[Economy] Current 2014 Feb Week 1: Bilateral, Poverty Hunger, Food Processing, PIN (Part 3 of 3)

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Economic Survey
  1. Prologue
  2. [Act 6] Bilateral/Policy affecting Indian Interests
    1. #1: Visa on Arrival for 180 countries
    2. #2: [USA] Dushmani with Indian pharma cos.
    3. #3: [USA] India’s Aviation safety sucks
    4. #4: Pakistan- MFN status for India (hum nahi Denge)
    5. #6: India and Morocco (Ibn Batuta)
    6. #7: India-Fiji DTAA
    7. #8: India-Mauritius
    8. #9: Misc./Chillar developments
  3. [Act 7] Issues related to Poverty, Hunger, HRD
    1. #1: DTH = DBT v2.0
    2. #2: UIDAI is against Indian Constitution
    3. #3: Both UIDAI+RGI to focus on 4 states
    4. #4: NSSO survey: Poverty Declined because its election year
    5. #5: Gujarat: Earning >11 Rs. = not poor kyoki Lakdawalla says so
    6.  #6: Women SHG- interest subvention
    7. #7: Contract workers
    8. #8: NSDC
    9. #9: DSDS 2014: Desi liquor=sustainable livelihood
    10. #10: IMF: Inequality is growing (ya like we don’t it!)
  4. [Act 8] Agriculture/food processing/Export industries
  5. [Act 9] Persons in News (PIN): Feb Week#1 (2014)
  6. Epilogue

Prologue

Overview of Economy related Affairs during 1-7 Feb 2014. Total three parts

  1. Part 1 of 3: fiscal and monetary policy
  2. Part 2 of 3: FDI, regulatory bodies and infrastructure.
  3. Part 3 of 3: bilateral, poverty-hunger-HRD, Agriculture-food processing and Persons in News (PIN).

[Act 6] Bilateral/Policy affecting Indian Interests

IR topics can run miles long, but only cursory points here- of those related to Economy/trade.

#1: Visa on Arrival for 180 countries

Mechanism for (Tourist) Visa on Arrival (applicable from Sep’14)

  • Foreigner has to apply online (3 days before arriving to India)
  • When he reaches India, pays 60$ fees, goes through biometric identification and gets the (Tourist) Visa.
  • Validity: 30 days, Cannot be renewed. He must leave after that.

But Why should India give Visa on Arrival?

  1. Will boost tourism and business
  2. Can help us earn >40 billion USD by 2017
  3. Challenges: women security, bad infrastructure, unhygienic places.
Before 2014 from Sep.2014
~40 countries eligible for visa on arrival. Visa on arrival facility available to tourists from 180 countries. Including

  1. US (Despite Devyani!)
  2. China (Despite Dushmani!)
  3. UK
  4. UAE
  5. Bangladesh
Not eligible for Visa on Arrival [security reason]
  1. Pakistan
  2. Sudan
  3. Afghanistan
  4. Iran
  5. Iraq
  6. Nigeria
  7. Somalia
  8. Sri Lanka

Tourists from these countries need to apply for visa through Indian embassies in their country.

Same continued.

By the way, India is not the first country in the world to have “Visa on arrival” facility. Following countries already offer this facility: Japan, Finland, Singapore, Indonesia, Luxembourg, New Zealand, Cambodia, Vietnam, the Philippines, Laos and Myanmar.

#2: [USA] Dushmani with Indian pharma cos.

  • US Food and Drug Administration (FDA) commissioner is coming India
  • To inspect quality of Ranbaxy, Wockhardt and other companies. (+Spices processing companies in Kochi).
  • They’ve already banned production in Ranbaxy’s factory in Toansa, Punjab.

Why? (Conspiracy theories)

  1. American wants to teach us a “lesson” for the Devyani issue.
  2. Other foreign pharma companies have lobbied /bribed USFDA to teach us a “lesson”.

American/European MNC hate Desi companies because

  1. We’re largest producer generic drugs. (=cheaper copy of the foreign drugs, whose patent has expired.)
  2. We’re second largest drug supplier to US and Canada
  3. We’re major supplier of low cost medicines for Cancer, AIDS and Malaria to Africa and Latin America= Those foreign MNCs are loosing business.

#3: [USA] India’s Aviation safety sucks

  • US Federal Aviation Administration (FAA)
  • They reduced India’s safety rating from Status #1 to Status #2; meaning we’re as bogus as Ghana and Bangladesh. Infact even Pakistani Airlines are more safer than India!
  • Main reasons
  1. India doesn’t have sufficient number of Flight operation inspectors.
  2. India’s aviation regulator Directorate General of Civil Aviation (DGCA) does not meet the safety standards set by ICAO. [as we saw earlier this post has become retirement house for IAS.]
  3. (conspiracy theory) America intentionally downgraded the safety rating to “teach” us a lesson for the  Devyani Khobragade controversy.

Consequences:

  • When Indian flights go to USA, their officers will do more safety checking = more time will be wasted, inconvenience to Desi passengers.
  • Jet airways’ share prices fell down.
  • Domino effect: Singapore’s aviation authority also started inspecting Indian aircrafts.
  • The aviation regulators of EU, Japan, UAE will also reduce our rating.

Related topic: “Policy of USA affecting Indian interests” = Obama has urged the house to pass immigration reform bill,  that’ll give legal citizenship for illegal immigrants (=indians will be benefited) so, it’s not like Obama wants to “teach” us a lesson everywhere.

Anyways, moving on:

#4: Pakistan- MFN status for India (hum nahi Denge)

  • Pakistan has still banned import of 1000 Indian items, including automobiles, pharmaceuticals, agriculture and chemicals.
  • Only when Pakistan permits their import, we can say “India got Most-favored nation (MFN) status in India.”
  • Then our bilateral trade will increase to $10 billion USD.
  • Commerce Minister wrote a letter to pakis about this, but they didn’t reply, so it seems he will cancel his plans to visit Pakistan.

#6: India and Morocco (Ibn Batuta)

Screenshot_401

  •  Our Foreign minister had gone to visit 3 North African countries (Morocco, Tunisia, Sudan)- “Look Middle East” policy.
  • Morocco significant supplier of Phosphate to India= fertilizer, food security.
  • 14th Century: famous traveller Ibn Batuta came from Morocco to India
  • Morocco supports India’s demand to get Permanent seat in UNSC.
  • During this visit, many agreements on Environment coop, HRD, IT training.

#7: India-Fiji DTAA

Fiji

India and Fiji- Signed DTAA: double taxation avoidance agreement (DTAA).

From Indian businessman’s point of view:

  • If he has permanent business in Fiji, then his business profit will be t axed in Fiji only. And not in India.
  • If he makes capital gains in Fiji, he’ll have to pay taxes to Fiji only (and not in India). Recall Vodafone/Hutch controversy.
  • If his airline’s HQ in India, then India will tax (and not Fiji).
  • Dividends, interest, royalty and fees for services will be taxed both in the countries (India and Fiji).
  • + both countries agreed to exchange of banking information.

#8: India-Mauritius

mauritius

Mauritian authorizes have urged Indian investors to come in their country because:

  • Low tax regime
  • In doing business index (of World bank) = Mauritius rank 19th all over world, and 1st in Africa
  • Possible to start business in three working days
  • Indian entrepreneurs can setup base in Mauritius and focus on EU, Africa and West Asia.
  • IOCL already started Aviation fuel business here.
  • Potential areas: Seafood, IT, movie production.

#9: Misc./Chillar developments

Germany German President Joachim Gauck visit to India.

1 Billion Euro worth agreement for green energy project.

NZ UGC and its NZ counterpart signed agreement for research collaboration and education exchange
Japan JICA gives loan to Bihar road upgrade in NH82
UK
  • Our small cars (nano, Alto  etc.) have failed safety tests conducted by a UK-based body that tests car safety worldwide.
  • Car companies make excuses but fact is, none of these cars have airbags (because desi std. don’t require airbags).
  • Consequences= negative publicity= decline in sales in rich foreign countries.
ONGC
  • Rosneft = World’s largest oil company (by output). HQ: Russia
  • They’ve offered stakes to ONGC for exploration blocks- in Barents Sea and Black sea.
  • ONGC Videsh Ltd (OVL) and GAIL India also looking f or gas exploration opportunities in Tanzania.

[Act 7] Issues related to Poverty, Hunger, HRD

#1: DTH = DBT v2.0

  • DBT= Direct benefit transfer (to beneficiary’s bank account)
  • Now, Rural development minister (Jairam) came up with a new idea
  • DTH= Direct to Home (benefit transfer)
  • Women, disabled, widows, elderly and students will not have to go to banks or post offices to get their entitlement.
  • DTH system will transfer money to beneficiary via Micro-ATM and Mobile banking.
  • Pilot project in Andhra Pradesh

#2: UIDAI is against Indian Constitution

  • Petition in SC, by a group of retired judges and army officers.
  • They say UIDAI violates Indian Constitution because
  • UIDAI has no statutory powers. Its functioning under an executive order.
  • Even UIDAI was a statutory body (like SEBI) still, this project violates fundamental rights under Art. 14 and 21. Because project is putting a surveillance mechanism over humans = right to privacy, right to dignity violated.
  • Public funds given to private companies without parliamentary oversight.
  • Biometric= unreliable technology, privacy can be compromised.

#3: Both UIDAI+RGI to focus on 4 states

2009 UIDAI setup. They were mandated to give Unique ID number to residents in 18 states + Union territories.
In the other states this work is done by  Registrar General of India, under  National Population Register (NPR) process.
2013 end >55 crore Aadhar numbers generated.
2014 Government orders both UIDAI + Registrar General of India (RGI).

To enroll people in Uttar Pradesh, Bihar, Chhattisgarh and Uttarakhand

Why? This will help fully implement  Direct Benefits Transfer schemes in these States as well= some vote bank benefit.

At present, the DBT scheme covers 28 Centrally-sponsored schemes in 121 districts.

#4: NSSO survey: Poverty Declined because its election year

  • Planning Commission is the nodal agency for estimation of poverty at the national and state levels (with help of NSSO)
  • NSSO carries survey on quinquennial basis. (Every five years)
  • Poverty line is measured on Monthly Per Capita Consumption Expenditure
    • Rs. 447 (rural)
    • Rs. 579 (urban)
  • This method designed by Suresh Tendulkar Committee (2005)
  • 2012: Planning commission sets up a new Committee under C.Rangarajan to review this poverty estimation n method.
  • 2014: latest NSSO survey found that Poverty declined under Congress government (!)
FY11 ~40 crores poor people
FY14 ~27 crore poor people

For more, refer to Frontline Data card: click me

#5: Gujarat: Earning >11 Rs. = not poor kyoki Lakdawalla says so

poverty Committees

1993 Lakdawalla Committee to determine poverty status. He suggested calorie intake method.
2004 Union government asks state governments to implement Lakdawalla’s Calorie intake method. Accordingly, Gujarat = people earning more than Rs.10.80 per day=are not poor.
2005 Suresh Tendulkar Committee setup to review the poverty determination method.
2009 Tendulkar gave report
2011 Planning commission and Union government accepted Tendulkar method. Poverty line= 32 rupees (Urban); 26 Rupees (Rural).
2012 Rangarajan Committee (by Planning commission)
2014 Gujarat State government website mentions the old figure based on Lakdawalla (10.80 Rupees=poor). Hence the controversy.

BJP defends saying:

  1. this is based on Union government’s 2004 notification (Lakdawalla), and since Union did not update it, hence outdated number in our website”.
  2. Btw, we did accept Tendulkar, and for Gujarat, the official poverty line is Rs.38.40 (Urban) and Rs.31.06 (rural).

 #6: Women SHG- interest subvention

  • Scheme: National Rural Livelihoods Mission (NRLM)
  • Women Self-help groups (SHG) under this scheme, will get interest subvention

Mechanism:

  • All banks have to give them loan @7% (upto 3 lakhs)
  • Government (Rural development Ministry) will give interest subvention of 3% (meaning government will pay that much interest to bank, on SHG’s behalf)
  • Women SHG will have to pay only 7 minus 3 = 4% interest only.

#7: Contract workers

  • Among the employed people in India, ~40% are contract workers. (as per Assocham survey)
  • Is it good / bad? It is Bad because:
  1. They don’t get Job security
  2. They don’t get medical aid, gratuity, provident fund, educational funds, pension and health insurance and leaves benefits,”
  3. Regular worker gets >3 times salary for doing the same job.
  4. Given the oversaturated labor market, mushrooming self-financed colleges with overqualified people= even scientists, doctors, MBA and Engineers are also serving as contractor workers in private companies/hospitals.

#8: NSDC

National Skill development Corporation.

Ownership %
Private sector 51%
Finance Ministry 49%

Target: give skill training to 150 million Indians by 2022.

Why in news: signed MoU with some state government. Anyways that happen every now and them, Important thing for MCQ= above table and target.

#9: DSDS 2014: Desi liquor=sustainable livelihood

  • DSelhi Sustainable Development Summit 2014
  • Theme/ Focus: “Attaining Energy, Water, and Food Security for All”.
  • Location: Delhi
  • By Who? The Energy and Resource Institute (TERI). DG=RK Pachauri.
  • In the summit, Guests made lengthy speeches to give fodder points for essay/interview. Not covering here because article will run mile long.

#10: IMF: Inequality is growing (ya like we don’t it!)

Nothing that you don’t know already. Just some fodder points:

  • Chief=Christine Lagarde
  • Their report says: in last 15 years, the income of Indian billionaires increased by 12 times.
  • These Indian billionaires have enough money to eliminate India’s poverty TWICE!
  • In the coming decades, India’s population will surpass China;  Nigeria’s population will surpass the United States.
  • Income inequality rising in the entire world.
  • Richest 85 people in the world own the same amount of wealth as the bottom half of the world’s population.
  • In the Asia-Pacific region, 1.7 billion people lack access to sanitation and 680 million are without electricity.

[Act 8] Agriculture/food processing/Export industries

Some fodder points from Feb Week#1, 2014:

Indian Industry Potential Challenges
Soybean
  • non-genetically modified (GM) nature. Hence diet conscious rich foreigners prefer it.
  • When USA had imposed various sanctions on Iran, they used to buy Soybeans from India @high prices.
  • Large harvest in South America (Brazil, Argentina). Hence foreigners not making inquiry to Indian exporters.
  • In India, majority production comes from  Central India- but excess rain destroyed the crops
  • MP, Rajasthan farmers are also holding back the soybeans, in hope of fetching higher prices (which is not going to happen because of South America)
  • Result: Desi food processing industries that Soybean= suffering losses.
Spices Many
  • USFDA chief is making visit to Kochi, to inspect the charges that Indian spices are “Contaminated”.
Textiles
  • Textile ministry believes we have export potential of >40 Billion USD.
  • Export oriented Textile factories concentrated in South India, particularly TN. But cotton production concentrated in Gujarat, MH = transport cost.
  • Transport cost increased (Because of hike in diesel prices)
  • Cotton cultivation price increased (labor shortage MNREGA)
  • Gujarat cotton farmers are holding back the cotton bales. (Because cotton non-perishable, and want higher prices to coverup those labor costs.)
  • Factory cost increased due to electricity shortage.
Rubber 90% of production comes from Kerala.
  • Union government allows import of rubber= foreign competition destroying desi farmers. (Solution: Kerala government started directly buying Rubber from farmers, @prices higher than Rubber board of India)
  • VAT needs to be reduced.
Cardamom
  • Dry weather condition hurting harvest
  • Bumper production in Guatemala, they’re selling @cheaper price.
Rose
  • High demands from Singapore, NZ, Australia and Europe during valentine day.
  • Our competitors are China and Africa- but their rose-production declined due to adverse climate.
  • Good production around Bangalore (Karn.) and Hosur (TN)
  • Russia also permitted rose import.
  • Some of these countries rejected our rose exports for phytosanitary issues. (mites in the roses)
Coir
  • Factories in Kerala, but shortage of raw material.
  • Majority of the coir supplied from Tamilnadu. (Because Keralite grow coconuts as household activity, while Tamils do as a plantation= economies of scale, bigger production.)
seafood
  • Main ports from where seafood is exported: Vizag, Chennai, Tuticorin and Mangalore
Only marginal increase in export, compared to last year (except Kochi)

El Nino

Needs separate article. Just a cursory mention here:

  • Central & East Pacific gets warm
  • Western Pacific gets cold.
  • Result: less rainfall in India.
  • Experts believe 2014=El Nino year= less rainfall, desi farmers will suffer.

[Act 9] Persons in News (PIN): Feb Week#1 (2014)

List can go long, only the major names related to business/economy and been in news during 1st Week of Feb 2014.

#1: India

DG of Hydrocarbons BN Talukdar (newly appointed, FM wants to give him statutory status)
Secy, Economic Affairs Arvind Mayaram (makes statements on daily basis. He has to give new definitions FDI, FII)
Drug Controller General of India GN Singh (wants firgani powers like USFDA, but doesn’t have staff)
IRDA TS Vijayan (wants Broker model for bancassurance)
TRAI Rahul Khullar (doesn’t fully agree with Sibal on Spectrum auction)
UTI Leo Puri (golden jubilee of UTI)
LIC SK Roy (passing comments about IRDA guidelines)
EPFO Labour minister (Oscar Fernandes) =Chairman of the Central board of Trustee of EPFO. 16k max for compulsory EPF, 1k min for pension.
7th Pay commission Justice  Ashok Kumar Mathur
Walmart lobbying Justice Mukul Mudgal gave report
14th Finance commission YV Reddy, cannot finish report on time.

#2: Abroad

S.Jaishankar Indian Ambassador to USA.
Vivek Lall aerospace and cyber security expert. He became appointed special advisor to United Nations
Satya Nadella Hyderabad born CEO of Microsoft. Replaced Steve Ballmer. Microsoft has seen only three CEOs so far Gates, Ballmer, Nadella.
Germany Prez. Joachim Gauck. Recently visited India. 1 billion Euro worth green energy deal.

Note: Angela Markel is “Chancellor” and not the “President” of Germany.

US Feds (American RBI) Ms. Janet Yellen replaced Ben Bernanke as the chief of US Feds.
USFDA Margaret A Hamburg, commissioner, she is coming to India to inspect our pharma cos and spices factories.
IMF Christine Lagarde. Says income inequality rising in the world.

#3: Women entrepreneurs: Fortune Top 50

Notable Companies chief
General motors Mary Barra
IBM Ginni Rometty
Lockheed Martin (fightjets) Marillyn Hewson
Facebook Sheryl Sandberg (COO)
Yahoo Marissa Mayer
Pepsico Indra Nooyi (too clichéd)
ICICI Chanda Kochhar (too clichéd)

Epilogue

Q. Where are the mock questions?

Separately, when sufficient content is generated (perhaps at the end of entire Feb).

Q. Will you release the same Week#2 (i.e. 8 to 14 February 2014?)

Yes.

Q. does it mean I should stop maintaining notes from newspaper?

of course not. This is merely a reference point to crosscheck you did not miss any important development. Mrunal.org is no substitute for newspapers and standard reference books.

Q. what about current affairs on polity?

Refer to prsindia.org + [Hindu/IE]

Q. What about IR/diplomacy

Refer to idsa.in  + official site of MEA.  + [Hindu/IE]

Q. When are you going to release Hindu Sci-Tech compilation?

Somewhere in March or may be April. The way things rolled in Prelim and Mains 2013, Hindu Sci-tech compilations were mostly useless hence not in my priority list right now.

Q. When are you going to finish the pending articles in the land reform, world geography, and world history?

Ya I’ll finish those loops but next Mains is in December 2014, hence those pending articles are not in my priority list right now.

Q. When are you going to release PIN-2014 compilation?

Had plans to release it before CDS2014 and IBPS Specialist office exams (Feb2014) but after Nov’13, there weren’t many high profile PIN developments (Padma, Bharat Ratna is too clichéd). other than that, very few new noteworthy appointments/sports winners between Nov’13 to Jan’14. Hence dropped the idea. Now PIN-2014 =In April 2014, before SSC starts.

Q. will you release answer key for CDS(I) 2014?

Yes. Ofcourse.

Q. When are you going to release the remaining answerkeys for Mains 2013?

World history answerkey most likely in Feb-end, and remaining in March.

Q. What about ethics answer keys for GS Mains?

Once UPSC declares final result of CSE-2013, I’ll be interviewing the toppers and request them to share their answers of GS4, its case studies and strategy.

Q. What about strategy for xyz optional subject?

Same as above.

Visit Mrunal.org/Economy For more on Money, Banking, Finance, Taxation and Economy.

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