Economic ties are one of the biggest positive drivers of India-China relationship but the high imbalance of trade in favour of China remains a matter of concern. Discuss along with measures to reduce trade deficit for India. (15 marks)
- Introduce with India-China relationship
- Make a note on facts about trade imbalance
- Explain the reasons for trade deficit
- Suggest measures to improve trade balance
- Conclude appropriately
Model Answer :
India and China enjoy robust economic ties which have progressively increased over the years. China is among the top five trading partners of India. It has been hailed as among the biggest positive drivers of a relationship that is often beset with difficult political problems.
In 2017-18, India’s exports to China touched $33 billion while imports were of $76.2 billion, leading to a huge trade deficit to India of about $43 billion. The large trade imbalance in favour of China, which imports from China much higher than Indian exports to China is a matter of much concern. Various factors causing this trade imbalance include:
- China’s competitiveness in various sectors: China’s competitiveness in manufacturing across various sectors like manufactured goods and electronics cause them to flood India with cheap imports.
- High logistics cost in India: India’s poor logistics and infrastructure, in terms of connectivity of efficiency of ports, insufficient warehouses etc. raise export costs and reduce competitiveness. In 2014 it cost $1,332 on average to export a container from India, compared with $823 to ship from China.
- Barriers to services trade: Services trade between China and India remains small, with Indian powerhouse in IT and ITeS facing language barriers and various non-tariff barriers, including complex requirements for participating in contracts of Chinese state-owned enterprises (SOEs) and visa restrictions.
- Trade barriers in China: China has high trade barriers for rice, meat, pharmaceuticals and IT products from India.
- Non-tariff barriers: Farm exports, including bovine meat, as well as pharmaceutical exports from India face hindrances in the form of complex and opaque regulatory requirements.
Some measures to reduce trade deficit for India:
- Greater market access: India is making efforts to seek market access for various Indian agricultural products, IT services, animal feeds, oil seeds, milk and milk products, pharmaceutical products etc.
- Lower logistics costs: Programmes like Sagarmala and great investment in infrastructure including roads, freight corridors, power and warehouses are expected to bring down logistics costs.
- Lowering barriers in China: Government of India has been taking continuous and sustained steps to bridge trade deficit by lowering the trade barriers for Indian exports to China.
- Manufacturing in India: Other way to help eliminate the trade deficit is to get those manufacturering in China, including Chinese, to start making goods in India.
During the 11th session of India-China Joint Group on Economic Relations(JEG) in 2018, the Trade Ministers of two countries agreed to increasing bilateral trade between the two countries in a balanced and more sustainable manner. India must ensure this becomes a reality especially considering that China is under pressure already due to its trade war with China.
Subjects : International Relations
Headline : Taliban council agrees to cease-fire in Afghanistan
- The Taliban has agreed to a temporary ceasefire.
- It now provides a window during which a peace agreement with the U.S. could be signed.
U.S-Taliban talks over a peace deal
- Ending the 18-year long conflict has been considered too costly. Thus the decision to talk to the Taliban was taken during the Obama presidency.
- The Doha office (in Qatar) of the Taliban was established for negotiations.
- The Taliban have long maintained that they would negotiate only with the US not with the Afghan government. However, the US has insisted that the Afghan government should be involved in the process.
- Thus, several attempts at holding discussions to end the war not progressed.
- By the middle of 2018, the US started pushing for direct talks with the Taliban urgently (in line with President Trump’s agenda to withdraw troops from Afghanistan).
- Note: President Ashraf Ghani’s government was not included in the US-Taliban talks as this was the Taliban precondition for the talks.
- The U.S and the Taliban have held several rounds of talks since 2018 with the objective is to narrow the gap between opposing positions and hold broader, more formal negotiations to end the war.
- The draft agreement was reached after nine rounds of talks between US and the Taliban in Doha, Qatar.
- While no details of the draft agreement had been made public, the US Special Envoy had told the Afghan media organisation TOLO that the two sides had reached an agreement in principle.
About the Draft Agreement:
- The US troops were to withdraw from five bases in Afghanistan. However, no timeline was finalised for the US to pull out its 14,000 troops now in Afghanistan, but a period of 14 months had been mentioned in the past.
- In return, the Taliban committed to not allow “enemies of the US” i.e. namely Daesh/ISIS and Al Qaeda to set up base in Afghanistan and themselves would fight the enemies of America in Afghanistan.
- The Taliban were also said by some to have agreed to not attack the withdrawing American troops.
Cancellation of talks with Trump in 2019:
- Talks between the US and Talinam were proposed to be held in September, 2019.
- However, the US President Donald Trump called off the troubled U.S.-Taliban peace talks aimed at ending the 18-year conflict, after Taliban admitted to an attack in Kabul that killed one of US’ soldiers, and 11 other people.
- The Taliban has now agreed to a temporary ceasefire, providing a window during which a peace agreement with the U.S. could be signed.
- A peace deal would allow Washington to bring home its troops from Afghanistan and end its 18-year military engagement there.
- The U.S. wants any deal to include a promise from the Taliban that Afghanistan would not used as a base by terrorist groups.
- A key pillar of the agreement, which the U.S. and the Taliban have been working on for more than a year, is direct negotiations between Afghans on both sides of the conflict.
- Those intra-Afghan negotiations are expected to be held within two weeks of the signing of a U.S.-Taliban peace deal.
Section : International Relation
Headline : Tamil Nadu tops good governance index
- The Ministry of Personnel, Public Grievances and Pensions has recently launched the Good Governance Index (GGI).
- The index has been scientifically designed to reflect various parameters of governance.
- At present, there is no uniform index to objectively assess the state of good governance in the states.
- GGI is a uniform tool that will help in assessing the status of governance and the impact of interventions undertaken by governments across all states and UTs.
About: Good Governance Index
- According to a GGI report, Good governance is as an effective and efficient process of decision making and the process by which decisions are implemented (or not implemented) keeping the improvement of citizens as the topmost priority.
- Resource allocation, creation of formal establishments, setting up rules and regulations etc., are part of achieving this goal.
Objectives of GGI:
- To provide quantifiable data to compare the state of governance in all states and UTs.
- Enable states and UTs to formulate and implement suitable strategies for improving governance and
- Shift to result oriented approaches and administration.
- The states and UTs have been grouped into three categories: big states, Northeast and hill categories, and UTs.
- The index will consider 10 sectors agriculture and allied sectors, commerce and industries, human resource development, public health, public infrastructure and utilities, economic governance, social welfare and development, judicial & public security, environment, and citizen-centric governance.
- These sectors will be assessed on the basis of over 50 indicators, which have been assigned different weights. Scores will be summed up to reach composite scores.
Findings of the Good Governance Index:
- On the index, Tamil Nadu has got the highest score (5.62), followed by Maharashtra, Karnataka, and Chhattisgarh (5.4, 5.1, and 5.05) respectively.
- Jharkhand and Uttar Pradesh are among the big states that have fared poorly in the rankings.
- Among the Northeastern and hill states, Himachal Pradesh is at the top with a score of 5.22, followed by Uttarakhand, Tripura, and Mizoram at 4.87, 4.5, and 4.41 respectively. Arunachal Pradesh and Nagaland are the least performing states.
- Similarly, among Union Territories, Pondicherry, Chandigarh, and Delhi lead the ranking, with Lakshwadeep at the bottom.
Tamil Nadu’s performance:
- Tamil Nadu achieved excellence in the public infrastructure sector, which measures indicators like access to potable water, Open Defection Free (ODF) towns, connectivity to rural habitations, access to clean cooking fuel (LPG/PNG), 24×7 power supply etc.
- The state has also fared well in judicial and public security, which factors in indicators like conviction rate, availability of police personnel, the proportion of women police personnel, disposal of court cases, etc.
- However, the state was found languishing in sectors like agriculture and allied sectors, commerce and industries, social welfare and development.
Section : Polity & Governance