India Must Carefully Consider Strategic Response to U.S. – China Climate Accord

 Chinese President Xi Jinping and President Obama seen here during a ceremony at the Great Hall of the People in Beijing announced pledges to reduce greenhouse gases on November 12. Photo source Huang Jingwen Xinhua LandovThe new targets for carbon emissions reductions agreed on by the United States and China at the Asia Pacific Economic Cooperation (APEC) Summit, is important for understanding the risks and strategic responses to global climate change (GCC).

President Barack Obama announced the United States commitment to emit 26 percent to 28 percent less carbon in 2025 than it did in 2005 (double the pace of reduction it targeted for the period from 2005 to 2020).  President Xi Jinping pledged to boost the share of non-fossil fuels in its energy mix to around 20 percent by 2030.  Other plans include one initiative that aims to reduce pollution by cities, and another that encourages trade in “green goods” and environmentally clean technology.

A key component of the GCC’s political strategy has been to engage in a public debate over the science of climate change (Levy and Rothenberg, 2002).   Organizational scholars conceptualize that responsiveness to institutional pressures as a strategic choice (Goodstein, 1994), are based on assumptions and forecasts that arise within an institutional environment.   In particular – causes, constituents, content, control, and context – are considered forces motivating strategic responsiveness to institutional pressures.

The Climate Accord expresses with greater certainty the fact that aggregate economic losses accelerate with increasing temperature, though global economic impacts from climate change are currently difficult to estimate.   Now, there will be strong pressure on India, Brazil and other large developing countries to make a move.  The government of India must carefully consider its strategic response, as whether to follow the principles of this deal, or take the climate talks in a new direction.

Rising Incomes, Increasing Happiness

20141101_gdc115A Pew Research Center survey finds that people in emerging nations now rival those in advanced economies in their self-reported well-being (2014). The Pew poll asks respondents to measure, on a scale from zero to ten, how good their lives are.  In 2007, 57% of respondents in rich countries were counted as happy; in emerging markets the share was 33%; in poor countries only 16%.   But in 2014, 54% of rich-country respondents counted themselves as happy, whereas in emerging markets the percentage increased to 51%.

Wealth also has a significant effect on who is happy after market reforms.  Individuals with higher incomes, more education, more key household goods and paid employment are more satisfied with their lives than people who are less well-off.  Other characteristics also matter, however.  Women tend to be happier than men.  And there is a life-cycle effect: married people are more satisfied than unmarried individuals and middle-aged people tend to report lower well-being than both younger and older people (Pew, 2014).

In India, the highest rated aspect is their social life (69%) followed closely by their health, family and religion (68% each).  In nearly every country surveyed in Asia the lowest ratings go to either their present job (regional median of 60%) or their standard of living (58%).

The survey was conducted in 43 countries among 47,643 respondents from March 17 to June 5, 2014.  The overall relationship between life satisfaction and GDP per capita noted in the survey is consistent with what other research has found.  However, the exact curve of the logarithmic regression line and magnitude of the coefficients depends on what countries are included in the analysis.

Widows of Vrindavan begin Diwali Celebrations on Yamuna Banks

Widows, who have been abandoned by their families, light sparklers after offering prayers on the banks of the river Yamuna as part of Diwali celebrations in VrindavanThe widows of Vrindavan lit hundreds of earthen lamps at the banks of Yamuna as they began their three-day Diwali celebrations through which they intend to spread awareness about the need for the river’s cleanliness.

India’s burgeoning towns and cities are littered with garbage, the result of massive urban migration, poor civic planning and inadequate waste disposal systems, and rivers and lakes are polluted with sewage and industrial effluents.

Less than a third of India’s 1.2 billion people have access to sanitation and more than 186,000 children under five die every year from diarrhoeal diseases caused by unsafe water and poor sanitation, according to the charity WaterAid.

The resulting diseases and deaths cause major economic losses, and a World Bank report in 2006 estimated that India was losing 6.4 percent of GDP annually because of poor access to sanitation.

Photo source: REUTERS/Ahmad Masood.

India Credit Growth: Minorities Community Lending Totaled Rs. 240838 Crores

Top 5 Banks in terms of percentage share of minorities community lending 9. 18. 2014

Indian banks stepped up lending in the first Quarter, contributing to the growth of the Priority Sector by extending credit on favorable terms in Minorities Community Lending (MCL).

Punjab-And-Sind-Bank-LogoThe growth in the percentage share of MCL, in total Priority Sector Lending (PSL)  show banks have been working in accordance with the reform policies of the Government of India (Ministry of Finance, 18 September 2014).    The top 5 Indian banks (PSUs) having the largest percentage share of MCL Outstanding in total PSL are Punjab & Sind Bank, State Bank of Travancore, State Bank of India, State Bank of Patiala and Canara Bank.  Though State Bank of India is on the third position in Percentage terms, it is the top most bank as per MCL Outstanding in terms of absolute amount i.e. Rs. 53671 crores out of the total PSL of Rs.278590 Crores as on Quarter ending March 31, 2014.

All the 27 Indian PSU banks including IDBI and Bhartiya Mahila Bank, put together, have MCL Outstanding of Rs. 240838 crores out of the total PSL of Rs.1497055 crores as on the Quarter ending March.

Priority sector refers to those sectors of the economy which may not get timely and adequate credit in the absence of special exemptions.  Typically, these are small value loans to farmers for agriculture and allied activities, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sections of the economy (Reserve Bank of India, 2014).   The central bank revised guidelines on lending to steady credit growth and avoid the big fluctuations that unnerved the market, October 2013.

Nobel Peace Prize Awarded for Advancing the Rights of Children

Aldred NobelThe Norwegian Nobel Committee awarded Indian child rights campaigner Kailash Satyarthi and Pakistani child education activist Malala Yousafzai the Nobel Peace Prize for their struggle against the suppression of children and young people, and for the right of all children to education.

Kailash Satyarthi, 60, maintaining Gandhi’s tradition of non-violence, has headed various forms of protests and demonstrations, all peaceful, focusing on the grave exploitation of children for financial gain.  He has also contributed to the development of important international conventions on children’s rights.

Malala Yousafzay, 17,  has shown by example that children and young people, too, can contribute to improving their own situations. This she has done under the most dangerous circumstances.  She has emerged a leading spokesperson for girls’ rights to education.

I applaud the Committee’s decision.  My view is that the labor dimension of economic development has long been neglected, while policy and research focused on improving the ‘real’ side of the economy.  It has been calculated that there are 168 million child laborers around the world today.  It is estimated that there are 21.6 million children, aged between 5 and 14 years, working in South Asia out of a total of 300 million children in this age group (International Labor Office, 2004).  The factors that generate child labor include parental poverty and illiteracy; social and economic circumstances; lack of awareness; lack of access to basic and meaningful quality education and skills, and high rates of adult unemployment and under-employment.

Announcing the prize in Oslo on Friday, chairman Thorbjorn Jagland said it was also important for “a Hindu and a Muslim, an Indian and a Pakistani, to join in a common struggle for education and against extremism.”  South Asia has the world’s largest working-age population, a quarter of the world’s middle-class consumers, the largest number of poor and undernourished, and several fragile states of global geopolitical importance.  “In conflict-ridden areas in particular, the violation of children leads to the continuation of violence from generation to generation.”

New Data: Top 5 States for Rural Employment

October 1, 2014 Employment generated under Mahatma Gandhi National RuralIn spite of all its shortcomings, the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) of 2005 has had some major achievements.  All these achievements, however, are conditional on work being available on the ground (Ministry of Statistics and Programme Implementation, 1 October, 2014).

The total number of households which were provided employment was 49494518, which was 96.82% of households who had demanded employment (i.e. 51120857 households), during the Financial Year 2012-13.  The top 5 States where the maximum number of households which were provided employment during the Financial Year 2012-13 are: Tamil Nadu (7060722), West Bengal (5801138), Andhra Pradesh (5786315), Uttar Pradesh (4931708) and Rajasthan (4217157).

The data illustrates a number of interesting points that are also corroborated in other studies (See Dreze, 2010).  First, MNREGA is reaching the poorest of the poor, and is of particular significance for marginalized communities such as the Scheduled Caste (SCs) and Scheduled Tribes (STs).  Second, MNREGA is of special significance for women who have very limited opportunities for remunerated employment.  Third, MNREGA workers have a productive value -creating useful assets in the village.  Fourth, the transition to a right-based framework appears to be leading to a major decline in the exploitation of labor at public works.  Fifth, MNREGA has shown its potential as an organizational tool for rural workers (Dreze, 2010).

The MNREGA is a significant step towards the realization of the right to work.  The Act, which aims to guarantee hundred days of wage-employment in a financial year to a rural household whose adult members volunteer to do unskilled manual work, came into force February 2006  in 200 districts , and was extended to the entire country April 2008.    However, there is still a long way to go in protecting basic entitlements of rural workers under MNREGA – work on demand, minimum wages, payment of wages within fifteen days of work, basic worksite facilities, and unemployment allowance, among others (Dreze, 2010).

Modi: Development and Growth-Oriented Employment is the Government’s Responsibility

PM launches global initiativeThe process of trade and investment liberalization in India suggests the importance of history and process in a political explanation (Pierson 2004: 54-78; Mukherji 2010: 492).  Prime Minister Shri Narendra Modi’s ‘Make in India’ global initiative allows a reconsideration of economic geography, that is, it’s time to attempt to incorporate the insights of the long but informal tradition in India (Krugman, 1991).

Modi’s approach is based on the premise that many goods and services can be produced more cheaply in long series, a concept generally known as economies of scale.  Meanwhile, consumers demand a varied supply of goods.  As a result, small-scale production for a local market is replaced by large-scale production for the world market, where firms with similar products compete with one another (Krugman, 1991).

The Prime Minister has urged investors not to look at India merely as a market, but instead see it as an opportunity.  “Development and growth-oriented employment is the government’s responsibility,” he said.

Krugman’s theories have shown, that these processes enables specialization and large-scale production, just what the Make in India program hopes to achieve.    However, scaling economies also require attention in areas such as: tax policy, climate change, outsourcing, intellectual property rights, ‘ease of doing business’, ‘effective’ governance and skilled labor for manufacturing and other issues.

The New Security Dilemma

Narendra Modi, India's Prime Minister, left, speaks to Shinzo Abe, Japan's Prime Minister.  Photographer Shizuo KambayashiBloombergLast month – Japan (Narendra Modi, India’s Prime Minister, left, speaks to Shinzo Abe, Japan’s Prime Minister), Germany, the UK among others – pledged commitments to India’s economic security.  The pledge, “special” strategic and global partnership, along with vocational training and infrastructure projects, renewable energy or the remedying of environmental damage, especially in river basins across the country – and millions of dollars for public and private investment and financing.   India’s ambitious economic and social transformation has created a security dilemma.  In the offing, a consistently more competitive and dangerous world (Glaser, 1997).

The Security Dilemma

The security dilemma exists when “many of the means by which a state tries to increase its security decrease the security of others” (Jervis, 1978).  First, it provides the rational foundation for what Jervis termed the ‘spiral model’, which describes how the interaction between states that are seeking only security – economic or otherwise – can fuel competition and strain political relations (Glaser, 1997).   Second, Jervis explains that the magnitude and nature of the security dilemma depend of two variables: offense-defense balance and offense-defense differentiation.

Offense-Defense Theory

Offense-defense theory argues that the relative ease of offense and defense varies in international politics.  When the offense has the advantage, military conquest becomes easier and war is more likely; the opposite is true when the defense has the advantage.  The balance between offense and defense depends on geography, technology, and other factors (Brown et. al., 2004).

 Cooperation or Competition?  

The reality is mass cooperation and participation in creating energy efficiency, clean technology at affordable prices, food security, and building model towns with facilities for solid waste management and waste water treatment is a boon for growth and competition.  That said -a large scale resetting of extant decision structure mechanisms and strategy is underway.  Needless to say, powerful interest groups that will benefit from this change have every reason to exaggerate the dilemma.

The Increasing Complexity of Class Conflict and Caste Cleavages

Caste remains a focal point for political mobilization in India.  But recent research also suggest that class and caste politics is being modified in new and unexpected forms.

First, political cleavages are being reflected in new policy demands such as the demand for reservation by subgroups (Jayal and Mehta, 2011).  While some agriculturalists call for a second green revolution to meet the ever-increasing demand for food, others remain skeptical of the technology and its consequences.  The chemical fertilizers that helped increase crop yields also killed important vitamin A-rich weeds; also, the geographic distribution of emerging agricultural research remains disproportionate.

The Green Revolution helped India move from being a massive food importer, heavily dependent on aid, to a food exporter.  Reaching self-sufficiency in food had huge political implications.  Now the prospect of re-revolutionizing with bio-crops, for example, would mean strengthening employment and food security for tribal population and farmers in some states.

Second, class is complex interacting with new forms of identity including caste and gender.  The National Human Rights Commission (NHRC) recently issued a notice to Punjab Government after the Commission took suo motu cognisance of a media report that 105 families belonging to Scheduled Castes have been facing social boycott by upper caste people in Baopur village of Moonak Sub-Division of Sangrur district since May 15.

Reportedly, they are facing this situation since they decided to cultivate 26 acres of Panchayat land reserved for the Scheduled Castes.  Earlier, this land was being cultivated by the upper caste people who allegedly used to get it on contract through auction in the names of Dalits.  The Commission has observed that the contents of the press report, if true, raise a serious issue of violation of human rights of Dalits.

It’s possible a solution may be found in restructuring legal regimes that govern property, labor and natural resources to make them hospitable to new forms of identity.  Major economic transformation and the emerging middle class, notwithstanding its uneven rates of political participation has increased the complexity of class composition.  While caste will remain important, there is a possibility of several new and shifting coalitions emerging (Jayal and Mehta, 2011).


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