GS – 2
Concluding a trade deal between India-EU is imperative. Explain 150 Words
In the News:
- The need for a trade deal between the two sides looms large. India has restarted trade talks with the EU for a preferential trade agreement, with the ultimate goal of actualising a free trade agreement.
- It will be recalled that negotiations for a bilateral trade and investment agreement between India and the EU were suspended in 2013 as the two sides had hit a dead end on issues such as tariffs on European cars and wine, data security and India’s pitch to include services and more visas for Indian professionals in the agreement.
Roadblocks:
- Among the roadblocks was India’s decision to cancel bilateral investment treaties with 22 EU countries in 2016. This slowed interest from European companies, who did not want to risk investing unless a solid investment protection agreement was put in place.
- But having already pulled out of the Regional Comprehensive Economic Partnership agreement last year over fears of China dominating that trade grouping, India has to do trade deals elsewhere if it seriously wants to entrench itself in global supply chains.
Way ahead:
- A trade deal with the US will be big which is why a trade deal with the EU – and a separate one with the UK – becomes important. Besides, both India and the EU today are concerned about China’s predatory trade and investment practices and are taking steps to counter them.
- This should create enough synergy to deliver an India-EU trade accord without getting sidetracked by local lobbies and vested interests.
Economic reforms are sustained, deep and pronounced because of bold decisions and strong political will. Analyse the statement 250 Words
In the News:
- Economic reforms are a matter of continuing interest in India. Even from 1989, the brewing balance of payments crisis was getting noticed.
- India had to undertake higher levels of borrowing, and correspondence with the IMF and World Bank had commenced by late 1990. Without the borrowing, India would have had to default on its external payment obligations.
Structural adjustments:
- The IMF pegged the release of the credit tranches to our quarterly performances based on specified criteria. The World Bank provided the structural adjustment loans linked to specified benchmarks.
- India was to open its economy to be market driven and out of the licence quota raj. To dismantle the four-decade-old command and control model required immense political will, which despite running a minority government Rao had shown. India had to be pulled out of a near bankruptcy.
- A leadership and its vision for India adds strength to the required political will to undertake reforms which seems to be lacking. It doesn’t take a crisis to reform, nor should a crisis be allowed to overwhelm India.
Major reforms:
- The Insolvency and Bankruptcy Code and setting up of the National Company Law Tribunal in 2016 provide a major relief for companies looking for an exit policy. Long pending resolutions are happening now.
- The Code may be on insolvency but now resolutions most often are for going concerns. Speedy disposal also ensures reasonable value realisation. Corporate tax was reduced to 15% for new manufacturing companies and for the old to 22%.
- Options were provided for those who wished to continue benefiting from accumulated exemptions to remain in the old scheme. So was personal income tax simplified and made exemption free. To remove any perception of harassment, tax assessment and scrutiny were made faceless.
- Using technology, every correspondence with the assessed has a centralised Document Identification Number. Also, to strengthen existing indigenous capacities in defence production invited greater investment has been made in the Indian space sector. Reforms have continued even as the necessary stimulus is being provided for restarting the Covid-hit economy. Reforms are sustained, deep and pronounced.