Commentary
Find our newspaper columns, blogs, and other commentary pieces in this section. Our research focuses on Advanced Biology, High-Tech Geopolitics, Strategic Studies, Indo-Pacific Studies & Economic Policy
How China’s Nuclear Ambiguity Affects India
What China’s nuclear ambiguity means for India is different from that for other nuclear powers such as the United States and Russia.
Ever since China exploded its first nuclear device in 1964, Beijing’s nuclear strategy has largely remained unchanged: it is based on achieving deterrence through assured retaliation. A crucial requirement for this is the survivability of its arsenal following a nuclear or conventional adversary’s first strike. But the improved technology and evolving security dynamics with the United States have compelled China to rethink its operational capabilities to achieve effective deterrence. China is rapidly attempting to modernize its conventional and nuclear arsenal and increase its nuclear ambiguity through subtle changes in the doctrine, force posture, and capabilities.
Don’t just game the system, return to Kautilya’s goal of happiness in Covid 2nd wave
Gaming the system is a term that usually carries negative connotations of achieving desired outcomes by manipulating rules and procedures that are meant to protect and regulate the system. However, it can also be utilised for benevolent purposes. At the core, it is power play. But ultimately, how power is wielded and what purposes are achieved for the common good, provide scope for an informed judgement.
The passing but devastating second wave of the Covid-19 pandemic has brought focus on India’s health care system, and calls to strengthen it will rent the air until either another wave arrives or another event, good or bad, gains centre stage.
But these constant streams of events blind us to perceive the issue as a whole or how the second wave of the pandemic in India connects to the extant strengths and weaknesses of the Indian State. In particular, the State acts through its political system, which is the fountainhead that provides the wherewithal to tackle the menaces as well as to discern, create and exploit opportunities. The sole purpose in theory is one of improving the welfare of its citizens. This is what Kautilya describes as the central focus of statecraft — Yogakshema. Read the full article on ThePrint
It’s Not Just About 50 Tweets and One Platform
This article originally appeared in TheWire. An excerpt is reproduced here.Transparency and a voluntary actThis latest attempt came to light because Twitter disclosed this action in the Lumen Database, a project that houses voluntary submissions. And while Twitter is being criticised for complying, reports suggest that the company wasn’t the only one that received such a request. It just happened to be the only one that chose to disclose it proactively.Expanding on legal scholar Jack Balkin’s model for speech regulation, there are ‘3C’s’ available (cooperation, cooption and confrontation) for companies in their interaction with state power. Apart from Twitter’s seemingly short-lived dalliance with confrontation in February 2021, technology platforms have mostly chosen the cooperation and cooption options in India (in contrast to their posturing in the west).This is particularly evident in their reaction to the recent Intermediary Guidelines and Digital Media Ethics Code. We’ll ask for transparency, but what we’re likely to get is ‘transparency theatre’ – ranging from inscrutable reports, to a deluge of information which, as communications scholar Sun-ha Hong argues, ‘won’t save us’.Reports allege that the most recent Twitter posts were flagged because they were misleading. But, at the time of writing, it isn’t clear exactly which law(s) were allegedly violated. We can demand that social media platforms are more transparent, but the current legal regime dealing with ‘blocking’ (Section 69A of the IT ACT) place no such obligations on the government. On the contrary, as lawyers Gurshabad Grover and Torsha Sorkar point out, it enables them to issue ‘secret blocking’ orders. Civil society groups have advocated against these provisions, but the political class (whether in government or opposition) is yet to make any serious attempts to change the status quo.
It's time to bid goodbye and good riddance to board examinations
UK outlines global-focused defense strategy
Britain seeks to remain relevant in a world where it sees threats proliferating, while its finances are shrinking
The United Kingdom has outlined a vision for its defense and foreign-engagement priorities in its latest Integrated Review and Defense Command Paper.The paradigm of defense reviews in the UK goes back at least to the 1950s. The new document, published in March, has implications ranging from raising and appropriating defense spending to setting up new international bureaucratic structures and strategic nuclear signaling that nobody expected.It is no exaggeration to say that the document is Britain’s plan to remain relevant in a world where it sees threats proliferating, while its finances are shrinking.
Cummings couldn’t ‘cut’ it
Boris Johnson, the current British prime minister, promised an integrated review during his election campaign in 2019. However, at the time, Dominic Cummings, the technocratic chief adviser to the PM, was thought to be influencing the review. Until his exit from Downing Street in November last year, there was a lot of speculation on the review bringing a lot of cuts.Cummings was thought to prefer investment in high-tech solutions and wouldn’t shrink from cutting personnel and conventional security and war-fighting capabilities in the belief that they’d be obsolete in the very near future.
But in the end, in the final document, the cuts are not as severe as initially thought, though the focus on high-tech solutions and new war-fighting domains like cyber, artificial intelligence, space and information technology remain.In several places throughout the document, Russia has been identified as a major “active threat” to the UK and China as a “systemic competitor,” which broadly conforms to the general alignment and policies of the North Atlantic Treaty Organization (NATO).In response, the Russian ambassador to the UK, Andrei Kelin, has said that the “political relationship between Moscow and London is nearly dead” – under the circumstances, not an unfair observation.Read the full article on Asia Times
Time to depoliticise Indian police. It can be Modi’s Sudarshan Chakra
The tragic loss of 22 policemen in a Naxalite ambush in the jungles of Chhattisgarh on 4 April invoked memories of earlier such incidents with the worst being the loss of 76 lives in Dantewada in 2010. As part of an old pattern, political and institutional homilies followed promises of revenge. One can be fairly certain that the matter will be officially investigated, and a politically patronised cover-up carried out, with only the lower-level officials facing the brunt. Life will continue as before, till another incident comes along, and the cycle will be repeated ad nauseam. The police leadership will continue to promise solutions to politicians as long as their numbers are increased, and going by the recent raising of CRPF battalions, financial constraints do not seem to come in the way of pumping up numbers. If only somebody educated India’s politicians that the qualitative inadequacies in the CRPF cannot be made good by numbers.The bigger picture and the truth is that for a long period of time, nearly 4,000 square kilometres of territory in south Bastar was in control of the Naxals. In a recent interview, the IG Police, Bastar, said that it has now been shrunk, but an area of 1,000 square kilometres is still with the Naxals. The executive is fully aware of it. Parliament and the media have chosen to remain silent.Running in parallel is l’affaire Param Bir Singh, the former DGP of Maharashtra, who after being sacked went to court complaining against former state home minister Anil Deshmukh. From what is publicly known so far, the role of the toxic underbelly, which is an admixture of corruption, criminality and political chicanery involving the nexus of political executive-bureaucracy, seems all too evident. As details keep emerging, it seems that the political-police nexus was all-pervasive. It stinks.No doubt, both these incidents have completely different contexts. One is about the avoidable loss of lives in a situation of armed uprising in the tribal belt of central India. The other is about corruption and possible murder by the law keepers themselves under the tutelage of their superiors. Both these incidents may seem unconnected, but even a casual look reveals that the dramatis personae remain unchanged, except they appear in different forms and contexts. Both incidents relate to politicisation and control by the executive of the police, and in both, the executive and the police lack accountability.Read the full article on ThePrint
In West Asia, where US and China’s interests intersect
Chinese foreign minister Wang Yi’s recent six-nation tour of West Asia has sparked discussions about Beijing’s taking a more active approach in the region. In part, this is driven by China’s expanding interests; in part, it is a product of the China-United States (US) competition and geopolitical churn underway after Joe Biden’s election.Read the full article in the Hindustan Times.
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.
Gender parity in the Indian Army
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.
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 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
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 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.
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.