QUESTIONS ASKED – DAY-8 (27/07/2013)
1) In India, despite consistent economic planning and robust economic growth in recent years, there is a consistent increase in economic inequality. Explain why?
2) ”Global warming and a race for resources could spark a new ‘cold war’ in the Arctic”. Critically analyze.
In the the last decade. India witnessed appreciable economic growth. In 2004-2008, the country’s economy grew by an average 8%. Even after the economic crisis years, its growth has been comparatively better than developed countries. However, this economic growth, instead of bringing up the standard of living of its total population, has resulted in increasing the existing inequality.
The World Bank releases a data called Gini coefficient every year, which is a measure of economic inequalities of nations. India’s Gini coefficient has been increasing since the last decade and in 2012 was 0.33. (A 0 Gini coefficient indicates perfect equality and 1 indicates perfect inequality)
This means that the growth has not infiltrated to the masses has it is expected. Rather it has made the wealthy wealthier. This may be because of the following reasons
-A majority of India’s population is involved in economic activities of low productivity like agriculture. Agriculture is actually a potentially high productive economic activity, however India’s agriculture faces issues like small and marginal holdings, poor mechanisation, poor irrigation, dependence on monsoon etc. Hence in spite of the hard labour, economic returns are less.
– Productive areas like manufacturing industry are not growing in a pace with economic growth. The economic survey 2013 says that micro, small and medium enterprises are not growing into bigger industries. One major reason for this is the regulations and rules. India fares poor in ease of doing business globally.
-Highly productive areas like service industry is not creating enough jobs. This is because of the low skill level of the people. Though India has an advantage of demographic dividend, it will yield results only when the young population has good health, necessary education and skills.
Hence to counter inequality India has to address these issues: Making agriculture productive, encouraging entrepreneurship through ease of rules and regulations and more spending on education, health and skill development
The Arctic region, till the 21st century has remained largely frozen. Thanks to the increase in green house gases, its ice content is melting fast.When it sends an alarming signal to island nations and countries with a large coastal area, the nations bordering the Arctic circle are looking at a different area. The melting ice has made the Arctic less harsh, more habitable, more navigable and more explorable.
It has been said that Arctic region has about 10% of world’s unexplored oil and 30% of natural gas. Besides it may house resources like coal, zinc etc.Besides ship traffic from east Asia to Europe will benefit significantly if it takes the northern Arctic route since it is shorter than the Malacca-Suez route.
Countries bordering the Arctic region understood the linkage between the melting of ice, benefit of global ship traffic along their borders and existence of resources well before. There is an organisation called Arctic Circle comprising of 8 nations: Sweden, Norway, Iceland, Denmark, Russia, Finland, Canada and USA. These countries have been claiming Arctic and its resources as their own and have taken measures to explore the resources by setting up research stations.
Recently, China remarked that Arctic should be a part of global commons and all nations should have a claim in its resources. The Arctic Circle admitted 5 other nations, including India and China, as Observers recently.
All these show that the world nations are preparing for a resource race in the Arctic. However it is unlikely to become a bipolar cold war like scenario. Rather, going by the current needs of the population, geographic setting and diplomatic alliances, it may result in a multipolar race with Scandinavian and European nations as one block, the USA and Canada as one block, Russia, India and South east nations as one block and China with its partners as a 4th block.
The LPG reforms introduced way back in 1991 has contributed to the prosperity with country clocking a growth of more than 8% in the time when the world in reeling under recession but the rich have become richer faster than the poor improved. That is; even while poverty levels reduced impressively, inequality has grown too.
The reasons for steep inequality are multifarious:
1. Income growth is concentrated in certain urban centres leading to urban rural divide. It has created islands of prosperity in the ocean of poverty.
2. More than 50% of the population still rely on agriculture and allied sector with a mere contribution of around 12% in GDP. Obsolete and outdated technology coupled with lack of technology transfer and research and development in agriculture has led to perpetuation of poverty
3. Low education standards damaging the long term prospect as it restricts the no. of person who can join market
4. Dismal health indicators and low public investment in the primary health care infrastructure leading to out of pocket expenses of poor.
5. Most of the growth was the result of services sector with stagnation in manufacturing and industrial base. Lack of labour intensive growth and lackadaisical approach towards MSME with low skill and training capacity has created wide income gaps.
The rising temperature due to global warming has resulted into the melting of ice in the arctic region. This has opened up avenues for new trade route and exploitation of region for the extraction of mineral resources and hydrocarbons.
Every littoral state of arctic region is claiming an upper hand for harnessing the economic potential of the region. This had led to a standoff which resulted in the formation of arctic council for a coordinated approach in the region. If the shipping routes through the Arctic become more dense, the countries that lie astride these routes, will gain in importance.
The exploitation of the rich resources of the region will add to the wealth and economic significance of the already affluent U.S., Canada and northern European countries.
Russia may be the most prominent beneficiary of this shift, not only because it occupies the largest part of the Arctic, but also because it has the most experience in dealing with the harsh conditions that will continue to prevail in the region. The geopolitical centre of gravity may well swing back from the Asia-Pacific to the trans-Atlantic. It is ironic that while on the one hand the world is grappling with global warming triggered by climate change, the world’s major powers are scrambling to profit from its consequences in the fragile Arctic zone.
However the creation of arctic council is a right mechanism to avert any confrontation between the states. Further, what is required is an all inclusive approach like that of Antarctic template in which every country has a stake and the region should not be monopolized for getting economic benefit.
India suffers from a paradox.India possesses more billionaires than Great Britain itself.But at the same time India has largest number of poor in the world and nearly 50% of its children suffer from malnutrition.This in spite of the the high economic growth enjoyed in recent years.
The main causes for this persistent inequality are:
1.LACK OF PARTICIPATORY GROWTH:
it is said that growth benefited mostly rich and the middle classes who were better positioned to exploit the opportunities arising from economic reforms and growth.They had the necessary education,technical skills and knowledge of Englishr the poor and rural people lacked these capabilities and thus excluded from growth
2.NOT ALL SECTORS WERE EQUALLY BENEFITED
only few sectors benefited from economic growth like software,telecommunications and service sector which are highly skill intensive.Whereas the sectors like agriculture and manufacturing which employ most of the population,either stagnated or were negatively affected.
3.FAILURE TO GENERATE JOBS:
the high growth period failed to substantially improve the employment situation .
4.LACK OF GOOD GOVERNACE:
the success of trickle down theory depends on the efficiency of govt’s redistributary role.However in India , plagued by a highly corrupt and inefficient govts both at center and state levels,this redistribution did not take place well.
for example:nearly 40% of the grains meant for poor are diverted to market .Hospitals are not working ,affecting the health of poor and thereby their productivity.
5.LOPSIDED PLANNING:in recent years it can be argued that planning was done to boost private investment rather than empowering poor.For instance,Govt of india spends much less on Health when compared to capitalistic countries of west.
Mere economic reforms and consequent growth is not sustainable.For growth to be sustainable it must be widely shared and accompanied by other crucial reforms in governance ,health ,education and democracy itself.
Thanks to global warming,the arctic ice is melting thereby open new maritime routes and huge reserves of resources like petroleum, gas etc.
This Gold rush apart from harming the delicate and pristine arctic ecosystem,could seriously affect world peace due to competition for resources which is exaggerated due to lack of true estimates of the resources. Nearly every arctic country is dreaming of a bonanza and are not willing to share the spoils with rest of the world.
This attitude is clearly visible in the behavior of ARCTIC COUNCIL member-USA ,Canada,Russia,Denmark,Norway etc.Each one of them want of grab as much area as possible and also exclude rest of the world from accessing it.
This scramble for resources in arctic region creates the risk of another cold war among these nations.Already few countries like Russia and Norway are involved in disputes.
Further the region ,unlike Antarctic is not bound by any treaty or law.This anarchic situation foster cold war and also may break in a fully fledged hot war.
Thus it is in the interest of world nations that Arctic region like Antarctic ,should be made as global commons.UN should regulate all activities with the aim of sustainable utilization of resources.Also on the principles of equality,ever developing and underdeveloped nations should have an opportunity of participate in arctic region.
Since independence, the democratic governments in India have undertaken many programmes under the Five Year Plans to achieve growth, self-reliance, poverty reduction and to improve the quality of life of the people. As a result there was a steady GDP growth of around 3 to 5% before 1991 and after the economic reforms, India has grown consistently above 5%. The recent high economic growth has catapulted India into the league of emerging economies alongside Brazil, China, South Africa and Russia. But the sad fact is that only in India do we find such a stark contrast between the lives of the poor and the rich.
The economic inequality in India expressed in terms of Gini coefficient is well more than 0.35. There are some factors in India like the caste system, extreme dependence on agriculture by more than 60% of the population and disproportionate growth of urban centres which perpetuate this inequality. But it is the overall failure of the government to address the inequality through better implementation of its social welfare programmes that makes the situation worse. It is the responsibility of the government to provide universal education and health facilities to its people. The illiterate and unhealthy poor in India are thrown into the abyss of poverty through a vicious cycle unless the state performs its duties.
Scientists and politicians across the world are debating whether the global warming is real or not. You don’t need a better evidence for this than the scramble for the resource of Arctic Ocean by the eight nations that constitute the Arctic Council, United States, Russia, Norway, Finland, Iceland, Denmark, Canada and Sweden and also some others outside it looking for a pie of the new wealth.
The melting of Arctic ice exposes the ocean in summer throwing open opportunities for navigation, exploitation of mineral and oil resources and research. Instead of finding ways to mitigate the impacts of melting of ice on native communities and the rise in sea level through global forums like United Nations Framework Convention on Climate Change, the Arctic Council states regard the Arctic Ocean as a legitimate avenue for exploitation of resources.
Among the Arctic council states, there is a considerable opposition to the claims of Russia by the other states. Since Russia has the longest coastline among them, most of the Arctic Ocean would be under its control if the international maritime laws like UNCLOS are applied. This is resented by the other states, particularly United States.
The uneasy relationship between Russia and Unites States on international issues have a spillover effect in Arctic Ocean. There is a need for the United Nations to play a dominant role on the fate of Arctic Ocean considering it as global commons like the mechanism for Indian Ocean. Otherwise, the whole world would have to repent and not only the native communities of Arctic.
Economic inequality arises in any society due to an unequal distribution & growth in the economic resources available with the people that form a society.India traditionally has such economic inequality in which most part of the resources were accumulated in the hands of the upper caste of the society with some exception.After Independence and even after adoption of LPG model, Indian leaders are not able to eradication or minimize economic inequality instead of that it was increase because of some following reason,
1) Unequal distribution of land resources on which 58.2% of our population depends for their livelihood.Small group of people owned larger share of land while larger group of people owned small share of land.This type of mismatch makes weaker section less active in the use of latest technology & improved agricultural practices.
2)Though there was consistency in the overall economic planning but this consistency was not there for agriculture sector since independence and even since adoption of LPG model in 1990′s.
3)Educational facility and skill development training,required to take part and then get the benefit of economic planning and growth,were not provided to the full extent to weaker sections.
4)Poor implementation of the schemes and programmes made for economically weaker sections and of course,large scale corruption in them.
5)Adoption of Market Economy itself is a reason for economic inequality because it reward those who can cope with it & punish those who cannot.
Economic inequality is a phenomena not unique to india, it has been suffered by others incl. communist china. However, the reasons are many for our failures.
At the time of independence, fear of partition has made our founding fathers to rely on time tested instruments of governance, though many of ideals in preamble, fundamental rights and DPSP are high sounding. Many opine that coincidence between our constitution and GOI 1935 is 80 percent. This made sure that, however effective planning might have been, the implementation failed due to over reliance on centralized hierarchical bureaucray and absence of participatory development or inclusion of stake holders in ensuring accountability.
Growth of a country greatly depends on unlocking the potential of its citizens, and this has been done in 1990 reforms and rightly so,we have elected people not to run business,but to fulfil their core Areas of responsibility – health, education, Infrastructure,rule of law and justice. But state in India failed- seen from the public expenditure as percent of GDP, and expenditure o health and education – 7% GDP, where as OECD -15% for decades. Out of pocket expenditure on health of an India has been one of the highest globally. Education failed to produce skilled, employable, wealth creators, productive students.
Absence of social reforms/ civil society participation post independence, and perpetuation of caste, religion, sex discrimination based in accident of birth and acceptances of hierarchies.
Absence of truly functional panchayats raj system, accountable and efficient bureaucracy, participation of stake holders, citizen centric service by public service, rule of law, decentralized decision making etc. are some of the systemic defects that need to be corrected.
In India, despite consistent economic planning and robust economic growth in recent years, there is a consistent increase in economic inequality. Explain why?
Indian economy after 2nd-G economic reforms, gained a steady increased growth rate.even during 9th and 10th five year plans,the growth rate almost touched to 9%.But what has been concern of our economic planners is growing inequality. in the event of such growing inequality,the 12th plan document also had to title “Inclusive Growth”,instead of only growth.
Economic inequality can be explained under following subheads:
*UNEQUAL DISTRIBUTION OF INCOME:the most responsible factor behind this growing inequality has been our tax structure.as the matter of fact is,our indirect taxes are greater than direct taxes.this causes the inequality among the people.. a poor people pay the greater part of their income in form of indirect taxes,while the rich people pay a tiny part of their income as indirect taxes.it promotes inequality of income.as far as direct tax is concerned,The trend of tax evasion further fuels it.
*COLLAPSED SOCIAL WELFARE SCHEMES: due to lack of proper implement ion most of our social welfare schemes are hardly been effective.they failed to deliver for what they meant for.rampant corruption and wide leakages collapsed all flagship welfare programmes. It took heavy toll on vulnerable part of our population.Health services,PDS,Universal education system have been key issues regarding this.Such negligence added significant economic inequality component.
*WIDENING TRADE DEFICIT: continuous widening of trade deficit has also promoted inequality by and large.widening of trade deficit has always averse effects over domestic trade and monetary policy.as trade deficit wide central bank follows “cheap money policy” to boost up exports,which ultimately results in fueling inflation.it add fuel to fire.It also reduce the “public purchase parity” among poor people and promote Inequality.
taking account of all above reasons,which are generally outcomes of our lacking in willing power promotes inequality, despite heavy growth rate and wise planning.we need to address the above issues to achieve “Inclusive growth”.
As far as global warming and race for resources are concerned,perhaps the Arctic region is the most vulnerable area,where it can create major conflicts.arctic region is administrated and managed by “Arctic council”,which consisting the US,Canada,Russia,Denmark,Iceland,Norway,Sweden and Finland.these nations have exclusive rights to manage the whole arctic region,though a few Asian countries have also been conferred the observer designations.
As it is tangible fact that the Arctic region is treasure house of natural resources and a group of countries has been alleging that arctic council continuously exploiting the Arctic region rather than to manage it.The Arctic region also accounts for a significant reservoir for reserve water.increasing global warming in this region can be resulted in melting of the great icebergs which have immense potential to bring serious climate change effects.these effects will be global,weather in sea level rise, acidification of sea water and change in oceanic currents. that’s why,non-council nations,have been suspicious about the activities of the Arctic council countries in said region and sought a demand for Arctic should be treated on same manner as Antarctica being on.
more importantly,the Arctic has virtually become the inland water space of five coastal states-Russia,Norway,Denmark and the US so it sets ground for arguing in favor of council nations.The council nations have conveyed a stern message that it cannot be treated as any other ordinary region,they have full sovereignty over arctic and they cannot leave their responsibilities towards arctic to any other authority.
some non-council countries,including India are also in favour to drag the Arctic issue within the United Nation Framework for Climate Change(UNFCC) and advocated for an independent institution to control and manage Arctic region.it further strain the situations as it will harm considerably the interests of arctic nations.
more or less,this issue has created a huge space between council and non-council nations and “conflict of interests” has been nucleus to this discourse.It might lead a next “cold-war”,where one side is lured by great natural resource reservoirs while other side is committed to protect the earth from odd consequences of arctic exploitation.
The nature of Indian state is that of an welfare state. The philosophy enshrined in the Preamble of our constitution establishes an egalitarian society, as stated economic political ans social justice for all citizens.
However even after all these years of economic planning we are far away from achieving economic justice for all. After independence India adopted socialistic model of economy which was not able to deliver very high rate of growth. LPG reforms introduced in 1991 slowly delivered the once dreamt of economic growth rate. Focus completely shifted to achieving higher GDP growth and human development indicators do not receive the required importance. GDP does not indicate the income distribution.
In all sectors of economy pockets of growth developed. Micro and small enterprises remained small and the large enterprises made huge profits. A major reason is lack of capital available to small enterprises.
In the agriculture sector too large land holdings are with the few and majority farmers have small lands. Small farmers are not able to invest in farm equipments and modern technology and make small profits.
Education in India is not skill development oriented as a result low skilled employees are paid less. HRD ministry is now introducing skill training at higher secondary level.
Therefore the shift of focus towards achieving high GDP and other economic indicators and neglecting the human development is main cause. Due importance should be given to Education to all, Capital support to small enterprises and Agricultural reforms.
Global Warming and resultant melting of ice has made Artic circle approachable. Exploration of minerals and hydrocarbons also navigation through the region hitherto commercially unviable is now possible.
Researches in the region have led to discovery of huge mineral and hydrocarbon reserves. The economic value of these reserves have lured the countries to focus on the region.
Arctic Council is formed by the 8 surrounding countries, USA Russia Norway Iceland Denmark Canada Finland and Sweden, affirming Arctic region as their territory, this approach is opposed to the one adopted for the Antarctic region which is declared as global common and open only for scientific research to all countries.
The Arctic Council countries are themselves putting forward their competing claims under the UNLOS beyond their continental shelf. The territorial disputes are increasing further with the melting of ice and developing international trade passage through the region.
In such scenario Arctic region has gained geopolitical significance and the region is open to the New Great Game. However in this competition what is neglected is that nations should work together to control global warming. Melting of ice in the arctic will only further fuel global warming which is already impacting the world adversely.
India marched into planned level of economy from 1950 onward. It has been more than 60 years of independence but India’s economic inequality has been rising. India also marched from closed economy to much more liberalized economy from 1990s. From 2005 to 2010 India grew at very fast rate, however there are various reason in spite of this economic inequality persists:
1. Indian Planning has been centralized and has never been able sufficiently involve grass roots people in developing plans for their economic development.
2. Asset distribution in population is varied. Land, capital are unevenly distributed.This structured problem has been not reformed yet.
3. Agriculture income has not increased in India, although 70 % of population depends on it. The agriculture contribution has consistently decreased in GDP. This creates problem because although large population depends on it, but its productivity is decreasing.
4. Public Investment in major sector of economy such as agriculture and infrastructure has been low.
5.Further employment generation has been at slower rates. MGNREGA has to some extent improved condition in rural area, but it can not be long term solution. Investments in development of human capabilities is also require. Skill and vocational education has been very slow in India.
6.Further more economic inequalities have been accentuated by faulty implementation of various social sector schemes. Finally last but not least corruption in governance is also contributing for increased inequality in India.
History suggests that every country has always scrambled for resources to keep its countries population thriving. One of the reason for imperialism in 19th century was European demand for raw material and resources to feed its industries. Recently due to global warming ice has started melting in Arctic circle, this has lead to new shorter international trade pathways and also unlocking of various natural resources.
According to official estimate there is about 13 % of world’s undiscovered oil reserve and 30 % of gas undiscovered gas reserve in Arctic. This has lead to new zeal among various nation to be part of that gold rush.
Not only littoral states are interested but far of states as well. China has vociferously looking for resources in Arctic. India has been taking keen interest in research in Arctic since 2008. Recently five states including was given observer status in Arctic Council which comprises of 8 littoral states.
However, research suggest that global warming will lead to release of methane gas from Arctic which has capabilities of raising the global temperature further. This is going to create more trouble for developing countries.
This is future will lead to division among countries as there would be divide who will get benefit of resources of the Arctic. More important is that exploitation of resources of Arctic will further disturb the fragile global eco-system.
It therefore become important that India does not become part of such mad rush and rather advocates issues related to exploitation of Arctic circle at appropriate forums.
The reason for this are as follows:
1. We have a Planning but its mechanism is top-down. So most of the times plans are prepared at central level without considering the environment and needs of every bottom place. Because of this one plan doesn’t suit to all states, somewhere it get success somewhere it fails.
2.We have many good policies like MGNREGA but, they are marred by poor implementation and corruption, so its benefit gets minimized.
3 Unequal distribution of resources. We see progress where there are mineral resources or good agricultural conditions and poverty where these are not available.
3.Poor employment generation rate and if employment available then lacking of skilled manpower adds to the woes.
4. Unequal spread of industries. In some areas there are industrial hubs which added to growth where industry lacks, employment lacks and poverty grows.
5. We still have population to agricultural employment ratio high because we don’t have employment in other sectors.
6. We are mainly agricultural country but less investment and poor technology leads to low productivity. With that excess employment dependency on it leads to less income benefit.
cold war of 1950-90 was of a different kind and the squabble over Arctic resources Will be of a a new kind. It has been estimated that the Arctic contains about a quarter of the world’s untapped oil reserves and it is natural that proximate states should seek to exploit the geographical advantage. scramble already started among the Arctic council member states for the control of new shipping routes,
untapped oil and gas reserves, and commercial fishing rights that would be thrown open when the melting of Arctic ice-cover in the summer touches 100 per cent, which is expected to happen in a few decades. To assert their territorial claims, these countries have been dispatching scientific expeditions to prove that the continental shelves originating in their coasts extend beyond the 200 nautical miles allowed under the
While India set up a research station in the Arctic in the 2008, and is keen on a say in the area, China is far ahead of it. A Chinese icebreaker made a three-month journey in the Arctic Ocean last year, thus becoming the first Asian ship to navigate through the
treacherous waters. China, was very keen on an Arctic sea route since it would be beneficial.
Norway wrapped up one of the largest Arctic manoeuvres ever Exercise Cold Response with 16,300 troops from 14 countries training on the ice for everything from high intensity warfare to terror threats.
The U.S., Canada and Denmark had done major exercises for the purpose, and in an unprecedented move, the military chiefs of the eight main Arctic powers Canada, the U.S., Russia, Iceland,
Denmark, Sweden, Norway and Finland had a meeting to specifically discuss regional security issues.
As the number of workers and ships increases in the High North to exploit oil and gas reserves, so will the need for policing, border patrols and may lead to military tussle.
Russia, Canada and the United States have the biggest stakes in the Arctic,and they already started their planning to move ahead of other.
This situation will not lead to immediate war, but certainly a race in technology know-how warfare techniques to have an edge over opponent, which is a kind of cold war.
The Indian standing committee on finance in its recent report said that there has been an overall increase in widening of gap between the rich and the poor. Economic inequality is the fundamental disparity that permits one individual certain choices to make while restricting many others.
Recent policies like reduction in public expenditures in crucial sectors like agriculture, infrastructure development, downsizing of employment in public sector units, closing down loss making public sectors, casualisation of labour has had adverse effect on the earning capabilities of the people.
Financial sectors and trade liberalization policies favouring the rich has also resulted in growing inequality. Reluctance of banks to lend in many priority sectors and failure of many microfinance institution has resulted in reduced financial empowerment of rural India.
Trade liberalization in favour of export sector has also affected our import substitution domestic production. Also many businesses are growing by unethical practices and by exploiting the working class.
Moreover, economic inequality has increased due to a bad shaped agricultural sector and lack of proper rural safety nets. This safety nets include rural infrastructure like power, road transport facilities etc. Also, rural employment schemes, public distribution system are not working properly to facilitate better earning capabilities of the rural population.
Global warming is having a devastating impact in the Arctic region. Average temperature in the Arctic region in increasing twice as fast as in other places on earth. This has led to, melting and finally rupturing of ice sheets and shrinking of polar ice caps.
The direct consequence of global warming has led countries mainly of the Arctic circle to explore possibilities of deposit of minerals with easy accessibility to many remote places. Russia, with the longest coastline along the Arctic is already involved in such projects. USA, Canada, Denmark, Norway, Sweden, Finland and Iceland are also in favour of similar explorations. This has led to the possibility of another Arctic cold war.
Moreover, new shipping lanes have come up in the summer seasons. The north east passage and the north west passage tends to connect Asia with North America and Europe. This will lead to increased tourist accumulation and stiff competition among the Arctic region countries.
It is therefore, easy to see why the countries that lie in the Arctic littoral are keen to monopolize the resources of the regions and shut out any other interlopers. The sharpening tensions arising out of long standing border issues among the Arctic countries are also a consequence of the prospects of the long economic gains that could be made from exploiting the locational advantages and potential resources of the vast and frozen place.