CURRENT AFFAIRS – 06/05/2023

CURRENT AFFAIRS – 06/05/2023

The horizon for India beyond the G-20, SCO summits

M.K. Narayanan
is a former Director, Intelligence Bureau, a former National Security Adviser, and a former Governor of West Bengal
India’s year-long presidency of the G-20, and leadership of the Shanghai Cooperation Organisation (SCO), should not blind us to the persisting challenges the nation faces, due to a concatenation of circumstances. It must, hence, tone down the high expectations that are being generated of reaping a rich dividend from helming the two summits. Global peace, on which India’s Prime Minister had waxed eloquent at the last G-20 summit in Indonesia, is nowhere in sight with India holding the reins. Instead, everything points to a further deterioration in the geo-political climate, and to a distinct possibility of impending conflict. Priorities listed by India as signifying its presidency, viz., climate change, clean energy, sustainable developmental programmes and reform of multilateral institutions, are likely to take a back seat, given the deteriorating global situation. Consequently, hopes of reaping a rich dividend from the summitry may be misplaced.
India also needs to be aware that the importance of the G-20 appears to be declining in today’s world. The SCO seems to have somewhat greater traction. During its presidency of the two institutions, India may well be called upon to chart a course that balances the contradictory demands of the G-20 and the SCO — and even more so that of the Global South. All this leaves little room for grandstanding, and India should proceed with caution.
Two camps and distrust
The world may not, as yet, be on the brink of a global conflict, but it is perilously close to it. Distrust between the two camps led by the United States and China/Russia, respectively, leaves little scope for countries such as India — that have not declared their allegiance to either camp — any room for manoeuvre. The U.S. and its allies are meanwhile making a virtue of the fact that they are in a position to provide Ukraine with an arsenal of the most sophisticated weaponry available, alongside provision for training Ukraine troops.
Today, Ukraine presents a spectacle of possessing substantial quantities of sophisticated modern weaponry. Less obvious is the fact that Russia is also clandestinely receiving equipment and material from its allies, China not excluded. The two sides are thus positioning themselves to demonstrate which set of modern weaponry is superior. A single misstep could well unleash an Armageddon.
The process of assembling the most advanced arsenal of weapons in modern history had begun quite some time ago, but it was April that witnessed an apogee of sorts. Apart from U.S. and European nations such as Germany, many nations elsewhere are participating in what is turning out to be Europe’s war with a global impact. The list of potential suppliers of military equipment now includes even countries such as South Korea, risking the threat that supplying arms to Ukraine makes them a participant in the conflict.
The issues for India begin with China
For India, apart from the war clouds on the horizon in Europe and tensions in the East Pacific, there are several issues of deepening concern. Foremost is how to deal with a rampaging China, currently on a major diplomatic-cum-strategic offensive across Asia, especially West Asia. This is further accompanied by a display of its naval prowess in the seas around much of East and Southeast Asia, and a flexing of its military muscle in the Ladakh and Arunachal sectors of the Sino-Indian border. China is unlikely to be deterred by the ‘vanilla’ laced response proffered by India’s Defence Minister, Rajnath Singh, during his recent meeting with his Chinese counterpart, Gen. Li Shangfu, viz., that improvement in ties with China would depend on ‘peace on the border’.
This is only likely to reduce room for manoeuvre on India’s part, at a time when China is launching several other regional initiatives to checkmate India in the Indian Ocean region, viz., the China-Indian Ocean Region Forum which has seen participation by an overwhelming majority of Indian Ocean states. Also, and unlike India (which seeks to limit the conflict with China to border issues),
China is seeking to widen the arc of conflict with India. Currently China is targeting India for going closer to the U.S. and the western bloc, for its partnership in the Quad (India, Australia, Japan, the U.S.), as well as its participation in maritime surveillance exercises with the U.S., Japan and Australia.
China is also actively engaged in seeking new friends in India’s extended neighbourhood, in a bid to limit India’s influence in this region. West Asia, once a region where India’s influence was preponderant, appears to be fast yielding to China’s muscular and diplomatic offensive. Notwithstanding India’s attempts to reach out to erstwhile friends such as Egypt (the Egyptian President was the chief guest at the Republic Day parade this year) India seems to have been sidelined, given the major churn in West Asia, much of it on China’s initiative. The new China brokered Iran-Saudi Arabia entente is setting the stage for major diplomatic shifts across the region, marginalising India and certain other nations.
India is not unaware of China’s hostile intentions overall. It is well aware of China’s ability to embark on hybrid warfare, including the adoption of cyber tactics, engage in the ‘politics of water’ by re-directing the Himalayan rivers, and adapting to modern conditions the tactics popularised by the Fifth Century BCE Chinese Strategist, Sun Tzu, of ‘winning wars without fighting through avoiding the enemy’s strength and attacking his weaknesses’. Caution has to be India’s watchword.
The neighbourhood and Russia
Other turmoils in India’s immediate neighbourhood in South Asia, compound India’s problems. The situation in Afghanistan appears to be steadily worsening. Events in that country are now beginning to affect nations on its periphery. India has, meanwhile, lost all traction with the Taliban in Afghanistan. Pakistan and Sri Lanka, to different degrees, represent ‘worst case’ scenarios.
India’s relations with Russia also appear to be entering a prolonged phase of uncertainty. Russian ties are not necessarily anchored in defence cooperation, but this has been a key factor in cementing their relations. As India looks more to the West, specially the U.S., for state-of-the-art weaponry, the inevitability of the relationship can no longer be guaranteed. With the Russia-China strategic relationship getting stronger and both countries openly giving vent to their belief in the utility of such a relationship, strains are inevitable in India-Russia relations. Russia’s unequivocal attack on the Quad during the SCO Defence Ministers meeting in New Delhi recently, is a pointer to the winds of change that are becoming evident. In the meantime, other pacts involving Russia, such as the Tripartite Russia-India-China platform and BRICS, have lost much of their dynamism. The economic content of the bilateral relationship is limited, and for the present linked to trading in oil, imparting little dynamism to the relationship.
The moot point, hence, is that while India is one of the few countries in the world which has managed to emerge from the COVID-19 pandemic and the resultant economic crisis without much damage, and is widely seen as a prospective global power, it has much to do before it attains this pinnacle. There are many obstacles that have to be overcome before India can achieve its predetermined goal. Well before this, and notwithstanding its fortuitous position of helming both the G-20 and SCO simultaneously, India should not claim to have attained its goal.
New Delhi needs to tone down the high expectations that are being generated of reaping a rich dividend from helming the G-20 and the Shanghai Cooperation Organisation

Switching on India’s smart electricity future

Shalu Agrawal
is a Senior Programme Lead at the Council on Energy, Environment and Water (CEEW), and the lead author of the study ‘Enabling a Consumer-centric Smart Metering Transition in India’
Imagine a future where your electricity meter becomes your adviser on all things electricity. It tells you about your electricity use during different times of the day, months and seasons. It notifies you about changes in power tariffs so that you plan your activities during low-tariff periods. It points you to appliances that are using more electricity than they should, and suggests options to replace them with new, efficient ones. It even allows you to trade solar power directly with your peers. All this on a mobile app.
India is witnessing the future unfold now. More than 5.5 million smart meters have been installed in India, and over 100 million sanctioned. The target is to replace 250 million conventional electric meters with prepaid smart meters by 2025-26. India is supporting this initiative through a results-linked grant-cum-financing to help power distribution companies (discoms) become financially sound and efficient to deliver better services to consumers. However, there are also on-ground challenges.
Reaping technology benefits
A recent study by the Council on Energy, Environment and Water (CEEW) found that the majority of smart meter users have already begun to experience some of the technology benefits. The study covered about 2,700 urban households that use prepaid or postpaid smart meters across six States. Half the users reported improvements in billing regularity, and two-thirds said paying bills had become easier. Around 40% of users alluded to multiple co-benefits such as a greater sense of control over their electricity expenses, a drop in instances of electricity theft, and improved power supply to the locality. In fact, 70% of prepaid smart meter users said they would recommend the technology to their friends and relatives. These findings give confidence that India’s smart metering transition is heading in the right direction.
There are some road bumps, though. For instance, half the users were not using the smart meter mobile app, and many were unable to access detailed electricity bills, leaving them doubtful about their bill computation and deductions. Solving these will help bring a smart-meter revolution in India.
How actors can step up
As India marches towards its vision of a financially sound and digitalised power sector through smart metering interventions, it must pursue a user-centric design and deployment strategy. Here are four suggestions on how diverse actors can step up.
First, the Ministry of Power should drive a nationwide campaign to educate consumers about smart meter benefits and improve the uptake of smart meter apps. The apps should be accessible to users from diverse socio-economic backgrounds and provide actionable tips and information. This is important, as user satisfaction with smart meters is linked to their ability to access and decipher online bills and perceived technology benefits. High-user satisfaction in Assam and high uptake of the mobile app in Bihar indicate learning opportunities on how to scale smart meter usage for discoms in other States.
Second, discoms must co-own the programme and take the driving seat. The majority of smart meters in India are being deployed by the Advanced Metering Infrastructure Service Providers (AMISPs), responsible for installation and operation of the AMI system for the project lifetime (10 years).
Discoms must closely work with AMISPs to ensure a smooth installation and recharge experience for users, to leverage smart meter data for revenue protection and consumer engagement. For this, discoms will need to strengthen their internal capacity through suitable staffing and training interventions.
Third, discoms, system integrators and technology providers should collaborate to devise innovative and scalable data solutions. Effective use of smart meter data is fundamental to unlocking their true value proposition. This would require an ecosystem that fosters innovation in analytics, data hosting and sharing platforms, and enables key actors to collaboratively test and scale new solutions.
Fourth, policymakers and regulators must strengthen regulations to empower consumers to unlock new retail markets. Currently, important provisions concerning phase-out of paper bills, arrear adjustment, frequency of recharge alerts, buffer time, rebates, and data privacy are scattered across different regulatory orders or simply missing. Their incorporation within existing State frameworks will be crucial for a positive technology experience for end users. Regulators must also enable simplification and innovation in tariff design and open the retail market to new business models and prosumagers (producers, consumers, and storage users). In a progressive step, last month, the Ministry of Power proposed amendments to the Electricity Rules to enable time-variable tariffs for all smart meter users.
India is on a unique journey of meeting its growing electricity demand while decarbonising its generation sources. Smart meters comprise a critical part of the transition toolbox, by way of enabling responsible consumption, efficient energy management, and cost-effective integration of distributed energy resources. A user-centric design and deployment philosophy will be crucial for the success of India’s smart metering initiative.
A user-centric design and deployment philosophy is what will power India’s smart metering initiative.

Symptomatic stall

The aviation industry needs policy changes and regulatory overhaul
Go Airlines, the Wadia Group’s low-cost carrier, this week became India’s first domestic airline since the outbreak of the COVID-19 pandemic to go into a mid-air stall and seek bankruptcy protection. For an airline that rebranded itself as Go First less than two years ago in a bid to make a fresh start, with CEO Kaushik Khona declaring at the time “our consumers come first” and “…our confidence in the brighter tomorrow”, the carrier’s abrupt announcement of a suspension of operations is rich in irony. While it has laid the blame squarely on “the ever-increasing number of failing engines” supplied by Pratt & Whitney, which it claimed had resulted in half its Airbus fleet being grounded, the engine problems could at best be termed the proximate cause. Go First’s financial woes predate the fleet troubles and the pandemic and are largely symptomatic of the malaise afflicting the wider industry. Given the high capital and operational costs, the commercial air transport industry operates with wafer thin margins. Added to this, the swelling competitive intensity in India’s budget airline sector a decade and a half ago saw rivals adopt aggressive pricing strategies to gain market share that stretched balance sheets and made companies more vulnerable to shocks.
If the lockdowns announced in India in March 2020 and the tight travel curbs to combat the spread of the SARS-CoV-2 virus dealt a deeply bruising blow to all contact intensive sectors, last year’s surge in crude prices in the wake of the Ukraine invasion combined with the rupee’s depreciation against the dollar sent aviation turbine fuel (ATF) costs soaring for domestic carriers. And when air travel demand rebounded last year as the pandemic-linked restrictions were lifted, Go First found itself already hobbled with almost a third of its fleet having been grounded by December 2020, ostensibly due to engine issues. With the airline now moving the National Company Law Tribunal for initiation of insolvency proceedings and an accompanying moratorium on outstanding credit, aircraft lessors have opposed the carrier’s resolution plea and instead sought aircraft deregistration and repossession. The outcome in the NCLT notwithstanding, the developments hold a mirror to the industry’s systemic infirmities. Rival carrier SpiceJet is simultaneously facing an irate overseas lessor who has moved the insolvency tribunal over unpaid lease rentals. The government knows the issues dogging the industry including a tax structure that keeps ATF costs prohibitive and a regulatory apparatus that is outdated. The onus is on the Centre to find long-term policy solutions if it wants India’s struggling airlines to reach cruising altitude.

Centre looks into options to counter EU’s carbon tax plan

The Commerce Ministry is exploring various options to cope with the European Union’s decision to introduce a Carbon Tax, including retaliatory tariff measures, a challenge at the World Trade Organisation and measures to help smaller Indian exporters, a top trade official said.
The EU plans to introduce a Carbon Border Adjustment Mechanism (CBAM) that will entail a monitoring mechanism for imports from producers deploying non-green technologies starting this October and a tax levy from January 2026. This is likely to hit Indian metal and engineering products’ exports to the EU.
Addressing this challenge is one of the top agenda items for the Commerce Department and several options are being examined, Director-General of Foreign Trade Santosh Kumar Sarangi said at a meeting hosted by engineering goods exporters’ body, EEPC India, on Thursday.
“How do we create mechanism which will support micro, small and medium enterprises [MSMEs], our steel industry, our aluminium industry… is something on which the Department of Commerce, the Ministry of Steel and the MSME Ministry, all are trying to work together,” he said.
EEPC India chairman Arun Kumar Garodia made a pitch for including the primary iron and steel sector into the Remissions of Duties and Taxes on Exported Products (RoDTEP) scheme and raising the scheme’s benefits for engineering products. “The rebate given by RoDTEP for engineering sector is in the range of 0.5% to 1%, which is lower than the incentives provided under the earlier merchandise exports from India scheme that offered incentives in the range of 2% to 5%,” he stated.