Indian Prime Ministerand Chinese Presidentmight have had a successful Sino-Indian summit at Mamallapuram in Tamil Nadu during 11-12 October.
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However, when it comes to protecting trade interests, the government has adopted a tough stand, especially in reaching an agreement on the Regional Comprehensive Economic Partnership (RCEP).
RCEP is the government’s most ambitious trade agreement planned to date. The agreement is based on its existing free-trade agreements (FTAs) with the 10-nation Association of Southeast Asian Nations (ASEAN) and five other nations.
The pact will include China, Japan, South Korea, Australia and New Zealand, with which ASEAN has trade agreements.
Japanese wire agency Kyodo quoted an unnamed Singapore official as saying that India “almost banged the table” during the negotiations. Thailand termed the ministerial meeting as “tough and serious”, and that the agreement was inconclusive due to India’s tough stand that stalled the negotiations.
What was the stand taken by India that stalled the talks? India insisted that it wants a safety valve or a process to safeguard its interests against at least 50 per cent of Chinese imports under RCEP if they flood the Indian market.
New Delhi also expressed its concern over issues such as e-commerce, investments, taxations, small and medium enterprises (SMEs), and regulations fixed by local bodies. It sought that the framework on these be reworked before it can sign the deal.
India contends that its taxation policy changes shouldn’t be questioned, while its obligations towards its SMEs should be allowed to be met. It has demanded more favourable investment rules, wanted its local bodies’ norms to be respected and asked Japan to address its concerns on e-commerce.
India faces a real dilemma with regard to the RCEP deal. On the one hand, it doesn’t want to miss out on an opportunity to be part of a large trading bloc. Trade among the bloc is worth around $2.8 trillion annually.
On the other hand, the fear in signing the deal is that it could trigger a deluge of imported Chinese goods — like electrical and electronic goods — in its domestic market.
India’s trade deficit with China, the largest exporter among the bloc to India, is $54 billion, more than half of the total $105 billion trade deficit with the bloc of nations that form the group.
India’s problems do not end with the threat of Chinese imports. The agriculture sector, particularly dairy and plantation industry, is worried that imports of dairy products, rubber, cardamom, pepper, and other spices could affect them adversely.
These products will likely come from New Zealand, Malaysia, Vietnam and Australia.
For example, India currently imposes a 64 per cent duty on import of dairy products. If it signs the RCEP agreement, the duty will have to slowly be reduced to zero, most probably over a 20-year period.
This could affect the Indian dairy farmers, who number over 100 million compared to 10,000 farmers in New Zealand. Thanks to its vibrant domestic market, India exports only a fraction of its milk products from 180 million tonnes (mt) it produces annually.
In comparison, New Zealand ships out over 90 per cent of the 22 mt it produces. Also, Indian farmers get 70 per cent of the milk price as their returns, while it is 30 per cent in New Zealand.
The manufacturing industry — especially metals like iron, steel, and aluminium — also fears it could be affected by the RCEP deal.
Trade observers say India’s exports to the countries that are part of the RCEP pact are only 20 per cent of its total shipments abroad, while imports from these nations make up 35 per cent of the consignments that arrive at the ports.
Those opposed to the deal also point at various FTAs that India has signed with countries such as Sri Lanka and Japan, and Malaysia and Singapore that are part of ASEAN.
According to a 2017 Niti Aayog report, exports from India are lower than imports from partnering countries with whom it has signed the FTAs. Indian exporters, too, are not taking full advantage of the agreements, thus resulting in New Delhi losing out.
China is the one that is pushing India to sign the RCEP agreement. The issue figured at the Mamallapuram summit and the Chinese premier reportedly assured India that its concerns would be addressed.
Commerce Ministry officials are of the view that one way of checking the deluge of Chinese goods is to have an auto-trigger mechanism to alert them for some of the imported products. Once an imported product crossed a pre-determined threshold, the mechanism is triggered, and India would begin imposing duties on these products.
The RCEP deal will allow importing of 74 per cent Chinese products duty-free but developing nations are pressing for allowing 90 per cent of their products to be duty-free.
India also says the trigger mechanism would cover over 65 per cent of the Chinese products, but China, predictably, is not in favour of such a triggering mechanism for so many of its products.
And trade experts say that the connectivity between Indian ports isn’t good enough to set off the alerts effectively.
There is, however, one agreement among the bloc: the pact will result in 28 per cent of the traded goods being made duty-free in the first phase. In the second phase, 35 per cent of all products will be free of any import levy.
India believes its professionals in the Information Technology field, medical personnel, and chartered accountants would stand to gain from the deal and hence, it would be good to sign it.
Despite pressure from China, India is insisting on a balanced and equitable deal. With India standing firm in protecting its interests, the bloc of nations looking to sign the deal has two options before them.
One, they can sign a limited deal with India that will protect everyone’s interests. Or two, they can try and address all of India’s concerns in a fair way and then sign the pact.
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In a diverse country like India, where each State is socially, culturally, economically, and politically distinct, measuring Governance becomes increasingly tricky. The Public Affairs Index (PAI 2021) is a scientifically rigorous, data-based framework that measures the quality of governance at the Sub-national level and ranks the States and Union Territories (UTs) of India on a Composite Index (CI).
States are classified into two categories – Large and Small – using population as the criteria.
In PAI 2021, PAC defined three significant pillars that embody Governance – Growth, Equity, and Sustainability. Each of the three Pillars is circumscribed by five governance praxis Themes.
The themes include – Voice and Accountability, Government Effectiveness, Rule of Law, Regulatory Quality and Control of Corruption.
At the bottom of the pyramid, 43 component indicators are mapped to 14 Sustainable Development Goals (SDGs) that are relevant to the States and UTs.
This forms the foundation of the conceptual framework of PAI 2021. The choice of the 43 indicators that go into the calculation of the CI were dictated by the objective of uncovering the complexity and multidimensional character of development governance
The Equity Principle
The Equity Pillar of the PAI 2021 Index analyses the inclusiveness impact at the Sub-national level in the country; inclusiveness in terms of the welfare of a society that depends primarily on establishing that all people feel that they have a say in the governance and are not excluded from the mainstream policy framework.
This requires all individuals and communities, but particularly the most vulnerable, to have an opportunity to improve or maintain their wellbeing. This chapter of PAI 2021 reflects the performance of States and UTs during the pandemic and questions the governance infrastructure in the country, analysing the effectiveness of schemes and the general livelihood of the people in terms of Equity.
Growth and its Discontents
Growth in its multidimensional form encompasses the essence of access to and the availability and optimal utilisation of resources. By resources, PAI 2021 refer to human resources, infrastructure and the budgetary allocations. Capacity building of an economy cannot take place if all the key players of growth do not drive development. The multiplier effects of better health care, improved educational outcomes, increased capital accumulation and lower unemployment levels contribute magnificently in the growth and development of the States.
The Pursuit Of Sustainability
The Sustainability Pillar analyses the access to and usage of resources that has an impact on environment, economy and humankind. The Pillar subsumes two themes and uses seven indicators to measure the effectiveness of government efforts with regards to Sustainability.
The Curious Case Of The Delta
The Delta Analysis presents the results on the State performance on year-on-year improvement. The rankings are measured as the Delta value over the last five to 10 years of data available for 12 Key Development Indicators (KDI). In PAI 2021, 12 indicators across the three Pillars of Equity (five indicators), Growth (five indicators) and Sustainability (two indicators). These KDIs are the outcome indicators crucial to assess Human Development. The Performance in the Delta Analysis is then compared to the Overall PAI 2021 Index.
Key Findings:-
In the Scheme of Things
The Scheme Analysis adds an additional dimension to ranking of the States on their governance. It attempts to complement the Governance Model by trying to understand the developmental activities undertaken by State Governments in the form of schemes. It also tries to understand whether better performance of States in schemes reflect in better governance.
The Centrally Sponsored schemes that were analysed are National Health Mission (NHM), Umbrella Integrated Child Development Services scheme (ICDS), Mahatma Gandh National Rural Employment Guarantee Scheme (MGNREGS), Samagra Shiksha Abhiyan (SmSA) and MidDay Meal Scheme (MDMS).
National Health Mission (NHM)
INTEGRATED CHILD DEVELOPMENT SERVICES (ICDS)
MID- DAY MEAL SCHEME (MDMS)
SAMAGRA SHIKSHA ABHIYAN (SMSA)
MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE SCHEME (MGNREGS)