Public A Round-up1

03 Foreign solutions for Indian problems?

08 Needed: Key legal andgovernance reforms 10 The key to growth:

A digital ecosystem

07 Why India is upping regional engagement

inside

February 2015 | Vol 2 | Issue 5

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Viewpoint

Love thy neighboursPrime Minister Narendra Modi has made his foreign policy the showcase of his first months in office. The strategy seems to have two centres of gravity: energy security for the country and the need to balance China’s regional ambitions.

Already energy-hungry, if India is to recover its economic mojo, it will need even more energy. Unfortunately, India manages to generate only 160 GW of electricity out of its installed capacity of 254 GW. This is largely because India is dependent on coal-fired thermal plants, but coal is in short supply. So short that stockpiles are at a 25-year low.

Hydro and nuclear power are critical to India’s future.

Both, Bhutan and Nepal, have huge hydropower potential. Bhutan’s untapped hydropower potential of 24 GW makes it key to India’s energy security. Nepal, meanwhile, has tried but failed at implementing large hydropower projects despite great access to water resources. An agreement with India’s Satluj Jal Vidyut Nigam to develop the 900 MW Arun III hydropower project at a cost of $1.04 billion has been inked. The plant, expected to start generation by 2020, will export three-fourths of its output to India.

Finally, the visit to Australia had uranium supplies at the top of the agenda.

As for China, India is keeping a wary eye on it. Modi’s visit

to Tokyo before China’s President Xi Jinping’s visit to India upgraded the relationship with Japan. In the pipeline are technology transfers and defence cooperation. What’s more, Japan has committed $35 billion to building manufacturing skills, creating smart cities, building high-speed rail and cleaning of the Ganga, among other things.

This edition of ‘Public Affairs Round-up’ analyses what India’s rejuvenated foreign policy will mean for the economy and the Asian power equilibrium.

The economy, however, needs more than regional cooperation. There are key legal and governance reforms crying out to be implemented. That’s what we look at through an infographic that explains why they are critical.

What’s critical also is a digital roadmap for the country. To that end, the unveiling of the Rs 1,13,000 crore ‘e-Kranti’, or ‘Digital India’, initiative is important. The world’s most ambitious broadband project, it envisages broadband highways connecting 2.5 lakh villages by 2017. More than 2,50,000 government schools will get wi-fi and broadband, with textbooks and other academic material delivered electronically.

Read on to know what it means for the country as well as the challenges it faces.

Ashraf Engineer, Vice-President – Content & Insights, MSLGROUP, India

ashraf.engineer@mslgroup.com

MSLGROUP is Publicis Groupe’s strategic communications and engagement company. We advise clients on all aspects of their multi-stakeholder communication strategies. Our 100+ offices span 22 countries today. Add our affiliates into the equation, and our reach expands to 46 countries.

MSLGROUP India is the nation’s largest PR and Social Media network. Comprising two leading brands–MSL INDIA and 20:20 MSL–MSLGROUP India combined includes 14 offices across 8 key-cities, 550+ professionals partnering with 220+ clients, national and global.

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Focus

Soon after taking charge, Prime Minister Narendra Modi completed his strategic engagement with the world’s three largest economies – Japan, China and the US – which collectively account for approximately 40% of the global GDP. This was part of a larger international reach-out that included neighbouring countries.

Beginning with Bhutan, his first foreign visit, and then Nepal, Modi underscored his ‘neighbours first’ policy. Clearly, this was Modi’s way of projecting strength in India’s backyard since China does not carry the strategic weight that India does with smaller countries in the region.

The foreign policy of the new government accentuates three actionable elements: economic engagement, security cooperation to hedge against China’s intentions, and energy security

Eye on ChinaChina is trying to reshape the geopolitics of the Indian Ocean through increased naval presence in island states, especially Sri Lanka and the Maldives.

Foreign solutions for Indian problems?

Nirav Khatri, manager – research, MSLGROUP in India

Global engagement could well be the foundation of Narendra Modi’s national economic programme

Raising concerns over this, R Hariharan, a retired Indian army colonel and an associate at the Chennai Centre for China Studies, told Reuters: “For the first time, Chinese submarines are being made part of the People’s Liberation Army in the Indian Ocean region fleet operation.”

A Chinese media report said that Beijing is planning 18 naval bases across Sri Lanka, Pakistan, Myanmar and other places in the western and southern Indian Ocean.

The Senkaku Islands dispute between Japan and China in the East China Sea, resulting in hostile encounters and heated diplomatic exchanges, was the outcome of Chinese projection of naval power.

Energy securityIndia generates only 160 GW of electricity out of its total installed capacity of 254 GW. A little over half of its energy needs are met by coal-fired thermal plants. However, inadequate supply of coal means that generation falls short of capacity and the energy shortfall worsens.

A power ministry official, expressing concern at India’s low coal stockpile of 7.2 million tons, told the UK’s ‘Daily Mail’: “This is the lowest in 25 years.”

Modi is seriously considering alternatives such as hydro and nuclear power to reduce paralysing shortages. With an installed nuclear power capacity of 5.3 GW, an ambitious plan to reach 63 GW by 2032 is being drawn up. For this, the supply of uranium is critical.

Raising concerns over this, R HariHaran, a retiRed indian army colonel and an associate at the Chennai CentRe for China studies, told Reuters: “For the first time, Chinese submarines aRe being made part oF the People’s libeRation army in tHe indian ocean region Fleet operation.”

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Asian collaborationThe choice of Modi’s first port of call, Bhutan, was guided by its strong relations with New Delhi and worries about China intensifying efforts to win over Thimphu.

India wants to counter this through support for hydro power projects that would benefit both countries. India is already the largest recipient of Bhutan’s single largest export commodity – electricity. Also, Bhutan’s untapped hydropower potential of 24 GW makes it key to India’s energy security.

To this end, Modi laid the foundation stone of the 600 MW Kholongchu hydroelectric power station. More importantly, both countries reiterated their commitment to produce 10,000 MW of hydropower through a joint venture by 2020.

Nepal has been unsuccessful in implementing large hydropower projects despite great access to water resources. India and Nepal share amicable relations and the latter’s hydropower projects can only be harnessed through the former’s cooperation. Modi’s visit acted as a springboard for this.

Simultaneously, a $1 billion soft credit line was extended for Nepal’s infrastructural development.

During the SAARC summit, Modi’s second visit to Nepal, an agreement with India’s Satluj Jal Vidyut Nigam Ltd to develop the 900 MW Arun III hydropower project at a cost of $1.04 billion was inked. The plant, expected to start generation by 2020, will export three-fourths of its output to India.

The new Indian government seems to be keeping a wary eye on China, sending it a strong multi-level message through its strategic regional engagement.

In this regard, Modi’s trip to Japan before China’s President Xi Jinping’s visit to India was transformational – it elevated the relationship with Japan from important to strategic. The Tokyo Declaration will boost, apart from economic engagement and technological transfers, defence cooperation through the strengthening of maritime security across the Indo-Pacific region and regular joint naval exercises with Japan and the US. This is a must for shaping a healthy Asian power equilibrium.

Furthermore, Japan’s $35 billion commitment over the next five years towards building manufacturing, developing skills, creating smart cities, building high-speed rail lines and urban subways, the cleaning of the Ganga, clean energy and rural development is profound.

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President Pranab Mukherjee’s Vietnam visit just days before the Chinese Premier’s visit to India too was a careful diplomatic manoeuvre.

Though the meetings with the Chinese were warm, nothing much came out of them. China doesn’t need a special push for investments like India does and border issues have made it tough for India to take its assurances seriously.

According to ‘The New York Times’, “China has the ability to channel billions of dollars into Indian infrastructure and manufacturing projects, allowing Mr Modi to pursue the jobs-creation agenda that was at the heart of his campaign.”

Almost as a consolation, the two nations agreed to strengthen railway infrastructure through redevelopment of stations, the setting up of a Railway University in India and the training of personnel. They also agreed to develop two industrial parks in India, one for power equipment and another for automobile components.

Finally, though China has shown interest in India’s nuclear energy programme, there are regulatory and safety issues with Chinese reactors that need to be dealt with.

Solidarity with the USModi’s visit to the US was aimed at improving the underperforming relationship with the world’s largest economy. Indo-US bilateral trade stands at $100 billion; Modi knows that his strategy of manufacturing-led export growth cannot succeed without greater access to US markets.

A meeting with top business leaders preceded the US-India Business Council committing $42 billion over the next two-three years.

From an energy perspective, both countries decided on an inter-agency contact group to sort out outstanding liability and technical issues to fast-track the 2005 civil nuclear deal implementation.

Improving Asia-Pacific tiesAfter attending the India-ASEAN Summit and the India-East Asia Summit in Myanmar, Modi went to Australia for the G20 summit, becoming the first Indian prime minister in 28 years to visit the country.

Australia is keen to deepen strategic ties with India. During his September visit, the Australian prime minister sealed a civil nuclear deal to supply uranium along with more coal and natural gas. India is the first to buy Australian uranium without being a signatory to the nuclear non-proliferation treaty.

Also, the Adani Group’s – which is said to have backed Modi during the general election – interest in coal mines is well known. Australia’s coal reserves can last for nearly 1,000 years and it exports nearly 7,000 tonnes of uranium annually.

Critics, however, argue that the uranium deal compromises safety standards and can trigger a disaster if the concerns are not addressed immediately.

Modi received a combination of warmth and reverence in Fiji after his Australia trip. Given its location in the South Pacific Ocean, the 14 islands, including Fiji are important because they lie at the centre of a key, resource-rich maritime route. Therefore, a strong hold on Fiji is important. While India lagged in giving attention to Fiji for years, China set up diplomatic missions in almost all the islands and expanded its naval bases in the region.

Dutourdumonde Photography/Shutterstock.com

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Fiji’s location is also significant for India to track the pride of its space programme – the Mangalyaan Mars orbiter.

Modi, who came to power on the promise of reviving the economy, has so far presented improved foreign relations as his showcase achievement. While critics have pointed out that his government has not done enough on the reforms front so far, it could well be that Modi sees international collaboration as the underpinning of his national economic agenda.

India’s energy security imperative• Energy security is a top priority for the

manufacturing sector and the ‘Make in India’ initiative. India has 13 million youths entering the job market every year and manufacturing would be a key employment driver.

• India lost out on producing more than 15 billion units of electricity due to non-availability of coal in the last two fiscal years.

• Exploring Bhutan and Nepal’s untapped hydropower potential should be a priority.

• Australia’s potential to export 7,000 tons of uranium every year would help nuclear power generation.

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Why India is upping regional engagementSince assuming office, Prime Minister Narendra Modi has made sev eral foreign trips, concentrating on neighbours such as Bhutan, Nepal (twice), Japan and Myanmar

Indo-US bilateral trade is valued at Rs 6,00,000 crore. Greater access to US markets is necessary to realise the strategy of manufacturing-led exports

The visit to secure energy supplies in the form of uranium and coal

Apart from energy cooperation, India wants China’s claim over Bhutan’s territory thwarted

The objective is to keep a check on growing Chinese influence in the country

The engagement is intended to check on China’s growing naval presence in the APAC region

A combined commitment of Rs 3,30,000 crore from both nations to accelerate economic growth through infrastructure development, augmenting manufacturing capabilities, exchange of technical knowhow and skills enhancement

Modi’s two visits put India ahead of China in developing Nepal’s energy industry and securing its own supply

US Japan & China

Nepal Bhutan

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Aust

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Needed: Key legal and governance reformsCreating a sustainable legal apparatus that delivers timely, just decisions is the cornerstone of inclusive, equitable growth. So is governance focused on efficient deli very of benefits. MSLGROUP identifies the key reforms that seek immediate attention from the ministries concerned

Tribunals

Challenges • The 29 tribunals operating outside the court structure face distinct challenges: lack of

functional autonomy, difficulty in finding judicial persons with the right expertise. • This leads to unsatisfactory dispute resolution and negates the benefits of having tribunals

as an alternative to the courts for quick resolution

Recommendations• Tribunals, appellate tribunals and similar bodies need greater uniformity to their functioning • Tribunals must draw up their own budgets, raise funds to enable operational autonomy from

parent ministries • Use technology to monitor functioning, judgments and pending positions

Public sector

governance

Challenges • Bureaucratic control• Lack of financial, technical expertise at management level• Lack of enough transparency, accountability• Excessive political interference

Recommendations• Repeal all statutes establishing non-banking public sector units (PSUs). Transfer

shareholding to companies incorporated under the Companies Act, 2013, and classified in accordance with the business of PSUs under consideration (operating companies)

• Transfer government shareholding in all operating companies to a common parent company for better supervision, operational efficiency

• Provide PSUs with a level playing field with other market participants

Reducing government

litigation

Challenges • Ill-conceived appeals, slow judicial machinery result in exponential increase in number

of cases

Recommendations• Implement National Litigation Policy at the earliest to reduce courts’ burden

Challenges • Forest laws like Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of

Forest Rights) Act, 2006, have failed to create awareness among forest dwellers about their rights

• Indian Forest Act, 1927, perpetuated through the Wildlife (Protection) Act, 1972, and the Forest (Conservation) Act, 1980, has vice-like grip over forest land

• Much of the tussle between local populations and forest officials is due to the 1927 act

Recommendations• Repeal Indian Forest Act and its replacement through an expansion of the rights-based

Forest Rights Act• Introduce uniform procedure to settle claims to forest land, irrespective of its category• Reduce forest officials’ arbitrary powers, encourage village councils’ participation in

delivering justice

Forest laws

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Challenges • Varied interpretation of ‘worker’ and ‘employee’ in various acts results in different wage

limits and applicability of benefits• Unequal application does not provide necessary protection

Recommendations• Draft a single definition for ‘employee’ and ‘worker’• Standardise wage limits under various laws for simpler access to benefits

Labour laws

Challenges • Bills such as Prevention of Corruption Amendment Bill and Prevention of Bribery of Foreign

Public Officials Bill have serious drafting defects• Lokpal and Lokyukta Act, 2013, does not empower Lokpal to tackle corruption at state level

Recommendations• Common definition of corruption as an offence for Indian and foreign bribery• Protection to whistleblowers• Clarification of powers of Lokpal and Lokayukta to facilitate thorough investigation and

prosecution

Challenges • Minority schools imparting quality education exempt from the Right To Education (RTE)

Act, 2009, because of judicial interpretation of the term ‘minority’• Such schools need not reserve 25% of seats for students from economically weaker

sections

Recommendations• Obligation under Article 21A should be extended to government-aided schools, even

‘minority’ institutions• This helps in extending the applicability of the RTE Act far beyond present coverage

Right to Education

Anti-corruption legislation

Sources: www.openthemagazine.com, Vidhi Centre for Legal Policy report ‘Towards the rule of law: 25 legal reforms for India’, www.livelaw.in, Equitymaster, www.kpmg.com/IN/en/IssuesAndInsights, www.niticentral.com, indiatoday.intoday.in

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Viewfinder

The key to growth: A digital ecosystem

More than three-and-a-half decades ago, author and futurist Alvin Toffler portrayed the post-industrial era as the Information Age in his book ‘The Third Wave’. He predicted that the development and distribution of information will become the nucleus of productivity and power. Sure enough, information (some would term it as ‘data’) is at the centre of politics, business, sports, virtually all human activity.

The internet is the medium of this change. Though internet penetration has crossed 300 million users, India is still a laggard in terms of embracing government-delivered benefits through it. Bridging the digital divide is essential, especially at a time of increasing awareness about citizens’ rights and the expectations they have from the government.

Taking note of this, Prime Minister Narendra Modi in his maiden Independence Day speech listed ‘Digital India’ as a priority. The campaign’s primary objective is to enable the rapid adoption of technology for governance. Proliferation of the internet through communication infrastructure would enable such a transformation. In an interview to the ‘Financial Express’, Prakash Kumar,

national technology officer at Microsoft India, said: “We see integrating technology into everyone’s everyday life as a huge opportunity to achieve better citizen services, inclusive growth and a digitally-empowered economy.”

The Rs 1,13,000 crore ‘e-Kranti’, or ‘Digital India’, initiative is the world’s most ambitious broadband project, aiming to provide digital access through broadband highways and mobile telephony. Among other things, the project envisages connecting 2.5 lakh villages to the internet by 2017 from the current 130,000 at a cost of Rs 32,000 crore. More than 2,50,000 government schools will get wi-fi and broadband, with school books and other academic material delivered electronically.

The Andhra Pradesh state government made a beginning by partnering with Google India to jumpstart the ‘Digital AP’ vision. This includes creating awareness among women and a friendly interface with local content. Andhra Pradesh Chief Minister Chandrababu Naidu told Livemint.com: “We want to become the first state to embrace the prime minister’s vision of ‘Digital India’ and set an example for other states to follow.”

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However, large-scale execution will be a challenge. A heterogeneous platform – wireless, fibre optic cables, etc – is needed. Unfortunately, the main driver of the programme, The National Informatics Centre, does not have the capacity to handle even a fraction of the task. Also, localisation of content is the key to accessibility for rural and elderly persons, the main beneficiaries of governmental schemes.

It will be impossible to achieve this mammoth task without the private sector. A public-private partnership can create 17 million direct and 85 million indirect jobs.

There is enough evidence to suggest that broadband equals economic benefits. The Broadband Commission – an initiative by the UN agency responsible for IT – and UNESCO found that a 10% increment in broadband adoption could result in a growth spurt of 0.2% to 1.5%.The message is loud and clear: if India is serious about growth, it has to embrace a digital culture.

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Back of the Book

3,000Number of world’s top companies that the ‘Make in India’ campaign is targeting

Rs 1,00,000 croreCost of the Swachh Bharat (Clean India) mission in rural areas spread over five years

Rs 2,100 croreWhat India is spending on building toilets and sewage treatment plants in 1,649 villages on both sides of the Ganga in five states

142India’s ranking, among 189 countries, in the World Bank’s ‘Ease of Doing Business - 2015’ index

0.5%Share of India’s inland waterways in overall freight traffic. This is considerably lower than in the US (8.3%) and Europe (7%)

34.7 croreAdditional skilled manpower required in 21 high-growth sectors by 2022

Rs 3,00,000 croreEstimated investments required in India’s power transmission sector over the next five years

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