1.Revenue, fiscal deficits understated in 2018-19: CAG

Tamil Nadu’s revenue deficit of ₹23,459.44 crore during 2018-19 was understated by ₹3,757.23 crore and fiscal deficit by ₹1,300.49 crore primarily owing to short transfers totalling ₹1,366 crore towards various reserve funds, such as sinking fund and guarantee redemption fund, according to the Comptroller and Auditor-General’s report on State finances for the year ended March 2019. There were also book adjustments of interest receipts to the tune of ₹2,461.48 crore.

The CAG also found that in 20 cases, there was a total expenditure of ₹1.34 crore without appropriation by the legislature either in the original or supplementary estimates, while in 24 cases, an expenditure of ₹8.15 crore was incurred without final modified appropriation.

“As on March 31, 2019, 348 cases of misappropriation, shortages, theft and loss, involving a total amount of ₹14.71 crore, were pending disposal. Out of these cases, 331 were pending for more than 10 years,” the report said. Of these, 170 are awaiting departmental and criminal investigation, departmental action has been initiated but not finalised in 116 cases, 16 have criminal proceedings finalised but the recovery of the amount is pending and 24 are awaiting orders for recovery or write-off, while 22 cases are pending in the courts.

A total of 257 cases have been pending for 21 years and above, and 34 cases are pending between 16 years and 20 years, while 40 cases have been pending for over 11 years.

About CAG

• CAG is an independent authority under the Constitution of India.
• He is the head of the Indian audit & account department and chief Guardian of Public purse.
• It is the institution through which the accountability of the government and other public authorities (all those who spend public funds) to Parliament and State Legislatures and through them to the people is ensured.
• Shri Rajiv Mehrishi is the incumbent CAG of India.

Background

• Office of the Accountant General was established in 1858 (the year the British took over administrative control of India from the East India Company).
• In 1860 Sir Edward Drummond was appointed as the first Auditor General.
• Meanwhile after some restructuring the Auditor General of India came to be called the Auditor and Accountant General to the Government of India.
• In 1866, the position was renamed Comptroller General of Accounts, and in 1884, it was re-designated as Comptroller and Auditor General of India.
• Under the Government of India Act 1919, the Auditor General became independent of the government as statutory backing was given for the position.
• The Government of India Act 1935 further strengthened the position of the Auditor General by providing for Provincial Auditors General in a federal set-up.
• The act also described the appointment and service procedures and gave a brief overview of the duties of the Auditor General of India.
• The Accounts and Audits Order of 1936 provided detailed accounting and auditing functions of the auditor general.
• This arrangement remained unchanged until India’s independence in 1947. After independence, Article 148 of the 1949 Indian Constitution provided for the establishment of a Comptroller and Auditor General to be appointed by the President of India.
• CAG jurisdiction was extended to Jammu and Kashmir in 1958.
• In 1971 the central government enacted the Comptroller and Auditor General (Duties, Powers, and Conditions of Service) Act, 1971. The act made CAG responsible for both accounting and auditing duties for central and state governments.
• In 1976 CAG was relieved from accounting functions.
• CAG has undergone rapid computerization and modernization since the 1990s and pervasive nature of Indian corruption has kept CAG vigilant and it has audited and investigated some of the worst and most controversial corruption scandals in Indian history.

Comparison with Britain CAG

• CAG of India only performed the role of an Auditor General and not of a Comptroller but in Britain it has the power of both Comptroller as well as Auditor General.
• In India the CAG audits the accounts after the expenditure is committed i.e. ex post facto. In UK no money can be drawn from the public exchequer without the approval of the CAG.
• In India, CAG is not a member of the parliament while in Britain; CAG is a member of house of the Commons.

Constitutional Provisions

• Article 148 broadly deals with the CAG appointment, oath and conditions of service.
• Article 149 deals with Duties and Powers of the Comptroller and Auditor-General of India.
• Article 150 says that the accounts of the Union and of the States shall be kept in such form as the President may, on the advice of the CAG, prescribe.
• Article 151 says that the reports of the Comptroller and Auditor-General of India relating to the accounts of the Union shall be submitted to the president, who shall cause them to be laid before each House of Parliament.
• Article 279 – Calculation of “net proceeds” is ascertained and certified by the Comptroller and Auditor-General of India, whose certificate is final.
• Third Schedule – Section IV of the Third Schedule of the Constitution of India prescribes the form of oath or affirmation to be made by the Judges of the Supreme Court and the Comptroller and Auditor-General of India at the time of assumption of office.
• According to Sixth Schedule the accounts of the District Council or Regional Council should be kept in such form as CAG, with the approval of the President, prescribe. In addition these bodies account are audited in such manner as CAG may think fit, and the reports relating to such accounts shall be submitted to the Governor who shall cause them to be laid before the Council.

Independence of CAG

• There are several provisions in the Constitution for safeguarding the independence of CAG.
• CAG is appointed by the President by warrant under his hand and seal and provided with tenure of 6 years or 65 years of age, whichever is earlier.
• CAG can be removed by the President only in accordance with the procedure mentioned in the Constitution that is the manner same as removal of a Supreme Court Judge.
• He is ineligible to hold any office, either under the Government of India or of any state, once he retires/ resigns as a CAG.
• His salary and other service conditions cannot be varied to his disadvantage after appointment.
• His administrative powers and the conditions of service of persons serving in the Indian Audit and Accounts Department are prescribed by the President only after consulting him.
• The administrative expenses of the office of CAG, including all salaries, allowances and pensions are charged upon the Consolidated Fund of India that is not subject to vote.

Functions and Power of CAG

• CAG derives its audit mandate from different sources like–
  • Constitution (Articles 148 to 151)
  • The Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971
  • Important Judgments
  • Instructions of Government of India
  • Regulations on Audit & Accounts-2007
• CAG audits the accounts related to all expenditure from the Consolidated Fund of India, Consolidated Fund of each state and UT’s having a legislative assembly.
• He audits all expenditure from the Contingency Fund of India and the Public Account of India as well as the Contingency Fund and Public Account of each state.
• He audits all trading, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts kept by any department of the Central Government and the state governments.
• He audits the receipts and expenditure of all bodies and authorities substantially financed from the Central or State revenues; government companies; other corporations and bodies, when so required by related laws.
• He audits the accounts of any other authority when requested by the President or Governor e.g. Local bodies.
• He advises the President with regard to prescription of the form in which the accounts of the Centre and States shall be kept.
• He submits his audit reports relating to the accounts of the Centre to the President, who shall, in turn, place them before both the houses of Parliament.
• He submits his audit reports relating to the accounts of a State to the Governor, who shall, in turn, place them before the state legislature.
• CAG also acts as a guide, friend and philosopher of the Public Accounts Committee of the Parliament.

CAG and Public Accounts Committee (PAC)

• PAC is a Parliamentary Standing Committee created under GOI Act, 1919.
• CAG audit reports are handed over to the PACs at the centre and at the state.
• Three CAG reports i.e. audit report on appropriation accounts, audit report on finance accounts and audit report on public sector undertakings are examined by PAC.
• At the central level, these reports are submitted by CAG to president, who makes them to be laid in parliament.
• CAG also assists the committee in its deliberations by preparing a list of the most urgent matters which deserve the attention of the PAC.
• He also helps in making the actions of the committee clear to the witnesses and in making the action of the government clear to the committee.
• CAG position is sometimes one of interpreter and translator, explaining the officials’ views to the politicians and vice-versa.
• The responsibility of the CAG does not end here. He has to watch whether the corrective action suggested by him has been taken or not. In cases whether it has not been taken, he reports the matter to the PAC which will take up the matter.

Challenges and Opportunities

• In present times audits are getting complex because forms of corruption and maladministration extremely difficult to detect.
• Besides the historic task of keeping a close watch on the Central and State governments, CAG are now auditing several public-private partnerships (PPP) projects.
• In this context CAG of India has suddenly landed in the midst of unprecedented opportunity and challenge.
• No criterion or procedure has been prescribed either in the Constitution or in the statute for the appointment of CAG.
• This has given the sole power to the executive to appoint a person of their choice as the CAG. This goes against the international best practices prevalent across the world.
• The CAG has the authority to inspect any Government office and to call for any accounts. However, in practice, the supply of records is often denied.
• Moreover, usually inordinately delayed and more often than not, crucial documents are supplied to the auditors at the end of the audit programme with the sole objective of obstructing meaningful audit of those crucial records.
• Just like the citizen’s right to get the information within a month under RTI Act 2005, auditors should be provided access to records on priority basis within seven days, failing which, heads of departments should be required to explain the circumstances that caused the delay.
• In 2015, an all-India conference of PACs of Parliament and State/Union Territories legislatures discussed the need for complete independence of the CAG, making it a part of the PAC, like in the UK and Australia.
• It also called for prior consultation with the Chairman, PAC, before appointment of the CAG and consequential need to amend the CAG Act to this effect.
• Though the Indian Constitution provides for a six-year term to the CAG, the cap of 65 years of age has been reducing the actual terms of successive CAGs in the recent times.
• Shorter tenure works as an impediment to the independent and proper functioning of the institution due to lack of continuity of the leadership and loss of expertise.
• Internationally, the CAG of the UK and the Comptroller General of the US has 10 and 15 years of term respectively.
• The work of audit of accounts of the Union and of the States is actually done by the officers and staff of the IA&AD. However, no statutory recognition has been given to the work of IA&AD in India as against National Audit Office of the UK.
• The recognition of the IA&AD as a statutory body with delegation of powers to lower functionaries on the pattern of IT Act will improve the quality of audit and give credibility to the work done by the officers and staff of the IA&AD, thereby leading to greater impact and better outcome.
• Some of the audits of CAG in recent times have attracted criticism due to exaggerated loss estimates or outlandish figures.
• To avoid such allegations CAG should follow rigorous standards so that the integrity of audits is not affected by extraneous considerations.

Reforms suggested by Vinod Rai (former CAG)

• Bring all private-public partnerships (PPPs), Panchayati Raj Institutions and government-funded societies, within the ambit of the CAG.
• CAG Act of 1971 should be amended to keep pace with the changes in governance.
• A collegium type mechanism to choose a new CAG on the lines of selecting a Chief Vigilance Commissioner (CVC).
• From climate change to PPPs, there are dramatic changes happening in the way government funding and public goods are exploited. CAG has to change its audit mechanisms in this context.
• CAG has to prepare itself to audit issues like implementation of the Sustainable Development Goals and the Goods and Services Tax.
• In the wake of the Big Data revolution, CAG came out with a Big Data management policy in 2016 and also established a Centre for Data Management and Analytics in Delhi. This is a welcome step.
• In 2017, CAG of India hosted the Commonwealth Auditors General Conference. Leveraging technology in public audit and environment audit were the two themes of the conference. Conference helped in fostering partnerships amongst Commonwealth countries for capacity development in public audit.
• CAG successfully audited the UN headquarters which involves multifarious and complex operations; it shows the credibility of Indian CAG.

2.The rural economy can jump-start a revival

The Government needs to reverse its neglect and policy missteps as key indicators show the sector has resilience

The second wave of the COVID-19 pandemic could be slowly receding with a decline in the official estimates of daily infections and deaths. The economy is also very gradually getting back to normal, with many States beginning to ease some of the restrictions imposed in their lockdowns. However, the challenge of an economic recovery is far more serious than the health pandemic despite official claims of there being an economic recovery. Last month, the National Statistical Office (NSO) released the estimates of the Indian Gross Domestic Product (GDP) growth for the fiscal year 2020-21. The decline in GDP, at 7.3%, was slightly better than expectation, even though this is a gross underestimate of the reality given the methodological issue of underestimation of the economic distress in the unorganised sector.

Making things worse

But what makes economic recovery challenging is that this decline followed three years of sharp decline in GDP even before the novel coronavirus pandemic hit the country. Economic growth had already decelerated to 4% in 2019-20, less than half from the high of 8.3% in 2016-17. Since then, the slowdown in the economy has not only made things worse as far as economic recovery is concerned but also come at a huge cost for a majority of households which have lost jobs and incomes. The pandemic has only worsened an already fragile economic situation. The sharp decline in GDP was partly a result of the trend of a slowdown in economic activity since 2016-17. But a large part of the economic outcome in the first year of the pandemic is also a result of a mishandling of the economic situation.

While a strict national lockdown certainly hit economic activity last year, what made matters worse was the less than adequate response from the Government in increasing fiscal support to revive demand in the economy. Many of the grand announcements remained largely on the monetary side without the enabling policy framework to help small and medium enterprises as well as the large unorganised sector which bore the brunt of the restrictions in economic activity.

Agriculture, a key driver

Despite the lack of fiscal support, an important contributor to the better-than-expected economic performance was the resilience of the rural economy, particularly the agricultural sector. While rural areas were the first point of refuge for a majority of migrants who walked back thousands of kilometres from urban metropolitan areas, agriculture was the only major sector (other than electricity, gas, water supply and other utility services) which reported an increase in Gross Value Added (GVA) in 2020-21. It not only provided jobs to returning migrants but also sustained the economy in the rural areas.

Agriculture has not only been the biggest saviour during the period of the pandemic but has consistently been an important driver of the economy throughout the last five years which has seen the economy slow down sharply. The average growth rate in agriculture GVA in the last five years, at 4.8%, is significantly higher than the GVA growth of the economy as a whole, at 3.6%, in the last five years.

But can the rural sector play saviour again? Unlikely, in the present context. And it will not be due to any natural calamity such as drought but a result of the neglect and policy missteps by the Government. Even though the lockdowns imposed by the State governments at the beginning of the second wave were less severe when compared to last year, they did impact the non-agricultural economy as is evident from the high frequency data for the last two months. The expectation of positive growth in this fiscal year may suggest recovery. However, given that the economy has already suffered last year, any recovery will largely be a statistical artefact driven by the low base of last year rather than a real recovery. The fact that a majority of households have already suffered job losses and income decline which are yet to regain their pre-pandemic levels suggests caution in making any inference on an economic recovery.

However, even the aggregate data are unlikely to capture the actual extent of devastation in the rural areas. While this is true for even the basic estimates of death and the health catastrophe caused by the pandemic, it is even more severe in its economic impact. Similar to the official statistics which have underestimated deaths due to the pandemic in most States — as has been brought out recently in several newspapers — the economic distress in rural areas is also largely unreported and underestimated.

The second wave affected rural areas disproportionately, in terms of health but also in terms of livelihoods. Many households have lost an earning member and an equally large number have spent a large sum on private health care expenditure in dealing with the infection. It will not be surprising if rural areas now witness a sharp rise in indebtedness from non-institutional sources.

However, the response from the Government has not been commensurate with the scale of the pandemic in rural areas. Unlike last year, the Government has not increased the allocation this year for the National Rural Employment Guarantee Scheme (NREGS). For the country as a whole, despite an increase in employment demand in NREGS, the person-days generated in May 2021 was only 65% when compared to May 2020. While the free food-grain scheme has been extended this year as well, it does not include pulses as was provided last year. Similarly, there has not been any cash transfer to vulnerable groups, unlike last year.

Decline in jobs, income

The impact of declining incomes and job losses on demand is now visible even in rural areas. While real wages have continued to decline with the latest estimates of April 2021 showing a decline in rural non-agricultural wages by 0.9% per annum in the last two years, agricultural wages continue to stagnate. One indicator of declining demand is the decline in wholesale prices of most of the agricultural commodities. Cereals and vegetables, which together account for more than half of crop output, have seen prices decline on a year-on-year basis for more than six months now. This is happening at a time when international agricultural prices are at an all-time high.

Some of this is reflected in the rise in inflation in pulses and oilseeds groups, both of which are largely imported. The net result is a peculiar situation where output prices for dominant agricultural commodities in the domestic market are declining while consumer prices of essentials such as edible and pulses are contributing to rising inflation.

Inflation threat

Rising inflation further threatens to reduce the purchasing power of the rural economy struggling with declining incomes and job losses. This is further compounded by the shift in terms of trade against agriculture which has put agricultural incomes under strain. The rise in input prices for diesel has already contributed to rising input costs but the recent increase in fertilizer prices for most of the complex fertilizers have also added to the misery of farmers. Rising inflation in international commodity prices also threatens the rural non-farm economy. A majority of the rural non-farm sector already struggling from low demand has now seen its profit margins getting impacted due to the increase in the cost of raw material.

Despite these setbacks, the rural economy including the agricultural economy continues to remain crucial for any strategy of economic revival. But for that, it will require proactive intervention from the Government to protect the rural population by speeding up vaccination. Unfortunately, so far, the rural areas have been lagging behind in the overall rate of vaccination. At the same time, rural areas will also need greater fiscal support, both in terms of direct income support to revive demand in the economy but also through various subsidies and protection from the rising inflation in input prices. This urgent intervention is not just necessary to support economic revival but also prevent another humanitarian crisis, this time as a result of economic mismanagement.

Gross Domestic Product

Definition: GDP is the final value of the goods and services produced within the geographic boundaries of a country during a specified period of time, normally a year. GDP growth rate is an important indicator of the economic performance of a country.

Description: It can be measured by three methods, namely,

1. Output Method: This measures the monetary or market value of all the goods and services produced within the borders of the country. In order to avoid a distorted measure of GDP due to price level changes, GDP at constant prices o real GDP is computed. GDP (as per output method) = Real GDP (GDP at constant prices) – Taxes + Subsidies.

2. Expenditure Method: This measures the total expenditure incurred by all entities on goods and services within the domestic boundaries of a country. GDP (as per expenditure method) = C + I + G + (X-IM) C: Consumption expenditure, I: Investment expenditure, G: Government spending and (X-IM): Exports minus imports, that is, net exports.

3. Income Method: It measures the total income earned by the factors of production, that is, labour and capital within the domestic boundaries of a country. GDP (as per income method) = GDP at factor cost + Taxes – Subsidies.

In India, contributions to GDP are mainly divided into 3 broad sectors – agriculture and allied services, industry and service sector. In India, GDP is measured as market prices and the base year for computation is 2011-12. GDP at market prices = GDP at factor cost + Indirect Taxes – Subsidies

3.Staging a comeback, re-energising India’s Africa policy

New Delhi needs to make new commitments, developing and deepening links in health, space and digital technologies

Africa is considered a foreign policy priority by India. The Narendra Modi government designed a forward-looking strategy to deepen relations with African countries. Its implementation was managed quite well, with much political will invested in expanding the multi-faceted engagement. Even as the COVID-19 era began in March 2020, New Delhi took new initiatives to assist Africa through prompt despatch of medicines and later vaccines.

But now the policy implementation needs a critical review.

The macro picture

The latest economic data confirms what was apprehended by experts: India-Africa trade is on a decline. According to the Confederation of Indian Industry, in 2020-21, India’s exports to and imports from Africa stood, respectively, at $27.7 billion and $28.2 billion, a reduction of 4.4% and 25% over the previous year. Thus, bilateral trade valued at $55.9 billion in 2020-21, fell by $10.8 billion compared to 2019-20, and $15.5 billion compared to the peak year of 2014-15.

India’s investments in Africa too saw a decrease from $3.2 billion in 2019-20 to $2.9 billion in 2020-21. Total investments over 25 years, from April 1996 to March 2021, are now just $70.7 billion, which is about one-third of China’s investment in Africa. COVID-19 has caused an adverse impact on the Indian and African economies.

India’s top five markets today are South Africa, Nigeria, Egypt, Kenya and Togo. The countries from which India imports the most are South Africa, Nigeria, Egypt, Angola and Guinea. India’s top three exports to Africa are mineral fuels and oils (processed petroleum products), pharmaceutical products and vehicles. Mineral fuels and oils, (essentially crude oil) and pearls, precious or semi-precious stones are the top two imports accounting for over 77% of our imports from Africa. The composition of the India-Africa trade has not changed much over the two decades.

Global competition

These latest trends in bilateral economic relations should be assessed against two broad developments.

First, COVID-19 has brought misery to Africa. As on June 24, 2021, Africa registered 5.2 million infections and 1,37,855 deaths. Given Africa’s population (1.3 billion) and what happened elsewhere (the United States, Europe and India), these figures may not have drawn international attention, but Africans have been deeply affected and remain ill-equipped. A recent World Health Organization survey revealed that 41 African countries had fewer than 2,000 working ventilators among them. Despite these shortcomings, Africa has not done so badly. Experts suggest that the strength of community networks and the continuing relevance of extended family play an important supportive role. Besides, Africa has some of the protocols in place, having recently suffered from Ebola, and managed it reasonably well. Sadly though, with much of the world caught up in coping with the novel coronavirus pandemic’s ill effects, flows of assistance and investment to Africa have decreased.

Second, as a recent Gateway House study, Engagement of External Powers in Africa; Takeaways for India, showed, Africa experienced a sharpened international competition, known as ‘the third scramble’, in the first two decades of the 21st century. A dozen nations from the Americas, Europe and Asia have striven to assist Africa in resolving the continent’s political and social challenges and, in turn, to benefit from Africa’s markets, minerals, hydrocarbons and oceanic resources, and thereby to expand their geopolitical influence. A mix of competition and contestation involving traditional and new players, especially the United States, the European Union (EU), China, Japan and India, has attracted much attention from governments, media and academia.

While China has successfully used the pandemic to expand its footprint by increasing the outflow of its vaccines, unfortunately India’s ‘vax diplomacy’ has suffered a setback. This came in the wake of the debilitating second wave of COVID-19 in the country and the shortage of vaccine raw materials from the U.S. Geopolitical tensions in Asia and the imperative to consolidate its position in the Indo-Pacific region have compelled New Delhi to concentrate on its ties with the United Kingdom, the EU, and the Quad powers, particularly the U.S. Consequently, the attention normally paid to Africa lost out.

India’s role

This must now change. For mutual benefit, Africa and India should remain optimally engaged. It was perhaps this motivation that shaped the substantive intervention made by External Affairs Minister S. Jaishankar on May 19 in the UN Security Council’s open debate on conflict and post-pandemic recovery in Africa. Touching on politico-diplomatic dimensions, he regretted that “the voice of Africa is not given its proper due” in the Security Council. He highlighted India’s role in peacekeeping in Africa, in lending support to African counter-terrorism operations, and contributing to African institutions through training and capacity-enhancing assistance. India’s aid for economic development in the African continent is set to continue, he assured. His visit to Kenya (June 12-14 ) has helped to re-establish communication with Africa at a political level.

It is time to seize the opportunity and restore Africa to its primary position in India’s diplomacy and economic engagement. The third India-Africa Forum Summit was held in 2015. The fourth summit, pending since last year, should be held as soon as possible, even if in a virtual format. Fresh financial resources for grants and concessional loans to Africa must be allocated, as previous allocations stand almost fully exhausted. Without new commitments, India’s Africa policy would be like a car running on a near-empty fuel tank.

Areas with promise

The promotion of economic relations demands a higher priority. Industry representatives should be consulted about their grievances and challenges in the COVID-19 era. It is essential “to impart a 21st century complexion to the partnership with Africa”, as the above-mentioned study argues. This means developing and deepening collaborations in health, space and digital technologies.

Finally, to overcome the China challenge in Africa, increased cooperation between India and its international allies, rates priority. The recent India-EU Summit has identified Africa as a region where a partnership-based approach will be followed  Similarly, when the first in-person summit of the Quad powers is held in Washington, a robust partnership plan for Africa should be announced. For it to be ready in time, work by Quad planners needs to begin now.

Why in News?

• Recently, President of South Africa Cyril Ramphosa visited India on a two-day visit. He was the chief guest at 70th Republic Day Celebrations in New Delhi.

Historical Ties

• India’s relations with Africa date back several centuries. The presence of Indians in East Africa is documented in the ‘Periplus of the Erythraean Sea’ or Guidebook of the Red Sea by an ancient Greek author written in 60 AD.
• The geographical proximity and easy navigability in Indian Ocean resulted in well-established trade network between India and the Swahili Coast predating European exploration.
• More concrete relation between India and Africa begins to emerge during the Islamic age which is evident through the accounts of Venetian traveller Marco Polo.
• Political connection during the colonial era was linked through M.K Gandhi who began his political career in South Africa, became the leader of colonized and established Indian Natal Congress in 1894.
• After India got independent, it raised voice for African liberation taking their case to all the available international forums. End of racial struggle and decolonization became the rallying point of India–Africa relations.
• India was a forerunner as a champion of the interests of the developing countries from Africa, particularly through the Bandung Declaration of 1955, the Group of 77, and the Non Aligned Movement (NAM).
• India’s policy of NAM provided the world with the third front at the time of heightened cold war rivalry between US and USSR, where African nations acted as the strengthening factor.
• A large chunk of Indian diaspora continues to live in African countries such as Kenya, Uganda, Mauritius, and Nigeria.
• It is this sense of solidarity, mutual trust and confidence born in the difficult days of the Cold War which continues to drive India-Africa cooperation to this day.

Importance of Africa

• Africa is home to over half a dozen of the fastest growing countries of this decade such as Rwanda, Senegal, and Tanzania etc making it one of the growth pole of the world.
• Real GDP in Africa and Sub-Saharan Africa in the past decade has grown by more than twice the rate in 1980s and 90’s.
• African continent has a population of over one billion with a combined GDP of 2.5 trillion dollars making it a huge potential market.
• Africa is a resource rich nation dominated by commodities like crude oil, gas, pulses and lentils, leather, gold and other metals, all of which India lack in sufficient quantities.
• India is seeking diversification of its oil supplies away from the Middle East and Africa can play an important role in India’s energy matrix.

India in Africa

• Engagement at all levels with African countries has increased in the last two decades with a large number of public and private sector companies from India investing in Africa.
• India’s duty-free tariff preferential scheme for Least Developed Nation (LDCs) launched in 2008 has benefited 33 African states.
• India’s engagement with African nations remains at three levels: Bilateral, Regional and Multilateral.
• Multilateral engagement was launched with the first India Africa Forum Summit (IAFS) in 2008.

India Africa Forum Summit

• The India–Africa Forum Summit (IAFS) is the official platform for the African-Indian relations.
• It is held once in every three years beginning from 2008.
• India by consistently holding India- Africa Forum Summit (IAFS) in places like New Delhi (2008), Addis Ababa (2011) and New Delhi (2015) has already forged ties with the 54 African states through the African Union (AU).
• India is investing in capacity building providing more than $1 billion in technical assistance and training to personnel under the Indian Technical and Economic Cooperation (ITEC) program.
• As a full member of African Capacity Building Foundation (ACBF), India has pledged $1 million towards ACBF’s sustainable development, poverty alleviation, and capacity building initiative.
• India has invested $100 million in the Pan-African E-Network to bridge the digital divide in Africa, leveraging its strengths in information technology.
• Indian military academies offer training to military officers from a number of African states.
• India has also unveiled the Vision Document of the Asian Africa Growth Corridor which is jointly prepared by Indian and Japanese think tanks.
• The corridor will focus on Developing Cooperation Projects, Quality Infrastructure and Institutional Connectivity, skill enhancement, and People-to-People Partnership.
• India postulates that its partnership with Africa is an amalgam of development priorities in keeping with the African Union’s long term plan and the Africa Agenda 2063, as well as India’s development objectives.

Areas of Cooperation

• Trade – Indian-African synergies can be used for expanding sectors like tourism, banking, telecommunications, manufacturing and agriculture.
• Security – Being the littoral states in the Indian Ocean, they can work towards establishing mechanisms to deal with threats to regional security including terrorism and piracy.
• Capacity Building – Africa’s expectation from India in the field of public health goes beyond just the supply of affordable medicine to cover assistance in developing the continent’s public health services capacities.
• Maritime Cooperation – development of blue economy and renewable energy for the continent’s growth can be realized by Indian experience and the expertise to develop and manage the maritime resources.
• Food Security – India and Africa face similar challenges in regards to hunger and undernutrition. Importing food grains from African nations will address nation’s food security problem.
• It will also provide opportunities to farmers of Africa to increase income, productivity and generate employment.

Challenges

• Ethnic and religious conflicts and governance issues in some countries make foreign contributors aversive to venture in the region.
• India’s substantive presence in Africa has remained marginal as it focused on its own periphery through much of the Cold War period which limited its capabilities.
• Since the end of the Cold War China’s presence has grown in Africa, who has been providing soft loans to African states which has resulted in Chinese growing influence in the continent.
• With government institutions and businesses working in separate silos, India has no coordinated Africa policy nor does there seem to be an avenue where the strengths of both actors can be leveraged.