On July 22, 2021, the Union Cabinet approved the Production Linked Incentive (PLI) scheme of Rs 6,322 crore for the Speciality Steel sector to create over 5.25 lakh jobs and attract Rs 39,625 crore worth of investment. This is yet another instance of Prime Minister Narendra Modi’s ‘Make in India’ initiative, setting the tone for an Aatmanirbhar Bharat and thereby reducing the dependence on the import of steel to fulfill the country’s needs. There is a cap as far as the incentive is concerned at Rs 200 crore per entity. This is a demand-driven scheme and it will fulfill the country’s need for steel and create multiple export opportunities.
Specialty Steel is used in some form or the other in air-conditioners, fridges, solar energy structures, high strength/wear-resistant products like construction equipment, armour bodies, specialty rails used in high-speed rails, alloy steel wires used in crankshaft walls, tyre tracks and of course electrical steel used in transformers or electric motors. The Modi government’s ambitious PLI scheme in Speciality Steel to attract an additional investment of Rs 40,000 crore will give employment to over 5.25 lakh people of which 68,000 will be by way of direct employment. The duration of the scheme will be for five years— from 2023-24 to 2027-28.
With a budgetary outlay of Rs 6322 crore, the scheme will lead to a capacity addition of 25 MT. Speciality Steel has been chosen as the target segment because out of the production of 102 million tonnes of steel in India in 2020-21, only18 million tonnes of value-added Steel/Speciality Steel was produced in the country. Apart from this, out of 6.7 million tonnes of imports of steel in 2020-21,4 million tonnes worth of import was of Specialty Steel alone, resulting in forex outgo of Rs 30,000 crore. By becoming Aatmanirbhar in producing Speciality Steel, India will move up the steel value chain and come at par with advanced steel making countries like South Korea and Japan.
It is also expected that the Speciality Steel production will become 42 million tonnes by the end of 2026-27. This will ensure that 2.5 lakh crore worth of Speciality steel will be produced and consumed in the country, which would otherwise have been imported. Similarly, the export of Specialty Steel will be over 5.5 million tonnes as against the current 1.7 million tonnes. The benefit of this scheme will accrue to both big players, as in, integrated steel plants, and to the smaller players (secondary Steel players) too.
Specialty Steel is value-added Steel wherein normal finished steel is worked upon by way of coating, plating, heat treatment, etc., to convert it into high value-added steel which can be used thereafter in various strategic applications like Defence, Space, Power, Automobile Sector and Specialized Capital Goods. There are 3 slabs of PLI incentives, the lowest being 4 per cent and highest being 12 per cent. The PLI scheme for Specialty Steel will ensure that the basic Steel used is ‘melted and poured’ within the country, which means that raw material (finished steel) used for making Specialty Steel will be made in India only, thereby ensuring that the scheme promotes an ‘end to end’ manufacturing within India.
The Modi government’s Production Linked Incentive (PLI) scheme for the food processing industry to support the creation of global food manufacturing champions commensurate with India’s natural resource endowments in the international markets with an outlay of Rs 10900 crore. The food processing sector in India encompasses manufacturing enterprises in all segments, from micro to large industries. India has a competitive advantage in terms of resource endowment, a large domestic market and scope for promoting value-added products.
Achieving full potential of this sector would require Indian companies to improve their competitive strength vis-à-vis their global counterparts in terms of the scale of output, productivity, value addition, and linkages with the global value chain. Supporting food manufacturing entities that seek expansion of processing capacity and improving brand equity abroad to incentivise the emergence of strong Indian brands is the key motive of PLI.
Increase in employment opportunities of off-farm jobs, ensuring remunerative prices of farm produce, and higher incomes to farmers are the other benefits of PLI.
For the promotion of Indian brands abroad, the scheme envisages grants to the applicant entities for in store branding, shelf space renting, and marketing. Scheme will be implemented over a six year period from 2021-22 to 2026-27. The scheme will be rolled out on an India basis and shall be implemented through a Project Management Agency (PMA). The PMA would, inter-alia, be responsible for appraisal of applications/ proposals, verification of eligibility for support, and scrutiny of claims eligible for disbursement of incentives. The scheme is “fund-limited”, i.e. cost shall be restricted to the approved amount. The maximum incentive payable to each beneficiary shall be fixed in advance at the time of approval of that beneficiary. Regardless of achievement/ performance, this maximum shall not be exceeded.
The implementation of this scheme would facilitate the generation of processed food output of Rs 33,494 crore and create employment for nearly 2.48 lakh persons by the year 2026-27 which is excellent news. The PLI scheme would be monitored at the Centre by the Empowered Group of Secretaries chaired by the Cabinet Secretary. The Inter-Ministerial Approval Committee (IMAC) would approve selection of applicants for coverage under the scheme, sanction, and release of funds as incentives. The concerned ministry will prepare an annual action plan covering various activities for the implementation of the scheme. A third-party evaluation and mid-term review mechanism would be built into the programme.
Outgo on incentives in next six years will be Rs 10,790 crore, increase in sales will be at Rs 1.20 lakh crore, incremental sales in 6th Year will be Rs 33,494 crore, cumulative additional investment will be Rs 6057 crore, increase in exports in 6 Years will be Rs 27,816 crore, increase in employment at end of Year-5 will be 2.5 lakh people per annum.
Apart from food processing ,South Korean company Samsung Electronics, Taiwan’s Pegatron and Foxconn and Singapore’s Flex are looking to either set up new units or expand the existing units to avail benefits under the PLI scheme for electronics. These companies have either received approval or are in the final stages of negotiations to benefit from the Ministry of Electronics and Information Technology’s (MeitY) production linked incentive (PLI) scheme, for making mobile phones and certain other specified electronic components. What exactly is a PLI scheme for electronics? Well, as a part of the National Policy on Electronics, the IT ministry had notified a scheme which would give incentives of 4-6 per cent to electronics companies which manufacture mobile phones and other electronic components such as transistors, diodes, thyristors, resistors, capacitors and nano-electronic components such as micro electro-mechanical systems.
According to the scheme, companies that make mobile phones which sell for Rs 15,000 or more will get an incentive of up to 6 per cent on incremental sales of all such mobile phones made in India. In the same category, for companies that are owned by Indian nationals and make such mobile phones, the incentive has been kept at Rs 200 crore for the next four years. The scheme will attract big foreign investment in the sector, while also encouraging domestic mobile phone makers to expand their units and presence in India. The PLI scheme will be active for five years with financial year (FY) 2019-20 considered as the base year for calculation of incentives. This means that all investments and incremental sales registered after FY20 shall be taken into account while computing the incentive to be given to each company.
For the first year, the total incentive to be given has been capped at Rs 5334 crore, while for the second and third years it has been kept at Rs 8064 and Rs 8425 crore, respectively. In the fourth year, the incentive will be hiked substantially to Rs 11,488 crore, while in the fifth and final year, the incentive to be distributed has been capped at Rs 7640 crore. The total incentives over five years have thus been kept at Rs 40,951 crore for the electronics sector. Which companies and what kind of investments will be considered? All electronic manufacturing companies which are either Indian or have a registered unit in India will be eligible to apply for the scheme. These companies can either create a new unit or seek incentives for their existing units from one or more locations in India.
Any additional expenditure incurred by companies on plant, machinery, equipment, research and development, and transfer of technology for the manufacture of mobile phones and related electronic items will be eligible for the incentive scheme. However, all investment done by companies on land and buildings for the project will not be considered for any incentives or determine the eligibility of the scheme. Apart from new players, companies such as LG India— which already have manufacturing units in India— have also shown interest in the scheme. In the budget-category phone segment also, companies such as Lava, Dixon, and Karbonn have applied to give a further boost to Prime Minister Narendra Modi’s vision of an empowered, aspirational and transformative India.
Beyond the technicalities, the PLI scheme is aimed at reducing the compliance burden, further improving the ease of doing business (EODB), cutting down logistical costs for various industry segments, and is expected to increase the country’s production by $520 billion in the next five years. In the current year’s Budget, about Rs 2 lakh crore was earmarked for the PLI scheme with a focus on job creation. An average of 5 percent of production is given as incentive. Over the past 6-7 years, several successful efforts have been made to encourage ‘Make in India’ at different levels and the PLI scheme is at the forefront of indigenisation.
PM Modi has on umpteen occasions, stressed the need to take a big leap forward in terms of self-reliance, as well as to increase the speed and scale of local manufacturing, by creating multi-modal infrastructure to reduce logistics costs and constructing district-level export hubs.
The government, Modi said, believes that its interference in everything creates more problems than solutions and “therefore, self-regulation, self-attesting, self-certification are being emphasised”.
“We have to attract cutting-edge technology and maximum investment in the sectors related to our core competency,” the PM added.
Underlining the difference between the earlier schemes and those of the current government, the Prime Minister said that earlier, industrial incentives used to be open-ended, input-based subsidies, but now they have been made targeted and are performance-based through a competitive process. About PLI benefits,13 sectors have been brought under the ambit of this scheme and it would benefit the entire ecosystem associated with these sectors. With PLI in Auto and Pharma, there will be very less foreign dependence related to auto parts, medical equipment and raw materials of medicines. The energy sector will be modernised in the country with the help of advanced cell batteries, solar PV modules, and Specialty Steel, and the PLI for the textile and food processing sectors will benefit the entire agriculture sector as well.
Even during the pandemic last year fresh investment of over Rs 1300 crore was seen in the mobile manufacturing and electronic sectors, creating thousands of new jobs. On a different note, the United Nations has declared 2023 as the International Year of Millets and more than 70 countries came forward to support India’s proposal and unanimously accepted it in the UN General Assembly. This is a big opportunity for our farmers, which will get added traction, thanks to the PLI scheme in the food processing sector.
Again, IT Hardware is estimated to achieve Rs 3 lakh crore worth of production in the next four years and domestic value addition is expected to rise from the current range of 5-10 per cent to a far higher range of 20-25 per cent in next five years. Similarly, Telecom equipment manufacturing will witness an increase in value addition of about Rs 2.5 lakh crore in the next five years alone. In the Pharma sector, there is an expectation of more than Rs 15,000 crore investment in the next 5-6 years under PLI, which will lead to Rs 3 lakh crore by way of added Pharma sales and a massive rise in Pharma exports of over Rs 2 lakh crore. Further, trust has increased in Indian medicines, medical professionals, and equipment across the world, especially after the development of Covaxin, produced jointly by the Indian Council of Medical Research (ICMR) and Bharat Bio-Tech, in a fitting tribute to Indian scientists and of course the political courage of conviction of PM Modi, who has always encouraged scientific temper. It would be apt to conclude with a quote by Prime Minister Narendra Modi who recently said: “Time for phrases like ‘Hota Hai-Chalta Hai’ is now a matter of the past. India is growing rapidly and the world has high expectations from us. We cannot let this opportunity go”.
The writer is an economist, national spokesperson of the BJP, and the bestselling author of ‘Truth & Dare: The Modi Dynamic’. The views expressed are personal.
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NON-CRICKETING REASONS FORCE KOHLI TO QUIT TEST CAPTAINCY
Virat Kohli, the country’s most successful Cricket Captain had to give up his position due to politics within the Board of Control for Cricket in India (BCCI). It is apparently an array of the non-cricketing reasons that have compelled him to step down, and it would become a very difficult job for the administrators of the game to find his replacement. Kohli made this public declaration of relinquishing his Captaincy after first informing his own teammates and Head Coach Rahul Dravid besides speaking with BCCI secretary Jay Shah. The announcement has left Cricket fans shell-shocked and the entire Cricketing fraternity throughout the world has hailed King Kohli as one of the best in the game and someone whose contribution in making India, amongst the topmost cricket-playing nations is an acknowledged fact. While it is for sports writers and experts to figure out how the team shall be rebuilt, there are reports that Kohli was likely to be served a show-cause notice for publicly contradicting the BCCI president Sourav Ganguly on the issue of giving up the T-20 Captaincy, before the team embarked for the South African Tour. It was to pre-empt the show cause notice that he took this drastic decision. It goes without saying that after the exit of Ravi Shastri as the Indian Coach, Kohli had very little support left, and it would have been a matter of time that he would have quit.
Dravid is a legendary all-time great of the game but his and Kohli’s personalities are totally apart. There has also been a lot of politics within the Board where the West Zone has regained control of matters and has the final say in major decisions including team selection. The complexion of the Indian team shows how certain players have made it to the squad due to regional bias that has triumphed over merit. Kohli had made the Indian side into a fighting force that was feared by all Cricketing countries. In the pre-Kohli era, whenever team India lost on a foreign tour, fans would accept the outcome. However, after Kohli took over the leadership role, the expectations were always high and the recent loss to South Africa was described by everyone as “an upset”. This was Kohli’s influence over the game and his teammates.
Sunil Gavaskar, perhaps the greatest Indian batsman ever, feels that giving up Captaincy would help Kohli to concentrate on his batting. His opinion is that many more centuries would now flow from Kohli’s willow in the next five or six years of Test Cricket he shall play, given his exceptional fitness levels. India has to look for a new leader who can lead from the front and earn the respect of all the teammates. Rohit Sharma and KL Rahul are the front runners but one cannot rule out R. Ashwin to be in the reckoning also. Gavaskar is of the view that Rishabh Pant would make a very good Captain. However, the Board must seriously consider Ajinkye Rahane even though he has not been in the best form of his life. His Captaincy in Australia had been extraordinary and from the current crop of players, he would be a very good choice during this transitional phase till a new leader can be identified.
Just a ‘security breach’ or a sinister plan?
Unsurprisingly, after the inexplicable dereliction of duty by Punjab administration and police, defiance of all the existing protocols and sheer disrespect of the Constitutional authority, the Congress regime made a mockery of the incident.
The unprecedented breach in the security of the Prime Minister of India has left the entire nation shocked and aggrieved. It is difficult to believe that the cavalcade of the world’s most popular leader gets stranded for more than twenty minutes over a flyover merely ten kilometers away from the Pakistan border. Historically speaking, India has never witnessed a security lapse of such a magnitude where busloads of protestors brazenly obstruct the PM’s convoy. The casual and high-handed manner in which the security of the PM was handled is even more shameful and raises serious doubts upon the intention of the Congress government in Punjab.
The absence of the Chief Minister, DGP and Chief Secretary of Punjab for the customary reception of PM, false assurances of route clearance given by DGP and refusal by CM Channi to get on the phone for resolving the issue goes fundamentally against the ethos of democracy and is sufficient to raise a cloud of suspicion. Unsurprisingly, after the inexplicable dereliction of duty by Punjab Administration and Police, defiance of all the existing protocols and sheer disrespect of the Constitutional authority, the Congress regime made a mockery of the incident. While the situation demanded an immediate and prompt response from the CM as the security of the supreme elected head of the state was under threat, he preferred to engage himself in whataboutery. He candidly questioned the need for opting the land route despite being well aware that the weather conditions were not conducive for a safe flight. Is it not enough to suggest that the Congress desired the Prime Minister to meet the same unfortunate fate as that of first CDS Late Gen. Bipin Rawat and thirteen others who succumbed to a plane crash recently?
The other Congress leaders reduced the security lapse to a narrow prism of another political stunt, completely putting a blind eye to the potential threat faced by the PM from global terrorists for enjoying an overwhelming popularity across the world. However, the glaring gaps in security must not be seen as an isolated event rather it just seems to be a tip of an iceberg. It reeks of a larger sinister plan to create unrest in Punjab and the rest of India. It would not be absurd to say that the Congress has a predominant role in fueling up this conspiracy against the nation. According to media reports, the DGP of Punjab got in touch with senior members of the government and conveyed his inclination to use ‘force’ to disperse the protestors but he was told to exercise restraint. Without paying any heed to the fact that the security of the PM is sine-qua-non to maintain stability in the country, he was further ordered to not do anything which could put the state government in a fix. One of the leaders of the protestors has publicly admitted that he was informed by the SSP of Punjab Police about the route of the PM’s convoy whereas the existing norms do not allow anyone to disclose this fact. It undoubtedly hints towards the mala-fide intentions of the Congress government to create another riot against Sikhs with an aim to whitewash its own blot of 1984 killings.
It is an established fact that Congress can stoop to any low to retain its power. The security personnel deployed at the spot where PM’s cavalcade was stuck were seen enjoying tea with the protestors. What were the reasons that compelled the celebrated Punjab Police to act so loosely? This shameful display of connivance of Police officials with the protestors cannot be made possible without political patronage from the Congress leaders in power. In the 1980s, Congress supported extremists to dethrone Akalis and dissociate them from Sikhs in order to gain power. In the process of achieving its political goals, it set the peaceful environment of Punjab on fire as mayhem surrounded the entire region. As a result, Punjab witnessed mass killings, terrorist attacks and separatist insurgency, ultimately leading to the mysterious ends of many of its leaders including the assassination of Prime Minister Late Indira Gandhi. Sadly, Congress leadership doesn’t want to learn from its own doings in the past and has restarted echoing the voices of secessionist elements. The blatant appeasement of the fervid proponents of Khalistan by Congress who created ruckus in the recent farmers’ agitation sends a clear message that it will do anything to retain power, even if it means another partition of India.
Moreover, it cannot be a coincidence that three terrorists were arrested from around the same sensitive region soon after the incident. A few videos surfacing over the internet which were uploaded a year ago eerily reflect the similar events which transpired during the security breach. The FIR registered against 150 unidentified persons after the incident does not mention the security breach rather it only deals with the obstruction in any public way attracting a penalty of meagre two hundred rupees. Thus, the aftermath of the incident is self-explanatory and indicates Congress’ deep plunge into the murky waters of depravity and moral turpitude.
Once a prominent leader of Jana Sangh, Balraj Madhok had famously remarked that if Congress is malaria, Communists are a plague. This comparative analysis of both the ideologies has taken a new turn in the contemporary parlance. The recent turmoil created by Congress suggests that it has unhesitatingly adopted the Communist’s infamous goal of anarchy. This thirst of grabbing power at the cost of compromising PM’s security makes the situation even more worrisome and uncannily resembles a deadlier pandemic for a vibrant constitutional democracy like ours. Though this incident has unraveled many nefarious agendas of the Congress party but a plethora of questions still remain unanswered. It cannot be outrightly denied that the protestors and police were certainly hand in gloves with those at the top levels acting in cahoots. The people of Punjab have witnessed misgovernance and complete collapse of law and order in the past one year and hence, they will take the Congress party to task by voting them out of power in the upcoming elections.
Writer is the Co-Incharge BJP, Jammu & Kashmir Affairs. Views expressed are the writer’s personal.
Congress leaders reduced the security lapse to a narrow prism of another political stunt, completely turning a blind eye to the potential threat faced by the PM from global terrorists for enjoying overwhelming popularity across the world. However, the glaring gaps in security must not be seen as an isolated event rather they just seem to be the tip of the iceberg. It reeks of a larger sinister plan to create unrest in Punjab and the rest of India.
DESERTIONS PUT YOGI ON THE BACKFOOT IN UP
Desertion by several OBC leaders from the Bharatiya Janata Party on the eve of the Uttar Pradesh Assembly elections could spell trouble for Chief Minister Yogi Adityanath and come in the way of his second consecutive term. In fact, the momentum seems to be shifting towards his principal challenger, Akhilesh Yadav in the run-up to the crucial polls that have been described by several political pundits as the semi-final before the finals in 2024. The desertions by prominent leaders such as Swami Prasad Maurya, Dara Singh Chauhan, Dharam Singh Saini, Avtar Singh Bhadana, Madhuri Verma and Roshan Lal Verma amongst others, also reflects that there were a large number of issues that remain unaddressed by the Yogi government. It is evident that the government was perhaps thriving because of high voltage publicity and divisive politics.
The BJP has tried to underplay the decision of these leaders amidst claims that at least 100 more prominent functionaries from the State may similarly leave the party in the near future. What should be worrying for the ruling dispensation is that its political narrative so far, could even damage the Narendra Modi brand. Modi is the undisputed political leader in the country and since his name and performance is being also projected as plus points for the BJP, a major problem could arise in the event the Saffron Brigade loses the plot in the most populous state of the country. In view of the unfolding developments, it would not be surprising that the double-engine slogan of the party, to lay emphasis on the development of the state, due to the close coordination between the Centre and the Yogi government may be amended in order to shield the Prime Minister. The outcome of the UP polls would have wide ranging ramifications and could even impact the Presidential elections later this year.
If the BJP is unable to secure majority of its own, it would be very difficult for the central leadership of the party to decide on a person of its first choice for the top position. The choice could narrow down to someone who is also acceptable to sections of the Opposition or States, which otherwise are opposed to the BJP and its allies. Therefore, the BJP shall have to pull a rabbit out of its hat to upset the existing calculations which seem to be projecting an easy win for Akhikesh, notwithstanding the overwhelming projections in favour of the ruling party in most opinion polls. This is also a wake-up call for the BJP Parliamentary Board and the Sangh Parivar that they should stop taking things for granted and believe only in their own caste formulas, rather than the emerging situation on the ground. In the past three Assembly polls, Uttar Pradesh has given a convincing mandate to whichever party won. In 2007, it was for Mayawati, in 2012 it was for Akhilesh and in 2017, for the BJP. Therefore, if the trend continues, then it would again be a repeat of a one-sided election in favour of whoever wins ultimately. The reason for these desertions is that the Yogi government has been engaged in hyping the issues close to its agenda while ignoring the concerns of those who are leaving or have left. The most obvious inference is that in pursuance of Kamandal politics, the BJP underestimated the threat from Mandal politics. The consequences of these resignations, if they go against the interests of the party, could put a question mark over Yogi’s ability to lead. He is desperate and to send a polarizing signal, he recently talked about the contest between 80 percent who favoured development, and 20 percent who were against it.
The figures alluded to the religious ratio within the State where Hindus constitute 80 percent and the Muslims 20 percent. Yogi’s critics have urged the Election Commission to take notice of this loaded and communal reference by the Chief Minister which allegedly constituted violation of the Model Code of Conduct. However, Yogi is undeterred and knows that if he wins, he would truly emerge from the shadows as a leader who could be in the reckoning for a top slot in the post-Modi era. It is equally true that if Akhilesh Yadav wins the 2022 Assembly polls, he would alter the Opposition’s current equations regarding a collective plan to contest the 2024 Parliamentary polls since he would be a claimant for the leadership of the coalition as well. Interesting times are here and the Uttar Pradesh saga could spring up many more surprises as the election process progresses.
Is the Arab world ready for a post-oil future?
In terms of preparing for a post-oil future, GCC governments will need to curtail public services, benefits, and jobs even further, while also curbing opportunities for rent-seeking in the private sector.
Since the 19th century, oil has been one of the world’s major energy resources. Oil meets 33% of global energy demand, but oil demand may begin to decline sooner than expected due to renewable resources trends around the world and technological advancements. Arab countries in the Gulf region are beginning to take precautions through diversification as they need to transform their oil-dependent economies. The issue of economic diversification has taken on new urgency in the Persian Gulf countries. The global economic slowdown induced by the coronavirus pandemic has pushed the price of Brent crude oil from $64 a barrel in early 2020 to $23 a barrel in April 2020.
For decades, GCC countries have been concerned about the long-term viability of their hydrocarbon revenues. In the long run, oil and gas reserves will deplete. Bahrain and Oman are the most vulnerable, with reserves expected to run out within the next decade for Bahrain and within the next 25 years for Oman. In the short term, GCC countries have already begun to tap into $2 trillion in financial assets amassed over decades and invested in sovereign wealth funds for future generations. The International Monetary Fund (IMF) predicted that unless GCC countries implemented significant fiscal and economic reforms, their conserved wealth would be depleted by 2034.
DIVINE SANCTION AND A CHALLENGE
Natural resources abound in the Gulf Cooperation Council (GCC) countries. They have been using this wealth to improve the lives of their citizens, developed infrastructure, constructed modern cities and plan for a future without oil, they have made significant progress in their objectives.All have Human Development Index scores above 0.8, putting them ahead of all other Middle East and North African (MENA) countries and on par with some European Union countries (EU).
The GCC countries, on the other hand, have struggled to make progress on the third goal: diversifying their economies. Despite their good intentions, mirrored in their national visions and economic development plans, the GCC economies remain pig-headedly keen about hydrocarbons.Thus,for economic diversification to be sustainable, other essential ingredients must be present, such as moderate government spending, increased non-oil exports, and even more foreign direct investment (FDI).
While GCC members have made significant headway over the last decade, oil and gas production continues to account for more than 40% of gross domestic product (GDP) in most countries, excluding the United Arab Emirates (UAE) and Bahrain. Nonetheless, oil and gas royalties directly fund a large portion of the region’s other economic activities, such as construction and infrastructure development. For Bahrain, oil accounts for a minor share of GDP because the region’s oil reserves have been depleted; yet, oil continues to underpin economic activity indirectly through transfers and expenditure from neighbouring nations. Consequently, though efforts have been made to diversify government finances, hydrocarbons account for 70% or more of overall revenue in all countries except Saudi Arabia (68%) and the United Arab Emirates (UAE) (36%). Nonetheless, many of the diverse revenue streams in those two countries are supported by petroleum economic activities.
The Gulf countries do manufacture goods and services within their borders, principally for domestic usage. These embody Agricultural products, manufactured items, and business services are examples of them. However, domestically produced goods and services would not be able to replace the massive volumes of imported goods and services required to support the region’s 27 million natives and 29 million expats.
OIL IN INTERNAL POLITICS
Generally, advanced democracies and the presence of inclusive institutions boost economic growth. Yet, in some instances, economic growth can impede democratisation. “Rentierism” is one of the most well-known theories on the subject.Rentier states generate money by collecting rent from foreign governments, businesses or individuals. They do not require tax revenues because their primary job is to disperse incoming foreign resources.
Furthermore, rentier nations are financially independent and autonomous from society, contributing a little portion of external rent earnings to domestic spending while retaining the majority of the wealth. Despite considerable criticism, the link between authoritarian Arab regimes that sell oil and their citizens lends validity to the notion. However, as the post-oil era approaches, Arab states are attempting to escape the trap of rentierism.
THE SAUDI PARAGON
The oil sector contributes 28.7 percent of Saudi Arabia’s GDP and accounts for 80 percent of its exports. These figures demonstrate the significance of economic diversification in Saudi Arabia.
Saudi Arabia’s audacious economic makeover might be successful. To prepare for a Post Oil future, the Kingdom announced its “Vision 2030” with economic diversification as its primary economic goal.
Saudi Arabia has tried to enhance its private sector, unleash the potential of non-oil industries, and expand non-oil exports with this goal in mind.
It will not be easy to attain this target quickly, which is why the kingdom has tightened its laws and begun forcing foreign corporations to relocate their Middle East operations to Saudi Arabia.To attract new investment and generate new employment, the Saudi government and government-backed institutions will no longer sign contracts with multinational firms that do not have a regional centre in Saudi Arabia in early 2024.This decision heightened tensions with rival countries such as the United Arab Emirates (UAE). Some UAE-based investors described the decision as “obviously geared” .
The UAE, like Saudi Arabia, has increased attempts to attract overseas companies in order to restructure their economy and reduce their reliance on oil.
This appears to be one of several competitors in the region as many Arab oil-exporting countries attempt to modernise their economies as conflicts of interest appear to be inescapable.
SAUDI AS A MOVER AND SHAKER
Saudi Arabia as predicted would never be a mover and shaker again. The decline is irreversible, because “oil-rich” is a word that will become as obsolete as “carbon copy.” Arab producers’ oil revenue has dropped by more than two-thirds, and it will never recoup. So far, the decline has been mostly driven by a sharp drop in oil prices; demand has steadily increased, but oil production has consistently increased faster; nonetheless, an outright collapse in demand is also on the horizon.
As the climate situation worsens, motor vehicles (which account for half of all oil consumption worldwide) are shifting to electricity. The United Kingdom and France have officially pledged to cease all new automobile sales with internal combustion engines by 2030, which means that no one will buy a new petroleum-fueled car after 2025. Many other countries are debating similar measures.
The unprecedented stability of these nations without a single regime change among the six “oil-rich” monarchs of the Arabian peninsula in the last 50 years – has been solely predicated on the traditional rulers’ ability to buy the consent of their subjects. When wealth disappears, so does stability. Even Saudi Arabia’s unity, established by force less than a century ago, may not survive the shift.
THE ROAD AHEAD
In terms of preparing for a post-oil future, GCC governments will need to curtail public services, benefits, and jobs even further, while also curbing opportunities for rent-seeking in the private sector. Economic diversification policies must take genuine rent-seeking behaviour into account. GCC governments will need to have an open dialogue with their citizens about the financial restrictions they confront and the options available to them in the future, and then redraw the parameters of the governing social compact in a way that is perceived as equitable and fair. This renegotiation will require both political elites and regular individuals to give up some of their rights and privileges in light of diminished hydrocarbon reserves and lower prices that are predicted to persist and sink further in the long run. GCC countries have established free zones, innovation parks, and entrepreneurial centres outside the boundaries of their rentier-based private sectors over the last two decades. Nonetheless, all of these things are primitive.
The coronavirus outbreak, combined with reduced global oil prices, has intensified pressure on Gulf governments to accelerate economic diversification initiatives. GCC policymakers must look beyond the urgent need to slash expenditures and instead focus on laying the groundwork for a thriving and sustainable post-hydrocarbon economy. Economic and political pressures have already compelled Saudi Arabia, the United Arab Emirates, and Bahrain to lift their three-and-a-half-year embargo on Qatar, paving the way for further regional economic integration.
WILL REFORMS BE ENOUGH?
Firstly, economic modifications are required since the economies of the Gulf Cooperation Council (GCC) members are heavily reliant on oil, and resources will need to be reallocated among other sectors.
Secondly, the transition will be political, because oil is used to bolster authoritarian governments and quiet democratic demands in many oil-exporting Arab states.
Petroleum countries would be impacted and pushed to undergo economic and political reforms. Oil has long been a key element in Middle Eastern politics, and the world’s post-oil futures may have significant ramifications in the region and global politics as a whole.
As rentier regimes make strides in preparation for a post-oil future, ultimately time will tell whether they are strong enough to protect authoritarian regimes. Oil-exporting Arab regimes may face a fresh and more robust ‘Arab Spring’ in the twenty-first century if they continue to focus primarily on the economic side of things and fail to implement institutional reforms promptly.
THE OPPOSITION HAS FAILED THIS NATION
The Indian Opposition has failed the people. Bereft of ideas and somewhere having the ruling syndrome in them, they have become shadow ruling parties oblivious of the key issues and problems of the people.
It is indeed a critical economic situation where the opposition could not play the constructive role and if they did they were not impactful. This is just not only in the post-2019 situation but even the nation can trace it to their activities since Nov 8, 2016, when the demonetisation was announced. They did raise their voice but were unable to show the nation the way from which it could really move forward.
The opposition was on the back foot because they were in a dilemma whether they should whole-hog oppose the move or accept it. Their feeble voice could not impress that they were speaking for the people. The government communication was forceful and opposition only mewed against it.
Lakhs of people were standing in the queue, mostly from the lower economic strata. A bit better were able to replace their currency notes at discount giving rise to new middlemen. Many of the parties were in dilemma themselves as they had enough cash were suffering from the same “black money” syndrome. Strangely enough, till today, nobody has been able to explain what black money is. Is it the ill-gotten money through drug trafficking, gun-running and other illicit activities or just merely not paying tax on the income.
Suffering from guilt complex most opposition parties raised feeble, incoherent charges only strengthening the arguments of their rival among the people. The opposition did little to the farmers’ issue though it allowed some of them to seek new alignment.
Similarly, on issues of toll, entry fees to cities like Delhi, the Opposition remains silent on excessive toll charges on highways, high parking fees and train fares. It is oblivious that such illicit charges add to prices.
It appears that the opposition has stopped having rational thinking being in fear that they also have been ruling and “might” be at fault.
They even did not raise the issue of whether drastic economic decisions like note-ban should be taken unilaterally. They did not question the constitutionality of the move that had shaken the country. The government could always be on the right foot, but it is the opposition’s right to challenge each move. They even did not say that just in 2016, the economy had started taking a turn when it all ground to a halt.
Soon after in July 2017, the GST was brought in changing the entire gamut of the tax structure. Forget about their opposing it most state finance ministers felt they were running the country and took a decision that had again unshaken the foundation of the economy. It was surprising that a party that had blocked the GST when they were in opposition would be pressing for it. And the opposition parties once again showed their ‘ruling’ instinct by keeping the petroleum fuel out of the GST ambit. The people started taking the brunt as did the economy as soon after that both the states and the centre continued to hike taxes every other day. Today the opposition is trying to rake up inflation, price rises, difficult living conditions as the key election issues during the state election campaigns forgetting it is their doing.
The pandemic exposed how brittle the Indian economy is. While transportation cost went on going through the roof, people in a panic left their working places to reach back to the safety of their homes. They could not ride the trains that were cancelled in a few hours’ notice and nobody explained the reasons. The opposition party governments were virtually oblivious of the needs of about 18 crore migrants. Almost all be it Maharashtra, Karnataka, Andhra, UP, Rajasthan, Bihar or any other ruled by different parties behaved atrociously with the migrant workers.
So many people perished in the queues and a new phenomenon that came to light was that bank men themselves not only suffered the ordeal but also became middlemen themselves. They could not raise the voice for the small and medium industry, though the big ones also suffered, who had to bear a severe brunt.
Pandemic exposed the severe weaknesses of the health sector. Either it was too inadequate, too expensive and chaos extending from ambulances to cremation grounds. The chinks of every opposition government came to the fore.
Amid pandemic as the NEP came, the opposition virtually gave it a pass without discussion. The degree course duration is increased to four years to attune it to the US system. The nation does not know that the US “degree mills” –largely institutions of not so repute – provide degrees on a platter. Let us recall the opposition stalwarts like socialist George Fernandes or Congreess’ Tarakeshwari Sinha who opposed linking graduation degree to a job as it delayed their employment by two to four years in the 1960s.
The nation is committing similar follies now. They did not try to find out the fault lines. Not to blame anyone but it has many, particularly the stress on PhD, terming it as research. Even at present many syllabi are for 2.5 years but given a degree after three years. The opposition neither read the NEP nor tried to study its implication. But teachers know that students are unable to pay even moderately charged government universities. Apart, now students would remain away from the job market for one more year and technically there would be fewer jobless.
Despite a painstaking effort, any good product can have faults. The NEP is faulted for trying to align Indian education to that of the West. No educationist explains why India should have to increase terms to suit the western needs. Let India have a 14 to 15-year education with one-year masters and alongwith degrees making diplomas more meaningful. The advantage is that more courses could be studied simultaneously. The West could follow us.
The West is discriminatory. They admit, say for the dental course, a student with Indian bachelor’s degree-BDS, to the masters course, because the Indian pays to them, but denies jobs because “Indian BDS is inadequate”. The opposition has to rake this up to correct the NEP.
Let us bring back the opposition glory of yesteryears when there used to be vibrant critics even within the ruling Congress. The ruling NDA may be doing fine but an analytical opposition could sharpen that approach. The New Year can begin with this resolve.
Seldom known causes of climate change
Several factors have created an unsustainable world. The very individuals who cause major global warming have barely understood this phenomenon. Most are in denial and do not wish to understand it, either deliberately or otherwise.
Spurred by a colonial mindset and slave mentality, imitative lifestyles and conscious consumerism are on the upswing. So is a new throw-away culture that is snobbish and imitative. A colonial mindset exists where all gains and successes are measured in terms of GDP, and there is an attendant emphasis is on a living, lifestyle and diet that is not in sync with either our environment or geography. Lives are based on splurging resources, money, and showering love and affection on animals more than anyone else which are not in sync with available resources and their base.
All these factors have created a world that is unbalanced, unliveable, and unsustainable. The very individuals who cause major global warming have barely understood this phenomenon. Most are in denial and do not wish to understand it as well deliberately or otherwise.
This is a society that uses goods only once. Consequently, consumer goods are not designed for long-term use or even reuse, in some cases. Our society likes to travel and that too in places which are only to be seen not to be travelled and despite they still feel unlucky even with all the attendant luxuries. Covid-19 has been one of the biggest lessons for mankind. The pandemic, shutdown of social and economic activities led global carbon dioxide emissions to drop by 6.4% or 2.3 billion tonnes. People have adapted to the new normal and that means things will be back to square one, pretty soon.
A large percentage of global warming originates from Fast Fashion, the use of pets, suburban living, and travel. Still, it is hardly mentioned, understood, or acknowledged by our society. Incidentally, they are the same ones who scream about climate change and lead protests as well mostly online allowing off-liners to gaze in amazement. The fashion industry affects greenhouse gas emissions both directly and indirectly. It is the second-largest polluter in the world, after the oil industry. There are three main drivers of the textile industry’s global pollution impacts- dyeing and finishing (36%), yarn preparation (28%), and fibre production (15%).
The fashion industry accounts for 10 percent of global carbon emissions which is more than the emissions for all international flights and maritime shipping, combined. Carbon dioxide emissions in the manufacture of polyester are three times more than those for cotton. By 2030, such emissions from the manufacture of textile alone are projected to increase more than 60 percent.
Fast fashion contributes to greenhouse gases emissions and pollutes the water, air, and soil. This means that as an associated consequence we will use more energy for cleaning carbon emissions. Over its lifespan, a pair of jeans emits the equivalent of 33.4 kg of CO2. This is the same as driving 100 km in an ordinary car or watching around 250 hours of TV on a plasma big-screen television.
More than a third of those emissions originate from fiber and fabric production. Cutting, stitching, and finishing the jeans account for 8%. Packaging, transportation, and retail account for 16 percent of the emissions, with the remaining 40 percent coming from consumer usage (primarily washing the jeans) and landfill disposal.
The textile dyeing industry depletes water sources and poisons them since 72 toxic chemicals end up in waterways. They dump untreated water which contains harmful substances including lead, mercury, arsenic and more.
60 per cent of the material used for making clothes is plastic including polyester, acrylic and nylon textile. These fabrics are in demand as they are durable, lightweight, and economical but they shed microplastics with each wash. Laundry alone releases half a million tonnes of microplastics into the ocean every year.
Heaps of discarded clothes either go to landfills (around 85 per cent) or are burned. One garbage truck of clothes is sent to landfills or incinerated every second and yet only 1 percent of clothing is recycled. Non-vegetarian diet creates a lopsided world and widens the gap between polluters and non-polluters in terms of being culprits and also in terms of being at the receiving end.
The use of animals as food and feed has an undeniable role in releasing GHG. Animals feed on large quantities of straw from grains, rice, and wheat. In return, they produce only a small amount of meat, eggs, and dairy products. There is a loss of 90 percent energy when food is transferred from one trophic level to another. This means that the energy required in meat production is high when compared to direct consumption of plant products.
When equated to other meats and animal products, beef production releases five times the amount of greenhouse gas emissions. Studies suggest that beef requires 28 times more land, 11 times more water, and produces 6 times more reactive nitrogen when compared to the average of other categories.
Meat production contributes to global warming at a much higher rate than the cultivation of grains and vegetables. Meat-eaters have twice the carbon footprint of vegans. Livestock and their by-products account for at least 32,000 million tons of carbon dioxide (CO2) per year or 51% of all worldwide greenhouse gas emissions. Cows produce 150 billion gallons of methane per day. Methane has a global warming potential of 86 times that of CO2 and is 25-100 times more destructive than CO2 over a 20-year time frame.
Livestock is responsible for 65% of all human-related emissions of nitrous oxide – a greenhouse gas with 296 times the global warming potential of carbon dioxide. It stays trapped in the atmosphere for 150 years. Methane emissions from manure and the resources used to produce one calorie of meat products are high.
An increase in the consumption of meat also burdens the freshwater resources of the world. The water footprint of meat from cattle (15 400 m 3 /ton as a global average) is much higher than the footprints of meat from sheep (10 400 m 3 /ton), pig (6000 m 3 /ton), goat (5 500 m 3 /ton) or chicken (4 300 m 3 /ton). The global average water footprint of chicken eggs is 3 300 m 3 /ton and cow milk amounts to 1000 m 3 /ton.
The beef/cattle rearing industry uses one-third of the total volume of water requirement and the dairy sector uses up another 19 percent. Water extraction and processing require energy. Such an energy-intensive society will produce more greenhouse gases.
Pets have a close relationship with GHG. The more animal-loving you are, the more are you a polluter. There are 470 million pet dogs and 370 million pet cats on the planet, and they all add to climate change.
An average-size cat generates 310kg of Carbon dioxide equivalent (CO2e) per year, an average-size dog produces 770 kg of CO2e per year, and a large dog produces 2,500kg of CO2e per year. Over 64 million tons of greenhouse gases are released only because of America’s pet cats’ and dogs’ eating habits.
Pets feed on about a fifth of the world’s fish and meat. One kilo of beef production generates 1,000 kilos of carbon dioxide. Every year, 49 million hectares of agricultural land are used to produce dry pet food for cats and dogs. The pet food industry generates higher greenhouse gases each year than do countries like the Philippines.
Incidentally, there is no lifestyle more harmful to the environment than splurging urban and suburban habits in urban sprawl. Urban sprawls have the potential and capability to alter the heat balance of urban areas and add to global greenhouse gases.
80% of global GDP is produced in urban areas and results in higher income, consumption, and associated levels of emissions. In fast-growing cities, a considerable share of the global carbon budget will be used up for the capability building of new infrastructure. Land-use changes increase emissions when cities expand and natural vegetation makes way for city grounds.
Cities cover just 3% of the global land surface but account for 58% of the world’s population. Emission savings linked to higher densities, connectivity, accessibility, and land use depend on compact structures. Only a few cities like Copenhagen and Amsterdam offer examples that make good use of such structures and present low emission lifestyles.
The impact of and role of travelling in increasing emissions are understood but underestimated. Travel actually generates huge amounts of carbon. The travel industry accounts for 8 percent of global carbon emissions and tends to grow at a rate of 4% annually. It is the need of the hour to promote carbon offsetting to compensate and reduce travel emissions. Visitors from high-income countries contribute to a majority of this footprint.
The use of plastics in napkins and reusable menstrual cups are other additions. Plastic cutleries, brochures, and tickets keep adding to it. Estimates suggest that around 12 billion pounds of carbon dioxide (CO2) can be saved and the digital sector has a huge potential to cut down global emissions in half by 2030.
Ironically, people who raise the greatest concern, who shout the loudest, whose voice is shrillest best, and all those who cannot defend themselves of their lifestyle are the ones who are the greatest emitters and polluters. But in an age of perception management and for a society riddled by infodemics, should this be surprising?
The writer is a strategic thinker, educationist, earth scientist, author, mentor, and advisor to various governments. Views expressed are the writer’s personal.
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