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Analysis

India should tap EU, East Asia to overcome ‘late convergence stall’

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The usual brouhaha around the Budget strips the Economic Survey of the attention it deserves. The Survey document, especially since Arvind Subramanian has taken over as the Chief Economic Advisor, has consistently pushed the envelope on economic thinking, providing exciting new insights for the Indian economy. The latest one, released three days before the Budget, introduced a new phrase into economic jargon: The “late convergence stall”. It is a phenomenon that the Survey fears might affect the growth process of the developing world.

The basic argument is this. Economic convergence, which is the process of low-income countries catching up with richer ones in standards of living, has been taking place over the last few decades at an accelerated pace; something which economists like to call “convergence with a vengeance”. To be precise, countries were on a divergence path before 1997, a period of convergence from 1998 till the financial crisis in 2008 and an era of accelerated convergence post-crisis.

However, with changing global economic scenarios, it might be more and more difficult for developing countries to narrow the gap. In other words, the economies that have been rapidly climbing up the economic ladder might face a “late convergence stall”.

The threat of a convergence stall might result from the development of four challenges that were non-existent during the formative stages of the developed world. The first and the most crucial one is the end of rapid globalisation that benefitted the East Asian economies and even China. High levels of export growth rates of these countries have been drivers of their economic growth stories.

Developing nations that are late to the global scene cannot expect to achieve such export levels in the current inward-looking shifts in trade policy, especially across the developed world.

Subramanian always remains careful in stating that it is the era of “hyper-globalisation” (or rapid globalisation) which has come to an end, and not globalisation per se. However, globalisation, if defined as a period when trade among nations is growing faster than the global GDP growth, can be seen to be growing rapidly from 1950 till a few years after the economic crisis of 2008. During this period, growth in trade was close to five per cent while growth in world GDP was close to four per cent.

After 2010, growth in world trade levels has fallen below GDP growth, marking an era of de-globalisation (3.5 per cent economic growth against global trade growth of 2 per cent). Therefore, even though the Survey takes a conservative approach in claiming that globalisation has come to an end, the data shows that the world is, in fact, de-globalising.

It can be the case such low levels of trade might not hold once the world economic growth is running in full throttle, but the fact of the matter remains that the developing world cannot reap the same gains that were received in the later part of the 20th century. This could bring about the historical divergence that world economies had experienced throughout much of modern economic history. This trend was famously evidenced by Harvard’s Lant Pritchett in his paper “Divergence, Big Time” in which he showed that between 1870 and 1990, the richest and poorest countries have shown considerable divergence between their per capita incomes. Therefore, the convergence has only been a recent phenomenon. It would not be a surprise if it returned.

To make matters worse, other avenues of economic development that had been open earlier are also closing down. While industrial expansion was the most effective means of achieving economic successes for poor economies in the past, high productivity has implied that economies in current times reach the pinnacle of industrial employment much earlier on their growth path.

Turkish economist Dani Rodrik, also from Harvard, calls this “premature deindustrialisation” and shows how most of the developing world is affected by it. Therefore, resources which earlier used to shift from the low-productivity informal sector to high-productivity jobs, now usually shift to sectors that are only marginally more productive. The economic gains from a shift of labour across sectors are thus not derived to an extent that was true for the countries that are now high up on the income spectrum.

The case for a slowing down of convergence or divergence is, therefore, quite strong. The developing world needs to be prepared for any such restoration of the past economic trend. The advent of automation and similar technological innovations will further accentuate the problem because the richer countries will be more capable of deploying them for production on a mass scale. It is comforting to realise that the Indian government is well aware of the threat in advance, but it remains to be seen if this awareness is followed up with appropriate policy action.

The Economic Survey gets it right in recommending rapid improvements in human capital to sustain growth at current levels, but takes a defeatist approach in suggesting that India can do very little about diminishing globalisation. On the contrary, there remains immense scope for the country to play an enabling role in further integration of the global economic order. If the US is currently a lost cause, there remain other large markets like the EU and East Asia where India can further the cause of higher trade openness.

(Amit Kapoor is chair, Institute for Competitiveness, India. The views expressed are personal. He can be contacted at [email protected] and tweets @kautiliya. Chirag Yadav, researcher at Institute for Competitiveness has contributed to the article)

Analysis

Hindu migrants from Pakistan living a life of homeless wanderers, courtesy Indian red-tapism

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Hindu migrants from Pakistan,

Jodhpur, Aug 14 : At a time when the world is battling one of its biggest refugee crises, India has its own share of the problem — thousands of Hindu migrants from Pakistan remain stranded at this Rajasthan transit hub. They have been awaiting their citizenship papers for years, despite submitting their passports, documents and hard-earned money too.

Although the world observed International Refugee Day in June, these migrants continue to run from pillar to post to check their status as a callous Indian bureaucracy works at its own inefficient pace unmoved by their plight.

Wandering like a nomad, one of these migrants, Anumaal, told IANS: “Our lives have become deplorable since the time we came to India. The longing to be a part of this country forced me to come here. But since then, from the year 2000 in April, we have been making untiring efforts to get citizenship, but to no avail.”

“My son has completed his 12th, but he couldn’t get admission in any college as the authorities demand domicile certificates and other identity proof. Eventually, he started working as a labourer to ensure we don’t die of hunger. His future has become dark and the same will be the case with my other son who is pursuing his 12th. Eighteen years of running from here to there has failed to bring any result for us,” he lamented.

“In a camp organised in the year 2005, we missed submitting our certificate by a day. The officials asked us to come with a certificate but it being a Saturday, we reached on Monday and since then, our grievances remain unheard,” Anumaal added.

“We surrendered our passports, our forms were duly filled, and they asked us to come along with a certificate. However, when we reached on Monday, we were informed that we can’t be given citizenship as they had received fresh instructions from the government. Since then, we have been meeting district collectors… the home secretary too, but to no avail. We have exhausted all our savings to pay these officials. We have even borrowed money, which has now exhausted. Now we are asked to fill in fresh forms and deposit fresh fees. When asked about the money we had already deposited, the officials said its gone, so forget about it and make a fresh start.

“There are many people like me who are running around in distress. We were doing agriculture in Pakistan but here we are forced to work as labourers. Initially, during partition, we lost our ancestral land which was seized by residents of Pakistan. Most of the Hindus lost their lands at that time. Now this is the second time we are losing a lot. We were initially in Jaisalmer. However, we left the place a long time back because of the water crisis. It is an irony that people consider us as Pakistanis now, which is quite sad to hear,” he added.

Then there is Dr Rajkumar Sharma, who practises medicine and was whose citizenship was confirmed on June 17. He said, “We came to Jodhpur in 2004. Since then, we have been working hard to make a decent living. There are thousands like me who have come here, their passports have been submitted, but they are yet to get their citizenship. The major challenge for them is getting a long-term visa (LTV) which gets stuck in red tapism,” he added.

Sharma said that he, being educated, managed to earn his bread and butter. “But when I think of other people like me who have migrated, I have tears in my eyes. They are really suffering. People refuse to give them a house on rent or a job to earn considering them as Pakistanis. More than 1,000 people are awaiting their long-term visas,” he informed.

“I belonged to Sindh and came here as Muslims were not so kind to Hindus in Pakistan. Radicalism was growing and so was their influence. Although we had land there, we preferred coming here leaving everything as we knew that things might become challenging in the coming days for Hindus,” he said, adding: “Now, when I have got citizenship, I will try to clear the Medical Council of India examination so that I can start my practice here.”

Dr Hindu Singh Soda, an activist for Pakistani minorities living in India, said that the number of Total Registered Migrants (TRMs) at various FROs in Rajasthan is 13,623. Of them, 12,253 are at FRO Jodhpur alone. Of them, 3,408 were granted LTVs in 2017 while rest of the applications are still under process.

On paper, an LTV is supposed to be granted within 120 days of applying; but in almost all cases, these are not granted for many years, he said, adding that 965 migrants were permanently sent back to Pakistan in 2016 and 2017.

Soda said red-tapism is to be blamed for this situation. Also, the processing of LTVs needs to be hastened to ensure the migrants get justice in India — a land for which they have left everything in Pakistan, he added.

(Archana Sharma can be contacted at [email protected])

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Analysis

Kerala floods: Here’s how Twitter can save you from fake news

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iduki

New Delhi, Aug 11 (IANS) If you are in Kerala and are affected by the devastating floods, using Twitter may help you steer clear of fake news.

When communication services are limited and internet connectivity is poor, using the data-friendly “Twitter Lite” can help you connect easily with government agencies, relief organisations, media and volunteers.

One just needs to use hashtags such as #KeralaFloods, #KeralaFloods2018 to find information regarding relief operations, such as locations of relief centres.

Other hashtags such as #OpMadad can help with aid or rescue and #KeralaFloodRelief for raising funds for Kerala flood survivors.

To keep abreast with latest information, you can track Twitter “Moments” which is available in over 40 languages and can also be accessed offline.

“Moments” are curated stories showcasing the most relevant tweets for what’s happening on the micro-blogging site.

One can also create a chronological account of the situation and curate relevant tweets, which can serve as a point of reference later on.

Further, tracking government agencies like the National Disaster Response Force (@NDRFHQ) Indian Navy (@indiannavy), Press Information Bureau (@PIBIndia), the Chief Minister of Kerala (@CMOKerala), and the Indian Coast Guard (@IndiaCoastGuard) can help get the latest news from trusted sources, as and when it happens.

Avoid sharing information that you are not able to verify and after receiving the help you need, make sure you update your tweet to save time and avoid duplication of effort.

The northern and central parts of the state have been battered by heavy rains since August 8, causing one of the worst floods in its history and have until now claimed 29 lives and left 54,000 homeless.

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Analysis

CAG blasts defence PSUs for delays and defective items

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CAG

NEW DELHI: From failing to meet the Army’s UAVs requirements to defective and life threatening parachutes and critical quality problems in the Pinaka rocket systems, the Comptroller and Auditor General has come down heavily on India’s state-run defence research and production sector.

In a report tabled this week in Parliament, the CAG states that two types of Unmanned Aerial Vehicle (UAV) could not be inducted into the Army due to severe delay in their development by the DRDO. Among issues listed are problems with the airframe, engine and payload that have impacted the Army’s aerial surveillance capability. In a particular model’s case, all four trial unmanned planes were lost to crashes.

The auditor has said that Ordnance Parachute Factory Kanpur met production targets for parachutes only in five instances out of 49 analysed and faced complaints from the forces. This led to a critical shortage that adversely affected the operational preparedness of the two forces such as grounding of aircraft and efficiency of paratroopers.

The CAG also highlighted quality problems in Pinaka rockets for the Army such as excessive short ranging, bursting of rockets and burning chunks of propellants. But two Failure Analysis Boards could not pinpoint the exact problem in the manufacture of the rockets. With this, the CAG stated that the production of the rockets has not fully stabilised.

Detailing problems with the ‘Nishant’ UAVs, the CAG pointed out that they failed to meet any requirements of the Army and all four given for trials crashed within three years of receipt. “Army found it unsuitable due to its inadequacy in meeting the surveillance requirement of the Strike Corps, because of its poor mission reliability, long preparation time and defect prone quality. All the four UAVs crashed within three years of their receipt. Only one UAV ordered was replaced by the DRDO, which also crashed in November 2015 due to failure of parachute recovery system,” reads a CAG report.

In regard to parachutes, the CAG found that as the ordnance factory did not meet production targets, there were significant shortfalls in Pilot Parachute for Mirage 2000 aircraft, Pilot Parachute Chest Type, Paratrooper Tactical Assault (Main) and Brake Parachute for Sukhoi-30 aircraft.

The CAG also said that 730 parachutes valued at `10.80 crore did not achieve specified quality parameters but were passed by state run units with deviations.

“Though the users (army and air force) expressed serious concern on the nature of the defects having flight safety implication and high risk in man dropping activity, undue delays in rectification or replacement of defective items by the ordnance factory led to critical deficiencies at the user’s depot and field units,” said the reports.

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