Ambitious Chinese 65 Billion CPEC Project Is In Multiple Jeopardy Quagmire

The $ 65 billion China-Pakistan-Economic-Corridor (CPEC), from the restive if oppressed Uighur Muslim majority province of Xinkiang in China, all the way to the Pakistani/Balochi port of Gwadar, is clearly in deep jeopardy now. On top of the obvious debt trap to China, Pakistan finds itself facing a near uncontrollable security dilemma.

Runaway Uighur fighters from Xinkiang, otherwise systematically oppressed by the Han Chinese, are in some degree contributing to the terrorism in Pakistan. This along with the Pakistani Taliban, the Baluchistan Liberation Army, sundry terrorist groups once enthusiastically spawned by Pakistan to deliver a ‘thousand cuts’ to India - plus their variously mutating affiliates.

Baluchis sheltering in Iran are also contributing their mite to the unrest and instability, with Iran reluctant to act harshly against their significant minority population.

This difficult situation is being aggravated daily by the economic weakness of China, plagued by a massive property and real-estate industry collapse, massive non-performing assets (NPAs), a low GDP growth rate, trade and diplomatic differences with the West, as well as a host of its neighbours.

Its currency also cannot be trusted. Its Pakistan ‘all-weather partner’ turned dire liability, is living hand-to-mouth, as it is all but bankrupt. It not only owes billions, under multiple heads and sources, to China, it owes equally huge sums to the multilateral lending agencies such as the IMF and the World Bank plus other Western and Arab lenders. Total Pakistani debt topped $ 126 billion in 2022 and has worsened since.  The currency, the Pakistani rupee, is well on its way to becoming worthless. Foreign currency reserves have gone. Its revenue generation, never robust, as its economy is based on consumption and government spending, is now practically non-existent.

The multilateral lending agencies want Pakistan to renegotiate its loans from China before it gives it more money, but Pakistan is in no position to do so in real terms.

This entire situation is making the Chinese truculent and short with Pakistan, but not really to best effect. Pakistan, as per its long-studied practice, is trying to balance the influence of the super powers, by playing the United States off against China to obtain a measure of leverage with both.

The US Ambassador in Pakistan Donald Blome, no doubt at the urging of the US State Department, visited oil, gas, and mineral rich Baluchistan, the largest province of Pakistan, on 12^th September 2023. The Chinese have been operating in Baluchistan for long. But this visit is probably the beginning of a brand-new US initiative. The US Charge d’affaires had visited in 2021. And this was a long time after the visit of a previous American official, way back in 2006.

Blome met with Pakistani officials in Baluchistan and their Navy’s West Commander. He also visited the port at Gwadar, run by the China Overseas Ports Holding. China hopes to use Gwadar for transhipments, oil cargoes to itself should anything go wrong in the South China Sea, the Malacca Straits, its access to its Pacific ports-and exports to America. How it will drive its cargo through Pakistan to Xinkiang  is another matter.

Pakistan, on its part, sees Gwadar as its only port besides Karachi.

Blome was also to see for himself that there is no Chinese military base in Gwadar as of now, even though the security situation is highly unstable. The Pentagon, in 2022, warned that there could be a People’s Liberation Army (PLA) Navy base in Gwadar before long. More so, if Pakistan capitulates any further to China.

 But, first, before the US can consider fresh investments, there are the growing insurgencies. Almost to illustrate this, the same Pakistan Navy base Blome visited in Gwadar was also recently attacked by Balochistan militants. The Balochis have also attacked and killed Chinese engineers working on a dam at Dasu on the Indus river this month. This is in the sparsely populated Khyber Pakhtunkhwa region.

The Balochi militants routinely attack the provincial capital of Quetta, where the Chinese ambassador recently escaped an attempt on his life. They also do not hesitate to use human bombers in Karachi, again targeting and killing the Chinese, three teachers as it turned out.

All this, despite the best efforts of the Pakistan security forces. The Chinese have so far been disallowed to bring in their own security forces onto Pakistani territory, or indeed into Gwadar Port, other mining sites and Chinese population concentrations in Baluchistan. But the demand is renewed every time there is another terrorist attack on Chinese workers, officials and engineers.

The economic woes plaguing Pakistan have caused then to default on payments on power plants and infrastructure being built by the Chinese. The Pakistanis are also demanding a discount of $3 billion on the cost of a railway known as Main Line -1 from $ 9.9 billion to $6.6 billion. All this is putting pressure on the viability of the CPEC project, and has largely brought it to a stand-still.

The ambitious multiple roads, with industries, infrastructure projects, power plants, railways, pipelines, are only partially completed after more than a decade. And most don’t make any money making repayment of loans only possible via other loans.

The CPEC  main road snakes through India-disputed Pakistan Occupied Kashmir (PoK) and Gilgit-Baltistan, which could prove to be a choke point should India reclaim its territory, down to the plains of Pakistan.

The largely Shia population of PoK and Gilgit-Baltistan, like that of Baluchistan at the other end, are deeply unhappy with rough and ready Sunni Pakistani administration. The PoK/Gilgit -Baltistan native population that Pakistan is trying to swamp with Sunni Muslims from the plains, would rather be part of Jammu and Kashmir on the Indian side. They have been demonstrating to this effect.

Once on the plains, the CPEC carriageways run for over 3,000 km. to the deep-water port at Gwadar. The Chinese have succeeded in building the deep water port there, but it is still a-begging for cargo and usage, very much like their other white elephant port at Hambantota in Sri Lanka.

At least the Sri Lankans are not attacking the empty, if state-of-the-art port that Sri Lanka had to cede to China on its territory. The same cannot be said for Gwadar in Baluchistan, regularly attacked by terrorists armed with explosives, grenades and small arms.

The Baluchis have made clear that they see no benefit from the Chinese built port for themselves, lacking as they still are, in basics like electricity and water. The fishing in the area has been harmed. The air is polluted with coal-based power plants. The local population is constantly bullied by the Pakistani armed forces.  

The recent elections in Pakistan to the Gwadar constituency in the Balochistan provincial assembly saw Maulana Hidayat ur Rehman, leader of the Gwadar Rights Movement elected. This will now provide an official voice to the Baluchistan activists.

 Prime Minister Shahbaz Sharif is scheduled to visit Beijing shortly, and though he is well-experienced, will come under pressure on various aspects of the CPEC, the progress, payments, and security situation. However, China may well be caught between a rock and a hard place, having already invested billions. It is unable to make fresh investments now to keep up the pace of the project.

The geopolitical situation has also changed considerably for China, to its detriment, particularly since the Covid pandemic, and no easy solutions present themselves.

China is now recalibrating its belt and road initiative that has spanned 150 countries since 2013. It will now concentrate on smaller projects, and has spurned Pakistani proposals for more BRI projects via direct investment on its soil.

(1,263 words)

March 28^th, 2024

For: Firstpost/News18.com

Gautam Mukherjee

 

 

Why Are So Many Young Indian Students In Their Early Twenties Dying in the US?

Why are so many young Indian students in their early twenties dying in the US? The tally is nine so far in the three months of 2024 alone. Is it an outbreak of racism extended to the brown Indian student? Are they quite thoroughly unwelcome in America? If so, why do their Indian parents send them there in droves and at enormous expense? The expatriate Indian student community is the largest in the US and bigger than that of the Chinese.

Normally it is the American, Caribbean, and African black people subjected to murderous racist attacks, if one can call such savagery normal. The Black Lives Matter movement is a testament to the fact that rampant racism involving some institutions and the police departments persists in America.

To prevent violent attacks against Indian students and other Indians, [Gautam Mu1] the current Biden administration is committed to provide adequate security, both on and off campus, and in the community at large.

But do some Indian students put themselves in harm’s way by flouting cautionary advisories on dangerous areas?

Four Indian students have been done to death in a period of two weeks according to a news report date-lined 2^nd February 2024. They were 19 year old Shreyas Reddy Benigher from the Linder School of Business, Ohio, Neil Acharya of Purdue University, Vivek Saini from Panchkula in Haryana. The latest is Sameer Kamath, an Indian-American pursuing his doctorate in mechanical engineering in Purdue University again.

In addition, Akul Dhawan was found dead of hypothermia outside the University of Illinois UIUC in Champaign.

G Dinesh of Telangana and Nikesh of Andhra Pradesh were found gassed to death in their flat in Connecticut.

Kuchipudi and Bharat Natyam dancer Amarnath Ghosh, age 34, was shot to death in St Louis Missouri.

Paruchuri Abhijit of Boston University was found dead in his car, making up the 9^th senseless death so far in 2024.

There is at least one death of an Indian every day across the US says an American Community leader Mohan Nannapaneni, founder of volunteer based non-profit organisation TEAM Aid. These are mostly students and H-1B employees who have recently come to America. 

Are some Indian students lonely and feeling alienated far from home? Do some of them, unable to fit in socially or cope academically, persist in their studies there due to societal and parental pressures emanating from back in India? Though more often than not, Indian students who go to American universities are exceptionally bright and are there on earned scholarships. But are they mature and experienced enough in the Western cultural mores and milieu to avoid bullying[Gautam Mu2]  and ridicule? Sometimes, there are underlying mental health issues even amongst the gifted students which are activated by the pressures of academics and those of fitting in.

There are also those who die of physical illness and natural causes. Perhaps lack of seeking timely medical attention in an alien medical system is to blame. Again, this is a phenomenon that affects foreign students even here in India, because many tend to neglect themselves in the absence of relatives to keep an eye on them.

In January 2024, a young girl graduate student Jaahnvi Kandula was run over by a speeding policeman Officer Kevin Dave in a police car at a street intersection crosswalk in Seattle. To compound matters, the manslaughter caused by the police car being driven at 119 kmph was laughed off by another Seattle Police Officer Daniel Auderer, who said Kandula’s life had ‘limited value’. He dismissed  the proposition that officer Dave was at fault and that a criminal investigation was necessary.

The MEA in India has said a total of 403 Indian students have died abroad from various causes since 2018. The largest number of deaths occurred in Canada followed by Britain.

Several voices in India are being raised against the necessity of sending Indian students to study abroad. Perhaps the answer lies in sending them to better regulated and safer places such as Singapore where the spectre of racism is largely absent.

It seems that most of the White world, including Australia and New Zealand has a racist problem, that their governments are struggling to quell.

The lure of obtaining lucrative jobs in Europe and America by studying and graduating from their universities is under pressure now because of economic recession. The fact that many American corporations already have Indians in prominent positions or at the top is probably resented by the natives.

Unlike White immigrants, the Indian, by dint of his or her colour does not blend in. The Indian also tends to not assimilate into the great American or European melting pot. Tensions are bound to result.  

The answer may lie, at least in the medium term by setting up US  and European university campuses in India and West Asia. Till then, these are very real risks that Indian students and their families must face.

As for the H1 B visa employees, they too must weigh their pros against their cons. Of course, statistically, these tragic demises are not very large compared to the masses of students and employees who go to America.

The Indian diaspora in the West is now in millions after all, and many have found jobs in local, state and federal government as well as the judiciary and medicine.

Those who are already European and American citizens must organise to maintain their security. More so in America, a land where the first amendment allows everyone to own and use firearms. Nothing works better than a strong response and the perception that Indians are not timid pushovers.

(930 words)

March 22^nd 2024

For Firstpost/News18.com

Gautam Mukherjee

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 [Gautam Mu1]e

 [Gautam Mu2]

 

India Is Rebooting Into A Middle Income Economy

The country was startled in a good way by the announcement of 8.4% GDP growth for the third quarter of fiscal 2024. This was till December 2023, instead of the earlier estimated 6.5% for the same quarter. This, of course, is in the so-called ‘real economy’ that is benefiting from multiple structural changes over the last decade and the lack of any big ticket corruption.

 The Indian stock market, that has recently overtaken that of Hong Kong with a little over $ 4 trillion in market-cap, reacted by reaching fresh all-time highs on the Sensex and Nifty. But now, this cannot be labelled as mere exuberance, irrational or otherwise, froth, or a bubble, as in the past.

The number of Indian stocks that have tripled in value terms over the last decade and are worth $1 billion or more are 183 in number, making it No.1 for this feat. The next two positions have the US with 157 such companies and China with just 79. The US, of course has a $ 62 trillion worth of stock market and its biggest companies have a market-cap bigger than the entire Indian economy.

But in its place, the Indian debt and bond market is seeing significant foreign investor inflows, ever since it was included in the Morgan Stanley debt fund global indices in New York. Morgan Stanley has issued bullish statements on the Indian stock market and is overweight India. Likewise, Jefferies and a number of other international investment houses. A number of international allocation indices have halved percentage weightages for China, based on its economic decline and geopolitical tensions it has engendered, and doubled those for India. This should see sizeable investment coming in from abroad, despite so-called high valuations in the smallcap and midcap space.

In addition, the domestic institutional investors (DII) and the mutual fund industry has been pouring resources into the Indian stock market, keeping the market buoyant by buying on dips. The systematic investment programmes (SIP) into mutual funds have seen the influx of lakhs of retail investors and sizeable collective funds.

The foreign institutional investors (FII) who controlled 60% of the Indian stock market activity in 2016, now account for 40% of the larger market-cap, and cannot take the market up or down at will anymore.

India is rapidly turning into an ‘asset class’ on its own in the opinion of investment gurus, fuelled by growth figures of 15% per annum or more in a large number of private sector and now public sector companies too.

It is little wonder that John Thomas Chambers, the former CEO of Cisco Systems, one of the greatest successes of the internet era, thinks that India will have the largest economy in the world by 2047.

Chambers expects an accelerated partnership between the US and India to make this happen, along with taking artificial intelligence (AI) into the mainstream. Chambers also thinks Prime Minister Narendra Modi is the greatest leader in the world.

 The year FY 24 is now estimated to end with 7.5% GDP growth. This augurs well for the period after the general elections 2024, which the NDA is expected to win with a majority, because more bold economic reforms can be effected soon thereafter.

This continuity and expected stability of governance is another highly favourable factor for the increased thrust towards manufacturing including  those of the high value electronic chips. Three ventures are in the works, and several more are likely.

The rapid development of infrastructure has already reduced bottlenecks and a proportion of the logistical costs from a high of 14% towards a low of 8%. The China plus one initiative has gained ground with renowned manufacturers like Apple.  

India’s thrust on Make in India in defence manufacturing is bearing tangible fruit in a number of areas such as fighter jets, light tanks, armoured carriers, bailey bridges, radar, missiles, helicopters, military transport aircraft, bullet proof vests, howitzers, rifles, ammunition and so on.

Agriculture is in need of substantial reform but still has created a food surplus along with substantial exports of rice and other commodities to West Asia and beyond.

Exports in general, from manufactured and value added goods to services have vastly increased and are on a sharp upward trajectory.

Arvind Panagariya, the University of Columbia professor from New York, who was Vice Chairman of the Niti Aayog earlier, and has recently taken on the mantle of Chairman of the Finance Commission (that decides which state gets how much out of central collections and resources), and Vice Chancellor of the rebuilt Nalanda University, is ahead of the curve. While most analysts expect about 7% growth in GDP for several years going forward, Panagariya sees a potential to achieve 10% GDP growth per annum year-on-year. This is the coveted double-digit growth that took China to No.2 in the world, albeit over a much longer period based, not on a roaring domestic economy, despite a formidable manufacturing capacity, but exports to the West.

Eminent economists Surjit Bhalla and Arvind Virmani are calling India a middle-income economy now.

India, at just about $ 4 trillon in GDP, is already poised to become the 3^rd largest by 2030, just six years away. This, particularly with Germany, Japan, as well as several other European economies, slipping into recession.

India’s indirect tax, the Goods and Services Tax (GST) collections, a barometer of a growing legitimate economy, also rose 12.5%  year-on-year to 1.68 lakh crores in February 2024 for transactions conducted in January. The average monthly gross collection for FY 24 is steady at Rs. 1.67 lakh crores. As of February 2024 the total gross GST collection stood at Rs. 18.40 lakh crores, 11.7% higher than the corresponding period in 2023.

Going forward, GST collections of 1.7 lakh crores per month is likely to become the minimum if it doesn’t go higher.  This increase in taxes is likely to cushion, if not obviate any impact on the fiscal deficit from higher nominal growth rates as they come. Direct taxes similarly are seeing a noticeable increase too.

As of January 2024 the government has clocked up only 63.6% of its fiscal deficit target or 11.02 lakh crores in absolute terms. This leaves enough elbow room for the remaining two months of the fiscal year 2024. GDP at current prices in FY 24 is estimated to reach Rs. 293.90 lakh crores, up from Rs. 269.50 Lakh crores in FY 23. It is therefore clear, that the slow-down in the economy occasioned by Covid is now over.

As for those, like the Communists and sections of the opposition, who like to think that the rich are getting richer and the poor are getting poorer, there was other news. The percentage of people in absolute poverty amongst India’s 1.4 billion plus people declined to just 5% of the population. We are now within striking distance of abolishing absolute poverty. And the growth is becoming more and more inclusive of all sections of the population. At the prevailing growth rates let alone the double digit ones, the per capita income will also rise into multiples of what it is today and become more evenly spread.

Another news item stated that rural consumption figures have nearly caught up to urban ones. People there were now spending much more on non-essentials, lifestyle and so on. This is not surprising because of rising aspirations. The impact of not only greater disposable income, but the reach of satellite TV, social media on the internet, and the fact that over half of the billion plus  smart phones are owned by citizens from the rural areas and the tier two/ three, tier four towns now.

Barring impactful Black Swan events in a volatile geopolitical scenario, India is poised to make its Amrit Kaal period to its centenary in 2047, a truly transformative one.  

(1,300 words)

March 3^rd 2024

For: Firstpost/News18.com

Gautam Mukherjee

 

Anant Ambani Creates Vantara An Animal Sanctuary And Hospital In Jamnagar

Vantara or Star of the Forest, the spectacular new Ambani initiative, is inspired by the Sanatan Dharma concept of Jeev Seva.  Anant Ambani, its sponsor and prime mover, says there are specific animals associated with every deity in Sanatana Dharma, and all  creatures, great and small, are precious in Hinduism.

 Family patriarch Mukesh Ambani’s own deep and abiding interest in wild life and visiting sanctuaries in India and abroad with his family over the years, has sparked a grand new philanthropic project. That it is of of world class proportions is all the better, given the aspirations of the New India.

Vantara is Anant Ambani’s passion project, springing from a deep empathy for injured and abused animals. Anant is also a Director of Reliance Industries, his main day job. He is the younger son of Mukesh and Nita Ambani.

Anant also heads the Reliance Renewable Energy Project in Jamnagar designed to make Reliance Industries, heavily invested in petro-chemical refining and production, Net Zero Carbon by 2035.

Like other leading business groups such as Tata and Birla, Reliance has an increasing number of initiatives in the public space now. Other public initiatives include the running of an IPL cricket team, schools, hospitals, a spectacular centre for the arts and crafts, major sponsorship of temples and their betterment. Most of these activities are helmed by Chairman Mukesh Ambani, his wife Nita Ambani, their other two children and their growing families, who, like Anant, are prominent in the direction of Reliance Foundation as well.

The Ambanis have also created the world’s largest mango plantation in Jamnagar, a once semi-arid area in a backward part of Gujarat.

This latest initiative that is receiving global attention, is the brain child of Anant Ambani, who is also shortly getting married in Jamnagar. He prefers to live there these days, where he attends to Vantara and a plethora of other Reliance assignments. His bride to be, Radhika Merchant, is also keenly interested in the  Vantara project now.

Currently, Vantara is a sanctuary for over 200 injured elephants and other animal species such as leopards, rhinos and crocodiles. It will eventually breed  global endangered animal species to be released into the wild.

The project began on the ground in 2010, says Anant, with a 600 acre habitat for rescued elephants. It was started with special planting to replicate a space specially for the rescued pachyderms.

Later, a massive international quality elephant hospital, fully staffed with  specialists, including 50 expatriates, was built. It specialises in surgery, healing therapies, and rehabilitation. It has state-of-the art surgical equipment, robotic surgery facilities, giant hydraulic 7 ton lift platforms to raise the pachyderms. Anant visited over 30 ICU facilities abroad to formulate his ideas. The elephant hospital is equipped with portable x-ray and laser machines, a pharmacy, a pathology laboratory, a hyperbaric oxygen chamber. It provides Multani-mitti and hot oil massages. There are state of the art elephant shelters in the near area, day and night enclosures, hydrotherapy pools, a large elephant jacuzzi for arthritis treatment. There is a 500 strong team of veterinarians, nutritionists, pathologists, biologists, physio-therapists.

 In addition, there is a separate hospital for the smaller animals, similarly equipped with an ICU, MRI, CT Scan, X-ray, ultrasound, endoscopy, dental scalars, lithotripsy, dialysis and OR1 technology. So far, there are 1,000 crocodiles, and 2,000 animals across 43 species inclusive of felines, herbivores and reptiles.

Both hospitals could become important academic and research facilities for animal ailments, bio diversity, conservation, rehabilitation. Vantara expects to collaborate with International Union for Conservation of Nature (IUCN), The World Wildlife Fund (WWF), and others. It already works in close coordination with the Forest and Wildlife Departments of Gujarat, various Indian zoos and sanctuaries, and the entire forestry and wildlife universe in India.  

The area dedicated to Vantara is 3,000 acres that could go up to 4,000 acres and incorporate a zoological park for visitors in due course.

Vantara is near the mostly Nita Ambani supervised and built city for Reliance employees. In the rural environs of Jamnagar, a dozen new temples have also been built in the surrounding villages recently, in a region famous for its old temples.

Jamnagar, as the site of the now green-belt Ambani petro-chemical empire, was started by the Ambani visionary and founder Dhirubhai Ambani. He grew up himself some 215 km away in the coastal village of Chorwad, his humble ancestral  home renovated and recently turned into a museum by son Mukesh.

Jamnagar and its facilities and installations have been vastly expanded by Mukesh Ambani. It hosts the Reliance crude oil refinery, the biggest and reportedly the most modern in the world, and other Reliance owned petro-chemical complexes. There are also state of the art shipping export infrastructure in the nearby port.  

Anant’s passion project Vantara gained further momentum during the Covid years, he says, when a new non-profit trust was born. Vantara is closed to visitors for the benefit of the rescued animals brought here, and of course, the wildlife and bio-diversity conservation research it engenders.

Vantara provides direct and indirect employment to over 10,000 people who grow the food for the elephants, cook for all the injured animals, feed them, heal them with allopathic and ayurvedic medicines and other therapies, befriend the abused animals, and keep them secure from any threats.

In time Vantara and its expertise aims to improve all the 150 plus animal sanctuaries and zoos in India in terms of training, capacity building, and animal care infrastructure. One day soon, with multiple international cooperation already in the works, Vantara could lead the world in its unique Sanatani Jeev Seva space.

(933 words)

February 28^th, 2024

For: Firstpost/News18.com

Gautam Mukherjee

 

Minimum Support Prices Have Outlived Their Utility

Even as the government has called for a fifth round of talks, and the farmer protestors are bent on resuming their push to Delhi, the Minimum Support Price (MSP), remains the central issue.

 MSP was introduced at the time of the Green Revolution in the 1960s. It was in order to spur on the efforts of farmers in Punjab, parts of Haryana and Western Uttar Pradesh, specifically chosen for the purpose, because their lands were already well irrigated.

India’s food situation was in dire straits at the time, and the country was dependent on America providing wheat, rice, milk powder and the like under their PL-480 food aid programme. Since then, India has come a long way, despite a quadrupling of its population from 1947. It is not only food surplus now but is the world’s biggest exporter of rice among other things.

Over the years, it is farmers from these three states, some 6% of the total, numerically, ruled by a miniscule rich farmer nexus, that have been the principal beneficiaries of MSP.

It is this collection of farmers, that is now demanding even more benefits beyond the existing MSP, free water, electricity, nil taxation, regular increases in MSP rates, and other subsidies and grants from the government.

Of course, the world over, farming is a highly subsidised business, but in the developed countries there has been massive collectivisation of land holdings, mechanisation, modern scientific methods to produce high yields, and some 1-4% of their much smaller populations produce all the food for consumption and export.

In India, by way of depressing contrast, over 50% of the population, some 70 crore people, are engaged in agriculture, and still only contribute some 12-14% to the GDP. It is a highly inefficient sector even 75 years after independence. It is also very difficult politically to reform agriculture and push a majority of the rural population into urban areas for other, more gainful occupations.

The bulk of the crop purchased by the government under MSP still constitute wheat and paddy from semi-arid Punjab and environs. It still uses scarce canal and ground water as it did in the 1960s. Even though there are much better rain-fed areas that grow a surplus of both wheat and paddy today but the Punjab farmers want to corner most of the MSP.

This procurement is, in turn, used to service the public distribution system (PDS) for rations to poorer consumers at subsidised prices, as well as free rations to millions of the poorest.

The rest of these ‘cereal’ crops, if any is left over year to year, after the spoilage from exposure to the elements and rodents,(because of inadequate government storage facilities), is sold in the open market. It is sometimes exported too, particularly rice and wheat. Some of it is retained, as buffer food stocks. Other items like onions, produced mainly in Maharashtra, are also exported. Fruit exports include mangoes. Indian goats are much in demand in West Asia.

The debate on MSP has hotted up once again with a plethora of opinions being offered by a wide selection of people. The ongoing farmer agitation, led by those from Punjab, is picking up where the last episode left off two years ago. In the last encounter, the agitators, led by vested interests determined to maintain the status quo, refused to allow three farm laws from being implemented. These were designed to reform the sector to benefit the vast majority of agriculturists and increase farm income across the board. Emboldened by that success, the same elements are back with a long list of audacious demands.

These include pensions for some 50% of the Indian population engaged in this low output agriculture from the age of 60 and beyond. They are also asking for comprehensive farmer debt waivers. There is also a bizarre demand that India must walk out of the World Trade Organisation (WTO).

The MSP being asked for now must come with a legal guarantee. It is also a much more expensive MSP. The new demand is for implementation of an unrealistic pricing formula, based on suggestions made by the late Dr. MS Swaminathan, the father of the Indian Green Revolution. If implemented, the new MSP would shoot up the retail food prices by an estimated 30%. However, the government is keen to negotiate a veering away from the cultivation of wheat and paddy in Punjab.

The government is in no position to agree to raised MSP for wheat and paddy from Punjab with guaranteed offtake of all that the state can produce. If they do anything like that most other development initiatives will suffer great harm, inflation would run amuck, the fiscal deficit would soar.

It can however buy other crops at MSP in order to encourage a badly needed diversification. It will take time to ramp up in volume terms and may actually strengthen the economy.

Wheat and paddy at high MSP on the other hand, would land India into an internal debt trap worse than what the Chinese have imposed on various countries.

Since MSP has been retained as a political hot potato ever since it was introduced, it is time for it to do some good in terms of present day requirements.

Early efforts of the government to try and bring about a shift in MSP covered crops from just paddy and wheat towards pulses, maize and cotton have been swiftly rejected by the farmer unions, overwhelmingly from Punjab. But the government wants to enter into a fresh round of talks to nudge this objective forward.

The farm unions from Punjab bent on their wheat and paddy seem unconcerned about the imminent desertification of their state with the water table having gone down by over 25 meters already.

The Trojan Horse of 22 or 23 crop items on the protestor list does not reveal that nearly 70% of the MSP is expended on the procurement of just paddy and wheat from the original Green Revolution belt plus Madhya Pradesh now. This needs to change in favour of some of the other 21 crops on the list and procurement from several other states in addition.

Unfortunately, the government’s procurement system has failed to energise the cultivation of pulses so far. These are imported to make up for the shortfall in these staples, in three types of commonly consumed dal.  The Indian government also imports copious quantities of palm oil for example, and could save a lot of foreign exchange if it could catalyse higher Indian production.

A number of hypothetical calculations on the impact of the various demands are doing the rounds. The MSP as it exists have given rise to several market price distortions.

In some cases, and some crops, the market prices have been higher, implying that the small farmer, for example, may prefer to sell outside of the government procurement system. Likewise, some of the rich agitators too, if they agree to grow anything beyond wheat and paddy. In other instances, MSP is higher than prevailing market prices, involving a government procurement outgo if all the output is to be mopped up. But naturally, prices cannot be static, both domestically and internationally from season to season, year to year.

In the end, and under the circumstances, with the MSP historical precedents in situ, the government is on the right track to use this agitation as an opportunity to  try and incentivise reform. The agitators in turn must realise that their room to force their point of view on the government is actually quite limited.

(1,255 words)

February 21^st, 2024

For: Firstpost/News18.com

Gautam Mukherjee

 

 A Witch’s Brew:  I.N.D.I. Opposition, Congress, AAP, SP, Canada-backed Khalistanis, Pakistani ISI, Islamic Jihadis, Chinese & Soros Money, Maoists, NE Separatists, Leftist International Media, All Fuel Punjab Farmer Bosses in Farmer Agitation 2.0

The I.N.D.I opposition is in tatters with entire parties and prominent individual leaders deserting it frequently. Rahul Gandhi’s East-West Bharat Nyaya Yatra  is a damp squib. Other efforts from the DMK in Chennai and the Congress in Karnataka, both seeking to promote poisonous and divisive agendas, have also failed to gain any traction.

Meanwhile, the ruling combine has been notching up one success over another, and is poised to win the 2024 elections with a larger majority than in 2019.

 But here comes a significant and emotive disruptor. In utter violation of democratic norms of measured negotiation, Supreme Court directives against demonstrators blocking highways, imposition of Section 144, the Punjab Farmer bosses are about to lay siege to Delhi once again.

This is flying in the face of three union ministers, Piyush Goyal, Arjun Munda and Nityanand Rai, camped in Chandigarh, engaged in negotiations with the farmer unions. They have already agreed to the MSP demands but have not got around to the rest. The agitators seem keen on a confrontation rather than negotiated settlements.

Predictably, so far, all attempts have failed to avert the march on Delhi, further Bharat Bandhs and threats of violence. Meanwhile, hordes of turbanned Sikhs have arrived at the barricaded Shambhu border already, and the police are busy dispersing them with tear gas.

Ostensibly, this time, the government is determined to end this agitation at the earliest. It has readied a stadium to act as a temporary detention centre for any protestors that do get in to Delhi.

The agitation named ‘Delhi Chalo’ is a march composed of people of dubious provenance that claim to represent India’s farmers. They  are apparently Punjabi Sikhs in turbans laying a bogus claim to representing all.

Some, from the Samyukta Kisan Morcha, held a televised press conference on the 13^th of February, and exhorted other farmer and other groups/ unions affiliated with the BJP to join their agitation. This clearly indicates they are supported by anti-government forces.

They are converging on Delhi with over 1,000 tractors and trolleys, some reports say 2,500, with enough provisions and rations to settle in for six months. The financing for such substantial mobilisation and elaborate bandobast, has come in, most like from the anti-Modi government forces, both in the country, and from abroad. It is absolutely déjà vu.  

Will the central government end up conceding the points raised by the protestors once again? Yes, if the infamous roll back of the Farm Laws is anything to go by.

That controversial, politically calculated capitulation of two years ago, may have emboldened this mobilisation in February 2024. The timing is shortly before the Model Code of Conduct imposed by the Election Commission (EC), goes into force. This could happen by March. After that no major initiatives will be permitted.  But still, these agitators plan to dig in for six months.

The Delhi Police has sealed all the main routes into Delhi with barricades and other elaborate fortifications. But this will disrupt other legitimate traffic, trade and supplies causing heavy losses, like the last time. Some protestors can get in by the lesser routes too.

The assembling of apparently over a 100 farmer unions, some reports speak of 200 unions, from Punjab, supported, allegedly by an equal number of labour unions, have suddenly sprung up.  Each of these unions however must necessarily be quite small. This prompted the government ministers to question their representativeness, before going on to discuss their demands.

This is not an all India stir by any means, and is principally centred  in Punjab. There are no people purporting to be farmers from other states at all, except some opposition led elements from Haryana and Western Uttar Pradesh who may turn up like last time, as this goes on. This is trying to grow into a replica agitation of the one to protest the three Farm Laws two years ago. The laws were rolled back by the central government under immense pressure.  

Ostensibly, this agitation is to demand guaranteed Minimum Support Prices (MSP) for a large number of crops, farmer and farm labour pensions, debt waivers, compensation for those killed in the clashes of the last farmer agitation at Lakhimpur Kheri, possibly a ban on privatisation of farming if it is being contemplated, other lesser demands. The fiscal impact of conceding all these demands could be considerable and impact the GDP growth projections.

The entire crowd so far seems to consist of Punjabi Sikhs. Punjab is ruled by the opposition Aam Aadmi Party (AAP), which is supporting the agitation. Is this then merely a political stir encouraged by the AAP?

The AAP is embroiled in a liquor Scam and multiple other corruption? Several of their ministers are in jail including the Delhi deputy chief minister. Chief Minister Kejriwal has been dodging summonses from the Enforcement Directorate (ED).

The Congress Party, in competition with the AAP in Punjab for the forthcoming Lok Sabha elections, is also offering a degree of support to the Delhi Chalo agitation, motivated perhaps by the pressure that is being applied on the central government.  

The BJP, and even the Akali Dal that may be thinking on rejoining the NDA, have little electoral possibilities in Punjab.

In Haryana and Uttar Pradesh however, BJP is in a strong position. So, the central government has no great reason to cave in to these gun-to-the-head tactics. Of course, the public relations fallout of a renewed and prolonged farmer agitation is a relevant political factor.

Given the prominence of the Punjab Sikhs in this stir, most probably financed and supported by a bouquet of anti-NDA forces, the question arises, are they the only farmers in India? Why are they routinely pampered ever since the Green Revolution engineered by MS Swaminathan, even though many other states have become major agricultural contributors since.

The anti-India forces that could be behind this stir include Canada based Khalistanis, drug dealers and underworld forces from Punjab and Canada, the Pakistani ISI and their Islamic jihadist assets in the country, Chinese moles in-country, Maoists, some North East separatists, Chinese money and arms, the Congress Party, The Samajwadi Party, George Soros and his money, Kashmiri separatists abroad, the foreign leftist media such as  The Washington Post, New York Times,  The Guardian, Economist, the BBC, Time, Newsweek, Al Jazira, some academics in America, parts of the OIC and Turkey.

As one can see, the list is quite long, and not necessarily exhaustive. Many of these people think the prospect of a third consecutive term for Prime Minister Narendra Modi and the Hindu nationalist NDA is a threat to their world view, particularly with India’s current buoyant economic prospects. Strategically, a weaker central government in India would make it more biddable for the Western forces and China alike. These apparently agricultural agitators at Delhi’s borders, are regarded as convenient cat’s paws by such forces.

(1,110 words)

February 13^th, 2024

For: Firstpost/News18.com

Gautam Mukherjee

 

Interim Budget 2024 Stresses Growth, Reduction of Fiscal Deficit & Inflation

No, Finance Minister Nirmala Sitharaman did not runaway with the ball. This, for an interim budget and vote-on-account with its constraints and conventions.

Sounding, for all the world, like she was presenting the Economic Survey, not done this year because of the impending general elections, she slipped in as much self-advertisement for the government as she could, that would not attract special notice or criticism. Everybody kept their remarks short, from Sitharaman to the prime minister. Many other government big wigs didn’t speak on the interim budget at all, leaving it to the denizens enjoying the CII lounge.

Still, like a good shepherd, the government, acutely aware it has the fastest growing economy in the world now, intends to keep it safe, with all its gains intact. It also aims to keep all its emphases and thrust areas on course and has upped the ante slightly in all of them.  

There is an effort to broad-base the growth drivers to various other parts of the economy such as dairy farmers, fisheries, housing, 600 crores more for the hydrogen mission, 8,500 crores more to Solar, more aviation and aeroplane orders, more airports. This, in addition to the infrastructure main thrust areas of connectivity, roads, railways, bridges, metros, ports. Include therefore the people-friendly many yojanas, with several mentions of Nari Shakti with attendant incentivisation.

The BJP must be surveying the reception to such yojanas for efficacy -but for the media-reading public, much of it appears like a propagandist jamboree that somehow delivers more BJP votes. Playing it close to the chest is practically DNA to the top brass.

There is now a general call for greater private sector participation in various areas to introduce competitiveness, efficiency, design, style. But, apart from Adani, Ambani and Tata, we cannot be sure whether they will attend. Congress will carp on crony capitalism, but why don’t they get one of their own to come forward.  DLF, anyone?

The habit in the private sector, is to ask for interest reduction and other concessions, never mind what it does to the budget deficit. They could miss the bus of course, with the sarkar continuously doing all the heavy-lifting.

But, as Nadir Godrej said, the private sector will first build additional capacity, if required, in whatever they are involved in.  Unsaid is the fact that the last time the private sector went into infrastructure, the projects were stuck for funding, as were their bills. But this was when their favourite ideological UPA government was in-charge, corrupt but ruling, and  well before Modi Raj began in 2014.

Development of Lakshadweep has found mention here for both tourism and strategic reasons, this prominently, for the first time.

Manufacturing, slated to grow into another 5% of GDP, will get a basic, enabling thrust, with a large, Rs. 1 lakh crores for research and development (R&D), for the first time. Repayable in 50 years, making it practically a grant.

With automobiles accounting for about 50% of manufacturing in India, this R&D funding could come in handy for the development of components and other items in the value chain both for industry consumption and export. Companies like Volvo, Mercedes, Audi, BMW, Toyota, Suzuki, Hyundai, which are ensconced in automobile manufacturing and assembly in India, need to be further encouraged to become global hubs operating out of India. Will the government take Arvind Panagariya’s advice in July, and lower tariffs at least in line with the ASEAN countries?

The overall logistic costs are to be brought down from 14% to about 8% with the ongoing efforts of this government on road, rail, air, port infrastructure. This is commendable, dramatic, because it is now credible, and will have profound consequences on the confidence generated amongst foreign investors in India-based manufacture and export.

The stress on government capex continues, will another Rs. 11.1 lakh crores allocated.This was the biggest announcement, and is indeed less than the 13 lakh crores it would have been, if the momentum of the present fiscal was to be maintained into 2024-25. However, the sector accounts for almost 4% of GDP now, and is the main growth driver.  

The government is cutting its market borrowing programme in fiscal 2024-25 to reduce its debts, as the private sector investment increases, compared to before. This indicates greater confidence in the economy. Some of the government’s friends, big boys all, are not afraid.

Meanwhile the government’s fiscal deficit, at 5.9%, is to be reduced to 5.1% in 2024-25, en route to meeting the target of 4.5% in  FY 2025-26. Will this mount 5.1% lead to interest rate cuts? RBI Governor Shaktikanta Das, most likely, will not react to intentions, and wait for the attainment of 5.1% first.

All changes in direct and indirect taxes remain untouched for now, but the implication is that there may be some benefits announced in the full budget of July 2024.

Prominent mention of rooftop solar for one crore households to generate 300 units of free electricity, with connectivity to sell overages, has enthused the energy stocks such as IREDA, Websol Energy, Suzlon Energy and Sterling and Wilson. However, this initiative may do better in the countryside and new construction in smaller towns and cities. The technology associated with solar panels also needs to evolve.

Likewise Electric vehicle (EV) stocks rallied on the reiteration of adoption of EV in public transport. India is also working hard on green hydrogen technologies as an alternative to EVs.

Interestingly, divestment targets, after the success of returning Air India to the Tatas, have actually been reduced. There are more important things for the government to concentrate on, with a dramatic turnaround in many PSU stocks connected with aatmanirbhar initiatives and defence manufacturing.

The middle class will be helped to build their own houses or purchase their dwellings. But there is no indication that the government intends to ramp up the real estate sector in general, despite its potential of becoming a massive employer of skilled and unskilled jobs, if it goes up from the $ 120 billion at present to $ 1 trillion by 2030. Millions of people, men and women, from the rural surplus could be absorbed, apart from those who go into management, sales and so on. It would need incentives, loans, industry status.

Small disputed income tax demands, some going back to 1962, and subject of much contention, have been withdrawn for up to Rs. 25,000  till FY 2009-10 and Rs. 10,000 up to FY 2014-15. This is a welcome thing, but a curious and somewhat trivial item to introduce here.

Defence stocks, Railway stocks, declined somewhat, probably not excited by the steadiness of gait. Where are the huge bump-ups in expenditure? However, the announcements showed that investments are slightly enhanced and are continuing. Railways will get more trains. Defence manufacturing gets more money, the budget upped by 4.4 %.

Unexpected money is going into Solar, EV, Nari Shakti, middle class housing, and all this has been well received.  The large-scale induction of the female population into the work force could add 1 to 1.5% to the GDP. Can this be achieved in the period 2024-2029?

 

(1,184 words)

February 1^st, 2024

For; Firstpost/News18.com

Gautam Mukherjee