THE HINDU EDITORIAL : MARCH 7, 2018
THE HINDU EDITORIAL : MARCH 7, 2018
a) Make the neighbourhood first again
Almost four years after Prime Minister Narendra Modi began his term with a “Neighbourhood First” moment, by inviting leaders of all South Asian Association for Regional Cooperation (SAARC) countries to his swearing-in ceremony, India’s neighbourhood policy is clearly adrift. New Delhi’s connect with its South Asian neighbours is weaker than it has been for a very long time.
A perfect storm?
The first problem is that for various reasons other governments in the SAARC region are either not on ideal terms with New Delhi, or facing political headwinds. In the Maldives, President Yameen Abdul Gayoom has gone out of his way to challenge the Modi government, whether it is on his crackdown on the opposition, invitations to China, or even breaking with New Delhi’s effort to isolate Pakistan at SAARC. In Nepal, the K.P. Sharma Oli government is certainly not India’s first choice, and Kathmandu’s invitation to the Pakistani Prime Minister this week confirms the chill. And no matter which party is in power in Pakistan, it is difficult to see Delhi pushing for official dialogue, especially with the military on the ascendant once again. In other parts of the neighbourhood, where relations have been comparatively better for the past few years, upcoming elections could turn the tables on India. In Sri Lanka, the recent local election results that have gone the way of the Mahinda Rajapaksa-backed party could be a portent of his future re-election. In Afghanistan, Bhutan and Bangladesh, elections this year and the next could pose challenges for India.
The next problem is the impact of China’s unprecedented forays into each of these countries. Instead of telling the Nepal government to sort out issues with India, for example, as it had in the past, China opened up an array of alternative trade and connectivity options after the 2015 India-Nepal border blockade: from the highway to Lhasa, cross-border railway lines to the development of dry ports. In Sri Lanka, Bangladesh, the Maldives and Pakistan, China holds strategic real estate, which could also be fortified militarily in the future. At present, it means China has a stake in the internal politics of those countries. While China’s growing presence in infrastructure and connectivity projects has been well-documented, its new interest in political mediation must be watched more carefully as a result. When China stepped in to negotiate a Rohingya refugee return agreement between Myanmar and Bangladesh, or host a meeting of Afghanistan and Pakistan’s foreign ministers to help calm tensions and bring both on board with the Belt and Road Initiative (BRI) connection between them, or offer to mediate between the Maldivian government and the opposition, it wasn’t just breaking with its past policy of ignoring political dynamics in countries it invests in. Beijing is now taking on a role New Delhi should have been in a better position to play, and by refusing to play it Delhi is being shown up as unfeeling, partisan or, worse, ineffective in the bargain.
The third issue is that the Modi government’s decision to use hard power tactics in the neighbourhood has had a boomerang effect. Theoretically, given its central location in South Asia and being the largest geographically and economically, India should be expected to hold greater sway over each of its neighbours. However, the “surgical strikes” on Pakistan of 2016 have been followed by a greater number of ceasefire violations and cross-border infiltration on the Line of Control. The 2015 Nepal blockade and a subsequent cut in Indian aid channelled through the government did not force the Nepali government to amend its constitution as intended, and the subsequent merger of Mr. Oli’s Communist Party of Nepal (UML) with Prachanda’s CPN(Maoist) is seen as a reversal of India’s influence there.
Mr. Modi’s decision to abruptly cancel his visit to Male in 2015 did not yield the required changes in the government’s treatment of the opposition, and New Delhi’s dire warnings about Mr. Yameen’s emergency in the past month have led to the Maldives cancelling its participation in the Indian Navy’s “Milan” exercises. Even in Bangladesh, the Indian Army chief, General Bipin Rawat’s tough talking last week about immigration has drawn ire there, with Bangladesh’s Home Minister Asaduzzaman Khan describing the remarks as untrue, unfounded and not helpful.
While many of these factors are hard to reverse, the fundamental facts of geography and shared cultures in South Asia are also undeniable, and India must focus its efforts to return to a more comfortable peace, and to “Making the Neighbourhood First Again”.
Time for reversal
To begin with, despite conventional wisdom on the benefits of hard power and realpolitik, India’s most potent tool is its soft power. Its successes in Bhutan and Afghanistan, for example, have much more to do with its development assistance than its defence assistance. It’s heartening, therefore, that after sharp drops in 2016 (of 36%) and 2017 (of 19%) year on year, the budget allocations for South Asia have seen an increase (of 6%) in 2018. After the Doklam crisis was defused in 2017, India also moved swiftly to resolve differences with Bhutan on hydropower pricing, and this February it announced a tariff hike for energy from Bhutan’s Chhukha project, the first in several years.
Next, instead of opposing every project by China in the region, the government must attempt a three-pronged approach. First, where possible, India should collaborate with China in the manner it has over the Bangladesh-China-India-Myanmar (BCIM) Economic corridor. Second, when it feels a project is a threat to its interests, India should make a counter-offer to the project, if necessary in collaboration with its Quadrilateral partners, Japan, the U.S. and Australia. Third, India should coexist with projects that do not necessitate intervention, while formulating a set of South Asian principles for sustainable development assistance that can be used across the region.
This will all only be possible if India and China reset bilateral ties, which have seen a marked slide over the past few years. It is noteworthy that the government appears to have started this process with Foreign Secretary Vijay Gokhale’s recent visit to Beijing.
Learning from ASEAN
It will also be impossible to renew the compact with the neighbours without reviving the SAARC process. In their book The ASEAN Miracle, Kishore Mahbubani and Jeffery Sng describe in detail the need for SAARC to learn from the success of ASEAN. Mr. Mahbubani suggests that leaders of SAARC countries meet more often informally, that they interfere less in the internal workings of each other’s governments, and that there be more interaction at every level of government. They also say that just as Indonesia, the biggest economy in the ASEAN, allowed smaller countries such as Singapore to take the lead, India too must take a back seat in decision-making, enabling others to build a more harmonious SAARC process.
“It is much safer to be feared than to be loved,” wrote Niccolo Machiavelli, “when one of the two must be wanting.” The government’s challenge is to steer India towards a course where it is both feared and loved in appropriate measure, and away from a situation in which it is neither feared nor loved.
- b) Sharp correction: on stock market volatility
Investors who expected 2018 to be yet another blockbuster year for stocks may have to temper their expectations. After a strong start to the year, since the beginning of February, stock markets around the world have witnessed a sharp correction. The U.S.’s decision to impose import tariffs on steel and aluminium was the latest development to infuse a sense of uncertainty. As of Tuesday, the Sensex and Nifty are marginally down since the beginning of the year. While the poor state of health of public sector banks has added to the pain, market breadth suggests a more broad-based decline. Notably, this correction comes after a record bull run that stocks enjoyed in 2017. While the Sensex advanced about 28% in 2017, the Nifty climbed 30%. Judging by the initial trading sessions of the Indian indices in March, markets look likely to keep investors on their feet. After the sharp correction in February, many expected Indian stocks to rebound to new highs, as in the case of previous corrections. But the Nifty and the Sensex, which traded sideways until Monday after their initial fall in February, resumed their short-term downtrend on Tuesday. Whether they will break lower to experience further correction or consolidate for a while before moving upwards is anyone’s guess. But it is no secret that investors have been willing to bid up the prices of Indian stocks far ahead of their fundamentals. Despite the absence of any strong rebound in corporate earnings, an underperforming economy and economic shocks such as demonetisation and the GST, investors have found enough reason to stay optimistic about Indian stocks. It is only natural that stock prices have begun to reflect, at least partially, the underlying risks.
Going forward, the biggest challenge to stock prices will be higher interest rates as central bankers move to rein in inflation amid strengthening economic growth. The U.S. Federal Reserve is expected to reduce the size of its balance sheet by $2 trillion in the next four years as it moves to let interest rates rise. Bond yields have begun to reflect the prospect of tighter liquidity. The U.S. 10-year Treasury has almost approached the 3% mark from just around 2% in September last. Many noted bond investors have confidently proclaimed the end of the multi-decade bull market in bonds, which began in the early 1980s. The Indian bond market too has witnessed a sharp increase in yields in the last few months amid fears of faster inflation as well as the government’s worsening finances. Compared to the taper tantrum of 2013, stocks have in recent times been relatively subdued in reaction to the prospect of higher interest rates. But higher interest rates are likely to eventually dampen stock prices. All this suggests that stocks may be set to experience more volatility than in the last few years.
Meaning: An act or series of acts performed according to a traditional or prescribed form.
Example: “We found a rabbi to perform the ceremony for us”
Synonyms: Rite, Ritual
Meaning: Without purpose, direction, or guidance.
Example: “She found herself cast adrift in a land full of strangers”
Meaning: A wind blowing from directly in front, opposing forward motion.
Meaning: Rising in power or influence.
Example: “The newly ascendant liberal party”
Synonyms: Growing, Increasing
Meaning: A sign or warning that a momentous or calamitous event is likely to happen.
Example: “Many birds are regarded as being portents of death”
Synonyms: Omen, Sign
Meaning: Never done or known before.
Example: “The government took the unprecedented step of releasing confidential correspondence”
Synonyms: Unparalleled, Unequalled
Antonyms: Normal, Common
Meaning: A sudden attack or incursion into enemy territory, especially to obtain something; a raid.
Example: “The garrison made a foray against Richard’s camp”
Synonyms: Raid, Attack
Meaning: Provide (a place) with defensive works as protection against attack.
Example: “The whole town was heavily fortified”
Synonyms: Build defences round, secure
Meaning: Mark an area with stakes so as to claim ownership of it.
Example: “The boundary between the two manors was properly staked out”
Synonyms: Mark off, Mark out, Demarcate
Meaning: Obtain or bring about by discussion.
Example: “He negotiated a new contract with the sellers”
Synonyms: Arrange, Work out
Meaning: A strong supporter of a party, cause, or person.
Example: “Partisans of the exiled Stuarts”
Synonyms: Supporter, Follower
Meaning: An action or strategy carefully planned to achieve a specific end.
Example: “The minority attempted to control the Council by a delaying tactic”
Synonyms: Strategy, Scheme
13) Boomerang effect
Meaning: The boomerang effect refers to the unintended consequences of an attempt to persuade resulting in the adoption of an opposing position instead.
Meaning: Control or influence (a person or course of action).
Example: “He’s easily swayed by other people”
Synonyms: Influence, Affect
Meaning: A temporary suspension of fighting; a truce.
Example: “The latest ceasefire seems to be holding”
Meaning: Make minor changes to (a text, piece of legislation, etc.) in order to make it fairer or more accurate, or to reflect changing circumstances.
Example: “The rule was amended to apply only to non-members”
Synonyms: Revise, Alter
Meaning: Suddenly and unexpectedly.
Example: “The film ends rather abruptly”
Meaning: Extremely serious or urgent.
Example: “Misuse of drugs can have dire consequences”
Synonyms: Terrible, Dreadful
Antonyms: Good, Mild
Example: “The plans provoked the ire of conservationists”
Synonyms: Anger, Rage
Meaning: Unable to be denied or disputed.
Example: “It is an undeniable fact that some dogs are easier to train than others”
Synonyms: Indisputable, Indubitable
Antonyms: Debatable, Questionable
Meaning: At high speed; quickly.
Example: “She got up and walked swiftly to the door”
Synonyms: Rapidly, Quickly
Meaning: A tax or duty to be paid on a particular class of imports or exports.
Example: “The reduction of trade barriers and import tariffs”
Synonyms: Tax, Duty
Meaning: Pierce or stab with a fork.
Example: “He passed his fork to the right hand to prong the meat”
Meaning: Restore to life or consciousness.
Example: “Both men collapsed, but were revived”
Synonyms: Resuscitate, Bring round
Meaning: Free from disagreement or dissent.
Example: “Harmonious relationships”
Synonyms: Friendly, Amicable
Meaning: Guide or control the movement of (a vehicle, vessel, or aircraft), for example by turning a wheel or operating a rudder.
Example: “He steered the boat slowly towards the busy quay”
Synonyms: Guide, Direct
Meaning: A person’s state of mind seen in terms of their being angry or calm.
Example: “He rushed out in a very bad temper”
Synonyms: Temperament, Disposition
Meaning: To only a limited extent; slightly.
Example: “Inflation is predicted to drop marginally”
29) Market breadth
Meaning: Market breadth is a technique used in technical analysis that attempts to gauge the direction of the overall market by analyzing the number of companies advancing relative to the number declining.
Meaning: Increase in scale, value, or power.
Example: “Deer numbers have been climbing steadily”
Synonyms: Increase, Rise
Antonyms: Fall, Decrease
Meaning: A downward tendency, especially in economic matters.
Meaning: Combine (a number of things) into a single more effective or coherent whole.
Example: “All manufacturing activities have been consolidated in new premises”
Synonyms: Combine, Unite
Meaning: Hopeful and confident about the future.
Example: “The optimistic mood of the Sixties”
Synonyms: Cheerful, Cheery
Antonyms: Pessimistic, Negative
Meaning: Keep under control; restrain.
Example: “With an effort, she reined back her impatience”
Synonyms: Restrain, Check
Meaning: Surrounded by; in the middle of.
Example: “Our dream home, set amid magnificent rolling countryside”
Synonyms: In the middle of, surrounded by
Meaning: Declare officially or publicly to be.
Example: “He proclaimed King James II as King of England”
Synonyms: Declare, Announce
Meaning: An uncontrolled outburst of anger and frustration, typically in a young child.
Example: “He has temper tantrums if he can’t get his own way”
Synonyms: Fit of temper, Fit of rage
Meaning: Overcome, quieten, or bring under control (a feeling or person).
Example: “She managed to subdue an instinct to applaud”
Synonyms: Conquer, Defeat
Meaning: Make less strong or intense.
Example: “Nothing could dampen her enthusiasm”
Synonyms: Lessen, Decrease
Meaning: Liability to change rapidly and unpredictably, especially for the worse.
Example: “The succession of new rulers contributed to the volatility of the situation”
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