Latest news with #RahulJacob
Mint
07-07-2025
- Business
- Mint
Watch electricity usage to track industrial activity in real time
As India has embarked on a quest to become a global manufacturing powerhouse, with ambitious targets such as raising the share of manufacturing in gross domestic product (GDP) from about 17% currently to 25% by 2030 and creating 100 million jobs, tracking progress both accurately and in real-time is critical. Yet, policymakers and analysts typically rely on lagging indicators. The Index of Industrial Production (IIP) has a lag of 42 days, which is being lowered to 28 days; quarterly GDP is reported with a two-month delay; and the Annual Survey of Industries (ASI) is released about two years after the relevant financial year. The real-time pulse of our industrial economy, however, lies not in delayed data and indices, but in the silent electric current flowing through our wires, which is updated every second, everywhere. Also Read: Rahul Jacob: Manufacturing is crying out for a reality check Electricity consumption is one of the most immediate, granular and underused indicators of industrial output. It powers not just lighting and ventilation, but also looms, furnaces, extruders, assembly lines and cold storage facilities. Where there is manufacturing activity, there is electricity demand, and changes in it offer powerful insights into the industrial sector's health. We conducted an analysis using the ASI of 2022-23 to assess the strength of the relationship between electricity consumption and manufacturing output. Across a sample of nearly 48,000 factories, the correlation between the logarithm of electricity purchased and consumed and the logarithm of manufacturing output was a striking 0.80 (1 being perfect correlation). A 'local polynomial smoothed curve' (or a fitted line) plotted over the data showed a tight upward-sloping trend across the output spectrum, suggesting that electricity usage tracks production volumes with high precision. The data strongly suggests that electricity usage can reliably serve as a proxy for factory output across plant sizes and industries. Also Read: Think ahead: India's electronics manufacturing must go up the value curve What stands out is the strong correlation between electricity consumption and manufacturing output across states. Those like Meghalaya, Jharkhand, Punjab and Odisha top the list with coefficients above 0.84, while even large and industrially diverse states like Tamil Nadu (0.80), Maharashtra (0.79) and Gujarat (0.76) show robust associations. The pattern holds in less industrialized regions too; Assam shows a correlation of 0.81, and so does Jammu & Kashmir and Ladakh. Only a few states like Nagaland (0.62) and Tripura (0.69) fall significantly below. In all, the broad reliability of this relationship across geographies is clear. Also, electricity-output correlations remain strong across industries. Energy-intensive sectors like rubber and plastics (0.86), paper and printing (0.85), pharmaceuticals (0.85) and metal and fabricated products (0.84) top the list. Even moderately intensive sectors such as textiles (0.79), electronics (0.77) and food and beverages (0.76) show consistent and robust associations. Also Read: Going nuclear will be the only way to keep the lights on as AI guzzles ever more electricity Just because electricity use and manufacturing output move together doesn't necessarily mean that one causes the other. So, we conducted a more rigorous analysis using an instrumental variable (IV) approach. Again, the findings were striking: a 1% increase in electricity consumption leads to a highly statistically significant 0.26% increase in the value of manufacturing output, even after accounting for other relevant inputs. Hence the relationship isn't just a statistical coincidence, it's economically meaningful and causally robust. Unlike most macroeconomic indicators, electricity data is available in real time, is objective and less prone to misreporting. And because it can be disaggregated by geographic region or industrial consumer category, it provides granular insights that are ideal for identifying which districts or sectors are struggling and which are progressing. For example, imagine being able to detect a production dip in the textile hub of Tirupur or a slowdown in auto-parts manufacturing in Pune not a month later through the IIP, but within days based on electricity consumption patterns. This kind of responsiveness could fundamentally change how we support and promote manufacturing activity, including managing supply chains and preparing for shocks. The IIP, being a national indicator, fails to capture industry-specific trends at the state, district and more granular levels. Also Read: Manufacturing versus services: Why privilege one over the other? India already has the infrastructure to make this transition. What we need now is to properly classify electricity consumption data by type of industry and institution and integrate it with decision-making at the most granular level. The Central Electricity Authority (CEA) already lays down guidelines for information reporting for distribution companies in each state. It should also collect information on the institutional status of each industrial consumer. We could use such identifiers as the Company Identification Number (CIN) issued under the Companies Act, Factory Serial Number obtained from the chief inspector of factories, Shops and Commercial registration number for partnerships and proprietary entities registered with the state government, and even the GST number, along with the entity's nature of activity as categorized under the National Industrial Classification system of 2008. A dashboard showing daily-updated electricity data that integrates IIP as well as GST metrics and also uses the Geographic Information System (including satellite feeds) could revolutionize how we track and support industrial growth in India. The authors are, respectively, former director general, ministry of statistics and distinguished fellow, Pahle India Foundation; and associate fellow, Pahle India Foundation.
Mint
18-06-2025
- Business
- Mint
Rahul Jacob: Alcohol isn't what it used to be but maybe that's alright
Next Story Rahul Jacob Younger folk aren't drinking much in the rich world, a trend that could catch on elsewhere too, but that doesn't mean this industry is staring at doom. As volumes fall, prices are going premium. Young people seem to be discovering cocktails and are not part of the developed world's shift away from alcohol. Gift this article On few subjects is there a greater generational divide in the developed world than on the merits of having a cocktail. In the past couple of decades in the US, sales of alcohol to those between 65 and 74 years of age rose by half, even after adjusting for inflation. On few subjects is there a greater generational divide in the developed world than on the merits of having a cocktail. In the past couple of decades in the US, sales of alcohol to those between 65 and 74 years of age rose by half, even after adjusting for inflation. By contrast, sales declined by 60% to those aged 25 and under. Japan, whose work culture and push for 'total quality management' were once known for long work days and hard drinking by the 'salaryman,' has seen a decline in overall per capita consumption by more than a quarter in the past three decades. In France, of all places, wine consumption, especially of red wines, faces what an analyst calls an 'existential" decline. Alcohol stocks on developed-world stock markets have been pummelled because it is seen as a sunset industry that is also in the sights of regulators. Diageo's shares have fallen by a third since 2020, according to an article last month by the Financial Times, which quoted its chief executive officer Debra Crew as saying that 'people want to drink better, not more." This push towards the premium end of the scale is working to an extent. Notwithstanding the doom and gloom surrounding the industry, data company International Wine and Spirit Research (WSR) estimated that in 2023, revenues from alcohol sales actually increased by 2% even as volumes declined by 1%. Younger people drinking less alcohol or switching to alcohol-free drinks implies that this strategy of raising prices leaves the industry dependent on wealthy but ageing baby boomers. While the industry has not been forced to use anything in the league of health warnings about smoking that tobacco companies must place on cigarette packs, health concerns may be catching up with it. Also Read: Why classic cocktails will never go out of style At the beginning of this year, outgoing US surgeon general Vivek Murthy called for the labelling of cancer risks from alcohol consumption on alcohol cans and bottles. This gave a whole new meaning to 'Dry January,' the annual month for resolutions to abstain from alcohol. The World Health Organization, meanwhile, is ramping up warnings that there is no 'safe level' of alcohol consumption. 'Alcohol is the third leading preventable cause of cancer behind tobacco and obesity," Dr Murthy told a medical columnist of USA Today, adding that it causes 20,000 cancer deaths in the US alone. 'We now know there are seven cancers that are caused by alcohol consumption—breast cancer, colorectal cancer, mouth cancer, throat cancer, voice box (larynx) cancer, oesophageal cancer and liver cancer." Dr Murthy's declaration sparked several articles on the subject. Last month, one in the New York Times quoted Timothy Stockwell, an alcohol researcher at the University of Victoria in Canada, as saying that 'when you have a drink, your body turns the ethanol that's present in the alcoholic beverage into a really nasty substance" called acetaldehyde, which can damage your DNA. Given the increasing frequency of these warnings, it will be no surprise if we all—and not just young people—start drinking less. And yet, there is a case for moderation and being a social drinker. The Economist, in a contrarian column this May, issued some warnings of its own. It argued that the restaurant industry would be devastated if people drastically reduced drinking. Further, the publication claimed that alcohol has a positive impact on creativity and sometimes helps get couples together, dubiously or jokingly linking an observed drop in productivity growth to greater abstinence from alcohol. The chief executive officer of Asahi has blamed excessive screen time and gaming for reduced alcohol consumption, but it may simply be that people entertain differently and that health warnings are being taken more seriously. Alcohol's global giants are looking to markets such as China, India and Brazil to boost sales. But even in the developing world, consumption growth is not as bubbly as it used to be. While the compound annual growth rate of the per capita consumption of pure alcohol was about 15% for India and China between 2005 and 2010, according to an analysis by Technopak, a consulting company, it is expected to grow just 1.2% annually between 2023 and 2028 for India. Alcohol consumption is declining even faster in China than in the West. Also Read: Sip on Bengaluru: Cocktails inspired by the city's scents But the regulatory framework in India is also a dampener on sales. Hardly a month or two goes by before a major state levies additional excise duties or raises the cost of liquor licences for restaurants and bars or booze outlets. But India at least offers a demographic dividend of a different kind. Young people seem to be discovering cocktails and are not part of the developed world's shift away from alcohol. In Bengaluru, synonymous with pubs, cocktail bars are opening all the time, reports Rohil Kalita, head bartender of Bar Spirit Forward in the city. He adds that about 60% of Spirit Forward's customers are aged between 25 and 40. I am a good bit older than that, but part of the trend. Having been disciplined during the first covid lockdown, during the second, I re-watched Mad Men, the television series about an American advertising agency set in the 1960s, in which cocktails have a central role. Don't take my word for it, but in the annus horribilis that is 2025, a cocktail or three a week with friends seems preferable to doom scrolling. The author is a Mint columnist and a former Financial Times foreign correspondent. Topics You May Be Interested In Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Mint
06-06-2025
- Business
- Mint
Wanted: A new social contract for ‘Make in India'
Earlier this month, external affairs minister S. Jaishankar launched the Global Access to Talent from India (GATI) Foundation to position India as a global talent hub. GATI signals India's ambition to be at the centre of global labour mobility, offering legal, ethical and safe pathways for Indian workers to fill skill gaps abroad. GATI has the potential to enable a transformation. By creating pathways to high-paying jobs abroad, it can recast the social perception of vocational training. When skilling leads to economic and social mobility, the social contract is complete and individuals are empowered to invest in their own growth. A similar social contract is needed for domestic manufacturing if 'Make in India' is to truly succeed. Also Read: Rahul Jacob: Manufacturing is crying out for a reality check It is necessary to ensure the availability of a skilled and motivated workforce, one that is adept at new-age capabilities such as electric vehicle assembly and meets the requirements of in-demand workers such as qualified welders and fitters who can read machine drawings. We also need to create reliable pathways for stable jobs and economic mobility for skilled workers. To realise this ambition, we must confront a few systemic constraints. First, a large proportion of shop-floor jobs in India remain informal and short term. Around 69% of the manufacturing workforce is temporary and hired usually through formal and informal intermediaries. Smaller intermediaries or contractors are poorly organised, with limited capacity to meet wage and safety standards, let alone invest in skill development. This informal workforce does not have job security, leading to high attrition. The weak fallback net creates a floating pool of workers who often switch from one job to another, driving down productivity. Second, the gap between industry demand and available skills is widening. More than 56% of employers report difficulty in finding skilled workers. As a result, many employers invest in basic to intermediate training for new recruits, a process that can take weeks, if not months. However, companies prefer a plug-and-play approach, seeking job-ready workers. Larger, legacy companies are better placed as they have invested in developing internal skilling systems over time. But mid-sized and smaller firms, which make up a large share of India's industrial base, struggle to bridge this gap. Third, our existing system disadvantages women. Women have better safety records and deliver higher productivity but they remain significantly under-represented in the manufacturing workforce. Also Read: How a manufacturing boom could help India close the gender gap The transitory nature of contract work, remote locations with lack of mobility and limited support structures are hurdles to female participation. This ecosystem reveals a paradox: Even as manufacturers report difficulty finding skilled workers, large numbers of young Indians remain unemployed. As the economy evolves, shaped by automation and AI, the demand for productivity is rising. How, then, can we shape a new social contract for India's workforce, one that supports the vision of 'Make in India' while ensuring meaningful employment? A critical effort lies in carving a middle path, one that offers greater job security for workers while preserving flexibility and cost competitiveness for businesses. This requires intermediaries that operate the full stack; i.e. manage the entire employment lifecycle: from screening and onboarding to skilling, job matching, compliances and benefit provision. There is a role here for markets, philanthropy and government to come together. We need a public-interest organisation for workforce management at population scale. There is an unmet need of managing the lifecycle of workers. Profits in this domain may be thin or non-existent. Who can shoulder this responsibility in the absence of a viable market? Perhaps the National Skill Development Corporation (NSDC) should go beyond skilling to take end-to-end ownership of worker well-being. Another option could be to build an organisation similar to the National Payments Corporation of India that runs payments. India is the pioneer of Digital Public Infrastructure (DPI), and we can use technology to enable better demand–supply matching, track worker lifecycles and ensure continuity in employment histories and benefits. Interoperable platforms that build on digital credentials could unlock a worker-friendly ecosystem without compromising industry's need for efficiency. Also Read: Time to re-imagine Indian manufacturing from the ground up Second, the industry needs to focus on developing a productive workforce with an eye on worker well-being. A 10% increase in trained workers can boost firm-level productivity by 6%. 'Farming' talent internally rather than 'fishing' for ready-made talent can create a systemic change across industries. We need manufacturing firms to treat workers as a strategic investment. The payoffs in productivity, retention and legacy are significant. Third, tap the potential of women in the manufacturing workforce. Steps to meet women's needs, including gender-friendly mobility, accommodation and childcare support can be promising avenues. Equally important is to change the narrative. Skilling must be made aspirational for women, as a path to employment and a symbol of agency. More than a century ago, Henry Ford said, 'There is only one rule for the industrialist and that is: make the best quality goods possible at the lowest cost possible, paying the highest wages possible." His legacy was not just Ford's Model T motor car, but a system where workers could afford the products they themselves had made. If we can forge this new social contract, where most of India's workers have the safety net of wages and essential benefits, we will finally unlock the potential of 'Make in India.' The author is founder and CEO, Kalpa Impact.
