Implications Of The Last Minute Rescue Of A No-Deal Brexit

The last minute reprieve to a no-deal Brexit has prevented  the worst of a hard landing. The agreement that has come is the best one can have under the hard negotiating circumstances, with economic challenges facing both the EU and Britain.

It is most interesting that Protestant Northern Ireland, a part of the UK, will stay in the EU, while the rest of Britain leaves. It could therefore conceivably reunite with EIRE, very much in the EU, and leave the UK in due course. Already, there is an increased level of cooperation between Catholic Republic of Ireland and Protestant Northern Ireland.

Scotland may not like to stay in post Brexit Britain either. It voted 62% in favour of staying in the EU at the infamous 2016 referendum, but for the moment, it seems to have been contained. However, the Scottish Nationalist Party (SNP) is without an absolute majority in the Scottish Parliament at present. Should the SNP gain a majority in elections due in May 2021, there could well be a shift towards independence.

As for the joint administration of EU and British waters for fishing by both sides, it will remain to be seen how the catches are distributed. There is a formula agreed on for five years, after which British waters will become exclusive to Britain and likewise for EU waters for the Europeans.

It is a complex parting of ways, not only in matters of trade, taxation, movements, and commerce, but the untangling of the non-applicability of EU laws concerning anything in Britain and vice versa. Taxation is being largely kept neutral at present but of course this could change in future.

London, till now a major financial capital of Europe, will not be able to offer financial services into the EU henceforth without setting up on the Continent according to their laws. British qualifications may have to be overlaid with EU ones. Brexit has already seen quite a few international players relocating almost entirely across the Channel.

British manufacturing that imports parts from the EU has to stockpile rather than work on zero inventory or last-minute provisioning. Many will lose their competitive edge on the continent as a consequence.

The good news is that the UK can now go forth and enter into trade deals on its own bat with other countries, such as India. Bilateral trade is currently at a modest $15.5 billion in 2019-20.

Britain may be keen on a free trade agreement (FTA) with India which has a lucrative domestic market. This especially because an FTA with America may not fructify quite so easily or quickly. American goods could swamp the UK. Being part of the EU, it was the strain of more EU imports vis a vis British exports that  hastened the split. India on its part will be looking at high technology from Britain, joint ventures to improve our self-reliance, professional training in various fields and cooperation in the higher reaches of the Services Sector.

With Boris Johnson set to grace the occasion on our forthcoming Republic Day shortly, there may be a boost to the process.

India counts Britain as its sixth largest source of foreign direct investment (FDI). With $30 billion incoming over the last 20 years, it accounts for 6% of total FDI into India presently.

The UK will need to reorient its diplomatic relationship with India, as the UAE and Saudi Arabia have done. It will have to jettison some, if not all of its adversarial positions vis a vis Pakistani interests and those of China.

It must stop commenting on India’s internal matters, its politics, its leadership, certainly at any official level. This is necessary to clear the decks between the two countries. India is not interested in hectoring from its former colonial master, or partisan support given to a defeated Opposition.

The Leftist portions of British media and the Labour Party display a consistent hostility towards the Modi government. Calling an elected government all sorts of names is not endearing the British to the Indian establishment. Casting slurs on the majority Hindu community is also unacceptable.

India’s relative leverage to get sweeter terms as well as less interference in its internal affairs is now considerably enhanced. The various anti-India groups and lobbies that seem to operate freely in London and elsewhere in Britain will have to be reigned in.

If bold initiatives to reassure Indian sensitivities are undertaken by Britain, it will be first of all to its own benefit. Presently, India does have several alternatives such as France, Russia, the United States and Israel, for ongoing high technology cooperation, particularly in joint venture defence manufacturing.

Countries and companies relocating some of their manufacturing from China post the Covid-19 pandemic is also creating new possibilities and strategic depth.

Cooperation on the high seas, particularly in the Indian Ocean and the Asia-Pacific with the QUAD nations of the US, Australia, India, Japan is attracting other regional players such as Vietnam and Singapore as well.

France, Britain and Germany, Russia have also begun to contribute naval power to the region as well. All these countries are developing a common strategy to keep the international shipping lanes in the region open and unhindered by Chinese hegemony. Britain’s commitment towards this changing world order will be of particular interest to India.

While Britain as we know it now may be truncated in the years ahead, it has much to contribute by way of expertise in multiple areas to a developing India.

It will be a new relationship, based not on the erstwhile Raj or the near pointless Commonwealth, but on 21^st century realities. This as the world begins the third decade of this century. And India enters its 75^th year as an independent democratic republic.

(956 words)

For: Sirfnews

December 29^th, 2020

Gautam Mukherjee

 

Stock Market Flies Saffron Flag, Opposition Hates Rages

Political audacity combined with a strong organisation storms straight ahead while dominating the flanks. It is the signature action of the saffron forces, now grown familiar. It does not take anything from the style of politics and governance with its constant self-service of the last many decades.

The unequal Opposition, caught flat-footed, thrown out of the citadels of power, plays old drums and flutes - threats, intimidation, murders, booth-capturing, minority appeasement, arson, riots, lies, embezzlement.

It all worked perfectly well once, the public was none the wiser, beguiled by promises that never seemed to reach their maturity. But now there is the sullen dullness that comes with knowing one has been betrayed. It results however in arrests of the old masters under draconian laws, and attachment of their properties for recompense.

As if on another plane altogether, the Sensex, Nifty, Midcap index and even the Bank Nifty are touching new highs despite an ongoing, though reducing, economic contraction.

There is less panic into gold and silver. Less worry about major bank collapse. Some revival in real estate. New reform for the long-neglected farming sector. There is a great deal of infrastructure building. It is probably the principal driver of the Indian economy through the six years of the Modi administration.

Bold reform, obscured sometimes by strident misinformation spread by the disgraced, in the key areas of labour, land, company law, digitisation, electricity, water, social injustice has been undertaken. More and more transformation is in the offing from this determined government. Our foreign affairs and diplomacy have been completely revamped. India’s position in the world has been rebooted.

Old power brokers and middlemen, rent-seeking bureaucrats, extortionists, commission agents, benami wealth hoarders, runaways, are all under pressure. Promises made again and again in the past are being delivered upon by this government.

The North East of the country has been drawn into the mainstream. Foreign investors are pouring money into the Indian bourses and into foreign direct investment (FDI). The foreign exchange reserves are at an all-time high, close to $500 billion. Contrast this with the near bankruptcy of 1991 before the economy was liberalised.

 Now the foreign stock market players are apparently not daunted by steep  stock valuations because they are optimistic about the future. It is a liquidity rush yes, but far from mindless speculation.

There is expectation of a global end to Covid with several vaccines to tame it. And a shift of economic attention away from a very badly behaved China. It has become a predatory China, under a misguided CCP, with attitudes better suited to a long-departed age of imperialism. How much time before this 1949 born Red China comes unstuck and on its way to a democracy?

India is and will continue to benefit from standing up to China. The world has taken note. Armaments, organisation and force readiness on land, sea and air, is moving fast. Border area infrastructure is being rapidly completed. If there is a future conflict there is no doubt that India will acquit itself well.

Parts of the Opposition are seething in anger, motivated by hate and fear, unable to digest their rejection by the masses. This part of the Opposition cannot stand the idea of Prime Minister Narendra Modi and the BJP moving from strength to strength. Neither, of course, can inimical neighbours such as China and Pakistan. It is a sad thing, but parts of the Opposition have made common cause with anti-nationals, terrorists and other enemies of the nation.

The BJP has recently won decisively in Bihar alongside its ally the JD(U). It is about to repeat the performance in the border state of West Bengal plagued by Islamic aggression, terrorism and infiltration. This is openly supported by the presently ruling TMC, heavily dependent on the nearly 30% Muslim population. The demographics and the culture of the state have changed alarmingly, much to the quiet annoyance of the Hindu majority. West Bengal has enormous untapped economic potential. It is now firmly looking to the BJP for rescue. The chances of it coming to power in the 2021 assembly elections in the state gains ground every day.

On the national stage, India is showing the world not just the spectacle of the biggest democracy in action with its expert management of free elections, but also its talent for generating atmanirbhar chaos and bloodshed.

Those Communists, Leftist, Christian, Islamic, Maoist, Khalistani, Kashmiri hard-liners along with Pakistani and Chinese elements, who don’t want India to prosper, love the chaos.

But they can’t seem to make any appreciable dent by backing the weak, fractured, and rudderless Opposition. An Opposition with just a single point agenda. There is no positive or developmental vision at all that might have enthused the voters.

The arson, the loot, the street blockages, the atrocities, are funded by those who want to destroy the already hurting economy, and encourage the aggression of India’s enemies on its borders. They are not bothered about taking advantage of the damage done to the economy and health by the Covid-19 pandemic.

The lust to bring down the Modi government at any cost,  in spite of it being very popular with the voting masses, is  a difficult proposition. Admit it or not,  all the brickbats are boomeranging.

There are also substantial chunks of the non-aligned Opposition who vote with and support government initiatives. In parliament, the government’s domination in both houses is now evident. The electoral juggernaut too rolls on from the grassroot elections to panchayats, blocks, districts and city municipalities, all the way through the state assemblies and on towards the national elections.

Substantial money is coming in from near and far to fund the rabid sections of the Opposition. The protests and insurrections are well planned home productions. The return on investment though, is dismal.

Even the agent provocateurs are well known, often fiery, but ineffective. Many are out-of-office politicians, ageing, frustrated people, aided by some disgruntled state governments also in the fray. The entire bandwagon suffers from lack of credibility, rampant corruption, internal rivalries, and sheer jealousy of the success the government enjoys. It is an unequal contest, becoming more tilted against the would-be usurpers by the day.

One narrative is backed by the power of the government. The other by the powerless Opposition and its camp followers determined to trash the whole place if nothing else. The powerful government refuses to retaliate with violence. The powerless Opposition tries even greater provocation.

This has become a familiar see-saw over the last six years, in parliament, in the TV studious, in the speech-making, on the streets. There is arson, rape, murder, false news. There is a desperate scrambling for lost electoral traction, a search for  new leadership,  even as vested interests refuse to let go.

It is obvious the baton has passed decisively to the BJP and its brand of nationalist, majoritarian politics. The leadership here has dedication honesty and vision. It has an efficient organisation. The world can see it.

However, those who have lost after decades in power refuse to do so, even as they are staring at the imminent end of their line. The new year 2021 is about to dawn after a most difficult 2020. It will usher in a new decade, the third of the 21^st century.

India will prosper like never before, but it won’t be  thanks to the florid code that hid under the ‘Idea of India’. That made the majority Hindu ashamed of his grand heritage.

 Modi’s Atmanirbhar is not an inward-looking thing. It is getting out of the clutches of commission agents and needless imports. It is building a strong domestic military machine for the country’s defence and export. And this government’s ‘New India’ is a very different thing from the false secularism that preceded it. There is room in it for every nationalist of every caste, creed, region and religion, but none for those who want to destroy the country.   

(1,319 words)

For: WIONEWS

December 20^th, 2020

Gautam Mukherjee

 

Protest Against Farm Reform Laws Is A Conundrum Confounded

Reform in an entitled and entrenched system takes courage and commitment. The Narendra Modi government has demonstrated both in the passing of three farm laws that were long overdue. Some states and their farmers have hailed the new laws as they have begun to receive immediate benefits. These include BJP ruled Madhya Pradesh and surprisingly, given the stance taken by the party against the new laws, Congress ruled Rajasthan.

The new laws, amongst other things, have cast doubt on the longevity of the minimum support price regime going forward. Though there are no specific words to say it will be abolished or diluted. But the fact is that farmers do not have to sell their produce exclusively at government controlled mandis any more. Mandis where, the minimum support price (MSP), is operational on the procurement of all the wheat and paddy brought in. The middle-men use their influence with the government to see to it that all of it, even if the quality of some of it leaves something to be desired, is procured. There are  multiple bad practices ranging from fraudulent weighing-in, to false counts, all to manipulate the commissions they earn.

So, not insisting on bringing in the wheat and paddy and indeed all other crops, to these government controlled mandis is a potential blow to the people who control them and influence the minimum support price.

The farmers who have to pay the dictated commission to the middle-men on the MSP, can now realise more by selling directly to other merchants, exporters, processors, and end users. And the central government can be proud of having done something to stem the terminal decline of the actual farming sector.

The middle-men are naturally upset. It is an entrenched system in place for over 50 years that is being upended. They lose both income and clout if these laws work against them. They well might, though the farmer is free to continue as always. He is likely to do so for a proportion of his crop of wheat and paddy so as to keep in with the old order in parallel.

But the new laws give the ordinary farmer some options. The middle-man’s hold is so extensive at present, that the government in the states outsource their inspection and regulatory functions to them for ease of operation and, of course, a commission. The state also charges a tax on transactions at the mandis. It is said the politicians receive kickbacks and commissions too.

Rich farmers, some 6% of the total in Punjab are high consumers. They are both middle-men themselves and contracting overlords that engage poor farmers to work their own land for the lion’s share of benefits. They control remuneration and payments. They provide farming inputs and maintain never paid-up books of the poor farmers’ debt. It is another form of the abolished zamindari system of yore and essentially tyrannical.

The coming of the new laws has drawn attention to the minimum sale price (MSP) mechanism applicable to government procurement of just wheat and paddy.

It is an anachronistic rule left-over from an era of food grain shortages in the 1950s, 60s and 70s. There is no need for the government to buy and hoard so much wheat and paddy in a food surplus nation, even for strategic purposes. Much of it is sold to alcohol makers at huge losses when it becomes unfit for consumption.

In 2020 or 2021, when bumper surpluses of wheat and paddy production has been the norm from various states for several years now, it makes little sense to have an MSP mechanism at all.

But, like the varna system that was designed to facilitate occupational categories, it has solidified over time. Like the caste system, MSP too has morphed into something rigid, even as its purpose and need have vanished. Today, it supports a vast class of agents who live off the work of the farmers without doing any farming. The system disincentivises the production of other crops or vegetables too.

Paddy in particular consumes huge quantities of scarce ground water and much canal water in Punjab and Haryana. It has also created the stubble burning menace because of multiple annual crops. Paddy is a crop from heavily rain-fed areas of the country, and not native to Punjab and Haryana at all.

MSP now often acts as a maximum price, higher than the free market. It  results in huge procurent costs estimated at over rupees eight lakh crore. It artificially inflates procurement prices for the public distribution system.

The public distribution system (PDS) itself, which once catered to many people from the middle-class in addition to the poor, is no longer as important.

It was, in the years of scarcity, a means of accessing price controlled, subsidised, food items. That its grain and sugar and cereals were often sub-standard was offset by cheaper than market offerings. Items such as  heavily subsidised kerosene, was used widely for cooking and lighting in rural and semi-urban areas in those times. Now kerosene is not subsidised at all, and is in any case, no longer in vogue, after the wide advent of LPG and widespread electricity.

The PDS system and ration cards are mostly history. Most people prefer buying their needs in the open market these days. While there can be an argument for the government maintaining buffer stocks in case of crop failure or other calamity, the proportions are not to the extent that MSP produces.

Systems put in place when India suffered from acute staple food shortages have no relevance now. Surplus wheat and paddy emanating from multiple states are rotting in Food Corporation of India (FCI) godowns.

Use Of mandatory government mandis was once prescribed to prevent  private hoarding. Now, it is just a mandi with out-of-date extraordinary powers.  Money-Lenders,(Arthiyas), rule the roost, and make a virtue out of their hand-holding. They provide inputs required by the farmer, some cash, but all of it at rapacious rates of interest. Besides they take the bulk of the profits via their commissions.

Farmers do face multiple hazards from the vagaries of the weather, pests, crop failure, need for money for the next planting, other expenses, including marriages. The relationship with Arthiyas, like the village money-lender, is symbiotic. But it is also extremely exploitative. It can, of course, continue for its virtues and its familiarity, but not with the balance of power stacked so heavily in favour of the money-lenders.

Some of the slack may well be taken up by corporate demand and contract farming with better terms than the rich farmers. Digitisation and the introduction of high-speed internet into remote villages has given the farmer power to sell to whomsoever he likes. To say he is too ignorant to do a job of it is self-serving on the part of the Arthiyas. To bully the ordinary farmer to support what is a money-lender agitation along with various other disgruntled elements such as Islamists and Khalistanis is inevitable.

The Modi government has pledged that it will double farmer income. Partially, this is already happening via subsidies paid directly into the accounts of the farmers. These new farm laws may well enable farmers to grow lucrative crops and sell them directly at good prices to those who buy directly from them. Prime Minister Modi has recently declared in favour of standing firm over the farm laws. His government has decided to change the future for the ordinary farmer. Agitations by vested interests always occur when reform is afoot- but they rarely succeed.

(1,254 words)

For: Sirfnews

December 6^th, 2020

Gautam Mukherjee