April 02, 2018

Indialogue, Weekly Newsletter By Aman Thakkar

Hi,

Welcome to Indialogue, a weekly newsletter dedicated to analyzing major developments in India.

This week’s brief looks at a number of domestic policy developments, such as a decision to privatize the government-owned Air India and a move to remove the Chief Justice of India. On the foreign policy front, I cover a reversal on policy towards Tibet as part of the India-China reset, and the end of the emergency in the Maldives.

Before we dive into the nitty-gritty of each of these stories, a brief self-promotional interlude: The Observer Research Foundation published a research paper I wrote analyzing India’s strategies at the UN, and explaining how game theory could explain India’s successes and failures on specific issues. The paper is available here, if you are interested.

As you read this newsletter, please feel free to reach out to with any questions, concerns, comments, and or advice by replying to this email. And if you enjoyed this newsletter, please consider forwarding it to a friend who might like it too. And if someone forwarded you this newsletter, you can sign up for it here.

- Aman

Inching Forward on Privatizing Air India

On Wednesday this past week, the government announced it is inviting bids to sell 76% of its stake in Air India, the nation’s wholly government-owned national airline. The move comes nine months after the Cabinet agreed to sell the government’s stake in the loss-making airline, and privatize as part of the Modi government’s push to privatize loss-making public sector companies. The deal would see the government maintain 24% of its share in the company, as well as absorb a third of Air India’s Rs. 48,781 crore (~$7 billion) in outstanding debt. Whatever entity or group of entities wins the bid will win management control of the company, but would also have to absorb a burden of debt worth Rs. 33,392 crore (over $5 billion).

The path forward, however, remains uncertain. Private sector entities are unlikely to lucrative price for the government given Air India’s level of debt. Moreover, the government hasarticulated a goal to finalize the deal by December, a hugely ambitious target for an airline sale even without the complexities accompanying this particular sale. Opposition leaders have already expressed concern over the deal, with West Bengal Chief Minister and Trinamool Congress leader Mamata Banerjee calling for the order to sell the airline to be withdrawn. Indian National Congress leader Ahmed Patel also raised questions about the deal, asking“Government will sell 76% equity but will retain 52% of the company’s debt? Isn’t this a complete sell out designed to benefit certain private agents?”

Why this Matters?: If you read the news articles hyperlinked in the above paragraphs, you’ll see Air India referred to as the “family jewel” of government-owned companies, arguing they are a source of public wealth. However, the continues losses and high debt have made privatization necessary, as the taxpayer continues to foot the bill rather than enjoy the “public wealth.” Moreover, successful privatization would boost Prime Minister Modi’s claims to be a “reformer,” especially with the December deadline ahead of the 2019 General Elections.

U-Turn on Tibet Despite “Sensitive Time” in India-China Ties

The past couple of editions of Indialoguehave discussed the ongoing “reset” between India and China. A feature of this reset was a leaked note from the Cabinet Secretary that discouraged government and bureaucratic officials from attending events organized by the Tibetan government-in-exile (read more from Indialogue here) for the 60th anniversary of the arrival of the Dalai Lama to India given the current “sensitive time” in India-China relations.

However, in an apparent reversal in this policy, Ram Madhav, the National General Secretary of the Bharatiya Janata Party (BJP), along with the Minister of State for Culture, Mahesh Sharma and Members of Parliament from both the Indian National Congress (INC) and the BJP, attended an eventwith the Dalai Lama and the leader of the self-declared Tibetan government-in-exile, Lobsang Sangay in Dharamsala last week. The attendance of such high-level guests at a 60th anniversary celebration event marks a stark reversal on India’s part just weeks after the government instructed officials and Ministers to steer clear of these events. Indeed, the specific event that Ram Madhav and other attended had beenmoved from New Delhi to Dharamsalaspecifically after the leak of the memo from the Cabinet Secretary.

The Dalai Lama with Union minister Mahesh Sharma, the BJP’s Ram Madhav, and others

Insight: There’s been a lot of confusion, and rightly so in my opinion, about where exactly India is headed with regards to its ties to China. If the goal is indeed to improve ties before the Modi attend the Shanghai Cooperation Organisation summit later this year and Tibet is a sensitive issue, then why the sudden reversal on policy towards Tibet? Is Tibet no longer considered sensitive, or has India decided to go ahead with engagement with Tibet despite sensitives? If so, is India okay with not normalizing ties before the SCO meet? And if not, how does India plan on normalizing while engaging with Tibet? More questions than answers currently, I’m afraid.

Maldives Emergency Lifted, but Disadvantage Still India

Previous editions of Indialogue have also been following the declaration andsubsequent extension of emergency in the Maldives. On Feb. 5th, the President of the Maldives, Abdullah Yameen, declared a state of emergency in the country after the Supreme Court ordered the release nine political prisoners and the reinstatement of 12 parliament members, which would have given the opposition parties control of legislature. The declaration of emergency, which lasted 45 days, saw the arrest of the Chief Justice of the Maldives as well as former President Maumoon Abdul Gayoom. The emergency was lifted this past Thursday. India reacted to the emergency noting that this is simply the first step towards a full restoration of democracy on the island nation. Indeed, a number of opposition leaders in exile, most prominently former President Mohamad Nasheed, argued that President Yameen had only lifted the emergency after establishing “total control over the judiciary and parliament.”

Abdullah Yameen, President of Maldives

However, India is already at a disadvantage looking towards the future. Following the lifting of the emergency, news reports emerged that India had communicated to China that “it will not intervene in the Maldives and expects it to reciprocate this measure of ‘strategic trust’ by not crossing certain ‘lines of legitimacy.’” The statement was promptlyfollowed by an unnamed senior official telling The Indian Express that “The days when India believed that South Asia was its primary sphere of influence and that it could prevent other powers, such as China, from expanding its own clout are long gone.” These reports were followed up by a visit from the Chief of Army Staff of Pakistan to the Maldives on Sunday, who became the highest-ranking official to visit the Maldives following the lifting of the emergency. However, Maldivian officials did not confirm the meeting when reports broke before Sunday, with the Maldivian  Ambassador to India stating “I am not aware,” when asked about the then-impending visit.

Bigger Picture: As India reckons with how to re-engage with Maldives following the lifting of the emergency, it should be concerned about the island nation’s outreach to China and Pakistan. Maldives has long had a India-first policy, which seems to be under threat, and depending on “strategic trust” vis-à-vis China or brushing aside growing closeness to Pakistan would only put India on the losing side of geopolitics in its own neighborhood.  

Opposition Parties “Seriously Considering” a Motion to Impeach the Chief Justice of India

Opposition parties in Parliament, led by the Indian National Congress, are “seriously considering” circulating a petition in the Rajya Sabha, or upper house of Parliament, to bring a motion of impeachment against the current Chief Justice of India (CJI), Dipak Misra. Theallegations made against the Justice as as follows:

“Arbitrarily using his authority” to allot sensitive cases to hand-picked judges by ignoring other senior judges;“Forgery” in changing the date of a recent judicial order of much-importance to the government;“Corrupt practice” in dealing with the case regarding Prasad Medical College;Questionable conduct in the acquisition of land; andCompromising the independence of the Supreme Court.The charges stem from a press conference held two months ago by four senior judges of the Supreme Court, who also expressed concern over a number of these issues.

Dipak Misra, Chief Justice of India

The process of impeaching a Supreme Court Justice is long and complex. First, a petition must be signed by either 100 members of the Lok Sabha or 50 members of Rajya Sabha, and is upon the discretion of the chairperson of each house, which currently are both held by BJP members and are likely to reject such a motion. While some analysts have noted that the move is likely apolitical maneuver on part of the INC to put pressure on the CJI to refrain from passing verdicts on important upcoming cases, others have noted that if these allegations do emerge to be true, impeachment and removal of the CJI isjustified.

Insight: While the impeachment motion is not likely to succeed based on the information that is currently out there, the move does outline a growing threat to India’s democracy: the erosion of India’s apex institutions. I’ll point you to Milan Vaishnav’s article from a couple of weeks ago discussing how institutions such as the Reserve Bank of India, the Election Commission, and the Supreme Court of India, which are meant to be independent, are increasingly vulnerable to politicization.

Stories you might enjoy:

Mihir Sharma argues “India is short of cash and it is, unfortunately, starving its military...The share of military spending in India’s federal budget has fallen below 1.6% of gross domestic product—the lowest proportion since 1962. That’s a year instantly recognizable to every Indian, since it’s when India’s underpowered army was routed in a border conflict with China.”

Liz Mathew paints a picture of a dysfunctional parliament this past week, writing “Discounting the time spent in laying papers — it takes place at noon after the statutory question hour window — the total time spent on a substantive motion like the no-trust motion has been all of 16 minutes over eight days.”

The Economist argues that “predictions of Chinese-style growth [in India] seem over-optimistic in the absence of deeper economic reforms... But the labour market is as gummed up as ever. Private businesses find securing land for new factories near-impossible. Whole swathes of the economy, from coal and steel to banking and condom-making, remain at least partly under state control.”

Amy Kazmin writes how “India’s “cheating mafia” — as those in the business are called — profit from the yawning gap between young Indians’ desire for the social status that comes with a secondary school completion certificate, and schools’ abysmal education quality.”

Vivek Dehejia notes “The Congress party is signalling that it wishes to go back towards the centre on economic policy, and away from the left, marking a distinct change, at least potentially, from the economic philosophy which animated the two innings of the Congress-led United Progressive Alliance (UPA).”

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