📰 More troops on China border
But the number of men at the Doklam tri-junction has not been enhanced
•India has deployed more troops along the entire 1,400 km of the border with China in Sikkim and Arunachal Pradesh in the face of heightened rhetoric by Beijing over the Doklam standoff, senior government officials said here on Friday.
•The “caution level” among the troops has been raised, the officials said on condition of anonymity. The decision followed a detailed analysis, they said.
•The officials declined to give any figure or percentage of increased deployment, saying they cannot disclose “operational details”. The Sukna-based 33 Corps and 3 and 4 corps based in Arunachal Pradesh and Assam have been tasked with protecting the border in the east. The officials, however, said there was no enhancement of troops at Doklam.
Jaitley’s assurance
•Defence Minister Arun Jaitley on Friday assured the Lok Sabha that the armed forces were prepared for any eventuality amid a tense standoff between India and China in Doklam. He was responding to a question on the issue, and specifically a question based on a senior Army officer’s statement that Pakistan’s defence industry was better than India’s. He said the armed forces had adequate equipment to tackle any exigency. On a CAG report that the forces had ammunition only for 22 days in case of a war, he said “significant progress” had been made on this issue.
📰 Ayodhya dispute: Supreme Court to hear opening arguments on December 5
Contesting parties given 10 weeks to translate documents related to the Ramjanmabhoomi-Babri Masjid title dispute.
•As the Uttar Pradesh government pushed for an early hearing, the Supreme Court on August 11, 2017 scheduled the hearing of 13 appeals in the Ramjanmabhoomi-Babri Masjid title dispute on December 5, 2017, the eve of the 25th anniversary of the demolition of the 15th century mosque.
•A Special Bench of Justices Dipak Misra, Ashok Bhushan and S. Abdul Nazeer said the contesting parties, including the deity Ram Lalla, U.P. Central Sunni Waqf Board, Nirmohi Akhara, the Uttar Pradesh government and the several legal heirs and representatives of the original parties who died over the years of litigation in various courts, can make their opening statements on December 5, 2017 and continue for two more days in December before the court closes for Christmas vacations.
•The court gave the Uttar Pradesh government responsibility to translate the oral evidence in the case within a period of 10 weeks from now. The State government, represented by Additional Solicitor-General Tushar Mehta, visibly displayed eagerness to kick-start the hearing in the Supreme Court. It said it needs just four weeks to translate documentary evidence. Documentary evidence in the case involve scripts, palimpsests and records dating back several centuries and written in various languages ranging from Pali and Sanskrit to Arabic, Persian and Urdu. The case has about 533 documentary exhibits running to over 8,000 pages.
•The Uttar Pradesh government insisted that the court hearing begin soon and the parties can, on their own, translate the documents they intend to rely on as and when they require during the hearings. "Every party knows what document they are going to rely. So let's start and the translations can be done as and when a document is relied on during the hearing," Mr. Mehta submitted.
•This suggestion was strongly objected to by the Sunni Waqf Board represented by senior advocate Anup Chaudhary and senior advocates Kapil Sibal and Rajeev Dhawan, appearing for some of the opposing parties. Mr. Chaudhary said the "appeals were not yet ripe for hearing". Mr. Sibal and Mr. Dhawan said the documents needed to be translated first and the translations have to be finalised before the hearings start. Mr. Dhawan said otherwise a party can translate a document and "add their own spin to it".
•At this point, the court asked the warring parties what they were doing the past seven years the appeals against the September 2010 Allahabad High Court judgement in the title dispute were pending in the Supreme Court. "What were you doing all these years? Why did you not finish translating the documents," Justice Misra asked. The Bench pointed out that these are the same documents which had already been produced before the Allahabad High Court. The court finally ordered the parties to complete translation of the respective documents they would be relying on in the next 10 weeks.
•The court said it would first hear the appeals on the original title suits and then subsequently hear a writ petition filed by BJP leader Subramanian Swamy that the right to worship at the Ram mandir in the disputes land is his fundamental right. On March 22, 2016, a Bench led by then Chief Justice of India T.S. Thakur had said that Mr. Swamy's plea to “rebuild” the Ram temple would be sent to the appropriate Bench dealing with the Ramjanmabhoomi title dispute appeals. At that time, the Supreme Court had said that the case would be tagged with the appeals and heard in due course.
•The dispute, which has seen much tension and violence over the past decades, has been a subject of intense litigation since the 1950s.
•On September 30, 2010, a three-judge Lucknow Bench of the Allahabad High Court held that Hindus have the right to the makeshift temple under the central dome of the Babri Masjid. The High Court ruled in favour of a three-part division of the disputed 2.77 acre area among Sunni Waqf Board, Nirmohi Akhara and the Ram Lalla at the disputed site. The Bench had relied on Hindu faith, belief and folklore.
•Justice Sudhir Agarwal and Justice D.V. Sharma on the High Court Bench had concluded in their separate judgements that Lord Ram, son of King Dashrath, was born within the 1,482.5 square yards of the disputed Ramjanmabhoomi-Babri Masjid premises over 900,000 years ago during the Treta Yuga. Justice Sharma added that the "world knows" where Lord Ram's birthplace is.
•The third judge, Justice S.U. Khan, said his finding was an “informed guess” based on “oral evidences of several Hindus and some Muslims” that the precise birthplace of Ram is under the central dome.
📰 Law itself allows cattle slaughter, SC tells govt.
‘But cruelty to animals not regulated’
•If slaughtering cattle for food or religious sacrifice is allowed under the Prevention of Cruelty Act, why did the government ban the sale of cattle for these purposes in the new livestock market rules, the Supreme Court asked the Centre on Friday.
•A Bench of Chief Justice of India J.S. Khehar and Justice D.Y. Chandrachud pointed out that the Prevention of Cruelty to Animals Act of 1960 allowed slaughter for food and religious sacrifices.
•On the other hand, the Prevention of Cruelty to Animal (Regulation of Livestock Market) Rules of 2017 require a person coming to the market to give a written undertaking that he will not sell his cattle for slaughter.
•“How can you [the Centre] insist that a person should give a written undertaking that he is not bringing cattle to the market for sale for slaughter? This is an interference of his fundamental right to carry on trade, protected under the Prevention of Cruelty Act,” Justice D.Y. Chandrachud told the government.
Confirms HC order
•The Bench confirmed the order of the Madurai Bench of the Madras High Court staying certain provisions of the livestock rules banning sale or purchase of cattle in markets for slaughter and religious sacrifices. It, however, clarified that there was no stay on the implementation of the Prevention of Cruelty to Animals (Maintenance of Case Property Animals) Act of 2017.
•Disposing of the pleas challenging the rules, the court gave liberty to petitioners to approach it in case of grievance about the fresh rules the government proposes to notify soon.
📰 Push for law to ensure transparency rules
‘People can’t claim ignorance as defence’
•The government could consider introducing a new law to ensure transparency of rules, the Economic Survey has recommended, stressing that the ‘opaque mesh’ of regulations prevalent in India not only make life difficult for citizens who cannot feign ignorance of the rules as a valid defence, but also act as a magnet for corruption and endless litigation.
•“The problem is that it is not easy for ordinary citizens [and businesses] in India to navigate the multitude of rules, regulations, forms, taxes and procedures imposed by various tiers of government. Moreover, these rules frequently change and sometimes contradict each other,” the Survey’s second volume tabled in Parliament on Friday said.
•Arguing that India would benefit enormously if the average citizen could easily access the latest rules and regulations in a comprehensible format, the survey suggests a Transparency of Rules Act (TORA) as a possible solution.
•Explaining that it is not referring to the content of the rules but solely about the ease of finding out what the citizen is expected to so, the Survey said even government officials struggle to keep up with ‘the latest version’ of complicated rules.
‘Attempt to change’
•“The TORA is an attempt to change in some ways the relationship between the average normal citizen and the State. All forms of governance are based on citizens being expected to follow the rules. Unfortunately, in India, very often, the rules are not so transparent. I don’t mean the grand laws passed in Parliament, but the administrative rules, forms, procedures that citizens have to follow,” said Principal Economic Advisor Sanjeev Sanyal.
📰 Growth likely to be in the lower range, closer to 6.5%
Many indicators point to a deceleration, says second volume of Economic Survey
•The Indian economy’s growth in 2017-18 is more likely to be closer to 6.5% than 7.5%, according to Chief Economic Adviser Arvind Subramanian. Speaking to the media after the second volume of the Economic Survey was tabled in Parliament on Friday, Mr. Subramanian outlined new downside risks to growth that have emerged since the presentation of this year’s Union Budget.
•“We are not changing our growth forecast (a range of 6.5%-7.5% estimated in February), just saying that because of all these risks, it’s less likely that we will see outcomes towards the upper end of the forecast. The balance of risks to the growth outlook has clearly shifted to the downside and the balance of probability has correspondingly shifted away from the upper end of the growth forecast,” Mr. Subramanian said.
Demonetisation impact
•Stressing that it would be premature to say that growth can rebound very quickly unless there is a ‘clean-up’ and significant ‘deleveraging’ in the Indian economy, Mr. Subramanian said there has been an ‘across-the-board deceleration in real activity since the first or second quarter of last year,’ which could have intensified owing to demonetisation of high-value currency notes by the government last November. The economy grew by 7.1% in 2016-17.
•“I think it is quite telling that for the first time, many indicators — credit growth, index of industrial production, Gross Value Added, manufacturing, investment – all point to the same direction of deceleration in growth,” Mr. Subramanian said. “There are various steps taken with medium-term benefits. The real challenge now is short-term growth and we need to bring to bear all the policy tools that we have to revive short-term growth,” he concluded.
Farm loan waivers
•While refusing to get drawn into a debate on whether farm loan waivers announced by States are good or bad, he said such waivers will act as a ‘drag on growth’ rather than have an inflationary impact.
•“To accommodate the loan waiver, States will have to cut down either expenditure or raise taxes which will be deflationary. This is not something I am making up. Look at the Uttar Pradesh Budget – capital expenditure has been slashed by 13% or so. That represents less demand, less growth,” he said, suggesting this could impact demand by as much as 0.7% of GDP, drag down growth in the short run and worsen States’ aggregate fiscal deficit indicators.
📰 ‘Ease norms for airlines to fly abroad’
Survey urges protectionism, liberal rules for Indian airlines to fly international
•The Economic Survey has suggested a mix of protectionism for domestic airlines and liberal norms for flying abroad to bolster their share in international air traffic.
•The second volume of the Economic Survey 2016-17 released on Friday said a large increase in capacity entitlements under bilateral air service agreements with foreign countries has helped foreign carriers in gaining a large share in the international traffic to and from India as domestic carriers have underutilised their rights.
•About 38% people fly in and out of India through Indian carriers as per estimates for January-March 2017.
•“Indian domestic airlines have a very low share in international traffic to and from India,” the Survey said. “Factors like foreign airlines utilising the sixth freedom of the air, expansion of capacity entitlements under bilateral air service agreements with foreign countries, lower utilisation of India’s own capacity entitlements, the 0/20 rule and fleet constraints are responsible for the same.”
‘Sixth freedom’
•Sixth freedom is the bilateral air traffic right to fly from a foreign country to another foreign country while stopping in one’s own country. For instance, Emirates operates flights between India and the U.K. while stopping at Dubai, its home state. Sixth freedom traffic constituted 61.14% of the total international traffic in 2015-16, increasing from 59.15% in 2014-15. The Survey said this had reduced the share of direct, long-haul flights for Indian carriers from 25% in 2011-12 to 20.5% in 2015-16.
•The Survey said that the government should focus on building its own aviation hubs as “India is as advantageously placed in terms of geographic location as Dubai or Singapore.”
•It noted that the capacity entitlements between Dubai and India have increased sixfold between 2003 and 2017. It increased ninefold in the case of Oman and 12-fold in the case of Qatar. “While capacity entitlements are reciprocal in nature, the benefit of such increases in capacity entitlements have accrued more to the foreign partner vis-a-vis India. This is because India’s utilisation of these rights is lower than the foreign counterparts.”
•The Survey said the 0/20 rule to allow for overseas operations should be further diluted. In its 2016 policy, the Central government had diluted the contentious ‘5/20 rule’ that required an Indian airline to have five years of domestic flying experience and 20 aircraft in its fleet before it could fly to overseas destinations. According to the present norm, known as the 0/20 rule, a domestic airline needs to deploy at least 20 planes in the domestic sector before getting the right to fly on international routes from India.
📰 ‘Unstable power, a big barrier in India’
Japan says its micro-grid is a solution
•Japan said unstable power supply was among the biggest investment barriers in India. The comment comes ahead of Japanese Prime Minister Shinzō Abe’s India visit next month during which bilateral discussions on cooperation in energy sector would get priority.
•Incidentally, Japan had commited to develop mega-industrial corridors and high-speed rail network in India through financial aid and technology transfer. These projects would require uninterruptible power supply. “... the problem of unstable power grid... is still one of the biggest investment barriers in India,” said Japanese Ambassador to India Kenji Hiramatsu. He said the Japanese system using solar cells and micro-grid control technology could provide solution to this. He was speaking after opening a solar power plant here.
📰 System lighter by ₹3.5 lakh crore of cash: Survey
Says demonetisation also has increased digitisation across the board; all economic indicators have returned to normal and filing of income tax returns has gone up
•Demonetisation has reduced ₹3.5 lakh crore of cash from the amounts available in the system before, and digitisation has increased across the board, even among the poor, says Volume II of the Economic Survey.
•The volume, tabled in Parliament on Friday, noted that while the informal sector suffered initially from demonetisation, all indicators, such as two-wheeler sales and demand for MGNREGA work, had returned to normal. It found that while the number of income tax returns had increased sharply, the average income declared had not risen commensurately.
•“In levels, and as a share of GDP and money, there seems to have been a sharp and equilibrium decline in the use of cash: as of July, the holding of cash is about ₹3.5 lakh crore (20%) less than what might have been the case had pre-demonetisation trends prevailed, consistent with the calculations presented in Volume I,” it said.
•“Of course, a definitive judgement can only be passed if current levels of cash relative to GDP persist over time but, so far, reliance on cash appears to have declined sharply,” the Survey added.
📰 The challenge is growth rebound in short term: Arvind Subramaniam
CEA says many indicators point to a deceleration
•Early signs of the long-term benefits such as higher number of taxpayers from demonetisation are evident, though if this will have an effect on tax collections remains to be seen, the Economic Survey’s second volume tabled in Parliament on Friday says. Downside risks to growth have increased since the Budget, the Survey notes. Edited excerpts from the presentation of Chief Economic AdvisorArvind Subramaniam on the Survey’s broad outlook for the economy:
On demonetisation effects
•Demonetisation will have long-term benefits and that long term will still depend on what happens in the next one, two or three years, but we can see early signs of potential benefits.
•The high-frequency data shows we did see a growth deceleration before demonetisation, but that continued and maybe intensified in the last two quarters of the financial year.
•So, maybe demonetisation was associated with the deceleration of activity. Two-wheeler sales could be one way to consider the informal sector impact. There was a decline after demonetisation but now it’s catching up and we are almost back to where we were.
Near-term outlook on inflation and growth
•The Reserve Bank of Indian and the government have substantially overachieved on inflation. For the last 10 months, our estimate is that we have done better than whatever target we set ourselves by about 150 basis points on an average for almost a year. Our assessment, if you put all of this together, is that by March 2018, we would be well within the inflation target and average inflation for the year as a whole would be well below target.
•Even if you reach about 4% by end-March, inflation for the year as a whole, which is a more important number, that will be closer to the 3% mark.
•There’s been an across-the-board deceleration in real activity since the first or second quarter of last year and I think it is quite telling that for the first time, many indicators — credit growth, IIP, GVA, manufacturing, investment — all point to the same direction of deceleration in growth. A number of countries that experienced a credit boom, growth boom and then a credit and growth collapse … India didn’t de-leverage at all. So it is almost premature to say that growth can rebound very quickly unless we clean up and do the de-leveraging.
•Real interest rates are rising and are high, exchange rates are appreciating. So both from the domestic side on monetary policy and the external side, by exchange rates, we are seeing a greater drag on growth.
•The balance of risks to the growth outlook has clearly shifted to the downside and the balance of probability has correspondingly shifted away from the upper end of the growth forecast. So we are not changing the growth forecast (6.5% to 7.5% for 2017-18)… just that because of all these risks, it’s less likely that we will see outcomes towards the upper end of the forecast.
•There are various steps taken with medium-term benefits, the real challenge now is short term growth and we need to bring to bear all the policy tools that we have to revive short term growth.
📰 Risks to growth
Given the recent policy changes, the CEAhas done right to flag mid-year concerns
•Five months after the Economic Survey 2016-17 was released, Chief Economic Adviser Arvind Subramanian has presented the second volume of the annual economic review-cum-prognosticatory report. With the intervening period having provided a wealth of data points and policy developments, including the momentous roll-out of the Goods and Services Tax, there was a clear need to update and refresh outcomes and forecasts. And his outlook for growth in the current financial year has clearly turned more sombre. While Volume I had projected the gross domestic product expansion in 2017-18 in a range of 6.75-7.5%, the CEA has had to take cognisance of several new factors that have contributed to his diagnosis: “that the balance of risks seem to have shifted to the downside” with a far lower likelihood of growth being “closer to the upper end”. A quick look at each of the risks that Mr. Subramanian has cited shows it is going to be hard to find a ‘magic bullet’ fix that encompasses most of the concerns. For instance, the continuing appreciation of the rupee’s real exchange rate means exporters are increasingly going to find themselves struggling to compete on pricing against competitors from countries whose currencies have weakened against the dollar and the euro. And this even while the recovery in global trade demand is still to acquire more robust momentum. Another dampener, according to the CEA, would be the increasing stress to balance sheets that companies in the power and telecom sectors have to contend with, and the deflationary bias to activity that such stress would impart.
•Besides its long-term structural benefits, the implementation of the GST, says Mr. Subramanian, would also straightaway provide a short-term impetus by easing a cross-country logistics constraint following the removal of checkposts. And yet, the transitional challenges from the actual operation of the new indirect tax regime could feed into the mix of factors retarding momentum. Pointing to other factors including the farm loan waivers and agricultural stress that pose risks to the growth outlook, the survey posits that as part of the government’s remedial responses “policy must be driven by the recognition that, over longer horizons, there is no necessary opposition between farmer and consumer interests.” Backed by procurement, remunerative and stable support prices can help ensure that the risk of wild swings in the production and prices of farm produce is obviated, thus protecting both farmers and consumers. The CEA makes bold to recommend that the “time is also ripe to consider whether direct support to farmers can be a more effective way to boost farm incomes.” Ultimately, he argues, quick and considerable monetary easing by the RBI — with policy rates cut to about 4.25-5.25% from the current 6% — could help the economy approach full potential and aid in resolving the issue of stressed balance sheets.
📰 No level playing field
The Insolvency and Bankruptcy Code has loopholes to close down businesses instead of assisting entrepreneurs
•The Insolvency and Bankruptcy Code, 2016 was enacted with the intention of improving the ease of doing business in India, a country perceived to have a weak insolvency framework and where defaulting debtors abuse the law. At the outset, the Code appears to have the interests of business at heart: it aims to overhaul laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms, and individuals; attempts to ease the process of recovery of money by operational and financial creditors in a timely manner; and places the onus on professionals to put forth resolution plans within 180 days. It seeks to ensure that there is neither scope for any further claims by the creditors, except through the Code’s mechanisms, nor for the corporate debtor to challenge the claims made by the creditor.
•In reality, however, the Code has enough loopholes to close down businesses instead of assisting entrepreneurs. As explained subsequently, it fails to provide adequate safeguards to protect the rights of the company before handing over the management in its entirety to the resolution professional. The entourage of appeals before the National Company Law Appellate Tribunal, and writ petitions before numerous High Courts, in a short span begs the question: Is the Code truly poised to meet the ends it proclaims?
A quick process
•In relation to corporate persons, the Code looks to wrap up the game in 180 days. It warrants a notice of dispute to be issued followed by a response period of 10 days for the corporate debtor, failing which the creditor is entitled to file an insolvency application before the National Company Law Tribunal (NCLT). Within 14 days from filing, the application must be admitted. Upon admission, the moratorium period (freezing of bank accounts, prohibition on foreclosures in relation to financial debts, etc.) commences. At this stage, the existing management of the company loses complete control and all powers vest with an interim resolution professional, who has merely 30 days to put together all the relevant information and call for a meeting of the financial creditors.
•Once the financial creditors meet, they must appoint a resolution professional who will put together an information memorandum of the company that forms the basis for a resolution applicant to propose a resolution plan for the company. The Code fails to define a resolution applicant. All such resolution plans are placed before the financial creditors. When at least 75% of the financial creditors approve, the plan is implemented by way of an order by the NCLT. If the financial creditors fail to arrive at a consensus, the default plan is to liquidate the company.
The flaws
•The Code rides substantially on the unquestionable word of the creditors. Neither does the corporate debtor have an opportunity to put forth his/her case nor is there any scope of discretion provided to the adjudicating authority itself. At various stages — of admission of the insolvency proceedings, of appointing the insolvency professional, of finalising the resolution plan — the Code fails to provide any opportunity to the corporate debtor to make a representation, at the very least. In this manner, the Code ignores rights enshrined in the Constitution. (In Maneka Gandhi v. Union of India, 1978, the Supreme Court observed that it is the duty of the authority to give reasonable opportunity to be heard, even where there is no specific provision for showing cause when a proposed action affects the rights of the individual.)
•The Code is also deficient in providing a yardstick for the qualification of the interim and of the final insolvency resolution professionals. It allows for any person to access the information memorandum put together by the insolvency professional without restricting competitors or imposing any confidentiality obligations. This allows for any person to access proprietary information of the corporate debtor and misuse the same, given that there is no law protecting confidentiality and vitiates the fundamental right to business under Article 19(1)(g).
•It is also shocking that the Code prohibits withdrawal of the application once the same has been admitted. This means that there is no scope whatsoever for settlement. This is despite the recent ruling of the Supreme Court in Lokhandwala Kataria Construction (P) Ltd. V. Nisus Finance and Investment Managers LLP (2017), wherein a settlement proposal was taken on record and the appeal was disposed of. However, this cannot be held as a precedent.
•Further, the unrestricted access of any person without mandatory contractual obligations in relation to confidentiality vitiates the fundamental right to business under Article 19(1)(g).
•All this shows that the Code still requires a lot of hand-holding by the judiciary to put in place adequate safeguards and guidelines to ensure its smooth, effective, and fair enforcement. The Code may have teething troubles, such as infrastructure, but there is no excuse at all for basic constitutionality flaws.
📰 Slow injustice
Speedy trials alone can undo the sense of injustice caused by acquittal after years in jail
•The wholesale acquittal of all 10 persons arrested in connection with a blast at the Police Task Force office at Begumpet in Hyderabad in 2005 must occasion serious introspection on the prevailing gulf between crime and justice. While they no doubt bring relief, acquittals in such cases also carry a sense of injustice, especially when they are based on absence of evidence and not merely because there is some doubt about culpability. It may also seem unfair to those who feel the accused got away; but more often, the injustice flows from the loss suffered by the accused who might have spent years in prison, possibly in the prime of youth. There have been quite a few instances, in recent times, of those arrested for alleged involvement in terrorism incidents being released after years in prison. Examples include Nisar-ud-din Ahmad, who spent 23 years in prison in connection with several train blasts, before the Supreme Court ordered his release last year. Aligarh Muslim University research scholar Gulzar Mohammed Wani spent 16 years in jail on suspicion of being a member of the Hizbul Mujahideen before he was acquitted due to lack of evidence. Exoneration from one or two charges cannot be adequate recompense for the loss of liberty and the trauma of the trial. A key aspect of these cases is that they were serious crimes warranting credible investigation and vigorous prosecution. The outcome, often acquittal for want of evidence, reflects poorly on the investigating machinery as well as the judicial system. In December 2016, the National Investigation Agency managed to get Yasin Bhatkal, founder of the Indian Mujahideen, and four others convicted and sentenced to death in connection with the 2013 twin blasts in Hyderabad, but it is a rare instance of a successful prosecution and a relatively quick trial.
•Fairness in the administration of criminal justice is not secured by the final outcome alone, but must be built into the process of determining whether a person is guilty or not. Courts tend to deny bail in cases related to terrorism, but do not show a matching commitment to an expeditious trial. Delayed trials weaken the prosecution’s case. Witnesses tend to forget crucial details or lack the resolve to depose carefully. Every person acquitted may not be innocent; equally, it cannot be said that people are going scot-free after committing grave offences. Individuals come under suspicion for their links with organisations or groups, but are exonerated by courts after the prosecution fails to link them to any particular crime. One way of addressing the problem of prolonged incarceration and perfunctory prosecution is to make it a matter of policy to have a quick and time-bound trial at least in serious cases involving acts of terrorism and those under special laws. Justice, if it has to be substantive, cannot be in slow motion.
📰 In South Asia, be the Un-China
India needs to rekindle the SAARC process in order to secure historical affinity with its neighbours
•As the stand-off between the Indian and Chinese militaries enters its third month at Doklam, it is not just Bhutan that is keenly anticipating the potential fallout. The entire neighbourhood is watching. There is obvious interest in how the situation plays out and the consequent change in the balance of power between India and China in South Asia. India’s other neighbours are likely to take away their own lessons about dealing with their respective “tri-junctions” both real and imagined, on land and in the sea. A Chinese defence official was hoping to press that nerve with India’s neighbours when he told a visiting delegation of Indian journalists this week that China could well “enter Kalapani” — an area near Pithoragarh in Uttarakhand that lies along an undefined India-Nepal boundary and a tri-junction with China — or “even Kashmir” with a notional India-China-Pakistan trijunction.
Buzzword is equidistance
•Perhaps, it is for this reason that governments in the region have refused to show their hand in the Doklam conflict. “Nepal will not get dragged into this or that side in the border dispute,” Nepal’s Deputy Prime Minister Krishna Bahadur Mahara said ahead of a meeting with External Affairs Minister Sushma Swaraj, who had travelled to Kathmandu for the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) regional summit. Chinese Vice Premier Wang Yang will be in Kathmandu next week, and Nepal’s Prime Minister Sher Bahadur Deuba in Delhi the week after. Making a similar point while speaking at a conference on public relations this week, a Sri Lankan Minister in Colombo contended that India and China are “both important” to Sri Lanka. Bhutan’s Foreign Ministry has stuck to its line, blaming China for violating agreements at Doklam, but not mentioning India. Columnists in the country too are increasingly advocating that Bhutan distance itself from both Indian and Chinese positions.
•A policy of ‘equidistance’ for our closest neighbours is a far cry from India’s past primacy in the region and something South Block can hardly be sanguine about. Yet, it is a slow path each of the neighbours (minus Bhutan) has taken in the past few years. When the Maldives first turfed private infrastructure group GMR out of its contract to develop Male airport in 2012, few could have imagined the situation today with Chinese companies having bagged contracts to most infrastructure projects. This includes development of a key new island and its link to the capital Male and a 50-year lease to another island for a tourism project.
•Similarly, when the then Prime Minister of Nepal K.P. Sharma Oli signed a transit trade treaty and agreement on infrastructure linkages with China in late 2015-2016, Ministry of External Affairs mandarins had brushed it off as a “bluff”. Today, China is building a railway to Nepal, opening up Lhasa-Kathmandu road links, and has approved a soft loan of over $200 million to construct an airport at Pokhara. According to the Investment Board Nepal, at a two-day investment summit in March this year, Chinese investors contributed $8.2 billion, more than 60% of the foreign direct investment commitments made by the seven countries present.
•Sri Lanka’s Hambantota port construction project went to the Chinese in 2007 only after India rejected it. Today, China doesn’t just own 80% of the port; it has also won practically every infrastructure contract from Hambantota to Colombo. Chinese President Xi Jinping’s visit to Bangladesh last October was another such overture, with $24 billion committed in infrastructure and energy projects. Earlier this year, the largely state-owned Chinese consortium, Himalaya Energy, won a bid for three gas fields in Bangladesh’s north-east shoulder from the American company Chevron, which together account for more than half of the country’s total gas output.
•Even if Pakistan is not counted in this list, it is not hard to see which way India’s immediate neighbours, which are each a part of China’s Belt and Road Initiative (BRI), are headed in the next few years. More pointedly, once the investment flows in, it will be that much harder for them to stave off a more strategic presence which China is now more unabashed about.
•If one of the aims of the action in Doklam is to save Bhutan from the same fate, then what else must India do to ensure that China doesn’t succeed in creating similar space for itself in a country that stood by India in its objections to BRI, and bring its other neighbours back?
Rebooting SAARC
•To begin with, India must regain its role as a prime mover of the South Asian Association for Regional Cooperation (SAARC), the organisation it abandoned a year ago over its problems with Pakistan. Despite sneers all around, SAARC has survived three decades in spite of its biggest challenge, India-Pakistan tensions. That New Delhi would cancel its attendance at the summit to be held in Pakistan in the wake of the Uri attack, winning support from other countries similarly affected by terrorism such as Bangladesh and Afghanistan, is understandable. But a year later, the fact that there have been no steps taken to restore the SAARC process is unfortunate. This will hurt the South Asian construct and further loosen the bonds that tie all the countries together, thereby making it easier for China to make inroads. It should be remembered that despite China’s repeated requests, SAARC was one club it never gained admittance to. For all the Narendra Modi government’s promotion of alternate groupings such as South Asia Subregional Economic Cooperation (SASEC), BIMSTEC, the Bangladesh, Bhutan, India, Nepal (BBIN) Initiative and Security and Growth for All in the Region (SAGAR), none will come close to SAARC’s comprehensive cogency.
•Second, India must recognise that picking sides in the politics of its neighbours makes little difference to China’s success there. In Sri Lanka, the Sirisena government hasn’t changed course when it comes to China, and despite its protestations that it was saddled with debt by the Rajapaksa regime, it has made no moves to clear that debt while signing up for more. The United Progressive Alliance government made a similar mistake when President Mohamed Nasheed was ousted in the Maldives, only to find that subsequent governments did little to veer away from Chinese influence.
•India made its concerns about the then Prime Minister Oli very clear, and was even accused of helping Pushpa Kamal Dahal ‘Prachanda’ to replace him in 2016, yet Nepal’s eager embrace of Chinese infrastructure and trade to develop its difficult terrain has not eased. In Bangladesh too, Prime Minister Sheikh Hasina, who has overseen the closest ties with New Delhi over the past decade, has also forged ahead on ties with China. Should her Awami League lose next year’s election, the Bangladesh Nationalist Party will most certainly strengthen the shift towards China. In Bhutan’s election, also next year, it is necessary that India picks no side, for nothing could be worse than if the Doklam stand-off becomes an India-versus-China China election issue.
A policy of respect
•Above all, India must recognise that doing better with its neighbours is not about investing more or undue favours. It is about following a policy of mutual interests and of respect, which India is more culturally attuned to than its large rival is. Each of India’s neighbours shares more than a geographical context with India. They share history, language, tradition and even cuisine. With the exception of Pakistan, none of them sees itself as a rival to India, or India as inimical to its sovereignty. As an Indian diplomat put it, when dealing with Beijing bilaterally, New Delhi must match China’s aggression, and counter its moves with its own. When dealing with China in South Asia, however, India must do exactly the opposite, and not allow itself to be outpaced. In short, India must “be the Un-China”.
