Union Finance Minister Nirmala Sitharaman’s announcement on Monday was a supply-side fiscal measure in the form of tax cuts on motor fuels, cooking gas subsidies and duty cuts on input imports, aiming to shield domestic consumers from global price vagaries. These subsidies would directly shave ~45 bps off retail inflation, with possible ~15 bps of indirect impact. Fuel price action of the oil marketing companies’ (OMCs) needs to be watched in later months, especially amid still-high under-recoveries.
While it could alleviate the price rise ahead, the fiscal cost to the exchequer due to these measures amounts to ~1% of GDP. On net, the Centre’s FY23 fiscal math is likely to get disturbed by ~0.5% to 6.9% of GDP. The fiscal hit in the form of higher doles on food and fertilizer subsidies, lower divestment, telecom proceeds, excise cuts and RBI dividend may outstrip buffers such as inflation-led higher nominal growth, better direct tax buoyancy and possibly some capex cuts. Gross dated borrowing could increase by Rs 1.1 trillion, despite higher net T-bills.
Near-term bear-steepening of the Gsec curve may happen. Counter-cyclical fiscal response to consumption and inflation could reduce future rate rises and output sacrifice. However, front-loaded hikes (another 100-125 bps in FY23) may continue as inflation will still exceed 6% in the coming two quarters. However, the front-loaded rate-hike cycle does not imply a lengthy tightening cycle, and once the RBI reaches the supposed neutral pre-Covid monetary conditions, the bar for further tightening incrementally may be higher amid increasing growth-inflation trade-offs.
Counter-cyclical action to target inflation and consumption
In an effort to offer some reprieve on inflation, the government deployed counter-cyclical fiscal measures to shield domestic consumers from global price vagaries. The slew of measures include: (1) Rs 8/litre and Rs 6/litre tax cuts on gasoline and diesel, respectively – back to pre-pandemic levels, (2) Rs 200 subsidy on cooking gas, benefitting around 90 million poor households, and (3) cut in import duties on raw materials and intermediaries of plastics, iron, coal, cement and steel. This comes after the government announced enhanced subsidies on food and fertilizers, which we think still run the risk of overshooting.
FY23 GFD/GDP to slip ~0.5% of GDP as excess net expenditure topples some revenue buoyancy
We raise our FY23 GFD/GFP estimate to 6.9%, from the budgeted estimate of 6.4% – implying around Rs 1.9 trillion slippage from the budgeted deficit. The fuel excise cuts and LPG subsidy will cost the exchequer ~Rs 850 billion and Rs 61 billion, respectively. Enhanced food and fertilizer subsidy should further burden the fiscal by 0.5% of GDP each. We assume the free grain scheme may stay the whole year, instead of only H1 – implying Rs 1.5 trillion fiscal hit – to be partly countered by lower procurement cost. Meanwhile, on the revenue front, lower RBI dividend and telecom and divestment proceeds will further hit by 0.3% of GDP. Even assuming (1) stronger nominal growth, (2) tax revenue upside amid conservative budgetary estimates, and (3) capex cut by more than 0.2%, the GFD/GDP is poised to print close to 6.9% (Exhibits 1 & 2). The financing of the fiscal could put pressure on the gross dated borrowing to the tune of Rs 1.1 trillion, despite assuming double of net T-bill borrowings from the budget.
Net direct inflation relief of around 45bps but watch out for OMCs revert in coming months
With the fuel excise cut and other supply-side fiscal measures, the government has finally joined the RBI to bring down inflation. We note that near-term inflation expectations can be better tamed by such supply-side fiscal policies, which could eventually impact the RBI’s reaction function more effectively. We estimate the motor-fuel tax cuts and gas cylinder subsidy would directly shave ~20 bps and 25 bps off headline CPI – to be felt largely in June. The second round impact via transportation costs/electricity genset, etc. could add another 10-15 bps. We await further advalorem fuel duty cuts by states on fuel, which could further aid at the margin. While OMCs seem to have passed on duty cut benefit to consumers, our Oil and Gas team reckons given the underrecoveries, OMCs may recover margins later, especially if global prices stabilize. Meanwhile, other measures like import duty cut and control cement prices will also help reduce some underlying inflationary pressures at the margin. Overall inflation could average around 6.4% (vs 6.8% earlier), with further downward pressures if MSP hikes are contained (Exhibit 3).
Case for front-loaded hikes remains, but the cycle may not be too lengthy
Counter-cyclical fiscal response to consumption and inflation – which could reduce future rate rises and output sacrifice – has been an ask from some MPC members. While this move is welcome, will tame HH expectations, and may ease some pressure from the RBI in the medium term, the June policy will still see hikes to the tune of 25-50 bps (with a bias toward 50 bps). The MPC reaction function is evolving with fluid macro realities. Despite some cooling-off, the inflation prints of the next two quarters are also likely to exceed 6%, which could pressure the RBI into acting sooner rather than later. FY23 could thus further see rates going up by 100-125 bps, with the RBI intending to keep real rates neutral or above to quickly reach pre-Covid levels. However, the front-loaded rate-hiking cycle does not imply a lengthy tightening cycle, and once they reach the supposed neutral pre-Covid monetary conditions, the bar for further tightening incrementally may be higher amid increasing growth-inflation trade-offs.
(The author is Lead Economist at Emkay Global. She has been ranked one of the top three women economists in India by Bloomberg.)
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CONG HOPES RAHUL’S YATRA WILL CATAPULT PARTY TO POWER IN KARNATAKA
The Mekedatu padayatra was just a prelude as the scale at which DK is orchestrating this Bharat Jodo is unimaginable, sources in the Congress said.
With the Rahul Gandhi-led Bharat Jodo Yatra all set to enter Karnataka via Kerala’s Wayanad on 30 September, the Pradesh Congress has made elaborate arrangements to amplify the yatra on a grand scale, hoping to revitalize the party ahead of the crucial 2023 Assembly elections. The yatra which started from Kanyakumari will begin its Karnataka leg from Chamarajnagar district and cut through the state for over 500 km from Old Mysore region, which is the Cauvery Delta Region all the way to Bengaluru, and then move towards North Karnataka.
The yatra in the Cauvery delta is touted as a game-changer as D.K. Shivakumar, the KPCC president, is leaving no stone unturned to amplify the rally on foot. He intended to achieve two things—showcase his organizational prowess and also score brownie points from the Gandhis. The Old Mysore region is dominated by Vokkaligas and thus the significance. In the last six months, there were several instances where D.K. Shivakumar and former Chief Minister H.D. Kumaraswamy have crossed swords over donning the Vokkaliga leader mantle.
The Mekedatu padayatra was just a prelude as the scale at which DK is orchestrating this Bharat Jodo is unimaginable, sources in the Congress said. The optics here are also relevant from the point of view of who is the mass leader from the Old Mysore Region. Siddaramaiah faced an embarrassing defeat last time and is now made Badami of North Karnataka his political home. History has it that whoever is voted for in huge popularity in this region has become the chief minister of Karnataka and in that D.K. believes that his time has come. Even H.D. Kumaraswamy at a recent event had said on stage that “if a situation presents itself where DKS needs my support to become CM, I will’’
The yatra will then move towards Bengaluru and then towards north Karnataka which is very critical for the Congress. It is here that during the 2013 elections, Congress reaped over 45 seats, thanks to the fallout B.S. Yediyurappa had with the BJP then. The big question is will Congress successfully convert the anger in the Linagayat community over BSY to its kitty? From Shyamanur Shivsankrappa to M.B. Patil, the grand old party has prominent Lingayat leaders, but will they occupy the space vacated by Yediyurappa remains to be seen.
The yatra will have a galaxy of national and state leaders who will join Rahul Gandhi–former chief minister Siddaramaiah, ex-Deputy CM Dr G. Parameshwar, M.B. Patil, Ramalinga Reddy, B.K. Hariprasad, Krishna Byre Gowda, Dinesh Gundu Rao, K.H. Muniyappa, Veerappa Moily and Mallikarjun Kharge along with others will walk during different stages of yatra. During the yatra, the Congress is expected to rake up several issues and revive its campaign coined around “40pc commission govt” and “Nimma hathira iddiya Uttara”, a charge sheet compiled to highlight the failure of the BJP government for not implementing promises made in its last manifesto.
Russia, West at odds over NATO expansion
The Ukraine crisis is caused primarily by NATO’s aggression and expansion. Achieving lasting peace means checking that aggression and expansion; however, the US is leveraging the war as an elaborate advertisement for NATO
Everything old is new again. Through the lens of Ukrainian history, the world has been reminded of the Russian colonial imperialism imposed upon its neighbours. This is important to understand within the context of today’s crisis because Putin fundamentally believes that Ukraine is not a nation state and perceives other neighbouring countries similarly.
To understand the current realities of Russia and Ukraine, and the part NATO has played in defining the current hostilities between the two nations, it is important to rewind history and trace the developments that have happened since the 1990s. Most of the conflicts in the world have an extended history of various complexities and overlapping difficulties, the Ukraine-Russian crisis is no exception.
The crisis in Ukraine is caused primarily by NATO’s aggression and expansion. Achieving lasting peace means checking that aggression and expansion; however, the US is leveraging the war as an elaborate advertisement for NATO, promoting a bloc-based version of collective security premised on opposing Russia. Sweden and Finland have long thrived under a policy of military non-alignment, but they are now coming under pressure to discard neutrality in favour of NATO membership. Such a policy will foment collective insecurity and push the European continent further into chaos.
Nobody can seriously argue that NATO is fundamentally defensive in character. It is an aggressive, nuclear alliance designed to enforce US hegemony. In the decades following the Soviet collapse, NATO has expanded from 16 countries to 30 – reneging on repeated promises made to the Soviet and Russian leadership in the early 1990s that NATO’s borders would move “not one inch” East of Germany. In fact NATO’s borders have moved right up to Russia’s doorsteps.
Putin aims to rollback much of the security architecture that has been put into place in Europe since the end of the Cold War, particularly with regard to Central and Eastern Europe. This means not only closing the door to potential NATO membership for Ukraine but curtailing any form of Western military assistance available. The Kremlin also seeks to undermine many of the measures that have been put in place by the NATO alliance dating back to the 1997 Founding Act – a framework designed to determine how their relationship should move forward in view of NATO enlargement – in effect, neutralizing the alliance in Central and Eastern Europe. The challenge for NATO, as an alliance of democratic countries, is that it cannot let Russia dictate the terms of membership.
Russia’s full-scale invasion of Ukraine in 2022 marked a dramatic escalation of the eight-year-old conflict and a historic turning point for European security. With expanding Western aid, Ukraine has managed to frustrate many aspects of Russia’s attack, but many of its cities have been pulverized and one-quarter of its citizens are now refugees or have been displaced. It remains unclear if and how a diplomatic resolution could emerge. Ukraine’s place in the world, including its future alignment with institutions such as the European Union (EU) and North Atlantic Treaty Organisation, hangs in the balance.
Ukraine was a cornerstone of the Soviet Union, the archrival of the United States during the Cold War. Behind only Russia, it was the second-most-populous and -powerful of the fifteen Soviet republics, home to much of the union’s agricultural production, defense industries, and military, including the Black Sea Fleet and some of the nuclear arsenal. Ukraine was so vital to the union that its decision to sever ties in 1991 proved to be a coup de grâce for the ailing superpower.
In its three decades of independence, Ukraine has sought to forge its own path as a sovereign state while looking to align more closely with Western institutions, including the EU and NATO. However, Kyiv struggled to balance its foreign relations and to bridge deep internal divisions. A more nationalist, Ukrainian-speaking population in western parts of the country generally supported greater integration with Europe, while a mostly Russian-speaking community in the east favored closer ties with Russia.
Ukraine became a battleground in 2014 when Russia annexed Crimea and began arming and abetting separatists in the Donbas region in the country’s southeast. Russia’s seizure of Crimea was the first time since World War II that a European state annexed the territory of another. For many analysts, the hostilities marked a clear shift in the global security environment from a unipolar period of U.S. dominance to one defined by renewed competition between great powers.
Some Western analysts see Russia’s 2022 invasion as the culmination of the Kremlin’s growing resentment toward NATO’s post–Cold War expansion into the former Soviet sphere of influence. Russian leaders, including Putin, have alleged that the United States and NATO repeatedly violated pledges they made in the early 1990s to not expand the alliance into the former Soviet bloc. They view NATO’s enlargement during this tumultuous period for Russia as a humiliating imposition about which they could do little but watch.
Despite remaining a non-member, Ukraine grew its ties with NATO in the years leading up to the 2022 invasion. Ukraine held annual military exercises with the alliance and, in 2020, became one of just six enhanced opportunity partners, a special status for the bloc’s closest nonmember allies. Moreover, Kyiv affirmed its goal to eventually gain full NATO membership.
In the weeks leading up to its invasion, Russia made several major security demands of the United States and NATO, including that they cease expanding the alliance, seek Russian consent for certain NATO deployments, and remove U.S. nuclear weapons from Europe. Alliance leaders responded that they were open to new diplomacy but were unwilling to discuss shutting NATO’s doors to new members.
Putin ordered a full-scale invasion, crossing a force of some two hundred thousand troops into Ukrainian territory from the south (Crimea), east (Russia), and north (Belarus), in an attempt to seize major cities, including the capital Kyiv, and depose the government. By March, 2022, some Western observers said that, given unexpected setbacks it incurred on the battlefield, Moscow could curtail its aims and try to carve out portions of southern Ukraine, such as the Kherson region, like it did in the Donbas in 2014. Russia could try to use these newly occupied territories as bargaining chips in peace negotiations with Ukraine, which might include stipulations about Kyiv’s prospects for membership in the EU and NATO. Others warned that continued attacks on Kyiv belied any of Moscow’s claims of a shift in military operations away from the capital.
As a security partner, Ukraine is not afforded any security guarantees under Article V–the US and its allies in the NATO organization do not have a commitment to defend Ukraine and so it becomes difficult to deter an attack on Ukraine through conventional means. However, the gray zone is useful for both sides in the management of escalation risks. Putin wants to be perceived as a strong military leader, but the costs (e.g., political, economic, reputational, etc.) of escalating to kinetic warfare may force him to recalculate. These costs may be the most effective deterrent there is – the West needs to make sure these are communicated clearly.
There is still room for diplomacy but the longer this plays out, the more costly it becomes to keep these troops on Russia’s border with Ukraine. There is room for agreement on issues like nuclear arms control, but this is unlikely to be what Putin is hoping to achieve with this massive military buildup and his outrageous demands. Rather, Putin appears to be seeking a pretext to justify some level of military action.
One wonders – as did the American diplomat George F. Kennan, the father of the Cold War containment doctrine who warned against NATO expansion in 1998–whether the advancement of NATO eastward has increased the security of European states or made them more vulnerable.
If NATO’s extension continues and reinforced its presence in Ukraine, as may propose by offensive realists, Ukraine Crisis will be escalated even more, and country’s eastern part will be turned to another ‘frozen conflict’ in post-Soviet space. In contrast, halting the enlargement policy in the face of Russian aggression in Ukraine can encourage Russia even more to use military force in its ‘near abroad’. For these reasons neither approaches are compatible to cope with the ongoing crisis. However, using both views partly help to come up with a solution for the puzzle. Currently, ensuring the territorial integrity of Ukraine should be prioritized, and for this purpose, NATO enlargement policy should not be used to deter Russia (which indeed escalates the war in Eastern Ukraine) instead NATO membership option for Ukraine should be used as a leverage in peace process to ensure territorial integrity of Ukraine.
The writer is an Associate Professor in Seedling School of Law and Governance, Jaipur National University, Jaipur. He had worked as an Assistant Professor in Apex Professional University, Pasighat, Arunachal Pradesh, and as a journalist in esteemed newspapers, portals and magazines.
THE TALIBAN NEVER EVER ‘WON’ AFGHANISTAN
It speaks of the resilience of the shards of the philosophy of Untermensch and Übermensch even within “liberal” minds that explains why it was the liberal W.J. Clinton in 1996 and in 2021 the liberal J.R. Biden Jr who gifted Afghanistan to the Taliban. The latter is these days shrugging off blame for the consequences of his disastrous “Everybody Out” policy on Afghanistan by blaming it on the Trump Surrender Document that was signed in Doha in 2020. If patriotism has been the excuse for many sins committed in the past, there has been within the US since the 1960s a tendency to use the CIA as the whipping boy for several of the policy blunders committed by US Presidents. The boilerplate excuse proffered is that wrong information fed by the CIA was the reason for egregious errors in policy. In the case of Afghanistan, the excuse of apologists for the apparently clueless if usually personable Joe Biden is that the CIA came up with the finding that there was now a Taliban 2.0, that was almost Social Democratic in a newly acquired commitment to reform. That the era when children, women, Hazara, Tajik and other non-Pashtuns were subjected to evident discrimination that was a feature of Taliban rule during 1996-2001 was over and that the “new” Taliban, although comprising of many elements of the old Taliban, was qualitatively different and could be relied upon to rule in an equitable manner. Such was indeed the mantra of the so-called “experts on Afghanistan” that had backed Clinton and subsequently Biden in their consigning to Taliban overlordship the Afghan people, individuals such as Zalmay Khalilzad or Barnett Rubin. If the CIA agrees with such an assessment, that organisation needs to get disbanded immediately, and its analysts need to work behind the counter of junk food stalls. The truth is that it is unlikely that such were the findings, although it is plausible that a liberal dash of rosewater was added to the findings of analysts and agents by those higher up the chain of command in the CIA, those of whom spend much of their time in the essential task of buttering up the politicians who are in charge of US agencies. Who can forget George Tenet, the CIA Director who served both Clinton and Bush, and who assured President Bush that his obsession with neutralising Saddam Hussein was not founded on prejudice rather than reason but was based on “Slam Dunk” evidence that Saddam had WMD? If DCIA Tenet knew where such stockpiles were, after the US-UK occupation of Iraq he declined to reveal them to the weapons inspectors, who came up with nothing in the way of WMD after months of enquiry.
A handful of analysts such as Bill Roggio in the FDD in Washington, not to mention the present writer, challenged the perception that there was now a Taliban 2.0. Instead, the only change in that collection of warlords was that the “new” Taliban had many more within their non-operational wings that spoke English. They knew exactly what buttons to press in their interactions with Atlanticist media and policymakers to make many believe the fiction peddled by the Rubins and the Khalilzads. Executions of those who assisted NATO in Afghanistan were instituted soon after “Taliban 2.0” took over Afghanistan as a consequence of Biden’s folly. This has been blamed by the 46th President on the 45th President, as though Biden was elected President merely to follow the agenda of Trump but without the orange hair.
Such killings continue, such that the number of such former auxiliaries of mainly US forces is shrinking almost by the day, and who are in much greater risk of death than the Ukrainians who are being welcomed across both sides of the Atlantic in a manner that is being used to suggest by rivals of the Atlantic Alliance that the reason is that they are European. There must be other reasons for such throbbing love, but in Asia, Africa and South America, if not yet in the African-American community in the US, the belief that such favouritism is based on ethnic considerations is widespread. The Afghan people deserved better, even if not all of them look the way Ukrainians do.
Adieu, Mikhail Gorbachev, the last CPSU General Secretary
That Russia would never be accepted as part of the ‘common European family’ by France, Britain and Germany was never comprehended by Gorbachev
His repeated forgiving of the efforts of Mahmud Ghori to bring down his kingdom and take away his life ensured that Prithviraj Chauhan was the tragic idealist who initiated the process of destroying the India that had endured for many millennia. He failed to recognise that in Ghori, he faced an opponent who sought nothing less than the destruction of an entire system of governance and its concomitant way of life. Each time Prithviraj spared his life, Ghori went back determined to succeed against the merciful ruler the next time around. Finally, Ghori’s day came with a pre-dawn attack that caught Prithviraj’s army unawares, most being deep in sleep. The Rajput princes of the time fought wars in a manner reminiscent of cricket, with set rules designed to make the contest a battle between chivalric foes. Their error was that as a collective as well as individually, the princes of the day failed to comprehend the systemic, the civilizational nature, of the battle that their foe to the north west was intent on waging. That easy, indeed facilitated and assisted plunder, created in their implacable foe an appetite to control the land and its people. In such a conflict, only a single side wins, and eventually that was not the side of Prithviraj.
In his final moments, as he was facing death at the hands of a foe who had from the start been implacable, the luckless Samrat may have understood the fatal error he had made in sparing the life of a foe with the ambition to transform the land and the people in his own image. Even after more than seven centuries of domination by the Mughals, that did not happen. In villages across India, in minds and in the homes of tens of millions, their belief systems remained intact in a manner that had not been the case in any other country taken over by those who had linked their confidence in victory to their belief and fealty to what they believed to be the message of the Almighty. Later, the Rubicon of cruelty was crossed by Aurangzeb, who as a consequence found himself not the protector of Mughal rule but its destroyer. The Marathas in particular, led by the charismatic military tactician Chhatrapati Shivaji Maharaj, proved to impossible to subdue.
Wars within India opened the doors to conquest by the European powers, with the British establishing dominance over the subcontinent through the use of any means that they judged to be effective for the purpose. The age of chivalric combat had perished with the defeat and execution of Prithviraj, and from then onwards, wars were fought not by another version of the Marquis of Queensbury rules but freestyle. Anything was permitted to subdue the rival. It took the blow to the loyalty towards the British Raj of the Indian armed forces effectuated by Subhas Chandra Bose through the Indian National Army to make Whitehall realise that their time was up in India. Had it been Subhas Bose who had headed the freedom struggle rather than the hand-picked lawyer chosen by Mahatma Gandhi, Jawaharlal Nehru, there may not have been a partition of India in 1947, nor perhaps the peeling away of Sri Lanka, Myanmar and other territories that had earlier been an intrinsic part of the subcontinent. Until Partition, Nehru had been adamant that he would not accept any status for the Muslim community different from that which existed for Hindus, aware of the harm that had been done by the separate electorates and partitions that had earlier been agreed to by the Bose-less Congress leadership.
Only after Partition did Nehru transition to a policy that in many ways sought the separation from the majority of the minorities in India. He instituted a difference in treatment that many regard as a repudiation of secularism while others claim that such an across-the-board separation of the Hindu majority and the rest of the population was on the contrary the essence of secularism. Thus was born Nehruvian secularism, in which rather than accept their common cultural DNA, Muslims and Hindus in particular were subjected to messaging that they were different from each other, an obviously erroneous notion that had been the foundation of M.A. Jinnah’s call to the British to divide the country before exiting it. This past quarter, the rate of growth of the economy has been 13.5%. This is the natural growth rate of the economy, given the abundant qualities of the people of India, although under its initial rulers, the growth rate hovered around 2% annually, breaking free of this only when P.V. Narasimha Rao was the Prime Minister. Incidentally, Rao was disliked, indeed despised, by the matriarch since the tragic death of Rajiv Gandhi in 1991, Sonia Gandhi. Any individual who had the effrontery to argue that she should work to help Rao in his reforms rather than weaken him became an instant object of irritation and worse in her. Ultimately, the fissures in the Congress Party that resulted in the weakening of Narasimha Rao ensured the rise of the BJP. Understandably, A.B. Vajpayee had a soft corner for Sonia Gandhi throughout his six years in the PMH, the Prime Minister’s House.
Returning to Gorbachev, from the start of his ascent to the General Secretaryship of the Communist Party of the Soviet Union, he refused to accept the existential nature of the USSR-US battle that was waged during Cold War 1.0. This was much the way President Biden and some of the other leaders of the Atlantic Alliance have failed to understand the existential nature of the challenge being thrown by the CCP to the US-led alliance, a challenge most visible in the era of the supremacy of Xi Jinping over the CCP. When faced with the economic crisis caused by the statist policies inherited from the Brezhnev era, Gorbachev turned for assistance to the very countries intent on the downfall of the Soviet system. While there was indeed Glasnost, greater freedom of expression, during his time, the only Perestroika (reform) introduced under Gorbachev was to preside over one unconditional, unilateral surrender of USSR interests to the Atlantic Alliance. That Russia would never be accepted as part of the “common European family” by France, Britain and Germany was never comprehended by Gorbachev, although it was by Vladimir Putin, after nearly six years of effort seeking to enter on honourable terms “our common European home” (Putin’s view at the time) proved fruitless. The USSR was eventually destroyed by its lack of substantive Perestroika, but that demise was speeded up by the folly of Gorbachev in handing over the keys to the survival of the USSR to the hands of its most implacable foes. Small wonder that the Gorbymania unleashed by the demise of the last CPSU General Secretary is not shared within his own country.
The silly season is back, rather, it is always silly season when it comes to western media’s coverage of India. But this time there is a sudden increase in the number of anti-India articles in the western legacy media to mark 75 years of India’s Independence. Headlines such as “At 75, India’s democracy is under pressure like never before” and “Modi’s India is where global democracy dies” ring the death knell of India under Prime Minister Narendra Modi. Reading these articles the following thoughts come to mind: it is as if the Prime Minister of the country was not elected with a landslide in a completely free, fair and hard-fought election; as if regular elections do not take place in the country; as if Opposition parties do not win elections at the state level; as if the government was not forced to backtrack even on its landmark reforms in a sector as critical as agriculture because of opposition from a handful of interest groups from a tiny state; it is as if there is state mandated discrimination of minority groups; as if the media is not robust; as if the judiciary and other institutions are not independent and powerful. One can go on and on. The problem is, some people have decided that since a particular government is not to their liking, hence it signifies the end of democracy in India. The hatred for Narendra Modi as a person and leader increases the aggravation as well as the fact that these people do not see any light at the end of their tunnel because of the inability of the Opposition parties, particularly the Congress, to come to power at the Centre. So, whatever be the positive indices about India, whatever be the ground reality, they have already written the headline that democracy has died in Modi’s India. And now they just need to write the story—the fiction.
75 years after Independence, India’s fault lines are a product of its history and in keeping with its character. To blame them on the last eight years of the current government is to be economical with the truth. If there is division in society, it has been always there—Partition is proof of that. Papering over that reality led to appeasement and gave the majority a minority complex. Indian society is as good or as bad as it has always been. Things have not worsened in the last eight years. At the most, the majority community has become more vocal, and cast aside a few old shibboleths such as secularism, which in practice, is anything but. India is still as complex and colourful as any democracy of its size is expected to be. If anything has changed, it is for the better—India has become a more aspirational society, which is bound to happen with economic prosperity. India is also more open now, apart from more confident. None of this would have been possible if there was a despotic government in power.
Just because Rahul Gandhi says that democracy is dead in India, does not make that a fact. His party’s, rather his family’s inability to win elections, is their own doing. To say that he is not being allowed to win elections is to cast aspersions on India’s institutions. If democracy has died anywhere, it is in his own party—in fact, it has died a thousand deaths ever since the oldest political party of India has been converted into a family enterprise. So, to take Rahul Gandhi’s words as indicator of the state of democracy in India amounts to spreading deliberate disinformation.
It is this same western legacy media that will uphold Canadian Prime Minister Justin Trudeau’s imposition of emergency and the use of force to counter anti vaccine protesters as legitimate, but will call the Indian government fascist even if it erects a barrier to stop protesters from entering the national capital and spreading mayhem.
It is ironic that a Jeff Bezos-owned newspaper can express worries about the state of the Indian media when an Indian corporate giant buys stakes in Indian TV channel. What is even more appalling is that many of these legacy media outlets, particularly one published from Los Angeles, will regularly publish supplements on authoritarian China, singing paeans to Chinese governance, while berating India for the “lack of democracy”. There has to be a limit to hypocrisy, to double standards.
India at 75 is a miracle. That democracy has survived, nay thrived in this country, in spite of all the odds, is a miracle in itself. If the western media is blind to this fact, it is because they wear blinkers and are motivated by ideological or pecuniary reasons. No wonder, it is so difficult to take western legacy media seriously.
Digital literacy, innovation keys to transformation
Digital transformation is an unstoppable development with far-fetched ramifications across the several domains of technology, policies, economy, and society. India’s innate want to participate in it manifests in the Digital Dream, the intent of which is layered in the National Digital Communication Policy 2018. The dream is to “transform into a digitally connected society that enables seamless access to and use of information resources that help create a competitive, innovative and knowledge-based society”. Despite the veritable intent, there are challenges, the most crucial being defining a path to realize this dream by balancing the realities.
Beyond the requirements of the supporting ecosystem of power adequacy, interrupted internet with adequate speed, and device affordability, there exists the ability and willingness to use and adapt to the technology environment. Proceeding with digital transformation without ensuring the presence of these elements risks a digital divide and marginalization. It risks exclusion of group or groups of people from participating in the social, economic, political or cultural processes essential for social inclusion. This would be in direct contradiction to the spirit of the Indian Digital Dream shared above.
Despite overall improvements, issues about the inadequacy of the supporting ecosystem remain. According to the “Household Social Consumption: Education” survey by NSO (2017-18), only 4% of rural and 23% of urban households possessed computers. Just 24% of the households in the country had internet access, which drops to 15% for rural households. According to the 2019 TRAI report titled “Wireless Data Services in India,” less than 50% of the population has access to wireless data services. The current appreciation of digital literacy as shared under Pradhan Mantri Gramin Digital Shakshrata Mission appears limited to the operation of digital devices and the ability to browse the internet besides undertaking digital payments. However, under evolving realities, there is an urgent need to widen it to include awareness and inculcate an attitude to enhance the ability to understand and use information in multiple formats and from various sources. The requirement goes way beyond just the technical knowledge to operate devices properly. It highlights the need to elevate awareness and cognition that instill the ability and responsibility to interpret media and evaluate and apply new knowledge emanating from digital environments, necessitating the ability to communicate, participate and collaborate.
Limitations in digital literacy, especially in terms of the notion highlighted above, can result in several inconveniences, one of the most prominent ones being increased exposure to cybercrimes. According to the 2021 Internet Crime Report by the Federal Bureau of Investigations, India ranked fourth among top 20 international victim nations after US, UK and Canada, way ahead of the peer group nations like Brazil, China, and Argentina. Prevalence of such instances can inhibit technology adoption in the absence of clearly defined, easily understandable, implementable policies supported by the governance structure in the country.
Besides, policies must be vigilant in balancing the multifaceted relationship between technology and inequality. While it is true that technologies help accelerate economic growth, there is a need to ensure that the benefits get distributed equitably, which need not be an automatic outcome.
Technology adoption while sustaining competitiveness can significantly impact the composition and nature of jobs and relative wages and income. In reality, technology and automation are gradually replacing repetitive manual and routine tasks known as middle-skill jobs, i.e. occupations whose wages place them in the middle of the wage distribution like those for drivers, cashiers, secretaries etc. Simultaneously technology adoption can facilitate a rising share of high-skilled jobs as well. This can exacerbate wage, and income equality, wherein high-skilled workers, witness higher wages and income.
In contrast, the low-skilled workers languish, competing with the displaced middle-skilled workers. Different estimates of the share of such jobs at risk due to technology and automation are especially high in developing countries, as shared in UN World Social Report 2020. For India, estimates of shares of jobs at risk of being lost to automation due to technology usage are more than 50 per cent. Hence it is necessary to promote cooperation across and within countries to exploit technology dividends. Internationally, United Nations Technology Mechanism and United Nations technology banks for LDCs are a step in the right direction. Besides any other form of inducements for bilateral and multilateral cooperation mechanisms, must enjoy some policy priority. Within the country, an active framework for reskilling displaced workers and support for transition to new jobs could enhance technology adoption besides those designed toward taming economic rents.
However, the principal amongst them is to develop a policy mindset geared toward promoting inclusive technologies and innovations that can disseminate technology dividends across the broader range of economic agents in society. More so as we step towards being the most populous nation in the world in 2023, according to the UN report on World Population and Prospects 2022. It is strictly up to us how we want to reap demographic dividends by ushering in more inclusive technologies and innovations.
The author is Professor Economics, Environment & Policy Area, IMT Ghaziabad.
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