Mitras Analysis of News : 27-05-2017

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1.Abolishing FIPB: Red tape herring? (The Hindu)

2.One China Principle (BBC, World Focus)

3.Rising Co2 and iron deficiency (Down to Earth)

 

1.Abolishing FIPB: Red tape herring? (The Hindu)

 Synoptic line: It throws light on issue abolition of Foreign Investment Promotion Board (FIPB).(GS paper III)

Overview

  • The Union Cabinet recently approved phasing out of the 25year old Foreign Investment Promotion Board (FIPB). The FIPB, the inter-ministerial body, is a single window clearance mechanism for applications on foreign direct investment (FDI) in India in sectors under the government approval route.
  • The move to phase out the FIPB is aimed at making India a more attractive FDI destination and increasing FDI inflows by providing greater ease of doing business and promoting the ‘Maximum Governance and Minimum Government’
  • The Department of Industrial Policy and Promotion under the Commerce Ministry is now expected to formulate a standard operating procedure to process foreign direct investment applications in 11 sectors that are still not in the automatic FDI approval list.
  • In sectors where there are concerns related to security, FDI proposals will also need Home Ministry approval.

About FIPB

  • FIPB was an inter-ministerial body housed in the Department of Economic Affairs in the ministry Of Finance, responsible for processing foreign direct investment (FDI) proposals and recommending for approval to the finance minister and subsequently to the Cabinet Committee on Economic Affairs, if the investment amount exceeded Rs3, 000crore.
  • FIPB was chaired by the economic affairs secretary and other permanent members included secretary, Department of Industrial Policy and Promotion (DIPP), commerce secretary, economic relations secretary in the ministry of external affairs and overseas Indian affairs secretary. The small, medium and micro enterprises secretary and the revenue secretary were co-opted on the board.
  • The board used to co-opt other secretaries in the Central government and when a matter pertaining to their department was scheduled to be discussed in the meeting.
  • In 2017-18 Budget speech Finance Minister mentioned that, “More than 90% of the total FDI inflows are now through the automatic route. The FIPB has successfully implemented e-filing and online processing of FDI applications. We have now reached a stage where FIPB can be phased out. We have therefore decided to abolish the FIPB in 2017-18.

Outlook and critical analysis

  • The government believes that by abolishing FIPB, red-tapism will shrink, ease of doing business will improve and investors will find India more attractive, however the decision is seems to be more than a symbolic gesture, over 90% of investment does not require an FIPB nod as it comes in through the automatic route and while the FIPB may have delayed clearances at times, the efficacy of this move will be determined by the ability of individual ministries to exercise ‘discretionary’ powers without fear as provided by a collective decision-making body.
  • Over the last two years the government has taken up a number of reforms to liberalise the FDI regime. In 2015, 15 sectors were liberalised for FDI and in 2016, the government made sweeping amendments to the FDI policy in seven sectors, most importantly in defence, civil aviation and pharmaceuticals.
  • Further, the government has taken other kinds of measures such as relaxing FDI norms for NRIs, PIOs and OCIs, allowing their non-repatriable investments to be treated on a par with domestic investments and not be subjected to FDI caps.
  • Despite higher percentage allowed for FDI in different sectors, the archaic land acquisition and labour laws continue to make it difficult for large factories to come up.

Way ahead

  • DIPP should come out with clear guidelines and operating procedures defining the parameters that should be considered for clearance of proposals, ensuring that there is alignment in the approach of different ministries.
  • It is a clear message to investors that India is in the bet to assure rapid growth in an otherwise uncertain global scenario. In the rising protectionist tendencies across the world, the abolishing of FIPB and the statement of intent to further liberalize FDI policy sends out an encouraging signal.
  • FDI off course might be one of the important sources of financing the economic development. However, one should not forget that FDI alone is not a solution for poverty eradication, unemployment and other economic ills. India needs a massive investment to achieve the goals of vision 20-20. Policy makers need to ensure transparency and consistency in policy making along with comprehensive long term development strategy.

Question What does the scrapping of FIPB indicates? Is it a real fulfilment of the ideals envisaged in 1991 reforms? 

 

2.One China Principle  (BBC, World Focus)

 Synoptic line: It throws light on the Chinese policy on Taiwan and its implications. (GS paper II)

Overview

  • The One China Principle forms the core of Chinese national interest and it is believed to be the cornerstone of the cross-strait relationship. This issue has been of outmost importance to the People’s Republic of China (PRC) as it directly concerns it’s sovereignty.

A brief history of the One China policy

  • The origin of the Taiwan issue dates back to Ist October 1949 when the new People’s Republic of China (PRC) was formed. The civil war in China (1946-49) ended with the victory of the communist and the retreat of the Kuomintang’s (Nationalists) to Taiwan or Formosa.
  • The Kumomintang was in confrontation with the government in mainland China and therefore they established themselves in Taiwan.
  • The Kuomintang’s ruling claim that they represent the true China and one day they would return to mainland China, and establish their power in Beijing.
  • On the other hand, the government in PRC claim to be the sole legal representatives of China and have given clear signals to the international community that any deviation from the One China Policy would hinder it’s inter- state relations across the world.

One China policy

  • One China Principle states that there is only one China and that Taiwan is an integral and inalienable part of mainland China. Both PRC and ROC together constitutes one state called China.
  • The One China Principle is the present policy followed by PRC. Even, ROC states that there is one China and both mainland China and Taiwan constitutes one sovereign China.
  • The most fundamental question that revolves around the One China Principle is the disagreement, not with regard to whether there is one China or not but with respect to the question of who signifies the true representative of China, whether is it PRC or ROC? As per the existing One China Principle of the PRC, Taiwan is considered a part of China and the government of People’s Republic of China is the only legal representative of China.
  • The One China Principle can be summarised as the existing policy of PRC that states:
  1. That Taiwan is an inalienable part of China.
    2. That Peoples Republic of China is the sole representative of China.
  • China has deployed various tactics through which it could materialise its One China Principle. These methods have been determined by the exigencies of time, context and attitude of different political leaders. Leaders mobilized the issue through the use of diplomatic relations, innovative policies, coercion tactics and mass appeal.
  • The recent understanding is that China is gaining leverage over Taiwan as China has required economic power, military and diplomatic leverage around the world. It is difficult to supersede China as most countries are dependent on China for trade and business. Also any use of force might ruin reputation of China in the international community and thereby garnering animosity of people in Taiwan. History demonstrates that the One China Principle has served the interest of multiple players.
  • United States and China are likely to avoid a military confrontation in the region’s stability. Stability is the current foreign policy imperative of both the countries as it would ensure successful economic cooperation between the two giants. Stability in the region will encourage China and Taiwan to focus on its developmental needs while United States will also extract economic incentives through cooperation with PRC.

Conclusion

  • In the light of the Taiwan issue it would be wise for both United States and China to avoid any sort of escalation of the conflict around the strait considering the domestic and economic challenges faced by both the states. As far as the future of Taiwan is concerned, processes like democratization, military modernization and nationalism are likely to determine the future of the One China Principle.
  • Although the issue of Taiwan is a domestic concern for PRC as it is enmeshed in the big power politics. Beijing has made it clear that deviation from the One China Principle would constraint its relationship with the concerned state. It may have serious implication on the peace and stability of the trait.

Question: Discuss One China Principle with regard to its implications over South East Asia. Does it pose any threat to regional peace? 

 

3.Rising Co2 and iron deficiency (Down to Earth)

 Synoptic line: It throws light on the impact of Climate change and subsequent rise of Co2 over Food security (GS paper III)

Overview

  • Crops grown in the high-CO2 atmosphere of the future could be significantly less nutritious. Based on hundreds of experiments in the field, the work reveals a new challenge as society reckons with both rising carbon emissions and malnutrition in the future.

Rising Co2: a cause of concern

  • Increased level of CO2 in atmosphere not only causes polar ice to meltand coastal food web to collapse, but it is also directly linked to iron deficiency in human beings.
  • Findings are based on recent studies that reveal how commonly consumed crops like wheat, rice, barley, legumes and maize have lower iron concentrations when grown under increased atmospheric CO2 concentrations.
  • The researchers did an estimate on the percentage of dietary iron that would be lost due to human-induced CO2 emissions between now and 2050. They also considered the staple diet of people in 152 countries around the world and the current prevalence of anaemia.
  • About half of the total anaemia cases around the world are believed to be caused due to lack of adequate iron in the diet.

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Areas of concern

  • Apart from South and East Asia, regions with the highest risk are also located in North and East Africa. In all these regions, people mostly depend on plant-based diets.
  • Across all countries, the estimated percentage of lost dietary iron under rising CO2 levels varies from modest 1.5 per cent to severe 5.5 per cent.
  • Iron deficiency reduces capacity for physical activity, lowers IQ, and increases maternal and child mortality, impacting roughly a billion people worldwide.
  • The countries with the highest anemia prevalence also derive their iron from the fewest number of foods, even after excluding countries consuming large amounts of unaccounted wild-harvest foods.
  • Certain highly consumed crops C3 grains (wheat, rice, barley), legumes and maize have lower iron concentrations of 4-10 per cent when grown under increased atmospheric CO2 concentrations (550 PPM).

Way ahead

  • The researchers call for immediate intervention in the form of dietary behavioural changes, agricultural innovation and improved health delivery systems. However, they fear that it will be difficult to sensitise people about this threat as it affects the content of crops but not the yield. Hence, people might not see the health threat and don’t feel the need to adapt to it.

Question What should be the move by government to ensure food security in the wake of climate change?

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