News & Editorial Analysis 16 March 2023
The Hindu News Analysis
1 – PM MITRA Park Scheme:
GS III Topic Government Policies and Interventions:
According to Union Minister of Textiles Piyush Goyal, the Prime Minister MITRA (Mega Integrated Textile Region and Apparel) scheme’s implementation States would shortly be announced by the Ministry of Textiles.
The Minister claimed that the challenge route was used to identify the States, and that the PM MITRA parks will offer the ideal eco-system for the textile sector to congregate in one place, with plug-and-play infrastructure, and boost the competitiveness of the textile value chain. The Confederation of Indian Textile Industry’s three-day Global Textile Conclave was inaugurated by the Minister. It will also promote the five F (farm, fibre, factory, fashion, and foreign) vision of the prime minister.
Through a Public Private Partnership (PPP), a Special Purpose Entity that will be under the management of the Central and State Governments will build a park.
A textile-related incubation facility, a common processing facility, a common effluent treatment facility, as well as other amenities like design and testing centres, will all be present in each Park.
Throughout the duration of the concession, the Master Developer will construct and maintain the Industrial Park.
For each brownfield park and each greenfield MITRA park, the centre would contribute up to Rs 200 crore and up to Rs 500 crore, respectively, towards the construction of shared infrastructure.
A greenfield project must be started from scratch, whereas a brownfield project is one that has already been worked on.
Individuals who are entitled to incentives:
Each of these parks will receive an additional Rs 300 crore as a competitiveness incentive support in order to promote the early development of textile manufacturing facilities.
If investors create “anchor facilities” that employ at least 100 people, they would be eligible for incentives worth up to Rs 10 crore each year for a maximum of three years.
Reduce the expense of logistics
It will reduce logistics expenses and boost the value chain of the textile sector, increasing global competitiveness.
High logistics costs are thought to be impeding India’s desire to enhance textile exports.
It is estimated that each park will create 1 lakh direct jobs and another 2 lakh indirect jobs.
The parks are crucial to attracting foreign direct investment (FDI).
Only 0.69% of all FDI inflows between April 2000 and September 2020 went to India’s textile industry, totaling Rs 20,468.62 million.
2 – Trade Policy of India:
GS III Topic Indian Economy:
The administration will unveil a new foreign trade strategy next week, which may include measures to increase exports of goods and services and rein in the out-of-hand import bill. The current trading approach was developed in 2015. Due to the unique circumstances, its five-year term was extended by one year when it concluded a week after the country was placed under a pandemic lockdown. It is less warranted to extend the prior policy past March 2021, especially with the current six-month term that pushes the expiration date to September 30.
What Is the Meaning of an International Trade Policy?
The Government of India’s Foreign Trade Policy is made into a binding document by the Foreign Trade Development and Regulation Act of 1992.
Since the 1991 economic reforms, when it was reviewed and updated every five years, the FTP has served as the compass for all stakeholders.
The basic objective of international trade policy is to encourage trade by reducing transaction and transit costs and timeframes.
A FTP lays forth the regulations for foreign trade and reveals the government’s position on a variety of parallel but important policy issues, including, among others, technology flow and intangibles.
Why is a Modern Foreign Trade Policy Important?
India’s position and alignment with flagship programmes like the “Local for Global” and PLI (Production Linked Incentive) schemes, the WTO’s decision to reject India’s export incentive programmes, a long overdue review of the Special Economic Zone (SEZ) scheme, shifting geographic profiles of India’s export basket, and FTA implications must all be made clear.
A WTO dispute panel had determined in 2019 that the export incentives offered under the FTP violated India’s WTO agreement.
Impact on companies with an export-oriented focus: Another argument for amending the FTP is the fact that several ad hoc, contradictory, and inconsistent revisions to the 2015 FTP have had a negative effect on some export-oriented businesses.
The 2015 FTP promoted exports by directly issuing duty-credit coupons in proportion to exports. The maximum export incentives were nevertheless limited by the government to Rs. 20 million for goods in 2020 and Rs. 20 million for services in 2021.
Also, the changes to service incentives were retroactively announced in September 2021 with an April 2019 implementation date.
Decreased Expenditure and Incentives: The annual export incentives known as the Merchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS), both of which were valued Rs. 51,012 crore, were replaced by the RoDTEP plan incentive, which was worth Rs. 12,454 crore.
The remaining Rs. 38,558 crore was put into PLI to help a select few sectors.
Infrastructure hiccups: The typical turnaround time for ships in India is roughly three days, while the global average is 24 hours. This is because India’s export infrastructure, including ports, warehouses, and supply chains, has not been effectively improved. Tractor export incentives, which were previously offered at 3%, are now only offered at 0.7%.
MSMEs are in trouble since they are crucial to achieving the difficult export targets and account for about 29% of the GDP and 40% of global trade. Yet, the spike in input and petroleum prices is having a detrimental impact on the bottom lines of MSMEs.
Due to the rising costs of raw materials like plastics and steel, as well as a shortage of shipping containers and labour, MSMEs are having difficulty taking full advantage of the global boom in demand.
What changes to the New FTP might be made?
To help MSMEs out of their difficulty, the SEIS gives incentives of 3-7% of net foreign exchange revenues to Indian service exporters of registered services.
Faster GST refunds to international services and a modification to the minimum cap on the amount of net foreign exchange earnings that can be claimed under the scheme are both crucial with the new FTP.
The government must also encourage MSMEs in using the export potential in current tariff lines if it hopes to increase the proportion of exporting MSMEs and increase MSME exports by 50% in 2022–2023.
Extra Exporter Incentives: If the MSME category’s incentives for retail and wholesale merchants are also extended to them, the new FTP might aid exporters.
The new FTP must enable exporters to utilise technology in the context of global trade. This will enable MSMEs to compete on an international scale.
Infrastructure Improvement: Exporters would be better able to participate in a highly competitive market if there was a well-developed infrastructure network, including warehouses, ports, special economic zones (SEZs), laboratories for quality testing, certification centres, etc.
India needs to invest in enhancing its export infrastructure in order to compete with technologically advanced countries like China.
Also, it needs to adopt modern business practises, which can be accomplished by digitising the export process. Costs will go down, and time will be saved.
GST Export Benefits: Because FTP does not now cover the GST export benefit, some exporter classes have had their eligibility for export benefits denied.
Hence it is vitally important to reduce the gap between the two policies. Furthermore, it is critical that administrative procedures do not impede the efficient distribution of GST refunds.
This is what the FTP should be designed around. The WTO seeks to deter governments from heavily subsidising exporters in order to ensure that all nations compete on an equal level.
Although the Indian government is well aware of the need to comply with WTO requirements, it has already taken significant steps to abolish projects driven by subsidies.
More basic work must be done in order to boost exports and ensure that Indian exports remain competitive in the global market.
Further actions To build an intended designed and directed policy stance that directs both the Center and private enterprises for the progress of the nation’s economy, the decision-makers must right away widen their field of consideration to encompass all stakeholders.
These elements should also consider the current paradigm, including the urgent need to replace fuel imports, taking advantage of improvised logistics, and igniting entrepreneurial zeal.
The new FTP will gradually endeavour to lift export prohibitions, assess the operational and legal framework to reduce transit costs, and create a low-cost operating environment through developed logistics and utility infrastructure. This is due to the pandemic’s significant economic impact.
3 – NCBC:
GS II Topic Statutory and Non-Statutory Bodies:
The Union government reported on Wednesday that it has only chosen a chairperson and one member to the National Commission for Backward Classes (NCBC), in answer to a Rajya Sabha inquiry regarding why the Commission still required a vice-chairperson and members.
The 102nd Constitution Amendment Act of 2018 gave the National Commission for Backward Classes constitutional protection (NCBC).
It has the authority to investigate welfare claims and initiatives for academically and socially underprivileged groups.
Previous to this, the NCBC was a statutory organisation under the control of the Ministry of Social Justice and Empowerment.
What is the past of the NCBC?
Two Backward Class Commissions were appointed under Kaka Kalelkar and B.P. Mandal in the 1950s and the 1970s, respectively.
The Kaka Kalelkar Commission is also known as the First Backward Classes Commission.
In the 1992 Indra Sawhney case, the Supreme Court ordered the government to set up a permanent committee to review, analyse, and recommend the inclusion and exclusion of various Backward Classes for the purpose of benefits and protection.
The National Commission for Backward Classes (NCBC) was created in 1993 as a result of the National Commission for Backward Classes Act, which was approved by parliament.
The 123rd Constitution Amendment bill of 2017 was put out in Parliament to better safeguard the interests of underrepresented groups.
A new law passed by Parliament repealed the National Commission for Backward Classes Act of 1993, rendering the 1993 Act ineffective.
The President approved the bill in August 2018, giving NCBC legal stature.
What Kind of Structure Has NCBC?
The President, through a warrant carrying his signature and seal, appoints the Chairperson, the Vice-Chairperson, and three more members to the Commission.
The Chairman, Vice-Chairperson, and other Members’ periods of office are determined by the President.
Which Constitutional clauses apply to NCBC?
In accordance with Article 340, it is crucial to identify those “socially and educationally backward classes,” understand the factors that contribute to their backwardness, and present measures to help them.
The 102nd Constitution Amendment Act introduced new Articles 338 B and 342 A.
The version also makes changes to Article 366.
According to Article 338B, the NCBC has the authority to look into complaints and welfare initiatives involving socially and educationally disadvantaged people.
Under Article 342 A, the President has the power to designate socially and educationally disadvantaged classes in various states and union territories.
After speaking with the governor of the pertinent State, he may take this action.
However, a measure approved by Parliament will be required if the list of disadvantaged classes is to be altered.
What responsibilities and power does the NCBC have?
To determine how well the protections provided to socially and educationally disadvantaged classes under the Constitution or under other laws are working, the commission investigates and keeps track of all relevant concerns.
The socioeconomic advancement of the economically and socially undeveloped classes within the Union and any State is taken into consideration, counsel is offered, and an assessment is made.
Reports on the effectiveness of those protections are given to the President once a year and at other times the Commission may deem appropriate. The President delivered these reports to each House of Parliament.
Every time such a report, or any portion thereof, refers to a subject that has an impact on the State Government, a copy must be given to that State Government.
NCBC is required to carry out whatever extra responsibilities the President may, according to the terms of any laws established by Parliament, by regulation, define with regard to the defence, welfare, development, and advancement of the economically and socially disadvantaged classes.
It has all the power of a civil court while hearing a matter.
4 – Animal Husbandry Sector of India:
GS III Topic Indian Economy:
A total of 77.56 crore is allocated to animal husbandry in the Puducherry budget for 2023–2024.
One of the key steps to increase the revenue of livestock producers is the government’s plan to pay the premium amount due by farmers, less the subsidies supplied by the Central government.
Selective breeding and livestock management are regarded as components of animal husbandry. With management and care, the genetic traits and behaviours of animals are developed further for financial advantage.
A sizable portion of farmers make their living primarily from animal husbandry. About 55% of people living in rural areas rely on it for a living.
Livestock presently makes for 28.63% of the total Gross Value Added (at Constant Prices) for the agriculture and allied industry, up from 24.32% in 2014–15, according to the Economic Survey–2021 (2018-19).
The majority of cattle owners in the world are found in India.
There are 535.78 million animals in the entire country, up 4.6% from the Livestock Census-2012, according to the 20th Livestock Census.
There are many possible facets to raising animals.
For instance, the 1970 execution of Operation Flood helped dairy producers control their own growth, increased milk production (“a flood of milk”), enhanced rural incomes, and made sure that customers were paying fair rates.
It has significantly increased women’s earnings and social involvement while also significantly advancing their liberation.
It is an important risk-reduction tactic for small and marginal farmers, particularly in India’s rain-fed regions.
It is at the heart of initiatives to decrease poverty from an equity and livelihood standpoint.
The Inter-Ministerial Committee highlighted seven sectors of revenue increase, including livestock production, in order to meet the government’s objective of doubling farmers’ income by the year 2022.
It is difficult to find superior breeding bulls.
Several laboratories produce inferior quality sperm.
insufficient feed supplies and poor handling of animal illnesses.
For local breeds, there is no field-focused conservation strategy.
Farmers’ infrastructure is poor, and they lack the services and expertise needed to boost productivity.
Governmental Initiatives to Advance This Industry:
Animal Husbandry Infrastructure Development Fund (AHIDF):
About: The Farmer Producer Organizations (FPO), commercial dairy players, individual business owners, and non-profit organisations are all included in this first large government fund.
The establishment cost of the fund is Rs. 15,000 crore.
Goal: To promote private investment in dairy processing, value addition, and infrastructure for cow feed.
Incentives will be given for the construction of factories to export specialised items.
A niche product is one that caters to a certain area of a larger industry or market. Niche products typically cost more than more generic ones, but not always.
Also, it will aid in the development of various sized animal feed plants, including silage production facilities, mineral mixing plants, and animal feed evaluation labs.
National Program for Animal Disease Prevention:
It has been implemented for Foot and Mouth Disease (FMD) and Brucellosis to ensure that the population of cattle, buffalo, sheep, goats, and pigs is fully immunised, with a total cost of Rs. 13,343 crore.
The goal of Rashtriya Gokul is to protect and advance local cattle breeds.
to boost milk production and the cash that comes from it for the farmers.
The National Livestock Mission:
launched in 2014–2015.
to provide capacity building for all stakeholders and development in cattle production systems on both a quantitative and qualitative level.
Program for National Artificial Insemination: to offer fresh advice on conceiving female breeds.
to boost the effectiveness of the breed by preventing the spread of particular genital infections.
How to Proceed:
The burden on the agriculture sector will decrease if investments are made as soon as feasible, even as the country tries to recover from the pandemic-caused economic depression, which would have a huge positive impact on the entire economy.
Employment and climate change are directly impacted by the animal husbandry business, and better infrastructure may make processing plants more energy-efficient and lower their carbon footprint.
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The Hindu Editorial Analysis
What Are India’s Immediate Growth Prospects:
In February 2023, fresh information on the annual and quarterly national income for 2020–2021, 2021–2022, and 2022–2023 was released by the National Statistical Office (NSO). With the help of this new dataset, it is possible to assess the whole negative impact of COVID-19 on India’s GDP growth.
Recovery compared to the year prior to COVID:
According to NSO’s second advance estimate, India saw a contraction of (−) 5.7% in 2020–21, which is much smaller than its (–) 7.7% first advance estimate (FAE) (SAE). Manufacturing, construction, and banking, real estate, etc., were the three industries that benefited the most from this modification.
Real GDP increased from the previous estimate of 134.4 lakh crore to 136.9 lakh crore for this COVID-19 year. Since then, the GDP has increased by 7.5% in 2022–2023 and 9.1% in 2021–2022.
Comparing the current real GDP level of 159.7 lakh crore with the period between 2019–20 and 2022–2023, the compound annual average growth rate (CAGR) was 3.2%. It should be emphasised that despite COVID-19’s effects, a number of countries, including China, Bangladesh, and Vietnam, saw positive economic development in 2020.
Alterations by industry:
Despite the fact that the overall GVA in 2022−23 would increase by 11.3% from 2019–20, the mining and quarrying sector is still in contraction at (–) 0.3%. A meagre 4.3% increase is seen in all sectors, including commerce, hotel, and transportation.
Construction, manufacturing, banking, real estate, and other industries all experienced higher-than-average growth, increasing by 18.6%. Agriculture and manufacturing followed with increases of 12% and 14.8%, respectively.
Gross Fixed Capital Formation (GFCF):
Government final consumption expenditure (GFCE) increased by 7.4% while real GDP expanded by 10% in terms of overall spending. Both and demonstrate increases in private final consumption spending of 17.7% and 13.1%, respectively (PFCE).
The nominal increase in the GFCF to GDP ratio from 2019–20 to 2022–2023 is from 28.6% to 29.2%. The corresponding real investment rates are 34% and 31.8%, respectively. Because capital goods experience different rates of inflation compared to GDP overall, real and nominal interest rates change.
Capacity utilisation and the ratio of incremental capital output (ICOR):
The investment rate has so greatly increased in real terms. Hence, 8.5 instead of 4.9 was the predicted ICOR for 2019–20. This is because the GDP growth rate for 2019–20 was only 3.7%, which is rather low and suggests that there is a lot of untapped capacity.
The average capacity utilisation ratio in the manufacturing sector fell from 75.2% in 2018–19 to just 70.3% in 2019–20. In the first half of 2022–2023, the capacity utilisation ratio is higher, standing at 73.5%. The gross fixed capital creation rate has risen both in real and nominal terms, but the muted expansion points to reduced capacity utilisation and a higher ICOR.
Forecasts for future growth:
In Q3 of 2022–2023, real GDP growth was 4.4%, down from 6.3% in Q2 and 13.2% in Q1. Yet, the Central Bank of India’s previous estimates were in line with this decrease in growth. Growth of 5.1% in the fourth quarter is now required to achieve an annual increase of 7% in 2022-2023.
The Purchasing Managers’ Index, or PMI:
This appears logical given that the majority of high frequency indicators result in greater economic activity. PMI manufacturing was higher than its long-term average of 53.7 in January and February 2023, at 55.4 and 55.3, respectively. PMI services increased from 57.2 in January 2023 to a nearly 12-year high of 59.4 in February 2023.
Index of industrial production (IIP) incorporating credit expansion:
Core IIP climbed by 7.8% in January 2023, up from 7% in December 2022. Even still, loan growth, at 16.1% for the week ending February 10, 2023, was quite high. Yet, monthly credit data only reveals a notable rise in credit growth for personal loans. Industrial credit growth reached a seven-month low. Given that growth was subdued in the same quarter of the prior year at 4%, a bigger quarterly growth in Q4 appears possible due to a favourable base effect.
Repercussions for development:
Given the anticipated global economic slowdown, India’s growth in 2023–2024 will likely be lower than the 7% growth it saw the year before. The RBI projects growth of 6.4% during 2023–2024. The International Monetary Fund (IMF), on the other hand, forecast a lower growth rate of 6.1%.
If fiscal stimulus is sustained, primarily through capital expenditures as suggested in the 2023–24 Union budget, we might get closer to the RBI’s growth projection. But, considering that elections are soon, there may be pressure to increase revenue and spending. This can lead to a growth rate of around 6%.
In order to maintain India’s long-term outlook, all growth-stimulating policies should be put into action while following to the budget reduction strategy. Only if the fixed capital production rate is raised by an extra 2% over the longer term can a constant growth of 6% to 7% be ensured. This is true despite the depressing global circumstances.
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The Indian Express Editorial Analysis
India And The Anglosphere:
The US, UK, and Australia recently concluded a multibillion dollar nuclear submarine agreement under the umbrella organisation AUKUS. They said that the measure was done to uphold the “free and open” status of the Indo-Pacific area.
According to the agreement, the US would begin selling Australia three Virginia-class submarines in the early 2030s, with the possibility of two more if necessary.
As a result, Australia would have access to nuclear-powered submarines to try and stop China’s expansion in the Indo-Pacific.
AUKUS, which is associated with the Quad, is thought by geopoliticians to be a turning point in the evolution of Asian geopolitics (which US and Australia are a part of including India and Japan).
The AUKUS road plan implementation creates a variety of technical and policy challenges:
Project Timeline and Cost: Current estimates place the project’s cost at roughly $250 billion (to the Australian taxpayer). It will be close to three decades before a nuclear submarine made in Australia is put into service.
Large-scale projects always face significant delays and rising costs.
The initial step has been taken, though, and it seems that the three countries have strong bipartisan support for a project that will strengthen their alliance and make it significant for the Indo-Pacific.
The AUKUS project aims to build, assemble, and operate the “sovereign fleet” of the Australian Navy:
The crux of the AUKUS project is the US and UK’s desire to assist the Royal Australian Navy in developing, constructing, and managing a “sovereign fleet” of conventionally armed, nuclear-powered submarines (SSNs). This will go through a few stages.
As the first step in the immediate execution of AUKUS, Australian personnel will be incorporated into the American and British nuclear submarine bases. Also, there will be more nuclear-powered US and British submarines visiting Australian ports.
In the third phase, which will start early in the following decade, the US will sell up to five nuclear-powered submarines to Australia. Washington and London will forward deploy nuclear submarines to Australia in the second phase, starting in 2027, “to speed the development of the Australian navy workforce, infrastructure, and regulatory system necessary” to build robust SSN capabilities in Australia.
In the fourth phase, which will start in the late 2030s, Canberra will receive the first AUKUS submarine made in Britain.
Beginning in the early 2040s, the Australian-built nuclear submarines will begin to be deployed.
Several strategic ramifications of the AUKUS project are felt in Asia, particularly in India:
AUKUS’s primary objective is to transform Australia’s strategic capabilities and elevate it to a key position in influencing the security environment in the Indo-Pacific.
Nuclear-powered submarines are but a part of this wider objective. In order to confront the drastically growing Chinese naval might in the Indo-Pacific, the US, UK, and Australia will collaborate more closely as a result of AUKUS to develop a variety of undersea technology.
UKUS also comprises collaboration between the three countries on a range of cutting-edge technologies, including as artificial intelligence and quantum computing, which may affect regional security scenarios.
More S&T cooperation between Australia and India may result from improved relations between the two nations, which should eventually expand to include delicate strategic fields.
Second, foreign policy professionals in India typically fail to recognise the enduring strategic significance of Britain in the world.
After Central Europe was impressed by London’s engagement in the Ukraine war, the AUKUS pact will boost London’s reputation in Asia.
By combining cutting-edge US technologies, British domestic nuclear capabilities, and Australian demand to build and create a new generation of nuclear-powered submarines, the UK plays a significant role in the AUKUS.
It thereby resumes the UK’s active involvement in Asia. Since stepping down from its responsibilities in the East of Suez in the late 1960s, the UK had played a supporting role in Asian security for decades.
AUKUS has also reintroduced the idea of a “Anglosphere,” which refers to the close geopolitical relations between the US, UK, Australia, Canada, and New Zealand.
The Indo-Pacific region is the focus of the AUKUS pact, which extends beyond information sharing to integrate the defence and technology industries of the three countries.
In order to strengthen its position in the Indo-Pacific region, India, which in the past had tense relations with the Anglosphere, is now witnessing a quick increase of those relations.
Fourth, the absence of nuclear weapons from AUKUS’s mandate has been emphasised by the three countries. While the US and UK are nuclear weapon nations, Australia has renounced its nuclear option by ratifying the Nuclear Nonproliferation Treaty.
China has launched an offensive to attack the AUKUS, alleging that it transgresses non-proliferation laws.
The NPT does not, however, forbid cooperation between nuclear and non-nuclear weapon states, such as AUKUS.
Last but not least, the US has made it clear that it does not want to include new allies like Japan and India in the AUKUS system.
There are no plans for a similar level of cooperation in Delhi. Additionally, Delhi has no reason to disagree with the AUKUS plan to halt Chinese growth in the Indo-Pacific.
Formerly, the US aspired to use its own military resources to unilaterally enhance regional security.
As it adapts to the enormous scale of the military threats that China presents, the USA is increasingly eager to enhance the strategic capabilities of its friends and partners in the Indo-Pacific.
The US’s priority varies with various allies. Yet maintaining regional power balances is also the aim.
The US is currently bolstering the forces of Japan and South Korea and striving to establish tighter strategic technological linkages with India.
In light of this, India has the opportunity to forge unique agreements with the US and its allies that will boost both India’s overall national power and its contribution to regional stability and security in the Indo-Pacific.
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