Discuss the positive and negative effects of globalization on farmers in India.

Approach:
● Introduce with what is globalisation
● Positives and Negative impact of globalisation on Indian agriculture
● What measures were taken to safeguard farmers
● Way forward

Answer:
Globalization aims at integrating national economy with that of the world. Increased free and open international trade, foreign investment, technology exchange etc. are all integral to the globalised world. Globalisation had a significant impact on Indian agriculture – in many good and some bad ways.

Positive Impact of globalisation:
Economic impact: Globalisation enabled greater access to technological advancements in
agriculture, including high yield varieties, genetically modified crops (GM crops) and micro-irrigation techniques. Foreign investment in agriculture in contract farming, cold storage and food processing have helped farmers. Access to foreign markets has greatly boosted Indian agricultural exports.
Social impact: Globalisation helped improve food productivity and production and helped transform rural agrarian societies. It has empowered the farmers to understand, reach out and compete in global markets. The new technologies, especially in irrigation, helped in addressing rural water stress and keeping agriculture viable. It has also helped change the agrarian society’s attitudes towards new technologies in farming.

Negative Impact of globalisation:
Economic impact: Multi National Companies (MNCs) captured the Indian markets making farmers dependent on the expensive high yield seeds and fertilizers. Attraction of global market resulted in farmers shifting from traditional or mixed cropping to unsustainable cropping practices. The competition from cheaper imports pushed down the prices of crops like cotton, wheat etc making agriculture unsustainable for many farmers.
Social impact: Unsustainable agriculture practices post-globalisation and the inability to
compete against cheaper imports contributed to distress migration of rural farmers, destroying rural agrarian societies and traditional family structures. The dependency of MNC seeds resulted in farmers losing touch with indigenous seeds and farming methods. Globalisation caused change in food habits with increased consumption of proteins, sugars and fats causing increase in lifestyle diseases.

In light of certain harmful impact of globalisation, government has taken many steps to safeguard the farmers from globalisation including:

● Negotiating at the WTO for fairer rules and trade practices
● Imposing higher duties on imports to safeguard farmers from import surges
● Higher MSPs for farmers to protect against fall in prices due to cheaper imports
● Promotion of Indian produce through GI tags & organic foods
● Encourage sustainable agricultural practices, indigenous breeds and seeds

Way forward:
More than 50 per cent of Indian population is still dependent on agriculture as the main source of income. In this era of globalisation, the farmer not only needs to be protected from the harmful impact of globalisation, but also needs to be empowered through institutional and infrastructural reform to take full advantage of it.

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GST- Pros and Cons of Electricity Inclusion

Why should electricity be brought in GST

1. Multiplicity of rates

  • Currently, there is a confusing number of electricity taxes that vary by states and across user categories (lower tax rates for consumers and high for industrial users).
  • Taxes levied by the states thus vary from 0% to 25%.
  • The current situation imposes large costs that seriously undermine the government’s Make in India initiative.

 

2. Higher cost of electricity making manufacturing costlier:

  • The most serious problem is that costs to industrial users of electricity are higher because they include the taxes on inputs that have gone into the supply of electricity.
  • These include taxes on raw materials (coal, renewables) and other equipment (solar panels and batteries).
  • Not being part of the GST means that input-tax credit can not be claimed.
  • This results in input taxes getting embedded in the final price.
  • This, along with the cross-subsidisation of domestic and agricultural users, total up to increased costs and lower margins of between 1-3% for several industries.

Hurts domestic manufacturers:

  • This embedding of taxes hurts manufacturers selling to the domestic market.
  • For the textile industry, for example, these embedded taxes amount to about 2% of the price.

Hurts exporters even more:

  • In particular, they hurt exporters of electricity-intensive products because they are not liable to any duty drawback—relief for taxes embedded in exports.
  • 1-3% increased costs for manufacturers are significant especially for exporters who face ferocious international competition and where a 1% extra cost could be fatal.

3. Will remove current bias in GST towards renewables:

  • Currently, there is a large bias in favour of renewables in GST policy.
  • Inputs to renewables generation attract a GST rate of 5% while inputs to thermal generation attract higher rates of 18%.

GST in not the tool to support renewables:

  • Support for renewables should be direct, conscious, and transparent.
  • GST should not become the instrument for adding (non-transparently) to that support.
  • Supporting renewables might be conscious policy (and also good policy), but currently subsidisation is proliferating across many policies, making it difficult to quantify the overall support.

Electricity in GST will level the field:

  • If electricity were to be included in GST, then there would be no discrimination between renewables and thermal energy. This is because all inputs going into both forms of electricity generation would receive tax credits.
  • GST would then become neutral between different forms of electricity generation as good tax policy should be.
  • Thus, the case for including electricity in the GST is compelling.

Won’t be easy to get electricity in GST

It would lead to losses for both Centre and especially States:

  • As explained above, including electricity in the GST would reduce or eliminate embedded taxes in electricity-using products.
  • That means that both the central and state governments would lose revenues from these products.
  • In addition, state governments would lose taxes from electricity use itself.

States would be reluctant to lose taxes on electricity:

  • Taxes on electricity is an important source of revenue for the states, amounting to about Rs. 31,000 crore for all the states combined.
  • On average, electricity taxes account for about 3% of own tax revenues of the states, going up to close to 9% in other states.
  • States are therefore reluctant to give up the right to levy these taxes.

What can be done to make it possible to include electricity in GST

1. Centre and States share the burden in light of benefits:

The Centre and the states can bear the losses of the embedded taxes since the benefits would also be shared.

The Centre would then compensate the states only for the direct loss of revenues.

2. Allow state governments to impose a small non-GST able cess:

Tax (about 5%) could be imposed on electricity in the GST—allowing inputs tax credits to flow through the GST pipeline.

To compensate for loss of revenue, the state governments may be allowed to impose a small non-GST able cess on top of the GST rate.

In this case, however, the greater the cess, the more it would resemble situation as is now, with all its problems. So, this half-way solution must come with some limits on state governments’ freedom to levy further taxes on electricity.

Summary of benefits of electricity in GST:

In sum, there are four clear benefits from bringing electricity into the GST:

  1. Reducing the costs for manufacturing
  2. Improving the competitiveness of exporters
  3. Reducing the cross-subsidisation of electricity tariffs that further undermines the competitiveness of manufacturers and exporters
  4. Eliminating the large biases—and hence restoring neutrality of incentives—in electricity generation

Conclusion:

There would be costs in terms of foregone revenues but the benefits would be large and states could be partially or fully compensated. Indian manufacturing is saddled with costs. Efficient GST policy should aim to reduce them.

Everything about TFA, GATS and  WTO Ministerial Conference

  • The Ministerial Conference is the highest decision-making body of the WTO and meets at least once every two years.

Main points of discussion in MC11

  • Service negotiation under GATS will be on priority:
    • Domestic regulation: to address the contentious issue of professional visa fee hikes by the likes of the US and UK, which India has been claiming are discriminatory.
    • Agreement on Trade Facilitation in Service (TFS)
    • Global rules on services and e-commerce: While EU proposed it and wants to finalize but India wants to avoid these rules.
  • India will also push for others pending issues like progress of Doha Development Agenda (DDA), commitment on Public stock-holding, new mechanism for domestic support for food procurement, seeking sharp cuts in support to farmers in the US and Europe etc.

What is GATS?

  • While services currently account for over 60 percent of global production and employment, they represent no more than 20 per cent of total trade (BOP basis).
  • In order to facilitate the trade in service sector by simplifying or removing complexity in trade rules & regulation by member state in service sector, it was needed to have General Agreement on Trade in Services (GATS) with same objectives as its counterpart in merchandise trade, the General Agreement on Tariffs and Trade (GATT)
  • GATS entered into force in January 1995 as a result of the Uruguay Round negotiations to provide for the extension of the multilateral trading system to services.
  • The GATS is the first multilateral, legally binding set of rules covering international trade in services.
  • The objective of GATS:
    • Creating a credible and reliable system of international trade rules
    • Ensuring fair and equitable treatment of all participants (principle of non-discrimination)
    • Stimulating economic activity through guaranteed policy bindings
    • Promoting trade and development through progressive liberalization
  • All Members of the World Trade Organization are signatories to the GATS and are committed to entering into further rounds of services negotiations.

Modes of Supply of services:

The definition of services trade under the GATS is four-pronged, depending on the territorial presence of the supplier and the consumer at the time of the transaction.

  • Mode 1 — Cross border trade: A user in country A receives services from abroad through its telecommunications or postal infrastructure.  Such supplies may include consultancy or market research reports, tele-medical advice, distance training, or architectural drawings.
  • Mode 2 — Consumption abroad: Nationals of A have moved abroad as tourists, students, or patients to consume the respective services.
  • Mode 3 — Commercial presence: The service is provided within A by a locally-established affiliate, subsidiary, or representative office of a foreign-owned and — controlled company (bank, hotel group, construction company, etc.).
  • Mode 4 — Presence of natural persons: A foreign national provides a service within A as an independent supplier (e.g., consultant, health worker) or employee of a service supplier (e.g. consultancy firm, hospital, construction company).

Major areas of services negotiations under GATS:

  • Services negotiations covers four areas:
    1. Trade Facilitation in Services (TFS)
    2. Services related to e-commerce – Set of rules to facilitate online service transactions focusing on the issues of electronic contracts, electronic authentication and trust services, consumer protection and unsolicited commercial electronic messages
    3. Market Access- Negotiations to liberalize market conditions for trade in services
    4. Domestic Regulation – It relate to how WTO members should develop licensing & qualification-related measures and technical standards to ensure that these measures & standards are impartial and adequate. These should be based on objective and transparent criteria that do not constitute unnecessary barriers to trade in services.
  • The first such round started in January 2000. Since 2001 the services negotiations became part of the “single undertaking” under the Doha Development Agenda (DDA), whereby all subjects under the negotiations are to be concluded at the same time.

What is Trade Facilitation in Services (TFS)?

  • TFS will be like the Trade Facilitation Agreement (“TFA”). TFA, adopted recently, will facilitate trade in goods.  Similarly a well-structured TFS will significantly enhance the potential for trade in services.
  • India is pushing for TFS Agreement, which also aims to ensure easing rules regarding movement of professionals and skilled workers across borders for temporary work/projects.
  • The objective behind India’s proposal for an Agreement on TFS is to initiate discussions at the WTO on how to comprehensively address the numerous border and behind-the-border barriers, across all modes of supply, which are impediments to the realization of the full potential of services trade.

India’s submission

  • On TFS:

    • Through TFS, India wants issues related to easier access for Indian software and accounting professionals along with nurses and doctors.
    • It particularly emphasised hurdles faced by natural persons supplying services in foreign jurisdictions.
  • On Domestic rule:

    • India has highlighted the difficulties faced by services suppliers from developing economies in complying with complex domestic regulations brought out by developed country Members.
    • India also rejected attempts by some WTO Members such as European Union and Canada to include ‘gender equality’ in the services trade negotiations agenda under DR discipline as it will create service trade barrier.
  • On e-commerce:

    • There is fear that under the banner of e-commerce several other aspects are sought to be introduced that will leave countries like India with little flexibility in seeking domestic content for programmes such as Digital India and may also make it tough to depend on open source software.
    • Plus, it limits the government’s ability to tailor rules that serve its interests instead of policies that benefit only Amazon or Alibaba.
  • On Doha Round

    • For the last 16 years, WTO has been negotiating the Doha Round – which includes agriculture, services and import duty on industrial goods – but has made little headway due to the reluctance of the US and the EU to play ball.
    • Instead of discussing and negotiating issues of Doha round like agriculture farm subsidy, public stock-holding etc., these countries instead want new issues such as e-commerce, investment facilitation and a global regime for MSMEs.
  • The other issue that is likely to be clinched is a global agreement on support for fisheries although the agenda has now been reduced only to illegal, unregulated and unreported fishing. On this issue too Indian officials said, they would seek a postponement as it will impact poor fish farmers who receive support from the state governments.

India’s support

  • India is banking on support from the African Group to block the launch of negotiations, which may culminate in global standards.
  • But there is a split with many African countries indicating their backing for the move from Japan, South Korea and Singapore, with tacit support from the US.
  • In past, India and China have joined hands to get the developed world for many negotiations like reduce subsidies offered to their farmers etc. But China too is not in favour of international disciplines but is open to a more accelerated work programme.

Way forward

  • Due to short time duration, no outcome in the form of an agreed text can be expected in Buenos Aires in these areas, and the proponents agree with this assessment.
  • In terms of post-Buenos Aires work on these two topics, India and the EU have communicated their intention to re-engage on services trade facilitation and online transactions, respectively.

Effects of Globalization on Indian Culture and Society

Effects of Globalization on Indian Culture

Globalisation has affected what we eat and the way we prepare food (Mcdonaldization), what we wear , purchase etc( Walmartization).

There is trend toward homogenization of culture with similar food habits, dressing pattern, music, news , TV programs, movies etc. However, there is also increasing tendency toward Glocalization of Culture.

Glocalization refers to mixing of Global with Local. Eg Foreign TV channels like Star, Sony , Cartoon Network use Indian languages.

Other Effects:-

1. Development of Hybrid Culture– Due to increase exposure to different cultures, there emerge a 3rd culture or hybrid culture. It accept the change and preserve the tradition in social and cultural life.

2. Language– Globalization give rise to increased use of English with people becoming more bilingual and multilingual than before. On the other hand, over emphasis on English leads to decline and even extinction of various language. Eg BO

3. Religion– Globalization leads to changes in the religion and practices. Now, secular aspect of religion like honesty, non violence, brotherhood are promoted. There is also increasing commodification of various religious practices with rise of sects and cults.

4. Festivals– There is general trend toward decline in ritual aspect of culture and growth of secular festivals. Eg Father’s day.

Effects of Globalization on Indian Society

1. Marriage– With Globalization, there is increasing trend toward civil marriage over ritual marriage, love marriage over arranged marriage. Inter caste and inter religious marriages are also increasing.

2. Family– Globalization has increased the pace of transformation of families from Joint families to either Nuclear families or Extended families. Due to declining Joint family system, Elderly population suffers from isolation, powerlessness and depression.

3. Education– Globalization catalyses the rate of literacy. It also increases investment in education and global education system. However there is more and more commercialization of education.

Effects of Globalization on Indian Economy

Effects of Globalization on Indian Economy

1. Liberalization– main features of liberalization policy were:- (i) General reduction in role of state in economic governance. (ii) Withdrawal by state from many economic sectors and its replacement by the private sectors. (iii) Decline in the public sector spending in basic and key industries like banking, insurance and other PSUs. (iv) Decline in the state’s role in provision of public social services like education , housing and health.

2. Privatization– It largely means selling of publicly owned assets to private owners. Indian government adopted various measures such as abolition of license raj, scrapping of MRTP and FERA, disinvestment in PSU etc with the aim of privatization of Indian economy.

3. Globalization of Financial Market– There has been progressive liberalization of controls on financial flows and market leading to increase FDI, FII, etc. It centre around the movement of capital , of which FDI is major form.

4. Role of WTO as International Trade Regulatory Body– India’s increase participation in rule based system in the governance of international trade is the result of its increased foreign trade. It helped to ensure more predictability in trade rules and benefits of features like MFN/ National Treatement etc for its export.

5. Increased penetration of MNCs and TNCs– It results into creation of more job opportunities, improved technologies and improved revenue to state (by way of Corporate taxes etc).

6. Infrastructure Development– Globalization warranted for the world countries, faster and large scale development of infrastructure. It was to ensure and facilitate industries and trade in order to become more competitive in world market.

7. Expansion of Information and Communication Technology– Rapid development of I.T. in different areas of governance, economy, education, banking, etc has improved productivity. Augmentation of I.T. also results in phenomenal growth of “outsourcing” of services. Eg BPO, KPO, back office operations etc.

China Myanmar Economic Corridor

  • China and Myanmar have moved a step closer on negotiating the China-Myanmar economic corridor.
  • This initiative is being given a high priority on account of the stalled Bangladesh-China-India-Myanmar (BCIM) connectivity proposal.
  • The negotiations for the formation of the BCIM corridor have virtually been stalled after Beijing went ahead with its plans to establish the China-Pakistan economic corridor.

Y- shaped corridor

  • China-Myanmar economic corridor will be a Y- shaped corridor.
  • It will start from China’s Yunnan province and head towards Mandalay in Myanmar.
  • From Mandalay, it will extend towards Yangon New City in the East and Kyaukphyu special economic zone (in the Rakhine province) in the West.

Importance of the corridor

The corridor is important for both China and Myanmar in the following ways:

  1. It will enhance the connectivity between the two countries.
  2. It will connect Beijing with the Indian Ocean.
  3. It will accelerate the transfer of China’s industries to Myanmar (Due to the rising cost of labour, overcapacity and industrial development, China has begun to transfer some of its industries abroad).
  4. It will turn Myanmar into an important destination for China and other East Asian countries.
  5. It will create more jobs and bolster development.

Myanmar’s approach

  • Despite a flurry of diplomatic interaction between China and Myanmar in the aftermath of the Rohingya crisis, the Myanmar side is shedding a zero-sum approach and is also actively engaging with India.
  • Myanmar is seeking Indian investments in the central Myanmar region.
  • Myanmar has backed India’s Act East Policy and Neighbourhood First approach that promoted India’s relationship with the ASEAN countries including Myanmar.
  • Recently, India-Myanmar Bilateral Military Exercise (IMBAX-2017) was concluded at the Joint Training Node in Umroi, Meghalaya.

Everything about Global Entrepreneurship Summit (GES)

Global Entrepreneurship Summit (GES)

• It is the preeminent annual entrepreneurship gathering that convenes emerging entrepreneurs, investors and supporters from around the world.

• It was started by U.S. government in 2010.

• It serves as a vital link between governments and the private sector and convenes global participants to showcase projects, network, exchange ideas and champion new opportunities for investment.

Aim

• It aims to highlight entrepreneurship as means to address some of the most intractable global challenges.

GES-2017, Hyderabad

• It is the eighth annual GES summit.

• It is the first GES summit being held in South Asia.

• Since 2010, it has been hosted by Kenya, Morocco, Turkey, the United Arab Emirates, Malaysia and last year it was held in Silicon Valley in the US.

• The Theme of GES-2017 is ‘Women First, Prosperity for All’.

• The main focus will be on supporting women entrepreneurs and fostering economic growth globally.

Areas of focus:

The GES 2017 will focus on four key industry sectors:

1 Energy and Infrastructure

2 Healthcare and Life Sciences

3 Financial Technology and Digital Economy

4 Media and Entertainment