All newspaper Editorials at One place 08 Feb 2024

All Newspaper editorials in one place – February 08, 2024

THE HINDU – Winning trust
THE HINDU – Music without borders
THE INDIAN EXPRESS – The gloves are off
THE INDIAN EXPRESS – Taking cancer on
THE INDIAN EXPRESS – Bumrah days
THE TIMES OF INDIA – ‘I’ In Society
THE TIMES OF INDIA – Job Half Done
THE ECONOMIC TIMES – Digibanks, Know Thy KYC-Keeping
THE ECONOMIC TIMES – With Hotel Check-Ins, Add Hotel Check-Ups
THE HINDU BUSINESSLINE – Algo excesses
BUSINESS STANDARD – Ensuring energy security
BUSINESS STANDARD – Balanced approach
FINANCIAL EXPRESS – Resources for Railways

THE HINDU

February 8, 2024

Winning trust

JMM and its allies found a viable way out of the Hemant Soren arrest ordeal

By nominating Champai Soren to the position of Chief Minister and ensuring a convincing win in the trust vote, the Jharkhand Mukti Morcha and its allies, the Congress and the Rashtriya Janata Dal, did well to weather the storm after the resignation of Hemant Soren over corruption charges. The predominantly tribal populated Jharkhand remains one of just a few States that have not been wrested by the Bharatiya Janata Party ever since the beginning of what political scientists call the era of the BJP-dominated party system in northern India. It is to the JMM’s leadership’s credit that it sought to elevate a leader who played a major role in the State’s formation (after its bifurcation from Bihar) rather than appointing another family member, even if this was a decision taken under duress, and avoiding the impression that it was the Shibu and Hemant Soren-led family that would rule by proxy. This, in a way, bucked the trend in most regional parties, where power tends to concentrate in the families of its most popular leaders, either due to the fact that this allows party finances to be controlled by those closest to the leadership or because such parties are unable to evolve into cadre-based, ideology-driven units.

By catapulting Champai Soren to the helm of governance, the JMM signalled a return to its past when it was more a movement and less a typical party. Yet, two issues should worry the party. His appointment was also made possible because of a family rift over the possible candidature of Kalpana Soren, Hemant Soren’s wife. And, second, the unedifying sight of MLAs being transported to Congress-ruled Telangana suggests that the ruling alliance was not so sure of ideological leanings acting as a glue to keep its flock together — a phenomenon that has become sadly true of many politicians in India. Hemant Soren’s resignation would also have been welcomed in normal circumstances where anyone in government should give up power if they face serious corruption charges as he did in a purported land scam. But the fact that the Union government has used its law enforcement agencies such as the Enforcement Directorate less as weapons against corruption and more as a tool to browbeat any opposition, gives cause for pause. Regardless of this, Mr. Soren’s case must be thoroughly investigated and should not be subject to the vagaries of political outcomes such as the retention of power by the JMM and its allies. In a way, the developments should compel the JMM-led government to reorient its focus on governance in one of India’s most mineral-rich, but materially poor, States, and that will be its best answer to the questions raised about it following the arrest.

THE HINDU

February 8, 2024

Music without borders

The Grammys were a celebration of women singers, past and present

Time stood still twice at the 66th annual Grammy Awards on Sunday when iconic singer-songwriters Joni Mitchell and Tracy Chapman took the stage to tell stories one more time through music. While the 80-year-old Mitchell, who had suffered a life-threatening aneurysm some years ago, performed her 1968 song, ‘Both Sides Now’, Tracy Chapman, 59, accompanied by her guitar and Luke Combs, belted out her classic hit, ‘Fast Car’ — both numbers powerful markers of the human experience and still speaking to the times. As if on cue, Annie Lennox, who paid tribute to Sinead O’Connor by reprising her haunting song, ‘Nothing Compares 2 U’, shouted at the end of her performance: ‘Artists for ceasefire. Peace in the world’. After that, two ongoing wars and other social crises appeared forgotten for the most part of the show, though the super indie group, boygenius, who won for ‘best rock performance’, advocated for a ceasefire through red pins on their attire. After years of being pulled up for not celebrating female, black, Hispanic artists enough, the Grammys made amends this time by honouring a host of young women musicians. ‘Swifties’ were duly acknowledged by helping Taylor Swift make history with her record-setting fourth album of the year award for ‘Midnights’, surpassing Frank Sinatra, Stevie Wonder and Paul Simon, who won the award three times.

Miley Cyrus (‘Flowers’), Billie Eilish (‘What Was I Made For?’, a melancholic melody for Greta Gerwig’s Barbie) and SZA all got their moment in the spotlight. India made a mark too with a belated nod coming in for one of the country’s best-known fusion bands, Shakti, which bagged the Best Global Music Album for ‘This Moment’, a studio album they released after four decades. The band, formed in the 1970s to critical acclaim and fame, later regrouped and brought out an album in 2023 with founding members, guitarist John McLaughlin and tabla maestro Zakir Hussain, joining vocalist Shankar Mahadevan, percussionist V. Selvaganesh and violinist Ganesh Rajagopalan. Zakir Hussain won two more Grammys, one with flutist Rakesh Chaurasia, and two other performers, for their song ‘Pashto’ which won in the Best Global Music Performance category. In the past, the Grammys have honoured and celebrated the music of Pandit Ravi Shankar, Pandit Vishwa Mohan Bhatt, A. R. Rahman and others. But Indian artists of today, who play a mind-boggling array of instruments, from the sitar, sarod and veena to the flute, mridangam and violin, can now aspire to claim their rightful place on the global stage and be open to collaborations which have brought musicians such as Zakir Hussain accolades and recognition.

THE INDIAN EXPRESS

February 8, 2024

The gloves are off

PM’s speeches as curtains come down on 17th Lok Sabha sharply draw battlelines ahead of the elections

In Prime Minister Narendra Modi’s two speeches, replying to the Motion of Thanks on the President’s address in Lok Sabha and Rajya Sabha, it was possible to hear the drumbeats of the impending election. The speeches were a throwing down of the political gauntlet, pointers to the shape of the ruling party’s campaign ahead. It is clear that for the Modi-BJP, the target is Congress. In a layered polity where the BJP is also ranged against several regional parties, it seems to clearly regard the Congress, the only party that despite its dwindling electoral numbers has a pan-India presence and possibility, as Enemy No 1. That distinction – between opponent and enemy — may also be worth making, given the aggressive take-no-prisoners tone of the PM’s speeches in both Houses of Parliament. From accusing the Congress of being in the grip of “parivarvad” or dynastic politics to saying that that it is a naysayer trapped in a “cancel culture”, from disparaging it as a party with petty goals and low ambitions to charging it with elitism and enslavement to the British/West, from describing it as inadequate for its role as Opposition and as anti-backward caste, PM Modi gave little quarter. He invoked the Emergency, of course, and he charged Congress with fostering a “narrative” that divides and disintegrates the nation, and makes space for separatist tendencies and terrorism.

The PM did not use the phrase “Congress-mukt Bharat”, but listening to him, it seemed clear that having displaced Congress as the centrepiece of the one-party dominance system, the BJP’s urgent goal is to lay it low — or lower. A BJP that cultivates an image of being the party of big ideas arguably calculates that regional parties, with their inevitably narrower platforms, do not add up to much of an opposition at the national level. And that by felling Congress, flailing and floundering for a decade now, it also undercuts the joint Opposition front that has been in the making. So it was that the PM’s speeches were peppered with quotes of Congress prime ministers — from Nehru to Indira Gandhi and Manmohan Singh — spun to give the lie to Congress criticism of the Modi government, and to turn it on its head.

In his speeches, the PM spoke of a third term in power, even laying down an agenda and goals for “Modi 3.0”. The outcome of the election is still in the distance. But for now, the PM’s speeches have pointed to the challenge the Opposition faces: Of hardening political battlelines sharpened by a winner-takes-all approach that the PM himself seemed to oppose when he spoke of the need for the Centre and states to come together for a common good – as they did successfully, he recalled, to fight Covid. His underlining of competitive and cooperative federalism, his call for a federal unity that transcends state borders and political lines will need parties and leaders to reach out across the dividing lines, step across the aisle. That seems to be a possibility only on the other side of the election that is round the corner.

THE INDIAN EXPRESS

February 8, 2024

Taking cancer on

Homegrown therapy against the disease holds promise. Researchers and planners must work to cut costs

For decades, oncologists have relied on chemotherapy, radiation and surgery to treat cancer patients. These are still the primary methods to treat the dreaded disease. In the past two decades, however, research has extended the frontiers of anti-cancer interventions. Drugs have been developed to home in on the molecules cancer cells require to survive and spread. Immune system-boosting drugs have shown the ability to shrink tumours in some patients with advanced malignancy. CAR T-cell therapy is among the most promising recent developments, especially because it has shown the ability to eradicate advanced leukemias and lymphomas. Most of the early research in this field was conducted in laboratories in the US, Europe and China. In October, India joined this elite list after the country’s drug regulator approved a CAR T-cell therapy incubated at Tata Memorial Centre and IIT Bombay laboratories. Now, a 64-year-old former army doctor has become the first patient in the country to be free of cancer cells after being administered this therapy.

CAR T-cell therapies are customised for each patient. It involves extracting T cells — they help orchestrate the immune response in a patient’s body — growing them in the laboratory, arming them against cancer via gene editing and infusing them back into the patient’s body. In other words, the patient is fortified with a living drug that’s constantly working against cancer. While it would be too early to say if the former army doctor has been cured for life, evidence from countries that have pioneered the treatment shows that CAR T-cell therapy is effective against relapse. The treatment is far less exacting for the patient compared to several sessions of chemotherapy. Laboratory and animal studies have shown that India’s homegrown therapy has significantly fewer side effects compared to those developed in the West.

In the last decade, cancer mortality rates have declined in the developed countries. Cancer incidence and mortality, however, continue to rise, driven by spikes in the Global South. In India, where the disease claims about 8 lakh people every year, treatment is expensive for an overwhelming section of the population. The homegrown therapy costs about a tenth of the treatment in the US. However, at about Rs 40 lakh, it’s beyond the reach of most patients in the country. With more laboratories working on this oncological intervention, there is reasonable optimism that costs could come down appreciably in the next decade. The country will require inputs from its planners, scientists and policymakers to ensure that the products of such cutting-edge research reach the most vulnerable.

THE INDIAN EXPRESS

February 8, 2024

Bumrah days

His genius does not need the ratification of numbers, statistics only embellish his art

Every time Jasprit Bumrah explodes into his nine-step run-up, he provokes a melange of emotions. There is the thrill of watching a genuine fast-bowler. There is the wonderment of witnessing the skill of a one-of-a-kind cricketer. There is the hope that something dramatic will unfold. In that sense, Bumrah is the Shane Warne of fast bowling. And since he happens to be the country’s premier match-winner, most Bumrah days end with India finishing on top.

He can twist the ball, and the script of a game. He could cut the ball in and snake it away. He could swing the ball, white or red or pink. He could hit the head, toes or torso, the way he wishes. He could bowl as fast as the wind, he can even make it travel as slow as a passenger train. His bowling doesn’t depend on conditions or the pitch. Bumrah’s genius does not need the ratification of numbers, statistics only embellish his art. In 34 Tests, Bumrah has grabbed 155 wickets. Among those with 150 wickets, only Sidney Barnes has a better rate. The averages in shorter versions too are staggering — 23.55 in ODIs, 19.66 in T20s. He picks a wicket once in every five overs.

But Bumrah needs to be protected against himself. The unnatural action could invariably force injuries, like the year before, in which he missed the T20 World Cup. The non-stop calendar could usher in fatigue, both physical and mental, and eventually force a premature burnout. His country, and the audience, want him to bowl as fresh as he can in every important tournament. Even more so this season, when the series against England is raging, there is the T20 World Cup in June and the series Down Under. There is the IPL too. India cannot afford to overexpose its golden goose, tempting though it is to play him in every game and tournament.

THE TIMES OF INDIA

February 8, 2024

‘I’ In Society

Laws need to keep up with times. That means lawmakers should listen to young people

Society doesn’t stand still. The meaning of right or wrong, just or unjust, even traditional or modern, keeps shifting in new directions. Consider that most enduring stratification, patriarchy. Its look has been changing decade by decade, let alone century by century. Male domination could hardly remain impervious to young Indian women’s literacy rising from 40% to 96% since 1981. A society undergoing such momentous changes wears out older laws at express pace. Like India’s new criminal law codes, this is the most welcome quality of the Uttarakhand UCC bill. To meet needs of society as they are, rather than as they were. But such legislations need revision wherever they suffer tone deafness. Particularly to young people’s thinking, living, doing.

A lot of this dissonance is centred around assertions of individuality. Marriage is seen as being in service of family, live-in relationships are not. Why doesn’t Uttarakhand govt feel the need to properly justify its plan to aggressively track live-in relationships, even though this is unprecedented? Because it is assumed that all parents will tacitly consent and clap. Lawmakers and judges are often only loyal to parents’ generations. Their jobs require them to be much more open. Young people are pulling away from past scripts to write uncharted stories. Old headed institutions are made anxious by this confident adventurism. But while greybeards’ entrenched power can inflict setback after setback on young ‘uns, there is no stopping this tide. They will keep pursuing legalisation of gay marriage, criminalisation of marital rape, surrogacy rights for singletons, mandatory paternal leave, unsurveilled live-in relationships. Yes, the young lack the political heft of usual identity-based mobilisations. Yes, they don’t threaten other people’s life or property. They only challenge worldviews. Like income taxpayers, 3% of whom contribute to 48% of total collection, they have no vote-value. And yet, disregarding young people’s voices is a giant socioeconomic self-goal.

How will young people chained up by past social mores, individual desires bent to bygone codes, live up to their potential? That’s why it’s in urgent national interest that lawmakers be guided by what Supreme Court said in its landmark Right to Privacy judgment. State should not intrude upon a citizen’s personal liberty. In fact, protection of liberty is one of state’s key remits. State isn’t Papa. In any case, Papa doesn’t know best. Those fearful of change shouldn’t crush those pushing it.

THE TIMES OF INDIA

February 8, 2024

Job Half Done

Bill to prevent exam cheating tackles supply side. Key question: why’s there a huge demand for cheating

Students who spend years preparing for govt exams truly feel cheated when some fellow candidates cheat. GOI has tried to address this growing problem with a new bill, cleared by Lok Sabha on Feb 5.

Severe punishment | Public Examinations (Prevention of Unfair Means) Act 2024 sets store on deterrence through harsh punishments. Offences under this legislation are cognisable, non-bailable and non-compoundable. In design, it’s on par with legislations dealing with grave crimes.

All about supply | Cheating in exams needs to be understood from both demand and supply sides. GOI’s bill focuses exclusively on supply side. Punishments are all aimed at collusions and disruptions that may facilitate cheating. That’s necessary but not sufficient.

Demand measures | Students are absent from bill’s provisions. They are buyers of dodgy services that lead to exam malpractice. It’s likely that anti-cheating law sidesteps addressing demand issues because core problems are beyond its scope.

Craze for govt jobs |ASER 2023 survey of rural students threw up insightful results about their aspirations. Most popular choices among boys were army and police posts. Police was a popular choice amongst girls too. ASER survey showed that underlying virtually all responses were students’ assumption that good jobs are only to be found in govt institutions.

Quality matters | But govt jobs are a small fraction of total jobs. But student responses showed they are preferred because they offer job security and pension, and command ‘social respect’. This feeds into a huge coaching ecosystem and eventually creates demand for clearing exams – and for means to cheat exam systems.

So, this bill may deter cheating to an extent but it’s unlikely to really dent it. What students need are better quality jobs.

THE ECONOMIC TIMES

February 8, 2024

Digibanks, Know Thy KYC-Keeping

Concern over degeneration of databases valid

The latest regulatory intervention by RBI over customer identification by payments banks may appear to be harsh for startups. Digital wallet providers have argued their business model does not support enhanced KYC compliance where costs spike with video and physical corroboration. There are also infrastructure challenges in onboarding customers in smaller towns. Yet, the banking regulator cannot be faulted for its concern over the qualitative degeneration of KYC databases, as the onboarding process moves away from physical to electronic verification. There is regulatory sympathy over compliance burden on startups, and roadmaps have been released on improving adherence with scale.

That payments banks would need some hand-holding with KYC was apparent from the outset. This explains the preference shown to telcos in issuing mobile wallets because of their advantage in customer identification. Banks are another industry with an identifiable customer base. In both cases, cost of providing digital wallets is subsidised by their core business of communication and lending. For others, the business has a long gestation with large upfront costs, including KYC, that have acted as an entry barrier. KYC requirements for payments banks were tailored accordingly. But they appear to be jeopardising system integrity.

Paytm Payments Bank is a pure-play digital wallet. Any compliance lapse could be indicative of operational and tech constraints to onboarding customers. RBI would have weighed the compliance burden against the business model before ordering a freeze on Paytm’s deposit collection. The rest of industry will have to demonstrate improved execution for it to be able to absorb Paytm’s customers. Since regulatory intent is guided less by customer protection and more by database vulnerability, RBI will have to address the question whether digital transaction facilitation is best served by telecom and banking industries, or by a separate category of players. Essentially, it is a decision on a type of ‘banking’ rather than a ‘bank’.

THE ECONOMIC TIMES

February 8, 2024

With Hotel Check-Ins, Add Hotel Check-Ups

There’s a hospitality sector binge underway. Hotels are not just springing up in boom towns and ‘strategically targeted’ neo-getaway destinations like Ayodhya and Lakshadweep, but they are hot and happening across India. This is not just to cater to post-pandemic revenge tourism — with a statutory nudge to ‘travel and see India’ — but also to a revival with a vengeance in corporate travel. Tatas-backed IHCL, for instance, is pushing the embossed envelope and welcome tray, by opening, according to MD-CEO Puneet Chhatwal, ‘two hotels a month’. That suggests a troops-level occupancy demand.

Included in this accelerated ‘room service’ spree are high-end hotels. With this premium sub-sector comes assured quality stay. This is important for the travelling businessperson and corporate jaunter. Apart from taken-for-granted features like grade A in-room dining, spa services et al, this is the right time for business guests to be provided in-house doctor’s service. With premium hotels comes a bespoke aspect that can be extended to in-house healthcare — not restricted to emergencies but for check-ups, diagnostics, the works… the same way one avails of a fine-dining experience or a gym associated with the hotel.

Last year, Hotel Association of India anticipated hotels to grow by 11%, 13% and 15% in the short, mid and long term. This includes associated services that include F&B, spas and salons. Adding new verticals like in-house doctors to expand the range of premium services that a top-notch hotel provides will only add that qualitative edge to the already burgeoning numerical one. Luxury cruises provide this necessary feature. There is no reason why the business traveller should only be provided this service only when stranded at sea.

THE HINDU BUSINESSLINE

February 8, 2024

Algo excesses

Supervision of algos used by retail investors needed

The surge in new investors entering the stock market, which began during the pandemic, shows no signs of abating. The number of active individual investors trading on NSE reached an all-time high in December 2023 with 1.26 crore active retail investors in the cash segment and 42.5 lakh active investors in the futures and options segment.

Of concern is the fact that many of these investors are succumbing to illegal get-rich schemes and guaranteed return products. Many also apparently trade with the help of unauthorised trading algorithms. Against this background, the market regulator Securities and Exchange Board of India’s (SEBI’s) proposal to regulate algo trading platforms and make it mandatory for brokers to get the algo strategies being used by clients approved by exchanges, appears a good step. Not only will this protect investors from fly-by-night operators, but it will also help prevent trading disruptions. Earlier, algo trading was predominantly done by institutional investors or stockbrokers trading in their proprietary accounts.

According to SEBI regulations, the algo programmes used by investors had to be submitted to the exchanges for their approvals and any changes to the programme also had to be ratified. While larger investors could be following these rules, smaller investors are unlikely to be doing so. Algo trading has become increasingly democratised of late with many brokers providing an interface for investors to programme their algos and execute them on the exchange. Many platforms allow investors to code their algo programmes and run them on exchanges through a broker’s interface. The point is that with algo trades accounting for around 50 per cent of trading in equity derivatives segment and over 65 per cent of cash market trading, it would not be right to place undue curbs on them. They should be allowed to grow, but with sufficient checks. SEBI’s approach in asking these algo platforms and the algo strategy provider to register with it is the right way to regulate. This way, their activities can be supervised and the more risky or speculative algorithms rejected.

Making the algo strategy providers pass an entrance exam will ensure that only skilled strategy providers operate in the market. While brokers should not be stopped from providing APIs (application programming interface) to their clients, the algos created by clients should be ratified by the broker. Giving free access to clients to run their algos, can result in trading disruptions, if the algos flood the system with orders or enter orders far beyond the market price. The SEBI chief had recently expressed displeasure at some of the algo strategy providers guaranteeing returns of up to 300 per cent in order to lure investors. Getting the claims of these algo providers substantiated by a performance validation agency can put an end to such tall claims. Better still, registered algo strategy providers should be stopped from guaranteeing returns.

BUSINESS STANDARD

February 8, 2024

Ensuring energy security

India must explore both domestic reform and foreign outreach

The International Energy Agency (IEA) on Wednesday issued a projection of growth in global crude oil demand up to the year 2030. According to the IEA, the largest driver of this demand growth will be India, which will take over the spot previously occupied by China, the leading importer of oil. India, currently the world’s third-largest importer, is projected to increase its demand for oil by almost 1.2 million barrels a day between 2023 and 2030. Given that the total increase in crude oil demand in this period will be about 3.2 million barrels a day, India is basically expected to drive one-third of global crude oil demand growth. This will take consumption in India to 6.6 million barrels per day by 2030. The Indian economy, according to the IEA, will continue to see growth in demand for transport fuels, which is stagnating or decreasing in other markets.

For India, dependence on external suppliers for this demand growth is a major economic and security vulnerability. Global spikes in oil prices can cause chaos to the external account and fiscal position, drive up inflation, slow growth, and lead to political turmoil. Meanwhile, supply chains for fossil fuels are vulnerable to geopolitical tensions in West Asia. Thus, the government has rightly chosen to emphasise alternatives to fossil fuels. The IEA has estimated that new electric vehicles and more efficient use of existing energy sources will reduce demand growth in India by almost 500,000 barrels a day. The government has also focused on speeding up the installation of solar and wind power capacity. But even with these, India will clearly continue to be dependent on oil and gas for some time to come.

There are only two approaches that can help moderate this problem. First, if domestic resources can be properly discovered and exploited. And second, if greater control can be exerted on global supply chains, including through the actual purchase of fields by Indian oil and gas majors. Some progress is being made on both, but not enough. On Tuesday, Prime Minister Narendra Modi met with about 20 top executives of multinational fossil-fuel companies, including BP, Vedanta, and ExxonMobil. The government’s aim is to increase private-sector investment in exploration in the country. However, previous attempts at this policy have been focused on maximising government revenue, with little thought given to moderating investor risk. This is not the right approach for the sector, and recent attempts to course-correct must be followed through.

There are compelling reasons to increase exploration in India, and fears that the private sector might make windfall profits should not hold policymakers back. Besides, Indian oil majors should also be pushed abroad. This week, it was reported that Oil India Ltd was discussing a return to operations in Libya with that country’s national oil company. Libya is aiming for an increase of over 75,000 barrels a day in oil production in the next three to five years. Other such attempts to secure the crude oil supply chain are needed, and financial and diplomatic support from New Delhi must be available to do so. The future competitiveness and stability of the Indian economy depend on sustainable supply chains for energy, and both domestic reform and foreign outreach should, thus, be a major priority for the government.

BUSINESS STANDARD

February 8, 2024

Balanced approach

Manufacturing needs growth and diversification

The Ministry of Statistics and Programme Implementation recently released the results of the Annual Survey of Industries (ASI) for 2020-21 and 2021-22. Notably, in both these years, the Indian economy was facing disruption related to the Covid-19 pandemic. However, the results exhibit the resilience of India’s manufacturing sector in terms of input use, output, and profits. The ASI extends to the entire country and remains the principal source of industrial statistics. It considers units employing 10 or more workers using power and the ones employing 20 or more workers without using power. The manufacturing sector contributes around 17 per cent to India’s gross domestic product (GDP). While India’s industrial sector did well during the period under review, its relatively small scale and concentration remain matters of concern.

The growth rates in the manufacturing sector’s gross value added (GVA) in FY21 and FY22 were 8.8 per cent and 26.6 per cent, respectively, at current prices. Despite the contraction in output, GVA in 2020-21 registered positive growth on account of a sharp fall in input prices. It’s worth noting that output contracted not just in FY21, but also in the preceding year, which was only marginally affected by the pandemic, before bouncing back in FY22. In terms of employment, predictably, the sector experienced a marginal fall in FY21. But this was more than compensated for in the subsequent year, with total employment registering a growth rate of 7 per cent year-on-year. Average compensation per employee in the sector also increased in the two years covered in the survey. Besides, the pandemic did not lead to a decline in capital employed. Both fixed and invested capital registered positive growth during the reference periods.

However, the manufacturing activity remains concentrated geographically and across a few product categories. ASI results showed that only five states — Gujarat, Maharashtra, Tamil Nadu, Karnataka, and Uttar Pradesh — contributed more than 50 per cent to total manufacturing GVA in both FY21 and FY22. Also, basic metal, coke and refined petroleum, pharmaceutical product, motor vehicle, food, and chemical product industries, taken together, contributed about 56 per cent to the total GVA in the sector. In terms of employment, despite the recovery, only a little over 17 million people were employed in the manufacturing sector in FY22.

This is one of the biggest weaknesses of the Indian economy. India has not been able to create enough jobs in the manufacturing sector to pull people from agriculture, where productivity is low. The government on its part has intervened to attract investment with measures like lower corporation tax, single-window clearances, and production-linked incentive schemes in various sectors. It is also being hoped that diversification away from China by global corporations would result in higher investment in India. Thus far, however, there has been limited success on this account. India will need to constantly work on improving conditions for attracting investments. The policy challenge for the government is not only to encourage and attract higher investment in order to push output and employment, but also to ensure that investment is not concentrated in a handful of states. Skewed growth in terms of industrial output and employment can increase tensions in a federal system, which have, in fact, started to surface in different forms.

FINANCIAL EXPRESS

February 8, 2024

Resources for Railways

External support to capex needs to sustain, but improving the lot of Railways is vital

The growth of railway capital expenditure has in recent years been faster, even as the Indian Railways (IR) wouldn’t generate any surplus from its core business—transportation of goods and people. The financing of capacity expansion and modernisation of the railway infrastructure has in the last decade been through higher market borrowings and a larger dependence on taxpayers. Simultaneously, capital-intensive ventures like dedicated freight corridors, high-speed rail lines and metro networks primarily relied on multilateral agencies, and the less-than-optimal resort to public-private-partnerships. This strategy has been inevitable and cannot be taken exception to. Since private-sector models in railway infrastructure haven’t been a roaring success even in the developed world, it would be unreasonable to expect a different result in India. The last decade saw private rail ventures floundering in Europe, and a 50% cost escalation for passengers in the UK.

But the worrying fact is that even the “external financing” strategy seems to have come unstuck for India. The interim Budget envisages railway capex to grow just 2% annually to Rs 2.62 trillion in FY25. Budgetary support is pegged to grow just 5% in FY25 against 51% in FY24. While borrowings had peaked at Rs 1.21 trillion in FY21, it has since been scaled down as the debt burden threatened to exacerbate (just Rs 10,000 crore in FY25). The idea behind accelerated capex via external means was to pitchfork the national transporter over the years into running its operations with certain degree of self-reliance. Investments in new assets were expected to generate a tidy sum as surplus.

However, the capex pace had to be slowed before achieving that goal, due to fiscal strains. Worse, there has hardly been any improvement in the railways’ operational parameters over the last decade. The only glimmer of hope is that with the eastern and western freight corridors set to go on stream, the railways may regain a part of the market share ceded to road transport over the next few years. IR’s operating ratio has been close to 100% over the last decade. That threshold for losses would have crossed in all these years, had it not starved key funds like the one for replacing over-aged assets, the value of which is seen at over Rs 1 trillion now. The IR still spends more than Rs 2 to earn Rs 1 from passengers, and currently incurs a loss of Rs 75,000 crore annually in this segment. Of course, earnings per passenger nearly doubled from Rs 55 in FY15 to Rs 107 in FY24 (RE), thanks to “dynamic pricing” and premium fares of semi-high speed Vande Bharat trains, but this was offset by a decline in passenger volumes.

At 6.5 billion, the number of passengers in FY24 (RE) was still below the pre-Covid level of 8.4 billion (FY19), and a far cry from 12 billion targetted for 2031. The situation isn’t any better in the freight segment that bears the cross-subsidy burden, with revenue to grow at 4.2% in FY24, less than half the pace of the nominal GDP. The salvaging strategy for IR ought to be multi-pronged. The capex support must continue for core capacity creation, even while private sector is roped in for areas where they find lucrative returns. The plans to build new rail corridors must be expanded, and put on the fast-track by tying up patient capital. Passenger revenues could creep up, with the launch of more high-end trains.

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