K.Venugopal
With the oil bill this year likely to be as much as the entire net tax revenue of the Central government, over Rs. 500,000 crore, the government has been left with little room for manoeuvre.
Every time one of those large supertankers takes on a consignment of 250,000 tonnes of crude oil at a West Asian port for delivery to a refinery in India, the oil company that wants to buy the cargo has to open a letter of credit for over Rs. 1,000 crore. “The amounts have become so large that there are few banks in India that can handle such deals on their own,” remarked a director at one of India’s large private sector refineries. His refinery buys four tanker loads of crude oil a month; the country needs about 480 such loads a year. At today’s price, the total value of crude oil the country will consume this year will be as much as the net tax revenue of the Central government, over Rs. 500,000 crore. That is the scale of the oil economy, and the problem that has been spawned by the doubling of the price of crude oil in just 12 months.
Rising under-recoveries
It is not just the refining companies that are struggling to write out the cheques. Private sector oil companies, of course, are saving their skins by exporting much of their products profitably at international prices, which generally rise in tandem with that of crude oil and provide pure-play refiners with adequate profit margins. On the contrary, public sector oil companies are not so well placed. They now pay the substantially higher price for crude, but get more or less the same price for the products they market to domestic customers with the government maintaining a tight lid on what they can charge. While the prices of LPG and kerosene have remained unchanged, those of petrol and diesel have increased but marginally over the past year. As a result, under-recoveries at the public sector oil companies are Rs. 600 crore a day, and unless compensated adequately and quickly, they will soon run out of cash. If they are then unable to keep the petroleum pipelines full and flowing, the consequences for the economy will be disastrous.
The options
Such is the bind the government is in. As the owner of the public sector oil companies, it has to prevent them from going bust. There are three different pockets it can pick some extra cash from: One, it can ask consumers to pay more; two, it can ask ONGC, the oil-producing company to give up some of the windfall gains made on domestically produced oil; and three, it can ask the oil marketing companies to thin their profit margins. Indeed, over the past year, as oil prices gradually crept up, all three ideas were used. Consumers were asked to bear a nominal increase in the price of diesel and petrol; aviation turbine fuel prices were also marked up requiring passengers to pay a higher fuel surcharge. ONGC was granted only a little more than half the international price for the oil it produced. As these measures were inadequate, the government issued bonds to the oil companies that they could hawk in the market and add the proceeds to their sales revenue. With those in the account books, the public sector oil companies were able to show an 18 per cent growth in profits in April-Dec 2007 over the same nine months in 2006. For the government, the oil bonds are a clever accountant’s creation; they are like any other form of borrowing, but they will not be shown as part of the fiscal deficit. A future generation of taxpayers will repay the bondholders and bear the burden of keeping petro prices steady for today’s consumers.
Never mind the murmurs and misgivings from the various quarters, the accounting jugglery was able to keep the system up and running till March. With crude oil prices continuing to rise steeply, what the government is confronted with now is a much bigger problem, and worse, there is much less room for manoeuvre. If global prices of crude oil stayed at the current level through the year, the oil companies will lose close to Rs. 200,000 crore. The obvious solution is to increase prices for consumers. That would send the signal the market usually puts out for consumers to curtail their consumption. An increase in use efficiency usually results and that will not be such a bad thing considering the effect the burning of fossil fuels has on the planet’s climate. Yet with the general elections less than a year away, the government seems to worry more about the impact an increase in petroleum prices will have on the general inflation level, which is already above 7 per cent. From hindsight, it is easy to say that the government ought to have let petroleum prices find their market levels a couple of years ago when inflation was low, at around 4 per cent. In any case, that opportunity was lost.
To keep consumer prices where they are, the Opposition parties have suggested that the Centre reduce taxes on petroleum so that the oil companies can keep more of the consumer rupee. On the face of it, this appears a reasonable suggestion but it could be both inadequate and unfair. The Centre collected about Rs. 71,000 crore in excise and import duties on petroleum in 2006-07, which means that even if the duties were forsaken entirely, they would provide just 40 per cent of the need. On the other hand, without such revenue the budget would be weakened leading to spending cuts on many a social programme. While petroleum is used in the production of most goods and even services, not every one in the population enjoys it in equal measure. Just one third of the country’s households, for instance, use LPG in the kitchen. Of course it is much the cleaner fuel, and every attempt must be made to make it more accessible. But as things stand, the less fortunate in the population, who make do with firewood and farm residue, gain nothing from a stable LPG price. It would be a rather unjust denouement if a reduction in any government social programme should impact this section of society.
Surprisingly State governments have not figured in this debate thus far. They are no mean players in this stage, earning collectively over Rs. 62,000 crore in sales tax on petroleum products in 2006-07. Will they be called upon to make a sacrifice in revenue this time?
If the past is any guide, the Central government will be tempted to issue more oil bonds, which means postponing the hard decision, thrusting the burden on the next government, while making it appear that it has handled the situation. By all accounts, it will succumb to that. It will also deny ONGC the full international price for domestic oil, and it will ensure that the oil marketing companies make minimal profits.
More efficient use
Having worked its creative accountants to the full, the government may claim it has won the battle, but it will lose the war. The proper response to a doubling in the oil price would be to ensure a more efficient use of the resource that the world knows is limited and exhaustible. At less than three million barrels of oil out of the 86 million the world consumes each day, India is by no means a large consumer. Yet consumption is rapidly gathering pace, and that is not just because of the fast-growing economy and the commensurate need for transportation. With electricity generation capacity not rising fast enough — only half the capacity increase promised in the Eleventh Plan (2002-07) did fructify — there is an exceptionally large-scale use of petro fuels to generate power both for the grid and for captive use. Rural electrification has made slow progress, forcing farmers to fall back on diesel pumps. Coastal shipping and inland water transport, that imply more energy-efficient cargo movement, have not found official encouragement.
On their own, consumers do respond appropriately to price signals; they know how to moderate consumption when the purse is pinched. If the government insists on shielding its consumers from global price changes, then it must take on the role of modulating consumption. Some one will need to bear the pain.
© Copyright 2000 - 2008 The Hindu
Saturday, May 24, 2008
Oh, these oil prices! - The Hindu
As global crude prices continue to rise, the United Progressive Alliance government needs urgently to put in place a strategy to deal with the fiscal and inflationary consequences — if it is not to be checkmated. Under the present system of subsidised domestic pricing for petrol, diesel, kerosene, and the LPG, the country’s public sector oil marketing companies (OMCs) lose more than Rs.500 crore a day. With international prices topping $130 a barrel, twice what they were a year ago, and India importing more than 70 per cent of its needs, the annual cumulative losses are expected to exceed Rs.180,000 crore. Unless these losses are made good through budgetary support, the public sector oil undertakings will be forced to compromise their investment and exploration plans to the detriment of the country’s future energy security. The dilemma of the UPA government is this: If domestic prices for oil products rise, inflation, which is already high, will increase. With the 15th general election due within a year, the political consequences are feared. But if prices are left untouched, the fiscal deficit will increase, again with inflationary consequences. Two key issues need to be addressed clear-sightedly. Who should bear the subsidy burden? Secondly, how can the subsidy bill be brought down? The answer to the first question is obvious: the OMC losses must be borne by the Central budget, not by PSU balance sheets. The answer to the second question is more complex.
Right now, about 40 per cent of the retail sale price of petrol and diesel consists of excise and import duties. Sales tax constitutes another 15 per cent to 25 per cent depending on which State one is in. Reducing these levies, while moderating the increase in retail prices, will improve the bottom line of the OMCs. Nearly a quarter of Central tax revenues come from levies on oil products but given the other positive trends in the economy, it should be possible to calibrate an excise-cum-subsidy adjustment that is broadly revenue-neutral. Over the medium-term, a prudent tax policy will require a widening of the revenue base away from excessive dependence on petro products. With the average oil price predicted to hit $150 and even $200 a barrel in the months ahead, the slack provided by excessive indirect taxation will eventually be exhausted. Protecting the poor by subsidising kerosene is one thing but there is no reason why the owners of private vehicles, for example, should be protected from global price trends. The real longer-term answer is taking energy conservation seriously. This means a strategic policy of targeting the present energy inefficiencies, reducing the energy-intensity of the economy, expanding public transportation, and sending out the right price signals towards this end. That will be good economics as well as good politics, also because it will be a progressive response to the critical challenge of climate change.
Right now, about 40 per cent of the retail sale price of petrol and diesel consists of excise and import duties. Sales tax constitutes another 15 per cent to 25 per cent depending on which State one is in. Reducing these levies, while moderating the increase in retail prices, will improve the bottom line of the OMCs. Nearly a quarter of Central tax revenues come from levies on oil products but given the other positive trends in the economy, it should be possible to calibrate an excise-cum-subsidy adjustment that is broadly revenue-neutral. Over the medium-term, a prudent tax policy will require a widening of the revenue base away from excessive dependence on petro products. With the average oil price predicted to hit $150 and even $200 a barrel in the months ahead, the slack provided by excessive indirect taxation will eventually be exhausted. Protecting the poor by subsidising kerosene is one thing but there is no reason why the owners of private vehicles, for example, should be protected from global price trends. The real longer-term answer is taking energy conservation seriously. This means a strategic policy of targeting the present energy inefficiencies, reducing the energy-intensity of the economy, expanding public transportation, and sending out the right price signals towards this end. That will be good economics as well as good politics, also because it will be a progressive response to the critical challenge of climate change.
Tuesday, May 6, 2008
Reservations on the road: pause, reflect & learn
Tathagata Chatterji
To become successful, the BRT or any other transit system needs to grow beyond mere traffic engineering. Socio-cultural parameters need to be built in, right from the conceptualisation stage.
The experimental Bus Rapid Transit (BRT) system in Delhi, which reserves a portion of the road space to facilitate fast movement of high capacity buses and prioritises public transport over private, has been facing a barrage of vitriolic media criticism ever since its inception. A wary Union Urban Development Ministry has now ordered a review of the Rs.2,883-crore BRT plan for eight other cities — Ahmedabad, Bhopal, Indore, Jaipur, Pune, Rajkot, Visakhapatnam and Vi jayawada. Apart from this, Chennai is also planning a BRT under a separate funding pattern.
The controversy has put a question mark over the future of mobility in urban India. But before we apply permanent brakes — under political and media pressure — on a system which has succeeded in several big cities across the world, we need to pause, reflect and learn the appropriate lessons.
Cities across India are now choked with cars. Between 1981 and 2001, on an average, the population of the six metro cities multiplied by 1.8 times but the number of vehicles increased by over 6 times. With 1,396 cars per square kilometre, Chennai today has a higher car density than the vastly more affluent Berlin. The crisis is sure to escalate further as the new set of mini-cars hits the roads in the near future.
Cars occupy 75 per cent of road space but are used by less than 15 per cent of the populace even in the most affluent Indian cities. In contrast, buses occupy a mere 8 per cent of the road area but are used by almost 20 to 60 per cent of the people. Pedestrians and cyclists constitute an overwhelming 40 to 75 per cent of commuters but are completely marginalised in our planning system as a major part of budget allocations is consumed for road widening or flyover building, which primarily benefit cars and two wheelers.
Compare this with New York, London, Paris or Singapore — the high temples of international finance. These are all cities where people get around on foot, by cab or via mass transit. Urban policies discourage private cars. With oil prices consistently hovering above $100 a barrel and the threats of global warming looming large, there is a clear need to reprioritise our urban transportation policy in favour of public transit.
Among the major urban mass transit options, the road-based bus rapids are much more economical in terms of capital cost and offer greater operational flexibility compared to rail based systems like Metro or Light Rail Transit (LRT). For the cost of one km of a metro system, about 8 to 10 km of LRT or a 30-50 km modern bus network can be developed. In terms of day-to-day running costs and ability to move large numbers of people at high speed, dedicated bus transits enjoy certain advantages over LRT systems.
However, electric powered rail based systems are environmentally more sustainable — when running in full capacity — and have been better able to attract motorists as many stations offer park and ride facility. They also enjoy a better public image. In India, the Delhi Metro has emerged as a benchmark of efficiency in public service, even though running under huge state subsidy.
It is of course wrong to see different mass transit options in an ‘either-or’ context, as great cities frequently have a combination of all, most often with integrated ticketing and connection at key junctions for seamless transfer. The bus rapids, light rails and tramways frequently act as feeders to the metro system.
The appropriateness of the transit alternative depends on ridership pattern and economic profile of the area. Another important factor in integrated planning is scalability. That is, a particular region may start with BRT, with an eventual plan of changing over to LRT or full-fledged metro, at a future date, as demand increases.
Rede Integrada de Transporte, the world’s first bus rapid transit, was pioneered in 1974 in the Brazilian industrial city of Curitiba. Enrique Peñalosa, the former mayor of Columbia’s capital, Bogotá, started the famed Transmileno BRT in 2001 as part of his visionary concept of a more inclusive urban space. He sought to give the city back to the people through an integrated policy for pedestrian and cycle friendly streets and affordable mass transit. In doing so, of course, he had to overcome extreme political hostility.
The Transmileno is now universally acknowledged as the most advanced BRT system, and operates almost like a surface metro — even with grade separation in stretches. It has attractive stations with wheelchair access, bicycle parking and air conditioned low floor buses. The central control room monitors bus movements, round the clock, through GPS and synchronises traffic lights.
The success of Bogotá has inspired other bus rapids such as the Los Angles Orange Line, Ottawa Transitway, and Adelaide O-bahn. Several Chinese cities are going big on BRT and the Beijing one will be opened before the Olympics. Of course, success in other countries does not guarantee the success of BRT in India, as we have a unique, heterogeneous traffic pattern. In most of our cities, overspeeding cars, buses, tempos, zigzagging bikers, slow push carts and jay walking pedestrians all jostle for road space with little regard for road discipline. On the other hand, adverse feedback from a small stretch in South Delhi does not mean that BRT cannot succeed elsewhere in India, for each city has certain inherent internal characteristics.
Chennai, Mumbai or Kolkata have a much more compact urban form, a longer tradition of public transit and better road discipline than Delhi. The Delhi NCR has a sprawling spatial pattern, great distances and more cars than the combined figure of the other three metros.
Although appropriate at a broad conceptual level, the BRT implementation in Delhi has suffered due to poor detailing and lack of interdisciplinary coordination amongst the stakeholder agencies.
Undoubtedly, cars and two wheelers offer the most comfortable door-to-door journey, particularly for distances up to 15-20 km. Since the primary objective of the BRT is to reduce road congestion, all successful systems in the world offer high-quality vehicles that are clean, easy to board, and comfortable to ride. Lack of synchronisation
But what the Delhi BRT has rolled out are the same accident prone, rickety tin-pot Blueline buses charging down the road in competitive frenzy. The high capacity low floor buses originally proposed and ordered for the segment have been grossly inadequate in numbers. Obviously, the bus procurement plan and BRT implementation were not synchronised.
The Delhi Metro, in contrast, from the very beginning, had caught the public imagination, with its spic and span image, punctuality and attention to quality. Urban India is no longer willing to accept something second-rate and obsolete.
Pedestrians, who should normally have first claim on the road in any mature city, have become the missing dimension in our transportation policy. Be it the BRT or any of the newly opened flyovers which criss-cross our cities today, the case is the same: Desperate women trying to jump over the medians or old men running through the maze of traffic to cross the road are sights common enough in India.
Thus the BRT has bus stops along the central verge, but without any quick crossover. In our country, pedestrian crossovers get built only after a few fatalities — as an afterthought. Elevated foot over bridges with long stair climbs are of course a cruel joke on the disabled and the aged. But then who cares?
To become successful, the BRT or any other transit system needs to grow beyond mere traffic engineering. Socio-cultural parameters need to be built in, right from the conceptualisation stage. The issues of equity and social justice in the urban physical realm are seldom explored. We need to make our urban transportation policies more inclusive, equitable and sustainable. But the crux of the challenge lies in co-ordinated policy implementation. Failing this, the future of mobility in urban India will forever remain stuck in a jam.
(The author is a Delhi-based architect and urban planner.)
© Copyright 2000 - 2008 The Hindu
To become successful, the BRT or any other transit system needs to grow beyond mere traffic engineering. Socio-cultural parameters need to be built in, right from the conceptualisation stage.
The experimental Bus Rapid Transit (BRT) system in Delhi, which reserves a portion of the road space to facilitate fast movement of high capacity buses and prioritises public transport over private, has been facing a barrage of vitriolic media criticism ever since its inception. A wary Union Urban Development Ministry has now ordered a review of the Rs.2,883-crore BRT plan for eight other cities — Ahmedabad, Bhopal, Indore, Jaipur, Pune, Rajkot, Visakhapatnam and Vi jayawada. Apart from this, Chennai is also planning a BRT under a separate funding pattern.
The controversy has put a question mark over the future of mobility in urban India. But before we apply permanent brakes — under political and media pressure — on a system which has succeeded in several big cities across the world, we need to pause, reflect and learn the appropriate lessons.
Cities across India are now choked with cars. Between 1981 and 2001, on an average, the population of the six metro cities multiplied by 1.8 times but the number of vehicles increased by over 6 times. With 1,396 cars per square kilometre, Chennai today has a higher car density than the vastly more affluent Berlin. The crisis is sure to escalate further as the new set of mini-cars hits the roads in the near future.
Cars occupy 75 per cent of road space but are used by less than 15 per cent of the populace even in the most affluent Indian cities. In contrast, buses occupy a mere 8 per cent of the road area but are used by almost 20 to 60 per cent of the people. Pedestrians and cyclists constitute an overwhelming 40 to 75 per cent of commuters but are completely marginalised in our planning system as a major part of budget allocations is consumed for road widening or flyover building, which primarily benefit cars and two wheelers.
Compare this with New York, London, Paris or Singapore — the high temples of international finance. These are all cities where people get around on foot, by cab or via mass transit. Urban policies discourage private cars. With oil prices consistently hovering above $100 a barrel and the threats of global warming looming large, there is a clear need to reprioritise our urban transportation policy in favour of public transit.
Among the major urban mass transit options, the road-based bus rapids are much more economical in terms of capital cost and offer greater operational flexibility compared to rail based systems like Metro or Light Rail Transit (LRT). For the cost of one km of a metro system, about 8 to 10 km of LRT or a 30-50 km modern bus network can be developed. In terms of day-to-day running costs and ability to move large numbers of people at high speed, dedicated bus transits enjoy certain advantages over LRT systems.
However, electric powered rail based systems are environmentally more sustainable — when running in full capacity — and have been better able to attract motorists as many stations offer park and ride facility. They also enjoy a better public image. In India, the Delhi Metro has emerged as a benchmark of efficiency in public service, even though running under huge state subsidy.
It is of course wrong to see different mass transit options in an ‘either-or’ context, as great cities frequently have a combination of all, most often with integrated ticketing and connection at key junctions for seamless transfer. The bus rapids, light rails and tramways frequently act as feeders to the metro system.
The appropriateness of the transit alternative depends on ridership pattern and economic profile of the area. Another important factor in integrated planning is scalability. That is, a particular region may start with BRT, with an eventual plan of changing over to LRT or full-fledged metro, at a future date, as demand increases.
Rede Integrada de Transporte, the world’s first bus rapid transit, was pioneered in 1974 in the Brazilian industrial city of Curitiba. Enrique Peñalosa, the former mayor of Columbia’s capital, Bogotá, started the famed Transmileno BRT in 2001 as part of his visionary concept of a more inclusive urban space. He sought to give the city back to the people through an integrated policy for pedestrian and cycle friendly streets and affordable mass transit. In doing so, of course, he had to overcome extreme political hostility.
The Transmileno is now universally acknowledged as the most advanced BRT system, and operates almost like a surface metro — even with grade separation in stretches. It has attractive stations with wheelchair access, bicycle parking and air conditioned low floor buses. The central control room monitors bus movements, round the clock, through GPS and synchronises traffic lights.
The success of Bogotá has inspired other bus rapids such as the Los Angles Orange Line, Ottawa Transitway, and Adelaide O-bahn. Several Chinese cities are going big on BRT and the Beijing one will be opened before the Olympics. Of course, success in other countries does not guarantee the success of BRT in India, as we have a unique, heterogeneous traffic pattern. In most of our cities, overspeeding cars, buses, tempos, zigzagging bikers, slow push carts and jay walking pedestrians all jostle for road space with little regard for road discipline. On the other hand, adverse feedback from a small stretch in South Delhi does not mean that BRT cannot succeed elsewhere in India, for each city has certain inherent internal characteristics.
Chennai, Mumbai or Kolkata have a much more compact urban form, a longer tradition of public transit and better road discipline than Delhi. The Delhi NCR has a sprawling spatial pattern, great distances and more cars than the combined figure of the other three metros.
Although appropriate at a broad conceptual level, the BRT implementation in Delhi has suffered due to poor detailing and lack of interdisciplinary coordination amongst the stakeholder agencies.
Undoubtedly, cars and two wheelers offer the most comfortable door-to-door journey, particularly for distances up to 15-20 km. Since the primary objective of the BRT is to reduce road congestion, all successful systems in the world offer high-quality vehicles that are clean, easy to board, and comfortable to ride. Lack of synchronisation
But what the Delhi BRT has rolled out are the same accident prone, rickety tin-pot Blueline buses charging down the road in competitive frenzy. The high capacity low floor buses originally proposed and ordered for the segment have been grossly inadequate in numbers. Obviously, the bus procurement plan and BRT implementation were not synchronised.
The Delhi Metro, in contrast, from the very beginning, had caught the public imagination, with its spic and span image, punctuality and attention to quality. Urban India is no longer willing to accept something second-rate and obsolete.
Pedestrians, who should normally have first claim on the road in any mature city, have become the missing dimension in our transportation policy. Be it the BRT or any of the newly opened flyovers which criss-cross our cities today, the case is the same: Desperate women trying to jump over the medians or old men running through the maze of traffic to cross the road are sights common enough in India.
Thus the BRT has bus stops along the central verge, but without any quick crossover. In our country, pedestrian crossovers get built only after a few fatalities — as an afterthought. Elevated foot over bridges with long stair climbs are of course a cruel joke on the disabled and the aged. But then who cares?
To become successful, the BRT or any other transit system needs to grow beyond mere traffic engineering. Socio-cultural parameters need to be built in, right from the conceptualisation stage. The issues of equity and social justice in the urban physical realm are seldom explored. We need to make our urban transportation policies more inclusive, equitable and sustainable. But the crux of the challenge lies in co-ordinated policy implementation. Failing this, the future of mobility in urban India will forever remain stuck in a jam.
(The author is a Delhi-based architect and urban planner.)
© Copyright 2000 - 2008 The Hindu
Monday, May 5, 2008
Retaining competitiveness of the services sector - The Hindu
Hoda committee recommends education reform and development councils
The growth of the financial services sector will be hampered by shortage of qualified people.
— PHOTO: V. SUDERSHAN Anwarul Hoda (left), Chairman, High Level Group on Services Sector, with Montek Singh Ahluwalia, Deputy Chairman of Planning Commission, releasing a report on services sector recently in New Delhi.
To enhance the competitiveness of the services sector, the high level group set up by the Planning Commission has recommended that the education system must be reformed and expanded. The skill deficit in almost all service sectors must be eliminated through concerted action and the physical infrastructure, including the urban infrastructure and civic amenities, brought to world standards.
The group, chaired by Planning Commission member Anwarul Hoda, noted: “Shortages exist equally at the level of managers and supervisors, and of skill categories. In some categories, the numbers being turned out by the institutions are extremely inadequate, while in other, the quality of trainees is poor and they need to undergo ‘finishing’ process so that they become employable.” It has, therefore, recommended the establishment of the private sector led development councils for each sub-sector, broadly on the model of the Construction Industry Development Council.Urban infrastructure
Of particular interest to the services sector, the group report said, was the quality of urban infrastructure, including sewerage, drainage, water supply, solid waste management and urban transportation.
This was important in any city for smooth movement of people and goods. “All cities must have an integrated traffic and transportation plan, the implementation of which should be monitored by a Unified Metropolitan Transport Authority, as envisaged in the National Urban Transport Policy.
In large cities, a major requirement is provision of mass rapid transit systems, connecting various parts of the cities, including the railway stations and airports. The competitiveness of the services sector is affected if too much time of the worker is taken in commuting between residence and the workplace. In view of the increasing congestion and rising costs in existing metros, it is necessary for the State governments to promote new townships.”
Trade in IT and ITeS being a main driver of growth in India’s trade in services in recent years, this sector has been dealt with in detail. India has become a leader in IT and BPO offshore segments, accounting for an estimated 64 per cent of offshore IT spends and 41 per cent of offshore BPO spends in 2007. The report noted: “India cannot aspire to become a knowledge society with a Gross Enrolment Ratio — GER — of 11 per cent, against the world average of 23.2 per cent. It has become imperative to consider ways of expanding the system for higher education.”
The group recommended that constraint of educational institutions being run only by non-profit organisations be removed, and the concern for social equity be met by mandating full or part scholarship seats for meritorious students who do not have the means to pay the fees. To start with, this could be tried in technical education.
To deal specifically with the security concerns of systems in this critical sector, the group suggested that a separate data protection law, in conformity with EU directives on data protection and EU Safe Harbour Decision is imperative.Tourism
With tourism accounting for 5.83 per cent of the GDP and 8.27 per cent of employment in the country, it called for special attention. It has been estimated that the shortfall in tourist accommodation in the country will be 1.50 lakh rooms by 2010, of which more than one lakh will be in the budget category. As land prices and availability were the main bottlenecks, the State governments could arrange for long-term lease of lands for hotel development. Similarly, the Indian Railways could speed up the proposal for development of budget hotels in its land on a PPP basis. Beach tourism was of particular interest and the Coastal Regulation Zone requirements have posed a major barrier. The group calls for a decision in line with prevailing practices in other countries.
It has also recommended special incentives and tax breaks for development of convention centres and promotion of Meetings, Incentives, Conference and Exhibitions (MICE).
There has been considerable focus on health, medical education, and medical insurance too.
The group emphasised the need for early implementation of the National Commission for Enterprises in the unorganised sector for a health insurance scheme for BPL families — about five crore families in five years.
Considering the number and the variety of services, the group set up two sub groups — one on the financial sector (headed by ICICI Bank Managing Director K. V. Kamath), and another on tourism (headed by ITC’s Executive Director S. S. H. Rehman). These sub-groups submitted their reports, which were incorporated in the final report.Financial services
The projected shortage of manpower in financial services, notably banks and insurance, has been underlined in the report, which calls for consolidation among players and leverage of the synergistic benefits.
The growth of the financial services sector will be hampered by shortage of qualified people, unless there was investment in educating and training professionals. “There is need for vocational training to equip those with high school and graduate level qualifications with skills for financial sector jobs.” On bank jobs, it specifically recommends: Individual banks should be given the freedom to determine their recruitment, placement, promotion, performance evaluation, and compensation policies, including performance bonuses and stock options.
These are essential tools in attracting, retaining, and leveraging human capital, which is a key competitive differentiator.
V. JAYANTH
© Copyright 2000 - 2008 The Hindu
The growth of the financial services sector will be hampered by shortage of qualified people.
— PHOTO: V. SUDERSHAN Anwarul Hoda (left), Chairman, High Level Group on Services Sector, with Montek Singh Ahluwalia, Deputy Chairman of Planning Commission, releasing a report on services sector recently in New Delhi.
To enhance the competitiveness of the services sector, the high level group set up by the Planning Commission has recommended that the education system must be reformed and expanded. The skill deficit in almost all service sectors must be eliminated through concerted action and the physical infrastructure, including the urban infrastructure and civic amenities, brought to world standards.
The group, chaired by Planning Commission member Anwarul Hoda, noted: “Shortages exist equally at the level of managers and supervisors, and of skill categories. In some categories, the numbers being turned out by the institutions are extremely inadequate, while in other, the quality of trainees is poor and they need to undergo ‘finishing’ process so that they become employable.” It has, therefore, recommended the establishment of the private sector led development councils for each sub-sector, broadly on the model of the Construction Industry Development Council.Urban infrastructure
Of particular interest to the services sector, the group report said, was the quality of urban infrastructure, including sewerage, drainage, water supply, solid waste management and urban transportation.
This was important in any city for smooth movement of people and goods. “All cities must have an integrated traffic and transportation plan, the implementation of which should be monitored by a Unified Metropolitan Transport Authority, as envisaged in the National Urban Transport Policy.
In large cities, a major requirement is provision of mass rapid transit systems, connecting various parts of the cities, including the railway stations and airports. The competitiveness of the services sector is affected if too much time of the worker is taken in commuting between residence and the workplace. In view of the increasing congestion and rising costs in existing metros, it is necessary for the State governments to promote new townships.”
Trade in IT and ITeS being a main driver of growth in India’s trade in services in recent years, this sector has been dealt with in detail. India has become a leader in IT and BPO offshore segments, accounting for an estimated 64 per cent of offshore IT spends and 41 per cent of offshore BPO spends in 2007. The report noted: “India cannot aspire to become a knowledge society with a Gross Enrolment Ratio — GER — of 11 per cent, against the world average of 23.2 per cent. It has become imperative to consider ways of expanding the system for higher education.”
The group recommended that constraint of educational institutions being run only by non-profit organisations be removed, and the concern for social equity be met by mandating full or part scholarship seats for meritorious students who do not have the means to pay the fees. To start with, this could be tried in technical education.
To deal specifically with the security concerns of systems in this critical sector, the group suggested that a separate data protection law, in conformity with EU directives on data protection and EU Safe Harbour Decision is imperative.Tourism
With tourism accounting for 5.83 per cent of the GDP and 8.27 per cent of employment in the country, it called for special attention. It has been estimated that the shortfall in tourist accommodation in the country will be 1.50 lakh rooms by 2010, of which more than one lakh will be in the budget category. As land prices and availability were the main bottlenecks, the State governments could arrange for long-term lease of lands for hotel development. Similarly, the Indian Railways could speed up the proposal for development of budget hotels in its land on a PPP basis. Beach tourism was of particular interest and the Coastal Regulation Zone requirements have posed a major barrier. The group calls for a decision in line with prevailing practices in other countries.
It has also recommended special incentives and tax breaks for development of convention centres and promotion of Meetings, Incentives, Conference and Exhibitions (MICE).
There has been considerable focus on health, medical education, and medical insurance too.
The group emphasised the need for early implementation of the National Commission for Enterprises in the unorganised sector for a health insurance scheme for BPL families — about five crore families in five years.
Considering the number and the variety of services, the group set up two sub groups — one on the financial sector (headed by ICICI Bank Managing Director K. V. Kamath), and another on tourism (headed by ITC’s Executive Director S. S. H. Rehman). These sub-groups submitted their reports, which were incorporated in the final report.Financial services
The projected shortage of manpower in financial services, notably banks and insurance, has been underlined in the report, which calls for consolidation among players and leverage of the synergistic benefits.
The growth of the financial services sector will be hampered by shortage of qualified people, unless there was investment in educating and training professionals. “There is need for vocational training to equip those with high school and graduate level qualifications with skills for financial sector jobs.” On bank jobs, it specifically recommends: Individual banks should be given the freedom to determine their recruitment, placement, promotion, performance evaluation, and compensation policies, including performance bonuses and stock options.
These are essential tools in attracting, retaining, and leveraging human capital, which is a key competitive differentiator.
V. JAYANTH
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