Sunday, 28 August 2011

Palliative care

Palliative care (from Latin palliare, to cloak) is a specialized area of healthcare that focuses on relieving and preventing the suffering of patients. It includes care of the patient and family, pain and symptom management, disease-modifying treatments, psychological, social, spiritual support and bereavement support. 1

Palliative care assumes importance in every health-care programme. It is estimated that nearly one million Indians with conditions like cancer die in acute, unnecessary pain because of the lack of palliative care. 

Kerala has a functioning palliative care model- the Neighborhood Network in Palliative Care (NNPC). Every week, thousands of volunteers across the state give up their time to go and tend to those who are dying. They may cook food, help with chores, or simply provide a listening ear. 3 Community mobilization and involvement of self-government institutions have led to its success.

Two-third of the palliative care initiatives of the country are in Kerala. There are more than 200 community based organizations running palliative care initiatives in the state in addition to the 300 Government palliative care initiatives.  2 It is also the only state in the country to have a palliative care policy. Discussions are on to spread this model to the rest of the country.

Thursday, 25 August 2011

Maritime Agenda 2010-2020

The Ministry of Shipping released the ‘Maritime Agenda 2020’ in Jan 2011. It is a vision document for Indian shipping industry for the next 10 years, and replaces the National Maritime Development Programme. The aims are:
  •           increase the Indian tonnage four fold to 43 million Gross Tonnage (GT),
  •           increase the port capacity to around 3200 million tonnes requiring an investment of about Rs 3 lakh crore,
  •           enhance India's share in global shipbuilding to 5% and
  •           increase the share of Indian seafarers to at least 10%.  

  •  India is a major maritime nation by virtue of its long coast line of around 7517 Kms (continental coastline and island), with 13 major and 176 non-major ports, strategically located on the world’s shipping routes.
  • About 90% by volume and 70% by value of the country’s international trade is carried on through maritime transport.
  • Development of India’s ports and trade related infrastructure will continue to be critical to sustain the success of accelerated growth in the Indian economy. For eg: India’s merchandise trade intensity is still below 30% of GDP- as this grows it would make greater demands on the country’s ports and shipping facilities.
  • As trade grows, the demand for maritime transport also grows. Technological developments in bulk and container transport have made maritime transport cheaper.
  • Maritime transport is a crucial catalyst in the global economy by providing access to new markets and the benefits of international trade.

  •          Following the 2008 financial crisis traffic volumes collapsed, freight rates plummeted and practically all capital investment programmes were curtailed.
  •          All ports were hit by the recession, but not all cargo flows were affected to the same extent, and the competitive positioning of ports has changed. There was lower growth in consumption activity and more interest in energy and energy security.
  •           New global trading patterns have emerged with Asia becoming the new hub of global container trade. The emerging markets of southeast Asia, the Indian subcontinent, sub-Saharan Africa, Latin America and the Middle East are gaining importance. The lack of port and transportation infrastructure in these regions emphasizes the major role that established container terminal developers and operators will continue to play.
  •           Generally there is slower growth in world seaborne trade compared to world trade, because of slow growth in volumes. Reasons:  use of lightweight metals and lower material intensity in manufacturing processes; increase in transport of electronic items, medicines, jewellery, apparel that may weigh less.
  •           Environment pollution: caused by increase in the number of plying ships and related shipping activities (towing, mooring, berthing, piloting, marine survey, sea patrolling, deployment of dredgers). World Ports Climate Initiative (WPCI) was initiated by the International Association of Ports and Harbours (IAPH) to address this issue.

Types of transport: Bulk transport involves shipping one homogeneous commodity (e.g. grain, ore etc) at any one time, but in large quantities; in contrast, container transport entails transporting different goods at the same time, but in standard containers that are easy to load and unload.


Tuesday, 23 August 2011

Attitudes of Young India

The survey was conducted by ‘One Young World’ to assess attitudes of young Indians. Findings are as follows:
-       72% have more faith in global business than they do in world politics
-       64% think global business is doing more to reduce poverty than governments
-       63% think big business promotes positive ethics and social values
-       75% say methods of scrutinizing public servants in India are not strong enough
-       84% think that politics in India needs major reforms
-       84% believe businesses that make profit must provide social benefits
-       76% think business should play a central role in relieving poverty (It is because of this demand that most successful businesses of the future will be those that are most socially responsible because they will derive huge benefits from consumers/employees/media who will become powerful advocates for them)
-       84% feel online social media will change global media landscape
-       79% have ambition to run their own business
-       70% feel that they will work only for companies that share their ethics

Source: “Amid turbulent politics, businesses can lead”, David Jones, Mint 20/8/2011.

Double-dip recession

A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession. It is also referred to as a ‘W’-shaped recession.

There are fears that the US may be facing a double-dip recession.
The US economy fell into what was at first a fairly mild recession at the end of 2007. But the downturn turned into a worldwide plunge after the failure of Lehman Brothers in September 2008 led to the vanishing of credit for nearly all borrowers not deemed super-safe. Banks in the United States and other countries needed bailouts to survive.The unavailability of credit caused a decline in world trade volumes of a magnitude not seen since the Great Depression, and nearly every economy went into recession.

But it turned out that businesses overreacted. While sales to customers fell, they did not decline as much as production did. That set the stage for an economic rebound that began in mid-2009. Manufacturers around the world reported rapidly rising orders.
Until recently, most observers believed the US economy was in a slow recovery, albeit one with very disappointing job growth. There is, of course, no assurance that a new recession has begun or will do so soon. But concerns have grown that the essential problems that led to the 2007-09 recession were not solved, like housing prices have not recovered; millions of Americans owe more in mortgage debt than their homes are worth; low employment growth.

Beggar-thy-neighbour policy

What is beggar thy neighbour policy?
The beggar thy neighbour policy refers to a policy that aims at addressing one's own domestic problems at the expense of others — trading partners in particular.
What are the instances of such a policy?
The most popular forms of a beggar thy neighbour policy are in the areas of foreign trade and currency management. Conventionally, countries often impose tariff barriers and restrict imports to protect their domestic industries. However, with globalisation, such practices are not popular.
But to achieve its domestic policy objective, for instance, encouraging exports, central banks devalue or encourage the depreciation of their own currencies compared to its trading partners to retain their respective competitive edge. Sometimes economies compete in encouraging appreciation of their currencies to tame inflation at the expense of hurting income in the exporting countries.
Is China adopting a beggar thy neighbour policy?
Many economists, especially in the US, say China has deliberately kept the value of its currency low to forge ahead in exports. But in this case, more than the competitors, the importing country, US, is complaining because more than anything else, cheap Chinese imports are hurting its domestic economy.
How do current economies policies compare?
Currently, the raging concern among most emerging market economies in Aisa is spiralling inflation on account of rising global commodity prices. Central banks in most economies, including India's, are (though not necessarily planned) encouraging appreciation of their respective currencies.
This is helping them curtail inflation arising out of imported goods as imposing tariff barriers is perceived to be against the principles of free trade. Such a practice hurts export earnings of the countries from where such imports are sourced. But the impact also depends on how crucial such exports are for each economy.
What are the limitations of such a practice?
In certain cases, such a policy may prove counter productive. If, for instance, even the competing country counters one policy move, of say, depreciation (to protect exports) then such a practice may not have desirable results, especially the country's imports are not price elastic (the imports are essential and not dependent on prices) and instead could end up hurting the trade balance through higher import price and resulting in inflation in such economies.

Friday, 19 August 2011

Voluntary Guidelines to Business, 2011


Financing Urbanisation (Ishar Ahluwalia Committee)

India is set to urbanize at a rapid pace. A recent report by McKinsey Global Institute titled “India’s Urban Awakening” has made a few projections about the status of India’s urban spaces in 2030:.
-       India will have 62 million+ cities, in comparison to the present 42 cities.
-       India’s urban population will increase from 340million to 590 million, which is almost doubling of the urban population
-       Indian cities could generate 70% of net new employment, produce more than 70% of GDP, and quadruple the national per capita income.
-       Increase in middle class households from 22 million presently today to 91million.

To cope with the pace of urbanization as projected above a big investments are required. GOI  has recognized this and constituted a committee- the Isher Ahluwalia Committee on Urban Financing has made recommendations (March 2011:
1.    Investment requirement of Rs.39.2lakh crore for 2012-32, with Rs 17.3 lakh crore for urban roads, Rs 8 lakh crore for sectors delivering urban services such as water supply, sewerage, solid waste management and storm water deains, Rs 4 lakh crore for renewal and redevelopment including slums.
2.    New and improved JNNURM covering all cities and towns, with implementation spread over 20 years
3.    More broadbased revenue-sharing with urban bodies
a.    Inserting a local bodies finance list in the Constitution, from which local bodies can exclusively levy taxes
b.    Support to municipal bonds by tapping the growing market of pension, insurance and provident funds
4.    Proper city planning
5.    Capacity building and improving service delivery
6.    Investment in urban renewal and redevelopment esp slum development
7.    Improving governance mechanism and put in place single-point accountability- presently there are many local government bodies in urban spaces leading to confusion, dereliction of duty and lack of accountability.

Well conceived cities are important because they attract investment, unlock new growth markets, create stronger and larger middle-class, boost GDP and National Income, improve quality of life, are efficient users of energy (as opposed to dispersed habitations). To achieve this synergistic partnerships need to be developed between private and public sector as well as learn from the experiences of other countries/societies. 

1.    “Cities are India’s future”, The Times of India, 31/5/2011
2.    “India’s towns need big money”, The Economic Times, 10/5/2011

Manufacturing Sector in India

Manufacturing is the organised activity devoted to the transformation of raw materials into marketable goods. The outputs from one manufacturing system may be utilised as the inputs to another. 10 A manufacturing system is, therefore, a typical input-output system.

Manufacturing sector is the backbone of any economy. It fuels growth, productivity, employment, and strengthens agriculture and service sectors. Additionally, manufacturing sector also safeguards the national economic security, because large economies with a sizeable home market cannot afford to become dependent on imports for vital industrial products. They must foster domestic manufacturing capabilities and capacities in order to create the foundation of skills and the infrastructure of national security and prosperity.

Indian Manufacturing sector comprises: Capital Goods & Engineering; Chemicals, Petroleum, Chemicals & Fertilizers; Packaging; Consumer non-Durables; Electronics , IT Hardware & peripherals; Gems & Jewelery; Leather & Leather Products; Mining; Steel & non-Ferrous Metals; Textiles & Apparels; Water Equipment.

India is fast emerging as a hub for global manufacturing. A study by US Council on Competitiveness ranked India second in manufacturing competitiveness (China placed 1st). It has been said that manufacturing could overtake services as the engine of growth. There are many factors that are fuelling this development:
-       Growing workforce- demographic dividend
-       Vast English-speaking workforce
-       Engineering talent: The country is getting recognised for high value goods that require engineering precision and quality
-       Low labour costs: in the context of rising labour wages in China
-       India’s domestic market: by 2025 India will become the fifth largest consumer market of the world, according to McKinsey Global Institute.
-       India’s subcontinental size: Size and Strategic geographical position: ability to service markets from South East Asia to West Asia and even Central Asia. India is being increasingly developed by various companies as a supply point for Asian markets
-       All these factors assist India in operating in the export market with ease

Nonetheless there are many challenges to overcome before this potential is realized:

-       Build world-class infrastructure (power, connectivity, distribution chains) - China and the competitor South-east Asian nations all have better infrastructure than us.
-       Use of primitive technology or under utilization of technology - Can learn from China which incentivizes foreign investors to transfer technology.
-       Official paperwork and regulation are still onerous- India ranked 134 in the ‘Ease of Doing Business Index 2011’ (prepared by World Bank), and sadly its rank is reducing instead of improving. Thus GOI needs to create a more enabling climate to support enterprises and businesses. A liberalized regulatory framework which will attract investors.
-       Reform of land acquisition laws
-       Tendency of workers to strike: Companies have now found ways to work around this by hiring and nurturing workers unlikely to join a union. Companies seek out villagers with scant opportunity or experience, often women.7
-       Thus labour reform is critical- to ensure that employers will invest to upgrade their workers’ skills, and job security, social benefits- this will inturn improve productivity and produce globally- valued goods. Inclusive growth is delivered far more effectively from labour empowerment.
-       Unorganised sector provides 90% employment but generates less than 1/3rd of manufacturing output. This creates sharp inequality between per capita output and wages also. There is also a stagnancy in per capita real wages.
-       Further any growth in compensation has heavily favoured the management as against the shopfloor workers, further discouraging them. Parity in wages will help retain technologists in the production process, which will increase productivity.
-       Mass-scale absorption of underemployed farm labour into factories is required, to realize poverty alleviation. Normally manufacturing sector is the main absorber of mass unskilled farm labour. However in the Indian case dependence of workforce on manufacturing as hardly changed.
-       Indian manufacturing is material intensive with total value added being barely 20% of output value.  In US the total value added is equal to half the output value compared to only 1/5th in the case of India. If the Indian manufacturing sector is unable to increase the value added to intermediate goods, then a systemic restructuring is in order.
-       Improvement in technical and vocational education.
-       Support of SMEs
-       India's emergence as a manufacturing hub comes as multinationals look for alternatives to China. However competition from other south-east nations (Thailand, Malaysia, Cambodia) exist.

To improve efficiency and potential of this sector, GOI is discussing a National Manufacturing Policy. The main aim is to increase the contribution of manufacturing to GDP from present 16% to 25% by 2025, and create 100 million additional jobs by 2025. One of the major components would be the creation of National Investment and Manufacturing Zones (NIMZ) which are envisages as mega investment regions equipped with world-class infrastructure. However all developments have to take adequate care of environment and labour welfare concerns.

Related points of interest:
-       The usual first wave of low-cost manufacturing — the making of toys, electric kettles and television sets, among other wares — will remain out of India's reach because it is hard to run Indian factories on the large scale that China does. But a vast middle segment of factory goods relies on a mixture of technical skill and low-cost labor, and here India can supplement China, experts say. Not toys, but cellphones. Not hangers, but bras. Not patio furniture, but car parts. Not synthetic shoes, but leather ones.

-       Increasing manufacturing sector is critical to job-creation. Job creation has clearly not kept pace with GDP growth. The GDP growth increased to 8.6 percent during 2005-10 from 6 per cent during 2000-05, but the net addition to jobs remained almost flat at around 27 million during the two time periods. Combined with a decline in the number of self-employed persons, this sharply reduced the employment intensity (number of employed persons per lakh of real GDP) to 1 during 2005-10 from 1.7 in the preceding five years. 4

1.     “Boost Manufacturing”, The Times of India, 29/6/2011
2.     “Paying a heavy price for ignoring manufacturing sector”, The Hindu,
3.     “Manufacturing hub called India”, The Business Line, 23/5/2011.

Thursday, 18 August 2011

Ethanol Blending Programme (EBP)

Ethanol is an organic solvent, similar in properties to the components of petroleum-derived gasoline. When ethanol is blended into fuel (at recommended level) then it increases combustion efficiency of the fuel. Furthermore Ethanol blending has important consequences for energy security, livelihood enhancement of farmers, health benefits, lower oil costs to consumers and government.

In India, ethanol made its foray into the transport sector as a fuel additive in 2001. Presently, under the EBP, GOI has mandated blending of 5 per cent ethanol with petrol on an all-India basis except North-Eastern states, Jammu & Kashmir and the islands. The programme is a significant step in utilising alternative, renewable and environment-friendly sources of energy like ethanol to supplement fossil fuels.

The EBP programme is primarily based on indigenously produced ethanol from sugarcane molasses.  India is the fourth largest producer of ethanol in the world. By blending petrol with 10 per cent biofuel, 80 million litres of petrol could be saved annually in India, says a report by the Institute of Defence Studies and Analyses.2 With reduced dependence on crude oil consumers can pay less for petrol. This will also contribute to reducing the government’s subsidy burden wrt to crude oil.

Ethanol is produced from molasses that are a byproduct of the processing of sugarcane. Thus ethanol production would in no way reduce food security. Further it would lead to better returns for sugar cane farmers and consequently better sugarcane and sugar production.- Increase in rural prosperity.

Further, ethanol is environment-friendly as it enhances combustion of petrol, resulting in lower emission of pollutants. Toxic pollutants like carbon monoxide and aromatics are reduced, and the potential to produce ground level ozone is lowered because the elements necessary for its production have been greatly lessened. Studies from polluted cities of US, Europe and Brazil which have used ethanol blended fuel, show a remarkable improvement in air quality. Thus EBP will also contribute to a healthy environment and public health.

Despite all its benefits the EBP has not taken off. This is due to various reasons:
-       Conflicting views on adequate availability of ethanol.
o   An ethanol shortfall due to EBP could impact the alcohol and chemical sectors.
o   Shortage of molasses for alcohol industry could lead to diversion of foodgrains for making alcohol- affecting food security. [This would become a very serious problem for GOI if the National Food Security Act is enacted]
-       Conflicts between different ministries- the petroleum and food ministries are actively supporting EBP.
-       Higher price of molasses being offered by alcohol industry leading to diversion of molasses to alcohol industry. Oil companies have only secured 32% of required ethanol in 2011.
-       Some state governments are disinterested in the programme. Eg: Tamil Nadu has a thriving alcohol industry that contributes substantial revenues to the state, and thus TN has banned ethanol supply to EBP.

However these problems should be resolved by:
-       encourage sugar industry to manage demands of the fuel and alcohol industries
-       ensure competitive pricing for ethanol
-       conversion of surplus sugarcane into ethanol
-       explore other sources of ethanol like jatropha, seaweed, cellulose waste from agro-forestry
-                     --        Plantation of bio-diesel producing plants on waste /degraded / marginal lands.

4.     “Food Ministry seeks delay in ethanol blending plan”, The Economic Times.
5.     “The ethanol imperative”, The Hindu

Wednesday, 17 August 2011

FATF (Financial Action Task Force)

Financial Action Task Force is an inter-governmental policy-making body mandated to establish international standards for combating money-laundering and terror financing. FATF countries have to put in place adequate legislative measures and capacities to curb money-laundering and terror financing. It was established by G-7 countries in 1989 in recognition of the emerging complexities of money laundering in a world of technological and financial innovation.

India joined FATF in June 2010. In keeping with the recommendations of FATF, it will amend the Prevention of Money Laundering Act, and also introduce some new legislations like ‘The Benami Transactions (Prohibition) Bill to prevent misuse of benami transactions which is a key source of illicit funds. Membership of FATF will help in the following ways:
-       FATF membership and the ensuing legislative framework will make India a more attractive destination for foreign companies. This is because capital flows from FATF-countries to non-FATF countries face significant costs and restrictions. Full membership of FATF secures the lowest costs for capital flows. 5.
-       It will also facilitate exports of financial services by Indian companies. In 2007 some countries denied permission to Indian banks to expand, claiming that Indian financial system could not be trusted to block/trace money laundering and terror financing.FATF membership address these concerns.
-       India faces terrorist attacks, and needs the comprehensive toolkit for law enforcement agencies to be able to track the money behind terrorist attacks, both within India and from other countries.
-       India’s tax enforcement authorities (Enforcement Directorate, Financial Intelligence Unit, Central Economic Intelligence Bureau, Directorate of Revenue Intelligence) would be able to exchange and access vital information with member countries on money laundering and terrorist financing activities. It’s a significant step in tracing illegal funds stashed away in tax havens. 4
-       India wishes to approach FATF to include the ‘fake currency notes’ as an instrument of ‘terror financing’. GOI believes that fake currency will be used by terrorist organizations to fund their operations in J&K and also by sleeper cells. Recent seizures of fake Indian currency point to use of highly sophisticated machinery, and the GOI perceives this as an attack on economic security and sovereignty of India.2.
-       In its latest report FATF has found that hawala route of illegal money transactions are being used for paying ransom in sea-piracy cases. GOI is also keeping its eye open on this issue.1.

It is important to note that India is now being accepted into a substantive role in critical global bodies such as the Financial Stability Board (FSB), Basle Committee on Banking Supervision (BCBS), International Organization of Securities Commissions (Iosco), G-20 , etc. India has also signed the UN Convention against Corruption also known as the Merida Convention. 5.