End of the global trade order?

One of the pillars of the global trade order, the World Trade Organisation’s (WTO) dispute settlement system is set to collapse quietly this week. Though its demise may not make headlines akin to the US-China trade war, but its demise entails moving further away from multilateral rules, designed to promote global free trade and towards a law of the jungle where the mighty wins.
 
The collapse has been in the making for over two years, driven by a US blockade on appointments to the WTO’s highest court, the Appellate Body. In fact, U.S President Donald Trump has rallied against the WTO, calling it a catastrophe and a disaster, based on the assertion that the United States loses cases due to a skewed proportion and representation of Americans in the court. It is not unknown that Trump faces a barrage of disputes, at the WTO against his trade policies, including global tariffs on steel, and a tariff war with China with no end in sight.
 
Since he came to power, Washington has blocked all appointments to the appeals’ chamber as existing judges’ terms end. Such absence of new appointments, which can only occur by consensus of all WTO members in December, the appellate body will shrink to only one member out of its standard of seven, two less to form a quorum of three necessary to hear appeals and settle trade disputes. In a matter of months, their rotation will become meaningless, placing an impossible workload on the remaining members. The next vacancies for the US and Indian members occur in December 2019, at which point the appeals process would be crippled.
 
Essentially, what is at stake is a unique system that has on balance safeguarded the interests of all WTO members, regardless of their economic size or diplomatic influence. Governments must settle trade disputes through the dispute settlement system, if other diplomatic means are exhausted. The dispute settlement mechanism often referred to as the “crown jewel” of the WTO provides governments the right to appeal decisions and the right to withdraw trade concessions and raise tariffs in the event of an adverse funding. The international legitimacy of the WTO dispute settlement system makes it an indispensable tool that governments can use to hold trading partners accountable and without entering a retaliatory mechanism in tariff escalation in a bid to change behaviour.
 
Without a multilateral architecture to hold rule-breakers accountable, international economic relations would revert to the law of the jungle where countries with economic heft would rule the ground. That reversion definitely sits ill with multinational businesses, the global economic framework and the rule of law, thereby potentially jeopardizing international economic stability.
 
India Outbound
Nov 22, 2019
 
 

source https://indiaoutbound.org/end-of-the-global-trade-order/

The noble fight against poverty

The 2019 Nobel Prize in Economics to Abhijit Banerjee, Esther Duflo and Michael Kremer reaffirms the value of evidence-based policymaking in addressing intractable problems. Even as the pursuit of capital accumulation is underway in the international sphere, the world continues to be plagued with multiple distressing phenomena. Instances such as 700 million people trapped into poverty, or 50% children leaving schools without basic skills in literacy and numeracy are grim reminders of how policymaking at a macro-level could prove inadequate to address such crises.
 
Often, in instances such as global poverty, economists tend to rely on a macro-level understanding to alleviate poverty. Ideas related to immigration and economic growth are recognized as tools to improve the quality of life among the world’s poor. On the contrary, the relative narrowness of the scope of this year’s winner’s work is owed in part to their method of analysis. Mr. Banerjee and Ms. Duflo explicitly reject big thinking about big questions in their 2011 book “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty.”
 
What is unique about the duo’s work is the employability of the approach; Randomized Control Trial (RCT) has been the buzzword among development economists for almost two decades. Inspired by the impact of the RCTs in medical science, the trio has used this technique to test the effect of small interventions on individual behavior. Such trials involve selecting two sets of individuals at random, out of which one is then exposed to policy intervention. The experiment examines the impact of such interventions, often over long periods of time, to gauge the impact of policy and whether or not, it justifies the costs associated with it.
 
This has proven exemplary in areas such as education and healthcare. For instance, the Nobel Committee highlighted how their “experiment-based approach has transformed development economics over the past decades.” They specifically mentioned the result of one such randomized trial wherein “more than 5 million Indian children have benefited from programmes of remedial tutoring in schools.” Further, the results of another experiment suggest that multi-topic medical training of informal healthcare providers may offer an effective short-run strategy for improved healthcare.
 
Nonetheless, the effect of such rigour in policy analysis is considerable and as a consequence, the RCT approach has taken over the field of development economics. For Duflo and Banerjee, an important part of their work has been ensuring that the agency of the beneficiaries, usually in developing countries such as India, is put at the centre of any policy design. This is a crucial method in which experimental results often provide better outcome than large-scale data-based inference.
 
However, this approach is not without its critics. For instance, Angus Deaton, who won the 2015 Nobel prize in economics noted that while RCTs can play a role in building scientific knowledge, they can do so only as part of a cumulative program. While the approach has enamored a large number of development economists for its simplicity, where inferences of what works or not are drawn from field experiments, it has also been criticized for reducing the study of poverty to small interventions unconnected to the life experiences of the poor. But, despite the conditional nature of these studies, it is difficult to deny that policy interventions require better understanding to ensure efficient outcomes, especially in countries with finite state capacities. Thus, in a country like India, where billions in money goes into formulating policies to help the poor, which are often unaccompanied with the real scenario, such research can be enormously valuable in informing public debate and can thus aid in policy making.
 
India Outbound
october 24, 2019
 
 

source https://indiaoutbound.org/the-noble-fight-against-poverty/

Brexit, deal or no deal?

The fact that even a long gloomy night breaks into dawn is nothing short of a miracle. Although, the word miracle might not sound apt here, but the Brexit conundrum that has been lingering for more than three years seems to have made some sort of a breakthrough. After months of confusion, the negotiating teams of the United Kingdom and the European Union have reached a consensus on what could transpire as a no-deal Brexit if this gets approved. Both the British Prime Minister Boris Johnson and European Commission President Jean Claude-Juncker have announced their mutual agreement over the deal, where Juncker reportedly stated that it is a “fair and balanced agreement for the EU and the UK.”
 
The deal after the announcement still must clear several hurdles, including getting approval from Europe’s leaders and most crucially passage in the British Parliament, where an agreement reached by Johnson’s predecessor May suffered three successive defeats in the Parliament. The Brexit deal comes just ahead of the two-day EU summit starting Thursday and holds the possibility of removing some of the uncertainties that have dogged the EU-UK relationship since 2016.
 
However, the latest onslaught came from the Democratic Unionist Party (DUP) in Ireland who refused to support the deal as “things as stand.”Their concern is over the backstop arrangement, which if made redundant, would establish a hard border between the Northern Ireland (part of the UK) and the Republic of Ireland. Currently, there are no physical borders between the two parts. Johnson, a hard Eurosceptic in a sense, apparently junked the vexed backstop arrangement that had fluttered Brexiters all along. For Tories of that school, the purpose of Brexit is liberation from a regulatory yoke, imposed by the Brussels bureaucracy. Hatred of the backstop has its origin in the ambition to extricate the UK economy from the social protections preferred by many European countries. The theory is that a competitive edge is achieved by reducing the cost of doing business in Britain.
 
Mr. Johnson’s frantic rush to strike a Brexit bargain by October 31 has forced a focus on technicalities of withdrawal, but it also serves his agenda to distract his attention from the bigger picture. Largely, Johnson has portrayed himself as the man who would get Brexit done, a phrase he had often used as a weapon to stir the hysteria of Brexit and play down Theresa May’s deal.
 
But, it is important to remember that Brexit is not a game or a play to advance one man’s ambitions. Though Brexit was conceived and supported by the people who want the EU to fail, a government that seeks to uphold the notions of multilateralism will want the EU to survive. An outcome of the deal will shape the strategic direction of the country for generations and affect millions of livelihoods. What matters is for Johnson and his government to not play poker with the deal and strive towards an outcome that would co-opt both the UK and the EU in a favourable manner.

source https://indiaoutbound.org/brexit-deal-or-no-deal/

Why India needs a female boardroom revolution?

Over the years, the issue of gender diversity in business organizations has become particularly relevant in the international corporate governance arena. For proponents of more women to secure seats at the boardroom table, this marks a remarkable moment of the shattering of the glass ceiling. Here, the glass ceiling is used as a metaphor to represent an invisible barrier that prevents a given demography, in this case women, from rising beyond a certain level of hierarchy.
 
Research on gender diversity has often invoked sundry perspectives on how to efficiently solve problems that companies face. To this end, India had this epiphany only back in 2013 where the 2013 Companies Act made it mandatory for listed companies as well as companies with a turnover of INR 300 crore to appoint atleast one woman director. But often, companies would induct a women member from their promoter families to meet the requirement. This was largely tied to the objective of protecting business interests.
 
While this broadened women’s representation, this also led to a small cohort of women accumulating directorships. So, to ameliorate this concern and to make the boardroom truly diverse, in October 2017, Securities and Exchange Board of India (Sebi) mandated that there should be atleast one independent woman director in all listed companies.
 
Research evinces that companies with truly diverse boards perform better than their peers over a long period of time. So far, the legal provisions have managed to trigger off a right trend where according to Prime Database (which explored and analysed data for the boards of 500 top companies listed on the National Stock Exchange or Nifty500) found that female representation increased to 13.8 % in 2017, from 5% in 2012, indicating a 8.8% increase. However, the gain is not significant as per data shown by the 2019 edition of the Credit Suisse Gender 3000 report wherein Indian female representation in boardrooms has risen to 15.2% in 2019, falling below the global average of 20.6 %.
 
Apart from the normative argument that suggests both men and women should have an equal opportunity to attain leadership positions, what explains the logic of having a gender-diverse boardroom? Simply put, does investment in women actually translate to better financial results for firms? The broad answer is yes. There is a significant body of research, which suggests that gender diversity can have a positive impact on financial performance as well as brand perception.
 
Further research shows that companies with atleast one woman on board have a higher return on equity, higher earnings and stronger growth in stock price than companies with all-male boards. In fact, the evidence abounds. According to a research brief produced by Mckinsey, companies in the top quartile of gender diversity are 15% more likely to financially outperform those in the bottom quartile. Similarly, multiple surveys have also linked companies with more women on their boards to better corporate governance and more ethical behavior.
 
Meanwhile,another survey published in the International Journal of Business Governance and Ethics pointed out that firms with at least one woman on the board have a 20% lower risk of bankruptcy. These stark figures should in themselves serve as an incentive for businesses to see female representation as a commercial imperative.
 
The quota for female representation, albeit motivated by both ethical and social responsibility also produces better economic yields. Since boards appoint and monitor the executive positions such as the Chief Executive Officer (CEO) and guide the firm’s strategy, boardroom composition has a strong impact on firm performance. Naturally, a gender diverse boardroom will positively affect the economic performance of the firm and Indian businesses would do well to co-opt women in boardrooms to ensure a successful business.
 
India Outbound
October 16, 2019
 
 

source https://indiaoutbound.org/why-india-needs-a-female-boardroom-revolution/

What does the FM’s stimulus package indicate?

The Finance Minister’s announcement of a stimulus package harbours well for the economy that has seen a sustained slowdown. Measures to revive growth come at a time when the world economy at large is buffeted by global headwinds and trade slowdown. All of these does indeed impart some sort of stability and underpins a new growth impetus for India.
 
Following the persistent slowdown, there have been widespread demands of a fiscal stimulus package from various quarters since Sitharaman’s budget to spur growth. But given the precarious fiscal situation, as many economists have warned, it had left the FM very little room to offer a package without breaching the fiscal deficit target. However the FM’s announcement made it evident that she has sought to revive the “animal spirits”, a term initially coined by John Maynard Keynes and found several references in the economy. On top of it she has also tried to unclog the liquidity blockages to ensure smoothening of credit flows and has tried to incentivise demand in certain sectors, without the new measures having any broadscale impact on the country’s finances.
 
Decoding some of the moves
 
The Budget proposal to hike surcharge on Foreign Portfolio Investors (FPIs) had spooked foreign investors, which was supposed to impact 40% of the FPIs as per industry estimates. Nonetheless, the present decision to rollback this enhanced surge is indeed a welcome concession, as the massive capital outflows that stemmed because of this decision could be reversed and instead, aid in the rupee’s appreciation.
 
The withdrawal of the surcharge on FPIs would boost a sagging market. However, a sustained rally on the market is only expected when there is a visibility of good earnings growth and a reversal of the slowdown in the economy.
 
Other steps such as infusion of INR 70,000 crore as capital in state-run banks, to smoothen credit flow that will benefit corporate, retail and market segments is another credible move. However, past instances of capital infusion simply have not proven sufficient and addressed banking issues that has prolonged the country’s economic recovery. An example of this is that while the RBI has announced successive rate cuts, it has not simply got transmitted to bank’s lending rates, whereby hitting both the supply and cost of credit. India’s banking industry dominated by PSUs will be competitive, more efficient and profitable only if there is a structural design change, featuring operational interdependence, empowered bank boards, better governance standards and improvement in quality of lending.
 
Meanwhile, withdrawal of the draconian angel tax that tightened the noose around startups dependent on angel investors is a welcome move. For instance, any startup that has registered itself with the Department for Promotion of Industry and Internal Trade (DPIIT) and has completed all the required valuations would not be bothered by tax authorities. This waiver of the angel tax that would subsequently simplify the flow of risk capital for young startups generally spellswell for a thriving ecosystem. But this response to “tax terrorism,” which had somewhat put a dent on the government’s conduct acts as a post-dated cheque. For a tax that has been in operation for seven years and has been responsible for snuffing out nascent startups, its removal should have occurred earlier.
 
Crucially, the automobile sector that has experienced a lackluster growth for a considerable time has also been accorded some attention. An increase in one-time registration fee has been deferred, a depreciation benefit on vehicles has been doubled, a ban on the purchase of vehicles by government departments has been lifted and a renewed emphasis has been laid on helping a supply chain emerge for the local manufacture of electric vehicles. All of these measures help with both the inventory buildup and creating a new market for e-vehicles, but car manufacturers are unlikely to ramp up production until they see a sustainable return to normal volumes.
 
On the whole, Sitharaman’s stimulus package should rein in investor sentiment and create confidence within the market. This in itself could power the growth engine such as India’s long-languishing investment rate. However, what is needed is to sustain the growth and this could only start with driving up consumption levels which implies more money in the hands of people.
 
India Outbound
September 30, 2019
 
 

source https://indiaoutbound.org/what-does-the-fms-stimulus-package-indicate/

The millennial angle in India’s auto sector slump

Finance Minister’s Nirmala Sitharaman’s logic on explaining the slump in the automobile sector has clearly brought much humour on social media platforms. She stirred a hornet’s nest when she attributed the “mindset of millennials,” who prefer to use Ola and Uber, as one of the critical reasons behind the Indian auto sector’s spectacular fall. According to Sitharaman, millennials today would rather opt for Ola, Uber and other ride-hailing services instead of paying monthly installments for a car.
 
Sitharaman’s comments coincidentally come a day after the automobile sector reported its steepest monthly decline in sales since 1997-98. Vehicle sales across categories including passenger vehicles, two-wheelers and commercial vehicles fell 23.5 % year-on-year, according to the industry body Society of Indian Automobile Manufacturers (SIAM).
 
What resulted from Sitharaman’s statement is it set the stage for a debate. While there are some takers to her side of logic, other industry analysts have merely panned it. Obviously, for the sake of a sound argument, what matters is to figure out that if there exists a direct correlation between buying a car and hiring a taxi. In plain terms, what this implies is whether Sitharaman’s comment has substance or was it off the mark?
 
For one, along with passenger cars, the sales of bus and trucks also saw a precipitous 39% fall last month, thereby compounding the auto industry’s travails. Analysts have said that in this case, it would be far-fetched to lump the blame on millennials, since they would rarely own a bus or a truck. What this broadly implies is a general fall in consumer demand within the Indian economy, something that extends far beyond the millennials and their purchasing behavior.
 
Second, cab aggregators like Ola and Uber are largely restricted to metro cities and to some extent tier-2 cities. Sitharaman’s argument does not explain why vehicle sales have slumped in rural India. For instance, two-wheeler sales, a key indicator of demand from rural India, fell 22% year-on-year in August, according to SIAM.
 
Third, according to some analysts, the crisis of non-banking finances companies or shadow banks have also hit car sales. Although the government in recent times has taken measures to ease up the liquidity crunch in the sector by allowing credit flow, but the supply of easy finance has taken a toll where over three-fifth of vehicles sold are financed through loans.
 
Also, for the record, the concept of ride-hailing services such as Ola and Uber have come to India during the last 6-7 years. Thus, it might be premature to blame them for the disruption, given that the sector has seen some rosy years during the time of their existence. On the larger front, the auto slowdown is more a function of the country’s broader economic woes than of any one specific factor. Consumption, the main pillar of the economy is down in the dumps with GDP growth falling to a six-year low. This is playing out in case of consumers who are holding back purchases because of uncertainty.
 
Hence, it would be wrong to construe the mindset of millennials as the factor behind the slowdown. The reasons for the auto-industry’s plunging fortunes are varied and the millennials aversion to owning cars is only miniscule fraction of this complex issue.
 
India Outbound
September 25, 2019
 
 

source https://indiaoutbound.org/the-millennial-angle-in-indias-auto-sector-slump/

Negotiation is the only way forward: drone attack in Saudi Arabia

A weekend drone attack on Saudi Arabia that cut into global energy supplies and has halved the kingdom’s oil production threatened to exacerbate tensions in the already fragile Middle East. The responsibility of the attacks was claimed by the Houthis, a rebel group in Iran, who struck at the world’s biggest petroleum-processing facility. That matters greatly because as a result, the Saudi Aramco, the kingdom’s state–owned oil company was forced to suspend production of 5.7 m barrels a day. It usually produces and exports around 9.8 million barrels of oil (latest OPEC figures) to consumers around the world, primarily in Asia.
 
Naturally, what this means is a strain in the supply security, and its ripple effects were felt in the oil market where the price of Brent crude surged 18 % (on Sunday evening) before pulling back to a 12% increase. Meanwhile, the strikes also expose the vulnerability of Saudi infrastructure to attacks, historically seen as a stable source of crude to the market. Although on a short-term basis, oil from strategic storage to meet demand and temper the impact on prices could help, this attack introduces a new irreversible risk premium into the market.
 
There are two reasons for this risk premium. If the Saudi outrage gets prolonged and oil prices rally significantly, then it is likely that shale producers (primarily the US) will raise output. But there exist constraints on how much the United States can export because oil ports are already near capacity. Second, oil from storage could keep the market supplied for some time, but oil markets will tend to become increasingly volatile if the storage is exhausted and the possibility of a supply crunch arises.
 
While Saudi Arabia had stopped short of blaming Iran for the attacks, the possibility that Iran has a direct linkage with the attacks was made explicit by Mike Pompeo, along with the U.S government’s damage assessment of one of the stricken oil facilities. These developments come at a time of increasing tension between Iran and the United States. Since the Trump administration’s withdrawal from the Joint Comprehensive Plan of Action (JCPOA)- the nuclear deal with Iran and the renewal of its sanctions has led to an eruption of sorts. From the US launching airstrikes against Iran, to the rise of Iran’s provocation in the Gulf and consequently, Iran’s enrichment of uranium, the situation is teetering on the brink of a war.
 
The U.S has also maintained a “maximum pressure” campaign against Iran that is meant to throttle its economy already reeling under severe sanctions. On the other hand, however, Trump has expressed his desire to meet Iranian President Hassan Rouhani with no pre-conditions that has roiled some of his top advisers.
 
Though it would be premature to call the present act of Trump, who had been publicly pining for a meeting with Rouhani, an extension of an olive branch, one should remember that it takes two to tango. And in this, Iran has been vehement in showing its reluctance to come to the negotiating table with him.
 
What is clear is that the recent spike in the US-Iran tension could spell doom for not only the oil market, but for global energy markets where the Strait of Hormuz has become a maritime flash-point in the US-Iran conflict. For a region that is already reeling under multiple conflicts, what is required is stability and for the sake of it, a bilateral meeting is the most optimal shot.
 
India Outbound
September 23, 2019
 
 

source https://indiaoutbound.org/negotiation-is-the-only-way-forward-drone-attack-in-saudi-arabia/

UNSC discussion about Kashmir: Way forward from an economic perspective

The lack of an outcome of the closed-door discussion on Kashmir in the United Nations Security Council (UNSC) is a diplomatic victory for India. In an implicit criticism of China and Pakistan, Syed Akbaruddin, India’s Ambassador and Permanent Representative to the UNSC, relayed that the UNSC recognized that “Article 370” was entirely an internal matter and henceforth, holds no external ramifications.
 
In effect, all of these reflect India’s growing diplomatic clout coupled with Pakistan’s failure to internationalise the issue. But this should not mean that India can rest on its diplomatic laurels. Truly capturing the benefits of the revocation of Article 370 implies a sound economic development of the state.
 
Behind the decision to revoke Kashmir’s autonomy has lingered the intention of boosting its economy. As PM Modi captures it well in an interview given to the Economic Times, where he states that “the greatest casualty (to the Kashmiris) was the lack of any proper economic avenues to increase earning” and abrogation of these roadblocks i.e. Article 370 and 35 (A)would ensure that people obtain economic opportunities.
 
The Prime Minister also emphasized upon the fact that how Article 370 acted as a stumbling block or impediment in the process of industrialization and concluded that through this revocation, integration with the Indian mainland would boost investment, innovation and outcomes.
 
A pertinent criterion of economic growth is the tide of investments that needs to seep down into the economy. However, investments are unlikely to be forthcoming as long as the state continues to be crippled with unrest. For instance, Kashmir received only $6 million in foreign direct investments between April 2000 and April 2019, the lowest among Indian states. Moreover, the economy, mostly reliant upon agriculture and handicrafts, shows a declining contribution, exacerbated by factors such as vanishing jobs, lower disposable income sand lackluster expansion of the state’s economy.
 
To remedy this crisis, what is required a sustained string of public investments in form of connectivity or power supplies by the Modi administration. For private investments to trickle in, which is still far-fetched given the present crisis at hand, it is important that governments at every level work together by engaging communities in Jammu & Kashmir and Ladakh to ensure that the promises made by the Centre are translated into action.
 
India Outbound
August 27, 2019

 
 

source https://indiaoutbound.org/unsc-discussion-about-kashmir-way-forward-from-an-economic-perspective/

Kickstarting a slowing economy is a challenge that the Indian government needs to fend off

Currently, there exists a persistent shroud about an economic slowdown. For those who are still grappling with the concept, consider this as an example. You are deriving a monthly salary from working in a firm. With that salary, you buy your groceries from a supermarket, dine at a restaurant, employ a help in your home and pay your taxes. What has happened here is that the movement of the money has generated activities within the economy, which would not have happened if you had simply deposited the salary in a bank. In other words, this capital movement has contributed to the Indian Gross Domestic Product (GDP).
 
GDP, in the conventional sense of the term, simply means the measure of all the goods and services produced within a country during a specific time. In this sense, GDP measures the movement of money through and around the economy or rather the economic activity. The above instance adequately substantiates how economic activity contributes to the country’s GDP. Now this cycle of activity is supposed to work and add to the economic activity and GDP.
 
However, it is this economic activity that has taken a beating in India, since the beginning of 2019. As per data from the Central Statistics Office, the GDP growth from January to March 2019 has slowed down to a 5-year low of 5.8%. If we consider the economic activity taking place after the period, it would be pragmatic to concede a further slowdown.
 
Given that consumption forms the most important part of the Indian economy, thereby impacting the overall economic health of the country, it would be prudent to take stock of any slowdown in consumption. The most recent example of this is the crippling of the auto sector, due to a paucity in demand and recurrent job losses. As per the data released by the Society of Indian Automobile Manufacturers (SIAM), vehicle sales across categories, including passenger vehicles and two wheelers have witnessed a decline of 18.71%, the sharpest fall in the last 19 years.
 
The impact of this deepening slowdown has been felt beyond discretionary purchases such as vehicles and has impacted other industries such as the Fast Moving Consumer Goods (FMCG) companies. For Hindustan Unilever, considered to be the largest FMCG Company, there was a 7% point dip in volume growth between the June quarterthis year versus the same period last year. Other companies like Britannia and Dabur have also recorded a similar slide, which indicates a worrying trend, given that people seem to be going slow on even everyday purchases.
 
Such an all-round demand deceleration is worrying given that India has primarily been an economy where supply is constrained. At the core of it lies the obvious fact that incomes are simply not rising enough. Of particular interestis the decline in household savings, as they are a net supplier of funds to both the corporate and the government sector, which have declined to 17.2 % of GDP in 2017-18 from 23.6 % of GDP in 2008-09.
 
The current slowdown in demand is an undeniable fact that the government will need to address. Multiple meetings have been held between the Finance minister and the industry heads to reverse the prevalent economic slowdown. It is crucial that the government enables the initiation of high-end growth, sustained by a virtuous cycle of savings, investments and exports to kickstart the Indian economy again. For this to take place, it is imperative that a coordinated policy response is formulated with the support of the private sector.
 
India Outbound
August 21, 2019
 
 

source https://indiaoutbound.org/kickstarting-a-slowing-economy-is-a-challenge-that-the-indian-government-needs-to-fend-off/

It’s just the oil, honey

The decision of the Organisation of the Petroleum Exporting Countries (OPEC) to extend oil supply cuts at the recently concluded meeting may have important implications for both oil producers and more importantly oil consumers, like India. Collectively, OPEC and its allies (together known as the OPEC+) would curb production by 1.2 million barrels per day (mb/day) for nine months until March 31.
 
Context
 
Global commodity prices saw a dip after the global financial crisis. This occurrence was counter-intuitive due to a kind of hysteresis and slowdown in demand and thus, the resulting price drop happened much later. However, the prices peaked in 2012 when the OPEC average crude oil price touched a high of almost $110. But then prices began to plummet- as low as $40 in 2016.
 
Now, the OPEC+ alliance has been reducing oil supply since 2017, to prevent prices from sliding and has opted to extend the cuts repeatedly since then. Credence to this statement includes the shale oil boom, which requires less upfront investment to push up oil supply. Also, the economic reprieve provided for Iran, one of the core founders of OPEC, ramped up the production, followed by differences propping up among members who failed to reach an agreement that consequently resulted in oversupply. These were the reasons that have caused oil prices to remain at rock-bottom.
 
So, the recent decision to curb supply is poised to restore demand. But, amidst signs that the global economic slowdown may hit the oil demand growth, OPEC and allies might face an uphill task to shore up prices by reining in supply.
 
How does this play out for India?
 
These extensions of production cuts come against the backdrop of supplies from Iran and Venezuela drying up from India’s energy baskets. The US sanctions on Iran and Venezuela in conjunction with the extra cuts made by Saudi Arabia have taken more oil off the market than the rest of the 11 countries involved in the production cut agreement combined. With tensions escalating in the Persian Gulf, India, the world’s third largest oil importer has been trying to impress upon the Saudi Arabia-led cartel, its own concerns on volatility in crude prices and its impact on India consumers.
 
Though the United States on its part has promised India of adequate crude oil supplies as was mentioned by US Secretary of State Mike Pompeo during his visit to India, but it is not so much about the sourcing rather than the price at which it is bought, which will impact the Indian economy.
 
What India needs now is a carefully driven strategy that is not myopic in nature, but instead, aims to gradually insulate the country from global oil price volatility. Such a strategy should be centered on three things: expediting migration to electric mobility, expanding the blending of biofuel in petrol and stimulating exports.
 
In this case, the much needed impetus to push electric mobility during the 2019 budget is a well-concerted move. Reducing the country’s reliance on oil imports would bode well for energy security and make the Indian financial markets less volatile in the event of untoward development of the oil market. Also, savings from reduced oil imports could in turn be used to finance the infrastructure projects which are crucial for India’s long-term growth prospect.
 
India Outbound
July 23, 2019

 
 

source https://indiaoutbound.org/its-just-the-oil-honey/

Indian-Russian ties amidst changing Eurasian dynamics

A new breakthrough happened in the Indo-Russian relationship on the sidelines of the 2019 G20 summit. On this note, the proposal by the Indian government to move forward with the S-400 defense system, whose payment would apparently be made in euros to a Russian nominated bank speaks heaps about the eminence that India attaches towards the relationship. However, for a partnership to become robust it needs to be supported by strong geo-political and geo-economic foundations that will provide it with much needed sustenance.
 
Apropos, during the Bishkek summit, PM Modi’s bilateral with his Russian counterpart outlays the significance of Russia in India’s foreign policy. This was visible through remarks of Vijay Gokhale, the foreign secretary, who emphasized upon Russia’s participation in India’s Act East policy, where India is looking to expand collaboration in Russia’s Far East.
 
Further, PM Modi’s acceptance of Vladimir Putin’s invite to be the Chief Guest for the Eastern Economic Forum to be held in Vladivostok early September also outlines the strategic importance accorded to this partnership, as the two leaders decide to further widen the scope of their economic partnership, in sectors such as energy, Arctic region, transfer of technology among others.
 
A defining aspect of the Indo-Russian partnership,post the Cold War days includes the military-technical cooperation between the two countries that have gone up tremendously and is probably at its most dynamic stage.With the induction of Russia into India’s Act East policy, where both Russia and India prepare to explore areas for enhancing India’s presence in Russia’s Far East, spell both economic and strategic imperatives for India, given the uncertainty in the international affairs.
 
So far, there is trade imbalance in favour of Russia, a marked departure from the past when the erstwhile Soviet Union was among India’s leading trade partners. More so, according to statistics, India-Russia trade during 2015-16 amounted to a dismal $6.7 billion, thereby highlighting the fact that trade and investment ties remain far below potential. In this sense, the above initiatives reflect some semblance of hope of reigniting the aspect of economic cooperation between the countries that has so far remained dormant.
 
So where exactly do the India-Russia relations stand now? The relationship in fact is quite a good metaphor for the polycentric world of offsetting ties of cooperation and competition as the sun sets in the turn on US unipolar dominance. Russia‘s pivot to Asia (read: China) started in 2014, following the US and the European Union, imposing sanctions to isolate Moscow after its annexation of Crimea. Further, Chinese premier Xi Jinping’s visit to Moscow, underscoring the strengthening of the Beijing-Moscow axis, compounded with Moscow’s outreach to Pakistan has definitely triggered concerns in New Delhi.
 
Thus, in a world that is increasingly grappling with the challenges of the bipolar emergence of power (US and China), India and Russia share a convergence of interests. In times such as this, where Trump is interested in pushing towards a “deglobalisation wave” while China is promoting “globalisation2.0.”,it makes sense for India and Russia to strengthen collaboration in all forms to hedge any disruptive forces.
 
India Outbound
July 4, 2019

 
 

source https://indiaoutbound.org/indian-russian-ties-amidst-changing-eurasian-dynamics/

Premier launch of CHRI’s ESTD report in India

The Human Rights Council (HRC) is a supranational organ of the United Nations (UN), which focuses on the “promotion and protection of Human Rights around the globe.” The HRC serves as a useful platform for countries and voluntary associations, such as the Commonwealth, to engage in meaningful dialogue with regard to human rights around the world. In order to facilitate such dialogue, it is important to educate stakeholders about the UN, its mechanisms and the various pledges and obligations that countries have voluntarily committed to, so that they are aware of the standard to which their performance should be pegged.
 
Enter, the Easier Said Than Done (ESTD) report.
 
Since 2007, the ESTD report has been produced by the Commonwealth Human Rights Initiative (CHRI) to evaluate the performance of Commonwealth member states at the Human Rights Council (HRC), and to highlight the opportunity for the Commonwealth and its member states to re-elect on and improve their human rights record. This year’s report, the 11th edition, was prepared by CHRI’s International Advocacy and Programming (IAP) department of CHRI, led by research officers, Aditi Patil and Sarthak Roy, and their team: Chinmay Panigrahi, Catia Trevasani and Aditya Bhattacharya.
 
For the first time since its inception, the ESTD report was launched in New Delhi, India at the OP Jindal Auditorium on 21 June 2019. This report covered the 40th session of the HRC and analysed the performance of 11 Commonwealth countries elected to the council:Australia,Bangladesh,Cameroon,India,Nigeria,Fiji,Pakistan,Rwanda, South Africa,the Bahamas,and the United Kingdom.
 
Aside from the launch of the report, the event featured presentations from the authors of the report, as well as panel discussions on the key findings, and India’s presence at the HRC. The 40th session saw the introduction of Fiji at the HRC, marking the first election of a Pacific Island country to the council. Commenting on the milestone, H.E Yogesh Punja, High Commissioner of Fiji, noted that reports such as the ESTD were fundamental for enabling effective and objective dialogues between countries to further the protection of human rights.
 
Several other eminent diplomats, senior government officials, activists and human rights defenders also attended the event, such as: Mr. Muchkund Dubey, former Ambassador and former Indian Foreign Secretary; Ms. Yukiko Koyama, Senior Protection Officer, UNHCR India; Mr. Jawad Ali, Counsellor, High Commission of Pakistan to India; Mr. Micyo Rutishisha, Second Counsellor, Rwandan High Commission, Ms. Pallavi Nayek, Direct Aid Program Administrator with the Australian High Commission, and Ms. Friederike Tschampa, a representative from the European Union.
 
When the topic of the discussion shifted to India’s human rights conditions, there were lively contributions from the distinguished panellists, each of whom reiterated the universality and indivisibility of human rights.
 
Mr Paul Divakar, General Secretary, National Campaign of Dalit Human Rights (NCDHR), said that inter-generational labelling had to be addressed at the grass-roots. Discussing the nature of identity politics and its role in rising divisiveness in the country, Mr Divakar added that there was no place for discrimination based on caste, gender or sexuality, in a meritocratic society.
 
Mr. TCA Rangachari (IFS, retired), former Amabassador to Algeria, France, Germany and India’s Permanent Mission to the UN New York, raised some concerns about India’s economic ability to follow through on its commitments at the international standard.
 
With the successful launch of the ESTD report at the 40th session of the HRC, and with the 41st session already underway, CHRI hopes that such reports will not only raise awareness among Commonwealth nations, but also spur the formulation of effective measures for the protection of human rights, at both the state and international levels.
 
Aditya Bhattacharya
July 3, 2019

 

source https://indiaoutbound.org/premier-launch-of-chris-estd-report-in-india/

Pompeo’s visit to India: What holds for the India-US ties?

The arrival of the US Secretary of State Mike Pompeo to New Delhi brings forth a range of issues that holds ground both for India and the US. As external affairs minister Subrahmanyam Jaishankar sits down for a bilateral with our American counterpart, the aim will be to inject a new energy into a relationship that seems to have been enveloped in crisis. Well, argument about the usage of word “crisis” might surface, but it is worth noting that there have been recent occurrences of divergence over certain issues. Even as geo-strategic issues converge, relations in the economic sphere have remained testy between both the countries.
 
For nearly two decades, Delhi and Washington had shed their Cold war differences and expanded the ambit of their bilateral and multilateral cooperation. Part of the reason includes the rise of the revisionist power such as China, about whom both India and US share common ground. But, differences once again dominate the public narrative. These range from trade and market access, to cross border data flows and India’s purchase of oil from Iran and advanced weapons from Russia.
 
On this front, this piece takes stock of the threemost potent issues that will be on the table:
 
Trade tensions
 
For the White House behemoth who perceives every relationship in a transactional sense, trade seems to be the signature issue. The sharp convergence of US-India on geo-strategic issues has unfortunately seen trade ties deteriorate under the Trump administration. For instance, Trump has often termed India as “tariff king,” citing high tariffs imposed on items such as the Harley Davidson. Indian exporters recently lost preferential access to American markets for several products and the US seems bent on equal tariffs on both sides on tradable goods. It is very likely that Pompeo will discuss tough topics with his Indian counterpart such as GSP, trade barriers for American companies and data localisation. On the latter, it is likely that US might face resistance, since India has explicitly vouched for localisation of data i.e. data to be stored within the geographical parameters of the country.
 
Oil
 
The volatility in crude oil and its impact on Indian consumers is also a potential issue to feature in the discussions. The visit comes in the backdrop of the increasing tensions in West Asia, with the US tightening its screws on Iran. The West Asian country has for so long been one of India’s top oil suppliers, exporting 23.5 million tones in financial year 2018-19. Though India can source oil from other sources, for instance, the US is a likely partner, but the price at which the oil will be brought would hurt the Indian economy. A formidable example includes the time that would be taken for tankers from the US to reach India. While ships can economically sail from the Gulf to India carrying oil quantities as low as 60 to 40 tonnes, a journey from the US could only be possible in large tankers. Also, voyages from US would take around 50 days,while those from West Asia usually take around eight to ten days.
 
On terrorism and Afghanistan
 
Beyond business, the emphasis will also include taking a common view on the conflict brewing in the west of India. While prospects of oil imports from US-blockaded Iran appear negligible,Washington may have no problems with India’s assets in Iran’s Chabahar port, a project that would establish trade linkages with Afghanistan. In this, India would like the US troops to stay in Afghanistan and stabilize the country, rather than cut a deal with Taliban. New Delhi is not happy with the talks that the US is having with the Taliban that could possible indicate full withdrawal of the US troops in the region. India’s Afghanistan policy is majorly driven by pursuit to stymie Islamabad’s influence in the region, where a Taliban-led government could quickly side with Pakistan. The subject of terrorism thus makes it an inescapable feature in the talks, as Pakistan’s influence in Afghanistan will not only reduce India’s sphere of influence, but also make India more susceptible to Pakistani-inspired terrorism in the wider region.
 
Thus, it is widely apparent that given the present status, where both Indiaand the US are at the crossroads of various issues, it is imperative for both to iron out the contentious aspects of it. In this, a non-ideological approach to the negotiations would focus on breaking the irritants to smaller parts, expanding the boundary conditions and creating linkages across sectors. If Washington views this relationship through the prism of transactionalism, then it could wreck havoc for both the countries. In all, the ball is in DC’s court and it is for them to decide.
 
India Outbound
June 27, 2019

 
 

source https://indiaoutbound.org/pompeos-visit-to-india-what-holds-for-the-india-us-ties/

Could libra revolutionise the financial system?

Facebook, in its latest development, unveiled the launch of its own version of cryptocurrency, Libra, which it says would be a tool for financial inclusion and will disrupt the world’s cumbersome payments system. After a period of intense speculation, the massive social network, along with its partners is touting the Libra digital coin that would make sending money across the world as easy as texting. According to the white paper released on June 18 2019, the usage of Libra would do away with fees, delays and other barriers to the free flow of cash.
 
What exactly is the Libra?
 
Facebook calls its new crypto currency, the libra, which was the Roman unit of weigh measurement for scales or balance. Interestingly, Libra, the astrological symbol, holds the scale of justice, and phonetically it sounds like libre, which is French for free or freedom. Thus, the name is a combination of money, justice and freedom.
 
Besides the nomenclature, another factor that makes Libra interesting, is that its market value is tied to a basket of bank deposits and short-term government securities for a slew of historically stable international currencies, including the dollar, euro, pound among others, unlike the bitcoin (that is known for its volatility). So then, the Libra Association maintains this basket of assets and can change the balance of its composition, if necessary to offset major price fluctuations, in any one foreign currency, so that the value of the libra stays consistent. Also, libras will be fully reserved; so every time a user trades traditional currency for Libra, the money will go into the reserve, and stay there until the customer withdraws from the system. All in all, the libra with all its features, assumes the identity of the money rather than an investment vehicle.
 
Another factor that differentiates libra from other cyptocurrencies such as Bitcoin, is that it can process 1000 transactions per second, which means it is actually scalable, unlike Bitcoins and others relying on similar blockchains(widely shared online ledgers that keep track of activity). Another accentuating feature is there will be no service fees, which could save customers plenty of time and money on moving funds across the borders.
 
Clearly the Libra has been well thought of to raise eyebrows around the world. Notwithstanding the exciting make, the commercial potential of using libra is also significant. Say, if each of Facebook’s 2.4 billion users converted a slice of their savings into Libras it could become a widely circulated currency. Also, if broadly adopted, it could alsovest unprecedented power in the hands of the issuer. In that sense, the usage of Libra could be truly disruptive.
 
Another fact that appears novel in Facebook’s approach to Libra is that Facebook wants to outsource the running of Libra to a consortium of worthies recruited from the world of technology, finance and NGOs. In this regard the Libra Association will assume control. Further, this association to be set up in Geneva will run the currency on a equal-vote basis. Its 100 members are to jointly manage accounts, govern Libra’s reserves and take key decisions. This explains the Libra association’s move to a “permissionless structure” (permission means only entities that fulfill certain requirements are admitted to the association).If such a move is established, this will imply an even distribution of control, encourage competition and lower the barrier to entry, which will essentially lead to the libra being decentralized.
 
What’s in it for India?
 
If Libra works, then it could be a money spinner for Facebook, albeit not directly. However, for all of Facebook’s talk about helping the unbanked in developing countries (read India), it seems intent on becoming a major competitor of the existing banking system. Having said that, governments often tend to resent private institutions that infringe on their prerogatives. This explains India’s staunch opposition to cyptocurrencies, even proposing a 10 year jail term for people who handle them.
 
Though much doubt surfaces about Libra being typified as a cryptocurrency, previous instances of the government holding firmly against WhatsApp Pay, refusing to approve the platform’s launch date, is a stark reminder of this, It could well be that inconsistencies that usually accompany such non-fiat currencies might not matter for the Indian users (especially where the libra could reduce service fees for Indians sending money to families), but governance issues could very well stall the adoption of this form of currency in the near future.
 
India Outbound
June 25, 2019

 
 

source https://indiaoutbound.org/could-libra-revolutionise-the-financial-system/

The strain in trade ties between the two economies comes when global economic growth rate is projected to slow down as trade tensions constantly brew between US and China, weighing heavily on business confidence and investments. https://t.co/mdnbTeM7HN

The strain in trade ties between the two economies comes when global economic growth rate is projected to slow down as trade tensions constantly brew between US and China, weighing heavily on business confidence and investments. https://t.co/mdnbTeM7HN

— India Outbound (@india_outbound) June 21, 2019

from Twitter : https://twitter.com/india_outbound

"Since a company that manages to earn huge revenues from the country through remote digital participation, it is only natural that a portion of the company’s profit be allocated based on the market activity undertaken in such country." https://t.co/FEFIIM2XNa

"Since a company that manages to earn huge revenues from the country through remote digital participation, it is only natural that a portion of the company’s profit be allocated based on the market activity undertaken in such country."https://t.co/FEFIIM2XNa

— India Outbound (@india_outbound) June 21, 2019

from Twitter : https://twitter.com/india_outbound

"As a part of the Indian diaspora, I observe that there is a sense of duality in the Indian mindset that fails to understand those who are their own." https://t.co/nTkCOlp0en

"As a part of the Indian diaspora, I observe that there is a sense of duality in the Indian mindset that fails to understand those who are their own."https://t.co/nTkCOlp0en

— India Outbound (@india_outbound) June 21, 2019

from Twitter : https://twitter.com/india_outbound

"India’s foreign policy arc no longer solely rests on forging or balancing bilateral relationships with super-powers (most notably the US), but has reoriented towards its backyard." https://t.co/H5Di9FvRLh

"India’s foreign policy arc no longer solely rests on forging or balancing bilateral relationships with super-powers (most notably the US), but has reoriented towards its backyard."https://t.co/H5Di9FvRLh

— India Outbound (@india_outbound) June 21, 2019

from Twitter : https://twitter.com/india_outbound

"Given that suspicions Huawei’s hardware cannot be dismissed, but it would do India good to realign their strategic alignment and engage with countries objectively." https://t.co/DleKQYviyh

"Given that suspicions Huawei’s hardware cannot be dismissed, but it would do India good to realign their strategic alignment and engage with countries objectively."https://t.co/DleKQYviyh

— India Outbound (@india_outbound) June 21, 2019

from Twitter : https://twitter.com/india_outbound

The trade row between India and the US

Days after the US terminated India’s designation as a beneficiary developing nation under the Generalised System of Preferences program (GSP),India retaliated by imposing higher tariffs on 28 US products.The penalties run as high as 70% and include highly consumed agricultural goods such as almonds, walnuts and apples as well as chemical and finished metal products.
 
The strain in trade ties between the two economies comes when global economic growth rate is projected to slow down as trade tensions constantly brew between US and China, weighing heavily on business confidence and investments. The decision to levy tariff on US agricultural products appears to be strategic – politically it is an important constituency, but India needs to tread carefully. While failure to react could be construed as a sign of weakness, there is a genuine concern that the move could provoke further action. And given that Modi government is keen to pursue an economic foreign policy, it would be in the interest of India to avoid a trade confrontation.
 
A trade war starts when a country attempts to protect its domestic industry and create jobs. Trump’s directive in levying trade tariffs is part of his strategy of wanting to reduce the hefty trade deficit that US has with India,to create more jobs. But what began as a tool to cut down of US trade deficits have quickly morphed into a defining feature of the trans-Pacific trade. Though tariffs are known to work in the short term but in a trade war scenario, all involved countries lose out from lower productive efficiency (in some ways, this depresses economic growth for all) and higher consumer prices.
 
Such a scenario would play out like a double edged fork for India. On the one hand, India would suffer a lowering of the exports and investments, given that US occupies a sizeable share in FDI equity inflows to India, on the other hand straining of economic ties could spread over to other aspects of strategic partnership that both countries share.
 
Apropos, the US perhaps remains the most consequential partner in India’s Indo-Pacific strategy and several US documents including the recent Indo-Pacific strategy released by the Department of Defense, laud the convergence of interest and values between the two countries further a “free, open and inclusive and rules-based Indo-Pacific.”
 
To be sure, India has much at stake in ensuring that economic ties with its largest trading partner do not end up foundering on the rocky shoals of the current US administration’s approach to trade and tariffs. Trade is not and must not be viewed as a zero-sum game. In this regard, negotiations imply a “give and take” between countries and often require a long-term perspective. India’s great power relations are at a turning point where New Delhi has to adroitly manage its security and economic imperatives. Though the trade tariffs could work as a bargaining chip for India in the short run, it would be India’s own interest to manage the relations with US.
 
India Outbound
June 21, 2019

 
 

source https://indiaoutbound.org/the-trade-row-between-india-and-the-us/

Digital taxation and the path ahead

A key take away from the G20 Finance Ministers and Central Governor’s Meeting that was held last week is the creation of a digital tax for multinational technology companies. This simply means that digital companies such as Facebook and Google will soon have to pay taxes regardless of their physical presence or measured profits in the source countries. Though US staunchly opposes it, given that majority of these tech biggies are physically headquartered there, countries such as Japan, India , UK and France have batted for it, citing the need for both regulation and to get a “fair” share of taxes from the revenue generated by such businesses.
 
A world that is increasingly predominated by everything digital evokes the imperative to create a separate framework for taxing these online service providers. A pertinent example includes the increase in value of e-commerce transactions from 19.3 trillion in 2012 to $27.7 trillion in 2016, which outlines the necessity in recognizing the tradability in digital goods.
 
Now, the DNA of this digital economy functions way differently from the traditional brick and mortal businesses. This is because the digital economy is characterized by a unique system of value creation, resulting from a combination of factors such as sales, function, algorithms and personal information of users. Although using consumer data as a metric to drive businesses is not exclusive to the digital economy, it accumulates a large space in the revenue map of technology companies, where value created by user participation translates into revenue.
 
It was the European Union that initially floated the idea of a Digital Service Tax (DST). The proposal for the DST directive was intended to establish a common system for the taxation of digital services for revenues generated by the supply of these online companies. It mandated that a company established in a member state offering digital services in other member states would have to pay a 3 percent DST in each member state where revenue is generated. Despite the promise in initial intentions, the policy stifled short of achieving a unilateral consensus and is pending as of now.
 
On a similar angle, India too adopted some unilateral measures. A reckoning was made with the accommodation of a 6 % equalization levy (EL) within the Finance act 2016, for specified digital services (particularly advertising services) provided to residents in India. However, are cognition of the burgeoning digital economy paved way for an expansion of the business connection to “Significant Economic Presence” (SEP) that includes digital services under the Finance Act 2018.
 
What is interesting is, an evaluation of these companies in an SEC report lists two major components i.e. user participation and marketing tangibles under profit allocation. But, it is the issue of user participation that leaves one befuddled. Although, it is known that these tech companies often generate massive value through highly engaged user participation from source countries, but since this assessment of the value of user contribution is non-quantifiable, determination of a taxing threshold becomes difficult. So even at the behest of recognizing the virtual space as constituting a nexus for the purpose of taxation becomes novel, but it clearly lacks the metric of user threshold.
 
Thereby, since a company that manages to earn huge revenues from the country through remote digital participation, it is only natural that a portion of the company’s profit be allocated based on the market activity undertaken in such country. But, to do this would include deliberations by policy makers to devise a methodology to assess the user contribution objectively, which would in turn then lead to efficient taxation.
 
India Outbound
June 19, 2019
 
 

source https://indiaoutbound.org/digital-taxation-and-the-path-ahead/

The Living Bridge and a sense of duality in the Indian mindset

The quest to India has historically been to attain dominion of aluxurious plateau, which determined economic and global prosperity of its acquirers. India in its very being was localised in its strength, demarcated internally by regional, cultural and social boundaries. Conquering India has determined the might, fate and valour of many countries that in today’s day and age have emerged as global superpowers.Considering the ongoing Brexit negotiations and India’s creditable economic growth, a dialogue between world’s oldest democracy and the largest democracy would reinvigorate a strong partnership. An episode that started with the establishment of the East India Company in Calcutta, the relationship between India and Britain is one which has withstood the test of time.
 
In 1947, India stood up for itself to combat years of social misconstruction and disharmony, regulating the numerous princely states under a central power to rebuild a country premised on a strong constitution. Our governance and judiciary boldly adopted the English legal system, which is founded on the principles of common law. Least to mention, its commendable political prowess, which has long adopted the principle of “Diversity and Inclusion” is internationally studied and applauded.
 
India has grown enormously since its independence and one of the key factors in its favour is its population, which comes from various regions possessing ingenious talent and intelligence. India is not limited to its geographical parameters. It extends from the farmers in the remotest villages in India feeding masses, to the law-makers of countries across the world. Needless to say, our agility and perseverance has blurred lines of discrimination and incompetency in global competition. Despite our exemplary stronghold at unifying diversity and hard work, there is a lack of connect between an average Indian person and the system that he/she should be able to look up to.
 
As a part of the Indian diaspora, I observe that there is a sense of duality in the Indian mindset that fails to understand those who are their own. There is a clear distinction made between Indians living in India coming from North, South, East and West, and of another breed altogether-the Non-Resident Indians. We grapple with the nuances of customs found in various regions, where not one regional tradition entirely tallies with another. This distinction seems to be nourished at every level, in a strange bureaucratic fashion; from education institutions to obtaining government services that every Indian (regardless of their status) is rightfully entitled to.
 
Naturally, this distinction brews a sentiment of detachment towards our country that contains huge potential for growth. Our wealth of diversity and experiences are not implemented optimally to benefit the wider cause of strengthening our grip as global performers at development. I consider India to be a culmination of “little Indias,” situated in various other countries and spread across the world, where they act as brand ambassadors of India as a whole.
 
India is not limited to an average taxpayer or farmer in India, but extensively includes a person who has made a mark on an international platform in a foreign land. This person is a part of the Indian diaspora- a cornerstone of India’s progress today. The diaspora is the part of the same Indian fabric that perhaps is more unified by reason of nationality on foreign soil, who have learnt that strength lies in accepting differences and learning about them. A lot needs to be done in the policy making space to incorporate the incredible amount of exposure, experience and value that the diaspora can bring to the Indian table of governance. For instance, education institutes need to be more accessible to all Indians equally; and infrastructural analysis needs to encompass needs like those of developed countries.
 
As a qualifying lawyer educated in the UK, I am faced with a common question as to whether I can practice in India and how that is strange considering the laws in India and the UK are different? The striking feature of this question is unawareness. It is not just the legal industry, but in various spheres, there is a dire lack of information and awareness of our own calibre. Our champions of Indian independence- Mahatma Gandhi, Pandit Jawaharlal Nehru, Dr B. R. Ambedkar and many more, were all educated in the UK and brought about a revolution in India that gave billions of us our identity as Indians. If what they brought back with them in the early 20th century gave us independence, today we have a wider reach, exposure and authority on some level that can help us bring out the best for our country.Today, we have over 10 MPs of Indian origin in the current UK Parliament and if we view this broadly, it is a matter of immense pride. A country that ruled us for over two centuries, now includes our fellow Indians for governance and law-making in their country.
 
As we study India carefully, it is a country that is based on a robust foundation, which devolves and branches out intricately, but there is a need to bridge a gap found at a local level amongst these regional differences and vibrant cultures. Knowledge is power and the more we learn about our own internal dynamics, we would be able to progressively move forward. To encompass our international acumen, our diaspora is the network that brings us a global identity. It is that resource that gives us a voice to dictate global economics and politics.
 
India needs to create opportunities to facilitate a holistic and fair exchange of talent and resource for its diaspora to enhance the voice of the nation, for us to be able to exercise our constitutional rights and ask our government the right questions. There is a need to actively bridge the gap between our rich history and our future. India needs to invest in its human resource that internalises global change and equally contributes to it. It is the living bridge that if provided for and developed optimally,promises a brighter future and a pool of international opportunities for the nation by the time it meets its centenary of independence.
 
To read the original article, please click here.
 
Bridge India
June 18, 2019

 
 

source https://indiaoutbound.org/the-living-bridge-and-a-sense-of-duality-in-the-indian-mindset/

China is spearheading the next-gen technology and India would do best not to miss it

Gone are the days when the world particularly the United States used to look down upon the Russian and Chinese internets. But that has all changed with Huawei becoming the springboard of Chinese technology. Established in 1985, Huawei started as a private technological startup by Ren Zhengfei, a veteran of the People’s Liberation Army’s engineering corps, rose to become one of the predominant players in the telecommunications industry by grabbing a 29 percent market share in the industry.
 
Huawei’s growing dominance
 
More importantly, Huawei has by most accounts taken the lead in the technological race to develop one of the modern world‘s most important technologies-fifth generation mobile telephones or 5G. More so, it is has also surpassed Apple to become the second-largest smartphone maker.
 
Perhaps for the first, in China’s modern history, Huawei’s growing market share and technological prowess are putting the Chinese government in a position to dominate the next-generation technology. 5G technology time will support next-gen digital applications and will permit ultra-fast, low latency and high thoroughput communications that will be important for consumers. Further, 5G will also be the technology that ensures artificial intelligence function seamlessly, that driverless cars will not crash among others.
 
In short, 5G will become the nervous centre of the 21st century economy and if Huawei continues its rise, then it is Beijing, not Washington, which will be poised to call the shots in the market.As a result, Huawei’s startling ability to gatecrash what has until now been considered an exclusive bastion of the developed worldhas sent ripples across the western front.
 
Why is it controversial?
 
However, the rise of Huawei has been mewith much consternation who has asserted that the company poses a national security threat. Moreover, the US, without any fruitful evidence has claimed that allowing the company to be involved in the build-out of the 5G networks raises unmanageable security risks because of the nature of the technology and the nature of the relationship between the Communist Chinese Party and the technology companies. Also, given the fact that there will be huge amounts of data on 5G networks both, in the core and periphery, this might result in creating vulnerabilities not present on 3G or 4G networks. In this, Washington has been pressing allies to keep Huawei out of mobile networks, warning that Beijing could use the sensitive data infrastructure for spying.
 
Tasks cut out for India
 
In India, Huawei is one of the prime contenders for sourcing technology for 5G infrastructure. While India has not absolutely refrained from inducting Huawei, has a potential market, but indeed, there are security concerns. This has been explicitly stated by telecom Minister Ravi Shankar Prasad who stated that it is not merely a matter of technology, where Huawei’s participation in 5 G is concerned, rather it also involves a “security” angle to it.
 
Given that suspicions Huawei’s hardware cannot be dismissed, but it would do India good to realign their strategic alignment and engage with countries objectively. In this regard, it would be best to let Indian service providers to use their own technical expertise to assess such espionage risks. For an optimum policy , where both national security and economic prosperity are intertwined, India would do good to adopt a measure that will not only preserve its immediate interest, but will also enhance its technological capabilities.
 
India Outbound
June 17, 2019
 
 

source https://indiaoutbound.org/china-is-spearheading-the-next-gen-technology-and-india-would-do-best-not-to-miss-it/

Modi neighbourhood policy: The Shanghai Cooperation Summit

Under Prime Minister Modi’s leadership, the Neighbourhood First policy has received fresh impetus. India’s foreign policy arc no longer solely rests on forging or balancing bilateral relationships with super-powers (most notably the US), but has reoriented towards its backyard. In his government’s strategic imagination, India’s relations with neighbouring countries must receive the topmost priority. This article takes stock of India’s pivot to Eurasia, underpinned by the Shanghai Cooperation Summit (SCO),being held on June 13-14, Bishkek, Krygyzstan.
 
Modi is often known for projecting himself as an innovative and decisive leader who could make things happen. This was evident from his invitation to the leaders of from the South Asian continent to attend his inauguration in 2014. True to his style, this time too,he invited leaders from the BIMSTEC grouping, along with leaders from the Krygz republic and the Maldives that reaffirms the government’s strategic focus.
 
His outreach to his Krygyzstan counterpart, who is also currently the chair of the SCO, is the one that deserves attention on this context. For long, where India had been merely cognizant of the forum (given that it had been an observer until 2017), the recent invitation clearly signals India’s desire to increase its engagement with the organization.
 
History of the SCO
 
Having begun as the Shanghai Five in 1996 to resolve border disputes between China and four other members i.e. Russia, China, Kazakhstan, Tajikistan and Kyrgyzstan, the forum re-christened itself as the SCO in 2001, after the admission of Uzbekistan. The forum, which primarily started as a security organization, with a moderate ambition of managing border skirmishes and jointly combatting the “three evil forces“ of terrorism, separatism and extremism,has evolved to include in its agenda, political, economic and security cooperation.
 
The SCO opportunity
 
The admission of India and Pakistan in 2017 has expanded the geographical, demographical and economic profile of the SCO, where the grouping currently represents 42 % of global population,22 % of land area and 20 % of global GDP. The SCO’s relevance for India lies in geography, economics and geopolitics. Its members occupy a huge landmass that lies adjacent to India’s extended neighbourhood, where India has both economic and security imperatives.
 
Since the breakup of the Soviet Union, the optimal development of India’s relations with Central Asian countries has been constrained by both political and security reasons. Incidentally, the factor that had actually pulled off India from its formal participation in the summit is the overwhelming Chinese presence in the forum. As Robert Kaplan explains in The Revenge of Geography, where given the idea of a Eurasian integration is organic, its avatar is decidedly Chinese. This is further exemplified by the fact that India is the only country to oppose the BRI (Belt and Road) initiative where, the other SCO members have embraced it.
 
India’s strategy at SCO
 
Given that conventionally, SCO has been a China-led forum with an overwhelming economic presence, it is in India’s interest to carve out a political and economic space for itself in Central Asia. Following the disintegration of the USSR, where both Russia and China have attempted a joint influence over the region, the Central Asian countries would welcome India in breaking into this duopoly.
 
Further, all of this definitely plays out in the broader scheme of things where India is looking to broaden both its economic and strategic engagement. In this sense, the SCO will act as a lever that not only aids India in enhancing its economic cooperation with the Eurasian states, but will also allow India to benefit from the security framework, especially on counter-terrorism. Also, the issue of global terrorism, situation in Afghanistan and the connectivity project through Iran are some critical subjects that essentially ties with the importance of India’s association with the SCO. And this in itself is enough fodder for India to capitalize on the platform to consolidate itself both on the economic and strategic front.
 
India Outbound
June 14, 2019
 
 

source https://indiaoutbound.org/modi-neighbourhood-policy-the-shanghai-cooperation-summit/

PM Modi’s eastward shift in neighbourhood policy

To a foreign policy analyst, Prime Minister Narendra Modi’s first visit abroad in his second term to Maldives and Sri Lanka was expected. Where the first tenure saw Modi carefully harvesting relations with our neighbours both through bilateral meetings and multilateral conventions, his second tenure is about consolidating those dividends that he had reaped during his first tenure.
 
The visit to Male and Colombo strengthens the government’s emphasis on the Indian Ocean island states in its regional geography. While clearly, the invitation of the BIMSTEC leaders reflects a new shifting interest for New Delhi focused on eastward connectivity and economic integration, the visit to these two Indian ocean littorals gives an energy booster to his “Act East” policy. On a similar plane, External Affairs Minister S. Jaishankar’s visit to Bhutan underscores the eastward shift, where between Modi and Jaishankar the focus on India’s neighbourhood was unmistakable.
 
Between the leaders present in Modi’s swearing ceremony over the years and his early high-level travels, a redefinition of the concept of neighbourhood comes forth. This indicates that the Indian Ocean, the Himalayas, Central Asia and South East Asia (by way of the Indian north east) are the strategic loci of his foreign policy. Following the plummeting of ties between India and Pakistan since late-2016, these trends have already been building for some time now.
 
Modi’s visit to Maldives
 
With the Maldives, PM Modi’s visit was astutely designed to showcase that a turnaround has taken place in India-Maldives relations, given the election of a pro-India government in the island country. A slew of announcements, including those focused upon people-centric welfare measures, dominated his visit along with the implementation of an $800 million Line of Credit to the nation. With this, the PM’s visit to the island nation underscores three important objectives; one to continue high-level contacts between close neighbours, assist as developmental partners and strengthen people-to-people ties. Such measures are a stark contrast to China’s approach of extending massive loans for mega infrastructure projects which often results in debt-traps for the host nation.
 
Modi’s visit to Sri Lanka
 
PM Modi’s visit to Colombo was prudent. As the first foreign leader to visit a country that is still reeling under the dastardly attacks of the Easter Sunday, his visit was primarily aimed at expressing solidarity with both the people and the government of the nation. India has already invested in a slew of projects in Sri Lanka since 2017 and thereafter, his visit also signaled a commitment to continue bilateral cooperation on those developmental projects.
 
Moreover, given that India-Sri Lanka already shares a relation fraught with complexities (owing to the Chinese influence in the region, a classic example being the Hambantota Port), PM Modi‘s visit as the first international leader sends a powerful message in the neighbourhood.
 
What has been palpable in these overseas visits is that under Modi, India’s outreach to the neighbourhood is primarily driven by concerns about China. While given the overbearing Chinese influence in India’s own backyard, the overarching messaging from the Indian side has sought to affirm what countries could gain by engaging with it. As Minister of External Affairs, S. Jaishankar has correctly stated that India’s neighbourhood policy had to be “more generous” and freed from bureaucratic reciprocity. With a fresh and powerful mandate combined with creative intelligence the Modi government is well placed to do it.
 
India Outbound
June 13, 2019
 
 

source https://indiaoutbound.org/pm-modis-eastward-shift-in-neighbourhood-policy/