Solar Power: Need of a Techno-nationalistic Approach

Recent revision of targets for raising the solar power capacity in the country to 100 Gigawatt by 2021-22, in place of 22 GW set earlier, would place India ahead of rest of the world, with 9% share of solar power in the total power generation, from a current level of 0.5%. Currently, the Germany has highest capacity of 35 GW of solar power and Italy has the highest share of 7.2% in total generation. A 33 fold rise in solar power capacity in India from the current 3.3 GW to 100 GW in 7 years would set another world record, reflecting Modi government's resolve to reduce Carbon emissions effectively, which would also strengthen India's position at the upcoming 21^st Conference of Parties (CoP-21) on climate change, scheduled in Paris.

Such a huge addition of solar power capacity would also provide an opportunity for the country to kickstart stagnating investments in the economy by infusion of more than Rs. 6.5-7 lac crores into the sector, capable to add manifold more output in GDP and investment by ancilliarisation and development of vast supply line for components down the supply chain, along with development of a state of the art technology. But, it would happen if larger participation of indigenous firms is ensured in adding the new capacity. To the contrary, if we would dole-out this opportunity to Chinese, German and American suppliers in the name of bringing foreign direct investment (FDI) to tide over the ongoing current account deficit (CAD) the country may loose this dream opportunity of kickstarting growth and development, including the technology development as well as components sector via a multiplier impact, capable to generate employment, income and growth on a sustainable basis. Each of the top 10 solar power generating countries of the world have preferred to develop their indigenous solar power industry to meet the domestic demand. In our case as well, if the domestic firms are provided an initial breather by imposing anti-dumping duties on imported hardware and/ or are subsidized to give them a level playing, we can build a booming solar power sector to cater growing indigenous as well as global demand. A forbearance of 2-4 paisa of extra cost per KWHr, arising from imposing of anti-dumping duty on imported hardware or from providing a subsidy to the indigenous industry would pay rich dividends in developing the domestic capacity and resultant employment, income and growth. An attempt to provide a level playing field to the indigenous industry, inter alia by imposition of precautionary anti dumping duty on imported hardware, R&D support, equity funding and a host of other measures are the need of hour and which may help the country see a thriving domestic manufacturing sector with its entirely domestic supply chain to save forex and preserve the outflow of forex to be involved in the component import or likely to be repatriated as dividends; which would outweigh the investment inflow.

Therefore, India should not repeat the past mistakes wherein the country had badly lost similar opportunities of growth from the development of domestic capacity in telecom, power, shipbuilding etc.; by doling out the bounties of supply-orders to foreign players. For instance, India had made a praiseworthy breakthrough developing in the first generation of telecom technology of world order. The Indigenous hardware, including switching systems for electronic exchanges upto 80,000 lines were developed indigenously and were well at par with those of the Motorola (an erstwhile American company now taken over by the Chinese) and Siemens (a German company). But, the country doled out more of the domestic orders to foreign suppliers, and for that reason alone the indigenous players including the C-DOT could not generate enough revenues to envision and develop 2^nd generation telecom (2G) technology for mobile telephony. China, thereafter over-stretched to overtake the Euro-American companies in developing the 3^rd generaton telecom technology (3G) but it could develop only a very primitive and tortuous technology, the TD-SCDMA (a modified version of 2G SCDMA technology). Notwithstanding this it kept pursuing a techno-nationalistic course and permitted to roll out only indigenously developed 3G network in China, pursuing further research to improve upon it inspite of the fact that this Chinese indigenous technology was far inferior to the Euro-American 3G technology. But, China did not adopt Euro-American technology. So, out of the resources generated from rolling out their indigenous 3G technology alone, China succeded to develop very superior 4^th generation telecom (4G) technology ahead of, and also better than the Euro-American companies. They (Chinese) developed the TD-LTE as 4G telecom technology from the same tortuous, but indigenous TD-SCDMA technology. Now, according to various estimates, the Chinese TD-LTE has been adopted by 45% of world's 4G networks, including the Reliance, Qualcomm etc. India, inspite of having the first generation technology in early 90s, much superior to that of Chinese has got badly crippled and become fully dependent upon external supplies for 2G, 3G and 4G telecom technologies and largely upon China, a security threat of first order for the country, solely because of patronizing foreign firms in 1990s. Now, China has been working on 5^th generation telecom technology from the revenues generated from the indigenously developed 3G and 4G technologies, while we missed the train from the time of 2G till date. China could take this escalator in developing the indigenous telecom technology and pursue techno-globalism solely by the techno-nationalistic approach.

In the field of power sector also, Indian hardware had been much superior to the Chinese in 90s. But, now more than half of our orders for super-critical thermal power plants are being poured into Chinese coffers instead of being given to indigenous players. Order books of indigenous suppliers like BHEL, L&T and others including hundreds of their ancilliary units are below their capacity. Moreover, there are reports that power hardware of the Chinese origin of approx Rs. 2 lac crores is experiencing snags due to inferior Chinese-supplies. In shipbuilding we have suffered most badly. Indeed in shipping the share of Indian flagged ships in our total foreign trade is very dismal and withdrawal of support to shipbuilding from the eleventh five year plan onwords has brought down our share in world shipbuilding to 0.01 percent. South Korea which accounts for less than 5 percent of geographical area and population of India, and having far less than 70 percent of our GDP, today accounts for 40% of world-shipbuilding. Needless to say India is the 3^rd largest steel producer with a large pool of skilled manpower and 7100 Km coast line can easily capture at least 10% of world shipbuilding if proper policy, design, R&D and fiscal support is extended by the government. Overall, the Korea has been spending 4 % of its GDP on R&D while India spends less than 1 percent of its GDP on R&D, inspite of our repeated assertions to raise our R&D outlay to 2% of our GDP in the science and technology declarations being made since 2003.  Indeed our share in the world shipbuilding was 0.1 percent in 2002. Very small budgetary support extended to ship building in the 10^th five year plan (2002-07) from the government raised India’s share from 0.1 to 1.4% by 2009. But, the support was soon discontinued in 11^th plan, so it has how receded to 0.01% just on account of discontinuance of that support in 11^th plan. To the contrary, a single policy support to pharma sector extended in 1970 by replacing the provision of product patents with process patents in the Indian Patents Act of 1970, India could acquire record 10% share in the world Pharma-Manufacturing by volume. Besides, we have ushered in a new era in the area of pharma education and Research & Development just by virtue of this policy support. Though it is also now bound to erode with our reverting back to product patents since 2005 and our gradual succumbing to Euro-American pressure in the field of IPR.

 Therefore, in our endeavor to raise solar power capacity, if a proper blend of fiscal support,  purchase priority, integrated policy support and R&D support is extended to indigenous manufacturers for building the domestic capacity in solar power hardware manufacturing, India can do the miracle, become world leader in solar power and usher in a new era of growth and development. Already, the cost of power per unit has come down to Rs. 5.5 from 20 in last few years. The solar is therefore only hope for global energy woes. And India can ride this global wave. If India can send Mars orbitat at one sixth of the global cost, then, in solar power as well, we may emerge as world leader by pursuing a techno-nationalistic approach as has been done by China in telecom, power, shipbuilding etc. But, if we would add solar power capacity through foreign supplies and FDI we would miss another escalator for a quantum leap for next more than a decade.

Agriculture Credit: Declining Access of Real Farmers

India is the world's second largest food producer with highest number of farmers and farming-dependent population. This vast section of population has been witnessing ever growing distress with sagging confidence in farming, largely on account of inept policy interventions of the post-reforms period, wherein, the agricultural loans have been diverted to industry and commerce, by deliberate and protracted dilutions in the definition of agricultural credit for the window-dressing of the government's achievements. The recent enhancement of the provision for agriculture credit to Rs. 8.5 lac crores, along with a slew of many other measures in the budget for 2015-16 of the NDA government can indeed alleviate the plight of farmers effectively, provided the access of the farmers to agricultural credit is again restored.

Deliberate Dilutions: Policy dilutions, leading to financial exclusion of poor farmers had been initiated as early as in 1993, when Dr. Manmohan Singh was the finance minister. Till 1993, only direct finance to cultivators was counted as part of the priority sector lending, for meeting the target of 18 percent bank credit for agriculture. But, from October 1993, indirect finance was also allowed to be counted together with the direct finance to cultivators for fulfilling the priority sector target of 18% loans for agriculture. The government has thereafter, kept on diluting the definition of 'indirect credit to agriculture' to include even the corporate borrowings as well as infrastructure project fundings in indirect agriculture credit. By virtue of this, even the loans given to the multinational companies like ITC and other contract farming and agri-processing companies too are now being counted into the quantum of loan extended to farmers, which amounts to almost up to 50% of farm sector indirect loans in states like West Bengal etc.  Only four of such one dozen dilutions made by the government are enough to be given hereunder to expose the tactical deprivation of real farmers from agriculture credit under the decade long regime of Manmohan, Sonia and Rahul's trio. These dilutions are:

(i)                  The loans given to even power distribution corporations or companies, emerging out of the bifurcation or restructuring of SEBs as part of power sector reforms were ordered to be considered as indirect finance to agriculture from July 2005.

(ii)               The loans to food and agro-based processing units with investments  in plant and  machinery up to  RS 10 crore (other than the units run by individual, Self Help Group and cooperatives in rural areas) are also being considered as indirect finance to agriculture since April 2007.

(iii)             From April 2007 onwards, two-thirds of loans given to corporates, partnership firms and institutions for agricultural and allied activities (such as beekeeping, piggery, poultry, fishery and dairy) in excess of Rs 1 crore in aggregate per borrower have been declared to be considered as indirect finance to agriculture. The rest of the one-third amount was to be treated as direct finance.

(iv)              From October 2012 the loans given to corporates, partnership firms and institutions for agricultural and allied activities in excess of Rs 2 crore in aggregate per borrower are also defined to be treated as indirect finance. Even such loans of amount less than Rs 2 crore are being treated as direct finance.

Indeed, the indirect loans which were less than 15 percent in 1980s have now crossed over to 25% of total agri-credits, which are never accessed by the farmers.

Growing Dominance of Big and Non Cultivating Borrowers: since 2000, the advances of Rs 10 crore and above, and even up to Rs 25 crore are on increase while no ordinary ordinary farmer can afford to borrow such huge sums. Table No. 1 clearly shows that the share in total of advances of the loans of size "less than Rs 2 lakh" have contracted from 82.3 per cent in 1990-91 to 44.7 per cent in 2010-11. On the other hand, the share in total advances above Rs10 crore increased sharply from 1.2 per cent in 1990-91 to 20 per cent in the year 2010-11.  Farmers normally cannot take a loan of Rs 10 lakh or more. Mostly the cultivators do not take a loan of more than Rs. 2 lakh. So, probably the increasing share of agri-credit must be going to the input dealers or agri-business firms or corporate groups involved in agricultural and allied activities.

Table 1 Amount-wise distribution of outstanding agricultural advances of scheduled commercial banks.

Loan size (Rs)	Share of amounts outstanding in various ranges in %
	1990-91	2010-11
Less than 2 lakh	82.3	44.7
2 lakh to 10 lakh	4.4	22.9
10 lakh to 1 crore	7.9	6.2
1 crore to 10 crore	4.1	6.1
10 crore to 25 crore	1.2	2.6
Above 25 crore		17.4

Urban Centric Loans on Rise: The real farmer is mostly village dweller, while, there is an increased absorption of agricultural credit from urban and metropolitan branches, depicting a fall in the share of agricultural credit in rural areas. (vide table 2). In 2011, about one-third of total agricultural credit and one-fourth of direct agricultural credit were outstanding from bank branches located in the urban or metropolitan areas reflecting continuing diversion of agricultural (indirect) credit towards urban-based dealers and agricultural (direct) credit to urban-based corporates (as part of direct credit) and altogether depriving the real farmers based in rural areas.

        Table 2 Share of agricultural credit outstanding with rural and urban branches from 1990-2011

Year	Share (%) of agricultural credit outstanding from
	Rural branches		Urban or metropolitan branches		All branches
	Total Agriculture Credit	Direct Agriculture Credit	Total Agriculture Credit	Direct Agriculture Credit
1990	85	88	15	11	100.0
2005	69	84	30.7	15	100.0
2011	67	74	33	25	100.0

        

 Uneven Disbursement Across the Year: It is most astonishing that over 40-45% of annual agriculture loans are often disbursed in the last quarter of the financial year by most of the commercial banks, probably just to meet their targets. Of this fraction also about one third to half of it is often disbursed in the last month of FY i.e. March itself.  The last quarter of a financial year or the month of March is not the normal period of borrowing by the farmers when the sowing is over.

Growing Dependence on Non-Institutional Lenders: Continuons deprivation of real farmers from institutional credit has been compelling them to depend more upon the exploitative and non-institutional lenders. Therefore in the All India Debt and Investment Survey of the National Sample Survey Organisation in the 70^th round reveals that non-institutional agencies played a major role in advancing credit to the households. Particularly in rural India. The non-institutional agencies had advanced credit to 19% of rural households, while the institutional agencies had advanced credit to 17% households.

Prohibitive Pre-Sanction Costs: Since, almost 50% of the farmer are small and marginal farmers and the agriculture loans are not cost free and the farmer approaching a bank for a loan of over Rs.1 lakh, has to spend more than Rs 3,000 just for documentation. This expenditure of 3% of the loan value even before the loan is disbursed is a prohibitive levy.

Plight of Farmers: In 2013-14 as well as 2014-15 the unseasonal heavy rains, thunder and hailstorms have ravaged the due-for-harvesting chana, lentils and wheat in Madhya Pradesh, wheat mustard, cumin  and all other crops in Rajasthan and onions and grapes in Maharashtra. Instead of an expected bumper harvest on the back of excellent monsoons, farmers reaped only misery.

To conclude, India needs a better customised and well targetted farm sector loans policy for the exclusive benefit of real cultivators, including tenant cultivators. Indirect agricultural loans be altogether be stopped from being reported as agriculture loans, atleast to arrive at the priority sector lending targets. In addition to it the insurance outreach for farm sector too needs to be spread fast, as hardly 5-10 percent of the farmers are able too avail crop insurance benefits. Plight of the ordinary farmers can be well understood from the mere fact that if 3 lac farmers have committed suicides since 1991 in the country, the remaining 100 million farmers and their families too are surviving in the same socio-economic circumstances, in which those 3 lacs have committed sucide. Hence, agriculture needs a 360° approach for the redressal of their problems to allevite the plight of neo-liberal economic reforms.