Hunger and PDS

India is a hungry country. The Food and Agriculture Organisation Report on Hunger 2006 pegs the number of malnourished in India at 212 million and estimates that between 20 and 34 per cent of our population is malnourished. Despite the implementation of the Public Distribution System for several decades and Targeted PDS for the last one-and-a-half decades, it is estimated that more than 50 per cent of the children in rural areas suffer from malnourishment; with 21 per cent suffering from severe malnutrition. The irony is that these dismal facts and statistics coexist with record production of foodgrains. So, why is it that there is such deprivation amidst such plenty?

Green Revolution

More than 65 per cent of the Indian landmass is semi-arid. The agriculture that evolved under these regions is adapted to low rainfall and poor soils. The agricultural systems here are characterised by the practice of mixed farming. Whether it is the Saat Dhaan of Rajasthan or theBaraah Anaaj system of Uttarakhand or the Pannendu Pantalu system of Andhra Pradesh, one sees a multitude of crops being cultivated; and such systems ensure the survival of rural communities, even under the harshest of conditions.

The Green Revolution brought about fundamental changes in the paradigm of Indian agriculture. It offered purely technical solutions to the food crisis that was prevailing. Improved, high-yielding and hybrid seeds were introduced; farmers were pushed to use chemical pesticides and fertilizers; mono-cropping was introduced; all with an intention to augment food production; and augment it did. One cannot dispute the fact that the Green Revolution resulted in an increase in the production of certain foodgrains; and it did lead to the prosperity of farmers in certain pockets of the country. But in the long run, the policies pursued under the Green Revolution greatly undermined Indian agriculture.

Rural communities lost control over the seeds they were sowing in their lands, and became dependent on traders and extension services for most of the agricultural inputs; the progressively high doses of pesticides and fertilizers led to poisoned soils; the cost of cultivation shot up; agricultural bio-diversity was decimated, with several endemic land-races completely disappearing; and nutritional deficiencies got further accentuated, especially in rural India. All these factors together precipitated an agrarian crisis that saw more than 200,000 farmers, mostly in arid and semi-arid regions, committing suicide.

A closer look at existing PDS

PDS was created with an intention to provide the people of India — the poor especially needed to lead a dignified life. Analyses have indicated that rice, wheat and sugar account for 75 per cent of all items purchased from PDS outlets in rural areas. The vast majority of the rural population depends on cereals for most of the calorific and nutritional requirements — 68 per cent of the calorific needs and 67 per cent of the protein needs of the rural population are met through cereals alone. And yet, there has been an overall decline in both calorific intake as well as protein intake especially among the poor. This clearly points to the poor quality of cereals that are being consumed by the rural populace (NSSO data indicate that PDS rice and wheat are inferior to millets and endemic foodgrains in terms of nutritional content). This also indicates that the decimation of mixed farming systems that comprised a variety of crops undermined the nutritional intake of the rural households. Since nutritional needs could not be met from within their villages and lands, rural households were compelled to meet them from markets; with the result, more than 55 per cent of the monthly per capita expenditure incurred by rural households is towards food. This is where the current PDS has fallen short.

In the PDS as it exists today, large quantities of grains are procured from one part of the country, stored in warehouses, and moved to other parts. Despite spending millions on these processes, we have not succeeded in reaching every nook of India; nor have we been able to curb corruption that has become endemic to this system.

Finally, the availability of cheap rice and wheat at PDS outlets has dissuaded many a rural household from trying cuisine that evolved out of the environmental and socio-economic conditions in a given area. These local cuisines were cost-effective, used local ingredients thus minimising the need to depend on external sources, and were designed to meet the nutritional needs of people in the most effective way.

In the light of these arguments, we advocate the need for decentralising the PDS. The decentralised Public Distribution System is PDS reimagined; one that is democratic and involves rural communities at every stage of planning and implementation.

The concept of decentralised PDS rests on the principles of localised procurement, storage and distribution. The emphasis is on the participation of people — especially the marginalised and women — and on a holistic approach that integrates biodiversity, natural resource management, rural livelihoods and empowerment. The inclusion of local knowledge and expertise at every stage would make such a PDS truly participatory. Such a PDS would focus on the food crops that are locally produced. In some locations this might be millets, while in others it might be endemic varieties of rice and wheat. Being made a part of PDS would enhance the demand for these foodgrains and augment their production, thus reviving traditional agricultural practices. The storage of these grains would also be undertaken by the local communities, at village or panchayat level, thus reducing storage and transport costs, and generating employment for a few rural households.

Revival of traditional systems

The revival of traditional agricultural systems would mean that a diverse range of cereals, pulses, oilseeds and vegetables would be available close on hand to the rural communities. The combination of such crops would ensure that the nutritional needs of the communities are locally met at a reasonable price. This is likely to enable rural households to spend less on food and use the money thus saved for other purposes. The fact that such systems are hardy and do not need pesticides and fertilizers would also help farmers to bring down the cost of agriculture. Further, the in-built risk-mitigation properties of such agricultural systems enhance the capacities of rural households to cope with the phenomenon of climate change.

Together, these benefits would enhance incomes and savings of rural households, and strengthen the rural economy; and hold the potential to decrease distress migration. Further, decentralised PDS and reviving the traditional systems would restore women's place in the drivers' seat, as far as the production and distribution of the foodgrains are concerned; give them an opportunity to develop entrepreneurial and organisational skills and break stereotypical gender roles in relation to division of labour in agriculture.

Thus, a decentralised PDS not only ensures that the rural communities have access to adequate food and nutrition, but also empowers them to seek that nutrition in their midst. It places the control over food and farming back into the hands of the rural populace and re-establishes the prominent role of women in agriculture; not to mention the prominent ecological and economic costs that would be accrued by the communities.

Food Security Bill & PDS

The National Food Security Bill that has been tabled in Parliament seeks to enhance the food security of the poor, but provides for measures that are grossly inadequate. Many RtF activists, including the Deccan Development Society (DDS), have been demanding the inclusion of millets and the implementation of a decentralised PDS. However, the Bill accepts only the former. Considering the small quantities of millets that are presently produced (18 million tonnes), handling them centrally would be unviable in the long run. Further, a centralised PDS would sideline local knowledge and food cultures and thereby undermine the well-being of the rural masses. Therefore, for long-term food sovereignty of India and for the nutritional security of its rural communities, it is absolutely vital that a decentralised PDS be made part of NFSB and vigorously implemented.

Source: http://www.thehindu.com/todays-paper/tp-opinion/article3255934.ece

Economic Review 2011-12

Just ahead of the Union Budget and the Reserve Bank of India's scheduled interest policy review meeting — both in mid-March — there has been a succession of lacklustre news on the growth front. Although, by no means, unexpected, the bunching of not-so-favourable official statistics in a short time further reinforces the strong perception of a downward drift in the economy.

The advance estimates pegged GDP growth at 6.9 per cent for 2011-12 compared to 8.4 per cent for 2010-11. The Prime Minister's Economic Advisory Council (PMEAC) has projected only slightly higher at 7.1 per cent. It may be argued that growth rates of around 7 per cent are not unimpressive by themselves and do compare favourably with many other countries. However, in India's case, expectations were unnecessarily raised from the beginning of this year: a GDP growth of around 9 per cent was believed to be achievable. It took the government a long time after other official forecasters and almost all private ones to become more realistic about its growth prospects. Such a delayed reaction, for whatever reason, has ill-prepared the government to receive the latest instalments of bad news.

Data released on Monday last showed India's GDP growth at 6.1 per cent for the third quarter of the current fiscal, the lowest in any quarter since 2009. Moreover, each succeeding quarter has clocked a lower rate than the previous ones. At this rate, it will be well-nigh impossible to meet the growth projection set by the PMEAC or even the advance estimates.

Bleak picture

The bad news appears to be even worse once the sectoral breakdown of the GDP numbers are analysed. Manufacturing continues to present a bleak picture with just half a percentage point of growth recorded in the third quarter, compared to 7.8 per cent in the same last year. In fact, the sector's performance has steadily declined in the earlier quarters for this year.

A revival in manufacturing alone holds the key to boosting employment and equally importantly for ushering in broad-based-economic growth.

Of particular concerning, manufacturing is the fact that there has been no pick up in the investment rate. Gross fixed capital formation, as a percentage of the GDP, has steadily declined during the first two quarters of this fiscal. At 30 per cent in the third quarter, it is more than two percentage points below what is was a year ago

Mining has contracted for the second quarter in a row. The neglect of this sector will have serious consequences for other crucial infrastructure industries such as electricity. Most disquieting has been the deceleration in services, a sector, which till now has bolstered the overall GDP growth.

Month of policy announcements

The month of March is going to be extremely critical for economic policy announcements. The Union Budget and an interest policy review by the RBI are scheduled back-to-back. Then, there will be the Economic Survey and the Railway Budget. All these, individually as well as collectively, give the broad direction of economic policy. The global environment is still not conducive to growth. Increased global uncertainty in the wake of the eurozone crisis has weakened external demand and has been a principal contributor to declining exports from India. Compared to Europe, the U.S. economy seems to have perked up somewhat but economic growth there is still below potential. Thus, in varying degrees, India's two principal export markets are showing signs of weakness.

Pressure on CAD

An immediate consequence for India is the deterioration in merchandise trade deficit. The widening trade balance, also caused by rising oil prices, puts pressure on the current account deficit (CAD), which, according the PMEAC, is slated to rise to unprecedented levels. The challenge is to encourage foreign institutional investors and foreign direct investors to build a comfortable cushion in the country's external sector. Plenty will depend on the policy stance here. On the one hand, the government has demonstrated pragmatism by relaxing rules for non-resident investment and increasing the cap for external commercial borrowing. But on the other hand, it has not been able to implement big-ticket reform such as multi-brand FDI in retail.

There are other acute policy dilemmas to be faced. For instance, given the urgency of fiscal consolidation, it has been prepared to restore the service tax and central excises to their pre-crisis levels of 12 per cent to yield about Rs.35,000 crore to the Central Exchequer. But with manufacturing in doldrums, such a policy will not be commended.

On the other hand, without a road map for fiscal consolidation, the Indian economy will lose its lustre in the eyes of investors, whose confidence levels are reportedly not high even now.

Source: http://www.thehindu.com/todays-paper/tp-business/article2961697.ece

Forest Fire

The destruction wreaked by a massive forest fire at Nagarahole National Park in Karnataka is the worst in recent years, and is a major setback to conservation efforts in this prime tiger and elephant reserve.

The 643 sq km national park is contiguous to Bandipur National Park in Karnataka, Mudumalai Wildlife Sanctuary in Tamil Nadu, and Wayanad Wildlife Sanctuary in Kerala and is part of the famed Nilgiri Biosphere reserve.

The fire, which was first noticed last Sunday, blazed through the core area and reduced vast swathes of jungle to cinders. The official figures of 600 hectares of forests being lost to fire, is disputed by wildlife activists, but the park managers agree that devastation in the core area comprising Marapannakatte (Marappanakere) in Compartment 4 of Nagarahole is total.

After it was first noticed on February 26, the fire raged for four days. It was put out after considerable effort by tribals in the area and forest guards but not before widespread destruction to the ground vegetation, innumerable insects, nesting birds and rare species like the Malabar giant squirrel.

Contrary to popular belief, most forest fires do not occur spontaneously. They are unwittingly or otherwise triggered by humans. While these fires are an annual occurrence in national parks, what is significant about the recent fire is its duration and intensity: it raged for almost a week in the core area of Nagarhole which, due to its moist grasslands, was untouched for 45 years. This was the favourite browsing place for herbivore animals like deer, sambhars, gaurs, etc., that constitute the prey base for carnivores such as tigers, leopards and dholes, Indian wild dogs.

Nagarahole has one of the highest prey densities in the country, a fact established by independent scientific studies and the National Tiger Conservation Authority (NTCA). “Given the prey density, the tiger population increased over the years and the entire Bandipur-Nagarahole-Mudumalai-Wayanad complex supports an estimated population of 350 to 400 tigers,” Praveen Bhargav of Wildlife First, Bangalore, told The Hindu . “It is also home to about 7,500 elephants making it one of the prime elephant and tiger landscapes in the world and the best hope for their long term conservation.”

“With such a valuable meta population of two charismatic but highly endangered species, this landscape with four major reserves and connecting forests deserves to be protected far more intensively from the known threat of forest fires,” he added.

A GPS-based survey has shown that 509 hectares of core area of Nagarahole has been devastated in the fire apart from affecting Metikuppe and the Anechowkur range, Kalalla, D.B. Kuppe and Veeranahosahalli.

In the adjoining Bandipur National Park, the fire burnt through A.M. Gudi, Kalkere, Gundre, Moolehole and reached Muthanga in Wayanad in Kerala. Moolapura near the Kaniyanapura elephant corridor of Bandipur and areas near Nayihalla in Gundre, the link between Bandipur and Nagarahole for elephant movement, too were affected by the fire and will take years to recover.

The long term loss to wildlife and conservation efforts which stems from habitat degradation is immense, according to Sanjay Gubbi, member, State Wildlife Board. “If the ground fire destroys the vegetation, the forage for herbivore is destroyed, unedible weeds like Lantana and Epatorium take over the forests and the population of prey animals dwindles, which impact the carnivore population. In addition, smaller mammals, ground-nesting birds, insects, slow moving reptiles and other wildlife species are destroyed and valuable leaf litter accumulated on forest floor that acts as natural manure for trees and plants are burnt, leading to fodder shortage in forests”.

Although Nagarahole, like Bandipur, Mudumalai and Wayanad, is prone to forest fires, the intensity of the recent fire was made worse by the failure of showers in December-January. The national park was like a tinderbox that burst into flames at the first spark. The forest department should have been on a state of high alert with fire spotters posted to detect forest fires.

Controlled burning of fire lines during winter is critical to fighting forest fires and should have been completed by mid-January, when there is moisture in the vegetation. But NGOs say this was not done this year and was one of the reasons for the fire.

K.M. Chinnappa, president, Wildlife First, said the forest department was “apathetic” about carrying out such preventive measures even though there was no dearth of funds.

Mr. Bhargav pointed out that prevention of fires, vital for forest and wildlife conservation, is best achieved by reaching out to local communities and hiring sufficient number of people as fire watchers.

Aside from clearing fire lines, actual deployment of fire watchers with forest staff at strategic locations at watch towers, constituting response teams to put out fires are at the core of a preventive strategy.

Not only is dousing forest fires extremely difficult but it takes a very long time for the habitat destroyed by them to recover.

B.J. Hosmath, Field Director, Project Tiger, said a lesson should be learnt from the fire to ensure that such damage does not recur. The main lesson is that forest fires are best prevented because it is difficult to control them. Nagarhole had major fires in 1999 and again in 2004 but the 2012 fire shows that this lesson has not been learnt.

Source - http://www.thehindu.com/todays-paper/tp-opinion/article2961703.ece

Durban Conference

http://www.thehindu.com/todays-paper/tp-opinion/article2890584.ece

You know your negotiating strategy is in trouble when countries ranging as far as Norway in the developed world to partners like South Africa and neighbours like Bangladesh start quoting Gandhi and Nehru back to you.

Two months ago, this was the unfortunate situation Environment Minister Jayanthi Natarajan had to face at the Durban conference on climate change. That she managed, through a passionate last-minute speech, to ensure that all was not lost for India goes to her credit. But the fact that India found itself outwitted and cornered at the endgame of these negotiations, with no option but to resort to an angry ministerial plea, is an indication of how far New Delhi has lost its way on the issue.

As the dust from the conference settles, and a new United Nations deadline approaches for countries to submit their formal views on the subject by the month end, it is time to reappraise India's performance at Durban, and see what lessons it can learn from it.

Three objectives

India had gone to Durban with three predominant objectives. First, to secure the continuance of the Kyoto Protocol, whose ‘first commitment period' is scheduled to end in 2012. Second, to ensure that its particular concerns on equity, intellectual property rights and unilateral trade measures, neglected in previous negotiating rounds, were substantively integrated in the future climate agenda. And third, to preserve the notion of ‘differentiation' between developed and developing countries, recognised through the principle of ‘common but differentiated responsibilities' (CBDR) in both the U.N. Framework Convention on Climate Change (UNFCCC) and the 1992 Rio Declaration on Environment and Development.

Notwithstanding the euphoric declarations of victory in some national newspapers that uncritically peddled the government line, the overall results of the conference do not make comfortable reading for India. On the plus side, one may point to the fact that industrialised countries have now agreed to a ‘second commitment period' of the Kyoto Protocol, which requires them to reduce their emissions in a legally binding manner, potentially up to 2020. This is something India was anxious to secure, not least given its high investment in, and exposure to, the Clean Development Mechanism of the Protocol. The progress made in operationalising the technology mechanism that India championed might perhaps also be counted as a success. But these apart, there is little else from Durban that it can cheer about.

The continuation of the Kyoto Protocol, important as it may be, offers little more than an ephemeral gain. With the United States refusing to ratify the treaty; Canada blatantly disregarding its previous ratification; and Japan, Australia and Russia equally disinclined towards it, it is only the European Union's commitment at Durban that has still kept the Protocol alive. But it is unlikely to survive in its current form beyond this extended phase. And, going by past record, its ability to enforce serious emission reductions in developed countries also remains equally dim.

What India gave up in return at Durban however holds far more serious consequences. The most important decision that Parties took at Durban was to terminate the ongoing negotiating process on ‘Long-term Cooperative Action' (LCA) that had been launched under the Bali Action Plan in 2007, by the end of 2012. Adopted following tough negotiations, this had notably maintained the ‘firewall' between developed and developing countries and also the ‘linking clause' that had made mitigation by the latter contingent on the level of technological and financial support that they received from the former.

Copenhagen & Cancun

The 2009 Copenhagen Accord and the 2010 Cancun Agreements were both negotiated under this mandate. Even though they diluted the Bali ‘firewall', they nevertheless reaffirmed the core UNFCCC norms, that nations would need to combat climate change on the basis of ‘equity' and in accordance with the CBDR principle, respecting the various provisions of the Convention.

The new decision at Durban that now replaces the LCA negotiating track with the ‘Durban Platform for Enhanced Action' remarkably fails to make even a passing reference to these foundational principles. Calling instead for the ‘widest possible cooperation by all countries,' a preferred formulation of the West, it launches a new process to develop a ‘protocol, another legal instrument or an agreed outcome with legal force' by 2015, which is to be ‘applicable to all Parties', and enter into force from 2020.

Given the uncertainties of what this new mandate might ultimately produce, India did well to ‘loosen up' its legally-binding character by insisting on the inclusion of the third option. But the fact that a key decision was adopted for the first time in the entire 20-year history of international climate talks without even a cursory mention of ‘equity' and CBDR should give policymakers in New Delhi serious pause. What makes this omission even more striking is that it occurred, not through any oversight, but despite India's persistent and voluble invocation of these norms throughout the two-week long conference, and the months preceding it.

Absence of bedrock principles

Some have argued that since the new process is set to operate ‘under the Convention', all its principles and provisions will automatically apply, and hence do not need repetition. While this may hold some force, the absence of these bedrock principles from the Durban Platform text should be seen clearly for what it is: a successful attempt by the developed world to detach the future climate negotiations from their existing normative moorings, and to revise the very basis on which their legal obligations, and the legitimacy of the positions and arguments of countries like India, have so far been based.

India also failed in its bid to gain substantive recognition for the issues of intellectual property rights and unilateral trade measures. Even on ‘equity', the issue closest to its heart, all that it managed to secure in the end is a ‘workshop' on ‘equitable access to sustainable development', itself an ambiguous formulation, under a mandate that is now scheduled to expire. To what extent ‘equity' will find any formal operational recognition beyond 2012 remains an open question.

The outcome of the Durban conference — and India's failure to attain most of its stated objectives — should now raise serious questions about the wisdom of its negotiating strategy, and especially its alliance management. It should also raise questions about the capacity that it has brought to bear in these negotiations to date. At Durban, India fielded a delegation of 34 members, as opposed to 96 from the U.S., 101 from the EU, 228 from Brazil, 167 from China, and even 102 from Bangladesh. And insiders well know what the teeth-to-tail ratio even within this small group is.

Complexity of climate negotiations

However capable our top negotiators are, the sheer weight and complexity of climate negotiations today will inevitably lead to more slippages in the future unless this capacity constraint is urgently, and meaningfully, addressed. This overstretch is partly also the reason why key decision makers are left with little time to think more deeply and open-mindedly about the newer challenges that are confronting India today, and to develop effective and imaginative responses to them.

In recent years, India's climate foreign policy has undergone considerable oscillation, in not always explicable ways. While climate change is a complex issue, and genuine differences of opinion can exist among our politicians and bureaucrats on how best to approach it, it is far too important and strategic a concern for the country in the long run to be weakened by either individual caprice or collective groupthink.

If the interests of 1.2 billion Indians are to be adequately safeguarded in the coming decade and beyond, it is imperative that India develops both a coherent grand strategy to address climate change that enjoys broad cross-party parliamentary support, and a strong negotiating team to see it through.

Get your act together

In a few months' time, in June 2012, the international community will reconvene in Brazil to commemorate the 20th anniversary of the historic Rio Earth Summit. The developed world will then no doubt try to use the precedent set at Durban to press for a more general erasure of the principle of ‘differentiation' within international environmental law itself. If this is an outcome that India wishes to avoid, it needs to rapidly get its act together on this issue. Durban is a wake-up call that it must not ignore.

If India wants ‘equity' back in the climate change debate, it must develop a grand strategy and a strong negotiating team to see it through.

CRIS

Finance Ministry Develops Comparative Rating Index of Sovereigns (CRIS);  A New Index of Sovereign Credit Rating and an Estimation of CRIS over the Last Five Years

Major credit rating agencies give out the sovereign credit rating of each nation as an absolute grade. How other nations fare does not matter in a particular nation’s rating score. This is very different from a comparative rating. An example of comparative rating is the percentile score—the way GRE results are at times given. If a student is described as belonging to the 99th percentile, it clearly says something about this student’s performance vis-à-vis other students. It is arguable that even for sovereign credit ratings there is a case for providing some kind of a comparative score. When an investor searches across nations for a place to put her money, the relative rating of nations is important. If nation i’s rating remaining the same, other nations’ ratings improve over time, there may well be a case to invest less in nation i. Over the last five years, the global economy has gone through lots of highs and lows. Nations have moved up and down the ratings ladder. This makes it entirely possible that a particular nation that has had no rating change may now be better off or worse off in comparative terms. Also, a nation that has travelled down the rating ladder in absolute terms may be, in relative terms, better off because others have done even worse. Since, for investors, relative or comparative rating is such an important concept, it was felt that the Ministry of Finance ought to develop a new index which captures precisely this idea. Accordingly, the new index that has been developed is called the “Comparative Rating Index for Sovereigns” (CRIS). The detailed derivation of CRIS is available in the full paper on which this summary is based. The full paper is currently classified. The computation of CRIS is based on nothing apart from Moody’s ratings and data on the GDPs of different nations as given by the IMF. In the paper we define CRIS formally and then track how nations have done over time. In order to capture this impact, the Ministry of Finance developed a new system for comparing the relative ratings of sovereign debt based on the historical evolution of their ratings over five years and the volume of their economic activity as measured by their GDP (not adjusted for Purchasing Power Parity (PPP)). The Finance Ministry develops a relative rating index and rank 101 economies according to this for the years 2007 to 2011. The index uses external data on GDP and ratings combined in terms of pure mathematical and statistical methods without interventions or interpretations. The Moody’s ratings that the Ministry has used for all countries are the long term foreign currency sovereign ratings. To clarify, the Moody’s rating by this measure for India in 2007 and 2011 was the same (Baa 3). The CRIS score for these years for India were 66.47 (2007) and 69.83 (2011). In other words, in relative terms India has become a better investment destination by 5.06%. In addition, India’s rank in terms of CRIS has moved up from 61st to 55th. If we view the rankings in terms of quintiles (blocks of one-fifth of the distribution) India moves from the fourth quintile to the third, that is, the middle quintile. As expected the CRIS score for Greece has dropped sharply from 74.24 in 2007 to 13.97 in 2011—a decline of 81%; and that of Ireland and Portugal have dropped by more than 14%. Interestingly, in terms of CRIS, the U.S. has seen its score rise from 78.20 to 81.81. Ironically, this is accompanied by a loss of rank from the top of the chart to the 16th position. This shows that CRIS is distinct from a percentile score which is also a relative measure of status. In 2007 the 1st rank was shared between 20 economies but by 2011 this cohort had shrunk to 15. The improvement in CRIS scores of nations such as India, China and Indonesia are partly due to the dramatic falls of scores of some European nations leading to a deterioration of the world average by over 4.8%. This was especially evident in the cases of Greece, Ireland, Italy, Portugal and Spain. Dramatic falls of this type across the 2007 to 2011 period include Portugal’s fall from 23rd to 74th position with an index erosion of almost 15%, Ireland’s descent from the 1st rank club to 70th position with an over 14% fall in its index value and Greece’s precipitous dive from 30th rank to 101st (last) position accompanied by an over 81% fall in index value across the same period. Italy descended from 23rd to 37th rank with an index value loss of around 0.5%.Spain moved down from 1st to 34th rank and its index value lost approximately 1.35%. Iceland also suffered a great fall from 1st rank to 61st with an index fall of about 11.5%. Other interesting developments include China’s index value increase of about 7.3% across the 2007 to 2011 time span. Brazil’s index value increased by 11.8%, Russia’s by about 7.5% and South Africa’s by about 5.79% in the same period. All the BRICS had improvements in rank as well as index value. Among other economies, Israel increased in terms of CRIS value from 73.01 in 2007 to 77.58 in 2011 and Saudi Arabia had a CRIS value jump from 74.24 to 78.82 across the same period. Botswana’s CRIS value increased from 73.01 to 76.25 across the 2007 to 2011 interval. The ten highest increases in the CRIS from 2007 to 2011 were achieved by (1) Paraguay (31.26%), (2) Lebanon (22.71%), (3) Bolivia (21.2%), (4) Uruguay (18.09%), (5) Belize and Nicaragua (both 15.63%), (7) Philippines (14.26%), (8) Indonesia (12.83%), (9) Peru (12.75%) and (10) Ecuador (12.27%). In interpreting these results, it needs to be borne in mind that for countries which began with low CRIS values, the scope for improvement is more. Seventeen economies had negative growth in the CRIS across this period. The ten highest decreases were (1) Greece (-81.19%), (2) Portugal (-14.82%), (3) Ireland (-14.14%), (4) Iceland (-11.52%), (5) Belarus (-10.05%), (6) Jamaica (-7.45%), (7) Egypt (-7.16%), (8) Cyprus (-5.94%), (9) Pakistan (-5.83%) and (10) Hungary (-4.66%).  Source: http://pib.nic.in/newsite/erelease.aspx?relid=80004

The magic number...

http://www.economist.com/node/21542763

INDIA’S economy might be thriving, but many of its people are not. This week Manmohan Singh, the prime minister, said his compatriots should be ashamed that over two-fifths of their children are underfed. They should be outraged, too, at the infant mortality, illiteracy, lack of clean drinking water and countless other curses that afflict the poor.

Poverty has many causes, and no simple cure. But one massive problem in India is that few poor people can prove who they are. They have no passport, no driving licence, no proof of address. They live in villages where multitudes share the same name. Their lack of an identity excludes them from the modern economy. They cannot open bank accounts, and no one would be so foolish as to lend them money.

The government offers them all kinds of welfare, but because they lack an identity, they struggle to lay hands on what they have been promised. The state spends a fortune on subsidised grain for the hungry, but an estimated two-thirds of it is stolen or adulterated by middlemen. The government pays for an $8 billion-a-year make-work scheme for the rural poor, but much of the cash ends up in the capacious pockets of officials who invent imaginary “ghost workers”.

Suppose those thieving middlemen were obliged to deliver grain, not to poor people in general but to named individuals who could confirm receipt by scanning their fingerprints? And suppose those ghost workers had to undergo an iris scan before being paid? If poor Indians each had an identity number tied to unique biometric markers, it would be much harder for the powerful to rob them. Sceptics will scoff that the Indian government is far too incompetent to implement such a scheme. But the sceptics are wrong.

ID-ing the benefits

This month India’s unique identity (UID) scheme will enroll its 200 millionth member, having had almost none only a year ago (see article). By the end of this year, says Nandan Nilekani, a former software mogul who runs the project, the tally could stand at 400m, a third of all Indians. The scheme is voluntary, but the poor are visibly enthusiastic about it. Long lines wait patiently in the heat to have their fingerprints and irises scanned and entered into what has swiftly become the world’s largest biometric database.

For the poor, having a secure online identity alters their relationship with the modern world. No more queueing for hours in a distant town and bribing officials with money you don’t have to obtain paperwork that won’t be recognised if you move to another state looking for work. A pilot project just begun in Jharkhand, an eastern state, will link the new identities to individuals’ bank accounts. Those to whom the government owes money will soon be able to receive it electronically, either at a bank or at a village shop. Ghost labourers staffing public-works schemes, and any among India’s 20m government employees, should turn into thin air. The middlemen who steal billions should more easily be bypassed or caught.

That is just the start. Armed with the system, India will be able to rethink the nature of its welfare state, cutting back on benefits in kind and market-distorting subsidies, and turning to cash transfers paid directly into the bank accounts of the neediest. Hundreds of millions of the poor must open bank accounts, which is all to the good, because it will bind them into the modern economy. Care must be taken so mothers rather than feckless fathers control funds for their children. But most poor people, including anyone who wants to move around, will be better off with cash welfare paid in full. Vouchers for medical or education spending could follow.

Companies—and their customers—stand to gain from the system too. Mr Nilekani talks of India stealing a march on other countries if firms have an easy, secure way of identifying their customers. Banks will be more likely to lend money to people they can trace. Mobile-phone firms will extend credit. Insurers will offer lower rates, because they will know more about the person they are covering. Medical records will become portable, as will school records. Ordinary Indians will find it easier to buy and sell things online, as ordinary Chinese already do. Just as America’s Global Positioning System, designed for aiming missiles, is now used by everyone for civilian navigation and online maps, so might UID become the infrastructure for India’s commercial services.

They’ve got your number

India’s scheme holds three lessons for other countries. One is that designing such a scheme as a platform for government services, not security, keeps the costs down and boosts the benefits. Another is to use the private sector. From the start, Mr Nilekani harnessed the genius of Indians abroad, including a man who helped the New York Stock Exchange crunch its numbers and one of the brains behind WebMD, an American health IT firm. Both public and private actors (mostly tech firms that enroll participants and process data) are paid strictly by results. The cost of enrolling each person is a little over 100 rupees ($2). Many other poor countries could afford that.

And the third is that, alas, even a brilliant idea has enemies. India’s stubborn home minister, P. Chidambaram, is now blocking a cabinet decision to extend the UID’s mandate, which is needed for the roll-out to continue. Parliamentarians and activists have raised worries over India’s lack of strong privacy and data-protection laws; they also complain about the weak legal basis for the scheme.

These complaints have some validity, but not enough to derail the scheme. For instance, India plainly needs better data-protection laws, but even if the existing rules remained unchanged, the threat to liberty would be dwarfed by the gains to welfare: to people who live ten to a room, concerns about privacy sound outlandish. Some of the resistance is principled, but much comes from the people who do well out of today’s filthy system. Indian politics hinge on patronage—the doling out of opportunities to rob one’s countrymen. UID would make this harder. That is why it faces such fierce opposition, and why it could transform India.

Strategic Relationship

http://www.thehindu.com/todays-paper/tp-opinion/article2806672.ece

“Strategic relationship” is one of the most frequently used phrases in foreign policy discussions today, but perhaps one of the least understood. Scholars have traced its appearance in international relations to the end of the Cold War. Countries that were until then arranged in blocs allied to one of the two superpowers suddenly found themselves on their own and began to cast about for new bilateral alliances, usually with states more powerful than themselves.

Nations define their relations with other countries variously — partnership, alliance — but when two countries describe their relations as strategic, their ties are deemed to have risen to a new level.

In the last decade, India has signed strategic partnership agreements with over a dozen countries. This is seen as a natural consequence of India's arrival on the global stage as a growing economic power; the acknowledgement of its democracy and its shared values with the democratic world; its neighbourhood, with the Afpak region on one side, China on the other; as well as it having the second largest population in the world.

Defining the concept

But foreign policy wonks are still struggling to define the concept — what exactly does it mean? The Oxford Dictionary defines strategic as anything relating to long term interests and goals; a strategic partnership, by extension, would relate to long term shared interests and ways of achieving them.

Strategic partnerships are commonly associated with defence or security related issues, but a survey of formal strategic partnerships around the world reveal they can also be quite a hold-all, covering a wide range in bilateral relations, from defence to education, health and agriculture, and quite commonly, economic relations, including trade, investment and banking.

Some scholars of international relations theory have argued against a set definition, arguing that each agreement belongs to a specific time and context, and thus has its own meaning. Some have even argued that the phrase is nothing more than nomenclature, and parties use it to project a higher status to their ties.

Assessment study

The latest attempt to better understand the concept comes from a New Delhi-based think tank, the Foundation for National Security Research. A study conducted by the organisation assesses India's strategic partnerships, and has sought to identify what New Delhi should seek from these partnerships, thus aiming to provide a home-grown definition of the king of bilateral relations. Titled “India's Strategic Partners: A Comparative Assessment,” it was carried out by a group of foreign policy and strategic analysts associated with FNSR, which shared the findings with The Hindu .

Specifically, the study has assessed India's strategic partnership with six countries — United States; Russia; France; United Kingdom; Germany; and Japan — by grading them on the dividends these partnerships have yielded for India in three areas of co-operation: political-diplomatic ties; defence ties; and economic relations. Using these three parameters, each partnership has been graded on a 10-point scale for present performance, sustainability, and potential.

The Russia-India partnership comes up tops on the scale — Russia consistently backs India on Kashmir, Pakistan, Afghanistan and terrorism, and according to the study “is most comfortable with India's rise” while sharing Indian “concerns on the implications of China's rise”. On nuclear issues, its 2009 India-Russia civilian nuclear pact is much better than the deal that New Delhi got from United States. Defence co-operation too is in good health. India sources most of its military hardware from Russia. But of all the six countries Russia scores least on trade relations. The total annual trade between the two countries is just slightly over $5 billion.

U.S. comes second

The United States, with which India's strategic partnership goes back to 2004, comes second, having fared poorly on FNSR's political-diplomatic scale. The study describes U.S. support for India on Kashmir, Pakistan, Afghanistan as “insubstantial and inconsistent”. It sees U.S. support for India's candidature to the U.N. Security Council as the “weakest” among the six nations. In contrast to Russia, India-U.S. trade relations are the best, with greater potential for the future.

The study sees the 2006 strategic partnership with Japan as the least developed, making only 34 points. Japan's support for India in international fora has varied, the study points out grimly, and notes that while there is scope for co-operation in maritime security, Japan's lack of interest in India's concerns over Kashmir and terrorism, its deep reservations on nuclear co-operation with India and a limited capacity to play a meaningful role in India's UNSC bid “would suggest that the potential in their strategic relationship will be slow to realise”. There is “virtually nothing to say about India-Japan defence ties” in the past, the study notes, and not much for the future either. As for trade, it could be much higher.

The conclusion: India should not bestow the “respectable nomenclature” of a strategic partner on one and all, but only on those countries with which there is “a strong and mutually beneficial relationship” in all three sectors — political-diplomatic; defence and economic co-operation. For India's so-called strategic agreements with a host of other countries, the study suggests finding a “less serious” nomenclature.

What the study ignores is that India's main “strategic partners” have other strategic partners. Welcome to the big, bad promiscuous world of international relations. The most glaring example of how strategic partnerships collide with each other is the U.S.-India partnership on the one hand, and the U.S.-Pakistan one on the other. Should India ditch its partnership with Russia if there is a chance it will improve the strategic content of the partnership with the U.S.?

Balancing conflicting interests

In reality, how a strategic partnership evolves has much to do with how successfully one or both parties balance the conflicting interests of its various partners, and keep differences to a minimum. It sounds unrealistic to lay down the line to other actors and expect them to behave as if they have no other interests.

In fact, it says something about strategic partnerships that the U.S. has such deals going all across the world. But it has no formal strategic partnership agreement with its most important strategic partner, Europe, and its relationship with Britain is described as just “essential”, or “special”

MFIs can tap ECB

http://www.thehindu.com/todays-paper/tp-business/article2730200.ece

The Reserve Bank of India (RBI) on Monday allowed micro finance institutions (MFIs) to raise funds via external commercial borrowings (ECBs) up to $10 million or equivalent during a financial year for permitted end-uses under the automatic route. The MFIs eligible for the same will be: those registered under the Societies Registration Act, 1860; those registered under Indian Trust Act, 1882; MFIs registered either under the conventional state-level cooperative acts, the national level multi-state cooperative legislation or under the new state-level mutually aided cooperative acts and not being a co-operative bank; non-banking finance companies (NBFCs) categorised as ‘non-banking finance company-micro finance institutions' (NBFC-MFIs) and companies registered under Sec. 25 of the Companies Act, 1956, and involved in micro finance activity. Further, the MFIs registered as societies, trusts and co-operatives and engaged in micro finance activities should have a satisfactory borrowing relationship for at least three years with a scheduled commercial bank authorised to deal in foreign exchange; and would require a certificate of due diligence on ‘fit and proper' status of the board/committee of management of the borrowing entity from the designated authorized dealer (AD) bank.

ECB funds should be routed through normal banking channels. NBFC-MFIs will be permitted to avail themselves of ECBs from multilateral institutions such as IFC and ADB/ regional financial institutions/international banks / foreign equity holders and overseas organisations.

Companies registered under Sec. 25 of the Companies Act and engaged in micro finance activities will be permitted to avail themselves of ECBs from international banks, multilateral financial institutions, export credit agencies, foreign equity holders, overseas organisations and individuals. Other MFIs will be permitted to raise funds via ECBs from international banks, multilateral financial institutions, export credit agencies, overseas organisations and individuals.

However, overseas organisations and individuals complying with specific safeguards may lend.The RBI has also stipulated that the designated AD must ensure that the ECB proceeds are utilised for lending to self-help groups or for micro-credit or for bona fide micro finance activity, including capacity building. It has also been decided that non-government organisations engaged in micro finance activities can avail themselves of ECB up to $10 million or equivalent under the automatic route as against the present limit of $5 million or equivalent per financial year. The RBI has also said that these amendments to ECB policy would come into force with immediate effect and the framework with respect to MFIs would be reviewed after one year.