Editorial 1: The problem with India’s multi-alignment stand
Introduction
- China’s recent mediation efforts to resolve the Ukraine crisis have once again spotlighted India’s approach to conflict resolution.
The sharp contrast
- India has increasingly used varied symbolic instruments of power to enhance its soft power appeal. Prime Minister Narendra Modi now projects India as the “mother of democracies” and as a “moral force” to enforce global peace.
- In sharp contrast to the Chinese President Xi Jinping’s first outreach last month to the Ukraine President Volodymyr Zelenskyy, since the Russian invasion, our Prime Minister has spoken to Mr. Zelenskyy many times and had expressed India’s solidarity with Ukraine while extending support for peace efforts.
- Our Prime Minister had publicly told Mr. Putin that “today’s era is not of war” — a remark that seemed to be a reprimand to Moscow.
India’s Multi-alignment approaches
- Multi-alignment is defined as a series of parallel relationships that strengthen multilateral partnerships and seek a common approach among the grouping towards security, economic equity and the elimination of existential dangers like terrorism.
- The regular interactions of India with Ukraine may be seen as underscoring India’s rising stature and recognition of its unique position in the emerging global order, despite western criticism of India’s continued energy imports from Russia and export of excess refined Russian fuel to the European market.
- Nationalist ideas have always influenced the Indian state, contributing to their further proliferation in society and polity. The choice of the ‘Vishwaguru’ is not accidental as it is at the core of the Modi government’s nationalist foreign policy discourse.
- The contemporary salience of Vishwa Guru image seeks to emphasise the distinctiveness of the country’s cultural ethos and civilisational values, also highlights the unique nature of ‘soft power’ in foreign policy debates.
The challenges
- Soft power is simultaneously ubiquitous and ambiguous, accepted as significant yet narrow in its policy impact.
- India lacks hard power. if India had been adequately powerful, then such an incident [Ukraine war] would not have come before the world. This narrative assumes that a powerful Indian civilisational state will stand for global peace and stability.
- While India has expressed its disapproval of the Ukraine war, it has avoided taking a clear position in many UN resolutions on the issue. This ambiguity does not behove a nation aspiring to become a permanent member of the UNSC, which implies a commitment to speak as a global voice against territorial aggression and rights violations.
- Moreover, the normative pillars of the democratic, self-confident and morally superior Vishwa Guru identity cannot be identical to those underlying the cynical hegemon maximising its power at all costs, bereft of any morality.
- While India’s seemingly evasive position in the Ukraine war underlines India’s traditional discomfort in viewing its national interests in binary terms as well as Russia’s military and geopolitical importance for India’s military preparedness, yet Russia’s justifications for its military actions in Ukraine do not resonate among most of India’s political elite.
- India’s views on sovereignty converges with a universally acceptable Westphalian notion and thus clash fundamentally with the communist China’s political philosophy of ‘might is right’.
Nevertheless, the Ukraine war alone is not sufficient to undermine India’s historical ties with Russia, which is based as much on New Delhi’s military dependence on Moscow as it is on the anti-colonial strand of India’s strategic autonomy doctrine.
Way forward
- Thus the government must ensure that India’s refusal to condemn Russian belligerence and continued increase in the import of Russian fuel is not interpreted as a pro-Moscow approach.
- While India’s ties with Russia are likely to be on a downward spiral, the piecemeal distancing from Russia will take a bit longer as New Delhi struggles to find some manoeuvring space in the emerging nexus between Russia and China.
Editorial 2: What is the stalemate over the U.S. debt ceiling?
Context
- The U.S. Treasury Secretary notified Congress last week that the country could default on its debt as early as June 1, if the Republican-dominated House of Representatives and President Joe Biden’s White House did not reach a consensus to raise or suspend the debt ceiling.
Defining debt ceiling and underlying issues
- When the federal government spends more than it brings in, it runs up a budget deficit. It then has to borrow money to meet its financial obligations, accruing debt.
- Before the debt ceiling was established, Congress had a free hand on the finances of the country. In the year 1917, during the First World War, the debt ceiling was created to hold the federal government accountable for all financial policies.
- Over time, the debt ceiling was raised every time the country approached the limit. Reaching the limit and not paying interest to bondholders would put the United States in debt, thus increasing the cost of its debt and reducing its creditworthiness. Further it can lead to large-scale job losses, weakening of the dollar, stock sell-offs, and a rise in the cost of borrowing for the government.
- Most democratic countries around the world do not have a debt ceiling, thus United States is one of the few exceptions.
Advantages of debt ceiling
- Helps in keeping the government finances in check.
- The debt can be used to fund various government operations.
- The debt ceiling also improves the efficiency of the government’s ability to finance the various obligations, including Medicare benefits and Social Security
Types of debt and instruments in India
- The Reserve Bank of India has allowed the following bodies to issue debt instruments in India:
- Central and State Governments,Municipal Corporations,Government agencies, Banks,NBFCs,Public Sector Units,Corporates.
- Debt products available include bonds, Certificates of Deposit, Commercial Papers, Debentures, National Savings Certificates, Government Securities, Fixed Deposits, and more.
- In India, public debt includes the total liabilities of the Union government that have to be paid from the Consolidated Fund of India (Article 292).
- It is further classified into internal & external debt. Internal debt is categorized into marketable and non-marketable securities.
- The part of a nation’s debt that is borrowed from foreign lenders, such as commercial banks, governments, or international financial institutions, is referred to as its external debt.
- The debt-to-GDP ratio shows how probable it is that the nation will be able to pay off its debt. Investors frequently use the debt-to-GDP ratio to determine the capacity of the government to finance its debt. Global economic crises have been fueled by higher debt-to-GDP ratios.
Debt Management in India
- Sovereign or public debt management is the process of establishing and executing a strategy for managing the government’s debt to raise the required amount of funding.
- It aims to achieve its risk and cost objectives and to meet any other sovereign debt management goals the government may have set, such as developing and maintaining an efficient market for government securities.
- In 2015, the creation of a statutory body called Public Debt Management Agency (PDMA) was envisaged in India that deals with the management of public debt called the Public Debt Management Cell.
- Public Debt Management Cell is an interim arrangement before setting up an independent and statutory debt management agency namely the Public Debt Management Agency (PDMA).
Conclusion
- An excessive level of public debt can result in higher interest rates, which has a crowding effect on the amount of private investment in the economy and the rate of economic expansion as a whole. Although it temporarily boosts overall demand, if left unchecked it can cause a country’s economy to experience spiralling losses.