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May 2019

 

Media coverage in India this month naturally revolved around the 2019 national elections, whose result was announced on May 21st, flooding a wave of reporting, commentary, praise and criticism.  However, reporting in the run-up to the election results also covered India’s success in lobbying the United Nations Security Council to designate Jaish-e Mohammad chief, Masood Azhar as a “global terrorist” and President Trump’s new “merit-based” immigration proposal to overhaul the United States’ immigration policy.

Prime Minister Narendra Modi’s BJP Returns to Power with Large Parliamentary Majority

Indian Prime Minister Narendra Modi was re-elected in May, with his Bhartiya Janata Party (BJP) winning 303 out of a total 541 seats in the national parliament, thereby further building out the already comfortable majority it had won in the 2014 elections.  Various media publications weighed in on the implications of the BJP’s return to power on the Indian economy and analysed various opportunities and challenges for the incoming government as well as the way forward for the Congress Party following another resounding defeat in the national elections.

The Economic Times highlighted that the victory for BJP in the elections pointed to a fundamental shift in Indian politics, from the irrelevance of old caste loyalties to one for aspiration and development.  “The BJP’s stunning win pointed to a fundamental shift in Indian politics, in which old caste loyalties from the post-Mandal era appear to be no longer relevant.  “There are only two jaatis (castes) in India today — one is that of the poor, and the other is made up of those who want to contribute to take people out of poverty.  There is no other caste,” Modi said in his victory speech at the BJP headquarters on Thursday evening.  Affirming that the vote for the BJP was one for aspiration and development, Modi said: “Those who wore the mask of secularism are today exposed, as the people have voted us back to power for the work we did.”…Besides Modi’s charisma, his administration’s focus on welfare schemes for all segments of society consolidated the ‘gareeb vote’, and expanded BJP’s support base among women and first-time voters… The other big trend was the decline of regional satraps wherever the BJP expanded. In UP, Mayawati’s BSP may have gained a few seats with the help of SP, but the party’s vote share remained at roughly 19%. West Bengal chief minister Mamata Banerjee received a big jolt as the BJP was leading in 17 seats, just five short of the Trinamool Congress’ tally of 22 in the 42-seat state… The political shift towards a centrist, nationalist political force was further validated by the fact that only regional parties aligning with the BJP — Shiv Sena, JDU and Lok Janshakti Party — did well.”

Shifting focus to that task at hand for the new government, a column in The Outlook listed the key areas of focus for Mr. Modi’s second term in office, while also enumerating possible challenges could arise.  “[The] stellar performance of Prime Minister Narendra Modi’s BJP with another large parliamentary majority will see continuity of macroeconomic policy in the next five years but the key economic challenge now is to continue reforms, brokerages and economists said Thursday.  The BJP still does not have a majority in Upper House of Parliament, the Rajya Sabha, and this will pose hurdles to the party’s legislative reform agenda, IHS Markit said in a note on election verdict.  Despite [these] challenges, the economic outlook looks positive for the second term of the Modi-led BJP government, with GDP growth forecast to average around 7 per cent per year over the 2019-2023 period… “Going forward, we see potential structural reforms focusing on four key themes: Land – transparent auctions, and digitisation of records; Labour – creating an enabling regulatory environment; Privatisation – in areas such as agriculture and banking; and export promotion,” Goldman Sachs said.”

A column in Livemint argued that having successfully laid the ground work for a number of structural reforms during its first term in office, Mr. Modi’s government could now focus on implementing the said reforms. “The sustained hard work for the past five years will now allow the prime minister and his team to take up several reforms in his next term and make India a country that is entirely business friendly.  His government has streamlined regulations, tackled corruption, promoted entrepreneurship, created jobs and worked towards a newer and better India.  However, this is just the beginning.  In the next five years, markets have a realistic hope for BSE Sensex crossing 50,000 and 60,000…  The past five years saw the incumbent government taking some strong reform measures on the back of their decisive majority.  The GST Act streamlined the country’s tax mechanism, the Insolvency and Bankruptcy Code (IBC) helped restore the lender’s confidence, while the direct transfer benefit system is a direct result of the government’s commitment to financial inclusion.  The action taken to reduce corruption, ensuring more money is available to beneficiaries due to schemes like Swachh Bharat, Ujjwala Yojana, Jan Dhan and Aadhaar is hugely successful at the grassroots.  These measures will not only have a visible impact on the economy today but also in the coming years.”

Focusing on the way forward for the opposition, Business Standard highlighted that while it is time for a non-Gandhi to take over leadership of the Congress party, it is crucial for the party to rebuild its public perception before a new leader can take over in a manner that will be seen as natural rather than stage-managed. “There are doubts among the rank and file over whether the Gandhi family should continue to lead the party.  Stung by last week’s resounding defeat, workers on the ground have been criticizing the leadership for lacking the wisdom to build strong pre-poll alliances and an inability to cash in on its electoral gains in three major states where Congress had wrested power from Modi’s Bharatiya Janata Party just six months ago… While historically Congress secured more than 25% of the vote share, it now hovers at less than 20%. That could signal the party is headed for a death spiral, according to research by Delhi-based Centre for Policy Research… “Elections are a game of perception, and that is what was lost,” said Anil Shastri, senior Congress leader and the son of former Prime Minister Lal Bahadur Shastri. “Congress couldn’t counter the BJP’s campaign on nationalism.”  

An article in the Economic Times specified the urgent short and medium-term economic challenges facing the country while outlining how the new government must work towards addressing them. “The central government has been shrinking in size (share of GDP). To improve productivity and predictability of public expenditure, immediately introduce a medium-term fiscal framework to replace annual budgeting as the operational instrument for the execution of fiscal policy… This requires GoI to specify a medium-term expenditure ceiling assuming no significant increase in revenue-GDP ratios over the medium term… The government should also commission a review of three important areas of central expenditure: defence, internal security and railways, and specify resource envelopes for these over the next nine years… The major structural weakness that India faces is that, so far, growth is spurred by catering to the consumption of the top 15% of the population… The task before GoI and the private sector is now to deliver a business model such that both agriculture and affordable housing provide opportunities for those in these businesses to earn at least 15% return, while those earning twice the minimum wage are able to meet the demand for these items without subsidy.”

 

A final opinion piece in the Livemint took a much more critical look at underlying messages it read into Mr Modi’s return to power.  The article called into question the sincerity of Mr Modi’s victory speech and its commitment to secularism and inclusiveness: “The Prime Minister of India can today face the whole nation and make fun of “secularism”, as Modi did on Wednesday in his victory speech. Secularism was always an atheist’s point of view on how believers should behave. It never made sense to believers… After Modi’s dig at secularism, some journalists pointed out that the word was part of the Indian constitution (added late, though, in 1976), as if this somehow made it some sacred quality of Indian character.  But then, Modi knew very early in his life that if a nation had to proclaim it was secular, it probably was not.”  Similarly, in his speech he also said that he would create an inclusive India, which the article dismissed: “This is unlikely. There will not be such an India for years to come. Modi was just reaching out, and being nice, which has its own value.”   The article also questioned the nature of tolerance towards Muslims in India in the future: In new India, Muslims will certainly find opportunities to excel; Muslims may continue to be film superstars, another Muslim might captain the Indian cricket team, but a measure of freedom in a country is also the right to make a mistake and get away with it, or face only proportionate punishment.”

 

China Lifts Block on the United Nations (UN) Designating Masood Azhar, As a Global Terrorist

On the back of sustained diplomatic pressure applied by India and other Western countries, China withdrew its objection to the UN designating Masood Azhar, the founder of the Jaish-e-Mohammad, as a global terrorist.  Various media publications attributed the change in China’s stance to enormous global diplomatic pressure while highlighting what may turn out to be a turning point in the global war on terror, serving as a warning to countries like Pakistan who use it as a strategic tool.

A column in the Economic Times highlighted how China’s acquiescence to the UN labelling Azhar as a global terrorist reflected its growing frustration with Pakistan’s strategy of using terror masterminds as strategic assets. “China’s decision to drop its objection to the UN listing Jaish-e-Mohammed (JeM) chief Masood Azhar as a terrorist reflects its growing frustration with Pakistan’s use of terror masterminds as strategic assets… People familiar with China-Pakistan ties told ET that while for decades China has used Pakistan as a tool to box India in South Asia, it is now feeling the heat from Islamabad’s strategy to encourage terror groups. One of the persons said that Pakistan’s strategy to use terror masterminds as strategic assets is resulting in increasing face loss for China…  Besides carrying out attacks in India, the JeM is also threatening Chinese interests in Pakistan, according to one of the persons cited earlier. On April 30, a day before Azhar’s listing, 51 members of the European Parliament issued a collective letter addressed to PM Imran Khan, expressing concern and seeking assurances that the persecution of religious minorities will cease immediately, increasing pressure on China to act on the listing proposal…  The letter criticised Pakistan and its establishment for falsely accusing and targeting individuals under the blasphemy law.”

An article in The Hindu detailed out the reasons for China shifting its stance on Masood Azhar while covering the potential implications of this decision on future relations between India and China. “The shift in China’s position after a decade-long stalemate can be attributed to many reasons, the first being the changing geo-strategic dynamics in the Indo-Pacific region and mounting U.S.-China tensions. Against this backdrop, China’s support for Azhar, would only have nudged India closer to the U.S. Second, the escalation by the U.S. of the matter in the UNSC would have compelled China to openly provide convincing reasons for its stand…  Third, instead of letting the U.S., France and the U.K. take credit, China would have seen merit in reassuring India on a key concern, which, had emerged as a major bugbear in bilateral ties… China would also expect such accommodation to soften India’s cut-and-dried position against the Belt and Road Initiative (BRI)…  Fourth, with more terror attacks in India and the neighbourhood emanating from Pakistan, and the growing influence of Pakistan-based groups, China must have realised that the game was simply not worth the candle…  The next step for India would be to sustain the pressure on Pakistan to take conclusive action against terror outfits operating from its soil… Nevertheless, China had condemned the Pulwama attack and cooperated at the Financial Action Task Force Plenary Session in Paris in ensuring that Pakistan remained on the “grey list”. Significantly, it had not reacted to India’s ‘pre-emptive strikes’.”

The Livemint outlined why following China’s decision to lift its block, the global powers need to unite in their stand against terrorism going forward by ensuring all terrorists are treated alike. “The United Nations (UN) on Wednesday finally designated the Pakistan-based Jaish-e-Mohammed’s (JeM) chief, Masood Azhar, as a global terrorist but not till China, under enormous global diplomatic pressure, finally blinked and lifted its block on the move. It may well be a turning point in the global war on terror and a warning to countries like Pakistan who use it as a strategic tool… India’s first attempt to get Azhar listed as a terrorist came in 2009… Given this dubious track record it was rather inexplicable to see the Chinese block a UN resolution designating Azhar a terrorist since 2016…  Regardless, it should be apparent to global powers, especially to China, that terrorism does not respect topography and they need to be united in their stand. The distinction between good and bad terrorists is absolutely untenable. Terrorists have to be treated alike… the audacious strikes on the World Trade Center in New York in 2001 exposed the vulnerability of the US to this global scourge. In fact, the US had been cautioned by then prime minister Atal Bihari Vajpayee exactly a year earlier. The tragic incidents in New York underlined this stark reality; just like the terrorist attacks in 2015 in Paris—and these were preceded by attacks on London and Madrid…  In the final analysis, it is clear that designating Azhar as a terrorist was long overdue. That it has been achieved overcoming Chinese resistance is further cause for celebration. Now it is time for all countries to take the right cue. Or is that wishful thinking.”

 

US President Donald Trump Unveils New Immigration Policy for Merit-Based Professionals

US President Donald Trump announced a proposal to overhaul the country’s immigration policy that would give preference to foreigners based on merit rather than the existing system that gives preference to family ties.  Media houses weighed in on the issue, its implications and potential challenges, with many opining that Indian nationals are expected to be the biggest beneficiaries of the new policy, given that Indians account c.75% of all pending employment-based green card applications.

The Economic Times outlined why the new merit-based policy is important for Indian H-1B visa holders, noting that it currently takes an Indian national at least nine-and-a half-years on average to get a green card.  “Indian nationals are likely to be the biggest beneficiaries of US President Donald Trump’s new plan to change the system that allows foreign immigrants to become permanent residents in the country.   Trump proposal for a point-based system means people with skills will be preferred for permanent residency as against the current country-based quotas that favours family ties for green cards. Under the plan, 57% of the proportion of green cards, or lawful permanent residence status, will be given to people with skill-based visas as against the 12% currently.  The point-based system is similar to what Canada, Australia and New Zealand follow, which means skilled workers get a faster route to permanent residency status in the US…   Currently, it takes an Indian national at least nine-and-a half-year on average to get a green card. “If this proposal becomes law it will obviously help Indian H-1B visa holders because it will probably do away with a lot of the green card backlog. There are a finite number of US Green Cards and they are taken by family-based petitioners,” said Vivek Tandon, founder of EB5 BRICS and an immigration advisor.”

An article in Business Today covered the possibility of the plan facing an uphill task in getting approved due to the US Congress being divided on the issue of immigration reform.  “The plan faces an uphill task mainly because of the bitterly divided Congress on partisan lines, especially on the issue of immigration reform.  Even if Trump succeeds in convincing his Republican lawmakers on this, the opposition Democrats, led by Congresswoman Nancy Pelosi, House Speaker, and Senate Minority Leader Chuck Schumer, are dead against any such legislative success to the president.  The Trump Administration is well aware of the issue. It is planning to make it an election issue in 2020 if the opposition Democrats are unwilling to be engaged on this, a senior administration official told reporters during an interaction on the eve of the rollout of the merit-based immigration policy.”

Quartz India argued that while removal of per-country limits for green card applications will help reduce processing time for Indian applicants, the fate of hundreds of thousands of Indians already in the queue for green cards, waiting for years due to the immense backlog, is uncertain. “Donald Trump’s new “merit-based” immigration plan seems to be tipping the scales in favour of skilled foreign talent. But admitting skilled talent through this route won’t be a bed of roses either, experts warn… “It is entirely possible that the new system renders ineligible large numbers of people who are eligible under the current system,” said Leon Rodriguez, partner at the Washington, DC office of Seyfarth Shaw and former director of USCIS. “As an advocacy matter, I think it is critical that policymakers consider grandfathering of those already waiting for green card…Others have ditched the American dream altogether and are looking north, finding a sea of opportunities in neighbouring country Canada.  Recently, the UK, too, has started opening its doors wider for foreign immigrants.”