vidyanand acharya

Hello I am Back

2011-11-21T02:09:00.000-08:00

Hello viewers
I am back again with news and views on various issues of national and international importance.
vidyanand acharya

India's New Generation-Sandwithched between "Baap" and "Beta"

2010-09-27T06:36:00.000-07:00

The squeeze is on for Asian families struggling to provide

for children and elderly parents

As people in Asia live longer and women have children later in life, a rising number of adults are simultaneously caring for young children and ageing parents—a phenomenon long recognised in other parts of the world as the growth of the ‘Sandwich Generation’. New research by the Economist Intelligence Unit and sponsored by Fidelity International—Feeling the squeeze: Asia’s Sandwich Generation—shows one in five working-age Asians is now a member of this cohort. These people are typically aged 30 to 45, married, and supporting one or two children and two parents or parents-in-law. The size of the Sandwich Generation varies considerably across regions: in China 37% of the working-age population is supporting multiple generations; in Australia and Japan, only 6% is in this position. Across the region, many members of the Sandwich Generation are squeezed by the financial burden of caring for multiple generations and are concerned that their future living standards will decline.

These findings are among the results of a survey of 700 people in Australia, China, Hong Kong, Japan, Singapore, South Korea and Taiwan who are currently supporting both their children and their parents. The aim of the survey, which was conducted by the Economist Intelligence Unit in March and April 2010, was to ascertain how the burden of supporting parents and children affects the decisions of working-age adults in relation to their disposable income and investment/saving behaviour.

The other key findings of the report are as follows:

Asia’s Sandwich Generation is saving for retirement, but many anticipate a reduced standard of living. For the most part, members of Asia’s Sandwich Generation are contributing to public and private pensions or insurance policies, but 42% expect their standard of living to fall once they leave the work force. South Korean and Japanese Sandwich Generation members display the highest level of anxiety about their retirement years. Regardless of their projections for the future, few Asian Sandwich Generation members (just 16%) seek professional advice in financial planning.

The Sandwich Generation is working harder, saving less and taking fewer risks with their investments. More than one-third of Asia’s Sandwich Generation members have had to work harder to cover family expenses since becoming “sandwiched”; about half have reduced their savings and investments, and nearly two-thirds are more cautious with their existing investments than they would otherwise be.

Many are struggling under the pressure. More than one-third, 36%, of Sandwich Generation members say they are “struggling to cope” with the competing demands of their parents and children. Those in Hong Kong are feeling the most pressure, with 53% of respondents reporting they are struggling to cope.

The pressures of supporting parents and children have grown, but dedication to ageing parents remains strong. As longevity has risen and women are having children later, families are simultaneously caring for young children and ageing parents more than in the past. But although the demands may have increased, the Asian Sandwich Generation’s sense of filial obligation remains strong, with 78% agreeing that it is their responsibility to help their ageing parents.

Education is a major expense for the Sandwich Generation, but they are willing to pay handsomely for the investment in their children’s future. Asian Sandwich Generation members spend more time and money caring for children than parents, and their children’s education is the primary concern. Educational expenses, which can be considerable, start as early as primary school. Many expect to continue paying for their children into early adulthood: some 58% regionally (and 73% of Sandwich Generation members in Taiwan) say they expect to care for their children into their 20s.

Caring for parents can also be expensive, especially where the social safety net is weak. In regions where the elderly often lack pensions or access to public healthcare services, the burden is heavier than elsewhere on Sandwich Generation members to cover their parents’ costs. Sandwich Generation members in China and Hong Kong spend more on their parents than their Asian peers, a result in part of weak social security systems that provide little support for retirees or their families.

Posted by Vidyanand Acharya
Courtsey-EIU Research

Global Competitve Report 2011

2010-09-21T02:42:00.000-07:00

Switzerland tops the overall rankings in The Global Competitiveness Report 2010-2011, released today by the World Economic Forum ahead of its Annual Meeting of the New Champions 2010 in Tianjin. The United States falls two places to fourth position, overtaken by Sweden (2nd) and Singapore (3rd), after already ceding the top place to Switzerland last year. In addition to the macroeconomic imbalances that have been building up over time, there has been a weakening of the United States’ public and private institutions, as well as lingering concerns about the state of its financial markets. The Nordic countries continue to be well positioned in the ranking, with Sweden, Finland (7th) and Denmark (9th) among the top 10, and with Norway at 14th. Sweden overtakes the US and Singapore this year to be placed 2nd overall. The United Kingdom, after falling in the rankings over recent years, moves back up by one place to 12th position.

The People’s Republic of China (27th) continues to lead the way among large developing economies, improving by two more places this year, and solidifying its place among the top 30. Among the three other BRIC economies, Brazil (58th), India (51st) and Russia (63rd) remain stable. Several Asian economies perform strongly, with Japan (6th) and Hong Kong SAR (11th) also in the top 20. In Latin America, Chile (30th) is the highest ranked country, followed by Panama (53rd) Costa Rica (56th) and Brazil.

Several countries from the Middle East and North Africa region occupy the upper half of the rankings, led by Qatar (17th), Saudi Arabia (21st), Israel (24th), United Arab Emirates (25th), Tunisia (32nd), Kuwait (35th) and Bahrain (37th), with most Gulf States continuing their upward trend of recent years. In sub-Saharan Africa, South Africa (54th) and Mauritius (55th) feature in the top half of the rankings, followed by second-tier best regional performers Namibia (74th), Botswana (76th) and Rwanda (80th). Read the highlights of the report.

- Download the full Global Competitiveness rankings (PDF or Excel format)

“Policy-makers are struggling with ways of managing the present economic challenges while preparing their economies to perform well in a future economic landscape characterized by uncertainty and shifting balances,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. “In such a global economic environment, it is more important than ever for countries to put into place the fundamentals underpinning economic growth and development.”

Xavier Sala-i-Martin, Professor of Economics, Columbia University, USA, and co-author of the report, added: “Amid concerns about the outlook for the global economy, policy-makers must not lose sight of long-term competitiveness fundamentals amid short-term challenges. For economies to remain competitive, they must ensure that they have in place those factors driving the productivity enhancements on which their present and future prosperity is built. A competitiveness-supporting economic environment can help national economies to weather business cycle downturns and ensure that the mechanisms enabling solid economic performance going into the future are in place.”

The Global Competitiveness Report’s competitiveness ranking is based on the Global Competitiveness Index (GCI), developed for the World Economic Forum by Sala-i-Martin and introduced in 2004. The GCI is based on 12 pillars of competitiveness, providing a comprehensive picture of the competitiveness landscape in countries around the world at all stages of development. The pillars are: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.

The rankings are calculated from both publicly available data and the Executive Opinion Survey, comprehensive annual survey conducted by the World Economic Forum together with its network of Partner Institutes (leading research institutes and business organizations) in the countries covered by the study. This year, over 13,500 business leaders were polled in 139 economies. The survey is designed to capture a broad range of factors affecting an economy’s business climate. The report also includes comprehensive listings of the main strengths and weaknesses of countries, making it possible to identify key priorities for policy reform.

The report contains an extensive data section with a detailed profile for each of the 139 economies featured in the study, providing a comprehensive summary of the overall position in the rankings, as well as data tables with global rankings for over 110 indicators.

This year’s report also features discussions on selected regions and topics. These include an analysis of the competitiveness of the European Union countries (guest-authored by European Commissioner Joachim Almunia); a review of Latin America’s infrastructure challenges, with a special focus on Brazil; a timely discussion on the relationship between macroeconomic stability and longer-term competitiveness; and the results of the EU Joint Research Centre’s analysis of the GCI, highlighting the statistical robustness and soundness of the index.

High Politics, Low gains

2010-01-14T05:00:00.000-08:00

The Copenhagen Outcome- High politics and Low gains

The United Nations climate change conference narrowly avoided a complete catastrophe after two weeks of acrimonious negotiations, when a select handful of leaders formed a political agreement behind closed doors on Friday night, while around a hundred of their counterparts sat in another room. Despite achieving agreement among the major economies - also known as the “major emitters” - whose buy-in holds the key to addressing climate change, the agreement reached in Copenhagen is insufficient to resolve the most critical elements that will stabilize the atmosphere, protect vulnerable communities from harm, and ensure the continued sustainable development of developing countries.

The three-page “Copenhagen Accord“, spearheaded by the United States, China, India, Brazil and South Africa, is not a politically binding agreement, as Parties originally intended when they set out together on the Road to Copenhagen two years ago at COP 13. The negotiations in Copenhagen, which came to a close on Saturday, were fraught with mistrust of the process chaired by Lars Lokke Rasmussen, the Danish Prime Minister who presided over the conference. In the last days, when over 100 Heads of State arrived in Denmark, an agreement was far from ready. Unwilling to go home empty handed, the small group of political leaders took pen to paper and hammered out an agreement, as the majority of leaders and their ministers sat in the plenary hall waiting. When the Accord emerged late in the evening, many leaders had not been effectively consulted and tempers flared. A number of countries ended up rejecting the Accord, and it was eventually relegated to an attachment that the final decisions of the COP “noted” in their conclusions.

In effect, the Accord is a political statement of a few, supported by some, and not accepted by others. It is unclear what will happen to the agreement and what its formal status will be leading up to the next COP. The inclusive processes of the United Nations were sidelined in the interest of achieving a decision, under the noses of the General Secretary, and with the facilitation of the Secretariat of the Convention itself. The impact of COP 15 on the future of multilateral climate change decision making is yet to be determined; however, the damage to the trust of many countries in the system is undeniable.

Anatomy of the Accord

The Accord concedes that the world needs to curb global warming from rising above 2 degrees Celsius from pre-industrial times, although it does not specify deeper emissions cuts for developed countries - a key factor for avoiding the 2 degrees limit. Notably, a majority of the 193 signatories to the UN climate convention - those represented in the Alliance of Small Island States (AOSIS), the Least Developed Countries (LDCs) and the Africa Group - have all warned that 1.5 degrees is the absolute limit and that 2 degrees will mean hardship, mass migrations, and even death for many of their citizens. In addition to lack of specificity on developed country mitigation, the Accord lays out a very general intention for developing countries to voluntarily curb their carbon intensity.

The Accord affirms a commitment of US$30 billion in funding over the next three years to assist developing countries with their mitigation and adaptation, and sets a goal of US$100 billion in annual funding by 2020. However, the level of funding aspired to falls far short of the sums calculated by entities such as the World Bank, McKinsey, and the United Nations Development Program, among others, to address adaptation and mitigation.[1] In addition, the fund will include an undetermined share of both public and private financing, with no certainty of reaching the level and, perhaps more importantly, does not guarantee the much needed sustainable financing or the ease of access that developing countries require.

A final element of the Copenhagen Accord that presented the most difficulty is the issue of reporting and transparency of emissions reductions. This issue was of key importance to the United States, but also the most contentious for the Chinese, who considered it an infringement on national sovereignty and a way for developed countries to monitor competitiveness. The final result was that mitigation actions taken independent of international support would be reported only through National Communications - a standard reporting tool under the UNFCCC for developing countries - every two years. Mitigation actions carried out with international support will be entered in a registry and are subject to international measurement, reporting and verification. Notably, securing these transparency tools cost the US the reference to the “50% global cut by 2050″ that was initially in the agreement. The implications of these requirements will surely come to light as the LCA process advances and the political guidance from the Accord begins to weigh in on definition of the LCA text.

The goalpost has been pushed back for an international agreement on climate change, although it is not clear how far, since the Accord does not set a deadline for forming an internationally binding treaty. Among the Decisions of the COP, Parties were able to agree to continue the negotiating process of the Ad-hoc Working Groups on Long-term Cooperative Action (LCA) and on the Kyoto Protocol into next year. Notably, a proposal to hold permanent negotiations in Geneva, Switzerland, for the coming year received some support. This format would resemble that of other complex international negotiations, and is favored by many developing countries because it would allow them to access support from their permanent missions in Geneva, where many have standing economic, social and environmental negotiating capacity.

Trade issues - the state of play

Reaching a global agreement that directly strikes at consumption and production necessarily requires consideration of trade implications. Indeed, the failure of the United States to sign the Kyoto Protocol was directly linked to the concern in its Congress that it gives developing countries unfair trade advantages because they are not held to the same production standards. This time around, labor and industry interest groups in the US are demanding border measures in order to allow passage of national legislation to address emissions and energy. This issue has led commentators to warn that passage of the law may trigger a “green trade war” between countries, requiring WTO dispute settlement and stressing already delicate relations among countries.

On a related issue, the notoriously dirty fuels used in shipping and aviation came under the spotlight in Copenhagen, with a number of countries calling for international levies on bunker fuels. These fuels were not subject to regulations under the Kyoto Protocol. That may change, however, under a new climate change agreement. A number of proposals have been tabled, ranging from a straight tax to a cap and trade system.

Given the sensitivity of the climate change issues that impact on international trade, it is not surprising that these are among the negotiating topics that remain unresolved. What follows is a summary of the outcome of the negotiations in those areas that touch most directly on international trade and development.

Border carbon measures

Whether they are called border carbon adjustments (BCAs), border tax adjustments (BTAs), or border tax measures (BTMs), it boils down to the same thing: unilateral measures that a state imposes when a good is imported from a country that has not ‘comparably offset’ the greenhouse gas associated with a given good’s production. Border carbon measures are highly contentious. On the one hand, interest groups in developed countries fear that domestic regulations on emissions will encourage industries to set up shop in countries that apply lesser standards. This is a concern expressed in Washington, where lawmakers are considering legislation that would implement BCAs as part of a larger package of climate change policies.

Yet many developing countries resist border carbon measures. “We are totally against it - totally against it,” said India’s chief climate change negotiator in Copenhagen, Jairam Ramesh, summing up the view that many developing countries have on BCAs. The specter of BCAs raises at least three concerns: (i) that BCAs may clash with international trade rules, which prescribe equal treatment among equal goods; (ii) that BCAs may be set as a disguised form of protectionism; and, (iii) that the notion of BCAs neglects and undermines the principle of common but differentiated responsibilities among countries at different levels of development.

Border carbon measures are being addressed within the text on the potential economic and social consequences of response measures. Three options have been placed on the table. The first is strong language prohibiting their use. The second option would borrow from the existing Article 3.5 of the UNFCCC, which uses language from GATT Article XX. Article 3.5 states: “Means taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade…” A third proposal also borrows from Article 3.5, but includes more precise language providing additional comfort for parties and perhaps a middle of the road that all can accept.

In addition to BCAs, many countries in Copenhagen expressed concern over the competitiveness effects of free allowances as an integral tool of cap-and-trade regimes. Arguably, such allowances are tantamount to a subsidy and, as with the case of any differentiated response measures on carbon, it would affect the relative costs of production of internationally tradable goods. No language on BCAs or allowances is included in the Copenhagen Accord.

Agriculture

The agricultural sector finally received particular attention in the climate change negotiations in the run up to Copenhagen and at the COP itself for two primary reasons: first, agricultural production is a large contributor of greenhouse gas, responsible for at least 14 percent of global emissions; second, the sector will be highly affected by the increased temperatures, droughts, floods, doubts and unpredictable rainfall associated with global warming. The negotiating group on sectoral approaches has developed a text that focuses solely on the agricultural sector. Going into Copenhagen, this text was heavily bracketed, meaning there was little consensus. It remains so today. However, the text has evolved in the Copenhagen negotiations, and now emphasizes the relationship between climate change and food security. The text also recognizes the importance of traditional knowledge and calls for a special work programme on this issue. Many scientists and experts remain puzzled at the immensely unequal attention that forestry and agriculture have received in the UNFCCC context, dealing both as they do, with similar issues related to land use, carbon sequestration functions and emissions.

Technology and Intellectual Property

Arguably the biggest hurdle to significantly reducing greenhouse gas emissions is the development of new technologies that will wean the world off fossil-fuel dependency. This challenge is especially acute in the developing world, where the capacity to develop or access such technologies is often lacking. Efforts to make green technologies available, and useable, are being pursued on a number of fronts in the UNFCCC negotiations. Parties are considering an array of mechanisms, funds and plans, some of which mirror initiatives at the WTO. In this regard, it is notable that the Copenhagen Accord calls for the establishment of a “Technology Mechanism”, intended to enhance action on technology development and transfer. Such a mechanism will require further elaboration and steps for implementation within the negotiations under the LCA.

Adaptation and financing

Financing is the big ticket item in the negotiations. Although the estimates vary, there is no disputing the fact that climate change adaptation and mitigation will be costly. Especially for least developed countries (LDCs) and small island developing states (SIDS), predictable long-term sources of financing are essential if they are going to adapt to environmental and economic changes resulting from climate change. The World Bank estimated in 2009 that between US$140 billion and US$175 billion will be needed to help developing countries implement the mitigation measures required to keep the world from warming above 2 degrees Celsius. Billions more are needed to help developing countries adjust to the environmental changes wrought by global warming.

The United States, the EU and Japan grabbed headlines with their announcements on financing in Copenhagen. In the case of the EU, some US$10 billion has been committed over three years towards a ‘fast-track’ fund, which is more than was originally expected to flow from the EU’s coffers. Japan also offered US$15 billion over three years, bringing governments closer to raising US$10 billion annually in the next three years; a sum that was committed to in Copenhagen. Meanwhile, the United States voiced its support for a US$100 billion per year climate change fund by 2020, which would come from a combination of public and private sources. Yet the most important details related to longer-term financing remain missing, including how the annual $100 billion would be sourced.

Picking up the pieces

There is no doubt that international governance and the UN decision-making process took a hit in Copenhagen. Parties leave with less confidence and trust in the institutions, as well as in their ability to achieve results. World leaders are unlikely to come together again behind this cause, at least in the short term, considering the clumsiness, and some even claim disrespect, with which they were treated.

As for climate change, the world is no closer to resolving the issue through international political processes than two years ago. In the absence of a treaty, trade issues will begin to encroach even further on the territory of climate policy, particularly with respect to the evolution of BCAs and responses thereto. Meanwhile, in the absence of clear regulatory signals at the international level, the carbon market, with all of its investment and technology potential, is left vulnerable and funds may not flow as abundantly towards R&D for climate change - another glaring omission in the Copenhagen Accord.

With twelve months until next year’s COP in Mexico City, the road ahead will not be smooth. Achievements in Copenhagen may be recorded in the realm of dialogue and awareness building. On the former, unprecedented frank exchanges took places between the major emitting economies at the highest political level. Differences were clearly articulated; acrimony cannot any longer be blamed on a presumed incapacity of negotiators to bridge technical differences. A gulf in political will and mandates has been exposed. On the other hand, while scepticism continues to increase among segments of the public, more of the world is aware of climate change, its causes and risks. These are important steps towards advancing into the realm of necessary and effective solutions. From here to Mexico in 2010, the ball is as much in the court of legislators in the US and of constituencies all over, as it is in political leadership.

Posted by Vidyanand Acharya

Courtsey- ICTSD

WTO Ministerial Can Send ‘Strong Signals’ to the World: Lamy

2009-11-19T05:42:00.000-08:00

Director-General Pascal Lamy, in his report to the General Council on 17 November 2009, said that while the upcoming WTO Ministerial Conference would not be a negotiating session, it would be “a platform for ministers to review the functioning of this house,” including the Doha Round, and an occasion “to send a number of strong signals to the world with respect to the entire WTO waterfront of issues — from monitoring and surveillance to disputes, accessions, Aid for Trade, technical assistance and international governance”।
Thank you Mr Chairman.

Since my last report to the General Council on 20 October, I have met with the Negotiating Chairs and the General Council Chairman on a number of occasions to exchange views on the overall process and to coordinate activities so as to facilitate the work of delegations. You will all have received the organizational fax on 10 November outlining the schedule of meetings during the Senior Officials' Week. The Negotiating Chairs, the General Council Chairman and I are still fine-tuning this programme with a view to ensure predictability, inclusiveness and transparency in the context of an intensive meeting schedule. There may be a few minor changes to the overall schedule of meetings and I intend to outline these at the informal TNC on 23 November.

Before I provide you with a brief overview of the state-of-play and outlook of the negotiating groups, let me pay tribute to the Negotiating Chairs for their work and commitment. The past year has been one of modest, but nevertheless progress in all areas of negotiations, albeit of a different type. In some cases progress has meant a better understanding of positions; in some others, however, there has been tangible progress and we are about to capture this in a draft negotiating text, as is the case with trade facilitation.

Before the year ends, we still have two weeks of Senior Official engagement which need to be used to continue to move the ball forward. What is clear is that if we are to conclude this Round in 2010 as you have pledged to, we will need to take a hard look at where things stand early in the new year and map the road that would lead us to a successful result.
Vidyanand Acharya

ECONOMIC CRISIS EXPOSES FRAGILE GLOBAL FOOD SYSTEM, NEW UN REPORT SAYS

2009-11-17T02:18:00.000-08:00

The sharp spike in hunger triggered by the global economic crisis has hit the poorest people in developing countries hardest, revealing a fragile world food system in urgent need of reform, according to a report released today by FAO and the World Food Programme (WFP).

The combination of food and economic crises has pushed the number of hungry people worldwide to historic levels — more than one billion people are undernourished, according to FAO estimates.

Nearly all the world's undernourished live in developing countries. In Asia and the Pacific, an estimated 642 million people are suffering from chronic hunger; in Sub-Saharan Africa 265 million; in Latin America and the Caribbean 53 million; in the Near East and North Africa 42 million; and in developed countries 15 million, according FAO's annual hunger report, The State of Food Insecurity, produced this year in collaboration with WFP. The report was published before World Food Day, to be celebrated on 16 October 2009.

Decade-long trend

Even before the recent crises, the number of undernourished people in the world had been increasing slowly but steadily for the past decade, the report says.

Good progress had been made in the 1980s and early 1990s in reducing chronic hunger, largely due to increased investment in agriculture following the global food crisis of the early 1970s.

But between 1995-97 and 2004-06, as official development assistance (ODA) devoted to agriculture declined substantially, the number of hungry people increased in all regions except Latin America and the Caribbean. Gains in hunger reduction were later reversed in this region as well, as a result of the food and economic crises

The rise in the number of hungry people during both periods of low prices and economic prosperity and the very sharp rises in periods of price spikes and economic downturns shows the weakness of the global food security governance system, FAO said.

"World leaders have reacted forcefully to the financial and economic crisis and succeeded in mobilizing billions of dollars in a short time period. The same strong action is needed now to combat hunger and poverty," said FAO Director-General Jacques Diouf.

"The rising number of hungry people is intolerable. We have the economic and technical means to make hunger disappear, what is missing is a stronger political will to eradicate hunger forever. Investing in agriculture in developing countries is key as a healthy agricultural sector is essential not only to overcome hunger and poverty but also to ensure overall economic growth and peace and stability in the world," he said.

"We applaud the new commitment to tackle food security, but we must act quickly. It is unacceptable in the 21st century that almost one in six of the world's population is now going hungry," added Josette Sheeran, Executive Director of WFP.

"At a time when there are more hungry people in the world than ever before, there is less food aid than we have seen in living memory. We know what is needed to meet urgent hunger needs — we just need the resources and the international commitment to do the job."

Another blow for poor households

Several factors have conspired to make the current crisis particularly devastating for poor households in developing countries.

First, the crisis is affecting large parts of the world simultaneously, reducing the scope for traditional coping mechanisms such as currency devaluation, borrowing or increased use of official development assistance or migrant remittances.

Second, the economic crisis comes on top of a food crisis that has already strained the coping strategies of the poor, hitting those most vulnerable to food insecurity when they are down. Faced with high domestic food prices, reduced incomes and employment and having already sold off assets, reduced food consumption and cut spending on essential items such as health care and education, these families risk falling deeper into destitution and the hunger-poverty trap.

Threat challange for Indian Agriculture?

2009-07-30T01:29:00.000-07:00

Note-Please read this article(Courtsey- ICTSD) because if this happens as per study and its findings a chaotic situation will emmerge for Indian Agriculture. V Acharya

A global trade deal at the WTO would lead to significant cuts in China’s already-low agricultural tariffs, new ICTSD research shows.

As governments renew efforts to clinch a deal in the ongoing Doha Round of trade talks, the study shows that the draft accord would cut China’s maximum permitted ‘bound’ farm tariffs by around one sixth - despite current rates already being one quarter of the average world tariff level. Because China’s actual applied tariff levels are close to these bound levels, most cuts would translate directly into new market access for exporters.

”China is one of the least protected markets for agricultural products in the developing world,” notes the author of the study, Professor Tian Zhihong of the China Agricultural University.

The study shows that tariff rates would be brought down to 13 percent from an initial average of 15 percent, after accounting for gentler tariff cuts for products deemed to be ’sensitive’ and for those considered important for food security and livelihoods. With 900 million people working in agriculture, and a growing income gap between cities and the countryside, China has emphasised the need to shield key products from cuts.

”China has set the pace in promoting the liberalisation of trade among WTO Members,” argues Tian. “There is therefore relatively little room left for further substantive concessions on special products that are important for food security, farmers’ livelihoods and rural development.”

China will also benefit from clauses permitting countries that have recently joined the WTO to cut tariffs by less - a key Chinese demand after gruelling accession negotiations slashed tariffs on 95 percent of the country’s products to below 30 percent.

As urban incomes in China are over three times higher on average than those in rural areas, the government has recently shifted from taxing agriculture to supporting it. The new draft text could constrain planned spending on cotton, and, if prices are high, on wheat. However, many other payments are likely to be exempt from cuts on the basis that they cause no more than minimal trade distortion.

”WTO regulations will be important factors affecting China’s agricultural policy-making,” the author notes.

The draft text could also reduce barriers to China’s exports - primarily to developed countries, where average tariffs facing Chinese exports would be cut by about one third, from 16 percent to 11 percent. Continued EU and Japanese protection for rice - one of China’s main exports - would probably mean little market access expansion for this product, although tariffs on other key exports such as vegetables could be cut by around one third.

The US has insisted that large developing countries such as China offer more market access for their exports before a draft WTO accord can be signed. Developing countries have argued that this would affect their food security and the livelihoods of small farmers, especially while developed countries maintain extensive trade-distorting subsidies for their domestic producers.

Is Doha Conclusion possible in 2010?

2009-07-22T03:12:00.001-07:00

Heads of state from 13 major world economies vowed last week “to seek an ambitious and balanced conclusion to the Doha Development Round in 2010,” just as trade officials at WTO headquarters in Geneva prepared to ramp up their negotiations before the organisation’s annual summer break.

But such high-level promises have been made before. The recent statement from the G8+G5 countries has been preceded by dozens of political vows for a quick end to the global trade talks, which were launched in 2001 to help developing countries prosper through trade. But after nearly eight years of slow progress and missed deadlines in the negotiations, the ongoing economic slump has made a world trade deal - a deal that the WTO’s director-general says would save the global economy more than US$ 130 billion each year - appear more pressing than ever.

The call for a push to conclude the talks emerged from a summit of the G8 countries - Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States - that was held in L’Aquila, Italy last week. The G8 were joined by the G5 major emerging economies - Brazil, China, India, Mexico and South Africa - for talks on the second day of the three-day summit. The declaration was signed by both groups.

But the Doha talks will not have to start from scratch. The leaders said that the negotiations should build “on the progress already made, including with regard to modalities” - the WTO’s term for the framework deals on tariff and subsidy cuts - that officials have been negotiating over the past several years. But the statement also stressed the need to enhance “the transparency and understanding of the negotiating results to date,” a nod to recent calls from Washington, which has insisted that its exporters need greater clarity on how they might be affected by a deal.

The heads of state also called on their trade ministers “to explore immediately all possible avenues for direct engagement within the WTO” and to meet in advance of the next G20 summit, which will be held in the industrial city of Pittsburgh in the US in September. India has already begun preparations to host such a meeting; the gathering is set to take place in New Delhi on 3 and 4 September (see Bridges Weekly, 8 July

Cortsey-Bridges, By Vidyanand Acharya

G 8 to wrap Doha Round?

2009-07-10T20:44:00.000-07:00

Leaders from the G8 group of major world economies will commit to wrapping up the WTO’s Doha Round of trade talks as soon as possible, according to a draft communiqué that was seen by Reuters. Absent from that statement, however, is a timeline for the completion of the talks, a point that is being strongly pushed by the G5 group of major developing economies.

But a second draft statement that has been prepared for the G8 plus the G5 does include such a timeframe - it calls for the global trade talks to be concluded before the end of next year.

”Leaders commit to reaching an ambitious and balanced conclusion to the Doha round in 2010, consistent with its mandate, building on progress already made on modalities,” a draft of the G8+G5 statement said, Reuters reported.

The discrepancies between the two drafts are expected to be ironed out in joint talks between the two groups on Thursday.

An announcement on Doha is expected to be made official before the end of the three-day G8 summit that kicked off in L’Aquila, Italy on Wednesday. The G8 countries consist of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.

The G5 countries - emerging economies Brazil, China, Egypt, India, Mexico and South Africa - were slated to hold parallel talks on Wednesday and will join the G8 leaders for meetings on Thursday.

WTO Director-General Pascal Lamy, who is attending the summit, shied away from assessing the prospects for concluding a global trade deal, which he has long championed as a means to bolster the global economy and forestall a substantial increase in protectionist measures amid the ongoing slump.

”I probably will be able to give you a clearer answer to this question on Friday after the G8 and the G8-plus-5 discussions on trade,” Lamy said on Tuesday, Reuters reported.

Further progress toward a Doha deal could come in early September, when India is planning to host a two-day conference of trade ministers in New Delhi. The ‘mini-ministerial’ will bring together top trade envoys from a select group of 25 to 30 countries, according to a trade official with knowledge of the meeting. While the meeting’s agenda has yet to be finalised, the focus of the gathering will be the Doha Round of trade talks, which have struggled along in fits and starts for nearly eight years without reaching a conclusion. The meeting in New Delhi, set for 3 and 4 September, is intended to build momentum on Doha ahead of a summit of the G20 heads of state to be hosted by the US later that month.

Also on the agenda at this week’s summit in L’Aquila is a proposal to help the world’s hungry.

”We hope to approve an initiative for food security in the world. We will approve about $10-15 billion for all the people in the world who are suffering from hunger,” Italian premier Silvio Berlusconi told journalists on Tuesday, Reuters reported.

Washington is prepared to pledge US$3-4 billion for the plan, and has called on other countries to match that commitment, according to a draft declaration that was seen by Reuters.

NGOs have called on the leaders to prioritise agriculture and food policies that improve the position of small producers and women in their declaration on the matter.

ICTSD reporting; “G8 plus G5 agree to conclude Doha in 2010 - draft,” REUTERS, 8 July 2009; “Berlusconi hopes G-8 to pledge $10-15 billion for food security,” 7 July 2009.

Leaders from the G8 group of major world economies will commit to wrapping up the WTO’s Doha Round of trade talks as soon as possible, according to a draft communiqué that was seen by Reuters. A second draft statement prepared for the G8 plus the G5 group of major developing economies calls for the global trade talks to be concluded before the end of next year.

The announcements are expected to be made official before the end of the three-day G8 summit that kicked off in L’Aquila, Italy on Wednesday. The G8 countries consist of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.

The G5 countries - emerging economies Brazil, China, Egypt, India, Mexico and South Africa - were slated to hold parallel talks on Wednesday and will join the G8 leaders for meetings on Thursday.

”I probably will be able to give you a clearer answer to this question on Friday after the G8 and the G8-plus-5 discussions on trade,” Lamy said on Tuesday, Reuters reported.

Also on the agenda at this week’s summit in L’Aquila is a proposal to help the world’s hungry.

Washington is prepared to pledge US$3-4 billion for the plan, and has called on other countries to match that commitment, according to a draft declaration that was seen by Reuters.

NGOs have called on the leaders to prioritise agriculture and food policies that improve the position of small producers and women in their declaration on the matter.

Courtsey- ICTSD

HOLI

2009-03-10T04:02:00.000-07:00

Wish You a Happy and Colourful HOLI

Vidyanand Acharya

POPULATION ISSUES KEY TO FIGHTING POVERTY

2009-02-05T23:31:00.000-08:00

POPULATION ISSUES KEY TO FIGHTING POVERTY, OTHER ILLS IN ASIA, UN-BACKED FORUM AGREES

Population policy, reproductive health and gender equality remain central to reducing poverty in the Asia and the Pacific region despite recent economic growth, specialists agreed at a conference convened by United Nations agencies in Bangkok this week.

In the three-day review of progress since the Fifth Asian and Pacific Population Conference (APPC) held in Bangkok in 2002, experts concluded that its plan of Action on Population and Poverty is needed more than ever in light of the global economic crisis and its likely impact on the poor.

Hundreds of millions have been left behind despite the progress made in the fight against poverty over the past few decades, with a quarter of a million women, mostly poor, dying each year in the region as a result of failing maternal health services.

Without swift action, there is little hope of attaining the Millennium Development Goals

Posted by Vidyanand Acharya

Services Sector in a Globalized Economy

2009-02-05T23:25:00.001-08:00

Opening Markets for Trade in Services highlights the key challenges and opportunities for the services sector in a globalized economy. This new book — co-published by the World Trade Organization and Cambridge University Press — focuses on the unilateral action taken by countries across the world as well as the bilateral and multilateral liberalization of trade in services. It explores the challenges, motivations and achievements of the growing number of preferential trade agreements (PTAs) between countries and of the global trade negotiations within the WTO.

The publication includes studies on a wide range of sectors, such as air transport, distribution, audiovisual services, postal services, energy, finance and telecommunications, and on a variety of themes, such as cross-border trade, government procurement and the movement of natural persons. Chapters covering each of these sectors/themes review market and regulatory developments, discuss key negotiating issues and assess the liberalization already achieved by PTAs and WTO negotiations. The book also looks ahead to future opportunities and challenges.
The book also includes case studies on countries as diverse as Australia, Chile, Colombia, Costa Rica, Dominican Republic, India, Singapore, South Africa, Thailand and Uruguay. These case studies aim to shed light on the elements that have shaped bilateral and multilateral negotiations on services. What are the reasons for negotiating bilateral agreements? Why do negotiations lead to such different results? What role is played by national interests?
Contributors to this volume include WTO staff, negotiators, academics and experts from other international organizations. A foreword has been provided by the WTO's Director-General, Pascal Lamy. (courtsy-WTO)

Posted by Vidyanand Acharya

DEAL STILL POSSIBLE THIS YEAR?

2008-09-09T02:56:00.000-07:00

WTO Agriculture talk to resume

The month following the failure of world trade talks, trade ministers and world leaders have sought to ensure that the significant progress that was made before negotiations fell apart will not be lost in the aftermath of the collapse. Whether - or to what extent - that aim can be realised is far from certain.

For the immediate future, at least, a schedule has been set: senior-level talks (that is, below the ministerial level) on agriculture will resume at WTO headquarters in Geneva the week starting of 14 September. Key to those discussions will no doubt be the Special Safeguard Mechanism (SSM), which was at least the proximate trigger of the failure of the talks.

In the weeks following the collapse, WTO Director-General Pascal Lamy paid visits to both the Indian and US trade ministers - the primary players, along with the head Chinese trade official, in the SSM deadlock. In a speech to industry representatives in India, Lamy reportedly said that he was urging the two sides to "try to understand each other a bit more, at the political level, because this is a political discussion that has to translate into a technical discussion, not the other way around."

The SSM is a tool that would allow developing countries to raise tariffs temporarily when import volumes increase or prices fall suddenly. One of the main sticking points in the July talks was the question of whether, and by how much, developing countries would be allowed to raise tariffs beyond current 'bound' levels in order to protect domestic producers. India and China fought for more flexible terms for the use of the SSM, while the US was firm in its demands for predictable market access for its farm products.

Many involved in the talks expressed surprise that the SSM, a seemingly minor and technical matter, ended up playing such a critical role in the collapse. "It became a huge issue because of the politics on both sides," Lamy said in an interview with Reuters. "I wouldn't say if we solve the SSM, the rest will fall in place. But what I'm certain is if we don't solve this, the rest will not fall into place," he said.

Some trade observers now speculate that the US refused to yield on the SSM in order to avoid a discussion of its cotton subsidies, which the WTO has repeatedly ruled to be in violation of the US' word trade commitments. After the SSM, cotton was the next item on the negotiators' agenda.

"I know there are a lot of conspiracy theories running on this...To be frank, I don't suspect the US broke on the SSM not to have cotton on the table. They know cotton has to be there," Lamy said in an interview with Reuters.

Looking ahead

Whether progress can be made on the SSM and other outstanding issues remains to be seen. On his recent trip to India, Lamy met with trade minister Kamal Nath, who reportedly expressed his support for the resumption of high-level talks in Geneva. But speaking to reporters on the sidelines of a meeting in Singapore a week later, Nath made it clear that he thought that other players should take on more responsibility: the "key to the lock of the [WTO] deadlock is not in our hands. The key is with the developed countries," he said. Nath is expected to meet with EU Trade Commissioner Peter Mandelson on 12 September.

Less than two weeks after his visit to New Dehli, Lamy paid a call on US Trade Representative Susan Schwab, who also expressed her support for continued talks, telling reporters that a world trade deal was "still conceivable" this year. She cautioned, however, that whether an agreement can be reached "depends largely on the seriousness of purpose, commitment, flexibility of the key players, and grandstanding isn't going to do it."

Schwab called for senior officials to re-engage and work to establish a framework for further action at the ministerial level. "Our sense is we need to have a representative group of countries that are ready, willing and able to engage in good faith to try to find an ambitious outcome to this round," she said.

The US position has been somewhat complicated by opposition from its domestic manufacturing lobby, which disagrees with some language in a report on the status of the industrial goods talks put out by committee chair Don Stephenson in mid-August. The National Association of Manufacturers (NAM), the largest industrial trade group in the US, has argued that the report does not go into enough detail on the offers Members put forward on sectoral liberalisation initiatives, provisions that would rapidly cut tariffs to a low level, even zero, on specific sectors, such as bicycle parts or forest products.

In a statement released while Lamy was in Washington, NAM president John Engler made his organisation's demands clear: "balance for American manufacturers is only possible if the big emerging manufacturers of Brazil, China, and India are part of sector-specific agreements that would be aimed at eliminating tariffs in significant industrial sectors. These countries must open their markets."

While the US and Indian ministers did not go so far as to call for ministers to re-engage in negotiations immediately, Brazil and Australia were explicit in their calls for ministers to return to Geneva as soon as possible to try to hammer out the final terms of a deal. "I'm still hopeful that we can still make an effort, but it has to be very fast," Brazilian foreign minister Celso Amorim told reporters on a visit to Australia at the end of August. "Based on past experience, there are two possibilities. We either do it now, in September, or we will have to wait for a long time," he said.

Many people involved in the talks consider the US presidential election in early November to be a final deadline for the agreement of a world trade deal in the near future.

In a speech to the Australian parliament on 26 August, Trade Minister Simon Crean expressed similar optimism on the prospects of deal. "The amount of distance that we covered in July and the relatively short distance left to travel does offer hope that WTO members can get back to the negotiating table soon," Crean said. "With further and sufficient political will brought to the task, we have a real chance to move forward."

Meanwhile, trade officials from the G-33 group of developing countries, which lobbied hard on the SSM during the July talks, sought to construct a potential compromise on the sidelines of a recent meeting of the Association of Southeast Asian Nations (ASEAN) in Singapore.

"We're working hard to come up with a compromise which we think is doable," Indonesian Trade Minister Mari Pangestu told reporters at the meeting. She said she hoped that ministers would return to Geneva to continue discussions in September, stressing the importance of acting quickly. "When you have an economic slowdown as is being predicted in the US as well as Europe and Japan, then this is often the time when you have unilateral protectionism. We certainly would be very concerned about that," she said. (ICTSD)

World Trade Report 2008

2008-08-06T05:25:00.000-07:00

The WTO launches World Trade Report 2008: Trade in a Globalizing World

Trade has allowed nations to benefit from specialization and economies of scale to produce more efficiently। It has raised productivity, supported the spread of knowledge and new technologies, and enriched the range of choices available to consumers। But deeper integration into the world economy has not always proved popular, nor have the benefits of trade and globalization necessarily reached all sections of society। As a consequence, trade scepticism is on the rise in certain quarters.This year’s World Trade Report, entitled “Trade in a Globalizing World”, is devoted to an examination of the gains from international trade and the challenges arising from higher levels of integration. Over many years, governments in most countries have increasingly opened their economies to international trade, whether through multilateral trade negotiations, increased regional cooperation or as part of domestic reform programmes. “Few would contest the benefits that globalization and trade have brought in terms of greater prosperity for hundreds of millions, as well as greater stability among nations. But many individuals in different societies across the world have shared little or not all in the benefits. The challenges facing governments in managing globalization are formidable, and success in spreading prosperity more widely requires a strong common purpose” says WTO Director-General Pascal Lamy in an introduction to the Report.The Report explores a range of interlinking questions, starting with a consideration of what constitutes globalization, what drives it, the benefits it brings, the challenges it poses and what role trade plays in this world of ever-growing interdependency. We ask why some countries have managed to take advantage of falling trade costs and greater policy-driven trading opportunities while others have remained largely outside international commercial relations. We also consider who the winners and losers are from trade in society and what complementary action policy-makers need to take in order to secure the benefits of trade for society at large. In examining these complex and multi-faceted questions, the Report reviews both the theoretical trade literature and empirical evidence that can help to give answers to these questions.

The causes and consequences of globalization
The Report notes that the key economic characteristic of globalization is deeper integration of product, capital and labour markets. Globalization is driven by technological innovation, political change, and economic policy choices, and this process of integration has caused significant structural changes in parts of the world economy. The increased fusion of product, capital and labour markets internationally has resulted in a more efficient allocation of economic resources. Economic integration has resulted in higher levels of current output and prospects of higher future output. Capital can flow to countries which need it the most for economic growth and development. Allowing workers to move across national borders can alleviate skill shortages in receiving countries or respond to the needs in rapidly ageing societies while alleviating unemployment or under-employment in countries providing these workers. Today’s industrialized economies were the early beneficiaries of globalization in the immediate post-war period, and more recently newly industrializing economies have been among the major winners from increasing economic integration. Trade has consistently grown faster than output in the world economy, and manufactures have accounted for an expanding share of total trade. Traded services have also grown significantly, although their importance is still poorly understood as a consequence of limited data. A major evolving feature of production is the fragmentation of production processes across multiple jurisdictions. International capital flows have played a vital role in the internationalization of production, and more generally in fostering globalization.

Pascal Lamy to focus on Agri and NAMA

2008-07-03T05:21:00.000-07:00

TRADE NEGOTIATIONS COMMITTEE
Lamy urges “maximum effort” for July meeting of ministers
Director-General Pascal Lamy, at an informal meeting of the Trade Negotiations Committee on 27 June 2008, urged “maximum effort from everyone over the next weeks” to ensure a productive meeting of a number of ministers scheduled for the week of 21 July 2008. He said the immediate challenge is to make progress that “will provide a basis for improved texts in Agriculture and NAMA”.
Exerpts of speech
The focus now is, as I said earlier, to create convergence on Agriculture and NAMA so that the Chairs can prepare texts for ministerial consideration, either with areas where full convergence has been achieved, or with straight choices for Ministers. This means a very intensive phase of work in these areas which should culminate in the circulation of the revised texts. Obviously once the texts are out, you and your capitals will need some time to consider them. There will also be an opportunity for the full membership to react to them before we move to the final intensive phase of preparing issues for consideration by Ministers.
In particular, I believe that it will be important for me to continue with my process of consultations, which will increase in intensity and move from being more of an information exchange, towards focusing more on the substance of the topics, to adequately prepare for a ministerial discussion. I see these horizontal consultations with ambassadors and Senior Officials as key to proper preparations for a successful outcome.
Now, the timing. We are now at the end of June, so the end of July is in one month. We need a timeline to manage expectations if we are to do the deal in July, and in my view, we have to plan on a number of Ministers meeting here in the week starting 21 July. I would recommend that they be here a couple of days before in order to warm up, have bilaterals and prepare the ground.
In line with the importance we all attach to transparency and inclusiveness, the process that week will follow the pattern that has worked in the past — concentric circles of consultations with constant communication among them. This means that there will be informal meetings at the level of Head of Delegation, which will serve both to guarantee transparency and to help build consensus. I will supplement them with continuing dialogue with the regional and other groups as well as with the green room. Time will also be set aside for Group meetings and consultations.
27 June 2008

Highlights of China

2008-07-03T04:44:00.000-07:00

OVERVIEW
China's economic growth has moderated to a more sustainable pace.
Headline inflation is receding even as non-food price pressures emerge.
Amidst weaker and uncertain global prospects, China's growth will be supported by strong international competitiveness and a robust domestic economy.
On current growth forecasts, there is no need to ease the overall macroeconomic stance, although global uncertainty calls for vigilance and flexibility.
Reducing China's very large external surpluses remains a key policy challenge.
RECENT ECONOMIC DEVELOPMENTS
In line with slower growth elsewhere, China's GDP growth moderated so far in 2008.
The moderation of growth in 2008 in part reflects less buoyant investment.
External trade volumes have decelerated, but sharp increases in import prices are inflating import values.
The large decline in the terms of trade reduced China's trade surplus from a year ago in the first five months.
More detailed external trade data seems consistent with a slowing global economy and a still robust domestic economy.
High food price increases pushed up overall consumer inflation, but the worst of the food price hikes may be over.
Surges in other commodity prices had until recently had less impact on China's consumer prices.
Higher prices of food, oil, and industrial raw commodities have started to spill over into some other prices, although spill-over to core consumer prices has remained limited.
Foreign reserves accumulation breaks new records.
The balance of payment surpluses complicate monetary policy, but money growth remains under control.
Motivated by the need to rebalance the economy and to dampen price pressures, China's RMB has continued its gradual exchange rate appreciation.

Inflation and common man

2008-04-28T20:43:00.000-07:00

MOUNTING INFLATION AND THE COMMON MAN
Ruddar Datt

The wholesale price index (WPI) touched the high level of 226.0 by end March 2008 as against 210.4 end March 2007 (1993-94=100) signaling 7.4% rise in WPI during the year, highest witnessed during the last ten years. It crossed the limit of 5 percent comfort zone specified by RBI. Consequently, UPA government was upset due to the inflationary rise of prices.
Critics, however, raised issues about the flawed measurement of WPI. Parliamentary Standing Committee on Finance headed by BJP leader Ananth Kumar recommended revised price indices, but the Government has shown inordinate delay in adopting its recommendations. Similarly, in 2005, Taskforce headed by Dr. Abhijit Sen, member, Planning Commission recommended updating the base year, instead of continuing 1993-94 as the base year; increasing the number of commodities and making changes in weightage given to different commodities. Such changes would give a higher rate of inflation and thus, the Government is holding back its revision of WPI. The Committee had recommended 2004-05 as the base year.
However, there is a gap between the perception of the Government and that of ‘aam admi’ (Common man) who is experiencing a much higher retail inflation. The Government, was experiencing a sharp rise in prices of foodgrains, especially rice and wheat and pulses and besides that of vegetables and fruits. The Common man was experiencing double-digit inflation and according to one estimate, about another 10 crore people have been pushed below the poverty line due to the impact of recent price inflation.
The Government tried to take shelter behind the plea that inflation in India was part of global inflation. During the short span of 8 months between August 2007 and March 2008, global price of coconut oil has risen by 61%, groundnut oil by 71%, maize by 54% and Thai rice by 72%, US wheat by 74%, bananas by 76% and sugar by 35%. According to World Bank data, between August 2007 and Mrch 2008, low and middle income countries have witnessed 73% rise in the prices of agricultural products, 88% in foods; 71% in fats and oils and 105% in grains. But all this was cold comfort for the poor people and the plea of the Government did not cut much ice.
To douse the anger of the common man, Government adopted ‘Fire Fighting Approach’ to tackle inflation. The following measures were announced:
*Scrapped import duties on edible oils
*Banned export of basmati rice
*Reduced duty on maize imports from 15% to zero
*Extended ban on export of pulses for one year
*Banned export of edible oils
*Withdrew export incentives in steel and cement.
The principal objective of the Government was to make available supply of foodgrains, pulses, edible oils for domestic use and to facilitate the import of these commodities to reduce the impact of supply constraint. But these measures did not produce the desired effect.
Another problem is the wide gap in the prices of food items in the wholesale mandis as revealed by the figures of Agricultural Produce Marketing Committee and those charged by retailers. The Government should have set up distribution centres or used the PDS shops after making bulk purchases from wholesale markets and thus provided a competitive and countervailing structure to provide relief to the consumers which it has failed to do. Such a firefighting measure would have mitigated the hardship for the consumers and tamed the middlemen who are making huge profits taking advantage of the prevailing scarcity.
Failure to improve growth rate in agriculture
Basically, the present inflation, which is driven by the prices of foodgrains, pulses, vegetables and fruits is not a demand-driven inflation, but is the result of failure government policy on the agricultural front to raise output. It is the supply constraint that has fuelled inflation.
During the last 4 years of UPA government (2004-05 to 2007-08), production of foodgrains, especially rice, wheat, pulses, potato has shown stagnation, whereas the population has been growing at the rate of 1.5% per annum and reached a level of 1,130 million. Overwhelmed by the GDP growth rates during 2004-05 to 2006-07, driven by high growth in industry and services, the Government neglected agriculture. This is evidenced by the fact that public investment in agriculture, especially irrigation, stagnated to 0.4% of GDP during the 4-year period (2002-03 to 2005-06).
There is a dire need to raise productivity in states where yield levels are low in agriculture. For the extension of seed-fertilizer technology to secure better yields, irrigation is a basic necessity. But facts stare us in the face that during 2000-01 to 2005-06, there has been very little increase in irrigated area, specially in two major crops, viz., rice and wheat.
As data reveals that irrigated area under wheat ranged between 23 to 24 million hectares and that under rice oscillated within the narrow range of 24-25 million hectares and that of pulse ranged between 3 to 3.7 million hectares during 2000-01 and 2005-06. This was the result of a fall in public sector investment during the post-reform period. There is a concomitant need for better utilization of water, whether made available due to rains or melting of snow. This requires a major compaign for water-shed development so that the utilization of water is significantly stepped up. This is specially important for regions which have sufficient rainfall. The two measures extension of irrigation and watershed development can trigger a second green revolution in poor and backward states, and also save soil from the dangerous effects of water logging and soil depletion. Both will require substantial step up of public sector investment. Government seems to have realized its mistake and is making efforts to raise the level of investment in agriculture.
Minimum Support Price for Farmers
Another problem which has affected agriculture is the Minimum Support (MSP) for farmers. Since the cost of production in agriculture is increasing, there is a need to increase MSP for farmers. Till 2007-08 it was Rs. 850 per quintal in case of wheat and Rs. 745 per quintal for rice. It was alleged that the Government is paying more for imports in the international market, but is not paying a higher MSP to its own farmers so that it can have more foodgrains for its buffer stocks. Only recently, the Government has revised MSP for wheat to Rs. 1,000 per quintal, but has not done so for rice so far.
Fuels, Cement and Steel
Besides foodgrains, other commodities which are exercising an upward pressure on WPI, are fuels, cement and steel. The price of petrol in the international market has reached an unprecedented level of $ 114 per barrel. Via rise in transport cost, it pushes up the price level. But this is an exogenous factor on which the government has no control. Recently, there is a diversion of certain foodgrains towards the manufacture of bio-fuels. This has resulted in pushing up international prices of foodgrains by over 80 percent, thus raising the cost of imported foodgrains. In the domestic economy as well, the diversion of foodgrains to bio-fuels is aggravating the supply constraint. To mitigate the situation, the Government should impose severe restrictions on use of foodgrains for bio-fuels as a temporary measure till such period that foodgrains output growth is accelerated by the measures initiated to reach the target of agricultural growth by 4% per annum.
In case of controlling the prices of steel and cement, the Government has been dilly-dallying action against cartelization in these two industries. Experience the world over reveals that cartels are not tamed by issuing advisories. The tendency to exploit the market is so strong that industrial magnates refuse to listen. Grilled by the opposition, Finance Minister P. Chidambaram stated in the Lok Sabha on April 16, 2008: “I have no hesitation in repeating that cement manufacturers are behaving like a cartel.. There are signs that even steel manufactures are behaving like a cartel… If they do not understand the gravity of the situation and behave responsibly, Government will not hesitate to take tough administrative measures.” It is really strange that when the country has created Competitive Commission of India (CCI) in place of MRTPC, the Government should have asked the CCI to initiate action much earlier. It is bad policy first to allow much damage to be done, and take very belated action.
These appears to be divergence of views within the Government. As against the Finance Minister’s strong view warning tough measures against cartel-like behaviour by steel and cement manufacturers, the Minister of State for Steel Mr. Jitin Prasad in a written reply to a query in the Lok Sabha stated: “the steel prices are determined by market forces, such as demand and supply and international prices… However, no evidence on cartelization by steel companies in determining steel prices has been brought to the notice of the ministry of steel.” With such divergent views within the Government, chances of breaking cartels appear to be very poor. The Government following USA and European Union should have used ‘the leniency principle” – an application of the ‘approver principle’ in the economic domain to break cartels. There does not appear a strong resolve by the government to do it. Even if the CCI initiates action suo motto, it will not be effective in view of confusion within the Government.
Ban on Future Trading in essential items
The alliance partners in Congress-led coalition Government have been voicing strong views on future trading in essential commodities. CPM leader Sitaram Yechury pleaded for imposing a ban on future trading of 25 commodities, since the left maintains that large scale speculation in futures trading in grain has been the main factor responsible for rises of prices. To quote Mr. Yechury: “The only way to insulate ourselves from international speculation is to reverse the process of liberalization in commodity trade and prohibit future trading in essential commodities.” But Mr. Sharad Pawar, Minister for agriculture, food and civil supplies is not convinced about the correlation between future trading and increase in essential commodity prices. However, he conceded that ban on future trading in rice did help to stabilize prices, in urad and tur, it did not happen. The Minister would like to wait for the Abhijit Sen Committee to submit its report on the subject. It may be noted that in 2007, under pressure from its allies, the government had banned future trading in wheat, rice, urad and tur.
Abhijit Sen Committee has decided to take an escapist route and not provide an answer to the question of banning future trading. Dr. Abhijit Sen mentioned: “the evidence we have found is not unambiguous. Based on data that we have analysed, it is neither possible to say that future trading in agricultural commodities leads to price rise in the spot market, nor is it possible to say that there is no impact.” (Business Line, April 24, 2008) The Committee could have on balance, drawn some conclusion, but preferred to run with the hare and hunt with the hound.
The terms of reference of the Committee mentioned: “To study the impact of future trading on commodity prices and suggest measures to minimize such impact.” There is enough scope in this term of reference to express an opinion on the ban on future trading of essential commodities as a measure of minimizing the impact of future trading on commodity prices.
It is really strange that Ministers within the government voice divergent views on the question of controlling price rise in essential commodities. To be effective, the government should bring about a clear policy to control inflation after due deliberation within the cabinet. It should state the short-term measures to alleviate the suffering of the common man and also state the long term measures to increase supplies of essential commodities, more especially foodgrains. Among the short term measures to augment supply, the government announced the import of one million tonne of edible oils and subsidize it at the rate of Rs. 15 a litre for sale through the public distribution system. Also 15 lakh tonnes of pulses are being imported to mitigate the situation.
To sum up: it is vitally necessary to build a market information system which should reflect the changes in the prices of essential commodities accounting for 60 to 70 percent of the expenditure of low income groups. For this purpose, revision of price indices is essential after considering the recommendations of various committees. Secondly, there is a need to take timely action so that the hardship of the common man by way of erosion of his income with sharp increase in the prices of essential commodities, can be reduced. Thirdly, the government should give top priority to the development of agriculture. Fourthly, the government must take measures to reduce the use of multi-crop land for non-agricultural purposes, like Special Economic Zones. Last, but not the least, efforts should be made to undertake a second green revolution, with a special focus on agriculturally backward states. The country should follow a policy of self-sufficiency in food and essential commodities. That way lies hope for the common man and progress towards inclusive growth. In this connection Mr. Prashant Goel concludes: “The sustainable way out of the current mess is to increase food production and productivity and this cannot come without right prices. If the farmer does not get remunerative price for his produce, even the loan waiver package may not deliver. Given our large arable land and favourable climate, and rising global food prices, a proper policy framework could ensure that India becomes world’s food bowl.” (Food Inflation offers an opportunity, Economic Times, 18th April 2008).

2008-04-11T04:09:00.000-07:00

Dismal Experience of NREGA: Lessons for future

-Ruddar Datt-

The National Rural Employment Guarantee Act came into force on February 2, 2006 and was implemented in 200 of India’s most backward districts. The Ministry of Rural Development described it as a revolutionary measure to transform the rural economy. In 2007, it was extended to another 130 districts and with effect from April 1, 2008, the Act is to cover all districts.
For its progress and the weaknesses during its implementation, two kinds of reviews are available – (i) the implementation of NREGA has been reviewed by the Controller & Asuditor General (2007) and (ii) Certain NGOs, especially the National Consortium of Civil Society Organisations (CSOs), have also undertaken several reviews.
The CAG Report underlines the fact that the guidelines indicated in the NREGA have not been followed. The Report specifically mentions lack of provision of professional staff to implement the scheme.
(1) Lack of professional staff – Every State government was required to appoint in each block, a full time Programme officer, exclusively responsible for the implementation of NREGA. The state Government, however, directed Block Development Officers (BDOs) to take “Additional charge” to implement NREGA. CAG report finds that 19 states had not appointed these officers in 70 percent of the blocks surveyed. The point which needs to be highlighted in that NREGA is not a programme that can work of on “additional charge”
Besides this, one employment guarantee assistant (ESA) was to be appointed in each gram panchayat. According to CAG report, 52% of the 513 gram panchayats surveyed had not appointed ESA.
In addition, the state government was to create panels of accredited engineers at the district and block level. They were expected to undertake costing of works to be undertaken, to make measurements of the works done to release payments to labour as stipulated in NREGA. The CAG found that the panels were missing in 20 states it surveyed.
As a consequence of shortage of staff, there were delays in execution of works and payment of wages on account of lack of measurements; delays in wages payments of two to three months were noticed. Consequently, labour households preferred to undertake other jobs, even if the payments were relatively low, but prompt.
All this resulted in a situation where out of 20.1 million households employed in NREGA, only 2.2 million (i.e. 10.5%) received the full 100 days employment and wages as promised by the Act. The average employment per household was 43 days in 2006-07 and 35 days in 2007-08, as revealed by the Ministry of Rural Development.
(2) Lack of proper project planning – NREGA specifically mentions the creation of durable productive assets, in the form of roads, improving rural infrastructure, drought-proofing, watershed development, water conservation etc. The survey found that the focus is on rural connectivity and wells. Other meaningful projects for rural transformation were conspicuous by their absence.
(3) Bureaucratic resistance to NREGA – CSO found that whereas Panchayati Raj Institutions leaders are keen to implement NREGA, secretaries and executives officers of gram panchayats were seen to be working overtime to convince these leaders of the “Perils” of getting entangled in NREGA. On account of the detailed procedures and rules under NREGA, an impression has been created that it is much more difficult to make money under NREGA. Given relatively few chances of corruption, it is better to go in for other programmes that are relatively less strict. In Rajnandgaon district, Chhattisgarh, according to NGOs Reports “Sarpanches fear that getting work done under NREGA is tantamount to going to jail and that the unemployment allowance will have to be given out of the sarpanch’s pocket”.
(4) Lack of transparency and absence of social audit – Although NREGA has provisions for transparency in the process of implementation, in actual practice, data on work done and payments made for various kinds of jobs is kept as a closely guarded secret. As a consequence, there is a mockery of social audit. Even some of the fake NGOs are prepared to verify social audit by charging a ridiculously low fee per panchayat. As a consequence, the most radical provisions of NREGA are violated with impunity.
(5) Inappropriate Rates of Payment – NREGA stipulates that projects shall not be implemented by employment of contractors, because contractors do not pay labour statuary minimum wage and get most of the work done by machines. Muster rolls are faked, labour is underpaid, bogus workers are shown as paid workers while actual work is done by machines. The schedule of rates is not observed in practice. Studies by NGOs reveal that employment guarantee assistants (EGAs) employed by panchayats themselves work as contractors. Besides this, in Chattisgarh, the Study of 50 percent of NREGA works supposed to be implemented by rural labourers and other staff are invariably found using machinery.
CAG report (2007) has brought out glaring deficiencies of NREGA in the following words:
“The main deficiency was the lack of adequate administrative and technical manpower at the block and gram panchayat level. The lack of manpower adversely affected the preparation of plans, scrutiny, approval, monitoring and measurement of works, and maintenance of stipulated records at the block and gram panchayat level. Besides affecting the implementation of the scheme and provision of employment, this has also impacted adversely on transparency, and made it difficult to verify the provision of the legal guarantee of 100 days of employment on demand. Planning was inadequate and delayed, which resulted in poor progress of works. Systems for financial management and tracking were deficient, with numerous instances of diversion/ misutilisation, and delay in transfer of state share. … Maintenance of records at the block and gram panchayat level was extremely poor, and the status of monitoring, evaluation and social audit was also not up to the mark.” (CAG (2007), Draft performance audit of implementation of NREGA, p. 95)
Besides these deficiencies which require remedial action, the NGOs also found in their studies, wherever social mobilization of rural workers was successful, public pressure led to improved implementation of the scheme, reduction in the use of contractors and machines, reduced corruption in bureaucracy and also resulted in better payment of minimum wages. Obviously, continuous mobilization of rural poor is a basic necessity for securing the intended benefits of NREGA.
A study by the Centre for Environment and Food Security (CEFS) about the progress of the programme in Orissa revealed that the Government had claimed that out of a budgetary provision of Rs. 890 crores for 2006-07, the state government was able to utilize Rs. 733 crores (i.e. 82.4). As a result 57 days of wage employment was provided during the year. Not a single household was denied wage employment in 19 NREGs districts. The government also claimed that 1.54 lakh families in the State completed 100 days of wage employ during 2006-07.
However, the research team of CEFS revealed the hollowness of these claims. Out of Rs. 733 crores spent under NREGS, more than Rs. 500 crores was unaccounted for, probably siphoned off and misappropriated by government officials. The research team also found that not a single family in the 100 sample villages was able to secure 100 days of wage employment. Very few families got 20-40 days, the rest mostly between 5-20 days, if at all. Fake job cards and fabricated muster rolls exaggerated the benefits of the scheme. The social audit was non-existent. Thus, the ground reality was highly distressing despite tall claims of the government of the success about NREGS implementation.
At the same time, it also necessary to take the following measures to strengthen the support structure of the NREGA.
(i) Appointing full-time professionals for implementing NREGA at all levels which is vitally necessary to implement the scheme.
(ii) Provision of full-time employment guarantee assistants at the panchayat level to make rural people aware of the benefits of the scheme and induce them to take advantage of the scheme.
(iii) Specific efforts should be made to reduce the time gap between work done and payment received by rural lobourers in NREGA.
(iv) To use Management Information System (MIS) and improve the system of monitoring of the scheme as also to check leakages and misappropriation of funds.
(v) To undertake a massive programme of generating awareness about the scheme with the help of information technology.
(vi) To revise the schedule of rates periodically so that changes in statutory minimum rates of wages are made consistent with their revision.
(vii) To prepare a shelf of projects at the district levels with the help of programme officers and other technical staff as well as Panchayati Raj Institution leaders so that projects cleared at the district level can be implemented at the grassroots level.
(viii) To make a study of various states with a view to learning from their experience of implementing NREGA and thus develop a spirit of competition among the states to take advantage of the scheme.
(ix) NREGA payments should be made through post-office accounts. Andhra Pradesh Government has made use of this method. The state had 6 lakh accounts till 2005. By 2008, the number of accounts jumped to 70 lakhs and authorities are being forced to strengthen the postal infrastructure so that it can handle the new responsibilities. This can also limit to a large extent fake muster rolls and corruption in the scheme.
(x) NREGA is a comprehensive employment programme. This implies that other employment generation programmes should be merged with it so that the alternative of shifting to another attractive programme from the point of view of misappropriating funds is closed. This will also help to rationalise various employment generation programmes.
The report card of the UPA government towards the implementation of NREGA reveals that as against the budgetary provision of Rs. 10,800 crores for 2007-08, the actual utilization was of the order of Rs. 4,196 crores i.e. only 39 percent of budgetary provision. This is really a sad commentary on the implementation of a flagship programme of the UPA government.
There is no denying the fact that NREGA is conceptually a very important national programme initiated at the level of the Central Government, but its record of implementation reveals that there are widespread complaints of corruption and pilferage of funds and very low level of utilization of budgeted provision. It has not succeeded in creating sufficient productive assets for strengthening rural infrastructure. It has, therefore, failed to impact on the poor rural households and if deterioration is not checked, the programme will lose the enthusiasm and momentum generated for the programme in 2006, describing it as a revolutionary project to impact on the life of the poor.
(Posted by Vidyanand Acharya)

India Moving towards Debt Trap

2008-03-31T22:27:00.000-07:00

INDIA’S EXTERNAL DEBT FOR THE QUARTER ENDED DECEMBER 2007
India is gradually moving towards the debt trap as its external debt has increased up to eight lakh crores at the end of December 2007. The import is overshadowing export in each quarte of financial year. India's external debt outstanding at the end of December 2007 was US$ 201.4 billion (Rs.794,017 crore), reflecting a rise of US$ 10.3 billion over the quarter. As compared to the level of US$ 169.7 billion at end-March 2007, India’s external debt at end-December 2007 increased by US$ 31.8 billion. Valuation change, due to the depreciation of US dollar vis-a-vis major international currencies and Indian Rupees, accounted for US$ 1.1 billion of the increase during the quarter and US$ 6.0 billion during April-December 2007. The increase in external debt was mainly brought about by commercial borrowing and short-term debt. Based on original maturity, long-term debt accounted for 82.6 per cent and short-term debt comprised 17.4 per cent. Long-term debt rose by US$ 6.3 billion to US$ 166.2 billion and short-term debt by US$ 4 billion to US$ 35.2 billion over the quarter. Amongst the components of long-term debt, commercial borrowing increased by US$ 4.9 billion (9.4 per cent) to US$ 57 billion. While NRI deposits declined by 1.5 per cent (US$ 0.6 billion) to US$ 43 billion, multilateral debt, bilateral debt and export credit increased marginally to reach US$ 37.9 billion, US$ 17.3 billion and US$ 8.9 billion, respectively, at end-December 2007. Rupee debt continued to remain around the level of US$ 2 billion. Under short-term debt, while trade related credits rose by around US$ 4 billion, FII debt investment in Government papers rose by US$ 262 million over the quarter. In the endeavour to improve the analytical content of the report, the external debt stock at end-December 2007 is provided in terms of residual maturity as well, for the first time in the quarterly debt data release. Based on residual maturity, long-term debt accounted for 64 per cent of total debt at end-December 2007. Short-term debt by residual maturity, consisting of principal repayments due during a one-year reference period under medium and long-term loans, and short-term debt with original maturity of one year or less, accounted for 36 per cent of the total external debt. The share of government debt in total external debt stood at 26.3 per cent (US$ 53 billion). Correspondingly, the share of non-Government (private) debt was 73.7 per cent (US$ 148.5 billion). At end-December 2007, India’s foreign exchange reserves which include foreign currency assets of the Reserve Bank of India, gold, SDRs and Reserve Tranche Position in the International Monetary Fund (IMF) stood at US$ 275.3 billion, providing a cover of 137 per cent to total external debt, while the foreign currency assets of the RBI at US$ 266.6 billion provided a cover of 132 per cent. The share of US dollar in India’s external debt portfolio has showed an increasing trend over the last few years. It further increased to 54.5 per cent at end-December 2007 from 52 per cent at end-March 2007. -Vidyanand Acharya

Budget 08-09: Aam Adami Ignored

2008-03-25T23:31:00.000-07:00

BUDGET, FARMERS AND SOCIAL SECTOR
Ruddar Datt

Finance Minister Mr. P C Chidambaram presented his 2008-09 budget on 29th February 2008. The budget was hailed as ‘revolutionary’ by the Congress leaders, but ‘irresponsible’ by others who felt that the Finance Minister to satisfy a large section of the farmers has proposed a huge package of Rs. 60,000 crores of relief. So far as the marginal and small farmers (with holdings less than two hectares) are concerned, full waiver of outstanding loans has been promised, while for other farmers there will be one-time settlement (OTS) for all loans that were overdue on December 31, 2007. Under OTS, a rebate of 25 % will be given against payment of balance of 75 percent.
Many questions have been raised by the critics. Firstly, the loan waiver was used during Mr. V P Singh regime and it impacted on the culture of credit. The defaulters were rewarded and honest farmers who repaid their due installments were penalized. Moreover, the defaulters would be eligible for fresh loans after the waiver and they would continue to default and wait for a waiver package in future. Thus it creates a moral hazard since farmer-borrowers are likely to assume that the future outstanding loans will also be written off.
The Government had appointed a Committee headed by Mr. R. Radhakrishna to study the problem of agricultural indebtedness. This Committee, as Mr. Chidambaram himself admitted, did not recommend such a waiver. According to the Report of R. Radhakrishna Committee, 48% of the farmers surveyed were indebted. For more than 49% of the indebted farmers – with holdings up to 2 hectares, also the target of Chidambaram’s waiver – the sources of loans were non-institutional agencies. The package promised by Mr. Chidambaram will thus be available to a little more than half of the marginal and small farmers.
According to the National Sample Survey Organization 59th Report, 43 percent of the farmers obtained loans from non-institutional sources, mainly money lenders. 53 percent of the loans carried an interest rate of more than 15%. The more distressing fact is that 16 percent of the loans from non-institutional sources were burdened with an interest rate of 30 percent. Since the loan-waiver covers only institutional credit taken from commercial banks, rural regional banks and co-operatives, a big proportion of the most vulnerable group of farmers has been left out of the benefit of loan waiver. The Finance Minister intended to produce a dramatic effect for his political adventure of loan waiver in view of the impending general election, rather than take more enduring measures to remove the deep distress of farmers. It would have been far more prudent to take up the non-dramatic measures recommended by Radhakrishna panel.
Radhakrishna Committee had recommended “formalization of non-formal credit of farmers” who have taken loans from moneylenders. The banks could be used to provide one-time long term loans to farmers to enable them to repay their debt to moneylenders. This could be achieved by taking the help of Panchayati Raj institutions, NGOs and farmers organizations to negotiate settlement of loans by the moneylenders. Simultaneously, the committee had recommended the creation of Moneylenders Debt Redemption Fund with a corpus of Rs. 1,000 crores to begin with. But instead of providing more enduring relief to the most vulnerable section of the farmers, the Finance Minister, being in a hurry to produce a ‘magic effect’ opted for a blanket waiver for all loans from banks and co-operatives. Need it be mentioned that two lakh suicide deaths of farmers during the last decade were mainly due to the crushing burden of moneylenders loans on the farmers, according to the Study of Tata Institute of Social Sciences.
Secondly, the National Commission on Farmers had recommended that agricultural credit should be provided at 4% rate of interest. Nothing seems to have been done to move towards this goal so that the poor farmers could be helped on a longterm basis in reducing the burden of debt.
Thirdly, the Finance Minister did not make any distinction on the nature of land i.e. whether it is irrigated or dryland. States like Chattisgarh, Maharashtra, Madhya Pradesh and Rajasthan with 53% to 75% of the small and marginal farmers would be adversely affected. Such a distinction was made while fixing ceiling on agricultural holdings in the seventies. This legitimate distinction should have been made by the Finance Minister in view of social justice criterion.
Fourthly, there is a need to improve the minimum support price (MSP) for farmers. The Government is faced with the problem of stagnation of foodgrains production, especially that of wheat, during the last few years. Consequently, the government is forced to import 5 million tonnes of wheat at much higher international prices in comparison with the minimum support price to farmers. As a consequence, our food security is being threatened and a larger proportion of food subsidy will be consumed for food imports. It is, therefore, desirable that MSP for farmers should be raised keeping in view the rising costs of cultivation with an escalation of the prices of agricultural inputs – seeds and fertilizers.
Fifthly, a major cause of suicides, more especially in Vidharbha and other cotton producing regions was due to the very low prices of international cotton. The Government of USA is providing huge subsidies to its cotton producing farmers. As a result, international cotton prices are depressed. There is a strong need to protect Indian farmers against this unhealthy competition.
Last, but not the least, is the decline in public investment in agriculture after the introduction of economic reforms in 1991. Although it was expected that private sector investment would increase, yet it was observed that private sector investment was concentrated in diesel pumping sets, tractors, harvesters etc. which led to the mechanization of agriculture. Excessive use of diesel pumping sets resulted in a decline in water table, even in agriculturally better off state like Punjab which also reduced increase in foodgrains production. Public investment in irrigation and watershed development declined in the post-reform period. Consequently, gross capital formation in agriculture which was 2.45 percent of GDP in 1999-00 indicated a decline to 2.1 percent in 2002-03 and it further declined sharply to 1.61 percent in 2006-07. However, 58% of the population was dependent on agriculture for its livelihood in agriculture. There is a need to reverse this trend, more especially, in agriculturally backward states to improve the lot of farmers.
Although the Finance Minister announced a loan-waiver package of Rs. 60,000, he did not make any provision in the budget to compensate for the loss to the banks. There was speculation among the top bank executives that the Government may be issuing bonds so that the banks can writer off the loans and clean their balance sheets of the non-performing assets created by the defaulter farmers-borrowers. Business Line in its editorial dated March 5, 2008 clarifies the point: “what does this magical figure represent? The entire outstandings of the scheduled banks’ credit to the sector upto December 2007 or are the NPAs a fraction of that – Rs. 7,637 crores by March 2007. The Finance Minister’s figure is the total outstanding credit due to all the three entities – banks, co-operative banks and RRBs.”
But the Prime Minister clarified in the Parliament that the government will pay the lending institutions out of the expected increase in tax revenues over the budgeted provision. There is, therefore, uncertainty about the budgetary provision for loan waiver scheme even now.
From an analysis of the loan-waiver scheme, it follows that the scheme was politically motivated. That is why the opposition described the 2008-09 budget as an “election budget.” The government opted for a dramatic measure of debt relief for all marginal and small borrowers and partial relief for other farmer-borrowers. It was restricted to institutional borrowers and 43% of the non-institutional borrowers were left to shiver in cold. Keeping in view the vulnerability of non-institutional borrowers and the high rate of interest ranging from 15 to 30% charged by the moneylenders, they deserved to be bailed out first. Moreover, an illogical decision was taken to have a uniform cutt-off of less than 2 hectares of landhording, irrespective of the fact whether the holding was irrigated or unirrigated. This runs counter to the concept of social justice. No effort has been made to adopt the recommendation of Radhakrishna Panel to create Moneylenders Debt Redemption Fund and help farmers to come out of the clutches of the moneylenders. Neither did the Scheme emphasize reduction in rate of interest to a level of 4% as recommended by the Swaminathan Commission on National Farmers.
It would have been far better to adopt more enduring measures to improve the plight of farmers, but since the UPA Government seemed to be in a hurry, it presented a half-baked loan waiver scheme intended to have an electrifying effect on farmers. Whether it will be able to provide relief to 4 crore farmers by 30th June 2008 as targeted by the Finance Minister is also considered very doubtful, given the past record of our bureaucracy. The experience of loanwaivers in our country in 1990 underlined the lesson that such schemes are recipes for disaster, rather than becoming instruments in structural change in agriculture.
Social Sector in 2008-09 Budget
The Finance Minister in his budget speech mentioned: “The revenue deficit is estimated at Rs. 55,184 crore, which amounts to 1.0 percent of GDP…. However, because of the conscious shift in expenditure in favour of health, education and the social sector, we may need one more year to eliminate the revenue deficit. In my view, this is an entirely acceptable deferment” (Budget Speech 2008-09, p.22).

Since total expenditure of the budget has increased from Rs.6,80,521 crore in 2007-08 (BE) to Rs.7,50,884 crores in 2008-09 (BE), it implies 10.3% increase in overall expenditure. Total social sector expenditure in the budget has increased from Rs. 61,137 crore in 2007-08 (BE) to Rs. 72,093 crore (BE) – an increase by 17.9%. Due to the overall increase in expenditure by 10.3%, the social sector has been provided 7.6% more than the normal expected increase. In absolute terms, the budget increase in social sector expenditure for 2008-09 works out to be Rs.10,956 crore which is only 19.9% of total revenue deficit of Rs.55,184 crore. The Finance Minister has, therefore, over-estimated the impact of increase in social sector expenditure as the principal cause of revenue deficit. FM should, therefore, find other factors responsible for the remaining 80 percent increase in the revenue deficit.
As a proportion of total budget expenditure, social sector expenditure was 9.0% in 2007-08 (BE) and it has been increased to 9.6% in 2008-09 (BE). This is a very marginal shift in the proportion of social sector expenditure, which cannot be described as “conscious shift”.
However, it may be noted that while Rs. 61,137 crore were budgeted for social sector in 2007-08, the revised estimates now place it at Rs. 57,050 crore – Rs. 4,087 crore less than the budgeted expenditure. This implies that the utilization rate of social sector of the budget provision was 93.3 percent. Consequently, social sector expenditure (revised estimate) accounts for only 8% of total expenditure in 2007-08 (BE). The biggest slippage was in education in which the utilization rate was only 88.7%, followed by health & family welfare 94.8%. The upshot of this analysis is that providing large increases in two major items of social sector – education and health – should also be accompanied by improvements in the utilization rate, failing which the intended objective of higher allocations may not be achieved. It is necessary to improve the absorptive capacity with higher provisions under various heads.
Under-estimation of the Revenue and fiscal deficits
Unlike the Railway Budget (2008-09) which has made a provision for the escalation of expenditure as a consequence of Sixth pay Commission recommendations, the Central government budget has not made any provision for the purpose. However, it has been estimated that this may require Rs. 20,000 to 25,000 crores. Besides this, Rs. 20,000 crores to be paid to commercial banks and co-operative banks due to the loan waiver scheme in 2008-09 have not been provided. Taken together, there is a demand for Rs. 40,000 to 45,000 crores likely to arise due to both these expected expenditures.
Even if it is conceded that as a consequence of better tax compliance, an additional Rs. 15,000 crores becomes available, it still leaves a gap of Rs. 30,000 crores.
The Government is toying with the idea of raising it by marginal disinvestment of public sector enterprises, but due to strong opposition from left parties and trade unions, it may not succeed or achieve its target of generating Rs. 11,065 crores only partially.
Keeping these factors in mind, the inevitable conclusion is that there is an under-estimation of revenue deficit. The Finance Minister has already pleaded for post-ponement of FRBM target of attaining zero revenue deficit by one more year, i.e. instead of 2008-09 to 2009-10. The whole purpose of reducing revenue deficit to zero as per the FRBM target in 2008-09 was to obtain more resources for governments’ capital expenditure. (Fiscal deficit minus revenue deficit is the amount of borrowed money available for capital expenditure, mainly infrastructure) which is very necessary for promoting and sustaining high GDP economic growth.
To conclude, budget (2008-09) has mainly focussed on short-term gains and by a populist measure like the loan waiver, it aimed at reaping political dividend in the forthcoming general election. Obviously, politics has taken precedence over economics in the budget. Professor Shyamal Roy of IIM Banglore is right when he draws the following conclusion: “The 2008-09 budget thus runs the risk of being dubbed as a budget with a short term focus.” (Economic Times, March 4, 2008).
Note:
The Government has now realized the flaws in the Scheme and has been forced by its critics to modify it. The Finance Minister has submitted a proposal in the supplementary budget to provide Rs. 10,000 crores for the debt waiver scheme. The Government is also reconsidering the size of the holding in irrigated and dry areas and thus may cover holdings upto 4-6 hectares for the purpose in dry areas.

Yamuna Pollution : Who is Responsible

2008-03-24T22:20:00.000-07:00

According to a study conducted by the Central Pollution Control Board (CPCB), the stretch of river Yamuna between Wazirabad and Okhla in Delhi is among the most polluted stretches of major rivers across the country. It has been reported that the volume of wastewater generated from Delhi accounts for about 79 per cent of the total wastewater generated from major towns located along the banks of river Yamuna. Due to large scale extraction of water from the river upstream of Wazirabad barrage at Delhi for various uses, the flow of river in Delhi stretch mainly comprises of the wastewater flow from the surrounding areas during the non-monsoon period. The groundwater quality monitored by CPCB at the selected locations of Delhi area indicates that at Prahladpur, the concentration of toxic metals exceeds the drinking water quality standards prescribed by the Bureau of Indian Standards (BIS) during the pre-monsoon period. However, the groundwater quality improves in the post monsoon period due to recharge. Government of India has launched Yamuna Action Plan (YAP) for the abatement of pollution in river Yamuna with the assistance of the Japan Bank for International Cooperation in a phased manner. YAP, Phase-I was launched in April, 1993, and declared closed in February, 2003. The second phase of YAP was commenced in December, 2004. The total approved cost of both the phases of Yamuna Action Plan is Rs.1339 crores and expenditure incurred so far under both the phases is 719.76 crores. In addition to the YAP, the Government of NCT of Delhi has also taken up large scale pollution abatement works for river Yamuna from its own resources. A total of 269 schemes have been implemented in 21 towns of the three States of Delhi, Uttar Pradesh and Haryana and 753.25 million litres per day of sewage treatment capacity has been created so far under both the phases of YAP. The works completed under YAP include interception and diversion of raw sewage, setting up of Sewage Treatment Plants, creation of low cost sanitation facilities, setting up of electric/improved wood crematoria and River Front Development. This information was given by the Minister of State for Environment and Forests Shri Namo Narain Meena, in a written reply to a question by Shri Ekanath K. Thakur in the Rajya Sabha today.

Vidyanand Acharya

2008-03-10T04:24:00.000-07:00

Vital Stats
Legislative activity in Parliament
Parliament passes about 60 Bills every year. It devotes 20 - 25% of its time on legislative
business. The time spent on debating each Bill varies widely. In 2007, 30 - 40 % of Bills were
passed without significant debate. About one in every four Lok Sabha MPs and one in every
two Rajya Sabha MPs participated in some legislative debate in 2007.

Number of Bills passed by Parliament Emergency Election years Since 1952, Parliament has passed an average of 60 Bills every year.In recent years, legislative activity has dipped during
election years, as Parliament functions for fewer days. Between 2000 and 2006 (except the election year of 2004), on average, 65 Bills were passed every year. Parliament passed 46 Bills in 2007 as compared to 65 in 2006.
Percentage of total time spent on legislative debate Finance and Appropriation Bills are not included Lok Sabha is scheduled to work for 6 hours and Rajya Sabha is scheduled to work for 5 hours in a day.
In the last three years, Lok Sabha spent approximately 20% of its total time each year debating legislation other than financial business. During the same period Rajya Sabha spent an average of
25% of its total time debating legislation other than financial business.
Time spent in debating a Bill: Lok Sabha
Finance and Appropriation Bills are not included In 2007, Lok Sabha passed 41% of Bills (not including Financial Bills) with little or no discussion. In the last three years, the percentage of Bills passed with almost no discussion increased from 17% to 41%.
During the same period the number of Bills on which substantial debate (2 hrs +) took place reduced from 39% in 2005 to 24% in 2007.
Time spent in debating a Bill: Rajya Sabha
Finance and Appropriation Bills are not included In 2007, Rajya Sabha passed 32% of Bills (not including Financial Bills) with little or no discussion. The percentage of Bills passed with almost no discussion in Rajya Sabha increased from 26% in 2005 to 32% in 2007. During the same period the number of Bills on which substantial debate (2 hrs +) took place reduced from 29% in 2005 to 24% in 2007.

Posted by vidyanand acharya

courtsy- prs

Corrupt Rulers are scuttling the process of self-reliance of the country

2008-02-06T06:29:00.000-08:00

Corrupt Rulers are scuttling the process of self-reliance of the country

Important Economic Events of the Year 2007 and Prospects for The Year 2008' was the topic of discussion conducted by Swadeshi Vichar Kendra in its continuing series of monthly group discussions. Discussion was held on 28th of Jan 2008, at its central office "Dharamkshetra" Sector-8 RK.Puram. Sh.R. Balashankar, editor of the Organiser, presided over and a large number of intellectuals, professionals and social activists participated in the enlightened exchange of views. Sh. Vidyanand Acharya, the editor of Swadeshi Patrika Hindi welcomed the participants and gave them a brief introduction of the monthly activity of Swadeshi Vichar Kendra.

Initiating the discussion, he said that the year 2007 has been a year full of economic activities. The year will be remembered for a long time to come because of the impact of several incidents that took place in 2007.He mentioned different reports that were published during the year amidst euphoric shouts of high growth rate. Vidyanad Acharya in particular referred to Arjun Sengupta report on unorganised sector and its conclusion that over 77% of Indian population was forced to live on an average income of below Rs. 20/- per day. This, he said, exposed the claims of poverty reduction propagated by the government. This vindicated the stand of people like proponents of Swadeshi that the economic policies followed were not helping the common man. Now every body including the PM Dr. Man Mohan Singh is talking about inclusive growth. Vidyanad Acharya also mentioned Singur and farmer suicides throughout the country in general and in Vidharba in particular.

Sh. Balashankar Ji took the discussion forward and underlined several issues of importance. Recalling some important media events now being held regularly in the country, Balashankar ji pointed out how political leadership across the spectrum was behaving in unison. Issues concerning common people never figure in these conclaves. He also mentioned the increasing gulf between the rich and poor. Criticising the neglect of infrastructure projects, Balashanker said that Gujarat has demonstrated how a simple road link to villages spurts the economic activity there.

Others who participated in the discussion is presented in brief hereunder along with some of their views.

Sh. Harsh Aggarwal: inclusive growth is imperative and GDP growth not a dependable measuring rod. Raw material based export policy and import of high cost capital goods not in the long-term interest of Indian Nuclear Deal a compulsion.

Sh. Shiva Ji Sarkar: Priorities of policy planners shocking. High cost projects like Delhi Metro preferred in spite of better alternatives available. Parallel Highway NH2 in UP pure loot of public money. Concept, cost and utility of the 1400 km NH2 questionable. Repairing and redeveloping GT Road would have been much better option. cost of the project revised to 40,000 crores from initially talked 30,000 crore, should by liberal estimates not exceed Rs. 10,000 crore @ standard cost of construction( Rs 5 crore/Km.)

Energy policy of the government faulty. No basic research in energy sector. No thought given to the crisis that will emerge after 2015. (Year when petrol products will peak). Large numbers of workers returning from gulf will be a huge task. A future looking proper energy policy needed.

Sh Pradeep Ji : New Metro projects developed in standard gage format where there is no experience in this country. Desirability of metro at a cost of Rs. 30 crore per metre needs a study.

Niloranjan: Indian economy being destroyed deliberately. A strong national agitation not visible. Integration of smaller protests a must.

. Ajay Bharti: communal angle introduced by the incumbent government into economy through Sachar Committer report, wheat imports policy and global warming will impact economy adversely

Dr. Devinder Sharma (renowned Agriculture and food security expert)

People including policy makers fail to understand economic terms like growth & GDP. China, accepting its mistake and is talking about reducing growth rate to about 7%. A higher growth rate means nothing to the country if it continues to widen gap between rich and the poor.

Agriculture policy of successive governments at centre, irrespective of the parties to which they belonged, has been to push farmers out of farming. It is exit policy for farmers. Decision makers and the ruling class believe only be 20% population should be dependent on farming to sustain the economy. Accordingly Agriculture patterns of west particularly the US, being imitated. 40 crore Indians that will be displaced from villages by the year 2015 because of these policies not discussed by rulers. This is going to be the largest displacement in history of mankind and will lead to uncontrolled social, Political and economic repercussions.

Districts under Naxal control went up to 200 from 161 at the time Prime Minister Dr. Man Mohan Singh took over. central government promising liberal help to states to tackle the naxal menace without addressing the basic issue responsible for the growth in Naxal problem.

Referring to the wheat imports, he added, that government was about to import paddy as well. 2008 will be the year when we will be dependent on wheat imports, he added further and critised the over all policy thrust of the government. Citing the example of oil seeds, the learned speaker explained that the government focus was to import oil seeds by bringing down the duty to 0%. It is help to the industry and not to the farmers who could have been encouraged to cultivate oil seeds within the country. Underlining yet another strange aspect of government policy, Devinder Ji said, argument forwarded in case of wheat import was to check the rising price in the interest of consumers, but fall of prices in sugar is being checked ignoring the very interests of the consumer". "It is simply the way to help industry at the cost of poor farmers and the Aam Aadmi in every situation".

Political class not in a position to provide solutions. Contract farming and future tradinghas not helped farmers in USA. Farmer's income in US down from 70% to 4% in a short span of time. The reduced income going to new breed of middlemen. Destruction of Indian Agriculture is being done in a panned manner and there is unanimity in the ruling class across the political spectrum on this count.

Dr. J.K Bajaj : A large number of people including several well-meaning friends think differently. They believe economy is going in right direction and it will take a little time to ensure that the change trickles down. Change taking place can't be denied.. Therefore a discussion with the people who think differently is needed

Reward System in the country has broke down. Present reward system dividing the country. core Jobs getting neglected. Huge disparity between wages of an MBA and a PhD scholar. Incentives needed to attract talent to basic sciences. Laws related to Agriculture have been weakened. Ruling class, it seems, has found a way to eliminate 40% population of the country that it believes are excess in number. India has 40% more people than needed has been belief of ruling elite since Independence

Sh. Ajay Ji (Precharak) : Rulers( both present and past) culprits of scuttling the process of self reliance and regeneration. self reliant and independent villages threat to corrupt governments. Gandhi's doctrine espoused in Hindu Swarajya rejected by congress led by Pt. Nehru on this premise.. Time to develop some models, one in every district to begin with, to show case the possible alternative path.

Sh. B.K. Keayla Ji,: people in government agree with you when you meet them, but they do nothing when it comes to action.. Conclusions of the discussions should be taken to the people in position who can deliver. Utility of WTO for USA decreasing. FTA route by that country being used increasingly. India finding it difficult to have F.T.A with countries like Sri Lanka. As these countries are already committed to USA. need to address the issue related to FTA and IPR as apriority.

Sh. Kashmiri Lal ji: There have been people who have delivered. Kinkari Devi a legend. Swami Viveka anda's vision and inspiration behind establishment of Tata's Indian Institute of Sciences. Need to make the conclusions of such discussion part of election manfestos of political parties. Continuos effort needed.

Vidyanand Acharya

2008-01-31T02:35:00.000-08:00

Household Consumer Expenditure in India, 2005-06

“Household Consumer Expenditure in India, 2005-06”- Report No. 523 based on the data of 62^nd round survey of National Sample Survey Organisation (NSSO) in the Ministry of Statistics and Programme Implementation, Government of India, has been released. The field work of the survey was carried out during July 2005-June 2006. Data collected included commodity-specific information on 148 items of food, 13 items of fuel, 28 items of clothing, bedding and footwear, 18 items of educational and medical expenses, 52 items of durable goods, and about 85 other items. The present report contains the information on distribution of households and persons by 12 classes of household monthly per capita consumer expenditure (MPCE), average MPCE , composition of MPCE by item category (cereals, pulses, clothing, etc.), quantity and value of per capita consumption of different cereals, distributions of households or persons by other characteristics such as educational level, structure and area of dwelling unit, and energy sources used for cooking and lighting etc. The estimates are provided separately for rural and urban sectors at State level as well as for all-India. No separate estimate is provided for small States & UT’s due to small sample size, instead, in such cases the estimates have been provided for a group of States/ UT’s.

The survey covered the whole of the Indian Union except (i) Leh (Ladakh) and Kargil districts of Jammu & Kashmir, (ii) interior villages of Nagaland situated beyond 5 kilometres from the bus routes and (iii) villages in Andaman and Nicobar Islands which remain inaccessible throughout the year. The survey was spread over a randomly drawn sample of 39436 households spread over 4750 villages and 5120 urban blocks,

The earlier survey on the same subject was the NSS 61^st round quinquennial survey (2004-05) spread over 7999 villages and 4602 urban blocks covering 1,24,644 households (79,298 in rural areas and 45,346 in urban areas) and enumerating 6,09,736 persons. The main characteristics associated with household consumer expenditure are broadly comparable at the national level. However, at State/UT level comparison of the results of this round with the quinquennial round on some of the characteristics needs to be attempted with due caution.

Some of the important findings of the survey are given below:

· In 2005-06, nearly 19% of the Indian rural population belonged to households with monthly per capita consumption expenditure (MPCE) less than Rs.365, that is, spending less than Rs.12 per person per day on consumption, at 2005-06 prices.

· In urban India, 22% of the population belonged to households with monthly per capita expenditure less than Rs.580 (about Rs.19 per person per day).

· Average monthly per capita consumer expenditure (average MPCE) in 2005-06 was Rs.625 in rural India and Rs.1171 in urban India at 2005-06 prices.

· Out of every rupee spent in 2005-06 by the average rural Indian on consumption, 53 paise was spent on food. Of this, 17 paise was spent on cereals and cereal substitutes, 8 paise on milk and milk products, 6 paise on vegetables, 5 paise on sugar, salt and spices, and 4 paise on beverages, refreshments, processed food and purchased meals.

· Out of every rupee spent in 2005-06 by the average urban Indian on consumption, 40 paise was spent on food. Of this, 9 paise was spent on cereals and cereal substitutes, 7 paise on milk and milk products, 6 paise on beverages, refreshments and processed food, and 4 paise on vegetables.

· Value of average food consumption per person in urban areas was within the range Rs.451-Rs.500 per month in 7 out of 17 major States. In respect of rural food consumption, 13 major States belonged to the range Rs.251-400.

· Average quantity of cereals consumed per person per month in 2005-06 was 11.9 kg in rural areas and 9.8 kg in urban areas.

· About 19% of rural households lived in katcha structures (both roof and walls made of katcha materials). About 50% lived in pucca structures (both roof and walls made of pucca materials). The remaining 31% of rural households lived in semi-pucca structures, that is, structures of which either the roof or the walls (but not both) were made of pucca materials.

· In urban India, the percentage of households using LPG as the major fuel for cooking was in the range of 40-75% in all the major States. In rural India, 74% of households continued to depend on firewood and chips as their major cooking fuel. About 9% used dung cake and another 9% used LPG.

· About 56% of households in rural India used electricity for lighting while 42% used kerosene.

The average rural and urban MPCE for major States and All India is given in the Annex.

This report is also available in the website (www.mospi.gov.in) of Ministry of Statistics and Programme Implementation.

Annex

Average rural and urban MPCE in the major States and at All India level, 2005-06

State	Average MPCE (Rs.)
State	Rural	Urban
(1)	(2)	(3)
Andhra Pradesh	704	1304
Assam	626	1352
Bihar	465	684
Chhattisgarh	429	1214
Gujarat	684	1105
Haryana	743	1156
Jharkhand	469	1093
Karnataka	573	1154
Kerala	1056	1566
Madhya Pradesh	487	982
Maharashtra	697	1342
Orissa	460	900
Punjab	1010	1520
Rajasthan	701	1004
Tamil Nadu	688	1171
Uttar Pradesh	570	908
West Bengal	583	1233
All India	625	1171

62nd round survey of National Sample Survey Organisation on Employment and Unemployment

2008-01-31T02:11:00.000-08:00

Employment and Unemployment Situation in India: 2005-06

“Employment and Unemployment Situation in India: 2005 –06”- Report No.522 based on the data of 62^nd round survey of National Sample Survey Organisation (NSSO) in the Ministry of Statistics and Programme Implementation, Government of India, has been released. The field work of the survey was carried out during July 2005-June 2006.. This report provides some broad features of employment and unemployment situation in India and some characteristics associated with them at the national and state levels. Information regarding participation in public works was collected for the first time in this round for persons of age 15 years and above in the rural areas. No separate estimate is provided for small States & UT’s due to small sample size, instead, in such cases the estimates have been provided for a group of States/ UT’s.

The survey covered the whole of the Indian Union except (i) Leh (Ladakh) and Kargil districts of Jammu & Kashmir, (ii) interior villages of Nagaland situated beyond 5 kilometres from the bus routes and (iii) villages in Andaman and Nicobar Islands which remain inaccessible throughout the year. The survey was spread over 4,798 villages and 5,125 urban blocks covering 78,879 households (37,975 in rural areas and 40,904 in urban areas) and enumerating 3,77,377 persons (1,86,571 in rural areas and 1,90,806 in urban areas).

The earlier survey on the same subject was the NSS 61^st round quinquennial survey (2004-05) spread over 7999 villages and 4602 urban blocks covering 1,24,680 households (79,306 in rural areas and 45,374 in urban areas) and enumerating 6,02,833 persons. The main characteristics associated with employment, unemployment are broadly comparable at the national level. However, at State/UT level comparison of the results of this round with the quinquennial round on some of the characteristics needs to be attempted with due caution.

Some of the important findings of the survey contained in this report are given below:

About 74 per cent of the households belonged to rural India and accounted for nearly 76 per cent of the total population
In rural areas, about 79 per cent of the households possessed some kind of ‘ration card’. This percentage was lower at 68 in urban areas.

Literacy rate for population of all ages was about 66 per cent for male and 47 per cent for female, in the rural areas. The corresponding literacy rates for urban areas, were 82 per cent and 70 per cent respectively.
About 50 per cent of the persons in the age group 5-29 years were currently attending educational institutions – 49 per cent in rural areas and 53 per cent in urban areas.
According to the usual status (ps+ss), about 56 per cent of rural males and 31 per cent of rural females belonged to the labour force. The corresponding proportions in the urban areas were 57 per cent and 15 per cent respectively.
In rural India, more than half of the usually employed (‘all’ workers) were self-employed – 57 per cent among males and nearly 62 per cent among females. The corresponding figures in urban India were 42 for male and 44 for female.
The percentage of regular wage/salaried employees was relatively lower among females as compared to males in both rural and urban India ( figures being 10 for male and 4 for female in the rural areas, and 42 for male and 40 for female in the urban areas ).
The proportion of female casual labourer was about 1 percentage point higher than that of male casual labourer in both rural and urban areas.
In rural India, among ‘all’ usually employed, about 65 per cent of the male and 81 per cent of the female were engaged in the primary sector (excluding mining and quarrying), the proportion in the ‘secondary sector (including mining and quarrying)’ being 17 per cent for male and 12 per cent for female while the proportion in the ‘tertiary’ (NIC-2004 industry division: 50-99) sector –is 18 per cent among male and 7 per cent among female.
In urban India, the ‘tertiary’ sector engaged about 59 per cent of the male workers while the ‘secondary’ sector accounted for about 34 per cent of the usually employed males. For female, the corresponding figures were lower: 52 and 33, respectively. Proportion of urban male and female employed in the primary sector was 6 percent and 15 percent respectively.
The average wage rate for regular wage/salaried employees in rural areas was Rs. 138.74 for male and Rs. 87.71 for female. The corresponding wage rates in the urban areas were Rs. 205.81 for the male and Rs. 158.23 for the female.
In the rural areas, on an average, Rs. 59.29 was earned in a day by a male casual labourer whereas a female casual labourer earned Rs. 37.97 in a day, in the urban areas male casual labourer in earned Rs. 80.70 in a day and a female, Rs. 44.57 in a day.
According to the usual status approach, the unemployment rate in the rural areas was around 2 per cent (for male nearly 3 per cent and for female nearly 2 per cent) . In urban area the unemployment rate was 5 percent (for male nearly 5 per cent and for female nearly 8 per cent).
The unemployment rate obtained by any of the approaches, was higher for females than that for the males in the urban area but it was lower than that for males in the rural area.
Among educated persons, (with education level secondary and above), in the age group 15 – 29 years, the unemployment rate in rural and urban area was 12 per cent and 16 per cent respectively.
The proportion of usually employed male who were found to be not employed during the week preceding the date of survey, termed as visible underemployment rate, was 5 per cent in the rural and 2 per cent in the urban area. Compared to male, the problem of underemployment was more serious among the usually employed female, particularly in the rural area. Among them, the underemployment rate was as high as 18 per cent in the rural and 8 per cent in the urban area.
The proportion of person-days without work of the usually employed was about 35 per cent and 18 per cent for female in rural and urban India, respectively as against 11 and 5 per cent for male in rural and urban India, respectively.
The percentage of person-days on which persons with some work during the reference week (according to current weekly status) were without work was about 6 for rural male, 21 for rural female, 3 for urban male and 11 for urban female.
The rate of under-employment was thus found higher in rural than urban, and higher for female than for male under the three approximations.
Among the persons of age 15 years and above in the rural area, only 5 per cent got public works, 7 per cent sought but did not get public works and nearly 88 per cent did not even seek work in public works. For male, nearly 6 per cent got public works, 8 per cent sought but did not get public works and 85 per cent did not seek work in public works. The corresponding figures for female were, 3, 6 and 91 respectively.
The average number of days worked in public works, during the last 365 days, by male and female was almost the same- 17 for male and 18 for female.
Average wages received per day, for work in public works, was Rs. 56 for male and Rs. 54 for female.

Posted By Vidyanand Acharya

Growing unemployment across the globe

2008-01-23T23:38:00.000-08:00

Global Unemployment Getting Bigger

· Vidyanand Acharya

Employment generation has become important parameter to measure the success of developmental policies adopted by the governments at state and at national level. However, the approach to tackle the problem of unemployment has varied from time to time and also from place to place. The gap between the GDP growth rate and employment growth rate in any country and also across the globe has attained its peak today. As a result the global unemployment situation have increased to nastiest level. The unemployment across the globe has reached at alarming height as per latest International Labour Organisation’s Global Employment Trends Report. The report warns that there could spur an increase in global unemployment by an estimated 5 million persons in 2008.

As per the report, the new projection for 2008 is in contrast to 2007, a watershed year in which sound global GDP growth – of more than 5 per cent, led to a “stabilization” of global labour markets with more people in work, a net increase of 45 million new jobs and only a slight increase in the number of people unemployed, to a total of 189.9 million persons worldwide.

“This year’s global jobs picture is one of contrasts and uncertainty”, said ILO Director-General Juan Somavia. “While global growth is annually producing millions of new jobs, unemployment remains unacceptably high and may go to levels not seen before this year. What’s more, though more people are in work than ever before, this doesn’t mean that these jobs are decent jobs. Too many people, if not unemployed, remain among the ranks of the working poor, the vulnerable or the discouraged.” Significantly, the ILO report noted that the reduction in the growth in developed economies attributed to credit market turmoil and higher oil prices so far had been “compensated for in the rest of the world”, especially in Asia, where economic and job growth remained strong. However, the ILO report warned that an expected slowdown in growth during 2008 could increase the global unemployment rate to 6.1 per cent, with a resulting absolute increase of at least 5 million unemployed worldwide.

Though the Global economy growth of 5.2 per cent created an estimated 45 million new jobs in 2007, but failed to have any significant impact on the growth of unemployment. Overall, 61.7 per cent of the global populations of working age –or an estimated 3 billion people – were employed in 2007. Although the global unemployment rate remained virtually constant at 6 per cent, that meant an estimated 189.9 million people, compared to 187 in 2006, were unemployed worldwide in 2007.

The report said five out of 10 people in the world are in vulnerable employment, either contributing family workers or own-account workers with a higher risk of being unprotected. In developing countries these two categories are most likely to work informally and hence have jobs that leave them vulnerable to poverty and risks such as low earnings, dangerous working conditions and lack of health insurance. The ILO report said an estimated 487 million workers – or 16.4 per cent of all workers – still don’t earn enough to lift themselves and their families above the US$1 per person, per day poverty line while 1.3 billion workers – 43.5 per cent – still live below the US$2 per day threshold.

The report also underlined that the service sector continued to grow during 2007, further surpassing agriculture as the world’s most prevalent source of employment. The service sector now provides 42.7 per cent of the world’s jobs, compared to agriculture, which provides 34.9 per cent. The industrial sector, which had seen a slight downward trend between 1997 and 2003, has continued a rather slow upward trend in recent years, representing 22.4 per cent of global jobs.

Regional trends

The report has produced a comprensive picture of unemployment prevailed at regional level. The report observed that the Middle East and North Africa still had the highest unemployment rates at 11.8 and 10.9 per cent respectively in 2007, followed by Latin America & the Caribbean, Central & South Eastern Europe (non EU) & the Commonwealth of Independent States (CIS) at 8.5 per cent. The situation in the Developed Economies & European Union (EU) seemed to be stagnating, the ILO report said, with job growth at its lowest in the last five years and unemployment up by 600,000 over 2006.

The ILO report said it appeared that, on current information, the initial impact of the credit crisis on Developed Economies & EU growth would result in an estimated 240,000 fewer new jobs in the region. However, the ILO analysis also indicated that from a global perspective this downward tendency in the developed economies would be “offset by the rest of the world”, largely due to strong economic and jobs growth in Asia.

ILO’s employment report said that South Asia was the leader in jobs growth during 2007, contributing 28 per cent of the nearly 45 million jobs created during the year worldwide. At the same time, the region has the highest share of vulnerable employment much of which reflects the poor quality of jobs created. More than seven out of 10 people are either own-account workers or contributing family workers, carrying a higher risk of being unprotected, without social security and without a voice at work.

The report said East Asia appeared to be on its way to becoming a middle income region, as sustained productivity growth had increased incomes and helped lift millions of people out of poverty. The ILO said the estimated share of East Asian workers living with their families below the US$2 per day poverty line dropped to 35.6 per cent today from 59.1 per cent 10 years ago, while the percent living below US$1 per day had decreased to 8.7 per cent from 18.8 per cent over the same period.

The report also noted that although the Middle East saw a considerable increase in the employment-to-population ratio the share of people of working age who were employed increased from 46 per cent in 1997 to 50.1 percent in 2007. At the same time, the Middle East was also the only region where labour productivity decreased within the same period.

The global unemployment trends clearly reveal that the process of ongoing globalisation and economic progress based on western developmental model, doesn’t automatically translate into new jobs. This shows once again that labour market policies must be at the centre of macroeconomic policies to ensure that economic growth is inclusive.

2008-01-22T04:58:00.000-08:00

Famous Yogiraj Yamuna Das Baba of Mithilanchal.
He was basically from Rajnagar(Ghonghor)

Rural India is the backbone of unorganised manufacturing enterprises

2008-01-21T04:01:00.000-08:00

Operational Characteristics of

Unorganised Manufacturing Enterprises in India

“Operational Characteristics of Unorganised Manufacturing Enterprises in India”- Report No.524 based on the data of the survey of unorganised manufacturing enterprises carried out by the National Sample Survey Organisation (NSSO) in the Ministry of Statistics and Programme Implementation, Government of India, as part of the 62^nd round of the NSS, has been released. The fieldwork of the survey was carried out during July 2005-June 2006. This report, first in the series of three reports based on the data on unorganised manufacturing enterprises, provides information on estimated number of enterprises and number of workers, the operational characteristics of the enterprises like location of enterprise, maintenance of accounts, number of working hours, nature of operation, status of registration etc. at all India level for different industry groups and at the States / UT level for all the industry groups taken together. The term ‘unorganised manufacturing enterprises’ referred to all manufacturing enterprises, which were not covered by Annual Survey of Industries (ASI). All government and public sector undertakings were outside the coverage.

All States/Union Territories were covered by the survey except some interior areas of Nagaland, Andaman & Nicobar Islands, and Leh and Kargil districts of Jammu & Kashmir. A dual frame approach was followed in the survey with a view to improving the reliability of the overall estimates by separating out apparently large units into one frame (list frame) and covering the remaining units within the coverage through the area frame. A sample of 82897 enterprises were actually surveyed out of which 2,260 enterprises belonged to the list frame and the remaining were spread over 9,923 sample villages/urban blocks in the area frame.

Some of the important findings of this survey are given below:

· During 2005-06, the number of unorganised manufacturing enterprises was estimated as17.07 million in India. It is seen that during 2005-06, West Bengal had the highest share (16%) of unorganised manufacturing enterprises. The two states, West Bengal and Uttar Pradesh together had 30 percent share of all unorganised manufacturing enterprises in the country.

· Of the total estimated enterprises, 71% were in rural India and 29% in urban India.

· Own Account Manufacturing Enterprises (OAME) constituted 86% of all enterprises and the remaining 14% were establishments. (The respective share of NDMEs and DMEs were 10% and 4% of total enterprises)

· About 36.44 million persons were estimated to be working in unorganised manufacturing enterprises during 2005-06. West Bengal had the highest share (15%) of workers in unorganised manufacturing enterprises of the country closely followed by Uttar Pradesh (14%). About 55% of all workers were concentrated in five states viz. West Bengal, Uttar Pradesh, Tamil Nadu, Andhra Pradesh, and Maharashtra.

· The estimated number of workers per enterprise was about 2.13.

· Nearly 94% of all enterprises were perennial enterprises.

· About 98% of all enterprises were proprietary enterprises.

· About 3% of all enterprises had no fixed location of operation.

· About 90% of all enterprises were not registered with any agency.

· About 92% of all enterprises did not receive any assistance from any government or non-government agency.

· About 32% of all enterprises had undertaken at least some work on contract basis and also 28% of all enterprises had undertaken other economic activity.

· Majority (77%) of enterprises having other economic activities as the major source of income derived income from agriculture, hunting, forestry, mining, quarrying etc.

Estimated number of unorganised manufacturing enterprises during 2005-06
State/UT	Estimated number of enterprises
State/UT	rural	urban	all
Andhra Pradesh	1085242	447997	1533239
Arunachal Pradesh	541	318	859
Assam	333006	37774	370781
Bihar	663379	109018	772397
Chhatisgarh	172610	34871	207481
Delhi	3639	93997	97636
Goa	4546	5762	10308
Gujarat	300753	353605	654358
Haryana	119687	110423	230110
Himachal Pradesh	100437	7005	107442
Jammu & Kashmir	140468	32944	173412
Jharkhand	540250	45698	585948
Karnataka	663211	298549	961761
Kerala	492777	165914	658692
Madhya Pradesh	564463	290097	854559
Maharashtra	556168	570294	1126462
Manipur	35797	16721	52518
Meghalaya	34513	2474	36987
Mizoram	3291	1810	5101
Nagaland	7167	2739	9906
Orissa	870877	86352	957229
Punjab	150208	143029	293237
Rajasthan	400875	235595	636470
Sikkim	3684	420	4103
Tamilnadu	850353	631580	1481933
Tripura	38900	6470	45370
Uttaranchal	53940	15146	69087
Uttar Pradesh	1704516	654859	2359375
West Bengal	2223768	529025	2752793
A & N Islands	1872	444	2316
Chandigarh	753	621	1373
D & N Haveli	797	172	969
Daman & Diu	1464	1175	2639
Lakshadweep	255	142	397
Pondicherry	4058	9513	13572
all-India	12128266	4942554	17070820

Annex-II

Estimated number of workers in descending order in different States/UT
State / UT	estimated number of workers			% share
State / UT	OAME*	Establishment$	All (in descending order)	% share
West Bengal	3980082	1513751	5493833	15.08
Uttar Pradesh	3744877	1543024	5287901	14.51
Tamil Nadu	1760313	1609206	3369519	9.25
Andhra Pradesh	2003229	935716	2938945	8.06
Maharashtra	1235091	1666326	2901417	7.96
Orissa	1836331	187210	2023541	5.55
Karnataka	1107479	866890	1974369	5.42
Gujarat	845248	1006884	1852132	5.08
Madhya Pradesh	1437477	303169	1740646	4.78
Bihar	1311718	141355	1453073	3.99
Kerala	673565	717441	1391006	3.82
Rajasthan	797748	497587	1295335	3.55
Jharkhand	840208	109137	949345	2.61
Assam	472123	160358	632481	1.74
Punjab	313818	286992	600810	1.65
Haryana	234038	309986	544024	1.49
Chhattisgarh	376669	81697	458366	1.26
Delhi	26478	430730	457208	1.25
Jammu & Kashmir	260614	58255	318869	0.87
Himachal Pradesh	125522	39911	165433	0.45
Uttaranchal	80353	67485	147838	0.41
Tripura	55272	89588	144860	0.40
Meghalaya	49894	40543	90437	0.25
Manipur	67836	13534	81370	0.22
Pondicherry	10009	34700	44709	0.12
Goa	8903	19584	28487	0.08
Nagaland	12925	3382	16307	0.04
Mizoram	6037	3410	9447	0.03
Daman & Diu	2239	6311	8550	0.02
Sikkim	5218	2408	7626	0.02
A & N Islands	2466	3571	6037	0.02
Arunachal Pradesh	1081	2220	3301	0.01
Chandigarh	1217	1382	2599	0.01
D & N Haveli	724	1540	2264	0.01
Lakshadweep	491	221	712	0.00
all-India	23687294	12755505	36442799	100.00

Group Discussion on Bali Conference

2008-01-21T02:39:00.000-08:00

Group Discussion on Bali Conference

Swadeshi Vichar Kendra organized a group discussion on climate change and Bali Conference in New Delhi on December 22, under the chairmanship of Shri Swadesh Sharma Reader English Department Delhi University. Several important people from different fields of life participated in the enlightening discussion.
Climate change and its effect on planet earth has become an important topic of discussion and have caused sufficient concern all over the world. Governments as well as international bodies are worried and are engaged in finding the solution to the one of the worst kind of challenges human kind has ever faced. Bali conference on Climate Change was the result of this increased concern over the issue and urgency to find solutions.
Swadeshi Vichar Kendra is regularly inviting intellectuals, professional and experts on various issues of vital importance to have some exchange of views and sharing of information.
Recently concluded Bali conference once again demonstrated the difference of opinion and clash of interests between different nation states. Even though a vague deal was signed in Bali it was clear that the humanity was still far away from any consensus approach to the issue of such importance as threatens the very existence of world.
Discussion in this background was enriching and stimulating. Almost all aspects of the issue including the politics behind global warming were discussed. There was consensus on following:
a) Global warming and climate change is a reality that is being felt in routine normal life.
b) Developed world, particularly USA is primarily responsible for the degradation of environment.
c) West that was not ready to accept the issue as a problem has taken notice of it only after it started feeling the heat of climate change.
d) Positive aspects of Bali include acceptance of issue as a serious threat and urgency to act before it is too late.
e) USA, Canada and Japan isolated for their stubborn stand.
f) Negotiations will take at a brisk pace now onwards and India should make proper preparations for these negotiations.
g) Attempt should be made to take US on board and in case that country refuses to join international community must explore punitive measures against it.
h) Indian people being aware of the cyclic phenomenon of ‘Pralaya’ should not feel unnecessarily over concerned on the issue.
i) India shall utilise this opportunity to strengthen its position in every respect.

Ours Growth Theirs Benefits

2008-01-18T05:39:00.000-08:00

Ours Growth Theirs Benefits
Strong growth in developing countries is likely to cushion the impact of the US downturn and of global financial market volatility over the next two to three years, predicts Global Economic Prospects 2008: Technology Diffusion in the Developing World. The report also examines the advancement of technology in developing countries since the early 1990s. It reveals on the one hand that technological progress in developing countries has been much faster than in high-income countries--reflecting increased exposure to foreign technology. On the other hand, the technology gap remains large, and the domestic factors that determine how fast technologies spread often stymie progress, especially among low-income countries.

MNCs of developing world, do they follow the same road?

2008-01-18T05:29:00.000-08:00

Do they change their way?
WHEN Ford Motor Company bought Jaguar in 1989 and Land Rover 11 years later, it marked a low point for Britain's ailing industrial heritage. Last year Ford concluded that it could not make money from the illustrious British marques—equally a sign of its waning fortunes. The two firms shortlisted to take the prize come from India. Their ambition and confidence is a sign of something new in global business: the arrival in force of emerging-market multinationals.

Tata Motors, the carmaking bit of Tata Group, India's biggest industrial conglomerate, has edged ahead of Mahindra & Mahindra, a sprawling group that makes tractors and off-road vehicles, to become the preferred bidder. Ford told Jaguar workers this month that it was “in substantive discussions” with Tata. The future of these two grand old badges will be shaped not in Coventry, cradle of the British motor industry, but in Pune, home of Tata Motors.

Another indication of this newcomer's growing strength was the unveiling this week of the revolutionary, cheap “one lakh” car, which will sell in India and South-East Asia for the equivalent of $2,500. Thus the Indian company, which launched its first saloon car barely ten years ago, is beating the industry's established giants in a new market segment in which sales will surely grow fast.

Tata is certainly not the only company from an emerging economy striding onto the global stage. A study by Boston Consulting Group (BCG) found 100 companies from emerging markets with total assets in 2006 of $520 billion, more than the world's top 20 car companies. By 2004 the UN Conference on Trade and Development (UNCTAD) even noted that five companies from emerging Asia had made it into the list of the world's 100 biggest multinationals measured by overseas assets; ten more emerging-economy firms made it into the top 200.

By 2006 foreign direct investment (including mergers and acquisitions) from developing economies had reached $174 billion, 14% of the world's total, giving such countries a 13% share (worth $1.6 trillion) of the stock of global FDI. In 1990 emerging economies accounted for just 5% of the flow (see chart 1) and 8% of the stock. Their slice of global cross-border M&A has been climbing. It reached 14% in value terms in 2006 (chart 2). That year they spent $123 billion in more than 1,000 cross-border deals.

Since UNCTAD's first analysis in the early 1970s there has been concern about the power wielded by companies from rich countries in poorer ones. Developed countries have had their bouts of anxiety too. In the 1960s the French fretted about le défi américain, as IBM, Ford, General Motors, Dow Chemical and ITT spread their tentacles across Europe; in the 1980s it was America's turn to squirm as Japanese firms bought up Hollywood and Manhattan.

The latest trend reflects a new, fundamental shift. In a more open world, emerging economies are spawning their own giants. UNCTAD is turning its attention to the new shape of global business: investment now flows increasingly from south to north and south to south, as emerging economies invest both in the rich world and in less developed countries.
Meet the new boys(The Economist)

BABU GENU: a Swadeshi martyr

2007-12-24T02:12:00.000-08:00

BABU GENU: A TRIBUTE TO A MARTYR

He was a congress party worker in the pre-independence era. Yet not many congressmen today may know him. Very few even within that party (or for that matter in any other political party in India) today may realise the profound significance of the message contained in his life. Fewer still would be in a position to recall the same. Even old timers within the Congress would be unaware that he was a four-anna member of the party – his registration number being 81941. None from his family benefited by his “joining” politics or the congress party, nor did he did not leave behind a “rich” legacy.

Though he was sad on hearing the news of the death of his mother, he confessed that he was in a way relieved at her death as it gave him the necessary leeway in life to fully devote himself for the cause of the nation. Being a fully dedicated volunteer to the cause of India’s independence; he did not have enough time and leisure to attend his brother’s wedding. Contrast this to the vulgar display of wealth in the marriages of those who are in power in modern times in India!

He was Babu Genu. On this day seventy-seven years ago (12^th December1930) Babu Genu was killed in the most gruesome manner while attempting to stop a speeding truck in Mumbai from carrying imported materials from Britain. Babu Genu lay on the ground before the speeding truck in the New Hanuman Road at Kalba Devi at around 11 AM on that fateful day in an attempt to prevent foreign goods from entering the Indian soil.

Even as the police were physically preventing him and his colleagues from participating in this non-violent protest, Babu Genu never gave up his resolve to stop the trucks. The truck driver - Balbir Singh – an Indian would come close to the protestors and stop for he would not and could not drive over fellow Indians. Seeing this, the police once again intervened and physically removed the protestors from the road to enable the truck pass through.

Freeing himself from the policemen gathered there, Babu Genu once again lay on the road in another attempt to prevent the passing trucks. Seeing the procrastination of the Indian driver the British sergeant lost his temper and took on himself to drive the truck at full speed over Banu Genu crushing his head and leaving behind a pool of blood and mass of flesh. Babu Genu was seriously injured and within hours passed away. He was in his early twenties when he died. Yet his life is a message to every Indian.

A brief life history

Babu Genu was born in 1908 in a poor family in Pune district of Maharasthra – a family that was steeped in abject poverty. The only prized possession of the family was a bullock that was used for farming. His father was a farmer and the other members of his family were his mother, two elder brothers and a sister. His father passed away in 1910 when he was a mere two year old child.

And when the bullock died too – a terrible tragedy for the family given their economic background - his mother unable to continue living in her village migrated to Mumbai to earn her livelihood as a domestic help. She left her sons back in the village in the care of some neighbours

All this meant that Babu was deprived of formal education in his formative years. Yet that did not mean that he was neither ignorant nor unaware of the issues confronting the country. After a spending a few years in the native village Babu Genu joined his mother in Mumbai. As his mother could not support his stay in Mumbai Babu Genu was compelled to seek employment as a casual labourer in the mills of Mumbai.

On many days he would not get employed. This did not deter him and he did not feel left down. Quite the contrary that gave him enough time and space to interact with the leading lights of independence movement in Mumbai and in the process understand it in different perspective.

Babu Genu was highly influenced by the sacrifices of Lala Lajpath Rai and the trio of Bhagath Singh, Rajguru and Sukh Dev. Yet he was wedded to the cause of non-violence and satyagraha as enunciated by Mahatma Gandhi.

The message of his life

As briefly mentioned above Babu Genu was not formally educated. Yet he understood the symbiotic link between geo-politics and geo-economics. He understood that the geo-strategic interests of the British Rule in India. He knew that economics was the driving force of British rule; establishment of the British Raj was merely a ruse to perpetuate the economic dominance of the British over India.

It is in this context Babu Genu understood the socio-economic-politic arguments propounded by Gandhiji and its significance. That meant that should the British rule were to be economically unsustainable it would collapse as there would be hardly any incentive for the British to continue their rule in India.

He knew economic independence of India was interlinked, intertwined and integrated to the political independence – a fact that escapes the attention of our political and the debating class today. He was fully aware that the no price could be less by any yardstick for the economic independence of the country. For there lay the key to political independence of the nation. No wonder he did not hesitate to make the supreme sacrifice of his life for the cause he so dearly believed.

Decades later as the nation is in search of the economic model that is suited for its development (and crucially what that development means) one may be tempted to dismiss Babu Genu’s economic thoughts as primordial, xenophobic or simply anachronistic. Yet one cannot and should not dismiss the message contained in the life of these great men, who literally and physically in broad daylight, gave their life for upholding their beliefs.

Why? Firstly, that is so because the fact of the matter is that we the present generation live in independent India only because of the noble thoughts, selfless actions and supreme sacrifices of these great men. That is the least a nation may do to express its gratitude to such great men.

Secondly, and the far more important reason is that the context of the life and history of Babu Genu may seemingly differ significantly from what it is prevalent in India today.

Yet, the text does not. Global powers clearly have a well-designed agenda – read global order - in imposing their will, thoughts, ideas and beliefs on others. If it was political domination through religion in the first millennia after Christ, it was done through the army in the second millennia. What is feared is that it could possibly be through economic intervention in the third.

Unfortunately, this brief history of mankind and a grim reminder of how the world looks at others and the manner in which it seeks to engage others – as one of that has to subjugate and ones that need to be subjugated. Surely, it is not how we look at the world or presume as to how the others look at the world – as one of near equals.

As the ideas and ideals of the likes of Babu Genu fade from our collective memory, one is tempted to only quote the oft-repeated cliché: if you forget history you are condemned to repeat it. Obviously, to assume that global economic interests are completely independent of geo-political intentions or devoid of conspiratorial motives in these modern times would be childish to say the least.

Yet this is what we seem to have done for the past several years. And the spectacular growth of our economy in the past few years seems to have made us oblivious to this risk. And that would mean necessarily understanding, redefining and recalibrating our concept of growth and development. Lop sided growth in recent years of our economy, rising disparity of income and crucially lack of genuine economic opportunities point out to a serious systemic imbalance, especially in the manner in which we have engaged the world – politically or otherwise.

And to correct the same we need to get our priorities right. It would be a fitting tribute to the life of Babu Genu if we could get our priorities right in our economic policies and begin afresh the debate on our development and growth and the terms by which we should engage the world, both in global politics and economics. And that in my opinion would be a fitting tribute to Babu Genu on his martyr’s day.

M.R.Venkatesh

The author is a Chennai based Chartered Accountant. He can be contacted at mrv1000@rediffmail.com

Remittance flows a great poverty alleviation tool

2007-12-14T02:43:00.000-08:00

Remittance flows a great poverty alleviation tool, says report

A study commissioned by the UN agency International Fund for Agricultural Development (IFAD), estimates that remittances -- the portion of migrants' earnings sent back to their families -- reach 10% of the world's population, most of it in the developing world.

An estimated 150 million migrants worldwide sent more than US$ 300 billion to their families in developing countries during 2006.

There are over 50 million migrants from Asia and the Pacific. India is Asia's main exporter of migrants, accounting for 22% of total migrants. Asia receives almost US$ 114 billion in remittances annually -- the highest regional total in the world. And India is the top recipient country, receiving US$ 24.5 billion.

The impact of remittances on rural areas in developing countries in Asia is substantial. In Asian countries that are 65% or more rural, the ratio of remittances per capita to per capita GDP is 23%, and the highest in the world.

These funds are used primarily to meet immediate family needs but a significant portion is also available for savings, credit mobilisation and other forms of investment.

The report calls remittances the world's largest poverty alleviation programme and says it could become an effective grassroots economic development programme, particularly in rural areas that present some of the greatest challenges to financial inclusion.

To aid and enhance the process, the report suggests improvements in data collection, reduction in transaction costs, and increased efforts to leverage remittance flows for greater development impact.

Many Asian migrants and their dependents do not have access to basic financial services. For example, only 11% of Indians in the state of Kerala -- a major exporter of labour -- have bank accounts. Transaction costs too can be high in some countries, as much as 3% per transaction in Central Asia.

Nandigram Massacre - dual face of the Marxists exposed

2007-12-12T23:17:00.000-08:00

NANDIGRAM MASSACRE

Following the adage of Deng Xiao Peng that the colour of the cat is immaterial as long as it catches the mouse, the Marxist’s attempt in Bengal to usurp the fertile agricultural land of small peasants in the name of industrialization , from the very same people it has so far proclaimed to stand for and the subsequent exposure of ugly sequence of events so far in Nandhigram has sent shock waves across the country. Cracks have appeared not only among the coalition of the left front but also among the wider public. The noted intellectuals, artists and professionals have all condemned the state sponsored massacre of innocent agriculturists. This massacre has been condemned even by the constitutional authorities like the Governor of West Bengal and the National Human Rights Commission Chairman as well as the Kolkata High Court.. The reformer cum mass leader image of Buddhadev Bhattacharya crashed making him run from pillar to post seeking pardon day in and day out. Nandigram today is encircled by armed party cadre of CPI(M), who are terrorising the people. Despite the report of the Governor, the role of the central government is that of a mute spectator, encouraging the goons of CPI(M).

Nandigram symbolizes the wide spread resentment by small land owning peasants and their refusal to part with their livelihood earning asset inherited by generation after generation. Though the opposition and agitation is spread across the country, like POSCO in Orissa and Mangalore in Karnataka, Nandigram generated so much heat leading even to disruption of parliament and the subsequent debate putting the Marxists on the defensive. The nation started sensing the beginning of the end of Marxists Raj in Bengal.

Nandigram should be an eye-opener to other states involved in acquiring agricultural lands of small farmers in the name of SEZs. From IMF to the Finance Ministry all have pointed out the revenue loss of lakhs of crores year after year. It has also been pointed out that only shift in employment and relocation of industries will take place without addition to employment or productive capacity. The Approach paper to the 11^th Five year Plan of the Government of Maharastra has timely pointed out that the originators of the SEZs, namely the Chinese Government have admitted mainly real estate activities alone takes place in SEZs and the concept needs rethink.

The SJM fully shares the feelings of the people of Nandigram and assures that it will stand by them in this hour of crisis and in their valiant struggle to protect their livelihood. The SJM hopes that Nandigram will lead to two desirable things; exposure of the dual face of the Marxists and death to the concept of SEZs.

RESOLUTION NO. 3, Swadeshi jagarn Manch, 8^thALL INDIA CONFERENCE, Indore

7^the TO 9^the DECEMBER, 2007

STOP ENTRY OF CORPORATES IN RETAIL TRADE

2007-12-12T23:09:00.001-08:00

STOP ENTRY OF CORPORATES IN RETAIL TRADE

The declared intention of the government in various fora to permit FDI in retail trade is highly deplorable. In our country 125 lakhs of small and medium shops exist providing direct and indirect employment to more than 4 crore people.

In this way this sector provides livelihood to more than 20 crore people with employment opportunities next only to agriculture and contributing 13% of GDP. This sector consists of hawkers, cart vendors, street sellers and also small and medium shops. The sector also is known for providing more employment with least amount of capital.

GOVERNMENT’S POLICY OF OPENING RETAIL TRADE TO CORPORATES

Under pressure from MNCs, the government has so far permitted 51% FDI in single brand retail and efforts are on to further open up the sector. After taking over the retail trade in U.S., U.K., the rest of Europe, South East Asia and China, the MNCs have now turned their attention to India. Because of popular resistance, the government is unable to proceed further in its intentions. This has resulted in MNCs making back door entry in association with Indian corporates. Some big Indian companies are also entering the retail trade in a big way trying to increase their hold on Indian Retail Sector.

EMPLOYMENT ENDANGERED

According to McKinsey report, labour productivity in Indian retail trade is hardly 6% of what it prevails in U.S., In other words every job created in organized retail trade displaces 15 jobs of normally less educated people in the informal sector who cannot be employed elsewhere leading to high unemployment among ordinary people.

OTHER DANGERS

The entry of corporates will also affect the productivity of Indian manufacturing sector, whole-sale trade and the consumers in the long run. It may be noted that MNC’s finished the shoe industry of U.S., and led to the closure of Coats in U.K. After monopolizing retail trade, these companies start fleecing the consumers. According to a study made by the Fortune magazine, due to monopoly of retail trade. the MNCs sold the goods at a price of 40% over the existing price in Europe leading to increased cost to the consumers.

When the METRO Multinational tried to enter retail trade in Bangalore misusing the whole sale license, due to opposition by SJM–lead traders agitation, the company shelved its plan and also the lost the court battle. Opposition to the entry of MNC’s and Indian Corporates in retail trade continues through out the country.

In this background, the SJM demands that:

01. Entry of MNCs and Corporates in retail sector be stopped forthwith to save the livelihoods of crores of people engaged in the sector.

02. Encouragement be given to the retail trade to modernize and expand their business by provding all out support including tax rebates and finance at an interest rate of 4%.

RESOLUTION NO. 2, Swadeshi Jagaran Manch, 8^thALL INDIA CONFERENCE Indore

7^the TO 9^the DECEMBER, 2007

GOVERNMENT SPONSORED AGRICULTURAL CRISIS

2007-12-12T23:01:00.000-08:00

GOVERNMENT SPONSORED AGRICULTURAL CRISIS

The policies of globalization, liberalization and new economic policies in the name of reforms adopted by the government over one and half decades have pushed the agro crisis to its peak. Increasing number of farmers' suicides demonstrates the severity of the crisis. According to the government’s own statistics over 1.5 lac farmers have committed suicides so far after adopting new policies and the attitude of the government towards farming community continues to be indifferent. If the same situation continues the country might have many suicides in the years to come. The rehabilitation package announced by the Hon’ble Prime Minister could not give adequate relief to the farmers entangled in debt trap and the corruption of administrative machinery in implementing the package bears testimony to the insensitiveness of government. Lake adequate access to formal credit mechanism made farmers more dependent on informal credit and suffering its consequences.

SEZ A GOVERNMENT PROMOTED LAND GRAB CAMPAIGN :-

In the name of export promotion and development, the government had already approved 408 SEZ in the country and many more are in pipeline. For establishing these SEZs the Union and the State Governments are acquiring huge tracks of fertile and cultivable lands and transferring them to big corporate houses at throw away prices. Those lands which are treated as symbol of pride and also provide lively hood to millions of farmers are being forcibly taken away by the powers that be and in lieu of that the farmers are slapped with ignominy and even mortal persecution more often in the form of firing bullets. Nandigram is a classic example of a State sponsored terrorism to suppress the voice of the rightful owner of land for centuries with sentimental attachment to it. Acquiring huge tracks of fertile land for non-agricultural purposes is threatening the food security of the nation which is already in deep crisis.

INCREASING STRANGLE HOLD OF CORPORATE IN AGRICULTURE :-

Contract farming, genetically modified seeds, import of foreign seed. Futures trading in commodities, APMC Act., retail trade are some of the means through which the government had facilitated the big MNCs like PRO - AGRO, SINZENTA, MONSANTO, DU-PONT ect. to establish their strangle hold in agriculture. Because of the policies adopted by the government in agriculture with the abetment of big corporate houses, on one side the public investment in agriculture sector had sharply declined over different plan periods on the other side the government facilitated corporate investment into agriculture, resulting in unabated loot of farmers as well as consumers. The increasing presence of corporate strangle hold on agriculture had rendered farming as a non-remunerative vocation to small marginal farmers. The government’s documents disclose that about 40% of the farmers are willing to give up cultivation (farming) indicating alarming situation.

LOOMING THREAT ON INDIAN AGRICULTURE DUE TO WTO NEGOTIATIONS :-

Despite the stalemate in WTO negotiations due to the hard and strong positions taken by US and EU with regard to cutting down their farm subsidies, the developed nations are constantly demanding countries like India to provide them more agri-market access, and pressurize the third world countries to take forward the negotiations to suit their requirements. The undue interest shown by our Commerce Minister in building a consensus on the issue could be understood by the citizens. The farm bill, 2007 of US establishes beyond doubt the protective measures adopted by the developed nations to insulate their agriculture from external changes. The changes made to our laws in the form of new Patent Act, Farmers and Breeders Rights Act, Seed Act, etc. in accordance with WTO negotiations have already denied the Indian Farmer of all the rights enjoyed by him traditionally. On one side the developed nations are protecting their agriculture sector and on the other they are pressurizing the developing nations to import minimum percentage of their farm produce requirements, and government of India had willingly succumbed to their pressures due to which the import of agricultural products have reached record heights, worsening the agro crisis in the country. The developed nations have enlarged the agenda for negotiations to under mine Doha development declaration.

STEP MOTHERLY TREATMENT WITH WHEAT FARMERS-IMPORT OF WHEAT :-

For the second consecutive year the government of India had resorted to import of inferior quality of wheat at a very high price of around 400 dollars (2007) per tonne in the name of improving buffer stocks and paying not even half the import price to Indian wheat farmer, who produces superior variety of wheat only shows the extreme bias of government towards MNCs and step motherly treatment with Indian Farmer. When the wheat was imported in the past alongwith wheat came several viruses, weed, pest and fungus with telling effect on Indian farms and farmers had to face the challenge using different pesticides which not only increased cost of production of wheat in India and reduced incomes of farmers but also resulted in erosion of micro nutrients in several states. This time again the government further liberalized the quarantine laws in the country paving way for import of infectious and inferior variety of wheat. The policy of import of wheat had conferred windfall gains to MNCs like Glencore, Cargil, AWB etc. and the corrupt administrative machinery allowed unsuitable wheat throwing phyto sanitary measures to winds. The fact that even cattle refused to eat imported wheat in Maharashtra speaks volumes about the quality of that wheat. Same is the case with many other horticulture crops to cite an example the imported apples from US contained huge pest residue, SJM considers these aspects as instances of bio-terrorism from the west.

THE SJM STRONGLY RESOLVES TO DEMAND :-

01 The government should immediately divorce its love for MNCs, formulate and implement

plans/policies to promote the agriculture in general and farmers interests in particular. The government should enhance budgetary allocation to agriculture from present level of 6% to 25%.

02. To prevent the suicidal tendencies of farmers, the government should announce a package to write of their loans at the same time provide fresh loan to farmers at 3 or 4% rate of interest. Agriculture subsidy be given in the form of cash to farmers.

03. The farmers should be provided with the remunerative prices and mechanism should be evolved to enable farmers to reduce cost of cultivation.

04. SEZ act, 2005 should be repealed and the cultivable lands taken from farmers should be return to them with compensation for damages caused.

05. Ban import of wheat, pulses, oilseeds and other farm products and also implement special plan to increase their production in the country to ensure food security.

06. Promote organic and traditional farming methods with special budgetary allocation to support those activities.

07. Extensive social security measures like oldage pensions, health insurance etc. should be implemented for small marginal farmers and landless poor. Also extend crop insurance to all crops. Proposed Displacement and Rehabilitation Act should not be implemented without detailed survey and consensus.

(RESOLUTION NO. 1 swadeshi jagaran manch, 8^thALL INDIA CONFERENCE, 7^the TO 9^the DECEMBER, 2007

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