In line with Government’s ‘Waste to Wealth’ mission and encouraging environmentally sustainable National Highways construction, a trial use of ‘Steel Slag’ in road construction has been initiated by the National Highways Authority of India (NHAI).
Major Highlights:
Earlier, NHAI had announced testing the use of phosphor-gypsum — a by-product of fertilizer production — in road construction on national highways.
NHAI has also used fly ash — the fine residue of coal combustion in thermal power plants — for the construction of highways and flyover embankments.
NHAI is encouraging the use of waste plastic in road construction. Studies have established that roads built using plastic waste are durable, sustainable and increase the life of bitumen.
Significance:
The initiative will help to address thechallenge of shortage of materials used in the development of the National Highways and could replace natural aggregates such as sand, gravel, or crushed stone with the waste material from the steel industry.
The use of such materials in road construction shall make construction more economical and will promote the circular economy.
About Steel slag:
Steel slag is a solid waste or an unavoidable by-product during the production of steel. It is produced in large quantities (nearly 100-150 kg per tonne of steel) during the separation of the molten steel from impurities in steel-making furnace.
Benefits:
Steel slag particles become an integral part of the concrete matrix, acting as a filler and helping to improve the density of the concrete i.e., improve its strength and durability.
Steel slag is resistant to weathering and can withstand more load and pressure than traditional aggregates such as gravel and crushed limestone.
The Reserve Bank of India (RBI) has reported a sharp decline in gross non-performing assets (NPAs), or bad loans, in the banking system in the last two years, but wilful defaults have shot up with more legacy loan accounts now getting added to the wilful default category.
There has been a rise of 38.50% or Rs 94,000 crore, in wilful defaults in the last two years, reflecting the gaps in loan appraisals and risk management in the banking sector.
According to the RBI’s ‘Report on trends and progress of banking’, overall NPAs have fallen from 7.3% (of total advances) in 2021 to 5% by September 2022. In absolute numbers, gross NPAs (which also include wilful defaults) of banks reduced by 19.5% to Rs 6.1 lakh crore as of December 31, 2022 as against Rs 7.5 lakh crore over a year ago.
Basics Of Bad Assets:
Non-Performing Assets (NPA): An asset that is not returning in the form of principal or interest during the last 90 reporting days is classified as NPA.
Gross Non-Performing Assets (GNPA): GNPA is an absolute amount which reflects the total value of non-performing assets for the bank in a particular financial year.
Net Non-Performing Assets (NNPA): NNPA subtracts the provisions made by the bank from the gross NPA. Hence, net NPA gives you the exact value of non-performing assets after the bank has made specific provisions for it.
Provisioning is a mechanism to deal with bad assets. Under provisioning, banks have to set aside some funds to a prescribed percentage of their bad assets. The percentage of bad assets that has to be ‘provided for’ is called provisioning coverage ratio. The provisioning coverage ratio is the percentage of bad assets that the bank has to provide for from their own funds –most probably from profit.
Wilful default: is deemed to have occurred if the borrower has defaulted in meeting their repayment obligations to the lender even when they have the capacity to honour the said obligations.
Impact of Non-Performing Assets:
Reasons For Declining NPAs:
Drop in slippage ratio: The slippage ratio is the rate at which good loans are turning bad. It is the ratio of “Fresh accretion of NPAs during the year” to “Total standard assets at the beginning of the year”.
The slippage ratio is around 2% in September 2022 for SCBs, which is the lowest since 2015. Low slippage shows how well the asset qualities are managed by the bank.
Increasing write-offs: Banks voluntarily choose to write off NPAs to maintain healthy balance sheets. According to the data given by the Finance Ministry, banks had written-off bad loans worth ₹ 10,09,511 crore in the last 5 years. In the first half of FY 2022-23, the loan write-offs as a ratio of GNPAs increased to 22.6%.
These factors not only helped in reducing the share of bad assets but also increased the profitability of scheduled commercial banks in the last one year.
The EU-India Trade and Technology Council (TTC) is a high-level coordination platform, which will allow the EU and India to tackle strategic challenges at the nexus of trade, trusted technology and security, and to deepen their bilateral relationship in these fields. It should help ensure political commitments are implemented on the ground.
Why is it Needed?
In a rapidly changing geopolitical environment, the EU and India have a common interest in ensuring security, prosperity and sustainable development based on shared values.
The TTC will provide the political steer and the necessary structure to coordinate approaches and advance technical work.
To lay the groundwork, both sides have agreed to work on critical areas such as connectivity, green technologies and resilient supply chains.
Format:
The TTC will be co-chaired on the EU side by the Executive Vice-Presidents (EVP) of the European Commission in charge of digital technology and trade.
The TTC will be co-chaired on the Indian side by the Ministers in charge of External Affairs, Commerce & Industry, and Electronics & Information Technology.
Both sides will invite other Members of the College/Ministers to contribute to TTC meetings depending on the issues discussed. When issues to be discussed at the TTC fall under the competences of the High Representative/Vice-President the HRVP will participate in the relevant meeting.
Meetings of the TTC will take place at least once a year, with the venue alternating between the EU and India. Meetings of the TTC could take place in person or virtually.
Ministerial meetings of the TTC will rely on the preparatory work of three working groups:
Strategic technologies, digital governance and digital connectivity: the group will work jointly on areas of mutual interest such as digital connectivity, Artificial Intelligence, 5G/6G, high performance and quantum computing, semiconductors, cloud systems, cybersecurity, digital skills and digital platforms.
Green & clean energy technologies: this group will focus on green technologies, including investment and standards, with emphasis on research and innovation. Areas to be explored could be clean energy, circular economy, waste management, plastic and litter in the ocean. It will also foster cooperation between EU and Indian incubators, SMEs and start-ups.
Trade, investment and resilient value chains: the group will work on the resilience of supply chains and access to critical components, energy, and raw materials. It will also work to resolve identified trade barriers and global trade challenges by promoting cooperation in multilateral fora. It will work towards promotion of international standards and cooperation on addressing global geopolitical challenges.
Ministerial meetings of the TTC will take place at least once a year, with the venue alternating between the EU and India. As of today, the three working groups are established and will begin their cooperation. The first EU-India ministerial meeting is planned to be held in spring 2023.
Way Forward:
The partnership with India is one of the most important relationships for the upcoming decade and strengthening this partnership, including through the TTC, is a priority. The cooperation in the TTC should focus on key issues of shared strategic importance, including trade, trusted technology and security, notably in respect of challenges posed by rival governance models. In this context, cooperation on research and innovation are important to unlock potential.
The EU-India Trade and Technology Council is the second such bilateral forum for the EU and the first one established with any partner for India. It will complement the Digital Partnerships already launched with Asian partners as part of the EU Strategy for Cooperation in the Indo-Pacific.
The Petroleum and Natural Gas Regulatory Board (PNGRB) was constituted under The Petroleum and Natural Gas Regulatory Board Act, 2006.
The Act provides for the establishment of Petroleum and Natural Gas Regulatory Board to protect the interests of consumers and entities engaged in specified activities relating to petroleum, petroleum products and natural gas and to promote competitive markets and for matters connected therewith or incidental thereto.
Further as enshrined in the act, the board has also been mandated to regulate the refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas excluding production of crude oil and natural gas so as and to ensure uninterrupted and adequate supply of petroleum, petroleum products and natural gas in all parts of the country.
Vision of PNGRB
To create a vibrant energy market with rapid and orderly growth, we aim to facilitate the flow of investments into basic infrastructure. This infrastructure supports the efficient transportation and distribution of petroleum, petroleum products, and natural gas at minimum cost.
Additionally, we are committed to a high level of protection of consumer interests. This is achieved through fair trade practices and fostering competition amongst entities. Our goal is to ensure the enhanced competitiveness of the Indian economy and achieve high customer satisfaction.
Powers regarding complaints and resolutions of disputes by the Board
The Board shall have jurisdiction to:
Adjudicate upon and decide any dispute or matter arising amongst entities or between an entity and any other person on issues relating to refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas, unless the parties have agreed for arbitration.
Receive any complaint from any person and conduct any inquiry and investigation connected with the activities relating to petroleum, petroleum products and natural gas on contravention of:
Retail service obligations;
Marketing service obligations;
Display of retail price at retail outlets;
Terms and conditions subject to which a pipeline has been declared as common carrier or contract carrier or access for other entities was allowed to a city or local natural gas distribution network, or authorisation has been granted to an entity for laying, building, expanding or operating a pipeline as common carrier or contract carrier or authorisation has been granted to an entity for laying, building, expanding or operating a city or local natural gas distribution network;
Any other provision of this Act or the rules or the regulations or orders made there under.
While deciding a complaint, the Board may pass such orders and issue such directions as it deems fit or refer the matter for investigation.
Functions of Board: The Board shall
Protect the interest of consumers by fostering fair trade and competition amongst the entities;
Register entities to:
Market notified petroleum and petroleum products and, subject to the contractual obligations of the Central Government, natural gas;
Establish and operate liquefied natural gas terminals;
Establish storage facilities for petroleum, petroleum products or natural gas exceeding such capacity as may be specified by regulations;
Authorise entities to: lay, build, operate or expand a common carrier or contract carrier or expand city or local natural gas distribution networks;
Declare pipelines as common carrier or contract carrier;
Regulate, by regulations:
Access to common carrier or contract carrier so as to ensure fair trade and competition amongst entities and for that purpose specify pipeline access code;
Transportation rates for common carrier or contract carrier;
Access to city or local natural gas distribution network so as to ensure fair trade and competition amongst entities as per pipeline access code;
In respect of notified petroleum, petroleum products and natural gas:
Ensure adequate availability;
Ensure display of information about the maximum retail prices fixed by the entity for consumers at retail outlets;
Monitor prices and take corrective measures to prevent restrictive trade practice by the entities;
Secure equitable distribution for petroleum and petroleum products;
Provide, by regulations, and enforce, retail service obligations for retail outlets and marketing service obligations for entities;
Monitor transportation rates and take corrective action to prevent restrictive trade practice by the entities;
Levy fees and other charges as determined by regulations;
Maintain a data bank of information on activities relating to petroleum, petroleum products and natural gas;
Lay down, by regulations, the technical standards and specifications including safety standards in activities relating to petroleum, petroleum products and natural gas, including the construction and operation of pipeline and infrastructure projects related to downstream petroleum and natural gas sector;
Perform such other functions as may be entrusted to it by the Central Government to carry out the provisions of this Act.
The NHB was set up by the Government of India in 1984 as an Autonomous organisation under the administrative control of the Ministry of Agriculture and Farmers Welfare.
It is registered as a society under Societies Registration Act with its headquarters at Gurugram.
Presently, NHB has 29 field offices located all over the country.
Aims & Objectives of NHB Schemes:
The main objectives of the NHB are to improve integrated development of the Horticulture industry and to help in coordinating, sustaining the production and processing of fruits and vegetables. Detailed objectives of the Board are as under:-
Development of hi-tech commercial horticulture in identified belts and make such areas vibrant with horticultural activity, which in turn will act as hubs for development of horticulture.
Development of modern post-harvest management infrastructure as an integral part of area expansion projects or as a common facility for clusters of projects.
Development of integrated, energy efficient cold chain infrastructure for fresh horticulture produce.
Popularisation of identified new technologies / tools / techniques for commercialization / adoption, after carrying out technology and need assessment.
Assistance in securing availability of quality planting material by promoting setting up of scion and rootstock banks / mother plant nurseries and carrying out accreditation / rating of horticulture nurseries and need based imports of planting material.
Promotion and market development of fresh horticultural produce.
Promotion of field trials of newly developed/imported planting materials and other farm inputs; production technology; PHM protocols, INM and IPM protocols and promotion of applied R&D programmes for commercialization of proven technology.
Promotion of Farm Mechanization in Horticulture through demonstration and its uses at farmers field level to reduce labour cost and increase the productivity of Horticulture crops.
Promotion of applied R & D for standardising PHM protocols, prescribing critical storage conditions for fresh horticulture produce, benchmarking of technical standards for cold chain infrastructure etc.
Transfer of technology to producers/farmers and service providers such as gardeners, nurserymen, farm level skilled workers, operators in cold storages, work force carrying out post harvest management including processing of fresh horticulture produce and to the master trainers.
Promotion of consumption of horticulture produce and products.
Promoting long distance transport solutions for bulk movement of horticulture produce through rail etc.
Carrying out studies and surveys to identify constraints and develop short and long term strategies for systematic development of horticulture and providing technical services including advisory and consultancy services.
Power is among the most critical components of infrastructure, crucial for the economic growth and welfare of nations. The existence and development of adequate power infrastructure is essential for sustained growth of the Indian economy.
The fundamental principle of India’s power industry has been to provide universal access to affordable power in a sustainable way.
The Government has made significant efforts over the past few years to turn the country from one with a power shortage to one with a surplus by establishing a single national grid, fortifying the distribution network, and achieving universal household electrification.
India’s power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power, to viable non-conventional sources such as wind, solar, agricultural and domestic waste.
Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required.
Facts Associated with Power Sector in India:
India was ranked 4th in wind power, 5th in solar power and 4th in renewable power installed capacity, as of 2020.
India is the only country among the G20 nations that is on track to achieve the targets under the Paris Agreement.
As of October 31, 2022, India’s installed renewable energy capacity (including hydro) stood at 165.94 GW, representing 40.6% of the overall installed power capacity.
Solar energy is estimated to contribute 61.62 GW, followed by 41.84 GW from wind power, 10.70 GW from biomass, 4.92 GW from small hydropower, and 46.85 GW from hydropower.
The peak power demand in the country stood at 210.79 GW on June 9, 2022.
Why is India at an Advantage:
Growing Demand:
India is the third-largest producer and consumer of electricity worldwide, with an installed power capacity of 408.71 GW as of October 31, 2022.
Growing population along with increasing electrification and per-capita usage will provide further impetus. Power consumption is estimated to reach 1,894.7 TWh in 2022.
Attractive Opportunities:
Under the Union Budget 2022-23, the government announced the issuance of sovereign green bonds, as well as conferring infrastructure status to energy storage systems, including grid-scale battery systems.
In the same budget, Rs. 19,500 crore (US$ 2.57 billion) was allocated for a PLI scheme to boost manufacturing of high-efficiency solar modules.
Policy Support:
100% FDI allowed in the power sector has boosted FDI inflow in this sector.
Schemes such as Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS) are expected to augment electrification across the country.
Higher Investments:
As per the National Infrastructure Pipeline 2019-25, energy sector projects accounted for the highest share (24%) out of the total expected capital expenditure of Rs. 111 lakh crore (US$ 1.4 trillion).
Total FDI inflow in the power sector reached US$ 16.39 billion between April 2000-June 2022.
Issues Associated with Power Sector
Challenges in fuel supply: include unequal contractual provisions, inadequate supply, and poor transport logistics. Coal is transported over long distances through railways, but such long haulage leads to increased delivery costs, thefts and life-cycle energy consumption
Challenges to open access: While all states in India have notified open access, only 19 have determined all the charges (cross-subsidy charges, wheeling charges, transmission charge) on open access.
Poor financial health of DISCOMS: The main causes of which include unmetered consumption, low collection efficiency, and high technical losses due to insufficient capital expenditure on up-gradation of existing infrastructure. The extent of commercial losses of DISCOMS across India increases by over 50% in the absence of subsidy.
High Transmission & Distribution Losses: averaging about 22.3% of electricity which is very high as compared to those of the developed countries (6-11%).
Under-procurement of power by states - cancelling out costlier Power Purchase Agreements (PPAs) in favour of newer and cheaper agreements.
Coordination Issues: Multiple ministries and agencies are currently involved in managing energy-related issues which presents challenges of coordination and optimal resource utilisation, thus undermining efforts to increase energy security.
Government Policies & Initiatives
The Government of India has identified the power sector as a key sector of focus to promote sustained industrial growth. Some initiatives by the Government to boost the Indian power sector are as below:
In the Union Budget 2022-23, the government allocated Rs. 19,500 crore (US$ 2.57 billion) for a PLI scheme to boost manufacturing of high-efficiency solar modules.
As of August 24, 2022, over 36.86 crore LED bulbs, 72.18 lakh LED tube lights and 23.59 lakh energy-efficient fans have been distributed across the country, saving around 48,411 million kWh per year and around Rs. 19,332 crore (US$ 2.47 billion) in cost savings.
As of November 2022, over 51.62 lakh smart metres have been deployed under the National Smart Grid Mission (NSGM), with a further 61.13 lakh to be deployed.
Electrification in the country is increasing with support from schemes like Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), Ujwal DISCOM Assurance Yojana (UDAY), and Integrated Power Development Scheme (IPDS).
In order to meet India’s 500 GW renewable energy target and tackle the annual issue of coal demand supply mismatch, the Ministry of Power has identified 81 thermal units which will replace coal with renewable energy generation by 2026.
In February 2022, a parliamentary standing committee recommended the government to take steps to increase the loan limit for the renewable energy sector under priority sector lending. The current limit stands at Rs. 30 crore (U$ 3.93 million).
In November 2021, the government announced future plans to increase the funding under the PLI scheme for domestic solar cells and module manufacturing to Rs. 24,000 crore (US$ 3.17 billion) from the existing Rs. 4,500 crore (US$ 594.68 million) to make India an exporting nation.
In November 2021, Energy Efficiency Services Limited (EESL) stated that it will partner with private sector energy service companies to scale up its Building Energy Efficiency Programme (BEEP).
The Pradhan Mantri Sahaj Bijli Har Ghar Yojana, “Saubhagya”, was launched by the Government of India with an aim of achieving universal household electrification. As of March 2021, 2.82 crore households have been electrified under this scheme.
Road Ahead
In the current decade (2020-2029), the Indian electricity sector is likely to witness a major transformation with respect to demand growth, energy mix and market operations.
India wants to ensure that everyone has reliable access to sufficient electricity at all times, while also accelerating the clean energy transition by lowering its reliance on dirty fossil fuels and moving toward more environmentally friendly, renewable sources of energy.
Future investments will benefit from strong demand fundamentals, policy support and increasing government focus on infrastructure.
The Government of India is preparing a 'rent a roof' policy for supporting its target of generating 40 GW of power through solar rooftop projects by 2022. It also plans to set up 21 new nuclear power reactors with a total installed capacity of 15,700 MW by 2031.
The Central Electricity Authority (CEA) estimates India’s power requirement to grow to reach 817 GW by 2030. Also, by 2029-30, CEA estimates that the share of renewable energy generation would increase from 18% to 44%, while that of thermal energy is expected to reduce from 78% to 52%.
The government plans to establish a renewable energy capacity of 500 GW by 2030.
Inflation based on the Wholesale Price Index (WPI) moderated to a two-year low of 3.85% in February from 4.73% in January, with manufactured products’ inflation cooling from 3% to a little under 2%, and primary articles, food and fuel and power recording milder downturns in the pace of inflation from a month earlier. The base effect also contributed as February 2022 saw a 13.4% pace.
Office of Economic Advisor, Ministry of Commerce, and Industry
National Statistical Office, Ministry of Statistics and programme Implementation
Base year
2011-12
2012
Categories
Primary Articles Manufactured products Fuel and Power
Food and beverages Pan, Tobacco, and Intoxicants Clothing and Footwear Housing Fuel and Light Miscellaneous- Education, Healthcare, Transportation etc.
Highest Weightage
Manufactured products
Food and Beverages
Impact of increase in Food items
Less impact on WPI as compared to CPI since WPI provides higher weightage to manufactured products and lower weightage to Food items.
Larger impact on CPI as compared to WPI since it gives more weightage to food products.
Services included
No
Yes
Indirect Taxes Included?
No
Yes
Targeted by RBI?
No
Yes. The RBI is required to maintain CPI rate of inflation of 4% with a deviation of 2%.
Headline and Core Inflation
The headline inflation simply refers to the inflation in the CPI (or WPI) covering all the categories of goods and services. On the other hand, the core inflation excludes the volatile categories such as food and fuel in order to measure the increase in the prices of goods and services. Hence, a drastic fall in the food and fuel prices can bring down the headline inflation by a to a large extent. However, the core inflation may remain unaffected.
Note: Presently, the RBI is targeting the CPI headline rate of inflation (and not Core Inflation)
Base Effect: To calculate the rate of Inflation, the prices of Goods and services in the current month are compared with the prices in the corresponding month of the previous year.
The rate of inflation in the current month is calculated as
(Prices of Goods in Current Month- Prices of Goods in Corresponding month of Previous year)/ Prices of Goods in Corresponding month of Previous year * 100
As can be seen in the above formula, the denominator (base) is the prices of Goods in the corresponding month of previous year. So, the if the denominator (base) value is lower, the rate of inflation in the current year would be higher. Similarly, if the denominator (base) value is higher, the rate of inflation in the current year would be lower. This can be understood as seen below:
Reasons for the rising Inflation in India
Imported Inflation: Increase in global commodity prices such as Crude oil, Edible oil etc.
Increase in certain food items such as Egg , Edible oils, Fruits, Pulses.
Increase in services such as Health, Transport and Communication etc.
Low Base effect as the prices of some of the Goods had declined last year due to the pandemic.
What to Target: Headline or Core Inflation?
Presently, the RBI targets CPI headline rate of inflation and not the Core Inflation. In this regard, the Economic Survey 2020-21 has highlighted that sole focus on CPI headline rate of Inflation may not be appropriate on account of number of reasons. Accordingly, it has recommended that a greater focus on core inflation is warranted.
Reasons:
Firstly, Headline inflation may take place due to volatility in prices of Crude oil and Food commodities, over which RBI has no control. For example, failure of monsoons, lack of cold chain infrastructure, supply side bottlenecks etc. usually lead to increase in Food prices.
Secondly, most of the time inflation in Food commodities is transitory and may not require any policy action by the RBI
Thirdly, if the RBI tries to control inflation due to volatility in prices of food commodities, it can prove to be counter productive. For example, to control inflation, rate of interest would increase--> Decline in Investment and Consumption Expenditure--> Economic Slowdown.
Fourthly, to measure inflation correctly, weightage must be assigned to different categories of commodities depending upon their share in the household expenditure. Higher the share, higher should be weightage. The share of food commodities in the household expenditure has declined since 2011-12, yet the CPI gives a weightage of almost 45% to the food commodities.
India is aiming to add 200 million tonnes (MT) of refining capacity, or around 4 million barrels a day, in the next 10 years to meet the growing demand for fuel. This is important for India’s energy security as India’s oil demand will double to 11.1 million barrels a day (550 MT) by 2045, according to OPEC’s World Oil Outlook. However, the achievement of target is facing challenges
Oil refining in India
Oil refining in India is a significant industry that plays a crucial role in meeting the country's energy needs. India is one of the largest consumers of petroleum products in the world and imports more than 80% of its crude oil requirements. As a result, oil refining has become an important activity in the country.
India has several oil refineries, both public and private, located in different parts of the country. These refineries process crude oil and produce a variety of petroleum products such as petrol, diesel, aviation fuel, liquefied petroleum gas (LPG), kerosene, and others. The Indian oil refining industry has been growing steadily over the years, driven by the increasing demand for petroleum products.
The largest oil refinery in India is located in Jamnagar, Gujarat, and is owned by Reliance Industries. The refinery has a capacity of 1.24 million barrels per day and is one of the largest refineries in the world. Other major refineries in India include the Indian Oil Corporation refineries in Panipat, Gujarat, and Mathura, and the Bharat Petroleum Corporation refinery in Mumbai.
The Indian government has also taken several steps to encourage investment in the oil refining sector. The government has liberalized the sector, allowing private players to enter and operate in the market. It has also set up several Special Economic Zones (SEZs) to promote oil refining and attract foreign investment.
Challenges to addition of refining capacity
State-run refiners, which account for 65% of the domestic business, are proving slow to act, with IOC’s Paradip the last greenfield project to be commissioned in 2016 after a long delay.
Indian refiners need to add 20 MT of capacity per year to meet the target, but the growth in refining capacity has stalled, expanding by only 17 MT over the past five years, compared to 21 MT in the previous five years.
Over the next few years, only around 50 MT of capacity may come up with state-owned refiners sitting on decisions for the past six years to build new projects, despite government backing.
Exports leave India with less fuel for domestic use. Earnings from oil product exports accounted for 15% of India’s gross exports by value in April-January FY23. Reliance and Nayara account for the bulk of exports with state oil companies catering to the domestic market.
The upcoming capacity of 50 MT may yield only around 30 MT of fuels because around 25% of the capacity from new refineries will be dedicated to petrochemicals, and another 10% used to run the refinery, according to a former chairman of a state refiner.
State refiners slowed capacity addition fearing an exodus to EVs, yet EV sales next fiscal will trail state targets by half, according to a Business Standard report.
While the current impetus on decarbonisation is expected to cast a shadow over long-term consumption growth, a significant decline in consumption of petroleum products remains unlikely.
In order to solve the challenges, following measure can be suggested.
Measures Suggested
Encourage private investment: The government could create a more conducive environment for private companies to invest in the oil refining sector. This could include offering tax incentives, reducing regulatory hurdles, and simplifying the approval process for new projects.
Streamline decision-making: The government could work to streamline the decision-making process for state-owned refiners. This could help reduce delays and ensure that new projects are approved and completed more quickly.
Improve efficiency: The government could work with refiners to identify opportunities to improve efficiency and increase output from existing refineries. This could help address the current shortfall in refining capacity and reduce the need for new projects.
Increase exports: The government could encourage refiners to increase exports of refined petroleum products. This could help generate additional revenue to fund new projects and reduce the impact of lower domestic demand.
Develop alternative fuels: The government could invest in research and development of alternative fuels, such as biofuels or hydrogen. This could help reduce India's dependence on fossil fuels and provide new opportunities for refiners to diversify their businesses.
Address the issue of petrochemicals: The government could work with refiners to address the issue of petrochemicals. This could include developing policies to incentivize investment in petrochemical production and reducing the amount of refining capacity dedicated to petrochemicals to free up more capacity for fuel production.
Focus on domestic demand: The government could prioritize meeting domestic demand for refined petroleum products over exports. This could help ensure that India has sufficient capacity to meet its growing energy needs and reduce dependence on imports.
Lean Manufacturing or Lean Production, which is often known simply as LEAN, is a production practice that considers the expenditure of resources for any goal, other than the creation of value for the end customer, to be wasteful, and thus, a target for elimination.
Lean manufacturing includes a set of principles that lean thinkers use to achieve improvements in productivity, quality, and lead-time by eliminating waste through kaizen.
Kaizen is a Japanese word that essentially means "change for the better" or "good change." The goal is to provide the customer with a defect free product or service when it is needed and, in the quantity, it is needed.
Why the need for such a Scheme?
MSMEs form an integral part of almost every value chain and there is a symbiotic relationship between the large corporations and relatively small sized suppliers.
As domestic & global competitiveness becomes intensive, there is a need for MSMEs to transition to a new business environment especially with the disruption in the global supply chains and convergence of multiple sourcing as a methodology in vendor development.
Recognizing the importance of overall economic growth of a country and the need for enhancing its productivity, competitiveness and employment generation besides resource optimization, many countries have initiated institutional mechanisms for a national approach on improving the quality of manufacturing & services.
Objective:
The objective of the scheme is to enhance the Domestic and Global Competitiveness of MSMEs through the application of various Lean Techniques that inter-alia includes:
Reduction In: Rejected rates, product and raw material movements, product cost.
Optimization Of: Space utilisation, Resources like water, energy, natural resources etc.
Enhancement Of: Quality in process and product, production & export capabilities, workplace safety, knowledge & skills sets, innovative work culture, social & environmental accountability, profitability, introduction & awareness to industry 4.0, digital empowerment.
Scheme Components:
Industry Awareness Programmes/Workshop: MSMEs will be made aware of the Scheme through Nation-wide awareness programmes (online and/or face-to-face, as appropriate) with the assistance of stakeholders like Industry Associations, Implementing Agencies, MSME-DFOs, District Industries Centres (DICs), Large Enterprises/OEMs.
Training Programmes: Stakeholders like the MSME Officers, Assessors and Consultants will be trained on the MSME Competitiveness (Lean) Scheme to enable an effective implementation by Implementing Agencies like QCI, NPC.
Handholding: MSMEs will be provided handholding towards the implementation of Lean Tools and Techniques at three different levels – Basic, Intermediate, and Advanced. Completion of each stage is verifiable end term assessment or assessment by Implementation Agency along MSME -DFOs as the case may be.
Benefits/Incentives: Graded incentives will be announced by the Ministry of MSME for MSMEs for encouraging MSME units’ participation under the scheme. Implementation of Lean (Generation of Lean ID) Lean Pledge & Undertaking (Generation of Lean Pledge Level) Implementation of Lean (Basic, Intermediate, Advanced).
PR campaign, Advertising & Brand Promotion: For popularising the Lean Scheme, a Nation-wide publicity will be done.
Digital Platform: Lean Scheme process will be e-enabled through a single window digital platform which will be utilised for the implementation of the scheme.
Coverage and Eligibility:
All MSMEs registered with the UDYAM registration portal (of the MoMSME) will be eligible to participate in MSME Competitive (Lean) Scheme and avail related benefits/incentives.
Scheme is also open to Common Facilities Centres (CFCs) under SFURTI (Scheme of Fund for Regeneration of Traditional Industries) and Micro & Small Enterprises - Cluster Development Program (MSE-CDP) Schemes.
Financial Assistance for MSME Units:
To support MSMEs, the government will contribute 90% of implementation cost for handholding and consultancy fees. There will be an additional contribution of 5% for the MSMEs which are part of SFURTI clusters, owned by women/SC/ST and located in NER.
In addition to the above, there will be an additional contribution of 5% for MSMEs registering through Industry Associations/Overall Equipment Manufacturing (OEM) organisations after completing all levels.
There is a unique feature to encourage Industry Associations and OEMs to motivate their supply chain vendors to participate in this scheme.
Scheme Levels: MSME Competitive (Lean) Scheme can be attained in THREE Levels after registering and taking the Lean Pledge:
Any inflation rate essentially tells us the rate at which prices have been rising in an economy. As such, an inflation rate is expressed as a percentage. If the prices of onions rose from Rs 10 a kg last year to Rs 15 a kg this year, the inflation rate will be 50%. That’s because a kg of onion is Rs 5 — that is, 50% — more than the base price (Rs 10) in this example.
For every month, inflation rates are calculated both on a year-on-year basis — how prices have changed over the past year — as well as on a month-on-month basis — how prices have changed over the past month.
The two most-often used inflation rates in the country are the year-on-year
Wholesale Price Index (WPI) based inflation rate
Consumer Price Index (CPI) based inflation rate
The former is called the wholesale inflation rate and the latter is called the retail inflation rate. These are two different baskets of goods and services.
The government assigns different weights to different goods and services based on what is relevant for those two types of consumers.
Difference between WPI and CPI
Criteria
Wholesale Price Index
Consumer Price Index (CPI)
Level
Measures Inflation at Wholesale level
Measures Inflation at Retail level
Who Calculates?
Office of Economic Advisor, Ministry of Commerce and Industry
National Statistical Office, MoSPI
Base year
2011-12
2012
Released on
14th of Every Month
12th of Every Month
Number of Items covered
697
299
Categories and their respective weightages
Primary Articles: (22.6%)Manufactured products (64.2%)Fuel and Power (13.2%)
Food and beverages (45.86%)Pan, Tobacco and Intoxicants (2.38%) Clothing and Footwear (6.53%)Housing (10%)Fuel and Light (6.84%): Electricity, LPG, Kerosene etc. (Does not include Petrol and Diesel)Miscellaneous- Education, Healthcare, Transportation and Communication etc. (28.32%)
Weightage given to Food Articles
WPI-Food Index (24%): Food articles from "Primary Articles" and "Manufactured Food Product".
Consumer Food Price Index (CFPI):(39%): Out of 12 sub-groups contained in 'Food and Beverages' group, CFPI is based on ten sub-groups, excluding 'Non-alcoholic beverages' and 'Prepared meals, snacks, sweets etc. (For Details, refer to Rau’s Economic Survey Video)
Impact of increase in Food items
Less impact on WPI as compared to CPI
Larger impact on CPI
Weightage of Fuel and Power
Included in separate category of Fuel and Power (13.2%)
Weightage (~8%): Included in (a) category of Fuel and light and (b) Category of Transportation and Communication (Fuel for Transportation)
Highest Weightage
Manufactured products (64.2%)
Food and Beverages (45.9%)
Services included
No
Yes
Indirect Taxes Included?
No
Yes
Targeted by RBI?
No
Yes. The RBI is required to maintain CPI rate of inflation of 4% with a deviation of 2%.
Recent Developments:
The RBI’s target inflation rate is 4% with a leeway of two percentage points either side. But as the chart shows, since November 2019, inflation rate has rarely touched 4% — it has never fallen below 4% — and has often stayed outside the 6% mark.
Ordinarily a single month’s inflation data would not be any more (or any less) important that any other month but, given the fact that India’s monetary policy is balanced on a knife-edge at present, February’s data has gained significance.
Retail inflation inched lower to 6.44% in February from 6.52% in January, even as it remained above the upper band of the 6% medium-term target of the Reserve Bank of India (RBI) for the second consecutive month.
While food inflation eased marginally to 5.95% in February from the revised level of 6% in January (earlier 5.94%), inflation for cereals, milk and fruits picked up.
Among the sub-groups, while vegetables continued to remain in deflationary mode for the fourth consecutive month at (-)11.61% in February, cereals inflation increased to 16.73% in February, the sixth consecutive month of double-digit inflation. Inflation rate for milk and products increased to 9.65% in February from 8.79% a month ago, while that for fruits rose to 6.38% from 2.93% a month ago.
Measures taken by RBI to control Retail Inflation:
Since May 2022, however, the RBI has been rapidly raising interest rates in a bid to contain high inflation. As a result, the repo rate — or the interest rate that the RBI charges banks when it lends money to them — has gone up by 250 basis points since May. It was 4% in May and stands at 6.5% today. Since repo is the rate at which banks get money, a hike in repo implies higher interest rates for all concerned in the Indian economy.
While on paper the RBI’s central responsibility is to maintain price stability, it often also concerns itself with boosting economic growth. It can be argued that over the past four years, the RBI has been more concerned about growth than inflation.
These two concerns pull the RBI in opposite directions. Boosting economic growth requires maintaining low interest rates while containing inflation demands high interest rates.
However, after retail inflation hit an eight-year high in April 2022, however, the RBI has prioritised containing inflation. But doing this is starting to hurt growth.
Way Forward:
Though the government’s measures to cool off wheat inflation through open market sales in February and reduction in reserve price is likely to show an impact on inflation with a lag, sticky core inflation and onset of summer may push perishable products prices higher. Also, higher prices of milk and prepared meals are a cause of concern.
As the core inflation (non-food, non-fuel component) has continued to remain above 6% for the fourth consecutive month, it has prompted expectations of another rate hike of 25 basis points by the RBI in its upcoming policy review in April.
However, excessive front-loading of rate hikes carries the risk of over-shooting because raising real policy rates to reduce demand has a stronger effect on growth than it does on inflation.
Also, Inflation print above 6% level for the second straight month indicates a lag in the impact of monetary policy, under which the RBI has increased the repo rate by a cumulative 250 basis points to 6.50% since May last year. That is to say that it takes a few months, sometimes quarters, before a hike in repo rate results in higher interest rates across the board in the economy and in denting consumption and investment demand.
As the headline inflation print is expected to ease March onwards due to a significant base effect, the MPC should wait for a while to let past repo rate hikes take effect.
Measures the quantum of changes in the industrial production in an economy.
The current base year for the IIP series in India is 2011-12.
It is compiled and published every month by the National Statistical Office (NSO) under the Ministry of Statistics and Program Implementation (MoSPI).
The Quick Estimates of Index of Industrial Production (IIP) are released on 12th of every month (or previous working day if 12th is a holiday) with a six weeks lag and compiled with data received from source agencies, which in turn receive the data from the producing factories/ establishments.
Categorization Of IIP:
Sectoral Classification: Mining, Manufacturing and Electricity. Highest weightage has been assigned to Manufacturing. The sectoral composition of the IIP is as follows:
Use-Based Classification:
Primary goods: Goods directly obtained from natural sources and used for further processing and consumption E.g.: Ores and Minerals and Electricity.Capital goods: Plants, machinery and goods used for further investments. E.g.: Boilers, Air & Gas Compressors, Engines including Internal Combustion and Diesel Engine.Infrastructure/ construction goods: Finished goods which are primarily used in the infrastructure industry or construction industry as an input. E.g.: paints, cement, cables, bricksIntermediate goods: Any good/product produced as an incomplete product, or which goes as input in production for further finishing or forming a part of a product. E.g.: Cotton yarn, Plywood etc.Consumer durables: Products directly used by consumers and having a longer durability (more than 2/3 years). E.g.: Pressure Cooker, Air Conditioners, Tyres etc.
Consumer non-durables: Products that are directly used by consumers and can’t be preserved for long periods. E.g.: Soybean Oil, Full cream/ Toned/ Skimmed milk etc.
Index Of Eight Core Industries:
In India there are eight core sectors comprising coal, crude oil, natural gas, petroleum refinery products, fertilisers, steel, cement and electricity.
The eight core industries constitute 40.27% of the total IIP.
This index is prepared by the Office of the Economic Advisor, Ministry of Commerce and Industry and is published monthly with the base year as 2011-12.
Weightage of different sectors in the Index:
Sector
Weight (in %)
Coal
10.33
Crude Oil
8.98
Natural Gas
6.88
Refinery Products
28.04
Fertilisers
2.63
Steel
17.92
Cement
5.37
Electricity
19.85
Note: It is noted that IIP is published by CSO, MoSPI while Index of Eight core Industries is published by Office of Economic Advisor, Ministry of Commerce and Industry.
Revision of base year
The IIP is an index which shows the growth rates in different industry groups of the economy in a stipulated period of time. The IIP index is computed and published by the Central Statistical Organisation (CSO) on a monthly basis.
The Central Statistics Office (CSO) revises the base year of the macroeconomic indicators, as a regular exercise, to capture structural changes in the economy and improve the quality and representativeness of the indices. The base year of the all-India Index of Industrial Production (IIP) was revised from 2004-05 to 2011-12 to not only reflect the changes in the industrial sector but to also align it with the base year of other macroeconomic indicators like the Gross Domestic Product (GDP), Wholesale Price Index (WPI).
Revisions in the IIP are necessitated to maintain representativeness of the items and producing entities and also address issues relating to continuous flow of production data.
With the release of the new series of IIP (base 2011-12), an institutional mechanism has been established for facilitating dynamic revision of the item list of products and the panel of factories, through a Technical Review Committee, chaired by Secretary, MoSPI. This Committee will meet at least once a year for identifying new items that need to be included in the item basket and removing those that have lost their relevance in the industrial sector or are no longer being produced.
IIP in the revised series will continue to represent the Mining, Manufacturing and Electricity sectors. The revised series uses the National Industrial Classification (NIC) 2008 for the purpose of classification of industrial production. The unit coverage of IIP will, as before, cover entities in the organised sector units registered under the Factories Act, 1948.
At the broad level, the new series has a total of 809 items occurring in the manufacturing sector in the item basket (405 item groups), where 149 new items like Steroids and hormonal preparations, Cement clinkers, Medical/ surgical accessories, Prefabricated concrete blocks, refined Palm Oil have been added and 124 items such as Biaxially Oriented Polypropylene (BOPP) Films, Calculators, Colour TV picture tubes, Gutka have been deleted from the 2004-05 series which had 620 items (397 item groups) in the manufacturing sector.
To reflect the increasing significance of electricity generation from renewable sources, it has been decided to include data on electricity generation figures from these sources in the new series.
The number of source agencies reporting data for compilation of IIP in the new series will be 14 as compared to 15 in the outgoing series.
Reserve Bank of India has granted 'Infrastructure Finance Company (IFC)' status to Indian Renewable Development Agency (IREDA). Earlier, IREDA was classified as 'Investment & Credit Company (ICC)'.
About Infrastructure Finance Company Status (IFC)
Infrastructure loan means a credit facility extended by NBFCs to a borrower for exposure in the following infrastructure sub-sectors, listed by the Harmonised Master List of Infrastructure sub-sectors.
IFC is a non-deposit accepting loan company with following features:
Minimum 75%o of total assets of an IFC-NBFC should be deployed in infrastructure loans.
Company should have minimum net worth of Rs 300 crore.
Minimum credit rating of IFC should be 'A' or equivalent.
IFCs may exceed concentration of credit norms.
About Harmonised Master List of Infrastructure Sub-Sectors
Department of Economic Affairs under Ministry of Finance notifies the Harmonised Master List of Infrastructure Sub-Sectors.
Category
Infrastructure Sub-Sectors
Transport & Logistics
Roads & bridges Ports & their dredging Shipyards Inland Waterways Airport Railways (Track, Rolling Stock and Terminal Infrastructure) Urban Public Transport (except rolling stock in case of urban road transport) Logistics Infrastructure including Multimodal Logistics Park comprising Inland Container Depot Bulk Material Transportation Pipelines (Oil, Gas, Slurry, Water Supply & Iron Ore pipelines)
Energy
Electricity Generation, Transmission, Distribution Oil/Gas/LNG storage facility & strategic crude storage Energy Storage Systems
Water & Sanitation
Solid Waste Management Water treatment plants Sewage collection, treatment & disposal system Irrigation (dams, channels, embankments etc.) Storm Water Drainage System
Education institutions (Capital Stock) Sports Infrastructure Hospitals (Capital Stock), Medical Colleges, Para-Medical Training institutes & Diagnostics Centres. Tourism Infrastructure (i) Thee-star or higher category outside cities with population of more than 1 million (ii) Ropeways & Cable Cars Common infrastructure for Industrial Parks and other parks with industrial activity such as food parks, textile parks, SEZs, tourism facilities and agriculture markets. Post-harvest storage infrastructure for agriculture and horticulture produces including cold storage. Terminal markets Soil-testing laboratories Cold Chain Affordable Housing Affordable Rental Housing Complex Exhibition-cum-Convention Centre
Benefits of Infrastructure Finance Company Status (IFC)
Help IREDA to access wider investor base for fund mobilisation, resulting in competitive rates for fund raising.
Allow IREDA to take higher exposure in Renewable Energy financing.
Increase investor's confidence in IREDA.
Enhance brand value of IREDA.
Generate positive outlook in market towards IREDA.
About Indian Renewable Energy Development Agency (IREDA)
IREDA is a Mini Ratna (Category-1) enterprise under administrative control of Ministry of New & Renewable Energy (MNRE).
It is a public limited government company established as a Non-Banking Financial Institution in 1987.
Functions: Promoting, developing and extending financial assistance for setting up projects related to new & renewable sources of energy and energy efficiency/conservation.
Motto of IREDA: Energy for Ever.
Sectors to which IREDA lends:
Solar Energy
Wind Energy
Hydro Power
Biomass Power & Cogeneration & Biomass (Briquetting, Gasification & Bio-methanation from industrial, Effluents)
Energy Efficiency & Cogeneration
Wate to Energy
National Clean Energy Fund (NCEF)
Miscellaneous (Loan to government bodies, Bridge Loan, GECL)
Others like Energy Access, Ethanol, Transmission, Hybrid and Electric Vehicle
