Defending Dollar Debt
Marti G Subrahmanyam | Professor of finance at New York University
The Times of India
Subrahmanyam makes a case for issuance of foreign currency-denominated sovereign bonds. He argues against some of the points raised by former RBI governor Raghuram Rajan recently against foreign currency-denominated sovereign bonds. He concedes, however, that Rajan’s first argument that small amounts of foreign currency-denominated sovereign bonds will not create a credible Indian sovereign yield curve is correct.
He criticises Rajan’s second argument that any such issuance “would hinder the internationalisation of the rupee”. The author writes this is anyway just a hope for some time to come as even the Yuan is facing challenges in attaining such a status.
On Rajan’s third argument that policymakers might go on a bond-issuing binge, he writes this is just “pure speculation”.
Rajan’s fourth argument was that since India can relax the cap on Foreign Portfolio Investments (FPIs), which will bring more investments into rupee bonds, thus, there is no point in issuing foreign currency-denominated bonds.
Against this, the author argues that the benefit of foreign currency bonds will be that “Indian sovereign risk would be priced with lower liquidity/risk premia”.
ICJ’s Kulbhushan Jadhav Verdict: What it means for India and Pakistan
Prabhash Ranjan | The writer teaches at the faculty of legal studies, South Asian University
Hindustan Times
Ranjan outlines and explains some of the pronouncements of the International Court of Justice (ICJ) in the Kulbhushan Jadhav case. He writes India had claimed that Pakistan violated its obligations under Article 36 of Vienna Convention on Consular Relations (VCCR). Under this, Jadhav had the right to consular officers of his state and Pakistan was obliged to inform the Indian consular post about Jadhav’s arrest.
The author mentions the ICJ concluded that Pakistan had violated Article 36 of the VCCR. It also rejected Pakistan’s claim that the issue of consular access between the two states was governed by their 2008 treaty and not VCCR.
However, the author also writes India had asked the ICJ “to direct Pakistan to release Jadhav and to facilitate his safe passage to India”. On this, the ICJ stated that its jurisdiction was restricted to only interpreting and applying VCCR. Simultaneously though, the ICJ has asked Pakistan “to undertake an effective review and reconsideration of the conviction and sentence of Jadhav”.
The original sin
Shaji Vikraman | The writer is consulting editor, The Indian Express
The Indian Express
Vikraman argues that despite economic reforms, the political philosophy of Indira Gandhi on banking — that it is “a commercial enterprise driven by a larger social purpose and political considerations” — has remained unchanged. Regardless of the political ideology of the party at the Centre, there has been remarkable consensus on this front, which ignores the fact that the fundamental obligation of banks is to depositors, says Vikraman.
He writes this political philosophy has created huge fiscal costs and also posed a risk to our financial stability. To reinforce his point, he cites certain financial indicators of our public banking system.
He argues one of the consequences of this situation is the unwillingness of banks to reduce lending rates sharply even though the RBI has cut interest rates by 75 bps this year.
He concludes by saying that the banking model resting on political considerations and ownership control now needs to be undone.
OIC’s curious record on Xinjiang
Sujan R Chinoy | Director General, Institute for Defence Studies and Analyses, New Delhi
The Hindu
Chinoy discusses how the Organisation of Islamic Cooperation (OIC), a group of 57 states, repeatedly expresses concern over the situation of Muslims in Jammu and Kashmir, but overlooks China’s alleged human rights violations of Uighur Muslims in its Xinjiang province. He cites that the recent Abu Dhabi OIC declaration, or even the previous Dhaka declaration, “made no reference to China or its Muslim minorities”. In fact, he mentions, that one resolution passed at Abu Dhabi actually hailed China’s efforts in taking care of its Muslim citizens. This despite the fact that a UN committee and Human Rights Watch have both criticised China for its actions.
He suggests that the reasons for this OIC stance are that China is a major power with a permanent UNSC seat, is “a large market for hydrocarbons” and is also a “source of arms and investments”. Countries that are under any kind of US pressure, or require sanctions relief, often turn to China. In return, they guard its interests at the OIC, writes Chinoy.
An unimpressive budget after the massive electoral mandate
Sudipto Mundle | Distinguished fellow, National Council of Applied Economic Research
Mint
The BJP, which got a huge electoral mandate, has lost the opportunity to present a game-changing budget. Mundle writes that while most of the Budget work must have been done by the time Finance Minister Nirmala Sitharaman took charge and notwithstanding Prime Minister Narendra Modi’s penchant for game-changing schemes, the North Block mandarins have given us a largely incremental and pedestrian Budget.
Fiscal deficit was contained due to expenditure compression. Revenue expenditure grew by 6.9 per cent in 2018-19, down from 11.1 per cent a year ago. The continuing reversal of hard-won tariff reforms was disappointing.
The Pradhan Mantri Kisan Samman Nidhi scheme (PM-Kisan) — income support of Rs 6,000 per year for farmers — is an important beginning. Building on this programme, India could move towards an unconditional universal income transfer scheme.
Protecting India’s river basins
Mihir Shah | Co-founder, Samaj Pragati Sahayog
Business Standard
Inter-state conflicts over sharing of river water have become endemic in India, despite decades of effort at resolving them, says Shah. It is a national shame, reflecting a symptom of faulty approach to water management.
New York residents pay those in the city’s watersheds for the eco-system service they provide by protecting catchment areas and keeping river basins clean.
MGNREGA needs to be recast on a watershed basis and use its enormous resources for river rejuvenation and water harvesting. Urban planners need to keep in mind that destructive land use and land encroachment will impact sustainability and quality of water sources.
According to Shah, the only solution to the Kaveri conflict for example is to ensure that all stakeholders come together to find a solution. Each river basin is a shared resource and its health will determine the future.
Ball is in Pakistan’s military court
Harsh V Pant | Professor, international relations, Department of Defence Studies, King’s College London
The Economic Times
Pant, in his column, writes Pakistan is visibly under pressure. It agreed to many of the Indian demands pertaining to the Kartarpur corridor negotiations, re-opening its airspace to Indian planes followed by Pakistan’s Punjab province registering FIRs against Hafiz Saeed and his accomplices. Its isolation was also clear when the ICJ ruled in favour of India in the Kulbhushan Jadhav case.
The Modi government, in its first term, faced flak for not having a ‘Pakistan policy’, but not only was there a sustained policy, it was part of a broader foreign policy.
Pakistan is now showing its keenness to reopen dialogue with India. “How Pakistan deals with Jadhav’s case after the ICJ verdict will be an important test case for Islamabad’s commitment to seeking normalisation of ties with New Delhi,” he says.