[UPSC Newspaper Clips] June 01, 2020

UPSC Newspaper Clips


The False Promise Of Self-Reliance

[An inward-looking India could quickly slide towards closed-mindedness, cronyism and mediocrity]

Sadanand Dhume , [ The writer is a resident fellow at the American Enterprise Institute in Washington, DC.]

Will we look back on 2020 as the year India formally ended its nearly 30-year-long romance with globalisation? With the coronavirus continuing its grim march across the planet, India appears ready to turn once again to “self-reliance” as its national credo. Going by past experience, this would be a terrible mistake.

“The state of the world today teaches us that a self-reliant India (atma-nirbhar Bharat) is the only path,” said Prime Minister Narendra Modi in a televised national address on May 12 that outlined his government’s response to the ongoing pandemic. “Our responsibility to make the 21st century the century of India will be fulfilled by the pledge of self-reliant India.”

Though the PM clarified that his call for self-reliance should not be mistaken for “self-centric arrangements”, this is cold comfort for those who remember the suffocating drabness of pre-liberalisation India. Bluntly put, the rhetoric of self-reliance could easily slide into the familiar territory of closed-mindedness, cronyism and mediocrity.

Nonetheless, it’s easy to see why some people find the idea appealing. Like many other government promises, its strength lies in its apparent obviousness. When Modi laid out his vision of 100 smart cities, nobody said they would rather live in dumb cities. You can’t really counter the gauzy dream of “digital India” by making the case for “analog India”. Similarly, who could possibly prefer weak-kneed dependence to the prospect of robust self-reliance?

It helps that the embrace of the homegrown carries a long pedigree in Indian politics. In Katherine Frank’s biography of Indira Gandhi, the author recounts the Nehru family’s dramatic renunciation of imported goods under the influence of Gandhi. Indira’s first memory recalled a bonfire in the family home of “richly-coloured satins, silks, chiffons, hand-tailored Savile Row suits and starched shirts”. You could argue that Indian independence was won by a party that believed in going “vocal for local”.

The Covid-19 pandemic has accentuated the virtues of self-reliance. In his speech, Modi spoke of India quickly developing the capacity to produce 2,00,000 masks and 2,00,000 PPE kits a day. The unspoken implication: Unlike many countries, India would not depend on China to protect itself from a virus that originated in that country.

Even before the onset of the pandemic, globalisation was in trouble. Pundits widely interpreted the 2016 election of Donald Trump in the United States and the British decision to exit the European Union the same year as signs of a populist wave sweeping much of the world. Trump and Boris Johnson, like Brazil’s Jair Bolsonaro, Hungary’s Viktor Orban and Turkey’s Recep Erdogan, symbolise the revolt of rooted “somewheres” against rootless “anywheres”.

Modi and home minister Amit Shah represent the same phenomenon in India. English-speaking elites now wield less power than they have at any point in independent Indian history. Arguably it’s still too early to define the details of Modi’s brand of self-reliance. His talk of integrating India into global supply chains leaves open the prospect that in the end the rhetoric may be more radical than the reality.

Nonetheless, based on past experience, it’s hardly unreasonable to worry. Over the past three years, the Modi government has reversed nearly three decades of trade liberalisation by raising tariffs on a range of goods. Last year’s decision to walk away from the Regional Comprehensive Economic Partnership (RCEP) sent a signal that India was not ready to subject its companies to the salutary effects of global competition. The ultimate losers: Well-run Indian firms and the Indian consumer.

The language of self-reliance also creates new worries for foreign investors at a time of great global uncertainty. Will India allow multinationals to compete fairly with domestic companies, or will it attempt to boost the latter at the cost of the former? Clarifications of intent notwithstanding, what kind of business environment does the rhetoric of self-reliance create?

How can we be certain that over-enthusiastic officials (in cahoots with domestic businesses) won’t unfairly discriminate against foreign firms? Would Walmart have made its $16 billion purchase of Flipkart two years ago had it foreseen a possible nativist turn for India?

We have seen this movie before. Until the advent of economic reforms in 1991, socialist India boasted one of the most closed economies in Asia. When Pepsi re-entered the country in 1990, after a nearly three-decade absence, it had to use the prefix “lehar” (wave) as part of its brand name. An apocryphal story suggested that Prime Minister VP Singh himself had to green light this decision. Barely a decade and a half earlier, India had forced out Coca-Cola and IBM.

For the average Indian, the self-reliant decades before liberalisation were synonymous with shoddy products made by businesses whose success depended more on access to government than on providing better goods and services to consumers. If you had the right contacts, you could jump the queue for a clunky scooter and sell it at a markup.

Few countries have benefited as much from openness as India. Had it shelved the policies that accompanied an obsession with self-reliance in 1971, rather than in 1991, it’s quite possible that today India, not China, would be Asia’s largest economy. Policy makers can’t go back and correct past mistakes, but the least they can do is try not to repeat them.


Battle For Hong Kong

[As China, US and young protesters face off, Delhi must look at how its interests in Hong Kong are affected by new dynamic]


As Hong Kong gets caught in the Cold War between China and America, India will have to pay close attention to the economic and strategic consequences of the current churn. The application of the principle of “one country, two systems” for Hong Kong when Britain restored it to China in 1997, after nearly 150 years of colonial control, seemed like a stroke of genius. Designed to satisfy the needs of the people of Hong Kong, Beijing and the Anglo-American powers, the special status of Hong Kong was to last until 2047. Half a century looked long enough for Hong Kong’s painless integration into China. But the compact has been under stress for many years.

China’s growing emphasis on the principle of “one country” has met resistance from Hong Kong’s young activists, who underline the idea of “two systems”. China’s recent focus on extending its national security laws to Hong Kong has sharpened the inherent contradictions in the Anglo-Chinese compact and triggered large-scale protests against Beijing’s effort to tighten its grip over the city. Unable to push them through the Hong Kong legislature, Beijing has now taken direct charge. Last week, China’s National People’s Congress authorised a standing committee to draft a national security law for Hong Kong. The law is expected to be approved by September and adopted in Hong Kong. If Beijing’s patience with the Hong Kong protests has worn thin, Washington has announced plans to revoke the special privileges that Hong Kong enjoys, as a distinct and autonomous Chinese region, under US law.

While the details of the Chinese law and the US response will unfold in the days ahead, an important era in Hong Kong’s history is coming to an end. India has been an intimate part of Hong Kong’s founding and its rise as a critical player in Asia’s economic transformation. If Indian soldiers and traders were involved in securing and developing the city in the 19th and early 20th centuries, Indian migrants and entrepreneurs in the 21st century are adding to the city’s dynamic business environment. Like the rest of the world, India, too, has benefited from Hong Kong’s special status. Hong Kong today is one of the top trading partners of India and hosts a sizeable Indian community of nearly 40,000. Until now, India has carefully avoided being sucked into Hong Kong’s politics — both internal and international. It is time for Delhi to take a fresh look at its multiple interests in Hong Kong and how they might be affected by the triangular dynamic between China, US and the city’s young protestors.


The dimming of a Chinese strongman’s aura

[The question is not whether but when disgruntled forces might challenge Xi Jinping’s leadership]

Sujan R. Chinoy, a China specialist and former Ambassador, is currently the Director General of the Manohar Parrikar Institute for Defence Studies and Analyses, New Delhi.

To the outside world, China seeks to project a picture of monolithic unity behind President Xi Jinping’s highly centralised leadership. However, media tropes point to a greater scrutiny of his role and leadership style, especially during the early stages of the COVID-19 outbreak in Wuhan. Reports have surfaced alleging delays in reporting facts, conflicting instructions and tight censorship. Observers have drawn parallels between Mr. Xi and his powerful predecessors, Mao Zedong and Deng Xiaoping, perhaps a tad unfairly to both the iconic architects of the People’s Republic of China (PRC).

A timeline of change

Mao presided over the founding of the PRC in 1949. He consolidated his leadership during the Long March in the mid-1930s. Despite his many detractors, he remained the undisputed leader of China until his death on September 9, 1976 even if, towards the end, it was the Gang of Four, led by his wife Jiang Qing, which had usurped power in his name. Mao banished his adversaries frequently, whether it was Liu Shaoqi, Lin Biao, or even Deng Xiaoping. Mao’s reign after the founding of the PRC lasted 27 years. By comparison, the 67-year-old Xi Jinping has been at the helm for just under eight years.

Deng Xiaoping, the paramount leader who never held the posts of either Head of State or Head of Government, changed China’s economic destiny with bold and far-sighted policy shifts, ushering in the Four Modernisations of agriculture, industry, defence, and science and technology. The open-door policy, beginning the late 1970s, enabled China to emerge as the world’s largest recipient of foreign direct investment and a trade behemoth.

Deng generally favoured a collegial form of decision-making in consultation with a clutch of senior leaders – the Party’s “Eight Elders”. Hu Yaobang and Zhao Ziyang, both successive General Secretaries of the CPC, were for long Deng’s “left and right hands”, but when they were perceived as deviating from the CPC’s line, they were packed off ignominiously by the party elders led by Deng. From 1990 until his death in 1997, Deng’s only title was that of the Honorary Chairman of the Bridge Association of China. Yet, he remained the unquestioned leader, wielding great power even in his dotage, long after his successor Jiang Zemin had assumed the top posts.

Spotlight on Xi

The history of the CPC suggests that Mr. Xi wields less power than either Mao Zedong or Deng Xiaoping. He perhaps evokes more fear than respect on account of his ruthless anti-graft campaign that has brought down even high-ranking People’s Liberation Army (PLA) generals and Politburo members. In the consensus-driven system of the CPC developed after the Cultural Revolution, it was not uncommon to target the gofers of rivals, but top Party and PLA leaders were generally considered inviolable to avoid retribution when fortunes changed. In contrast, Mr. Xi has put behind bars “tigers” such as PLA Generals Xu Caihou and Guo Boxiong, political heavyweights such as Bo Xilai, Zhou Yongkang and Sun Zhengcai, besides thousands of “flies” — venal lower-ranking cadres. The question is not whether but when disgruntled forces might challenge Mr. Xi’s leadership.

Since reining in the pandemic in China, the Chinese economy has had a head start, but it is clearly not out of the woods. Economic hardship could spark off public dissent and harsher security measures. Moreover, a military confrontation with the United States leading to a “loss of face”, however limited the engagement, is a risk that Mr. Xi can ill afford. Indignation could lead the Chinese people, nurtured on hubris, to quickly direct their ire against a leader who has abandoned Deng Xiaoping’s advice, so well captured in the abbreviated aphorism, “hide our capacities and bide our time”.

Having steered through a constitutional revision in early 2018 that permits him to stay on in power beyond two terms, no doubt Mr. Xi would wish to preside over not just the centenary celebrations of the CPC in 2021 but also the hundredth anniversary of the founding of the PLA in 2027.

Trouble areas

The run-up to the PLA’s centenary harbours potential for instability and conflict, especially in relation to China’s avowed goal of reunification with Taiwan. Any use of force by China could drag the U.S., and perhaps its allies too, into the maelstrom, a view supported by the recent passage of the Taiwan Allies International Protection and Enhancement Initiative (TAIPEI) Act by the U.S. which seeks to inter alia strengthen Taiwan’s de facto independence.

Contrary to tradition, Mr. Xi has no anointed successor. When he assumes the mantle again beyond the 20th CPC Congress in 2022, he will thwart the ambitions of an entire “sixth generation” leadership. The only leader after Deng to have an extended stint was Jiang Zemin who was General Secretary from 1989-2002, President from 1993-2003 and Chairman of the CPC’s Central Military Commission (CMC) from 1989-2004. Jiang had clung on to the CMC post well after the baton had been passed to Hu Jintao as General Secretary of the CPC and President of the PRC. He survived after loosening his grip on power perhaps because he did not ride roughshod over other influential power centres. By comparison, Mr. Xi is “riding a tiger”.

A recently leaked internal report of the China Institutes of Contemporary International Relations (CICIR), a think-tank affiliated to the Ministry of State Security in Beijing, purportedly warns China’s top leadership of a rising tide of anti-China sentiment in the wake of the novel coronavirus outbreak, the worst since the Tiananmen incident of June 1989. The leak may point to internal churnings or it could well be meant to convey that China remains undaunted. The analogy is also reminiscent of China’s short-lived isolation after Tiananmen.

The hope, that an economically rich and prosperous China would gradually become liberal and democratic, has been belied. Whether the current U.S. pressure on China for its controversial policies towards Xinjiang, Tibet, Hong Kong, and Taiwan will induce change remains to be seen.

For now, the face-off continues and demands for accountability for the outbreak are mounting, testing Mr. Xi’s leadership. The alienation by China of a sizeable section of the international community and public criticism of Mr. Xi, including in the Chinese social media, suggest that the sun may have reached its zenith.


It’s time for a universal basic income programme in India

[Providing unconditional regular pay checks, at least till the economy normalises, is the need of the hour]

Anil K. Antony is the Convener of INC – Kerala Digital Media, and the National Coordinator of PIIndia.org, a COVID19 action group. 

The ongoing crisis is creating changes that could end up dividing society into pre- and post-COVID-19 days. These changes are also likely to exacerbate the novel challenges accompanying the fourth industrial revolution.

Today, disruptive technologies like artificial intelligence are ushering in productivity gains that we have never seen before. They are also steadily reducing human capital requirements, making jobs a premium. A microcosm of these trends can be seen in Silicon Valley. The region is home to five of the world’s eight most valuable companies. These giants, all technology companies, have a cumulative market cap of over $4 trillion, yet they together directly employ just 1.2 million people.

Tool to eradicate poverty

Many consider a universal basic income (UBI) programme to be a solution that could mitigate the looming crisis caused by dwindling job opportunities. UBI is also deliberated as an effective poverty-eradication tool. Supporters of this scheme include Economics Nobel Laureates Peter Diamond and Christopher Pissarides, and tech leaders Mark Zuckerberg and Elon Musk.

UBI in its true sense would entail the provision of an unconditional fixed amount to every citizen in a country. Nevertheless, countries across the world, including Kenya, Brazil, Finland, and Switzerland, have bought into this concept and have begun controlled UBI pilots to supplement their population.

India’s huge capacity and infrastructure-building requirements will support plenty of hands in the foreseeable future. Nonetheless, even before the pandemic, India was struggling to find enough opportunities for more than a million job aspirants who were entering the job market each month.

The 2016-17 Economic Survey and the International Monetary Fund (IMF) had once proposed quasi-basic income schemes that leave out the well-off top quartile of the population as an effective means of alleviating poverty and hunger. The fiscal cost of a UBI pegged at ₹7,620, at 75% universality, was 4.9% of the GDP. A UBI on par with the numbers suggested by the Economic Survey could lead to targeted household incomes increasing by almost ₹40,000 per annum, since the average Indian household size is approximately five.

The political will was nonetheless lukewarm because of the costs involved. Requirements to trim some of the existing subsidies to balance the resultant deficit were also difficult political minefields for the then government. So the proposition was finally shelved.

Different times

The times now are very different. IMF has projected global growth in 2020 to be -3.0%, the worst since the Great Depression. India is projected to grow at 1.9%. The U.S. economy is expected to fall by 5.9%. The unemployment rate and unemployment claims in the U.S., since President Donald Trump declared a national emergency, is the highest since the Great Depression. Unfortunately, India does not even have comparable data.

Lockdowns in some format are expected to be the norm till the arrival of a vaccine. With almost 90% of India’s workforce in the informal sector without minimum wages or social security, micro-level circumstances will be worse in India than anywhere else. The frequent sight of several thousands of migrant labourers undertaking perilous journeys on foot in inhumane conditions is a disgraceful blight on India. One way to ensure their sustenance throughout these trying times is the introduction of unconditional regular pay checks at maximum universality, at least till the economy normalises. If universal basic income ever had a time, it is now.