📰 India must create 70 mn jobs to achieve $5 tn economy by 2024
140 mn jobs needed in next decade, says Shanmugaratnam
•The country needs to significantly increase employment and productivity levels to achieve a $5 trillion economy by 2024, Tharman Shanmugaratnam, Senior Minister of Singapore, a renowned economist and a political personality, said on Tuesday.
•Pointing out that job growth and productivity improvement are critical, Mr. Shanmugaratnam said, “To achieve a $5 trillion economy by 2024-25 and to ensure unemployment does not keep going up, India will have to create something like 140 million jobs over the next decade — half of that in the first half of the decade.”
•Prime Minister Narendra Modi has announced the aim to achieve a $5 trillion dollar economy by 2024. But dwindling economic growth has made the task much tougher than thought earlier.
•Productivity growth needed to be in the order of 7-8% per year, he said, while delivering the Third Suresh Tendulkar Memorial Lecture at the Reserve Bank of India.
•“India is making a major effort to transform its society and economy. And it is going to take some time because it is starting from a heavy legacy of the past,” he said.
•“Job growth and productivity growth are fundamental. “It is critical particularly for India because you have the largest young population in the world... much larger than China’s,” he added.
📰 Govt. plans to cut spending by ₹2 lakh crore to curb deficit
Lack of demand and weak corporate earnings growth in the economy led to lagging tax collections which has resulted in a revenue shortfall of about ₹2.5 lakh crore.
•India's government is likely to cut spending for the current fiscal year by as much as ₹2 lakh crore as it faces one of the biggest tax shortfalls in recent years, three government sources said.
•The economy, which is growing at its slowest pace in over six years because of lack of private investment, could be hurt further if the government cuts spending.
•But with a revenue shortfall of about ₹2.5 lakh crore, the government has little choice to keep its deficit within “acceptable limits”, the first official, who did not want to be named, told Reuters.
•The government has spent about 65% of the total expenditure target of ₹27.86 lakh crore till November but reduced the pace of spending in October and November, according to government data. A ₹2 lakh crore reduction would be about a 7% cut in total spending planned for the year.
•In October and November, government spending increased by ₹1.6 lakh crore, nearly half the 3.1 lakh crore it spent in September. The fiscal year starts April 1 and ends March 31.
•Lack of demand and weak corporate earnings growth in the economy led to lagging tax collections this year. Analysts said growth will be hurt.
•“When the private investment has slowed so much, this will definitely drag down growth further,” said Rupa Rege Nitusure, chief economist at L&T Financial.
•India's economic growth slowed for six consecutive quarters to 4.5% in July-September, despite a 135-basis-point cut in interest rates by the central bank since February 2019.
•Now, even the Reserve Bank of India seems to have become more worried about inflation rising. It kept its key lending rate on hold on December 5, even though it slashed its growth forecast for the current fiscal to 5%, which would be the lowest in a decade.
•Even a surprise corporate tax rate cut announced by Finance Minister Nirmala Sitharaman earlier this year failed to spur private investment in the economy.
•The government is likely to keep the fiscal deficit under 3.8% of gross domestic product, sources said, while letting it slip from its earlier set target of 3.3% for the year.
•The government is likely to announce additional borrowing of ₹30,000 crore to ₹50,000 crores for the current year to match the revised fiscal deficit, two sources in the government said.
📰 Amidst a tragedy, an opportunity
The raging bushfires give India and Australia a chance to deepen their dialogue, including on energy
•The writer David Horne once described Australia as “the lucky country”, with its abundance of natural resources, good weather, and its relative geographical isolation from the turbulence of the world. Today, with wildfires burning more than 12 million hectares of land, destroying native flora, killing thousands of wild animals, including endangered species, and displacing residents and tourists, Australia is confronted with a dystopian vision, where “apocalypse becomes the new normal”, to borrow the title of a recent op-ed by Nobel laureate, Paul Krugman.
Dialogue on energy
•At this moment of crisis, and while the tragedy of the bushfires is still unfolding, New Delhi and Canberra have a rare opportunity: to translate their rapidly converging interests and coalescing of values into a formidable partnership for the 21st century. When I co-chaired the Australia India Leadership Dialogue last month in Melbourne, the breadth and depth of the relationship was evident, as was the scope for the future in diverse areas, including the grand challenges facing our planet.
•Clearly, as a consequence of the bushfires, the debate on global warming, climate change and fossil fuels is going to intensify in the weeks ahead, even while scientists grapple with the new evidence. Australia’s celebrated novelist Richard Flanagan concluded in a powerful, if controversial, essay: “Australia today is ground zero for the climate catastrophe.” As evidence, he pointed out that the Great Barrier Reef “is dying”, the “world-heritage rain forests are burning”, giant kelp forests have disappeared, “numerous towns have run out of water or are about to, and now the vast continent is burning on a scale never before seen.”
•Mr. Flanagan is not alone; environmental activism has gained ground throughout the country, and while the Indian Ocean Dipole may have triggered the drought that is related to the fires, the campaign against fossil fuels and the export of coal is sure to intensify in the days to come.
•As two economies with a great stakeholding in fossil fuels, it is critical for India and Australia to ensure that their dialogue on energy acquires momentum. This will require a joint scientific task force to disinter the latest evidence linking climate change and extreme climatic events with fossil fuels and to study the promise and potential of “clean” coal technology. Both countries must simultaneously strengthen the International Solar Alliance and the search for other alternative green fuels.
•The Leadership Dialogue also recognised that we are living through a period of immense turbulence, disruption and even subversion. For instance, the near overwhelming presence of an illiberal, totalitarian China, increasingly unilateralist, interventionist and mercantilist and willing to write its own rules, is the single biggest challenge to our two countries. Not even our thought leaders of the future or political representatives today, especially in Australian universities and democratic institutions, are sanitised from Beijing’s surveillance or longer-term grand designs.
•Fortunately, in New Delhi there is a near consensus within the political leadership and the strategic community that the Australia-India relationship is an idea whose time has well and truly come. From water management to trauma research to skills and higher education, from maritime and cybersecurity to counterterrorism, a world of opportunities awaits the two countries if they can work in coordination.
•A few years ago, the Australia-India Institute at the University of Melbourne, in partnership with the Sydney-based Lowy Institute, commissioned one of the most comprehensive surveys of Indian public opinion on key foreign policy issues and critical challenges of governance. Indians ranked Australia in the top four nations towards which they feel most warmly. Only the U.S., Singapore and Japan ranked higher. Today, Indians feel warmer towards Australia than towards European countries and BRICS nations.
•Apart from being two English-speaking, multicultural, federal democracies that believe in and respect the rule of law, both have a strategic interest in ensuring a free, open, inclusive and rules-based Indo-Pacific region in which the principles of sovereignty and territorial integrity are ensured. In addition, Indians are today the largest source of skilled migrants in Australia and the economic relationship, already robust, could potentially be transformed if the promise of the Peter Varghese and Anil Wadhwa reports, commissioned by the two governments, is realised. In Canberra, there is considerable sensitivity to India’s concerns over the Regional Comprehensive Economic Partnership while there is still hope that there is an early conclusion of a bilateral Free Trade Agreement.
An important partner
•After more than six decades characterised by misperception, lack of trust, neglect, missed opportunities and even hostility, a new chapter in India’s relations with Australia has well and truly begun. Consider this: in 1955, Prime Minister Robert Menzies decided that Australia should not take part in the Bandung Afro-Asian conference. By distancing Australia from the ‘new world’, Menzies (who would later confess that Occidentals did not understand India) alienated Indians, offended Prime Minister Jawaharlal Nehru, and left Australia unsure for decades about its Asian identity. India and Australia should bring this chequered past to a closure, and herald a new united front for the Indo-Pacific.
•Nearly a decade ago, when I decided to be the inaugural director of the Australia India Institute at Melbourne, it was seen as a giant leap of faith. I had not visited Australia before and had little knowledge of the country. My friends warned me that I was literally going “Down Under”, soon to become irrelevant and marginal to all policy issues in India. At school, my teenage daughters were told they risked being bashed up in school and college, and my extended family was astounded. But today I have no doubt that it was one of the best decisions of my life. With not one unpleasant experience in the country, as a family we have found Australians open, friendly, fair, accepting and generous, and the country a model of good governance.
•In her account of India-Australia bilateral relations, historian Meg Gurry relates how Arthur Tange, High Commissioner to India and one of Australia’s most formidable diplomats, wrote in 1965 to his Foreign Minister, Paul Hasluck, that there was fertile ground between the two countries, but “no one seems to know what seed to plant”. More than 50 years on, there are not only many seeds waiting to be planted, but also ripe fruit ready to harvest.
•While Australian Prime Minister Scott Morrison, who postponed his visit to India because of the bushfires, will be missed at the Raisina Dialogue, one hopes that one immediate decision that be will taken by New Delhi and Canberra is to elevate the ‘two plus two’ format for talks from the secretary level to the level of foreign and defence ministers. That should signal that New Delhi recognises Canberra as important a partner as Washington and Tokyo.
📰 There is a design flaw with this military post
Creating a Chief of Defence Staff is problematic; it also erodes civilian supremacy over the defence establishment
•The scale of the First World War underscored the command and control dilemmas of concurrent conflicts playing out simultaneously in multiple theatres of conflict.
War and the West
•During the locust years of Great Britain, an issue that received consideration was the British higher command and control structures. With the declaration of the Second World War, the onus for the higher direction of war fell to the remit of the War Cabinet serviced by the Chiefs of Staff Committee. The British legislative system functioned through the Second World War. Winston Churchill, as Prime Minister, was given supreme powers but stayed accountable to Parliament through the War Cabinet. He assumed the portfolio of Minister for Defence, with the resultant duty of overseeing the British War effort. This allowed him, as Chairperson of Chiefs of Staff Committee, to exercise both tactical and strategic options.
•After the United States entered the war, following the Pearl Harbor attack, an integrated command became the norm during the Second World War as diverse allies including the Soviet Union had to work in unison. A unified command required a single commander liable to the joint chiefs of staff supported by a joint staff and exerting command over all constituents of his allocated force irrespective of their service.
•After the war ended and the world split into two ideological blocs, General Dwight D. Eisenhower became the First North Atlantic Treaty Organization (NATO) supreme commander while political power was vested in the NATO Council. The First Supreme Commander of the Warsaw Pact Forces was Marshal Ivan Konev, while de-facto political authority resided with the General Secretary of the Soviet Union in Moscow. The United States, vide the National Security Act 1947, established the Joint Chiefs of Staff. They were jointly tasked to be Military Advisers to the President and the Secretary of Defence. Despite the experience of the Second World War, they chose not to appoint a Chief of Defence Staff (CDS). The U.S. amended this structure vide the Goldwater–Nichols Act in 1986 by having a chairperson and vice-chairperson of the Joint Chiefs of Staff. The Joint Chiefs in unison are again the principal military advisers to the government. There is no CDS. The military chain of command runs directly from the theatre commanders through a civilian Defence Secretary to the President. However, Britain, conversely in 1959, created a Chief of the Defence Staff. Air Chief Marshal Sir William Dickson became the first CDS after serving as the rotational chairperson of the Chiefs of Staff Committee. Was it required or was it the hubris of a declining power — the jury is still out on that.
The outline for India
•In India, ‘in 1947, Lord Ismay, the Chief of Staff to Lord Mountbatten, Governor General of India, recommended a three-tier higher defence management structure to Prime Minister Jawaharlal Nehru. Three committees were constituted: the defence committee of cabinet presided over by the Prime Minister; the Defence Minister’s Committee chaired by the Defence Minister, and the Chiefs of Staff Committee integrated into the military wing of the Cabinet Secretariat. The chair of the committee was rotational, with the Service Chief longest in the committee becoming the chairperson’.
•This procedure operated into ‘the middle of the 1950s despite the Commander-in-Chief only being an invitee to the Defence Committee of Cabinet. The designation of the Commander in-Chief of the three services was consciously altered to Chiefs of Staff in 1955. After the 1962 Sino-Indian war, the Defence Committee of the Cabinet first morphed into the Emergency Committee of Cabinet and then later into the Cabinet Committee on Political Affairs’. It is now the Cabinet Committee on Security, or CCS. This system has served India well over the years.
•On December 24, 2019, a Press Information Bureau release on the Cabinet clearing the appointment of a Chief of Defence Staff (CDS)said: “The following areas will be dealt by the Department of Military Affairs headed by CDS: The Armed Forces of the Union, namely, the Army, the Navy and the Air Force. Integrated Headquarters of the Ministry of Defence comprising Army Headquarters, Naval Headquarters, Air Headquarters and Defence Staff Headquarters. The Territorial Army. Works relating to the Army, the Navy and the Air Force. Procurement exclusive to the Services except capital acquisitions, as per prevalent rules and procedures.”
•It added, “The Chief of Defence Staff, apart from being the head of the Department of Military Affairs, will also be the Permanent Chairman of the Chiefs of Staff Committee. He will act as the Principal Military Adviser to the Raksha Mantri [RM] on all tri-Services matters. The three Chiefs will continue to advise RM on matters exclusively concerning their respective Services. CDS will not exercise any military command, including over the three Service Chiefs, so as to be able to provide impartial advice to the political leadership.”
A subordination
•Herein lies the contradiction and the design flaw. As Secretary in charge of the Department of Military Affairs (DMA) and having superintendence over the Indian Army, Indian Navy and Indian Air Force, there would be an implied subordination of the three service chiefs to the CDS notwithstanding any declaration to the contrary. As Secretary of the DMA, the CDS is tasked with facilitating the restructuring of military commands, bringing about jointness in operations including through the establishment of joint/theatre commands.
•This will invariably encroach upon the domain of the service chiefs.
•The CDS, as Permanent Chairperson of Joint Chiefs of Staff Committee, would outrank the three service chiefs even though theoretically all are four star. Moreover the advice of the CDS could override the advice of the respective Service Chiefs on critical tactical and perhaps even strategic issues.
•With the creation of the DMA on most issues, the reporting structure of the three services to the Defence Minister would now be through the CDS; if not immediately it would become the norm over time. Even today while in theory the service chiefs report directly to the Defence Minister, in practice all files and decisions are routed through the Defence Secretary.
•However most problematic is the erosion of civilian supremacy over the defence establishment in the Ministry of Defence itself. This impacts on the first principles of constitutionalism and has implications for our democratic polity also. Sophistry is being employed to suggest that the Secretary DMA would be in charge of military affairs and the Defence Secretary would look after the ‘defence of the realm’. The fact is that the defence of India is managed by the three services who would now report to the DMA.
•Since the DMA would exercise control over the three services, it virtually makes the CDS the ‘Supreme Commander of the Indian Armed Forces’. A new czar has risen.
