Editorials/Opinions Analysis For UPSC 13 June 2022
Contents
- What India must do to protect its ties with the Islamic World
- India is not the fastest growing Big Economy
What India Must Do To Protect Its Ties With the Islamic World
Context
A controversial remark by the ruling party spokesperson against the Prophet has snowballed into a diplomatic row. Against this backdrop, New Delhi should not stop engaging the Gulf countries and strive to move beyond damage control.
Relevance
GS-II: Effect of Policies and Politics of Developed and Developing Countries on India’s interests, Indian Diaspora
Dimensions of the Article
- International reaction against the remarks
- Why WANA is important for India
- Way Forward
International reaction against the remarks
- The United Arab Emirates, Oman, Indonesia, Iraq, the Maldives, Jordan, Libya and Bahrain have joined the growing list of countries in the Islamic world that have condemned the remarks.
- Earlier, Kuwait, Iran and Qatar had called Indian ambassadors to register their protest, and Saudi Arabia had issued a strongly-worded statement.
- Campaigners (including a few GCC regimes) demand that Prime Minister of India should tender an apology for all that happened.
- But New Delhi’s stance is categorial and legitimate insofar as the Union government has nothing to do with such unsolicited comments.
Why WANA is important for India
- Engagement with WANA: Countries in West Asia and North Africa (WANA) region do not have a fixed position vis-à-vis India.
- Delhi has vibrant economic and strategic ties with almost all regimes in the region.
- That’s precisely the reason these countries are unwilling to join the Islamabad-led chorus or go beyond passing resolutions.
- India’s signing of a free trade agreement (FTA) with the UAE and the ongoing negotiations for a wider FTA with the GCC could be an eye-opener for the country’s detractors.
- India’s energy needs: As much as 40 per cent of oil and an equal share of gas requirements are met through India’s strategic cooperation with the Gulf regimes.
- Mutuality of interests: India and the WANA regimes know that there is a mutuality of interests in these transactions which cannot be substituted by any other segments of the world system.
- Indian diaspora: Equally important is the role of the more than eight million-strong Indian diaspora in the WANA region.
- The “Gulf remittance” is an important part of the Indian economy, as important as the Indian investment in the GCC and GCC investment in India.
Way Forward
- India’s foreign policy strategy — which includes strategic bargaining with regional and international actors — would fetch reasonable dividends.
- The response to its Ukraine war strategy has convinced South Block that it has adequate manoeuvrability in global affairs.
- New Delhi should not stop engaging the countries, especially the ones in the WANA region, as both have shared interests. Therefore, South Block must go beyond a mere damage-control exercise.
Source – The Indian Express
India Is Not the Fastest Growing Big Economy
Context
The Provisional Estimates of Annual National Income in 2021-22 just released show that GDP grew 8.7% in real terms and 19.5% in nominal terms (including inflation). It makes India the fastest growing major economy in the world.
Relevance
GS-III: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
Dimensions of the Article
- What Data Implies
- Issues with the Data
- Possible Corrections
What data Implies
- Just 1.51% larger: Provisional Estimates of Annual National Income in 2021-22 also indicate that, the real economy is 1.51% larger than it was in 2019-20, just before the novel coronavirus pandemic hit the world.
- In nominal terms it is higher by 17.9%.
- Inflation: These numbers imply that the rate of inflation was 10.8% in 2021-22 and 16.4% between the two years, 2019-20 and 2021-22.
- Almost no growth: This picture implies almost no growth and high inflation since the pre-pandemic year.
- So, the tag of the fastest growing economy means little.
- Quarterly growth rate: The quarter to quarter growth currently may give some indication of the present rate of growth.
- In 2020-21, the quarterly rate of growth increased through the year.
- In 2021-22, the rate of growth has been slowing down.
- Of course in 2020-21, the COVID-19 lockdown had a severe impact in Q1 (-23.8%); after that the rate of growth picked up.
- In 2021-22, the rate of growth in Q1 had to sharply rise (20.3%).
- Ignoring the outliers in Q1, growth rates in 2021-22 have sequentially petered out in subsequent quarters: 8.4%, 5.4% and 4.1%.
- Going forward, while the lockdown in China is over, the war-related impact is likely to persist since there is no end in sight.
- Thus, price rise and impact on production are likely to persist.
Issues with the Data
- The issue is about correctness of data.
- The annual estimates given now are provisional since complete data are not available for 2021-22.
- There is a greater problem with quarterly estimates since very limited data are available for estimating it.
- No data for Q1 of 2020-21: The first issue is that during 2020-21, due to the pandemic, full data could not be collected for Q1.
- No data for agriculture: Further, for agriculture, quarterly data assumes that the targets are achieved.
- Agriculture is a part of the unorganized sector.
- Very little data are available for it but for agriculture — neither for the quarter nor for the year.
- It is simply assumed that the limited data available for the organized sector can be used to act as a proxy.
- The non-agriculture unorganized sector is represented by the organized sector.
- Changes in non-agriculture unorganized: The method using the organized sector to proxy the unorganized non-agriculture sector may have been acceptable before demonetization (2016) but is not correct since then.
- The reason is that the unorganized non-agriculture sector suffered far more than the organized sector and more so during the waves of the pandemic.
- Shift in demand to the organized sector: Large parts of the unorganized non-agriculture sector have experienced a shift in demand to the organized sector since they produce similar things.
- This introduces large errors in GDP estimates since official agencies do not estimate this shift.
- All that is known is that the Micro, Small and Medium Enterprises (MSME) sector has faced closures and failures.
- If GDP data are incorrect, data on its components — private consumption and investment — must also be incorrect.
- Further, the ratios themselves would have been impacted by the shock of the lockdown and the decline of the unorganized sectors.
- Private consumption data is suspect since according to the data given by the Reserve Bank of India which largely captures the organized sector, consumer confidence throughout 2021-22 was way below its pre-pandemic level of 104 achieved in January 2020.
- In brief, neither the total nor the ratios are correct.
Possible Corrections
- In the best possible scenario, assume that the organized sector (55% of GDP) and agriculture (14% of GDP) are growing at the official rate of growth of 8.2% and 3%, respectively.
- Then, they would contribute 4.93% to GDP growth.
- The non-agriculture unorganized component is declining for two reasons: first, the closure of units and the second the shift in demand to the organized sector.
- Even if 5% of the units have closed down this year and 5% of the demand has shifted to the organised sector, the unorganised sector would have declined by about 10%; the contribution of this component to GDP growth would be -3.1%.
- Clearly, recovery is incomplete and India is not the fastest growing big economy of the world.
Source – The Hindu
