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Prepare business strategies for districts and leverage existing government schemes to make India a global economic powerhouse

In the face of the COVId-19 pandemic and the rise in food and fuel prices it may appear difficult for the country to reach its US $5-trillion economy target by 2025. But a study conducted by the National Council of Applied Economic Research (NCaEr) shows that the targets are easily attainable by following the bottom- up approach recommended by the Department of Promotion of Industry and Internal Trade (dPIIT).

INFRASTRUCTURE IS KEY

Since both Ratnagiri and Sindhudurg districts fall in the Konkan region of Maharashtra they share similar geographical characteristics and weather conditions and thus have similar potential sectors of economic growth. NCaEr has identified that horticulture sector. Another suggestions to boost trade is the inclusion of cashew in the Centre’s One District One Product scheme and setting up a “cashew export promotion council”.

Unlike cashew mangoes are recognised as an important product; the Konkan region has been declared an agri-export zone due to its Alphonso mango. Ratnagiri has several processing units some of which are 100 per cent export-oriented. But they often do not get mangoes of good quality due to a lack of cold storage and transportation facilities. Hence here too NCaEr recommends setting up necessary facilities under existing central government- sponsored schemes. Quality fears plants aquaculture centres and to promote deep-sea fishing. Crab cultivation can also be encouraged through subsidies or research grants under the Centre’s Mangrove Protection and Employment Generation Scheme 2017-18. The Pradhan Mantri Matsya Sampadan Yojana can help develop a framework for fisheries.

For tourism NCaEr encourages homestays and improving security and safety basic amenities and cleanliness under the Centre’s Bed and Breakfast Scheme and the Maharashtra Tourism Policy.

Similarly the Maharashtra Coir Policy can aid new industries such as handicrafts and jewellery. NCaEr notes that local communities and resources hold the the cashew mango fisheries crab tourism and coir sectors show untapped growth potential in the both the districts. Ratnagiri and Sindhudurg for instance account for 60 per cent of Maharashtra’s  total cashew production. However NCaEr researchers observed that cashew is not directly exported from these districts due to transportation gaps.

This challenge can be partially resolved by building warehouses and cold storages. “Development of a storage facility by establishment of warehousing infrastructure” comes under the Rashtriya Krishi Vigyan Yojana (rkVY) that incentivises investment in agriculture and allied sectors.

Similar provisions are also there in the Centre’s Cluster Development Programme which aims to enhance productivity of micro and small manufacturing enterprises and the Mission for Integrated Development of Horticulture that promotes holistic growth of the can also be assuaged through awareness programmes that highlight its Geographic Indication tag and through training for farmers to adhere to international packaging standards. Farmers can also be encouraged to take up ultra- high density plantations of mango where trees are planted in a dense pattern. This increases productivity and fertiliser uptake and reduces water usage by up to 50 per cent raising the farm income.

The fisheries sector also has existing schemes for capacity- and infrastructure-building. The Blue Revolution: integrated development and management of fisheries a central government-sponsored scheme has provisions to set up basic facilities at landing points processing units effluent treatment key to India’s economic growth. In both the districts institutions like NaBard (National Bank for Agriculture and Rural Development) Marine Products Export Development Authority and the Agricultural and Processed Food Products Export Development Authority have implemented certain projects to boost economic growth. But there is partial to no knowledge of these projects on the ground. While dPIIT has conducted awareness campaigns there is a need for dedicated efforts to narrow the knowledge gap.

As far as countercyclical policy support is concerned it is important to adhere to macroeconomic prudence and to recreate adequate policy buffers. There are certain policy actions India could pursue.

In the latest World Economic Outlook (WEO) released on Tuesday the International Monetary Fund (IMF) has lowered the projected growth rate for the world economy to 3.2% in 2022 and to 2.9% in 2023 from the 3.6% it had earlier projected for each year. Putting these numbers in perspective during the current as well as next year the world economy is expected to grow at a rate slower than the average decadal growth rate of 3.7% prior to the Covid pandemic or that of 4.2% prior to the Global Financial Crisis.

IMF has attributed the growth downgrades to exceptional tightening of monetary policy around the world in the wake of high and persistent inflation the impact of Covid-induced lockdowns in China and the impact of the prolonged Russia-Ukraine war.

A Deeper Dip

That is not all. It has cautioned that the growth out-turns may be even lower than the latest downgraded rates. The downside risks stem from the Russia-Ukraine war getting further prolonged inflation turning out to be sticky despite aggressive policy actions and the persistence of Covid that could continue to result in restrictions on mobility and economic activity. Conditional on these risks materialising global growth could decline further to about 2.6% and 2% in 2022 and 2023 respectively.

In line with the revisions for most other countries IMF has also downgraded the outlook for India’s growth rate from its earlier projection of 8.2% to 7.3% for the current year and to about 6% for next year.

• IMF’s prognosis raises two questions.
• Are these revised projections reasonable for India?
• In what way can this outlook guide the policy framework for India?

The magnitude of the downgrade for the current year is the fourth largest for India less than only the downgrades for the US China and Germany at 1.4 1.1 and 0.9 percentage points respectively. The downgrades for these economies have been attributed to their unique circumstances including high and persistent inflation in the US necessitating aggressive monetary policy actions China’s ‘zero-Covid’ policy resulting in severe lockdowns and Germany bearing the brunt of the war in Ukraine and an unprecedented level of inflation.

India has been impacted primarily by the spillovers of global shocks rather than specific home-grown challenges. Its economy has been adversely affected by the high oil prices and tightening of the monetary policy in the US resulting in the reversal of capital flows. Its growth downgrade may be attributed as much to IMF’s objective of correcting the erstwhile unduly optimistic projected growth rate of 8.2% as to these spillovers.

The revised projected growth rate of 7.3% for India is closer to the official estimates and seems more realistic. If the global environment turns out to be as grim as projected by IMF the growth out-turn for India this year may be even slower at or a bit below 7%.

Beyond these headline numbers for projected economic growth rates for various countries the WEO Update also contains relevant projections for oil prices inflation and trade volumes:

• Oil price would peak this year and decline by 12% in 2023.
• Global inflation is projected to peak at about 8% this year while settling down to below 6% next year.
• Inflation level in advanced economies is expected to climb down from 6.6% this year to 3.3% next.
• The trade outlook is more sombre with an anticipated growth of only 4% this year falling further to 3% next.

Shout-Out to Green Shoots

From India’s perspective this outlook on balance seems positive. Being a net importer of oil India’s growth rate is directly shaved off by high oil prices in a technical accounting way as they lead to an increase in the import bill of oil. Any reduction in oil prices in the near future as predicted by IMF will lower India’s import bill and boost its growth rate.

Benign projections of oil prices and global inflation combined with projections of a normal monsoon indicate that domestic inflation will peak soon. This would result in a rather short cycle of monetary policy tightening likely to end during the fiscal year.

Apart from the WEO updates other predictions have highlighted similar trends. A recent Bloomberg survey indicated that US policy rates are expected to peak by early- to mid-2023 and to thereafter start declining. These developments would help restore normalcy in the international financial markets and bring back investment flows to emerging markets including to India.

The gloomy trade outlook will however have a detrimental impact on growth in India. A ray of hope is that India has shown encouraging though still nascent trade buoyancy during the past year. This needs to be consolidated on priority. Towards this end it would be prudent to focus on:

• Firming up new free trade agreements (FTAs). Ensuring a competitive exchange rate.
• Leveraging the policy attention to logistics in the trade sector.

As far as countercyclical policy support is concerned it is important to adhere to macroeconomic prudence and to recreate adequate policy buffers. Possible policy actions include:

• Normalising monetary policy.
  
• Allowing the exchange rate to act as a natural stabiliser.
  
• Out-of-the-box thinking to make the country’s fiscal policy sustainable again. This is particularly critical as India’s fiscal policy has ostensibly run its course and is calling out for an urgent and much overdue revamp.

Poonam Gupta is Director General at NCAER. The views expressed are personal.

While Government schemes may help map current strengths all districts need to have a vision for the future and plan for it in a holistic and integrated fashion. 

The Aspirational Districts Programme is doing a commendable job of pulling backward districts away from a low equilibrium state to a high one.  Along with that the Government of India (GoI) is also implementing several district-focused schemes for example developing districts as export hubs One District One Product (ODOP) scheme District Skill Development Plans (DSDPs) etc. 

While these schemes may help map current strengths all the districts need to have a vision for the future and plan for it in a holistic and integrated fashion.     

Hence there is an urgent need for all the districts to develop their own Perspective Plans. The GoI should develop a framework for such a plan and how to implement it which will act as a guidance tool for all districts.

A perspective plan is a blueprint a framework for long-run growth of 15-20 years.  This will help determine districts’ growth strategy both in the medium to long run versus setting out detailed plans of achieving specific targets and help direct district-focused schemes based on evidence.  

Within the ambit of a District Perspective Plan (DPP) the district should first utilise the available secondary data to understand where it has a current comparative advantage in goods & services and where advantages can be developed. 

In an integrated fashion the DPPs need to take into account all the districts’ advantages and disadvantages in various dimensions namely geographic demographic economic ecological social etc.  Marrying growth strategies with spatial planning will help plan further for land use urbanization urban development logistics public transport environment and energy etc.

The sustainable development goals could also be integrated with this. DSDPs can be further developed based on this.   Computation of Domestic District Product input-output models can come to the aid of districts in planning a green growth trajectory along with the identification of sources of growth.

This kind of planning is practical and feasible. The National Council of Applied Economic Research (NCAER) has recently prepared District Development Plans (DDPs) for three districts of India – Ratnagiri & Sindhudurg in Maharashtra and Solan in Himachal Pradesh – for the Department for Promotion of Industry and Internal Trade (DPIIT) Ministry of Commerce and Industry. 

The DDPs were prepared following the DPIIT’s recommendation to follow a bottom-up approach with districts as planning units to work towards the government’s strategy of making India a USD 5 trillion economy by 2025. 

This required undertaking an action-oriented policy research at the district level to enable districts to achieve an additional 2-3 per cent growth and the aforementioned districts were chosen as pilot districts.  

The preparation of DDPs were phased into two parts. Phase I involved thorough desk research secondary data analysis and developing an initial implementation plan based on stakeholder consultation with district administration and industries. Hence NCAER identified the potential economic activities/sectors for growth and the inherent limitations.

The second part of the study or Phase II was based on more rigorous consultation; visits to tehsils/blocks; and interactions with farmers/fishermen/businesses. The key implementable recommendations were proposed in this part of the study for the policy-makers to facilitate fast-track growth in the districts. 

Apart from GI-tagged Alphonso mango cashew was identified as an additional product with export potential from the Maharashtra districts of Ratnagiri and Sindhudurg under the ODOP.

Other than cashew mango there is international demand for other products like fish and crab. Therefore the districts are proposed to be developed as export hubs so that the producers and traders could ship these products out directly from the districts saving the transport cost to the nearest port in Mumbai 300 km away from Ratnagiri. 

For Solan Asia’s largest pharmaceutical hub a few amendments were proposed in the state’s industrial policy based on consultations with the industry. Some of these amendments were made in the state’s New Industrial Policy-2019.

Further given the availability of wild cannabis in abundance its cultivation was proposed to be legalised which was eventually allowed to be used for industrial and medicinal purposes by the State government.    

In the second phase NCAER provided hand-holding support to the district economic development units for implementing the suggested growth strategies and recommendations for course corrections. 

In order to facilitate their easier implementation the recommendations were converged with the existing central or state government sponsored schemes in the districts.The concerned central or state government ministries were directed to examine the proposed recommendations and take them forward to achieve favorable and desired outcomes. 

The DPPs can enhance state capacity and contribute to state-level growth & eventually all-India growth.  It is imperative that the Government develops a holistic & integrated DPP framework for districts.

Bornali Bhandari and Poonam Munjal are Senior Fellows at NCAER. Views are personal. Additional comments by Dr Sanjib Pohit Professor NCAER.

Indoor air pollution is as much a health hazard as outdoor pollution and women bear the brunt of it. Use of clean cooking fuel must increase.

The mistaken belief that pollution-related illnesses can be controlled mainly by controlling outdoor air pollution has led us to ignore the serious challenges posed by indoor air pollution. People spend a large portion of their time in homes where solid fuels are burnt in open stoves leading to indoor concentration levels that probably account for a larger total exposure than outdoor sources in the region.

The World Health Organization estimates that 4 million people die each year from pneumonia and other diseases caused by household air pollution.

There is growing scientific evidence to support the numerous anecdotal accounts that relate high biomass smoke levels to important health effects. These are principally acute respiratory illnesses in children COPD (chronic obstructive pulmonary disease) adverse pregnancy outcomes and lung cancer in women.

Kalpana Balakrishnan Professor of Biophysics Sri Ramachandra University Chennai terms burning of biomass in households as the single largest cause of air pollution deaths in India followed by coal combustion and crop burning. Women children and the elderly are at the greatest risk from toxic emissions.

Kirk R Smith an environmental scientist from the University of California at Berkeley and also a member of the Intergovernmental Panel on Climate Change which received the 2007 Nobel Peace Prize argues “The impact of household air pollution is on a scale with any other major health risk in developing countries including exposure to HIV mosquitoes or dirty water.”

The causes

Firewood is the main source of fuel used for cooking and heating in large parts of the country.

Additionally people use cow dung crop residue and charcoal for heating and cooking. Although many hundreds of separate chemical agents have been identified in biofuel smoke the four most emphasised pollutants are particulates carbon monoxide polycyclic organic matter and formaldehyde.

Burning wood and other biomass fuels indoors increases the concentration of PM2.5 particles.

According to the latest National Family Health Survey (2019-21) report 56 per cent of the rural households still use solid wood and 11 per cent use grass crop residue or dung cake for cooking. While urban households have better access to cleaner fuels their living conditions increase their vulnerability. Poor ventilation cooking inside the living areas asbestos roofing and gaseous pollutants like formaldehyde volatile organic compounds released from paints etc. compound the challenge.

Recognising the public health hazards created by indoor air pollution the government launched the Pradhan Mantri Ujjwala Yojana (PMUY) in 2016. The provision of free LPG connection to BPL households under the scheme boosted the access to clean fuel among these households as evident from the NFHS data. Usage of clean cooking fuel among rural households has increased from 24 per cent during NFHS 4 to 43 per cent during NFHS 5.

However biomass fuels still form the backbone of major cooking activities. LPG is used for small and quicker cooking like the preparation of tea heating cooked food etc. Income loss due to the coronavirus pandemic and gradual increase in LPG price have added more hurdles to refilling of cylinders for subsequent rounds. The refill consumption remained pretty low (3.08 cylinders in the 12 months preceding September 2019) among the beneficiary households compared to the national average of 6.25 cylinders (14.2 kg).

To encourage refills the government recently announced a subsidy of ₹200 per cylinder to eligible households. However considering the high price of the cylinders (more than ₹1000 each) a majority of these poor households might find it difficult to obtain refills.

Traditionally cooking is regarded as the duty of the female members of the household. Since men are primary earners any investment in clean fuel or chimney/ventilation in the kitchen becomes a low-priority affair. Research by Pallavi Choudhuri and Sonalde Desai finds that an increase in women’s incomes is associated with greater use of clean fuels in contrast an increase in men’s earnings is associated with consumable items like automobiles or vehicles which increase pollution. They also argue that access to clean fuel increases the time available to women to participate in wage work and helps increase maternal time investments in child care and supervision of children’s education.

As India takes over the presidency of the G-20 it would be an ideal opportunity to bring developing world sensibility to the climate commitments.

 At present much of the discourse on reducing carbon footprint emphasises vehicle emissions and fossil fuel use in the production of electricity but much less attention is paid to the use of clean cooking fuel. Increasing the use of clean fuel will be a win-win situation for the environment as well as for women and families.

The writer is a Fellow at NCAER National Data Innovation Centre. Views are personal.