What Trends Will Dominate Policy in India in 2021?
Indialogue is a newsletter analyzing the biggest policy developments in India
Hi there, I’m Aman Thakker. Welcome to Indialogue, a newsletter analyzing the biggest policy developments in India. The aim of this newsletter is to provide you with quality analysis every week on what’s going on in India.
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What Trends Will Dominate Policy in India in 2021?
Recently, I was asked by Rohan Venkataramakrishnan, author of the fantastic The Political Fix newsletter for Scroll.in, about what one issue I would paying attention to going into 2021. He collated my response, and that of several other newsletter authors, experts, podcasters, and other creators, for his newsletter last week, (which you can read here).
I thought that an extended version of that topic would be a great place to start Indialogue this week, as well as spur some discussion with the readers, about what they think will drive policy developments in India this coming year.
India-China Relations
My response to Rohan was about India-China relations. I wrote:
“After 2020, there will be so much to study and analyse going into 2021 from a policy perspective, but I think the one issue I’ll be focusing on is the trajectory of India-China relations. Obviously, India-China relations will not revert back to business as normal after what has transpired in Eastern Ladakh since May 5, 2020. But 2021 may start to give us indications of where that relationship goes, and how India will orient its diplomatic strategy, its military posture, its relations with key partners across geographies, and its overall grand strategy. So that will certainly be something I will be studying.”
With both countries still entrenched in their positions along the Line of Actual Control in Eastern Ladakh, and with the impact of the border confrontation spilling over into the wider relationship, I believe this bilateral relationship will continue to be one that impacts the trajectory of India’s policymaking.
For one, India will quickly emerge as a test case of whether and how a country can start to decouple from China. India’s steps to ban Chinese apps and throw up barriers to Chinese goods and services signal its intentions to create higher costs for Chinese businesses to keep up their activities in India. With question marks about whether or not the Biden administration will continue the trade and economic war started by President Trump and his administration, and with the European Union signing an investment deal with China, India’s steps can cast a long shadow on not just the tactical aspects of undertaking economic statecraft vis-à -vis China, but also India’s own desire to protect its domestic industries and possibly pursue a path of industrial policy.
Further implications will be on India’s military strategy. While there has been much discussion about India’s two-front challenge (the fact that India will have conflicts on both of its northern borders with Pakistan and with China), there is another “two-front” challenge: India’s continental vs. maritime orientation. The standoff with China necessitates India commit more resources to its continental challenges. However, it’s wider push for a “free, open, and inclusive Indo-Pacific” are based on India’s investments in the maritime domain. However, if India’s growth is less than expected as it recovers from the COVID-19 pandemic, it will present significant implications for India’s ability to commit resources in both domains, forcing it to make tough choices. How it maneuvers those tough choices will have a significant bearing on the future trajectory of not just India-China relations, but its relations with key partners such as the United States, Japan, Australia, Vietnam, Indonesia, and others.
Vaccine Nationalism The Post-COVID-19 Recovery
India post-COVID-19 recovery won’t just affect its military. It will affect all aspects of India’s policy-making. India’s growth rate was already slowing before the pandemic, and the slowdown can be traced all the way to 2016, when growth fell from 8.2% in FY2016-2017 to ~5% in 2019-2020. Can India, which has seen case rates fall dramatically in recent months, safely reopen enough to get the economy going again? Can it vaccinate its 1.3 billion+ population quickly enough to see a return to normalcy?
If we take India’s approach to the latter question, it doesn’t bode well for policymaking. Indian regulators made the questionable decision to approve indigenous vaccine Covaxin, which is being developed jointly by the Indian Council of Medical Research and National Institute of Virology. Covaxin, for which there is no Phase III trial data, was approved alongside the Oxford-AstraZeneca vaccine “Covishield.” However, unlike the latter vaccine, Covaxin will only be used for “public interest as an abundant precaution.”
India is hardly the first to promote its indigenous vaccine in an effort to beat the COVID-19 pandemic. Russia’s Sputnik V vaccine, which the Russian government touted as the “first” vaccine to be approved, did not go through Phase III trials before it won approval. China, too, has been pushing indigenous vaccines, while providing little data to allow scientists to peer review claims of effectiveness.
However, if India takes the approach of prioritizing nationalism over science, and untested vaccines that are home-grown rather than complete the necessary processes to ensure the vaccine is safe AND effective, then it presents numerous implications for India’s post-COVID recovery.
Lack of transparency regarding the safety and efficacy of Covaxin could spread doubt among Indians about getting vaccinated and damage trust in government at a time when getting a critical mass of the population will be more important than ever. It could make India’s uphill task only harder.
Preserving Institutions of Democracy
Although this newsletter is very explicitly about India, it is hard to escape the fact that the United States faced an armed insurrection in the national capital on Wednesday this week. It was a reminder, among other things, that democracy and democratic institutions are fragile, and need to be cared for, lest they break down and shake the very foundation of our republic.
I want to be very clear. I’m not trying to argue that India faces the same challenges that led to the insurrection in the United States. Nor am I trying to argue that any Indian official or leader shares characteristics with President Trump. I only raise the point to argue that India’s democratic institutions, too, are fragile. And that they, too, have been tested and need to be preserved.
Indian media remains incredibly sensationalist and politicized, with an overwhelming emphasis on rhetoric over substance. Our social media landscapes, too, can often serve as echo-chambers, be it Twitter, Facebook, or WhatsApp. Political scientists have warned us about the politicization of the Supreme Court, and of the Reserve Bank of India. We are all bracing for what will be toxic election in West Bengal.
We may disagree on our politics. We may disagree on what leaders we respect, or what philosophies guide our ideologies. We may even disagree on what we think is the most important problem that India faces, and the solutions that are needed to solve it. However, the events of this week in D.C. should remind us that, despite those differences, we need to agree to preserve the institutions of our democracy.
A Penny/‘Paisa’ for Your Thoughts?
I would love to hear from you on what you think are the most important trends that will influence the direction of Indian policy in 2021. Please feel free to email me back with you thoughts, or share a comment and start a discussion with fellow readers on Substack’s platform.
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News Roundup
India conducted a massive “dry run” on January 8, 2021, to prepare the government for COVID-19 vaccinations. The dry run was conducted in 736 districts across 33 states and Union Territories, with Dr. Harsh Vardhan, Minister for Health and Family Welfare, supervising the dry run.
Prime Minister Modi held a bilateral virtual summit with Chancellor Angela Merkel of Germany on January 6. The two leaders discussed post-COVID-19 cooperation between both countries, as well as regional and global issues of mutual interest, and the future trajectory of India-EU relations. The summit also included the announcement that Germany would join the International Solar Alliance.
The Cabinet Committee on Economic Affairs approved a proposal by the Department for Promotion of Industry and Internal Trade for a Central Sector Scheme for Industrial Development of Jammu & Kashmir. The scheme, which would see a total financial cost of Rs. 28,400 crore until the year 2037, would promote the development of manufacturing industry in the Union Territory of Jammu and Kashmir.
The Cabinet approved the signing of a Memorandum of Cooperation between India and Japan on sending and accepting skilled Indian workers, who have qualified the required skill and Japanese language test, to work in fourteen specified sectors in Japan.
The Ministry of External Affairs released a draft of India’s first ever Arctic Policy, noting that “India seeks to play a constructive role in the Arctic by leveraging its vast scientific pool and expertise in Himalayan and Polar research. India would also like to contribute in ensuring that as the Arctic becomes more accessible, the harnessing of its resources is done sustainably and in consonance with best practices formulated by bodies such as the Arctic Council.” The draft policy is open to feedback until January 26, 2021, and is available here.
In the latest salvo in the ongoing trade dispute between the United States and India, the Office of the United States Trade Representative has determined that “India’s Digital Services Tax (DST) is unreasonable or discriminatory and burdens or restricts U.S. commerce and thus is actionable under Section 301.” India has argued that its 2% Equalisation Levy levied on e-commerce supply of services is to ensure fair competition, reasonableness and exercise the ability of governments to tax businesses that have a close nexus with the Indian market through their digital operations.
India and France held their annual Strategic Dialogue on January 7, 2021, with the Indian side represented by National Security Advisor Ajit Doval and the French side represented by Diplomatic Advisor to the French President Emmanuel Bonne.
Three to Read
From cogent analysis to potentially big news that you should keep an eye on, here are a few commentaries and other pieces of writing that I found particularly enlightening:
Arun Kumar, chairman & CEO of KPMG in India and former Assistant Secretary of Commerce for Global Markets in the Obama administration, writes: “When Joe Biden takes the oath of office as the US’s 46th president later this month, he would be taking charge of a nation embroiled in a health crisis, economic crisis and race crisis. The priorities induced by these crises will dictate that the new administration’s initial focus be on domestic matters. Foreign policy will have to play second fiddle, and this could inform the Biden administration’s stance on India in the economic and commercial domain. A major geopolitical reality that will shape the Biden administration’s approach to India will be its position towards China. There is a bipartisan change in the US’s attitude to China. The Biden administration’s tone of engagement may be different from that of the Trump regime, but one must expect continuity in major trade goals — reducing the trade deficit, ensuring a level-playing field, reducing market distortions created by the dominance of state-owned enterprises and keeping a keen eye on technology rivalry.”
Jasmine Shah, vice-chairperson of Dialogue and Development Commission, argues: “The lasting legacy of Covid-19’s impact on India won’t be the large number of fatalities it has caused, it will be how governments across India watched silently as a crashing economy caused a devastating impact on the lives of millions of poor… Covid-19 has taught all governments many lessons. But the most important one will be this: The strength of our social safety net will determine the heights the Indian economy will scale.”
S.D. Muni, professor emeritus at JNU, member of executive council of IDSA, and a former ambassador and special envoy of the Government of India, writes: “Nepal has drifted into a political crisis following its Prime Minister (PM) KP Sharma Oli’s decision to dissolve Parliament… India has played its cards cautiously and craftily. With an assiduously cultivated façade of non-interference, it let China smear itself into the mud of micromanaging the ruling party’s internal conflicts… As no major development in bilateral relations appears likely during the prevailing uncertainty, India must encourage consolidation of a people-driven polity, and improve its own popular profile.”
Thank you for reading this latest edition of Indialogue. Please let me know if you have any thoughts or feedback by emailing me at aman@amanthakker.com.