GSLV Story: A Rocket Science

Source: By Amitabh Sinha: The Indian Express

The launch of Chandrayaan-2, India’s first attempt at landing a spacecraft on the Moon was aborted less than an hour from liftoff 15 July 2019 morning after scientists detected a technical glitch in the launch vehicle system. The mission vehicle was a GSLV Mk-III rocket, a relatively new acquisition that is critical to ISRO’s future missions.

What makes the new rocket crucial?

ISRO intends to use the rocket, a product of over three decades of research and development, for all future deep space exploration missions, including Gaganyaan, India’s first human mission, scheduled to be launched before 2022. The vehicle, which can launch heavier commercial satellites, is also projected to be a big revenue generator for ISRO.

However, the mainstay of ISRO’s launches over the last three decades has been the Polar Satellite Launch Vehicle (PSLV), a rocket that has failed on only two of its 48 launches since the early 1990s. Chandrayaan-1 and Mangalyaan too, were launched by PSLV.

Why wasn’t PSLV used for Chandrayaan-2?

PSLV has its limitations. It does not have enough power to carry heavier satellites, or to go deeper into space. PSLV can deliver a payload of about 1750 kg to lower Earth orbits, up to an altitude of 600 km from the Earth’s surface. It can go a few hundred kilometres higher in Geostationary Transfer Orbit (GTO), but only with a reduced payload. Chandrayaan-1 weighed 1380 kg, while Mangalyaan had a liftoff mass of 1337 kg.

Many of the common commercial satellites used for remote sensing, broadcasting or navigation are well below 1,500 kg, and need to be put into low Earth orbits. PSLV has proved an ideal vehicle to do this — for both Indian and foreign commercial satellites.

However, there are satellites that are much heavier — in the range of 4,000-6,000 kg or more — and need to be put into geostationary orbits that are over 30,000 km from Earth. Rockets that carry such massive satellites need to have substantially more power.

Built as the rocket for the future, as ISRO aims to put bigger and bigger payloads, and probe deeper into space, GSLV Mk-III has an interesting history and a story of three decades of hard work in taming the cryogenic technology.

GSLV rockets

GSLV (Geosynchronous Satellite Launch Vehicle) rockets use a different fuel, and have a thrust that is far greater than PSLV’s. They can, therefore, carry heavier payloads and travel deeper into space. Chandrayaan-2, for example, had a total mass close to 4,000 kg.

Among ISRO’s GSLV rockets, GSLV Mk-III is the latest and most powerful. It has had two successful flights so far — it carried and deployed the GSAT-19 communication satellite on June 5, 2017 and then, the GSAT-29 communication satellite on November 14 last year. It had an experimental flight in 2014.

GSLV Mk-III is powered by a core liquid engine, has two solid boosters that are used to provide the massive thrust required during liftoff, and a cryogenic engine in the upper stage.

What is a cryogenic engine?

Cryogenics is the science relating to behaviour of materials at very low temperatures. Cryogenic technology is challenging to master, but essential for a rocket like GSLV Mk-III. Among all rocket fuels, hydrogen is known to provide the greatest thrust. But hydrogen in its natural gaseous form is difficult to handle, and therefore, not used in normal engines in rockets like PSLV. Hydrogen can be used in liquid form, but it turns liquid at a very low temperature — nearly 250°C below zero. To burn this fuel, oxygen too, needs to be in liquid form, and that happens at about 90°C below zero. Creating an atmosphere of such low temperatures in the rocket is difficult — it creates problems for other materials.

When and how did India advance in such technology?

The development of the GSLV Mk-III is the story of three decades of hard work on cryogenic technology. The technology was denied to India by the United States in the early 1990s, forcing it to go for indigenisation.

ISRO had planned the development of a cryogenic engine back in the mid-1980s, when just a handful of countries — the US, erstwhile USSR, France and Japan — had this technology. To fast-track the development of next-generation launch vehicles — the GSLV programme had already been envisioned — ISRO decided to import a few of these engines. It held discussions with Japan, the US, and France before settling for Russian engines. In 1991, ISRO and the Russian space agency, Glavkosmos, signed an agreement for the supply of two of these engines along with transfer of technology, so that Indian scientists could build these in the future.

However, the US, which had lost out on the engine contract, objected to the Russian sale, citing provisions of the Missile Technology Control Regime (MTCR), of which neither India nor Russia was a member. MTCR seeks to control the proliferation of missile technology. Russia, still recovering from the collapse of the USSR, succumbed to US pressure and cancelled the deal in 1993. In an alternative arrangement, Russia was allowed to sell seven, instead of the original two, cryogenic engines, but it could not transfer the technology to India. These Russian engines were used in the initial flights of the first and second generation GSLVs (Mk-I and Mk-II). The last of these was used in the launch of INSAT-4CR in September 2007.

After the original Russia deal was cancelled, ISRO got down to developing its own cryogenic technology at the Liquid Propulsion Systems Centre in Thiruvananthapuram. It took more than a decade to build the engines. In 2010, two launches of second generation GSLV rockets, one with a Russian engine and the other developed indigenously, ended in failures.

The big success came in December 2014, with the experimental flight of third generation (Mk-III) GSLV, containing an indigenous cryogenic engine. This mission also carried an experimental re-entry payload that ejected after reaching a height of 126 km, and landed safely in the Bay of Bengal.


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India's space missions

Source: By Prasun Chaudhuri: The Telegraph

If everything goes to plan, India’s ambitious Chandrayaan 2 lunar mission has already taken off. And, three months after the launch, a lander and a rover stacked in the rocket will land gently near the South Pole of the Moon. According to the Indian Space Research Organisation (ISRO), India’s second moon mission — Chandrayaan 1 was launched in October 2008 — consists of an orbiter, a lander and a rover.

The orbiter is supposed to observe the moon’s surface and relay communication between Earth and Chandrayaan 2’s lander. Its scientific payloads include a high-resolution camera, synthetic aperture radar, a solar X-ray monitor as well as other sophisticated instruments that will map the lunar surface. The lander, called Vikram in honour of space scientist Vikram Sarabhai, will stack the rover — a six-wheeled vehicle named Pragyan — along with scientific instruments that include a camera, a seismometer and a thermal profiler.

These payloads will provide information on moonquakes, the temperature and thermal conductivity of the moon surface. Pragyan will use a range of cameras to analyse the chemical composition of the lunar surface. All the instruments are indigenous, except a retroreflector array— a sophisticated mirror — provided by the US space agency Nasa. This will help scientists determine the position of the lander on the Moon and precisely calculate its distance from Earth. The powerful launcher or rocket, GSLV Mk-III, is capable of lofting 4-tonne satellites and has been both designed and fabricated in the country.

Isro states that Chandrayaan 2 is a lunar mission “that will boldly go where no country has ever gone before — the Moon’s South Polar Region”. The target area of the lander and rover is about 600km from the pole — the first time any mission will land so far from the lunar equator. “The indigenously built lander’s attempt at soft landing on the Moon will be a tough test. If successful, India will become the fourth country [after the US, Russia and China] to carry out such a landing,” says Sandip Chakrabarti, director, Indian Centre for Space Physics (ICSP) in Calcutta. According to Chakrabarti, who worked at Nasa early in his life, a soft landing on the regolith or surface of the Moon is crucial. Otherwise, the attempt might create a huge dust storm that can take many days to settle and the lander can sink in layers of dust. Recently the Israeli spacecraft Beresheet crashed during its attempted landing on the Moon.

Fifty years ago this month, Neil Armstrong took that historic step on the moon. In those days, lunar exploration had a geopolitical rather than scientific motive; it was primarily a race between the US and the Soviet Union to dominate space exploration.

Why is there a sudden resurgence in lunar exploration by so many nations (US, China, Japan, Israel, Korea and Europe) including India? Isro states: The Moon is the closest cosmic body at which space discovery can be attempted and documented. It is also a promising test bed to demonstrate technologies required for deep-space missions.

According to A.R. Rao, professor of astronomy and astrophysics, Tata Institute of Fundamental Research, Mumbai, the aim of Chandrayaan 2 is to “build and enhance the brand of Isro in the public eye”. He iterates that it’s supposed to “enhance India’s esteem in the world”.

The budget of Chandrayaan 2 is a measly $140 million (Rs 978 crore), compared to Nasa’s Apollo programme, which, back in 1973, cost $25.4 billion. The Beresheet mission’s budget was $90 billion (Rs 6,170 crore), most of which came from SpaceIL, a private company. Only about $2 billion (Rs 137 crore) came from the Israeli government.

Isro claims that Chandrayaan 2 is an “attempt to foster a new age of discovery, increase our understanding of space, stimulate the advancement of technology, promote global alliances, and inspire a future generation of explorers and scientists”. The question is: Will it really help research by Indian space scientists? Indian space missions are actually all about technology demonstration and boosting national prestige. Murthy said, “We have always placed actual science at the bottom of the heap. Projects are done for other reasons — which are important — and the science is shoehorned in at the end. Chandrayaan 2 will do useful science but the scientific return would have been much greater if we had an active lunar science community and they had been involved from the beginning.”

Chakrabarti of ICSP, however, is sceptical about scientific gains for India. According to him, the most significant achievement of Chandrayaan 1 was the detection of evidence of water on the Moon. “This was primarily done by the Moon Mineralogy Mapper (M3), an instrument provided by Nasa. Even though the data was right under our nose, a team of Nasa scientists found the definitive evidence of frozen water on the Moon’s surface.” According to him, this time too the Nasa instrument is most crucial and it will benefit the US agency more than India. “This will eventually help Nasa firm up their plan to land astronauts on the lunar South Pole by 2024,” he says.

During his stint at Nasa, he’d seen how scientists and engineers play an equal role in space missions. Chakrabarti laments that Isro projects are run by technocrats and engineers, scientists are secondary. “Pan-Indian scientific research institutes should be involved in the country’s space projects if India wants to stay ahead in the space race.


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A question of federalism

Source: By Nihar Singh: Deccan Herald

Recently, Parliament passed the Jammu and Kashmir Reservation Bill which seeks to amend a Presidential Order of 1954 in order to change how reservation was applied in Jammu and Kashmir. Given that Jammu and Kashmir does not have an elected government at present and is functioning under the Governor, the Bill has several implications for the federal character of the Constitution. With the constitutional amendment, the benefits of reservation available to the residents along the Line of Actual Control (LAC) have been extended to residents living along the International Border (IB). This benefits residents in Jammu, Samba and Kathua.

Through the Presidential Order, the Cabinet applied the 77th Constitutional Amendment of 1995 to J&K, giving benefits of reservation in promotion to Scheduled Castes and Scheduled Tribes in government service. The Cabinet also applied the 103rd Constitutional Amendment of 2019 to J&K, which gave 10% reservation to Economically Weaker Sections among people in the general category.

While there has been no opposition to the move to extend the benefit of reservation, the Bill has been questioned on the methods adopted by the Centre in the absence of an elected government in Jammu and Kashmir. The 1954 order is an executive order issued by the President under Article 370 to extend provisions of an Act of Parliament to J&K state, which can be done only with the concurrence of the state government.

The mechanism for governance of Jammu and Kashmir has been provided in Article 370 of the Indian Constitution. Article 370 defines the state government as ‘the Maharaja’ and/or the ‘Sadar-i-Riyasat’ aided by a council of ministers. At the centre of the controversy is the question whether the Governor, in the absence of an elected government, has the authority to give consent to extend a law of Parliament and change the constitutional arrangement between J&K and the Union.

The issue of the Governor’s powers was defined by the Supreme Court in Mohammad Maqbool Damnoo vs State of J&K (1972). While dealing with the replacement of an elected government with the Centre-appointed Governor, the court observed that a Governor is the “head of government aided by a council of ministers”. “It is not as if the state government, by such a change (replacing elected [government] with Centre-appointed Governor) is made irresponsible to the state legislature… there is no question of such a change being one in the character of the government from a democratic to a non-democratic system.”

India has adopted federalism to actualise and uphold the values of national unity, cultural diversity, democracy, regional autonomy and rapid socio-economic transformation through collective efforts. Federalism is a device by which the plural qualities of a society are articulated and protected. A product of historical forces in plural societies, federalism is devised to secure both regional autonomy and national unity. The strength of these regional and national forces changes from time to time, in keeping with changing social, economic and political conditions and compulsions.

Federalism is a principle which defines the relationship between the central government at the national level, and the constituent units at the regional, state or local levels. A well-designed and, more importantly, a well-functioning system of federal governance, by virtue of its manifold benefits, plays a key role in promoting the stability and prosperity of nations, as the heights attained in development by the leading federations of the world — USA, Canada, Australia and Switzerland — demonstrate.


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In D C Wadhwa vs State of Bihar (D C Wadhwa), it was held that “It is a right of every citizen to insist that he should be governed by laws made in accordance with the Constitution and not laws made by the executive in violation of the constitutional provisions.” In the present case, laws made in accordance with the Constitution would imply that Parliament is bound to have the concurrence of an elected government. As such an elected government does not at present function in J&K; the Bill would not be in accordance with the Constitution.

The Bill may also affect the rule of law guaranteed by Article 14 of the Constitution. “The rule of law constitutes the core of our Constitution and it is the essence of the rule of law that the exercise of the power by the State, whether it be the Legislature or the Executive or any other authority, should be within the constitutional limitations and if any practice is adopted by the Executive which is in flagrant and systematic violation of its constitutional limitations…a member of the public would have sufficient interest to challenge such practice by filing a writ petition and it would be the constitutional duty of the Supreme Court to entertain the writ petition and adjudicate upon the validity of such practice”, held the Supreme Court in D C Wadhwa.

The Centre has said that the amendments were recommended by the State Administrative Council (SAC) headed by the J&K Governor. If this entire episode is interpreted in the light of the Supreme Court judgement in Mohammad Maqbool Damnoo vs State of J&K, one may also reach a conclusion that the above act of the Union government is intra vires of the Constitution as “there is no question of such a change [from elected government to the Governor] being one in the character of the government from a democratic to a non-democratic system.”

It is pertinent to note here that the amendments introduced through the Bill were earlier approved as an ordinance by the Union Cabinet in February this year. Multiple petitions were filed in the court to determine the constitutionality of the ordinance. Now, a material change has been brought by introducing the ordinance as a Bill. It will be interesting to see how the courts approach the Bill if it becomes law. This will contribute towards a new understanding of the federal character of the Constitution.

An Aspiration trap

Source: By Milind Sohoni: The Indian Express

The National Education Policy (NEP) document is now up for discussion. The section on higher education starts with the agenda of a “revamp” of the sector to build a “world-class multi-disciplinary” system with a gross enrollment (GER) target of 50 per cent by 2035. Yet, it offers no guidance on what will happen to all these graduates or any analysis of employability. The absence of data is noted and the concerned national institute, NIEPA, is pulled up. However, the question of how we have produced millions of unemployable graduates is not addressed.

The NEP does offer the vision of India as a cultural, scientific and economic power. The task is of preparing well-rounded and creative individuals, who will also be ready for multi-disciplinary jobs. It says faculty and students will work with the community on real-world problems and also be aware of national issues and concerns of the day. It lists some of the hurdles in achieving this.

They are the usual, except that the “lack of transparent and competitive peer-reviewed research funding” is noted. Missing in this list are the two elephants in the room: The hostile takeover of science and society by competitive exams and coaching classes, and the hijacking of curricula and research agenda by central agencies. A cursory analysis of the first elephant is offered and it is delegated to the National Testing Agency, another MHRD outfit.

The NEP has proposed a consolidation of the 40,000 odd colleges into effectively a three-tier system of 12,000 multi-disciplinary institutions. Colleges (or institutions) are to be classified as type I, which are primarily research institutions, type II, which do both teaching and research, and, type III, which will only do teaching.

There is also an implied hierarchy based on “quality of research” — type I institutions will be role models for type II, and they in turn for type III. Finally, type I institutions must do “cutting edge research” and “become world-class universities” achieving global recognition. As it transpires, type I institutions are largely the existing “central institutions”, the IITs, IISERs, TIFR, etc., and type II are the state universities. Types III are obviously our local colleges, the dispensers of hand-me-down knowledge for the bottom 80 per cent. This is how types become tiers and our higher education system remains a client of global science.

Then there is the National Research Foundation (NRF), tasked with “permeating a culture of research and innovation” and addressing societal challenges. However, its project-proposal based design is similar to say, the Department of Science and Technology (DST).

There is no mechanism, such as innovative curricula or extension units, for tier II or tier III institutions to work on local problems. It has no access or accountability to people or their representatives. Given its “competitive” nature and the absence of state representation as with DST, funds may largely go to tier I institutions to follow “world-class research”. This will neither permeate to local colleges nor change state agencies or improve drinking water.

A full chapter is devoted to the liberal arts university, which is modelled after the Ivy League universities in the US or large monastic gurukuls such as Nalanda, or the modern JNU. This is a top-down approach to learning. There is no pedagogical vehicle provided, e.g., the case study, which is accessible to the common student. Thus the opportunity of making the lived reality of the public hospital or imported ganapatis worthy of liberal study is lost.

There are other parts — on regulation or governance, etc. — that reflect deep centralised thinking. For example, the pedagogy of social engagement is not interpreted as a systematic probing of the immediate vicinity, for instance, of documenting a taluka bus depot or preparing a watershed plan, but is dissipated and emasculated into volunteerism and “tutoring groups”.

For all the talk of autonomy, the education secretary of the state is not made any more accountable. It is also peppered with many references to 21st century themes of the “new knowledge society” and “the fourth industrial revolution”, while the problems of 19th century shackle us.

In short, the document fails to state clear and measurable strategic objectives of higher education and research, or a plan to achieve them. This will only consolidate an elite-vaad of global jobs and global science as the agenda for higher education. It will also perpetuate the aspirational trap that our youth are in. The vikas agenda once more will be relegated to social mobilisation, community service and volunteerism, rather than formal academic and professional work. This is precisely why problems such as drinking water or public transport, and sustainability in general, have become intractable.

Indeed, the demands of development are urgent and require the highest intellect and competence and the ability to work across disciplines and agencies. The necessary institutional and individual skills are simply not there. The NEP could have provided a road map to get there, of delicate decentralisation, innovative pedagogies and partnerships between central and state institutions and regional agencies. Moreover, many new challenges, such as climate change, require collaborative thinking and collective action right down to the community level. Rather than recognise the importance of state colleges as our primary agents of change, the report proposes to entangle them in a bureaucratic web of NTA, NAAC, NHERA and others.

Thankfully, the NEP is still a proposal. Parliament should request the committee to rework the three basic instruments along the above lines. Next, bring more accountability to type I institutions, and build more direct linkages between the three types of institutions, development agencies and funds. Lastly, consider a few models of decentralisation of MHRD, DST and other agencies.

Finally a word to the student; development is not only about the expectation of better public amenities, but is also acquiring skills, knowledge and agency to deliver them. The next wave of companies will not only have gadgets and equipment to offer, but also developmental services. They will want graduates who are not only competent in their disciplines, but who also understand the broader society, the importance of field work, measurements and documentation. So demand such training from your college. For that is the future of jobs and the way out of the current aspirational trap.


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Humpty Dumpty’s fall

Source: By Tilak Devasher: The Indian Express

If ever proof were needed that India and Pakistan lived in parallel universes, the reaction to the International Court of Justice (ICJ) judgment in the Kulbhushan Jadhav case provides it. The vital difference, however, is that while India’s universe is rooted in reality, Pakistan’s is quite delusional.

The key issue that the case dealt with was the sanctity of the Vienna Convention on Consular Relations (VCCR). The Indian case was the “egregious violations” of the convention by Pakistan, inter alia, by not granting consular access to Jadhav. Pakistan’s defence was that the VCCR was not applicable to alleged spies. In addition, Pakistan sought to deny the jurisdiction of the ICJ in the case, and deny the admissibility of India’s application, citing a 2008 bilateral agreement with India that held that consular access in matters of national security would be decided “on its merits”.

The ICJ rejected Pakistan’s contention on each of these issues and upheld that of India either unanimously or by an overwhelming 15-1 margin — the dissenting judge being a Pakistani. The majority included a judge from China. The judgment held that the court had jurisdiction, India’s application was admissible, there was no provision in the VCCR to deny alleged spies consular access and that the bilateral agreement could not displace obligations under international conventions.

The court also asked Pakistan for “effective review and reconsideration of the conviction and sentence of Mr Jadhav”; so as to ensure that full weight was given to the effect of the violation of the rights set forth in Article 36 of the VCCR and guarantee that the violation and the possible prejudice caused by the violation are fully examined. The court directed that “the continued stay of execution constituted an indispensable condition for the effective review and reconsideration of the conviction and sentence.” This specific direction was a source of relief for India and a clear containment of Pakistan’s national jurisdiction.

The ICJ went further. It reprimanded Pakistan by saying that it “was under obligation to cease internationally wrongful acts of a continuing character.” This is as strong a condemnation of Pakistan as the court could make and would remain a stain on Pakistan for years to come.

The court also upheld India’s contention that Pakistan should have informed it about Jadhav’s arrest immediately and not after three weeks; that Pakistan failed to inform Jadhav of his rights including his right to communicate with and access to India’s consular officers; India was entitled to obtain consular access as soon as his detention was made public by Pakistan; India’s consular officers had the right to visit Jadhav, to converse and correspond with him and to arrange for his legal representation.

Pakistan’s argument that alleged spies were not entitled to consular access was actually dangerous. It not only sought to emasculate Article 36 of the VCCR but, if accepted, would allow states, if they so wished to charge citizens of another country with espionage and so deny them consular access.

An important point India had hammered home was that the trial of a civilian in a military court failed to satisfy the minimum standards of due process on at least three counts: Jadhav was denied a fair and impartial trial, in which he could be represented by a lawyer of his choice; his conviction and death sentence by a military court was farcical and based on “confessions” taken in captivity without adequate legal representation and he was denied consular access that would have enabled India to assist him in realising due process. All this was in total violation of the rights and protections provided under the VCCR and theInternational Covenant on Civil and Political Rights (ICCPR).

In Pakistan’s delusional parallel universe, victory has been claimed on two grounds: Jadhav’s death sentence was not annulled and the ICJ did not order his release. Some in Pakistan have even claimed that by not releasing Jadhav, the ICJ has accepted that he is a terrorist and that implicitly India is a state sponsoring terrorism! For example, the Pak daily, The Express Tribune, quoted Major General Asif Ghafoor, the Director General of Inter-Services Public Relations (ISPR), stating that the ICJ’s decision has declared India a terrorist state; “They are certified to undertake state-sponsored terrorism.”, he said.

Much has also been made about Pakistan’s judicial system. Thus, according to Foreign Minister Shah Mehmood Qureshi, by not annulling the military court’s verdict, “the ICJ showed its confidence in Pakistan’s judicial system which is very fair and transparent”. Brave words indeed!

Where such statements are delusional is that the ICJ is not a Criminal Court of Appeal. India was appealing against Pakistan’s violation of the VCCR. Hence, there were no arguments on the merits of the actual case or the evidence adduced. In fact, even though India had asked for a copy of the military court’s judgement, Pakistan did not provide it. The ICJ’s focus was limited to determining whether there was a breach of international covenants and here its findings were crystal clear and a victory for India.

Jadhav is an important element in Pakistan’s narrative of a “foreign hand” behind the troubles in Balochistan. Given its failure to tackle the fifth insurgency in the province, Pakistan has sought to divert attention by claiming that India was fomenting terrorism. Hence, the charade that Jadhav was involved in terrorist activities. In reality, media reports indicate that the terrorist outfit, Jaish ul-Adl, linked to the Jundullah, actually kidnapped Jadhav from Iran and sold him to the ISI.

During the trial, Pakistan’s counsel had likened India to Humpty Dumpty who sat perched on his flimsy wall of lies, which would soon come crashing down. In reality, it is Pakistan’s web of lies and egregious violations of international covenants that have come crashing down.


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Signal of intent~II

Source: By Govind Bhattacharjee: The Statesman

As the Economic Survey has stressed, the focus should be on transforming the current $2.7 trillion (Rs 190 trillion) economy into $5 trillion (Rs 350 trillion) by 2024-25. This means adding some Rs 30 lakh crore every year to the GDP, warranting a growth rate in excess of 10 per cent in real terms (more than 8 per cent as indicated), assuming that the stability of Re-Dollar exchange rate would be maintained over the next five years which again will depend on inflation, trade deficit and fiscal deficit.

Given the current shares of agriculture, industry and services in the GDP, this would mean adding about Rs 5 lakh crore annually from agriculture, Rs 10 lakh crore from manufacturing and Rs 15 lakh crore from services. To achieve these targets would require a host of structural reforms, including lowering of corporate tax rate to levels around 20 per cent prevailing in the East Asian economies, lowering of import duties which is a tax on exports, besides transformational reforms in the factor market, elimination of revenue deficits and reduction of fiscal deficit other than by way of creative accounting, creating transparent fiscal rules and establishing fiscal councils to provide credibility to our budget numbers to foreign investors.

The budget does address some of these issues, like its promise of investment of Rs 100 crore over the next five years in infrastructure, a huge jump in housing construction, especially in the rural areas (1.95 crore in rural and 81 lakh in urban areas) which will have a significant multiplier effect in income employment in various sectors. Rural infrastructure has been given a much-needed welcome push, by allocating Rs 80,000 crore on augmenting 1.25 lakh kilometres of rural roads, with the aim of setting up a national highway grid.

The focus on tax administration was one of the most welcome measures of this budget which was long-overdue. In their zeal for increasing revenue, tax administration is often ignored by Finance Ministers. To the credit of Mrs Sitharaman, the crucial bottlenecks in this regard have been identified and addressed by instituting appropriate mechanisms.

The first of these was the interchangeability of Aadhaar and PAN numbers, which will ease the problems of those not having the PAN cards for filing their income-tax returns. Also welcome was the announcement regarding the introduction of pre-filed returns to further ease the process of filing tax returns wherein the relevant tax-related information will be collected and collated from various sources such as banks, registrars (for stamp duty and registration fees for transactions in land and real estate’s), mutual fund houses, financial investment companies, etc.

The return will be readily available for download from the income tax e-filing website, while taxpayers only need to verify the details therein, pay the taxes and file the returns. But the most welcome feature was the faceless incometax assessment in the electronic mode involving no human interface which is be launched this year in a phased manner, aimed at reducing taxpayer harassment and elimination of corruption amongst the tax assessing officers.

With the Modi Government’s single-minded focus on curbing corruption in public life, as evidenced in its recent dismissal of number public servants ~ mostly from the revenue services ~ on charges of corruption, this will further bolster its credibility as far as attitude towards corruption is concerned, while cleansing the tax administration significantly. Only by the innovative use of technology, like in prefilled returns and expansion of tax base can corruption and black money be eliminated.

In this regard, the 2 per cent TDS on cash withdrawals ~ a positive step to curb black money ~ was half-hearted at best. The ceiling of Rs 1 crore on cash withdrawal in a year to attract this is way too high to make any real difference. If the Government is really serious about digitising the economy, it needs to move in this direction much more aggressively.

The level of cash in the economy now exceeds that before demonetization after which it had come down for some time, but the tempo was not maintained. To start with, a lower ceiling, of say Rs 50 lakh, could have been prescribed, while laying out a plan for progressive reduction in the ceiling over the next 3/4 years. Clearly, the Government is still shy of walking its talk of digital economy. If higher cash requirements of companies managing ATMs were the consideration, this can be resolved with suitable exemptions.

One important measure announced in the budget was the intention to tap the overseas money market for the first time for Government borrowing, with an eye to boost foreign institutional inflows. Foreign investors can only invest in Government rupee bonds, with no exchange risk involved. With borrowing in foreign currencies, the government will have to bear the attendant exchange risks which have spelled disasters for many economies worldwide with a high level of external debt. Our external debt ($543 billion in March 2019) to GDP ratio is rather small 19.7 per cent (compared to our overall Debt: GDP ratio of 68 per cent), three quarters of which can be covered by our forex reserves.

With sovereign external debt ($104 billion) constituting only 3.8 per cent of GDP, there is certainly scope for borrowing from foreign money markets that offer much lower interest rates. If investments are to be boosted, the cost of capital must be lowered, and even with India’s current ratings (Moody’s Baa2 and S&P’s BBB), India’s foreign borrowing may command interest rates lower than 3 per cent, allowing the Government to save substantially on interest costs, provided the exchange rate could be maintained which the Government thinks possible with the current low inflation and continued focus on fiscal consolidation. So far, this option has not been explored, and whether its time has come can be debated, but given the fact that the Government’s huge domestic borrowings have been crowding out private borrowings, creating pressure on interest rates that need to be eased for boosting demand and growth, the step is a welcome one in the right direction.

Allocating Rs 350 crore for the MSME sector was a sop for the sector, but it would have been better to incentivize them to expand and become nonMSMEs. Sops work only in the short term, for long term gains, one need to have a coherent strategy backed by a well formulated plan, implemented efficiently. Implementation still remains our biggest hurdle and how many of the budget proposals would be implemented efficiently remains to be seen.

The target to raise Rs 1.05 lakh crore from strategic disinvestment of the public sector perhaps will be the biggest challenge in this regard, especially in view of our recent experiences with Air India, even though the Government is agreeable to lower its stake below 51 per cent. The welfare agenda retains its hold on this budget too, like in all other previous budgets. Arguably, it was a legacy inherited from the Congress-led UPA and cannot be rolled back without incurring significant political costs for which the BJP, even with such a huge majority, seem to have little appetite. But to sustain the huge welfare expenditure, we need a real GDP growth of the magnitude of 10 per cent on which depends on India’s destiny. All that can be done in the interregnum is to ensure that leakages stop. Significant progress towards this has already been attained through the JAM and DBS initiatives. This rhythm must be accelerated.

A huge burden inherited by this government from the UPAera was the NPAs of banks and NBFCs. This has continued to torment their balance-sheets, credit, profitability and returns. The Insolvency and Bankruptcy Code has helped somewhat, but not sufficiently to restore the balance-sheets to health. The NPA crisis has softened but is still far from being resolved, despite recapitalizing the banks during the last two budgets by capital infusion of Rs 1.35 lakh crore through the recapitalisation bonds. The government has promised them another tranche of Rs 70,000 crore this year by the same route of recapitalisation bonds, which do not show up on fiscal deficits as only the interest payments on these bonds are only accounted for in the Government Accounts which again is nothing but an accounting trick. It’s time to recognise all liabilities and assets for what they are truly worth and promote fiscal consolidation with better credibility and integrity


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Signal of intent~I

Source: By Govind Bhattacharjee: The Statesman

The technical name for the budget is Annual Financial Statement, which is essentially a yearly exercise in balancing the government’s revenue and expenditure over the course of the coming year. But if the first budget presented by a newly elected government can be reckoned as an indicator of the direction of the country’s economic trajectory for the next five years, then Mrs. Nirmala Sitharaman’s first budget was loud and clear about several things ~ at least so far as intent and aspirations are concerned.

These include faster and greater integration with the global economy, creation of jobs through massive investments in infrastructure, sufficient confidence in the country’s monetary and fiscal stability and readiness to explore international money markets, simplification of the tax administration with concomitant reduction in the scope of corruption, through faceless electronic scrutiny in direct tax administration, strengthening the RBI’s regulatory powers for possible prevention of the IL&FS-type scams, giving a much needed boost to credit and investment, etc. There was also a positive indication that the reforms would be intensified, by allowing higher FDIs ceilings in many sectors and lesser restrictions on FIIs.

There were also many downsides as well, notably increasing import duties on several items with a misplaced protectionist focus on import substitution, inflationary increases in duties of petrol and diesel, reduction in the allocations of several important ministries/ departments vital for the Government’s ambitious flagship programmes like Swachh Bharat, Clean Ganga, etc. Among the affected are the departments of drinking water and sanitation, food processing, water resources, river development and Ganga rejuvenation.

The Defence budget, practically at the same level as the one last year and especially at a time of very high security risks on our borders, was also a major dampener. Fiscal consolidation has been stressed, with a rather hazy roadmap. Drawing the surplus cash from PSUs has hitherto been a standard practice for bridging the fiscal deficits, through a buy-back route rather than disinvestment to the disadvantage of the concerned PSUs. HAL is a case in point which has been converted from a cash rich company into a cash scarce company unable to pay salaries of its staff without borrowing. This will probably continue. Similarly, expecting higher dividend payout from the RBI, a contentious issue, is another inefficient way of financing the Government’s fiscal deficit. The huge expectations from PSU disinvestment are also a tad overoptimistic. Jobs ~ the most urgent problem facing the nation ~ also got much less focus than it deserved.

A Finance Minister’s job is a tightrope balancing walk and some compromises are necessary, especially so because the budget was presented amidst unmistakable signs of a slowing economy. Even the Economic Survey admitted that the manufacturing sector was decelerating, with the index of Industrial production grown at a paltry 0.3 per cent during Q4 of 2018-19, compared to 7.5 per cent a year ago; production for all categories of automobiles ~ commercial and passenger vehicles as well as two-wheelers ~ had declined, and so did consumption and investment, the primary drivers of our economy. It recognised that “the decline in GDP growth during 2018-19 arose primarily from deceleration in private final consumption in the final two quarters of 2018-19” due to” low farm income in rural areas arising from low food prices and also due to the stress in NBFCs which affected its lending”, leading to low growth of credit and investment.

On the external sector, current account deficit (CAD) increased from 1.9 per cent of GDP to 2.6 per cent over the last one year. Though the widening of CAD was partly driven by the higher crude prices, it was largely due to the slowing of exports, both merchandise as well as services. The trade deficit now stands at $184 billion, up from $162 billion a year ago. Growth in service exports declined from 18.8 per cent in 2017-18 to only 5.5 per cent in 2018-19 and growth in imports also declined significantly, further slowing down economic activity.

The impact of all these was an overall slowing down of the GDP growth from 7.2 per cent in 2017-18 to 6.8 per cent in 2018- 19. Of course the slowdown was mainly attributable to global headwinds, including the ongoing trade war between the US and China and tensions in the Middle East, besides a decline in demand in the advanced economies without which consistent high growth rates in the emerging economies like India cannot be maintained.

China is already on the spiral of retardation, and to boost the economy in this depressing global economic environment, the budget should have given some very strong positive signals to attract foreign investment and to rejuvenate manufacturing to create jobs. These signals, unfortunately, were conspicuously missing. Instead some potently wrong signals had emerged which may even drive investment further away. No wonder the markets were not impressed, as indicated by the continued fall in Sensex and Nifty indices.

One such signal was the unintended consequence of raising taxes for the superrich to reduce the burden on others, with the peak tax rate being increased to 42.7 per cent, among the highest in the world. The proposal probably was not thought through. This may appeal to voters, but may ultimately harm the economy by diverting investments and businesses away from India. Besides, the Foreign Portfolio Investors (FPI) operate as trusts which have the status of legal persons for the purpose of tax, and were hitherto subject to 30 peak rate.

Their tax liability now abruptly shoots up, pushing them to exit the Indian market. FPIs have been net buyers for the past five consecutive months, with net amounts invested in the Indian capital market, both equity and debt, being Rs 81,140 crore during March-June 2019. In contrast, during 1-12 July, they withdrew a net sum of Rs 4,954 crore from the equities market. Though they invested Rs 8,505 crore net into the debt market, their cumulative net investment amounted to only Rs 3,551 crore during this period, not sufficient to lift the market sentiment and stock exchange numbers.

To stem the tide of falling investment, the Finance ministry has advised the FPIs to convert themselves into corporate entities so as to avail the lesser corporate income tax rate (30 per cent peak rate), but the budget did not offer enough incentives to nudge them to do so. For one thing, tampering with tax rates ~ whether for direct or indirect taxes ~ unnerves any foreign investor who always look for stability in political as well as the economic and fiscal environment so that they plan for their investments with a secure, longterm perspective. When rates are increased or decreased at the whim of every finance minister in every budget, they are obviously not enthused. We seem to have forgotten the lessons from our past reforms which lowered the tax rates and improved revenue while encouraging investment, industrial revival and thereby achieved nearly doubledigit growth.

The most important determinants of growth ~ lower corporate taxation, farm distress; export stagnation, labour and land market reforms, etc. ~ were left largely unaddressed in the budget. Labour code has been a work in progress for quite some time, and save the declaration of intent of reforming our archaic labour laws, there was not much else; the clarity was completely missing. The lowering of corporate tax rates for industries with a turnover of Rs 400 crore would cover about 99.3 per cent of the corporate taxpayers, but it is the remaining 0.7 per cent big companies that contribute the bulk of income-tax revenue.

The Finance Minister was obviously hesitant to include them in the lower rate bracket in view of the likely adverse impact of revenue collection, but given the dismal growth scenario, more boldness was called for. In fact there is hardly any incentive for a small company to expand and become a big company; it will then end up paying much higher taxes and forced to comply with stringent labour laws that negatively affect labour productivity. Smaller companies will rather diversify and expand in more taxfriendly countries. Many companies prefer not to distribute their profits as dividends as that will attract a stiff tax on dividend distribution, discouraging investors. The 20 per cent tax on buyback imposed in the budget has further closed the option of sharing profit with investors without incurring tax liability. The tax on long-term capital gains on stock trading imposed last year has not been beneficial to industries. If capital is not favoured over everything else, it will fly away to other greener destinations, something that our Finance Ministers are yet to learn.

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India’s second lunar probe

Source: By Amitabh Sinha: The Indian Express

Chandrayaan-2 is India’s second lunar probe, and its first attempt to make a soft landing on the Moon. It has an Orbiter, which will go around the Moon for a year in an orbit of 100 km from the surface, and a Lander and a Rover that will land on the Moon. Once there, the Rover will separate from the Lander, and will move around on the lunar surface. Both the Lander and the Rover are expected to be active for one month.

The Orbiter, Lander and Rover are each fitted with several instruments to carry out experiments. While Chandrayaan-2 is expected to yield a wealth of new information about the Moon, apart from demonstrating ISRO’s new capabilities, here are a few things that are likely to be discussed the most in the coming days.

How is Chandrayaan-2 different from Chandrayaan-1?

Chandrayaan Lander: Named Vikram after Dr Vikram A Sarabhai, Father of the Indian Space Programme. The Vikram Lander has been designed to be able to communicate with the Indian Deep Satellite Network near Bengaluru, as well as with the Orbiter and Rover.

The Indian Space Research Organisation (ISRO) was forced by circumstances to develop its own Lander and Rover for Chandrayaan-2. Originally scheduled to launch in 2011, Chandrayaan-2 was supposed to carry a Russian-made lander and rover, since ISRO did not then have the technology to develop these. The type of lander and rover that Russia was building for Chandrayaan-2, however, developed problems on another mission, forcing it to make design corrections. But then, the proposed new design would not have been compatible with Chandrayaan-2. Russia eventually pulled out, and ISRO began to develop its own Lander and Rover, a task that delayed the Mission by a few years.

How has the landing been scheduled?

The Lander and Rover were scheduled to descend on September 6, more than 50 days after the launch early July 15. The launch, however, got delayed due to technical issues. Most of the other lander missions have taken considerably less time to reach the Moon. The human missions, in fact, all landed within three to four days. Chandrayaan-1 had taken 12 days to enter the Moon’s orbit. The time taken to reach the Moon is dictated by many factors, such as the strength of the rocket carrying the spacecraft, the nature of experiments to be carried out, and the position of the Moon in its orbit.

Chandrayaan-2’s launch vehicle, GSLV-Mk-III, is the most powerful rocket ISRO has built — however; it is still not powerful enough to reach the Moon’s orbit in one shot. Therefore, the spacecraft will go around the Earth several times, successively raising its orbital height, before transferring itself into the lunar orbit. Once there, it will orbit the Moon for several days before ejecting the Lander and the Rover. The date, September 6, was chosen because the landing site will remain well illuminated by sunlight over the next one month while the Lander and Rover work and collect data. Also, there is no lunar eclipse during this period.

How is a soft landing achieved?

In terms of technology, landing is the most complicated part of the Mission. Travelling at nearly 6,000 km per hour at the time of their ejection from the Orbiter, the Lander and Rover would have to slow down to roughly about 3 km/hr. This 15-minute exercise will mark the “most terrifying moments” for the mission, as ISRO chairman K Sivan put it. The Moon does not have an atmosphere to provide drag, so the use of parachute-like technologies to slow down the Lander cannot be used. Instead, thrusters will be fired in the opposite direction to slow it down. All this while, the Lander will also be imaging the lunar surface to look for a safe site to land.

What new information will the Mission look for?

South Pole: Chandrayaan-2 is attempting to go where no spacecraft has gone before — to the south pole of the Moon. There have been 28 landings on the Moon so far, including six human landings. All these landings have taken place in the equatorial region. Studies have, however, indicated that the unexplored Polar Regions could hold much greater scientific potential.

Chandrayaan Rover: A 6-wheel robotic vehicle named Pragyan (wisdom). It can travel up to 500 m and will leverage solar energy for its functioning. It can only communicate with the Lander.

The polar regions of the Moon are understood to be filled with small and large craters, ranging from a few cm to several thousands of km. These craters make it extremely hazardous for a spacecraft to land. This region is also extremely cold, with temperatures in the range of –200°C. Unlike the Earth, the Moon does not have a tilt around its axis. It is almost erect, because of which some areas in the polar region never receive sunlight. Anything here is frozen for eternity. Scientists believe that rocks found in these craters could have fossil records that can reveal information about the early Solar System.

Chandrayaan-2 will carry out extensive three-dimensional mapping of the topography of the region, and will also determine its elemental composition and seismic activity.

Quest for Water: Two instruments on board Chandrayaan-1 provided irrefutable evidence of water on the Moon, something that had been elusive for more than four decades. Chandrayaan-2 will take the search further, trying to assess the abundance and distribution of water on the surface. The large craters in the South Polar Region are believed to hold large amounts of ice — in millions or billions of tonnes, by one estimate.

Equally important would be the attempt to determine the origins of water on the Moon — whether it has been produced on the Moon, or has been delivered from an outside source. This would also offer a clue on how reliable the water resources could be. Studies show that the water detected on the Moon could have been formed in a few different ways. It is known that the lunar surface is full of oxides of multiple elements. These oxides could react with hydrogen ions in the solar wind to make hydroxyl molecules, which could combine with hydrogen to make water.

The water could also come from external sources. Comets and asteroids that contain water vapour are known to have collided with the Moon in the past, and could have transferred traces of this water to the Moon, which could have got trapped inside the extremely cold regions.

It is the discovery of water on the Moon by Chandrayaan-1, and by a NASA mission a year later, that has rekindled interest in the Moon, and given rise to hopes that it could finally be used to set up a permanent scientific mission, and also as a possible launchpad for going deeper into space. Finding adequate water, and being able to extract it economically, is crucial to this dream.

Timeline: India in space, through the years

February 16, 1962: The Indian National Committee for Space Research is formed under the leadership of Vikram A Sarabhai and physicist Kalpathi Ramakrishna Ramanathan.

November 21, 1963: India’s space programme takes off with launch of a sounding rocket from Thumba Equatorial Rocket Launching Station in Kerala. It was for probing upper atmospheric regions and space research.

August 15, 1969: ISRO is formed.

April 19, 1975: Aryabhata, India’s first satellite, is launched from a Soviet Kosmos-3M rocket from Kapustin Yar in then Soviet Union. It was designed and built in India.

June 7, 1979: Bhaskara-I, the first experimental remote-sensing satellite built in India, is launched. Images taken by its camera were used in hydrology, forestry and oceanography.

July 18, 1980: Satellite Launch Vehicle-3, India’s first experimental satellite launch vehicle, takes off with Rohini Satellite RS-D2. Camera had ability to use data for classifying ground features like water, vegetation, bare land, clouds and snow.

April 10, 1982: Insat-1A is launched. Was abandoned in September 1983, when its attitude control propellant was exhausted.

April 2, 1984: Rakesh Sharma, former IAF pilot, becomes the first Indian in space. In a joint India-Soviet Union mission, Sharma boards the Soyuz T-11 spacecraft to the Salyut 7 Orbital Station.

October 22, 2008: Launch of Chandrayaan-1. It orbits the Moon but does not land. It performs high-resolution remote sensing aiming, among various missions, to prepare a 3D atlas of both the near and far sides of the Moon.

November 5, 2013: Launch of Mangalyaan, the Mars Orbiter Mission. Orbiting and studying Mars since September 24, 2014.


Why everyone wants to go back to the moon

Source: By Kenneth Chang: Deccan Herald

Everyone, it seems, wants to go the moon now. In January, Chang’e-4, a Chinese robotic spacecraft including a small rover, became the first ever to land on the far side of the moon. India is aiming to launch Chandrayaan-2 on 15 July 2019, its first attempt to reach the lunar surface but it postponed due to technical snag. Even a small Israeli non-profit, SpaceIL, tried to send a small robotic lander there this year, but it crashed.

In the coming decades, boots worn by visitors from these and other nations could add their prints to the lunar dust. China is taking a slow and steady approach, and foresees its astronauts’ first arrival about a quarter of a century in the future. The European Space Agency has put out a concept of an international “moon village” envisioned for sometime around 2050. Russia has also described plans for sending astronauts to the moon by 2030, at last, although many doubt it can afford the cost.

In the United States, which sent 24 astronauts toward the moon from 1968 to 1972, priorities shift with the whims of Congress and presidents. But Nasa in February was suddenly pushed to pick up its pace when Vice President Mike Pence announced the goal of putting Americans on the moon again by 2024, four years ahead of the previous schedule. “Nasa is highly motivated,” Jim Bridenstine, the former Oklahoma congressman and Navy pilot picked by President Donald Trump to be the agency’s administrator, said in an interview. “We now have a very clear direction.”

For India, reaching the moon would highlight its technological advances. China would establish itself as a world power off planet. For the United States and Nasa, the moon is now an obvious stop along the way to Mars.

The fascination with Earth’s celestial companion is not limited to nation-states. A bevy of companies has lined up in hopes of winning Nasa contracts to deliver experiments and instruments to the moon. Blue Origin, the rocket company started by Jeff Bezos, founder and chief executive of Amazon, is developing a large lander that it hopes to sell to Nasa for taking cargo — and astronauts — to the moon’s surface.

For three decades after the end of the Apollo programme, few thought much about the moon. The US had beaten the Soviet Union in the moon race. After Apollo 17, the last visit by Nasa astronauts in 1972, the Soviets sent a few more robotic spacecraft to the moon, but they soon also lost interest in further exploration there. Nasa in those years turned its attention to building space shuttles and then the International Space Station. Its robotic explorers headed farther out, exploring Mars more intensely, as well as the asteroid belt and the solar system’s outer worlds.

Bridenstine says one of the main reasons for accelerating a return to the moon now is to reduce the chances of politicians changing their minds again. A 2024 landing would occur near the end of the second term of Trump’s presidency, if he wins re-election next year. “I think it’s sad that we have not been back to the moon since 1972,” Bridenstine said. “There have been efforts in the past. They’ve never materialised.”

Nasa has named the new moon programme Artemis, after Apollo’s sister in Greek mythology. Its first mission would be a crewless test of the Space Launch System, a big rocket already in development. It is scheduled for late 2020, although many expect the launch to slip to 2021.

The second flight — the first with astronauts aboard — would zip around the moon, but not land, in 2022. On the third flight, in 2024, astronauts would first travel to Gateway, an outpost in orbit around the moon, and from there take another spacecraft to the lunar surface, somewhere near its South Pole. Bridenstine, echoed by other Nasa officials, has repeatedly said that Artemis would take the “first woman and the next man” to the moon.

A primary impetus for a moon stampede now the discovery that there is water there, especially ice deep within polar craters where the sun never shines. That is a potentially invaluable source of drinking water for future astronauts visiting the moon, but also for water that can be broken down into hydrogen and oxygen.

The oxygen could provide breathable air; oxygen and hydrogen could also be used as rocket propellant. Thus, the moon, or a refuelling station in orbit around it, could serve as a stop for spacecraft to refill their tanks before heading out into the solar system. “If we can do it, the Gateway becomes a fuel depot,” Bridenstine said.

A key turning point in the revival of interest in the moon came in 1998 from Lunar Prospector, a small, inexpensive Nasa orbiter. Alan Binder, a planetary scientist who worked at Lockheed Martin, conceived of Lunar Prospector as a way to follow up on hints of water ice in the shadowed craters and to demonstrate how to execute space missions at bargain basement prices.

In 2005, Nasa rolled out plans for Constellation — a fleet of new and bigger rockets, capsules and landers it planned to build. Michael Griffin, then Nasa’s administrator, described them as “Apollo on steroids.” But over the next decade, the moon ambitions flagged again.

Making moon money

As administrations wavered, entrepreneurs had begun brainstorming possible business ventures on the moon. In 2007, the X Prize Foundation announced a $20 million grand prize, bankrolled by Google that would be awarded to the first private team that could put a robotic lander on the moon.

The competing teams found the challenge much more financially and technically difficult than anticipated. Even after the deadline was extended several times, the prize expired last year without a winner. But while no company could claim the jackpot, many have not given up on the moon as a business opportunity. The payoffs of the moon could include helium-3 mined from the lunar soil, potentially a fuel for future fusion reactors, although practical fusion reactors are still decades away.

There could be an opening for companies that would ship the ashes of loved ones to the moon as a memorial. And some private companies could carry payloads for scientific research. For instance, the far side of the moon could be ideal for opticaland radio telescopes because they would not face earthly interference there.

In the past, Nasa would have designed and launched its own spacecraft to accomplish those tasks. The agency had started down that path with Resource Prospector, a rover that would drill a yard into the soil and extract substances like hydrogen, helium, nitrogen, carbon dioxide and water. But last year, Nasa cancelled Resource Prospector, and it will instead pay commercial companies to take its payloads there. Many of the businesses are either former Google Lunar X Prize competitors or companies taking advantage of technology developed by those teams.

Nasa’s efforts to reach the moon by 2024 will depend on whether Congress funds them. Nasa has asked for an additional $1.6 billion for the 2020 fiscal year, and Bridenstine said last month that the accelerated schedule might cost a total of $20 billion to $30 billion, raising worries that the money might be diverted from other parts of Nasa to pay for Artemis. Bridenstine now says the price tag may not be as high. “I think it could be well less than $20 billion,” he said. “I say that, because a lot of our commercial partners are willing to put their own money into it.”

Without support from both Republicans and Democrats, the moon programme could stumble again, he said. “My goal is to make sure that we’re looking at a very balanced portfolio and we don’t step on any political land mines, which has been the history of the agency,” Bridenstine said. “It should be, in my opinion, bipartisan and apolitical.”


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Think before getting machines

Source: By V. Anantha Nageswaran & S. Raghu Raman: Mint

If technology magazines are to be believed, Artificial Intelligence (AI) would have to make moral choices in the very near future. Drones in a war zone would have to decide—and decide quickly—whether to drop a bomb on an enemy hideout near a hospital. Self-driving cars would have to make a choice between slamming the brakes suddenly and injuring their passenger or hitting a jaywalking pedestrian.

Serious attempts are being made to distil moral principles from observing human decision-making in experimental conditions. There is a strong push to make machines learn from humans and human artefacts on decision-making and morality. Futurologists like Ray Kurzweil predict that by 2029, we would have machines that can do all things that humans do today and could even better them. But can humans do a good job of coaching AI to exercise moral choices?

There is a debate around the issue of whether humans inherit a moral sense or acquire it as we grow. One school of thought argues that morality in humans is deeply intertwined with our evolutionary and cultural past. Charles Darwin alluded to it and more recently E. O. Wilson has been at the forefront of pushing this idea forward.

Essentially, it has been suggested that moral preferences have been shaped through millions of years by evolutionary forces. If social psychologist Jonathan Haidt is correct, moral judgements are, in effect, automatic and intuitive. Experiences, family, upbringing and culture play a crucial role in developing a moral sense. But, in both these theoretical cases, what is reasonably clear is that the development of a moral compass takes time. It could be aeons or human years, but it’s still a time-consuming process. Transferring this capability to AI or robots would have to recognize this challenge. Put differently, it is not a simple matter of developing a manual and coding it into robots. That would be hubristic on our part.

Of course, it could be argued that what matters is the decision and not the process per se, and so if we crowdsource decisions for moral dilemmas then the AI would discern patterns and use it as a template for decision-making. This is precisely what “Moral Machine" (Nature, 24 October 2018) did. As an online experimental platform, it collected around 40 million decisions from millions of users around the globe on what their preferred option was when faced with moral dilemmas such as the one on self-driven cars described earlier.

Results point to three preferences which the authors recommend as foundation stones for machine ethics: spare humans over animals, spare more lives, and spare younger ones. The results are interesting. But, at the same time, it is also important to note that decisions made by humans, which forms the foundation for building machine ethics, are context-specific and hence not always consistent.

Experiments of Daniel Kahneman and Amos Tversky, the celebrated cognitive psychologists, have convincingly demonstrated the pitfalls of human decision-making. We rely on heuristics or short-cuts for making decisions, and continue to do so even if we are told that the decisions are sub-optimal. Added to this, Prospect Theory, for which Daniel Kahneman won the Nobel Prize in 2002, postulates that humans assign more weight to losses than comparable gains—loss aversion. In fact, multiple experiments have shown that the way a question is framed, in terms of either a loss or a gain, alters our response to that question.

To top it all, various biases plague our choices. Not surprisingly, humans transmit these biases when they teach AI. For example, Amazon’s experimental AI-based hiring tool showed a distinct preference for men over women. This is not surprising if you consider that the AI “learnt" to do this by scanning applications received by the company in the last 10 years, which were predominantly from males.

Leaving aside the world of experiments, how humans respond to real life moral dilemmas also shows the quirks and inconsistencies that characterize us. Take the case of expeditions to Mount Everest. In an article (The Guardian, 28 May 2012) Jon Henley narrates how in 2006, almost 40 climbers went past a dying British mountaineer. None stopped to help. In contrast, a few weeks later, a US climber abandoned his bid to summit and instead joined others to rescue an Australian climber. In 2012, an Israeli climber rescued another mountaineer by carrying him on his back for almost eight hours.

The question is not whether AI could be taught to avoid all human heuristics, but whether or not it is right to avoid them. Perhaps heuristics have served humans well because other humans understand them and know what to anticipate. Second, in a confrontation, how will two machines figure each other out? Third, forget about teaching morals to machines. Is it even moral to replace men (and women) with machines, especially in low-skill occupations? Finally, in the Indian context, it is sobering to note that, based on a perusal of election manifestos, Indian political parties have barely grasped the import of the challenge that AI poses humans.


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India’s hidden challenges

Source: By Raghav Gaiha: Mint

The budget for 2019 is a surreal mix of fact and fancy. While there is a belated recognition of investment as a barrier to the acceleration of growth and a sharp spike in the allocation for agriculture, primarily to finance higher minimum support prices (MSPs), healthcare—especially of the ageing, a growing share of the population—has been overlooked as a major priority.

Huge losses of output inherent in the incapacity of the aged increasingly vulnerable to non-communicable diseases (e.g. diabetes, cardiovascular diseases, cancer) are avoidable not just through higher outlays on health, but also through a reorganization of the health system with much greater emphasis on primary medical centres or PMCs. Ironically, neither renewed emphasis on investment-driven growth, nor higher outlays on agriculture, are likely to substantially boost employment. So, the vision of a resurgent India is distorted and lopsided, apart from the worry that the budget’s fiscal arithmetic is awry.

With the brouhaha over unemployment touching a 45-year high of 6.1% in 2017-18 dying a slow death after the National Democratic Alliance government’s release of the first periodic labour force survey (PLFS) a day after taking oath, the emphasis is beginning to shift to the slowing of gross domestic product growth. Assertions are made ad nauseam that the Indian economy is in a middle-income trap, in complete denial of the growing deficiency of aggregate demand, induced by the wrong-headed policy shock of demonetization and glaring failures of the goods and services tax.

Such assertions are intended to divert attention from a deepening crisis in agriculture, the paralysis of the informal sector, sputtering manufacturing growth and slowing exports. So, a high unemployment rate is no surprise. However, while averages are useful in helping policymakers focus on a serious problem, it is necessary to look beyond them.

We focus on the aged (60 years and above), with their growing vulnerability to NCDs and disabilities (such as the inability to walk and dress, apart from speech and vision impairment), and caste and education barriers impeding their employment. The analysis is based on a nationwide panel survey, the India Human Development Survey 2015 (IHDS 2015), covering 2005 to 2012.

Four mutually exclusive categories of farm, business, wage and salary employment were identified: Not employed, employed for less than 240 hours in a year (just employed), and those employed for more than 240 hours in a year, disaggregated as part-time employment (but not throughout the year), and full-time employment. The sample comprises persons in the age groups of 15-30 years, 31-50 years, 51-60 years, 61-70 years, and above 70 years.

Relative to those in the 15-30 years group, those in the older 31-50 years group exhibited lower probabilities of being not employed, and just employed, but higher probabilities of being employed part-time and full-time. A similar pattern is associated with the next age-group of 51-60 years, as well as 61-70 years. As expected, the oldest, aged 71 years or more, were most likely to be not employed and less likely to be just employed, employed part-time and full-time. So, old age acts as a barrier to part-time and full-time employment.

The caste divide was glaring

Brahmins and other “forward" castes showed notably lower probabilities of being not employed, or just employed, but higher probabilities of being employed part-time and full-time, compared to Other Backward Classes (OBCs). Dalits and tribals displayed patterns similar to OBCs’.

Relative to illiterates, those with 1-4 years and 5-8 years of education showed higher probabilities of being not employed and just employed, and lower probabilities of part-time and full-time employment, while those with 8-10 years of education showed no significant pattern. In contrast, those with 11 years or more of education displayed significantly lower probabilities of being not employed and just employed, and much higher probabilities of part-time and full-time employment, leading to the inference that a turning point in long-duration employment occurs at above-matriculation level.

Relative to those who were not afflicted with NCDs, those who did display higher probabilities of being not employed and just employed, had much lower probabilities of part-time and full-time employment. A similar pattern was revealed by disabilities. These findings suggest considerable loss of manpower and potential output through ill-health.

Greater state affluence is associated with lower probabilities of being not employed and just employed, and significantly higher probabilities of part-time and full-time employment. Thus, state affluence through growth has substantial employment potential.

In brief, instead of wallowing in an imaginary middle-income trap, more attention must be paid to policies designed to boost aggregate demand and provide better healthcare for the aged through Ayushman Bharat Yojana (ABY), with due emphasis on integrated medical care through PMCs. Astonishingly, the ABY, despite its transformative claims, was mentioned only once.


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Enlarging the growth deficit

Source: By Deepak Nayyar: Mint

The Union budget for 2019-20, presented by the finance minister in Parliament, is the annual financial statement of the government under Article 112 of the Constitution of India. But the budget speech turned out to be a quinquennial political statement of the government. It showcased the achievements of the past five years and outlined the good intentions for the next five years. In doing so, it reached out to a wide range of constituencies—villages, farmers, women, youth, taxpayers, industry, foreign investors—with political messaging, particularly for the poor. Politics—deft and populist—was in command.

Alas, the problems confronting the economy did not receive sufficient recognition or attention. Gross domestic product (GDP) growth in the fourth quarter of 2018-19 was the lowest in twenty quarters. The investment rate dropped to 29% of GDP during 2014-15 to 2018-19, from 33% during 2011-12 to 2013-14, and 35% in preceding financial years. Exports have stagnated at around $300 billion in current prices for five years. The unemployment rate is the highest in decades. The budget has done little to revive growth, or investment and exports, both of which are important drivers of economic growth and employment creation.

The irony is that the National Democratic Alliance government walked the supposedly virtuous path of macroeconomic stability between 2014-15 and 2018-19. Fiscal deficits were reduced. Inflation rates were moderate. Ease of doing business was pursued as a priority objective. Commodity prices, particularly crude oil, also remained low. However, the virtuosity did nothing to stimulate private investment or foster growth.

Given this experience, in such an economic slowdown, it would have been logical for the budget to revive growth from the demand side by increasing government expenditure, particularly on public investment. In 2019-20, as compared with 2018-19, total government expenditure as a proportion of GDP remains almost unchanged at 13%, while capital expenditure as a proportion of total expenditure at 12% is lower than the 13% in the previous financial year. Thus, there is no attempt to use government spending or public investment to revive growth.

The basic underlying reason is the objective of keeping the fiscal deficit at 3.3% of GDP. But the magic number of 3% is not sacrosanct. There is nothing in macroeconomics that stipulates an optimum level to which the fiscal deficit must be reduced as a percentage of GDP. Government borrowing is always sustainable if it is used to finance investment and if the rate of return on such investment is greater than the rate of interest payable. The obsessive concern of the ministry of finance mirrored in the media, with the gross fiscal deficit of the central government—as if fiscal deficits of state governments or borrowing by public sector enterprises are irrelevant—is even more baffling.

There is, as always, creative arithmetic in the budget, which underestimates expenditure and overestimates revenue. The outlays provided for sectors or programmes, infrastructure or welfare, simply do not match the ambitious outcomes envisaged in the budget. The revised estimates of revenue receipts for 2018-19, reproduced from the interim budget, significantly exceed the actuals reported by the Controller General of Accounts, which were made public before the budget was presented.

In fact, the shortfall in collection of taxes in 2018-19 was a massive 1.67 trillion. Consequently, the 2019-20 budget estimates for gross tax revenue can be realized only if these are almost 20% higher than the actuals in 2018-19, compared with just 8% in 2018-19. That is not all. Non-tax revenue is estimated to rise from ₹2.45 trillion to ₹3.13 trillion, including a whopping 38% increase in dividends and profits from 1.19 trillion to 1.64 trillion. That is a tall order for dividends from public sector enterprises, unless the Reserve Bank of India pays a very large dividend.

The sale of government shares in public sector enterprises, described as strategic disinvestment, is expected to fetch ₹1.05 trillion. This is portrayed as a reform. In effect, it finances the fiscal deficit, which is defined as the difference between revenue receipts plus non-debt capital receipts (of which 88% are disinvestment receipts) and expenditure. It is clearly not fiscal adjustment, because it uses asset sales that provide one-time receipts rather than revenue receipts that recur year after year. Given that total budgetary support for capital expenditure is 3.38 trillion, disinvestment receipts should be dedicated to retiring public debt or augmenting public investment.

At this juncture, stepping up public investment and government expenditure could have kick-started growth. Through multiplier effects, it could also have provided a stimulus to private investment and private consumption. Allowing the fiscal deficit to widen by 0.5% of GDP would have provided the government with 1.06 trillion of additional resources. Given a supporting milieu of macroeconomic stability and low inflation, this could have provided the impetus for driving growth. For a government with a decisive electoral mandate from the people, this first budget was a missed opportunity.

The government has stressed its desire to make India a $5 trillion economy by 2024. It is a catchy slogan that sounds good. It would feel good only when it improves the well-being of our people. But it is essentially about the arithmetic of compound growth rates. If GDP growth in current prices is 12% per annum (say real GDP growth at 7% and inflation at 5% per annum), and the rupee does not depreciate, India’s GDP would rise from $2.7 trillion to $5 trillion in just over five years.

A bolder expansionary budget, which raised public investment and allowed the fiscal deficit to be wider by just 0.5% of GDP, would have made this objective easier to attain by fostering growth. Instead, obsessive concerns about the fiscal deficit might now lead to a growth deficit.


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An Ocean of Neighbour

Source: The Indian Express

Prime Minister Narendra Modi’s first visit abroad in his second term to Maldives and Sri Lanka is being billed as the reaffirmation of Delhi’s traditional diplomatic emphasis on “neighbourhood first”. Hopefully, it is a little more than that — an effort to redefine what our neighbourhood is.

The visit to Male and Colombo offers the opportunity to firmly place the Indian Ocean island states into India’s regional geography. A beginning was indeed made in his first term, when Modi travelled to Seychelles, Mauritius and Sri Lanka in early 2015 and outlined an Indian Ocean strategy called SAGAR (Security and Growth for All in the Region). Modi must now expand the ambit of the strategy to draw in Madagascar, Comoros, Reunion and Diego Garcia. Reunion is part of France and Diego Garcia hosts a major American military facility.

Similarly, Delhi should focus on a number of small islands that dot the sea lines of communication in the eastern Indian Ocean — the Cocos and Keeling islands belonging to Australia come readily to mind. In both the east and the west, India’s own island territories — the Andaman and Lakshadweep — have a critical role in reshaping our maritime neighbourhood.

But first to the conceptions of India’s strategic geography, nothing has diminished India’s geopolitical thinking than the idea of South Asia. The shrinking of India’s regional vision was also reinforced by India’s inward economic orientation and the sundering of historic commercial ties with the maritime neighbours. Maps of the neighbourhood those of the Foreign Office, barely showed countries like Myanmar, Thailand, or Indonesia with whom India shared land and/or maritime boundaries. The unfortunate conflation of “neighbourhood” with “South Asia” and SAARC was complete.

When he came to power in 2014, Modi seemed to go by the traditional South Asian framework. He invited all the leaders of the SAARC for his swearing in-ceremony to signal the commitment to putting the neighbourhood first. There was one exception though — it was the invitation to the political leadership of Mauritius to join the swearing-in. The invitation probably reflected Modi’s sensibility to India’s deep diasporic connection with the Indian Ocean island republic. Whatever the intent might have been, it set the stage for visualising a region that transcends South Asia and puts the maritime neighbourhood back into India’s strategic consciousness.

At the only SAARC summit during his first term, held in Kathmandu at the end of 2014, Modi saw the forum’s dysfunction. It could not wrap up regional connectivity agreements negotiated for years before, thanks to Pakistan’s decision to pull the plug at the last minute. With SAARC going nowhere, Modi turned to the BIMSTEC grouping, invited its leaders to join the BRICS summit at Goa during 2016, and again last month for the inauguration of Modi’s second term.

The limitations of SAARC are structural and enduring. Before “South Asia” became the dominant moniker, our region was known as “the Indian Subcontinent”. Many of the problems afflicting SAARC today are a legacy of the Subcontinent’s tragic Partition in 1947. As new sovereignties emerged out of undivided India, there were problems aplenty to deal with.

Any numbers of SAARC summits are not going to resolve the quarrels in the post-Partition Subcontinent. Most of them are bilateral between India and each of its neighbours. The one exception is the nature of the disputes between Afghanistan and Pakistan. Answers to these quarrels too will have to largely come through bilateralism. Where there has been progress in addressing these problems — for example with Bangladesh — the consequences have been huge and positive.

Delhi should have no problem recognising that Islamabad is not ready for economic integration with India; it wants a settlement of the Kashmir question to precede any economic and political cooperation with India. That might take a while. But should we hold up the rest of the region until Pakistan is comfortable with India-centred regionalism?

Modi’s focus on BIMSTEC was as much about rediscovering a forgotten regional organisation as it was about putting the Bay of Bengal on India’s mental map. Equally important was Modi’s focus on the Indian Ocean islands. His 2015 trip to Seychelles, Mauritius and Sri Lanka was to include Maldives, but had to be cancelled at the last minute because of the crackdown on opposition leaders. Modi travelled briefly to Maldives at the end of last year to celebrate the restoration of democracy in the island state.

Over the last few years, Colombo has been persistent in claiming an “Indian Ocean identity” rather than a South Asian identity. The future of the Maldives, sitting astride one of the world’s busiest sea lines of communication, is in the Indian Ocean. Both of them are acutely conscious of their growing maritime salience and have not been hesitant to develop all-round political leverage.

As Modi travels to the southern seas, Delhi must come to terms with a number of realities. First, it needs to recognise that island states and territories — including the smallest pieces of real estate — are coming into strategic play amidst the return of great power rivalry to the littoral. Second, the island states in the south western Indian Ocean form a coherent group and must be dealt with in an integrated framework. In eastern Indian Ocean, a focus on developing the Andaman Islands opens up possibilities for sub-regional cooperation with Thailand, Indonesia and Singapore. Third, India needs to develop its own national capabilities — especially in the delivery of strategic economic and security assistance to the island states. Without that the ambitious goals identified under the SAGAR vision will remain elusive.

Finally, in his SAGAR vision, Modi signalled India’s readiness to work with other powers in promoting regional prosperity and security. There are big possibilities for collaboration with France, the US, Australia and Japan in different corners of the Indian Ocean. The joint bidding by India and Japan for the development of East Container Terminal in the Colombo port underlines the potential.


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Budget and the world

Source: By Sanjaya Baru: The Indian Express

An unexpected announcement in Finance Minister Nirmala Sitharaman’s Union budget speech was the proposal for the government to raise funds globally by borrowing abroad to bridge the deficit at home. It is not an idea one readily associates with a nationalistic political party like the Bharatiya Janata Party. The reason why since 1991 successive governments chose not to seek fueling growth through external borrowing was because of the terrible memory of what excessive and short-term borrowing in the 1980s did to India’s global standing.

While the PV Narasimha Rao government entered into a fiscal stabilisation and structural adjustment programme with the International Monetary Fund and the World Bank in 1991 to manage the balance of payments consequences of the fiscal and external economic policies of the 1980s, no government has since been willing to tap funds through external borrowing. Sitharaman’s proposal to launch sovereign bonds draws attention to the binding constraint on growth imposed by inadequate government finances and domestic savings. Resisting the temptation to print money and spend one’s way to growth, the finance minister has opted for incentivising private investment and borrowing abroad.

Taken along with the currency swap agreements signed last year with Japan and the United Arab Emirates, the Indian economy’s dependence on external finance is once again growing. With merchandise exports remaining sluggish, the finance minister has turned to import substitution in the name of Make in India. Partly to ward off criticism of protectionist trade policies from developed economies, the government has opened doors more widely to foreign direct investment.

If the government is able to stimulate new economic activity and thereby ease the domestic fiscal constraint, it will have more leg room to spur growth. However, this will have to be done with care, given increased exposure to global sentiments that comes with increased dependence on external finance and markets. In days to come, India will have to engage its global economic partners and financial markets to enable the finance minister to raise the funds required to finance higher growth. Equally, the commerce minister too will have to engage the world to justify the tariff measures announced in the budget. Managing both fronts will require deft diplomacy.

What could have prompted Prime Minister Narendra Modi to encourage Finance Minister Sitharaman to walk this path? It seems to me that Modi has concluded from his external engagements over the past few months that the global political environment is conducive to India’s increased external financial dependence even as it becomes more protectionists on the trade front. Incidentally, this stance is the exact opposite of the one adopted in 1991 when India chose to reduce external financial dependence while pursuing trade liberalisation.

In 1991 such trade liberalisation was facilitated by exchange rate depreciation. Today trade protectionism is being necessitated by exchange rate appreciation. Raising funds through dollar-denominated sovereign bonds will only continue to exert pressure against exchange rate depreciation. Managing the balance of payments with the trade account seeking depreciation and the capital account resisting it will be tricky.

What is interesting from a policy perspective is that Prime Minister Modi seems to believe that the external environment can in fact be more supportive of India’s growth aspirations even when the domestic environment remains challenging. This stance recalls to my mind a statement made by then Prime Minister Manmohan Singh at the India Today Conclave in February 2005: “I submit to you for your consideration”, he said, “the idea that the global environment has never been more conducive for India’s economic development than it is today. The world wants India to do well. However, we recognise that our real challenges are at home.”

Prime Minister Modi may well feel the same way today. He must, of course, be mindful of the fact that even if the global political environment may be equally conducive, the global economic environment is less so compared to 2005. Securing external support for India’s emerging strategy to become a US$5 trillion economy requires greater coordination between the managers of foreign policy and diplomacy, on the one hand, and financial and trade policies on the other. This, in essence, is the geo-economics of the budget.

Prime Minister Modi has an effective team of four persons in place, including Finance Minister Sitharaman, External Affairs Minister S Jaishankar and the ministers for industries and trade, Piyush Goyal and Hardeep Puri, to coordinate economic and foreign policy aimed at raising the rates of investment and growth and India’s share in world trade and capital flows. While Sitharaman and Goyal have a good grasp of the domestic economy and politics, Jaishankar and Puri are able diplomats with experience in economic diplomacy.

Such coordination between the managers of economic policy and of foreign policy has always been necessary but today it is more so both because of the many structural changes in global power and economic relations and the fact that this year’s budgetary strategy has increased the importance of external economic management to domestic economic performance. Of course, government spokespersons have quoted Deng Xiaoping to say that India will only “cross the river by feeling the stones.” That would be wise. But the stones to feel would be both economic and geopolitical.

It has been a long time since Indian macro-economic policy has exposed itself as much as it has this year to external judgments. Western rating agencies have lost some of their professional reputation but they have not gone away and sovereign borrowing will bring them back into play. Their considerations are never purely economic nor entirely professional. External debt brings with it exposure to external judgment. India’s nationalist leadership must learn to live with it. All the more reason, why economic policy managers and foreign policy managers have to work in tandem to manage the geo-economics of fiscal policy?


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Transformative Budget

Source: By TV Mohandas Pai: The Financial Express

The mandate for the first budget under Modi 2.0 was given to Nirmala Sitharaman under stressed growth conditions. The Budget’s emphasis was rightly on laying down a strong vision for the next five years as opposed to announcing large outlays. This is a welcome move, addressing the need for strengthening the economy, and improving citizens’ lives. The FM further lowered the fiscal deficit target for FY20 to 3.3% of GDP from 3.4%.

The focus of the government since the last term has been to provide the bare necessities to every Indian citizen and it is well on its way to success. Substantial expenditure on social infrastructure is continued in this budget. The most far reaching impact of these reforms will come in the boost given to higher education. The proposed National Education Policy will help groom and retain India’s top talent. There has not been enough quality research output from our universities. The creation of the National Research Foundation to foster research is, thus, timely. Setting up the Higher Education Commission to bring in greater autonomy to institutes will create better academic outcomes.

Large-scale infrastructure development will be the next frontier for this government, catalysing and supporting the growth from other sectors. Logistics in India accounts for 14.4% of GDP—twice as much as those of western economies. There is tremendous potential for bringing in efficiencies here. The government announced its intention to invest `100 lakh crore in infrastructure over the next five years. Projects from the current budget to restructure the National Highway Programme, upgrading the Railway and Inland Waterway infrastructure, and making power accessible across states at consistent costs will lend more efficiency in the logistical network post the GST reforms that eased cross-state goods movement.

Streamlining the 44 existing labour laws and structuring them into four labour codes will standardise compliance processes for businesses. Easing the tedious bureaucracy around registration and returns filing will help bring down business costs and also invite foreign investment in labour-intensive industries. The formalisation of labour will help bring in wage parity and reduce labour disputes and harassment.

Critical mandates were taken up by the FM to propel some upcoming sectors. Investment-linked income tax deduction will help attract global companies to set up mega-manufacturing plants in sunrise and advanced technology areas like semiconductor fabrication (FAB), solar photo voltaic cells, lithium storage batteries, solar electric charging infrastructure, computer servers, laptops, etc.

In a dedicated move to help India’s growth complement the protection of the environment, the government has given a big boost to the development of India as a manufacturing hub for Electric Mobility and its adoption within the country.Phase-II of the FAME scheme will make an outlay of `10,000 crore to encourage faster adoption of electric vehicles. From income tax deductions to the tune of `1.5 lakh on EV loans to reduction of GST and custom duties, the sector as a whole has been given a very healthy push.

In the most important announcement from the current Budget, the FM announced the initiative to increase sovereign borrowings in external currencies. This will ease pressure on domestic savings and interest rates and bring in much needed liquidity to the market, providing good support to bolster consumption. To grow at a rate of 8-9%, the country needs more inflow of overseas capital. Initiatives to make the FDI program more lucrative for investors were much needed, especially in the sectors targeted—aviation, media, and insurance. The disinvestment target of `1.05 lakh crore will be achieved on the back of the healthy growth in popularity of ETFs.

Corporate tax rate of 25% was widened to include companies with annual turnover up to `400 crore, covering 99.3% of the companies. What the government does not account for, however, is that the remaining 0.7% of companies are the ones largely competing against international companies in markets where corporate tax rates have been lowered in the past couple of years. These are the companies that are grooming the best of India’s formal sector talent and, hence, must be supported in their growth. At the same time, the benefits to MSMEs in this budget are laudable and helps sustain the entrepreneurial zeal of Indians. Easing credit access to businesses posts the NBFC crisis last year while strengthening the banking infrastructure was the absolute need of the hour. The FM has taken good steps in this direction.

To help financially sound NBFCs raise capital, the government allocated `1,00,000 crore to make a partial credit guarantee of six months for PSBs to purchase high-rated pooled assets for first loss of up to 10%. Further, the requirement of Debenture Redemption Reserve for public issues of debt by NBFCs will also be removed. Building a deeper corporate bond market to increase access to low cost capital will help drive investment-led growth. PSU banks, too, have been given a strong capital boost of `70,000 crore.

The NDA government continued its fight against the black economy, incentivising digital payments in business transactions by levying TDS of 2% on withdrawals over `1 crore from a single bank account. The interchangeability between Aadhar and PAN cards for filing tax returns will also help. Back in 2014, Arun Jaitley had made a commitment to rein in tax evasion.

Since then, the government has only increased the tax burden on honest taxpayers and tax terrorism has not seen any substantial reduction. People who have diligently been following the law and declaring their true income are penalised with a higher tax rate every year. In 2016, the FM increased surcharge by 3% on individuals with income over `1 crore. In 2017, the surcharge became 10% for individuals with income between `50 lakh and `1 crore. This year again, individual with incomes over `2 & `5 crore will be charged a higher rate of tax, with surcharges of 10% & 15% respectively. Must there be such a premium on honesty? No effective steps for reducing tax terrorism, perverse assessments, or tax disputes have been announced.

The FM removed the angel tax harassment from AIF Category I & II investors, which is a much-anticipated relief. However, to encourage investors to invest in high-risk, low-liquidity startups, capital gains must be brought down from 20% to 10%. If not incentivised, these investors will flock back to the less risky public markets. The startup ecosystem must be encouraged in order to grow and create better-paying long-term jobs for the country and incentivise Indian investors. Today, India is well on its way to becoming a digital colony as most of our largest digital startups are substantially owned by overseas investors; the government must remedy this on a priority basis. The lack of clarity on the creation and disbursement of the `20,000 crore startup Seed Fund has been disappointing.

ESOP taxation, which currently places undue burden upon employees by taxing them on exercise based on the price paid by investors, has not seen any change either. Finally, the new budgetary provisions for the GIFT City will attract global companies to make long-term investments and help India make a mark as a global financial hub.

Considering the headwinds in the global economy and India’s growth opportunity, the reforms announced in this budget will hopefully be transformative and play a crucial role in setting a stable platform for the next five years.

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