India’s Relations with the US

india v usHistorically, Indo-US relations have not been very close owing to India’s lead role in the Non Alignment Movement. In fact, India had always been perceived to be closer to USSR, leaning on it for military spares and other resources. The US, on the other hand, has traditionally been closer to Pakistan – to have a strategic base for Afghanistan, and to counter the USSR influence on India.

After the Cold War ended, India, however,  developed relations with NATO members, especially France, Germany and Canada. India’s relationship with the US also flowered mostly as a result of the fact that both countries are strong, populous democracies that have strategic and economic importance in the world. In the year 1991, India also opened up its economy to the world; it was the start of the Liberalization Privatization Globalization (LPG) age and Business Process Outsourcing (BPO) to India – especially from countries like the US – increased multifold.

In 1998, as India tested its nuclear weapons in Pokhran, sanctions were imposed on trade by the US, Japan and several European countries. The sanctions imposed by Bill Clinton under the 1994 US Nuclear Proliferation Prevention Act seemed serious, at least at first. The US protested any international financial institution loans to non-development projects in India. The situation was not helped by the then-Defence Minister supporting the tests by citing possible nuclear threat from China. The US urged India to sign the Comprehensive Test Ban Treaty (CTBT). India has thus far signed neither the Non-Proliferation Treaty (NPT), nor the CTBT as it believes that these favour the use and ownership of nuclear weapons by the five declared nuclear countries of the world. In fact, before the Pokhran-II tests, India was all for systematic and gradual destruction of all nuclear weapons owned by any country in the world – a move that was not favoured by the US and other European countries. However, most of these sanctions were lifted by 2001. India has since categorically stated that it believes in the “no first use of nuclear weapons” policy and believed in “credible nuclear deterrence”.

Relations with the US have improved since, with the latter signing the Indo-US Nuclear Pact on cooperation in the civilian nuclear field with India in 2006, despite the former not being a part of the Non-Proliferation Treaty. India agreed to separate its military and civilian nuclear programmes and the latter would be brought under the guidance of the International Atomic Energy Agency (IAEA). The United States would, in turn, sell India the nuclear supplies, reactors and fuel required to set up these civilian programmes. This deal required a special exemption from the Nuclear Suppliers Group (NSG) and an amendment of the US Law, apart from overcoming several disturbances and disruptions in the Indian parliament, in order to become a reality. The major finding from the US pursuing this deal with such fervour is the fact that the US has finally realized that urging India to roll back its nuclear weapon arsenal is fruitless. Instead, it has realized India’s strategic and geographic importance and is now aiming to use India’s resources for its broader objectives of non-proliferation and counter-proliferation.

While Indo-Us relations have never been better – with Barack Obama declaring in his address to the Indian Parliament that the US would back India’s bid for a permanent seat in the UN Security Council – the present seems a little uncertain. The recent incident with Indian diplomat Devyani Khobragade being allegedly manhandled and arrested for a matter of human trafficking and the subsequent tit-for-tat rebuttal by the Indian government leaves relations a little unclear. While the diplomat is back in India, the US is refusing to let the charges go.

It remains to be seen how exactly the two countries handle this standoff.

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India’s Relations with the EU

indiai-kul-es-biztonsagpolitika-es-az-europai-unio-22573

Relations between the European Union and India date way back to the 1960s. India officially signed bilateral agreements with the EU in 1973 (once the United Kingdom joined), and was one of the first countries to do so. These relations moved from a basic trade and development agreement to overall cooperation, as laid down by the Cooperation Agreement signed in 1994. This shift in the relations has led to various dialogues in the areas of politics, industry, security, and ofcourse, trade. India and the EU have annual summits – the latest one was held in Brussels in 2013 – where such topics are discussed and joint policy statements are then released for the general public.

In 2004, India’s relations with the EU were upgraded to a Strategic Partnership keeping in mind both partners’ wishes to cooperate on international issues in the face of ever-spreading globalization. The EU-India Joint Action Plan (JAP) was formed in the 2005 Summit (and then revised in 2008) – this enlisted common objectives and defined cooperation measures in the fields of politics, economics and development. Negotiations and talks related to the Fair Trade Agreement  are going on till this date. Joint Declarations over the years have focused on diverse topics such as international terrorism, science, education and the like.

Ever since the Lisbon Treaty came into existence in 2007, EU and India have made significant strides in the political and economic dimension, with several measures in the fields of counter-terrorism, cyber security, counter-piracy, disarmament and non-proliferation being underway and/or under discussion. This has led to increased dialogue about foreign policy and subsequent cooperation between the two partners. The EU-India Human Rights Dialogue, which is held locally in India every year, deals with human rights issues and partnership between EU and India on the same. Issues that have been discussed include(but are not limited to) minority (and Dalit) rights, death penalty, communal violence, women’s rights, decent work, and human rights activism.

EU accounts for 20% of India’s total trade, thus becoming India’s largest trade partner. However, India accounts for only 1.8% of EU’s trade and only 0.3% of European Foreign Direct Investment. It still forms India’s largest source of Foreign Direct Investment, though. From 25.6 billion euros in 2000 to 55.6 billion euros in 2007, trade between the two partners has more than doubled and is predicted to increase even more. An understanding to reach an annual bilateral trade turnover of 100 billion euros has been reached by India and EU. India is the eight largest trading partner of the EU, behind Russia and China, according to a report that came out in 2010.

As interactions between the two partners increase in all spheres, one can only predict a greater sense of closeness and increased cooperation in the coming years.

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Role of media in good governance

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Role of media in our Democracy 

media

Good governance has been considered important since ancient times while the media in its present day avatar is a relatively new industry. The ancient Roman Empire, which existed approximately 2000 years ago, was formed on the basis of good governance of smaller, diverse kingdoms. Since then, irrespective of whether a state was a republic or a dictatorship, good governance has been a requirement for functioning of any society. Leaders are the supreme authority accountable for good governance but if the quality did not satisfy people, they challenged these authorities to ensure a worthy level of governance.

Media usually refers to mass media, which is any medium that provides citizens with information regarding all the current affairs of any area at a large scale. It is unbiased reporting of facts through print, television, radio or Internet.

Traditionally and constitutionally, the media has no defined role in governance. It doesn’t have the power to change any decisions made by the various arms of a state––the legislature, executive and the judiciary. Yet, the media plays one of the most important roles in the functioning of any society. It amplifies the voice of citizens and communicates their opinions to the lawmakers. Pandit Nehru called media the watchdog of our democracy. This handed the media a huge responsibility in the functioning of our society.

This is true in a global context as well. Recently, The Guardian and The New York Times, two large media houses were responsible for uncovering information on the violation of privacy laws by the US government tapping communications of officials from other countries. Similarly, in India, the media was primarily responsible for revealing corruption in the coal, telecommunication and environment sectors. Media, thus, brings illegal practices to the people’s notice. A vital element in ensuring good governance.

The media protects the rights of citizens, especially the less privileged and whose voices go unheard. This function helps countries like India where the judiciary is overburdened. It brings to the judiciary’s notice, incidents that would otherwise have been ignored.

The case of the IAS officer Durga Shakti Nagpal, who was suspended for no reason and the case of Jessica Lall’s murder are just two examples of how the media has protected individuals and ensured that justice is done in society.

Newspapers and radios facilitated India’s freedom struggle and since then have continued to play a central role in social and political movements that looked after the interests of diverse communities and minorities. This led to them being governed better. The Narmada Bachao Andolan is a prime example of this.

Any organization that functions efficiently requires a mechanism that allows it to receive constructive feedback. The media is a feedback mechanism for every state run institution. It rates the performance of these institutions as the people rate them and is a critic to all the policies formed and laws enacted. The media is responsible for bringing opposition to poorly performing institutions. It also plays a crucial part in bringing help to areas affected by natural calamities, as it happened after the 2004 tsunami that devastated areas surrounding the Indian Ocean.

The defined role of media as the information provider is only a share of the real role it plays. It is, in many ways ensuring efficient functioning of society. It does this by encouraging the people responsible to provide good governance. Thus so we noticed that lately media and esp social media played a very important role in the growth and development of India.

A society without media is hard to imagine and will be a deterrent to good governance. So media is not just an ordinary industry in society, it is a necessity for good governance and efficient functioning of society

In theory, the media appears to be a perfect check on good governance but it has been accused of not fulfilling its responsibilities.

It is said to be biased towards some political parties and runs advertising campaigns for them. Media companies are suspected of charging money for publishing articles, which leads to the problem of news being influenced by wealthy people. Wealthy companies that tend to look after their own interests are increasingly running media in India. All these problems are of grave concern for the media, since it questions their ability and contribution to the society’s proper functioning.

In the 1999 Kargil War, a news channel was blamed for revealing strategic data, which led to the death of Indian soldiers. If the media is not responsible, it will end up doing more harm than good. Media persons must draw a moral line regarding their jurisdiction.

Sometimes the media’s shallow but tangible goal of earning the maximum TRP influences its news while its role as a watchdog is forgotten.

Nonetheless, the media has the power to shape peoples’ opinion. With this power, they are more accountable to increasing the quality of governance. Thus, it becomes even more important for the media to look into the criticisms it’s received and make the changes required. It is essential to have a watchdog that is sincere and loyal to its true owners (the citizens).

Possibly we are looking forward to a day where the media (aka fourth pillar of our democracy) will have a lot of power over the decisions being taken by the parliament since media at the end represents majority of us.

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The Interpretation of India Budget to a Common Man!!!

budget

Budget is always driven by the mandate of the needs of the political party in power; after all populism decides the electoral fortunes. Being an election year, a lot could have been expected like the budget in 2009 where loan waiver, NREGA and other populist schemes tilted the results in favour of the ruling alliance. However, government has played safe this time focusing on deficit and fiscal consolidation. In reality, economics should be the prime driver of the budget where the guiding mantra should be fiscal prudence and economic rationalism. But, good economics and good politics do not go hand in hand especially in a developing country like India where there are huge social responsibilities like poverty, underperforming healthcare, large unemployed population and below par public education system. Our human development Index (HDI) in terms of literacy, per capita income and life expectancy is mired with problems with little improvement in recent years; we are often compared to sub-Sahara African countries on these accounts. Thus, it is important to see what Budget 2014 has to offer for a common man.

Under the umbrella of social responsibilities government offers huge subsidies to poor and under-privileged section of the Indian population. Government has earmarked Rs 246,397 crore for food, fertilizer and fuel subsidy. UPA’s ambitious scheme National Food Security Act seeks to cover almost 2/3 of the Indian population (75% rural and 50% urban) which could cost around Rs 115,000 Cr to the exchequer. Though there is intent but still much needs to be done to plug leakages and siphoning of funds where much of the benefits do not reach the intended beneficiaries. As per government estimates almost one-third of the benefits are siphoned in education and healthcare where outlay is almost the same with major work left to the next government.

To ensure outcome based budget, government had unveiled its ambitious Aadhaar project (12 digit number for Digital identification) in 2009 for Indian residents, where identification based on biometrics and technology can ensure de-duplication and recipients being traced at each step of subsidy-dispensing process. Already Aadhaar number has been issued to around 400 million people which can dramatically enhance the inclusiveness of public services. Aadhaar enabled bank account following KYC norms can ensure direct transfer of benefits to individual bank accounts of the beneficiaries. Next level would be how to scale the benefits to all in other services. Thus, Aadhaar is one of the most promising works done by the Indian government in this term.

However, all these measures are not panacea to the ills in the system, common man is still grappling with price rise, high inflation especially food inflation where uncertainty in monsoons, dismal warehousing , lack of proper supply chain management and inadequate storage facilities have worsened the problems. Subsidies are just little respite to poor Indians where 67% of their household expenditures as per Economic survey goes into food and healthcare.

After the liberalization, the picture has changed for the middle class with higher growth prospects and more employment opportunities. The upwardly mobile population employed in services sector has something to cheer in this budget considering their number today has swelled almost to 300 million (close to population of United States). Though there is no change in the income tax rates, still there are some incentives in automobiles sector, telecom, defense personnel and students with education loans. The beleaguered automobile industry got some relief in terms of excise duties to offset the unprecedented negative growth last year. Excise tax on small cars, scooters, motorcycles, trucks and buses reduced to 8% from 12%. On sports-utility vehicles the excise tax was cut to 24% from 30% and on sedans and mid-size cars from 27% and 24% to 24% or 20%.

Cellphones and smartphones by foreign companies will cost more after India’s finance minister restructured taxes on imported handsets, and allowed local companies to offset 6% or 1% of input taxes on their handsets depending on how much of the phone is made in India. Nokia and Samsung which have the manufacturing units in India may see the reduction in excise duty. Teledensity of the country stands at around 75% with mobile subscribers around 900 million. Economic low cost smartphones are much in demand with internet penetration too reaching around 15% of Indian Population. Cellphones are one of the largest items on India’s import bill, after crude oil and gold. Cheap Indian mobile would only boost domestic production and usher more FDI and thus more opportunities. Price of many consumer goods such as keyboards, digital cameras, electric irons, MP3 player, scanners, vacuum cleaners, TVs, refrigerators, printers, computers, hair dryers, dish washers etc will be lowered down. Thus manufacturing sector is set to regain its lost momentum of growth.

In the education sector, Students who took a loan for their studies before March 31, 2009 and had interest owed on it up to Dec. 31, 2013 will be cheering Finance Minister’s decision to impose a moratorium on the payment of interest on those loans. The move is expected to benefit nearly 900,000 students as the government has allocated funds to the tune of 26 billion rupees ($419 million) to cover the interest on the loans.

Government raised the country’s defense budget for the next fiscal year by 10% defying expectations along with major move “one-rank one pension,” a long-standing demand among the defense services to ensure that retirees receive a pension to match the rank at which they retired regardless of when they leave the forces. The pension decision will affect the over one million people in the country’s military.

Overall Budget seems to be middle class friendly and restricted to the buyers of SUV and automobiles, student with education loans, retired defense personnel and manufacturing sector.  But there is no respite to the problems of a poor man. Rising cost of vegetables, fruits and other food items is still a problem. May be the next budget later this year with new government can come up with renewed hope to accelerate the economy and meet the ex

Why are good politics and good economy misaligned?
What are the problems of Indian Human Development Index?
How has National Food Security Act and Aadhar project contributed so far?
Which economic reforms have changed the picture of Indian middle class?
How would one-rank one pension promote defense sector?

pectations of the citizenry.

(The writer, Pramod Singh, a mentor and counsellor of students for various competitions i.e. Civil services, CAT(Current Affairs, GD/PI) )

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Demographic Dividend of India

Demo divi

Demographic Dividend is defined as that period in the demographic transition of a country when the majority proportion of people is young. This period usually lasts 20-30 years. Since most of the population belongs to the working age group in this period, there is a lower dependency ratio and, as a result, higher economic growth.

Economists identify four mechanisms for high growth when a country is in this phase. First, there is higher labour supply, as a result of more people in the working age group. Second, there are increased savings, as there are fewer dependents and more earning members of the society. Third, there is better and healthier human capital, as extra savings and income are used to improve nutritional status and provide better healthcare to members of the family. Fourth, there is increasing domestic demand, as a result of the combination of a higher Gross Domestic Product (GDP) per capita and a lower dependency ratio.

India is currently in a position where it derives benefits from the Demographic Dividend period. This period is expected to last till 2045, approximately. Currently, a third of India’s population is below the age of 15 years. This is particularly advantageous for us as we are entering this phase when China is exiting it, according to Mr.BikramSen, former Indian Census Board Director. Thus, this period can prove to be one of great economic growth and development for India.

However, the Indian population is plagued with certain problems that make it difficult to derive maximum benefits from this period. One such problem is the skewed sex ratio. According to the 2011 Census, there are 933 females for every 1000 males in our country. This is only a slight improvement from the 1991 Census which indicated that there were 921 females for every 100 males. There are number of reasons for this alarming phenomenon, debatably the most important of which are the practices of sex-selective abortion andfemale infanticide that are prevalent in the country as a result of a strong son preference among many families. Moreover, there is a high Maternal Mortality Rate (MMR) of 301 maternal deaths per 100,000 live births. This indicates that every seven minutes, a mother dies while giving birth! Early marriage, repeated births, poor nutrition, inadequate or unhygienic birth conditions are some of the issues that contribute to a high MMR. Not only do these affect the mother, but also her child. Studies have shown that a child who has lost his mother is ten times more likely to die than the ones with both parents alive.

Another problem that India faces is a high Infant Mortality Rate (IMR) of 60 deaths for every 1000 live births. While this is close to the world average, it is still in the unacceptable range. Also, this rate is not uniform across India – there are states like Kerala with figures as low as 40 deaths per 1000 live births, states like Tamil Nadu and Punjab with figures below 50 deaths per 1000 live births, and states like Orissa with figures such as 96 deaths per 1000 live births. Enrolment in Schools is another problem. Further, of these 100 children who are enrolled, 70 children drop out by the time they reach secondary school. We are the country with the highest number of child labourers. We also have the unfortunate privilege of being the country with the highest incidence of child sexual abuse – as high as 53% of children have been sexually abused at some point.

Statistics show that 0.9% of our population suffers from HIV/AIDS. While this may seem like a small proportion, it translates into huge numbers thanks to our large, ever-growing population. However, NACO suggests that this rate has been slowing down, in recent times. More than the disease itself that can be controlled to some extent by modern medicine, the social stigma attached with HIV/AIDS is what needs to be corrected.

The government has already undertaken a number of measures to spread awareness about and curb the various issues discussed above.

Article by: Garima Kaushal

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Questions asked previously:- 
How can we sustain the Demographic Dividend of India?
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India’s Demographic Dividend – Is it Asset or Liability?
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The Food Security Bill

Food Security Bill

Despite many efforts, food insecurity –  the lack of availability, accessibility and affordability – remains a formidable challenge for India. The National Food Security Bill (NFSB) is a step towards changing this for the better.

The objective of the Bill is “to provide for food and nutritional security in human life cycle approach, by ensuring access to adequate quantity of quality food at affordable prices to people to live a life with dignity”. As a result of this, persons belonging to priority households and general households are legally entitled to receive food grains (wheat, rice and millets) at a subsidized price through the Targeted Public Distribution System (TPDS). This entitlement is available for up to 75% of India’s rural population and up to 50% of India’s urban population. Furthermore, to make things simpler, this Bill brings various existent food security schemes under one umbrella.

Now, there are some obvious advantages to this Bill. As mentioned above, India has an acute food insecurity problem. Despite being an agrarian economy and having a considerably sized buffer stock, we have not been able to correct this issue, so far. The government says that this bill will help mitigate and ultimately eliminate food insecurity by getting rid of the food grains that are currently in storage and are, thus, going to waste.

Opponents of the Bill, however, claim that the Bill will do more harm than good. Since the Public Distribution System is to be used, the existing infrastructural difficulties being faced by the system will hinder the implementation. Another worry is that families were entitled to 35kgs of grains earlier as opposed to a family of four now getting 20kgs.

The major bone of contention is their belief that the NFSB will lead to an increase in India’s Fiscal Deficit. This is countered by comparing India’s expenditure on food security related measures to that of other lower middle income countries in Asia. In data released by The Asia Development Bank, it has been found out that the average relevant expenditure of a lower middle income country in Asia is around 3.4% of GDP while India’s is merely half of that at 1.7% of GDP.

It is said that this Bill is nothing but a populist measure undertaken by a government scrambling to get its act together. The fear is that such a Bill and the way it was passed – “reform by stealth”, as it is termed by some – will spell disaster for the Sensex and send wrong signals to the world about the Indian economy.

The above view has led to prominent political analyst and former media advisor to Prime Minister Manmohan Singh, Harish Khare, writing a biting article in The Hindu titled “This Perverse Rage Against The Poor” in which he talks about the government’s priorities. He elaborates on the fact that India, being a socialist country, needs to take the poor under its wing and any measure to do the same should be encouraged. He argues that capitalist sentiment has led us to become an elitist society that worries more about the impression foreign investors have of us than we do about the welfare of our own citizens.

All said and done, a Bill is only as good as its implementation. The issues and constraints need to be worked out so as to ensure a smooth functioning of this bill. It is yet to be seen how this will pan out. All we can do is wait and watch!

Article By: Garima Kaushal

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The Map that Democracy drew…

Elections & Democracy

“At the stroke of midnight hour, when the world sleeps, India will awake to life and freedom. A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends, and when the soul of a nation, long suppressed, finds utterance.”

Jahawar Lal Nehru, Tyrst with Destiny

India, the largest democracy in the world, witnessed its first-ever election in 1952 where country’s first Chief Election Commissioner Sukumar Sen supervised the challenge of colossal proportions, with 4500 seats – about 500 Parliament and the rest provincial assemblies. 224,000 polling booths, equipped 2 million ballot boxes with 56,000 presiding officers and 224,000 policemen to guard against violence and intimidation. Throughout 1951, the Election Commission used the media of film and radio to educate the public about this novel exercise in democracy.

In the past 64 years, India has seen magnanimous rate of growth; from 176 million voters in 1947 to 814 million voters in 2014. Today, the electoral exercise is even bigger in proportion and grander with technology and system in place. And this only works to remind us the success of electoral democracy in India, today we are more democratic than ever and idea of democracy is more deeply etched among the citizens of the nation. From the past few months, the Lok Sabha elections 2014 are hogging the limelight with poll predictions, analysis and election outcome. The largest ritual of the democracy has been renewed with political consciousness, hope and aspirations, these elections might set the pace for future generations.

Founding fathers of the Independent India envisioned political freedom for all and India adopted multi-party system to address the needs of the diverse nation of the country. India’s diversity and composite culture in terms of language, region and religion was unique and in spite of the differences, the entire country was practically ruled by Congress at the centre and in the states till 1967, when with the advent of regional parties like Dravida Munnetra Kazhagam (DMK) in Tamilnadu, etc, power was distributed. The Telugu Desam Party (TDM) in Andhra Pradesh was found mainly due to self respect movement, Telugu pride, regional sentiments, lack of redressel of regional grievances and centralization of power by subsequent governments. Period of 70’s were tumultuous in Indian Political history, it was during this time that Prime Minister’s centralization of powers , misuse of constitutional provisions, infringement with the constitution and further promulgation of ‘emergency’ not only questioned the legitimacy of the government but also created a phase of uncertainty, thus, eroding the faith of public at large, in the democratic setup.

The phase of ‘Emergency’ is considered as a blot on democracy, against the will of the sovereignty and fundamental rights of the citizens. However, democracy and faith in institutions resounded back when the ruling party was voted out of power after the emergency. This phase also witnessed rise of caste assertions in form caste politics mainly in states like Bihar and Uttar Pradesh where votes were cast in the name of caste, soon after the Mandal and the Mandir movement. Defragmentation of Indian Polity on caste and religious lines created social fissures weakening the secular fabric of the nation. Indian Political system was also engulfed with corruption and criminalization of politics where the winning ability became the guiding mantra and voters were swayed under the complex web of money, muscle power along with primordial affiliations in form of caste, region, language and religion. The backward caste movement, women’s movement and rise of regional politics indubitably strengthened the Indian democratic setup where political freedom created scope for bargaining and deepening of democracy.

After globalization, came the phase of coalition era, mainly due to prominence of regional parties and decline in the influence of national parties. Initially there was confrontational attitude among parties forming the governments which later changed to co-operative coalition based on ideologies and political compulsions to provide stable governments at the centre. It only emphasized the acceptance on the basis on mutual consensus and compromise.

Past decade in Lok Sabha was driven by coalition of Congress party i.e. United Progressive Alliance (UPA), this phase proved to be mired with alleged corruption, policy paralysis, jobless growth and price rise and governance deficit. Lok Sabha elections in 2004 was based on common man and government initiated many welfare and populist schemes for the people, the UPA government came back in power in 2009 on basis of populist schemes again. However, this phase of past 5 years is known for its inefficiencies, corruption, scams and policy paralysis. It also saw heightened political consciousness due to Jan Lokpal movement with participation of youth, upwardly mobile middle class and surge in patriotic spirit to cleanse the system. Today’s voters are more assertive and seek development and good governance.

In a country where 70% of the population is under the age of 35, elections are the only hope for their future. Lok Sabha elections 2014 is the election of hope and aspiration, the present demographic dividend wants more opportunities, jobs and better quality of life. The voting percentage in Lok
Sabha elections 2014 is expected to rise by almost 10% from previous Lok Sabha election in 2009; this signifies a quantum shift in the mood of the voters, their expectations and sense of duty towards the nation. Democracy is strengthened only when voters have faith in the electoral process and then seek real accountability from their political representatives. The writing is there on the wall and it definitely is going to set the momentum where elections will be above individual’s social group and primordial affiliations and in future, only the nation’s interest will drive the electoral outcome.

(The writer, Pramod Singh, a mentor and counsellor of students for various competitions i.e. Civil services, CAT(Current Affairs, GD/PI) 

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Ethics in Today’s Business is a Contradiction

business-ethics-wordsTo understand how ethics relates to business, we must first understand what we mean by ethics. Ethics is a branch of philosophy that deals with the concept of right and wrong. If we narrow down the definition, we could say that ethics are “moral principles that govern a person’s behaviour”. To understand business ethics, we must first understand what business means. Business refers to any commercial activity that is undertaken with a view to earning profit. The main axiom of business is the maximisation of profit. On the contrary, business ethics seek to impose constraints on the blind pursuit of profit. They require businessmen and firms to give due importance to non-economic concerns as well as to practise free and fair trade.

If we only look at the definition of both these terms, it may come across as a contradiction. However, students of business as well as business firms will tell you that ethics are increasingly becoming a part of business philosophy. Pursuit of profit is seen as short-sighted and such a goal has been proved as detrimental to the longevity of the business. If a business wants to last, it must focus on what the consumers want and need. Not serving its customers well would result in a loss of business which in turn would result in a loss of profit. Thus, if a business seeks to maintain its earnings, it must be ethical.

Customers have faith in firms that they will not be cheated and will be provided with quality goods and services. For example, if we talk of a mutual fund manager, an investor would automatically assume that the fund manager would not differentiate between a fund that his friends have invested in and another fund. This is because an investor assumes that the fund manager is going to manage both funds to the best of his knowledge and ability. Similarly, stockbrokers and investors assume that a company is not indulging in insider trading and that the prices of shares reflect all available information in the market. Whenever there is a failure to uphold this implicit trust, the company also fails as can be seen from the example of Enron or Satyam. Thus, it is in the best interest of the business to be fair in its practices and policies as far as possible.

Ethics in a business do not limit themselves to fairness in financial policy. Business ethics is an umbrella term that comprises a number of things. Due to evolving corporate philosophy, each company has its own code of ethics that its employees are expected to follow. For example, Ernst and Young’s code of ethics dictates that its employees demonstrate integrity, teaming, respect, energy, enthusiasm and the courage to lead. Such guidelines help mould the morality of employees. If all employees exhibit these core values, it helps the company to follow ethical practices. Another aspect of business ethics is work ethics. Having good work ethics implies that a person is hard working, diligent, takes initiative, and constantly strives for self-improvement. If businessmen or CEO’s of companies exhibit good work ethics, it would imply that the business decisions that they take would reflect these values. Having ethical human resource policies like fair compensation, privacy, absence of biases and discrimination, policies to check harassment would also further a business’ aim of being ethical. Professional ethics would also come into play when we talk of firms of lawyers or a hospital. Professional ethics are a set of rules that members of that profession are expected to adhere to due to their possession of specific knowledge and skill. For example, if a passenger falls sick on a plane, any doctor present on the plane has an ethical responsibility to treat such a patient.

Ethics is an individual conception and thus, different people ascribe different meanings to what is ethical. Being ethical may sometimes be very expensive for the business but this does not mean that businesses shouldn’t strive towards ethical practices. No human being is faultless and thus it is wrong to judge the ethicality of business on a very stringent standard. If we do this, we might be forced to say that business ethics are a contradiction of terms. Ethics in business are something that keeps on evolving with the times. Therefore, it would be prudent to see business ethics as an opportunity for constant self-improvement.

Article by Simrit Bajwa

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