With 180% of debt-GDP ratio, falling growth rates and a staggering unemployment of 40%, another default is due very soon, writes Sanjay Banerji Finally the great Greek tragedy has been averted as the warring sides have conceded to each other in the game of chicken where the loser is the first one to bow to the pressure of the opponents. The Germans gave a reluctant nod to the third bailout plan promising the Greeks €80 billion in exchange of a series of reforms curtailing pensions, privatizing government assets, raising taxes and other painful measures. The left wing Greek PM had to swallow the bitter pills, rejected outright by his countrymen in last month’s referendum. The deal reached after a lot of teetering and angry exchanges in a marathon 19-hour meeting finally saved Greece not only from the immediate exit from the Eurozone but also from the consequent financial, social and economic disaster. Sanjay BanerjiIt turns out in the hindsight that the risky Greek manoeuvring paid the country off at least temporarily. First, the referendum bought all parties more time in negotiations and meanwhile soothed their frayed nerves. Tactically also, a solid no to austerity demands from creditors brought the latent cracks within the coalition of 19 countries in Eurozone. Much to the chagrin of the Germans, the vocal French supported the new Greek proposal for the third bailout plans. The Italians and Irish scratched their heads with indecisions. In the crucial Sunday meeting, the French support made to Greece was not out of any special affinity with an ancient civilization but from the country’s concern for German domination while the Irish knew that they could be in the line for a future bailout in case of another jolting economic shock. The inner division among the Europeans, US concerns to prevent a NATO ally from defecting to Putin’s camp, and IMF’s (an important creditor to Greece) open stand against austerity (elaborated in a recent key document) got Greece new allies which forced the German camp to backtrack the hawkish path and work out a compromise formula before the end of that long day. Without this consensus, Greece by now, would have been on the road towards an ignominious exit from the Euro zone with immediate disaster writ large all over. The expulsion was not to be thrust upon Greece by force because there is no ‘exit clause’ in the Euro system. The Grexit, if it were to happen, would be purely banking and monetary phenomena. The rush by panicky depositors in recent weeks to withdraw fund dried up Greek Banks’ liquidity. Under normal circumstances, shortfall between withdrawals and deposits are made up through loans from the interbank system or by emergency funding from the Central bank. With Greek Central banks running an arrear of more than €100 billion with others and freezing of the ‘emergency liquidity assistance (ELA) by the European Central Bank, the Greeks have nowhere to go. To ensure daily transactions of goods and services and payments to parties and a smooth flow of credit, the Government under these circumstances had to issue either IOUs or print Drachmas. Only then enter the Grexit with all hell breaking loose! The value of the new currency would have gone south with issuer’s credibility reaching its nadir, causing destruction of payment system or hyperinflation or anything in between. Last week’s agreement of the sparring 19 nations thus saved Greece from the imminent financial hara-kiri. Did it then resolve all the problems for good? The answer is an unambiguous no. The Euro is an empty political dream wrapped by a monetary union without being backed by a reasonable degree of fiscal and banking unions. In good times nobody feels the pinches of the fissures within the system. But the bad times bite with a vengeance because no sustainable and durable mechanism can work without an agreeable degree of comprehensive union. The essence of resolving pains of bad times is finding a mechanism that redistributes losses among stakeholders in a fair, equitable and efficient manner. It is not forthcoming without an union of the trinity. To take a concrete example, India and US are two different countries in many dimensions but both have the fiscal, monetary and banking unions. When New Orleans or a part of India are battered by natural calamities, the Federal Governments in both countries can ship relief to the affected areas and finance it by taxing other regions. Fiscal and monetary union work in unison and losses are shared by the citizens and a single currency facilitates the effort by lowering transaction costs. The same orderly principle applies for resolution of bad banks no matter whether they are located in Mumbai or Chennai. In 1992, India was in the brink of disaster as her available foreign currency reserves then could meet only two week’s bill of oil imports. The country instituted fiscal, monetary and banking reforms and had her currency depreciated by more than 50 per cent in a short time. She became competitive in export markets and stood on her feet within a short time. The reckless borrowing by Greece and irresponsible lending by creditors made her debts explode and to carry on the country needs a debt relief as austerity impacts GDP adversely. Without fiscal union, other parties are not keen to share this burden of debt payments and with no currency of her own to depreciate, competitiveness in export is not forthcoming either! The country is at the receiving end on both accounts. It is a safe conclusion that with 180 per cent of debt-GDP ratio, falling growth rates, staggering unemployment of 40 per cent, another default is due very soon. The Eurozone countries last week diffused a ticking time bomb but replaced it with a new one. Will it explode at its time of maturity in 2018 or even before? Well, the answer lies in the following much heard maxim in the street. "If someone defaults $1000, he is in trouble; If the person defaults a million, then his bank is in trouble’’. When the figures reach billions, the sound of financial tsunamis reach all important corridors in both sides of Atlantic. (Sanjay Banerji is currently Professor of Finance at Nottingham University Business School and head of the Group. Prior to joining Nottingham, Professor Banerji had taught in McGill University in Canada and Essex University Business school and had been a visiting Professor to University of Athens and Concordia University. He has also been a visiting scholar to Finance Ministry in India. He has published in major Journals of Finance of International repute and has interests in Corporate Governance, International Financial markets and India's political economy and Financial Markets.)
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India is now being lauded as the leading light in the global growth race. Over the last couple of months, NITI Aayog vice chairman Arvind Panagariya has made quite a few statements about India's growth forecast in the next five years, 10 and 15 years. On Friday (17 July), Panagariya exuded confidence that India could be an $ 8-trillion economy within next 15 years or even less if it continues with growth-enabling policies. In April this year, Panagariya said that the Indian economy may grow at 8-10 per cent for the next 15 years, though the expansion may be higher in dollar terms. He went to add that if the economy actually grows at 8-10 per cent in rupees, in dollar terms it would be about 11-12 per cent and that kind of growth will turn India into about an $8 trillion economy from the current $2 trillion. "Taking into account the real appreciation of the rupee, during the decade of 2003-04 to 2012-13, we've grown above 10 per cent per annum in real dollars. At this pace, we can turn the current $ 2-trillion economy at 2014-15 prices into an $ 8 trillion in the next 15 years or less. That would place us well above Japan, the No 3 economy now," said the NITI Aayog vice chairman. The World Bank and the IMF as well as many analysts have predicted that the country would become the third largest economy after China and the US with a GDP of $ 10 trillion by 2030. Global rating agency Moody's Analytics said India would grow 7.5 per cent in 2015. A Harvard study has projected India to achieve the highest annual GDP growth rate of 7.9 per cent over the next eight years, which is nearly double of China's growth of 4.6 per cent during the period. The Organisation of Economic Development think growth could hit 8 per cent in 2016, returning India to the vertiginous heights of 2004 to 2012, when output averaged 8.2 per cent a year. At present, it is high time to check whether this ambitious target is possible at all. Belying expectations of an industrial recovery, India’s factory output growth slowed to 2.7 per cent in May as production of consumer goods contracted after a momentary pickup in April, signalling that rural demand remains fragile amid weak monsoon rainfall. Index of Industrial Production (IIP) growth for April, too, was revised down to 3.4 per cent from the provisional figure of 4.1 per cent released earlier. In June, the services industry contracted for a second month as new business again declined, suggesting Asia’s third-largest economy is struggling to maintain growth, the Nikkei Services Purchasing Managers’ Index (PMI) survey showed. The Narendra Modi-led National Democratic Alliance (NDA) government has been aggressive with its growth policies. This, however, hasn't translated into absolute growth figures as indicated by the aforementioned numbers. To achieve the target of becoming a $8 trillion economy by 2030, India will have to grow at a CAGR of 9.86 per cent. It means India will have to consistently whip out near double digit growth for the next fifteen years. However, the Modi government's promise of economic prosperity is not merely a political pledge. It is vital to secure the livelihoods of hundreds of millions of the country’s poorest. Growth over the past two decades is estimated to have already pulled 200 million out of poverty.
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As much as 86 per cent of the rural population and 82% of the urban population is without health-expenditure support. The average medical expenditure for treating one ailment without being admitted to hospital was Rs 509 in rural India and Rs 639 in urban India. Up to 58 per cent of hospital care occurred in private hospitals in rural India; it was 68% in urban India. Allopathy was the most prevalent form of treatment for both urban and rural India, and private doctors were the most important single source of treatment across India, according to the latest health survey conducted by the statistics ministry. Nearly 12 per cent of people in urban areas reported ailments over a survey period of 15 days, an increase of 2 per cent over the previous survey in 2004. Only 9 per cent of rural India reported some ailment during the period, a marginal increase. The urban-rural divide becomes more pronounced when you look at the age-wise break-up of those suffering ailments: The rural-urban divide is particularly evident in the 45-59 age group. While only 13 per cent of people in rural India reported some ailment, the figure was nearly 21 per cent in urban India, greater by 8 per cent. This was also evident in the 70+ category: 31 per cent in rural India were unwell, as against 37 per cent in urban India. Changing lifestyles are driving an epidemiological transition from communicable to non-communicable diseases across India, particularly urban India, IndiaSpend previously reported. The indicators are based on surveys between January and June 2014 across 4,577 villages in rural areas and 3,720 urban blocks spread across all states and union territories. The number of households contacted for the survey was 36,480 in rural India and 29,452 in urban India. Expenditure in private hospitals four times higher than in state hospitals While 4 per cent of people in urban India were hospitalised over the year before the survey, only 3.5 per cent of people in rural India were hospitalised. While 42 per cent in hospitals in rural India chose public hospitals, it was only 32 per cent in urban areas, as we mentioned. That means 58 per cent of the people in rural areas and 62 per cent in urban areas were treated in private hospitals. Expenditure in private hospitals was almost four times higher than in public hospitals: Rs 25,850 in private hospitals and Rs 6,120 in public hospitals. About 12% of the urban and 13% of the rural population got health insurance through the Rashtriya Swasthya Bima Yojana (National Health Insurance Scheme) or similar plans, the report said. Malayalees Sicker Than Other Indians Kerala reported the highest deviation for both urban and rural areas at 31 per cent, against the all-India ailment average of 12 per cent and 9 per cent, respectively. This implies prosperous Kerala, with one of India’s best public-health systems, is particularly susceptible to lifestyle diseases, as IndiaSpend has reported. Dipping Into Savings While 75 per cent of urban India relied on income or savings to pay hospital expenses, only 68 per cent of rural households could do the same. Almost 25 per cent of households in rural areas had to borrow money to meet hospital expenses. (Team IndiaSpend)
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The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a proposal for redevelopment of 400 railway stations on "as is where is" basis by inviting open bids from interested parties who will submit their designs and business ideas, including permitting commercial development of real estate by the zonal railways. This process of bidding is called the Swiss Challenge approach. Swiss Challenge is a new bidding process to help private sector initiatives in core sector projects. Explaining the Swiss Challenge process, Finance Minister Arun Jaitley said, "Any person with credentials can submit a development proposal to the government. That proposal will be made online and a second person can give suggestions to improve and beat that proposal." An expert committee will accept the best proposal and the original proposer will get a chance to accept it if it is an improvement on his proposal. If the original proposer is not able to match the more attractive and competing counter proposal, the project will be awarded to the counter proposal. The Swiss method, however, is already in use in states such as Karnataka, Rajasthan, Madhya Pradesh and Gujarat for road and housing projects. In 2009, the Supreme Court approved the method for award of contracts. This method can be applied to projects that are taken up on a private-public partnership (PPP) basis but can also be used to supplement PPP in sectors that are not covered under the framework. The railways alone cannot afford the redevelopment project as its finances are already constrained. At present, the railways has a very high operating ratio of about 91.8 per cent. The high operating ratio leaves very little financial resources for other essential areas like safety and expansion. It is expected that private players will bring in the much required funds, technical expertise and professionalism for station redevelopment. The government has also been scouting for foreign players from France and Japan to take part in its station redevelopment scheme. Requiring huge resources, the government has already decided to allow foreign direct investment (FDI) in certain segments of the railways, like coach manufacturing, station development, suburban rail and high-speed network. In its first Railway budget, the Narendra Modi-led government had focussed on passenger amenities and inviting private participation in the modernisation of infrastructure. The government planned to significantly upgrade passenger amenities and make them akin to airport terminal buildings. Similarly, the plan to leverage the extensive extent of railway land available has been talked about for years, without much progress being made. Commercial utilisation of railway land could be very profitable, but needs to be done with caution to prevent exploitation or corruption. The approval to leverage real estate assets is to lure the private sector which kept away from the redevelopment scheme of the previous government. Experts are of the view that the policy should be framed in such a manner that clearly defines the role of the private sector and the potential leverage they can extract out of the real estate assets.
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ADB today retained India's growth projection for the current fiscal at 7.8 per cent, making it the fastest growing economy, but cautioned that delay in land and taxation reforms could hinder growth. In its Supplement to the Asian Development Outlook, which was released in March, ADB lowered China's growth forecast to 7 per cent for 2015, from the earlier 7.2 per cent. For 2016, it is forecast to decelerate to 6.8 per cent. "India's growth forecasts remain at 7.8 per cent for this fiscal year and 8.2 per cent for next, supported by a healthy monsoon and new investment — and assuming concrete progress on reform," Asian Development Bank said. Indian economy grew 7.3 per cent in 2014-15.It also added that "risks to growth prospects could emerge from further delay in passing some legislations crucial to easing land acquisition for industry and to implementing a uniform goods and services tax (GST)". The land acquisition bill, which aims to make it easier for industry to acquire land for industrial corridors and other purposes, is facing stiff political opposition. The GST Bill, is currently being scrutinised by a Rajya Sabha Parliamentary Committee. The government proposes to roll out GST, which would subsume excise, service tax and other local levies, from April 2016. As regards the price situation, ADB said inflation remains low in India. It retained 2015 and 2016 inflation forecast at 5 per cent and 5.5 per cent respectively. ADB's estimates is, however, lower than the 8-8.5 per cent growth estimates of Indian government for the 2015-16 fiscal beginning April. It is better than 7.5 per cent projection by the International Monetary Fund (IMF). ADB has also trimmed the growth projection for developing Asia because of subdued economic activity in US and China. It expects developing Asia to grow at 6.1 per cent in 2015, slower than 6.3 per cent estimated earlier. ADB lowered the growth outlook for major industrial economies — the US, euro area and Japan — to 1.6 per cent, from the March projection of 2.2 per cent for 2015. For East Asia, it said, growth would be subdued and GDP would expand slower at 6.2 per cent in both 2015 and 2016. As regards Asia's largest economy China, ADB said the growth was slower than expected in the first half of the year. For full 2015, it has been revised down to 7 per cent and 6.8 per cent in 2016. For India, it said, the pace of GDP growth is expected to accelerate to 8.2 per cent in 2016-17, driven by continued service sector growth and removal of procedural bottlenecks that have hampered investment flow. "A healthy monsoon extending to early July has seen summer crop sowing increase 57.6 per cent over the last year and is expected to boost growth in agriculture. The number of new investment projects announced has continued to increase for the fourth consecutive quarter during the quarter ended June 2015, indicating brighter investment sentiment," it said. It added that improvements in indirect tax collection in the first quarter of the current fiscal points to some recovery in manufacturing. The index of industrial production rose at an average rate of 3.2 per cent in January–May 2015, double the 1.6 per cent growth in the same period of 2014. "Muted hikes in rural wages and minimum support prices and a healthy monsoon would help rein in food inflation, while low crude oil prices globally bode well for fuel inflation as diesel and gasoline prices have both been deregulated," ADB said. For Asia as a whole, ADB anticipates that food prices would drop by 11 per cent in 2015, much sharper than 6 per cent anticipated earlier. On the global oil prices, the ADO supplement retained the March forecast of USD 65 per barrel for Brent crude on average in 2015 but revised down the projection for 2016 from $75 to $70.(PTI)
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India's goods exports fell for the seventh straight month in June as global demand remained sluggish, underscoring the challenges Prime Minister Narendra Modi will face to maintain and further boost economic growth. Merchandise exports, equivalent to about a fifth of India's $2 trillion economy, have shown increasing weakness in recent months. In June, they contracted 15.82 percent year-on-year to $22.29 billion. While Modi aims to accelerate growth to over 8 percent in 2015-16, a global trade slowdown is undermining chances of an export-led recovery, while high interest rates and weak monsoon rains are putting the brakes on domestic demand. "It's a very sharp decline ... If this trend continues then we would expect a much lower GDP number," said N.R. Bhanumurthy, an economist at the National Institute of Public Finance and Policy, a Delhi-based think tank. Bhanumurthy, however, said he was hopeful India's exports will pick up pace as the global economy revives. Modi aims to almost double goods and services exports to $900 billion in the next four years, but his 'Make in India' initiative to attract foreign investors has yet to yield results even though big Asian tech investors are circling. Indian businesses are losing competitiveness due to high borrowing costs and the relative strength of the rupee, as well as the country's long-standing weaknesses - bad infrastructure, red tape and corruption. Hopes of a near-term cut in interest rates have been dampened by the latest figures showing that consumer price inflation rose to an eight-month high in June. A nuclear deal that foresees lifting sanctions against Iran offers one bright spot, at least, and could boost India's exports to the Islamic nation by over a third to $6 billion this fiscal year. Food exporters may gain most. Wednesday's data showed the trade deficit widened slightly to $10.83 billion from $10.41 billion in May. Imports in June fell 13.4 percent from a year earlier to $33.12 billion, their seventh consecutive decline, chiefly reflecting a slide in prices for oil - India's top import. Oil has fallen further after the nuclear accord between Iran and global powers. "Both exports and imports remain in the contractionary zone, and we think it is unlikely that exports will be a big driver of GDP growth," Goldman Sachs said in a note on Tuesday. While India's growth outlook has improved after Modi took charge last year, some of his vital reform proposals, crucial to boost growth further, have faced opposition protests. Next week's monsoon session of parliament is expected to be volatile, with political scandals likely to disrupt proceedings and put land, labour and tax reform bills on the back burner. (Reuters)
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Skilling India is an imperative for a strong, prosperous nation where inclusive growth is a reality for all sections of society, writes Miriam CarterThe clarion call to skill India echoes the sage petitions of Mahatma Gandhi, the Father of our Nation. During the Wardha Conference in 1937, he underscored the vital relationship between skills, self-reliance, and independence. Thus, the links between a skilled populace, economic growth, and social mobility were indelibly forged.Fast forward to 2015, and it is crystal clear that not only are these ideals profoundly reinvigorating discourse on our national ethos and democratic values, but potentially revolutionising vocational education and training – “skills” -- reforms to improve employability and job creation. Moreover, our abundant young and growing population makes India uniquely positioned to lead the global workforce for many years to come.Skilling India is an imperative for a strong, prosperous nation where inclusive growth is a reality for all sections of society. The National Skills Qualification Framework (NSQF) and increasing harmonization and coordination of myriad skills initiatives under the new Ministry of Skills and Entrepreneurship promise equal opportunity to quality skills training that is accessible and affordable, and does not shy away from preparing people for jobs, especially youths, girls, and women from rural India where the majority of the population lives. By providing skills for all --- school drop-outs to the educated yet unemployable -- leading to real employment, the nation will be transformed and inclusive development realised. Research literature on human capital theory and observations from developed and emerging economies provide compelling evidence of the correlation between education and training completion rates and improved quality of life indicators, gender equality, population stabilization, and employment.Much is at stake for India as the nation takes bold steps towards training the masses. The world is watching: Never before in history has such a Herculean task been attempted in less than a generation. To make strides, quality, relevance, equity, transparent and clear systems are the order of the day not to mention an army of (re)trained teachers and third party assessors; new curricula as well as innovative teaching approaches, reimagined learner materials and job-related practical experiences.Integration of technology and an upsurge in massive open online courses (MOOCs) for vocations will facilitate scaling skilling efforts. A sharpened focus on understanding and genuinely responding to the varied needs of diverse learners, many of whom are marginalized and disenchanted with an education system that has failed them, cannot be overstated. Expecting success along with providing the tools to succeed accelerates self-respect, confidence building, and character and values development, transferable life-skills that are needed in today’s workplaces around the globe.(The writer is Director, OP Jindal Community College)
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The government on Tuesday (14 July) clarified that "service charge" collected by certain restaurants and hotels is not "service tax", which is levied at a rate of 5.6 per cent on the total bill. In a statement, the Finance Ministry said some hotels, restaurants and eateries, besides charging for the food and beverages, are also levying "service charges" in their bills which are retained by them. Some of the consumers have a misapprehension that these "service charges" are being collected by the restaurant on behalf of the government as tax, it added. "It is clarified that these 'service charges' collected by the restaurants/hotels/eateries are retained by the restaurants/hotels/eateries and are not 'service tax' imposed by the government," the Ministry said. In case of air-conditioned eateries and hotels, the service tax at the rate of 14 per cent is charged only on 40 per cent of the bill amount. The effective service tax rate in respect of services provided in relation to serving of food or beverage by a restaurant, eating joint or mess having the facility of air-conditioning or central air-heating in any part of the establishment is 5.6 per cent of the total amount charged. The government had increased the service tax rate to 14 per cent from 12.36 per cent (including education cess) from June 1.(PTI)
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Deflationary trends continued for the eighth month in a row in June with the wholesale price- inflation slipping to (-)2.4 per cent, largely due to cheaper vegetable and fuel prices.However, pulses turned dearer.The overall Wholesale Price Index (WPI) based inflation was (-)2.36 per cent in May, the government data showed today.It has been in the negative zone since November 2014. A year ago in June 2014, inflation was 5.66 per cent.The data come a day after the retail inflation for the same month rose to an 8-month high of 5.4 per cent. Experts said the conflicting data would make it difficult to predict the next course of action for RBI, which has cut its rates three times so far this year.RBI mostly tracks the consumer price inflation for its monetary policy decision, and its next review is due on August 4. The central bank has said it would watch out for the data, including inflation, and the monsoon progress before any change in its policy rates.Last month, rate of price rise for food items, especially wheat, fruits and milk eased at the wholesale level. Overall wholesale inflation in food category declined to 2.88 per cent compared with 3.80 per cent in May.However, vegetable prices declined 7.07 per cent, with potato prices slumping 52.40 per cent.However, pulses got dearer by 33.67 per cent as against 22.84 per cent in the previous month.Inflation in fuel and power category stood at (-)10.3 per cent in June.The manufactured products index inflation was (-)0.77 per cent as against (-)0.64 per cent last month. Prices eased for cement, non-metallic mineral products and transport equipment and parts.According to some experts, RBI may not tinker with the rate in its August policy review as it would rather wait for more data on inflation. It would also wait for banks to pass on the benefit of three rate cuts during the year completely.Last month, RBI cut the repo rate (short-term lending rate) from 7.5 per cent to 7.25, but left all other policy tools like cash reserve requirement unchanged at 4 per cent and statutory liquidity ratio (SLR) at 21.5 per cent.(PTI)
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UN's Addis Ababa meet will discuss the funding issues and flows for the proposed Sustainable Development Goals which are set to replace the Millennium Development Goals, writes Simar SinghDiscussion has reached unparalleled heights in the run up to the Third UN Conference on Financing for Development (FFD) which will be held in Addis Ababa from the 13th to the 16th of this month. One such panel discussion was the ‘Consultation on Financing for Development’ held in New Delhi last Wednesday. The discussion was organised by the Research and Information System for Developing Countries (RIS), Forum for Indian Development Cooperation in association with the UNDP.The conference that is to be held in Addis is to discuss and finalise the funding issues and flows for the proposed Sustainable Development Goals (SDGs) which are set to replace the Millennium Development Goals (MDGs) that will expire by the end of the year. These will set the guidelines and benchmarks for the post 2015 development agenda.The issue of financing is at the heart of any global development agenda, with its ultimate success and implementation heavily reliant on it. Recognising this, the panel consisting of various stakeholders across academia, civil society, students and government representatives, agreed that there was the need for a clearly defined, healthy and inclusive finance structure.Move From A Donor-centric ApproachConcerns were raised about the donor centrism of existing global development financing, which unwarrantedly had a tendency of prioritising the wants, views and ideals of the developed nations, further bifurcating the North-South divide. This has been the existing structure of the MDG implementation and something that has been solidified in the Monterry Consensus in 2002, the subsequent Doha conference in 2008 and ODA (Official Development assistance) style funding.According to one of the panellists, Prof. Deepak Nayyar of JNU, where the MDGs lacked was that their real focus was on “concessional development” through aid, which essentially was the outcome of a donor-centric worldview. He stressed on his belief that “the connection between concessional development and development outcomes was elusive.”Instead, most agreed that there was a need to move away from a focus on external funding through transfers and aid to that derived from mobilizing nationally or regionally domestic resources.“There is more to development than external finance and there is more to external finance than aid”, said the professor as external financing tend to come paired with unfair rules that constrict and encroach upon internal policy spaces that are traditionally meant to be sovereign.Even when it came to external finance, issues were raised by the likes of Adarsh Saikia who is a member of the UN Department in the Ministry of External Affairs. Contention was about their unstructured and sporadic nature and the fact that they were no specific commitments made by developing countries.This reality possibly stems from the fact that till date there has not been the acceptance of the notion of common differentiated responsibility. This is an idea that has been largely resisted by global heavyweights and has lead to an ideological divide on the development template.“Cohesive nationally owned sustainable development strategies, supported by integrated national financing frameworks, will be at the heart of our efforts to eradicate poverty through facilitating sustainable economic growth and industrialization, social inclusion and environmental sustainability”, says the May 6 draft of the Addis FFD Accord, echoing this sentiment.New Strategies For Internal FundingDevelopment finance has historically been primarily flowed to fund poverty alleviation strategies and other social issues- compartmentalising itself to the social purview.Although industrial finance has contributed to the development trajectory, according to some of the panellists these provisions have been inadequate and did not solve long term problems on normal days, let alone crisis days.They added that the Capital market, particularly in India, was too restrained and unwilling to take risks. This local investment could help turn the wheels of development only if investors were willing to take risks, think long term in the way of creating a steady flow of capital over a sustained period of time. “This would create a variety of financial assets to cater to everyone.”Other ways to activate financial avenues apart from development finance were also discussed including deepening markets to supplement it, mobilizing savings and the local corporate debt market, developing a national capital market and promoting small local investments.The achievement of these was believed to be reliant on three dimensions – the promotion of inclusive economic growth, social inclusion and good governance.Subrat Das, Executive Director at the Centre for Budget and Governance Accountability added that the low cash to GDP was also an indicator that there was scope to mobilize domestic resources. Most developing Asian countries, including India, have less than 17% cash when compared to their respective GDPs because of the general inability to collect adequate tax revenue.According to him there was a need to strengthen tax administration and cooperation between countries to avoid the ‘race to the bottom’ (the phenomenon in which nations competitively engage in lowering tax concessions to attract investment).Learning From The Shortcomings Of MDGsThere was a reiteration of the need for SDGs to be different from the MDGs, not in terms of goals necessarily, but in terms of being more result orientated and creating stronger and better quality fund flows. A system that reviewed and created some accountability needed to be set up.Some even called for a paradigmatic shift from a concentration on poverty alleviation to the post-colonial concept of justice- a move away from a patronising lens or charitable approach to one that rendered greater inclusivity and empowerment. This process was seen to be best for India- which does have the capability of becoming reliant on internal funding as long as a global network of technology and knowledge sharing and transfer was set up. Development has to be “underscored by the principle of national ownership”.Involving the private sector is something that has been mentioned in the May 6 draft itself. This calls for “strengthening public finance and unlocking the transformative potential of people and the private sector, while ensuring that investment and consumption and production patterns support sustainable development, strengthening national and international policy environments, closing technology gaps and increasing capacity building at all levels”. This is a concept that has increasingly become important with the turn of the century.Some panellists criticised the existing draft for, just like the MDGs, being ambitious-which was good- but not looking at the problems of the existing structure that spurred inequality. This creates an essential, underlying incoherence in the document.It was agreed that there was the need to concentrate on the creation of a fair global economy and the reformation of hegemonic global monetary structures like the Bretton Woods institutions. This could be done by promoting greater South-South cooperation for eventual collective bargaining.
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