Editorials/Opinions Analysis For UPSC 09 March 2022
- Breaking with Russia on Defense is Difficult
- The Macroeconomic Framework that can guide our Policy Choices
Breaking with Russia on Defense is Difficult
India has been in the crosshairs of Ukraine-Russia Conflict which has brought the world on the brink of Cold War era. India would want to avoid being a collateral casualty amidst the tensions between its allies, Russia, US and the UK.
GS-II: Bilateral, Regional and Global Groupings and Agreements involving India and/or affecting India’s interests.
Dimensions of the Article
- India and Russia Historical Ties
- India and Russia Defense Engagements
- Issues created by Russia-Ukraine Conflict for India
- Issues with India’s Domestic Defense Industry
- Way Forward
India and Russia Historical Ties
- India has shared a cordial relationship with Russia since the mid-1950s.
- India maintained a neutral stance to Russia’s invasion of Hungary in 1956 and Afghanistan in 1960.
- Russia in return has backed India’s South Asia Policy.
- Russia backed India when Goa was liberated in 1961.
- Russia maintained a neutral stance to Sino-India Conflict of 1962.
- Russia has favoured India with regard to the Kashmir at various International Forums.
- Epitome of India Russia relationship is highlighted in the assistance provided by Russia in the 1971 War.
- Presently, India has abstained from voting at all UN platforms against Russia maintaining its neutrality towards Ukriane-Russia Conflict.
India and Russia Defense Ties
- Russian equipments form the backbone of our ordnance with share of about 85%.
- In last two decades Russia has accounted for 66.5% arms imports by India.
- India is currently acquiring the S-400 Surface Missile System, Grigorovich Frigates, an Akula Class Nuclear Submarine on lease and MiG-29 Fighters.
- Kalashnikov 203 Rifles too are being imported with technology transfer to India.
- Licensed production of T-90S Tanks and Sukhoi M-30 Jets is also under process.
- In 1950s and 1960s, Russia provided India with MiG-21 fighters, the demand for which was refused by British.
Issues being created by the Russia-Ukraine Conflict for India
- Heavy sanctions being imposed on Russia poses challenges to India’s ongoing defense acquisitions and future engagements.
- Countering American Adversaries Through Sanctions Act (CAATSA) may be invoked by the US to sanction India due to its continued engagements with Russia.
- India can’t afford geopolitical fallout with the West as it helps it counter China.
- Economic Sanctions on Russia will affect India’s investments in Russia and developing its Far East Region.
Issues with India’s Domestic Defense Industry
- India’s R&D expenditure in the defense sector is miniscule.
- Lack of Investment in the defense sector.
- Lack of Industry-Academia Connect.
- Red-Tapism and Corruption.
- Lack of Experts and Skilled Professionals.
India needs to find away to continue its engagements with Russia without attracting sanctions from the West. Another challenge that lies ahead is circumventing the sanctions being imposed on Russia. India has to engage with diplomatic neutrality and ensure that both sides come to an amicable position with regard to India. Meanwhile, India must reduce its dependency on Russia and diversify its arms import while augmenting its own Defense Industry.
Source: Hindustan Times
The Macroeconomic Framework That Can Guide Our Policy Choices
Indian Economy is presently recovering from the shocks of the pandemic. Policy makers are trying to balance growth and inflation while keeping in check the deficits in the economy. Swan Diagram might be a useful concept in deciding our policies in future.
GS-III: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
Dimensions of the Article
- Current Condition of Indian Economy
- What is Swan Framework?
- How does Swan Framework help in Policy Formulation?
- Way Forward
Current Condition of Indian Economy
- India is slowly exiting the stimulus placed post the pandemic hit in 2020.
- India’s Balance of Payments has been remarkably stable even through tough times.
- Though domestic investment was weak in private sector, International flows made up for the gap.
- However, Russia-Ukraine crisis can cause imported inflation in India and affect the estimates made by the government.
- Inflation in energy sector would cause spillover to other sectors as well which primarily use energy.
- This would put our Balance of Payments under stress.
What is Swan Framework?
- A microeconomic balance, both Internal and External needs to exist for the economy to be healthy.
- Internal Balance – Full Employment or Economic Growth is at potential or when Inflation isn’t accelerating.
- External Balance – Neither a huge Current Account Deficit nor Surplus.
- Swan Framework given by Trevor Swan attempts to chart out response of an economic policy to the various possibilities of Internal and External Balance.
How does Swan Framework help in Policy Formulation?
- Every country wants to achieve the blissful point where the Internal and External Balance lines meet.
- Hence Real Exchange Rates and Domestic Demand in the economy need to be maintained.
- Though various factors like Trade Shocks, Productivity Growth can alter the equilibrium.
- Policies of the Government, RBI and the global turbulence also would impact the policy choices.
- Swan Framework only provides a conceptual thinking rather than exact estimates.
With increasing global economic disturbances, India needs to be on its toes to protect itself from the any impact that can be an obstacle to its economic recovery post pandemic. Swan Framework can provide the necessary understanding and direction of the policies being framed so that Internal and External Balance is maintained.