IASbaba's Flagship Course: Integrated Learning Programme (ILP) - 2024 Read Details
TOPIC: General Studies 2:
- India and its International relations.
- Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
- Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.
In news:
The talks to negotiate the India-European Union trade pact, the Broad-based Trade and Investment Agreement (BTIA), did not progress during the 14th India-EU Summit, held in New Delhi on October 6. Both sides continue to recalibrate their bargaining power and understanding of their relative positions on the international stage.
Recent changes:
Much has changed for the EU since the last summit held in Brussels in 2016:
Similarities:
On multi-polarity:
India and the EU reaffirmed their commitment to a “rules-based” international order and a “multipolar” world. This is significant in the context of the U.S. moving towards reneging on several international deals. Mr. Trump has said he is going to “decertify” the nuclear deal with Iran — a deal that the EU is keen to uphold — and his administration has given notice of intent to withdraw from the Paris Accord. The reference to multipolarity is a recognition that there is more than just one chair at the top table, not just with the U.S.’s shifting position but also due to Russia and China’s ascent.
On Terrorism:
The India-EU joint statement on terrorism this year called for “decisive and concerted actions” against Hafiz Saeed, Dawood Ibrahim, Lashkar-e-Taiba and other purveyors of terror; this will further bolster India’s efforts to call out Pakistan on the issue of sponsoring terror. The EU itself has been no stranger to terrorism these last few years and the two sides have agreed to enhance cooperation at multilateral and bilateral interactions.
Trade talks: Issues
The talks regarding Broad-based Trade and Investment Agreement (BTIA) didn't move forward because of following challenges:
The liberalisation of services and access to EU markets for those who deliver them go hand in hand with the liberalisation of the goods market; wanting an open market for automobiles and liquor but unduly restricting the movement of natural persons is not acceptable. There are winners and losers from globalisation on both sides of the border and it is up to governments to institute policies to redistribute the gains from trade.
Cementing the bond:
India and the EU should continue to welcome each other’s leadership roles in the world, primarily because of commonly shared values.
But the strength of China’s relationship with EU member states themselves is heterogeneous, with China trying to make inroads into Eastern and Central Europe through infrastructure investments. This makes it vital for India to cement its bonds with the EU further.
Conclusion:
With around €100 billion in bilateral goods and services trade last year, India and the EU have a lot to gain from a trade deal. It’s not just about trade. It is far from clear what presence the EU will have in a decade’s time. However, it will certainly be beneficial for both India and the EU to keep each other close as they feel their way around the emerging international order.
Connecting the dots:
TOPIC: General Studies 3:
- Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
- Inclusive growth and issues arising from it.
- Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.
Introduction:
China and India are two of the fastest growing economies in the world. But they are following very different growth paths. China is a formidable exporter of manufactured goods. India has acquired a global reputation for exporting services, leapfrogging the manufacturing sector.
Background:
Services contribute more than manufacturing to India’s output growth, productivity growth and job growth. Given the relatively large size of the service sector compared to manufacturing, India’s growth pattern resembles that of the US. We need to think on the answer to following questions- Can services be as dynamic as manufacturing? Can services contribute more than manufacturing to output growth, productivity growth and job growth?
Industrialization is not the only route to rapid economic development:
It is argued that industrialization is the only route to rapid economic development for developing countries. The potential for explosive growth was seen only in the manufacturing sector. This is no longer the case:
There is mounting empirical evidence that developing countries are relying more on services and less on manufacturing as drivers of growth and job creation.
The sectoral trends:
The chart shows the sectoral trends—agriculture, manufacturing and services—over the last four decades, for a large group of countries. In the early 1970s, the relationship between the manufacturing labour share and income was far steeper than it is today, having followed a progressive erosion of the initial strength of this correlation over the past four decades.
Changed scenario:
The relationship between income and economic structure has shifted over time, with countries across the income distribution uniformly increasing the share of labour in service sectors. While global growth convergence in manufacturing was a clear and strong trend some decades ago, it is no longer as strong in recent decades. Services show stronger growth convergence in recent decades. A young population is generally more connected with technological changes.
Is services-led growth sustainable?
New opportunities for India:
Example: Take the example of mobile technology and examine its role in banking. Banking is currently concentrated in the urban areas, but cities are saturated with bank branches. On the other hand, 300 million rural people across 300 districts in India have no access to banking. Expansion of digital technology can play a big role in improving rural access to banking. Financial inclusion can be achieved through last-mile connectivity. Services are spatially more neutral compared to manufacturing. So financial inclusion could in turn help medium-size cities, small towns and villages to become new drivers of growth.
What to do?
Specific strategies for services is required. Investments in both physical and human infrastructure matter greatly for attracting new enterprises in both manufacturing and service industries. But unlike in the manufacturing sector, investments in human infrastructure, education and skills, matter much more. Given its stage of development, India needs accelerated investments in both physical and human infrastructure to support new drivers of growth and job creation.
Conclusion:
The process of globalization in the late 20th century led to a sharp divergence of incomes between those who industrialized and broke into global markets and the “bottom billion” in some 60 low-income countries, where incomes stagnated. India shouldn't wait for China or other such giant industries to become uncompetitive in labor-intensive manufacturing. It should leap forward with its services sector which is already one of its strength. Leaping forward would offer new hopes to other developing countries as well who are struggling to strengthen their economy in this competitive world.
Connecting the dots:
Course correction
Resources aplenty
A better GST
Women of science
Moving towards better corporate governance
Where have all the women leaders gone?
Putting rail safety on the right track