Topic 1 : Keep it porous
Introduction: Announcing the move last week, Union Home Minister Amit Shah said that plans to formally end the Free Movement Regime (FMR) regime, suspended since September 2022, are also on the government’s anvil. The Centre should rethink its decision to fence the country’s 1,643-km border with Myanmar.
What is the Free Movement Regime?
- The FMR, which came into effect in 2018, allowed people living along the border of either side to travel up to 16 km into the other country without any visa.
What are the latest concerns regarding FMR?
- Admittedly, the situation along the Indo-Myanmar border has deteriorated after the Tatmadaw seized power in Yangon in February 2021.
- The junta has persecuted the Kuki-Chin people and the turmoil has resulted in an influx of Myanmarese refugees in the country’s Northeast.
- The instability has sparked security concerns in Delhi.
- The trafficking of arms and drugs is also worrying.
Why ending the FMR is a bad idea?
- Sealing borders could complicate matters in parts of the Northeast that bear the scars of insurgencies and ethnic strife, past and present.
- Undermining people-to-people relations can cause heartburn amongst tribal groups like the Kukis in Mizoram and Manipur who share kinship ties with Myanmar’s Chin community.
- Mizoram’s Chief Minister Lalduhoma — like his predecessor Zoramthanga — has opposed the fencing and civil society groups in the state have also criticized the move.
The Junta rule in Myanmar and India
- The junta has ruled Myanmar for all but five years since 1990.
- Unlike Western powers, which have made democracy the sole prism of their Myanmar policy, India has chosen to do business with the military regime, and that also has to do with the latter’s help in the denial of a safe haven to insurgents from the Northeast.
- Myanmar has also been a part of India’s Look East Policy.
- The strategy to do business with Yangon worked to a large extent till the latest military takeover three years ago.
- Since February 2021, the country’s Chin province which shares a border with Mizoram has become a major battleground in the conflict between the junta and its opposition.
The latest Junta regime and challenges for India
- Entire villages have reportedly been burnt down for failing to comply with the Tatmadaw’s writ.
- In August last year, External Affairs Minister S Jaishankar told his counterpart in Myanmar that “India’s border areas have been seriously disturbed and any action that aggravates the situation should be avoided”.
- That, however, was a rare admonition. Delhi has, by and large, failed to restrain Yangon from acting against Indian interests.
- Instead, the Union Home Ministry now seems to be picking on the junta’s victims.
In short-
Challenges Posed by the FMR
- Unintentional aiding of Illegal Immigration
- Illegal arms, counterfeit goods, drugs trade using the FMR
- Refugee Influx that is triggered by Myanmar’s military coup
- Deforestation & Tensions: Manipur’s Concerns
- Resistance to eviction, which later triggers to Violence
Proposed Solutions for Addressing Challenges
- Better Regulation of FMR, rather than ending it altogether.
- Addressing the socio-political-economic changes before ending the FMR.
- Inclusion of the Local Population in the decision-making process.
Conclusion: India’s border with Myanmar cuts through villages and divides families in Mizoram, Nagaland and Manipur. It should remain porous.
Topic 2 : A limited growth
Introduction: As per the first advance estimates of national income, released by the National Statistical Office in early January, the Indian economy is expected to grow at 7.3 per cent in the ongoing financial year. This growth estimate has surpassed even the most optimistic assessments by analysts.
RBI’s study on investment growth in the Indian economy
- A study by economists at the RBI notes that this stronger than expected growth is “underpinned by a shift from consumption to investment”.
- Investments, as measured by gross fixed capital formation, are estimated to grow at 10.3 per cent in 2023-24.
- Growth this year will push the investment to GDP ratio (at current prices) to 29.8 per cent in 2023-23, up almost one percentage point from 28.9 per cent in 2021-22.
The factors that are driving the investments in India
- The study says that investment activity is driven by the government’s sustained push on capex, which is beginning to crowd-in private investment, and investments by households in residential housing.
- In economics, the crowding-in effect refers to the phenomenon where an increase in government spending leads to an increase in private investment.
- The Centre’s capital spending is up around 31 per cent in the first nine months (April-November) of the year.
- And till November, it had sanctioned Rs 97,374 crore under the scheme for special assistance to states for investment as per the study. (This is roughly 75 per cent of the Rs 1.3 lakh crore allocated for the financial year).
- However, investment spending by state governments has been slower as per a study by economists at Bank of Baroda.
- Of the Rs 7 lakh crore of capex projected by 26 states, by November only Rs 3.18 lakh crore or 45 per cent had been spent.
- Household investments in real estate, though, continue to grow at a brisk pace.
- As per the study, the housing market “is seeing its highest sales in more than a decade”.
The status of private investments in the Indian economy
- On private corporate sector investments, the study notes that public sector spending is beginning to crowd-in private investment, “as high corporate profitability… has begun to induce creation of fixed assets”.
- However, as per a report by economists at Bank of Baroda, new investment announcements during April-December were at the lowest levels in recent years (excluding 2020).
- Moreover, of all the new investments announced, almost half of them can be traced to the aviation sector, where airlines have placed large orders for new aircrafts.
- Gross inward foreign direct investments have also fallen by 4.1 per cent to $47 billion during April-November.
- So while private investments may have picked up in some sectors, there is little indication of a broad-based pick-up in corporate investment activity.
Advantages of an Investment-driven economy
1. Long-term Growth:
- Increased Productivity: Investments in infrastructure, technology, and education can raise worker productivity and output, leading to sustained economic growth in the long run.
- Innovation and Competitiveness: Investment in research and development fosters innovation, new technologies, and competitive products, enhancing a country's position in the global market.
- Diversification: Investing in new industries and sectors reduces dependence on specific ones, mitigating risks from economic downturns or market fluctuations.
2. Improved Infrastructure and Quality of Life:
- Better Infrastructure: Investments in roads, transportation, communication, and energy grids improve efficiency, connectivity, and access to opportunities.
- Enhanced Public Services: Investments in education, healthcare, and social safety nets lead to a healthier, more educated, and skilled population, boosting overall well-being.
- Environmental Sustainability: Investment in renewable energy, clean technologies, and resource management promotes sustainability and reduces environmental impact.
3. Job Creation and Higher Wages:
- New Opportunities: Investment in new industries and businesses creates jobs in diverse sectors, expanding the labor market and reducing unemployment.
- Skill Development: Investment in education and training enhances workforce skills, leading to higher wages and career advancement opportunities.
- Increased Tax Revenue: Increased economic activity generated by investment drives up tax revenue, allowing the government to invest further in public services and infrastructure.
Potential challenges for an investment-driven economy
- Income Inequality: Investment gains might not be distributed equally, potentially widening the gap between rich and poor.
- Short-term Disruptions: Transitioning to an investment-driven model may involve adjusting consumption patterns and adapting to new technologies, causing temporary disruptions.
- Financial Stability: High levels of investment can create debt dependence and financial risks if not managed responsibly.
Conclusion: The Centre's capex push and residential housing drive investment activity. But there are few signs of broad-based pick-up in private sector spending