Editorial 1. Positing India’s stand on the Ukraine war
Introduction:
In February 2023, on the eve of the first anniversary of Russia’s invasion of Ukraine, the United Nations General Assembly (UNGA) adopted a resolution, calling for an end to the war. The resolution was favoured by 141 members and opposed by seven, while 32 states abstained. Unsurprisingly, India was one among the abstaining countries.
The Indian position on Ukraine:
This is in line with the position India has been taking on the Ukraine crisis from the beginning. India has refused to condemn Russia for the invasion; it has refused to join the West’s sanctions; has stepped up buying Russian fuel at a discounted price, and has consistently abstained from UN votes on the war.
India’s position has triggered sharp responses in the West. Before the war, there was much debate among the global strategic commentariat about India’s irreversible shift towards the West. However, after the war began, many wondered why the world’s largest democracy did not condemn Russia. For some others, India was “financing” Vladimir Putin’s war by buying Russian oil. Why did India take a different line from that of its partners in the West? To understand India’s position, one has to look at how India sees the war.
Democracies versus autocracies
For U.S. President Joe Biden, and for the Atlanticists in general, the war by an authoritarian Russia on a “democratic” Ukraine is an affront to global democracy. According to this narrative, anything less than a complete Russian defeat would mean “the end of the international order”. So, to save global democracy, the rules-based order and international law, all democratic and law-adhering states should take a position against Russia and join the western coalition.
Is this a battle between democracies and autocracies? Granted, an overwhelming majority of nations have supported UNGA resolutions calling for the war to be brought to an end. But beyond the UN votes, the U.S. has hardly managed to mobilise democracies outside its traditional western alliance system against Russia.
India and South Africa, large democracies from Asia and Africa, have consistently abstained from votes at the UN and refused to join the sanctions — because the sanctions were unilateral, imposed by specific countries or blocs, without UN approval.
Even some countries that are part of the western alliance system, say Israel and Turkey, are reluctant to join Mr. Biden’s crusade. Most of these countries see the war as a European problem between two former Soviet countries with its roots going back to the end of the Cold War. For them, it is less about global democracy than the post-Cold War security architecture in Europe.
Morality versus national interests
Even if this is not a war between democracies and autocracies, there is still the question about morality. There is no doubt here that Russia has violated the sovereignty of Ukraine. And Russia’s annexation of Ukrainian territories is a clear violation of international laws. So, how can countries such as India ignore this fact and move on?
India has repeatedly stated in the UN that the sovereignty and territorial integrity of all countries should be respected. But a key dilemma before any country in international relations is that when it comes to specific actions in the event of a clash between moral positions and national interests, it is about which path they should take.
For the U.S. and much of Europe, there is a convergence of their moral positions and foreign policy objectives in the case of the Ukraine war. The U.S. wants to “weaken” Russia, as U.S. Defence Secretary Lloyd Austin said, and Europe wants to make Russia’s invasion costly so that they believe Moscow would be deterred in the future. So, the moral line they take serves their strategic purpose.
In 2003, the U.S. launched its illegal invasion of Iraq, violating the country’s sovereignty. In 2011, the North Atlantic Treaty Organization (NATO) turned a UN Security Council resolution to establish a no-fly zone in Libya into a full-scale invasion. Right now, the U.S. has illegally placed its troops in Syria.
Or, take the case of Israel, which has illegally annexed East Jerusalem and Syria’s Golan Heights and keeps building illegal Jewish settlements in the occupied West Bank. The U.S. has recognised Israel’s annexation of Golan and moved its embassy to Jerusalem. While Russia is being pounded with sanctions, Israel is getting billions worth of military aid every year from the U.S. Another case is that of Turkey, a NATO member, which has illegally seized Syrian territories but faces no international ire.
In other words, when there was a divergence between national interests and moral concepts, the West, without qualms, embraced the first. Then why should not emerging countries such as India put their national interest at the core of their policy making?
What New Delhi wants
So, what are India’s national interests here?
1. Energy — discounted fuel coming in from Russia is a relief for India, the world’s fifth largest economy, that meets over 80% of its fuel needs through imports. But the energy ties are largely opportunistic — even if supplies from Russia are disrupted, India could find alternatives for a higher price.
2. Defence supplies— Russia has fulfilled over 46% of India’s defence needs in the last five years. There is a sound argument that India should diversify its source of defence imports, but such a change would take time.
3. Coalition- at a time when Russia is deepening its ties with China, which is India’s main competitor, India should ask itself whether it should retain its leverage over Russia through existing ties or lose it completely by joining the western coalition over moral commitments.
4. Continental security concerns— India has to work with powers in the Eurasian landmass after the disastrous withdrawal of US troops from Afghanistan. Russia plays a key role in India’s continental foreign policy.
Conclusion:
India’s preferred outcome in the Ukraine war is neither the weakening of Russia nor the destruction and splintering of Ukraine. What India wants is an immediate end to the war and a new security equilibrium between great powers so that the global economy could be stabilised and the world could focus on more pressing problems — from climate change to UN reforms. So, India should stick to its pragmatic neutrality, rooted in realism, and continue to push for a practical solution to the Ukraine crisis.
Editorial 2. Data dissonance: On the revised GDP estimates
Context:
The National Statistical Office’s (NSO) latest release of GDP data estimates a further deceleration in growth in the October-December 2022 quarter, a slowdown that the government’s Chief Economic Adviser (CEA) has attributed largely to an upward revision in the year-earlier period’s figures.
About NSO:
NSO acts as the nodal agency under the Ministry of Statistics and Programme Implementation (MoSPI) for planned development of the statistical system in the country, lays down and maintains norms and standards in the field of statistics, involving concepts and definitions, methodology of data collection, processing of data and dissemination of results.
The National Statistical Office(NSO) was created in 2019 after merger of the Central Statistical Office (CSO) and the National Sample Survey Office (NSSO).
Functions of NSO:
1. It compiles and releases the Index of Industrial Production (IIP) every month in the form of ‘quick estimates’
2. It conducts the Annual Survey of Industries (ASI)
3. It provides statistical information to assess and evaluate the changes in the growth, composition and structure of the organized manufacturing sector.
GDP vs GVA:
While the GDP measures the total value of products and services that the country manufactures or delivers, the GVA measures the value added to the product in order to enhance its worth.
The GDP gives the picture from the consumers’ angle or demand perspective, whereas the GVA gives a picture of the state of economic activity from the producers’ perspective or supply side. Notably, both measures might not match because of the difference in the treatment of net taxes.
The GVA provides a sector-wise breakdown, helping policymakers decide which sectors need incentives or stimulus and accordingly formulate sector-specific policies. But the GDP is a key measure while making a country-wide analysis and comparing the incomes of different economies.
Latest data:
Gross domestic product (GDP) of India is posited to have expanded by 4.4% from the year-earlier quarter, an appreciable deceleration from the 6.3% pace logged in the preceding three months and lagging the 5.2% growth of the October-December 2021 period as well.
Gross Value Added (GVA) growth slowed to 4.6%, from the second quarter’s 5.5%, as the estimates for manufacturing suggested a continuing contraction (- 1.1%), albeit narrower than July-September’s shrinkage (- 3.6%). Sequentially too manufacturing appears to have shrunk (- 2.4%).
Growth in 3 of the 5 services sectors including the crucial trade, hotels, transport and communications as well as the financial, real estate and professional services categories also slowed sharply from the second quarter, signalling that the pent-up demand seen in the contact-intensive sectors, which had been worst hit by the COVID-19 pandemic, had begun to wane.
On the expenditure front, the mainstay private final consumption expenditure (PFCE) lost some momentum with its percentage share of overall GDP easing to 61.6%, from 63% in the year-earlier quarter. That this happened in the traditional festival quarter when consumption spending usually peaks ought to be cause for concern and suggests that the relentless pace of retail inflation is eroding consumptive capacity.
Analysis of the findings:
The CEA, however, has suggested that if the year-earlier manufacturing output data used to calculate the year-on-year growth had remained unrevised, the sector would have actually logged an expansion of 3.8%, instead of the 1.1% shrinkage that the NSO estimates show.
Similarly, he has asserted that private consumption spending (PFCE) would have logged third-quarter growth of about 6%, instead of 2.1% that the latest NSO release indicates, if the data prior to revision had been used instead. Still, even at 6%, consumption spending growth would lag the second quarter’s 8.8% expansion, making it clear that momentum is flagging.
Gross fixed capital formation (GFCF), which reflects investment by businesses in new capacity, contracted sequentially, with its share of GDP slipping to 31.8%, from 34.2% in the July-September period.
Conclusion:
With global demand weakening considerably and unlikely to recover over the course of 2023, and the risks from likely unfavourable weather conditions raising uncertainty over farm output in the coming months, policy makers will need to do all they can to buttress domestic demand. That the data revisions have essentially made it that much harder to draw meaningful conclusions, spotlights the challenges to crafting policy solutions, as top central bank officials have frequently pointed out.
