China, Digital India, India - U.S., Indo-pacific, Research

India @ 75: Ethic, Economy and Exemplar

If a weary international community—reeling from unanticipated challenges and unprecedented disruptions in the early 21^st century—was looking forward to a stabilising start to the 2020s, its hopes were short-lived. COVID-19 continues to weave its way through borders and continents, felling victims and flummoxing governments. Two years down the line, it is increasingly clear that we have to learn to live with the virus, as it shows signs of transitioning to become endemic. A “new normal” where COVID-19 does not cripple communities, countries and whole continents is the future, even as vaccine inequity makes the possibility of more lethal variants imminent.

But even before COVID-19 forced us to radically rethink and redo the way we live our very lives, a certain tiredness had been evident. Generational and geographical shifts in the balance of power, rapid advances in technology-led innovations, and existential global risks like climate change have all strained the capacity of prevailing international norms and institutions. These have left them looking wilted, if not withered. Now, these norms and institutions have all but shattered from the strain of the pandemic. There is no percentage in stating the obvious, yet it must be reiterated: The international community needs new ideas, anchors and torchbearers to reinvigorate globalisation and strengthen global co-operation.

Towards this end, only asinine assessments of a future world order as the century turns 20 would ignore the crucial role of India in shaping this decade, and determining the trajectory of the decades to follow. Our endeavour with this series of essays is to capture the ideas and ethics driving contemporary Indian diplomacy; examine the methods and contours of India’s engagement with the world; and, offer a prognosis of India’s future as a leading power.

Under the rubric of ‘India@75: Aspirations, Ambitions, and Approaches’, ORF has curated 18 essays written by some of the world’s finest minds, representing former heads of state and government, members of parliament, heads of international institutions, leaders from business, and experts from academia and media. Between them, they have studied India’s evolving relationship with new geographies, its engagement with new domains of global governance, and the human imperative that must define India’s rise.

Few predict the path ahead will be easy for India, or that latent and legacy challenges confronting this nation can be ignored. Indeed, most assessments in this volume suggest disquiet and uncertainty. Amrita Narlikar begins her essay with a cautionary note on world affairs. “Multilateralism is facing a crisis of unprecedented proportions,” she writes, “It manifests itself in a fundamental questioning of the very value of multilateralism within countries and deadlocks in negotiations in multilateral organisations.” But this global crisis, she argues, also begets opportunities for India. C. Raja Mohan agrees and asserts that this period of churn offers India the opportunity to shed the temptation to act alone and actively build new coalitions and consensus with other powers. But this will depend, he argues, on how quickly India can restructure its traditional worldview.

As Harsh V Pant writes in this essay, this restructuring is already underway, as “India’s past diffidence in making certain foreign policy choices is rapidly giving way to greater readiness to acknowledge the need for a radical shift in thinking about internal capability enhancement by leveraging external partnerships.”

As the world’s centre of gravity shifts from the Atlantic system, India’s engagement with both emerging and old geographies acquires new salience. And this is where the new external partnerships are actively taking shape. Central among these is the dynamically evolving Indo-Pacific construct which, as Premesha Saha posits, will weave communities, markets and states from the East Pacific to East Africa into one strategic geography. How India adapts its “economic structure” to these realities and implements its “commitment to prevent hegemony in the oceans”, argues Kwame Owino, will determine its ability to lead these new regions.

But shaping new geographies will also require India to manage certain old relationships. The Indo-Pacific should not be seen in isolation—its markets and communities are also rapidly integrating with the Eurasian supercontinent. Steven Blockmans laments that the India-EU relationship has underperformed given its potential to anchor democratic and rules-based governance in greater Eurasia. Solomon Passy and Angel Apostolov boldly make the case for exploring the possibility of a dialogue between NATO and India, indicating just how drastically—and rapidly—the mental maps of the world are morphing.

There is a common thread that binds these analyses: A keen interest in India’s evolving relationship with the US and China. These three nations will, after all, rank among the largest three economies by the middle of this century. The turbulent Twenties will see the dynamics of this power triangle assume centre stage. The US sees India as a partner in its endeavour to neutralise an increasingly aggressive and expansionist China. Jane Holl Lute argues that India “has understood China’s principal strategic aim to replace the United States as the most consequential security power in Asia”. While India’s choices will undoubtedly implicate the balance of power between the US and China, India will most likely chart its own course in international affairs.

ORF Distinguished Fellow Rajeswari Pillai Rajagopalan highlights India’s behaviour in international negotiations on outer space as a primary example. In every significant process—from the UN GGE to the EU CoC—India has argued for greater multilateralism while actively discouraging behaviour that is “inherently destabilising”. I would add India’s engagement on cyber governance, particularly on emerging technologies, to this list. Although technological systems are rapidly unravelling, India has sought to frame rules for its digital economy that both serve its development interests and preserve interdependence. As Trisha Ray writes, “New Delhi must prepare to shape, rather than be shaped, by these shifting geopolitical winds.” Others remind us that much work still needs to be done. Renato Flores urges India to learn lessons from its RCEP withdrawal, shed traditional hesitations, and emerge as a leading advocate for multilateral trade.

India’s most significant contribution to the global commons will be providing sustainable livelihoods to its own people, and its battle against climate change. Indeed, Oommen Kurian & Shoba Suri begin their analysis with the proposition that success or failure in implementing the global SDG agenda is dependent almost wholly on India achieving its own targets. India already produces nearly half of all global vaccines and is a leading voice on IPR reform, as Khor Swee Kheng & K. Srinath Reddy note, making it essential for global health security. India will also be tasked with achieving livelihood goals for itself and the world in a carbon-constrained world, which is why Jayant Sinha argues that India can no longer rely on the ‘farm to industry’ model of development.

Instead, Nilanjan Ghosh asserts that India’s own goal of becoming a US$10 trillion economy, which is both equitable and inclusive, is only possible by following through on the SDG agenda. All of this, according to Adil Zainulbhai, will be powered by India’s already immense digital infrastructure, innovation capabilities and skilled workforce as it leverages the Fourth Industrial Revolution to its advantage. “India’s green transformation,” asserts Mihir Sharma, “will have to be led by the decisions of its people and by the energy of its private sector.”

It is these twin imperatives—achieving sustainable development and the climate change agenda— that make India a very different type of ‘rising power’. Its path to prominence will not be defined by military dominance or coercive economic capabilities. Instead, India’s rise will be characterised by its ability to provide solutions, technologies and finance to emerging communities in urgent need of new models of economic growth and social mobility. It is this ‘new economic diplomacy’, Navdeep Suri believes, that will define India’s foreign policy priorities in the decade ahead.

Underwriting India’s foreign policy will be its civilisational identity as a democratic, open and plural society. Arguably the most abstract of all its foreign policy tools, India’s own ability to retain social cohesion while providing economic growth and development will, as Prime Minister Stephen Harper observes, help “lead the world as a whole to greater prosperity and peace”. Indeed, each essay has this very sentiment at its core—the importance of India’s rise for its own people, its region, and indeed as a model for the world in this century.

We hope these essays will provide an intellectual stimulus to debates and discussions that will undoubtedly contribute to shaping our collective future, examine our contemporary challenges and allow us a moment to learn from the journey so far. The world in the 2020s demands more from us. Indians must be ready to deliver.

This piece is the Editor’s Note for the essay series, India@75: Aspirations, Ambitions, and Approaches

China, Digital India, Media, Research

The shaky ground that digital democracies walk on

A decade ago, the Arab Spring levelled the divide — even if briefly — between the Palace and the Street. Powered by social media, the age of digital democracy was upon us. Technology has since become the mainstay of civic activism. Not only are more voices heard, but elected governments are also more responsive to them. And indeed, in many countries, more people are participating in politics than ever before. From attitudes and approaches of platforms and governments to the proliferation of intrusive technologies that invade personal spaces, the gains of the past decade are nevertheless being undermined. The past year or so has made us acutely aware of the weaknesses and threats to digital democracies. Some of these need a coordinated global response.

First, the very platforms that have fuelled calls for accountability often see themselves as above scrutiny, bound not by democratic norms but by bottom lines. The fact is acquisition metrics and market valuations don’t sustain democracy. The contradiction between short-term returns on investment and the long-term health of a digital society is stark. If hate, violence, and falsehoods drive engagement, and, therefore, profits for companies and platforms, our societies are indeed on shaky ground.

To make technology serve democracy, regulation will have to be completely rethought. Big Tech boardrooms must be held to standards of responsible behaviour that match their power to influence and persuade. Moreover, any accountability framework must be global. The global south lives with and depends on technology platforms designed in the north. These platforms have been visibly taken to task by lawmakers and institutions in the countries of their design. Does the larger cohort of users in the developing and emerging democratic world have recourse to such action? And is this denial tenable and fair?

Most democratic constitutions around the world, while protecting expression, do so with safeguards that are meant to secure peace and co-existence in societies that have histories longer and more storied than America’s.

Second, much of Big Tech is designed and anchored in the United States (US). Understandably, it pushes American — or perhaps Californian — free speech absolutism. This is in conflict with laws in most democracies — including in the US after January 6. Most democratic constitutions around the world, while protecting expression, do so with safeguards that are meant to secure peace and co-existence in societies that have histories longer and more storied than America’s.

This American approach to freedom of expression imposed on other democratic societies, at velocities facilitated by technology, is a formula for serious disorder. If American Big Tech wishes to emerge as Global Tech, it must adhere to global democratic norms. Its normative culture must assimilate and reconcile, not prescribe and mandate. In the absence of such an understanding, a clash is but inevitable. It must be emphasised that the fault line would be social norms, not the benefits of technology.

If global democracy and global tech are to coexist, the global south must sit at the high table when regulations are designed and as ethics are embedded in algorithms. Today, the global south’s participation in policy and design decisions that shape our tech future is like the map of vaccinations in our pandemic world — significantly underrepresented in democratic Africa and Asia.

Finally, the greatest danger to the freedom our democracies enjoy is from authoritarian regimes that exploit our liberties and turn them against us. In the real world, Peng Shuai is under house arrest. But in the virtual world, she is presented as being free and happy. Wolf warriors have given a whole new meaning to the phrase “virtual reality”. Recently, an Indian speaker at a transportation conference in China found her microphone turned off because she questioned the Belt and Road Initiative. We are in an unprecedented political landscape where authoritarians weaponise our debates even as we are silenced in theirs. Would any country allow another to open an embassy if it did not have reciprocal rights in the other capital?

The global south’s participation in policy and design decisions that shape our tech future is like the map of vaccinations in our pandemic world — significantly underrepresented in democratic Africa and Asia.

We are living in that perverse reality already. China’s media and government handles conduct aggressive diplomacy in our digital public sphere while we are denied the right to do so in theirs. Beijing and other authoritarian regimes are omnipresent in our digital lives. Their handles bombard us; their chosen narratives besiege and colour the truth. How can we prevent such regimes from gaming the public sphere, and from this perversion of institutions, academia, media, and tech platforms? Their presence on our platforms represents a systemic challenge and a security risk. It must be responded to.

The alleged disruption of America’s elections in 2016 will be child’s play as compared to what may happen in 2024. That year, India, the US and the European Union Parliament will all hold elections — the first such coincidence in the age of digital democracy. We face a perfect storm of misinformation and manipulation. Confronted by wolf warriors, the rest of us can’t be lambs to the slaughter. Open societies have always stoutly defended their borders. Now, they must safeguard these new digital frontlines. At the Summit for Democracy — called by President Joe Biden and addressed by, among others Prime Minister Narendra Modi, it was apparent to all that the democratic world needs to get its house in order. Even as democracies attend to this they need to ensure that other’s don’t burn the house down.

economy, Green Technology, Research, Water / Climate

Setting a path to green, resilient and inclusive development

Co-Authored with Mari Elka Pangestu

By investing now to build a green, resilient and inclusive economy, countries can turn the challenges of COVID-19 and climate change into opportunities for a more prosperous and stable future.

The decade following the 2009 global financial crisis was characterised by growing structural weaknesses in developing countries, which have been further aggravated by the COVID-19 pandemic and climate change, worsening poverty and inequality. These weaknesses include slowing investment, productivity, employment, and poverty reduction; rising debt; and accelerating destruction of natural capital. The pandemic has already pushed over 100 million more people into extreme poverty and worsened inequality. The effects of climate change are expected to push an estimated additional 130 million people into extreme poverty by 2030.

COVID-19 and climate change have starkly exposed the interdependence between people, the planet, and the economy. All economic activities depend upon ecosystem services, so depleting the natural assets that create these services, eventually worsens economic performance.

Figure 1: Global income losses due to the COVID-19 pandemic

A business-as-usual recovery package that neglects these interlinkages would not adequately address the complex challenges that confront the world nor its structural weaknesses and would likely result in a lost decade of development. Targeting socioeconomic, climate change and biodiversity challenges in isolation is likely to be less effective than a coordinated response to their interacting effects. A continuation of current growth patterns would not address structural economic weaknesses and would erode natural capital and increase risks that affect long run growth. As the depletion of forests, oceans, and other natural assets worsen, the cost of inaction is becoming more expensive than the cost of climate action and it is the poor and vulnerable who are most disadvantaged by it.

The GRID approach

The solution is to adopt a Green, Resilient and Inclusive Development (GRID) approach that pursues poverty reduction and shared prosperity with a long-term sustainability lens. This approach sets a recovery path that maintains a line of sight to long-term development goals; recognizes the interconnections between people, the planet, and the economy; and tackles risks in an integrated way. Research from the University of Oxford, World Economic Forum and Observer Research Foundation has all shown that a green recovery will not just be beneficial for combating climate change but also offer the best economic returns for government spending and yield development outcomes. The GRID approach is novel in two respects.

First, though development practitioners have long worried about poverty, inequality and climate change, the GRID approach pays particular attention to their interrelationships and thus, on the cross-sectoral nature of critical development policies. Second, achieving GRID implies simultaneously and systematically addressing sustainability, resilience and inclusiveness. GRID is a balanced approach focused on development and sustainability and tailored to each country’s needs and its Nationally Determined Contributions (NDC) objectives. Such a path will achieve lasting economic growth that is shared across the population, providing a robust recovery and restoring momentum on the Sustainable Development Goals (SDGs).

Research from the University of Oxford, World Economic Forum and Observer Research Foundation has all shown that a green recovery will not just be beneficial for combating climate change but also offer the best economic returns for government spending and yield development outcomes.

Recovering from COVID-19 with GRID

The pandemic has inflicted a particularly harsh blow on developing economies. Most urgently, a fast and fair vaccine rollout is critical to an L-shaped recovery. Vaccine access and deployment presents challenges unprecedented in scale, speed and specificities, which will require strong coordination.

Looking ahead, setting a path to GRID will require urgent investments at scale in all forms of capital (human, physical, natural, and social) to address structural weaknesses and promote growth. Special attention is needed on human capital development to rebuild skills and recover pandemic related losses, especially amongst marginalised groups. While the pandemic has amplified the challenges of providing education for all, it has also highlighted how disruptive and transformational technologies can be leveraged in addition to traditional in person learning to help education services withstand the unique pressures of this time.

Recovery packages are an opportunity to prioritise investments in the infrastructure needed to develop and roll out transformative technologies.

Women must be at the center of the GRID agenda as powerful agents of change. Education for girls, together with family planning, reproductive and sexual health, and economic opportunities for women will accelerate the green, resilient and inclusive dimensions of development.

Technology and innovation will play an essential role in promoting low carbon growth. Recovery packages are an opportunity to prioritise investments in the infrastructure needed to develop and roll out transformative technologies.

One takeaway from Glasgow has been that securing green finance at scale will be essential for the GRID agenda. However, developed countries found it difficult to secure the necessary funding for developing countries to implement the green transition to sustainable and equitable development.

But there may be a silver lining. The global economy is awash with excess savings estimated at around $3.9 trillion that are earning negative or low returns and there are $46 trillion of pension funds in search of reasonable returns. The low carbon transition may offer an opportunity for investors, especially as the returns to green investments begin to exceed investments in more conventional technological choices.

Necessity and urgency of systemic investments and transformations

Transformational actions will be needed in key systems — for example, energy, agriculture, food, water, land, cities, transport and manufacturing — that drive the economy and account for over 90 percent of greenhouse gas emissions. Without significant change in these sectors, neither climate change mitigation nor sustained and resilient development are possible. Such a transition, by addressing economic distortions, will promote greater economic efficiency and reduce adverse productivity and health impacts, leading to better development outcomes.

Domestic resource mobilisation can also be increased by enhancing tax progressivity, applying wealth taxation, and eliminating tax avoidance. There is also a need for greater selectivity and efficiency in spending.

But the fruits of the transition may not be evenly distributed and will require a range of social and labour market policies that address adverse impacts, safeguard the vulnerable and deliver a just transition. The GRID approach, therefore, supports a transition to a low carbon economy while considering countries’ energy needs and providing targeted support for the poorest.

Significant reforms of fiscal systems will be needed to mobilise domestic resources and finance the transition. Taxes on externalities are a large and unused source of potential revenue, which can create incentives for the private sector to invest in more sustainable activities. Domestic resource mobilisation can also be increased by enhancing tax progressivity, applying wealth taxation, and eliminating tax avoidance. There is also a need for greater selectivity and efficiency in spending.

A strong private sector involvement will be needed. The scale of investment needed far exceeds the possibilities of the public sector. Reforms are needed to remove constraints to private investment in appropriate sectors and technologies. Thus, at the country level, a strong partnership and dialogue between the public and private sector is urgently needed. And further developing and implementing green financial sector regulation, such as reporting standards and green taxonomies, can help harness investors’ increasing appetite for sustainable investments, which offer both measurable impacts on the environment and society.

However, sustainable and substantial flows of finance across borders will need to supplement domestic efforts. Multilateral development banks (MDBs) and Development Finance Institutions (DFIs) must focus on catalytic and transformational investments in priority areas to develop green, inclusive and resilient project pipelines that support economic growth, and job and income generation. On this front, MDBs can help lower risks for private capital through guarantees and blended finance. But at the end of the day the most effective way to attract private capital is through policies that correct distortions that render environmental destruction profitable.

Multilateral development banks (MDBs) and Development Finance Institutions (DFIs) must focus on catalytic and transformational investments in priority areas to develop green, inclusive and resilient project pipelines that support economic growth, and job and income generation.

Climate change is a reality shaping lives as we speak and not a distant mirage that will materialise only in the future. From Pacific Island nations facing rising sea levels to the Sahel region struggling with longer dry seasons, climate change is changing lives of the poor and vulnerable across the world. The future for the world’s climate vulnerable groups will remain bleak unless we transform policy and economic thinking and secure the financing that is needed.

Countries face a historic opportunity to establish a better way forward. Despite the damage wrought by the pandemic, the exceptional crisis response offers a unique opportunity for a “reset” that addresses past policy deficiencies and chronic investment gaps. Crisis related expenditures can be used to invest in new opportunities, such as accelerating digital development, an expansion of basic service provision, improvements in regional supply chains, strengthening ecosystems services, and policies to catalyze job creation in growth sectors. Private sector dynamism and innovative financing will need to power the recovery and to create economic growth and employment through investment and innovation. Public-private partnerships and key upstream policy reforms can spur private investment (including FDI), support viable firms through restructuring, and enable the financial system to support a robust recovery through the resolution of non performing loans.

Books / Papers, BRICS, China, COVID-19, Research

Stocktaking and Recommendations for Consolidation: Joint Academic Paper by ORF and RIS

brics-report_final_december-2021 Download

As the BRICS passes through a crucial milestone of its existence, celebrating 15 years of its formation, this report examines the initiatives launched since inception and makes recommendations for consolidating and streamlining the agenda.

The BRICS remains a prominent grouping in the global governance architecture due to the individual influence of each member-state and the collective size of their economies. The confidence in BRICS from within and the perceptions outside the grouping are shaped by its successes in institution-building and resource mobilisation. The highlight of BRICS’s success is its strong focus on issues of financial stability and global governance reforms, particularly in areas related to macroeconomic stability. These are supplemented by attention to sustainable development issues backed by finance and technology.

The BRICS agenda has witnessed a steady expansion of its scope ever since its inception. During the initial years, the agenda was focused on responding to the trans-Atlantic financial crisis with a special focus on multilateralism, particularly the need to reform the international monetary and financial architecture. Subsequently, the BRICS established the New Development Bank and the Contingent Reserve Arrangement, two flagship financial initiatives that remain the biggest success stories of the plurilateral to date. Notably, with the outbreak of Covid19 in 2020, there has been a special focus on responding to the pandemic and coordinating recovery.

Given the expanding scope, there is a need for consolidation and streamlining of the BRICS agenda. This will help address structural deficiencies and facilitate the smooth coordination for building consensus on key issues. To realise these goals, a thorough review of the BRICS cooperation mechanisms is necessary. This joint academic study presents an assessment of the various tracks under the BRICS framework, such that the grouping can better pursue the collective agenda of economic cooperation and sustainable development.

The year 2021 has been significant, with the Indian presidency underscoring ‘BRICS@15: Intra-BRICS Cooperation for Continuity, Consolidation and Consensus’ as the theme. The aspect of ‘consolidation’ received special attention. The Indian presidency also helped in concretising several action areas that had remained dormant. A case in point is the Agriculture Research Platform proposed by India at the 2015 Ufa Summit with a memorandum of understanding signed during the Indian presidency in 2016. This was launched in the virtual format in 2021, again during India’s presidency.

India’s presidency of BRICS in 2021 has set a definite example for streamlining of the BRICS agenda. As the agenda consolidates, future presidencies will find room for emerging themes that require urgent attention. Consolidation does not always only mean weeding out weaker sprouts, but to have comprehensive approaches towards setting common goals so that even relatively weaker initiatives can be scaled with resources. A preliminary assessment of the initiatives launched by BRICS is presented in this report.

Samir Saran

Monthly Archives: January 2022