Editorial 1: Exploring the blue in the India-France partnership
Introduction:
- The celebration by India and France of 25 years of their strategic partnership (January 26) presents an important opportunity for both to introspect on their relations. Signed in 1998, the time-tested strategic partnership has continued to gain momentum over shared values and aspirations of peace, stability and, most importantly, their desire for strategic autonomy.
The big picture
- There are no real substantive disagreements between the two nations. France has emerged as a key trading partner of India with annual trade of $12.42 billion in 2021-22. It is the 11th largest foreign investor in India with a cumulative investment of $10.31 billion from April 2000 to June 2022, which represents 1.70% of the total foreign direct investment inflows into India.
Defence partnership:
- More importantly, it has emerged as a key defence partner for India, becoming the second largest defence supplier in 2017- 2021. France has emerged as a major strategic partner for India with crucial defence deals and increased military to military engagement.
- A key example of this is the inducting of the French Scorpene conventional submarines, being built in India under technology transfer agreement of 2005, and the Indian Air Force having received 36 Rafale fighter jets.
- The Tata group has also tied up with Airbus to manufacture C-295 tactical transport aircraft in Vadodara, Gujarat. This line is expected to be expanded into other civilian and military aircraft manufacturing in a joint venture with France.
- These relations are further fortified with the robust network of military dialogues and regularly held joint exercises — Varuna (navy), Garuda (air force), and Shakti (army).
A long history of strategic partnership:
- As the complexities in the international geopolitical order have emerged, both countries have worked towards a deepening and broadening of their cooperation. France was among the first countries with which India signed a civil nuclear deal. Paris also played a critical role in limiting India’s isolation in the non-proliferation order after the 1998 nuclear tests.
- In a sign of expanding cooperation, France supports India’s bid for permanent membership of the United Nations Security Council (UNSC)as well as its entry into the Nuclear Suppliers Group (NSG).
- An area of importance for both is climate change, where India has supported France in the Paris Agreement expressing its strong commitment towards mitigating climate change impact. New Delhi and Paris, as part of their joint efforts on climate change, launched the International Solar Alliance (ISA) in 2015.
Maritime ties
- The deepening of the strategic partnership is also visible in their maritime cooperation. India and France are resident powers of the Indian Ocean and in the Indo-Pacific.
- The importance of the Indian Ocean Region was visible during the visit of French President Emmanuel Macron’s visit to New Delhi in 2018 when the leadership of both countries welcomed the “Joint Strategic Vision of India-France Cooperation in the Indian Ocean Region” which presented a blueprint for a strengthening of ties.
- In operational terms, Franco-Indian joint patrolling in the Indian Ocean signals New Delhi’s intent to engage with like-minded partners in expanding its footprint in the Indian Ocean. Maritime security has further gained momentum as both countries have articulated their common vision for a free, fair and open Indo-Pacific.
- As both countries share a comprehensive strategy for the Indo-Pacific (it seeks to provide comprehensive solutions for maritime security, regional cooperation, climate change adaptation), India and France in September 2022 agreed to set up an Indo-Pacific Trilateral Development Cooperation Fund (IPTDCF) that will support sustainable innovative solutions for countries in the region.
- The two partners have formed a trilateral grouping with the United Arab Emirates to ensure maritime domain awareness and security from the east coast of Africa to the far Pacific.
Common grounds of cooperation:
- While there are divergences over the Ukraine crisis, there is a broad understanding of each other’s position and both countries are working together to coordinate on playing a constructive role in the crisis. It
- Both countries also share concerns over the rise of China and its aggressive behaviour, regionally and globally, and have committed to working together to ensure that there is no imbalance in the Indo-Pacific.
- India’s partnership with France is built on common values and goals. Both have underlined the ‘importance of maintaining strategic autonomy with a shared understanding of global risks in many domains.
- There is a high-level India-France political dialogue that is ongoing in defence, maritime, counterterrorism and the Indo-Pacific. They are now forging ahead with cooperation in issues such as digitisation, cyber, green energy, a blue economy, ocean sciences, and space’.
Conclusion:
- India and France understand each other’s interests and dependencies, be it in relation to China or Russia. In marking a long strategic partnership, a common interest in enhancing strategic autonomy and improving resilience, there is much ground ahead for further collaboration.
Editorial 2: India must avoid growing into a dystopia
Introduction:
- The Budget that was presented recently, has received a lot of praise in some media. Clearly, those who praise it are happy with their own economic situation and they see the Budget as pro-growth.
Recent developments:
- Data presented in this newspaper (January 13, 2023) show private investment plans during the first nine months of this year to be over 50% greater than what they were a year ago. India it seems is on a roll as far as economic growth is concerned. But is income all we should be concerned with when valuing an economy?
- As in many other instances, the Prime Minister has led the focus on the size of India’s economy. In 2019, he proposed a target of $5 trillion economy within five years (2024-25). As the date approaches, it is clear that the goal is unlikely to be met.
- However, India having overtaken the United Kingdom to become the world’s fifth largest economy seems only to have buoyed their spirit. Next, as 2022 drew to a close, the London-based consultancy Centre for Economics and Business Research (CEBR) predicted that by 2035, India’s economy would reach $10 trillion and become the world’s third largest by 2037.
- Recently a leading Indian financial daily calculated the average annual growth needed to take India to the number one spot globally by 2047, and indicated that this could come true, even though the calculation was of nominal GDP, which implies that the target can be reached with a little help from inflation.
The West’s self-interest in India
- India’s rise on the global stage attracts attention in the West. India is not only a relatively rare democracy in the east but also the largest one in terms of population. As all the countries in the West are democracies, western elites see a possible alliance of interests.
- India’s growing economic size has made it attractive in a way that it was not before. This is not as a market for goods though as the West’s manufactures are no longer alluring to Indians. But its fast growth is an investment opportunity for the surplus savings of the West, which will fetch them the highest returns globally. So, the continuous hum from the West about India’s growth reflects a deep-seated self interest.
- But how should we in India view the rosy predictions of the growth of its economy? There are two aspects to this. First, can we assume that current growth rates will continue? And, second, can we afford to be sanguine about the consequences of our growing economic size?
Jobs and the ecology
- Let us simply assume that India will grow into a $10 trillion economy in 15 years. This would be over three times its current size. Will size bring along the attributes that we would like to see in an economy? Or will it, in a worst-case scenario, lead us to a dystopia induced by their absence?
- In particular, will the economic growth lead to employment opportunities for a growing population of youth and generate the social and physical infrastructure necessary for a good life? Or will it magnify the rising economic inequality and ecological insecurity?
- None of these outcomes is inevitable but a creative economic management of the growth process would be necessary to bring about the positive ones and to avert those that are negative.
Unemployment and growth:
- Unemployment was barely mentioned in the Finance Minister’s Budget speech. Government data show that in mid-2022, unemployment among urban males was much higher than it was a decade ago. Data from the private sector, namely Centre For Monitoring Indian Economy (CMIE), shows that the number of people employed in December 2022 was less than it was in 2016. Clearly, the growth of the national economy has not generated an equal growth in employment.
- For the mass of the unemployed, concentrated in agriculture, employment opportunities will arise only when there is demand for goods in the production of which they can participate. Growth of the IT sector or of exportable manufactures will not be of much use here as this is a cohort with low education and skills. Increased demand for goods of mass consumption alone will lead to an expansion in the demand for these workers.
- For an expansion of this demand, arresting the price of food would be essential, as only then will low-income households have enough to demand more manufactured goods. Instead, we have today a persisting inflation driven by the price of food.
- Our experience of the past decade suggests that India could well grow fast over the next decade-and-a-half without generating sufficient employment for the legion of unemployed youth, especially in rural areas. Fast growth would be cold comfort for them if employment opportunities do not arise.
- Only a concerted policy focus can create the conditions for employment generation in India. Currently, we do not have an employment policy, either at the Centre or in the States. Welfarism, defined by the free or subsidised distribution of private goods, is no substitute.
On the infrastructure push
- In the continuing unemployment, we have seen that growth does not guarantee the things we would aspire to in the economy. On the other hand, we can see that unbridled growth will almost certainly result in outcomes we would like to avoid, such as ecological insecurity.
- The frenetic building of new elevated national highways, implemented by riding rough-shod over local communities, often cuts a swathe through the countryside, destroying agricultural land and jeopardising livelihoods. State governments have not been far behind when it comes to encouraging disastrous geo-engineering projects.
- Across India, political parties seem to be pursuing growth with a view to enhancing their electoral prospects, without concern for a possible negative fallout.
Conclusion:
- India needs growth as it has a backlog of poverty. But the growth that one often sees does not do enough for improving the lives of the poorest, such as by generating employment, and is ecologically harmful. Size is valuable only when it enhances the well being of the population.
