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.

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.

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.

From a breakout Nation to a breakdown Nation

The rupee has collapsed, stock market is falling – has India moved away from a breakout nation to a breakdown nation in just a few months?

A crisis point that Indian Economy is facing is the all-time lowest point that it had had in past. Experts have their own views on this, if it will be a long term or a short term crisis. If this situation is persistent and it continues to be like this, India is likely to be declared junk status. A short term loan of $170 bn  standing to be paid by March 2014 is making the situation worst. Rupee has collapsed and the stock markets are in a free fall.

At the time of independence Indian economy was at par with no foreign debt and economy was in equilibrium. With subsequent requirement for foreign investment the dollar rose. With a GDP growth of 8% in 2008-09 India was experiencing a boom. A slowdown in US economy was a gain for India. A free fall in the rupee in last few months has been erratic for the Indian economy. This has certain internal as well as external factors attached to it. A mismanagement of Economy by UPA-2 government along with certain macroeconomic factors has led to a slowdown of Indian Economy.

Current Account deficit is considered to a major factor behind this slow down and downward movement of rupee against dollar. CAD occurs when total imports are greater than total exports thus making India a debtor to rest of the world. Strengthening of Dollar in the last six months the dollar has strengthened by 3.52 percent with the strengthening of the US economy. The dollar has been rising on signs of growing economic momentum and talk of an early end to the Fed’s stimulus effort.  This is something which is beyond the control of the Indian Government and it is hampering the recovery of the rupee. This is one of the immediate reasons for fall of rupee that the US Economy is doing better. Money is flowing to United States. Insufficient inflow of FDIs and outflow of the foreign investments. The downfall in the Indian economy has 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. The US federation has 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 has been pulling out of the Indian economy. The month of May has seen a record outflow of foreign investments of Rs. 44162 crore. With the giants like Posco pulling out of its Rs. 30000 crore steel plant project in Karnataka followed by ArcelorMittal pulling out of its Rs. 50,000 crore project in Odisha due to delays and land acquisition delays.

The rising import bill is one of major concern and is has hindered the government effort to tackle the falling rupee. Oil accounts for 35% of the total imports and gold 11% on India’s current bill. Oil and gold imports account for 35 per cent and 11 per cent of India’s trade bill respectively. There has been an uninterrupted demand for the dollar from the oil importers pushing the rupee lower. Likewise the falling gold prices have made the central bank to reduce imports, which increases CAD and hits the currency directly. Indian economy requires a strong structural reform to maintain a positive balance of payment. According to the latest figures released by the RBI the CAD has fallen down to 1.2% of GDP on the back of turnaround in exports and decline in gold imports.

The Gross Domestic Product (GDP) has hit its lowest patch in the last 10 years. 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.

The central government has unraveled a multipronged strategy to bring about an increment in the inflow of dollars and limit the outflow to compensate for the sliding value of rupee. A planned increase in import duty has been exercised to shore up the decrement in rupee. Some of the other possible remedies that can be emphasized are:

• The customs duty on several red-hot imports like gold and silver is on the rise as it’s a strategic movement by the central government to ease the gap between dollar and rupee.
• NRI bank deposits can be made more attractive and foreign loan norms eased.
• The government has also decided on three public sector institutions based on finances to raise funds in dollars through bonds.

• Electronic goods top the list when it comes to making big business. In order to stabilize rupee a significant increase in customs duty on Electronic goods needs to be exercised.
• Another point that can be kept on the anvil is that some imports should be denied. The products can include crude palm oil, copper and certain varieties of coal.

The best business prototype anyone can have is to spend in rupees and earn in dollars, which is what the giants of India Inc, including the top IT companies, excel in. Basically the sector which is targeting exports for its industrial operations are the one wins the game.

Dollar appreciation would be positive for sectors such as IT, pharmaceuticals, hotel, textiles and automobiles which have the total foreign exchange earnings of these firms are far greater than their forex spends. As much as the rupee weakens, the foreign exchange earners gain provided the other factors remains constant. A sharply declining rupee triggers inflation, broaden the current account deficit, hits investor sentiment and creates burdens for organization with high exposure to foreign debt. The government and the Reserve Bank of India have taken several reform initiatives to resist the downturn, but their success stories are looking gloomy. As a whole we can say that though weakening rupee is the reason for someone’s smile it is a real threat for the country’s overall fiscal health and increase the current account deficit heavily. But in my opinion this huge downgrade is a temporary phenomenon and the rupee is really oversold. Now the Central bank and Government should work hand in hand and find out the policy measures to stabilize the frightening scenario. I personally hope a further cut in SLR to ease the liquidity to save rupee and also import duty hike in gold and other related materials. RBI can buy bonds to ease liquidity in the market. Finally we can say that the situation is tight and challenging for us, but we can not only hope for the best but also should contribute the most to get back Indian economy in the driving seat.

From a breakout Nation to a breakdown Nation by Luv Sharma

The economy of India is 10th largest in the world by the GDP and the third largest in terms of purchasing power parity(PPP).For much of the past decade, India waa celebrated as one of the emerging nations destined to rise indefinitely.India's dream run continued from 2003 and lasted for five years with economy recording an average annual growth rate of 9% throughout that period i.e. 2003-04 till 2007-08.It was during these times that stories of a breakout nation vis-a-vis India started doing rounds in World market but this raging Indian juggernaut was brought to a deafening halt as recession hit the world in 2008.Though India survived the recession but its after-effects that reverberated throughout the world affected India too.India's economy & its currency has been on a downward spree ever since.

When India got freedom value of Dollar was at par with rupee.To finance welfare and development activities especially after introduction of 5year plan in 1951 ,the government started external borrowings which required the devaluation of Currency.The rupee was pegged at 4.79 against dollar between 1948 & 1966.In 1975 it was 12 against dollar.During 1991 economic crisis ,a period marked by high inflation, low growth & low foriegn reserves forced India to further devaluae rupee to 17.90.The rupee traded in the range of 40-45 between 2000 & 2010 touching a high of 39 in 2007 during economic boom.This boom that India witnessed was the outcome of a surge in bank credit to the private corporate sector boosted by a flood of foreign capital.The loose monetary policy followed by the US to revive the domestic economy after the dot-com bubble burst and Japan's near zero.interest rates around the middle of the first decade of this century led to the resurgence of the capital outflows to the emerging markets , with investors prepared to take greater risks in search of higher returns.FDI inflows also increased during this period as Indian Government relaxed norms to allow Venture funds/Private equity/Hedge funds to enter Indian Market .This was the story till the dream run lasted but as soon as the lehman brothers collapsed foreign portfolio investment ezpectedly fled for the safety of the dollar.

From 2008 till 2013 rupee has drooped to its lowest when it touched a record low of 62.80 against dollar in August .Present case scenario can.be attributed to many factors ,inflation and High Fiscal Deficit being prominent among them.If we take up inflation in India then one achool of thought argues that inflation in India is because of factors like increased payment through MGNREGA, higher minimum support prices for farmers& recently goverment introduced food bill under which it has committed to spend around Rs 1.3Lakh Crore per annum ..Money spent without increase in storage capacity in case of Food Bill & many infrastructure projects not getting under MGNREGA is bound to cause inflation.Questions are further raised about effective usage of Government money on health & education.Critiques also argue that although development indicators have improved ,money is not being spent as well ,as quality of service has not improved.Add corruption to this and one finds a perfect recipe for inflation.Inflation and a rise in Fiscal Deficit is bad news for exchange rate.Jn foreign exchange markets ,expectation plays a major role.High fudcal deficit & higher inflationary expectations make domestix assets less attractive .Currency depreciates & foreigners pull out money from the domestic capital market.

The fall of rupee every other day is a direct consequence of the above fact.The fall in currency has had its adverse impact on India's economy and will further dent it.India's CAD is likely to increase further as oil and precious metals still contribute to the bulk of India's imports.Moreover as government of india imports oil for its energy needs and then sells it at subsidised prices to companies the reultant Oil import subsidy bill will contribute its share to CAD .India buys oil in dollars and sells in rupees so this part of our import package is going cut a gaping hole in our forex reserves..Government takes short-term loans from international organisations that it will have to reimburse at a higher rate because of fall in the value of rupee.Still there are ways government and RBI can seek to fight it out in this tough battle.Govt can take number of steps like creation of environment for long-term capital investment,Improving of trade relations with Iran which will allow India to import oil in rupee so no need of spending precious dollar.Similarly Govt can try to implement government funded schemes better.Reforms such as Direct Benefits Cash Transfer(DBT)Scheme are welcome as they are expected to plug leakages in the system.Further short-term measures include, curbing imports of gold and silver by raising of import duties, raising of additional funds through ECBs by PSUs,liberalised deposit schemes to attract dollar inflow from NRIs,tighteninh of liquidity to reduce rupee availability in the system and lastly reducing amount of dollar resident Indians can take with them.outside.

The irony of the situation is profound.Indian leaders wete quick to credit a boom to the country's natural strengths, rather than easy flow of capital from.outside world but now they are quick to blame their troubles on the receding glolobal tide.This phase too shall pass as government looks to take some strict measures but toexpect a likely turnaround soon would be a farcry.India has always wanted to be 'next china' in economic terms but beating China to next crisis is not whay Indians had in mind.People are still wondering as to how their breakout nation became a breakdown nation seemingly overnight.

Food Paradox of India: Hunger amidst Plenty By Luv Sharma

India is the world's second biggest grower of rice and wheat & may very well produce a record quantity of food in the 2013-14 season as monsoon covered the entire nation early.India has world's highest percentage of arable land area & second largest in total(after US) coupled by the fact that it also ranks first in gross irrigated croplands, an obvious corollary would have been the non-existence of hunger & malnourishment in India but such is the criminal & strange paradox of plenty that in india millions still go without food.Not only this to further substantiate a brilliant example of hunger amidst plenty it was ranked 66th in Global Hunger Index.Even after 45yrs of the Green Revolution India provides a unique spectre of overflowing warehouses & rotting grqins on the one hand while.millions go to bed hungry.

Spurred by the agricultural innovation & generous subsidies, India now grows so much food that it has a bigger grain of stockpile than any country except china & it exports some of it to countries like Saudi Arabia & Australia.Yet 1/5th of its people are malnourished , which is double the rate of other developing countries like Vietnam & China.This glaringly ironical situation has been under constant neglect from the government.

The explanation of this anomaly lies in the complex regulations that govern procurement & distribution .One major problem is the storage of the grains.For past 25yrs the storage capacity has not been upgraded at all.Part of the grain is officially stored outside warehouses, where chances of rotting are high.The current storage facilities are quite inadequate.Granaries are filled beyond capacity & many are in deplorable condition.The above problem is further compounded by infrastructural barriers like insufficient road network & transportation.Consider the example of punjab which has been blessed with rich & fertile soil and is popularly called as bread-basket of India.It has been reeling under inadequate incentives and investment for procurement & storage of food grains.Of 14Million ton of wheat to be purchased by State govt's food & civil supplies deptt., Punjab currently has space to store only 6Million ton.This has forced state govt to look for alternative storage spaces in empty mills,abandoned factories ,schools & even graveyards.Meanwhile its open sites are overflowing & slowly spoiling grain from previous years.So the need of the hour is to setup a network.of grain silos & warehouses & godowns across country .This would redice the burden for stock holding of wheat by the producing states and they can also be used for effective distribution among the poor.Another problem is the inefficient & corrupt system used to get the food to those who need it.Just 41.4% of the grain picked by the states from central warehouses reaches Indian homes, according to a worldbank study.Officials all along the chain, from warehouse managers to shopkeepers, steal food and sell it to the traders, pocketing tidy ,illicit profits.Many families have still not got their ration cards and they hesitate in.getting them due to bribery involved.Some States like TamilNadu & Chhatisgarh have made marked improvements by using technology to track food & have made it easier for households to get ration Cards.India should move towards giving poor cash or food stampsas US ,Mexico & other countries have done.That would eliminate mismanagement because govt would.buy and store only enough grain to insure against bad harvests thus solving the twin problem of wastage and of providing maximum outreach.

Recently food security law has been passed by government of India which gurantees 67% population nutritious food at very low prices.This is an another step towards achieving food security.If implemented correctly this law would not only help in exterminating the problem of hunger and malnourishment but also help divert the excess grain procured by the govt thereby eliminating the wastage of grains.

The visuals of food rotting speak volumes of the criminal apathy,neglect & callousness on our part with which we, as a nation have failed to address the shameful scourge of hunger.

India is facing a major food problem ,arising mainly from poor policies,infrastructure & corruption but it can be resolved with sincere efforts on the part of government by strengthening the market support system & establishing a network of storage spaces across the country.

Every piece of grain wasted is a cruel joke and a slap on the faces of millions of children living under poverty and malnourishment.Perhaps if policy makers could realise the gravity of what Gandhiji was trying to say when he said " There are people in this world  so hungry that God cannot appear for them except in the form of bread.

Perhaps its high time that India puts the national Agricultural ox before the cart of being a major global power.