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Development Watch – Week #2 June ’23

Development News

States to provide information on stuck housing projects

Union ministry of Housing & Urban affairs (MoHUA) has directed chief secretaries of all states and union territories to provide requisite information on stalled projects in their respective jurisdictions. in April 2023, the Ministry constituted a 14-member committee headed by Amitabh Kant to examine stalled real estate projects and suggest remedial measures so that they can be delivered to homebuyers. Following the Ministry’s directive, the state governments have reached out to homebuyers’ associations to provide details in addition to the information already available with authorities.

Forum for People’s Collective Efforts (FPCE) has recommended compiling data on stalled projects. In 2019, the governemt established an AIF-Special Window for Affordable and Mid-Income Housing Fund (SWAMIH) Investment Fund. It is worth Rs. 25,000 crores and has been set up to provide last-mile funding for stalled housing projects. This will help infuse liquidity in stressed projects to help homebuyers get delivery of stuck projects.

App-based premium buses being introduced in Delhi

Delhi will get premium buses under a scheme by the state government. Delhi Premium Bus Aggregator Scheme aims to run a unique bus service. Citizens will be able to book seats from a dedicated mobile app. The AC buses will also feature WiFi, CCTV Cameras, panic buttons. The ticket prices will be higher than for DTC tickets. CNG buses which are not older than 3 years will be used in the premium service. The policy will be shared online for public feedback.

Private companies’ sops for building Nicobar Port

Private companies have sought incentives to set up the proposed International Container Transshipment Port in the Great Nicobar Island. The greenfield development will be located in Galathea Bay. The Great Nicobar Project is significant for India since nearly 75% of shipped cargo is handled at ports outside India. Colombo, Singapore and Klang handle more than 85% of this cargo, with Colombo port alone handling 45% of this. Indian ports can thus save $200-220 million each year on transshipment cargo if the Galathea project is materialized. Incentives sought by private companies include Hybrid Annuity PPP model. Under this, the central government through its arms hold 70% stake. Private participant gets 30% during construction stage.

India to expand global aviation operations

India has frozen extension of flying rights to middle east countries to encourage Indian airlines to fly widebody aircrafts, and provide direct connectivity to North America and Europe. Air India is said to be in favour of the freeze as it plans to increase direct connectivity through long-haul flights. India wants to grow it’s presence in global skies. So far India has lop-sided bilateral aviation pacts with 116 countries. These allow quotas on basis of seats or flights per week. The countries distribute these quotas to their respective airlines. Signed mostly prior to 2014, the CAG found that these preexisting pacts mostly favored foreign carriers.

The foreign airlines made full use of these rights to operate flights to and from India, while Indian rights remained under-used. Indian airlines keep extending the bilateral rights without launching flights to use those rights. The government has now told Indian airlines that it would allot international flying rights for this year’s winter schedule. It would begin from end of October, on the basis of their capacity utilization. Indian airlines required 5 years of operational experience and a fleet of 20 aircrafts to become eligible for foreign flights. But in 2017, the 5-year rule was dropped. On the other hand, Dubai and Singapore have become major aviation hubs largely by Indians flying to North America and Europe. Nearly 2/3 of India’s international passenger traffic is carried by foreign airlines.

Restoration after devastating train accident in Balasore

According to a statement by South Eastern Railway Chief Public Relations Officer (CPRO), trains are reported to be running on all four lines and all lines are fit for use. He also said that compensation has been given for 661 casualty cases so far and Rs. 22.66 Crores have been disbursed in connection with the accident that took place on June 2. It involved collision of two passengers and a goods train. Regular maintenance was going on and speed of trains was kept slow near the place. Both CBI and Commissioner of Railway Safety teams were collecting data and working in coordination, along with a forensic team at the accident site. The accident in which 288 people died involved Shalimar-Chennai Coromandel Express, Bengaluru-Howrah Express, and a goods train.

Surge in demand for Solar Energy

Driven by solar power booms and high fuel prices, renewable energy has surged in India. According to a report by International Energy Agency (IEA), high fuel prices prices, resulting from Russia’s attack on Ukraine, boosted the rollout of solar and wind power installations. It is expected to reach 440 gigawatts in 2023 in India. The global installed capacity would go to 4,500 GW. About 2/3 of this year’s increase in renewable power capacity will come from Photo-voltaics. This includes both large-scale solar farms and consumer rooftop installations. However, power grids must be upgraded and expanded to cope with the intermittent nature of solar and wind power. This requires a fundamentally different approach by network operators compared with existing coal, gas, or nuclear plants.

India’s green goals offer $500 billion business opportunity

According to the CEO of ReNew Power, India has set a target to nearly triple its generation capacity from non-fossil sources by 2030. India is the world’s 3rd largest emitter of greenhouse gases. To reach the generation capacity, the government is planning to auction 50 gigawatts of wind, solar and hybrid projects every year. This will offer companies in the renewable energy sector a massive opportunity. In addition to building wind and solar projects, the government is seeking investments in domestic manufacturing of solar panels to make India self-reliant. ReNew power has plans to invest in the de-carbonization chain. The company with about 8 gigawatts of operational capacity is among India’s top renewable producers. Another 4-gigawatts a year solar modules manufacturing plant will become operational this year.

Retail inflation eases to two-year low of 4.25%

India’s consumer price index (CPI) based inflation has remined within RBI’s tolerance band of 2-6% for the third consecutive month. This is as per the data released by Ministry of Statistics. A Reuters poll of 45 economists had predicted inflation to come down to 4.42% in May. This is down from 4.70% in April. This number is set to be the lowest since October 2021. The number can be attributed to moderation of food and fuel prices apart from the base effect.

Other factors include easing price of cereals and vegetables, lower energy prices, and sharp fall in international prices of LPG and kerosene. However, the impact of El Nino disturbances, higher MSP price increases and late arrival of monsoons could be upside risks for inflation trajectory in future. Despite heat waves across the agriculture-dependent country, price rises in food could be kept in check by lower input costs. Government is also regularly intervening to curb price spikes.

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