September 2013 could very well go as the watershed month for policy reforms as important and long pending pieces of legislation were passed. There was also a revival of business sentiments by Dr Raghuram Rajan’s appointment as the governor of Reserve Bank of India. The passage of PFRDA bill and the new Companies Act have been some very welcome developments. PFRDA bill’s passage will lay the road for new products and players entering the market. We feel that the new Companies Act will add to the clarity of doing business in India.
Here in FICCI, it has been a busy month for us too. We released our Business Confidence Survey for July and August 2013 – the results of which were astounding. India’s business confidence is at its lowest during the last seventeen quarters. I hope that it has reached its nadir and the only way forward, is going up. That said, I am optimistic about the India story, primarily because the government is now actively considering resolving key industry concerns, which are – further liberalization of FDI norms, resolution of tax concerns of industry, fast tracking public sector investments and containing the fiscal deficit. All these would give a boost to investor sentiment and help kick-start the investment cycle in the economy.
As always, your business chamber, FICCI has been in the forefront by suggesting further measures that the government and the Reserve Bank can take up to prop up the economy and importantly, the business sentiments. FICCI has been actively working on various issues across sectors. We are working at a granular level across varied sectors that include power, skills, environment, specifically climate change initiatives, real estate, aviation and many more. I am pleased to share a recap of our activities and policy suggestions with you through this report.
However, I would like to draw your interest to a critical area of concern for us – the capacity deficit in power transmission. Enhancing India’s power transmission capacity along with generation and distribution is critical. The attention that we have been paying to enhancing our power transmission capacity is at best, inadequate. A less than optimal progress on this front threatens to jeopardize India’s efforts to raise economic & manufacturing growth and the socio-economic well-being of the people.
Power shortages currently entail a GDP loss of US$ 68 billion or 0.4% of India’s GDP. The fact that only 135 GW of peak demand is met despite installed capacity of 225 GW, highlights the need for capacity creation in power transmission sector. We stand at a tipping point. And, we need to act fast.
We, at FICCI, along with Booz & Co. released a report – ‘Power Transmission: The Real Bottleneck’. The report is a result of the work done by FICCI Task Force on Power Transmission and outlines the challenges in creating transmission capacity along with actionable recommendations to avert a potential crisis. Some of our suggestions to the government were to:
- Anchor an efficient planning process by pruning concept to commissioning period to 40 months;
- Reduce the concentration of excessive projects to a single PSU;
- Incentivize the use of modern technology to allow bridging the power transmission capacity gap and also to conserve environment;
- Create a level playing field for private participants with PGCIL in terms of forest clearance and role in planning; and
- Establish an adequate dispute redress mechanism, stringent qualification and simpler exit norms to address the huge private capital requirements for the XII plan.
I’m pleased to share our activities report with you and will be sharing similar reports with you regularly . I look forward to your ideas and suggestions.
Image source: Flickr