EUROPEAN UNION

The European Union (EU) is an economic and political union of 27 member states, located primarily in Europe. But the EU’s territory is not the same as that of Europe, as parts of Europe

Committed to regional integration, the EU was established by the Treaty of Maastricht on 1 November 1993 upon the foundations of the pre-existing European Economic Community.

[The EU has developed a single market through a standardised system of laws which apply in all member states, ensuring the freedom of movement of people, goods, services and capital. It maintains common policies on trade, agriculture, fisheries and regional development. A common currency, the euro, has been adopted by sixteen member states that are thus known as the Eurozone. The EU has developed a limited role in foreign policy, having representation at the WTO, G8 summits, and at the UN. It enacts legislation in justice and home affairs, including the abolition of passport controls between many member states which form part of the Schengen Area. Twenty-one EU countries are also members of NATO.]

An international organisation, the EU operates through a hybrid system of supranationalism and intergovernmentalism. In certain areas, it depends upon agreement between the member states; in others, supranational bodies are able to make decisions without unanimity. Important institutions and bodies of the EU include the European Commission, the Council of the European Union, the European Council, the European Court of Justice (ECJ), and the European Central Bank (ECB). The European Parliament is elected every five years by member states' citizens, to whom the citizenship of the European Union is guaranteed.

The EU traces its origins to the European Coal and Steel Community formed among six countries in 1951 and the Treaty of Rome in 1957. Since then the union has grown in size through the accession of new countries, and new policy areas have been added to the remit of the EU's institutions.

Member states
The European Union is composed of 27 independent sovereign states which are known as member states: [Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.]

To join the EU, a country must meet the Copenhagen criteria, defined at the 1993 Copenhagen European Council. These require a stable democracy which respects human rights and the rule of law; a functioning market economy capable of competition within the EU; and the acceptance of the obligations of membership, including EU law. Evaluation of a country's fulfilment of the criteria is the responsibility of the European Council. The current framework does not specify how a country could exit the Union (although Greenland, a territory of Denmark, withdrew in 1985), but the proposed Treaty of Lisbon contains a formal procedure for withdrawing.

History
After the end of the Second World War, moves towards European integration were seen by many as an escape from the extreme forms of nationalism which had devastated the continent. One such attempt to unite Europeans was the European Coal and Steel Community (1951) which was declared to be "a first step in the federation of Europe". The founding members of the Community were Belgium, France, Italy, Luxembourg, the Netherlands and West Germany.

In 1957, the "Six" mentioned before signed the Treaties of Rome. These treaties extended the earlier cooperation within the European Coal and Steel Community and created the European Economic Community, (EEC) establishing a customs union and the European Atomic Energy Community (Euratom) for cooperation in developing nuclear energy. In 1967 the Merger Treaty created a single set of institutions for the three communities, which were collectively referred to as the European Communities, although more commonly just as the European Community (EC).

[In 1973 the Communities enlarged to include Denmark, Ireland and the United Kingdom. In 1979 the first direct, democratic elections to the European Parliament were held. Greece joined in 1981, and Spain and Portugal in 1986. In 1985 the Schengen Agreement created largely open borders without passport controls between most member states. In 1986 the European flag began to be used by the Community and the Single European Act was signed. In 1990, after the fall of the Iron Curtain, the former East Germany became part of the Community as part of a newly united Germany.

The European Union was formally established when the Maastricht Treaty came into force on 1 November 1993, and in 1995 Austria, Sweden and Finland joined the newly established EU. In 2002, euro notes and coins replaced national currencies.]

Economy
Since its origin, the EU has established a single economic market across the territory of all its members. Currently, a single currency is in use between the 16 members of the eurozone. If considered as a single economy, the EU generated an estimated nominal gross domestic product (GDP) of US$18.39 trillion (15.247 trillion international dollars based on purchasing power parity) in 2008, amounting to over 22% of the world's total economic output in terms of purchasing power parity, which makes it the largest economy in the world by nominal GDP and the second largest trade bloc economy in the world by PPP valuation of GDP. It is also the largest exporter of goods, the second largest importer, and the biggest trading partner to several large countries such as India and China.

Single market (Four Freedoms)
Two of the original core objectives of the European Economic Community were the development of a common market, subsequently renamed the single market, and a customs union between its member states. The single market involves the free circulation of goods, capital, people and services within the EU, and the customs union involves the application of a common external tariff on all goods entering the market. Once goods have been admitted into the market they can not be subjected to customs duties, discriminatory taxes or import quotas, as they travel internally. The non-EU member states of Iceland, Norway, Liechtenstein and Switzerland participate in the single market but not in the customs union.

Free movement of capital is intended to permit movement of investments such as property purchases and buying of shares between countries. The free movement of capital is unique insofar as that it is granted equally to non-member states.

The free movement of persons means citizens can move freely between member states to live, work, study or retire in another country. This required the lowering of administrative formalities and recognition of professional qualifications of other states.

The free movement of services and of establishment allows self-employed persons to move between member states in order to provide services on a temporary or permanent basis. According to the Treaty the provision of services is a residual freedom that only applies if no other freedom is being exercised.

Monetary union
The creation of a European single currency became an official objective of the EU in 1969. However, it was only with the advent of the Maastricht Treaty in 1993 that member states were legally bound to start the monetary union no later than 1 January 1999. On this date the euro was duly launched by eleven of the then fifteen member states of the EU. It remained an accounting currency until 1 January 2002, when euro notes and coins were issued and national currencies began to phase out in the eurozone.

Competition
The EU operates a competition policy intended to ensure undistorted competition within the single market. The Commission as the competition regulator for the single market is responsible for antitrust issues, approving mergers, breaking up cartels, working for economic liberalisation and preventing state aid. However, it is unclear whether this will have any practical effect on EU policy.

Development
The Common Agricultural Policy (CAP) is one of the oldest policies of the European Community, and was one of its core aims. The policy has the objectives of increasing agricultural production, providing certainty in food supplies, ensuring a high quality of life for farmers, stabilising markets, and ensuring reasonable prices for consumers. It was, until recently, operated by a system of subsidies and market intervention. Until the 1990s, the policy accounted for over 60% of the then European Community's annual budget, and still accounts for around 35%.

[For WTO and its impact on the agriculture of developing countries: The EU’s policy of price controls and market interventions led to considerable overproduction. These were intervention stores of produce bought up by the Community to maintain minimum price levels. In order to dispose of surplus stores, they were often sold on the world market at prices considerably below Community guaranteed prices, or farmers were offered subsidies (amounting to the difference between the Community and world prices) to export their produce outside the Community. This system has been criticised for under-cutting farmers in the developing world. The overproduction has also been criticised for encouraging environmentally unfriendly intensive farming methods.]

Energy
The Commission has five key points in its energy policy: increase competition in the internal market, encourage investment and boost interconnections; diversify energy resources; establish a new treaty framework for energy co-operation with Russia while improving relations with energy-rich states in Central Asia and North Africa; use existing energy supplies more efficiently while increasing use of renewable energy; and finally increase funding for new energy technologies. The EU currently imports 82% of its oil, 57% of its gas and 97.48% of its uranium demands.

Infrastructure
The EU is working to improve cross-border infrastructure within the EU, for example through the Trans-European Networks (TEN). The developing European transport policies will increase the pressure on the environment in many regions by the increased transport network. In the pre-2004 EU members, the major problem in transport deals with congestion and pollution. After the recent enlargement, the new states that joined since 2004 added the problem of solving accessibility to the transport agenda.

Regional development
There are substantial economical disparities across the EU. On the high end Frankfurt has €71,476 PPP per capita, Paris €68,989, and Inner London €67,798, while Vaslui County with €3,690 PPP per capita, Botoşani County with €4,115, and Giurgiu County (all in Romania) with €4,277. Compared to the EU average, the United States GDP per capita is 35% higher and the Japanese GDP per capita is approximately 15% higher. There are a number of Structural Funds and Cohesion Funds to support development of underdeveloped regions of the EU.

Environment
The first environmental policy of the European Community was launched in 1972. Although the Commission's right to propose criminal law against “ecological crimes” was contested, it was confirmed by the Court of Justice. In 2007, member states agreed that the EU is to use 20% renewable energy in the future and that is has to reduce carbon dioxide emissions in 2020 by at least 20% compared to 1990 levels. This includes measures that in 2020, one-tenth of all cars and trucks in EU 27 should be running on biofuels.

Education and research
Education and science are areas where the EU's role is limited to supporting national governments. In education, the policy was to develop university exchange programmes which began in 1987. Scientific development is facilitated through the EU's Framework Programmes, the first of which started in 1984. The aims of EU policy in this area are to co-ordinate and stimulate research.

Urban Poverty in India

The county’s urban poor, according to the Planning Commission’s estimates, number 80 million and constitute 25.70 per cent of the urban population. The dynamics of urban poverty are very different and the problems the urban poor face are also different from that faced by their rural counterparts who at 220 million form 28.3 per cent of rural population. Though the urban poor have better access to employment and income, these are often irregular and are mostly in the informal sector. The other key determinants of urban poverty are the levels of access to basic facilities, namely, housing, sanitation and drinking water and services such as healthcare and education.

It is significant that poverty alleviation programmes in India have had a marked rural bias, evident from the decrease in absolute numbers of the rural poor from 261 million in 1973-74 to 220 million in 2004-05. This is in contrast to the rise in the numbers of the urban poor from 60 million to 80 million over the same period. Addressing urban poverty alleviation through the rural prism runs the risk of coming up with partial solutions, such as those based on self-employment schemes. Lack of access to housing and public utilities that causes urban poverty more than factors related to employment and income, so the strategies should differ from those for the rural poor.

Given the fair measure of success the ongoing National Rural Employment Guarantee Scheme (NREGS) has achieved, it is only appropriate that the 42nd Indian Labour Conference held recently, should have recommended the launching of a similar scheme for the urban poor. But replicating the NREGS will not yield the same results because urban realities differ. The success of the NREGS is set against the rural-specific milieu characterized by poorer educational attainment levels, lower levels of economically active population, declining employment opportunities in the agriculture sector and a shift towards the tertiary sector as a job provider. The demographic and economic differences that exist between rural and urban India call for a modification of the NREGS pattern in devising as urban employment guarantee scheme.

Again, the National Sample Survey (NSS) data for 2005-06 point to a pronounced difference in the educational attainment levels of those in the 15-plus age group. While 42 per cent of the urban population completed secondary education, this proportion is a mere 16 per cent in rural India. Urban India, also has a higher working age population at 65 per cent, compared with 58 per cent in rural areas. The causes of unemployment in rural and urban areas differ, and so do the possible avenues of employment.

Naturally therefore, a national urban employment guarantee scheme should improve upon the current prototype, which hinges on creating jobs largely through public works such as construction and road maintenance. India’s long experience of employment generation programmes has lessons to offer. The lack of comprehensive planning, improper targeting of beneficiaries, and leakages in implementation are some of the major deficiencies. An employment scheme for urban India should go beyond the present scope of public works projects, and address urban demands. For instance, urban renewal and restoration projects that build on the conceptual framework of rural public works but are in tune with urban necessities merit consideration. An important requirement for a successful scheme is the involvement of local bodies, since they are closer to the problem. Empowering local bodies to create jobs in education, healthcare and other public services such as construction of roads, buildings, water and sanitation projects will cater to the varied requirements of urban job seekers and serve as an efficient starting point. However, wage employment schemes supported by government can only offer transitional solutions. The government should simultaneously address skills-shortage and create the environment necessary for fostering economic development. A social security system for all unorganized workers, therefore, is a priority. Improving the conditions of housing for the urban poor is another area for urgent action. The larger aim of poverty reduction programmes should be to ensure that the vulnerable are not impoverished because of the pressure of urban living.

Meanwhile, the Centre has decided to revise the cost of a dwelling unit provided under the Integrated Housing and Slum Development Programme (IHSDP) under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to Rs 1 lakh from Rs 80,000. The Centre also decided on certain modifications in the guidelines for the Swarna Jayanti Shahari Rojgar Yojana (Golden Jubilee Urban Employment Scheme) based on the recommendations of the third party evaluation of the scheme. From now, there would be no more educational qualification criteria for the beneficiaries under the urban self employment programme. For group enterprises set up by urban poor women, the subsidy would be now 35 per cent of the project cost or a maximum of Rs 60,000 per member. The minimum number of members required to form a women’s group would also be lower at five instead of 10 and the revolving fund entitlement per member would be enhanced to Rs 2000. The component for skill training has also been restructured to ensure that quality training was provided, with the involvement of reputed institutions such as Indian Institute of Technologies (IITs), National Institute of Technologies (NITS) and Polytechnics.

(By HK Goswami. Published in Assam Tribune, 8 June 2009).

OFFSHORE BANKING

An offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax jurisdiction that provides financial and legal advantages. These advantages include:

• greater privacy

• low or no taxation

• easy access to deposits (at least in terms of regulation)

• protection against local political or financial instability

While the term originates from the Channel Islands being "offshore" from the United Kingdom, and most offshore banks are located in island nations, the term is used to refer to such banks regardless of location, including Swiss banks and those of other landlocked nations such as Luxembourg.

Offshore banking emerged due to restrictive regulations governing certain transactions.

Growth of offshore banking was encouraged by certain jurisdictions which saw opportunities to enhance their economic development and job creation capabilities. These were –

• favorable regulatory and tax environment,
• infrastructure supports like telecommunication & transportation as well as development of talent pool,
• expansion of services from booking of loans and deposits units to full fledged banking services like Trade Finance, Wealth Management and Treasury Management

The development of offshore banking will continue though setbacks can occur caused by economic out turns. For instance,

• The development of Hong Kong and Singapore as a financial centre was adversely affected by the 1997 Asian economic crisis
• Some banks reduced or closed down their operations in these locations
• The government of both Hong Kong and Singapore implemented a series of measures to improve the regulatory framework and the infrastructure to improve the attractiveness of their centres
• Singapore identified new growth areas, like wealth management, to be developed
• This in turn attracts more banks to locate operations in these centres and expand existing operations

Offshore banks play a crucial role in the shift of economic power among countries and regions. Offshore banking has often been associated with the underground economy and organized crime, via tax evasion and money laundering; however, legally, offshore banking does not prevent assets from being subject to personal income tax on interest. Except for certain persons who meet fairly complex requirements, the personal income tax of many countries makes no distinction between interest earned in local banks and those earned abroad.

Although offshore banks may decide not to report income to other tax authorities, and have no legal obligation to do so as they are protected by bank secrecy, this does not make the non-declaration of the income by the tax-payer or the evasion of the tax on that income legal. Following September 11, 2001, there have been many calls for more regulation on international finances, these being possible crossroads for major illegal money flows.

Defenders of offshore banking have criticised these attempts at regulation. They claim the process is prompted, not by security and financial concerns, but by the desire of domestic banks and tax agencies to access the money held in offshore accounts. They cite the fact that offshore banking offers a competitive threat to the banking and taxation systems in developed countries, suggesting that Organisation for Economic Co-operation and Development (OECD) countries are trying to stamp out competition.

In the offshore banking business, centres and banks must constantly evolve to remain competitive:

• Centres with poor reputation are less likely to attract business
• Centres must have an available talent pool
• Government policies must be supportive to the continuing development of the centres
• Banks operating in reputable jurisdictions stand a better chance of success provided they
• Have skilled professionals
• Product offering that continues to meet the needs of their clients

Statistics concerning offshore banking

Offshore banking is an important part of the international financial system. Experts believe that as much as half the world's capital flows through offshore centers. Tax havens have 1.2% of the world's population and hold 26% of the world's wealth, including 31% of the net profits of United States multinationals. According to Merrill Lynch and Gemini Consulting's “World Wealth Report” for 2000, one third of the wealth of the world's “high net-worth individuals”—nearly $6 trillion out of $17.5 trillion—may now be held offshore. Some $3 trillion is in deposits in tax haven banks and the rest is in securities held by international business companies (IBCs) and trusts.

The IMF has said that between $600 billion and $1.5 trillion of illicit money is laundered annually, equal to 2% to 5% of global economic output. Today, offshore is where most of the world's drug money is allegedly laundered, estimated at up to $500 billion a year, more than the total income of the world's poorest 20%. Add the proceeds of tax evasion and the figure skyrockets to $1 trillion. Another few hundred billion come from fraud and corruption. "These offshore centers awash in money are the hub of a colossal, underground network of crime, fraud, and corruption" commented Lucy Komisar quoting these statistics. Among offshore banks, Swiss banks hold an estimated 35% of the world's private and institutional funds (or 3 trillion Swiss francs), and the Cayman Islands (1.9 trillion US dollars in deposits) are the fifth largest banking centre globally in terms.

India:

State Bank of India opened the first Offshore Banking Unit (OBU) in India at the SEEPZ Special Economic Zone, Mumbai on 17th July 2003 - another landmark in the history of India's Financial Sector. The OBU undertakes the following activities:

1. Raise funds in convertible foreign currency as deposits and borrowings from Non Residents sources.

2. Transact in foreign exchange with residents in India who are eligible to enter into or undertake such transactions in terms of various Rules and Regulations as framed under Foreign Exchange Management Act, 1999.

3. Open foreign currency accounts abroad as well as with other OBUs in India

4. Trade in foreign currencies in the overseas market and also with banks in India where both legs of the transactions are denominated in foreign currencies.

5. Provide customised loan and liability products for the benefit of clients

6. Maintain Special Rupee account with an Authorised Dealer in India out of the convertible foreign exchange resources for meeting local expenses

7. Buy Rupees from an Authorised Dealer in India to fund the Special Rupee Account.

Advantages of offshore banking

Offshore banking business continues to evolve as financial institutions strive to meet their clients’ needs:

Technological and IT developments

Globalization of business

Integrated global solutions

Competitive value proposition

More sophisticated

Wider choices

Environment

Clients’ needs

Services

• Offshore banks can sometimes provide access to politically and economically stable jurisdictions. This will be an advantage for residents in areas where there is risk of political turmoil, who fear their assets may be frozen, seized or disappear (corralito for example, during the 2001 Argentine economic crisis). However, developed countries with regulated banking systems offer the same advantages in terms of stability.

• Some offshore banks may operate with a lower cost base and can provide higher interest rates than the legal rate in the home country due to lower overheads and a lack of government intervention. Advocates of offshore banking often characterise government regulation as a form of tax on domestic banks, reducing interest rates on deposits.

• Offshore finance is one of the few industries, along with tourism, in which geographically remote island nations can competitively engage. It can help developing countries source investment and create growth in their economies, and can help redistribute world finance from the developed to the developing world.

• Interest is generally paid by offshore banks without tax being deducted. This is an advantage to individuals who do not pay tax on worldwide income, or who do not pay tax until the tax return is agreed, or who feel that they can illegally evade tax by hiding the interest income.

• Some offshore banks offer banking services that may not be available from domestic banks such as anonymous bank accounts, higher or lower rate loans based on risk and investment opportunities not available elsewhere.

• Offshore banking is often linked to other structures, such as offshore companies, trusts or foundations, which may have specific tax advantages for some individuals.

• Many advocates of offshore banking also assert that the creation of tax and banking competition is an advantage of the industry, arguing with Charles Tiebout that tax competition allows people to choose an appropriate balance of services and taxes. Critics of the industry, however, claim this competition as a disadvantage, arguing that it encourages a "race to the bottom" in which governments in developed countries are pressured to deregulate their own banking systems in an attempt to prevent the offshoring of capital.

Apart from the above, competition among offshore centres and offshore banks have produced positive results like -

• Lower “onshore” tax rates

• Development of new financial products

• Efficient international capital flows

• Financing of the industrial development of South East Asian countries in the 1980’s and 1990’s

• Current financing of China and India’s development

Disadvantages of offshore banking

• Offshore banking has been associated in the past with the underground economy and organized crime, through money laundering. Following September 11, 2001, offshore banks and tax havens, along with clearing houses, have been accused of helping various organized crime gangs, terrorist groups, and other state or non-state actors. However, offshore banking is a legitimate financial exercise undertaken by many expatriate and international workers.

• Offshore jurisdictions are often remote, so physical access and access to information can be difficult. Yet in a world with global telecommunications this is rarely a problem for customers. Accounts can be set up online, by phone or by mail.

• Offshore private banking is usually more accessible to those on higher incomes, because of the costs of establishing and maintaining offshore accounts. However, simple savings accounts can be opened by anyone and maintained with scale fees equivalent to their onshore counterparts. The tax burden in developed countries thus falls disproportionately on middle-income groups. Historically, tax cuts have tended to result in a higher proportion of the tax take being paid by high-income groups, as previously sheltered income is brought back into the mainstream economy [4]. The Laffer curve demonstrates this tendency.

• Offshore bank accounts are sometimes touted as the solution to every legal, financial and asset protection strategy but this is often much more exaggerated than the reality.

Regulation of offshore banks

Offshore banks have come nder hard international scrutiny with regard to their –

• Business practices

• Contribution to international efforts such as fights against money laundering and terrorism financing

• Their role in international financial stability

• Compliance with other international standards set by G10, OECD, etc institutions

In the 21st century, regulation of offshore banking is allegedly improving, although critics maintain it remains largely insufficient. The quality of the regulation is monitored by supra-national bodies such as the International Monetary Fund (IMF). Banks are generally required to maintain capital adequacy in accordance with international standards. They must report at least quarterly to the regulator on the current state of the business.

Since the late 1990s, especially following September 11, 2001, there have been a number of initiatives to increase the transparency of offshore banking, although critics such as the Association for the Taxation of Financial Transactions for the Aid of Citizens (ATTAC) non-governmental organization (NGO) maintain that they have been insufficient. A few examples of these are:

• The tightening of anti-money laundering regulations in many countries including most popular offshore banking locations means that bankers are required, by good faith, to report suspicion of money laundering to the local police authority, regardless of banking secrecy rules. There is more international co-operation between police authorities.

• In the US the Internal Revenue Service (IRS) introduced Qualifying Intermediary requirements, which mean that the names of the recipients of US-source investment income are passed to the IRS.

• Following 9/11 the US introduced the USA PATRIOT Act, which authorises the US authorities to seize the assets of a bank, where it is believed that the bank holds assets for a suspected criminal. Similar measures have been introduced in some other countries.

• The European Union has introduced sharing of information between certain jurisdictions, and enforced this in respect of certain controlled centres, such as the UK Offshore Islands, so that tax information is able to be shared in respect of interest.

European Savings Tax Directive: In their efforts to stamp down on cross border interest payments EU governments agreed to the introduction of the Savings Tax Directive in the form of the European Union withholding tax in July 2005. A complex measure, it forced EU resident savers depositing money in any country other than the one they are resident in to choose between forfeiting tax at the point of payment, or allowing notification by the offshore banks to tax authorities in their country of residence. This tax affects any cross border interest payment to an individual resident in the EU.

Furthermore the rate of tax deducted at source will rise in 2008 and again in 2011, making disclosure increasingly attractive. Savers' choice of action is complex; tax authorities are not prevented from enquiring into accounts previously held by savers which were not then disclosed.

Recent Steps

But no government has ever taken any serious steps to clamp down on this anti-social economic offence till date. It is only after the unanimous decision in G-20 summit of London in early April, 2009 that the member countries appear to have resolved, either willingly or under political and economic pressures, to take specific steps to demolish tax heavens in some foreign countries. The Organisation for Economic Cooperation and Development (OECD) has strongly supported the move saying that a crackdown on tax heavens and cross border tax evasion will help developing countries to raise more revenues to pay for much-needed schools, roads and hospitals.

The USA has resolved to put a shutter on the country’s loopholes in tax laws and has proposed to outlaw three offshore tax-avoidance techniques, the use of which has given a specific company the scope of saving tax worth $190 billion in one decade. The Obama government will limit tax concessions like expense deductions for American companies, deferring of tax on foreign profits and halting abusive foreign tax credit. The burden of proof will be on individuals when assets are allegedly hidden in offshore bank accounts.

India should be equally determined to take such stringent measures to unearth thousands of crores of rupees in the form of such hidden assets in foreign banks. In response to a public interest litigation and query made by the Supreme Court of India, the Centre has indicated that many Indians might have parked their huge sums of illicit money in the LGT bank of Lichenstein in Germany. The German authorities have recently given a list of account holders of that bank to India. India’s income tax department has raised a demand of Rs 71,848 crore against only one such wrong-doer among hundreds on the basis of seized documents and materials.

Maternal mortality - Assam, India and the World

Maternal mortality is defined as the death of women while pregnant or within 42 days of termination of pregnancy. Death may be due to any cause related to or aggravated by pregnancy and its management. Maternal mortality rate (MMR) is the number of maternal deaths per 100,000 live births in one year.

In many developing nations, complications of pregnancy and childbirth are the leading causes of death among women of reproductive age. More than one woman dies every minute and 585,000 women die every year from such causes. Less than one percent of these deaths occur in developed countries, demonstrating that these could be avoided if resources and services were available. The gap between maternal mortality between developed and developing regions is wide.

In addition to maternal death, women experience more than 50 million maternal health problems annually. As many as 300 million women (more than one-quarter of all adult women living in the developing world) currently suffer from short or long term illness and injuries related to pregnancy and childbirths.

Every woman can experience sudden and unexpected complications during pregnancy, childbirth and just after delivery. Although high quality, accessible health care has made maternal death a rare event in developed countries, these complications can often be fatal in the developing world. Women risk death and disability each time they become pregnant. Women in developing countries face these risks much more often, since they bear many more children than women in the developed world, apart from other reasons.

At least 40 percent of women experiences complications during pregnancy, childbirth and the period after delivery. An estimated 15 percent of these women develop potentially life-threatening problems. Long term complications can include chronic pain, impaired mobility, damage to the reproductive system and infertility. Women’s poor health during pregnancy, inadequate care during delivery and lack of newborn care cause almost 8 million still births and neonatal deaths (death within one week of birth) each year. A study in Bangladesh found that a mother’s death sharply increased the probability that her children, up to age 10, will die within 2 years. This was especially true for her daughters.

Women’s risk of dying from pregnancy and childbirth varies by regions around the world:

All Developing countries -1 in 48

Africa -1 in 16

Asia -1 in 65

Latin America and Caribbean -1 in 130

All Developed countries -1 in 1,800


Europe -1 in 1,400

North America -1 in 3,700

Country-level differences are even more dramatic. For example, in Ethiopia, 1 out of every 9 women dies from pregnancy-related complications, as compared to 1 in 8,700 in Switzerland.

The Indian Scenario: Surveys, special studies or indirect estimation of MMR have been made to assess levels of maternal mortality in India. Estimates of MMR vary between 400-500 per 100,000 live births. According to World Health Organization (WHO) estimates, India accounted for 25.7 percent of maternal deaths in the world in 2000 (i.e. 136,000 out of 529,000 global maternal deaths occurred in India). This is the highest for any single nation in the world. Maternal mortality in India varies by region and state. MMR is higher in the eastern and central regions and lower in the north western and southern regions. Socio-economic variations are not well documented in India.

A report, “Advocating Accountability: Status Report on maternal Health and Young People’s Sexual and Reproductive Health and Right in South Asia”, prepared by South Asian Association for Regional Cooperation (SAARC) revealed the above figures about India, maintaining that the main cause was the unskilled birth attendants. The overall MMR of the SAARC region was 500 per 100000 live births, which is among the highest in the world. The region also accounts for approximately 7.2 million unsafe abortions annually according to the report.

Another report on “Maternal and Newborn Health”, released in Jaipur on January 24, 2009, by the UNICEF says about 8000 women and 1.17 lakh children die every year in Rajasthan due to complications arising out of pregnancy and child birth. While Rajasthan contributes about 7 per cent of the total live births in India, it accounts for 9.2 per cent of the total maternal deaths.

MMR under Sample Registration System (SRS) in some of the Indian States (1998):

Uttar Pradesh - 707 (As per January 2009 Report, Uttarakhand ranks first with MMR of 517)

Rajasthan – 670 (445 as per January 2009 Report, ranking 3rd at present in MMR)

Madhya Pradesh – 498

Bihar – 452

Assam – 409 (490 as per the January 2009 Report, ranking 2nd in terms of MMR)

Orissa – 369

West Bengal – 266

Punjab – 199

Kerala – 198

Karnataka – 195

Andhra Pradesh – 154

Maharashtra – 135

Haryana – 103

Tamil Nadu – 79

Gujarat - 28 (lowest)

All India – 407


There was an overall relative decline in maternal mortality of nearly 24 percent during 1997-2001. This included a 16 percent decline in the 8 Empowered Action Group (EAG) states of Bihar, Jharkhand, Orissa, Madhya Pradesh, Chattisgarh, Rajasthan, Uttar Pradesh and Uttaranchal. In contrast, MMR has fallen by only 7 percent in the southern states of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu. MMR has declined from 398 in 1997-98 to 301 in 2001-2003 in India according to a report on ‘Maternal Mortality in India: 1997-2003 – Trends, Causes and Risk Factors’. MMR is higher in the EAG states and Assam than in the other states in India. In 2001-03, lifetime risk of a woman dying during childbirth was 1.8 percent in the EAG states and in Assam, 0.4 percent in the southern states and 0.6 percent in other states.

UNICEF’s latest report, “State of the World’s Children – 2009” says that in India, more than two-thirds of all maternal deaths occurred in U.P., Uttaranchal, Bihar, Jharkhand, Orissa, M.P., Chhattisgarh, Rajasthan and Assam. Despite an increase in institutional deliveries, 60 per cent of women still deliver their babies at home.


Causes of Maternal Deaths and Complications (most of which occur either during or shortly after delivery):

Research shows that common risk factors for maternal deaths are: a mother’s age below 20 years or above 35 years, illiteracy, poor socio-economic status and lack of antenatal care. Some of the commonly identified factors include bad obstetric history, anemia, maternal complications and diseases, delivery by an unskilled person and unsafe abortions. These can be further elaborated:

During Pregnancy: The percentage of women who seek antenatal (pre-delivery) care at least once, is 63 percent in Africa; 65 percent in Asia and 73 percent in Latin America and the Caribbean. At the country level, however, use of such services can be extremely low. In Nepal, for example, only 15 percent of women receive antenatal care. Poor or negligible care during pregnancy is an important factor in aggravating death.

During Childbirth: Each year, 60 million women give birth with the help of untrained traditional birth attendant or a family member or with no help at all. Almost half of births in developing countries take place without the help of a skilled birth attendant (such as a doctor or midwife), which increase the cases of casualties during birth.

After Delivery: The majority of women in developing countries receive no post-partum (after delivery) care. In very poor countries and regions, as few as 5 percent of women receive such care.


Causes preventing women in Developing Countries from seeking/getting their needed Life-Saving Health Care include:


• Distance from health services;

• Cost (direct fees as well as the cost of transportation, drugs and supplies);

• Women’s lack of decision-making power within the family;

• Multiple demands on women’s time;

• Poor quality of services, including shoddy treatment by health providers, makes some women reluctant to use services;

Most maternal deaths, many health problems among women and children, and also the deaths of at least 1.5 million infants each year could be prevented through:

• Routine maternal care for all pregnancies, including a skilled attendant (midwife or doctor at birth);

• Emergency treatment of complications during pregnancy, delivery and after birth;

• Post Partum (after delivery) family planning and basic neonatal (within a week of birth of baby) care. Such care would cost about $3 per person per year in low income countries. Basic maternal care alone can cost as little as $2 per person per year.

• Improvement of women’s status alongwith support from their husbands and raising awareness about the consequences of poor maternal health. Families and communities must encourage and enable women to receive proper care during and after delivery.

An analysis of the causes of decline in MMR in various western countries such as Sweden, Holland and Denmark, reveals that introduction of skilled midwives to conduct deliveries has led to reductions in maternal deaths as much as 250-300 per 100000 live births.

EDUCATIONAL INVESTMENT IN DEVELOPING COUNTRIES

In the context of economic development, the educational product as a whole not only includes components of consumption (enjoyment of the fuller life permitted by education) and direct investment (increased earnings to the educated person, i.e. “internal” gains of education), but also “external” gains which accrue to other members of the community, i.e. the economic and social system at large.

The most important characteristic of educational investment is externality. This aspect of external benefits of education lies in the change in the social and cultural climate, incident to the widening of horizons, which education entails. At the same time, this benefit result is not an automatic consequence of general education, but only of the proper type, quality and quantity of education. Supply of professional people who cannot be absorbed into appropriate positions may readily become an external diseconomy and source of instability.

Apart from the factor of externality, educational investment has certain other characteristics:
The product of education outlays carries the joint features of consumption and investment. For this reason, the share of resources allocated to education cannot be considered wholly an investment outlay. The consumption component of education may be divided into current consumption (the delights of attending school) and the future consumption (the ability to appreciate life more fully later on). Future consumption being the major element, the consumption component is largely in the nature of a durable consumer good and hence investment. Thus the essential distinction is not between consumption and investment aspects of education, but between education investment which generates imputed income (fuller life later on) and education investment which generates increased factor earnings to the labour supplied by the educated person.

The imputed-income component of education tends to be of particularly great importance at the early stages of development. Extension of secondary education becomes the primary goal of education policy in countries with a low level of education capital stock with extension of elementary education and technical training at the next level of capital stick and expansion of higher education at a more advanced stage.

Secondly, investment in education is characterized by a gestation period which is substantively longer than that of many other types of capital formation. Periods of ten to twenty years may be involved, depending on how far the education process is carried, and even longer spans may be involved if teacher training is taken into consideration. Even though certain skills may be acquired fairly rapidly, especially if a previous foundation is laid, the educational capital stock cannot be changed quickly, particularly for the more advanced type of education. This is a constraint in investment planning requiring public policy guidance and planning.

A further feature of investment in education is the relatively long useful life of the educational asset as compared to other competing investments. Obviously, there may well arise a difference between the government’s and the private investor’s allocation of share for education in investment outlays. The relatively long, useful life makes it necessary that the type of education be chosen in order to meet future demands in particular skills. This applies more to specialized and technical education. Thus, educational planning in the context of a longer-term development view is essential.

Finally, the resource cost of education not only includes teachers’ salaries, buildings and equipment, but also the opportunity cost of lost income on the part of the student. Where there is a general surplus of labour supply, the opportunity cost of foregone earnings will be small or non-existent. Other components of education cost (school teachers’ salaries in particular) tend to be relatively high in developing countries. So, even though the income stream from a given factor input into education will be large, the rate of return on educational investments is therefore not as high.

Sensible education targets must be developed by considering the needs of the particular economy and the demands posed by its specific plans in order to absorb additional supplies of educated manpower. The matter of educational priorities is of vital importance. Unless the right kind of education is provided, setting overall targets has little meaning. Educated persons who are unable to find suitable jobs, fail to add to the national product and also become a source of political instability. Since the cost of various types of education differs greatly, the very setting of overall targets has to be based on the composition of education supply.

Whether undertaken privately or in the public sector, the necessity for investment planning cannot be denied. Left to household decisions, neither market knowledge, nor foresight nor financial requirements are present which are needed to secure adequate supplies. This is especially the case in developing countries where the whole attitude towards education has to overcome conventional barriers and become reoriented to the development process.

AGEING OF POPULATION

Ageing is an inescapable reality of human existence and a vital factor in the global demographic transition. According to projections by the UN Population Division, there will be two elderly persons for every child in the world by 2050. This implies that the aged 60 and above, which currently constitute less than 20 per cent of the world population, will account for 32 per cent of the population by 2050.

Moreover, according to the UN agency, future fertility levels in most developing countries is expected to fall below 2.1 children per woman, which is the level needed to ensure the long-term replacement of the population at some point in the 21st century. Thus, with higher life expectancy and lower fertility levels, there will be more of elderly and less of young people in the age structure. This changing balance between the age groups would create multidimensional socio-economic problems both in developed countries (acute manpower shortage, for instance) and developing countries.

In India the age structure (urban) according to 2006 estimates was: 30.8 percent in the 0-14 age group, 64.3 percent in the 15-64 age group and 4.9 percent in the age group 65 years and above.

The average age of Indians is 26 years. Hence, talking of an old-age crisis in a country where nearly two-thirds of the population are below the age of 30 appears ludicrous, but there is no denying the problem. For countries like India and Thailand , it will take only 25 years for their aged population to get doubled. The population of senior citizens, aged sixty and above, in India has increased from 42.5 million in 1981 to 55 million in 1991 and then to 70.6 million in the 2001 census. They comprise about 6.9 per cent of the total population. It is estimated that the number of older persons will grow to 137 million by 2021 in our country.

In India, provisions have been made under legislations such as the Code of Criminal Procedure,1973 and the Hindu Adoption and Maintenance Act,1956 to enable aged parents with insufficient resources to meet their needs. However, the process under these legislations is cumbersome and time consuming. The Government of India adopted the National Policy for Older Persons in 1999. Recognizing that financial security is one of their needs, the Government of India commissioned a National Project titled 'Old Age Social and Income Security' (OASIS) in 1999 with an aim to draw up a comprehensive plan for the financial security of workers on retirement and old age in sectors where no formal arrangements for post retirement have been made. The Government covers around 32 million workers and their families under schemes for provident funds and health and insurance facilities. However, there is a need to reach out to many more who do not have access to such schemes and would be rendered vulnerable on attaining retirement and old age. The Older Persons (Maintenance, Care and Protection) Bill, 2005 which subsequently became an Act will hopefully meet this need.

The nations of the world had gathered at Vienna in 1982 for the First World Assembly on Ageing and brought out the International Plan of Action on Ageing. The Plan of Action was drawn up with clear understanding of the implications that the increase in the ageing population would have on the socio-economic structure of both the developed and developing countries. The basic aim of the Plan of Action

was to ensure that ageing is both a graceful and a productive process. The Second World Assembly on Ageing was at Madrid in 2002, which focussed on ageing agenda with current global developmental issues. Across the globe, steps have been taken by various countries such as the United States, Canada, the United Kingdom, New Zealand and Germany to provide social security systems for the elderly and other disadvantaged groups. Such systems ensure that senior citizens are not deprived of their most basic needs when they lack the resources to fulfil them.

The role of Non-governmental organizations is crucial in promoting the welfare of the aged. The Government of India provides financial assistance to NGOs for certain projects aimed at providing shelter and meeting recreational and medical needs of the elderly. Special privileges like old age pension, tax concessions and various amenities in the transportation and health services, provision of services at the grass root level by NGOs and emerging civil society groups which proactively voice the concerns of the aged are some of the encouraging developments in our country.

In India it is the last stage of life that society accords the highest respect and prestige to an individual. This is why old age home concept, though not alien, is rare in Indian families. However, globalization and its economic effects, is causing a silent and invisible transformation within the social structures. Fragmentation of the traditional family network is leading to an erosion of the available support within the immediate and extended family. Migration of younger generations from rural to urban areas and from one urban centre to another and transnational migration results in the elderly persons being left out to fend for themselves at a time when family support becomes more necessary. This has increased insecurity and loneliness among the geriatric (elderly) population. Poor financial status, physical and mental disorders and guilt of being dependent on others are some of the problems nagging the elderly population in India and other countries around the world. An ageing society will give rise to special problems from health, family and social angles.

Besides shelter, medicare and nutritional problems, the elderly population in India also faces a multi-dimensional socio-psychological pressure. A paper on the mental health of the ageing population by Dr. Vikram Patel and Martin Prince, points out that in the developing world, including India, the aged with psychological problems do not get the required medical attention. In particular, the study found that while dementia is considered a normal process of ageing that a doctor cannot help much, depression is rarely diagnosed or treated. An increasing number of older persons are also falling prey to other geriatric diseases such as rheumatism, arthritis, osteoporosis and cardiac complications. An in-depth study by the New Delhi-based All India Institute of Medial Sciences (AIIMS) found that elderly women are affected more by dementia, depression and psychosomatic disorders than their male counterparts. According to this study, the population structure of the elderly is dominated by poorly educated women, economically dependent on children without any tangible authority or status in the family.

Apart from the serious social crisis, there is an important fiscal angle to the problem of ageing, as large proportion of the resources meant for developmental activities will have to be diverted to take care of the needs of the elderly population. For, as a study done by Gautam Bhardwaj of the Invest India Economic Foundation (IIEF), a think-tank that works on the pensions sector, and ex-UTI chief Surendra Dave estimates, providing a pension cover for just the civilian employees of the central and state governments adds up to 55 per cent of the country's GDP. Less than a sixth of those about to retire in the next decade are covered by some form of pension, and only 2 per cent of those not working in government (where pensions are generous) will be able to fund their retired lives if they cut expenses by half, according to an all-India survey done by the IIEF.

Very little attention has been focused on the pitiable plight of the elderly population in rural areas of the country. Field studies pertaining to the problems of the aged in rural India reveal that deteriorating health and economic insecurity are the most pressing problems facing the elderly population in the villages in the absence of financial support from family and old-age pension schemes of the State governments. Inspite of their poor physical and mental health, the aged males are forced to work to eke out a living.

While the problems of the aged often cut across national boundaries and have almost an equal impact, there are bound to be some differences both in perceptions and actual ground realities from nation to nation. Unfortunately, the concept of a welfare state where many of the needs of the ageing population are taken care of by the state is being criticized by agencies, such as the World Bank, which are keen that governments provide only minimum levels of social security to the elderly population groups.

Ageing is an ongoing process. The population of older persons is increasing every year and the changing social order is not always conducive to their well being. Striking a balance between aspirations of the young and the rights of the aged members of society is a daunting task for any nation, particularly for economies in transition such as India. In this context, it must not be forgotten that the elderly people in their productive spans of life have made significant contributions. Awareness programmes relating to traditions of the country, importance of values, morals, ethics etc.should be organised frequently to educate the younger generation to respect and care for their seniors. Moreover, steps may be taken to promote schemes such as the ‘adoption of senior citizens’ by persons or families having means as a welfare measure. Such a scheme would not only provide financial security to senior citizens, but also create a sense of belonging. Sometime back, the UN Secretary General Kofi Annan, while referring to the ageing population had observed: "Trees grow stronger over the years, river wider and like with the age, human beings gain immeasurable depth and breadth of experience and wisdom. That is why older persons should not only be respected and revered but they should be utilized as the rich resource to society that they are".

Interrelationship between Primary, Secondary and Tertiary Sectors

People are engaged in various economic activities within the economy. There are several ways to group them: primary/secondary/tertiary; organized/unorganized; and public/private. These groups are called sectors.

Primary Sector: There are many activities that are undertaken by directly using natural resources. For example, the cultivation of cotton. Cotton production depends mainly (though not entirely) on natural factors like rainfall, sunshine and climate. So cotton is a natural product. Similarly, in case of activity like dairy, we are dependent on the biological process of the animals and availability of fodder etc. The product milk is a natural product. Minerals and ores are also natural products. When we produce a good by exploiting natural resources, it is an activity of the primary sector. This is because it forms the base for all other products that we subsequently make. Since most of the natural products we get are from agriculture, dairy, fishing, forestry, this sector is also called agriculture and related sector.

Secondary Sector: This sector covers activities in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activity. It is the next step after primary. The product is not produced by nature but has to be made and therefore some process of manufacturing is essential. This could be in a factory, a workshop or at home. For example, using cotton fibre from the plant, we spin yarn and weave cloth. Using sugarcane as a raw material, we make sugar or gur. We convert earth into bricks to make houses and buildings. Since this sector gradually became associated with the different kinds of industries that came up, it is also called as industrial sector.

Tertiary Sector: After primary and secondary, there is a third category of activities that falls under tertiary sector. These activities help in the development of the primary and secondary sectors. But these activities, by themselves, do not produce a good but they are an aid for the production process. For example the goods that are produced in the primary or secondary sector would need to be transported by trucks or trains and then sold in wholesale and retail shops. At times, it may be necessary to store these in godowns. We may also need to talk to people or send letters/mails (communicate) or borrow money from banks to help production and trade. Transport, storage, communication, banking, trade are some examples of tertiary activities. Since these activities generate services rather than goods, the tertiary sector is also called the service sector.

Service sector also includes some essential services that may not directly help in production of goods. For example, we require teachers, doctors and those who provide personal services such as washermen, barbers, cobblers, lawyers and people in administrative and accounting works. In recent times, certain new services based on information technology such as internet café, ATM booths, call centres, software companies etc have become important.

Thus it is clear that the various economic activities, though grouped into three different categories, are highly interdependent. Further examples of economic activities can be cited which shows how the three factors are dependent on each other.

(a) Farmers sell sugarcane to a particular sugar mill. If these farmers refuse to sell sugarcane, the mill will have to close down. This is an example of the secondary (industrial) sector being dependent on the primary sector. The manufacturing sector depends on the primary sector for raw materials.

(b) In turn, the primary sector depends on the secondary sector. One aspect of dependence is the fact that the output of the former is used as inputs in the latter. If fabric manufacturers decided not to buy from the Indian market and import all cotton from abroad, the plight of the Indian cotton cultivators is unimaginable. Indian cotton cultivation will become less profitable and the farmers may even go bankrupt, if they cannot quickly switch to other crops. Cotton prices will fall. The other aspect is that output of the manufacturing sector is used as inputs in agricultural production. For example, farmers buy many goods such as tractors, pumpsets, electricity, pesticides and fertilizers. If the prices of fertilizers or pumpsets go up, cost of cultivation of the farmers would rise and their profits would be reduced.

(c) People working in industrial and service sector get the food that they need from the primary sector. If the farmers decide not to sell their products food will become scarce and workers of the industrial and tertiary sectors will suffer. On the same footing, if there is a strike by transporters and lorries (service sector) refuse to carry vegetables, milk and other food items from the place of their production to the markets, the farmers will be unable to sell their products.

(d) The industrial sector thrives on the services from the tertiary sector and the existence of the service sector would be meaningless if it had no services to render to the other two sectors.