1. The Union Home Ministry has constituted committees to examine methods to curb the misuse of free movement along the Myanmar border. Does this indicate a shift in India’s policy towards Myanmar? (GS 2)
Myanmar shares unfenced borders and unhindered movement of people across the border. Free movement regime is unique in many ways as it has a visa-free movement regime for people living within 16 kms on either side of the border.
However this has been misused and pushed the government for shifting the policy:
- Free movement regime is being misused by militants and trans-border criminals who smuggle weapons, contraband goods and fake Indian currency notes.
- Taking advantage of the free-movement regime, occasionally they enter India, commit crimes and escape to their relatively safer hideouts.
- The reasons behind the union home ministry” recent decision are
- to stop militants and trans border criminals who smuggle weapons,fake indian currencies and various rare goods.
- to prevent trans border criminals who commit crime and escape easily.
- to isolate china’s influence on north-east states as china already influenced Burma.
However change in the policy is not there as Myanmar being a friendly country of India, Myanmar remains a important trading partner to India
- Kaladan project an initiative of both countries will help both countries trade immensely.
- Both countries are the members of BIMSTEC and Mekong -Ganga cooperation,helping India to develop its influence on ASEAN countries.
What can be done?
- The report has suggested dedicated crossing points in border villages, where policemen would be made in charge of regulating the movement of people.
- Despite a bumper harvest and a good monsoon the prices of agricultural produce are still very low,so this shows that the failure of the policy and issues of neglect.
Need for enabling a sustainable price discovery for agricultural produce:-
- There is not much awareness about MSP in the farmers ,so a sustainable price would actually help the farmers and also not all crops are covered under this which make farmers even more debt ridden.
- The state intervention of producing sustainable price shall help the farmer to make positive income and make a profit.
- The awareness should be enhanced through state programmes on sustainble prices for the farmers won’t sell their goods to local lenders at throw away prices.
- The government procurement at sustainable prices shall also help farmers in not selling the good at the local market by ‘fire sales’.
- With growing prices of fuel and inflation at its new level farmers duly need sustainable price for their survival.
- Freedom from Debt trap and participation of rural youth in the agriculture could be encouragement be done only by the Government’s assurance on provision of a sustainable price.
- India adopted a inflation target of 4% for next five years under the monetary policy framework as previously agreed and in line with the Centre’s focus on macroeconomic stability to boost growth while keeping prices in check.
India is unable to reach the target because of the following reasons:
- Some studies:
- The International Monetary Fund (IMF) in its latest World Economic Outlook (WEO) database, puts Indian inflation at above 5% till the end of 2019-20 and 4.9% by the end of 2021-22.
- The government’s fixing the inflation target at 4% +/-2 percentage points, as recommended by the Reserve Bank of India, signals that the political establishment too is committed to the fight against inflation.
- In short, getting inflation down to 4% and keeping it there by 2018 is going to be tough. There had been some speculation about a higher inflation target being prescribed to create room for a reduction in interest rates to boost growth.
- However, in a developing country like India, which has been growing over 7%, a focus on inflation means that the RBI would like to keep interest rates relatively high, which would slow economic activity and growth.
- This fear was realised when the RBI kept interest rates constant at its last policy meeting, when most analysts expected it to cut rates to support an economy hurt by demonetisation.
- The global consensus has shifted to a point where inflation targeting is not such a good idea for India
- Things like food inflation and fuel prices, which are largely determined by international prices, are beyond the RBI’s control.
- In fact, in countries like India, one of the main contributors to inflation is food inflation caused by excessive demand and limited supply of agricultural products.
- In India, it is the supply side factors which are causing inflation. The major reasons for inflation have been agricultural vagaries due to irregular monsoons and the huge imports of oil in the country.
- Monetary policy is more effective when it comes to controlling inflation caused by things like demand for bank loans purchasing homes and cars etc.
- A negative side of inflation targeting as a philosophy is that it openly accepts reduction of economic growth as a way to achieve price stability. But growth is as important as price stability.
- Also potential cost push pressures that may emerge, including the 7th Pay Commission award on house rent allowances, and the increase in minimum wages with possible spillovers through minimum support prices also restricted India to reach its goal.
However India’s inflation targeting works towards greater policy transparency and predictability, both of which should help in policy transmission and hence monetary policy effectiveness.
- At a time when large increases in wages are implemented in the public sector, moderate inflation expectations could help prevent spillovers to wage and price settings in other, sectors.
- Sustained moderate inflation would contribute to macroeconomic stability and help prevent a repetition of the short marked cycles of the past.
The demographic aspects need to be considered while managing inflation. India, which is unique given its young demographic status, should factor in the aspirations and consumption demand of the young population and focus on employment generation and growth, rather than low inflation rate, solely based on experiences of advanced countries