Books / Papers, Development Goals, India - U.S., Politics / Globalisation

The new India-US partnership in the Indo-Pacific: Peace, prosperity and security

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Over the years, India earned the epithet of a reluctant power in Asia — exuberant in its aspirations, yet guarded in its strategy. However, as the challenges in its immediate neighbourhood and beyond continue to evolve, India is today gearing up to embrace a larger role in the far wider theatre of the Indo-Pacific.

Forming the core of the ongoing global economic and strategic transitions are a rising and assertive China, an eastward shifting economic locus, and the faltering of Western-led multilateral institutions. These converge with domestic development and national security objectives to demand that India strive to expand its presence, reach, and voice both on land and in the sea in its extended neighbourhood. Today, New Delhi is actively seeking to create opportunities for mutual development in the Indo-Pacific, in the Arabian Sea and in Africa even as it engages like-minded nations in the pursuit and preservation of a rules-based order that promotes transparency, respect for sovereignty and international law, stability, and free and fair trade. In both these endeavours, the United States is an appropriate and willing partner. As Indian Prime Minister Narendra Modi stated in his address to the US Congress in 2016, “[a] strong India-US partnership can anchor peace, prosperity, and stability from Asia to Africa and from the Indian Ocean to the Pacific.”

The US has been a principal architect and the traditional guarantor of a liberal economic and maritime order in the Indo-Pacific. While the commentariat in the US and India might express apprehension at the idea of US President Donald Trump’s ‘America First’ strategy, this moment must be seen as an opportunity to rebalance the Indo-US relationship to reflect a real convergence of strategic interests, as opposed to an abstract engagement based on values alone and one that has disregarded the core interests of both countries.

Even as the phrase ‘free and open Indo-Pacific’ replaces ‘Pivot to Asia’, it is clear that the US will continue to play an important role in the region.

The US is acutely aware that disengagement is not an option when the contests of the region are, in fact, irrevocably moving both westwards and eastwards, and ever closer to its own spheres of influence. Thus, maintaining an influential presence and assets in the region effectively responds to its agenda. The US continues to retain an unequivocally large military presence in the Indo-Pacific. Moreover, Washington appears intent on finding ways to address shortfalls in its defence budget. The most recent defence bill specifically authorises the establishment of the new Indo-Pacific Stability Initiative to increase US military presence and enhance its readiness in the Western Pacific. As it remains an invested actor across the Middle East and in Afghanistan, and as it confronts an unrelenting North Korea, it must seek to empower regional like-minded nations such as India, which it recognises as having an “indispensable role in maintaining stability in the Indian Ocean region.”

US Secretary of State Rex Tillerson’s remarks at the Center for Strategic and International Studies a few days before his visit to India in the fall of 2017 is a testament to the continuity of the relationship: “The increasing convergence of US and Indian interests and values offers the Indo-Pacific the best opportunity to defend the rules-based global system that has benefited so much of humanity over the past several decades.” In a way, the title of his speech, “Defining Our Relationship with India for the Next Century”, should set the tone for the Indo-US relationship; and this new direction must not be influenced even by changes in leadership in the two capitals. It must first be imagined and then crafted as a multi–decade relationship that engages with the disruptions that abound in a multipolar world. This 21st century partnership must take into account each country’s economic trajectory, political values and strategic posture. The Indo-Pacific region will be the theatre in which this partnership will truly be realised. Both President Trump and Prime Minister Modi seem cognizant of this reality, and are intent on creating a new blueprint for this long-term engagement.

The terms of this bilateral cannot be limited to maintaining the regional balance of power. Rather, both countries, in concert with other likeminded powers, have a stake in enabling and incubating a peaceful, prosperous, and free Indo-Pacific. As these countries align in their desire to see a new regional architecture emerge, the following present themselves as the most crucial domains where a strengthened India-US The New India-US relationship can have deep and influential impact in a region that matters to the whole world:

Defence trade and technology

India’s designation as a ‘major defense partner’ of the US, and the Defense Technology and Trade Initiative provide a bilateral platform for defence trade and technology sharing with greater ambitions and at a faster pace. The ‘Make in India’ initiative strengthens scope for coproduction and co-development. The new appetite for business reforms is catalysing the largest volumes of foreign direct investment ever received by the country.

As India undertakes broader defence transformation initiatives, US defence companies can collaborate with New Delhi in its USD 150 billion military modernisation project. They can do this by jointly identifying the gaps and working together to equip Indian forces in the short run. This must be followed by cooperation on advanced technologies to help build up the country’s defence manufacturing base in the longer term.

Continuous progress on these fronts will enhance Indian capabilities, enable greater readiness of Indian forces, and level the playing field. Specifically, priority military hardware, technologies and areas for joint production need to be identified. Pending sales, such as that of the Guardian RPVs, need to be expedited, along with the micro unmanned aerial vehicle project. Further, the matter of quality and subsequent liability of equipment made in India through joint Indian-US ventures needs immediate attention. Additionally, the hesitation of US companies in sharing proprietary and sensitive technology is a concern that will need to be taken up on a case-by-case basis.

Maritime freedom and security

There is a rare moment of clarity in US and Indian policy circles on the importance of each other in this region. This is important if the countries are to act as “anchor of stability” in the Indo-Pacific.

It is time to begin conversations on new arenas of military cooperation, intelligence sharing, and strategic planning, to include advanced platforms like fifth-generation fighters, nuclear submarines, and aircraft carriers. Already, the two countries share a maritime security dialogue, which was instituted in 2016, as well as working groups on aircraft carrier technology and jet engine technology. They should be strengthened further and complemented by new working groups.

The annual Malabar exercise, which now formally includes a third partner, Japan, is another key feature of military cooperation, improving coordination and interoperability. Adding to these efforts are the Logistics Exchange Memorandum of Agreement, which will create maritime logistic links, and a white shipping agreement which promotes regional maritime domain awareness.

India-US maritime security cooperation is critical because it supports efforts that prioritise joint stewardship for ensuring freedom of navigation and unimpeded trade across a maritime common that is a major conduit for commercial and energy supplies, and is rich in natural resources, ecosystems, and biodiversity. Moreover, the Indian Ocean Region is extremely vulnerable to extreme weather events that are likely to increase significantly in the coming years. To address these developments, the US and India can cooperate to provide humanitarian assistance and disaster relief missions in the region.

Further, the two sides are committed to resisting the aggression that China has displayed in the South China Sea and elsewhere in the Indo-Pacific. Indo-US cooperation in the Indo-Pacific must also serve to affirm the principles of freedom of navigation and peaceful settlement of maritime disputes.

An expanded bilateral maritime partnership that involves transfer of technology to build India’s capacity in the Indian Ocean Region will help create a more stable and balanced security architecture there. This same partnership should explore new forms and formats of joint exercises and naval drills, such as anti-submarine warfare and maritime domain awareness missions, and encourage support for Indian leadership as “force for stability” in the IOR.

Blue economy

India and the US must also collaborate to promote a market-driven blue economy as a framework for growth and prosperity in the Indo-Pacific — home to bountiful hydrocarbon, mineral, and food resources, as well as burgeoning coastal populations.

India and the US can further elevate cooperation in marine research and development to create common knowledge hubs and share best practices. They can collaborate to develop mechanisms and foster norms that ensure respect for international law. The US can support regional collaboration in the Indo-Pacific to explore new and environmentally conscious investment opportunities in maritime economic activities and industries, such as food production and coastal tourism. Direct investments in Indian efforts, such as in identified coastal economic zones and the Sagarmala initiative, and participation in regional groupings like the Indian Ocean Rim Association, are two ways in which it can do so.

Effectively, the US can support India in creating a resilient regional architecture in the Indo-Pacific that places an emphasis on stability, economic freedom, growth and maritime security.


Today, states in the Indo-Pacific are in dire need of funds and expertise to improve infrastructure development and regional connectivity. Beijing has introduced its own project — the Belt and Road Initiative — through which it is investing in infrastructure initiatives across Eurasia and the Indo-Pacific. While connectivity is undoubtedly the primary aim of the project, it is increasingly clear that China seeks to expand its political and military influence in the region under the aegis of the BRI. To prevent the emergence of an Asian order inimical to the rules-based order, states must work together to forge a more inclusive approach towards an emerging regional architecture. This framework must be willing to accommodate everyone, including China, in connectivity projects from Ankara to Saigon, or the sea lanes seeking to link ASEAN with Africa.

For this to occur, pragmatic, democratic, and normative powers need to first create a political narrative within which Asia’s connectivity will take place. This narrative must underscore the importance of good governance, transparency, rule of law, and respect for sovereignty and territorial integrity. This can then be posited against strictly bilateral projects such as the BRI, which burden participating countries with debt and environmentally unsound projects. This alternative proposition to China’s BRI can then become the blueprint for connectivity and integration from Palo Alto to Taipei, Bengaluru to Nairobi, and Tel Aviv to Addis Ababa. The possibilities are endless and straddle hard infrastructure, digital connectivity, knowledge clusters, and value chains in the Indo-Pacific space.

The India-US partnership has an important role to play in this respect. The American vision of the Indo-Pacific Economic Corridor supplements India’s Act East policy, and India-US cooperation in physical and soft infrastructure can link cross-border transport corridors; help create regional energy connections; and facilitate people-to-people interactions. Further, India and the US can cooperate as “global partners”, with US investment in Indian projects in Africa. Accordingly, the Asia-Africa Growth Corridor proposed by Japan and India can provide a common platform to all three states. Further, the US can nurture burgeoning regional partnerships between Japan, South Korea, Australia, and India, as these countries work towards building a consultative and collective Asian framework.

Digital connectivity, trade, and technology

Digital connectivity merits particular attention. After all, in the next decade, the largest cohort of internet users will emerge from the Indo-Pacific region. China is working aggressively to ensure that digital platforms in the region will be influenced by its own model for cyberspace premised on sovereignty. A major part of China’s BRI is the new “information silk road”, which facilitates investments by Chinese companies in South Asia’s internet architecture.

Accordingly, the US and India must cooperate to ensure that digital platforms, trade, connectivity and norms are shaped according to the democratic and open nature of the internet. To do so, they must create a framework that responds to developing-country imperatives such as affordable access, local content generation and cybersecurity. Already, Prime Minister Modi’s ‘Digital India’ programme provides a model for other states in the region to use internet-enabled technology to spur economic growth. India’s Aadhaar initiative, a unique digital identity programme, has already generated significant interest amongst South Asian states. American companies have increasingly sought to adopt standards and technologies to leverage this platform and build new markets in India. For example, WhatsApp has integrated with India’s unified payments interface to provide digital payments. Examples of other development initiatives are also abundant. Elsewhere, the Google RailTel initiative aims to provide WiFi at 400 railway stations across India by 2018.

India-US bilateral cooperation in using the digital as a tool for economic development and empowerment can be the template to connect the three billion emerging users in other developing countries in the Indo-Pacific and across Africa. As digital norms are institutionalised — whether pertinent to data flows and e-commerce, or related to critical infrastructure, defence, and public services — there is a real opportunity for India and the US to build and subsequently provide a model working relationship for the digital economy. Effectively, the US and India can propose a set of ‘Digital Norms for the Indo-Pacific’ that can be operationalised under their various dialogues and mechanisms for cooperation in the region.




Books / Papers, Water / Climate

New Room to Manoeuvre: An Indian Approach to Climate Change

Books / Papers, Columns/Op-Eds, Energy

The false debate on India’s energy consumption

Economy & Society

Samir Saran & Vivan Sharan

Original link is here

Despite having among the largest coal reserves in the world, India lags far behind in consumption, at less than a fifth of China’s levels.[1]  The average Indian’s coal consumption is around 20 percent that of the average US citizen, and 34 percent that of the average OECD citizen. And yet, in international negotiations, India finds itself caught in a shrill and binary debate pitching growth against climate. This is a false debate, which stems from the inability of the current mercantilist system to grant all actors a fair share of the “carbon space” – the amount of carbon dioxide-equivalent emissions that can be released into the Earth’s atmosphere without triggering dangerous climate change.

In international negotiations, India finds itself caught in a shrill and binary debate pitching growth against climate

India’s position in climate negotiations is based on the importance of access to energy for human development. This is supported by data, including the positive correlation between energy access and the Human Development Index (HDI).[2]  Estimates vary on how much energy is needed to meet basic human needs (hereafter referred to as “lifeline energy”). The methodologies vary depending on whether these basic needs are considered through the prism of GDP growth targets, HDI levels, or calculations of the energy needed to meet a predetermined set of development goals.[3]

This essay will argue that, if the climate debates have allowed even a nominally equitable level of coal consumption towards meeting lifeline energy needs, India currently has immense room for manoeuvre. The analysis relies on a benchmark metric: that 2,000 watts (W) per capita is a basic level of lifeline energy, covering housing, transport, food, consumption (of manufactured goods), and infrastructure. This is based on a study by Novatlantis, which demonstrates that this level of consumption could power daily life in Western Europe.[4]  Therefore, lifeline energy is defined liberally in this study, as being high enough to cover the minimum lifestyle needs of citizens in developed countries.

Consumption after the financial crisis

While developed countries such as OECD and EU member states have reduced per capita coal consumption since the financial crisis, developing countries such as India have increased consumption over the same period. This reduction by developed countries does not necessarily reflect a greater degree of climate “responsibility”, and, conversely, the increase in consumption by India does not reflect “irresponsibility”, as this analysis will demonstrate. Table 1 shows the total per capita consumption of key regions and countries that are shaping the climate change discourse.


Countries/Regions 2005 2009 2014
US 2,580.8 2,147.5 1,887.6
China 1,324.4 1,674.4 1,909.6
Germany 1,308.9 1,162.7 1,269.7
Japan 1,260.2 1,127.9 1,321.5
India 217.2 279.3 377.3
World 640.9 675.7 717.3
of which:   OECD 1,316.0 1,143.0 1,100.6
                  Non-OECD 484.7 571.9 635.1
                  EU 846.8 705.6 704.8

Source: BP Statistical Review of World Energy, 2015; The World Bank; author’s calculations

Taking a closer look at coal consumption before and after the financial crisis, it is apparent that the trends are nuanced. Two key sub-trends are visible in Table 2, which tracks coal consumption against total primary energy consumption. The first is that, while developed countries have been cutting total energy consumption, developing countries have been increasing it, albeit at a gradually declining pace since the crisis. Second, while developed countries have cut coal consumption faster than total primary energy consumption, developing countries have increased coal consumption faster than total primary energy consumption. Clearly, then, coal consumption is very much part of the lifeline consumption matrix for developing countries since they require base load generation for industrial-driven economic growth (which is a prerequisite in countries such as India for improving the HDI and generating employment).


Regions Category 2006 2009 2010 2011 2012 2013 2014
OECD TOTAL 0% -5% 3% -2% -1% 0% -2%
COAL 0% -11% 6% -2% -5% 0% -2%
Non-OECD TOTAL 4% 0% 4% 4% 2% 1% 1%
COAL 6% 2% 2% 6% 1% 1% 0%
EU TOTAL 0% -6% 4% -4% 0% -1% -4%
COAL 3% -12% 5% 2% 3% -3% -7%

Source: BP Statistical Review of World Energy, 2015; The World Bank; author’s calculations

Finally, Table 3 shows that the average citizen of the US and of China both consume nearly the entire 2,000W lifeline energy benchmark in the form of coal. Conversely, in India’s case, only about 19 percent of the 2,000W benchmark is consumed in the form of coal. In fact, citizens of OECD countries get a much larger proportion of their energy needs from coal than citizens of non-OECD countries. This is also a function of the disparity in per capita energy consumption as a whole between developed and developing countries – while coal consumption as a percentage of lifeline energy in developed countries is decreasing, the gap between the per capita coal consumption of developing and developed countries remains vast.


Countries/Regions 2005 2009 2014
US 129% 107% 94%
China 67% 84% 95%
Germany 65% 58% 63%
Japan 63% 56% 66%
India 11% 14% 19%
World 32% 34% 36%
of which:   OECD 66% 57% 55%
                  Non-OECD 24% 29% 32%
                  EU 42% 35% 35%

Source: BP Statistical Review of World Energy, 2015; The World Bank; author’s calculations

India’s twin imperatives

The World Bank’s Special Envoy on Climate Change recently stated that “clean energy is the solution to poverty, not coal”.[5]  This is a view that resonates within a number of development-financing institutions based in OECD countries. For instance, the US Export-Import Bank stopped funding greenfield coal power generation projects worldwide in 2013. The World Bank also seems to be moving in this direction, even though coal consumption has been increasing in developing countries and coal-based energy remains the most practical option at a large scale.[6]  This narrative isolates economic growth from lifeline energy and skirts over the role of growth in development.

The preceding analysis attempts to address some myths related to coal consumption. First, in per capita terms, developed countries in fact consume much more coal than developing countries: The average OECD citizen consumes about double the coal of the average non-OECD citizen. China is a notable exception. And if Chinese per capita coal consumption is a benchmark, the debate on India’s consumption is clearly redundant.

The average Indian already spends much more on renewable energy (as a proportion of income) than counterparts in China and the US

The per capita trends show that India will supply a larger proportion of its 2,000W benchmark through clean(er) fuels than developed countries. There is enough room for India to increase its coal consumption while continuing to accelerate its renewable-energy thrust. India has set a target renewable-energy capacity of 175 gigawatts by 2022. This means that it will be among a handful of countries to source a large proportion of its lifeline energy needs from non-conventional sources. The average Indian already spends much more on renewable energy (as a proportion of income) than counterparts in China and the US.[7]  To spend even more, purchasing power will need to grow, and so, in turn, will lifeline consumption.

This has clear implications for India, and for other similarly placed developing countries. Unlike developed countries, which have already seen peaks in their energy consumption, India must respond to two imperatives. First, to increase its lifeline energy as well as clean energy. This means that the country will have to ensure financial flows towards lifeline energy, make coal consumption more efficient, and engage with the international financial system to ensure that regulations do not make clean energy investments more costly than they already are. Second, and at the same time, lifestyle emissions need to start adhering to or approximating the Swiss model, which shows that “daily life in Western Europe could be powered by less than one-third of the energy consumed today&rd[8]  The estimated 20 million people at the top of India’s socio-economic pyramid, and large companies that consume as much energy as counterparts in developed countries, must be included within the paradigm of “climate responsibility”.

[1]   In 2014, China accounted for more than half the world’s coal energy consumption, at around 3.9 billion tonnes of oil equivalent, while Organisation for Economic Cooperation and Development (OECD) countries consumed just over half this figure. China’s target of capping coal consumption at 4.2 billion tonnes by 2020 was welcomed by OECD countries. See data from the BP Statistical Review of World Energy, June 2015, available at; “China seeks to cap coal use at 4.2 billion tonnes by 2020”, Agence France-Presse, 19 November 2014, available at

[2]   UNDP, 2013; The World Bank, n.d.

[3]   Shripad Dharmadhikary and Rutuja Bhalerao, “How Much Energy Do We Need?”, Prayas Energy Group, May 2015, available at, Dharmadhikary and Bhalerao, “How Much Energy Do We Need?”)

[4]   Novatlantis, “The 2,000-Watt Society”, 2007.

[5]   Rachel Kyte, “World Bank: clean energy is the solution to poverty, not coal”, theGuardian, 10 August 2015, available at

[6]   Sunjoy Joshi and Vivan Sharan (eds), “The Future of Energy”, Observer Research Foundation, 2015, available at

[7]   Samir Saran and Vivan Sharan, “Indian leadership on climate change: Punching above its weight”, Planet Policy blog, The Brookings Institution, 6 May 2015, available at

[8]   Dharmadhikary, Shripad and Bhalerao, Rutuja, “How Much Energy Do We Need?”, Prayas (Energy Group), May 2015.


Rebalance and Reform Pic

Books / Papers, Columns/Op-Eds, In the News, Politics / Globalisation

Rebalance & Reform : An Agenda for The New Government


July 14, 2014, Monday, Niti Central

Original link is here

Samir Saran along with Mr. Raja Mohan, Mr. Manoj Joshi & Mr. Ashok Malik, authored a different kind of a book. Usually these kind of books get stocked up in reference sections of an economist’s library, but this is out in the market. While speaking on the situation that the Nation has been through in the last decade, he says, “UPA’s lack of political direction has resulted in economic crisis”. The book suggests ways to rebalance and reform the political situation for a brighter future.

Rebalance and Reform

Books / Papers, Non-Traditional Security, Politics / Globalisation, Uncategorized



ORF Faculty members Nandan Unnikrishnan, Samir Saran and Uma Purushothaman have provided inputs for this Policy Perspective.

The Russia-India-China (RIC) grouping is the only body that brings together the three largest Asian countries at a time when there is a churning in the existing security architecture in the region. But, RIC seems to have lost steam amidst the alphabet soup of
multilaterals in which the three countries are engaged, despite some efforts lately to rejuvenate the forum.

Together, Russia, India and China occupy around 50 percent of Asia’s landmass. The three countries constitute some of the largest economies in Asia. They certainly also have the largest political stakes in the region. There are a lot of potential synergies among the three countries, making a compelling case for their collaboration. Therefore, it is natural that they should have a significant say in the emerging governance architecture in their neighbourhood and be an influential voice on issues of global governance.

Given the commonality of strategic goals, the RIC forum appears to be an appropriate platform that should now identify a unique roster of issues, which would differentiate it from other multilateral organisations, like BRICS and SCO, as well as allow the three powers to specify common objectives in the region and at global forums.

The first task would be to flag important issues in which the forum should engage. This exercise needs to be ambitious as well as steeped in a degree of realism. Congruent interests must also be accommodated in this effort. The three countries need to spell out some of the nuanced yet converging positions on key issues. Keeping these twin objectives in mind, some of the potential areas of engagement at the RIC forum may include:


Afghanistan is an area of interest for the three countries. Moscow, Delhi and Beijing want Afghanistan to be stable and each of them has a significant stake in ensuring that Afghanistan is not a refuge for terrorism or a haven for terrorist organisations. This can build on previous discussions held among the three National Security Advisors trilaterally and among other officials bilaterally. The three could work on projects for the economic development of Afghanistan and integrating the country into the regional economic mainstream, making it a subset of the SAARC effort to create a common South Asian market. Afghanistan can potentially become the geographic trade bridge between South Asia and Central Asia. Towards this end, it would help if Russia is brought into SAARC as an observer. This may have the added benefit of providing a
certain equilibrium to the RIC platform.


There are some global issues on which prima facie the three countries should have similar positions. India, Russia, and China could pursue a dialogue on counter-terrorism issues—starting with the exchange of information. Moreover, the forum could discuss cyber-security and develop a common understanding on cyber-governance. This is important given the growing online populations as well as the rise of digital commerce in all three countries; much of the discourse on management of cyber-space currently emanates from the West. It is important that RIC maintains
the distinction between cyber-governance and cyber-security.


RIC can take up strategic issues, including the emerging security architecture, the situation in West Asia and Central Asia. At the multilateral level, they could discuss coordinating positions within the BRICS and SCO. India should lobby within RIC to promote reforms in the United Nations, including the Security Council, and specifically get RIC to endorse India’s candidature for the Security Council. The three countries should also work towards a consensus on pushing reforms
in institutions of global governance.


There are sufficient synergies between Russia, India and China in Central Asia to justify deep cooperation. The three countries have ongoing bilateral dialogues on Central Asia. They could expand this engagement by also having a trilateral dialogue on the region. RIC must work towards thwarting the rise of Islamic extremism, providing political stability in the region and extending such stability to Afghanistan. The Indian subcontinent could be connected with Russia and Central Asia by developing transportation and telecommunications links via China.


RIC could develop a roadmap for joint collaboration projects in the Russian Far East, which
Moscow is keen on developing. India and China could pitch in with their respective skill and labour competencies as well as investments.


RIC countries can cooperate in non-traditional areas such as disaster management, human trafficking, and drug trafficking by developing joint guidelines on these issues. They could also
enhance their cooperation in counter-piracy and humanitarian relief in the Indian Ocean.


The nuclear non-proliferation regime is witnessing dramatic changes with the temporary deal and talks between the West and Iran. RIC needs to engage with this emerging global nuclear order. Additionally, RIC countries could look at means to enhance civil nuclear cooperation among themselves. India and Russia are already partners and China has long to mid-term plans to enter this space commercially. This would offer India and China the chance to further their claim to play a strategic role in shaping the new nuclear order. It could buttress India’s entry into the four nuclear export control regimes, i.e. the Australia Group, Wassenaar Arrangement, Missile
Technology Control Regime (MTCR) and the Nuclear Suppliers Group.


The three countries should discuss energy security in Asia as they form the core of much of the energy supply and demand of the world. India and China are two of the largest importers of energy and Russia is one of the largest exporters of energy. According to IEA estimates, by 2030, China is projected to consume 200 bcm of gas while India is projected to consume 116 bcm. At the same time, Russia’s gas production is expected to reach 727 bcm while Central Asia is expected to produce around 323 bcm. The three countries could discuss the creation of an Asian energy grid. This would go a long way in ensuring energy security for the region as well as allow these
countries to determine prices suitable to them.


Russia, India and China can broaden joint research, cooperation and exchanges in education, agriculture, healthcare and science. They could also work towards a common understanding on global governance issues like maritime spaces and outer space.


RIC could also discuss a multilateral currency swap arrangement on the lines of the Chiang Mai initiative. They could discuss the possibility of the establishment of a framework for enhanced cooperation among Chambers of Commerce of the three countries and improvement of the exchange of information on commercial opportunities and specific trading conditions in order to boost trade and investment. The RIC should discuss ways and means of promoting bilateral trade—using the trilateral to strengthen bilateral trade ties. Joint projects, for example, in aerospace should also be on the agenda.

The Indo-Russia relationship is one with hardly any differences at the political level. India and Russia should leverage this special relationship in order to deepen China’s integration into the RIC format.

To conclude, RIC stands at a historic moment when it can further Asian integration at a time when the region is seeking to redefine itself. RIC can also significantly influence the development of the new rules of global engagement. This moment must not be lost. To this end, the following specific suggestions may help give the RIC forum greater relevance in the near future:

• Establish an annual RIC summit level meeting;

• Start a RIC dialogue on Central Asia;

• Intensify the RIC Dialogue on Afghanistan;

• Institutionalise a Dialogue of National Security Advisors on Cyber Security and Counter Terrorism;

• Create a joint working group on energy cooperation;

• Create a joint working group on drafting joint guidelines for cooperation in disaster management in the

Nandan Unnikrishnan, Vice-President & Senior Fellow Samir Saran, Vice-President & Senior Fellow Uma Purushothaman, Associate Fellow February, 2014, Observer Research Foundation

ORF Policy perspective

Books / Papers, In the News, Politics / Globalisation

Corporate Governance and Business Responsibility

An Empirical Assessment of Large Indian Companies

GIZ Study booklet

It is widely accepted today that the onus for business responsibility must lie with senior management and Board members of corporations. The contours of what constitutes ‘responsibility’ though are still under discussion and description. However, there is a broad consensus that this must imply integration of environmental, social and economic priorities within the business model and governance processes of companies.

The Board of Directors of any firm have a significant role to play in terms of providing strategic vision as well as performing critical oversight of business operations. Therefore any efforts at embedding sustainability within business operations, whether through mandatory or prescriptive frameworks, must originate at the level of the Board.

Additionally, the entire market ecosystem within which firms operate is also relevant to the business responsibility discourse. For instance, the performance metrics of production supply chains are often overlooked by companies. Even within large companies, oversight of supply chains, are limited to negotiations on price points and timelines. This must see radical transformation. Similarly, long term risk assessment frameworks around environment, social responsibility and good governance practices must become a part of decision making processes at the highest levels.

Lack of awareness at the level of the Board is not the only impediment to holistic integration of sustainability priorities in the case of large Indian companies. For enhanced community engagement to become a pillar of business operations, systemic policy hurdles need to be addressed (for example: inefficient licensing regimes in critical sectors).

In India, like in most other places, corporate governance and business responsibility tend to be viewed as being mutually distinct. However, this study shows that there is visible correlation between adherence to corporate governance regulations and business responsibility norms – which is precisely the paradigm of ‘responsible corporate governance’ that is referred to in this research report.

This study establishes that large companies that already have the basic mandatory processes and governance structures in place are more likely to also be the ones that tend to adhere to voluntary norms. Therefore, further analysis and research is required to study behavioural drivers at the level of the Board as well as the impacts of regulatory processes across and within sectors. On the external front, sustained effort is required by stakeholders to bridge institutional capacity gaps, in order to streamline and harmonise regulatory processes and policies with ‘intra-company’ mechanisms.

So clearly, two sets of core issues need to be addressed. The first, dealing with internal corporate processes; and the second related to the interaction of these with the regulatory environment and societal expectations. This study is the first step in analysing some of the above and beginning an engagement with multiple stakeholders to discover next steps and pragmatic pathways that would allow accelerated adoption of best in class responsible corporate governance practices by all and certainly by the large corporations that have a compelling impact on society, environment and development.

I would like to thank the Indian Institute for Corporate Affairs (IICA) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, for their continued support and guidance in the conceptualisation, and writing of this report. And, I would like to congratulate Vivan Sharan and Andrea Deisenrieder for their stellar work and very interesting research on one of the most debated themes of these times.

Samir Saran

Chairman and CEO, gTrade

Books / Papers, BRICS


Original link is here 

The objective of this document is to formulate a long-term vision for BRICS. This in turn flows from substantive questions such as what BRICS will look like in a decade and what the key priorities and  achievements will be. It is true  that  BRICS is a nascent, informal grouping   and   its   agenda   is  evolving   and   flexible.   Therein  lays  the uniqueness of BRICS. The BRICS leaders have reiterated that  BRICS will work  in  a gradual,  practical and  incremental manner. Nonetheless, the grouping  needs  a long-term vision  to  achieve  its  true  potential for two reasons: (1) to dove-tail  the tactical and individual activities into  a larger framework and direction; and (2) to help in monitoring the progress of the various sectoral initiatives in a quantifiable manner.

The  Track  II BRICS dialogue,  under  the  chairmanship of India  in 2012, has been robust. On March  4th  – 6th,  2012,  academics and experts  from the five BRICS nations—Brazil, Russia,  India,  China and South  Africa— assembled  in  New  Delhi   for  the   4th   BRICS  Academic   Forum. The overarching theme was “Stability, Security  and  Growth.” This  theme is useful for understanding the motivation and ethos of BRICS as a platform for dialogue and cooperation on issues of collective interest.

The  dialogue  led to the drafting of a comprehensive set of recommendations for BRICS leaders  (Annexure 1). The  17  paragraphs that  capture the  recommendations to  the  BRICS leaders  were  reached through a consensual process between  60 academics and experts from the five countries. Forum  delegates  contributed a number of research and policy papers  that  formed  the basis for the enriching discussions. Each of these  papers  highlighted key  areas  for  cooperation, within the  overall construct of the BRICS agenda.  This  research led to a significant build-up of knowledge on BRICS. This  long-term vision document is an attempt to aggregate the dialogue and research that  has fed the Track II process so far and to build upon it.

Broadly speaking, the document is divided into four sections. The first, on ‘Common Domestic Challenges’, aims to pinpoint multiple areas in which sharing experiences and best practices within the BRICS Forum  will help to respond to common problems. For example, BRICS nations have vastly differing levels of educational attainment and healthcare policies. As large developing   countries with  significant  governance challenges,  but  also ‘demographic dividends’ and  other  drivers  of growth  to reap,  BRICS can greatly benefit from innovative ideas emanating from similarly positioned nations.

The  second  the  matic section focuses  on  ‘Growing  Economies, Sharing Prosperity’. Given  the  huge distance that  the  BRICS nations have yet to cover   in   tackling  poverty   and   providing   livelihoods  to   their   rising populations, there  is no option other  than maintaining and  accelerating economic growth.  This  section outlines the necessity of deepening intra- BRICS  and  worldwide   trade   and  economic synergies.   Additionally,  it documents growing energy needs and discusses how the economic growth imperative affects the BRICS discourse on climate change.

The third section, titled ‘Geopolitics, Security and Reform of International Institutions’, outlines an enhanced role for BRICS within an increasingly polycentric world  order.  Within the  United  Nations  (particularly the Security  Council), enhanced BRICS representation can institutionalise a greater  respect  for  state   sovereignty and  non-intervention. In  Bretton Woods Institutions, like the IMF and World Bank, BRICS seeks to reform voting  shares   to  reflect  the  evolved  global  system, different  from  that forged in the immediate aftermath of World War II. Finally,  as leaders  in the   developing   world,   BRICS  nations  seek  to  create   a  development discourse that better represent their aspirations.

The  fourth thematic section, on the  ‘Other Possible  Options for Cooperation’, outlines possible  developments to further collective engagement once the necessary prerequisites are achieved. At the present juncture, it  may  be  too  early  to  think of  BRICS  becoming a  formal, institutionalised alliance. However,  it  is important for the  grouping  to envision a commonality of purpose, continuity of operation and dialogue beyond annual summit meetings.

There are five prominent agendas  of cooperation and  collaboration that emerge from this  vision document. These themes are integral to the very idea of long-term engagement between  the  BRICS nations and provide  a framework for accelerating momentum and  increasing significance over the long term:

1.         Reform of Global Political  and Economic Governance Institutions: This  is the centrepiece of the BRICS agenda,  which  in many  ways resulted in the  genesis  of the  grouping. With  the  move  towards a polycentric world order,  BRICS nations must assume a leadership role in the global political  and economic governance paradigm and seek greater equity for the developing world. Over the coming years, they  must continue to  exert  pressure for  instituting  significant reforms within institutions—such as the United Nations Security Council (UNSC),  the World Bank, and the International Monetary Fund  (IMF). Various  suggestions outlined in this  report  provide  a constructive framework for enabling substantive reforms.

2.         Multilateral Leverage: There are multiple formats for engagement and cooperation in order to leverage the BRICS identity at the global high  table.  The  outcome of the  BRICS officials  meeting on  the sidelines of the  November 2012  G20  in  Mexico,  where  it  was decided  to  create  and  pool  a currency reserve  of up  to  USD  240 billion   is  one   instance  of  enhanced  intra-BRICS cooperation. Similarly, the  Conference of Parties, the  United Nations, and  the World  Trade   Organisation are  existing   cooperative frameworks,

within which BRICS countries can collectively position themselves by fostering  intra-BRICS consensus on issues  of significance. The United Nations is central to a multilateral framework, and there  is significant potential for BRICS to collaborate and  assume a more prominent  role   in   global   political   and   economic  governance, conflict  resolution etc.,  through institutions such  as the  Security Council.

3.         Furthering Market Integration: Global  economic growth  has  been seriously  compromised in the years following the Global Financial Crisis. Each percentage point  reduction in global growth  leads to a significant  slowdown  of  economic development within  BRICS which hinges  upon  a necessary component of economic growth.  In this   regard,   market  integration within  BRICS,  whether in  the context of trade, foreign investments or capital markets, is a crucial step  to  ensure that  the  five countries become  less  dependent on cyclical trends in the global economy.

4.         Intra-BRICS  Development   Platform:  Each   BRICS  nation  has followed a unique development trajectory. In the post-Washington Consensus era, developing  economies within BRICS must set the new development agenda, which in turn must incorporate elements of inclusive growth,  sustainable and  equitable development, and perhaps most   importantly,  uplifting those  at  the  bottom of the pyramid. The  institution of BRICS-specific  benchmarks and standards, as  well  as  more  calibrated collaboration on  issues  of common concern including the rapid pace of urbanisation and the healthcare needs of almost half the world’s population represented by BRICS, must be prioritised.

5.   Sharing of Indigenous and Development Knowledge and Innovation Experiences  across   Key  Sectors:   Along   with   the   tremendous potential for resource and technology sharing and mutual research and development efforts, coordination across  key sectors—such as information technology, energy generation, and high-end manufacturing—would prove immensely beneficial for accelerating the BRICS development agenda. Moreover, the BRICS nations must share  indigenous practices and experiences to learn and respond to the immense socio-economic challenges from within and outside. This  vision document contains multiple suggestions for instituting such  sharing mechanisms through various  platforms and cooperation channels.

This   document  analyses  the   above   themes  in   detail.   Each   section concludes with  recommendations specific  to  the  chapter’s theme. The final  section contains synthesised suggestions which  serve as an outline/framework for enhancing intra-BRICS cooperation and collaboration. The  official declarations/statements of BRICS leaders  are available in Annexure (s) 2 to 5.

Books / Papers, Politics / Globalisation


Original link is here..





By Samir Saran, Senior Fellow and Vice President, Observer Research Foundation (ORF);

Vivan Sharan, Associate Fellow, Observer Research Foundation (ORF)


India is a study in contrasts. In the post liberalisation era, since 1991, the country has witnessed a rapid GDP growth, secular expansion of its services sector, and a commensurate increase in per capita consumption. As a result, in 2012, the country overtook Japan’s GDP (in purchasing power parity terms), to become the third largest economy in the world. However, at the same time, a recent survey across 100 districts in the country revealed that 42 per cent of India’s children under the age of 5 are underweight and a shocking 59 per cent are stunted in their physical development98. Extrapolating these results to reflect the overall state of socio-economic development, the picture at once becomes stark. This paper will delve into some macro trends

through which it aims to unbundle facets of the country’s distorted growth narrative.


In March 2012, the Planning Commission of the Government of India set the poverty line at INR

28.65 (approximately USD 0.52) for urban areas and INR 22.42 (approximately USD 0.4) for rural areas in terms of per capita expenditure. Using rounded approximations of INR 28 and INR

22 (USD 0.5 and USD 0.4) for urban and rural areas respectively, National Sample Survey data from household surveys conducted in 2009-10 reveal that 22.98 per cent of India’s urban population and 36.58 per cent of its rural population spend less than the approximated poverty line (Table 1). Meanwhile, India’s ‘emerging’ identity, which derives from its significant middle class, is also exposed for what it is. Only about 4 per cent of India’s population earns more than INR 100 a day (approximately USD 1.8 a day in nominal terms). The rural urban divide is also particularly prominent and can be observed throughout this paper.


Table 1. Per Capita Expenditure and Population, 2009-10



All India




% of Population

% of Population

% of Population

< Rs. 28 per day




Between   Rs. 28 to 100 per day




More than Rs. 100 per day








Source: NSS, 2009-10 @ ORF India Data Labs


The world is still grappling with the ripples caused by the Global Financial Crisis. While the crisis found its origins in the West, it perhaps has greater absolute implications for the emerging and developing world. India has witnessed a slowdown in growth to around 5 per cent in 2012-

13. The fundamental assumption about GDP growth, echoed by Indian policymakers has been that faster GDP growth is a prerequisite to reducing poverty and concomitantly, enhancing development99. Such views are reflections of a wider international consensus that “there is every reason to believe that economic growth reduces poverty”100. In this case, the converse argument also holds, and every percentage point slowdown in India’s GDP growth impacts the sustenance prospects of millions of rural and urban poor.


There is of course a large volume of academic literature which questions such simplistic correlations. For instance the India Chronic Poverty Report (2011), states that “the issue arising



98 The HUNGaMa Survey Report, Naandi Foundation, 2011

99 poverty-at-faster-pace/article4153965.ece

100 Roemer, Michael and Gugerty, Mary K., “Does Economic Growth Reduce Poverty?”, Harvard Institute for

International Development, March 1997




in some developing economies with large populations is not that there is poverty in spite of moderate to high economic growth, but that this poverty is often created by the very nature of economic growth itself’’101. While this view is open to debate, it is sufficiently clear that there has been a consistent rise in inequity between the rich and the poor in India. This is evidenced from the fact that those at the bottom 10 per cent of per capita wealth account for merely 3.6 per cent of total consumption, while the top 10 per cent account for 31.1 per cent102. Additionally, Pal and Ghosh (2007) have observed that “comparable estimates of the 50th (1993-1994) and

55th (1999-2000) rounds of National Sample Survey data reveal that inequality increased both in

rural and urban India”103.


Perhaps the starting point for any meaningful analysis or explanation of India’s unequal society must be an overview of aggregated expenditure profiles for different social groups. From table 2, it is evident that the traditionally disadvantaged groups (scheduled tribes, scheduled castes, and other backward classes), on average fare worse than those that fall  within the category of “others” in terms of per capita expenditure. On an all India level, less than 2 per cent of the disadvantaged groups spend more than the nominal equivalent of USD 2 a day. A majority (at an all India level) are below the approximated urban poverty line expenditure assumed here. It is

safe therefore, to infer strong causality between income classes and social groups104.


Table 2. Per Capita Expenditure and Social Group, 2009-10





Social Groups


< Rs.   28 per day

Between      Rs.

28 to 100 per day


Greater     than

Rs. 100 per day





Scheduled Tribes





Scheduled Castes





Other Backward   Classes















Source: NSS, 2009-10 @ ORF India Data Labs


When the multidimensional nature of poverty is taken into account, it is not surprising that self fulfilling spirals can trap millions within a variety of systemic constraints. Table 3 helps to illustrate that while nearly all of those spending more than INR 100 per (approximately USD

1.8) day have access to electricity for domestic consumption, over 35 per cent of those who spend less than INR 28 (USD 0.5) in rural areas, still have no access to electricity.


Table 3. % Population with Electricity for Domestic Use and per Capita Expenditure, 2008-09



All India



< Rs. 28 per day




between Rs. 28 to 100 per day




greater than Rs.   100 per day








Source: NSS, 2008-09 @ ORF India Data Labs





101 India Chronic Poverty Report, Indian Institute of Public Administration, 2011

102 Mehta et. al., “India Chronic Poverty Report”, Indian Institute of Public Administration, 20011

103 Pal, Parthapratim and Ghosh, Jayati, “Inequality in India: A Survey of Recent Trends”, Department of Economic and Social Affairs (DESA) Working Papers, United Nation, 2007

104 Expenditure can be used as a substitute for income, using the established economic relationship that savings =

income – expenditure; and assuming negligible savings at the bottom of the pyramid.




Peeling through the multiple dimensions of social inequity and concomitant to the above described ‘sociology of the poor’ are issues around access to services and resources. Saran and Sharan (2012) point out that between 30 to 40 per cent of those belonging  to the various disadvantaged  groups still use kerosene for lighting in rural areas105. This is a particularly illustrative statistic on two counts. Firstly, typical kerosene lamps deliver between 1 to 6 lumens

per square metre of useful light compared with typical Western standards of 300 lux for basic tasks such as reading. There is no convergence of living standards for those at the bottom of the pyramid. The second is that those with least access are disadvantaged on multiple fronts.


Access to modern forms of energy is necessary for development. Access to resources such as water is necessary for basics sustenance which underpins development. Wide divergences in the access to drinking water across different income profiles are indicative of a serious structural deficit. This deficit has no doubt helped to perpetuate inter-generational infirmities. Table 3 shows that those with per capita expenditures greater than INR 100 (USD 1.8) a day are around two and a half times as likely to have access to drinking water within their premises as those in the bottom quartile assumed here (expenditure less than INR 28 (approximately USD 0.5) per day). Those at the bottom are much more likely to walk significant distances to access water than those at the top. There are multiple implications of such divergences in access, including on household productivity.


Table  4.  % Population  and  Distance  from  Drinking  Water  Sources  Mapped  to  per  Capita

Expenditure, 2008-09






Outside Dwelling but   within the Premises

Outside Premises





0.2 to

0.5 km

0.5 to

1.0 km

<  Rs.    28    per












Between      Rs.

28 to 100 per   day





















More than   Rs.

100 per day











Source: NSS, 2008-09 @ ORF India Data Labs


Household productivity is also closely linked to the levels of education attainment. Within a rights-based framework for development, the role of education is increasingly emphasised. Tilak (2005),  notes  that  “poverty  is  seen  as  deprivation  of  opportunities  that  enhance  human capabilities  to  lead  a tolerable life” and  importantly that  “education  is  one such important opportunity, deprivation of which in itself represents poverty”106. While it is up for debate

whether primary, middle and secondary education actually offers productivity gains that are commensurate with the contextual imperatives for human capital formation given the scale and nature of poverty; and whether higher education or vocational education should be prioritised; the statistics in table 5 illustrate that there is a clear causality between income and education levels. Indeed, many studies have argued that this causality runs both ways.






105 Saran, Samir, and Sharan, Vivan, “Identity and Energy Access in India: Setting Contexts for Rio+20”, Energy

Security Insight, TERI, Volume 7 (1), January 2012

106 Tilak, Jandhyala B.G., “Post-Elementary Education, Poverty and Development in India”, Working Paper Series

No. 6, Centre of African Studies, University of Edinburgh




Table 5. Education Levels Mapped to % Population sorted by Per Capita Expenditure, 2009 – 10







Education Levels

All India


<   Rs.     28 per   day

between   Rs.     28     to

100 per day

more than Rs. 100 per   day









upto primary















higher secondary





diploma & certificate course





graduate & above










Source: NSS, 2009-10 @ ORF India Data Labs


India is rated as having a moderate inequality relative to several other developing countries, with a Gini coefficient of 36.8 in 2004-05107. While the coefficient has likely worsened since then, India is leagues ahead of several other G20 countries, including the United States and China. However, the Gini coefficient cannot capture the nuanced trends of inequity, and the causal relationships that perpetuate it.


Development is a long term, complex process. It is clear from the socio-economic realities which have been outlined in this paper, that India’s development trajectory is steep, and the challenges, stark. Concomitantly, the public policies which have also been highlighted here, have been formulated by policymakers to bridge inequities between various socio-economic identities and promote inclusive  growth.  They aim  to  provide better  access  to  services,  employment  and information; and are certainly enablers of transformation when implemented right. Even so, they are necessary but not sufficient. A number of systemic initiatives are required to create the momentum and maintain the development gains required for a broad based transition to higher levels of prosperity and equity, particularly for those at the bottom of the pyramid. In this context, we suggest there are two fundamental questions that Indian policymakers must pose to themselves, to tailor effective and efficient interventions that can ensure that development in fact leads to growth:


1.   What is the threshold level of inequality for political and social stability?

2.   How can policy interventions resolve the strategic, but not necessarily binary choice between generating employment and increasing productivity?


Two decades have passed since India embarked on a new growth trajectory underpinned by a neoclassical economic framework. Liberalisation led reform has delivered unequally. With over

1.2 billion people and  an extremely heterogeneous socio-economic profile, any attempts to recalibrate policy prescriptions must be fully cognizant of diverse realities and trends that have become firmly embedded. Whether GDP growth has exacerbated inequities, or served as the template for improving living standards is not the most urgent question in the contemporary context. Rather, policymakers and political leaders must focus their energies on understanding the causal influences that have a bearing on socio-economic trends; and accordingly designing a progressive and contextual framework for development and growth. We suggest that such a framework must include and be complemented by the following crucial elements:




107 World Bank Indicators




                           Nearly 12 million people enter the Indian workforce ever year. A majority lack the skills to gain meaningful employment, and face an abject lack of access to decent work. As a result those at the bottom of the socio-economic pyramid are largely employed in the informal sector, without any form of job security or social security. The availability of productive and remunerative employment is central to enabling equitable growth. The Indian economy must employ a larger proportionate share of its workforce. In turn, minimum wages and domestic labour standards must be enforced universally; and the skills gap must be addressed through strategic emphasis on subsidised and targeted vocational education.

   The Indian economy relies asymmetrically on growth of the tertiary sector, particularly capital and skilled labour intensive sectors such as information technology which have not been  able  to  bridge  the  systemic  employment  gap.  Employment  creation  is  a  policy imperative for enabling equitable outcomes; and the revitalisation and reemphasis on the growth of the secondary sector is a necessary prerequisite for achieving broad based socio economic transformation. The industrialisation process requires a number of enablers, including improved infrastructure and service delivery; and the creation of a workforce with skill sets commensurate with a strategic vision for industrial growth.

   The competitive advantage of the  Indian  economy in  the export  sector  remains  largely untapped. With an export to GDP ratio of 16.5 per cent (in 2012), the Indian export economy has a vast potential. In this regard, high productivity, labour intensive sectors in particular demand a sustained policy focus. Greater integration with regional supply chains and increased leverage of regional trade agreements can provide the necessary momentum for secular growth of such sectors. Monetary policy, fiscal management and financial market depth must complement such growth.

   Policy Emphasis must be placed on facilitating access to markets with strong internal drivers demand. This will help the Indian economy to hedge against global demand volatility perpetuated  by disruptive  business  cycles.  The  Southwards  shift  of  Indian  exports  is  a positive sign in this context. According to the Indian Exim bank, the share of Asia, Africa and LAC regions has increased sharply from 47% in 2001-02 to 62.7% in 2011-12; and the share of Asia has risen from 40% to 52% during this period.

   The equitable growth of the Indian economy will to a large extent be determined by the degree   and   nature   of   private   sector   participation.   The   virtual   stagnation   in   the investment/GDP ratio (of which the private sector is a larger contributor than the public sector), which has grown by a mere 5 per cent since 2005-06 to 37.6 per cent in 2011-12, is indicative of inherent challenges. Greater participation of the Indian private sector can be driven by a better environment for doing business. Policy frameworks must address issues around corporate governance and labour reforms without compromising market competitiveness.

   Long term capital formation through increased participation in the financial markets must be prioritised. This will entail a broad based emphasis on imperatives such as financial literacy, financial inclusion, and investor protection. The nominal proportionate retail participation in the domestic capital markets is a cause of concern. Household savings must be productively and efficiently deployed in order to finance the widening current account deficit. Simultaneously, short term speculative participation must be offset by genuine market opportunities for growth. Commensurate emphasis must be placed on channelling global savings into long term asset creation in the Indian economy, with a supportive policy framework. Increased government emphasis on development of micro, small and medium enterprises as well as industrial clusters must be sustained despite political cycles. Policy disruptions can quickly reverse gains achieved over time, and political risk poses the greatest challenge to unleashing the entrepreneurial potential in the country. A coherent, inclusive and long term political vision must complement policy formulation. Robust legal frameworks must be employed to secure long term growth largely devoid of political risk uncertainties.








The HUNGaMa Survey Report (2011) Naandi Foundation.

URL: gdp-growth-to-reduce-poverty-at-faster-pace/article4153965.ece

Roemer, M., Gugerty, M. K. (1997), Does Economic Growth Reduce Poverty?, Harvard Institute for International Development, March.

India Chronic Poverty Report (2011), Indian Institute of Public Administration.

Mehta et. al. (2011), India Chronic Poverty Report, Indian Institute of Public Administration.

Pal,  P.,  Ghosh,  J.  (2007),  Inequality  in  India: A Survey  of  Recent  Trends,  Department  of

Economic and Social Affairs (DESA) Working Papers, United Nation.

Saran, S., .Sharan, V. (2012) Identity and Energy Access in India: Setting Contexts for Rio+20, Energy Security Insight, TERI, Volume 7 (1), January 2012.

Tilak, Jandhyala B.G. (2005), Post-Elementary Education, Poverty and Development in India, Working Paper Series No. 6, Centre of African Studies, University of Edinburgh
























Books / Papers, Water / Climate

“Mitigating Carbon Emissions in India: The Case for Green Financial Instruments”

New Delhi, 18th of February 2013
Please find here the link to download the report.

Executive Summary
With the sun gradually setting on the Kyoto Protocol (Phase One), it has become quite apparent that the global response to resource scarcity and climate change is going to be variable and disaggregated. Increasingly, countries and businesses across the globe are adopting various financial mechanisms and policies in order to manage such challenges. However, many such responses are restricted to advanced, developed countries, whereas the effects of climate change and the increasing cost of resources such as fossil fuels are likely to be more severe for developing countries. This dichotomy in response measures needs to be urgently addressed, and this report is an attempt to highlight the benefits of an inclusive growth oriented financial response mechanism with particular focus on India.

In its first chapter the report briefly outlines the relevance of GHG emissions mitigation through in- clusive market based mechanisms in India. With shifting patterns of economic growth and increased global demand volatility companies and investors in emerging economies, such as India, need to rec- ognise the value created through the supply chain of business deliverables by mitigating emissions. Mechanisms which exclude companies that do not meet global benchmarks, whether by way of share- holder advocacy and investment exclusion, or regulatory policies, will have a significant impact on the way that these companies choose to grow.

Low carbon strategies can only be implemented if the emissions landscape and its effects on sustainable growth are clearly defined and understood. The second chapter outlines emissions trends in India in order to map the carbon landscape and set the context for the rest of the discourse. Chapter 3 examines the trends of energy consumption and emissions at a sector specific and firm specific level (within the assessed sector). It is found that firms in the assessed sector (cement) are operating in sub optimal con- ditions, along with a lack of policy frameworks and market based emissions reduction incentives – there are no indigenous market based mechanisms to incentivise and stimulate change.
A firm level case study of one of the bigger private players in the Indian cement sector has revealed that the firm’s financial performance could have been better. At the same time, capacity additions and increased output have caused the total emissions of the company to increase, which is not sufficiently offset by the revenue gains. As a result, the firm’s emissions intensity has been rising consistently for clinker production. However, enhanced use of additives has kept the overall GHG intensity of cement based revenue lower. The average emissions intensity of the company was higher for three years than the sector average for the same period. The high correlation between the firm’s environmental perfor- mance and its financial performance has been highlighted.
The results of chapter 3 are aligned with the philosophy that environmental performance must not be excluded from the range of parameters that are used by investors while choosing a stock, especially a long term investment. This is true since the two concepts are inherently interlinked under the overall aegis of sustainable growth. It highlights the need for developing market based mechanisms to signal investment opportunities based upon carbon efficiency and financial performance, as both tend to complement each other in the medium to long term.

Chapter four concludes that; companies preparing for risk are not risk averse, but rather are risk prepared. The difference is subtle but important. Market based mechanisms which incentivise good performance by channelling investments to firms that respond to risk better than their competitors in a given environment, help investors realise this distinction clearly. For “green” market mechanisms and investment vehicles to be viable and effective, they must efficiently ensure that the transmission mecha- nism works and only performance based, credible signals are relayed to the open markets. This becomes even more important in the context of a developing country due to the nascent capital markets, and urgent need for scaling up sustainability initiatives – both at the firm and policy levels.

Capital generation should not be looked at as the problem. Rather, redirecting existing and planned capital flows from traditional high-carbon to low-emission; resilient investment is the key challenge of financing transition to a low-emission economy. In order to facilitate such transitions, a universally replicable model will be used – a multipronged approach to achieve the above objectives. This would involve creation of innovative financial products based on purely quantitative data, create and publish sector wise and cross sectoral market reports, and facilitate progressive policy advocacy in order to en- able market realisation for its products. It will further seek to replicate the model in other developing countries through a hub and spoke approach to expansion.