Editorials - 01-02-2022

In a sense, Putin is seeking to rewrite history, with an attempt to push NATO back and restore Russian stature

In early January, there was a flurry of diplomatic activity beginning with talks in Geneva between United States Deputy Secretary of State Wendy R. Sherman and Russian Deputy Foreign Minister Sergei Ryabkov, shifting to Brussels for a North Atlantic Treaty Organization (NATO)-Russia Council meeting on January 12, with the finale being the 57-member Organization for Security and Co-operation in Europe (OSCE) meeting in Vienna the following day. The immediate provocation was the presence of 1,00,000 Russian forces, backed by heavy artillery, tanks and armoured personnel carriers on the Russia-Ukraine border, generating apprehensions about an imminent invasion. The diplomacy has continued with meetings and phone calls at the highest levels. In the absence of any forward movement, the situation in Ukraine remains tense as analysts try to read Russian President Vladimir Putin’s mind about Russia’s next move.

Russian problems

In 2008, the Bucharest NATO summit declaration offered an open-ended timeframe for membership to Georgia and Ukraine. Russia was quick to pick up the gauntlet. Months later, citing Georgian President Mikheil Saakashvili’s actions in South Ossetia as a provocation, Russia intervened taking over the Georgian provinces of South Ossetia and Abkhazia.

As protests mounted in 2013 against Ukrainian President Viktor Yanukovych who was seen as pro-Russia, Russia annexed Crimea, legitimising it with an estimated 94% vote in a referendum in 2014. For the last seven years, the eastern provinces of Luhansk and Donetsk have seen pro-Russian militias fighting the Ukrainian forces in a civil war that has claimed over 10,000 lives.

However, troubles come in multiples. Even as Mr. Putin tries to dampen the Ukrainian tilt to the West, he has had to shore up Belarus President Alexander Lukashenko whose move to get a sixth term in office sparked widespread protests, creating new uncertainty on Russian borders.

In the South Caucasus, fighting had broken out between Azerbaijan and Russian treaty ally Armenia over the disputed area of Nagorno-Karabakh. In end-2020, Russia brokered a ceasefire that has proven to be tenuous. Turkish President Recip Tayyip Erdoğan has been expanding his regional role and provided vital military support to enable Azerbaijan to gain the upper hand. In Ukraine too, Turkey has sold drones and other military hardware to bolster President Volodymyr Zelensky’s ability to resist Russian advances. All this even as Mr. Erdoğan engages with Russia in the Astana process on Syria and is a client for the S-400 missile defence system.

In Central Asia in early January, protests against the fuel price increases in Kazakhstan led to violence, prompting President Kassym-Jomart Tokayev to issue shoot-at-sight orders to the security forces. Mr. Tokayev took over in 2019 from Nursultan Nazarbayev who had ruled for 29 years but public protests forced him to resign. However, he remained influential, as Chair of the National Security Committee, controlling the defence, intelligence and police sectors through his loyalists. He has since quit and his right-hand man, former Prime Minister Karim Massimov, was sacked as head of National Security Committee and arrested for treason. Mr. Tokayev also reached out to Mr. Putin and for the first time since it was set up in 2002, the Collective Security Treaty Organisation (CSTO) has sent a Russian-led 4,000-strong military contingent to restore law and order and protect key government facilities. CSTO was a Russian initiative and includes Armenia, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan.

Notwithstanding the multiple eruptions in its borderlands, Russian Foreign Minister Sergei Lavrov captured the Kremlin sentiment when he described the former Soviet territories not as “free, sovereign and liberated nation-states” but as “territories that lack ownership”.

Seeking lost glory

In a sense, Presidents Biden and Putin are both seeking to rewrite history. The U.S. would like a return to the 1990s, its unipolar moment when it set into motion the eastward expansion of both NATO and the European Union as the instrument for ensuring European security. It engaged Russia through NATO’s Partnership for Peace that grew into the NATO-Russia Council with over two dozen working groups covering arms control, non-proliferation, counter-terrorism, logistics, peacekeeping, civil emergencies, etc.

Mr. Putin thinks differently. He considers the break-up of the USSR the biggest tragedy of the 20th century and has called the eastward expansion of NATO that added 14 new Baltic and Central and East European member states (in stages) an existential threat. At the 2007 Munich Security Conference, Mr. Putin raised the issue of security guarantees for Russia for the first time. He has also described the protest movements (colour revolutions) in the former Soviet republics as western attempts at bringing about regime change. He seeks to push back NATO and restore Russian stature and influence to what USSR enjoyed during the bipolar era.

On December 17, Russia had presented two parallel drafts on security guarantees with the U.S. and NATO. These included a prohibition on any further NATO expansion, removal of all U.S. nuclear weapons from Europe and U.S. troops to be restricted to NATO territory prior to the expansion as in 1997. These would also have curtailed U.S. naval vessels from the Black Sea, the Barents Sea in the north and the Okhotsk Sea in the east. These demands were dismissed by the U.S. as “non-starters”; in turn, it proposed talks on arms control, missile deployments, constraints on military exercises and confidence-building.

While declaring that “Russia had no intention to invade Ukraine”, Russian Deputy Minister Sergei Ryabkov reiterated that “Ukraine must never, never, ever join NATO” and warned of “military and technical consequences that could put European security at risk.” Ms. Sherman maintained that “NATO’s open-door policy was non-negotiable” while Washington hinted at crippling economic and trade sanctions if Russia intervened in Ukraine. The talks in Geneva, Brussels and Vienna ended in a stalemate and brinkmanship continues.

Risks of over-reach

On January 14, over 70 Ukrainian government sites were subjected to a cyber-attack with a warning, ‘Be Afraid and Expect the Worst’; Ukraine has attributed it to Russia. The same day, White House Press Secretary Jen Psaki disclosed intelligence that Russia had pre-positioned special forces and operatives to undertake false flag operations in eastern Ukraine, warning Russia against using it as a pretext for intervention. On January 27, Mr. Biden said he expects Mr. Putin to make a move in February.

In the recent past, former U.S. President Donald Trump was calling NATO a drain on the U.S. and French President Emmanuel Macron had called NATO “brain-dead”. While U.S. President Joe Biden has sought to rebuild alliances, the messy withdrawal from Afghanistan left NATO allies doubting long-term U.S. commitments. Barely six months ago, France recalled its Ambassador from Washington and Australia, protesting against the creation of AUKUS (a trilateral security pact between Australia, the United Kingdom and the U.S. in 2021) that led Australia to cancel its multi-billion submarine deal with France. There were fewer and fewer NATO candidates ready to host U.S. nuclear weapons. The 2008 declaration about expanding NATO to include Georgia and Ukraine was seen as a rash promise that NATO was keen to forget. Even Russia’s takeover of Crimea had been overlooked. But Russian actions in Ukraine have revived NATO, giving it a new lease of life by restoring its original purpose.

On China

The U.S. focus on China and the Indo-Pacific was an opening that Russia sought to exploit but Mr. Biden cannot afford to ignore Europe or be accused of appeasing Russia. Mr. Putin is shrewd enough to know that shifting U.S. focus away from China cannot be in Russian interest; it makes Russia more dependent economically on China because the Nord Stream 2 gas pipeline remains frozen and sanctions isolate it from European markets. Further, it gives China a free hand to expand its influence in Central Asia. An overtly antagonistic relationship with the U.S. and Europe may also limit Russian options in West and South Asia.

Ultimately, a war in Ukraine is something that neither Russia nor the U.S. want. Both need a way out of the escalatory spiral. The recent talks have brought Russian concerns about NATO’s eastward expansion centre-stage. Now, Mr. Putin has to decide which is a greater challenge — a liberally oriented Ukraine or confrontation with a rejuvenated NATO together with an unconstrained China. The choice is clear.

Rakesh Sood is a former diplomat and currently Distinguished Fellow at the Observer Research Foundation



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The trends in employment have not shown any clear and consistent patterns over the years

The two important indicators of structural transformation in any economy are rates of growth and changes in the structural composition of output and the workforce. India has experienced fairly consistent changes in the first indicator, especially after the 1991 reforms, but the trend in employment has not revealed any consistent or clear pattern.

The growth rate of the economy, measured by gross value added (GVA) at constant prices, accelerated from 4.27% in the 20 years before the economic reforms to 6.34% in the 20 years following the reforms and to 6.58% between 2010-11 and 2019-20 at 2011-12 prices. This growth trajectory was accompanied by a steady decline in the share of agriculture from 30% in 1990-91 to 18% in 2019-20 and a steady increase in the share of non-agriculture output in total economic output.

Employment patterns

But when it comes to deciphering trends in employment pattern in India, there are wide variations in the conclusions drawn by experts and studies on employment. This is partly due to economical, sociological and technological factors that have brought about changes in the workforce and employment and partly due to gaps in data on various aspects of employment.

Two major sources of data on workforce and employment have been the decennial population census and the nationwide quinquennial surveys on employment and unemployment by the National Sample Survey Office (NSSO). The last available data from the Census refer to 2011. Similarly, the quinquennial NSSO data on employment and unemployment are available up to 2011-12. This was replaced by the Periodic Labour Force Survey (PLFS), started in 2017-18 on an annual basis. The PLFS data set is now available for three consecutive years i.e., 2017-18, 2018-19 and 2019-20. The PLFS is based on a different sampling framework and uses s different analytical approach vis-a-vis NSSO surveys on employment. As a result, the time series data on employment and unemployment available from NSSO surveys are not comparable with PLFS data. At best, the NSSO data can be used as a reference point.

Though the PLFS data cannot be used to infer an underlying trend, as they are available only for three years, they can be used to reveal the effect of various policies and developments during the current NDA regime as well as to understand and shape the employment scenario based on concrete statistics.

PLFS data show an increase in the worker to population (WPR) ratio from 34.7% in 2017-18 to 38.2% in 2019-20. This is a reversal of the previous trend which showed a decline in WPR after 2004-05. The change also implies that employment has increased at a much faster rate than growth in population. The increase in WPR has been reported in the rural and urban population and in the male and female population. This increase in WPR is even more significant as it has occurred in the midst of an increase in the labour force participation rate.

It is interesting to note that the data from the PLFS surveys do not support the assertion that women are going out of the workforce. Female WPR ratio increased from 17.5% to 24% between 2017-18 and 2019-20. When this ratio is multiplied by the female population, it shows an annual increase of 17% of women workers. Another positive indication from PLFS data is that the gap between the male and female worker participation rate is narrowing down. As against 100 male workers, there were 32 female workers in the workforce in 2017-18. This number increased to 40 in 2019-20. Women constituted 24% of the workforce in the country in 2017-18 and 28.8% in 2019-20.

Also, the unemployment rate in the female labour force in rural areas is far lower than the male labour force, whereas the opposite holds true in urban areas. This is despite the fact that the female labour force participation rate in rural India is 33% higher than the rate in urban areas. The reason could be that there is less gender discrimination in informal jobs, which dominate rural areas, than in the formal sector which dominates urban areas.

The unemployment scenario

PLFS data show that the unemployment rate based on principal status plus subsidiary status declined from 6.1% in 2017-18 to 4.8% in 2019-20. This shows that the number of jobs increased at a faster rate than the increase in the number of job seekers between 2017-18 and 2019-20. But despite this, the number of unemployed persons has increased by 2.3 million between 2017-18 and 2018-19, mainly because of an increase in the number of job seekers (52.8 million) in these two years.

The sectoral composition of the workforce shows that 45.6% of the workers in India are engaged in agriculture and allied activities, 30.8% in services and 23.7% in industry. According to PLFS data, there is no increase in the share of industry and services in total employment. This means that the labour shift out of agriculture is not happening. Between 2019-20 and 2017-18, 56.4 million new jobs were created. Out of this, 57.4% were created in the agriculture and allied sectors, 28.5% in services and 14.5% in industry. Within the broad industry group, employment in the manufacturing sector showed a meagre increase of 1.8 million in two years; and construction activity added 6.4 million new jobs.

That a majority of the new entrants to the labour force between 2017-18 and 2019-20 got absorbed in the agriculture sector has serious implications. The young labour force, which is getting increasingly educated, sought more remunerative work outside agriculture but only a few succeeded. This is because the industry and services sectors have adopted capital-intensive and, in many cases, labour-displacing technologies and production strategies. This is getting further aggravated with the rising adoption of modern technologies like Artificial Intelligence and Internet of Things. This raises a big question about the future of new entrants into the labour force.

That there is a dichotomy between the rising share of industry and services in national income without a sizeable increase in employment share is a fairly well-established fact for post-liberalisation India. This puts a serious question mark on the relevance of conventional models of economic growth and development (like the dual-sector model of Arthur Lewis centred on the large-scale shift of the labour force from agriculture to industry. Perhaps it is pertinent to question the conventional economic development models and their applicability for emerging economies like India. Instead, should we rethink our strategy of striving for an industry-led growth model and explore a more relevant agri-centric model of economic transformation to create more attractive, more remunerative and more satisfying employment in and around agriculture?

Besides this there is also an urgent need to generate much more employment in the manufacturing and services sector compared to the number of jobs they have offered in the recent past. This should include (i) changes in labour laws which discourage industry to adopt labour-intensive production (ii) employment-linked production incentives and; (iii) special assistance for labour-intensive economic activities.

Ramesh Chand is Member of NITI Aayog and Jaspal Singh is Consultant at NITI Aayog. Views are personal



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Protecting all children, especially those who have risk factors, should be a humanitarian priority for the Government

There is a general misconception that vaccination ought to be reserved against diseases that cause death in large numbers. COVID-19 is generally a mild disease in the large majority of healthy young children infected with SARS-CoV-2.

However, children living with diabetes, chronic heart/lung/kidney/neurological diseases, obesity, and with an immunocompromised state due to immunodeficiency syndromes or immunosuppressant therapies are at high risk of severe disease, need for hospitalisation and expensive treatments, even of mortality. Older children and adolescents have a higher risk of severe COVID-19, approximating adult risk levels. All such children deserve COVID-19 vaccination to preserve good quality of life.

MIS and diabetes

Four to six weeks after COVID-19, irrespective of severity, some among otherwise healthy children develop Multisystem Inflammatory Syndrome (MIS). Statistics available in India showed 5% mortality among 800 children hospitalised for MIS; more than half required intensive care and prolonged hospital stay. Without a national registry of MIS, we do not know its real burden. The U.S. Centers for Disease Control and Prevention (CDC) reported 91% protective effectiveness of two doses of Pfizer’s mRNA vaccine against MIS in children 12 to 18 years. COVID-19 vaccination prevents MIS.

Another post-COVID-19 disease in adults and children is diabetes, starting within weeks. In a report from the CDC on 80,893 children (below 18 years), the incidence of post-COVID-19 diabetes was 31 per 10,000 versus control, 11.8/10,000 after other respiratory infections. India already has a heavy burden of diabetes in children. COVID-19 vaccination will prevent post-COVID-19 diabetes.

The Brihanmumbai Municipal Corporation’s COVID dashboard (January 13, 2022), showed 16,426 total deaths, of which 19 were in children below 10, and 43 in children between 10 and 18 years (total of 62 or 0.38%). January data from UNICEF show that 0.4% of a total 3.5 million COVID-19 deaths were in children and adolescents. India’s reported deaths were 4.86 lakh till January 17, 2022 — child deaths at 0.4% rate would amount to 1,944. Independent analysis by expert epidemiologists (Science, January 6, 2022) estimated a six to seven-fold higher number of deaths, suggesting a far higher number of child deaths.

Other factors

It is estimated that 2,00,000 children are born with congenital heart defects every year in India. New cases of cancer in children are about 50,000 per year. A huge number of children have neurological disorders. As in a United Nations estimate, about 40 million in India are disabled due to various diseases, among whom over 7% are children. India has the second highest number of obese children in the world (~14.4 million). The burden of childhood nephrotic syndrome annually is about 1,40,000. Sickle cell disease is highly prevalent in the tribal populations in India. The Indian Society for Primary Immune Deficiency estimates that over a million children have primary immune deficiency disease. These are all conditions that are known as risk factors for severe COVID-19. Protecting them with COVID-19 vaccination is a humanitarian priority.

India’s third COVID-19 wave began from December 28, 2021. On January 3, 2022, children above 14 years are allowed vaccination, undoubtedly a step in the right direction. They become eligible for the second dose four weeks later — thus, children are not getting the benefit of protection during the present wave. Although we have not been able to protect children with vaccination so far, the Government of India must now plan for protection against the inevitable future endemic COVID-19. Paediatricians caring for children with the above listed conditions associated with high risk of COVID-19 and its complications, need approval to protect them with vaccination.

SARS-CoV-2 (except the Omicron variant) invades many body tissues and organs. Damage to the pancreas is the reason for new onset diabetes. COVID-19 is a new disease and the extent of damage to the health of children will be known only in due course. All facts considered, rolling out vaccination with vaccine(s) of assured safety is the right way forward.

Vaccine safety

Since the risks of severe COVID-19, its related complications and mortality are much higher in adults, a risk-benefit comparison has so far favoured vaccination, even with vaccines with some known serious adverse reactions. Globally, both mRNA vaccines and Adenovirus vectored vaccines are recognised to cause some specific and defined diseases that need to be immediately diagnosed and treated in order to prevent mortality

Since risk of COVID-19 severity is low in children, only vaccines with little or no risks of serious adverse reactions are justified in them. Thus, vaccine safety is the most crucial criterion for approval. Fortunately, the indigenous inactivated virus vaccine with adjuvant promoting cell-mediated and antibody arms of immunity had been investigated for safety in children at and above two years, and found to be safe without any serious adverse reaction. Obviously for this reason the Government has allowed it for exclusive use in children between 15 and 18 years. We argue for vaccinating younger children also with the same vaccine.

The urgency for vaccination is the continued high risk of disease, complications and death in children who, on account of their chronic diseases or prolonged treatments are vulnerable. Selective vaccination of high-risk groups will not be feasible under the emergency use approval (EUA) of vaccines in children. Once safe vaccines are licensed for general use, health-care givers can vaccinate selected children under their care.

Age of eligibility

As of now, the ethical, scientifically sound and wise decision ought to be step-wise lowering of age of eligibility: first to above 12 years, then to above five years and eventually to above two years, in rapid succession, ensuring safety in each age group. Expanding the age range for EUA of the vaccine does not necessarily mean that all families may opt for their otherwise healthy children to be vaccinated. However, without EUA, children who need prophylaxis against COVID-19 will continue to be denied the benefit of vaccination.

Dr. Dhanya Dharmapalan is a paediatric infectious diseases specialist in Navi Mumbai. Dr. T. Jacob John is a former (retired) Professor of Virology, Christian Medical College, Vellore, Tamil Nadu



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By failing to decide key constitutional cases in a timely way, the apex court has not acted as the ‘sentinel on the qui vive’

American lawyer James M. Beck described the U.S. Supreme Court as a lighthouse whose gracious rays of justice and liberty light up the troubled surface of the water, making America a free and strong nation. M. Jagannadha Rao, a former Indian Supreme Court judge, citing Beck, said that what is true of the American Supreme Court is equally true of the Indian Supreme Court. In the 73rd year of our Republic, it is time to put this belief to test especially in the wake of mounting majoritarianism and surging ethnocultural nationalism.

In the last few years, the Indian Supreme Court has delivered some judgments of far-reaching consequence. It declared the right to privacy a fundamental right; decriminalised consensual sexual conduct between adults of the same sex; recognised transgender persons as the third gender; and outlawed triple talaq. These decisions shore up the belief in republican values like liberty and equality reified in our Constitution.

Black marks

Notwithstanding these bright spots, there are several black marks on the Supreme Court’s record. The Vidhi Centre for Legal Policy has developed an excellent comprehensive tracker of all the pending cases before the five-judge, seven-judge, and nine-judge constitution benches of the Supreme Court. According to this tracker, there are 25 main cases pending before the five-judge constitution bench and five cases each pending before the seven-judge and nine-judge benches. These cases relate to significant constitutional and other legal matters that can have serious repercussions on the fundamental rights of ordinary citizens and our core republican values. Related to these main cases, there are more than 500 connected cases. These cases cannot be decided till the legal issues in the main cases before the constitutional benches are addressed. Some of the important cases gathering dust in the Supreme Court are as follows.

First, a deluge of petitions was filed before the Supreme Court challenging the constitutionality of the Citizenship (Amendment) Act, 2019, that provides non-Muslim communities from Bangladesh, Pakistan, and Afghanistan a fast-track route to Indian citizenship. More than two years later, the matter continues to languish in the apex court. Second, innumerable petitions have been filed challenging the Presidential Order of August 5, 2019 that effectually diluted Article 370 of the Constitution and split Jammu and Kashmir into two Union Territories. To date, the court has done precious little to decide this vexed question of law.

Third, petitions challenging the constitutionality of the Constitution(One Hundred and ThirdAmendment)Act,2019 that provides reservations in public educational institutions and government jobs for economically weaker sections are also languishing in the Supreme Court. It is shocking that the case has not been heard since August 5, 2020, while the law has already been implemented.

Fourth, a momentous case known asVivek Narayan Sharma v. Union of Indiais in the Supreme Court for more than five years. This case relates to the legality of demonetisation of all Rs. 500 and Rs. 1,000 notes aimed at curbing black money. It was the most audacious economic experiment in the life of the Indian republic that went horribly wrong because more than 99% of the cash came back into the banking system, according to the Reserve Bank of India. Appallingly, the Supreme Court hasn’t heard this case since September 2, 2019.

Fifth, the Supreme Court has failed to accord proper hearing in the last four years to the constitutional challenge to the electoral bonds scheme. This scheme strikes at the heart of our polity because anonymous funding of political parties is the root cause of corruption in public life.

Constitutional duty

Granville Austin, a distinguished constitutional scholar, said, “the Supreme Court is …custodian of the equality under the law that lies at the heart of the country’s constitutional democracy. Unless the Court strives in every possible way to assure that the Constitution, the law, applies fairly to all citizens, the Court cannot be said to have fulfilled its custodial responsibility”. By abjectly failing to decide key constitutional cases in a time-bound manner, the Supreme Court has not acted as the “sentinel on the qui vive”. The Court should perform its constitutional duty of being a formidable counterforce to brute majoritarianism. The power of judicial review that the Chief Justice of India, N.V. Ramana, calls as critical to democracy should be exercised assiduously. Or else, India’s hard-fought constitutional democracy would be in grave peril.

Prabhash Ranjan is Professor and Vice Dean, Jindal Global Law School, O P Jindal Global University. Views are personal



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Unfriendly relations between a head of state and head of government can have unsavoury consequences

Early strains have appeared in the relationship between Tamil Nadu Governor R.N. Ravi and the M.K. Stalin-led DMK government. Mr. Ravi has invited the ire of the ruling party for seemingly advocating policies that are in conflict with popular political ideology in the Dravidian heartland. In his Republic Day address, Mr. Ravi subtly pushed for a three-language policy. “While it is important that [the] Tamil language is given wider spread in the rest of the country, it is also important that our school students learn other Indian languages like students in other States. Depriving our students of knowledge of other Indian languages is unfair to all,” he contended. This came as a surprise since in Tamil Nadu, any attempt to tinker with the time-tested two-language formula is akin to treading on a landmine. As recently as June 2019, a clause recommending mandatory Hindi teaching in schools was dropped from the Draft National Education Policy (NEP) following a backlash, primarily from Tamil Nadu.

The State government’s first counter to Mr. Ravi was diplomatic and through the official channel. The Minister for Tamil Official Language and Culture, Thangam Thennarasu, responded, “Those who are aware of the history of protests for language in Tamil Nadu would realise that ‘other Indian languages’ is only another terminology for pushing Hindi.” He argued that the two-language policy has not prevented students from acquiring educational qualifications or holding major positions. However, this was followed by a sharp attack in the DMK’s mouthpiece,Murasoli, which not only questioned Mr. Ravi’s performance in his previous gubernatorial assignment in Nagaland but also conveyed to the former IPS officer that politics is a different ball game. “He [Mr. Ravi] is not a politician who experienced the climate of politics before becoming a Governor. He was a police officer who was appointed Governor after his retirement. The police department may require methods of threat and intimidation, and they may yield results there. But they will be of no use in politics...,” the article with the byline Silandhi, usually penned by a member of the DMK first family, said.

The government and the DMK were also upset with Mr. Ravi for seemingly backing the National Eligibility-cum-Entrance Test (NEET), while not forwarding for presidential assent a Bill seeking to dispense with the NEET in Tamil Nadu. MPs from Tamil Nadu protested against Mr. Ravi’s inaction on this in the joint sitting of Parliament on Monday.

This was not the first time Mr. Ravi had spoken on these lines, especially on matters relating to education, a Concurrent List subject, where the State government differs with the Central government. While Mr. Stalin declared that Tamil Nadu will not implement the NEP, Mr. Ravi hailed it as a revolutionary document that is inevitable for the higher education system in a dynamic scenario. Going a step further, at the convocation of Bharathidasan University, a State-run institution, he sought to link the NEP’s objectives with the “new India” dreams of iconic Tamil poets Subramania Bharathi and Bharathidasan.

Relations between Raj Bhavan and the Secretariat thrive on understanding and mutual respect. Mr. Ravi’s intentions in advocating an alternative policy could perhaps be well meaning, but the popular view is such matters are best left to an elected government. At the same time, there is a perception that Mr. Stalin, known for his amiable politics, must ensure that any differing viewpoint is tackled diplomatically, lest the issue escalates into a full-blown cold war.

Unfriendly relations between a head of state and a head of an elected government can have unsavoury consequences as the current developments in West Bengal show.

sureshkumar.d@thehindu.co.in



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Nadal keeps overcoming the challengesposed by age and injury

In legendary sporting careers, there comes a moment which perfectly encapsulates the champion’s relentless pursuit of transcendent brilliance. For Sachin Tendulkar it was reaching a hundred international hundreds and for Kapil Dev it was getting to 432 Test match wickets to become the then highest wicket-taker. It spells consistency, across decades and geographies. On a balmy Sunday evening in Melbourne, it was the turn of Rafael Nadal to attain similar nirvana with a record 21st men’s singles Grand Slam title, passing Roger Federer and Novak Djokovic in the all-time tally. The 35-year-old is only the fourth man in history (after Roy Emerson, Rod Laver and Djokovic) to win all four Majors at least twice. Nadal was not best placed to achieve what he did. For much of the second half of 2021 he was in exile and a chronic foot injury had him considering retirement. In Australia, he was physically sub-prime and in the final against Daniil Medvedev — a 6’6” albatross, who barely five months ago felled Djokovic at the 2021 US Open with a blindingly devastating performance — he was on the cusp of defeat, down two sets and three break-points. But what came to the fore was Nadal’s greatest trait, the uncanny ability to thrive when barely allowed to live, culminating in what he called his “greatest comeback” and the “most unexpected achievement” of his already glittering career.

The previous decade in Australia has been one of disappointment for the Spaniard, having lost four finals, including two from winning positions. A repeat seemed in the offing when deep in the fifth set he failed to serve out the match. But such was the rarefied heights he reached that he quickly left a bad service game behind, relaxed into the moment and earned another opportunity for a shot at history that he would not miss. There was a history-maker among women too as the classy Ashleigh Barty, a player with indigenous Australian heritage, won her maiden Major on home soil, a first for an Australian since 1978, and third overall after the 2019 French Open and 2021 Wimbledon. Adept on grass and clay, courtesy her first-rate footwork and outstanding racquet skills, Barty seamlessly transitioned to the acrylic, adding some aggression while keeping her finesse and variety intact. Even in the crowded marketplace that global tennis is, there are no styles and personas quite like Nadal’s and Barty’s. It was apt that the event ended with rousing victories for the duo, despite the fog of Djokovic’s deportation saga that had settled pre-tournament. For Indians, Sania Mirza’s announcement of retirement at the end of the season will bring a tinge of sadness. But the year ahead will be another opportunity to relive and celebrate her stunning achievements and trailblazing legacy.



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Air India will need all the managerial expertise it can get to turn into a successful buy

The Tata Group’s consummation of its acquisition of Air India last week marks both the culmination of the airline’s return to its original founders after an almost seven-decade hiatus, as well as the start of an arduous long-haul flight for the loss-making, formerly state-owned flag carrier. The Tatas’ enthusiasm for winning back what was once the country’s iconic airline brand notwithstanding, the skies in which the industry operates have changed considerably. A look at the market share data from the domestic air passenger segment clearly shows that budget or low-cost flights now hold a dominant position, commanding about four-fifths of the market. The Tata group’s full-service venture, Vistara, with no less a partner than Singapore Airlines on board, has struggled to establish a foothold and with Air India’s addition, the Tatas find themselves saddled with a bulk of their combined domestic market share of 23% (as of November) being in the less-in-demand full-service segment. Nor is the group’s newly combined share from the low-cost segment, comprising Air Asia India’s 5.9% and the fractional share that Air India’s Air India Express has, significant enough at the moment to give it scale in the high-volume business. That the group is said to be considering consolidating Air India’s domestic low-cost services along with Air Asia India’s operations is a clear indication that the Tata bosses realise the need to optimise the varied aviation resources that are now in the group’s fold so as to enhance viability.

On the international front too, Air India faces multiple challenges, not the least of which is the Government’s current pandemic-related curbs on commercial international flights. With foreign carriers restricted to limited capacity under the ‘Air Transport Bubbles’ arrangement, Air India too has found itself constrained in the number of overseas flights it can operate under the bilateral arrangements with counterpart countries. The Tatas, though, could use the current curtailment of overseas services as an opportunity to undertake a long overdue overhaul of Air India’s inflight experience. Also, with Vistara now operating to a few select overseas destinations, the Tatas will need to decide if they would want a younger in-house competitor to Air India once COVID-19 restrictions are lifted and normalcy restored as regards international flights. For the Tata group, the choices going forward will need to be strategic. With the domestic market set to see more churn with at least one new budget airline set to enter and other rivals struggling for capital, the group needs to decide whether it wants to add capacity to budget offerings or stay a predominantly full-service carrier at a time when the more lucrative business class travel has been hit. And with aviation fuel costs set to soar further, Air India will need to tap into all of the Tata group’s vaunted managerial expertise if it is to turn into a successful buy.



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Kathmandu, Jan. 31: King Mahendra of Nepal died of a heart attack early to-day at Bharatpur, 200 kms. from here. The King had gone to Bharatpur for rest, but he was taken ill suddenly yesterday. A team of doctors was rushed to Bharatpur immediately after the King was taken ill but they could not save him. Within hours of King Mahendra's death, Crown Prince Birendra was enthroned as the new King of Nepal, the only Hindu kingdom in the world.

Soon after the King suffered a heart attack yesterday the Government of India was contacted by the Indian Ambassador in Kathmandu and a cardiologist was immediately flown to Bharatpur. The end came at 3:45 a.m. to-day. Queen Ratna was at the side of the 51-year-old King, when he breathed his last. Only two months ago, King Mahendra had returned from a medical check-up in London. The King had suffered a heart attack early in 1968 too.

Crown Prince Birendra was sworn-in King by the Chief Royal Priest amidst chanting of hymns with traditional Hindu rituals at a brief ceremony in the ancient Hanuman Dholka Palace, where his predecessors had been enthroned. A formal coronation ceremony will be held later on a date to be fixed by astrologers in accordance with traditions.



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Getting to the truth

Nothing stops the Government from suingThe New York Timesif it feels the contents in the said report have no grain of truth. Instead of a flurry of denials of any wrongdoing, it should submit a factual and comprehensive report before the expert committee constituted by the Supreme Court of India to probe the matter. To maintain secrecy over the issue under the garb of national security is unacceptable since it concerns the constitutionally guaranteed rights and privileges of citizens, who are entitled to know the truth.

V. Johan Dhanakumar,

Chennai

The Narendra Modi government needs to come clean. Dismissing allegations of any kind of surveillance, saying that there is no concrete basis or truth associated with it whatsoever is not enough. It is the abuse of Pegasus that is at the centre of the row now. If India has established robust protocols when it comes to surveillance, as the Government claims, stonewalling the damning revelations only adds fuel to the fire.

N. Sadhasiva Reddy,

Bengaluru

Think poll reforms

While a voter cannot exercise his/her franchise from two places in the same election, it is an irony that a candidate can contest from two constituencies in the same election. It is wasteful expenditure in terms of tax-payers’ money and valuable resources. It is high time that electoral reforms are discussed and debated by all stakeholders to uphold the value of democracy and the rights of voters.

A. Jainulabdeen,

Chennai

Blockbuster tennis

What sets Rafael Nadal apart from his contemporaries is not only his uncanny and inspiring ability to find new ways to adapt to different surfaces and younger opponents but also his exemplary demeanour of remaining grounded and not courting controversy which he has displayed with ease throughout his storied career. His determined fight against frailties will continue to serve as the greatest source of inspiration for all budding tennis players.

M. Jeyaram,

Sholavandan, Tamil Nadu

Rafa’s win proves that the basic qualities of hard work, grit and resilience still hold good at all times.

Daniil Medvedev does look to be a very worthy successor to the great trio. There were other notable performances — even among the women players — which resulted in quality tennis. Many congratulations to Ashleigh Barty and Nadal.

Subash Balakrishnan,

Mississauga, Ontario, Canada



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The suggestion to set up a joint commission was made by the PM when Pakistan Foreign Minister Agha Shahi met her.

Indo-Pak Commission

While the talks on a no-war pact are not making any headway, India and Pakistan agreed to set up a joint commission to tackle bilateral problems. The suggestion to set up a joint commission was made by the PM when Pakistan Foreign Minister Agha Shahi met her. Shahi accepted the proposal immediately. While details about the composition of commission — its mandate and how often it should meet — are yet to be discussed by the two governments, the foreign ministers of the two countries are likely to be its co-chairmen. Both India and Pakistan have joint commission arrangements with many countries, but this is the first time the two countries will be setting up an institutional mechanism to tackle nagging bilateral problems. Problems concerning Indo-Pak trade, travel facilities, communications, cultural exchanges and perhaps the settlement of a maritime boundary are likely to be referred to the proposed joint commission.

Billa, Ranga hanged

Billa and Ranga, killers of the Chopra children were hanged simultaneously at Tihar jail in Delhi exactly three years and 159 days after the ghastly offence. The hanging brings down the curtain on one of the most publicised criminal cases in the country. It follows a long drawn legal battle by Ranga, which went up to the Supreme Court.

Pawar on Antulay

The Congress (S) is likely to launch an agitation against the appointment of former Maharashtra Chief Minister A R Antulay as chairman, Irrigation Corporation, according, to Sharad Pawar, president of the party. Talking to newsmen, Pawar said in Mumbai that they would also raise the issue in the proper forums, like the state assembly. He welcomed the CPM resolution adopted at Vijayawada on united opposition on issues of common interest. He said his party would welcome even the BJP and other left parties in this effort.

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All that Medvedev wanted was love while accumulating his own Grand Slam trophies. It’s the one thing he’ll have to do without, apparently, while the search for the GOAT bleats on.

The tyranny of reverence towards tennis’ holy trinity was always going to be tricky for those biding their time in the wings. Daniil Medvedev, perhaps, has picked up the gauntlet of dislodging their pedestal, and is feeling the heat of howling crowds who aren’t sensitive to how their vocal love for the Big Three can end up sounding like jeers for their younger challengers. The three-way debate on who is GOAT will continue unabated, and Rafael Nadal stole a march over Federer and Djokovic by reaching his 21st at Melbourne.

But what the 6-hour-long battle, where the Spaniard came from two sets down to jostle past Medvedev, did to the Russian, showed that in tennis’ fervent dogma for the three presiding divinities, sport’s enduring underdog story has crumbled. So insistent are the fans in their devotion to the trio, that anyone not playing second fiddle to them will have to play the antagonist, and no more.

A disruptor of the near-two-decade-long hegemony, owing to his hard-court consistency, Medvedev is acutely feeling the un-love of the crowds. The 25-year-old who might’ve started out as a fan of the trinity, finds himself in the unenviable position of being good enough to take them apart in Grand Slam finals. But he’s simultaneously hit by the whiplash realisation that his childhood dream where the crowds would root for an underdog as he slayed the giants, is not coming true. Medvedev is uniquely in the hot seat when New York whimsically starts showering love on Djokovic and Melbourne shushes audibly so Nadal can peacefully serve out. All that Medvedev wanted was love while accumulating his own Grand Slam trophies. It’s the one thing he’ll have to do without, apparently, while the search for the GOAT bleats on.

This editorial first appeared in the print edition on February 1, 2022 under the title ‘Three plus one’.



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At stake is the credibility of institutions and it’s up to the Justice Raveendran panel to take the new revelations forward.

The report in The New York Times last week that the Indian government bought Israeli spyware Pegasus in 2017 as part of a $2-billion defence deal revives questions that were raised earlier but never addressed. Last year, an investigation by a global consortium of media groups revealed that Pegasus was used by governments, including in India, for targeting individuals for alleged surveillance. The government stonewalled questions and claimed that the probe was an exercise in “maligning India’s well-established institutions”. A few weeks after the Pegasus story broke, the Defence Ministry informed the Rajya Sabha that it “did not have any transaction with the NSO group,” the Israel-based developer of the spyware. A month later, however, after the matter reached the Supreme Court, Solicitor General Tushar Mehta was more ambivalent. He told the three-judge bench that lawful interception is permitted to prevent terrorist incidents and “whether it’s done through which software etc can’t be a matter of public debate.” The court did the right thing by calling out the use of national security as a free pass and constituted an inquiry panel under former judge R V Raveendran. Now, this expert committee must extend the scope of its investigation to include the questions raised in the NYT report.

Union Minister of Information Technology Ashwini Vaishnaw has maintained that only “lawful interception of electronic communication” is carried out for “national safety”. There is no contesting the government’s mandate to meet security-related imperatives. Surveillance is a part of the security toolbox but, in a democracy, there need to be checks and balances. In the present case, the government’s equivocation doesn’t wash. The issue at hand is not about keeping a watch on the activities of terrorists through established procedures. It is, instead, this: Since those allegedly targeted by Pegasus include Opposition leaders, civil society activists, a former election commissioner, and journalists (including three editors of this newspaper, two current and one former), were any red lines breached to violate these individuals’ right to privacy? Targeting the Opposition’s phones corrodes democracy and so, as SC pointed out, “any restriction must pass constitutional scrutiny”.

The NYT investigation has revealed that the FBI bought Pegasus but discarded its plans to use the spyware last year. Union minister General V K Singh has dismissed the US daily’s probe as one conducted by “supari media”. Singh’s name-calling deserves to be ignored. But, as the SC rightly underlined, “The public is entitled to know whether the spyware was used by the government by any other method other than those permissible under the law”. At stake is the credibility of institutions and it’s up to the Justice Raveendran panel to take the new revelations forward.

This editorial first appeared in the print edition on February 1, 2022 under the title ‘Court & Pegasus’.



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The continuing distress in the labour market, the sharp rise in inequality, the lingering financial stress among the MSMEs, especially those operating in the informal parts of the economy, are issues that need to be explored more exhaustively.

The economic survey 2021-22, tabled by Finance Minister Nirmala Sitharaman in Parliament on Monday, expects the Indian economy to grow by 8-8.5 per cent in the upcoming financial year, on the back of a 9.2 per cent expansion in 2021-22. The Survey’s projections appear conservative when compared to recent assessments of the IMF, which has pegged the economy to grow at 9 per cent, or the World Bank which expects it to grow at 8.7 per cent. As the annual flagship document of the Ministry of Finance, it is disturbing that the Survey does not examine the uneven nature of the recovery in greater detail. The continuing distress in the labour market, the sharp rise in inequality, the lingering financial stress among the MSMEs, especially those operating in the informal parts of the economy, are issues that need to be explored more exhaustively. While the Survey has sought to assure that when it comes to macro-economic stability, India is better placed than it was at the time of the global financial crisis and the taper tantrum, what is less clear is the extent to which the recovery will heal the scars induced by the pandemic in the near term.

While there is always a gap between growth projections and reality, the Survey has rightly flagged the risks to these projections. To begin with, the external environment is likely to be less benign, and financial conditions will tighten considerably. In its recent World Economic Outlook, the IMF has pegged global GDP growth at 4.4 per cent in 2022, down from 5.9 per cent in 2021, with global trade volumes growth expected to fall in 2022. There is also the threat of another wave of infections and the associated impact on economic activity. Elevated crude oil prices are another area of concern — while the Survey has assumed oil to remain in the range of $70-75 per barrel, crude oil prices are currently around $90.

The Survey has, once again, mounted a strong defence of the policy response to the pandemic, arguing in favour of the emphasis on supply-side oriented measures, rather than relying solely on “demand management”. Even so, coming ahead of the Union budget on Tuesday, the underlying message is of continued government support to the economy. The “government has the fiscal capacity to maintain the support, and ramp up capital expenditure when required,” it says. The sharp rise in central government revenues provides it with the necessary fiscal space. However, considering that the general government debt stands at 89.3 per cent in 2021-22 (BE), up from 74.6 per cent in 2019-20, the government needs to remain mindful of its constraints. The upcoming Union budget will be judged on how the finance minister balances the twin objectives of supporting the economy and putting government finances on a credible path of consolidation.

This editorial first appeared in the print edition on February 1, 2022 under the title ‘Ramp up support’.



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Qudsiya Contractor writes: Invocations of the Indian Constitution and one’s rights as citizens alongside religious symbols suggest a deepening of the cultural aspects of a secular democracy

As the election dates close in, there is a scramble among parties to get the social formula right in the selection of candidates. The last few days have seen major political players like the Bahujan Samaj Party, Samajwadi Party and the All India Majlis-e-Ittehadul Muslimeen announcing a significant number of Muslim candidates. The NDA, too, has announced one Muslim candidate. The Muslim-majority districts of Uttar Pradesh are expected to play an important part in the first phase of elections, the results of which may hold the key to power.

This suggests a growing claim for greater political representation from the community and the deepening of secular democracy in a society that is diverse and divided along caste and religious lines. It also seems to suggest that the BJP under CM Yogi Adityanath is under pressure as it tries to consolidate the votes of all caste fragments under the Hindutva banner. But is it possible that competition between Muslim candidates will end up being an advantage for the BJP again? The use of Muslim cultural symbolism by leaders such as AIMIM president Asaduddin Owaisi has been criticised for attempting to rouse communal sentiments. What is the use of community identification by Muslim candidates meant to achieve — separatism or representation?

Electoral competition may not necessarily be bad for Muslims because, as scholars have pointed out, they, like others, tend to vote based on issues rather than the identity of the candidate. Even in a communally-polarised constituency, what matters is local issues of access to public services and amenities. Electoral competition has, in the past, led to a change in patronage politics of the Congress that would field very few Muslim candidates, despite the rising threat of BJP. Politically underrepresented social groups within Muslims have joined other political parties and forged alliances with other traditionally marginalised groups such as OBCs and Dalits to counter the communal agendas of dominant caste Hindus. This has also helped counter the prioritising of personal gain by elite Muslims over addressing local issues concerning equitable development, justice and dignity.

Muslims, like Hindus, are not a homogenous community. Factions based on class, sect and jaat/biradari are part of the Muslim social world. Electoral competition may only create more opportunities for politically underrepresented groups within the community. It might force Muslim candidates to walk the talk in order to keep one’s electoral constituency.

Using Muslim symbols in this context may not necessarily mean stirring communal sentiments. Since these refer to forging a collective identity not violently opposed to Hindus, such symbols could be seen as a way to mobilise Muslim votes with the acknowledgement that being part of a secular democracy also means inclusive development for all citizens. It is an attempt, often found effective in Indian political culture, to forge an identity by stringing together a common experience of marginalisation and political alienation. Invocations of the Indian Constitution and one’s rights as citizens alongside Muslim symbols suggest a deepening of the cultural aspects of a secular democracy.

The BJP and the Sangh Parivar have been actively engaged in appropriating Hindu secular symbols in an attempt to empty democracy of its cultural signifiers. The use of Muslim symbols in this context across parties may be a way to break the cycle of a long-standing political alienation of Muslims, for a more inclusive secular democracy. The new generation of Muslim voters is starting to connect to such an identification in the context of a dominant Hindu right-wing discourse, as opposed to an earlier tendency to downplay their identities when aligning with secular liberal parties.

Even though representation might seem to be at the heart of modern democracies, it will always be a challenge for Muslim politics in a Hindu majoritarian democracy to be acceptable and endorsed. If the thwarting of the anti- CAA protests was a display of how the state uses violence to discipline its subjects, “Muslim” politics requires new ways of making demands for representation. The upcoming elections in UP might just be showing us the way it could be done.

This column first appeared in the print edition on February 1, 2022 under the title ‘Resetting the balance’. The writer is a faculty associate, IIT-Goa.



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Saugata Bhattacharya writes: It shows that post-Covid recovery has stabilised and projects moderate growth. But some risks will need to be addressed

The Economic Survey has evolved into a valuable document and, in recent years, has often presaged the contours and strategy of the Union budget. Even in its truncated form this year, the Survey provides insights into the economic conditions and outlook which are key inputs for the FY23 budget assumptions.

The Survey notes that India’s growth–inflation trade-off is becoming more favourable. Economic recovery has stabilised and is proceeding apace, while prices are expected to moderate in the months ahead. It projects that GDP growth in FY23 will be 8.0-8.5 per cent, moderate and more realistic compared to the IMF’s recent forecast of 9.0 per cent for India. This follows the official estimate in early January of a 9.2 per cent growth for FY22, which the Survey has retained.

However, there are risks that will need to be addressed.

India’s external environment is likely to be less benign than in FY22, and financial markets are likely to remain volatile. As the world comes out of the pandemic and the set of extraordinary policy stimulus measures, the Central banks of many countries, grappling with high, persistent inflation, have reversed their accommodative monetary policy stance. The US Federal Reserve is expected to aggressively tighten its monetary policy, starting with hiking its policy rates at its March 2022 meeting and, thereafter, start extracting the huge infusion of liquidity during the pandemic period.

In its recent update of the World Economic Outlook, the IMF projects that the world GDP growth will decelerate from 5.9 per cent in 2021 to 4.4 per cent in 2022. China’s slowing economy is expected to contribute to this, but the large developed markets are also decelerating. India remains the only bright spot, with growth expected to continue at 9.0 per cent (or even the Survey’s 8.0-8.5 per cent range). The WTO forecasts global trade volumes to moderate, falling from 10.8 per cent in 2021 to 4.7 per cent in 2022. This is going to be mostly led by a drop in emerging markets. Note, too, that the high demand for consumer goods during the pandemic is likely to cycle back towards travel and hospitality services, meeting pent-up demand.

Even more importantly, India’s nominal growth in FY22 is 17.6 per cent, which implies an increase of roughly Rs 30 lakh crore over the FY20 pre-pandemic level. In terms of the segment of economic activity which is expected to contribute to this increase in nominal incomes in FY22, both consumption and fixed investment are expected to add about Rs 10 lakh crore each and government spending about another Rs 6 lakh crore. How this additional income is likely to be distributed, especially for lower-income households, will have implications for durable recovery and aggregate demand going forward. The FY23 budget is likely to project a nominal growth rate of 13–14 per cent on which the fiscal assumptions will be based, assuming an 8.3 per cent real GDP growth and 4.5 per cent inflation rate.

On inflation, prospects seem a little better in FY23, with our base scenario of a gradual fall from the current high levels of about 6 per cent in Q4 of FY22, to an average of 4.8 per cent in FY23. However, there are risks. Crude oil prices — indeed, the entire energy complex of gas and other hydrocarbons — remain a source of concern. Brent crude is likely to remain elevated so long as current global geopolitical tensions continue, but are unlikely to lower significantly due to a continuing demand–supply imbalance (the International Energy Agency had recently forecast that demand in 2022 is likely to be higher than the pre-Covid levels, particularly if travel demand resumes), coupled with very moderate investments in new sources of hydrocarbons. China’s growth slowdown had cooled the prices of some key metals, but more stimulus measures are already underway, and some growth recovery might again take these prices up. In addition, the broader move towards electrification and decarbonisation will keep the prices of another set of metals high. Shortages of chip and electronic components are likely to continue for some time. The good news is that logistics and the operational costs of cross-border trade have come down.

In light of these expectations, the importance of the Union Budget, and more broadly the fiscal space, is evident in the sequencing of the Survey chapters, with the fiscal developments following the lead chapter on growth and aggregate demand. The role of monetary policy will largely be in keeping financial conditions stable, even as the RBI begins a gradual, calibrated normalisation. While the Centre’s balance sheet remains strong, growth in tax and other receipts might be expected to moderate in FY23, given the economic conditions noted above, and a possible need to further cut excise taxes on fuels. Be that as it may, the Centre has headroom to maintain relatively high expenditure without having to take recourse to a large bond borrowing programme, which might take interest rates much higher. The very large estimated cash balances with the RBI at present are likely to be augmented by direct tax and GST collections in March, and will help to finance the fiscal deficit in FY23. Proceeds from the LIC IPO will either add to these balances in FY22 and or become an additional revenue source in FY23, opening up the fiscal space to provide additional support to economically vulnerable segments, which is likely to be required.

On reinforcing India’s medium-term “potential growth” prospects and the associated “output gap”, the Survey notes longer-term uncertainty in the post-Covid world due to technology, supply chains, geo-politics and other shifts. The ability to sustain a 7-8 per cent growth over many years without the economy overheating and the consequent need for policy tightening will determine income potential and distribution over the next decade. The Economic Survey notes that MSMEs account for 33 per cent of India’s nominal Gross Value Added (GVA), and will be a key pillar for supporting growth and employment. This segment will be a key beneficiary of the Union budget’s pivot towards capital spends during the last couple of years, a statement of the government’s commitment to a growth revival plan, which is expected to continue even in FY23. Backing this is a programmatic approach to creating infrastructure through a pipeline of projects, supported with a financing outlay, including the planned asset monetisation. The “Twin Balance Sheet problem” of impaired corporates and banks had hindered capex programmes for many years but has now been significantly resolved. Conditions are favourable for the next capex cycle and will need multiple interventions, supported by industrial, trade and skilling policies to further ease business operating conditions. The Survey “particularly highlights the importance of process reforms” to raise India’s competitiveness and growth trajectory.

This column first appeared in the print edition on February 1, 2022 under the title ‘The room to grow’. The writer is executive vice president and chief economist, Axis Bank. Views are personal



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Priyadarshini Singh writes: The nation can mean much more than may be discerned from voting choices and public statements of political leaders.

Do most Indians see India as a Hindu and Hindi nation?

Statements by some political leaders and recent survey research seem to suggest so. At the inauguration of the Kashi Vishwanath corridor project, Prime Minister Narendra Modi declared that India is defined by Hindu tradition and history. Alongside, Rahul Gandhi stated that a distinction must be made between the “good”, truth-seeking Hindus and the power-seeking “Hindutva-vadis”. Pew Research survey findings on religion and nationhood in India in July 2021 highlighted a similar conclusion. On the one hand, valuing religious diversity (84 per cent) is among the key attributes of being an Indian along with respecting elders (88 per cent) and having an Indian ancestry (70 per cent). On the other hand, a majority also believes that being a Hindu (56 per cent) and speaking Hindi (57 per cent) are important. Among Hindus, the support is higher — for 64 per cent, being a Hindu and for 59 per cent speaking Hindi is important for Indian-ness.

Understanding the meaning of this Hindu-Hindi idea of India at the grassroots is critical, particularly because it has electoral implications. As we have seen over recent decades, voting choices and electoral victories of parties are used as insights into the everyday meanings of nation and nationhood.

My research highlights that for ordinary Indians, the idea of India has many layers. It includes cultural and civic elements; some parts of it determine political choices while others don’t. Being an Indian is not just about being a part of a homogenous national community. India is a community of communities. When people talk about India, they often speak from the standpoint of multiple community locations. For example, one respondent talked about corruption in national politics but in terms of how it impacted him as a Gujjar, living in a poor village. The importance of one’s own religion (Hinduism) and language (Hindi) for being an Indian highlighted in the Pew Research data is likely emerging from this idea. This

In one research village in Rajasthan, upper castes accepted an important demand made by a Dalit farm labourer and tea-stall owner. He said that the village should nominate a Dalit to contest the village sarpanch election (a general seat) because Dalits are also a part of India. That is, they are citizens not just in their individual capacity but also as Dalits, just as others are as Hindus, Brahmins, Muslims, Shias, etc. Similarly, during discussions on national pride with people working on farms, small dairies, shops, etc, it emerged that their idea of Indian-ness included many different types of identities. They are proud of India not only on “national” issues like “defeating” the British or the Taj Mahal but also of their community identities. As one respondent in a village in Sawai Madhopur district said, “if we are talking about India, we are from Rajasthan, we should be proud of being Rajasthani”. While stating this, he strongly brushed aside his friend who was telling him that he should highlight Hindu-Muslim peacefulness in their village. Another respondent, in a village in Karnataka, said that she is proud of India because “it has everything — there is Kashmir, it has gold, iron, silver, good weather and food”. In fact, some of the Pew Research data also highlights this. Fifty-three per cent of Indians believe that religious diversity benefits India and only 24 per cent believe it harms us. Almost all Indians are expressly proud of their states (95 per cent) and their religion (94 per cent).

The critical thing the research highlights is that contexts impact the way people talk about the nation. And the context could include the people with whom one is discussing the idea of the nation or the political dynamics of the localities or even professional backgrounds. In my field sites, areas where there was a history of tension between religious groups, many respondents expressly said that they were proud to be Indian because of the good relationship between communities; in other sites, this was rarely mentioned.

The nation can mean much more than may be discerned from voting choices and public statements of political leaders. One respondent, a Gujjar diary owner in Sawai Madhopur, educated till Class XI, said that national culture cannot be homogenised and a person born in India is an Indian because “where will the others go”. His illiterate wife aggressively said that everyone has a different language. Differentiating between the political and non-political aspects of national pride, he said that “fights between groups are about politics, now even brothers fight”. His political support, however, tended towards a Hindu-centred idea of nationhood. Yet, he was proud of India because “it has everything, dharma nirpekshata (secularism), sanskriti (culture), vikas (development)… yeh toh sone ki chidiya hai (a golden bird)”.

Above all, I discovered that the idea of India is meaningful because it has immense moral significance. It is the ideal horizon — a hope, a promise of a future defined by dignity, equality, justice and socio-economic development. It’s this emancipatory promise of nationhood that resonates across groups. Prejudices and differences and how they project onto politics co-exist alongside valuing diversity. But the nation is not just its politics, and an Indian is not just who they vote for. Alternative ideas, inclusionary narratives exist even if the corresponding politics does not.

This column first appeared in the print edition on February 1, 2022 under the title ‘Ideas of Indian-ness’. The writer is fellow, Centre for Policy Research, Delhi



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Upendra Baxi writes: It reaffirms that nuclear war cannot be won and must never be fought and recommits to the principles of non-proliferation

The nuke-wary people of Earth have not risen in unison to welcome the statement made on January 3 by the five permanent members of the United Nations Security Council (P5). Yet, the assurance about “avoiding an arms race and not targeting each other or any other state”, and preventing the proliferation of nuclear weapons, is important.

The P5 statement reaffirms that a “nuclear war cannot be won and must never be fought” because of its “far-reaching consequences”. The statement further reaffirms that nuclear threats must be addressed and emphasises the importance of “preserving and complying with our bilateral and multilateral non-proliferation, disarmament, and arms control agreements and commitments”. The statement also expresses a commitment to the group’s Treaty on the Non-Proliferation of Nuclear Weapons (NPT) obligations and “to prevent the unauthorised or unintended use of nuclear weapons”.

Declaring that an arms race would benefit none and endanger all, the P5 have undertaken to: (1) “work with all states to create a security environment more conducive to progress on disarmament with the ultimate goal of a world without nuclear weapons with undiminished security for all”; (2) “continue seeking bilateral and multilateral diplomatic approaches to avoid military confrontations, strengthen stability and predictability, increase mutual understanding and confidence”; and (3) pursue “constructive dialogue with mutual respect and acknowledgement of each other’s security interests and concerns”.

This is a major statement. It is not a binding resolution and reiterates some of the core obligations of the NPT, while a review of the NPT remains postponed till August due to the Covid-19 pandemic. But none of these factors diminish the urgency and the political significance of the statement, especially given the unimaginable danger posed by the 13,000 nuclear weapons currently believed to be held by a handful of countries, and the growing spectre of loose nukes, which may be deployed by armed terrorist groups for nefarious purposes.

The P5 statement was followed by a warning from UN Secretary-General António Guterres that nuclear annihilation is “just one misunderstanding or miscalculation away”.

Bold action on six fronts was necessary, he said. First, that member states should chart a path forward on nuclear disarmament; second, they should agree to new measures of “transparency and dialogue”; third, they should address the “simmering” nuclear crises in the Middle East and Asia; fourth, they should strengthen the existing global bodies that support non-proliferation, including the International Atomic Energy Agency (IAEA); fifth, they should promote the peaceful use of nuclear technology, and finally, they should remind “the world’s people – and especially its young people – that eliminating nuclear weapons is the only way to guarantee that they will never be used”.

Gandhi taught us that the right to peace is an essential framework for all human rights and that waging peace is everyone’s work, regardless of vocation, profession, or discipline. Peace is necessary for rights, freedom, equality, and justice and for that reason, we need what Justice Oliver Wendell Holmes Jr. called “education in the obvious” — namely, peace education. This is required at multiple levels, ranging across the planetary, global, supranational, regional, national, and local levels of social cognition and action. These spheres are intensely related, critical and transformative. As Betty Reardon writes: “… the general purpose of peace education… is to promote the development of an authentic planetary consciousness that will enable us to function as global citizens and to transform the present human condition by changing the social structures and the patterns of thought that have created it.” If this “transformational imperative” is placed at the centre of peace education, there will be a “profound global cultural change” that will influence ways of thinking, world views, values, behaviours, relationships, and the structures of public order — “a change in the human consciousness and in human society of a dimension far greater than any other that has taken place since the emergence of the nation-state”.

Critical peace education should perform a number of tasks. Among these are: Bearing witness to negativity (that is, telling the truth about the realities and inequalities of this society); throwing light on spaces for possible actions that can challenge these realities; and acting ( to borrow the words of the introduction to Rita Verma’s 2017 book Critical Peace Education and Global Citizenship) as the “critical secretary of the people, programmes and practices that are actually interrupting the dominant relations and building workable alternatives to them in educational institutions, communities and other sites”. Instead of creating cadres of techno-public intellectuals, peace education requires the creation of a mass of “critical secretaries” to people’s movements.

Gandhi would have certainly welcomed the slender but significant UN Resolution 39/11 (November 12, 1984), which “solemnly proclaims that the peoples of our planet have a sacred right to peace” and equally solemnly declares that the “preservation of the right of peoples to peace and the promotion of its implementation constitute a fundamental obligation of each State”. The subsequent UN Resolution 53/243 B, declaring a programme of action for a culture of peace (1999) also owes a great deal to Gandhi’s legacy and mission. May the managers of our education system no longer privilege ignorance and the promotion of social indifference, resilient even now.

This column first appeared in the print edition on February 1, 2022 under the title ‘The right to peace’. The writer is professor of law, University of Warwick, and former vice chancellor of Universities of South Gujarat and Delhi



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C. Raja Mohan writes: Until now, India had the luxury of treating its foreign, economic and strategic policies as separate domains. It needs to integrate its financial, trade, technological, security and foreign policies

As India returns to a high growth path after a slowdown in the last decade, its geopolitical salience in the world will continue to rise. India’s GDP has grown manifold since 1991-92 when it stood at $270 billion. Today, India’s GDP is $3.1 trillion and could cross, according to some estimates, $8 trillion by the end of this decade.

India is now the sixth-largest economy and could become the third-largest by the end of the decade if the current projections hold. India’s total trade, which was about $38 billion in 1991-92, is expected to touch $1.3 trillion this year. This is about 40 per cent of India’s GDP and underlines the fact that India is more deeply tied to the world than ever before.

But the GDP’s journey from three to eight trillion will not be a linear process; nor would it be easy to secure India’s interests amidst the deeper integration with the world. That the world itself is in a geo-economic churn makes the transition a challenging one.

Elevating India to a higher economic orbit would involve a recalibration of its assumptions, taken for granted in the last three decades of reform. For, the international context in which India has rapidly grown has begun to change. If globalisation was seen as inevitable and irreversible during the last three decades, India’s task now is to adapt to significant changes in the global economic order.

First, a word about the current buzz on geoeconomics. It was Edward Luttwak, the well-known American strategist, who triggered a global discourse on the idea of geoeconomics in a seminal article in 1990 amidst the end of the Cold War and a new wave of economic globalisation.

Luttwak — who is speaking to the Indian strategic community this week on the legacy of the Indian strategist late K Subrahmanyam — addressed the emerging consensus on the new importance of economics in global affairs, as opposed to the dominance of military competition during the Cold War years.

The rapid economic rise of China in the last three decades and Beijing’s success in leveraging its growing economic clout for political gain is widely seen as a classic example of geoeconomics. But Luttwak was not really talking about economics replacing politics in the international system. Luttwak was offering a more powerful argument on the relationship between geopolitics and geoeconomics.

Luttwak warned against the excessive optimism that was enveloping the post-Cold War era — that economic interdependence would eliminate the contestation among nation-states. The idea of a borderless world promoting perpetual peace and prosperity across the world had indeed become a powerful force amidst the fall of the Berlin Wall and the collapse of the Soviet Union. Luttwak argued that the “logic of conflict” between states is likely to persist in the age of globalisation if only in the “grammar of commerce”. He suggested that the emphasis on “national interest” will remain as powerful in the economic domain as in the geopolitical domain. He also insisted that states will continue to do what matters more within their frontiers than the presumed imperatives of global good.

Luttwak posits that zero-sum situations that prevail in military conflicts are not exclusive to geopolitics. They also exist in the economic domain inevitably triggering conflicts, some of which could escalate to the military level. But the popular notion of geoeconomics as a metaphor for the replacement of politics by economics endures. The latest example is the recently issued document on Pakistan’s national security policy.

Pakistan’s real challenge is not replacing geopolitics with geoeconomics. What Pakistan needs is a long-overdue transition from a rentier national security state to a developmental state. This, in turn, demands ending the dominance of the military, the feudals and a kleptocratic elite over the country’s economy. Rearranging the Pakistani state is in the end a political task rather than an economic one.

Luttwak’s warning against illusions of economic interdependence and globalisation have been borne out by major changes in US-China relations in recent years. The dramatic expansion of economic interdependence between China and America over the last four decades — what some called “Chimerica” — was the principal evidence for the thesis that geopolitics and ideology no longer mattered.

That “capitalist” America and “communist” China would form such an expansive economic partnership reinforced by a massive linkage between their business elite and civil societies reinforced the power of geo-economics. Chimerica was held up as an efficient economic fusion that underscored the virtues of economic globalisation. That mythology is now being shredded by developments in the US and China.

Economic nationalism has re-emerged in both countries today. In the US, President Joe Biden has persisted with his predecessor Donald Trump’s emphasis on “America First” economic policies. He has gone one step forward by making the effort at rebooting America a more purposeful one. The US is also strengthening domestic research and industrial capabilities to compete more effectively with China.

Biden is resisting strong pressures from the American financial capital and other interested groups to restore the old economic engagement with China. It is not the US alone that is backtracking from globalisation. China too has adopted the economic strategy of “dual circulation” that focuses on strengthening domestic capabilities and reducing exposure to external factors.

The question of China has also shaped India’s recent policies on free trade. At the end of 2019, India has walked out from the Regional Comprehensive Economic Partnership (RCEP) suggesting that the costs of joining a China-centred regional economic order are unacceptable.

Although there is widespread criticism of India’s decision to turn its back on Asian economic integration, there are others who share Delhi’s concerns about China’s dominant economic position. In a recent book, China’s Rise and Asia’s Decline, William Bratton argues that the short-term benefits for Asia from China’s growth might be temporary and will be overshadowed by the long-term costs of economic, industrial, financial, and technological dependence on China.

After abandoning RCEP, Delhi has turned towards free trade agreements with countries like Australia, Britain, UAE, and Israel. This must be seen as the beginning of a process of deepening India’s engagement with countries whose economies are complementary. Trade liberalisation with Europe and the US will be difficult but important next steps.

India is also arguing, much like the US and China, that no large country can simply abandon domestic manufacturing to other countries in the name of economic efficiency and globalisation. India is now taking a number of initiatives to promote domestic manufacturing in a range of sectors — from mobile phones to armaments — under the banner of “Atmanirbhar Bharat”.

India’s selective trade arrangements and the policies to promote domestic manufacturing have drawn much criticism at home as a dangerous return to economic protectionism and deglobalisation. While those arguments must continue, they must be related more closely to the structural changes in the international economic order.

Until now, India had the luxury of treating its foreign, economic and strategic policies as separate domains pursued by different bureaucracies with different agendas. Adapting to the current global geo-economic churn demands that Delhi find better ways to integrate its financial, trade, technological, security and foreign policies. Above all India needs a strategy that can respond to the imperatives of building domestic capabilities, developing geo-economic partnerships, and constructing geopolitical coalitions with like-minded countries.

This column first appeared in the print edition on February 1, 2022 under the title ‘Doing business in a new world’. The writer is a contributing editor on international affairs for The Indian Express



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One of the big takeaways in Budget 2022-23 is the provision related to cryptocurrencies or virtual digital assets. Profits from all virtual digital assets will be taxed at 30% while every crypto transaction will also attract 1% TDS. Finance minister Nirmala Sitharaman simultaneously announced the issuance of the RBI digital currency sometime this year, which is not to be confused with private cryptocurrencies. In fact, in the post-Budget press conference, Sitharaman made this distinction very clear, emphasising that the only digital currency is the one that RBI will be issuing. 

This is certainly a welcome move. For, there was considerable lack of clarity around cryptocurrencies given the absence of a regulatory framework. Plus, there were previous indications from the government that it wanted to ban all private cryptocurrencies. However, cryptos are a reality and crores of Indians have already invested in the virtual digital assets. Thus, banning them completely would have been counterproductive.

In that sense, the Budget announcement strikes a good balance by treating cryptos as an asset class alone and taxing them at the highest bracket. This clears the air around the legality of cryptos, but at the same time creates substantial disincentives for investors looking to make a quick buck. Add to this the launch of the RBI digital currency and the message is clear: The government continues to see private digital assets as risky but will reluctantly live with them. Given that cryptos aren’t backed by central banks and can be extremely volatile assets, this is a sensible approach. Allowing investors with appetite for risk to continue to dabble in cryptos while clarifying the red lines is the best that the government could have done. This will also enable innovations in the underlying technology. A proper regulatory framework for virtual digital assets flowing from the Budget guidelines is now eagerly awaited.    >



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The key message of the Economic Survey is that in 2022-23, the economy is expected to grow between 8-8.5%, mainly on account of vaccination-triggered normalcy, robust exports and the availability of fiscal space for GoI investment. These are reasonable assumptions and lend credibility to  projections. But the forecast also assumes there won’t be any more shocks. First, the Survey expects monsoon to be normal. Second, it assumes key central banks in rich countries will ensure that financial markets don’t panic during liquidity tightening. Third, it says the average price of oil will drift down from the current $89/barrel to about an average of $70-75.

Even assuming all these hold, there are implicit assumptions in the Survey. These are less convincing. GoI assumes that the pandemic’s economic cost is entirely temporary. That vulnerable economic segments will bounce back. This is inconsistent with data on both employment and overall consumption. Private consumption in 2021-22 is not expected to reach the level that existed two years ago even though the overall GDP will be higher. The underlying cause shows up in the employment data, be that of GoI or CMIE. GoI’s quarterly surveys on urban employment show that jobs have shifted to the informal sector. In the January-March 2021 survey, there’s a 2.4 percentage points dip over a year in formal sector jobs to 48.1%. Those jobs have shifted to the informal sector. CMIE’s data covers the period till September-December 2021. It shows that over two years, there’s more than a 2 percentage points fall in the labour force to 40.3% of the population. With people dropping out of the labour market, and informal sector jobs offering low and uncertain incomes, consumption hasn’t kept pace with overall GDP. This also has implications for revival of private investment. Even if banks have lendable funds, industry will wait for robust demand.

The recovery in overall GDP, however, has provided GoI with fiscal space arising from buoyant revenue. Therefore, in addition to capital expenditure, it needs to use the fiscal space to help contact-intensive services sectors to get back on their feet. This will also improve the job market and feed into private consumption. Recovery has been good. But worries remain, domestic and possibly external.



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The Union Budget this year will be presented while EC’s Model Code of Conduct is in force across five states, including India’s most populous one, UP. In 2017, EC had forbidden GoI from announcing state-specific schemes or broaching achievements relating to the five poll-bound states in the Budget speech. The 2012 Budget, now infamous for Pranab Mukherjee’s retrospective taxation fiasco, was postponed to March 16 for state polls to conclude. This year, EC hasn’t issued specific directions like 2017 though MCC’s usual strictures against announcing “any financial grants or promises” that have the effect of influencing voters should still apply.

But elections have other effects on budgets. For example, UP’s and Punjab’s discoms are among the most debt-ridden. They urgently require reforms worked out for the electricity sector to come into effect. But these reforms are usually unpopular, because they attack subsidies, especially those given to farmers. So, it is almost certain today’s Budget will steer clear of signalling anything on electricity reform. Sometimes ‘election budgets’ do the other thing – when MCC is not in force, they give generous doles. The best recent example is Congress’s 2008 Budget – general elections were in 2009 – that announced the farm loan waiver. That sop was thought to have helped Congress come back to power. But when Congress increased allocation for food security in the 2013 Budget – general elections were in 2014 – and followed it up with a food security law, voters remained unimpressed and the party was thrashed.

The lesson here is that sops alone can’t win elections, and sometimes you can win elections even without competing on giving the best sop. In the election year 2019, Congress came up with the basic income transfer scheme, Nyay. But BJP’s Budget proposed a limited income transfer scheme to farmers. BJP won a thumping majority – thanks to other factors.

However, BJP also won in 2019 despite elections being held in the middle of slowing GDP growth. This should not be seen by parties, including BJP, as indicating that the economy is irrelevant. It’s very, very relevant most times because it is one of the factors that determine how voters feel about themselves. UP polls, being held amidst job losses and rising inflation, will be a test of the economy-election hypothesis.



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The most important feature of this Union Budget is that it has a unifying theme. It is neither a collection of outlays on populist welfare schemes nor a statement of assorted changes in the direct and indirect tax regime. The unifying theme is to lay the solid foundation for achieving our vision of a digitally empowered India with world-class infrastructure and globally comparable education and health sectors in 2047, when we celebrate the centenary of our Independence. It is a Budget that focuses on the long-term while at the same time addressing the immediate challenges thrown up by the worst shock in a century, caused by Covid-19. It has risen above being a partisan Budget. Instead, it has kept its gaze fixed, laser-like, on the country’s principal goals and objectives.

The four priorities, which have driven the Budget’s agenda, are essential components of this unifying theme. The Gati Shakti master plan, its priority, seeks to provide a seamlessly integrated world-class physical infrastructure to meet the logistics need of a rapidly growing economy. The rapid expansion and modernisation of the seven constituent sectors of this master plan — roads, railways, airports, ports, mass urban transport, waterways and other logistics dimensions — will have a productivity-enhancing and employment-generating impact. In addition, it will make Indian business globally competitive and help boost exports and remove bottlenecks in supply chains, thereby helping to bring down inflationary pressures in the economy. It is important to remember that the recent rise in the inflation rate is not a result of excess demand, but reflects supply-side constraints. This is true not only of India, but globally as well.

Therefore, the Budget has announced a whopping increase of 35.4% in government capital expenditure for 2022-23 (FY23) over the previous Budget estimate. Even when compared to the higher revised estimate of 6.02 lakh crore (risen due to the write-off of Air India’s debt), it still represents a substantial increase of 25%. This comes on top of a sharp increase in public capital expenditure in 2021-22. This amply demonstrates this government’s commitment to not pander to short-term populism, but to build the strongest foundations for long-term, sustained, rapid and equitable growth of the economy.

Infrastructure development generates employment. It crowds in private investment which, in turn, again creates jobs. Additionally, a world-class infrastructure and logistics network lowers costs for corporates and helps them become globally competitive. This allows them to ramp up exports, which again are employment-intensive. The finance minister stated that a key component of the government’s threefold vision for India@100 is: “Relying on virtuous cycle starting from private investment with public capital investment helping to crowd-in private investment.” The Budget seeks to accelerate this virtuous cycle, thereby, generating massive multiplier effects, which will boost both growth and employment.

In a similar vein of giving India@100 a globally comparable education system and enabling us to reap the demographic dividend, the Budget has increased the outlay for the education sector to more than 1 lakh crore, representing a 12% rise over the Budget estimate of FY22. Combined with the digital ecosystem for skilling and livelihood; setting up 750 science and math virtual labs; 75 skilling e-labs in FY23 and facilitating “Drone Shakti”, the Budget gives a strong fillip to the implementation of the national education policy that aims to renovate and rejuvenate the country’s education system. The health sector outlay, having been raised by more than 7% in FY22, is being further ramped up by 16% over last year’s Budget estimate to ensure better living conditions for the “aam aadmi” (common man).

Another aspect of developing a vibrant modern economy is to bolster the growth of the domestic manufacturing sector. To this end, the government had already announced its ambitious Production Linked Incentive (PLI) Scheme in 14 sectors with an outlay of about 2 lakh crore.

This Budget further enhances this focus in several ways. It provides an additional outlay of 19,500 crore for the production of solar power equipment to minimise imports; it earmarks 68% of the total defence capital budget for procurement only from domestic manufacturers; it reduces import duty on several imported components for export-oriented sectors such as diamonds, gems and jewellery and textiles; it also raises duties on imported goods such as umbrellas, which compete with our small enterprises; the Budget does away with anti-dumping surcharges on intermediate products whose global prices have risen to lower production costs domestically; over 25,000 compliances have been reduced and 1,486 laws repealed to further improve the ease of doing business; finally it rationalises the exemption and import duty structure on capital goods, thus making domestic production more competitive. All these measures will permit a globally competitive manufacturing sector to expand in India. That will also generate jobs, with approximately six million additional jobs coming from the 14 PLI schemes already announced.

There are also some direct measures for improving the lives of the common person. The Jal Jeevan Mission, which will enable tap water to reach an additional 38 million households, has been allocated an additional 60,000 core in FY23 over the 50,000 crore in FY22. Under the Ayushman Bharat Digital Mission, an open platform for the national digital health ecosystem will be rolled out in FY23. 7,800 crore has been allocated to the PM Jan Aarogya Yojana that provides subsidised health insurance to the less well-off.

This Budget successfully balances the requirements for accelerating growth while taking care of equity. At the same time, it addresses immediate post-pandemic challenges while laying the foundations for a New India that will meet the aspirations of its young population.

Rajiv Kumar is vice-chairman, NITI Aayog

The views expressed are personal



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A focussed, business-like approach to the Budget at a time when there was pressure to come up with a populist one shows the maturity and sagacity of the Narendra Modi government. It leaves no doubt that the government is clear on long-term objectives and not too perturbed by short-term disruptions, and that it is committed to putting India on the trajectory of a high single-digit growth rate on a sustainable basis.

The Budget is high on policy stability, predictability and trust-based governance. This is evident from the fact that it has left all important provisions related to direct and indirect taxation unchanged. Government after government has tweaked the tax regime in successive budgets, but the finance minister (FM) has changed the narrative this time. The government has reaffirmed its commitment to keeping tax rates low and, at the same time, easing tax compliances by giving an opportunity to taxpayers to rectify their tax return, subject to a few conditions.

The government has also decided to follow a sound litigation management policy and declared that if a question of law is pending before a jurisdictional high court or the Supreme Court, the tax department will not file any appeal in a matter involving the same question of law till the time it is settled. Stable and predictable policies play an important role in engendering private economic decisions and fostering economic growth.

While there are many takeaways from the Budget, the continued emphasis on public capital expenditure (capex) is one of the highlights. The FM reiterated that private capital expenditure is still weak, and the government will have to do the heavy lifting. Public capex has been increased by a whopping 35% to 7.5 lakh crore for 2022-23. Together with central government grants and aids to state governments for capital expenditure, this figure goes up to 10.68 lakh crore. As a result of this, private capex may take off sooner than expected. This will catalyse growth in many business ecosystems. The Economic Survey 2021-22 has already showed that there has been an uptick in bank credit growth.

Micro, small and medium enterprises (MSMEs), which are the backbone of the manufacturing sector, have been more severely impacted by Covid-19. Keeping this in mind, the government has extended the Emergency Credit Guarantee Line by one additional year to March 31, 2023, with additional 50,000 crore for hospitality and related sectors that were hit the hardest by the pandemic. Credit guarantee for micro and small enterprises (CGTMSE) has also been revamped. Thus, the ameliorative measures in the Budget are extremely targeted, bringing efficiency in the use of taxpayers’ money.

The government has also struck a fine balance between capital expenditure and fiscal consolidation. Fiscal deficit for FY 22-23 has been projected at 6.4% of the Gross Domestic Product (GDP) and the government remains committed to bring it below 4.5% of the GDP by 2025-26. The glide path is going to be smooth and gradual. The Goods and Services Tax (GST) collection of 1.41 lakh crore in January 2022, the highest since the inception of this transformative tax regime, assures us of the strength of economic recovery post-pandemic. Hence, there should not be any negative surprises on the revenue front in the coming financial year. We must bear in mind that the current average tax rate under GST is around 11.6%, which is much below the revenue-neutral rate of 15-15.5% calculated by an expert body at the time of its implementation. Therefore, there is enough room to further increase GST collection, should the government choose to.

Nowhere is the Budget as future oriented as when it talks about urbanisation. We all know that our top six cities are bursting at the seams and all additional expenditure being incurred by their governments is to mostly make them liveable for the existing population.

The FM rightly said that our tier-2 and tier-3 cities will have to step up to shoulder the responsibility of ongoing urbanisation. Cities and towns can be our future engines of growth only when they are properly planned, inclusive and operate on sustainable principles, not when they present a picture of squalor and apathy.

The emphasis on new building by-laws, revamped town planning and creating centres of excellence in these areas in leading academic institutions through the grant of 250 crore to five such institutions show the commitment of the Modi government in this area.

It is evident from the Budget speech that the PM Gati Shakti is going to be the linchpin around which the government will build a world-class, seamless, multi-modal transport and logistics infrastructure, based on clean energy. One of the reasons why our manufacturers are not globally competitive has to do with high logistics costs and broken domestic supply chains. The share of logistics costs right now is around 14% of GDP and the government is committed to bringing it down to 8-9%. Gati Shakti, with its focus on seven engines (sectors), will bring down logistics costs, reduce tedious documentation and enable lean inventory management.

In her speech, the FM said that this Budget will set the template for the next 25 years, from India@ 75 to India@100, the 25 years of Amrit Kaal. If India commits itself to follow this template of high public capital expenditure, control on populist measures, stable and predictable tax regime and government policies, and a single-minded focus on reforms, this Budget will be remembered as the trailblazer.

Gopal Krishna Agarwal is the Bharatiya Janata Party’s national spokesperson on economic affairs

The views expressed are personal



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India’s recovery from the coronavirus pandemic has been nothing less than spectacular. More than 1.7 billion doses of the vaccine have been delivered in less than two years, and a food crisis has been averted by executing the world’s largest free food grain distribution programme. Thanks to the fiscal stimulus, and impressive corporate performance, the Indian economy is the fastest growing among all large economies, according to the International Monetary Fund. Foreign money has poured in, and a record number of unicorns were born last year. The dynamism of startups and entrepreneurs is palpable.

Yet, challenges such as large- scale job creation, support to struggling micro, small and medium enterprises (MSMEs) hit by the pandemic, and making up for the two-year education backlog of school children remain. The objective of the Union Budget is, then, to balance the imperatives of meeting these immediate challenges while also laying the foundation for long-term sustainable, inclusive growth. This has been done eminently well.

Welfare spending is up substantially, and so is spending on capital items such as roads, railways, ports and airports. The predominant theme of this Budget is indeed that of “capex”. I believe that India will see a resurgence of capital and investment spending in the coming decade, both from the public and private sectors. The total public capex spending next year will reach nearly 3% of the Gross Domestic Product (GDP), perhaps even higher in the coming years. This thrust on capex has not compromised the fiscal situation, which is an admirable feat. The finance minister said that the government is well on its way to meeting the fiscal deficit target of 4.5% of the GDP by 2026.

If anything, the revenue estimates are conservative, and will spring a positive surprise in the coming year. Just this past fiscal, the total gross revenue was 3 lakh crore more than what was budgeted. And nominal GDP, or national income, grew by three percentage points more than projected last year.

Another notable theme in this year’s Budget has been the proposals that are forward-looking, future-oriented, and address the aspirations of future generations. The introduction of blockchain-based digital currency is one example. India will be one of the few countries to start using digital currency. This also gives a boost to the immense talent that is working in this cutting-edge field. Electronically linking all one-and-a-half lakh branches of the post office bank is another example of an aspirational initiative. That is sure to connect rural savers with mainstream financial services.

The floating of a sovereign green bond is a third example. It shows an innovative form of financing, and an enlightened policy, which will nudge the economy to transit toward a greener and cleaner growth path.

The agenda of climate action is front and centre for the government. India’s ambition for a share of renewable energy in the national energy mix is one of the boldest in the world. Drones as a service initiative, a national e-portal for skilling and training, and national policy on battery swapping are further examples of futuristic thinking.

While there is an emphasis on investment for future growth and aspirational initiatives, the welfare aspects have not been ignored. Indeed, the recognition of the need for a national tele-mental health counselling programme is admirable and progressive. Likewise, the strengthening of the anganwadi system is also welcome.

India’s recent strong performance in exports, robust collections in Goods and Services Tax , high growth in major economies in the world, all these are good tidings. The Budget has laid the foundation for sustained and inclusive growth, with a focus on public spending on infrastructure, which will surely induce private investments in the coming years.

Kumar Mangalam Birla is the chairman of the Aditya Birla Group

The views expressed are personal



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The finance minister (FM)’s Budget speech was briefer in length than in previous years. However, it covered a lot of ground across sectors, and so, one must choose a few noteworthy themes. Perhaps the most far-reaching element of the statement was the willingness to continue with a 6% plus fiscal deficit. The present government has generally believed that it possesses competent execution capabilities and can, therefore, manage large capital expenditure plans efficiently.

Consequently, it has been prepared to live with a very high level of capital expenditure of 7.5 lakh crore in FY 23. This element, if well executed, has the power to keep India at an 8% trajectory of growth.

Within the various areas that one can spend money on, this government has historically over-delivered on the implementation of road and logistics projects. Echoing the confidence that comes from this, the finance minister dedicated 20,000 crore for highways, 400 new Vande Bharat trains and several initiatives for logistics. Another pet project, and one I am a fan of, is the affordable housing programme under the Pradhan Mantri Awas Yojana ( 48,000 crore for this).

Another interesting topic in the speech was the idea of sustainability. In the wake of the government’s commitments at the COP26 climate conference, we now see serious capital touching on various aspects of the climate crisis. The government has offered a 19,500 crore production linked incentive for solar panel manufacture. The extensive reference to new policies around the circular economy across 10 sectors will require businesses to change the way they deal with waste. Similar references to energy efficiency savings models for commercial buildings and investments in special mobility zones for electric vehicles will make this one of the most climate conscious Budgets in the world.

While the speech did not overtly refer to many subsidies, it offered safety nets for a few groups facing undue hardship. Even lay readers will have observed the pain faced by the hospitality sector. The government has expanded the emergency credit line scheme, the invaluable credit guarantee system, with an additional 50,000 crore dedicated to the hospitality sector and other sectors. The same scheme has been continued for other small and medium enterprises, who have also suffered the short end of the K-shaped recovery.

One of the winners in the Budget speech was a city. Gandhinagar might have, some years ago, been felt to be an unusual location for a financial centre — Mumbai being the obvious choice. However now, the efforts of the Centre as well as that of the Indian Financial Services Centre (IFSC) are coming to fruition. The finance bill was replete with tax incentives for portfolio managers, ship lessors. It is exciting to see the IFSC being visualised as a Global Centre for Climate Finance, competing with Luxembourg and London. If this succeeds, it can prove to be a magnet for foreign funds.

Budgets, in the digital age, have tended to use the power of technology to bring about reform. Continuing this theme, the government will create an open digital platform for health. It will complete the core banking linkages of the post offices to allow farmers and senior citizens to save and invest more easily. Seventy districts will have digital banking units and funds are again allocated for digital skilling. These forms of soft technology infrastructure will drive growth by avoiding leakages, increasing reach, and generating business efficiencies

No Budget is ever perfect. One would have liked to see an explicit articulation of job creation measures, although it is clear that the FM feels that the many programmes she has outlined will lead to job creation. There was also no reference to how we will manage inflation, especially given high oil prices. The FM has had to deal with two waves of Covid lockdowns this fiscal and now looks forward to elections in several states. This did not leave her with a lot of elbow room to do things.

In these circumstances, it is commendable that she has chosen to stay the course on capital expenditure expansion. Many of the best economic outcomes have come from small reforms. The Budget addresses a range of initiatives and also looks to protect domestic industries from imports. This focus on capital investment coupled with reforms across industries, and assistance to small enterprises will nurse the economy to its growth path.

Govind Sankaranarayanan, a former COO and CFO of Tata Capital, is currently vice chairman at ESG Fund ECube Investment Advisor 

The views expressed are personal



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American author and journalist Hal Borland once noted, “The year’s end is neither a beginning nor an end but a going on.” As India enters 2022, what are its most challenging geopolitical goings-on, and which interlinked relationships will continue to be the most consequential?

One of the most important partnerships for India today is that with the United States (US). Under the Trump administration, the bilateral relationship had accelerated rapidly – the two countries conducted joint exercises, signed three defence agreements, began the 2+2 Strategic Dialogue, and India was given access to a wider range of American technologies. This pace did not slacken in the first year of the Biden administration, despite important bilateral forums such as the 2+2 ministerial dialogue and the US-India CEO forum have not yet taken place. As a former high-ranking US official told me, there is now a “strategic compulsion” (read: China) to the relationship that cannot be denied.

That being said, there are irritants that, if not tended to, could prove stumbling blocks for the US-India relationship in 2022. One is India’s long-standing relationship with Russia, most recently emphasised when India began receiving deliveries of the Russian S-400 air defence system in December 2021. Other than this serving, for the US, as irksome evidence of India’s continued reliance on Russian military resupply and hardware (creating in effect a technical upper-ceiling on US-India defense cooperation), it raises the question of whether the United States will enforce the “Countering America’s Adversaries through Sanctions Act” or CAATSA. Under this federal law, the US has previously sanctioned not just China but also Turkey (a North Atlantic Treaty Organization ally) for buying S-400s. If President Joe Biden does not waive CAATSA sanctions for India, this will be a serious problem in the relationship.

Despite the S-400 sale, India faces a very real challenge in its relationship with Russia. On the one hand, President Putin, who has otherwise been skipping in-person summits, visited India in December. The Russian and Indian defence and foreign ministers also held a 2+2 ministerial dialogue. And India and Russia signed 28 MOUs on different issues, including a 10-year pact on military cooperation.

On the other hand, India’s deepening partnership with the US, and involvement in the Indo-Pacific Quad, may drive Moscow, India fears, towards a growing strategic partnership with China. India will be wary of taking steps that could spur Russian closeness with China even further while locking it into alignment with the US. For example, were Russia to invade Ukraine or engage in a limited incursion — as is possible given its ongoing military buildup — India’s response would be a test of the relationship. In 2014, Putin thanked the Indian government for its support of Russia’s position towards Ukraine. If, in 2022, Putin has reason to again extend his thanks, it would bode ill for the US-India relationship. But were India to voice opposition to Russia’s behaviour, historical solidarity within the India-Russia relationship will be diminished.

This brings us to India’s ongoing necessity of managing China. The latter’s infrastructure and force build-up continue along the Sino-Indian border in Ladakh. Beijing now maintains a large troop presence that it can sustain through the winter with the building of significant infrastructure, including small airports, landing strips, and heated buildings.

A permanent militarisation of the border would benefit neither country, yet talks have stalled. The China-Pakistan relationship, always valued by Pakistan, is also of value to the Chinese government. Chinese media touts the success of the China-Pakistan Economic Corridor, and broader Belt and Road Initiative (BRI) projects that India perceives as encircling, and highlights Pakistan’s consistent support for China and the growing people-to-people (P2P) relations – marking everything from appreciating Prime Minister Imran Khan’s decision to attend the opening ceremony of the Beijing Olympics to celebrating the 70th anniversary of the establishment of diplomatic ties with Pakistan.

For China, Pakistan is also an important conduit to the Taliban, and, in the wake of the US withdrawal, Beijing hopes to expand and manage its influence in Afghanistan. After the Taliban takeover, China became the first country to offer humanitarian assistance to Afghanistan. Other than offering $31 million in aid, and food and medical supplies, including Covid-19 vaccines, China has reportedly agreed to finance building mosques (a significant step for the religion-allergic Chinese Communist Party) and wells in the country.

It maintains direct communication with the Taliban government, and Chinese and Afghan officials have met on multiple occasions to discuss reconstruction. This poses a challenge to India, which fears a Pakistan-friendly government in Kabul, the consequences of emboldened extremism, and the possible expansion of BRI into Afghanistan.

Separate from its position towards Afghanistan and China, India’s bête-noire, Pakistan will continue to be a significant challenge. Although a surprising and welcome ceasefire was announced along the border last year, the relationship will continue to be uncertain in 2022. Given the tensions along the China-India border, stabilising the India-Pakistan border would be beneficial, but a serious trust deficit between the two countries will likely prevent meaningful progress. Pakistan recently released its first National Security Policy document in which India unsurprisingly held the dubious honour of being mentioned more than any other country. For Pakistan, Kashmir remains top among its concerns, but for India, Pakistan-sponsored cross-border terrorism will be its priority.

The backdrop for all of these relationships is the world’s entry into year three of the Covid-19 pandemic. Whether 2022 proves to be just a “going on” for India will be determined by its ability balance these interconnected and complicated relationships.

Manjari Chatterjee Miller is a senior fellow at the Council on Foreign Relations, and research associate at the University of Oxford. She is on leave from the Pardee School, Boston University, where she is associate professor

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The Union Budget is essentially a statement of the government’s spending and receipts over the next financial year. But it also gives an insight into the larger political economy philosophy of the government of the day. It is a reflection of the outlook of the regime.

The fact that this year’s Budget has not done anything aimed at the ongoing election campaign in five states, which includes India’s largest state of Uttar Pradesh, suggests that the regime does not see serious political problems on the economic front. Such a belief can be a result of three factors. The political incapability of the Opposition to make the economy an issue; a belief that there is nothing wrong on the economic front; or a deep-rooted conviction that the Centre is on the right path as far as the economy is concerned.

There is enough anecdotal and statistical evidence to rule out the absence of large-scale distress in the economy. The proof of this is that private final consumption expenditure (PFCE) is not expected to return to pre-pandemic levels in 2021-22. This leaves the first or third factors as the driving philosophy behind the Budget. It is useful to look at them in reverse order.

For the past few years, the overarching theme of the Budget had been making India a $5-trillion economy by 2024-25. While this year’s Economic Survey mentioned this objective, the Budget itself has adopted a longer-term framework. It now envisions India’s economic fortunes 25 years from now, when we complete 100 years of Independence.

It is this long-term horizon that the Budget is targeting with a detailed supply side vision of a revamp of the economy where international investors will pour in money via green bonds to power an India with eco-friendly cutting-edge infrastructure, which, in turn, will create unprecedented opportunities for income and employment.

On the face of it, there is nothing wrong with this line of argument. All high-income economies have better infrastructure facilities than India and infrastructure development cannot take place without a hands-on approach by the government.

So should one accept the Budget’s approach uncritically? John Maynard Keynes, the greatest economist of the 20th century, makes a case for why this need not be the case. “But this long run is a misleading guide to current affairs. In the long run, we are all dead. Economists set themselves, too easy, too useless a task if in the tempestuous seasons they can only tell that when the storm is long past the ocean is flat again,” Keynes wrote in A Tract on Monetary Reform in 1924.

Anybody who believes that we are back to a business-as-usual scenario in the Indian economy with the GDP reaching pre-pandemic levels is, at best, being economical with the facts. There is enough evidence to believe that the government’s forced formalisation of the economy, the pre-pandemic slowdown it created and the pandemic’s economic scars have tilted the scales in favour of capital in the labour-capital binary and the formal sector in the formal-informal sector one.

In simple terms, it means that for the same amount of income generation in the economy, the share of the rich has increased. Because the rich have a lower marginal propensity to consume, it also means a lower consumption demand in the economy. While it is reasonable to assume that highways and airports boost investment in the long-run, it is an indisputable fact that short-term investment decisions are taken on the basis of consumption demand in the economy.

If the poor are having to cut on their consumption because of an income squeeze, then current investment is bound to experience headwinds. This, via the expectations loop, will have an adverse effect on future investments as well.

The Budget is right in making a virtue of the government’s capital expenditure push, but it may have erred by not doing anything to either reverse the pro-rich tilt in the economy, or offering some support to the precarious consumption demand of the poor. Theoretically, one can always cite Keynes to criticise such an approach. However, it must be remembered that political economy questions are rarely, if at all, settled in the realm of academic debates.

It is here that the relevance of the first factor — the incapability of the political Opposition in shaping the government’s economic strategy — comes into play. The three farm laws repealed last year were also a part of the government’s larger strategy of linking the informal sector with the formal sector. They had to be taken back because of a sharp political backlash.

The government did not face any pushback in the rest of the economy. It should not surprise us then that it has not made any changes to its supply-side driven political economy framework in the Budget. We will know if the government is right on March 10, when the results of the five state elections are announced.

roshan.k@htlive.com 

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On the eve of the 2022-2023 Budget presentation, officials from the ministry of finance informed the nation that buoyant revenues had ensured that there was enough fiscal space to support our economy as it struggled to emerge from the Covid-19-induced shocks. I was thus hoping for an expansive Budget, one that would accommodate increased government expenditure whilst setting itself on the path towards fiscal consolidation. After all, the economy is still under stress and the demand for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) continues to be higher than pre-pandemic levels.

But the fine print of Budget 2023 suggests the opposite. Buoyant revenues — net tax revenues are higher than budgeted — have been deployed toward fiscal consolidation rather than broad-based support to a struggling economy. Revised estimates for the current financial year (2021-22) highlight that total expenditure reduced by approximately 1.5% of the Gross Domestic Product (GDP) from 2020-21 to 2021-22 and will continue on this path to reduce by a further 0.95% of the GDP from 16.24% in 2021-22 to 15.29% in 2022-23. The fiscal deficit, on the other hand, reduced by 2.5% of the GDP. The fiscal space created by improved revenues this FY has been used toward reduction in the fiscal deficit and not to support expanded public expenditure.

The critical area of contraction is revenue expenditure, specifically welfare spend. Capital expenditure, as was evident in the finance minister (FM)’s Budget speech, has increased, pointing to a clear shift in policy priorities. Perhaps the government has convinced itself that the economy has recovered from the worst of the pandemic. But this is far from the lived reality for most of India.

Our economic recovery is K-shaped and the pandemic has disproportionately impacted the poorest. Household incomes have stagnated at about 80% of their pre-pandemic levels and demand for MGNREGS remains elevated. In December 2021, 9.1 million households that demanded work under MGNREGS were yet to receive work under the programme. Clearly, the government bet that increased capital expenditure will provide succour through its multiplier effects to the poor is yet to yield results. Therefore, increased welfare expenditure visible in the first year of the pandemic needed to continue. However, this has not been the case. Allocations for MGNREGS reduced from 1.1 lakh crore in 2020-21 to 98,000 in 2021- 22. For 2022-23, Budget estimates are at a lower 73,000 crore. MGNREGS apart, overall outlays for the rural development have reduced from 1.09% of the GDP to 0.89% of the GDP in the current fiscal. This downward trend in expenditure will continue into 2022-23. But perhaps the biggest reduction can be found in the food subsidy bill. Outlays for food subsidy have collapsed from 2.74% of the GDP in 2020-21 to 1.23% in 2021-22 revised estimates. It is projected to reduce further to 0.80% GDP in 2022-23.

Beyond MGNREGS and food subsidies, centrally sponsored schemes (CSS) finance critical public services – education, health, nutrition, drinking water. Spending in these areas has been slow since the start of the pandemic. However, overall allocations for centrally sponsored schemes have reduced, down from 1.94% of the GDP in FY 21 to 1.79% in FY 22, and are projected to reduce further to 1.72% of the GDP in FY 23.

Many of these schemes are state subjects and it could be argued that state governments will be able to make up for the reductions in CSS. However, the devolution to states remains lower than mandated by the Fifteenth Finance Commission. The share of the states as a percentage of gross tax revenue remains static at 29% despite the finance commission mandate of devolution of 41% from the divisible pool of taxes. The central government’s old habit of deploying cess and duties to deprive states of their share of revenues continues unabated. The Budget does commit to a 1 lakh crore interest-free loan to states. This is a positive move but it is linked to conditions, thus deepening centralisation rather than empowering states to provide public goods as prioritised by their voters.

The real policy bet in this Budget is on the significant expansion in capital expenditure. As the FM presented her Budget speech, it would be easy to forget that India is just emerging from a pandemic. Rather, this was a Budget with a vision for a country with vast digital network and robust physical infrastructure. This may well be our Amrit Kaal (as the government refers to the period between the 75th and the 100th year of Independence) but the reality of today is an economy that still is struggling with the devastation of Covid-19. The informal sector is in deep distress, poverty has risen leading to increased inequality. The buoyant tax revenue was an opportunity to respond to these immediate challenges. On this, the Budget disappoints.

This inability to balance increased capital expenditure with elevated welfare expenditure, is in part, a consequence of a repeated failure to meet disinvestment targets. The proposed target of 1,75,000 crore in disinvestments receipts in 2021-22 has been missed. Going forward, in 2022-23, the government has been more conservative, reducing its disinvestment target to 65,000 crore. While realistic targets are welcome, the failure to disinvest is costing the country dearly.

Finally and most worryingly, health expenditure is down from 0.41% of the GDP in 2021-22 to 0.37% in 2022-23, perhaps because Covid-specific expenditure has reduced. The National Health Mission — the government’s flagship central scheme for health — has seen a marginal increase from 34,460 crore to 36,960 crore. Clearly we have chosen to learn little from the ravages of Covid-19. India needs far greater investments in health. That is the one lesson that Covid-19 has taught us, but once again we have refused to learn.

Yamini Aiyar is president and chief executive, Centre for Policy Research 

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In my column in the run-up to the Budget, I said I will be counting the number of times finance minister (FM) Nirmala Sitharaman utters the word “jobs” in her speech. She mentioned “jobs” thrice and “Prime Minister” five times! Cheekily, this is perhaps an indicator of the FM’s economic priorities.

The principal thrust in this year’s Budget is the directional shift from welfare (labour) to capital. In the fiscal year 2021-22, the Government of India spent 4.3 trillion in providing food, fertiliser and fuel subsidies and roughly 1 trillion in wages under the Right to Work (Mahatma Gandhi National Rural Employment Guarantee Scheme), which can be classified as welfare expenditure for poor Indians. This total amount of 5.3 trillion spent last year has been cut to roughly 4 trillion for next year. In other words, the government will be spending 10,000 less in welfare on every poor family in the bottom half of the population.

The 1.3 trillion saved from the welfare spend will be used for capital expenditure by the government to presumably build infrastructure and other assets. The hope is that this infrastructure boost by government spending will catalyse demand for raw materials such as cement, steel, iron ore etc. and create direct and indirect jobs. This is the conventional “trickle down economic” premise. But it is also a big gamble for the 400 million workforce in the immediate aftermath of the Covid pandemic.

The first question is, does the Union government have the capacity to spend such a large sum of capital expenditure in one year? This is the highest budgeted amount for capital expenditure in India’s history. In the current year 2021-22, the government barely managed to spend the amount it budgeted last year for capital expenditure (after accounting for a one-time expenditure for Air India disinvestment). When the government struggled to spend a 30% higher amount in capital expenditure in the current year, can it really spend 36.2% more in capital projects next year?

The second question is, does higher capital expenditure truly lead to more jobs and greater job creation in the economy. The textbook theory is that infrastructure investment leads to increased economic activity which manifests itself in greater demand and production which then leads to companies creating more jobs and hiring more people. But in contemporary economic development models, production has become heavily capital intensive and is not as labour intensive.

In other words, the global experience is that modern machine-intensive production methods do not need more people even as demand and output increase. Semiconductor, steel, cement and car factories do not create as many jobs as they used to. It is only small- and medium-sized businesses in textiles, leather goods and other such labour-intensive sectors that create jobs. The top 400 companies in India experienced a huge increase in sales, profits and market value last year but the total number of employees remained exactly the same as the year before.

To be sure, higher infrastructure investment can boost employment in construction and other semi-skilled sectors. But one has to be cautious in expectations for a big surge in employment driven by higher government capital expenditure.

Since this bet on increased capital expenditure has come at the cost of welfare and subsidy programmes for the poor, if adequate jobs are not created through this shift to capital expenditure, it will turn out to be a double whammy for the poor with neither jobs nor welfare. This is Sitharaman’s bold gamble and for the sake of our nation and youth, I hope it pays off.

Contrary to the euphoria over capital expenditure, the Budget expects India’s nominal Gross Domestic Product (GDP) to grow only 11% next year vis-à-vis a 19% nominal GDP growth this year. The FM called it a conservative estimate but it is still puzzling. It is well accepted that inflation is going to be much higher this year than the previous year. In which case, higher inflation alone, with all else being equal, would yield a higher nominal GDP growth number. Surely, if the government had such a strong conviction in its capital expenditure gamble, then the nominal GDP growth estimates should have adequately reflected that confidence too.

To add to that, the new Chief Economic Adviser in the subsequent press conference said the government expects an 8-9% real GDP growth (after inflation) which then implies that the government expects inflation to be 3%, which is completely unrealistic. So, clearly, there is something amiss about the government’s nominal GDP estimate for next year which is also reflected in its surprisingly lower tax revenue estimates.

Prior to the Budget, there was some expectation from the private sector to boost flailing personal consumption with schemes such as an urban MGNREGS. On the contrary, the government cut even the rural MGNREGS budget, let alone launch a new urban programme. I suspect the fear of rising inflation at the time of five state elections deterred the government from any consumption-focused measures which may have caused inflation to rise further.

Predictably, there is much discussion and excitement over the FM’s announcement of a digital rupee and a 30% tax on cryptos. As I have written earlier, taxing cryptos showers legitimacy and the status of an “asset” on such digital tokens which is being penny wise, pound foolish. The government should have ignored cryptos just as it would have paid no attention to people indulging in esoteric trading of, say, peacock feathers. By taxing cryptos, the government may have inadvertently opened a Pandora’s Box for further demands for regulation of such trading, rules for valuation methods of these “assets” and so on.

By shifting expenditure away from MGNREGS, food and fertiliser subsidies to capital expenditure, 5G roll out etc., the government has bet on a “trickle down” impact to kick in and catalyse private sector investment, ultimately leading to jobs and livelihoods. At a time when the economy is not working for the vast majority of India’s poor, this is an audacious gamble, which I sincerely hope pays off and does not go the “demonetisation gamble” way.

Praveen Chakravarty is a political economist and chairman, data analytics of the Congress 

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August 2021 changed many a narrative when it comes to the entire ideation behind the United States (US)’s “war on terror” — a counterterrorism blueprint devised by Washington DC that the world rallied behind in the aftermath of 9/11. Fast-forward 20 years later, and the Taliban walked back into Kabul, and today, one way or another, the world is divided on how to deal with the militant group regaining control over Afghanistan. 

In January, India assumed the chair of the Security Council Counter-Terrorism Committee of the United Nations (UN). The seat gives India a great podium to highlight the cross-border terrorism it has faced over the decades, much of which has been highlighted repeatedly as a state policy act of Pakistan. However, these views have mostly fallen on deaf years as Islamabad itself became a critical “ally” for the US in its war against al-Qaeda. This, even though al-Qaeda chief and architect of 9/11, Osama Bin Laden, was found and killed by the US in Abbottabad, Pakistan, a stone’s throw away from the country’s military establishment. 

Many geopolitical flashpoints, where terror and militant groups have found their feet ultimately struggle from one common denominator, contrarian political and geopolitical policies, whether from a regional or international point of view. All these crisis points have found debate in multilateral forums such as the UN, however, instances of diplomatic breakthroughs to either end or come to a viable solution to such conflicts have been far and few. For example, the UN itself has been unable to settle upon a definition of “terrorism” that is agreed upon by all member states. That famous saying that often echoes around UN headquarters, “one man’s terrorist is another man’s freedom fighter”, remains a stumbling block when it comes to any encompassing “global” pushback against the very fundamentals of terrorism. In fact, UN officials themselves have said that what constitutes a terror group remains an undeciphered aspect of diplomacy against these threats. 

However, it is not just the UN where diplomacy of terrorism has often been used as a tool to stifle or support geopolitical rivalries, instead of rallying a common global narrative. For example, the recent attack by Houthi militants against the United Arab Emirates brought back the long-running conflict in Yemen to centre-stage, where two power blocks of West Asia, a Saudi-led Gulf alliance on one side and Iran-backed Houthi militants on the other have wreaked havoc on the people of Yemen. In February 2021, the US removed the Houthis from their terror designation list. The reason behind the delisting was given as a “recognition of the dire humanitarian situation in Yemen”. Another, perhaps unmentioned reason, was also to show intent to Iran that some concessions were on offer if Tehran was to return to the nuclear deal that the US unceremoniously exited in 2018 under the presidency of Donald Trump. Fast-forward to today, and the US is once again threatening to return the Houthis back to their terror listing as the group expands its attacks. 

Another example of geopolitics meeting the realpolitik of counterterror diplomacy was the removal of the East Turkestan Islamic Movement (ETIM) by the US in November 2020, as tensions between Beijing and Washington DC escalated over the former’s human rights record, particularly on the issue of its Uyghur Muslim minorities and their suppression in the Xinjiang province.

China criticised the decision, adding that the US “has an ugly two-faced approach toward terrorist organizations”. ETIM itself, known to be largely defunct today, has been known to have links to al-Qaeda. However, it was almost never a homogenous group, and emitted from a small number of Uyghur’s who came to Afghanistan during the Taliban’s rule in 1998 with the intent to launch a religious war against the Chinese state. Even today, China’s dealings with the Taliban revolve around the latter’s commitments to stamp out the ETIM threat. As Professor Sean R Roberts, author of The War on the Uyghurs has said, the listing and de-listing of ETIM were “complicated and political” to begin with. 

Finally, the question that arises here is: What are the gains that diplomacy on counter-terrorism, resolutions of the UN Security Council and other such multilateral instruments bring to the table? Kinetic actions against terror groups have shown mixed results. Does the diplomacy of listing, delisting, definitions and so on help curb terrorism, terror groups and violence launched by them? Geographically, regional diplomacy between warring political ideas and actors may be a more suited strategy. This begs the question: Where does it leave international, multilateral diplomacy when it comes to countering terrorism? Gains made by the “international community” on this front remain largely philosophical, strategically, and tactically, regional diplomacy is where successes in counterterrorism may ultimately reside. 

Kabir Taneja is a fellow, Strategic Studies Programme, Observer Research Foundation, and the author of The ISIS Peril: The World’s Most Feared Terror Group and its Shadow on South Asia

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On February 1 last year, as many in India were busy with news of the annual budget, distressing news poured in from neighbouring Myanmar. The tatmadaw (military), under the leadership of Senior General Min Aung Hlaing, arrested most of the ministers of the National League for Democracy (NLD) led government, including State Counsellor Aung San Suu Kyi and President Win Myint, in the early hours of the day. Thereafter, military convoys rolled through the streets of the capital in a dramatic fashion, breaking up the first Parliament session after the November 2020 election. When a year-long emergency was declared by the acting President and the reins of governance handed over to Min Aung Hlaing, there was no doubt that it was a full blown political coup, the third since Burma’s independence in 1948.

Most people who follow Myanmar’s politics are aware of what happened in 1988, when General Ne Win, who came to power through a coup in 1962, was forced to resign as chairman of the Burma Socialist Programme Party. The government that came to power after him was ousted in September that year, by General Saw Maung, a confidant of Ne Win. In short, it was a coup of the military, by the military, for the military. By that precedent and more, there is no denying that the tatmadaw feels it has a right over the governance of the country. Unfortunately, that has not changed. When that sense of right begins to slip away, political turmoil ensues in Myanmar.

This is exactly what happened last year. Min Aung Hlaing was approaching retirement in 2021 and Suu Kyi was accumulating power after the NLD’s clear victory in 2015 and 2020. As per the 2008 constitution, 25% of the seats in the Hllutaw (parliament) is reserved for the tatmadaw. Yet, it is to return to the barracks when peace, stability and development become a norm in Myanmar. Suu Kyi highlighted this after the NLD’s election victory. The tatmadaw, instead, complained of fraud during the elections. Nobody listened. In such a case, what better way for the junta to keep political control than use an old (and successful) trick?

On the other hand, experts also point towards the personal dislike that Min Aung Hlaing and Suu Kyi have for each other as one reason that negatively impacted the civil-military balance. Notwithstanding international criticism in the context of the Rohingya crisis, Suu Kyi has remained an icon of democracy for decades. But her stubborn attitude towards the tatmadaw, probably in the hope of sending the military back to the barracks for good, reeked of ignorance emanating from an ageing and insecure, yet over-ambitious leader.

As a result, not only did Min Aung Hlaing extend his term and declare himself Prime Minister of Myanmar by August 2021, but also called the National Unity Government (NUG) in exile ‘terrorist’. Importantly, he made enough arrangements to Suu Kyi’s career in politics through her house arrest. As the list of allegations against her mount, there is no doubt that so will the quantum of her sentence, which is currently two years.

It is insufficient to understand Myanmar’s politics after the coup only through the prism of political personalities. When democracy is stifled, it is the people who are the most affected. As of now, the State Administrative Council (the junta government) has assured multi-party elections in 2023. But people are not ready to get fooled by this anymore. People’s resistance has found new vigour in the country, despite no clear political face of the opposition.

The junta’s way of dealing with protesters and opponents has been brutal. Who can forget the sight of the teenage girl, wearing a T-shirt saying ‘everything will be ok’, being shot in the head. Throughout the year, instances of villages being set on fire by tatmadaw men were reported. Human rights violations touched new highs in the country, with people even being burnt alive in some cases. Within a year, the death toll is reported to have reached 1499, with 11,801 arrests and 1,967 warrants issued (as of January 28). There are also reports of prison gallows, long out of use, being refurbished.

As assessments are made about the end of an era led by Suu Kyi, it does not automatically translate into victory for Min Aung Hlaing. Even after a year of the coup, the SAC struggles to find legitimacy and control. The Civil Disobedience Movement has remained strong. Meanwhile, the NUG announced the establishment of People’s Defence Forces to resist the military. Many have joined without fear. Interestingly, some Ethnic Armed Organisations, which are essentially seen as insurgent groups, have also joined hands against the junta (The Kachin Independent Army is an example). This is evidence that it is not going to be easy for Min Aung Hlaing to rule for an extended period, like some of his predecessors. Indeed, the politics and the people are very different today than in the decades that followed coups of the past.

Shrabana Barua is assistant professor, department of Political Science, Hindu College.

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It’s difficult to look beyond the big number in the Union Budget. This is the 35.4% increase to 7.5 lakh crore in capital expenditure in 2022-23. The number is important because, in the absence of private investment, it is public investment that needs to drive the economy, and there were fears that the government, after increasing capital expenditure by 29% to 5.54 lakh crore in 2021-22, would, with an eye on balancing its books, perhaps not follow up with another signifi-cant increase. Those fears have proved unfounded, and it is clear that the finance minister (FM) recognises the importance of public investment in the coming financial year (it will “crowd in private investment,” FM Nirmala Sitharaman said). Public investment has played a significant role in the economy’s recovery from the (still) ongoing pandemic, and it’s reassuring that the government realises that it needs to do much of the heavy lifting in 2022-23.

Yet, there is more to Union Budget 2022-23. One, there is a repeated emphasis on domestic manufacturing across sectors (including defence and electronics) which, if successful, could mean jobs apart from self-reliance. Two, there is acknowledgement (backed by allocation) that the education sector has been hit hard and that significant intervention is needed to ensure that the two years that many students have lost do not end up disadvantaging them for life. Three, there is a clear focus on reducing the economy’s carbon intensity (and footprint) — from pushing the cause of solar (through a boost to local manufacturing of modules) to sovereign green bonds to implementing recycling policies across 10 sectors to a push for public transport in urban areas to a battery swap plan for electric vehicles. Four, there is a continued push on the digitisation front, evident in the 50% increase (to 79,887 crore) in the IT and telecom expenditure budgeted for 2022-23. Five, there is a nod to the future — not just in the decision to adopt a central bank digital currency, but also in plans for areas such as artificial intelligence, genomics and space. And six, there is the demonstration of the ability to leave well enough alone. There are no new worrisome or meddlesome taxes (the one on crypto and digital assets was required). Also absent were widely anticipated populist measures with an eye on elections in five states.

All of this has been achieved with a fiscal deficit that is estimated to be 6.4% of the GDP in 2022-23. No one is likely to complain about that number — and Mrs Sitharaman’s unapologetic acceptance of it shows that the government is focusing on growth, not deficit. The math of the Budget appears to be conservative. It assumes a nominal GDP growth of 11.1%, which is low. In 2021-22, it assumed a nominal growth of 14.4%, but ended up seeing nominal growth in excess of 17% — which also found a reflection in its buoyant tax revenue. This seems to suggest that the tax revenue for 2022-23 could also beat the Budget estimates. And, that the actual fiscal deficit could be substantially lower. To be sure, it is also possible that this conservatism is born out of fears about downside risks, including ongoing supply constraints and the rising price of oil.

Those are the hits. As for the misses, the Budget seems to be betting on growth getting consumption demand up, rather than any feel-good interventions (read tax cuts, sops) to do so — just as it seems to be betting that with the economy reviving, some of its relief measures may no longer be needed. It hasn’t announced a Plan B for the agriculture sector after the government repealed late last year, the three reformist farm laws that were Plan A. And it is silent on the inclusion of Indian bonds in global bond indices, something that was expected to attract more foreign investments. The silence on bonds, combined with the government’s record borrowing plan — the Budget fine print shows that it will borrow 14.95 lakh crore, much higher than the 12-13 lakh crore expected by the market, raising concerns that there may not be enough credit to fuel corporate growth — roiled the debt market soon after the Budget. The fears about debt supply also come in at a time when global central banks are tightening interest rates and the Reserve Bank of India is also expected to do so. And like all other plans built around public investment, Budget 2022-23’s success (or failure), finally comes down to the timely disbursal, and the efficient utilisation of this money.

It may set the stage for the next 25 years of India’s journey as Mrs Sitharaman mentioned in her speech, or it may not, but there can be no doubt that Budget 2022-23 is as close as can be to being the kind of Budget India needed at this point in time.



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