Editorial 1 : Trade ups and downs
Introduction: After falling in November last year, India’s merchandise exports picked up marginally in December. Analysts at Nomura expect the current account deficit to touch around 1.6 per cent of GDP in the quarter.
How India’s exports and imports are performing?
- As per data released by the Ministry of Commerce and Industry this week, goods exports stood at $38.45 billion in December 2023, up 1 percent over the same period the year before.
- Stripping away petroleum exports, core non-oil exports grew at a higher 6 percent.
- India’s imports continue to fall, declining by 4.9 percent in December.
- This combination of mildly positive export growth and falling imports has led to the merchandise trade deficit narrowing to $19.8 billion in December, down from $20.6 billion in November.
Sectoral dissection of exports data
- In December, of the 30 key merchandise sectors, 17 showed positive export growth.
- Exports of electronic goods grew at a healthy 14.4 per cent, engineering goods by 10.2 per cent, and gems and jewellery by 14 per cent.
- For the year so far (April-December), while aggregate exports are almost 6 per cent lower than over the same period last year, 14 sectors have shown positive growth, with sectors like electronic goods and drugs and pharmaceuticals showing healthy performance.
- The former has grown by 22 per cent, while the latter has registered a growth of 8.2 per cent.
Sectoral performance of imports
- On the other hand, even as imports on aggregate have declined by almost 8 per cent in the year so far (April-December), they remain healthy in segments such as iron and steel, non-ferrous metals, machinery and machine tools, electronic goods and gold.
Challenges to global trade
- Global trade is facing tremendous uncertainty due to the Houthi attacks in the Red Sea.
- The consequent increases in transportation costs, insurance premiums and the time involved — as per reports a substantial number of vessels are now being rerouted through the Cape of Good Hope — are likely to adversely impact India’s exports, especially to Europe which accounts for around 15 percent of the country’s merchandise exports.
- As per the commerce ministry, around 80 per cent of the outbound shipping to Europe takes place through the Red Sea region.
- The full impact of these attacks in the Red Sea will only be visible in weeks and months ahead.
- However, if India’s exports are sharply impacted, the merchandise trade deficit could widen more than currently expected in the last quarter of the financial year.
How can India make its global trade more resilient?
India can take several steps to mitigate these uncertainties and strengthen its trade resilience:
Diversification:
- Markets: Reduce dependence on any single market or trading partner. Focus on expanding trade with emerging economies, regional blocs, and countries with complementary economic structures.
- Products and Services: Broaden the export basket beyond traditional goods like textiles and garments. Invest in high-value sectors like pharmaceuticals, software, and engineering services.
- Supply Chains: Develop diverse supply chains with geographically dispersed sources of raw materials and production facilities. This reduces risks of disruptions in any single location.
Domestic Policy:
- Strengthen infrastructure: Invest in critical infrastructure like ports, roads, and logistics facilities to improve trade efficiency and reduce costs.
- Ease of doing business: Simplify regulations and bureaucratic procedures to attract foreign investment and boost domestic exports.
- Skill development: Focus on creating a skilled workforce to meet the demands of global markets and support export-oriented industries.
- Technology adoption: Promote the use of technology in trade processes to improve transparency, traceability, and efficiency.
Trade Policy:
- Free trade agreements: Pursue strategic free trade agreements that offer preferential access to key markets and reduce trade barriers. Specially with European Union, USA and Gulf countries must be on priority while signing any FTAs.
- Regional trade cooperation: Strengthen ties with regional trade blocs like SAARC and ASEAN to expand trade opportunities and leverage collective bargaining power.
- Trade facilitation measures: Implement trade facilitation measures such as single window platforms and electronic data interchange to streamline customs procedures and reduce trade costs.
- Strategic diplomacy: Engage actively in international trade negotiations and forums to advocate for India's interests and promote open and predictable trade rules.
Additional Strategies:
- Building domestic resilience: Invest in domestic agriculture, manufacturing, and renewable energy to reduce dependence on imports and ensure self-sufficiency in critical sectors.
- Promoting innovation: Encourage research and development in emerging technologies to boost productivity and competitiveness in international markets.
- Social safety nets: Strengthen social safety nets to protect vulnerable populations from the negative impacts of trade shocks and global economic downturns.
Conclusion: Goods exports pick up marginally in December. But, Houthi attacks in the Red Sea may have clouded the outlook.
Editorial 2 : Classroom at a click
Introduction: Two decades ago, there was much hope that computers with the Internet would revolutionize education. A decade later, mobile technology led to the belief that education anytime anywhere was possible. The recent Annual Status of Education Report (ASER) 2023 report shows that education is yet to become universal in India.
The digital revolution in education in India
- We are about to reach a situation when there will be a mobile phone in every home.
- In its survey of 14-18-year-olds across the country, the recently released Annual Status of Education Report (ASER) 2023 shows that about 89 percent youth in the surveyed age group of 14-18, said they have a smartphone at home.
- An even higher proportion — 92 percent — said that they can use a smartphone.
- Of those who reported knowing how to use a smartphone, two-thirds said that they had used mobile phones for their studies, the week before the survey.
- This is a large proportion, but it’s smaller than the population who reported using smartphones for entertainment.
- The market has many products from for-profit and not-for-profit companies for education but they are generally focused on preparing for examinations.
- AI-based tutoring programs are growing. As technology advances, making such programs in local languages will be easily possible.
- There is reason to believe that costs will keep falling.
- But their focus is still on preparation for exams because that is what the market demands.
- Technology barriers to the availability of knowledge are falling but the transfer of this knowledge and certification is still a restricted process. These processes need to be opened up.
Whether digital revolution can bring universal education in India?
- The idea of education anytime anywhere is now being put to test.
- Universal elementary school enrolment has been achieved in India and we are on our way to achieving universal secondary and higher secondary enrolment.
- But, as ASER first reported in 2005, enrolment or schooling is not the same as learning.
- Also, the 2023 report points out, half of these adolescents start working part time after completing Class X or the age of 15-16.
- Although the education policy talks about greater flexibility in entering and re-entering the formal education process, the need really is for the underprivileged to be able to study while working to earn a living.
- Open schooling and digital technology are a powerful combination.
- The open school and open university processes need to be decentralised and strengthened.
- Rapidly developing technology is going to make it easy not only to teach and learn anywhere-anytime but testing anytime-anywhere should be possible as well.
The need of diversification of education in India
- There is also a need for non-formal education to supplement the formal processes of education or fulfil other needs.
- Widespread smartphone ownership combined with cheap data presents a huge challenge because of the risks of distortion of information.
- But it is also an opportunity for education of the kind that is not offered in schools and colleges.
- For example, agriculture, or broadly natural resource management, is a subject that is not offered in rural schools and colleges, at least on the scale it should be.
- The ASER 2023 survey found that while 56.4 per cent and 31.3 per cent rural students respectively were studying Humanities and Science beyond Class X, only 0.7 per cent reported they were studying agriculture.
- Agriculture employs over 50 per cent of India’s workforce and ASER 2023 shows that nearly a quarter of all adolescents in the 14-18 age group also work in agriculture while being enrolled in schools or colleges.
- The need to formally train our youth in advanced skills and knowledge of agriculture, fisheries and forestry, traditionally handed down in families, should be obvious.
- This is not a matter of skilling for jobs or livelihoods alone.
Education and natural resource management in India
- Issues of natural resource management are the issues of environment and climate.
- They have always been interconnected. The difference now is that there is a growing awareness about the linkages.
- Therefore, there is all the more reason for the entire population to learn about agriculture and the environment — not just agrarian communities.
- Each home has a laboratory around it for experimentation and learning.
- Knowledge and information can be accessed using digital technology wherever people are.
- So, the way to do it probably is not through rigid structures of classrooms, departments, and universities run by governments or for-profit private players although these will continue to thrive for much of the foreseeable future.
Conclusion: Our education system has grown to train students for doing well in examinations and getting jobs, that will continue to be a goal for a good proportion of youth but life goals that are not connected with academics are also becoming popular. Our system has to evolve to support them. Technology can assist but our mindsets have to change.