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Posts tagged ‘sustainable development’

NITI’s vision 2032 disappoints

NITI vision 2

NITI vision 2032 : foggy, disjointed & barely hanging together

Prime Minister Narendra Modi and the chief ministers of states spent most of Sunday deliberating over the plans and prospects for India in the next 15 years to 2031-32. The third governing council meeting of the Niti Aayog seems to have been an underwhelming affair, judging from the two presentations put up on its website. Why this listless thinking?

Great expectations

Three years ago, when the dowdy Planning Commission was transformed into a glitzy Niti Aayog, expectations were high that it would be the loci of innovation and cutting-edge analytics in public policy. The Planning Commission was merely an extended office of the Prime Minister. Chief ministers, whilst supposedly integral to the National Development Council (NDC), which the commission serviced, felt like interlopers rather than participating members. The flamboyant J. Jayalalithaa used the NDC forum like a television station — walking in to deliver her speech and then walking out. Others stoically suffered the process, making debating points, that no one heard.

New beginnings

Some of that has changed. Mr Modi has done away with the elevated podium of yesteryear for the PM and Union ministers. Now all are seated at the same level around a round table. Another first — the meeting was held at Rashtrapati Bhavan. Symbolic, as our head of state is not the PM, but the President, with whom the Union and state governments have an independent constitutional equation. In deference to the beacon ban, the long line of official cars streaming into the venue were minus their flashing red lights, thereby letting the tricolour atop Rashtrapati Bhavan take pride of place. On optics, the arrangements were perfect.

More optics than substance

The substance, however, seems not to have been as uplifting. Five examples will illustrate.

Lacks credibility

indian dream

A car for every household – is this the Indian dream?

First, a 15-year vision which is not nuanced enough to reconcile trade-offs lacks credibility. To aim to make India a prosperous economy by 2032 is a pie in the sky. India can, at best, and that too with enormous effort, go from being a lower middle-income country (per capita at current $1,600) to become a middle-income country (per capita current $4,800). A very long shot from being prosperous. The per capita income (at current US dollars) in Latin America and Caribbean today is $8,415, while in East Asia it’s at $9,512. There is no way we can catch up to even these levels by 2032. Consider also that the high growth rates required to make this jump could negatively impact equality. The international experience amply demonstrates that high levels of growth come with the risk of increasing inequality. There is not a whisper in the vision statement of how we propose to navigate the trade-off between growth and equality — the latter being part of the PM’s vision.

More of the same

brick stacks

Second, the Niti Aayog’s vision statement is backward looking. It ignores the dislocation caused by technological developments which technology leaders like the Chinese entrepreneur, Jack Ma have been warning against. NITI aims to make India a highly-educated country by 2032. Should we not be looking, instead, at becoming highly skilled? We are already battling progressive robotisation. By 2032, artificial intelligence would have squeezed jobs further in traditional sectors. New jobs, 10 million a year, which we require and still don’t have, are only likely in highly specialised areas — like space travel, frictionless transportation and psychological counselling — niches which are not easy to robotise, rather than general education which we value today. By 2032, just as plumbers, carpenters, masons and welders would be obsolete so would equity traders, bank clerks, low-level lawyers and IT workers. We will still need pure scientists, social scientists and engineers, but in limited numbers, We already produce 2 million of these every year. But very few are of cutting edge quality. Our challenge is to develop innovative minds with appropriate skills, not to educate 400 million of our under 18 years population to become “thinkers” – the bulk of the thinking will soon be done by machines. Humans will need the skills required to choose and make wise decisions, intermediate between humans machines and train other humans to work with machines. No sign of this transformation in the vision.

Not joined up – conflicting objectives

oil pollution

Third, the vision statement wishes India to become “energy abundant”. But being energy abundant is a retrograde desire tinged with the potential for waste. Energy abundance means energy prices tumbling, spurring even more per capita consumption of energy. Surely this is incompatible with the other objective of being “environmentally clean”? Are we really aiming to provide a car or a motorbike to each household, as the vision proclaims, or do we wish to make public transport the most convenient option? Should we not be allocating funds to become energy efficient rather than spending on acquiring or developing more energy resources? The hunger for energy abundance is a stale ambition.

Mushy & emotional, not pragmatic

Fourth, the Niti Aayog aims to make us a “globally influential nation”. How is one to go about this Dale Carnegie-type revamp? India has thumped the tables of the United Nations for over five decades. And yet, suddenly today, we are more influential globally than ever before because of our large, growing markets, relatively easy access for foreign capital and technology, facilitating internal institutional arrangements and stable polity. Influence is an outcome of domestic capacity, confidence and conviction. These 3C’s are the drivers we should be looking at. Best, like Arjun, to aim for the eye of the bird and not get distracted by the clouds floating around.

Process matters for cooperative federalism

Fifth, the Niti Aayog was constituted to showcase cooperative federalism and be the entry door for its implementation. But it remains poorly organised for living by this principle. Its staff should be deputed both by the Union government and directly by the state governments, much like multilateral entities operate. It must have a permanent secretary-level board to review and clear documents to be presented to the governing council, and provide a forum for discussion and implicit negotiations between officers from the Union and the states deputed to the Aayog. The governing council should structure meetings to provide for negotiations at the political level to evoke the spirit of cooperation and collaboration. Currently, the council functions more as a receptacle for the views of state governments and offers an opportunity for the Union government to tell states what it is doing, just like the Planning Commission used to do.

Put some flesh on the vision

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The vision unveiled, yesterday, is muddied by a vast array of disjointed initiatives, thereby reducing the clarity of purpose expected from such a document. Words matter and must be used selectively and deliberatively. Otherwise a vision is nothing but a laundry list of wishes. For years the World Bank “dreamt” about a world free of poverty. It now recognises that wishes need to disciplined to the takable actions to convert wishes to reality.

The public expects much, much more than old wine in new bottles from Mr Modi- especially over the next decade. He and the outstanding talent in the Aayog, must allocate time for thoughtful negotiations at multiple levels. There is no other way to make others — particularly the state governments — feel like valued members of the same Team India!

Adapted from the authors article in The Asian Age  April 25, 2017 http://www.asianage.com/opinion/oped/250417/niti-aayogs-vision-2032-disappoints.html

PM NITI 3 GC

 

Climate balance sheet post Paris

Paris cops

Paris cops patrol the streets prior to COP21: photo credit: http://www.nytimes.com

The Paris terror attack, days before the COP21 meet, seemed to be the only outlier in the run up to this event. Expectations from the meet were low and procedural, rather than substantive, in terms of doing something concrete and time bound to limit global warming.

There will be a deal…but it will be minimalist…noncontroversial….and most importantly universal…it will not make the commitment or the result legally binding…it will sidestep… review of the INDCs.On additional finance…it will not mention specifics” thereby freeing developed countries from their obligation under the UN Framework Convention on Climate Change to take the first and drastic actions because of their historical responsibility

Sunita Narain, India’s combative, veteran climate campaigner,November 22, 2015.

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The UNFCC (UN Framework Convention on Climate Change) has assessed the Intended Nationally Determined Contributions (INDCs), comprising actions till 2030, submitted by 166 countries as insufficient to hold global temperature increase over pre-industrial levels at the targeted 2⁰C. This is not what signatories to the 1997 Kyoto Protocol intended when they signed on for equitable, differentiated commitments to reduce Green House Gas (GHG) emissions.

The Science Of Climate Change

In the two decades since Kyoto, despite regular conferences of the parties to the UNFCCC 1992, an agreement has been elusive on the timelines and volumes for mitigation actions by specified countries. Adequate finance for mitigations is another problem. Meanwhile GHGs have continued to accumulate and the globe has continued to warm up.

Each of the last three decades has been the warmest since 1880. The global average temperature was 0.8⁰C higher in 2012 than in 1850. The science on what has caused the increase in temperature points to the accumulation of GHG – 78 per cent of which is carbon dioxide emissions from the burning of fossil fuels.

The IPCC (Intergovernmental Panel on Climate Change) in its fifth report in 2014 estimated that the maximum emissions the globe can adjust to, without severe adverse consequences, is around 2900 Giga tons of CO2. Accumulations by 2011 were already 1900 Gt CO2 leaving just around 1000 Gt of carbon space for future emissions. With annual emissions at around 50 GtCO2 in 2010 this leaves just about 20 years (till 2030) to prevent the globe going over the “tipping point”- popularized by the metric of a mean temperature increase of 2⁰C.

“Enormous costs and human suffering are inevitable unless adequate concessional finance drives mitigation aggressively and countries pull together to define a common strategy”

R. K. Pachauri Director General TERI and ex chair IPCC, November 27, 2015

The Conundrum

Collective action involving 196 sovereign nations is a gigantic task. Consider how porous the implementation of the Non Proliferation Treaty 1970, banning nuclear proliferation, has been even though it recognizes just five countries as Nuclear Weapon States.

At the heart of the problem of climate change compliance is the long disconnect between irresponsible behavior today and consequences occurring a century later. Corporate entities and nations rarely strategize beyond twenty years. This implies we should budget for crossing the tipping point. The inevitability of this scary scenario is what most nations – developed and developing – seem to be working towards.

Is there still time to do something?

Rapid economic growth in the developing economies is the best solution to even out the existing asymmetry between the capacity of the developed and the developing world to deal with climate change. But it also advances the “tipping point” by filling up the available carbon space. One-third of the world GDP today and nearly one half of incremental GDP added during the period 2000 to 2014 was contributed by low and middle income countries.

The OECD estimates that its trend growth till 2050 will be around 1¾ to 2¼ per cent per year. Compare this with expected growth in non-OECD countries of 7 per cent till 2020 declining to around 5 per cent in the 2030s and to about half that by the 2050s. Today’s developing countries will account for more than 60 per cent of the world’s GDP by 2030. This will still be less than their share of 85 per cent in the world population of 8.5 billion in that year, as assessed by UNDESA (UN Department of Economic and Social Affairs). But the continuing differential in economic growth will empower these new economies.

The Kyoto Protocol arrangements visualized a static world divided into Annex 1 (industrialized) and other countries, with only the former morally obliged to reduce emissions to “pay for the pollution” they had created. This argument – thin as it was even then – has proved impractical in the face of a dynamic and integrated world economy.

The developing world has copied the carbon-intensive path as it has grown richer. A bald per capita comparison of energy consumption across countries hides the fact that elites in developing countries – who are the domestic role models – are at least as energy profligate as people of a similar income level in the industrialized world. Moral outrage at the profligate West is mere rhetoric. But it is also true that the rich have not uniformly stepped up to the plate. In contrast, several “newly emerged economies”, like India, are pulling above their weight.

Interim strategies till 2030

Some more scientific clarity please

Much of the resistance to spending more on adaptation and mitigation relates to the uncertainty with respect to the timing and magnitude of the impact and the credibility of mitigation options. Diluting the uncertainties can greatly enhance the willingness to invest in green options for growth.

360⁰ strategy for sustainable development

Global climate concerns need to be built into local development strategies. Working bottom upwards rather than the more usual top down approach can pay rich dividends in resolving the presumed trade-off between development and the environment.

Take sea level rise – that most dramatic of adverse effects – which is expected to force people in small islands and low lands to migrate. A Climate Central Research Report estimates that a 3⁰C increase in temperature is expected to result in a rise in the sea level between 4.7 to 8.2 meters and induce displacement of between 255 to 597 million people based on 2010 population levels.

China has the most to lose from habitat disruptions followed by India, Bangladesh, Vietnam, Indonesia, Japan, the United States, Philippines, Egypt, Brazil, Thailand, Myanmar and the Netherlands, in descending order. Land use and building regulations can regulate further construction in the areas to adapt infrastructure to the likelihood of being inundated. But as the recent Chennai disaster shows, government and citizens are not sensitized to this threat.

Taxing land use appropriately can boost local government revenues whilst also optimizing land use, resulting in more energy efficient cities and villages. A 360⁰ approach to sustainable development, as embedded in the Sustainable Development Goals adopted earlier this year, is the way to go.

Compensate for the conservation of natural resources

Just as forests are a carbon sink, coal or oil reserves, left unexploited in the ground, are also voluntary economic sacrifices. Compensating the public or private owners could incentivize conservation. Of course there are political economy issues associated with compensatory transfers. Natural resource rich countries may be non-democratic and dictatorial. Some oil rich regimes in West Asia use oil wealth to indirectly support the political use of terror. Empowering such governments with fiscal transfers may cross humanitarian and security “red lines”. But the principle can be applied selectively to freeze the threat of incremental carbon emissions.

New institutional arrangements

Effective institutions raise the benefits of cooperative solutions or the costs of defection, to use game theoretic terms

Douglass C. North, Nobel Laureate and Institutional Economics Guru.

-Douglass_North

Institutional change imposes costs. But it can be the game changer for getting results by aligning incentives with outcomes. We would do well to recall this central thesis of Nobel Laureate Douglass C North, Institutional Economist, who passed on last month. Changing the institutional framework within which foreign aid works and international cooperation arrangements are structured can have similar outcomes.

Incentives for improving cooperation

Unless shifts in the international economic fundamentals are explicitly recognized and factored into the architecture for cooperation, useful outcomes become prisoners to the asymmetry between intent, capacity and authority of individual countries. Implementation of the long sought for reforms in the governance of multilateral institutions could be one option to signal the need for emerging economies to play a more substantive role.

Going beyond voluntary pledges of finance

Additional finance is critical for mitigation. The existing arrangements seek to funnel additional funds provided by developed countries into the Green Climate Fund. But only $10.2 billion has been pledged against the targeted annual receipt of $100 billion by 2020. Dwindling growth, ageing populations and a reducing share of the rich countries in the world GDP are unlikely to create the political economy drivers for making them more generous.

“India is pulling above its weight to contain climate change. But without similar additional effort from the legacy economic powerhouses, achieving the target of 2⁰C is tough. No developing country should be pushed into having to trade-off growth for environment.”

Ashok Lavasa, Secretary Environment. Government of India, November 27, 2015

Lavasa

A universal “carbon tax” is an alternative, straight forward approach. But it raises implacable issues of equity based on differential natural endowments and differential access to technology across countries.

Show me the money!

A better proxy of wealth to tax is cross-border investment. Imposing a tax on international capital flows, at a time when liquidity needs to be enhanced, does not make intuitive sense. But the distortionary impact can be minimized by keeping the tax at low levels making it too fractional to inhibit individual transactions.

The annual flow of cross-border private investments (debt, portfolio and foreign direct investments) has reduced significantly since the downturn of 2008 but the IMF still estimates it at US$ 4 trillion. Capital exporting countries also tend to be those which are growing well. Green bonds are already in the market. One driver of cross-border investments is the search for higher returns abroad or risk diversification. These drivers are unlikely to be diluted by a marginal tax on private capital outflow. The green tax could be a significant and buoyant source of green finance.

hourglass

Time is running out. The existing clunky climate arrangements are broken. A new institutional framework is needed to integrate growth, development and environmental preservation. Improving the science of climate change is critical for a nuanced least-cost assessment of the balance between mitigation and adaptation. “Value for money” must replace today’s environmental theology to make people willing to pay for change.

Adapted from the authors article in http://swarajyamag.com/world/beyond-the-paris-meet

Myopic Urbanization

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Divisive economics is worse than divisive politics. Proponents of Urbanization are the loudest proponents of economic divisiveness. The vision they subscribe to is of shinning cities connected by corridors of gold, glittering like diamonds in a waste land of the rest of Bharat. Their justification is that the rest of the World has adopted this approach. But India constitutes 17% of the World’s population and around 33% of the World’s poor people. It is for us to define “good practice” in development, not to blindly follow international examples, which do not relate to the context of India.

A second “best” defense of “urbanization wallahs” is that it is “inevitable” so best to plan for it. The “inevitability” is related, yet again, to the manner in which growth has happened in the past and not to the specific prospects for India in the future. The fact that even by 2039 only 50% of the population is expected to be in “urban areas” is glossed over, whilst making the inevitability argument. In any case we must not succumb, further than we already have, to the “everything is written” syndrome. It is for Indians to write their own destiny.

Here are three reasons why a divisive focus on urbanization is retrogressive.

First, people tend to fall into the category the State creates for them. Caste, gender, religion are traditional fault lines created by “Authority” such as it was defined since ancient times. None of these provide any progressive social value today. The modern World identity of Urban versus Rural is as corrosive.

The needs of a shopkeeper in a village or a city are much the same; a serviceable road linked to the habitations of their bulk suppliers and customers; electricity for extended business hours, storage of perishable goods and medicines; security of life and property; a collection service to collect the trash generated by customers and sanitation facilities; customers with money in their pockets and a bank in which to safely put her money and access credit; telecommunication links to remain in contact with current events and clean water. Why would we want to discriminate in the standards of supply of these public goods between urban and rural areas? By creating “urban” and “rural” labels we are perversely creating a modern fault lines around which antagonistic interest groups start to coalesce. Please stop this. We have enough fault lines as it is. It doesn’t help when power elites benefit from the touting of urbanization.

Second, sustainable development is indivisible. You cannot steal from the future to make the present pleasant. You cannot fatten the urbanite at the expense of the rural poor. In our democratic society, you cannot cordon-off urban development from rural prosperity as China can and does. Urban centric development is self-corroding due to unlimited in-migration from rural areas in much the same way as international immigrants storm the national borders of developed countries, spawning land and migration mafias and vote banks. Cities and rural areas are organically linked as a sugar factory is linked to the cane fields; a steel factory to the iron ore mines and an electric power generating station to the coal mines, the water or solar, wind or marine energy harvesting area.

 Area based “indivisible” development optimizing on the comparative advantage of each development area has been a standard development tool. Why have we abandoned it? Let us instead abandon the decrepit slogans of the past and opt for integrated development which maximizes value generation using resources which are available locally whilst benefiting from India’s vast, common, domestic market and the liberalization of international trade. Innovation in India need not be limited to cities it has to be a fundamental credo of growth.

Third, the literature tells us cities benefit from the economics of agglomeration. That is why incomes are higher in cities and businesses happy to locate there. Population density is higher so it is cheaper to provide public services. Product markets are larger so scale economies kick in for suppliers and effective competition can pass on the benefits to consumers. Finally, the human element; traditional identities (religion, caste and gender) are replaced by modern identities in the anonymity of cities; professional human networks leverage human capacity and aspirations change. In a recent survey, two thirds of Lady Shri Ram College alumni (admittedly an elite Delhi college for women pulling in the best) viewed their professional identity as the primary one, even over gender.

All these are indeed the virtues of cities, but should they also not make the cities self-financed? Do they justify the subsidies provided by the State to keep cities alive and humming at quality-of-life standards far above rural areas? Collection of user charges even in metros is rarely more than 40% of the cost of providing services. Revenue collected by cities from their own sources (by taxing residents and from their real estate and other assets) only meets slightly more than 50% of their expenditure. The rest is grants from the Government of the related State or the Government of India. Development schemes which are off-budget for Cities but are directly funded by the Central Government, like the Jawaharlal Nehru Urban Renewal Mission further add to their kitty of goodies. A full accounting of the actual distribution of the government’s resources between urban and rural areas, including expenditure on education, health, science and technology, industry would further skew the allocation in favour of cities, where the elite reside. This resource allocation bias for cities is indefensible.

Relying on urbanization for economic growth is an end-of-the-pipe option, like a housewife resorting to RO filtration to drink clean water as against the State cleaning the rivers and other ground water sources. It is expensive and exclusionary.

Ignoring the human cost of migration from the villages to cities, in search for work, including the life cycle social costs of predominantly male migration, in large numbers, is scary.

Lastly, in the context of the recent democratic trend of targeted social disruption as an instrument of political power, cities are powder kegs waiting to be blown up. A “soft” State, like India, cannot cope with the unleashing of such violent and disruptive, social pressures.   

 

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