China Threat: India must get its economic act together for major countries to value it more
-Shakti Sinha,,Ex-IAS & Personal Secretary to former PM late Shri Atal Bihari Vajpayee
While the world is battling just Covid19, the Indian Economy is struggling with its burgeoning population, consistent threat of terrorism from neighbours, rising borders dispute with China, cyber attacks, and what not

While the world is battling just Covid19, the Indian Economy is struggling with its burgeoning population, consistent threat of terrorism from neighbours, rising borders dispute with China, cyber attacks, and what not. Amid all this, independent journalist Mahima Sharma spoke to former IAS officer, Shri Shakti Sinha, who has served as the Private Secretary to former Prime Minister late Shri Atal Bihari Vajpayee. And Shri Sinha helped Indiastat gauge the SWOT analysis for India and how the nation must stride ahead in a better way, to overcome the above rising challenges amid unemployment in all sectors.

MS: You have served various policy-making institutions of India. In your experience and opinion, what new policies and upgrades of the older ones are needed to reverse the falling graph of its health, employment and economic scenario?

SS : The pandemic has been an unprecedented one, and though we have seen a sudden rise in unemployment, with attendant consequences for health and educational indicators, we need to understand that there is a short-term goal of coping with, and reversing, the immediate effects of the pandemic and the long-term goal of high economic growth. On the first, it is all about support to individuals and families to cope with the loss. Free foodgrains and a sharp pickup in MNREGA is part of the response. The trouble with economic policies in such continuing circumstances is that even as government revenues have been affected, the demands for expenditure and increased fiscal deficit are getting stronger. On the one hand, there is the risk of deflation, and on the other of rising inflation. I would argue that in the short-term, India has no option in stepping up expenditures, in creating demand including by putting cash in the hands of the poor. The long-term growth would require going ahead with restructuring of the economy, privatisation of PSUs, easing the microeconomic impediments to growth and investments, on the economy side, and stepped up public investments by states and the union in education, health (especially preventive side) and in improving the accountability of the health and education institutions to deliver better outcomes. An overhaul of the government machinery to make it effective, efficient and accountable would be required.

MS: Vaccine diplomacy by India and a rising need to timely vaccinate its own people. What's your take on this? How India must prioritise its public (most of which lives below the poverty line and finds it tough to afford even the basic viral fever treatment) while trying to maintain mutually beneficial international relations?

SS: While a country's first priority has to be its own citizens, in the true spirit of 'Vasudhaiva Kutumbakam' we cannot cut ourselves from the world. We should slowly restart supplying vaccines to our neighbourhood and to poor countries everywhere.

MS: Till last year, India had an edge above China due to its manpower when foreign policies changed. Then the pandemic catapulted and the masses took the worst beating. Technologically an advanced China is again trying to be back in command. What steps will India need to take to stride ahead towards its dream of being a global manufacturing leader, when so many SMEs have shut down?

SS : China was almost five times richer than India even before the pandemic, so it is not correct to say that India had an edge. While China has reemerged economically as a power house, its strategic mis-steps have meant that it is trusted even less. Irrespective of China, we have to move strongly to get growth going, attract investments so that manufacturing and employment picks up. There is no magic wand available, and I have given a broad description of the strategies we need to adopt, in the first answer.

MS: Not just economy-wise, Indo-China relations continue to be strainful due to the ongoing border tensions. What hard steps India is in a position to take right now, to enthuse confidence not just in its border forces but also the ones living on tenterhooks in the troubled regions?

SS : Our response has been robust but the problems with the People’s Republic of China (PRC) are not going away soon. PRC clearly wants the border dispute to linger; its nuclear and missile partnership with Pakistan is India-centric. The PRC feels that with the world distracted by Covid and its continuing consequences, this is the time to assert itself. Historically, PRC’s external aggressiveness is always linked to internal tensions within the Chinese Communist Party (CPC). Xi Jinping, the General Secretary of the CPC has centralised political, economic and strategic decision-making in an unprecedented way. Thousands of CPC cadres have been punished, ostensibly on corruption charges. These anti-corruption campaigns may well reflect tensions within the CPC, with a blowback against Xi’s policies. China's population has started shrinking, which means that the country may age before it becomes rich. And the tensions with India in Ladakh have shown up the inadequacies of the People's Liberation Army. At the same time, the leadership of the CPC is convinced that the West under the USA is in terminal decline, and that the PRC must now assert its leadership of the world, beginning with its neighbourhood and with Asia.

MS : Bad loans, bank frauds, easy escape by scammers to foreign shores, pending extraditions, and so on and so forth have been consistent scenarios over the last few years. Amid all this, what new laws must be framed? And till then, where do you see the future of India in terms of FDI and international investments into India?

SS: One should not link bad loans with bank frauds, though a certain overlap is there. Businesses fail, sometimes changed circumstances means that basic premises for investment are no more relevant while in others, it can be just bad business sense. These cannot be penalised. But yes, the ability of crooks to cheat the system does not reflect well on us. Our regulatory regime needs strengthening through better professionalism. It needs the ability to spot problems before they become too large and a systemic risk, e.g., Yes Bank, PMC etc. For wrong-doing, there should be certainty of punishment and an end to the culture of impunity. Government ownership of banks and insurance companies is troubling. This does not mean that privatisation alone will solve all problems, but it is the minimum required. It has to be accompanied by stronger and effective regulations, but this should not be confused with micro-management by regulators.

MS : Rising face of Taliban in Afghanistan and some very heart-wrenching incidents of violence in the region after the US announcing troops withdrawal from the nation. And, rising terror in its neighbourhood - where do you think India stands right now amid all this and tense Indo-China & Indo-Pak relations, a raging pandemic and sinking economy? And major steps need to be taken on an immediate basis so as to secure its own republic from any Taliban generated terror activity?

SS: Any rise of the Taliban to power in Afghanistan, particularly if it exercises a monopoly of violence, would not be in the interests of its principal supporters and mentors - Pakistan. It would also destabilize Iran and not be good for China. Things would not be easy for India but this is not the 1990s, and Kashmir is also different. So while India cannot be complacent, and must exercise close monitoring, it must also engage all Afghan factions India is a friend of Afghanistan, and is not in the business of choosing sides in domestic disputes. There may not be any cause for panic though.

MS : Time and again, we hear murmurs from the diplomatic circles and the think tanks, asserting one common point - India must shed its bureaucratic shackles and cut the red tape to be a better socio-economic republic. What is your take on that?

SS: That we need a new approach to governance is something that is no longer just a proposition for debate. It is impossible in reply to a question to suggest a full-fledged alternative. A few basic approaches are suggested here. Local governments (city, district, village) have to be strengthened, by giving them resources along with responsibilities. Service delivery - schooling, preventive health, water supply, etc - must be better aligned with the needs of the people and must be accountable to the local communities. Implementation, and micro-policy making must be delegated to the lowest level possible. Lateral entry must be there at all levels of the government, allowing internal candidates to compete with outsiders. Layers of bureaucracy must be reduced, and accountability norms laid down at all levels, with clear deliverables associated with each and every job. Aligning capabilities with job description and encouraging professional growth would empower civil servants and make them more effective.

MS: Coming on to the next sector of India - the power sector. It has a huge potential. But in one of your opinion columns, we read an eye opener - "Tariffs that the public pays do not reflect the true costs. It threatens the viability of the sector and bypassing the costs of today's consumption to tomorrow's consumers is unethical." Each state is making its own policy decisions, resulting in a lack of parity of power distribution as well as inconsistency in pricing across the. Don't you think India needs a uniform law? How can this situation be changed on a sooner basis? Your detailed take on this.

SS: My point is very clear - someone has to pay the costs here and now. If it is not the direct consumer or the government providing for subsidies upfront and paying for it, then it is an unfunded activity straining the rest of the system, and leaving it to the future to pay for today's consumption.This is unsustainable and unfair. I am not a great fan of a uniform national policy since local circumstances are very different. But a uniform approach, or sets of guiding approaches are required to be discussed and agreed to, based on the core principles of equity and economic viability.

MS: What strategy must India implement to tame the fuel-price-hike-driven rising inflation, which is giving a double beating to the already hit masses?

SS: India's ability to control fuel prices is limited. Can our states function without the substantial taxes that they are able to collect via sales of petrol, diesel etc.? Historically, in any case, fuel prices are low in real terms. What India must do is to increase its energy efficiency by an order of magnitude. And for the very poor, either subsidise consumption, which could lead to leakages, or give poor direct, unconditional cash advances to meet a basket of consumer needs and remove individual subsidies and other price distortions

MS: Cryptocurrency and fluctuating RBI policies. Your take on that. And where do you see India's future in the world of Digital Currency amid unstable cybersecurity?

SS: RBI has been excessively cautious in this. Porto Rico, on the other hand, has allowed cryptocurrency as legal tender. Can we learn from China and UK which is issuing its own digital currencies. In fact, from worries about cybersecurity, which are a very big threat at present, cryptocurrencies being decentralised networks are immune to capture. What we can learn from global developments, and apply them to India, is the way forward. We should not throw out the baby with the bathwater; technological innovations must be tapped for our good

MS: What immediate and stepwise educational policy changes are needed so that children who have lost a year or more of education can find consistent means of education at home, especially in the times when education has gone online and people don't have enough meals to eat, let alone afford that gadget to study?

SS: Some loss would have to be accepted. The issue is how soon normalcy can be restored, and of course, a common understanding on what we mean by the 'new normal.' Then using technologies available, and classroom teaching, use courses formatted to improve learning, work on closing the gap which has been created since March 2020 - though serious gaps in learning outcomes are a continuing legacy, as Pratham's ASER shows regularly. But let us accept that there are no short-cuts, and technology can help us only if we know what it is that we need to target, and how we measure that learning is actually happening.

MS: INDIAN FOREIGN POLICY POST COVID19 PANDEMIC - What's your take and detailed view on this? Kindly elaborate with some data analytics to add weight.

SS: 'The world is going through unprecedented turmoil that predicting the future can be hazardous. Covid19 and the attendant disruptions have not only led to introspection about the received wisdom of economic policies, be it globalisation, supply chains or financial integration, but its affects would not just geo-economics but also the geo-strategic landscape of the world. Two, the completely unsettling disruptions caused by the 4th technology revolutions means that we really know little about the kind of jobs required in the world of 2025, leave alone 2030. The labour costs arbitrage that developing countries to attract investments, may be on its last legs. Three, and like technological change, another trend that predates Covid19 is that with the end of USA’s unipolar movement, means that for the first time in three centuries, there is neither a global hegemon nor an undeclared Cold War between two hermetically sealed rival power blocks. The People's Republic of China sees a narrow window in which it can challenge the USA. The first to feel the heat are China's neighbours - India, Japan, Taiwan and Mongolia and 'new' neighbours like the Philippines, where the PRC is pushing itself and trying to gain strategic and geographical space. PRC's increasing clout over the econ mies of Sri Lanka and Myanmar and potentially Maldives is another facet of such moves in India's neighbourhood.

The power - economic, military and political - asymmetries between India and China are likely to move away from us in the near-future. India's need to bandwagon with those who share its worldview that prioritises negotiations over unilateral changes, respects territorial integrity of all countries regardless of size and are committed to keeping the oceans free, is the only rational way the country can adopt. India must get its economic act together so that other, major countries can see the value of working closely with India. Lastly, India must remain engaged with the world, even with those countries increasingly tied to Chinese apron strings.

MS: Your social media is quite vocal in calling a spade, a spade. And recently India has changed its Digital Media laws. Your take on the same and related policies of the nation (keeping aside your political inclinations) from the eyes, heart and mind of a citizen of India.

SS: I am all for spaces that encourage disagreements but without being disagreeable. Unfortunately, SM encourages quick judgements, dispensing often with niceties of interpersonal communications since logic and facts are irrelevant. Are SM platforms commercial spaces? If so, Government’s interference should be minimal - limited to seeing that such platforms are not used for promoting violence or hateWhere SM platforms decide to act as censors, the rules should be clear and easy to understand. The user must be given an opportunity to explain in a neutral space. But where platforms say, rightly, that they do not have control over content, and act only in the rare cases of promotion of violence, then they should not act as censors. They should decide what they are? A sovereign whose job is to uphold the law, or a commercial space?

About Shri Shakti Sinha

Shakti Sinha is the Honorary Director of the Vadodara-based think tank, the Atal Bihari Institute of Policy Research & International Studies (Maharaja Sayajirao University of Baroda). Earlier, he was the Director of the Nehru Memorial Museum & Library, New Delhi, a national institution. He is a Distinguished Fellow at the India Foundation (New Delhi), and Non-Resident Senior Fellow at the Institute of South Asian Studies (ISAS), Singapore. He has a master’s in public policy from George Mason University, and a master’s in history from Delhi University. He was a member of the Indian Administrative Service from 1979 to 2013. He has held positions at different levels at the union, provincial and local levels. Internationally, he headed the United Nation’s governance & development team in Afghanistan (2006-09) coordinating donor support to the Afghan government, and was earlier Senior Advisor to India’s Executive Director on the World Bank board (2000-2004), representing Bangladesh, Bhutan, India and Sri Lanka.

Mr. Sinha has also worked at think tanks in India (Director, India Foundation; Visiting Senior Fellow, Observer Research Foundation), at Singapore (Research Fellow, Institute of South Asian Studies). He is the author of a recently published book, ‘Vajpayee: The Years That Changed India.’. He has edited eight books, the most recent one being an authoritative account of different facets of India-China relations (One Mountain Two Tigers: India, China and the High Himalayas). He has written many book chapters, working papers, policy briefs, columns etc. on political economy of India, Indian foreign policy & strategic affairs, governance, and on Afghanistan, for global and Indian publications.

About the Interviewer

Mahima Sharma is an Independent Journalist based in Delhi NCR. She has been in the field of TV, Print & Online Journalism since 2005 and previously an additional three years in allied media. In her span of work she has been associated with CNN-News18, ANI - Asian News International (A collaboration with Reuters), Voice of India, Hindustan Times and various other top media brands of their times. In recent times, she has diversified her work as a Digital Media Marketing Consultant & Content Strategist as well. Mahima can be reached at

Disclaimer: The opinions expressed in this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of Indiastat and Indiastat does not assume any responsibility or liability for the same.

(Estimated as of now)
Socio-Economic Voices
Shashikant Hegde, Director & CEO, ProjectsToday

... Read more

District FactbookTM
District FactpageTM
publication publication publication publication
India's most comprehensive e-resource of socio-economic data. A cluster of 56 associate websites
Provides election data for all 543 parliamentary and 4120 state assembly constituencies
A collection of over 4000 data-oriented publication in print, eBook, eFlipbook & web-based access formats
A comprehensive collection of Infographics, videos, maps and charts on various socio-economic and electoral Insights
An e-resource providing socio-economic statistical information about India, its states, sectors, regions, and districts.
A one-stop-app for all who are craving for the latest economic facts and figures of India.
One-of-a-kind online learning platform offering specialised courses and also providing interactive learning.
Twenty Three years of serving socio-economic and electoral research fraternity in india and abroad.
© Datanet India Pvt. Ltd.