25-05-2017 (Important News Clippings)
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Date:25-05-17
How to combine GST with a sharp Make in India strategy to convert India into a global manufacturing hub
One, GST replaces eight central and nine state taxes such as central excise duty, service tax, state VAT and entry tax. This means the end of an era of multiple taxes levied at central, state and local levels, each with a different tax compliance system.
Two, GST reduces the cascading effect of taxes. An example will explain the current system. A manufacturer pays central excise at 20% on a shirt of value Rs 100. Next, the state government charges VAT not on Rs 100 but on Rs 120 which is the value of shirt and the tax already paid. VAT rate of 15% in effect becomes 18%, leading to a higher price of the shirt. GST resolves the issue by integrating tax systems of Centre and state. Also, GST is to be paid only on the value addition and not on absolute value.Three, GST would lead to lower transportation and distribution costs. Currently, firms spend a high 5-8% as product distribution and warehousing cost. The main reason for the high cost is the expense incurred on branches and warehouses that exist due to tax saving rather than business considerations. This would further reduce cost.The lower taxes, simplified tax structure, seamless tax credit facility and technology driven easy tax compliance system offered by GST provide an ideal platform to increase manufacturing’s share of GDP from the current 17.4% to 25% by 2025.
This would require India to expand its manufacturing value add to $837.7 billion and manufacturing gross output to $3.8 trillion by 2025. These are ambitious targets. Getting there would require a laser-like focus on the following four manufacturing categories.First, develop a plan to facilitate manufacture of factory machinery, the machinery that makes the goods. No nation becomes a manufacturing power without manufacturing capital goods.
We can focus on semiconductor making equipment (SME) which is at the heart of most import products/ sectors today: computers, mobiles, telecom, automobiles, and now Internet of Things. Part of the technology for such products can be obtained through licences or outright purchase. But most critical will be to develop in-house industrial R&D centres.Second, set up facilities for manufacturing of specialty materials, nanotechnology, precision mechanical devices, integrated circuits, etc. This would require investments in existing and new R&D institutions headed by professionals of proven capability. Korea is an interesting example of how a developing country can transition into a high-tech manufacturing country largely through government driven interventions, providing subsidy on R&D investments.
Third, facilitate manufacturing of computer, TV, mobile phone and other electronic and telecom equipment. This sector made China the world’s industrial giant. Starting in the mid-1990s, China focussed on electronics and telecom sectors where final products contained a large number of components and parts that could be imported from other countries. In less than 15 years China emerged as the leading exporter of electrical machinery, electronic and telecom equipment. India already spends large amounts of foreign exchange importing such items.Fourth, create large-scale manufacturing facilities for producing skill- and labour-intensive products like auto components, toys, furniture, footwear, apparels, mattresses, locks, low-end engineering products. This would require creating the largest possible scale of organised production that ensures economies of scale.
India should move quickly as the factories are easy to develop and can employ millions of people who can move from agriculture or informal sector to formal jobs. Labour law reforms are a critical factor in facilitating large scale employment.GST will raise India’s productivity and reduce prices. Combining GST with a clearly articulated manufacturing strategy would attract global investments, create jobs and make India a large manufacturing nation within a few years.There cannot be a better time to jump-start the Make in India programme.
Date:25-05-17
CPEC is a sea change: It transforms the matrix of opportunities and threats in India’s neighbourhood
Xi declared the China Pakistan Economic Corridor (CPEC) to be BRI’s flagship, thereby hotting up Kiplingian ‘great games’ in India’s neighbourhood. Some enthusiastic commentators have compared BRI to America’s Marshall Plan to resuscitate postwar Europe. This is wildly optimistic.
When the Marshall Plan was launched the US bestrode the world economy like a colossus – accounting for close to 30% of global economic output – while Europe and Japan lay in ruins. Moreover America was facing off with the Soviet Union; the Cold War was just beginning.These factors made the Americans remarkably generous. Most Marshall Plan aid was in the form of grants instead of loans; Europeans themselves were asked to create their own plans to rebuild their countries; technical assistance was provided to European manufacturers. Moreover the Americans extended Marshall Plan-like aid to Asian countries such as Japan, Taiwan and South Korea, and opened their market to them without reciprocal benefits. Soon, they would flower into ‘miracle’ economies with explosive growth rates.Dating from 1948 the Marshall Plan, in fact, launched America as an outward looking, global power (some might argue that era ended in 2016 when America elected Trump and looked to return to pre-World War II isolationatism). So, did China just do in 2013 – when Xi launched BRI – what the US did in 1948?
Far from it. China’s own ‘miracle growth’ has tapered off and its economy is under unprecedented pressure. According to Ruchir Sharma, Morgan Stanley’s chief global strategist, China has kept its growth going after the 2008 financial crash mainly through stimulus measures, by pumping debt into wasteful projects.China’s public and private debts have grown from a manageable 150% of GDP during the boom years to an unsustainable 260% now, which according to Sharma’s calculations will most likely whipsaw its economy into a deep slowdown or even a recession. The next global financial recession, in fact, could be triggered by China.
The details of most BRI deals, negotiated between secretive governments, are murky. They often have the flavour of the Mughal emperor bestowing a firman on the East India Company. The subcontinent has seen this movie before and is understandably leery, including in Pakistan which otherwise sees China as its “iron brother”. There’s a debate in Pakistan now, on whether CPEC should be seen as a gift horse or a Trojan horse.
The Nawaz Sharif government has not yet released details of the CPEC master plan which it agreed to in December 2015, going so far as to characterise a recent report detailing the plan in Pakistan’s Dawn newspaper as an appalling ‘leak’ (on par with Dawn’s earlier leak about Islamabad pleading with Rawalpindi to curb its proxy warriors, a leak which incensed the military and caused senior government heads to roll). The shroud of secrecy, together with the sweeping and ambitious scale of the plans as revealed by Pakistani press reports, incline one towards the ‘Trojan horse’ metaphor.
Thus, while there will be a panoply of tax and duty concessions for Chinese enterprises – not available to Pakistani businessmen, let alone investors from other countries – the bulk of the aid will consist either of expensive loans or equity transfers. Pakistan was made to refuse a loan offer from the multilateral Asian Development Bank for its $8 billion Peshawar-Karachi railway line, whose funds must be drawn from a Chinese bank instead. Thousands of acres of land are to be leased to Chinese entities. Visa-free access to Pakistan is planned for Chinese nationals, with no reciprocity.There is no clarity whatsoever on the funding and repayment terms of CPEC projects. One report cites a planning ministry official to the effect that Pakistan has bound itself to awarding all CPEC projects to Chinese contractors at whatever price the latter quote. Instead of being excited about CPEC, Pakistani businessmen are apprehensive of its fallout.
In short, if CPEC is BRI’s flagship, then BRI could be a way of exporting the debt problem that burdens the Chinese economy and rapidly acquire assets abroad. The Hambantota story is well known: when the current Sri Lankan government came to power it found itself saddled with $8 billion in Chinese debt, thanks to deals negotiated by the previous Rajapaksa government. To help pay this debt Sri Lanka now wants to sell off the strategically located Hambantota port to a Chinese company, but is being held back by vociferous political protests.
How should India play BRI? Its general attitude of wariness is the right one, but that should be married to an awareness of the compulsions and weaknesses driving Chinese policy, which Beijing will mask by projecting its sense of manifest destiny and grandiose rhetoric around BRI.Such an awareness may even enable New Delhi to leverage those compulsions and get Beijing to pay more attention to its concerns. But for that it must be prepared to negotiate hard and keep its own strengths in mind – unlike the Pakistanis who have walked into a trap driven by a simplistic worldview that may be summed up by the quasi-Orwellian dictum: “China good, India bad”.
Date:25-05-17
The Latest IDEA of India
The Narendra Modi government has entered its fourth year. Three years ago, the country was running the risk of a sovereign ratings downgrade (to junk status) that could have potentially snowballed into India’s isolation from global capital markets. Today, the situation is rife with speculation about the possibility of a sovereign ratings upgrade.Avid investor interest is chasing India with its conspicuous arrival on the international high table, in the middle of a successful transformation of the economy from one of the ‘Fragile Five’ among the Brics economies in 2013 to a ‘Global Macro Hot Spot’ currently.
This transformation is a culmination of several decisive policy decisions taken by GoI over the last three years. Focusing squarely on the objective of economic plumbing, policymakers embraced the principle of festina lente — make haste slowly. In the process, over the last three years, GoI has touched upon various facets of reforms. A key facet of these reforms has been the whole new ‘IDEA’ (International collaboration, Domestic reforms, Ease of doing business, Active consensus building) behind them.
International collaboration: Through determined policy engagements, this government is leveraging the di- plomatic channels for enhancing trade and commercial linkages. In the process, it is carving out an active role for India on the geopolitical map.Domestic reforms with outcome orientation: Structural macro reforms like the goods and services tax (GST), Make in India, Skill India, fuel price deregulation and the re-contouring of the Fiscal Responsibility and Budget Management platform will pave way for boosting India’s potential GDP growth by at least 1.5% in the medium term.
Ease of doing business: This was one of the first objectives of the new government. Various policies like GST, foreign direct investment (FDI) liberalisation and digitisation have been tailored around this theme. Also, the government has ensured that this trickles down at the state level through competitive fiscal federalism.Active consensus building: Consensus on critical policies like GST, the Bankruptcy Code and FDI brings out the importance of political unison and the concept of ‘Team India’ in a meaningful manner.
Licence to Skill
The reform agenda has made considerable progress in the last three years. The next few years will see a laser focus on reviving private investments and boosting job creation. As programmes like Skill India take flight, we will see an impetus to employment, which will be key to reap the benefits of the demographic dividend that India is expected to enjoy until 2040.
Very soon, people born in the new millennium will start entering the labour force. Against the backdrop of the changing nature of jobs in a world that is currently at the crossroads of globalisation, Industrial Revoluti- on 4.0 and protectionism, policy focus on boosting employment and nurturing micro, small and medium enterprises (MSMEs) as an extension of existing policies will yield the desired outcomes.The NDA government is now in power in 16 states. Reforming labour laws should be accorded top priority. States like Rajasthan, Gujarat and Madhya Pradesh have already made a beginning with labour market flexibility. These initiatives trickle down to other states in order to bring out the best practices.
Further, states also need to amend archaic provisions in the Factories Amendment Bill, the Industrial Relations Code, and the Shops and Establishments Bill to synchronise it with the needs of a modern economy.
The MSMEs generate close to 45% of the total industrial employment and are critical for the ground-level consummation of the ‘Make in India’ project. While GST will provide a shot in the arm, cluster-based development will further help MSMEs reap economies of scale.Further, a specific focus financing for MSMEs through attractive corpo- rate tax structures, and the building of a robust ratings and exchange trading culture, will go a long way in strengthening these enterprises.Stand Up, for You’re RightVocational training under skill development is critical in a world where disruption and exponential change is the new paradigm. In addition, we should see the policy emphasis on DICE (Design, Innovation, Creativity & Entrepreneurship) getting further energised through the Stand-Up India and the Startup India programmes.The economic energy in the existing team of policy architects is palpable and infectious. After renovating the house, the government is now ready to take the next leap. India took 31years to increase the size of its economy by 10 times to its current level of $2.3 trillion.Now, armed with the four tectonic changes in the form of IDEA, India’s next phase of 10-fold transformation to a $20-trillion economy will take less than half the time.
Rana Kapoor The writer is managing director, Yes Bank
Date:25-05-17
India and Africa must focus on mutual benefits
That the African Development Bank chose India for its annual meeting, in the fourth time the meet has been held outside Africa, is an indication of the promise and hope of India-Africa partnership and the historically cordial ties India has with many post-colonial African states, notwithstanding much bigger investments in the region by China.
India became a member of the African Development Bank in 1983, but it took another 30 years to move the partnership forward. This slow pace is emblematic of India’s African engagement. Though the fifth-biggest investor, India accounts for $54 billion, or 19.2 per cent, of Africa’s foreign direct investment. In 2015-16, bilateral trade was at $56.9 billion. Increasing its investment and presence in Africa will require India to improve the pace of decision-making.
It is not enough to extend generous lines of credit. Improving pace of project implementation is another area New Delhi must focus on, to overcome a reputation for scant ability to meet contractual obligations. Finance minister Arun Jaitley described the Indian approach as demand-driven and free of conditions. To this end, India needs to align its efforts with Africa’s goal to diversify away from natural resource dependence.This one factor would set India apart from China and the EU. New Delhi must ensure job creation and building local capacities on the continent, while diversifying its investment destinations beyond five or six countries in Africa.
PM Narendra Modi and his administration have made the case for a deeper partnership with the African continent, and that India’s version of partnership focuses on needs identified by African countries. Africa is listening, but what the partnership now requires is to gain speed and efficiency. Perhaps India could emulate Africa’s famed long-distance runners.
सामाजिक ताना-बाना संतुलित रखने में भाजपा की नाकामी
उत्तर प्रदेश के नए मुख्यमंत्री योगी आदित्यनाथ की शुरुआती जय जयकार अब हाहाकार में बदलने लगी है। पश्चिमी उत्तर प्रदेश में हिंदुत्व की सोशल इंजीनियरिंग की राजनीति विभाजनकारी साबित हो रही है। हिंदू-मुस्लिम दंगे के रूप में शुरू हुआ सहारनपुर का तनाव अब हिंसक सवर्ण-दलित टकराव का रूप ले चुका है। यह सवर्ण राजनीति का उग्र चेहरा है जो लंबे समय के बाद प्रदेश की सर्वोच्च सत्ता पर सवर्ण जाति के एक व्यक्ति के विराजमान होने पर प्रकट हुआ है। उसके परिणाम प्रशासनिक नियुक्तियों में दिखाई पड़ रहे हैं और सामाजिक संबंधों में भी नए प्रकार से घटित हो रहे हैं। भले ही भाजपा यह कहकर अपना पल्ला झाड़े कि मायावती ने अपने राजनीतिक स्वार्थ के लिए सभा करके सहारनपुर को दंगे में झोंक दिया लेकिन, हकीकत में यह भाजपा और संघ परिवार की विफलता है, जो प्रदेश में कानून और व्यवस्था को काबू करने और सामाजिक ताने-बाने को संतुलित रखने में नाकाम रही है। दरअसल हमारे राजनीतिक दलों के वैचारिक खोखलेपन और संदिग्ध नीयत के कारण मौजूदा समाज वोट भले एक साथ देता है लेकिन, वह एक साथ शांति से रहने और देश की तरक्की में योगदान देने को तैयार नहीं है। मौजूदा दलों की दिक्कत यह है कि वे समाज के किसी व्यापक उद्देश्य की बजाय प्रतीकों के आधार पर फर्जी गोलबंदी करते हैं और उसे किसी तनाव में परिवर्तित करके छोड़ देते हैं। ऐसा तब हुआ जब भाजपा ने सवर्ण (हिंदू) दलित एकता कायम करने के लिए 14 अप्रैल को आंबेडकर जयंती पर जुलूस निकालना चाहा तो पुलिस प्रशासन ने उसे अल्पसंख्यकों के मोहल्ले से गुजरने नहीं दिया और टकराव हुआ। किंतु महाराणा प्रताप का जुलूस निकाले जाते समय सवर्णों और दलितों के बीच जो टकराव हुआ वह हिंदुत्व के सिद्धांत को दोफाड़ कर रहा है तो भीम सेना नामक दलित संगठन के सामने आने और दिल्ली में जबरदस्त रैली करने से बसपा की पहले खिसकी जमीन फिर हिल रही है। संदेश साफ है कि डॉ. भीमराव आंबेडकर के विचारों के आधार पर संगठित हो रही दलित राजनीति सामाजिक परिवर्तन की मांग करती है और उसे न तो हिंदुत्व के दर्शन के आधार पर हजम किया जा सकता है और न ही चंदे की बसपाई राजनीति से संतुष्ट किया जा सकता है।
Date:25-05-17
‘बैड बैंक’ जैसे साहसी कदमों का इंतजार
डिजिटल मुहिम के लाभ की चमक बकाया लोन से फीकी
किसी प्रधानमंत्री ने कभी मोबाइल पर पेमेंट एप लॉन्च कर देेशवासियों को मोबाइल पेमेंट करने के लिए आह्वान नहीं किया होगा। मोदी के डिजिटल मुहिम का बैंकिंग को बहुत फायदा पहुंचा। नोटबंदी के कारण वह संभव हुआ, जिसे 3 से 5 साल और लगते। नंबवर 2016 में इलेक्ट्रॉनिक लेने-देन 96.53 खरब रुपए था, जो मार्च 2017 में 480.16 खरब रुपए हो गया। कम लागत के अधिक डिपॉजिट से बैंकों का मुनाफा बढ़ा। सीएएसए अनुपात (कुल डिपॉजिट की तुलना में करंट व सेविंग अकाउंट डिपॉजिट) पिछले साल के 35 से बढ़कर 40 फीसदी हो गया। जन-धन कार्यक्रम से सिर्फ 32 माह में बैंकिंग से बाहर रहे तबके के 28.52 करोड़ नए खाते खुले। मुफ्त बीमा जैसी सहूलियतें देकर सरकार ने खाते खोलना लाभप्रद बना दिया। मुद्रा योजना के तहत यही काम छोटे व्यवसायियों के लिए किया गया है। मोदी सरकार ने कई अन्य दूरगामी फैसलों से बैंकिंग पर प्रभाव डाला है।
‘आधार’ और ‘इंडिया स्टैक’ मौलिक रूप से भारतीय बैंकिंग को रूपांतरित कर देंगे। कई बैंक तो बिना किसी कागजात के मिनटों में खाते खोल रहे हैं। पेमेंट बैंक और फाइनेंस बैंकों के रूप में 21 लाइसेंस नए बैंकों के लिए दिए गए हैं। यह साहसी प्रयोग है, जिससे गरीब व बैंकिंग से अब तक बाहर रहे तबकों को औपचारिक बैंकिंग सेवाएं देने में मदद मिलेगी। लेकिन, बकाया लोन (एनपीए) का बढ़ना चिंताजनक है। पिछले तीन साल में सकल एनपीए अनुपात 2014 के 4.1 फीसदी से बढ़कर 7.6 फीसदी हो गया है। लगता है कि जब 2017 के वित्त वर्ष में सारे बैंक नतीजे बता देंगे तो यह आंकड़ा 10 फीसदी के पार चला जाएगा। टेक्नोलॉजी से जो फायदा हुआ है, उस पर बकाया कर्ज पानी फेर रहा है। दिवालिया कानून और आरबीआई को नए अधिकार जैसे कदम पर्याप्त नहीं है। दुनिया में अन्य जगह सफल रहा ‘बैड बैंक’ बनाकर एक बार में ही सफाई का साहसी कदम नहीं उठाया गया।
सौरभ त्रिपाठी सीनियर पार्टनर व डायरेक्टर, बोस्टन कंसल्टिंग ग्रुप
अर्थव्यवस्था ग्लोबलमांग में भारी गिरावट और नोटबंदी जैसे घरेलू आघात
इकोनॉमी
अर्थव्यवस्था ग्लोबलमांग में भारी गिरावट और नोटबंदी जैसे घरेलू आघात से निपटने में सफल रही। औसत आर्थिक विकास दर 7% के आसपास रही। वित्तीय घाटा, चालू खाता घाटा, उपभोक्ता मुद्रास्फीति, विदेशी मुद्रा भंडार और रुपए की विनिमय दर जैसे सूक्ष्म आर्थिक मापदंड एकदम दुरुस्त हैं। यह जुलाई-अगस्त 2013 की तुलना में एकदम उलट है, जब भारत को गंभीर संकट की कगार पर बैठी ‘पांच कमजोर’ उभरती अर्थव्यवस्थाओं में शामिल किया गया था। आज विदेशी बाजारों में भारत की पूछ-परख है। उसने 2016-17 में लगभग 65 अरब डॉलर का विदेशी निवेश आकर्षित किया है।
विदेशी निवेशकों का बेहद सकारात्मक रुख होने के कारण ये हैं 1. बड़े पैमाने पर किए गए आर्थिक सुधार जैसे जीएसटी कानून, दिवालिया कोड, कारोबार करने के वातावरण में सुधार, बेनामी संपत्ति कानून। 2. उच्च स्तर पर भ्रष्टाचार और घोटाले विदा हो गए हैं। ई- गवर्नेंस ने सरकारी दफ्तरों में उपस्थिति और सरकारी योजनाओं की मॉनिटरिंग और कामकाज में सुधार किया है। 3. जन धन, आधार और मोबाइल फोन के प्रभावी उपयोग से सरकारी पैसे और सब्सिडी के हस्तांतरण में गड़बड़ी रुकी है। 4. आरबीआई को मुद्रास्फीति पर काबू पाने का वैधानिक अधिकार देने और एक स्वतंत्र मौद्रिक नीति समिति का गठन कर निवेशकों के लिए आने वाले वर्षों में मामूली मुद्रास्फीति सुनिश्चित की है। 5. सरकार ने फिजूलखर्ची रोकने के लिए प्रतिबद्धता दिखाई है। 6. राज्य विद्युत मंडलों के भारी कर्ज को समाप्त करने के लिए उदय योजना और बिजली वितरण कंपनियों को लाभकारी बनाने के उपाय। 7. डिजिटल इंडिया, गरीबों को मुफ्त गैस कनेक्शन जैसी 35 योजनाओं का लक्ष्य गरीबों के जीवन स्तर में सुधार है।
देश के प्रति विदेशी निवेशकों का बेहद सकारात्मक रुख
राजीव कुमार अर्थशास्त्री,डायरेक्टर पहले इंडिया फाउंडेशन
राज्यों से तालमेल के जरिये तेजी के साथ मंजूरी देेने की कोशिश
डेवलपमेंट
तीन साल मंें मजबूत सकारात्मक बदलाव हुए हैं। परियोजनाओं को तेजी से मंजूरी देने और समयबद्ध तरीके से नतीजों बहुत जोर दिया जा रहा है। एकल खिड़की से मंजूरी और प्रोजेक्ट को तेजी से मंजूर और उन पर जल्दी अमल के लिए राज्यों के साथ तालमेल बैठाने पर बल है। इसके लिए प्रक्रियागत बदलाव लाया गया है। यही वजह है कि बिज़नेस करने की आसानी में भारत की रैंकिंग 142 से उठकर 130 के ऊंचे स्थान पर चली गई है। वर्ल्ड बैंक के लॉजिस्टिक परफॉर्मेंस इंडेक्स पर भारत 160 देशों में 19 पायदान की छलांग लगाकर 35 वें स्थान पर आ गया है।
बुनियादी ढांचा ही देश में डेवलपपेंट को तेजी देता है। बिजली-पानी जैसी मूल जरूरतों के ढांचों की खामियां दूर करने पर जोर है और सड़कों व राजमार्गों पर भविष्य की दृष्टि से निवेश किया जा रहा है। स्मार्ट सिटी और हाई स्पीड ट्रेन भी इसी दिशा में पहल हैं। बंदरगाहों, सड़कों, रेलवे, ऊर्जा, शहरी सुविधाएं इन सब क्षेत्रों में उठाए कदमों का कोयला, इस्पात, सीमेंट, निर्माण आदि क्षेत्रों में द्विगुणित प्रभाव हुआ है। देश को अगले पांच साल में 31 खरब रुपए बुनियादी ढांचे पर खर्च करने की जरूरत है। इसमें से 70 फीसदी बिजली, सड़क और शहरी ढांचे के लिए जरूरी है। यही वजह है कि सरकार का जोर बुनियादी ढांचे पर सार्वजनिक खर्च आधारित निवेश को बढ़ाकर अर्थव्यवस्था को गति देना है। सरकार ने अगले तीन साल में 25 खरब रुपए की निवेश योजनाए बनाई है। इसमें से 8 खरब तो 27 इंडस्ट्रियल क्लस्टर बनाने और 5 खरब रुपए सड़क, रेल और बंदरगाह जोड़ने की योजनाओं पर खर्च होंगे। ऊर्जा क्षेत्र में भी अगले 4-5 वर्षों में 250 अरब डॉलर के निवेश की क्षमता है। 2050 तक 84.30 करोड़ लोग शहरों में अा जाएंगे। प्रधानमंत्री आवास योजना के तहत प्राइवेट डेवलपरों के माध्यम से शहरों में झुग्गी-झोपड़ियों में रहने वालों के लिए 2 करोड़ सस्ते आवास बनाए जाएंगे।
डीएस रावत सेक्रेटरी जनरल,एसोचैम
Date:25-05-17
बैंकों का फंसा हुआ कर्ज और एआरसी
बैंक अपनी फंसी परिसंपत्ति मूल्य कम करने के लिए तैयार नहीं हैं। जबकि एआरसी को ऐसी कीमत स्वीकार्य नहीं है। इसकी वजह से फंसे कर्ज के निपटान में दिक्कत आ रही है, बता रहे हैं जैमिनी भगवती और शुहेब खान
Continental ties – India’s outreach to Africa
India begins the heavy-lifting needed to transform economic partnerships in Africa
The African Development Bank’s decision to hold its annual general meeting in India this month is a signal of the importance African countries attach to New Delhi’s growing role in its development. It was nearly a decade ago, in 2008, that India made a serious attempt for a strategic partnership with all of Africa, instead of just the nations it traded with, at the first India-Africa Forum Summit. At that time, India’s efforts seemed minimal, a token attempt at keeping a foothold in a continent that was fast falling into China’s sphere of influence. New Delhi had its work cut out, building a place for India as a partner in low-cost technology transfers, a supplier of much-needed, affordable generic pharmaceuticals, and a dependable donor of aid that did not come with strings attached. Over the past few years the outreach to Africa has also been driven by visits of President Pranab Mukherjee, Vice-President Hamid Ansari and Prime Minister Narendra Modi. As Mr. Modi pointed out in his speech to the AfDB in Gandhinagar on Tuesday, every country in Africa has by now been visited by an Indian Minister, highlighting the personal bonds India shares. During the India-Africa summit held in Delhi in 2015, the Centre announced a further $10 billion export credit and a $600 million grant which, despite being a fraction of the aid Africa received from China and blocs such as the European Union, was a significant sum for India.Having established its credentials and commitment over time, the Centre is now taking its partnership beyond dollars and cents to a new strategic level. To begin with, India is working on a maritime outreach to extend its Sagarmala programme to the southern coastal African countries with ‘blue economies’; it is also building its International Solar Alliance, which Djibouti, Comoros, Cote d’Ivoire, Somalia and Ghana signed on to on the sidelines of the AfDB project. In its efforts, India has tapped other development partners of Africa, including Japan, which sent a major delegation to the AfDB meeting. It has also turned to the United States, with which it has developed dialogues in fields such as peacekeeping training and agricultural support, to work with African countries. It is significant that during the recent inter-governmental consultations between India and Germany, both countries brought in their Africa experts to discuss possible cooperation in developmental programmes in that continent. It will take more heavy-lifting to elevate India’s historical anti-colonial ties with Africa to productive economic partnerships. But it is clear that at a time when China is showcasing its Belt and Road Initiative as the “project of the century” and also bolstering its position as Africa’s largest donor, a coalition of like-minded countries such as the one India is putting together could provide an effective way to ensure more equitable and transparent development aid to Africa.
