KEYNESIAN OR HAYEKIAN MODEL FOR INDIA

Indian economic thought is still fired up with the keynesesian remedies prescribed for the industrial countries in the late 1930s. The keynesian analysis was that there was  an excess of saving over investment and,as there was  large unemployment,the remedy was for the government to undertake pump-priming.
In the aftermath of the 2008 global economic crisis, Indian economists are ecstatic that pump priming was being restored in a big way in the industrial countries which then gave legitimacy to India restoring to pump priming. The unexpected monitory fiscal expansion resulted in a sharp expansion of inflation,and put paid to the aspirations of double-digit growth.
OVER INVESTMENT THEORY:
In India, there is a lack of appreciation for business cycles. It was argued that since India is a planned economy it was immune to business cycles. As Indian economic thought was allured by the keynesian doctrine,it totally ignored the over investment theory of business cycle set out in F.A. Hayek's Prices and Production(1931). Under the Hayekian approach, there is excess of investment over saving,and this has to be equilibrated by forced saving via created money. At each successive round of production,the created money has to be larger and larger,and as inflation gathers momentum,the central bank inevitably presses the panic button and the economy goes into a tailspin. In the Hayekian model. the upper turning point is the most important point of the business cycle. John Hicks in his 'Hayeks story ' in Critical Essays in Monetary Theory (1966) emphasized that it was Hayekian approach which was relevant to developing countries.
The lesson is that monetary tightening should be undertaken during the upswing of the business cycle,well before the upper point is reached ,this is easier said than done  as the  central bank is accused of being the spoil sport ruining the party. Invariably monetary tightening is undertaken after the upper turning point,when the downturn has started, and this accentuates the downturn. Earlier monetary tightening is optimal as the extent of tightening is mild.

PROSPECTS OF INDIAN TOURISM

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Tourism is a vital element for overall growth of economy and gears both state and central governments to work towards increasing India’s tourism market share on the global platform in the current 12^th plan (2012-2017). The ministry has projected the budget requirement of Rs 22,800 crores for various activities relating to development of tourism. The foreign tourist arrivals (FTAs) in India witnessed an impressive growth of around 8.9% during 2011 as compared to 4.4% for the world as a whole. During the first four months of 2012 growth in FTAs has been 8.3%.

CINEMA TOURISM:

In an Endeavour to establish India as a filming destination, the ministry of tourism and ministry of information and broadcasting have recently entered into a memorandum of understanding (MOU) to promote cinema of India as a sub brand of INCEREDIBLE INDIA at various international film festivals and markets to develop synergy between tourism and film industry and to provide an enabling partnerships between India and the global film industry.

SPIRITUAL TOURISM:

The government is promoting spiritual tourism by coordinating with local authorities and other stakeholders to keep the highest standards of hygiene at sacred places. In consultations with stakeholders the Jain circuits, the Buddhist circuits Sufi and other spiritual circuits have been identified for development during 12^th plan.

Jain circuits:

(a)   Jodhpur-Bikaner-Udaipur-Chittorgarh-Nagpur

(b)   Bengaluru-Mandya-Hassan-Dakshin kannada-Udipi

(c)    Muzaffarpur-Bhojpur-Patna-Nalanda-Girdhir-Navda-Jamui-Banka

(d)   Bhavnagar-Mehsana-Patna-Udaipur-Bikaner-Nagur        

Sufi circuits:

(a)   Delhi-Agra-Fathehpursikri-Ajmer

(b)   Mumbai-Aurangabad-Shiridi

(c)    Sufi circuit of Bihar

(d)   Hyderabad-Bijapur-Gulbarga

(e)   Dargahs of J&K, Punjab,Himachal Pradesh

Sufi circuits of Awadh region           

   

The government is also targeting the Buddhist rich destinations of Himachal Pradesh, Odisha, Arunachal Pradesh, J&K, Sikkim, and Bihar. The ministry of tourism is endeavoring to strengthen international infrastructure capable of meeting the market demand of hospitality sector. This is done for both managerial as well as skilled service provider categories.

Tourism Promotion in North East:

 

Embracing the eastern Himalayan region from Sikkim eastwards, north east region of India witnessed an incredible increased flux of tourists. Each year people come here to experience its rich natural beauty serene environments exotic flora and fauna. Huge plan for promoting tourism in north east as it will have a positive socio economic impact of these states. Central financial assistance to augment infrastructure at selective places is provided

ADIZ

What is an ADIZ?

It’s a section of international airspace over which a country declares its right to identify aircraft, ostensibly to protect itself from foreign threat. It’s a product of customary international law but it’s not jurisdictional.

What happens once an ADIZ is established?

A country would use radar to detect unexpected aircraft flying in the ADIZ and observe them. This would sort some, if not most, into the category of being unthreatening. Using radio, it would query those it was concerned about. The country may ask who they are and what they are doing. If they are not a security threat, that would be sufficient. If the country was still not sure, it would launch an aircraft to intercept and observe. The country would not have the authority to do anything else unless it thought the aircraft was a direct threat to the country.

What’s the problem with China declaring an ADIZ?

Well, the problem is that China’s ADIZ overlaps with the ADIZ that was created by the U.S. after World War-II and transferred to Japan in 1969. Japan sees this as an affront to its sovereignty. The bigger problem is that China’s ADIZ encompasses the Diaoyu/Senkaku islands claimed by both China and Japan. This is the first time an overlapping ADIZ has been declared in an area where there is a sovereignty dispute. As a result, with China monitoring the space, and the U.S. and China’s neighbours defying it, there is now an increased risk of either a deliberate or accidental incident involving military aircraft. Some are also concerned that China thinks the ADIZ will strengthen its claim over the Diaoyu/Senkaku islands

Is it Diaoyu or Senkaku? And what’s the history issue that crops up in every article?

The Chinese call the islands Diaoyudao. The Japanese call them Senkaku. Impartial observers try to get both names in. The “history problem” (lishi wenti) as China terms it, refers to the history of Japanese colonialism in China. Japan, once a vassal state of imperial China, subjugated and humiliated the Chinese not once but twice in different periods of time — in the late 1800s, and again, in the 1930s. Japan’s domination and exploitation of China, along with the conquests of Western powers, falls under the “century of humiliation” (bainian guochi) in the Chinese historical narrative.

The Diaoyudao islands were considered lost during this period when Japan formally annexed them in 1895. The suffering at the hands of Japan was particularly shocking for China and the issue remains hugely sensitive, not just because Japan was considered an inferior vassal state at the beginning of this tumultuous period, but also because modern Japan is seen as unremorseful of the atrocities it inflicted on China.

So why did China suddenly declare the ADIZ? Is it just about controlling Diaoyu/Senkaku?

That depends on whom you talk to. Chinese foreign policy decision-making is highly opaque, so all anyone can do is to speculate and there have been a number of speculative theories. First, China could be redefining the status quo. China feels it has a right to an ADIZ to protect its sovereignty over both its territory as well as its claimed maritime spaces. After all, Japan has an ADIZ.

Moreover, Japan’s ADIZ comes within 130 km of China’s territory; therefore it’s only fair that China’s ADIZ extends to within 130 km of Japan’s territory. Second, it could be a direct challenge to Japan’s administration of Diaoyu/Senkaku. Japan has administrative control over the islands; this could be China’s attempt at a different kind of parallel control.

Third, this could be not about Diaoyu/Senkaku but rather about bigger maritime security issues in the East China Sea and asserting Chinese dominance. The New York Times quoted an unnamed adviser to President Obama saying, “It’s pretty clear this isn’t about the islands.”

Fourth, it could be a combination of domestic political pressure from Chinese nationalists in the media and the PLA, and President Xi Jinping feeling his way into his new role. Japan is a domestic hot button issue and any move by the government that could be interpreted as pushback against Japan would appeal to a small but highly vocal section of nationalists in the media as well as the PLA, which tends to take stronger stances on Chinese territorial sovereignty than the Ministry of Foreign Affairs. That, combined with President Xi’s relatively new leadership, could be a way for him to consolidate his authority.

What does this mean for India?

Well, hawks would immediately jump to the conclusion that China is more aggressive in its foreign policy, which does not bode well for its relations with India. Certainly, China’s announcement of the ADIZ was unexpected. It was done without any consultation with Japan and has thus been seen as very disrespectful. It has also been called unnecessary. Since the ADIZ is not jurisdictional, it makes no legal difference to China’s claim over Diaoyu/Senkaku.

A more sober look, however, would take into account a few additional facts. First, many countries have an ADIZ and establishing one is not surprising in itself. It’s possible the Chinese government did not realise that the establishment of the ADIZ would lead to this strong backlash. In their eyes, they were establishing parity with Japan, not needling it. Second, China backed off from their initial terming of the ADIZ as “emergency defensive measures” and insisted that they just want notification from aircraft entering the airspace, and are not about to respond with force.

Third, as The Diplomat pointed out, China is engaging in “lawfare” — using international institutions to achieve strategic goals. This is indicative of acceptance rather than the rejection of the current international order. Fourth, because China, like all other countries, has a right to an ADIZ, the ADIZ itself should not be the problem. Rather, China’s actions should be scrutinised.

If Japanese planes flying towards Diaoyu/Senkaku are intercepted on a regular basis, that would be more of an issue than the establishment of the ADIZ itself, unexpected though it may have been. Last, unpalatable as this may be to the Indian power elite, given the focus on the “China threat”, India, currently at least, simply does not factor into China’s strategic priorities. China is intently focused on the United States. Implicitly, this may actually be a good thing, leading to maintenance of the status quo for the foreseeable future.

SOURCE: THE HINDU