Editorials - 03-02-2021

Budget 2021 is a departure from a key tenet of the Washington Consensus — macroeconomic stability

Enough of fiscal orthodoxy. Spend like there is no tomorrow. That is what the Narendra Modi government’s Budget for 2021-22 seems to signal with its fiscal deficit at 9.5% of GDP for FY21 and 6.8% in FY22.

A mix

The change in fiscal stance is part of a selective departure from market orthodoxy that has marked the government’s economic policy in the last few years. The government has increased duties on some imports in order to protect and foster domestic industry. It has introduced performance-linked incentives for designated sectors, something that goes counter to market economics. The government is, however, happy to adhere to other elements of market orthodoxy, such as privatisation and a greater role for foreign direct investment (FDI).

To comprehend the shift in fiscal thinking, you only need to compare one document in the Budget with that of previous years. This is the document titled Medium Term Fiscal Policy cum Fiscal Strategy Statement (https://bit.ly/3aFM0pJ). The document begins with a table on various fiscal indicators.

In previous years, the document would give the indicators for the past two years as well as the projections for the next two years. The idea was to show that the economy was moving along a fiscal consolidation path, with a fiscal deficit of 3% of GDP as the eventual target. In this year’s Budget, the yearly projections are missing. All we have is a commitment in the Finance Minister’s speech to lower the fiscal deficit to 4.5% of GDP by 2025-26.

For well over a decade-and-a-half, we have kept up the pretence of attaining the deficit targets set out in the Fiscal Responsibility and Budget Management (FRBM) Act (2003). In this Budget, the pretence goes out of the window. The Finance Minister has promised to introduce an amendment to the FRBM Act to formalise the new targets.

Moving away from framework

The Budget thus marks an important departure from one of the key tenets of the Washington Consensus, the framework for market-oriented economics which has dominated policy making in most parts of the world. ‘Macroeconomic stability’ is central to the Consensus. ‘Macroeconomic stability’ means that government budgets need to be broadly in balance so that borrowings to finance the deficit are kept to the minimum. ‘Austerity’ became something of a mantra. It has been bitterly contested in recent years, especially in Europe, but austerity won the day until the COVID-19 crisis struck.

The Economic Survey that preceded the Budget laid the groundwork for a departure from a rigid adherence to fiscal consolidation. It has a quote from economist Olivier Blanchard, “If the interest rate paid by the government is less than the growth rate, then the intertemporal budget constraint facing the government no longer binds.”

The “intertemporal budget constraint” means that any debt outstanding today must be offset by future primary surpluses. Blanchard was saying that this is not true if the Interest Rate-Growth Differential (IRGD), the difference between the interest rate and growth rate, becomes negative. In the advanced economies, as interest rates have turned negative, Blanchard’s condition has been met. So governments there do not have to worry that deficits will render public debt unsustainable.

‘Spend more’

The International Monetary Fund (IMF) and the World Bank, both flag-bearers of the Washington Consensus, have been urging a departure from fiscal orthodoxy in the wake of the pandemic. Both these institutions used to be wary of any increase in the public debt to GDP ratio beyond 100%. Today, they are urging the advanced economies to spend more by running up deficits even when the debt to GDP ratio is poised to rise to 125% by the end of 2021.

The Survey argues that in India, the growth rate is higher than the interest rate most of the time. So the conventional restraints on fiscal policy need to be questioned, especially when there is a serious contraction of the sort the Indian economy faced in 2020-21. It says that, in the current situation, expansionary fiscal policy will boost growth and cause debt to GDP ratios to be lower, not higher. Given India’s growth potential, we do not have to worry about debt sustainability until 2030.

These points are by no means novel; the conditions for debt sustainability are well known. However, the Survey’s line was not accepted in the past. Indian fiscal policy has adhered to orthodoxy even during a downturn, such as the one we faced in the years preceding the pandemic. An important consideration was the fear that the rating agencies would downgrade India if total public debt crossed, say, 10%-11% of GDP. That is a risk that cannot be wished away unless the rating agencies have decided to toe the IMF-World Bank line on fiscal deficits.

Key concerns

Another concern is that a large fiscal deficit can fuel a rise in inflation. It is more than likely that a change in the fiscal consolidation targets will require a change in the inflation target of 4% set for the Reserve Bank of India. The Budget makes no mention of such a possibility. Perhaps the Finance Minister did not want to administer too many surprises at one go.

A third concern is that, with the tax to GDP ratio not rising as expected, the sale of public assets has become crucial to reduction in fiscal deficits in the years ahead. This is a high-risk strategy. For years now, revenues from disinvestment have fallen short of targets. The sale of Air India, which was begun in 2018, is still dragging on.

We need to face up to an important reality: large-scale privatisation is not easily accomplished in India. Selling public assets cheap is politically contentious. There will be allegations of favouring certain industrial houses. Public sector unions are a vital political constituency. Privatisation of banks raises concerns about financial stability. Job losses from privatisation are bound to evoke a backlash.

Privatisation means FDI

Moreover, large-scale privatisation almost always involves substantial FDI. In South East Asia and Eastern Europe, privatisation of banks meant a large rise in foreign presence in the domestic economies. Atmanirbhar Bharat connotes greater self-reliance and stronger Indian companies. How does the government reconcile a rise in FDI with Atmanirbhar Bharat?

If the nation’s political economy came in the way of our meeting the FRBM targets, it is also likely to pose an obstacle to large-scale privatisation. A departure from fiscal orthodoxy is welcome. But the government needs to think of ways to make it more sustainable.

T.T. Ram Mohan is a professor at IIM Ahmedabad. E-mail: ttrammohan28@gmail.com

In Myanmar, the break-up between the NLD and the military was inevitable

On February 1, the Myanmar army seized power, turning a partial democracy into a full-fledged military rule, yet again. This creates a perception of déjà vu as one recalls 1962, 1988 and 1990, the milestone years when the generals took similar drastic actions to overthrow a democratic government or derail people’s expressed preferences.

Between March 2016 and January 2021, the National League for Democracy (NLD) led by Aung San Suu Kyi shared power with the military. This was a bold experiment to govern an intensely complex nation in Southeast Asia. Myanmar thus became a car driven by two drivers. On Monday, one driver ejected the other to take charge fully, with implications that will become clearer only with time.

Emergency or coup?

To explain the military’s actions, its spokesman pointed out that there was “terrible fraud in the voter list” in the parliamentary elections held in November 2020, and that the Election Commission “failed to settle the matter.” Claiming that this development would “obstruct the path to democracy”, the army declared an emergency, transferring all powers to Commander-in-Chief Min Aung Hlaing.

The decision seems questionable on legal and constitutional grounds. First, electoral issues need to be addressed and resolved by relevant authorities, not the military leadership. Second, Article 417 of the Constitution empowers the President to proclaim emergency, in consultation with the National Defence and Security Council. It does not seem that the Council met or presidential consent was obtained. In fact, President Win Myint and the de facto head of the government, Ms. Suu Kyi, have been detained. Therefore, the conclusion is inescapable: it is a coup d’état staged by the army in a fashion familiar to the people. But it is a coup with a difference: the party wielding half of the power decided to help itself with the other half too, regardless of the law or consequences.

Deeper reflection raises a fundamental question: what troubled the NLD-military equation in the past five years, making it an uneasy relationship which collapsed completely this week? The fact that the generals swung into action hours before the newly elected Parliament was due to hold its first session shows that discussions to resolve differences may have continued until the last minute. As they failed, the break-up became inevitable.

In this context, three fault lines may be pinpointed. First, ideologically the two segments of the political elite have been at war with each other. The army has a sense of entitlement to power on the grounds that it secured independence, defended the country against secession, and ensured stability and development. It views itself as the guardian of the state. NLD leader Ms. Suu Kyi, the other protagonist, has always expressed admiration for the army (especially because it was established and nurtured by her father), but she has been a staunch advocate of democracy, a system in which the army should be completely apolitical. Specifically, the two sides have had modest to serious differences over ethnic reconciliation, constitutional reform, the Rohingya issue, and the China policy.

Second, in political terms the fight is for power. The army has been used to exercising power for long, which yields it immense economic dividends too. Playing second fiddle to democratically elected leaders was a difficult role for it.

Third, presidential ambitions and the future of Senior General Min Aung Hlaing’s career constitute a relevant issue. Back in 2016, and even now, argue well-informed sources, he nurtured the dream to be Myanmar’s President. Ms. Suu Kyi was opposed to it. Besides, she was perhaps unwilling even to extend his tenure. He is due to retire from the army in July. Presumably the coup guarantees an indefinite extension.

The military leadership understands the people’s psyche well. The divide between the Burmans, the majority group, and the ethnic minorities remains wide. The latter are generally opposed to a strong Central government. As to the former, they are no doubt supportive of ‘Mother Suu’, but only up to a point. They are largely Buddhists and peace-loving. Hence, they might accept the grabbing of a half loaf of power from elected representatives, by the army. In areas where palpable discontent arises, the army possesses enough tools to manage situations. And Burmese jails are not short of space.

Externally, calls for an early restoration of democracy were issued predictably. This is unlikely to impress the Commander-in-Chief. The diminished international halo of Ms. Suu Kyi is an open secret. Besides, he banks on the support of only one constituency: his fellow ranking generals.

Policy of non-interference

Many worry how India, the world’s largest democracy, should cope with the forcible overthrow of democracy in a neighbouring country. This is unnecessary. Our Mandarins know how to navigate the tricky path. Institutional memories and experiences are helpful. Whenever democracy suffers, India feels concerned, even anguished. But the government is committed to the policy of non-interference in another state’s internal affairs. It is also guided by the national interest. Therefore, in managing relations with Myanmar, India will astutely balance its principles, values, interests and geopolitical realities. The visit to Myanmar last October by Foreign Secretary Harsh Vardhan Shringla and Chief of Army Staff M.M. Naravane was an unmistakable sign that New Delhi fully understood where power lay in Naypyidaw. Those takeaways will be invaluable now.

Rajiv Bhatia is Distinguished Fellow, Gateway House and a former Ambassador to Myanmar

Contrary to expectations, the Budget maintains incrementalism and continues with business as usual

Budget 2021 comes in the backdrop of the optimism ofthe economy turning the tide from an estimated 7.7% contraction in 2020-21. The Economic Survey projects India’s real GDP growth to be 11% in 2021-22, which is arrived by an implicit assumption of 4.4% inflation and a nominal GDP growth of 15.4%. This double digit growth projection is on a very low base and it is important to highlight the fact that even if these numbers are realised, this growth path would entail a real GDP growth of 2.4% over the absolute level of 2019-20; this means that the Indian economy would take two years to reach and surpass pre-COVID-19 levels. This echoes the intensity of the abnormal times for the economy — which requires non-standard policy responses, and which was the expectation from Budget 2021. Those who designed the Budget, in turn decided to maintain incrementalism and continue business as usual.

The Finance Minister’s speech eloquently laid out the six pillars on which the vision of the Budget rested. As expected, the health sector was the first pillar with enhanced outlays, which have been spread over the next six years. While this strategy of spending over the medium term presents the so called ‘road map’, the yearly outlays get subsumed by the big numbers announced. The immediate outlays are of significance in the present circumstances, when the overall demand in the economy is tepid.

The construction of the six pillars, which was expected to be on the current year’s enhanced expenditures, seems to be a bit misplaced, with very little increase in the overall expenditure of the government. The fiscal arithmetic provides evidence of this as the total expenditure for 2020-21 is stated as Rs. 34,50,305 crore in the revised estimates, with a capital expenditure at Rs. 4,39,163 crore. The Budget estimates for 2021-22 states the total expenditure at Rs. 34,83,236 crore. This means an additional spending of just Rs. 32,931 crore, which is less than even 1% in a year of income contraction for a vast majority of the population.

No multiplier effects soon

However, the big bet for growth and employment generation, capital expenditure, increases by 26% but still accounts for only 15% of the total expenditure. This increase in capital expenditure, which is expected to be channelised via the infrastructure push, in turn bears two risks at the moment. First, there is the risk of delay in completion, which leads to cost overruns. Second, as the life cycle of these projects is long, an inventory of funding needs to the ready in the pipeline. Thus, the immediate multiplier effects to lift the aggregate demand in the economy might not emanate as quickly as expected.

Sector-specific targeted proposals, barring production-linked incentives for industry are few as agriculture and the micro and small industries segment — which shores up demand with their consumption multipliers — seem to have been accorded lower priority

There are no radical reform proposals for the agriculture sector, with no announcements with regard to bringing urea under the nutrient-based subsidy regime or rationalising the Public Distribution System issue prices of foodgrains. In fact, the recent growth performance of the sector has led the Finance Minister not to have any increase in cash transfers under the Pradhan Mantri Kisan Samman Nidhi Scheme (PM-KISAN) from the existing Rs. 6,000 per year.

Manufacturing growth, which is expected to be a catalyst in pushing the economy toward the $5-trillion economy goal (by 2025), would depend entirely on how private investments pick up. While the textile sector is the focal point to push employment and industrialisation, a lack of concrete policies towards export promotion at a time when the exchange rate is appreciating and a pedalling with tariffs to increase protection is frequent, might undermine the competitiveness of manufacturing exports.

The creation of a development finance institution addresses one the three issues that infrastructure provisioning faces in the economy. While the financing part can be addressed to some extent by this new entity, the other two — execution risk and regulatory issues — are still left wide open. This new institution can be seen as the first step toward cleaning up the financial sector as the amount set aside for the recapitalisation of public sector banks looks short of the requirement. Given the emphasis on start-ups and one-person companies, the stress on the financial system in the coming years is likely to increase as these firms are more prone to the cycles in the economy.

Urban unemployment left out

The growth push of the Budget subsumes the welfare implications, which is the hallmark of the ‘new welfarism’ model of the present government. Both employment and demand generation are left largely to the vagaries of growth cycles. While extending the social security benefits to gig economy workers is a welcome move, the lack of a concerted plan to tackle urban unemployment might prove costly, given the demographic profile and pace of urbanisation of the country.

The Budget sets out some grand plans and does not provide the precise mechanisms to achieve those. However, it does attempt to spell out some institutional changes in major areas such as tax administration and provides a push to public sector research and development. The digital push to Census operations might be a long-term investment towards publishing vital data about the economy, quickly and in time.

Resources and spending

Importantly, the Budget is candid on the fiscal deficit numbers and sets out a slow fiscal glide path. However, the resource mobilisation for spending seems to be banking on disinvestment, privatisation and asset monetisation. The route for reducing fiscal deficit, from 9.5% to 6.8% of GDP, rests on three components: the benefit of a stronger denominator because of better nominal growth, total revenue might get some boost from better tax revenue and compared to last year, there is a renewed hope for better divestment revenues. All of these are hypothetical at the moment.

The Budget reveals two interesting aspects of the political economy of policy formulation. First, it shows how important it is not to have ‘one nation one elections’, as all the States that are going for elections this year get enhanced outlays. Hence, States would be starved of this one-time bonanza if there is a simultaneous election. Second, the reaction of stock markets shows how important it is not to have disruptive unexpected ‘strikes’ on the economy. The stock market which was expecting some shocks reacted positively and looks relieved from the fear ofad hocpolicy thrusts. But is this incrementalism enough to lift the economy? Perhaps it might just fall short.

M. Suresh Babu is Professor of Economics at IIT Madras. The views expressed are personal

Political forces could transform beacons of democracy into cautionary tales

The world’s oldest and largest democracies were punctuated by two dramatic sieges at the start of 2021, each of which provides an insightful glimpse into the troubled politics of two countries.

On January 6, 2021, the U.S. Capitol building was partially taken over by a violent mob comprising supporters of former President Donald Trump. They attacked law enforcement officers, vandalised public property, and threatened lawmakers in Congress. One woman was killed at the site of the siege, and four others died during the course of the attack and its aftermath, including a police officer.

Twenty days later, a rally planned on Republic Day in India led to violence after farmers protesting three new laws aimed at reforming agricultural markets broke off from the planned parade and entered Delhi, including the premises of the Red Fort by breaking the gates, only to be met by a police crackdown including arrests and lathi charges.

There are both similarities and differences between the two episodes, each worth considering in turn.

Similarities

The common thread between the sieges on two major public buildings — the U.S. Capitol and the Red Fort — is that a discontented collective vented its anger about a recent political development through a mass rally. In America, that anger was directed at the very heart of democracy itself, the 2020 presidential election that saw Joe Biden emerge victorious. The context for the surge of anger at this outcome was the fact that Mr. Trump sought to deliberately undermine the credibility of the vote tallying process by attacking, for many months on Twitter, mail-in voting as fraudulent. Despite fact-checkers and mainstream U.S. media consistently emphasising that Mr. Trump’s claims were empirically false and misleading, it was only when Twitter suspended his account that the volley of fake news from the Oval Office finally ended. Subsequently, Mr. Trump faced the ignominy of being the first U.S. president in history to be impeached for a second time by the House of Representatives – this time for incitement of violence – although again it appears that Senate Republicans will not support the move to convict him and potentially deny him the right to hold public office again.

In India, anger has been rising steadily since Parliament passed three laws reforming the way the mandi, or marketplace, system works. This effectively cuts out middlemen and traders and empowers private entities to directly contract with agricultural producers, yet it also potentially endangers the historically entrenched minimum support price system that can be the economic backbone of small-scale farmers. While farmers initially staged peaceful sit-ins in Delhi and its surrounding areas, braving the winter cold to demand that the government repeal the laws, the lack of forward movement on the negotiating table appears to have triggered the ugly Republic Day clashes.

A second similarity across the two sieges is the emergence of disturbing images on social media, showing a darker side of the mass rallies – a propensity for targeted or planned violence. In the case of the Capitol building, one member of the invading mob was seen holding zip ties, implying a threat to the lives of lawmakers in the building, should they have been captured by the mob. Law enforcement discovered a truck filled with guns and bombs near the site of the attack.

In Delhi, social media was flooded with images of the Nishan Sahib, a religious flag of the Sikhs, being hoisted at the Red Fort, setting off a storm over whether the protests were less spontaneous than politically motivated. Yet, equally disturbing has been the move by law enforcement to crack down on the media in the aftermath of the protests — several senior journalists have been slapped with sedition and other criminal charges.

At the heart of both incidents is contested democracy. In the U.S., Mr. Trump’s clarion call for nativist populism and the dog whistles to white privilege reasserting its racist ethos into mainstream politics has found support with the 74 million-odd people who voted for him. Despite Mr. Biden’s convincing victory, the U.S. remains deeply divided over the vision of its future, a fact that will continue to haunt its politics for decades to come, impacting everything from economic protectionism to women’s reproductive rights.

In India, contrarily, politics has tipped sharply over the past decade towards the saffron world view of the Bharatiya Janata Party, and its brute force majority in Parliament has empowered the government with the ability to refashion major policy paradigms as per this vision. Yet the farm laws protests shows that there is another India – the India of the poor, the lower castes and classes – which will not be silenced by majoritarian politics. Even if we grant that to an extent there might have been political motives behind the farm law protests, that still shows that pockets of resistance to the government’s laissez faire or neoliberal economic policy leanings will continue to make their voices heard. The same could be said of those who are excluded from the BJP’s homogenising view of Indian culture – the southern States with their distinctive political and ethnic histories are prominent examples of stand-out cases in this context.

Undermining democracy

In the widest arc of history, democracy has often been about the informal balance of power in societies — usually favouring a religious or racial majority — expressed through formal trappings of democratic practice, principally the institution of elections. As was seen during the rise of fascism in pre-World War Europe, democratic societies are inherently and perennially capable of tipping towards power structures that undermine democracy itself. The institutions of a free press and free and fair elections typically get degraded and devalued by society in the process. The U.S. and India have been beacons of democracy in the modern world, but the political forces unleashed in the two countries during the past decade or more could eventually transform them into cautionary tales.

narayan@thehindu.co.in

Much more needs to be done for left wing extremism to be completely wiped out

The sad incident of an Assistant Commandant of the elite and highly trained CoBRA (Commando Battalion for Resolute Action) unit, Nikhil P. Bhalerao, dying in an improvised explosive device (IED) blast in November 2020 has once again highlighted the need for us to enhance our intelligence system. The IED went off while an anti-Maoist operation was under way and also injured eight others.

Induction of CRPF

Following the deaths of 80 personnel of the Central Reserve Police Force (CRPF) in Chhattisgarh due to land mine blasts in various incidents in 2008, the then Union Minister of Home Affairs, P. Chidambaram, ordered massive deployment of CRPF personnel in the left wing extremism (LWE)-affected States of Chhattisgarh, Jharkhand, Odisha, West Bengal, Madhya Pradesh and Uttar Pradesh. With the law and order situation showing improvement in the Kashmir Valley then, the CRPF battalions were pulled out of there and inducted into the LWE-affected States, with major deployment being concentrated in Chhattisgarh.

These newly inducted battalions underwent 12 weeks of induction training in Chhattisgarh so that they would be familiar with the terrain, the modus operandi of the Maoists, and the precautionary measures to be taken. They were also put through intensive firing practice. Soon the Border Security Force and the Indo Tibetan Border Police joined the CRPF and the State police forces in combating the Maoists.

Despite the training and precautionary measures adopted, security forces lost many personnel in 2009 and 2010, with 76 CRPF men killed in a terrible attack in Dantewada in April 2010. But the CRPF hit back with a vengeance and neutralised close to 200 Maoists between 2009 and 2011.

The CRPF slowly gained the upper hand and is now largely on the offensive. It has forced the Maoists to be on the run or surrender, which has brought down incidents of violence in LWE-affected States. As many as 55 Maoists were killed in operations in 2019, and 32 last year. The number of Maoists killed in the last decade has risen to 569. With the morale of the Maoists at its lowest ebb, 359 of them surrendered before the security forces in September 2018.

More needs to be done

However, as lives are still lost, the intelligence set-up in the LWE-affected States needs to be geared up not only to avert attacks on security forces but also so that they can be on the offensive against the extremists. Extensive use of Belgian Malinois dogs could help in timely detection of IEDs. Drones, too, are being used as force multipliers though they have not been very effective in thwarting IED blasts. Efforts are on to upgrade technical intelligence.

Much more needs to be done for LWE to be completely wiped out. CRPF personnel should stay in pucca buildings as temporary huts are not only prone to attacks but also take a toll on the men due to the vagaries of the weather, though there can be no denying that there has been considerable improvement in recent years.

There is the issue of funds too. Lately, against a projected demand of Rs. 114 crore for construction of accommodation, a meagre Rs. 33 crore was allotted. The responsibility of providing suitable accommodation to the Central Armed Police Force (CAPFs) battalions devolves on the States where they are deployed, though the CRPF has now undertaken this task on its own to hasten the work.

According to K. Govindan Nampoothiry, a Right to Information campaigner, the Ministry of Home Affairs has released Rs. 3,551.72 lakh to Chhattisgarh and another Rs. 2,857.89 lakh to Jharkhand for security-related expenditure for 2020-2021 among the LWE-affected States.

Even after certain districts are declared free of LWE activities, CAPFs will have to be stationed for some years until the States rely completely on their own Commando outfits like the Greyhounds and the Jharkhand Jaguars to prevent Maoist elements from raising their heads again.

M.P. Nathanael is Inspector General of Police (Retd), CRPF

The Budget as an instrument of politicsfound full play this year

The largesse to the election-going States of Kerala, Tamil Nadu, West Bengal and Assam in the Budget presented by Finance Minister Nirmala Sitharaman on Monday was unmistakable. The massive outlay of Rs. 65,000 crore for the development of the NH 66 corridor in Kerala, as well as the announcement of the second phase of the Kochi Metro and the development of the Kochi fishing harbour as a commercial hub are big ticket budget proposals by any standard. Ms. Sitharaman announced that national highway works worth Rs. 19,000 crore are in progress in Assam and projects of more than Rs. 34,000 crore covering over 1,300 km of national highways will be undertaken in the State within the next three years. The BJP has been harping on the “transformation” of Assam’s road network over the last five years to showcase its focus on infrastructure development. For West Bengal, there is a new “Economic Corridor” covering 675 km of national highway, with an expected investment of Rs. 25,000 crore. For an industry-starved State, which is still trying to wish away its anti-industry image, investment in infrastructure was aimed to give a message that the BJP has plans to bring in investment in the State. The party has started saying that the announcement was the beginning of “Sonar Bangla”. For Tamil Nadu, the proposed projects could cost up to one lakh crore rupees. This includes the Chennai Metro Rail (phase two) of 118.9 km for Rs. 63,246 crore and two expressways connecting Chennai.

Besides infrastructure allocations, the Budget also seeks notable social sector interventions in these States. Assam and West Bengal get a special scheme, with a Rs. 1,000 crore outlay, for the welfare of tea workers, especially women and children. Plantation workers and descendants — or “tea tribes” and “ex-tea tribes” — comprise almost 20% of Assam’s total population, and are a decisive factor in many Assembly seats, in Assam and West Bengal. The Budget is an instrument of politics, but it should not be predicated entirely on immediate electoral calculations. The BJP’s single-minded pursuit of its ideological politics is often a source of tensions, but its developmental politics expressed in the Budget, particularly the significant outlays for infrastructure, has to be appreciated. The BJP is trying to retain power in Assam, and in West Bengal, it is within striking distance. In Tamil Nadu and Kerala, it is quite a distance away from being a serious contender for power. The allocations for these States are therefore a significant statement of intent by the party. The projects here will take a few years to complete, but have considerable transformative potential. The BJP appears serious about its southern foray, but its rivals might not allow it to take full credit for the allocation of State resources.

The Army’s coup in Myanmar seriously undermines the gradual return to democracy

In one swift operation, Myanmar’s military establishment has wiped out a decade of the country’s democratisation process. By arresting President Win Myint, State Counsellor Aung San Suu Kyi and the rest of the ruling National League for Democracy (NLD) leadership, and declaring military rule under a state of emergency for at least a year, General Min Aung Hlaing has made it clear that it is the military that is in charge, and he is not particularly concerned about the opposition to or condemnation of the move. The immediate reason for the coup was that the newly elected National Assembly was due to meet in Naypyidaw on Monday, despite the Tatmadaw’s (Army’s) claims that the November general elections had several irregularities, and its contestation of the NLD’s landslide victory. Ms. Suu Kyi had refused to bow to Gen. Hlaing’s demand that the results, which also saw the military-backed Union Solidarity and Development Party with a reduced strength in Parliament, be set aside. Clearly, the Army, which still nominates a fourth of the parliamentary seats and retains the important Defence, Borders and Interior portfolios, felt it was better to dismiss the NLD government before it increased its clout. Gen. Hlaing is due to retire this year, and it is possible that the move was meant to extend his longevity in power. Backed by a silent Beijing, the junta leadership may also have gambled that it was better to take drastic action against the democratic leaders before the new U.S. administration finds its feet. The return to Army rule was also helped to some extent by Ms. Suu Kyi, who came to office in 2015, but has lost opportunities to put her country more firmly on the road to democracy. She has accepted a dual power system in the state. Daw Suu, as she is known, has also failed to bring democracy to her party, and been criticised for her autocratic style. Her refusal to rein in the Generals when the Tatmadaw unleashed a pogrom on the Rohingya between 2016-17, had lost the Nobel Peace laureate much international support.

Regardless of the reasons for the coup, the step is a setback for the international community’s efforts to engage with Myanmar, after a strict sanctions regime. For India, which had cultivated a careful balance, between nudging along the democratic process by supporting Ms. Suu Kyi, and working with the military to ensure its strategic interests to the North East and deny China a monopoly on Myanmar’s infrastructure and resources, the developments are unwelcome. The government will need to craft its response taking into consideration the new geopolitical realities of the U.S. and China as well as its own standing as a South Asian power, and as a member of the UN Security Council. New Delhi’s immediate reaction, to merely express “deep concern” and counsel following the rule of law and democratic processes, is unlikely to suffice as a long-term strategy.

The students in the final year class, the Veterinary College, Vepery, resenting to unpleasant and contemptuous language made use of by the Principal, Mr. D.A.D. Atchison, during the course of his professional instruction, resolved to step away from the hospital and college work. The students of all the other classes also, who could not bear to see their brethren taken to task in a manner revolting to their self-respect and dignity caught the opportunity to become one of them, as a result of which a general strike ensued which commenced early this morning. They however requested Mr. P. Sreenivasa Rao, G.M.V.C., a distinguished Veterinary Surgeon, to help them in their further proceedings, with which he did comply immediately by kindly approaching the Principal on their behalf and representing to him their greivances for redress. At the intervention of Mr. Sreenivasa Rao, the Principal with great courtesy disclosed to his students in a letter through their representative “that he never meant to either insult his students or to hurt their feelings in whatever he might have said to them even in the way of reproach and that he was sincerely sorry if they took him in that light.”

The skyjacked Indian Airlines Fokker plane was blown up by the two hijackers at Lahore airport destroying most of the aircraft, the Associated Press of Pakistan, Lahore, told PTI to-night [February 2] when contacted on the telephone. This action came despite India’s demand that the Pakistan Government ensure the immediate and safe return of the hijacked plane together with the baggage, cargo and mail. APP said the two hijackers stood outside the aircraft with hand grenades threatening to blow up fire engines if an attempt was made to put out the fire. There were two other explosions following the first explosion. The hijackers were inside the plane as the first explosion occurred, but jumped out as the fire spread. Both hijackers were slightly injured and admitted to hospital. Their condition is stated to be “out of danger”. According to APP the fire engines were allowed to put out the blaze only after most of the plane had been destroyed. Only the tail and the left wing of the plane were intact, APP said. Radio Pakistan said that the two hijackers who had forced the plane to fly to Lahore on Saturday [January 30], blew up the plane at 20-05 local time (20-35 I.S.T.).