Jan 23, 2015
[Eco] Centre to release new series of Consumer Price Index next month
For presenting a more accurate and realistic price situation, the government will release next month a new series of Consumer Price Index (CPI) with 2012 as base year for computing the retail inflation rate.
The first series (revised) would be compiled for January, which will be released on February 12.
From January, 2016, onwards, inflation rates would be compiled using the actual CPI of the revised series, according to an official release “Now the CSO is in the process of revising the Base Year from 2010=100 to 2012=100,” it said adding that with this (base) revision, the gap between Price Reference Year (Base Year) and the Weight Reference Year has been minimised. Apart from base revision, a number of methodological improvements have been introduced in the revised series.
The first series (revised) would be compiled for January, which will be released on February 12.
From January, 2016, onwards, inflation rates would be compiled using the actual CPI of the revised series, according to an official release “Now the CSO is in the process of revising the Base Year from 2010=100 to 2012=100,” it said adding that with this (base) revision, the gap between Price Reference Year (Base Year) and the Weight Reference Year has been minimised. Apart from base revision, a number of methodological improvements have been introduced in the revised series.
Source - The Hindu
[Eco] ECB makes last-ditch attempt to revive euro economy
The European Central Bank took the ultimate policy leap on Thursday, launching a government bond-buying programme, which will pump hundreds of billions of new money into a sagging eurozone economy.
The ECB said it would buy government bonds from this March until the end of September, 2016, despite opposition from Germany’s Bundesbank and concerns in Berlin that it could allow spendthrift countries to slacken economic reforms.
Together with existing schemes to buy private debt and funnel hundreds of billions of euros in cheap loans to banks, the new quantitative easing programme will pump 60 billion euro ($69 billion) a month into the economy, ECB President Mario Draghi said.
By September next year, more than one trillion euro would have been created.
“The combined monthly purchases of public and private sector securities will amount to 60 billion euro,’’ Mr. Draghi told a news conference. “They are intended to be carried out until end-September 2016, and will in any case be conducted until we see a sustained adjustment in the path of inflation.’’
Bonds will be bought on the secondary market in proportion to the ECB’s capital key, meaning the largest economies from Germany down will see more of their debt purchased by the ECB than smaller peers.
The prospect of dramatic ECB action had already prompted the Swiss central bank to abandon its cap on the franc while Denmark, whose currency is pegged to the euro, was forced to cut interest rates in anticipation of the flood of money.
The Danish central bank intervened to weaken the crown ahead of the announcement.
The euro fell, European shares jumped and bond yields in Italy, Spain and Portugal fell with the single currency dropping a full cent against the dollar to $1.1511.
Mr. Draghi has had to balance the need for action to lift the eurozone economy out of its torpor against German concerns about risk-sharing and potentially being left to foot the bill.
Tensions broke out as the meeting got underway with French Finance Minister Michel Sapin firing a broadside at Berlin.
‘The Germans have taught us to respect the independence of the European Central Bank,” he told France Info radio. “They must remember that themselves.”
Mr. Draghi said 20 per cent of the asset purchases would be subject to risk-sharing, suggesting the bulk of any potential losses will fall on national central banks.
Source - The Hindu
[Eco] SEBI relaxes regulation for delisting of shares
The Securities and Exchange Board of India (SEBI), on Thursday, approved a raft of changes to regulations, including mandatory 25 per cent upfront payment by foreign investors for warrants and partly-paid shares issued by domestic companies.
Besides, existing debt issuers would be allowed to re-issue the corporate bonds which would help in increasing overall liquidity in the market concerned.
The SEBI board, which met here, also cleared relaxed regulations for delisting offers, made norms stricter for securitisation trustees, and gave 18-month time period for companies trading on exiting bourses to move to nation-wide stock exchanges.
As per the changed norms, a domestic company would collect at least 25 per cent of the total amount while issuing partly-paid shares or warrants to overseas entities.
This would be applicable for such securities issued by way of public offer or rights issue.
In the case of partly-paid shares, the balance consideration would continue to be received within 12 months if the issue size is less than Rs.500 crore, SEBI said.
If the issue size exceeds Rs.500 crore and the issuer has appointed a monitoring agency, SEBI said the period for paying the remaining amount can be decided by the issuer as per the existing regulatory framework.
“In respect of warrants issued along with public or rights issue of specified securities, 25 of the consideration shall be received upfront by the issuer and tenure of such warrants shall be 18 months as against 12 months presently,” it added.
Amendments have also been approved to incorporate provisions for enabling ‘consolidation and re-issuance of debt securities’ and ‘call and put options’ with regard to redemption of debt securities.
“By enabling consolidation and re-issuance of debt-securities, the illiquid and infrequently traded corporate bonds can be re-issued thereby leading to creation of a larger floating stock that can increase liquidity in the market,” SEBI said.
To make the delisting process much more easier, SEBI said the requirement of mandatory buying minimum 25 per cent shares of public shareholders would be relaxed.
The relaxation would be done only if the acquirer and the merchant banker concerned are able to “demonstrate that they have contacted all the public shareholders, about the offer.”
In such cases, “the condition of mandatory participation of 25 per cent of the public shareholders holding shares in demat mode would not be applicable,” SEBI said.
Taking into consideration the difficulties faced by entities, the board has decided to give them 18-month time period to get listed on nation-wide stock exchanges.
Source- The Hindu
No agreement on a new Nepal Constitution
Opposition lawmakers obstruct proceedings; demand withdrawal of "majority vote" move
On the day the Constituent Assembly (CA) was to deliver the new Constitution, it saw continued obstruction of the House by Opposition lawmakers even as top leaders held a series of discussions to end standoff but could not reach an agreement.
The Opposition lawmakers resumed their obstruction of the proceedings of the Assembly after the talks broke down among the four political parties. They are against resumption of proceedings of the Assembly until the government withdrew its move to draft the Constitution through the process of majority vote.
Earlier, one of the members from the UCPN (Maoist), Umesh Kumar Yadav broke chairs again in the House, protesting strong security presence and rigorous security check of the CA members, reports said. Mr. Yadav had resorted to vandalism on Monday midnight as well.
Earlier, in a meeting initiated by CA Chairman Subas Nembang, political parties held inter- and intra-party talks on the proposal floated by Madhesi Janadhikar Forum (Loktantrik) Chairman Bijay Kumar Gachchhedar on sending resolved subjects to the Constitution Drafting Committee of the CA and take one more month to resolve the dispute on state restructuring.
According to MJF (Loktantrik) Chief Whip Ram Janam Chaudhary, Mr. Gachchhedar suggested that the subject of electoral system and judiciary be sent to the Drafting Committee since the parties have reached an understanding on them. On model of governance, the parties had agreed that “improved” Westminster parliamentary system would be adopted but it be sent to the committee with a note of dissent on it from the UCPN (Maoist). The party has been advocating a system of directly elected executive President.
On the most intractable issue of federalism, Mr. Gachchhedar said the parties should discuss forming six to nine States, and decide the names and boundaries of new States in the next two months.
While all sides termed the proposal positive, they failed to agree on the way ahead. The Nepali Congress and the CPN-UML wanted to send subjects to the Drafting Committee as proposed. However, the UCPN (Maoist)-led Opposition alliance wanted to limit it to reading out a statement of agreement on it.
The day was marked with tension but all sides exercised restraint. Nepal Federation of Indigenous Nationalities (NEFIN) announced its picketing of CA premises and the central secretariat at Singh Durbar.
On the day the Constituent Assembly (CA) was to deliver the new Constitution, it saw continued obstruction of the House by Opposition lawmakers even as top leaders held a series of discussions to end standoff but could not reach an agreement.
The Opposition lawmakers resumed their obstruction of the proceedings of the Assembly after the talks broke down among the four political parties. They are against resumption of proceedings of the Assembly until the government withdrew its move to draft the Constitution through the process of majority vote.
Earlier, one of the members from the UCPN (Maoist), Umesh Kumar Yadav broke chairs again in the House, protesting strong security presence and rigorous security check of the CA members, reports said. Mr. Yadav had resorted to vandalism on Monday midnight as well.
Earlier, in a meeting initiated by CA Chairman Subas Nembang, political parties held inter- and intra-party talks on the proposal floated by Madhesi Janadhikar Forum (Loktantrik) Chairman Bijay Kumar Gachchhedar on sending resolved subjects to the Constitution Drafting Committee of the CA and take one more month to resolve the dispute on state restructuring.
According to MJF (Loktantrik) Chief Whip Ram Janam Chaudhary, Mr. Gachchhedar suggested that the subject of electoral system and judiciary be sent to the Drafting Committee since the parties have reached an understanding on them. On model of governance, the parties had agreed that “improved” Westminster parliamentary system would be adopted but it be sent to the committee with a note of dissent on it from the UCPN (Maoist). The party has been advocating a system of directly elected executive President.
On the most intractable issue of federalism, Mr. Gachchhedar said the parties should discuss forming six to nine States, and decide the names and boundaries of new States in the next two months.
While all sides termed the proposal positive, they failed to agree on the way ahead. The Nepali Congress and the CPN-UML wanted to send subjects to the Drafting Committee as proposed. However, the UCPN (Maoist)-led Opposition alliance wanted to limit it to reading out a statement of agreement on it.
The day was marked with tension but all sides exercised restraint. Nepal Federation of Indigenous Nationalities (NEFIN) announced its picketing of CA premises and the central secretariat at Singh Durbar.
Source - The Hindu
Sutlej, Beas to be included in water highways project, says Gadkari
99 rivers across the country to be developed; Approval soon
Sutlej and Beas have been included in the ambitious project in which 99 rivers across the country would be developed as water highways.
The Parliament is expected to grant its approval to the project in its Budget session.
Announcing this at Bathinda on Thursday, Union Minister of Road, Transport and Shipping Nitin Gadkari also launched the construction of Rs.18,000 crore worth of road projects that would make Punjab the first State in the country to have connectivity of all major cities through four or six lane highways.
Mr. Gadkari laid the foundation of seven projects, including the four-laning of the National Highway from Bathinda to Chandigarh. The project would be completed at a cost of Rs.3,342 crore and would connect Punjab, Haryana and Rajasthan.
Mr. Gadkari said that by December 2015, Punjab would also witness the initiation of the four-laning of Amritsar-Bathinda highway at a cost of Rs.3,800 crore, Jalandhar to Moga for Rs.1,500 crore, Moga-Barnala for Rs.500 crore, augmenting Jalandhar-Hoshiarpur highway up to Himachal Pradesh border for Rs.1,000 crore, Chandigarh-Ludhiana costing Rs.2,000 crore, Kurali-Kharar for Rs.300 crore, Rupnagar-Phagwara with Rs.1,000 crore investment, as well as construction of by-passes at Ladowal in Ludhiana costing Rs.315 crore and Amritsar-Attari at Rs.250 crore.
Deputy Chief Minister Sukhbir Singh Badal said that things had changed for the State after the formation of the NDA Government as during the last five years, the UPA Government had not cleared single project. He added that during a meeting three months ago, he had presented Mr.Gadkari the proposals for all these projects.
Sutlej and Beas have been included in the ambitious project in which 99 rivers across the country would be developed as water highways.
The Parliament is expected to grant its approval to the project in its Budget session.
Announcing this at Bathinda on Thursday, Union Minister of Road, Transport and Shipping Nitin Gadkari also launched the construction of Rs.18,000 crore worth of road projects that would make Punjab the first State in the country to have connectivity of all major cities through four or six lane highways.
Mr. Gadkari laid the foundation of seven projects, including the four-laning of the National Highway from Bathinda to Chandigarh. The project would be completed at a cost of Rs.3,342 crore and would connect Punjab, Haryana and Rajasthan.
Mr. Gadkari said that by December 2015, Punjab would also witness the initiation of the four-laning of Amritsar-Bathinda highway at a cost of Rs.3,800 crore, Jalandhar to Moga for Rs.1,500 crore, Moga-Barnala for Rs.500 crore, augmenting Jalandhar-Hoshiarpur highway up to Himachal Pradesh border for Rs.1,000 crore, Chandigarh-Ludhiana costing Rs.2,000 crore, Kurali-Kharar for Rs.300 crore, Rupnagar-Phagwara with Rs.1,000 crore investment, as well as construction of by-passes at Ladowal in Ludhiana costing Rs.315 crore and Amritsar-Attari at Rs.250 crore.
Deputy Chief Minister Sukhbir Singh Badal said that things had changed for the State after the formation of the NDA Government as during the last five years, the UPA Government had not cleared single project. He added that during a meeting three months ago, he had presented Mr.Gadkari the proposals for all these projects.
Source - The Hindu
[PIB] Tourism and Airline Industries
Minister of State for Tourism (Independent Charge), Culture (Independent Charge) and Civil Aviation Dr. Mahesh Sharma has said that the coordination between tourism and airlines industries is crucial for promoting tourism in the country. He said the Government believes in bringing all stakeholders together to discuss how the air transport industry can best contribute to the development of tourism. He was speaking at an “Interaction between Tourism and Airlines” organized by the Ministry of Tourism and Ministry of Civil Aviation in association with Federation of Association in Indian Tourism and Hospitality (FAITH) here today. The Minister informed that the Government has set up an agenda of 25 actionable points for the year 2015 to promote tourism.
Dr. Sharma said that the implementation of Electronic Travel Authorisation (ETA) enabled Visa on Arrival, for 43 countries, is showing excellent results and the Government is hopeful that this facility will be extended to all remaining countries in the near future. He informed that as on 21 January 2015, (less than 2 months from the launch of this facility) 41,114 TVOAs have been issued. Expressing happiness over positive growth of both international and domestic tourism, he said Foreign Tourist Arrivals (FTAs) during 2014 were 74.62 lakh with a growth of 7.1% as compared to the FTAs of 69.68 lakh in 2013.
The Minister underlined that the true potential of the country is much more. A target of increasing the tourist arrivals to 10 million in near future has been setup. Dr. Sharma said that the airlines sector is an important part of the supply chain for “Make in India” in Tourism sector. He said over 90 percent international tourists arrive in India by air. The Minister added that the growth of aviation depends on good commercial decisions, and on the quality and capacity of India’s airports, and the other highly visible infrastructure associated with aviation.
The delegates from airlines and tourism industries deliberated on various issues concerning promotion of tourism and increasing connectivity. The issues raised included better airport infrastructure, security measures including women’s safety, increasing immigration counters, cleanliness, e-visa facility etc. Dr. Sharma assured that whatever issues were discussed during the interaction will be addressed within a definite time frame.
Source - PIB
Ban on Indian mango imports to EU to be lifted
A ban on Indian mango imports into the European Union is to be lifted, clearing the way for them to return to the UK and other member states.
However, other foodstuffs such as Indian aubergines, two types of squash, and a type of leaf used in cooking will remain restricted.
Indian mango shipments to the EU were suspended in May after fruit flies were found in consignments.
A European Commission committee voted to lift the ban on Tuesday.
There had been "significant improvements" in India's mango export system, the European Commission said after the unanimous vote.
The UK government previously said it was working towards the ban being lifted and was one of the member states that participated in the vote to lift the ban.
"We have been working closely with our Indian and European counterparts to resolve the issue as quickly as possible and I am pleased that trade in mangoes will resume," said the Minister for the Natural Environment, Lord de Mauley.
"Today's decision demonstrates the marked improvements India has made to its export system and it is important that these standards are maintained so that trade can continue and UK plant health remains protected," he said.
However, other foodstuffs such as Indian aubergines, two types of squash, and a type of leaf used in cooking will remain restricted.
Indian mango shipments to the EU were suspended in May after fruit flies were found in consignments.
A European Commission committee voted to lift the ban on Tuesday.
There had been "significant improvements" in India's mango export system, the European Commission said after the unanimous vote.
The UK government previously said it was working towards the ban being lifted and was one of the member states that participated in the vote to lift the ban.
"We have been working closely with our Indian and European counterparts to resolve the issue as quickly as possible and I am pleased that trade in mangoes will resume," said the Minister for the Natural Environment, Lord de Mauley.
"Today's decision demonstrates the marked improvements India has made to its export system and it is important that these standards are maintained so that trade can continue and UK plant health remains protected," he said.
Source - BBC
India hunger striker Irom Sharmila to be freed
It is not the first time 42-year-old Irom Sharmila will be free to go home and her force-feeding suspended.
The authorities have force-fed her in Manipur using a law against suicide.
But India's recent decriminalisation of suicide could mean that the authorities will find it harder to detain her again.
However, her supporters warn that the relevant clause has not yet been removed from the criminal code.
She started her hunger strike to protest against sweeping powers for the army in her remote north-eastern home state.Not since November 2000 has Irom Sharmila eaten a meal voluntarily.
The Armed Forces Special Powers Act allows the army to search and enter properties, make arrests and shoot on sight.
'Cycle of arrest'
Sharmila, also known as the Iron Lady of Manipur, was briefly freed last year after a court set aside the charges against her.
But when she vowed to continue her fast, she was given a fresh charge and taken into custody again.
In December the home ministry announced its intention to decriminalise attempted suicide.
"The judgement must end the farcical cycle of arrest and re-arrest that this brave activist has faced for so long", said Amnesty International's India Programme Director Shemeer Babu.
He urged the authorities to engage with the issues Sharmila was raising with her prolonged campaign.
Source - BBC
Sri Lanka’s ‘rainbow revolution’
People of all races, religions, classes, castes and creeds united using the ballot box to make clear their determined stance against nepotism, corruption and oppression
January 9 was the beginning of a new era for Sri Lanka, domestically and internationally. After my first week as Foreign Minister, I feel encouraged by the level of warmth, openness and goodwill shown to the new Sri Lankan government by an overwhelming number of representatives of the international community.
For too long now, a culture of paranoia and a debilitating fear psychosis has gripped Sri Lanka and we have isolated ourselves within a rapidly globalising world. Now as we open up to the world, and re-establish ties equally with all nations, we also look forward to the world opening up to us. Despite many election law violations, the misuse of state resources during campaigning as well as a last-minute attempt at a coup d'état, thanks to the bravery of the Sri Lankan voters and the dedication and integrity of our armed forces, police, public servants and elections commissioner, we were able to transition peacefully from what was becoming a military state into the democratic norms of a civilised nation. In this uniquely Sri Lankan concoction of the Arab Spring, instead of bullets, pellets and stones, Sri Lankans of all races, religions, classes, castes and creeds united in a rainbow revolution by using the ballot box to make clear their determined stance against nepotism, corruption and oppression.
First steps
The challenge we face today is to rebuild our institutions while maintaining the principles upon which our campaign was developed, and to re-emerge into the global sphere as a key stakeholder in Asia and thereafter the world, as a nation committed to democracy, good governance, law and order and pluralism. Our first steps as a new government have been to open our doors without fear to all journalists and to replace the Northern Province Governor with a respected diplomat. We have also begun the process of initiating far-reaching political reforms in Parliament regarding the right to information, the 19th amendment, and the abolition of the executive presidency which President Maithripala Sirisena has promised in his manifesto and will fulfil in the coming months.
Embarking on our first diplomatic trip to India was symbolic of our intentions to restore a relationship that grew strained under the Rajapaksa regime. Our closest neighbour, India received us as if it were welcoming back after many years of absence a dear and old friend. We spent three hours discussing our bilateral relationship in detail with the Indian External Affairs Minister, and committed ourselves to the early resolution of mutually problematic issues such as fisheries, while also acknowledging the increased opportunities for regional integration, connectivity and economic development that accompany the restoration of favourable relations. As India emerges as one of the world’s foremost economic superpowers, we will extend our support and friendship to it, and after my meeting with Prime Minister Narendra Modi, I am confident not only that India will take utmost pride in our successes and feel deepest sorrow for our grievances, but will also act wholeheartedly to support us in our difficult journey ahead.
Motivated by fear of war crimes allegations, the Rajapaksas continue to spread unfounded rumours about our international allies and our fellow Sri Lankans living abroad, while attempting to fuel communal tensions locally. Our vision for Sri Lanka is one of post-war unity, and this means appealing to the hearts and minds of our fellow citizens in the North and East, without compromising on the integrity or security of the rest of the country. This means also reducing the cost of living, ensuring the freedom to practise religion, and eliminating corruption while also constructing a meritocracy with streamlined, fair and efficient internal processes so we can accelerate development. These reforms in our political culture will ultimately benefit tourism, investment and local industry, so the common Sri Lankan men or women, a majority of whom are Sinhalese and who were critical in securing this change, will be able to reap the benefits. This government will take into account the interests and the history of long-suffering minorities and address their needs as equal citizens of Sri Lanka. If the Tamil and Muslim people can trust our government to govern without discrimination and without neglecting their many grievances, then we can truly begin on the journey towards reconciliation and national unity. This will not be an easy task and calls for the demonstration of concrete actions that reflect our vision and resolve to achieve it. The ghosts of suspicion, distrust and uncertainty created by the previous government in the minds of the minorities towards state actors will not be easy to banish.
Beam of hope
I am privy to the collective sigh of relief that Sri Lankans are feeling, as the fear and intimidation dissipate, and signs of true reconciliation begin to precipitate. I hope the story of our people and their rainbow revolution is able to provide a beam of hope for the rest of the world. In the last few days, we have seen our very own ‘Burma moment,’ where in a story similar to our own, decades-long military rule and oppression were abandoned for the promise of democracy.
The effects of many years of state propaganda by the Mahinda Rajapaksa regime to coerce Sri Lankans into believing in the myth of an international conspiracy will not wear away easily, without the informed and active leadership of politicians, businessmen, civil society, artists and that of the international community. Making the congratulatory voices coming from the international community audible to those who need to hear it the most will go a long way in eroding some of the politically cultivated doubts and fear among some Sri Lankans towards the international community. I sincerely hope that in the next few challenging days, the international community will rally behind Sri Lankans, who fought against unimaginable odds and oppression to vote in conditions of fear and uncertainty, and realised a miraculous victory for their country. I also hope the international community will support us to help secure and entrench the progressive constitutional reforms that are part of the vision to make Sri Lanka an advanced modern democracy.
(Mangala Samaraweera is Foreign Minister of Sri Lanka.)
January 9 was the beginning of a new era for Sri Lanka, domestically and internationally. After my first week as Foreign Minister, I feel encouraged by the level of warmth, openness and goodwill shown to the new Sri Lankan government by an overwhelming number of representatives of the international community.
For too long now, a culture of paranoia and a debilitating fear psychosis has gripped Sri Lanka and we have isolated ourselves within a rapidly globalising world. Now as we open up to the world, and re-establish ties equally with all nations, we also look forward to the world opening up to us. Despite many election law violations, the misuse of state resources during campaigning as well as a last-minute attempt at a coup d'état, thanks to the bravery of the Sri Lankan voters and the dedication and integrity of our armed forces, police, public servants and elections commissioner, we were able to transition peacefully from what was becoming a military state into the democratic norms of a civilised nation. In this uniquely Sri Lankan concoction of the Arab Spring, instead of bullets, pellets and stones, Sri Lankans of all races, religions, classes, castes and creeds united in a rainbow revolution by using the ballot box to make clear their determined stance against nepotism, corruption and oppression.
First steps
The challenge we face today is to rebuild our institutions while maintaining the principles upon which our campaign was developed, and to re-emerge into the global sphere as a key stakeholder in Asia and thereafter the world, as a nation committed to democracy, good governance, law and order and pluralism. Our first steps as a new government have been to open our doors without fear to all journalists and to replace the Northern Province Governor with a respected diplomat. We have also begun the process of initiating far-reaching political reforms in Parliament regarding the right to information, the 19th amendment, and the abolition of the executive presidency which President Maithripala Sirisena has promised in his manifesto and will fulfil in the coming months.
Embarking on our first diplomatic trip to India was symbolic of our intentions to restore a relationship that grew strained under the Rajapaksa regime. Our closest neighbour, India received us as if it were welcoming back after many years of absence a dear and old friend. We spent three hours discussing our bilateral relationship in detail with the Indian External Affairs Minister, and committed ourselves to the early resolution of mutually problematic issues such as fisheries, while also acknowledging the increased opportunities for regional integration, connectivity and economic development that accompany the restoration of favourable relations. As India emerges as one of the world’s foremost economic superpowers, we will extend our support and friendship to it, and after my meeting with Prime Minister Narendra Modi, I am confident not only that India will take utmost pride in our successes and feel deepest sorrow for our grievances, but will also act wholeheartedly to support us in our difficult journey ahead.
Motivated by fear of war crimes allegations, the Rajapaksas continue to spread unfounded rumours about our international allies and our fellow Sri Lankans living abroad, while attempting to fuel communal tensions locally. Our vision for Sri Lanka is one of post-war unity, and this means appealing to the hearts and minds of our fellow citizens in the North and East, without compromising on the integrity or security of the rest of the country. This means also reducing the cost of living, ensuring the freedom to practise religion, and eliminating corruption while also constructing a meritocracy with streamlined, fair and efficient internal processes so we can accelerate development. These reforms in our political culture will ultimately benefit tourism, investment and local industry, so the common Sri Lankan men or women, a majority of whom are Sinhalese and who were critical in securing this change, will be able to reap the benefits. This government will take into account the interests and the history of long-suffering minorities and address their needs as equal citizens of Sri Lanka. If the Tamil and Muslim people can trust our government to govern without discrimination and without neglecting their many grievances, then we can truly begin on the journey towards reconciliation and national unity. This will not be an easy task and calls for the demonstration of concrete actions that reflect our vision and resolve to achieve it. The ghosts of suspicion, distrust and uncertainty created by the previous government in the minds of the minorities towards state actors will not be easy to banish.
Beam of hope
I am privy to the collective sigh of relief that Sri Lankans are feeling, as the fear and intimidation dissipate, and signs of true reconciliation begin to precipitate. I hope the story of our people and their rainbow revolution is able to provide a beam of hope for the rest of the world. In the last few days, we have seen our very own ‘Burma moment,’ where in a story similar to our own, decades-long military rule and oppression were abandoned for the promise of democracy.
The effects of many years of state propaganda by the Mahinda Rajapaksa regime to coerce Sri Lankans into believing in the myth of an international conspiracy will not wear away easily, without the informed and active leadership of politicians, businessmen, civil society, artists and that of the international community. Making the congratulatory voices coming from the international community audible to those who need to hear it the most will go a long way in eroding some of the politically cultivated doubts and fear among some Sri Lankans towards the international community. I sincerely hope that in the next few challenging days, the international community will rally behind Sri Lankans, who fought against unimaginable odds and oppression to vote in conditions of fear and uncertainty, and realised a miraculous victory for their country. I also hope the international community will support us to help secure and entrench the progressive constitutional reforms that are part of the vision to make Sri Lanka an advanced modern democracy.
(Mangala Samaraweera is Foreign Minister of Sri Lanka.)
Source - The Hindu
[Ed] [Eco] A misinformed policy debate
Governor Raghuram Rajan’s January 15 reduction in the policy repo rate from 8.0 per cent to 7.75 per cent has generated ecstasy in the stock market, industry and the media as if the Reserve Bank of India has resolved most of the problems of the Indian economy with a magic wand. It’s a typical case of irrational exuberance.
Memories are short; it was not too long ago that the RBI was criticised for the ineffectiveness of its policy actions-- that a series of increases/decreases of the policy repo rate have not produced the desired effect. Markets and opinion-makers often forget that monetary policy operates with a lag and it is futile to expect an instant policy impact.
The change in the repo rate is at best a signal. They at best bring about minor variations in banks’ lending rates. Banks, to defend their margins, would first reduce interest rates on fixed deposits. As a reduction in deposit rates is only on fresh fixed deposits and renewals, the beneficial effect on banks’ margins is very gradual.
In contrast, when lending rates are reduced, the impact is on all lending. As such, banks reduce lending rates only on select sectors. Since interest costs account for about 10 per cent of total industrial costs, a 0.25 percentage point reduction in lending rates reduces industrial costs by 0.025 percentage points. As such, the market reaction to the recent reduction in the policy repo rate was totally unwarranted. All that could be justifiably concluded is that the RBI has done its bit and passed on the relay baton to the fiscal authorities.
Fiscal consolidation
Dangerous ideas are being floated by some segments of industry that the medium-term fiscal consolidation programme should be abandoned and that more specifically, the heavens won’t fall if the fiscal deficit for 2014-15 exceeds the Budget estimate of 4.1 per cent of GDP. It is gratifying that the government has categorically indicated that it is committed to the 4.1 per cent target.
The fiscal deficit target is expressed as a percentage of nominal GDP. This is deceptive as the nominal GDP has a component of real growth and inflation, and the achievement of the target can have major qualitative differences. Hence, it is more meaningful to express the fiscal deficit as a percentage of total expenditure. Looked at this way, the fiscal deficit is close to 30 per cent of total expenditure, which is clearly excessive.
The time profile of the budget deficit shows a major qualitative weakness. According to the Budget estimate, the deficit is 30 per cent of total expenditure for the full year, but in the first eight months of the current fiscal year up to November 2014, the deficit is 49 per cent of total expenditure. The compression of the Budget deficit towards the latter months of the financial year is a result of undesirable measures.
Further, it is essential to ensure that the compression in the period from December 2014 to March 2015 does not fall exclusively on the vulnerable social sectors such as education and health; rather, it should happen in sectors where there are clear signs of wasteful expenditure.
PSU sales
The sale of public sector units (PSUs) raises a number of issues. When the government sells its family silver, it should reduce its debt and not use it to cover up its Budget deficit. Illustratively, the proceeds of PSU sales should be earmarked to build up a Consolidated Sinking Fund (CSF) to redeem the public debt.
This has been recommended on many occasions, but the fiscal pundits have shot this down on the ground that there is no point in building up a CSF.
As a result, the way the government undertakes its borrowing is to determine its net borrowing requirement and then add the repayments to derive its gross borrowing requirement; this is the epitome of a Ponzi scheme. Fiscal experts take comfort in the fact that the ratio of debt to GDP of the Centre and States has declined from 90 per cent in 2003-04 to 69 per cent in 2013-14. This argument is strengthened by the fact that the Indian debt to GDP is substantially lower than Japan (226 per cent), Italy (130 per cent), France (98 per cent), the UK (92 per cent) and the US (72 per cent).
Brutal non-transparent tax
What is generally not appreciated is that the major factor contributing to the lower ratio for India is the relatively high inflation in India as also the fact that in India the deficit excludes PSU borrowing. Inflation is a brutal non-transparent tax, which is totally regressive as it affects the lowest income group the most.
It is pertinent to recall that when Yashwant Sinha was finance minister, the sales of PSUs were specifically earmarked for the National Renewal Fund.
Later, however, as fiscal pressures increased, the proceeds of PSU sales were blatantly used to cover up the fiscal deficit.
Issues relating to taxation and expenditure control will require separate examination. (to be continued)
The writer is a Mumbai-based economist
Memories are short; it was not too long ago that the RBI was criticised for the ineffectiveness of its policy actions-- that a series of increases/decreases of the policy repo rate have not produced the desired effect. Markets and opinion-makers often forget that monetary policy operates with a lag and it is futile to expect an instant policy impact.
The change in the repo rate is at best a signal. They at best bring about minor variations in banks’ lending rates. Banks, to defend their margins, would first reduce interest rates on fixed deposits. As a reduction in deposit rates is only on fresh fixed deposits and renewals, the beneficial effect on banks’ margins is very gradual.
In contrast, when lending rates are reduced, the impact is on all lending. As such, banks reduce lending rates only on select sectors. Since interest costs account for about 10 per cent of total industrial costs, a 0.25 percentage point reduction in lending rates reduces industrial costs by 0.025 percentage points. As such, the market reaction to the recent reduction in the policy repo rate was totally unwarranted. All that could be justifiably concluded is that the RBI has done its bit and passed on the relay baton to the fiscal authorities.
Fiscal consolidation
Dangerous ideas are being floated by some segments of industry that the medium-term fiscal consolidation programme should be abandoned and that more specifically, the heavens won’t fall if the fiscal deficit for 2014-15 exceeds the Budget estimate of 4.1 per cent of GDP. It is gratifying that the government has categorically indicated that it is committed to the 4.1 per cent target.
The fiscal deficit target is expressed as a percentage of nominal GDP. This is deceptive as the nominal GDP has a component of real growth and inflation, and the achievement of the target can have major qualitative differences. Hence, it is more meaningful to express the fiscal deficit as a percentage of total expenditure. Looked at this way, the fiscal deficit is close to 30 per cent of total expenditure, which is clearly excessive.
The time profile of the budget deficit shows a major qualitative weakness. According to the Budget estimate, the deficit is 30 per cent of total expenditure for the full year, but in the first eight months of the current fiscal year up to November 2014, the deficit is 49 per cent of total expenditure. The compression of the Budget deficit towards the latter months of the financial year is a result of undesirable measures.
Further, it is essential to ensure that the compression in the period from December 2014 to March 2015 does not fall exclusively on the vulnerable social sectors such as education and health; rather, it should happen in sectors where there are clear signs of wasteful expenditure.
PSU sales
The sale of public sector units (PSUs) raises a number of issues. When the government sells its family silver, it should reduce its debt and not use it to cover up its Budget deficit. Illustratively, the proceeds of PSU sales should be earmarked to build up a Consolidated Sinking Fund (CSF) to redeem the public debt.
This has been recommended on many occasions, but the fiscal pundits have shot this down on the ground that there is no point in building up a CSF.
As a result, the way the government undertakes its borrowing is to determine its net borrowing requirement and then add the repayments to derive its gross borrowing requirement; this is the epitome of a Ponzi scheme. Fiscal experts take comfort in the fact that the ratio of debt to GDP of the Centre and States has declined from 90 per cent in 2003-04 to 69 per cent in 2013-14. This argument is strengthened by the fact that the Indian debt to GDP is substantially lower than Japan (226 per cent), Italy (130 per cent), France (98 per cent), the UK (92 per cent) and the US (72 per cent).
Brutal non-transparent tax
What is generally not appreciated is that the major factor contributing to the lower ratio for India is the relatively high inflation in India as also the fact that in India the deficit excludes PSU borrowing. Inflation is a brutal non-transparent tax, which is totally regressive as it affects the lowest income group the most.
It is pertinent to recall that when Yashwant Sinha was finance minister, the sales of PSUs were specifically earmarked for the National Renewal Fund.
Later, however, as fiscal pressures increased, the proceeds of PSU sales were blatantly used to cover up the fiscal deficit.
Issues relating to taxation and expenditure control will require separate examination. (to be continued)
The writer is a Mumbai-based economist
Source - Business Line
[Ed] [Eco] How not to contain the fiscal deficit
The tendency to opt for poorly conceived expenditure cuts and use non-tax revenues to plug the gap must stop
India is in a precarious situation. More than eight months into the current fiscal, fiscal deficit is almost breaching the annual target; revenue receipts are not reaching even half the yearly target; and over Rs. 8 lakh crore are pending in direct tax recoveries. Future steps would demonstrate if the government has a long-term strategy in place for fiscal governance.
High levels of deficit give rise to structural weaknesses and are unsustainable for any economy. They not only cause sharp increases in the debt-GDP ratio, but also adversely affect savings and investment, and consequently growth.
Therefore, containing deficits is important. However, it must be noted that in doing so means are as important as ends. Use of unsuitable means, while providing short-term relief, compromises the ability of a country to develop a long-term fix.
The problem
While India has managed to contain deficits to budgeted levels, this has been achieved through incessant cuts in budgeted Plan expenditures, or through generation of non-tax revenues. This strategy is not sustainable.
Diversions of up to 20 per cent on either side as against the budgeted figures for revenue and expenditures have increasingly being noticed in recent years. Private sector investment plans are inextricably linked to priority areas set by the government. As a result of large scale expenditure cuts without really differentiating between important and unimportant sectors, the private sector is forced to alter its investment strategies midway, which is not a healthy sign.
Similarly, using non-tax revenues, in the form of disinvestment receipts and sale of natural resources to make up the shortfall in tax revenues, demonstrates a short-term mindset. Such revenues are not an annual fixture, and they provide a false sense of respite about the government’s ability to meet deficit targets.
Long term fiscal policyIndia needs a long-term policy on fiscal governance and an independent budget office to aid its implementation.
The policy must have a long-term objective to achieve sustainable levels of deficits by achieving a balance between expenditure and tax revenues, taking into account the unavoidable phases of growth and contraction in the economy.
The objectives must be set up, and periodically reviewed, in accordance with performances of central, state and local-level actors. The policy must prescribe for clear accountability mechanisms, and must not allow diversions from budgeted figures of expenditure and revenue beyond a prescribed ‘safe harbour’.
Revenue regimeTo augment tax revenues, the policy must set out a time-bound and focused roadmap to realise outstanding revenues. It must undertake a honest assessment of costs incurred in contesting the pending claims; drop the cases in which cost to contest is more than the amount claimed; engage with litigants in relation to other claims; and ensure receipts within a time-bound manner.
The policy must also initiate reforms in the revenue foregone regime. It must revisit unnecessary exemptions, deductions and rebates that do not serve any purpose today, suggest simplification and rationalisation required, and provide a transition path to implement its suggestions within a specified time.
The policy must avoid insalubrious reliance on non-tax revenues and a separate disinvestment strategy must be developed for generating and utilising revenues from sale of assets and natural resources.
Expenditure regimeThe long-term fiscal policy must take into account State-level considerations while setting out broad contours of expenditure planning, implementation, monitoring and evaluation.
It must put in place evidence-based expenditure regime, and the short and medium term plans of the Centre and States must be compliant with the policy. The policy must aim to build capacity of local level actors to facilitate execution, which would also aid in fixing accountability. The policy must make a clear distinction between merit and non-merit subsidies, with a roadmap to gradually reduce the latter.
Independent budget office
A successful adoption and implementation of a long-term fiscal policy for India will need to be supported by setting up an independent budget office.
The office should have expert staff to provide research, review and technical support for planning, execution, monitoring and evaluation of short and medium term revenue and expenditure targets.
This would ensure their consonance with the long-term fiscal policy. In line with the fiscal policy, the budget office must aim to build capacity of actors to better understand, develop and implement plans at the central, state and local levels. The advice of the budget office must be guided by ground level experience.
The budget office must coordinate with other central level institutions, such as the NITI Aayog, to take a holistic view in relation to optimal long-term fiscal governance strategy.
Consequently, we must not repeat mistakes of getting enamoured by annual budgetary exercise of setting and meeting deficit targets, which must be nothing but short-term targets in process of achieving the objectives set out by long term fiscal policy. The IBO would aid in development and achievement of such targets.
While a long-term fiscal policy was laid down in 1985-86, the time is ripe now to modify it to suit the current times. A long-term vision for fiscal governance, with clear mid-term targets, aided by an independent budget office to ensure implementation, will make much-needed contribution to revitalise India’s growth story.
The writer is the secretary general of CUTS International. This article is co-authored by senior policy analyst Amol Kulkarni
India is in a precarious situation. More than eight months into the current fiscal, fiscal deficit is almost breaching the annual target; revenue receipts are not reaching even half the yearly target; and over Rs. 8 lakh crore are pending in direct tax recoveries. Future steps would demonstrate if the government has a long-term strategy in place for fiscal governance.
High levels of deficit give rise to structural weaknesses and are unsustainable for any economy. They not only cause sharp increases in the debt-GDP ratio, but also adversely affect savings and investment, and consequently growth.
Therefore, containing deficits is important. However, it must be noted that in doing so means are as important as ends. Use of unsuitable means, while providing short-term relief, compromises the ability of a country to develop a long-term fix.
The problem
While India has managed to contain deficits to budgeted levels, this has been achieved through incessant cuts in budgeted Plan expenditures, or through generation of non-tax revenues. This strategy is not sustainable.
Diversions of up to 20 per cent on either side as against the budgeted figures for revenue and expenditures have increasingly being noticed in recent years. Private sector investment plans are inextricably linked to priority areas set by the government. As a result of large scale expenditure cuts without really differentiating between important and unimportant sectors, the private sector is forced to alter its investment strategies midway, which is not a healthy sign.
Similarly, using non-tax revenues, in the form of disinvestment receipts and sale of natural resources to make up the shortfall in tax revenues, demonstrates a short-term mindset. Such revenues are not an annual fixture, and they provide a false sense of respite about the government’s ability to meet deficit targets.
Long term fiscal policyIndia needs a long-term policy on fiscal governance and an independent budget office to aid its implementation.
The policy must have a long-term objective to achieve sustainable levels of deficits by achieving a balance between expenditure and tax revenues, taking into account the unavoidable phases of growth and contraction in the economy.
The objectives must be set up, and periodically reviewed, in accordance with performances of central, state and local-level actors. The policy must prescribe for clear accountability mechanisms, and must not allow diversions from budgeted figures of expenditure and revenue beyond a prescribed ‘safe harbour’.
Revenue regimeTo augment tax revenues, the policy must set out a time-bound and focused roadmap to realise outstanding revenues. It must undertake a honest assessment of costs incurred in contesting the pending claims; drop the cases in which cost to contest is more than the amount claimed; engage with litigants in relation to other claims; and ensure receipts within a time-bound manner.
The policy must also initiate reforms in the revenue foregone regime. It must revisit unnecessary exemptions, deductions and rebates that do not serve any purpose today, suggest simplification and rationalisation required, and provide a transition path to implement its suggestions within a specified time.
The policy must avoid insalubrious reliance on non-tax revenues and a separate disinvestment strategy must be developed for generating and utilising revenues from sale of assets and natural resources.
Expenditure regimeThe long-term fiscal policy must take into account State-level considerations while setting out broad contours of expenditure planning, implementation, monitoring and evaluation.
It must put in place evidence-based expenditure regime, and the short and medium term plans of the Centre and States must be compliant with the policy. The policy must aim to build capacity of local level actors to facilitate execution, which would also aid in fixing accountability. The policy must make a clear distinction between merit and non-merit subsidies, with a roadmap to gradually reduce the latter.
Independent budget office
A successful adoption and implementation of a long-term fiscal policy for India will need to be supported by setting up an independent budget office.
The office should have expert staff to provide research, review and technical support for planning, execution, monitoring and evaluation of short and medium term revenue and expenditure targets.
This would ensure their consonance with the long-term fiscal policy. In line with the fiscal policy, the budget office must aim to build capacity of actors to better understand, develop and implement plans at the central, state and local levels. The advice of the budget office must be guided by ground level experience.
The budget office must coordinate with other central level institutions, such as the NITI Aayog, to take a holistic view in relation to optimal long-term fiscal governance strategy.
Consequently, we must not repeat mistakes of getting enamoured by annual budgetary exercise of setting and meeting deficit targets, which must be nothing but short-term targets in process of achieving the objectives set out by long term fiscal policy. The IBO would aid in development and achievement of such targets.
While a long-term fiscal policy was laid down in 1985-86, the time is ripe now to modify it to suit the current times. A long-term vision for fiscal governance, with clear mid-term targets, aided by an independent budget office to ensure implementation, will make much-needed contribution to revitalise India’s growth story.
The writer is the secretary general of CUTS International. This article is co-authored by senior policy analyst Amol Kulkarni
Source - Business Line
[PIB] Election Commission of India to Host 5th National Voters’ Day on 25th January
Theme for this Year NVD: ‘Easy Registration, Easy Correction’
The National Function will be held at Weight Lifting Auditorium, Jawahar Lal Nehru Stadium, New Delhi and presided over by Hon’ble former President of India, Dr. A.P.J. Abdul Kalam. The Chief Guest will give away Awards for the Best Electoral Practices to Chief Electoral Officers and District Election Officers. Awards will also be given to Media Houses and Civil Society Organizations for best campaign in Voters’ Education and Awareness.
25th January is also the foundation day of the Commission, which came into being on this day in 1950. The Commission's objective through NVD is to increase enrolment of voters, especially of the newly eligible ones. The National Voters' Day is also utilized to spread awareness among voters regarding effective participation in the electoral process.
Source - PIB
[Ed] Dispute over ICC intervention
Some of the points of criticism against the ICC are in fact valid. These are that the juridical nature of the ICC tends to hinder the peace process rather than build it, and that with an arguably grim record the Court has been ineffective and slow in investigating crimes. Also, Israel claims to be fighting the war against Hamas that it considers a terrorist organisation; so the move of the ICC, it argues, amounts to an absurdity. Such reasons, although partly true, still do not trump the need for an international criminal justice system to adjudicate war crimes. First, the role of the ICC must be clearly understood. The ICC is not meant to be a political body mediating a peace process; it is envisaged as a judicial body meant to end impunity and hold accountable those who have committed the gravest of crimes. Given this, even if the ICC may harm a peace process, which in the case of Israel-Palestine is anyway in deadlock, the politics of peace cannot prevail over justice, accountability for heinous crimes, and the upholding of dignity, women’s rights and other human rights. Second, even if the ICC is a slow and ineffective mechanism, holding those responsible for human rights violations in war crimes is necessary. Third, the investigation is against any person who may have committed war crimes during the conflict. So, both Hamas and Israel would be under the ICC’s investigation.
Source - The Hindu
The science of saving tigers
India is unique in having a significant number of tigers in the wild, in spite of growing population and resource extraction pressures on their habitat. The latest estimate of tigers in various landscapes published by the Ministry of Environment and Forests claims an appreciable rise in numbers of the big cat. That there could be as many as 2,226 tigers in the country — up from 1,706 four years ago — in nature reserves ranging from the hills in the Northeast to central Indian forests and the Western Ghats, besides the mangrove-rich Sundarbans delta, gives India a special place on the global conservation map. Clearly, some States deserve credit for strengthening the protection of wild tigers since the notorious wipeout in Sariska a decade ago. Such conservation measures, notably the extension of protected area boundaries, must continue. Yet, as credentialed scientists are pointing out, the numbers available from the latest count may merely indicate the presence of tigers in a given area, rather than serve as the conclusions of a definitive census. What they highlight is the need to improve those aspects of the ecology that lead to a rise in numbers — voluntary relocation of forest-dwellers from core forests, a severe crackdown on the hunting of prey animals, improved patrols against poaching, safeguards against harmful land-use changes and constant monitoring using scientific methods.
The science of conserving tigers, arguably the most charismatic animals on the planet, is increasingly focussed on saving ‘source populations’ of the cat. These are defined in the literature as sites where more than 25 breeding females can be hosted, in turn embedded in a larger landscape that can potentially have more than 50 female tigers and which enjoy protection. By some accounts, 70 per cent of the world’s tigers are to be found in such sites; in India, 90 per cent of the population is part of 30 or 40 major source populations. As the Wildlife Conservation Society has pointed out, conservation of this stock holds the key to achieving a significant rise in their numbers in the coming years — potentially, India could have several thousand more if it provides them the requisite space and the connected landscapes that facilitate dispersal. In the current counting exercise, the Centre has done well to include non-governmental experts and rely on improved methods such as camera trapping, although it is yet to move to continuous monitoring and annual assessments. The government must be open to the idea of more intensive research within forests to protect the tiger and other endangered species, and adopt a liberal approach to permit bona fide independent scientists to work in protected areas. The encouraging status report on tigers awaits refinement and confirmation in March.
The science of conserving tigers, arguably the most charismatic animals on the planet, is increasingly focussed on saving ‘source populations’ of the cat. These are defined in the literature as sites where more than 25 breeding females can be hosted, in turn embedded in a larger landscape that can potentially have more than 50 female tigers and which enjoy protection. By some accounts, 70 per cent of the world’s tigers are to be found in such sites; in India, 90 per cent of the population is part of 30 or 40 major source populations. As the Wildlife Conservation Society has pointed out, conservation of this stock holds the key to achieving a significant rise in their numbers in the coming years — potentially, India could have several thousand more if it provides them the requisite space and the connected landscapes that facilitate dispersal. In the current counting exercise, the Centre has done well to include non-governmental experts and rely on improved methods such as camera trapping, although it is yet to move to continuous monitoring and annual assessments. The government must be open to the idea of more intensive research within forests to protect the tiger and other endangered species, and adopt a liberal approach to permit bona fide independent scientists to work in protected areas. The encouraging status report on tigers awaits refinement and confirmation in March.
Source -The Hindu
[Ed] An ‘India exception’ for climate talks
As India and the U.S. build closer ties, they should pursue a win-win agreement on climate. It is in the U.S.’s strategic interest that India grows into a regional power, which can only be accomplished if India is given sufficient development space to grow its economy and eliminate poverty. It is in India’s interest to diversify its energy portfolio — a prospect that can be strengthened with the U.S.’s assistance. The way to achieve these objectives is to forge an “India exception” at the global climate talks in Paris; doing so is the only realistic pathway to a global climate deal and will cement the growing ties between the two critical actors in an evolving international order.
A unique dilemma
India faces a predicament which previous countries that used energy to grow their economies did not face. It stands on the cusp of industrialisation just as the world may finally be willing to take multilateral action to reduce carbon emissions. As it possesses vulnerable coastlines and is reliant on the monsoon and glacial melt, India is as susceptible as any other country to the consequences of collective action failure on climate. But for India, the tradeoffs between environment and growth (and poverty elimination) are harsher than perhaps anywhere else. India’s overall size of both population and emissions makes it the most critical low-income country at the Paris climate talks.
Despite India’s importance to the climate debate, it continues to pollute below its weight. Though India’s emission intensity would be expected to rise in the coming decades, it has committed to reducing emission intensity by 20 to 25 per cent by 2020 (from 2007 levels). Prime Minister Narendra Modi’s victory has created the opportunity for all of India to benefit from the renewable energy-friendly policies he pursued as Chief Minister of Gujarat and has opened up the possibility for it to become a leader in cost-competitive renewables. India is already the world’s largest biomass, third largest solar and fourth largest wind energy producer.
“If India chooses to grow through the traditional carbon-intensive pathway, there will be no credible prospect for global carbon reduction”
There is a strong strategic imperative for the U.S. in supporting India’s role in Asia. A successful India can play a major role in stabilising Asia during an otherwise turbulent transition, and can be a vital partner to the U.S. India could act on climate change on its own by reprioritising spending away from its planned naval expansion or other defence expenditures, but as China’s defence budget soars, nations around the region are becoming more invested in a balance of power that includes India. It is profoundly in the U.S.’s interest that there be a strong India — an India that is prosperous and contributing to a stable Asia and Indian Ocean.
The U.S. could reapportion part of its international development budget towards India’s green modernisation, create a way for U.S. cities that have successfully used clean building techniques to work with Indian cities, and invest in Indian efforts on energy-efficient urbanisation. It can help ensure that the Green Climate Fund and the World Bank support and crowd in private sector and other investments towards this end.
There would have to be a generational partnership between the U.S. and India. Challenges in aligning the private incentives of U.S. financiers with public incentives in India can be solved by a high-level agreement between President Obama and Prime Minister Modi on public monies through bilateral or multilateral tools.
India as an exception
India’s unique circumstances necessitate specific exceptions. Any climate agreement must exclude India from obligations that do not befit a country in an earlier stage of development. It must be allowed lifeline energy at affordable prices. India cannot agree to a peaking date; Indian poverty cannot be frozen by a dateline. A global peaking date will depend on other nations taking on mitigation commitments to account for India’s exceptional challenge. However, certain pathways could be pursued that would allow a U.S.-India partnership to contribute to the global effort. These could include: continuing and supporting India’s voluntary emission intensity reduction goals that move its economy from a ‘business as usual’ trajectory; focussing the spending of the Green Carbon Fund and similar instruments, including technology transfer, on Indian energy options; following common but differentiated responsibility within India, requiring rich states and cities to develop further mitigation methods; initiating a universal agreement on corporate emissions mitigation that would involve large Indian companies on equal footing with developed country corporations and mandating sectoral efficiency goals for these large corporations; and a decadal review of India’s development status, as no exception should outlive its rationale.
Such a deal is the only way to maintain climate progress. If India chooses to grow through the traditional carbon-intensive pathway, there will be no credible prospect for global carbon reduction and India will soon add another European Union to the world’s carbon emissions budget. India has a veto on a global climate agreement — both in the room, and more importantly in how any deal is implemented. India has walked away from global deals like the World Trade Organization, when they are perceived to be counter to its core interests.
If the U.S. partners with India for more efficient industrialisation and supports an “India exception” in global climate talks — using bilateral ties and the Major Economies Forum on Energy and Climate to help build a clean energy ladder for India — it could be the kind of investment that cements ties between these two countries. From the perspective of a stable international order, it would be a big deal; from the perspective of global climate talks, it is the only realistic path forward.
(Samir Saran is a senior fellow and vice president at the Observer Research Foundation and Bruce Jones is deputy director of the Foreign Policy Program at the Brookings Institution. This is an adaptation of an article published by the authors for Brookings and ORF earlier this month.)
Source - The Hindu
[Ed] Going beyond bonhomie
Visits to India by world leaders are routinely high profile events. A visit by the President of the United States has the added attraction of high expectations. President Barack Obama’s coming visit — the second during his Presidency — has raised expectations by several notches and greatly raised the stakes, coming as it does so soon after Prime Minister Narendra Modi’s highly successful visit to the U.S.
U.S. Presidents, in their second term, tend to be generally more expansive in their attitude towards India than during their first term. Presidents Bill Clinton and George W. Bush demonstrated this in ample measure. Mr. Obama did not, however, wait for his second term to demonstrate his desire to strengthen the relationship with India. The effusive welcome that he afforded former Prime Minister Manmohan Singh in 2009, including holding his first State Banquet in honour of the Indian leader is part of diplomatic folklore in Washington and New Delhi.
Mr. Obama would no doubt retain warm memories of the tumultuous reception he received when he addressed the Indian Parliament during his visit in 2010. The visit, in effect, demonstrated that the era of estranged democracies had come to an end and the era of engaged democracies had come into being. This time, if anything, a warmer welcome awaits him, as the first U.S. President to be the chief guest at the Republic Day celebrations on January 26.
‘Natural allies, global partners’
In contrast, visits of Indian Prime Ministers to Washington have generally been low key and strictly limited to the business on hand. Mr. Modi broke this mould during his September 2014 visit to the U.S. His was a visit rich in symbolism and, at times, as in the case of his Madison Square Garden appearance, a high profile media event. This was among the many departures from established practice and protocol that Mr. Modi effected with excellent results.
“The coming two years are critical if India and the U.S. are to achieve the full potential in terms of their relationship.”
It is difficult to see how the rhetoric employed by both sides during the Prime Minister’s visit to the U.S. can be bettered. On his part, Mr. Modi went much beyond former Prime Minister A.B. Vajpayee’s reference to India and the U.S. as being “natural allies,” and substantially raised the bar when he said that India and the U.S. are “natural global partners” embodying the enduring and universal relevance of their shared values. The Prime Minister further added that the complementary strengths of India and the U.S. could be used for inclusive and broad-based global development to transform lives across the world.
There is considerable scope, however, for fine-tuning many of the issues that were discussed in Washington — which require satisfactory closure — such as clean energy, the Bilateral Investment Treaty, climate change issues, WTO-related matters, foreign direct investment (FDI) and Intellectual Property Rights. None of these items is however likely “to set the Jamuna on fire.” Renewal of the Defence Framework Agreement (first signed in 2005 as a prelude to the visit of Dr. Singh to Washington) and the Defence Technology and Trade Initiative again will hardly amount to a breakthrough in relations that both sides seek. This is the age of teleology, and the second Modi-Obama summit will in all likelihood be judged by the quality of the dialogue rather than the number of agreements signed.
Visits and the results
There are certain inherent risks connected with high profile visits and summit diplomacy. Seldom do they lead to anticipated results. India-U.S. relations are replete with instances of this kind. Old-timers will recall the excitement concerning U.S. President Eisenhower’s visit to India in 1959, only to be followed soon thereafter by a U.S. “tilt” towards Pakistan, and a stream of military and other forms of aid to that country. Mr. Clinton’s visit to India during his second term did lead to a perceptible thaw in India-U.S. relations, but the visit itself did not produce a new dawn in terms of the relationship.
On the other hand, low key visits do sometimes produce dramatic results. Dr. Singh’s visit to Washington in 2005 hardly compares with that of Mr. Modi’s in 2014 in terms of coverage and publicity, but the results were near transformational. The first significant breach in the “nuclear Great Wall,” leading to the dismantling of the nuclear apartheid regime occurred during this visit.
Likewise, the visit of President Bush to India in 2006 hardly compares with the kind of adulation showered on his successor, but it produced a critical breakthrough relating to the Separation Plan (viz., separation of India’s strategic military weapons programme from its civilian nuclear programme), an essential component for finalisation of the India-U.S. nuclear deal. The personal involvement of the U.S. President and the Indian Prime Minister was crucial for this, as at one stage negotiations had virtually collapsed.
Dr. Singh’s visit to the U.S. in 2009 — another low key visit — led to taking the final step, thus paving the way for India to trade in nuclear materials with countries across the globe. This was a one-of-a-kind international agreement, seldom seen in the diplomatic history of nations.
It is not often in a generation that an opportunity for a meeting of minds of this kind occurs. Mr. Obama and Mr. Modi must, hence, set their sights high, to try and produce a transformational impact. Without belittling the efforts needed to sort out prickly issues such as the “Nuclear Liability Law” (which has been holding up India-U.S. nuclear cooperation), as also other steps required to enhance the political and military dialogue further by renewing the U.S.-India Defence Framework Agreement for another ten years, the opportunity provided by the Summit should be utilised for some “big ticket” items.
The world is, today, at a tipping point. At one level, geography and nationalism are striking back with renewed vigour. Across continents, nations appear to be reverting to the syndrome of fractured smaller States (already evident in West Asia). There is a growing arc of violence and upheavals in regions like West Asia. As radicalist ideas and beliefs gain ascendancy in the region and beyond, the spectre of asymmetric warfare and terrorism haunts many regions.
China’s assertiveness
At another level, the world has to take note of China’s increasing assertiveness — not only in dealing with issues directly affecting its territorial claims — but going well beyond the “Nine-dash-lines” that it had historically limited itself to. There are again signs of a growing rapprochement between Russia and China, with “oil diplomacy” paving the way for reinforcement of military ties. The intention is possibly to counter the U.S. pivot towards Asia, but the Russia-China axis will have an impact elsewhere as well, including in West Asia, of eroding the influence of countries like the U.S. and India. Internal developments in China, even as President Xi Jinping seeks to emerge as China’s most powerful leader since Deng Xiaoping, also merit careful assessment.
A summit of this nature thus provides an opportunity for an all-encompassing look at geopolitics and geoeconomics across the region and beyond. This option should not be foreclosed by concentrating on the smaller items. A comprehensive discussion of this nature would be a significant outcome worthy of a summit of this nature. The Prime Minister’s statement that India and the U.S. are “natural global partners” would then ring true.
Possibly what is most important for the two leaders is to establish an exceptional level of trust, and reinforce their personal chemistry going beyond mere bonhomie. This is vital if they are to cut through bureaucratic tangles at critical junctures. The India-U.S. nuclear deal is a prime example of what can be achieved when two leaders have full trust in each other, for it was this level of trust that led to the resolution of extremely difficult issues when the respective bureaucracies appeared adamant in holding fast to their viewpoints.
Mr. Obama has two more years in office, while Mr. Modi will have more years thereafter. The coming two years are critical if India and the U.S. are to achieve the full potential in terms of their relationship. It is, hence, important that the leaders are not deflected from the key task of strengthening their personal bonds for this could well be the most valuable asset in their armoury to sort out not only mutual problems, but also a range of global issues.
(M.K. Narayanan is a former National Security Adviser and former Governor of West Bengal.)
Source - The Hindu
[Ed] Reasserting a friendship
The visit by Sri Lankan Foreign Minister Mangala Samaraweera to New Delhi, days after the new government in Colombo was sworn in, sends the clear message of an enduring friendship between the two countries. As with all such friendships, there have been phases of turbulence, but the impression that ties had hit rock bottom under the previous government in Sri Lanka is not correct. New Delhi remained deeply engaged with the Rajapaksa government until the end. There were difficulties for sure, and these have not disappeared. Sri Lanka’s list of complaints against India is probably long, and these would include baiting by extremist Tamil groups in Tamil Nadu and trespassing by Indian fishermen into its waters. Differences over the former President’s reluctance to address post-war political and human rights issues relating to the Tamil minority led to India voting against Sri Lanka twice at the UN Human Rights Council and abstaining once. There was also concern when a Chinese submarine docked in Colombo twice in a span of two months last year. Statements by Mr. Samaraweera that his government would correct the “pro-China tilt” in foreign policy have gladdened India. At the same time, any suggestion of a “pro-India tilt” by the new government is likely to make it unpopular at home, and will be in neither side’s interests in the long term. What the two countries can do is to maximise the advantages of their geographic proximity and age-old bonds to further common economic and strategic interests.
India’s foremost expectation from the new government would be an early settlement of the Tamil question. The top priority that President Maithripala Sirisena has committed to give to the abolition of the executive presidency should ideally go hand in hand with plans to address the political aspirations of the Tamil minority, even as it comes up with a plan to address allegations of war crimes, disappearances and other violations of rights of Tamil civilians. This is likely to come up when the Sri Lankan President visits India next month. Secondly, New Delhi is hopeful that Colombo would upgrade the existing Free Trade Agreement with a Comprehensive Economic Partnership Agreement, for which a draft was finalised in 2008. Sri Lanka is reluctant to sign off on it, fearing India would swamp its economy. Given that Sri Lankan businesses only recently began to accept that the FTA has benefited them, a turnaround will come on CEPA too — if India is not seen as exerting pressure. Third, the two sides finalised a draft defence cooperation pact in 2003. Domestic political compulsions in India ensured it did not progress. It could be revisited given the potential for maritime security cooperation in the Indian Ocean region.
India’s foremost expectation from the new government would be an early settlement of the Tamil question. The top priority that President Maithripala Sirisena has committed to give to the abolition of the executive presidency should ideally go hand in hand with plans to address the political aspirations of the Tamil minority, even as it comes up with a plan to address allegations of war crimes, disappearances and other violations of rights of Tamil civilians. This is likely to come up when the Sri Lankan President visits India next month. Secondly, New Delhi is hopeful that Colombo would upgrade the existing Free Trade Agreement with a Comprehensive Economic Partnership Agreement, for which a draft was finalised in 2008. Sri Lanka is reluctant to sign off on it, fearing India would swamp its economy. Given that Sri Lankan businesses only recently began to accept that the FTA has benefited them, a turnaround will come on CEPA too — if India is not seen as exerting pressure. Third, the two sides finalised a draft defence cooperation pact in 2003. Domestic political compulsions in India ensured it did not progress. It could be revisited given the potential for maritime security cooperation in the Indian Ocean region.
Source - The Hindu
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