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Political Diary
Gold New World Currency: RBI’S RESERVES SWELL!, By Shivaji Sarkar, 13 May 2024 |
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Economic
Highlights
New
Delhi, 13 May 2024
Gold New World Currency
RBI’S RESERVES SWELL!
By Shivaji Sarkar
In a
strategic move reminiscent of Indian households safeguarding their wealth, the
Reserve Bank of India (RBI) is fortifying the nation’s economic resilience by
actively acquiring gold reserves. This bold initiative mirrors the prudence of
household savers, as the central bank positions itself to shield against
potential economic turmoil and bolster the country's financial stability.
The RBI
now has accumulated gold reserves of 817 tonnes. This surge can be attributed
to a combination of factors including escalating tensions in West Asia, Israel
assault on Palestine, the Russia-Ukraine war, and persistent inflation, all of
which have heightened the appeal of gold.
Central
banks worldwide are actively accumulating gold to diversify reserves and reduce
dependency on the US dollar. China, in particular, has been on a gold-buying
spree for the 17th consecutive month, aiming to hedge against currency
depreciation and geopolitical risks. The world is unofficially going back to
gold standards it abandoned in 1971.
India is
also hit by a continuous six-day fall in the stock market. It wipes out a
significant investment. The loss is estimated at Rs 7 lakh crore. The household
savers, of course, got their savings dipped as unemployment and rising prices
hit them. Though RBI. in a clarificatory note on May 9, mentions that “they are
putting their savings into real estate and the central bank is not worried of
the phenomenon”.
The bank
itself has stepped up gold purchases to “help diversify its foreign exchange
reserves base amid the US dollar volatility”. The US inflation rate in February
hit 3.2 per cent year over year. Since the Federal Reserve began raising rates
in 2022, it has raised rates to 5.25 per cent to 5.5 per cent in July 2023.
It’s holding further raise in view of the US elections.
The price of gold has surged over 10 per cent since
the start of the year, cementing its status as a preferred hedge against
inflation and a sanctuary amid political and economic uncertainty. This
significant uptick is largely due to considerable purchases by central banks and
a rising demand for safe-haven assets.
Gold
prices, in India, have been experiencing a significant surge in 2024, with a
remarkable rally that has propelled them to an unprecedented all-time high of
over Rs 73,000 per 10 gm two days before Akshay Tritiya, when customary gold
purchases reach a peak. This surge represents an impressive increase of
approximately 21.1 per cent within the span of just one year. On the day of
Akshaya Tritiya on May 10, it has slightly dipped to Rs 72,788. Over six
months, domestic gold prices surged from Rs 54000 per 10 grams to a record high
of Rs 73,958.
One can
realise that nothing can appreciate faster than the gold and can’t question the
RBI’s sagacity. One dollar is at Rs 83.88. Rupee is expected to rise to Rs
82.50 in six months, a gain of about a 1.1 per cent, and in a year it could
rise to Rs 82 - a gain of 1.7 per cent. It means the RBI dollar reserves would
lose about 2 per cent value in a year. So, the RBI has decided to buy more gold
than dollars. Its investment would be less at even Rs 73000 for 10 gm and gains
over 20 per cent. That’s an intelligent economy.
The RBI
has increased gold purchases to diversify reserves, with gold value
contributing to a $3 billion rise in forex reserves to $648.5 billion. The RBI is
acquiring more gold in early 2024, aiming for diversification and inflation
hedging. The World Gold Council (WGC) says that RBI gold purchases touch 19
tonnes during January-March. This dwarfs the 16 tonnes of gold it bought in the
whole of 2023.
In terms
of countries with the highest gold reserves, USA leads with 8,133 tonnes,
followed by Germany, Italy, France, and the Russian Federation with 3,366.49,
2,451.84, 2,436.01, and 2,271.16 tonnes of gold, respectively, according to
WGC. The surge in central banks’ gold acquisitions stemmed from the aftermath
of the US imposition of sanctions on Russia. These sanctions, triggered by
Russia’s invasion of Ukraine, included freezing Russian reserve dollars and
imposing restrictions on crucial commodity trades such as crude oil. The global
repercussions of these measures were profound, exposing vulnerabilities within
Western financial institutions.
The
option of investments in the stocks has become riskier. In February, China
divested an additional $22.7 billion in U.S. Treasury securities, as per the
latest Federal Reserve data, reducing its total holdings to $775 billion.
Despite this decrease, China retains its position as the second-largest foreign
holder of U.S. debt. China is reducing its dependence on dollar, as per US
Federal Reserve data.
According
to ICICI direct study, the RBI wants to diversify its foreign exchange reserves
and reduce dependence on the US dollar. Gold offers stability and isn’t
directly tied to the performance of any one currency. It can be especially
valuable during times of economic uncertainty or fluctuations in the dollar’s
value. Gold is considered as a hedge against inflation. When the value of
currencies weakens due to inflation, gold tends to hold its value or even
increase. It protects the purchasing power of India’s foreign reserves.
The
diversification of the portfolio to gold reserve, RBI says, can inspire
confidence in the Indian economy from foreign investors. It signals a strong
financial position and stability, potentially attracting more foreign
investment. While less common today, gold can still be used for international
transactions. Holding a gold reserve allows India to settle debts with other
countries if needed, even if those countries aren’t willing to accept the rupee.
The next
few years can be times of turmoil and gold can be a stabilising factor in the
international economy. It is particularly so as the IT sector, industry,
markets are in a destabilised condition and would take time to calm. At such volatile
times, gold is likely to be more in demand than paper currencies. The RBI has
resorted to the right move and lead the India economy, which has been striving
to become one of the major world economies.---INFA
(Copyright, India News & Feature Alliance)
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‘Religious Minorities’ Study: POLITICAL ARENA FLARES UP, By Insaf, 11 May 2024 |
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Round The States
New Delhi, 11 May 2024
‘Religious Minorities’ Study
POLITICAL ARENA FLARES UP
By Insaf
The
debate on religion and politics has further ignited the electoral arena. A
study ‘Share of religious minorities: A cross-country analysis’, by
Economic Advisory Council to the Prime Minister has triggered a political
slugfest between the BJP and INDIA bloc partners. The study says the share of
majority Hindu population declined by 7.81% to 78.06% between 1950 and 2015,
while that of the Muslim community surged 43.15% 14.09%, in the corresponding
period. Giving statistics of other minority communities as well the study says ‘India's
performance suggests there’s a conducive environment to foster diversity in the
society…’ However, the BJP has grabbed the opportunity provided by the Council
and has voiced serious concern over rise in Muslim population. Said its
spokesperson, “If by this pace the population is increasing and Congress is
hell bent upon giving reservation to the Muslims on the basis of population,
they will cut the share of the SCs, STs and the OBCs if voted to power.”
Another BJP leader has gone a step further saying “Hindu population is
decreasing; Muslim population is increasing... It shows that in the days to
come they want to make India an Islamic State.”
On the
other hand, the Opposition has questioned the sheer timing of the report
accusing the saffron party of sowing communal discord during ongoing Lok Sabha elections.
Why now, asks a leader of Left parties, adding “The prime minister is already
trying to polarise people in the name of Muslims, talking about handing over
keys of Ram Mandir to Muslims…” Another leader’s response is “It’s a conspiracy
to create hatred and polarise the voters.” Indeed, it is disconcerting, and the
Election Commission would do well to take note. More importantly, the media
must exercise constraint in its reportage as Population Foundation of India has
expressed concern about some recent reports ‘misreporting’ the findings from
the study to spread alarm. It advises: “Population growth rates are not linked
to religion and the total fertility rate among all religious groups is
declining, with the highest decrease observed among Muslims…The study’s focus
on changes in the share of majority and minority religious groups globally over
a 65-year period should not be used to incite fear or discrimination against
any community.” Both media and political leadership must heed. A stitch in time
saves nine.
* * * *
‘Conspiracy’
In J&K
J&K
administration does a swift U-turn! On Thursday last, it allowed NC to hold
public rallies on May 12 in Sopore police district, Baramulla constituency
being contested by its Vice President Omar Abdullah. This, only after he wrote
to ECI urging it to uphold ‘electoral process integrity’ by directing SP Sopore
to allow campaigning as per schedule and ‘rectify the injustice.’ Earlier,
without citing any reason, the SP had asked Baramulla administration to direct
parties, already given permission, to ‘reschedule programmes’ from May 9-18.
With polling on May 20, NC termed the order as ‘discriminatory’, ‘direct
assault on democracy and principles of fair competition’ and aimed at
‘sabotaging party’s campaign’ in comparison to other parties (without naming
People’s Conference chief Sajad Lone, perceived to enjoy BJP backing).
Likewise, PDP chief Mehbooba Mufti had written to EC accusing it of
participating in a ‘conspiracy’ to derail her campaign in Anantnag-Rajouri seat
after it had deferred poll to May 25, where Apni Party’s Zaffar Iqbal Manhas,
believed too to have BJP backing, is pitted against her. Will J&K
administration uphold values of democracy, is the big question.
* * *
False
Narrative In WB?
West
Bengal’s Sandeshkhali case not only gets curiouser but turns spurious. Ruling TMC
has urged ECI to start criminal proceedings against BJP leaders concerned for ‘orchestrating
conspiracy including paying bribes’ to Sandeshkhali women to ‘falsely raise
complaints’ and attempts ‘to influence investigating agencies and
constitutional authorities.’ This, after it shared a ‘sting operation’ video on
social media showing a local BJP leader claiming rape charges were ‘staged’ at
behest of BJP leader Suvendu Adhikari, who has rubbished the claim. TMC asserted
victims may have had a few complaints over land grab, but never of sexual
offence and shared fresh videos of women alleging they were ‘manipulated’ by
BJP into filing ‘false rape cases.’ TMC-BJP fight has spilled over to Raj
Bhavan. A contractual woman employee has levelled molestation charge with
Kolkata police station against Governor Ananda Bose, who has said its ‘absurd
drama’, ‘dirty’ politics of Mamata Banerjee and launched programme ‘Sach ke
Samne’ showing related CCTV footage to 100 people, except ‘Mamata and her
police’.
* * * *
BSP’s
Surprise Move
Amid
elections, BSP makes intriguing headlines. On Tuesday last, party supremo Mayawati
divested nephew Akash Anand of his post as national co-ordinator and her ‘successor’,
barely five months after she had anointed him! In
a post on X, she said the decision was taken in ‘interest of party and
movement and till the time Anand gains full maturity’. Till then her brother
and Akash’s father Anand Kumar is to continue to fulfil his responsibilities as
before. Three days later, Anand took to X saying ‘Totally respect your order. I
will keep fighting till my last breath for Bhim Mission and my society.’ The
surprise decision has led to a guessing game. Is it because Akash was booked in
a suo motu case of violating MCC with 4 others for allegedly using ‘objectionable
language’ at a rally in Sitapur, saying ‘This government is a bulldozer
government and a government of traitors. The party that leaves its youth hungry
and enslaves its elderly is a terrorist government. Taliban runs such a
government in Afghanistan.’ Or is Mayawati enduring to play safe in Yogi land and
be seen as coming to BJP’s rescue?
* * *
Haryana Govt In Crisis?
The future
of BJP government in Haryana hangs in balance. Jannayak Janta Party leader
Dushyant Chautala has written to Haryana Governor seeking an immediate floor
test saying Nayab Singh Saini’s government no longer commands a majority. This
is prompted by 3 Independent MLAs withdrawing their support (and backing the
Congress) on Tuesday last, reducing it to a minority in the 90-member Assembly.
The Congress has demanded that Saini resign immediately, President’s Rule be
imposed, and fresh elections be held. However, Saini insists his government is
not in trouble and had ‘won a confidence vote in March and if it comes to
seeking the trust vote, I will do it again when the time comes.’ The Assembly has
an effective strength of 88, BJP has 40 MLAs, Congress 30 and JJP 10, INLD and
HLP one each and five Independents. Scales have turned with the 3 independents
backing Congress and JJP sending signals it could support the grand old party. With
halfway mark being 45, and NDA currently having 43 MLAs, will the government be
able to ride with the tide? ---INFA
(Copyright, India News & Feature Alliance)
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India’s Global Rise: AND REGIONAL DECLINE, By Prof. (Dr.) D.K. Giri, 10 May 2024 |
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Round The World
New Delhi, 10 May 2024
India’s Global Rise
AND REGIONAL DECLINE
By Prof. (Dr.) D.K. Giri
(Secretary General, Assn for
Democratic Socialism)
The Government of
Maldives, the archipelago country, has urged India to encourage tourists to
visit their country. Maldivian President Mohamed Muizzu has urged Indian Prime
Minister Modi that his country’s economy depends on tourism and therefore India
should continue be a part of Maldivian tourism sector. Likewise, Maldivian
Tourism Minister Ibrahim Faisal in an interview on 6 May has highlighted the
historical relations between the two countries and has invited the Indian
nationals to visit his country to vitalise its faltering economy. The Foreign
Affairs Minister, Mossa Zameer was to arrive in New Delhi on 9 May on an
official visit. While discussing issues of mutual interest, he would be raising
the risk of Indian tourists dwindling in Maldives.
Maldivian concern
about depletion of Indian tourists is being expressed against the backdrop of
increased geo-political tensions between the two countries. It started with
election of ‘pro-China’ President Muizzu who asked for Indian army personnel to
be relocated away from Maldives. The dilution of India-Maldives bilateral
relations is indicative of India’s decline as a regional power, while India is
growing globally. This simultaneous as well as contrarian development in
India’s foreign policy presents a paradox.
India’s global rise is
explained by its growth in absolute power, strategic positioning, economic
growth in GDP terms, military strength and its largest demography, particularly
the youth population. India’s membership of strategic groupings like Quad,
G-20, even BRICS and SCO plus the invitation to G-7 marks its global growth. At
the same time, India seems to be struggling to retain its influence in the
neighbourhood in the face of an aggressive and expansive China. Because of the
obvious asymmetry in strength between two countries India is experiencing a
decline of relative power, in regard to China.
Paradoxically, the
factors that cause the decline of India’s regional influence are the ones that
contribute to its growth as global power. I am referring to the withdrawal of
America and Western countries from South Asia and shifting their focus to India-Pacific
region. This has left the space open to Chinese penetration into the region. In
the face of competition from China, as said before, due to lesser economic
strength, New Delhi is unable to maintain its hegemony in the neighbourhood. One
Nepalese ambassador to India admitted frankly in a seminar that China has quite
a bit of surplus money which countries in South Asia are seeking to tap into.
Withdrawal of the West
from South Asia also has made India the focus of attention as a counterweight
to China. Although New Delhi is cautiously moving between America and its
allies and China-Russia axis, the West would like India to be a strategic ally.
Unsure of America’s unwavering commitment to India vis-à-vis China, New Delhi has
not cast the die. But surely, the West courting India is propelling the
latter’s global rise. The question is, if India sticks to its strategic
autonomy, how will it balance the mismatch between its regional and global
influences?
Let us probe India’s
fraying relations with the tiny archipelago, Maldives. Quite a few observers
suggest that the rupture in the relations is not because of Muizzu’s tilt
towards China, it is largely how New Delhi is reacting to this. Before Muizzu,
other leaders followed an India First Policy but Muizzu changed it to Maldives
First. As said before, countries in South Asia would like to exploit to their
advantage the growing rivalry in the region between India and China. When
President Muizzu asked India to withdraw her forces, Govt of India reacted
strongly. Muizzu also decided not to renew the agreement with India on a
hydrographic survey of its waters. Recall that this agreement signed in 2019
allowed India to conduct a hydrographic survey of the Maldivian territorial
waters, study and chart reefs, lagoons, coastlines, Ocean current and tide
levels.
However, the tweet by
Prime Minister Modi extolling the tourist potential of Lakshadweep vis-à-vis
Maldives dramatically changed the people-to-people perceptions. This hit
Maldives below the belt. What was worse were the unworthy personal comments
made by two of Muizzu’s ministers on Prime Minister Modi. The social media
reacted to it very strongly to the point of boycotting Maldives. It was perhaps
an overreaction as those ministers were promptly removed from the Cabinet. Not
only that, Muizzu has been losing to his opponents after his apparent
anti-India posturing. In fact, there have been protests by the Opposition in
Maldives that warm relations with India should be restored forthwith.
Maldives is the
smallest country in South Asia and India is the largest. The relations between
two countries signify the conduct of Maldives on how to deal with the biggest
country in the neighbourhood. But the onus lies more on India as New Delhi
should be wary of giving an inferiority complex to Maldives. Despite the
difference in size, both countries need each other in their mutual interest.
Maldives works as a
‘toll gate’ for nearly half of India’s external trade and 80 per cent of its
energy imports. Maldives is situated along the crucial maritime trade routes
between the Gulf of Aiden and the Strait of Malacca. Maldives is also
strategically located in the Indian Ocean and is therefore, of great interest
to India. Maldives can counterbalance China’s growing influence in the Indian
Ocean on behalf of India.
Likewise, Maldives
needs India for various critical reasons. India is the main supplier of
essential commodities, provides a base for education of number of Maldivians.
India is the second largest trade partner of Maldives. For Maldives, India has
been the main responder; be it the coup attempt in 1988 which made the Indian
forces intervene under the code ‘Operation Cactus’, or the Tsunami disaster in
2004. India was the first country to send relief assistance. In 2014, Male had
drinking water crisis as a major desalination plant broke down, India overnight
air lifted drinking water to the Islands. During the Covid-19 pandemic, India
sent essential medical supplies.
In comparison to
China, India has greater soft power which New Delhi must deploy. This should be
done not as a bully or a big brother in the region but as an unoffending
friendly country despite huge difference in size and strength. One way New
Delhi could use its soft power is to encourage informal contacts between
political and civil society actors in India and other South Asian countries.
Second, India could encourage non-state actors to engage in conflict management
mechanisms in the region as New Delhi is reluctant to get involved at an
official level – Myanmar is a case in point.
The track-II diplomacy
consisting of cultural exchange, education collaboration and business promotion
is the best way forward. The myth that foreign policy objectives can be met by
the Ministry of External Affairs alone has to be busted. In so doing, India can
resolve the contradiction between her global rise and local decline.---INFA
(Copyright, India News & Feature
Alliance)
|
|
India’s Global Rise: AND REGIONAL DECLINE, By Prof. (Dr.) D.K. Giri, 10 May 2024 |
|
|
Round The World
New Delhi, 10 May 2024
India’s Global Rise
AND REGIONAL DECLINE
By Prof. (Dr.) D.K. Giri
(Secretary General, Assn for
Democratic Socialism)
The Government of
Maldives, the archipelago country, has urged India to encourage tourists to
visit their country. Maldivian President Mohamed Muizzu has urged Indian Prime
Minister Modi that his country’s economy depends on tourism and therefore India
should continue be a part of Maldivian tourism sector. Likewise, Maldivian
Tourism Minister Ibrahim Faisal in an interview on 6 May has highlighted the
historical relations between the two countries and has invited the Indian
nationals to visit his country to vitalise its faltering economy. The Foreign
Affairs Minister, Mossa Zameer was to arrive in New Delhi on 9 May on an
official visit. While discussing issues of mutual interest, he would be raising
the risk of Indian tourists dwindling in Maldives.
Maldivian concern
about depletion of Indian tourists is being expressed against the backdrop of
increased geo-political tensions between the two countries. It started with
election of ‘pro-China’ President Muizzu who asked for Indian army personnel to
be relocated away from Maldives. The dilution of India-Maldives bilateral
relations is indicative of India’s decline as a regional power, while India is
growing globally. This simultaneous as well as contrarian development in
India’s foreign policy presents a paradox.
India’s global rise is
explained by its growth in absolute power, strategic positioning, economic
growth in GDP terms, military strength and its largest demography, particularly
the youth population. India’s membership of strategic groupings like Quad,
G-20, even BRICS and SCO plus the invitation to G-7 marks its global growth. At
the same time, India seems to be struggling to retain its influence in the
neighbourhood in the face of an aggressive and expansive China. Because of the
obvious asymmetry in strength between two countries India is experiencing a
decline of relative power, in regard to China.
Paradoxically, the
factors that cause the decline of India’s regional influence are the ones that
contribute to its growth as global power. I am referring to the withdrawal of
America and Western countries from South Asia and shifting their focus to India-Pacific
region. This has left the space open to Chinese penetration into the region. In
the face of competition from China, as said before, due to lesser economic
strength, New Delhi is unable to maintain its hegemony in the neighbourhood. One
Nepalese ambassador to India admitted frankly in a seminar that China has quite
a bit of surplus money which countries in South Asia are seeking to tap into.
Withdrawal of the West
from South Asia also has made India the focus of attention as a counterweight
to China. Although New Delhi is cautiously moving between America and its
allies and China-Russia axis, the West would like India to be a strategic ally.
Unsure of America’s unwavering commitment to India vis-à-vis China, New Delhi has
not cast the die. But surely, the West courting India is propelling the
latter’s global rise. The question is, if India sticks to its strategic
autonomy, how will it balance the mismatch between its regional and global
influences?
Let us probe India’s
fraying relations with the tiny archipelago, Maldives. Quite a few observers
suggest that the rupture in the relations is not because of Muizzu’s tilt
towards China, it is largely how New Delhi is reacting to this. Before Muizzu,
other leaders followed an India First Policy but Muizzu changed it to Maldives
First. As said before, countries in South Asia would like to exploit to their
advantage the growing rivalry in the region between India and China. When
President Muizzu asked India to withdraw her forces, Govt of India reacted
strongly. Muizzu also decided not to renew the agreement with India on a
hydrographic survey of its waters. Recall that this agreement signed in 2019
allowed India to conduct a hydrographic survey of the Maldivian territorial
waters, study and chart reefs, lagoons, coastlines, Ocean current and tide
levels.
However, the tweet by
Prime Minister Modi extolling the tourist potential of Lakshadweep vis-à-vis
Maldives dramatically changed the people-to-people perceptions. This hit
Maldives below the belt. What was worse were the unworthy personal comments
made by two of Muizzu’s ministers on Prime Minister Modi. The social media
reacted to it very strongly to the point of boycotting Maldives. It was perhaps
an overreaction as those ministers were promptly removed from the Cabinet. Not
only that, Muizzu has been losing to his opponents after his apparent
anti-India posturing. In fact, there have been protests by the Opposition in
Maldives that warm relations with India should be restored forthwith.
Maldives is the
smallest country in South Asia and India is the largest. The relations between
two countries signify the conduct of Maldives on how to deal with the biggest
country in the neighbourhood. But the onus lies more on India as New Delhi
should be wary of giving an inferiority complex to Maldives. Despite the
difference in size, both countries need each other in their mutual interest.
Maldives works as a
‘toll gate’ for nearly half of India’s external trade and 80 per cent of its
energy imports. Maldives is situated along the crucial maritime trade routes
between the Gulf of Aiden and the Strait of Malacca. Maldives is also
strategically located in the Indian Ocean and is therefore, of great interest
to India. Maldives can counterbalance China’s growing influence in the Indian
Ocean on behalf of India.
Likewise, Maldives
needs India for various critical reasons. India is the main supplier of
essential commodities, provides a base for education of number of Maldivians.
India is the second largest trade partner of Maldives. For Maldives, India has
been the main responder; be it the coup attempt in 1988 which made the Indian
forces intervene under the code ‘Operation Cactus’, or the Tsunami disaster in
2004. India was the first country to send relief assistance. In 2014, Male had
drinking water crisis as a major desalination plant broke down, India overnight
air lifted drinking water to the Islands. During the Covid-19 pandemic, India
sent essential medical supplies.
In comparison to
China, India has greater soft power which New Delhi must deploy. This should be
done not as a bully or a big brother in the region but as an unoffending
friendly country despite huge difference in size and strength. One way New
Delhi could use its soft power is to encourage informal contacts between
political and civil society actors in India and other South Asian countries.
Second, India could encourage non-state actors to engage in conflict management
mechanisms in the region as New Delhi is reluctant to get involved at an
official level – Myanmar is a case in point.
The track-II diplomacy
consisting of cultural exchange, education collaboration and business promotion
is the best way forward. The myth that foreign policy objectives can be met by
the Ministry of External Affairs alone has to be busted. In so doing, India can
resolve the contradiction between her global rise and local decline.---INFA
(Copyright, India News & Feature
Alliance)
|
|
India’s Global Rise: AND REGIONAL DECLINE, By Prof. (Dr.) D.K. Giri, 10 May 2024 |
|
|
Round The World
New Delhi, 10 May 2024
India’s Global Rise
AND REGIONAL DECLINE
By Prof. (Dr.) D.K. Giri
(Secretary General, Assn for
Democratic Socialism)
The Government of
Maldives, the archipelago country, has urged India to encourage tourists to
visit their country. Maldivian President Mohamed Muizzu has urged Indian Prime
Minister Modi that his country’s economy depends on tourism and therefore India
should continue be a part of Maldivian tourism sector. Likewise, Maldivian
Tourism Minister Ibrahim Faisal in an interview on 6 May has highlighted the
historical relations between the two countries and has invited the Indian
nationals to visit his country to vitalise its faltering economy. The Foreign
Affairs Minister, Mossa Zameer was to arrive in New Delhi on 9 May on an
official visit. While discussing issues of mutual interest, he would be raising
the risk of Indian tourists dwindling in Maldives.
Maldivian concern
about depletion of Indian tourists is being expressed against the backdrop of
increased geo-political tensions between the two countries. It started with
election of ‘pro-China’ President Muizzu who asked for Indian army personnel to
be relocated away from Maldives. The dilution of India-Maldives bilateral
relations is indicative of India’s decline as a regional power, while India is
growing globally. This simultaneous as well as contrarian development in
India’s foreign policy presents a paradox.
India’s global rise is
explained by its growth in absolute power, strategic positioning, economic
growth in GDP terms, military strength and its largest demography, particularly
the youth population. India’s membership of strategic groupings like Quad,
G-20, even BRICS and SCO plus the invitation to G-7 marks its global growth. At
the same time, India seems to be struggling to retain its influence in the
neighbourhood in the face of an aggressive and expansive China. Because of the
obvious asymmetry in strength between two countries India is experiencing a
decline of relative power, in regard to China.
Paradoxically, the
factors that cause the decline of India’s regional influence are the ones that
contribute to its growth as global power. I am referring to the withdrawal of
America and Western countries from South Asia and shifting their focus to India-Pacific
region. This has left the space open to Chinese penetration into the region. In
the face of competition from China, as said before, due to lesser economic
strength, New Delhi is unable to maintain its hegemony in the neighbourhood. One
Nepalese ambassador to India admitted frankly in a seminar that China has quite
a bit of surplus money which countries in South Asia are seeking to tap into.
Withdrawal of the West
from South Asia also has made India the focus of attention as a counterweight
to China. Although New Delhi is cautiously moving between America and its
allies and China-Russia axis, the West would like India to be a strategic ally.
Unsure of America’s unwavering commitment to India vis-à-vis China, New Delhi has
not cast the die. But surely, the West courting India is propelling the
latter’s global rise. The question is, if India sticks to its strategic
autonomy, how will it balance the mismatch between its regional and global
influences?
Let us probe India’s
fraying relations with the tiny archipelago, Maldives. Quite a few observers
suggest that the rupture in the relations is not because of Muizzu’s tilt
towards China, it is largely how New Delhi is reacting to this. Before Muizzu,
other leaders followed an India First Policy but Muizzu changed it to Maldives
First. As said before, countries in South Asia would like to exploit to their
advantage the growing rivalry in the region between India and China. When
President Muizzu asked India to withdraw her forces, Govt of India reacted
strongly. Muizzu also decided not to renew the agreement with India on a
hydrographic survey of its waters. Recall that this agreement signed in 2019
allowed India to conduct a hydrographic survey of the Maldivian territorial
waters, study and chart reefs, lagoons, coastlines, Ocean current and tide
levels.
However, the tweet by
Prime Minister Modi extolling the tourist potential of Lakshadweep vis-à-vis
Maldives dramatically changed the people-to-people perceptions. This hit
Maldives below the belt. What was worse were the unworthy personal comments
made by two of Muizzu’s ministers on Prime Minister Modi. The social media
reacted to it very strongly to the point of boycotting Maldives. It was perhaps
an overreaction as those ministers were promptly removed from the Cabinet. Not
only that, Muizzu has been losing to his opponents after his apparent
anti-India posturing. In fact, there have been protests by the Opposition in
Maldives that warm relations with India should be restored forthwith.
Maldives is the
smallest country in South Asia and India is the largest. The relations between
two countries signify the conduct of Maldives on how to deal with the biggest
country in the neighbourhood. But the onus lies more on India as New Delhi
should be wary of giving an inferiority complex to Maldives. Despite the
difference in size, both countries need each other in their mutual interest.
Maldives works as a
‘toll gate’ for nearly half of India’s external trade and 80 per cent of its
energy imports. Maldives is situated along the crucial maritime trade routes
between the Gulf of Aiden and the Strait of Malacca. Maldives is also
strategically located in the Indian Ocean and is therefore, of great interest
to India. Maldives can counterbalance China’s growing influence in the Indian
Ocean on behalf of India.
Likewise, Maldives
needs India for various critical reasons. India is the main supplier of
essential commodities, provides a base for education of number of Maldivians.
India is the second largest trade partner of Maldives. For Maldives, India has
been the main responder; be it the coup attempt in 1988 which made the Indian
forces intervene under the code ‘Operation Cactus’, or the Tsunami disaster in
2004. India was the first country to send relief assistance. In 2014, Male had
drinking water crisis as a major desalination plant broke down, India overnight
air lifted drinking water to the Islands. During the Covid-19 pandemic, India
sent essential medical supplies.
In comparison to
China, India has greater soft power which New Delhi must deploy. This should be
done not as a bully or a big brother in the region but as an unoffending
friendly country despite huge difference in size and strength. One way New
Delhi could use its soft power is to encourage informal contacts between
political and civil society actors in India and other South Asian countries.
Second, India could encourage non-state actors to engage in conflict management
mechanisms in the region as New Delhi is reluctant to get involved at an
official level – Myanmar is a case in point.
The track-II diplomacy
consisting of cultural exchange, education collaboration and business promotion
is the best way forward. The myth that foreign policy objectives can be met by
the Ministry of External Affairs alone has to be busted. In so doing, India can
resolve the contradiction between her global rise and local decline.---INFA
(Copyright, India News & Feature
Alliance)
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