What is Viability Gap Funding (VGF)?
The main constraint in India’s infrastructure sector is the lack of source for finance. More than the overall difficulty of securing funds, some projects may not be financially viable though they are economically justified and necessary. This is the nature of several infrastructural projects which are long term and development oriented.
For the successful completion of such projects, the government has designed Viability Gap Funding (VGF). Viability Gap Finance means a grant to support projects that are economically justified but not financially viable.
The scheme is designed as a Plan Scheme to be administered by the Ministry of Finance and amount in the budget are made on a year-to- year basis.
Such a grant under VGF is provided as a capital subsidy to attract the private sector players to participate in PPP projects that are otherwise financially unviable. Projects may not be commercially viable because of long gestation period and small revenue flows in future.
The VGF scheme was launched in 2004 to support projects that comes under Public Private Partnerships.
VGF grants will be available only for infrastructure projects where private sector sponsors are selected through a process of competitive bidding. The VGF grant will be disbursed at the construction stage itself but only after the private sector developer makes the equity contribution required for the project.
The usual grant amount is upto 20% of the total capital cost of the project. Funds for VGF will be provided from the government’s budgetary allocation. Sometimes it is also provided by the statutory authority who owns the project asset. If the sponsoring Ministry/State Government/ statutory entity aims to provide assistance over and above the stipulated amount under VGF, it will be restricted to a further 20% of the total project cost.
The project agreements must also follow the best practices that would secure value for public money. Regular monitoring and evaluation should be done by the lead financial institutions for the disbursal of the grants.
The lead financial institution for the project is responsible for regular monitoring and periodic evaluation of project compliance with agreed milestones and performance levels, particularly for the purpose of grant disbursement
Why are MOOCs critical for India?
India’s future in the 21st century will be defined by how well it educates its young men and women. With 20-26 million children born every year, over the next 35-50 years an estimated 700 million to 1.3 billion of India’s youth will require access to higher education. Providing them with excellent higher education and preparing them for their lives and careers is India’s defining challenge and opportunity of the 21st century.
However, India’s higher education system is in crisis. Today, India’s gross enrolment ratio (GER), which is the percentage of the population in the age bracket of 18-23 years that is enrolled in an institute of higher education, is less than 24% (this is in sharp contrast to most developed countries, who have a GER of 50-95%). In other words, more than 76% of India’s youth do not even have access to higher education. And the youth who do have access to higher education receive such dismal quality of education that 70-90% of the college graduates in India are considered unemployable by the industry. And, even after 70 years of independence India does not have even one world-class multidisciplinary research university.
India needs to urgently address the crisis in its higher education system, otherwise, it’s future is at risk. However, it is severely constrained by lack of world-class faculty, infrastructure, resources, and time. In this context, MOOCs can be the much-needed silver bullet for India. If India embraces and adopts MOOCs successfully, it can provide an excellent education to all in the near future with relatively modest resources.
How is India’s effort on MOOCs?
In 2014, India’s Ministry of Human Resource Development (MHRD) announced India’s own nation-wide MOOCs initiative, SWAYAM (Study Webs of Active Learning for Young Aspiring Minds). After several fits and starts, a beta version of the SWAYAM platform was finally launched in late 2016.
Based on our review, however, we find that the SWAYAM platform falls utterly short of the needs and aspirations of India’s youth and industry, and the initiative is way below the global standards in several aspects.
- Aspirations: The government’s aspirations for SWAYAM are low, and approach lacks a sense of urgency. Within three years, China’s MOOCs initiative (XuetangX) has become the 3rd largest MOOCs provider in the world with its emphasis on excellence. Within two years, Malaysia has launched a national policy on credit recognition and transfer. Within one year, Israel is offering MOOCs in Hebrew, Arabic, and English. In contrast, many of the courses developed by faculty outside of IITs and IISc, that we reviewed on SWAYAM, were insipid and uninspiring, indicating a serious lack of emphasis on excellence. There are no clear efforts to implement a comprehensive credit recognition and transfer policy or to make the MOOCs available in Hindi and major regional languages.
- Leadership: SWAYAM does not have a single leader or a group responsible for its vision, strategy, and execution. The responsibilities and funding are diffused across multiple initiatives, agencies, and institutions such as NPTEL, teachers training initiative, AICTE, UGC, IGNOU, and IITs. The current crisis in higher education is evidence that leadership from existing regulatory agencies does not inspire confidence, innovation, or excellence.
- Funding: In Budget 2017, there is Rs. 75 crores ($11 million) earmarked for MOOCs, same as in Budget 2016. This allocation represents a mere 0.23% of the higher education budget, 0.09% of the education budget, and 0.003% of the national budget. While there appears to be funding to develop courses at the low level of aspirations, there is little or no money to manage the efforts to ensure that the best faculty members are being tapped to teach each subject. There also appears to be no funding to experiment to improve learning outcomes.
- Pedagogy: Initiatives like FutureLearn (UK) and XuetangX (China) are pioneering innovations in pedagogy to improve the learning outcomes for the students such as making the learning material rich and interactive, rethinking discussion forums to encourage social learning, and personalising the learning experience for each student. On the other hand, SWAYAM’s approach of simply replacing classroom lectures with online video lectures is largely non-technical and lacks inspiration.
- Impact: Countries like China, France, and Malaysia are investing heavily in keeping their MOOCs aligned with the changing needs of their industries and societies. However, despite high demand from youth and industry, SWAYAM is largely academic in nature with no clear engagements with industry or society to make an impact.
What does India need to do to unleash the potential of MOOCs for its youth?
To say the least, the government needs to reboot SWAYAM. Taking a leaf out of how similar initiatives in the past, like Aadhaar, have been successfully executed at the national scale, the government needs to take the following steps urgently in order to unleash the potential of MOOCs in India with scale, speed, and excellence.
- Launch a national mission on MOOCs. This national mission will be tasked to bring world-class education to every Indian’s computer, tablet, and mobile device in a matter of 1-2 years. It will offer over 1000 courses focused on making students ready for life and career, and for solving the needs of the society and the nation. And, the courses will be offered in English, Hindi, and all major regional languages.
- Appoint a recognised leader to the national mission. The leader would have significant credibility and network to make an immediate impact. The leader would be someone who has expertise in higher education, technology, and MOOCs. Finally, the leader would be a cabinet-level appointment to show the government’s seriousness and urgency in addressing this challenge and opportunity.
- Provide authority, accountability, and funding. The leader would have the necessary authority, accountability, and funding to organise a team of experts to make the vision and plans a reality. And, all the related government departments, agencies, and institutions would report to this team for MOOCs-related matters and ensure its success.
“Every crisis is an opportunity”, says an old proverb. In its higher education crisis, India has a unique opportunity to provide an excellent education to its people and leapfrog the world. For that, we desperately need to act urgently to make MOOCs India’s national priority.
If India succeeds in this national mission then students like Amol Bhave, Karthik Puthraya and hundreds of millions of India’s youth and professionals will transform their lives and careers. Now, that is a legacy worth creating.
US vs China; the imminent trade war
When the world’s biggest economies– the US and China are preparing for a trade tussle at the end of globalisation era, the world should keep its breath. President elect Donald Trump announced the preparation by appointing pre-WTO trade strategist Robert Lighthizer, as his chief trade negotiator, responsible for better deals aimed at reducing U.S. trade deficits.
Mr Lighthizer – a known China critic, is an oldie who disliked the WTO led trade order where the US sat in the crowd.
Deep rooted political rivalry is leading the both sides to wage a trade war. This is the danger side. One can feel the heat of the interwar period in recent years; at least on and around the South China Sea.
Alliance formation between the two will divide the world again on political lines as that was prevailed during second world war.
The conflict between the US and China can’t be avoided for Trump as the ‘Chinese eating away US job’ was his election theme. For him, trade and that also trade with China was a major election agenda that helped him to rose to Presidency.
He can’t go away from making some sort of a step.
Whatever Trump does, it will set the pattern for next type of trade engagement all across the world besides determining the future of globalisation.
The risk of a trade war is that China will use its political muscle power and newly acclaimed economic size to win friends away from the US camp. Life will be miserable for traditional allies of the US in East Asia.
There are many who is going to be injured- the US allies in East Asia – South Korea, Vietnam etc. are some of them.
Incidents one after another indicate that a showdown is undergoing between the two world powers. Soon, the rest of the world will be compelled to join as all countries are strongly depended on these two.
Already, China has instructed South Korean companies to keep away from the US missile defense programme that the US is building in South Korea against the North.
On the other side, the Obama administration blocked a Chinese acquisition bid for Aixtron, a German chip equipment manufacturer which has assets in the US.
US says that Aixtron is supplying components to the Patriot missile defence system to the US government.
“You have to adjust for basic imperatives and our national security is really critical.” Ms Penny Pritzker, the outgoing US commerce secretary, said in an interview to the Financial Times.
If Trump makes the first shot, the Chinese will retaliate. They are more politically courageous and willing to make forceful replies now a day. China knows that it has an edge over the US as their country is leading on science and technology fronts.
China may bleed more if trade war intensifies
Most analysts warn that US is going to suffer bigger than China. But trade records indicate the opposite.
The Chinese exports to the US averaged around $450 bn in the last three years including 2016, whereas US exports to China was just $110.
For the Chinese, the disengagement will torpedo a $450 bn market. They may loss a big market in the US. China sells a large array of goods to the United States that where Trump can impose heavy tariffs.
Without exports to the US, Chinese economic engine may freeze.
Both have developed deep interdependence and if this is diluted, it will create bigger loss for China than for the US.
But if the US initiates trade war, it is not necessary that employment will come back to USA as Mr Trump hope. Two hurdles are there for non-occurrence of employment surge in the US. First, in the new era of fourth industrialisation, technology takes away a lot of jobs. Secondly, there are other cheap labour, friendly states of America who may benefit from the shift of US engagement from China.
The fundamental question
The asymmetric trade relationship between the world’s top two economies is not limited to the huge trade deficit of the US. Rather, it tells an interesting story that occurred in the golden days of globalisation. The Chinese have reduced sourcing their products and components from the US gradually. They reduced US dependence and are get readied. The trade deficit just illustrates this.
China has gradually and successfully reduced its dependence on US firms to supply inputs and technical components. But the US has not done this to China.
Here comes the use of Mr Robert Lighthizer’s strategic vision, which according to Trump the US has lost in the past decades.
Can the US develop policies that will reduce its dependence on China in retaliation to restrictive policies against the US companies silently adopted by the Chinese over the golden days of globalisation?
Trump’s action should contain an answer.
China is more prepared
Trump’s option against the Chinese is are limited. The most he can do is to raise tariff against Chinese imports by between 10 to 40%. But the Chinese will retaliate according to Ms Pritzker.
Hence, instead of trade war, the best that the US can do against the Chinese is to source their products to some other countries.
This may benefit US’s friends like India, Indonesia, Vietnam etc.
Trade economists warn that the benefits also not going to be substantial as US may still continue at the same place in its trade ties with China. A rhetoric may heal US minds as the world’s political power is getting into an ‘erstwhile giant status’ in the context of the Chinese rise.
There are many who believe that Trump may limit to be ‘hard’ and may not opt for a trade war.
A trade war will benefit third parties and not either the US or China. They may recognize it earlier. Hence it will be better if Trump restricts his action to populism satisfying token measures against China
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