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A Policy With Many A Right Intention: Bold Moves
A Policy With Many A Right Intention: Bold Moves
Tilak
Thirty-four years after the last National Policy on Education was introduced, in 1986, the
National Education Policy, 2020 has been announced. It has been approved by the Union
Cabinet, and will hopefully be approved by Parliament soon. It has several innovative ideas and
daring proposals, but also makes a few problematic assumptions.
Bold moves
It is heartening that there are statements in the policy such as “education is a public
good” and “the public education system is the foundation of a vibrant democratic society”. I
wish these statements forcefully guide the formulation of the policy in all aspects. The
recognition of education as a public good has important implications for public policy in
planning, providing, and financing education. It also has important implications for the state’s
approach towards private education. In fact, benevolent private players and private
philanthropists draw inspiration from the nature of education as a public good. It is public
education that contributes to the building of nations, their growth — socially, economically,
politically, culturally, and technologically — and the building of a humane society. There are
many more statements in the policy that may be welcomed. For instance, the policy promotes a
holistic education as well as “each student’s holistic development in both academic and non-
academic spheres”, emphasises extra-curricular activities, emphasises research, speaks of
“substantial investment in a strong, vibrant public education system”, and so on.
The major recommendations of the Committee that have been approved include a
5+3+3+4 system in school education that incorporates early childhood care and education;
universal education that includes the secondary level; adoption of school complexes; breakfast
in the school meal programme; and introduction of vocational education at the upper primary
level. A series of reforms have been proposed in higher education too. These include a
multidisciplinary system offering choices to students from among a variety of subjects from
different disciplines; integrated (undergraduate, postgraduate and research levels) education; a
four-year undergraduate programme; and overhauling of the governance structure in higher
education. There will be just one regulatory body for the entire sector in the Higher Education
Commission of India. The policy also places emphasis on the liberal arts, humanities, and Indian
heritage and languages; facilitates selective entry of high-quality foreign universities; aims to
increase public investment in education to 6% of the GDP; promises to provide higher
education free to about 50% of the students (with scholarships and fee waivers); and aims to
increase the gross enrolment ratio in higher education to 50% by 2035. Some of these
proposals were suggested by earlier committees such as the Yashpal Committee and C.N.R. Rao
Committee, and several experts. As they have immense scope in revitalising the system, we
may applaud many of these moves.
Some policy decisions are bold. For instance, the policy says, “Wherever possible, the
medium of instruction until at least Grade 5... will be the home language/mother tongue/local
language/regional language.” It also says the three-language formula will be implemented. The
first proposal, which should apply to all schools including private schools, will reduce elitism
and dualism in schools to a great extent, though one might expect a bolder move like a
common school system, which would be a greater equaliser. The three-language formula will
promote national integration. Reforms like revamping the University Grants Commission and
abolishing the affiliating system were only dreamt of earlier by many experts. Of course,
implementation of these audacious reforms is still a major challenge.
A sweeping policy document on education has taken a long time in coming — the last such
being unveiled way back in 1986. The National Curriculum Framework 2005 was a pedagogical
document, whereas the present one looks at overhauling the structure of school and college
education. It suggests moving from a 10+2+3 system to a 5+3+3+4 one; easing the curriculum
burden with emphasis on concepts as opposed to rote learning; doing away with the cast iron
division between ‘science’ and ‘arts’; and at the college level bringing in a four year
undergraduate course with ‘multiple exit’ options. Foreign universities will be invited, a move
that will lift standards, if they indeed do come. The intent to make learning interdisciplinary at
higher levels is unexceptionable. The limitations of over-specialised learning have become
apparent in an increasingly complex world, impacting the quality of decision-making by
corporates and governments. Interdisciplinary courses will enable students to align their pursuit
of studies with their aptitudes, hopefully reducing drop-outs in the process.
However, the challenges lie in universalising access, developing on principles of the Right to
Education Act, forking out finances, arriving at a consensus with States on issues like an apex
body for higher education and common entrance exams, and perhaps most importantly, in
capacity building of teachers. There has been no systemic effort to create quality teachers, with
state-run institutes not measuring up to the demands of the day — more so in an age where
teachers need to go beyond what is available on the Internet. Eclecticism in curriculum must be
matched by a focus on creating teachers who can deliver. It is not surprising that annual ASER
surveys report dismal learning outcomes. In restructuring courses to make them ‘easier’ and
‘interesting’, rigour should not be sacrificed. It will hurt our position as a knowledge economy.
The policy has mooted regional language medium of instruction at least till Class 5. This seems
like going against the grain, given the social demand for learning English. The trouble is that
English is a global language, but if teachers are ill at ease in teaching subjects such as Maths,
Accountancy and Physics in English it also puts students at a disadvantage.
Perhaps, the most significant policy suggestion is on financing. It suggests that the Centre and
the States will work together to increase public investment in the education sector to 6 per cent
of the GDP. The policy makes a strong economic case for “investment” in education, as against
regarding it as “expenditure”. Indeed, India’s future depends on this shift. Its budgetary bias
against developing human capital has lasted far too long.
Digital-driven solutions
We have two choices: First, sit back and watch. Second, act. If we choose the latter, it is the
time to think for out-of-the-box solutions. If schools fail to accommodate the children, can we
break the walls, as it were? If we don’t have more teachers, can we set up a system where one
teacher can effectively teach more children?
We need to redefine our education system in rural India. We need to work on creating a
different kind of infrastructure, and we need to invest in building teaching capacity, but not by
sticking to conventional training methods. We have to leverage innovation in technology in
order to deal with the numerous factors that can fail us in ensuring education for our coming
generation in the post-Covid world.
But this is easier said than done. It requires fast-tracking the growth of the digital
communications infrastructure in rural India, bridging the digital divide and, most importantly,
creating a free learning platform where we track the progress of each child rather than just
making content available through TV or YouTube. Learning is not a process that starts or ends
with content.
Besides this, we need to equip teachers with multimedia tools to allow them to simultaneously
teach hundreds of children remotely across several locations, which will help address the
shortage of teachers in these schools. Digitalisation of education through well-thought out
interventions is the only way forward, and if we do it systematically, it can address various
problems ailing the education system of the country.
And this requires preparing one of the largest workforces — the teachers — to attempt
something they have never done before: Using new, innovative teaching methodologies and
tools. We cannot wait for the pandemic to peter out before we begin doing that, because time
does not wait for anyone.
Rebuild India’s confidence, revive the economy
These are extraordinarily difficult times for our nation and the world. People are gripped
with the fear of disease and death from COVID-19. This fear is ubiquitous and transcends
geography, religion and class. The inability of nations to control the spread of the novel
coronavirus and the lack of a confirmed cure for the disease have exacerbated people’s
concerns. Such a heightened sense of anxiety among people can cause tremendous upheavals
in the functioning of societies. Consequently, disruption of the normal social order will
inevitably impact livelihoods and the larger economy.
The economic impact of COVID-19 has been much discussed. There is unanimity among
economists that the global economy will experience one of its worst years in history. India is no
exception and cannot buck the trend. While estimates vary, it is clear that, for the first time in
many decades, India’s economy will contract significantly.
It is thus imperative to act with utmost urgency to nurse the economy back to good
health. The slowdown in economic activity is both a function of external factors such as the
lockdown and behavioural changes of people and enterprises, driven by fear. The foundation
for reviving our economy is to inject confidence back in the entire ecosystem. People must feel
confident about their lives and livelihoods. Entrepreneurs must feel confident of reopening and
making investments. Bankers must feel confident about providing capital. Multilateral
organisations must feel confident enough to provide funding to India. Sovereign ratings
agencies must feel confident about India’s ability to fulfil its financial obligations and restore
economic growth.
This amount, in Jan Dhan accounts, should be made easily accessible by improving last mile delivery
of cash, reducing rejections, and putting in place a digital system where ongoing issues can be
swiftly picked up and resolved
Covid highlighted two contradictory and critical facts about digital payments and cash for meeting
the needs of India’s vulnerable population. On the one hand, because we had a working digital
payments backbone and had activated Jan Dhan accounts across the country, it meant that
delivering Direct Benefit Transfers to BPL families’ banking accounts was easy, swift and leakage
free. On the other hand, it also put a spotlight on the fact that there were significant last mile
challenges in ensuring that the money deposited could actually reach intended beneficiaries and
the fact that they needed “cash in hand” to be able to meet their subsistence and emergency
needs.
A survey of around 50,000 BPL households revealed that close to 72 per cent would have either lost
their jobs or seen their wages decrease. Governmental assistance was critical and close to 85 per
cent of such vulnerable households received one of four governmental cash welfare schemes. This
was a good validation of the Government’s ability to respond to the distress faced by people using
the Jan Dhan and Aadhaar architecture.
However, most of these recipients are unable to use digital money/debit cards and hence they need
the money to be available to them in cash form. It is striking that less than 50 per cent of surveyed
persons could actually withdraw money from their accounts. Worries related to lockdown rules and
potential infection stopped people from accessing cash.
There were other reasons that stymied cash access. One was the surge in traffic in biometric
enabled cash withdrawal that resulted in an overload on bank servers and led to large number of
failed transactions. The other was dormancy of inactive Jan Dhan accounts due to extant rules. The
Government responded with a change in Prevention of Money Laundering norms so that
inoperative accounts receiving such transfers could be considered active. Anecdotally, the pressure
on servers also eased up post lockdown.
In spite of this, the percentage of households withdrawing cash remained less than 50 per cent. This
seems like a conundrum. What is stopping access to cash at a time when it is needed most?
The value of balances in bank accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY)
has crossed the ₹1 lakh crore mark, as per updated data on the scheme’s website. A total of 39.39
crore beneficiaries held balances worth ₹1,34,733 crore as on June 17, 2020. This puts the average
account balance of a Jan Dhan account at ₹3,454.
This raises a fundamental issue. Is about 50 per cent not being withdrawn on account of short-term
issues like lockdown and health worries, or are there some significant structural issues that merit
understanding and attention. Should the target be for Jan Dhan account balances to be as close to
zero as possible?
Or, put in a different way, are there ways in which this welfare relief can reach targeted BPL families
and enable spending by them on much needed essentials?
The amount in Jan Dhan balances is approximately 0.8 per cent of GDP and can unlock relief and
consumption stimulus without further pressure on the government’s fiscal health with three key
actions:
Financial deepening
Time is money for a large part of the BPL population. A day spent in going to a bank or ATM is
essentially a day’s worth of labour foregone. It is important to have cash out point coverage across
all areas.
An open source geo-spatial platform can help map existing points of presence for cash
disbursement. It can particularly map areas of need and enable more informed build up of cash
delivery points. This pictorial depiction can further highlight which of these points are active and
functioning so that a trip to that location is not a wasted one.
The good news is that this basic infrastructure already exists and it is only a question of getting a
collaborative of practitioners and infra providers together to make this work.
Transaction success
There are two significant requirements to improve access and reduce rejections in Jan Dhan
accounts. First, biometric failure appears to be an important reason for rejections of transactions in
cash withdrawals. Second is the fact that mobile numbers in this demographic change constantly.
Data shows that 15 per cent of people have the wrong number linked to Aadhaar and 39 per cent
have no number at all. Hence the ability to easily update mobile numbers and to resolve biometric
issues could significantly improve the successful usage of these accounts.
Dalberg’s State of Aadhaar Report 2019 had stressed Aadhaar updation as a key challenge and the
fact that 25 per cent of those who tried to update details had failed to do so. As much as 33 per
cent of those who succeeded had found it difficult. A quick win would be to make all updating
processes online. For things that cannot be updated online (mobile, biometrics), it is critical to have
more points for updation.
Grievance redress
A digital system can be easily architected to have a continuous feedback loop so that ongoing issues
can be swiftly picked up and resolved. Given the existence of a central payments backbone and a
highly advanced digital financial ecosystem, this can be achieved in quick time. It will ensure that
fixing problems and identifying opportunities for improvement become an ongoing exercise.
These three interventions can have a significant outcome of unlocking ₹1,34,733 crore of money to
provide welfare relief, a 0.78 per cent of consumption stimulus at no extra cost to the exchequer
and, most importantly, to strengthen the lives and help recovery of those who need it the most.
As guest workers swallow the insult done to them during lockdown and return to work, it is
only fair to treat them with respect
The photograph of a migrant worker, who had alighted from a Shramik Express in Bihar, kissing the
ground was telling. It reflected his anger at the way he was treated by the governments, not to
mention his employer/contractor and the resolve to never leave his home State again in search of
work. In fact, he should count himself among the lucky 6.3 million people who got a train ride back
home. Thousands of migrant workers had to walk home hundreds of kilometres, many with their
children in tow.
Insecurities — job, income and food — coupled with a fear psychosis forced migrant workers to
panic and return home, defying the lockdown. The reverse migration that ensued brought to light
many aspects of guest workers that the country conveniently choses not to see.
Though they are said to account for 20 per cent of the total workforce — this puts their number
anywhere between 100 million and 140 million — and are said to be responsible for 10 per cent of
GDP, migrant workers get a raw deal. They are paid less and are denied formal contracts even
though they work harder and put in longer hours. They are not given gratuity or medical benefits
and are not entitled to any leave with pay. When at work, they do not have adequate occupational
safety and out of work, they lack a social safety net. Their living conditions are often appalling. They
lack political support as they are disenfranchised (they rarely get an opportunity to cast their vote).
The local population hates them as they are seen as job-stealers.
Even under these circumstances if they continue to migrate for work, it is because they earn much
more than what they can back home. Despite the relatively poor pay, they manage to save and wire
money back home to supplement the family’s income. But the traumatic experience they were
subjected to post-lockdown, many feared, would be the last straw which will deter them from
migrating in search of work again.
With lockdown easing across the country and manufacturing picking up pace, industry is beginning
to miss the migrant workers. Some companies in host States have already sent buses all the way to
Odisha, UP and other home States to fetch the workers. Migrant workers, on their part, have come
to terms with reality. Their initial anger has given way to pragmatism. They have realised that there
is no way they can earn enough staying back in their villages. The demand for jobs under MGNREGS
is far more than what is being offered. The textile sector is Coimbatore and Tiruppur is getting
‘frantic’ calls from migrant labour asking the companies to arrange e-passes and get them back to
work. According to labour economists, as much as two-thirds of the migrant labour will eventually
return to work.
While their return is critical for the country’s rapid economic revival post-Covid, it is only fair that
when they do come back, they are treated with the respect they deserve. After all, they are playing
a significant part in nation-building. Many will be surprised to know that there is already a law —
Inter-State Migrant Workmen Act, 1979 — to prevent exploitation of migrant labour. It calls for
registration of all establishments employing migrant labour and licensing of contractors.
Contractors are mandated to provide details of immigrant labour they have deployed to the
relevant authority. That apart, contractors should ensure regular payment, suitable
accommodation, no discrimination, free medical facilities and protective clothings.
There is a reason why this law has remained just on paper. It is onerous to implement and makes
the cost of hiring a migrant labour more than a local. Yet another case of an over-enthusiastic
bureaucrat defeating the very purpose for which the law was made. As things stand, there is no
information on the number of migrant workers with any State.
What is needed today is a national policy on migrant labour. It should accept that migration is
inevitable as there will regional inequalities in development. It should ensure that a migrant
worker’s economic, social and political rights are protected. They should not be discriminated
against when it comes to pay and other benefits that regular workers get.
They should be registered and given an ID which can be linked to their Aadhaar and Jan Dhan
account. Once this is done, the government can use direct benefit transfer to send them benefits
(experts admit that lack of such a facility caused the large-scale reverse migration now).
The Government’s plan to have a one nation-one ration card will help them source their
entitlements from whereever they are based. Similarly, their voter ID card has to be made portable.
This will ensure that they can participate in the democratic process and gain strength as a vote
bank.
These measures will help in integrating the migrant workers with their place of work. As Chinmay
Tumbe, an expert on migration, puts it: presently “migrants get economic security in the city and
social security in their villages”.
The policy should also ensure that contractors and the employers are made accountable when they
employ migrants. This alone will prevent exploitation. Efforts should be made to skill/re-skill the
labourers and a national registry created for them based on their skills. This will help them find jobs
independently. Today, they are beholden to their contractor for the next job.
Some baby steps have been taken by two large home States — Uttar Pradesh and Madhya Pradesh.
They have set up a Migrants Commission. This is not enough. They should discuss with host States
such as Maharashtra, Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Kerala and Gujarat to
ensure that migrant workers are treated well.
A smarter way is to start economically developing their States and creating local employment. If
they do so, supply of workers to host States will reduce and employers will be forced to treat them
better. But what some home States have instead done is to dilute or dispense with their labour
laws. That will go against the interest of migrant workers.
It has been three years since the Goods and Services Tax (GST), India’s biggest tax reform, was
introduced on July1, 2017. Since then, it has been a roller-coaster ride for the government, for
industries and consumers due to this transformational law, which replaced a fragmented State
and Central based law on indirect tax.
This was coupled with changes and reforms, primarily focussed on rationalising rates,
simplifying procedures, and curbing tax evasion. Additionally, we have also witnessed
stabilisation of one of the world’s biggest online tax compliance system — the GSTN.
As we celebrate the third anniversary of India’s biggest tax reform since Independence, and talk
about the focus areas for the future, let us also rewind and glance at some of the critical
milestones achieved during the past three years.
Increase in tax base: From over 64 lakh taxpayers migrating into GST regime, India had about
1.23 crore active GST registrations as on March 31, 2020. This growth indicates a significant
increase in tax base and a change in taxpayers’ compliance behaviour.
Rate rationalisation: With frequent changes in tax rates, the government continued to focus on
rationalising GST rates. On July 1, 2017, around 19 per cent items were under the 28 per cent
GST rate bracket, which is now down to only around 3 per cent. Also, about 50 per cent items
are in the 18 per cent bracket, 21 per cent face 12 per cent tax, and 25 per cent of items are
subject to 5 per cent GST.
Introduction of e-way bill system: Introduction and stabilisation of the e-way bill system was
also a major step taken in the right direction. By enabling some 56 crore e-way bills generation
in FY19 and around 63 crore during FY20, the system has been largely streamlined and has
enabled hassle-free movement of goods across States.
Legislative amendments and clarifications: From its original shape and form as on July 1, 2017,
the GST law has undergone significant changes. With almost 700 notifications, 145 circulars,
and over 30 orders, significant changes have been made to address taxpayers’ demands, to
carry out procedural simplifications and curb tax evasion.
The above statistics are encouraging and show the right intent of the government towards
further simplifying the GST law. We shall now proceed to discuss the key challenges faced
during these years, which industry hopes will be addressed by the government.
GST policy
Restrictions on the transitioning of pre-GST credits has resulted in multiple litigations
Non-issuance of clear-cut guidelines related to anti-profiteering law has created confusion and
fear in the industry, particularly with those dealing in consumer goods
Issues around “deemed supply” transactions amongst branches in country and related-party
transactions in the country and cross border
Blockage of input tax credits (ITCs) and limited ability to seek refund — that is,, only on exports
and inverted duty structure of goods
Denial of input tax credit on the construction and setting up of related capital expenditure
Mandatory registration for sellers on e-commerce platforms and impact on working capital for
these sellers on account of TCS
Procedural issues
Blocking of input tax credit by authorities in GSTN system due to non-reconciliation
Complex return filing process and issues related to functioning of the GST network system
Ambiguity over jurisdictions, particularly on tax audits and investigations
Investigation authorities commencing detailed audits in some cases
The aforementioned challenges coupled with the impact of Covid-19 have not only affected
large companies but also liquidity of MSMEs. Additionally, due to lack of resources, MSMEs are
also not able to do their regular compliance. In view of these, the following are some of the
suggestions which the government may consider to improve liquidity as well as simplify
compliance:
Improving liquidity
Allow refund of accumulated GST credit due to inverted duty structure, triggered by input
services as well
Permit payment of IGST on import of goods and services, using accumulated input tax credits
Make input tax credit of CGST fungible across States
Allow transfer of GST credit, as scrips
Allow refund of GST paid on capital goods to exporters
Easing compliance
Extension in the timelines for mandatory input tax credit reconciliation for taking ITC beyond
September
Relaxation in the timeline of 180 days provided under Section 16 for taking input tax credit
A world-class, simplified, and technology-enabled robust GST system is not only critical for
sustainable growth, but also imperative for the ease of doing business. In the next few years,
the government may take steps to further simplify the GST law. These steps can prove to be a
harbinger of growth at a time when the entire world is affected by the Covid pandemic.
Implementing e-invoicing and new returns, rationalising GST rates, reducing litigations related
to transitional credits, centralising advance ruling authority, having a single jurisdiction for
audits and investigations, and strengthening the GSTN system would be the key areas to watch
out for in the near future.
Indians used about 12 GB data per month on an average in 2019, the highest consumption globally, and
this is expected to rise even further to about 25 GB (gigabytes) per month by 2025, driven by affordable
mobile broadband services and changing video viewing habits, according to telecom gear maker
Ericsson.
Ericsson, in its Mobility Report for June 2020, said India’s data traffic growth continued its upward
trajectory and it remains the region with the highest usage per smartphone and per month.
Given that only 4 per cent of households have fixed broadband, smartphones are the only way to access
the internet in many cases.
“Total traffic is projected to triple, reaching 21 EB (exabytes) per month in 2025. This comes from two
factors: high growth in the number of smartphone users, including growth in rural areas, and an
increase in average usage per smartphone,” Patrik Cerwall, Head of Strategic Marketing Insights and
Executive Editor of the Ericsson Mobility Report, said on Tuesday.
“The average traffic per smartphone is expected to increase to around 25 GB per month in 2025,”
Cerwall added.
He said that around 410 million smartphone users are expected to be added in India by 2025.
Global total mobile data traffic reached around 33 EB per month by the end of 2019, and is projected to
reach 164 EB per month in 2025.
Cerwall said the largest share of traffic increase during the Covid-19 pandemic has been absorbed by
fixed residential networks, which have experienced a 20-100 per cent growth.
However, many service providers also noticed a spike in demand on their mobile network, he added.
Citing a recent study conducted by Ericsson Consumer Lab, he said 83 per cent of the respondents from
11 countries had claimed that ICT (information and communications technology) helped them a lot to
cope with the lockdown.
While 57 per cent said they will save money for financial security, one-third plan to invest in 5G and an
improved broadband at home to be better prepared for a potential second wave of Covid-19.
Ericsson’s latest report noted that the average monthly mobile data usage per smartphone in India
region continues to show robust growth, boosted by the rapid adoption of 4G.
Low prices for mobile broadband services, affordable smartphones and people’s changing video viewing
habits have continued to drive monthly usage growth in the region.
Ericsson expects the global number of 5G subscriptions to top 190 million by the end of 2020, and 2.8
billion by the end of 2025.
By the end of 2025, 5G subscriptions are expected to account for around 30 per cent of all mobile
subscriptions at that time.
LTE (4G) will remain the dominant mobile access technology by subscription during the forecast period,
it said.
It is projected to peak in 2022 at 5.1 billion subscriptions and decline to around 4.4 billion subscriptions
by the end of 2025 as more subscribers migrate to 5G, it added.
In India, 18 per cent mobile subscriptions are forecast to be 5G and 64 per cent LTE (4G), and the
remaining on 2G/3G in 2025.
Mobile broadband technologies accounted for 58 per cent of mobile subscriptions in 2019, and this
figure is predicted to reach 82 per cent by 2025.
“The total number of mobile broadband subscriptions is set to exceed 1 billion by 2025. The number of
smartphone subscriptions has increased to 620 million in 2019 and is expected to grow at a CAGR of 9
per cent, reaching 1 billion by 2025,” the report said.
Ericsson anticipates that by 2030, up to USD 700 billion of 5G-enabled, business-to-business value could
be addressed by service providers.
In India, the projected value of the 5G-enabled digitalisation revenues will be approximately $17 billion
by 2030.
“5G is a platform for innovation. It enables new services for consumers, enterprises and industry,
including large-scale IoT use cases. Healthcare, manufacturing, automotive and the energy/utilities
sectors are among the biggest revenue generating opportunities for communications service providers
in 5G,” Cerwall said.
India’s solar plans will have to stay their course, despite curbs
on imports from China
India, however, has a long road to traverse if it is to be both cost-effective and
self-reliant in this sector
The Prime Minister’s recent inauguration of ‘Asia’s largest solar power project’ in Rewa,
Madhya Pradesh, yet again sends a signal that India remains serious about clean energy. Yet,
the country’s solar installed capacity, at about 40 GW today, is short of the goal of achieving
100 GW by 2022. The pace of capacity additions has slowed somewhat after the imposition of
safeguard duty on solar cells and modules from China and Vietnam with effect from August
2018. The two-year period for which this duty was imposed ends in a few days. Reports, amidst
a policy of atmanirbharta, suggest that this levy may be continued in the form of a regular
tariff.
A move to build a self-sufficient solar sector for strategic reasons is unobjectionable. It is
notable that China accounted for over 75 per cent of India’s cell and panel imports (totalling
over $2 billion) at least before the imposition of safeguard duties, after which Singapore,
Thailand and Vietnam seem to have plugged some of the gap. That India’s costs are higher now
is apparent from the fact that a ‘manufacturing-linked tender’ awarded by the Solar Energy
Corporation of India in January was based on a tariff of ₹2.92/kWh, which is more than
contracts awarded sometime ago, based on a tariff of about ₹2.50/kWh. It is not as yet clear to
what extent the cells and wafers will be indigenously sourced in such cases. Studies have
estimated that domestically produced modules are 33 per cent more expensive than their
Chinese counterparts. Apart from scale economies playing a role, the cost of the raw materials
is estimated to account for a major share of the cost difference. At present, India is estimated
to have a module manufacturing capacity of 9 GW and a cell making capacity of 3 GW.
Ironically, the indigenous manufacture of PV modules calls for a reliable supply of electricity.
Clearly, India has a long road to traverse if it is to be both cost-effective and self-reliant in this
sector. Yet, there can be no getting away from the need to shift to non-hydro renewables, given
ecological obligations.
While China leads the world in PVs, making two-thirds of the world’s modules, the EU is trying
to make a comeback. The ongoing global stand-off with China will prompt a shift in this
direction, as the EU, once a leader in producing PVs, accounts for at least a fifth of PV
installations globally for which it is reliant on China. It is a sobering thought that solar power
accounts for just 3.6 per cent of India’s electricity generated, and 9.8 per cent of the total
installed capacity. India should take a leaf out of China’s policy book (China’s increase is a post
2005 phenomenon) and create the right demand and supply ecosystem. The PM-KUSUM
scheme is a notable step in this respect.