In a significant move, the Indian Air Force will now
commission a squadron of Sukhoi-30MKI fighter jets with the capacity to
carry the supersonic BrahMos cruise missile at its Thanjavur airbase in
Tamil Nadu. This is the first time that South India is getting a Sukhoi
squadron and is clearly meant to counter China’s growing influence in the
Indian Ocean Region. The Sukhoi’s range and strike capabilities give it
an edge here, and equipped with the BrahMos, it can dominate the sea-lanes
right up to the Strait of Malacca from its South India base. This also
highlights the success of a weapons platform like BrahMos. The supersonic
cruise missile jointly produced by India and Russia gives the Indian
military excellent precision strike capabilities from land, air and sea. In
fact, all the three services have inducted the BrahMos, highlighting its140 versatility. But with wars of the future slated to become more
technology-intensive, we need many more success stories like160
BrahMos. It is here that we need to look at creating an American-style
indigenous military-industrial complex to develop cutting-edge weapons
platforms. for that to happen, there needs to be greater private sector
participation in defence instead of just relying on Government bodies like
DRDO. Evidently, it is through the private sector that we can unlock the
true potential of indigenous defence development. Make in India in defence is
all very well. But the next step ought to be Made by India.
The statue-building frenzy in Maharashtra has caught the
attention of the Bombay High Court which noted the irony of the State Government
building a Rs. 1070 crore statue for BR Ambedkar but neglecting the very people
he280 represented. The Court
was taking cognisance of the freeze on grants to two public hospitals when the
recent decision of the State Cabinet sanctioning an additional Rs. 300 crore to
account for a 100-feet increase in the Ambedkar statue’s height320 to 350 feet appears to
have caught its eye. Besides the Ambedkar statue, Maharashtra is also building
a Shivaji statue costing nearly Rs. 4,000 crore at sea. Both projects were
conceived by the previous NDA Government but given the important political
constituencies they represent, once announced no Government can afford to
backtrack. The statue-building frenzy in India received a fresh impetus after Sardar
Patel’s statue was unveiled in Gujarat. Uttar Pradesh has also announced a
grand Lord Ram statue at Ayodhya. The argument that these statues would offer a
boost to tourism and hence will replenish the exchequer, in420 the long run, is
persuasive but not fully convincing. For one, the politics behind appropriating
these personalities raises the question of whether public funds should be
utilised for such vanity projects. Secondly, Indian tourism is not going to get
a global boost through building some statues. The general disrepair evident at
tourism sites, lax law and order, and poor infrastructure and480 transportation
facilities never seem to be getting the funding they deserve. These systemic shortcomings
are preventing India from tapping its immense tourism potential. The Court’s
observations will help mount some public pressure and could appeal to the moral
good sense of political leaderships. The under-funding of Government
hospitals is a travesty in a country like India with so many poor people who
cannot afford private healthcare. The sooner governments get their
funding priorities right, it would do a world of560 good to the poor and
ensure that the State would not have to deal with such
uncomfortable questions from the judiciary.
The US and China, the world’s largest economies, on
Wednesday signed a preliminary trade deal signalling an end to two years of
friction. The pullback by the two sides is still at a nascent stage
as key tariffs raised by the US in the last two years remain in place.
What the preliminary deal does is to provide a way640 for both sides
to gradually de-escalate. This is a welcome start to the year as
the trade friction has had an adverse impact on the economies of not
just the two countries but also the entire world. In October, IMF
lowered the global growth forecast to 3%, the lowest level since the financial
crisis over a decade ago. The broad-based700 nature of the slowdown
was termed as a “synchronised slowdown”, and the trade friction was identified
as an important cause of the problem. There were two kinds of negative
effects on account of the trade friction. One, it was the slowdown because
of the impact of tariffs. Two, the postponement of investment decisions because
of the trade friction and the possibility that it would get worse. It is
this aspect which is likely to get partially offset by the preliminary
trade deal.
India will be a beneficiary of this development. The
economy has seen six successive quarters of a slowdown in GDP800 growth. A part of it
is on account of the weak state of the global economy and cross-border trade. A
full-fledged recovery in the Indian economy will be helped if the global
economic situation improves as an acceleration in exports840 is an engine of
growth. A cessation of trade hostilities also makes for a more
favourable environment for potential foreign investment in global value
chains. The ongoing relocation of some manufacturing assembly lines based in
China will continue. From an Indian standpoint, it is important to
keep in mind that the current development provides a window of opportunity.
The preliminary agreement skirts some sensitive issues where the positions of
the US and China are radically different. Moreover, there is no
independent dispute resolution mechanism if they differ in their
interpretation of some clauses in the agreement. The peace is, therefore, fragile.
For India, the forthcoming Budget is an opportunity to make the
most of the window. The best960 way to navigate a more uncertain world is to
take steps which improve the competitiveness of the Indian economy.
The Kerala980 Government’s challenge to the Citizenship
(Amendment) Act in the Supreme Court, making it a formal Centre-State
dispute, marks a new phase in the opposition to the contentious
legislation. Coupled with the possibility of more States refusing to take
up works related to the National Population Register, the Centre has a
real problem on its hands, and one that it walked into despite getting advance
warning from the vociferous protests in North East States. What
has made Centre’s position difficult was the frequent invocation of a
nationwide National Register of Citizens to follow CAA by Government functionaries
led by Home Minister Amit Shah. Though Centre has dialled back from this
course, the almost simultaneous sanctioning of funds for the NPR exercise and
the CAA has ended up likening it to the NRC. The course suggested in the
Citizenship Rules 2003 to use1120 NPR to create a National Register of Indian
Citizens and a Local Register of Indian Citizens is creating another
battleground, evident in the letter written by 106 retired civil
servants cautioning against the disruptive nature of the exercise. Given these circumstances, Centre must carry the
States along if it wishes to make meaningful progress on integrating refugees
and identifying illegal immigrants. The National Development Council comprising
the Prime Minister, Union Cabinet and Chief Ministers offers an ideal forum for
a meeting of minds. The Modi Government can look at its own success in
bringing States on board through the GST Council to follow the same course
at yet another difficult juncture in Centre-State relations.
Retail inflation in December surged to 7.35%, the highest level
recorded in over five years. A rise in the level of prices in the backdrop of1260 a slowdown in economic
momentum and high unemployment has sparked concern. The concern is warranted.
But the remedy requires a1280 clear-sighted analysis of the primary
problem facing the economy. The rise in retail inflation has been driven
primarily by food prices. Within the food basket, it is mainly
vegetables which have pushed up the rate of inflation. Food items make
up a little less than half the spending in an average household’s consumption
basket. Their price trend also happens to be particularly volatile, susceptible
to sharp swings on account of factors beyond a Government’s immediate
control. Unlike the last bout of high inflation during the UPA-II years,
the current surge in headline inflation has been accompanied by a decline in
core inflation. Core inflation, a measure of the price level of a household’s
consumption basket after excluding food and fuel, is1400 a good proxy of the robustness
of consumption. Over the last year, core inflation has declined by about
two percentage points to the present level of 3.5%.
The primary economic challenge today is the growth slowdown.
While that does not1440 in any way lessen the importance of food
prices for consumers, the current surge in vegetable prices may turn out to
be transitory. Yet, they also serve as a reminder that the Government’s
unfinished reform agenda includes agriculture. Sharp vegetable price swings are
also due to the lack of supply-side reforms. Such reforms would reduce
wastage and intermediation costs between farmers and consumers, benefiting both
sides. The core inflation is the most troublesome part of December’s
inflation data. The current slowdown has exceeded 18 months and early revival
is unlikely. Conventional monetary tools such as interest rate reductions are
unlikely to meaningfully impact growth as the financial sector is almost
overwhelmed by bad loans and risk aversion. The Government and RBI need
to jointly work out a way to improve the quality of financial intermediation in
India which will have a positive impact on both economic growth
and transmission of monetary policy. The rise in food inflation cannot be taken
lightly.1600 Equally, policy makers shouldn’t lose sight of the fact
that reviving growth is the priority.
