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China steps in to fill the space left by India
- China confirmed it was sending fuel supplies to Nepal amidst the blockade of India Nepal border by Indian origin Madhesi Nepali’s.
- This ends India’s monopoly on the export of petroleum products to the Himalayan nation.
WB says growth will remain under 8 per cent till 2018
- World Bank projected that India’s GDP growth will remain below 8 per cent till 2018.
- The projection contrasts sharply with the Government’s projection that the growth rate will cross 8 per cent this year and will be in double digits before the end of its term.
WB’s suggestions
- For the economy to achieve its potential, the Update called for three key reforms:
- First, boosting balance sheets of the banking sector by addressing the underlying challenges in the infrastructure sector, especially power and roads.
- Second, continuing to improve the ease of doing business and enacting the GST and
- Third, enhancing the capacity of states and local governments to deliver public services as more resources are devolved from the centre.
Reasons for low growth projections
- Loss of export market share due to Chinese devaluation of Yuan and less competitive Indian exports.
- Stressed financial sector (NPAs).
- Since oil prices are unlikely to fall further, reducing deficits beyond the current financial year is a tough challenge.
Positives from WB update
- Foreign exchange levels improved from equivalent to six months of imports in 2012-13 to nine months of imports as a consequence of the current account deficit narrowing.
- WB welcomed greater devolution of taxes to the states and the higher capital spending by the Centre.
Urget need to shift towards Green Energy based Economy
- Green Jobs: Helps to reduce dependence on outsourced jobs:
- For decades, mature economies have seen their jobs being off-shored to newly industrializing countries. To stop the bleeding, they are working hard to unleash the digital and renewable energy revolutions.
- In the long run, India’s comparative advantages are under pressure. In many emerging economies, manufacturing costs have almost reached US levels, shifting investors’ focus to factors like quality, supply chains, shipping times and local governance. Digital automation will further erode the comparative advantage of cheap labour.
- Renewable emery development needs lot of research and innovation. It can provide high paying skilled jobs to thousands of youth locally.
- We have to reap maximum out of ‘cheap labour’ advantage: Ever increasing manufacturing costs are making exports uncompetitive. China is slowly losing its cheap labour advantage. Though India has lot of potential in terms of cheap labour, it fares badly in terms of cheap energy production which offsets labour advantage. So manufacturing will be viable only with reduction in energy costs. But fossils fuels are driving energy costs higher and higher. So the only available solution is Green Energy.
- Environmental degradation offsets economic gains: Pollution has put a lot of stress on healthcare system which sucks up billions. Pollution is also responsible for climate change and associated natural calamities which are responsible for damages costing billions of dollars.
- Less vulnerable to external shocks: Less dependence on imported fossil fuels, especially petrol, diesel etc. = ENERGY SECURITY. (No more a slave of Oil Cartel and their petty politics – freedom from Saudi Arabia, Iran, Nigeria etc.)
- Lower subsidy burden: Excess expenditure in the form of fuel subsidy can be phased out. This money can be used to build sustainable infrastructure.
- Less environmental pollution, improved life expectancy and less stress on health care.
- Green Energy is becoming cheaper compared to fossil fuels: Constant innovations in green energy sector have reduced the costs involved to a great extent.
- Overall, we need Sustainable Development and Green Energy is the only option.
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