Thursday, October 27, 2016

Stand by India

by Harish Gupta, National Editor, Lokmat Group

Deepavali, the Hindu festival of light, is not just an Indian event. It is a public holiday in as many as 11 countries, including Pakistan, as it signifies the victory, among other things, of hope over despair.

As far as India's economy is concerned, it is doubtful if the coming Deepavali has much bright tidings to offer. The indicators on the ground, like sluggish sales of fancy cars, expensive flats and such big-ticket items, are matched with an array of drooping indicators. Of the latter, I think the most significant is the sharp fall in the second quarter of 2016-17 of the Gross Fixed Capital Formation (GFCF). The GFCF measures the capital deployed in investment at a given point. From the first quarter of the current financial year to the second, it dropped from Rs 8,861.47 billion to Rs 8,639.56 billion. If investible capital shrinks, how will industry grow?

The fact that industry is caught in a mess is apparent from data churned out by the Central Statistical Office. Industrial production in India has contracted 0.7 per cent year-on-year in August 2016. It follows a 2.5 per cent squeeze in July. The declining industrial production figures show sector-wise collapse. Like a 49.4 per cent drop in electrical machinery and apparatus, and a 22.4 per cent fall in furniture and wearing apparel. Arguably, it points towards a downward spiral in standard of living. Such a conclusion is logical in view of the poor growth of bank credit, which stood at around 10-12 per cent year-on-year most of this year against 16-18 per cent in 2013-14 and in subsequent years. 

Cement production is down to 22,283 thousands of tonnes in August, from over 25,000 thousand tonnes most of 2015. The number of cars registered in September, though a respectable 268,058, is still way behind the previous monthly high of 304,000 in March 2012. The index measuring infrastructure output has levelled to 3 after reaching an 8-plus high earlier this year. Although steel has rebounded in the past few months, electricity, coal, natural gas and crude continue to be a dismal story. What is certainly on the rise is the government's military spending, from US $48,403 million in 2013 to US $51,115.9 in 2015. And like most other indices, the export growth languishes and so does import.

Simultaneously, there is a general decline in global interest in the so-called "India story", as evident from more guarded reports on Indian economy in the western media. An ominous silence has descended on the IT sector, India's proud emblem of technological maturity. IT czars like TCS and Infosys, after showing anaemic results for quarter after quarter, are now engaged in a battle for survival. Their Western clients are now reluctant to outsource operations to foreign vendors as globalisation as a concept is facing rough weather politically. But the brick-and-mortar alternative to information technology is gasping. The recent news of a few hundred graduate engineers being among seven thousand applicants for 120-odd sweepers' jobs, at Amroha in Uttar Pradesh, was found so commonplace that it buried it in the inside pages.

Narendra Modi, before becoming prime minister, routinely condemned the previous government for "jobless growth". On assuming office, he launched a slew of projects such as Start up India, Digital India, Smart City, Skill India, MUDRA. All these were aimed at creating a new class of Indians educationally and professionally equipped to manage their careers themselves. But so far these have remained largely signboards. On the other hand, a million boys and girls are entering the labour market each month with little hope to land a job. In a recent sample survey, 77 per cent of households were found without a single member with regular income. Unemployment rate has hit a five-year high of five per cent. It is argued that definition of employment and employability has changed with the change of time and merely obtaining an engineering degree alone cannot take the person to an upper income bracket. Lakhs of such graduates passing out each year are casual employees or have some seasonal income.

Modi came to power promising a remedy to jobless growth, but it seems he does not have a silver bullet. The new entrants in the labour market severely lack training. Just 2.5 per cent of the country's working population have any vocational training, compared to 60 to 70 per cent in OECD countries. As its natural consequence, reservation demands in jobs and educational institutions from caste groups like Patel, Maratha and Jat have become the defining feature of electoral politics. 

Modi is a globe-trotter and claims having strong views on all nations, including China, the neighbour with which he is involved in duelling on terrorism. Since he has a deeper knowledge of global economy, he’d have noticed that China emerged as the ‘workshop of the world’ by systematically keeping its currency devalued for decades, with its workers producing goods cheaply because they were paid very little. Something similar, though on a smaller scale, is happening in Bangladesh, where unskilled or semi-skilled workers, mainly women, have turned the country into an international hotspot for ready-made garments.

At a time when jobs are disappearing everywhere, and Artificial Intelligence has been to industry what steam was two centuries ago, it requires innovative thinking to create jobs for the multitude. It calls for a deeper understanding of how resource-poor nations engage large number of workers in making export-grade products. Maybe India needs to rethink its strategy of holding the exchange value of its currency at a high level, as it is more necessary to earn dollars than to let the rich buy his BMW cheap. It is also necessary to enable more women to join the productive work force. That will be more useful than leaders showering advice on women about dressing and lifestyle.

Tuesday, October 18, 2016

All BRICS no mortar

by Harish Gupta, National Editor, Lokmat Group

If the eighth summit in Goa of BRICS—the geography-defying grouping of Brazil, Russia, India, China and South Africa—ended Sunday on a subdued note, it was because of the presence-in-absence of a non-member, Pakistan. The summit, inarguably, was timed rather awkwardly. The mind-space of India, host for the event, was preoccupied with the western neighbour ever since the attack by Pakistan-based terrorists on an Indian army brigade headquarters at Uri in Kashmir, leading to the death of 19 security personnel. It led India to make unanimity on "terror" its continuous refrain through the summit.

BRICS is a grouping focused on cooperation in trade, but two developments have lately got it derailed. First, the rise of China has changed the dynamic of trade. By 2013, China had grabbed a fifth of all manufacturing export worldwide, compared to only two per cent in 1991. In the first decade of this millennium, when BRICS got going, there was hope that China could be the engine to drive a trading bloc forward. But such optimism has now given way to the fear of being swamped by Chinese imports. 

The other problem relates to the changing dynamic of strategic power. Of the five-nation group, the three leading military powers—Russia, China and India—have their individual strategic objectives. Russia under President Vladimir Putin is bent upon regaining the respect it commanded in the Cold War era as a formidable war machine. It is a growth trajectory that expectedly leaves the US uptight. It responded by extending NATO, the five-decades-old anti-Soviet strategic alliance, to Ukraine at Russia's doorstep. Russia has hit back in a complex bag of stratagem, from helping Syrian president Bashar al Assad, whom America regards as foe, to reportedly interfering with the US presidential elections by using its agents to hack the computers of the Democratic Party. The rapidly declining US-Russia relations have put India in a double bind as it needs both. The US is its life-line to technology, foreign capital and remittances whereas Russia is not only its sole supplier of basic military hardware but its only dependable 'big daddy' to extend help at international forums. The escalating conflict between the Cold War gladiators has left even the Western powers in a dilemma, not to speak of India, Brazil or South Africa.

Besides, China has Pakistan as it strategic partner, its "iron brother". To China, Pakistan is a trusted interlocutor to the Islamic world, and a useful guide to the US security establishment due to Pakistan's close links with the American army for decades. Unleashing Pakistan on India, or at least egging it on, is also China's way of acting tough on India without dirtying its own hand. This Chinese tactic has become rather obvious in its dogged Chinese persistence to protect Masood Azhar, the chief of Jaish-e-Mohammed. The JeM is a terror group reportedly responsible for the Uri attack as well as the 2001 attack on Indian Parliament. Its due to China that JeM couldn't be declared by the UN as a terrorist group. It points at the possibility of a substantial Chinese stake in the terror factory that Pakistan has nurtured.

In 2006, when BRIC (South Africa was yet to join) took shape, it was visualized as a club of large and fast-growing economies. But they have slowed down since then. South Africa, which came on board in 2010, grew at only 1% in 2015. Brazil is in its worst recession in the past 80 years. Russia is grappling with a slew of sanctions. The drop in oil and gas prices has combined with the global downturn in consumption of manufactured goods, Russia's forte, to make its condition worse. On the other hand, triggered by a wage spiral, China's slowdown is a drag on global growth. India's PPP GDP is 40% of China. It is growing reasonably fast but not fast enough to catch up with China in the foreseeable future. Besides, rather than giving India access to its market, it is demanding unhindered entry into the Indian market.

The BRICS talks reflected an uneasy and troubled relations between China and India and, in the process, turning the summit into an exchange of litany on terror. It is no wonder that, for India, the only concrete outcome is a costly shopping list from Russia of missile systems, stealth frigates, fighters and helicopters.

Significantly, the BRICS summit in Goa coincides with a meeting of the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), an avowedly economic partnership of seven nations: India, Nepal, Bhutan, Bangladesh, Myanmar, Thailand and Sri Lanka. The BIMSTEC outreach wants to keep away from big power rivalries, though there are temptations galore. Chinese president Xi Jinping’s next destination, after Goa, is Dhaka where he has a 24 billion dollar loan-and-aid package to offer. It is unlikely that China’s heart is melting for Bangladesh. China was on the aide of Pakistan in the 1971 Bangladesh war. It recognized Bangladesh as late as 1977, two years after the assassination of Sheikh Mujibur Rahman, architect of the new nation. Besides, most gifts from China prove costly to the recipient as they involve a cluster of Chinese private investments that are based in inflated revenue expectations. Failure to repay such debt become sovereign liability. It has happened with Chinese-financed Hambantota port in Sri Lanka which has negligible revenue but high cost.

BRIC is the brain wave of an executive in Goldman Sachas, an American bank, who used the acronym in 2001 to hype up the emerging economies. It is now a platform for power play of two ambitious global powers, Russia and China. It is BIMSTEC, on the other hand, which has the beginner’s simplicity. All it’s passionate about is a road from India to Myanmar and Thailand.

Tuesday, October 11, 2016

Why Muslim women will thank Modi

by Harish Gupta, National Editor, Lokmat Group

By opposing the Muslim marital practice in India of "triple talaq", the Narendra Modi government, in a submission to the Supreme Court last week, has taken a bold move that previous governments didn"t dare. The ministry of law and justice, in its affidavit, pointed at the constitutional principles, like gender equality and secularism, and said: "The fundamental question for determination by this court is whether, in a secular democracy, religion can be a reason to deny equal status and dignity available to women under the Constitution of India".

While Muslims, the largest minority group, are free to abide by their personal laws for marriage, divorce or inheritance, women"s rights activists have been strident for a long time in their demand for reform of the archaic and oppressive divorce. It allows a husband to divorce a wife who has fallen out of his favour simply by using the shortcut of uttering the word "talaq" three times at her.

Islam"s holy book, the Quran, constructed its rules of matrimony as a social contract. It has provision for divorce if it is exercised in a sequential manner, with a gap of 90 days between each step. These gaps leave sufficient room for reconciliation and negotiation. The final separation, "Talaq-ul-Bidat", comes after exhausting all options of rapprochement. It is not too long after the Quran was written that Islamic scholars of various schools devised the quick fix of saying three talaq at the same time. That gave a misogynist edge to Islamic personal world throughout the medieval and early modern ages. It changed around the early twentieth century, with Turkey adopting the western civil laws and Egypt banning triple talaq. Now as many as 22 Islamic nations, including Pakistan and Bangladesh, have abolished it. Besides, there is no triple talaq among Shias, making Iran free from its bane.

In India, stonewalling of reform of the Shariat Application Act, 1937 is the handiwork of an orthodox group in the Muslim community that controls the network of mosques and madrasahs, and plays on the collective insecurity in the minority psyche. A book published by Bharatiya Muslim Mahila Andolan titled "Seeking Justice Within Family" lambasts the practice. It said fast-track divorce regime enabled by the one-sided and male-chauvinistic law has led to untold misery. Hundreds and thousands of poor Muslim women and their helpless children live in shanties. The organisation found that out of a sample of 4,710 women, as many as 525 were divorced. Of them, 346 were divorced verbally, 40 by letter of divorce and three through e-mail. The divorce rate among Muslims is higher than any other religious groups. But the slapdash method of divorce, and the law"s silence on continuous and meaningful maintenance for the children, has turned many Indian Muslim households into nightmare for the womenfolk. Women activists have correctly pointed out that the pauperization of Indian Muslims as a community, as noted in the Sachar Commission report, is substantially due to the inhumanity inherent in the divorce law.

However, the government wouldn"t have been called upon to take the initiative in banning triple talaq 

if former prime minister Rajiv Gandhi had not seriously erred on his judgment 30 years ago. In 1986, Shah Bano, a 62-year-old Bhopal housewife, who had been turned away from home by her husband employing triple talaq, had found the Supreme Court by her side. The court disregarded her husband"s interpretation of the Sharia on constitutional ground, and made the divorce conditional upon compensation to be paid by him in conformity with civil divorce. But Rajiv Gandhi buckled under pressure of his advisors, who were against upsetting a "vote bank". Besides, he surrendered to powerful pleading by the orthodox All India Muslim Personal Law Board (AIMPLB), an elite minority group closely connected with the network of mosques and seminaries. Rattled for no ostensible reason--the Congress under Rajiv enjoyed absolute majority in the lower House at that time--the government enacted a new law in record time to limit the Supreme Court"s power via-vis Muslim personal law. It is an irony of history that the same AIMPLB is the main opponent to the current move to finally reboot the Muslim divorce law. And, unlike in the days of Rajiv Gandhi, the party now in power neither has a Muslim vote bank nor has to worry about electoral backlash from a community that hardly votes for it. There is every possibility, therefore, that a decision of the court in favour of the women activists" petition will lead to a new legislation that brings Muslim divorce law at par with that prevailing for other communities.

However, the public opinion created among Muslim women, and many educated men, against the injustice done to the society's weaker members under the cloak of religion underlines the necessity to discard fixed ideas about any community. In Pakistan, Mohammed Ali Bogra, the prime minister in 1955, fell in love with his secretary whom he married by divorcing his earlier wife calling triple talaq. It created such furore that the government had to enact a new divorce law in which it became necessary for a disgruntled husband to file a complaint against his wife to the union board (local administration) chief before divorce, and send the wife a copy to exercise her right to reply. At its birth in Bangladesh in 1971, it inherited from Pakistan the amended divorce law.

The Islamic nations that are also democratic have no compulsion to look upon their Muslims as vote bank. That may be the reason why their personal laws have kept pace with time. In India, on the other hand, the government's hyper-sensitivity about not offending the conservative mullahs tied its hands. It is good news that a party that does not give a hoot to the electoral blessings from a community is taking measures that will benefit its members over generations.

Tuesday, October 4, 2016

A surgery long overdue

by Harish Gupta, National Editor, Lokmat Group

By giving a nod to a swift and target-based military retaliation in the early morning of September 28, Prime Minister Naraendra Modi has turned inside out India's long-established set of responses to provocations from Pakistan. The upending of the familiar Indian strategy is even more pronounced by India taking the initiative in declaring the authorship of the "surgical strike" on the terrorists' staging camps. The Indian Special Forces also inflicted "huge casualties" including killing "two Pakistani soldiers" who had come to the terrorists' rescue. If there were low-key line-of-control crossing episodes in the past, India never went public. Whether it was Operation Parakram in 2002 or India retaliating to the beheading of the soldier in 2013, the government never claimed that its forces crossed the LoC. India always treated armed reprisal as the last resort. It waited for 24 years till 1998 to turn its tested nuclear capability into a weapons programme. In 2008, following the most daring attack in Mumbai by Pakistan Army's proxies, resulting in the loss of 164 lives, public outcry for a retaliatory attack on Pakistan was at its shrillest pitch. Yet India did not budge from its commitment to "strategic restraint".

That Modi has finally moved away from that doctrine is consistent with his pre-election commitment of giving a "fitting reply" to Pakistan. Following terrorist attacks in Gurudaspur, Pathankot and finally Uri, failure to live up to his promise would have haunted him like albatross around his neck. It was a risk he could ill-afford, with the manufacturing struggling to pick up, unemployment haunting and elections to Uttar Pradesh, Uttarakhand, Punjab, Goa & Manipur round the corner. His Man-Friday and BJP president Amit Shah is a hawk and played a key role in formulating political decision making. Even beyond electoral politics, inaction after the Uri attack would have put at stake his identity as someone "different" from the Nehruvian "peaceniks". His rating as a man of iron would have fallen even below that of his predecessor from BJP, Atal Bihari Vajpayee, who, despite his reputed fondness for 'biriyani diplomacy' with Pakistan, had actually fought a costly and difficult war with it on the peaks and slopes of Kargil in 1999.

That Modi would choose the tough path was evident from his choice of Ajit Doval as his National Security Advisor. Doval is the bureaucratic architect of the current policy shift from strategic restraint to "offensive defence'. As early as October 2014, he summoned the BSF chief and advised him to respond to cross-border firing from Pakistan with "higher than proportionate" intensity. The BSF was also advised by Doval to desist from holding the usual flag meetings with Pakistan Rangers after such incidents. The policy shift began paying dividends in an indirect but purposeful way, by boosting morale of the armed forces after a decade of despondency and despair caused by the regular cycle of aggression from the Pakistan side and mere hot words from Indian politicians. The September 29 surgical strike by Indian Special Forces should be seen in this context. India desperately needed to come out of morass of helplessness against a bullying neighbour, and its territory being used, in the words of one of our diplomats in the UN, Eenam Gambhir, as the "Ivy Leagure of terrorism". In the past, such forceful phrases would have sounded hollow without any concrete action on the ground. But, after the 29 September reprisal, our DGMO was the first to declare that our forces had indeed penetrated inside PoK territory to carry out attacks. India was at last walking the talk. 

Pakistan has so far refused to accept the incident, or its nature, brushing it aside as just another cross-border episode. But such reticence may be a ruse to buy time and collect strategic thoughts to deal with a more determined India which is no longer shy to step on the escalation ladder. It now seems that Prime Minister Modi and his security team led by Doval have seen through Pakistan's decades-long practice of military and nuclear blackmail, and they have decided to call the bluff. Though the flow of bluster from Pakistan is as usual—and India is battle-ready with strike forces and other units fully mobilized—the civil leaders of the neighbouring nation, and their military bosses, are certainly finding severe limits on their choices. The Indian action has shown that Pakistan cannot hide behind its plea that the terrorists on the prowl are "non-state actors", so it must remain prepared for full-scale military retribution for every mischief committed by the UN-designated terror groups it trains, arms and harbours. As a strategic expert in Delhi was explaining to me, "the next Mumbai attack from Pakistan may trigger a combined naval and air attack on Karachi on an epic scale".

The source of Pakistan’s confidence so far is two-fold: first, the belief that China, its “iron brother”, will do all it takes on India’s northern and eastern frontiers to force India to scale down; and the US will exercise its influence to de-escalate the confrontation before it reaches the nuclear ignition point. However, Pakistan’s recent lessons from responses from Beijing and Washington are disappointing. China, on its part, did not go beyond expressing concern about the confrontation and said “both nations should exercise restraint”. The US pinpointed the Uri terrorist attack as the “cause of escalation” and reiterated that Pakistan must de-legitimise the UN-designated terror outfits. Besides, Pakistan found itself bereft of friends in South Asia as it was compelled to cancel the scheduled November SAARC summit in Islamabad following unequivocal condemnation of terror by Afghanistan, Bangladesh, Bhutan and Sri Lanka.

Modi is inarguably a controversial leader, but, in the third year of his rule, his diplomatic and military gambits are paying off. Except an electorally defunct CPI(M) and politicians like Mamata Banerjee and Lalu Yadav, wedded to minority vote bank, every opposition leader, including Congress president Sonia Gandhi and Rahul Gandhi, complimented Modi for his bold move.