Wednesday, November 27, 2013
Renewable Energy: Market and Policy Environment in India; Vivan Sharan and Andrea Deisenrieder; September, 2013
India's significant economic growth over the last decade has led to an inexorable rise in energy demand. Currently, India faces a Ichallenging energy shortage. To grow at 9 per cent over the next 20
years, it is estimated that its energy capacity must increase by approximately 5.8 per cent per year. While more than 70 per cent of India's energy is generated from coal based plants, by the end of March 2012, 12.26 per cent of India's energy installed capacity was from renewable sources. This number is expected to increase to 17.12 per cent by March 2017. India's renewable energy market relies heavily on incentives provided by government programmes. This paper outlines
the potential of renewable energy in addressing India's energy supply and access; it identifies challenges and provide a discursive overview of the various market and policy instruments developed to scale up renewable energy generation.
Link to the Paper: http://orfonline.org/cms/export/orfonline/modules/occasionalpaper/attachments/occasionalpaper47_1384251016780.pdf
years, it is estimated that its energy capacity must increase by approximately 5.8 per cent per year. While more than 70 per cent of India's energy is generated from coal based plants, by the end of March 2012, 12.26 per cent of India's energy installed capacity was from renewable sources. This number is expected to increase to 17.12 per cent by March 2017. India's renewable energy market relies heavily on incentives provided by government programmes. This paper outlines
the potential of renewable energy in addressing India's energy supply and access; it identifies challenges and provide a discursive overview of the various market and policy instruments developed to scale up renewable energy generation.
Link to the Paper: http://orfonline.org/cms/export/orfonline/modules/occasionalpaper/attachments/occasionalpaper47_1384251016780.pdf
A Long Term Vision for BRICS; Samir Saran, Vivan Sharan and Ashok Singh; Released on 20th September, 2013
The Observer Research Foundation – the official Indian Track II coordinator at the BRICS Academics and Experts Grouping from the five BRICS nations (Brazil, Russia, India, China and South Africa) – hosted the 4th BRICS Academic Forum in New Delhi between March 4-6, 2012. Delegates at the forum presented papers, debated and discussed key areas of cooperation and coordination among the BRICS countries. The recommendations that emerged from the deliberations were submitted to the Heads of States of BRICS nations who met later that month in New Delhi.
Following up from the Delhi Declaration and the Delhi Action Plan articulated by the Heads of States at the March 2012 summit, this document aims to formulate a long-term vision for BRICS. It was submitted to the BRICS Think Tanks Council in March 2013 in Durban for consideration of other BRICS academic and research institutions in the respective countries. A “Long Term Vision for BRICS” is currently being finalised by the concerned South African institutions, based on the initial submissions of this document.
'The Future of Aid' - Traditional Aid Has No Future: Markets and India’s Lines of Credit, Global Policy Journal, Vivan Sharan, 18 November, 2013
This column by Vivan Sharan is part of Global Policy’s e-book, ‘Emergence, Convergence and the Future of Aid’, edited by Andy Sumner. Contributions from academics and practitioners will be serialised on Global Policy until the e-book’s release in the first quarter of 2014. Find out more here or join the debate on Twitter #GPfutureofaid.
The events of September 09, 2001 shook the world. They reaffirmed the fact that domestic security of nation states in the West is also a function of external stability in geographies near and far. While globalisation has created wealth, it has done so disproportionately. Hard data shows that the world is more unequal now than ever before. Aid has traditionally been projected as an instrument of support or relief for those left at the so called economic ‘periphery’ – and perhaps has even been deployed in the same spirit, to bridge the sharp cleavages created by the international system. Ravaged by poverty, hunger and disease, African countries have been the ‘recipients’ of around US$ 2 trillion of such aid since 1950.
In 2005, 15 countries of the European Union (EU) agreed to achieve a target amount of ‘Official Development Assistance’ (ODA) by 2017, a term which the Organisation of Economic Cooperation and Development (OECD) defines as the concessional part of the resource flows towards developing countries. An equivalent spending target of 0.7 per cent of Gross National Income (GNI) on ODA was first pledged in a UN General Assembly Resolution in 1970, by a group of 35 economically advanced countries, without specific timelines.
However, the Global Financial Crisis has left advanced economies with very little fiscal room to manoeuvre. National budgets have shrunk, and spending decisions are under scrutiny. The situation is particularly severe in the EU, which has seen bilateral aid budgets stagnate at 2012 levels. Accounting for inflation, this means there is now a year on year decline in spending on ODA and the chances of achieving the 2017 target are remote. As growth and job creation dwindle, the case for increased spending on external assistance is becoming increasingly politically difficult to navigate for EU leaders. What does this mean for the future of traditional aid?
Traditional aid defined as ODA has largely been the remit of OECD countries. At the same time, there is little doubt that the global economic centre of gravity now lies somewhere to the East of Europe. Concomitantly, the aid discourse emanating from the West is now underpinned by two narratives. The first is that ‘emerging countries’ must share commensurate aid ‘burden’ with OECD countries. And the second is that this burden sharing must take place within suitable frameworks of accountability and effectiveness which have been developed and refined by OECD countries. Viewed from India, this discourse is redundant.
India’s history of external development assistance can be traced back to its independence from British rule in 1947. Its programmes were driven by a principle of solidarity with postcolonial states in Asia and Africa, and not a donor-recipient framework that is characterised by ‘tied aid’. India’s development assistance strategy was shaped by its political stance in global matters, such as ‘Non Alignment’ with geopolitical blocs. While normative principles were never enshrined as policy, India’s aid was, and continues to be premised on mutual benefit rather than burden sharing. Similarly, ‘South-South Cooperation’ is a wide and symbiotic concept that circumscribes India’s development cooperation, and encompasses trade and investment flows.
Over the past decade or so, rapid economic growth has made India a prominent stakeholder in global political and economic governance system. A self aware India, no longer accepts tied aid, and is deploying upwards of US$ 1 billion annually through its development cooperation programmes. In 2012, to maintain strategic consonance with its foreign policy objectives, the Indian Ministry of External Affairs created the Development Partnership Administration (DPA) to manage development assistance programmes. The DPA has centralised within its fold, various functions that were previously disaggregated under multiple institutions and departments.
One of the main instruments of India’s development cooperation, which is coordinated through the DPA, is the Lines of Credit (LoC) scheme. Under this scheme, a concessional rate of interest is extended to overseas borrowers for importing goods from India, by the Indian EXIM bank. The difference between the market rate of interest extended to borrowers and the concessional rate – is provided through the government’s budgetary resources. However, unlike other forms of development assistance, LoCs are relatively unconstrained by the national budget, since the EXIM bank raises funds for them from international debt markets.
In 2012, the total amount of open LoCs was already over US$10 billion. While LoCs are a key instrument for development cooperation, they are fundamentally market based and demand driven. These elements make it the perfect tool for leveraging relatively modest sums of money through the markets, and for benefiting both countries involved. They are simultaneously a form of export promotion for domestic industry, and concessional lending which can fuel consumption and growth in countries that choose to borrow. The Indian experience shows that while LoCs may not check all the boxes of aid effectiveness since all their real impacts are not directly measurable, they cannot be discounted as credible and sustainable instruments of foreign aid.
Markets tend to get a lot of bad press during financial crises. Yet only markets offer solutions for economic rebalancing at the sheer scale and urgent pace at which it is required. Crisis or not, developed countries cannot wish away their historical responsibility and should not obfuscate the aid discourse by alluding to the incumbent responsibility of ‘emerging’ countries. The new stakeholders in the international system, including India, are not easily compelled by the rather misplaced set of assumptions that underpin this discourse. And indeed the accompanying dissonance between responsibility sharing and burden sharing is not easily resolved unless a truly inclusive, innovative and flexible global partnership can be instituted.
By using the markets, whether for programmes on trade similar to the LoC scheme, poverty alleviation through impact investments or even climate change mitigation through pooled funds that can be leveraged through market instruments; developed countries still have a lot to offer the international community – particularly the developing world. However, this would involve a fundamental recast of traditional aid into a wider framework, wherein there would be opportunities to learn and work with the global South.
Vivan Sharan is an Associate Fellow at the Observer Research Foundation, India.
Less corporate, more social: Op Ed for the Hindu, Vivan Sharan and Samir Saran, August 10, 2013
http://www.thehindu.com/opinion/op-ed/less-corporate-more-social/article5007515.ece
CSR principles enshrined in the Companies Bill 2012 offer businesses a chance to transform their poor record in community participation and development
Finally we are seeing some signs of life in the business of legislation. Not surprisingly, one of the early beneficiaries is the Companies Bill (2012) which shall replace a six decade-old antiquated law after Presidential assent. The Bill, which was passed in the Upper House this week, was earlier approved by the Lok Sabha in December 2012 and reflects a number of amendments to the Companies Bill, 2011, based on the recommendations of the Parliamentary Standing Committee on Finance. It encompasses important areas for the effective governance of companies including clauses on mergers, audit and auditors, appointment of company directors, aside from providing for constitution of a National Company Law Tribunal and a National Company Law Appellate Tribunal to fast-track company law cases and corporate structuring.
Crucial
Perhaps, the most important new element introduced in Clause 135 of the Bill is the notion of mandatory Corporate Social Responsibility (CSR). Colloquially referred to as the “2 per cent clause,” it has the potential to transform the landscape of CSR in India. Indian businesses have been loath to go beyond the “glorified worker towns” syndrome or providing employee services and benefits passed off as social interventions. Indeed, “Corporate India” has fared rather poorly when it comes to affirmative action in employment, environmental responsibility and in resource efficiency and revitalisation over the years. Therefore, a scheme that potentially transfers profits towards social causes, environmental management and inclusive development could be the much needed medicine for a nation with such deep socio-economic cleavages. This provision in the new bill must be welcomed and its efficient implementation must be ensured.
It is important that Clause 135 is complemented and supplemented with regulatory and institutional mechanisms to ensure that it actually results in a new paradigm of “stakeholder responsibility” and does not become another scheme where a paternalistic government is able to create another framework of patronage that the politician-businessperson nexus finds favourable for its dealings. This hypothesis needs to be carefully examined, particularly in the context of the upcoming general election, when political masters are at once beholden to corporates for election funding, and where constituency-level CSR commitments could be politically useful.
However, beyond the “profit for patronage” issue, there are some other aspects that must be discussed. The new law will make it incumbent for companies having a net worth of Rs.500 crore or more, or a turnover of Rs.1,000 crore or more or a net profit of Rs.5 crore or more, during any financial year, to spend at least two per cent of net profits towards CSR activities. While this seems uncomplicated, the efficacy in implementation may be in doubt for more than one reason.
The whole concept of CSR must, by its very definition, be a product of the fundamental need to price services, infrastructure and resources that societies provide businesses located in their proximity. By mandating a plain vanilla formula for allocation of two per cent of net profits towards CSR, the law will create a locational distortion, delinking CSR from community responsibility. Businesses must be responsible for proximate communities first, rather than being able to choose the destination of this commitment to society.
There is also a temporal distortion in the construct of CSR as spelt out by the Bill. Paragraph 5 of Clause 135 states that two per cent of the average net profit over three immediately preceding years must be allocated for CSR activities. In the case of most large companies of the sort that would be mandated to allocate net profits, business operations would have had a run-off effect on societies and would have fed off communities for more than three years. Therefore, must not the commitment to these communities and geographies reflect the impact of these businesses over their operation periods? And is there not a case for ensuring sustained “plough back” by the company in these geographies before diverting their commitments elsewhere?
Implementation
Even as we begin to debate how best to address these “time-place” distortions, it is certain that the CSR mandate must be made more robust, ensuring that at the very least it stands up to some simple tests of reasonableness and fairness. There are a number of ways to achieve this baseline objective.
First, voluntary policies that ensure a stakeholder approach to CSR is followed by corporates already exist and must be strengthened. The National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) suggest nine core principles which businesses should follow. Principle 8 for instance, directly alludes to coherent, social impact measures and assuring “appropriate resettlement and rehabilitation of communities who have been displaced owing to their business operations.” Integration of NVGs, initiated by the Ministry of Corporate Affairs, in the form of more constructive guidelines for deploying corporate CSR policies, is a viable option.
Second, CSR policies must be determined organically, through demand-driven consensus. Instead of being the mandate of high-level committees, company specific CSR policies should flow from a transparent interface between community stakeholders and corporates. The process must be devolved below the level of the corporation, to the level of the business unit. Corporate leaders and civil servants in the national capital must not determine community engagement strategies. Community stakeholders and the business units concerned must. Allocations must also be made on the basis of how much different stakeholders can absorb.
Employee benefits
Concomitantly, employee benefits must not be passed off as CSR. Such tricks are already used by the banking sector, wherein mandated priority sector lending targets are often met through incredibly convoluted means, including issuance of no-frills/general credit cards for their own contracted workers. A “tick-the-box” approach is simply not legitimate.
The third suggestion also follows from this. A demand-driven process for articulating company specific CSR policies must be instituted at the district level. Consultations can be steered by public officials such as district magistrates, involving village and town leaders and representatives. Decisions could be made through majority outcomes, and the process must be recorded and filed. This sort of a process has the potential to create a public accountability framework for delivery of CSR far superior to legal provisions that we fail to enforce.
Audit
Fourth, as this culture evolves over time, CSR allocations must not remain consigned to bottom line (profits) commitments. Obligations to community stakeholders must be placed alongside the top line (receivables and debt) and must be considered seriously as the next step as CSR must not be an afterthought to profit accumulation. It must be embedded within the very fabric of large businesses.
Finally, there are multiple concerns around the audit of CSR and a discomfort with the lack of audit and oversight required for CSR activities. “Comply or explain” simply has not worked in the case of other existing regulatory frameworks that deal with corporate governance issues. It is time to realise that in India, only a few are in a position to ask, while nobody is in any hurry to explain.
(Samir Saran is vice-president and Vivan Sharan, an associate fellow at the Observer Research Foundation, a New Delhi-based public policy think tank.)
Mitigating Carbon Emissions in India: The Case for Green Financial Instruments
The link to the report: http://www2.gtz.de/wbf/4tDx9kw63gma/Low%20Carbon%20Growth%20Path%20-%20MT%20Soft%20copy.pdf
Published by Deutsche Gesellschaft für Internationale Zusammenarbeit, August 2012
Authors:
Samir Saran, CEO, Gtrade Carbon Ex Rating Services Private Limited
Vivan Sharan, Business Head, Gtrade Carbon Ex Rating Services Private Limited
Bhuvanesh Kumar, Senior Research Analyst, Gtrade Carbon Ex Rating Services Private Limited
Prof. Amit Garg, Indian Institute of Management, Ahmedabad
Aniruddha Shanbhag, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Published by Deutsche Gesellschaft für Internationale Zusammenarbeit, August 2012
Authors:
Samir Saran, CEO, Gtrade Carbon Ex Rating Services Private Limited
Vivan Sharan, Business Head, Gtrade Carbon Ex Rating Services Private Limited
Bhuvanesh Kumar, Senior Research Analyst, Gtrade Carbon Ex Rating Services Private Limited
Prof. Amit Garg, Indian Institute of Management, Ahmedabad
Aniruddha Shanbhag, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Capital Markets and Sustainability: A Baseline Evaluation of the Indian Context
Published by Deutsche Gesellschaft für Internationale Zusammenarbeit, June 2013
Link to report: http://www2.gtz.de/wbf/4tDx9kw63gma/Capital%20Markets%20-low-NJ2.pdf
Authors:
Vivan Sharan, Business Head, G-trade Carbon Ex Rating Services Pvt. Ltd.
Aled Jones, Director, Global Sustainability Institute, Anglia Ruskin University, Cambridge
Aniruddha Shanbhag, Technical Advisor, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Link to report: http://www2.gtz.de/wbf/4tDx9kw63gma/Capital%20Markets%20-low-NJ2.pdf
Authors:
Vivan Sharan, Business Head, G-trade Carbon Ex Rating Services Pvt. Ltd.
Aled Jones, Director, Global Sustainability Institute, Anglia Ruskin University, Cambridge
Aniruddha Shanbhag, Technical Advisor, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Monday, August 5, 2013
The IBSA Moment, Global Times, Samir Saran, Vivan Sharan, 22 July, 2013
http://www.globaltimes.cn/content/798099.shtml#.Uf6tCZKw284
June 6, 2013 was the 10th year anniversary of the seminal Brasilia Declaration by the foreign ministers of India, Brazil and South Africa, formalizing the cooperative mechanism better known as India-Brazil-South Africa Dialogue Forum (IBSA).
India, currently the chair of IBSA, is responsible for steering the agenda for trilateral collaboration.
In its capacity as chair, it is incumbent upon India to revitalize the geopolitical group, which has been so central to the construct of "South-South Cooperation" that engages most political thinkers today.
Developing countries with converging interests have a lot to gain from coordinating positions on a wide spectrum of issues. And indeed India is also uniquely placed to establish its own global identity and brand through the group.
At the end of the Durban summit earlier this year, BRICS resembled a schizophrenic milieu; a strange mix of countries from the Group of 77 and Russia. Under South Africa's chairmanship, there was a visible failure to shed the identity of reactionary "trade unionists."
Moreover, consumed by regional aspirations of one member, instead of being representative of a fast moving lithe club of five, BRICS appeared to be burdened with carrying the divergent and diverse aspirations of an additional continent on its shoulders.
The IBSA countries must not let ownership of the South-South agenda slip away. This, we feel, would require at least three conceptual underpinnings.
First, the format for engagement must remain unburdened and the core values undiluted. That is, the dialogue must continue to follow the format already instituted. Proxy memberships of other countries through regional institutions, must not constrain the nimble grouping. Regional issues must be represented, without members themselves becoming stubborn regional representatives.
Second, a common thread which ties all three IBSA members is their robust democratic institutions and frameworks. Democratic values must be kept at the forefront. The legitimacy that such a governance ethos can bring is perhaps unmatched. The cries for reform of the existing global governance architecture converge with the imperative of ensuring legitimacy through democratic transparency.
IBSA offers member countries an audible voice on the global governance high table, and democracy is an undervalued and underutilized trump card that they each possess.
Finally, for each of the IBSA members, the next few decades need to be centred on inclusive growth. Each is an emerging "middle power," and each needs to harness growth to craft sustainable trajectories, unleashing drivers of socio-economic progress including productivity, innovation and social welfare.
IBSA offers its members a moment for cooperating on this incumbent need. IBSA must focus on itself even as it reaches out.
A lot has already been discussed under the IBSA umbrella. Conversations on reform of Bretton Woods institutions, regional issues (particularly the Arab-Israeli imbroglio), sectoral cooperation ranging from tax administration to higher education, people-to-people linkages, free trade agreements, to name a few prominent areas, have taken place.
Additionally, we suggest that IBSA members must explore collaborating on three specific agenda items.
The first is that IBSA must reach out to other democracies, perhaps initially by according observer status to similarly placed countries. Replicating the format followed by the Shanghai Cooperation Organisation could be a viable alternative, and serve as a suitable whetting process for new members.
Second, IBSA must shed its reluctance to share its own deep reservoir of democratic experiences. Clearly, Atlantic countries cannot and do not offer the only appropriate models of development for democracies. In this post-Washington Consensus era, IBSA members possess a number of experiences which provide a template for the developing world. These must be mapped, shared and discussed.
The third concrete action item must be to move towards a new format for ocean governance. India-Brazil-South Africa Maritime, a naval exercise conducted between the three navies (an element of IBSA's regional cooperation), is an ideal point of departure.
IBSA members can also begin to address issues dealt under the United Nations Convention on Law of the Sea, to develop a robust international framework for governing the oceans and seas. A new framework articulated by the South would have a compelling weight.
The conceptual underpinnings and agenda discussed here can prove to be levers of IBSA's transformation. The decade old cooperative mechanism has endured, and now it is time for it to mature and deliver.
June 6, 2013 was the 10th year anniversary of the seminal Brasilia Declaration by the foreign ministers of India, Brazil and South Africa, formalizing the cooperative mechanism better known as India-Brazil-South Africa Dialogue Forum (IBSA).
India, currently the chair of IBSA, is responsible for steering the agenda for trilateral collaboration.
In its capacity as chair, it is incumbent upon India to revitalize the geopolitical group, which has been so central to the construct of "South-South Cooperation" that engages most political thinkers today.
Developing countries with converging interests have a lot to gain from coordinating positions on a wide spectrum of issues. And indeed India is also uniquely placed to establish its own global identity and brand through the group.
At the end of the Durban summit earlier this year, BRICS resembled a schizophrenic milieu; a strange mix of countries from the Group of 77 and Russia. Under South Africa's chairmanship, there was a visible failure to shed the identity of reactionary "trade unionists."
Moreover, consumed by regional aspirations of one member, instead of being representative of a fast moving lithe club of five, BRICS appeared to be burdened with carrying the divergent and diverse aspirations of an additional continent on its shoulders.
The IBSA countries must not let ownership of the South-South agenda slip away. This, we feel, would require at least three conceptual underpinnings.
First, the format for engagement must remain unburdened and the core values undiluted. That is, the dialogue must continue to follow the format already instituted. Proxy memberships of other countries through regional institutions, must not constrain the nimble grouping. Regional issues must be represented, without members themselves becoming stubborn regional representatives.
Second, a common thread which ties all three IBSA members is their robust democratic institutions and frameworks. Democratic values must be kept at the forefront. The legitimacy that such a governance ethos can bring is perhaps unmatched. The cries for reform of the existing global governance architecture converge with the imperative of ensuring legitimacy through democratic transparency.
IBSA offers member countries an audible voice on the global governance high table, and democracy is an undervalued and underutilized trump card that they each possess.
Finally, for each of the IBSA members, the next few decades need to be centred on inclusive growth. Each is an emerging "middle power," and each needs to harness growth to craft sustainable trajectories, unleashing drivers of socio-economic progress including productivity, innovation and social welfare.
IBSA offers its members a moment for cooperating on this incumbent need. IBSA must focus on itself even as it reaches out.
A lot has already been discussed under the IBSA umbrella. Conversations on reform of Bretton Woods institutions, regional issues (particularly the Arab-Israeli imbroglio), sectoral cooperation ranging from tax administration to higher education, people-to-people linkages, free trade agreements, to name a few prominent areas, have taken place.
Additionally, we suggest that IBSA members must explore collaborating on three specific agenda items.
The first is that IBSA must reach out to other democracies, perhaps initially by according observer status to similarly placed countries. Replicating the format followed by the Shanghai Cooperation Organisation could be a viable alternative, and serve as a suitable whetting process for new members.
Second, IBSA must shed its reluctance to share its own deep reservoir of democratic experiences. Clearly, Atlantic countries cannot and do not offer the only appropriate models of development for democracies. In this post-Washington Consensus era, IBSA members possess a number of experiences which provide a template for the developing world. These must be mapped, shared and discussed.
The third concrete action item must be to move towards a new format for ocean governance. India-Brazil-South Africa Maritime, a naval exercise conducted between the three navies (an element of IBSA's regional cooperation), is an ideal point of departure.
IBSA members can also begin to address issues dealt under the United Nations Convention on Law of the Sea, to develop a robust international framework for governing the oceans and seas. A new framework articulated by the South would have a compelling weight.
The conceptual underpinnings and agenda discussed here can prove to be levers of IBSA's transformation. The decade old cooperative mechanism has endured, and now it is time for it to mature and deliver.
India's Development Cooperation: Charting New Approaches in a Changing World, Vivan Sharan, Ivan Campbell, Daniel Rubin, July 2013
As India's economy has grown in recent decades, the range and volume of its development
cooperation has increased significantly. While the definition of India's development cooperation is debated, foreign spending in 2013-2014 on aid is estimated to rise to $1.3 billion. India's growing stature as a global development actor has generated much international interest on the nature and evolution of its external assistance programmes.
click here to read the special report
cooperation has increased significantly. While the definition of India's development cooperation is debated, foreign spending in 2013-2014 on aid is estimated to rise to $1.3 billion. India's growing stature as a global development actor has generated much international interest on the nature and evolution of its external assistance programmes.
click here to read the special report
The International Rules Based Architecture: Identifying Indian Priorities, Vivan Sharan, June 2013
The Observer Research Foundation (ORF), in partnership with the Foreign and Commonwealth Office of the United Kingdom, organised a multi-stakeholder workshop on the 'International Rules-Based Governance' on March 15, 2013. The objective of the workshop was to arrive at a better understanding of the order of priorities for India within the international rules-based architecture.
Three areas of focus were identified, namely: Corporate governance benchmarks and regulations, International trade and Global financial governance. This Issue Brief highlights the main issues and ideas that were discussed and debated by participants from the Indian policy-making sphere, the private sector and civil society
Click here to read the full issue brief
Three areas of focus were identified, namely: Corporate governance benchmarks and regulations, International trade and Global financial governance. This Issue Brief highlights the main issues and ideas that were discussed and debated by participants from the Indian policy-making sphere, the private sector and civil society
Click here to read the full issue brief
Wednesday, July 3, 2013
CIVIL 20 PROPOSALS FOR STRONG, SUSTAINABLE, BALANCED AND INCLUSIVE GROWTH
"In the run up to the St. Petersburg G20 summit the Civil 20 initiated preparing a report and recommendations to G20 focused on surmounting the risks originating from growing income inequality. A special Task Force, bringing together experts from G20 member countries has been established to draft the report. Presented and discussed within the Russian G20 Presidency Civil Society Track (www.g20civil.com), the report provides an independent analysis and proposals for a dialogue between a wide range of stakeholders and the G20 governors on the G20 concerted policies and actions to improve economic equality within their countries and beyond."
India Chapter by Vivan Sharan and Samir Saran: http://www.g20civil.com/upload/iblock/d28/Civil20-Proposals-on-SSBI-Growth.pdf
India Chapter by Vivan Sharan and Samir Saran: http://www.g20civil.com/upload/iblock/d28/Civil20-Proposals-on-SSBI-Growth.pdf
Left out to Center: Why BRICS is important to Brazil, Vivan Sharan and Samir Saran, Global Times, 24 March, 2013
http://www.globaltimes.cn/content/770242.shtml#.UdMdZfmw284
Brazil has a prominent role to play in the global governance architecture. The country has sustained structural economic growth on the back of favorable demographic drivers, growing middle class consumption and broad scale socioeconomic transformation. As a result, the business environment in the country has steadily improved; and the number of people living in extreme poverty has halved over the last decade.
It is time for the country to place commensurate emphasis on consolidating its position as a regional leader; and as a key stakeholder on the global governance high table. BRICS provides the perfect platform to marry the dual imperatives.
Brazil boasts of one of the world's largest domestic markets and a sophisticated business environment. It ranks 53rd on the World Economic Forum's Global Competitiveness Index (2001-12), and is ahead of the rest of the BRICS nations in the availability of financial services among other key indicators of financial market penetration.
Brazil's upwardly mobile middle class and its elite have inexorably embraced the liberal globalisation framework, promoted by the developed world. Consequently, since the 1990s, they have shown a greater willingness to engage with the international system, and accept transnational regulations and norms.
As a willing signatory to international norms, ranging from those around mitigation of climate change to preventing nuclear proliferation, Brazil has often broken its own historical typecast of being defensive. What superficially seems to represent a systemic re-prioritisation requires deeper investigation.
According to the Economist Intelligence Unit, domestic savings rates in the country are below 20 percent. Middle-sized industries still largely rely on external markets for raising money and channelling investments. By default, international perception about the Brazilian economy is an important component of national strategy. Furthermore, the Latin American identity is one that successive governments have strived to shed.
Being part of the BRICS grouping has helped Brazil leverage its "emerging market" identity and dehyphenate from its Latin American identity which had its own convoluted dynamics in any case. This is evident both in the global economic and political spheres.
BRICS has provided Brazil with a platform to engage with the international system more progressively. It can now navigate the international rules based architecture, with greater bargaining power and seek greater representation in institutions of global economic and political governance.
Using the BRICS identity, Brazil no longer has to drive a wedge between its development and growth imperatives. It can shield its poor from international regulations, without fear of it's "investment worthiness" being diluted. It can participate at the global high table, while simultaneously catering to nuanced regional imperatives.
The recent death of Hugo Chavez was termed "an irreparable loss" by Brazilian President Dilma Rousseff. This serves as an example of the ideological flexibility, which the country employs to engage with a neighborhood that is strictly divided on the Venezuelan president's legacy.
Indeed fine balancing tactics are not new to Brazilian foreign policy, also termed "a study in ambivalence." The pluralistic construct of BRICS fits perfectly with Brazil's strategic outlook on its neighborhood and the world. Brazil has taken on more regional commitments over the same 20-year period during which it has enhanced its engagements with the international system. This is evidenced from increased participation in regional working group meetings, official summits and informal gatherings by the government.
There are numerous accounts of Brazil's deployment of regional priorities as a bargain chip. Through Mercosur, Brazil has been able to successfully negotiate trade agreements in favor of its national interests. It is a pivotal founding member of the five-member trading bloc.
In the on-going negotiations for a Free Trade Agreement with the EU, Brazil has pulled out all the stops, shielding its local industries from cheaper foreign made imports; with support from other members including Argentina.
Similarly, common interests rather than common ideologies dictate the BRICS agenda. Brazil's membership of the grouping is in complete consonance with its regional and global strategic imperatives.
Aside from the adaptive flexibility that the informal BRICS grouping offers, it allows Brazil great latitude in bringing specific agendas around innovation, intellectual property rights and green growth at its core.
Brazil is home to nearly half of the world's biodiversity; the overarching sustainable development agenda is not surprisingly a national priority. Similarly, Brazil has the opportunity to use mechanisms such as the BRICS Exchange Alliance for attracting investments.
While the current framework enables investors to trade in cross-listed futures indices, if there is political will, the mechanism could eventually encompass various products with different underlying assets including equities. Another relevant sector specific example is commercial aerospace cooperation, where Brazil has unmatched expertise within the grouping.
There are in fact multiple opportunities for Brazil within BRICS, not limited to the economic sphere. In many ways, the grouping brings Brazil from the left corner of the world map to the center, where the geopolitical theatre is most active; in Asia and the Indo-Pacific.
However, there are two oddities in the Brazilian agenda which would require circumnavigation if Brazil is to be brought to the heart of the geopolitical discourse.
The first is to moderate its insistence on pursuing "euro-styled" agendas such as interventionist doctrine "responsibility to protect," with an ambiguously defined alternative "responsibility while protecting." Sovereignty matters to other BRICS, and there is some time before supra-national initiatives would pass muster.
And the second is to shed its reluctance on the agenda for creation of a BRICS-led Development Bank. In this instance Brazil, with its considerable Development Bank experience, can help shape a credible institute that will empower billions south of the equator.
Brazil has a prominent role to play in the global governance architecture. The country has sustained structural economic growth on the back of favorable demographic drivers, growing middle class consumption and broad scale socioeconomic transformation. As a result, the business environment in the country has steadily improved; and the number of people living in extreme poverty has halved over the last decade.
It is time for the country to place commensurate emphasis on consolidating its position as a regional leader; and as a key stakeholder on the global governance high table. BRICS provides the perfect platform to marry the dual imperatives.
Brazil boasts of one of the world's largest domestic markets and a sophisticated business environment. It ranks 53rd on the World Economic Forum's Global Competitiveness Index (2001-12), and is ahead of the rest of the BRICS nations in the availability of financial services among other key indicators of financial market penetration.
Brazil's upwardly mobile middle class and its elite have inexorably embraced the liberal globalisation framework, promoted by the developed world. Consequently, since the 1990s, they have shown a greater willingness to engage with the international system, and accept transnational regulations and norms.
As a willing signatory to international norms, ranging from those around mitigation of climate change to preventing nuclear proliferation, Brazil has often broken its own historical typecast of being defensive. What superficially seems to represent a systemic re-prioritisation requires deeper investigation.
According to the Economist Intelligence Unit, domestic savings rates in the country are below 20 percent. Middle-sized industries still largely rely on external markets for raising money and channelling investments. By default, international perception about the Brazilian economy is an important component of national strategy. Furthermore, the Latin American identity is one that successive governments have strived to shed.
Being part of the BRICS grouping has helped Brazil leverage its "emerging market" identity and dehyphenate from its Latin American identity which had its own convoluted dynamics in any case. This is evident both in the global economic and political spheres.
BRICS has provided Brazil with a platform to engage with the international system more progressively. It can now navigate the international rules based architecture, with greater bargaining power and seek greater representation in institutions of global economic and political governance.
Using the BRICS identity, Brazil no longer has to drive a wedge between its development and growth imperatives. It can shield its poor from international regulations, without fear of it's "investment worthiness" being diluted. It can participate at the global high table, while simultaneously catering to nuanced regional imperatives.
The recent death of Hugo Chavez was termed "an irreparable loss" by Brazilian President Dilma Rousseff. This serves as an example of the ideological flexibility, which the country employs to engage with a neighborhood that is strictly divided on the Venezuelan president's legacy.
Indeed fine balancing tactics are not new to Brazilian foreign policy, also termed "a study in ambivalence." The pluralistic construct of BRICS fits perfectly with Brazil's strategic outlook on its neighborhood and the world. Brazil has taken on more regional commitments over the same 20-year period during which it has enhanced its engagements with the international system. This is evidenced from increased participation in regional working group meetings, official summits and informal gatherings by the government.
There are numerous accounts of Brazil's deployment of regional priorities as a bargain chip. Through Mercosur, Brazil has been able to successfully negotiate trade agreements in favor of its national interests. It is a pivotal founding member of the five-member trading bloc.
In the on-going negotiations for a Free Trade Agreement with the EU, Brazil has pulled out all the stops, shielding its local industries from cheaper foreign made imports; with support from other members including Argentina.
Similarly, common interests rather than common ideologies dictate the BRICS agenda. Brazil's membership of the grouping is in complete consonance with its regional and global strategic imperatives.
Aside from the adaptive flexibility that the informal BRICS grouping offers, it allows Brazil great latitude in bringing specific agendas around innovation, intellectual property rights and green growth at its core.
Brazil is home to nearly half of the world's biodiversity; the overarching sustainable development agenda is not surprisingly a national priority. Similarly, Brazil has the opportunity to use mechanisms such as the BRICS Exchange Alliance for attracting investments.
While the current framework enables investors to trade in cross-listed futures indices, if there is political will, the mechanism could eventually encompass various products with different underlying assets including equities. Another relevant sector specific example is commercial aerospace cooperation, where Brazil has unmatched expertise within the grouping.
There are in fact multiple opportunities for Brazil within BRICS, not limited to the economic sphere. In many ways, the grouping brings Brazil from the left corner of the world map to the center, where the geopolitical theatre is most active; in Asia and the Indo-Pacific.
However, there are two oddities in the Brazilian agenda which would require circumnavigation if Brazil is to be brought to the heart of the geopolitical discourse.
The first is to moderate its insistence on pursuing "euro-styled" agendas such as interventionist doctrine "responsibility to protect," with an ambiguously defined alternative "responsibility while protecting." Sovereignty matters to other BRICS, and there is some time before supra-national initiatives would pass muster.
And the second is to shed its reluctance on the agenda for creation of a BRICS-led Development Bank. In this instance Brazil, with its considerable Development Bank experience, can help shape a credible institute that will empower billions south of the equator.
Need to Create Viable Investment Avenues, Hindustan Times, March 01, 2013
The finance minister, P Chidambaram, managed to present a
fairly balanced Union Budget. The stock markets initially treated the budget as
a non-event. There were no big unforeseen surprises and it was relatively
measured given that we are in a pre-election year. It is hard to ignore that
the global economy continues to be in turmoil. The Central statistical organization (CSO), in
its advanced estimate pegged India's GDP growth at a modest 5% for the current
fiscal. Committed solutions are required to comfortably decouple from global
trends.
The announcement that the fiscal deficit has been reigned in
well within the targeted levels to 5.2% is good news. A continued commitment to
eliminating the revenue deficit over a fixed time horizon is even better news.
After over a decade of expansion of the real economy and domestic consumption,
the Indian economy is now at a veritable crossroads. The government has to
urgently create viable investment opportunities and support long term gross
capital formation.
Households must be able to derive value from productive
assets, and Chidambaram rightly noted that they "must be incentivised to
save in financial instruments". The proposals to introduce inflation
linked instruments and create a new debt segment in national exchanges will
certainly aid such objectives; and concomitantly contribute to the
sustainability of the current account deficit.
However, an unwavering systemic emphasis on well regulated,
competitive and transparent markets with reduced transaction costs is still
required. Industrial growth, particularly manufacturing sector growth must
underpin resilient GDP growth. The Micro, Small and Medium Enterprises (MSME)
sector has a crucial role to play in enabling this, and the extension of
benefits for a period of 3 years after graduation to a higher category bodes
well for increased participation and interest in the sector.
In consonance with popular sentiment, Chidambaram laid out a
three-pronged development approach, emphasising empowerment of women, the youth
and the poor. Some of the initiatives that are circumscribed within this
approach include the setting up of a public sector women’s bank with an initial
capitalisation of Rs. 1,000 crore; a Nirbhaya fund of a Rs. 1,000 crore;
emphasis on skill development and the development of a skill-based curriculum;
and the assurance that Direct Benefits Transfers will roll out “during the term
of the UPA”. While the existing 173 Centre-sponsored schemes will be reduced to
just 70, subject to review every two years, the Rs. 5.5 lakh crore figure for
planned expenditure reflects an approximate 30% jump over revised estimates.
Within the context of revenue generation imperatives to
offset increased expenditure, the fact that both direct and indirect taxes have
remained relatively untouched, is certainly progressive. The budget is not
practically feasible unless there is enhanced private sector participation,
stability of long term capital inflows, expansion of the tax base, and
effective control of the price level. This in turn requires recalibration of
priorities — and a shift from short term focus to a medium term focus, and a
tempered pre-election budget is a step in the right direction.
Wednesday, January 9, 2013
More than just a catchy acronym: six reasons why BRICS matters Global Times | By Samir Saran and Vivan Sharan
http://www.globaltimes.cn/content/754826.shtml
There have been heated discussions over the role of BRICS recently. Ian Bremmer, President of the Eurasia Group, a political risk consulting firm, wrote an eye-catching article in the New York Times in late November, proclaiming that BRICS is nothing more than a catchy acronym.
The BRICS nations represent over 43 percent of the global population that is likely to account for over 50 percent of global consumption by the middle class - those earning between $16 and $50 per day - by 2050. On the other hand, they also collectively account for around half of global poverty calculated at the World Bank's $1.25 a day poverty line.
What, then, is the mortar that unites these BRICS?
First, unlike NATO, BRICS is not posturing as a global security group; unlike ASEAN or MERCOSUR, BRICS is not an archetypal regional trading bloc; and unlike the G7, BRICS is not a conglomerate of Western economies laying bets at the global governance high table. BRICS is, instead, a 21st-century arrangement for the global managers of tomorrow.
At the end of World War II, the Atlantic countries rallied around ideological constructs in an attempt to create a peaceful global order. Now, with the shifts in economic weights, adherence to ideologies no longer determines interactions among nations.
BRICS members are aware that they must collaborate on issues of common interest rather than common ideologies in what is now a near "G-0 world," to borrow Bremmer's own terminology.
Second, size does not matter and it never has. Interests do and they always will. Intriguingly, Bremmer expresses his concern over China being a dominant member within BRICS.
Clearly, Bremmer has chosen to ignore the fact that the US accounts for about 70 percent of the total defense expenditure of NATO countries or that it contributes nearly 45 percent of the G7's collective GDP.
Third, BRICS is a flexible group in which cooperation is based on consensus. Issues of common concern include creating more efficient markets and generating sustained growth; generating employment; facilitating access to resources and services; addressing healthcare concerns and urbanization pressures; and seeking a stable external environment not periodically punctuated with violence arising out of a whim of a country with means.
Fourth, it is useful to remember that the world is still in the middle of a serious recession emanating from the West. As Bremmer himself points out, systemic dependence on Western demand is a critical challenge for BRICS nations. Indeed, it is no surprise that they have begun to create hedges. The proposal to institute a BRICS-led Development Bank, instruments to incentivize trade and investments, as well as mechanisms to integrate financial markets and stock exchanges are a few examples.
Fifth, through the war on Iraq, some countries undermined the UN framework. The interventions in Libya reaffirmed that sovereignty is neither sacrosanct nor a universal right. While imposing significant economic costs on the world, they failed to produce the desired political outcome. By maintaining the centrality of the UN framework in international relations, BRICS is attempting to pose a counter-narrative.
Sixth, in the post-Washington Consensus era, financial institutions such as the IMF and the World Bank are struggling to articulate a coherent development discourse. BRICS nations are at a stage where they can collectively craft a viable alternative development agenda.
In the Fourth BRICS Summit in New Delhi in March 2012, there was clear emphasis on sharing development knowledge and further democratizing institutions of global financial governance within the cooperative framework.
BRICS is a transcontinental grouping that seeks to shape the environment within which the member countries exist.
While countries across the globe share a number of common interests, the order of priorities differs. Today, BRICS nations find that their order of priorities on a number of external and internal issues which affect their domestic environments is relatively similar.
BRICS is pursuing an evolving and well thought out agenda based on this premise. And unlike Bremmer, we are not convinced that they are destined to fail.
There have been heated discussions over the role of BRICS recently. Ian Bremmer, President of the Eurasia Group, a political risk consulting firm, wrote an eye-catching article in the New York Times in late November, proclaiming that BRICS is nothing more than a catchy acronym.
The BRICS nations represent over 43 percent of the global population that is likely to account for over 50 percent of global consumption by the middle class - those earning between $16 and $50 per day - by 2050. On the other hand, they also collectively account for around half of global poverty calculated at the World Bank's $1.25 a day poverty line.
What, then, is the mortar that unites these BRICS?
First, unlike NATO, BRICS is not posturing as a global security group; unlike ASEAN or MERCOSUR, BRICS is not an archetypal regional trading bloc; and unlike the G7, BRICS is not a conglomerate of Western economies laying bets at the global governance high table. BRICS is, instead, a 21st-century arrangement for the global managers of tomorrow.
At the end of World War II, the Atlantic countries rallied around ideological constructs in an attempt to create a peaceful global order. Now, with the shifts in economic weights, adherence to ideologies no longer determines interactions among nations.
BRICS members are aware that they must collaborate on issues of common interest rather than common ideologies in what is now a near "G-0 world," to borrow Bremmer's own terminology.
Second, size does not matter and it never has. Interests do and they always will. Intriguingly, Bremmer expresses his concern over China being a dominant member within BRICS.
Clearly, Bremmer has chosen to ignore the fact that the US accounts for about 70 percent of the total defense expenditure of NATO countries or that it contributes nearly 45 percent of the G7's collective GDP.
Third, BRICS is a flexible group in which cooperation is based on consensus. Issues of common concern include creating more efficient markets and generating sustained growth; generating employment; facilitating access to resources and services; addressing healthcare concerns and urbanization pressures; and seeking a stable external environment not periodically punctuated with violence arising out of a whim of a country with means.
Fourth, it is useful to remember that the world is still in the middle of a serious recession emanating from the West. As Bremmer himself points out, systemic dependence on Western demand is a critical challenge for BRICS nations. Indeed, it is no surprise that they have begun to create hedges. The proposal to institute a BRICS-led Development Bank, instruments to incentivize trade and investments, as well as mechanisms to integrate financial markets and stock exchanges are a few examples.
Fifth, through the war on Iraq, some countries undermined the UN framework. The interventions in Libya reaffirmed that sovereignty is neither sacrosanct nor a universal right. While imposing significant economic costs on the world, they failed to produce the desired political outcome. By maintaining the centrality of the UN framework in international relations, BRICS is attempting to pose a counter-narrative.
Sixth, in the post-Washington Consensus era, financial institutions such as the IMF and the World Bank are struggling to articulate a coherent development discourse. BRICS nations are at a stage where they can collectively craft a viable alternative development agenda.
In the Fourth BRICS Summit in New Delhi in March 2012, there was clear emphasis on sharing development knowledge and further democratizing institutions of global financial governance within the cooperative framework.
BRICS is a transcontinental grouping that seeks to shape the environment within which the member countries exist.
While countries across the globe share a number of common interests, the order of priorities differs. Today, BRICS nations find that their order of priorities on a number of external and internal issues which affect their domestic environments is relatively similar.
BRICS is pursuing an evolving and well thought out agenda based on this premise. And unlike Bremmer, we are not convinced that they are destined to fail.
Subscribe to:
Posts (Atom)