Economy Leadership Policy

Pakistan flounders, Sri Lanka enlist allies

Virtual isolation of Pakistan makes its economic revival difficult while growing support may quickly get Sri Lanka on path to normalcy K.A.Badarinath It’s the tale of two South Asian economies that continue to provide jitters to analysts and policymakers alike. Pakistan and Sri Lankan economies facing tumult are pictures in contrast. The two Indian neighbours are on the verge of collapse on economic front. The two have also been struggling and desperate to get back on revival mode with very little headway thus far. The course taken by both these countries seems diametrically opposite to deliver what they set out to achieve as uniquely placed Indian Ocean small countries. Sri Lanka with an economic size of $ 84.52 billion has piled up a debt of $ 40 billion from bilateral and multi-lateral sources over last one decade that’s unsustainable. In contrast, Pakistan with a medium sized economy of $ 376.49 billion that had previously grown in double digits is in doldrums with virtually no savior in sight. It’s heading for virtual bankruptcy given that the Islamist country that believes in terrorism as a state instrument has piled up $ 274 billion debt that’s roughly over three fourths of its gross domestic product in January this year. Both the South Asian economies have landed in a big mess and it is their own making. While Sri Lanka’s misdirected reforms pushed the island’s fragile economy into chaos, its political churn and protests over last one year have added to the people’s woes. On the other hand, Pakistan’s unsustainable energy import bill, unserviceable expensive foreign debt stock, lack of investments and revenues coupled with huge spending on its untenable security establishment are clear culprits. Unwritten word is that huge unaccounted spending in exporting terror in particular to Bharat is a big expenditure head with no or rather negative returns. Highest common denomination factor in both cases is China where it pushed both countries into a huge debt trap by design especially the funding of infrastructure projects, belt and roads initiative. As per publicly available data, more than two dozen countries including Sri Lanka and Pakistan have been pushed into unsustainable debt contracts via the BRI (Belt and Road Initiative), a pet initiative of President Xi Jingping and Chinese Communist Party. Apart from economic and strategic expansionism of China run by its oligarchy, global headwinds are not in favour of Pakistan and Sri Lanka given the looming recession in Europe and United States in aftermath of protracted conflict between Ukraine and Russia. Metamorphosis of this conflict into a big war cannot be ruled out given that the US and Germany apart from other NATO allies were sending in tanks and major military equipment to support the battered Ukraine. Over 60 per cent consumer price inflation in Sri Lanka has rendered millions of people jobless, without food and shelter. Moving away from traditional agricultural practices to purported organic farming without safety latches or back up plan has boomeranged on this beautiful island nation. The political uncertainty has also destroyed its famed tourism and hospitality industry that’s known globally for being very ‘inviting’. On the other hand, Pakistan that reported over 40 per cent retail inflation in January 2023 has made basic food items like wheat flour, oil, sugar, out of the reach for a large section of its population. Owing to massive corruption in both Pakistani army establishment and political leadership, most food items are either unavailable or retail prices unreasonably doubled or tripled. Hoarders and business cartels have had a field day in both Sri Lanka and Pakistan cashing in on weak political structures and greasing corrupt hands all the way. In this adverse situation loans or cash advances have been hard to come by for both countries. Both countries have burnt the midnight oil to keep their heads afloat. Sri Lanka has some advantage over Pakistan that has no friends in the region barring China. India has taken the lead to provide financing assurances to Sri Lanka if one were to go by external affairs minister Subramanyam Jaishankar to the island nation. In effect, outstanding debt can be paid by Sri Lanka on deferred basis. Also, Colombo can access fresh lines of credit in sync with debt restructuring proposal made by International Monetary Fund in which Bharat is actively involved as representative of South Asia. As an ally, Japan is also bound to follow suit. If these developments go as anticipated, Sri Lanka will be able to access $ 2.9 billion relief package from IMF. But, this will happen only when China as the largest contributor to most expensive debt Sri Lanka has availed agrees. As of now, indications are that China may extract its pound of flesh in terms of lucrative contracts and Colombo agreeing to approve its expansionist tantrums. While Sri Lanka has enlisted support of trusted allies like Bharat, Pakistan has not made any headway so far. Barring Saudi Arabia’s agreement to defer payments on oil imports, Pakistan has not made much progress thus far. Deferred payments proposal for Russian oil has not fructified till now. As per State Bank of Pakistan (SBP), the country’s reserves have plummeted to $ 5.576 billion as of January 1, 2023. This means there’s every possibility of Pakistan defaulting on its repayments if immediate support is not enlisted. Even after businessman turned Pakistan Prime Minister Shehbaz Sharif buckled and agreed to tough conditions proposed by IMF for $ 6.6 billion bailout package, the multi-lateral lender is yet unconvinced on Pakistan economy’s unsustainability. As on date, IMF has not sent its team for negotiation though Pakistan requested for early conclusion of negotiations. Most significant is that it’s all weather friend and military equipment supplier China has not acceded to Pakistan’s request for deferment of its $ 6.3 billion loans. Only Saudi Arabia has hinted at deferring $ 3 billion repayments for Pakistan that matured in December 2022. Possible collapse of Sri Lankan and Pakistan economies collapse will have larger impact in South and

Media Policy

611

India, a natural Nepal pal

Hands off New Delhi policy towards Kathmandu vis-à-vis expansionist China will work wonders for Prachanda’s regime K.A.Badarinath Nepal is on tumult. As expected, a big chunk of China inspired Maoists and Marxists that failed to co-exist previously have got back to rule the mountain kingdom that have seen about ten swearings-in and out in as many years. Maoist guerrilla Pushpa Kumar Dahal seems to have not learnt bitter lessons of 2017 when he aligned and broke off from Communist Party of Nepal (Marxist – Leninist) led by Khadga Prasad Sharma Oli. Thanks to opportunistic political saga unfolding in Nepal, Dahal who’s popularly known as ‘Prachanda’ ditched his latest ally Nepali Congress and returned to CPN – ML for forming a government primarily to assume Prime Ministerial position on Monday. In fact, Dahal represents the oft quoted saying that politics is an art of possibilities played very bold. Dahal seems to have made most of these possibilities to ascend for the third time to become Prime Minister of Nepal in last few years. His key lieutenants led by Deputy General Secretary from the Communist Party of Nepal – Maoist Barsha Man Pun had headed for Beijing even as counting of votes after November 20 elections threw up the possibility of a hung Parliament. While avowed reason was Pun’s ‘illness’, his political engagements with Communist Party of China (CPC) seem to have reportedly led to the breakup of pre-electoral alliance of Nepali Congress – CPN Maoist Centre. It was quickly followed by forging of a new alliance of comrades from all shades and denominations pushed aggressively by CPC. CPN – ML leader K.P.Sharma Oli’s inroads and linkages with CPC leadership also seem to have worked well in pushing the Nepali Congress into opposition space notwithstanding the latter being single largest party with 89 members in 275-strong Parliament. Big question in the melee is whether Dahal aka ‘Prachanda’ have his way to run Nepal’s affairs without being a lacky to China? Dice are cast given that Beijing’s proxy K.P.Sharma Oli would like to take all important political, economic and strategic calls relating to China and India. This uneasy alliance between Prachanda and Oli forged by forces in Beijing may find it difficult to find a working relationship given the bad blood that flew in the earlier government and in run up to the campaign. From India’s perspective, Nepali Congress being out of power may be a big disappointment. But, it will have to find ways to work out a nuanced relationship with the new dispensation that’s bound to assert the China way. In fact, Prachanda with his independent views that are equidistant from both China and India may be the biggest bet. Prime Minister Narendra Modi was the first global leader to congratulate Prachanda on his appointment as his Nepalese counterpart through a twitter post. Secondly, a hands-off approach towards Nepal which has been the centre of India’s engagement with Kathmandu till date, should continue to guide the civilizational partners. Continuing with the time tested 1925 Indo-Nepal pact in ‘spirit and content’ without interference from third party will be the biggest challenge. Thirdly, India being trusted economic and development partner, should continue to engage with the new Nepali government irrespective of machinations attempted by K.P.Sharma Oli for his masters in Beijing. Fourthly, political uncertainty is bound to continue given the multiple partners in the coalition and the aspirations that they bring to the table rather than the value, ideas and content to the new government. Keeping close tabs on political developments, interest groups and policy matrix will work well for India. Fifthly, Beijing is bound to push itself hard this time round to edge out India and attempt a ‘virtual occupation’ through Belt and Roads Initiative apart from taking control of the country’s hydroelectric power generation assets. More than all that forced DNA sampling of Nepali population is likely to be done ala what is being Tibet as part of its strategic and expansionist thrust. Sixthly, India will have to work overtime to keep even-keeled relations with Nepal that’s been its partner from milk, vegetables to oil needs. More than all that, the two countries’ ‘Sanatan dharmic linkages’ will have to be celebrated and embellished thereby reinforcing the unalienable nature of the two people’s relationships. Chinese foreign minister Wang Yi is to be believed, Beijing proposes to work with India for steady and sound growth in bilateral relations. In this backdrop, not meddling with India’s civilizational partners like Nepal could work as the starting point. Nepal’s political leadership from across the spectrum will have realize that its interests were intertwined with that of India as an all-weather friend that can work wonders in South Asia. (Author is Director & Chief Executive, Centre for Integrated and Holistic Studies, a bipartisan think tank based in New Delhi)

Leadership Media

619

China braces to play dirty in Nepal

Delicate political applecart has the potential to throw up a storm given multiple coalition partners, communists &Maoists may go Beijing way! Rohan Giri Himalayan Kingdom Nepal is going through trying times as no single party would enjoy even simple majority in the Parliament following the November 20 elections. Having said this, the five-party alliance led by Nepali Congress Sher Bahadaur Deuba is set to form the next government in the 275 member Nepali House as the five coalition partners began their power sharing formula in the new dispensation. For a stable government to be sustainable, the alliance will have to get 138 of their candidates elected as members. This seems to be within the reach for the coalition in this Hindu majority state – Kingdom. The results and trends indicate that Nepali Congress has emerged as front runner while the Communist Party of Nepal (Unified Marxist-Leninist) is at second place. Nepal Communist Party (Maoist Centre) follows it at third position and Nepal Communist Party (Unified Socialist) would have fourth largest block of elected members. There are currently two significant coalitions in the election, one led by Nepali Congress (NC) and the other by the Nepal Communist Party (United Marxist-Leninist). Apart from this, the National Independent Party entered the fray for first time with its own set of candidates. Nepal Communist Party (United Marxist Leninist) made Nepal’s territorial integrity as its campaign call. Its supremo K.P.Oli took upon himself to withstand pressure from purported India pressure. On the other hand, Nepali Congress party included the country’s territorial conflict with China as its rallying point. International concerns on Belt and Road Initiative (BRI) and the Millennium Challenge Corporation (MCC) were brought to national debate. After a decade-long deadly Maoist insurgency followed by 10 years of political instability, Nepal adopted new constitution in 2015. This election is the second federal and provincial election in Nepal after the enactment of its constitution in September 2015. Last five years of government have been in turmoil and instability owing to bickering and coups of a different variety. Internal power struggles and flipping sides by political leaders defined the instability in Nepal while the country evolved as an exciting full democracy in South Asia with its own unique character. China’s aggression in Nepal through its wolf diplomats and direct involvement in the political overturns bring to fore its expansionist streak. Case in point is the Chinese Foreign Minister Wang Yi’s state visit to Kathmandu, transfer of the Chinese Ambassador to Nepal, and other high-level interactions in the midst of electoral process. This is typical to the Oligarchs driven Chinese Community Party and its general secretary Xi Jinping. During O.P. Sharma’s term as Prime Minister in 2015-16 and 2019-21, Nepal’s engagement with China was elevated to one of strategic partnership. Chinese scholars believed that since the Nepali Congress took reins, the country progressively drifted away from China. Due to United States presence in Nepal and India being natural ally of the Himalayan Kingdom, Chinese strategists have been working overtime to gain full control on the country as was the case with Pakistan. From Indian perspective, Nepali Congress led by Deuba may be the best bet as of now. New Delhi has been a benevolent partner in Nepal’s progress under the monarchy as well as the new democratic state. India’s concern may accentuate in case communist elements within the majority coalition and maoist extremists driven opposition look at realignment to carve out a pro-China political formation and edge out Nepali Congress even after having emerged the largest party. It is undeniable that during KP Oli’s leadership, relations between Nepal and India deteriorated over a number of issues, including the modification of the map of Limpiyadhura, Lipulekh, and Kalapani. The roti-beti culture of India and Nepal makes their relationship unique, and the open borders between the two countries provides the facility for citizens to move and manage trade and relationships, especially the Madhesis. During KP Oli’s tenure, he turned to China for supplies, signing a trade and transit treaty that led to the Chinese invasion of Nepali territory. Oli not only attempted to position himself against India to please China but willingly ignored China’s encroachment Nepal territory. India believes in neighbor first policy and Nepal is the immediate neighbor. India has been Nepal’s “firm partner” on the path to peace, progress, and development. This election is important for both Nepal and India to sustain the bilateral ties, cultural and civilizational relations, and geopolitical situation. In this backdrop, China’s mobilization of Nepal’s communist parties may put India’s long-standing relations in a bind. An unholy alliance between Deuba and Oli is being attempted as a way for China to have foothold in the new power structure. Chinese encroachment in the Himalayan state is a challenge for New Delhi as well. Although Nepal elections outcomes are expected to benefit India, it entails strengthening interpersonal links and structurally incorporating Kathmandu into connectivity projects focused on sub-regional trade with India. One would keep fingers crossed as the political slugfest in Nepal unfolds and Chinese dragon breaths down the Himalayan Kingdom’s neck. (Rohan is a journalism graduate from Indian Institute of Mass Communication (IIMC) New Delhi, and Manager Operations at CIHS.)

Business Policy

664

New India’s Rupee Goes Global & Dematerialized!

Oil and gas deals, gold imports, small & medium ticket trade payments must be settled in rupees. Russia jumping on to the rupee bandwagon is a big breakthrough even as India readies to overtake Germany as third largest economy. K.A.Badarinath Two significant developments this week have made the trajectory on Indian rupee very clear. One, Indian government’s fancy idea of taking the modest rupee global has taken wings. And, there’s definitive movement forward on digitizing the rupee after having rejected calls for legalizing private crypto currencies. Both these movements point to the ambition and forward looking policy stance of the Indian government and Reserve Bank of India if one were to gauge the implications. First things first, how does one make Indian rupee a global currency to reckon with after Chinese Yuan or Renminbi that has emerged as the fifth largest trading currency in last few years? Some baby steps seem to have been taken with regards to the rupee though naysayers think that it’s more of positioning the Indian currency by ultra-patriotic Narendra Modi government and Hindutva forces. Using Special Rupee Vostro (SRV) and bespoke accounts to expand international trade and settle export import deals on rupee terms is good beginning to internationalize the Indian currency. By-passing the dollar, euro, yuan or pound sterling denominated trades is no doubt the first step. The advantage in settling trade deals against rupee is many folds. Apart from internationalizing the rupee, Indian payment systems and gateways get popularized across trading and currency community. Secondly, volatility in global currencies that hitherto rummaged our trading community and foreign exchange traders catering to a large community of Indian students and travellers may now have limited impact once the deals are squared in rupees. Russia, a large energy and strategic partner for India, became the first large economy to open a special rupee vostro account to settle trade deals in rupees. Gazprombank of Russia has already opened a rupee denominated account with UCO Bank. Two largest banks, Sberbank and VTB Bank from Russia are also in the process of opening such accounts through their branches in Delhi. This will give a big push to non-dollar, euro or Yuan designated trade between India and Russia that’s facing issues as it has been cut off from the Swift payment system globally after its attack on Ukraine. Sri Lanka, Maldives, several South East Asian, African and Latin American countries may also follow suit given their inclination to pursue non-dollar trade deals concluded in Rupees. Countries like Zimbabwe, Malawi, Djibouti, Ethiopia, Sudan, Madagascar, Kenya, Namibia and Bangladesh may also be willing to do rupee denominated trade deals. Current volumes and value of trade with these countries may be very insignificant. But, with big players like Russia joining the bandwagon, Indian rupee is bound to get the foothold it’s looking for in the global currency and trade markets. With over $ 800 billion merchandise trade clocked annually, there may be no reason why India should not have a say in determining payment terms. An equivalent value in services trade or more should add muscle to Indian negotiators seeking to make rupee settlements. While non-oil trade products and services deals may take a while to settle in rupees, oil and natural gas deals should be done in rupees. Given that Russia has emerged biggest supplier of oil after Iraq, Saudi Arabia, UAE and USA in that order, negotiation with Moscow on rupee denominated payment terms seems to have been concluded. Moreover, both India and Russia have long history of clinching oil deals in rupee – roubles during protracted cold war era. With Iraq, UAE and Saudi Arabia as well, there’s no limitation on India to settle oil and gas deals bypassing the US dollar or the euro. In the non-oil trade, small and medium ticket deals with a dozen countries can still be targeted. Chinese President Xi Jingping may be more than willing to do a Yuan – rupee designated deals thereby disrupting virtual monopoly of US dollar and euro denominated deals. Given that India continued to be a big customer for China, non-dollar deals should be okay irrespective of the geo-political tensions and border disputes between the two countries. Gold imports are something that should move to rupee denominated settlements. With India being largest consumer of gold at about 1050 – 1200 tonnes annually valued at about $ 55 – 60 billion, New Delhi should begin rupee pitch on the bullion market. Gold is the second largest import item after oil and natural gas imports that range between $ 100 – 120 billion yearly. Second big development is modest rupee going digital on pilot basis that kicked off last few days beginning with Government securities. This is a definitive milestone in India’s banking history that goes beyond the British imperialist era. Rejection of cryptos as decentralized, speculative and block chain based currency in India was a difficult step but the right one. Having rejected private crypto currencies for commercial transactions, recognition as an asset and banks’ collateral, India’s foray into digital space through the rupee monitored and regulated by RBI marks a new beginning for the world’s fourth largest economy. As India prepares to surpass Germany and emerge third big economy internationally, phased roll out of e-rupee was the most desirable and sustainable option that Modi government and RBI has taken recourse to. This is in contrast with countries like Hong Kong that legalised crypto-currencies and El Salvador that set up a dedicated cryto-currency city. Central Bank Digital Currency (CBDC) or e-rupee has nothing to do or common with the private crypto-currencies. E-rupee is equivalent in value and acceptable to Indian government as much as the rupee in physical notes and coins. Even most advanced economies like US, UK and European geographies are grappling with the havoc unleashed by private crypto currencies that are speculative in values, not backed by an asset and mostly used for narcotic drug deals and laundering by terror groups internationally. It would

Human Rights Media Policy World

524

Tolerate Xi, No Other Option

Western powers may shudder at third term for Chinese President, India may be uneasy with the pit-bull, but then does world have a say? K.A.Badarinath “Over throw the dictator” posters and banners that donned Sitong Bridge overpass in Beijing. Similarly thousands of Chinese people gathered at one of the suburban town 45-kilometres away on eastern edge of Beijing protesting the repressive President Xi Jingping’s zero-covid 19 norms in three years. These two instances are symptomatic of unease and restlessness within Chinese population against Oligarchs and multi-billionaires controlled Communist Party of China’s government even as the prima donna leader President Xi gets ready for third term coronation. Rarest of the rare protests that ordinary working class people staged on Thursday demanding their right to travel to work places in Beijing is tip of the iceberg. Whatever may be the line pursued by official communist party organ, People’s Daily, information trickling across social media point to a section of Chinese people seeking change in the leadership. South China Morning Post’s story talks of the protests that have sent larger message to President Xi Jingping and the Communist Party of China’s five years once national congress that begins its week-long session on Sunday. “Say no to Covid test, yes to food. No to lockdown, yes to freedom. No to lies, yes to dignity. No to cultural revolution, yes to reform. No to the great leader, yes to vote. Don’t be a slave, be a citizen,” read banners during Thursday protests as per a dispatch of CNN. These liners sum up the ordinary folks’ aspirations in China. “Go on strike, remove the dictator and national traitor Xi Jinping” pointed to the intent behind protest very succinctly. Not that these protests, public outrage or demand for democratic governance structures would mean anything to the autocratic rule led by President Xi Jingping. Anointing Xi to the ‘core’ by central committee of CPC only reflects the sycophants that have filled in the high chair. After having secured the ‘iconic status’, there’s nothing that may come in his way from continuing his lacklustre regime for another five years. Upper age limit of 68-years may not be applicable to President Xi. Party’s rule book that limits the Presidency to two terms also may not be a limiting factor. If reports from outlets like BBC were to be believed, President Xi will continue as ‘supreme leader’ for his life time. Apart from revamping the seven member polit-bureau standing committee with his acolytes, President Xi may even be elevated to become chairman with executive powers, a post that was abolished at the twelfth national congress in 1982. Mao Zedong who shaped Communist Party of China in the formative years was the most popular and the only chairman of the leftist formation China had in aftermath of the long march. If President Xi were to get designated as the Chairman now or after five years, he’s bound to ensure that one of his stooges would be appointed as General Secretary with limited or no executive powers. The 25-member strong polit-bureau of the party to be announced next week end would have faces that are ‘very loyal’ to President Xi Jingping. Along with third term for President Xi and reorganizing party and government’s top deck, there’s every possibility that Chinese military, political and party doctrine would get rewritten. Western block led by US, Japan, Australia and some of their European allies are bound to mount fresh challenge to Chinese Indo-Pacific strategy apart from isolating China further on economic, trade and investments matrix. His signature projects like Belt and Roads Initiative that pushed lot many countries into the Chinese debt trap may get a leg up. China’s development and security initiatives would get redefined and fortified notwithstanding its own block making and criticism on dragon’s debt stranglehold. China under President Xi’s third term would try and re-assert on security front, reimagine and re-energise its economy that took a huge hit last three years owing to Covid 19 pandemic. In a bid to bring the disenchanted communist cadres together and give a fillip to the world’s largest military, President Xi may lean heavily on the ‘nationalist sentiment and emotional China centric appeal’ that’s very anti-thesis of Communist party’s ideological stand. Russia – Ukraine conflict that has had led to a huge energy crisis in entire Europe and China siding with President Putin serves as the perfect backdrop to CPC rewriting its doctrine on ‘development and security’. For India, the fallout of possibly a more stringent CPC line, will be huge given that Beijing – New Delhi ties got redefined especially after East Ladakh adventurism attempted by President Xi and his cronies in last two years. On economic front, there could be significant challenges as India readies to replace China across supply chains network including Defence equipment and services. As India warms up to assume chairmanship of G-20 and China continues to hold reins of BRICS till June next year, a huge change in bilateral and multi-lateral engagements in the region and beyond would shape the post-Covid 19 world. Also, with India being chair of UNSC as an elected member for two years, there’s likelihood of some churn in global organizations. As a write up in South China Morning Post put it, western powers led by US may not like a third term for President Xi Jingping, but do they have an option. They have to live with it and the world will have to tolerate him for perhaps his lifetime. India will have to move its pawns with care and caution keeping the independent and balanced security and foreign policy stand intact. (Author is director and chief executive, Centre for Integrated and Holistic Studies, New Delhi)

Business Policy World

582

Economic Divergence Unfolds

India has emerged as fastest growing economy with 8.7 per cent surge while China struggled to stay afloat with $ 5.5 trillion package K.A.Badarinath It’s a tale in contrast. The two countries have always been viewed as competitors to gain global footprint, acceptability and reach. Presently, the two nations in question are going through a differential economic curve that depicts a picture in contrast. Without second guess, one would easily make out that it’s the economic story of China and India that are unfolding differently in the backdrop of a huge crisis in Eastern Europe and Baltic region, rise in commodity prices leading to huge inflationary pressures and thereby tightening of money policy by central banks. The humungous fiscal stimulus package announced by President Xi Jinping’s administration indicates that not everything is going right for China’s economy that’s in complete control of the Communist Party of China, its minions and the oligarchs. Protracted lockdowns in various cities of China owing to Covid 19 pandemic has pushed the dragon country’s economy into an abyss. While it struggles to stay afloat with positive growth, China has lost its exalted position as the fastest growing country. President Xi, cabinet, state council and CPC decision to pump prime the economy speaks volumes on the crisis that has rattled the world’s second largest economy. Ukraine war, disruption in its supply chains and resultant slide in manufacturing growth has led to rampant pink slips and loss of livelihoods. Bloomberg’s back of the envelope calculation put the fiscal stimulus at $ 5.3 trillion that President Xi’s communist administration has announced. From deep tax rebates, cheap loans, withdrawal of restrictions on automobiles buying to booster dose for e-platform companies, China seems to be trying every trick to get back the growth mojo. Already, Chinese monetary authorities and its central bank seem to have reconciled to the challenge faced in achieving downwardly revised growth of 5.5 per cent in 2022. Investment bank UBS forecast of 4.2 – 3 per cent growth in China has not only unnerved President Xi who’s preparing for third term coronation in September. Earlier this week, J.P.Morgan had also cut the China growth forecast to 3.7 per cent from earlier 4.2 per cent. There seems to be no easy way out of economic bind in which China has landed itself especially after the Communist regime went on a war path against the growth drivers like the big home grown technology companies and platform enterprises. David Qu, Bloomberg’s China economist may be right when he says that Chinese central bank has now only played a supportive role. And, the government’s fiscal measures had more space to support growth in the $ 17 trillion Chinese economy. Implementing the fiscal package may also pose a big problem as there’s reported resistance from states and local governments whose finances are already fragile, borrowings touching the roof and very little elbow room to undertake development projects. Otherwise, there’s no plausible reason for Xi’s administration to send dedicated task forces to 12 provinces to realize the actual economic package. In contrast, Indian that’s celebrating eight years of BJP government in office is on a virtual high. Prime Minister Modi’s decisive leadership to deliver on economic and development front has worked. India has emerged as the fastest growing economy globally displacing China with 8.7 per cent GDP uptick in fiscal year ending April 2022. Incidentally, this is the highest growth posted by India in 22 years after 8.8 per cent reported in 2000. India with its $ 3 trillion economy is making waves globally with new partnerships and markets thereby creating new work opportunities for the aspiring youth. Having navigated the two difficult waves of Covid 19 pandemic relatively unscathed, India’s reading along with its partners like Australia, Japan and US to displace China with alternative and sustainable supply Chains. If one were to go by chief economic advisor V. Anantha Nageswaran, even in current fiscal, India’s economic growth has been estimated at 7.5 – 8 per cent. At this juncture, these projections may look daunting due to slide reported in January – March 2022 at 4.1 per cent. Economic resilience back home and deft management is what one can bank upon to realize this expansion. Core sector performance of 8.6 per cent spread over eight infrastructure areas during April 2022 provides enough optimism for maintaining the growth momentum in the Indian context. Given the government’s continued commitment to invest over Rs 750,000 crore across infrastructure areas, India will continue to be the brightest spot in the global growth sweepstakes. Given the hard work put in by Prime Minister Narendra Modi and his government in last eight years, retaining the tag of fastest growing economy should be celebrated as a big leap forward. This does not mean that Indian leadership should be carried away by the euphoria and not recognize the challenges like crude prices touching $ 120 as against budgeted $ 75 per barrel apart from surge in other commodities prices. If data available with credible agencies like International Monetary Fund (IMF) and World Bank are anything to go by, then India may be the only large economy that would post GDP growth beyond 7 per cent till 2025. Creating jobs for millions of unskilled, semi-skilled and low-end earners in rural hinterlands may have to be the focus while Prime Minister Modi’s government goes about methodically in economic integration to evolve India as a unified behemoth. (Author is Director & Chief Executive of Centre for Integrated and Holistic Studies based in New Delhi.)

Policy World

595

Gone with the wind: The Curious Case of Foreign Minister Wang Yi

Amrit Pal Kaur / New Delhi Chinese State Councillor and Foreign Minister Wang Yi was on a diplomatic visit to South Asia from 21st March to 27th March 2022. His visit to the region is significant for many reasons, including but not limited to the Russia-Ukraine crisis. As the trip advanced, it became clearer that the State Counsellor was trying to drum up support for the Chinese position on the ongoing crisis and that China saw it as an opening to push forward its diplomatic agenda, which has been stalemated since the Galwan Valley days. That State Counsellor Wang Yi would talk in warm tones to his Pakistani audience was expected, but he would subscribe to the resolution of the Organisation of the Islamic Cooperation, which included remarks on India’s domestic policies and issues, right before coming to New Delhi, defies all reasons. His discussions with Indian National Security Advisor Ajit Doval and External Affairs Minister Dr S. Jaishankar came to a nought, and his request for an audience with Prime Minister Modi was declined were some of the signs of how his impromptu escapade to New Delhi ended. His visit to New Delhi was being speculated, but the Chinese Foreign Ministry kept the details shrouded. However, the bigger question is why China felt the need to send the State Counsellor to India, given the relations between the two countries in recent history? Part of the answer lies in India’s position on the Russia-Ukraine crisis. India has asked both sides to keep the diplomatic channels open and resist the violent path to resolve the issue. India’s Permanent Representative to the United Nations Tirumurti has abstained from voting on the resolutions in UNSC on the Ukraine crisis, coming from either side, keeping its diplomatic options open while walking on a tight rope. It can be speculated that China sees India’s autonomous diplomacy as a favourable opening stance to its position, especially since the Chinese have been increasingly facing the music on account of their support to Russia. Gaining India’s support would have been significant. However, India’s position is far more nuanced than what is meeting the eye. To begin with, the Indo-Russia relationship is indeed based on strategic cooperation, which goes back many decades. Russia is India’s largest armament partner, covering over 60% of its ammunition inventory. It is an essential consideration for India, especially considering the less than cordial environment on Indian borders. Indo-Soviet bonhomie of the cold war days is also frequently cited to be the high-water mark of the relationship, but the lesser-known fact is that Indira Gandhi did not agree to sign the Peace and Friendship Treaty for nearly two years, and it came into being against the backdrop of Pakistani aggression and refugee crisis in 1970-71. In order to hedge and balance its interest in the fast-evolving geo-strategic conditions in South Asia, non-aligned India signed the Treaty with the Soviet Union. Nevertheless, the treaty is not the only reason, and critical geostrategic concerns and calculations inform the Indian stance. Historically, as a major Eurasian country, Russia has always had a bearing on Indian foreign policy since the colonial era. Central Asia and Afghanistan were seen as the buffer between the Russian Empire and British India. In order to protect its Indian territory, British Raj always tried to keep Russian expansion towards the south in check. The Anglo-Afghan Wars of the 19th century were essentially fought with this purpose. Also, the north-western region has been a sensitive zone because in its history, most attacks on India happened from the northwest, where the famous ‘passes’ in the Himalayan ranges would allow the attacking armies to come through. As a powerful territorial empire in the north, Russia has held strategic significance for India. Its influence on Central Asia, Iran and Afghanistan has been an essential consideration in the Indian foreign policy calculations as these countries are critical strategic partners. In order to maintain peaceful relations in the neighbourhood and keep harmony in the larger Asian context, Russia has its niche in Indian geo-strategy. Another reason for the cautious Indian stance on Russia is, of course, the Dragon and its South Asian partner. Since the Crimea war of 2014, as the western pressure on President Putin increased, Russia has been walking into the Chinese orbit. For India, Russian decision making influenced by any third country is a possibility rife with pitfalls. Indo-Chinese relations have been sub-par for some time, and getting its strategic partner close to China is undesirable. What India would seek from Russia is support for its position in case if Galwan Valley like situation repeats. Assertive and revisionist China has been a cause of concern for the Asian region. The South China Sea disputes, East China Sea dispute, the Galwan Valley, and the Doklam dispute have piqued the world. Given these circumstances, countries like India have their concerns concerning geo-political issues. In this context, when President Biden calls Indian stance on Ukraine’ Shaky’ and the number of world leaders come to India in the guise of ‘bilateral relations, it cuts a rather curious picture as to why these dignitaries, including State Councillor Wang Yi, are making their way to New Delhi. First, about State Councillor Wang Yi’s visit, it can be derived that Indian reticence to criticize Russia outrightly on the Ukraine issue is seen as an essential toe-hold to persuade India to join China in supporting President Putin. Secondly, China is hosting this year’s BRICS summit and whether India decides to join or does not join will leave a significant impression on the leadership of President Xi especially keeping in mind the impending once in a decade leadership change in China which President Xi, in all probability, seeks to reverse. It will also send a message to the world about China’s rising power. Finally, in the context of the ripples created by the QUAD grouping in recent years, this BRICS summit will, in all prospects, seek to re-establish itself as a potent global force. For

Human Rights

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Winter Olympics: China heading for isolation

Communist Party of China and President Xi’s track record of human rights violations and unabated expansionism have riled the world Amritpal Kaur / New Delhi Winter Olympics and Paralympics this year being held in China beginning next week were to be showcased as President Xi Jingping’s acumen and dexterity with which he engaged the world. If reports were anything to go by, it’s not working for President Xi Jingping and his Communist Party of China that’s burning midnight oil to prevent the country’s total isolation in the international community. First came the political and diplomatic boycott of Chinese winter Olympics by the world powers to send out a strong message against well documented human rights violations of Uighur muslim minorities. Though most countries may still send in their sporting contingents, their officials will skip to protest against abuse and genocide unleashed against Uighurs. Going back to its origin in 1896, Olympics have been touted as the bridge to mitigate differences among countries and forging a bond of friendship. On the contrary, Winter Olympics 2022 being held at Beijing have walked into a grave shadow of all round acrimony due to China’s arbitrary actions with a number of Southeast Asian neighbours’ boycotting the games. Looming threat of Omicron variant of COVID-19 and massive internet crackdown by the powerful regulator in China has also not gone well with sporting nations. Since the last decade, Chinese growth story has translated into its assertiveness and obsession for blanket security theology. Its resurgence has made China more vocal treading on the verge of covert violence. One dimension of such an upturn has been China’s territorial disputes with its neighbours like USSR and Myanmar but with varying outcomes that range between amicable solution and outright arm twisting. However, amicable solutions have been scarce and far in between. In fact, the last amicable resolution of border dispute that China achieved was in 2011 with Tajikistan. On the contrary, the past decade shows a marked change in the Chinese modus operandi in dealing with such disputes. Since 2009 Beijing has been claiming unilaterally South China Sea its territorial waters by pushing forward Nine-dash Line which demarcates the whole of the water body as its territory. South China Sea has been a central to territorial dispute between China and its South East Asian neighbours. And, this got accentuated beginning 2013 when China started developing Spratley Island and Paracel Island region. The Chinese state has been claiming ownership of most uninhabited islands in South China Sea Zone at a fast pace. These Islands include Cuarton Reef, Fiery Cross Reef, Gaven Reef, Hughes Reef, Johnson South Reef, Mischief Reef, Subi Reef. Though Vietnam had been reclaiming some islands, what set the alarm bells ringing was the urgency with which Chinese started to develop these shoals. During 2014-16, China reclaimed more islands and territories than all other nations combined in the region’s history. Graver aspect of this Chinese belligerence is militarizing these islands. South China Sea is a narrow body which is also strategic as an important marine route that accounts for substantial world trade at over $ 3 trillion annually. Chinese attempt to capture scattered islands and fortifying them as its military zones has unnerved several of its friends and foes alike. Discreet reclamation of territories led to coining of term, ‘Salami Slicing’, that denotes Chinese attempt to expand its territory, one shoal at a time. Chinese expansionism has been in full display in its tussle with its India. Though settlement of Himalayan border issue has been an elusive phenomenon, over a period India and China had developed a mechanism to keep bilateral relations cordial while taking a piecemeal approach to disputed territory. Passage of Border Peace and Tranquility Agreement (1993) during the Narasimha Rao era is a case in point. Subsequently, technical agreements to manage the border issues were adopted after tough negotiations in 1996, 2005, 2012 and 2013. However, recent skirmishes in the high Himalayas including Galwan crisis, Pangong Tso tussle, Depsang Plain offensive in 2020 is a worrying signal. According to experts, China is engaged in salami slicing of Himalayan border by taking one post at a time. It has also been speculated that China is keeping the Himalayan fault lines simmering to hem India and gain simultaneous advantage in the Indian Ocean as an emerging blue water navy. This expansionist posture, mastering the seas around and major sea lanes of communication, it’s a crucial move in the strategic chess that China continues to play. Chinese arm twisting and expansionism is visible in the recently enacted Land Border Act (2021). On the face of it, the act charts the course that China is to adopt in the border determining process. It states that territorial sovereignty is inviolable and China would ‘resolutely defend territorial sovereignty and land border security.’ But, the trouble with this assertion is that only India and Bhutan do not have a settled border with China. Further, China’s ‘official map’ unilaterally claims entire Arunachal Pradesh, Barahoti plains of Uttarakhand and territory till 1959 claim line in the Ladakh region as its own land mass. The act of China declaring complete ownership of rivers running through its territory setting aside claims of lower riparian states had led to more disputes with neighbours. As far as India is concerned, its recently adopted Land Border Act has no validity since it has no veracity or solid ground. China seems to be waging a psychological offensive against its neighbors, through posturing, unilaterally declaration of unacceptable claims on disputed territories as well as constantly shifting goal posts. Since the Sixth Plenary Session of Communist Party of China in November 2021, it has been obvious that President Xi would continue into his third term as Chinese President. He has already put himself in the list of great leaders of China next only to Mao Zedong and Deng Xiaoping with his thought enshrined in the Chinese Constitution. Winter Olympics for him could have been a virtual crowing, a cherry on top of

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