India’s GDP growth for Q3 FY21 has come in at 0.4%, versus the -7.3% recorded in Q2 of FY21. Earlier, the contraction for Q2 had been estimated at 7.5%, but has now been revised upwards to a decline of only 7.3%. Q1, on the other hand, has been revised from a 23.9% to a 24.4% contraction. The NSO said, “GDP at constant (2011-12) prices in Q3 of 2020-21 is estimated at Rs 36.22 lakh crore, as against Rs 36.08 lakh crore in Q3 of 2019-20, showing a growth of 0.4%.”
Will the Indian economy have a V-shaped recovery, as is now increasingly being touted? The answer, without doubt, is a resounding yes! With a Covid recovery rate of over 97%, a mortality rate of barely 1.4% and an active caseload of only 1.2%, and with over 15 million people vaccinated, the overall economy of the country is rapidly moving back to normalcy and the GDP numbers are only going to get better in Q4. This is evident from the IHS Markit India Manufacturing PMI reading of 57.5 and 57.7, recorded in February and January 2021, respectively. Composite PMI reading rose from 55.8 in January 2021 to 57.3 in February, the highest since October 2020, while Services PMI rose from 52.8 in January to 55.3 in February, the highest in a year. Unified payments interface (UPI) trades hit a new high of 2.3 billion transactions in January 2021, amounting to Rs 4.31 lakh crore in value terms. The blistering pace continued in February 2021, with 2.29 billion transactions, amounting to a value of Rs 4.25 lakh crore, further corroborating the full-fledged V-shaped recovery which is taking shape.
Services growth in Q3 fell by 1%, which is much lower than the 11.3% fall seen in Q2 and the 21.4% fall in Q1. Agriculture growth has come in at a solid 3.9% in Q3, versus 3% in Q2. Manufacturing sector grew by 1.6% in Q3, which is great news as the big decline of 35.9% in Q1 and the 1.5% fall in Q2, at the height of the Covid pandemic, has now turned into a positive number. The industrial sector witnessed a growth of 2.7% versus a -3.03% growth in Q2. This 2.7% growth was supported by a manufacturing growth of 1.6%, electricity, gas, water and utility services growth of 7.3% and a healthy growth in construction at 6.2%. The high traction in the real estate sector was on the back of the reduction in stamp duty and other levies across various states, thereby attracting home buyers to invest in new homes.
The output of eight core infrastructure sectors grew 0.1% in January 2021 as compared to last year. The infrastructure output, which comprises eight core sectors, including coal, crude oil, and electricity, fell by 8.8% during the April-January period in 2020-21, against a growth rate of 0.8% in the corresponding period in 2019-20. However, Q4 should see a turnaround in the infra space. The Modi government’s decision to invite private investment in 400 port and shipping projects worth Rs 2 lakh crore will give a fillip to the infra space. The Modi government is also aiming to attract investment worth Rs 3.39 lakh crore during the Maritime India Summit 2021, that kicked off on March 2, 2021.
The Indian Railways carried 119.79 million tonnes of freight in January 2021, the highest ever in a month, beating its previous record of 119.74 million tonnes in March 2019, showcasing how the Indian economy’s momentum is gaining rapid traction. In February 2021, the Indian Railways’ loading was 112.25 million tonnes, which is 10% higher compared to February last year, which had been 102.21 million tonnes. On just February 28, 2021, the freight loading of the Indian Railways was 5.23 million tonnes, which is 37% higher compared to last year’s loading for the same date, at 3.83 million tonnes.
For the December 2020 quarter, cement major ACC saw a solid 73% jump in profit, while cement behemoth Grasim saw profits rise by a massive 107%. Since cement sales are a lead indicator, it should be suffice to say that a core sector bounce is back on the cards. Car sales, another lead indicator, continued to be robust with a 16% growth year on year (YoY) in January 2021, with Toyota, Tata Motors, Honda and Nissan, witnessing a YoY growth of 92%, 94%, 114% and 220%, respectively. In February 2021, while Maruti saw a growth of 11.8% year on year (YoY), tractor major Escorts saw a growth of 30.6%, showing the all-pervasive nature of a demand resurgence that is underway in both rural and urban areas.
The economic growth in the coming year, i.e., 2021-22 (FY22) will be robust, with a broad-based momentum across various sectors. The government’s focus on infrastructure, real estate demand on the back of low-interest rates, recovery in commodity prices and healthy consumption expenditure all point to better times for the GDP trajectory. Private and foreign investment is also on the rise and capex should be higher than in previous years, aiding long-term growth. In the last one year, FPI and FDI inflows put together have been in excess of Rs 2.32 lakh crore, which speaks volumes about India’s attractiveness as an investment destination, all thanks to Prime Minister Narendra Modi’s courage of conviction and reformist mindset which is now bearing fruit.
Significant recovery in manufacturing and construction segments also augurs well for the support these sectors are expected to provide to growth in FY 2021-22. Real GVA in manufacturing has improved from a contraction of 35.9% in Q1 to a positive growth of 1.6% in Q3, while in construction the recovery has been from a contraction of 49.4% in Q1 to a positive growth of 6.2% in Q3. Going ahead, only for a quarter at the most, we are likely to see the continuation of a K-shaped recovery, with some sectors growing faster than others. However, beyond Q4 FY21, the K-shaped recovery will soon transform into a sharp V-shaped recovery that will be both fast-paced and broad based in FY22.
The growth stimuli available from the Union Budget and additional measures, including the production linked incentive (PLI) scheme, will lead to a sturdy growth path over the recovery horizon. The real push will be visible in the Q4 (January-March) 2021 because lockdowns in many sectors, particularly hospitality and travel, have begun to ease substantially. The 1% growth in GVA and 0.7% growth in core GVA (core GVA excludes agriculture and public administration), in particular, marks the end of a contractionary phase. In fact, all the sectors except (a) mining and quarrying, (b) trade, hotels, transport and communication services, and (c) public administration, defence and other services, have recorded positive growth in the third quarter of FY21, which is great news as it vindicates the flurry of GDP upgrades seen in recent times. Even in trade and hotels, the pace of decline has slowed down significantly from a negative growth of 15.3% in Q2 to 7.7% in Q3. In public administration, the pace of fall has been reined in at -1.5% from -9.3% in Q2. The construction sector, which contributes about 9% to India’s GDP, is back with a bang on the back of a strong recovery in execution, registering a 6.2% growth in Q3 from -7.5% in Q2, which is nothing short of outstanding. India is amongst the very few economies which are posting growth for the December 2020 quarter—one amongst 16 major world economies – which shows that Prime Minister Narendra Modi’s Rs 30 lakh crore stimulus package has been able to boost both business sentiment and spending via the multiplier effect.
While gross fixed capital formation (GFCF) has improved from a contraction of 46.4% in Q1 to a positive growth of 2.6% in Q3, private final consumption expenditure (PFCE) has recovered from a contraction of 26.2% in Q1 to a much smaller contraction of 2.4% in Q3. The revival of investment demand, triggered by capital spending by the Modi government, has helped in a big way. Besides the overall uptick in the economy, the resurgence of GFCF in Q3 was also triggered by capex by the Central Government, that increased year-on-year by 129% in October, 249% in November and 62% in December 2020. The fiscal multipliers associated with this capex are at least 3-4 times larger than government final consumption expenditure (GFCE), as capex induces much higher consumption spending than normal income transfers.
For the fortnight ending January 8, 2021, credit growth has picked up to 6.6% YoY, while deposit growth is 11.4%. Excellent results by banking sector biggies showcase the ongoing economic momentum. HDFC Bank and ICICI Bank posted profit growth of 18% and 19%, respectively, for the December 2020 quarter, with the retail loan book growing by anywhere between a healthy 13% to 16%. The robust profit growth for these two banking giants came about, despite a high provision coverage ratio (PCR) of 148% for HDFC and 78% for ICICI.
Needless to add, the Indian economy has seen a superb rebound from the onslaught of the Covid-19 pandemic, thanks to the Modi government’s relentless war against the Wuhan virus. From being a net importer in March 2020 to becoming the world’s second largest exporter of PPE kits and N95 masks, it is a telling tale of how “Make in India” is about a grand vision and also about the ability to translate that vision into a meaningful end result. India produced more than 60 million personal protection equipment (PPEs) and almost 150 million N-95 masks till October 2020, from almost zero in March 2020. India also exported more than 20 million PPE and over 40 million N-95 masks during this period. Speaking of Covid, the two states that account for over 72% of all the active coronavirus cases in India are Maharashtra and Kerala, one where the Congress in in power with allies and another which is a Left-ruled state. The horrific performance by these two states in reining in Covid is a testimony to all that is woefully wrong with both the politics and economics of the Congress and the CPI(M).
With a pro-growth budget, structural farm and labour market reforms and the Modi government’s bold decision to raise Rs 2.5 lakh crore by monetising 100 sick, loss making and unviable CPSEs, coupled with the RBI’s resolve to support the financial markets and economy, the Indian economy is well poised to ride the long-term structural growth path, despite states like Maharashtra being a drag due to the misgovernance of the Congress-centric Maha Vikas Agadhi (MVA) alliance.
Investments were the primary driver in pushing up Q3 GDP numbers and were up 2.1% YoY, versus a fall of 28.2% in the first half of fiscal year 2020-21 (1HFY21). Consumption was down only 2.2% YoY in Q3, versus a sharp fall of 16.7% in 1HFY21. The 4.9% growth in consumer durables and 2% growth in consumer non-durables in December 2020 are a precursor of demand resurgence. Even two-wheeler major Hero Moto Corp, for the last six months, has been selling over 4.5 lakh units every single month, with more than 14 lakh units sold in just the two months of October and November 2020. Tractor major M&M too has seen utility vehicle sales growing in excess of 20% on an average in the last few months, pointing towards a demand rejuvenation. Nominal GDP grew strongly at 5.3% in Q3, implying that GDP deflator was 4.8% in 3QFY21. While CSO/NSO expect a contraction of 1.1% YoY in 4QFY21, implying an 8% fall in FY21, this is highly unlikely. Many domestic investment banking houses believe Q4 real GDP growth could be as high as 3.5%, leading to a GDP decline of only 6.7% in FY21, versus CSO’s more conservative estimate of an 8% decline in GDP in FY21.
An 8% or 6.7% GDP decline is less relevant. The more relevant part is that growth momentum is picking up pace significantly, with GST collections in January 2021 at Rs 1.19 lakh crore and February collections being equally healthy at Rs 1.13 lakh crore. GST collections have topped the Rs 1 lakh crore mark every single month from October 2020. FASTag collections hit Rs 102 crore last Friday, crossing the earlier high of Rs 80 crore collected by way of toll in a single day. E-way billing is applicable for inter-state sales in excess of Rs 50,000. Rs 6.42 crore E-way invoice reference numbers (IRNs) were generated in January 2021, versus a number of just 26 lakh IRNs that were generated in September 2020, once again vindicating the sharp uptick in routine business activity.
The GVA equivalent of manufacturing companies, arrived at after adding up wages, depreciation, interest and profit before tax (PBT), grew a robust 17% on a yearly basis in Q3 FY21, after a 9% growth in Q2 this fiscal and a 29% contraction in Q1. Since manufacturing GVA is a leading indicator of the manufacturing sector’s performance, the sharp uptick in manufacturing GVA is indeed highly reassuring. In many cases, GVA equivalent is a better predictor of manufacturing sector’s performance than IIP since the latter captures volume of production while the former captures value of production, ICICI Securities argues. Hence, the manufacturing sector is expected to record a healthy growth in the upcoming Q4FY21. The manufacturing GVA currently has a share of 19% in the country’s real gross value added (GVA).
Moody’s has raised India’s growth forecast to 13.7% for FY22, from the earlier 10.8%. For the current FY21 fiscal also, Moody’s revised its prediction of a contraction in real GDP to 7.1%, from the earlier projected contraction of 10.6%. Interestingly, Moody’s has also said that the Modi government’s fiscal deficit for FY21 and FY22 could be much lower than the projected 9.5% and 6.8% of GDP, respectively, supported by stronger revenue generation in the fourth quarter of FY21 and higher nominal GDP growth in 2021-22 (FY22). The big upside to growth projections in FY22 are absolutely realistic and not based on a low base effect. Rather, the massive growth upside in FY22 will be driven by facilitative government measures, including the Modi government’s capital expenditure increases, with the Central Government budgeting an impressive 34.5% rise in capital spending at Rs 5.54 lakh crore in FY22, compared to the revised estimate for FY21.
Exports which were lagging too have begun to pick up, with a 6% YoY growth in January 2021, and February seeing only a minor fall of 0.25%. Imports also grew by 7% in February, versus a 2.03% growth in January 2021. Interestingly, in February, while oil imports fell by 16.63% YoY, non-oil imports rose by 16.37%, suggesting both an economic revival and improving terms of trade.
The initial policy choice of “lives over livelihoods” succeeded by “lives as well as livelihoods” is now bearing excellent results, converging with the foresight the Modi government had about an imminent V-shaped recovery when it entered the war against the pandemic. The sharp V-shaped recovery is being driven by rebounds in both private final consumption expenditure (PFCE) and gross fixed capital formation (GFCF) as a combination of the astute handling of the lockdown and a calibrated fiscal stimulus that has allowed strong economic fundamentals to trigger quick resumption of high activity levels in the economy. It would be apt to sum up India’s swift economic recovery with a brilliant quote from Prime Minister Narendra Modi’s Independence Day speech last year, where he emphasised the relevance of Aatmanirbhar Bharat, when he said, “It is now time for India to move forward with new policies and new customs. Now simple and ordinary will not work. Our policies, our processes, our products, everything should be the best.”
The author is an economist, national spokesperson for the BJP and the bestselling author of ‘Truth & Dare: The Modi Dynamic’. The views expressed are personal.
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Direct Selling Rules: The return of the inspector raj?
The one in a century catastrophe, the Covid-19 pandemic, has been a disruptor of businesses and a fuel to social imbalances. The Covid crisis has put a dent on the growth delta and has caused a tectonic shift in the fundamental functioning of the economic ecosystem. Priority consumer spending during the pandemic was a boon for the IT and pharma sector, however, it devastated the most labour intensive and consumer discretionary product industries, which together make up 30% of the total population and majority of the lower middle class. Worsening the fact is that 81% of the workforce in these industries are in the informal structure, often on daily wage with no job security. In the past few months, as the local brick and mortar businesses struggled to stay afloat, global e-commerce giants spread their reach across the urban & rural areas. As a result, over 7.4 million livelihoods are on a brink of a fallout.
The Direct Selling industry (where products reach consumers from their friends, neighbours of family-members who are direct sellers) offers livelihoods to millions, with no investment but time and effort, this is an industry that is now part of the socio-economic landscape of the country. According to the annual survey of IDSA, this industry is part of the global $180 billion industry, that has heavyweights like Amway, Herbalife and Oriflame from overseas, as well as Indian companies like Medicare etc. Pegged at a Rs 16,772 crore annual turnover in 2019-20, this industry has been struggling to find its place in the sun, due to the baggage of perception, when they are unfairly mistaken with Ponzi schemes. To be sure, it is a disruptive form of selling daily-use products, that has come under flak in many countries for the aggressive recruitment and sales pitch.
The industry which has been seeking regulatory clarity for over a decade, may finally see light at the end of the tunnel, as and when the Department of Consumer Affairs (DoCA) notifies Direct Selling Rules under the Consumer Protection Act 2019.
In end-2016, the DoCA notified Guidelines for the Direct Selling industry, which were the result of an Inter-Ministerial Committee comprising Consumer Affairs, Finance, Commerce, Law, IT as well as Chief Secretaries of three States. Sixteen States notified these guidelines and Direct Selling found mention in the Consumer Protection Act 2019, along with e-commerce. These Rules are expected to strengthen consumers› interest, as well as to bring about regulatory clarity for the Direct Selling business in the country. On 30 June this year, DoCA put up the Draft Rules for Direct Selling on their website, giving until 21 July for stakeholders to send in their comments.
What’s interesting is that precise a decade since the first regulatory action threatened the very existence of this industry. In July 2011, the Oomen Chandy-led government in Kerala, was on the verge of shutting this industry down, as a few Ponzi scheme operators vanished overnight. In a classic case of let’s-throw-the-baby-out-with-the-bathwater, there was a move to shut down this industry, till intense industry interactions spread over three months, saw the State issue guidelines in September 2011.
A perusal of the recently proposed Rules indicates that the industry will finally get what it has sought—total and complete legitimacy, but may push the industry toward a licence raj. If the Rules come out the way they are, each and every of the 7.4 million Indians will have to register themselves with the Department for the Promotion of Industry and Internal Trade. Industry associations representing this industry are of the view that this goes against the fundamentals of Ease of doing business, as this unprecedented step, will take this fledgling industry, back into the licence raj days.
In 2020, India jumped 14 ranks to 68th position in the World Bank›s annual report on the Ease of Doing Business (EODB). This was owed to an increased penetration of digitalisation, simplified IBC norms and narrowing of the registration windows. However, in reality, these advances are limited to medium and large enterprises and often does not touch the small business who are majorly unorganised but employees the maximum unskilled workers. India can achieve true ease of doing business only when a person, even with no formal education, can ideate and execute a business within a viable period of time. However, the recently passed Direct Selling Rules can act as a major deterrent in achieving this goal.
Even though the Indian government was finally able to recognise the industry, but the strict norms of registration may demolish the flexibility of the system, which gives the industry a major leverage. Our neighbouring countries, although were before the time in their regulations, however, they maintained the sanctity of the industry functioning. The Direct Sales and Direct Marketing Act 2002 of Thailand, the Multi-Level-Marketing Supervision Act 2014 of Taiwan, the Door-to-Door Sales Act of South Korea not only recognised the industry but also allowed generous slack in the system.
The implementation of the Direct Selling Rules will act as an inflection point in the growth trend of the industry. However, If the government wants to promote entrepreneurship at the grassroots level, the current norms of direct selling need to be amended and the direct selling business should be made reachable to the lowest income strata and women, which currently constitutes 74% of the total people involved in the industry. We hope with dialogue and actions we can resolve the only point in this revolutionising regulation.
Rajesh Mehta is a leading consultant & columnist working on Market Entry, Innovation & Public Policy. Uddeshya Goel is a financial researcher with specific interests in international business and capital markets. The views expressed are personal.
SECRETARY BLINKEN HAS A GOOD VISIT TO INDIA
US Secretary of State Antony Blinken would have won many admirers for himself and his administration in India for the sincerity and seriousness with which he handled the question on the state of India’s democracy during the press conference he addressed in New Delhi on Wednesday, along with External Affairs Minister S. Jaishankar. In a ringing endorsement of Indian democracy, he described it as “a force for good”, while pointing out “that every democracy, starting with our own (the United States), is a work in progress”. He said when he discusses these issues, he does it with “humility” and added that “as friends (India and the US), we talk about these issues, we talk about challenges we face in renewing and strengthening our democracies. Humbly we can learn from each other. No democracy regardless of how old or large has it all figured out.” This is exactly what India has been saying—that no democracy is perfect, that they are a work in progress, but it’s ultimately the people of a democracy who make it great and there is no dearth of that “quality” in this country. Or as Secretary Blinken put it, “Like our own, India’s democracy is powered by its free thinking citizens.” That there was not even a whiff of “lecture” in his statements would have reassured many observers of India-US relations, who were worried that Blinken would give legitimacy to the spurious narrative of “backsliding of India’s democracy” being peddled by the mainstream western media, and a section of activists and analysts. During the press meet, Dr S. Jaishankar made it clear that India’s policies of the past few years came in the category of righting historical wrongs and that freedoms did not mean non governance and lack of governance. It appeared from Secretary Blinken’s statements that there was a realization of India’s position. Hence, his statements will go a long way in building trust between the two countries. It is also hoped that this will force the woke-Wahhabi public pushing the concocted narrative, to fall silent and concentrate on a matter that is of actual concern—how to prevent the takeover of the civilized world by a malign power.
As EAM Jaishankar pointed out, India-US relations have undergone major transformation—for the better—in recent years and have advanced to a level that enables them “to deal collaboratively with the larger issues” of Indo-Pacific, the Quad, climate change, tackling Covid-19, as well as regional problems such as the Af-Pak. The centrality of China in all these spheres cannot be ignored, not even in climate change—it emits nearly 28% of the world’s greenhouses—and now increasingly in Afghanistan. The day Blinken was in India, the Chinese were hosting the radical extremists of Taliban in Beijing. China hopes to extend its sphere of influence in Afghanistan by facilitating an armed takeover of Kabul by the Taliban. In such an eventuality, Afghanistan will descend into chaos and slide back into the medieval ages, with all gains made in the last 20 years lost. The human cost will be too high, apart from the strategic and economic costs for both US and India. Afghanistan does not have any option but to continue with a democratically elected government in Kabul. As EAM Jaishankar pointed out, peace was a priority in Afghanistan and there was more convergence than divergence between India and US on this issue. But peace is one commodity that the Taliban cannot guarantee and in this context Secretary Blinken’s clear condemnation of the Taliban was important, especially when Washington has allowed itself to believe that the Taliban will keep its end of the peace-bargain and not aim for a hostile takeover of Afghanistan. Blinken was categorical that taking Afghanistan by force was not the path that the Taliban should pursue and that the peace process must be Afghan-led and Afghan-owned. However, this is easier said than done, and now that China is joining hands with these dangerous extremists and terrorists, it will have to be seen whether US action will go beyond lip service and what role India can play to bring peace in Afghanistan.
On the Quad, Blinken pointed out that it was not a “military alliance” but was meant to work on regional challenges, including vaccine production. It seems that both India and US are wary of antagonizing China, knowing its sensitivities about the Quad, which is perceived to be an anti China grouping. But if it is not a military alliance, in which category do the military exercises of the Quad countries come? Given China’s aggressive nature and its dream of world domination as an imperialist power, sooner or later the Quad will have to develop into a security alliance. And in this, US and India will have to work hand in hand. After all, one of the defining partnerships of the 21st century—India-US—also has a well-defined enemy
Hardball diplomacy needs hard power
To defend the Indian Ocean and the Himalayas, and to play a prominent role in the Indo-Pacific and have a seat on the global table, India has no alternative but to achieve sophisticated high-level economic growth through its manufacturing and technological muscle.
In spite of the fact that service and consumer economy has been a major contributor to India’s GDP, it’s not good enough to meet the rising aspirations of the high-tech digital generation; nor does the service economy enable India to face the complex challenges of national defence, diplomacy, and international trade. Service economy does not create muscle power.
Tourism, call centres, delivery services, public education, and healthcare, etc, are very important, in fact indispensable, for the general welfare and prosperity of the people; but the Aatmanirbhar Bharat needs a strong and diverse technology and manufacturing base that can raise companies like Huawei, Samsung, and Taiwan Semiconductors Manufacturing Company (TSMC), for example.
Japan, South Korea, Taiwan, and later China grew their economic strength out of manufacturing, and the push to meet global standards made them exporting juggernauts. China’s share of global manufacturing is 28.7% compared to India’s 3.1%, according to Statista (2019). By and large, it’s manufacturing that enabled China to lift 850 million people out of extreme poverty since Deng Xiaoping opened up the country to the outside world. The Belt and Road Initiative rose out of its “Made in China” manufacturing might.
Without a vast, diversified and sophisticated manufacturing & industrial base, India would be always looking for the next generation of French Rafale jets or Russian S-400 missile system. And keep enviously looking at China’s Mars rover Zhurong and fearing its next move in the Himalayas.
India’s has the potential to, and must, become a globally competitive manufacturing and exporting colossal; and in the process, apart from absorbing surplus farm labour due to increasing agricultural mechanisation, it would create high paying jobs by utilising the brainpower of 1.5 million engineering graduates it turns out annually from its more than six thousand engineering and technology institutions. Hardly 20 percent get jobs for which they have been trained.
Manufacturing challenges scientists, engineers, and technocrats to keep developing new technologies and products through R&D for which there’s no end state. There’s always a new product to be developed to meet the competition. A culture of innovation and zero-defect perfection begins to develop in society.
Last year, a McKinsey Global Institute report, India’s Turning Point, posited that by 2030 India would need to generate at least 90 million new nonfarm jobs. Therefore, in order to “capture frontier opportunities, India needs to triple its number of large firms,” which numbering about 600 “account for almost 40 percent of total exports, and employ 20 percent of the direct formal workforce.”
Large companies (over $500 million revenue) are more innovative and productive than small or midsize firms. India needs to shed its socialistic-era fear of private sector big corporations, which must be allowed to become the engines of growth and high-paying employment. That said, in comparison with their corporate peers in major Asian economies, “India’s large firms have also not achieved their productivity or profitability potential,” according to the report.
India’s private sector needs more global exposure. Excessive protectionism diminishes competitive spirit and the need for innovation. Creative destruction is sine qua non for a free marketplace economy.
An atmosphere of intense marketplace competition, challenge and response, and struggle to scale up or perish must be created so that only the most efficient and best performing firms survive. The government’s recent decision to privatise more than 300 Public Sector Undertakings is a step in the right direction because it would open up huge spaces for the private sector to expand, compete, and innovate as well as create tremendous investment opportunities for Indian and global players.
To accomplish these goals India needs a new political-economic paradigm under which the Central government, the states, and the business sector need to be partners for economic growth. In the wake of the Covid-19 pandemic, the public-private sector cooperation has become absolutely essential as it is happening in the United States where the Biden government has stepped up to support critical industries from vaccines to advance manufacturing, space, and semiconductor chips. China, of course, has always supported its strategic companies, financially and diplomatically, to help them expand globally of which Huawei is a supreme example.
Being a democratic country, India cannot cherry-pick any particular company for the fear of crony capitalism; but it must select critical export-oriented manufacturing sectors for its “Make in India” programme and support them financially and diplomatically. Today exports need diplomatic support.
It is important to keep in mind that an exporting nation is diplomatically a stronger nation. International trade and commerce create diplomatic leverages, apart from spreading the nation’s culture. To have a global market share, a company has to be constantly innovative and price competitive, which in turn also helps the consumer at home. The United States, the European Union, and now China use their trading powers to advance their diplomatic goals.
Not least, to defend the Indian Ocean and the Himalayas, and to play a prominent role in the Indo-Pacific and have a seat on the global table, India has no alternative but to achieve sophisticated high-level economic growth through its manufacturing and technological muscle. Hardball diplomacy needs hard power.
Narain Batra, the author of ‘The First Freedoms and America’s Culture of Innovation’, and the forthcoming ‘India In A New Key: Jawaharlal Nehru to Narendra Modi’, is a professor of communications and diplomacy, Norwich University, Vermont. The views expressed are personal.
RADIA, PEGASUS AND BEYOND
Why has the Pegasus snooping scandal not created the same amount of buzz as the Radia tapes? Well, the obvious reason is that the Radia tapes actually had transcripts of alleged conversations (later, some were found to have been manipulated by FBI forensic experts). The Pegasus list so far is just that, a list of names alleged to have been snooped upon but no transcripts of conversations that took place. The second reason of course is that unlike the BJP which played up the Radia tapes to the hilt alleging that UPA was one big nexus of corrupt Luytens’ Delhi “privilegentia” that fixed ministerial appointments, the Congress has not been able to get the same kind of mileage out of the Pegasus list. Even though the firm that owns Pegasus NSO has confirmed that it sells its snoopware to only governments or vetted government agencies. That does give rise to a concern that if the snoopware was misused against Indians and it wasn’t by our own people then surely the Government of India should be worried as to which enemy state was spying on us? The fact that the only denial so far has been that there was no ‘unauthorised’ use of the snoopware has not reassured those whose names are on the list.
But already the government has moved on to other business. And so has the rest of Parliament, including the Congress. Rahul Gandhi, for one, does feel that the issue needs to be played up; he is leading from the front on this one, holding an impromptu press meet outside Parliament to highlight his concerns. But others in his party feel that the issue is not emotive enough to reverberate outside the capital. There is a feeling that everyone does it so what is so new about the Modi government doing the same, if indeed it did deploy the snoopware as is being claimed. Even if this was the case that “every government” has done this in the past, it has had a catastrophic impact on some of the governments accused. From R.K. Hegde to Chandrasekhar, several leaders lost their governments on such allegations. Even the UPA was affected by Radia tapes. But from the Opposition’s point of view, the Pegasus allegations have failed to make a dent on the Modi government. This has led a rethink within the Congress on whether to stay on the issue or raise something more emotive such as the economy, rising fuel prices and the contentious farm bills. This had Rahul Gandhi driving a tractor to Parliament to protest against the farm bills as well.
The issues raised by the Pegasus revelations are grave enough to have the French and Israeli governments institute an inquiry. What if they turn up something awkward for the current government? Will the government be under global pressure to react, for unlike the Radia tapes this is not confined within India›s borders? While the Pegasus scandal may not have the impact the Opposition would have been hoping for, the last word on this is not out yet.
Iron birds in grey skies: Age of drones
A forward-looking, harmonised and appropriate legal framework must be put in place to harness the benefits of drone technology, while protecting the common citizen from its illegal and criminal use.
As fireworks lit the sky for the opening of the Tokyo Olympics, something magical happened: A fleet of 1,824 drones in the air formed the official symbol of the Tokyo Games; the display then transformed into the Earth with coloured maps of continents. This heavenly performance was orchestra to the score of Imagine by John Lennon (reworked).
The drones utilised Intel’s “Shooting Stars” platform, and displayed the unprecedented power of the advanced technology with a breath-taking spectacle like none before.
The global commercial drone market size has been valued at $13.44 billion in 2020. Expected to be galloping at a compound annual growth rate (CAGR) of 57.5% from 2021 to 2028, the Covid-19 pandemic has accelerated this growth rate with a considerable increase in the utilisation of drone technology across various scenarios. UNICEF has said that more than eighteen countries have deployed drones for delivery and transportation purposes during the pandemic.
The terrorist organisation ISIS has been using drones for warfare and has posted videos from its successful hits online. The US government has been successfully using Predator drones to take out high value terrorist targets in Pakistan and Afghanistan. Recently the terrorists in Jammu and Kashmir upped their game by attacking an Indian Air Force technical airport with drones on 27 June, increasing instances of use of drones by anti-national elements and terrorists are being noticed causing widespread concerns.
The Drones have umpteen applications, some of which we have not yet envisioned.
Replacing hazardous works such as climbing tall structures, inspecting confined areas and traversing dangerous terrains. They are helping save lives during search and rescue efforts and are optimising energy production and delivery.
1. Enforcement: The drones are an important enforcement tool been used by the police in search and rescue, identification of victims, monitoring, analysis, and management of road traffic, or for monitoring pedestrian behaviour and accident prevention, to deal with illegal immigration, for border surveillance. In some US states, the police use drones for crowd control, in accidents, crime tracing, for the monitoring of crime suspects, and in search and rescue operations.
2.Commercial: As compared to on-ground vehicle deliveries, drone deliveries are more environmentally friendly and companies are drawn towards preparing themselves to offer drone delivery services. Some examples among others are Amazon and Google.
3.Environmental Protection: Another crucial and effective role of Drones are in protection of the environment, enforcement of environmental law and environmental crime prevention. In Africa drones have been used to deal with illegal poaching, which threatens the extinction of mammalian species, while in Italy, the police launched the “DroMEP” project, which involves the use of drones in environmental monitoring. Apart from Forest Monitoring, illegal logging, deforestation, and smoke detection to prevent forest fires, small drones can be used for low-cost data collection for biodiversity, natural disasters, and wildlife monitoring and assessment.
4.Agriculture: Agriculture has been most benefited from the usage of drones for different applications such as: mid-season crop health monitoring, irrigation equipment monitoring, and midfield identification. Data acquisition and analysis and for continuously monitoring fields for learning and developing modern farm management skills by the farmers.
5.Health and public: Low-cost drones with a camera on board have been used for public health purposes by detecting water spots to reveal mosquito breeding areas responsible for malaria.
6.Healthcare Logistics: Drones are facilitating the much needed requirement of modernising the last mile in medical deliveries and bridging gaps in access by providing regardless of location—just in time resupplies of key medical items.
In recent times, drones for healthcare have witnessed a range of landmark moments.
A. In India, Medicine from the Sky, a World Economic Forum initiative in partnership with the Telangana government and Apollo Hospitals, has also helped enable and scale drone-based medical deliveries in the region.
B. University of Maryland drone delivered a kidney that was successfully transplanted into a patient suffering from a serious neurological condition, the first ever drone delivery of a human organ.
C. In Rwanda more than 13,000 deliveries have been done by Zipline drones demonstrating their humanitarian potential.
D. Outside of Kigali, drones now carry 35% of blood supplied for transfusion.
E. In Ghana delivery of Covid-19 testing materials.
Globally, every state is acknowledging the use of drone technology as the need of the hour. India with vast and equally difficult geography and wide-raging healthcare disparities need to incorporate drone delivery solutions on a much larger scale.
Ranging from Boeing’s Phantom Eye with a 150-ft wingspan that cruises at 20,000m for days together to small hummingbirds, drones come in all shapes and sizes. Airplane-like with fixed wings, Helicopter-like with rotary blades, or balloon-like and insect or bird-mimicking devices.
There are different categories of drones, drones with different weights, control systems and else. They can be remotely piloted via a communication link from a ground station, with a smartphone, or utilise satellite communication; they can even be autonomous. Their speeds may vary from static hovering to more than 1,000 km/h. Drones can have varying flight ranges and endurance, from a few minutes to even months. They have evolved to use different power sources, including solar energy. Furthermore, they utilise different lift technologies from fixed wing drones which can take off in the same way as aeroplanes, to other types that can be launched through a rocket or catapult or even by hand; there are some which take off vertically using multi-rotor and helicopter type blades, the variety is immense and mind-boggling.
When an emerging technology does not fit neatly within a pre-existing regulatory scheme, regulators have the difficult task of creating new rules that do not conflict with existing ones. In the absence of an established record of risk assessment data, regulations of new and emerging technologies are largely based on ethical considerations, perceptions of risk, or their potential impacts. This is the case with regard to unmanned aerial vehicles, more commonly referred to as drones, and the potential threat they pose to manned aircraft and persons on ground. The Ministry of Civil Aviation recently released a draft policy for drones titled Drone Rules 2021 which will replace the Unmanned Aircraft System (UAS) Rules 2021, which came into force in March this year. The said policy focuses on more safety features and aims at addressing the concerns of India’s nascent unmanned aerial vehicle (UAV) such as self-certification, and non-intrusive monitoring, reducing the number of approvals required by applicants. From 25 the number of forms required are reduced to 6 with reduced fees for certain approvals. The draft policy also makes a push for ‘Made in India’ technologies, includes exemptions for research and development (R&D) activities, and envisions a drone trade body. On the aspect of safety—the policy proposes mandatory safety features like ‘No permission—no take-off’. It also mandates for drones to be equipped with a real-time tracking beacon and geo-fencing. This technology ensures safety as it will help in triggering real time alerts if and when the vehicles cross a certain boundary which are prohibited or under exempted list. The existing drone owners who don’t have these installed, will have to incorporate them within six months of the rules coming into effect. Interesting aspect introduced in the draft rules are provision for promotion of adoption and use of drones by creating a Drone Promotion Council which will facilitate:
(a) development of a business-friendly regulatory regime, including automated permissions;
(b) establishment of incubators and other facilities for the development of drone technologies;
(c) involvement of industry experts and academic institutions in policy advice; and
(d) organising competitive events involving drones and counter-drone technologies.
The new rules also provide for classification of drones based upon the maximum all-up weight including payload which remains unchanged and are as under:
(a) Nano drone: Less than or equal to 250 gm;
(b) Micro drone: Greater than 250 gm and less than or equal to 2 kg;
(c) Small drone: Greater than 2 kg and less than or equal to 25 kg;
(d) Medium drone: Greater than 25 kilogram and less than or equal to 150 kilogram;
(e) Large drone: Greater than 150 kg.
The draft rules are open for public suggestions until 5 August, 2021.
The INTERPOL has recently issued a detailed ‘Framework for Responding to a Drone Incident’ which provides guidelines for First Responders and Digital Forensics Practitioners on how to respond to a drone incident.
Once a drone is captured there is an opportunity to collect a wide range of forensic evidence. This may include the serial number of the frame of proprietary drones, which can lead to the person who purchased the machine, to physical cues like fingerprints of the pilot or other ground crew who put it in the air or handled its operations. It may also have connected devices that store data in an SD card and can be used as forensic evidence.
A camera onboard can be a source of rich information for investigation; other than the stored data, the recorded footage might contain not only visual information but metadata in the form of EXIF data. Exchangeable Image File Format (EXIF) is a standard that defines specific information related to an image or other media captured by a digital camera. It is capable of storing such important data as camera exposure, date/time the image was captured, and even GPS location.
Analysis of electronic evidence for forensic purposes consists of discrete stages such as acquisition, examination, analysis, and presentation. Throughout the process, the chain of custody of the evidence must always be updated whenever it changes hands and its integrity must be secured at all times.
There are two primary sources of evidence in a drone related incident viz. The Drone, and Drone Remote Controllers (RC.)
Data on drones can include the one stored on different data storage mediums, including the drone itself, removable storage mediums, mobiles devices, the cloud, and so on. In addition, there is important residual data held on the drone RC which includes: (a) Telemetry data related to the drone’s flights such as GPS, (b) Velocity, (c) direction, (d) altitude, (e) motor speeds, (f) Time and Date (from GPS signal), and (g) user inputs.
Then maybe Associated Devices that have been paired or connected to the controller such as a mobile handset or tablet. Which can provide IMEI of the handset or unique hardware ID of the device.
Additionally, it may hold important information about Registered User Accounts containing email address or registered account name that has been created with the drone manufacturer.
Communication logs would contain signalling data which logs the signal strength between the drone and the RC. These and other related artefacts can be of immense importance interesting the origin, motive targeting and tradecraft of the adversary.
Law has a tightrope to walk, on one hand it has the task of adapting and rising up to ever-changing technologies, on the other, not to be a hindrance to innovation and growth.
The future is a grey sky filled with iron birds, which will be doing almost everything, from surveillance to saving lives and assisting with pest control to cleaning oceans.
Criminals, terrorists and disruptive elements will not be behind too; from contraband transport to targeted assassinations, attacks on critical infrastructure to dissident protests in the sky, and violation of individual privacy to advanced cybercrime, drones will be used by adversaries to the fullest.
It is, therefore, imperative that a forward-looking, harmonised and appropriate legal framework is put in place to harness the benefits of this wonderful emerging technology, while protecting the common citizen from its illegal and criminal use.
Brijesh Singh, IPS, is an author and IG Maharashtra. Khushbu Jain is an advocate practising before the Supreme Court and a founding partner of law firm Ark Legal. The views expressed are personal.
CONCOCTED NOISE ON HUMAN RIGHTS CANNOT STALL INDIA-US PARTNERSHIP
US Secretary of State Antony Blinken is all set to visit India this week, during which he is expected to discuss the Quad—specifically how to counter the threat posed to the world by China—the situation in Afghanistan and the terrorism emanating from Pakistan. However, a State Department spokesperson’s statement that Blinken will also raise human rights issues with New Delhi, has got people of the woke variety excited, without realizing that at best any such talk will be a sideshow, a token mention under pressure from lobbies, some of which are even backed by Pakistan and China. The focus will be primarily on countering China, and India’s role in this scheme of things. Amid the cacophony over human rights, it must be pointed out that India has never claimed to be a perfect democracy. India is as flawed or as “perfect” as any other major democracy. Nothing has happened in the last seven years of the Narendra Modi government for India to be losing its democratic values. The whole issue is political, where a narrative of intolerance and authoritarianism has been spun for the last seven years by the “entitled”—and their ecosystem—who have been tossed out of the power structure and have become increasingly irrelevant. In fact, the power structure itself is more democratic now because of the wider representation on top from those outside of the “entitled” zone. The citizens of this democracy are as powerful as ever in exercising their will, and know how to keep their rulers under check. Institutions too are resilient enough to correct the excesses. The flaws are, of course, innumerable, but then which democracy is perfect? The American version, with its difficult race relations, its BLM riots, its mess of an election process which leaves millions feeling disenfranchised, its President’s refusal to hand over power even after losing an election? Hence, the picture being painted globally by mainstream foreign media—severely burdened by its left-liberal baggage—and some foreign policy analysts, with active help from some of those from inside this country itself, is a caricature of the ground reality. Add to this the fact of the rabid Left joining hands with the Wahhabis in the US, a manifestation of which are the so-called Progressives in American politics, and we have the concoction of a narrative whose ultimate goal seems to be ensuring a regime change, disregarding the verdict of the people in the world’s largest democracy.
The consensus in India is that Blinken will make a huge mistake if he barks up the “human rights” tree. Lecturing will not be tolerated. The backlash will be severe to the unfair criticism, jeopardising India-US strategic partnership. This is exactly what the Chinese want, to drive a wedge between the two nations. However, there is no reason to believe that he doesn’t understand that, whatever be the Democratic Party’s domestic compulsions, where the radical Left-Wahhabi fringe is threatening to become mainstream. The US recognises the threat that China is to the civilized world and the need to contain it. In fact, to come across as tough on China is excellent domestic politics for Joe Biden, given the negative sentiments in his country about India’s neighbour.
Considering Xi Jinping’s dangerously aggressive overreach, where he wants to be the emperor of all that he sees, military means may be the only way of containing him. So a conflict is likely, sooner or later—a conflict where the Quad will have to play a central role. Hence, much to their disappointment, the woke public is likely to discover that the “human rights” talk is at best a sideshow, confined to token statements from both nations. No amount of spurious noise can stall a partnership whose time has come, and Blinken’s India visit is testimony to that.
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