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Farmer ID Scheme:LEASE CROPPERS NEED A PIE, By Shivaji Sarkar, 21 April 2025 Print E-mail

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)

 

 

Rate Cut Roils 2.52 Bn Old, Poor: FANCY IMPORTS HIT LIQUIDITY, By Shivaji Sarkar, 12 April 2025 Print E-mail

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)

Dealing with Pak: A NEW NORMAL!, By Dr. DK Giri, 23 May 2025 Print E-mail

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)

DEFENCE DEALS AND SECURITY, By Inder Jit, 22 May 2025 Print E-mail

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)

Widening Trade Pacts: DOES INDIA STAND TO GAIN?, By Dhurjati Mukherjee, 21 May 2025 Print E-mail

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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