Development as a people’s movement / Madhav Gadgil

Development was a key issue in the 2014 Lok Sabha election. In his very first speech after taking over as Prime Minister, Narendra Modi asserted that his government is committed to carrying on development as a people’s movement. This, he has asserted, will draw upon India’s democratic, demographic and demand dividends. But are we genuinely moving towards organising development as a people’s movement while building on these strengths?

At the heart of democracy is access to information. We do have the vital Right to Information Act, but need to do much more since the public is being continually misled. To reap the demographic dividend, our youth should be well nourished. But what is the reality? The government’s statistics show that 28 per cent of school children were malnourished in 1993; this came down to 17 per cent by 1999 and declined further to 8 per cent by 2006. However, this is based on information provided by schools, and many of them are guilty of maintaining bogus records of enrolment and expenses towards the provision of mid-day meals. As a cross-check, we have the data provided by the carefully and professionally conducted National Family Health Survey. According to its very different and shocking results, 53 per cent of school children were malnourished in 1993. This came down slightly to 47 per cent by 1999 and changed a little by 2006, to 46 per cent.

To cater to India’s massive population of consumers, people should have adequate purchasing power, such as that enjoyed by people employed in the industries or services sector. Unfortunately, as the malnourishment statistics indicate, a vast majority of Indians are poor, with barely 10 per cent employed in the organised sector. We are being convinced that vigorous economic growth is generating substantial employment. But this is not so. When our economy was growing at 3 per cent per year, employment in the organised sector was growing at 2 per cent per year. As the economy began to grow at 7-8 per cent per year, the rate of growth of employment in the organised sector actually declined to 1 per cent per year since most of the economic growth was based on technological progress, including automation. At the same time, the increasing pressure of the organised sector on land, water, forest and mineral resources has adversely impacted employment in farming, animal husbandry and fisheries sectors. People who are being pushed out of these occupations are now crowding in urban centres. This is in turn leading to a decline in the productivity of the organised industries and services sector. Evidently, the ship of our development is sadly adrift.

What is development?

Undoubtedly, people aspire for development. But what is development? Joseph Stiglitz, a recipient of the Nobel Prize in Economics and one-time chairman of Bill Clinton’s Economic Advisory Council, offers an insightful analysis, asserting that development should result in an enhancement of the totality of a nation’s four-fold capital stocks: the capital of material goods, natural capital such as soil, water, forests and fish, human capital including health, education and employment, and social capital comprising mutual trust and social harmony. Our current pattern of economic development is by no means a balanced process resulting in the overall enhancement of the totality of these stocks. Thus, for instance, mining in Goa has severely damaged the State’s water resources and caused high levels of air and water pollution. The ever-increasing content of metals in drinking water reservoirs has adversely impacted health. When thousands of trucks were plying ore on the roads of Goa, the resulting chaos in traffic and accidents seriously disrupted social harmony. Evidently, the single-minded focus on industrial growth is not leading to sustainable, harmonious development, but merely nurturing a money-centred violent economy.

We must, of course, continue to develop modern technology-based industries and services, but these cannot generate employment on the massive scale required. It is therefore imperative that this modern sector must rein in its adverse impacts on labour-intensive, natural resource-based occupations and livelihoods. The modern capital-intensive, technology-based economic sector must nurture a symbiotic relationship with the nature-based, labour-intensive sector. Our democracy provides for fashioning such a mutual relationship through the 73rd and 74th constitutional amendments and the Biological Diversity Act, the Panchayats (Extension to Schedule Areas) Act and the Forest Rights Act. We must take advantage of this constitutional framework that promotes decentralised governance and work with nature and people to move forward on a path towards genuine development — a path that would be entirely compatible with making development a people’s movement.

Examples of people’s movements

In Chandrapur and Gadchiroli districts of Maharashtra, both of which are Naxal-torn, there are hopeful examples emerging of how development may be nurtured as a people’s movement. A number of tribal and other traditional forest-dwelling communities of these districts now have management rights over Community Forest Resources under the Forest Rights Act. The state retains ownership over such resources, and these cannot be diverted to other purposes. But now these resources are being managed holistically with a fuller involvement of the people. The citizens of Pachgaon, for instance, have, through two full-day meetings of their entire Gram Sabha, decided upon 40-odd regulations. Tendu leaves are a major forest produce, but their harvest entails extensive lopping and setting of forest fires. So, Pachgaon has decided to forego this income and instead focus on marketing the edible tendu fruit. By stopping the collection of tendu leaves, the trees are healthier and both fruit yield and income from its marketing have gone up. Incomes from bamboo harvest have also gone up manifold, and for the first time the people are moving out of the earlier precarious existence. Notably, they have on their own initiated protecting part of these forests as newly constituted sacred groves. Such community management of forest resources is the only sane way to combat extremism, and I have every hope that the new government, with its commitment to making development a people’s movement, will wholeheartedly support these initiatives.

Verle village, perched atop Sahyadri mountains in Goa’s Sanguem taluk, provides another instance of how we can make development a people’s movement. In this charming village, the locals have initiated a cooperative tourism project. Visitors stay in the homes of the locals, which are now equipped with modern amenities, and enjoy home-cooked food. They can wander around to their heart’s content with three well-trained local youth who serve as nature guides. This is a neat example of how development benefits people at the grassroots level while safeguarding the natural heritage.

Recently, I had requested Goa University students to write an essay on any issue of their interest. Many chose tourism; they were very concerned with the negative fallout of the flourishing hotel industry. These included depletion and pollution of ground water, ever-growing piles of solid waste, encroachments on public beaches and alarming growing drug abuse, associated crimes and women’s insecurity. They also felt that few economic benefits actually reach the people of Goa. Why then can we not focus on enterprises that are nature-friendly and give full scope to local initiatives like Verle to develop tourism? Why do we not organise activities such as these that genuinely promote development as a people’s movement?

Furthermore, Goa could revive its currently stagnating mining business through novel people-oriented initiatives such as the proposal from the tribals in Caurem village in Goa’s Quepem taluka. There, extensive community lands that harbour a large sacred grove — lands that ought to have been assigned as Community Forest Resources — have been encroached upon by palpable illegal mining, which has damaged water resources, affected farming, and created social dissonance. The mines are currently closed because of the illegalities, and the Gram Sabha has unanimously resolved that if they are to be restarted, this should be done through the agency of their multi-purpose cooperative society.

The Goa government ought to seize this golden opportunity and do all that it can to ensure that it succeeds. When the first cooperative sugar factory in the country was established at Pravaranagar in Maharashtra 60 years ago, many doubted if the farmers could manage such an enterprise. But it succeeded beyond people’s wildest dreams because of capable farmer-leaders like Vitthalrao Vikhe Patil and a sympathetic Finance Minister like Vaikunthbhai Mehta. Let us therefore hope that the Goa government with its commitment to making development a people’s movement will vigorously support the Caurem initiative and create for the country a new model of how mining can be developed as a people’s activity.

(Madhav Gadgil is D.D.Kosambi Visiting Research Professor, Goa University.)

Lower petroleum prices: A mixed blessing for India / Mahesh Sachdev

The Oil Ministers of 12 member states of Organization of the Petroleum Exporting Countries (OPEC) concluded their meeting in Vienna on November 27 by deciding to continue with their three-year-old production quota of 30 million barrels per day (mbpd). Thus, they calculatingly ignored nearly one mbpd oversupply in the global oil market which has pushed the crude prices down by over 30 per cent since June 2014. The global oil glut, in turn, has been caused by a number of factors which include OPEC’s own overproduction, rising non-OPEC production (particularly by the U.S.-based “Shale Revolutionaries”) and lower demand from China and Europe. By declining to cut their output to shore up the prices, OPEC in general, and Saudi Arabia in particular, have refused to play the role of global “swing producer.”

As most factors responsible for the current global demand-supply disequilibrium are systemic in nature, the world faces prospects for relatively bearish oil prices over the foreseeable future. Indeed, the prices have continued to fall with the Indian basket touching $72.51/barrel on November 27 — a decline of nearly $9 from the average during the first fortnight of the month.

As the world’s fourth largest importer of crude, India can afford to exult at this precipitous crude price decline. Still, given the strategic importance of this development, a more comprehensive analysis is desirable.

A virtuous cycle in the economy

From the limited perspective of India’s consumer economy, lower global oil prices undoubtedly augur well. Lower pump prices reduce pressure on the consumer who can spend the savings elsewhere, spurring the demand side of the economy. As petroleum products form a large part of the consumer price indices, lower crude prices result in reduced inflation, which in turn paves the way for lower interest rates and greater buoyancy in investments. Thus, lower oil prices can trigger a virtuous cycle in the Indian economy. After all, with India’s imports running at an estimated 3.7 mbpd in 2013, a $30/barrel decline in oil prices amounts to a $40 billion savings bonanza on annual imports. The impact would be best felt on the petroleum sector where marketers have been groaning under subsidy burden. The transport sector would also be a direct beneficiary.

If we widen the impact analysis to consider the totality of the Indian economy, some challenges also appear. First, as oil producers are India’s major markets and investment destinations, their economic decline may affect the country. Recent decline in the share prices of Bharti Airtel and Bajaj Auto due to the devaluation of the Nigerian Naira illustrates this more complex trend.

Second, apart from being the fourth largest oil importer, India is also the world’s sixth largest petroleum product exporter earning over $60 billion annually — nearly a fifth of global exports. A bearish oil market would hurt this segment with reduced demand, lower unit prices and lower margins.

Third, the oil price decline coincides with resumed foreign interest in investing in India. It is difficult to assess their mutual correlation, but lower oil revenues may attenuate arrival of petrodollars into India.

Fourth, whenever oil revenues decline, countries that export Gulf oil try to tighten their belts by emphasising local production and downsizing their foreign labour force in which Indians dominate. Thanks largely to over five million Indian expatiates there, India was the world’s largest recipient of remittances which topped $70 billion in 2013. The possibility of these remittances being reduced cannot be ruled out. This would have a serious impact on remittance-dependent States such as Kerala and Goa.

Fifth, lower crude prices may cast a shadow over the sputtering controversy over natural gas pricing norms in India as the latter generally follow the oil prices. Future investment decisions in oil-related sectors may get delayed.

Sixth, lower pump prices may cause higher fuel consumption as sales of automotive products soar. This would worsen commuter woes as well as cause increased urban pollution.

Finally, a decline in oil prices generally accompanies a global decline in commodity prices, particularly those of minerals and agricultural products. India remains a major exporter of these and would see lower realisation, particularly of Guar Gum, a critical input for the shale industry.

The long-term impact of lower oil prices is likely to be felt beyond the economic domain. Geopolitically, persistent lower oil revenue could propel a number of emerging exporters towards domestic political instability as the ruling elites lose their capacity to provide “stomach infrastructure” to the common man. Countries with lower per capita oil revenue such as Nigeria, Iran, Algeria and Venezuela may be more at risk. In general, however, lower oil revenues may have a dampening effect on regional or domestic disputes.

Measures to leverage oil prices

India can leverage the current low oil prices for long-term gains. To this end, the following measures can be considered. One, it can foster long-term crude supply relationships with exporters in return for stable prices, upstream engagements, inbound investments, etc. Two, it can enter into oil-for-infrastructure barter deals to boost project exports. Three, it can restructure public sector oil companies to make them more productive and globally proactive for leaner times ahead. Four, it can channel some of the oil bonanza to mitigate the increased cost disadvantage of renewable and alternative energy sources. Five, it can build its own strategic oil reserves.

The current downturn in oil prices underlines the cyclic nature of commodity trade and illustrates OPEC’s reduced regulatory capacity consequent to it supplying only a third of global demand. While Shale Revolution may be a new and price-sensitive factor, it is unlikely to vanish with time or with lower prices. During past oil bear-hugs in 1986, 1993-99 and 2008, the lower prices invariably spurred consumption and the oil bounced back. There is no reason to believe that the oil prices shall not rise again. India would do well to recall an old oil adage, “The cure for high oil price is high oil price itself” — and use this rare, cyclic opportunity for long-term gains.

(Mahesh Sachdev has served as Indian ambassador to Algeria, Norway and Nigeria — all major oil exporting countries.)

Source : http://www.thehindu.com/todays-paper/tp-opinion/a-mixed-blessing-for-india/article6645245.ece

A FUNNY CHUTUKLA …

***
Let me tell you a short ‘chutukla’ a dear friend once told me.

***

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. 

If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing. 
The fifth would pay $1. 
The sixth would pay $3. 
The seventh would pay $7.
The eighth would pay $12. 
The ninth would pay $18. 
The tenth man (the richest) would pay $59. 


So, that’s what they decided to do.. 

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner offered “Since you are all such good customers, I’m will reduce the charge of your daily beer by $20″. Drinks for the ten men would now cost just $80. 

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? How could they divide the $20 windfall so that everyone would get his fair share?


They realized that $20 divided by 6 is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.
And so the fifth man, like the first four, now paid nothing (100% saving). 
The sixth now paid $2 instead of $3 (33% saving). 
The seventh now paid $5 instead of $7 (28% saving). 
The eighth now paid $9 instead of $12 (25% saving). 
The ninth now paid $14 instead of $18 (22% saving). 
The tenth now paid $49 instead of $59 (16% saving). 



Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
”I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man,”but he got $10!” 

”Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than me!” 

”That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!” 

”Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”


The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill! 



(Never mind all the math, the gist of the chutukla is that rich are overburdened with taxation in our taxation system which suffers from a ‘socialist’ mindset.)

***
And that is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the atmosphere is friendlier.

But does this tell us the complete story when applied to the real life? Let me tell you another chutukla…

***

To save the argument of the chutukla, let me reframe it. Let 1 beer every day be essential for a man to survive. Now obviously poor are poor. They can’t afford even 1 beer. Let us now add weight to the argument of the chutukla. Lets say there is only 1 rich man, 2 middle class men and rest 7 are poor. The rich man has the money to pay for 10 beers, middle class to pay for 1 beer each and the poor have zero money.

Lets say richest man goes in a bar alone and drinks his beer there from his own money. Now when he comes out, our other 7 poor guys and the 2 middle class men ask him to go back in and pay for their beer as well. Now in this second visit the richest man doesn’t drink, only the 7 poor and 2 middle class drink and the rich man pays the entire bill (for all 9) happily. Let this be our initial taxation system (even more unfair to the rich man than the initial chutukla, ain’t it?).

Now enter the real life. In real life, the rich man is never happy paying the bill for the other 9 men’s beers. So he goes and tells the government, “I ll pay you 1 beer (for your election spending or whatever purposes) so that you give me an exemption from paying for say 2 beers.” Now both the middle class men will have to buy their own beers (in best case)… less equity but still acceptable. But it doesn’t stop here. Our rich man now goes and tells the government, “I ll pay you 2 beers so that u exempt me from paying for 4 beers.”… Now what? In the best possible case also, 2 poor men will have to die (or be deprived of ‘minimum needed’ economic resources).

***

In real life, it is obvious that the rich man has all the incentive in the world (except should he be otherwise persuaded by a dissenting conscience) to bribe the government to save his taxes… and the government will have all the incentives in the world to accept the bribe since its overriding objective is to win elections. So in all likelihood the second chutukla is going to prevail. At least 2 poor are going to die, the rich man will invest the saved beer in a say beer refinery and produce 5 more beers tomorrow. GDP will grow and we will call this development. Funny…

The poor are worse off in the system. But they are in majority. So how does the system survive in a democracy like ours? Consider this…
***

Lets multiply everything by 2 now and let us assume that 1 beer is essential for physical survival and 1 for other basic needs like education, health, environment etc. which are otherwise essential to lead a minimum “meaningful” life. Now lets eliminate the middle class and club them with poor so that there are 9 poor. Say our rich fellow now bribes the government 4.5 beers so as to save on 9 beers in tax. Now every poor will have his 1 beer of physical survival but thats it. Election time comes and government distributes the 4 beers among the poor (read “populist” fiscal sops or alcohol, cash, mixers etc.), the poor are happy and vote for the government.
***

The rich are happy (they got to save 4.5 beers), the government is happy (it got reelected and also saved 0.5 beers), the poor are happy (they got election time sops). But the poor are still the losers for now they have been condemned to poverty in perpetuity. The poor – they never knew they had a chance of a better life… think of that child who has no future in our society now and yet he finds unparalleled joy in laying his hands upon a kite or playing with dustbin in a park riding it as if it were a horse….

The question we must then ask ourselves is whether in a civilized society (which we claim to be) can we condemn the unfortunate to live lives in perpetual “unfreedoms” (borrowing the term from Sen) given that they may find joy in small things (but which in no way can enable them to overcome their unfreedoms)? Lets not forget that men (and of course women) are human beings and not just a factor called labor used in the process of producing economic goods and services and its only the “accident of birth” which determines whether a man will be poor or rich in an overwhelming majority of cases in a real world society like India. (If you are considering of negating this then I implore you to impartially consider the probability of you being what you are today had you suffered from the “accident” of taking birth in any poor household. In fact at the risk of diverging from the current discussion, I would go to the extent of saying that the only difference between a feudal society and what we have today is that while in a feudal society there was legal sanction to the discrimination based on the accident of birth whereas now we have no such legal sanction but in 90-95% cases, our social and economic construct ensures such a discrimination prevails.)

So what can we do? The most compelling way I think is to “awaken” and “empower” people. Think of this… for 60 years since our independence the state had been providing all social goods to the poor (at least that was the declared aim). I am sure 450 years ago, Akbar would have been doing the same and some 2300 years ago, Asoka would have tried the same… yet none of it worked (or let me claim “could have” worked)… this is because the truth of all such efforts, however praiseworthy was that they were “acts of generosity by the state”. If you are a poor and the state is providing you with food, health and education, it was state’s “generosity”. It wasn’t your right… So if you happened to get nothing there was nothing which you could possibly do to redress the situation. However, if we are to really eliminate deprivation, it should be a matter of “right” for the poor to claim such benefits. Just because they happen to exist, they should have the right to have proper food, proper education and proper health… and if they don’t get it they could take action against the state…

MGNREGA (the national employment guarantee scheme) was implemented on this philosophy by making employment a right and not an act of generosity and dare I say it has been one of the most meaningful and successful schemes ever (true, there are defects but dude, we don’t live in a bookish world. In real world everything has defects).

P.S. A good read on MGNREGS here…http://www.indiawaterportal.org/sites/indiawaterportal.org/files/mgnrega_sameeksha.pdf

-- Gaurav Agrawal

[This article is borrowed from Gaurav Agrawal's (IAS topper 2013) blog 'Khelo India', you can read original article with readers comments HERE ]

RBI's payment bank norms to deepen financial inclusion

The Reserve Bank of India (RBI) on Thursday announced the final guidelines for setting up payment banks and small banks, to attract serious players and push financial inclusion. It allowed corporate houses, including telecom players and retail chains, to set up payment banks, and also gave them the option of forming joint ventures with commercial banks. But small banks will be a no-go area for companies, including promoters of large non-banking financial companies. Small banks will, however, not have any geographical restriction, as proposed in the draft norms.

Government-owned entities, such as India Post, have been allowed to set up payment banks, subject to their owner’s approval.

RBI has asked interested parties to apply by January 16. The application will be screened by an external committee, which will send its recommendations to the central bank.

The final norms on payment banks, analysts said, were more liberal than the draft guidelines issued in July this year. Rishi Gupta, chief operating officer & executive director of FINO PayTech, said the guidelines had expanded the scope of activities and given clarity on providing third-party products and services, such as mutual funds, insurance and pension. This would open avenues to earn fee income. The guidelines have also allowed sending and receiving remittances from multiple banks & international remittances and permitted payment banks to function as business correspondents of other banks.

The guidelines have also simplified the promoter structure — listing is mandatory within three years of reaching a net worth of Rs 500 crore, unlike the requirement to dilute promoter stake to 40 per cent within three years as stated in the draft.

Besides, payment banks should have a leverage ratio of at least three per cent (its outside liabilities should not exceed 33.33 times its net worth). This was around five per cent earlier.

Payment banks are not allowed to lend and must have a cap of Rs 1 lakh on deposits which can be invested in government securities, but they will have access to the RBI’s liquidity windows. They will be required to invest at least 75 per cent of their ‘demand deposit balances’ in statutory liquidity ratio (SLR)-eligible government securities and treasury bills with maturity of up to one year. They can hold a maximum of 25 per cent in current and time/fixed deposits with other scheduled commercial banks for operational purposes and liquidity management.

Payment banks will be allowed to issue debit cards, but not credit cards, and can offer current and savings account deposits.

CLEARING THE AIR Payment Bank guidelines

Dos Have to use the word ‘Payment Bank’ in their name Can accept demand deposits; that is, current deposits and savings bank deposits, from individuals, small businesses and other entities Can hold a maximum balance of Rs 1 lakh per individual customer Will be allowed to set up branches, ATMs, business correspondents Will be allowed to issue debit cards and offer internet banking Can accept a large pool of money to be remitted, but the balance should not exceed Rs 1 lakh at the end of the day Can accept remittances to be sent to, or receive remittances from, multiple banks Permitted to handle cross-border remittances in the nature of personal payments on the current account Allowed to distribute mutual fund, insurance and pension products Can undertake utility bill payments  Don’ts No NRI deposits should be accepted Cannot issue credit card Not allowed to set up arms to undertake NBFC activities Other financial and non-financial services of promoters should not be mingled with the working of payment banks

For payment banks, both cash-in and cash out services are allowed through various channels like branches, automated teller machines (ATMs) and business correspondents (BCs). Cash-in could be made through mobile banking and cash-out via point-of-sale terminals.

Initial capital requirement for payment banks, as well as small banks, have been set at Rs 100 crore. In case of the former, the promoter will have to retain a 40 per cent stake in the first five years.

For small banks, a promoter’s minimum initial contribution will be 40 per cent of the paid-up equity capital. If the initial shareholding is over 40 per cent, it has to be brought down to 40 per cent in five years. Further, the promoter’s stake should be brought down to 30 per cent within 10 years, and to 26 per cent within 12 years.

The cap on foreign shareholding has been kept in line with the existing rules for private-sector banks — at 74 per cent, with a minimum requirement of 26 per cent to be held by residents.

For small banks, the maximum loan size and investment limit exposure to single and group obligors has been restricted at 10 per cent and 15 per cent of its capital funds, respectively. Additionally, at least 50 per cent of their loan portfolio should constitute loans and advances of up to Rs 25 lakh, the RBI has said.

The central bank has also said that small banks can convert themselves into universal banks, though the transition would not be automatic; it will depend on the regulator’s approval.

The RBI has also allowed the promoter of a small bank to set up a payment bank. But banks of both types will have to be set up under a Non-Operative Financial Holding Company (NOFHC) structure.

“However, a promoter will not be granted licences for both universal bank and small bank, even if the proposal is to set those up under the NOFHC structure,” the RBI guidelines say.

Experts said more players would be interested in setting up small banks which liberated the scope of activity.

“Many players will now be interested in small banks as geographical restrictions proposed in the draft have been removed,” said Shinjini Kumar, leader (banking & capital markets), PwC India.

But large non-banking financial companies would still not be interested in setting up small banks, as they have to convert into banks. That would mean meeting reserve requirements, such as cash reserve and statutory liquidity ratios.

The banking regulator has indicated that applications will be invited on a continuous basis, after gaining experience from the present exercise.

Source: http://www.business-standard.com/article/finance/rbi-s-payment-bank-norms-to-deepen-financial-inclusion-114112700916_1.html

India to sign TFA: positives and negatives

India is all set to sign the Trade Facilitation Agreement (TFA) at WTO's special General Council (GC) meeting in Geneva today. The TFA aims at easing global customs rules for smoother and easier movement of goods across international borders. India vetoed signing the deal in July this year. However it seems to have agreed now that the government has reached an understanding with the US which has promised to support its demand for a permanent food 'Peace Clause' until a definitive solution to public stockholding schemes is achieved by the WTO. 

Here are the positives and negatives once India signs the TFA

POSITIVES:

1. Industry will save transaction costs that runs into billions of dollars for exporting their products in the international markets.

2. Indian exporters will be able to achieve greater access in some of the difficult markets like US, Europe, Japan & China that have stringent customs rules and regulations.

3. Indian small and medium enterprises (SMEs) will be the biggest beneficiaries as they will now be able to spend more on marketing their products than spending time and money on tedious paperwork that result in inordinate delays. 

NEGATIVES

1. India will lose a major bargaining power before it achieves a permanent solution on the food security issue. It is believed that once the developed countries obtain the TFA, they will not expedite talks on public stockholding issue, which is in fact India's main goal.

2. To have a permanent food security 'Peace Clause', India will have to adhere to some stringent riders to avail the provision. Farmers & civil society activists fear these stringent riders will result in disastrous consequences.

3. India's main demand of having a permanent solution to the food security issue might get delayed forever. Achieving a permanent solution to the food stockpile issue entails amendment of the WTO Agreement on Agriculture.

source : http://www.business-standard.com/article/economy-policy/india-to-sign-tfa-positives-and-negatives-114112600180_1.html

WTO Trade Facilitation pact, food security signed

After almost 11 months of parleys, the World Trade Organization (WTO) on Thursday signed the trade facilitation agreement (TFA) and agreed to India’s demand for a perpetual ‘peace clause’ till a final solution to the issue of food stockholding is found. The decisions were taken at a ‘special’ meeting of the WTO General Council (GC), the highest decision-making body after ministerial conferences.

Following tense negotiations and last-minute hiccups due to oppositions from Argentina and Pakistan, the GC adopted three main decisions — signing of the TFA protocol, extension of the ‘peace clause’ for an indefinite period and setting a deadline for the remaining Bali package commitments for poorer countries. “With Thursday’s decision, our chances of getting a permanent solution to the food stockholding issue gets a massive boost. Now we do not have to beg for it. We are now in a position to negotiate an optimum solution,” an official involved in the talks told Business Standard.

WTO had not issued an official statement till the time of going to press.

The breakthrough came after India and the US earlier this month reached an understating where the Americans assured support to India’s demand for a permanent ‘peace clause’ and, in turn, India agreed to sign the TFA, which it had vetoed in July.

The TFA, expected to infuse $1 trillion into the global economy and create 21 million jobs, will now be open for ratification by all 160 member countries. After that, it will be implemented by July 2015. “WTO has taken a critical step forward by breaking the impasse that had prevailed since July. I am pleased that the US was able to work with India and other WTO members to find an approach that preserved the letter and spirit of the package of decisions reached at last year’s Bali Ministerial Conference. With this win under WTO’s belt, we can again focus our efforts on revitalising the organisation’s core negotiating function,” said US Trade Representative Michael Froman.

The Bharatiya Janata Party, which came to power at the Centre in May after a landslide victory, had vetoed adoption of the process that would have turned the TFA into a legally binding deal by July 31, the previously set deadline.

Since then, the government had been insisting on having a parallel agreement on public food stocks for its poor and marginal farmers.

STEPS TO THE PACT

Dec 7,’13: WTO 9th ministerial concludes in Bali. Members agree to sign TFA. India claims victory for achieving the ‘peace clause’ for a period of four years that will give it the freedom to provide WTO-prohibited subsidies to its poor and marginal farmers February ‘14: July 31 fixed as deadline to sign TFA pact; to fully implement it by July 2015 July 31: WTO General Council suspended; India refuses to sign the TFA, demands a parallel agreement on food stockholding Sep 29: Preparatory committee on trade facilitation meets; India stays firm on stand. US denies further meetings on TFA,  demanding a pact on food security along with TFA will entail collapse of entire Bali Package Sep 30: PM Modi holds first meeting with US President Obama; both agree on achieving "next steps" in WTO talks Oct 16: Trade Negotiations Committee meets; talks inconclusive Nov 13: India claims to garner US’ support on its concern for food stockpiling Nov 27: WTO ‘special’ General Council agrees to TFA implementation and food security ‘peace clause’

A permanent ‘peace clause’ insulates India and other developing countries with public stockholding programmes from challenges by other WTO members, even for violation of global rules on farm subsidies.

The so-called ‘peace clause’ also grants India the freedom to offer subsidies to its farmers without following any limit. The cap, according to WTO rules, is 10 per cent of the total production of the crops that are covered under the food stockholding programme.

At present, India offer subsidies in the form of ‘minimum support price’ for rice, wheat and cereals. However, the ‘peace clause’ does not come for free. India, along with other developing countries, have to adhere to some strict conditions to avail of the interim relief. The most important rider pertains to future food stockholding programmes, which would not be covered under this provision. In other words, any new food stockholding programme will have to follow WTO’s 10 per cent threshold.

Another condition is that countries following food stockholding programmes will have to ensure they do not distort trade and adversely affect similar schemes of other developing countries. Otherwise, the affected country will have to the option of appealing to the WTO dispute-settlement body.

Minister of State (independent charge) for Commerce & Industry Nirmala Sitharaman is expected to make a statement on Friday.

--Nayanima Basu / Source : http://www.business-standard.com/article/economy-policy/wto-trade-facilitation-pact-food-security-signed-114112701151_1.html

Happy Ending | Review

Only reason to watch this film was ( even after critics declared it 'flop' ) its story. Its a story of a writer (best selling) who stop working coz he thought ki there is enough to enjoy so why should work! I thought, I ll gain something as writer but forgot that its a Krshna & Raj's film and they never add a single meaningful scene in their films.

Saif Ali Khan is in cool-guy avatar , is a single book wonder who is struggling to survive. Illeana D'cruz as new successful writer, who is enjoying her success. Govinda as typical bollywood hero, Ranvir Shorie as Biwi-se-Bachao character and Preity as Saif's ex GF, Kalki as Saif's current GF and Sif again as his alter ego Yogi. Overall cast is good and anyone can make a hit film from it except director duo. I don't know why they are here in film industry.

Illeana and Saif has common agent and they meet there. Saif gets new assignment as script writer for Govinda's film, hang out with Illeana and Ranvir and story goes on. Dialogue contain many urban dictionary words and few ma-bahen gali and sometimes make you laugh and sometimes you feel- why the fuck is gali is here.

Music is ok ok. None of the song will remain in your mind for so long.

Saif, Govinda and Ranvir did well, Illeana is good and looked bful. Preity is as always justified her small character.

Youth : The demographic challenge

The rhetoric on the capacity of countries to reap the so-called demographic dividend cannot mask the more complex reality of a not-so-young world in 2014, and non-uniform patterns of growth. About a quarter of the world’s population — 1.8 billion — is in the age-group of 10-24 years, according to the latest United Nations Population Fund report. In 1950, the proportion was higher, at almost a third of the global total, at 721 million. The 10-24 age segment has thus declined overall, while it has more than doubled in absolute terms during the period. This means that in theory, people in this age bracket, their number larger than China’s population, can hope to live longer, be better fed and educated, do decent jobs and earn adequate incomes. In concrete terms, this segment would swell the share of the working-age population — those between 15 and 64 years — over the next few decades. But here is the catch. Nine out of ten people, or 89 per cent, in the 10-24 age-group live in less developed countries, says the UNFPA report. Most people who are alive today are below 30 years of age. In 17 states, 15 of them from sub-Saharan Africa, one half of the population is under 18 years. One in three girls in the developing world is married before reaching 18, raising the risk of early and perhaps unintended motherhood among children and hampering the realisation of their full potential. One in seven HIV infections occur during adolescence.

According to the World Bank, last year there were 100 dependents (those below 15 years and above 64 years) for every 100 people in the working age in Angola. The ratio was even higher, at 103, for Chad; for other states in the conflict zones of sub-Saharan Africa, the figures were in the 80s and more. Whereas India’s age-dependency ratio has ranged in the 50s per 100 working population between 2010 and 2013, China has stayed in the mid-30s during the corresponding period. India’s higher ratio underscores the extent to which social protection measures would have to be strengthened for both the components to ease their mutual interdependence and enhance the quality of life. Alongside measures to boost growth and attract multinational corporations in the manufacturing and services sectors, Prime Minister Narendra Modi must take up massive public-funded programmes in basic education, health care and vocational training, with a thrust on building a clean economy. Only then could the current younger age profile of the population prove advantageous. The demographic dividend refers to the potential among countries to increase economic growth by taking advantage of the changing age structure in the population. Clearly, a great deal remains to be done to realise this potential.

Source: http://www.thehindu.com/todays-paper/tp-opinion/the-demographic-challenge/article6637656.ece

Before the 'second generation reforms’ / Pratap Bhanu Mehta

As expectations for reform soar, it is important to remind ourselves of the nature and magnitude of the challenge. There is much talk about second-generation reforms. But as one smart government official quipped: Forget second-generation reforms, India needs minus-one generation reforms. We don’t even know what we are facing. Political stability, the RBI’s determined effort to fight inflation (despite big business engaging in ideological obfuscation) and changing international circumstances have altered the mood. But the underlying rot is deep. Its surface has yet to be scratched. Too much energy is being expended on reforms that are besides the point, rather than on credible fundamentals.

Just imagine this. Structural regulatory uncertainty continues to affect about a quarter of India’s economy in sectors like mining, natural resources, any investment involving land. This has large indirect effects. There is always some uncertainty and dispute in an economy. But structural regulatory uncertainty basically means that a pricing mechanism has irrevocably broken down. You can have either a market mechanism or an administered price mechanism. The problem is that we do not have either that is credible.

Prime Minister Narendra Modi was right to say in Australia that reform by stealth does not work. What it ended up creating was institutions that had neither the old certainties of state-set prices in areas like coal, nor fully developed markets. Add to this the fact that the legal landscape has now become incredibly complicated: The coal judgment, for example, does not just raise questions about the method of giving mining licences; it has implications for federalism and who should be issuing them. But we underestimate this fact. The regulatory web is now so tangled that you don’t quite know what will happen if you pull at one string. This history of regulatory reform in India, with a few exceptions, has ended up muddying the landscape rather than clarifying it.

Two of the most critical sectors for the economy, health and education, exhibit these characteristics. The single biggest mistake of the right to education, for instance, was to muddy the distinction between public and private. Instead of saying let the public do its job and the private its function, we now have a regulatory system than distorts both irretrievably. And now it is proving near impossible to set the system right. The health sector is a combination of laissez faire and half-baked regulatory interventions. And each attempt to reform the system makes it more vulnerable. There is no reliable measure of inflation in these two sectors either, which probably has a greater effect on the rest of the economy than we realise.

All factors of production still face pricing and structural uncertainty. Add to this the quiet chaos in the financial system. The Indian banking system was not good at assessing projects or pricing risk. Or rather, what it was good at was assessing risk in the context of a closed loop of crony capitalism, where you could count on renegotiated contracts, unscrutinised gold-plating and government patronage. But there are two problems. The first is whether there will be a banking culture that can price risk and promote innovation. The jury is out on this one. The second is this: The lines of credit look more like electricity wires in a standard Indian city — so tangled that you don’t know what you will short circuit if you try and straighten and clean them up.

What will be needed for reforms under the circumstances of such regulatory mess? The first thing is a war against casualness. The besetting sin of government now is casualness more than venality. It thinks it can wing regulatory reform. The finance minister glibly concedes that the land acquisition bill was passed in a moment of populist casualness. Is there any evidence that any proposed reforms to this act will not also be equally casual in the other direction? After all, it is the same lot now trying to reverse course.

The government is underestimating the degree to which, some exceptions apart, the bureaucracy has atrophied — to the point that you cannot expect nuance or thoroughness from most departments. The one thing you could count on the IAS for — saving you from legal trouble — is no longer a virtue that exists. We don’t see the support scaffolding in place. Second, in none of these sectors is there a clear and precise articulation with appropriate nuance of the problem you are trying to fix. This is especially so in the land debate, where we are pretending as if we fully understand what we are trying to fix.

There is also a corresponding casualness in talk of taxes, deficits and so forth. Containing deficits is important. But you cannot restore growth dynamism without increased public investment. There is a deep disjuncture between the finance minister’s talk of lowering tax burdens and tight fiscal deficits on one hand, and the prime minister’s infrastructure dreams on the other. The government has not made a credible case for how it proposes to square the circle. More public investment in a broken system of rules creates its own problems, but the intellectual groundwork for it needs to be done.

The second challenge in this. Unfortunately, economies don’t come with a clean slate. There are too many sunk costs in different sectors. And creating new competencies takes time. Under such circumstances, the path to a new equilibrium is messy: it often involves cutting deals so that the costs of the new path are minimised. Banks will have to sit down with those in their debt and, in many cases, cut deals. Your problem is this: Will the forms of legal, political and public scrutiny allow for some sensible deals or will these get stuck in the logjam of recrimination? Which bankers will feel empowered to sign on them?

Tocqueville’s warning, that governments feel vulnerable when they try to reform, is still apt. Crafting reform requires recognising the depth of the rot. But rather than creating a climate for nuance, the depth of the rot often emboldens calls for more of a slash-and-burn exercise, especially when the state has low credibility. This is why governments still find it hard to come clean. After Modi’s call, what is preventing the government from producing an analytically sound, honest and credible white paper on the rot in several sectors — infrastructure, power, banking, credit, possibly land, and even the growth framework? Reform by stealth is not easy to give up in a system where you can be, for good reason, damned if you do and damned if you don’t.

The writer is president, Centre for Policy Research, Delhi, and a contributing editor for ‘The Indian Express’ 

- See more at: http://indianexpress.com/article/opinion/columns/starting-at-minus-one/99/#sthash.6EZHi55H.dpuf

Lost in Translation (2003) | Short Review

Lost In Translation film is story of two american characters lost  in alien Japanese culture. But in addition, they are lost in their own lives and relationship. This leads to their blossoming friendship and growing connection with one other.

Bob Harris an aging actor, married for 25 years came to Tokyo to shoot advertisement for a good deal. Charlotte is just-graduated young wife of a celebrity photographer confused about her future. Both are alien to Japanese culture. They both meet in hotel bar and this leads to friendship. Bored due to his work, accepting offer from Charlotte, Harris spend quality time with Charlotte and her local friends. Many events happens and the affection between central characters increases. In the end Harris left from Tokyo sharing a kiss with Charlotte. (Watch it for the full story:P)

Film is directed by Sofia Coppola, daughter of very famous Francis Coppola (Director of The Godfather) and got Academy nomination for direction and won for original screenplay. So, screenplay is good, direction is also good. Music is the thing runs with the story. Some songs are very bful like 'too young', 'alone in Kyoto' 'are you awake?' Some scene from monastery, Kyoto and Harris-Charlotte kiss scene are bful and memorable.

This time I thought of writing a long review but this is kind of film where you end with explaining story.... so, keeping it simple ending here. Haan, Scarlett Johanssons as Charlotte looked very bful and Harris has a very good sense of humour.

Watch if you want to watch a simple-go story. for Sofia's direction. for Bill Murray's acting (as Harris).

Do not watch if you do not like simple-go stories. 

My Rating: 84%