ODOP programme

Greenvissage explains, What is the One District, One Product (ODOP) programme?

The One District One Product (ODOP) initiative, implemented by the Government of India, seeks to identify and promote unique indigenous products from different districts across the country. The primary objective is to enhance the skills and productivity of local artisans and craftsmen, uplift rural economies, and create employment opportunities. Under this initiative, each district is encouraged to focus on a specific product or craft that showcases its traditional expertise and cultural heritage. By providing necessary support and infrastructure, such as skill development training, market linkages, and financial assistance, the government aims to boost the production, marketing, and export potential of these distinct products. The ODOP initiative has gained significant momentum since its launch, with 761 districts participating and showcasing their unique products. It is expected that the promotion and development of these products will not only contribute to the economic growth of the districts but also preserve and promote India’s rich cultural diversity. The One District One Product (ODOP) scheme in India has several components, including skill development, capacity building, infrastructure development, and marketing support for the identified product. These components aim to empower local artisans, craftsmen, and small-scale industries by enhancing the quality and marketability of their products. Any individual, group, organization, or industry with expertise in the identified product can apply for the ODOP scheme and avail of its benefits. The scheme provides financial assistance in the form of loans and subsidies to eligible applicants, enabling them to grow their businesses and improve their product offerings.

The Department for the Promotion of Industry and Internal Trade (DPIIT) and Invest India, in collaboration with the Department of Industries and Commerce, Nagaland, recently organized the ODOP Sampark Event in Nagaland, to create awareness about the One District One Product (ODOP). The event focused on several major highlights, including enhancing market access for Indian products, particularly from Nagaland, in foreign markets such as the European Union (EU) and Switzerland. It also emphasized infrastructure development, such as leveraging the Krishi UDAN scheme for better transportation and expanding railway connectivity. The Union Budget 2023-24 has allocated INR 5,000 crores for the construction of Unity Malls across the country, which will serve as central marketplaces for ODOP products. The event featured an ODOP exhibition showcasing various products from Nagaland, including chilli, fish, coffee, and turmeric. With over 1,000 products selected from all 761 districts, the initiative covers a wide range of sectors, including textiles, agriculture, processed goods, pharmaceuticals, and industrial items. Inspired by the success of the Uttar Pradesh government’s ODOP scheme, the central government adopted the concept and launched it as a national initiative. ODOP contributes to economic development by strengthening the local economy, promoting entrepreneurship and skill development, preserving traditional knowledge and heritage, and creating market linkages and branding opportunities for local products. Additionally, the DPIIT has instituted the One District One Product Awards to recognize the outstanding work done by states/UTs, districts, and Indian missions abroad in promoting economic development and realizing the vision of Atmanirbhar Bharat.

Greenvissage Explains, Why is India seeking a credit rating upgrade?

In the realm of global finance, credit ratings play a crucial role in shaping the perception of a country’s economic stability and investment potential. India, as a burgeoning economic powerhouse, has been striving for a credit rating upgrade to enhance its standing in the international market. With aspirations to attract more foreign investment and improve its borrowing costs, the Indian government has been engaged in discussions with credit rating agencies, particularly Moody’s, in an attempt to understand the rating methodologies and address concerns. However, the elusive rating upgrade continues to be a topic of debate and analysis. India’s pursuit of a credit rating upgrade has gained attention in recent years, as the country seeks to bolster its economic prospects. Credit ratings are critical as they impact borrowing costs, investor sentiment, and the overall perception of a nation’s economic health. A higher credit rating signifies lower risks for lenders, prompting reduced interest rates on loans. Additionally, an improved rating can instil confidence in foreign investors, encouraging them to channel funds into the country. These benefits have spurred India’s desire to secure a higher sovereign credit rating. However, India’s credit rating has remained stagnant at the lowest investment-grade level for over a decade. This has raised questions about the methodologies employed by rating agencies, which some critics argue might be biased against emerging economies like India. The Indian government, along with market participants and analysts, has sought to understand and address these concerns to pave the way for an upgrade.

The primary credit rating agencies, including Moody’s, Standard & Poor’s (S&P), and Fitch, evaluate countries based on various factors such as fiscal discipline, economic growth, political stability, and institutional effectiveness. While India has made significant progress in several aspects, challenges persist. High public debt, limited fiscal manoeuvrability, and structural issues hindered by bureaucracy and complex regulations have impeded India’s progress towards a rating upgrade. One of the key points of contention revolves around the rating agencies’ assessment of India’s fiscal deficit. India has consistently targeted lower fiscal deficits, showcasing its commitment to fiscal discipline. Nevertheless, rating agencies remain cautious, highlighting the need for sustained improvement in India’s fiscal position. Moreover, the agencies have expressed concerns over the country’s high public debt and its impact on fiscal sustainability, further contributing to the rating conundrum. Another factor affecting India’s credit rating is its economic growth trajectory. Despite being one of the fastest-growing economies globally, India has faced challenges in maintaining consistent and robust growth rates. Sluggish economic growth in recent years, coupled with the disruptions caused by the COVID-19 pandemic, has given rating agencies reason to exercise caution in upgrading India’s rating. They emphasize the importance of sustainable and inclusive growth to alleviate concerns surrounding the country’s economic stability. Additionally, rating agencies take into account factors like political stability, institutional effectiveness, and ease of doing business. India’s vast and diverse political landscape, coupled with bureaucratic hurdles, has often been perceived as impediments to swift decision-making and implementation of reforms. These concerns have been reflected in the evaluation of India’s creditworthiness. In response to the challenges, the Indian government has engaged in dialogues with rating agencies, notably Moody’s, seeking to comprehend their methodologies better. The government has sought clarifications and presented its case, demonstrating the measures taken to address key concerns. The aim is to bridge the gap between the current rating and the desired upgrade, with the government endeavouring to exhibit the progress made on fiscal discipline, economic reforms, and growth potential. Despite the hurdles, India’s pursuit of a sovereign credit rating upgrade remains steadfast. The government has implemented significant reforms such as the Goods and Services Tax (GST), bankruptcy code, and various initiatives to enhance the ease of doing business. Moreover, structural reforms in sectors like agriculture and labour are underway to boost productivity and promote sustainable growth. These efforts, along with continued engagement with rating agencies, may eventually pave the way for a higher rating.

Greenvissage explains, What are new FPI disclosure norms and their link to Adani Group fiasco?

In a bid to strengthen transparency and ensure better corporate governance, the Securities and Exchange Board of India (SEBI) recently announced significant changes to the disclosure norms for Foreign Portfolio Investors (FPIs). These new amendments come in the wake of the Adani fiasco, which brought to light certain inadequacies in the existing regulations. By implementing stricter disclosure rules, SEBI aims to enhance market integrity and safeguard investor interests. The Adani Group, one of India’s leading conglomerates, faced allegations of non-compliance with regulations, triggering a sharp decline in its share prices. In response to this incident, SEBI embarked on a mission to revise and fortify the disclosure norms to prevent similar occurrences in the future. The board approved the new amendments, signalling its commitment to maintaining transparency and strengthening corporate governance in the Indian market. SEBI’s revised norms introduce additional disclosure requirements for FPIs, placing a greater emphasis on transparency and accountability. FPIs are now required to disclose the details of their beneficial owners, including individuals, trusts, or entities holding more than 25% of the investment vehicle. This information aims to enhance transparency and ensure that the ultimate owners behind FPIs are known to regulators. SEBI has also introduced a new category of FPIs known as ‘high-risk jurisdictions’ to identify entities based in countries that pose a higher risk of money laundering or terrorist financing. These FPIs will undergo enhanced scrutiny, and stricter Know Your Customer (KYC) norms will be applied. FPIs are now also required to disclose the ultimate beneficiary owners on an annual basis, ensuring a comprehensive understanding of the ownership structure. Furthermore, any changes in beneficial ownership exceeding 10% of the investment vehicle must be reported within 15 days. The new norms mandate FPIs to submit consolidated reports, including their investment details, across different securities, every month. This step aims to streamline reporting mechanisms and enable regulators to monitor the market more effectively.

SEBI’s revised disclosure norms hold significant implications for the Adani fiasco. The allegations against the Adani Group highlighted concerns regarding the non-disclosure of the ultimate beneficiaries behind certain FPIs invested in their companies. The introduction of beneficial ownership disclosure requirements directly addresses this issue, ensuring that the ownership structure is transparent and known to regulators. By doing so, SEBI aims to prevent situations where market participants are unaware of influential stakeholders who may impact share prices and corporate decisions. Furthermore, the inclusion of high-risk jurisdictions as a distinct category of FPIs strengthens the due diligence process. This step not only mitigates potential risks associated with money laundering and terrorist financing but also demonstrates SEBI’s commitment to upholding international best practices in combating financial crimes. SEBI’s new norms also promote proactive reporting by FPIs. The requirement for annual disclosure of ultimate beneficiary ownership and prompt reporting of any significant changes creates an environment of accountability and facilitates a deeper understanding of the ownership dynamics within FPIs. While the new norms are certainly a step towards accountability and transparency, and make it difficult for corporates to hide their beneficial owners, various loopholes are still available to exploit which not only provide cover to the ultimate owners but also ensure that they are publicly untraceable in the future.