IT & ITeS – Job creators in Nineties & early 21st century
Nineties & early 21st century saw the emergence of IT & ITES as the leading revenue and job creation sectors, which was further enhanced by the evolution of mobile telephony and smartphones. The rapid development in the communication technology and communication devices helped in creation of a large number of jobs both for skilled and unskilled workers. The higher salary levels in the ICE sector helped in boosting the real estate and consumer durable markets which in turn provided large job opportunities for the unskilled & low skill level workers in the country. The global slowdown has impacted the IT & ITES jobs which in turn has had a cascading effect on the real estate, consumer durable market, and jobs for unskilled workers.
The relentless pursuit of the present government to attract foreign investment, enhance manufacturing & development activities for achieving higher growth rate has witnessed a limited success. With problems of unemployment staring in the face of all countries globally, every country has started imposing restrictions on external workforce which has also impacted the Indian workforce.
In the absence of both skilled and unskilled jobs, the demography which was supposed to yield a dividend is becoming an albatross around the country’s neck. There is a gradual increase in unrest in the various parts of the country which is getting triggered at the slightest provocation. The Mandal movement of the nineties got triggered because of the fear of unemployment. If one were to analyze the underlying cause of the various unrest in the recent times, it may well turn out to be due to the simmering anger of the people, resulting fundamentally from lack of jobs. In some parts, this has made the youths take to drugs too.
JOB CREATION – A Billion Dollar Question
How to create jobs? This is a billion dollar question that has been haunting the politicians, globally and not just in this country. Our country, fortunately, has not witnessed large scale exit of factories that the developed nations have faced. Had that happened, there would have been riots on the streets. In order to attract industries to invest into their states for creating jobs, the heads of state from all over the world are wooing investors to invest into their states. All of them are willing to offer tax concessions and other incentives. Despite the concessions, it has not yielded the desired results.
The present government feels that they have improved the “Ease of Doing Business”, liberalized FDI norms, are more investor-friendly etc but still the growth in employment is elusive because no large-scale manufacturing is happening which can create jobs. With advancements in robotics, the manufacturing is in fact now moving back to the developed nations, since the arbitrage due to lower labor cost ( which was the primary reason for industries to move out in the first place ) has been nullified by low-cost robotics. Therefore the chances of India becoming a factory hub like China is unlikely.
Given this possibility of stagnant growth in manufacturing, IT & ITeS, there is an urgent need to develop an alternate plan for creating the huge job requirement. Considering the fact that almost 70% of the population and 50% of the workforce still in the villages, there is an urgent need for the jobs to be created not only for urban population but also for the Rural population.
DISTRIBUTED RE-POWER GENERATION FOR RURAL JOB CREATION
The primary hurdle for creating jobs in villages is the highly regulated power supply to the villages. The villages in India have become an unsuspecting victim of the habit of free/subsidized power that the political system have got them into. Having got addicted to free / subsidized power, it has become difficult to wean them out of this habit. In the initial periods, since the agricultural consumption was low, the distribution companies were able to pass on the burden to the residential, commercial & industrial customers. However, over a period of time since the tariff levels for residential, industrial & commercial consumers have gone up significantly, it has become difficult to load the free power burden on the rate payers, and the regulatory commissions shifted the burden on to the tax payers by making the government responsible for providing the subsidy. Though on paper the governments have to make good the subsidy, however, since they are also invariably cash strapped, the discoms most often do not get this amount and they go on accumulating losses or take loans until the central government finally bails them out by some form of amnesty schemes. In order to keep the agricultural subsidy burden as minimal as possible, the practice adopted by most of the discoms is to restrict the power supply to the bare minimum such as to meet the irrigation needs of the villagers which is generally around 6-8 hours in a day and that too mostly in the night, when the power demand is low in the urban areas.
The unreliable and restricted power supply to the Rural areas inhibits any meaningful industrial or commercial activity to be taken up in the villages as a result of which no jobs get generated in the villages other than farming and the villagers have no option but to migrate to urban areas. The migration of the rural community puts further pressure on the urban infrastructure which is already overstressed.
GOI’s 175 GW power generation capacity plan thru Renewables offers an excellent opportunity to not only generate power in a sustainable manner but also has the potential to provide 24 X 7 power to villages & generate large number of jobs as a result of availability of reliable power.
The renewable energy sources in general and solar in particular is a naturally distributed energy source and also being modular in nature, is best set up in a distributed manner rather than in a centralized solar park concept- ( refer https://www.linkedin.com/pulse/empowering-rural-india-thru-renewable-energy-venkataraman-nagarajan-1?trk=pulse_spock-articles) 98% of the villages are grid connected and therefore the distributed RE project set up in a village can be connected to the existing line and the power exported out to the urban consumers. Since the power supply to the villages is generally limited to only 6-8 hours a day, the distribution lines to the villages are being utilized only for 25%-30% of the time. This is a gross waste of the resource. However by setting up the RE plant in the village those lines can be utilized 24X7 for exporting power from the village.
24X7 operation of the RE project in a village can be achieved by integrating the solar project with bio-mass gasifier unit of say 500 KW or 1 MW . The solar PV – bio-mass hybrid plant will help in improving the grid stability by ensuring dispatchable power from these hybrid solar – bio-mass plant. Bio-mass gasifier can use the various types of agricultural residue or juliflora which will provide employment to lot of villagers in fuel collection, cutting, feeding etc. Additionally, there would be cleaning jobs for cleaning the solar panels. This leads to direct job creation for gasifier suppliers, gas engine suppliers apart from solar plant suppliers.
ADDITIONAL JOB CREATION DUE TO MIGRATION OF FACTORIES TO VILLAGES
The dispatchable power from the 1 MW solar + 1 MW bio-mass hybrid would provide firm power for which the power developer can be paid a fixed Rs 5 / KWhr . 5%-10% power from these solar hybrid plants can be provided free to the village where the plant is located. This can be viewed as a Direct Benefit Transfer scheme. The tariff of Rs 5 / KWhr has been arrived at by factoring the 10% free power to the villages over the average solar auction rate of Rs 4.50/KWhr. The RE developers can execute PPA at the fixed tariff as soon as the plant is ready. This way we can save time spent on reverse auction process. The free power to the village from the RE plant will take away the subsidy burden from the Discoms and improve their health.
The 1+1 MW hybrid solar plant will produce about 60 lakh units of power. 10% free power would amount to 6 lakh units. The village will be left with surplus power even after meeting all their needs and they can invite industries to set up manufacturing unit in the village by offering them lower cost power at about Rs 3.50 / KWhr as an incentive. Compared to the present retail power in urban areas at Rs 6 +/ KWhr, a number of units can shift to village due to lower cost of manufacturing. With cost of communication reducing drastically, the industries can be managed remotely.
Such 1+1 MW solar biomass hybrid plant can be set up amongst the 98% of villages which have grid connectivity and the 175 GW target can be achieved within a matter of 2 years.
Large number of rural jobs will be created in Rural RE power generation & also due to migration of factories to villages. The villages will become energy centers and will not only be providing food to the nation but also the much-needed energy to the nation.
Electric Vehicles for job creation in Urban areas:
Achieving 175 GW thru renewable is not at all a problem. The real problem is that in light of the surplus power situation in the country, who is going to buy that power in the absence of manufacturing growth. This is where it is necessary to develop Electric Vehicles which will play a complementary role for RE just as ITES played a complementary role for the IT sector. Electric Vehicle development would help to absorb the surplus domestic energy and displace the costly imported oil. While ITES enabled flow of foreign exchange into the country EVs will stop flow of foreign exchange out of the country which will straight away add to our GDP.
EVs will not only enable utilization of surplus domestic energy, but also trigger large-scale manufacturing of Lithium Batteries, various types of vehicles, charging stations, battery swapping outlets and thus generate large number of jobs.
Major Public Sector power & oil companies like BHEL, NTPC, NHPC, IOC, ONGC etc should be mandated to set up 1 GW Lithium cell manufacturing factory each, in collaboration with Panasonic, LG Chem, Hitachi, Samsung etc. Since all the PSUs already have large plant area and all resources for manufacturing, the manufacturing units can come up very fast and the cost of manufacturing will also be lower compared to a green field plant. Also, the engineers can be easily retrained for battery manufacturing. Large number of jobs will be created for assembly of the Lithium cells to battery pack which can be taken up as a cottage industry. These actions alone will help to bring the Lithium battery cost down to a level of US$ 250 / KWhr.
The PSUs can further avail of the GOI subsidy ( out of green cess funds ) and provide the Li battery at US$ 150 / KWhr to the EV manufacturers which will make the EVs more competitive to the conventional vehicles.
Presently all PSUs have announced their plans for setting up GW scale Solar PV plant which is not the best use of the PSU’s resources. This is perhaps a result of the earlier mindset of building large plants which needed the resources of PSUs. The solar PV as stated earlier is ideally set up in a distributed manner. The solar PV-biomass hybrid plants in the decentralized 1+1 MW village level does not require the support of PSUs. These can be best set up by urban consumers themselves as a group captive plant and thru virtual net metering, the generation can be adjusted against their consumption. The discoms can be suitably compensated such that the other consumers are not burdened by migration of the consumers to that of a prosumer.
If GOI wants to generate more jobs, it cannot be done by adopting the centralized power generation concepts which were suitable for the fossil fuel era. If the governments is serious about transitioning to RE, they need to adopt alternate decentralized generation, democratize energy by empowering the consumers and break the monopoly of the large power companies including the discoms.
Transforming the country requires radical decisions and breaking away from the traditional centralized approach and adopting unconventional approaches which are customized according to the latest technology and the country’s rural-urban structure.
RE & EV has the potential for large-scale job creation and in transforming the country to a double-digit growth thru sustainable development.