1. India not as decoupled, still on a sticky path: economists
China’s absence as a shock absorber for global economy is conspicuous this time, says QuantEco’s Rao; adds private capital expenditure mostly missing due to global uncertainty and volatility
Although it appears that India is decoupled in the short term from the global economic recession, it is still on a relatively sticky path as far as inflationary trends are concerned unless inflation drops to 4% levels, a panel of economists noted.
Observing that India’s growth had outpaced global growth mostly because its base was small, Shubhada M. Rao, Founder, QuantEco Research said the country’s ‘macros were still far better compared with the rest of the world’. “But our economy is globally synchronised and therefore we can not be fully insulated,” added Ms. Rao, one of the economists who spoke on India’s growth outlook amidst the looming global slowdown, at a webinar on Friday.
Ms. Rao also noted that China was conspicuous by its absence as a shock absorber this time.
“Unlike in the past, China has been a big absentee in supporting global recovery this time. So, we can’t see China absorbing recessionary shocks.”
Commenting on economic stimulus through investments, Ms. Rao said private capex was mostly missing as there still remained a fair degree of uncertainty and volatility in the global markets.
Sachchidanand Shukla, chief economist, Mahindra & Mahindra, said some States were seeing a consumption slowdown due to lower purchasing power.
“India should have systems that can plan debts better,” he added.
2. The G-20 can be the UN Security Council alternative
As India begins its presidency of the G-20 (Group of Twenty), there is a certain reluctance on its part to take the bull by the horns and try to end the Russian invasion of Ukraine. India has gone out of its way to say that Ukraine will not be the centrepiece of the G-20 this year. This position is because of the fear of failure, especially because of the position India has taken not to condemn Russia; it is not because the Russian invasion is not the most urgent issue for the world to resolve. But after the G-20 summit in Bali, Indonesia, in November, there is greater understanding of the Indian position — as articulated by U.S. President Joe Biden himself. Considering that the Bali declaration was virtually drafted by India, New Delhi has been recognised as a potential honest broker who may be able to end the devastating war.
The right place and the right time for India
The alphabetical rotation of the G-20 presidency has brought India to the right place at the right time, especially when the world is looking for an alternative to the United Nations Security Council (UNSC), which has been paralysed by the veto. Most recently, during the COVID-19 pandemic and the Russian invasion of Ukraine, the UNSC’s credibility hit rock bottom. Any reform of the UNSC, particularly the expansion of its permanent membership, will be strongly resisted by the permanent members and a large majority of the General Assembly because it does not benefit anyone except those who aspire to be permanent members.
Every candidate has a strong opponent waiting to pounce the moment there is any serious proposal to make the candidate country a permanent member. Among the proposals made in the last three decades, there is none that can command the votes of the five permanent members as well as two-thirds of the members of the General Assembly. Although the G-20, which consists of 19 countries and the European Union (EU), was set up by the G-7 countries in 1999, and upgraded to the level of Heads of State/Government in 2008 to address “major issues related to the global economy, such as international financial stability, climate change mitigation and sustainable development”, its composition is such that it looks like it is an expanded Security Council. It is representative of all the significant countries of the 21st century and is balanced between developed and developing countries. The present permanent members and declared aspirants have been included while Africa and Latin America have also been represented. The EU represents a very important segment of the global power structure. A consensus decision of G-20 should be universally acceptable.
The platform of the Bali Declaration
A gradual transformation of the G-20 from an economic body to a political body can be initiated on the basis of the Bali Declaration, which constitutes the consensus in the group on the Russia-Ukraine war. If the G-20 emerges as peacemaker in Europe, it will attain legitimacy as a group to promote international peace and security; it can gradually become an alternative to the UNSC.
The most important difference will be that no one can prevent its meetings by use of the veto. Care should be taken not to isolate anyone and promote a solution, which is acceptable. Russia will have to reason out its behaviour rather than threaten the use of the veto to intimidate the international community. The grave danger of a permanent member waging a war and vetoing every resolution against it is a reality that the UN should address.
The first step for India to take is to highlight the Bali Declaration and to present a road map during the preparatory process for the G-20 and persuade the sherpas to take it on its agenda. The response cannot be negative except by Russia as it has to negotiate as an equal with the other members of the G-20. If Russia is looking for an escape route, even Russia will accept India’s role as an honest broker in the process. This will enhance India’s capacity to deal with the crisis in a formal way within the G-20. It will accomplish India’s ultimate goal of securing the reform of the UNSC. Once the basic work is done, the UNSC can formalise the decision and implement it for international peace and security.
Not a new role
Being an honest broker in international peace and security is a role that is not new to India. Although it has taken strong positions on decolonisation and rights of the developing countries to play a role as a leader of the non-aligned world, it kept the conversation going among the protagonists and promoted a balanced outcome. India was the author of several landmark resolutions of the UNSC on the question of Palestine and administered the healing touch whenever confrontation developed in multilateral fora. India was a part of efforts made to prevent the expulsion of Egypt from the Non-Aligned Movement at the Havana summit when the Arabs turned against Egypt.
Flexibility in negotiations even while being principled in its national position gave India a role in many situations. As the President of the G-20, the fund of goodwill that India has earned in the UN will be an asset at this critical moment.
The legitimisation of the G-20 as a global arbiter in international affairs will create a multilateral instrument where all members are equal. Though it may take a very long time for it to replace the UNSC, a beginning will have been made in making the UN an effective instrument in stopping wars and building cooperation. Such an opportunity comes, but rarely in history. It will be worth the effort even if it only plants the seeds for the beginning of a new UNSC.
3. ‘India, China trade deficit is at $51.5 bn’
The trade deficit, difference between import and exports, between India and China has touched $51.5 billion during April-October this fiscal, Parliament was informed on Friday.
The deficit during 2021-22 had jumped to $73.31 billion as compared to $44.03 billion in 2020-21, according to the data provided by Commerce Minister Piyush Goyal in a written reply to the Rajya Sabha. According to the data, imports during April-October this fiscal stood at $60.27 billion, while exports aggregated at $8.77 billion. He said that the merchandise exports from India to China had increased from $11.93 billion in 2014-15 to $21.26 billion in 2021-22.
4. Tense moments as Sharmila embarks on indefinite fast
YSR Telangana Party (YSRTP) president Y.S. Sharmila was detained by the police at Tank Bund in Hyderabad on Friday when she squatted there to embark on an indefinite fast against the alleged denial of permission by the police to resume her ‘Praja Prasthanam’ padayatra in Warangal district.
Along with party leaders, Ms. Sharmila arrived at the busy Tank Bund where she symbolically submitted a memorandum to the statue of B.R. Ambedkar before staging a sit-in protest.
Tense moments were witnessed when police tried to foil the protest. Women police shifted Ms. Sharmila into a police vehicle and drove her away to her residence.
Ms. Sharmila continued her indefinite fast on the road at the entrance of the YSRTP office beside her residence. According to party sources, she was forcibly removed and shifted inside the YSRTP office. The sources said Ms. Sharmila and others sustained injuries in the melee.
5. Revdi or welfare, government scheme delivery brings win for BJP in Gujarat
Even as the freebie versus welfare debate grabbed headlines in the run-up to the Gujarat election, it was the delivery of government schemes such as free ration and medicines that bolstered the BJP’s support in the polls. It was the popularity of the Central and State government initiatives such as free ration, Awas Yojana, and Kisan Samman Nidhi that played a key role in helping the BJP acquire a seventh consecutive win in Gujarat.
A post-poll study conducted by Lokniti-CSDS asked voters if they had benefited from government welfare schemes. Close to seven in 10 households said they had bought cheap ration under the public distribution system (PDS). Two out of three voters reported getting free ration under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).
PMGKAY attracts voters
The Central government’s PMGKAY scheme, which provides 5 kg of free grains in addition to subsidised ration, remained the most popular scheme among all respondents, with four of five rural, lower incomes, SC, ST, and OBC voters each saying that they received the benefit. According to data made available by the Centre, 53% of the population in Gujarat is beneficiary of the initiative.
Another popular scheme was the Jan Dhan Yojana, which aims to enhance financial inclusion by making it easier to open bank accounts without the need for minimum balance or documents. Fifty-two per cent of those surveyed said they had opened an account under the Jan Dhan Yojana. The largest beneficiaries of the scheme were the middle class (63%). Other policies that connected with the people were the provision of free LPG cylinders (57%), money for building houses (40%) and direct cash transfers for farmers (47%) (Table 1).
The two State-specific schemes which provide financial security to daughters — for their weddings and for their welfare — also benefited one-third of the surveyed households.
The findings suggest that the BJP has a lead among beneficiaries of some of the welfare schemes such as financial assistance for daughters, free ration, Kisan Samman Nidhi and Awas Yojana (Table 2). Not much difference in voting preference among beneficiaries and non-beneficiaries of other schemes was observed.
The picture is different from the discourse perpetuated by the BJP in the lead-up to the Gujarat and Himachal Pradesh elections. Prime Minister Narendra Modi had cautioned against the revdi (freebie) culture, calling it “dangerous for the development of the country”.
Despite proclamations against freebies, delivery of social welfare schemes to particular communities has contributed to the BJP’s massive victory in Gujarat.
