The Hindu Editorial : 18-08-2017

Redrawing the arc of influence

Indian diplomacy needs to display higher levels of sophistication for New Delhi to play a global role


Prime Minister Narendra Modi’s schedule of foreign visits has been extremely impressive, and he has managed to inject a degree of dynamism into a system accustomed to a more leisurely pace. Estimating outcomes from these visits is, however, more difficult.
Taking the two most recent visits, for example, one can easily see the contrast in outcomes. The U.S. visit was a carefully calibrated one producing few surprises, despite the U.S. President having a reputation of being highly unpredictable. For his part, the Prime Minister charted a time-tested course, concentrating mainly on counter-terrorism and the defence security partnership, avoiding contentious trade-related issues. The naming of the Hizbul Mujahedeen chief as a “specially designated global terrorist” and a “new consultation mechanism on domestic and international terrorist designations listing proposals” were the high points of the counter-terrorism agenda. Reiteration of India’s position as a major defence partner and confirmation of the sale of the Guardian Unmanned Aerial System to India, reflected the deepening security and defence cooperation.
In concrete terms, not much else took place during the visit, despite an oblique reference in the joint statement to China’s Belt and Road Initiative (BRI) and reiteration of support for “freedom of navigation” in the Indo-Pacific. What was most obvious was the U.S. tilt towards transactional rather than strategic aspects.
A clear de-hyphenation
In the case of Israel, this being the first ever visit by an Indian Prime Minister to that country, the euphoria of the standalone visit, de-hyphenating Israel from Palestine, was understandable. It also produced better dividends, including elevation of the India-Israel relationship to the level of a ‘strategic partnership’. Israel achieved a major propaganda scoop by getting the Indian Prime Minister to visit the memorial of Theodor Herzl, founding father of the Zionist movement.
The main focus of the visit was on defence cooperation, joint development of defence products and transfer of technology. Most of the agreements signed related to transfer of technology and innovative technology-related items and India expects to benefit substantially, considering that Israeli export rules are far more flexible than those of the U.S.
Both countries also expressed a strong commitment to combat terror. The reality, however, is that when the two countries speak of terrorism, they speak of very different things. Iran and Hezbollah are the main targets for Israel, which has little interest in the Afghan Taliban or Pakistan’s Lashkar-e-Taiba. For India, it is the latter that matters.
The euphoria of the visit cannot, however, conceal China’s importance for Israel. China is a far bigger investor and trading partner of Israel than India. On this occasion, India and Israel decided to set up a $40 million Innovation Fund to allow Indian and Israeli enterprises to develop innovative technologies and products for commercial applications, but it is clearly dwarfed by the Israel-China comprehensive innovation partnership which has an outlay of $300 million. India and Israel also have differences over China’s BRI: Israel is eager to participate in it, unlike India, and possibly views this as an opportunity to develop a project parallel to the Suez Canal.
It’s the neighbours
Two countries where India’s diplomacy, despite the impetus given to it, is currently facing heavy odds are China and Pakistan. China in Asia is already exercising some of the political and economic leverages that the U.S. previously possessed. China has a significant presence in East and Southeast Asia, is steadily enlarging its presence in South Asia, and is also beginning to expand into West Asia. For instance, China’s influence in Iran today appears to be at an all-time high, whereas India’s influence seems to be diminishing.
India has, however, refused to be inveigled by China’s blandishments, including the BRI. Nor has it flinched from standing up to Chinese ‘bullying’, as in the recent instance of the Doklam plateau in Bhutan. Few other countries in Asia are, however, willing or in a position to tangle with China. A divided ASEAN again has provided China with an opportunity to demonstrate its economic and military muscle. Most countries in the region also demonstrate a desire to join China-based initiatives. Even in South Asia, despite India’s commanding presence, China has been successful in winning quite a few friends among India’s neighbours such as Bangladesh, Nepal, Sri Lanka and the Maldives.
In the case of Pakistan, the implosion of the state arising from its internal stresses and problems, together with the virtual standoff between India and Pakistan (involving a total cessation of talks or any kind of worthwhile contacts), has enabled the Pakistani Deep State to further entrench itself. India has been left with few options and this is leading to a diplomatic gridlock which does not augur well for India.
As Pakistan becomes still more deeply mired in problems, its dependence on China is growing. This is contributing to a strategic imbalance in the South Asian region. It is a moot point whether India and Indian diplomacy can do something to rectify matters in this context, but for the present it confronts Indian diplomacy with one more serious dilemma.
Notwithstanding India’s efforts, the diplomatic scene vis-à-vis Russia also could be better. Russia is undergoing a strategic resurgence of sorts, sustained in good measure by the close relations recently established with China. Buoyed by developments in the Ukraine and Crimea, and the uncertainties surrounding U.S. commitment to NATO, the new Russia-China ‘strategic congruence’ is certain to impact Asia. The problem for India and Indian diplomacy is that at this time India-Russia relations appear less robust than at any time in the past half century.
India’s ‘Act East and Look West’ policies have given a new dimension to Indian diplomacy in both East and West Asia. In both regions, however, but especially in West Asia, Indian diplomacy still lacks the nimbleness required to deal with fast-changing situations. In West Asia, despite its long time presence in the region, a 9-million strong diaspora, and the region being its principal source of oil, India is not a major player today. Both Russia and China have overtaken India in the affairs of the region. This is particularly true of Iran where the Russia-China-Iran relationship has greatly blossomed, almost marginalising India’s influence.
Fadeout in West Asia
India’s absence from, and its inability to play a role in, West Asia, even as the region confronts a split down the line between the Arab and the non-Arab world is unfortunate. More so, there is the possibility of a series of confrontations between an increasingly powerful Shiite Iran and a weakening Saudi Arabia. The most recent challenge is the one posed by Qatar to the existing order in the West Asian region. The fallout of all this will impact India adversely and Indian diplomacy’s inability to make its presence felt will matter. An additional concern for India would be that growing uncertainties in the region could further fuel radical Islamist terror in the region.
The ‘Act East’ policy has produced better results. Closer relations with countries in East and South East Asia, especially Japan and Vietnam, are a positive development. However, in the Asia-Pacific, India has to contend with an increasingly assertive China. There is little evidence to show that India’s diplomatic manoeuvres individually, or with allies like Japan, have succeeded in keeping the Chinese juggernaut at bay — or for that matter provide an alternative to China in the Asia-Pacific.
India’s diplomatic establishment is all too aware of the political history and economics of the Asian region. Under Prime Minister Modi, diplomatic styles have changed but it would seem that the substance has altered little. His recent visit to Israel was, no doubt, a resounding success, but Israel was already one of the very few countries which had shown a complete understanding of India’s defence and security needs, even ignoring the sanctions imposed on India by some countries. Israel’s supply of critical defence items during the Kargil conflict (of 1999) is an excellent example.
What Indian diplomacy currently needs to do is to find a way to steer amid an assertive China, a hostile Pakistan, an uncertain South Asian and West Asian neighbourhood, and an unstable world. The strategic and security implications of these, individually and severally, need to be carefully validated and pursued. Indian diplomacy may possibly need to display still higher levels of sophistication to overcome the odds.
M.K. Narayanan is a former National Security Adviser and a former Governor of West Bengal

That sinking feeling

In contrast to its pronouncements, the government’s own data suggest the economy is in a deep hole



Prime Minister Narendra Modi, in his Independence Day address, spoke triumphantly about how demonetisation drove ₹3 lakh crore of unaccounted money into the banking system. The Reserve Bank of India (RBI) is still counting old notes, and unaccounted money cases are ongoing. Thus, this number is at best a guesstimate, and cannot be taken seriously.
Dipping indices
For the facts, turn to the mid-year Economic Survey II, tabled in Parliament deliberately on the last day of the monsoon session, ensuring no discussion. The Survey states that GDP growth will miss the targeted 6.75% to 7.5%. This is a massive understatement. Examine this quote from the Survey: “A number of indicators — GDP, core GVA (GVA excluding agriculture and government), the Index of Industrial Production (IIP), credit, investment and capacity utilisation — point to a deceleration in real activity since the first quarter of 2016-17, and a further deceleration since the third quarter.” The Survey thus confirms that demonetisation ambushed a slowing economy. Consequently, core GVA, i.e. private business activity, dropped steeply from 11% in March 2016 to 4% in March 2017.
The Survey shows how demonetisation devastated the informal sector, using two-wheeler sales as a proxy indicator. These dropped steeply for two quarters after demonetisation. Construction, which absorbs migrant labour, was also badly hit. The Survey thus supports the Opposition’s argument that Finance Minister Arun Jaitley’s “record” allocation for MGNREGS merely reflects displaced migrant workers returning to villages and exercising their right to social insurance.
Demonetisation badly affected farmers’ incomes resulting in a loss of demand, lowering food prices. Consequently, inflation has hit lows below the RBI’s targeted band. Low inflation levels come at a human cost — farmers and those in the informal economy are losing their limited purchasing power.
Additionally, hasty implementation of the Goods and Services Tax (GST) has paralysed the informal manufacturing sector which lives on the edge, often saddled with debt. Protests in the textile hub of Surat reflect how GST is affecting medium, small and micro-scale enterprises. Formalisation of the economy should not shut down businesses and extinguish livelihoods. Similarly, leather, another labour-intensive sector, is in trouble due to restrictions on cattle slaughter.
Overall, there is concern that the economy is in a deep hole, the opposite of what the government would have us believe. It has entered the “Modi Slump”. Banks are not lending. In the year ending March 2017, credit growth plunged to 5.1%, lowest in 60 years. The private sector is not borrowing and the manufacturing sector is operating at a historically low capacity utilisation of 70%. The latest IIP shows a contraction of 0.1% in June 2017.
Neither credit nor investment will increase until the government addresses the “twin balance sheets” problem. Fixing these should have been top priority. Sadly, the Modi government’s early focus was on undoing the 2013 land acquisition law instead of addressing non-performing assets (NPAs). Bank lending is the lifeblood of the economy but government inaction has brought investments to a halt. In March 2014, NPAs were ₹1,73,800 crore. Today they are about ₹7,79,163 crore. Instead the government talks up foreign investment (only 2-3% of GDP) or aggressively lobbies the RBI to cut interest rates, which is unlikely to achieve much.
As State governments find their fiscal space narrowing, private investment falters, and demand slows, we are entering a deflationary environment. Still there are fiscal policy measures that the Union government can deploy. It can belatedly share the benefits of low oil prices by cutting excise duties on petroleum to give people and businesses more spending power, boosting demand.
Destroying, not creating
On the most important indicator — jobs — we are seeing job destruction! The Centre for Monitoring Indian Economy reports that 1.5 million jobs were lost during January-April 2017. Ignoring his own promise of creating two crore jobs a year, Mr. Modi exhorted jobseekers to become job creators. But international experience, for example in developed OECD (Organisation for Economic Co-operation and Development) countries, shows self-employment is only about 15% of total employment. Most Indians are self-employed out of necessity.
Mr. Modi extolled the job-creating impact of the MUDRA loan scheme. In contrast, MUDRA’s CEO is on record saying that it cannot be verified that the agency has created large numbers of jobs. Another misguided Union minister recently gloated about “job creation” under MGNREGS — not realising that it is a social protection scheme that people turn to when they have no alternative employment and not exactly a reason for cheer.
Overall, the real state of India’s economy is deeply worrying. The latest RBI surveys of consumer confidence, industrial outlook, and professional forecasters point to pessimism on all fronts except inflation management. Mr. Modi spoke of how a train slows down as it changes tracks. Unfortunately, Economic Survey II’s numbers suggest that the economy has actually been derailed. The sooner the government understands this, the better.
M.V. Rajeev Gowda is a Member of Parliament and Chairman, AICC Research Department. Salman Soz is Regional Coordinator (North Zone), All India Professionals’ Congress

Instead of becoming a bridge between the government and the Muslim community, he has burnt his bridges



No former Vice President would have got into controversies as easily as Hamid Ansari did and no one would have got out of it too as easily as he has, at least so far.
Man of controversies
He was once accused of “influencing” Rajya Sabha TV, of which he was the chief as Chairman of the Upper House, of total blackout of the live telecast of the Yoga Day event. Mr. Ansari was accused of not saluting the national flag during the Republic Day parade in 2015. His office clarified that as per protocol, only those in uniform (and probably the head of state) salute the national flag while the national anthem is being played. Again in August 2013, the Chairman wondered if “members (of the Rajya Sabha) wish the House to become a federation of anarchists”; both Congress and BJP members protested. In 2010, it was alleged that a poor farmer’s hut was brought down to make way for his helicopter to land.
For the record, Mr. Ansari also castigated Pakistan in very strong words for using terrorism as a state policy and rearing terrorists to be deployed in India. I don’t remember if anyone commended him then.
Naturally, therefore, I was surprised at some parts of the last speech he made [as Vice President, at the 25th annual convocation of the National Law School of India University in Bengaluru] and some points he flagged in an interview to Rajya Sabha TV while answering questions on Muslims in India and how they feel, about “a feeling of unease, a sense of insecurity creeping in”.
Not a Muslim spokesman
Now, Hamid Ansari is no ordinary Muslim from a poor background. He is an educated former Indian Foreign Service officer who has effectively represented India abroad, especially in Islamic countries. Does he reflect the views and sentiments of the ordinary Muslim? I don’t think so.
By creating a halo of victimhood around Muslims, the Congress effectively insulated the community from mainstream politics, empowerment and benefits of development. In the bargain, a ready-made vote bank was created. The Left parties, Samajwadi Party, Trinamool Congress and others took over from where the Congress had left and benefited politically. What they actually did was to create a false sense of insecurity among sections of the Muslims and use the influence of the clergy to corner their votes. The 2014 elections and others held after have shown that sections of Muslims are turning towards the BJP, or at least turning away from the Congress and other parties that trumpeted that they are the true representatives of Muslims.
Indian secularism
India is secular not because the Constitution says so (since 1976) but remains secular because of its centrist Hindu ethos. The real danger to secularism is from Islam-khatrey-mein-hai (Islam is in danger) brigades as much as it is from the so-called Hindu fringe. I don’t know why Mr. Ansari said what he said. I had even tweeted expressing my surprise at his views and felt that he has actually done a disservice to the Muslim community. Instead of becoming a bridge between the government and the Muslim community, he has probably burnt his bridges.
In many of the controversies, reported and unreported, I was on Mr. Ansari’s side as he is sober, logical, and not the kind who can be compelled or convinced to wear his religion on his sleeve.
For once, I am surprised that he chose to speak like a politician rather than a centrist thinker whose views may be unpalatable but not wrong on facts.
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