Trade and development report update: April 2024
The report forecasts global economic growth to 2.6% in 2024, barely above the 2.5% threshold commonly associated with a recessionary phase. The report says the prevailing focus on inflation overshadows
Economic Development
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Maharashtra attracts big funds with mega project policy
Maharashtra governor SC Jamir on Monday asserted that despite suicides by farmers and burgeoning power deficit, the state continues to attract investments of Rs 1,14,000 crore by steamlining the proce
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Rs. 7,074 crore Japanese loan for various projects
Japan on Monday approved a massive loan package of about Rs.
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Focus should be on scheme implementation
Urging the people from the cross-sections of the society not to ponder much over what the Northeast region got and what it did not from the recently announced General Budget, Prof Dr Madhurjya Bezbaruah of Gauhati University instead said that the focal point should now be to keep a close eye on the implementation aspect, which would eventually determine the growth of the country as a whole and the Northeast in particular. Calling the General Budget as an election Budget, Dr Bezbaruah stressed on the need for an inclusive growth by bridging the gap between the haves and the have-nots, which is one of the biggest challenges before the 11th Five Year Plan. Dr Bezbaruah was speaking during a discussion on the recently announced General and Railway Budgets, which was organised under the aegis of the All Assam Students' Union and the Asom Unnati Sabha. The Northeast, especially Assam, in recent times, has witnessed a phase where a series of development schemes has been initiated, but when it comes to the implementation of the schemes, there has always been a question mark. "A proper implementation monitoring system is what we need at this moment,' he pointed out. He also rued over the fact that unlike some of the other educational institutes of the country, some of the oldest and premier educational institutes of the State like the Cotton College and the Gauhati University had failed to draw the attention of the Union Finance Minister, which is a matter of concern. Dr Bezbaruah also took an exception to the Union Finance Minister's decision to waive off loans of the farmers, stating that it might well destroy the rural loan market. "The Government can help the cause of farmers by encouraging bank and institutional loan system,' he pointed out. RS Joshi, director, FINER, while echoing the concerns of Bezbaruah, further said that political aspirations have overtaken the recently announced General Budget. He, while mentioning that the allocation for the North East in the Budget has remained more and less stagnant, further called for giving stress on the service sector which contributes heavily to the country's economy. "Though the country's overall GDP growth is 8.7 per cent, the north-eastern States' growth rate is however lagging behind,' Joshi stated, adding, "The North East has to be in the scheme of things of the Union Government if the regional imbalances in the country are to be bridged.' S Borborah of Indian Institute of Technology, Guwahati, while stressing the need for expediting infrastructure development, said, "More than allocation, evaluation and monitoring of various projects is what can produce greater dividends.'
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Seeking the right balance
The Union budget has sought to send a message that the government will do all it can to rein in inflation even while maintaining the growth momentum. The Prime Minister had made the point earlier that no government can be oblivious to the objective of ensuring price stability without hurting the growth process. However, as all recent monetary policy statements have been articulating, the pursuit of both the objectives calls for a deft balancing of the often conflicting options. For instance, higher interest rates are necessary to contain inflation but are detrimental to economic growth. It is clear from the budget proposals that the fiscal policy too is seized of a similar urgency in stimulating an economy that is slowing down and vulnerable to a resurgent inflation. There are downside risks from the external environment. While the consequences of the U.S. sub-prime crisis on the Indian economy are not yet clear, high food and commodity prices, including that of oil, pose significant supply side risks and are inflationary. The budget envisages several measures to boost domestic consumption. One of the key drivers of the spectacular GDP growth over the past four years, private domestic consumption has been lagging during the current year. The adjustment in income tax slabs should increase the disposable incomes of the middle class estimated at 250 million. The considerable step-up in the allocation of funds for Bharat Nirman and other social sector schemes will also boost consumption. So will the reduction in CENVAT and specific excise duties such as those on small cars and two wheelers. Over the past 18 months, domestic interest rates have risen as the RBI pursued a vigorous anti-inflation policy. Both consumption and manufacturing have been adversely affected. The government's commitment to fiscal rectitude should help ease interest rates. In fact, a vastly improved picture of public finance is seen in the lower public borrowing projections for 2008-09. However, the off-budget subsidies on food and petroleum do not figure in the government's estimates of the fiscal deficit. Also it is not clear how the government proposes to compensate the banks for the Rs.60,000 crore write-off of farm loans. Both public and private investments have been rising as a share of the GDP but their growth would seem likely to moderate. Continuing the attempts at removing infrastructural bottlenecks and upgrading the skills of the young workforce will help in removing supply-side bottlenecks. Along with the emphasis on agriculture and rural development, they hold the key to more inclusive growth with stability.
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CM warned over attempts to foist SEZs on Goa
The SEZ Virodhi Manch has warned Chief Minister, Digambar Kamat that any attempts by the Ministers in his government or by other vested interests in Goa or by the Ministry of Commerce to foist the SEZs on Goa under any label or force the pace of industrialisation by any other scheme will be resisted by Goans will all their might. In a letter to the Chief Minister, the SEZ Virodhi Manch while appreciating the recommendation to the government of India to scrap all SEZs, including the three notified ones in Goa, has expressed deep concern about recent media reports suggesting that the promoters of notified SEZs should served show cause notices and that they should be invited for discussion on the payment of compensation. The Manch has said the Goa government should flatly refuse to pay compensation to the SEZ promoters. On the contrary, the Manch has asserted that the promoters should be compelled to pay heavy compensation to the people for rampant hill-cutting, land-filling, rock blasting and other destruction carried out on the allotted land without authorisation from the competent authority. "The GIDC has no authority under SEZ Act to issue any permission to do hill cutting or developers. Construction activities have taken place before the SEZs were notified. Hence, all the constructions initiated in the SEZs are illegal', the Manch maintained. Saying that bore-wells sunk by the SEZ promoters at Keri and Verna have affected sub-soil water levels in surrounding areas and that wells and springs have dried up, the Manch said this ecological disaster should be investigated and the promoters made to compensate the respective villagers. Requesting the Chief Minister to instruct the GIDC to cancel the land allotment they had made and to resume the land they had alloted, the Manch said the land can be utilised in the future for purposes only after involving the Gram Sabhas of the local Panchayats in all future procedures for the use of this land. Reminding the Chief Minister about the demand for a CBI inquiry into the fraudulent allotment of land to the SEZ promoters by the GIDC, the Manch said the criminal compliant made with the Goa police is yet to be registered as an FIR. "Such inaction on the part of the government gives reason for suspicion', the Manch said and hoped the government does not force Goans to resort to agitations again to seek justice.
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When economics yields to politics
There were no gasps of surprise when Palaniappan Chidambaram, Indian finance minister, unveiled a populist budget aimed at boosting the chances of the Congress-led governing alliance in the general el
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Urban Futures
UN report predicts 55 per cent of Indians will live in cities by 2050 Half of the world's population is expected to turn urban by the end of this year. A UN report now estimates that cities in Africa and Asia will account for most of the growth in urban population by 2050. However, over 45 per cent of India's population may continue to live in villages, down from the 70 per cent now. In comparison, only 30 per cent of Chinese are expected to live in the countryside, against 60 per cent now. The growth in urban population is a historical trend and India can't be an exception. People have historically moved from rural areas to urban enclaves due to social and economic reasons and aspirational factors. Cities generate more jobs than villages, especially in the organised sector. They have good schools and hospitals, diverse markets, vibrant cultural spaces and are assumed to offer a better quality of life. People naturally prefer to migrate to cities when given the opportunity. The flip side of this trend is that cities can get overcrowded and stretch public utilities. Many Indian cities face this prospect. One way to address this problem is to incentivise reverse migration so that our overcrowded cities are decongested, besides, of course, upgrading the facilities in urban centres. Reverse migration is now a realistic proposition due to social and economic changes and emergence of new forms of technology. Our democratic institutions are now more representative and inclusive thanks to Panchayati Raj. Women and lower castes have a visible presence in local government. Social oppression that forced many people to flee villages to cities is on the decline in most parts of the country. The IT revolution is changing the concept of work and workplace. Many non-metros have benefited from these changes. As local economies grow in size markets too will diversify and more jobs will be created in and around these cities. More small towns could reap the benefits of the emerging economy if local governments pursue the right policies. The task before the government is to make policies to ensure that urban amenities presently available only in big cities reach small towns and even villages. States like Kerala and Tamil Nadu have demonstrated that this could be achieved. These two states have built a seamless network of small towns and villages well connected by roads and communication links. As the Budget has revealed India does not face shortage of capital. The task is to ensure that resources are deployed in the right manner. An urbanised population spread more evenly over a large number of cities would be a better option for the future than a handful of overcrowded mega cities.
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Budget to prop up agriculture sector
The performance of agriculture sector during the year 2007-08, despite its record production of food grains, is still a cause for concern due its low rate of growth (2.6%) affecting the well being of farmers in various parts of the country. This calls for bold measures for bringing about a turn around of the agriculture sector and the announcements made by the finance minister are a pointer to such measures. The loan waiver for marginal and small farmers and the one-time settlement (OTS) of loans for other farmers and their entitlement for fresh loans with a target of Rs 2,80,000 crore during 2008-09 is expected to take care of the issues relating to the accessibility of credit from institutional sources and reduce the dependence of the resource poor farmers on money lender. The implementation of the Vaidyanathan Committee recommendations for revitalising the long-term co-operative credit structure ensures availability of increased credit for private investments in agriculture by farmers. The contribution of Rs 5,000 crore to the NRC(ST) Funds of Nabard helps in ensuring that the demands of the farmers for their production needs are met. Financial inclusion of the disadvantaged sections is facilitated through opening of additional bank branches in districts with predominant minority population, enhancing the income limits to Rs 18,000 in rural areas under the DRI scheme and access to Janashree insurance product of LIC for all women SHGs credit linked to banks. The increase in the corpus of RIDF by Rs 2,000 crore, coupled with the increased allocation under Rashtriya Krishi Vikas Yojana, Accelerated Irrigation Benefit Programme, the Rainfed Area Development rainfed farming and the setting up of the Irrigation and Water Resources Finance Corporation will facilitate in bringing more area under irrigation as well as in conserving land and water resources, critical to the performance of the sector. These investments will also help in stepping up investments in the private sector also. Various other measures announced for improving the performance of the sector include stepping up funds under the National Horticulture Mission, creation of special funds for plantation crops like cardamom, coffee and rubber, introduction of insurance scheme for select plantation and horticulture crops, etc. The overall thrust in the Budget is not only in boosting the performance of the agriculture sector but in ensuring that there is overall rural development through providing infrastructure- both physical and social, social security, human resource capacity development, off-season employment under NREGA, etc. These should help in achieving the goals of full employment, abolition of poverty and elimination of inequality in the medium term. The writer is Nabard chairman
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Waiver won't end indebtedness: Bardhan
This was only a one-time waiver and farmers would fall back into debt Left parties would oppose move to increase working hours from 8 to 10 THRISSUR: Communist Party of India (CPI) general secretary A.B. Bardhan said on Saturday that the loan waiver scheme announced by Finance Minister P. Chidambaram in his budget speech on Friday was no solution to farmers' indebtedness. "For four years, you saw the farmers dying. For four years, you watched them fall deeper and deeper into indebtedness and committing suicide in States like Maharashtra, Madhya Pradesh and Kerala. And, in the fifth year, with the elections coming, you hand out some sops. Then again, it is a one-time waiver. But what happens tomorrow? They will be thrown from one round of indebtedness to another,' Mr. Bardhan said, inaugurating the four-day State conference of the CPI here. Beneficiaries The CPI leader also questioned the government's claim about the number of farmers who would benefit and pointed out that the Reserve Bank of India (RBI) was on record that more than half the farmers in the country were dependent on money-lenders for their credit needs. The government's loan waiver offer would not touch such loans. If the government was sincere about the farm debt crisis, it should have announced the formation of a Debt Relief Commission and pegged the interest rate on farm loans at 4 per cent as demanded by the Left parties when the budget was in the making, he said. Mr. Bardhan said the CPI and other Left parties would oppose the proposal in the Economic Survey to increase working hours from eight to ten. They would wage a battle to thwart attempts to curtail the rights won by the working class over 150 years ago through a long struggle. He also pointed out that the Finance Minister did not respond to the Left's plea for measures to universalise the public distribution system. He welcomed the decision to extend the National Rural Employment Guarantee Scheme to all the districts in the country, but regretted that only Rs.16,000 crores was earmarked for its implementation. This would not be sufficient to provide 100 days' employment to all the eligible persons in the rural areas or to give them wages as envisaged in the NREG Act. The failure to make adequate funds available clearly showed that the government was not interested in implementing the scheme in letter and in spirit, Mr. Bardhan said. The BJP was trying its best to utilise the discontent in the minds of the people over a host of issues, including the sharp increase in the prices of essentials, he said. The Congress seemed to be offering power to the BJP on a platter, with its ill-conceived policies and failure to come out with people-friendly measures. On its part, the Left was committed to keeping the BJP out of power and wanted all the Left and secular parties to come together on a common platform on the basis of a clear pro-people programme. What emerged from the exercise should not be a Third Front where parties came together for electoral purposes, but a real third alternative to the Congress and the BJP, he said.
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ISRO's manned space mission gets Rs 125-cr allocation
Indian Space Research Organisation's (ISRO) human space mission proposal has got its first significant budgetary share, Rs 125 crore, while the Department of Space has got 24 per cent raise in outlay for its 2008-09 activities. The space budget of Rs 4,074 crore, compared with Rs 3,290 crore last fiscal, partially provides for at least three major projects