Shale Gas in the Sci-Tech section, yet at the risk of sounding ungrateful, I realised it lacked on certain fronts; specially the technological aspects and analysis with respect to the Indian scenario. Here is my 2 cents to it. (I have taken certain parts from mrunal sirs article because there was no substitute and they were simply awesome).
Shale Gas : The Sanjeevani for Indian fuel pangs?
What is Shale Gas?
Natural gas (mainly methane) is generally classified under two heads:
* Conventional gas, and (b) Unconventional gas.
Most of the natural gas that is produced globally comes under the category of conventional gas where, after drilling in a sedimentary basin that is rich in gas, the gas migrates through porous rocks into reservoirs and flows freely to the surface where it is collected, treated, and then piped to various users. Shale gas is an unconventional source of methane, like coal-bed gas (in coal seams), tight gas (trapped in rock formations) and gas hydrates(off shore frozen methane).
The Technology
Shale gas is located in rocks of very low permeability and does not easily flow. Therefore, the technique for recovery of shale gas is quite different from that of conventional gas. The technology implied is a complex one and is just out of development phase. The main steps involved are:
* Shale rock is sometimes found 3,000 meters below the surface. Therefore, after deep vertical drilling, there are techniques to drill horizontally for considerable distances in various directions to extract the gas-rich shale.
* A mixture of water, chemicals, and sand is then injected into the well at very high pressures (8,000 psi) to create a number of fissures in the rock to release the gas. The process of using water for breaking up the rock is known as hydro-fracturing or fracking.
* The chemicals help in water and gas flow and tiny particles of sand enter the fissures to keep them open and allow the gas to flow to the surface. This injection has to be done several times over the life of the well.
Advantages of the shale gas technology
* Using gas as a fuel in itself is a big advantage because it is cheaper to generate electricity from gas, and the process releases up to 50% less carbon dioxide than does coal.
* Shale gas can serve as a useful substituent for the fast depleting natural gas reserves.
* With the advances in exploration technology, large reserves have been discovered in USA, Europe and India till date. This paves way for the disconcentration of energy resources from the middle-east and the resulting political turmoil that engulfs the region.
* It shows promising potential for substituting future fuelling needs, especially for industries dependent on gas like power petrochemicals and fertilizers.
Disadvantages of the shale gas technology
* Gas in itself poses certain problems as a fuel including high cost of transportation and storage, liquefaction etc. Also gas prices vary around the globe regionally and it has no global price. (On a separate note, India and Japan, the two leading importers of LNG in Asia are working together to formulate a Uniform Gas pricing policy)
* Shale gas, in particular, involves more complex extraction technology for optimal exploitation of shale gas/oil which requires horizontal and multilateral wells and multistage hydraulic fracturing treatments and still awaits certain environmental clearances.
* High risk of investment as the technology is still infant and yet to show any significant returns.
* It poses threat to underground water resources and aquifiers from hydro-fracturing and fracturing fluid disposal.
* The water after hydraulic fracturing is flowed back to the surface and may have high content of Total Dissolved Solids (TDS) and other contaminants
What the world is doing?
The US is the technology leader in the exploration and extraction of shale gas. There are 34 states in the US, which have vast deposits of rocks rich in shale gas. Production of the gas has added about 20 per cent to domestic gas availability and over 20,000 wells have been drilled. From being an importer of LNG, the country is now self-sufficient and there are plans to export gas from the very terminals that were built for imports. It is being called The North American shale gas revolution,
Europe has not had the same success in exploiting shale gas as the US for several reasons. In the US, resources under the land belong to the land owner who is happy to allow drilling and get paid by the gas companies, whereas in Europeas also in India these resources belong to the government. Also, important tax benefits are given to companies in the US to drill and produce shale gas. In Europe, the geology of shale rock is different from that of the US and it is more likely to be found in places that are more densely populated. The NIMBY effect (Not in My Back Yard) is much more prevalent in Europe than in the US. France, Bulgaria, Luxembourg, the Czech Republic, and the Netherlands have either banned or put a moratorium on shale gas exploration.
What India is doing?
The Ministry of Petroleum and Natural Gas (MoPNG) has identified six basins as potentially shale gas bearing. These are Cambay, Assam-Arakan, Gondwana, Krishna-Godavari, Kaveri, and the Indo-Gangetic plain. In a study conducted by the United States Geological Survey (USGS), recoverable resources of 6.1 tcf(trillion cubic feet) have been estimated in 3 out of 26 sedimentary basins. According to the Oil and Natural Gas Corporation (ONGC), there are about 34 tcf of shale gas in the Damodar basin alone (compared to Indias total conventional gas reserves of 47 tcf) of which 8 tcf are recoverable.
The Government of India had also put out in 2012, a draft policy for the exploration and exploitation of shale gas, inviting suggestions from the general public, stakeholders, environmentalists, etc.
Indian Scenario: Roadblocks and how to move forward
As has been already mentioned above, India has a significant amount of recoverable and prospective estimates of shale gas reserves which overshadow the conventional gas reserves. These could totally change the game in the energy deficit crisis that India is facing today. Yet, we have a long way to go in identifying shale gas rich basins and acquiring the necessary technology and experience to extract shale gas.
Let us have an objective look at the major concerns which need to be addressed before banking upon such an alluring prospect:
* The number of wells to be drilled for shale gas far exceeds the number of wells required in the case of conventional gas and the land area required is a minimum of 80 to 160 acres. India has already been facing several cases regarding various projects running down because of inadequate land acquisition policies.
* The most egregious is the issue of water requirements. Shale gas procurement may require large volume of water 3-4 million gallons per well depending upon the well type and shale characteristics. These concerns need a second look in a country such as ours which is already a water-stressed country and is fast approaching the scarcity benchmark of 1,000 m3 per capita. In the next 12-15 years, the consumption of water will increase by 50% while the supply will increase by only 5 to 10%.
* The water after hydraulic fracturing is flowed back to the surface and may have high content of Total Dissolved Solids (TDS) and other contaminants. The possibility of contamination of aquifier (both surface and subsurface) from hydro-fracturing and fracturing fluid disposal is also persistent.
These are some of the concerns which have been raised since the prospect of shale gas as a potential fuel dawned upon India. But any new technology comes with a baggage of criticisms which are necessary in their own sense. However, it is evident that India needs to tap this energy source since its natural gas market continues to see a deficit. In 2012-13 natural gas consumption in India is expected to stand at 104.4 bcm against its production of 40.7 bcm.
* India needs to build strong service and infrastructure capabilities, along with a favourable regulatory regime.
* A framework policy which while addressing environmental and social concerns, can also promote exploration and production activities.
* A mandatory rain-water harvesting provision in the exploration area which trivializes the extent to which the water which will be utilized in extraction.
* As far as possible, river, rain or non-potable water should be used for fracking and appropriate investment should be made in technologies minimizing the water use and reuse and recycle of water.
* Adequate land acquisition policies and proper implementation of LARR Bill, 2013
Some Interesting Facts :
Interestingly, Reliance Industries Ltd (RIL) has made big investments (US$ 3.5 billion) in the largest unconventional gas field in the US which is one of the largest worldwide, with estimated net recoverable resources of 318 trillion cubic feet (tcf) (In comparison, the resources in RILs own D6 fields in the KG Basin were estimated to hold around 3.4 tcf in November 2012, dropping from 10.3 tcf in December 2006.(you know why!!)). Oil India Limited (OIL), Indian Oil Corporation (IOC), and GAIL India Limited have also made investments in shale gas production in the US.
The other interesting contribution to shale gas development in the US is the export of guar gum from India, which helps in improving the viscosity and flow of water in the fracking process. The gum is extracted from guar ki phalli, grown mainly by farmers in arid lands in Rajasthan and Haryana. Earlier, guar gum was used mainly as an additive in ice creams and sauces, but with the serendipitous discovery of its use in shale gas extraction, its production has risen enormously, earning almost US$ 5 billion during the period from April 2012 to January 2013.
Also, Nicaragua has expressed interest to invite propositions from Indian firms for a $40 billion project to connect the Pacific and the Atlantic Ocean by a mammoth canal. Its primary objective is to facilitate the passage of ultra large tankers carrying shale gas from US into the Asian and African markets which cannot be accommodated through the Panama Canal.
----------------------X---------------------------------X-------------------------------------X---------------
Pradyumn Gaurav
Sources :
The Energy Resource Institute(TERI) Policy Brief : Shale Gas in India: Look Before You Leap
The Hindu : Game changer or Spoiler?
The Hindu : India needs strong infrastructure to boost shale gas industry
http://suvratk.blogspot.in/2011/05/india-basin-wise-shale-gas-estimates.html (Mr suvrat Kher, sedimentary Geologist)
Showing posts with label US. Show all posts
Showing posts with label US. Show all posts
Monday, January 13, 2014
Role of media and social networking sites in internal security
Role of media and social networking sites in internal security challenges
1. Media:
Any communication channel through which any kind of information, news, entertainment, education, data, promotional messages etc. can be disseminated is called media.
Media could be broadly classified as:
1. Print Media (newspapers, magazines, books, etc.)
2. Electronic Media (news websites, social networking sites, mass SMS schemes, television, internet, radio, cinema etc.)
Besides there are many other forms of mass communication which cant be classified in either of the above forms like various forms of dances etc.
1. Principles governing media:
The experience of freedom of press with the British made our founding fathers realize its importance and hence it was included in the constitution in the form of freedom of speech and expression as articulated in the constitution in Article 19(1) a. This freedom of speech and expression is not absolute but is limited by scenarios given in Article 19(2) of the constitution. The article says that nothing in the freedom of speech and expression shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence.
1. Internal security challenges:
According to Wikipedia, Internal Security could be defined as the act of keeping peace within the borders of a sovereign state or other self-governing territories, generally by upholding the national law and defending against internal security threats.
What could be the internal security threats facing India?
1. Terrorism
2. Communalism
3. Naxalism
4. Cyber Hacking and its aftermath
1. Role of Media:
1. In terrorism:
India has been home to terror activities since its independence. Terrorism funded through foreign land is not new to India. Pakistan has funded terror in J&K area, while many of its state and non-state actors are allegedly involved in many of terrorist attacks in various parts of the country, the most talked of being the 26/11 Mumbai attacks. Similarly India has many terror outfits operating within its own frontiers which have carried out terrorist activities in the country.
TV has been the most important broadcast media with reach comparable to newspapers. With the coming of cable TV in India, there has been a tremendous increase in the news channels available to an individual. Though news through print media comes only a day later, news channels via the broadcast media provide information 24x7. This enables them to provide real time information to the public especially those affected by the terrorist attack. But without any curbs on the amount of coverage, these forms of media can be used by the terrorists to mislead the investigation agencies and/or the public as was the case during the 26/11 Mumbai attacks [1]. In the 26/11 attack, the handlers of the terrorist used the media coverage to tell them the exact locations of the policemen and advised them about the best way to attack the police. Thus the thoughtless media coverage, in a way helped the terrorist [2]. Also the goriest details of the attack were shown virtually non-stop [2]. Situations like the Mumbai attack check the credibility of our media. This incident certainly weakened the media demand to regulate itself.
1. In Communalism:
India is home to different communities having different religious sentiments. The history of India is full of incidents of communal tensions most particularly between Hindus and Muslims. Broadcast media particularly news TV channels is often criticized for its non-stop live coverage of these incidents which might incite the communities to further wreak havoc. Even print media sometimes thoughtlessly carries messages from the leaders of opposing factions creating further tensions.
One particular incident would be the Gujarat riots of 2002. The report of The Editors Guild of India on media ethics states that the local newspaper of Gujarat Sandesh had headlines which would "provoke, communalize and terrorize people. The newspaper also used a quote from a VHP leader as a headline, "Avenge with blood". But the same report also lauded some other local newspapers for their coverage [3]. Broadcast media was heavily criticized for the gory images that were shown non-stop.
One other such incident would be the recent Assam riots. The social media and the SMS were blamed for rumour mongering during the Assam unrest. They were alleged of misrepresentation of facts and doctoring news which incited the opposing factions and led to huge migration of north easterners across the country [4].
1. In Naxalism:
The term Naxalism takes its name from the village Naxalbari in West Bengal where a group of left radical communist brought an uprising against a local Zamindar in 1967. Today, the Naxal movement is spread across various districts of West Bengal, Orissa, Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Tamil Nadu, Uttar Pradesh, and Uttarakhand to varying degrees. Our PM while addressing the police force in 2009 even announced that Naxalism is the greatest internal security threat to India [5]
Media can be used very effectively to mainstream the naxal areas. Innovation is the key here. Street Plays can be used to educate the junta about various schemes of the govt. Recently Home Ministry issued guidelines which apart from providing SOP (Standard Operating Procedures) to security forces while working in Naxal areas gave a directive to screen movies on Indias freedom struggle and national leaders in such areas, which is a welcome move [6].
1. In Cyber Space:
The problem with cyber security related to massive social media networks is that there is limited knowledge about the consequences of the snooping which is carried by various countries in the name of security. Countries like US are not only snooping on their own citizens but are also able to freely intrude the privacy of any individual in other countries too. US has the specific advantage of having the servers of main social networking sites like Facebook, Twitter etc. within its frontiers and hence in the outreach of their laws.
Experts have suggested India to build our own social networks like the way China has its own. Though the reason China built its own social networks was to suppress public dissent and monitoring online activities to identify troublemakers, India can follow the same to avoid personal information of millions of individuals going into the hands of US and other countries. But then again, this kind of islanding would defeat the purpose of internet.
Also the media networks are regularly hacked by enemy countries to spread false information and to recover classified data. Recently hacking of New York Times and Twitter servers by Syrian agencies was in news. Similarly the US and China continue to exchange blows in the field of hacking.
1. Possible ways to plug the shortcomings of media:
1. Sensitizing journalists about the possible effects of non-stop display of gory images during coverage of riots, terrorist affected areas etc.
2. Preparing guidelines for the coverage of areas affected by man-made disaster.
3. Building solid networks and creating a task force to combat any kind of hacking.
There could be many more suggestions but then they would grossly interfere with the freedom of press.
Question Bank
1. Enumerate ways to use social media in combating Naxalism.
2. Enumerate ways in which media could be used to promote social harmony.
3. Enumerate ways in which broadcast media can be used to create awareness about terrorism.
4. If you were to prepare guidelines for media to operate in disaster situations, what points would your draft include?
by Jayesh Nikam
Bibliography
1. Ansari trained 26/11 terrorists to mislead media and investigators; http://www.indianexpress.com/news/-ansari-trained-2611-terrorists-to-mislead-media-and-investigators-/1018217/
2. Its official! Media helped 26/11 terrorists; http://www.niticentral.com/2012/08/30/its-official-media-helped-2611-terrorists-5832.html
3. http://en.wikipedia.org/wiki/2002_Gujarat_violence#Media_coverage
4. http://www.thehoot.org/web/The-rumour-mills-on-social-media/6182-1-1-19-true.html
5. http://www.indianexpress.com/news/naxalism-gravest-internal-security-threat-pm/517294/0
6. http://www.indianexpress.com/news/mha-script-for-naxal-areas-aid-patriotic-films/1160106/
1. Media:
Any communication channel through which any kind of information, news, entertainment, education, data, promotional messages etc. can be disseminated is called media.
Media could be broadly classified as:
1. Print Media (newspapers, magazines, books, etc.)
2. Electronic Media (news websites, social networking sites, mass SMS schemes, television, internet, radio, cinema etc.)
Besides there are many other forms of mass communication which cant be classified in either of the above forms like various forms of dances etc.
1. Principles governing media:
The experience of freedom of press with the British made our founding fathers realize its importance and hence it was included in the constitution in the form of freedom of speech and expression as articulated in the constitution in Article 19(1) a. This freedom of speech and expression is not absolute but is limited by scenarios given in Article 19(2) of the constitution. The article says that nothing in the freedom of speech and expression shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence.
1. Internal security challenges:
According to Wikipedia, Internal Security could be defined as the act of keeping peace within the borders of a sovereign state or other self-governing territories, generally by upholding the national law and defending against internal security threats.
What could be the internal security threats facing India?
1. Terrorism
2. Communalism
3. Naxalism
4. Cyber Hacking and its aftermath
1. Role of Media:
1. In terrorism:
India has been home to terror activities since its independence. Terrorism funded through foreign land is not new to India. Pakistan has funded terror in J&K area, while many of its state and non-state actors are allegedly involved in many of terrorist attacks in various parts of the country, the most talked of being the 26/11 Mumbai attacks. Similarly India has many terror outfits operating within its own frontiers which have carried out terrorist activities in the country.
TV has been the most important broadcast media with reach comparable to newspapers. With the coming of cable TV in India, there has been a tremendous increase in the news channels available to an individual. Though news through print media comes only a day later, news channels via the broadcast media provide information 24x7. This enables them to provide real time information to the public especially those affected by the terrorist attack. But without any curbs on the amount of coverage, these forms of media can be used by the terrorists to mislead the investigation agencies and/or the public as was the case during the 26/11 Mumbai attacks [1]. In the 26/11 attack, the handlers of the terrorist used the media coverage to tell them the exact locations of the policemen and advised them about the best way to attack the police. Thus the thoughtless media coverage, in a way helped the terrorist [2]. Also the goriest details of the attack were shown virtually non-stop [2]. Situations like the Mumbai attack check the credibility of our media. This incident certainly weakened the media demand to regulate itself.
1. In Communalism:
India is home to different communities having different religious sentiments. The history of India is full of incidents of communal tensions most particularly between Hindus and Muslims. Broadcast media particularly news TV channels is often criticized for its non-stop live coverage of these incidents which might incite the communities to further wreak havoc. Even print media sometimes thoughtlessly carries messages from the leaders of opposing factions creating further tensions.
One particular incident would be the Gujarat riots of 2002. The report of The Editors Guild of India on media ethics states that the local newspaper of Gujarat Sandesh had headlines which would "provoke, communalize and terrorize people. The newspaper also used a quote from a VHP leader as a headline, "Avenge with blood". But the same report also lauded some other local newspapers for their coverage [3]. Broadcast media was heavily criticized for the gory images that were shown non-stop.
One other such incident would be the recent Assam riots. The social media and the SMS were blamed for rumour mongering during the Assam unrest. They were alleged of misrepresentation of facts and doctoring news which incited the opposing factions and led to huge migration of north easterners across the country [4].
1. In Naxalism:
The term Naxalism takes its name from the village Naxalbari in West Bengal where a group of left radical communist brought an uprising against a local Zamindar in 1967. Today, the Naxal movement is spread across various districts of West Bengal, Orissa, Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Tamil Nadu, Uttar Pradesh, and Uttarakhand to varying degrees. Our PM while addressing the police force in 2009 even announced that Naxalism is the greatest internal security threat to India [5]
Media can be used very effectively to mainstream the naxal areas. Innovation is the key here. Street Plays can be used to educate the junta about various schemes of the govt. Recently Home Ministry issued guidelines which apart from providing SOP (Standard Operating Procedures) to security forces while working in Naxal areas gave a directive to screen movies on Indias freedom struggle and national leaders in such areas, which is a welcome move [6].
1. In Cyber Space:
The problem with cyber security related to massive social media networks is that there is limited knowledge about the consequences of the snooping which is carried by various countries in the name of security. Countries like US are not only snooping on their own citizens but are also able to freely intrude the privacy of any individual in other countries too. US has the specific advantage of having the servers of main social networking sites like Facebook, Twitter etc. within its frontiers and hence in the outreach of their laws.
Experts have suggested India to build our own social networks like the way China has its own. Though the reason China built its own social networks was to suppress public dissent and monitoring online activities to identify troublemakers, India can follow the same to avoid personal information of millions of individuals going into the hands of US and other countries. But then again, this kind of islanding would defeat the purpose of internet.
Also the media networks are regularly hacked by enemy countries to spread false information and to recover classified data. Recently hacking of New York Times and Twitter servers by Syrian agencies was in news. Similarly the US and China continue to exchange blows in the field of hacking.
1. Possible ways to plug the shortcomings of media:
1. Sensitizing journalists about the possible effects of non-stop display of gory images during coverage of riots, terrorist affected areas etc.
2. Preparing guidelines for the coverage of areas affected by man-made disaster.
3. Building solid networks and creating a task force to combat any kind of hacking.
There could be many more suggestions but then they would grossly interfere with the freedom of press.
Question Bank
1. Enumerate ways to use social media in combating Naxalism.
2. Enumerate ways in which media could be used to promote social harmony.
3. Enumerate ways in which broadcast media can be used to create awareness about terrorism.
4. If you were to prepare guidelines for media to operate in disaster situations, what points would your draft include?
by Jayesh Nikam
Bibliography
1. Ansari trained 26/11 terrorists to mislead media and investigators; http://www.indianexpress.com/news/-ansari-trained-2611-terrorists-to-mislead-media-and-investigators-/1018217/
2. Its official! Media helped 26/11 terrorists; http://www.niticentral.com/2012/08/30/its-official-media-helped-2611-terrorists-5832.html
3. http://en.wikipedia.org/wiki/2002_Gujarat_violence#Media_coverage
4. http://www.thehoot.org/web/The-rumour-mills-on-social-media/6182-1-1-19-true.html
5. http://www.indianexpress.com/news/naxalism-gravest-internal-security-threat-pm/517294/0
6. http://www.indianexpress.com/news/mha-script-for-naxal-areas-aid-patriotic-films/1160106/
Quantitative Easing by the US Federal Reserve: Its effect on
Quantitative Easing by the US Federal Reserve: Its effect on India
What is Quantitative Easing?
QE or Quantitative easing was a unconventional policy introduced by the US Federal Reserve (Simply called Fed) which is the Central Bank of USA, like RBI is for India.
Essentially QE implies the policy of the Fed to buy bonds in the open market to essentially ease out liquidity that is to push more money into the market and system. At its latest version i.e. QE3 the Fed was pushing nearly $85 Billion into the market every month through these purchases.
How does QE help? Or what is its main purpose?
QE was a result of the great depression of 2008, by which investor sentiment was much muted globally and especially in the US. Due to the bust (depression) investor sentiment was very low as well as people were not investing in markets, nor taking loans for housing, as well as unemployment was spreading.
To counter this initially the Fed lowered all sorts of rates to bring interest rates down (similar to RBI reducing CRR, SLR, Repo rate etc to reduce interest rate of loans in India). However even after reducing these to the minimum the Fed felt that the investor sentiment was not pushing up and loans were still expensive. So it decided to push money into the hands of the market for use. So basically the Fed hoped to drive up the supply of money available for loans, driving down long-term interest rates so more people would buy and build homes and invest in businesses.
Wouldnt that extra money result in Inflation?
Technically yes. But practically no. It is true that now there is way more money in the system chasing the same products and so would technically lead to inflation. But we also have to consider the fact that the USD (US Dollar) is a hard currency and freely convertible around the world, and in much demand as it is considered as a stable investment (US is the worlds biggest economy after all). But, instead of all the money staying in the US and in the US market, most of it made its way around the globe to the other economies and countries, one of which was also India.
The people with all the money in US realised that they could not earn much by keeping their money in US Banks or stock market since returns are very low, so why not invest this around the globe in different emerging market stock markets to earn better returns. This resulted in free flow of all the extra money to global markets one of which was India. Indias Sensex and Nifty had been giving very good returns for quite some time and so we saw an influx of FII investment. This helped us not only sustain a larger Current Account Deficit but also made the INR (Indian Rupee) appreciate w.r.t . the USD. A similar event was occurring in nearly all emerging economies around the globe. This appreciation made exports uncompetitive, thus leading to what is termed as Currency Wars.
What was Currency Wars?
It was a term given by Brazilian Finance MinisterGuido Mantega, who made headlines when he raised the alarm about aCurrency Warin September 2010. He claimed that competitive devaluation was being done by various countries, whereby countries who were competing against each other to achieve a relatively lowexchange ratefor their own currency, to help exports from their domestic industries.
Thus he said that countries were not playing fair, but were cunningly using a pegged exchange rate mechanism rather than market determined exchange rate mechanism.
It must be mentioned that India was not a part of this Currency War and was a vocal critic of the same in the G-20 Meet.
Why all the alarm about QE now?
Some time back the Fed saw that the US economy has finally begun to pick up, and that unemployment is going down with more jobs being added every month, thus it saw its QE programme beginning to have effect.
Since the Fed is the Central Bank of the US and not of the world, it concentrates only on the US economy. Thus ignoring the fact that the US economy in a way dictates global economy.
It (Fed Chairman Ben Barnanke) announced the slow reduction in QE soon in the future seeing the recovery of US economy.
How does that impact India?
Since a lot of the funds of QE were flowing into India, the news of the QE being phased out drove investors to think that since the Indian Economy is slowly failing it would be safer to invest in the rising interest rates and stock market back home. Thus they started withdrawing from the Indian stock markets. Since most of this money was in form of FIIs, we cant make it stay (hence called Hot Money) and it exited Indian Stock Market, resulting in Stock Markets Crash.
Further since now there are less dollars available in the country due to all the FIIs taking back their investments in USD, a dearth of dollars is felt, thus resulting in depreciation of INR w.r.t. USD. Hence it suddenly went from $1=Rs. 55 to 69.
Also since Indias Imports are much greater than our Exports, we were dependent on this FII investment to cover our import deficit, that is our Current Account Deficit, however since FII are not coming easily now, or are still leaving the government is concerned about how it will make Balance of Payments = 0 (Zero) that is finance Current Account Deficit.
Thus the government is trying to curb imports of unimportant items. However the coming of Raghuram Rajan has been seen by the market as a positive for the failing Indian growth story and hence as per reports there is once again a slow influx of FII.
On September 18th the Fed announced that it would not be tapering off the QE yet, this further gave impetus to FII and market sentiment.
Future?
The future states that sooner or later Fed will erase off QE and we must be prepared now to see a depreciation in rupee once again. To counter this we need to strengthen Indias economic fundamentals further, push for big-ticket reforms, and revive investor and entrepreneur confidence in the economy and the government apparatus.
We cannot be dependent on FIIs forever, rather we need to focus on turning FII into FDI which is more stable. Also we need to drive up our exports especially manufacturing based exports to not be at the mercy of FII for our CAD, rather aim to turn it to CAS (Current Account Surplus) like that of Germany and China, which is based on manufacturing exports.
By:Anant Mittal
References:1.) The Hindu + Indian Express daily reading2.) http://www.usatoday.com/story/money/business/2013/09/18/federal-reserve-quantitative-easing/2831097/3.) http://en.wikipedia.org/wiki/Quantitative_easing4.) http://en.wikipedia.org/wiki/Currency_war
What is Quantitative Easing?
QE or Quantitative easing was a unconventional policy introduced by the US Federal Reserve (Simply called Fed) which is the Central Bank of USA, like RBI is for India.
Essentially QE implies the policy of the Fed to buy bonds in the open market to essentially ease out liquidity that is to push more money into the market and system. At its latest version i.e. QE3 the Fed was pushing nearly $85 Billion into the market every month through these purchases.
How does QE help? Or what is its main purpose?
QE was a result of the great depression of 2008, by which investor sentiment was much muted globally and especially in the US. Due to the bust (depression) investor sentiment was very low as well as people were not investing in markets, nor taking loans for housing, as well as unemployment was spreading.
To counter this initially the Fed lowered all sorts of rates to bring interest rates down (similar to RBI reducing CRR, SLR, Repo rate etc to reduce interest rate of loans in India). However even after reducing these to the minimum the Fed felt that the investor sentiment was not pushing up and loans were still expensive. So it decided to push money into the hands of the market for use. So basically the Fed hoped to drive up the supply of money available for loans, driving down long-term interest rates so more people would buy and build homes and invest in businesses.
Wouldnt that extra money result in Inflation?
Technically yes. But practically no. It is true that now there is way more money in the system chasing the same products and so would technically lead to inflation. But we also have to consider the fact that the USD (US Dollar) is a hard currency and freely convertible around the world, and in much demand as it is considered as a stable investment (US is the worlds biggest economy after all). But, instead of all the money staying in the US and in the US market, most of it made its way around the globe to the other economies and countries, one of which was also India.
The people with all the money in US realised that they could not earn much by keeping their money in US Banks or stock market since returns are very low, so why not invest this around the globe in different emerging market stock markets to earn better returns. This resulted in free flow of all the extra money to global markets one of which was India. Indias Sensex and Nifty had been giving very good returns for quite some time and so we saw an influx of FII investment. This helped us not only sustain a larger Current Account Deficit but also made the INR (Indian Rupee) appreciate w.r.t . the USD. A similar event was occurring in nearly all emerging economies around the globe. This appreciation made exports uncompetitive, thus leading to what is termed as Currency Wars.
What was Currency Wars?
It was a term given by Brazilian Finance MinisterGuido Mantega, who made headlines when he raised the alarm about aCurrency Warin September 2010. He claimed that competitive devaluation was being done by various countries, whereby countries who were competing against each other to achieve a relatively lowexchange ratefor their own currency, to help exports from their domestic industries.
Thus he said that countries were not playing fair, but were cunningly using a pegged exchange rate mechanism rather than market determined exchange rate mechanism.
It must be mentioned that India was not a part of this Currency War and was a vocal critic of the same in the G-20 Meet.
Why all the alarm about QE now?
Some time back the Fed saw that the US economy has finally begun to pick up, and that unemployment is going down with more jobs being added every month, thus it saw its QE programme beginning to have effect.
Since the Fed is the Central Bank of the US and not of the world, it concentrates only on the US economy. Thus ignoring the fact that the US economy in a way dictates global economy.
It (Fed Chairman Ben Barnanke) announced the slow reduction in QE soon in the future seeing the recovery of US economy.
How does that impact India?
Since a lot of the funds of QE were flowing into India, the news of the QE being phased out drove investors to think that since the Indian Economy is slowly failing it would be safer to invest in the rising interest rates and stock market back home. Thus they started withdrawing from the Indian stock markets. Since most of this money was in form of FIIs, we cant make it stay (hence called Hot Money) and it exited Indian Stock Market, resulting in Stock Markets Crash.
Further since now there are less dollars available in the country due to all the FIIs taking back their investments in USD, a dearth of dollars is felt, thus resulting in depreciation of INR w.r.t. USD. Hence it suddenly went from $1=Rs. 55 to 69.
Also since Indias Imports are much greater than our Exports, we were dependent on this FII investment to cover our import deficit, that is our Current Account Deficit, however since FII are not coming easily now, or are still leaving the government is concerned about how it will make Balance of Payments = 0 (Zero) that is finance Current Account Deficit.
Thus the government is trying to curb imports of unimportant items. However the coming of Raghuram Rajan has been seen by the market as a positive for the failing Indian growth story and hence as per reports there is once again a slow influx of FII.
On September 18th the Fed announced that it would not be tapering off the QE yet, this further gave impetus to FII and market sentiment.
Future?
The future states that sooner or later Fed will erase off QE and we must be prepared now to see a depreciation in rupee once again. To counter this we need to strengthen Indias economic fundamentals further, push for big-ticket reforms, and revive investor and entrepreneur confidence in the economy and the government apparatus.
We cannot be dependent on FIIs forever, rather we need to focus on turning FII into FDI which is more stable. Also we need to drive up our exports especially manufacturing based exports to not be at the mercy of FII for our CAD, rather aim to turn it to CAS (Current Account Surplus) like that of Germany and China, which is based on manufacturing exports.
By:Anant Mittal
References:1.) The Hindu + Indian Express daily reading2.) http://www.usatoday.com/story/money/business/2013/09/18/federal-reserve-quantitative-easing/2831097/3.) http://en.wikipedia.org/wiki/Quantitative_easing4.) http://en.wikipedia.org/wiki/Currency_war
Issues and challenges pertaining to the federal structure
Issues and challenges pertaining to the federal structure
What is Federalism?
* Dynamic theory of nation and state building
* Institutionalised political co-operation and collective co-existence
* Grand design of living together
* Self rule plus shared rule Daniel Elazar
* Unity of polity and plurality of society Rasheeduddin Khan
3 essential components
1. Formation of states and territorialisation of federal local administration to promote closer contact between people and govt.
1. This means creation of institutions of self rule
2. States at macro level and local self governance at micro level
2. Distribution of federal powers on a non centralised basis
3. Division of federal powers and functions on a relatively autonomous basis
4. Each unit has sufficient legislative competence, executive authority and financial resources
5. To perform its function in the allotted domain efficiently and effectively.
3. Creation of institutions of shared rule
6. Collective governance on matters of translocal importance and mutual concern.
7. Shared rule institutions may take variety of institutional shapes like zonal council, ministerial council, inter-state council, and independent constitutional authorities like boards, commissions, planning and other regulatory bodies.
Essence of Indian federalism
* Important roles with centre
* Nation building and nation preserving
* Maintaining and protecting national unity and integrity
* Maintaining constitutional political order throughout union of India
* States assigned only local subjects
Salient features of Indian federalism
Unionisation
* This allows Indian federalism to assume Unitarian features or centre rule over whole country
* Situation During internal or external threat to sovereignty and maintenance of constitutional political order in the states
* Union govt has added responsibility of securing balanced economic growth and social change across the regions and social segments
Regionalisation
* Valid principle of nation building and state formation
Meaning of Union
* Implies indestructibleness of union and unity.
* No unit possesses right to secede
* Only centre can form states by division, merger or altering existing boundaries
* Union also possess right to admit any new territory in union of India
* It is not compacting federalism between 2 pre-existing sovereign entities
* The union has come out in existence only through the unified will of the people of India, nourished during the National movement.
* Thats why (Rajya Sabha), expected to represent the interests of the units of federation, does not have symmetrical representation.
* A large state like UP has 31 seats whereas smaller states like Manipur and goa have only 1 seat
Working of Indian federalism
* During 1st 4 decades federalism in India exhibited a strong centralising tendency
* Union govt. Accumulated powers beyond its constitutional competence
* Constitution permits circumstantial concentration of federal powers in union. But not in normal times
* Centre legislating upon subsidiary subjects
* Encroached upon subjects originally assigned to states
* Acts passed under entries 52 (Industries) and 54 (Regulation of mines and mineral development) under union list
* Under entry 52 parliament passed industries development and regulation act, 1951
* So union now controls large number of industries mentioned in schedule 1 of act
* By way of omission, addition and transfer, the union government through different amendment acts has brought changes in the distribution of competences mentioned under seventh schedule of the constitution, between centre and states.
* State list now has only 61 subjects compared to 66 originally.
* Planning commission centralised planning. This is an e.g. of how union has extended into areas like agriculture, fisheries, soil, water conservation, minor irrigation, area development, rural construction, housing etc.
* Article 356 has been used, abused, misused, and overused to settle political scores.
* Reservation of state bills by governor
* Financial allocation of resources between union and states
* Growing politicisation and subjectivity of institution of governor
* Deployment of Para-military forces
* Very recently - The efforts of the Union government to divide Andhra Pradesh irrespective of the State legislatures views, pose a grave danger to federalism and unity.
* This is the first time in India that a state is sought to be divided without the consent of the State legislature, and without a negotiated settlement among stakeholders and regions, and in the face of public opposition.
Sarkaria Commission recommendations
* Set up in June 1983
* To examine relationship and balance of power between states and union govt.
* Headed by justice rajinder singh sarkaria
* Made 230 recommendations
* 108 implemented, 35 rejected and 87 are still in implementation stage
* Union govt. Constituted interstate council - 1990
Council decisions
* Residuary list subjects to be transferred to concurrent list
* Consultation with states for concurrent list legislations
* Consultation in appointment and selection of governor
* Person should not have any political link
* Person should not return to active politics after tenure
* Time bound clearance of state bills
* Article 356 amendment
Federal democracy has decentralised to village self-governance
* Perceived as instrument of peoples empowerment
* States allowed to negotiate for FDI
Present Issues due to federal structure
* Political issues relating to a state have begun impinging on Indias foreign and security policies.
E.g.
* SL Tamil issue,
* Water sharing with Bangladesh
* Left parties against nuclear deal in UPA I
* NCTC Issue
* With union govt. taking the form of coalitions, they have become vulnerable to pressure.
* This sometime results in pure blackmail
* Sep 2011 Mamta banerjee opposed river water agreement with Bangladesh and forced govt. To call off signing of teesta water sharing formula
* 2013 Gujarat election Modi became a surprise entrant to this club by raising sir creek issue
Implications of these issues
1. SL Tamil issue
* Govt. Had to balance its policies to ensure Colombo doesnt drift towards China or Pakistan
* Resolution on HR issues are double edge swords in our context
* Our record is shoddy in dealing internal insurgency
1. Teesta Issue
* Expectation was that, in return Dhaka will give transit rights to land locked N-E states
* Increased commerce would have resulted
1. Nuclear deal
* India was the only gainer in this
* It was US who had to abandon its sanctions.
* This was a deal which only US could pilot Balance of power in international system
* All china, Russia, France put their stamp through NSG
1. Sir Creek
* In this case, both countries are gross losers
* No one invest in exploiting natural resources
* Losing out on extended exclusive economic zone they get under UN convention
1. NCTC Issue
* Role of NCTC to be carefully examined without any political colour.
* NCTC is for curbing terrorism only.
* It will not be construed as a violation of federalism.
Some other recent cases
* Italian marines case and Kerala govt.
* J&K complains about river water sharing due to Indus water treaty with pak
* Bihar, Assam have issues of water sharing with Nepal, China
* Only US is the country where interest of federal constituents are taken into consideration into account in formulation of policies
* It is difficult to graft US like structure.
* But time has come when Mizoram, Nagaland have a say in Myanmar Policy
References
* The Hindu Articles
* Indian Express Articles
* IGNOU Notes
Pushpender singh
What is Federalism?
* Dynamic theory of nation and state building
* Institutionalised political co-operation and collective co-existence
* Grand design of living together
* Self rule plus shared rule Daniel Elazar
* Unity of polity and plurality of society Rasheeduddin Khan
3 essential components
1. Formation of states and territorialisation of federal local administration to promote closer contact between people and govt.
1. This means creation of institutions of self rule
2. States at macro level and local self governance at micro level
2. Distribution of federal powers on a non centralised basis
3. Division of federal powers and functions on a relatively autonomous basis
4. Each unit has sufficient legislative competence, executive authority and financial resources
5. To perform its function in the allotted domain efficiently and effectively.
3. Creation of institutions of shared rule
6. Collective governance on matters of translocal importance and mutual concern.
7. Shared rule institutions may take variety of institutional shapes like zonal council, ministerial council, inter-state council, and independent constitutional authorities like boards, commissions, planning and other regulatory bodies.
Essence of Indian federalism
* Important roles with centre
* Nation building and nation preserving
* Maintaining and protecting national unity and integrity
* Maintaining constitutional political order throughout union of India
* States assigned only local subjects
Salient features of Indian federalism
Unionisation
* This allows Indian federalism to assume Unitarian features or centre rule over whole country
* Situation During internal or external threat to sovereignty and maintenance of constitutional political order in the states
* Union govt has added responsibility of securing balanced economic growth and social change across the regions and social segments
Regionalisation
* Valid principle of nation building and state formation
Meaning of Union
* Implies indestructibleness of union and unity.
* No unit possesses right to secede
* Only centre can form states by division, merger or altering existing boundaries
* Union also possess right to admit any new territory in union of India
* It is not compacting federalism between 2 pre-existing sovereign entities
* The union has come out in existence only through the unified will of the people of India, nourished during the National movement.
* Thats why (Rajya Sabha), expected to represent the interests of the units of federation, does not have symmetrical representation.
* A large state like UP has 31 seats whereas smaller states like Manipur and goa have only 1 seat
Working of Indian federalism
* During 1st 4 decades federalism in India exhibited a strong centralising tendency
* Union govt. Accumulated powers beyond its constitutional competence
* Constitution permits circumstantial concentration of federal powers in union. But not in normal times
* Centre legislating upon subsidiary subjects
* Encroached upon subjects originally assigned to states
* Acts passed under entries 52 (Industries) and 54 (Regulation of mines and mineral development) under union list
* Under entry 52 parliament passed industries development and regulation act, 1951
* So union now controls large number of industries mentioned in schedule 1 of act
* By way of omission, addition and transfer, the union government through different amendment acts has brought changes in the distribution of competences mentioned under seventh schedule of the constitution, between centre and states.
* State list now has only 61 subjects compared to 66 originally.
* Planning commission centralised planning. This is an e.g. of how union has extended into areas like agriculture, fisheries, soil, water conservation, minor irrigation, area development, rural construction, housing etc.
* Article 356 has been used, abused, misused, and overused to settle political scores.
* Reservation of state bills by governor
* Financial allocation of resources between union and states
* Growing politicisation and subjectivity of institution of governor
* Deployment of Para-military forces
* Very recently - The efforts of the Union government to divide Andhra Pradesh irrespective of the State legislatures views, pose a grave danger to federalism and unity.
* This is the first time in India that a state is sought to be divided without the consent of the State legislature, and without a negotiated settlement among stakeholders and regions, and in the face of public opposition.
Sarkaria Commission recommendations
* Set up in June 1983
* To examine relationship and balance of power between states and union govt.
* Headed by justice rajinder singh sarkaria
* Made 230 recommendations
* 108 implemented, 35 rejected and 87 are still in implementation stage
* Union govt. Constituted interstate council - 1990
Council decisions
* Residuary list subjects to be transferred to concurrent list
* Consultation with states for concurrent list legislations
* Consultation in appointment and selection of governor
* Person should not have any political link
* Person should not return to active politics after tenure
* Time bound clearance of state bills
* Article 356 amendment
Federal democracy has decentralised to village self-governance
* Perceived as instrument of peoples empowerment
* States allowed to negotiate for FDI
Present Issues due to federal structure
* Political issues relating to a state have begun impinging on Indias foreign and security policies.
E.g.
* SL Tamil issue,
* Water sharing with Bangladesh
* Left parties against nuclear deal in UPA I
* NCTC Issue
* With union govt. taking the form of coalitions, they have become vulnerable to pressure.
* This sometime results in pure blackmail
* Sep 2011 Mamta banerjee opposed river water agreement with Bangladesh and forced govt. To call off signing of teesta water sharing formula
* 2013 Gujarat election Modi became a surprise entrant to this club by raising sir creek issue
Implications of these issues
1. SL Tamil issue
* Govt. Had to balance its policies to ensure Colombo doesnt drift towards China or Pakistan
* Resolution on HR issues are double edge swords in our context
* Our record is shoddy in dealing internal insurgency
1. Teesta Issue
* Expectation was that, in return Dhaka will give transit rights to land locked N-E states
* Increased commerce would have resulted
1. Nuclear deal
* India was the only gainer in this
* It was US who had to abandon its sanctions.
* This was a deal which only US could pilot Balance of power in international system
* All china, Russia, France put their stamp through NSG
1. Sir Creek
* In this case, both countries are gross losers
* No one invest in exploiting natural resources
* Losing out on extended exclusive economic zone they get under UN convention
1. NCTC Issue
* Role of NCTC to be carefully examined without any political colour.
* NCTC is for curbing terrorism only.
* It will not be construed as a violation of federalism.
Some other recent cases
* Italian marines case and Kerala govt.
* J&K complains about river water sharing due to Indus water treaty with pak
* Bihar, Assam have issues of water sharing with Nepal, China
* Only US is the country where interest of federal constituents are taken into consideration into account in formulation of policies
* It is difficult to graft US like structure.
* But time has come when Mizoram, Nagaland have a say in Myanmar Policy
References
* The Hindu Articles
* Indian Express Articles
* IGNOU Notes
Pushpender singh
Irans Nuclear Program detailed
Irans Nuclear Program detailed
Irans nuclear program launched as early as in 1950 as a part of USs Atoms for Peace program.
Atoms for Peace Program, 1950:
* It is the first sincere attempt of US President D.D. Eisenhower to end the Brinkmanship in context to nuclear power in which he emphasized on the issue of transparency and cooperation in the field of nuclear energy in a speech dedicated to UNs General Assembly.
* Before that atomic development in the nukes and corners of the world was kept under strictest of secrecies that kept the world always pushing towards the brink of a civil war.
* Many countries acclaimed this endeavor and openly voiced their supports to this initiative for universal peace and human dignity and security.
* The first nuclear reactor in Pakistan and Iran were built during this program by American Machine and Foundry.
Iran ratifies Nuclear Non-Proliferation Treaty (NPT), 1968:
* Its a watershed in the history of atomic development which is aimed at prevention of nuclear weapons and weapon technologies, to promote cooperation and peaceful uses of nuclear energy.
* It may be interpreted as a three pillar system that are:
* Non-proliferation
* Disarmament
* The right to peacefully use nuclear technology for civilian purposes
* It contains a preamble and 11 articles.
* It is binding on the participating states.
* Open for signature in 1968, the treaty effectively came into force in 1970
* A total of 190 states have joined the treaty, a testament of the treatys significance.
* 4 UN nations never joined NPT:
* India
* Pakistan
* Israel
* South Sudan
* North Korea initially signed it, but never came into compliance and finally withdrew it in 2003.
* It identifies 5 states, the 5 permanent members of UN Security Council (UNSC) , also called P5, as Nuclear Weapon States(NWS), they are:
* USA
* UK
* France
* China
* The Soviet Union
* Apart from these nations India, Pakistan and North Korea openly tested and declared of their possession of nuclear weapons, whereas Israel maintains a Policy of Deliberate Ambiguity in context to their possession of nuclear weapons.
* India-USA Civil Nuclear Deal, 2008:
* In 2006, India signed US-India Peaceful Atomic Energy Cooperation Act under which India agreed to separate its military and civil nuclear facilities and to place the civil nuclear facilities under International Agency for Atomic Energy (IAEA) safeguards. In exchange, India is allowed full access to civil nuclear energy.
* Despite being not a member of NPT India was granted this status owing to its clean non-proliferation record and its growing need for nuclear energy emerging from rapid industrialization and a billion-plus population.
* In 2008, IAEA approved the India Safeguard agreement.
* Later in 2008, India was granted the waiver at the Nuclear Supply Group (NSG) meeting held at Vienna, Austria.
* As a result, India could commence trade in nuclear materials with other willing countries.
* Any kind of nuclear export by all major countries to Pakistan and Israel is prohibited by this treaty.
* Pakistan made a bid to reach similar agreement, which was rebuffed by USA and other NSG members owing to lack of high energy requirement in Pakistan and also due to its bad proliferation records.
* Nuclear Supply Group (NSG):
* Established in 1975.
* 46 members, including P5+ 1.
* NSG is a multinational body concerned with reducing nuclear proliferation by controlling the export and re-transfer of nuclear materials and by improving safeguard and protection to existing materials.
* Founded in response to India Nuclear Test in 1974.
* The NPT countries realized that certain non-nuclear weapon technology could be easily modified to develop nuclear weapons and felt that export of nuclear materials, equipments and technology should be limited further.
* Another advantage was that to bring the non-NPT and non-Zangger Committee nations (specifically France, at that time) in the ambit of non-proliferation.
Zangger Committee Nations:
Zangger Committee Nations or Nuclear Export Committee nations sprang from Article III.2 of NPT under which IAEA safeguards must be applied to nuclear exports.
Each state party of Zangger Committee undertakes not to provide: a. Source or special fissionable material and b. equipment or technology used for the processing of fissionable materials to any non NWS unless it is subject to the safeguard required by this Article of NPT.
P5 + 1:
P5 +1 or E3+3 is a group of 6 World Powers who joined the diplomatic effort with Iran in 2006, in respect of Irans nuclear program.
P5 is the 5 permanent members of UNSC, i.e., China, France, Russia, UK and USA + 1 , Germany.
Role of Germany:
Germany is a key trading partner of Iran. Irans nuclear program depends mainly upon the imports of equipments and others from Germany.
Comprehensive Test Ban Treaty (CTBT):
* Adopted by UN General Assembly, in 1996.
* A multilateral treaty by which states agrees to ban and not to encourage in any sort of nuclear explosion, for military or civil, inside the region of their control.
* It is yet to come in force. 8 states are yet to ratify or sign it out of 44 states listed Annex-II States. Among these states:
Signed but havent ratified yetHavent signed it yet
ChinaIndia
EgyptNorth Korea
IranPakistan
Israel
USA
* CTBT Organisation Preparatory Commission monitors nuclear explosions through forensic seismology, hydro acoustics, infrasound and radionuclide monitoring.
* A change in the mindset of Iran after the 1979 Revolution in which Shah Government was toppled.
* After various twist and turns in the international diplomatic equations with Iran, in 2002 the issue caught an eye of concern of the major world countries.
Discovery of Secret Plants in Iran, 2002:
* Mujahedeen Khalq, an Iranian dissident group also known as the M.E.K., obtains and shares documents revealing a clandestine nuclear program previously unknown to the United Nations.
* The program includes a vast uranium enrichment plant at Natanz and a heavy water reactor plant at Arak.
* The United States accuses Tehran of an"across-the-board pursuit of weapons of mass destruction".
Teheran Agreed Statement 2003 &Paris Accord, 2004:
* Both Agreed between EU-3 (France, Germany and UK) and Iran.
* Iran agrees a suspension of enrichment and re-processing related activities.
Iran denies EUs Comprehensive Proposal, 2005:
* Iran strongly denies EUs proposal for a diplomatic, scientific and economic cooperation in exchange of limited nuclear activity of Iran.
* The argument was that the proposal was not in conformity with Article I and II of NPT, which confer Iran the inalienable right to develop, research, produce and use nuclear energy for peaceful purposes.
* UN approved its first round of sanctions on Irans nuclear export and import in an attempt to curb Irans nuclear activity.
* The sanction was further extended to Irans petrochemical, gold trading as Iran continued to enrich Uranium and IAEA discovers new instances of Irans enrichment program exceeding the safe level.
* US bolsters sanctions on Iran blacklisting a number of companies in Iran accusing them of helping Iran in enriching nuclear fuel.
* Irans economy goes in a shamble.
* Iran kept defending its enrichment programme claiming it to be aimed just for peaceful energy generation and for civilian purpose and the sanctions kept pushing Iran into the corner.
But there a few more countries like Israel who are purportedly performing clandestine nuclear activities, then why so much pressure on Iran particularly?
Because:
1. Other states like India, Israel and Pakistan who are supposed to possess nuclear weapons have not ratified NPT. So the scope of inspection and intervention are limited there.
2. Iran ratified NPT in its nascent stage. But over the years IAEA has time and again found evidences of secret enrichment programmes of Iran that breach the conventions with IAEA. Although NPT on its own doesnt mention any strict level upto which a nation is allowed to enrich and although article IV of the treaty confers the unalienable right on the states to develop, research, produce and use nuclear energy for peaceful purposes, there are certain facts that drives us to the notion that Iran is pursuing a nuclear weapon:
1. Nuclear device is based on Highly Enriched Uranium (HEU) U-235 or plutonium. In natural Uranium the share of U-235 isotope is around 0.7%. Natural uranium has to be transferred into hexafluoride for the purpose of enrichment. For weapon purposes one needs a concentration over 90% of U-235. Once it reaches the enrichment over 90%, it has to be converted into metallic uranium. Only metallic uranium can be used to for a metal hemisphere the core requirement of a nuclear bomb. Iran has in its disposal sufficient supply of uranium to carry on this process. There are two uranium mines in Iran one operating and one unused, that are capable of producing 20 tons of uranium per year. Iran possesses the technology required to prepare a nuclear weapon.
2. Almost 35,000 kg of uranium hexafluoride was discovered in Iran Natanz plant centrifuges out of which approximately 33 kg was enriched upto 20%. But for civilian and peaceful purposes enrichment upto 3.5% is sufficient which corresponds to the civilian Light Water Reactor. That in all enough Low Enriched Uranium (LEU) to manufacture two nuclear bombs once enriched.
3. The above figures are only based on the known activities in facilities under the IAEA safeguards. Iran is supposed to possess additional clandestine enrichment programmes that are out of the supervision of IAEA.
4. Hence this sizeable nuclear programme which is out of proportion to legitimate peaceful needs of the existing or the projected Iranian civilian nuclear programme.
5. P1 type of centrifuges, given its high failure rate and vulnerability to software attacks are not ideal for the purpose of nuclear weapon. Iran is pursuing P2 type of new generation centrifuges and also making rapacious attempts to upgrade its existing centrifuges.
6. Iran is pursuing the option of a heavy water moderated nuclear uranium reactor (ar Arak), which if readied, might be used for the production of plutonium.
7. Iran has in the past shown interest in technologies that might be used to separate plutonium from the spent fuel.
8. Iran has been involved in acquiring nuclear weapon technology through the Ab dal Qadeer Khan network.
9. Most of the Irans R&D, construction and enrichment effort in the past have been carried out in a secret manner violating Irans existing IAEA safeguard agreement and they are to an increasing degree being carried out in underground facilities that are better protected from any possible external military action.
10. Iran is pursuing ballistic missile technology (short, medium and intermediate range) for military purposes. Given their poor accuracy, the acquisition of such weapon system only makes sense in case it has been adopted to be used as a delivery vehicle of a nuclear weapon.
11. Many prominent Iranian politicians has time and again drawn statement according to which wiping out Israel is a legitimate strategic option.
12. Prominent Iranian politicians have touted their state as the main source of resistance and defiance of the US and the international community as a whole. Without nuclear weapons such defiance cannot be maintained for long.
* What is centrifuge?
A mechanism to enrich uranium
All the Sanctions on Iran:
By UN:
* Ban on all enrichment and reprocessing activities.
* Ban on supply of nuclear related materials and technologies to Iran and froze the assets of key individuals and companies associated with such activities.
* Called upon its states to monitor the activities of Iranian banks, to track the Iranian ships and aircrafts
* Ban on any kind of activities of Iran related to development of ballistic missiles.
* Froze the assets of Iran Revolutionary Corp Guards (IRCG), Islamic Republic or Irans Shipping Lines and recommended its states to inspect Iranian cargos, prohibited states to offer servicing to Iranian vessels involved in prohibitive activities.
* Ban on financial activities and banking sector of Iran. Prohibited Irans banks to open branch of their territory and prevented them to get in any kind of relationships or transactions with their banks.
By US:
* Ban on almost all companies doing business with Iran.
* Ban on all Iranian imports.
* Ban on Irans oil sector and oil companies.
* Ban on all financial institutions of Iran.
* Sanction against Iran Air and Tidewater Middle East Co.
* Ban on Irans Central Bank and other commercial banks. Froze all Iranian governments properties in the foreign exchange holdings in the banks of other countries.
* Ban targeting on Irans energy sector which provides for 80% revenue of their government.
* Ban on Major Iranian electronic producers, Internet policing agencies, State broadcasting authority. That targeted Islamic Republic of Iran Broadcasting responsible for overseas production of Iranian television and radio channels.
* On Iranian Cyber Police and Communication Regulating Authority.
By EU:
* Imposed restrictions on cooperation with Iran, Irans foreign trade, financial services, energy sector and transfer of technologies.
* Banned the provision of insurance and reinsurance by insurers of member states to Iran owned companies and its vessels.
* Iranian banks were disconnected from SWIFT network, the world hub of electronic financial transaction.
Apart from these:
* Canada imposed similar set of bans of Iran separately.
* India enacted a ban on exports of all items, materials, goods and technologies that could contribute Irans nuclear programme.
* Various other countries imposed separate bans or terminated international affiliations with Iran in the backdrop of the sanctions already imposed to it by other countries or organizations.
Effects of Sanctions on Iran:
* Irans nuclear programme had to face numerous difficulties to develop further due to the lack of materials and technologies needed to pursue the programme.
* Irans export declined substantially. Oil export decreased by almost 40% contributing to distorted trade deficit
* Owning to the bans on Irans crude oil sector, many oil companies and MNCs had to withdraw from Iran. Production of Oil declined.
* Iran lost almost USD 60 billon of investment every year.
* Being disallowed to trade in dollars, euro initially Iran had to search for a buyer for trading for a long period of time.
* Even when it managed to get partners to trade, its vessels had to travel long way to bypass regions into which it had lost its permit due to sanctions => profit shrank in huge margins
* China is Irans biggest crude oil customer. Though Iran was trading with China in Renminbi, it cut its bulk import to avoid a possible US ban on its financial companies. Even India (2nd large customer, 12% of Indias total oil import from Iran) had cut oil import extensively.
* Fiscal deficit grew to a large dimension, economy stagnated.
* Inflation was near to 25%, Irans Central bank was expecting a hyperinflation.
* Though no sanction was imposed on humanitarian trading, health system suffered due to delayed transfer of drugs and medical equipments. Many people died from diseases like cancer, thalassemia and other severe diseases.
Why does Iran simply not walk out of NPT and do whatever it wants in peace without these whiney guys?
Because every time Uncle Sam frowns at something, the voice of the world starts quivering
Anyway, according to Article X of NPT, in exercising the sovereignty a state have the right to withdraw from the treaty giving a 3 months notice to all other parties of the treaty. But,
* Strategically,
* It may strictly portray Irans motivation to pursue a nuclear bomb.
* In case it moves out of NPT, Russia will most probably cease to support its nuclear energy process by providing materials and technologies. So in any case, its nuclear program is bound to suffer.
* Economically,
* The world powers may refer Iran to the UNSC and it might face a set of fresh new sanctions.
* Against the backdrop of present sanctions and a stagnating economic profile, Iran is not in a position to carry on its activities in isolation anymore.
* Geo-politically,
* There is an open animosity and rivalry among the Middle East countries.
* In case it walks out of NPT, an anti-Iranian movement is likely to take place under the guidance of US.
Also,
Iran wont be able to drink expensive wines and juicy bananas from Russia.
From a different viewpoint, the impending dangers of a nuclear armed Iran are:
* It might decouple the region from broader strategic context and impair the regional strategic balance as well. It might encourage an inexorable rush for nuclear weapons in the Middle East (Saudi Arabia, Gulf States, Egypt, Syria, Turkey) and to an anti Iranian alliance under US. It might well increase the nuclear competition between Iran and Israel to an alarming dimension.
* It will pose direct threat to NATO member states and widen the existing cleavage between US and its non nuclear allies in Europe over the USs nuclear guarantee to the latters security.
* NPT might collapse completely and it may spell out the end of the peaceful non-proliferation regime of over 40 years. The global powers are likely to get divided two separate groups of nuclear and non-nuclear states. International affiliations and relations to suffer bad shocks.
However, after a long period of rivalry, frustration and open animosity, Iran and P5 + 1 finally came to settle on an interim agreement in November, 2013 in Geneva.
The Interim Nuclear Agreement between Iran and P5+1:
The temporary deal for next 6 months before a more comprehensive agreement between them looks like this:
* Halting the progress of Irans nuclear programme:
Iran will:
* Halt uranium enrichment above 5%.
* Dilute the existing stockpile of highly (20%) enriched uranium below 5% or convert them to a form not suitable for further enrichment. [ as per critics, it would be better to have agreed to dilute the stock outside of Iran]
* Not install any additional centrifuge, postpone any new enrichment programme, not use any next-generation centrifuge to enrich.
* Not commission or fuel Arak reactor, install any additional reactors or any reprocessing capacity.
* Unprecedented transparency and intrusive monitoring of Irans nuclear programme:
Iran will provide:
* Daily access by IAEA inspectors to Natanz and Fordow.
* IAEA access to centrifuge assembly facility.
* IAEA access to uranium mines and mills.
* Secret information on design of Arak reactor and also more frequent access to the Arak reactor.
* Verification Mechanism:
* A joint commission of Iran and P5 + 1.
* The joint commission will work with IAEA to facilitate resolution of past and present concerns regarding Irans nuclear programme.
* Limited, Temporary and Reversible Relief to Iran:
* No additional sanction on Irans nuclear programme for next 6 months if Iran abides by the deal.
* Suspend certain sanction on gold and precious metals.
* Partially phase out bans on Irans auto sector, petrochemical exports potentially providing Iran USD 1.5 billion in revenue.
* Allow purchase of Iranian oil at their currently significant reduced levels and release USD 4.2 billion in installments that international market owes to Iran.
* Humanitarian Transactions:
* US exempted any humanitarian transactions like agricultural goods, food, pharmaceuticals and medical equipments from sanctions.
* Facilitate the humanitarian transactions on the face of the agreement.
* Limited Relief:
* In total USD 7 billion will be transferred to Iran that was frozen in the bank accounts of other countries till now.
* Maintain Economic pressure on Iran:
* Sanction affecting crude oils sale will continue.
* Sanction affecting petroleum product export to Iran stays.
* The vast majority of fund of around USD 100 billion in foreign exchange holdings still remain inaccessible to Iran.
* Sanction against Central Bank of Iran and other commercial banks and other financial institutions, sanctions on ballistic missile program, all UNSC sanctions continue.
Reactions after the deal:
* Iran gets a chance to overhaul its slugged economy and also to enrich uranium for civil energy and peaceful purposes. So the deal offers a great opportunity to Iran.
* For US and EU, after the 1979 revolution they have been able to strike a comprehensive deal with Iran regarding its nuclear programme that will enable them to get a clearer and more transparent picture of what Iran is actually up to. So the deal marks a watershed for them.
* Israel, a staunch supporter of US, looks upon the deal as a historic mistake and fears that Iran might well carry on their clandestine process of enrichment even after the deal while forging an amicable relationship with the West to get rid of the sanctions. It may also lead falter US Israel relationship which is already under stress.
* Saudi Arabia, a challenging regional rival of Iran, also evinced disappointment over the deal since it may lead to emergence of Irans clout in the West.
* For India, however, it doesnt make a really big difference in the amount of oil import from Iran and before six months India cant strike a more comprehensive deal in crude oil with Iran. Also till now India was trading with Iran in rupee, but after the deal the transactions will take place in dollars again. Speculations are that it might lead to a decline in Indian forex reserves with concomitant rupee volatility once again.
The probable future strategic positions centering the deal:
Irans Geostrategic location:
* It is the gateway to Central Asia and South-West Asia.
* Connected to Caucasia and Europe in north.
* Hence its pivotal geography has allowed it to extend its Persian ethno-culture, linguistic, religious economic and geopolitical influence over the heart of Central Asia, Caucasia and beyond.
USAs stake at the nuclear deal: a delicate equation
* The growing influence of the developing Asia, especially China and Russia is a threat to prevailing US Eco-political hegemony.
* After the sanctions of EU and US on Iran, and after Iran had been thrown out of the pacts that USA signed with the petro-monarchies with Saudi Arabia in the head, it lost the opportunity to trade its oil in dollar.
* Iran employed an array of mechanisms especially in the financial sphere to balance the effect of the crippling sanctions.
* It started to trade in Euro initially, but after successful US pressure on the banking sector of EU, Iran was disallowed to trade in Euro even.
* Hence it turned to the East and started trading with China and India in Yuan and Rupee respectively. Iran even traded oil with turkey in gold. Iran found a good use of century old barter system for trading purpose and hence insulating a large part of the heavy financial pressure that was being imposed on it by the West.
* On the other hand, a part of the world petro-trades was going on currencies other than dollar, with concomitant decline in the value of dollar in international oil market.
* At this juncture, USs petrodollar standard came under severe strain and it rendered crucial to forge a tie with Iran.
* Also many commentators dubbing the Geneva accord as a sharp political move to unsettle ties between the emerging global powers, chiefly China and Russia.
Russia in European Energy Sector:
* Russia enjoys a monopoly in European market in export of natural gas. Russian company Gazprom, with its numerous subsidiaries supplies gas to EU.
* Russia accounts for more than 35% of EUs total gas import and more than 30% of EUs total crude oil import.
* 80% of the gas pipelines from Russia to Europe pass through Ukraine. Since 2005 the gas dispute between Russia and Ukraine has been sharp on issues of pricing and tariffs. This in turn, bruising the EU market with lots of uncertainties.
* So European countries always in a search of other gas sources and routes in order to diversify the supply and curb the Russian monopoly.
* As per a report of European Commission Europes natural gas consumption will increase by almost 60% by the year 2030. Hence Russian supply will not be sufficient to meet the consumption need of Europe.
* Thus anyway EU needs to explore other avenues to meet the natural gas demands.
Nabucco West Pipeline: A West enterprise
* An EU and USA backed pipeline.
* Signed in 2009.
* It will assume supply from the Shah Deniz basin in Caspian Sea of Azerbaijan through the Trans-Anatolian Pipeline (TANAP).
* Runs from Turkey-Bulgaria border to Austria.
* But the supply of gas through Nabucco pipeline will be very insufficient without participation of Iran since the Shah Deniz authority preferred another Trans-Adriatic Pipeline over Nabucco in 2013.
* In the wake of an interim agreement between Iran and P5+1 on nuclear issue, and phased lifting of sanctions that were imposed on Iran in its international trade of oil and natural gas, Iran will emerge as a centerpiece of this project.
* If Iran stays bound by the agreement that is supposed to last for 6 months after which a more comprehensible deal in the matter of nuclear energy and other eco-political subjects is supposed to be preached, It is due to play a significant role in the revival of Nabucco pipeline and hence helping EU and USA to curb sharply growing Russian influence in the West.
* In this case Russia will be upset by Irans policy.
Irans trump card: IIS pipeline
* A friendship pipeline among the governments of Iran, Iraq and Syria.
* Signed in 2011, construction work delayed due to Civil war in Syria.
* Maximum amount of gas will be drawn from Irans South Pars gas field in the Persian Gulf.
* South Pars is the largest gas field of the world in the Persian Gulf, shared between Iran and Qatar.
* Once this develops, there is a future proposal of further extending it to Greece through an under-sea channel.
* In Greece a node of Russias Europe bound South Stream pipeline is also planned.
* If Greece becomes the junction of these two pipelines then the western dream of importing gas from Persian Gulf through an independent route bypassing Russia will be extinguished.
* Hence Iran plays a crucial role in choosing between Nabucco and IIS.
South Stream: Bypass Ukraine
* From Russia to EU through Black Sea, bypassing Ukraine
* To iron out the difficulties faced by Russia and EU to export through Ukraine owing to the Russia Ukraine Gas dispute.
* Construction started in 2012, first commercial delivery supposed to be in 2015.
* It is considered to be a rival project of Nabucco and Russian initiative to maintain its clout in the Western gas market.
Chabahar port: what India is eyeing on:
* A Sea Port in Chah Bahar in southeastern Iran.
* Only Iranian port with direct access to ocean.
* It is partially developed by India in 1991.
* After the interim agreement, this port may play a major role to Indian access to the landlocked Afghanistan. At present all the routes to Afghanistan passes through Pakistan, so the chabahar port once developed will be the first route to Afghanistan bypassing Pakistan. It will also be another Indian channel to trade with Iran as well.
-Bishwarup Bhattacharjee
Reference:
www.thehindu.com
en.wikipedia.org
http://www.ispk.uni-kiel.de/fileadmin/user_upload/thumbpublikationen/Publikationen_Krause/Krause_Mallory_Iran.pdf
http://edition.cnn.com/2013/11/23/world/meast/iran-nuclear-deal-details/
http://www.un.org/en/conf/npt/2005/npttreaty.html
Some more sites probably, cant remember exactly at this moment.
Irans nuclear program launched as early as in 1950 as a part of USs Atoms for Peace program.
Atoms for Peace Program, 1950:
* It is the first sincere attempt of US President D.D. Eisenhower to end the Brinkmanship in context to nuclear power in which he emphasized on the issue of transparency and cooperation in the field of nuclear energy in a speech dedicated to UNs General Assembly.
* Before that atomic development in the nukes and corners of the world was kept under strictest of secrecies that kept the world always pushing towards the brink of a civil war.
* Many countries acclaimed this endeavor and openly voiced their supports to this initiative for universal peace and human dignity and security.
* The first nuclear reactor in Pakistan and Iran were built during this program by American Machine and Foundry.
Iran ratifies Nuclear Non-Proliferation Treaty (NPT), 1968:
* Its a watershed in the history of atomic development which is aimed at prevention of nuclear weapons and weapon technologies, to promote cooperation and peaceful uses of nuclear energy.
* It may be interpreted as a three pillar system that are:
* Non-proliferation
* Disarmament
* The right to peacefully use nuclear technology for civilian purposes
* It contains a preamble and 11 articles.
* It is binding on the participating states.
* Open for signature in 1968, the treaty effectively came into force in 1970
* A total of 190 states have joined the treaty, a testament of the treatys significance.
* 4 UN nations never joined NPT:
* India
* Pakistan
* Israel
* South Sudan
* North Korea initially signed it, but never came into compliance and finally withdrew it in 2003.
* It identifies 5 states, the 5 permanent members of UN Security Council (UNSC) , also called P5, as Nuclear Weapon States(NWS), they are:
* USA
* UK
* France
* China
* The Soviet Union
* Apart from these nations India, Pakistan and North Korea openly tested and declared of their possession of nuclear weapons, whereas Israel maintains a Policy of Deliberate Ambiguity in context to their possession of nuclear weapons.
* India-USA Civil Nuclear Deal, 2008:
* In 2006, India signed US-India Peaceful Atomic Energy Cooperation Act under which India agreed to separate its military and civil nuclear facilities and to place the civil nuclear facilities under International Agency for Atomic Energy (IAEA) safeguards. In exchange, India is allowed full access to civil nuclear energy.
* Despite being not a member of NPT India was granted this status owing to its clean non-proliferation record and its growing need for nuclear energy emerging from rapid industrialization and a billion-plus population.
* In 2008, IAEA approved the India Safeguard agreement.
* Later in 2008, India was granted the waiver at the Nuclear Supply Group (NSG) meeting held at Vienna, Austria.
* As a result, India could commence trade in nuclear materials with other willing countries.
* Any kind of nuclear export by all major countries to Pakistan and Israel is prohibited by this treaty.
* Pakistan made a bid to reach similar agreement, which was rebuffed by USA and other NSG members owing to lack of high energy requirement in Pakistan and also due to its bad proliferation records.
* Nuclear Supply Group (NSG):
* Established in 1975.
* 46 members, including P5+ 1.
* NSG is a multinational body concerned with reducing nuclear proliferation by controlling the export and re-transfer of nuclear materials and by improving safeguard and protection to existing materials.
* Founded in response to India Nuclear Test in 1974.
* The NPT countries realized that certain non-nuclear weapon technology could be easily modified to develop nuclear weapons and felt that export of nuclear materials, equipments and technology should be limited further.
* Another advantage was that to bring the non-NPT and non-Zangger Committee nations (specifically France, at that time) in the ambit of non-proliferation.
Zangger Committee Nations:
Zangger Committee Nations or Nuclear Export Committee nations sprang from Article III.2 of NPT under which IAEA safeguards must be applied to nuclear exports.
Each state party of Zangger Committee undertakes not to provide: a. Source or special fissionable material and b. equipment or technology used for the processing of fissionable materials to any non NWS unless it is subject to the safeguard required by this Article of NPT.
P5 + 1:
P5 +1 or E3+3 is a group of 6 World Powers who joined the diplomatic effort with Iran in 2006, in respect of Irans nuclear program.
P5 is the 5 permanent members of UNSC, i.e., China, France, Russia, UK and USA + 1 , Germany.
Role of Germany:
Germany is a key trading partner of Iran. Irans nuclear program depends mainly upon the imports of equipments and others from Germany.
Comprehensive Test Ban Treaty (CTBT):
* Adopted by UN General Assembly, in 1996.
* A multilateral treaty by which states agrees to ban and not to encourage in any sort of nuclear explosion, for military or civil, inside the region of their control.
* It is yet to come in force. 8 states are yet to ratify or sign it out of 44 states listed Annex-II States. Among these states:
Signed but havent ratified yetHavent signed it yet
ChinaIndia
EgyptNorth Korea
IranPakistan
Israel
USA
* CTBT Organisation Preparatory Commission monitors nuclear explosions through forensic seismology, hydro acoustics, infrasound and radionuclide monitoring.
* A change in the mindset of Iran after the 1979 Revolution in which Shah Government was toppled.
* After various twist and turns in the international diplomatic equations with Iran, in 2002 the issue caught an eye of concern of the major world countries.
Discovery of Secret Plants in Iran, 2002:
* Mujahedeen Khalq, an Iranian dissident group also known as the M.E.K., obtains and shares documents revealing a clandestine nuclear program previously unknown to the United Nations.
* The program includes a vast uranium enrichment plant at Natanz and a heavy water reactor plant at Arak.
* The United States accuses Tehran of an"across-the-board pursuit of weapons of mass destruction".
Teheran Agreed Statement 2003 &Paris Accord, 2004:
* Both Agreed between EU-3 (France, Germany and UK) and Iran.
* Iran agrees a suspension of enrichment and re-processing related activities.
Iran denies EUs Comprehensive Proposal, 2005:
* Iran strongly denies EUs proposal for a diplomatic, scientific and economic cooperation in exchange of limited nuclear activity of Iran.
* The argument was that the proposal was not in conformity with Article I and II of NPT, which confer Iran the inalienable right to develop, research, produce and use nuclear energy for peaceful purposes.
* UN approved its first round of sanctions on Irans nuclear export and import in an attempt to curb Irans nuclear activity.
* The sanction was further extended to Irans petrochemical, gold trading as Iran continued to enrich Uranium and IAEA discovers new instances of Irans enrichment program exceeding the safe level.
* US bolsters sanctions on Iran blacklisting a number of companies in Iran accusing them of helping Iran in enriching nuclear fuel.
* Irans economy goes in a shamble.
* Iran kept defending its enrichment programme claiming it to be aimed just for peaceful energy generation and for civilian purpose and the sanctions kept pushing Iran into the corner.
But there a few more countries like Israel who are purportedly performing clandestine nuclear activities, then why so much pressure on Iran particularly?
Because:
1. Other states like India, Israel and Pakistan who are supposed to possess nuclear weapons have not ratified NPT. So the scope of inspection and intervention are limited there.
2. Iran ratified NPT in its nascent stage. But over the years IAEA has time and again found evidences of secret enrichment programmes of Iran that breach the conventions with IAEA. Although NPT on its own doesnt mention any strict level upto which a nation is allowed to enrich and although article IV of the treaty confers the unalienable right on the states to develop, research, produce and use nuclear energy for peaceful purposes, there are certain facts that drives us to the notion that Iran is pursuing a nuclear weapon:
1. Nuclear device is based on Highly Enriched Uranium (HEU) U-235 or plutonium. In natural Uranium the share of U-235 isotope is around 0.7%. Natural uranium has to be transferred into hexafluoride for the purpose of enrichment. For weapon purposes one needs a concentration over 90% of U-235. Once it reaches the enrichment over 90%, it has to be converted into metallic uranium. Only metallic uranium can be used to for a metal hemisphere the core requirement of a nuclear bomb. Iran has in its disposal sufficient supply of uranium to carry on this process. There are two uranium mines in Iran one operating and one unused, that are capable of producing 20 tons of uranium per year. Iran possesses the technology required to prepare a nuclear weapon.
2. Almost 35,000 kg of uranium hexafluoride was discovered in Iran Natanz plant centrifuges out of which approximately 33 kg was enriched upto 20%. But for civilian and peaceful purposes enrichment upto 3.5% is sufficient which corresponds to the civilian Light Water Reactor. That in all enough Low Enriched Uranium (LEU) to manufacture two nuclear bombs once enriched.
3. The above figures are only based on the known activities in facilities under the IAEA safeguards. Iran is supposed to possess additional clandestine enrichment programmes that are out of the supervision of IAEA.
4. Hence this sizeable nuclear programme which is out of proportion to legitimate peaceful needs of the existing or the projected Iranian civilian nuclear programme.
5. P1 type of centrifuges, given its high failure rate and vulnerability to software attacks are not ideal for the purpose of nuclear weapon. Iran is pursuing P2 type of new generation centrifuges and also making rapacious attempts to upgrade its existing centrifuges.
6. Iran is pursuing the option of a heavy water moderated nuclear uranium reactor (ar Arak), which if readied, might be used for the production of plutonium.
7. Iran has in the past shown interest in technologies that might be used to separate plutonium from the spent fuel.
8. Iran has been involved in acquiring nuclear weapon technology through the Ab dal Qadeer Khan network.
9. Most of the Irans R&D, construction and enrichment effort in the past have been carried out in a secret manner violating Irans existing IAEA safeguard agreement and they are to an increasing degree being carried out in underground facilities that are better protected from any possible external military action.
10. Iran is pursuing ballistic missile technology (short, medium and intermediate range) for military purposes. Given their poor accuracy, the acquisition of such weapon system only makes sense in case it has been adopted to be used as a delivery vehicle of a nuclear weapon.
11. Many prominent Iranian politicians has time and again drawn statement according to which wiping out Israel is a legitimate strategic option.
12. Prominent Iranian politicians have touted their state as the main source of resistance and defiance of the US and the international community as a whole. Without nuclear weapons such defiance cannot be maintained for long.
* What is centrifuge?
A mechanism to enrich uranium
All the Sanctions on Iran:
By UN:
* Ban on all enrichment and reprocessing activities.
* Ban on supply of nuclear related materials and technologies to Iran and froze the assets of key individuals and companies associated with such activities.
* Called upon its states to monitor the activities of Iranian banks, to track the Iranian ships and aircrafts
* Ban on any kind of activities of Iran related to development of ballistic missiles.
* Froze the assets of Iran Revolutionary Corp Guards (IRCG), Islamic Republic or Irans Shipping Lines and recommended its states to inspect Iranian cargos, prohibited states to offer servicing to Iranian vessels involved in prohibitive activities.
* Ban on financial activities and banking sector of Iran. Prohibited Irans banks to open branch of their territory and prevented them to get in any kind of relationships or transactions with their banks.
By US:
* Ban on almost all companies doing business with Iran.
* Ban on all Iranian imports.
* Ban on Irans oil sector and oil companies.
* Ban on all financial institutions of Iran.
* Sanction against Iran Air and Tidewater Middle East Co.
* Ban on Irans Central Bank and other commercial banks. Froze all Iranian governments properties in the foreign exchange holdings in the banks of other countries.
* Ban targeting on Irans energy sector which provides for 80% revenue of their government.
* Ban on Major Iranian electronic producers, Internet policing agencies, State broadcasting authority. That targeted Islamic Republic of Iran Broadcasting responsible for overseas production of Iranian television and radio channels.
* On Iranian Cyber Police and Communication Regulating Authority.
By EU:
* Imposed restrictions on cooperation with Iran, Irans foreign trade, financial services, energy sector and transfer of technologies.
* Banned the provision of insurance and reinsurance by insurers of member states to Iran owned companies and its vessels.
* Iranian banks were disconnected from SWIFT network, the world hub of electronic financial transaction.
Apart from these:
* Canada imposed similar set of bans of Iran separately.
* India enacted a ban on exports of all items, materials, goods and technologies that could contribute Irans nuclear programme.
* Various other countries imposed separate bans or terminated international affiliations with Iran in the backdrop of the sanctions already imposed to it by other countries or organizations.
Effects of Sanctions on Iran:
* Irans nuclear programme had to face numerous difficulties to develop further due to the lack of materials and technologies needed to pursue the programme.
* Irans export declined substantially. Oil export decreased by almost 40% contributing to distorted trade deficit
* Owning to the bans on Irans crude oil sector, many oil companies and MNCs had to withdraw from Iran. Production of Oil declined.
* Iran lost almost USD 60 billon of investment every year.
* Being disallowed to trade in dollars, euro initially Iran had to search for a buyer for trading for a long period of time.
* Even when it managed to get partners to trade, its vessels had to travel long way to bypass regions into which it had lost its permit due to sanctions => profit shrank in huge margins
* China is Irans biggest crude oil customer. Though Iran was trading with China in Renminbi, it cut its bulk import to avoid a possible US ban on its financial companies. Even India (2nd large customer, 12% of Indias total oil import from Iran) had cut oil import extensively.
* Fiscal deficit grew to a large dimension, economy stagnated.
* Inflation was near to 25%, Irans Central bank was expecting a hyperinflation.
* Though no sanction was imposed on humanitarian trading, health system suffered due to delayed transfer of drugs and medical equipments. Many people died from diseases like cancer, thalassemia and other severe diseases.
Why does Iran simply not walk out of NPT and do whatever it wants in peace without these whiney guys?
Because every time Uncle Sam frowns at something, the voice of the world starts quivering
Anyway, according to Article X of NPT, in exercising the sovereignty a state have the right to withdraw from the treaty giving a 3 months notice to all other parties of the treaty. But,
* Strategically,
* It may strictly portray Irans motivation to pursue a nuclear bomb.
* In case it moves out of NPT, Russia will most probably cease to support its nuclear energy process by providing materials and technologies. So in any case, its nuclear program is bound to suffer.
* Economically,
* The world powers may refer Iran to the UNSC and it might face a set of fresh new sanctions.
* Against the backdrop of present sanctions and a stagnating economic profile, Iran is not in a position to carry on its activities in isolation anymore.
* Geo-politically,
* There is an open animosity and rivalry among the Middle East countries.
* In case it walks out of NPT, an anti-Iranian movement is likely to take place under the guidance of US.
Also,
Iran wont be able to drink expensive wines and juicy bananas from Russia.
From a different viewpoint, the impending dangers of a nuclear armed Iran are:
* It might decouple the region from broader strategic context and impair the regional strategic balance as well. It might encourage an inexorable rush for nuclear weapons in the Middle East (Saudi Arabia, Gulf States, Egypt, Syria, Turkey) and to an anti Iranian alliance under US. It might well increase the nuclear competition between Iran and Israel to an alarming dimension.
* It will pose direct threat to NATO member states and widen the existing cleavage between US and its non nuclear allies in Europe over the USs nuclear guarantee to the latters security.
* NPT might collapse completely and it may spell out the end of the peaceful non-proliferation regime of over 40 years. The global powers are likely to get divided two separate groups of nuclear and non-nuclear states. International affiliations and relations to suffer bad shocks.
However, after a long period of rivalry, frustration and open animosity, Iran and P5 + 1 finally came to settle on an interim agreement in November, 2013 in Geneva.
The Interim Nuclear Agreement between Iran and P5+1:
The temporary deal for next 6 months before a more comprehensive agreement between them looks like this:
* Halting the progress of Irans nuclear programme:
Iran will:
* Halt uranium enrichment above 5%.
* Dilute the existing stockpile of highly (20%) enriched uranium below 5% or convert them to a form not suitable for further enrichment. [ as per critics, it would be better to have agreed to dilute the stock outside of Iran]
* Not install any additional centrifuge, postpone any new enrichment programme, not use any next-generation centrifuge to enrich.
* Not commission or fuel Arak reactor, install any additional reactors or any reprocessing capacity.
* Unprecedented transparency and intrusive monitoring of Irans nuclear programme:
Iran will provide:
* Daily access by IAEA inspectors to Natanz and Fordow.
* IAEA access to centrifuge assembly facility.
* IAEA access to uranium mines and mills.
* Secret information on design of Arak reactor and also more frequent access to the Arak reactor.
* Verification Mechanism:
* A joint commission of Iran and P5 + 1.
* The joint commission will work with IAEA to facilitate resolution of past and present concerns regarding Irans nuclear programme.
* Limited, Temporary and Reversible Relief to Iran:
* No additional sanction on Irans nuclear programme for next 6 months if Iran abides by the deal.
* Suspend certain sanction on gold and precious metals.
* Partially phase out bans on Irans auto sector, petrochemical exports potentially providing Iran USD 1.5 billion in revenue.
* Allow purchase of Iranian oil at their currently significant reduced levels and release USD 4.2 billion in installments that international market owes to Iran.
* Humanitarian Transactions:
* US exempted any humanitarian transactions like agricultural goods, food, pharmaceuticals and medical equipments from sanctions.
* Facilitate the humanitarian transactions on the face of the agreement.
* Limited Relief:
* In total USD 7 billion will be transferred to Iran that was frozen in the bank accounts of other countries till now.
* Maintain Economic pressure on Iran:
* Sanction affecting crude oils sale will continue.
* Sanction affecting petroleum product export to Iran stays.
* The vast majority of fund of around USD 100 billion in foreign exchange holdings still remain inaccessible to Iran.
* Sanction against Central Bank of Iran and other commercial banks and other financial institutions, sanctions on ballistic missile program, all UNSC sanctions continue.
Reactions after the deal:
* Iran gets a chance to overhaul its slugged economy and also to enrich uranium for civil energy and peaceful purposes. So the deal offers a great opportunity to Iran.
* For US and EU, after the 1979 revolution they have been able to strike a comprehensive deal with Iran regarding its nuclear programme that will enable them to get a clearer and more transparent picture of what Iran is actually up to. So the deal marks a watershed for them.
* Israel, a staunch supporter of US, looks upon the deal as a historic mistake and fears that Iran might well carry on their clandestine process of enrichment even after the deal while forging an amicable relationship with the West to get rid of the sanctions. It may also lead falter US Israel relationship which is already under stress.
* Saudi Arabia, a challenging regional rival of Iran, also evinced disappointment over the deal since it may lead to emergence of Irans clout in the West.
* For India, however, it doesnt make a really big difference in the amount of oil import from Iran and before six months India cant strike a more comprehensive deal in crude oil with Iran. Also till now India was trading with Iran in rupee, but after the deal the transactions will take place in dollars again. Speculations are that it might lead to a decline in Indian forex reserves with concomitant rupee volatility once again.
The probable future strategic positions centering the deal:
Irans Geostrategic location:
* It is the gateway to Central Asia and South-West Asia.
* Connected to Caucasia and Europe in north.
* Hence its pivotal geography has allowed it to extend its Persian ethno-culture, linguistic, religious economic and geopolitical influence over the heart of Central Asia, Caucasia and beyond.
USAs stake at the nuclear deal: a delicate equation
* The growing influence of the developing Asia, especially China and Russia is a threat to prevailing US Eco-political hegemony.
* After the sanctions of EU and US on Iran, and after Iran had been thrown out of the pacts that USA signed with the petro-monarchies with Saudi Arabia in the head, it lost the opportunity to trade its oil in dollar.
* Iran employed an array of mechanisms especially in the financial sphere to balance the effect of the crippling sanctions.
* It started to trade in Euro initially, but after successful US pressure on the banking sector of EU, Iran was disallowed to trade in Euro even.
* Hence it turned to the East and started trading with China and India in Yuan and Rupee respectively. Iran even traded oil with turkey in gold. Iran found a good use of century old barter system for trading purpose and hence insulating a large part of the heavy financial pressure that was being imposed on it by the West.
* On the other hand, a part of the world petro-trades was going on currencies other than dollar, with concomitant decline in the value of dollar in international oil market.
* At this juncture, USs petrodollar standard came under severe strain and it rendered crucial to forge a tie with Iran.
* Also many commentators dubbing the Geneva accord as a sharp political move to unsettle ties between the emerging global powers, chiefly China and Russia.
Russia in European Energy Sector:
* Russia enjoys a monopoly in European market in export of natural gas. Russian company Gazprom, with its numerous subsidiaries supplies gas to EU.
* Russia accounts for more than 35% of EUs total gas import and more than 30% of EUs total crude oil import.
* 80% of the gas pipelines from Russia to Europe pass through Ukraine. Since 2005 the gas dispute between Russia and Ukraine has been sharp on issues of pricing and tariffs. This in turn, bruising the EU market with lots of uncertainties.
* So European countries always in a search of other gas sources and routes in order to diversify the supply and curb the Russian monopoly.
* As per a report of European Commission Europes natural gas consumption will increase by almost 60% by the year 2030. Hence Russian supply will not be sufficient to meet the consumption need of Europe.
* Thus anyway EU needs to explore other avenues to meet the natural gas demands.
Nabucco West Pipeline: A West enterprise
* An EU and USA backed pipeline.
* Signed in 2009.
* It will assume supply from the Shah Deniz basin in Caspian Sea of Azerbaijan through the Trans-Anatolian Pipeline (TANAP).
* Runs from Turkey-Bulgaria border to Austria.
* But the supply of gas through Nabucco pipeline will be very insufficient without participation of Iran since the Shah Deniz authority preferred another Trans-Adriatic Pipeline over Nabucco in 2013.
* In the wake of an interim agreement between Iran and P5+1 on nuclear issue, and phased lifting of sanctions that were imposed on Iran in its international trade of oil and natural gas, Iran will emerge as a centerpiece of this project.
* If Iran stays bound by the agreement that is supposed to last for 6 months after which a more comprehensible deal in the matter of nuclear energy and other eco-political subjects is supposed to be preached, It is due to play a significant role in the revival of Nabucco pipeline and hence helping EU and USA to curb sharply growing Russian influence in the West.
* In this case Russia will be upset by Irans policy.
Irans trump card: IIS pipeline
* A friendship pipeline among the governments of Iran, Iraq and Syria.
* Signed in 2011, construction work delayed due to Civil war in Syria.
* Maximum amount of gas will be drawn from Irans South Pars gas field in the Persian Gulf.
* South Pars is the largest gas field of the world in the Persian Gulf, shared between Iran and Qatar.
* Once this develops, there is a future proposal of further extending it to Greece through an under-sea channel.
* In Greece a node of Russias Europe bound South Stream pipeline is also planned.
* If Greece becomes the junction of these two pipelines then the western dream of importing gas from Persian Gulf through an independent route bypassing Russia will be extinguished.
* Hence Iran plays a crucial role in choosing between Nabucco and IIS.
South Stream: Bypass Ukraine
* From Russia to EU through Black Sea, bypassing Ukraine
* To iron out the difficulties faced by Russia and EU to export through Ukraine owing to the Russia Ukraine Gas dispute.
* Construction started in 2012, first commercial delivery supposed to be in 2015.
* It is considered to be a rival project of Nabucco and Russian initiative to maintain its clout in the Western gas market.
Chabahar port: what India is eyeing on:
* A Sea Port in Chah Bahar in southeastern Iran.
* Only Iranian port with direct access to ocean.
* It is partially developed by India in 1991.
* After the interim agreement, this port may play a major role to Indian access to the landlocked Afghanistan. At present all the routes to Afghanistan passes through Pakistan, so the chabahar port once developed will be the first route to Afghanistan bypassing Pakistan. It will also be another Indian channel to trade with Iran as well.
-Bishwarup Bhattacharjee
Reference:
www.thehindu.com
en.wikipedia.org
http://www.ispk.uni-kiel.de/fileadmin/user_upload/thumbpublikationen/Publikationen_Krause/Krause_Mallory_Iran.pdf
http://edition.cnn.com/2013/11/23/world/meast/iran-nuclear-deal-details/
http://www.un.org/en/conf/npt/2005/npttreaty.html
Some more sites probably, cant remember exactly at this moment.
Why Iran is important in geopolitical balance
The nuclear deal signed between Iran and p5+1 is proved to be a game changer. Iran got what it had always wanted, namely, an implicit right to enrich uranium for its civilian nuclear programme, and that the West got what it always wanted, namely, a guarantee that Iran would not move towards a military nuclear programme (something Iran has always denied).
Now we have to see why it is called a GAME CHANGER? In this article we will check it from the different countries point of view.
IMPORTANT FEATURE OF IRAN
At the gateway to Central Asia, Southwest Asia, West Asia, Caucasia and Europe, its unique geography has, over centuries, resulted in the extension of the Persian ethno-cultural, linguistic, religious economic and geopolitical influence into the heart of Caucasia, Central Asia and beyond.
US STANCE-Washington kept on changing its foreign policy since world war. From dollar diplomacy to oil diplomacy, from space war to cyber war and this time it is pivot to Asia. But a year after the initial pronouncements on pivot, the policy was rechristened rebalancing. It down played the military aspects of the pivot, emphasized economic cooperation and called for closer engagement with China. A Trans-Pacific Partnership (TTP) between the US and some twelve states in the region would create a free trade area. Simultaneously, the US would enhance its economic assistance and deepen its diplomatic involvement.
WHY THIS SUPEREME POWER IS COME TO NEGOTIATED WITH IRAN
* diplomatic failure in west Asia (IRAQ, AFGANISTAN, SYRIA)
* Economic crisis at home,
* losing support of European allies
* Most important emerging china factor that pushed it to focus on Asia than else.
RUSSIA STANCE- There is no doubt that Russia and China has been anti towards west policy so this time also Moscow tried to be lenient with sanctions on Iran. There is also other factors that woos Moscow.
* Iran holds a trump card, which can retain Moscows standing on top of Eurasias energy pyramid.
* Iran is the core participant of the Iran-Iraq-Syria (IIS) pipeline. The pipeline is configured to pump around 40 billion cubic meters annually, drawn mainly from Irans giant South Pars gasfield, towards Syrias Mediterranean port of Tartus, and home to a Russian base.
CHINA STANCE- it has been really balancing in its policy of anti intervention like in case of Syria. It may be more because of its fear about Xinjiang and Tibet issue. The energy starved china needs Iran support to play its card in west Asia.
Recently Irans deputy minister recommended IPIs extension to china.
Iran has become an important political actor in its region not just through a politics of sectarianism (as a political centre of Shiism) but also through its energy diplomacy and its resolute posture against US (and other Western) intervention. Iran has emerged as one of the main political forces that could provide the basis for stability. Any post-US Afghan political settlement will require Iranian involvement not only because of the close ties between western Afghanistan and Iran but also because half of Afghanistans oil comes from Iran and the pipeline agreements with Pakistan, India and central Asia would require Afghan participation. Iranian diplomacy and power will also be crucial to any policy in Syria, where the civil war has tilted in large part to favour Irans ally, the regime of Bashar al-Assad.
SAUDI ARAB AND ISRAEL STANCE- calling this agreement a big historical mistake, they are feeling the threat of nuclear hegemony.
Good news followed quite quickly after the embargo around Iran lifted. Oil prices dropped; influenced by the expectation of Iranian oil being allowed to more easily enter the world market (Indonesia hastily inked a deal to buy Iranian oil).
INDIA STANCE-Although Indias reaction to the deal is positive, it remains to be seen whether it puts India-Iran energy relations back on track. It has made it clear that bilateral trade can be enhanced if India introduced banking reforms, facilitating dollar/euro based trade. Second, the European Union is yet to take a decision on when to lift the ban on re-insurance which was the main impediment to oil shipments from Iran. Moreover, Iran has cancelled Indias proposed investment in Farzad-B oil field.
New Delhi is still looking for positive outcomes.
* Energy hope-TAPI & IPI(oil and natural gas)
* 70 km long rail line (the railroad could help India save crores of rupees in logistics to Central Asia, the 55-million-people market. central asia key resource for U)
* Both nations had then started a joint effort to increase Indias exports to Iran so that the rupee payment for oil deposited in Irans account could be gainfully utilised. India imports petroleum products worth over $10 billion from Iran.
* Development of Chah-bahar port barely 80 km away from Pakistans Gwadar port and providing access to Afghanistan (a push for the North South Corridor that will use the Bandar Abbas port for connectivity with Turkmenistan, the Caucasus and beyond).
* Improving intra-Asian security, trade and energy linkages.
* An Indian-built road from the Afghan border town of Zaranj to Afghan garland highway for providing it market.
* India has allotted $100 million for the sorting out a trilateral arrangement with Iran and Afghanistan for a customs and transit agreement.
Well by analyzing all the facts we can say it is defiantly a game changer that somehow shifts the power balance in west Asia. At least war has been temporally averted.
Now it is up to New Delhi how she plays her role in changing geopolitics.
Neha Shrivastava
SOURCES
* THE HINDU
* IDSA
* EPW
Now we have to see why it is called a GAME CHANGER? In this article we will check it from the different countries point of view.
IMPORTANT FEATURE OF IRAN
At the gateway to Central Asia, Southwest Asia, West Asia, Caucasia and Europe, its unique geography has, over centuries, resulted in the extension of the Persian ethno-cultural, linguistic, religious economic and geopolitical influence into the heart of Caucasia, Central Asia and beyond.
US STANCE-Washington kept on changing its foreign policy since world war. From dollar diplomacy to oil diplomacy, from space war to cyber war and this time it is pivot to Asia. But a year after the initial pronouncements on pivot, the policy was rechristened rebalancing. It down played the military aspects of the pivot, emphasized economic cooperation and called for closer engagement with China. A Trans-Pacific Partnership (TTP) between the US and some twelve states in the region would create a free trade area. Simultaneously, the US would enhance its economic assistance and deepen its diplomatic involvement.
WHY THIS SUPEREME POWER IS COME TO NEGOTIATED WITH IRAN
* diplomatic failure in west Asia (IRAQ, AFGANISTAN, SYRIA)
* Economic crisis at home,
* losing support of European allies
* Most important emerging china factor that pushed it to focus on Asia than else.
RUSSIA STANCE- There is no doubt that Russia and China has been anti towards west policy so this time also Moscow tried to be lenient with sanctions on Iran. There is also other factors that woos Moscow.
* Iran holds a trump card, which can retain Moscows standing on top of Eurasias energy pyramid.
* Iran is the core participant of the Iran-Iraq-Syria (IIS) pipeline. The pipeline is configured to pump around 40 billion cubic meters annually, drawn mainly from Irans giant South Pars gasfield, towards Syrias Mediterranean port of Tartus, and home to a Russian base.
CHINA STANCE- it has been really balancing in its policy of anti intervention like in case of Syria. It may be more because of its fear about Xinjiang and Tibet issue. The energy starved china needs Iran support to play its card in west Asia.
Recently Irans deputy minister recommended IPIs extension to china.
Iran has become an important political actor in its region not just through a politics of sectarianism (as a political centre of Shiism) but also through its energy diplomacy and its resolute posture against US (and other Western) intervention. Iran has emerged as one of the main political forces that could provide the basis for stability. Any post-US Afghan political settlement will require Iranian involvement not only because of the close ties between western Afghanistan and Iran but also because half of Afghanistans oil comes from Iran and the pipeline agreements with Pakistan, India and central Asia would require Afghan participation. Iranian diplomacy and power will also be crucial to any policy in Syria, where the civil war has tilted in large part to favour Irans ally, the regime of Bashar al-Assad.
SAUDI ARAB AND ISRAEL STANCE- calling this agreement a big historical mistake, they are feeling the threat of nuclear hegemony.
Good news followed quite quickly after the embargo around Iran lifted. Oil prices dropped; influenced by the expectation of Iranian oil being allowed to more easily enter the world market (Indonesia hastily inked a deal to buy Iranian oil).
INDIA STANCE-Although Indias reaction to the deal is positive, it remains to be seen whether it puts India-Iran energy relations back on track. It has made it clear that bilateral trade can be enhanced if India introduced banking reforms, facilitating dollar/euro based trade. Second, the European Union is yet to take a decision on when to lift the ban on re-insurance which was the main impediment to oil shipments from Iran. Moreover, Iran has cancelled Indias proposed investment in Farzad-B oil field.
New Delhi is still looking for positive outcomes.
* Energy hope-TAPI & IPI(oil and natural gas)
* 70 km long rail line (the railroad could help India save crores of rupees in logistics to Central Asia, the 55-million-people market. central asia key resource for U)
* Both nations had then started a joint effort to increase Indias exports to Iran so that the rupee payment for oil deposited in Irans account could be gainfully utilised. India imports petroleum products worth over $10 billion from Iran.
* Development of Chah-bahar port barely 80 km away from Pakistans Gwadar port and providing access to Afghanistan (a push for the North South Corridor that will use the Bandar Abbas port for connectivity with Turkmenistan, the Caucasus and beyond).
* Improving intra-Asian security, trade and energy linkages.
* An Indian-built road from the Afghan border town of Zaranj to Afghan garland highway for providing it market.
* India has allotted $100 million for the sorting out a trilateral arrangement with Iran and Afghanistan for a customs and transit agreement.
Well by analyzing all the facts we can say it is defiantly a game changer that somehow shifts the power balance in west Asia. At least war has been temporally averted.
Now it is up to New Delhi how she plays her role in changing geopolitics.
Neha Shrivastava
SOURCES
* THE HINDU
* IDSA
* EPW
Infrastructure
Infrastructure
Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
Infrastructure is the basic facilities needed for the functioning of a community or society. In other words, it is the basic physical or organizational structures needed for the operation of a society or enterprises. The 12th 5YP envisaged the investment requirement in infrastructure to the tune of $1trillion, with 47% of this fund coming from the private sector.
1. Physical infrastructure:
* Energy: coal, oil and natural gas, hydro, nuclear and renewable.
* Transport: roadway, railway, airway and waterway.
* Communication: telecom and postal services.
* Urban: transport housing and civic amenities.
2. Social infrastructure: (I will not cover this part)
* Education
* Health
Energy: India will produce 71% of its energy needs domestically by 2016-17, and 69% by 2021-22. The remaining will be met through import.
Integrated energy policy (IEP) 2031-32
Sector2003-04 (%)2031-32 (%)Power generation 2012 (%), total-2,14,000MW
Coal5142-6557 (1, 20,000MW)
Oil3628-330.6 (1,190MW)
Natural gas97-129 (18,900MW)
Hydro23-418.5 (39,3240)
Nuclear15-62.02 (4780)
Renewable5-712.5 (28,000MW)
Coal: Indias reserve as on March, 2012 was 293.5billion tones (40% proven and some 40bn tons proven) & Domestic production-540million tons in 2011-12 (import-100mn tons) need to increased to 795mn tons by 2016-17; even then there will be import need of 185mn tons.
* IEP says present potential to last for 40years.
* Mines & Mineral (development and regulation) bill 2011 for simple and transparent mechanism for granting of mining lease or prospecting license through competitive bidding; Coal forecasting, private participation and captive mining for merchant uses.
* Pricing change from useful heat value (UHV) to Gross Calorific Value (GCV) in 20012 (grade I-VII: 15% ash & moisture content) - mainly Bituminous coal. Need to invest in super-critical boiler technology.
* Liquefaction of coal: gasification to liquefaction (Sasol process in S. Africa and Fischer Tropsch process in Germany).
Oil & Natural Gas: 73% import dependent, 90% import by 2031-32. Indias Refining Capacity 215mmt in 2013, exporting 60.84mmt of petroleum products worth $50bn (20 refineries: 17 public & 3 Pvt.).
Steps taken by the govt.:
* New Exploration Licensing Policy (NELP), 1999- 177 oil & N. Gas discoveries in 39 NELP blocks.
* Deregulation of prices: petrol, diesel-dual pricing, L.P.G- 9 cylinders/year, kerosene-direct cash transfer through ADHAAR, underway; import parity pricing system underway.
* Pipeline Network (16 crude pipelines- 106MMT).
* Vision 2015: Piped Natural Gas by re-gasification of Liquefied Natural Gas to 200 cities.
* Rajiv Gandhi Gramin LPG Vitaran Yojana, 2009- 75% population by 2015 -5.5cr new connections
* Rangarajan formula on gas pricing: KG-D6 gas price to go up to $8.4mbtu from $4.2mbtu by April 2014.
* International effort: India-Oman (1100km) undersea pipeline, Turkmenistan-Afghanistan-Pakistan-India (TAPI-1700km) pipeline to transport 3billion cubic feet of natural gas per day.
* Lost opportunities: Iran-Pakistan-India (IPI) pipeline and India-Bangladesh-Myanmar natural gas pipeline.
(Sweden has declared that they will have nothing to do with oil by 2050).
Hydro: potential of around 1, 45,000MW: environmental, and relief and rehabilitation issues. (157 projects-57,672MW, 38-mega dam with 320MW capacity, 12% free to Arunachal Pradesh).
Nuclear: 20 power plant running 4780MW, two at Kudankulam (2000MW) yet to connect to grid, five under construction (3300MW)
* Target-20,000MW by 2022 and 63,000MW by 2032.
* Signed Civil Nuclear Energy Treaty with 9 countries (US, Canada, Russia, France, Kazakhstan, Mongolia, S. Korea, Argentina and Namibia).
Major Issue: Safety and Environment (Sweden, Germany and Japan will discard Nuclear Energy by 2040).
Other sources:
Coal Bed Methane (CBM): 4th largest proven reserved. 33 exploration block- Assam, Gujarat, Andhra Pradesh, Chhattisgarh, M.P, T.N, Odisha, Rajasthan Production started 0.28mmscmd (million metric standard cubic meters per day).
Gas/Chathrate Hydrates: Methane Gas trapped inside ice in coastal sea, ocean sediments, polar seabed, and permafrost (around 300mt deep in temperate region and nearer in polar region).
Shale Gas: 2012 draft policy for the exploration and exploitation: Shale Gas in India: look before you leap. It is being considered by a group of ministers. India is believed to have technically recoverable resources of 96 trillion cubic feet (tcf) of wet shale gas.
* Ministry of Petroleum and Natural Gas (MoPNG) has identified 6 basins as potentially shale gas bearing: Cambay, Assam-Arakan, Gondwana, Krishna-Godavaari, Kaveri and the Indo-Gangetic basin. MoPNG has signed a MoU with the Deptt.of states USA.
* US geological survey: India has recoverable resources of 6.1 trillion cubic feet (tcf) in 3 of the 26 sedimentary basins.
* ONGC: 34 tcf in Damodar basin alone with 8tcf recoverable (47tcf- total conventional reserves)
* Procedure: hydro-fraction or fracking- horizontal drilling by injecting a mixture of water, chemicals (guar gum), and sand into the well at very high pressures (8000psi-pounds per square inch) to create a no. of fissures in the rock to release the gas. It requires minimum land area of 80-160 acres and 3-4 million gallons per well (11,000 15, 000 cubic mts of water).
* TERI- india will be a water stressed country by 2030, so the result might not be as dynamic as in the US.
* India-waterportal.org: next 15-20 years, consumption of water will increase by 50%, supply by 5-10%; resulting in to the scarcity of water.
* Possibility of contamination of aquifer (both surface and sub-surface) from hydro-fracturing fluid disposal.
Nuclear Fusion: ITER-international thermonuclear experimental reactor, Cadarache, France; started in 2005-07 to be completed by 2018. It has 7 member countries: Japan, China, India, S. Korea, US, Russia and EU. 50MW input power to produce 500MW output.
Renewable Energy: Potential 89,760MW, present installed capacity-28,000MW & plan to double renewable energy generation by 2017.
Small Hydro: less than 25MW, 3496MW installed with potential of 15,000MW.
1. Bio-fuel: 5% (earlier 10%) blending target, Brazil-25%.
* Bio-diesel (mono alkyl esters of long chain fatty acid): jatropha, karanj, Mahua, Soyabean oil
* Ethanol (water soluble alcohol30% oxygen): Bagasse (2239/5000MW), Corn, Sorghum, Potatoes, Wheat, Sugarcane.
2. Solar: Photo Voltaic (363MW) and thermal (800MW) - 1000MW by 2013
* JN National Solar Mission 20,000MW grid connection by 2022.
* Major issue: Gallium, Arsenic, Selenium, Indium and Tellurium getting depleted.
Wind: more than 18,000MW in operation, and total capacity of 49,130MW.
* Rare Earth Elements (REE) use in magnets in Wind Mills is available mainly in China.
Tidal and Wave Energy: ocean currents are the store house of infinite energy. West coast of India is the most favorable region for harnessing this energy.
Geothermal Energy: when the Magma from the interior of earth comes out on the surface, tremendous heat is released. This heat energy can successfully be tapped and converted to electrical energy. Also the hot water that gushes out through the geyser wells is used in the generation of thermal energy. Himalayan region has major potential.
Bio-energy/ Biomass: energy derived from biological products which include agricultural residues, municipal, industrial and other wastes (1200MW/17,000MW).
Waste to Energy (WtE) incineration Okhla 16MW has taken off but yet to connect to Grid, Ghazipur- 10MW, Narela-Bawana 36MW
Ministry of New and Renewable Energys (MNRE) flagship program on energy recovery from urban and industrial waste, announced in May 2011 aimed to generate 84MW of power from waste by providing subsidies upto Rs 10cr to developers.
Negative effect of WtE incineration:
1. WHO: Dioxins are one of the dirty Dozen a group of dangerous chemicals known as persistent organic pollutants (POPs) - potential of causing cancer.
Central Pollution Control Board and Chennai based Non-profit org. Global Alliance for Incinerator Alternatives (GAIA) revealed life threatening levels of particulates and toxic chemicals including Dioxins which is 30-40 times above permissible level in Okhla, Delhi. Those who live close to incinerator since 2009 are experiencing incidences of cancer and low birth weight.
1. The United States environmental protection agency (USEPA) recognizes incinerators emit 2.5 times more carbon dioxide per MW than coal fired power plants.
2. Cost twice the cost of Nuclear Energy, and incinerator relies heavily on govt. fiscal and financial incentives.
3. US largest WtE company, Covanta, recently announced its plan to conclude operations in the U.K., whereas, the Municipal Corporation of Hyderabad announced its plan to construct Indias largest incinerator using Covantas technology. Europe is committed to ending the land-filling and incineration of recyclable waste by 2020. Aiming instead to implement a resource-efficiency strategy that will boost a circular economy; where, all waste is treated as a resource rather than requiring expensive infrastructure to dispose of it.
(Sustainable waste management option; prevent, reuse and recycle).
Alternative: Plasma Gasification of municipal waste.
* Yoshii, Japan 24tonne per day running for decade released less than 1% to that of incineration plants.
* 200 municipal solid waste gasification plants under construction or in operation globally.
* India: Pune & Nagpur, 68 tons each/day commercial plants employing this technology have been disposing of medical and other hazardous wastes.
* British Airway partner Solena (US based bio-fuel co.) to set up plants that will gasify 1300 tons/day of Londons solid waste to use as ATF.
Challenges in power sector: total installed capacity-2, 14, 000MW; Industrial sector-45%, domestic-22%, agriculture-17% and commercial-8.9%); Transmission & Distribution Loss (India-24%, world average-15%, US & EU-4%, China-7%), Power theft (20,000cr annual loss), under pricing and subsidies. The overall power shortage-8.6% and peak shortage of -9%.
Power sector reform:
1. Power discipline: unbundle by amending states electricity act (central electricity act, 2003 amended)
2. Merchant sale of electricity
3. Integrated energy policy 2031-32
4. 1% cut in consumption Rs1000cr saving in the economy.
Initiatives taken in Power Sector:
* 4UMPP, coal-based of 4000MW: Sasan-MP, Mundra-Gujarat: three units of 800MW commissioned in 2012, Krishnapatnam-A.P, TilaiyaJharkhand.
* Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), 2005: rural electrification program to provide free connection (202lakh achieved by 2012) to BPL household.
* National Grid: inter-regional transmission capacity of 27,750MW connected to Northern, western, eastern and NE region in a synchronous mode operating at the same frequency and same mode with southern region.
* Open Access: buyer to choose supplier & vice-versa at the interstate level is now fully functional, facilitative framework created through the central electricity regulatory commission (CERC), 2008.
* Bachat Lamp Yojana (BLY) Scheme: Replacement of incandescent bulb by CFL (in the long run by LED).
* 11th plan target-62,374MW, achievement: 54,964MW. 12th plan target: 88,537MW.
Other initiatives in energy sector:
* National Energy Fund: 0.1% Cess of turnover in energy products for companies worth Rs100cr.
* National Mission for Enhanced Energy Emission (NMEEE): to save 23 million ton oil equivalent in 5 years.
* Energy Conservation building Code
Energy Security: it means having access to the requisite volumes of energy at affordable prices, i.e., supply must be impervious to disruptions and sufficient quantity must be available in time from variety of sources.
Communication:
1. Telecom: 2nd largest telephone network after China.
National Telecom Policy 2012:
* To secure affordable, reliable and high quality telecom and broadband services across the country.
* One nation-one license across services area.
* One-nation full mobile no. portability and work towards free roaming
* Rural Tele-density from 39- 70% by 2017 and 100% by 2020 (total telephone in 2012-951 connections with 96.7% wireless, urban tele-density-169%, overall- 78.66%)
* Telecom, broadband connectivity as basic necessity and work towards right to broadband.
* Affordable and reliable broadband on demand by 2015 (175mn-2017, 600mn-2020 from 2mbps to 100mbps)
Present status: TRAI begged the total no. of internet subscribers in India as of March 31, 2013 at 164.81 million and broadband penetration-1%; 12mn, 7/8 access internet through mobile, expected to cross 165mn by March 2014. However, comScore put the no. of internet users in India at 74 million. Net users spend the most time on Facebook, followed by LinkedIn and twitter. While the most unique visitors sites is Google, and the most popular site for news is Yahoo.
Broadband policy 2004: 22.8mn internet subscribers including 13.7mn broadband by 2012.
* Substantial transition to new IPv6 by 2020
National Optic Fiber Network (NOFN)-2.5lakh broadband connections to gram panchayat for e-health, e-education, e-governance, funded under universal service obligation fund (USOF)-7310 towers set up by 2012. USOF has also signed an agreement with the BSNL to provide rural wire-line broadband connectivity with a speed of 512Kbps.
Village Public Telephones Scheme has covered 97% of villages.
Two years after the Department of Telecom (DoT) decided to set up a telecom equipment testing lab at the Indian Institute of Science (IISc), Bangalore to address security issues, foreign vendors have now refused to share their design details with the premier academic institute as it could hurt their business interests. This sudden turn of events will now further delay the setting up of a full-fledged Telecom Testing and Security Certification Centre (TTSCC), which should have become fully operational by April 2013. It will also hurt Indias preparedness towards creating the Telecom Security Directorate as mandated by the National Security Council. TTSCC could be established under the DoT.
1. Postal Services: Amongst the largest network in the world in terms of area covered and people served. It has broadly 4 service areas:
2. Communication services letters, post cards
3. Transportation: Parcel logistic post
4. Financial: saving banks, life insurance
5. Premium value added services: speed post, business post, retail post
Project Arrow launched in 2008: IT driven project to modernize the Post Offices to become part of core banking solution and real time banking services, better mail delivery, remittances, insurance, saving, Speed Post-One India One Rate Scheme for just Rs.39 for any consignment weighing up to 50gms (Leasing out land, develop shopping complexes in postal departmental land, etc. are the other initiatives).
Transport: Road, Railways, Waterways and Airways.
Civil Aviation: 15 international airports out of the total 187 airports (manage by the Airport Authority of India, set up in 1994). Construction of airports through PPP: IGI T3 Delhi, Hyderabad, Bangalore and Greater Mumbai and Completely Pvt.-Kolkata & Chennai.
* Operators: 15 scheduled operators including 2 regional and 2 cargos, around 419 aircrafts (Directorate General of Civil Aviation).
* 9th largest in the world with 18% CAGR: 142 million passengers (14mn international) - 5% of travelling population, 1.6 million tons of air cargo.
* Worldwide Revenue-$671bn in 2012, just 1% profit, 2013-1.6% (10.6bn), need 7 to 8% profit to cover capital cost.
19111st flight: Allahabad to Naini, 1947 four service providers
1953Nationalized: Domestic-Indian Airlines & Air India International: merged in 2007-70% completed.
1992Open Sky Policy for Cargo
2003Kingfisher (operation operation from 2005-2012: loss making)
2007Jet Airways-Air Sahara; KFA- Air Deccan; merged.
Issues: Aviation Industry - $20bn debt.
* Strict Entry Rules: At least 5 fleet- Rs 50cr, next 2 fleet-2cr paid up capital, International Route: 5years experienced plus 20 fleet, 10% capacity in route II to be employed in route I (need to fly non-profitable route), Route preferences to national carrier (Paris-exclusive for Air India).
* High Excise duty on ATF: 4-40%, costing 45% operating cost (33% world average). Monopolies of the 4 state own suppliers. Import will save 25-30% of the ATF cost.
* Forged Pilot license: 14, and substandard pilot training schools.
* Air India Problems: Rs 5000-7000cr annual losses and 42,000cr since 2006. Retirement age 60years; large expatriate pilots recruited with 40% higher salary. Ordered 50 Boeing (27 Dreamliner 787) & 40 Airbus aircrafts; 6 Boeing 787 delivered on Jan2013 which constitute 4% of AIs total capacity (Delhi-Paris, Frankfurt, 3 domestic and 1 Standby). Indian Pilots Guild-AI employees (440)-Boeing; Indian Commercial Pilots Association-IA employees (700)-Airbus; strike for parity of pay.
* Dreamliner Boeing 787: 210-290 passengers, 16,000km non-stop, 20% more fuel efficient. But due to overheating of brakes, A/C problems, electrical fires, cracked cockpit window, battery malfunction50 dreamliners were grounded globally.
Steps taken:
* Air India: Rs 30,000cr ($6bn) debt restructuring plan.
* DGCA: to phase out Expatriate pilots in 9 months.
* Direct import of ATF & FDI up to 49%: (Jet Airways-Etihad (24%), Air Asia India, Spice Jet- Emirates/ Tiger Airways, Indigo- Qatar Airways).
* Unbundled services: check-in baggage above 15Kg, preferential seats, meals/snacks, carriage of sporting equipment and musical instruments will bear extra charges.
Railways: Introduced in 1853 between Bombay & Thane: 34Km.
* Freight: 1.025billion metric tons in 2012-13 (china, US & Russia), 2011-12: 969mmt. Earnings: 30% passenger tickets and 70% freight.
* Budget 2013-14: Rs 63,363cr (Revenue-Rs.57, 863cr, 2.3% of GDP): 16 zones.
ZonesHQEarnings: passenger %Goods %Total %
NorthernN. Delhi15911
CentralMumbai CST14810
Southern centralSecunderabad8.38.88.7
Northern centralAllahabad6.78.78.1
Broad gauge1.676mt74%
Meter gauge1mt21%
Narrow gauge0.762mt4%
Major Issues:
* Cross-subsidy: Garibh rath/student concession/passand freight charges & upper class ticket set high.
* Competition from other modes of transport: Road-4-6 lane, expressway & golden quadrilateral & waterway- coastal shipping, pipelines, and cheap airplanes.
Steps required:
* Gauge conversion
* Doubling of existing single lanes
* Electrification
* Pvt. Participation in wagon & coach manufacture
* Running Duranto express-long distance train.
Steps initiated:
1. Dedicated Freight Corridor (DFC):
Eastern DFC 1839 Km: Dankuni, Kolkata-Ludhiana, Punjab (target-2017, WB-66% funding)
Western DFC 1499Km: JNPT Mumbai- Dadri/Rewari, Delhi-UP (target-2016, Japan International Cooperation Agency-77% funding).
1. Adarsh Station: drinking ware, waiting rooms, dormitories (60/980 stations)
2. Anbhumati Coaches: Latest modern milieu
3. Computerized unreserved ticketing system
4. Kisan Vision Project: Cold storage, temperature controlled perishable cargo centers through PPP
5. Linke Holfmann Bush (LHB): Better riding comfort, speed, longer life, amenities, controlled discharge toilet: implemented in 14 Rajdhanis, 12 Shadabdis, and 11 AC Duranto Coaches.
6. Bio-toilets: 8 trains running with 436 bio-toilets, DRDO to complete it by 2016-17.
7. GPS system & RFID (radio frequency identification device) technology for tracking railway trains.
8. Onboard fire-detection & fire fighting equiptment.
Feasibility study underway:
1. DFC: East-West (Kolkata-Mumbai), North-South (Delhi-Chennai), East Corridor (Kharagpur-Vijayawada), South Corridor (Goa-Chennai), and Chennai-Bangalore freight corridor.
2. High Speed Rail Corridors: 160-200Km/hr; High Speed National Rail Authority (NHSRA) Constituted.
* Delhi-Chandigarh-Amritsar
* Pune-Mumbai-Ahmedabad
* Hyderabad-Chennai
* Chennai-Ernakulum
* Howrah-Haldia
* Delhi-Patna
4. Biometric VCD: Drivers Vigilance Telemetry Control System.
Small wrist-watch like device to monitor drivers posture, pulse, etc. constantly. If the driver consumed alcohol and is half asleep in the cabin, station manager would get alarmed and automatically stop the train. Russia has been using for Loco-pilots (train pilots)
1. Train Collision Avoidance System (TCAS): Combination of GPS & Radio Frequency
Applies brakes without pilots and avoid collision of human errors, rain, fog, sabotage
(Anti-Collision Device-Raksha Kavach was invented by Rajaram Bojji and patented by Konkan Railway Corporation Ltd).
IR requires Rs.16, 000cr to implement all these steps.
Kakodkar Committee Railway Safety 1lakhcr
Sam Pitroda Committee on modernization of IR 5.6lakhcr
IR Vision 2020: Annual outlay of Rs 1.4lakhcr is required over a decade with estimated annual gross budgetary support of Rs.50, 000cr by the central govt. need to fix the 15,000 unmanned level crossings which is responsible for 40% of the accident in 2011, in the next 5yrs.
Water Ways: Shipping-95% of Indias trade volume and 68% in terms of value.
Seaports: 13 major ports accounted for 74% of the cargo transport (12 govt. & 1 corporate owned-Ennore port), 187 notified intermediate and minor ports. Two new major port being proposed: Sagar in W.B & in A.P to add 100million tones of capacity.
Commodity transport in terms of volume: POL (petroleum, oil & lubricants)> Container Cargo> Other Cargo> Coal.
Inland Waterways:
NW1: Allahabad-Haldia: 1620Km, 1986
NW2: Sadiya- Dhubri: 891Km, 1988
NW3: Kottapuram-Kollam: 205Km, 1991
NW4: Kakinada-Pondicherry: 1095Km, nov.2008
NW5: Talcher-Dhamra(Brahmani river): 623Km, nov.2008
NW6: Lakhipur-Bhanga (River Barak)-target; 1st phase 2016-17 & 2nd phase 2018-19: 121Km, 2013
Road: NH-2% of the total roads NH/Expressways-70,000Km, State Highway-1,54,522Km: National Highway Authority of India (NHAI)
National Highway Development Project (NHDP);
2. Golden quadrilateral: 5846 completed
3. NS-EW: 7142/6053
4. NHDP phase III-VII: 39809/5959
5. Port connectivity: 380/368
6. SARDP-NE: 388/49
7. Other NHs: 1390/964
8. NH34: 5.5/
Total 55,460/19,239 completed till December 2012.
New Initiatives:
* Engineering Procurement & Construction (EPC): contact for far flung areas not viable under BOT (toll). 100% govt. funding-to reduces cost and time overrun.
* Introduction of Radio Frequency Identification (FRID)
* Less than 5hectare areas not to insist on environment clearance by MoEF.
* Select highway projects to private players under Operate, Maintain and Transfer (OMT).
Urban Infrastructure:
JNNURM (65mission cities) was launched for 7yrs, but it has been extended till April 2014. Its sub-components under the Unban Infrastructure and Governance (UIG) include: Urban renewal, water supply, sanitation, sewerage and solid waste management, urban transport, development of heritage areas, and preservation of water bodies. It has also emphasized on 3 key mandatory pro-poor to enhance the capacity of urban local bodies:
1. Internal earmarking within local body budgets for basic services to the urban poor.
2. Earmarking at least 20-25% of developed land in all housing projects (both pvt. & public) for the economically weaker sections/low income groups.
3. Implementation of seven-point charter for provisioning of 7 basic entitlements/services.
The Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT): a sub-component of the JNNURM for development of infrastructure facilities in all towns and cities other than the 65 Mission Cities covered under its UIG sub-mission. So far it has covered 672 towns and cities under UIDSSMT.
Urban Transport: under JNNURM, proposal for Bus Rapid Transit System (BRTS) have been approved in Ahmedabad, Bhopal, Indore, Jaipur, Pune-Pimpri-Chinchwad, Rajkot, Kolkata, Surat, Vijayawada and Vishakapatnam. Purchase of 15,260 bus have been approved and till nov.2012, more than 12,620 modern intelligent transport system (ITS)-enables low-floor and semi-low-floor buses have been delivered to the states/cities.
Metro Rail Projects: NCR-3rd phase 103.5Km started, Bangalore-42.3Km by dec.2013, Kolkata-14.67Km by 2015, Chennai-46.5Km by 2015, Kochi-25.6Km, Mumbai-42.94Km, Hyderabad-71.16Km and Jaipur-7Km.
Achievements of the govt. in Infrastructure sector in the last few years:
1. Special purpose Vehicle (SPV)
India Infrastructure Finance Company (IIFCL) set up in 2006 for long term projects by providing up to 20% of the project cost both through direct lending to project companies and by refinancing banks and financial institutions. It raised fund both from domestic and international market on the strength of govt.s guarantees. At the end of 12th plan it will become a catalyst for mobilizing resources for financing infrastructure by providing guarantees for bonds issued by private infrastructure companies rather than expanding its direct lending operations. This would enable mobilization of insurance and pension funds, external debt, and household savings.
Infrastructure Debt Fund (IDF): tax free bonds up to Rs.50, 000cr- 1st IDF NBFC set up by ICICI, BoB, CITI, and LIC.
Rural Infrastructure Development Fund (RIDF): RIDF-XIX in 2013-14 to Rs.20, 000cr for warehouse, god-own, cold storage, silos
Viability Gap Funding (VGF): 20% cost to be borne by the govt. with a corpus of Rs.2000cr; 13 new projects qualified under VGF-cold chains and post harvest storage, education, health, and skill development, NIMZ, oil/gas/LNG storage facility, irrigation, telecom, infrastructure in agri. Market
PPP: toll, annuity, VGF, Negative grantBOT-expressway, BOO-Mobile tower, BOOT- highway, DBOT (design built operate transfer), DBFO (design built fund operate), BLT (built lease transfer)
WB report- India received almost half of Pvt. Participation in Infrastructure (PPI) since 2006, in developing countries, and 98% of the total regional investment with a total investment of $20.7 billion in 2011. By end dec.-2012, there were 900 PPP projects in infrastructure sector.
Challenges:
* Resources requirement: 47% pvt.; FDI- decline in inflow in the last few years due to regulatory uncertainties, slower growth, and delays in acquisition of land; Long term resources-Banking, Insurance, Pension
* Pricing: subsidy, under-pricing, cross-subsidization
* PPP model: sufficient?
* Govt. inefficient spender
* Dovetailing- Planning Commission
* Apolitical
## ONGC acquisition of Crude oil asset abroad: (Indian companies investment commitment to date in overseas market-$100billion, actual investment-$25billion)
Overseas oil assets dont constitute energy security-neither ONGC Videsh Limited (OVL) nor its Chinese counterpart actually brings any significant quantities of oil from any of its overseas assets. Most of OVLs overseas oil production is sold in the local or international markets and the company is compensated in cash payments. Gazprom was nominated the sole export agency for gas exports from Sakhalin. As for gas, OVL does not bring to India even a molecule of gas produced in its own fields in Sakhalin, Vietnam or Myanmar. China fares better in this regard, primarily because it has had the foresight to build transnational gas pipelines. Even in the case of producing fields, equity participation is subject to certain contractual terms with the host government. Sharing equity with other partners as in a consortium or joint venture is also subjected to the terms of the consortium or joint venture agreement or the operating agreement between parties.
August: OVL acquired 10% stake in Mozambique gas field from Anadarko Petroleum Corp of US. It also acquired in June, along with OIL, 10% stake in the same block from Videocon Group, and 2 blocks each in Columbia and Bangladesh.
Types of participation:
Production sharing agreements-usually has an express provision with the host government wherein the foreign investor can take his share of production in kind (ownership of the mineral vests with the host government, except in the U.S. impose Domestic Market Obligations where the operator is required to sell part or all the production to the local market). Sometimes, the domestic market has prior claim and only surpluses can be exported. Certainly OVL can exercise its option to take its profit shareex anteand bring the oil or gas to India wherever it is able to do so.
Service contracts- envisage only a pre-determined fee, not a share in production,
* If the circumstances allow it, OVL can swap its equity oil with other buyers, for example; it can swap Sakhalin/Venezuelan oil with Japan and divert oil bound for Japan from the Persian Gulf region to our ports.
* When international prices of crude/gas reign high, a risk-free asset whose production/development costs are reasonable can make an excellent investment option, provided we have not paid a higher-than-competitive price for acquiring the asset.
References: Indian Economy by Dutt & Sundaram and Ramesh Singh, India year book, Economic Survey, The Hindu, Times of India, Yojan and, Union Budget.
Ringthing Hongchui
Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
Infrastructure is the basic facilities needed for the functioning of a community or society. In other words, it is the basic physical or organizational structures needed for the operation of a society or enterprises. The 12th 5YP envisaged the investment requirement in infrastructure to the tune of $1trillion, with 47% of this fund coming from the private sector.
1. Physical infrastructure:
* Energy: coal, oil and natural gas, hydro, nuclear and renewable.
* Transport: roadway, railway, airway and waterway.
* Communication: telecom and postal services.
* Urban: transport housing and civic amenities.
2. Social infrastructure: (I will not cover this part)
* Education
* Health
Energy: India will produce 71% of its energy needs domestically by 2016-17, and 69% by 2021-22. The remaining will be met through import.
Integrated energy policy (IEP) 2031-32
Sector2003-04 (%)2031-32 (%)Power generation 2012 (%), total-2,14,000MW
Coal5142-6557 (1, 20,000MW)
Oil3628-330.6 (1,190MW)
Natural gas97-129 (18,900MW)
Hydro23-418.5 (39,3240)
Nuclear15-62.02 (4780)
Renewable5-712.5 (28,000MW)
Coal: Indias reserve as on March, 2012 was 293.5billion tones (40% proven and some 40bn tons proven) & Domestic production-540million tons in 2011-12 (import-100mn tons) need to increased to 795mn tons by 2016-17; even then there will be import need of 185mn tons.
* IEP says present potential to last for 40years.
* Mines & Mineral (development and regulation) bill 2011 for simple and transparent mechanism for granting of mining lease or prospecting license through competitive bidding; Coal forecasting, private participation and captive mining for merchant uses.
* Pricing change from useful heat value (UHV) to Gross Calorific Value (GCV) in 20012 (grade I-VII: 15% ash & moisture content) - mainly Bituminous coal. Need to invest in super-critical boiler technology.
* Liquefaction of coal: gasification to liquefaction (Sasol process in S. Africa and Fischer Tropsch process in Germany).
Oil & Natural Gas: 73% import dependent, 90% import by 2031-32. Indias Refining Capacity 215mmt in 2013, exporting 60.84mmt of petroleum products worth $50bn (20 refineries: 17 public & 3 Pvt.).
Steps taken by the govt.:
* New Exploration Licensing Policy (NELP), 1999- 177 oil & N. Gas discoveries in 39 NELP blocks.
* Deregulation of prices: petrol, diesel-dual pricing, L.P.G- 9 cylinders/year, kerosene-direct cash transfer through ADHAAR, underway; import parity pricing system underway.
* Pipeline Network (16 crude pipelines- 106MMT).
* Vision 2015: Piped Natural Gas by re-gasification of Liquefied Natural Gas to 200 cities.
* Rajiv Gandhi Gramin LPG Vitaran Yojana, 2009- 75% population by 2015 -5.5cr new connections
* Rangarajan formula on gas pricing: KG-D6 gas price to go up to $8.4mbtu from $4.2mbtu by April 2014.
* International effort: India-Oman (1100km) undersea pipeline, Turkmenistan-Afghanistan-Pakistan-India (TAPI-1700km) pipeline to transport 3billion cubic feet of natural gas per day.
* Lost opportunities: Iran-Pakistan-India (IPI) pipeline and India-Bangladesh-Myanmar natural gas pipeline.
(Sweden has declared that they will have nothing to do with oil by 2050).
Hydro: potential of around 1, 45,000MW: environmental, and relief and rehabilitation issues. (157 projects-57,672MW, 38-mega dam with 320MW capacity, 12% free to Arunachal Pradesh).
Nuclear: 20 power plant running 4780MW, two at Kudankulam (2000MW) yet to connect to grid, five under construction (3300MW)
* Target-20,000MW by 2022 and 63,000MW by 2032.
* Signed Civil Nuclear Energy Treaty with 9 countries (US, Canada, Russia, France, Kazakhstan, Mongolia, S. Korea, Argentina and Namibia).
Major Issue: Safety and Environment (Sweden, Germany and Japan will discard Nuclear Energy by 2040).
Other sources:
Coal Bed Methane (CBM): 4th largest proven reserved. 33 exploration block- Assam, Gujarat, Andhra Pradesh, Chhattisgarh, M.P, T.N, Odisha, Rajasthan Production started 0.28mmscmd (million metric standard cubic meters per day).
Gas/Chathrate Hydrates: Methane Gas trapped inside ice in coastal sea, ocean sediments, polar seabed, and permafrost (around 300mt deep in temperate region and nearer in polar region).
Shale Gas: 2012 draft policy for the exploration and exploitation: Shale Gas in India: look before you leap. It is being considered by a group of ministers. India is believed to have technically recoverable resources of 96 trillion cubic feet (tcf) of wet shale gas.
* Ministry of Petroleum and Natural Gas (MoPNG) has identified 6 basins as potentially shale gas bearing: Cambay, Assam-Arakan, Gondwana, Krishna-Godavaari, Kaveri and the Indo-Gangetic basin. MoPNG has signed a MoU with the Deptt.of states USA.
* US geological survey: India has recoverable resources of 6.1 trillion cubic feet (tcf) in 3 of the 26 sedimentary basins.
* ONGC: 34 tcf in Damodar basin alone with 8tcf recoverable (47tcf- total conventional reserves)
* Procedure: hydro-fraction or fracking- horizontal drilling by injecting a mixture of water, chemicals (guar gum), and sand into the well at very high pressures (8000psi-pounds per square inch) to create a no. of fissures in the rock to release the gas. It requires minimum land area of 80-160 acres and 3-4 million gallons per well (11,000 15, 000 cubic mts of water).
* TERI- india will be a water stressed country by 2030, so the result might not be as dynamic as in the US.
* India-waterportal.org: next 15-20 years, consumption of water will increase by 50%, supply by 5-10%; resulting in to the scarcity of water.
* Possibility of contamination of aquifer (both surface and sub-surface) from hydro-fracturing fluid disposal.
Nuclear Fusion: ITER-international thermonuclear experimental reactor, Cadarache, France; started in 2005-07 to be completed by 2018. It has 7 member countries: Japan, China, India, S. Korea, US, Russia and EU. 50MW input power to produce 500MW output.
Renewable Energy: Potential 89,760MW, present installed capacity-28,000MW & plan to double renewable energy generation by 2017.
Small Hydro: less than 25MW, 3496MW installed with potential of 15,000MW.
1. Bio-fuel: 5% (earlier 10%) blending target, Brazil-25%.
* Bio-diesel (mono alkyl esters of long chain fatty acid): jatropha, karanj, Mahua, Soyabean oil
* Ethanol (water soluble alcohol30% oxygen): Bagasse (2239/5000MW), Corn, Sorghum, Potatoes, Wheat, Sugarcane.
2. Solar: Photo Voltaic (363MW) and thermal (800MW) - 1000MW by 2013
* JN National Solar Mission 20,000MW grid connection by 2022.
* Major issue: Gallium, Arsenic, Selenium, Indium and Tellurium getting depleted.
Wind: more than 18,000MW in operation, and total capacity of 49,130MW.
* Rare Earth Elements (REE) use in magnets in Wind Mills is available mainly in China.
Tidal and Wave Energy: ocean currents are the store house of infinite energy. West coast of India is the most favorable region for harnessing this energy.
Geothermal Energy: when the Magma from the interior of earth comes out on the surface, tremendous heat is released. This heat energy can successfully be tapped and converted to electrical energy. Also the hot water that gushes out through the geyser wells is used in the generation of thermal energy. Himalayan region has major potential.
Bio-energy/ Biomass: energy derived from biological products which include agricultural residues, municipal, industrial and other wastes (1200MW/17,000MW).
Waste to Energy (WtE) incineration Okhla 16MW has taken off but yet to connect to Grid, Ghazipur- 10MW, Narela-Bawana 36MW
Ministry of New and Renewable Energys (MNRE) flagship program on energy recovery from urban and industrial waste, announced in May 2011 aimed to generate 84MW of power from waste by providing subsidies upto Rs 10cr to developers.
Negative effect of WtE incineration:
1. WHO: Dioxins are one of the dirty Dozen a group of dangerous chemicals known as persistent organic pollutants (POPs) - potential of causing cancer.
Central Pollution Control Board and Chennai based Non-profit org. Global Alliance for Incinerator Alternatives (GAIA) revealed life threatening levels of particulates and toxic chemicals including Dioxins which is 30-40 times above permissible level in Okhla, Delhi. Those who live close to incinerator since 2009 are experiencing incidences of cancer and low birth weight.
1. The United States environmental protection agency (USEPA) recognizes incinerators emit 2.5 times more carbon dioxide per MW than coal fired power plants.
2. Cost twice the cost of Nuclear Energy, and incinerator relies heavily on govt. fiscal and financial incentives.
3. US largest WtE company, Covanta, recently announced its plan to conclude operations in the U.K., whereas, the Municipal Corporation of Hyderabad announced its plan to construct Indias largest incinerator using Covantas technology. Europe is committed to ending the land-filling and incineration of recyclable waste by 2020. Aiming instead to implement a resource-efficiency strategy that will boost a circular economy; where, all waste is treated as a resource rather than requiring expensive infrastructure to dispose of it.
(Sustainable waste management option; prevent, reuse and recycle).
Alternative: Plasma Gasification of municipal waste.
* Yoshii, Japan 24tonne per day running for decade released less than 1% to that of incineration plants.
* 200 municipal solid waste gasification plants under construction or in operation globally.
* India: Pune & Nagpur, 68 tons each/day commercial plants employing this technology have been disposing of medical and other hazardous wastes.
* British Airway partner Solena (US based bio-fuel co.) to set up plants that will gasify 1300 tons/day of Londons solid waste to use as ATF.
Challenges in power sector: total installed capacity-2, 14, 000MW; Industrial sector-45%, domestic-22%, agriculture-17% and commercial-8.9%); Transmission & Distribution Loss (India-24%, world average-15%, US & EU-4%, China-7%), Power theft (20,000cr annual loss), under pricing and subsidies. The overall power shortage-8.6% and peak shortage of -9%.
Power sector reform:
1. Power discipline: unbundle by amending states electricity act (central electricity act, 2003 amended)
2. Merchant sale of electricity
3. Integrated energy policy 2031-32
4. 1% cut in consumption Rs1000cr saving in the economy.
Initiatives taken in Power Sector:
* 4UMPP, coal-based of 4000MW: Sasan-MP, Mundra-Gujarat: three units of 800MW commissioned in 2012, Krishnapatnam-A.P, TilaiyaJharkhand.
* Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), 2005: rural electrification program to provide free connection (202lakh achieved by 2012) to BPL household.
* National Grid: inter-regional transmission capacity of 27,750MW connected to Northern, western, eastern and NE region in a synchronous mode operating at the same frequency and same mode with southern region.
* Open Access: buyer to choose supplier & vice-versa at the interstate level is now fully functional, facilitative framework created through the central electricity regulatory commission (CERC), 2008.
* Bachat Lamp Yojana (BLY) Scheme: Replacement of incandescent bulb by CFL (in the long run by LED).
* 11th plan target-62,374MW, achievement: 54,964MW. 12th plan target: 88,537MW.
Other initiatives in energy sector:
* National Energy Fund: 0.1% Cess of turnover in energy products for companies worth Rs100cr.
* National Mission for Enhanced Energy Emission (NMEEE): to save 23 million ton oil equivalent in 5 years.
* Energy Conservation building Code
Energy Security: it means having access to the requisite volumes of energy at affordable prices, i.e., supply must be impervious to disruptions and sufficient quantity must be available in time from variety of sources.
Communication:
1. Telecom: 2nd largest telephone network after China.
National Telecom Policy 2012:
* To secure affordable, reliable and high quality telecom and broadband services across the country.
* One nation-one license across services area.
* One-nation full mobile no. portability and work towards free roaming
* Rural Tele-density from 39- 70% by 2017 and 100% by 2020 (total telephone in 2012-951 connections with 96.7% wireless, urban tele-density-169%, overall- 78.66%)
* Telecom, broadband connectivity as basic necessity and work towards right to broadband.
* Affordable and reliable broadband on demand by 2015 (175mn-2017, 600mn-2020 from 2mbps to 100mbps)
Present status: TRAI begged the total no. of internet subscribers in India as of March 31, 2013 at 164.81 million and broadband penetration-1%; 12mn, 7/8 access internet through mobile, expected to cross 165mn by March 2014. However, comScore put the no. of internet users in India at 74 million. Net users spend the most time on Facebook, followed by LinkedIn and twitter. While the most unique visitors sites is Google, and the most popular site for news is Yahoo.
Broadband policy 2004: 22.8mn internet subscribers including 13.7mn broadband by 2012.
* Substantial transition to new IPv6 by 2020
National Optic Fiber Network (NOFN)-2.5lakh broadband connections to gram panchayat for e-health, e-education, e-governance, funded under universal service obligation fund (USOF)-7310 towers set up by 2012. USOF has also signed an agreement with the BSNL to provide rural wire-line broadband connectivity with a speed of 512Kbps.
Village Public Telephones Scheme has covered 97% of villages.
Two years after the Department of Telecom (DoT) decided to set up a telecom equipment testing lab at the Indian Institute of Science (IISc), Bangalore to address security issues, foreign vendors have now refused to share their design details with the premier academic institute as it could hurt their business interests. This sudden turn of events will now further delay the setting up of a full-fledged Telecom Testing and Security Certification Centre (TTSCC), which should have become fully operational by April 2013. It will also hurt Indias preparedness towards creating the Telecom Security Directorate as mandated by the National Security Council. TTSCC could be established under the DoT.
1. Postal Services: Amongst the largest network in the world in terms of area covered and people served. It has broadly 4 service areas:
2. Communication services letters, post cards
3. Transportation: Parcel logistic post
4. Financial: saving banks, life insurance
5. Premium value added services: speed post, business post, retail post
Project Arrow launched in 2008: IT driven project to modernize the Post Offices to become part of core banking solution and real time banking services, better mail delivery, remittances, insurance, saving, Speed Post-One India One Rate Scheme for just Rs.39 for any consignment weighing up to 50gms (Leasing out land, develop shopping complexes in postal departmental land, etc. are the other initiatives).
Transport: Road, Railways, Waterways and Airways.
Civil Aviation: 15 international airports out of the total 187 airports (manage by the Airport Authority of India, set up in 1994). Construction of airports through PPP: IGI T3 Delhi, Hyderabad, Bangalore and Greater Mumbai and Completely Pvt.-Kolkata & Chennai.
* Operators: 15 scheduled operators including 2 regional and 2 cargos, around 419 aircrafts (Directorate General of Civil Aviation).
* 9th largest in the world with 18% CAGR: 142 million passengers (14mn international) - 5% of travelling population, 1.6 million tons of air cargo.
* Worldwide Revenue-$671bn in 2012, just 1% profit, 2013-1.6% (10.6bn), need 7 to 8% profit to cover capital cost.
19111st flight: Allahabad to Naini, 1947 four service providers
1953Nationalized: Domestic-Indian Airlines & Air India International: merged in 2007-70% completed.
1992Open Sky Policy for Cargo
2003Kingfisher (operation operation from 2005-2012: loss making)
2007Jet Airways-Air Sahara; KFA- Air Deccan; merged.
Issues: Aviation Industry - $20bn debt.
* Strict Entry Rules: At least 5 fleet- Rs 50cr, next 2 fleet-2cr paid up capital, International Route: 5years experienced plus 20 fleet, 10% capacity in route II to be employed in route I (need to fly non-profitable route), Route preferences to national carrier (Paris-exclusive for Air India).
* High Excise duty on ATF: 4-40%, costing 45% operating cost (33% world average). Monopolies of the 4 state own suppliers. Import will save 25-30% of the ATF cost.
* Forged Pilot license: 14, and substandard pilot training schools.
* Air India Problems: Rs 5000-7000cr annual losses and 42,000cr since 2006. Retirement age 60years; large expatriate pilots recruited with 40% higher salary. Ordered 50 Boeing (27 Dreamliner 787) & 40 Airbus aircrafts; 6 Boeing 787 delivered on Jan2013 which constitute 4% of AIs total capacity (Delhi-Paris, Frankfurt, 3 domestic and 1 Standby). Indian Pilots Guild-AI employees (440)-Boeing; Indian Commercial Pilots Association-IA employees (700)-Airbus; strike for parity of pay.
* Dreamliner Boeing 787: 210-290 passengers, 16,000km non-stop, 20% more fuel efficient. But due to overheating of brakes, A/C problems, electrical fires, cracked cockpit window, battery malfunction50 dreamliners were grounded globally.
Steps taken:
* Air India: Rs 30,000cr ($6bn) debt restructuring plan.
* DGCA: to phase out Expatriate pilots in 9 months.
* Direct import of ATF & FDI up to 49%: (Jet Airways-Etihad (24%), Air Asia India, Spice Jet- Emirates/ Tiger Airways, Indigo- Qatar Airways).
* Unbundled services: check-in baggage above 15Kg, preferential seats, meals/snacks, carriage of sporting equipment and musical instruments will bear extra charges.
Railways: Introduced in 1853 between Bombay & Thane: 34Km.
* Freight: 1.025billion metric tons in 2012-13 (china, US & Russia), 2011-12: 969mmt. Earnings: 30% passenger tickets and 70% freight.
* Budget 2013-14: Rs 63,363cr (Revenue-Rs.57, 863cr, 2.3% of GDP): 16 zones.
ZonesHQEarnings: passenger %Goods %Total %
NorthernN. Delhi15911
CentralMumbai CST14810
Southern centralSecunderabad8.38.88.7
Northern centralAllahabad6.78.78.1
Broad gauge1.676mt74%
Meter gauge1mt21%
Narrow gauge0.762mt4%
Major Issues:
* Cross-subsidy: Garibh rath/student concession/passand freight charges & upper class ticket set high.
* Competition from other modes of transport: Road-4-6 lane, expressway & golden quadrilateral & waterway- coastal shipping, pipelines, and cheap airplanes.
Steps required:
* Gauge conversion
* Doubling of existing single lanes
* Electrification
* Pvt. Participation in wagon & coach manufacture
* Running Duranto express-long distance train.
Steps initiated:
1. Dedicated Freight Corridor (DFC):
Eastern DFC 1839 Km: Dankuni, Kolkata-Ludhiana, Punjab (target-2017, WB-66% funding)
Western DFC 1499Km: JNPT Mumbai- Dadri/Rewari, Delhi-UP (target-2016, Japan International Cooperation Agency-77% funding).
1. Adarsh Station: drinking ware, waiting rooms, dormitories (60/980 stations)
2. Anbhumati Coaches: Latest modern milieu
3. Computerized unreserved ticketing system
4. Kisan Vision Project: Cold storage, temperature controlled perishable cargo centers through PPP
5. Linke Holfmann Bush (LHB): Better riding comfort, speed, longer life, amenities, controlled discharge toilet: implemented in 14 Rajdhanis, 12 Shadabdis, and 11 AC Duranto Coaches.
6. Bio-toilets: 8 trains running with 436 bio-toilets, DRDO to complete it by 2016-17.
7. GPS system & RFID (radio frequency identification device) technology for tracking railway trains.
8. Onboard fire-detection & fire fighting equiptment.
Feasibility study underway:
1. DFC: East-West (Kolkata-Mumbai), North-South (Delhi-Chennai), East Corridor (Kharagpur-Vijayawada), South Corridor (Goa-Chennai), and Chennai-Bangalore freight corridor.
2. High Speed Rail Corridors: 160-200Km/hr; High Speed National Rail Authority (NHSRA) Constituted.
* Delhi-Chandigarh-Amritsar
* Pune-Mumbai-Ahmedabad
* Hyderabad-Chennai
* Chennai-Ernakulum
* Howrah-Haldia
* Delhi-Patna
4. Biometric VCD: Drivers Vigilance Telemetry Control System.
Small wrist-watch like device to monitor drivers posture, pulse, etc. constantly. If the driver consumed alcohol and is half asleep in the cabin, station manager would get alarmed and automatically stop the train. Russia has been using for Loco-pilots (train pilots)
1. Train Collision Avoidance System (TCAS): Combination of GPS & Radio Frequency
Applies brakes without pilots and avoid collision of human errors, rain, fog, sabotage
(Anti-Collision Device-Raksha Kavach was invented by Rajaram Bojji and patented by Konkan Railway Corporation Ltd).
IR requires Rs.16, 000cr to implement all these steps.
Kakodkar Committee Railway Safety 1lakhcr
Sam Pitroda Committee on modernization of IR 5.6lakhcr
IR Vision 2020: Annual outlay of Rs 1.4lakhcr is required over a decade with estimated annual gross budgetary support of Rs.50, 000cr by the central govt. need to fix the 15,000 unmanned level crossings which is responsible for 40% of the accident in 2011, in the next 5yrs.
Water Ways: Shipping-95% of Indias trade volume and 68% in terms of value.
Seaports: 13 major ports accounted for 74% of the cargo transport (12 govt. & 1 corporate owned-Ennore port), 187 notified intermediate and minor ports. Two new major port being proposed: Sagar in W.B & in A.P to add 100million tones of capacity.
Commodity transport in terms of volume: POL (petroleum, oil & lubricants)> Container Cargo> Other Cargo> Coal.
Inland Waterways:
NW1: Allahabad-Haldia: 1620Km, 1986
NW2: Sadiya- Dhubri: 891Km, 1988
NW3: Kottapuram-Kollam: 205Km, 1991
NW4: Kakinada-Pondicherry: 1095Km, nov.2008
NW5: Talcher-Dhamra(Brahmani river): 623Km, nov.2008
NW6: Lakhipur-Bhanga (River Barak)-target; 1st phase 2016-17 & 2nd phase 2018-19: 121Km, 2013
Road: NH-2% of the total roads NH/Expressways-70,000Km, State Highway-1,54,522Km: National Highway Authority of India (NHAI)
National Highway Development Project (NHDP);
2. Golden quadrilateral: 5846 completed
3. NS-EW: 7142/6053
4. NHDP phase III-VII: 39809/5959
5. Port connectivity: 380/368
6. SARDP-NE: 388/49
7. Other NHs: 1390/964
8. NH34: 5.5/
Total 55,460/19,239 completed till December 2012.
New Initiatives:
* Engineering Procurement & Construction (EPC): contact for far flung areas not viable under BOT (toll). 100% govt. funding-to reduces cost and time overrun.
* Introduction of Radio Frequency Identification (FRID)
* Less than 5hectare areas not to insist on environment clearance by MoEF.
* Select highway projects to private players under Operate, Maintain and Transfer (OMT).
Urban Infrastructure:
JNNURM (65mission cities) was launched for 7yrs, but it has been extended till April 2014. Its sub-components under the Unban Infrastructure and Governance (UIG) include: Urban renewal, water supply, sanitation, sewerage and solid waste management, urban transport, development of heritage areas, and preservation of water bodies. It has also emphasized on 3 key mandatory pro-poor to enhance the capacity of urban local bodies:
1. Internal earmarking within local body budgets for basic services to the urban poor.
2. Earmarking at least 20-25% of developed land in all housing projects (both pvt. & public) for the economically weaker sections/low income groups.
3. Implementation of seven-point charter for provisioning of 7 basic entitlements/services.
The Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT): a sub-component of the JNNURM for development of infrastructure facilities in all towns and cities other than the 65 Mission Cities covered under its UIG sub-mission. So far it has covered 672 towns and cities under UIDSSMT.
Urban Transport: under JNNURM, proposal for Bus Rapid Transit System (BRTS) have been approved in Ahmedabad, Bhopal, Indore, Jaipur, Pune-Pimpri-Chinchwad, Rajkot, Kolkata, Surat, Vijayawada and Vishakapatnam. Purchase of 15,260 bus have been approved and till nov.2012, more than 12,620 modern intelligent transport system (ITS)-enables low-floor and semi-low-floor buses have been delivered to the states/cities.
Metro Rail Projects: NCR-3rd phase 103.5Km started, Bangalore-42.3Km by dec.2013, Kolkata-14.67Km by 2015, Chennai-46.5Km by 2015, Kochi-25.6Km, Mumbai-42.94Km, Hyderabad-71.16Km and Jaipur-7Km.
Achievements of the govt. in Infrastructure sector in the last few years:
1. Special purpose Vehicle (SPV)
India Infrastructure Finance Company (IIFCL) set up in 2006 for long term projects by providing up to 20% of the project cost both through direct lending to project companies and by refinancing banks and financial institutions. It raised fund both from domestic and international market on the strength of govt.s guarantees. At the end of 12th plan it will become a catalyst for mobilizing resources for financing infrastructure by providing guarantees for bonds issued by private infrastructure companies rather than expanding its direct lending operations. This would enable mobilization of insurance and pension funds, external debt, and household savings.
Infrastructure Debt Fund (IDF): tax free bonds up to Rs.50, 000cr- 1st IDF NBFC set up by ICICI, BoB, CITI, and LIC.
Rural Infrastructure Development Fund (RIDF): RIDF-XIX in 2013-14 to Rs.20, 000cr for warehouse, god-own, cold storage, silos
Viability Gap Funding (VGF): 20% cost to be borne by the govt. with a corpus of Rs.2000cr; 13 new projects qualified under VGF-cold chains and post harvest storage, education, health, and skill development, NIMZ, oil/gas/LNG storage facility, irrigation, telecom, infrastructure in agri. Market
PPP: toll, annuity, VGF, Negative grantBOT-expressway, BOO-Mobile tower, BOOT- highway, DBOT (design built operate transfer), DBFO (design built fund operate), BLT (built lease transfer)
WB report- India received almost half of Pvt. Participation in Infrastructure (PPI) since 2006, in developing countries, and 98% of the total regional investment with a total investment of $20.7 billion in 2011. By end dec.-2012, there were 900 PPP projects in infrastructure sector.
Challenges:
* Resources requirement: 47% pvt.; FDI- decline in inflow in the last few years due to regulatory uncertainties, slower growth, and delays in acquisition of land; Long term resources-Banking, Insurance, Pension
* Pricing: subsidy, under-pricing, cross-subsidization
* PPP model: sufficient?
* Govt. inefficient spender
* Dovetailing- Planning Commission
* Apolitical
## ONGC acquisition of Crude oil asset abroad: (Indian companies investment commitment to date in overseas market-$100billion, actual investment-$25billion)
Overseas oil assets dont constitute energy security-neither ONGC Videsh Limited (OVL) nor its Chinese counterpart actually brings any significant quantities of oil from any of its overseas assets. Most of OVLs overseas oil production is sold in the local or international markets and the company is compensated in cash payments. Gazprom was nominated the sole export agency for gas exports from Sakhalin. As for gas, OVL does not bring to India even a molecule of gas produced in its own fields in Sakhalin, Vietnam or Myanmar. China fares better in this regard, primarily because it has had the foresight to build transnational gas pipelines. Even in the case of producing fields, equity participation is subject to certain contractual terms with the host government. Sharing equity with other partners as in a consortium or joint venture is also subjected to the terms of the consortium or joint venture agreement or the operating agreement between parties.
August: OVL acquired 10% stake in Mozambique gas field from Anadarko Petroleum Corp of US. It also acquired in June, along with OIL, 10% stake in the same block from Videocon Group, and 2 blocks each in Columbia and Bangladesh.
Types of participation:
Production sharing agreements-usually has an express provision with the host government wherein the foreign investor can take his share of production in kind (ownership of the mineral vests with the host government, except in the U.S. impose Domestic Market Obligations where the operator is required to sell part or all the production to the local market). Sometimes, the domestic market has prior claim and only surpluses can be exported. Certainly OVL can exercise its option to take its profit shareex anteand bring the oil or gas to India wherever it is able to do so.
Service contracts- envisage only a pre-determined fee, not a share in production,
* If the circumstances allow it, OVL can swap its equity oil with other buyers, for example; it can swap Sakhalin/Venezuelan oil with Japan and divert oil bound for Japan from the Persian Gulf region to our ports.
* When international prices of crude/gas reign high, a risk-free asset whose production/development costs are reasonable can make an excellent investment option, provided we have not paid a higher-than-competitive price for acquiring the asset.
References: Indian Economy by Dutt & Sundaram and Ramesh Singh, India year book, Economic Survey, The Hindu, Times of India, Yojan and, Union Budget.
Ringthing Hongchui
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