📰 Narendra Modi-Xi Jinping ‘informal summit’ in Chennai from October 11
India will focus on building on the Wuhan ‘consensus’ for better ties; But, hours after the two sides announced the visit, differences grew over comments by Mr. Xi and Pakistan Prime Minister Imran Khan on Kashmir.
•Chinese President Xi Jinping will arrive in Chennai on October 11 for the second “informal summit” with Prime Minister Narendra Modi, New Delhi and Beijing announced on October 9.
•The meeting between the two leaders, that follows the Wuhan summit last April that reset ties, is expected to enhance bilateral cooperation.
•Just hours after the two sides announced the visit, differences grew over comments by President Xi and Pakistan PM Imran Khan on Kashmir, made in Beijing, where Mr. Xi said that China “is concerned about the situation in Kashmir”, according to a report on Chinese official news agency Xinhua.
•“China supports the Pakistani side in safeguarding its legitimate rights and interests and hopes that the parties will resolve the dispute through peaceful dialogue,” the report added. In a separate “joint Press release” issued by the Pakistan government, the Chinese government reportedly referred to UN Security Council resolutions on Kashmir, a day after it had spoken of a bilateral settlement to the issue.
•In a sharp reaction to the statements, the government reasserted that Jammu and Kashmir is an “integral part of India”.
•“China is well aware of our position. It is not for other countries to comment on the internal affairs of India,” said the official spokesperson Raveesh Kumar.
•Speaking about the agenda for talks between PM Modi and President Xi on October 11 and 12, government officials said India would not discuss the government’s move to amend Article 370, and would broadly focus building on the Wuhan “consensus” for better ties.
•“The forthcoming Chennai Informal Summit will provide an opportunity for the two leaders to continue their discussions on overarching issues of bilateral, regional and global importance and to exchange views on deepening India-China Closer Development Partnership,” a common statement issued by the MEA and Chinese Ministry of Foreign Affairs said.
•Speaking about another possible source of tension at a press conference in Beijing, Chinese Vice-Minister and former Ambassador to India Luo Zhaohui said that Beijing doesn’t recognise the Him Vijay mountain combat exercises in what he called the “disputed Eastern sector”.
•“As far as we know the so-called military exercises is not a fact, it is not true. Second, the region you mentioned is a sensitive region and we don’t want to hear that reference,” Mr. Luo said in reply to a question about whether China had protested the exercises, and added that the two leaders will build on the “personal chemistry” achieved in Wuhan. “Both the leaders have strategic vision and global perspective… So for them to sit down in Chennai and discuss global and regional affairs shows that the dragon and the elephant can work together, (and) that we can have bilateral relations and practical cooperation between the two countries,” said Mr. Luo.
•No specific outcomes, or agreements are expected after the Modi-Xi meet in Chennai, said officials, but the two leaders will hold talks on bilateral issues including enhancing trade, resolving the boundary dispute and possible new Confidence Building Measures (CBM); regional issues including Afghanistan, Indo-Pacific policy, terrorism and other global and bilateral trade issues.
•The meetings will also lead to several other high-level exchanges, including the delayed boundary talks between Special Representatives as well as annual India-China anti-terrorism “Hand-in-Hand” exercises in December this year.
•Both leaders will meet again within two weeks at the East Asian and RCEP summit in Thailand, and the 16-nation FTA will be on the table for talks, along with bilateral trade issues. “We have seen some movement on the regulatory and market access fronts, but the trade deficit remains a matter of concern,” an official said.
•Mr. Xi will be accompanied by Foreign Minister Wang Yi and Special representative Yang Jiechi, and PM Modi will be accompanied by External Affairs Minister S. Jaishankar and NSA Ajit Doval on some of their discussions, and are expected to also hold talks without any other officials present, as they did in Wuhan.
•According to the programme, the two leaders will hold a series of discussions at a hotel in Mamallapuram, about an hour away from President Xi’s hotel in Chennai. On Friday, Mr. Xi will land in Chennai shortly before 2 pm. He will join the PM for sightseeing in the Mamallapuram temple complex, including the Shore Temple, the Pancha Rathas (five chariots) and Arjuna’s penance monuments. The will have dinner along the beach after a cultural performance by Kalakshetra. President Xi will return to Chennai that evening, but return on Saturday morning for another meeting with Mr. Modi followed by Lunch, and then will fly out to Kathmandu around 2pm.
•The choice of Mamallapuram and Chennai had been made due to several reasons, officials aware of the planning said. PM Modi had given “clear guidance” that it would have to be held outside the national capital, and at a historical place, given President Xi’s “interest in history and culture”. Tamil Nadu has a number of historical connections to China, including Tamil prince Bodhidharma, who is credited with bringing Zen Buddhism to China, the visit of 7th century traveller Hsuan-tsang to Kanchipuram, and trading expeditions from the Pallava kingdom to the South east coast of China.
India to join RCEP e-commerce talks.
•India’s data localisation plans hang in the balance as it will join the other Regional Comprehensive Economic Partnership (RCEP) countries on Thursday in discussing the e-commerce chapter of the RCEP agreement. The RCEP meeting will take place in Bangkok from October 10-13. If India agrees to the provisions of Chapter 10 on e-commerce, as specified by most of the other countries, it will mean it won’t be allowed to impose data localisation rules on companies looking to do business in India.
•This would go against the Reserve Bank of India’s (RBI’s) norms on localisation of payments data that it had ordered in April 2018. “No Party shall require a covered person to use or locate computing facilities in that Party’s territory as a condition for conducting business in that territory,” reads the wording in the draft chapter — as suggested by Australia, Japan, New Zealand, South Korea, and the 10 Association of Southeast Asian Nations (ASEAN) — reviewed by The Hindu.
•Further, the suggested phrasing by the 14-member group (the RCEP comprises 16 countries including China) on cross-border electronic transfers is that “a Party shall not prevent cross-border transfer of information by electronic means, where such activity is for the conduct of the business of covered person.”
•In its April 2018 notification, the RBI had said that “all system providers shall ensure that the entire data relating to payment systems operated by them are stored in a system only in India”.
•This data is to include the full end-to-end transaction details, information collected, carried, or processed as part of the message or payment instruction. If India agrees to the wording as it is, then these rules by the RBI will also have to be reviewed, as would any future plans the government has to implement data localisation in any form.
•However, Indian negotiators are trying to dilute the provisions in the Chapter, by including a provision to make the RCEP clauses subject to domestic laws.
•India’s suggestion for the Chapter thus reads: “No Party shall, subject to laws and regulations framed by it from time to time, require a covered person to use or locate computing facilities in that Party’s territory as a condition for conducting business in that territory.”
•A similar change has been suggested to the clause on the transfer of electronic information across borders, where India wants to make the clause subject to domestic laws and norms framed from time to time.
📰 Maintaining the India-China stride length
Wuhan was meant to stabilise India-China ties at a time of major global changes; the basic understanding must continue
•The recent calm in India-China relations might have erased images of the turbulent chapter that preceded it. For much of the period between 2014 and 2017, uncertainty regarding the other side’s policies and intentions leading to tension, mistrust, and competition characterised the relationship. It was an unusual spike in the post-Cold War era and only subsided in 2018.
Wuhan and after
•Over the past decade, three historical forces have been shaping India-China relations. Some of these forces have been pushing both countries towards competition and some impelling them towards cooperation and collaboration. The first is a changing world order and the rise of Asia, a phase that is generally traced to the period after the 2008 global economic crisis. The second is the idea that with the West’s declining capacity and inclination to responsibly manage international and Asian affairs, India, China and other re-emerging powers are being thrust into new order building roles that would require coordination and cooperation to preserve global stability and co-develop new governance institutions and norms. The third is a changing South Asia with China’s 2013 and 2014 policy declarations of deepening ties with its periphery including with subcontinental states, followed soon after with the ambitious Belt and Road initiative and the China-Pakistan Economic Corridor in April 2015.
•While all three factors contributed to the complexity of India-China relations in the period leading up to 2017, the region became the main arena of interaction, with both sides adopting antagonistic approaches and strategies. Much of this acrimonious build-up can be traced to China’s decision to expand linkages with its southwestern periphery and India’s perception and reaction to that process. In retrospect, the Doklam episode in the high Himalayas was really the culmination of a deeper festering question — how would India and China relate to each other as their footprints grew in their overlapping peripheries?
•It was only with the outbreak of the border crisis and the possibility of a conflict that both leaderships undertook a sober assessment of the complex historical forces at play. When situated against the broader picture of an emerging multipolarity, uncertainty on the future of globalisation, and, the still long journey towards social and high-tech rejuvenation of their economies, it led to a similar conclusion by the two leaderships: a lessening of regional tension was in the national interest of both countries. This, in essence, was the backdrop to the April 2018 “informal summit” in Wuhan, where both sides decided to arrest the deterioration in the relationship and attempt to chart a fresh course.
Creating some order
•Both leaderships also discovered the void of a contemporary framework to guide their complex relationship in a rapidly changing and uncertain international environment. Recall that the 1988 modus vivendi was built on a very pragmatic understanding that despite their decades-old territorial dispute, both sides would keep the ball rolling so to speak and develop all-round ties until the time was ripe for a dignified settlement of their dispute. But there was nothing in that understanding to either guide a geopolitical accommodation or regulate the depth and range of issues that have come to define the relationship in the ensuing decades. Wuhan 1.0 was an attempt to articulate some norms that could serve as a renewed set of guidelines to policymakers and bureaucracies in both countries. It was built on five pillars. The “simultaneous emergence of India and China”, two major powers with independent foreign policies is a reality. The relationship has regained importance and become “a positive factor for stability” in the global power flux. Both sides recognise the “importance of respecting each other’s sensitivities, concerns and aspirations”. Both leaderships would provide “strategic guidance to their respective militaries” to manage the border peacefully. And finally, both sides would strive for “greater consultation on all matters of common interest”, which includes building a real “developmental partnership”.
•Subsequently, the Wuhan approach was critiqued for not going far enough in terms of laying out a blueprint to resolve differences. There is some merit in that interpretation. Yet, the fact is both sides have contained much of the spiralling competition and mistrust, and, there is little doubt that an uncertain international environment motivated both sides towards such a choice. It has also been claimed that China had tactical reasons for a truce with India in order to focus on strategic competition with the U.S. This is also true. But what has not been emphasised enough is India too benefits from not having to overburden its military, weak economy, and under-resourced diplomatic corps from having to focus on two fronts in a region-wide rivalry with China. As India’s Foreign Secretary stated in February 2018, “India has to find and define for itself a relationship with China which allows us to maintain our foreign policy objectives and at the same time allows us a policy that is prudent enough that does not lead us to conflict on every occasion.” In essence, Wuhan was grounded in realpolitik considerations.
Three-point road map
•Going forward, India’s China policy should be guided by three grand strategic goals: an inclusive security architecture in Asia that facilitates a non-violent transition to multipolarity without disrupting economic interdependence; a fair and rules-based open international order to better reflect Indian and developing economy interests; and, geopolitical peace and sustainable economic development in the neighbourhood. China is important to the successful pursuit of each of these goals, and the principal task before Indian policymakers is to envisage and execute a policy framework that allows for progress on these three ends.
•The historian Odd Arne Westad recently advised, “The more the U.S. and China beat each other up, the more room for maneuver other powers will have.” One could equally apply that mantra to India and China. Unrestrained competition only benefits other powers. The recent stability in India-China relations is a choice made by both sides. History is obliging both countries to step up and play constructive roles to shape the emerging world order even as it is impelling both sides to learn to co-exist in a common neighbourhood.
📰 In Kashmir, opening a Pandora’s Box
The protests triggered by Imran Khan’s UN speech show that the current quietude is deceptive
•Addressing a press conference on the first 100 days of the Modi 2.0 government, External Affairs Minister S. Jaishankar said in late September that India expects to have physical jurisdiction over Pakistan-occupied Kashmir some day. How India proposes to do this is unclear, however. A few days later, Defence Minister Rajnath Singh said that if Islamabad did not mend its ways, PoK could go the Bangladesh way. He warned that the Indian Air Force took care not to attack the Pakistani Army during the Balakot strikes early this year, but that could change if terrorism continued.
•And yet it was India that said at the United Nations General Assembly that Pakistan Prime Minister Imran Khan’s detailed perception of the way things could spin out of control between the two countries over Jammu and Kashmir was “brinkmanship, not statesmanship”.
The U.S. reaction
•Mr. Khan’s speech at the UN seems to have been received well in the various constituencies he was addressing. In Kashmir, it triggered 23 protests in 24 hours, incidents of stone pelting, and anti-India slogans. And Mr. Khan has had a chance to explain the Kashmir situation, as Pakistan sees it, not once but twice to U.S. President Donald Trump. Mr. Khan probably thinks he succeeded the second time round.
•Consequently, Alice Wells, the Acting Assistant Secretary of State, stated: “Prime Minister Modi in August... sort of laid out a plan and objectives of returning Kashmir political life and restoration of — even of State status and engagement with a new generation of political leaders. And I think we are interested in knowing the next steps in engagement and encouraging that political dialogue to begin... We hope to see rapid action in the lifting of the restrictions and in the release of those who have been detained... Obviously, steps that would benefit the Kashmiri people we would welcome — I mean, economic benefits to the Kashmiri people. But right now, the focus I think has been on the return to political life and to a dialogue between the parties. This is a issue that members of Congress have raised in letters that they’ve sent to the administration and there will be — Congress has called for testimony on human rights in South Asia.”
•“Even of State status” seems to indicate that Jammu and Kashmir could once again be promoted to Statehood under certain conditions at some point in time. Does this then mean that the U.S. has signed on to India’s preferences on Kashmir? It appears that Indian policymakers have concluded that a tipping point in the country’s favour has been reached as far as Kashmir is concerned. Initial signs in Jammu and Kashmir have been taken as an endorsement of the government’s decision.
•While it is true that there have been no large-scale protests and deaths by police firing so far in Jammu and Kashmir, but only silence, that quietude could be deceptive. Even with such a massive deployment of troops and sketchy reporting of what is really going on in Kashmir, Mr. Khan’s speech at the UN and what it triggered immediately indicates that Kashmir could be a Pandora’s Box waiting to be opened. Given the expectations of the international community, can the Indian government hope to have so many forces deployed in Kashmir to keep the people confined for long? Is this the way Prime Minister Narendra Modi’s “new Kashmir” will be formally off to a start as a Union Territory on October 31, with promised shiny economic packages, delimitation, elections and Lilliputian political activity, even as normal life remains affected? When P.V. Narasimha Rao was once asked how much autonomy Kashmiris should enjoy, he said, “the sky is the limit”. Atal Bihari Vajpayee famously promised insaniyat (humanism), jamhooriyat (democracy) and kashmiriyat (Kashmir’s legacy of amity). Mr. Modi endorsed these promises and claimed they would be kept. Is this what he meant?
•The government faces a serious crisis of credibility. The older mainstream politicians in Jammu and Kashmir, now sidelined as “anti-nationals”, will probably continue to languish as long as the Public Safety Act continues to apply on them. The ground has not been prepared for a new political crop. It will be nearly impossible to yank out of this poorly politically primed soil local messiahs to bear New Delhi’s cross. Right now there seem to be no such pro-Delhi elements in Kashmir. The hurt and bottled up anger could grow exponentially under the curfew. An entire new generation is staying away from schools and colleges at the moment. They are hardly likely to embrace careers in the Indian civil service, or don uniforms to turn the gun on fellow Kashmiris. They are not going to warm up to the new dream sold by New Delhi. The Kashmiris are hardy people, furiously played all the time by all sides. Even as the rest of India, particularly the northern and central States, revel in the anticipation of the birth of this ‘new Kashmir’, the alienation of the Kashmiri Muslim will be complete, even as the schism between the rest of the country and Kashmir grows. Under this new curfew, Kashmiris are likely to close ranks, be more cohesive than before. The amount of time the National Security Adviser spends in Jammu and Kashmir is perhaps a good indicator that things are already tougher to work out than previously foreseen. It will be tougher now to prise away the potential collaborators.
‘New Kashmir’
•There is also the effect of the prolonged deployment of the armed forces on the armed forces themselves. The deployment is to counter public disorder, and is centred round the urban areas. In rural Kashmir, the radicals have a freer run. The communications blockade has probably hampered both sides of the security equation, and is perhaps affecting counterinsurgency ops as well. In the “new Kashmir” that is taking shape, suicide bombings of the Pulwama kind could be difficult to prevent. Though New Delhi does not control that trigger, it is egging on those who do. Once someone reaches for it there will be great difficulty in closing the lid of the Pandora’s Box.
📰 India slips 10 places to 68th on global competitiveness index
But ranks high in corporate and shareholder governance, green energy regulation
•India has moved down 10 places to rank 68th on the annual global competitiveness index, largely due to improvements witnessed by several other economies. Singapore, meanwhile, has replaced the US as the world’s most competitive economy.
•India, which was ranked 58th in the annual Global Competitiveness Index, compiled by the Geneva-based World Economic Forum (WEF), is among the worst-performing BRICS nations along with Brazil (ranked even lower than India at 71 this year).
•Announcing its latest index, the WEF said on Wednesday India ranks high in terms of macroeconomic stability and market size, while its financial sector is relatively deep and stable despite the high delinquency rate, which contributes to weakening the soundness of its banking system.
•India is also ranked high — at 15th place — in terms of corporate governance, while it is ranked second globally for shareholder governance, the WEF study showed. In terms of the market size, India is ranked third, while it has got the same rank for renewable energy regulation. Besides, India also punches above its development status when it comes to innovation, which is well ahead of most emerging economies and on par with several advanced economies, the report said.
•But these positive metrics contrast with major shortcomings in some of the basic enablers of competitiveness in the case of India, the WEF said, while flagging limited ICT (information, communications and technology) adoption, poor health conditions and low healthy life expectancy.
Neighbours all
•In the overall ranking, India is followed by some of its neighbours including Sri Lanka at 84th place, Bangladesh at 105th, Nepal at 108th and Pakistan at 110th place.
•The WEF said the drop of 10 places in India’s position to 68th place may look dramatic, but the decline in the country’s competitiveness score is relatively small. A number of similarly-placed economies including Colombia, South Africa and Turkey improved over the past year and hence have overtaken India.
📰 Ten years after 'suicide' mission, NASA thirsts for lunar water
•A decade after NASA sent a rocket crashing into the moon's south pole, spewing a plume of debris that revealed vast reserves of ice beneath the barren lunar surface, the space agency is racing to pick up where its little-remembered project left off.
•The so-called LCROSS mission was hastily carried out 10 years ago Wednesday in a complex orbital dance of two "suicide" spacecraft and one mapping satellite. It proved a milestone in the discovery of a natural lunar resource that could be key to NASA's plans for renewed human exploration of the moon and ultimately visits to Mars and beyond.
•"The LCROSS mission was a game changer," NASA's chief Jim Bridenstine told Reuters, adding that once water had been found the United States "should have immediately as a nation changed our direction to the moon so we could figure out how to use it."
•The agency now has the chance to follow up on the pioneering mission, after Vice President Mike Pence in March ordered NASA to land humans on the lunar surface by 2024, accelerating a goal to colonize the moon as a staging ground for eventual missions to Mars.
•Bridenstine says the moon holds billions of tons of water ice, although the exact amount and whether it's present in large chunks of ice or combined with the lunar soil remains unknown. To find out before astronauts arrive on the moon, NASA is working with a handful of companies to put rovers on the lunar surface by 2022.
•"We need next to get on the surface with a rover to prospect for water, drill into it, and determine how suitable it is for extraction," said Jack Burns, director of the Network for Exploration and Space Science at the University of Colorado.
📰 Slowdown effects more pronounced in India: IMF
International Monetary Fund chief Kristalina Georgieva warns of slower growth for 90% of the world this year.
•The largest emerging market economies like India are experiencing an even “more pronounced” effect of the global downturn, new International Monetary Fund (IMF) chief Kristalina Georgieva said on Wednesday, warning that the global economy is witnessing “synchronised slowdown” which will result in slower growth for 90% of the world this year.
•The IMF managing director pointed out that the widespread deceleration meant that growth this year would fall to its lowest rate since the beginning of the decade.
•She said the World Economic Outlook to be released next week would show downward revisions for 2019 and 2020.
•“In 2019, we expect slower growth in nearly 90% of the world. The global economy is now in a synchronized slowdown,” Ms. Georgieva said in her curtain raiser speech for the IMF and the World Bank’s annual meeting here next week.
•The headline numbers reflect a complex situation, she said.
•Despite this overall deceleration, close to 40 emerging market and developing economies are forecast to have real GDP growth rates above 5% — including 19 in sub-Saharan Africa, the IMF chief said. In the U.S. and Germany, unemployment is at historic lows.
•Yet, across advanced economies including the U.S., Japan and especially the Euro area, there was a softening of economic activity, she said.
China sliding
•“In some of the largest emerging market economies, such as India and Brazil, the slowdown is even more pronounced. In China, growth is gradually coming down from the rapid pace it saw for many years.”
•The precarious outlook presents challenges for countries already facing difficulties — including some of the Fund’s programme countries, she noted.
•The RBI on Friday lowered India’s GDP growth estimate for the year to 6.1% from the earlier 6.9% due to the ongoing period of economic slowdown.
•Ms. Georgieva called for using monetary policy wisely and enhancing financial stability.
•“Now is the time for countries with room in their budgets to deploy — or get ready to deploy — fiscal firepower. In fact, low interest rates may give some policymakers additional money to spend,” she said.
•Referring to new IMF research, which shows how structural reforms can raise productivity and generate enormous economic gains, she said these changes would be the key to achieving higher growth over the medium and long term.
•“The right reforms in the right sequence could double the speed at which emerging markets and developing economies reach the living standards of the advanced economies.” While the need for international cooperation is going up, the will to engage is going down, she said.
•“Trade is a case in point. And yet, we need to work together. From safely adapting to fintech, to fully implementing the financial regulatory reform agenda, to fighting money laundering and the financing of terrorism,” Ms. Georgieva said.
•Describing climate change as a crisis where no one was immune and everyone had a responsibility to act, she said one of its priorities was to assist countries as they reduce carbon emissions and become more climate resilient.
•At the current average carbon price of $2 per tonne, most people and most companies have little financial incentive to make this transition. Limiting global warming to a safe level requires a significantly higher carbon price.
📰 The minimum wage solution
While indexation of the NREGA wages is critical, lifting them to the minimum wage would help workers and the economy
•The government made two recent announcements at two ends of the spectrum to mitigate the economic crisis. One concerns a new indexation of NREGA wages meant to increase rural incomes. The second is a reduction in corporate tax rate.
•Prices of commodities increase each year, so it’s important to accurately estimate how much a NREGA labourer should earn in 2020 if she earned ₹179 (national daily average NREGA wage) in 2019. For this, we need a good index to benchmark and revise the wages. Indices are (weighted) averages of the prices of a basket of goods consumed and the index must be based on the main items of consumption for rural households. NREGA daily wages are to be indexed with an updated inflation index called the Consumer Price Index-Rural (CPI-R) instead of the older Consumer Price Index-Agricultural Labourers (CPI-AL). The calculation of CPI-AL involved more food items in the consumption basket while the calculation of CPI-R involves more non-food items such as healthcare and education. CPI-R better reflects the rural consumption basket compared to CPI-AL.
Increase base wages
•Although this new indexation is critical, it will have a sizeable impact on increase in rural incomes only if the base NREGA wages are high. For example, let’s assume a 10% increase in wages due to the new indexation. Then NREGA wages in Kerala at ₹271 per day, one of the highest, would become ₹298. However, if NREGA wages were equal to the State minimum wages, the wages in Kerala would increase from ₹490 to about ₹540. A substantial increase in NREGA wages and subsequent indexation with CPI-R would be meaningful for the workers and the economy. But barring three States/UTs, NREGA wages are still lower than the State minimum wages elsewhere, in violation of the law.
•Minimum wages are neither a dole nor an act of charity. They are a legal mandate that are arrived at by calculating the minimal nutritional requirement and basic needs of an individual. In fact, the Fair Wages Committee of the Ministry of Labour (1949) noted in a progressive report that a “living wage” should also include education, healthcare and insurance besides the bare essentials. In Sanjit Roy v. State of Rajasthan (1983), the Supreme Court held that paying less than minimum wages is akin to “forced labour”. In Workmen v. Management of Raptakos Brett (1991), it said that the aforementioned provisions must be added to arrive at a moral “living wage” to ensure basic dignity of life. Yet, the current daily NREGA wages are just a quarter of the minimum daily living wage of ₹692 as outlined in the 7th Pay Commission.
Increase inequality
•The current corporate tax cut will only widen economic inequality. According to the Oxfam Inequality Report 2018, in one year, the wealth of the richest 1% in India grew by ₹20.91 lakh crore, which is equivalent to the 2017-18 Budget. According to estimates by CRISIL, due to the recent tax cut, 1,000 companies would have annual savings of around ₹37,000 crore. In comparison, the last annual NREGA budget is ₹60,000 crore. So the estimated gains of more than a 1,000 companies would be equivalent to the annual earnings of around 7.2 crore NREGA labourers. What is worse is that the budget allocation for NREGA gets exhausted by October of each financial year, leading to delays in payment of wages. These are all legal violations.
•According to a 2015 IMF report, “if the income share of the top 20% (the rich) increases, then GDP growth actually declines over the medium term”, while “an increase in the income share of the bottom 20% (the poor) is associated with higher GDP growth”. While corporate tax cuts and lower interest rates would give corporations some liquidity, it is unlikely that rural demand will increase. On the contrary, without a substantial increase in NREGA wages, the wages would barely match inflation levels leading to wage stagnation in real terms. It is therefore economically prudent to substantially increase the budget for public programmes such as NREGA. This would lead to higher disposable income for the poor which in turn would have positive multiplier effects in the economy.
•On economic, ethical, and legal counts, it behoves the government to pay attention to the poor. However, the ruling party seems to pander to the super rich. In circumstances of unsustainable wages, the poor would be forced to become part of the migrant labour force eager to eke out a modicum of existence. India Inc. would, in turn, benefit by absorbing them at throwaway daily wages leaving no alternatives for labourers. Jean Dreze and Amartya Sen’s poignant — almost dystopian — imagery of India having pockets of California in a sea of sub-Saharan Africa is still eerily true. This, at the twilight of the second decade of the 21st century, is deeply worrying
