Business China Economy Policy United States USA

Titanic Shifts Inevitable!

Trump’s tariff wars provide a window of opportunity to Bharat for proving its mettle as a global force to reckon with its own economic development model. K.A.Badarinath There’s a huge body of analyses on possible impact of tariff orders signed by US President Donald Trump in last few weeks. Those in favour and against have argued emphatically leaving room for further discussion given that tariffs, trade and economic engagement has gained pre-eminence and a developing story. Several analysts described recalibration of tariffs as trade war. Yet others have attempted to look at implications of the trade centric conflict overflowing into geo-political stratosphere. Markets – equities, currencies, commodities, bullion and a host of financial products – felt the immediate impact. There has been roil in the market place. Billions of dollars’ worth investors’ wealth either vanished over night or partially restored as tariff orders were released by the White House in quick succession beginning ‘liberation day’ as Trump pompously described. Companies, services providers and logistics firms scurried for cover even as President Trump essentially targeted European Union with whom US has a trade deficit of $ 200 billion and China with deficit exceeding US $ 300 billion. Sixty countries – friends and foes – were treated by Trump with derision and slapped with counter-tariffs to bring down the US trade deficit that piled up to US $ 1.2 trillion. Some economists also pointed to trade surpluses run by US with about 100 countries which were royally ignored by ‘transactional Trump’ administration. Trump’s political agenda in run up to 2024 Presidential campaign centred around correcting the ‘unfair’ ripping of American people, businesses and denying his ‘voters’ the job opportunities thereby shifting manufacturing out of US. This is also the biggest ‘political agenda’ item of Trump that got him into power for a defining second four-year term. Apart from addressing domestic core whites’ constituency that were central to his ‘Make America Great Again’ agenda, Trump’s belief centre’s around ‘lifting the burden of American people’ on whose shoulders the world rejoices. Now that the trade, tariffs, manufacturing and jobs agenda gets to be implemented in US, the signals are ominous for anyone and everyone to pick up and put their counter-offensive in place. A lot of counter-offensive from US trade partners was kept on hold as 90-days window to fast-track trade and economic partnership negotiations began in Washington DC and elsewhere. China, however, has been treated differently after having slapped 145 per cent duties on most goods and services exported to US. China that countered with 84 per cent tariff on US goods and services was not part of the 90-days pause plan announced by President Trump. For now, trade war has turned direct and vicious between US and China while the latter owed ‘fight to finish’ action plan. Trade centric war is evolving and one may not see much hope in bringing this to an early close as negotiations between trade partners and US would be a long drawn process. Even if trade issues are sorted out, the impact would be profound on Western model of ‘globalization’ that got rolled out post-World War II and setting up of Bretton Wood institutions is bound to hit reset button. A fresh look at global trade and economic engagement is something that’s unavoidable or rather inevitable. This re-engagement will have huge bearing on socio-economic development paradigm of global communities especially with larger number of people reeling under poverty. A more America-centric economic policy roll out by Trump and ‘inward’ looking framework would lead to conceding geo-political and economic space to big players like Communist China. Each country – big or small – will have to learn fast to fend for itself and not depend on big brothers in either US, China or European Union. Next four years may also see ‘many more’ socio-economic self-reliance campaigns. It’s in this context that Bharat’s ‘self-reliance’ campaigns being run last eleven years would gain significance as existing value chains get rejigged, decoupling and re-engagement were definitively on the horizon. Bharat’s ‘strategic autonomy’ in terms of foreign policy and by extension, economic engagement, will hold strong. Unwilling to react in a hurry, announce counter-measures in a huff like several members of European Union or China, Bharat fell back on ‘time tested’ autonomous policy postulation. Free Trade Agreements (FTAs) with US, European Union and United Kingdom may have to be reworked with other economic parameters like investments more closely aligned. Secondly, given that Bharat has been treated ‘even handed’ with 26 per cent additional tariff, New Delhi should resist the temptation of falling into anti-US blocks. This should not translate to closing the door firmly on China that offered to align with Bharat to take on US. Thirdly, Bharat may consider making new partners on equitable and respectable terms that’s ‘mutually beneficial’ and ‘long lasting’ while economic engagement takes on new hue and different shade. Fourthly, measured and nuanced approach to trade, economic, development and geo-political engagement may have to be pursued in the spirit of ‘vasudaiva kutumbakam,’ the world is one big family. Fifthly, given that Bharat is on an ascent mode, wading through economic uncertainties globally and achieving its objective of becoming a ‘responsible economic power house’ will have to be carefully crafted. Sixthly, open, flexible, rules and regulations driven economic engagement with a ‘human face’ in reaching out to last man standing in queue should be basis for Bharat’s approach. Seventhly, this is the perfect time and context to present its own model of socio-economic development model that’s not exploitative, solely driven by consumer centric approach and instead push for synergies between nature and human living that’s sustainable in terms of judicious utilization of resources. Eighthly, realignment of global forces, both geo-political and market centric, is inevitable. And, carving out a distinct role for itself with responsibility is what’s recommended. Ninthly, falling back big on indigenous knowledge, development ecosystem based on sanatan Dharmic values for shared prosperity will test Bharat’s mettle. Tenthly, leadership role cannot be played from

Economy

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It’s Yagna & Sadhana

Economic Survey for 2024 – 25 pushes for deregulation and reforms as sure shot prescription for higher economic growth, resilience, employment, lower business costs amid global uncertainties. V. Anantha Nageswaran It will be over six months since the last Economic Survey when you lay your hands and cast your eyes on this document and this preface. In theory, there should not be much to write in this preface, given the short time lapse since the last Survey. In reality, there is. The world is perhaps evolving more rapidly than we realise. In the longer span of history, this is par for the course. But, we will leave that contemplation for another occasion. 2024 was a year of elections. Three big democracies went in for elections: India, America, and Indonesia. India returned the incumbent to office for a third term. The ruling party continued in Indonesia with a different leader at the helm. In America, there was a change in the presidency. The new President has been in office for less than two weeks now. The world has had an early inkling of policy changes that will affect the global movement of goods and labour. Europe faces both political and economic uncertainties. Europe’s biggest economic engine, Germany, experienced economic contraction for two successive years. Political uncertainty, too, is a factor since elections are due to be held in February this year. France has had political uncertainty due to developments in the wake of the snap elections called there. The United Kingdom had a change of government. After a long gap, the Labour Party came into office amidst fiscal pressures and a slowing economy. In general, Europe is facing competitiveness pressures amidst much higher energy costs caused, in part, by the transition towards renewable energy. To a large extent, these developments have affected the global economy. The Index of Global Economic Activity of the Federal Reserve Bank of Dallas has been volatile since the pandemic began slowing at the end of 2023. The reopening of the Chinese economy after the Covid shutdown has not led to a spurt in economic growth rate as overcapacity and financial strains in the real estate sector have come to the fore. Due to weak aggregate demand, the economy is in deflationary mode. The absence of a significant policy stimulus to boost domestic consumption has seen excess capacity spill over into external markets. Chinese exports are thriving. China’s trade surplus in 2024 was nearly one trillion US dollars. Recent strength in the US dollar and rethinking in the Federal Reserve about the path of policy rates in America have caused emerging market currencies to weaken. Fiscal strains and low real rates relative to history have led to rapid erosion of value in some currencies compared to others. Borrowing costs for sovereigns are also rising as financial markets re-evaluate the outlook for inflation, policy rates and fiscal prudence. Several stock markets worldwide are at elevated levels and do not appear unduly concerned about economic growth and earnings uncertainties. Nor have financial stability risks fazed investors even though serious concerns are re-emerging about securitisation, leveraged loans. “The Future of European Competitiveness” Mario Draghi wrote: “The EU also benefitted from a favourable global environment. World trade burgeoned under multilateral rules. The safety of the US security umbrella freed up defence budgets to spend on other priorities. In a world of stable geopolitics, we had no reason to be concerned about rising dependencies on countries we expected to remain our friends. But the foundations on which we built are now being shaken. The previous global paradigm is fading. The era of rapid world trade growth looks to have passed, with EU companies facing both greater competition from abroad and lower access to overseas markets.” This is the global backdrop for India as it seeks to steady and sustain the growth momentum that the economy has experienced post-Covid. The passing of the era of rapid world trade growth clouds the outlook for India’s export growth because, historically, India’s export growth has been a high beta play on global export growth. This means domestic growth levers will be relatively more important than external ones in the coming years. The report on European competitiveness could easily have been written for India. Most of the challenges cited therein apply to India, except that India is an aspiring nation, and the European continent has the cushion of a higher per capita income. Europe is, by and large, ageing, but India has a more youthful demographic profile. That is an advantage, but it comes with a huge responsibility. One of the refrains in the Draghi report is the ‘China Challenge’ to European competitiveness. It is no less for India. Several commentators have recently written about the manufacturing colossus that China has become in the last six years. India faces limitations in producing critical goods at the scale and quality required to serve the infrastructure and investment needs of an aspiring economy. For instance, India has low production capacity in the solar energy sector for key components like polysilicon, ingots, and wafers. The production capacity of monocrystalline silicon ingot is expected to quintuple by 2035 from 2 GW in 2023, but it won’t be enough to meet the demand in the country. Several solar equipment manufacturers in the country significantly depend on Chinese supply chains and related services. The single-source concentration risk in several product areas exposes India to potential supply chain disruptions, price fluctuations, and currency risks. India’s task is cut out. It means going all out to attract, promote and facilitate further domestic and foreign investments that India needs to become a competitive and innovative economy. It will not be easy because competition for investment is not only with other emerging economies but advanced economies, too, who are determined to keep their businesses at home. Equally, investing in and strengthening domestic supply-chain capability and resilience will be the hallmarks of strategic and long-term thinking on the part of the private sector. Alternative sources of supply,

Business Leadership

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Growing Clout, Footprint

Bharat’s businesses have come off age, taken over several global brands, top line corporates lock, stock, barrel or partnered in US, UK & Europe K.A.Badarinath Two large deals sealed in just one week speak volumes about Indian corporates verve, gut and appetite for going global. Reliance Industries Ltd (RIL) and Walt Disney tango in Bharat’s media, television and entertainment industry is not limited to creation of US $ 8.5 billion behemoth. It opens up a zillion opportunities for Indian companies, vendors and challenges competition to surpass this milestone. This joint venture also marks Bharat’s film-makers, entertainment and media firms going global hand in hand with best in the industry. Asia’s richest businessman Mukesh Ambani and his wife Nita Ambani being hands on RIL – Walt Disney gives a spicy twist to the deal. Going forward, the joint venture model can work well and logically in global territories and it throws up an opportunity for Reliance – Disney – Century Fox to become a formidable player in media and entertainment sectors internationally. Another home grown billionaire from The Punjab, Sunil Bharti Mittal sent tongues wagging when Bharti Airtel group heralded by him emerged biggest stakeholder in the British iconic telecom services provider, British Telecom. Buying out the Israeli magnate Patrick Drahi led Altice group’s entire stake and cornering 24.5 per cent in British Telecom for US $ 4 billion is the icing on cake for Sunil Bharti Mittal whose Bharti group provides telecom services in 17 countries. In the process, Mittal has emerged largest stakeholder in British Telecom, hitherto the public telecom services provider. What would have been more satisfying for Sunil Bharti Mittal is that life has come full circle. Before 2010, British Telecom held over 21.5 per cent stake in Mittal’s then fledgling Bharti Airtel. This deal not only provides high-stakes branding push but allows Bharti Airtel access to United Kingdom’s 5G technologies, artificial intelligence networks and cutting edge technologies. Deutsche Telecom and T-Mobile Holdings with 12 per cent each are the two other large owners of British Telecom. Strategic insights in telecom, media and corporate markets in United Kingdom and Europe are something Sunil Bharti Mittal should look forward to being at head table of British Telecom. Bharti is not the first Indian company to go shopping in United Kingdom, US or Europe for iconic companies and brands that were seen as value enhancing prepositions. Most talked British brand and company acquired was Jaguar Land Rover by Tata group that was once mocked at for having produced the smallest and modest ‘Nano’ car. Uptight United Kingdom honchos could hardly come to terms with being led by a coloured team of Tata professionals to turn around the JLR that was once seen as a drain on the company and Britain was struggling to save the automobile brand. When Ratan Tata, easily the most celebrated businessman walked into the boardroom of Ford on March 26, 2008 to acquire JLR business at US $ 2.3 billion, disbelief and disconnect confounded top leadership team of British company. In 15-years, the group has turned around JLR into a kicking Bharat – British brand that’s hard to compete with. Tata group was labelled audacious when it took Corus Steel in $ 12 billion bid around the same time to emerge UK – Europe’s one of the largest players in steel market. While this was happening, Reliance bought out one of the oldest and most recognized British toy company Hamleys with 259-years corporate history and British battery technology company, Faradion made global industry sit up to the onset of Indian buyers. Reliance acquisitions were relatively more modest, around the same time, Kumarmangalam Birla, yet another Indian billionaire had set eyes on Atlanta-based Aluminium major Novelis and acquired it in 2007 for a whopping US $ six billion. This catapulted the Aditya Birla group into fortune 500 companies list. After initial rush of half a dozen big ticket takeovers about 15-years back, scores of global brands and businesses came the Indian way or partnered to stay afloat. The list seems quite a long one and this phenomenon is across sectors. Several of them were risky investments and the familial story of turnaround for many Western companies was scripted by Indian businesses that stayed nimble footed for quite some time. For instance, none would have imagined that fourth Indian billionaire Anand Mahindra owned diversified group, Mahindra and Mahindra pumped life into BSA Motorcycles that stopped production about five decades ago. Birmingham Small Arms Company founded way back in 1861 known for producing motorcycles after Mahindra and Mahindra took over this defunct brand in 2022. As per Grant Thornton research, Indians own about 964 companies in UK alone as of last year if one were to go by a Reuters despatch earlier this month. It may not be an overstatement, to say that Bharat’s businesses have arrived. (Author is Director & Chief Executive of Centre for Integrated and Holistic Research based in New Delhi)

Education Hindus Leadership Policy

1.26K

Bharat, force for Strength & Stability

In 78-years post-British imperialistic occupation, Bharat is on way to become ‘Vishwa Guru’ and pursuer of ‘Vishwa Maitri’ in right earnest. K.A.Badarinath Bharat is celebrating her seventy eighth independence day after having fought imperialist British occupation and monarchy. Before the ignominious exit of 1947, Britain has had for decades looted Bharat’s wealth, resources and hit at her backbone by Anglicizing the country’s millennial education system. The indomitable spirit, valour and strong civilizational connect based on ‘Sanatan Dharma’ could not be dented even after decades of inhuman rule that pushed Bharat into poverty owing to continued laundering and misrule of British imperialists. Post-1947, Bharat moved on its own with twists and turns in its socio-economic paradigm. What kept the Hindustan together last 78 years was the determination of this 1.4 billion people to regain its place as ‘guiding light’ in the comity of nations. Most Indians – be it Hindus, Buddhists, Jains, Muslims or Christians – get nostalgic and wee-bit emotional while celebrating the Independence Day. It was a struggle that none globally would easily forget as British rule was marked by White supremacist mindset laced with monarchial expansionism and human subordination and slavery of inhuman variety. Then on, Bharat re-discovered herself on all fronts. It’s her day today and centuries to follow as it moves methodically to become a developed country by 2047 that also marks 100 years of independence from British tyranny. Bharat’s rise as an economic powerhouse and her march to become third largest economy in two – three years with $ 5 trillion spread is something that did not come easily given the hard work of her farmers, services professionals, industry and exporters. It’s only a matter of time when Bharat would challenge US and China from their coveted positions. None can be scared or distraught with Bharat’s rise given her standing that strives continuously for peace, tranquility and harmonious living sans conflict, violence and expansionism of any hue or shade. Going by Bharat’s Prime Minister Narendra Modi speech on Independence Day from ramparts of the historic Red Fort, New Delhi will play a stabilizing role in the world marred by conflicts between Russia – Ukraine, Israel – Hamas and the coup of sorts in Bangladesh. Strength and determination is what Prime Minister Modi emphasized upon to tackle global challenges. Bharat being at the ‘High Table’ in international affairs would only bring sanity to deliberations and negotiations at strategic level or economic management. Even in tackling new challenges, Bharat has shown the way. After having been party to Paris agreement on cutting carbon footprint and shifting to environment friendly economic structures, Bharat is the only country that has met all climate targets among G-20. Notwithstanding her energy consumption demands, shift to green options rapidly towards ‘net zero’ voluntarily and leading by example is something Prime Minister Modi referred to in his speech on Thursday. His call for end to end chip designing for the world is an extension of Bharat’s huge strides made in industrial manufacturing including defence products, services across sectors and deft management of her economy. This will push up Bharat in global pecking order for modernizing her economy to meet international demand. Bharat’s list of ‘to do’ things seem endless if one were to look at reversing brain drain especially in key sectors like medical education. Adding 75,000 new medical colleges’ seats to 100,000 plus existing capacity is something that will help Indian youth and talent pursue their education here and cater to the world as professionals. Prime Minister Modi had clearly hinted that ‘overseas students should come to India for top class education’ and reverse prevailing outflow to foreign shores. Becoming global educational hub in five years may be a tough target to meet. But, its doable. These are transitioning times for Bharat to become ‘vishwa guru’ and pursuer of ‘vishwa maitri’. (Author is Director & Chief Executive of Centre for Integrated and Holistic Studies based in New Delhi)

Business Education Technology

1.23K

Seven Red Flags That Can Sour India’s Growth Story

By Balbir Punj The 2024-25 budget is a smart fusion of political stratagem, coalition compulsions and a slew of deft moves to accelerate economic growth to help realise PM Modi’s resolve to turn India into a developed nation by 2047. However, given the domestic constraints and dismal emerging global economic scenario, the NDA Government’s quest to make India a global financial powerhouse is fraught with serious challenges. The wars in Ukraine and Gaza have disturbed global supply lines and devastated the world markets a great deal. No wonder the latest forecast for global growth five years from now, at three per cent, is the lowest in decades. The rise of India would be hamstrung by a bleak international scene, for a vibrant Indian economy will need to increasingly engage with the rest of the world. The budget is undoubtedly an exercise to retrieve the political ground the BJP lost to the opposition in the last Lok Sabha polls. But it’s not populist or irresponsible. The underlying theme is fiscal prudence and consolidation. The promise to peg the fiscal deficit at 4.9 per cent of GDP in 2024-25 is a significant reduction from 5.6 per cent last year. Finance Minister Nirmala Sitharaman has also reiterated her resolve to reduce the deficit to below 4.5 per cent by next year. The misgivings about India emerging as a developed nation over two decades from now aren’t entirely misplaced. India faces some insurmountable challenges that are difficult to deal with, particularly with a fractured polity that has evolved post-2014. Outrageous toxic narratives – completely divorced from facts and reality – are banded about to derail the public discourse. ‘Caste-identity’ – a divisive signature tune – is the season’s flavour. What’s the basis for believing that Modi’s vision of a developed India is not just a pipe dream but something doable? His track record. During his previous two terms, Modi managed to break the mould. Defying the system, he ensured the delivery of benefits to ordinary people sans any leakage. Modi made available gas connections, foodgrains, toilets, housing, drinking water, and road connectivity to crores of Indians. As a result, poverty levels dropped drastically, and today, India is among the world’s fastest-growing large economies, with a GDP growth above eight per cent. But here is the proverbial catch. The aspirations of millions who have moved out of morasses of poverty have since outgrown what the state freebies can offer. This exploding phenomenon is full of unchartered challenges and unexplored opportunities for the country. The expectations of India’s young millions have soared to unprecedented levels. They now want access to a decent standard of living. But can India meet their aspirations? Seven red flags can hold the country back and sour its dreams. #Education and Jobs: Among the “real” challenges India faces, the Economic Survey (2023-24) has outlined the lack of jobs. According to the survey, the country must create an estimated 78.5 lakh jobs annually. The government has launched five schemes to fix the problem. It’s a patchwork solution and leaves the core of the problem untouched. The issue is not unemployment. It’s that of ‘unemployable’. Leaving aside some islands of world-class academic excellence, most organisations styling as educational institutions don’t dispense education or talent but degrees. The state-run educational system is broken. There is no serious effort to resurrect it. According to the 2023 Annual Survey of Education, almost a quarter of all youth (14-18 years) cannot fluently read a class 2 text in their regional language. Only 43% can solve simple division sums. There are millions of slots waiting for qualified candidates. India ranked seventh in a talent shortage, with 81 per cent of employers reporting difficulty finding a skilled workforce. The skill gap is estimated at 2-2.5 million. It’s difficult to miss the irony – millions of jobs are going abegging, and countless remain unemployed. Rising Trade Gap with China: India-China trade touched almost $118 billion, with India’s exports at only $16.67 billion, with a trade deficit of over $100. The Economic Survey has termed it a “challenge”, a “Chinese Conundrum”, and a problem sans a solution. There appears to be no escape from the fact that China would continue to be the overbearing trade partner, with sinister implications for India’s security. Bureaucracy: Rampant corruption and inefficiency have been India’s bane. To Modi’s credit, corruption is nearly extinct in the top echelons of politics and babudom at the centre. However, the twin evils of graft and sloth continue to gnaw at the system from within. The raging NEET controversy and the scandal involving Puja Khedkar, a probationary IAS officer (now under investigation), underline the unsavoury fact of the extent to which the rot has set in. No plans, however perfect they may be, can work till the delivery mechanism is fixed. Judicial Reforms: To repeat an adage, justice delayed is justice denied. These statistics speak for themselves. In 2024, the total number of pending cases of all types and at all levels stood at 5.1 crores, including over 180,000 court cases pending for more than 30 years in district and high courts. Agriculture: The growth in agri-GDP in 2023-24 (FY24) was just 1.4 per cent as per the latest provisional estimates. The second advance estimate was, in fact, only 0.7 per cent. This sector engages 45.8 per cent of the workforce. Most of those claiming to be ‘kisans’ are, in fact, victims of disguised unemployment. Giving 5 kg/per capita/month of free rice or wheat is a dole. Vested interests (read so-called farm protests of 2020-21) successfully sabotaged all efforts to introduce reforms in this sector. This large section of India’s population has to be partnered in the country’s success story. Distorted Narratives: Foreign-funded groups have been hijacking popular mandates using globally tested tool-kits by building narratives based on white lies, half-truths and twisted facts. The ‘toolkit’ was used during India’s CAA and farm law protests. Power Outage: Per capita electricity consumption in India jumped from 16 units in 1947 to 1327

Geopolitics Leadership Security Technology

1.12K

Vienna Waltz for NSG

Modi’s visit to Austria signals global leaders to act decisively on nuclear governance, stability, innovation and facilitate India entry into NSG Rahul Pawa In a momentous visit that marks a significant milestone in India’s diplomatic history, Prime Minister Narendra Modi landed in Vienna on Wednesday after a successful tour of Russia. This visit, the first by an Indian Prime Minister to Austria in 40 years, underscores Modi’s strategic vision to elevate India’s global standing, particularly in the realm of nuclear technology and security. Austria, a key participating government of the Nuclear Suppliers Group (NSG), plays a pivotal role in shaping global nuclear policy. For India, securing NSG participating government status has been a long-held aspiration, one that Prime Minister Modi has tirelessly pursued. The NSG, a body of 48 participating governments that seeks to prevent nuclear proliferation by controlling the export of materials, equipment, and technology that can be used to manufacture nuclear weapons, represents a global group that India has sought entry into for over a decade. India’s quest for NSG entry began in earnest after its landmark civil nuclear agreement with the United States in 2008. This agreement, which allowed India access to civilian nuclear technology and fuel from other countries despite not being a signatory to the Nuclear Non-Proliferation Treaty (NPT), was a significant diplomatic achievement. However, for India to fully benefit from global nuclear commerce, NSG entry is crucial. It would provide India with greater access to nuclear materials and technology, enhancing its energy security but most importantly allowing India to contribute more significantly to global nuclear governance efforts. Modi’s visit to Vienna comes at a time when the global tech and security landscape is rapidly evolving. India’s potential inclusion in the NSG should be viewed not only as a recognition of its impeccable nuclear safety and clean usage record but also as a crucial step toward strengthening global nuclear technology and innovation. Austria’s influence within the NSG makes it a crucial ally for India in this pursuit for global good. India’s entry to the NSG has been a topic of discussion at multiple NSG plenaries over the past decade. Despite substantial support from several strong participating governments, Communist Party of China’s (CPC) opposition has been a significant obstacle. At the 2016 NSG plenary in Seoul, CPC insisted that India’s application could not be considered until the group agreed on criteria for non-NPT (Non-Proliferation Treaty) signatories, effectively blocking India’s bid despite strong backing from other major powers. CPC’s consistent stance against India’s entry, citing rules, procedural issues and the need for consensus, has frustrated many NSG members who view India’s inclusion as beneficial for global nuclear governance efforts and nuclear commerce. Meanwhile, India has made significant advancements in nuclear technology, particularly with its ambitious plans to develop thorium-based reactors. Thorium, a safer and more abundant alternative to uranium, promises to revolutionise nuclear energy. India’s expertise in thorium technology positions it as a leader in this field, with the potential to offer cleaner and safer nuclear energy solutions worldwide. The development of the Advanced Heavy Water Reactor (AHWR), designed to use thorium as its primary fuel, marks a significant stride in this direction. Several key NSG members, including the United States, France, Switzerland, and the United Kingdom, support India’s bid, arguing that India’s impeccable nuclear record, responsible nuclear behaviour, and potential contributions to global nuclear security make it a suitable candidate for the NSG. However, despite India’s commendable nuclear track record and significant advancements in nuclear technology, the Communist Party of China’s (CPC) objections to India’s entry into the NSG are perceived as a strategic maneuver to maintain its dominance in South Asia. CPC’s rationale appears to be rooted in a desire to prevent a regional competitor from accessing advanced nuclear technology and materials, thereby preserving its own strategic leverage. This stance is further complicated by CPC’s continued support for rogue nations like Pakistan and North Korea, which have contentious nuclear programs. By blocking India’s NSG entry, CPC not only undermines global efforts to foster responsible nuclear governance and energy security but also hampers broader international goals of enhancing nuclear safety, advancing technological progress in the nuclear sector and avoiding institutional scrutiny of its support to Pakistan and North Korea. As India continues its ascent as a major economic and technological power, its influence on the future of nuclear energy and security becomes increasingly crucial. PM Modi’s visit to Vienna transcends mere diplomacy; it is a powerful call for the world to acknowledge the evolving dynamics of global nuclear governance. The moment has arrived for the international community to move beyond regional politics and strategic rivalries, embracing a future where India’s contributions play a vital role in shaping global nuclear policies. During his visit, PM Modi is likely to engage in high-level discussions with Austrian leaders, emphasizing the mutual benefits of trade, business cooperation, collaborations, and significantly, India’s imminent NSG entry. This visit serves as a clear signal to the international community to recognise the significance of including India in the NSG and to act decisively in the interest of nuclear governance, stability and innovation. (Author is Director – Research, Centre for Integrated and Holistic Studies, a New Delhi based non-partisan think tank)

Geopolitics Leadership Policy

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Strategic Autonomy, Balancing Powers

Indo-Russian summit strengthened special & privileged strategic partnership. India offers to play role of a peacenik in Ukraine conflict Dr. Punit Gaur Indian Prime Minister Narendra Modi’s two day visit to Russia has been watched keenly across world capitals. Especially so, given that it is the first bilateral engagement of Modi in his third term and it coincided with North Atlantic Treaty Organization (NATO) summit in Washington DC. Modi’s Russia visit to participate in the twenty second annual summit of India and Russia invited sharp reactions from Indian allies and foes alike. From US, European Union to Ukraine, there were comments on what Prime Minister Modi should be doing in Moscow. The Moscow summit is a first after President Vladimir Putin’s visit to New Delhi in 2021 and this engagement has come in the backdrop of ongoing conflict on East European front with Ukraine. Perhaps, global leaders expected serious talks between Modi and Putin that paved for a swift and organic end to the bloody conflict in Ukraine. To their great comfort, Prime Minister Modi did not let them down, Modi made serious attempts to counsel and convince President Putin that peace in the region was not possible with blood on hands. At the same time, Modi played a balancing act not to annoy his host in Moscow who spent most of the two days with Indian Prime Minister. On its part, Keiv expressed its disappointment on Modi’s visit to Moscow though President Zelensky is fully aware of Bharat’s position vis-à-vis Russia. Resilience in relations between the two partners who have evolved relations despite challenges may not have missed Zelensky while stating the obvious on Modi’s Moscow visit. Even White House and European Union may have known the inseparable strategic relations between Bharat and Russia. Several firsts marked Prime Minister Modi’s visit to Moscow. The milestones crossed during the visit underscore profound significance attached to this bilateral engagement. Russia’s highest state decoration, the Order of St Andrew was bestowed on Modi that may not go well with India bashers. This award signifies PM Modi’s efforts to cultivate bilateral relations between India and Russia. In 2000, India took the initiative to commence the cycle of annual summits between two countries at highest level. The tradition of having structured high-level discussions has been easily recognized by both sides as a way to take the bilateral relations to next level each time. India-Russia trade has seen an unprecedented surge to more than US $ 65 billion in 2022 owing to diverse products and services and there’s no denying the fact that energy constitute a big chunk of this bilateral transactions. India’s continued oil and gas dealings with Moscow have not gone well with the Western powers. US $ 100 billion bilateral trade targeted in six years during Modi’s visit is yet again a milestone that can be easily achieved. In recent years, Russia’s Far East and Arctic have drawn India’s attention as possible strategic investment sites. Though national currencies account for 60 per cent trade between India and Russia, the urgency for quicker and more real-time settlement of transactions is growing, especially in backdrop of Russia that got delinked from SWIFT ecosystem. Ignoring the unilateral sanctions on Russia and threats from US, India has not only maintained but strengthened its diplomatic and commercial ties with Moscow. These ties fraught with challenges and underscores the need for more diversified trade. Additionally, India has increased military collaboration with Russia announcing plans to work together on weapon manufacture, joint deployment of troops, vessels and fighter jets and access to military installations. India and Russia call on visa-free travel would significantly boost tourism and people-to-people connectivity. The move to allow students and visitors to use national currency, clearances for MiR cards in India and RuPay cards in Russia is again a significant first. The proposal to open two more consulates in Russia underlines the importance of economic and cultural ties and holds the potential for further economic growth. Bharat’s decision to go ahead with ‘strategic autonomy’ on multilateral issues is what most allies have been trying to come to terms with. When Modi and Putin spoke at Uzbekistan in 2022 during Shanghai Cooperation Organisation (SCO) conference, he reportedly told the Russian president, “This is not the time for war.” This stance was reiterated during Modi’s Moscow visit while amplifying Bharat’s policy framework. India adopted an autonomous neutral stance regarding Ukraine and did not sign a joint communiqué at the Switzerland Summit last insisting on conditions for participation of all parties including Russia for lasting peace. Upholding UN Charter’s tenets, especially concerning value of preserving national sovereignty and territorial integrity was also insisted upon in Switzerland as well as Russia now. India firmly rejected the idea of using force to settle disputes. Peaceful negotiation and diplomacy are the most critical approaches for all disputes and this position reflected in Modi’s engagement with Russia. One significant development is Bharat’s willingness and commitment to offer a platform and play the role of a mediator for the peace process has again come to fore. At the same time, Bharat has emphasized that Russia should guarantee safety and repatriation of its citizens who are employed by Russian military ever since the conflict between Russia and Ukraine began. President Putin’s ready agreement on this request is a significant take away from Moscow. Russia seeks to create a multipolar world order and India vying for for a key role among Global South countries regard one another as crucial political allies. Russia continues to be an essential supplier of weapons, energy and space technology, all of which India views as necessary for its transition to become a major developed country by 2047. Modi’s trip to Russia not only demonstrates New Delhi’s intention to grow ties with Russia but underscores the potential for significant mutual benefits and the importance of India’s strategic autonomy. (Author is a Research Fellow at Indian Council of World Affairs with focus on Eurasia)

Education Leadership Technology World

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Think Different, Do Differently

Modi 3.0 may have to extricate itself from incremental expansion of on-going projects, if it were to lead Bharat to exalted developed nation status K.A.Badarinath Prime Minister Narendra Modi is expected to form a government for record third term in a row with comfortable majority after a tumultuous eight-week long Lok Sabha elections campaign. While Modi 3.0 begins mid-June, there’s huge interest globally on the agenda for the new government. There’s already some spadework done by the present regime on what would perhaps be rolled out in first 100-days of freshly minted National Democratic Alliance government. Once the new government takes charge with a reconstituted team under Prime Minister Modi, political stability at centre and 20-odd states ruled by BJP or its coalition partners is assured. Unlike several countries that are in the midst of wars, conflicts or political instability, Bharat would stand out as a nation of 1.4 billion people to emerge as the global economic powerhouse and a beacon of hope for global communities. The eight per cent plus growth coupled with stable interest rates and reined-in inflation levels at 4 per cent will serve as backdrop for Bharat to emerge as third largest economy globally surpassing Germany and Japan. After US and China, Bharat will emerge as third largest economy and a hub for agricultural produce, industrial manufacturing, providing services and export cost-effective quality goods and services. In first three years of Modi 3.0, Bharat will not only be valued as US$ five trillion economy, but would well be on way to move up market capitalisation in stocks sweepstakes. Already, both BSE and NSE have reported that market capitalization in Bharat have crossed a whopping US$ five trillion serving as a leading indicator on what’s in store for the economy. First big task for new finance minister to occupy the corner room in North Block would be to present a full regular budget in three months along with blueprint for making Bharat a developed economy by 2047. Opposition parties, especially the Congress, may have scoffed at the idea of ‘developed nation’ tag for Bharat, but putting in place nuts and bolts to go big is something inevitable. A commendable job done by Nirmala Sitharaman is what would come handy for Modi 3.0 while charting its course for attaining the exalted ‘vikasit bharat’ status which is both a commitment and conviction for Team Modi. Cash surpluses of over Rs. three lakh crore, RBI dividend of Rs 2.1 lakh crore and record foreign exchange reserves of US$ 648.7 billion as on May 25 serve as positives for new government to rollout short term measures in its long journey to becoming a developed nation. Even if interim budget expenditure projections of Rs 47.65 lakh crore and gross tax collections target of Rs 38.2 lakh crore are retained, borrowings through bonds and bills may be pruned by third edition of Modi government. Alternatively, retaining gross borrowings at Rs 14.13 lakh crore in 2024-25 will provide enough leeway for the new government to introduce new elements to economic expansion and put it on high growth trajectory of over 10 per cent growth on continuum for three years. A big push to capital spending to create assets across infrastructure areas at Rs 12 lakh crore may become focal point to further Modi government’s campaign to evolve New India along with new jobs, services and opportunities, cater to the aspirational youth that backed BJP-led NDA in the seven phase Lok Sabha elections that ended today. Sticking to fiscal prudence strategy that involves reduced fresh borrowings, lower accumulation of debt and interest payments outgo coupled with serious recalibration of food, fertilizer and oil subsidies may have to continue without any let up. On the parallel, deepening and broad-basing famed growth paradigm with focused development interventions in education, healthcare, housing, water and farm support is what the Narendra Modi government in its new avtar may have to continue. Real challenge will be to lay firm foundation for a ‘new developed’ Bharat. Out of box thinking may propel diversified economic expansion that’s inclusive and target oriented. For instance, can the new government think of 20 new growth centres to take Bharat’s economy to next level? What does that mean? Say for instance, can Sandeshkhali in West Bengal’s Sunderbans area where women faced violence and sexual abuse become new growth centre for women-centric development project? Three crore ‘lakhpati’ didis scheme be housed in Sandeshkhali and spread across Bharat as women’s economic empowerment project of Bharat. Local skills, opportunities and fresh ideas from different states apart from development of eco-sensitive Sundarbans waterfront can be weaved into this signature project of Prime Minister Modi. Comprehensive economic uplift project for tribal communities can be centred in Bastar or Narayanpur in Chattisgarh where both Left extremism and rampant religious conversion of vulnerable tribal communities happen routinely. Can a growth centre be planned and implemented for fisheries development with coastal Kerala or Andhra Pradesh being its headquarters? Should fisheries be managed and regulated from Delhi? A fresh economic growth model around fisheries and coastal areas development can be evolved to give thrust to these areas. If Hyderabad is developed as defence technologies and original manufacturing hub, can’t ports based economic development model be designed in Odisha? No new project, scheme or public sector company should be allowed registration in national capital region or the metropolis. Twenty-odd new thematic growth areas can be considered to spread development projects to nook and corner of Bharat. If required, some ministries, departments, state-run companies, autonomous bodies may have to be located away from Delhi. Modi 3.0 can even design twenty hubs with spokes and spines each for start-ups, different financial services etc as decentralized economic growth centres. Why not relocate agriculture ministry to say Amritsar or Ludhiana without making hue and cry about it? Should comprehensive hills development project not be run out of Uttarakhand or Himachal Pradesh? There’s very little utility in keeping environment and forests ministry housed in Paryavaran Bhavan located at posh Jor

Afghanistan Bangladesh Bhutan Geopolitics Leadership Nepal Policy Security Sri lanka Technology

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Bharat Goes Whole Hog in Neighbourhood

Stability, progress and growth is what Bharat seeks to achieve in South Asia through its ‘neighbourhood first’ policy Dr Divya Gupta Post-independence in 1947, Bharat pursued a regional policy based on the principle that neighbours are important to national security and a market that can contribute to India’s economic development. Given the bipolar world order that prevailed during Cold War, Bharat pursued non-alignment based on its stated global role as the third-world leader. India built her policy on the basis of “The Five Principles of Peaceful Co-existence” (Panchsheel) which was first signed on April 28, 1954 between then Prime Minister Jawaharlal Nehru and his Chinese counterpart Zhou Enlai. Panchsheel covered issues like sovereignty and integrity, territorial integrity, no mutual aggression, non-interference in each other’s internal affairs, equality, mutual benefit and peaceful coexistence. Panchsheel agreement was considered one of the significant bases for building foreign policy with immediate neighbouring countries that India pursued after independence. But, Prime Minister Nehru was particularly interested in building and strengthening international cooperation especially among developing countries. Indian foreign policy during that period had focused more on international relations than neighbourhood relations. After end of Cold War, India made significant adjustments in her foreign policy framework owing to international, regional changes and internal challenges. Over the years, India has gradually come to occupy a significant role on strategic chessboard within the region and the world. A person who thought ahead about close relationship with neighbouring countries was former Prime Minister Inder Kumar Gujral, known for his Gujral doctrine, a policy orienting the relationship between India and its neighbours. Gujral doctrine was a policy that sought friendship based on sovereign equality and non-interference with “non-reciprocal magnanimity” towards smaller countries such as Bangladesh, Nepal, and Sri Lanka. The incumbent Prime Minister Narender Modi has formulated, followed and executed “neighbourhood first policy” in letter and spirit with respect to our immediate neighbours including Afghanistan. Essence of this policy is the desire to effectively contribute to the construction and architecture to establish a stable foundation of peace and cooperation in South Asia in particular and Asia in general as a responsible, stable and large country. Narendra Modi expanded the matrix of his foreign policy framework, took new line showing distinct imprint in his policies. He formulated his foreign policy doctrine (Modi doctrine) and introduced new pillars of India’s foreign policy (Panchamrit) including five pillars: dignity, dialogue, shared prosperity, regional and global security, cultural and civilization linkages aimed at affirming India’s position as a rising power in the world. During high-level discussion at 69th session of United Nations General Assembly in September 2014, Prime Minister Modi said, “The destiny of a country is linked to its neighbourhood. That is why my government has placed the highest priority on advancing friendship and cooperation with neighbours” (Modi 2014). He argued that “neighbours are the number one priority” which is considered a bright spot in India’s foreign policy. India’s ‘Neighbourhood First policy’ guides its approach towards management of relations with countries in its immediate neighbourhood, i.e. Afghanistan, Bangladesh, Bhutan, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka. The policy is based on the idea that a stable and prosperous neighbourhood is essential for Bharat’s economic and security interests. The Neighbourhood First Policy is also part of Bharat’s larger vision of becoming a leading power in the region and world. India’s Neighbourhood First policy can also be seen as a manifestation of Modi government’s vision of building ‘Vasudhaiva Kutumbakam (the world as one family). Vaccine diplomacy and development assistance based on mutual respect and equal partnership are two most important pillars to catapult India’s Neighbourhood First policy[i]. Vaccine diplomacy has been seen as pragmatic response to a global pandemic and way to strengthen its image as a responsible leader at both regional and global levels. Noteworthy, Indian diplomacy, particularly during the Covid-19[ii] pandemic, resulted in India being recognised on the world stage as a harbinger of hope providing necessary help to needy nations and their people globally. As part of India’s Neighbourhood First policy, India, through its vaccine diplomacy (Vaccine Maitri)[iii], extended help to many countries of the world and neighbouring countries during the Covid-19 pandemic. Also, and notwithstanding that India was affected very badly, particularly during the second wave, India handled the situation very well to overcome the worst effects of the pandemic relatively, and at the same time, help other countries to address the challenge. Primary beneficiaries of Vaccine Maitri in South Asian region are Bangladesh (Rs 22.5928 million in total supplies in the form of commercial and grant assistance, followed by Nepal (Rs 9.499 million); Sri Lanka (Rs 1.2640 million); Afghanistan (Rs 1.4680 million); Bhutan (Rs 0.55 million) and Maldives (Rs 0.312 million). India committed $10 million to South Asian Association for Regional Cooperation (SAARC) Fund to address the global pandemic. Keeping with the spirit of Vasudhaiva Kutumbakam, India is providing support to Afghanistan and Sri Lanka to address their myriad challenges through its development assistance initiative. Since the Taliban assumed charge in Afghanistan, India supplied wheat and other essential food items and Covid-19 vaccines as humanitarian aid to Afghanistan. In its budget for 2022-23, India allocated Rs 2,000 million as development assistance to Afghanistan. Apart from this India also provides financial assistance to neighbouring countries through Lines of Credit (LoCs), Grant-in-aid, Credit Facility, Currency Swap Facility and others. India has extended four Lines of Credit worth US $ 7.862 billion to Bangladesh under Indian Development and Economic Assistance Scheme (IDEAS). India also supports Bangladesh in several developmental and infrastructure projects across sectors such as roads, highways, railways, ports, power transmission, waste management, economic zones, information and communication technology, solar power generation etc. India has also provided Rs. 45,000 million as development assistance for 12th Five Year Plan (November 2018-October 2023) to Bhutan. India has extended five LoCs totalling to US $ 1.33 billion[iv] to Maldives including assistance to Greater Male Connectivity Project. India has provided budgetary support to Maldives. In September 2020, India offered US $ 250 million in financial assistance to Maldives to mitigate the impact

Policy

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Has Economic Inequality Risen in Bharat?

World Inequality Lab report methodology, databases deployed are questionable & biased. It does not stand rigour of academic scrutiny. Chaitanya Khurana Over past several years, Bharat has made remarkable progress in ending poverty and hunger. In July 2023, United Nations has said that 415 million people have been brought out of extreme poverty within just 15 years spanning from 2005 – 21. These numbers were mentioned in absolute as part of global multidimensional poverty index which was released by United Nations Development Programme (UNDP), Oxford Poverty and Human Development Initiative (OPHI). Surjit S. Bhalla & Karan Bhasin, renowned commentators on poverty and economic issues recently reviewed latest official consumption expenditure data for 2022-23 which has shown an unprecedented reduction in rural and urban inequality. The inference from this latest released official data is that Bharat has achieved a remarkable feat of ending extreme poverty and there are suggestions for upward revision in poverty line and redefining existing social protection programmes for better targeting of beneficiaries so that few people who might have been left behind are uplifted. On the contrary, World Inequality Lab report, “Income and Wealth in India, 1922-2023: The Rise of the Billionaire Raj” (Pikketty et al, 2024) has made some claims that may not be tenable as per data points available in public domain. As per World Inequality Lab report, inequality levels declined post-independence but after early ‘80s, income and wealth inequality spiked and increased at rapid pace from early 2000s. The report claims that in terms of Income and Wealth, India’s top one percent holds 22.6 per cent and 40.1per cent respectively. The report added that India’s top one percent holds the highest income and wealth as against their peers in any other country and higher than South Africa, Brazil and USA. This is not the first time that Western Think Tanks and self-proclaimed intellectuals tried to defame India’s rising economic growth and success the country had in uplifting its poor. They seem to harbour unfounded fears in Bharat’s rise, dominance as an economic power and leader of the changing world order. The report has so many flaws and deficiencies that it may not stand academic scrutiny of its Data and methodologies used. On both the metrics, World Inequality Lab is flawed and found deficiencies. This whole analysis regarding Bharat’s wealth inequality is more propaganda and less of reality. First limitation in the World Inequality Lab arises out of combining data sets. Usually, Different databases use different methodologies to collect and estimate data. It is not an acceptable academic practice to combine two datasets just for the sake of an analysis. For instance, the report uses forecasting techniques of interpolation and extrapolation which can give you biased and inconsistent results as these are estimates and forecasts, not actual data. Instead of using latest consumption expenditure data, the study uses Generalized Pareto interpolation techniques for extracting which in itself shows that the data has been generated which can be inconsistent and biased because all forecasting techniques have limitations. The two datasets PLFS and HCES used in the report are not comparable so therefore claims of rising inequality are false. The reliance on PLFS data of the past which has been red flagged by India, International Labour Organization and giving this information in the footnote explains the hidden agenda. Secondly, tax collections database cannot be the basis to justify its claim on rising inequality. Higher tax collections imply that over the years, tax compliance has become better, more and more people are coming into the tax net with taxable incomes. Taking the tax database from 1920 and concluding that top one per cent earned less before 2010 and 1990 eras pre-supposes uniform tax compliance over the years which is absolutely false. Thirdly, focus of the authors was solely on top one per cent income earners in India. Over past many years, many foreign think tanks and intellectuals have had problems with Indian billionaires but if the billionaire was from a western developed economy, then it is not a crime. The report has cherry picked top one per cent earners and ignored emerging middle class that expanded considerably over past many years and constitute 31 percent of the population. Fourthly, the report has attempted to focus on perceived inequality aspect which is a very uni-dimensional approach to poverty. Many development economists now use multi-dimensional poverty index (MPI) to measure poverty and inequality which is more appropriate for analyzing the reduction in poverty for any country. Niti Aayog’s report on MPI has shown that 248 million individuals in India have overcome multi-dimensional poverty between 2013-23 and this holds greater significance for the typical ambitious Indian than count of billionaires in the nation. Reduction of Poverty is the ultimate goal and reduction inequality is its consequence. Fifth, the Report considers market capitalization or stock market wealth as part of net wealth. This is a very debatable assumption which has been considered in the report. Top one percentile income earners’ companies are listed on the stock market and with their valuations increasing related stock prices on the boom, suggestion has made that it translated to higher wealth for these income earners. On the contrary, if the stock prices fell and valuations dipped, their wealth would decrease and inequality shrinks. Taking this as a parameter to comment on India‘s inequality is completely inconsistent with good academic data driven rigor. This is not the first time that Piketty’s work has been criticized by economists and related commentators for its use of erroneous methodologies and inconsistent results. Geloso, Magness, Moore and Schlosser wrote in 2003 that in the Paper titled. “How Pronounced is the U-Curve? Revisiting Income Inequality in the United States, 1917–60”, inequality for United States of America has been overstated. Hence, the Inequality Lab report does not stand academic scrutiny, inconsistent and flawed with its methodologies and results which shows that this is just propaganda and nothing more. (Author is a doctoral scholar in finance at Indian Institute of Management, Indore)

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