EDITORIAL- MARCH, 9, 2022

 

THE HINDU EDITORIAL- MARCH 9, 2022

 

Clear signals India and China must take on board global currents that could reshape ties   China’s claim that the U.S. Indo-Pacific strategy is aiming to create “an Indo-Pacific version of NATO”, as the Chinese Foreign Minister, Wang Yi, put it on March 7 is not new. Indeed, even as long as 15 years ago, during the first iteration of the now revived India, Australia, Japan, U.S. Quad, Beijing warned of an impending “Asian NATO”, which, of course, never materialized. The latest statement does, however, assume significance in the current global context and amid the crisis in Ukraine. Mr. Wang, speaking in Beijing during the National People’s Congress, accused the U.S. of “stoking geopolitical rivalry “by “forming exclusive clubs”. He said by “strengthening the Five Eyes” intelligence alliance and “peddling the Quad, piecing together AUKUS and tightening bilateral military alliances”, the U.S. was leading what he called a “five-four-three-two” formation in the region. The broader goal, he said, was “to establish an Indo-Pacific version of NATO”. In recent weeks, Beijing has repeatedly blamed NATO for the crisis in Ukraine. While claiming to stay neutral, it has moved to reaffirm ties with Russia, which Beijing on Monday described as “rock solid”. When the two countries’ leaders met for a summit on February 4, China backed Russia on its concerns on NATO’s eastward expansion in Europe, and Russia returned the favour with both criticizing the U.S. Indo-Pacific strategy. Beyond their already deep political and economic linkages, these mirrored concerns on U.S. alliances are emerging as powerful binding glue in the China-Russia axis. New Delhi will need to consider how this will impact its close relations with Russia. By explicitly equating the Quad, which is not a military pact, with other security agreements, China now also appears to be clearly situating India as a part of the U.S. “exclusive club”. New Delhi has rejected that notion. Only last month, External Affairs Minister S. Jaishankar said “interested parties” were making a “lazy analogy of an Asian NATO” and India was not a U.S. treaty ally. Indeed, some in New Delhi have come to view Beijing’s aggressive moves along the LAC in 2020 as a warning sign to deter India-U.S. relations. India’s firm, and correct, response has been to hold the line, and continue deepening ties not only with the U.S. and the Quad but also other Indo-Pacific partners to underline it will not be swayed. The other message from India has been that sensitivity to concerns has to be mutual, and cannot be demanded from one side when ignored by the other; China’s relations with Pakistan being a case in point. Mr. Wang did acknowledge that recent “setbacks” in ties suited neither India nor China – a view New Delhi shares. The two sides will meet on March 11 for the next round of military talks to take forward LAC disengagement. As India and China continue to seek a much-needed modus Vivendi to restore ties from the lowest point in decades and ensure peace on the border, they will also need to have a broader conversation about global currents that are reshaping their bilateral relations.   Global stagflation risk India will have to cut fuel taxes or risk both faster inflation and slower growth As Russia’s invasion of Ukraine is set to enter the third week, the economic cost of the conflict in Eastern Europe threatens to stall the shaky global recovery from the COVID-19 pandemic. While the expansive financial sanctions imposed on Russia by the U.S. and its western allies have sent the value of the rouble plunging by more than 60% against the dollar since the start of the conflict, the war-led disruptions to supply and the sanctions have sent the prices of several key commodities soaring: from wheat and corn, to metals including nickel and aluminum, and, most crucially, crude oil and gas. Brent crude futures surged to a high not seen since July 2008, and are currently about 29% higher than before the invasion began on February 24. The price of natural gas has also risen sharply in Europe amid concerns that supplies from Russia could be hit either on account of European nations agreeing to a U.S. proposal to shut the tap on Russian energy exports or by retaliatory sanctions by Moscow. Russia supplies Europe about 40% of its gas requirements, roughly a quarter of its oil and almost half its coal needs, and an embargo on energy supplies from Russia could send already high electricity costs in the countries comprising the euro zone skyrocketing. That in turn would hit consumers, as well as businesses and factories, forcing them to either raise prices or possible even temporarily shut operations. Inflation in the euro area had accelerated to 5.8% in February, mainly on account of a more than 31% surge in energy prices, and with the uptrend in oil prices steepening sharply this week, the outlook for price gains in Europe and worldwide is not encouraging. The IMF< which had in January cut its forecast for global growth in 2022 to 4.4% citing the Omicron variant, rising energy prices and supply disruption, on March 5 warned that the war in Ukraine posed grave risks to the global recovery. With analysts projecting that crude price will cross $180 and some traders punting on prices surpassing $200 a barrel, India too can hardly be sanguine, its diplomatic fence-sitting notwithstanding. In a 2019 paper on ‘The Impact of Crude Price Shock on India’s Current Account Deific, Inflation and Fiscal Deficit’, two senior RBI researchers posited that a $10 increase in the price of oil from a $65 level would raise headline inflation by about 49 basis points (bps) or widen the Government’s fiscal deficit if it decided to absorb the entire oil price shock. India’s policymakers face a tough choice: bear the cost of lower revenue by cutting fuel taxes or risk both faster inflation and slower growth.

Poignant reflections that stretch a war’s canvas How can someone be so bad in 2022’ is a question that would resonate with millions of youth across the world KRISHNA KUMAR Thousands of images go past our eyes as they face the unending television coverage of Russia’s assault on Ukraine. In one such image, a BBC reporter asks a Ukrainian girl how old she is and what she is thinking as she boards a train out of Kyiv to head to the Polish border. She is 19, she says, and she wants to take revenge for what the Russian President is doing to her country. The she adds: ‘How can anyone be so bad in 2022? Though it is phrased like a question, it expresses a sense of moral outrage. It also conveys bewilderment 0 of a young person who is about to become a refugee. Layers of meaning  Her question reveals a globally shared emotion among youth born around the turn of the century. They have every reason to believe that the world is an inter-connected place, governed by rules and consensus. They have recently witnessed proof of the world is efficiency and inter-connectedness in in the handling of the COVID-19 crisis. The lethal virus failed to stop two Olympics from being held. In the first one, Ukraine won 19 medals, and in the second one, held a few weeks ago, it won a medal. Then, bombs started falling and city streets turned into rubble. No wonder the 19-year old girl feels lost. So are we, watching devastation in action. The girl’s question will linger for a while. It has already mutated into an allegory, with layers of meaning that are hard to decipher. How can this happen in 2022? The ferocity and the scale of the violence are shocking enough; the aggressor’s resolve to give peace no chance is profoundly depressing. We witnessed the helplessness of Myanmar’s common people over the whole of last year. This time, it is Europe’s turn to stare. Phrases assiduously promoted by United Nations agencies for decades now sound like stone-dry bean pods. Two of them come to mind with especially hollow effect: These are: ‘global citizenship and ‘sustainable development’. The pictures of Ukraine under attack show icons of prosperity catching fire, millions leaving homes, their faces looking numb with disbelief. They do not look like refugees from the poorer parts of the world, waiting at the Mexican or Greek borders. The news that Russia has put its nuclear system in a state of high alert also jars with received wisdom. The global information system had for decades reserved its dire phraseology to Iran, Palestine and Kashmir. Terms like ‘flashpoint’ and ‘nuclear neighbors’ were used for territories far away from Europe. Memories of the Bay of Pigs had faded, and the Hiroshima Peace Memorial Museum had been sanitized. When I visited it in the new century, all its horror-inducing imagery had gone. A member of the museum staff explained that the earlier style of display had proved discouraging for tourism. What the young confront For us in India, the poignant absurdity of Russia’s war in Ukraine is personified by our stranded students. The precarious nature of their plight, and the marks it will leave on their future, cannot be imagined. Some people, who should know better, have been asking: ‘How did so many Indian youth end up studying in Ukraine?’ This is not the right time to contemplate this kind of query, one can say. At the same time, we know how short public memory is – and few public concerns have longevity in our ethos. This situation reminds us of the folly of worrying about headdresses to be worn in classrooms. The news that a senior medical student who has been killed by a Russian bullet hails from Karnataka carries far too many connotations than one might with to probe, but not just now. The sudden turn their lives have taken in a war-torn land is no less sharp than what the 19-year old Ukrainian girl is trying to cope with. Her question expresses a feeling that millions of youth would empathies with. ‘How can someone be so bad in 2022’, she is asking. In many countries such as her own, middle class youth had convinced themselves that they were living in a world far better than the one their parents had to cope with. And they were sure it was getting better The digital convenience of negotiating the complex demands of life had a mesmerizing effect. Nothing seemed to pose a problem that technology and science might not be able to solve. That a European location can be the site of a nuclear alert might also surprise a generation that had no reason to remember how dangerous nuclear weaponry is. What has helped in the erasure of this awareness is the rhetoric of nuclear energy being clean and environmentally friendly. The discourse of separating nuclear energy from nuclear weapons and war has never died. Under the new, broader discourses of climate change, nuclear energy has begun to look safe, and those who talk of nuclear deterrence benefit from this idea. If a Russian Minister comfortably talks about a third World War based on nuclear arms, his world wide young audience cannot necessarily be expected to shiver. They have been told that the Cold War ended in the last century, leaving the new century to stride forward with a relaxed mind. It is rightly described as a post-truth generation as it is used to the idea that politicians can say and get away with anything. Russia’s assertion about Indian students being used as hostages is an example. At least on this matter, India has refuted Russia’s lie. A Widening gap in Russia No matter which nation they belong to, those born after 1995 do have a special problem making sense of the Russian invasion of Ukraine. There have been several visible signs of a generation gap in Russia society. For the younger Russians, the Bolshevik revolution is as distant as the map of the Soviet Union. Unlike many societies that go through sharp turns and historical twists, Russia has had to face the challenge of upgrading its sense of the past. Reforms in curriculum and teacher training since the beginning of the 1990s have been pursued with a considerable degree of imagination. Ironically, these very reforms have widened the gap between generations. It is perhaps a reflection of this gap to reach out to the young in order to explain to them the reasons for the ‘special military action’ in Ukraine. A vacuum The burden of history that sits so awkwardly on their shoulders cannot be lightened by good education alone. The problems of understanding what they face are quite similar to those encountered in parts of Germany following the removal of the remarkable Berlin Wall. It was a bizarre symbol of war-infested history. A 2003German film, Good Bye Lenin!, adroitly captured the difficulties that a senior citizen of Berlin had maintaining mental balance when the city’s division between the eastern and western sides of a wall had started facing open resistance from the younger citizens. The story revolves around an imaginative, desperate attempt to stretch the past into the present. Something like that is happening in Ukraine today, but this is not fantasy: the country is facing naked, violent aggression. Its struggle t survive echoes a terrifying vacuum in the modern world. That it is a moral vacuum is obvious enough, but it is also a vacuum in intelligence. In War and Peace, Tolstoy had said that ‘the need to seek causes has been put into the soul of man’. No cause that Russia can possible cite today can justify its violent behavior on display.   Revive tax increases, stub out tobacco product use The Government must stop the increasing affordability of tobacco items and also rationalize their taxation under GST RIJO M. JOHN Despite a relatively high degree of societal attention and debate spurring on the pace of COVID-19 vaccine development, the novel corona virus pandemic has continued to remain a serious public health concern worldwide. India is reported to have lost half a million of its people to the pandemic over the past two years. Another epidemic But there is a silent killer in our midst that kills an estimated 1.35 million Indians every year. It is the use of tobacco as a result of which more than 3,500 Indians die every single day, as estimated by scientific studies. It also comes at a heavy cost: an annual economic burden of 1, 77,340 crore rupees to the country or more than 1% of India’s Gross Domestic Product (GDP). Although not a communicable disease like SARRS-CoV-2, the tobacco epidemic – as the World Health Organization characterieses it –has some definitive solutions that can reduce the death toll. Research from many countries around the world including India shows that a price increase induces people to quit or reduce tobacco use as well as discourages non-users from getting into the habit of tobacco use. There is overwhelming consensus within the research community that taxation is one of the most cost-effective measures to reduce demand for tobacco products. Nevertheless, ever since the introduction of the Goods and Services Tax (GST) legislation in 2017, there has been no significant tax increase on any tobacco product barring a minor increase in the National Calamity Contingent Duty (NCCD) during the Union Budget 2020-21 which only had the effect of increasing cigarette prices by roughly 5%. Lost opportunity In short, there has been no significant tax increase on any tobacco product for four years in a row which is quite unlike the pre-GST years where the Union government and many State governments used to effect regular tax increases on tobacco products. As peer-reviewed studies show, the lack of tax increase over these years has made all tobacco products increasingly more affordable. The Union Budget 2022-23 was an excellent opportunity for the Government of India to buck this trend (of not effecting a significant price increase for the longest time in a row) and significantly increase either excise duties or NCDs on tobacco products. Needless to say, the tobacco industry and the public health community did expect such a move. This year, when the Finance Minister began her Budget speech, it was interesting to note that the movement of ITC stock was stable in contrast to most other stock indices, which were generally moving up. Just as the Budget speech concluded, and having realized that there were no tax hike proposals whatsoever on any tobacco product, ITC stocks gained by more than 6% and outperformed most other stocks in the next couple of hours. The market was just pricing in an unrealized negative prospect for the company. The reason is this: despite the claims of a business diversification away from the tobacco business, close to 85% of ITC’s profits are still derived from its cigarette segment. While the lack of tax hikes has helped the bottom-line of ITC, the Budget has dealt a significant blow to tobacco control efforts in India in particular. The absence of a tax increase on tobacco has the potential to reverse the reduction in tobacco use prevalence that India saw during the last decade and now push more people into harm’s way. It is known that more affordable tobacco products could attract new users especially among the youth. It would also mean foregone tax revenues for the Government especially at a time when the Government of India is looking forward to increasing the share of public spending on health; in the recent Union Budget, it has budgeted 2.2% of the total expenditures towards health. GST Council should act The Union Budget exercise, however, is not the only opportunity to initiate a tax increase on tobacco products. The Goods and Services Tax (GST) Council could well raise either the GST rate or the compensation cess levied on tobacco products especially when the Government is looking to rationalize GST rate and increase them for certain items. For example, there is absolutely no public health rationale why a very harmful product such as the bidi does not have a cess levied on it under the GST while all other tobacco products attract a cess. Similarly, there is no rationale why the specific cess applied on cigarettes (which is currently the largest component of overall cigarette taxes) has remained unchanged for four years in the face of increasing inflation. Since specific cess is applied as a fixed amount per stick of cigarette, increasing inflation will decrease the significance of this particular tax component making cigarette prices more affordable and reducing its effective tax burden. GST Council meetings must strive to keep public health ahead of the interests of the tobacco industry and significantly increase either the GST rates or the GST compensation cess rates applied on all tobacco products. The aim should be to arrest the increasing affordability of tobacco products in India and also rationalize tobacco taxation under the GST.