Development Watch – Week #3 February ’24
Development News
Rural economy may be a dark horse for 2024
Ongoing geopolitical rubbings and linked logistic constraints could cause volatility in the prices of goods and commodities. According to LGT wealth, the rural economy in India is expected to revive in FY2025, with a focus on mid-and-small cap stocks and sectors catering to rural consumption. The market mood is positive, with a rise in SIP contributions and a flurry of NFOs. Investors need to look at managers with robust research processes and reasonable fund manager bandwidth to consider allocations during NFOs. The RBI also hopes to maintain steady rates in the first half of 2024. There may be potential rate cuts later in the year due to disinflationary conditions.
Retail inflation eases for rural workers
Retail inflation for farm workers and rural labourers has eased marginally to 7.52% and 7.37% in January as compared to the previous month. This is mainly due to prices of food items. In December 2023, Consumer Price Index-Agricultural Labourers (CPI-AL) and Consumer Price Index-Rural Labourers (CPI-RL) was 7.71% and 7.46% respectively. Various organizations are also working on financial inclusion in rural India.
Building solar power without harming nature
Land is of prime importance when it comes to solar panels. Even animals need humans to solve climate change. Loss of habitat is a top driver of a staggering global decline in biodiversity. The boom in solar power is set to be the fastest-growing energy source in the US. However, there are ways for solar developers to make installations less harmful and even beneficial for many species. In the United States, as solar farms sprout nationwide, measures go unused. A patchwork of local and state regulations governing large-scale solar. 80% of states rely on voluntary approaches to minimize impacts to species and habitat.
It is worth noting that all kinds of energy development exact a toll on all kinds of plants and animals. Oil and natural gas reduce habitat and can cause pollution, including catastrophic spills. Wind turbines come with bird and bat collisions. Solar farms need much more land per land per unit of energy. Up to one-third of potential solar development in the US could overlap with areas that have high value for wildlife movement. Rooftop and other small scale solar (even in deserts?) can go a long way toward taking pressure off big installations.
Rs. 30 lakh Crores investment by 2030 for COP pledges
India will need Rs. 30 lakh crores in investment during financial year 2024-30 to meet its COP climate pledges. At COP-26 held in 2021, India has committed to an ambitious 5-part “Panchamrit” pledge. They included reaching 500 GW of non-fossil electricity capacity, generating half of all energy requirements from renewables. This would also include reducing emissions by 1 billion tonnes by 2030. India as a whole also aims to reduce the emissions intensity of GDP by 45%. Finally, India commits to net-zero emissions by 2070. There is a critical need for substantial investment to meet India’s Nationally Determined Contributions (NDC) goals by 2030. Investment is required in manufacturing of capacity for solar, electrolysers, wind and battery, transmission, green hydrogen, solar, hydro, wind and waste to energy sectors.
EVs for sustainable logistics and reducing costs
The Indian government’s ambitious targets for net-zero emissions by 2070 and reducing logistics costs below 8% of GDP drive the need for a green logistics ecosystem. There is a crucial role played by multi-modal integrated transportation and digitization. There is a potential cost reduction of 6% through Zero Emission Transportation (ZET) vehicles. Adopting greener fuels and electric vehicles can significantly reduce 14% carbon emissions contributed by trucks. EVs also boast approximately 40% lower carbon emissions than ICE vehicles. They also operate at a fuel cost 20% lower than fossil fuels. Initiatives like FAME-II, incentives for manufacturing and adopting EVs, and the development of charging infrastructure has also been crucial.
Infrastructure projects by Indian companies in West Asia
L&T is likely in the race to acquire a major EPC order with respect to Safaniyah oilfield whose expansion is being deferred. L&T’s bidding pipeline in West Asia remains strong, with prospects in Blue Ammonia, de-sulphurization, petro-chemical projects, Indian market and Aramco projects. Last month, Aramco announced its decision to pause expansion of its oil production capacity following a governmental directive. Aramco would target a maximum sustained production capacity of 12 million barrels per day (bpd), 1 million bpd below a target announced in 2020.
Foundation stone for 550 Amrit Bharat stations
On 26 February, the Indian PM will lay the foundation stone of 550 Amrit Bharat stations to improve facilities at railway stations. So far, 1,318 stations have been selected under the Amrit Bharat Station scheme. The facilities will include rooftop plazas and city centres at a cost of Rs. 40,000 Crores. The PM will also lay the foundation stone of nearly 1,500 road over-bridges and under-bridges across different states during a function that will be conducted virtually at over 2,000 railway stations.
The Amrit Bharat Station scheme involves the preparation of master plans and their implementation in phases to improve amenities at the stations through improvement of station access, high-level platforms (760-840 mm), circulating areas, executive lounges, landscaping, spaces for business meetings, lift/escalators as necessary, cleanliness, free Wi-fi, kiosks for local products through schemes such as “One Station, One Product”, and better passenger information systems. It also envisages improvement of buildings, integrating stations with both sides of cities, multimodal integration, amenities for persons with disabilities, provision for ballast-less tracks, ‘roof plazas’, and creation of city centres at the station.