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Farmer ID Scheme:LEASE CROPPERS NEED A PIE, By Shivaji Sarkar, 21 April 2025 |
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Economic Highlights
New Delhi, 21 April 2025
Farmer ID Scheme
LEASE CROPPERS NEED A PIE
By Shivaji Sarkar
In a landmark move
echoing the ambition of Todarmal’s legendary land reforms under Emperor Akbar,
the Indian government has launched a transformative Farmer Identity Scheme.
This reform marks a significant stride in the modernisation of Indian
agriculture. By assigning a robust digital identity to farmers, the initiative
aims to tackle long-standing challenges around accessibility, transparency, and
financial inclusion—ushering in a tech-driven agricultural revolution.
With its wide range of
benefits and user-friendly implementation, the Farmer ID has the potential to
become a cornerstone of rural empowerment and sustainable agricultural growth
in India. Already, under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN)
Yojana, eligible landholding farmer families receive a direct financial benefit
of ₹6,000 per year. The Kisan ID is used to identify these farmers and ensures
that payments are made directly into their Aadhaar-linked bank accounts. The
move is expected to cut drastically administrative expenses.
Todarmal’s land reforms
are known as among the most expansive for measuring land, identifying
locations, sizes, and other basic data. The first written patta to
individual landowners was issued with precision in the subas of Avadh and
Agra—present-day Uttar Pradesh. Though envisioned as a universal system, it
faltered in Bihar and other regions distant from the Mughal capital. In Bihar,
entire villages were issued a collective patta, which has led to ongoing
disputes. Even today, Bihar records the highest number of land-related
disputes—an issue that must be examined as part of the new digital system.
So far, the scheme has
provided digital identities to about 7 crore landholding farmers—out of an
estimated 26.3 crore total farmers. Only those who own land are being enrolled.
However, agriculture is far more complex, and identifying all those
involved—tenants, sharecroppers, agricultural labourers—remains a challenge.
Agriculture Minister
Shivraj Singh Chauhan has emphasised that the scheme ensures timely financial
support, with payments made regularly. The Aadhaar-linked bank account system
ensures that the benefits are transferred directly, making the process simple
and secure. Each registered farmer receives a digital Farmer ID, with their
personal and agricultural data securely stored in a centralized database.
The Farmer ID serves as
unique identification number for each farmer, the government says, enabling
them to receive targeted support and opening up a host of opportunities
previously out of reach. More than just a number, the Farmer ID is set to become
a gateway to financial aid, technological assistance, and efficient government
service delivery in rural India. The government says that this ID ensures that
farmers could directly access agricultural loans, crop insurance, input
subsidies, and other government schemes — reducing the need for intermediaries
and minimising delays. It does not need the farmers to move to the patwaris
and other land or district officers for documentation or authentication of
documents as their land records are being digitally uploaded with other
financial details and are accessible through Aadhaar.
That is how the PM-KISAN
pension scheme facilitates the ₹6,000 annual payout. Yet, some reservations
remain. Linking Aadhaar, PAN, and now land records raises concerns about data
security and privacy. The government assures that access is permission-based
and that data is protected—but apprehensions persist, especially given
instances of financial fraud.
Land ownership further
complicates matters. Many plots are jointly owned, sometimes by several people
with fractional shares. It’s unclear how these will be handled—whether there
will be joint IDs or other mechanisms. Clarification is needed on how pattas
will be digitised for such cases.
Even the exact number of
farmers remains uncertain. According to the 2011 Census, India had 26.3 crore
farmers—11.8 crore cultivators and 14.4 crore agricultural labourers. But
definitions vary across government surveys, including the Agricultural Census,
NSSO, and Periodic Labour Force Survey. Moreover, the data is outdated. A key
observation from 2011 was the decline in the percentage of the workforce
engaged in agriculture—from 58.2 per cent in 2001 to 54.6 per cent in 2011. A
more recent NABARD survey noted that average landholding sizes fell by 31 per cent
between 2016-17 and 2021-22.
There are e-NAM
registrations as well. The number of farmers registered on the e-National
Agriculture Market (e-NAM) platform is on the rise, indicating an increasing
number of farmers participating in modern market practices. As of March
2025, nearly 17 million farmers were registered on e-NAM, with Uttar Pradesh
leading in registration numbers.
The agricultural
workforce was shifting from cultivators to labourers. An important change,
according to National Highway Authority of India (NHAI), is shifting of 50 lakh
hectares of land from farms to roads. Its social and economic impact has yet to
be studied since 2019.
The land ownership is
also not simple. The Agriculture Census considers any land used for
agriculture, even if it's not owned by the person using it. A large
percentage of farmers in India are small and marginal, typically owning less
than two hectares of land.
In 2020-21, agriculture
employed more than half of India’s workforce and contributed 20.2% to the
country’s GDP. India is the world’s second largest producer of food
grains, fruits, and vegetables, tea, farmed fish, cotton, sugarcane, wheat, and
rice. Many of these have differing farm pattern. A critical area is the
sharecropping or leasehold farming. The Farmer ID is not supposed to include
these. This could be a lacuna.
The agriculture sector
in India has the second largest land in the world. It includes land-based
farmers. Variation is too wide. It includes crop; Livestock; Dairy
and Poultry farmers. There are also Truck farmers, who grow a
variety of vegetables for sale in local markets.
This apart there are Fishermen
engaging in fishing for commercial purposes Aquaculture or
fish farmers and Recreational/Sport fishers. Though
activities differ, there are overlaps as well. How these categories be listed,
if some or many of them, want to be registered as farmer is not clear. The move
may be good but there are various dimensions that need to be sorted out for
having the ID as an effective tool.---INFA
(Copyright, India News & Feature Alliance)
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Rate Cut Roils 2.52 Bn Old, Poor: FANCY IMPORTS HIT LIQUIDITY, By Shivaji Sarkar, 12 April 2025 |
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Economic Highlight
New Delhi, 12 April
2025
Rate Cut Roils 2.52 Bn Old, Poor
FANCY IMPORTS HIT LIQUIDITY
By Shivaji Sarkar
As the “Trumpire” strikes with aggressive
tariff moves to assert American dominance, India must resist the urge to mimic
Washington. Caving to the US pressure risks derailing the country’s swadeshi
push for self-reliance and manufacturing strength.
Meanwhile, the latest 0.25 per cent rate cut,
second since February—cheered by corporates, following an earlier US rate cut—delivers
a blow to middle-class savers and the aspiring poor, eroding the real returns
on their hard-earned deposits. It shears them of
their own hard-earned money as accrual reduces drastically. It was avoidable
but the Reserve Bank in its wisdom did not put it off. The inflation scenario
is not so bright as resort to a cut that deprives 2.52 billion, including 917.7
million women, individual bank accounts, billions of rupees of accrual a year.
They are potential purchasers, travelers, tourists, businessmen and
contributors to the growth. The RBI’s lowering of GDP growth rate to 6.5 per cent
is a pointer that the move may not have been wise. The US President Donald
Trump pausing retaliatory tariff for 90 days, including India, amid 125 per cent
tariffs on China and retaliatory moves by the European Union indicate that
global unease continues.
India wants to placate it with increased gold and precious metal imports
from the US to address Washington’s concern of a significant trade deficit.
Nobody has yet questioned the RBI’s wisdom of such fancy imports. The RBI gold
buying spree along with some other central banks have skyrocketed world gold
prices. The new buys are used for settling trade deals, but the surging prices
add to the cost.
RBI Governor Sanjay Malhotra says more than inflation, he is concerned
about US tariffs on growth. The tariffs, he says could impact growth in three
ways – by creating uncertainty that “dampens growth by affecting investment and
spending decisions; denting global growth and leaving a negative impact on
exports”. Hard days are indeed ahead.
Indian consumers are also fobbed by not
getting the benefit of international crude oil prices slump as the selling
prices are maintained by administrative price mechanism. A relief in retail
petroleum selling prices and cut in excessive highway and other toll rates
could have boosted the Indian economy.
Brent and West Texas Intermediate (WTI) crude
prices have plunged to their lowest levels in four years, each tumbling 16 per cent
in just a week. The sharp slide follows China’s retaliatory move slapping an 84
per cent tariff on U.S. oil, countering Washington’s aggressive 104 per cent
hike. Brent now trades at $60.35 a barrel, while WTI has dropped to $57.23,
after a steep midweek 7 per cent fall.
The State Bank of India (SBI) observes that
term deposit rates are impacted in a much stronger way than lending rates. This
starts to compress the net interest margins for banks, a kind of no-man’s-land
indicator that could signal at least two broader trends. One is what’s
happening on the funding side. Since term deposits are generally less liquid
than demand deposits and there is still a healthy growth in demand deposits,
banks could be moving towards a structure where they pay less for the funds
they are using to make loans.
As fixed deposit rates are expected to fall
even more in the coming months, analysts suggest that investors should take the
time to secure high-yield rates. Once the security of the deposit and its
accruals are hit, billions of people lose confidence and move away from the
market. In real terms, except for February vegetable prices, inflation is not
that low. There are apprehensions that future interest rate cuts are on the
horizon. It further shakes the investors and banks may not have comfortable
sources of funding.
Over the past two months, the RBI has cut the
repo rate by a cumulative 50 basis points—a clear shift in policy, despite
subdued inflation and fragile growth. This is welcome news for borrowers,
easing access to credit and lowering repayment costs. However, the outlook
isn't as bright for fixed deposit (FD) holders.
In response to the rate cut, banks have begun
adjusting their deposit schemes. Kotak Mahindra Bank was the first to act,
reducing FD rates by up to 15 basis points across select tenures. As of April
9, 2025, the bank offers interest rates ranging from 2.75 to 7.30 per cent for
the general public and 3.25 to 7.80 per cent for senior citizens on long term
deposit.
Deposit interest rates likely to decline
across banks, prompting investors to act before further cuts. It translates
into the savers moving away from banks and dampening the corporate enthusiasm
as funds become scarce. If that happens, despite rate cuts, actual lending
rates could soar.
The falling rupee adds to the woes making
imports expensive. Rupee fell 42 paisa to Rs 86.68 to dollar on April 9,
hitting a three-week low amid trade tensions and RBI rate cut. Bond yields
rose, and traders expect further rupee pressure as tariff concerns mount.
Senior citizens and others reliant on fixed
incomes are feeling the squeeze as banks slash fixed deposit rates in response
to the RBI’s easing stance. Once a haven for stable returns, FDs are losing
their edge. The HDFC Bank has axed its high-interest offerings of up to 7.40
per cent for long-term deposits. Bandhan Bank, Yes Bank, and Equitas Small
Finance Bank have followed suit, trimming rates across tenures.
Savings—historically sticky and making up 30
per cent of deposits—have so far muted the full impact of policy rate cuts. But
with current and savings account, CASA in banking terms, deposits falling and
liquidity pressure mounting, on banks, for managing liquidity, even these may
not stay immune for long, according to SBI.
After previous 25 basic point cuts in
February, weighted average term deposit declined from 6.56 per cent in January
to 6.48 per cent in February. Weighted average lending rate dropped from 9.86
per cent to 9.78 per cent.
In the current global context, key challenges
stem from underfunded global risks such as climate change, food insecurity, and
pandemics; inadequate attention to debt vulnerability and restructuring;
increasing reliance on the bank for global growth; insufficient resource
mobilization for transformative investments; and the near absence of the
private sector, which was expected to be a major driver of change. India must
redo its economic policy to have an independent path for progress. ---INFA
(Copyright, India
News & Feature Alliance)
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Dealing with Pak: A NEW NORMAL!, By Dr. DK Giri, 23 May 2025 |
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Round The World
New Delhi, 23 May 2025
Dealing with Pak
A NEW NORMAL!
By Dr. DK Giri
(Professor of Practice, NIIS Group of Institutions)
India’s foreign policy has been driven historically by three
determinants - Pakistan (because of Kashmir), non-alignment (now strategic
autonomy or multi-alignment) and economic growth (previously culture and
civilizational values). Today, I intend to deal with Pakistan as it has just
challenged India´s diplomacy and defence by retaliating to India´s assault on
terror.
How should New Delhi deal with Pakistan from now on?
In the paradigm-shifting speech made on 12 May, Prime Minister Narendra
Modi outlined the new strategy with regard to Pakistan. This seems to become
the new normal. It may be in order for observers, commentators and scholars to
decode the strategy. But before we do so, it is equally important to comprehend
the parameters of Pakistani state prompting policies vis-à-vis India. This will
help execute Prime Minister´s Pakistan policy with sub-strategies which the Prime
Minister could not have said as the head of the state.
The state of Pakistan has been standing on three legs – Kashmir, Islam
and its army. Two of those have broken and the third is tottering. Pakistan was
created as an Islamic state. But religion as the basis of state formation
proved to be untenable. If not, why did Pakistan break-up on the lines of
language in creation of Bangladesh, which is also an Islamic state?
As a former part of India, Pakistan at its creation was a diverse
country with Hindus, Christians, and multiple sects of Muslims inhabiting it.
But the leadership encouraged the dominant Punjabi Sunni Muslims undermine other
sects and cultural identities. Consequently, there have been sporadic protests
against Punjabi domination by Baluchs, Sindhis and Pakhtuns.
Also, take the case of the biggest religious minority, that is Hindus.
They were about 24 per cent of the total population at the time of creation of
Pakistan. Now they are less than 1 per cent. This dismal figure points to the
ruthless persecution of Hindus. Ahmediyas, another sect among the Muslims, are
facing violent extermination in Pakistan. Baluchistan has already declared
independence and is waiting for a day it can carve out a separate state by
defying Pakistan military, which has kept them so far by sheer brute force.
Sindhis and Pakhtuns will follow suit. At the time of writing, Sindhis are
protesting against discriminatory water shortage as the demonstrators have set
afire the house of the Home Minister of Sindh.
Kashmir is out of reach of Pakistan. The present government’s tough
stand on Kashmir and reclaiming PoK should rattle the Pakistanis, but not
quite. Pakistan survives economically by sponsoring terrorism in Kashmir. By
playing the victim card on Kashmir, Pakistan continues to beg for funds from
rich Sunni Muslim countries and the West. Kashmir also serves the political
leadership in Pakistan as they mobilise electoral support by dangling to the
voters the beautiful valley of Kashmir, which they promise to secure.
Former Prime Minister Zulfiqar Ali Bhutto had vowed to inflict thousand
cuts on India to snatch Kashmir. So, Pakistan will keep the Kashmir issue
burning until India puts PoK on the table and finally retrieves it. That is the
solution to the Kashmir problem.
New Delhi should not also lose track of Chinese involvement with
Pakistan. As Pakistan plans to continue the proxy war with India through
terrorism, Beijing wants to undercut New Delhi by egging on Islamabad.
The third leg, Pakistan army is more a business operator than a fighting
force. It is a mercenary army. Various countries in the world have governments
and armies for their security, but Pakistan army has a country in its grip to
further its vested interests. The army is steeped in corruption, money
laundering etc. Gen Asif Munir may self-promote himself as the Field Marshal to
cover his weakness and inefficiency, but the lid is wide open for the world to
see in the fight. It will fall some day or the other in the face of challenges
by forces of liberation like Baluchs, Pakhtuns and Sindhis. A truncated army
will be of no use to anyone then.
The strategy adumbrated by the Prime Minister consists of three
elements. One, unlike in the past, which Pakistan was comfortable with, India
will pursue terrorists and their mentors ‘to the end of the earth’, meaning, deep
into the territory of Pakistan. Second, blood and water, or terrorism and trade
cannot go together. Unless Pakistani state decouples itself from terror
networks existing in its territory, there will be no transaction with India; no
people-to-people contact, no Pakistani player or artists in India and no visa
processing. Third, if any dialogue has to happen, it will be on terrorism and
PoK, nothing else. After these two are resolved, other areas could be opened
up.
The above is a long-due masculine statesmanship aimed at achieving India’s
interests and security. What the Prime Minister could not say in public is that
Pakistan is a failed state and beyond redemption. It should not be allowed to
be a pawn in the power games played earlier by USA and now China. The process
of fragmentation on ethnic lines should be aided, into at least four states –
Pakistan (Punjab), Baluchistan, Sindhistan and Pakhtunistan. The precedent of
former Yugoslavia is a case in point. This is the way Pakistan and its
constituents could stay in peace free from the oppressive clutch of the army.
New Delhi should continue the ‘Operation Sindoor’ in one way or the
other till India’s purpose of terrorism-free security is served. The operation
is not only against Pakistan, by extension, it is also against its new
Godfather China. This is an opportunity for New Delhi to kill two birds with
one stone. Of course, admittedly, India´s defence and diplomacy will have to be
at their best to achieve the long-term purpose of ‘Operation Sindoor’.
India’s Defence Forces have demonstrated their capacity to punish
Pakistan for their irresponsible adventurism. The indigenously produced BrahMos
missile have outperformed their counterparts. There is a huge scope for India
trading in this missile with countries that have shown interest, subject to
some technical formalities. Ironically, the latest confrontation with Pakistan,
an 88-hour battle has exposed some pitfalls while opening many possibilities.
The world will now look at India differently. It is for New Delhi to
maintain the resolve in overwhelming Pakistan in diplomacy as well as security
and check China´s surreptitious moves against India. At the same time, India
should begin to count its friends while identifying the adversaries. This is
necessary in an inter-dependent world, not isolation in the name of strategic
autonomy. It is also time for a serious rethink and recalibration of India´s
foreign policy. ---INFA
(Copyright, India News & Feature Alliance)
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DEFENCE DEALS AND SECURITY, By Inder Jit, 22 May 2025 |
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REWIND
New Delhi, 22 May 2025
DEFENCE
DEALS AND SECURITY
By Inder Jit
(Released
on 2 September 1980)
Three
weeks ago, I expressed horror over the doings of the Union Energy Minister, Mr
Ghani Khan Choudhury, as exposed in the Lok Sabha. I also cautioned against a “dangerous
doctrine” advocated by the Union Law Minister, Mr Shiv Shankar, which sought to
make corruption by ministers respectable, even lawful. The rot, I now find, is
not confined at the Centre to the economic ministries and the recent scandalous
deals in regard to massive imports of sugar, crude and much else. Patient
probing shows that the cancer has also spread to the vital defence sector. Already,
India is being likened in diplomatic circles to Indonesia, where President
Suharto’s wife is popularly nicknamed “Madame Ten Percent” and is widely
acknowledged as one who can put through any deal for a consideration. In fact,
the Singapore High Court reportedly has before it a case filed by the widow of
a top Indonesian Director claiming from Jakarta her late husband’s “legitimate”
share in some $82 million collected in commissions in various State deals.
We first
heard of “slush money” in a big way during the Janata rule when the Defence
Ministry under Mr Jagjivan Ram decided to go in for the Anglo-French Jaguar in
preference to the French Mirage and the Swedish Viggen. I remember a
knowledgeable source calling me up the day the deal totalling about Rs 1,600
crores was announced to ask: Tell me, who has made how much? Don’t be shocked.
Some 50 crores have passed hands.” New Delhi is again reverberating with
stories which are at once ugly and frightening. Some of the city’s five-star
hotels are today said to be crowded with foreign agents who incredibly enough,
seem to have access to most persons in authority through local contacts -- and
to almost every inside information even about highly sensitive defence patterns
and deals. I treated most talk as wild until some weeks ago when responsible
persons, well-informed in defence matters, asserted: “Does anyone really care a
damn about what is happening in Defence? Many decisions are being taken on
extraneous considerations. National security is being jeopardised. We had
better watch out!”
Two cases
in point are specially mentioned and deserve notice. First, the Government’s
decision to review two major defence deals --acquisition and manufacture of
Jaguars for the Air Force and purchase of Sea Harriers for the Navy’s aviation
wing. Second, the Government’s decision to go in for the West German SSK
submarines at a special meeting of the Cabinet Committee on Political Affairs
on June 30. Undoubtedly, Mrs Gandhi’s Government has every right to review any
deal struck by the previous Janata Government or by itself in the best national
interest or to go in for a particular submarine. But the circumstances in which
these decisions have been taken have caused not a few eyebrows to raise even
among sober circles, apart from creating suspicion. Talk of a review of the
Jaguar and Sea Harrier deals, seems to have followed a somewhat breezy meeting
between a VVIP and the Chairman of the British Aerospace, Sir Fredrick Page in
New Delhi -- and not on à demand by Air Force or Naval experts for a fresh look
into the two deals.
Perhaps
there is a case for reconsidering the 1978 decision to build Jaguars at HAL in
Bangalore and take a fresh look at Mirage-2000 in the light of President Giscard
d'Estaing's visit to New Delhi in January this year and his reported offer of Mirage-2000
and improved versions. (India has agreed to manufacture 115 Jaguars at HAL, in
addition to importing 40 in a fly-away condition and another 45 for assembly in
a knocked down condition.) Perhaps, there is also a case for reviewing the
project in the context of continuing cost escalation. A Jaguar, it is
estimated, may cost anywhere from Rs 10 crores to Rs 12 crores each by the time
it is manufactured at HAL by about 1985 as against the original price of Rs 1.8
crores quoted in 1970 when the offer was first received. But the manner in
which the Government has decided not to import eight Sea Harriers under the
deal in addition to the eight already ordered is regarded among Naval circles
as nothing short of a dirty trick, ignoring a top-level policy decision in 1976
under which the Navy, after years of heated argument with the Air Force, was
made solely responsible for maritime reconnaissance.
Dirty
trick? The Union Government appears to have decided not to exercise its option
and buy another 8 Sea Harriers for Rs 128 crores at the 1978 rates (as against
the original rate of Rs 62 crores) reportedly on the advice not of the Navy but
of the Air Force. The Air Force is said to have disfavoured the Sea Harrier on
the ground that the plane was sub-sonic and had not been tried. Yet, according
to other reliable sources, the Sea Harrier was tried on the Vikrant in 1972 and
found satisfactory. What is more, the sub-sonic argument was advanced by the
Air Force prior to the deal but over-ruled by the Government on the reported
advice of the Scientific Adviser, Dr Ramanna. (The Sea Harrier, experts opine,
can take on a super-sonic Mirage in close combat at low levels.) At any rate,
the Navy should have been consulted and the issue should not have been left
exclusively to the Air Force considering its known opinion and its
understandable anxiety to settle scores. In the event of disagreement, the
Scientific Adviser could always have been brought in.
The Union
Government’s decision to purchase two West German HDW submarines and
manufacture another two at Mazagaon Docks is as intriguing as the manner in
which it was pushed through. In July 1979, an Inter-Ministerial Committee reportedly
decided in favour of the Swedish (Kokum) as its first choice and the West
German HDW as second among four. At the end of March this year, the Navy
expressed itself in favour of the Swedish offer but added that in case there
was any difficulty the HDW might also be acceptable. A new Inter-Ministerial
team set up in April this year interestingly found both HDW and Kokum equal in
merit and recommended that the final choice be made on the basis of quality of
cooperation and financial considerations. On June 30, a special meeting of the
Cabinet Committee on Political Affairs was held, notwithstanding the fact that
Mrs Gandhi was still in mourning, and a decision taken in favour of the HDW.
Representatives of the West German shipyard arrived in New Delhi on July 7 to
meet the Naval Chief and discuss the contract terms. But it seems that, the
Naval Chief himself was unaware of the Government’s decision at that time. The
talks were, however, held subsequently.
Some
observers have taken strong exception to the fact that the Government should
have met on June 30 and taken a decision in favour of the West German submarine
without obtaining a Memorandum of Understanding from the PRG Government,
safeguarding India’s basic interest in regard to the fulfilment of the
programme and tο bind Bonn on behalf of the shipyard for the supply of critical
spares throughout the life cycle of the submarine, namely 25 years, and
transfer of technology. But this is not a major issue. MOUs are normally
finalised after a firm decision is taken. What is, however, astonishing is that
the decision was announced in the Rajya Sabha in reply to a question before the
MOU was obtained. Experts are clear that this was tactically unwise and only
compromised India’s bargaining power. (Stiff competition from Sauro, offered by
Italy, is said to have greatly helped New Delhi bring down the prices of the
Swedish Kokum and the West German – HDW-- as also shorten the delivery period.)
Strangely, the answer in Parliament did not mention that the Government’s
decision was subject to all formalities being completed to New Delhi’s
satisfaction.
Defence
deals merit close public interest because of their long-term implications on
national security. In fact, experts are clear that national security gets jeopardised
in the three following ways. First, when one service is used (or played)
against another, as in the case of the Sea Harriers, with a view to securing
support for a decision, ignoring the larger need to ensure that nothing is done
which may in any way create bitterness between the three wings of the Defence
Forces. Second, when expert opinion is disregarded (or “persuaded” to fall in
line) in the acquisition of military hardware, causing frustration and
demoralisation. Third, when purchase of certain hardware is favoured even when
it is twice as expensive simply because it may mean a bigger kick-back. (A
specific case mentioned is best left undisclosed in the interest of national
security). Quipped an expert: “Ask for a gun these days and you are offered a
missile!” Higher expenditure on one item, it needs to be remembered, hits other
defence purchases.
Mrs Gandhi
has, of late, been emphasing the need to fight corruption. Speaking on
Independence Day she declared: “We are determined to end corruption from both
political and bureaucratic spheres.” She has also addressed a letter recently
to her Cabinet colleagues seeking their cooperation in cleaning up corruption
in Government, especially in high places. But rhetoric and letters alone will
not do when responsible people start feeling that national security may be
threatened. Mrs Gandhi would, therefore, do well both as Prime Minister and
Defence Minister to take a hard look at the major defence deals in the first
instance and ask for a fresh and unbiased evaluation of India’s requirement of
Sea Harriers as also of the S SK
submarine offers. (The SSK submarine to submarine kill -- deal is estimated to
cost anywhere from Rs 400 to Rs 500, crores.) Some top experts are not happy
with the selection procedure for the submarine which did not follow the healthy
like-to-like basis as in the case of the Jaguar and the Mirage. A few feel that
New Delhi should seriously consider Moscow’s offer of a “conventional sub” in
view of India’s mounting foreign exchange difficulties.
All this
is necessary in the context of certain recent oil and other scandals and hushed
talk of payment of slush money by some notorious international agents with
remarkable capacity to worm their way close to persons who matter whichever the
Government -- Janata or Congress (I). An initial payment of Rs 3.5 crores is
alleged to have been made on the submarine deal in mid-June. (True, June 30 was
the last date for deciding on the various offers and hence the CCPA meeting
that day. But the Defence Ministry could have surely obtained a further
extension of time to decide in view of Mrs Gandhi’s bereavement.)
Interestingly, the Janata Government, I learn, kept various agents out of its
talks with West Germany and had suggested that the ultimate price for the
submarines be reduced by the commission normally paid on such deals. The SSK deal,
it may now be disclosed, was discussed broadly in 1978 by Morarji Desai, then
Prime Minister, with the West German Chancellor, Mr Schmidt, at their meeting
at Frankfurt airport. Nehru himself is known to have favoured such an approach
in Government deals. But to cut a long story short, Mrs Gandhi needs to follow
up her declared intentions with firm action. An ounce of practice, as the old
saying goes, is worth more than a tonne of precept.--INFA
(Copyright, India News & Feature
Alliance)
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Widening Trade Pacts: DOES INDIA STAND TO GAIN?, By Dhurjati Mukherjee, 21 May 2025 |
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Open
Forum
New Delhi, 21 May 2025
Widening Trade Pacts
DOES INDIA STAND TO GAIN?
By Dhurjati Mukherjee
The global trade scenario is complex and the
situation is unlikely to improve shortly. With the US imposing tariff barriers,
it is unclear which countries stand to lose and what willbe India’s position.
India reached a favourable free-trade agreement with the UK which has been
hailed by business and industry groups as it is expected to facilitate trade,
boost jobs and growth for both economies. Analysts are of the opinion that such
treaty augurs well at a time when Indo-US trade agreement is under negotiations
to substantially reduce tariffs. Not just India but countries like Indonesia,
Brazil and South Africa have also to come to the negotiating
table.
After the successful trade deal with the UK, it has also firmed up an economic
partnership agreement with Chile to build upon the preferential pact that was
signed several years ago. The new deal will cover a broader set of sectors,
including digital services, investment promotion and cooperation, MSME and
critical minerals. Meanwhile, the negotiations with New Zealand have already
started and are expected to be finalised shortly. Additionally, the one with
EU, which has been in the pipeline for nearly two years, is also expected to
move faster, specially after the Union Commerce Minister’s Piyush Goyal parleys
with Marcos Sefcovic, the EU Commissioner for trade and commerce earlier this
month.
India which has a trade surplus with the US must
face a big challenge given its dependency on Washington. Though the spectrum of
India’s trade has been widening, it has not been successful in penetrating the
global market due to lack of proper technology and efficiency in manufacturing.
Some sectors such as handloom textiles and hand-knitted carpets endured on the
strength of tradition, skill and labour intensity. But many others struggle
against efficient and cost-competitive imports.
Skilling gaps, limited access to capital,
high power costs and outdated regulations left manufacturing hovering at around
15% of GDP, a figure that has barely shifted in a decade. Though the license
permit raj has been abolished, there’s corruption in getting clearances from
the government. India has the capability to benefit from the changed trade
scenario, but substantial measures are needed to make this effective.
Challenging China at this juncture is obviously not possible but India may try
to come near it through technological collaborations with Western companies.
The automotive sector has been the focus with
a target to achieve production of 30 million units by 2026. Similarly, the
electronics sector was given importance as the target was to reach production
of US$ 190 billion worth of mobile phones and components by 2025. By aiding the
production expansion, leading to higher exports from the country, the ‘Make in
India’ initiative has boosted investment in India. But manufacturing to the
extent desired has not picked up.
According to the World Bank, India’s exports
of goods and services as a percentage of GDP stood at 21.9% in 2023 as compared
to 13% in 2000. The enhancement of the export sector improves foreign exchange
reserves, stabilizes the national currency and aids the financial health of the
country. Achieving a target of US$ 2 trillion in exports holds great
significance for India in terms of the social and economic aspect. The
objective of this goal is not just about the US$ 2 trillion value but also
about the overall growth of the country in being a global force.
Experts believe that in the near term, the
change will yield a more fragmented global economy where efficiency may be
subservient to strategic alignment. India has to gain advantage. But for
this, it has to concentrate on technological skills and better infrastructure to
create a conducive business environment. While the country is working hard to
weave out a favourable trade deal with the US, it needs to withstand American
pressures to buy more military hardware, which would obviously affect
developmental expenditure, specially infrastructure development. But India to
develop better economic relations with China for the latter’s technological
prowess.
The expectation that more opportunities will
come India’s way remains to be seen. India’s manufacturing sector growth has
remained stagnant at 15% of GDP over the years, which should have improved with
new policies and incentives of the government. However, it is interesting to
note that almost 30% firms plan to invest in upgradation, supporting the robust
increase in capital spending for the year despite challenges such as weak
demand, geopolitical tensions and high borrowing costs, as per a survey of
private sector capital expenditure released by the statistics ministry.
The slightly lower capex for 2025-26 at Rs 4.9 lakh crore, though still above
2023-24 levels of Rs 4.2 lakh crore reflects cautious planning after a strong
2024-25 when the intended capital expenditure was estimated at Rs 6.8 lakh
crore.
No doubt, India will struggle hard to make
its presence felt in the international scenario. There should be sharp focus on
gearing up manufacturing, facilitating proper infrastructure development and
ensuring supply of high-skilled personnel so as to make products competitive
and at the same time cost-effective. Another issue relates to the poor R&D
spending by the private sector which is imperative to improve quality of
products. Though the government has been focusing on these aspects and also
urging the private sector to concentrate on R&D, what is necessary is a more
integrated strategy that needs to be evolved, preferable in consultation with
the industry associations. Only then will Indian products make its presence
felt in the international market.
India, apart from industrial products, should
focus on labour-intensive items that have a good market in the West. In this
connection, Indian artisans need to be trained to improve the quality of their
products. Also, promotional work has to be organised throughout the year, not
just by the trade organisations but also by the government.
Meanwhile, the destruction of the liberal
international order doesn’t presage multi-polarity but rather consolidates the
bipolarity that will subsist amid increasing entropy in global politics.
Trump’s policies will not reduce the conditions for China’s continued rise but
increase its legitimacy as a responsible power. The recent Washington-Beijing
accord demonstrates that pressure tactics helped China to reduce tariffs as
also its capability and expertise in the technological realm.
Finally, by focusing on high tariffs, Trump
appears to have won the battle of perception against India and other developing
countries. Experts believe that a new form of colonialism has taken shape
through dominance of the western world, primarily the US. Analysts have rightly pointed out that India should focus on national
interest in finalising the deal with the US, or for that matter any other
country or even the EU.The
UK agreement has given the country much leeway specially for labour-intensive
sectors and apparel where India will be in a position to challenge Vietnam and
Bangladesh. Only time will tell the nature of the trade agreement with the US
and the extent of tariffs India will have to reduce.---INFA
(Copyright, India
News & Feature Alliance)
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