Bangladesh Prime Minister Sheikh Hasinas India visit (GS Paper 2, International Relation)
Why in news?
Bangladesh Prime minister Sheikh Hasina’s four-day trip to India started recently with a slew of Memorandums of Understanding (MOUs) being signed on water sharing, railways, space, science and judiciary.
MOUs signed:
- MoU between the ministry of Jal Shakti, Government of India and ministry of water resources, Government of Bangladesh on withdrawal of water by India and Bangladesh from common border river Kushiyara.
- MoU between the ministry of railways (Railway Board), Government of India, and the ministry of railways, Government of Bangladesh on training of Bangladesh Railway personnel in India.
- MoU between the ministry of railways (Railway Board), Government of India, and the Ministry of Railways, Government of Bangladesh on collaboration in IT systems, such as FOIS and other IT applications for Bangladesh Railway.
- MoU between the National Judicial Academy, India and the Supreme Court of Bangladesh on training and capacity building programme for Bangladesh judicial officers in India.
- MoU on scientific and technological cooperation between Council for Scientific & Industrial Research (CSIR), India and Bangladesh Council of Scientific & Industrial Research (BCSIR), Bangladesh.
- MoU on cooperation in the areas of space technology
- MoU between the Prasar Bharti and Bangladesh Television (BTV) on Cooperation in Broadcasting
Trade and economic assistance:
- Bangladesh has approved discussions with India on a Comprehensive Economic Partnership Agreement (CEPA), which is expected to raise Bangladeshi exports to India two-fold and expand the country’s GDP by two per cent.
- There is a strong possibility that the Comprehensive Economic Partnership Agreement (CEPA) would be finalised during the visit.
- The agreement enables the countries to retain and secure all benefits in their trade ties, even after Bangladesh’s transition to a developing country. As a result, it is being hailed as a landmark agreement in India-Bangladesh diplomatic ties.
Bilateral trade:
- Bangladesh is now India’s biggest trade partner in South Asia and the bilateral trade has grown from $9 billion to $18 billion in the last five years.
- It has also become the fourth largest export destination for India with the exports registering a growth of over 66 per cent from $9.69 billion in 2020-21 to $16.15 billion in 2021-22.
Teesta water-sharing:
- India and Bangladesh need to reach a water-sharing arrangement for all the 54 rivers that flow across their borders, to weed out any potential irritants in bilateral relations.
- The plans to resolve the Teesta agreement, however, remain on the back burner for now. The lack of consensus between the Union government and the West Bengal state government can be cited as a reason for this indefinite delay in finalising the much-awaited Teesta agreement.
- However, Bangladesh expressed confidence that all outstanding issues including Teesta water sharing treaty would be concluded at an early date.
Positive developments in recent years:
- Ties between India and Bangladesh have witnessed considerable progress in recent years, especially in connectivity, with a number of initiatives being undertaken, such as inauguration of the Maitree Shetu over River Feni, Bangladesh’s offer to India to use its Chittagong Port, and the inauguration of the Mitali Express, connecting New Jalpaiguri, India with Dhaka.
- The recently inaugurated Padma rail-road bridge in Bangladesh also holds the potential to connect the two countries.
Way Forward:
- The agreement over the Kushiyara river is a testament to the decision in both countries to tackle the larger issues of water-sharing and water management, since this directly affects Bangladesh’s food security.
- Apart from efforts to increase cooperation, this visit is also designed to showcase the goodwill prevailing between the two countries by highlighting the reciprocity in relations.
Govt gives two-year extension to thermal power plants on SO2 norms
(GS Paper 3, Environment)
Why in news?
- Recently, the Union Environment Ministry has extended the deadlines for thermal power plants to install pollution control technologies and comply with new emission norms.
- This is the third time that the deadlines have been pushed in the last five years.
Details:
- The deadline for the power plants within a 10-km radius of Delhi-NCR and cities with a population of more than 10 lakh has been extended from December 31, 2022 to December 31, 2024.
- For the power plants in a 10-km radius of critically-polluted areas or non-attainment cities, the deadline has been pushed from December 31, 2023 to December 31, 2025.
- ‘Non-attainment cities’ are those that have consistently failed to meet the National Ambient Air Quality Standards. The Central Pollution Control Board (CPCB) has identified 132 such cities.
- For all other power plants across the country, the deadline has been pushed from December 31, 2024 to December 31, 2026.
- The power plant units declared to retire before December 31, 2027 will not be required to meet the specified norms for SO2 (sulphur dioxide) emissions in case such plants submit an undertaking to the CPCB and the Central Electricity Authority (CEA) for exemption on the ground of retirement.
Emission norms:
- It had revised the emission norms for particulate matter (PM), sulphur dioxide and the oxides of nitrogen for thermal power plants (TPPs) in December 2015, requiring those to install emission control systems by December 2017.
- The deadline was pushed to December 2022 for all the power stations in the country in view of implementation issues and challenges. However, the power stations in the National Capital Region (NCR) were required to comply with the revised norms by December 2019.
The deadline was pushed to 2024, with the power ministry citing a delay due to various reasons, including the coronavirus pandemic and import restrictions.
Non-compliance:
- Little progress has been made in the 18 months since the last extension was given to the polluting coal plants.
- No new coal-based unit installed FGD systems in the last 18 months. In a flue-gas desulphurisation system (FGD) system, sulphur compounds are removed from the exhaust emissions of fossil-fuelled power stations.
- It is clear that India's National Clean Air Programme (NCAP) target of reducing air pollution by 30 to 40 per cent by 2024 will never be achieved given the repeated leeway the government is giving to the violators.
Issues with Thermal Power Plants:
- The major pollutants from coal-fired power plants are the oxides of nitrogen (NOx), SO2 and particulate matter (PM).
- The TPPs account for more than 60 per cent of total industrial emissions of particulate matter, 45 per cent of SO2, 30 per cent of NOx and more than 80 per cent of mercury in India.
- These plants are also responsible for 70 per cent of the total freshwater withdrawal by all industries.
Controversy over K.K. Shailajas nomination for the Ramon Magsaysay Award
(Miscellaneous)
Why in news?
- The decision of former Kerala Health Minister K.K. Shailaja to decline an offer to be considered for the prestigious Ramon Magsaysay Award in 2022 has sparked a row following allegations that the CPI(M) (Communist Party of India (Marxist)) restrained her from accepting the honour.
Why did the CPI(M) decline?
- The party cited the ‘anti-communist’ credentials of the former Philippines President as the reason for declining the offer.
Magsaysay was a “staunch anti-communist” who oversaw the defeat of communists (Hukbalahap) in Philippines in the 1950s, leaders of the Left said. “…this award is in the name of Ramon Magsaysay who has a history of brutal oppression of the communists in the Philippines,” said CPI(M) general secretary.
Who was Ramon Magsaysay?
- Born in 1907, Ramon Magsaysay served as the seventh President of the Philippines from December 1953 to March 1957 before he was killed in a plane crash on Mount Manunggal in Cebu island.
- During World War II, he served as a guerilla leader against the Japanese as part of the 31st Infantry Division of the Philippines. The U.S. took note of his military leadership during the war and appointed him as the military governor of his home province after the Philippines attained independence in 1946.
- Ramon Magsaysay started his political journey with his election to the House of Representatives in 1946. He came into prominence with his appointment as the Secretary of National Defence to deal with the communist-led Huks movement.
- In 1953, Ramon Magsaysay became President of the Philippines. As President, Magsaysay led several agrarian, military and administrative reforms. His three-year tenure is often cited as the ‘golden years’ of the Philippines.
What is the Ramon Magsaysay Award?
- Following the death of President Ramon Magsaysay in 1957, the Rockefeller Brothers Fund (RBF) established the Ramon Magsaysay Awards in the President’s honour in agreement with the Philippines government.
- Later, the Fund set up the Ramon Magsaysay Award Foundation, a non-profit organisation to manage Asia’s biggest honour that recognises selfless work transforming lives.
- Regarded as Asia’s version of the Nobel Prize, the award was initially given for contributions to government service, public service, community leadership, journalism, literature and creative communication arts, and peace and international understanding.
- The category of ‘emergent leadership’ was added later.
- From India, 58 have bagged the international honour. Some of the past awardees include Mother Teresa, Satyajit Ray, Verghese Kurien, Arvind Kejriwal, Mahasweta Devi and Aruna Roy.
What about the campaign against the communist rebellion?
- The Hukbalahap was a communist-led, peasant-based movement with its roots in the pre-colonial era of political, economic and social inequalities. It was founded in the 1940s to fight the Japanese Army that had invaded the Philippines.
- A member of the Communist Party of the Philippines, Luis Taruc, was its first commander. The Hukbalahap emerged as a popular, well-organised, highly-trained force that aimed to seize power once the war ended. However, mistrust grew between the U.S. and the Huks which resulted in serious confrontations between the U.S. Army and the rebels.
- Backed by U.S. forces, the Philippines government disarmed the rebels and arrested their leaders. During the first elections held in the Philippines after its independence, a few from the Hukbalahap also contested and won including Luis Taruc, but they were unseated.
- The Huks then retreated to jungles in central Luzon where they began to restructure their organisation and resume plans to overthrow the newly elected Philippines government. They enjoyed massive support from the people who were still waiting for land reforms and were dismayed with corruption within the government.
- Between 1946 and 1950, the Huks took control of large patches of the islands and targeted the Philippine Army and Police Constabulary.
‘Operation Thunder-Lightning’:
- To deal with the threat of an uprising, President Elpidio Quirino appointed Ramon Magsaysay as the Secretary of National Defence — a vocal spokesperson against communism.
- Using his experience of guerilla warfare, Magsaysay reformed the Armed Forces of the Philippines, let go of ‘corrupt’ officers and built public support.
- He launched the Economic Development Corps (EDCOR) project to establish resettlement colonies for the Huks, provided ‘cash for guns’ to facilitate their return to mainstream society and pushed for a land reform law.
- Later as President, Ramon Magsaysay led a massive anti-Huks campaign ‘Operation Thunder-Lightning’ in 1954 with the help of a reorganised military and intelligence.
India, 7% plus annual growth, and the realities
(GS Paper 3, Economy)
Context:
- The National Statistical Office’s real GDP growth estimate of 13.5% for the first quarter of 2022-23 is 2.7% points lower than the Reserve Bank of India’s earlier assessment of 16.2%.
Beyond 7% growth:
- Assuming that the RBI’s estimates of the remaining three quarters of the fiscal year at 6.2% in 2Q, 4.1% in 3Q, and 4% in 4Q are realised, the annual GDP growth using the NSO’s 1Q estimate works out to be 6.7%.
- Compared to the pre-COVID-19 GDP level of ₹35.5 lakh crore in 1Q of 2019-20, real GDP at ₹36.9 lakh crore shows an increase of only 3.8%. This indicates that the performance of the Indian economy is not fully normalised yet which would be consistent with a growth of 6.5% to 7%.
- In order at least to reach an annual growth of 7%, GDP may have to grow at about 5% in 3Q and 4Q of 2022-23.
Composition of growth:
- Out of the eight Gross Value Added (GVA) sectors, the first quarter growth performance is higher than the average of 12.7% in public administration, defence and other services (26.3%), trade, hotels, transport et al. (25.7%), construction (16.8%), and electricity, gas, water supply et al. (14.7%).
- Agricultural growth has remained robust, showing a growth of 4.5% in 1Q of 2022-23, which is the highest growth over nine consecutive quarters.
- Growth in manufacturing, at 4.8%, however, is much below the overall average.
Increase with respect to corresponding output levels in the pre-COVID-19 normal year that is in 1Q of 2019-20:
- In this comparison, manufacturing seems to have done better with an increase of 7% in 1Q of 2022-23 while the trade, hotels, transport et al. sector has remained below its pre-COVID-19 level by a margin of minus 15.5%.
This was the main contact-intensive sector which suffered the most during COVID-19 and which may show better recovery in succeeding quarters. Construction has also increased by a small margin of 1.2% when compared to its 1Q 2019-20 level.
Demand side:
- On the demand side, all major segments showed magnitudes in 1Q of 2022-23 that were higher than their corresponding levels in 1Q of 2019-20.
- Recovery in domestic demand has been reflected in the growth rates of private final consumption expenditure (PFCE), at 25.9%, and gross fixed capital formation (GFCF) at 20.1% over the corresponding quarter of the previous year.
- As compared to its 1Q 2019-20 level, the GFCF showed a growth of 6.7%. The ratio of gross fixed capital formation to GDP at current prices is 29.2% in 1Q of 2022-23 which is 1% point higher than the investment rate of 28.2% in the corresponding quarter of the previous year.
Exports:
- The contribution of net exports to real GDP growth is negative at minus 6.2% points in 1Q of 2022-23 since import growth continues to exceed export growth by a tangible margin. Such an adverse contribution of net exports to real GDP growth is an all-time high for the 2011-12 base series.
- It is likely that import growth will continue to exceed export growth in the next few quarters, both in real and nominal terms, considering prevailing high global prices of petroleum products and other intermediate inputs and India’s growing demand for importing intermediate goods with a view to boosting ‘Make in India’.
Policy support:
- The Indian economy may still show a 7% plus growth in 2022-23 provided it performs better in the subsequent quarters, particularly in the last two.
- Two important areas of policy support for this purpose would be to further increase the investment rate and to reduce the magnitude of negative contribution of net exports.
Available high frequency indicators for the first four to five months of 2022-23 indicate continuing growth momentum:
- Headline manufacturing Purchasing Manager’s Index (PMI) was at an eight-month high of 56.4 in July 2022. It remained high at 56.2 in August 2022. PMI services were at 55.5 in July 2022, indicating 12 consecutive months of expansion.
- Outstanding bank credit by scheduled commercial banks (SCBs) grew by 15.3% in the fortnight ending August 12, 2022.
- Gross Goods and Services Tax collections have remained high at ₹1.49 lakh crore and ₹1.43 lakh crore in July and August 2022, respectively, although a good part of this may be due to the higher inflation levels of both Wholesale Price Index (WPI) and Consumer Price Index (CPI).
Capital expenditure:
- As seen in 1Q of 2022-23, GVA growth has been led by public administration, defence, and other services, with a growth of 26.3%. This has been driven by the central government’s frontloading of capital expenditure.
- The Centre’s capital expenditure grew by 62.5% during the first four months of 2022-23. This momentum needs to be maintained.
- This would be facilitated by a buoyant growth in the Centre’s gross tax revenues, which showed a growth of nearly 25% during the first four months of the current fiscal year.
- The relatively high tax revenue growth is in turn linked to the excess of nominal GDP growth at 26.7% in 1Q of 2022-23 over the real GDP growth of 13.5%. Such a large gap between these two growth measures reflects a high implicit price deflator (IPD)-based inflation which is estimated at 11.6% in 1Q of 2022-23.
- This in turn is because of the ongoing WPI and CPI inflation trends where the former continues to exceed the latter. With buoyant tax revenue growth, fiscal policy may strongly support GDP growth without making any significant sacrifice on the budgeted fiscal deficit target.
Future roadmap:
- Given India’s desire to achieve developed country status in the next 25 years, the required growth rate is in the range of 8% to 9%. In 2023-24, it must try to achieve a growth rate of 6% to 7%.
- The key to growth lies in raising the investment rate. Public capital expenditure has shown a rise. In crisis years, it is particularly good. It can crowd in private capital expenditure. But this cannot be the normal. Private capital expenditures, both corporate and non-corporate, must rise.
- It is pointed out that capacity utilisation in industry has touched 75% in 4Q 2021-22. This should help to attract private investment if demand for goods continues to increase.
Way Forward:
- The output loss because of COVID-19 and the consequent lockdown is greater if measured from the trend line rather than the base of 2019-20. Had it maintained growth of 7% since 2019-20 in successive years, the real GDP would have been ₹183.4 lakh crore in 2022-23.
- Even if it achieve a 7% growth in 2022-23 over 2021-22, there is a shortfall of ₹25.7 lakh crore at 2011-12 prices.
- The international environment for growth is bleak. Developed countries even fear a recession. India’s growth path in the next few years must depend on domestic investment picking up.
Sector-wise growth in investment must be the focus of policymakers in removing bottlenecks and creating a favourable climate.
