All publications of Austine Sequeira . बम्बई , भारत

The 2021 QUAD show: Advantage India!

More than a decade has passed since the idea of establishing the Quadrilateral Security Dialogue (the Quad) was initiated by the former Prime Minister of Japan Mr. Shino Abe. The idea was to create a grouping of major democracies viz. Australia, India, Japan, and USA forming an “Asian Arc of Democracy’’ in the Indo-Pacific region. Unfortunately, the very thesis was unceremoniously buried by withdrawal of Australia from the grouping. Quad was resurrected in 2017.The turning point came with Chinese aggression against India at the footstep of the Himalayas and worsening foreign relations between China on one side and Japan and Australia on the other side. Controversy over origin of Covid-19 and US-China trade war was the last harbinger to formalize and launch the first virtual summit of the Quad Leaders on 12th March 2021. Although the Summit agenda was benign packed with contemporary issues like Covid-19, vaccine diplomacy and climate change, the undercurrent was very much clear – beware China! here is a new mechanism to check your ambitions in the Indo-Pacific!!!

Predictably, China “firmly opposed” the Quad Leaders’ Summit calling it a cold war mentality and selective multilateralism. History of QUAD reads that China has always been against the very idea of QUAD which can give opportunity to four nations to control and dominate the Indo-Pacific region. It would not be a falsehood to say that a decade of Chinese economic and political pressure subverted QUAD from being cohesive group; at the same time Chinese political follies and aggressive postures post 2017 solidified the very idea of QUAD leading to QUAD Leadership Summit 2021 and diplomatic show of strength challenging Chinese hegemony in the region.

Indian Prime Minister Narendra Modi termed QUAD as a force for global good and important pillar of stability in the Indo-Pacific region. Since 2014, the right-wing government of India has for all practical purposes dumped the non-aligned foreign policy and seized every opportunity to lead world politics through its growing economic clout. Going by the summit reportage so far, India seems to have capitalized the Quad platform to showcase its achievements in fighting Covid-19 including its soft power in developing, manufacturing, and exporting vaccines and highlight its military power that successfully tackled Chinese aggression on its border. In summary, it was a platform to show “India has arrived” on the world scene and can evolve into a dominant player in the Indo-Pacific theatre, of course with the tacit backing of US and Japan. The US too seized the opportunity to proclaim that President Biden will largely follow President Trump’s China policy without drastic changes that China was hoping for. On the other hand, not much was said by leaders of Australia and Japan although these nations have an axe to grind against China.

“In the backdrop China flexing its muscles in the Indo-Pacific region and trying to stir things up on almost all of its border regions; the coming up of QUAD on the international center stage was inevitable and timely” says Ambassador V.B. Soni, a veteran Indian career diplomat and foreign policy commentator.

There is no denying that Chinese leadership seems to be rattled by the subtle belligerence of India and Australia in focusing on Indo-Pacific region to check Chinese territorial claims and hostility. That India is getting closer to US economically, commercially, and militarily is a cause of concern to China. India’s focus on the Indian Ocean Rim countries stretching up to Mozambique and consensus amongst QUAD leaders to support ASEAN countries has all the ingredients to derail Chinese “planned dominance” of the Indo-Pacific region also labelled as incremental encroachment strategy. It very well knows the stated policy of US to achieve national interest in the Indo-Pacific by bolstering proxies and India perfectly fits into the plot. Will India play the US softball? The answer to this question lies in the way Indo-Chinese relations will shape up in the near future.

What is the future of QUAD? According to Ambassador Soni, these are still early days for QUAD to formulate its approach and come up with coordinated policies. “But the QUAD has to take a major decision - whether to concentrate on peacetime activities like combating calamities like Tsunami, COVID 19 and global environment related burning topics or take strategic decision to give some teeth and muscle by converting it into global security alliance on the pattern of NATO for Indo Pacific” concludes Ambassador Soni.

Atmanirbhar Bharat - the key is with the Government Authorities!

Recently the Ministry of Textiles, Government of India (GoI) proudly announced that India has become world’s second largest manufacturer for PPE body overalls in a short time span of 2 months. Ever wondered how the local producers could achieve this feat during the lockdown? It is purely due to cutting the red tape of design and quality approvals by DRDO and related agencies involved in fighting the pandemic, allowing procurement of raw material that includes inter-state transportation, permitting factories to operate during lockdown and most importantly buying the production at a reasonable price by the government agencies. If it can happen to PPEs, it can happen to any and every product. After all the Government and its agencies are regulators, buyers and consumers as well! So, who has the key to make India Atma-nirbhar?

Covid 19 pandemic is changing the way business is conducted. A significant collateral damage emanating from the Covid-19 pandemic is the destruction of Global Value Chains (GVCs). Since the 80s, the world of manufacturing and supply has revolved around the GVCs wherein raw materials and intermediate components are shipped across the globe to deliver a finish product at the consumer’s doorstep. GVCs to a large extent have also made India a trading country – large amount of India’s exports are non-value added products. Chinese manufacturing hegemony insured that GVCs stayed under Chinese control.

All this has changed since March 2020. International trade has taken a severe beating due to logistical issues perpetuated by lockdowns in almost all global trading giants. Chinese trade statistics reveal that the Country’s imports and exports were lower by 4 and 17 percent respectively during the period Jan-Feb 2020 and there is no reason to believe any acceleration during March-May 2020 period, although China is said to have resumed business post Wuhan debacle. Scarcity of finished products in major economies of Europe, Asia and Americas can be squarely attributed to their dependence on China and the Chinese domination in fabricating both intermediates as well as finished products. Additionally, the Covid-19 pandemic has built a backlash against Chinese products and services and major world economies led by USA are looking at other geographies for supplies as well as re-location of their own enterprises out of China. This collateral damage is spiralling over global investment as well – according to an IMF Blog, the emerging markets have seen a capital outflows amounting to USD 100 billion on capital investment and portfolio investment. UNCTAD estimates up to 40 percent reduction in FDI flow across the globe.

The resultant situation is forcing nations to look inward and build their own “Local Value Chains (LVCs)” to ensure un-interrupted supplies and create a mechanism to absorb global disruptions. The French Minister of Economy and Finance was the first official to give a clarion call to EU members to have a hard look at the GVCs and urged France to buy local.

Not to left behind, Prime Minister Modi, sensing the early disruptions in medical supplies from China while tackling the pandemic, launched “Atma-nirbhar Bharat” (self-reliant India) program duly supported by a Rs 20 Lakh crores economic package. So far the nation is abuzz with the economic package and has paid little attention to the Atma-Nirbhar Bharat program terming it as one more “jumla” by the Modi Government.

Politics apart, Atma-Nirbhar Bharat is not the “swadeshi” program propounded by the RSS. It is not local protectionism either. Bad quality, lack of innovation and unfair trade practices are the products of Swadeshi and local protectionism. Atma-Nirbhar is the “Internationalisation of Indian Business” wherein India produces world class products in a large quantity at a shortest possible time. That’s exactly what the Japanese did after loosing badly during the World War II, so why not India?

Every business needs efficient factors of production. The economic package is large in volume but falls short in transmission of package components to the factors of production. Extending loans to business will either increase bankruptcies or in-efficiencies. On the other hand, accumulated interest waiver and onetime reduction in taxes on income would revive business confidence manifold. We have seen RBI taking the horse to the pond many times in ‘a financial year’ however the poor horse does not seem to drink the water. Land and labour reforms are slowly progressing. However, the key to entrepreneurial confidence building is regulatory reforms at local levels. 30 years have passed since India embarrassed globalisation of Indian economy. Regulatory mechanism to attract capital has undergone a positive change. However, the environment of approvals and restrictions that an entrepreneur undergoes on a daily basis has not changed for better. Regulatory processes at the State and district levels are same as they were 30 years ago. Ease of doing business exists at the national institutional levels, down below it is the same old India.

Truly, this has to change. Atma-Nirbhar Bharat is a necessity to engage and feed India’s burgeoning population. The PPE overall production milestone is a case study for Indian self- reliance. Ease of doing business should not be only during disasters but it should be a daily feature of our lives, only if we want to be atma-nirbhar!!!

"Apolitics" in World's largest Democracy

It is said that during national disasters, one does not indulge in competitive politics. Even if one wants to do politics, one may not find a reason to do so if the disaster management is converted into an apolitical activity.

Take the ongoing case of coronavirus spread across India and the consequent lockdown announced by the government of India. The lockdown project has been successfully sold to the Indian nation as a single remedy to save your life. Lockdown 1.0 was necessary and was welcomed by all. Masses clapped, banged whatever possible to generate sounds and lit lamps and expressed solidarity with Prime Minister Modi. As days passed the economic effects of lockdowns and lack of worthwhile economic package started sinking in. Daily increase in Covid +ve cases, zero growth rate, 35 percent unemployment and plight of migrant workers started hogging airwaves.

However, by then the apolitical nature of the subject had subdued whatever political activity that was left in the world’s largest democracy. The de-facto leader of India’s largest opposition party the Congress, Mr. Rahul Gandhi and his colleague Mr Chidambaram who had wholeheartedly welcomed the Lockdown 1.0 started raising issues of migrant workers and absence of plan to help them overcome their challenges. Genuine subjects!!! however, so subdued were their voices that it was a headline just for a day. By the time talks of Lockdown 2.0 were doing rounds, Congress party president Sonia Gandhi tried to seize the initiative by announcing setting up of a high-level committee to formulate the party's response on critical national issues. The committee chaired by former prime minister Manmohan Singh and comprising eminent members like Mr. Rahul Gandhi, among others were to study the socio-economic impact of the pandemic. So far nothing has come out of the so-called studies. Congress was kind to write a series of letters to Prime Minister Narendra Modi drawing his government's attention to issues related to the lockdown. Today when the migrants issue has become critical the Congress leadership has no voice to even comment on it, let alone suggest measures to get over it.

All walks of media including the diehard Modi detractors too became apolitical and toed the lockdown line conveniently migrating from Lockdown 1.0 to 3.0. Debates on economic implications of lockdown were relegated to non-primetime slots occasionally highlighting the plight of migrants.

Such was the success of the lockdown strategy implementation that acclaimed historians like Mr Ramchandra Guha compared Prime Minister Mr Modi to Late Indira Gandhi and un-compared Rahul Gandhi to Mr Modi. Meanwhile, Mr Rahul Gandhi found his political voice to attack the Government on “writing off” the large bank loans. The attack was a sort of foot in the mouth. Mr. Gandhi’s much publicised comments only cemented his lack of knowledge of banking and finance. Mr Gandhi tried one more occasion to attack the Government by sarcastically “observing surprise” on the While House unfollowing Prime Minister Narendra Modi which again was a sort of foot in the mouth. Intermittently the Congress party also sought expert comments from former RBI Governor Mr. Raghuram Rajan on economic issues. Sadly, no one cared to take note of what Mr Rajan was saying, although his daily discourse on health of India economy was closer to truth.

To summarise, Mr Modi has so far managed the Lockdown sage very well by converting it into a national issue for saving lives and relegated the livelihood issue to the back burner. As India enters Lockdown 3.0, Covid -19 cases are on the rise statistically and the economic damage is mounting day by day. Let’s hope Mr. Modi finds a solution that will be apolitical as well.

By now, the whole world is educated on the characteristics of coronavirus. Firstly, it is contagious and can be transmitted from one human to another and can grow into an epidemic if the infected is not isolated. Secondly, as on date, there is no cure although existing medicines are being repurposed. Vaccine is a year away. Therefore, social distancing and lockdown is perhaps the only way to stop the spread of this dreaded disease.

That several nations are under lockdown is known. Figures relating to cost of such lockdown too are being computed and they seem to be more dreadful than the disease. Handling of Covid-19 spread and imposition of lockdown has also brought to fore various shades of leaderships, their inclines towards material and non-material world and their ability to deal with extremes within a limited timeframe.

Coronavirus disaster started at China. Being an authoritarian system of governance, very little is known about the way China handled the disaster. Nevertheless, the speed at which it moved to isolate the epic centre viz. Wuhan and Hubie province and shield the countrywide growth centres is laudable. Equally commendable is their decision to re-open the economy including the epic centre for day-to-day business. Today all of China is humming with activity and supplying all sorts of material to globally affected countries including USA, UK and India to fight the virus. The approach of the leadership was clearly to swiftly isolate and contain the disease in “a geography” and shield the rest of the country with a focus on minimum economic damage.

Lockdown in India now extended for two more weeks is touted to be world’ largest lockdown and carries a huge economic cost. As per rating agencies and independent analysts, the 21-day Lockdown 1.0 is expected shave off US$ 98 billion of India’s GDP and up the unemployment rate at 24 percent. Economists are estimating up to 60 percent of micro, small and medium enterprises to go down under. India’s huge migrant labour force is idle and restless creating social cataclysms. According to Barclays, extension of the nationwide lockdown till May 3 will inflict an economic loss of USD 234.4 billion and stagnate the GDP growth during 2020. However, what is noteworthy is the speed at which the Indian Prime Minister has taken a call on the subject. Despite pressures from industry and trade bodies, swimming against the tide he took a humane approach. In his virtual address to G20 leaders on March 26, the Indian Premier clearly stated his intention to focus on humanity rather than economics while tackling the coronavirus pandemic. What followed was 21 days countrywide lockdown, high decibel campaign to educate and discipline the masses and economic support package for poor. Keeping in mind the federal structure of the company, the Indian Premier increased the lockdown after consulting state chief ministers. Surely, India is quite a different country by governance, social fabric, geographical size and population behaviour. Despite modest globalisation since 1991, the World’s largest democracy is largely governed by electoral politics and is strongly rooted in regionalism, caste reservation and subsidised socialism. Currently it is life over livelihood. Could the Indian leadership have looked the other way? Only time will tell.

The story of China and India though diagonally apart are in deep contrast with the happenings in the block of developed countries notably the USA, UK, Italy and Spain. To begin with, one wonders why Italy and Spain are tagged into the developed nations club. Both the political leadership and independent administration machinery in these countries was found to be lacking in response to initial spread of coronavirus cases. Delayed understanding, lack of proactiveness and resources to ramp up efforts of containment on a day to day basis has resulted in large scale deaths and spread of disease beyond their geographical boundaries. In contrast same sized countries viz. S. Korea and Taiwan have shown swift containment and near-total return to normalcy.

Another story that baffles the world is the response of USA to Covid-19 containment. USA with its highly acclaimed healthcare system is struggling to cope up with the pandemic and currently is the world’s epicentre of disease with highest infections and deaths. Some press reports emanating from US suggests that despite being world’s most powerful person, the US President has no power to declare and enforce country-wide lockdown due to federal democratic system. That power is vested with the respective State Governors. The President can only use his high office to prevail upon them. Therefore, President Trump did what he is best at doing- create confusion, a likely path will emerge. Despite horrifying prospects of 200,000 deaths by end April 2020 due to peaking of coronavirus, President Trump initially adamantly declared to keep the economy going. Later, accepting the advisory from the local health care sector notably the doctors and hospital operators and increased mortality rates due to coronavirus spread flipped to say “bad weeks ahead”. As states moved ahead to enforce lockdowns, the Country was flooded with economic analytics. Investment firm Goldman Sachs was quick predict US unemployment rate to shoot up to 15 percent during the second quarter of the year and GDP to fall at an annualized rate of 34 percent due to the coronavirus pandemic. Such pressure groups again reshaped President Trumps response to Corona pandemic. He wasted no time to introduce wonder drug Hydroxychloroquine and pressurised India to clear large consignment bound to USA. Nevertheless, as on date, the US corona death count is highest in the world. But that’s not stopping the President in planning the opening of economic activity across the States.

World economy has taken a huge beating. IMF says the world economy has “entered a recession as bad or worse than in 2009”. Morgan Stanley research report expects global GDP growth to decelerate by 2.3 per cent over the previous year in the first half of 2020. Coronavirus and the resultant lockdowns and social distancing so far has resulted in large scale disruptions to the economic activity globally. It is defining moment for every leader. Their response to Covid-19 handling as well as shaping the revival in the near future will permanently engrave their names in the world history.