10 November, 2020

  • Lessons from Vietnam and Bangladesh Economy
  • Under Biden, unfurling India foreign policy concerns I.R
  • No fireworks Env
  • The cost of clearing the air Env
  • India, Maldives sign four MoUs to boost ties I.R
  • Question for the day

Prelims Quiz

    Solution.

    • Total Marks 0
    • Total Scored 0
    • Total Attempted 0
    • Total Correct 0
    • Total Wrong 0
    • Total Not Attempted 0
    0%
    Description

    UPSC Current Affairs: Lessons from Vietnam and Bangladesh |Page 7

    UPSC Syllabus: Mains – GS Paper II – International Relations

    Sub Theme: | Export Oriented Strategies Adopted by Vietnam & Bangladesh | Problems with Export led Models | UPSC  

    In the last decade, smaller economies such as Bangladesh and Vietnam have pursued export-led model in order to promote economic growth, create more employment opportunities and lift millions of people above the poverty line. Bangladesh has become the second largest apparel exporter after China. On the other hand, exports from Vietnam have increased by over 240% in the last 8 years.

    In spite of having favourable advantages, India has failed to pursue export-led model. In this regard, let us focus on the following dimensions:

    1. Export-oriented Strategies adopted by Vietnam and Bangladesh
    2. Problems with the Export-led Models of Bangladesh and Vietnam
    3. Lessons for India

    Export-oriented Strategies adopted by Vietnam and Bangladesh

    Open-Trade Policy: Signing of FTAs with countries such as US, EU, China, Japan etc. enable them to export their commodities without attracting customs duty in importing countries.

    Liberalised FDI Norms: These countries have opened up various sectors such as electricity, real estate, hospital, defence, railways projects etc. for the FDI. This has incentivised the foreign companies to set up their manufacturing bases in these countries. For example, large brands such as Samsung, Foxconn, H&M, Nike, Adidas, and IKEA have flocked to Vietnam to manufacture their products.

    Cheaper labour Force: The rising Anti-China sentiments, US-China Trade war and growing labour costs in China has forced the foreign companies to shift their bases out of China to other countries such as Vietnam where labour costs are lower.

    Problems with the Export-led Models of Bangladesh and Vietnam

    Lack of Diversification of Exports: While most of the exports of Bangladesh are dominated by apparel, exports from Vietnam are dominated by Mobile phones, Textiles, Electronic Goods etc. 

    The poor diversification of exports from these countries is evident in Economic Complexity Index (ECI), published by Harvard growth Lab. This index ranks countries based on how diversified and complex its manufacturing export basket is. The ECI rank for China is 32, India 43, Vietnam 79, and Bangladesh 127. Such lack of diversification of exports hinders development of other crucial sectors such as Agriculture, Defence, Pharmaceuticals etc.

    Low Value Addition: One of the reasons for increase in Exports from Vietnam is on account of its integration with the Global value Chains (GVCs). However, the amount of value addition that takes place in Vietnam is quite lower. For example, most of its exports of electronic goods is on account of final assembly of Goods which are manufactured in other countries.

    Lessons for India

    Both Bangladesh and Vietnam are much smaller economies as compared to India. Obviously, being a large economy, India cannot rely only on exports to boost its GDP growth. Over-reliance on Exports could make India more vulnerable to external shocks.

    For example, the Export-to-GDP (EGR) ratio of Vietnam is around 107%, which makes it highly vulnerable to external crisis such as Global Financial crisis of 2008. In comparison, India's EGR is around 18.7%, which makes it less vulnerable.

    Undoubtedly, boosting exports is need of the hour. But, it should not be pursued at the expense of other sectors. Rather than focussing entirely on boosting exports, India needs to focus on boosting Manufacturing sector, attract FDI and thus promote economic growth. In that case, exports from India would automatically increase. So, rather than treating Exports as means to promote economic growth, the Government must perceive the exports as ends of economic growth.

    Some of the policy initiatives to be taken include:

    • Signing of FTAs with countries such as ASEAN, Japan, South Korea etc. has led to increase in India's trade deficit. India must renegotiate these FTAs to its advantage.
    • Integration with Global Value Chains (GVCs) should be accompanied by higher focus on diversification of our exports and higher value addition.
    • Attracting foreign Investment though Plug and Play Model: Under the plug-and-play model, the investors are provided with land at affordable cost with all the necessary pre-clearances including Environmental clearances. It would provide in-built office spaces and all the basic facilities such as Electricity, water etc. One of the biggest advantages of such a model is that it kickstarts the production as early as possible without any hurdles. Some of the States such as Maharashtra, Haryana etc. have decided to adopt such a model to boost foreign Investment. This model needs to be replicated by the other states as well.
    • Business Environment: Focus on reduction in the cost of establishing and running a business, Enabling Trade across borders etc.
    • Poor Logistics: Need to address poor logistics such as Roads, Ports, railways etc; Focus on multi-modal transport.
    • Access to Finance: Need to provide export focussed credit, especially for MSMEs, across most states in India.

     

    UPSC Current Affairs:Under Biden, unfurling India’s foreign policy concerns | Page 6

    UPSC Syllabus: Mains – GS Paper II – International Relations

    Sub Theme: India-US Foreign Policy |UPSC

    There has been a concern that defeat of Trump and incoming Biden Presidency. This article analyses consequences of incoming Biden presidency on India's relations with China and Iran. For particular interest to India will be the policy pursued by Biden Administration towards China and Iran.

    China

    USA-China relationship is of greatest consequence for the world. Relations with China are most critical from India's point of view.

    Under Trump, USA adopted a combative policy towards China. USA imposed trade sanctions on China. Technology companies in USA were targeted. In the strategic sphere, USA along with Australia, Japan and China floated QUAD grouping.

    China percieves the QUAD to be a military-strategic grouping constituted with the sole motive to contain China. USA wants QUAD to be formalised in the future. This will mean more members such as South Korea and Taiwan becoming members of QUAD and the group getting more institutionalised.

    Considering the power imbalance between China and India, India needs external support to balance China. Even Nehru (pioneer of non-alignment), asked for support from USA during the 1962 war with China. Thus, India's went close to US and has joined QUAD.

    Concerns with QUAD for India:

    1. QUAD grouping formed with containing China's maritime aspirations in South China Sea and Pacific Ocean. It will not have much bearing on India's China conflict over a boundary dispute which is continental in nature.
    2. Satellite imagery will be provided to India by USA according to BECA agreement for Geo-Spatial Cooperation. However, there are chances that no external power would to India's aid in case when there are major hostilities between India and China over the boundary issue.
    3. However, in the event of China's aggression in the South China Sea, members of QUAD will expect India to join them in fighting China, which is an area far removed from India's boundaries.
    4. Some strategic thinkers believe that have permanent tension with China. However, it is not in India's interests to have China permanently hostile to us as it will absorb huge resources, money and muscle power.
    5. If under Biden, USA adopts a more conciliatory approach towards China, India might find itself in a difficult situation. Countries including the USA, formulate their foreign policy based on their national interests, so if the USA is more accommodative towards China going forward, India might be left alone in its confrontation with China.

    Thus, the author argues for a more sanguine and independent approach to China and not be too dependent on the USA for countering China.

    Iran: Trumps Middle East Policy:

    Under his Presidentship, USA negotiated a deal to establish diplomatic relations between some Gulf States and Israel. (Abraham Accords)

    Trump supported Israel wholeheartedly.

    Trump was against Iran. He moved out of the JCPOA and imposed stringent economic sanctions on Iran.

    • It will not be easy for Biden administration to reverse Trump's Iran policy. Domestic compulsions will not allow Biden to re-adopt JCPOA in its original form. However, surely USA will re-engage Iran through Oman or any other intermediary.
    • It is expected that harsh unilateral sanctions imposed on Iran will be reversed. This would allow India to import oil and gas from Iran (Energy Security) and export products such as pharma and other commodities to Iran.

    India will also be able to move forward on its investments in Iran such as the

    • Expansion of Chabahar Port
    • Railway project connecting the Chabahar port to Afghanistan and further in Central Asia.
    • Investments in Oil and Gas projects

     Thus, according to the Author, defeat of Trump will not lead to a difficult situation for us. Especially considering his hawkish tone towards India. Some of which are:

    1. His calls to impose trade sanctions on India.
    2. He threatened India of consequences if India failed to export Hydrochloroquine pills to USA.

     

    UPSC Current Affairs: No fireworks – Editorial | Page 6

    UPSC Syllabus: Prelims: Environment | Mains: GS Paper-III - Environment

    Sub Theme: Reason to Ban Cracker due to Pollution| UPSC

    Background

    • Keeping in mind the covid 19 pandemic, the NGT has prohibited the sale and use of firecrackers from Nov 10 to 30 in the National Capital Region of Delhi and in all urban centres across the country that recorded poor or worse air quality in November last year.
    • Some concession will be given to cities and towns that have moderate or better air quality, by allowing “green crackers” and specified hours for bursting
    • These directions by NGT are an addition to the orders passed by SC in the past.
      Reason?
    • NGT has given emphasis to the precautionary principle and has given importance to sustainable development and healthy environment over employment and revenue losses.
    • As the impact of ever since impact of COVID 19 has been understood , there is were speculations regarding it becoming worse in winters , hence it was incumbent on the Centre to work with States and resolutely prevent the burning of farm stubble ahead of Deepavali. Stubble burning each year leads to a severe deterioration in air quality across eastern and northern India and causes heavy health and productivity cost.
    • Had there be no stubble burning during this time, some concessions may have been given to burst limited quality of fire crakes. However , since the situation is out of hand only possible solution is to do damage control by imposing such bans.
    • However , proper mechanisms need to be put in place to address the concerns of the firework industry. For eg Tamil Nadu, where 90% of firecrackers are produced, has concerns on the fate of the industry this year as rs 2300 crore of output is set to be affected.
    • A transparent compensation scheme for workers, and suitable relief for producers may be necessary, although the longer­term solution might lie in broad basing economic activity in the Sivakasi region, reducing reliance on firecrackers.


     A long term goal?

    • Policy makers should have this stance not just due to COVID risk but should incorporate such measures otherwise also , if they wish to achieve their ambitious targets under National Clean Air Programme, which seeks to reduce particulate matter pollution by 20% to 30% by 2024.
    • There were 148 days of poor to severe air quality during 2019 in the NCR, down from 206 days the previous year
    • With 40% of all pollution ­linked deaths  attributed to bad air quality in leading emerging economies and some evidence from the U.S. on higher COVID­19 mortality in highly polluted areas, it is time governments showed a sense of accountability on the right to breathe clean air.

     

    UPSC Current Affairs: The cost of clearing the air |Page 7

    UPSC Syllabus: Prelims: Environment | Mains: GS Paper-III - Environment

    Sub Theme: National Clean Air Programme (NCAP) | UPSC         

    Context:

    • To achieve the target under National Clean Air Programme (NCAP) i.e. reduce particulate matter by 20%¬30% from 2017 levels by 2024, Finance Minister Nirmala Sitharaman in February announced a Rs. 4,400 crore package for 2020¬-21 to tackle air pollution in 102 of India’s most polluted cities.
    • Though it was the largest¬ ever yearly allocation by a government to specifically tackle air pollution, the fine print revealed that only half the money was finally allotted to 15 States in November.
    • The rest will be given in January based on how cities achieve certain ‘performance parameters’ that are still being worked out by the Centre.

      Is it enough? - It is unclear if this amount is adequate to handle the task of improving air quality.

    • Firstly - the scale of the problem is unknown as we do not have adequate system in place to continuously monitor ambient air quality monitors.
    • Even the source of the pollution is unclear – whether it is the city’s own activities or whether the pollution is brough on by external factors like stubble burning.  
    • In fact majority of funds which are allocated go into the measurement of pollution and it’s sources.
    • Only 59 out of 122 cities had PM 2.5 data available. Only three States, for instance, had all their  installed monitors providing readings from 2016 to 2018.
    • Prior to 2016, data aren’t publicly available making comparisons of reduction incomparable.
    • Now manual machines are being replaced by automatic ones and India is still largely reliant on imported machines though efforts are underway at institutions such as the Indian Institute of Technology, Kanpur, to make and install low-cost ones.

      Cleaning up

    • The funds don’t take into account the trained manpower and the support system which is required to effectively maintain the systems and these costs are likely to be significant.
    • Then comes the all important aspect of cleaning up. Almost 50% of the budget is for Pollution clean-up activities.
    • Therefore, budgetary allocations alone don’t reflect the true cost of reducing air pollution.
    • Also, money alone doesn’t work. In the case of the National Capital Region, at least ₹600 crore was spent by the Ministry of Agriculture over two years to provide subsidised equipment to farmers in Punjab and Haryana and dissuade them from burning paddy straw.
    • Yet this year, there have been more farm fires than in the previous year and their contribution to Delhi's winter air woes remain unchanged.
    • While funds are critical, proper enforcement, adequate staff and stemming the sources of pollution on the ground are vital to the NCAP meeting its target.

     

    UPSC Current Affairs: India, Maldives sign four MoUs to boost ties |Page 13

    UPSC Syllabus: Mains – GS Paper II – International Relations

    Sub Theme: India-Maldives| UPSC    

    India has recently announced a $500 million package — including a grant of $100 million — in addition to previous line of credit of $800 million.

    RECENT TRENDS & DEVELOPMENTS

    • Maldives government has shown its willingness and commitment in strengthening and maintaining cordial relations with India.
    • According to the UNDP, the Maldives is amongst the worst affected countries in Asia region and potentially globally, due to the impact of Covid-19. During this pandemic, India took early steps and helped this tourism based nation in every possible manner.
    • India has invested hugely in infrastructure development, Health services, Defence and Connectivity.
    • India has announced that it will fund GMCP project which will include construction of a bridge-and-causeway link spanning 6.7 km. This landmark project will streamline connectivity between the four islands, thereby boosting economic activity, generating employment and promoting holistic urban development in the Male region.

    ABOUT INDIA- MALDIVES RELATIONS:

    • India had saved regime of Maumoon Abdul Gayoom from a Military coup in 1984 under Operation Cactus.
    • Due to its location in the Indian Ocean, the Maldives holds strategic importance for India under the ‘Neighbourhood First’ policy.
    • India and Maldives have always supported each other in multilateral platforms such as the UN, the Commonwealth, the NAM, and the SAARC.
    • In 2015, India launched Operation Neer to help the Maldives after a major fire broke out at the Male Water and Sewerage Company.
    • India and Maldives signed a trade agreement in 1981, which provides for export of essential commodities. Recently, India has renewed quotas for supply of essential commodities to Maldives for the year 2020-21.
    • The proximity of location and improvements in air connectivity has increased manifolds in recent years and that’s why number of Indians visiting the Maldives for tourism and business has grown significantly.
    • Maldives is important for uninterrupted energy supply to India and few other countries.
    • It has supported India’s permanent membership candidature at UNSC and has also voted in favour of India for non-permanent seat for the year 2020-21.
    • Maldivessupported India in its proposal to hold the 19th SAARC summit in Pakistan after Uri Attack.
    • India serves as an education, medical treatment, recreation, and business destination for Maldivians.

    ROLE OF CHINA

    • China has been a close development partner and lender. Male has been trying to renegotiate some $1.4 billion it owes to Beijing.
    • During President Yameen’s time in office, Male-New Delhi relations turned rather sour because he was pro-China.
    • Recently, China’s Exim Bank called on the Maldivian government to repay $10 million of loan. It created a furore in Male and has also created an opportunity for India.
    • India-Maldives ties had deteriorated significantly under its President Yameen who was perceived to be close to China.
    • India’s engagement has significantly grown since President Solih came to power, particularly in development partnerships.
    • Now Male is trying to make and maintain balance between China and India.

    Both Male and New Delhi will have to promote mutual cooperation and extend their support to each other. Also both the nations will have to move forward very cautiously as political opponents in Male and China are being very critical about re-growing closeness between India and Male. 

    Comments