Saturday, August 13, 2016

India's 70th Independence Day: Is "Make in India" All Hype?

Some of Prime Minister Narendra Modi's supporters claim that his "Make in India" campaign has brought India to the verge of becoming a manufacturing behemoth 69 years after the nation's independence. Others claim India is already a manufacturing powerhouse. Let's examine these claims based on data.

Manufacturing Ranking:

While India now ranks 6th in the world in terms of total manufacturing output, it still sits at a very low 142nd position terms of manufacturing value added per capita, according to the United Nations Industrial Development Organization's Industrial Development Report 2016.  Pakistan's manufacturing value added is ranked 146th by the same report.


Manufacturing Output:

India's 3% share of the world's total manufacturing output puts it at a distant sixth position behind China's 24%, United States' 17%,  Japan's 16%, Germany's 7% and South Korea's 4%.

The UNIDO data shows that India's manufacturing value added (MVA) per capita at constant 2005 prices increased from US$155.73 in 2005 to $168.42 in 2014.   However, as percentage of GDP at constant 2005 prices in US$, India's MVA decreased from 15.10% in 2005 to 13.85% in 2014

UNIDO reports that Pakistan manufacturing value added (MVA) per capita at constant 2005 prices increased from US$135.03 in 2005 to $143.84 in 2014. Its  MVA as percentage of GDP at constant 2005 prices in US$ decreased from 18.05% in 2005 to 17.41% in 2014.

India's manufacturing output declined 0.7% in April-June 2016-17

Make in India:

Prime Minister Narendra Modi has recognized how far behind India is in the manufacturing sector. His government's highly publicized "Make in India" is designed to Change that.

What does India, or for that matter any other developing country, need to boost its manufacturing output? Most experts agree on two essential pre-requisites for industrial development:

1. Energy and Infrastructure

2. Skilled Manpower

China's rapid industrialization over the last few decades has shown that the focus must be on the above two to achieve desired results. Has India learned from the Chinese experience? Let's examine this question.

Energy and Infrastructure Development:

"Infrastructure is the biggest hurdle to the ambitious Make in India program of the government," Standard and Poor Global Ratings Credit Analyst Abhishek Dangra told reporters on a conference call,  according to India's Economic Times publication.

"The government is scaling up spending, but its heavy debt burden could derail its ambitions to improve public infrastructure," the Standard and Poor report said.

India suffers from huge energy deficit. Over 300 million of India’s 1.25 billion people live without electricity.  Another 250 million get only spotty power from India’s aging grid, with availability limited to three or four hours a day, according to an MIT Energy Report. The lack of electricity affects rural and urban areas alike, limiting efforts to advance both living standards and the country’s manufacturing sector.

Skilled Manpower:

“India doesn’t have a labor shortage—it has a skilled labor shortage,” said Tom Captain, global aerospace and defense industry leader at Deloitte Touche Tohmatsu, according to a Wall Street Journal report.

The WSJ report said that over 80% of engineers in India are “unemployable,” according to Aspiring Minds, an Indian employability assessment firm that did a a study of 150,000 engineering students at 650 engineering colleges in the country.

NPR's Julie McCarthy reported recently that ten million Indians enter the workforce every year. But according to the Labour Bureau, eight labor-intensive sectors, including automobiles, created only 135,000 jobs last year, the lowest in seven years.

Impact on Agriculture: 

Prime Minister Modi's focus on manufacturing is talking away resources and attention from India's farmers who are killing themselves at a rate of one every 30 minutes.

Majority of Indian farmers depend on rain to grow crops, making them highly vulnerable to changes in weather patterns. As a comparison, the percentage of irrigated agricultural land in Pakistan is twice that India.

More than half of India's labor force is engaged in agriculture. Value added per capita is among the lowest in the world. Pakistan's agriculture value added per capita is about twice India's. This is the main cause of high levels of poverty across India.

Chinese Experience:

China has shown that it is possible to make huge strides in manufacturing while at the same time achieve high productivity levels in agriculture.

On the manufacturing front, China has taken care of the basics like energy, infrastructure and skilled manpower development to achieve phenomenal growth.

As part of the China-Pakistan Economic Corridor (CPEC) development, Pakistanis are learning from the Chinese to replicate success in manufacturing.

The first phases of CPEC are focused on building power plants, gas pipelines, rail lines, roads and ports at a cost of $46 billion. At the same time, China and Pakistan are also focussing on skills training via vocational schools and Pakistan-China Education Corridor. These projects will lay the foundation necessary to ramp up manufacturing in Pakistan.

Summary:

Both India and Pakistan want to emulate the success of China in the manufacturing sector. The Chinese experience has shown that development of energy, infrastructure and skilled labor are essential to achieve their manufacturing ambitions. The South Asians must move beyond hype to do the hard work necessary for it. Pakistan is working with China via CPEC to make progress toward becoming a manufacturing powerhouse.

Related Links:

Haq's Musings

Auto Industry in India and Pakistan

UN Industrial Development Report 2016

Indian Farmer Suicides

China-Pakistan Economic Corridor

Robust Energy Demand Growth in Pakistan

Human Capital Development in Pakistan


34 comments:

Mohsin H. said...

Good analysis, Sir!

Another issue is their red tape which Modi has not been able to cut through. Or the issue with the SMEs which, despite all the great press, have been a bit of a drag what with all the resistance to global standards!

Riaz Haq said...

Mohsin H.: "Good analysis, Sir!"

Meanwhile, India's manufacturing output is down 0.7% in April-June quarter and its exports are down 6.8%. Exports fell in July by 6.84% to $21.7 billion. Exports have declined for 20 of the past 21 months. India's power generation growth down to 1.6% in July lowest in yrs.

https://pbs.twimg.com/media/CptgeFVUAAEkVEz.jpg:large

https://pbs.twimg.com/media/Cpqaq3HXYAAfMBJ.jpg:large

https://pbs.twimg.com/media/CpjY8WfVYAEDM7K.jpg:large

Joseph Panchal said...

The "Make in India" is a seed that was recently planted. Proper conditions like the GST, Labor Laws and Training need to go through the legislative process. The germination and fruit bearing will come.

Asma said...

The MIT 10/2015 report you cite is a lengthy one and what you have mentioned from it is duly noted. The research was done from pre Modi to 1 year post Modi. Here is the conclusion:-

Paradoxically, the sheer size of the task ahead—the fact that India is in the early stages of upgrading and modernizing its energy system—is in some ways an advantage. It happens to be embarking on its modernization phase at a time when prices for renewable-energy generation, and for the technology to make it work at the local level, are starting to rival prices for traditional fossil-fuel-generated power.

BMW, for example, said earlier this year that it will build a solar plant to meet 20 percent of the power demand at its factory near Chennai. Indian Railways, which operates the most extensive railroad system in the world and is the nation’s largest employer, plans to build a gigawatt of solar capacity in the next five years. By avoiding the cost of providing universal, grid-based electricity, India can concentrate on what works best for specific locations and specific needs. Every microgrid and local solar system deployed reduces by a fraction the need to extend the grid; every new renewable-energy system installed by a business or factory reduces the pressure to build ultra-mega power plants.

Ananda Tushar said...

American military manufacturer Lockheed Martin could soon be producing F-16 fighters in an assembly line based in India, taking advantage of the new liberalised FDI conditions announced recently. India will also become a platform for export of F16s worldwide after technology transfer terms are negotiated all part of the Make in India thrust.
TATA collaborating with GE and Lockheed Martin will train engineers for this purpose. The government has earmarked $3.5 billion through private public partnership to overcome the skill deficit.

Anonymous said...

F 16 is a plane being phased out in the US and over 40 years old.the tot on offer is less than what we get from Russia for Su 30 mki.

US government are unreliable we should stick with Russia Israel and France and only buy things these countries can't offer like p8 Poseidon and transport planes line c 17...

Riaz Haq said...

#India redfaced as its independence day video shows #Pakistan’s #JF17 jets photoshopped with tricolor via @htTweets

http://www.hindustantimes.com/india-news/culture-ministry-video-features-pakistan-s-jf-17-jets/story-LnWQfOze4EbL2Ne5swuS0N.html

The culture ministry was embarrassed on Friday when social media users pointed out that one of its videos celebrating Independence Day featured Pakistan’s JF-17 Thunder combat jets in the opening segment.
The animated segment at the start of the 1.40-minute video showed two JF-17s, one on either side of a stylised symbol commemorating 70 years of the country’s independence and adorned with the Indian tricolour.
The video, which promoted an online application system for getting no-objection certificates for constructions from the National Monuments Authority, was posted on Twitter on Thursday. Eagle eyed social media users pointed out the jets in the video were Pakistani aircraft and it was removed from Twitter.
An official reaction from the culture ministry was awaited.
The JF-17 looks similar to India’s Tejas light combat aircraft. Both are single-engine jets but the Tejas does not have tailplanes while the JF-17’s air intakes are located further forward on the fuselage.

Riaz Haq said...

#BMI Research puts #Pakistan in top "10 emerging markets". Key Growth Drivers: #Auto & #Textiles #Manufacturing Hub http://read.bi/29mmYQT


"Pakistan will develop as manufacturing hub over the coming years, with the textile and automotive sectors posting the fastest growth at the beginning of our forecast period. Domestic manufacturing investment will be boosted by the windfall from lower energy prices compared to the last decade, and improved domestic energy supply."

A new report from BMI Research has identified the "10 emerging markets of the future" — the countries that are set to become new drivers of economic growth over the next 10 years.

BMI estimates that these countries will cumulatively add $4.3 trillion to global GDP by 2025 — roughly the equivalent of Japan's current economy.

In general, manufacturing and construction are the sectors that will drive the economies. BMI reports that new manufacturing hubs are set to emerge in Bangladesh, Myanmar, and Pakistan, and that these countries will see particularly strong growth in exporting manufacturing industries. And construction growth is going to be widespread throughout all the countries — partly to facilitate increases in urban populations and partly to help develop the manufacturing sector.

On the other hand, extractive industries — like mining, oil, and gas — are going to play a far smaller role in driving growth than they have the past 15 years.

While it might provide bright spots for some countries, the report states, "the ubiquitous commodity-driven growth model that was derailed by the 2012-2015 collapse in commodity prices is not coming back."

Anonymous said...

So BMI's prediction about Pakistan is right, and others prediction about India is wrong. At least in India's case there is already a baseline to compare with their industries producing various things from bikes to cars, trucks and locomotives, many of which is exported too.

what does Pak produce ?

It is amazing that Pakis think what they failed for 69 yrs would suddenly be solved.

You wanna bet. 10 yrs from now you still would be talking about Pak's potential.

Anonymous said...

https://lineshapespace.com/manufacturing-in-india/?utm_source=twitter&utm_medium=paid&utm_campaign=SimpleReach&sr_source=lift_twitter

Riaz Haq said...

Anon: "You wanna bet. 10 yrs from now you still would be talking about Pak's potential."

Yes, I agree.

It's because Pakistan is a young country with even younger demographics. Its potential is virtually unlimited.

It'll continue to grow with time as Pakistan achieves greater successes in the coming decade.

Here's Jacqueline Novogratz of Acumen Foundation:

"I look at the hundreds of young people, each of them filled with unlimited potential, undaunted by the lack of a traditional classroom or teacher or even time for school. Yet they couldn’t be more serious, more focused on learning, their only real hope for changing their own lives in ways that would give them more control."

https://medium.com/acumen-ideas/as-i-leave-the-karachi-airport-waiting-for-my-delayed-pia-flight-to-mumbai-my-twitter-feed-sends-79acf47d1d6c#.dwu82fu1w

Sushma Pandit, MSc said...

You have quoted future predictions such as, "Pakistan will develop as manufacturing hub over the coming years, with the textile and automotive sectors posting the fastest growth at the beginning of our forecast period. Domestic manufacturing investment will be boosted by the windfall from lower energy prices compared to the last decade, and improved domestic energy supply."

That is good for Pakistan but relative to other South Asian countries, Pakistan is expected to grow lot slower. Here are the estimates per capita PPP $ figures for 2016 & 2021 and the cumulative 5 year growth by the IMF economists.

Bangladesh 3841 & 5194 (35.22%)
India 6599 & 9837 (49.07%)
Pakistan 5174 & 6648 (28.49%)

Riaz Haq said...

SP: "the cumulative 5 year growth by the IMF economists."

IMF has been so wrong for so long that these long term forecasts are meaningless.

Here's an assessment of IMF's forecasts record:

In the 2001 issue of the International Journal of Forecasting, an economist from the International Monetary Fund, Prakash Loungani, published a survey of the accuracy of economic forecasts throughout the 1990s. He reached two conclusions. The first was that forecasts are all much the same. There was little to choose between those produced by the IMF and the World Bank, and those from private sector forecasters. The second conclusion was that the predictive record of economists was terrible. Loungani wrote: “The record of failure to predict recessions is virtually unblemished.”

Now Loungani, with a colleague, Hites Ahir, has returned to the topic in the wake of the economic crisis. The record of failure remains impressive. There were 77 countries under consideration, and 49 of them were in recession in 2009. Economists – as reflected in the averages published in a report called Consensus Forecasts – had not called a single one of these recessions by April 2008.

This is extraordinary. Bear in mind that this is not the famous complaint from the Queen that nobody saw the financial crisis coming. The crisis was firmly established when these forecasts were made. The Financial Times had been writing exhaustively about the “credit crunch” since the previous summer. Northern Rock had been nationalised in the UK and Bear Stearns had collapsed in the US. It did not take a genius to see that trouble was on the way for the wider economy.

More astonishing still, when Loungani extends the deadline for forecasting a recession to September 2008, the consensus remained that not a single economy would fall into recession in 2009. Making up for lost time and satisfying the premise of an old joke, by September of 2009, the year in which the recessions actually occurred, the consensus predicted 54 out of 49 of them – that is, five more than there were. And, as an encore, there were 15 recessions in 2012. None were foreseen in the spring of 2011 and only two were predicted by September 2011.


https://www.ft.com/content/14e323ee-e602-11e3-aeef-00144feabdc0

Sushma Pandit, MSc said...

Predicting a recession versus cross country comparisons in a region using existing fundamentals such as savings rate, and others you have mentioned, are two separate issues.

You have articulated Pakistan economic future yourself using BMI. Now, how does Pakistan compare with others in South Asia? That's where IMF comes in.

Riaz Haq said...

#Pakistan: Planting economic seeds for a brighter tomorrow- #CPEC #FDI

http://www.khaleejtimes.com/international/pakistan/pakistan-planting-economic-seeds-for-a-brighter-tomorrow

A few years ago a lot of international firms almost cringed at the idea of investing in Pakistan. Insecurity, instability and unfavourable business environment were the usual key words used to bail out of potential conversations. However, none of that holds true today. Pakistan has made commendable progress in restoring macroeconomic stability and is a rising star in south Asia, exuding confidence and optimism like never before.

Karachi, Pakistan's financial hub of 20 million, is flourishing with a spur in real estate boom and new, upmarket seaside restaurants and cafes. In major cities car sales are on the rise and shopping malls are sprouting to cater for an expanding middle class.

The revived health of the economy is evident from the vital statistics: the annual GDP growth rate for the fiscal 2015-16 that ended on June 30 stood at 4.7 per cent - its fastest pace in eight years. In 2014-15, Pakistan grew at 4.2 per cent, as per Pakistan Economic Survey report.

Inflation, the cornerstone of a healthy economy, has been tamed at around 3 per cent from the highs 20 per cent in 2008, as per the latest Economic Survey published by the Government of Pakistan.

The government's budget deficit too eased from 8 per cent to 5 per cent of the GDP, and the current account deficit is now at 1 per cent of the GDP. Tax revenues have doubled in the last three years, and remittances have reached a whopping $19.9 billion for the fiscal ending on June 2016. The foreign exchange reserves too are at an all-time high at over $21.4 billion, enough to finance over five months of country's import bills. Rightly so, the Pakistani rupee has maintained exchange rate stability during
the year.

The interest rates are at a 43-year low allowing strong credit expansion and helping companies in various industries, such as industrial, food, beverage, textile, electricity and construction.
Investment in infrastructure has seen a significant jump, primarily fuelled by initiatives undertaken as part of the massive China-Pakistan Economic Corridor (CPEC). The $46-billion commitment by China is expected to bolster Pakistan and turn it into a flourishing trade economy in a few years after completion.

Government initiatives

The first signs of improvement appeared in 2013 when Pakistan witnessed a peaceful transition of its civilian government for the first time in history. Since then the government has launched concerted programmes with the military to weed out extremism and terrorism from the soil of Pakistan and create an enabling environment. Zarb-e-Azb has immensely helped in this regard and a smooth implementation of the National Action Plan (NAP) too played an important role.

Concurrently, the government has also been working on the economic front by drafting prudent policies and implementing the same in time. In the last three years, financial coffers have been revived as the tax revenue doubled.
The government is now contouring plans to develop Pakistan into a manufacturing hub. It aims to diversify, grow at a consistently fast pace for the next 10 years, and emerge as the top 10 emerging markets from Asia and Africa. As of now, textile and automotive sectors are showing great potential and the fastest rate of growth.
The government has also managed to complete 11th successful reviews with the International Monetary Fund (IMF), which has further strengthened the confidence of international investors and has placed Pakistan on their radar screen as future investment destination.

Asif said...

Apne Templeton ka zikar kiya lekin out of $100 sirf $6 Pakistan will go to Pakistan. Koi guide 100% ke liye??. Emerging Market 2017 me Pakistan ayega. Please thanks

Riaz Haq said...

Asif: "Koi guide 100% ke liye??"

PAK ETF is 100% invested in Pakistan

Riaz Haq said...

SP: "Predicting a recession versus cross country comparisons in a region using existing fundamentals such as savings rate, and others you have mentioned, are two separate issues."

Unanticipated recessions are the biggest killers of long term growth forecasts.

Riaz Haq said...

What explains #Modi government kicking up a row over #China #Pakistan Economic Corridor (#CPEC) now?

http://scroll.in/article/814059/what-explains-modi-government-kicking-up-a-row-over-china-pakistan-economic-corridor-now … via @scroll_in

By MK Bhadrakumar

The big question is: How do the Chinese assess the Modi government’s proclivity to count the trees instead of seeing the woods? Do they sense this might be a matter of conscious choice?

What rankles most in the Indian mind is China’s relations with Pakistan. The Modi government demands that China should suspend the China-Pakistan Economic Corridor on the plea that Gilgit, Baltistan and Pakistan-Occupied Kashmir are Indian territories.

In reality, though, we have a classic situation where it is entirely up to India to raise dust (or not to raise dust). It is even baffling how economic development of those neglected regions would hurt Indian interests. After all, the people inhabiting those regions are also Indians, isn’t it?

The sensible thing would have been to let the Chinese loosen their purse strings to develop our territories that happen to be inside Pakistan temporarily so that when we finally make them part of Akhand Bharat, they won’t be the impoverished terrorist-infested swathes of land that they are today.

Frankly, India is taking an illogical stance. The Modi government estimates that Economic Corridor is “India-centric”, whereas, it is a strategic initiative by China in self-interest.

China has a good reputation for putting money only where the mouth is – and $46 billion is a lot of money. The Chinese motivations are not difficult to comprehend.

The Economic Corridor boils down to project exports by Chinese industry, which is saddled with excess capacity.
Two it opens up efficient communication links with markets in the Gulf and Africa.
It fuels the economy of Xinjiang.
It mitigates to some extent China’s “Malacca Dilemma” – the fact that 80% of China’s oil imports have to pass through the strait en-route from West Asia and Angola.
It creates leverage to balance the traditional American dominance over Pakistan.
Indeed, finally, it cannot be overlooked that One Belt One Road Initiative has a geopolitical dimension insofar as it counters the US’ strategy to encircle China and "contain" it.
Conceivably, the China-Pakistan Economic Corridor will galvanise Pakistan’s economy. Now, isn’t that a nice thing to happen if it prods our western neighbour to understand that getting rich is the smart thing to do?

If China succeeds in transforming Pakistan as a modern middle-income economy like Turkey or Malaysia, it can only strengthen regional security. But then, a paradox arises: If Pakistan does not collapse as a “failing state” and instead becomes a more prosperous country than India, what happens to Akhand Bharat?

The smart thing would have been to offer to the Chinese an economic corridor through our territory. It is advantageous to be a transit country.

Ramesh said...

https://twitter.com/makeinindia/status/765465794566250498

India moved 15th place to 66.
Pakistan is at 109th. It is expected that with China's help via CPEC it will become 9th within a decade.

Riaz Haq said...

Ramesh: "India moved 15th place to 66. Pakistan is at 109th. It is expected that with China's help via CPEC it will become 9th within a decade."

If you believe this ranking, you must also believe that UAE (41), Qatar (49) and Saudi Arabia (50) are way ahead of India in innovation.


http://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2016-intro5.pdf

Iqbal Singh said...

The Global Innovation Index is an annual ranking of countries by their capacity for, and success in, innovation. The operative word is not innovation success but the capacity for it.

Qatar and Saudi Arabia both fund many projects so their ranking is correct

Riaz Haq said...

IS: "The Global Innovation Index is an annual ranking of countries by their capacity for, and success in, innovation."

So why isn't US #1?

US dominates the list of top universities and spends 2.81% of its GDP and demonstrated of greater success than any other countryl

Iqbal Singh said...

US at #4 is an excellent rating. Mr. Riaz, I understand your reservations but many corporate businesses use this index in addition to other factors before they invest internationally.

Riaz Haq said...

IS: "many corporate businesses use this index in addition to other factors before they invest internationally. "

The primary motivation for US businesses is cheap labor. Be it Google, Apple, Cisco, etc, they all do real R&D in the United States and then use cheap labor for more mundane work in countries like India.

Besides, almost all of the basic research and development is funded by the US government that requires it to be done in US.

Major innovations like transistors, computers, networking as well as life-sciences have come from US taxpayer money put into DARPA, NSF, NIH, etc.

Jaishankar said...

"The primary motivation for US businesses is cheap labor. Be it Google, Apple, Cisco, etc, they all do real R&D in the United States and then use cheap labor for more mundane work in countries like India."


GE has set up shop in various countries to manufacture turbines to medical equipment. All that requires local engineering capacity to innovate (something the local firms were not doing). Boeing makes fuselages in the same manner. India makes auto parts for all the major Auto makers.
Your comment is only half true.

Riaz Haq said...

Dirty laundry: Welspun tangle highlights #India's #quality challenge. #MakeInIndia #Modi http://reut.rs/2bLju9n via @Reuters

Questions over the exact provenance of bedsheets sold by Welspun India to America's middle classes have not only wiped $740 million off the firm's market value, but also revived one of Indian manufacturing's enduring headaches: quality.

India's government, desperate to accelerate growth and create more jobs, has backed a "Make in India" manufacturing push. India already makes everything from car parts to t-shirts, but is trying to move up the chain to make higher-end products, like Apple's iPhone.

One major hurdle, however, has been product quality, often blighted by low salaries, poor training and sketchy suppliers. As India manufactures more, cheap is not always cheerful.


Quality assurance experts in India and beyond, however, said damage from the Welspun case could be contained - if the authorities and businesses move quickly to put in place stringent quality assurance standards.

"The government and the companies should themselves put in place better quality control standards to ensure India's image is protected," said a certifier at the Indian arm of a Europe-based textile certification company.

The $108 billion textile industry accounts for a tenth of India's manufacturing production, 5 percent of GDP and 13 percent of export earnings, according to government data. It is the country's second-largest employer after agriculture.

----
It's not clear what led to the problem. Welspun, whose share price nearly halved this week, has said it would do an external audit of its supply chain.

Other Indian manufacturers distanced themselves from Welspun, but many fretted over the broader impact as the country tries to bet on quality, not just cheap workers, where it faces constant competition from regional rivals.

"It's high time exporters improve the quality of their products," said S.C. Ralhan, president of the Federation of Indian Export Organisations, set up by the government and industry to promote exports. He said the group would take up the issue of quality with its members.

Arvind Sinha, national president of the Textile Association of India, said India's image as a manufacturing destination for textiles could be tarnished.

"This is another blot on the Indian exports resume," said an analyst at a local brokerage, who asked not to be named as it would violate his firm's policies. "The Welspun fiasco could have ripple effects and force companies to scout for options in other regions in Asia that have unscathed records."
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DRUGS AND NOODLES

India has been here before.

Its $15 billion pharmaceutical industry, a global supplier of cheaper generic medicines, has been dogged by quality concerns, with health regulators in the United States, Britain and Europe barring some plants from producing drugs for their markets because of inadequate standards.

Highlighting weak official checks and under-resourced testing facilities, Nestle India had to pull its popular Maggi instant noodles off the shelves last year after local regulators found some samples contained unsafe levels of lead. Subsequent tests at government-accredited laboratories showed the noodles were safe for consumption.

Riaz Haq said...

Chinese-backed coal excavation and power plants will displace thousands of people and deplete groundwater in Thar, a region ravaged by drought.


The Thar desert in Sindh province contains 175 billion tonnes of lignite coal – one of the largest untapped coal deposits in the world. It is also one of the most populated deserts in the world – home to world heritages sites and endangered species. Most of the 1.6 million people who live in the Thar desert region live in poverty and are highly vulnerable to extreme weather events. Twenty five percent of people live within the proposed coal development area. They thought they would benefit, but that has not been the case.

----

It was only in 2015 that work began on the fields, when the Thar coal project was included as part of a string of energy and infrastructure deals signed under the USD 46 billion China-Pakistan Economic Corridor. These agreements included eight coal-fired power plants and a 3,000-kilometre network of roads, railways and pipelines to transport oil and gas from Gwadar Port on the Arabian sea to Kashgar, in the northwestern Chinese province of Xinjiang.

In December 2015, China approved a USD 1.2 billion investment for surface mining of Thar coal and the establishment of 660 MW power projects. The deposits are divided into 12 blocks, each containing 2 billion tonnes of coal. In the first phase the Sindh provincial government has allocated block II to Sindh Engro Coal Mining Company (SECMC) to excavate 1.57 billion tonnes of coal and build a 660 megawatt power plant. The plant is expected to send power to the Pakistani national grid by June 2019 and will later be expanded to produce 1,320 MW of power.

A state-owned Chinese company, the China Machinery & Engineering Corporation, is providing the machinery and technical support for the excavation of coal and building and running the power plant. The local company will provide human resources, management and be responsible for the distribution of power. SECMC say the project has created 200 technical jobs and 1,600 menial positions. But locals have been protesting that the company has not even given them the menial jobs. Around 300 Chinese, including the engineers, miners and experts are also working on the site.


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The Chinese team have started excavating the first pit. In the first phase SECMC will relocate five villages, which are located in block II, including Thario Halepoto village.

SECMC has started paying villagers for their homes and agricultural land. SECMC’s chief executive officer, Shamsuddin Ahmed Shaikh, claims that his company will do all they can to help the villagers.

“We will construct model towns with all basic facilities including schools, healthcare, drinking water and filter plants and also allocate land for livestock grazing,” he told thethirdpole.net

He said that the company is paying villagers above market prices for their land – PKR 185,000 (USD 1,900) per acre. However locals say this price does not take into account its high environmental value and they do not want to be relocated to the new towns, the exact location of which is yet to be decided.


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A SECMC official said that the company will plant 10 trees for every tree cut. So far the company has planted 12,000 trees in an 18 acre area called the Green Park and more trees will be planted in next two years.

---

SECMC’s Shaikh rejected such claims saying his company would only use 1,400 acres for two reservoirs to store the water extracted during excavation. “It will be natural underground saline water, not toxic or poisonous in any way and it will not affect any village,” he claimed.


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http://thewire.in/62053/pakistans-coal-expansion-brings-misery-to-villagers-in-thar-desert/

https://vimeo.com/179874726

Riaz Haq said...

#India’s falling #exports killed 70,000 #jobs in just one quarter. #Modi #AchheDin http://qz.com/784625 via @qzindia

India’s dismal export growth is leading to massive job losses. And, after months of shrinking exports without any signs of improvement, the employment situation in Asia’s third-largest economy is set to worsen.
The jobs market is already in pain. In the July-September quarter of the 2015 fiscal year, India recorded the lowest job growth compared to the same period in 2009, 2011, and 2013.
Plummeting exports are adding to the problem. Some 70,000 jobs were lost in the second quarter of 2015 alone due to a fall in India’s exports, according to the Associated Chambers of Commerce & Industry in India (Assocham). Most of these were contractual in nature, the joint study by Assocham and Thought Arbitrage, a research institute, said.

“While contractual jobs were lost, not adequate regular jobs were added to compensate that loss. Textile has been most affected,” the industry body, which represents over 450,000 Indian business entities, said in a release on Sept. 18.
India’s export growth has been negative in the last couple of years. Lacklustre global demand is one reason. It also doesn’t help that India’s manufacturing sector is still weak. Private investment in manufacturing is yet to pick up, which means exporters are scrambling for funds. Their funding costs are high too. All this has had an impact on the jobs market because exports have been slacking in sectors that are labour-intensive, such as engineering goods, leather, textiles, and rubber, among others.
Eight of the 14 labour-intensive sectors saw exports shrink in the 2016 financial year. In the previous year, job growth in these sectors was the slowest in seven years.

Riaz Haq said...

Few jobs, weak #industrial prod, bad loans. What’s #India celebrating? #AchheDin #MakeInIndia #Diwali http://qz.com/805686 via @qzindia

The world’s fastest-growing major economy may have hit an air pocket.
India’s 7.6% annual growth in the 2016 fiscal year has made it a standout performer amid a sluggish global economic environment. So far, this year, the GDP numbers look good and a bountiful monsoon will help further. Benign global oil prices will also add to the headline GDP number since India imports over 75% of its crude oil requirement.
But there are some reasons to worry. Data released over the last few weeks show that the bad-loan mess in the banking system remains serious, industrial production has fallen for two straight months, and unemployment is at a five-year high.

The index of industrial production (IIP), which measures the country’s factory output, fell for the second straight month in August, Central Statistics Office data showed on Oct. 10. The index fell 0.7% in August, following a 2.5% drop in July. Manufacturing and mining growth contracted in August, indicating that a recovery is still far away. In the first five months of the current fiscal year (April-August), the IIP contracted 0.3% compared to an expansion of 4.1% in the same period a year ago.

“Manufacturing performance continues to face headwinds from subdued business and investment environment,” the Reserve Bank of India said in its bi-monthly monetary policy review statement on Oct. 04.

Former RBI governor Raghuram Rajan’s goal of purging Indian banks of toxic loans remains unfulfilled, new data shows. On Oct. 10, Reuters reported that non-performing assets in the Indian banking system had shot up from $121 billion in December 2015 to $138 billion in June 2016, according to RBI data. The central bank has given banks a March 2017 deadline to make provisions for bad loans. So, many big lenders have posted massive losses in recent quarters. Yet, the bad-loan pile is only getting bigger.
Meanwhile, the government is now also planning to consolidate public sector banks to make the system more efficient. It will soon merge two large banks based in Mumbai, Reuters reported on Oct. 11.
Unemployment

In 2015-16, the unemployment rate in Asia’s third-largest economy stood at a five-year high, according to a Labour Bureau report dated Sept. 15 (pdf). This is critical at a time when the Modi government is pushing its ambitious “Make in India” initiative to boost manufacturing and job creation. Employment was a top item in the election manifesto of Modi’s Bharatiya Janata Party. The all-India survey by the Labour Bureau (pdf) showed that 77% of the households that participated in it did not have a regular salaried or wage-earning member.

Riaz Haq said...

UNIDO in Pakistan

http://dailytimes.com.pk/opinion/10-Nov-16/unido-in-pakistan
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The salient achievements in the past can be seen in various sectors. It is particularly worth mentioning UNIDO’s efforts in building Pakistan’s trade capacity, and how that enabled many sectors to meet global market requirements. This was a multidimensional and intensive task. For example, UNIDO helped with the establishment of a comprehensive food safety system, starting with the passage of Pakistan Food Safety Bill developed by UNIDO over more than three years in cooperation with more than eight ministries. In the process, UNIDO helped 40 laboratories get accreditation, and more than 120 food inspectors and master trainers gain internationally recognised qualifications.

Setting up the first laboratory of its kind in the region for dioxin-testing is yet another good example, and facilitating the resumption of fish exports to the EU market after a seven-year ban is another. Thanks to UNIDO, mango farmers of Multan have now received sufficient training so that they can export their products directly to high-end markets, such as Walmart in the United Kingdom. Similarly, the certification of CE Marking was a gateway for accessing the EU market for various industrial products like surgical instruments, electric fans and cutlery, which will go a long way in boosting exports by capturing a niche in the global market.

In a country like Pakistan where there is a dearth of encouragement of innovation at the state level, UNIDO has been a flag-bearer supporting youth who have innovative ideas, especially in clean technology, and enabling them to access and compete at global arenas like Silicon Valley, USA.

Back in the 1980s, UNIDO started addressing the prevailing environmental issues in Pakistan by establishing the first combined effluent treatment plant at Kasur, a city in Punjab. The plant helped minimise the pollution generated by tanneries that were dumping production waste in adjoining water bodies.

Some personal success stories can also be highlighted. Asra, a young lady from Lahore, was shocked to hear her name announced by the jurist at the National Cleantech Award Ceremony, which was held in Pakistan last year. Asra was the only woman among the five winners who were selected from more than 450 contestants. Her idea was to create a hybrid technology to power bicycles by using the energy generated and stored while pedalling. The idea was further polished and developed with help from UNIDO’s Cleantech Project.

Similarly, Faisal, a young engineer, won the runner-up in the competition of the 2015 Cleantech Global Prize held in Silicon Valley. His novel idea was for a gasifier that runs on agricultural wastes and is mounted on the tractor that it drives.

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Last but not least, UNIDO has given a lot of emphasis to gender mainstreaming. One example is the story of Fakhra, a women hailing from Rawalpindi, who saw her family left helpless when her husband got acutely sick and lost his source of livelihood. She undertook training in fashion design under a UNIDO project entitled “Women’s Entrepreneurship Development.” She subsequently has become a successful businesswoman, running an enterprise that hires more than 10 women.

The gist is that UNIDO’s portfolio is diverse and dynamic in multiple areas. These achievements also clearly depict the inclusive and sustainable industrial development spirit, and are very much in line with the government’s “Vision-2025” for Pakistan. The guiding principle for UNIDO’s concrete role in the future lies in promoting Sustainable Development Goal (SDG) 9 (industry, innovation and infrastructure), and contributing to other SDGs.

Riaz Haq said...

Does India manufacture everything it needs? Here's the answer:


1. India's manufacturing value added per capita is about the same as Pakistan's. it still sits at a very low 142nd position terms of manufacturing value added per capita, according to the United Nations Industrial Development Organization's Industrial Development Report 2016. Pakistan's manufacturing value added is ranked 146th by the same report.

http://www.riazhaq.com/2016/08/indias-70th-independence-day-is-make-in.html

2. India runs huge trade deficits year after year because it imports bulk of of manufactured products it needs from China and elsewhere.


http://www.riazhaq.com/2010/05/soaring-chinese-imports-worry-india.html


Here's an excerpt of a piece by Indian entrepreneur Jaithirth Rao published by Indian Express:

"Uday Kotak said a few months back, in the course of an interview, that he was amazed that in his new office in Mumbai, not one of the furniture or fixture items were made in India. My friend Rahul Bhasin conducted a similar exercise in his office in Delhi and discovered pretty much the same thing. The carpet is from China, the furniture is from Malaysia, the light fixtures are from China, the glass partition is from all places, Jebel Ali in the Middle East and so on. Kotak went on to add that even Ganesha statues are no longer made in India. They are imported from China."

http://indianexpress.com/article/opinion/columns/how-they-killed-our-factories/

Riaz Haq said...

#American engineers find #India's home-made first aircraft carrier is a dud. Need another 10 years to make it work http://blogs.wsj.com/indiarealtime/2016/11/30/u-s-effort-to-help-india-build-up-navy-hits-snag/?mod=e2fb When top American naval engineers recently inspected India’s first locally made aircraft carrier they expected to find a near battle-ready ship set to help counter China’s growing sway in the Indian Ocean.

Instead, they discovered the carrier wouldn’t be operational for up to a decade and other shortcomings: no small missile system to defend itself, a limited ability to launch sorties and no defined strategy for how to use the ship in combat. The findings alarmed U.S. officials hoping to enlist India as a bulwark against China, people close to the meeting said.

“China’s navy will be the biggest in the world soon, and they’re definitely eyeing the Indian Ocean with ports planned in Sri Lanka and Bangladesh,” said retired Admiral Arun Prakash, the former commander of India’s navy. “The Indian navy is concerned about this.”

The February carrier inspection, in the port of Kochi, formed part of U.S. plans to share aircraft carrier technology with India. Indian naval officials followed up with a tour of an American shipbuilding yard in Virginia and strategy briefings at the Pentagon in September, the people close to the meetings said.

The U.S. and India are drawing closer politically and militarily. The two have participated in joint naval exercises with Japan. The U.S. has agreed to sell New Delhi everything from attack helicopters to artillery. Washington has approved proposals by Lockheed Martin and Boeing Co. to make advanced jet fighters in India. And in August, the two countries signed a military logistics-sharing accord.

Riaz Haq said...

Vanguard News: #Nigeria military buying #aircraft, #helicopters from #Pakistan #Russia

http://www.vanguardngr.com/2016/12/nigerian-airforce-expects-aircrafts-helicopters-pakistan-russia/

Concerned about global politics surrounding procurement of sophisticated arms from western countries, Nigerian Airforce (NAF) is expecting arrival of war-planes and helicopters from Pakistan and Russia to boost its fleets. The Chief of Air Staff, Air Marshal Sadique Abubakar made the disclosure at a breakfast briefing with Editors of Online Media in Abuja at the weekend.

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Air Marshal Abubakar said : “I want to say that we have been enjoying support from other countries. (Sometimes arm procurement) is shrouded in a lot of politics. Unfortunately, I’m not a politician, so I cannot be able to say much on that. But what I can tell you is that right now as I speak to you, we are expecting the Pakistani Chief of Air Staff in Nigeria soon. Pakistan has accepted to sell ten trainer airplanes. And that is why the Pakistan Chief of Air Staff is coming for the induction ceremony which is going to take place in Kaduna. “We are really getting support from many countries. Similarly, we have trained so many people in Pakistan, China. In the US, we have pilots that are training right now. We have other pilots that have just finished training from the United Kingdom. We have additional pilots that are training in South Africa. We have more pilots that are training in the Egyptian Air Force and so many other places including Russia…We are really getting support”, he said. On the competence of Nigerian fighter pilots, Abubakar said “In the last 18 months, we have flown almost 3000 hours with no incident. In terms of competence I can tell you that the Nigerian Air Force pilots are amongst the most competent. Because the training curriculum is very clear. And that is why now in the Air Force you look at the wings, pilots wear wings. We have categorized the wings according to their skill levels. We also organize simulation training for our pilots, we organize evaluation visits where pilots are evaluated without any notice. We have also sent over 700 personnel of the NAF to different parts of the world to train and acquire the skills required for them to be effective. The Chief of Air Staff said the air force is currently assisting the Nigerian Army and Navy in the North and South in countering criminal activities of terrorists and militants through operational strategy, air interdictions strategy and soft-core strategy. He explained that the main objective of is to create an enabling environment for the ground and surface forces, to be able to operate with little or no hindrance. He continued: “Another substrategy under this is the reactivation of airplanes. We have embarked on the reactivation of airplanes and today as I speak to you we are on the thirteenth aircraft. What I mean by reactivation is that aircrafts that were not in involved in any fight before the coming of the present federal government; they were parked before but are today part of the fight. “The thirteenth aircraft as I speak to you is being worked upon in Yola and we are hoping that before the end of this month that airplane will be flying. When you train, you must reactivate the platform to be used in flying.” The Air force boss also denied a recent rumour of helicopter crash in Makurdi. Explaining the incident involving Agusta AW 101 helicopter handed over to NAF by President Muhammadu Buhari, he said: “What happened in Makurdi was not a crash. Immediately we received the aircraft from the Presidency, we took one of them to Kaduna to paint it into desert camouflage. They removed the seal of the President and painted it into a combat machine.

Read more at: http://www.vanguardngr.com/2016/12/nigerian-airforce-expects-aircrafts-helicopters-pakistan-russia/