Modi’s Economic Missiles to tame the Dragon

In order to make the red dragon kneel at its own game, India must acquire the economic strength to challenge China in any kind of duel. PM Modi’s economic vision of AtamNirbhar Bharat must be made a stepping stone in this direction.

Written by July 6, 2020 16:26

The intrusion of Chinese Army at the Line of Actual Control (LAC) in the Eastern Ladakh region and the subsequent violent face-off with the Indian Army jawans at the Galwan Valley is being viewed as the most crude attempt to redraw the global power balance riding on the high economic growth trajectory. China views India as a major roadblock in its neo-imperialistic expansionary ambition not only in Asia but globally, thus continues its malignant efforts of destabilizing India by misusing its economic and military might.

As India recovers from major lockdown process, pandemic and constant terrorist attacks from Pakistan, danger of a military confrontation with China is very challenging. In such a scenario what can be a befitting reply to China which will not only prevent a military confrontation but also an impending economic distress. China is considered the “factory of the world” where all industries whether big or small from any part of the world heavily depend on either raw materials or finished goods at competitive prices.

China-and-India

In order to make the red dragon kneel at its own game, India must acquire the economic strength to challenge its northern neighbor in any kind of duel. Certainly, to achieve this, India must let go of its protectionism mode and look forward to actively becoming a reliable competitor and the business port where the whole world can dock for logistics and business. Such an arrangement will help India maintain its GDP growth rate between 8 to 10 percent.

Prime Minister Narendra Modi’s economic vision of AtamNirbhar Bharat must be made a stepping stone in this direction. The Modi-led BJP government has brought policies and taken several steps to achieve the dream of a self-reliant India but much is left to be desired. A major short fall is the gap between import and export which is almost double. India imports goods to the tune of $ 620 billion, our exports stand at a mere $ 330 billion. These statistics are all the more depressing if we just compare import and export between India and China. India imports materials and goods worth $ 75 billion from China and export is at a low of $ 16 billion only. India’s capability is no less compared to China but it’s important to note that China has been able to make its economy self-reliant in just about four decades so much so that its growth rate increased by 300% and foreign investments by 18000%.

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India having the greatest demographic dividend of youth and skilled work force must be able to perform better. The experience of some countries including China has lesson that India must not shy away from FDI but needs to attract more Foreign Direct Investments. India is showing signs of being open to more FDI as govt is taking major steps in tweaking labour laws that facilitate the same. Modi’s initiatives has resulted in improving India’s ranking in regard to “Ease of doing Business” in past six years. In 2014 India’s ranking stood at 142 as compared to 63rd in the year 2019.

But, still India needs to tread much ahead and more needs to be done to ease and facilitate business process in the country. This has been revealed in the 2020 Economic Survey. This report further sheds light on the contract filing process in major economies. In India, it takes 1445 days to execute business proposal or contract while in China, just 496 days and in New Zealand a mere 216 days. The system for filing tax returns also reflects on the ranking of Ease of Doing Business. In India, this process takes 250 hours despite being technologically competent but in China the taxes can be filed and processed in just 138 hours.

No wonder when such drastic measures are required to keep the economy on track with exacting quality, PM Modi is leaving no stone unturned to reconstruct the Economic policy in favour of India and achieve the dream of an Atmanirbhar Bharat. Economy as large and varied as India, every sector whether big or small plays an important role, hence a 20% fund has been directed towards supporting the MSMEs and save them from becoming dangerously dependent on China. A well-planned implementation of the economic policies in different phases assured that India would not only absorb the shocks such as of a Lockdown due to Covid-19 pandemic, but it is being forecasted by the major rating agencies in the world that India will come back with a bang in the fiscal year 2021. S &P, ADB and other agencies like Moody’s Investor Services have estimated a growth rate between 5 to 6.6 % for India.

PWC, which is one of the members of the “BIG4” accountancy firms, has projected in its reports, that the Indian economy will grow at the rate of 4.9 % from year 2017 to 2050. This forecast might be slightly off target compared to where India aspires to be but even at this rate India’s contribution to the world economy will increase from current 7 % to 15 % and by the end of the year 2040 India will surpass the American economy as well. Some of these reputed agencies also predicted that in few decades, India and China would be the only contenders for the number one position as far as economic yardsticks are concerned. If India and China are compared on the scales of Industrialization, infrastructure, growth rate, etc today China fares much better in all the categories.

However, in comparison to the national debts of both the countries, China’s debt has risen to $ 2.58 trillion while India’s debt stands at $ 564 billion. China’s labour force is equally divided between industry and agriculture while this gap is much larger in India with 20 % in industry and 49% in agriculture. China is doing better than India in the industrial arena while we rule the roost in the service sector. Now, it is very significant that India reduce its dependency on agriculture and shift focus towards the industrial and agro based industries. We also need to make fruitful changes in the field of imports of raw materials.

In the 1990s, India claimed the first spot in the production of pharmaceutical goods. But now the pharmaceutical industries are greatly dependent on imported Chinese raw materials. Whether its silk or glass, all raw materials are imported from China by almost all small and medium scale industries. If the Atmanirbhar Bharat Package is being strategically implemented as visualised by Modi, India’s dependency on Chinese raw materials will reduce greatly.

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Even the seasoned strategic experts are of the opinion that the real reasons for the recent Chinese intrusions at the LAC has its roots in the changing fiscal and economic policies by India during Covid-19. China has been the harbinger of the Covid-19 pandemic that turned the world economies upside down and resulted in thousands of deaths globally. The reckless and suspicious behaviour of China has turned whole world against the red dragon for causing the COVID-19 havoc. Its deceptive nature and lack of repentance has made many companies pack bags and leave China for good.

Some countries including India is trying its level best to cater to these companies who are making a beeline so as to set base in our country. Many states such as Uttar Pradesh and Madhya Pradesh have taken major steps to provide infrastructure and other facilities to these companies for a smooth transition to India. On the other hand, the Government of India has announced to offer all support including providing the land. States such as Maharashtra, Gujrat, Tamil Nadu, Andhra Pradesh, and Karnataka have allocated 4,61,589 hectares of land for this purpose, which is twice the size of Luxembourg.

Simultaneously PM Modi has also announced the Atmanirbhar Bharat Package. This announcement coincided with the revelation by the US-America Strategic and Partnership Forum that about 200 companies based in China wish to relocate to India. Such has been indicated by many Australian, French, Japanese companies and many more.

Frustrated by the exodus of major companies China had only one option and that is to send a message that India’s stability and it exploited it to the fullest. A potential Sino-India military conflict will create doubts in the minds of global investors, and it has its own bearing on India’s chances of becoming a favourable investment destination.

India is well aware of its emergence as the 5th largest economy in the world after decades of hard-work. This position has been acquired with great effort. India’s emerging status among the global economic high table has greatly contributed to some of its diplomatic and strategic operation of the recent past. Successful surgical strike against Pakistan followed by an air strike at Balakot and also abolishment of article 370 in Jammu and Kashmir is shining examples how country’s strategic and diplomatic interest can be safeguarded by becoming economically strong.

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China tried its best on all global forums including the United Nations to corner India on behalf of Pakistan but found itself isolated as global powers firmly supported India. So, now it’s high time for India to accelerate economic growth trajectory and hit back at China for its military malevolence.