liberalization and industrial policy

Question 1

Karnataka Engg research policy?

Answer 1

country’s maiden Engineering Research & Development (ER&D) Policy.

Highlights :

• seeks to raise contribution to the sector in the country to 45% in the next five years.
• It has the potential to create over 50,000 jobs in the ER&D space in five years.
• The policy aims to prepare the State to make use of the future opportunities emanating from this sector.
• It has identified five key focus sectors such as aerospace and defence; auto, auto components and EV; biotechnology, pharma and medical devices; semiconductors, telecom, ESDM; and software products.

Question 2

potential of Engg research and Development?

Answer 2

According to industry apex body Nasscom, ER&D has the potential to become a $100-billion industry in the country in the next five years.

The ER&D sector in the country is the fastest growing industry with a CAGR of 12.8%. Meanwhile, the global engineering research and development industry is expected to reach a spend of $2 trillion by 2025.

Question 3

National Export Insurance Accounut (NEIA) Scheme?

Answer 3

• NEIA Trust was set up in 2006 to promote project exports from India that could be of strategic and national importance.
• The Trust promotes medium and long term (MLT) project exports by extending (partial/full) support to covers issued by ECGC to MLT project export and to Exim Bank for Buyer’s Credit (BC-NEIA) tied to project exports from India.

Question 4

Export Related Schemes and Initiatives taken by Govt. in last few years to combat COVID induced stress?

Answer 4

1. Foreign Trade Policy (2015-20) extended upto 30-09-2021 due to the COVID-19 pandemic situation.
2. Rs 56,027 crore released in September 2021 to liquidate all pending arrears under all script base Schemes to provide liquidity in the COVID-19 times.
3. Roll out of a new Scheme – Remission of Duties and Taxes and Exported Products (RoDTEP). Rs 12,454 crore sanctioned for the Scheme in the FY 2021-22. It is a WTO compatible mechanism for reimbursement of taxes/ duties/ levies, which are currently not being refunded under any other mechanism, at the central, state and local level.
4. Support to the textiles sector was increased by the remission of Central/ State taxes through the ROSCTL scheme, which has now been extended till March 2024.
5. Trade Infrastructure for Export Scheme (TIES), Market Access Initiatives (MAI) Scheme and Transport and Marketing Assistance (TMA) schemes to promote trade infrastructure and marketing.
6. Government approves continuation of the National Export Insurance Account (NEIA) scheme and infusion of Rs. 1,650 crore Grant-in-Aid over 5 years.

Question 5

What is an International Securities Identification Number (ISIN)?

Answer 5

• An ISIN is a 12-digit alphanumeric code that uniquely identifies a specific security.
• The numbers are allocated by a country’s respective national numbering agency (NNA).
• ISINs are used for numerous reasons including clearing and settlement. The numbers ensure a consistent format so that holdings of institutional investors can be tracked consistently across markets worldwide.
• The ISIN code is the only common securities identification number that is universally recognized.

Question 6

Lesson from Air India sale?

Answer 6

• Priorities: Public commercial enterprises have unfair disadvantages in human resources. Air India had 12 trade unions, employees per plane were double global standards, and employee cost was an abnormal 20 per cent of revenues.
  
  • The state’s core job — security, primary healthcare and education, research funding, justice delivery, etc — suffered after Independence because scarce public resources were diverted to doing things that the private sector could do better. Air India’s sale represents a welcome shift in policy.
  • Unfortunately, public sector governance mirrors Agatha Christie’s Murder On The Orient Express — if everybody did something, then nobody can be held accountable.
  • No civil servant running Air India could deliver the “tone from the top” that JRD Tata did. An employee recalls “JRD would walk the aircraft, checking furnishings for stains, toilets for cleanliness, curtains for fraying, and windows for dust”. A note from JRD admonished “the tea served on board from Geneva is, without exaggeration, indistinguishable in colour from coffee. I don’t know whether this is due to the quality of tea leaves or excessive brewing”.
• Resources:
  
  • In 1953, the Hungarian economist Janos Kornai warned that state sector firms indulge in “investment hunger” and don’t fear losses because they know they will be bailed out. Kornai termed this excessive money appetite as “soft” budget constraints.
  • Air India cost the government only Rs 2.5 crore to buy, but it has incinerated Rs 1.1 lakh crore since 2009 (this could fund 15 years of school mid-day meals or be used to set up 660 medical colleges).
  • Air India’s nationalisation cost about Rs 20 crore in losses per day and its monopoly caused a 25-year delay in India becoming the third-largest civil aviation market.
  • The government’s creativity and persistence in divesting Air India must be replicated with most of the remaining 360-plus central PSUs. In parallel, with state government finances also ravaged by the pandemic, states privatising over 1,500 poorly run state PSUs could ease fiscal woes. Federalism is also about being responsible with public funds provided by taxpayers and devolved by the Union government.
• Mindset:
  
  • 1970s government’s belief in its omnipotence is captured by the PMO bureaucrat PN Haksar’s response to an application for private scooter capacity expansion — reject it and set up Scooters India (another misadventure).
  • The command, control and conquer mindset of the 1955 Avadi resolution — century-old second-hand ideas of a dead German guy — ignored our folk wisdom of jahaan raja vyapaari, vahaan praja bhikaari.
  • Under Deng Xiaoping and Zhu Rongji, China converted over two-thirds of its state-owned enterprises to private ownership, boosting productivity manifold.
  • the top ranks of Norway, Sweden, and Finland in government spending as a share of GDP are financed by their private efficiency. India needs to increase it tax to GDP ratio from 18% to 30% powered by a large, dynamic, and inclusive economy that finances focused, accountable, and decentralised state spending.
• The “fatal conceit” represented by Air India’s seven-decade tragedy suggests we need better role balancing between the three pillars of team India — private, public, and nonprofits. Or what poet Brij Narayan Chakbast called anasir mein zahur-e-tarteeb (orderliness among elements).
• In 1984, JRD Tata told the by then retired PN Haksar, “I began my 55-year-old career as an angry young man because I couldn’t stomach foreign domination… I end it as an angry old man… because the system of licences and controls not only discourages honest free enterprise but encourages a new breed of incompetents, bribers, and tax evaders”.