Deep Decarbonization & Climate Politics-An Ethical Dilemma

If we introspect on questions related to ‘ethics’, we often land upon fundamental questions, such as, how to live, or what to do, how should we live, what should we do?

Philosophers attempt to understand these questions, to figure out exactly what it means, how it can be answered, if at all, and to answer it systematically. So, I believe that these questions, what should I do, how should I live, etc. are very broad questions. It takes into account all of the pros and cons of all the different things you might do, all the different reasons you might have for and against the different actions you might perform.

We might say the question is, what should I do all things considered? Hence, it needs two types of consideration- considerations of morality and considerations of well-being.

We also shouldn’t assume the questions of morality and well-being exhaust all the kinds of reasoning in our lives. There may be other kinds of reasons that don’t have to do with either morality or well-being.

But at least two kinds of factors that we take into account when we’re asking, what should I do or how should I live, are considerations of morality and considerations of well-being.

Hence, ethics is primarily about pleasure and pain; Desire-Satisfaction theories of well-being, on which what’s good for you is getting what you want; and what we’ll call objective theories of well-being, on which what’s good for you depends on wanting the right things.

Can there be objective answers to ethical questions, objective answers to questions about how to live and what to do? Unfortunately, Ethics as a subject is not ‘objective’ in nature, rather is some way relative or subjective. And we hope you’ll see how thinking systematically about ethics can help you to live a richer, more self-directed life.

I am writing this blog in midst of unlockdown process and recovery from the COVID-19 pandemic, and, it is particularly built upon my repetitive thoughts, which I dealt with during the entire process of Lockdown. The pandemic has given an opportunity to explore in depth  about Ethics, the practical and moral flaws of the global economy and its applicability in the ‘very ethos of sustainable Development Goals’ which shall be examined through the lenses of Religious philosophies.

Ethics come from the domain of ‘Common Goods’, equity, development for all, which are expected to be illuminated with the lights of wisdom, from the established ‘school of thoughts’-ranging from religions to spirituality, moral code of conducts to sustainable living. Hence, this blog, will be quite unique from that perspective, as we will deal with most of those ‘cardinal principles’ of Ethical   theories and practices.

Socrates famously said, “The unexamined life is not worth living” and that’s the way I think of the impulse behind philosophy and Ethics in general, that we want to reflect on and examine our lives.

How does it relate to us today? Well, two ways, I guess I’d say.

As many of you know that, Socrates dies in 399 BCE–so you do the arithmetic– about 2,300 years ago is what we might think of as the period in which classical Greek philosophy reaches maturity in these three philosophers: Socrates, who is in some sense Plato’s teacher, and Plato who was in some sense Aristotle’s teacher, and then Aristotle is famous for being Alexander the Great’s teacher. Now Alexander the Great–talk about ethics in action. Well, he was in action, and he conquered the known world and got to the north of India, but how does this period relate to us today?

A 20th century philosopher, Alfred North Whitehead said, “The safest generalization to make about Western philosophy is that it’s a series of footnotes to Plato.” That lineage isn’t direct, but I think what we see is not only the emphasis in philosophy, on knowing oneself, on critical inquiry into why one is doing what one is doing, and also an extraordinary emphasis on the virtue of justice.

Let us discuss a bit the concept of Justice. The notion of justice in modern world was started out in the Book of Plato’s REPUBLICA.  In the first chapter of REPUBLICA, Plato raised this question:

“What is justice?” And various definitions are given, and one definition that is

given is just giving each person his due. Plato in the REPUBLICA through

Symmachus, one of the Sophists– Sophist is where we get the word “sophisticated,” “sophistical”–appears and he says, “I’ll tell you what justice is. Justice is whatever those in power say it is, and that will differ from country to country, from place to place. It’ll be one thing in India. It’ll be one thing in the United States. It’ll be one thing in China. It’ll be one thing in 1500. It’ll be a different thing in the 20th century. And so Plato then goes on to say,

“Whatever justice is, it’s some kind of ideal.”

And this is in the modern time, we say as moral relativism. Is morality variable from place to place? The ancient Greeks were aware of the fact that there were customs and habits that varied a lot from city state to city state, and the question– one of the questions they had is whether or not ethics and morality are universal, or whether they just involve local rules and things like etiquette.

As I mentioned in the beginning, Socrates said, “The unexamined life is not worth living.” A friend of mine added that the unlived life is not worth examining. If you really look at this you know long arc of human history, then, is our ethics intrinsic to who we are?

Who we are in the context of Global Economy and our commonly faced Ethical dilemma of ‘right or wrong’ good or bad’ rich or poor? 

I want to talk about this dilemma in three ways. Quite simply I’ll talk about the good, the bad, and the ugly, to be completely original.

Let’s start with the good.

In terms of the good, we have never been richer or more prosperous than we are today. Our global economy today is about 128 trillion dollars measured at international prices. That is an enormous sum of money which leads to an average output of around 17,000 dollars per person in the world. Though, of course, that’s extremely unevenly divided between countries and within countries. But let’s be honest about progress over the last few centuries.

If you use the World Bank’s definition of absolute poverty, which is set at $1.90 a day–again, measured at international prices–in 1800, at the start of the Industrial Revolution, about 90% of the world’s population lived in extreme poverty, and life expectancy was only about 35 years old. The world is so much better today. So much better.

So, absolute poverty fell from around 2 billion people in 1990 to around 736 million in 2018-19. About 10% of the world’s population. That was driven mainly by Asia, mainly by East Asia, and especially by China, which in a few decades transformed from a village-based impoverished nation to a middle-income country with a low poverty rate. Hundreds of millions of people out of poverty. We’ve never seen anything on that scale and speed before.

Quite remarkable.

In Sub-Saharan Africa, too, poverty rates have fallen not quite as fast but still substantially from around 54% in 1990 to around 41% in 2018-19. So good progress, but slower.

And a lot of the credit there is due to the Millennium Development Goals, which contributed to major improvements in health outcomes. Child mortality has also declined dramatically over this period, again, since 1990, and the number of children who die before their fifth birthday has fallen from around 12.5 million each year to just under 6 million each year by 2015. Again, a declined by around half. So that’s the good. You know, an immensely prosperous global economy with great progress in reducing poverty.

Well what about the bad?

Despite this, you know, immense wealth and despite this progress, we still see massive levels of poverty, deprivation, and social exclusion. I talked about the decline of absolute poverty, but it still sits at 736 million people. That’s staggering, and that’s a moral outrage.

About 820 million people are classified as hungry. That’s one out of every nine people in the world. Life expectancy, yes, it’s about 70 years today. That’s really good. But there’s about a 20-year gap between the richest countries and the poorest countries. And 6 million children still die before their fifth birthday, and almost all of these could be saved by basic medical interventions that cost very, very little.

And when we look at inequality–I mean Oxfam told us that last year the richest 1% took home 82% of the wealth in the world, and the bottom 3.7 billion got nothing. The World Inequality Report tells us that, since 1980, the top 1% took home twice the gains from growth as the bottom 50%. So vast levels of inequality.

And on fairness, this is the complicated story. Of course, you know, inequality is actually falling between countries as, you know, as countries like China converge with richer countries in the advanced world. But it’s rising within countries. So while people in Asia might gain, the middle class in some of the advanced countries are losing out, and we’re actually seeing a hollowing out of the middle class caused by such factors as technological change, globalization, but also policies that tend to benefit the rich.

And these are policy failures that reflect ethical failures. I’ve talked about exclusion. I’ve talked about poverty. What about the environment?

Of course climate change is the most dangerous here. We know every report that comes out, the news is just worse than before. And the concentration of carbon dioxide in the atmosphere is now higher than at any time in the past 800,000 years, probably in the past 3 million years, at a time when the Earth’s climate was far hotter and more hostile. We are on a path of disaster. Catastrophe. This is the great existential crisis of the 21st century, and our global economy is simply–seems oblivious to this challenge. So that’s the bad. I’ve talked about the good. I’ve talked about the bad.

What about the ugly? Well, by ugly I mean, what are the ethical flaws that are leading to this situation? What are the ethical flaws that are causing so much poverty and exclusion among so much wealth? What are the ethical flaws that are causing us to drive over the cliff of environmental disaster? Well there’s no simple answer to that story, but I think one possible answer is, freedom becomes about the maximal extension of individual choice. It’s “leave me alone!”

You’re not linking that freedom to the freedom of others. You’re not linking that freedom to a greater sense of social responsibility. Modern economics also creates this character called Homo economicus–this rational economic man–which says that we’re supposed to be self-interested, egotistical people seeking our own advantage, maximizing our own welfare. And welfare, of course, is identified with material goods, stuff you can buy in the market. And we’re supposed to want as much of that as we possibly can get, we possibly can afford. In other words, our appetites are voracious. And corresponding to that, firms, corporations are supposed to maximize profits.

Milton Friedman famously said that the only purpose of business is really to maximize shareholder value. A very kind of narrow and short-term outlook. This is all about the self over solidarity. Think about it. It’s self-interest, self-determination, self-improvement, self-actualization. We live in an age of the self, I would argue, to the detriment of the common good. It’s the Age of Me, rather than the Age of We.

And if we’re to solve these problems of exclusion and environmental sustainability, we need to change this outlook to a more common good approach than merely looking to short-term, selfish desires.

Economics or “oikonomia,” “oikos nomos,” is really about the ethical rules for managing our global economy, our private and our public households. For Aristotle, economics can never be distinguished from ethics, can never be separated from ethics.

And, I think, this is a 2500 year old insight, but I think it has a lot to say for what’s going on in the global economy today. If you just think about–in recent years, think of the global financial crisis, where the financial sector, sometimes they engaged in fraud and swindling their counterparts, engaged in reckless risk-taking detached from the common good, you know, not interested in creating social value but only interested in short-term profit, heedless of how it would affect the broader global economy. These are kind of the ethical flaws of the moral economy. And I would argue that that’s not only bad ethics. That’s bad economics.

 Because if you’re focusing only on short-term profit and maximum desire and acquisitiveness, it means you’re not going to be looking to the environment, which is really about the longer-term. You’re not going to be looking at longer-term trust or social cohesion, or that can create social tensions. You’re not going to invest in longer-term prosperity, which of course is what sustainable development is really all about. And it’s also bad ethics because, you know, we all agree that you should be nice, benevolent, kind, generous people in our social world. Nobody would disagree with that.

But isn’t it kind of weird to say that when you step into the economic domain, you’re supposed to be motivated by self-interest, by competition, by greed, by materialism? We are creating a bifurcated life, a bifurcated reality, and you’re creating a human being divided against itself. And that’s really, really absurd.

We also need to have the wisdom and insights from Adam Smith, who is considered as the Father of Economics, who wrote the wonderful book called “The Theory of Moral Sentiments.” Adam Smith argues that what really matters for human beings is our reputations. We want to gain social approval. We want people to like us. And how do we do that?

By being nice, decent people, by acting morally. Ok. So far, so good. But there’s one major flaw in that.

There’s one kind of bug in that system. And Smith says this is because we tend to admire the rich simply because they’re rich. No other reason. Smith says this is the major corruption of our moral sentiments. But the rich, they know that, so they don’t need to act morally. And moral norms degenerate. And, of course, people admire the rich, so if you see the rich acting that way, then you start, you know, acting less morally. And moral norms in society as a whole will falter. And I think that, you know, that’s a real powerful insight from Adam Smith that can explain some of the insights today as to why we have this ethical blindness when it comes to issues like social exclusion and environmental sustainability in our global economy, which is richer and so much more prosperous and with so much more potential than ever before. So, these are the moral flaws of the global economy. it doesn’t need to be that way. We could easily reorient our global economy around the common good. And that, in a sense, is what Ethics is really all about and this the ‘point of beginning’ of the very notion of sustainable development goals (SDGs).

As we move into the challenges of Ethics, let’s recall the history of sustainable development. It is, after all, the core organizing principle for global cooperation, and we should understand why it has become so central for our modern thinking.

The right starting point in current times takes us back almost fifty years to a very important, indeed a watershed conference in Sweden in 1972: the UN Conference on the Human Environment. This was a wake-up call for the world, when world leaders came together and, for the first time, heard a message which really had not been heard before—at least not at a global scale, and with such clarity. And the message was, “we’re on a collision course. The world economy, the world population are growing. The Earth is Limited. The Earth’s resources are therefore going to be under stress as a growing world economy with more and more human activity, more use of primary resources, more burning of fossil fuels, impacts our finite planet.” And that was the year that a pivotal book was issued: Limits to Growth, by the Club of Rome, which said that if the geometric growth of the world economy continued with the technologies that were in place, using more and more physical resources, that the burden on the planet would eventually become so great that the world economy would overshoot the carrying capacity of the planet and lead to a deep crisis, an ecological resource crisis in the 21st century.

Well, we’re here now and a lot of what was written in that pioneering Limits to Growth book and spoken of in that pioneering conference in 1972 is now upon us. Twenty years after that conference came what is now referred to as the Earth Summit or the Rio Earth Summit.

It was another UN gathering. It was the UN Conference on Environment and Development in Rio de Janeiro, Brazil, in 1992. Now, this was seen as setting in motion an action plan that took note of what had been declared in 1972 as an impending collision course. After 1972, many scholars went to work to understand the environmental threats ahead. And in 1987, a global Commission led by Norway’s Prime Minister and great world statesperson Dr. Gro Harlem Brundtland called on the world to adopt the concept of sustainable development. And the way Dr. Brundtland’s Commission put it in 1987 was that sustainable development means “meeting the needs of today’s generation in a way that will enable future generations to meet their needs.” The focus was, “don’t wreck the planet and leave a disaster for future generations.”

Well, Dr. Brundtland’s call to action was picked up in the 1992 Earth Summit, when the world’s governments adopted three major environmental agreements. The first, the UN Framework Convention on Climate Change, to fight human-induced climate change; the second, the UN Convention on Biological Diversity, to head off an impending disaster of ecosystem destruction and species extinction; and third, the UN Convention to Combat Desertification, the spread of degraded lands and the spread of deserts in the dryland regions. Well, one might have thought after such a successful meeting in Rio in 1992, “Job’s done. Three big treaties–we’re on our way to sustainable development!” If only life were so easy.

Because the three treaties were made, but suddenly vested interest politics, geopolitics, greed, short-sightedness, and so many other barriers came to bear, meaning that these treaties were not effectively implemented. Another twenty years passed, in fact, and the world’s governments assembled again, this time at a conference called Rio+20 to review what had happened since the Earth Summit.

The government’s met in June 2012–I was there from UN Industrial Development Organisation–in what I regard as one of the saddest conferences I’ve ever been at because, the main message of Rio+20 was, “Oh my God. Twenty years ago, with all of the optimism and aspiration and three major agreements, we thought we were looking forward to turning the world direction to safety, to avoid the overshooting that had been forewarned in Limits to Growth; but twenty years on, we see that these treaties have not been implemented.” And it was at the Rio+20 Summit that the governments adopted an idea–an idea to build clear, shared goals for the world that would become the Sustainable Development Goals. From 2012 to 2015 the UN member states deliberated, discussed, negotiated, debated what should those goals be, and–as I noted earlier–in September 2015 adopted 17 Sustainable Development Goals. Now this whole period has been, therefore, an arduous one of recognizing a growing crisis, and yet finding it very difficult to move the world in the necessary direction.

And from the time of Dr. Brundtland’s Commission report and the Rio Earth Summit till now, yet another phenomenon has become very clear, and that is that the world economy is not only creating environmental threats of a devastating dimension, but is also creating gaps between the richest and the poorest that are absolutely startling, and in many parts of the world unprecedented, in the measures of inequality that are resulting. And so, by 2015, governments put the emphasis not only on resolving this challenge of economic progress combined with environmental safety, but added in the third basic pillar of social justice and social inclusion so that, as economies develop, as living standards have the potential to increase, those benefits should be very widely shared, not just grabbed by the top 1% of the richest people in the world.

The 2015 Agenda became an agenda of economic, social, and environmental objectives combined. That brings us together wonderfully in understanding the challenges of sustainable development in a technical and a scientific and a social scientific manner, together with understanding the challenges of sustainable development in ethical and Economic manner.

Here is also a philosophical and religious dimension to this theory of development. The illustrations made as per the religion principles might be different from religion to religion, but the fundamental governing rules are same. Let us look from the view point of Indian civilization and Hinduism.

When we think of Hinduism, or we think of the Hindu tradition, we are thinking of a great, vast, and diverse tradition consisting of numerous micro traditions. So, it’s a tradition in which we see very clearly the interplay between unity and diversity.

Now, let me just quickly mention some of the broadly shared features of the Hindu tradition. First is a regard for the sacred texts, that we speak of as the Vedas, as an authoritative source of religious teaching. And these vedas are the sources of Hindu liturgical life– they are the places where the fundamental rituals of the Hindu tradition are described and elaborated, and they are also the sources of the earliest wisdom, teachings of this tradition. All Hindu traditions also subscribed to the doctrine of karma and samsara. This is very special and unique to the traditions that have come out of the Indian subcontinent.

First, karma: the teaching on karma has two important dimensions: one is that all actions produce effects. All actions have outcomes. Normally, we think of physical actions having physical outcomes but the karma teaching emphasizes that moral and ethical actions also have outcomes and effects. So, it’s a reminder to us that we have to be responsible, that we have to act responsibly and take our actions seriously because actions are consequential.

We have been talking about climate change, as an example, and its potentially disastrous effects, and it’s sometimes very difficult for us to think about how the choices that we are making, even the small choices that we are making in the present, are producing effects that will have long-term outcomes for our climate.

So, the second important teaching about karma is that the effects or consequences of our actions can stretch long into the future, that they are not always immediate. These actions don’t always manifest themselves, you know, very quickly, but they will manifest  themselves at some appropriate time, and that this is where karma gets connected  to the Hindu teaching about samsara.

So, samsara is the cycle of birth and death and rebirth. To put it simply, in the Hindu tradition, the opposite of life is not death but rebirth. So time is imagined and understood to be not linear, but cyclical. So from a seed, you have a tree, and then the tree generates a seed from which a tree is born again, and so the cycle of life proceeds in this way. So, potentially, the actions that I am performing in this life, or that we are performing as a community in this life, can generate results over a long period of time that we will come to experience in future rebirths, in a future world. How do we derive ethics in the Hindu tradition?

 And in this case, ethics–or virtue ethics, if we use that as our terms—spring profoundly from ontology, from the nature of reality, that the world as we experience it is not self-existent or self-explanatory– that the reality that  we experience–and sometimes in the Hindu tradition,  we speak of this reality as a reality of forms and names–has a deeper source, a deeper origin. We can say that the visible world has its source, and it abides and exists in the invisible reality. And that invisible reality, across the Hindu traditions, is referred to in Sanskrit as Brahman.

Brahman means “the infinite, limitless,” and so from this infinite, limitless reality, spoken of as Brahman, everything has come. In fact, the Hindu sacred texts speak of the universe as a multiplication of the one, the one brought forth the many out of it– out of itself. So the sacred texts of the Hindu tradition often speak of a desire or a wish on the part of the one to become many. “Let me become many.”

What is clearly established here is that this world of diversity has its origin in one–in a single reality, a single source, and the ethical implication of that is that the universe, and all living beings that constitute our universe, form a single community–Vasudhaiva Kutumbakam in Sanskrit–the world is a single family. Developing from that point, there is another very significant theological claim in the Hindu tradition that is very relevant for ethical thinking–that this Brahman is present equally and identically in everyone and everything, because it’s an unfragmented and unbroken infinite one. So that, at the heart of everything, that exists, and if we focus on human beings,  at the heart of every human being, at the most fundamental level of existence, there is this one reality constituting a fundamental unity in all things,  and this is the source of what we will speak of in the Hindu tradition as human dignity. Human dignity is not something that is granted by the state, it does not depend on economic or political circumstances.

 It’s intrinsic. At the core of the Hindu tradition is this claim that all beings have equal dignity and equal worth. Now, in saying this, I am not making a claim that in India, or in the history of the Hindu tradition, we have always been faithful to this core theological teaching with this ethical implications. Far from it.

You know, we have had, and we still have, social hierarchies. We have the reality of patriarchy, all of which I regard as violating this core Hindu theological claim,  but this is what is at the heart, or that the ideal of the religious tradition. When we translate these Ethics and insights, we come, perhaps, to the most fundamental ethical teaching in the Hindu tradition and this is what is described in the Sanskrit word ahimsa.

Ahimsa means “non-injury, not-hurting, non-violence”; and I’m sure many of you will connect or recall ahimsa with the life and practice of Mahatma Gandhi. He said, as a Sanskrit word, it is a negative word literally meaning non-injury or non-violence. But he emphasized that this word also had a very positive meaning. You can think of it as a coin –one side of the coin is not hurting, not harming, not injuring;  but the other side of the coin, as he so beautifully explained, is love, is compassion,  and for him, non-violence also meant the practice of justice,  and the avoidance of exploitation of human beings.

Ahimsa is the most important, it is the cardinal ethical teaching of the Hindu tradition, and it springs directly from the sacred word, the sacred dignity of every human being. In other words, to intentionally hurt or harm another is to violate his or her sacred worth, his or her sacred dignity, and just as important is to violate oneself. It is not only the violation of the other, but the one who inflicts injury is also violating something fundamental in himself or herself, because he or she is failing to see himself in the other. If we look at history, one of the things that we see very clearly is that violence seems to require that we detach or we disconnect ourselves from the one upon whom we want to inflict violence. We want to say, “We are not like them. They are different from us.” As human beings, at some fundamental level, we find it difficult, if not impossible, to be violent towards someone in whom we see ourselves. And this is why I think non-injury flows directly from a vision of life’s unity, of the connectedness at the deepest level that we have with all human beings. So, in the listing of the ethical virtues in the Hindu tradition, non-injury or ahimsa precedes even truth.

What is the Truth? Truth is unbearable- painful-colourless- tasteless-arid. As T S Eliot stated in his famous book Waste Land (Para 64):

Here is no water but only rock

Rock and no water and the sandy road

The road winding above among the mountains without water

If there were water we should stop and drink

Amongst the rock one cannot stop or think

Sweat is dry and feet are in the sand

If there were only water amongst the rock

Here one can neither stand nor lie nor sit

There is not even silence in the mountains

But dry sterile thunder without rain

It is dry and Sandy rock).

Eliot imagines the modern world as a wasteland, a land that has been mixed with ambiguity, aridness, and destruction. This land, according to some critics, gives no indication of purity, which neither the land nor the people could visualize.

Eliot’s reference was significant because he indicates people’s separation from nature. Also, it might reflect upon the disillusion moment he, among others, lived.

In this context of Truth, the ontological claims of the Hindu tradition, as well as its ethical values, especially ahimsa, to thinking about issues like poverty or migrants or stateless persons– one of the important ethical teachings also of the Hindu tradition is Loka Sangraha– it’s a Sanskrit term–Loka Sangraha.

So “Loka” in Sanskrit is a very inclusive term. It includes human beings, but it also includes the natural world, all of the elements. The entirety of the universe is described in this word, loka. And sangraha means “the well-being.”

So, Loka Sangraha means “the well-being of the whole, the well-being of the universe.”Today we may translate Loka Sangraha as “the universal common good.” In all things you do, in all of the choices you make, all of your decisions in life, however small a decision might be, and however great and vast that decision might be, always consider Loka Sangraha. Consider the universal common good.

Ask yourself, what are the implications of this choice, not only for me, but also for the universe that I inhabit? And linking such a question back to the doctrine of karma that I mentioned earlier requires me to think not only of the short-term outcomes, the short-term or ethical outcomes of what I do, but also the long-term ethical outcomes–those outcomes that might be generated when I no longer walk on this earth. In other words, can I be so considerate as a human being, can I be so compassionate as a human being, that in my decision-making I can think of generations and generations who will inhabit this earth, and who will find this planet to be a place with sustainable resources that will allow for their flourishing?

Are we capable, as human beings, of considering Loka Sangraha, the universal common good, in all that we do? This is the question that I want to leave you with today.

Keshav C Das

New Delhi, 1st October, 2020

Adapting to survive the coronavirus crisis and Food Processing Industries

The rampant spread of COVID-19 pandemic, across borders and geographies, has put global economy in recession with global economy projected to shrink by 3.2% (UN DESA). The disruptions caused by the outbreak and containment measures have left deep impacts on supply chains of manufacturing sector.  Companies across the globe have been scrambling to streamline their supply chains to secure immediate operations.  The economy of India is not an exception and the Indian industries including the food processing industries and MSME are severely affected. MSMEs are an important part of larger supply chains and their health has a bearing on the supply chains overall and indeed ability to supply major consumer product categories. Therefore, substantive support measures are required to see MSMEs through this crisis.

It is important to note that the food processing sector is recognised as a sunrise sector in India. The $600 billion industry currently employs close to 70 lakh workers, including around 15 lakh women. Furthermore, it has a massive potential to unlock the economic value of agricultural produce, thus facilitating the national agenda of doubling farmers’ income by 2022.

The ministry of food processing Industries recently announced the setting up of a task force to address some of the pressing concerns faced by the units. A closer look at some of these challenges highlights the need to understand the structural nature of the issues affecting the sector. It is evident that COVID-19 Crisis offers an urgent and much needed reset point for India’s Food Processing Industry.

The current Government is appeared to be committed to support the food processing industries and MSME in general for reviving their businesses and it is pertinent to highlight here the recently announced Financial and regulatory supports by Honourable Prime Minister and Finance Minister as part of the clarion call on ‘Atmanirbhar Bharat”. It is expected that industries will tide over the huge blow caused by the lockdown and able to provide more and creating more employment in coming years.

COVID-19 has revealed the weaknesses of a globalized manufacturing system and in order to respond, companies need to fundamentally rethink supply chains. In a post-lockdown world, supply chain stress tests will become a new norm.

It has moved from playing a “behind the scenes” organizational role to being a prime driver of the company business. Companies must have now appropriate ‘re-calibration’ strategies for modifying their supply chains as a key business driver and putting back the human asset as the most important factor for an agile business to succeed.

There are huge opportunities for Indian companies and would encourage them to attract international capitals and investment for creating a new manufacturing hub in India. This is possible, as many international manufacturers now looking into India considering its pro-business and FDI environment.   It is believed that our Industries need to strengthen on three fronts: cost (cheaper labour), quality (high skilled workforce), and supply chain (robust infrastructure), India can call itself the next global factory in future. We shall promote a ‘culture of manufacturing’ in India which is prevalent in a few countries such as Germany and South Korea, and closer home in South East Asia. We need to attract our best brains and encourage them to join the manufacturing sector. We need to establish manufacturing linkages. The lack of infrastructure pushes up the logistics cost, which at 14 per cent of GDP is one of the highest globally.  Our industries shall be able to present to the world the enormous opportunities that India offers as a base for manufacturing, innovation, design, research and development.

Keshav C Das

New Delhi, 31st May, 2020

Strategies and challenges towards USD1 Trillion Indian Manufacturing Sector

Manufacturing

In the journey towards achieving sustainable high growth trajectory and inclusive development, India needs to reinvigorate its manufacturing sector. “Since the industrial revolution, no country has become a major economy without becoming an industrial power.” A revival in the manufacturing sector is thus imperative for India to achieve an inclusive and sustainable growth.

As a country with a population projected to increase to more than 1.3 bn by 2021, India has tremendous human potential. The demographic dividend which will present India with a large pool of young and working age population has to be harnessed well and productive employment must be generated. The 183 million additional income seekers (according to the Planning Commission/Niti Aayog) that are expected to join the workforce in the next 14 years cannot be absorbed by the services sector alone. To take full advantage of its demographic dividend and to unlock the human potential of its entire people, India needs to strengthen its manufacturing sector.

To achieve a manufacturing-led transformation, my Government has launched the ‘Make in India’ programme to promote the manufacturing sector of India and make India a global manufacturing hub. The initiative seeks to raise the share of manufacturing to 25% of GDP and create 100 million manufacturing jobs by 2022.

In order to bring about the structural change in the economy, India will also have to move from low value-added to high value added and from low productivity to high productivity sectors or activities.

India has ranked number 1 in Asia on seven out of 10 indicators – political stability, currency stability, high-quality products, anti-corruption, low cost of production, strategic location and respect for IPR. These positive signs for manufacturing sector. The desires of industries and vision of our government match perfectly; our technology and talent can change the world; our scale and skills can speed up global economic growth.

These are all positive signals and we shall take up the agenda of ‘Manufacturing India’ as a collective responsibility.

Keshav C Das

Make In India needs to work

makeinindia

India has followed a peculiar growth story over the years. India has seen high growth in the services sector. The government has been focusing on right from creating a single window facility for addressing investor concerns, identifying key manufacturing sectors, to creating a common platform to unite state governments, bureaucracy and corporate leaders.

India is blessed with a large labour pool and admirable levels of judicial transparency. We can leverage our territorial position to play a critical role in the global supply chains. Doubling up as a potential high consumption market can keep demand fluctuations in check as well as save up on the logistics costs.

I trust that our Industries need to strengthen on three fronts: cost (cheaper labour), quality (high skilled workforce), and supply chain (robust infrastructure), India can call itself the next global factory in future.

We shall emulate a ‘culture of manufacturing’ in India which is prevalent in a few countries such as Germany and South Korea. We need to attract our best brains and encourage them to join the manufacturing sector. We need to establish manufacturing linkages. The lack of infrastructure pushes up the logistics cost, which at 14 per cent of GDP is one of the highest globally.

The idea of promoting manufacturing is to ensure our demographic dividend finds meaningful employment. We launched the Make in India campaign to create employment and self-employment opportunities for our youth.  We are working aggressively towards making India a Global Manufacturing Hub.  We want the share of manufacturing in our GDP to go up to 25 per cent in the near future.

We are also aware that under the pressure of this campaign, the government machinery will be required to make a number of corrections on the policy front.  There is an increasing need to stress on zero defect and zero effect manufacturing.  We shall place high emphasis on energy efficiency, water re-cycling, waste to energy, clean India and river cleaning.  These initiatives are directed at improving quality of life in cities and villages.  These initiatives provide you additional avenues for investment in technologies, services and human resources.

Keshav C Das

Sectoral Strategies for Transforming the Food Processing Industries in India

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In the context of India’s vision of becoming the ‘Global Manufacturing Hub’; food processing is the ‘SUNRISE SECTOR’. The Food & Grocery market in India is the sixth largest in the world. Food & Grocery retail market in India further constitutes almost 65% of the total retail market in India. The Government of India through the Ministry of Food Processing Industries (MoFPI) is taking all necessary steps to boost investments in the food processing industry. The government has sanctioned 42 Mega Food Parks (MFPs) to be set up in the country under the Mega Food Park Scheme. Currently, 17 Mega Food Parks have become functional. Our food and retail markets are all set to touch $ 828.92 billion investment by 2020. The Processed food market is expected to grow to $ 543 bn by 2020 from $ 322 bn in 2016.

By 2024, the Food Processing industry will potentially attract $ 33 bn investments and generate employment for 9 million people. These are all remarkable targets and asipiration for us. The Government has been working to linking Indian farmers to consumers in the domestic and international markets. The Ministry of Food Processing Industries (MoFPI) is making all efforts to encourage investments across the value chain.

The potentiality of the food processing sector is huge. We shall acknowledge that India offers the largest diversified production base and has a growing food industry. We are the largest milk producing nation. We are the largest producer, consumer and exporter of spices. We are world’s second largest producer of food grains, fruits, and vegetables. Hence, we have a glorious legacy, excellent track records and necessary skills-technologies and know-how to become a ‘manufacturing Hub in the food processing sector.

To make this aspiration we need only three things: firstly promoting profitable farm production with appropriate agronomical practices, secondly, linking farmers with market and thirdly attracting investment for transforming this important sector.

The government has been already working to secure these ‘development triangle’. For instance, under the Nivesh Bandhu program, which is an investor facilitation portal to assist investors on the investment decisions. A special fund of $285 Mn has been set up in National Bank for Agriculture and Rural Development (NABARD) for affordable credit.

The government has also 100% FDI in the food processing sector. Sector-specific Skill Development Initiatives are also being taken up, with National Institute of Food Technology, Entrepreneurship and Management (NIFTEM) and Indian Institute of Food Processing Technology (IIFPT) being recognized as Centres of Excellence.

Apart from growing population and burgeoning purchasing power, rising urbanization, rising retail trade due to initiatives such as Digital India, together with the presence of global players of the industry can be considered as the major growth drivers for the segment.  We have a population base of 1.3 bn offering a large demand-driven market, with the retail sector expected to treble by 2020. Hence, this is our time now to make India Better! This is our time to make India a leader in the food processing Industry’.

Addressing Water-Energy-Food Nexus

Although, India has made impressive progress in economic development and social transformation; it is continuing to struggle with challenges such as access to clean energy, food, water and ensuring an adequate standard of living for its vast population.  High population growth, rapid urbanization, fast economic progress, and industrialization, have increased demand for resources, including food, water, and energy, and intensified their use, with serious implications for the environment and long-term security of these sectors. South Asia remains home to more than 40% of the world’s poor (living on less than USD 1.25 a day) and India has managed to reduce the poverty level into 369 million (27.9 per cent of total population) in 2015-16[1]. The MDGs remain an unfinished agenda and its transition into Sustainable Development Goals (SDGs) accelerate the ambition of government in ensuring water-energy-food securities without degrading the natural resource base. This ambition remains as a fundamental development challenge.

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Freshwater, once abundant, is under over-exploitation due to increased demand for competing uses and anthropogenic negative impacts of climate change. About 14% of the Indian population (163 Million) lacks access to safe drinking water. Indian agriculture is dominated by small and marginal farmers, the ratio of agricultural land to agricultural population is about less than a hectare (0.3) per person, compared to more than 11 ha/person in developed countries. Over 90% of total water withdrawals are used for agriculture and about 60% of the population in India depend on groundwater for irrigation. Irrigation efficiency is low, water productivity is less than one-fifth of that in the world’s large food producing countries. There is a serious shortage of the energy required to make water available for crop production, for example through groundwater pumping. Per capita energy consumption in India is among the lowest in the world, which is about one-third of the global average (0.6 tonnes of oil equivalent (toe) as compared to the global per capita average of 1.8 toe). With growing populations, climate variability, declining agricultural land, increasing stress on water and energy resources, India faces the challenge of how to produce more food with the same or a reduced land area, less water, and increased energy prices, while conserving resources and maintaining environmental sustainability.

We need to focus on promoting sustainable use of energy with an integrated approach for water-Energy-Food (WEF) and do no harm to the environment. It is important to promote energy efficient irrigation pumps along with precession irrigation, which aims to replace the currently practiced business as usual irrigation facilities such as flood irrigation, powered with either diesel or electricity from gird. These efficiency measures along the entire agrifood chain can help save water and energy, such as precision irrigation based on information supplied by water providers, which can motivate farmers to invest in their systems to ensure the best returns from their water investment. It is expected this technological innovation around ‘energy efficient irrigation’ and water resources management strategy would create an enabling ecosystem in the country, which could trigger expansion of efficient irrigation to promote food grain production.

It is pertinent to underscore that the water-energy-food nexus is becoming an explicit focus issue among public-sector and private-sector businesses, which see an opportunity to help enable economic development and business growth in addressing nexus issues. At a global level, the United Nations’ 2015 Sustainable Development Goals include three that focus specifically on food, water, and energy. Organizations including the United Nations, World Bank, and the World Economic Forum have called for action to address the nexus stress. The voice of the private sector is also being heard through organizations such as WBCSD.

The private sector is emerging as a force in establishing and activating the water, energy, and food nexus ecosystems. Scaling these water, energy, and food nexus ecosystems can involve bringing in other stakeholders such as multinationals, NGOs, foundations, and regional or global banks to promote leading practices in water, agriculture, and energy management tied with the promotion of innovative technologies. This ‘increasing level of interests’ of various stakeholders are building up an impressive ‘startup and innovation’ culture for the Indian entrepreneurs and innovators, who could be benefited from the available knowledge, technologies and readily available financing. Cleantech is a rapidly growing market that shows great potential for Indian innovators. 84 innovators participated in a cleantech accelerator of UNIDO with their innovations covering energy efficiency, renewable energy, water and waste water and post-harvest management. A total of 26 already succeeded to create start-ups and collectively raised USD7 million for scaling up and commercialization.

There is also a need of ‘policy-push’ for strengthening the WEF nexus. Policies and instruments can be developed with an adequate consideration for the cross-sectoral consequences. The cross-sectoral efforts that have been made have remained linear, such as taking into account water for food or energy for food. This could create an imbalance between the sectors in terms of demand and supply. The connections between macro-economic and sectoral policies and cross-sectoral impacts should also be internalized into national policies. The common challenge facing India is how to decouple food production from water and energy use intensity and environmental degradation to make it sustainable. The planned Sustainable Development Goals (SDGs) are closely interlinked and success in achieving them will depend heavily on ensuring the sustainable use and management of water, energy, land (food), and other natural resources. These factors are not only interdependent, they also both reinforce and impose constraints on one another. It is within our power to combat scarcity by taking action at the nexus. Working together, and taking advantage of technological advances, the public sector, private sector, and NGOs can develop approaches that offer the hope of a sustainable and prosperous future.

[1] (source: 2019 global Multidimensional Poverty Index, UNDP and Oxford Poverty and Human Development Initiative)

India with Clean Air: will it be a reality?

State of Global Air 2019, published by Health Effects Institute (HEI), said exposure to outdoor and indoor air pollution contributed to over 1.2 million deaths in India in 2017. The report added that worldwide, air pollution was responsible for more deaths than many better-known risk factors such as malnutrition, alcohol abuse and physical inactivity. In India, air pollution is the third-highest cause of death among all health risks; each year, more people globally die from air pollution-related disease than from road traffic injuries or malaria.745228-airpollution-delhi-pti-101918

With a current population of almost 20 million, the National Capital Territory (NCT) of Delhi experiences periods of extremely high air pollution levels. According to WHO survey of 1600 world cities, the air quality in Delhi is the worst of any major city in the world. In Delhi, poor quality air damages irreversibly the lungs of 2.2 million or 50 percent of all children. In November 2017, in an event known as the ‘Great Smog of Delhi’, the air pollution spiked far beyond acceptable levels. Levels of PM2.5 and PM10 particulate matter hit 999 micrograms per cubic meter, while the safe limits for those pollutants are 60 and 100 respectively.

This worst scenario of air pollution is also vividly experienced in other Indian cities. According to the WHO, India has14 out of the 15 most polluted cities in the world in terms of PM 2.5 concentrations. Other Indian cities that registered very high levels of PM2.5 pollutants are Patna, Agra, Muzzaffarpur, Srinagar, Gurgaon, Jaipur, Patiala and Jodhpur, followed by Ali Subah Al-Salem in Kuwait and a few cities in China and Mongolia.

Although there are multiple reasons, including broad effects of meteorology, vehicular emissions contribute significantly to the problem. According to some reports, 80 per cent of PM2.5 air pollution is caused by vehicular traffic. Other causes include wood-burning fires, fires on agricultural land, exhaust from diesel generators, dust from construction sites, and burning garbage and illegal industrial activities.

India has initiated major steps to address pollution sources: the Pradhan Mantri Ujjwala Yojana Household LPG programme, accelerated Bharat Stage 6/VI clean vehicle standards, and the new National Clean Air Programme (NCAP) are a few key initiatives of government. NCAP is the first ever effort in the country to frame a national framework for air quality management with a time-bound reduction target. It proposes a framework to achieve a national-level target of 20-30 per cent reduction of PM2.5 and PM10 concentration by between 2017 and 2024. This is a right step forward and kindles a great deal of optimism and expectations. These and future initiatives have the potential, if fully implemented as part of a sustained commitment to air quality. Perhaps, government shall also focus on building the necessary ecosystem for implementing these initiatives.

There is an urgent need to start structured advocacy for managing the air pollution and develop an ‘’integrated ecosystem’’ which would contribute to the aspiration of sustainable and inclusive growth of India. The key components of this ‘’integrated ecosystem’’ could be robust research and development (R&D) for clean air promotion and deployment of appropriate solutions for ensuring ‘’clean air’’. Besides, implementation of stringent air pollution regulations and empowering states to take up take local action at cities level to improve air quality are also crucial.

Key stakeholders should have called on a voluntary response to air pollution and, within this context, taken up investment for promoting cleaner technologies. We must also promote innovation of low-emission and less polluting technologies and its deployment in industrial and other related sectors of Indian economy.

It is expected that similar initiatives shall be taken up by other development partners, aiming to integrate sustainability strategies into urban planning and management, which could eventually create a favourable environment for investment in infrastructure and service delivery for transforming our polluted cities to ‘’clean and sustainable cities.

Good air quality can go hand in hand with economic development, as indicated by some major cities in Latin America which meet, or approach, the WHO Air Quality Guidelines. Despite the upswing in air quality monitoring, many cities in India still lack capacity to do so. There is a particular shortage of data on air quality and its management. Hence, the government shall also focus on real time air quality monitoring and creating awareness at different level (household-industries and community level). India’s air pollution problem needs to be tackled systematically, taking an all-of-government approach, to reduce the huge burden of associated ill-health and livability in cities. This is a bigger responsibility to the newly formed government and its leadership!

 Keshav C Das

Establishing an Energy Fund for NDC Implementation

As part of the NDCs, India has committed to generate 40% of its electricity needs from renewable sources by 2030. However currently, the share of renewable in electricity generation as of 2017 is only 15%. The biggest bottleneck to achieve the targets is adequate financing of the RE assets by both government as well as private firms. There is an estimated need of $ 100 billion in next six years to achieve the targets set by the country. With the current flow of approximately $785 million in the last year, it seems highly impossible to achieve the targets without having a clear road map of financing and investments in RE sector in India. Financial innovation must happen at both investments as well as at the consumer level.

Goal: To Mobilize Domestic and New & additional funds from developed countries to implement the above mitigation and adaptation actions in view of the resource required and the resource gap. USD 2.5 trillion (at 2014-15 prices) required for meeting India’s climate change actions between now and 2030 as per preliminary estimates. Ashden India, along with its 30+ winners of the prestigious Ashden Award aim to work the government of India, industry groups and national financial agencies of India to design a financial framework for renewable energy financing. This framework will enable the implementing agencies (public or private) to select suitable and applicable financial models while designing and implementing renewable energy projects, ranging from solar to biomass; and on grid project to off-grid project.

It is expected that the proposed financial framework will recommend six innovative financing mechanisms – and likely finance providers – for mobilising investment and looks at the benefits and challenges of each approach. These mechanisms include emission trading schemes; green bonds; international financial institutions; international and regional climate funds; government-backed funds; and equity capital.

Keshav C Das

New Delhi

(I)NDCs as a pathway to realize national and global low-carbon, climate resilient – development strategies

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What is INDC and NDC?

Countries across the globe adopted an historic international climate agreement at the U.N. Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP21) in Paris in December 2015. In anticipation of this moment, countries publicly outlined what post-2020 climate actions they intended to take under the new international agreement, known as their Intended Nationally Determined Contributions (INDCs). The INDCs will largely determine whether the world achieves an ambitious 2015 agreement and is put on a path toward a low-carbon, climate-resilient future.

The word “intended” was used because countries were communicating proposed climate actions ahead of the Paris Agreement being finalized. However, as countries formally join the Paris Agreement and look forward to implementation of these climate actions – the “intended” is dropped and an INDC is converted into a Nationally Determined Contribution (NDC). This conversion happens when a country submits its respective instrument of ratification, accession, or approval to join the Paris Agreement. A detailed update on the (I)NDC can be found in the NDC registry site of UNFCCC[1]. In addition, the NDC platform of the World Bank[2] is also resourceful to get analysis on the (I)NDCs.

 

Why is it important for SNV?

 

(I)NDCs are important for SNV as it fits strategically into the corporate strategy of SNV with respect to poverty alleviation, energy for all, sustainable health and sanitation, reduced deforestation and sustainable landscape development. Besides, (I)NDCs are important for SNV as because they reflect national climate actions of governments. SNV wants to align with these to have more impact and increase opportunities to access climate finance.

INDCs contribute to the Sustainable Development Goals (SDGs). As such, INDCs will have implications for framing country’s low carbon and climate resilient development strategy, By participating in their implementation  SNV  can   contribute to the  Sustainable Development Goals (SDGs) 1 (to end poverty), 7, to “Ensure access to affordable, reliable, sustainable, and modern energy for all”, SDG 9 to “build resilient infrastructure, promote inclusive and sustainable energy and foster innovation”, SDG 6, to “Ensure availability and sustainable management of water and sanitation for all,  Increasing water productivity and adopting sustainable production and consumption patterns to meet the world’s projected future demands” and SDG 12 to “Ensure sustainable consumption and production patterns”.

At the level of country strategy; (I)NDCs are instrumental for identifying long-term and immediate low-carbon and climate resilient development priorities of countries. (I)NDCs implementation needs to be tailored to each country’s circumstances, building on existing strategies, plans and capacities, and clearly setting out how action on the ground will be delivered and turned into achievements. SNV can use this scope by contributing to the development of frameworks for NDC implementation, setting out the coordinated action required across five distinct (but intrinsically linked) pillars: governance, climate change mitigation, – adaptation, finance and measurement, reporting and verification (MRV).

There is increasing interest of donors to fund (I)NDCs activities, which could entice SNV to engage in these initiatives. In 2014-15, the NAMA Facility funded by BMU, UKAID, EU and Denmark committed 60 Million EUR for financing mitigation actions in line with the (I)NDCs. The Green Climate Fund received pledges of 11 Billion USD, which will fund 1:1 climate change adaptation and mitigation activities in accordance to (I)NDCs.  Bilateral donors like Norway, Denmark, UK and Germany are providing small funding to countries for preparing INDCs frameworks. T Currently available funding for developing INDCs are less than 10 Million USD. The climate finance update -2015 depicts[3] that developed countries pledged to deliver finance approaching $30 billion between 2010 and 2014, and committed to mobilize $100 billion per year from public and private sources by 2020 for investing in climate change mitigation activities (adaptation is still less than 15% of total funding available).

 

Objective and the targeted audience

 

Currently, countries have been developing detailed implementation plans for INDCs, which includes prioritization of activities to be taken up from 2021 and securing funding from international and domestic sources for implementation. Countries are expected to complete this preparation of implementation plans by mid of 2017 as UNFCCC has set this target. These plans will provide the blueprint for future climate financing.

SNV country teams have the opportunity to closer align with these plans and identify priority areas from INDCs in the agriculture, forestry and energy sectors, to develop low carbon and climate resilience programs with national actors, achieve poverty reduction- and environmental impact and access climate finance.   SNV country offices need to establish effective partnerships with the national governments to implement these NDCs projects and programmes.

To prepare these activities, SNV has undertaken an analysis of INDCs with the following objectives:

  1. To provide an overview of how agriculture, energy, forest and climate sectors have been included in the Intended Nationally Determined Contributions (INDCs) in SNV countries; and
  2. To provide recommendation on SNV interventions in 5 countries.

 

Structure of the report

 

The report includes 4 key sections, viz., (A). brief background on the definition of (I)NDC and its importance for SNV; (B). General overview on (I)NDCs according to sector focus, level of ambitions of countries; (C). Detailed analysis of (I)NDCs from countries, where SNV has presence and (D). Summary recommendation for SNV to realize its (I)NDC support ambitions through the establishment of partnerships with country governments.

Overview of (I)NDCs:

 

162 INDCs have been submitted to the UNFCCC as of July 29, 2016 by 190 countries (EU has submitted a regional INDC), accounting for over 90 percent of global emissions[4].

 

Most of the INDCs are national in scope; they address all major national GHG emissions or at least the most significant sources such as Co2, and CH4. The GHG reduction ambition of INDCs are different in scale (ranging from 1.5 to 89.0 per cent in comparison to BAU).  Approximately, 80 INDCs include relative targets for reducing emissions below the ‘business as usual’ (BAU) level, either for the whole economy or for specific sectors.

129 countries included in their INDCs sectoral or sub-sectoral quantified targets. These Parties included targets for energy and land use, land-use change and forestry (LULUCF) sectors together with their economy-wide targets.

 

78 countries identified targets for renewable energy. Renewable energy targets were expressed using different indicators, such as share in the energy matrix, installed capacity, generation and penetration, and ranged between 3.5 and 100.0 per cent for these indicators.

 

Renewable energy was highlighted in many INDCs. Related actions aim at increasing the share of and improving access to clean energy, such as feed-in tariffs, investment programmes for renewable energy generation, and improvement of the grid infrastructure. A few Parties communicated quantified renewable energy targets, with some aiming at achieving 100 per cent renewable energy supply for the electricity sector.

 

Actions on energy efficiency, also highlighted in many INDCs, include the modernization of energy generation and transmission infrastructure, the promotion of smart grids, efficiency improvements in industrial processes, and energy conservation standards. Sustainable transport is highlighted in several INDCs through measures such as improving public transport, limiting the import of inefficient vehicles and using fuel efficiency standards. A few Parties also communicated quantitative energy efficiency targets.

 

In several INDCs countries provided information on plans to implement policies and measures to reduce CH4 and other non-CO gases by improving crop and livestock production, promoting low-carbon agriculture and establishing waste management and recycling programmes as well as waste-to-energy facilities. Furthermore, several INDCs highlight measures to promote the conservation and sustainable management of forests. Some countries particularly highlighted the importance of REDD-plus activities in this context. A few countries communicated targets for increasing forest cover.

 

156 countries included emissions and removals from land use, land use change and forestry (LULUCF). A few countries indicated that a common framework for LULUCF accounting may be desirable, which could be based on existing guidance and experience under the Convention and its Kyoto Protocol. However, many of the INDCs do not provide comprehensive information on the assumptions and methods applied in relation to LULUCF, which presents a major challenge for the quantitative evaluation of the aggregated effect of the INDCs.

 

82 countries, most in sub-Saharan Africa, included sectoral mitigation targets for the agriculture sector, or quantified the potential reductions from their mitigation actions. These contributions ranged from 5 GgCO2e /year (Côte d’Ivoire) to 90 000 GgCO2e/year (Ethiopia), or 6.8% to nearly 50% of emissions, generally calculated against business-as-usual emissions in 2030.

 

As the reference point (baseline), some countries chose 1990, a few chose 2005 and others referred in their contributions to 2000, 2010, 2013, 2014 or 2015. Some countries specified their level of emissions for a base year or provided information on Business as usual BAU reference scenarios for the mitigation objectives expressed relative to BAU. Most Parties indicated either a 5- or 10-year implementation period for their INDCs. Many of the INDCs refer to an implementation timeline up to 2030, while a few refer to an implementation timeline up to 2025. A few of the INDCs communicated targets for both 2025 and 2030, one of which is indicative or interim. A few Parties indicated a timeline of up to 2035, 2040 or 2050, mostly in conjunction with another target year. Furthermore, a few countries communicated an implementation period starting before 2020.

 

134 countries provided information relating to planning processes, including specific aspects such as: the national process of the development and approval of the INDC; institutional arrangements; stakeholder engagement; policy and legislative issues; and priority areas for implementation. These Parties have already taken a number of steps to develop a strong domestic basis for planning and implementing their INDCs and expect to build on those efforts in the future. Many INDCs are directly backed by already existing national legislation or policies. And several INDCs provide information on processes towards new legislation and policies, triggered by the preparation of the INDCs. While the level of ambition and the degree of advancement in national climate policies vary, all Parties mentioned that their INDCs are based on, among others, existing policies or ongoing national processes, as well as on experiences with implementing the Convention and its Kyoto Protocol.

 

A few countries referred to the need to respect human rights and gender equality. The consideration of gender issues is seen by 87 countries as imperative in establishing an enabling environment for adaptation. For example, one country (Ghana) has established a climate change gender action plan. Other countries mentioned the need to address human rights.

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Many countries provided information emphasizing that their INDCs have undergone national stakeholder consultation processes with a view to raising awareness and securing buy-in with respect to their INDCs and related long-term development plans. Parties highlighted that support from actors such as the private sector, academia and civil society, as well as from relevant sectoral ministries and regional and local governments, is critical for the identification of realistic targets. Examples of processes to engage stakeholders included the establishment of expert task forces and working groups, parliamentary hearings, large-scale public consultations, including workshops, targeted meetings and an invitation for written submissions, as well as awareness-raising campaigns. A few Parties noted that they still plan to hold consultations on the overall national climate policy underlying their INDCs.

 

Over half of the communicated INDCs include the plan or intention to use market-based instruments from international, regional or domestic market instruments, including the clean development mechanism (CDM). Most of those countries indicated that they would use market instruments to meet only part of their targets. Several countries stressed that the use of market-based mechanisms is important for the cost efficiency of the mitigation effort and for enhancing the level of ambition. The assessment of the aggregate effect of the INDCs presented in this report assumes that no double counting of outcomes from actions to reduce emissions will occur.

 

Support needs for the implementation of INDCs were highlighted by several countries Those countries identified in their INDCs needs for targeted foreign/international investment and finance, capacity-building and technology, with some providing quantitative estimates of the support required for the implementation of their INDCs and for achieving the upper level of their mitigation contributions. Some countries identified domestic/national measures to support the implementation of their INDCs, including the use of market-based mechanisms, increased budgetary support, public–private partnerships, green procurement programmes, reforms of pricing and taxation regimes, the improvement of green credit mechanisms and the establishment of specialized national funds. A few Parties noted the importance of engaging the private sector. .

 

158 countries noted the importance of enhanced international support in the context of the new global agreement, including its scaling-up, and the strengthening of the role of and linkages between the existing operating entities of the Financial Mechanism, including the Green Climate Fund (GCF) and the Global Environment Facility (GEF), and the Technology Mechanism (CTCN) under the Convention.

 

Information contained in the INDCs shows a clear and increasing trend towards introducing national policies and related instruments for low-emission and climate-resilient development. Many INDCs are already backed by existing national legislation or policies and several have triggered national processes to establish relevant policy frameworks. Furthermore, many INDCs involved public consultation and the engagement of a wide range of stakeholders to demonstrate the developmental benefits of action to combat climate change and to secure the buy-in for such action.

 

Information provided by countries highlights the trend towards an increasing prominence of climate change on national political agendas, driven in many cases by inter-ministerial coordination arrangements as well as by an increasing trend towards the mainstreaming of climate change in national and sectoral development priorities. At the same time, many countries have made efforts to ensure that the private sector, civil society and other nongovernmental actors recognize the importance of, and provide support for, national action to combat climate change.

 

The INDCs show an increasing interest of countries in enhanced cooperation to achieve climate change goals collectively through a multilateral response and to raise ambition in the future. In particular, countries stressed the need for strengthening finance, technology transfer and capacity-building support for climate action in general as a means of creating an enabling environment and scaling up action.

 

Narratives provided by countries in their INDCs convey the vision that each country implements its own strategy and reveal the need for a process to reconcile efforts made in the context of different national circumstances with the efforts needed to keep the global temperature rise below 2 °C. This target of global temperature rise, should be addressed as Parties consider current and future efforts in relation to any agreed goal under the Convention.

 

Inclusion of adaptation in INDC: One hundred countries included an adaptation component in their INDCs. The secretariat received adaptation components from 46 African States, 26 Asia-Pacific States, 19 Latin American and Caribbean States, 7 Eastern European States and 2 Western European and other States.

 

Countries highlighted their common determination to strengthen national adaptation efforts in the context of the 2015 agreement. Some stressed that adaptation is their main priority for addressing climate change, in particular as they see it to be strongly linked to national development, sustainability and security.

 

All adaptation components of INDCs included information on key impacts and vulnerabilities. Countries reported in particular on observed changes or projections of future changes, the most vulnerable sectors or geographical zones, high-risk impacts and incurred costs resulting from the impacts of extreme events. In terms of climate hazards, the main sources of concern identified by most countries are flooding, sea level rise and drought/desertification.

 

The information provided clearly demonstrates that countries are moving to full-scale planning and implementation of climate change adaptation and strengthening and scaling up existing efforts (mitigation?). Most Parties referred to developing nationwide adaptation plans and strategies; several countries indicated that they are conducting the process to formulate and implement national adaptation plans (NAPs) and most of them foresee having developed their NAP by 2020. Such national efforts are often accompanied by specific policies, measures and initiatives in practically all key economic sectors and areas, with water, agriculture, health, ecosystems, forestry and infrastructure being reported as the priority ones. A few countries intend to undertake actions with regional or global impacts as they will address transboundary issues.

 

The recognition of the need to involve relevant stakeholders in the planning and implementation of adaption, including vulnerable communities, was high on the agenda of several countries. In addition, many emphasized the need to consider gender issues when undertaking adaptation.

 

Loss and damage associated with past and projected impacts of climate variability and change were reported by several countries, some of which have quantified projected loss and damage, for example in the form of absolute costs, annual loss of GDP, or percentage of land or agricultural production lost by a certain year or a particular threshold, for example a specific rise in sea level. A few countries provided details on projected costs of climate change impacts and how intended adaptation measures are expected to reduce them while leaving some residual damage, clearly making an economic case for investing in adaptation and disaster risk reduction.

 

Most countries provided information on the means of implementation (e.g. finance, technology and capacity-building) needed to support the implementation of their planned adaptation actions, including related to support needs and envisaged domestic and international support. Financial needs for adaptation were quantified by some countries, with individual needs ranging from USD 100 million to over 200 billion for the whole INDC period to around USD 10 million to 3 billion per year. A few Parties provided projected adaptation costs for different mitigation scenarios, thus clearly indicating that the need for adaptation depends on mitigation ambition.

 

Regarding the monitoring and evaluation (M&E) of adaptation action, countries highlighted that they have established or will establish quantitative and qualitative indicators for adaptation and vulnerability to measure progress. In terms of the M&E of domestic and international support provided and received, in particular finance, a few countries are putting in place climate finance systems for determining, disbursing and monitoring climate expenditure and for enhancing the visibility of adaptation measures within the allocation of national budgets.

 

159 Countries referred in their INDCs to the importance of extensive national consultation and interdisciplinary coordination to ensure strong alignment with development objectives and buy-in from all relevant stakeholders.  Parties specifically highlighted that all levels of government share responsibility for action and the existence of inter-agency coordinating mechanisms on climate change in the countries. A few of the INDCs have been approved at the highest political level, for example by the national Parliament, the Cabinet of Ministers or by the President. Furthermore, the importance of national, subnational and regional cooperative action both by government and non-State actors was noted by several Parties. A few of the INDCs specifically note that initiatives undertaken by cities and subnational governments will be an important driver for their implementation.

 

Conclusion

 

In sum, the (I)NDCs, submitted to the UNFCCC clearly depicts the level of commitments of countries for reducing GHGs emission. 74 developing countries have included information on the level of political support adopted in their INDCs. In 8 developing countries the Head of State have formally backed the INDC; in 33 developing countries INDCs were adopted through an inter-ministerial process; 29 developing countries have developed their INDC through a sole line ministry; 8 developing countries had their INDC validated in parliament before submission. 109 developing countries have developed their INDCs based upon existing national policies and plans. As discussed in the previous section, the (I)NDCs have included mainly 7 key areas under the mitigation sector and another 7 key areas under adaptation sector.

[1] http://www4.unfccc.int/ndcregistry/Pages/Home.aspx

[2] http://spappssecext.worldbank.org/sites/indc/Pages/INDCHome.aspx

[3] http://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/9358.pdf

[4] http://www.c2es.org/international/2015-agreement/indcs

 

Keshav C Das

Ashden India, New Delhi

 

Focus on Manufacturing for Economic Development

manufacturingIntroduction:

Developing countries have been experiencing rapid economic growth over the last decade that is mostly fueled by the strong performance of the agriculture sector, which in turn was mainly due to the higher yield and area expansion of smallholder farmers. However, there is a limit as to how much this strong performance of the economy can continue if the country continues to rely on the agriculture sector. To be able to sustain the strong economic performance of the last decade and achieve economic growth, countries need a structural change towards manufacturing. This raises a couple of questions: why manufacturing and what kind of manufacturing?

Why Manufacturing?

Much recent literature has demonstrated that economic development requires structural change from low productivity activities to high productivity activities. It also suggests that the industrial sector in general and the manufacturing sector in particular is the engine of economic growth. In fact, virtually all cases of high, rapid, and sustained economic growth in modern economic development have been associated with industrialisation, particularly growth in manufacturing production[1].

But these assertions require grounding in empirical regularities and theoretical justifications. Policy makers need to provide stylized facts regarding the correlation between the manufacturing sector and economic growth.

Empirical reasons (stylized facts)

There is an empirical correlation between the degree of industrialization and per capita income in developing countries.

One of the most prominent empirical regularities is that countries with a higher manufacturing share in GDP grow faster.  Of course one may object that, this evidence, based on a cross section data, may be a result of the fact that some countries have conducive economic policies and endowments that enable establishment of manufacturing and high growth. i.e., it may not be the case that manufacturing contributes to the faster growth, rather it may be the case that there is something else the countries have got that encourages manufacturing. This takes us to the second empirical regularity. The data shows that the experience of sustained fast growth in developing countries are associated with an increase in the share of manufacturing exports in the total exports and an increase in employment in the manufacturing sector.

A combination of the above two empirical observations suggests that manufacturing is a key sector for countries to experience sustained high growth. The next question then is whether manufacturing can be brought about by policy or countries are doomed to specialize in their comparative advantage. In other words, do the countries with higher share of manufacturing in their economy achieve that because they have a conducive endowment structure (e.g. abundance of labour) or do they achieve that because they have made conscious policy decisions that are conducive for the development of manufacturing?

A look at the data suggests that the latter is closer to the reality. Specifically, empirical regularities show that countries that grow fast are those that produce (especially export) goods more sophisticated than what their comparative advantage shows. In other words, a conscious policy to promote technological upgrading dictates whether a country engages in the production of a manufacturing good that facilitates its growth rate. Part of the reason why countries that produce goods more sophisticated than their comparative advantage grow faster is because that entails catching up to a higher level technology (i.e., getting closer to the technological frontier).

These empirical regularities suggest that a transition to manufacturing is likely to provide a boost to the economic fortunes of the country. One might wonder about the channels through which manufacturing provides such a growth boost. The following is a brief discussion regarding the theoretical rationale for it.

Theoretical reasons[2]

First, there is substantial data that shows that in developing countries the productivity of labor in the industrial (manufacturing) sector is much higher than the agriculture and service sectors. As a result, shifting labor away from agriculture/service towards the industrial sector provides a positive static shift effect. i.e., the country’s GDP will be much higher for a given amount of labor and hours worked. This static shift effect is known in the literature as a structural change bonus.

Second, the data also shows that in developing countries the productivity of labour tends to grow much faster in the manufacturing sector than in the agriculture and service sectors. In other words, a country where more workers are engaged in the manufacturing sector will grow faster due to the dynamism of the sector.

Third, the manufacturing sector tends to have stronger Linkage and spillover effects. There are evidences in the literature that the industrial sector provides a stronger demand for the products of other sectors (backward linkage) and supplies more inputs to other sectors (forward linkage). In addition, the manufacturing sector has traditionally been the sector where most new products and processes get developed. In other words, most sectors adopt new technologies and processes that originate from the manufacturing sector. To put it in an economic jargon, the manufacturing sector has stronger spillover effects (knowledge externalities).

Fourth, the manufacturing sector usually requires lumpy investments. This characteristic of the industry has two implications. The first implication is that production in the sector offers economies of scale, i.e. increased productivity as more is produced. The large-scale production that results from the effect of economies of scale will further provide opportunities for learning by doing. In other words, production in the industrial (manufacturing) sector provides both static gain (economies of scale) and dynamic gain (growth of productivity through learning by doing). The second implication of lumpy investment in the sector is that the sector provides more opportunities for capital accumulation.

Finally, there is the effect of Engel’s Law: as per capita incomes rise, the share of agricultural expenditures (as a share of total expenditures) declines and the share on manufactured goods increases. One consequence of this observation is that the expanding world market that results from economic growth provides a much larger market for manufacturing goods than agricultural commodities. As a result, countries that produce manufacturing goods are better positioned to benefit from this growth in the global economy.

What Kind of Manufacturing?

The above discussion has illustrated the benefit of transitioning to the manufacturing sector as a source of high and sustained growth. In addition, it shows that policy plays a role on whether a country achieves the suggested structural transformation or not. If policy is going to play such a role, then we have to identify what kind of manufacturing is likely to succeed in the country and therefore needs the support of the government.

When deciding which manufacturing sub sectors a country wants to trasit to it needs to take in to account two factors: Comparative advantage and linkages.

Comparative advantage is dictated by the type of productive asstes that are abundant in the country. In the case of developing countries cheap labor and land are the basis for our comparative advantage. The manufacturing goods that rely on these inputs are agro related food and non-food processing as well as as other light manufacturing such as textile and leather.

Whether producing a specific manufacturing commodity, that relies on cheap labor and agricultural commodities, will lead to rapid transformation compared to encouraging other relatively similar manufacturing goods depends on the degree of sectoral linkages it produces. If the production of the specific manufacturing good encourages stronger backward and forward linkages with the other sectors of the economy, then encouraging its production will lead to faster and sustainable growth.

Comparative advantage is one of the main criteria for encouraging the production of a specific manufacturing good. Ethiopia has an abundance of land, with potential to produce agricultural products as an input to agro processing manufacturing subsector. Comparative advantage, however, is not automatically translated into competitive advantage. Whether a country successfully industrializes or not depends on the availability of the right type and quantity of raw materials on long term and sustainable basis. In other words, the performance of the agricultural sector in terms of providing quality inputs at a competitive price and in suffient quantity is a fundamental issue for the success of the manufacturing sector.

[1] Szirmai(2009)

[2] Most of the discussion regarding theoretical justifications provided below relies on Szirmai(2009)

Keshav C Das

New Delhi, October, 31, 2016