Policies of developed and developing countries and their impact on India’s interests
Indian Economy and related issues
Putting Taiwan on India’s diplomatic priority
Background:
The new government in Delhi should put Taiwan on its diplomatic priority.
It might offend Chinese political sensitivities. But productive engagement with Taiwan is not about abandoning India’s “One-China” policy or playing some kind of a “card”. India has been rather careful in respecting China’s sovereignty and territorial integrity.
In 2014, the then External Affairs Minister vented the frustration that Beijing does not reciprocate with a “One-India policy”.
Given the stakes in a sensible relationship with China, the government rightly chose to stay the course on the “One-China policy”.
Steady progress in the relationship:
Since the establishment of formal channels of contact in the mid-1990s, there has been steady progress in the relationship.
Annual bilateral trade has reached $7 billion last year and the hope is to raise it to $20 billion in the next few years.
There has been a rise in Taiwan’s investments in India and a steady growth in exchanges between the two societies.
During the last five years, the government has taken steps to enhance the relationship. These include:
The upgradation of the bilateral investment agreement.
Promotion of major Taiwanese investments.
Expanding parliamentary exchanges.
Facilitating track-two dialogues on regional issues.
Need of engaging with Taiwan:
Delhi should take a fresh look at Taiwan and replace its current incrementalism with a more ambitious policy.
Geopolitical importance:
The delicate three-way political compromise between US, China and Taiwan crafted in the 1970s appears to be breaking down, thanks to rising China’s regional assertiveness, the renewed threat of forceful reunification of Taiwan and Beijing’s relentless pressure tactics against Taipei.
In Washington, as part of the belated push-back against China under the Trump Administration, the “deep state” is determined to strengthen ties with Taiwan. In reinforcing its security commitment to Taiwan, the Trump Administration has begun to send its naval ships through the Taiwan Straits more frequently than before.
Meanwhile, divisions within Taiwan on the future ties with Beijing have deepened.
Great strategic significance of Taiwan as it straddles the sea lines of communication in the Western Pacific and is a stone’s throw from China’s mainland.
If there is one piece of real estate that holds the key to the geopolitics of East Asia, it is Taiwan. The unfolding dynamic around Taiwan will have significant consequences for India’s Act East Policy and its emerging role in the Indo-Pacific Region.
Geo-economic importance:
The unfolding trade war between the US and China is compelling Taiwan to accelerate its plans to move its large manufacturing bases away from China to Southeast Asia and India.
Taiwan announced the “New Southbound Policy” in 2016. The objective is to strengthen ties with the 10 countries of the ASEAN as well as Australia, New Zealand and India.
As the structure of industrial production in East Asia undergoes a profound transformation, amidst the prospect of an economic decoupling between the US and China, India has once-in-a-generation opportunity to boost its own manufacturing sector.
For the government’s agenda of promoting industrial production and creating jobs in India, the Taiwan connection with its impressive small and medium enterprises is more than opportune.
Talent and technology:
Taiwan has embarked on a big mission to attract skilled workers. With a declining birth rate and growing emigration, Taiwan’s industry, education, and technology development could do with Indian engineers and scientists. At present, there are barely 2,000 Indians working in Taiwan.
There is no shortage of ideas for the transformation of India’s relations with Taiwan. An agreement on comprehensive economic cooperation is one of those. The synergy in human resources provides the basis for massive collaborations between the universities, research institutions and technology enclaves in the two countries.
Way ahead:
The bilateral relationship now needs a high-level political attention in Delhi to make things happen and quickly.
Expanding the engagement with Taiwan should be an important part of Delhi’s effort to come to terms with all corners of Greater China that looms so large over India’s future.
Conclusion:
Most major nations have significant cooperation with Taiwan without extending it diplomatic recognition. India, however, has too many self-imposed constraints on its Taiwan policy. It is now time to lift many of them.
Taiwan’s GDP is about $600 billion and twice the size of Pakistan’s economy. And few entities in the international system are today as eager and capable of boosting Modi’s domestic economic agenda. Prioritizing Taiwan in our international policies is thus a need of the hour
Connecting the dots:
Productive engagement with Taiwan without abandoning India’s “One-China” policy is the need of the hour. Comment.
NATIONAL/ECONOMY
TOPIC: General studies 2 and 3
Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Inclusive growth and issues arising from it.
Structural Reforms in various sectors
Introduction:
The strong mandate received by the new government grants the new government an opportunity to focus on a structural, as opposed to a project-based, economic agenda. Here are the priorities it must go after.
Statistics:
The government must commit to making India’s economic statistics modern, world-class and immune to political interference.
The first thing about “fixing” the economy is to measure it right and without “bias”. India is home to many truly world-class statisticians, and this is one area where we could use significant lateral entry to upgrade our talent.
Steps taken:
The ministry of statistics has recently announced the merger of the Central Statistics Office and National Sample Survey Office into a single entity, the National Statistical Office (NSO).
Going forward:
The NSO should report to Parliament in order to de-politicize economic statistics. An apolitical, high-quality NSO will serve as a strong foundation as we go about necessary structural reforms.
Employment:
Jobs are the most significant economic and political priority for the coming decade.
The two major foundational pillars for job growth for the medium and long term are – An industrial-strength apprentice and vocational training system in India and a quantum jump in the quality of our school education.
India’s vocational streaming and training system delivered primarily through a chain of Industrial Training Institutes (ITI) is broken.
Revamping this broken system—from streaming high-school youth into the vocational path to improving the quality and relevance of vocational education, and also creating an apprentice supply chain from these institutes into the workforce- will help.
Beyond this long-term fix, it is time for India’s “Green New Deal”.
This New Deal should focus on employment generation for environmentally sustainable infrastructure projects funded by the government.
Resources for this New Deal can only come from higher productivity and structural GDP growth, so undertaking structural reforms can become a self-fulfilling project.
Banking reform:
Structural reforms require three forms of capital—talent/governance, equity and debt.
The government cannot fully fix the problems of public sector banks with capital if it is not accompanied by governance reforms.
The government must immediately transfer its ownership in public sector banks to an empowered agency in the form of an exchange traded fund (ETF). This new agency must be empowered to delink these banks from all forms of governmental interference.
The government must fully privatize IDBI Bank—the only public sector bank set up as a private limited company.
With the advantage of time and an electoral majority, the centre should insist on accountability in the governance of all public sector banks.
Agriculture reform:
For decades, Indian governments have largely failed in their attempt to improve agricultural productivity and provide alternative occupational paths for rural households.
Focus should be on structural fixes that include access to better seeds and technology, drip irrigation and crop planning for the farmer, an easier path from farms to markets for products, a steadier offtake of farm products and a reduction in middleman costs.
A direct cash transfer to the marginal farmer can and should cushion this reform process.
Conclusion:
The new government has an unprecedented mandate to transform India into a middle-income country with widely inclusive prosperity. It is time the opportunity is seized.
Connecting the dots:
Structural reforms are required to boost employment, agricultural and banking sector. Comment.
