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Future of development
Dr. M.S. Kapadia
The new millennium has seen some trends that encompass both national and global sectors, pertaining to socio-economic-political areas. These trends, though presently at a nascent stage, are expected to shape future macro developments.
Kyoto Protocol
On February 16, 2005, the Kyoto Protocol came into effect. The Kyoto Protocol is a legally binding international agreement to reduce greenhouse gas emissions causing climate change. The genesis of this agreement dates back to December 1977, when more than 160 nations met in Kyoto, Japan, to negotiate binding limitations on greenhouse gases for the developed nations. These greenhouse gases include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), per fluorocarbons (PFCs) and sulphur hex fluoride (SF6).
The protocol calls upon the industrialised countries to reduce emissions of these greenhouse gases, translated to "CO2 equivalents" by 5 per cent by 2012. Parties to the Protocol have to implement:
- Design and implementation of climate change mitigation and adaptation programmes
- Preparation of a national inventory of emissions removals by carbon sinks
- Promotion of climate friendly technology transfer fostering partnerships in research and observation of climate science, impacts and response strategies
The United Sates of America, one of the original signatories, withdrew support for the Kyoto Protocol in March 2001. The main reason for the withdrawal being that the requirements to cut greenhouse gas emissions by 7 per cent below 1990 levels by the year 2012 would put a strain on its economy.
Developing countries are not legally bound to emissions reduction targets as yet, because these countries have historically been responsible for only a small portion of the global greenhouse gas emissions.
Extraction industry
As much of the world's natural resources are located in developing countries, the spread of foreign investment into mining is more pronounced. With high global prices for minerals like crude oil, coal, copper, iron ore etc., single-location extraction industry-based integrated operations may become unwieldy and, therefore, uneconomic, while the profitability of stand-alone extraction industry would see sharp improvement.
Knowledge industry
Globalisation has heightened demand for knowledge as an economic resource. Software exports and BPO incomes exceed engineering exports in the country. While intellectual property rights covering trade marks, industrial designs, knowhow etc., are heavily tilted in favour of developed countries, indigenous groups from developing countries are increasingly getting assertive. Globalisation has made it easier for these people to orgranise, raise funds and network with other groups round the world.
Workers' remittances
Workers' remittances have emerged as an important source of financing for many developing countries. The remittances are likely to increase as the differential demographic dynamics become more pronounced. Activation of Mode 4 of General Agreement on Trade in Services (GATS), namely movement of personnel for service delivery abroad, would accelerate these flows. Reductions in transaction costs of financial intermediaries would facilitate larger flows through organised channels.
End of MFA
The end of export quota restrictions on textiles and textile products as reflected multi-fibre agreements from January 2005 should see Indian textile industry regain partly its lost position. There are already signs of revival in investment in segments of textile industry that cater to exports.
GATS
World Trade Organisation (WTO) regulations for trade in services are in different stages of evolution in individual nations. Over the coming years, this is expected to open up a huge market for investment and trading in services like insurance, banking, financial services, transport, telecom, engineering, computer & software, R&D etc. India's earnings through services were nearly three-fifths of merchandise exports during April-December 2004, against around two-fifths two years back.
India-China
China has emerged as the most important trading partner for India, on the way to overshadowing USA shortly. India and China are the top two populated countries and both are on the upswing, though on different scales. The question is: Would these two countries compete or cooperate in global business? Signs point towards increasing understanding between the two. This scenario is likely to profoundly impact global demand-supply situation.
Waste management
While there is a well-laid chain from production to consumption, there is no reverse chain in what remains post-consumption of consumables, back to their enterprise-level reprocessing and production, and re-consumption. With exponential growth in industries and households, which would in turn lead to a multifold rise in solid, gaseous and liquid waste, there could emerge business ventures in waste collection, transport and recycle. Already, local government bodies are offering these facilities on BOT basis, sweetening the same with incentives. This would also give rise to demand and production of waste recycling equipment.
Regional dimensions
Economic, cultural, regional, political divergences of the Indian Federation are coming into focus. This is best reflected in per capita incomes, investment and human development levels in different states. Thus, per capita incomes range from Rs 6,213 in Bihar to Rs 29,963 in Haryana with the national average being Rs 20,989. Likewise, the lead state Kerala's human development index is one-and-a-half times the national average, while in Bihar it is at half this level. The Planning Commission can be expected to take cognisance of these imbalances in their strategies to achieve the targeted growth for the country.
In another development, the Central government's sway over state finances is getting less pronounced with successive Finance Commissions putting more money into the hands of the state governments and, in fact, local bodies like gram panchayats. States are chalking out business-like strategies to attract industries.
In yet another development, value added tax (VAT), the most ambitious tax reform in the post-Independence era, which seeks to bring uniform tax regime across states from April 2005, indicates the maturity of state politics, notwithstanding initial problems in implementation.
[2 May 2005]
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