allies don't want the bill to be passed. It is so clear that many reformist bills will get struck in Rajya Sabha simply because the ruling party doesn't have the numbers and the support of Rajya Sabha is important for several of these bills.   

No matter how one dissects the land bill that the government wants to pursue the existing land bill (passed by the UPA govt in 2013) has thrown a spanner in the wheels of infrastructure. Companies want to invest in roads and railways but cannot acquire land easily. The Prime Minister wants to create an atmosphere of jobs and a boom in manufacturing must happen. To have this happen the companies need infrastructure. Further, the surge in labor market and engineers can be created only when road construction picks up pace. Land is required for all of these. Despite its best intentions the government truly doesn't have numbers in the current scenario of the Parliament.

The scenario is grim because a trap has been laid for the government by the weakened opposition that is weakening a strong Prime Minister like Modi.  The PM has been caught in a deadlock where he cannot easily escape. It is such an irony that with just 44 members or less than 1/10th of Parliament strength the Congress party has been able to stall the Parliament and the country. It is also an irony that even with a majority in the Lok Sabha the ruling government is finding it tough to get several legislations passed.

It is aptly clear that Congress wants to take revenge for what BJP did when it was in Opposition. The game may be fair but not the timing. 

The government last week suddenly made a U turn on the land bill and is now withdrawing its original version and is indeed bringing back an amended version that is similar to the act passed in 2013. By making a U-turn on the land bill it clearly has upset its own plans and the industry at large.

The question therefore is this - Has the PM accepted defeat or is this a tactical retreat? My own analysis and instinct says that the PM has decided to retreat at the moment. The wind is not is in his favor and he has decided to choose the battleground for another time.  The PM has to blame himself for this. He did not use his art of communication to reach out to the farmers and explain what he intends to do with the modified land bill and how it will help them. With no official communication the opposition led by the Congress has created a fear in the minds of farmers that the land acquisition bill is a death knell to farmers. With his own fault at play the PM knows the time is not ripe to correct it. Hence, he is single mindedly focused on getting Goods and Services Tax Bill (GST) passed where several regional parties have agreed to it. There is another calculation to the retreat. The government needs numbers in Rajya Sabha and only winning Bihar and Uttar Pradesh (UP) elections will solve the matter. By allowing the bill to be withdrawn the government wants to weaken the Congress party's slogan that Modi's government is "suit boot ki sarkar".

Next year when the elections in Rajya Sabha are held BJP will gain strength and with its new strength it may be able to overcome Congress. Does this mean that the government will not do anything until then? Does that mean the government will not use its majority in Lok Sabha to pass other bills where the Rajya Sabha's approval is not required?

These questions only the PM can answer. It definitely appears that the PM is not in a mood to allow the quick pace of industrialization which the industry wants and at the same time he doesn't want to lose an opportunity where his socialist policies can touch the hearts of the poor and the underprivileged. It appears that he has some calculation in mind which may backfire given the current scenario.

Recently, Rahul Bajaj said this statement - "This is not Narendra Modi's government" (source). It is true in many senses. The government should have gone at an aggressive pace to create an ambience and tax environment where businesses can flourish.

In politics it is always said that nothing is constant. At this time the image the government wants to create is that of a defeat but in reality it is a tactical retreat on the matter of Land Acquisition bill.

Wednesday, July 1, 2015

The slow, but surely changing face of Indian Railways

Indian Railways has come a long way and still has a long way to go. There has been a number of empty slogans and huge budget outlays since a decade to ensure cleanliness is maintained on the stations  and services are improved. However, most of them haven't taken off.  The number of aggressive measures by the Govt since last year offers some real hope.

One of my friends commented when Modi talked about "Golden Quadrilateral of bullet trains connecting India" that a bullet train won't solve a problem unless Railways improves its quality of service both inside and outside the trains. It is very true that we can't simply have bullet trains when Railways fail to provide some basic services or upgrade its quality drastically. At the same time bullet trains must be executed.

There is a perceptible change in which Railways has improved with respect to providing services in the last 1 year. There are several ones and I thought I should highlight some of them as they play an important role in understanding how they are changing for the better, This is a sincere start of providing tangible services to passengers for the first time since decades.

The expectation is so high from the current government that people are looking to see radical changes. For me the day the first bullet train starts in India is a whole new revolution in itself. No matter how many people have varied opinions the presence of bullet train will create gigantic changes in the economy.

1) Aggressive pace of introduction of bio toilets in Indian Railways:
In 2011 only 57 bio toilets were introduced and then it was 169, and 1337 in 2013-14. However, in 2015 the number has drastically jumped to 17,000. Another 17,000 will be installed this year. All newly built coaches do have this and DRDO's patent design is being used in the Railways. This is a very important initiative that is gaining momentum, According to several reports(source) the fitting of bio toilets has been saving Rs.350 crore annually on manually removing the waste and costs Rs. 3 lakh for fitting in a coach. This often is not even cleaned manually in a proper manner. The absence of bio toilets will surely make our tracks worse and stink beyond explanation.

These bio toilets convert the waste into gas form when cleaning. However, people can be insane and can throw bottles, cigarette butts in these and there should be proper awareness spread about it. The list of trains fitted with these ones are listed in the source here

2) Cleaning up New Delhi Railway Station with frequent cleaning by private players
Now even though it is still a long dream to see our train stations cleaned and maintained well, a start has begun in New Delhi Railway Station.

This link in Times of India contains pictures and more stats on how the station is being cleaned

Not sure how long this will be kept clean.

3) E catering of food on 76 trains in phase - 1:
Passengers can order food at or call the toll-free number 1800-1034-139 or 0120-4383892-99 to avail the facility. IRCTC has tied up with Pizza chain such as Dominos and MTR for providing different types of food to be delivered to the passenger fresh. Once the booking is made a one-time password is sent to the registered mobile number (required at the time of delivery). The food is delivered only between 6 am - 10 pm and payment can be made online or by card.  The website will list all the trains stations where food will be delivered and the types of food. 

In the event train reaches late or cancelled there is a small fees and the difference will be refunded. (Source)

4) Increasing the refund for Tatkal tickets and changing the window of the booking
The refund for Tatkal tickets has been increased to a maximum of 50%. Also, the window of booking for AC Classes is 10-11 am and non-AC is 11 am onwards. This dedicated booking slot is to ensure there is no overcrowding or surge in online booking.

5) To prevent agents making bulk reservations of tickets and then selling at a higher price - This was a bad practice and a loophole quite easily exploited by station agents and affected customers who could not get tickets from IRCTC website between 8 am -12 noon. If any such tickets are booked somehow and passengers have it then the agent and the passenger - both will be penalized.
Here's an interesting news item that explains how the agents are making black money affecting actual passengers whose tickets never get confirmed.

6) To use preloaded Ru-Pay Debit Card to make purchase on the website.

7) Book 120 days in advance as against the existing 60 days.

8) Cash on Delivery for tickets for those customers who are apprehensive of using their credit/debit cards online

9) SMS intimation on cancelled or delayed train status. Refer for more information such as PNR alerts, Train status, Availability, schedule etc

10) Operation 5 minutes - where a ticketless passenger can get a ticket within 5 minutes of boarding the train. There is no need for printing the ticket and the confirmation will be stored on the user's smartphone and cannot be cancelled once booked. This is in its pilot stages and will be available soon for all smartphone users

11) Enhancing IRTC website to handle more ticket bookings daily:
Currently, The website can handle only 1.2 lakh tickets/day. Now, it is increased to 4 lakh tickets/day. This is a phenomenal increase and has been achieved because of installation of new software and increasing the capacity of existing servers.

The problem is the speed of the trains we have is too slow. We are still in 18th century world where the speed of the train is still less than 80 km/hr for 99% of the trains. This speed is so slow and pathetic that we are easily centuries behind. The right step is to introduce more semi-high speed and high speed trains. One good initiative so far being taken is Delhi-Agra train. This can run at 160 km/hr and can reach Agra well within 1 hour 10 mins. However, there are 8 other paths where trains have been selected to run at that speed but there is no momentum in that direction.

Overall the direction is encouraging even if far from inspiring.

Monday, March 9, 2015

Understanding the debate about Land Acquisition Bill

The PM Modi has promised houses for all by 2022. Is there no government in the past that has not promised building homes for homeless? Every state and central governments be it headed by Congress or BJP or otherwise has promised this and the promise is far from reality. Every one knows it.

To build these houses one requires land. To build highways, expressways, bullet trains we need land. To kick start manufacturing we need land. The Land act that was being followed by the Govt until UPA's Land Acquisition Act of 2013 came in was the British version of 1894 Land Act. Even though this act was devilish in nature it is the one that has led to urbanization we have seen in 60 years. Had it been not for this act we would not have seen modern airports in Delhi, Mumbai, Bangalore and we would not have seen the beautiful Golden Quadrilateral national highway system. No one can argue that the benefits of these highways, ports and airports has reached different sects of life - laborers, real estate developers, construction companies, power companies, water companies, skilled labors involved and many more in the evolution and maintenance of such projects. Imagine if these projects had not taken place we would still be the land of the villages with only villages everywhere. There would not have been good roads and so the transportation boom would have never taken place. This sort of boom also enabled people to travel across country making life and communication easier. The farmers who are at the center of the storm called Land Acquistion Bill Amdendment of 2014 have also benefited. There are of course several projects where farmers did not benefit because land was taken forcibly both by private companies and the government gave inadequate or no compensation to all or most of them. This resulted in large violent protests in different parts of the country. Between 2004-2010 there were several cases of farmers losing their lands and not getting anything at all.

The UPA government in 2013 passed an act that all together changed the terms of compensation for the affected and restricted the usage of lands for several purposes. I had debated the pros and cons of this bill in the article listed here. The Act was Congress's only chance to capture power in 2014 and they went to market it to farmers telling them no land of theirs can be taken by anyone including the Government leave alone private companies.  The clause added was that 80% of land owners must agree to give up their land; then there would be a SOCIAL IMPACT STUDY and then the land would be given to the buyer. The compensation fixed was 4 times the market value in rural and 2 times in urban areas. While the act itself was good in intent it was flawed. In the name of social impact assessment no project was allowed to start from 2013 till now. The bill is right in terms of compensation because that was what farmers wanted and the act does satisfy it.

Social Impact Assessment merely means government will study who would be impacted by the land if acquired and then compensate everyone accordingly. This is ridiculous since there is no impartial way of doing this and this simply delays the process to years. Several buyers who wanted to acquire the land lost interest and walked away. The real way farmers are going to get value of their own lands is when a) either technology is improved on their agricultural lands b) The land value increases which means they get a very high compensation in return for giving up their land so they can lead a different life.  a) doesn't happen and b) will not happen unless there is a demand for that land and a transparent way of getting the land for the buyer.  The existing act makes the whole process 4-5 years which makes any project unviable (Source)

Well known economist Amartya Sen once said right after passing the act - "Even though the land may be very fertile, industrial production could generate many times more than the value of the product produced by agriculture. The locations of great industry, be it Manchester or Lancashire, these were all on heavily fertile land. Industry has always competed against agriculture because the shared land was convenient for industry for trade and transportation," (source)

It is true that India cannot be an agrarian economy because it can never lift people out of poverty. The poverty that was more than 50% in 1947 drastically reduced to 30% because of economic reforms. If we continued to be agrarian we would have not come even this far. All educated Indians never even think of agriculture. Very few do. Rest all move to industries. Can one explain why this happens? Industries pay higher and returns is more predictable and secure. In the case of agriculture if land is not  maintained or there are crop failures they are doomed. The sons and daughters of most farmers don't want their kids on the land but do something else. Take any fresh graduate. They will prefer hi tech companies, multi national companies, manufacturing companies, construction companies because these are the jobs that can give monetary satisfaction. 

Several state governments have written detailed letters to the PM asking him to help in starting several projects that have been stalled because of this act. Congress states themselves have written such letters (another source). Several politicians love the fact that the land acquisition has become tougher because several rural politicians are land lords with vested interests. The middlemen involved in Social impact study will make the study harder to pass.

The total list of stalled projects is over 100 and they are worth 10 lakh crore. With these many stalled projects no state government has been able to start any industry. All the highway projects that were announced in 2014 and 2015 haven't even taken off. There are several companies who want to start their own manufacturing units so they can create jobs but the existing law makes it impossible to get the land. Just today the economictimes published that projects worth Rs.90,000 crore related to power projects haven't been started because of unavailability of land. It is this scary situation that the Government is seeking to change.

So, what does NDA amendment (source of the exact clauses) to the act do?

1) It has retained all clauses of the bill except that the process of acquisition has been made fast if it involves acquiring land for purposes of housing, rural electrification, defence, highways and industrial corridors. Which means there is no way the process can take 5 years, but instead the compensation will be made quick and fast. 

2) Private educational institutes and private hospitals can be built by acquiring land but not private hotels.

3) The existing law states that if a project is not done within 5 years the unused land has to be given back to the owner. This existing clause has been now made been more specific - "a period specified for setting up of any project or for five years, whichever is later."

4) Instead of applying different formula the existing law has one while evaluating compensation, but now 13 acts are included in the amendment which implies the compensation rates will vary and will be higher if the land is acquired for the larger causes such as electrification, highways and defense related purposes. The farmers tend to benefit from this.

5) It also does away with Social Impact study if the projects are small and involves rural electrification, highways, defense, housing for the poor. This is required because if government has to build houses it needs land. The other day Delhi CM Kejriwal met Mr. Modi and asked his help in fulfilling the dream of housing for all since land ownership is under Center in Delhi. Apparently, the PM informed him that the numbers are not in his favor to modify the existing land act and that makes it impossible for giving any land to Kejriwal for fulfilling the dream (Source of these details). All political parties including the BJP are hypocratic on many aspects. I wondered if Kejriwal can be different, but he too has proved he is the same. It is nothing but hypocrisy on the part of Kejriwal that he decided to join Anna Hazare's protest against this bill. He should have supported the PM instead. Anna Hazare is blinded by the fact that farmers will prosper only if they remain farmers and India will grow only if it continues to be a hopeless agrarian economy. How long can you stop preventing farmer suicides if you don't give them a happy path to their lives? Industrialization is not the answer to farmer suicides but will surely help them if they are quickly compensated with a huge amount instead of giving them loan waivers or keeping them in debt cycles one after another. 

My Problems with the NDA Amendment:

The act has two problems according to me. First, it dilutes the act to the extent that even farm lands where agricultural output is very high can be taken for this purpose. If the existing land produces more output it should be allowed to do so. After all it is these tracts of fertile land that has made us self sufficient in our food production. This is a clause that must be amended. Second, it is very well known that in the name of Special Economic Zone (SEZ) huge tracts of land were misused and the unused land is left as is. This should not happen and the fact that on the pretext of industrial corridors land can be acquired must be amended.

Mr. Modi has a big problem on this legislation. He has no numbers in the Rajya Sabha and he is in no mood to bend. The entire opposition and the allies want his blood and they feel this can bring his downfall for sure as the farmers vote banks is the way of winning any elections. This fight for his blood has only made matters worse for him.

When China reached this cross road two decades ago it decided to make farmers part of any factory that would come up on their land. Labor and training was given so that they can benefit in the long run. Similar provisions must be made.

In my view the PM is committing two major blunders:

1) Allowing this act to be the center piece of the Parliament session when he can get several acts passed and then tackle this act later. He can use his majority in Lok Sabha to pass more legislations that every party and the people have dreamt of since 1984. Examples include acts to modernize education, health, police stations and other legal and social sector reforms. These acts are far more powerful and significant.

2) Not been communicating to the people like the way he communicates every day. He should get down to radio, TV, newspapers, media highlighting the good intent of this act. This has clearly not happened and the opposition has increased their voice of dissent and suppressed all the good intentions.

Mr. Modi is very right that he needs to tackle this problem. It is the foundation on which the economy can grow. With good changes or amendments that the government has done the opposition will simply will not co-operate. The PM now has a very tough walk to do. If he succeeds the economy will turn around like nothing, but if he fails it will be his downfall. The downfall is mainly because the themes -" Make in India", "Bullet trains","Smart cities","24 hour electricity promise" - all will fail as it requires land. He would have wasted a landslide opportunity and will never get elected back.

What do you think the PM must do? Should be bend and make amendments or give up the fight for now and concentrate on a lot more pressing issues?