India on WTO+NEPAL-INDIA+India on Climate Change+ India & China : A comparison+Price Inflation Indicator

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NEWS Bulletin from Indian Society For Sustainable Agriculture And Rural Development------------- 1. India vows to take tough stand at WTO 2. Nepal seeks greater Indian investments3. India gears up to insist on forestry, tech and finance transfers 4. INDIA AND CHINA : How Their Economies Differ From Each Other5. Which is Better Indicator of Inflation: WPI or CPI ? -------------------------------

 

Multilaleral trade talks for re-energising global economy

 

India vows to take tough stand at WTO

 

Mini-ministerial meeting likely in September http://anypursuit.com/news/tiki-read_article.php?articleId=505 http://www.mynews.in/fullstory.aspx?storyid=22657

 

By: ASHOK B SHARMA on: Wed 29 of July, 2009 12:49 GMT India stuck to its tough stand that WTO negotiations can progress only if concerns of developing nations are addressed. Speaking at the upper house of the Parliament (Rajya Sabha) during question hour on Wednesday, the Indian minister for commerce and industry, Anand Sharma said : "... An early conclusion of Doha Round is important; India is willing to take part in negotiations at the WTO provided the core concerns of the Round, namely development concerns of developing nations are addressed." Sharma's remarks came a day after India expressed its concerns in Geneva that no real progress was visible from the key member countries, despite New Delhi showing desire to re-energise the multi-lateral trade talks

Later in the day Sharma while addressing a seminar hosted by the apex industry body – FICCI – said that India would host a mini-ministerial in Delhi in early September this year which would to participated largely by G-20 countries, the European Union, United States, ACP countries and others to sort out the problems confronting the developing and least developed nations (LDCs) and small and vulnerable economies (SVEs).

On the basis of technical discussions at the WTO some roadmap for negotiations was expected by the end of July, he said and added a full fledged negotiations would most probably resume in September, 2009. But a quick closure was unlikely given the large number of issues remaining unresolved, he said.

 

He, however, asserted that it was the right time to re-energise the stalled WTO negotiations as according to him the present global financial crisis presents both challenges and opportunities and there are signs of revival in some economies.â€Some are of the view that the economic crisis does not augur well for the successful completion of the Doha Round. In my view, however, I am sure you would agree, a fair and satisfactory outcome to the trade negotiations can actually be a catalyst for the combined international effort to break free of the economic crisis.â€

 

Since the G-20 Summit of November 2008 urging countries not to take protectionist measures in trade, he said the many countries resorted to overt protectionist measures at the behest of strong domestic agricultural and industrial interests.

 

According to a World Bank study, since the beginning of the financial crisis, roughly 78 trade measures have been proposed and implemented. Of these, 66 involved trade restrictions and 47 trade-restricting measures eventually took effect.

 

Spelling out India’s position the minister said that Doha Round’s core issue of development cannot be compromised. In the agriculture negotiations, a substantial and effective reduction in domestic support and tariffs on farm products by developed countries and sufficient flexibilities for developing countries to protect and promote the interests of their low income and resource poor farmers is a priority for India.

 

Under the non-agricultural market access (NAMA) negotiations, India has been negotiating for flexibilities that were both appropriate and adequate to protect its cottage, micro, small and agro-based industries, he said.

 

Sharma further said : “We also have major concerns in the area of fisheries subsidies which form part of the Rules Negotiations. Another area on which negotiations are underway is Services. India is very keen to take the services negotiations forward as services contribute to more than 55% of our GDP and a substantial portion of our trade. Services are a major driver of India’s economic growth and development and provide opportunities for gainful employment.â€

 

On the recent demand of some countries for a new approach to the WTO negotiations skipping the modalities stage and moving straight to notifying individual member commitments, Sharma said : “there must first be agreement on modalities. A huge amount of work has gone into preparing the draft texts of December 6, 2008 for agriculture and NAMA and we have made it clear these must be the basis on which further negotiations are held.â€

 

On likely changes in India’s own trade regulations, Sharma said he will meet the Union finance minister, Pranab Mukherjee and present the recommendations of the industry bodies and export houses, before unveiling the modifications in the country’s foreign trade policy (FTP). He said that he would come out with a policy which would address the immediate concerns of the exporters. India's exporters are battling the global demand recession. The country's exports are in negative zone since October 2008. The FTP broadly spells out the priority segments in external trade and also gives incentives and disincentives depending on the country's need. In the Union Budget 2009-10, the government has extended sops for exporters like interest subsidy and an insurance cover till March 2010. The minister has earlier stated that FTP is likely to lay more

emphasis on incentivising export diversification to non-traditional areas. The government is also considering a fresh stimulus for the exporters..The Board of Trade (BoT) headed by Sharma would also meet in the first week of August, before unveiling the new FTP. Sharma replaced noted industrialist Kumar Mangalam Birla as head of the BoT. The BoT had not met over the last two years.----- India-Nepal Trade Treaty likely to be revised

 

Nepal seeks greater Indian investments

 

Urges for bridging the trade deficit

 

http://anypursuit.com/news/tiki-read_article.php?articleId=580

http://www.mynews.in/fullstory.aspx?storyid=23905

 

By: ASHOK B SHARMA on: Wed 19 of Aug., 2009 13:34 GMT

 

With a view to bridge its trade deficit with India and to benefit from the positive spillover effects from its economically resurgent neighbour, Nepal on Wednesday invited Indian investments in hydropower, roads, bridges, infrastructure, construction materials, tourism industry, agro processing, education, IT, light manufacturing, health and financial services.

 

According to 2007-08 figures, Nepal's export to India was valued at only $592.4 million while its imports from India was valued at $2216.6 million.Main items of Nepal's export to India are GI sheet, threads, polyster yarn, vanaspati (hydrogeneted vegetable oil), textiles (cotton, synthetic and others), juices, sacks, cardamom, MS pipe ans aluminium section. It main imports from India are petroleum products, transport vehicles and parts, MS billet, medicine, machinery equipment and spare parts, hot and cold rolled sheets in coils, electrical equipment and goods, threads, chemicals and MS wire rod.

The visiting Nepalese Prime Minister, Madhav Kumar Nepal addressing a business meet organised by the three apex industry bodies - FICCI, Assocham and CII - in Delhi said : "India's continuously high economic growth rate despite the current global financial and economic crisis is a proof that Indian economy has matured and thus has placed itself among major emerging global economic power.....It is only natural that as the closest neighbour, we are looking forward to positive spillover effects from economically resurgent India....Despite our long and intense economic relations, ever growing trade deficit remains a matter of concern to Nepal."

 

Nepal is leading a high level official and business delegation to India and is accompanied by five Cabinet ministers. The delegation will meet captains of Indian industry also in Mumbai on August 21.

 

Saying that the full potential of bilateral trade and investment still remained untapped, Nepal urged the Indian industry to take advantage of the situation and invest in his country. He said that investment climate in Nepal was likely to improve with the adoption of the new Constitution and the success of the peace process. "We will do our best to ensure security and pecefull environment in the country by building consensus and cooperation among all parties including those in the Opposition. We have already come out with a new security plan, which we are committed to implement," he said.

 

The Nepalese Prime Minister said that he was committed to establish a high level investment board to clear all big projects and quickly provide as much facilities as possible and help foreign investors operationalise their projects at the earliest. Nepal has opened up almost all sectors for foreign investment. Procedures for investment have been simplified and repatriation of profit gauranteed by law, he said.

 

India is a major investor in Nepal with 130 operating projects out of 142 already approved

The Nepalese Prime Minister revealed that his country's new industrial Policy would be comprehensive and effective in attracting foreign investment by eliminating double taxation, promoting transfer of technology, enhancing productivity and competitiveness of the industrial sector. Special attention would be given to the areas of competitive advantage and comparative benefits, development and operationalisation of special economic zones, strengthening of the industrial governance and promoting collaboration with all.

On improving bilateral trade, he said that his government has contemplated more trade facilitation measures, removal of non-tariff and para tariff measures, enchancement of supply side capacity by attracting joint ventures and foreign invests. He hope that India should also initiate adequate trade facilitation measures vis-a-vis Nepal.

 

Nepal and India are among the eight countries who are parties to the South Asia Free Trade Area (SAFTA).

 

The President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Narendra Kumar Joshi hoped that the proposed modification in the trade treaty would aim at removal of tariff barriers, CVD, canalisation of imports, quota and discriminatory taxes, restrictions on movement of agricultural products and increase in number of border custom points and enhancing facilities, expediting setting up of test laboratories and recognising Nepal standard in India and more flexibilitry in the Rules of Origin. He said that joint task force have started its work and is expected to submit its report by the end of August, this year.

 

The acting President of Confederation of Nepalese Industry (CNI), Narendra Kumar Basnyat said that Nepal needs electrified railway running from east to west, an alternative international airport at Nijgadh, a East-West highway, three 800 Kv power transmission lines from three major river basins in Nepal to Indian border for providing easy power evacuation to Indian markets. Besides there are more than 25,000 MW hydropower projects waiting to be developed for Indian market with money and technology from India.

He urged the Indian industry to utilise rich deposits of cement grade limestone and abundant medicinal herbs found in Nepal. He called upon the Indian government and the industry to set up Special Economic Zone near the southern border in Nepal, designate and set up special `trade corridors' that would link Bangladesh, Bhutan, India and Pakistan, allowing Indian companies to be listed in Nepal Stock Exchange and allowing Nepalese companies to be listed in the Indian stock exchanges .#-----runup to Bonn Climate meet

 

India gears up to insist on forestry, tech and finance transfers

 

To host two global climate meets soon

 

By: ASHOK B SHARMA on: Fri 31 of July, 2009 12:43 GMT

 

http://www.financialexpress.com/news/india-to-insist-on-forestry-at-bonn-climate-meet/496600/0

http://www.mynews.in/fullstory.aspx?storyid=22768

 

http://anypursuit.com/news/tiki-read_article.php?articleId=522

 

In its preparation for the upcoming Bonn Conference on Climate Change scheduled from August 10, this year, India has called for recognizing forest conservation and forestation under the Reduced Deforestation in Developing Countries (REED) Scheme, adequate and flexible financing of climate projects in the Third World and viable technology transfer without tags.

“We are going to insist on these three pillars of negotiations at Bonn,†the Union minister of state for environment and forests, Jairam Ramesh said while addressing the mediapersons here on Friday.

 

He added : “We are not defensive in our approach on emission problem nor are we obstructionist. We are assertive and hope the Bonn Conference would ultimately pave the way for an agreement at Copenhagen meet.â€

India has also called for a two-day high level global conference on climate change and technology development and transfer beginning in New Delhi from October 22. This international conference is expected to be participated by environment ministers from 190 countries and would come out with a New Delhi Declaration on Technology Transfer.

 

Ramesh reiterated India’s position on the principle of common but differentiated responsibilities and respective capabilities – a principle that the entire global community has enshrined in UNFCCC concluded in 1992 at the historic Rio Summit. He said that India was for fixing per capita emission limits of countries. He said that India’s per capita emission level was low at 1.2 tonne of carbon dioxide as compared to 20.6 tonne in US, 20 tonne in Canada, 9.8 tonne in UK and Germany, 9.9 tonne in Japan.

 

He said that under circumstances India was not committed to reduce its greenhouse gas emissions and have already assured that its per capita emission would never exceed that of the developed countries. The developing countries have the right to take up development projects to fight poverty , he said.

 

India has already submitted 12 papers in 2008 and 2009 which encapsulate country’s views on relevant topics in the course of negotiations. Of particular note are country’s submissions on technology transfer and forestry. On technology, India has presented a proposal to establish a mechanism for the development and transfer of technologies needed by developing countries for addressing climate change. On forestry, India has put forth an innovative proposal on forestry-related emissions, in which the emphasis is not only on reducing deforestation, but also on forest conservation, sustainable forestry management and enhancement of forest carbon stock.

Prior to this upcoming global event, a two-day conference of environment ministers from eight South Asian countries – Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka – is scheduled in New Delhi from October 19, 2009 to evolve a common strategy for the region.

 

India is also slated to release on August 10, this year at the time of the Bonn Conference, an analytical report on how much global emission is captured by the country’s forest cover per year.

The minister said that India had a large afforestation programme with about 60% of the geographical area (65 million hectare) under forest cover. Within next six years additional six million hectare of degraded forest land would be brought under green cover

 

Ramesh said that he had already discussed with the US Secretary of State, Hillary Clinton about India’s position on climate change during her recent vist to India â€There is a possibility of India joining in a programme for a joint study on shrinking Himalayan glaciers with China. We will also have cooperation with US on solar energy and green coal technology,†he said.

 

Recently India has undertaken 15 initiatives relating to Climate change in the areas of forestry, energy, research, CDM and international conference for generating awareness. On clean development mechanism (CDM) front, the minister said India has largely benefited and could garner $600 million. The scheme needs to be expanded, he said.

The Cabinet Committee on Economic Affairs (CCEA) has recently approved a total outlay of Rs 369 million on major forestry management in the XI Plan period and the Japanese International Cooperation Agency (JICA) would provide for capacity building and training. Under this scheme the Union government would provide 70% grant to state government.

However in case of special category state the Union-States funding will be in the ratio 90:10

 

The minister informed that a Bill for setting up of a National Green Tribunal, replacing the existing bodies was placed in the lower house (Lok Sabha) of the Parliament on Friday. From January 7, 2010 labeling of Bureau of Energy Efficiency (BEE) would be mandatory for air conditioners, distribution transmitters, refrigerators and florescent lamps. After six months this would extended to cover electric motors and colour TVs. INDIA AND CHINA :

 

HOW THEIR ECONOMIES DIFFER FROM EACH OTHER http://www.justcareers.in/justcareers/article.html

ASHOK B SHARMA

 

India and China are two fastest growing economies of the world. During all this meltdown these countries have done good and their economies have grown at a relatively better pace than the rest of the world. Of these two China has fared better but India is the largest democracy on the earth, has edge over China in English speaking workforce, etc.

India and China are two world most populated countries, each having population of over one billion – China 1.33 billion and India 1.14 billion. The two countries have different political and economic systems. India follows multi-party democratic system and is the world’s largest democracy on basis of its population while China is under one party dictatorship. Economic systems of two countries vary to a great extent. Though China initiated the process of adjusting to the new global liberalized order earlier than India under the garb of “economic reforms†, it was limited to inviting foreign direct investments (FDIs) in select areas, more particularly in consumer durables. There are reports that China was successful in attracting more FDIs than India, a considerable chunk of which was from non-resident Chinese residing in other parts of the global. After the advent of recent global recession flight of capital from China

is also noticed. In China the state plays a dominant role in managing its economy and private sector participation, though minimal, is strictly under state supervision. The situation in Hong Kong and Macao are however different from mainland China. Allowing such a situation to prevail in the erstwhile British and Portuguese colonies, the Chinese government has said “it one country with two different systems†This applies also to Chinese Taipei which claims to be independent of China. But China asserting its influence have been successful in withholding recognition of Taipei by other countries as a separate country. Unlike India, China is not a soft state in dealing with insurgencies and in its external policies. Given the different political and economic system prevailing in two countries, it is difficult to strike a comparison. China, being almost a closed country, it is difficult for an outsider to assess

the real economic situation there. Only source is to depend upon the official data of the Chinese government. China is a new entrant to the WTO than India and as a new entrant is required to fulfill some commitments. China export earnings are more than that of India due to abundance of cheap labour and conditions imposed by the state and the deliberate manipulation of its currency exchange rate. UNCTAD has added a new dimension for disciplining multilateral trade by a new code of conduct to prevent manipulation of exchange rate, wage rate, taxes or subsidies. It said that changes in the nominal exchange rate that deviate from fundamental (such as inflation differentials) affect global trade in exactly the same way as do changes in tariffs and export subsidies. Consequently, such real exchange-rate changes have to be subject to multilateral oversight and negotiations. Reasons for the deviation

from the fundamentals and the necessary size of the correction have to be identified by an international institution and enforced by a multilateral body, it said In its Trade and Development Report-2007, UNCTAD further said that such rules could help protect all trading partners against unjustified overall losses or gains from competitiveness and developing countries could systematically avoid falling into trap of overvaluation that has been one of the major impediments to prosperity. UNCTAD’s suggestion is relevant when negotiations on multilateral farm deal are already under way in Genava and the WTO has already initiated a formal investigation intoallegations by US and Mexico that China is unfairly subsidising exports tax breaks and other initiatives. Indian exporters have also complained that artificial exchange rate in China has given an added advantage to that country. The UNCTAD report has

said that commodity exchanges in China and India are becoming major players in the global commodity trade. Even though interest in commodities as financial asset remained strong in 2006, there are some indications of a possible change in the attitude of financial investors vis-à-vis commodities, reflected in the market correction of January 2007. It further said that China would continue to play a key role in commodity markets, not only from the demand side but also from the supply side. UNCTAD has suggested that developing countries should strengthen regional cooperation amongst themselves, but proceed carefully with regard to North-South bilateral preferential trade. It suggested that multilateral trade arrangement as a better option than FTAs and RTAs. The report noted that South Asia Association for Regional Cooperation (SAARC) conceived in 1985 has not been followed up by fast growth in

regional trade. Trade flows may be driven not only by formal agreements, but also by de facto regional networks.- Which is Better Indicator of Inflation: WPI or CPI ? http://www.justcareers.in/justcareers/gd-master.html ASHOK B SHARMA Inflation is an indicator of the health of economy. The figure has psychological effect on investors and spenders.Therefore a correct evaluation is important. There has been a debate whether Wholesale Price Index (WPI) or Consumer Price Index( CPI) is correct indicator of inflation Monitoring of price inflation rate is essential for an economy, more particularly in the developing economies

like India. Price situation has a considerable impact on the average consumer as well as on the trade and industry. Generally there are two methods for measuring price inflation, one by the movement of the wholesale price index (WPI) and the other by the movement of the consumer price index (CPI). While the WPI reflects the change in wholesale prices of commodities or baskets of commodities, the CPI measures the change in prices of commodities or baskets of commodities which the consumer actually pay. According to a survey by the International Monetary Fund (IMF) 24 countries use WPI as the official measure to track price inflation, while 157 countries use the CPI. Many countries have aggregate CPI to measure the headline inflation rate while India has sectoral CPIs like CPI for industrial workers (CPI-IW), CPI for agricultural labour (CPI-AL), CPI for urban non-manual workers (CPI-UNME) and CPI for rural labour

(CPI-RL). India focuses mainly on the point-to-point movement of WPI on a weekly basis to assess price inflation. This has created a misleading situation for judging the actual headline price inflation, particularly in the present context when the price inflation rate based on the movement of WPI is hovering around zero per cent, that measured by the CPIs is appreciably much higher. When the price inflation rate based on WPI fell below 4%, some experts raised concern and went to the extent of saying that the country entered the regime of deflation. Such experts should know that the fall in WPI price inflation rate in the current year is against the abnormally high prices in the previous year. Therefore deflation can only occur when the WPI price inflation rate fall below -4% (Normally 4% to 4.5% is adjudged as tolerable price inflation rate in the Indian economy). Indian economy was impacted in the middle of 2008 by an

inflationary explosion in global commodity prices. In the global economy the growing demand for bio-fuel in particular caused the food prices to move in tandem with that of fossil fuel prices – a situation witnessed never before. As a result of cascading effect the prices of many other commodities shot up. The crude oil prices reached a peak high of $ 147 per bbl in July 2008. India was also impacted by high prices due to the global factor. Surge in capital inflows, which reached a crescendo in the last quarter of 2007-08 and the liberal monetary policy leading infusion of money in the market also caused price inflation in the country to an extent. However, the monetary policy was later adjusted to deal with the situation. The weekly WPI inflation rate reached a high of 13.6% at a point of time. The situation took a U-turn with the recent global financial meltdown and the accompanying recession in the global market. The crude oil prices

are now hovering around $ 61.58 per bbl. In India though the WPI price inflation rate has come down in recent times, that measured by different CPIs still remain high. This means at the retail level the consumers are still paying high prices for goods and services. Earlier with the impact of rising global commodity prices, the price inflation rates measured by WPI and different CPIs moved in close range till October 2008, but the divergence became more pronounced in recent months as the WPI inflation rate started declining from November 2008. The monthly WPI inflation rate ruled in double digits in the period June-October, 2008 ranging from 11.8% in June 2008 to 12.3% in September 2008 and then declining marginally to 11.1 in October, 2008. CPI-IW inflation rate ranged from 7.7% in June 2008 to 10.5% in October 2008. CPI-UNME inflation rate ranged from 7.3% in June, 2008 to 10.4% in October 2008. CPI-AL inflation rate ranged

from 8.8% in June 2008 to 11.1% in October 2008. CPI-RL inflation rate ranged from 8.8% in June 2008 to 11.1% in October 2008. These figures show the inflation rate measured by WPI and the CPIs moved in tandem. But unfortunately from November 2008 when the WPI inflation rate started declining from 8.5% to 1.2% in March 2009 and to almost zero per cent today, that measured by different CPIs still remain high – 8% by CPI-AW in March 2009, 9.3% by CPI-UNME in March 2009, 9.5% by CPI-AL in March and 9.7% by CPI-RL in March 2009-07-09. It would be more reasonable that apart from sectoral CPIs we have an aggregated CPI to assess the headline price inflation rate at the consumer level. The WPI inflation rate can be useful in trade and business and both the relationship WPI and CPI inflation rates can be useful for policymakers

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