The 1382 offshore-identified islands of India hold immense unexploited potential for fostering growth and achieving cohesive socio-economic development of the region in particular and also, the nation as a whole. They can significantly contribute to the GDP by leveraging the gains from promoting infrastructure and tourism on a large scale.
However, care must be taken to safeguard and maintain the position of these islands as vital strategic assets for national security while keeping their nature and composition as biodiversity hotspots intact.
Given the strategic location of Andaman & Nicobar (A&N Islands) and the Lakshadweep Islands and China’s belligerent expansionist policy in the Indian Ocean Region (IOR), not only is there a need to develop critical infrastructure and upgrade the military base in these regions, but also to harness the multiplier effect generated as infrastructure connectivity strengthens. This in turn, is expected to boost tourism and spruce up economic activity in the region.
Why are they important?
Of late, the Islands have garnered special attention in the wake of the rising maritime territorial tensions at the international front. India’s only tri-service command is established at the A&N Islands at the entrance of the Malacca Strait, the 2.8 km long -world’s most congested choke point, and the primary route for Chinese oil supply. However, with the recent Indo-Japanese initiative to expand civilian infrastructure in its vicinity, China has started exploring alternative land routes to the Middle East for oil, most notably, through the China Pakistan Economic Corridor (CPEC).
Emerging Sino-Indian competition in the region can be seen through the routine deployment of submarines by China, development of underwater surveillance networks, expansion of Chinese naval bases with the establishment of a military base in Djibouti and extending the reach of the One Belt One Road (OBOR) mega-initiative as India joins hands with Japan, Australia and the US in the Malabar Naval Exercises. This sentiment is mirrored in the recent formation of the ‘Quad’ coalition group by the same nations. The Doklam standoff and the recent Chinese policy of forming strategic/ critical commercial alliances with India’s neighbouring countries as the United States displays a clear proclivity towards India, makes fast-paced Island development all the more imperative.
The Immense Latent Potential
The Islands host an unexplored Exclusive Economic Zone (EEZ) with clearly demarcated boundaries that can be capitalized on in numerous ways; the varied ecosystem can be exploited for its medicinal plants and exotic plant species, sustainable agriculture and horticulture practices conducive to the agro-climatic conditions of the regions can be propagated, large-scale hydrocarbon explorations can be undertaken, and alternate renewable energy resources can be exploited so as to meet the energy needs of the nation.
Additionally, rainwater harvesting can be popularized so as to both conserve water and also narrow the critical water infrastructure deficit in the region due to scarcity of resources and inefficient management. Fisheries, the mainstay of the larger populace of these regions, can be given a thrust so as to develop modernized and sustainable inland fisheries and aquaculture ecosystem integrated with the ‘Blue Economy’ vision. Most importantly, the Islands can be developed as prime Tourist Hotspots for not just the country, but also internationally. The pristine beaches, coupled with rich tropical vegetation, can be turned into a more economical and attractive alternative to conventional destinations such as Bali and Maldives, thereby creating many forward and backward linkages and help boost the economy of the regions to a large extent.
Enter the Government:
The A&N Islands alone account for 30% of India’s EEZ-revenue. Given their unrealized potential, bridging the infrastructure gap becomes the next crucial step. Historically, Ship Building and Ship Repairing have been the high priority areas for infrastructure initiatives in the islands. However, acknowledging the urgency and potency of the pending development in these regions, the government in 2016, identified 26 Islands for promoting and implementing development based on sustainable approach to building a thriving economy of the project islands. The government has also announced laying of Rs, 1,102 Crore worth of submarine optical fiber cable between Chennai and A&N Islands so as to increase telephone and internet connectivity in the region by December 2018. Moreover, considering the unique maritime and territorial bio-diversity of the islands, the government has identified enhanced connectivity as one of the key priorities.
In 2017, the Island Development Agency (IDA) was established for the holistic development of the islands, focusing on community-based tourism. Key Infrastructure projects such as creation of jetties/berthing facilities, Roll-on/Roll-off ships; Bridges on Andaman Trunk Road; Upgradation of Diglipur Airport; Construction of Minicoy Airport; Modernization of existing Jetty at Kavarati; Augmentation of Satellite Bandwidth from 1.118 Gbps to 2.118 Gbps in Andaman & Nicobar; augmentation of helicopter services for Islanders and tourists etc. are being accorded priority accordingly.
With better communication services, Information Technology based and other Micro, Small and Medium Enterprises (MSME) would be promoted in the Islands. Further, after carrying out systematic study, 18 Projects, both in Andaman & Nicobar and Lakshadweep, have been identified for implementation, out of which 7 Projects are ready for launch through Public-Private Partnership.
Moreover, international collaborations can also be banked on for the same. The 2016 Indo-Japan Joint Statement on Bilateral Cooperation envisioned to develop “Smart Islands” on the line of the ‘Smart Cities’ project. Japanese capital and expertise can be both pioneering as well as beneficial to this endeavor. The development of the Reunion Islands by France can be a guiding example and also opens up the opportunity for prospective collaboration with Paris in implementation of such projects. The positive response by OECD countries in taking on ‘Smart Cities’ projects further demands similar international cooperation.
The Way Forward: Private Sector Participation
Collaboration is indeed, the need of the hour in this regard as provision of a robust regulatory environment by the government is needed so as to not encroach upon the natural and socio-economic rights of the Particularly Vulnerable Tribal Groups (PTVG) and also preserve the ecological balance of the region, while facilitating better connectivity and maritime security infrastructure. Moreover, the high financial costs entailed in such investments create a need for private sector involvement, where their operational and managerial expertise is required so as to optimally deliver on these projects. Similarly, International best practices can be modified suitably and replicated so as to maximize returns further.
Although, the need for civil infrastructure development in Island regions is unquestionable, in the wake of existing geo-strategic position of these islands, upgradation of defense facilities is equally important. This will constructively channelize the positive externalities of such assets to enhance the living conditions of entire populace.
However, due attention needs to be paid so as to not disturb the ecological balance, disrupt local livelihood-activities, and engage all stakeholders in the decision making process while ensuring that sufficient institutions and mechanisms exist for grievance redressal, compensation and rehabilitation. The road to development must sail through the islands.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.
Globally, around 80% of wastewater flows back into the ecosystem without being treated or reused, according to the United Nations.
This can pose a significant environmental and health threat.
In the absence of cost-effective, sustainable, disruptive water management solutions, about 70% of sewage is discharged untreated into India’s water bodies.
A staggering 21% of diseases are caused by contaminated water in India, according to the World Bank, and one in five children die before their fifth birthday because of poor sanitation and hygiene conditions, according to Startup India.
As we confront these public health challenges emerging out of environmental concerns, expanding the scope of public health/environmental engineering science becomes pivotal.
For India to achieve its sustainable development goals of clean water and sanitation and to address the growing demands for water consumption and preservation of both surface water bodies and groundwater resources, it is essential to find and implement innovative ways of treating wastewater.
It is in this context why the specialised cadre of public health engineers, also known as sanitation engineers or environmental engineers, is best suited to provide the growing urban and rural water supply and to manage solid waste and wastewater.
Traditionally, engineering and public health have been understood as different fields.
Currently in India, civil engineering incorporates a course or two on environmental engineering for students to learn about wastewater management as a part of their pre-service and in-service training.
Most often, civil engineers do not have adequate skills to address public health problems. And public health professionals do not have adequate engineering skills.
India aims to supply 55 litres of water per person per day by 2024 under its Jal Jeevan Mission to install functional household tap connections.
The goal of reaching every rural household with functional tap water can be achieved in a sustainable and resilient manner only if the cadre of public health engineers is expanded and strengthened.
In India, public health engineering is executed by the Public Works Department or by health officials.
This differs from international trends. To manage a wastewater treatment plant in Europe, for example, a candidate must specialise in wastewater engineering.
Furthermore, public health engineering should be developed as an interdisciplinary field. Engineers can significantly contribute to public health in defining what is possible, identifying limitations, and shaping workable solutions with a problem-solving approach.
Similarly, public health professionals can contribute to engineering through well-researched understanding of health issues, measured risks and how course correction can be initiated.
Once both meet, a public health engineer can identify a health risk, work on developing concrete solutions such as new health and safety practices or specialised equipment, in order to correct the safety concern..
There is no doubt that the majority of diseases are water-related, transmitted through consumption of contaminated water, vectors breeding in stagnated water, or lack of adequate quantity of good quality water for proper personal hygiene.
Diseases cannot be contained unless we provide good quality and adequate quantity of water. Most of the world’s diseases can be prevented by considering this.
Training our young minds towards creating sustainable water management systems would be the first step.
Currently, institutions like the Indian Institute of Technology, Madras (IIT-M) are considering initiating public health engineering as a separate discipline.
To leverage this opportunity even further, India needs to scale up in the same direction.
Consider this hypothetical situation: Rajalakshmi, from a remote Karnataka village spots a business opportunity.
She knows that flowers, discarded in the thousands by temples can be handcrafted into incense sticks.
She wants to find a market for the product and hopefully, employ some people to help her. Soon enough though, she discovers that starting a business is a herculean task for a person like her.
There is a laborious process of rules and regulations to go through, bribes to pay on the way and no actual means to transport her product to its market.
After making her first batch of agarbathis and taking it to Bengaluru by bus, she decides the venture is not easy and gives up.
On the flipside of this is a young entrepreneur in Bengaluru. Let’s call him Deepak. He wants to start an internet-based business selling sustainably made agarbathis.
He has no trouble getting investors and to mobilise supply chains. His paperwork is over in a matter of days and his business is set up quickly and ready to grow.
Never mind that the business is built on aggregation of small sellers who will not see half the profit .
Is this scenario really all that hypothetical or emblematic of how we think about entrepreneurship in India?
Between our national obsession with unicorns on one side and glorifying the person running a pakora stall for survival as an example of viable entrepreneurship on the other, is the middle ground in entrepreneurship—a space that should have seen millions of thriving small and medium businesses, but remains so sparsely occupied that you could almost miss it.
If we are to achieve meaningful economic growth in our country, we need to incorporate, in our national conversation on entrepreneurship, ways of addressing the missing middle.
Spread out across India’s small towns and cities, this is a class of entrepreneurs that have been hit by a triple wave over the last five years, buffeted first by the inadvertent fallout of demonetization, being unprepared for GST, and then by the endless pain of the covid-19 pandemic.
As we finally appear to be reaching some level of normality, now is the opportune time to identify the kind of industries that make up this layer, the opportunities they should be afforded, and the best ways to scale up their functioning in the shortest time frame.
But, why pay so much attention to these industries when we should be celebrating, as we do, our booming startup space?
It is indeed true that India has the third largest number of unicorns in the world now, adding 42 in 2021 alone. Braving all the disruptions of the pandemic, it was a year in which Indian startups raised $24.1 billion in equity investments, according to a NASSCOM-Zinnov report last year.
However, this is a story of lopsided growth.
The cities of Bengaluru, Delhi/NCR, and Mumbai together claim three-fourths of these startup deals while emerging hubs like Ahmedabad, Coimbatore, and Jaipur account for the rest.
This leap in the startup space has created 6.6 lakh direct jobs and a few million indirect jobs. Is that good enough for a country that sends 12 million fresh graduates to its workforce every year?
It doesn’t even make a dent on arguably our biggest unemployment in recent history—in April 2020 when the country shutdown to battle covid-19.
Technology-intensive start-ups are constrained in their ability to create jobs—and hybrid work models and artificial intelligence (AI) have further accelerated unemployment.
What we need to focus on, therefore, is the labour-intensive micro, small and medium enterprise (MSME). Here, we begin to get to a definitional notion of what we called the mundane middle and the problems it currently faces.
India has an estimated 63 million enterprises. But, out of 100 companies, 95 are micro enterprises—employing less than five people, four are small to medium and barely one is large.
The questions to ask are: why are Indian MSMEs failing to grow from micro to small and medium and then be spurred on to make the leap into large companies?
At the Global Alliance for Mass Entrepreneurship (GAME), we have advocated for a National Mission for Mass Entrepreneurship, the need for which is more pronounced now than ever before.
Whenever India has worked to achieve a significant economic milestone in a limited span of time, it has worked best in mission mode. Think of the Green Revolution or Operation Flood.
From across various states, there are enough examples of approaches that work to catalyse mass entrepreneurship.
The introduction of entrepreneurship mindset curriculum (EMC) in schools through alliance mode of working by a number of agencies has shown significant improvement in academic and life outcomes.
Through creative teaching methods, students are encouraged to inculcate 21st century skills like creativity, problem solving, critical thinking and leadership which are not only foundational for entrepreneurship but essential to thrive in our complex world.
Udhyam Learning Foundation has been involved with the Government of Delhi since 2018 to help young people across over 1,000 schools to develop an entrepreneurial mindset.
One pilot programme introduced the concept of ‘seed money’ and saw 41 students turn their ideas into profit-making ventures. Other programmes teach qualities like grit and resourcefulness.
If you think these are isolated examples, consider some larger data trends.
The Observer Research Foundation and The World Economic Forum released the Young India and Work: A Survey of Youth Aspirations in 2018.
When asked which type of work arrangement they prefer, 49% of the youth surveyed said they prefer a job in the public sector.
However, 38% selected self-employment as an entrepreneur as their ideal type of job. The spirit of entrepreneurship is latent and waiting to be unleashed.
The same can be said for building networks of successful women entrepreneurs—so crucial when the participation of women in the Indian economy has declined to an abysmal 20%.
The majority of India’s 63 million firms are informal —fewer than 20% are registered for GST.
Research shows that companies that start out as formal enterprises become two-three times more productive than a similar informal business.
So why do firms prefer to be informal? In most cases, it’s because of the sheer cost and difficulty of complying with the different regulations.
We have academia and non-profits working as ecosystem enablers providing insights and evidence-based models for growth. We have large private corporations and philanthropic and funding agencies ready to invest.
It should be in the scope of a National Mass Entrepreneurship Mission to bring all of them together to work in mission mode so that the gap between thought leadership and action can finally be bridged.