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    Industrialization and Innovation Could Make the Indian Economy Takeoff

    Labor-intensive manufacturing has historically been the best-known recipe for driving economy-wide productivity enhancement. Over time, several countries, notably those in East Asia, managed to move unskilled workers from farms in rural areas to factories in urban settings. This transition increased both individual incomes and national GDPs, ultimately boosting productivity.

    Not all countries have taken to manufacturing, though. Some of them have experienced premature deindustrialization, which economist Dani Rodrik has analyzed extensively. India’s manufacturing sector never reached full potential because of this phenomenon.

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    Instead, India ended up with the “premature servicization” of its economy. This diminished its capacity to create enough well-paying jobs for its large population and did not allow for increased productivity.

    India’s Drive to Industrialization and Innovation

    Services now comprise more than half of India’s GDP. As alluded to above, services do not deliver productivity growth in the same way as industry. Those who argue for free trade believe this does not matter. India can import industrial goods like cars and cellphones while exporting software writing and call center services.

    Such arguments for a trade-based economy fail to recognize, or in many cases deliberately omit, increasing trade deficits when a country has poor manufacturing. In a volatile and uncertain world, these deficits can become a geopolitical liability for any nation because manufacturers can shut off access to the most basic of goods. Manufacturing does not only increase productivity and enhance security, but it also creates jobs and lowers inequality. For these reasons, India has recently embarked on a reindustrialization program. 

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    The new Production Linked Incentives (PLIs) seek to attract the more reputed global manufacturers, the best brains in industry and high-quality, long-term investments to India. Under PLIs, participants can manufacture for the domestic and/or export markets. The government applied these incentives to 14 sectors, of which telecoms, cellphones, electronic equipment and automobiles are benefiting already.

    Many manufacturers station their Global Capability Centers (GCCs) in India, which has become a global base for services operations. A June 2021 report by Deloitte and NASSCOM states that 1,300 GCCs employed more than 1.3 million professionals and generated $33.8 billion in annual revenues in the financial year starting April 1, 2020, and ending March 31, 2021. Another report estimates that GCCs are likely to grow by 6-7% per year and rise to over 1,900 by 2025. It also says that these GCCs are evolving from back-office destinations to global hubs of innovation.

    Digitization is aiding this transformation of GCCs. Now, industrial design is no longer a monopoly of a headquarters in Michigan or Munich. Thanks to fast-speed internet and powerful computers, research, design and development of new machines, goods and consumption articles can take place anywhere in the world. Software is playing an increasingly bigger role in creating new hardware, driving additive manufacturing and automating factories. A process of disintermediation of manufacturing is under full swing, leading to what can be called a “servicization of manufacturing.”

    This trend gives India a unique opportunity. Global businesses need rapid, at-scale and cost-effective innovation. With its cost advantages and services ecosystem, India can provide that innovation to the world. Conventionally, innovation is associated with creating something new such as an iPhone or a Tesla. However, innovation occurs in less flamboyant ways as well. Any change in design or development that creates new value for the firm or provides an operational competitive advantage is an innovation too.

    A Unique Opportunity to Takeoff

    Global companies aiming to operate faster, cheaper and better are increasingly operating in India. The country has become more innovative over the years. India granted 28,391 patents in the financial year 2020-21, up from 9,847 in 2016-17 and 7,509 in 2010-11. Last year, the press reported that India registered as many trademarks in the past four years as in the previous 75. India’s rank on the global innovation index has moved up from 81 in 2015 to 46 in 2021. The World Intellectual Property Organization also recognized India as the second most innovative low and middle-income economy after Vietnam.

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    India missed out on the first and second industrial revolutions. The first one took place in Europe between the mid-18th and mid-19th centuries when India was fragmented and undergoing colonization by the British East India Company. The Second Industrial Revolution occurred in the 20th century, but India was ruled by the British government directly, which had no interest in industrialization. London’s incentive was to use India as a provider of raw materials and as a captive market for finished British industrial goods.

    After independence in 1947, India failed to industrialize unlike its East Asian counterparts. It chose a Soviet-style planned economy that was closed and protectionist. Only in 1991 when the Soviet Union collapsed did India embrace market reforms and liberalized its economy.

    Today, India is growing at 9% and its GDP is about to touch the $3-trillion mark. With strong global tailwinds, India can embrace industrialization and innovation, and finally enter what American economist Walt Rostow has termed the takeoff stage of economic growth.

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    The Politics Behind the Hijab Ban

    Political discourse in India is currently focused on the denial of some Muslim female students to their constitutional right of choosing to wear a hijab in classrooms at pre-university colleges — the equivalent to high schools.

    India Disappoints Its Friends and Admirers


    The ruling dispensation in the Indian state of Karnataka has invoked Section 133(2) of the Karnataka Education Act, 1983. This section says that the “State Government may give such directions to any educational institution or tutorial institution as in its opinion are necessary or expedient for carrying out the purposes of this Act … [and] such institution shall comply with every such direction.”


    On February 5, the ruling dispensation in Karnataka led to a letter being issued by Padmini S.N., under-secretary of the Education Department of Karnataka, requiring institutions to enforce particular provisions.

    First, as per the letter, students must wear a uniform that has been selected by an authority, such as college committees or administrative boards. Second, if the administrative committee has not issued a mandatory dress code, then “clothes which disturb equality, integrity and public law and order should not be worn.” Third, the letter cites the case of Asha Ranjan vs. State of Bihar and Ors in 2017. It claims that the Supreme Court “accepted the balance test where competing interests are involved and has taken a view that individual interest must yield to the larger public interest.” Fourth, the letter says that the ban on wearing a hijab inside educational institutions is not in violation of Article 25 of the constitution.

    Contesting the Claims

    Yet these claims are contestable. First, school management could introduce a uniform for students that is guided by the needs of education and the constitution. Education is concerned with the teaching-learning process. The sartorial choices of students or even teachers do not have any relevance to this process. In fact, preventing students from choosing what they want to wear may impede the fundamental right to education. Further, it cannot be logically argued that the sartorial choice of students impedes the integrity of the teaching-learning process.

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    Second, it is absurd to claim that clothes can impact equality, integrity and public order. Education is concerned with enhancing the ability of students to participate in social life after they graduate. This includes joining the labor force, participating in the political process, and building and sustaining communities. Inclusive development does not require all people to be part of sartorial (or any other type of) homogeneity, but it does need their participation in socially productive activities. Homogeneity is antithetical to equality with diversity. After all, the motto of India is “unity in diversity,” not unity before diversity.

    Furthermore, claiming that sartorial choices such as wearing a hijab will disrupt public law and order effectively serves as a dog whistle for vigilantes. When these vigilantes engage in actions that undermine public law and order, the original claim is thereby validated.

    Third, the Supreme Court, in the case of Asha Ranjan vs. State of Bihar and Ors, argued that there could be conflict between the legal rights of two individuals. In such an event, the interest of the wider community would be used to determine whose rights are prioritized. Yet the individual sartorial choices of students or teachers neither undermine the rights of others nor affect the public. Thus, in this case, the balance test is not applicable since there are no conflicts between individuals with regard to their rights as guaranteed by Article 21 of the constitution.

    Fourth, seeking to relate the ban on wearing a hijab (or the clothing choices of students or teachers) solely with Article 25 is legally untenable. In fact, if this standalone appeal to Article 25 of the constitution is made, then it leaves the door open to define religious or cultural practices as being more or less essential to the definition of a religion or culture. Doing so in this current case would directly impact the right to education of some Muslim female students.

    The key issue is whether the sartorial choices of students undermine the integrity of the teaching-learning process. The only logical answer is no. The choices of students and teachers are connected to the right to seek education under Article 21-A and the right to dignity under Article 21 of the Indian Constitution. The right to practice religion or culture, as guaranteed by Article 25 in the present case regarding sartorial choice, does not subvert the teaching-learning process. Therefore, Article 25, when read with Articles 21 and 21-A, demonstrates the legal untenability of the ruling dispensation in Karnataka.

    Why Now?

    But there is a fundamental question that arises from the ban on wearing a hijab. Why are such issues being raised in the first place? On the one hand, it is undeniable that the ruling dispensation in Karnataka seeks to trigger political debate over social issues, since it may deflect public attention from evaluating the state government’s record over other matters.

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    On the other hand, we believe there is a broader background to such moves. Policy initiatives that favor elites and put others at a disadvantage require the latter to provide at least implicit “consent.” This may be problematic if the interests of elites are equated with “national interests” through the deployment of ultra-nationalism. This process of “consent” may be reinforced if divisions emerge among non-elites by stigmatizing and labeling a section of non-elites as the “other.” In India, this process of stigmatization involves the furthering of communalism, which is the political manufacturing of social divides along religious lines.

    This manufactured rise in social divides, coupled with other factors such as the impact of the COVID-19 pandemic, has led to an economic crisis. Rising unemployment, inequality and inflation cannot be overcome with the “toolkit” available to the government. This policy toolkit involves the use of ultra-nationalism and communalism where the pot is always set to boil, causing social tension. The repeated use of such measures has started yielding diminishing results for the government, but it appears to have no alternative policy available.

    The way out of this impasse requires a different framework. This needs to involve public investment, fiscal policy undergirded by progressive taxation, and industry policy backed by mobilization and allocation of resources by the government. Such policies of inclusive development must be part of a process of recentering the constitutional imperatives of secularism, gender and social justice, and democracy.

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    India Disappoints Its Friends and Admirers

    India’s abstention in a recent vote at the UN Security Council over Russian threats to Ukraine raises serious questions over India being a key ally of the West in the years to come. Indian leaders failed to stand up for Ukrainian sovereignty because of India’s close relations with Russia, a major supplier of military equipment.

    For anyone who wants to explain away India’s conduct at the United Nations as an act of national interests, there is more to consider. India is sliding deeper into Hindu — as opposed to a diverse Indian — nationalism, diminishing its ability to be a long-term partner for Western nations.

    Modi’s India Is Becoming a Farce


    India’s slowing economic growth, declining investment in its military capabilities and social unrest have prevented the country from modernizing its army and fulfilling its strategic goals. But it is the ideology of its current leaders that is jeopardizing the notion of India as a dependable partner of the US in the Indo-Pacific region. 

    Instead of investing in human capital and health care, the focus of Prime Minister Narendra Modi’s government has been on rewriting history through crowdsourcing. Instead of further opening the Indian economy through policies and reforms that would boost growth, protectionism and regulatory policies are rising. India is slipping on the global freedom and democracy indices, with Freedom House downgrading it to “partly free.”

    “Undivided India”

    Leaders of the ruling Bharatiya Janata Party (BJP) continue to mobilize India’s majority Hindus to vote for it by targeting religious minorities, particularly Muslims and Christians. They describe Hinduism as an Indian religion, while Islam and Christianity are denigrated as “foreign” faiths transplanted onto India’s soil. Extremist Hindu leaders, including some from the ruling party, have even gone so far as to call for genocide against 200 million Indian Muslims. 

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    A 2021 Pew Survey on “Religion in India” demonstrated that tolerance for other faiths remains strong within Indian society. But a larger number of the majority (Hindus) now see religion as the core of their identity and support calls for a Hindu rashtra (state). This creates a dilemma for relations between India and other countries.

    For example, Pushkar Singh Dhami, the chief minister of the state of Uttarakhand, which borders Tibet and Nepal, was embroiled in controversy for something he posted on Twitter six years ago. The tweet showed a map claiming South and Southeast Asia as part of an “undivided India,” known as Akhand Bharat. In December 2021, an Indian broadcaster showed the entire region from the Middle East through South and Southeast Asia as belonging to Akhand Bharat, representing the reunification of territories influenced by India during ancient times.

    This undermines India’s projection of itself as a pluralist and open society, where minorities were respected, not just tolerated. For six decades after independence in 1947, India’s pluralism created a groundswell of respect, goodwill and admiration throughout the free world. Even India’s non-alignment during the Cold War did not interfere with its positive image. Most Americans appreciated Indian democracy and diversity and showed understanding when poverty-ridden India preferred not to side with the United States against the Soviet Union.

    Things Have Changed

    But things have changed since the end of the Cold War. India has made significant progress in reducing poverty. For two decades, there has been talk of India as a rising power. Americans have expected India to boost its economic growth, modernize its military and play a bigger role in confronting China. In 2010, President Barack Obama declared relations between India and the United States as the “defining partnership of the 21st century.”

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    That desire keeps getting thwarted by India’s leadership, particularly Prime Minister Modi and his allies in the BJP. Thus, India’s economic growth has slowed down, even before the impact of the COVID-19 pandemic, and is unlikely to recover quickly. More significantly, India continues to expand trade with China, reaching $125 billion in 2021. This is despite China’s military pressure on India along their disputed border. That should lay to rest the expectation of India confronting China anytime soon.

    Moreover, the commitment to democracy, human rights and liberal values, which made India a natural Western partner, appear under increasing threat.

    Americans who have spent the last few years praising India also need some appraising of India. It might be time to acknowledge that India’s performance has been underwhelming to merit the kind of expectations that have formed the basis of recent US policy.   

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    Truths, Not Myths, About Pakistan’s Founder Muhammad Ali Jinnah

    Many scholars have spilled much ink on Pakistan’s founder, Muhammad Ali Jinnah. A giant has now waded into the fray and penned a masterpiece. 

    Ishtiaq Ahmed is a professor emeritus at Stockholm University who first made his name with a pathbreaking book, “The Pakistan Garrison State: Origins, Evolution, Consequences.” He then went on to pen the award-winning “The Punjab Bloodied Partitioned and Cleansed,” a tour de force on the partition of Punjab in 1947. Now, Ahmed has published “Jinnah: His Successes, Failures and Role in History,” a magisterial 800-page tome on Pakistan’s founder.

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    Ahmed is a meticulous scholar who has conducted exhaustive research on the writings and utterances of Jinnah from the moment he entered public life. Pertinently, Ahmed notes the critical moments when Jinnah “spoke” by choosing to remain quiet, using silence as a powerful form of communication. More importantly, Ahmed has changed our understanding of the history of the Indian subcontinent.

    Setting the Record Straight

    Until now, scholars like Stanley Wolpert, Hector Bolitho and Ayesha Jalal have painted a pretty picture of Jinnah, putting him on a pedestal and raising him to mythical status. Wolpert wrote, “Few individuals significantly alter the course of history. Fewer still modify the map of the world. Hardly anyone can be credited with creating a nation-state. Muhammad Ali Jinnah did all three.” Both Wolpert and Bolitho argued that Jinnah created Pakistan. Jalal has argued that “Jinnah did not want Partition.” She claims Jinnah became the sole spokesman of Muslims and the Congress Party forced partition upon him. 

    Jalal’s claim has become a powerful myth on both sides of the border. In this myth, the Congress in general and India’s first prime minister, Jawaharlal Nehru, in particular opted for partition instead of sharing power with the Muslim League and Jinnah. Jalal makes the case that “Punjab and Bengal would have called the shots” instead of Uttar Pradesh, making the emergence of the Nehru dynasty impossible. Her claim that “the Congress basically cut the Muslim problem down to size through Partition” has cast Jinnah into the role of a tragic hero who had no choice but to forge Indian Muslims into a qaum, a nation, and create Pakistan.

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    The trouble with Jalal’s compelling argument is that it is not based on facts. She fails to substantiate her argument with even one of Jinnah’s speeches, statements or messages. Ahmed’s close examination of the historical record demonstrates that Jinnah consistently demanded the partition of British India into India and Pakistan after March 22, 1940. Far from the idea of Nehru forcing partition on a reluctant Jinnah, it was an intransigent Jinnah who pushed partition upon everyone else.

    Ahmed goes on to destroy Jalal’s fictitious claim that Nehru engineered the partition of both Punjab and Bengal to establish his dynasty. Punjab’s population was 33.9 million, of which 41% was Hindu and Sikh. Bengal’s population was 70.5 million, of which 48% was Hindu. The population of United Provinces (UP), modern-day Uttar Pradesh, was 102 million, of which Hindus formed an overwhelming 86%. When Bihar, Bombay Presidency, Madras Presidency, Central Provinces, Gujarat and other states are taken into account, the percentage of the Hindu population was overwhelming. In 1941, the total Muslim population of British India was only 24.9%. This means that Nehru would have become prime minister even if India had stayed undivided.

    Ahmed attests another fact to buttress his argument that Nehru’s so-called dynastic ambitions had nothing to do with the partition. When Nehru died, Gulzarilal Nanda became interim prime minister before Lal Bahadur Shastri took charge. During this time in power, Nehru did not appoint Indira Gandhi as a minister. It was Kumaraswami Kamaraj, a Congress Party veteran, and other powerful regional satraps who engineered the ascent of Indira Gandhi to the throne. These Congress leaders believed that Nehru’s daughter would be weak, allowing them greater say over party affairs than their eccentric colleague Morarji Desai. Once Indira Gandhi took over, she proved to be authoritarian, ruthless and dynastic. By blaming the father for the sins of the daughter, Jalal demonstrates that she neither understands India’s complex demography nor its complicated history.

    To get to “the whole truth, and nothing but the truth” about India’s partition, we have to read Ahmed. This fastidious scholar analyzes everything Jinnah wrote and said from 1906 onward, the year Pakistan’s founder entered into public life. Ahmed identifies four stages in Jinnah’s career. In the first, Jinnah began as an Indian nationalist. In the second, he turned into a Muslim communitarian. In the third, Jinnah transformed himself into a Muslim nationalist. In the fourth and final stage, he emerged as the founder of Pakistan where he is revered as Quaid-i-Azam, the great leader, and Baba-i-Qaum, the father of the nation.

    Ahmed is a political scientist by training. Hence, his analysis of each stage of Jinnah’s life is informed both by historical context and political theory. Jinnah’s rise in Indian politics occurred at a time when leaders like Motilal Nehru, Mahatma Gandhi, Sardar Vallabhbhai Patel, Jawaharlal Nehru, Maulana Abul Kalam Azad and Subhas Chandra Bose were also major players in India’s political life and struggle for freedom. Jinnah’s role in the tortured machinations toward dominion status and then full independence makes for fascinating reading. Ahmed also captures the many ideas that impinged on the Indian imagination in those days from Gandhi’s nonviolence, Jinnah’s religious nationalism and Nehru’s Fabian socialism.

    Jinnah’s Tortured Journey

    As an Indian nationalist, Jinnah argued that religion had no role in politics. His crowning achievement during these days was the 1916 Lucknow Pact. Together with Congress leader Bal Gangadhar Tilak, Jinnah forged a Hindu-Muslim agreement that “postulated complete self-government as India’s goal.” That year, Jinnah declared that India was “not to be governed by Hindus, and … it [was] not to be governed by the Muslims either, or certainly not by the English. It must be governed by the people and the sons of this country.” Jinnah advocated constitutionalism, not mass mobilization, as a way to achieve this ideal. 

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    When the Ottoman Empire collapsed at the end of World War I, Indian Muslims launched a mass movement to save this empire. Among them was Jinnah who sailed to England as part of the Muslim League delegation in 1919 to plead that the Ottoman Empire not be dismembered and famously described the dismemberment of the empire as an attack on Islam. 

    To support the caliph, Indian Muslim leaders launched the Khilafat Movement. Soon, this turned into a mass movement, which Gandhi joined with much enthusiasm. Indian leaders were blissfully unaware that their movement ran contrary to the nationalistic aspirations of Turks and Arabs themselves.

    Later, Islam would emerge as the basis of a rallying cry in Indian politics. The nationalist Jinnah started singing a different tune: He argued that Muslims were a distinct community from Hindus and sought constitutional safeguards to prevent Hindu majoritarianism from dominating. In the 1928 All Parties Conference that decided upon India’s future constitution, Jinnah argued that residuary powers should be vested in the provinces, not the center, in order to prevent Hindu domination of the entire country. Ahmed meticulously documents how the British used a strategy of divide and rule, ensuring that the chasm between the Congress and the Muslim League would become unbridgeable.

    As India turned to mass politics under Gandhi, Jinnah retreated to England. After a few quiet years there, he returned to India in 1934 and was elected to the Central Legislative Assembly, the precursor to the parliaments of both India and Pakistan. Jinnah argued that there were four parties in India: the British, the Indian princes, the Hindus and the Muslims. He took the view that the Congress represented the Hindus while the Muslim League spoke for the Muslims.

    Importantly, Jinnah now claimed that no one except the Muslim League spoke for the Muslims. This severely undercut Muslim leaders in the Congress. Jinnah had a visceral hatred for the erudite Congress leader Azad, who was half Arab and a classically-trained Islamic scholar with an encyclopedic knowledge of the Quran, the hadith and the various schools of Islamic thought. Furthermore, Azad’s mastery of the Urdu language stood unrivaled. He wrote voluminously in this pan-national Muslim lingua franca. In contrast, Jinnah was an anglicized lawyer who wrote in English and spoke poor Urdu.

    Jinnah’s argument that the Muslim League was the only party that could represent Muslims was not only conceptually flawed, but also empirically inaccurate. Muslims in Bengal, Punjab, Sindh and the North-West Frontier Province (NWFP) supported and voted for regional political parties, not the Muslim League. In fact, voters gave the Muslim League a drubbing in 1937. This hardened Jinnah’s attitude, as did the mass contact program with Muslims that the Congress launched under Nehru. When the Congress broke its gentleman’s agreement with the Muslim League to form a coalition government in United Provinces (UP) after winning an absolute majority, Jinnah turned incandescent.

    In retrospect, the decision of the Congress to go it alone in UP was a major blunder. After taking office, the Congress started hoisting its flag instead of the Union Jack and disallowed governors from attending cabinet meetings. Many leaders of the Muslim League joined the Congress, infuriating Jinnah. He drew up a list of Congress actions that he deemed threatening to Islam. These included the Muslim mass contact campaign, the singing of Vande Mataram, Gandhi’s Wardha Scheme of Basic Education and restrictions on cow slaughter. Jinnah came to the fateful decision that he could no longer truck with the Congress and the die was cast for a dark era in Indian history.

    The Two-Nation Champion

    In March 1940, Jinnah threw down the gauntlet to the Congress. At a speech in Lahore, he argued that India’s unity was artificial, it dated “back only to the British conquest” and was “maintained by the British bayonet.” He asserted that “Hindus and Muslims brought together under a democratic system forced upon the minorities can only mean Hindu Raj.” 

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    In this speech, Jinnah argued that Hindus and Muslims belonged “to two different civilisations which are based mainly on conflicting ideas and conceptions.” He claimed that Muslims were “a nation according to any definition of a nation, and they must have their homelands, their territory, and their state.” Ahmed rightly points out that this speech was Jinnah’s open declaration of his politics of polarization. From now on, Jinnah had set the stage for the division of India.

    Ahmed also goes into the claims of Chaudhry Sir Muhammad Zafarullah Khan, popularly known as Sir Zafarullah, an Ahmadi leader who was Pakistan’s first foreign minister. Khan and his admirers have claimed credit for the Muslim League’s Lahore resolution for Pakistan, following Jinnah’s historic speech. It turns out that Khan was implicitly supported by British Viceroy Lord Linlithgow who cultivated Khan and extended his tenure as a member of the Viceroy’s Executive Council. This indicates that Jinnah’s bid for Pakistan had the support of a canny Scot who wanted Indian participation in World War II, something the Congress was opposed to without the promise of postwar independence.

    While Jalal might trumpet Jinnah as the sole spokesman of the Muslims, the historical record reveals a very different picture. Within a month of Jinnah’s Lahore speech, the All India Azad Muslim Conference met in Delhi. Its attendance was five times that of the Muslim League’s Lahore session. This conference opposed partition, repudiated Jinnah’s two-nation theory and made a strong case for a united India.

    Others argued for a united India too. Ahmed tells us that Bhimrao Ramji Ambedkar, the towering Dalit social reformer who drafted India’s constitution, reversed his position on partition and on Pakistan. After the Lahore resolution, Ambedkar wrote a 400-page piece titled “Thoughts on Pakistan” that advised Hindus to concede Pakistan to the Muslims. By 1945, Ambedkar had come to the view that “there was already a Pakistan” in the Muslim-majority states. As a Dalit, he also turned against the hierarchy in the Muslim community where the high-born Ashrafs lorded it over the low-born Ajlafs and women had very limited rights.

    Jinnah took the haughty view that Muslims were not a large minority but a political nation entitled to self-determination. In 1941, he claimed that Muslims “took India and ruled for 700 years.” So, they were not asking the Hindus for anything. He was making the demand to the British, the rulers of India. Jinnah might have been arrogant but he had a genius for propaganda. He constantly fed the press with stories about impending dangers to Muslims once the Congress took over, fueling insecurities, distrust and division.

    While Jinnah was ratcheting up the pressure, the Congress made a series of political blunders. It vacated the political space when World War II broke out in 1939. Gandhi idealistically opposed the British while Jinnah collaborated with them, extracting valuable concessions from his colonial masters. When Field Marshal Archibald Wavell took over from Lord Linlithgow as the Viceroy, Jinnah wormed himself into Wavell’s confidence. It helped that Wavell despised the anti-colonial Congress. Ahmed observes that this British general “wanted to ensure that Britain’s military interest in the form of bases and manpower was secured.” Jinnah offered him that option while Gandhi did not. 

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    Jinnah was bloody-minded and shrewd but he was also plain lucky. Many of those who could have contested his leadership simply passed away. Sir Mian Muhammad Shafi, an aristocrat from the historic city of Lahore and a founder of the Muslim League, died in 1932. Sir Mian Fazl-i-Husain, a founding member of Punjab’s Unionist Party who served as counselor to the British Viceroy, died in 1936. Sir Sikandar Hayat Khan, the towering premier of Punjab, died in December 1942. Allah Baksh Soomro, the premier of Sindh, was assassinated in 1943. Sir Chhotu Ram, the co-founder of the National Unionist Party that dominated Punjab, died in 1945. With such giants of Punjab and Sindh dying, the Gujarati Jinnah gained an opportunity to dominate two Muslim-majority provinces where the Muslim League had struggled to put down roots.

    Last-Ditch Efforts to Preserve the Indian Union

    It was not all smooth sailing for Jinnah, though. In 1945, the Conservatives led by Winston Churchill lost the general election. Clement Attlee formed a Labour government committed to India’s independence. By this time, Jinnah was in full-fledged confrontation mode. When Wavell convened the 1945 Simla Conference, Jinnah had insisted that the Congress could not appoint any Muslim representatives. As a result, the conference failed and the last chance for a united independent India went up in smoke.

    Ironically, Jinnah wanted the partition of India but opposed the partition of Punjab and Bengal. In December 1945, Wavell observed that if Muslims could have their right to self-determination, then non-Muslim minorities in Muslim areas could not be compelled to remain in Pakistan against their will. Therefore, the partition of Punjab and Bengal was inevitable. Jinnah would only get his moth-eaten version of Pakistan.

    By now, the British wanted to leave. The 1946 Naval Uprising shook British rule to the core. Weary after World War II, a revolt by naval ratings, soldiers, police personnel and civilians made the British realize that the loyalty of even the armed forces could not be taken for granted. During World War II, large numbers had joined Bose’s Indian National Army and fought against the British. After the 1946 uprising, the writing was on the wall. Soon, the Cabinet Mission arrived to discuss the transfer of power from the British government to Indian political leaders. It proposed provinces, groups of provinces and a federal union. The union was to deal only with foreign affairs, defense and communications, and the power to raise finances for these three areas of government activity. The remaining powers were to be vested in the provinces. 

    Everyone rejected the Cabinet Mission Plan. Jinnah did not get his beloved Pakistan. The Congress was unwilling to accept such a weak federal government. The Sikhs bridled at the prospect of being “subjected to a perpetual Muslim domination.” Needless to say, the plan was dead on arrival.

    Even as deliberations about the transfer of power were going on, members to the Constituent Assembly were elected during July-August. Of a total of 296 seats for the British provinces, the Congress won 208, the Muslim League 73 and independents 15. British India also had 584 princely states that had a quota of 93 seats in the Constituent Assembly. These states decided to stay away from the assembly until their relationship with independent India became clearer. This turned out to be a historic blunder.

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    By now, the British had decided to leave. On August 24, 1946, Wavell made a radio announcement that his government was committed to Indian independence and that an interim government would be formed under the leadership of Nehru and that the Muslim League would be invited to join it. Initially, no member of the Muslim League was in the first interim government formed on September 2, but five members joined this government on October 26 that remained in power until India and Pakistan emerged as two independent states.

    The Run-up to Partition

    Before the two main parties joined the same coalition government, riots broke out across the country. Jinnah called for Direct Action Day on August 16, 1946. Calcutta, now known as Kolkata, experienced the worst violence. SciencesPo estimates that 5,000 to 10,000 died, and some 15,000 were wounded, between August 16 and 19.

    At the time, Bengal was the only province with a Muslim League government, whose chief minister was the controversial and colorful Hussain Suhrawardy. During the “Great Calcutta Killing,” his response was less than even-handed, deepening divisions between Hindus and Muslims. To add fuel to the fire, riots broke out in Noakhali, a part of the Chittagong district now in Bangladesh. In a frenzy of violence, Muslims targeted the minority Hindu community, killing thousands, conducting mass rape, and abducting women to convert them to Islam and forcibly marry them.

    As riots spread across the country and British troops failed to control the violence, India stood on the brink of anarchy. On June 3, 1947, the new Viceroy Louis Mountbatten announced India would be independent on August 15, chosen symbolically as the date Imperial Japan surrendered and Japanese troops submitted to his lordship in Southeast Asia two years earlier. 

    Importantly, independent India was to be partitioned into India and Pakistan. While the border was yet to be demarcated, the contours fell along expected lines. Yet partition came as a bolt from the blue for the Sikhs. In the dying days of the British Empire, this community had created a short-lived empire that died only in 1849. Yet the Sikhs were a minority in Punjab and widely dispersed around the state. The British had co-opted the Sikhs by recruiting them into the army in large numbers. The colonial authorities had given retired soldiers land in colonies they had settled near irrigation canals. These canal colonies were dotted around Punjab and Mountbatten noted that “any partition of this province [would] inevitably divide them.”

    Ahmed is critical of the way the British planned the partition of Punjab. They assumed that the transfer of power would be peaceful. Mountbatten trusted the Congress, the Muslim League and the Akali leadership of the Sikhs who promised to control their followers. Evan Meredith Jenkins, the British governor of Punjab, did not. He predicted that “bloodbath was inevitable in Punjab unless there were enough British troops to supervise the transfer of power.” History has proved Jenkins right.

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    Ahmed’s award-winning earlier work, “The Punjab: Bloodied, Partitioned and Cleansed” records those macabre days in grim detail. By this time, colonial troops were acting on communal sentiment. In Sheikhupura, the Muslim Baluch regiment participated in the massacre of Hindus and Sikhs. In Jullundur and Ludhiana, Hindu and Sikh soldiers killed Muslims. Even princely states were infected by this toxic communal sentiment. Ian Copland details how troops of Punjab’s princely states, including Patiala and Kapurthala, slaughtered Muslims.

    In the orgy of violence that infected Punjab, all sorts of characters from criminals and fanatics to partisan officials and demobilized soldiers got involved. The state machinery broke down. The same was true in Bengal. As a result, independence in 1947 came at a terrible cost.

    Jinnah Takes Charge

    Right from the outset, India and Pakistan embarked on different trajectories. Mountbatten remained as governor-general of India, a position instituted in 1950 to facilitate the transition to full-fledged Indian rule. In contrast, Jinnah took over as governor-general of Pakistan. This move weakened both Parliament and the prime minister. As the all-powerful head of a Muslim state, Jinnah left no oxygen for the new parliamentary democracy of Pakistan.

    Nawabzada Liaquat Ali Khan, an Oxford-educated aristocrat from UP, took charge as prime minister. Yet it was an open secret that Khan had little authority and Jinnah called all the shots. In India, Rajendra Prasad took charge as the president of the Constituent Assembly of India and the Dalit scholar Ambedkar became the chair of the drafting committee. In contrast, Jinnah was elected unanimously as the president of the Constituent Assembly of Pakistan that failed to draft a constitution and was acrimoniously dissolved in 1954.

    This assembly might not have amounted to much, but a speech by Jinnah lives on in history books and is a subject of much debate. On August 11, 1947, Jinnah declared: “If you change your past and work together in a spirit that every one of you, no matter to what community he belongs, no matter what relations he had with you in the past, no matter what is his colour, caste, or creed, is first, second, and last a citizen of this State with equal rights, privileges, and obligations, there will be no end to the progress you will make.”

    Jinnah summoned his 1916 self that championed Hindu-Muslim unity and blamed the colonization of 400 million souls on internal division. His rhetoric took flight and he claimed that “in course of time all these angularities of the majority and minority communities, the Hindu community and the Muslim community — because even as regards Muslims you have Pathans, Punjabis, Shias, Sunnis and so on, and among the Hindus you have Brahmins, Vashnavas, Khatris, also Bengalees, Madrasis and so on — will vanish.” 

    Jinnah also made a grand promise to Pakistan’s citizens: “You are free; you are free to go to your temples, you are free to go to your mosques or to any other place or worship in this State of Pakistan. You may belong to any religion or caste or creed — that has nothing to do with the business of the State.” Toward the end of his speech, Jinnah’s rhetoric soared. He envisioned that “in course of time Hindus would cease to be Hindus, and Muslims would cease to be Muslims, not in the religious sense, because that is the personal faith of each individual, but in the political sense as citizens of the State.”

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    No scholar has analyzed this speech better than Ahmed. This professor emeritus at Stockholm University points out that Jinnah neither mentions Islam nor secularism as a foundational principle of the state. Instead, Jinnah refers to the clash between Roman Catholics and Protestants in England. It seems this London-trained barrister is looking at the constitutionalism of Merry England as the way forward for Pakistan.

    Ahmed makes another astute observation. Jinnah’s speech might have been addressed less to his audience in a rubber stamp assembly and more to his counterparts in the Indian government. Jinnah did not want another 30 to 40 million Muslims from Delhi and UP immigrating to Pakistan, adding even more pressure on an already financially stretched state. If these Muslims were driven out in retaliation for what was going on to Sikhs and Hindus in West Punjab and East Pakistan (Bangladesh since 1971), then Pakistan could well have collapsed.

    Ahmed’s Evaluation of Jinnah

    Jinnah excites much emotion in the Indian subcontinent. For some, he is the devil incarnate. For others, he is a wise prophet. Ahmed evaluates Jinnah in the cold light of the day with reason, judgment and, above all, fairness. 

    Jinnah was indubitably an impressive character with wit, will and vision. He forged a disparate nation of Balochs, Pashtuns, Sindhis, Punjabis and Muhajirs, the Urdu term for refugees in the name of Islam, including those coming from India in the west and Bengalis in the east. However, Jinnah never attained a status worthy of Thomas Carlyle’s heroes. Unlike Gandhi, Jinnah did not come up with a new way to deal with the existing political situation. Gandhi insisted on ahimsa and satyagraha, non-violence and adherence to truth. He put means before ends. He was a mass leader but was only the first among equals in the Congress Party, which had many towering leaders. Gandhi was outvoted many times and accepted such decisions, strengthening his party’s democratic tradition. On the other hand, Jinnah was determined to be the sole spokesman who put ends before means and did not hesitate to spill blood to achieve his political ambitions.

    It is true that Gandhi erred in calling Jinnah a Gujarati Muslim in 1915 when Jinnah would have been preferred to be known as an Indian nationalist. Yet Gandhi genuinely believed that everyone living in India was an Indian and had equal rights as citizens. Jinnah championed the two-nation theory and argued that Muslims in India were a separate nation. For him, religious identity trumped linguistic, ethnic or national identity. Ahmed’s magnum opus might focus on Jinnah but Gandhi emerges as a true hero in his book.

    In the short run, Jinnah succeeded. Pakistan was born. Yet Jinnah also left Pakistan with many of its current problems. He centralized all power, reduced states to the level of municipalities and postponed the drafting of a constitution. Even though Jinnah himself neither spoke his native Gujarati or urbane Urdu fluently, he made Urdu the official language of Pakistan. This infuriated East Pakistan, which eventually achieved independence in 1971. As Atul Singh, Vikram Sood and Manu Sharma point out in an article on Fair Observer, the rise of ethnic nationalism threatens the further disintegration of Pakistan for which Jinnah must take some blame.

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    Ahmed’s book also brings into the spotlight the role of facts, factlets and factoids. His facts are based on sources that are empirically verifiable. Factlets are interesting asides, which have value in themselves but may or may not have a bearing on the meta narrative. Factoids are just plain lies that are repeated so many times that many people start believing in them. The biggest factoid in the Indian subcontinent about the partition is the assertion that a majority of Muslims in British India wanted Pakistan. Another factoid is the belief that the Congress Party was as keen on Partition as the Muslim League. Ahmed’s book is strong on facts, keeps the readers interested by providing riveting factlets and demolishes several factoids.  

    Three Takeaways for Today

    Ahmed’s masterpiece offers us three important lessons.

    First and foremost, facts matter. For a while, myth may obscure facts, narratives might cloud truth, but eventually a scrupulous scholar will ferret out facts. As the English adage goes, “the truth will out sooner or later.”

    Second, religion and politics may make a heady cocktail but leave a terrible hangover. At some point, things spin out of control, riots break out on the streets, fanaticism takes over, jihadists go berserk and a garrison state emerges with a logic of its own. Such a state can be deep, oppressive and even somewhat effective but is largely disconnected from the needs and aspirations of civil society. Such a state is also unable to create a dynamic economy and most people remain trapped in poverty.

    Last but not the least, the zeal of new converts becomes doubly dangerous when religion and politics mix. These new converts can turn into fanatics who outdo their co-religionists. As the adage goes, they seek to be more Catholic than the pope. The noted Punjabi Hindu leader Lala Lajpat Rai’s father returned to Hinduism after converting to Islam. Master Tara Singh, the champion of an independent Sikh nation, was born a Hindu but converted to Sikhism in his youth. 

    Jinnah’s grandfather, Premjibhai Meghji Thakkar, was a Bhatia Rajput who converted to Islam after orthodox Hindus excommunicated Thakkar for entering the fishing business. Similarly, Pakistan’s national poet Muhammad Iqbal, who studied at Trinity College, Cambridge and the University of Munich, came from a Kashmiri Brahmin family. Iqbal’s father, Rattan Lal, was a Sapru who reportedly embraced Islam to save his life and was consequently disowned by his family. Pakistan was not created by a Pashtun like Abdul Ghaffar Khan or a half-Arab, blue-blooded sayyid like Maulana Abul Kalam Azad but by a Rajput and a Brahmin who were recent converts. Ironically, this nation now names its ballistic missiles after Turkish invaders, makes it compulsory for its children to learn Arabic and pretends its roots lie in the Middle East instead of the Indian subcontinent.

    *[Ishtiaq Ahmed’s book, “Jinnah: His Successes, Failures and Role in History” is published by Penguin Random House and available here. The same book is published in Pakistan by Vanguard Books and is available here.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    Modi’s India Is Becoming a Farce

    They say history repeats itself, first as a tragedy and then as a farce. At the dawn of India as a republic, several Western and Indian scholars, including Dr. Babasaheb Ambedkar, had reservations about its survival as a democracy. Widespread poverty, illiteracy and deep-rooted social divisions based on caste and religion were considered as serious threats to meaningful implementation of universal enfranchisement.

    For all his follies, Jawaharlal Nehru, India’s first prime minister, understood the importance of building democratic institutions and, with a few exceptions, worked tirelessly to nurture them. The 1975-1977 emergency under Indira Gandhi was the first open assault on the system. It was a tragedy. Now, under the leadership of Prime Minister Narendra Modi, Indian democracy is in danger of devolving into a farce.

    A Modi-fied India Has Weakened on the World Stage


    By suspending the constitution, along with fundamental rights, incarcerating political opponents and censoring the media, Mrs. Gandhi canceled all local elections and ruled by decree. While Indira Gandhi’s authoritarianism was largely secular, her son Sanjay Gandhi’s forced sterilization drive of Muslims in the name of population control shocked the national conscience. In less than two years, a strong opposition coalesced around an agenda to save the constitution and regain fundamental rights.

    The Judiciary

    What prompted Indira Gandhi to call for fresh elections in 1977 remains a mystery. However, she paid the political price through her drubbing at the hands of a united opposition. In due time, the judiciary took corrective measures by apologizing for its failures during the dark era. In contrast, recent utterances and actions by India’s judiciary, the opposition and the ruling party are truly baffling.

    Consider a recent speech by N.V. Ramana, the chief justice of India, lamenting the demise of investigative journalism in the country. The judiciary is expected to be above the political fray, but it is hard to believe that it is oblivious to ground realities. It strains credulity that the chief justice is not aware of the prevailing toxic media environment aided by anonymous fundraising, questionable changes in the Right to Information (RTI) Act and the indiscriminate use of legislation like the sedition law and the Unlawful Activities (Prevention) Act (UAPA) against journalists. Barring exceptional circumstances where suo moto action is warranted, the judiciary can act only through cases presented to it.

    However, several cases related to anonymous electoral bonds, RTI changes and sedition/UAPA claims are pending in the Supreme Court. Given the track record of the past three chief justices, such a statement would have been a case of chutzpah. Since Chief Justice Ramana’s heart seems to be in the right place and he has been more active than his predecessors in some cases related to fundamental rights, perhaps we can call it ironic.

    The Opposition

    Then there is the specter of a rudderless opposition. We can discuss the Indian National Congress when it finds a full-time president. Out of the other two parties vying for national attention, Mamata Banerjee of the Trinamool Congress brings back memories of Congress-era socialism that Modi had promised to move India away from. Assorted schemes for social justice and women’s empowerment have helped her guard her home turf against Modi’s juggernaut, but West Bengal is not exactly a shining example of industrial dynamism.

    Banerjee could be a socially liberal counterweight to Modi’s rabid Hindutva-laced pseudo-nationalism, but her instincts are every bit as authoritarian. Rather than offering a new kind of politics, her currency is her willingness to go head-to-head with the ruling Bharatiya Janata Party’s (BJP) scorched earth tactics and street brawls. While some of this bare-knuckle politics can be a necessary evil, her track record in tolerating dissent, promoting freedom of expression and encouraging entrepreneurship does not inspire confidence.

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    The Aam Aadmi Party (AAP) is a strange creature. While it has built a decent track record of administering New Delhi for seven years, it does not have a guiding philosophy by design. In addition to focusing on education and healthcare in the capital, the AAP has also done reasonably well in managing its balance sheet with good trade and tax policies. However, its central plank of offering freebies, although popular among some sections, harken back to India’s Nehruvian past.

    Socially, by not taking a strong stand vis-à-vis the 2019-20 Shaheen Bagh protests against the Citizenship (Amendment) Act (CAA) and embarking on a temple run, the AAP seems to be gunning for a Hindutva-lite posture. An anti-corruption crusade and developing policies through consensus on the go might work in assorted state elections, but the lack of a socio-economic vision will hurt the AAP in general elections where voters are suckers for stories. Unless it comes up with its version of India’s legacy, national destiny and its place in the world that includes coherent defense and foreign policies, it will not be a serious competitor to the BJP nationally.

    The Central Government

    The lion’s share of the credit for turning India’s growth story into a farce goes to Modi, the Rashtriya Swayamsevak Sangh (RSS) and their obsession with Hindutva. Just like every previous administration, Modi has a few successful initiatives to boast of. His infrastructure building spree has forced erstwhile social justice politicians to focus on this long-neglected need. Government schemes for building toilets, offering cooking gas and safe drinking water have borne some fruits. The startup economy saw a record number of unicorns in 2021, although most of them are helping India formalize unorganized sectors and catch up with the developed world.

    In the process, Modi is learning what the erstwhile Nehruvian politicians realized a few decades ago, namely that it’s easy to distribute someone else’s money until it runs out. In spite of “Make in India” and the rebranded “Atmanirbhar Bharat” campaigns, the share of manufacturing in India’s GDP has gone down from 16% to 13% under Modi’s leadership and employment in the sector has halved. Exodus from manufacturing toward inefficient agriculture has increased poverty among Indians. The service sector might see an uptick after the COVID-19 pandemic subsides, but with the pace of automation and Modi’s hodgepodge of trade barriers, even an unlikely rebound in manufacturing will not lead to robust economic recovery.

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    The effects are visible in the government’s borrowings and the historic unemployment crisis. The once-in-a-century pandemic is not Modi’s fault and the debt-to-GDP ratio going from around 70% to 90% is understandable. The prime minister was dealt a bad pandemic hand and chose surgical fiscal interventions instead of putting cash in people’s hands, which would have further exacerbated inflation.

    However, had the pre-COVID Indian economy not been in the doldrums because of Modi’s bad stewardship, interest rates on the borrowing would not have shot up by 30-60 basis points before the 2022 budget, pushed up further by 20+ points as soon as another massive borrowing program was announced in the budget. With the US Federal Reserve staring at a series of interest rate hikes in 2022, borrowing might get even dearer for India.

    The resulting policy muddle and unemployment crisis are so stark, that even Arvind Subramanian, Modi’s former chief economic adviser, and Varun Gandhi, a parliamentarian from his own party, are finally speaking up. They are openly discussing India missing the boat of attracting manufacturers fleeing authoritarian China and seeing the demographic dividend — one of the few advantages India has over China that it cannot quickly fix — turn into a demographic disaster. While the rich will find ways to evade taxes and the poor don’t pay any, it is the middle class — enamored by the Hindutva ideology — that will shoulder the soaring debt.

    BJP-Ruled State Governments

    The story gets more farcical in BJP-ruled states. To placate unemployed youth, Haryana has passed a draconian job reservation law that reinstitutes Congress-era license raj and bureaucracy. In Uttar Pradesh, the BJP’s infrastructure poster-boy Yogi Adityanath has his own brand of lawlessness, exhibit A being the unconstitutionality in dealing with anti-CAA protestors.

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    Allahabad’s high court has already struck down critical provisions of Uttar Pradesh’s new “love jihad” law. That has not stopped Karnataka from wasting the state legislature’s time in debating an even more draconian and unconstitutional anti-religious conversion bill. Industry honchos drawing up plans to attract global talent to Bangalore seem unaware that in a worldwide competition for the best brains and entrepreneurs, few are interested in living in a country that cannot guarantee the rule of law, an efficient judiciary and personal freedoms.

    India might have edged out China in venture investments in 2021 due to Beijing’s crackdown on startups and Delhi still lagging behind in formalizing its economy. However, the celebration will be short-lived if India keeps marching in China’s direction in terms of the state’s heavy-handedness and assault on personal liberties. It is becoming increasingly clear that Modi, the so-called nationalist, purchased a cyber weapon — the Pegasus spyware — from a foreign country and used it against his innocent fellow citizens without any warrant or probable cause. Meanwhile, BJP-ruled states are busy competing amongst themselves in further undermining rule of law and due process.

    Looking Ahead or Back?

    As India kicks off the celebrations for the 75th anniversary of independence, Modi is lucky that his predecessors built robust space, missile and nuclear programs, respectable academic institutions that are churning out professionals leading the budding startup scene, a generic medicine and vaccine sector that saved India money in the pandemic, a professional military not infested by religious fundamentalism as well as defense production companies ripe for public-private partnerships. In a hostile neighborhood made even more so by Modi’s hubris, one shudders to think what he would have done without all these national assets.

    And yet, with no money left to redistribute and no quick fixes to the unemployment crisis, Modi has now embarked on mixing Hindutva with education. As if the Covaxin approval without phase 3 clinical trial data and Ramdev Baba’s Coronil controversy were not enough, a parliamentary panel has proposed teaching the Vedas in public schools. IIM Ahmedabad has started offering a Bhagavad Gita-based management course. IIT Kharagpur has courses in Vaastu and ancient Indian knowledge systems in the pipeline.

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    While the American private sector looks for ways to augment the government’s R&D funding juggernaut for secular scientific discoveries and knowledge creation, Modi is busy looking backward and further decimating India’s social capital. Despite the fanfare surrounding the new National Education Policy, funding for education has gone down from 4.4% to 3.4% of GDP and R&D funding is stagnant at 0.6%-0.7% of GDP.

    Fifty years after the emergency, India is still paying the economic price for Indira Gandhi’s misplaced jingoism and disastrous nationalization of huge swaths of industry. Narendra Modi’s authoritarian rule has India already staring at a demographic disaster for another generation, with potentially longer-lasting consequences. Gods and goddesses have mercy on India.

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    Liberalizing India’s Economy Is Critical for Global Stability

    The COVID-19 pandemic is increasing inequality globally and even advanced economies have not been spared. Before the pandemic began in 2020, inequality was on the rise. Decades of globalization, loose monetary policy and the rise of oligopolies have contributed to this phenomenon. In many ways, globalization has kept inflation down. When Walmart imports Chinese goods, Americans get more for less.

    China can manufacture cheaply because labor costs are low. The Chinese Communist Party (CCP) also runs an authoritarian regime. The regime has repressive land and labor laws with scant regard for human rights. Legally, the CCP owns all the land in China and can appropriate any property it wants. Similarly, workers have little recourse to courts and sometimes work in slave-like conditions.

    360° Context: The State of the Indian Republic


    A rising China is challenging the postwar global order. Democracies, including the United States, are finding it difficult to meet the challenge for two reasons. First, loose monetary policies in recent years have brought back the specter of inflation. Second, no economy other than China’s can meet the supply needs of advanced economies. From laptops to toys, most goods are made in China.

    Labor arbitrage has defined globalization from its early years. Companies set up factories where wages tend to be lower. This increases revenues and profits, making consumers and shareholders happy. Given rising inflationary expectations, advanced economies need labor arbitrage to keep costs of goods down. At the same time, these democratic societies want to decouple their supply chain from China.

    With the size of its young workforce, India has a unique opportunity to become the new workshop of the world and emerge as a stabilizing global force in a multipolar world. To grasp this historic opportunity, it has to liberalize its economy wisely.

    The Legacy of the Past

    India could do well to heed the lessons of the past. The Soviet Union, Western Europe and the US emerged as strong economies after World War II by leveraging their manufacturing base. The war economy had led to a relentless focus on infrastructure, mass production and industrialization. In the case of Western Europe, the Marshall Plan helped put shattered economies back on track.

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    Over time, these advanced economies deindustrialized and production started shifting to emerging economies. China’s rapprochement with the US allowed it to enter the postwar Western economic system. Reforms in 1978 were critical to its success. The fall of the Soviet Union in 1991 created a brave new world where companies chased cheap production. China, with its size, scale and speedy centralized decision-making, emerged as the big winner.

    As production moved to China, workers lost jobs in advanced economies and other industries did not emerge to retrain and employ them. The Rust Belt in the US has become a synonym for down-at-heel places left behind by globalization. Even as workers grew poorer, shareholders grew wealthier, exacerbating inequality.

    Today, the United States finds itself in a complicated position with China. On the one hand, the Middle Kingdom steals intellectual property, transgresses international law and challenges the US. On the other hand, it supplies American consumers with cheap goods they need. America’s economic stimulus during the pandemic has, in fact, reinforced the country’s dependency on China. So, Washington cannot hold China’s feet to the fire and penalize its bad behavior. Beijing follows its policy of pinpricks short of outright conflict.

    The US dollar is the reserve currency of the world. Since the days of Alan Greenspan, the Federal Reserve has followed a loose monetary policy. After the 2007-08 financial crisis, the US adopted the Japanese playbook from the 1990s and introduced quantitative easing. In practice, this means buying treasury and even corporate bonds to release money into the economy after interest rates touch zero. Such increased liquidity in the US has led to bloated company valuations and allowed the likes of Amazon or Uber to expand their operations. The cost of capital has been so low that profitability in the short or even medium run matters little.

    Loose monetary policy has enabled the US to counter China’s state-subsidized companies to some degree. Yet both policies have distorted the market. The US can only continue with loose monetary policy as long as inflation is low. Should inflation rise, interest rates would also have to rise. This might trigger a stock market collapse, increase the cost of capital for its companies and weaken the global dominance of the US economy.

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    To persist with its economic model and simultaneously contain China, the US needs to curb inflation. This is only possible by shifting some if not all production away from China. Mexico, Vietnam and Bangladesh are possible alternatives. Mexico has a major drug, violence and governance problem. Vietnam and Bangladesh benefit from huge Chinese investment. Therefore, they might not be the best hedge for securing supply chains from the Middle Kingdom, especially if the companies manufacturing in these countries are Chinese.

    As a vibrant democracy with a formidable military, India offers the US and the West a unique hedge against China. For geopolitical reasons alone, manufacturing in India makes sense. However, doing business in the country continues to be difficult because of red tape, corruption, erratic policymaking, a colonial bureaucracy with a socialistic culture and more.

    India’s Nehruvian past still hobbles the nation’s economy. The country adopted socialist command-and-control policies using a colonial-era bureaucracy that prevented the economy from achieving high economic growth. Manufacturing suffered the most. To start a factory, any entrepreneur needed multiple licenses that cost time, money and energy. Poor infrastructure made it difficult for manufacturers to compete with their East Asian counterparts. While wages were low in India, the cost of doing business made many manufacturers uncompetitive.

    Acquiring land in India is still a challenge. The experience of the Tata group in Singur revealed both political and legal risks that still exist. Similarly, convoluted labor laws made hiring and firing onerous, rendering companies inflexible and unable to respond quickly to market demand. Liberalization in 1991 improved matters, but the state continues to choke the supply side of the Indian economy.

    In the second half of the 1990s, liberalization lost momentum. Coalition governments supported by strong interest groups stalled reforms. In fact, India drifted back to left-leaning policies starting 2004 and this severely limited economic growth. For instance, many industrial and infrastructure projects were killed by ministers to protect the environment. India’s toxic legacy of Nehruvian socialism persisted in terms of continuing state intervention. The country never meaningfully transitioned from an agricultural to an industrial economy and still suffers from low productivity. This in turn has constrained consumption and slowed down growth.

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    India’s much-heralded information technology sector only grew because it was new. The government did not exactly know what was going on and, as a result, there were fewer regulations to constrain this sector. Fewer regulations meant that the likes of Infosys and Wipro had greater autonomy in decision-making and fewer bribes to pay.

    Reduce Red Tape

    The first thing that India needs is an overhaul of its colonial-era bureaucracy that resolutely strives to occupy the commanding heights of the economy. It foists endless red tape on business, strangles entrepreneurship and takes too long to make most decisions. Government service is seen as lifelong employment. Once people become bureaucrats, they have little incentive to perform. Like their colonial predecessors, they lord over citizens instead of serving them. Rarely do they craft sensible policies. Even when a government comes up with a good policy, bureaucrats implement it poorly when they are not sabotaging it actively. This must change. Bureaucrats must be accountable to citizens. Performance-linked promotions and dismissal for underperformance are long overdue.

    Over the years, politicians have tried to deliver benefits and services to citizens to win reelection. To get around a corrupt, colonial and dysfunctional bureaucracy, they instituted direct benefit transfers for welfare schemes, emulating other emerging economies like Brazil. This move is necessary but not sufficient. India needs sound economic policymaking directed by domain experts in each administrative department.

    Only members of the Indian Administrative Service (IAS) occupy key positions in the finance ministry. Instead, India needs economists, chartered accountants, finance professionals and those with varied skill sets in this ministry. The treasuries of the US, Britain, Germany and almost every advanced economies have this diversity of talent in their upper echelons.

    There is no reason why economic policymaking in 21st-century India should be monopolized by an archaic IAS. The government has made noise about the lateral entry of professionals into policymaking, but tangible results have been few and far between.

    If the bureaucracy holds India back, so does the judiciary. Nearly 37 million cases are pending in the courts. It takes around six years for a case to be resolved in a subordinate court, over three years in the high courts and another three years in the supreme court. A case that goes all the way to the supreme court takes an average of 10 years to resolve. Many cases get stuck for 20 to 30 years or more.

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    India needs to reform its judicial system if its economy is to thrive. Justice is invariably delayed, if not denied, and it also costs an arm and a leg. Not only does it add to transaction costs, but it also undermines business confidence. Virtual courts have already shown the way forward during the pandemic. A higher number of judges using both in-person and online technology could reduce the seemingly unending number of pending cases.

    Create Efficient Markets

    To improve labor productivity and consumption, the government must reduce inflation and improve purchasing power. For decades after independence in 1947, India was united politically but divided economically. Producers in one state could not sell in other states without paying taxes and, in some cases, bribes. In agricultural markets, they could not even sell in other districts. India’s new goods and services tax (GST) might be imperfect, but it has already made a difference. Even during a pandemic, interstate goods movement rose by 20% and menu costs, a term in economics used for the costs of adapting to changing prices or taxes, dropped because tax filings were done online.

    The 2016 Insolvency and Bankruptcy Code has led to major efficiency gains. Now, lenders can recover their debt more speedily. Bankruptcy proceedings are now much simpler even if haircuts remain high. Unsurprisingly, India has risen in the World Bank Doing Business rankings from 130 in 2016 to 63 in 2020.

    As Atul Singh and Manu Sharma explained in an article on Fair Observer in 2018, non-performing assets of Indian banks have led to a financial crisis. The government could do well to adopt some if not all the reforms the authors suggested. Given rising inflationary pressures because of rising oil prices, India’s central bank can no longer cut rates. So, the government has to be creative in tackling its banking issues and free up liquidity for Indian businesses with great potential to grow. Banks burnt by poor lending in the past and fearful of corruption charges as well must discover the judgment and appetite to lend to deserving businesses in a fast-growing economy that needs credit for capital formation.

    A little-noticed need of the Indian economy is to strengthen its own credit rating systems and agencies. Capital flows are aided by accurate corporate and political risk assessment. The US enjoys a global comparative advantage in attracting investments thanks to the big three homegrown agencies: S&P, Moody’s and Fitch. These agencies tend to fall short in their India assessment. The standards they set give American companies an advantage over Indian ones.

    Therefore, both the private sector and the government must strengthen Indian rating agencies such as CRISIL and ICRA. These agencies are improving continuously. They now have access to increased digital high-frequency data, which they can interpret in the domestic context. As a result, Indian agencies can benchmark corporate or sovereign risk better than their American counterparts for domestic markets. A better benchmarking of risk is likely to deepen the bond market and cause a multiplier effect by enabling companies to raise money for increased capital expenditure.

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    For decades, India followed a socialist model of agriculture, doling out large unsustainable subsidies. As Singh and Sharma explained in a separate article, the Soviet model was the inspiration for the Indian one. Indian agriculture denuded groundwater, emptied government coffers and lowered farm productivity. The current reforms allow farmers to grow what they want and sell wherever they want to bypass parasitic middlemen. The new legislation emulates the US farm bills and promises to boost agricultural production, lower inflation and increase exports. This legislation might also lower rural hunger and improve India’s human capital in the long term.

    India has to transition hundreds of millions from agriculture to industry. Currently, 58% of the country’s population is dependent on agriculture and contributes just 20% to gross domestic product (GDP). All advanced and industrialized economies have a much lower percentage of their populations engaged in agriculture. In the US, the figure is 1.3% and in Vietnam, 43% work in agriculture. The last time the US had 50% of its population engaged in agriculture was in 1870.

    Improve Infrastructure

    To facilitate movement from agriculture to industry, India must invest in infrastructure and urbanization. For decades, its infrastructure has been woefully inadequate. Indian cities are known to be chaotic and do not provide basic services to their citizens. Recently, India launched a $1.9-trillion National Infrastructure Pipeline that is engaged in a rollout of road, rail, seaport and airports to connect centers of manufacturing with points of export. This focus on infrastructure has to be consistent and relentless.

    India could emulate Chinese cities like Chongqing and Shenzhen that could be home to industry and hubs of trade, both domestic and international. Projects like the smart city in Dholera, 80 kilometers from Gujarat’s capital of Ahmedabad, are the way forward. Similarly, the new Production Linked Incentive scheme is the sort of policy India needs. The Tatas are setting up a plant to manufacture lithium-ion batteries under this scheme. Not only could Indian industry meet the needs of a fast-growing market, but it could also be a source of cheap imports for many other countries.

    India must not only focus on metropolises, but also smaller cities and towns where the cost of living is lower. Digitalization of work will allow people to stay in such urban areas. Of course, they will need investment and organization for which India must tap capital and talent not only nationally but internationally. For instance, pension funds in North America and Europe are seeking growth to meet their increasing liabilities. If India could get its act together, investment into Indian markets could be significant.

    A key part of infrastructure that needs reform in a low energy consumption society is the power sector. Gujarat’s growth is underpinned by increased production and improved distribution of electricity. The rest of the country must emulate this westernmost state and Gujarat itself must bring in further reforms. Renewable energy sources such as gas, solar, wind and hydro must grow further. A nationwide energy market would bring in efficiency gains and boost growth.

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    A focus on renewable energy also brings risks and opportunities. Currently, China controls critical metals and rare earths required in electric vehicle and battery manufacturing. Beijing has an effective monopoly over 80% of the world’s cobalt, 50% of lithium, 85% of rare earth oxides and 90% of rare earth metals. A decarbonized future cannot be intrinsically linked to an authoritarian state that has a history of not playing by free market rules.

    India’s $1.1-billion “Deep Ocean Mission” offers a unique opportunity for the country to provide energy security to democratic nations in North America, Europe and elsewhere. As they transition to clean technologies, India can provide a safer, more reliable and benign alternative to an increasingly belligerent China.

    In 2021, India has a historic opportunity to enter a new economic arc. The global conditions could not be more favorable. Advanced economies are looking to decouple from China without triggering inflation. India is the only country with the size and the scale to be an alternative. Its large youth population and rising middle class are powerful tailwinds for high economic growth. Indeed, India owes it not only to its citizens, but also to the rest of the world to get its act together and become a force for global stability at a time of much volatility and uncertainty.

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    When Truth No Longer Matters

    An effective communicator with a questionable past builds a successful campaign as an outsider disinterested in everyday, run-of-the-mill politics. He smartly taps into the fears and anxieties of voters and projects himself as the only person who can fix the supposedly broken system.

    Despite warnings from ex-associates and journalists regarding his sociopathic behavior, he decries the media and political opponents as unpatriotic. Policy wonks and veterans in his party are sidelined to create a personality cult unmoored from any ideology. Social media is used daily for dog-whistle rhetoric to promote the cultural supremacy of his ilk.

    Donald Trump Proves That It’s the System, Stupid


    By blaming all the socio-economic ills on outsiders, previous administrations and “others,” he builds a narrative of victimhood. His devoted followers start living in an alternate universe. Once in power, he uses his bully’s pulpit to undermine all democratic institutions.

    Riding Out the Storm

    You would be forgiven for thinking that this was about Donald Trump. But this is the story of India’s prime minister, Narendra Modi. The similarities end there, however. While the United States managed to pull back from the brink after the Capitol Hill insurrection of January 6, Indian democracy is in a dangerous downward spiral.

    To understand these divergent trajectories of the oldest and the largest democracies in the world, it is instructive to examine the key differences between Trump’s and Modi’s personalities, the maturity of democratic institutions in the United States and India, and the histories of these two republics.

    In the US, Trump’s effort to subvert democratic institutions has been well documented, with commentators still writing about how close the country had come to a constitutional crisis in his final days in office. Trump tried his best to manipulate all the American institutions, but there was rarely any method to his madness. Unlike Modi, he was more interested in vanity than power.

    On a given day, he could draw lines on a map for petty reasons and undermine the National Oceanic and Atmospheric Association or brazenly call the officials in Georgia and ask them to “find” enough votes in Trump’s favor to reverse the election result in the state. As much as Trump and his partner-in-crime, Attorney General William Barr, tried, they could not corrode the integrity of the system beyond a certain point.

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    Despite Trump’s vilification, the media stayed strong and kept hammering home the truth. While Trump tried to use the judiciary to run down the clock on several grave constitutional issues, scores of judges, including several appointed by the president, stood up to him when it mattered the most. The legislature impeached but failed to convict him twice. However, when push came to shove, it certified the votes and declared Joe Biden as the legitimate winner of the 2020 election.

    Barring a few minor missteps, the FBI withstood a concerted pressure campaign from Trump and his allies. The Federal Reserve, the Federal Election Commission, the intelligence agencies, vast bureaucracies and diplomats around the world kept their heads down and rode out the storm. With more than two centuries of experience, most American institutions have learned the importance of guarding their turf.

    Taming the Bureaucracy

    In India, on the other hand, while running his home state of Gujarat before becoming prime minister, Modi had perfected the art of taming the bureaucracy to his will, manipulating or marginalizing the media and polarizing the electorate for his narrow purposes. While he did deliver on a few key infrastructure promises, he also carefully crafted a larger-than-life persona around himself. As soon as he became prime minister, he stopped interacting with the media.

    Well before facing reelection in 2019, he enacted an anonymous political funding system and used it to build a formidable social media propaganda machine to fabricate an alternate universe for his voters. Behind the scenes, he methodically started dismantling the democratic checks and balances. While Trump’s Senate Majority Leader Mitch McConnell might not have been intent on destroying American institutions, Modi proved to be more like McConnell than Trump — someone playing the long power game.

    While previous governments of opposing parties were often guilty of undermining democracy, the brazenness and the cold, calculating manner in which Modi has approached it are astonishing. By using obscure parliamentary maneuvers, the prime minister has repeatedly sidelined or manipulated the Rajya Sabha, the upper house of Parliament, to pass laws that have long-term and far-reaching social consequences.

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    In addition to passing questionable constitutional amendments to enact his anonymous political funding scheme, the Right to Information Act (the equivalent of the American Freedom of Information Act) was amended so that those ensuring public access to non-classified government records lost their independence. As a consequence, it became increasingly difficult to shed light on the government’s opaque decision-making.

    The enormous war chest built through anonymous political donations, the government’s sizable advertising budget and the threat of central investigative agencies were used to browbeat most of the media outlets into submission. A top Election Commission official who took a stand against Modi’s incendiary rhetoric in the run-up to his reelection was reassigned to the Asian Development Bank, headquartered in the Philippines.

    The Reserve Bank of India, in charge of the country’s monetary policy, has been repeatedly coerced into taking unsound policy decisions and covering up for the government’s fiscal and economic policy failures. Policymaking powers of at least two states, Jammu and Kashmir and Delhi, have been curtailed through potentially unconstitutional means, disturbing India’s federal structure. The military has been repeatedly co-opted for Modi’s photo-ops to promote phony nationalism. Meanwhile, the Supreme Court has been a mute spectator, keeping on hold the hearing of cases related to some of the most pressing constitutional issues.

    As the unfolding global Pegasus spyware scandal indicates, Modi has probably compromised the judiciary’s independence as well. By allegedly hacking the phones of everyone from political rivals, constitutional authorities, judges, their staffers to activists, journalists and even his own ministers and friends in the private sector, Modi seems to have established an Orwellian surveillance-coercion state in which it is extremely difficult, if not impossible, to challenge the power of his executive branch.

    Opposite Paths

    Why have India and the US embarked on such opposite paths? One reason is the difference between the two leading men themselves. A devoted foot soldier of right-wing Hindu majoritarian ideology, Modi rose through the political ranks and served more than two terms at the helm of the state of Gujarat before running for the highest office in the land. He had carefully studied all levers of executive and bureaucratic power and, along with his deputy, Amit Shah, had already gained notoriety as one of the country’s most ruthless politicians.

    While both ran their campaigns as outsiders, Trump’s understanding of the government machinery was limited. As former National Security Adviser John Bolton recently pointed out, Trump is incapable of staging a coup because he lacks the attention span required for it. With no discernible political acumen, Trump was incapable of looking beyond the next news cycle or his narrow self-interest.

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    The American system dodging the Trump bullet and the Indian system crumbling under Modi also reflect the wide gulf in their socio-cultural values. By insisting on universal adult suffrage from its inception, the founding fathers of the Republic of India expressed tremendous faith in the citizenry and future leaders despite a severe resource crunch, a moribund economy and near-total absence of infrastructure for health, education or even basic transportation.

    While giving every adult the right to vote is hailed as a quintessentially Indian revolution, and rightly so, it has been a double-edged sword. On one hand, it has dismantled the centuries-old feudal social structures and slowly empowered historically oppressed castes. On the other, limited institutional capacity and lack of appreciation for their independence among voters have made the Indian system susceptible to demagoguery in the short run. This will change as India becomes more prosperous and internalizes the benefits of decentralizing power, but that brings into sharp relief Modi’s betrayal of his mandate.

    Fledgling Democracy

    At 75, India is still a fledgling democracy. It has already gone through one emergency under former Prime Minister Indira Gandhi, when all institutions, state and national elections, and fundamental rights were suspended amid near-total media censorship. While the Supreme Court took corrective action after the emergency, widespread poverty and, until recently, low levels of literacy have hampered rapid institutional capacity building in India. Corruption is endemic to all branches of government, making them easy targets for manipulation.

    In its short history as a republic, the socialist economic model adopted by India’s pre-1990 governments has also created a new feudal system in the form of political patronage. With the government tightly controlling the economy, politicians became the new overlords picking winners and losers. As the initial euphoria and idealism following independence faded, criminals came to dominate politics. Corruption became the mainstay of political life.

    While these might be birth pangs of any new republic — and might find parallels in the early decades of the existence of the United States — complacency and arrogance of the Indian National Congress (INC), India’s GOP, has fueled the rise of Modi.

    A Modi-fied India Has Weakened on the World Stage


    In the 1970s and 1980s, a 21-month-long national emergency, followed by legislative action favoring minorities to protect the INC’s own vote banks, had led to resentment among the Hindu majority. Instead of correcting some of these historic wrongs to move the discourse to a liberal center, Modi has swung it to the extreme right. He has not taken any overt steps that resemble the emergency that Indira Gandhi declared in 1975. Instead, he has chosen covert means to slowly and deliberately dismantle the Indian system of governance.

    More importantly, while Gandhi’s methods were largely populist, Modi has added toxic majoritarianism to it, making this movement more dangerous, with potentially longer-lasting consequences. For someone who claims that he developed his political consciousness during the emergency, Modi’s assault on the liberal system that enabled his rise from humble beginnings is truly ironic.

    A leader who promised to decentralize power and dismantle India’s new feudal system of political patronage now presides over one of the most centralized decision-making structures. When the framers of the Indian Constitution chose universal adult suffrage, they also expected elected leaders to nurture democratic institutions until they can stand on their own feet. Modi’s betrayal of that mandate, more so than Gandhi’s, will affect India for a generation, if not longer.

    Dark Phase

    Lastly, while the American system was built on an ethos of “don’t tread on me” and a desire to keep government out of people’s lives, historical factors like entrenched feudalism and extreme cultural diversity made India choose a cradle-to-the-grave approach to governance with a strong central executive.  

    Americans instinctively question authority and are suspicious of the government, whereas Indians, by and large, have tremendous faith in the government as a source of good and are still coming out of the shadows of colonialism. American society values individual liberty, privacy and agency, while Indians gravitate toward collectivism and fatalism.

    Perhaps the most telling indicator of this difference was the fact that Trump’s approval rating never crossed 45% while Modi commands favor among 60% to 70% of Indians despite his mismanagement of the pandemic, a series of foreign policy failures and the economic destruction under his watch.

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    Indian democracy is going through a dark phase, and all eyes are on the Indian Supreme Court to see if it will push back against Modi’s draconian executive branch. Even if the courts start asserting their independence again, India will pay a steeper price than the US did under Trump before it becomes a healthy democracy again. For the sake of their own democratic future, one can only hope that Indians start questioning their government more, hold it accountable and insist on securing privacy and liberty.

    While fast, centralized decision-making might seem seductive in the short run, India will reap long-term benefits if it can turn its latent admiration of developed Western countries into a deeper appreciation for the checks and balances that enable their stability. Against all odds, India has stared down some of the toughest challenges so far. With some more patience, if it can focus on building institutional capacity and spreading awareness about their importance through rapid upgrades in the quality of education, it will live up to its potential of becoming a liberal, democratic counterweight to China.

    Meanwhile, supporters of republican values in the United States will do well to learn from the goings on in India and count their blessings, or institutions, that helped the union survive Trump. In early August, as members of the House committee investigating the failed insurrection of January 6 heard gut-wrenching testimonies from Capitol Police, some of their Republican colleagues held press conferences blaming House Speaker Nancy Pelosi for the tragic events.

    As the January 6 commission has reconvened and subpoenaed scores of records from the government and private phone companies, Trump and his congressional supporters are back at it again, claiming executive privilege and threatening private companies with consequences if they cooperate with the commission to prevent it from shedding light on the truth.

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    The GOP leadership is keen on winning back both the houses of Congress in 2022 and knows the damage this fact-finding mission will do to electoral prospects. Some pushback or false equivalence is par for the course in this political game. However, the brazenness of the lies and fealty to Donald Trump more than six months after his ignominious While House exit is mind-boggling. Without condoning the messy last days of the US war in Afghanistan, they can take a leaf out of President Biden’s book to square with Americans about the systemic risk Trumpism poses to the system.

    As national attention shifts from the Afghanistan war to other domestic and foreign policies, insisting on the truth by supporting the January 6 investigation, even at the cost of losing one election cycle, would be a small price to pay for the conservatives to preserve the republic.

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    The State Versus the People: Who Controls the Internet?

    India’s government and Twitter have been fighting a legal battle over compliance with domestic laws. In June 2020, the tech giant failed to make key local appointments required under India’s new information technology rules. Twitter has more than 22 million users in India and was recently categorized as a “significant intermediary” alongside Facebook and WhatsApp.

    Soon after, the companies were required to appoint three Indian officers to a mandatory compliance and grievance redress mechanism. The government’s aim is to make social media companies more accountable to local law enforcement agencies. These officers would help local authorities access data from servers. While WhatsApp and Facebook complied, Twitter did not.

    When Technology Cancels Anonymity


    In retaliation, the Indian government petitioned and then stripped Twitter of its “safe harbor” immunity that protects them against liability for the content posted by users. Non-compliance has made Twitter vulnerable. Ever since, it has faced four major lawsuits from some of India‘s top statutory bodies, including the National Commission for Protection of Child Rights.

    During an appearance in the Delhi High Court, Twitter denied having any intent to contravene government regulations. In response, one official characterized Twitter’s position as a “prevarication” that “cocks a snook at the digital sovereignty of this country.”

    Today’s Daily Devil’s Dictionary definition:


    A term used to foreignize a rival while claiming moral supremacy and projecting oneself as an insider

    Contextual Note

    India is not alone in expecting tech giants like Twitter and Facebook to be subject to local laws. States across the world use various data localization legislation to assert their sovereignty. Over the years, companies have been asked to place their servers within national jurisdictions. Alternatively, governments have claimed copies of all data and unhindered access to servers located abroad. According to data collected by the European Centre for International Politics Economy, the number of such laws existing in 2010 more than doubled by 2015, from 40 to over 80. That number has been steadily increasing.

    Data localization trends reflect a certain sense of insecurity among states about diluting their digital sovereignty. In an article on digital sovereignty and international conflicts, James A. Lewis defines it as “the right of a state to govern its network to serve its national interests, the most important of which are security, privacy and commerce.”

    Nevertheless, the irony in this scenario is hard to miss. Little prevents information from being circulated on the largest technology markets due to companies and their vulnerability to being influenced. Government access to servers located in India or elsewhere cannot potentially exclude these enterprises themselves. At the very least, host countries pose a constant security threat concerning the data stored on servers in their jurisdiction. These states hold significant leverage.

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    Making matters worse, most global servers are concentrated in a select few powerful countries. Four of the world’s five largest server facilities are located in the US. Although seemingly borderless, the internet extensively depends on a physical infrastructure, which makes it vulnerable to interference. This makes data localization ineffective and hard to implement. For instance, since 2016, Forbes has identified multiple instances in which WhatsApp shared data with the US government. It may be that there are no laws that can provide states with the supremacy they seek. 

    These issues are not new. Experts have been dealing with the redundancy of data localization laws for some time. Lewis warns of an impending Balkanization of the internet because of such laws. He posits that each state seeking its own internet may lead to no internet at all.

    However, the struggle between omnipotent states and omnipresent corporations could have deeper impacts on where global power lies. Apart from the practical problem of granting each state supremacy, the fundamental question relates to our current idea of sovereignty and its bearing on our times.  

    Historical Note

    The modern idea of sovereignty was arguably formulated in Europe with the Treaty of Westphalia in 1648. The treaty brought an end to more than a century of continuous religious violence in the Holy Roman Empire. It was the culmination of various failed attempts that built up to the idea of recognizing a supreme authority within a territory that took on the character of a nation-state. However, sovereignty is a much wider concept with many variants.

    Modern sovereignty is envisaged as the political power held by one authority. Historically, that has not always been the case. Overlapping power was distributed between the monarchs and the Catholic Church throughout most of the Middle Ages. Monarchs dealt with the temporal prerogatives of society. Here too, authority was highly distributed among nobles and vassals responsible for maintaining the monarch’s troops. The church dealt with spiritual considerations. It stood as the conscience keeper of both monarchy and society, which permitted the church to play an active role in the secular authorities’ decisions. The church held large tracts of land and actively participated in wars.

    Thus, the Westphalian notion of “supreme authority over a territory” was established by overriding powerful historical forces in the process, including some that were even more powerful than the monarchs.

    The Treaty of Westphalia stripped the churches of their decision-making power. Pope Innocent X immediately expressed his reasoned disagreement along with his taste for provocative adjectives, calling the treaty “null, void, invalid, iniquitous, unjust, damnable, reprobate, inane, and empty of meaning and effect for all time.” 

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    Present-day corporations share some of the features of the mighty nobles and ecclesiastics of the past. At $2.1 trillion, Apple has a market capitalization greater than the GDP of 96% of the world’s countries, while Amazon surpasses 92% of country GDPs at $1.7 trillion. Undoubtedly, they command the digital realm with no real challenge to their authority and would be unlikely to accept a challenge by believers in modern sovereignty.

    Modern sovereignty was established on the basis of a territorial element, against large trans-border forces like religion. Unsurprisingly, it failed in its motives beyond curbing immediate violence. Today, the forces that states face are similar in their reach. The current scenario concerning data localization laws bears an uncanny resemblance to the Peace of Augsburg of 1555.

    At Augsburg, political forces sought to curb conflict by nationalizing religion. States agreed on the principle of cuius regio, eius religio, meaning that the prince’s religion would be their realm’s religion. This created power blocs consisting of countries practicing similar religions. This provided the historical logic behind the devastating Thirty Years’ War. Today, the Balkanization of the internet may result in blocs of states with similar laws, leading to potentially disastrous outcomes for internet freedom.

    The idea of sovereignty originated from morality and not mere capability. It may be legitimate to ask whether states, rather than people, are the correct party to claim rights to privacy and data protection. States have been equally guilty of exploiting access to private information. Recently, numbers of prominent political figures, journalists, human rights activists and business executives in more than 50 countries appear to have been targeted using the Pegasus spyware supplied by the Israeli cybersecurity NSO Group. Adding data privacy to the laundry list of state prerogatives, only because they concern supposedly foreign elements, may be an act of overreach. 

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    Instead, it may be up to individuals across the world to decide who they sign a contract with to secure a connection to the gods — the satellites in the sky. Just as monarchs, who unlike the church lacked the power to legislate the terms of salvation, today the state may be incapable of regulating what doesn’t belong to its realm: the internet. At best, it could play the role of facilitating a contract between the people and the tech giants.

    Hence, adapting to the changing times may require revising our concept of sovereignty. It will not be easy. The French philosopher Jacques Maritain, in his book “Man and the State,” traced the significant circumscription of sovereignty in the wake of World War II. States have at least theoretically united and often consensually given up on their supreme authority on subjects such as human rights and climate change. Supranational arrangements like the EU are testaments to the changing times and ideas.

    The rise of a new digital realm may provide us with a chance to forge this change. It could help us question whether issues like data privacy and protection should be subject to a state’s consent or whether they concern the people, who might want to define their own personal sovereignty. 

    *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More