South Asia

Subterms

    More stories

    • 75 Shares149 Views

      in World Politics

      Modi’s India Is Becoming a Farce

      by

      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

      READ MORE

      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.

      Embed from Getty Images

      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.

      Embed from Getty Images

      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.

      Embed from Getty Images

      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.

      Unique Insights from 2,500+ Contributors in 90+ Countries

      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

    • 100 Shares199 Views

      in World Politics

      Liberalizing India’s Economy Is Critical for Global Stability

      by

      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

      READ MORE

      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.

      Unique Insights from 2,500+ Contributors in 90+ Countries

      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.

      Embed from Getty Images

      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.

      Embed from Getty Images

      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.

      Embed from Getty Images

      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.

      Embed from Getty Images

      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.

      Unique Insights from 2,500+ Contributors in 90+ Countries

      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

    • 150 Shares169 Views

      in UK Politics

      British ex-soldier stranded in Afghanistan plots escape with 400 workers and families

      by

      A former British solder is set to flee Afghanistan with hundreds of Afghans — including his own staff — by travelling through Taliban-controlled land.Ben Slater is reportedly planning to make his own way out of the country as he did not receive the necessary visas for air evacuation from the UK government.The 37-year-old, who used to work as a bodyguard to British ambassadors abroad, toldThe Telegraph he felt “massively let down” by the government.Thousands of British nationals and Afghan allies have been evacuated from Afghanistan since its fall to the Taliban earlier this month.The final members of UK military and diplomatic personnel left Kabul airport on Saturday night, ending the largest evacuation mission since the Second World War.Mr Slater, who used worked for the Royal Military Police, reportedly supported dozens of evacuations in the UK’s airlift programme.He asked officials to organise the evacuation of himself and Nomad Concepts Group staff but did not receive visas,The Telegraph reported.Mr Slater has now launched his own operation to leave Afghanistan by land, attempting to flee the country with 400 Afghan nationals including his 50 staff members, which are mainly women, according to the newspaper.He told The Telegraph it is set to be a “long trip”. “I am hoping on the other end that the FCDO [Foreign, Commonwealth and Development Office] have got our visas sorted, or at least have spoken to the foreign affairs ministry in our destination country to allow access for our vulnerable staff,” he added.Dominic Raab, the foreign secretary, said the number of UK nationals still in the country was in the “low hundreds”.He was unable to give a “definitive” figure on how many Afghans the UK failed to airlift to safety after the Taliban seized power.The foreign secretary also said it would be a “challenge” for people trying to escape Afghanistan by fleeing to a border.Mr Raab told Sky News: “We are holding very squarely the Taliban to their explicit assurances – they have made them bilaterally to us, they have made them to other countries and we have now firmed this up with a UN security council resolution – that they must allow safe passage, not just for our nationals but for Afghans, particularly vulnerable ones, who wish to leave.”The FCDO has been approached for comment. More

    • 225 Shares139 Views

      in UK Politics

      Boris Johnson tells troops: ‘We’ll be forever grateful’ you kept UK safe from Afghan terror for two decades

      by

      Boris Johnson has told troops and veterans that Britain will be “forever grateful” and that it was not down to “chance or good fortune” that the UK had been safe from attacks launched from Afghanistan for 20 years.In an open letter, the Prime Minister said he had been “lost in admiration for the heroic efforts of everyone” involved in Operation Pitting, the evacuation efforts to remove UK nationals and Afghan allies from Kabul airport.Writing as the operation came to an end, with the last military and diplomatic personnel leaving Kabul on Saturday, Mr Johnson said: “There has been nothing like it in speed and scale, certainly in my lifetime.”And he recognised the downfall of Afghanistan to the Taliban after 20 years would have been difficult to comprehend.“Over the last two decades, many thousands of you dedicated years of your lives to service in Afghanistan, often in the most arduous conditions. In particular, I realise that this will be an especially difficult time for the friends and loved ones of the 457 service personnel who laid down their lives,” Mr Johnson said.But he repeated his message that their sacrifice was not in vain, and said: “Our purpose in Afghanistan was simple – to protect the United Kingdom from harm – and you succeeded in that central mission.“In the last 20 years, not a single terrorist attack has been launched from Afghan soil against the UK or any other Western country. I know this was not down to chance or good fortune.“Our country was protected because you joined with our allies to fight al Qaida, destroy its training camps, disperse or eliminate its leaders, and weaken its very core. I would not wish to contemplate what might have happened if you had not carried out this vital task.“You kept al Qaida from our door for two decades and we are all safer as a result.”And he highlighted the impact on the Afghan people too, whether through girls’ education, the clearing of landmines, or many homes having electricity for the first time.“I do not believe that any of these gains could swiftly be undone,” the PM said.“Education, once imparted, can never be taken away, and this progress would never have happened at all without your effort and sacrifice.“Whether you are still serving or a veteran, a loved-one, a relation or a friend, you all played your part and you should feel immense pride.”He added: “Do not lose sight of the essential fact that you fulfilled the first duty of the British Armed Forces – to protect our country – and we will be forever grateful that you did.” More

    • 100 Shares129 Views

      in World Politics

      India’s Highway Construction Is in the Fast Lane

      by

      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.

      360° Context: The State of the Indian Republic

      READ MORE

      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.

      Unique Insights from 2,500+ Contributors in 90+ Countries

      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

    • 100 Shares179 Views

      in World Politics

      India Is Slowly Evolving Into a Market Economy

      by

      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

      READ MORE

      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.

      Embed from Getty Images

      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

    • 113 Shares149 Views

      in World Politics

      Sinhala, Tamil and the National Identity of Sri Lanka

      by

      In March 2015, the unexpected newly elected president of Sri Lanka, Maithripala Sirisena, stated that the national anthem could be sung in Tamil at official and institutional events. For anyone alien to life on the teardrop island, this announcement may have come as a surprise since, after all, Tamil and Sinhala are the two official […] More

    • 88 Shares129 Views

      in World Politics

      The Indian Government Is Failing Its People

      by

      In India, the ruling Bharatiya Janata Party government has a tendency for doing things like a “surgical strike.” In 2016, at just a few hours’ notice, Prime Minister Narendra Modi removed the 500 ($6.50) and 1,000 rupee notes from circulation. The move, known as demonetization, sent shockwaves throughout India and hit everyday citizens hard, particularly […] More