📰 U.S. outlines a softer focus for Quad
Visiting U.S. Deputy Secretary of State clarified the different track compared to security role for AUKUS
•The Quad is a “non-defence, non-military” arrangement, said U.S. Deputy Secretary of State Wendy Sherman during her visit to India and Pakistan last week, indicating at two separate interactions that the purpose of the Australia-India-Japan-United States grouping is meant to cooperate on what are considered ‘softer’ issues.
•“The Quad is [a] vehicle which largely operates in security realms that are non-military, non-defence. Things we do together on vaccines, and infrastructure, supply chains, technology and climate — all the forward thinking areas in which we need to gain confidence and ensure security for our people,” Ms. Sherman said at an event organised by think-tank Ananta in Mumbai.
People-to-people ties
•In an interview to Pakistan’s official PTV, broadcast on Saturday as well, Ms. Sherman called the Quad “a cooperative effort to work on things like energy, people-to-people exchanges and infrastructure and supply chain resilience.”
•The comments by a senior U.S. official are the clearest signal yet that Washington has shifted its view of the Quad’s agenda, particularly after the announcement of the new Australia-UK-U.S. or AUKUS alliance for nuclear submarines in the Indo-Pacific. The announcement came just a week ahead of the first in-person Quad summit, which Prime Minister Narendra Modi attended in Washington in September.
•In a briefing by the U.S. State Department at the time, a senior official had also said there was no “military dimension to it or security dimension” to the Quad, which was earlier called the “Quadrilateral Security Dialogue”, calling it an “informal grouping” instead.
•Indian officials also said the imperatives of the COVID pandemic, including the need for vaccines, technology, supply chain resilience and HADR (Humanitarian Assistance and Disaster Relief) operations appear to have “clarified” the Biden administration’s plans for the Quad.
‘Repurposed’
•“The Quad has not been downgraded, but we are seeing it being purposed differently from the AUKUS,” said an official aware of the discussions.
•When asked about the difference between the Quad and AUKUS at the Ananta interaction, Ms. Sherman replied that the two were non-competing “pieces of a puzzle”
•“AUKUS is a one of a kind project, which will be a game changer in a maritime sense in this arena,” Ms. Sherman said, speaking about the project for the U.S. and UK to help Australia build a fleet of nuclear propelled submarines “which are faster, harder to detect, more agile”.
•Former Indian Ambassador to China Gautam Bambawale, who had posed the question to Ms. Sherman, said that in his view, the U.S. position has not shifted.
•“Quad may not be a military alliance, but it continues to undertake military activities like the Malabar Naval exercise,” he told The Hindu, pointing out that the 4-nation naval exercises will begin a second phase this week in the Bay of Bengal.
China factor
•However, other analysts say that the shift is perceptible, and that it could lead to more productive outcomes, given India’s hesitation over joining any military forum in the Indo-Pacific.
•“This is not about containing China as much as it is about competing with China. The costs of containment, especially for countries like India, is too high,” said Rudra Chaudhuri, Director of Carnegie India.
•Ms. Sherman’s words during her visit were in stark contrast to those of Michael Pompeo, the former U.S. Secretary of State during the Trump administration, during the Quad’s Ministerial level meeting just a year ago.
•“As partners in this Quad, it is more critical now than ever that we collaborate to protect our people and partners from the Chinese Communist Party’s exploitation, corruption, and coercion. We’ve seen it in the south, in the East China Sea, the Mekong, the Himalayas, the Taiwan Straits,” Mr. Pompeo had said in his opening statement in Tokyo in September 2020, where he lashed out at the Chinese government’s “authoritarian nature” and criticised it for the Covid pandemic.
Tatas will find turning around Air India tough with high fuel costs, travel hit by COVID-19
•Air India, the airline started by J.R.D. Tata in the 1930s, is all set to return to the Tata fold after a 68-year-long journey as India’s state-owned flag carrier. The Centre’s announcement on Friday that Tata Sons’ subsidiary Talace Pvt. Ltd. was the winning bidder for the 100% stake in the debt-laden airline rings the curtain on the government’s multi-year effort to privatise the loss-making carrier. Talace emerged winner in the two-horse race by bidding to take over ₹15,300 crore of Air India’s more than ₹60,000 crore of accumulated debt and offering an additional ₹2,700 crore in cash for the Government’s equity stake. For the Tatas, who have retained an abiding interest in the country’s airline industry and currently majority own both a budget carrier, AirAsia India, and a full-service airline, Vistara, the Air India acquisition brings opportunities to gain scale and synergies at a significant level. With Air India and its low-cost unit, Air India Express, together serving 55 overseas destinations, holding over 3,000 landing and parking slots, operating a 141-aircraft fleet of wide-body long-haul jets and narrow body planes for shorter flights, and the parent holding membership of the 26-airline Star Alliance, the Tatas in one stroke add unparalleled global reach among Indian carriers. Air India’s 13.2% consolidated market share of domestic traffic as of August also gives the group a more competitive combined share of almost 27%, albeit still a substantial 30 percentage points adrift of market leader IndiGo.
•The Centre, for its part, can finally heave a sigh of relief at having successfully exited the commercial aviation space, a high-cost industry that most governments around the world have left in the hands of private carriers so as to ensure taxpayers’ money is deployed more meaningfully in social and strategic sectors. After having ploughed in more than ₹1-lakh crore of capital in the past decade alone and seeing Air India suffer a daily loss of over ₹20 crore, the Government’s desperation to cut its losses and close out a fire sale is understandable. The pandemic’s impact on public finances and the carrier’s operations, especially given the devastating impact on air travel both domestic and international, is sure to have helped spur the Government’s decision to agree to not only absorb 75% of the carrier’s debt, but to also pick up the tab on medical benefits for former employees. And in a bid to protect the interests of the more than 13,000 permanent and contractual staff at the airline and its unit, the government has bound Talace to ensuring there should be no job cuts for at least one year. Still, integrating the state-run carrier’s sizeable workforce is going to be one among the many serious challenges, awaiting the Tatas. To turn around Air India at a time of soaring fuel costs and COVID-hit air travel, is sure to test the conglomerate’s managerial mettle.
📰 A ‘Taiwan flashpoint’ in the Indo-Pacific
In pursuing its Indo-Pacific strategy, India needs to be mindful of the China-U.S. equations in the region
•If the rising confrontation between the United States and China erupts into a clash of arms, the likely arena may well be the Taiwan Strait. Taiwan is the unfinished business of China’s liberation under the Chinese Communist Party (CCP) in 1949. The Guomindang (KMT) forces under Chiang Kai-shek lost the 1945-49 civil war to the CCP forces under Mao Zedong. Chiang retreated to the island of Taiwan and set up a regime that claimed authority over the whole of China and pledged to recover the mainland eventually.
‘Strategic ambiguity’
•The CCP in turn pledged to reclaim what it regarded as a “renegade” province and achieve the final reunification of China. Taiwan could not be occupied militarily by the newly established People’s Republic of China (PRC) as it became a military ally of the United States during the Korean War of 1950-53. It was described as an “unsinkable aircraft carrier” underscoring its strategic significance. This phase came to an end with the U.S. recognising the PRC as the legitimate government of China in 1979, ending its official relationship with Taiwan and abrogating its mutual defence treaty with the island.
•Nevertheless, the U.S. has declared that it will “maintain the ability to come to Taiwan’s defence” while not committing itself to do so. This is the policy of “strategic ambiguity”. China, on the other hand, is committed to pursuing peaceful unification but retains the right to use force to achieve the objective. This is its own version of strategic ambiguity. The PRC has pursued a typical carrot and stick policy to achieve the reunification of Taiwan with the mainland. It has held out the prospect, indeed preference for peaceful reunification, through promising a high degree of autonomy to the island under the “one country two systems” formula first applied to Hong Kong after its reversion to Chinese sovereignty in 1997. According to this formula, Hong Kong would retain its free market system and its political and judicial institutions and processes for a period of 50 years, thus enabling an extended and gradual transition. The same was promised to Taiwan, but with the added assurance that it could also retain its armed forces during the transition period.
Economic links
•With China itself adopting market-oriented reforms since 1978 and becoming, over a period of time, a significant economic and commercial opportunity globally, Taiwan business entities have invested heavily in mainland China and the two economies have become increasingly integrated. Between 1991 and 2020, the stock of Taiwanese capital invested in China reached U.S. $188.5 billion and bilateral trade in 2019 was U.S. $150 billion, about 15% of Taiwan’s GDP. By contrast the stock of Chinese capital invested in Taiwan is barely U.S. $2.4 billion although investments through Hong Kong may be considerable.
•Taiwanese attempts to reduce the island’s economic exposure to China have not been successful so far. China hopes that the considerable economic benefits that Taiwan business and industry enjoy through a burgeoning relationship with China would weaken opposition to unification. By the same token, China is capable of inflicting acute economic pain on Taiwan through coercive policies if the island is seen to drift towards an independent status.
Taiwan’s politics
•Taiwan has two major political parties. The KMT, dominated by the descendants of the mainlanders who came to the island along with Chiang Kai-skek in 1949, remains committed to a one-China policy and does not support the independence of Taiwan. The Democratic Progressive Party (DPP), on the other hand, is more representative of the indigenous population of the island, and favours independence.
•However, faced with aggressive threats from China and lack of international support, the demand for independence has been muted. China feels more comfortable with the KMT and is hostile to the DPP. Ever since the DPP under Tsai Ing-wen won the presidential elections in 2016, China has resorted to a series of hostile actions against the island, which include economic pressures and military threats. These actions have escalated since the re-election of Tsai Ing-wen in the 2020 elections. Public opinion swung in her favour as China adopted a series of hardline policies in Hong Kong, abandoning the ‘One Country Two Systems’ formula promoted by Chinese leader Deng Xiaoping. China could no longer pretend that the model was relevant in any sense to Taiwan’s future under Chinese sovereignty.
•One important implication of this development is that prospects for peaceful unification have diminished. Sentiment in Taiwan in favour of independent status has increased. The escalating military threats against Taiwan, through daily violations of its air defence identification zone (ADIZ) and aggressive naval manoeuvres in the Taiwan Strait are currently deterrent in nature, aimed at heading off any move towards independence and its closer military relationship with the U.S.
The U.S. stance
•While the U.S. does not support a declaration of independence by Taiwan, it has gradually reversed the policy of avoiding official-level engagements with the Taiwan government. The first breach occurred during the Donald Trump presidency when several senior officials, including a cabinet-level official, visited the island. The Joe Biden officials have continued this policy. The Taiwanese representative in Washington was invited to attend the presidential inauguration ceremony (Biden), again a first since 1979. Reports have now emerged that U.S. defence personnel have been, unannounced, training with their Taiwanese counterparts for sometime. In a new incident last week, a U.S. nuclear-powered submarine reportedly ran into an “unidentified object” while in the South China Sea. China has objected to these U.S. actions vociferously.
•The latest statement by Chinese President Xi Jinping on Taiwan on October 9, on the eve of Taiwan’s national day, responds to these developments. Mr. Xi said that unification should be achieved peacefully but added that the Chinese people have a “glorious tradition” of opposing separatism. Mr. Xi added, “The historic task of the complete reunification of the motherland must be fulfilled and will definitely be fulfilled.”
•These statements are somewhat less aggressive and impatient than his earlier ones on Taiwan. This may be related to the recent telephone conversation between President Joe Biden and Mr. Xi when Mr. Biden reportedly assured Mr. Xi that the U.S. would abide by the “Taiwan agreement”, that is, the U.S. would not overturn its one China policy.
•Is China prepared to carry out military operations to invade and occupy Taiwan?
•In March this year, the U.S. Pacific Commander, Philip Davidson, warned that China could invade Taiwan within the next six years as part of its strategy of displacing U.S. power in Asia. He appeared to suggest that Chinese military capabilities had been developed in order to achieve this objective. Other analysts argue that cross-strait operations would be extremely complex and pacifying a hostile population may prove to be long drawn out and costly. China may, therefore, be content to head off Taiwan independence while continuing to build its capabilities and await a further relative decline of U.S. power and its will to intervene in the defence of Taiwan.
Impact of alliances
•These calculations may be upset by accident or miscalculation, and the recent submarine incident is a warning in this respect. The recent crystallisation of the Quad, of which India is a part, and the announcement of the Australia-U.K.-U.S. alliance, AUKUS, with Australia being graduated to a power with nuclear-powered submarines, may act as a deterrent against Chinese moves on Taiwan.
•But they may equally propel China to advance the unification agenda before the balance changes against it in the Indo-Pacific.
•For these reasons, Taiwan is emerging as a potential trigger point for a clash of arms between the U.S. and China.
•In pursuing its Indo-Pacific strategy, India would do well to keep these possible scenarios in mind.
📰 The many questions arising from QES data
The Quarterly Employment Survey for the April-June quarter throws up some perplexing numbers
•The Labour Bureau released the results of the All-India Quarterly Establishment-based Employment Survey (QES) for the first quarter (FQ) of 2021 (April to June). The survey covers establishments employing 10 or more workers in the organised segment in nine sectors (manufacturing, construction, trade, transport, education, health, accommodation and restaurants, IT/BPO, and financial service activities). These sectors account for 85% of the total employment in establishments employing 10 or more workers as per the Sixth Economic Census (EC), which serves as the basis of the QES survey. The data for QES were collected either telephonically or through visits. The report cautions that “verification of records has not been resorted to for collection of data”. This could have significant implications for the statistics generated from the survey. While the QES provides a demand side picture, the National Sample Survey or Periodic Labour Force Survey (PLFS) gives the supply side picture of the labour market.
•The stated objective of the QES is to enable the government to frame a “sound national policy on employment”. India ratified the International Labour Organization’s Employment Policy Convention, 1964, which requires the ratifying countries to implement “an active policy designed to promote full, productive and freely chosen employment.” India does not have one till now.
•The PLFSs have not presented an encouraging picture of the labour market. The CMIE has been projecting a distressed labour market scenario, especially during the pandemic. Notwithstanding criticisms, the CMIE database has dominated the analyses and understanding of the labour market. This could be quite irksome to any ruling party. Thus, the government needed an ‘official’ database that projects a rosy picture of the economy and the labour market (remember the controversy over the release of the PLFS results in 2019, which showed the highest-ever unemployment rate of 6.1%). The government has also been using the payroll data periodically to show formal employment generation and/or recovery in employment during the pandemic. It is not surprising that the QES has reported a simple growth rate of 29% in employment in FQ2021 over 2013-14 (Sixth EC).
Data that raise eyebrows
•However, strangely, the QES provides very broad employment figures — “3 crores and 8 lakhs approximately” in FQ-2021 against a total of 2 crores and 37 lakhs in these sectors taken collectively [in 2013-14]”. By any reckoning, these are impressive statistics. But let us put these figures in perspective. Between the Fifth EC (2005) and the Sixth EC (2013), employment grew by a simple growth rate of 38.13%. And between the Fourth EC (1998) and Fifth EC (2005), it grew by 21.13%. The compound annual growth rate (CAGR) — a far more reliable indicator of growth rates spanning several years — between the two is 4.12%. The approximate CAGR between the 6th EC and FQ2021 is 3.33%.
•The remarkable simple growth rate reported above compares a normal period to a pandemic-ravaged period. The overall growth rate is incongruent with macro-economic factors and other labour market portrayals. The CMIE data revealed a rather discouraging picture in April as the salaried class shed an estimated 3.4. million jobs from the level in March 2021 and the urban unemployment rate was as high as 9.78%. Further, normal economic indicators like income growth rates, capacity utilisation, business confidence, aggregate demand measured by the Purchasing Managers’ Index and the Reserve Bank of India’s growth rates of high-frequency indicators during the pandemic did not show encouraging trends even though they were fluctuating. The provisional estimates of annual national income for 2020-21 showed contraction in manufacturing (-7.2.%), construction (-8.6%) and trade (-18.2.%), which are some of the sectors covered in QES. The real national income growth rates, though controversial for upward revisions, declined 2017-18 onwards — the annual average growth rate in 2013-14 to 2020-21 was 4.95%. Are we talking of employment growth despite economic slowdown – from jobless growth to job-loss growth to growthless job growth?
•Various surveys and reports, including those by the Central government, showed that the smaller establishments suffered much more than the bigger industries. This was surely more so during the more extensive lockdown period, April-June 2020, when they faced challenges concerning debt repayment, wage/salaries and statutory dues. They are also least likely to have permanent workers on their payroll. Given that nearly 75% of the estimated establishments employed less than 40 workers, as reported in the QES, one wonders about the credibility of two statistics reported in the report. One, that 87.5% of the estimated workers were regular workers and just about 2.1% (12.5% in construction) were casual workers. Two, even though excluding health and financial services, around 24-35% of the establishments were operational from March 25 to June 30, 2020, 66-86% of estimated employees received full wages including in the construction, trade and hospitality industries. We should treat these statistics as claims by employers rather than reliable data.
•The report throws up another perplexing statistic. It says contract workers accounted for 0.7% (IT/BPOs), 10.4% (manufacturing) and 17.6% (construction) and overall a measly 7.8%. According to the Annual Survey of Industries for 2017-18, 36.37% of the total workers are employed in the organised factory sector. However, the reported contra-statistics in QES are plausible because given the low employment demand, cost-minimising manufacturers would be more likely to engage permanent and possibly unionised and high-skilled workers while the flexible category workers will have to queue up for employment till better times come. On the flip side, the report concedes a decline in the share of female workers from 31% in the Sixth EC to 29% in FQ2021. Like the Sixth EC, it could have collected data on social aspects like caste and religion as the pandemic would have had differential impacts on social statuses of workers. The data on the formalisation of establishments as revealed by registration under the laws must take care of two aspects. One, there could be overlaps between the registrations (say, factories or shops registering under more than one law). Two, since this is an employment survey, it is relevant to consider labour laws under which the establishment can be registered like the Factories Act, Shops Act or the Building and Other Construction Workers Act and employ workers rather than including tax laws as QES does.
A starting point
•We need to wait for unit level data to generate data at the disaggregated levels and create cross-tabulations to understand the labour market dynamics much better than the ratios released in this report. At any rate, the F12021 QES must be considered as a starting point of the new data set rather than as a continuum of the Sixth EC as the Seventh EC would enable sensible comparisons. Finally, it is baffling why the Labour Bureau has initiated five segmented employment surveys when it could have put in place a high-frequency labour market information base like most advanced economies.
📰 Throttling the press in J&K
By denying the media freedom, the government is building its own narrative and providing space for fake news
•A major casualty of the abrogation of Article 370 on August 5, 2019, has been press freedom in Jammu and Kashmir (J&K). This has led to the problem of disinformation and is causing great anxiety in the region. The feeling of alienation in the Kashmir Valley is inimical to the national interest besides the interests of Kashmiris.
•Historically, the press in J&K used to highlight democratic, anti-feudal and secular struggles. It supported the efforts to accede with India as the Maharaja wavered and the political leadership under Sheikh Abdullah threw its weight behind democratic and secular India. The Urdu daily, Ranbir, was banned by the monarchy in June 1947 for demanding accession to India and the release of Sheikh Abdullah. The ban was eventually lifted. The editor of an Urdu weekly, Pukar, was also threatened in 1942 by the monarchy as the paper supported the Quit India movement led by Mahatma Gandhi.
Government-regulated press
•Nowadays, it is painful to see the newspapers of Kashmir in the morning. There is nothing about the current political situation in J&K; there are only government press releases. There is hardly any room for political parties and their statements. Newspapers mostly carry advertisements or advertisement-cum-statements of government officials and senior government functionaries. Government advertisements are used as an instrument to force editors to control the media narrative. And if a newspaper does not conform, it has to face action: advertisements are abruptly cancelled or investigating agencies carry out raids. Our journalist friends tell us that it is routine for the police to call them and seek information about them and their relatives. These actions only send a message to the larger journalistic community that freedom of the press, which is implied in the freedom of speech in the Constitution, is under threat.
•More and more journalists are being harassed since the administration introduced the revised Media Policy in 2020, which effectively gags the media. The Press Council of India has constituted a three-member fact-finding committee to inquire into the allegations of intimidation and harassment of journalists. The Council is scheduled to visit J&K. The aim of the Media Policy, which has been formulated without any consultation with the media groups, seems to be to marginalise the local media and build the government narrative. The press in J&K is now virtually a government-regulated one.
Strategy to prevent disinformation
•The denial of press freedom in J&K should be seen from a larger perspective. First, in this age of social media, where information and narratives are shared through encrypted platforms, it is important to protect the general public from disinformation and fake news. While state media outlets have a role to play in this, the public at large relies on sources of information which are seen as being more credible and independent. In this connection, allowing professional reporters to perform their task without being under duress or facing threats is at the heart of any strategy to prevent disinformation. After all, journalists are accountable to their newspaper editors who, in turn, have to abide by the laws of the land. Otherwise, in an environment where government press releases fill the newspaper space, the public will invariably reach out to easily available social media platforms which are notorious for feeding people with sensational, false information. In Kashmir, the information vacuum is a breeding ground for fake news. This has security implications as well.
•Second, J&K is a battleground of narratives at present. A credible narrative rooted in truth and honesty will win this battle. This can be met by allowing professional reporters to gather information, and editors to share their editorials in a freer environment. The lack of a democratic government has closed all avenues of redress. The government is not amenable to public sentiment as it has nothing to lose by alienating the people and the press. When journalists say it has become impossible for them to do normal reportage, it must be seriously taken by the courts. The judiciary must intervene to restore the dignity of the fourth estate and take serious cognisance of the cases filed against journalists and newspapers. If courts look the other way today, it will not augur well for democracy.
•More broadly, the refusal to integrate J&K with the Indian democratic tradition that provides for press freedom continues to be the main impediment for J&K’s emotional relationship with the country. As the peace activist Balraj Puri once said, “These premises are not only an insult to the people of Kashmir but to all democratic sensibility.”
