GS Paper III Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

India worthy of rating upgrade: OECD

What’s Happening-
Internationally influential think-tank, Organisation for Economic Co-operation and Development (OECD) threw its weight behind India saying the country is worthy of a credit rating upgrade, but cautioned Indian policy makers against taking measures only with an aim to get a better rating.

Key Points discussed were:

According to Angel Gurría, the Secretary-General of the OECD.

  • The Indian government needs to be a “good salesman” — by informing global investors and rating agencies about the reforms it has already undertaken (and will do so in the future) “in the best interest of the country” as well as their positive impact on the economy.
  • Governments take policy measures because they are in the best interest of the country… and the consequence may be that the rating agencies will recognise them.”
  • The rating agencies have become “ultra-cautious” after the debt of the firms they granted the highest (AAA) ratings, went wrong – leading to the 2007-08 American subprime mortgage crisis and then the 2008-09 Great Recession
  • Indian government have got to be a good salesman… go and do road shows.
  • You’ve got to tell everybody you are going to do a bond issue, and that is good opportunity to tell everybody, the rating agencies and the investors, what you are doing.


  • The reforms that the Indian government led by Prime Minister Narendra are undertaking relatively recent. They may need a little bit more time so that people can evaluate the results.

India’s (sovereign) credit rating has remained unchanged for the past several years at ‘BBB (-)’ – or the lowest investment grade, which is only a grade above “junk” status for government/sovereign bonds.
Leading international credit rating firms such as Standard & Poor’s, Moody’s and Fitch rate government/sovereign bonds on the basis of lending risks – or in other words, their estimation of the borrower’s ability to repay its debt and the likelihood of them defaulting.
According to the Indian government’s Economic Survey 2016-17, “India’s ratings have remained stuck at the much lower level of BBB-, despite the country’s dramatic improvement in growth and macro-economic stability since 2014.”

GS Paper II –  Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Spectrum auctions to be held annually: Deepak

Telecom Secretary says India is now gearing up for 5G

What’s Happening-

  • The government will hold fresh spectrum auctions between July and December this year and the exercise will be an annual affair from now, Telecom Secretary JS Deepak.

Key Points discussed were:

Government efforts towards 5G:

The Centre is also working to ensure that India embraces 5G telecom networks in tandem with the rest of the world, unlike 3G and 4G technologies whose rollout was far slower spectrum

Spectrum Auction:

  • Government from now onwards wants to Auction every year so that telcos can plan their needs, whether they need to trade it, buy it from someone else or come to the auction.
  • This ensures complete certainty and policy stability.
  • This year’s auctions are likely to be held between July and December.
  • The department of telecom is soon going to send a request to telecom regulator TRAI for its recommendations on the spectrum to be sold, the price and newer spectrum bands that could be offered.
  • Before July, the department will frame a policy for the use of various spectrum bands, including high frequency bands.
  • While limited spectrum was offered in auctions till 2015
  • Since last year, the government has started putting all the available spectrum on sale in line with a Supreme Court judgement.
  • Indian telecom is now like a spectrum supermarket. If a supermarket doesn’t sell all its goods in one day, it doesn’t get a heart attack or high blood pressure. It will sell the next day, next week, next month, the secretary said.

Early mover:

  • While South Korea is expected to be the first country to rollout 5G network services in time for the 2018 Winter Olympics, India is keen to be an early mover.
  • India should not be deprived of 5G.
  • It is not only a communication issue, it is a productivity issue for industry. It has wider applications in smart cities and grids and all kinds of things We are very keen to be with the world and have done a lot of preparation.
  • Government also came out with M2M (machine- to-machine) guidelines in 2015 and have issued draft service providers’ guidelines on which we have got comments.
  • Reacting to Bharti Airtel chairman Sunil Mittal’s comments that governments around the world tax telecom firms with a heavy hand, Mr. Deepak
  • There can always be an issue of what is less and more. None of us is happy with the income tax rate that we pay. Yes, companies need to get spectrum and need to make money on their opertions.

GS Paper III Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Free trade should be fair too

What’s Happening-
Trump cites Indian duty of 100% on motorcycles, demands reduction in it.
In an indication that increased market access for American companies will be a key priority in his engagement with New Delhi, U.S. President Donald Trump mentioned the 100% duty that India imposes on high-end motorcycles as a case of unfair trade practice and vowed to change it, in his first address to Congress.

Key Points discussed were:

  • Mr. Trump did not take India’s name, but India is the only major country that has a 100% customs duty on motorcycles. American company Harley-Davidson has been seeking a duty reduction for several years now.
  • Recalling his meeting with the company’s executives Mr. Trump said: “They said that in one case another country taxed their motorcycles at 100%. They weren’t even asking for change. But I am… I believe strongly in free trade but it also has to be fair trade.”

Cites Lincoln:

  • Citing Abraham Lincoln to declare that he would pursue an openly protectionist and nationalist policy that favours American companies, workers and soldiers.
  • Mr. Trump said American companies were facing trade barriers across the world.

Indian side view:

  • For India, that means that sectors with price controls, high customs duties, or compulsory local manufacturing rules may increasingly be on the radar screen.
  • Pressing India to liberalise FDI caps, which could result in manufacturing relocation, will get less attention. 

U.S. goods and services trade with India totalled an estimated $114.8 billion in 2016.Exports were $42.0 billion; imports were $72.8 billion.The U.S. goods and services trade deficit with India was $30.8 billion in 2016.India is currently our 9th largest goods trading partner with $67.7 billion in total (two way) goods trade during 2016.Goods exports totalled $21.7 billion; goods imports totalled $46.0 billion.The U.S. goods trade deficit with India was $24.3 billion in 2016.Trade in services with India (exports and imports) totalled an estimated $47.2 billion in 2016. Services exports were $20.3 billion; services imports were $26.8 billion. The U.S. services trade deficit with India was $6.5 billion in 2016.

GS Paper II –International Relations

Extremist forces delaying reconciliation: Sri Lanka

What’s Happening-
Sri Lankan Foreign Minister Mangala Samaraweera attributed to “extremist forces” the perceived delay on the part of the Sri Lankan government in moving ahead with reconciliatory efforts.
The extremists, he added, were creating roadblocks for narrow political gains.

Key Points discussed were:

Rights abuses:

  • Sri Lanka made several commitments to the UN body in September 2015, when it cosponsored a consensus resolution calling for a credible judicial process to probe alleged rights abuses.
  • However, sections of Sri Lankan society, particularly those living in the north and east, have been dissatisfied with the pace of government initiatives.

Government Initiatives:

Four Pillared Approach:

  • Truth, reconciliation, accountability and non-recurrence — the “four-pillar approach”.

The draft legislation on the Truth-Seeking Commission is going to be presented to the Cabinet of Ministers within the next two months.

International standards:

  • Sri Lankan government was progressing with the formulation of the legal framework of the proposed Counter Terrorism Act.
  • The government is said to be fine-tuning it to meet international standards.
  • Pointing to work done on drafting the new Constitution, the Foreign Minister said six sub-committees tasked with deliberating subjects such as fundamental rights, judiciary, law and order, public finance, public service, and centre-periphery relations had handed over their reports to the Constitutional Assembly.

The Sri Lankan Civil War was an armed conflict fought on the island of .
Beginning on 23 July 1983, there was an intermittent  against the  by the  (the LTTE, also known as the Tamil Tigers), which fought to create an   state called  in the north and the east of the island.
After a 26-year military campaign, the , bringing the civil war to an end.
Conclusion: Tripartite talks
Government initiatives are laudable yet needs to be speed up the process to solve the issue.
President Maithripala Sirisena also initiated tripartite talks with Prime Minister Ranil Wickremesinghe and Leader of Opposition R. Sampanthan, to expedite the Constitution-making process.