Economic Highlights

New Delhi, 18 December 2023

MP Meat Ban Disturbing

CAN RISK GLOBAL BIZ

By Shivaji Sarkar 

The new Union Budget will be tabled in less than two months from now and is supposed to pave the course of the biggest popular electoral process in the world. In a rising world inflationary situation and uncertainties all around in West Asia to Europe, would India be able to keep off the difficult realities amid the US Fed move to cut rates? 

More than that some decisions such as the Madhya Pradesh government banning egg and meat product sales could have serious repercussions. If it becomes the norm also in other states like Rajasthan or Chhattisgarh, the country may goo though a difficult phase. 

India being the highest seller of buffalo and other meat products would be having a dichotomy. In Madhya Pradesh alone there are 60 producers who export rabbit, crab, emu, chicken, pork, buffalo and a variety of other meat products. Would they be functioning? If they are made to shut down, India’s global business phenomenon could be treated as fickle paving way for flight of capital. 

The new syndrome could lead to law and order and difficult business-oriented phenomenon. Number of non-vegetarians are high. Most tribals are meat eaters. There could be law and order problems apart from clandestine sales and smuggling. Rent seeking could be high. Perhaps in lure of propaganda for flaunting religiosity, the new leaders have barged on to an uncharted course. The central government has been making efforts to increase all sorts of exports, which are seeing a decline for some time. 

This might aggravate the US rate-cut syndrome and impact the budgetary process. In normal circumstances it is expected to pour in the US and western funding. Besides, it would also depend on how the Israel-Hamas situation impacts overall the US monetary movements. It is raising losses for Israel in terms of casualties and a daily loss of an estimated $269 million. The heavy assaults in Gaza have its own repercussions. The businesses are suffering in Israel and its economy heads for contraction. Its political repercussions are not easy to predict, particularly in a year that the US heads for polls and sustains many of the losses of Israel. 

India, of late, has been seeking closer ties with Israel. Haifa port investments by the Adani group is considered strategic for financial gains and diplomatic clout. Besides, the disturbed West Asia has so far almost jettisoned the India-Europe Middle East trade corridor that was to pass through the region. It could have benefitted Indian companies immensely. 

The rate-cut was expected to lead to higher US investments in India and softening of the dollar. Each year that hope has been belied with dollar getting more expensive vis a vis rupee adding additional costs on Indian imports and higher forex outgo. On exports, it fetches fewer dollars. Outgo has increased on both counts. 

Despite petroleum prices falling, India has not been able to pass on the benefit to consumers. The rupee outgo has increased and cannot sail through even a softer international fuel price regime as dollar remains firm and hovers over Rs 83. It’s servicing on external debt of $629.1 billion is increasing.

The US dollar-denominated debt remained the largest component of India’s external debt, with a share of 54.4 per cent at end-June 2023, followed by debt denominated in the Indian rupee (30.4 per cent), SDR (5.9 per cent), yen (5.7 per cent), and the euro (3.0 per cent). 

India’s “Vikasit Bharat” narrative has led to demand for higher debt. The government says it was investing in the growth of India. Inflation was 7.4 percent in July and in November it is at 5.8 percent, a little below the Reserve Bank of India tolerance range of 6.5 percent. This means prices may go up further in normal domestic situation. If international situation worsens it would add to the pains of budgetary process. 

Surprise was the growth at 7.6 percent in the second quarter. It also sees rise in wholesale price index rising after a seven-month thaw. The concerns over rising prices are on the minds of the policymakers. Pulses and cereals denote significant rise in CPI food basket. Quite a few items’ prices such as onion, ginger, and garlic are rising continuously. Despite the ban on wheat exports, the prices have risen by about 25 percent. On the contrary, the farmers are not getting remunerative prices. 

The meat ban could increase “illicit sales” or smuggling of meat products, particularly in urban areas. Higher rents would add to inflation, costs on policing and harassment of business couriers vitiating the social atmosphere. All this increases costs and may lead to rework the budgetary process. 

If there are social disturbances, as the Lok Sabha election approaches nearer, Indian companies, renowned for their resilience and adaptability, creating opportunities amid global challenges, may get into a financial morass. It could also affect the ability to innovate, leverage technology, and respond swiftly.Such prudery also affects international business companies. Alarmed by such moves they might take decisions to postpone investments despite the additional finances likely to be available to the US investors. 

The changed milieu could create a stickiness that the US is trying to overcome. International community keeps a close watch on socio-political developments. An awry politico-social phenomenon in one part may have wider ramifications. The Manipur crisis has yet to subside. Mizoram has voted in a different way and the new BJP states are acting differently. These may not be considered welcome indicators by many global players, who are intrigued by increasing ethnic disturbances at different places. 

Global disruptions in supply chains, accentuated by events like the trade tensions between major economies, have prompted a reassessment of manufacturing and supply chain strategies. Indian companies, particularly in sectors like electronics, textiles, and pharmaceuticals, may have to drastically diversify or relocate to ensure they remain profitable. 

The inauguration of the Ram temple in Ayodhya is being seen as a jubilant phase in the society. If it gives rise to prudery, it might have undesirable impact on the ease of doing business. It is hoped that it might end in a whimper and would not majorly change the business syndrome. 

Any aberration could alter the business course. The leadership has to be pragmatic so that the economy thrives and does not get into a whirlpool that could disrupt economy, finance and political stability. Steering it deftly is the need of the hour.---INFA 

(Copyright, India News & Feature Alliance)

Round The World

New Delhi, 16 December 2023

India-US Ties

NEEDS MORE ENGAGEMENT

By Prof. (Dr.) D.K. Giri

(Secretary General, Assn for Democratic Socialism) 

A senior official, the Press Secretary of Pentagon, Pat Ryder, said in a news conference on 13 December that the US has made great progress in its defence ties with India and is looking forward to making further progress in military-to-military engagement in 2024. Note that the Pentagon is the metonym for US Defence Department. It is the most important and powerful institution of the US government, deriving from its role as the nerve centre of the country’s armed forces.

At the same time, Indian media reports that US President Joe Biden has declined the invitation to be the Chief Guest at the Republic Day parade next month. Also, India has voted for a resolution that calls for an immediate ceasefire in Gaza, whereas the US has voted against. It is also noteworthy that India also voted for two amendments, one moved by Austria and the other by USA. The Amendment Resolution proposed by USA made specific mention of “Heinous terrorist attacks by Hamas that took place on Israel on 7 October 2023 and the taking up hostages”. The Austrian amendment named Hamas holding Israeli hostages. It is another thing that both amendments were dropped as they did not receive the required number of votes.

Unarguably, in international politics, countries conduct their foreign policies in pursuance of their national interests, reflecting the values and norms they espouse and stand for, as well as the rules they adhere to. But the moot question is how the national interest is defined and realised in short and long term. In the formative years of independent India, the first Prime Minister Jawaharlal Nehru conceptualised the country’s foreign policy while other ministers were busy in uniting and stabilising the nascent independent country.

On reflection, experts, scholars and observers argue that the policy of Non-alignment, the hallmark of Nehru’s foreign policy proved costly for the country besides it not being maintainable as a strategy. It is also a truism that ‘people become wiser after the event’. But statesmen are known for taking sagacious and judicious steps which are in the interest of the country, and they are regarded as correct by historians.

India is moving on from Non-alignment to multi-alignment (the topic of this column published on 8 December). In the current scenario, in which India is leaning towards the US and the West for its growth and security, the engagement with this bloc seems to be proceeding in fits and starts. Is this right approach now or in the long-term interest of India? Are both the countries on the same page on many global and bilateral issues?

To take a few illustrations in order to examine the above assumption, let us look at the war in Ukraine. India abstained on several resolutions moved in the United Nations on naming Russia as an aggressor, which implied New Delhi’s stance has been pro-Russian. New Delhi has a tradition of expressing solidarity with countries suffering from intervention, neo-colonial exploitation and undue interference and intervention. In the past, when Hungary was invaded in 1956, Czechoslovakia in 1968 and Afghanistan (a non-aligned country) in 1979, all by the Soviet Union, India kept quiet. Similar is the position on Ukraine although it raised some informal protests with Putin, the Russian President.

Is that good for India’s reputation of embracing a value-based approach in international politics, particularly in comparison to China, which is out to grab other countries territory and is posing a systemic threat to world politics? Apparently, India did it in pursuance of its national interest which consisted of keeping up its traditional ties with the Soviet Union. Quite a bit of research has been done calculating the costs and benefits of India’s military trade with Soviet Union and now Russia. On the other hand, it has irked the United States with whom our partnership is growing. Prime Minister Narendra Modi went a step further in seconding the candidature of Donald Trump, who was a good friend of India inasmuch as he took on China.

On Ukrainian war, India would excel as a neutral party if the Prime Minister could broker a peace deal between Ukraine and Russia in consultation with the United States and Europe. Even if the peace deal was not a complete agreement, New Delhi could have contributed to a ceasefire and initiation of negotiations. The Mexican President had called for such an initiative from the Indian PM, albeit under the UN platform.

The Ministry of External Affairs and the PMO continued to hark on dialogue and diplomacy. It would have been better if these two tools were put into some action. Indian Foreign Policy establishment prided on their ability to negotiate both with US as well as Russia especially buying oil from the latter at cheaper rate from Russia. The oil import certainly did help in containing inflation of energy prices. But did it help even partially to ending of the war in Ukraine?

On the war in Gaza, India did display a pragmatic as well as normative approach by expressing solidarity with Israel as it faced a terrorist attack from Hamas. Since then, India had abstained in United Nations from voting for any resolution that did not name Hamas’ action on 7 October as a terrorist attack. In the latest resolution, India has taken a balanced position of calling for a ceasefire as well as calling out Hamas for terror attack and keeping Israeli hostages.

Again, does it help the Palestinians or Israelis? Palestinians are dying in bombardment by Israelis who will not stop until they “eliminate the military capacity of Hamas in repeating such attacks as of 7 October”. Any country, talking of India, could do well to ask Hamas to release the rest of the hostages and surrender, and Israel to withdraw its forces so that innocent civilians are not sacrificed. There seems no other way to stop the current bloodshed. Going back in history of action-reaction or aggressor-victim – aggressor syndrome will not stop the ongoing war.

There is more than one interpretation of Joe Biden not attending the Republic Day parade. It may be so that the back-to-back arrangement for Quad Summit and Republic Day celebration are not compatible with the Congressional schedule of the American President. The refusal of the invitation from Modi by Joe Biden could also be attributed to the irritation arising out of the “assumed Indian agency hand” in the attempted assassination of the controversial Sikh, an American citizen, Gurpatwant Singh Pannun. The issue has assumed greater seriousness after the murder of Hardeep Singh Nijjar, a Canadian citizen, allegedly by Indian agencies.

Be that as it may, there is a case for India’s greater engagement with the United States that takes a rounded approach, not just sectoral like the increased collaboration in defence. Bilateral relationship is based on shared understanding, deepening trust and often being on the same side on important international issues. Such an approach militates against India’s multi-alignment policy which is of course desirable in a gloablised world. Is it not necessary to differentiate between issue-based alignment and strategic partnership?---INFA

(Copyright, India News & Feature Alliance)

Round The World

New Delhi, 15 December 2023

Statistical Literacy

WHY IS IT IMPORTANT?

By Rajiv Gupta 

Suppose you take your temperature on two successive days. On the first day it is 98.2 degrees, on the second day it is 98.8 degrees. What would you infer from these readings? More importantly, what course of action would be warranted as a result? A lot of people take notice and act on information not very different from the example cited above. We often read items in newspapers with statistics to make a point. The numbers could be about the economy, the number of accidents, or the crime rate, etc. We read the numbers but not everyone reflects on what the numbers mean. Numbers convey meaning and it is up to the reader to discern the meaning. Let us take an example. 

A leading English national daily had a news item titled: “Fatal Accidents Down, Traffic Cops Cite Proactive Measures” on November 14, 2023, which gave statistics of road accidents in Delhi from 2019 to 2023 (up to October 31). There were 1433 fatal accidents in Delhi in 2019, 1163 in 2020, 1206 in 2021, 1428 in 2022, and 1141 up to October 31 in 2023. The Delhi Traffic Police cited these numbers to convey that there was a 4.7 per cent reduction in fatal accidents between 2022 and 2023 and that was due to proactive measures taken by the police. Is this a correct claim? Does it mean that in 2024 we should expect a further reduction in fatal road accidents? 

Statistics can either convey relevant information which can lead to sound decisions, or they could be misinterpreted leading to action when none is warranted. In the temperature example at the beginning of the article, it should be clear that no action needs to be taken. Why? Because typical human temperatures fluctuate in a range, the range depending on the individual circumstances. If any medication is taken because the body temperature reaches 98.8, it can lead to undesirable side-effects. Similarly, we need to examine the data in the newspaper article. The observations will be valid not just for the article but for a host of numbers seen in newspapers, television, and other media. 

The reason we should not start medicating ourselves when the body temperature reaches 98.8 is because body temperature has a natural range of variation. This variation is due to various factors such as the ambient temperature, our clothing, what we may have eaten, whether we have just exercised, etc. Dr. W.E. Deming, noted statistician and management guru who helped the Japanese industry become world leaders, called this natural variation caused by “common causes.” If the statistic (in this case the body temperature) is within some defined limits, no action is required. But if it goes outside these limits, then Deming said that we need to investigate and possibly take action. So once the body temperature crosses, say 100 degrees, it may be a sign that one needs to see a doctor. 

Returning to the accident data, If we plot the data points, something interesting emerges.  

What does the graph tell us? Should we conclude that some specific action resulted in a decrease in accidents? Or does it look like random variations in data which do not reveal any specific pattern or trend? Even without defining any limits which would indicate any unusual pattern of behaviour, it is easy to see that the number of accidents over the five-year period reported in the article is relatively stable. Not many people would interpret the reduction from the fourth to the fifth year as remarkable. 

A natural question which a reader can ask is “So what?” What is the harm in misreading natural variation and taking action to compensate for any effect that we feel necessary? Is it necessary for the problem to get big before we act on it? Should we not ward of problems by taking preventive measures? 

Deming wrote that if the data only shows natural or random variation, any action in response to a change from one period to the next would make the system unstable with the potential to increase the variation in the data. In the case of the body temperature example given in the beginning of this article, most healthcare professionals agree that unnecessary medication to counter random changes in the body temperature can lead to problems. We should take steps to improve one’s health such as eating well and exercise. But action should not be taken to counter a slight blip in the body temperature. 

Similarly, in the case of accidents, the authorities ought to take systemic actions to reduce the overall incidence of accidents. Actions such as better patrolling, better lighting, better road maintenance, etc. should result in a reduction in accidents. But these actions should not be taken as a knee-jerk reaction to a slight change in one year’s accident data. 

According to Deming, any unnecessary intervention based on short term changes in data would make the system unstable, with higher highs and lower lows. However, when the change is significant, i.e., the data crosses the limits beyond the natural variation, investigation into the cause of that occurrence is warranted and action needs to be taken. In the body temperature analogy, if the temperature were to cross 100 degrees, it often signals an infection for which some treatment becomes necessary. 

Examples of misguided overreaction to data are seen in several walks of life. Perhaps one of the more glaring examples is when a company announces a drop in the sales or profit number compared to the previous quarter or year. The immediate reaction of the stock market is to selling of the stock which often leads to a drop in its price. Sales and profits of organizations do not always go up in a straight line. Any panic selling of a company’s stock in response to a poor quarter or year is unwarranted as long as the company remains healthy. 

This article was written to emphasise the need to develop literacy in reading statistical data. Data is important for managing organisations, communities, and nations. However, collecting data involves time and cost. Therefore, we need to make sure that the data is put to proper use. In addition to the cost of collecting data, incorrect reaction to random fluctuations in the data can lead to worsening the system. The message should be clear. We need a better understanding of how to interpret statistical data.---INFA 

(Copyright, India News & Feature Alliance)

REWIND

New Delhi, 13 December 2023

VILE DISINFORMATION ON KASHMIR

By Inder Jit

(Released on 3 July 1990) 

Public memory is proverbially short. It seems to be even shorter in regard to the Kashmir developments, especially those preceding and following independence. This is not only so among our masses but also among those who should know better, both at home and abroad. Pakistan has taken full advantage of this ignorance in the past and is continuing to do so even today to spread vile disinformation. A case in point is Pakistan’s renewed demand for a plebiscite in Kashmir. Most of our commentators have justifiably faulted Pakistan in the matter. Pakistan has none but itself to blame for the non-implementation of the UN resolution advocating a free and impartial plebiscite. Yet Islamabad and its spokesmen at the UN, world capitals and even in New Delhi are again accusing India of having impeded the functioning of the United Nations Commission for India and Pakistan (UNCIP) through “machinations” and thereby prevented “the implementation of the resolutions calling for plebiscite to which it was, and continues to be, a party.” 

In a cleverly-worded letter in a New Delhi daily, the Pakistan High Commission stated the other day: “The provisions of the UN resolutions envisaged the demilitarization of Jammu and Kashmir... The withdrawal of the armed forces on the two sides had to be so coordinated in timing as not to place either side at a disadvantage and to prevent any possibility of the resumption of fighting. Thereafter, the stage would have been set for holding a free and impartial plebiscite. On its part, Pakistan secured the withdrawal of all tribesmen from Jammu and Kashmir, and in the meeting of representatives of the two parties convened by UNCIP in March 1949 suggested a framework within which the High Commands of the two armies could work a detailed and synchronized withdrawal programme, indicating that the completion of the Pakistani troops’ withdrawal would be achieved within three months. But the Indian side blocked discussions for synchronized withdrawal; nor did it submit any plan of its own for joint discussions and agreement. India’s machinations...”

What are the facts? The UNCIP came forward on August 13, 1948, with a resolution which was accepted by India on August 20, 1948 and by Pakistan late in December, 1948. This resolution was in three parts. Part I related to the Cease-fire Order, Part II to the Truce Agreement and Part III to reaffirmation by India and Pakistan “that the future status of Jammu and Kashmir would be determined in accordance with the will of the people.” Part I was implemented speedily. A cease-fire was brought about through separate and simultaneous orders of the High Commands of India and Pakistan in accordance with Part I which, importantly, also provided: “The High Commands of Indian and Pakistani forces agree to refrain from taking any measures that might augment the military potential of the forces under their control in the State of Jammu and Kashmir. (For the purpose these proposals, forces under their control shall be considered to include all forces, organized and unorganized fighting or participating in hostilities on their respective sides.) But Part II relating to a Truce Agreement never came to be implemented.

Why? Before attempting an answer, we would do well to recall the crucial Part II, the preamble of which states: “Simultaneous with the acceptance of the proposal for immediate cessation of hostilities as outlined in Part I, both Governments accept the following principles as a basis for the formulation of a truce agreement, the details of which shall be worked out in discussion between their representatives and the Commission.” The rest of Part II consists of three parts: A, B and C. Part A reads: “1. As the presence of troops of Pakistan in the territory of the State of Jammu & Kashmir constitutes a material change in the situation since it was represented by the Government of Pakistan before the Security Council, the Government of Pakistan agrees to withdraw its troops from the State. 2. The Government of Pakistan will use its best endevour to secure the withdrawal from the State of Jammu & Kashmir of tribesmen and Pakistan nationals not normally resident therein who have entered the State for the purpose of fighting. 3. Pending a final decision, the territory evacuated by the Pakistani troops will be administered by the local authorities under the surveillance of the Commission.”

Part B reads: “1. When the Commission shall have notified the Government of India that the tribesmen and Pakistan nationals referred to in Part II A 2 hereof have withdrawn, thereby terminating the situation which was represented by the Government of India to the Security Council as having occasioned the presence of Indian forces in the State of Jammu & Kashmir, and further, that the Pakistan forces are being withdrawn from the State of Jammu & Kashmir, the Government of India agrees to begin to withdraw the bulk of its forces from the State in stages to be agreed upon with the Commission. 2. Pending the acceptance of the conditions for a final settlement of the situation in the State of Jammu & Kashmir, the Indian Government will maintain within the lines existing at the moment of the cease-fire the minimum strength of its forces which in agreement with the Commission are considered necessary to assist local authorities in the observance of law and order. The Commission will have observers stationed where it deems necessary. 3. The Government of India will undertake to ensure that the Government of the State of Jammu & Kashmir will take all measures within its power to make it publicly known that peace, law and order will the safeguarded and that all human and political rights will be guaranteed.”

We need to remember the initial and basic fact of Pakistani aggression, which Islamabad and its propagandists conveniently forget. This, as Nehru emphasised in the Lok Sabha on March 29, 1956, was important “because everything subsequently flowed from it.” The UNCIP recognised this basic fact in its aforementioned resolution of August 13, 1948 which proposed: “As the presence of troops of Pakistan in the territory of the State of Jammu & Kashmir constitutes a material change in the situation since it was represented by the Government of Pakistan before the Security Council, the Government of Pakistan agrees to withdraw its troops from the State.” Nehru added: “The point to remember is that because of this admission of aggression, the first thing that the Commission required was that Pakistan should withdraw its forces from the area of the State occupied by it. We were asked to withdraw the bulk of forces later, that is, on Pakistan withdrawing from that area... The right of our Army to be there was recognised but it was stated that since Pakistan was withdrawing completely... India also could reduce her forces... to bring about a better atmosphere...”

Pakistan was required under Part II A 2 “to secure the withdrawal from Jammu & Kashmir of tribesmen and Pakistani nationals not normally resident therein who have entered the State for the purpose of fighting.” But this was not done. What is worse, the entire scheme of militarisation under Part II B was jeopardised by Pakistan through a fraud perpetrated by it not only on India but also on the Security Council. New Delhi and the Security Council were suddenly confronted with a new issue in regard to the demilitarisation of the state --- the disbanding and disarming of the “Azad Kashmir Forces”, forces which Pakistan had all along denied were there. (These forces were armed, equipped and officered by Pakistan and comprised some 35 battalions.) The UNCIP resolution of August 13, 1948, contained no reference to these forces, constraining India to tell the UN in March 1953 that it would not have accepted the UNCIP resolution of August 13, 1948 had it been aware of their existence. It would have insisted on the disarming and disbanding of these “Azad Forces” in the truce agreement.

There is no truth whatsoever in Pakistan’s renewed charge that India had “blocked discussions for synchronised withdrawal”, and it did not “submit any plan of its own for joint discussions and agreement.” In fact, an identical accusation was made by Mr Feroze Khan Noon in the Security Council in 1957. But Mr Krishna Menon effectively rebutted it. He conceded in the Security Council that India and Pakistan had agreed early in March 1949 to submit their plans for the withdrawal of their respective forces. But it was not true that India “first asked for more time and later refused to honour this agreement.” He quoted UNCIP’s Third Interim Report of December 3, 1949 to assert that the Commission had on March 28, 1949 “received the Government of India's views.” India had then conveyed its preparedness to accept a period of three months for the complete withdrawal of Pakistan forces. Its memorandum also contained a suggested schedule for the withdrawal of Indian forces. But it declined to disclose its own programme to Pakistan until a satisfactory agreement had been reached regarding the withdrawal of Pakistan forces and the replacement of the “Azad Kashmir Forces” by a Civil Armed Force.

Pakistan has also tried to confuse opinion on the plea that it had sought a balanced and “synchronised withdrawal” of Indian and Pakistani forces. Not many, however, remember that the UNCIP itself had rejected Pakistan’s view (a) that the objective of the truce agreement was to create a military balance between the forces on each side and (b) that the withdrawal of its regular forces depended upon plans acceptable to the Pakistan Government for the synchronisation of this withdrawal with the bulk of the Indian forces. The UNCIP candidly told Pakistan that “no simultaneity was intended” and that “synchronisation would be arranged between the respective High Commands and the Commission.” Further, Pakistan troops were required to withdraw in advance of the Indian troops and their withdrawal was not conditional on Pakistan’s agreement to the plan of the Indian withdrawal. In the final analysis, Pakistan calculatedly blocked the implementation of the UNCIP resolution as it clearly saw Jammu & Kashmir affirming its accession to India. There is no other explanation for the way Pakistan mixed up its alphabet and insisted on the implementation of Part B of the resolution before Part A! Islamabad cannot fool all the people all the time. --- INFA

(Copyright, India News & Feature Alliance)