INDIA'S AMBITIOUS TECHNOLOGICAL PURSUITS: A MOONSHOT APPROACH TO DEVELOPMENT
Introduction
- India’s space research in the 1960s faced skepticism but has achieved remarkable success.
- A critical question arises: How do these achievements coexist with poverty and destitution?
Historical Context
- India’s space research began before the establishment of ISRO in 1969.
- Public investments in diverse sectors demonstrated India’s commitment to advanced technologies.
- Visionaries like Vikram Sarabhai saw technology as a means to accelerate development.
Challenges to India’s Moonshot Development
- Critics pointed to heavy reliance on public investment.
- Some argued India should focus on labor-intensive industries.
- The long gestation period of new technology necessitates public funding.
Public Sector Support and Private Enterprise
- Public sector support laid the foundation for private enterprise.
- Indian professionals trained in public universities have assumed global leadership roles.
- India’s strategic importance in various sectors has grown.
Inequalities and Development
- India’s development strategy faltered in reducing inequalities and ensuring social development.
- Land redistribution and asset ownership remain skewed.
- Underinvestment in basic education perpetuates social inequalities.
Impact of Inequalities on Industrial and Economic Growth
- Lopsided domestic demand hinders growth in manufacturing.
- Entrepreneurship remains limited to a narrow social base.
- Contrasts with East Asian countries that achieved a more egalitarian social structure.
Reinstating State Support
- India must recognize the importance of state support in building technological and industrial capabilities.
- Industrial policy should be reinstated to compete in fast-growing economic fields.
- The US and China are providing significant government support for their industries.
Inclusive Growth through Education
- Accessible higher education is crucial for inclusive growth.
- Empowering the dispossessed with social and human capabilities is essential.
- Achieving this will be equivalent to a lunar takeoff in economic progress.
Conclusion
- India’s ambitious development strategy combining technology and state support has been partially successful.
To reach higher levels of development, India must address inequalities and promote inclusive growth while continuing to invest in technological capabilities.
Tracking India's growth trajectory
Introduction:
The conventional way to assess a country’s economic situation is through quarterly and annual GDP growth rates. India’s Q1 FY24 data presents a nominal growth rate of 8% and a real growth rate of 7.8%.
This growth story includes an uptick in agriculture and services, with talk of sustaining close to a 6.5% growth rate for the fiscal year. However, a closer look reveals nuances in the data.
Calculating GDP:
- GDP growth rate calculation involves complex statistical choices. The NSO used the income approach rather than the expenditure approach, resulting in a significant discrepancy.
- The price deflator adjusts for inflation, but in this case, deflation from falling commodity prices and a COVID-19 base effect overstates real growth.
Inflation and Depreciation:
- The sustainability of the proposed inflation rate is questioned due to rupee depreciation against the dollar, driven by capital outflows and rising crude oil prices.
- The 3% fall in diesel consumption in August hints at potential economic slowdown.
Revenue from Taxes:
- A K-shaped pattern in tax revenue emerges, with weaker direct tax collection compared to strong indirect tax revenue.
- This discrepancy is unexplained and should have grown in line with the nominal growth rate.
Government Expenditure:
- Narrowing revenue streams suggest forced austerity measures by the government to control the budget deficit and interest rates, making substantial growth from government expenditure unlikely.
A Nuanced Approach:
- In conclusion, a meticulous analysis of India’s Q1 FY24 economic data reveals potential over embellishment in the reported growth narrative.
- Discrepancies between income and expenditure approaches raise questions about its veracity. Inflationary adjustments and fluctuations in tax revenue signal a cautious trajectory.
- Concerns about the agriculture sector and fiscal constraints suggest a more restrained picture than initially portrayed.
India’s economic performance shows signs of resilience but requires a nuanced and critical assessment for the future.
A light-bulb moment for the Indian fan market
- Introduction
- India’s ceiling fan market, a staple for comfort in various climates, is experiencing changes driven by energy efficiency policy imperatives and regulatory shifts.
- These changes are essential for India’s goal of reducing harmful emissions and achieving sustainable growth in the face of climate change.
- Ceiling fans, used by 90% of households, represent a significant portion of household electricity consumption, making them a critical focus for energy efficiency improvements.
- The ‘Star Rating’ Program
- The Bureau of Energy Efficiency (BEE) made the ‘star rating’ program mandatory for ceiling fans in May 2022, transitioning from a voluntary program established in 2009.
- However, the adoption of ‘5-star’ fans, while energy-efficient, faces price sensitivity issues in India’s market.
- To address this, Energy Efficiency Services Limited (EESL) is planning a demand aggregation program to sell 10 million ‘5-star’ ceiling fans, aiming for a transformation similar to the LED lamp success story.
- Steps to a Sustainable Transformation
- Technology-Agnostic Policy: A policy that covers multiple fan technologies is more cost-effective in the long run.
While traditional induction motors are rugged but less energy-efficient, brushless DC (BLDC) motors meet the ‘5-star’ performance benchmark but have high import dependencies.
A technology-agnostic policy should allow manufacturers to offer different technologies, promoting competition and cost-effective market transformation.
- Balancing Price Reduction and Quality: Pressure on price reduction during the LED lamp program led to lower-quality products with higher failure rates. Transitioning from traditional fans to energy-efficient ones should prioritize quality to build consumer trust.
Market actors should determine the trajectory of price reduction rather than rigid enforcement.
- Boosting Domestic Manufacturing: India should focus on developing high-quality domestic manufacturing capacity for high-efficiency fans.
Leveraging its massive domestic market, India can achieve economies of scale for finished products and components, potentially expanding into the export market. Updating Indian quality and performance standards to align with international ones is crucial for competitiveness.
- Strengthening Standard and Labelling Programs: A significant portion of India’s ceiling fan market remains unorganized, posing challenges to the adoption of new technologies.
BEE and State-designated agencies should monitor the market, ensuring authentic energy performance labels reach consumers, eliminating non-compliant models, and reducing barriers to selling energy-efficient models.
- Conclusion
- Ceiling fans are undergoing a significant transformation driven by energy efficiency goals.
- Energy-efficient fans not only benefit vulnerable populations by providing critical cooling services with lower electricity bills but also play a central role in India’s clean energy transition and economic growth.
A holistic approach, encompassing technology diversity, quality control, domestic manufacturing, and robust labeling programs, is essential for the sustainable transformation of the ceiling fan market in India.
ANALYZING INDIA'S EFFORTS TO REDUCE OIL IMPORT DEPENDENCY THROUGH BIOFUELS AND ETHANOL BLENDING
Introduction
- International oil prices are on the rise, nearing $100 per barrel.
- India’s import dependence on crude oil reached a record high of 87.3% in FY2023.
- The country spent 25.8% of its import bill on crude oil and products.
- India’s economy has the world’s third-largest demand for crude and products.
- Biomass supplied up to 20% of India’s total primary energy supply over the last decade.
- The Global Biofuel Alliance, formed under India’s G20 presidency, aims to convert biomass into clean bio-energy for various applications and enhance energy security.
Ethanol Blending Program
- India launched its ethanol blending program in 2003 but faced slow progress.
- In 2022, after concerted policy efforts, India achieved 10% ethanol blending in petrol.
- Plans to increase blending to 20% (E20) by FY25-26 were accelerated by five years.
- Ethanol producers supplied nearly 430 crore litres of ethanol in 2022.
- The demand for 20% blending is set to increase ethanol demand to nearly 1,100 crore litres by 2025.
- Achieving the 2025 target requires investments and a reliable feedstock supply.
Petrol Demand and Blending
- About 60% of India’s petrol demand comes from two-wheelers.
- Four-wheelers make up the remaining 40%, with an expected increase in demand.
- A 2021 study indicated a desire for four-wheelers among urban respondents.
- A NITI Aayog report forecasts over a 45% growth in petrol demand by 2030.
- While blending can reduce petrol demand, it alone won’t significantly address the issue.
Biofuels and Flex-Fuel Vehicles
- Electric vehicles (EVs) face challenges related to minerals, materials, and components.
- Biofuels and flex-fuel vehicles (which run primarily on biofuels) could be viable options.
- India recently unveiled its first flex-fuel vehicle.
- First-generation ethanol production relies on food crops (sugarcane and grain).
Second-generation (2G) technologies for ethanol production have immense potential.
- Slow investments in 2G facilities pose challenges in meeting ethanol demand.
- Concerns about the food-energy-water nexus and climate change must be addressed.
Policy Focus
- Reducing overall petrol consumption and private demand for petrol should be the primary policy focus.
- Promoting EVs in public transit and implementing urban vehicle usage pricing can facilitate the transition to higher biofuel usage.
- A well-planned strategy for transforming India’s mobility sector can help reduce the import bill and support the automobile industry’s transition to EVs.
Conclusion
- As international oil prices surge, India’s oil import dependence remains a critical concern.
- The country’s efforts to increase ethanol blending and explore biofuels are steps in the right direction.
- However, addressing the challenges of feedstock supply, technological advancements, and sustainability is essential.
- A holistic approach that combines biofuels, EVs, and reduced private petrol consumption can enhance India’s energy security and economic stability while mitigating environmental impacts.
