Editorial 1 : A $5 trillion economy, but for whom?
Context:
- Recently Indian Prime Minister announced the extension of the Pradhan Mantri Garib Kalyan Anna Yojna (PMGKAY), a scheme providing 5 kg of foodgrains free every month to beneficiaries of the National Food Security Act (NFSA), by five years because he does not want any citizen to sleep hungry. This means that 80 crore Indians will still be receiving free foodgrains to stave off hunger in 2028.
- This is the year the government expects India to become the third largest economy in the world, with a GDP of $5 trillion. Will large swathes of Indians still be hungry with a GDP of $5 trillion? Who will benefit from the five year dash to these targets?
The story of Japan and China:
- For reference, let’s take a look at Japan today, the third largest economy by GDP in the world. For 40 years, Japan was the world’s second largest economy, powered by manufacturing and exports. But after the 2008 world financial crisis, the wheels came off the Japanese economy. Japan’s population started spending less, exports shrank, and government incentives dried up.
- On the other hand, China enjoyed a manufacturing boom and dislodged Japan to become the world’s second largest economy by GDP. On losing rank, however, Japan displayed remarkable ego free economic diplomacy. As soon as the economy plunged to the third position, Japan’s leadership publicly welcomed China’s ascent, stating that sustained demand from the (then) most populous country could only be good for Japan’s exports.
- However in Japan, as the high value industrial economy took centre stage, the strength of personal and professional relationships withered and the multigenerational family and social structure became atomised. They fell through the cracks into financial collapse and social withdrawal.
A deep divide
- Today, the Government of India claims that the country is on the cusp of an economic tsunami. How does the sprint to the target of $5 trillion bode for citizens, especially the 80 crore who will still be on free rations in 2028?
- India’s economic growth pivots on capital, productivity and labour, and data show that for over 4/5th of Indians, the $5 trillion economy is a bridge too far.
- Consider capital: in 2021, 1% of the population owned about 41% of the nation’s wealth, while 50% owned 3% of its wealth, according to Oxfam. In such an environment, the dash towards a $5 trillion economic trophy lies in the grip of the resource rich power brokers who will seize the initiative.
- But ironically, it is the low resource citizens who are funding the investment for the proposed $5 trillion economy: approximately 64% of the total Goods and Services Tax (GST) came from the bottom 50% of the population, and the top 10% contributed 3% of GST.
- At the same time, the contribution of labour, the other driver of growth, is hamstrung due to dubious educational and skill attainments and halting digital literacy. Productivity is just beginning to get a boost through the creation of digital and physical infrastructure.
- There are also other issues with Mr. Modi’s guarantee that India will be the third largest economy in five years. First, with a per capita income of $2,400, India ranks 149 among 194 countries in 2022. Since per capita income is a keen index of a population’s wellbeing, note that the average Japanese at $34,000 is considered better off than the average Chinese at a $13,000, even though China has outstripped Japan in world GDP rankings.
- What is India’s per capita income projected to be at $5 trillion? There are no official estimates available.
- Second, the nub of the chase to $5 trillion GDP is in its distribution, or the inequality index, generated by World Economics. A high value indicates a more egalitarian society. The values of both China and Japan are more than 50. These countries appear to be sharing their economic fortunes more evenly than India, which has a value of 21.9.
Conclusion:
- Will the divide between the two Indias deepen with the $5 trillion target? India might be on its way to achieving this goal, but most of the population still remains marooned in the slow lanes of an older India, watching as the new caravans storm past.
Editorial 2 : COP 28: India’s equity demand
Context:
- There is an almost linear relationship between global warming and cumulative carbon dioxide (CO2) emissions. The United Nations Framework Convention on Climate Change (UNFCCC) in 1992 noted that per capita emissions in developing countries are still “relatively low” and that their share in the global emissions will grow to meet their social and developmental needs.
CBDR-RC Principle:
- The Convention recognises the ‘common but differentiated responsibilities and respective capabilities’ (CBDR-RC) principle. This means different States have different responsibilities and respective capabilities in tackling climate change.
- This principle has been reaffirmed in the Paris Agreement, whose main aim is to hold “the increase in the global average temperature to well below 2 degrees Celsius above pre industrial levels’‘ and pursue efforts “to limit the temperature increase to 1.5 degrees Celsius above pre industrial levels”.
- According to the Intergovernmental Panel on Climate Change’s Sixth Assessment Report (IPCC AR6), every 1,000 billion tonnes of CO2 emissions causes an estimated 0.45 degrees Celsius rise in the global surface temperature.
- Axiomatically, limiting the rise in global temperature to a specific level means limiting cumulative carbon dioxide emission to within a carbon budget.
What is the global carbon budget?
- The term ‘global carbon budget’ refers to the maximum cumulative global anthropogenic CO2 emissions – from the preindustrial era to when such emissions reach net zero, resulting in limiting global warming to a given level with a given probability.
- The remaining carbon budget indicates how much CO2 could still be emitted, from a specified time after the preindustrial period, while keeping temperature rise to the specified limit.
| The IPCC AR6 has shown that the world warmed by a staggering 1.07 degrees Celsius until 2019 from pre industrial levels, so almost 4/5ths of the global carbon budget stands depleted. Only a fifth remains to meet the target set in the Paris Agreement. |
- For a 50% chance of limiting warming to 1.5 degrees Celsius, the U.S. would have to reach net zero emissions (NZE) in 2025, rather than 2050; and the EU28 bloc by 2031 instead of 2050. India has committed to reach NZE by 2070.
Who’s responsible for cumulative global emissions?
- According to the IPCC AR6, the developed countries have appropriated a disproportionately larger share of the global carbon budget to date. The contribution of South Asia — which includes India — to historical cumulative emissions is only around 4% despite having almost 24% of the entire world population.
- The per capita CO2 FFI (fossil fuel and industry) emissions of South Asia was just 1.7 tonnes CO2 equivalent per capita, far below North America and also significantly lower than the world average (6.6 tonnes CO2eq. per capita).
How does the carbon budget matter for India?
- The global carbon budget for a given temperature limit is a global resource, common to the entire world, but is exhaustible and limited and with only equitable methods of sharing it, consistent with the foundational principles of the UNFCCC.
- India must recognise a ‘fair share of the carbon budget’ as a strategic national resource whose reserves are depleting rapidly due to overexploitation by developed countries.
- In a rapidly depleting global carbon budget, if we fail to deploy resources at our command to forcefully use it as a strategic national resource, we will be short changed by new colonial techniques of developed countries.
- In almost all the emissions scenarios estimated by the IPCC, the world breaches an increase of 1.5 degrees Celsius from pre industrial levels in the early 2030s.
- In 2022, oil, coal and gas accounted for 30%, 27% and 23% of the world’s total energy, while solar and wind energy together contributed only 2.4%. The world is still largely powered by nonrenewable energy.
| Global North vs Global South:Developed countries have tried to browbeat developing countries into accepting rapid, economy wide changes. At the COP 26 talks in Glasgow, they forced the issue of phasing down the use of coal but then backtracked by reopening coal plants across Europe after the Russia- Ukraine war created an energy crisis.This has illustrated that the immediate phaseout of fossil fuels is infeasible in the face of shocks and also limits developing countries’ access to their ‘room to grow’. |
What should India’s stance be at COP 28?
- According to the NITI Aayog, U.N. Development Programme’s (UNDP) Multidimensional Poverty Index (MPI) Report 2023 review, India has been able to lift more than 135 million poor out of poverty in less than five years (2015-21).
- India has also just extended food security welfare measures to more than 800 million people in the country, under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), highlighting the magnitude of the challenge of poverty eradication after COVID-19.
Role of development:
- Development is the first defence against climate change. How long will developing countries have to divert their scarce resources, manpower, and attention to meeting global problems created by developed countries?
- It is imperative that developing countries receive a fair and equitable share of their carbon budget alongside stronger and more fruitful commitments from developed countries – including the promised but unmet climate specific new and additional finance.
- The Indian government has led from the front to foster international consensus to tackle climate change. To this end, India has set up the International Solar Alliance (ISA), Coalition for Disaster Resilient Infrastructure (CDRI), and Global Biofuel Alliance (GBA).
- Through the ‘Lifestyle for Environment’ (LiFE) mission, the Indian government also aims to spread awareness of good lifestyle practices and establish that sustainable lifestyles are the best way forward.
UNFCCC COP 28:
- Scientists estimate that at a conservative price of $50/tCO2eq, developed countries’ carbon debt to the world is pegged at over $51 trillion. Based on India’s historical emissions (1850- 2019), it has a carbon credit equivalent of 338 GtCO2eq., equal to around $17 trillion at $50/tCO2eq.
- Without finance and technology as promised in 1992 at the Rio Earth Summit, developing countries stare at an even more unfair world. The cover decision of the Glasgow Climate Pact recorded an unprecedented “regret” on the failure of the developed countries to provide US $100 billion dollars a year, as promised at the COP 15 talks in Copenhagen in 2009.
Conclusion:
- At COP 28, India must demand a fair share of its carbon budget or equivalent reparations to bring about fairness within the global order. Only development brings with it an assurance to tide over the roller coasters of climate change.
