Media coverage in India over the last month was heavily focused the economy. Prime Minister Modi’s address at the World Economic Forum at Davos, and its implications on the expected role of Indian in the global economy featured in the editorial and op-ed columns of most publications. The findings of the 2017-18 Economic Survey, released by the the Chief Economic Advisor of the coutry were also heavily scrutinised. Finally, outside the realm of economics, columnists weighed in on Isreali Prime Minister Benjamin Netanyahu’s visit to India, and its broader implications on Indo-Israeli ties going forward.
Prime Minister Modi’s Davos Address
Prime Minister Modi was the keynote speaker at the the World Economic Forum in Davos, Switzerland, earlier this month. His address, which sought to shape global perceptions on the attractiveness of the Indian economy and the role that India intended to play within the global economic context, was heavily scrutinised by most media houses in the country.
The Hindustan Times praised Mr. Modi’s address, particularly his ability to connect with his audience. “Any leader asked to address the plenary session of the World Economic Forum at Davos has an opportunity to do two things. The first is to pitch his (or her) country strongly to foreign companies and investors. The second is to build the brand of both the individual and the country by looking at issues and concerns beyond those that just concern his or her country. The world, after all, is sorely lacking in statesmen (and stateswomen) of global stature. The audience at the World Economic Forum was looking for these two big messages in Indian Prime Minister Narendra Modi’s speech during the plenary session of the World Economic Forum at Davos. It wasn’t looking for anything else and, in truth, it isn’t interested in anything else. At the end of a speech delivered in Hindi – this was expected, and seen as a sign of confidence; Chinese president Xi Jinping spoke in Chinese at the plenary in 2017 – it was evident that Modi had addressed the concerns of at least this audience. Given the preponderance of business leaders at the event, it was always clear that Modi would pitch India and India’s economy strong, and he did not disappoint.”
News 18’s digital publication was also full of praise for Mr. Modi’s performance, stating that “Modi showcased his marketing skills in identifying his target audience and making the correct pitch, in a correct manner. Modi was statesman-like and his speech was relevant for the forum and beneficial for India. Choosing Hindi among such a wide and vivid audience not only helped Modi express his thoughts in a more provoking way but also helped in setting the right tone for ‘Vasudhaiva Kutumbakam’. He connected to the audience, first by giving humorous one-liners like Tweeting being a bird’s thing and Amazon being a jungle in comparing the changes of the last two decades since Indian PM Deve Gowda visited Davos for WEF. He told the audience how the Indian GDP has increased 6 times since then. Some people may see it as a political comment but Modi said it as the PM of the country to highlight India’s growth… To sum it all up, Modi hit the right notes in his speech at Davos. He projected his country as an emerging global power ready for leadership on important global issues. He aptly presented India’s reforms that have been done and the way ahead. He did justice to the opportunity by talking as a leader of the country and not just that of a political party.”
An editorial in Live Mint, however, offered a counter-view, arguing that Mr. Modi missed an opportunity to successfully showcase India’s global leadership credentials. “He had a big act to follow; at the same conference last year, Chinese President Xi Jinping caught the attention of the world when he essentially sought to take up the mantle of global leadership that the US, under President Donald Trump, seemed to have carelessly discarded. Xi’s speech was a bravura defence of globalization, not one whit less impressive for the fact that his regime is not precisely the sort of global leader that much of the world would wholeheartedly welcome. Perhaps the problem is that Modi’s pitch fell between two stools. He wanted to both hard-sell India to his audience and to address the search for global solutions. Had India been growing at over 8%, its economy sound and his management unquestioned, he wouldn’t have felt the need to waste much of his speech on the kind of public-relations blitz that many in the audience would’ve heard before. Although India’s economy may be rebounding—slightly and hesitantly—after a self-inflicted slowdown, Modi’s government is obviously still under-confident, still conscious of the need to push its growth story on the world… But Davos is more than just any investor conference; and the prime minister could have saved the “invest in India” pitch for the roundtable meetings with executives that he does so well. Davos didn’t want India to sell itself to the world; it needed India to lead.”
India Economic Survey 2017-18
Earliert his month, the Indian Government, led by Chief Economic Advisor, Arvind Subramnaian, released its Annual Economic Survey for the upcoming fiscal year (2017-18). The survey, which publishes the government’s findings, forecasts and recommendations on the Indian economy was parsed carefully by various publications, with columnists analysing the data in the survey to opine on India’s economic growth prospects.
The Economic Times sounded an optimistic note, stating that “the Survey, over the last few years under Arvind Subramanian, has provided a refreshing take on resolving the challenges facing the Indian economy. In the past, he has given quite a few out-of-the-box policy recommendations like the establishment of a bad bank for resolution of the problem of bad loans and implementation of a universal basic income to do away with the inefficiency of subsidies. The document this year is no less insightful. The Survey places the GDP growth estimate for the current fiscal at 6.75 per cent. This figure is a tad higher than the Central Statistics Office’s projection at 6.5 percent, as in its own estimates, it has not incorporated the pick-up in growth in the latter half of the year. Moreover, the Survey estimates that, as a result of the reforms undertaken this year, real GDP growth will rise by 7 to 7.5 percent in the next fiscal. This would reinstate India’s position as the fastest-growing major economy in the world. On India’s economic growth in the recent past, the Survey highlights an interesting aspect. Over the last 4-6 quarters, India’s growth has temporarily decoupled with that of the world economy. Until early 2016, economic growth in India was accelerating while that of other countries was decelerating. Since then the opposite has been true.”
The Hindu, while also optimistic on the survey’s findings, was slightly more cautious. “The Economic Survey for 2017-18 paints the picture of an economy that gives reason for both optimism and caution. It projects that GDP growth could accelerate to 7-7.5% in 2018-19, from 6.75% in the current fiscal, reinstating India as the world’s fastest-growing major economy. According to Chief Economic Adviser Arvind Subramanian, the key factors contributing to the positive prognosis are the reform measures: the July 1 implementation of the Goods and Services Tax and the steps taken to address the twin balance sheet problem in the banking sector. The latter includes the push to use the Insolvency and Bankruptcy Code for debt resolution and the initiative to recapitalise public sector banks. Adding to these domestic enablers are the fair winds of a global recovery that have already lent a lift to overseas demand for India’s goods and services. But capitalising on these favourable factors while remaining vigilant to other macroeconomic threats, including a key risk in the form of persistently high oil prices, would require exemplary economic stewardship. Among the concerns the CEA has flagged is one relating to what the Survey calls “a classic emerging market ‘sudden stall’ induced by sharp corrections to elevated stock prices.” With Indian stock indices continuing to soar to new highs on an almost daily basis, the Survey warns against “sanguineness about its sustainability”. A correction in the stock market, besides triggering capital outflows, could force policymakers to raise interest rates, choking off the nascent recovery.”
Leading independent digital platform, the Wire, was critical of the Survey, and in particular, the fact that it appeared to gloss over certain key issues. “The roll-out of India’s GST has resulted in a “50% increase in unique indirect taxpayers under the GST compared with the pre-GST system”. This translates to a substantial “3.4 million new indirect taxpayers”. Chief economic advisor Arvind Subramanian and his team also carried out a rigorous assessment of the impact of demonetisation and found that the note ban and GST resulted in an additional 1.8 million individual tax papers, representing 3% of existing taxpayers. “Taking seasonality into account it is found that there is a 0.8 percent monthly trend increase in new tax filers (annual growth of ~10 percent). The level of tax filers by November 2017 was 31 percent greater than what this trend would suggest, a statistically significant difference,” the survey notes. How much of this formalisation has benefited India just yet? As it turns out, not so much in the short-term. While demonetisation resulted in a statistically significant increase in the number of individuals filing taxes, the Economic Survey also notes that “in many cases”, the new filers reported an average income close to the tax threshold of Rs 2.5 lakh, thus “limiting the early revenue impact.” Or in other words, demonetisation saw a bump in the number of people paying taxes, but a majority of these people are earning so little they don’t go past the minimum exemption limit.”
Israeli Prime Minister Netanyahu’s State Visit
Isreali Prime Minister Benjamin Netanyahu recently concluded a 6-day state visit to India, with a view towards deepening trade and defence ties between India and Japan. The visit was extensively covered by the Indian press and drew a diverse range of reactions from various columnists.
The digital platform of NDTV interpreted the visit as a step in the right direction for Indo-Israeli relations, stating that “Netanyahu’s New Delhi visit and Modi’s trip to Israel reaffirmed the fact that India and Israel have managed to insulate what many see as a strategic “match made in heaven” from their divergent policy preferences. Unforeseen events on the ground like a war in Gaza or Iran could alter the equation and make India’s overt friendship with Israel an issue of intense domestic political contention (as it was during the most recent Gaza war, when the Modi government came under pressure in Parliament for refusing to condemn Israeli actions). But in the meantime, no such trouble appears on the horizon. Indeed, the energy and warmth that animated both the prime ministerial visits is poised to propel the partnership to new heights.”
The Hindu also opined that the visit would further strengthen Indo-Israeli relations, but at the same time cautioned that India must also remain focused on the Middle East peace process. “With a relationship that is more open, India has also decided to have a more honest conversation with Israel on the peace process. While the Modi-Netanyahu meeting in July 2017 had practically brushed aside the Israel-Palestine peace process, the joint statement issued on Monday in New Delhi “reaffirmed their support for an early resumption of peace talks between Israelis and Palestinians”. This indicates that the two Prime Ministers had a deeper conversation on the issue this time, including India’s vote at the UN against the decision of the United States to recognise Jerusalem as Israel’s capital. Mr. Modi is expected to visit Ramallah as well as meet Jordan’s King Abdullah II, who as the custodian of the holy sites in Jerusalem is leading peace efforts in the Arab world, and is due in New Delhi shortly. This would take forward India’s commitment to assisting in finding a just solution for the conflict. It will require using the leverage India has built over the decades among Israelis and Palestinians in order to join global and regional powers in pushing them back to the negotiating table. It will also involve challenging Mr. Netanyahu’s contention that struck a jarring note in his otherwise successful visit. He said: “The weak don’t survive. The strong survive. You make peace with the strong. You ally with the strong.” India must stick to its strategy of strengthening ties with Israel without damaging its commitment to the West Asian peace process, and build its friendships and alignments in a way that goes beyond an appraisal of strengths and weaknesses.”
Finally, Live Mint argued that India and Israel appear to be at a stage where relations between both countries can progress independent of the broader political environment in the Middle East. “The regional situation in West Asia has been marked by conflict, turmoil and strategic rivalry between Iran and Saudi Arabia. Syria and Yemen have been destroyed by civil wars in which proxies of Iraq, Iran, Russia, Saudi Arabia, and Turkey were involved. The rise of the Islamic State (IS) led to an orgy of religious-inspired violence and brutality which has now been quelled. But IS has not been completely liquidated and is re-grouping in various countries. Iran has been convulsed by public demonstrators against the “Mullahcracy” that has retained an iron grip on power since 1979. Saudi Arabia, under the new leadership of Muhammad bin Salman, has taken bold steps to reform Saudi society and also challenged Iran’s influence in a competition with distinct sectarian Sunni-Shia overtones. Strategic rivalry and great power competition has destabilized West Asia. This has made India’s policy choices easier, as Gulf countries gravitate towards Israel is search of support against Iran. A divided West Asia helps India make independent policy choices that are underpinned by growing economic bonds, India-Israel ties, position on Palestine, ties with Iran and Saudi Arabia and other Gulf Cooperation Council countries, therefore, do not contradict each other but bolster India’s independent relations with different countries of West Asia. India-Israel relations are on course for further expansion under Modi and Netanyahu, who have developed the personal chemistry needed to take it forward.”
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