Hello, everyone. Good morning, afternoon or evening, and welcome to this edition of Notes from South Asia. You can find all the articles in the series here (along with my other diaries).
Today, we will cover state of the opposition in India and IMF and debt crisis in Pakistan and Sri Lanka.
India
Continuing Saga of Electoral Bonds and Political Corruption
Jahnavi Reddy and Project Electoral Bond report for the Scroll (and others) about the curious link between BJP and the Delhi Liquor Policy Case. (they updated headline since it first came out but you can see the URL).
Delhi Chief Minister Arvind Kejriwal was arrested by the Enforcement Directorate on Thursday on charges of corruption and money laundering in the Delhi excise policy.
Hours before his arrest, electoral bond data released by the Election Commission showed a company linked to another person accused in the same case, P Sarath Chandra Reddy, had donated Rs 5 crore to the Bharatiya Janata Party in 2022, just five days after Reddy was taken in custody. Another Rs 25 crore was donated to the BJP after Reddy turned approver in the Delhi excise policy case.
Sarath Reddy turned approver in the Delhi excise policy case in June 2023. In November 2023, Aurobindo Pharma gave another Rs 25 crore to the BJP.
In all, the company bought electoral bonds worth Rs 52 crore, of which Rs 34.5 crore went to the BJP. Before Sarath Reddy was arrested by the ED, Aurobindo Pharma had also donated Rs 15 crore to Bharat Rashtra Samithi and Rs 2.5 crore to the Telugu Desam Party.
Bharat Rashtra Samithi MLC Kalvakuntla Kavitha, the daughter of former Telangana Chief Minister K Chandrashekar Rao, was arrested by the ED in the Delhi excise policy case on March 15. Delhi’s former Deputy Chief Minister Manish Sisodia has been in prison for the same case since February 2023.
Whatever the corruption—if there is corruption—it is clear that the ruling party is as involved as any opposition party. Far more in fact.
On that note, as Vignesh Radhakrishnan reports for the Hindu, many many companies donated money to the ruling party ahead of or after ED/IT (Income Tax) raids/cases (Same clip in the photo above).
Many companies that faced regulatory action in the past five years have all donated electoral bonds to the Bharatiya Janata Party (BJP) in some measure, data released by the Election Commission (EC) to comply with the orders of the Supreme Court show.
The Hindu previously reported that Divi’s Labs, Micro Labs, Kalpataru Projects International, and other companies purchased bonds worth considerable sums of money between 2019 and 2023. These companies were also under the scanner of the Income Tax Department, the Enforcement Directorate or the U.S. Food and Drug Administration over alleged bad business practices or quality control, as the case may be.
On March 21, the commission shared the bond numbers associated with each purchase, thus allowing the lists of donors and the parties they were donating to to be matched.
Micro Labs purchased electoral bonds worth ₹16 crore in all, of which ₹7 crore went to the Sikkim Krantikari Morcha, ₹6 crore to the BJP, and ₹3 crore to the Congress.
Hetero Drugs Ltd., Hetero Labs Ltd., and Hetero Biopharma Ltd. donated ₹50 crore to the Bharat Rashtra Samithi (BRS), followed by ₹10 crore to the BJP.
State of the Opposition
As mentioned above Arvind Kejriwal, Aam Aadmi Party leader and Delhi Chief Minister was arrested yesterday on what is called the liquor policy/excise policy scam. He is not the first AAP leader to be arrested. Two other AAP ministers are in jail, one on a related case.
The INC meanwhile has had its bank account blocked to the tune of around 200+ crore (2000 million INR) for a minor discrepancy regarding tax filing a few years back (that was later corrected; the Hindu edit said it is not even clear there needs to be any action against the party for that).
On that note, let us see what the Hindu Frontline magazine has to say about the state of the opposition.
I wish I could use this picture at the top but that felt like stealing. So you have the Hindu E-paper clip as usual.
Asim Ali writes that Indian democracy needs a subaltern revival.
First he notes the obstacles in the path of the opposition in convincing the electorate that democracy is under threat from BJP and hence, they should vote for the opposition.
The first obstacle has been receptivity at the popular level. Among the demos (masses) of India, such messaging registers only a tepid response. In a recent Pew survey, India once again emerged as the global leader in terms of popular support for autocracy. A shocking 67 per cent of Indian respondents favoured the idea of a strongman rule sans Parliament and courts, according to the survey (the corresponding figure for 2017 was 55 per cent).
The second obstacle has been the behaviour of the political elites of the opposition itself. The INDIA bloc, even at this late stage, exhibits wide gaps in terms of unity—of leadership, purpose, or programme. Unlike in 1977 or 1989, the two previous occasions when a broad opposition coalition came together on a “save democracy” platform, there have been few joint rallies and press conferences this time. The stitching together of State-level coalitions was deferred until the last minute. And we still have not seen a clear and coherent political agenda on which the INDIA bloc will challenge the National Democratic Alliance (NDA) incumbent (as distinct from the agendas of the individual alliance partners). Compounding this chaos has been the desertion of several key alliance partners, like the Janata Dal (United), or JD(U), and the Rashtriya Lok Dal, or RLD.
Yet, there is a threat to democracy he notes.
The political analysts Andrea Kendall-Taylor and Erica Frantz explained how the global route towards authoritarianism now runs through a gradual erosion of democracy from within and not through military coups or violent insurgencies from without. In an essay for Foreign Affairs, titled “How Democracies Fall Apart” (December 2016), Kendall-Taylor and Frantz emphasised how elected leaders, once sufficiently entrenched, are increasingly able to manipulate institutions such as the mass media to choke off the normal channels of democracy. “From 1946 to 1999, 64 per cent of democracies failed because of (violent) insurgencies. In the last decade, however, populist-fuelled authoritarianization has been on the rise, accounting for 40 per cent of all democratic failures between 2000 and 2010 and matching coups in frequency,” they wrote.
How did the descend come about? By forgetting the essence of democracy, he notes.
As Charles Taylor, one of the leading contemporary theorists of democracy, has argued, the demos in democracy does not simply translate to people. A long line of thinkers from the ancient Greeks to the French revolutionaries has interpreted demos as the “non-elite” or the “plebs”. In this sense, the telos (normative end goal or essential purpose) of democracy is the rule of the ordinary masses, which displaces the rule of the preceding oligarchy. Thus, the essential condition for a functioning democracy is that the demos feel they have a stake in its continuity.
This is especially true of a country such as India, where elite support for democracy has tended to be uneven and conditional. We might note here that the formal suspension of democracy during the Emergency was indeed received with quiet relief by many among the elite. In their illuminating book on the Emergency, the academics Christophe Jaffrelot and Pratinav Anil have shown how “the middle class, industrialists, and the ruling elite” were “convinced that strong decisions were needed to contain labour agitations and to restore law and order”.
Of course, the larger political context of the Emergency was the failure of Indira Gandhi’s government to fulfil the promise of rescuing India from the blight of widespread poverty and enormous socio-economic inequality. Neither did the ruling Congress implement land reforms that would have benefited the rural poor, nor did it co-opt the ascendant farming castes from the Other Backward Classes (OBCs) into governing power structures. The result was “years of discontent and demonstrations” that “made it [the Emergency] more acceptable to sections of society eager for a return to ‘normalcy’”, write Jaffrelot and Anil. [...]
However, neither the rise of Mandal coalitions and Dalit politics nor the upsurge of regional parties has been able to stem the tide of growing inequality, certainly not economic inequality. Moreover, the increased participation of these newly mobilised subaltern groups has tended to remain at the descriptive level (such as share of MPs and MLAs), not at the substantive level (share in decision-making power at the top).
The full embrace of a top-down neoliberal model (free markets, depoliticisation of economic issues, reduction of welfare rights, cash handouts) has insidiously hollowed out the core of the democratic process. Parties that used to profess socialism and backward caste rights have long abandoned their roots and embraced big capital. For instance, the post-2000s entrenchment of the SP within the milieu of local elites and big business effectively turned it “conservative in practice”, in the political scientist Gilles Verniers’ phrase.
As an aside, a World Inquality Lab working paper noted that India has a rich-poor divide that is far above even that of the developed economies, such as US, UK. 1% of the population owns 40% of the wealth and 22% of the income in India (Abhishek Jha reports for the Hindustan Times). The inequality has been increasing since the 1990s when India liberalised its economy.
That is what Asim Ali is referring to above with that history. (Mandal coalition is OBC politics of the 1990s asking for more representative share in jobs and power; the main party that led it was Samajwadi Party, which has since entrenched elite politics leaving the marginalised still struggling).
He notes scholarly contention that increased inequality leads to decline in democracy. (Something US should think about as well.)
The “New Gilded Age” is how James Crabtree, a former Mumbai correspondent of Financial Times, described the Indian condition of “wealthy oligarchs” in his 2018 book, The Billionaire Raj. He compared the top 1 per cent that now controls half the country’s wealth, according to Oxfam, to America’s 19th century robber barons, fattened in a similar way by the state through bank bailouts and policy manipulation.
Documenting the deepening “extreme inequality” of India, the economists Ishan Anand and Anjana Thampi wrote in a 2021 paper: “The real wages of regular workers improved marginally in rural areas and declined by 0.9% per annum in urban areas between 2011–2012 and 2018–2019, reversing the gains between 2004–2005 and 2011–2012.” Similarly, the “share of wages in gross value added declined from around 17% in 1993–1994 to 13% in 2017–2018” as the “manifold increase” in “worker productivity” was “largely absorbed” by the “rising profit share”.
The people know this, he says and that is why they are losing trust in democracy itself. So what must the opposition do to combat it? He says opposition must opt for radical democracy that makes democracy not just about voting for people who will make decisions but about pushing for people’s participation in decision making and institutional power sharing.
The opposition’s demand for a nationwide caste census reflects its belated recognition of the need to take a radical stand. The caste census is often mischaracterised as a re-enaction of the old Mandal politics of narrow caste-based patronage. As Congress leader Rahul Gandhi has repeatedly said, the caste census only represents a prelude to a more egalitarian paradigm of apportioning political participation and economic resources. The Congress has borrowed an old slogan of Kanshi Ram, Bahujan Samaj Party founder : Jitni abadi utna haq (rights proportionate to share in population). The party has promised a nationwide caste census among its first actions if elected to office. [...]
The “Hindu” lens of politics works by providing what the sociologist Pierre Bourdieu described as the “symbolic capital” of hegemonic politics (“shaping the perception of social reality”). The “caste” lens is merely another source of symbolic capital, allowing people to draw on their experiences of caste-based marginalisation and historical memories of struggle. Thus, a radical caste-class politics contains the eminent possibility of politicising those domains of the political economy (employment, education, healthcare, agrarian distress, labour workforce migration) that have been depoliticised through the numbing effects of neoliberal economic structures and the commodification of social welfare through cash handouts.
Since he brings theories to his pieces, they are always a good read. So, if there is no paywall (I don’t know since I subscribe to them), please do read.
Pakistan
Economic Support for Pakistan
Khaleeq Kiani reports for the Dawn.
• Three-year programme to focus on strengthening public finances, restoring energy sector’s viability, returning inflation to target
• $1.1bn due next month after staff-level accord reached on final review of current package
ISLAMABAD: Announcing the staff-level agreement on the successful completion of the existing short-term facility, the International Monetary Fund (IMF) on Wednesday confirmed Pakistan was seeking a 24th medium-term bailout package for a permanent push towards longstanding structural reforms.
In its end-of-mission statement, the IMF said that subject to the approval of its executive board, the staff-level agreement would enable Pakistan to access about $1.1 billion — 828 million special drawing rights (SDR) — by late April.
It said Pakistan “expressed interest in a successor medium-term Fund-supported programme with the aim of permanently resolving Pakistan’s fiscal and external sustainability weaknesses, strengthening its economic recovery, and laying the foundations for strong, sustainable, and inclusive growth”.
There would be conditions attached to the money (as is the case with IMF bailouts).
As in the past programmes, four central areas would remain under focus for reforms. The top objective of the next medium-term programme — Extended Fund Facility of about 36 to 39 months — would be strengthening public finances, including through gradual fiscal consolidation and broadening the tax base, especially in under-taxed sectors (read real estate, retail and wholesale trade and agriculture) and improving tax administration to improve debt sustainability and create space for higher priority development and social assistance spending to protect the vulnerable.
The second objective of the next programme would be restoring the energy sector’s viability by accelerating cost-reducing reforms, including through improving electricity transmission and distribution, moving captive power demand to the electricity grid, strengthening distribution company governance and management, and undertaking effective anti-theft efforts.
The third key objective is returning inflation to the target, with a deeper and more transparent flexible foreign exchange market supporting external rebalancing and rebuilding foreign exchange reserves.
The fourth and last critical aim would be promoting private-led activity through the above-mentioned actions as well as the removal of distortionary protection, advancement of state-owned enterprises (SOEs) reforms to improve the sector’s performance, and the scaling up investment in human capital to make economic growth more resilient and inclusive and enable Pakistan to reach its economic potential.
Pakistan also got Foreign assistance from other sources (also by Kiani).
ISLAMABAD: Pakistan authorities could materialise about $6.68 billion in foreign economic assistance (FEA) in the first eight months of the current fiscal year, almost 38pc of the annual budget target.
The borrowing avenues remained limited in the wake of poor credit rating and adverse conditions in the global financial markets despite the support of the International Monetary Fund (IMF), the Ministry of Economic Affairs said on Thursday.
Ongoing Terrorist Attacks
Pakistan continues to see terrorist attacks in restive and border provinces. Dawn has an editorial on the subject.
CONFRONTED with a complex wave of terrorist violence, the state has little choice but to ‘restructure’ the National Counter Terrorism Authority, as the interior minister stated on Wednesday. Mohsin Naqvi was attending a meeting at the Nacta headquarters on the day Baloch separatists stormed the Gwadar Port Authority Complex, while only a few days earlier, militants believed to be associated with the Hafiz Gul Bahadur group had staged a deadly attack, martyring security personnel in North Waziristan.
The current terrorist threat is varied both ideologically and geographically, and over the last few years, particularly after the Afghan Taliban’s capture of Kabul in 2021, militants have been further emboldened and have staged a large number of attacks in Pakistan.
Formed in 2009 in the midst of an earlier terrorist insurgency, Nacta — though it is supposed to be the state’s primary counterterrorism organ — has been largely sidelined by the rulers after initial successes against militancy. Though envisioned as a ‘one-window operation’ to corral national CT efforts, the agency has not been empowered with the tools necessary to deliver on its mandated goals. Instead, the CT effort has been dominated by the military and its intelligence apparatus. While the military undoubtedly has a central role to play in rooting out terrorism, the militarised CT approach has its limits, particularly in urban areas, where civilian law-enforcement bodies, and related long-term CT strategies, are required to complement kinetic efforts.
Sri Lanka
IMF Again
As Newswire reports: IMF reaches Staff-Level Agreement on Second Review of Sri Lanka’s Extended Fund Facility
- After constructive discussions in Colombo, IMF Senior Mission Chief Mr. Peter Breuer and Deputy Mission Chief Ms. Katsiaryna Svirydzenka issued the following statement:
“The IMF team reached staff-level agreement with the Sri Lankan authorities on the second review under the economic reform program supported by a 4-year Extended Fund Facility (EFF) arrangement and concluded the 2024 Article IV Consultation discussions. The EFF arrangement was approved by the IMF Executive Board for a total amount of SDR 2.3 billion (about US$3 billion) on March 20, 2023.
“The staff-level agreement is subject to the approval by IMF management and the IMF Executive Board in the period ahead, contingent on: (i) the implementation by the authorities of prior actions; (ii) the completion of financing assurances review, which will focus on confirming multilateral partners’ committed financing contributions and whether adequate progress has been made with the debt restructuring to give confidence that the restructuring will be concluded in a timely manner and in line with the program’s debt targets.
“Upon completion of the Executive Board review, Sri Lanka would have access to SDR 254 million (about US$337 million), bringing the total IMF financial support disbursed under the arrangement to SDR 762 million (about US$1 billion).
“The authorities are making good progress in implementing an ambitious reform agenda under the EFF with commendable outcomes, including rapid disinflation, robust reserve accumulation, and initial signs of economic growth while preserving the stability of the financial system. Public finances have strengthened following substantial fiscal reforms. Program performance was strong, with all quantitative performance criteria and indicative targets for end-December 2023 met except for the indicative target on social spending. Most structural benchmarks due before end-February 2024 were either met or implemented with delay. Reforms in some areas are still ongoing.
The Human Rights Watch has asked IMF to Oppose Restrictions on Freedom of Expression and Civil Society Groups says Colombo Telegraph
The International Monetary Fund (IMF) should urge Sri Lanka’s government to abandon draft legislation that would severely curtail civil society and jeopardize the IMF’s program in the country, Human Rights Watch said in a letter to the IMF that was released today. The proposed Non-Governmental Organizations (Registration and Supervision) Act is among several recent and planned measures that would curtail fundamental freedoms, despite the critical role of public scrutiny in promoting good governance and combatting corruption.
The IMF’s US$3 billion bailout of Sri Lanka – which is linked to government commitments to reform – helped stem the immediate economic crisis after the country defaulted on its foreign debt in 2022, but further progress is threatened by the adoption of laws by President Ranil Wickremesinghe’s administration that would severely restrict basic rights. The Online Safety Act, enacted in January, creates vague and broad speech-related offenses punishable with lengthy prison terms. The Anti-Terrorism Bill, currently before parliament, contains sweeping new speech-related offenses and arbitrary powers of arrest. And the draft law to regulate nongovernmental organizations could make independent civil society activity all but impossible in Sri Lanka.
“As the economy collapsed in 2022, Sri Lankans demanded good governance and an end to corruption, but instead now face draconian laws and policies that threaten human rights and undermine reforms,” said Meenakshi Ganguly, deputy Asia director at Human Rights Watch. “The protests helped bring President Wickremesinghe to power, but instead of listening to calls for change, he’s clamping down on peaceful dissent.”
That is it for today. Until next Friday, everyone. Stay safe. Be well. Have a good week.
May the middle class see that it is the rich and their bought politicians along with their own racial, gender, and ethnic prejudices and need for supremacy that stand in the way of worldwide prosperity. Not the poor.