Impact of digitalisation on the Indian banking sector - The Daily Guardian
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Impact of digitalisation on the Indian banking sector

Chetna Alagh



Digitalization is the new buzz or the latest expression in all the sectors. It refers to the use of digital technologies to change a business model and further provide new revenue and value-producing opportunities. The world has seen a rapid advancement in technology over the past several decades. Technology has left an indelible mark on everything and anything that human beings can fathom. There has been seen technology outburst in all sectors and banking has been one of the sectors to adopt information technology. All over the world, banks are making a tremendous stride towards digitalization to cope up with the competition and provide their clients with the best services.


“Digital Banking” refers to digitalizing the traditional methods of banking to conduct banking transaction more smoothly. Contrary to traditional banking, digitalized banking aims to make versatile computerized products and services to fulfil the requirements of their digitalized clients. The introduction of digital banking has revolutionized the banking sector and modified the entire procedure bank transfers, it has facilitated the purchasers assisting them to see their account details, pay online bills and transfer money from one account to the opposite during a faster way. This has helped the end-user to enjoy a methodical financial life, further embracing hassle-free online banking.

The need for computerization was felt within the Indian banking sector within the late 1980s, where there was a need to enhance the customer service, book-keeping and MIS reporting. In the late 1980s, India was marred by various financial reforms and therefore the banking sector felt a requirement to enhance customer services and computerization of recording and accounting of knowledge. A committee was found out in 1988 by the Federal Reserve Bank of India which was headed by Dr C. Rangarajan to review Computerization within the Banking Sector. After the introduction of the Liberalization, Privatization, and Globalization (LPG) policy, the method of digitalization picked up the pace alongside the change within the Indian Economy.

The method of computerization gained pace with the reform within the Indian economy in 1991-92 at the time when private and foreign banks entered the Indian market meaning to digitalize the economy and improve the services provided by the general public sector banks to the purchasers. 1996-1998 were the years of internet banking/e-banking adoption in India after which, within the year 2000, the govt of India enacted the Information Technology Act, 2000 to provide legal recognition to electronic transactions and other means of electronic commerce.

The digitalization within the banking sector is often seen in India since the establishment of ATMs. Further developments like Telebanking, Electronic Compensation Service, Electronic Funds Transfer system, MICR, RTGS (Real-Time Gross Settlement), Point of sale terminal, etc. are often seen within the banking sector. E-banking has resulted in reducing costs drastically and has helped generate revenue through various channels. Various steps and initiatives had been adopted by the RBI and National Payment Corporation of India in strengthening the Payment and Settlement Systems in banks just like the launch of United Payments Interface (UPI) and Bharat Interface for Money. It is due to such initiatives and platforms, customers now don’t have to store or carry cash alongside them anymore, they will now make transactions anywhere at any time.


Today banks aim to provide fast, accurate and quality banking experience to their customers. Today, the topmost concern for all the banks in India is digitization.

The Indian Government is at a high rate is promoting digital transactions. The launch of the United Payments Interface (UPI) and Bharat Interface for Money (BHIM) by National Payments Corporation of India (NPCI) are the 2 major significant steps for innovation within the Payment Systems domain in India.

UPI is a mobile interface where people can make instant funds transfer between accounts in several banks supported virtual address.

As per the RBI Report of 2016-17, there are 2,22,475 Automated Teller Machines (ATMs) and 25,29,141 Point of Sale devices (POS). Implementation of electronic payment system like NEFT (National Electronic Fund Transfer), ECS (Electronic Clearing Service), RTGS (Real Time Gross Settlement), Cheque Truncation System, Mobile banking industry, Debit cards, Credit Cards, Prepaid cards have all gained wide acceptance in Indian banks. These are all remarkable landmarks within the digital revolution within the banking sector. Online banking has changed the face of banking and has achieved an important change in banking operations.

National Electronic Funds Transfer (NEFT) is that the most ordinarily used electronic payment method for transferring money from any bank branch to a different bank in India. It operates in half-hourly batches, at the present, there are 23 settlements.

Real-Time Gross Settlement (RTGS) is primarily used for high-value transactions which are supported ‘real-time’. The minimum amount to be remitted through RTGS is Rupees Two Lakhs. there’s no upper limit.

Immediate Payment Service (IMPS) is a moment electronic funds transfer facility offered by National Payments Corporation of India (NPCI) which is out there 24 x 7.

The usage of Prepaid payment instruments (PPIs) for the acquisition of products & services and funds transfers has increased considerably in recent years. Transactions through PPI Cards which include mobile prepaid instruments, gift cards, foreign travel cards, corporate cards & mobile wallets have jumped drastically from Rs.105 billion and Rs. 82 billion respectively in 2014-15 to Rs. 277 billion and Rs. 532 billion respectively in 2016-17.


Artificial Intelligence has acted as a backbone in the E-Banking and has continuously been contributing to the banking industry for a very long time to provide a greater level of value to us, reducing the risks, providing better opportunities as the financial engines of our modern economy.

AI is helping with the coming up innovations and transforming the way the needs of the clients are fulfilled and acts as a major role. Artificial Intelligence is also working on providing personalized support, better customer experience, time-efficient, reduced risks and cost-saving.

Better performance, higher profitability, and risk reduction are the three main goals which banking and financial sectors are trying to achieve at the moment to keep up with the competition in the world.

In this data-driven world, performance is dependent on those big data technologies which can store and manage data in real-time. Banks even have to mandatorily lend loans at a lower rate of interest to priority sectors like agriculture, housing, education. Data Analytics has played an important role in reducing cost, development and increasing client base for the banks.


Digital banking lately is not just confined towards using the web to access the banking services, as is typically perceived, however, it likewise incorporates of a whole exhibit of banking services delivered or consumed using technology. Advantages of digitalization within the banking sector are:-


Digitalization within the banking sector has offered the use of various sorts of services by sitting reception alongside no time restrictions. It has also reduced the gap between rural and concrete areas. With the digital payment modes or through E-Banking one can send money from one account to the other account of any bank branch from anywhere and anytime. Modes like USSD (Unstructured Supplementary Service Data), E-Wallets, UPI, Paytm other banking applications allow us to try to do so.


Digitalization has offered us to take care of our record, track our spending and budget planning. By using online applications, we get a record of each transaction we make. Applications automatically record the transactions within the passbook or simply have the records maintained inside the E-Wallet App. Thanks to digitization, more data are going to be available to banks. Banks can make use of digital analytics to form sound data-driven decisions. The threat of faux currency is going to be reduced as there’ll be a rise in cashless transactions.


Digitalization has created a simple and convenient lifestyle for the purchasers and therefore the financial organization, as now the utilization of physical cash has become very less as compared to digitalized cash and there’s no need carry along loads and a lot of cash from one place to another. The danger of human error has minimized which has led to a rise in consumer loyalty. Services like NEFT (National Electronic Fund Transfer), RTGS, etc. have also made it easy to transfer the amount from one bank to another very conveniently and quickly.


One of the good advantages of online banking is online bill pay. instead of having to write down checks or fill out forms to pay bills, once you found out your accounts at your online bank, all it takes is just simple click — or maybe less, as you’ll usually automate your bill payments. With online bill pay, it’s easy to manage your accounts from one central source and to trace payments into and out of your account.


Many discounts were announced by the govt and therefore the financial institution to encourage digital payments. If one uses digital modes for a payment up to 2000 INR, one gets full exemption from service tax. Nowadays many mobile application operators also provide some incentives like cash back and other promotional offers which have also provided benefits to the consumers. One also gets 75 per cent discounts on fuels and 10 per cent discounts on insurance premiums of state insurers etc.

Challenges Involved in Digitalizing Banking Activities

Digitalization has many obvious advantages such as accessibility to information, easy and immediate communication, low cost, reduced time and ability to share information, new jobs, and increased commercial competition. Even though there are plenty of advantages in going digital and enjoying the comfort of going digital but digitization in banking does not come without disadvantages. Below is a list of some of the challenges faced due to digitalization in the banking sector:

Cybercrime: Cybercrime is the use of digital instruments to further illegal ends, such as committing fraud, violating privacy, or stealing identities. This mode does not require the physical presence of the person, and one can execute such a crime from a faraway place, sitting comfortably in front of their computer/mobile screens. As the information and services have been digitalized the risk has been increased for both the bank and the consumer.


There is an immense feeling of consolation while using smartphones with various applications and features. The introduction by banks and financial institutions of application has progressively offered comfort and extravagance of observing costs at anywhere and time. It has made it easy for consumers to enjoy the services provided by the bank through mobile applications. But these associations have omitted that for several people these services are inaccessible as some can’t afford mobile and a few don’t skill to work these applications. Nonetheless, most of those applications are frequently ridden with bugs and also face various performance issues. it’s hard to explore these apps, once in a while, and that they frequently crash.


Worldwide, business-oriented banks like Chase have global transaction capabilities, like the power to send payments to quite 35 different currencies worldwide, that online banks won’t be ready to master. Without a real-world presence, most online banks can’t even offer the services of a notary, which require an in-person visit and necessary for many important financial transactions like buying a home.

Decreasing Quality at the cost of Speed: In the surge of wanting to convey products and services at an accelerated speed, companies regularly tend to compromise on the standard of the application. The standard-issue is that there’s nothing of the type as a touch bug; a bug may be a bug; it can harm the smartphones easily. There are a couple of cases of associations purposely choosing to disregard deserts in products and programming even before the thing hit the market.


Technology isn’t constant, it always keeps on evolving. As technology develops, more and more banking services are digitized to deal with the competitive market. Thus, it becomes difficult for consumers to stay up with these advancements and learn accordingly. As an example, an adult man after learning the banking application with difficulty started using it but some days later as technology advances, new features and updates are released by the bank on its applications then it again becomes difficult for that man to find out the updated app which mostly happens in the older population of the society and then they have to go back to the traditional ways of banking.


The main issues which are mainly faced by the banking authorities is the issue of authentication of their customers. The instructions which have virtually been provided by the Customer have originally been lodged or requested by him/her only or someone is personating on behalf of him is the main issue. Even after enacting various different measures like OTP, PIN, SMS/CALL verification relationship numbers, customer ID, etc. for securing the authentication of the consumers, the Bank and Cyber Frauds are increasing day by day and have emerged as a major challenge before the Cyber Cells and the concerned authorities.


Superheating the marketplace by offering imaginative services isn’t simply wanted, yet also, it required remaining on top of things and attracting a good customer base. Particularly with a huge base of youthful users, it becomes imperative to acknowledge the institution within the consistently becoming and competitive marketplace. In any case, financial institutions are frequently reluctant to require the jump, as they know that things can reverse discharge and cause moment reactions from perturbed customers.


E-Banking is no different business it is just banking utilizing Internet Channels. Banking is directed by RBI under RBI Act Subject to licensing Law regarding Electronic documents which are contained in the Information Technology Act 2000 as amended by the Information technology Act 2008.

Various provisions of law, which are applicable to traditional banking activities, are also applicable to internet banking. However, this does not overcome various problems, and therefore there is an urgent need for introducing stricter rules and regulations specific to meet the problems of e-banking. The legal framework for banking in India is provided by a group of enactments, viz.

The Banking Regulation Act, 1949; the Reserve Bank of India Act, 1934 and Foreign Exchange Management Act, 1999 are few among many such legislations. It is mandatory on the part of all entities to obtain a license from Reserve Bank of India under Banking Regulations Act, 1949 to function as a bank. Besides, banking activities are also influenced by various enactments governing trade and commerce, such as The Indian Contract Act, 1872, the Negotiable Instruments Act, 1881, Indian Evidence Act, 1872, etc.

Even after having a plethora of laws regulating e-banking yet there exists a grey area, which has neither been spelt out properly nor has there been any workable modes of implementation suggested by the Constitutional institutions.


Business Analytics and AI (AI) has the potential to bring a serious change. Robotics, enabled by AI, is predicted to be the longer-term game-changer within the banks. Many private banks are getting to deploy Robots for customer service, investment advisory and credit-approval process to enhance the services and be cost-effective within the end of the day. Digital Banking is going to be the foremost preferred sort of banking within the coming years.

Indeed, even as the COVID-19 pandemic claims a harsh cost for the economy, it’s catalyzing digital transformation across business models, channels and touchpoints. Fundamental this move is that the requirement for more noteworthy hierarchical nimbleness likewise as closer binds with clients during a changing world request. the technique for computerized change, in any case, is unpredictable and tedious for organizations likewise as buyers. Banking and payments, basic mainstays of the economy, are among the center territories that have seen a genuine uptick in computerized contributions and selection. While going advanced isn’t new, the pandemic has fundamentally quickened the reception of computerized innovations, with extensive ramifications for the more extended term of the financial area.

The digitalization has grown in every sector. As all the things have pros and cons, the same goes for the digitalization in the field of banking. The cons of digitalization carry the danger of fraud. The Linking of bank accounts with other Information’s have led a way for the criminals. The only way out is to have strict rules and regulations and the security system needs to be revised. The digitalization cannot be taken back to the old way but, the new way can be made safer with stringent rules and regulations.

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Pankaj Vohra



Virat Kohli, the country’s most successful Cricket Captain had to give up his position due to politics within the Board of Control for Cricket in India (BCCI). It is apparently an array of the non-cricketing reasons that have compelled him to step down, and it would become a very difficult job for the administrators of the game to find his replacement. Kohli made this public declaration of relinquishing his Captaincy after first informing his own teammates and Head Coach Rahul Dravid besides speaking with BCCI secretary Jay Shah. The announcement has left Cricket fans shell-shocked and the entire Cricketing fraternity throughout the world has hailed King Kohli as one of the best in the game and someone whose contribution in making India, amongst the topmost cricket-playing nations is an acknowledged fact. While it is for sports writers and experts to figure out how the team shall be rebuilt, there are reports that Kohli was likely to be served a show-cause notice for publicly contradicting the BCCI president Sourav Ganguly on the issue of giving up the T-20 Captaincy, before the team embarked for the South African Tour. It was to pre-empt the show cause notice that he took this drastic decision. It goes without saying that after the exit of Ravi Shastri as the Indian Coach, Kohli had very little support left, and it would have been a matter of time that he would have quit.

Dravid is a legendary all-time great of the game but his and Kohli’s personalities are totally apart. There has also been a lot of politics within the Board where the West Zone has regained control of matters and has the final say in major decisions including team selection. The complexion of the Indian team shows how certain players have made it to the squad due to regional bias that has triumphed over merit. Kohli had made the Indian side into a fighting force that was feared by all Cricketing countries. In the pre-Kohli era, whenever team India lost on a foreign tour, fans would accept the outcome. However, after Kohli took over the leadership role, the expectations were always high and the recent loss to South Africa was described by everyone as “an upset”. This was Kohli’s influence over the game and his teammates.

Sunil Gavaskar, perhaps the greatest Indian batsman ever, feels that giving up Captaincy would help Kohli to concentrate on his batting. His opinion is that many more centuries would now flow from Kohli’s willow in the next five or six years of Test Cricket he shall play, given his exceptional fitness levels. India has to look for a new leader who can lead from the front and earn the respect of all the teammates. Rohit Sharma and KL Rahul are the front runners but one cannot rule out R. Ashwin to be in the reckoning also. Gavaskar is of the view that Rishabh Pant would make a very good Captain. However, the Board must seriously consider Ajinkye Rahane even though he has not been in the best form of his life. His Captaincy in Australia had been extraordinary and from the current crop of players, he would be a very good choice during this transitional phase till a new leader can be identified.

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Just a ‘security breach’ or a sinister plan?

Unsurprisingly, after the inexplicable dereliction of duty by Punjab administration and police, defiance of all the existing protocols and sheer disrespect of the Constitutional authority, the Congress regime made a mockery of the incident.

Ashish Sood



The unprecedented breach in the security of the Prime Minister of India has left the entire nation shocked and aggrieved. It is difficult to believe that the cavalcade of the world’s most popular leader gets stranded for more than twenty minutes over a flyover merely ten kilometers away from the Pakistan border. Historically speaking, India has never witnessed a security lapse of such a magnitude where busloads of protestors brazenly obstruct the PM’s convoy. The casual and high-handed manner in which the security of the PM was handled is even more shameful and raises serious doubts upon the intention of the Congress government in Punjab.

The absence of the Chief Minister, DGP and Chief Secretary of Punjab for the customary reception of PM, false assurances of route clearance given by DGP and refusal by CM Channi to get on the phone for resolving the issue goes fundamentally against the ethos of democracy and is sufficient to raise a cloud of suspicion. Unsurprisingly, after the inexplicable dereliction of duty by Punjab Administration and Police, defiance of all the existing protocols and sheer disrespect of the Constitutional authority, the Congress regime made a mockery of the incident. While the situation demanded an immediate and prompt response from the CM as the security of the supreme elected head of the state was under threat, he preferred to engage himself in whataboutery. He candidly questioned the need for opting the land route despite being well aware that the weather conditions were not conducive for a safe flight. Is it not enough to suggest that the Congress desired the Prime Minister to meet the same unfortunate fate as that of first CDS Late Gen. Bipin Rawat and thirteen others who succumbed to a plane crash recently?

The other Congress leaders reduced the security lapse to a narrow prism of another political stunt, completely putting a blind eye to the potential threat faced by the PM from global terrorists for enjoying an overwhelming popularity across the world. However, the glaring gaps in security must not be seen as an isolated event rather it just seems to be a tip of an iceberg. It reeks of a larger sinister plan to create unrest in Punjab and the rest of India. It would not be absurd to say that the Congress has a predominant role in fueling up this conspiracy against the nation. According to media reports, the DGP of Punjab got in touch with senior members of the government and conveyed his inclination to use ‘force’ to disperse the protestors but he was told to exercise restraint. Without paying any heed to the fact that the security of the PM is sine-qua-non to maintain stability in the country, he was further ordered to not do anything which could put the state government in a fix. One of the leaders of the protestors has publicly admitted that he was informed by the SSP of Punjab Police about the route of the PM’s convoy whereas the existing norms do not allow anyone to disclose this fact. It undoubtedly hints towards the mala-fide intentions of the Congress government to create another riot against Sikhs with an aim to whitewash its own blot of 1984 killings.

It is an established fact that Congress can stoop to any low to retain its power. The security personnel deployed at the spot where PM’s cavalcade was stuck were seen enjoying tea with the protestors. What were the reasons that compelled the celebrated Punjab Police to act so loosely? This shameful display of connivance of Police officials with the protestors cannot be made possible without political patronage from the Congress leaders in power. In the 1980s, Congress supported extremists to dethrone Akalis and dissociate them from Sikhs in order to gain power. In the process of achieving its political goals, it set the peaceful environment of Punjab on fire as mayhem surrounded the entire region. As a result, Punjab witnessed mass killings, terrorist attacks and separatist insurgency, ultimately leading to the mysterious ends of many of its leaders including the assassination of Prime Minister Late Indira Gandhi. Sadly, Congress leadership doesn’t want to learn from its own doings in the past and has restarted echoing the voices of secessionist elements. The blatant appeasement of the fervid proponents of Khalistan by Congress who created ruckus in the recent farmers’ agitation sends a clear message that it will do anything to retain power, even if it means another partition of India.

Moreover, it cannot be a coincidence that three terrorists were arrested from around the same sensitive region soon after the incident. A few videos surfacing over the internet which were uploaded a year ago eerily reflect the similar events which transpired during the security breach. The FIR registered against 150 unidentified persons after the incident does not mention the security breach rather it only deals with the obstruction in any public way attracting a penalty of meagre two hundred rupees. Thus, the aftermath of the incident is self-explanatory and indicates Congress’ deep plunge into the murky waters of depravity and moral turpitude.

Once a prominent leader of Jana Sangh, Balraj Madhok had famously remarked that if Congress is malaria, Communists are a plague. This comparative analysis of both the ideologies has taken a new turn in the contemporary parlance. The recent turmoil created by Congress suggests that it has unhesitatingly adopted the Communist’s infamous goal of anarchy. This thirst of grabbing power at the cost of compromising PM’s security makes the situation even more worrisome and uncannily resembles a deadlier pandemic for a vibrant constitutional democracy like ours. Though this incident has unraveled many nefarious agendas of the Congress party but a plethora of questions still remain unanswered. It cannot be outrightly denied that the protestors and police were certainly hand in gloves with those at the top levels acting in cahoots. The people of Punjab have witnessed misgovernance and complete collapse of law and order in the past one year and hence, they will take the Congress party to task by voting them out of power in the upcoming elections.

Writer is the Co-Incharge BJP, Jammu & Kashmir Affairs. Views expressed are the writer’s personal.

Congress leaders reduced the security lapse to a narrow prism of another political stunt, completely turning a blind eye to the potential threat faced by the PM from global terrorists for enjoying overwhelming popularity across the world. However, the glaring gaps in security must not be seen as an isolated event rather they just seem to be the tip of the iceberg. It reeks of a larger sinister plan to create unrest in Punjab and the rest of India.

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Pankaj Vohra



Yogi Adityanath

Desertion by several OBC leaders from the Bharatiya Janata Party on the eve of the Uttar Pradesh Assembly elections could spell trouble for Chief Minister Yogi Adityanath and come in the way of his second consecutive term. In fact, the momentum seems to be shifting towards his principal challenger, Akhilesh Yadav in the run-up to the crucial polls that have been described by several political pundits as the semi-final before the finals in 2024. The desertions by prominent leaders such as Swami Prasad Maurya, Dara Singh Chauhan, Dharam Singh Saini, Avtar Singh Bhadana, Madhuri Verma and Roshan Lal Verma amongst others, also reflects that there were a large number of issues that remain unaddressed by the Yogi government. It is evident that the government was perhaps thriving because of high voltage publicity and divisive politics.

The BJP has tried to underplay the decision of these leaders amidst claims that at least 100 more prominent functionaries from the State may similarly leave the party in the near future. What should be worrying for the ruling dispensation is that its political narrative so far, could even damage the Narendra Modi brand. Modi is the undisputed political leader in the country and since his name and performance is being also projected as plus points for the BJP, a major problem could arise in the event the Saffron Brigade loses the plot in the most populous state of the country. In view of the unfolding developments, it would not be surprising that the double-engine slogan of the party, to lay emphasis on the development of the state, due to the close coordination between the Centre and the Yogi government may be amended in order to shield the Prime Minister. The outcome of the UP polls would have wide ranging ramifications and could even impact the Presidential elections later this year.

If the BJP is unable to secure majority of its own, it would be very difficult for the central leadership of the party to decide on a person of its first choice for the top position. The choice could narrow down to someone who is also acceptable to sections of the Opposition or States, which otherwise are opposed to the BJP and its allies. Therefore, the BJP shall have to pull a rabbit out of its hat to upset the existing calculations which seem to be projecting an easy win for Akhikesh, notwithstanding the overwhelming projections in favour of the ruling party in most opinion polls. This is also a wake-up call for the BJP Parliamentary Board and the Sangh Parivar that they should stop taking things for granted and believe only in their own caste formulas, rather than the emerging situation on the ground. In the past three Assembly polls, Uttar Pradesh has given a convincing mandate to whichever party won. In 2007, it was for Mayawati, in 2012 it was for Akhilesh and in 2017, for the BJP. Therefore, if the trend continues, then it would again be a repeat of a one-sided election in favour of whoever wins ultimately. The reason for these desertions is that the Yogi government has been engaged in hyping the issues close to its agenda while ignoring the concerns of those who are leaving or have left. The most obvious inference is that in pursuance of Kamandal politics, the BJP underestimated the threat from Mandal politics. The consequences of these resignations, if they go against the interests of the party, could put a question mark over Yogi’s ability to lead. He is desperate and to send a polarizing signal, he recently talked about the contest between 80 percent who favoured development, and 20 percent who were against it.

The figures alluded to the religious ratio within the State where Hindus constitute 80 percent and the Muslims 20 percent. Yogi’s critics have urged the Election Commission to take notice of this loaded and communal reference by the Chief Minister which allegedly constituted violation of the Model Code of Conduct. However, Yogi is undeterred and knows that if he wins, he would truly emerge from the shadows as a leader who could be in the reckoning for a top slot in the post-Modi era. It is equally true that if Akhilesh Yadav wins the 2022 Assembly polls, he would alter the Opposition’s current equations regarding a collective plan to contest the 2024 Parliamentary polls since he would be a claimant for the leadership of the coalition as well. Interesting times are here and the Uttar Pradesh saga could spring up many more surprises as the election process progresses.

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Is the Arab world ready for a post-oil future?

In terms of preparing for a post-oil future, GCC governments will need to curtail public services, benefits, and jobs even further, while also curbing opportunities for rent-seeking in the private sector.



Since the 19th century, oil has been one of the world’s major energy resources. Oil meets 33% of global energy demand, but oil demand may begin to decline sooner than expected due to renewable resources trends around the world and technological advancements. Arab countries in the Gulf region are beginning to take precautions through diversification as they need to transform their oil-dependent economies. The issue of economic diversification has taken on new urgency in the Persian Gulf countries. The global economic slowdown induced by the coronavirus pandemic has pushed the price of Brent crude oil from $64 a barrel in early 2020 to $23 a barrel in April 2020.

For decades, GCC countries have been concerned about the long-term viability of their hydrocarbon revenues. In the long run, oil and gas reserves will deplete. Bahrain and Oman are the most vulnerable, with reserves expected to run out within the next decade for Bahrain and within the next 25 years for Oman. In the short term, GCC countries have already begun to tap into $2 trillion in financial assets amassed over decades and invested in sovereign wealth funds for future generations. The International Monetary Fund (IMF) predicted that unless GCC countries implemented significant fiscal and economic reforms, their conserved wealth would be depleted by 2034.


Natural resources abound in the Gulf Cooperation Council (GCC) countries. They have been using this wealth to improve the lives of their citizens, developed infrastructure, constructed modern cities and plan for a future without oil, they have made significant progress in their objectives.All have Human Development Index scores above 0.8, putting them ahead of all other Middle East and North African (MENA) countries and on par with some European Union countries (EU).

The GCC countries, on the other hand, have struggled to make progress on the third goal: diversifying their economies. Despite their good intentions, mirrored in their national visions and economic development plans, the GCC economies remain pig-headedly keen about hydrocarbons.Thus,for economic diversification to be sustainable, other essential ingredients must be present, such as moderate government spending, increased non-oil exports, and even more foreign direct investment (FDI).

While GCC members have made significant headway over the last decade, oil and gas production continues to account for more than 40% of gross domestic product (GDP) in most countries, excluding the United Arab Emirates (UAE) and Bahrain. Nonetheless, oil and gas royalties directly fund a large portion of the region’s other economic activities, such as construction and infrastructure development. For Bahrain, oil accounts for a minor share of GDP because the region’s oil reserves have been depleted; yet, oil continues to underpin economic activity indirectly through transfers and expenditure from neighbouring nations. Consequently, though efforts have been made to diversify government finances, hydrocarbons account for 70% or more of overall revenue in all countries except Saudi Arabia (68%) and the United Arab Emirates (UAE) (36%). Nonetheless, many of the diverse revenue streams in those two countries are supported by petroleum economic activities.

The Gulf countries do manufacture goods and services within their borders, principally for domestic usage. These embody Agricultural products, manufactured items, and business services are examples of them. However, domestically produced goods and services would not be able to replace the massive volumes of imported goods and services required to support the region’s 27 million natives and 29 million expats.


Generally, advanced democracies and the presence of inclusive institutions boost economic growth. Yet, in some instances, economic growth can impede democratisation. “Rentierism” is one of the most well-known theories on the subject.Rentier states generate money by collecting rent from foreign governments, businesses or individuals. They do not require tax revenues because their primary job is to disperse incoming foreign resources.

Furthermore, rentier nations are financially independent and autonomous from society, contributing a little portion of external rent earnings to domestic spending while retaining the majority of the wealth. Despite considerable criticism, the link between authoritarian Arab regimes that sell oil and their citizens lends validity to the notion. However, as the post-oil era approaches, Arab states are attempting to escape the trap of rentierism.


The oil sector contributes 28.7 percent of Saudi Arabia’s GDP and accounts for 80 percent of its exports. These figures demonstrate the significance of economic diversification in Saudi Arabia.

Saudi Arabia’s audacious economic makeover might be successful. To prepare for a Post Oil future, the Kingdom announced its “Vision 2030” with economic diversification as its primary economic goal.

Saudi Arabia has tried to enhance its private sector, unleash the potential of non-oil industries, and expand non-oil exports with this goal in mind.

It will not be easy to attain this target quickly, which is why the kingdom has tightened its laws and begun forcing foreign corporations to relocate their Middle East operations to Saudi Arabia.To attract new investment and generate new employment, the Saudi government and government-backed institutions will no longer sign contracts with multinational firms that do not have a regional centre in Saudi Arabia in early 2024.This decision heightened tensions with rival countries such as the United Arab Emirates (UAE). Some UAE-based investors described the decision as “obviously geared” .

The UAE, like Saudi Arabia, has increased attempts to attract overseas companies in order to restructure their economy and reduce their reliance on oil.

This appears to be one of several competitors in the region as many Arab oil-exporting countries attempt to modernise their economies as conflicts of interest appear to be inescapable.


Saudi Arabia as predicted would never be a mover and shaker again. The decline is irreversible, because “oil-rich” is a word that will become as obsolete as “carbon copy.” Arab producers’ oil revenue has dropped by more than two-thirds, and it will never recoup. So far, the decline has been mostly driven by a sharp drop in oil prices; demand has steadily increased, but oil production has consistently increased faster; nonetheless, an outright collapse in demand is also on the horizon.

As the climate situation worsens, motor vehicles (which account for half of all oil consumption worldwide) are shifting to electricity. The United Kingdom and France have officially pledged to cease all new automobile sales with internal combustion engines by 2030, which means that no one will buy a new petroleum-fueled car after 2025. Many other countries are debating similar measures.

The unprecedented stability of these nations without a single regime change among the six “oil-rich” monarchs of the Arabian peninsula in the last 50 years – has been solely predicated on the traditional rulers’ ability to buy the consent of their subjects. When wealth disappears, so does stability. Even Saudi Arabia’s unity, established by force less than a century ago, may not survive the shift.


In terms of preparing for a post-oil future, GCC governments will need to curtail public services, benefits, and jobs even further, while also curbing opportunities for rent-seeking in the private sector. Economic diversification policies must take genuine rent-seeking behaviour into account. GCC governments will need to have an open dialogue with their citizens about the financial restrictions they confront and the options available to them in the future, and then redraw the parameters of the governing social compact in a way that is perceived as equitable and fair. This renegotiation will require both political elites and regular individuals to give up some of their rights and privileges in light of diminished hydrocarbon reserves and lower prices that are predicted to persist and sink further in the long run. GCC countries have established free zones, innovation parks, and entrepreneurial centres outside the boundaries of their rentier-based private sectors over the last two decades. Nonetheless, all of these things are primitive.

The coronavirus outbreak, combined with reduced global oil prices, has intensified pressure on Gulf governments to accelerate economic diversification initiatives. GCC policymakers must look beyond the urgent need to slash expenditures and instead focus on laying the groundwork for a thriving and sustainable post-hydrocarbon economy. Economic and political pressures have already compelled Saudi Arabia, the United Arab Emirates, and Bahrain to lift their three-and-a-half-year embargo on Qatar, paving the way for further regional economic integration.


Firstly, economic modifications are required since the economies of the Gulf Cooperation Council (GCC) members are heavily reliant on oil, and resources will need to be reallocated among other sectors.

Secondly, the transition will be political, because oil is used to bolster authoritarian governments and quiet democratic demands in many oil-exporting Arab states.

Petroleum countries would be impacted and pushed to undergo economic and political reforms. Oil has long been a key element in Middle Eastern politics, and the world’s post-oil futures may have significant ramifications in the region and global politics as a whole.

As rentier regimes make strides in preparation for a post-oil future, ultimately time will tell whether they are strong enough to protect authoritarian regimes. Oil-exporting Arab regimes may face a fresh and more robust ‘Arab Spring’ in the twenty-first century if they continue to focus primarily on the economic side of things and fail to implement institutional reforms promptly.

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Shivaji Sarkar



The Indian Opposition has failed the people. Bereft of ideas and somewhere having the ruling syndrome in them, they have become shadow ruling parties oblivious of the key issues and problems of the people.

It is indeed a critical economic situation where the opposition could not play the constructive role and if they did they were not impactful. This is just not only in the post-2019 situation but even the nation can trace it to their activities since Nov 8, 2016, when the demonetisation was announced. They did raise their voice but were unable to show the nation the way from which it could really move forward.

The opposition was on the back foot because they were in a dilemma whether they should whole-hog oppose the move or accept it. Their feeble voice could not impress that they were speaking for the people. The government communication was forceful and opposition only mewed against it.

Lakhs of people were standing in the queue, mostly from the lower economic strata. A bit better were able to replace their currency notes at discount giving rise to new middlemen. Many of the parties were in dilemma themselves as they had enough cash were suffering from the same “black money” syndrome. Strangely enough, till today, nobody has been able to explain what black money is. Is it the ill-gotten money through drug trafficking, gun-running and other illicit activities or just merely not paying tax on the income.

Suffering from guilt complex most opposition parties raised feeble, incoherent charges only strengthening the arguments of their rival among the people. The opposition did little to the farmers’ issue though it allowed some of them to seek new alignment.

Similarly, on issues of toll, entry fees to cities like Delhi, the Opposition remains silent on excessive toll charges on highways, high parking fees and train fares. It is oblivious that such illicit charges add to prices.

It appears that the opposition has stopped having rational thinking being in fear that they also have been ruling and “might” be at fault.

They even did not raise the issue of whether drastic economic decisions like note-ban should be taken unilaterally. They did not question the constitutionality of the move that had shaken the country. The government could always be on the right foot, but it is the opposition’s right to challenge each move. They even did not say that just in 2016, the economy had started taking a turn when it all ground to a halt.

Soon after in July 2017, the GST was brought in changing the entire gamut of the tax structure. Forget about their opposing it most state finance ministers felt they were running the country and took a decision that had again unshaken the foundation of the economy. It was surprising that a party that had blocked the GST when they were in opposition would be pressing for it. And the opposition parties once again showed their ‘ruling’ instinct by keeping the petroleum fuel out of the GST ambit. The people started taking the brunt as did the economy as soon after that both the states and the centre continued to hike taxes every other day. Today the opposition is trying to rake up inflation, price rises, difficult living conditions as the key election issues during the state election campaigns forgetting it is their doing.

The pandemic exposed how brittle the Indian economy is. While transportation cost went on going through the roof, people in a panic left their working places to reach back to the safety of their homes. They could not ride the trains that were cancelled in a few hours’ notice and nobody explained the reasons. The opposition party governments were virtually oblivious of the needs of about 18 crore migrants. Almost all be it Maharashtra, Karnataka, Andhra, UP, Rajasthan, Bihar or any other ruled by different parties behaved atrociously with the migrant workers.

So many people perished in the queues and a new phenomenon that came to light was that bank men themselves not only suffered the ordeal but also became middlemen themselves. They could not raise the voice for the small and medium industry, though the big ones also suffered, who had to bear a severe brunt.

Pandemic exposed the severe weaknesses of the health sector. Either it was too inadequate, too expensive and chaos extending from ambulances to cremation grounds. The chinks of every opposition government came to the fore.

Amid pandemic as the NEP came, the opposition virtually gave it a pass without discussion. The degree course duration is increased to four years to attune it to the US system. The nation does not know that the US “degree mills” –largely institutions of not so repute – provide degrees on a platter. Let us recall the opposition stalwarts like socialist George Fernandes or Congreess’ Tarakeshwari Sinha who opposed linking graduation degree to a job as it delayed their employment by two to four years in the 1960s.

The nation is committing similar follies now. They did not try to find out the fault lines. Not to blame anyone but it has many, particularly the stress on PhD, terming it as research. Even at present many syllabi are for 2.5 years but given a degree after three years. The opposition neither read the NEP nor tried to study its implication. But teachers know that students are unable to pay even moderately charged government universities. Apart, now students would remain away from the job market for one more year and technically there would be fewer jobless.

Despite a painstaking effort, any good product can have faults. The NEP is faulted for trying to align Indian education to that of the West. No educationist explains why India should have to increase terms to suit the western needs. Let India have a 14 to 15-year education with one-year masters and alongwith degrees making diplomas more meaningful. The advantage is that more courses could be studied simultaneously. The West could follow us.

The West is discriminatory. They admit, say for the dental course, a student with Indian bachelor’s degree-BDS, to the masters course, because the Indian pays to them, but denies jobs because “Indian BDS is inadequate”. The opposition has to rake this up to correct the NEP.

Let us bring back the opposition glory of yesteryears when there used to be vibrant critics even within the ruling Congress. The ruling NDA may be doing fine but an analytical opposition could sharpen that approach. The New Year can begin with this resolve.

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Seldom known causes of climate change

Several factors have created an unsustainable world. The very individuals who cause major global warming have barely understood this phenomenon. Most are in denial and do not wish to understand it, either deliberately or otherwise.



Spurred by a colonial mindset and slave mentality, imitative lifestyles and conscious consumerism are on the upswing. So is a new throw-away culture that is snobbish and imitative. A colonial mindset exists where all gains and successes are measured in terms of GDP, and there is an attendant emphasis is on a living, lifestyle and diet that is not in sync with either our environment or geography. Lives are based on splurging resources, money, and showering love and affection on animals more than anyone else which are not in sync with available resources and their base.

All these factors have created a world that is unbalanced, unliveable, and unsustainable. The very individuals who cause major global warming have barely understood this phenomenon. Most are in denial and do not wish to understand it as well deliberately or otherwise.

This is a society that uses goods only once. Consequently, consumer goods are not designed for long-term use or even reuse, in some cases. Our society likes to travel and that too in places which are only to be seen not to be travelled and despite they still feel unlucky even with all the attendant luxuries. Covid-19 has been one of the biggest lessons for mankind. The pandemic, shutdown of social and economic activities led global carbon dioxide emissions to drop by 6.4% or 2.3 billion tonnes. People have adapted to the new normal and that means things will be back to square one, pretty soon.

A large percentage of global warming originates from Fast Fashion, the use of pets, suburban living, and travel. Still, it is hardly mentioned, understood, or acknowledged by our society. Incidentally, they are the same ones who scream about climate change and lead protests as well mostly online allowing off-liners to gaze in amazement. The fashion industry affects greenhouse gas emissions both directly and indirectly. It is the second-largest polluter in the world, after the oil industry. There are three main drivers of the textile industry’s global pollution impacts- dyeing and finishing (36%), yarn preparation (28%), and fibre production (15%).

The fashion industry accounts for 10 percent of global carbon emissions which is more than the emissions for all international flights and maritime shipping, combined. Carbon dioxide emissions in the manufacture of polyester are three times more than those for cotton. By 2030, such emissions from the manufacture of textile alone are projected to increase more than 60 percent.

Fast fashion contributes to greenhouse gases emissions and pollutes the water, air, and soil. This means that as an associated consequence we will use more energy for cleaning carbon emissions. Over its lifespan, a pair of jeans emits the equivalent of 33.4 kg of CO2. This is the same as driving 100 km in an ordinary car or watching around 250 hours of TV on a plasma big-screen television.

More than a third of those emissions originate from fiber and fabric production. Cutting, stitching, and finishing the jeans account for 8%. Packaging, transportation, and retail account for 16 percent of the emissions, with the remaining 40 percent coming from consumer usage (primarily washing the jeans) and landfill disposal.

The textile dyeing industry depletes water sources and poisons them since 72 toxic chemicals end up in waterways. They dump untreated water which contains harmful substances including lead, mercury, arsenic and more.

60 per cent of the material used for making clothes is plastic including polyester, acrylic and nylon textile. These fabrics are in demand as they are durable, lightweight, and economical but they shed microplastics with each wash. Laundry alone releases half a million tonnes of microplastics into the ocean every year.

Heaps of discarded clothes either go to landfills (around 85 per cent) or are burned. One garbage truck of clothes is sent to landfills or incinerated every second and yet only 1 percent of clothing is recycled. Non-vegetarian diet creates a lopsided world and widens the gap between polluters and non-polluters in terms of being culprits and also in terms of being at the receiving end.

The use of animals as food and feed has an undeniable role in releasing GHG. Animals feed on large quantities of straw from grains, rice, and wheat. In return, they produce only a small amount of meat, eggs, and dairy products. There is a loss of 90 percent energy when food is transferred from one trophic level to another. This means that the energy required in meat production is high when compared to direct consumption of plant products.

When equated to other meats and animal products, beef production releases five times the amount of greenhouse gas emissions. Studies suggest that beef requires 28 times more land, 11 times more water, and produces 6 times more reactive nitrogen when compared to the average of other categories.

Meat production contributes to global warming at a much higher rate than the cultivation of grains and vegetables. Meat-eaters have twice the carbon footprint of vegans. Livestock and their by-products account for at least 32,000 million tons of carbon dioxide (CO2) per year or 51% of all worldwide greenhouse gas emissions. Cows produce 150 billion gallons of methane per day. Methane has a global warming potential of 86 times that of CO2 and is 25-100 times more destructive than CO2 over a 20-year time frame.

Livestock is responsible for 65% of all human-related emissions of nitrous oxide – a greenhouse gas with 296 times the global warming potential of carbon dioxide. It stays trapped in the atmosphere for 150 years. Methane emissions from manure and the resources used to produce one calorie of meat products are high.

An increase in the consumption of meat also burdens the freshwater resources of the world. The water footprint of meat from cattle (15 400 m 3 /ton as a global average) is much higher than the footprints of meat from sheep (10 400 m 3 /ton), pig (6000 m 3 /ton), goat (5 500 m 3 /ton) or chicken (4 300 m 3 /ton). The global average water footprint of chicken eggs is 3 300 m 3 /ton and cow milk amounts to 1000 m 3 /ton.

The beef/cattle rearing industry uses one-third of the total volume of water requirement and the dairy sector uses up another 19 percent. Water extraction and processing require energy. Such an energy-intensive society will produce more greenhouse gases.

Pets have a close relationship with GHG. The more animal-loving you are, the more are you a polluter. There are 470 million pet dogs and 370 million pet cats on the planet, and they all add to climate change.

An average-size cat generates 310kg of Carbon dioxide equivalent (CO2e) per year, an average-size dog produces 770 kg of CO2e per year, and a large dog produces 2,500kg of CO2e per year. Over 64 million tons of greenhouse gases are released only because of America’s pet cats’ and dogs’ eating habits.

Pets feed on about a fifth of the world’s fish and meat. One kilo of beef production generates 1,000 kilos of carbon dioxide. Every year, 49 million hectares of agricultural land are used to produce dry pet food for cats and dogs. The pet food industry generates higher greenhouse gases each year than do countries like the Philippines.

Incidentally, there is no lifestyle more harmful to the environment than splurging urban and suburban habits in urban sprawl. Urban sprawls have the potential and capability to alter the heat balance of urban areas and add to global greenhouse gases.

80% of global GDP is produced in urban areas and results in higher income, consumption, and associated levels of emissions. In fast-growing cities, a considerable share of the global carbon budget will be used up for the capability building of new infrastructure. Land-use changes increase emissions when cities expand and natural vegetation makes way for city grounds.

Cities cover just 3% of the global land surface but account for 58% of the world’s population. Emission savings linked to higher densities, connectivity, accessibility, and land use depend on compact structures. Only a few cities like Copenhagen and Amsterdam offer examples that make good use of such structures and present low emission lifestyles.

The impact of and role of travelling in increasing emissions are understood but underestimated. Travel actually generates huge amounts of carbon. The travel industry accounts for 8 percent of global carbon emissions and tends to grow at a rate of 4% annually. It is the need of the hour to promote carbon offsetting to compensate and reduce travel emissions. Visitors from high-income countries contribute to a majority of this footprint.

The use of plastics in napkins and reusable menstrual cups are other additions. Plastic cutleries, brochures, and tickets keep adding to it. Estimates suggest that around 12 billion pounds of carbon dioxide (CO2) can be saved and the digital sector has a huge potential to cut down global emissions in half by 2030.

Ironically, people who raise the greatest concern, who shout the loudest, whose voice is shrillest best, and all those who cannot defend themselves of their lifestyle are the ones who are the greatest emitters and polluters. But in an age of perception management and for a society riddled by infodemics, should this be surprising?

The writer is a strategic thinker, educationist, earth scientist, author, mentor, and advisor to various governments. Views expressed are the writer’s personal.

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