Dear Govt of India, Here’s Why a Cess Needs Impact Analysis Report

 During the 2021-22 Union Budget speech, Union Finance Minister Nirmala Sitharaman announced yet another cess — an Agriculture Infrastructure and Development Cess of Rs 2.5/litre on petrol and Rs 4/litre on diesel.At first glance, this just means that your commute got dearer. But scratch beneath the surface and you’ll realise that cesses such as these are gnawing away at India’s federalism. Here’s how.The divisible pool comprises taxes like corporation tax, taxes on income, customs, union excise duties, etc. It is called so because this pool of money gets ‘divided’ between the Union and the State governments through a formula recommended by the Union Finance Commission.In contrast, the money that union governments raise by levy of cesses and surcharges is not shared with the states. Cesses are earmarked taxes levied for specific purposes to provide necessary financial impetus to a particular sector/area. Surcharges are additional charges or taxes levied on existing taxes. A surcharge is calculated on payable tax, and not on income generated. Over the last few years, the union government has been increasingly relying on both cesses and surcharges, resulting in lesser resources being transferred to the states.Read the full article on The Quint

Seventh Fleet move a reminder that Quad must remain a group of equals, not a US-led posse

The US Navy’s Seventh Fleet statement of 7 April 2021, after the freedom of navigation operation off Maldives in India’s Exclusive Economic Zone or the EEZ, even if legally valid, and watered down later by the Pentagon Spokesman, was unwarranted and seems indifferent to the sensitive phase in India-US relations. Post the statement, it is understood that China’s defence attaché in New Delhi went to town pointing out the US’ treatment of India as a rebuke of a subordinate. The possibility of this poke in India’s strategic eye being a lower level gaffe cannot be ruled out. But if it was earlier sanctioned by the US Secretary of Defence, then one can surmise that it was meant to convey who is the boss. That would be unfortunate for India-US relations because a reluctant New Delhi has now finally shed its inhibitions with regards to the Quad. The US seems to have misunderstood India’s political stance, especially New Delhi’s understanding of the nature of Quad.

In India’s view, the resurrected Quad is a platform that has four partners at its core with others being invited to participate, depending on common interests. Therefore, the specific issues that relate to freedom of navigation in the South China Sea, Vietnam, Philippines or any effected country, could be potentially co-opted. Such flexibility can be a fruitful method for the Quad to adopt.

Read the full article on ThePrint

Gender parity in the Indian Army

Two rounds of a prolonged legal battle by women officers of the Indian Army were won through Supreme Court judgements on February 17 and March 25. The actual ‘war’ is a quest for ‘Equality of Opportunity’, which the government is constitutionally bound to uphold. Unfortunately, its efforts in the courts point in the opposite direction. The continued effort by the government to deny justice to women officers is glaring. A 2010 judgement of the Delhi High Court that provided relief on the issue of Permanent Commission has remained unimplemented for a decade. The government’s negative attitude is apparent. That said, it is not that the government does not have a case. It certainly does.

Read the full article on ThePrint

What's behind China's Wolf Warrior Diplomacy?

China’s imposition of punitive sanctions on EU institutions and individuals over Xinjiang, its attacks on the West’s colonial past when discussing human rights and the recent outburst by Yang Jiechi during the dialogue in Anchorage have all re-ignited discussions over Beijing’s assertive diplomacy. In fact, throughout the past year, there has been much debate about the increasing abrasiveness of Chinese diplomats.

Read the full article in Times of India.

India should cooperate with Africa in renewable energy

Recently, India entered a strategic partnership with the International Energy Agency. “India will have a critical role in shaping the world’s energy and climate future,” said the executive director of the IEA.Now, India will see great potential in creating renewable energy and must partner up with other countries in this space. Africa has been seeing positive developments, mainly in its solar energy expansion. The two regions seem to have a great future ahead of them and could create greater results by cooperating.South Africa and Egypt are leading the race as big solar powers in the continent. The two are also the only countries to be a part of the solar “gigawatt club” – nations with the capacity to produce 1GW of solar power.Read the full article on AsiaTimes 

Russia-Japan relations and why the Kurils matter

While there are signs of pragmatism in both Moscow and Tokyo, this last barrier to concluding WW2 remains

The Kuril Islands, or the Northern Territories as Japan likes to call them, are at the center of an uneasy relationship between Russia and Japan.The USSR occupied the islands between August and September 1945. Since the end of World War II, the disputed territory and related issues are the primary subject of engagement between the two countries.The contention over the ownership of the Kurils is also the main hurdle for the conclusion of World War II between the two nations. Over the decades, the diplomatic efforts by Japan have been unsuccessful in getting the islands back.In recent times there has been considerable cause to suggest that the Russian side has taken or has been compelled to take an icy approach to settling the Kuril Islands dispute because of public opinion.Laws in the new constitution adopted by Russia in July 2020 criminalize any alienation of Russian territories or advocacy for territorial concessions. These laws apply equally to every part of Russia, including those with some controversy around them, such as the Kuril Islands, Crimea and Kaliningrad.Read the full article on Asia Times

India’s recognition of Taliban should just be tactical, not let it rule Afghanistan again

This article was first published in ThePrint.Afghanistan is living proof that technological superiority in warfare is an insufficient condition for winning wars. The political outcomes of wars are hostage to success on the political table of diplomatic parleys. How else can one explain that the most powerful nation in the world, equipped with state-of-the-art technology and after having expended a great deal of blood and costly resources, has been unable to achieve favourable political outcomes. Yes, the US has so far prevented the Taliban from coming back to power in Kabul. But even that accomplishment was, for all practical purposes, undermined when the Donald Trump administration negotiated a peace deal with the Taliban in February 2020 and conceded that the militants can share power with the Afghan government as long as Afghanistan is not utilised as a base to launch terrorist attacks against the US. A peace deal that was done without the concurrence of the democratically elected government of Ashraf Ghani. Dumping allies has never troubled the US too much.

The peace process had envisaged the withdrawal of all American troops by 1 May 2021. But with Joe Biden as president now, the deal seems to be in jeopardy, because the US has serious concerns of a Taliban takeover once the withdrawal takes place without a power-sharing agreement between the Ashraf Ghani government and the Taliban. The US is pressuring the Ghani government for an agreement and is, in all probability, pushing Pakistan to get the Taliban to make concessions including the continued presence of US troops. Pakistan’s supposed change of stance was publicly projected through a tweet on what the DG ISPR said on 25 February: “Today’s Afghanistan is not the country it was in the nineties, whose state structure collapsed easily. Pakistan has also changed. It is not possible for [the] Taliban to take over Kabul and for Pakistan to support them. That will never happen.”

Meanwhile, the US leverage with Pakistan has strengthened somewhat due to the latter’s dire economic status and weakened support from its traditional Arab friends.

The Intra-Afghan negotiations are expected to discuss the ceasefire; agreement over the future political roadmap of Afghanistan; the rights of women, free speech, and changes to the country’s constitution. The talks would also have to chalk out the fate of Taliban fighters as well as all the armed militias. This is a tall order to meet before the 1 May deadline.

Missing the wood for the trees

The Biden administration is backing several meetings between high-level Afghan government and Taliban officials. One such was hosted in Moscow in mid-March, which was also attended by US Special Envoy Zalmay Khalilzad, and representatives of Iran, India, China and Pakistan. The next one is to follow in Turkey in April. Afghanistan was the focus at the Heart of Asia Conference held in Tajikistan on 30 March and India was represented by foreign minister S. Jaishankar who stated: “India has been supportive of all the efforts being made to accelerate the dialogue between the Afghan government and the Taliban, including intra-Afghan negotiations”. He also declared India’s support for a regional process to be convened under the aegis of the United Nations.The conventional wisdom in India has always been that withdrawal of the US from Afghanistan will be detrimental to New Delhi’s interests as the Taliban could come to power and that would halt India’s aspirations to access Central Asia through the Chabahar Port. Also, a Taliban in power may provide the impetus of breeding terrorists that Pakistan would channelise towards India. These concerns are valid. But this view may be missing the wood for the trees.The real battle involving force in Afghanistan has been between a US-backed Afghan government and the Pakistan-backed Taliban. The US is no longer willing to pay the price for its continued backing of the government. It is desperate for an honourable exit. There is now an increased likelihood that the US will first try with the help of Pakistan to get the Taliban to agree to an extension of the withdrawal date. Broadly, three scenarios could now unfold.

Three options for Afghanistan

Scenario One. The Intra-Afghan talks fail, and the Taliban starts an offensive and takes control of key road communication links weakening the Afghan government’s ability to govern its provinces. The US stays put and further Intra-Afghan talks are stalled. Violence spikes and the civil war deepens endlessly.

Scenario Two. The Intra-Afghan talks fail. The US exits. Taliban launches a major offensive with Pakistan support and Kabul falls. Pakistan recognises the Taliban government. Former Afghan forces consolidate in northern Afghanistan bordering Tajikistan and Uzbekistan. Some forces are given shelter in Iran. Taliban establishes an ideologically extremist State.

Scenario Three. Intra-Afghan talks succeed. The Taliban shares power. The US exits. A fragile peace prevails for a year or two but is followed by a civil war with Pakistan backing the Taliban. The global community’s attention to violence receives a resigned acknowledgement. Russia, Iran, China and India take sides and provide support in various forms. Pakistan evades US pressure and that pushes it deeper into China’s embrace.

US must leave, Afghans must decide

None of these scenarios has a happy ending. However, the complex web of actors in Afghanistan tends to distract attention from the primary issue that must be resolved even if it has to be done through the currency of violence. It is about the rejection or acceptance by the Afghan people of the Taliban as an extremist religious entity. Decades of foreign interference has only prolonged the long and tortuous journey to peace. Afghans themselves must be left to resolve this ideological war. The US must exit with or without progress on Intra-Afghan talks and most importantly, all international actors, preferably through the UN Security Council, must mutually agree to non-interference and only provide humanitarian aid and developmental assistance. Pakistan’s public change of posture enunciated by its DG ISPR is encouraging, but it will require both the US and China to help Islamabad keep its word.India’s recent tacit recognition of the Taliban should at best be a tactical move. Strategically, the Taliban in power in Afghanistan is detrimental to India’s interest. India must not waver from its stand on the ideological front even as it leaves it to the Afghans to resolve the resultant imbroglio. The exit of the US will deny the Taliban the narrative of pushing its ideology in the garb of fighting the foreigners and will be a strategic blow for them. For India, Pakistan will lose leverage with the US and that can only be to our benefit. A US exit can only do good. Prolonging its stay also deepens the misery of the Afghan people without an end in sight.Lt Gen Prakash Menon is Director, Strategic Studies Programme, Takshashila Institution, Bangalore and former Military Adviser, National Security Council Secretariat. Views are personal.  

How a new rail line in China will pose a security challenge to India

The Sichuan-Tibet rail link will help China mobilise the 77th Group Army and consolidate its hold on the border defence villages along the Sino-Indian border

China’s 14th Five-Year Plan, approved in the recent National People’s Congress’s (NPC) annual session, outlines the Sichuan-Tibet railway line near the China-India border as a key strategic priority.

The 1,629km Sichuan–Tibet high-elevation railway line will connect Chengdu, Sichuan province’s capital, to Lhasa, the capital of Tibet Autonomous Region (TAR). The 14th Five-Year plan reportedly highlighted this railway’s central section, from Ya’an in Sichuan to Nyingchi in Tibet, as a key infrastructure project. In November 2020, the Communist Party of China’s general secretary and China’s president, Xi Jinping, said that this railway line’s work is extremely challenging due to the complex geological and climatic conditions and the region’s sensitive environment.

The article was originally published in the Hindustan Times. Cover Image Source: China Discovery

Consumers need to pay more if workers are to be given a fair deal

This article was originally published in National Herald.President Joe Biden’s administration was able to push through a major fiscal package in March worth 1.9 trillion dollars and includes another round of 1400 dollars of stimulus cheques for individual Americans, 350 billion dollars to states and local governments as grants, and 160 billion dollars for coronavirus testing, tracing and vaccines. But it failed to get the voting support needed to raise the nationwide minimum wage to 15 dollars an hour. The Democrats have a comfortable majority in the Congress (the lower house), but it is a knifeedge situation in the Senate (the upper house). And within the party itself, there are voices opposing increase in the minimum wage which is currently 7.25 dollars per hour.This minimum wage number was set back in 2009. However, individual states in the federal system are free to add to that and have done so. For instance, in New York, Washington DC etc., the minimum wage is far higher. For the rest who follow the 2009 number, in inflation adjusted terms, the minimum wage is even below what prevailed in the 1970s. Surely that needs a correction.

But Republicans and a significant number from the Democrats feel that this increase would put an undue burden on employers, at a time when the economy is coming out of a deep recession. As a compromise, don’t be surprised if an 11-dollar wage is voted successfully. But that is yet to happen. It may also subsequently get indexed to the inflation rate.

That this is happening in capitalist America is a very significant development. Even in the United Kingdom, which has had a conservative, pro-business, pro-employer government for more than 10 years, the minimum wage has been raised to 8.7 pounds for all adults above the age of 25. This may go up further. This wage is roughly two third of the median wage earned by all workers in the UK.In America too, if the 15-dollar minimum wage is imposed, it would be close to two third of the national median. As such the total income (i.e. earnings from wages, salaries and other sources) for a median American household has stagnated for nearly four decades. This has happened despite the growth in national income, and a roaring stock market. Which means that substantial gains of income and wealth were going to the top tier in society.This has lessons for India. Wages have to grow, if incomes and standards of living have to improve. Will a higher minimum wage help? Will that crimp employers and lead to lower employment?While per capita income rose by nearly 7 per cent per year during 2003 to 2012 in India, subsequently this growth has slowed down. This was also a period when rural wages were rising. India’s labour market has 90 per cent of its workforce in the informal or unregistered sector. Which means that they work either without a written contract, or without any health and retirement benefits.Even in sectors where there is a significant registered (‘permanent’) employment, the ratio of permanent to contract workers is very skewed, which is also reflected in their respective benefits and pay. Sometimes this creates a de facto caste system, where for the same work, a contract worker is paid much less than a permanent worker.Such conditions can create stress and unrest, sometimes leading to intemperate outcomes, like the violence a few years ago in an auto plant in Manesar. Due to the large number of informal and seasonal workers, the data on wages and earnings is notoriously bad. But survey data indicates that wages have stagnated. Of course, during the pandemic, there have been large scale job losses too.When surplus labour moves out of agriculture, it is coming from disguised unemployment, so productivity is nearly zero. Hence even a small wage is a decent improvement on zero. This process of absorbing surplus labour from zero wage, can continue for a long time, until agriculture no longer has any surplus labour.Indeed, this was the strategy of sustaining high growth and high exports, at low and constant wages, in China. The low wage workers were taking away higher wage jobs from advanced countries. The low wages in China meant that much of the benefit of high GDP growth was going to capitalists, in this case mostly State-owned enterprises. That profit was continuously re-ploughed leading to high GDP growth rate.To some extent it can work in India, only if industrial employment increases continuously. But unlike China, India’s services sector is nearly 60 per cent of the GDP (national income). It employs only 25 per cent of the workforce. Besides India’s consumption expenditure as a share of GDP is much larger than in China.It is not as if raising the minimum wage in India will make the jobs vanish out of the country. This is because these low paying jobs are mostly in services sector, which is a non-tradable sector. Besides if the increase in the minimum wage is not very large, it does not even affect the demand for those services. Think of the wages paid to farm labour, or security guards, or courier services workers. An increase in their wages surely will not affect the demand for those services, nor will it lead to a decrease in employment. The increase in minimum wages in most sectors just means that consumers pay more. When a McDonald worker gets a fifty per cent higher minimum wage, the burger price goes up by 25 cents.This is a way of transferring incomes from consumers to workers, without causing a burden to the exchequer. It is similar to increasing the minimum support price to farmers, so that urban consumers pay a bit higher for food, and the farmer earns a bit more. This removes the urban bias of the food policy.Similarly, an increase in minimum wage will remove the pro-employer bias of the wage policy. The current national minimum wage of 176 rupees per day certainly needs to be revised upward.Dr. Ajit Ranade is an economist and Senior Fellow, Takshashila Institution. Views are personal 

Ladakh didn’t work out for China. It will now drive a wedge between Quad partners

This article originally appeared in ThePrint. You can read it here.In the contemporary global geopolitical landscape, China has evoked more fear than hope. It has displayed an impressive capacity for political organisation to pursue its objectives. After nearly three decades of resting hopes on a China that will be a responsible power in the international system, there is now an increased consensus among most Western and Asian powers that a collective approach is necessary to tackle it.

China’s justification for its strategic behaviour rests on a historical argument of recapturing its rightful place in the world that was earlier displaced by Western imperialism. This is a historically revisionist argument that is factually correct but would also be the case for many nations of the world. This argument was earlier used for incorporating Xinjiang, Tibet and Inner Mongolia. As China has grown progressively stronger, it has been embarking on its other questionable historical territorial claims that particularly involve India, Japan, Taiwan, the Philippines, Vietnam, Brunei, Indonesia and Malaysia. China has also created artificial islands in the South China Sea on at least seven reefs and islets and built military infrastructure on them, which includes three airfields.

China’s economic heft as the manufacturing hub of the world, coupled with its Belt and Road Initiative, has been mobilised to create a web of dependencies and influence. Thus, several nations are vulnerable to exploitation and eventual subordination. The success of this project entails progress towards a historically imagined Middle Kingdom. Combined with its growing military power, China is on a neo-colonial path and on the lookout for converting more and more nations into vassal states. Asian powers are facing the brunt of it and one of the major areas in contention is understandably the geographical space that is the lifeblood of China’s economic power – the Indo-Pacific.

The Quad pushback

The recent version of Quad, or the Quadrilateral Security Dialogue, as a cooperative strategic visualisation, has an expanded concept of security to include several other areas. It signifies the pushback to China’s rise and the consequent aggressive behaviour. The Quad finally came to acquire political ballast in February 2021 after more than a decade in limbo. For long, both India and Australia were uncomfortable being viewed as part of any cooperative venture ostensibly aimed at China. But the concurrent turn of events in both the countries has combined with the change of administration in the US to conclude that the time for Quad had arrived. India’s hesitancy was cast aside by China’s Ladakh aggression. Australia faced the brunt of China’s economic antipathy.China is certain, now, to attempt to rearrange its pieces on the global geopolitical chessboard. Xi Jinping ought to avoid major risky ventures in an ambience where the winds of anti-China sentiments are gathering steam and greater possibilities exists of the US catalysing opposition against it. This could herald the deepening of China’s strategic nightmare regarding a combined opposition to its rise, coming home to roost. China has already foreseen this possibility and pulled Russia into its fold, a realignment that was hastened by the worsening of US-Russia relations. The support for the Quad from other European powers like France, UK, Germany and some Asean nations like Vietnam should also give pause to China. However, China will continue to pressurise the Asean from taking sides. Its plans of governing military bases and increased access in the Indian Ocean Region will remain unaffected with strengthening of the Pakistan Navy. What then are the implications for India?

China after Ladakh

India should have to brace itself for China flexing its military and economic muscles, and could be the prime target to drive a wedge in Quad. China will show little restraint in keeping India contained within the subcontinent, a geo-strategy that it has followed for long. Earlier, it was mostly Pakistan that was useful to slow down India’s economic progress, create internal instability and channel its political and diplomatic energy in diverse directions. Now, Nepal and Sri Lanka have been added to that list with varying degrees of success.Militarily, the Ladakh tensions have temporarily eased. But further progress of disengagement and de-escalation awaited. China would have hopefully learnt the lessons on limitations of military power against adversaries whose stakes are higher and may be willing to risk escalation. If China’s Ladakh objective was related to warning India against a US tilt, the main strategic outcome has certainly worked against it and instead energised the Quad. But it also means that Beijing will strengthen its military efforts to redirect India’s resources towards the defence of the northern border so as to slow us down from emerging as a powerful maritime entity. Small doses of military tensions coupled with actions aimed to debilitate the economy, should be expected.The other prong of containment are India’s neighbours. Despite the ceasefire on the Line of Control, Pakistan’s support for terrorism in Jammu and Kashmir is likely to continue. With the US withdrawal from Afghanistan hanging in the balance, Pakistan’s Afghanistan engagement may deepen. China’s recent political machinations in Nepal have not followed its script but its presence and ability to create trouble for India through Nepal will endure. China’s efforts with Bhutan and Bangladesh have not met with much success. But Sri Lanka is vulnerable and would require continued engagement. The coup in Myanmar requires deft handling and has the potential for slowing down the execution of the China Myanmar Economic Corridor. Overall, India has geographic proximity, historical and cultural affiliations on its side. But it has various unresolved issues with each of its neighbours, and capability for assistance is now impacted by a weakened economy. China is the outsider with economic clout but cultural affinity is low. Also, our neighbours can be expected to play both sides. It is not going to be easy for India, at all.

India needs domestic stability, resilient economy

India’s ability to deal with China’s multiple prongs in the subcontinent is intimately connected to the goings on in its domestic polity. With a neutered opposition, the ruling elite now enjoys unbridled power. However, the Hindu majoritarian impulse in the populace has deepened communal polarisation. Several key institutions that have to act as constitutional safeguards have been deliberately weakened by depriving them of power for independent functioning. Key constitutional pillars of democracy and federal structure of the nation are being undermined, with the latest being the attempts by the central government to render the Delhi UT government ineffectual. Coupled with the economic impact of the Covid-19 pandemic and large scale unemployment, the evolving cocktail for possible internal discord could seriously hinder India’s capacity to contest China’s influence on the neighbouring nations. This factor may act as a primary drag, even if other foreign policy measures succeed.In many ways, the Quad may mark an important strategic milestone in contemporary global affairs. However, India would also require more economic and technological support from Quad partners. In this pursuit, strategic autonomy will be stressed. Also, the Quad’s effectiveness would be enhanced if other powers are incorporated, depending on the issue being tackled and interests involved. It might increase options of many other nations from being overwhelmed by China’s coercion. China’s reactions can be expected to increase probability of varying forms of conflicts at global and regional level. India, now having come to realise the true nature of the Chinese Communist Party (CCP), must not waste time in determining its strategic trajectory.The global geopolitical chess game is moving fast. For India, there is no better way than internal consolidation, accompanied by increased cooperation with nations across the globe and with its immediate neighbours being a top priority area. Strategic tide is turning and India’s domestic political motor will be on test. 

The current national minimum wage of Rs 176 per day must be revised upward

This article was first published in Free Press JournalPresident Joe Biden’s administration was able to push through a major corona-relief fiscal package this month. It is worth $1.9 trillion and includes another round of $1,400 in stimulus cheques for every American, $350 billion to states and local governments as grants, and $160 billion for coronavirus testing, tracing and vaccines. But it failed to get the voting support needed to raise the nationwide minimum wage to $15 an hour. The Democrats have a comfortable majority in the Congress (the Lower House), but it is a knife-edge situation in the Senate (the Upper House). And within the party itself, there are voices opposing what they consider a steep increase in the minimum wage, which is currently $7.25 per hour.This minimum wage number was set back in 2009. However, individual states in the federal system are free to add to that and have done so. For instance, in New York, Washington, etc., the minimum wage is far higher. For the rest who follow the 2009 number, in inflation-adjusted terms, the minimum wage is even below what prevailed in the 1970s. Surely that needs a correction? But the Republicans, and a significant number from the Democrats feel that this increase would put an undue burden on employers, at a time when the economy is coming out of a deep recession. As a compromise, don’t be surprised if an $11 per hour wage is voted successfully. But that is yet to happen. It may also subsequently get indexed to the inflation rate.Significant development

That this is happening in capitalist America is a very significant development. Even in the United Kingdom, which has had a conservative, pro-business, pro-employers’ government for more than 10 years, the minimum wage has been raised to £8.7 pounds for all adults above the age of 25. This may go up further. This wage is roughly two-thirds of the median wage earned by all workers in the UK.

In America too, if the $15-dollar minimum wage is imposed, it would be close to two-thirds of the national median. As such, the total income (i.e. earnings from wages, salaries and other sources) for a median American household has stagnated for nearly four decades. This has happened despite the growth in national income and a roaring stock market. Which means that substantial gains of income and wealth were going to the top tier in society, and for the vast majority incomes were stagnating.This has lessons for India. Wages have to grow, if incomes and standards of living have to improve. Will a higher minimum wage help? Will that crimp employers and lead to lower employment, or will it help workers?While per capita incomes rose by nearly seven per cent per year from 2003 to 2012 in India, subsequently, this growth has slowed down. This was also a period when rural wages were rising. India’s labour market has 90 per cent of its workforce in the informal or unregistered sector. Which means that they work either without a written contract, or without any health and retirement benefits. Even in sectors where there is a significant registered (‘permanent’) employment, the ratio of permanent to contract workers is very skewed, which is also reflected in their respective benefits and pay.De facto caste systemSometimes, this creates a de facto caste system, where for the same work, a contract worker is paid much less than a permanent worker. Such conditions can create stress and unrest, sometimes leading to intemperate outcomes, like the violence a few years ago in an auto plant in Manesar. Due to the large number of informal and seasonal workers, the data on wages and earnings is notoriously bad. Anecdotal and survey data indicate that wages have stagnated in recent years. Of course, during the pandemic, there have been large-scale job losses too.When surplus labour moves out of agriculture, it is coming from disguised unemployment, so productivity is nearly zero. Hence, even a small wage is a decent improvement on zero. This process of absorbing surplus labour from zero wage, can continue for a long time, until agriculture no longer has any surplus labour. Indeed, this was the strategy of sustaining high growth and high exports at low and constant wages, in China. The low-wage workers were taking away higher wage jobs from advanced countries.The low wages in China meant that much of the benefit of high GDP growth was going to capitalists, in this case mostly state-owned enterprises. That profit was continuously re-ploughed, leading to high GDP growth rate. To some extent, it can work in India, only if industrial employment increases continuously, like it did in China. But unlike China, India’s services sector is nearly 60 per cent of the GDP (national income). It employs only 25 per cent of the workforce. Besides India’s consumption expenditure as a share of the GDP is much larger than in China.Jobs won't vanishIt is not as if raising the minimum wage in India will make the jobs vanish out of the country. This is because these low-paying jobs are mostly in the services sector, which is a non-tradable sector. Besides if the increase in the minimum wage is not very large, it does not even affect the demand for those services. Think of the wages paid to farm labour or security guards, or courier services workers. Even the gig economy workers, such as hail tax drivers feel the squeeze. An increase in their wages surely will not affect the demand for those services, nor will it lead to a decrease in employment.This has been amply documented by researchers in America, who show that contrary to populist caricaturing, the increase in minimum wages in most sectors just means that consumers pay more. When a McDonald worker gets a fifty per cent higher minimum wage, the burger price goes up by 25 cents. This is a social tug of war. This is a way of transferring incomes from consumers to workers, without causing a burden to the exchequer.It is similar to increasing the minimum support price to farmers, so that urban consumers pay a bit higher for food and the farmer earns a bit more. This removes the urban bias of the food policy. Similarly, an increase in minimum wage will remove the pro-employer bias of the wage policy. The current national minimum wage of Rs 176 per day certainly needs to be revised upward.The writer is an economist and Senior Fellow, Takshashila Institution.

How India and Israel can lead the way on 5G collaboration

Despite the evident opportunities, 5G deployment globally hasn’t been without challenges. Superpower competition, costly infrastructure, and slow application development are holding back development. India and Israel can, together, leverage their strengths to collaborate in areas such application development, building networks of trust, and future research and development and unleash the possibilities of 5G for their citizens.Read the full article in Hindustan Times.

Vaccinate people in areas worst affected by COVID's second wave

This article was first published The Mint. You can read the original piece here.In the past month, we have learnt two things about the pandemic. First, that relaxed behaviour by previously better-protected populations across the country is causing a surge in new coronavirus infections; and second, that the speed of the vaccination programme is constrained by hesitancy, mismatch of demand and supply, and perhaps short-term challenges in scaling up vaccine production. In the light of what we know now, there is a case to review the national vaccination strategy and direct it at quelling a widespread second wave.

Instead of pursuing a progressive nationwide expansion of vaccination prioritized by age-groups, the Narendra Modi government should open up vaccination to all adults in cities and districts where there is a surge in new covid cases. This is not only the most effective way to use available vaccine supplies, but also to avoid pressure on the national vaccination programme by reducing the risks of more serious second waves elsewhere in the country.Not only should the government make every adult in the worst affected areas eligible for vaccination, but massively expand the vaccination points by permitting all registered clinics to administer the vaccine. As the government is currently the sole distributor of vaccines, it should ensure that these worst-hit areas are supplied as a matter of urgent priority. India would be better off with a dynamic vaccination strategy of ‘quelling the surge’ wherever it occurs.Contrary to what its critics say, India’s vaccination programme has demonstrated a good mix of caution and flexibility so far. A gradual ramp-up was justified, given that two new vaccines are being administered to hundreds of millions of adults. So is the careful expansion of vaccination points and age-groups. But this programme was drawn up when many experts and analysts—including your columnist—didn’t expect such a severe second wave. Circumstances have changed. What the National Expert Group on Vaccine Administration Working on Management of Covid-19 Vaccine Roll-Out (Negvac) and the Union cabinet must now take into account is the risk that the current path of the programme might not be fast enough and focused enough to prevent second waves in many more parts of the country. To use a military metaphor, we would do better to adopt a war footing, concentrating forces to win decisive battles, instead of spreading them thinly all across the front. Indeed, the very case for centralized management of national vaccination is the ability it grants to focus resources in a strategic manner across regions and populations.The main disadvantage of central planning is that it can never equal the market’s efficiency in matching demand and supply. Cases of wasted vaccines that worry our public officials would disappear if allocations were done by markets instead of administrators. Similarly, raising the daily vaccination rate and extending the coverage require private-sector involvement. No public service in India has been delivered by the government alone. There is some justification in keeping vaccines under government control in the early stages, when supply is limited and the vaccines’ impact on the population unknown. But once supply is no longer a serious constraint—perhaps a quarter hence—vaccination should be fully deregulated. As long as a good vaccine is available free at government hospitals and inexpensively at private ones, opening up the market for vaccinations will enable India to reach its targets faster. It makes little sense for the government—even if it were not facing severe fiscal constraints—to insist on subsidizing vaccines for people who can easily afford them. The only requirement would be to ensure all vaccinations are registered on a reinforced Co-Win backbone.In many Indian cities today, the younger population is more mobile and exposed, as it is driving economic activity. This is desirable, as it fuels a national recovery from the devastation caused by the pandemic. Yet, this is the very population that is last in queue for the vaccine, while being both vulnerable to the disease as well as responsible for its spread. The older population is more vulnerable, yes, but is relatively less required to move around. In the face of a surge in infections, from both epidemiological and economic standpoints, it is better to prioritize higher-risk younger adults for vaccination and isolate the older ones until more supplies come aboard.This is arguably the most ethical approach too, as public policy ought to be judged more by outcomes, less by intentions, and least by emotions. Redirecting limited vaccine supplies to highly-affected populations will mean that other populations and regions will have to wait longer. This in itself is not inequitable, for we must consider the network effects of an epidemic. Quelling a surge helps not only the population and a region that is prioritized, but also others who might face their own surges if the situation is not tackled. In any event, it is now only a matter of a few months before adequate supplies of several vaccines are available. But the next few weeks can save a lot of people across the country from avoidable suffering if enough vaccines reach the few affected districts in time.

Why did India close Jalalabad consulate?

This article was first published in Deccan Herald.

In a sudden and surprising development in March last year, India closed its consulates in Jalalabad and Herat. Jalalabad is 65 km from the Torkham border crossing with Pakistan, and Herat about 120 km from Iran. Though there was no official statement, one newspaper reported that a high-level security group had recommended closure over heightened security threats and Covid-related concerns. The closure was said to be temporary, and reopening would await a review. India has had consulates at these cities even in the years when fighting raged.

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Northern Sea Route: hopes and challenges

The feasibility of a year-around Arctic transshipment route, a longtime dream of Russia, is still unclear

Media reports and commentaries are hailing the Russian LNG (liquefied natural gas) carrier Christophe de Margerie’s latest voyage along the Northern Sea Route as a watershed. The voyage has brought Moscow’s dream of year-around access to the NSR into the limelight again, and speculation is rife about whether the prospect is closer to reality than previously thought.However, a few less-reported aspects can shed more light on the NSR’s feasibility as a transshipment route.

Sister ship didn’t emerge unscathed

The Nikolay Yevgenov, another LNG carrier and sister ship of the Christophe de Margerie, departed a day later on the same route but suffered damage to its propulsion system. The ship took a detour through the Suez Canal and is in dry dock in France for repairs. The incident has diminished the sensational claims that the Arctic is now open for year-around safe voyages without heavy icebreakers clearing the way.Read the full article on Asia Times

India dives into Quad waters

This article first appeared in Deccan Herald

Several strands of strategic vectors may have been generated from the geostrategic moves signified by the first ever summit, albeit virtual, of the Quad leaders, Joe Biden, Narendra Modi, Yoshide Suga and Scott Morrison on March 12, 2020. In a first for the Quad, a joint statement was released that serves as a declaration broadly conveying the goals and areas of focus of the group. China is not mentioned and that silence is deafening.

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Vaccine diplomacy post-Covid-19

Vaccine diplomacy is state-led action of leveraging vaccine expertise for furthering foreign policy goals. These goals can range from maintaining ties between nations, burnishing an international reputation, or developing influence within a region. A robust framework can aid in the identification of vaccine diplomacy opportunities and allow India to quickly respond to such need.According to GAVI, the international organisation aimed at improving access to vaccines, “today the potential for diseases to spread is actually increasing,” due to an exponential increase in international travel, an increasing majority of people living in urbanised areas and climate change. (Read more)

DNA Technology Regulation Bill: Will the Standing Committee's concerns about privacy, capacity be addressed by Parliament?

This article first appeared in FirstpostThe DNA Technology (Use and Application) Regulation Bill, 2019 is listed for consideration in the ongoing budget session of the Parliament. The Bill is aiming to create a DNA Regulatory Board to oversee the standardization of DNA profiling – a technique widely employed in forensics, where databanks of DNA from victims, deceased remains, crime scene, suspects and offenders can be compiled. DNA profiling has so far been used for forensic purposes in India, where it has been used to solve individual crimes. The new Bill may go a long way in streamlining the use of DNA profiling, and widen its purpose in identifying the deceased (in case of missing persons or disasters) and track down repeat offenders based on the data available in the DNA data bank. (Read more)

Chinese Communist Party has goals. India needs to have its own, not just respond to aggression

This article was originally published in ThePrintThere are glaring dissimilarities in India’s foreign policy stances towards China post the military disengagement in Doklam 2017 and the ongoing one in Ladakh. The former was followed by a reset that resembled closeness and acquiescence through informal summits in Wuhan and Mamallapuram while the latter seems to have prompted a distancing from China that was exemplified in the elevation of the Quad meeting to the level of political leadership on 12 March 2021 wherein Prime Minister Narendra Modi declared that “members of the Quad will be closer than ever before”. Remarkably, for the first time, a joint statement was issued which was followed up by a joint article by the Quad leaders was also published in The Washington Post and China’s reaction is awaited. Meanwhile, it was not surprising that China was stalling the disengagement process in Ladakh.

While one can endlessly speculate on China’s motives in Doklam and Ladakh, what matters ultimately is the strategic effect of Chinese military aggression on India. Loss of trust cannot be cranked up impetuously. In any case, the Wuhan and Mamallapuram facade has perished and the reality of China’s perennial perfidy should forewarn and prepare us to exercise greater circumspection and watchfulness.

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Fukushima's lesson is the need for effective nuclear regulation

This article was first published in The MintIt has been a decade since 11 March 2011, when the most powerful earthquake recorded in Japan triggered a tsunami and killed over 19,500 people and displaced over 230,000. It was the country’s worst natural disaster since 1995. The ‘Great East Japan Earthquake’ or ‘Great Tohoku Earthquake’ is better known as the ‘Fukushima nuclear disaster’ and often cited as Exhibit A in the case against nuclear energy. Yes, the quake and tsunami caused a catastrophic failure of three reactors at Fukushima Daiichi power plant, leaving a contained radioactive mess that will take decades to clean up, and triggered a mass evacuation during which 2,313 people died. Yet, for all the horror stories, the actual number of deaths or cases of radiation sickness due to the accident is—take a deep breath—zero. Coinciding with the tenth anniversary of the disaster, a United Nations scientific committee confirmed findings that there have been no adverse health effects linked to radiation exposure. Nobody died and no one fell sick due to the reactor accident.

That’s not all. The popular narrative often neglects to mention that there were 11 operational reactors—including the three at Fukushima Daiichi—at four nuclear power plants in the region. All of them shut down automatically, but the three at Fukushima failed to complete the process. Sixty kilometres away, three reactors at Onagawa were undamaged and shut down safely, despite being closer to the epicentre and suffering a more powerful tsunami. None of this is to downplay the human, environmental and economic damage that the Fukushima accident caused, or indeed the risks arising from nuclear power plants; only to put it in perspective. What we have is a case for greater attention to safety and governance, not a knee jerk rejection of nuclear energy as we saw in many Western countries soon after the incident.A dispassionate assessment of technology and economics suggests that nuclear energy has to be part of the civilizational response to climate change. In its latest report, the International Energy Agency points out that while wind and solar power are already competitive compared to fossil-fuels, nuclear “remains the dispatchable low-carbon technology with the lowest expected costs in 2025." The cost structure for renewable energy must include that of energy storage systems if it is to replace coal and gas for base-load capacity. Even if, in line with current expectations, the economics of renewable energy become more attractive over time, nuclear will remain an important source of low-carbon diversity. As a country dependent on fuel imports, India must invest in renewable energy, but cannot afford to ignore nuclear.Vaclav Smil, one of the world’s most thoughtful energy analysts, calls nuclear energy “a successful failure" for its inability to gather public support despite its ability to deliver. Despite the facts, ‘Fukushima’ is a one-word argument made around the world to silence any debate on building new nuclear power stations.The derogation of nuclear energy is not a failure of technology or economics. It is a failure of public policy. In that sense, India’s 2010 civil liability law is not unique in preventing greater investment, innovation and development of nuclear energy. It is a nearly global phenomenon. Other than Russia and China that have used the decade since the Fukushima accident to become global leaders in the field, almost every other country has adopted statutes and policies that strangle the development of the nuclear industry.India has done well to remain invested in nuclear despite the adverse global sentiment, but the pace has been slower than estimated, and, more importantly, the industry governance structure remains unreformed. Against the promise of producing 20,000MW of nuclear power by 2020, India currently has operational capacity of 6,780MW, constituting only 2.4% of the electricity generated. In addition to the eight under construction, the government has approved 12 more reactors, targeting 22,480MW by 2031.In a reply to a Lok Sabha question, the government stated that it has no plans to promote domestic and foreign investment in the sector.This makes Fukushima’s lesson especially relevant for India. The causes of that accident were traced to a poor safety culture arising from regulatory capture and poor oversight. Investigators blamed a “mindset that emphasises hierarchy and acquiescence and discourages asking questions."If India’s nuclear industry is government-run for the foreseeable future, then it is all the more important to restructure its governance. The case for an industry regulator and safety auditor independent of the India’s atomic energy establishment has been clear since 1995, a point re-iterated in a 2015 review by an independent international expert group.The Narendra Modi government should restructure the civilian nuclear energy establishment in the manner it did the space sector last year: structurally separate the policymaker, regulator, research and development, and commercial operators. Safety requires more, timely and better information. Not everything needs to be in the public domain, but an effective governance structure will give the government better-quality information on the state of affairs in the sector.