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Tag: India

Changing Paradigms of Political Canvas in Sri Lanka

The intransigent ethno-political emotional divide amongst the Sri Lankan society of 1980s manifested into a bloodiest insurgency with the Tamil separatists almost succeeding in carving out a separate Tamil Elam in the North and Eastern regions of the island nation. The political divide at that juncture was result of a racial cleavage between the Sinhala majority and oppressed Tamil minority which prompted the later to rebel in the face of socio-economic denials of all kinds.

It was India who came to rescue of the Sri Lankan government of the day in 1987 to ensure territorial integrity of the country even at the cost of negative political repercussions within India. The India had to pay the price of this political outreach to Sri Lanka with life of Rajiv Gandhi, the prime minister who went out of way to help them in their hour of crisis. The deeply indebted Sinhala dominated Sri Lanka of 80s seem to be chartering a different trajectory now with self serving opportunist afflictions due to inducements of easy money from extra regional players, especially China.

While encashing the apparent Chinese benevolence, the gullible Sri Lankan politicians seem to have ignored the basic dictum that ‘there are no free lunches’ in this world. And the slip is showing wherein the Sri Lankan political dispensation seems to have compromised on their territorial integrity by leasing out Habantota port and 15000 acres of land in lieu of repayment of Chinese loans. A precedence has been set for more such sovereign compromises in times to come for which India had fought a bloody battle against their own co ethnic insurgents.

The motive of the ongoing political drama appears to be focused on facilitating the Chinese cause even if it amounts to tempering with the constitutional jurisprudence. Indeed, there is a paradigm shift in political thinking with its doctrine of development through Chinese support which has obvious inherent centrifugal tendencies as against focus on internal economic consolidation. Instead of reclaiming the lost politico-economic ground to China post Habantota episode, a major part of Sri Lankan polity seem to be under compulsion to toe the Chinese lines due to debt diplomacy so cleverly orchestrated by the Chinese.

The close scrutiny of Sri Lankan political conduct in the past hinges on the non accommodation of rival ethnic, social or political groups within the Sri Lankan society which seem to continue even today in some form or other. Earlier it was based on ethnic rivalry between Sinhala and Tamils, and now it is intra Sinhala dispensation vying for more political and money power in a political set up with opportunist tendencies. Despite a vibrant democratic political dispensation to take care of well being of its subjects, the island nation has witnessed spells of changing political priorities and concomitant societal upheavals in the recent times. The military driven turbulent ethno- political complexion of 80s gave way to consolidation of socio-political synergies alongside resolving the internal security issues for almost three decades.

Subsequently, in the aftermath of subjugation of Tamil insurgency in 2009, the priorities changed to the much needed economic development of the nation. However, the tourist predominant economy had woeful inadequacies of infrastructure and public conveniences to tap the potential of the nation at par with other international tourist destinations close by. To do that, there was no money due to prolonged war effort which in turn prompted Sri Lankan polity to look outwards paving way for externally influenced politico-economic opportunism.

Chinese concept of BRI suited both China as well as the Sri Lanka as a mutually beneficial mechanism to take care of each other’s interests. The BRI concept envisages development of communication and transportation net work, industrial and power corridors as part of Chinese grand game for their global economic expansion. As far as China is concerned all the countries in the Indian Ocean are important for Chinese geo political matrix as a response mechanism for the security of her economic interests. Chinese conduct when hyphenated with their ‘’String of Pearls in the Indian Ocean’’, and their defiant politico-military stance in the South China Sea speaks of their seriousness and sensitivities of their interest in the Indo Pacific region. Sri Lanka happens to be in a pivotal position to serve the Chinese geo political interests.

In the given circumstances, close affiliation with the China is a win -win situation for Sri Lanka for their economic buoyancy and a politically strong anchor to stand by their side in the time of crisis. However, there are also apprehensions of negative fallouts of new found political bonhomie with an outsider with prospects of disturbing existing stable regional political equilibrium fully aligned with socio- cultural emotional bind of Indian legacy. Accordingly, there is an emerging pattern of an internal political divide amongst Sri Lankan parties and individuals believing in encashing the pragmatic opportunism as against continuation of stability through India centric regional cohesiveness.

The Mahindra Rajpaksha during his premiership was given loans worth $ 6 billion for various infrastructural projects including Hambantota port. Later the dept trap diplomacy of China got highlighted in their demand of ownership of the port plus land adjacent to it. It, surely, has exposed the dubious ways of China which has prompted number of recipients of Chinese benevolence to revisit their commitments with them as regards to BRI scheme. Sri Lankan civil society is ceased with this Chinese conduct and there is a resistance to encouraging Chinese intrusion into Sri Lankan affairs beyond a point.

The opponent Ranil Wickremasinghe, is known to be a proponent of the Indian lobby who had, recently , cancelled housing project of more than 50,000 houses in North and Eastern Tamil areas given earlier to China in favour of Indian companies. The Rajapaksha was brought back as the prime minister by the president through an untenable political move leaving the country in a political chaos. The parliament was dissolved paving way for fresh elections. However, the Supreme Court ruled against this unconstitutional move by the president. It was probably done as Rajapakshe, like his previous tenure, would facilitate better relationship with the China looking at their current political compulsions and national interests.

What is happening in the Sri Lankan political canvas seem to have imprints of pro India vs pro China lobbies. The fact that there is an outstanding loan of almost $ 5 billion despite handing over the Hambantota port to them, China may be pulling the strings to bring in a political dispensation favourable to them to do their bidding. The way the democratic norms are being flouted do indicate a desperate situation precipitated by the looming economic catastrophe waiting to happen.

The military geography of Sri Lanka has bestowed her with a unique location to take care of the most vulnerable security concerns of China with 70% of trade and 90% of energy supplies passing through the Indian Ocean. Therefore, it is obvious that China is here to stay as a permanent feature and to do that they seem to have acquired a substantial political space in the Sri Lanka. Whereas, the Sri Lanka seem to have lost out on her autonomy to some extent as there is a probability of China dictating their terms when they find the policies are not in sync with Chinese interests.

The likely Chinese naval presence at Hambantota port barely few hundred miles from Indian shores is a security concern for India. The Chinese politico-military afflictions in Sri Lanka is likely to prompt the western powers also to further enhance their military presence closer to the Indian shores. It, obviously, would impact the Indian security matrix with the extra regional players milling around in the areas of Indian influence all this time. The new nomenclature of ‘Indo Pacific ‘ referring to erstwhile IOR and Asia Pacific is manifestation new US maritime doctrine as a response mechanism to Chinese geo political expansion. The increase in the US sponsored military diplomacy in the region and revival of Quad are all indicative of new global strategic grand games being unfolded closer to the Indian shores.

India has no choice but to upgrade her military capabilities to take care of the inimical developments around her periphery both on land as well as maritime domain. It warrants looking beyond defensive doctrines and acquire offensive capabilities for optimum power projection in the areas of concern, besides defence of the island territories and international maritime obligations. Given the distances from the main land and bottle necks for shipping, China would always be militarily vulnerable in the Indian Ocean. It stands to an advantage for India which need to be factored in the design of the military doctrine and its political strategic outreach.

The Sri Lanka needs to recall that they stand integrated today due to unflinching support by India in their hour of crisis and sacrifices made by the Indian soldiers to hold their country together. They should also appreciate that the India continues to be the stabilizing factor for Sri Lanka and a friend in need. China on other hand is here to exploit the Sri Lankan geographical space for their geo political motives sans any benevolent emotional connect. In fact, China has already usurped their strategically located land through their manipulative ways. If the Sri Lankan polity has not understood their game plan then they should be prepared for more such disintegrating moves as part of their dubious debt diplomacy. The Sri Lanka is in economic crisis and stands vulnerable which is reflective in their recent political conduct. In that, there seem to be tell tale signs of Chinese complicity in the ongoing happenings in the Sri Lankan political space which is not a good news.

India, obviously, has not been pro active enough to sense the aspirations of her neighbours and propensity of China to exploit the political deficit on the strength of her deep pockets and liberal military outreach. The Sri Lanka has a great significance for Indian security and we need to take all the possible measures to neutralize the Chinese foot prints in the island nation. India fortunately has a large influence in the Sri Lankan society and reckonable political leverages which needs to be nurtured and exploited in our national interests. India as a responsible regional country need to go all out to extend a helping hand to Sri Lanka in her testing times as their political stability is essential to the Indian strategic interests.

Lt Gen Rameshwar Yadav is an Indian Army veteran and former Director General, Infantry. The views expressed are his own. This article was published earlier in https://cenjows.gov.in/article-detail?id=122

November 29, 2018
Indian Air Force at 86: Challenges of Sustaining Credible Force Structure
The Indian Air Force celebrates its 86^th anniversary on this October 8^th, making it one of the oldest and large air forces of the world. Despite many challenges, most of which relate to inefficiencies of political decision making and inadequate financial support to modernisation, the IAF has come out with flying colours to continue to demonstrate its operational capabilities and strategic reach. The recent ‘Gaganshakti’ high intensity exercise is an outstanding example. While the IAF continues to grapple with its huge problems of obsolescence, the last decade and a half has also been testimony to some major transformations underway in the IAF. As the 21^st century dawned, the IAF began a rapid transformation from being largely a tactical air force to a strategic force, with significant expeditionary capability.

Isolation to Outward Engagement

             For more than half a century, outward engagement of the three services was limited to participation in UN peace-keeping missions. As India began its transformation with economic liberalisation in 1991, it began to dismantle its inward looking licence raj, and with it a global outlook started to emerge. As Indian economy accelerated into an overdrive by the late 1990s, and as India’s strategic image strengthened with the overt declaration of its nuclear weapon status, the government encouraged military to military interactions and defence diplomacy. IAF’s international engagement expanded significantly from the 2000s. Major bilateral exercises were carried out on regular basis with major air forces – USA, UK, France, Singapore, South Africa, Oman, and Malaysia. Also, the IAF became a regular participant in USAF’s multinational exercises such as Cope Thunder and Red Flag. Recently the IAF has expanded its international exercises to involve Israel, Russia, Australia, Indonesia, and Malaysia. For over a decade, the Singapore Air Force carries out its two month long annual training from one of IAF bases on the eastern coast. Joint exercises for humanitarian assistance, involving multinational forces, is now a regular feature. These interactions and engagements have highlighted IAF’s high quality operational expertise, its global standing, and in turn, has contributed immensely to IAF’s growth in its international understanding. Today, the world sees the IAF as the sharp edge of India’s military power as well as the primary instrument of its humanitarian assistance capability worldwide.

Enhancing its Reach

             Although the IAF inducted the Jaguar from 1979, its air-to-air refuelling capability was kept inactive. Induction of Mirage 2000 in 1985 met the same fate. The importance of aerial refuelling in extended range operations by the USA in its Libyan strike, Osirak nuclear reactor strike by Israel, and Falklands operations by the UK was not lost on the IAF, and it decided in favour of this force multiplier in the late 1990s. Although the IAF was one of the last major air forces to induct the aerial refueler, its pace of operationalisation was probably the fastest. In less than a decade IAF fighters were flying across Atlantic Ocean to participate in international exercises like the ‘Red Flag’ and ‘Cope Thunder’. Within the last decade the IAF has demonstrated its extended operational reach through all its major exercises. Aerial refuelers form critical component of IAF’s operational capability in terms of reach and penetration. An expansion of this fleet is now long overdue.

Technological and Operational Transformation

             Airpower, by its very nature is technology intensive. The IAF embarked on major operational reorientation through induction of major technologies from the early 2000s. This began with induction of precision weapons, UAVs, electro-optical systems, and sensors. The IAF initiated its first upgrade program in the mid 1990s, for 125 MiG-21 Bis aircraft, by stitching together a complex avionics upgrade involving three nations – Russia, France, and Israel. The success of this program has established an irreversible upgrade culture as a cost-effective strategy for sustaining its force structure. This upgrade strategy has also contributed immensely to indigenisation capability of Indian industry. The Jaguar fleet went through a series of comprehensive upgrades, giving rise to significant expansion of its capabilities. The Su-30 MKI is an excellent result of IAF’s conceptualisation and implementation of avionics suites and mission optimisation. Between 2004 and now, the IAF’s upgrade strategies have given fresh lease of life to various aircraft fleet and weapon systems: AN-32, MiG-27, MiG-29, Jaguar, Mirage-2000, and air defence missile systems. More programs involving upgrades of Su-30 MKI fighters and IL-76 transport aircraft are likely to be taken up soon.

The IAF moved to transform its air defence operations through the induction of AWACS platforms. Selecting the proven IL-78 platform, the IAF again masterminded a complex three nation development program to evolve a modern, state-of-the art AWACS platform by 2009. The three AWACS platforms inducted in phase I have been utilised extensively to bring in major operational transformation of its air defence operations in a very short time-frame. The AWACS has certainly given the IAF a significant operational edge vis-à-vis the PLAAF challenge across the Himalayas. Simultaneously, the IAF has supported the indigenous program of AEW aircraft development based on Embraer-145 platform.

Indo-US strategic partnership manifested itself in significant transformation in IAF’s airlift capability. By 2012, the IAF inducted and operationalised C-130J Hercules aircraft for special operations, which is also the IAF’s first 20 tonne airlift aircraft; and C-17 Globemaster heavy lift aircraft. These are going to be joined by Chinook heavy lift helicopters and Apache attack helicopters. By 2012 large numbers of Russian Mi-17 1V helicopters entered service. With these inductions, the IAF’s airlift capability has truly attained transcontinental proportions.

The air defence missile segment, afflicted by long delays and overruns in terms of cost and time, has finally started showing results. The IAF, inducted its first squadrons of LLQRM (short range air defence missiles) based on Israeli systems, while simultaneously inducting indigenous Akash missile systems. This still indicated huge gaps, which is sought to be filled by the long-delayed MRSAM, jointly developed by India and Israel. With the projected signing of the contract for the Russian S-400 long-range SAMs the air defence will be on stronger operational capability.

The most significant operational and technological capability of the IAF is its net-work centric warfare capability, which is underway for more than a decade. The IAF is the most significantly networked military force amongst the three services. It first established its primary communication grid, AFNET (Air Force Network), and simultaneously established its air defence network inclusive of vital command and control network, IACCS (Integrated Air Command and Control System). The IACCS integrated all its ground based radar sensors and other inputs to create a common operational picture for real-time command and control to become effective. This was a pioneering transformation. The culminating transformation is its ‘airborne network’, which involved evolving NCW concepts based on futuristic ‘self-organising, master-less, node-less, architecture’. The concepts were validated through a three-year long pilot project in 2013. Centred on the SDR (Software Defined Radio) the IAF is focused on indigenous solution. However, interim acquisition of limited numbers of SDR to kickstart operationalisation has stalled for nearly four years due to our infamous acquisition procedural delays. NCW operationalisation is a huge challenge that involves significantly large number of legacy aircraft and systems.

The transformation of the IAF as an aerospace force began in the aftermath of Kargil war. IAF has been at the forefront of transforming the ISR domain through its operational strategies involving various ISR assets – UAVs, tactical and strategic reconnaissance systems, and satellites. It has played a stellar role in defining the roadmap for developing and deploying space assets. It is matter of time before the IAF leads the tri-service aerospace command in true measure to formalise and operationalise India’s Space security strategy.

IAF as the instrument of India’s Global Power

             The rise of India and China is the major transformative process of the 21^st century international system. That India aspires to be a global power is well known and well founded. India’s march to global power status in the 21^st century will be a challenging and arduous task. Rise to great power status is not one of just prestige and power but comes with huge responsibilities. These responsibilities come with significant costs. A great power should be willing to share and shoulder the costs of providing public goods to the global community. This is precisely what the USA is now complaining about, as it finds the costs of sustaining itself as a hegemon is becoming prohibitively expensive. The USA is clearly signalling that aspiring great powers should share the costs of global public goods albeit without upsetting an international order crafted to its advantage. This is where India must rise to the challenge by rising as a benign power with the right balance of hard and soft power to influence the course of emerging power politics.

The IAF, on its 86^th anniversary, is at the cross roads of evolving as the instrument of India’s global power. As the 21^st century progresses, the centrality of aerospace power in the national power of major countries has become unquestionable. Joint or integrated warfare has been necessitated by the critical role of aerospace power in all domains, be it precision, reach, rapidity of application, and intelligence through ISR. The viability of conventional deterrence comes from aerospace power’s ability to deter through the fear of precise punishment. It becomes obvious that the IAF has to be the cutting edge instrument of India’s hard military power. This obviously calls for the right combination of force structure with cutting edge technologies and weapon systems with significantly long reach. A serious introspection would reveal that the IAF, as it enters its 87^th year, faces daunting challenges of building and sustaining the requisite force structure.

IAF’s Force Structure Challenges

IAF has been grappling with problems of obsolescence and dwindling force structure for more than two decades. Long drawn out and unending MMRCA acquisition process is an example of leaving operational capability gaps unactioned as well as loss of opportunities to enhance industrial and technological capabilities. Time and cost overruns in the indigenous Tejas-LCA program is again an operational shortfall for the IAF. The IAF today is at an all-time low of 32 fighter squadrons. An analysis of the history of IAF’s force structure would reveal a story of crisis management to sustain minimum force levels. Much of the blame must go to the political leadership for failure to grasp the importance of sustaining credible conventional force structures, while part of the blame must certainly fall on services themselves.

JRD Tata committee, set up in the aftermath of 1962 humiliation against China, recommended an IAF force structure of 65 combat squadrons. This was accepted by the government but was pruned down to 39.5 squadrons as an interim measure on account of resource constraints. This figure has remained more or less permanent, till the government approved a figure of 42 squadrons in 2005. Even though the IAF has enhanced its combat capability with the induction of force multipliers, and networked air defence capability, its approved force structure may fall short of meeting India’s requirements of functioning effectively as a global player. In the modern, net-centric aerospace environment, the IAF will be India’s main instrument of conventional deterrence. Tata committee recommendations look more apt for India, given India’s emerging stature and global responsibilities expected of it. However, the immediate requirement is to get IAF’s force structure back to the approved 42 combat squadron strength. Given the large number of aircraft that need to be replaced, this would take at least 15 years if only done on war-footing.

Modernisation and Indigenisation Imperatives

As it celebrates its 86^th anniversary the IAF would do well to do some serious introspection. Modernisation processes for all militaries in all countries face the challenges of timely resource availability, particularly for capital-intensive service like the Air Force. In India the problem is compounded by inadequate aerospace industrial and technology base. Indian military power, and IAF in particular, is heavily import dependent. Despite more than 70 years of indigenisation efforts, not much has changed in critical areas. A major cause for this state of affairs is the lack of adequate involvement of the user service in project management and technology development. The IAF will have to take a leaf out of the USAF model to make a major impact on indigenisation. This will need the following to be done on a time bound basis:
- IAF needs to create a cadre of research personal. It also needs to operate aerospace research laboratories. These will focus on research and development of aerospace technologies. Ideally the IAF needs to exercise command and control over laboratories such as ADE, DARE, CABS, etc.
- Programs like the Tejas-LCA should have been managed by the user service, the IAF, after the technology demonstration phase. Program management by the user service is an absolute must as it will be driven by operational needs balancing technology, cost, and time factors. As a corollary, it becomes obvious that the IAF must create the necessary expertise to manage its programs.
- IAF’s involvement in DRDO driven programs must clearly define them as those that are technology development oriented and those that are user driven weapon system development. The latter programs must clearly be managed by the IAF while the former must be enabled by IAF support.
- The IAF must clearly lay down a 20 year strategic roadmap for the government wherein all aircraft and major weapon systems are made completely free of foreign OEM dependence.
Conclusion

India’s security environment cannot be viewed simply as just border and territorial disputes with Pakistan and China. Its strategic challenges in a fast changing 21^st century world are increasing by the day. China’s aerospace capability has leapfrogged significantly over the last two decades, and it poses a major challenge to India. The IAF will need to spearhead India’s aerospace capability to balance China’s dominance.

IAF’s long-term force structure strategy could revert to its earlier ‘auxiliary air force’ format, albeit in a new form. Indian government wound up the auxiliary air forces post 1962, while it retained the ‘Territorial Army’ model. The benefits of this scheme is well established. It provides huge opportunities to a large segment of qualified young people to do military service, provides a ready reserve, and forms an important component of second rung security structure. With slight modification this could be created as Air National Guards, much like the US system. The objective should be to achieve one squadron of Air National Guards for each state in a defined time period based on financial and technical resources. These squadrons should be equipped with Tejas aircraft. Over a period of time this could become a win-win situation for the IAF, civil society, and the country as a whole. A comprehensive approach to force structure could see the IAF as the foremost air force in Asia and a major powerful force in the world by 2032, that will be IAF’s centenary year.

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The author, Air Marshal M Matheswaran AVSM VM PhD (Retd) is a former Deputy Chief of Integrated Defence Staff (Policy, Plans & Force Development).
October 8, 2018
The Military Industrial Component of the U.S.-India Partnership – Panel Discussion at Stimson Centre

Past Events July 24, 2018 The Military-Industrial Component of the U.S.-India Partnership
JULY 24, 2018 | 12:15 PM
Please join the Stimson South Asia program for a conversation with Air Marshal M. Matheswaran, the former Deputy Chief of the Integrated Defence Staff in the Indian Ministry of Defence, who will talk about the military-industrial component of the U.S.-India partnership. Joanna Spear, Associate Professor of International Affairs at the Elliott School, and Benjamin Schwartz, Head of the Aerospace and Defense Program at the U.S.-India Business Council, will serve as discussants. Sameer Lalwani of the Stimson Center will moderate.
WHAT: An on-the-record discussion with Air Marshal M. Matheswaran on the military-industrial component of the U.S.-India partnership.
WHERE: The Stimson Center, 1211 Connecticut Avenue, NW, 8th Floor, Washington DC, 20036
WHEN: Tuesday, July 24 from 12.15 to 2 pm. Lunch will be served at 12.15 and the discussion will begin at 12.30.
RSVP: Click here to RSVP for the event.
FOLLOW: @StimsonCenter on Twitter for event news and use #StimsonNow to join the conversation
Featuring:
Sameer Lalwani, Senior Associate and Co-Director, South Asia Program, Stimson Center (moderator)
Sameer Lalwani is a Senior Associate and Co-Director of the South Asia Program at the Stimson Center where he researches nuclear deterrence, inter-state rivalry, and counter/insurgency. He is also an Adjunct Professor at the George Washington University’s Elliott School and a Contributing Editor to War on the Rocks.
Air Marshal M. Matheswaran, former Deputy Chief of the Integrated Defence Staff, Indian Ministry of Defence
Air Marshal M. Matheswaran retired from the Indian Air Force in 2014 after nearly 39 years of military service. In his last appointment, he was the Deputy Chief of the Integrated Defence Staff for 23 months at the tri-service headquarters in the Ministry of Defence, India. Since then, he has held defense and aerospace consulting positions at Hindustan Aeronautics Limited and Reliance Defence. He is the Founder, Chairman, and President of the Peninsula Foundation, a think-tank for security policy research.
Benjamin Schwartz, Head, Aerospace & Defense, U.S.-India Business Council
Benjamin Schwartz leads the U.S.-India Business Council’s Defense and Aerospace program where he advocates for pro-trade policies before officials in the Indian and American governments. He previously served in a range of positions within the U.S. national security community, including at the Department of State, the Department of Energy, and the Department of Defense, where he was Director for India in the Office of the Secretary of Defense.
Joanna Spear, Associate Professor of International Affairs, George Washington University.
Joanna Spear is Associate Professor of International Affairs and Director of the FAO Regional Sustainment Initiative at the Elliott School of International Affairs at George Washington University. Her areas of focus include U.S. and UK arms sales policies, U.S. counter-proliferation policies, and transatlantic relations. In 2012, she was a Senior Visiting Fellow at Institute of Defence Studies and Analyses New Delhi, working on India’s arms import policies and offset strategies.
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August 22, 2018
Foreign Reserves beyond a point are Pointless

Mohan Guruswamy October 07, 2017

Clearly the Indian economy is not at a place where it wants to be. The Modi government is finds itself in a chakravyuh that it is unable to fight its way out. The government is just unable to make or attract the investment needed to make the economy buoyant again. India enjoyed a decade of unprecedented growth from 2004-14 that seemed to have lost steam in the last year. It was largely caused by a huge decline in the proportion of capital investment expenditure. Despite the growth of the private and foreign investment, the Indian economy is still largely dependent on government investment to lead the investment and growth cycle.

The promise of Modi was that he was expected to set right this trend and once again begin a new cycle with government led investment. He promised us a hundred new cities, a nationwide grid of high-speed rail networks, a national river-linking program and so many other major transformational projects. A hundred new cities have now become a hundred smart cities, which means little more than free wi-fi networks. The nationwide grid of fast trains has now become an exorbitant and apparently uneconomical single bullet train joining Ahmedabad and Bombay. Similarly all other feasible and exciting promises made are now mere caricatures of what were promised. It is simply that the Modi government has been unable to free the economy from its high subsidy burden and PSU black hole, where only the oil and power companies earn a profit due to administered pricing.

Consequently the picture continues to be bleak. Output of capital goods contracted 1% in July against growth of 8.8% a year ago. Production of consumer durable goods shrank 1.3% against a nominal increase of 0.2% a year earlier.

Then came the twin black swan events. Demonetization came as a body blow to the cash-dependent unorganized sector that makes up 40% of India’s GDP. The unorganized sector also accounts for 90% of the total employment of around 450 million. The loss of jobs due to the two events – demonetization and hasty implementation of GST- is still not empirically confirmed. Estimates vary. The construction and vegetable and fruit retail sectors seem to have taken a massive hit and the ballpark estimation of loss of jobs is at about 25-30 million. These sectors mostly employ rural landless labour with few skills and hence forced into taking up daily wage and earnings sustenance. They don’t shout much and few notice their pain. Unlike the loss of even a few thousand jobs in the IT sector.

The implementation of GST forced companies to reduce production in the run-up to its 1 July implementation as dealers reduced inventory. The inadequate training and preparation was abundantly evident. The announcement of rates was hasty and the many mismatches between input and output rates compounded the confusion. Of the Rs.95000 crores collected in the first month, as much as Rs.65000 is due to be refunded. The problem is that the government doesn’t seem to have the cash to do so.

In a belated effort to reverse these trends the government is planning to loosen its fiscal deficit target of 3.2% of GDP to enable it to spend up to Rs. 50,000 crore. This is piddly sum for an economy whose GDP is over Rs.150 lakh crores now. Right now we have a net outflow of foreign investment. What we need is a huge dollop of cash infusion to boost investment. Loosening fiscal deficit norms will help. But meaningfully slashing subsidies when Modi’s term is on the slope to elections is not politically feasible.

There is that old saying that when the going gets tough, the tough get going. Modi should now show toughness and imagination that is tempered with realism. He needs to revive the national mood and generate optimism over the economy. He now needs a plan to drive investment. He doesn’t have to go far to find the money to fund this plan.

The government is sitting with reserves of nearly $400 billion with about $135 billion alone sitting in US banks earning next to nothing. These reserves are equal to about 80% of our foreign debt. Even after providing a quarter of the reserves to cover short-term hot money of NRI investors each taking a pound of flesh for mostly foreign bank financed investment in their mother country, we will still have $300 billion in hand. How much money can be freed from the other $300 billion for investment is the big question now? Kaushik Basu has said that India’s foreign reserves need not be more than the current account deficit (CAD) or about $80 billion. Others are more cautious.

This will certainly raise many eyebrows. One is surprised over the number of people who think holding huge reserves abroad in ridiculously low yield securities is a sign of our wealth. No. It is a sign of our stupidity.

Just holding enough reserves to cover the CAD or exports for a few months would be about enough. This nonsense of holding reserves to at least cover six months imports is just plain arbitrary and concocted by the people who made the Washington Consensus. This “consensus” assures New York banks plenty of cheap money to finance American domestic consumption and extravagances. The Chinese have now realized the stupidity of financing the US cheaply with their reserves which not long ago almost touched $4trillion. They have run it down by about $1trillion since.

Now how much do you think the US foreign reserves amount to? Hold your seat. It is now $65 billion or about a fifth of India’s. What a travesty.

Clearly running them down by $100-120 billion or Rs.6.5L- 8L crores can be contemplated. The government could establish an India Infrastructure Investment Fund and start shifting meaningful fractions from the foreign reserves into this fund. A board of well-regarded experts, who can allocate investments on merits to prevent the usual leakages and political misuse, could administer the fund. The fund must also mandate the minimum level of local procurement and investment to boost Make in India.

Slow growth and no new jobs are Narendra Modi’s twin Achilles heels. He is vulnerable on both counts. He must seize the moment with both hands and start running with both legs.

Shri Mohan Guruswamy is a former Rajya Sabha MP and a political commentator. He is a Trustee of TPF.
This article was earlier published in ‘The Economic Times’.

July 1, 2018
India needs a Space Security Architecture

Ajay Lele December 12, 2017

In the 21^st century Space Security is rapidly emerging as a critical component of the National Security architecture. Today, space has emerged as a major instrument for the human survival. Very many activities associated with humans day to day leaving are depending on the satellite technologies directly or indirectly. Owing to increasing emphasis on space technologies space industry is also found making rapid growth. At the same time space has obvious utilities for the militaries too for the smooth and fast conduct of their various operations. Unfortunately, space is also emerging as a potential battleground with the possibility of confrontations both on the earth and also in the outer space. Naturally, for the states with significant amount of assets positioned in space as well as for the states having dependence on space technologies, it becomes imperative to evolve a specific policy structure to address issues concerning space security. This article attempts to discuss a need of such framework for India.

Necessity

Indian space programme is civilian in nature and existing space structures has been evolved essentially to cater for such requirement. Presently, Space Commission is responsible for growth, development, sustenance and furtherance of India’s space programme. There is no specific defence element involved with this structure. Hence, appreciating the military needs and also to allow ISRO to continue with its civilian mandate, it has become necessary to have a separate commission for handling strategic requirements. For this purpose a Military Space Commission needs to be established.

Such commission could oversee all space security aspects. Under this commission a specific agency could be established for coordinating activities of various stakeholders and liaise with various agencies of (civilian) Space Commission. Such agency could suggest modifications in exiting policy architecture as found necessary from time to time and also establish an experts group. This is important because human resources having an understanding about strategic requirements in respect of outer space issues may not be readily available. Hence, to address modern day threats it is inessential to have human resource of specialists with multidisciplinary vision. Such group should consist of military personnel, space scientists, cyber experts, AI/robotic experts, strategic technologists, technology managers, lawyers, academicians, disarmament & arms control experts and diplomats.

Military Space Command, a tri-service organisation should be the main implementation agency for this commission. This agency should have a larger mandate encompassing various issues. In coming years, Indian Army, Navy, Air force and other services like the Coastguard, Border Security Force etc are likely to increase their reliance on satellites for the purposes of intelligence gathering, communication, navigation, and operations of various weapon systems. Over last couple of years is has been noticed that the need for I-S-R capacities in space to support network centric strategies is significantly increasing. Space command should be tasked to administer various military and para military related aspects of satellite technologies. This command should directly liaise with the Military Space Commission to project its requirements. For operational purposes this command could be put under the CDS/IDS. Home Ministry representative could a single point source amongst para military forces to liaise with this command. The command should have an exclusive research wing. Also, special focus should be given to issues related to Space Situational Awareness (SSA) and Space Meteorology.

India has no intent to weaponize the space. However, India needs to develop (not necessarily test) certain offensive technologies, from ASAT to jamming to cyber tools. Today, the idea of weapons in space is more theoretical in nature. However, this could become a reality in coming few years. From deterrence perspective it is important for India to have a mechanism in place which could address such issues. The policy perspective in this regard should be developed by the Military Space Commission and Space Command should be the implementation agency. Legal and foreign policy related issues would play a major role towards evolving any space security architecture. In regards to these matters, it is important for Military Space Commission to liaise with the Space Commission and evolve an India specific view.

Context

Indian space programme is civilian in nature and existing space structures has been evolved essentially to cater for such requirement. Presently, Space Commission is responsible for growth, development, sustenance and furtherance of India’s space programme. There is no specific defence element involved with this structure. Hence, appreciating the military needs and also to allow ISRO to continue with its civilian mandate, it has become necessary to have a separate commission for handling strategic requirements. For this purpose a Military Space Commission needs to be established.

Such commission could oversee all space security aspects. Under this commission a specific agency could be established for coordinating activities of various stakeholders and liaise with various agencies of (civilian) Space Commission. Such agency could suggest modifications in exiting policy architecture as found necessary from time to time and also establish an experts group. This is important because human resources having an understanding about strategic requirements in respect of outer space issues may not be readily available. Hence, to address modern day threats it is inessential to have human resource of specialists with multidisciplinary vision. Such group should consist of military personnel, space scientists, cyber experts, AI/robotic experts, strategic technologists, technology managers, lawyers, academicians, disarmament & arms control experts and diplomats.

Military Space Command, a tri-service organisation should be the main implementation agency for this commission. This agency should have a larger mandate encompassing various issues. In coming years, Indian Army, Navy, Air force and other services like the Coastguard, Border Security Force etc are likely to increase their reliance on satellites for the purposes of intelligence gathering, communication, navigation, and operations of various weapon systems. Over last couple of years is has been noticed that the need for I-S-R capacities in space to support network centric strategies is significantly increasing. Space command should be tasked to administer various military and para military related aspects of satellite technologies. This command should directly liaise with the Military Space Commission to project its requirements. For operational purposes this command could be put under the CDS/IDS. Home Ministry representative could a single point source amongst para military forces to liaise with this command. The command should have an exclusive research wing. Also, special focus should be given to issues related to Space Situational Awareness (SSA) and Space Meteorology.

India has no intent to weaponize the space. However, India needs to develop (not necessarily test) certain offensive technologies, from ASAT to jamming to cyber tools. Today, the idea of weapons in space is more theoretical in nature. However, this could become a reality in coming few years. From deterrence perspective it is important for India to have a mechanism in place which could address such issues. The policy perspective in this regard should be developed by the Military Space Commission and Space Command should be the implementation agency. Legal and foreign policy related issues would play a major role towards evolving any space security architecture. In regards to these matters, it is important for Military Space Commission to liaise with the Space Commission and evolve an India specific view.

In closing

It is important to note that Military Space Commission is not an attempt to evolve a parallel architecture to Space Commission and ISRO. Duplication of assets is not advisable and all necessary assistance (and advise) should be taken from ISRO to organise range of activities. There sould be horizontal and vertical interaction with various departments of ISRO and also with Defence Research & Development Organisation (DRDO). Today, the rapidly changing global space order is posing different type of challenges to national security. As one of the leading space-faring states in the world and also being a major military power and possessor of nuclear weapons, it is important for India to have well-thought-of policy of using space for military and deterrence purposes.

References: Author has referred various Internet based sources

Dr Ajay Lele is a Senior Fellow at the IDSA.

June 29, 2018