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India, Energy&$: BRICS DILEMMA FOR TRUMP, By Shivaji Sarkar, 14 July 2025 |
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Economic Highlights
New Delhi, 14 July 2025
India, Energy&$
BRICS DILEMMA FOR TRUMP
By Shivaji Sarkar
The “King Dollar” is feeling
threatened—not by a rival superpower, but by a non-currency from BRICS. In
response, President Donald Trump has proposed a 10 percent additional tariff on
imports from the bloc. The threat may seem minor, but Trump’s reaction tells a
different story.
Much like the mythical tale of a dwarf
almost defeating Arjun, the Mahabharata’s warrior-hero, BRICS—despite lacking a
common currency—has rattled Washington. Why else would Trump warn that losing
the US dollar as the global standard would be akin to losing a “major world
war”?
This is not just bluster. It signals a
grave threat in the making. Trump's brand of America First nationalism is again
squaring off against an emboldened, expanded BRICS alliance. This isn’t an
ideological standoff of capitalism versus socialism; it’s a structural
battle—unilateralism versus multipolarity, petrodollar dominance versus
de-dollarisation, US-led hegemony versus a Global South resurgence.
At the heart of this confrontation
lies an entire worldview. BRICS—now expanded to include Iran, Egypt, Saudi
Arabia, Ethiopia, and the UAE—represents over 40 percent of the world’s
population and more than 30 percent of global GDP (PPP). Over the past decade,
BRICS has swelled from five to ten members, with Indonesia joining this year.
Saudi Arabia is listed as a member but has yet to formally confirm its status.
Additionally, nine partner countries and dozens more are queuing up to join.
Trump, who scorns multilateralism and
prefers bilateral muscle-flexing, views this growing coalition as a direct
threat to the post-World War II American-led order.He once threatened sanctions
on European firms dealing with Iran. Now, with BRICS pushing for a bloc payment
system, potentially involving a basket of mutual currencies, his old playbook
of dollar leverage is under siege. No surprise, then, that he's talking
tariffs, global tax threats, and trade punishments for states that defy
Washington’s currency diktat.
At its latest Brazil summit, BRICS
made two significant moves: first, calling for a replacement of the Bretton
Woods institutions; second, backing the IMF’s 16th General Review of Quotas,
urging swift implementation. More provocatively, it extended strong support to
Iran in its confrontation with Israel.The joint BRICS statement pulled no
punches, condemning the US-Israeli bombardments of Iran in June as a “blatant
breach of international law” and advocating for a Palestinian state. Though it
remained silent on the Russia-Ukraine conflict—where Russia is a central
actor—it criticized Ukrainian strikes on Russian territory.
Meanwhile, on July 11, India under
Prime Minister Narendra Modi revised its proposal to impose retaliatory duties
under WTO provisions in response to US tariffs on steel and
aluminium—especially after Trump announced additional hikes. New Delhi’s move
to suspend concessions is intended as a bargaining chip at continuing trade
talks.Still, trade among BRICS nations remains modest. Intra-BRICS trade
accounted for just 3 percent—about $1 trillion—of the global $33 trillion trade
volume in 2024. India’s combined trade with Brazil and South Africa stands at
around $31 billion.
Dollar dominance still looms large
over global commerce. But in this context, the BRICS initiative is undeniably
bold.Ambitions like a gold-backed common currency, dubbed the “Unit,” have
stalled. India, wary of China’s yuan hegemony, has rejected the plan. Brazil,
the 2025 summit host, also prefers local currency trade over a single BRICS
currency.“India, together with Brazil, is trying to balance the anti-Western
messaging from BRICS, which is dominated by China and Russia,” says Alicia Garcia-Herrero,
chief Asia-Pacific economist at Natixis.
Meanwhile, Trump seems determined to
turn the clock back—reviving a unipolar world where the US remains the de facto
and de jure global power. Oil remains a decisive front. The inclusion of Saudi
Arabia, UAE, and Iran into BRICS 2.0 signals a strategic shift: oil exporters
are slowly decoupling from dollar-only trade. China is pushing for yuan-based
oil contracts; Russia has moved to rouble settlements; and even former enemies
Iran and Saudi Arabia are cooperating.
Trump, in contrast, is preparing to
flood the world with US shale, roll back climate pacts, and resurrect the
Reagan-era fossil fuel doctrine. His likely gutting of green subsidies and
return to oil diplomacy may face a BRICS counter-strategy aimed at diluting
dollar dominance in energy.
BRICS' New Development Bank (NDB),
though modestly capitalised, offers an alternative to the IMF and World
Bank—particularly appealing to nations weary of western conditionalities. The
NDB extends credit without the strings that often accompany loans from
Washington-based institutions.
Trump, who previously slashed US
funding to WHO and sparred with WTO and NATO, is unlikely to support any
multilateral setup that doesn’t obey his directives. In contrast, BRICS is
building institutional alternatives—creating a vacuum that many neutral or
non-aligned countries may now gravitate toward.
Though not a military bloc, BRICS
shows signs of developing a strategic security understanding—especially between
Russia and China. Meanwhile, Trump is expected to ramp up Indo-Pacific
militarisation, provoke Taiwan confrontations, and push for NATO expansion.His
erratic past—pulling out of Syria, threatening to exit NATO, abandoning
Afghanistan—has already diminished US credibility. If BRICS maintains a steady
hand in promoting regional security dialogues, it could further shift the
global balance.
India walks a tightrope. As a founding
BRICS member and a key US strategic partner through the QUAD and bilateral
deals, it is under pressure to pick sides. Trump may again press India to align
against China, Iran, or Russia.Yet New Delhi appears to be hedging: buying
discounted Russian oil, testing rupee-based trade with Africa, investing in
Iran’s Chabahar port, and simultaneously deepening defence ties with
Washington. A heavy-handed Trump approach could push India further into the
BRICS fold.
BRICS apparently is no longer a
talking shop. It is a growing counterweight with economic muscle, political
ambition, and strategic unity.This is not just about Trump versus BRICS. It's a
battle between legacy dominance and emergent pluralism. The unipolar world is
fading, and Trump’s familiar tactics may see a tough challenge against an
unfamiliar, more coordinated resistance.
The new Cold War won’t be fought over
ideology—it will be fought over systems, influence, and who gets to write the
rules. And this time, the Global South isn’t just a bystander. It’s a player.
And it’s choosing sides.---INFA
(Copyright,
India News & Feature Alliance)
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Modi’s Five-Nation Visit: PAVING THE THIRD WAY, By Dr. D.K. Giri, 11 July 2025 |
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Round
The World
New
Delhi, 11 July 2025
Modi’s Five-Nation
Visit
PAVING THE THIRD WAY
By Dr. D.K. Giri
(Prof of Practice,
NIIS Group of Institutions)
Prime
Minister Narendra Modi visited five countries en route to attend the 17th
BRICS Summit in Rio de Janeiro. This was his longest trip since a decade. These
visits also broke many new grounds. The countries he visited – Ghana, Trinidad
& Tobago, Argentina, Brazil and Namibia - were all former colonies of
Britain, Spain, Germany and Portugal. Significantly, in the current
geo-political scenario, whilst America and China are flexing their military and
economic muscles to gain influence world over, these countries have tried to
remain independent of the power blocs.
Strategically,
Prime Minister Modi may be offering a third way by inviting these countries to
‘grow together’ as partners and seek ‘security through solidarity’. He said
that the power and value of a country do not manifest only through military
mind or market size but in promoting inclusivity, cooperation and trust. The
reference is obvious, that is, to America and China. Let us explore the
viability of this aspiration of Indian diplomacy and leadership.
There
is hardly any debate on India’s commitment to the Global South. Modi’s visit to
these countries heavily reflected this. He himself asserted that India has been
concerned about the conditions of exploitation and discrimination of Global
South. New Delhi sought to create an equal world where Global South has a voice
and space. It created Non-Alignment Movement in the past was active in G-77,
now G-20. Modi claims to, and rightly so, have led the G-20 successfully.
The
notable achievement has been inclusion of The African Union as a full member in
the New Delhi summit. He promised to give a ‘new form’ to BRICS under its
leadership that is passed on from the current Chair, Brazil. As a wizard of
acronyms, Modi even suggested a new name for BRICS; Building Resilience and
Innovation for Cooperation and Sustainability. Will he succeed in transforming
BRICS as he did to G-20? Remember, BRICS is largely controlled by Sino-Russian
axis.
In
the absence of Chinese and Russian Presidents, there was quite a bit of
coherence evident in the deliberations and statements that came out of Rio
Summit. The members were unanimous in their reference to the wars in Gaza and
Iran. The Indian delegation even managed to insert a paragraph on Pahalgam
condemning the act of terrorism. This was not possible in the recent SCO
Conference. Yet, substantially restructuring BRICS is a tall order. If Modi
succeeds in giving it a new form, kudos is due to his deft diplomacy and
inimitable leadership.
However,
his first stop was the Port of Spain, the capital of Trinidad & Tobago.
This was after the last visit of an Indian Prime Minister in 1999. Indian
labourers were brought to that country way back from 1845. The current
President Christine Carla Kangaloo and the Prime Minister Kamla-Prasad
Bissessar owe their ancestry to India. Modi, as usual, addressed the Indian
Diaspora and said the story of Diaspora is no longer that of struggles and
suffering but now consists of success and value. The leadership of Indian
origin is a testimony to that hugely qualitative change. An important MoU was
signed on Indian Pharmacopia, meant to facilitate supply of generic medicines
from India.
The
next stop was Ghana. Modi’s visit was first by an Indian Prime Minister in 30
years. Ghana is a strategic partner for India in West Africa as it is a member
of African Union and ECOWAS – Economic Community of West African States
comprising 15 countries. Four MoUs were signed during the visit in the areas of
traditional medicine and Ayurveda, BIS – Bureau of Indian Standards and a Ghana
counterpart for trade investment, a cultural exchange (2025-29) and a Joint
Commission for Regular Interaction between officials of both countries. Ghana
was one of the first countries to use UPI payments. New Delhi offers to develop
Ghana as a vaccine hub of Africa.
India
would focus on Ghana to reduce China’s dominance in Africa. New Delhi has
second largest number of projects in Ghana (11), and Indian companies have
invested up to 2b USD in 818 projects. Ghana has been active in international
politics along with India from the days of Kwame Nkrumah and Jawahar Lal Nehru.
Ghana has produced illustrious personalities like Kofi Annan, the former
Secretary General of United Nations and Shirley Botchwey, the current
Secretary-General of the Commonwealth. Modi duly acknowledged that. In turn,
Ghana honoured Modi with their highest civilian award.
As
usual, Modi appreciated the contribution of 15000 strong-Indian Diaspora who
contributes to deepening the contact between both the countries. The bilateral
relationship was elevated to a comprehensive partnership. India and Ghana are
looking forward to consolidating their relations. They have agreed to double
the trade (3b USD) in five years. New Delhi is aiming at securing a strong platform
in Ghana to engage most of Africa.
In
Buenos Aires, the capital of Argentina, the third stop in Modi’s itinerary, he
was received by President Javier Milei. The discussions focused on common
themes of his entire visit – pharmaceuticals, vaccines, digital technology,
food security and critical minerals. Argentina is rich in shale gas and oil. Both
countries agreed on critical minerals as India offered pharmaceuticals.
Modi
flew from the neighbouring country Argentina to Rio (Brazil) for the BRICS
Summit, the highlights of which have been mentioned here earlier. After the
Summit, Modi made an official visit to the country. He was met by his
counterpart, the formidable Left leader, the President of Brazil, Luiz Inacio
Lula da Silva, popularly known as Lula. Modi acknowledged the contribution of
Lula as the chief architect of India-Brazil strategic partnership. Both leaders
agreed that India-Brazil cooperation is an important pillar of the world. Both
countries are members of BRICS and IBSA. Six agreements were inked which
covered renewable energy, terrorism, intellectual property, agriculture,
protection of classified information and defence (on mutual trust).
The
last port of call was Namibia. This was first for Prime Minister Modi and third
ever by an Indian Prime Minister. Namibian President Netumbo Nandi-Ndaitwah
conferred Modi with the highest civilian award of her country. India has stood
by Namibia’s struggle for liberation. Its forerunner SWAPO – South West African
Peoples Organisation had diplomatic contact with India in 1986. India was one
of the first countries to recognise Namibia as it got independence in 1990. Several
MoUs were signed with Namibia including the Global Bi-fuel Alliance. Namibia
also accepted to launch UPI digital payments. Modi addressed the Namibian
Parliament. He struck a chord as he announced that India aims in Africa to
build together. Africa should not be seen as a source of raw materials but also
for value creation.
All
in all, this long trip of five countries was an exercise essentially in
economic diplomacy. Modi said profoundly that relationship should be built
through technology, trade and trust. In this tour, Modi articulated alternative
economic mechanisms to the developed world of Global North. It is perfectly in
order to promote economic diplomacy and build trade partnership. But, at the
end of the day, the world order is defined by power, in its multiple
dimensions. The countries in Global South are disunited despite common history
and destiny. The big question is how to execute their aspiration in the current
geo-political complexity. Admittedly, economic diplomacy can be independent of
other variables in global politics. However, this is doable and desirable as
long as it lasts. ---INFA
(Copyright, India
News & Feature Alliance)
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TIME NOW FOR POLL REFORMS, By Inder Jit, 10 July 2025 |
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REWIND
New
Delhi, 10 July 2025
TIME
NOW FOR POLL REFORMS
By
Inder Jit
(Released
on
12 June 1984)
Some top Opposition leaders
have spoken out not a day too soon in directing the country’s attention to the
question of electoral reforms. Poll laws and the electoral system are no doubt
a matter of perennial interest in any healthy democracy. But the subject
deserves greater importance in the year of the general election. All talk of
poll reforms is meaningless until it yields specific results. It is thus time
to get the Government to take long-pending decisions on various recommendations
made by the Election Commission and the Opposition parties over the years. In
fact, the Commission itself has again recommended to the Government some important
changes with an eye on the forthcoming election. Among other things, it has
urged amendment of the electoral law so as to treat any breach of the model
code of conduct for parties and candidates as a corrupt practice and an electoral
offence entailing the election of the successful candidate to be set aside.
Many of these suggestions
have been made time and again. But no action has been taken on these
recommendations. In fact, the Government’s approach to poll reforms has been
most unfortunate. Let alone the recommendations of the poll Commission and the
Opposition parties, it has not even cared to implement some of the suggestions
of its own leaders. What is worse, the Government has been taking defence
behind unworthy pleas. The Union Cabinet is known to have set up a
sub-committee some two years ago to consider various proposals in regard to
electoral reforms. But the sub-committee has hardly functioned. It met last
about 18 months ago--in January 1983. Four or five meetings of the sub-committee
are stated to have been fixed thereafter. However, these were postponed every
time as its Chairman, Mr P.V. Narasimha Rao, Minister of External Affairs, was
abroad. The members are Mr Jagannath Kaushal, Mr P.C. Sethi and Mr Shiv
Shankar.
In July 1981, Mrs Gandhi
held talks with Mr Atal Behari Vajpayee President of the BJP, and Mr Chandrajit
Yadav, President of Janwadi Party and conceded the need for poll reforms. The
Prime Minister, I was told at the time, also agreed that two things could be done
straightaway to prevent impersonation and rigging. Identity cards could be
issued to voters and electronic voting machines installed. However, Mrs Gandhi
added that identity cards could perhaps be introduced by stages, beginning with
West Bengal, in view of its “heavy cost”. Mrs Gandhi was then told that,
according to the Election Commission, the cost for the whole country would be
Rs 40 crores. It was also pointed out that the investment in identity cards
would be useful in several other ways. These could, for instance, be used for
verification of rationing and banking -- and for checking infiltration of
foreigners. (Think of its utility in Punjab and the North-East region today!)
Mrs Gandhi maintained that the scheme be put through in stages.
Three years have meanwhile
rolled by. Little has also been done in regard to switchover to electronic
voting which proved an instant hit with the voters in the Parur constituency in
Kerala and, importantly, cut down impersonation and bogus voting to the
minimum. (Voting in the constituency shot up to 75 per cent.) True, the Supreme
Court held in March last that the Election Commission’s order directing the
casting of ballot by machines was without jurisdiction, according to law, and
hence illegal. True also, that the Government declared in Parliament that the
law as now laid down by the Supreme Court’s judgement “is unexceptionable.” But
nothing prevented the Union authorities from seeking a review of the judgment,
described by some experts as “retrograde and preposterous,” in the interest of
a cleaner poll. What is more, nothing barred the Government from coming forward
with an amendment of the law and the rules to clarify that balloting includes
voting by the electronic machine, a fact already accepted by at least one
updated dictionary.
Curiously, however, Mrs
Gandhi expressed her inability to go along with the Opposition on two other
counts. First, Government funding of elections as recommended by the Election
Commission. Second, inclusion of expenditure incurred by a political party in
the candidate’s account, as was the case prior to the amendments made by Mrs
Gandhi’s regime in the Representation of the People Act following the famous
case in which the Supreme Court set aside in 1975 the election of a Congress
(I) MP, Mr Amar Nath Chawla on a petition by Mr Kanwar Lal Gupta, a Jana Sangh
leader. Curiously? Yes. I had it on good authority that the Congress (I)
leaders had given their full and eloquent support to these two reforms also
while their party was out of office and the Janata was in power. In fact, in
those days Mr C.M. Stephens even pressed for the two reforms as they were, one,
unsure of their own ability to raise funds while in the wilderness, and, two,
feared that the 1975 amendment to the Representation of the People Act would
heavily load the dice against them as it had made the poll expense ceiling
meaningless.
All the four reforms should
be put through as also a few others. Constitutional pundits are, for instance,
agreed on two basic points in regard to the functioning of the Indian system.
First, the system has failed to function efficiently because of political
fragmentation and multiplicity of parties. Some way, it is urged, needs to be
found to limit the number of parties and, if possible, to have a maximum of
three parties as in the case of Britain. Even rich and highly developed
countries have suffered grievously from the consequences of multiplicity of
parties or from groupism. The Third Republic in France between 1870 and 1940
had 99 Governments. The Fourth Republic between 1946 and 1958 had 28
Governments. France somehow carried on without, in effect, a Government at all
because, first, it had a highly competent and a highly respected civil service
and, secondly, France's economy was in essence free. Under the Weimar
Constitution, Germany had no less than 20 Governments between 1919 and 1933. It
was this lack of Government, coinciding with the great depression, which led to
the destruction of democracy by the National Socialists under Hitler and the
colossal carnage of the Second World War.
There is no shortage of
ideas or suggestions for electoral reforms or, specifically, for limiting the
parties to three or four. In West Germany, for instance, a party is allowed
representation in Parliament under the list system only if it polls a minimum
of five per cent of the total votes cast. A similar idea was mooted by the late
Mohan Kumaramangalam to achieve the purpose to eliminate splinter groups and
enable the political party which came to power to enjoy certain stability for a
period, so that it could be helped to implement its programme. The Election
Commission, for its part, has already taken some welcome steps over the years
to put an end to the growth of mushroom parties. Gone are the days when any
group of people could easily get registered with the Election Commission as a
political party. The Commission now rigorously enforces the criteria laid down
for according registration under the Election Symbols (Reservation and
Allotment) Order. A party can no longer obtain registration from the Commission
first and then organise its activities. There has to be a party properly so
called before it can be registered.
Parliament has before it
many other suggestions. These include the proposal that India should change
over to proportional representation or the list system. (Under the list system
the electors vote not for individual candidates but for party list and after
the poll the party receives a share of seats corresponding to the percentage of
votes secured by them respectively. Apart from ensuring fair representation the
list system would have one other advantage in the Indian context, it would end
the premium on caste and communal considerations and help to give due emphasis
on parties and their programmes). While such basic issues can be discussed at
length and a national consensus sought, several other things could be done
straightaway to reform the electoral system. Voting, for instance, could be
made compulsory as advocated by the Election Commission several years ago and
by Mr C. Subramaniam, Congress President, after the 1971 poll. Compulsory
voting is prevalent in over a dozen countries, including Australia, Italy and
Egypt and its introduction has proved both effective and encouraging. Defaulters
could be asked to pay a fine or have their names suspended from the poll for
the next general elections. As an Australian leader once said: “Compulsory
voting assists a Government, which is popular and punishes one which is
unpopular.”
The Government could do much
else in the limited time still available between now and the general election.
Among other things, it could, as proposed by the Election Commission, lay down
some clear and firm rules in regard to use of official planes and transport.
(In 1967, Mrs Gandhi used IAF planes for her 46-day poll campaign round the
country and paid for it no more than Rs 8,650. During the mid-term poll in U.P.
early in 1969, she was charged Rs 6 and few odd paise for a 20-minute helicopter
ride from Deoria to Kasia an air distance of 20 miles.) At the same time, the
Union authorities could implement some eminently practical suggestions put
forward by the BJP leader, Mr L.K. Advani, to prevent the Government from
misusing All India Radio, Doordarshan and DAVP for poll purposes. Money-power
and media power, according to Mr Advani, “have become two major threats to the
fairness of elections”. Specifically, he has proposed a special cell to monitor
the coverage of poll news by AIR and Doordarshan in accordance with the model
code, accepted by all parties. In the final analysis, everything depends upon
Mrs Gandhi and her Government. Are they willing to do their best for free and
fair poll? --- INFA
(Copyright, India News and Feature Alliance)
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Should We Gild the Cornices?, By Andrzej Lubowski, 12 July 2025 |
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Spotlight
New Delhi, 12 July
2025
Should We
Gild the Cornices?
By Andrzej Lubowski
(Centre for International Relations, Poland)
Last weekend, United
States President Donald Trump, from his private golf club in Bedminster, New
Jersey, was deliberating over the phone about what to do with the tariffs
announced on “Liberation Day.” Should he impose these, or give the world—and
especially reluctant contractors—a few more weeks to think it over? The White
House reminded, not for the first time, that the waiting rooms were crowded
with eager parties, and the president had “clearly stated: The United States,
the largest and best consumer market in the world, holds all the trumps and
leverage in negotiations to unilaterally make deals with appropriate tariff
rates for our trading partners.”
So it’s
understandable that the president is a bit irritated—things are dragging on,
since it’s been over three months since “Liberation Day.” He’s riding high
after signing the “One Big Beautiful Act” and bombing Iran, so a trade success
would be the cherry on top. Unfortunately, the cherry will have to wait a bit
longer.
On Monday, he
postponed the implementation of the tariffs for another three weeks and sent
warning letters to contractors who were dragging their feet. In the evening, he
told journalists that the new deadline—August 1—was “final, but not 100%
final.” On Tuesday morning, he published an online statement saying that “no
extensions will be granted,” only to announce later that day that the original
deadline hadn’t changed at all. During Tuesday’s cabinet meeting, he said,
“that wasn’t a change,” but rather “a clarification, maybe.”
That meeting—fresh as
warm rolls—gave the president a chance to share his feelings with the world.
And he did, for 104 minutes. The mood swung from gloomy and full of complaints
to cheerful. At the start, he lamented that “it’s hard to have a successful
country when you have corrupt media.” Here, the president was referring to
those who dared quote the preliminary intelligence assessment, which differed
from his opinion that the strikes on Iran had “wiped nuclear sites off the face
of the earth.” In a constructive tone, he pointed out who should be thrown out
over this. He expressed his disappointment with Russian President Vladimir Putin,
who remains nice but just not enough. Not nice.
When a journalist
asked who decided to halt arms deliveries to Ukraine, a decision Trump suddenly
reversed on Monday, he replied, “I don’t know. Maybe you can tell me?” And
unfortunately, we still don’t know who decided. Maybe some insubordinate major,
say, from the Marines.
It’s known that the President
Trump can’t wait for the new central bank chief, so he pointed to the Secretary
of the Treasury and said, “I like you better.” He was very annoyed when asked about Jeffrey Epstein, the American financier
and convicted sex offender, and, in his usual delicate way, chewed out his
people, who once were eager to solve mysteries but no longer are. And that’s
the point. Once he let out most of his complaints, the mood clearly improved,
as the president focused on interior decorating.
He described a
pendulum clock he took from the State Department. Then he gave a history
lesson, focusing on several of his predecessors. The cabinet learned, for
example, that President James K. Polk “was, in a sense, a real estate
guy—people don’t know that,” and Dwight D. Eisenhower “was the toughest, at
least until we came along.” He then turned to John Quincy Adams’s portrait,
specifically its frame. “You know,” he said, “I’m a frames guy. Sometimes I
like the frames more than the paintings.” The cabinet laughed. Then President
Trump looked up at the ceiling. The matter of whether to gild the cornices was
weighing on him.
“Linda, do you have
an opinion?”—he asked the Secretary of Education. Ms. McMahon—the one from the
wrestling federation—replied that she liked the idea of gilding the ceiling.
Then the president addressed the entire cabinet: “Who would be in favor of gilding?
Could you raise your hands?”
Unfortunately, I
don’t know the outcome of that vote. If anyone does, I’d be most grateful for
the information.---INFA
(Copyright, India
News & Feature Alliance)
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Job Creation & Incentive: CONNECTING DOTS VITAL, By Dhurjati Mukherjee, 9 July 2025 |
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Open Forum
New Delhi, 9 July 2025
Job Creation & Incentive
CONNECTING DOTS VITAL
By Dhurjati Mukherjee
The Cabinet’s decision to roll out the Employment Linked Incentive (ELI)
scheme with an outlay of over Rs 99,000 crore to create 3.5 crore jobs over the
next two years, to be run by Employees Provident Fund Organisation (EPFO) from this
August is welcome. Job creation is a critical problem given that the workforce is
increasing with every passing year in a country with a massive population.
Delving into the scheme, it needs to be stated that its focus is on the
formal sector which, no doubt, needs attention. The decision to pay one month’s
wage of Rs 15,000 in two installments is fine but the limit prescribed i.e. up
to a salary ceiling of Rs 1 lakh should be reconsidered. It’s very much on the
higher side and should have instead been a maximum of Rs 50,000. Firms participating
in the scheme will get a cash incentive of ₹3000 for each additional
employee hired for two years. However, this should have been raised as it would help in garnering more employment.
Such an incentive scheme is necessary for the informal sector where
conditions of work and the meager salary they receive need urgent attention. It
would have been better if the government had simultaneously announced some
scheme for this sector as it makes a valuable contribution to the country’s
economy and absorbs a large section of the workforce.
It is also a fact that India needs to generate at least 8 million jobs
every year over the next decade to stay on course for its goal of becoming a
developed nation by 2047. This was rightly pointed out by Chief Economic Advisor
V Anantha Nageswaran while addressing the Columbia India Summit 2025, at
Columbia University in April. Nageswaran underlined the imperative to increase
job creation and the proportion of manufacturing in the GDP of the country. He
stressed that although India cannot dictate the international environment, it must
work within its limitations to create a robust domestic growth trajectory
conducive to creating more employment.
“We have a vision to construct a developed India in the 100th year of
independence. But we must realize that the world around us in the next 10 to 20
years will not be as accommodative as it was in the past,” Nageswaran said.
While our political leaders are harping on artificial intelligence, he warned
that new technologies could potentially endanger low-skilled and entry-level
jobs, rendering job generation a multifaceted endeavor. “We have to achieve the
right equilibrium between technology take-up and jobs-led policies,” he said.
Not just Nageswaran but most economists have been emphasising the need
to build India’s small and medium enterprises (SMEs), which are critical to
expanding the manufacturing base. “No country has made it in manufacturing
without a strong SME base,” he added. But unfortunately, the contribution of
manufacturing to GDP has not increased while job creation in this segment is
far from satisfactory.
It is estimated that over 66 per cent of its population is of working
age. India’s median age is 29.5 years, which starkly contrasts with China’s
39.8 years and the United Kingdom’s 40.6 years. This emphasizes the tremendous
potential of a dynamic, innovative, and youthful workforce but providing adequate
employment is not an easy task in this age of mechanisation. Though some label
it as an opportunity, it may be so for a developed economy but not an emerging
one like India.
Going by statistics, between 2014 and 2024, India created 17.19 crore
more jobs, compared to the previous decade’s creation of just 2.9 crore jobs
(2004-14). Notably 4.6 crore jobs were added in the year 2023-24 alone. Some
initiatives of the government helped in reducing unemployment and increasing
workforce participation. The unemployment rate fell from 6 per cent in 2017-18
to 3.2 per cent in 2023-24, while the labour force participation rate rose from
49.8 per cent to 60.1 per cent during the same period.
These figures offer little reassurance, as
both unemployment and significant underemployment persist. Low wages remain a
problem even for qualified candidates; for instance, most MBA or B.Tech
graduates earn only Rs 20,000–25,000 to start. Those relocating for work must
cover living expenses from already modest salaries.
The obvious reason for the low remuneration is the large number of
candidates available in the market and they cannot dictate terms. Economists
believe that the salary structure has remained the same for the last 7-8 years
or even more. With such low salary, the profitability of companies has
obviously increased. The government may consider fixing an entry-level minimum
salary for such candidates, joining the private sector.
At this juncture the government should focus more on high-skill,
high-pay employment opportunities. India has one of the world’s most
significant numbers of graduates in STEM -- science, technology, engineering,
and mathematics -- fields. A closer look at technical education is imperative
as India produces 1.5 million engineers annually. But only 10 to 15 per cent of
this number was expected to secure deserving jobs in 2024. Materials engineers,
more relevant for industrial manufacturing, are only a few thousand.
For job creation, there is a need for the institutions to coordinate
with industry and reorient technical education as per their needs. It also
needs to be pointed out in this connection that the government should support
self-employed sectors, which show higher mobility potential and need support
through credit, training, digital inclusion and market access.
Specialized skills in areas such as artificial intelligence, automation,
robotics, electric mobility as also marine engineering, space technology etc.
may help in garnering employment but that would not be sufficient to tackle the
problem of job creation. India’s ambitious target of achieving 500 GW of
non-fossil fuel energy by 2030 is good for the environment and this may become
one of the biggest job generators. Likewise, the Indian space economy, valued
today at $8.4 billion, is supposed to reach $44 billion by 2033 and would
create thousands of specialised jobs, directly or indirectly.
While private sector investments are called for in a big way, the thrust
must be on the labour-intensive cottage and small units and special incentives need
to be given to them. Moreover, export incentives may also be considered so that
they can tap the global market. Plus, there is a need for professionalism and
technology upgradation to compete in the international market.
What is of equal importance is that India needs to transform its present
education curriculum with special emphasis on skilled education, right from the
school statute. More investment in education is required for candidates to get
the requisite qualification to enter the job market. It should go hand in hand
with the incentive scheme. ---INFA
(Copyright, India News & Feature Alliance)
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