Development Watch – Week #4 May ’23
Support for ‘universal access’ to green power
The G20 Energy Transition working group committee has agreed on universal access to modern and sustainable energy and its priority in energy transition. This is being seen as a major potential success area under India’s presidency. Solar energy was initially favoured as the most important. With time, other options such as small hydel and wind have also come up.
Deliberations of the working group are around 6 priority areas. These include technological gap for energy transition, mobilizing low-cost financing, energy security and diversified supply chains. Additionally, fuel for future, energy efficiency measures and just energy transition are high-priority areas. Technologies such as carbon capture and utilization, high-efficiency fuel cells and electrolysers, modular reactors and alternative chemistry for batteries have also been agreed upon.
Off-shore oil blocks-cum-wind farms
Ministry of New and Renewable Energy (MNRE) is in discussions with Ministry of Petroleum and Natural Gas (MoPNG) to combine exploration of offshore hydrocarbon blocks, with offshore wind farms for better synergies. This allows maximum energy extraction through the same resource or block. Initial discussion with stakeholders has been positive. This idea assumes significance as India gets ready to float its first offshore wind seabed lease tender shortly. The first phase of offshore wind projects will be located along the coasts of Tamil Nadu and Gujarat, with a combined potential of 70 GW. Both the states have shown interest in purchasing offshore wind power at a competitive tariff rate of Rs. 4/- per unit in the initial projects.
Mumbai 3rd biggest data center market in Asia-Pacific
Mumbai Metropolitan Region (MMR) has emerged as the third biggest data center market in Asia-Pacific after Shanghai and Tokyo during March Quarter FY-22. The capacity in Mumbai stands at 2,337 MW, while that in Shanghai is 2,692 MW, and 2,575 MW in Tokyo. The growth in data center sector is driven by increase in internet usage across commerce, social media, entertainment, and cloud adoption. A study by Knight Frank focuses on 9 rapidly emerging markets in the Asia Pacific region, namely, Bangkok, Hong Kong, Kuala Lumpur, Mumbai, Seoul, Shanghai, Singapore, Sydney and Tokyo. The latter 5 have a high percentage of their capacity in live segment. This indicates higher level of commissioning and demand.
$2.3 billion Investment in Hospitality for next 5 years
A report by CBRE South Asia states that total investment in the hospitality sector during 2020-2023 is likely to exceed $0.4 billion. 12,000 hotel rooms are likely to be added in 2023. Till 2025, the number of hotel rooms may grow at an expected CAGR of 3.3% by 2025. A strong vaccination programme, reopening of borders, removal of travel restrictions, and sustained economic growth have put hospitality sector on a recovery path. The report is titled “Indian Hospitality Sector: On a Comeback Trail” and is one of the first such reports for the sector.
Puri-Howrah Vande Bharat Express in Odisha
On May 22, The Prime Minister flagged off the Puri-Howrah Vande Bharat Express and launch other railway projects in Odisha. The projects are valued at more than Rs. 8,000 Crores, including redevelopment of Puri and Cuttack railway stations. The Puri-Howrah VB would cover a distance of 500 km in 6.5 hours. The ultra-modern semi-high-speed train is equipped with state-of-the-art passenger amenities. It will pass through Khordha, Cuttack, Jaipur, Bhadrak and Balasore districts in Odisha. In West Bengal, it will travel through Paschim Medinipur and Purba Medinipur districts. The train will also provide a faster, more comfortable and convenient travel experience to passengers. It will contribute towards boosting tourism and promoting economic development in the region.
Government’s plan for Civil Aviation sector
The government is formulating a 3-pronged strategy for the country’s fast growing civil aviation market. Quoting the potential, domestic passengers have risen to 144 million in 2019 from 60 million in 2014 (CAGR 14.5%). The focus of Civil Aviation Ministry would be to create capacity, ensure there are no bottlenecks for industry players, and have simplified processes and procedures. Efforts are also no increasing the number of airports, heliports and waterdrones from 148 to 200 in 394 years’ time. According to the Civil aviation secretary, there is huge potential to increase international air connectivity in India.
High growth in aerospace sector in India
According to a recent statement made by the Finance Minister, India’s aerospace and civil market is on a high growth trajectory. This was in reference to a bulk order for aircraft placed by Indian companies. Additionally, aircraft leasing operations have been undertaken by banks in GIFT-IFSC based at GIFT City in Gujarat. Aircraft manufacturers are being invited to invest in India. To see India not just as a captive market but as a hub for the region as a whole. India can position itself as a maintenance-repair-operations (MRO) hub between Europe to Africa to Far East.
Rural demand and private consumption to drive growth
India’s GDP growth for the April-June quarter in 2023 (Q1 of FY24) is to be driven primarily by private consumption, revising rural demand and renewed uptick in manufacturing. Presently global economy is transfixed in cross-currents of slowing growth and high inflation. An uneasy calm prevails in global financing markets as they wait for clearer signals from policy authorities. These pertain to banking regulation and supervision, and contours of deposit insurance. There has also been a release of pent-up demand for contact-intensive services. In 2021-22, private consumption had grown at 11.2%. In rural areas, growth will also depend on Kharif marketing season of 2022-23 and Rabi marketing season of 2023-24.
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