Quad is becoming a key post-Covid coalition

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Quad is becoming a key post-Covid coalition

China’s global standing has taken a hit. New alignments are getting firmed up

14/05/2020

 

Quad-core is part of computer vocabulary, but may equally apply to the heart of a post-coronavirus pandemic world order. The United States (US) has been holding high-level conversations with clusters of governments about the coronavirus disease (Covid-19) and what comes after. India was party to the most recent one, a foreign minister-level meeting, which also included Japan, Australia, South Korea, Brazil and Israel. A regular weekly meeting is now held at the foreign secretary-level, which replaces the last two (Brazil and Israel) with New Zealand and Vietnam. What is common to both are the four members of the Quadrilateral Security Dialogue, generally called the Quad. If this pattern continues, it will indicate Washington and the three other members see as a cornerstone of a post-Covid-19 world.

The Quad is far from being a group with a coherent purpose. What has happened is that all four governments have come to accept that they are strategically committed to the organisation. India’s concerns that Australia lacked a domestic consensus on the Quad is a case in point. China’s global standing is much reduced by Covid-19, a status aggravated by its bullying tactics, and has left a space for this sort of alignment. Of all the members, New Delhi will be least interested in talk of an alliance. It has arguably the best working relationship with Beijing and alone lacks a formal US military relationship. However, this is a foursome that has begun to evolve rapidly into something larger than the sum of its parts and, rightly, is being kept on the top of the stack of geopolitical options.

Boosting the economy

The first part of India’s ₹20 lakh crore economic package was announced on Wednesday — the second, if one factors in the relief to the poor and marginalised announced in late March, and the Reserve Bank’s announcements in March and April — and it provides some indications on what the government hopes to achieve. That the Narendra Modi government would focus on micro, small and medium enterprises (MSMEs) was a given. Its first package focused on individuals at the bottom of the pyramid. It was only natural that that it would then turn its focus to enterprises at the bottom of the pyramid. The package offers small enterprises easy credit, guaranteed by the State; support for those weighed down by loans they can’t service; and an equity infusion. It also redefines them, removing a disincentive to grow (and be competitive), and reserves business for them by not allowing global tenders for government purchases less than ₹200 crore. All of these — credit, competitiveness, and an emphasis on the local — flow from the prime minister’s speech on Tuesday.

The extension of three more months (June, July, August) provident fund support for businesses and workers — in companies employing fewer than 100 people, with 90% earning less than ~15,000 a month — is effectively a 24% wage support to small enterprises, and the reduction in the contribution of both employees and employers in other companies to the provident fund (from 12% to 10%) will provide ₹6750 crore of liquidity, split equally between companies and employees. Liquidity was another theme in the prime minister’s speech on Tuesday. The measures also tackled the issue of a looming crisis in the shadow-banking sector by providing it with a fully guaranteed ₹30,000 crore special liquidity scheme, and a ₹45,000 crore partial credit guarantee scheme. There was also a focus on real estate and power, both extremely stressed sectors.

Finally, in an attempt to put more money in the hands of people, the government announced a 25% reduction in tax deducted or collected at source, but only for non-salary payments. This covers everything from interest on fixed deposits to dividend and rent payments, and will result in ₹50,000 crore more flowing into the system (which people will hopefully spend). This is perhaps the best directed part of the measures announced on Wednesday, and the only one that will help the middle class. More such measures, that either cut tax, or actually transfer cash to individuals and businesses, will be needed to spur demand and get the wheels of the economy chugging.

Why PM Modi’s address is historic

Prime Minister (PM) Narendra Modi has gone beyond expectations. His address to the nation on May 12 will perhaps mark the day when India embarked on the path of converting a global crisis into an opportunity to accelerate its economic transition and build on the solid foundations laid in the first term of this government. This will involve eliminating poverty, improving equity, and raising the living standards of the population in line with their aspirations. It promises to be historical.

The PM announced a package of ₹20 lakh crore or nearly 10% of GDP to trigger economic growth in the post-coronavirus disease (Covid-19)-induced pandemic period to protect the interests of those affected by the extended lockdown, which was critical in the face of the pernicious virus. In doing so, he has overcome conservative impulses within the establishment and laid the ground for a paradigm shift. It is clear that we cannot continue to operate within self-imposed fiscal constraints. Across the world, these are being discarded in response to the deteriorating economic situation. Fiscal prudence has to be understood in a dynamic perspective. It can be achieved by reversing the slackening economic growth rate, rather than through a continued reduction in public expenditure in response to declining revenues. That would be the certain path to a vicious downward growth spiral from which it would take years to rebuild the economy.

But the unexpectedly large fiscal stimulus package is only one of the components of the PM’s address on May 12. For me, the promise to undertake bold structural reforms and jettison the incremental approach holds an even bigger promise for India to regain its growth momentum. Without these bold reforms in areas such as land, labour, liquidity and laws, the fiscal stimulus risked being wasted in a one-off consumption hike, whose growth impulse would taper off quickly. With bold structural reforms, the proposed increase in public expenditure will help attract fresh private investment to build new production capacities, raise productivity by absorbing frontier technologies and promote equity through higher efficiency in the delivery of public services. The Bharatiya Janata Party (BJP)-governed states have taken the lead by introducing a slew of labour market reforms that will give flexibility to investors to tailor their workforce in line with changes in seasonal demand and output.

These bold reforms will also underpin the PM’s call for a self-reliant India, but one which is not self-centred and protectionist. He made it clear in his address that India will continue to participate even more aggressively in global value chains on the basis of greater competitiveness of its domestic firms and industries. This will call for encouraging local production, building local brands, improving logistics and lowering energy costs for domestic companies. This will enable them to achieve economies of scale and technological sophistication for successfully competing in global markets.

The PM’s emphasis on India’s continued engagement with global trends in commerce, finance and technology is surely an effective and decisive response to those raising fears of India turning protectionist. Self-reliance with continued participation in global markets and value chains will be the mantra going forward.

His call for promoting local products so that they become global brands and capture a share of international markets is timely. As new capacities are created locally, the support from the consumer will propel them to achieve global qualities and scale. The domestic market, though large and growing, is still not enough to afford global scales of production and economies of scale.

India’s software industry came of age and achieved global scales and competitiveness with the Y2K phenomenon, mentioned by the PM in his address. Duties on hardware imports were reduced and software companies were supported to achieve this breakthrough. Similarly, India’s readymade garments industry achieved its present scale and competitiveness only through catering to global demand. It should be evident by now that Indian consumers are a discerning lot who are acutely price and quality conscious. The bold reforms emphasised by the PM in his address will help Indian firms to meet the demands of the local consumers while gaining share in global markets.

We should not lose sight of the fact that the challenge has just begun. There is a difficult road ahead of us with the global economy showing signs of a perilous downward slide which could well be as steep as in the Great Depression of the 1930s.

The pandemic’s full impact on the global and domestic economy is still not fully known. In the coming days, we have to constantly be on guard, looking out for emerging risks and opportunities, and responding with agility and focus on these emerging trends. We have started a paradigm shift, which will take us in the direction of becoming a global player by focusing on our strengths and rooting our policies in our own ground realities. We will thus actualise the PM’s call for converting this crisis into an opportunity.

Securing Aarogya Setu

Securing Aarogya Setu

The Aarogya Setu application was born out of a need to bring a 21st century technology-based solution to an unprecedented problem. India is not alone in deciding to leverage the ubiquitous smartphone for tracking outbreaks, a strategy that fundamentally involves a compromise with privacy. But it is the only democracy which has, without the requisite legal architecture in place, made the app almost mandatory for mobility and to resume work. This compromise is evidence of how the Sars-Cov-2 has upended conventional disease containment efforts, with a higher degree of government supervision, and even control, over the lives of citizens than usual. But it is crucial that this necessity does not lead to a lasting change in how we approach privacy. By design, the app goes a step further than most such tools developed around the world. It tracks where people have been, instead of merely determining who they were in close contact with. While such functionality can theoretically help identify disease hotspots, it will need to be corroborated with the exactness of physical contact tracing.

The other concern stems from the nature of computer programmes. They are prone to vulnerabilities, particularly in early iterations. This was proved by a French programmer who demonstrated the possibility of accessing parts of the Aarogya Setu app that store a person’s contact records. Common cybersecurity and hacking techniques have proven capable of reverse engineering such data to dig out information that was meant to be hidden. What the researcher demonstrated was the penultimate step before someone can be traced without the need to break into a government database. An increasing number of countries are discovering flaws — in design or code — and are going back to the drawing board. The United Kingdom’s National Health Service is considering abandoning its version of a centralised contact-tracing app, where data is sent to government servers, to switch to the decentralised platform being developed by Apple and Google, where data is matched on phones.

As the approaches around such tools evolve, India must look at the experiences and experiments in other countries. One of the main demands by privacy as well as cybersecurity experts around the world is to throw open the code behind these contact-tracing applications so that they can be audited for design and programming flaws. At the very least, the developers of Aarogya Setu must consider doing this, since it will not only be a step toward transparency but also help quash bugs. After all, the current gold standard of such tools, Singapore’s Trace Together, is an open-source programme. Beyond this, India must seriously contemplate a legal design around the app, which strikes a balance between disease containment and privacy.

Women: The invisible face of hunger

Sunita Haldar lives in a village in Fulia district of West Bengal. Her husband migrated to Kerala and she supports herself and her three small children by working in a weaving shed. Now, there are no orders and she and the children are getting by on one meal a day.

Sayidabano stitches garments for a contractor in Ahmedabad and gets paid on a piece-rate basis. Her husband died of tuberculosis five years ago. Her eldest son is 15 years old and she wants to give him an education so that he can earn well and support the family. But now, she has no work and her savings are over. She depends on her neighbours for rations.

Multiply these pen portraits of struggle and deprivation a million times, and one gets to see the invisible face of hunger. And that is the face of a woman. The coronavirus disease (Covid-19) lockdown has revealed the precarious lives of a large number of people. Migrants, mostly men in cities, are the visible face of hunger and despair we see every day in the media. The women left behind in the villages, while their menfolk migrate, are equally deprived of food and cash. In normal times, these women continue to work, while the men are away. They look after their own small farms, manage their cattle and other livestock; they are agricultural labourers or small manufacturers doing weaving, garment-making or embroidery; they are domestic servants or provide other services like child care.

Then suddenly, abruptly, came the lockdown. And women found themselves without any means of support. The remittances stopped as the migrants grappled with their difficult situations in cities. At the same time, women’s own incomes collapsed. Women who grow vegetables found that they have no way to take them to market; all manufacturing came to a halt, labour was no more in demand; and although the government has mandated the starting of the Mahatma Gandhi National Rural Employment Guarantee Act, this has hardly happened yet anywhere.

The slums and mohallas of urban India hide equally hungry women and children. Perhaps the most affected are the women who are the sole earners in their families. These are widows or those whose husbands or fathers cannot earn due to illness, or sometimes due to addictions. They work as domestic help, street vendors, construction labour, ragpickers or engage in small manufacturing in their homes and bring in money to support their children and the elderly in the family. Even in normal times, they are on the edge of survival. Now with their work gone, hunger stalks their homes.

Governments have instituted systems by which grains are widely available for families with ration cards. For those without cards, many state governments have systems for filling up documents using the Aadhaar card or other local documents of proof, through which families can access grains. However, a certain percentage, usually the most vulnerable, are outside the zone of this security net. Sometimes, it is due to not having a ration card or even an Aadhaar card; often it is due to the problems in distribution. The central government had announced various cash transfers including ~500 into women’s Jan Dhan accounts. But here too, many fall through the net. In a study done by Dalberg, a global consulting firm, in mid-April among the 18,000 of the poorest, the Indian below poverty line families, it was found that 45% had not received free rations. And over 70% had not received cash payments into their Jan Dhan accounts.

This is not all. Other stresses crowd in. Since money is tight, and the period of lockdown uncertain, there are often quarrels in the house about how to budget and on which items. Women usually bear the brunt of these arguments, and face both mental and physical violence.

There is, however, a group of invisible people who are ready to reach out to these hungry families. Within every community, there are those who do their best to ensure that others receive food.

Many of the volunteers are women like Sarabjit Kaur, a widow who lives in a village in Patiala district with her son. She is primarily a domestic worker, but also cooks for weddings and events and works as agricultural labour to make ends meet. As soon as she heard about the impending lockdown, she identified all vulnerable families in her community immediately and conveyed this information to the local non-governmental organisations and political leaders. These families received ration kits on a priority basis.

There are countless such Sarabjit Kaurs throughout the country, and they should be recognised and asked to become part of the government’s distribution system, so that food can reach the last woman.

Om namo shivai

Om namo pitai