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Analysis

India ranks 122nd in happiness index

Norway took the top spot from Denmark as the happiest country in the world.

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happiest countries

Oslo, March 20 : India ranked 122nd, behind terror-riven Pakistan and poorest-of-poor Nepal in the global list of the happiest countries, according to a United Nations report released on Monday.

India came down by three slots, as last year it was placed at 118th spot. It was behind the majority of South Asian Association for Regional Cooperation (Saarc) nations, apart from war-ravaged Afghanistan, that stood at 141.

Among the eight Saarc nations, Pakistan was at 80th position, Nepal stood at 99, Bhutan at 97, Bangladesh at 110 while Sri Lanka was at 120. However, Maldives did not figure in the World Happiness Report.

Norway took the top spot from Denmark as the happiest country in the world.

The Scandinavian nation, which was ranked fourth in last year’s report, jumped to the top this year on the basis of several key calculations, including levels of caring, freedom to make life decisions, generosity, good governance, honesty, health and income.

Other factors by which 155 countries were measured in the annual World Happiness Report are: inequality, life expectancy, GDP per capita, public trust (i.e. a lack of corruption in government and business), and social support.

Denmark, Iceland, Switzerland and and Finland round out the top five, while the Central African Republic came last in the World Happiness Report.

Western Europe and North America dominated the top of the table, with the US and Britain at 14th and 19th positions, respectively.

Syria placed 152 of 155 countries — Yemen and South Sudan, which are facing impending famine, came in at 146 and 147.

The World Happiness Report was released to coincide with the United Nations’ International Day of Happiness on March 20.

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Analysis

Four years of PM Narendra Modi: What worked, what didn’t and what still can

In the 2018 budget, the government was widely expected to announce a National Employment Policy, which would lay a comprehensive roadmap for job creation, but that did not happen.

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Narendra Modi

On 26 May, Prime Minister Narendra Modi completes four years as the head of India’s first majority government since 1984. While campaigning for the 2014 general elections, Modi’s Bharatiya Janata Party (BJP) had made a slew of promises to end the 10-year rule of the Congress-led United Progressive Alliance. A corruption-free regime, 10 million new jobs a year and doubling farm incomes by 2022 were among those promises.

With less than a year to go before the next election, VCCircle takes a look at the Modi government’s four big achievements and failures during its tenure and four major opportunities it can still tap into.

Hits

Goods and Services Tax: Although the landmark legislation that overhauled the country’s indirect tax regime had been in the works for more than a decade and a half, the Modi government does deserve credit for getting the GST implemented in July 2017. However, the GST was not without its controversies that stretched India’s federal fabric to the hilt, resulting in strained centre-state relations at various junctures.

Moreover, what finally emerged was a complex multi-slab system instead of the one tax regime it was initially envisaged to be, even as key commodities like fuel and liquor remain outside the ambit of the GST. Further, owing to implementation glitches, tax numbers took a hit, at least in the initial few months following the GST rollout. Yet, the implementation of the GST did alter the country’s indirect tax regime for good.

Insolvency and Bankruptcy Code: The Modi government can pat itself on the back for implementing a comprehensive bankruptcy law, India’s own version of the Chapter 11 regulation in the US Bankruptcy Code. Ever since its implementation in 2016 though, the IBC has been the subject of legislative and regulatory tinkering by parliament, the Insolvency and Bankruptcy Board of India and the Reserve Bank of India.

These encumbrances notwithstanding, available data analysed by BloombergQuint show that operational creditors have overwhelmingly outnumbered corporate debtors in using the provisions of the law—by as much as 87%—so much so that the latter are beginning to pay them even before they trigger the IBC.

Also in the news have been 12 large cases of defaulters as identified by the RBI. Just last week, debt-laden Bhushan Steel was acquired by Tata Steel for Rs 35,200 crore, making it the first big settlement under the IBC, with several other big deals set to close in the coming months.

No allegations of big-ticket corruption: The Manmohan Singh-led UPA was under fire during the last leg of its tenure as several of its ministers and members of parliament were embroiled in corruption cases. The Modi government can take some heart from the fact that no one among its top leadership or the cabinet has been accused of serious corruption thus far.

Rival political parties and some media reports have sought to target BJP leaders, but the charges haven’t really stuck enough for investigating agencies to get involved. Having said that, the Modi government has been accused of being in cahoots with some top industrial houses and going soft on high-profile defaulters like diamond merchants Nirav Modi and Mehul Choksi and former liquor baron Vijay Mallya.

Aggressive foreign policy: In March, the Foreign Policy magazine reported that, until then, Modi had made 35 foreign trips as prime minister, having visited 53 countries, rubbing shoulders with nearly all of the world’s top leaders. Although Modi has been accused by foreign policy wonks of conflating action with achievement, he has succeeded in making significant rapprochement with key neighbors like China, evidenced by the amicable settlement of the Doklam standoff, which was threatening to snowball into a major armed skirmish.

However, Modi’s Pakistan policy and his overtures of peace, including an impromptu visit, have not paid off, as the Pakistani intelligence and army continue to back insurgent groups in the Kashmir valley. Moreover, the government’s trade policy, too, has seen average success at best, with the country actually reducing tariffs and ceding ground much beyond what the World Trade Organisation guidelines had demanded.

Misses

Make in India /Startup India: The Modi government had promised to make India a global manufacturing hub catering to both the export and domestic markets. The government followed through on this promise by launching its flagship ‘Make in India’ programme in a bid to significantly boost local manufacturing and creating a new skills development ministry to provide vocational training to unskilled youth. It also launched a much-hyped ‘Startup India’ programme with the ostensible goal of making India the startup capital of the world, just like Israel.

But none of these initiatives seem to have gone very far. In fact, how dismally India has done in export terms is borne out by the fact that the country’s trade deficit with China remains skewed in the latter’s favour by a ratio of four to one. According to a status report on the Startup India website, only 74 startups had been identified to receive tax benefits as of January first week.

Black money: On 8 November 2016, Modi banned the use of high-value notes, sucking 86% of the currency in circulation in one swoop, with the ostensible aim of delivering a body blow to black money hoarders. But the government had perhaps not factored in the fabled Indian ingenuity to subvert the system. So, while the government had hoped that as much as a third of India’s unaccounted wealth would go out of the system, in the end, nearly all the currency found its way back, riding pillion on hundreds of thousands of poor Indians who acted as mules, for a cut, filling up their hereto dormant Jan Dhan accounts, or simply exchanged cash over the counter. The move brought the country’s informal economy to a standstill and dented growth.

Bad loans: This was a problem the Modi government inherited and promised to resolve. Bad debts—now at more than Rs 9 trillion—continue to weigh heavily not just on government-controlled banks but also on its fiscal health. Last year, the government implemented a massive Rs 2.11 trillion recapitalisation plan to keep public-sector banks afloat. But its efficacy is in doubt, especially after Punjab National Bank was hit by a Rs 13,000-crore fraud.

The government also merged the State Bank of India with its subsidiary banks, and could merge several of the remaining 22 state-owned banks among themselves. But it remains to be seen whether these measures will take the massive load of bad debt off their books. It can, however, be safely said that the next regime too will inherit this problem, only at a much bigger scale.

Agriculture: One of Modi’s key poll promises in 2014 was to double farm incomes by 2022. Instead, farm incomes have fallen in real terms, primarily on account of food price deflation and the breakdown in the cash-based rural economy in the wake of the November 2016 demonetisation. In fact, if one compares India’s real GDP growth to expansion of its farm sector, the latter has consistently lagged the former since 2012.

Moreover, the 2018 pre-budget Economic Survey notes that on account of climate change, farm incomes could see a further 25% decline in the long term. Not only has farm distress exacerbated the issue of farmer suicides, it has also brought farmers on to the streets, as happened in Mumbai, when in March this year 20,000 farmers converged upon India’s wealthiest city demanding a complete waiver of loans and power dues. Farmer unrest could cost Modi dearly especially in areas of rural Maharashtra, Karnataka and even Uttar Pradesh, where the BJP’s rival political parties could be quick to cash in on it.

Opportunities

Direct Tax Code: After GST, the Direct Tax Code is the other big tax reform that the Modi government is reportedly looking at implementing. News reports say a draft bill could be introduced in the upcoming monsoon session of parliament. The code could introduce new income tax slabs and cap the corporate tax at 25%.

With these changes, Modi aims to bring some cheer to middle-class Indians by reducing their actual tax outgo and make corporate houses more competitive by reducing their tax liability. If he does manage to pass the direct tax code, the BJP could reap rich dividends in the 2019 elections.

GDP growth: India’s economic growth slumped in the quarters following demonetisation. However, the momentum seems to be back in the recent past, with the December quarter clocking 7.2% growth and India reclaiming the tag of the world’s fastest-growing economy from China. The Modi government would do well to try and keep this momentum going.

But there are some risks ahead. Global crude oil prices have topped $80 a barrel and are unlikely to go down by much in the near term. This could hurt the balance of payments, and lead to a spike in inflation and interest rates. In fact, consumer prices in April rose 4.58% reversing a three-month slide. The Modi government will have to keep its fiscal math in check amid a tough global economic scenario before the next general elections.

Infrastructure (Roads/ Railways// Power): In September 2017, Modi and his Japanese counterpart Shinzo Abe laid the foundation stone for the Ahmedabad-Mumbai bullet train project, which is to be completed by 2022. Although the Modi government has been criticized for prioritising the Rs 1.1 trillion project over other necessary development projects, it does underscore the fact that India’s infrastructure needs an urgent facelift.

In fact, the 2018 Economic Survey says India faces a $526 billion infrastructure investment gap by 2040. In October last year, the government had said it planned to build 83,000 km of roads at a cost of Rs 7 trillion. Railways, power and ports are the other major infrastructure sectors where the government will invest in a bid to kick-start the country’s sputtering economy. Now, if only it could follow through with these lofty promises.

Jobs: If the Modi government plays its cards well, this could well be its biggest trump card yet, even as four-fifths of its time in office is already gone. In 2014, during its election campaign, the government had promised to create 10 million jobs a year. Instead, it ended up creating less than a million in the four years it has been in power.

In the 2018 budget, the government was widely expected to announce a National Employment Policy, which would lay a comprehensive roadmap for job creation, but that did not happen. The government could usher in such a policy now to focus on employment-intensive sectors, especially in the small and medium enterprises space.

Credit : VCCircle

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Analysis

Modi gets real on China: Wuhan summit demonstrated that a weak economy gives India few cards to deal

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Kapil Sibal

The informal summit at Wuhan between Prime Minister Narendra Modi and President Xi Jinping must be seen in the context of changing global equations. China with its trade volumes and economic clout is seeking to challenge American supremacy.

In recent years, China has undergone a period of tepid growth. The launch of its One Belt One Road (OBOR) initiative is an attempt not only to fuel growth but also influence our neighbours. It has invested or committed more than $150 billion in the economies of Bangladesh, Maldives, Myanmar, Pakistan, Nepal and Sri Lanka. This along with the Chinese project in Pakistan’s Gwadar Port showcases the real intent of the Chinese to symbolically encircle India.

On the other hand, President Donald Trump has struck a blow to globalisation with his ‘America First’ policy. On the trade front, Trump seeks to create tariff barriers to reduce China’s over $200 billion trade surplus.  Trump wants access to Chinese markets and seeks to persuade NATO allies to share defence costs. His sanctions against those who deal with Russia and pulling out of the Iran nuclear deal will have implications for India and global trade.

Illustration: Ajit Ninan

China recognises this. The overbearing presence of the Chinese in our neighbourhood and Trump’s non-sentimental approach both to trade and diplomacy are factors that have led to Wuhan. Modi, after almost 4 years of unchartered, unguided and inconsistent policy towards China, has realised that it is time to have a quiet bilateral dialogue.

Neither the optics lapped up by captive channels when Xi was feted on the Sabarmati’s banks, nor the flexing of muscle in response to Chinese expansion at Doklam has paid dividends. Modi realised it was time to distance himself from the Dalai Lama and seek Chinese collaboration to deal with outstanding issues. Our economy requires investments in key sectors.

China has penetrated the Indian economy in telecom, power, engineering and infrastructure and has shown interest in setting up industrial parks. India’s digital payment company Paytm is 40% owned by Chinese. Chinese firms such as Harbin Electric, Dongfang Electronics, Shanghai Electric and Sifang Automation either supply equipment or manage power distribution networks in 18 cities in India. This move forward with the Chinese has come towards the end of Modi’s five-year term.  Photo ops and expansive statements clearly are no substitute to hard-nosed diplomacy.

In dealing with China, we must accept a few truths.

First, the Chinese will never give up on their all-weather friend Pakistan. The Chinese will not support our candidature at the UN high table, nor will they agree for us to be a part of the Nuclear Suppliers Group. While they have access to our markets, they are loath to reciprocate and open up their markets including in the IT sector. A recent decision by the Chinese to allow some of our pharmaceutical companies to do business and export generic drugs to China is one way to deal with the imbalance of our bilateral trade that is tilted in favour of China.

We must also recognise that we need to collaborate with and not confront China because between us, we host 2.5 billion people and we are the two largest players in this part of the world. On many issues at international fora, we have to take positions consistent with our developmental needs. As a democracy, we have greater political affinity with the US, and in the context of global power equations we need to collaborate both with the US and Japan.  However, our economic interests, given our developmental needs, have greater affinity with China. We must maximise our leverage considering fast-paced developments in global trade.

The Indian and Chinese statements at Wuhan show both a divergence in emphasis and a meeting of minds. While terrorism is an issue addressed elaborately in our statement, the Chinese referred to it only once. They will pay lip service in their response to terrorist activities launched across the border but will not condemn Pakistan. During the Doklam crisis only Japan issued a statement in India’s support; Trump was silent. The other difference is that while the Chinese talked about investments in India, we emphasised the importance of balanced trade.

While India sought mutual trust and ‘predictability and effectiveness in the management of border affairs’ this was missing from the Chinese statement. The Indian statement seeks an environment in which both sides can manage to control tensions and not let them spiral out of control, but the Chinese statement has been more assertive on sovereignty. China has not addressed the issue of its $71.5 billion trade surplus in 2016-17.

Much of foreign policy is dependent on a country’s economic situation. Diplomatic options are enhanced when an economy has the potential to grow at a fast pace. Any country which seeks to add muscle to its foreign policy must have the economic leverage to do so. In this context, it is difficult to match China.

Even in our bilateral relationship with the US, Americans have kept their economic interests paramount. Reduction of H1-B visas and the insistence by Trump on economic justice to Americans makes us suspect the US may not be the steadfast partner we can wholly rely upon. We need a calibrated and institutionalised policy response to China and other countries; not a personalised policy where institutional memory and positions are sidelined.

I hope Modi has realised that and the Wuhan meeting is a step in that direction.

DISCLAIMER : Views expressed above are the author’s own.
Courtesy: This article is published in TimesOfIndia on 21st May 2018
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Analysis

Yeddy does ‘Atal’, deals blow to BJP’s south strategy

With Karnataka gone now, Yeddyurappa made an emotional last bid to win people’s heart ahead of the 2019 Lok Sabha polls.

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BS Yeddyurappa

New Delhi, May 19 : The BJP’s efforts to expand in southern states suffered a blow on Saturday with its two-day old government collapsing as Chief Minister B.S. Yeddyurappa resigned before a trust vote in an assembly where no party has majority.

The party now hopes that the move, akin to what then Prime Minister Atal Bihari Vajpayee did in 1996 after failing to garner enough support for his 13-day old government, will help it gain sympathy in the 2019 Lok Sabha polls.

Despite knowing the fact that it was short of the required numbers, the BJP leadership went ahead to stake claim and took risk of allowing Yeddyurappa to take oath as Chief Minister.

This is what Vajpayee — the first Bharatiya Janata Party (BJP) Prime Minister — did almost 22 years ago.

The BJP, which considers Karnataka as its gateway to south, tried its best to win the trust vote after forming the government on Thursday but failed to sustain it.

Despite this, BJP leaders are hopeful Yeddyurappa’s emotional speech in the Assembly before resigning and clearing his vision for the cause of farmers and downtrodden, will help the party in 2019 elections.

“Yeddyurappa did the same way Atal Bihari Vajpayee made his speech in the Lok Sabha in 1996 before resigning as the Prime Minister,” a senior BJP functionary told IANS, recalling how the BJP-led NDA returned with a thumping majority in the elections that followed.

“The BJP surged all over the country and formed governments (in many states) with coalition as well as of its own in 2014. We are hopeful of emerging in south too through Yeddyurappa,” he said.

With the possibility of relatively fewer seats in the Hindi belt states like Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Gujarat, Rajasthan, Jharkhand and other north Indian states during the Lok Sabha elections in 2019, BJP President Amit Shah has been working on a strategy to compensate a bit from the probable loss of seats in southern part of the country.

But after Yeddyurappa’s resignation, Shah’s startegy has suffered a jolt as it provided an opportunity to the opposition camp to remain united.

The Assembly poll results clearly indicate that if the Congress and JD-S join hands in 2019, it will be a tough task for the BJP.

In 2014, the BJP had won 17 out of total 28 Lok Sabha seats of Karnataka. Out of total 129 seats of southeren states of Andhra Pradesh, Tamil Nadu, Telangana, Karnataka and Kerela, the BJP could win only 21 in 2014.

With the Telugu Desam Party (TDP) quitting the NDA, the BJP has already suffered a jolt in south as its position has weakened considerably in Andhra Pradesh where Chief Minister N Chandrababu Naidu is campaigning against the Modi government for not meeting the demand of special status to the state.

To compensate TDP’s departure from the NDA, the BJP has been eying YSR Congress. But that looks like not an easy task as YSR Congress itself has been vehemently opposing the Modi government for not meeting the demand of special status.

In 2014, the BJP could won only two out of 25 seats in Lok Sabha in Andhra Pradesh.

In Tamil Nadu, the BJP is also facing the ire of the people as the Union government has failed yet to constitute a Cauvery Management Board.

With AIADMK in power and DMK as the main opposition, the BJP has very little space for its emergence in the state. In the 2016 state Assembly elections, the BJP even found it hard to identify candidates for the 234 constituencies in the Dravidian state.

The BJP is now trying to make inroads in Kerala but it will again not be an easy cup of tea for the party.

Although the BJP improved its vote share by around nine per cent in 2016 state Assembly elections, but it failed to stop Left Democratic Front from retaining power. In that year, the BJP opened an account in the state assembly — a first in the history of Kerala.

The BJP is hopeful of gaining ground in Telangana but faces a tough contest from the Telangana Rashtra Samithi and the Congress. In 2014, it could win only one seat out of total 17 in the state.

Now, with the country all set to face general elections next year, the only state through which the BJP could have made inroads in south was Karnataka.

With Karnataka gone now, Yeddyurappa made an emotional last bid to win people’s heart ahead of the 2019 Lok Sabha polls.

“I will travel across the state non stop. We have received tremendous love and support across the state. For 2019, I promise, we will win 28 out of all 28 Lok Sabha seats. I won’t relent. I will continue to fight till my last breath,” he said in the Assembly, before meeting Governor Vajubhai Vala to resign.

(Brajendra Nath Singh can be contacted at [email protected])

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