Showing posts with label 1 June 2017. Show all posts
Showing posts with label 1 June 2017. Show all posts
Thursday, 1 June 2017
World Bank report concludes Modi’s demonetisation had more pluses than minuses (Hindustan Times - 01 June 2017)
Shock therapy can work, even in India, but not without leaving some burn marks. The World Bank’s latest India Development Update attempts to make another assessment of the impact of the Narendra Modi government’s demonetisation experiment. It does not shy away from saying that demonetisation caused considerable distress among informal sector workers in general. But its general conclusion is that ‘notebandi’ had many more pluses than minuses and its negative fallout was limited. Part of the reason for this, however, was simple luck: A normal monsoon helped cushion the rural economy.
The report interestingly looks at the velocity of M1 money supply, a way to measure the number of transactions in cash, bank accounts and normal places people keep their money. The velocity fell from 5.7 to 5.6 between the last quarter of 2016 and the second quarter of 2017. This would be expected but the fall was remarkably small, indicating that a national inclination for jugaad found ways around the lack of physical banknotes. The bank predicts a sharp rebound in velocity in the coming quarters.
The report repeats what other studies have shown, that India’s GDP growth rate dipped but only marginally during the demonetisation period. It estimates GDP growth rate was at 7.3% in the first half of the fiscal year and dropped a mere one-third of one percentage point in the second half. However, like everyone else who has come out with such a figure, the bank admits it has no clear means to calculate the impact on the informal sector. But certain parts of the formal economy proved quite resilient: Air travel by the urban middle class was wholly untouched by ‘notebandi’.
There are clues to the degree of turmoil in the informal sector. Demand for jobs in the formal sector by February, for example, matched the entire demand of 2016. This is a clear sign of how many jobs were lost during demonetisation. However, this also underlines a key advantage of demonetisation, at least if it is merged with a widespread digitisation of financial transactions: It is helping push India out of the shadow of its black economy.
Formalisation of the economy has numerous gains: It means better wages and conditions for workers, greater revenue for government, less corruption and more transparency, and higher productivity and investment levels overall. There are many who speak in favour of the informal sector. But the poor man’s economy has a crucial flaw. Because of its static productivity and technology levels it keeps its inhabitants in poverty. If India’s economy is substantially whitened, demonetisation will be remembered as the act that began the process.
Temple politics: Adityanath visit to disputed site in Ayodhya sends out communal signals (The Times of India - 01 June 2017)
Yesterday in a highly choreographed move full of political symbolism, Yogi Adityanath became the first Uttar Pradesh chief minister in 15 years to visit the disputed Ram janmabhoomi/ Babri mosque site in Ayodhya. This is just a day after a special CBI court in Lucknow framed charges of criminal conspiracy in the 1992 Babri demolition case against top BJP leaders including LK Advani, MM Joshi and Union minister Uma Bharti. Adityanath met these three senior leaders before they appeared in court and in Ayodhya he was accompanied by Dharam Das, against whom also conspiracy charges have been framed. This sends a disturbing signal, with UP’s ruling party appearing to take sides when it should be conveying neutrality.
Adityanath offered prayers at the banks of Saryu river in Ayodhya. He should have gone a step ahead and also met leaders of the Muslim community who are party to the dispute. This would have been in line with the top court’s assessment that it would be best to settle the dispute amicably. Extending the olive branch could go a long way in disentangling an issue that appears intractable to most outsiders. It would also put pressure on the warring parties to make a reasoned argument, if they resist efforts to bring them to terms.
The CM’s Ayodhya visit is part of a larger pattern. Since BJP came to power in March, four UP cabinet ministers have already visited the makeshift temple at the disputed site. Rather than upping the ante on such an emotive and explosive dispute, Adityanath must focus on bread and butter issues such as providing employment to local youth, reviving industrial and agricultural growth in the state or providing it 24×7 power supply as promised in the BJP election manifesto.
Adityanath offered prayers at the banks of Saryu river in Ayodhya. He should have gone a step ahead and also met leaders of the Muslim community who are party to the dispute. This would have been in line with the top court’s assessment that it would be best to settle the dispute amicably. Extending the olive branch could go a long way in disentangling an issue that appears intractable to most outsiders. It would also put pressure on the warring parties to make a reasoned argument, if they resist efforts to bring them to terms.
The CM’s Ayodhya visit is part of a larger pattern. Since BJP came to power in March, four UP cabinet ministers have already visited the makeshift temple at the disputed site. Rather than upping the ante on such an emotive and explosive dispute, Adityanath must focus on bread and butter issues such as providing employment to local youth, reviving industrial and agricultural growth in the state or providing it 24×7 power supply as promised in the BJP election manifesto.
Modi in Germany: India must cement mutually beneficial ties with an evolving EU (The Times of India - 01 June 2017)
Marking growing warmth in bilateral ties, India and Germany have signed a slew of pacts covering cyber security, urban development, vocational education and infrastructure during Prime Minister Narendra Modi’s visit to the European nation. In fact, Modi even took the opportunity to emphasise that India and Germany are made for each other. There’s great scope for synergy. German investments in Indian infrastructure under the Make In India framework or the Smart Cities initiative can do wonders for the Indian economy. Meanwhile, India is a huge market for German companies – an equation that Berlin would like to strengthen further.
Germany today is looking for stable partners in the developing world in light of uncertainties in the overall global order. Europe, for example, is undergoing fundamental shifts following Brexit. Add to this US President Donald Trump trying to modify America-Europe relations by asking EU members to shoulder greater responsibility for their defence. Trump has also criticised the American trade deficit with Germany, stating this needed to change. All of this compelled German Chancellor Angela Merkel to comment that the US and UK may no longer be completely reliable partners.
It’s in this context that Modi’s ongoing Europe tour needs to be seen. Germany has decided to play the role of sheet anchor of EU and is even quietly going about laying the foundation of a combined European defence force by integrating military divisions from smaller European nations. Then there is Germany’s determination on climate change mitigation efforts – something that isn’t shared by Trump. And with Emmanuel Macron – a strong Europhile – being elected French President, the Germany-France relationship is likely to shape the future direction of Europe. This is precisely why Modi’s schedule also includes visits to Spain and France. As EU evolves, India would do well to reaffirm its support to the European bloc and push for investments and technology transfers.
Besides, it needs to be borne in mind that China too is eyeing developments in EU for its own strategic interests. For New Delhi to not lose out to Beijing, the former should devote more resources to actualising the India-EU free trade agreement. As Europe emerges from America’s shadows it will become a veritable standalone pole of the multipolar global order. India needs to capitalise on this and take ties with the continent to the next level.
Uncertain times: on the security situation in Afghanistan (The Hindu - 01 June 2017)
The major terror strike in Kabul underlines a rapidly deteriorating security situation
Afghanistan is no stranger to terror attacks. Even so, the repeated strikes in the most fortified areas with mounting casualties demonstrate a steadily deteriorating security situation. In April, the Taliban had targeted an army base in Mazar-e-Sharif, killing over 100 soldiers. Now, at least 90 people, mostly civilians, have been massacred in a suspected truck bomb blast in Kabul. The Wazir Akbar Khan area where the blast occurred is one of the most secured places in the city, given its proximity to the presidential palace and embassies, including India’s. Still, a terrorist managed to drive in with a vehicle full of explosives and detonate it. It is not immediately clear who is behind the attack. The Taliban have denied any role, saying they don’t kill civilians. Afghanistan’s jihadist landscape has been diversified. There are multiple Taliban splinter groups that do not accept the current leadership of the insurgency. And then there is the Islamic State, which operates from eastern Afghanistan and had targeted civilians in the recent past. Amid all this, the Afghan government is struggling to win a modicum of public confidence that it can turn things around. Since most American troops withdrew from Afghanistan in 2014, terror attacks have been on the rise. Last year was particularly bloody, with over 11,500 people having been killed or injured even as the Afghan government’s writ shrunk to just over half of the country’s 407 districts.
The problem has political, diplomatic and security dimensions. Politically, the government is seen to be corrupt, incompetent, and unable to get its act together. Vice-President Abdul Rashid Dostum, who faces allegations of sexual abuse, has fled the country. President Ashraf Ghani and Chief Executive Abdullah Abdullah are reportedly not on the same page on key issues. Corruption is pervasive across government departments, and Mr. Ghani is yet to begin delivering on his promise to streamline governance. The diplomatic challenge before Mr. Ghani is to cut off the Taliban’s supplies from abroad. It is an open secret that Pakistan is supporting the insurgency. There were reports recently that Iran and Russia may also be arming them for geopolitical reasons. Unless the Taliban are cut off from their external backers, Kabul’s writ will remain circumscribed. The security challenge, perhaps the most important one, is that the Afghan army, after years of relentless war, is demoralised. Though Afghanistan has a 170,000-strong army, the main combat operations are overseen by a small U.S.-trained contingent. They are stretched on the battlefield, given the challenges from different militant groups. The question is, what is Mr. Ghani’s government doing in the face of these challenges? Do its international backers, including the U.S., have any plan to stabilise Afghanistan, and if so, what priority do they accord it? As things stand, the country is at risk of sliding back to the chaos of the 1990s.
Politics and propriety: on Uma Bharti's continuance as Minister (The Hindu - 01 June 2017)
The framing of charges against Uma Bharti makes her continuance as Minister untenable
With the Supreme Court invoking its extraordinary powers under Article 142 of the Constitution — to pass decrees and orders to ensure complete justice — in the case relating to the demolition of the Babri Masjid, and reviving the criminal conspiracy charges against senior BJP leaders L.K. Advani, Murli Manohar Joshi, Uma Bharti and Vinay Katiyar, the CBI Special Court in Lucknow could not but have framed charges against them. Over the last 24 years, poor investigation and weak prosecution combined with inordinate judicial delays ensured they did not have to stand trial for making provocative speeches that allegedly incited kar sevaks to demolish the masjid. With the Supreme Court ordering this case to be clubbed with the one involving the actual demolition by unnamed kar sevaks, and directing day-to-day trials, there is hope that the years of delay are over. India has a poor record in finding speedy judicial resolution in instances of mob violence and communal riots; in that sense, the Babri Masjid cases are perhaps unexceptional. But given the historical importance of the case, and the impact of the demolition on communal harmony, it is vital to see them through to the end.
Both Mr. Advani and Mr. Joshi are in the twilight of their political careers, wielding little power or influence in the BJP. Ms. Bharti is, however, a Union Minister, and the Narendra Modi government cannot pretend that the development has no bearing on her continuance in the Council of Ministers. The BJP has tended to underplay the significance of the case on the ground that it is ‘political’ in nature. But this simply does not wash as the revival of criminal conspiracy charges against them was done at the instance of the Supreme Court. In opposition, the BJP had been quick to demand the resignation of ministers for much less than being chargesheeted. The argument that the standards of propriety that apply in corruption cases are different from those that apply in a criminal case of this nature is absurd. Even by the lax standards of today’s political morality, it is important to draw the line somewhere — and framing of charges is a good stage given that it is a formal document drawn up by a court of law. Rather than defend Ms. Uma Bharti, the Modi government would do well to consider the example set by none other than Mr. Advani himself, who resigned as a Member of Parliament in 1996 after he was implicated in the Jain hawala case, in which the court later held that there was no material to frame charges against him. For a government that makes much of standing for probity in public life, the application of different standards to one of its own is bound to damage its image. Ms. Bharti’s guilt or innocence is for the courts to establish. Political propriety demands that she be shown the door.
