Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.
Hyperglobalisation and period after
The post-World War II period witnessed a rapid rise in trade between nations. By the end of the 1980s and early 1990s, global trade integration had reverted to levels last seen before World War I.
Term ‘Hyperglobalisation’ is used by the Economists to describe the phase between early 1990s up to the global financial crisis of 2008, during which the international trade witnessed dramatic increase.
After 2008 global financial crisis, many economists have argued that the phase of high trade has come to an end and went to the extent of claiming that hyperglobalisation was a one-time event unlikely to be repeated. Scepticism is expressed regarding a revival of global trade.
The below article assesses the following areas –
Why there was a rapid rise in international trade post-World War II? What factors led to high growth phase?
Whether the recently concluded hyperglobalisation phase is really a one-time event or is it likely to be repeated? Are there any signs of revival of global trade in future?
What policy measures should India follow to escape the global slowdown?
Factors that led to rapid rise in international trade post-World War II
Post World War II (from 1945) there was gradual development or rise in global trade partly due to reductions in policy barriers—first in the advanced economies, under the auspices of the then General Agreement on Tariffs and Trade (GATT), and later in developing countries, through unilateral liberalization actions or under programs with the International Monetary Fund (IMF) and World Bank.
Trade was also facilitated by technological advances, especially in shipping and transportation.
Increasing connectedness among nations lead to a virtuous cycle of economic expansion.
Whether the recently concluded hyperglobalisation phase is really a one-time event?
Proponents of this view argue that – the 19th century globalisation was underpinned by technological advances that facilitated trade. The advent of the telegraph enabled the communications infrastructure intrinsic to trade and the invention of the internal combustion engine enabled the fast, reliable and cheap transportation of goods across seas.
They view that these technological advances dwarf anything since, including the Internet, in terms of their capacity to expand trade. And, none is foreseen in the immediate future. Hence, claims that hyperglobalisation is a one-time even unlikely to repeat.
However, history shows that this type of ‘Hyperglobalisation’ or ‘high trade’ phase is not a new concept and similar kind of phase was experienced during last quarter of the 19th century when, for close to 50 years, the world saw an expansion in trade that was actually as great or even greater than during the recently concluded hyperglobalisation phase.
Then had also occurred an unprecedented movement of capital and of people. British capital flowed into building the railways across the world, immigrants moved from Europe to the United States and Asian labour was moved to the sites of deployment of western capital.
The fact is that the world has seen ups and downs of global traffic in goods, capital and people.
The phase of high trade which started from 1870 came to an end with the First World War and was to revive, slowly, only after the Second. Then, following the collapse of East European communism in the early 1990s, there was a resurgence in global trade. Now even this phase has somewhat abruptly ended with the global financial crisis.
Advances in technology had no doubt fuelled trade but the role of the growth in demand for these technologies is of high relevance. Trade expanded as the demand for goods and technology grew. Therefore, when global demand expands, countries can exploit the trade route to grow their economies again.
What policy measures should India follow to escape the global slowdown?
World economy is set to grow slowly for sometime and the current phase calls for reforms or replacement of 1991 economic policy in India.
It had been assumed then that globalisation was here to stay and India had to move in that position to ride to prosperity. This India has even successfully done in phases since.
However, policy makers should now recognise that the game may have changed substantially. The shift that has taken place is visible most in the IT industry (insecurity grips its particularly young workforce).
Recognising the diminished tempo of globalisation, India’s economic policymakers must address the growth of the home market, which is the demand for goods and services emanating from within the country. In the short run or the present, when the global economy is sluggish, only domestic investment can move demand.
Most economies will not be able to grow by exports alone and will need to take on significant structural reforms if they are to be better suited to handle the slower GDP growth that appears on the horizon.
Mark Blyth puts it this way, “The era of neoliberalism is over. The era of neonationalism has just begun.”
In India, we have been witnessing slowing or depressed private investment for close to five years by now.
Properly targeted public investment can do much to boost economic performance, generating aggregate demand quickly, fueling productivity growth by improving human capital, encouraging technological innovation, and spurring private-sector investment by increasing returns. Though public investment cannot fix a large demand shortfall overnight, it can accelerate the recovery and establish more sustainable growth patterns. India must now rely on our own devices to grow, in the sense of finding the source of demand. In a situation when private investment is not forthcoming, public investment has a role not only as a source of aggregate demand but also as catalyst. The Government of India would have a unique role to play now.
Connecting the dots:
What do you mean by the term ‘Hyperglobalisation’? Some economists have claimed that the recently concluded hyperglobalisation phase is really a one-time event, unlikely to be repeated. Do you agree? Give your opinion.
“The era of neoliberalism is over. The era of neonationalism has just begun.” Elucidate.
Discuss what policy measures should India take to escape the impact of global slowdown?
General studies 1:
Social empowerment, Development Issues
General studies 2:
Functions and responsibilities of the Union and the States, Local Government; Indian Constitution- features, amendments, significant provisions
Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections.
Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
The recent report of a joint task force on social audit has made unanimous recommendations that have opened the possibilities of social audit becoming a vibrant, independent and citizen-based monitoring system.
The Supreme Court too in an ongoing PIL has taken a note of these recommendations and is exploring strengthening social audit as a systemic solution in law.
The Comptroller and Auditor General in 2016 laid down “auditing standards” for social audit. This, as the CAG office states in the introduction is, “the first ever such exercise for the formulation of standards for social audit in the world”. It is indicative of a remarkable trajectory in the expanding theoretical and practical framework of social audit over the past two decades.
In the last few months, the Union rural development ministry is promoting social audit of the work, the official said. Rules for such audits have been framed in consultation with the Comptroller and Auditor General of India (CAG).
What is social audit?
With its roots in rural Rajasthan, social audits refer to a legally mandated process where potential and existing beneficiaries evaluate the implementation of a programme by comparing official records with ground realities. The public collective platforms of jansunwais or public hearings that social audits conclude with remain its soul.
Difference between Government, People’s and social audit:
Pic credit: Indian Journal of Community Medicine, Vol. 36, No. 3, July-September, 2011, pp. 174-177
Objectives of social audit :
Accurate identification of requirements
Prioritization of developmental activities as per requirements
Proper utilization of funds
Conformity of the developmental activity with the stated goals
Assessing the physical and financial gaps between needs and resources available for local development
Creating awareness among beneficiaries
Increasing efficacy and effectiveness of local development programmes
Scrutiny of various policy decisions
Benefits of social audit:
In the course of a social audit, individuals and communities get empowered and politicised in a way that they experience the practical potential of participatory democracy.
Social audit process at times results into redistribution of power based on evidence and fact. For instance, when it is publicly read out that many workers who worked under the MGNREGA are still waiting for their wages, whereas family members of the sarpanch who never visited, let alone worked on a NREGA worksite, receive uninterrupted wage payments into their bank accounts, the reaction could range from anger to a firm determination for answers.
Where social audits have been able to take place effectively, they have served as an important tool to detect corruption and influence redress. Nearly Rs 100 crore has been identified as misappropriated funds through social audits under the MGNREGA, out of which nearly Rs 40 crore has been recovered. The impact of continuous cycles of social audit in deterring potential corruption is beyond quantification.
The government can decide to use social audit and harness peoples’ energies in facing the vast challenge of implementation and monitoring.
Thus social auditing helps ensure transparency, accountability, and citizen participation.
Hurdles in social audit:
Institutionalisation on the ground has been inadequate, and has faced great resistance from the establishment.
The lack of adequate administrative and political will in institutionalising social audit to deter corruption has meant that social audits in many parts of the country are not independent from the influence of implementing agencies.
Social audit units, including village social audit facilitators, continue to face resistance and intimidation and find it difficult to even access primary records for verification.
Lack of any legal proceedings for not following social audit principles. Unless there is a stringent penalty on authorities for not implementing social audit, they will not give up control because it reduces their kickbacks and authority.
Lack of education among the common masses. Since common people are not that educated, they do not know their rights, let alone get them enforced.
Untimely transfer of functionaries makes it difficult to have appropriate responsibility fixation
Lack of people participation, Timely meetings are not held, No follow up
In an age where phrases such as open data and open government are used in any conversation around governance, social audits should serve as a critical point of reference. Social audit is no longer a choice. Along with other transparency and accountability platforms, it is a legal, moral, and democratic necessity.
Connecting the dots:
What do you mean by social audit? Despite its potential in implementing and monitoring various welfare schemes, it is yet to be institutionalized. Critically analyze.