iastoppers-india-export
Editorial Notes

Editorial Notes 14th October 2016

2016 Global Hunger Index and India; Municipal Solid Waste (MSW) rules; India’s exports; India-China Bilateral Relations.
By IT's Editorial Notes Team
October 14, 2016

Contents

Polity & Governance

  • Food for thought

Economy

  • It’s a long haul for India’s exports

Environment & Ecology

  • A matter of waste

Bilateral & International Relations

  • The Asian century beckons

 

Polity & Governance

GS (M) Paper-2: “Issues relating to development and management of Social Sector/Services relating to poverty and hunger.”

Food for thought

Introduction:

  • India’s position on 2016 Global Hunger Index is both ironic and tragic as it ranks a lowly 97 among 118 countries on 2016 GHI.

iastoppers-2016-global-hunger-index

Improved, but miles to go:

  • As it is one of the largest producer of cereals, vegetables and fruits and it produces enough food other than pulses to provide adequate nutrition to all. Still 184 million people or about 15.2 per cent of the population are undernourished according to the estimates of the GHI 2016 — and that means India has the largest number of hungry people.
  • That is not to say India has not made progress in reducing proportion of people who are under-nourished, it has improved its score on the GHI 2016 to 28.5, up 39 per cent since 1992 when the index read 46.4.
  • Proportion of under-nourished people has declined seven percentage points from 22.2 % in 1992 population was 846 million, but the count of undernourished may not have declined at all due to the rise in total population.
  • The GHI also notes that wasting and stunting among Indian children below the age of 5 has declined sharply —declined from about 20 % in the early 1990s to about 15.1 % now and from 62 % to about 38.7 % respectively.
  • When compared with the improvements made by several other poorer nations in Asia and Africa, India’s progress pales. For instance, Myanmar improved its GHI score by 61% between 1992 and 2016 — the country had a poorer score than India in 1991. Ghana and Vietnam both have recorded 65% or more improvement during the same period.
  • Each of these countries improved their score by bringing down the proportion of undernourished population, prevalence of wasting and stunting among children under five years as well as by reducing under-five mortality rate.

Access problem:

  • India too can lower the under-nourishment levels by ensuring better access to nutritious food to the poor.
  • Reducing post-harvest wastages of fruits and vegetables and making food security programmes more comprehensive.

Post-harvest wastages:

  • India’s post-harvest waste of vegetables and fruits is estimated at 25 per cent and exports at five per cent.
  • As result, although the gross per capita availability of fruits is estimated to be about 170 grams per day and vegetables at 385 grams per day, the net per capita availability is far lower — 120 grams of fruits and 270 grams of vegetables per day.
  • Pulses intake, estimated at 47 grams per day currently, is lower than the intake prior to the Green Revolution.
  • Also, availability of milk, a rich source of nutrition, has risen over the years and India is currently the largest producer of milk in the world.
  • Production of eggs, another rich source of proteins, has also climbed and India is now the world’s third largest producer.
[Ref: Business Line]

 

Economy

GS (M) Paper-3: “Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.”

It’s a long haul for India’s exports

Introduction:

iastoppers-india-export

  • In 20 out of the last 21 months, India’s merchandise exports posted negative growth.
  • Services exports, which were earlier doing well have now started to decline.
  • Indian officials claim that the export decline has bottomed out and hence it should soon pick up.
  • However, that doesn’t seem a possibility.  Let us see why?

Global factors:

  • Lower demand for imported goods and services in most parts of the world. The slowdown in regions such as China, Japan and EU, along with the great commodity crash, will impede the revival of international trade any time soon.
  • Global trade liberalisation is progressing slow. As trade policy now has to deal with contentious non-tariff issues such as labour and environment, tighter WTO-plus rules on protection of intellectual property rights, public procurement and investment.
  • Brexit is the newest worry as the EU accounts for nearly a third of the global trade even though its share in global GDP is 25 per cent.
  • To make matters worse, trade elasticity (that measures change in world trade as a result of change in global GDP) has gone down from 2 (1980-2011) to 1 (2012-15/16). It is falling both in China and the US — that’s roughly a third of the world economy. For instance, the share of imported components in China’s manufacturing exports has fallen from a peak of 60 per cent in mid-1990s to 35 per cent in 2014 indicating lower demand for outside exporters.

Similarly, increased production of US shale gas has reduced the demand for imported crude oil.

GDP growing not Global trade:

  • Global trade, which on an average grew at double the rate of global GDP during 1980-2011, is now growing at either the same or slower rate as global GDP i.e. sub-3 per cent.
  • According to WTO, world trade is likely to grow at 1.7 per cent in compared to world GDP at 3 per cent this year.
  • The share of services (which are mostly produced and consumed locally rather than traded) in global GDP is increasing sharply and not adding much to the global trade.

Raghuram Rajan aptly says, ‘as countries become richer, non-traded services constitute a greater share of output causing GDP to grow faster than trade.’

Implications for India:

  • Due to lower demand for imported products and services, exports of countries such as India will be affected worst even if India’s global trade share is not significant.
  • Slowing China will impact India’s exports directly — by limiting exports to China and giving tough competition to India’s exports in third country markets as India competes with China in several products starting from apparel and footwear to steel and chemicals.
  • Indirectly, China, by limiting the growth of commodity exporting nations as well as ASEAN, Japan and Korea, will limit the overall demand for Indian exports.
  • Moreover, India’s dream of replacing China as the exporter of low cost manufactured goods in Make in India initiative is going to be seriously challenged by ever-growing competition from LDCs which are likely to have labour cost advantage over India.
  • India will continue to be under pressure to keep hiking minimum wages despite having lower labour productivity compared to countries such as Bangladesh and Vietnam in key manufacturing industries.
  • Further, the EU accounted for 17 per cent ($45 billion) of India’s merchandise exports in FY 2016. Similarly, UK accounted for half of $24 billion IT exports to the EU. These exports are likely to hit by Brexit and its after-effects.

India’s peculiarities in Global trade:

  • Narrow export basket, both in goods and services, top 20 product categories account for 80 per cent of total goods exports.
  • Services sector accounts for roughly 60 per cent of its GDP (and global trade in traded services is growing faster than trade in goods), yet India is not able to benefit much as it has a narrow services export basket with information technology being its main export.
  • Over 62 per cent of IT export goes to the US alone, and one vertical, BFSI accounts for 40 per cent of total IT export, i.e. relying too much on one sub-sector and one market.
  • Despite diverse geography and rich cultural heritage, India has not been able to tap its tourism potential primarily because of infrastructural bottlenecks, lack of ethical business practice and women safety issues.
  • Most exports are either commodities or, have ‘commodity-like’ nature. For instance, contract export of labour intensive items such as apparel or foot wear, have no pricing power and hence operate on thinner margins.
  • Contrary to popular belief, gimmicks such as keeping rupee undervalued won’t help India’s exports. Rupee depreciation usually leads to demand for steeper discounts from buyers in a sluggish global demand scenario. Thus, we end up supplying more goods for the same amount of dollars.
  •  It’s important to realise that faster global GDP growth rather than discounts lifts India’s exports as India’s export basket is now more income elastic than price elastic.

Conclusion:

  • Government is trying to fix trade infrastructural bottlenecks, yet lots remains to be done. Obsessed with revenue collection targets, India’s finance ministry has not shown any urgency in addressing the problem of inverted duties that continues (and may be, will continue) to constrain India’s exports by discouraging value addition within the country.
  • Badly conceived and poorly negotiated trade pacts are not helping India’s exports either and for India’s bad luck they are too difficult to fix once they are concluded.
[Ref: Business Line]

 

Environment & Ecology

GS (M) Paper-3: “Disaster and disaster management”
GS (M) Paper-3: “Environmental pollution and degradation”

A matter of waste

Introduction:

iastoppers-municipal-solid-waste

  • Two landfills in Delhi have caught fire for the second time in less than six months.
  • Smoke tendrils have been issuing out of the two landfills, earlier too, fire caught in these sites.
  • At that time, a Delhi government committee had recommended measures to check such fires such as, setting up waste-to-energy plants, preparing fire safety plans and stationing fire tenders at the sites.
  • These recommendations have been ignored and even if they had been implemented, they were just short term solutions.

Looking the problem:

  • The city generates 9,000 to 10,000 tonnes of waste everyday and its landfills are equipped to take less than two-thirds of it.
  • The fires in the two overstressed landfills are symptomatic of a persistent problem of Indian cities.
  • According to a Central Pollution Control Board (CPCB) report of 2014, Indian cities generated 30,000 tonnes of waste everyday in 1999-2000.
  • By 2010-2011, India’s urban waste burden had risen to more than 50,000 tonnes.
  • Most urban authorities in the country are at sea when it comes to dealing with so much garbage.
  • The precarious state of the landfills is symptomatic of the neglect of urban solid waste disposal in India.

Municipal Solid Waste (MSW) Guidelines

  • The country got its first Municipal Solid Waste (MSW) rules in 2000.
  • They stated that mixed waste should not be dumped in landfills.
  • But 14 years after, the CPCB report rued the absence of a waste segregation system.
  • Moreover, a lot of the wet waste decomposes in the landfills and the rotting matter catches fire, sending toxic smoke into the atmosphere.
  • The rules were amended this year, which recognise that more than 50 per cent of the biodegradable waste can be turned into compost at the local level

But these rules — like their precursor — are akin to advisories and do not establish mechanisms for decentralised waste management.

Alternative approach:

Delhi and Mumbai — and most Indian cities — could do well to emulate Pune and Bengaluru where a system comprising residential welfare associations and informal waste collectors ensures that very little waste goes to landfills.

[Ref: Indian Express]

 

Bilateral & International Relations

GS (M) Paper-2: “Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests”

The Asian century beckons

Introduction:

iastoppers-china-india-relations

  • Over the past 20 years, China-India relations have improved in both breadth and depth. There has been a warming of political ties.
  • The World Bank’s statistics shows that India’s GDP grew from $284.2 billion in 1993 to $2.091 trillion in 2015, which is appreciable.
  • China-India business cooperation is booming. The two-way trade has soared from $272 million in 1993 to $75 billion in 2015.
  • People-to-people exchanges exceeded one million for the first time last year, and 11 pairs of sister provinces/cities have been created between the two countries.
  • There is close cooperation in international and regional affairs, with better coordination under the framework of multilateral regimes including the UN, G20, BRICS and the Shanghai Cooperation Organisation (SCO) & on issues pertaining to climate change, global governance and reform of international financial institutions.

Promoting the relationship between India & China:

According to author, who is 15th ambassador of the People’s Republic of China to India describes the following way to promote the India- China good relationship:

1) Keep up the momentum of high-level exchanges.

  • Frequent exchanges resulted dynamism into our ties. President Xi will attend the BRICS leaders’ meeting in Goa and meet PM Modi in a few days.
  • This will be the ninth meeting between the two leaders since they took office, and the third this year.
  • It is important to maintain regular exchanges between the senior members of the governments and legislatures as well as senior military officials of the two countries, and give full play to the existing mechanisms to enhance strategic communication and increase mutual understanding.

2) Aligning development strategies.

  • China is at a crucial stage of deepening reform and restructuring its economy comprehensively.
  • China is implementing programmes such as the Made in China 2025, Internet Plus and Mass Innovation and Entrepreneurship.
  • India too is at a critical juncture of reform and development. Prime Minister Modi has undertaken initiatives such as Make in India, Digital India, Smart Cities. We need to align our development strategies.

3) Deepen business cooperation.

  • China may actively explore a China-India regional trading arrangement and encourage cooperation on major projects. China is looking forward to new industrial cities built by the Wanda Group and China Fortune Land Development Company in India, which will help create jobs and boost India’s development.
  • Work together on new and renewable energy projects.

4) Promote people-to-people exchanges.

  • We can start more direct flights to destinations in the two countries.
  • We shall also continue our good work in matters pertaining to religious exchanges, and facilitate the Indian pilgrims who visit Kailash Manasarovar in China’s Tibet.
  • Next month, a 200-member Chinese youth delegation will visit India and a Chinese art troupe will take part in the Delhi International Arts Festival.

5) Enhance international and regional cooperation.

  • The scope of China-India relations has gone beyond bilateral matters.
  • Both countries have broad converging interests and face common challenges in Asia and beyond.
  • Need to enhance cooperation in SCO, and work together to ensure the success of the Asian Infrastructure Investment Bank and the BRICS New Development Bank, increase strategic communication and coordination on international and regional affairs and become global partners in matters of strategic coordination.

6) Managing differences properly

  • Should focus on cooperation while handling differences properly.
  • Reduce differences by expanding the pie of cooperation and work for healthier bilateral relations by addressing differences.

Conclusion:

  • China and India account for a third of the world’s population. The relationship between the two countries is one of the most important bilateral relations in the world.
  • A former Chinese leader Deng Xiaoping once said, “Only when China and India have developed will a real Asian century emerge”.
[Ref: Indian Express]

 

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