ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Pulling Out of the RCEP

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The union government has done well by pulling out of the Regional Comprehensive Economic Partnership (RCEP). This must be seen as a victory of the democratic voices, especially the All India Kisan Sangharsh Coordination Committee, civil society organisations, policy think tanks and experts in the field. By this, the government has sent a strong message to the world that it will not succumb to the pressures of trade deal by sacrificing the interest of the farming community, particularly the small and medium farmers. Apart from the above-mentioned factors, the mismanagement of demonetisation and the persisting issues in effective implementation of goods and services tax (GST) have motivated the government to not go ahead with the RCEP trade agreement.

In the context of the agrarian distress in the country, the deal would have been a major setback to the agrarian and allied sectors. The high tax burden and inadequate market structures are pushing the farmers into a cycle of indebtedness. To illustrate, the agreement would have liberalised the private seed marketing and fertiliser companies to enter the Indian market to exploit the burdened farmers with high input costs adding to the ongoing crisis in agriculture. By taking this stand of not going through with the RCEP deal, India now has to usher in new initiatives to augment the loss of economic benefits. For example, there is a need for an increase of trade competitiveness through improving the quality of goods and services. This will not only compensate the negative externalities of the deal, but will also strengthen the domestic demand and the robustness of the internal market.

In terms of trade, with the trade deficit of over $100 billion, our country would have given a platform to worsen the situation as the deal has the provision of reducing tariffs for its imports and exports. More specifically, India’s trade deficit with China, which stands at $53 billion trade might have gone up with the increase of electronic and manufacturing items allowing our country to be the dumping place for China. Rather, it is wiser to empower “Make in India” by supporting and encouraging the domestic players. In spite of the more than 120 memoranda
of understanding (MoUs) between India and China in the recent meeting between Chinese President Xi Jinping and Prime Minister Narendra Modi, the potential of these MoUs in reducing the trade deficit is not clear.

Nayakara Veeresha

Bengaluru

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