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      India’s Highway Construction Is in the Fast Lane

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      When experts look back at the early 2000s, they will observe that India embarked on a construction spree to develop its transport infrastructure. The country is emulating what the United States and Europe did in the previous century and what China and East Asia have done more recently. Traditionally, India focused on railways. For the last 20 years, roads have been the priority. Now, the country is also focusing on its 116 rivers and long coastline to develop commercial waterways. 

      As is well known, various factors contribute to a nation’s development. The most fundamental is the availability of food and water for the population. Here, India has had some success since its independence in 1947. In health care and education, India can and must do better. India also needs to improve safety and security for its citizens and improve the rule of law. The factor most important for India’s development is perhaps transportation because it has the greatest multiplier effect on the economy. As a result, transportation has the greatest potential to improve the lives of ordinary citizens.

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      Transportation infrastructure, such as railways, roads, air traffic and waterways, are the arteries of a country’s economy. The German economy was built on the backbone of an outstanding railway system and the legendary autobahn. The US is knit together by a crisscrossing network of freight trains, interstate highways and airports. Advanced economies like Japan, South Korea, Switzerland and the Netherlands are known for their evolved infrastructure.

      In recent years, China has set the standard for implementing infrastructure at a scale and speed unprecedented in history. Most economists credit spectacular rates of economic growth to Chinese investment in infrastructure. India is betting that building good infrastructure will boost growth, create jobs and raise the standard of living for hundreds of millions.

      Railway and Highway Infrastructure

      According to a 2018 report by NITI Aayog, the premier policy think tank of the Indian government, 59% of all freight in India is transported by road, 35% by railways, 6% by waterways and less than 1% by air.

      On March 31, 2020, India’s railway track length stood at 126,366 kilometers and, on March 31, 2019, the length of national highways was 132,500 kilometers. Per 100 square kilometers, India has more railway tracks and highways than countries like the US and France. This does not necessarily mean India is doing well. South Korea and Japan have over four times the highway length per 100 square kilometers.

      Instead of the density of infrastructure per unit area, density per population size seems to be the more accurate metric. When it comes to infrastructure per million people, India fares very poorly. For instance, Indonesia’s population is merely 20% of India’s, but its highways are twice as long as India’s. South Korea’s population is a tiny 4% of India’s, but its highways are thrice as long as India’s. The top two stars on the infrastructure front are the US and Australia, followed by Japan and France.

      India’s highway network is inadequate for the country’s needs. Highways comprise 1.94% of India’s total road networks but carry a staggering 40% of total road traffic. This means that not only do they suffer high wear and tear, but transportation continues to be a big bottleneck for the economy. It is little surprise that India is finally investing in transport infrastructure.

      After independence in 1947, India underinvested in infrastructure. Two centuries of colonial extraction had left the country with limited resources and almost unlimited public needs. In its early years of independence, India struggled to feed its masses. There was little money to build railways, roads, ports, airports and transport infrastructure.

      India also lacked the expertise to build such infrastructure at scale. Planners, engineers and skilled labor were all in short supply. The nation did not have enough knowledge of transport technology either. There was another challenge in a densely populated democratic country. Infrastructure projects result in the displacement of large numbers of people. Many resist, others negotiate hard and still, others approach their local politicians who start resisting these projects to win votes.

      India’s varied geography also imposed daunting challenges for developing infrastructure. Largely flat countries like Australia and France could focus on railways, which run twice as long as their roads. Mountainous countries like South Korea and Japan have built more roads than railway lines. While plains and plateaus in India are crisscrossed by railway lines, roads are the means of transportation in its extensive mountainous regions.

      A New Focus

      Over the last 20 years, India’s focus has shifted to roads. This began under the coalition National Democratic Alliance (NDA) government led by Atal Bihari Vajpayee of the Bharatiya Janata Party (BJP). Although this government lost the 2004 election, NDA’s vision set in motion transport infrastructure development. In 2014, the BJP-led NDA returned to power and accelerated the building of highways across the country.

      NDA-initiated highway construction was kickstarted by the Golden Quadrilateral, a project connecting India’s four biggest cities: Delhi, Mumbai, Chennai and Kolkata. This boosted economic growth. Since NDA returned to power, India has embarked on Bharatmala Pariyojana, an ambitious project to connect the entire country through a network of highways like the fabled interstate highway system of the US. Even remote regions such as the northeast and Jammu and Kashmir will be covered.

      In the past, India did not measure highways as per international standards. This meant their growth could not be measured and compared easily. To quote management guru Peter F. Drucker, “If you can’t measure it, you can’t improve it.” Since 2018, the measure of highway length in India has been aligned with international standards. While impressive figures on the growth of national highways have been published, their interpretation now is clear and consistent.

      There has also been a steady increase in highway construction rates. In March 2021, it reached 37 kms/day. For the 2020-21 financial year — India’s financial year begins on April 1 and ends on March 31 — road construction averaged 29.81 kms/day. In 2014-15, the rate was 16.61 kms/day. Six years on, the road construction rate has almost doubled and is the fastest India has achieved since independence. The credit goes to Nitin Gadkari, the minister for road transport, one of the star performers of the NDA cabinet. In March, he claimed that India had secured the world record for fastest road construction.

      India’s Evolving Waterways Make a Big Splash

      The oldest civilizations have originated and flourished near major rivers for a simple reason. They provide fresh water, a fundamental human need. Rivers also provided an easy way to travel and transport goods before the advent of roads and railways. Even today, commercial transport of goods via rivers, lakes and oceans continues to cost less than via land. While container ships regularly carry goods across the high seas, most countries no longer use their rivers very well. The US, Australia, Japan, Russia and China are among the few countries that use their rivers and inland waterways well. 

      India has 116 rivers. Potentially, these could provide 35,000 kilometers of waterways and should be tapped. The government set up the Inland Waterways Authority of India in 1986 for “development and regulation of inland waterways for shipping and navigation.” In spite of tremendous cost advantages, waterways’ commercialization received little attention over the next 30 years. In 2016, the NDA declared 111 rivers across India as national waterways, a quantum leap up from five. By 2020, the government operationalized 12 of these waterways. The journey to suitably develop the remaining 99 will be a long and expensive one. However, this investment will cut logistics costs tremendously in the long run and boost India’s competitiveness.

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      Gadkari points out that the cost of logistics in India is 18% of the total cost of production. For China, this figure is 8-10%. Notably, waterways account for 47% of total transportation in China, compared to 3.5% in India. As waterways develop, so will commercial activity along their banks and lead to job creation.

      India has another major underutilized natural resource. It has a long coastline of 7,500 kilometers spread across 14 states. To develop ports and coastal transportation, the government has launched the Sagarmala project. This could achieve what the Golden Quadrilateral did for roads in the past. By 2025, the government aims to increase the share of waterways transportation from 3.5% to 6%, reducing logistics costs, boosting exports and generating 4 million new jobs.

      The Road Ahead

      About 53% of India’s population is under 25 years of age and many of them need jobs. Employed young people are more likely to send their children to school. They are likely to eat better and live longer. So far, India’s growth rate has not exceeded the job creation rate. For social and political stability, the government needs to create jobs. 

      While India’s economy continues to grow, the pace of growth does not match the employment needs of India’s young population. Building infrastructure is one of the best ways to generate employment because of its massive multiplier effect in an emerging economy like India. The country needs competent ministers and bureaucrats with domain expertise such as Gadkari. Key ministries overseeing power and finance in New Delhi and India’s state capitals should emulate this model.

      Along with building infrastructure, India must reform its arcane laws of colonial and socialist heritage to boost economic activity. The government must also reform education and vocational training in collaboration with industry to raise the skills of the workforce, improve employability and increase productivity. This is a tall order, but if India can get its house in order, then domestic and foreign investment would flow in. Then, the country would finally be able to join the Asian tigers as one of the world’s fast-growing economies.

      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 Guardian view on Afghanistan withdrawal: a retreat into uncertainty | Editorial

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      OpinionAfghanistanThe Guardian view on Afghanistan withdrawal: a retreat into uncertaintyEditorialJoe Biden’s actions will be felt most keenly in Kabul, but they pose a broader question for an army-dominated Pakistan Mon 5 Jul 2021 14.20 EDTLast modified on Mon 5 Jul 2021 16.10 EDTBy bringing home US troops from Afghanistan, and leading Nato and allied forces out of the country, the US president, Joe Biden, is acting on his campaign trail argument that American “forever wars” distract from more pressing issues at home. While the effect of the withdrawal will be felt most keenly in Afghanistan, where there are justifiable fears that the Taliban are poised to reclaim power, the broader question Mr Biden poses is for neighbouring nuclear-armed Pakistan and the role that it wants to play in the region.Bluntly, there is little trust between Washington and Islamabad despite Pakistan being a frontline state in America’s longest war. Mr Biden served as vice-president to Barack Obama, who in his memoir, A Promised Land, wrote that he had preferred not to involve Pakistan in the raid on Osama bin Laden’s compound in 2011 because it was an “open secret” that elements inside Pakistan’s military, and especially its intelligence services, “maintained links to the Taliban and perhaps even al-Qaida, sometimes using them as strategic assets to ensure that the Afghan government remained weak and unable to align itself with Pakistan’s number one rival, India”.In Pakistan’s defence, it might be said that the past is another country. It says that it no longer provides any haven for terrorists or seeks to radicalise Muslim opinion with which it has influence. Pakistan has undoubtedly been the victim of terror attacks and shelters millions of refugees. Yet there was no disguising the anger of the Biden administration when, after eight days in office, Pakistan’s supreme court ordered the release of the man convicted in 2002 of orchestrating the abduction and killing of Daniel Pearl, a Wall Street Journal reporter.Pakistan is an army with a country attached. Imran Khan serves as prime minister. But it is the chief of army staff, General Qamar Javed Bajwa, who calls most of the shots. The general has had a phone call from Mr Biden’s secretary of defence. After it, the army chief pledged to “bury the past” with India. Mr Khan has yet to be rung up by the White House. That may be because Washington had wanted to pressurise Pakistan into granting the CIA a base in the country to launch drone strikes against the Taliban. The US was kicked out of its last Pakistani facility in 2011. Last month, Mr Khan wrote an op-ed quashing the idea that the US could regain a military foothold in the country.The ever-growing risks of a Taliban takeover will shape the region’s dynamics. Not least because decades ago they subjected the country to a reign of pious Sunni terror. Adjoining Iran sponsored an armed resistance. A Taliban regime in Kabul gave Pakistan the idea that it could control Afghanistan and acquire the “strategic depth” needed to challenge India. Since then, China has drawn closer to Islamabad. New Delhi, faced with a hostile Beijing, has attempted to improve relations with Pakistan. Mr Biden knows that Afghanistan is known as a “graveyard of empires” for good reason. He wants his foreign policy to mark a break with the past and face the challenges of the future. But turning points only work out if one knows where to turn.TopicsAfghanistanOpinionJoe BidenAl-QaidaBarack ObamaUS foreign policyNatoPakistaneditorialsReuse this content More

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      UAE Diplomats Accused in International Gold Smuggling Syndicate

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      The United Arab Emirates is one of the world’s major gold trading hubs. In 2019, it was the fifth-biggest importer and fourth-biggest exporter globally. During the COVID-19 pandemic, international demand has surged. But as Reuters reported in 2019, much of this gold is smuggled from West Africa and produced by artisanal and small-scale gold mining, a trade that funds armed conflict, costs producing countries in lost tax revenue and has significant consequences on public health and the environment.

      This is a story that has long been in the public domain: In 2020, the Financial Action Task Force published a report that stated: “The UAE’s understanding of the risks it faces from money laundering, terrorist financing and funding of weapons of mass destruction is still emerging … The risks are significant, and result from the UAE’s extensive financial, economic, corporate and trade activities, including as a global leader in oil, diamond and gold exports.”

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      In 2018, a UN report stated, “In every state [in the Economic Community of West African States region], it was reported that most of the gold exported from the region is destined for Dubai. Most of this gold is thought to be exported by plane; gold is thought to be smuggled, for the most part, out of the region through airports.”

      The UAE authorities have been facing increasingly strenuous calls to clean up their bullion trade. In 2019, an International Crisis Group report called on them to ensure income from the gold trade is not used to finance terrorism. In December 2020, the UK Home Office national risk assessment stated: “These deficiencies expose the UAE, and other countries, to abuse by international controller networks which continue to launder the proceeds of crime to and from countries including the UK. These criminal networks exploit features of the UAE’s laws and systems, in order to move cash and gold easily into and out of the country, as well as engage in money laundering through the UAE property market, international trade, and newer areas such as crypto assets.”

      Last year, the London Bullion Market Association (LBMA), the world’s most influential gold market authority, threatened to stop UAE bullion from entering the mainstream market if it failed to meet regulatory standards. Since gold was the UAE’s largest export after oil in 2019, a trend that in a post-oil age looks only set to grow, the authorities responded by quickly pledging support for an LBMA initiative in December 2020 to crack down on illegal gold trading and improve regulation around issues like money laundering and unethical sourcing.

      Gold Discovered in India

      But recent developments in a court case in India are once again calling into question the UAE’s commitment to clean up its bullion trade. In June 2020, Indian customs discovered over 30 kilograms of gold worth — at the official market rate — more than $2.1 million. The gold was found in diplomatic baggage addressed to the UAE Consulate-General Office in Thiruvananthapuram, the capital of the southern Indian state of Kerala; it had been listed as bathroom fittings, noodles, biscuits and dates. The subsequent investigation has opened a Pandora’s Box of organized crime that has already led to around 30 arrests, including a host of alleged facilitators, financiers, gold traders, former employees of the UAE Consulate and a principal secretary to the Kerala chief minister.

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      The National Investigation Agency (NIA), which is India’s counterterrorism task force, and at least four other central government agencies are now conducting separate but related investigations into a US dollar smuggling operation from Thiruvananthapuram airport to Cairo via Muscat. The operation was allegedly run by the former UAE Consulate Finance Department head, Khaled Ali Shoukry, an Egyptian national. The other investigations involve corrupt schemes related to various local government projects in Kerala, including the Wadakanchery LIFE Mission housing project, which is funded by the UAE Red Crescent, and the Kerala Infrastructure Investment Fund Board.

      This is the first time UAE diplomats have ever been publicly implicated in gold smuggling. Emirati authorities have promised to cooperate, claiming they were duped by their Indian and Egyptian staff. But the former UAE consul general, Jamal Hussain al-Zaab, and Admin Attaché Rashed Khamis Ali Musaiqri both fled home last year before they could be questioned and are now claiming diplomatic immunity.

      However, a steady stream of information has been coming to light through disclosures in Kerala High Court. The NIA said 150 kilograms of gold was smuggled through Thiruvananthapuram airport in the last six months in a similar fashion, and most of the money was used for funding terrorism. According to sources quoted in Indian media, over 20 such consignments allegedly came to India from Dubai since September 2019, around 19 of which were addressed to the UAE consul general and one was in the name of the admin attaché. At the same time, senior Indian politicians linked to the case were enjoying five-star trips to the UAE.

      The Claims

      In March, the political temperature rose significantly when two of the key accused, Indian nationals employed in the consular office, testified that the UAE consul general was personally involved in the criminal enterprise. Swapna Suresh, formerly the consul general’s Arabic-language translator, and another employee, Sarith P.S., stated in an affidavit that the consul general, as well as several senior Indian politicians, were aware of the gold and dollar smuggling activities and were coordinating illegal financial dealings under the cover of various projects run by the state government.

      “Swapna and Sarith [the accused] stated that it was a common practice among foreign nationals, including diplomats working at UAE Consulate, to carry currency notes above permitted limits. We suspect that they were engaged in hawala activities to fund smuggling of gold from Dubai to Kerala. Similarly, they also smuggled goods from abroad using diplomatic privileges and sold them in the Kerala market. Many Indian employees of the consulate were aware of such activities and they will be questioned soon” an Indian customs official reportedly said.

      The UAE consul general, Swapna alleged, split a 3-million UAE dirham ($817,000) commission for the Wadakkanchery project three ways between himself, Shoukry and her. Another accused claimed the consul general and Shoukry were carrying out illegal gold smuggling activities while working in the UAE Mission in Vietnam before coming to Thiruvananthapuram.

      The Indian Ministry of External Affairs recently issued permission to arraign the former consul general and admin attaché who served at the UAE Consulate in Thiruvananthapuram. “Both of them assisted Swapna Suresh and Sarith PS to clear the baggage containing gold that arrived from the UAE. They also were receiving remuneration as per the quantity of gold smuggling on 21 occasions. They are equally involved as other accused persons,” an Indian customs official reportedly said.

      *[This article was originally published by Arab Digest, a partner organization of Fair Observer.]

      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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      A Modi-fied India Has Weakened on the World Stage

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      Narendra Modi, the prime minister of India, has completed seven years in office. At the same time, his autocratic leadership has brought the simmering discontent in the foreign policy establishment out in the open. Some members of the Forum of Foreign Ambassadors of India signed an open letter slamming critics of Modi’s foreign policy. On May 31, the government notified the Central Civil Services (Pension) Amendment Rules, 2020, to further muzzle dissent by retired bureaucrats.

      Although rare, such vocal disagreements are not new in India. However, with its economy in shambles and a spate of downgrades by reputed international agencies on democratic values, human development, press freedom and hunger index, the foreign affairs discord will further diminish its global stature.

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      Over the decades, India has seen several significant changes in the way it looks at the world. It went from the idealistic Non-Aligned Movement in the 1950s to a close relationship with the Soviet Union during the Cold War. Now, India has cozied up to the United States to form the Quad, a strategic partnership to counter China that also includes Japan and Australia. India also flirted with BRICS nations for a brief while to form a coalition of developing countries — Brazil, Russia, China and South Africa — which seems to be dying a quiet death.

      All along, India has prided itself in maintaining strategic autonomy. Modi’s megalomania made him believe that he would suddenly catapult India to global power status. Unfortunately, his terms in office have left a muddled mess in its wake.

      Strong Start

      In today’s world of modern warfare and geopolitics, which includes nuclear-armed neighbors in Pakistan and China, Modi’s early years saw inane chatter about “Akhanda Bharat,” the ruling Bharatiya Janata Party’s (BJP) term for undivided India. This idea seeks to regain ancient India’s lost glory by spreading Hinduism’s influence across South Asia. Barring such misplaced euphoria, Modi rode the wave of international goodwill to regularize the border with Bangladesh.

      In western Asia, the Middle East was warming up to Indian influence. Progress was made on a deal to develop Iran’s strategic Chabahar port, which would facilitate overland access to Afghanistan. In 2017, Modi became the first Indian prime minister to visit Israel. India has also improved its relationships with Saudi Arabia and the United Arab Emirates. Yet since the 2017 Doklam standoff on the India-China border that Modi’s team handled well, Beijing has succeeded in building more infrastructure in the region than New Delhi. Though it could also be considered a strategic tie. Despite US objections, the decades-old India-Russia defense partnership evolved from New Delhi being a technology buyer to the recipient of technology transfer and, finally, a defense research and development partner — an evolution that has continued under Modi.

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      India’s perpetual see-saw with Pakistan has continued throughout Modi’s tenure. His initial outreach by inviting then-Prime Minister Nawaz Sharif to his inauguration in 2014 and a surprise stopover in Lahore a year later quickly fizzled out. In 2016, Pakistan-based militants carried out terrorist attacks near the town of Uri in the Indian state of Jammu and Kashmir. In response, India conducted “surgical strikes” across the Line of Control (LoC), which separates the disputed Kashmir region. In 2019, Pakistani militants attacked Indian soldiers in Kashmir. For the first time since 1971, India entered Pakistani airspace to bomb locations that New Delhi claimed to be terrorist training camps.

      The situation between India and Pakistan did not change much. Tensions between the two countries persist. But Modi was reelected in 2019 on the promise of this altered equation of India swiftly and boldly following up on terrorist attacks by Pakistan-based militants.

      The reality was much more nuanced. Despite Indian claims and Pakistani counterclaims, international observers concluded that the two cross-border raids by India were not particularly effective. By blocking access to bombed sites, Pakistan’s side of the story seemed flimsy. However, Islamabad’s downing of an Indian fighter jet in February 2019 and capturing an Indian pilot, who was returned a few days later, appeared to expose holes in India’s defense preparedness. Nonetheless, Modi managed to isolate Pakistan globally and, in 2018, have it included in the gray list of the Financial Action Task Force, the global agency tracking terror financing.

      India’s relations with the West did not improve much. In Europe, other than the Rafale warplanes agreement in 2016, the Modi government was unable to make progress on the stalled trade deal with the EU. To be fair, Brussels was busy rebuilding after the Great Recession and the chaos caused by Brexit. Across the Atlantic, there was optimism in the air. During his final term, US President Barack Obama reluctantly embraced Modi. Later, the bonhomie between Donald Trump and Modi could not prevent a trade war.

      However, India-US defense and strategic cooperation strengthened as Modi built on the hard work of his predecessors, Atal Bihari Vajpayee and Manmohan Singh. The rising threat of China also played its part in developing this relationship. The 2015 agreement between Obama and Modi on nuclear liability issues was followed by a bilateral Logistics Exchange Memorandum of Agreement in 2016 and a Communications Compatibility and Security Agreement in 2018. The Quad seems to be a natural extension of this closer US-India partnership, India’s Act East policy and the Asian pivot of the United States.

      What Changed?

      After a reasonably strong start, Modi’s India has found itself in a muddle. India’s foreign policy failures closely follow the country’s economic decline since 2017-18 and steadily rising majoritarianism. Trump’s erratic, isolationist policies and India’s widening geopolitical deficit vis-à-vis China played a role, but most of Modi’s wounds are self-inflicted.

      For his narrow domestic agenda and to pass the Citizenship Amendment Act (CAA), Modi selectively gave a pathway to citizenship to non-Muslims from the neighboring countries of Afghanistan, Bangladesh and Pakistan. Because it excluded Muslims, even persecuted ones, from these countries, the CAA was criticized and deemed discriminatory.

      In doing so, Modi alienated Bangladesh, which is rapidly modernizing and leaving India behind on most human development and economic indicators. Bangladesh swiftly showed India its place through a diplomatic snub and demonstrated its desire to walk into China’s open arms. Sustained diplomacy over the past year, combined with Modi’s recent trip to Bangladesh and India’s donation of COVID-19 vaccines, repaired some of the damage. While cooling down the CAA rhetoric might help, India’s weakened economy could still push Bangladesh closer to China.

      Embed from Getty Images

      Under the Trump administration, the US held a tough stance against Pakistan over what it called “Islamabad’s failure to take action against militant groups.” Aid from Saudi Arabia also dried up due to strained relations between Riyadh and Islamabad. As a result, Pakistan is beholden to China. The China-Pakistan Economic Corridor (CPEC), which passes through Gilgit and Baltistan, a disputed region that both India and Pakistan claim sovereignty over, has cemented China’s grip on Pakistan. New Delhi has not approached the recent ceasefire agreement with Islamabad and the resumption of peace talks from a position of strength. Rather, it is a tacit admission by both weakened parties that peace is mutually beneficial.

      Relationships with the Arab world and Israel remain strong, but Modi has lost the plot with Iran and is losing some ground with Russia. Beijing recently signed a 25-year strategic deal with Tehran and, with its economic clout, is pulling the Kremlin into its sphere of influence. In the pre-Modi era, as a rising economic power, India managed to carve out exceptions for itself to bypass US sanctions against Iran and Russia. Throughout Modi terms in office, China has steadily widened the economic and geopolitical gap with India. New Delhi’s growing weakness vis-a-vis Beijing has resulted in India kowtowing to the US and losing its strategic autonomy.

      Britain’s need for trade partners following its departure from the European Union might lead to a favorable India-UK deal. But a free trade agreement between India and the EU has not seen any significant movement under Modi. US President Joe Biden does not seem to be in any rush to end the trade war his predecessor began with India.

      For all the buzz surrounding The Quad, India is the junior partner that has little to offer to others in terms of economic benefits. New Delhi will enhance its strategic and military cooperation with other like-minded democracies, but it is unlikely to intervene if there is a full-scale confrontation between India and China. Unless the Indian economy becomes efficient and tightly integrates itself with Quad countries, its usefulness to other partners will be limited to its size and strategic location.

      In the Cold War, the US aligned with autocrats and religious fundamentalists, most notably in China and Pakistan, to defeat the Soviet Union. In the new brewing cold war between Washington and Beijing, Quad countries will pay lip service to building democratic institutional capacity in India. However, if push comes to shove, they will partner with an authoritarian India to counter China, which will serve their narrow self-interests.

      India-China Relations

      Modi’s biggest foreign policy failure is India’s frayed relationship with China. His misplaced overconfidence forced him to reject conventional wisdom and embark on a charm offensive with Chinese President Xi Jinping. Modi ignored the Doklam warning and kept expecting Xi to treat India as an equal, despite the crumbling Indian economy. Meanwhile, China had already started reducing New Delhi’s sphere of influence through its outreach to India’s neighbors and offers of economic and strategic partnerships. In 2019, Modi scrapped Article 370 of the Indian Constitution to downgrade the state of Jammu and Kashmir to a union territory status. His deputy, Amit Shah, made unrealistic claims about taking back the China-controlled Aksai Chin. In response, Xi directly occupied Indian territory in Ladakh for almost a year.

      China’s strength and India’s decline are best captured through the different ways the countries approach bonds. China is selling its government bonds internationally at a negative interest rate despite a raging pandemic, ongoing border clashes with India and a 300% debt-to-GDP ratio. Indian bond investors are demanding higher yields even though India’s debt-to-DGP ratio is below 100%.

      With a sizable military and tactical superiority, India was unlikely to lose territory to China. However, through emergency weapons purchases during the Doklam standoff, India paid dearly for Modi and Shah’s hubris and prioritizing domestic politics over national interest.

      Weakened on the World Stage

      Through his speeches, photo-ops with world leaders and tweets, Modi keeps peddling lies and projecting strength to voters. While India’s financial health has deteriorated significantly, the BJP has raised — through anonymous electoral bonds — millions in political donations that fuel Modi’s formidable propaganda machine.

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      The world knows that India is run by a narcissist who has built a false domestic narrative of the country’s global standing to keep winning elections. The West will keep hoping that India gets its act together economically and stops destroying independent institutions so that it becomes a democratic counterweight to China. But that is a battle only Indian voters can lead.

      As India warms up to the Quad, where does it go from here? As a new cold war brews, lessons from the past are informative. While the US used China and Pakistan to dismantle the Soviet Union, China cleverly used its leverage to strengthen its economy and authoritarian communist rule. Meanwhile, Pakistan indulged its military and majoritarian religious leadership to destroy itself from within.

      With his dismantling of democratic institutions and promotion of religious bigotry, Modi has left Indian foreign policy in doldrums. If voters want it to become a vibrant, democratic counterweight to China and a global player that does justice to its potential, India will have to find a leader who understands that issues like a strong economy, independent judiciary and social stability cannot be divorced from its foreign policy but are integral to it.

      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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      in US Politics

      US sets – and quickly suspends – tariffs on UK and others over digital taxes

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      The Biden administration announced 25% tariffs on over $2bn worth of imports from the UK and five other countries on Wednesday over their taxes on US technology companies, but immediately suspended the duties to allow time for negotiations to continue.The US trade representative, Katherine Tai, said the threatened tariffs on goods from Britain, Italy, Spain, Turkey, India and Austria had been agreed after an investigation concluded that their digital taxes discriminated against US companies.The move underscores the US threat of retaliation, first made under the Trump administration, over digital-services taxes on US-based companies including Alphabet, Apple and Facebook, that has sparked an international row over which countries should have taxing rights over some of the world’s largest companies.The US trade representative’s (USTR) office published lists of imports that would face tariffs if international tax negotiations fail to reach a solution. Goods from Britain worth $887m, including clothing, overcoats, footwear and cosmetics, would face a 25% charge as would about $386m worth of goods from Italy, including clothing, handbags and optical lenses. USTR said it would impose tariffs on goods worth $323m from Spain, $310m from Turkey, $118m from India and $65m from Austria.The potential tariffs, based on 2019 import data, aim to equal the amount of digital taxes that would be collected from US firms, a USTR official said. The news came as finance leaders from G7 countries prepare to meet in London on Friday and Saturday to discuss the state of tax negotiations, including taxation of large technology companies and a US proposal for a global minimum corporate tax. US tariffs threatened against France over its digital tax were suspended in January to allow time for negotiations.Tai said she was focused on “finding a multilateral solution” to digital taxes and other international tax issues.“Today’s actions provide time for those negotiations to continue to make progress while maintaining the option of imposing tariffs under Section 301 if warranted in the future,” Tai said.Tai faced a Wednesday deadline to announce the tariff action, or the statutory authority of the trade investigations would have lapsed.A British government spokesperson said the UK tax was aimed at ensuring tech firms pay their fair share of tax and was temporary. “Our digital services tax is reasonable, proportionate and non-discriminatory,” the spokesperson said. “It’s also temporary and we’re working positively with international partners to find a global solution to this problem.”Reuters contributed to this article More

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      in World Politics

      India Is Slowly Evolving Into a Market Economy

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      India has come a long way since its independence from colonial rule in 1947. It started as a mixed economy where elements of both capitalism and socialism coexisted uneasily. Jawaharlal Nehru, India’s first prime minister, was a self-declared Fabian socialist who admired the Soviet Union. His daughter, Indira Gandhi, amended the constitution in 1976 and declared India to be a socialist country. She nationalized banks, insurance companies, mines and more. 

      Gandhi tied Indian industry in chains. She imposed capacity constraints, price controls, foreign exchange control and red tape. India’s colonial-era bureaucracy now ran the commanding heights of the economy. Such measures stifled the Indian economy, created a black market and increased bureaucratic corruption. The Soviet-inspired Bureau of Industrial Costs and Prices remains infamous to this day.

      Expect an Uneven Rebound in MENA and Central Asia

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      India also adopted the Soviet five-year plans. A centralized economy emerged with the state controlling the media and telecom, financial, infrastructure and energy sectors. Even in seemingly private sectors such as consumer and industrial, the state handled too many aspects of investment, production and resource allocation.

      Opening Up the Economy

      In the 1980s, India took gentle strides toward a market economy and opened many sectors to private competition. In 1991, the Gulf War led to a spike in oil prices, causing a balance-of-payments crisis. In response, India rolled back the state and liberalized its economy. The collapse of the Soviet Union that year pushed India toward a more market-oriented economy. 

      Over the years, state-run monopolies have been decimated by private companies in industries such as aviation and telecoms. However, India still retains a strong legacy of socialism. The government remains a major participant in sectors such as energy and financial services.

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      After years of piecemeal reforms, the Indian government is again unleashing bolder measures. These involve the opening up of several state monopolies to private competition. They are diluting state ownership of public sector units. In some cases, they are selling these units to domestic or foreign buyers. In due course, professionals, not bureaucrats, will be running this sector.

      The government’s bold move to privatization is because of two reasons. First, India’s public sector has proved notoriously inefficient and been a burden on the taxpayer. Second, the COVID-19 pandemic has made the economy shrink and caused a shortfall in tax revenue. Privatization is a way for the government to balance its books.

      As Shwweta Punj, Anilesh S. Mahajan and M.G. Arun rightly point out in India Today, the country “will have to rethink how it sells” its public sector units for privatization to be a success. India’s track record is poor. The banana peels of political opposition, bureaucratic incompetence and judicial proceedings lie in waiting.

      Potential Benefits of Privatization

      Yet privatization, if managed well, could lead to several benefits. It will lead to more efficiently managed businesses and a more vibrant economy. Once a state-controlled firm is privatized, it could either be turned around by its new owner or perish. In case the company fails, it would create space for better players. Importantly, privatization could strengthen the government’s fiscal position, giving it greater freedom to invest in sectors like health care and education where the Indian government has historically underinvested. Furthermore, privatization could increase investable opportunities in both public and private markets.

      Given India’s fractious nature and labyrinthine institutions, privatization is likely to lead to mixed results and uneven progress. One thing is certain, though. Privatization is inevitable and cannot be rolled back. Sectors in which market forces reign supreme and shareholder interests are aligned are likely to do well. State-controlled companies that prioritize policy goals over shareholder value are unlikely to do so. Similarly, sectors that have experienced frequent policy changes are unlikely to thrive. 

      There is a reason why savvy investors are constructing portfolios weighted toward consumer and technology sectors. So far, companies in these sectors have operated largely free of state intervention. They have had the liberty to grow and function autonomously. Unsurprisingly, they have delivered good returns.

      The state-dominated financial services sector also offers promise. Well-managed private companies have a long runway to speed up on. Among large economies, India’s financial services sector offers unique promise. In the capitalist US, the state has limited presence and private players dominate. This mature market offers few prospects of high growth. In communist China, state-controlled firms dominate financial services, leaving little space for the private sector. With the Indian government planning to reduce its stake in a state-controlled life insurance company, as well as sell two state-owned banks and one general insurance company, the financial services sector arguably offers a uniquely important opportunity for investors.

      Just as India did well after its 1991 balance-of-payments crisis, the country may bounce back after the COVID-19 pandemic. The taxpayer may no longer need to subsidize underperforming state-owned companies holding the country back. Instead, market competition may attract investment, create jobs and increase 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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      in US Politics

      Republican Covid lies follow foreign strongmen’s lead – and are deadly for it | Robert Reich

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      A hospital in Uttar Pradesh, India’s most populous state, is being charged under the country’s National Security Act for sounding the alarm over a lack of oxygen that resulted in Covid deaths. The hospital’s owner and manager says police have accused him of “false scaremongering”, after he stated publicly that four patients died on a single day when oxygen ran out.Since Covid-19 exploded in India, the prime minister, Narendra Modi, seems to be trying to the control the news more than the outbreak. On Wednesday, India recorded nearly 363,000 cases and 4,120 deaths, about 30% of worldwide deaths that day. But experts say India is vastly understating the true number. Ashish Jha, dean of Brown University’s School of Public Health, estimates at least 25,000 Indians are dying from Covid each day.The horror has been worsened by shortages of oxygen and hospital beds. Yet Modi and his government don’t want the public to get the true story.One big lesson from the Covid crisis: lying makes it worse.Vladimir Putin is busily denying the truth about Covid in Russia. Demographer Alexei Raksha, who worked at Russia’s official statistical agency, Rosstat, but says he was forced to leave last summer for telling the truth about Covid, claims daily data has been “smoothed, rounded, lowered” to look better. Like many experts, he uses excess mortality – the number of deaths during the pandemic over the typical number of deaths – as the best indicator.Trump wants the credit for developing the vaccine. Then he also gets the blame for so few of his voters taking it“If Russia stops at 500,000 excess deaths, that will be a good scenario,” he calculates.Russia was first out of the gate with a vaccine but has fallen woefully behind on vaccinations. Recent polling puts the share of Russians who don’t want to be vaccinated at 60% to 70%. That’s because Putin and other officials have focused less on vaccinating the public than on claiming success in containing Covid.The US is suffering a similar problem – the legacy of another strongman, Donald Trump. Although more than half of US adults have received at least one dose of coronavirus vaccine, more than 40% of Republicans have consistently told pollsters they won’t get vaccinated. Their recalcitrance is threatening efforts to achieve “herd immunity” and prevent the virus’s spread.Like Modi and Putin, Trump minimized the seriousness of the pandemic and spread misinformation about it. Trump officials ordered the Centers for Disease Control and Prevention to downplay its severity. He declined to get vaccinated publicly and was noticeably absent from a public service announcement on vaccination that featured all other living former presidents.Trump allies in the media have conducted a scare campaign about the vaccines. In December, Fox News host Laura Ingraham posted a story on Facebook from the Daily Mail purporting to show evidence that Chinese communist party loyalists worked at pharmaceutical companies that developed the coronavirus vaccine.As recently as mid-April, Fox News host Tucker Carlson opined that if the vaccine were truly effective, there’d be no reason for people who received it to wear masks or avoid physical contact.“So maybe it doesn’t work,” he said, “and they’re simply not telling you that.”Why then should anyone be surprised at the reluctance of Trump Republicans to get vaccinated? A recent New York Times analysis showed vaccination rates to be lower in counties where a majority voted for Trump in 2020. States that voted more heavily for Trump are also states where lower percentages of the population have been vaccinated.The Republican pollster Frank Luntz says Trump bears responsibility for the hesitancy of GOP voters to be vaccinated.“He wants to get the credit for developing the vaccine,” Luntz said. “Then he also gets the blame for so few of his voters taking it.”Trump’s Republican party is coming to resemble other authoritarian regimes around the world in other respects as well – purging truth tellers and trucking in lies, misinformation and propaganda harmful to the public.This week the GOP stripped Liz Cheney of her leadership position for telling the truth about the 2020 election. At last week’s congressional hearing about the 6 January attack on the Capitol, one Republican, Andrew Clyde, even denied it happened.“There was no insurrection,” he said. “To call it an insurrection is a bold-faced lie … you would actually think it was a normal tourist visit.”Biden says he plans to call a summit of democratic governments to contain the rise of authoritarianism around the world. I hope he talks about its rise in the US too – and the huge toll it’s already taken on Americans. More

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      in Elections

      I Know What It Takes to Defeat Narendra Modi

      by

      KOLKATA, India — I am a member of the Indian Parliament, and on Sunday, the political party I belong to, the All India Trinamool Congress, defeated the party of Prime Minister Narendra Modi in elections for the West Bengal State legislature. Our party and my leader, Mamata Banerjee, the only female chief minister of a state in India today, showed what it takes to defeat Mr. Modi’s divisive, misogynist politics.Out of the 292 seats in West Bengal’s state legislature, Mr. Modi and his Bharatiya Janata Party won 77. We won 213 seats. But we weren’t simply fighting to form a state government. We were fighting to stop Mr. Modi’s centralizing, authoritarian juggernaut, which seeks to destroy India’s federalism and its secular character, and transform our country into an autocratic Hindu state.Mr. Modi and Amit Shah, India’s home minister, have systematically hollowed out the institutions that India held sacred and trusted. During the course of the West Bengal election, I witnessed how they reduced the once-respected Election Commission of India, a supposedly independent body that conducts state and national elections, to an errand boy serving their political agenda.On Feb. 26, when the second wave of Covid-19 was rising in India, the commission announced that elections in West Bengal would be conducted in eight phases staggered from March 27 to April 29. Four other Indian states were also going to polls, but the commission restricted them to one or two phases.By scheduling the West Bengal election in this way, the commission made it possible for Mr. Modi to campaign extensively in West Bengal. Indian elections are energetic, festive and crowded affairs. Our party protested and petitioned the commission to limit the election to fewer phases, as a dangerous second wave of Covid-19 had set in. The commission refused to listen.Mr. Modi and Mr. Shah, whose ministry is responsible for disaster management in the country, held numerous public meetings in West Bengal. Both men often appeared unmasked in the public rallies, setting a terrible example for the tens of thousands who attended and the millions who watched the widely televised events.Mr. Modi’s government did absolutely nothing to prevent religious gatherings such as the Kumbh Mela, a festival in Haridwar in the northern state of Uttarakhand, where millions of Hindus gathered for a dip in the Ganges River.On April 17, when India was reporting more than 250,000 new Covid-19 cases, Mr. Modi made a mild and vague appeal to the pilgrims at the Kumbh Mela, asking them to consider going home, and suggested that the festival should be “symbolic.” Yet by late afternoon on that day, Mr. Modi attended a public meeting of over 50,000 people in West Bengal. “Wherever I look, I just see people,” he gloated.The election was turning out to be a super spreader of coronavirus infections. The commission continued ignoring us while the second wave was battering India’s health care systems. The craven dereliction of duty compelled the Madras High Court to remark that the commission “should be put up on murder charges probably!”Mr. Modi prioritized pursuit of political power above Indian lives. The vital first three weeks of April, when the prime minister and his cabinet should have been working on ramping up critical health infrastructure and coordinating with state governments to prevent our catastrophic situation, were lost.India’s women will also remember Mr. Modi’s campaign in West Bengal for its brazen misogyny and toxic masculinity. On April 1, while at a public rally at Uluberia, a city in the state’s Howrah district, Mr. Modi referred to Ms. Banerjee, the leader of my party and the chief minister of West Bengal known affectionately as Didi, as “Didi Ooo Didi!” — to stupendous applause from crowds of men. He continued using that tone and phrase in other public rallies.To my ears, the tone and phrase were ominously close to what a neighborhood cat-caller may call out to girls walking past. To the Bengali middle class, the prospect of handing over the reins of the state to someone who openly endorsed a practice so much at odds with their sensibilities was frightening. Female voters in West Bengal, who make up 49.1 percent of the state’s electorate, cringed. A majority of women voted for our party. They did not allow such misogynist politics to win the day.A supporter of Mamata Banerjee, the leader of the All India Trinamool Congress, which supports a secular, inclusive ideology.Rupak De Chowdhuri/ReutersAnd culture matters. Mr. Modi and his B.J.P. hoped they would win by equating Bengali identity with Hindu culture. They failed to understand that Bengali culture is not a monolith; it combines secularism with non-vegetarianism and a strong contrarian instinct.We joke that laid-back middle-class Bengalis are content with three things: educating our children, the matinee on Saturday (“shoni bar e matinee”) and a mutton curry on Sunday (“robi baar e mangsho”).At the very least, the Bengalis reject anyone who wants to control what we eat, whom we love and what we wear.The Bengal experience has demonstrated that the B.J.P. is not invincible, that all Indians are not attracted to the idea of a majoritarian Hindu state and that Mr. Modi and Mr. Shah are not the master election strategists they are made out to be. Despite their huge financial resources, their misuse of federal investigative agencies to target opponents and accusations that they have been buying off opposition politicians, the B.J.P. can still be defeated by a focused regional party that stays true to its grass roots and a secular, inclusive ideology.It took a catastrophic pandemic for even Mr. Modi’s supporters to see they need oxygen cylinders more than they need a Hindu state. And it took the Bengal election for the rest of India to realize they don’t need toxic machismo. What India needs in a leader is a heart and a spine.Mahua Moitra is a member of the Indian Parliament from the All Indian Trinamool Congress.The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram. More