Will Modi’s push for economic self-reliance succeed?

Author: Suman Bery, Wilson Center India has pursued two linked objectives since its independence and partition in 1947: to restore the country’s standing as one of the world’s major economies and to preserve geopolitical freedom of action, or ‘strategic autonomy’. Economic strength is both an end in itself — to lift millions out of deep […] The post Will Modi’s push for economic self-reliance succeed? first appeared on East Asia Forum.

Will Modi’s push for economic self-reliance succeed?

Author: Suman Bery, Wilson Center

India has pursued two linked objectives since its independence and partition in 1947: to restore the country’s standing as one of the world’s major economies and to preserve geopolitical freedom of action, or ‘strategic autonomy’. Economic strength is both an end in itself — to lift millions out of deep poverty — and indispensable for maintaining diplomatic freedom of action.

Over this period, India’s engagement with the outside world has evolved in response to domestic imperatives and to its external environment. India is engaged in a major reset at this time, moving from market-driven global integration to strategic trade and investment policy, what Prime Minister Narendra Modi has labelled self-reliance. What are the forces shaping India’s present external posture and what are the associated risks?

As the economist Pravin Krishna has observed, at its independence India inherited a relatively open trade regime and in 1948 was one of the 23 original ‘contracting parties’ to the General Agreement on Tariffs and Trade, the WTO’s predecessor. India’s turn inward was facilitated a decade later when the GATT permitted ‘special and differential treatment’ for its poorer members.

Policy was then reinforced by geopolitics. Indira Gandhi of the Congress party became prime minister in 1966 and increasingly sided with the USSR in the Cold War in reaction to US support of Pakistan and China under President Richard Nixon. The outcome was economic stagnation but ‘strategic autonomy’ was preserved.

India’s return to openness in 1991 also occurred on the watch of a Congress-led government. Elections in 1989 led to rejection of the ruling Congress party led by Indira Gandhi’s son, Rajiv Gandhi. The inexperienced coalition government that took office was not in a position to handle a fiscal and balance of payments crisis. The crisis was exacerbated by external events: the collapse of the Soviet Union, an important trade and defence partner, and the first Gulf War. In the 1991 election campaign, Rajiv Gandhi was assassinated, as his mother had been seven years earlier.

The electoral outcome was a Congress-led coalition government headed by PV Narasimha Rao, the first Congress prime minister from outside the Nehru–Gandhi family. Rao’s technocratic finance minister, Manmohan Singh, advised the prime minister to seek support from the IMF. The program submitted to the IMF included comprehensive reforms covering trade, public finance, the exchange rate regime and capital markets. While prime minister Rao provided valuable political cover for these reforms, he was not inclined to mount a frontal challenge to the party’s centre-left orthodoxy External integration remained a largely technocratic project that came to be known as ‘reform by stealth’ which is why it remains subject to reversal.

Though weak, this impetus to liberalisation survived for the next two decades till the global financial crisis. There was substantial reduction in average applied industrial tariffs, though agriculture remained very highly protected. Liberalisation was largely unilateral, driven by a desire to emulate the export-led manufacturing success of the economies of Asia.

India was an active but unconvinced participant in the WTO’s Doha round launched in 2001. India argued — with some justification — that a new round was premature as there was unfinished business from the earlier Uruguay Round to be dealt with, particularly where agricultural trade was concerned. Washington’s retreat from committed multilateralism towards preferential agreements — first with Canada and later including Mexico through the North American Free Trade Agreement (NAFTA) — and its support for China’s WTO accession, together with the steady expansion of the European Community, undermined India’s faith in the multilateral order in the 1990s and early 2000s.

India remains by instinct a multilateral trading power, preferring to trade under the GATT’s most-favoured-nation rules. It actively uses the flexibility afforded by the gap between applied and bound tariffs, as well as trade remedies such as anti-dumping and safeguard measures in order to manage domestic lobbies, despite the uncertainty that such interventions create for domestic and international investors. In the first decade of the new century, it began to flirt with relatively shallow bilateral preferential trade agreements with a range of partners. It also agreed to participate in negotiations on the Regional Comprehensive Partnership Agreement (RCEP) in 2012 but withdrew in 2019.

By the size of its economy, India is now a consequential, though still poor, middle power. However, the share of manufacturing value added in GDP, needed to accommodate its rapidly growing labour force, has remained stagnant. Instead, the services sector has boomed. While the overall balance of payments has remained comfortable, its structure has been closer to that of an advanced country, with a large deficit in manufacturing trade balanced by surpluses in agriculture and services. The concentration of the manufacturing deficit in India’s trade with China has added to bilateral political and diplomatic tensions.

As in the 1960s and 1990s, a combination of external and domestic forces has again prompted a re-evaluation of India’s external engagement. The economic, medical, humanitarian and political dimensions of the COVID-19 scourge have exposed and reinforced weaknesses in India’s development trajectory, and may have contributed to a setback to Modi’s party in important recent state-level elections. China’s long-term economic success and its current political assertiveness are now shaping both the regional and global economic order as well as its bilateral relations with India.

In its post-COVID-19 recovery, India will wish to consolidate market access for its export of services to rich countries and to make access to the country’s growing market most attractive for those willing to bring the latest technology. The risk is that more active government intervention will get hijacked by powerful domestic lobbies as happened before. India is also refocusing on trade with its South Asian neighbours and investing greater energy in links with Europe and the United States. By contrast, an early return to the RCEP negotiations seems unlikely.

Suman Bery is a Global Fellow at the Woodrow Wilson International Center for Scholars.

An extended version of this article appears in the most recent edition of East Asia Forum Quarterly, ‘Reinventing global trade’, Vol. 13, No 2.

The post Will Modi’s push for economic self-reliance succeed? first appeared on East Asia Forum.
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North Korea Orders Youth League Reshuffle for More Effective Self-Criticism Sessions

With unfamiliar group leaders, youth will snitch on each other ‘more honestly.’

North Korea Orders Youth League Reshuffle for More Effective Self-Criticism Sessions

North Korea is ordering local leaders of the country’s main youth organization to change reviewers of self-criticism meetings to force young people to snitch on each other “more honestly,” sources in the country told RFA.

The new policy requiring people from outside one’s youth group evaluate mandatory self-criticism sessions is designed to break up cozy relations that have formed within units in which people rehearse their lines and cover for each other, the sources said.    

Every North Korean citizen must perform saenghwal chonghwa, or self-criticism, where they must confess their own state loyalty shortcomings, then publicly report any disloyal tendencies in their peers. Experts say the state uses these sessions to turn citizens against each other in order to control them more effectively.

For adults, self-criticism is done during mandatory meetings of their local neighborhood watch unit, while youth start from the age of 13, when they begin attending meetings of the Socialist Patriotic Youth League.

The league, formerly known as the Kimilsungist-Kimjongilist Youth League, is modeled after the Soviet Komsomol. In late April, the league held a nationwide congress in Pyongyang, where it received its new name, and new directives from North Korean leader Kim Jong Un on how to conduct the sessions.

“As soon as the 10th Congress of the Socialist Patriotic Youth League was over, they started inspections of the weekly self-criticism sessions for the youth here in Ryanggang province,” a resident of the northern border province told RFA’s Korean Service last week.

“During the inspections, low-level chairpersons that lead Youth League organizations in each factory observe the sessions in different factories, to review and report on them,” said the source.

Across the country, many citizens have come to take the weekly sessions for granted, and they collude with each other beforehand on how they will criticize each other, so they can avoid raising any red flags by being too harsh. Leaders of the sessions may also form friendships with attendees and allow them to simply go through the motions week after week.

The new policy on youth confessions aims to put a stop to this.

“The low-level chairperson dispatched to each Youth League organization should attend the self-criticism session and report on how honestly the young people criticize themselves in regard to antisocialist and nonsocialist thought, and how intensively they criticize other young people on the same subject,” said the source.

Another source, a resident of the northwestern border province of North Pyongan, told RFA that at a collective farm in Ryongchon county, chairpersons who returned from the 10th congress began inspecting the self-criticism session notes of youth league members.

“Since this review project lasts until the end of this month, all young people are pretty much forced to be honest in their criticism of their own and each other’s antisocialist and nonsocialist tendencies,” said the second source.

“They are conducting the review by sending youth league chairpersons to a different farm than their own. The purpose is to cross-inspect other cells of the youth league so that self-criticism is more genuine, because until now sessions have been more or less a formality,” the second source said.

The second source said the first cross-inspection of the sessions would take place on Saturday May 8, and that the people wondered how they might be different.

“The chairpersons are insisting that young people who have called people in foreign countries, especially in South Korea, or those that listened to foreign broadcasting in secret should self-criticize and earn the party’s forgiveness,” said the second source.

“They are also trying to make the youth criticize each other more sharply so they can find out who has been imitating South Korean speaking styles, dyeing their hair brown, and wearing clothing with English letters,” the second source said, citing the signs of outside influence Pyongyang tries to suppress.

The second source said that the youth find the new policy to be invasive.

“They are very critical of the authorities, who have nothing better to do than observe their self-criticism sessions and brand them enemies of socialism all while expecting them to work hard during the busier farming seasons.”

RFA reported last year that authorities were cracking down on young people for texting each other using slang terms they learned by watching or listening to South Korean media illegally, or for using South Korean spellings.

At emergency meetings of the youth league in May 2020, authorities confiscated members’ mobile phones and threatened harsh punishments if they found any illegal media or texts.

Reported by Hyemin Son for RFA’s Korean Service. Translated by Leejin Jun. Written in English by Eugene Whong.

Source : Radio Free Asia More   

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