National Economic Forum

Director Desk

Director Desk

Trump’s Re-election: Ramifications for India

The re-election of Donald Trump as the President of the United States in November, 2024 is a geopolitical event with profound implications for India. As the world’s largest democracy, India has enjoyed a multifaceted relationship with the U.S., and Trump’s return to power signals both challenges and opportunities for India’s economic and strategic trajectory. Through a data-driven lens, the impact of Trump’s policies on India’s debt markets, exports, and geopolitical alliances is poised to reverberate across various sectors. Under Trump’s administration, policies favouring tax cuts, deregulation, and increased borrowing could lead to an escalation in U.S. interest rates. India’s bond market, which witnessed an inflow of $18 billion in foreign portfolio investments (FPI) in FY2023, stands to lose its sheen in the face of a more lucrative U.S. market. This shift would trigger significant capital outflows from India, causing a depreciation of the Indian rupee. In 2023, the rupee averaged ₹82 per U.S. dollar, but Trump’s policies could push it closer and closer to ₹85 per dollar, increasing India’s external debt burden, which stood at $682 billion in June 2024. India’s equity market, the fifth largest globally, may encounter volatility with a possible 15-20% correction in sectors heavily reliant on U.S. exports, such as IT and pharmaceuticals. India’s IT sector, which contributes $194 billion in export revenues, could be hit by potential restrictions on H-1B visas – a policy Trump championed during his first term, with a continued thrust in the second term. India’s trade with the U.S., valued at $128 billion in FY23, might face hurdles under Trump’s protectionist stance. However, his continued emphasis on curbing China’s economic hegemony presents an opportunity for India to emerge as a preferred alternative in global supply chains. Sectors such as electronics manufacturing, which grew at a CAGR of 13%  FY23, are likely to benefit from the relocation of U.S. companies out of China to India, especially under initiatives like the Production Linked Incentive (PLI) scheme. Moreover, India’s pharmaceutical exports to the U.S., valued at over $8.7 billion in FY24, are vulnerable to stricter U.S. Food and Drug Administration (FDA) regulations, which could affect the sector’s profitability. A rise in U.S. tariffs could also adversely impact India’s textiles sector, with the US accounting for approximately 27% of India’s total textiles export in 2023. Trump’s re-election reignites the strategic dimension of the U.S.-India relationship, particularly in countering China’s influence in the Indo-Pacific. The Indo-Pacific region, which accounts for 40% of global GDP, remains critical to India’s maritime and defense strategy. With the U.S.-China trade tensions intensifying, India’s role in the Quadrilateral Security Dialogue (Quad) is expected to gain prominence, bolstering defense ties with the U.S. In FY24, India allocated approximately $75 billion to its defence budget, and with U.S. defence exports to India standing at $20 billion since 2008, Trump’s aggressive stance on China could further solidify Indo-U.S. defence collaboration. However, Trump’s unpredictable foreign policy could challenge India’s delicate balance with Russia, especially concerning energy security. Russia accounted for 42% of India’s crude oil imports between January and September 2024, and any pressure from a Trump-led U.S. on India to reduce its ties with Russia may strain bilateral relations. The return of Donald Trump to the White House heralds a period of economic and geopolitical recalibration for India. While the U.S. market offers opportunities for India’s strategic positioning in global trade and defence, protectionist trade measures and financial volatility may pose significant challenges. India must navigate this evolving landscape with astuteness to safeguard its economic interests while bolstering its global standing as a counterweight to China.

Director Desk

Global Lessons for India’s AI Regulation

Artificial Intelligence (AI) has emerged as a transformative force, influencing sectors ranging from healthcare to finance. Recognising the profound implications of AI, the European Union (EU) has pioneered a comprehensive regulatory framework – the AI Act – to ensure ethical development and deployment of AI technologies, as mentioned in my last article. This particular article examines the EU’s AI Act and assesses its applicability to India, considering the unique socio-economic and technological landscape of the country. It also explores what mechanisms a few other nations have laid out for AI regulation. In July 2024, the EU enacted the AI Act, marking the first major legal framework for AI regulation globally. The Act categorises AI applications based on a set of risk levels mentioned below:   Unacceptable Risk: AI systems that pose significant threats, such as social scoring by governments, are prohibited. High Risk: Applications in critical sectors like healthcare and transportation are subject to stringent requirements, including transparency, accountability, and human oversight. Limited Risk: Certain AI applications, such as chatbots, must adhere to transparency obligations, ensuring users are aware they are interacting with AI. Minimal Risk: Most AI systems, including video games and spam filters, are exempt from regulatory requirements.   The Act also establishes a European Artificial Intelligence Board to oversee implementation and ensure consistent application across member states (European Commission, 2024). India’s engagement with AI regulation has been evolving. In 2018, NITI Aayog, the government’s policy think tank, released the National Strategy for Artificial Intelligence, focusing on sectors like healthcare, agriculture, education, smart cities, and smart mobility. Subsequently, in 2021, NITI Aayog introduced the Principles for Responsible AI, addressing ethical considerations for AI deployment in India. In 2023, the Indian government enacted the Digital Personal Data Protection Act, which addresses some privacy concerns related to AI platforms. The Ministry of Electronics and Information Technology (MeitY) has issued advisories requiring platforms to obtain explicit permission before deploying unreliable AI models and to label AI-generated content, especially those vulnerable to misuse in deepfake technologies. Despite these initiatives, India lacks a comprehensive, AI-specific regulatory framework akin to the EU’s AI Act. The absence of a dedicated AI regulatory body and reliance on existing agencies for AI-related policies indicate a need for a more structured approach. While the EU’s AI Act presents a commendably robust regulatory paradigm, its complete transplantation into the Indian context confronts a constellation of formidable challenges. Foremost among these is India’s vast and heterogeneous populace, which demands a regulatory framework nuanced enough to accommodate regional disparities and the nation’s kaleidoscopic diversity. Moreover, the breakneck pace of AI innovation necessitates a governance structure endowed with the agility to adapt to rapid technological evolution. Equally significant is India’s imperative to cultivate innovation and accelerate economic growth, which may necessitate a more malleable regulatory regime, lest overly rigid rules stifle the burgeoning ecosystem of AI startups. Furthermore, while the Digital Personal Data Protection Act mitigates some privacy concerns, the absence of an overarching and coherent data governance architecture leaves room for improvement in ensuring responsible AI deployment. Finally, the successful enforcement of AI regulations hinges upon India’s ability to bolster its institutional expertise and infrastructure – an endeavour requiring sustained investment and capacity building. The EU’s AI Act represents a pioneering effort in AI regulation, emphasising ethical considerations and public trust. However, India’s unique socio-economic context, technological landscape, and economic priorities necessitate a tailored approach to AI regulation. While adopting the EU model wholesale may not be feasible, India can draw valuable insights from the Act to develop a framework that balances innovation with ethical considerations, ensuring that AI technologies benefit society at large. We must, albeit briefly, also cast our gaze upon the AI regulatory paradigms established across other parts of the globe. It is seldom a misstep to assimilate commendable elements from international frameworks into India’s prospective AI regulatory edifice, whenever it emerges from the labyrinth of deliberation and sees the light of day. The United Kingdom, though yet to unveil a comprehensive AI regulatory framework akin to its continental neighbour, the EU, has made significant strides in this domain. It has instituted the Office for AI, an independent authority within the AI Policy Directorate of the Department for Science, Innovation, and Technology. This body champions a context-sensitive and balanced strategy, leveraging extant sector-specific laws to guide AI governance. In March last year, the UK government unveiled a white paper elucidating its vision for a pro-innovation domestic AI regulatory approach. With over £2.5 billion invested in AI since 2014, Britain stresses the pitfalls of an overzealous and inflexible regulatory posture that risks stifling innovation and impeding AI adoption. Instead, it prioritises regulating AI applications based on their contextual deployment, adopting a judicious calculus of benefits versus risks. To this end, the UK has delineated essential characteristics for its AI regulatory architecture: enabling responsible innovation, maintaining proportionality to avoid undue burdens, fostering trust through risk mitigation, ensuring adaptability to technological evolution, providing clarity for stakeholders, and encouraging collaborative efforts among government, regulators, and industry. These principles aim to regulate AI usage rather than the technology itself, reflecting a nuanced approach. A phased implementation strategy, commencing with regulator discretion and evolving toward statutory obligations, further brings to fore this iterative approach’s adaptability. Indian policymakers can derive two pivotal insights from the British model. First, a context-sensitive, pro-innovation framework can catalyse responsible AI proliferation without hampering innovation, focusing on applications rather than the technology’s architecture. Second, the articulation of cross-sectoral principles, coupled with the flexibility accorded to sector-specific regulators, ensures coherence and dynamism in addressing the evolving AI landscape. Switzerland, in its 2021 position paper, laid the merits of a technology-neutral approach, advocating the judicious adaptation of existing data protection standards. Meanwhile, the United States, despite lacking a unified regulatory framework, boasts over 80 federal guidelines governing AI, reflecting a pragmatic, case-by-case governance ethos that eschews excessive precaution. Canada’s AI and Data Act (AIDA) places a premium on safeguarding human rights, curtailing high-risk AI applications, and promoting responsible innovation – a perspective Indian policymakers would do well to emulate. Intriguingly, Japan’s laissez-faire approach offers yet another paradigm, relying on sector-specific laws such

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Jaishankar Makes It Clear: Pakistan Is Now Just A Sideshow For India

After generating days of excitement in the media, the Shanghai Cooperation Organisation (SCO) summit finally concluded with External Affairs Minister S. Jaishankar making a quick visit to Islamabad. For all the speculation about India and Pakistan, in the end, what the 23rd meeting of the Council of Heads of Government (CHG) of the SCO will likely be remembered for is perhaps Jaishankar’s sunglasses. In this age of intense social media scrutiny, a small clip, now viral, of Jaishankar sporting his sunglasses in style became symbolic of India’s confidence in dealing with Pakistan. Hilarious though this might seem, all that is left of Pakistan in Indian foreign policy imagination today is decoding our diplomats’ style and body language. But, of course, in sending Jaishankar to Islamabad for the SCO summit, New Delhi was also sending out a message about keeping its engagement with its SCO partners intact. Last year, when Bilawal Bhutto Zardari visited Goa to participate in the SCO meeting, he became the first Pakistani foreign minister to visit India since 2011. And now, Jaishankar was the first Indian foreign minister to visit Pakistan in around a decade. These visits though were largely inconsequential in the wider scheme of bilateral ties between the two neighbours.​ Terrorism Continues To Upset Things Established in 2001 and including Russia, China, India, Pakistan, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Iran, the SCO is a Eurasian grouping that started out as a platform to deal with regional security challenges like extremism and terrorism. It later expanded to facilitating trade and investment and strengthening economic ties.

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The Bamboo Puzzle: Why India Imports Despite Abundance?

In a recent felicitation ceremony organised by the Bamboo Society of India (BSI) and Vidarbha Bamboo Development and Promotion Committee (VBDPC), Union Minister of Road, Transport and Highways, Mr. Nitin Gadkari, made a compelling offer to farmers: “You (farmers) grow Bamboo, I will give you a market” [Times of India, 2023]. The statement serves as an acknowledgement by the government about the policy shortcomings being faced by the Indian bamboo industry for the last two decades. The piece will try to position these shortcomings through a central problem and provide direct and indirect policy measures to address and actively engage with the solutions.  Approximately two decades ago, the planning commission envisioned the Indian bamboo industry as a potential 25,000-30,000 crore industry (estimated in the year 2004). This figure has also been reiterated by the central cabinet minister in a bamboo virtual conference in 2021, while providing assurance to the farmers for the support in product development and promotion from the Ministry of MSME [Economic Times, 2021]. The National Bamboo Mission (NBM), initiated in 2006, was meant to be a catalyst for the industry’s growth. It is a central institution embedded as a sub scheme under the Mission for Integrated Development of Horticulture (MIDH) to allocate financial resources, set priorities & goals, and formalise the national institutional structure for the development of the bamboo value chain. Fast forward to the  present, the industry is still striving to develop and stands at a curious crossroad. Despite undertaking dedicated reforms in 2018 by the central government to address potential policy gaps by restructuring NBM, India’s bamboo industry has still failed to match the growth witnessed by its Chinese and global counterparts [NBM Revised Guidelines] [UNCTAD]. For context, the Restructured National Bamboo Mission (RNBM) refocused its strategy on product development, market creation, and waste utilisation, extending well beyond the existing priorities of cultivation and plantation of bamboo.  So, how effective has the NBM been for the growth (or not) of the bamboo industry over the past two decades? Examining international trade provides a uniquely troubling scenario. India, despite having the world’s largest bamboo cover [ISFR 2021] and being the second-largest bamboo producer with nearly 14.6 million MT of harvest in 2019 [NBM Operational Guidelines 2019], still imported 88% of its bamboo raw materials in 2021 [INBAR 2021]. This glaring dichotomy highlights the industry’s dismal condition on both the supply and demand fronts domestically as well as globally. Due to lower productivity and gaps in the supply of raw materials, imported bamboo is being used to cater to the domestic demand as well as manufacture exportable goods. In addition to that, India’s integration in the global value chain of bamboo is also very minimal indicating a vivid supply-demand gap. After a detailed and careful assessment, it is theorised that the domestic bamboo industry grapples with four intertwined challenges, each one hampering its growth potential and needs to be addressed holistically.  First, the bamboo productivity in India is extremely low, indicating low yield cultivation, compared to China which stands at 30-40 tons/ha, in India, it ranges between 1-3 tons/ha with figures only as high as 6-9 tons/ha [NBM Concept Note] [NEDFI Action Plan 2020]. One among many issues are the legal ambiguities on the  governance of upstream segments of bamboo across states that have yielded inefficiencies [CCS n.d] [CCS 2013]. These regulatory inconsistencies between states and between states and the central government have further hindered progress. These discrepancies are bamboo species specific and range from transit tariff collection to imposing royalties [MoEFCC 2017].   Second, a significant portion of funds, amounting to more than 50%, allocated to state bamboo missions goes unutilised, within which 55% of the funds are directed solely towards planting and cultivation related activities [NBM Annual Action Plan 2021]. Ironically, despite increased investment in bamboo cultivation, the average annual plantation area has decreased significantly and has gone down from 10,417 (before 2018) to 5,939 (after the restructuring of NBM) [MoA&FW Annual Report]. Third, as the value chain ends up becoming a low policy and funding priority over the years, the development of midstream and endstream segments received limited support and focus, with a majority of sectors still involved in manual labour work for product development [NBM Annual Action Plan]. The industry has primarily focused on low-value-added products with labour-intensive work, resulting in limited profitability, and lower interests from farmers. Additionally, there is a distinct supply-demand gap in the domestic bamboo economy. Estimates suggest that domestic bamboo supply is half the demand in the finished product market. The production figure for bamboo was 14.6 million metric tonnes in 2019, whereas the demand projected was more than 30 million metric tonnes [NEF 2023]. The interesting point is that even by utilising India’s vast bamboo resources, the net output of novel productivity (assuming a yield of 6 tonnes/ha) would still be low, primarily due to limiting non-forest bamboo land and lower yield.  Finally, high waste generation persists due to non-mechanized processing methods and an unskilled labor force, which is further exacerbated by cheap imported raw material from China. Some estimates points the number as high as 40% with 70-80% in sectors like incense sticks [Bamboonomics] [NCDC DPR]. In 2019, The ITC reported that its share of Indian bamboo for its agarbatti manufacturing operations is limited to 5%, implying the majority is sourced through imports [NBM MoM 2019].  Nevertheless, what is the way out of this dichotomy and solutions towards substantially reducing our import dependence from China, which costs us more than 64 million USD annually [INBAR 2021]? And how can the National Bamboo Mission proceed with planning strategic reforms for the industry?  The National Bamboo Mission has been instrumental in curating and crafting the bamboo industry in India since its inception in 2006. Though several factors have influenced the positionality and nature of imaging bamboo as a product, the central goal of reducing import dependence remains consistent. It is crucial to build on this inherent perspective and radically propose reforms in the way the bamboo industry is structured

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HAPPINESS AND LAW: AN INTRODUCTION

Happiness, traditionally considered to be a positive emotion or experience, has now evolved into a scientific term capable of being quantified and measured according to set parameters. This evolution of happiness has been propelled by extensive research in various fields, regarding the importance of happiness as an objective of legislation and policy. This unusual correlation between happiness, law and policy stems from the realisation that economic prosperity doesn’t necessarily translate into increased individual happiness and consequently, national happiness. Contrarily, reliable data shows that in many wealthy nations an increase in per capita income has not led to a concomitant increase in happiness levels; thereby leading to a skewed model of national development. In an attempt to rectify this and to advocate for a more inclusive growth, researchers have been promoting a transition to the happiness approach. This happiness approach primarily puts forth a model wherein happiness parameters are a part of policy-making, and since any change in policy has to be driven by a corresponding change in law; it becomes pertinent to review the relationship between happiness and law. MEANINGS OF HAPPINESS It is important to delve into the different meanings of happiness to gauge the inherent attributes of the concept and how different disciplines view it. “In her 2007 book The How of Happiness, positive psychology researcher Sonja Lyubomirsky elaborates, describing happiness as “the experience of joy, contentment, or positive well-being, combined with a sense that one’s life is good, meaningful, and worthwhile”.” The Stanford Encyclopedia of Philosophy defines happiness from two perspectives: Philosophers who write about “happiness” typically take their subject matter to be either of two things, each corresponding to a different sense of the term: A state of mind A life that goes well for the person leading it In the first case our concern is simply a psychological matter…What is this state of mind we call happiness? Typical answers to this question include life satisfaction, pleasure, or a positive emotional condition … In the second case, our subject matter is a kind of value, namely what philosophers nowadays tend to call prudential value—or, more commonly, well-being, welfare, utility or flourishing. Ruut Veenhoven states, “When used in a broad sense, the word happiness is synonymous with ‘quality of life’ or ‘well-being’. In this meaning it denotes that life is good, but does not specify what is good about life.” Edward Diener goes a step further and introduces the concept of Subjective Well-Being (SWB) within the happiness paradigm. He asserts: Philosophers debated the nature of happiness for thousands of years, but scientists have recently discovered that happiness means different things. Three major types of happiness are high life satisfaction, frequent positive feelings, and infrequent negative feelings (Diener, 1984). “Subjective well-being” is the label given by scientists to the various forms of happiness taken together. Thus, happiness for the purpose of quantification is subdivided into three types: Evaluative (life satisfaction), Affective (positive or negative feelings) and Eudaimonic (sense of purpose). It is the sum of all the above which is taken together to measure a nation’s happiness levels.  HAPPINESS AND LAW Happiness as a goal of the Government is not a new theory. From ancient times the legitimate objective of monarchy has been to enhance the happiness of its citizens. Kautilya wrote in Arthashastra that a King is as happy as his people and so the King’s foremost duty (Dharma) is to his people. Bentham stated , “ the greatest happiness of the greatest number is the foundation of morals and legislation”, more popularly known as the theory of Utilitarianism. Kautilya and Bentham are a few of the many philosophers who have time and again stressed upon the principle of happiness as the guiding force of any Government, rather than economic objectives. However, this emphasis also led to the fear of interventionist policies by the authorities under the garb of promoting happiness; and this very fear became the bedrock for modern nations to adopt economic parameters such as the Gross Domestic Product for measuring their progress. The dependence on GDP as the sole and true marker of a country’s progress, led to a lopsided view of development. Despite pre-existing constitutional guarantees regarding happiness and its pursuit thereof, in written constitutions around the world, the concept of happiness took a backseat in legal and policy debates globally. It was in 1972 that Bhutan became the first country to introduce Gross National Happiness as its primary indicator of the country’s progress. “The phrase ‘gross national happiness’ was first coined by the 4th King of Bhutan, King Jigme Singye Wangchuck, in the late 1970s when He stated, “Gross National Happiness is more important than Gross Domestic Product.” The concept implies that sustainable development should take a holistic approach towards notions of progress and give equal importance to non-economic aspects of wellbeing and happiness.” In this way, Bhutan became the first country showcasing administered happiness.  Bhutan’s departure from the norm propelled an era of happiness and well-being research, which led to two major findings: a) Increased economic wealth did not necessarily translate into increased happiness, also known as the Easterlin paradox and b) A happiness based approach towards law and policy had the potential to provide more comprehensive outcomes. Based on these findings, nations across the world are slowly incorporating legislative and policy measures to enhance the happiness levels of the citizens alongside the already established economic objectives.  Law has long been considered as a tool of social change and engineering. In addition to its coercive role, law has also been attributed with the ability to uplift the quality of life of citizens; and orient the nation towards a safer, happier and more prosperous existence. Researchers argue that happiness studies have the potential of positively affecting all areas of legislation. “Gruber & Mullainathan (2005) analyze U.S. and Canadian General Social Survey happiness data to find that increased cigarette sales taxes are associated with higher self-reported well-being levels of those having a propensity to smoke.” From proportionality of punishment to levying of taxes, happiness studies have the potential to provide a deeper insight into the human perspective; thereby leading to a more informed law-making process.    Happiness studies have garnered a lot of

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INDIA’S PURSUIT OF HAPPINESS

On 20th of March 2023, like every year, the world celebrated “International Happiness Day”. Happiness is a fundamental human goal , the United Nations affirms, while calling for a holistic, pragmatic, and poised approach to pursue economic growth. In common parlance, The International Day of Happiness is deemed to be a day reserved for celebrating and enhancing people’s happiness, but it begs to answer the questions – what does it mean for a modern state? Is there a relationship between people’s happiness and the functioning of a country? How does the state materialise it in practice? The World Happiness Report is published annually and The World Happiness Report 2023 ranked India 126 out of 136 countries on its happiness index. The World Happiness Report measures happiness on six parameters, namely :GDP per capita, Social Support, Healthy life expectancy, freedom to make life choices, generosity and corruption. The Report has faced a lot of flak domestically for the abysmal ranking accorded to India, and to the prudent mind, the criticism may well be warranted. The research desk of the State Bank of India in its weekly report in April 2023 decided to censure the World Happiness Rankings, and rightly so. As asserted by the SBI Report “Ecowrap”, the biggest lacuna in the happiness survey is the one fits all approach. Happiness foremost is an extremely subjective emotion, and while it can now be reduced to a scientific concept and measured via structured determinants, it still cannot be devoid of its subjectivity. The biggest example of the same is the juxtaposed difference in the way the Bhutanese, considered to be the pioneers of happy-nomics, measure happiness for their goals and the way the Happiness Index in the World Happiness Report does it. The SBI Report highlights this intrinsic lacunae of the WHR, and goes ahead to measure India’s happiness according to a different set of parameters. According to the SBI, India stands on the 48th position in their Happiness Index; which unfortunately may not be as promising as it sounds. One, India is 48, but among 61 countries as per the SBI rankings, which still puts India at a similar percentile, much like the World Happiness Report. Two, the SBI Report fails to capture the objective of these happiness rankings. This ranking, much like the World Happiness Report, is not solely a measure of the ‘emotional happiness’ of a country, the objective is to make “national happiness an operational objective for governments”. It is at this stage where detractors of the happiness movement bring forth the subjective nature of the concept and thus, the issues in quantifying it as an absolute determinant of public policy. For this purpose, scholars over a period of time have realised that a country’s development cannot be measured only on the basis of its GDP. It has been accepted that a more holistic approach has to be undertaken, and that’s where “happiness” or more precisely “Subjective Well-Being (SWB)”, comprising of life evaluations, positive effects and negative effects, comes into the picture. Countries are being conscious to take steps to formulate policy and laws from the happiness perspective, so as to promote a more holistic model of development. India’s rankings in the World Happiness Index, from its very inception, have been unenviable to say the least, which seriously undermines India’s global positioning as a fast growing economic powerhouse with a stable and democratic government. Moreover, with an entire chapter in its written constitution endowing far-reaching fundamental rights to its citizens and an activist judiciary guaranteeing the rights to the people, the rankings lead to a paradoxical situation; as the entire objective of these rights is the enhancement of the social, political and economic well-being of the citizenry. India’s constitutional structure is based on the welfare model, with the goal of the Government being the upliftment of the citizenry. It is also true that ideologies aside, the Government has taken up a plethora of measures for the progress of the country, be it infrastructural, socio-economic, legal etc. Hence, India is no novice to the happiness agenda. However, the welfare policies of the Government have somewhere fallen short of realising their actual potential. Whether it is our National Food Security Act or the different Housing schemes floated by the Central Government and the State Governments or MNREGA, the list being endless, the authorities have time and again implemented a wide range of welfare policies with the objective of increasing people’s happiness. And yet we rank 126 as per the perceived Happiness index. Pragmatically now what is required is not to introduce the happiness agenda into the Indian polity, for the Indian constitution is very much a consequence of this agenda, but to create a framework so as to measure the efficacy of policy vis-a-vis happiness. It has become pertinent to bring public policy and happiness together, to achieve beyond the set traditional contours of any welfare action. It is time that we build upon a policy of happiness; for it will definitely go a long way in serving as a fulcrum for all consequent policy initiatives. India needs to bridge the gap between the ideal and the reality, for the New India, is an economically thriving and more importantly, not an unhappy nation.

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Battling the Red-Tapeism : Pivoting in this David v. Goliath Tale

The biblical story of David and Goliath is oft used to voice the case of the underrepresented underdog winning the battle of right v. wrong, against the well-established, perceived as the arrogant giant. In this tale, the institutions envisioning services to citizens and legal entities, unfortunately have seemed to have gone astray, being adversarial to the ones which they have sought to serve. The Indian economy has made its  mark as the fastest growing economy in the world, having a 5.5% average GDP growth rate in the last decade. By 2031, India’s GDP is forecasted to surpass US $7.5 trillion by 2031. As per the Economic Survey of 2020-2021, India’s merchandise exports grew to US $301.4 billion- a 50% year on year growth, while having the 4th largest forex reserve in the world as of November, 2021. The top 10 commodities which were torchbearers for the Indian export growth story were: Petroleum products, Precious/semi-precious stones, Iron and Steel, Drug formulation & Biologicals, Gold & other jewellery, Organic chemicals, Electric machinery and equipment, Aluminum & its products, Iron & steel products and Marine Products. These top 10 commodities, account for 39.7% of total Indian exports, amounting to US $115 Billion (just between April and November, 2021). Therefore, exports form a strong sentinel    supplementing the Indian economy’s growth picture.  While global trade amounted to US $28.5 trillion in 2021, the quantum of merchandise exports was valued at US $17.6 trillion. Therefore, the market of global trade in exports is an ocean of wealth and opportunities. But as with every opportunity, comes a risk. There are a multitude of risks associated with exports and  trade across the world, in the unknowns.  “Export Credit Guarantee Corporation of India (ECGC) is a government company (under the control of the Ministry of Commerce and Industry). ECGC provides a range of credit risk insurance cover to exporters. Sidestepping, a quick glance at the Indian insurance sector would reveal that insurance penetration (calculated as the ratio of insurance premium to GDP) was 4.2%  in 2020.  The vision of ECGC states that it strives to support the Indian export industry by providing cost-effective insurance and trade-related services to meet the growing needs of the Indian Export market through optimal use of the available resources. The key motifs, which emerge in the ECGC’s vision are: firstly, to support the Indian export Industry, secondly to have cost effectiveness as a focal point and lastly, to deploy all its available resources. Though the conduct of the ECGC is quite contrary to its innate values. The ECGC prides itself on the fact that the claims ratio to outstanding commitment increased from 0.25% to 0.3% in 2020 vis a vis 2019. The data available in the public disclosures of the ECGC on the pendency of claims dawns a grim picture. From the years 2016-17 to 2019-20, the number of claims pending for 1 year to 5 years has seen a 267% increase, while the amount involved has  almost tripled. Similarly, the number of claims being processed in 6 months or less, between the years 2016-17 and 2019-20, has seen a sharp 103% increase. Juxtaposed, against 811 total claims pending in 2019-20, only 553 were settled, that means a settlement ratio of 0.4. It is alarming that while the numbering claims pending for 1-5 years is booming, the disposal of claims smacks of inefficiency. Another alarming fact is that though 553 claims were settled, it’s not known whether they were allowed or disallowed – and how many have been appealed. A corporation whose goal, identity, and business is vastly affected by claim dispensation, these numbers do not inspire confidence in the ECGC’s ability to deftly address the core (and only) consumer turmoil of claim resolution.  The objective of the National Export Insurance Account (NEIA) through its cover for projects aims to help make Indian project exports more competitive and gain a stronger foothold in regions of national strategic interest. Successful project will improve a sustained visible impact on India’s capacity to execute projects. Thus, the NEIA and in turn ECGC, seek to achieve important economic effects. Hedging risks will make the business of project exports more viable, and once more viable and lucrative a larger number of Indian businesses will aim to provide services abroad. The catalytic effect of such needs no enumeration, job creation, more forex, diplomatic collaborations. an increased strategic soft power among others. Each of these results, in turn spur further microeconomic benefits. A negative perception of the ECGC and its functions, loses consumer confidence, therefore hurting long term economic advantages, which are needless to explain. It is unfortunate that ECGC, which falls under the purview of the Ministry of Commerce and Industry, seems to miss the big picture, draining the efforts the Central government or the Ministry makes in promoting India as a political and economic superpower. With the advent of further infusion of funds as grant, the ECGC needs to reflect and plug in the holes in its systems and processes, to mitigate the loss in consumer confidence. It is crucial to note, that the Law Commission of India in 1984, while envisioning a litigation policy, had remarked that litigation could be avoided if the official machinery is more energetic, more sympathetic and more imaginative. But alas, this caution has fallen on deaf ears, much akin to the ECGC. As the analysis over the next few paragraphs will espouse, the organisation seems to be losing its core value to promote exports by hedging credit risks, and cloaking an autocratic approach lacking energy and sympath Let’s take a look at the claim resolution motif available in the public domain. For instance, in the Supreme Court judgement recently reported as Haris Marine Products v. Export Credit Guarantee Corporation Ltd., the appellant which was a manufacturer of fish meat and fish oil, in 2012 has exported some goods, secured by ECGC’s policy which covered the failure of foreign buyers to pay for the goods exported. The period of policy started from 14th December 2012,

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