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IASbaba's Daily Current Affairs- 5th September, 2015

INTERNATIONAL

Creating a new Asian history

• All history is geographically located and influenced. Similarly, all geography is shaped, defined and redefined by history.
• This is evident not only from world history but also from the history of Asia — the glory of old Asia, its decline in colonial times, and its more recent rise again.
• For nearly three centuries, the geopolitical and geo-economic realities of Asia were negatively impacted by Europe and the West in general.
• Asia has begun to write its own destiny now.

China and India : The two Asian tigers

• 21^st century is called the Asian century, mainly due to the advancement of economies of china and India.
• China with its 8 trillion $ economy and huge forex reserves , is trying to establish trade connectivity with Europe , Africa and other Asian countries.
• Super-ambitious ‘Silk Road Economic Belt’ and the ‘21st Century Maritime Silk Road’ plans have been unveiled by china to create market for its exports and secure a firm position in being a regional superpower.
• On the other hand India, is trying to reach out for the world through its rich cultural heritage.
• Regional cooperation initiatives such as ‘Mausam’ and the ‘Spice ‘Route’ in the Indian Ocean region and beyond are some of the initiatives by India in the regard.
• [The ‘Mausam’ project envisages the re-establishment of India’s ancient maritime routes with its traditional trade partners along the Indian Ocean. It was launched in June 2014. The ‘Spice Route of India’ visualises the India-centered link-up of historic sea routes in Asia, Europe and Africa.]

Be it China’s strategy or India’s, neither can fully or smoothly become a reality in South Asia without a strong partnership between the world’s two most populous and civilisationally rich nations.

The key to the success of this strategy is the early implementation of the Bangladesh-China-India-Myanmar (BCIM) corridor, which envisages a network of modern road, railway, port and communication and trade connectivities in a region stretching from Kolkata to Kunming in southern China.

Even though BCIM is one of the richest regions in the world — in terms of natural and human resources and home to nearly 500 million people — it is also one of the least integrated areas, economically as well as socially.

The potential of BCIM :

• India will benefit from BCIM, which was conceptualised 16 years ago, in many self-evident ways.
• For instance, Agartala is 1,650 kilometres from Kolkata when one travels through the ‘Chicken’s Neck’, the narrow strip of land north of West Bengal, which is only 23 km wide. In contrast, the distance gets reduced to just 350 km if the journey passes through Bangladesh.
• At least one major reason behind Kolkata’s economic decline after India’s independence is its unnatural isolation from its natural eastern neighbourhood.
• Apart from denting the development of West Bengal and India’s north-east, this has hurt Bangladesh too.
• With natural gas reserves of about 200 trillion cubic feet, the largest in the Asia-Pacific, Bangladesh could become one of the major energy exporting countries. Yet, today it imports 500 MW of electricity from India and is planning to import an equal amount from Myanmar.
• Bangladesh attracts less than one million foreign tourists in a year. For India’s north-eastern States, the figure is less than 2,00,000. Contrast this to the fact that Vietnam attracts 8 million, Cambodia 5 million, and Thailand 26 million foreign tourists annually.

Synergy between CPEC and BMIC :

 Besides arguing for BCIM’s expeditious implementation, the logic of India-China regional cooperation needs to be extended westwards through India by connecting BCIM with the ambitious China-Pakistan Economic Corridor (CPEC).

• CPEC is an infrastructural corridor, running over 3,000 km, will connect Kashgar in China’s Xinjiang province to the Gwadar port in Pakistan’s Balochistan province. 
• China has pledged to invest $46 billion on CPEC — roughly one-fifth of Pakistan’s annual GDP.
• India should welcome this initiative.
• CPEC will no doubt boost Pakistan’s progress and prosperity. It will also help Pakistan tackle many social and other internal problems, including the menace of religious extremism and terrorism.
• It is in India’s vital interest to see a stable, prosperous, progressive, united and democratic Pakistan, which is at peace with itself and also at peace with all its neighbours.

However, CPEC in its present form, unlike BCIM, does not comprehensively capture the benefits of regional cooperation.

• It needs to be extended into landlocked Afghanistan, which is in urgent need of national reconstruction after several decades of war.
• It should also be extended into India through Kashmir and Punjab, the two provinces which are today divided between India and Pakistan.

A greater regional co operation can be achieved if CPEC extends to Afghanistan and connects itself to BCIM through Kashmir and Punjab.

A greater regional co operation promises the development of south asia and the realisation of dream of 21^st century being an Asian century.

Way ahead:

Rich dividends in terms of peace and development can be reaped if India and China work together to synergise the proposed regional cooperation projects that interconnect Bangladesh, Pakistan and other neighbouring countries.

Connecting the dots:

1. 21^st century world is called as the Asian century. Comment.
2. South Asia and China, home to nearly 500 million people and with huge economic and human resource, is one of the least integrated areas, economically as well as socially. Analyse.
3. Regional cooperation is the panacea for development of South Asia and realising the dream of 21^st century being Asian century. Critically analyse.

NATIONAL

7^th Pay Commission and its implication:

For periodic revision of wages government set up wage revision commission. Government set up Pay Commission every 10 years to recommend the wage/ pay revision.

Similar, commission was set up in 2006, popular as 6^th Pay Commission, headed by B. N. Srikrishna.

Seventh Pay CommissionFactsheet:

• Headed by A.K. Mathur
• Will come in effect from 1 Jan 2016
• Recommendatory in Nature

Pros of rolling out Seventh Pay Commission:

• Will help in bringing the pay at par with the private sector
• This will motivate employees in the Government sector
• Monetary driven motivation can lead to enhanced productivity in Government sector
• Can help in boosting economic growth as people will have more money to spend
• It will result in increasing collection of both direct and indirect taxes
• This can help in attracting best talent from the industry (Case in point being Singapore where the government pay are even higher than the private sector in order to attract the professionals and experts from various fields)
• Pay commission will facilitate investment and savings.
• Indirectly, it will facilitate capital formation and will push economy in growth mode

Cons of rolling out Seventh Pay Commission:

• Rolling out can seriously strain the government expenses
• Rolling out can be negative for the fiscal balances
• Deficit target will be at risk, deficits will become enlarged
• Pay Commission will wreak havoc on government finance
• More money in hand, can lead to inflation
• Put pressure on the state governments to implement it in the same manner as centre
• Can result in increasing inflation which would put strain on RBI for its control through various monetary tools.
• Will put pressure on private sector as well to bring the salary at par
• Pay commission will cover only the government employees however it will have no effect on the conditions and income of daily wage earners and casual labourers

Recommendations made by Seventh Pay Commission:

• This will hike the basic pay by 40-45%
• For senior level officers pay revision can be up to 50%
• HRA to increase for tier 2 and tier 3 cities by 15-20%

Way Ahead:

• Pay revision should be in accordance with the productivity of the employees, as in private sector.
• Periodic revision of pay is alright if government downsizes workforce
• A suggested way is to conduct periodic audits of government departments keeping in mind the cost effectiveness of government departments and timeliness.
• Some part of the pay should be performance linked so that employees can be motivated to put in extra efforts.
• Although more funds have been devolved to states on recommendations of 14^th finance commission but implementation of 7^th pay commission’s recommendation will again leave the states with less funds to be used for various social sector schemes.

Connecting the Dots:

• Evaluate the role of pay commission. Has the time come to move beyond the regular pay rise and link it to performance of the employees?
• Critically analyse the effect of pay commission’s recommendations on economic growth, inflation and financial relations between centre-states?
• “Pay commissions have outlived their utility”. In this regard comment whether there is a need to review the pay structure every decade or it should be made a more dynamic process with focus on productivity and performance.