04th May 2017, Editorial – Hindu

GS III: Inclusive growth and issues arising from it.

GS II: Welfare schemes for the vulnerable sections of the population by the Centre & States and the performance of these schemes.

Flight of the Common Man

  • UDAN – Ude Desh ka Aam Nagrik
  • Objective is to ensure affordability, connectivity, growth and development.
  • Who stands to benefit?
    • Citizens would get the benefit of affordability, connectivity and more jobs. The Centre would be able to expand the regional air connectivity and market.
    • The state governments would reap the benefit of development of remote areas, enhance trade and commerce and more tourism expansion.
    • For incumbent airlines there was the promise of new routes and more passengers.
    • For start-up airlines there is the opportunity of new, scalable business.
    • Airport operators will also see their business expanding as would original equipment manufacturers.

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  • The scheme UDAN envisages providing connectivity to un-served and under-served airports of the country through revival of existing air-strips and airports.
  • The scheme would be in operation for a period of 10 years.
  • Airfare for a one-hour journey (covering approximately 500 km) is to be capped at ₹2,500 per seat.
  • The airlines will be provided subsidy for three years in the range of ₹2,470-₹5,100 depending on the type of aircraft and distance covered.
  • Will get exclusive rights to fly on a regional route for the first three years.
  • Routes are awarded through a reverse bidding auction, so the airline that asks for the least subsidy support gets the exclusive right to fly.
  • The Centre has set up a regional connectivity fund, to be financed by levying access of ₹7,500-₹8,500 on each departing domestic flight on major national routes.
    • The partner State Governments (other than North Eastern States and Union Territories where contribution will be 10 %) would contribute a 20% share to this fund.
    • For balanced regional growth, the allocations under the scheme would be equitably spread across the five geographical regions of the country viz. North, West, South, East and North-east.
  • The selected airline operator would have to provide a minimum of 9 and a maximum of 40 UDAN Seats ( subsidized rates )on the UDAN Flights.
    • Airlines will provide lower airfare on 50% of the seats — for a maximum of 40 seats on a fixed-wing aircraft — and will be free to charge market price for the rest of them.
    • For helicopters: minimum of 5 and a maximum of 13 Seats.
    • On each such route, the minimum frequency would be three and maximum of seven departures per week.

Image Source: financialexpress.com

Source: The Hindu, PIB


GS II: India & its neighbourhhood relations.

The dragon beckons

India should ask China if it’s willing to address its concerns so as to enable participation at the BRI meet

modi-government-has-been-blind-to-this-pakistani-threat-to-make-in-india-read-how.jpg

  • Originated in 2013 as President Xi Jinping outlined plans for China’s global outreach through connectivity and infrastructure development.
  • Most ambitious global infrastructure project ever envisaged by one country.
  • Belt & Road Initiative (Previously called One Belt, One Road Initiative) comprises of:
    1. The Silk Road Economic Belt includes land corridors from China through Central Asia and Russia to Europe with spurs to West Asia and to Pakistan — the China-Pakistan Economic Corridor (CPEC).
    2. Maritime Silk Road links China’s east coast through major sea lanes to Europe in the west and the Pacific in the east.

      map1

  • Among Chinese objectives of the BRI are
    • finding outlets for excess capacity of its manufacturing and construction industries
    • increasing economic activity in its relatively underdeveloped western region, and
    • creating alternative energy supply routes to the choke points of the Straits of Hormuz and Malacca, through which almost all of China’s maritime oil imports pass.

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Strait_of_malacca.jpg

  • The political subtext:
    • is strengthening China’s influence over swathes of Asia and Africa
    • strenghten its ambitions to be a maritime power, and
    • developing financing structures parallel to (and eventually competing with) the Bretton Woods system.
  • Potential Threats:
    • Accommodating China’s overcapacity may interfere with a country’s developmental priorities.
    • political tensions between countries may prevail over considerations of economic benefit.
    • local elites may corner the “spoils” from new projects, thereby exacerbating* social tensions.
    • Financing strategies may result in countries sleepwalking into a debt trap (the Hambantota development projects in Sri Lanka provide a telling example)
      •  The vision was to build a number two city after Colombo in an under-developed, jungle area that’s best known for its pristine beaches and wildlife preserves.
      • Hambantota’s deep sea port struggled to attract ships and cargo volumes, Mattala International Airport became known as the world’s emptiest because of the region’s inability to attract passengers, newly paved, multi-lane highways provided thoroughfares for a severe lack of vehicles, the new cricket stadium was deficient of matches, and the conference center sat empty except for the odd local wedding. All the while, this loss-making infrastructure continued consuming massive amounts of national revenue to operate and maintain.
      • Nearly all of the infrastructure built in Hambantota was done with Chinese money, bringing Sri Lanka’s debt to the superpower to the east up to over $8 billion.

 

  • India’s Stand:
    • Officially, India says it cannot endorse the BRI in its present form, since it includes the CPEC (China – Pakistan Economic Corridor), which runs through Indian territory under illegal Pakistani occupation (Gilgit-Baltistan).
    • Threat to sovereignty.
  • More forethought and discussions required:
    • Will China recognise new transnational borders after the J&K issue is resolved?
    • Will it include the existing land corridor from India to Afghanistan, through Pakistan, in the BRI? This corridor would intersect the CPEC and may therefore open new routes for Chinese goods to both India and Afghanistan, besides promoting India, Pakistan and Afghanistan trade.
    • With its investment in the CPEC now estimated at over $60 billion, its increasing bilateral assistance to Pakistan and its growing military presence in that country, China is in a strong position to persuade Pakistan to recognise that this is in its best economic interest: it may even transform the CPEC into a commercially viable project.
  • Conclusion:
    • A more pragmatic approach of a partial endorsement may be adopted for now as the initiative rolls out in various countries, India can engage with them (and with China) to promote projects that would be of benefit with regards to infrastructure, increased trade, employment generation etc.

Source: The Hindu

Image Source: economictimes.com, wall street journal


 

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