Monday, 23 May, 2022
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Sanjaya Baru asks why US targeting India on trade & Ashok Desai on Pakistan’s economic woes

The best of the day’s opinion, chosen and curated by ThePrint’s top editors.

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Trump, trade and trust

Sanjaya Baru | Distinguished Fellow, Institute for Defence Studies and Analysis, New Delhi
The Indian Express

Baru says while India can cope with the withdrawal of GSP (Generalised System of Preferences) benefits by the US, how can the world’s richest country target a “poor one” under the garb of “free trade”? He says US President Donald Trump’s assertion that India hides behind tariff walls is untrue since India has a trade deficit with other countries. Trump’s grouse that India enjoys a trade surplus with the US is like a “rich man complaining” that he never gets a “return gift” from “poorer friends”.

Baru believes Trump has “mistakenly” targeted India as “corrective action” in a bid to “stop China”. New External Affairs Minister S. Jaishankar now must “support” a new dialogue process similar to the one undertaken by him at the time of the US-India nuclear deal.

For a little relief

Ashok V Desai | Economist, former chief consultant with the finance ministry
The Telegraph

Desai shares a long list of measures Pakistan can adopt to overhaul its troubled economy with a GDP rate of 4 per cent in recent times. On investments, he says, Pakistan must give online approvals to simplify the current 10 procedural hurdles to be cleared before investors can start a business. Pakistan must also expand its tax net, “enforce” and “incentivise compliance”. Desai argues that reforms were not previously implemented because of certain interest groups with political influence. He says the country’s savings ratio was only 13.8 per cent during 2011-2015, and its financial market and infrastructure are “undeveloped”. Also, “rampant protection” to “politically favoured firms” on tariff exemptions has led to Pakistan’s abysmal level of increase in exports.

The sum and substance of the jobs data

Sonalde Desai | Professor, University of Maryland and NCAER
The Hindu

Ranade says though the unemployment rate is used to measure performance of the economy, it is often inaccurate. The reported unemployment rate shows that younger Indians faced with employment challenges exhibit greater willingness to wait for the right job than their older peers. Ranade also says rising education levels have inflated unemployment challenges as unemployment is highest among those with secondary or higher education. Part of India’s unemployment challenge lies in its success in expanding education while not expanding formal sector jobs, Ranade writes that parents have invested much more in educating their children, who in turn hope to make rapid economic progress. Ranade concludes that the challenges before the government are to create jobs for an increasingly educated workforce.

Why Hindutva nationalism is unsettling

Mimi Mondal | Writer and editor
Hindustan Times

Mondal highlights the “unsettling nature” of hardline Hindutva nationalism that has increasingly polarised the country. She questions the idea of nation and nationalism as “nation is an idea spun upon a land…not the land itself.” India exists because the past nations that existed in its geographical location no longer do. Nationalism, as espoused by the freedom struggle, was the movement towards an India that did not exist prior to 1947.

Hindutva nationalism “threatens to unmake India and replace it with a different nation.” It aspires towards a mythic Hindu nation, which is a seditious and anti-national project. India is premised on a delicate balance of hundreds of communities and Hindutva nationalism threatens to collapse this precarious balance. It is a “destablising nationalism” that is not needed today, rather, “we need progress, jobs, less corruption, a stronger economy, but we need to build those things within India, equally accessible to others who are Indians too.”

Re-formed for reforms

Devashish Mitra | Professor, Syracuse University, New York
The Economic Times

Expansion of the manufacturing sector and job creation are critical for the new government. Mitra writes jobs can be created by attracting capital from other countries — US, Japan, etc. However, labour regulations, shortage of land for expansion of manufacturing and infrastructure, besides challenges related to land acquisition, create hurdles, says Mitra.

With the US-China trade war intensifying, many multi-nationals are looking to shift their base to India — it is critical to implement labour reforms and considering former RBI governor Raghuram Rajan’s suggestion to provide higher returns and incentives for giving up land. The recent lifting up of tariff exemptions on electronic parts and components needs to be rolled back as protectionism neither attracts job-creating foreign capital nor does it make domestic manufacturing competitive. Mitra says Modi’s second term will depend on a solid economic growth.

Could Indian banks set their own lending rates, please?

V. Anantha Nageswaran | Dean, IFMR Graduate School of Business (KREA University)

Nageswaran writes banks, which are guided by “marginal cost of funds-based lending rate” prescription chalked out in 2016, should decide their own interest rates. Even owners should stay away from interfering with such decisions. “Owners can demand profits but not set prices,” he says, adding that higher rates on small savings schemes are one of the reasons why banks are unable to lower rates on deposits when the central bank cuts interest rates.

He underlines the need to restore the health of India’s banking system. The formula should be a mix of privatisation, some consolidation and corporatisation of government banks – to bring them on par with their private sector peers. Setting performance criteria for recapitalisation is also critical.

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