Left Extremism

1. Forest Conservation Act, 1980 has provided fertile ground for the spread of left extremism among tribals living in front areas. Comment

2. Naxalism is not merely a law and order issue. Critically examine.

3. 'Police stick' and 'development carrot' as panacea for millitant extremism. How far do you think 14 point policy has worked in containing the left extremism.

2nd ARC 7th Report questions for discussion

The following questions will be taken up for the discussion on 29 Dec 2013. Please prepare answers referring to the 7th report of 2nd ARC.

CAPACITY BUILDING FOR CONFLICT RESOLUTION

1. The Constitution of India had been drafted by the framers of the Constitution for containing and moderating the conflicts. comment.
2. How linguistic conflict has been resolved after independence. (Ref. India After Gandhi by Ramachandra Guha)
3. Do you consider Mizoram issue as a successful attempt in ethnic and secessionist conflict resolution? Comment.
4. Examine the Assam hindu-muslim conflict of 2012.
5. Examine the conflict resolution of Darjeeling Hills.
6. Lack of responsive and good governance is often responsible for violent conflicts. Comment
7. Make brief notes on the following
• Gorkha National Liberation Front
• Khalistan
• Rajiv Gandhi- Longowal Accord July 1985

Biomaterials

Biomaterials are biological or synthetic substances which can be introduced into body tissue to replace an organ, bodily function also used as a part of an implanted medical device.

The type of substance used is depandant on the type of tissue needed ie., whether soft or hard.For soft tissue replacements like heart valve, liver,heart implants etc.,polymers like nylon,rubber,silicon are used.For hard structures like bone & joint replacements metals like chromium,titanium etc and their alloys are used.
About 45% of heart valve implants in US are made of bm’s explains its significance.Most commonly used valve is bileaflet valve.Also has variety of applications like bone plates,joint replacements, artificial skin in plastic surgeries and where injuries are so deep restricting usage of natural skin graft.Breast implants to prevent cerivical cancer,contact lenses etc.,

How ever their use is limited as it needs to satisfy biocompatibility that is such repalcements may face rejection by patients immune system.They inturn need to pass clinical tests. Also their lifespan decreases over a period of time with corrosion,degradation in case of metals and polymer valves.

Usage of these may not have problems like transplantation by natural organs like liver ,kidney face social,ethical constraints.Further with the advent of nano technology new avenues may be thrown open and use of biomaterials may increase with time.

An important use of biomaterial was demonstrated by French scientists when they successfully implanted an artificial heart with the help of biomaterials which mimics the functions of contractions of the heart.

India and Maldives Relations

India was one of the first countries to establish diplomatic relations with the Maldives after it gained independence in 1965 and the two settled their maritime border in 1976. India and Maldives share a friendly and close relationship. Today, both nations are members of the South Asian Association for Regional Cooperation (SAARC) and signatories to the South Asian Free Trade Agreement (SAFTA). During the first few decades of independence, the bilateral partnership was limited, although the two did sign a comprehensive trade agreement in 1981. However, bilateral relations took their first major step forward following India’s intervention to crush a coup against the Maldivian government in 1988. The Indian armed services quickly restored order in the archipelago and the Indo- Maldivian relationship reached a new high. During the last decade, as India’s interests have expanded further into the Indian Ocean, the geo-strategic importance of the Maldives to India has increased commensurately. Not only has New Delhi remained dedicated to its assistance in the Maldives during bilateral disputes, but it has also evinced a pattern of escalating support. In the past, India’s developmental assistance to the Maldives has been driven by three key priorities; maintenance of cultural and historical relations, trade and economic access, and finally, security interests, including the safeguarding of critical sea lines of communication. As India has increased its development cooperation with the Maldives, it has also strengthened security arrangements, demonstrating growing geostrategic ambitions in the Indian Ocean waters. These changes highlight the complexity of the bilateral relationship as New Delhi recognizes the strategic importance of the island chain while in turn the Maldives realizes its own leverage. Early bilateral development cooperation focused on health infrastructure. In 1986, India agreed to establish and finance entirely a medical complex in the capital of Male.  At present, the hospital provides the most sophisticated tertiary care in the Maldives. India continues to support the institution, and in November 2011, India financed a major renovation of the hospital at a cost of 372.4 million rupees. In 1996, India established in Male the Faculty of Engineering Technology, an institute of technical education. At present, India is also establishing the India-Maldives Friendship Faculty of Hospitality and Tourism Studies as well as a police academy in Male. These projects fall comfortably in line with India’s history of building long-term educational and health infrastructure in the Maldives. Disaster relief and management has been a second key part of Indian assistance to the Maldives. Following the tsunami that hit in December 2004, India was the first country to provide relief. Within 24 hours of the wave’s impact, the Indian Coast Guard and Air Force arrived with relief materials.

During a visit of the newly elected President Nasheed to India in December 2008, India extended a Standby Credit Facility (SCF) of US$ 100 million to the Maldives. Following this, in December 2010, the Export Import Bank of India announced its first Line of Credit (LOC) to the Maldives worth US$ 40 million for the construction of 500 housing units. The LOC has a two percent concessional interest rate with a repayment period of 20 years, putting it in the same interest rate category as loans provided to low income countries by the International Development Association of the World Bank. Although India and the Maldives signed a trade agreement in 1981, bilateral trade is not commensurate with its potential. However, since the early 2000s, Indian exports to the Maldives have been growing exponentially. India remains the Maldives’ third largest trading partner. India imports primarily scrap metals, while Indian exports to the Maldives consist of agricultural and poultry produce, textiles, pharmaceuticals, and a variety of engineering and industrial products. While China has now broken into the top ten in terms of trade volume with the Maldives, it has only risen one place in the ranking since 2007. India’s current exports to Maldives are four times as large as Chinese exports to the Maldives, leaving India with a sizable advantage in influence over the small island state.

Since the early 2000s, major increases in development cooperation have correlated closely with new security agreements. These agreements cover every sector of security, from environmental protection to terrorism. However, while some arrangements on climate change and disaster relief have been signed, Indian defense cooperation has primarily focused on strengthening traditional security agreements. This increase in development cooperation policy, beginning in the early 2000s, but accelerating in 2006-2007, follows increased Chinese presence in the region. While the immediate reason for enhanced defense cooperation is to build military assets in the Maldives to guard against terrorists and pirates, observers also view India's military positioning in the Indian Ocean island nation as a furtherance of its longer-term military deterrence against China. In 2006, rumors reached New Delhi that the Maldives was considering leasing an island to Beijing for a naval base. In response, India signaled that it would continue providing the island’s security, offering Male a state-of-the-art 260-ton fast-attack craft to aid in guarding coastal waters. New Delhi did not waste time in taking initiatives to strengthen defense cooperation with the newly elected democratic government either, positioning two helicopters for better surveillance, setting up new radar systems on all 26 atolls, and training the Maldivian security forces to operate the new equipment. Further, the Maldives being a Muslim country, India is wary about the influence that Pakistan may exert, including the possibility of infiltration by terror cells to launch attacks in India, as has happened in Bangladesh. New Delhi has thus been looking to set up an intelligence base in Male. India is concerned over bases being set up by China in its neighborhood, which have been described as a "string of pearls'' around India's neck that could easily be tightened should the need arise. The geostrategic importance of the nearly 1,200 islands of the Maldives as a “most important interstate,”  underlines the importance for New Delhi of positive bilateral relations with Male.

Success in the Indian Ocean, and consequently the 21st century global economy, will center on increased access to global resources. This access will principally be a response to the strength of bilateral relationships. India’s development cooperation adds a dynamic quality to the strength of the relationship by emphasizing cultural heritage, developing economic engagement, and integrating cooperative security networks. As these imperatives drive India’s development cooperation, New Delhi will do well to maintain its engagement with Male while looking to accommodate the growing interests of states that will lay in the wake of the Indian Navy.

India Japan Relations by Luv Sharma

The great bronze statute of Lord Buddha in Todaji Temple in the capital city of Nara stands testimony to a relationship that has grown stronger with each passing moment. Indo-Japan ties have their roots in & owe their genesis to  the introduction of Buddhism in Japan in 6th Century CE. Tenjiku is what India is referred to in Japan.From 16th century when Japanese established political contact with the Portuguese colonies in India to the Meiji era when first direct political exchange started between the two nations till the co-operation extended to the INA by the Japanese , India & Japan have only added more force , vitality and vigour to their bilateral relationship thereby working hand in hand & benefiting from each others' strengths while simultaneously re-enforcing & building upon their mutual relationship in economic, defence, political and cultural fields & performing a vita lgeostrategic role in maintaining peace and stability in South Asia.

India & japan's cooperation has many facets covering various aspects of bilateral relationship.Historically economic ties with Japan were very well established.After the destruction from World War 2 that ravaged Japan India came forward with its iron ore to boost recovery.Japan started giving Yen loans to India in 1956 to aid India in its economic development after its independence.During Cold war era relations between India and Japan suffered as India followed a Non-Alignment policy which leaned towards Soviet Union and Japan on the other hand was a US ally.Though after 1980s efforts made to rejvenate the bilateral ties bore fruit with the signing of the iconic joint venture agreement between Maruti Udyog ltd. & Suzuki of Japan in 1982 .The agreement gave birth to Maruti Suzuki which has now transformed itself

into one of the largest and successful automobile manufacturing company in India.

Currently both countries are engaged in various economically beneficial activites strengthening each others' economies in the process.India remains the highest recipient of Official Development Aid(ODA)from Japan.Since the unvieling of a global and strategic partnership in 2006 economic ties have gathered momentum.The commencement of CEPA(Comprehensive Economic Partnership Agreement)in August 2011 has added new dimension to existing economic relations between both countries.The agreement's importance could be gauged by the facts that it was the first time India signed a bilateral agreement with an industrialised nation & it was also the first truly comprehensive agreement concluded by India , given the wide range of issues it addressed.Economic partnershipbetween India and Japan is critical in providing a strategic balance to the East Asian Summit countries in face of steadily increasing economic influence of China.Furthering action to address this concern both india and japan have forged an alliance to jointly develop rare earth minerals to reduce dependence on China

Civil nuclear energy is another field where both countries are trying to converge together for helping each other in peaceful use of nuclear energy.Various joint statements by India and Japan have mandated and stressed upon civil nuclear energy agreement .However the pace of negotiations is slow esp after the fukushima disaster in Japan many anti-nuclear protests have happened in Japan demanding a complete ban on the use of nuclear energy and shutting down of nuclear reactors.So it is seen unethical by some sections of non-proliferation enthusiasts in Japan to sell other countries a technology which it is not intending to use ie, nuclear energyBoth countries can address safety concerns of the protestors by assuring them that adequate safety measures will be followed.Apparently Boiling Water Reactors were being used in fukushima.India has already modified its Boiling Water Reactors that are in use currently.Japan has endorsed India's candidature for 4 major multilateral export control regimes ie NSG, Missile Technology Control Regime, The Australia Group and the Wassenaar Arrangement.Japan has only learned from the recent disaster that struck its fukushima reactor and India can benefit by suitably restructuring its safety needs in accordance withinternational guidelines issued after the incident.India is energy deficient and the peaceful use of nuclear energy in civil sector would exterminate many of its problems most importantly the ever deepening power crisis

Advance technology commerce is another area where India can hugely benefit by Japanese technological briliance and sheer ingenuity.Some examples of projects where Japanese are contributing actively both in terms of technology and finance are viz., Western Freight Corridor, Delhi-Mumbai Industrial Corridor & Bangalore Metro Rail Project.

Its a known fact that Japan has a pacifist constitution meaning it has no offensive systems in terms of warfare but it has Asia's largest Naval fleet, conventional subs coupled with helicopters carrying destroyers and advanced Ballistic missile systems in the world.India on the other hand is world's largest arms importer and is desperately in need for developing its indigenous weapon evelopment and manufacturing capabilites.Japan and India can help each other here by working jointly to innovate new technologies and defence systems. Stable bilateral ties are almost always formed on the bedrock of security collaboration and cooperation.Case in point being that of China whose purely economic relationships with many countries like India, japan is constantly rigged with tensions and striations.Both the countries being energy deficient in terms of oil have to import oil form persian gulf region so securing the maritime trade routes have become a priority for both India and Japan.India and Japan have understood the above fact as they hold joint navsl exercises two improve their maritime cooperation and strengthen the information sharing systems to be able to work in a more structured manner if and when situation demands.

India can use Japan's Heavy Manufacturing industry Base while on the other hand India's services lead industry can help each other out.In this sense the economies of both the nations are complimentary to each other with India's Human capital & Japan's financial & technological prowess.Japan can help India in its infrastructural development.

Engagement at political level too has reached new heights .Current level of political engagement includes an annual level Prime Ministerial Summit & several pther yearly Ministerial dialogues including a strategic dialogue between Foriegn Ministers , a security dialogue between the Defence Ministers and so on.The recent visit of Emperor Akihito marked an historic chapter in bilateral ties between India and Japan.As he became the fjrst emperor from Japan to visit India.The visit signals intent of the japanese govt to take the bilateral relationship to whole new level with increasing engagement in not only political but every other facet of the relationship.

Though people to people engagement is on the lower side as only 500 Indian students in are their in Japan compared to 80,000 from China.

A nurturing and strengthening of the bilateral relationship between India and Japan will not only prove beneficial to both the countries and its people but also provide a much needed stability in South Asia.A rising Asia is not only a necessity for Asian countries but also for the whole world which can only be achieved with two of its vital nations engaging each other at every level of mutual cooperation.So that China's increasing footprint in the South Asian region & its ever increasing economic clout poses a threat to the regional stability and can create a political imbalance which can be countered verily by Indo-Japan mutual cooperation.

Assignment for December 2013

The below listed questions need to be answered them by 29 Dec 2013 as comments under this post. Any confusions or doubts can be taken up as group discussion. 

1. Identify the major obstacles in the smooth functioning of Parliamentary democracy in India.(250 Words)

2. “while economic growth is an important boon for enhancing living conditions, its reach depends greatly on what we do with the fruits of growth.” Comment. (250 Words)

3.Discuss the major extra constitutional factors influencing the working of federal polity in India. (250 words)

4.How does depreciating Rupee affect the CAD and Fiscal deficit? Explain. (250 Words)

5.Highlight the nature of the land reforms still needed in the country.(250 Words)

6.How is agricultural price policy is determined in India? Does the process take note of agricultural subsidies? (200  Words)

7. What do you understand by the term ‘Rule of Law’? How does the constitution of India seeks to establish it?

India and Japan Relations

The relationship between India and Japan is centuries old. During the reign of emperor Kemmei,

Japan first came into contact with India. According to one source, Korea in the year 552 AD

paid tribute to Japan in the form of an image of Buddha and a copy of Buddhist scriptures.

Buddhism was thus introduced in Japan. Several Indian Buddhist monks subsequently visited

Japan and brought the two countries together. Although India was under the colonial rule of Britain, Japan viewed with importance India’s role in accelerating the process of its industrialisation. In the meantime, Japanese people developed deep appreciation for Indian nationalism and the Indian leaders

came to value Japan’s industrial progress as a source of inspiration for the colonial peoples of

Asia. During the Indian freedom struggle, the Indian National Congress was critical of several Japanese

policies, including aggression against Manchuria Province of China. But when the Japanese forces

defeated the Western colonial powers during the Second World War, it brought cheers to many

subject colonial peoples, including Indians. However, the Japanese connection of some Indian

nationalist groups, especially the members of Ghadar Party and the Indian National Army under

Subhash Chandra Bose were meant to help India achieve independence. A real watershed in the

 relations between Japan and India came after the end of the Second World War. Japan was a defeated

nation. It was under American military occupation and several Japanese were to be tried for their war

crimes. Jawaharlal Nehru looked with warmth to the post-war Japan devastated by the atom

bombs and under foreign occupation at a time when India itself was able to overthrow the  

foreign rule. At the moment of Japan’s struggle for survival in the immediate postwar period, 

India offered to supply Japan with iron ore, which was so vital in the reconstruction of Japan. 

Nehru also refused to participate in the San Francisco Conference to sign a US-sponsored Peace 

Treaty with Japan and decided to forego claiming reparation against Japan. The emergence of the 

Communist China in 1949, the onset of the Korean War in 1950 and the Communist/Nationalist 

 upsurge in Indochina brought Cold War into Asia. As Japan’s foreign policy came to be 

influenced by its alliance relations with the US and the 1954 US-Japan Mutual Security Treaty, India followed a policy of non-alignment. The political divergences of an aligned Japan and non-aligned India were rather too many. To

cite a few examples, India and Japan held different views on the Korean and Vietnam wars; and

to India’s utter surprise, Japan did not even support liberation of Goa from the Portuguese

colonial rule.

The growing Indo-US political differences and strategic divergences affected India’s relations

with Japan, since the latter’s foreign policy was conditioned by the western, especially American,

views on world affairs. Even then some Japanese appeared to have appreciated and regarded

India’s non-aligned foreign policy postures and its role in the developing world, since Japan

could have followed such a policy but for the compulsion generated by the US influence over

post-war Japan.

Japan, in fact, viewed India as a rising Asian power and a better alternative

model of a developing country than China, despite the political differences on international affairs.

The 1962 military humiliation by China of India, however, seemed to have brought some

disappointment to Japan and India fell low in the Japanese foreign policy priorities. What was worrisome is the fact that Japan maintained neutrality during the Sino-Indian War of 1962, although the US positively responded to the Indian requests for help. Moreover, at the time of 1965 Indo-Pakistan war, Japan cut off aid and credits to India. As geopolitical developments in the early 1970s culminated in India’s political proximity to the erstwhile Soviet Union in strategic matters, Japan’s political distance from India got widened further. Japan did not support the liberation of Bangladesh nor did it endorse India’s peaceful nuclear explosion.

While political differences persisted, there was not much of a meaningful interaction between the

two countries in the economic field. Post-war Japan soon began to focus on its economic

reconstruction and development and was increasingly successful. This was a time when the Indian

economy was stagnating. The economic policy of India focusing on the import substitution strategy

disillusioned and discouraged the Japanese from engaging in more positive economic relations

with India. The trade relations were minimal. Although India became one of the first and the largest recipient of Japan’s Official Development Assistance (ODA), the assistance was suspended for years until the mid-1980s when prime minister Rajiv Gandhi visited Japan in the midst of a global political transformation. The end of the Cold War brought some positive movement in the interactions between

the Indian and the Japanese leaders, but the Pokharan II nuclear tests created tremendous tension

between Japan and India. By the time India emerged as a declared nuclear weapon power in

May 1998, Japan and India were on the verge of reshaping their political, security and economic

relations. The improved performance in the economic area was viewed as miniscule compared

to the potentialities. After all, if viewed from the Japanese side, the share of Indo-Japanese trade

remained less than 1 per cent of its total trade activities

But the harsh and strong Japanese reaction to the Indian nuclear tests in 1998 almost froze the

bilateral relationship for quite some time. However, by early 1999, Taro Nakayama, former

foreign minister visited India and handed over letter from the Japanese prime minister to the

Indian prime minister. It heralded a new period of relationship between the two countries with the

resumption of high-level exchanges. The visit of the Indian defence minister to Japan in 2000 was

path-breaking. The conduct of joint exercises by the Indian and the Japanese Navy indicates that

the two countries have decided to forge closer political, security and economic ties deep into the

21th Century.

As India and the US are increasingly coming together, the likelihood of closer Japan-India relations

also rises. The importance of the Persian Gulf, Indian Ocean and the stability in the Asia Pacific

region to both Japan and India is increasingly being realised. Japan today views India as a rising

power of Asia. The nature and intensity of Japan-India relations in the 21st Century will be

crucial to the maintenance of peace and stability in the world in general and Asia in particular.

India's food conundrum and WTO

This year's ministerial conference of WTO at Bali has been in news lately with India has been at its centre stage.The terms like AoA, product specific support , de-minimis level formed the part of daily headlines of leading national or international dailies.

Amidst the cacophony of dissenting voices that lead to WTO ministerial lets try to deconstruct the whole scenario in a piecemeal approach.

To the uninitiated the mjnisterial conference of WTO is its topmost decision making body and it meets every two years.This year's ministerial(9th) was at Bali, Indonesia.

As i write this article a good news ,that India has been able to get the deal at Bali to defend it subsidies is coming in, but we'll focus on it later on.For now we will focus our attention on the contentious issues wrt India and its case of defending subsidies at WTO.

Lets clear some basic terms at the start to facilitate a greater understanding of the issues discussed here.

1).AoA -Agreement on Agriculture or AoA as it is known popularly was negotiated Uruguay round of GATT(General Agreement on Tariffs and Trade)in 1988 and it came into force with commencing of WTO from 1st Jan 1995.It may be noted here that GATT was a preceding body of WTO i.e. it was established in 1948 & after Marrakesh Agreement WTO came into existence in its place.

2).Subsidies under AoA :

Type of subsidies under AoA are as follows ,

(a).Amber Box - These are the measures or subsidies that have a trade distorting effect at international level like the MSP india gives to its farmers fall under Amber box while the funding govt does for training and research in agriculture or likewise are not deemed to be as Amber box category but Green box .The amber box subsidies or measures if exceed their limit, invite penalities .

(b).Green Box - These measures or subsidies are those which do not have a trade distorting effect and are protected from legal challenges.

(c).Blue Box - These subsidies or measure have no limits .

Now,under AoA a minimun threshold has been kept beyond which if domestic support measures that which dont fall into any of the above exempt category of subsidies ,invite penalities.

(3).De-minimis - The threshold level of domestic support measures( that dont fall into any of above exempt category of subsidies ).This level is 5% for developed countries and 10% for.developing countries.

(4).Agrregate measurement of support( AMS) : The reduction commitments are calculated in terms of AMS .The product specific and non-product specific support are calculated as a single figure.In case of members with no reduction commitmments (Currently 30 countries have reduction committments at WTO under AoA)they are required to maintain their domestic support that doesnt fall into any of above exempt categories of amber,green or blue under relevant product-specific and non-product specific de-minimis levels.

Now lets move ahead with the main issue .

Issue :Countries like US and EU or simply developed countries are pushing developing countries like India to cut down on their trade distorting subsidies in agricultral sector.On the other hand G33 countries lead by India are demanding a continual of these subsidies citing reasons of food security and livelihood of poor farmers.

Another major issue that involves india and developed countries ( & WTO too) is its food bill or National Food Security Act(NFSA) as it is known popularly that guarantees 67% of population a quantity of 5kg/person per month at cheap prices of Re. 2-3 resp.

The matter of NFSA deals purely with India but its implications are to be felt at a global scale.As such this issue set the stage for a clash of interests at Bali.If India could take care of its food bill being not in violation of AoA at WTO then the incidental issue of food subsidies for developing countries would be automatically taken care of(As per latest news from Bali India has been successfull in that ).

To implement NFSA successfully would mean India would require 62million tonne of foodgrain in a year so as to give its 82 crore people 5kg of foodgrain per person in a month.For that increased rate of procurement India would have to increase its MSP to incentivise farmers to produce more foodgrain and in the process the subsidy levels will breach the de-minimis levels of 10% agreed to in AoA by India.

Although if procurement is done at current market price then no subsidy will be involved  but procurement at MSP entails subsidies from govt therefore according to AoA the above difference in the acquisition price i.e. procurement price and the ERP(External Reference Price -it is the world price notified by India in the 90s)will be accounted under "domestic support" which is a part of Amber Box measures.In other words,AoA implies that procurement price should be at market price (and not be higher then market price) & should not exceed the world price (Predetermined by ERP)

Concerns of developed countriee and EU wrt India's NFSA :

1).Developed countries fear that India's stockpiling of grains would first soar prices in international market & later on cheap exports will affect farmers' interests worldwide.

2).A case may also arise when monsoon is deficient in India & then India would have to  import grains to support NFSA .This would lead to soaring of global prices.India hence will start exporting inflation to poor countries like BDesh,Nigeria,Indonesia if imports swell during a drought year.

3).Some developed nations that are big commodity exporters believe that India's large stocks of wheat and rice could lead India to dump those in global markets.Also the giving away of foodgrains at cheap throwaway prices would lower local prices & damage demand for their products in one of the world's biggest market i.e. India

What developing countries and G33 say ,

Developing countries including India blame developed countries and EU that they have moved their trade distorting subsidies( or measures) from Amber Box to Green Box ,thereby concealing them & protecting them from legal challenges at WTO.

They also claim that the way de-minimis is calculated (I would show by example how de-minimis is calculated)is also outdated and flawed based on ERP prevailing during 1986-88.The rates have shot up 650% since then.

G33 argues that the illogical way the trade-distorting domestic subsidy is calculated means developing countries are in danger of reaching or exceeding the permissible limits.What matters is how high the govt administered prices i.e. MSP are compared to ERP of 1986-88.and not how much it spends in totality.Eg :-ERP notified by India is Rs.3.52/kg for.paddy while.current year's MSPis Rs.19.65/Kg.This implies an untenable subsidy of over Rs.16/Kg.

US & EU want India to sign a trade facilitaion agreement (trade facilitation looks at how procedures and controls governing the movement of goods across national borders can be improved to reduce associated cost burdens and maximise efficiency while safeguarding legitimate regulatory objectives ).

They also offered a peace clause .Under this clause the trade distorting  subsidies of developing countries in case they rise past de-minimis would not be legally challenged in WTO for a period of 4yrs i.e. till 11th ministerial.

What India can do to ward of concerns of Developed countries ?

1).Continually increasing farm productivity ,maintain consistently high stockpiles of wheat and rice (dont let them rot) which means increased investment in irrigation & creating efficient supply chains .India's food production dropeed from 250 million tonnes in 2011-12 to 250 million tonnes in 2012-13 because of poor rains.

2).Reducing dependence on monsoons and improving agricultural infrastructure is critical in curbing import distortions during drought year.

Challenge before India is to defend its national obligations while giving due credence to policy externalities (consequences of policy that extend beyond policymakers' domain) that may arise during implementation of NFSA.

Calculation for de-minimis

>First we need to calculate AMS

Below example is for wheat

All the figures and values are assumed in below example .

-MSP or procurement price or acquisition price or intervention price =Rs.1920

-Fixed ERP(World Market Price)= Rs.300

-Domestic production of wheat =2,000,000

-Total value of Wheat production =1920*2,000,000 = Rs.3840,000,000

-Wheat AMS would then be calculated as per formula ,

AMS =(MSP-ERP)*Total Domestic production =(1920-300)*2,000,000

         =1620*2,000,000=3240,000,000

Now for de-minimis ,

de-minimis is 5% of total value of production (for developed country it is 5% and for developing countries it is 10%)

          =5*3840,000,000/100= Rs.192,000,000

Hence in above case.,

         AMS1 > de-minimis

Note :.In actuality Current Total AMS is calculated .

Current total AMS =AMS1+AMS2+AMS3 . . . . .

Here AMS1 is for wheat,AMS2 is for rice & AMS3 is for paddy and so on .

Also is to be noted that in above calculation only those AMS ' are taken which have exceeded the threshold of de-minimis so if AMS1 in case of wheat is within de-minimis then it will not be included in final calculation of Current Total AMS

From a breakout Nation to a breakdown Nation by John

The economy of India is the tenth-largest in the world by nominal GDP and the third-largest by purchasing power parity (PPP). The country is one of the G-20 major economies and a member of BRICS. On a per-capita-income basis, India ranked 141st by nominal GDP and 130th by GDP (PPP) in 2012, according to the IMF. India is the 19th-largest exporter and the 10th-largest importer in the world. The economy slowed to around 5.0% for the 2012–13 fiscal year compared with 6.2% in the previous fiscal. On 28 August 2013 the Indian rupee hit an all time low of 68.80 against the US dollar. In order to control the fall in rupee, the government introduced capital controls on outward investment by both corporates and individuals. The independence-era Indian economy (from 1947 to 1991) was based on a mixed economy combining features of capitalism and socialism, resulting in an inward-looking, interventionist policies and import-substituting economy that failed to take advantage of the post-war expansion of trade. This model contributed to widespread inefficiencies and corruption, and the failings of this system were due largely to its poor implementation.  

     

Everything seems to be good  in term of number about india but it could have been a much better if , so let discuss about past  but  we should not discussion before independence , before independence india was a nation not a state while after that , india was a state as well as nation , because of sovereignty. india got independence  on 14th august 1947 , the value of rupee was almost equal to US dollar and also there was no foreign borrowing on India's balance sheet. india adopted its first five year plan in 1951 , the government started external borrowing for finance welfare and development activities , this required the devaluation of the rupee.

Year	Gross Domestic Product	US Dollar Exchange	Per Capita Income (as % of USA)
1950	100,850	4.79 Indian Rupees	3.12
1955	110,300	4.79 Indian Rupees	2.33
1960	174,070	4.77 Indian Rupees	2.88
1965	280,160	4.78 Indian Rupees	3.26
1970	462,490	7.56 Indian Rupees	2.23
1975	842,210	8.39 Indian Rupees	2.18

this figure is showing that , after independence, Indian choose to adopt a fixed rate currency regime. The rupee was pegged at 4.79 against a dollar between 1948 and 1966. but due to two consecutive wars from china in 1962 , from Pakistan in 1965 , resulted in a huge deficit on India's budget, forcing the government to devalue the currency to 7.57 against the dollar. The rupee's link with the British currency was broken in 1971 and it was linked directly to the US dollar. In 1975, the Indian rupee was linked to a basket of three currencies comprising the US dollar, the Japanese yen and the German mark. The value of the Indian rupee was pegged at 8.39 against a dollar. In 1985 it was further devalued to 12 against a dollar.

Year	Gross Domestic Product	Exports	Imports	US Dollar Exchange	Inflation Index (2000=100)	Per Capita Income (as % of USA)
1975	842,210			8.39 Indian Rupees		2.18
1980	1,380,334	90,290	135,960	7.86 Indian Rupees	18	2.08
1985	2,729,350	149,510	217,540	12.36 Indian Rupees	28	1.60
1990	5,542,706	406,350	486,980	17.50 Indian Rupees	42	1.56
1995	11,571,882	1,307,330	1,449,530	32.42 Indian Rupees	69	1.32
2000	20,791,898	2,781,260	2,975,230	44.94 Indian Rupees	100	1.26

If we see figure we can realize that import is more than exports in india after 1975 so India faced a serious balance of payment crisis in 1991 and was forced to sharply devalue its currency. The country was in the grip of high inflation, low growth and the foreign reserves were not even worth to meet three weeks of imports. Under these situation, the currency was devalued to 17.90 against a dollar. in this year the Indian economy adopted LGP. Prime Minister Narasimha Rao, along with his finance minister Manmohan Singh, initiated the economic liberalisation of 1991. The reforms did away with the Licence Raj, reduced tariffs and interest rates and ended many public monopolies, allowing automatic approval of foreign direct investment in many sectors. Since then, the overall thrust of liberalisation has remained the same, although no government has tried to take on powerful lobbies such as trade unions and farmers, on contentious issues such as reforming labour laws and reducing agricultural subsidies. By the turn of the 21st century, India had progressed towards a free-market economy, with a substantial reduction in state control of the economy and increased financial liberalisation. This has been accompanied by increases in life expectancy, literacy rates and food security, although urban residents have benefited more than agricultural residents

The year 1993 is very important in Indian currency history. It was in this year when the currency was let free to flow with the market sentiments. The exchange rate was freed to be determined by the market, with provisions of intervention by the central bank under the situation of extreme volatility. In 1993, one was required to pay Rs.31.37 to get a dollar.Rupee traded in the range of 40-50 between 2000-2010. It was mostly at around 45 against a dollar. It touched a high of 39 in 2007. The Indian currency has gradually depreciated since the global 2008 economic crisis, an all time low of 68.80 against the US dollar on august 2013.

these were some facts through which we realize the value of rupee in an international market , there are several reasons for that like CAD , poor GDP etc

CAD is considered to be the key factor behind the steep volatility of rupee against dollar. CAD occurs when the total import of goods and services of a country is greater than the total export goods and services thus making India a debtor to the rest of the world. CAD increases due to have oil and gold imports. India is among top five oil importer and also among top in gold importer.

With fall of the GDP to 4.8%, it had significant effect on the stock markets and the falling rupee. The manufacturing, mining and the agricultural sector has faltered and investors have become cautious of investing in India.  

From a breakout Nation to a breakdown Nation

The rupee had plunged to an all-time low against the dollar and its fall has become a subject for debate. India, which was a potential ‘breakout nation’ in past is now a days facing an economic and political crisis. It is now near the bottom of the emerging markets’ list of countries that will break through their troubles. Majority of India’s troubles are self-inflicted, but some are part of the global sweep of economic events.

At the time of independence, India had no foreign borrowings and the rupee was at par with the dollar. With the introduction of the 5 years plan and the subsequent requirements for foreign investments the dollar slowly rose. In the era of economic liberalization in 1991, there was a sharp devaluation of rupee and the rupee had dropped to Rs.24.5 against a Dollar. It continued and the rupee had hit an all-time low of Rs. 68.85 against a dollar on August 2013. Factors identified and responsible for fall of Indian Rupee against Dollar are Current Account Deficit and Poor economic growth in terms of GDP.

India’s current account averaged a deficit worth 1.5 billion USD since 1947 until 2013. In the first quarter of 2013 the CAD was 18.1 billion and at present it has gone up over 20 billion. India's these fundamental terms have deteriorated steadily since 2007. The current account deficit has exploded from $8 billion to $90 billion; it now equals 5% of GDP, twice the level academic studies suggest is sustainable. Meanwhile, many corporations have been on a borrowing mode. Since 2007, borrowing by the 10 most indebted companies has risen six-fold to $120 billion, with much of it denominated in foreign currencies.

The downfall in the Indian economy had worsened the situation and the government is unable to generate heavy capital inflows. Despite all the government effort to allow Foreign Direct Investment (FDI), there hasn’t been significant FDI inflow. US federation had also withdrawn some of its bond buying programmes resulting in a sudden outflow of money that in return has left India far behind in the race .Foreign investors started pulling out of the Indian economy.

As stated above, adverse point came in may, when signals that the US Federal Reserve was serious about tapering off its quantitative easing programme triggered a sharp rise in long-term interest rates in the US, drawing dollars home. The trickle of money out of emerging markets turned into a flood. In India, more dependent than ever on foreign capital, the rupee has fallen 20% since May - the largest decline of all emerging market currencies.

Economic growth has also fallen to an average of 4% in emerging nations. In India, it is barely 5%, disappointing for a country with an income of only $1,500 a head, compared with the emerging market average of nearly $10,000.

Indian government assumed strong investment and savings rates would keep growth above 8%, and dismissed inflation as the natural price of prosperity and crony capitalism as a normal symptom of early-stage growth, rather than recognising it as the serious decease that leads to a backlash against wealth creation.

After the advent of new governor of reserve bank of India and his policies on very basic instrument like repo rate, cash reserve ratio, SLR and many other fiscal matters, the falling trend of Indian Rupee was somehow controlled. Initiatives taken by RBI during this time was criticised by economist initially but accepted when it shows curbing on falling down of Indian currency.

Government of India and RBI are the main players in the field of economy in India and global world. Both are empowered to regulate and control the economy by respective area’s instruments. Government of India has although taken immediate action to control the down fall of Rupee and Indian economy, yet failed in all areas. This time RBI initiatives have somehow controlled the economy.

A sharp decline in rupee affects inflation, current account deficit and the economic growth of our country. The government and the Reserve Bank of India both have the power to regulate and monitor the economic and fiscal policy for India. They should work hand in hand to stabilize the situation and minimise the gap between Indian Rupee and Dollar. In present scenario of global economy uncertainty, both should be aware and updated on latest economic trends in world economy and its effects over India. They are required to be equipped with diversified business areas apart from traditional dependency on borrowing and imports, keeping eagle eye on CAD, Forex Reserves and GDP. External borrowing and Imports should be minimised and promotion to be given for maximum export of indigenous goods and services. It will help in strengthen the health of economy and Indian Rupee as well in global market.