The Hyde Act and 123 Agreement

Recently we have witnessed the visit of the US president Barrack Obama as the chief guest on our 66th republic day celebration. This was the first time that any US president was the chief guest of our national celebration. Lots of bonhomie and friendship were seen from both the sides. The visit was very important for India from strategic point of view that a strong relationship with US may help to constrain china towards its expansionary border policy. Many deals were done ranging from the Defence technology transfer agreement to the civil nuclear agreemment.

The civil nuclear agreement was the brainchild of the PM Manmohan Singh. Ironically the BJP was opposing it when congress initiated it due to some compromises India have to show by signing this agreement. But the same BJP govt. has finally concluded the bill to its final goal for good. The two hiccups the nuclear liability law and the inspection of nuclear facilities  by various countries was mitigated nicely.  Though the dias is completely in the hand of the US companies like Westinghouse and GE, we expect a positive outcome.

The resounding part of this agreement is that it is done under the 123 agreement and the Hyde act. So what is 123 agreement and the Hyde act , let's look at it one by one.

123 Agreement- It is a legislation in the United States constitution against the prevention of the nuclear weapon act. The article 123 of this act says the US can only go for Civil nuclear agreement with those countries which have signed the NPT ( Non- Proliferation Treaty) and CTBT ( Comprehensive Test Ban Treaty). According to NPT only the members of the UNSC ( US, France, China, Britain and Russia) can have the nuclear weapons. This agreement is very discriminatory in itself and that's why India is neither signatory of NPT nor CTBT. Apart from India , Pakistan and Israel are also not the signatory of NPT.

As the India is not the signatory of NPT, according the section 123 of the US legislation, it was not possible for US to have a civil- nuclear agreement with India. But this is problem was settled by passing an act proposed by the congressman Hyde, which gives a special concession only for India.

The Hyde Act- According to this act US can have civil- nuclear agreement with India. It can transfer its nuclear technology and material to India on the account of frequent verification and checking of the nuclear facilities in India. The US will have to insure that the technology supplied is not used for the purpose of the nuclear weapon.

No doubt the agreement has open the door for India to have the prospect of clean nuclear energy which is the foremost requirement of the country for realising its economic growth and elimination of its extreme poverty.

The Production Possibility Curve

Understanding microeconomics is the base of the whole economics, and the basis of the microeconomics is the production of goods. i.e. what to produce?, how to produce? and for whom to produce?. As the resources are scarce, it is very important to decide which product should be given priority for production. The Production Possibility curves help to decide the priority or actual combination of the goods to be produced.

suppose we have two- good economy. With the help of various resources like capital and manpower available, we are able to produce two kind of goods suppose X ( computer) and Y ( microwave oven). As the capital and manpower is limited, we have to decide how much amount of X and Y to be produced , so that it help to meet the optimum requirement of the people. suppose following are the various possibilities.

let the maximum production capacity of X be 75 lakh pieces an year and maximum production capacity of Y be 30 lakh pieces and year. If we want to achieve maximum production of the Product X, all the workforce and the labour has to be applied for the production of the product X, the production of the product Ywill be zero and vice-versa.

possibility	Product X( Pieces in lakh)	Product Y( pieces in lakh)
1.	75	0
2.	60	5
3.	45	15
4.	30	20
5.	15	25
6.	0	30

The various combination will be analysed and according to the requirement any one possibility will be opted for the production. In this way the economy achieves optimum production to fulfill the needs of the population. A graph can be drawn between the two variables of the production X and Y. The curve we obtain between these two possibilities is known as the production possibility curve. 

Production Possibility Curve

The curve has the negative slope because as production of the product increases, the production of the product X decreases. 

One of the most important point  to consider is that this level of production is possible only if the full utilisation of the workforce and labour is done. But in the countries like India, where the unemployment is huge, maximum utilisation of the labour and the capital goods is not possible. In such scenario Point C shows the level of production in the economy. The maximum production can't exceed the boundary of the curve. Also it is imperative to note that point D is impossible to achieve. The curve is also known as production possibility frontier.