Many articles have been written on India’s growth potential, following the slowdown in economic momentum in the last couple of years. This is myopic as the Indian growth remains robust; and the economic growth rate is likely to accelerate from 2012-13 onwards.
Before the global financial crisis of 2008, the Indian economy had been growing at well over 9 percent. The growth rate slipped to 6.7 percent in 2007-08, but recovered swiftly to 8.4 percent in 2008-09 and stayed at that level the following year as well. Since then, growth has declined to 6.5 percent in 2011-12 and likely 6 percent in the current fiscal year that will conclude in March 2013. You cannot blame an external observer for concluding that Indians have hobbled in their rope trick gone wrong and it is better to wait and watch, if not keep off. But those who let appearance overwhelm their appreciation of the reality are likely to miss the strongest growth story of the next two decades.
The government’s announcement in September last year of a slew of reform measures, allowing foreign investment in multi-brand retail (single-brand retail had already been opened up, although with conditions that are gradually being diluted), allowing foreign airlines to invest up to 49 percent in Indian airlines, raising the foreign investment cap in insurance to 49 percent, opening up some forms of distributing telecast signals to foreign capital, etc. Hopefully, this could well be the turning point for the economy. Not so much because these decisions in themselves break dramatic new ground, but because it signalled political decisiveness, key for India to break her shackles of policymaking inertia.
India has had minority or coalition governments continuously since 1989, except for a brief two-and-a-half years early in the ’90s. Therefore, making policy has been a function of not just reformist intent but of political management of coalitions as well. In this area, the present government had been seen as having a deficit bigger than the fiscal deficit. But the September reforms signalled boldness: A key ally with the second largest contingent of legislators in Parliament broke off in protest at opening up retail and left the ruling coalition but the political leadership was prepared for that exit and roped in external support. The government has been taking a number of measures that require considerable political courage. It has auctioned telecom spectrum, passed reforms to banking regulations that will allow the central bank, which also functions as the banking regulator, to issue new licences, initiated a system of direct cash transfer of subsidies and increased the prices of petroleum fuels, in order to reduce the subsidy burden on the fisc. The expectation is that more reforms would be announced when the annual budget is presented on the last day of February.
While this much is evident to anyone who follows the news on India, there are a few changes in the political economy that receive little attention but have enormous significance for accelerating growth.
The most important change is that in elections to the states (India has 28 provinces with their own elected governments), the people have made it clear that they are no longer content with empty promises or mere offer of voice and identity, as they had been in the past. Leaders are expected to deliver governance and development. Those who rise to this expectation are rewarded with another term in office, and those who do not are voted out.
Politics in India has traditionally been a matter of patronage. The new political economy is forcing the leaders to think of building expressways, new towns, forging policies for releasing land for industry and make schools teach and staff hospitals. Every major state now holds annual investor meets to draw in foreign investment.
The mass upheaval over corruption is forcing the system to adopt unprecedented transparency in the allocation of natural resources. A new mining bill in the works will adopt transparent auctions for mines. Pressures are mounting to dilute, if not scrap, public monopoly in coal mining, which has been a major factor in the shortage of fuel that has been keeping 50,000 MW of power generation capacity idle in the country. A new ruling by a central appellate tribunal now ensures that every state level electricity regulator would revise power tariffs at least once every year. Refusal by these regulators to pass on the higher cost of imported coal has been one reason behind the fuel shortage in the power sector.
The good news is that India today has 50,000 MW of idle capacity. In the absence of enough power to supply rural areas in the daytime (power is despatched for a few hours at night so that farmers can run their pumps for irrigation) has meant that very little rural industry has been possible till now. Once the fuel shortage has been sorted out, rural India would be ripe for structural diversification, new agro processing industry absorbing underemployed manpower and farmers gaining from new climate-controlled warehouses and better prices through local procurement by local industry for local processing. State-owned Bharat Broadband Corporation is busy rolling out fibre-optic cable to 250,000 large villages (India has a little over 600,000 villages in total).
( T K Arun is the Editor, Opinion,
at The Economic Times, New Delhi)
Indian economy poised for takeoff, growth robust
Indian economy poised for takeoff, growth robust
Saudi authorities foil attempt to smuggle $35m worth of captagon pills
RIYADH: The Saudi Zakat, Tax and Customs Authority has thwarted an attempt to smuggle over 1.4 million captagon pills into the Kingdom through the Jeddah Islamic Port.
According to the authority, the pills were found inside a shipment during customs procedures and live detection.
Coordination with the General Directorate of Narcotics Control led to the arrest of the intended recipients of the seized items in the Kingdom.
Captagon, a type of amphetamine, is used predominantly by young men and teenage boys across the Middle East and has a street value of between $10 and $25 a pill, according to research by the International Journal of Addiction Research.
Saudi Arabia to host regular World Economic Forum event in the Kingdom
DAVOS: Saudi Arabia announced a regular world economic global forum in the Kingdom said the country’s minister of economy Faisal Alibrahim in Davos on Friday.
Alibrahim said the decision was based on the success of the forum held for the first time last year.
Saudi foreign minister arrives in Damascus on an official visit
RIYADH: Saudi Arabia’s Foreign Minister Prince Faisal bin Farhan arrived in Syria on Friday, in an official visit foreign ministry said in a statement.
Prince Faisal will meet with Syria’s de facto leader Ahmed Al-Sharaa and meet with top officials in the new Syrian administration.
How Saudi Arabia is tapping AI to monitor the environment and extreme weather
- AI enhances weather predictions, improving forecasts for heatwaves and flash floods critical for Saudi Arabia’s climate adaptation efforts
- KAUST’s Center of Excellence for Generative AI focuses on Earth observation technologies to address climate challenges like water scarcity
RIYADH: Since the launch of Vision 2030, technological innovation and sustainability have been central to Saudi Arabia’s transformative plan, with artificial intelligence emerging as a key tool to tackle a range of issues, including environmental challenges.
With nearly 90 percent of its territory covered by desert, the Kingdom is utilizing AI to combat land degradation, improve water resource management, and promote sustainable practices.
The King Abdullah University of Science and Technology has joined the global AI race by advancing generative AI research.
Its Center of Excellence for Generative AI adopts a multidisciplinary approach, focusing on technologies like multimodal foundation models and AI-assisted Earth observation systems to address challenges, including water scarcity and land degradation.
Prof. Matthew McCabe, director of KAUST’s Climate and Livability Initiative, told Arab News that AI has provided a pathway to revolutionize our understanding and interpretation of Earth systems, ushering in an era where data can be rapidly channeled to provide new knowledge and actionable insights.
“While GenAI has already impacted greatly on a number of domains, its application in the Earth and environmental sciences remains emerging,” McCabe said.
The center’s research focuses on developing AI tools for satellite imaging and Earth observation, enabling better monitoring of ecosystems. This includes using drones and satellite-based remote sensing technologies to track environmental changes in real-time.
Drones and satellite systems provide high-resolution data that is crucial for understanding ecological shifts in regions that were previously difficult to study. This allows for more effective land management, ecosystem restoration, and better predictions regarding weather patterns.
“We will be using remote sensing and other data sources to undertake ecosystem monitoring, helping to advance some of the goals and objectives of the Saudi Green Initiative,” McCabe said.
Opinion
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AI-driven solutions are already aiding the Saudi Green Initiative’s goals of planting 10 billion trees and rehabilitating 40 million hectares of degraded land by 2030, analyzing regional climate data, soil conditions, and water availability to identify optimal planting locations.
The Saudi Data and AI Authority, known as SDAIA, has partnered with several government entities to leverage AI solutions in support of the Saudi Green Initiative. These efforts aim to create innovative, data-driven strategies for combating climate change.
AI is also transforming climate forecasting in Saudi Arabia. Hylke Beck, assistant professor of climate analytics at KAUST, highlighted AI’s potential to predict extreme weather events like heatwaves and flash floods, which are expected to become more frequent and severe due to climate change.
Beck said AI models can uncover hidden relationships within weather data that traditional forecasting methods cannot, enabling more accurate and actionable forecasts.
He noted that these improved forecasts are critical for the Kingdom as it works to adapt to climate challenges, such as the severe heatwave that affected Makkah last June or the devastating floods in April across the UAE and Oman.
“With projections indicating that climate change will intensify and increase the frequency of heatwaves and flash floods, alongside an expected 32 percent population growth by 2050, the need to harness AI technology has never been more urgent,” Beck told Arab News.
Although there are currently few weather forecasting systems specifically designed for the region, and even fewer that incorporate AI models, Beck says these technologies have transformative potential.
However, Beck says building effective AI models requires access to extensive datasets.
“Government support in making this data accessible is essential for creating a more climate-resilient future,” he said.
DID YOUKNOW?
• KAUST’s Center of Excellence for Generative AI focuses on Earth observation technologies to address climate challenges like water scarcity.
• Drones and satellites provide real-time data, aiding land management, ecosystem restoration, and environmental monitoring for the Saudi Green Initiative.
• AI models can uncover hidden relationships within weather data that traditional forecasting methods cannot, enabling more accurate and actionable forecasts.
Traditional weather models depend on equations created by scientists, but these equations can be limited by gaps in knowledge about certain weather patterns.
“These equations are imperfect because even the best meteorologists don’t fully understand all weather processes,” Berk said.
On the other hand, AI models analyze large amounts of data to find patterns, making predictions faster and more accurate. These are especially useful in areas where traditional systems struggle, like predicting thunderstorms, which are often harder to forecast accurately.
While traditional systems rely on expensive supercomputers, AI models can run effectively on regular computers, making them more affordable and accessible.
“These AI models can — and I believe will, in the not-too-distant future — fully replace current traditional models. However, they can also be integrated into them,” Beck said.
The Center of Excellence for Generative AI’s initiatives align with Vision 2030’s sustainability and innovation goals, collaborating with leading national entities like NEOM and Aramco, as well as international organizations like Meta and Nvidia to drive progress.
The center also addresses the shortage of generative AI talent in Saudi Arabia through training and upskilling programs for KAUST researchers, partners, and the wider community.
Saudi Arabia eyeing trade hub with trillion-riyal investments, transport official tells WEF
- Saudi Arabia’s logistics investments and business-friendly policies aim to position the Kingdom as a global trade gateway, panel hears
- Vision 2030 fosters clear goals, educated governance, and incentives, creating a robust foundation for logistics and transport growth
DUBAI: Savvy logistics investments and business-friendly policies are transforming Saudi Arabia into a global trade hub, a Davos panel was told on Thursday.
Nouf Al-Fares, assistant deputy minister at the Saudi Ministry of Transport and Logistics Services; and Ehab Aziz, chief financial officer of Agility, were speaking at Saudi House during the World Economic Forum’s annual meeting.
The panel highlighted the Kingdom’s ambitious logistics and investment targets, which are being met partly through international deals.
Al-Fares said: “A strategy was announced in mid 2021 by His Royal Highness Crown Prince Mohammed bin Salman. At the beginning I thought it to be intimidating having to raise SR1 trillion ($266 billion) in investments, but we are already halfway there through various established projects like the Riyadh Metro, and the new expansions of seaports and airports.
“We are now in motion to open a metro in Jeddah as well.”
The Kingdom’s shifting policies on foreign investment are also playing a role in surging growth, Al-Fares added.
Foreign investors are now able to claim 100-percent ownership of their Saudi-based businesses — a crucial policy in attracting investment.
“International companies are increasingly seeing the value of investing in Saudi Arabia,” the assistant deputy minister said.
“Chinese companies have already entered the Saudi market, with investments so far reaching over SR1 billion, and there are still more incoming projects.”
Saudi Arabia is preparing to open five new airports in the coming years that will further boost the Kingdom’s connectivity and infrastructure, she added.
“This aligns with our vision and position to being the gateway to Asia, Africa and Europe. We are also preparing projects to back the tourism sector as we are witnessing a surge in numbers of tourists, not including the religious ones.
“A lot of programs and funds that have been developed by our government are geared at attracting the youth, and those leaders with an appetite for change. We are excited for the upcoming completion of projects like the railway, which is to be completed within four years.
“The railway will connect the Kingdom to its GCC neighbors, namely Abu Dhabi, Kuwait and Doha.
Aziz praised the Saudi government’s proactive role in fostering a business-friendly environment.
He highlighted several schemes that have attracted domestic and foreign investment, particularly since the launch of Vision 2030.
The chief financial officer shared the details of his own company’s development in Saudi Arabia.
Agility, a logistics and supply chain leader, has been in operations for more than two decades, beginning as a Kuwaiti public company that constructed warehouses.
“Since its privatization Agility has become a global operator,” Aziz said.
“Today, the company has $11 billion worth of assets spread across various businesses. We also own one of the largest aviation companies that operates within 250 countries.”
A conviction that the Kingdom “would be the place to be in the future” led the company into a Saudi expansion, Aziz said, adding: “And so we have so far not been proved wrong.”
He said: “The story in Saudi is getting better and better over time. It is rare to find a country with a clear vision that is tangible with an educated government.
“The government incentivizing its employees through bonuses is also a new, atypical characteristic. All the infrastructure projects are very important but so is the mindset and attitude.
“And all that has been extremely positive. It has gotten to a level where you feel like you can completely count on the government; this increases your confidence in investing more in the country.”
Al-Fares and Aziz highlighted their optimism over the future of investment in the Kingdom’s transport and logistics sector.
The industry is poised for continued growth thanks to the government’s clear vision and investments that are providing a solid foundation for future development, they said.
“I think 2030 is carrying a lot and we are very optimistic,” Al-Fares added.
