India’s changing approach to global governance

India’s changing approach to global governance
India is increasingly unwilling to tolerate the old boys club with its closed membership
In 1996, India contested for a seat on the UN Security Council and lost to Japan by a big margin. The solidarity among developing countries came up short against what Indian officials called Japan’s “dollar diplomacy”, as Poorvi Chitalkar and David M. Malone note in The Oxford Handbook Of Indian Foreign Policy. More than two decades later, India has won a re-election of its candidate Dalveer Bhandari at the International Court of Justice (ICJ) against Britain. India’s appeal among developing and underdeveloped countries did indeed help. But so did India’s increased economic heft.

New Delhi’s desire to play a larger role in global governance is not a new phenomenon. This desire has come coupled with a clear preference for multilateralism. The approach in Jawaharlal Nehru’s years was characterized by high idealism. Global objectives like decolonization and disarmament were deemed important. But what India clearly lacked was material resources. Moral grandstanding, which New Delhi resorted to, proved to be an inadequate substitute. After Nehru’s demise, India began to look inwards. But the tendency to indulge in global activism did surface from time to time.

India’s enthusiasm for multilateral global governance did not bear fruit in terms of forwarding its own national interests. The best example comes from the UN. Nehru viewed it as the key to global peace and development. When some countries raised objections to inequitable distribution of power within the UN Security Council, Nehru thwarted them by raising the fear that rocking the boat would lead to the collapse of the UN. Unpersuaded by the realist logic that a stronger country should not involve a third party in a dispute with a weaker country, Nehru referred the Kashmir problem to the UN. To his great shock, the UN did not back India’s sovereignty claims over Kashmir.

India faced similar setbacks in other multilateral fora. Despite all its claims of speaking on the behalf of developing countries, India failed to get its crucial demands met in the negotiations for the Agreement on Trade-Related Aspects of Intellectual Property Rights (Trips). Moreover, India also earned the ire of developed nations for its—in Stephen Cohen’s words—“unrealistic combination of arrogance and poverty”. India’s approach to nuclear disarmament was even more puzzling. Rajiv Gandhi’s disarmament campaign was as foolish in its negligence of geopolitical realities as it was bold in its ambition. It seemed as if disarmament advocacy deluded India into a belief that its own security challenges would be taken care of. Unsurprisingly, the end results—Treaty on the Non-Proliferation of Nuclear Weapons (NPT) and Comprehensive Nuclear Test Ban Treaty (CTBT)—were deeply disappointing.

India’s record of engagement with the Bretton Woods institutions—the World Bank and the International Monetary Fund—has been better. But even here, its demands for voice and vote reforms to give greater say to emerging economies have fallen on deaf ears. The climate change negotiations started with a bounty for developing countries: the Kyoto Protocol in the mid-1990s recognized that the developed countries would bear the maximum burden of climate change mitigation. But by 2015 in Paris, that consensus was clearly overturned. However, by now, India had realized that it could not merely continue with persistent complaints.

New Delhi is now gradually shifting its approach to global governance and multilateralism. The primary objective of this new approach is to help shape the global rules and external realities in favour of India’s economic growth and strategic interests. For this purpose, India is simultaneously moving on three parallel tracks. First, New Delhi demands that the representation in global governance institutions should reflect the realities of today, not of 1945. It now campaigns aggressively for permanent membership in the UN Security Council. The victory in the ICJ against a permanent member will bolster India’s claim to the seat. Along with greater votes in Bretton Woods institutions, India also seeks membership in global export control regimes like the Nuclear Suppliers Group.

Second, India has been willing to partner with other countries, including China, to shape new institutions that are challenging the frozen post World War II order. India’s membership in Brics (the multilateral grouping comprising of Brazil, Russia, India, China and South Africa) was a reflection of frustration with lack of movement of reforms in the old institutions. It has played a key role in the formations of both Brics’ New Development Bank and the China-led Asia Infrastructure Investment Bank where it is the second largest shareholder. India’s recent entry into the Shanghai Cooperation Organization can be interpreted in a similar vein.

Third, India’s membership in these new institutions does not mean that it is, like China, aiming to mount a fundament challenge to the political West. This is clear from India staying out of China’s Belt and Road Initiative that has clear geopolitical ambitions. India is open to strengthening the liberal, democratic order in concert with the Western powers. Its recent partnership with Japan for building the Asia-Africa Growth Corridor is a case in point.

At the same time, India is increasingly unwilling to tolerate the old boys club with its closed membership. The conquest of the crumbling fortress of a declining power in the ICJ shows that New Delhi is ready to push the door open if mere knocking does not suffice.

Has India become more pragmatic in its approach to global governance institutions?

Delhi’s air pollution is both a challenge and an opportunity

Delhi’s air pollution is both a challenge and an opportunity
Success in tackling Delhi’s air pollution could provide a template for making other cities liveable—an essential requirement for attracting investment and generating quality jobs
Air pollution in Delhi has dominated the headlines over the past few weeks and rightly so. The problem is especially urgent because Delhi is not the only polluted city in the country. Eleven of the 20 most polluted cities in the world are in India. Given the massive expansion we expect in the urban population over the next 20 years, and the need to attract investment to create quality jobs, we need to make our cities liveable and attractive to tourists. Success in Delhi could provide a much needed template for the other cities.

Awareness of the problem

Recognizing the problem is the first step towards corrective action and there is progress in this area. A few years ago, an American journalist stationed in Delhi wrote a farewell piece saying that he was leaving Delhi because the air pollution monitors in the US embassy showed that staying in the Capital would put his children’s health at risk. There was an outburst of nationalistic outrage that the embassy was probably exaggerating the problem. Since then, a number of government monitoring stations have been established in Delhi and they confirm that the problem is indeed serious.

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The figure above reports the level of air pollution by PM 2.5 particles at the Siri Fort station in New Delhi for the 12 months from mid-November 2016 to mid-November 2017. The sharp spikes when readings go off the chart are frightening and attract headlines but the real problem is not these emergency situations. It is that the average for the year, at 142, is far too high. It is more than three times the national standard of 40, and 14 times the stricter WHO (World Health Organization) standard of 10. If the monsoon months are excluded, most of the readings are consistently in the unhealthy range.

Medical experts in India have warned that children exposed to this level of pollution will develop asthmatic problems much earlier than normal. Pregnant women exposed to high levels of air pollution are more likely to deliver low birth weight babies, with all the permanent health problems that it causes. Senior citizens are also at risk.

Many activists have been working hard at raising consciousness and even pushing the judiciary to act. But judicial pushing can only go so far. It is useful in cases where prohibition of activities is all that is needed. It cannot devise a carefully crafted strategy operating on many fronts. This is for the government to do and then implement.

Can pollution be controlled?

Until a few years ago, Beijing was more polluted than Delhi. There were many stories in the international press about the very high levels of pollution in the run up to the prestigious 2008 Olympic Games in Beijing. The Chinese government took firm action to control local industrial pollution, reduce the use of coal in power plants, and also restrain the sale of cars in Beijing. National Aeronautics and Space Administration’s (Nasa) satellite data show a 17% decline in the concentration of fine particulate matter over China between 2010 and 2015. The same data show an increase of 13% over India in the same period. Pollution in China is still bad, but it is seen to be slowly coming under control whereas it is rising in India.

An action plan for Delhi

If we want to bring pollution down from the average of 142 to the national standard of 40, we need to (a) reduce pollution by as much as 72% and (b) ensure that it stays at that level notwithstanding growth of population and economic activity. This will require action on a massive scale by many central ministries and Delhi state government bodies acting on different areas.

The Environmental (Prevention and Control of) Pollution Authority (EPCA), established by the Supreme Court, has prepared a comprehensive multi-dimensional action plan for control of pollution in Delhi. It includes proposals for shifting to cleaner vehicles and fuels, restraining the growth in cars and expanding public transport as an alternative, stopping pollution from coal-based power plants, controlling pollution from industry, putting a stop to burning garbage, preventing pollution from construction activities and controlling burning of crop residues in neighbouring states. Some of the actions have to be taken by the central government and others by the Delhi state government and local bodies. Actions that have to be taken by the central government are also spread across different ministries.

Road dust contributes about 38% of the pollution. This component is particularly difficult to control since it reflects both poor road conditions with unpaved footpaths, and the use of traditional technology—hand-held brooms—for sweeping the streets. Such sweeping can shift litter to one side, to be collected separately. It does little to control road dust. It only throws it up in clouds and shifts it to the side, from where it is disturbed again by traffic through the day. Vacuum cleaning devices attached to mechanical sweepers will help, but that would require massive investment in equipment, which may be beyond the funding budget of the municipality. Similarly, proposals for sprinkling water over all the roads in the city would run into water-availability constraints.

Vehicle emissions account for 20% of the pollution and this component is likely to increase as the number of cars multiplies. There is much that could be done in this area. The decision to advance BS VI fuel to 2018 for Delhi, and 2020 for the whole country, is a welcome move. It needs to be accompanied by action to ensure that new cars are all equipped with engines designed for BS VI fuel. The two together will reduce particulate pollution by 70% to 80%. However, since the large stock of older cars will remain for many years, and the total number of cars is also expected to expand, the total pollution load from automobiles may not come down sufficiently over the near future. There is no alternative to actively discouraging car ownership and plan a massive shift to public transport in the capital.

Discouraging car ownership calls for many tough decisions. We need to increase the taxation of cars by introducing an annual or biannual licence fee, as we have for buses. We also need to introduce higher parking charges in the areas of the city that are congested and the charges should be high enough to discourage car usage. We need to eliminate the current favourable tax treatment of diesel compared with petrol to discourage the trend to use diesel vehicles, especially SUVs. The WHO has classified diesel as a No.1 carcinogenic, along with tobacco. Diesel need not be banned since its use in sparsely populated areas will not create excessive pollution, but it should definitely be discouraged in urban locations. A higher licence fee could be prescribed for diesel vehicles.

In the longer run, electrification of cars and scooters will solve the problem, but even if all cars sold from 2030 onwards are electric, it will be a long time before a substantial portion of the stock of cars becomes electric. To accelerate adoption of electric vehicles (EVs) we should announce that all taxis and three wheelers must compulsorily be made electric in Delhi, as soon as such vehicles become available.

Discouragement of cars needs to be accompanied by a parallel effort to expand bus and Metro services. This is widely supported, but it runs into financial constraints. The EPCA has recommended the creation of an urban transport fund to upgrade public transport. All receipts from parking charges, and also the licence fee on cars and buses should be paid into this fund. Those who support public transport often baulk at measures to raise funds to finance it. The Central government could offer to provide matching funds equal to what is raised by the cities.

We should definitely consider ending the use of coal in power plants located close to Delhi. There are gas-based power plants which are under-utilized partly because the utility prefers to buy lower priced coal-based electricity, and partly because gas is not available. Gas could be imported, but this will make gas-based power even more expensive. A regulatory intervention forcing coal-based plants to shut down, ensuring adequate supply of gas, and most importantly, allowing the price of electricity to rise, is needed. Higher energy prices will be resented but they are essential if we want to shift to more energy- efficient outcomes. The present cess on coal needs to be increased steadily over time.

Tough action is also needed to control of industrial pollution. Sunita Narain of the Centre for Science and Environment has been conducting a one-woman battle to ban the import of Pet coke, an exceptionally dirty fuel which is banned in the US, but which is freely imported by us (from the US) and used by many smaller industries. The use of Pet coke is banned in Delhi, and we can monitor domestic refineries to ensure that they don’t sell the Pet coke they produce in Delhi. However, if large quantities are allowed to be imported, the ban on its use can only be enforced in Delhi by policing the consumers, which is near impossible. An outright ban on the import of this dirty fuel is a low-hanging fruit

Burning mixed municipal waste in Delhi is highly polluting. We need to shift within the next three years to an effective system of separating municipal waste into biodegradable waste which can be converted into compost and energy, recyclable waste including plastic which can be recycled, inert waste which can be converted into refuse-derived fuel for power generation, and residual non-combustible waste which has to go to scientific landfills. This is a challenge for the Delhi government which it should take on.

Since many ministries are involved, the ministry of environment should be tasked with (a) identifying the actions planned by different ministries, (b) estimating the effect of these actions on the trajectory of pollution, (c) determining whether the resulting trajectory is acceptable as a national commitment towards reaching the national target, and if not pushing for stronger action, and finally (d) monitoring progress on an agreed trajectory to see if pollution is indeed being reduced as projected. If progress is unsatisfactory, then the ministries have to go back to the drawing board.

Something along these lines would put us on a credible path to reducing pollution over time. It will take time, but at least we will know when we can start breathing easy. Anyone who doubts whether the costs are worth it should consider that researchers have concluded that if Delhi’s air pollution could be lowered to the national standard, it would increase the life expectancy of Delhi’s citizens by six years.

UMANG App

UMANG App
The Prime Minister launched the UMANG App that aims to bring 162 government services on a single mobile app, with a larger goal to make the government accessible on the mobile phone of our citizens.
UMANG at a glance:
· Uniform User Friendly Interface across Government services
· 162 services of 33 department/ applications and 4 States
· Single mobile app to access 1200+ services of various government services from Centre, State and utility services
· Supports 13 Indian languages and caters to on-demand scalability
· Will soon support feature phones without internet connectivity through USSD

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Text of PM's Address at GCCS 2017

His Excellency Mr. Ranil Wickremesinghe, Prime Minister of Sri Lanka
Ministers from India and abroad
Secretary General of ITU,
Other distinguished dignitaries
Delegates from over 120 countries
Students,
Ladies and Gentlemen.

I welcome you to New Delhi, for the Global Conference on Cyber Space. I also welcome all those who are joining this event remotely from across the world, over the internet.

Friends.

We all know how cyberspace has transformed the world over the last few decades. The senior generation among the gathering here, would recall the bulky mainframe computer systems of the seventies and eighties. A lot has changed since then. Email and personal computers brought about a new revolution in the nineties. This was followed by the advent of social media, and the mobile phone as an important vehicle of data storage and communication. Expressions such as the Internet of Things, and Artificial Intelligence, have now become commonplace. These indicate that change continues, perhaps at an even faster pace now.

These rapid developments in the digital domain have mirrored immense change in India as well. Indian IT talent has been recognized worldwide. Indian IT companies have made a name for themselves globally.

Today, digital technology has emerged as a great enabler. It has paved the way for efficient service delivery and governance. It is improving access, in domains from education to health. And it is helping to shape the future of business and economy. Through each of these ways, it provides the less privileged sections of society, a more level playing field. On a macro-scale, it has contributed to emergence of a flat world, where a developing nation like India can compete on a level footing with developed nations.

Friends.

Technology breaks barriers. We believe it validates the Indian philosophy of "Vasudhaiva Kutumbakam" - the world is one family. This expression reflects our ancient, inclusive traditions. Through technology, we are able to give meaning to this expression, and indeed to the best of democratic values.

We in India, give primacy to the human face of technology, and are using it to improve what I call, “ease of living.” Empowerment through digital access, is an objective that the Government of India is especially committed to. "Digital India" is the world's largest, technology-led transformative programme which is paving the way for our citizens to avail digital services. We are using mobile power or M-power to empower our citizens.

I am sure most of you are already aware of Aadhaar, which is the unique biometric identity of a person. We have used this identity to liberate our people from queues and cumbersome processes. Three factors: first, financial inclusion through our Jan-Dhan bank accounts; second, the Aadhaar platform; and third, the Mobile phone, have greatly helped reduce corruption. We call this the J.A.M. or JAM trinity. Through better targeting of subsidies, the JAM trinity has prevented leakages to the tune of nearly 10 billion dollars so far.

Let me share a few examples of how digital technology is becoming a great facilitator for "ease of living."

Today, a farmer can access a variety of services, such as soil-testing results, expert advice, and a good price for his produce, at the click of a button. Digital technology is therefore contributing to increased farm incomes.

A small entrepreneur can register on the Government e-Marketplace, and bid competitively for supply of goods to the Government. As he expands his business, he also contributes to lowering the cost of procurement for Government. This leads to increased efficiency, and greater value for public money.

Pensioners no longer need to present themselves in front of a bank officer, to provide proof of life. Today, a pensioner can leverage the Aadhaar biometric platform, to provide this proof with minimal physical effort.

Women form a significant part of the IT workforce. Digital technology has facilitated several new enterprises led by women. In this way the IT sector has contributed towards gender empowerment.

Citizens of India are increasingly adopting cashless transactions. For this, we created the Bharat Interface for Money – or BHIM App. This App is helping the movement towards a less cash and corruption free society.

These examples show the power of technology in improving governance.

Friends.

We are using the digital domain to facilitate participative governance, or Jan Bhagidari. When we assumed office in May 2014, many people, particularly youngsters expressed a keen desire to share their ideas and work for the nation. It is our firm belief that there are millions of Indians, whose transformative ideas can go a long way in taking India to new heights.

Therefore, we launched the citizen engagement portal, MyGov. This platform enables citizens to share their thoughts and ideas on important issues. In many key policy areas, we received thousands of valuable suggestions. Many logo and emblem designs for various Government initiatives today, are the result of crowd-sourcing, and competitions on MyGov. In fact, even the official app for the Prime Minister's Office, is the result of a competition floated on MyGov, which received brilliant responses from youngsters. MyGov is a prime example of how technology strengthens democracy.

Let me turn to another example. On assuming office, I realized that important government projects and initiatives often suffer on account of unnecessary silos in government functioning, and the lack of focused decision-making. Therefore, we devised a cyberspace based platform, called PRAGATI or Proactive Governance for Timely Implementation. PRAGATI, in Hindi, literally means progress.

On the last Wednesday of every month, I meet top Union and State government officials for a PRAGATI Session. Technology breaks silos. Sitting in our respective offices, aided by the cyber world, we discuss and resolve important governance issues. I am happy to share with you that the PRAGATI sessions have resulted in faster decision-making, through consensus, in the larger interest of the nation. PRAGATI has put back on track infrastructure projects worth billions of dollars which were stuck in red-tape.

I have even tried something of my own, through the Narendra Modi Mobile App. This App deepens my connect with citizens. The suggestions I get through the App are very useful.

Today, we launched the UMANG Mobile App, which will provide over a hundred citizen-centric services. At the back-end, these services will be catered for by many different departments of the Union and State Governments. This integrated approach will add an automatic layer of "peer performance pressure", in the working of these departments.

Friends,

We shall be happy to share our experiences and success stories with the global community. On the other hand, India is keen to find scalable models and innovative solutions in education and health, using digital technology. We also wish to make cyberspace an enabler for the differently-abled. Recently, during a thirty six hour Hackathon, college students suggested solutions to chronic problems that were put forward by Ministries. We look forward to learn from global experiences and best practices. We believe that growth happens only when we all grow together.

Cyberspace remains a key area for innovation. Our startups today, are looking to provide solutions to common everyday problems, and improving the lives of people. I am confident that the global investor community, will recognize the immense potential waiting to be tapped from India’s startup pool. I invite you to invest in this space, and be a part of the unfolding story of Indian startups.

Friends.

The internet, by nature, is inclusive and not exclusive. It offers equity of access, and equality of opportunity. Today’s discourse is being shaped by Facebookers, Tweeples, and Instagrammers. Social media platforms are making cyberspace participative for all. News that experts tell us from studios, is now supplemented by experiences highlighted on social media. This transition, to a blend of expertise and experience, is the contribution of the cyber world. The internet has become the ideal platform for youngsters to showcase their creativity, capability and capacity - be it an insightful blog, a beautiful musical rendition, artwork, or theatre… the sky is the limit.

Friends.

The theme of the Conference: "Secure and Inclusive Cyberspace for Sustainable Development" also highlights the importance of securing this vital asset for mankind. The global community needs to approach the issue of cyber-security with confidence, as much as with resolve. Cyberspace technologies must remain an enabler for our people.

The quest for an open and accessible internet often leads to vulnerability. Stories of hacking and defacement of websites are the tip of an iceberg. They suggest that cyber attacks are a significant threat, especially in the democratic world. We need to ensure that vulnerable sections of our society do not fall prey to the evil designs of cyber criminals. Alertness towards cyber-security concerns, should become a way of life.

One of the major focus areas should be the training of well-equipped and capable professionals to counter cyber threats. Cyber-warriors who will remain on the alert against cyber-attacks. The term "hacking" may have acquired an exciting, even if dubious overtone. We need to ensure that cyber protection becomes an attractive and viable career option for the youth.

On a related note, nations must also take responsibility to ensure that the digital space does not become a playground for the dark forces of terrorism and radicalization. Information sharing and coordination among security agencies is essential to counter the ever-changing threat landscape.

Surely, we can walk the fine balance between privacy and openness on one hand, and national security on the other. Together, we can overcome the differences between global and open systems on one hand, and nation-specific legal requirements on the other.

Friends.

Emerging digital technologies could impact our future in ways that we cannot yet foresee. Important questions of transparency, privacy, trust and security may need to be addressed. Digital technology serves to empower mankind. We must ensure that it continues to stay that way.

The large multi-stakeholder participation at this event, is proof of the global endorsement that this platform has received. Nation states, the industry, academia and civil society, all need to work towards a formal collaborative framework. This will enable a secure cyberspace which improves quality of life.

Friends.

This conference is perhaps the biggest ever such event in terms of numbers. I am told that all the background and logistics have been handled digitally. I hope delegates from around the world found it a smooth and seamless experience.

I conclude by wishing you fruitful and productive deliberations and outcomes. I once again welcome you, and wish the conference all success.

Thank you.

Adam Smith: The Father of Economics

Adam Smith: The Father of Economics

Adam Smith was an 18th-century philosopher renowned as the father of modern economics, and a major proponent of laissez-faire economic policies. In his first book, "The Theory of Moral Sentiments," Smith proposed the idea of the invisible hand—the tendency of free markets to regulate themselves by means of competition, supply and demand, and self-interest. Smith is also known for his theory of compensating wage differentials, meaning that dangerous or undesirable jobs tend to pay higher wages to attract workers to these positions, but he is most famous for his 1776 book: "An Inquiry into the Nature and Causes of the Wealth of Nations." Read on to learn about how this Scottish philosopher argued against mercantilism to become the father of modern free trade and the creator of the concept now known as GDP.

Early Life
The recorded history of Smith's life begins on June 5, 1723, at his baptism in Scotland; however, his exact birthdate is undocumented. Smith attended the University of Glasgow at age 14, later attending the prestigious Balliol College at Oxford University. He spent years teaching and tutoring, publishing some of his lectures in his 1759 book, "The Theory of Moral Sentiments." The material was well-received and laid the foundation for the publication of "An Inquiry Into the Nature and Causes of the Wealth of Nations," (1776), which would ultimately cement his place in history.

The Theory of Moral Sentiments
Smith is most famous for his 1776-piece, "The Wealth of Nations," but his first major treatise, "The Theory of Moral Sentiments," released in 1759 created many ideas still practiced today.

Some may be surprised to learn that in this book, Smith, notoriously known as the “Father of Capitalism,” discusses charity and human ethics extensively in this first book. While much of the philosophy behind Smith's work is based on self-interest and maximizing return, "The Theory of Moral Sentiments," was a treatise about how human communication relies on sympathy. The book extensively explored ideas such as morality and human sympathy. In the book, Smith argued that people are self-interested but naturally like to help others.

While this may seem to be at odds with his economic views of individuals working to better themselves with no regard for the common good, the idea of an invisible hand that helps everyone through the labor of self-centered individuals offsets this seeming contradiction.

The Wealth of Nations
Smith’s 1776 work, "An Inquiry Into the Nature and Causes of the Wealth of Nations," also shortened as "The Wealth of Nations," documented industrial development in Europe. While critics note that Smith didn't invent many of the ideas that he wrote about, he was the first person to compile and publish them in a format designed to explain them to the average reader of the day. As a result, he is responsible for popularizing many of the ideas that underpin the school of thought that became known as classical economics.

Other economists built on Smith's work to solidify classical economic theory , which would become the dominant school of economic thought through the Great Depression.

Laissez-faire philosophies, such as minimizing the role of government intervention and taxation in the free markets, and the idea that an "invisible hand" guides supply and demand are among the key ideas Smith's writing is responsible for promoting. These ideas reflect the concept that each person, by looking out for him or herself, inadvertently helps to create the best outcome for all. "It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest," Smith wrote.

By selling products that people want to buy, the butcher, brewer, and baker hope to make money. If they are effective in meeting the needs of their customers, they will enjoy the financial rewards. While they are engaging in their enterprises for the purpose of earning money, they are also providing products that people want. Such a system, Smith argued, creates wealth not just for the butcher, brewer, and baker, but for the nation as a whole when that nation is populated with citizens working productively to better themselves and address their financial needs. Similarly, Smith noted that a man would invest his wealth in the enterprise most likely to help him earn the highest return for a given risk level. Today, the invisible-hand theory is often presented in terms of a natural phenomenon that guides free markets and capitalism in the direction of efficiency, through supply and demand and competition for scarce resources, rather than as something that results in the well-being of individuals.

"The Wealth of Nations" is a massive work consisting of two volumes divided into five books. The ideas it promoted generated international attention and helped drive the move from land-based wealth to wealth created by assembly-line production methods driven by the division of labor. One example Smith cited involved the work required to make a pin. One man undertaking the 18 steps required to complete the tasks could make but a handful of pins each week, but if the 18 tasks were completed in assembly-line fashion by ten men, production would jump to thousands of pins per week.

In short, Smith argues that the division of labor and specialization produces prosperity. “It is the great multiplication of the productions of all the different arts, in consequence of the division of labor, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people,” states Smith in “The Wealth Of Nations."

Adam Smith Creates the Concept of GDP
Ultimately through the ideas presented in "The Wealth of Nations," Smith changed the import/export business, created the concept of what is now known as gross domestic product (GDP) and argued for free exchange.

Before the release of "The Wealth of Nations," countries declared their wealth based on the value of their gold and silver deposits. However, Smith’s work was highly critical of mercantilism; he argued that instead countries should be evaluated based on their levels of production and commerce. This sentiment created the basis for measuring nation’s prosperity based on a metric called GDP.

Before Smith’s book, countries were hesitant to trade with other countries, unless it benefited them. However, Smith argued that a free exchange should be created, as both sides trading become better off. This led to the increase in imports and exports and countries judging their value accordingly. Smith also argued for a limited government. He wanted to see a hands-off government and legislation conducive an open and free market. Smith did see the government responsible for some sectors, however, including education and defense.

The Bottom Line
The ideas that became associated with Smith became the foundation of the classical school of economics and gave him a place in history as the father of economics. Concepts Smith pioneered, such as the invisible hand and the division of labor serve are now quintessential economic theories. Smith died on July 19, 1790, at age 67 but the ideas he promoted live on in the form of contemporary economic research and institutes like the Adam Smith Institute. In 2007, the Bank of England placed his image on the £20 note.

about John Maynard Keynes

John Maynard Keynes
John Maynard Keynes was an early 20th-century British economist, known as the father of Keynesian economics. His theories of Keynesian economics addressed, among other things, the causes of long-term unemployment. In a paper titled "The General Theory of Employment, Interest and Money," Keynes became an outspoken proponent of full employment and government intervention as a way to stop economic recession. His career spanned academic roles and government service.

BREAKING DOWN 'John Maynard Keynes'
John Maynard Keynes was born in 1883 and grew up to be an economist, journalist and financier, thanks in large part to his father, John Neville Keynes, an Economics lecturer at Cambridge University. His mother, one of the first female graduates of Cambridge University, was active in charitable works for less-privileged people.

Keynes' father was an advocate of laissez-faire economics, and during his time at Cambridge, Keynes himself was a conventional believer in the principles of the free market. However, Keynes became comparatively more radical later in life and began advocating for government intervention as a way to curb unemployment and resulting recessions. He argued that a government jobs program, increased government spending, and an increase in the budget deficit would decrease high unemployment rates.

Principles of Keynesian Economics
The most basic principle of Keynesian economics is that if an economy's investment exceeds its savings, it will cause inflation. Conversely, if an economy's saving is higher than its investment, it will cause a recession. This was the basis of Keynes belief that an increase in spending would, in fact, decrease unemployment and help economic recovery. Keynesian economics also advocates that it's actually demand that drives production and not supply. In Keynes time, the opposite was believed to be true.

With this in mind, Keynesian economics argues that economies are boosted when there is a healthy amount of output driven by sufficient amounts of economic expenditures. Keynes believed that unemployment was caused by a lack of expenditures within an economy, which decreased aggregate demand. Continuous decreases in spending during a recession result in further decreases in demand, which in turn incites higher unemployment rates, which results in even less spending as the amount of unemployed people increases.

Keynes advocated that the best way to pull an economy out of a recession is for the government to borrow money and increase demand by infusing the economy with capital to spend. This means that Keynesian economics is a sharp contrast to laissez-faire in that it believes in government intervention.

How companies are spending on CSR projects The top 100 NSE companies are moving beyond compliance to focus on creating long-term impact for beneficiaries of their CSR projects

In the three years since Corporate Social Responsibility (CSR) rules were implemented, not much has changed in patterns of spending by the top 100 National Stock Exchange (NSE) listed companies by market capitalization. While education and healthcare continue to attract most of the monies, Maharashtra still sees the maximum inflow of CSR spends. The top 10 companies still account for almost half of the total CSR spend.

CSR Rules, which came into effect on 1 April 2014, state that companies with a net worth of Rs500 crore or revenue of Rs1,000 crore or net profit of Rs5 crore should spend 2% of their average profit in the last three years on social development-related activities such as sanitation, education, healthcare and poverty alleviation, among others, which are listed in Schedule VII of the Rules.

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In fiscal year 2017 (FY17), an actual spend of Rs6,810 crore was recorded for the 92 companies whose annual reports were studied to collect the data by Goodera (previously NextGen), a CSR and sustainability management platform. The cut-off date for collecting the data was 18 September. The remaining eight had either not released their annual reports or follow a different fiscal year.

At Rs3,307 crore, the share of the top 10 companies was once again nearly 50% of the total amount spent by the firms surveyed. “The overall CSR spend growth has reduced to 10% this fiscal from 23% in the previous. This is primarily due to two reasons: the overall rate of growth of companies’ profits has slowed down in this fiscal year and second, 16% of companies have reduced their overall spend, though their profits have grown, causing an overall slowdown of CSR spend in the ecosystem,” says Abhishek Humbad, founder and co-chief executive officer (CEO) of Goodera.

Public sector focus

Of the 92 firms surveyed, 15 were public sector units (PSUs) and their spend was Rs1,996 crore out of Rs6,810 crore, or 30% of the total spend.

“In FY17, spend by PSUs has decreased by 9%, though the prescribed spend grew by 1%. This is mainly due to certain PSUs being non-compliant since the law came into existence. Some of the common explanations cited for non-compliance are multi-year projects, delay in identification of projects and other related delays,” says Humbad.

One of the ways to improve the current situation is to invest in fewer but strategic projects instead of taking up more projects. “On an average, while private companies take up 14 projects, the corresponding number for PSUs is 26, which leads to thinning of resources and lack of adequate focus on projects under PSUs,” he adds.

As in the previous two years, in FY17, nearly half of the top 10 spenders exceeded their prescribed limit.

Perhaps one approach could be like that of NTPC Ltd, which ranks at No. 6 in the spend tally. The company reported that almost half of its CSR budget was allocated to hunger, healthcare and poverty alleviation projects. NTPC also takes up most of the CSR activities primarily in the neighbourhood villages of its units too. “Despite the slowdown in the growth rate of the economy, India is still one of the fastest-growing economies in the world. This growth has been accompanied by certain aberrations like social and economic inequity, lagging human development indicators, environmental degradation, etc. Therefore NTPC’s endeavours for sustainable socio-economic development,” says G. Sridhar, additional general manager (CSR) at NTPC.

Looking at new areas

As in the previous two years, in FY17, nearly half of the top 10 spenders exceeded their prescribed limit. Tata Steel Ltd, ranked at No. 9, led the tally with a spending of almost 67% above its prescribed limit. “We do not look at 2% as a cut-off limit. The onus is on us to do more nuanced and high-impact activities to bring in social change. This is built into the DNA of our company,” says Biren Ramesh Bhuta, chief CSR officer at Tata Steel. He believes that more and more companies in India are now incorporating sustainability practices and carrying out effective CSR practices because that is the need of the day. “There are two compelling reasons: If you as a business want to survive for 100 years, you have to do right by the society you work in and if you want to grow, you cannot do so by leaving a large section of the society so behind,” he adds.

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ITC Ltd, ranked as the seventh largest spender with spends in six of the 11 activities of Schedule VII, including the oft neglected national heritage, says it focuses on activities that meet the developmental needs of its stakeholder communities. “ITC’s CSR interventions are focused on two stakeholder communities: rural communities with whom ITC’s agri-businesses have forged enduring partnerships through crop development and procurement activities; and communities residing in close proximity to our production units,” says Ashesh Ambasta, executive vice-president and head (social investments) at ITC.

HDFC Bank Ltd has been looking to scale up its CSR strategy. Ranked four on the spend tally, for the first time in three years of reporting the bank has a 100% actual spend (Rs305.42 crore) versus the prescribed spend. “We have consciously tried to ensure that we have a broad spread. We operate in about 18 states and while we have been increasing our footprint, there is a certain method in how we pick the specific areas that we work in,” says Paresh Sukthankar, deputy managing director at HDFC Bank.

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“In the first year, we covered about 60-65 villages. Many of these villages had been allocated to us to open accounts under the Jan Dhan Yojana, and we thought that while we address their basic financial inclusion and banking needs, why not also do an overall needs assessment and deal with their other developmental issues too? By March 2017, we had covered 560 villages under this Holistic Rural Development Programme (HRDP) and many more villages under smaller projects. Today we are working in over 750 villages under HRDP,” he says.

The bank spent about 41.6% of its CSR spend under rural development category according to its annual report. “The higher level of spends has come from scaling up of some of the initiatives in the areas that we have been previously working in. We have always worked in education, skilling, sanitation and financial inclusion, and our initiative and outlays in these areas have grown. We have also got our toes wet in a few newer areas although the absolute outlays in some of these will be smaller,” adds Sukthankar.

Meanwhile, Ambasta says ITC, out of its total spend of Rs275.96 crore, spent Rs2.18 crore on conservation of heritage, art and culture through the ITC Sangeet Research Academy. “Exceptionally gifted students, carefully handpicked across India, receive full scholarships to reside and pursue their music education at the academy campus,” he explains.

Infosys, which ranks fifth in the top 10 spenders list, is also the only company to show CSR spend under the Armed Forces veterans category of Schedule VII.

Another company among the top 10 spenders in this category is Infosys Ltd, which spent about Rs3 crore on projects including the Anupu festival, Kelkar museum, etc., according to its annual report.

Infosys, which ranks fifth in the top 10 spenders list, is also the only company to show CSR spend under the Armed Forces veterans category of Schedule VII. The Infosys Foundation gives aid to disabled veterans and to around 194 families of Central Armed Police Forces martyrs. “This will be a multi-year activity for the foundation,” says Sudha Murty, chairperson of Infosys Foundation, who is also pleased to note that spending for CSR has gone up overall, with the company spending a little above its prescribed limit this year.

“From the perspective of Infosys Foundation we were glad to see the approved increase in spend, due to which we were able to commit and utilize funding for deserving multi-year projects and extend our reach to more states,” adds Murty.

The top spender, Reliance Industries Ltd, has held on to the position for the third year in a row and as in the previous years, has spent above its prescribed spend. “Reliance Foundation (which implements CSR projects for the company) is focused on addressing the nation’s development challenges in areas of rural transformation, education, health, sports for development and more,” says Jagannatha Kumar, CEO of Reliance Foundation. The company, which has spent 77.7% of its CSR funding on projects related to education, sanitation, skill development, etc., has also reported a Rs26.8 crore spending on the development of sports. Nita M. Ambani, founder and chairperson of Reliance Foundation who is also a member of the International Olympic Committee, is seen as the reason behind the push to include sports in the foundation’s work. “RIL believes in the power of sports to create positive social impact and is committed to creating a large-scale ecosystem for sports and to train the youth of India to take it up as a vocation,” adds Kumar.

Factoring in lessons

Among the Schedule VII activities that received the lowest funding were Prime Minister’s relief fund and technology incubators. “We will have to take it that it is a reflection of the need in the society. The priorities of the community needs is reflected in the CSR expenditures,” explains Santhosh Jayaram, partner and head (sustainability and CSR advisory) at KPMG.

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The general consensus among industry experts is that in the third year, companies are moving beyond compliance to focus on creating a long-term impact for the beneficiaries. “The MCA (ministry of corporate affairs) guidelines mandate companies to report on their CSR spend. However, we are seeing that many companies are proactively conducting extensive monitoring and evaluation, and impact assessment for their projects and reporting these through CSR specific detailed reports,” says Humbad of Goodera.

So some things have changed from FY15 and FY16. “The first two years there was struggle to get clarity on how existing work should be aligned to CSR and how initiatives have to be taken that are in conformity to the CSR schedule. In the third year, we found an improvement in quality of proposals that are being developed and an increased interest to develop flagship programmes that will give the companies greater visibility,” says Niraj Seth, executive director (advisory services) at EY India.

This is reflected not just in how the private sector is engaging with CSR but PSUs too. “During the last three years, many structural as well as procedural interventions have been taken to strengthen the CSR process of the corporation. IndianOil has framed a CSR Policy and Guidelines to streamline the execution, monitoring, evaluation and impact assessment of activities. Now, most of our CSR activities are being executed in project mode. Also, CSR officials have been posted in 31 key establishments and unit-level CSR panels have been constituted to conceive, implement and monitor CSR projects,” says Kali Krishna, chief general manager (corporate communications) at Indian Oil Corp. Ltd.

Jayaram of KPMG adds that now the thought process is going beyond spend allocation. “We see more detailed discussion around impact and very structured process for monitoring and evaluation.”

Besides wanting to include impact assessment and in some cases doing so, experts and companies shared some more learnings from doing CSR for three years. “This is our third year of CSR learning: While working in a specific geography, even though we may have started with one project or one specific activity, when we identified other areas of intervention that could make things better for the community, we saw value in a more holistic approach,” says Sukthankar of HDFC Bank.

Among the Schedule VII activities that received the lowest funding were Prime Minister’s relief fund and technology incubators.

Kumar of Reliance Foundation says the company is now looking at an outcome-oriented approach towards programme implementation and has accordingly been using various tools and methods to assess its programmes from time to time.

For Infosys Foundation, the focus was on processes and governance. “These have been tightened. Third-party impact assessment has been introduced and is periodically reviewed for improvement. Reach has been expanded to other states where Infosys Foundation does not have a presence,” says Murty.

This year, more than before, Ambasta of ITC believes organizations have figured out the nuances of the CSR Rules. “After a slow start, companies have set their CSR policy, focus areas and implementation mechanism in place. Most companies over the last three years are bound to have increased their CSR spends till they at least touch the 2% target. This has and will positively impact as well as address the developmental challenges that our country faces, including reduction in inequality.”

uttarakhand pcs current affairs from 1-10th september 2017 by samveg ias