The Peninsula Foundation

Tag: India

  • Indus Waters: Yawning Gap Between Threat and Reality

    Indus Waters: Yawning Gap Between Threat and Reality

    World Bank brokered the IWT between India and Pak after many years of intense negotiations to allocate the waters of the Indus river basin

    The Narendra Modi government has decided to start talks with Pakistan on the Indus Waters Treaty, and rightly so. After the Uri incident, Prime Minister Narendra Modi had said that “blood and water cannot flow together”. The reality, however, is that while flow of blood can be stopped, the water will continue to flow. The geography makes it next to impossible for the waters from the Indus, Chenab and Jhelum. Yet there is reason to revisit this treaty, because of Pakistan’s persistent misuse of the provisions of the IWT that enable it to adopt a dog in the manger attitude to prevent or delay any development of hydel projects on the three rivers that is permitted by the treaty. This must stop.

    The Indus rivers system has a total drainage area exceeding 11,165,000 sq. km. Its estimated annual flow stands at around 207 km3, making it the twenty-first largest river in the world in terms of annual flow. It is also Pakistan’s sole means of sustenance. The British had constructed a complex canal system to irrigate the Punjab region of Pakistan. Partition had left a large part of this infrastructure within Pakistan.

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  • Analyzing the Union Budget 2023-24 to Unravel its Underlying Strategy

    Analyzing the Union Budget 2023-24 to Unravel its Underlying Strategy

    Introduction

    Any budget is complex consisting of many things of varying importance. Often, people focus on things of their direct interest but miss the wider implications that affect them indirectly and may undo any benefit they may get directly. Thus, it is not only important to look at the trees but also the forest. So, it is important to analyse the Macroeconomic strategy of the budget.

    Further, the budget is based on three things. First, analysis of the current economic situation, second, the scenario likely to prevail in the coming year and finally, what direction policy makers may want to give to the economy. It also needs to be kept in mind that there are lags. Announcements do not mean that what is being said will immediately happen. Even after implementation begins, it takes time for the results to follow. But it is always possible that the expected results may not follow due to a variety of reasons.

    Thus, a budget needs to be analysed both for its short term and long term impact. Any contradictions between the short and the long term policies leads to their failure. For the country, the long term is critical but politically the ruling party may find the short terms gains more compelling. This article attempted to present an analysis of the Union Budget 2023-24 with these features in mind.

    Current Economic Challenges

    There are internal and external challenges facing the economy. Externally, the ongoing war in Ukraine and the `New Cold War’ are adding to India’s problems. Nothing much can be done with regard to these except making the economy more resilient. A stronger economy will be able to better deal with the external challenges.

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  • Role of Merchant Marine in Indian Maritime Security

    Role of Merchant Marine in Indian Maritime Security

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    Introduction:

    The Merchant Marine plays only a modest role in contributing towards securing India’s maritime neighbourhood or for that matter for any nation. On the other hand, its indirect contribution to security- largely through the economic dimension is significant.

    This paper seeks to explore the economic dimension of merchant ships and in doing so, endeavours to bring out the resultant contribution to maritime security.

    With my domain knowledge, I hope to cover global maritime, and its current scenario in India. I have spent 28 years at Sea of which 18 years in Command as Captain and an additional 25 years ashore in Senior Management positions. I have recently relocated back to India after 5 years in Sri Lanka and a year in Seychelles. So, I do consider it a privilege to share my experience.

    Global Maritime:

    Shipping is the life blood of global economy.  Without shipping, intercontinental trade, the bulk transport of raw materials, and the import/export of affordable food and manufactured goods would simply not be possible. The international shipping industry is responsible for the carriage of around 90% of world trade. Seaborne trade continues to expand, bringing benefits for consumers across the world through competitive freight costs. Thanks to the growing efficiency of shipping as a mode of transport and increased economic liberalisation, the prospects for the industry’s further growth continue to be strong.

    There are over 58,000 merchant ships trading internationally, transporting every kind of cargo. The world fleet is registered in over 150 nations, and manned by over 2 million seafarers of virtually every nationality. Ships are technically sophisticated, high value assets (larger hi-tech vessels can cost over US $200 million to build), and the operation of merchant ships generates an estimated annual income of over US $1.2 trillion in freight rates.

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    Feature Image Credits: Financial Times

  • Challenges of the Indian Economy and Banking Under the Sway of Global Capital

    Challenges of the Indian Economy and Banking Under the Sway of Global Capital

    Introduction

    In a modern day capitalist society, finance (vitta) is of crucial importance. It can help the individuals but also marginalize them since finance is not only complex but becoming more so and even educated people barely understand it. So, most people follow the herd mentality and often that leads to mistakes.

    Any analysis of the world of finance in India requires one to understand the nature of the current Indian Economy and its changing philosophical moorings. The problem is compounded by the rapidly changing technology in the world which is hard to keep track of, even for the experts, much less for the common person. Before one has understood the implications of a technology a new one arrives. For instance, in India, the advent of plastic cards has been quickly overtaken by electronic transactions and now the cryptos are threatening banks and even Central Banks.

    Thus, the financial sector itself faces unprecedented challenges with new financial instruments appearing in rapid succession. Since their impact on the financial system is little understood, risk has increased and that is leading to growing instability. To take care of the risks in the system newer instruments have emerged and they add to the instability. For instance, the global financial crisis of 2007-09 was triggered by the sub-prime crisis, growth of shadow banking, Credit Default Swaps, etc.

    So, the issues facing the world of finance today need to be understood in both the global context and historically.

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  • On China and Economy, Dialogue Is the Need of the Hour

    On China and Economy, Dialogue Is the Need of the Hour

    The strength of democracy is that debate and dialogue provide society with a self-corrective mechanism.

    The news of Chinese transgression in Tawang on December 9 is disturbing. The opposition has repeatedly demanded a discussion in the parliament but the government has not agreed. The government’s stock reply is that the matter should not be politicised and that we should have full faith in our army and our brave soldiers.

    This is diversionary since no one is saying that our soldiers are at fault or are not fighting valiantly. The issue is about policy and India’s political stance vis-à-vis China because of which the brave soldiers are suffering. A full discussion in parliament will help clear the air in this regard.

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  • RBI Affidavit on Demonetisation Obfuscates Rather than Clarifying

    RBI Affidavit on Demonetisation Obfuscates Rather than Clarifying

    Demonetisation is an example of a needless policy which failed because of lack of consultation and inadequate understanding of the issues. It led to a policy-induced crisis that deeply impacted the nation: all because democracy was not allowed its full play.

    In a vibrant democracy, critique of policy a) makes for a) better policies, and b) helps correct mistakes as they occur. Official spokespersons will always argue that the government is doing the best under given circumstances. But today, the world is changing so fast that mistakes will occur because the past may not be a guide for the future. Further, full information is not available even about the present. So, policies are made in an uncertain environment, leading to heightened risk of policy failure. Democracy provides the self-correcting mechanism when mistakes occur.

    While genuine mistakes will occur, there is a class of decisions based on misperceptions and inadequate consultation that go horribly wrong. Demonetisation is an example of a needless policy which failed because of lack of consultation and inadequate understanding of the issues. It led to a policy-induced crisis that deeply impacted the nation: all because democracy was not allowed its full play.

    Demonetisation case in court

    Soon after demonetisation was launched many challenged the decision in the courts because it was patently unfair to the marginalised who suffered hugely from it. The Supreme Court has now taken up this case, when six years have elapsed and the policy cannot now be reversed. It will be no relief to those who died or lost out. Compensation cannot be given because it would be hard to estimate who lost how much. Even if compensation is ordered by the court, citizens will only pay themselves through the government. The permanent damage to the economy cannot be restored.

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  • Don’t Put Troops in Harm’s Way

    Don’t Put Troops in Harm’s Way

    Every military campaign is fraught with dangers. The Russian army finds it in a mess it cannot jiggle out of. We should think twice before any adventurism in POK.

    Nine months on into the conflict in Ukraine, with its reputation and capabilities in tatters, the Russian Armed Forces are just hanging on by the skin of their teeth, hoping that the winter will allow them a badly needed reprieve to reorganise. One cannot help but wonder as to how they found themselves in such dire circumstances, despite a decade of reforms and modernisation.

    Clearly, much of the responsibility for the utter disaster that has ensued and the difficult predicament Russia finds itself in, must rest with Putin. However, it is utterly inconceivable that he acted without the advice, support and acquiescence of the military hierarchy. Though many of the missteps may be attributable to faulty intelligence assessments, the responsibility for the military’s non-performance rests squarely on the senior hierarchy of the Russian Armed Forces. Their obvious incompetence, lack of leadership skills and professional acumen, and the corruption that has been laid bare are without parallel. Yet, they are the lucky ones, given that Stalin executed Generals for much less.

    It is standard practice in all countries that selection of the military’s top leadership is overseen and approved at the highest political level, as it should be. Where autocracies and totalitarian regimes differ from democracies is in the necessity for them to give primacy to ideology or loyalty to the Supreme Leader even at the cost of professionalism. This lack is bound to percolate to lower levels over time and while it ensures the leadership remains unchallenged in the normal course of events, its consequences in a conflict can be devastating as has been the case with the Russians.

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  • Absence of Persons with Impeccable Integrity at the Helm is the Bane of India’s Democracy

    Absence of Persons with Impeccable Integrity at the Helm is the Bane of India’s Democracy

    Gandhiji said that institutions reflect what the people are, and that they cannot function as they are intended to unless those manning them are people of integrity. 

    A Supreme Court Constitution bench recently said that the Chief Election Commissioner should be one “with character” and who would not get “bulldozed” – a self-evident truth. Further, it suggested that the selection committee for the post should consist of an independent person like the Chief Justice of India (‘CJI’). It added that people like bureaucrat and former Chief Election Commissioner late T.N. Seshan, who could act independently, “happen once in a while”.

    Perhaps without meaning to, these comments indict the election commissioners appointed since Seshan’s time. Therefore, they have given voice to recent public concerns about the independence of the institution.

    Integrity of Constitutional Authorities

    Will the CJI’s presence in the committee to appoint the Election Commissioners make a difference? The CJI is a member of the committee to appoint the Director of the Central Bureau of Investigation (CBI). But the Supreme Court itself has called the CBI a “caged parrot”. The problem arises since the party in power would prefer a sympathetic person as an Election Commissioner, not an independent person.

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  • India’s Unorganised Sector Is Being Engulfed, Further Marginalised

    India’s Unorganised Sector Is Being Engulfed, Further Marginalised

    The organised sector must consider how much can the unorganised sector be run down without hurting its own interest.

    The corporate sector is doing well, as indicated by the stock market which reflects its health. But the corporates represent only a few thousand businesses out of the crores operating in the country. Ninety-nine percent of the businesses are in the unorganised sector and reports suggest that they are declining. The official GDP for Q1 of the current financial year 2022-23 was 3.3% above its pre-pandemic level. Yet, the stock markets are close to their historic high achieved in 2021. This disjuncture between the stock market and the economy reflects the surge in corporate profits in a stagnant economy – and there is a story behind it.

    The Reserve Bank of India data on around 2,700 non-government, non-financial companies released in August 2022 shows that the sales of these companies surged 41% and net profits increased by 24% over the last year. Even if these figures are deflated by the wholesale price index (WPI) which has been rising at above 10% during this period, the corporate sector surge far exceeds the growth of the economy. If one component of the economy is rising so rapidly, the other part, the non-corporate sector in industry, must be shrinking. The difficulty with the official data is that it does not independently capture the decline of the unorganised sector (it is proxied by the growing organised sector). If the true rate of growth could be obtained, the disjuncture between the official growth rate and the rise in the stock market would be even greater.

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  • BRICS Real Value: One Step Towards New World Order

    BRICS Real Value: One Step Towards New World Order

    While “BRICS” has been a frequently occurring acronym in our discourse in recent years, not many seem to have grasped the reality of Brics and its actual utility.

    The post-Cold War era has seen the economic and political rise of a host of nations — Brazil, China and India being foremost among them. Since 2000 and the advent of Vladimir Putin, Russia has with some help from soaring oil prices made impressive economic gains. The new South Africa, based equally on the industrial inheritance of the robust but unequal and exploitative apartheid regime and the bounty of nature, now finds itself as an advancing economic power. Unlike Nigeria, which has frittered its oil wealth and has been looted by its native kleptocracy, South Africa has been a relative symbol of responsible government and probity in public life. Each one of these nations is now a major economic player and some already have bigger GDPs than many countries in the Group of Seven. Together, in the next two decades, Brics is likely to outstrip the G-7.

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