India’s role in world affairs

03/10/2012

India is at present the second largest country in the world with every sixth person in the world being an Indian.In the next 10-15 years India will be the largest country with over 20% of the world i.e every fifth person in the world will be an Indian. At present India’s contribution to the world GDP is about 6-7%,being the third largest economy in the world. In the next 10-15 years,India’s share in the world GDP may go upto 10-12%, though it may continue to be the third largest economy. In this position,India should not contiue to take the stand that it does not want to interfere in the internal affirs of other counries. It should take active interest and major role in ensuring peace in the world and in helping poor countries not with materials but by giving consultation, technology, and if necessary loans.In particular, in consultation and cooperation with large countries like China,USA,Indonesia, Brazil etc India should strive for:

i.dissuading counries like Iran, Israel and North Korea to give up plans even for developing nuclear technology even for peaceful purposes,as this is the first step in the efforts for nuclear weapons

ii.persuading countries to take full responsibility for dismantling terror outfits and eliminating terror from the world. Terrorism has been one of the causes for world economic recession, as a lot of manpower is wasted in trying to preven terrorist activities

iii. being the largest country,it has to take responsibity to contribute to the health of the world population. towards this,India has to spend more, on medical research and spend more on establishing super speciality hospitals,so that small countries which cannot afford to establish the same can utulise the facilities in India

iv.India should increase its food production by 200-300% so that countries affected by natural calamities like floods, drought, earth quakes etc. can be assisted.

v.India should take initiative in brokering peace between warring countries or groups of coutries

vi.India should be the one which tables a large number of resolutions in UN organs like General Assembly, Security Council, specialised agencies etc.(It is taken for granted that by that time India would be a permanent member of the UN)

vii.India should spend much more on and expand its aciviies in the space, nuclear, ocean,heavy materials, renewable sources of energy, nano and emerging sciences as small countries will not be able to spend manpower and money on large projects and allow other countries to benefit from its activities in these spheres.

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Indian Economy

04/10/2011

Indian economy is quite sound as can be judege from the following:

i. there is no unemployment or the unemployment is very low now, compared to what it was in the past. In fact there is shortage of labour in every sector of the economy- in agriculture, industry, plantations, transport etc. Shortage of labour is seen both in the urban and in rural areas.
ii. production is increasing as can be seen from the increasing number of trucks moving goods across the country
iii. industry has no problem in getting finance, either by way of equity or loan from banks or other financial organizations-postponement of initial offerings by companies does not mean that the public are not interested in buying equity shares. It only shows that the prices of the offerings have been placed high.
iv. there is no dearth of loan facilities for agriculture
v. finance for acquiring vehicles is available from a large number of organizations
vi. there is no problem in selling products/commodities, (though sales promotions are required. ) This is because of higher purchasing power of people in general.
vii. the expenditure on food as a percentage of total expenditure f the households is continuously decreasing showing an increasing number of products being used by the people. This shows higher standard of the living of the people.
viii. prices are going up, but wages have already gone up and still are going up. Thus,price increases is not a major problem. For example, between 2006 and 2010 wages have gone up by about three times in most l cases. On the other hand, prices have gone up by 50%- 100% (which has resulted in higher standard of living of the people).
ix. people no longer walk even short distances. They use mopeds,motorbikes and cars. Very few people use bicycles. People are in a position to afford these luxuries now. They even travel by motorbikes for even the currently “low” paid jobs.
x. there is no communication problem now. Most of the people have cell phones.
xi. the markets are full of things –food items as well as industrial products.
xii. stock markets are volatile. Price of gold and silver is increasing,but this cannot be called economic crisis,but can only be called speculative activity. If FIIs are banned ,institutional investors are restricted in the secondary market, the markets will be steady.
xiii. however, there is a lot of scope to increase productivity, increase consumption and thus, expand production and GDP.
xiv. interest rates have gone up leading to higher cost of production, but the prices of all products have also gone up .Thus,the purchasing power of the interest amount from the deposits in banks,etc. Would have become lower, if interest rates are not raised. In other words, depositors would have suffered badly.
xv. there is shortage of labour. This can be solved by increasing mechanisation. In agriculture for example, mainly ploughing has been mechanised. There is scope of mechanisation in planting, weeding, harvesting,thrashing,etc. In industry also, there is a lot of scope for further mechanisation. This is how industrial revolution took place in Europe a few centuries ago.
Xvi. The problem of pollution should be tackled with proactive participation of the government.
xvi. Global warming is talked about but we are witnessing coldest winters and hottest summers which can rightly be called weather extremes rather than global warming.
xvii. higher public/government debt in itself cannot be an economic crisis if the debt has been incurred for productive purposes and the labour productivity remains high. after all, money can always be created by the government monetising debt.
As the fundamentals are strong in Indian economy, external happenings should not affect it. However, it does affect because of speculative activities. It would good to control speculations.


World Food Situation- No need for alarm

22/01/2011

Food situation in the world in general and in Africa in particular is not as alarming as the protests against food grain prices in several countries, as also the warnings by FAO economists suggest. Low production is a very serious matter which defies solutions but price increase is not impossible to be tackled by increasing/extending subsidies, loans etc. While main food grain producing countries have witnessed slight decline of less than 1.5% in production,(less than 10% of carry forward stock) most of the African countries like Ethiopia, Eritrea, Kenya, Malawi, Niger, Somalia, Uganda, Zimbabwe etc. have recorded higher production in 2010 than in the previous year. Higher prices in 2010 for food grains are likely to lead to a higher production in 2011, as farmers will be encouraged to try to produce more, by higher income. The lower production of food grains in main producing countries will only mean lower stocks being carried forward to the next year and not non-availability of food grains.

It is also heartening to note that wages in most of the African countries have increased during the last few years and thus people have more money to meet the higher food grain prices. It is also pleasing to note that among the 20 fastest growing economies in the world, as many as 11 are in Africa. In other world, out of 53 African countries, 11 are witnessing very high economic growth rates. (Among the 140 non-African countries, only 9 are witnessing high growth rates.). Thus, the people will be able to absorb the higher prices without much difficulty.

From the long term view also, India alone has the potential to double its production of food grains from about 225 million tonnes to 450 million tonnes. If India achieves just 50% of its additional food grain production potential, the world will not have food insecurity at all. Even without bringing in additional land under cultivation, Africa has the potential to double its production, as its yield is very low. What is required is substantial investment in irrigation projects.


Loans from International Organisations

13/09/2009

There is news that the Government of India is seeking a loan of US$3 billion or Rs.15,000 crores from World Bank for converting about 6,000 kilometers of single-lane national highways into two-lane highways.

For road works foreign exchange is not required too much. If the government wants money in Rupees, it can raise loans in India itself. If it difficult to raise loans from the public, it can borrow from Reserve Bank of India (RBI). If RBI has any difficulty, it can create a special purpose fund by printing currency and lending to the government. The amount can be recouped over a period of time, say 10 or 15 years.

If the government wants some quantum of foreign exchange, it can withdraw from the country’s foreign exchange reserves. These reserves are over $260 billion and have been deposited in foreign government bonds and in foreign banks yielding very low interest.

Thus, there is no need to seek loan from World Bank or any other international organizations.