Month: September 2019

India’s decision to scrap Kashmir’s special status and bifurcate the state has been a shot in the arm for Prime Minister Imran Khan. It has given Pakistan the perfect opportunity to exploit Delhi’s action to its advantage.

India-Pakistan ties will continue to deteriorate. It could go out of hand if there is a major terror strike in Kashmir. Delhi is bound to retaliate and the world community would scramble to restraint the two nuclear armed neighbours. In such a case US President Donald Trump will certainly try to weight in. He has been waiting in the wings nudging both sides to talk.

China is likely to bat for “all weather friend” Pakistan in such an event. The China-Pakistan Economic Corridor is at the centre of President Xi Jinping’s ambitious Belt and Road Initiative. The two countries are now bound not just by strategic ties but vital economic considerations.

Indian and Chinese troops have got into a scuffle in Ladakh this week and is a hint of more aggressive patrolling by China on the border. It possibly has nothing to do with Ladakh becoming a union territory, but China had objected to the Indian move soon after March 5. China already occupies 38,000 sq km of Aksai Chin as well as 5,800 sq km in Shaksgam Valley of J&K. India has constantly made the point that the CPEC runs through Indian territory which Pakistan occupied illegally in 1947.

It was mainly due to China’s efforts that the United Nationals Security Council held a closed door discussion on Kashmir last month. At the end of the Chinese foreign minister Wang Wang Yi’s recent visit to Pakistan, Kashmir was part of the joint statement. All this is not surprising. It will be interesting to see how far China is willing to go in support of Pakistan on Kashmir. Much will also depend on how the second informal summit between Prime Minister Modi and President Xi Jinping pans out later this year. As of now Xi is scheduled to come in October, tentative dates are 11-14, though a formal announcement.

There is no silver lining in sight for India and Pakistan for now. India’s talks and terror cannot go hand in hand, now has Pakistan’s insisting on no dialogue unless Kashmir’s former status is restored. There is no way that Prime Minister Narendra Modi’s government will do so. Abolishing article 370, is part of the BJP’s ideological commitment.

The international community has given India a long rope on Kashmir. Some in India are crowing that Pakistan has been unable to get the world community to condemn India. That is correct. But human rights issues are looming over the government and despite claims that the internet and mobile services are partially lifted and the curfew like situation will eventually end, the ground reality is different. The murmur on human rights has already begun, and is likely to gather momentum.

Islamabad has been on the backfoot for nearly a decade trying to deflect accusations about the terror networks operating from its soil. Islamabad efforts to hammer the point that it has borne the brunt of terror strikes on its people and security forces did not get much traction. This is mainly because it is well known that Rawalpindi has used terror outfits against both India and Afghanistan. Also both the US and NATO forces had first-hand experience of Pakistan’s double dealing.

Now Islamabad is getting a chance to point fingers at India’s action in Kashmir. For once the world is willing to listen, as Pakistan’s foreign minister as well as its diplomats are putting across their views on Kashmir in America, US and the Gulf to expose India.

At the UN, Pakistan will hope to catch the world’s eye on Kashmir. Prime Minister Narendra Modi will be addressing UNGA on the 27^th of this month. Pakistan’s leader Imran Khan will speak after Modi’s address. He will certainly talk forcefully on the past UN resolutions in Kashmir, and point to flagrant violations of people’s rights in Kashmir. Much of Indian diplomacy must now necessarily be centred on defending its position on Kashmir.

India and Pakistan are back to square one, with each country attacking the other in international forums. This week it was at the Human Rights Council in Geneva where India and Pakistan clashed. Pakistan claims it got 50 countries to support a joint statement at the Human Rights Council Chief, calling for respect and protection of fundamental human rights of the people of Kashmir, lifting of curfew and ending the communication shutdown and released of those detained. It is a throwback to the late 80s and 90s when Kashmir was a constant presence in all bilateral meets in Europe and US. Indian diplomats will have to work overtime to counter Pakistan. Balochistan will be highlighted by India. It will be a grueling few months for foreign minister Jaishankar and his team.

Not that any of this matters in the long run. What is important is for the Modi government to begin talking to the people of Kashmir. Muscular policy and a strong nation is part of the BJPs ethos. But needs to be tempered with concern for their well being. The sooner the government begins to reach out with compassion to the people of Kashmir the better.

The current partial lockdown cannot continue indefinitely. The main aim of the government was to be able to tell the world that there was no major loss of life. That’s commendable, but people’s voices also need to be heard. India is still a democracy and while the rest of the country, as well the Jammu area have welcomed the government move, the voices of the valley need to be heard.

Home Minister Amit Shah has said the removal of article 370, would help the authorities to fight terrorism effectively. He plans to rid Kashmir off terrorism and bring development back to the state. At the same time the Centre hopes to introduce new faces in politics. But for this government needs to begin a dialogue with people. The sooner India begins to take some corrective measures the better it will be able to manage the diplomatic fall out over Kashmir. There is no need for the government to waste energy on convincing the people of the country. Most Indians support Prime Minister Modi’s decision. The first move was meticulously planned but what next, is a legitimate question to ask the government.

National Security Advisor Ajit Doval claims that the majority of Kashmiris are happy with the removal of special status. Who are these people? Possibly, the Hindus of the state who are ardent supporters of the BJP. But they don’t represent the views of the entire population.

Prime Minister Modi needs to take a leaf out of Atal Bihari Vajpayee’s book. The PM is a great orator and should try to convince Kashmiris that India cares for them. Winning hearts and minds of Kashmiris is vital unless Delhi wants to give Kashmir in a platter to Pakistan.

Boosting consumer spending; incentivising investment in manufacturing; and pro-active wooing of foreign capital are three things crucial to jump-starting India’s economy

When former Indian Prime Minister Manmohan Singh made some dire observations on the state of the Indian economy recently in a video statement, it wasn’t surprising that a Bharatiya Janata Party spokesperson would quickly label him as being “a puppet” who was being used by people behind the scenes (read: Congress leaders). Such facetiousness is not unexpected of BJP spokespersons whose flippant one-liners serve little purpose than to make a mockery of the very people who utter them. Dr Singh is an accomplished economist with a distinguished career—besides being prime minister for two terms, he has been India’s finance minister, governor of India’s central bank (the Reserve Bank of India) and has headed the erstwhile planning commission. When Dr Singh speaks (and he rarely does) on the economy, it would be wise to listen.

In his statement, released to the press and aired on news TV channels, Dr Singh attributed the Indian economy’s travails—slow growth; lack of investment; demand, and jobs—to an “all-round mismanagement” by the Modi government. In the last quarter, GDP growth had sputtered to 5%; the manufacturing sector’s growth had dropped to an abysmal 0.6%; and companies had to resort to large-scale lay-offs (in the auto sector alone, an estimated 350,000 people are estimated to have lost jobs).

Dr Singh called the poor state of the Indian economy a manmade phenomenon and blamed a number of decisions that were taken by the Modi regime during 2014-2019 for the economic debacle, particularly actions such as demonetisation and a haphazardly-implemented Goods and Services Tax (GST) regime.

While the Modi government, now into its fourth month in power after it was re-elected should heed voices such as Dr Singh’s, here is a road-map that could significantly help in getting the economy back on tracks.

Reviving consumer demand. There are no sure-fire quick-fix solutions to boosting consumer spending but a number of factors can be made to act together, complementarily, to increase consumer confidence (currently at a low level in India) and make people fork out for consumer products. Chief among them is the interest rate. India’s monetary policy has in the past six years been weighted towards tackling inflation, which spiralled out of control in 2013. However, inflation rates in recent years have been moderate—and they now hover at levels lower than the 4% that the central bank thinks are normal. This could be a cue to reduce interest rates in order to boost demand and consumer buying.

Selective tax cuts on goods and services, property, and other indirect forms of taxation could also help in boosting spending and, thereby, mitigating the resulting loss in revenue from tax cuts by the increased volume of transactions.

Increased government spending is yet another factor that can have a multiplier effect on the economy and lead to a rise in overall spending. The government has recently been handed a windfall of Rs 1.76 lakh crore by the Reserve Bank of India but as of now there is little public awareness of what it plans to do with that. Could it not be channelled into government spending and, therefore, create ripples of upbeat consumer confidence all-round?

Increasing domestic investment. One of the Indian economy’s biggest problems is that its manufacturing sector has remained sluggish for a prolonged period. Industry contributes less than 30% of India’s GDP, while the services sector contributes nearly 55%. During the Modi regime 1.0 several big plans, including the “Make In India” scheme, were flagged off. But this has led to little in terms of outcome. Partly the decline in the manufacturing sector’s growth is on account of the travails of small and medium sized enterprises, which were hit hard by demonetisation and the complexities of the new GST system. While demonetisation cannot be reversed, it is possible for the government to take a close look at GST and see whether it can be further simplified.

Lower interest rates too will obviously boost manufacturing as will the measures to increase consumer demand. The central government could also work with states to see how each of them could incentivise domestic investment in manufacturing—either by proffering tax reliefs or other incentives. Japan’s manufacturing boom in the post-World War II era was catalysed by its powerful Ministry of International Trade and Industry (MITI), which worked closely with different Japanese industries to grow markets for Japanese products—both domestically as well as globally. India has the NITI (National Institution for Transforming India) Ayog. It replaced the earlier Planning Commission and works mainly as an advisory think tank. It may not be a bad idea to make NITI work like MITI did in Japan during the 1960s and 70s.

Encouraging foreign investment. India liberalised its policies on foreign direct investment (FDI) in 1991 and since then, in absolute terms, FDI has increased year-on-year. But in recent years, despite the government’s attempts to attract more foreign investment—both direct as well as through equity infusions—the growth rate of FDI has faltered. A good measure of FDI growth is by looking at foreign investments as a percentage of gross fixed capital formation (GFCF). And here’s the bad news. Gross FDI as a proportion of GFCF has actually dropped sharply in India: from over 32% in 2008-09 to a little over 8% in 2018-19. The government may tom-tom the “success” of its Make In India and other incentives but the numbers speak volumes.

Recently, foreign investment was opened up for the coal sector. And foreign investment limits were relaxed for retail businesses and for online media. However, those may not be enough to boost FDI significantly. India’s coal has lower calorific value than in many other countries; besides, although India has the world’s fifth largest coal deposits, global concerns about fossil fuel and its environmental effect have dampened the enthusiasm of multinational energy giants in expanding their coal businesses.

The need of the hour could be to actually form industry-government alliances in India that could target specific groups of foreign investors by way of roadshows where the objective should be to seal deals and hammer out incentives such as tax rebates. What India needs now is more than a flurry of announcements. The government-industry alliances could be sector-wise, or even as initiatives by separate state governments with leading businesses in their respective states. What India needs now to boost the economy is not a flurry of announcements at hyped-up press conferences, but focused and single-minded action.

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It is not a day too soon there is promise of India coming down with some force on the single use plastic, which the quintessential bottle holding still water principally represents. In the available order in the country, hardly anything of importance will move till the prime minister himself will herald a campaign. For example, the Swachh Bharat Abhiyan, a five-year mission launched with great fanfare in 2014 coinciding with the 150^th birth anniversary of Mahatma Gandhi took wing nationally because Narendra Modi made it his signature policy. Even then, we will be far from a ‘clean India’ by this yearend because of citizenry apathy. Hopefully, he will do better with putting a stop to the use-once-and-discard plastic items.

On the Independence Day speaking from the ramparts of Red Fort, Modi said: “Can we free India from single use plastic? The time for implementing such an idea has come. May teams be motivated to work in this direction.” Earlier on the World Environment Day in 2018, the then minister for environment, forest and climate change Harsh Vardan said attempts would be made to phase out use of single use plastic by 2022. Not unexpectedly, nothing worth telling has happened since the minister spoke. Except for a good number of states notifying full or partial ban on single use plastic.

But as is not uncommon in India, the state level fiat is respected more in violation than in observance. What is to be remembered is that the petrochemical industry has a strong lobby and this is the reason why violations happen with impunity. Is it any surprise then that the country’s leading retailers such as Big Bazaar, Reliance Retail and V Mart are far from being environment friendly as they continue to give buyers the bought items in plastic bags? An example of the triumph of convenience and consumer preference over keeping the environment clean.

Plastics, the emblem of postwar consumerism are described as the workhorse of modern economy. They are finding a wide range of applications because of their light weight, robustness, easy formability and price advantage over competition. Riding on these strengths, global annual production of plastics advanced from 15m tonnes in 1964 to over 350m tonnes presently. Consulting firm McKinsey says in case the present rate of demand growth is sustained, albeit defying the spasm of popular disgust against the harmful effect on environment and health, then plastics output will take a leap to 600m tonnes by 2034. Confidence about demand growth is high among producers, particularly in the US. The North American market is seeing record amounts of capacity in the pipeline.

Not surprisingly green activists and others are alarmed by the development. The concern is because not only are there emissions of enormous quantities of greenhouse gases in the course of production of plastics, the environment suffers further damage as overwhelmingly large portions of used plastics go into landfills, or are burnt or are left to litter everywhere from city streets to seashores to foothills of mountains. We do this without realising that plastics escaping the established waste collection system will be floating on the earth for centuries, all the time causing harm to the environment. The intended life of single use plastic products is not even a year but for the laxity on the part of administration in India and elsewhere they virtually get an infinite life.

A report co-authored by McKinsey, Ellen MacArthur Foundation and the World Economic Forum estimates the negative externalities of plastics at $40bn, including pollution impact and that is more than the industry’s annual profits. The report gives the warning that if the future demand growth for plastic products remains at the current rate then the global plastic-waste volume will climb to 460m tonnes a year by 2030 from 260m tonnes in 2016. The present waste volume is already a major environmental concern. But the waste size forecast for the future will take the problem to “a whole new level,” says the report. A chart prepared by culling information from multiple sources shows the recycle rate of plastics at lower than 40 per cent compares poorly with steel at 80 per cent, aluminium cans and glass at 78 per cent and beverage carton at 43 per cent. What particularly raises despair is the rate of recycling rate at a pathetically low of 10 per cent for polyethylene, which is the most commonly produced plastic.

As against the growing public discontent over the poor rate of plastic recycling, the World Steel Association and International Aluminium Association are upholding the virtues of circular economy under which not only the end of life metal products are collected and shredded for recycling but facilities have been built in production systems for optimum reuse of water and energy. Public anger besides that is forcing more and more governments to take action against single use plastics – as many as 127 countries have either banned or levied taxes on disposable plastic bags – the industry will have to contend with competition emerging from alternative biodegradable products such as wood fibre bottle, recently unveiled by brewer Carlsberg. Is it not time for jute goods makers to put their house in order to regain the market lost to plastic bags used in packing foodgrains and sugar? Unfortunately, ownership of jute mills, except for a few, has moved from respectable corporate houses to traders who lack foresight.

Modi hasn’t spelt it out in any detail, but his angst must be occasioned by almost a third of all plastic packaging leaks amounting to more than 8m tonnes a year finding its way into the oceans polluting waters. No wonder we read frequently reports of marine species such as whales, turtles and fishes perishing due to their unwittingly ingesting plastics thinking these to be food and choking themselves to death. To everyone’s horror, microplastics have been found in the remote reaches of the Arctic. Not only in tap water, but plastic fibres are found in more than 90 per cent of bottled water.

No wonder then plastics manufacturers are finally trying to find fixes of popular concerns. Some independent companies are working on breaking down plastics into their components for conversion into new materials. Scientists say waste polyethylene is a potential carbon source that could be made into value added polymers. Noticeable progress has been made in laboratories to turn waste plastics into a pliable wax like substance to which then is added other elements resulting into bioplastics. We don’t have at this point any estimate of how much of waste plastics in India could be recycled. But developed countries are targeting 70 per cent recycling by 2030. McKinsey has recommended decoupling of plastics from fossil feedstocks by way of exploring and establishing renewably sourced feedstocks. But this will be a journey which will meet with serious opposition from the powerful oil industry.

When the Congress Working Committee, the party’s highest decision-making body, met here earlier this month to pick Rahul Gandhi’s successor, it eventually settled on Sonia Gandhi after day-long deliberations. The difference between the two national parties and their fortunes could not be more symbolic than this step. Congress has become a pensioners’ party while BJP is the dynamic youth orientated national force.

The decision by Congress to reinstate Sonia Gandhi as leader was a major victory for the party’s old guard which had been working behind the scenes for nearly two months to see that Rahul Gandhi loyalists were denied the party’s presidency. By proposing Sonia Gandhi’s name, the party seniors silenced those who were pushing for a younger leader and also ensured that their hold on the party organization remained intact as they are essentially her camp followers.

The entire exercise ended up exposing the divide between the party’s old guard and the Gen Next leaders with the former having the upper hand. Consequently, the much-needed generational shift in the grand old party was effectively thwarted.

In fact, this battle between the two groups is not new. Afraid of losing their preeminent position in the party organization, the old guard has been blocking Rahul Gandhi’s plans since he was the party vice-president. Even after he took over as party chief, the Nehru-Gandhi scion had to tread carefully to ensure that he did not alienate the old-timers, known for their proximity to Sonia Gandhi.

That Rahul Gandhi was unable to shake them off was evident when it came to the appointment of chief ministers in Madhya Pradesh and Rajasthan after the Congress won the assembly polls in the two states last year. He had to willy-nilly endorse senior leaders Kamal Nath and Ashok Gehlot as chief ministers, overlooking the claims of younger leaders Jyotiraditya Scindia and Sachin Pilot.  

This ongoing turf war between Sonia Gandhi’s loyalists and Rahul Gandhi’s supporters in the Congress stands out in sharp contrast to the Bharatiya Janata Party, which has, over the past few years, placed young leaders in key positions of power without creating any major ripples in the party.

The first move in this direction was made after veteran BJP leader L.K.Advani fell foul of the party’s ideological mentor, the Rashtriya Swayamsevak Sangh, with his complimentary remarks on Mohammad Jinnah. Advani’s protégés Sushma Swaraj and Arun Jaitley were given the responsibility of leading the charge against the Manmohan Singh government in the Lok Sabha and Rajya Sabha, respectively. Both leaders were in their fifties then. Shortly thereafter, 52-year-old Nitin Gadkari was promoted as BJP president. Though dethroned, Advani retained a say in party matters through Swaraj and Jaitley, both mentored by him.

However, the BJP and the RSS woke up to the need for a further generational change after the party lost two consecutive elections in 2004 and 2009. It was clear that seniors like Advani and Murli Manohar Joshi were not inspiring younger and new voters and that it was time to take drastic decisions.

By then, three-time Gujarat chief minister Narendra Modi had positioned himself for a larger national role. Undoubtedly, his projection as the BJP’s Prime Ministerial face came up for opposition from Advani and his supporters in the run-up to the 2014 Lok Sabha elections. But, after a few hiccups, their resistance was eventually worn down. And once Modi proved his credentials in the electoral arena by leading the party to an emphatic victory in the 2014 Lok Sabha polls, there was no looking back.

Modi and his confidant Amit Shah have since moved fast to bring in younger leaders. Party seniors were been gradually sidelined and even second-generation leaders made way for a younger set. But unlike the Congress, the change-over has been a smooth affair.

Senior leaders were first denied ministerial berths in 2014 by laying down an upper age limit of 75 years. In the recent general election, these leaders, including Advani, Joshi, Shanta Kumar, Sumitra Mahajan, B.C.Khanduri and Kalraj Mishra were not even given tickets.

At the same time, Modi, assisted by BJP president Amit Shah, has picked new chief ministerial candidates which went against all conventional logic. For instance, Devendra Fadnavis, a Brahmin, was appointed a chief minister in Maharashtra where power has always been with the all-powerful Maratha community. Similarly, Manohar Lal Khattar, a non-Jat, was chosen as chief minister of Haryana where it is the Jat community which dominates. It’s the same story in Jharkhand and Assam.

Though there were initial murmurs in the party, there were no protests or counter moves to all these decisions, thus ensuring the emergence of a new-look BJP.  

The Congress can certainly take a few lessons from the BJP which successfully managed to reverse the trend of electoral losses by taking some tough measures. It was a gamble but it paid off. The result is that the BJP is the central pole of Indian polity today while the Congress is struggling for survival.

The Congress too needs to disturb the status quo and go in for major changes without being afraid of rocking the boat. But to do so, it needs a powerful and charismatic leader who also has capabilities of winning elections for the party. The BJP has that advantage.

Congress increasingly gives the impression of a party seeking ‘retirement’ as Sonia Gandhi with Manmohan Singh in tow, both shuffling when walking, are the face of Congress. But where is the new dynamic youthful strides going to come from?

Unfortunately, Rahul Gandhi has not measured up to the task, which has allowed the old guard to retain its vice-like grip on the party while Gen-Next leaders continue to wait in the wings.