Tag: daily editorials

Title: ​ ​ A gift horse’s teeth: on allocations and scientific research

The Budget 2025-26 announcements suggest a potential bonanza for scientific research and development. The Finance Minister outlined ₹20,000 crore budgetary support for developing small modular reactors, with the goal of readying five such reactors by 2033. Another major initiative is the Research, Development, and Innovation fund, included in the Department of Science and Technology (DST)’s expected expenditure. This substantial allocation is expected to benefit start-ups and sunrise sectors, though these remain undefined. The expectation is that private sector entities will receive financial support to boost R&D, a domain historically dominated by government spending. India’s R&D landscape has long suffered from low private sector participation. While government funding has driven most scientific advancements, private investment in research has remained inadequate. Currently, private sector R&D contribution is only 36%; overall R&D spending in India was 0.64% of GDP in 2020, the lowest since 1995. Over the last five years, business enterprises have accounted for around 40% of government R&D expenditure. Public sector R&D units allocated only 0.30% of their sales turnover to research, compared to 1.46% by the private sector in 2020-21, according to DST estimates.

The government’s ₹20,000 crore infusion hikes the DST’s total budgetary allocation to around ₹28,000 crore, over three times last year’s allocation and seven times the actual expenditure in 2023-24. These figures are encouraging, but a key concern is whether such massive investments can be effectively absorbed. Despite India’s strengths in technology-driven sectors such as fuel, metallurgy, pharmaceuticals, textiles, IT, and biotechnology, returns from core R&D and intellectual property generation are still meagre. Though the government has launched ambitious missions in quantum computing, artificial intelligence, and other cutting-edge technologies, the supporting infrastructure remains inadequate. India still lacks the essential building blocks, chipsets, semiconductor fabs, a skilled engineering workforce, and a strong innovation ecosystem, to fully capitalise on these investments. Without these, the lofty targets set for R&D growth risk falling short. The government must present a clear road map on how private sector entities can access these funds and what tangible benefits the public can expect. Increased funding alone will not guarantee success unless structural bottlenecks are addressed. To truly transform India into a research powerhouse, the focus must shift to strengthening foundational infrastructure, incentivising private innovation, and ensuring long-term, sustainable engagement from industry leaders.

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Title: ​ ​ A tough call: On the RBI MPC’s first policy review of 2025

The Reserve Bank of India’s Monetary Policy Committee (MPC) will conclude its first policy review of 2025 on Friday (February 7, 2025), in significantly different circumstances from its December 2024 meet. For one, the key personnel have changed. The RBI has a new Governor, with former Revenue Secretary Sanjay Malhotra replacing Shaktikanta Das soon after the last review. Deputy Governor Michael Patra, an MPC member who was in charge of monetary policy, also retired last month. With the Centre yet to name his successor, navigating this review is going to be a tad tricky for the new central bank boss, with another deputy holding additional charge of monetary policy. Second, the rupee is in a free fall of sorts. After hitting 85 to the U.S. dollar on December 19, 2024, it slipped to 86 on January 13, 2025 and crossed 87 on February 3, partly due to the third factor at work. The strengthening dollar is driven by U.S. President Donald Trump’s overdrive to ‘Make America Great Again’ with higher tariffs on major trade partners, and other disruptive economic plans such as exiting global tax accords, shutting aid flows, et al.

The Reserve Bank of India’s Monetary Policy Committee (MPC) will conclude its first policy review of 2025 on Friday (February 7, 2025), in significantly different circumstances from its December 2024 meet. For one, the key personnel have changed. The RBI has a new Governor, with former Revenue Secretary Sanjay Malhotra replacing Shaktikanta Das soon after the last review. Deputy Governor Michael Patra, an MPC member who was in charge of monetary policy, also retired last month. With the Centre yet to name his successor, navigating this review is going to be a tad tricky for the new central bank boss, with another deputy holding additional charge of monetary policy. Second, the rupee is in a free fall of sorts. After hitting 85 to the U.S. dollar on December 19, 2024, it slipped to 86 on January 13, 2025 and crossed 87 on February 3, partly due to the third factor at work. The strengthening dollar is driven by U.S. President Donald Trump’s overdrive to ‘Make America Great Again’ with higher tariffs on major trade partners, and other disruptive economic plans such as exiting global tax accords, shutting aid flows, et al.

One thing has not changed — the clamour for an interest rate cut from industry and government honchos. In December, this noise was heightened after a sharp growth blip in the July-September quarter when GDP grew just 5.4%. Now, with 2024-25 GDP growth downgraded to just 6.4%, and the no marked uptick in economic metrics in the December-ending quarter, growth worries remain entrenched. In the interim, there has been some back and forth between North Block and Mint Street on the factors responsible for stumbling economic activity. The Finance Ministry sought to lay some of the blame for an urban demand slump on tight monetary policy. RBI officials, in the central bank’s January bulletin, said the “one way” to spark a growth rebound and a virtuous cycle of fresh private investments, is to boost consumption through higher disposable incomes, especially for the urban middle class that has been pining for relief from food inflation. With the Budget delivering on this front with income tax cuts, the ball is back in the RBI’s court. Inflation has been over 5% in the last five months, but may have eased closer to the RBI’s 4% target in January. But a rate cut could also hurt the rupee further, and spur higher imported inflation. It is an unenviable situation for the new RBI chief to be in; he might be tempted to take a cue from Mr. Das who had surprised markets with a rate cut in the first review under his watch in 2019, reversing his predecessor’s stance.

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Title: ​ ​ Power and prestige: On the Delhi Assembly elections 2025 

Delhi is not much more than a Union Territory with limited powers for its legislature and government. The division of powers between the Lieutenant Governor and the provincial government has been a matter of perennial debate, and has curtailed the role of the latter. Yet, the Delhi Assembly elections are no less prestigious than that of any other State. Hosting the capital city and a humongous population that has burgeoned significantly, as the National Capital Region remains a magnet for employment, commerce and livelihoods, Delhi is a melting pot. Increasingly, class and welfare issues have become salient in Delhi’s elections even as identity issues have become less determinant of political fortunes. Delhi has urbanised dramatically, with some of India’s highest net worth families in posh neighbourhoods, living cheek by jowl alongside slums housing the working class and the urban poor. There is a large middle class no longer just employed in the massive government apparatus in the capital city. The metropolis is also host to small businesses, factories and services employing the many migrants from the hinterlands of north India. Civic concerns abound in each of these segments, making the Delhi elections unique. The three main political parties, AAP, the BJP and the Congress, must address these concerns in their campaigns and cannot focus on just identity and patronage politics.

As Delhi gets to vote today, it will be known whether the pattern of voting in recent election cycles, for the BJP at the Centre and favouring AAP in the Assembly will remain. AAP has managed to successfully get the support of a coalition of middle and lower class voters through its welfarist measures and by fostering an image of being a crusader for clean governance, helping it rule the roost in the past two elections. This time, however, its anti-corruption plank and image have taken a beating after its key leaders, Arvind Kejriwal and Manish Sisodia, were arrested for their roles in the liquor policy case. “Stand-in” Chief Minister Atishi has sought to reorient the party’s image even as it has doubled down on its welfarist message with a slew of sops targeting its core support base. The BJP has had to focus on emphasising its own welfarism in response while the Congress has tried hard to regain its lost base. Yet, the campaigns have been full of vituperation and mudslinging with little by way of a clear position on how to tackle the core issues — the air pollution in particular. As the dust clears, the electorate will have to choose candidates who are able to rise above narrow mindedness and cater to the aspirations of residents of what could well be India’s most populous city today.

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Title: ​ ​First resort: On Donald Trump’s mass deportation drive

Donald Trump’s mass deportation drive hit its first hurdle on Sunday (January 26, 2025) when Colombian President Gustavo Petro refused permission to two United States military planes carrying migrants to land. A furious Mr. Trump announced that the U.S. would impose a 25% tariff on all Colombian goods, which would be raised to 50%. The U.S. also threatened to impose banking and financial sanctions and issue travel bans on Colombian officials and associates. Mr. Petro, a former guerrilla, responded in kind by saying Colombia would also impose tariffs up to 50% on American goods and refused to “shake hands with white slaveholders”. But Bogota, under pressure, eventually accepted to take back the migrants “with dignity and respect”. A trade war would have been bad news for both countries whose bilateral trade stood at $53.5 billion in 2022, with a $4 billion surplus for the U.S. High tariffs would have been a body blow for Colombia, as the U.S. is its largest trading partner. With tariffs and financial and political sanctions, America could cripple Colombia’s economy and destabilise its polity at a time when its fight with guerrillas is escalating after a lull. Unsurprisingly, Mr. Petro backtracked and agreed to accept what the White House said was “all its terms”.

Colombia and other South American countries have been taking undocumented migrants back from the U.S. in recent years. In January, there were 90 deportation flights from the U.S. to its southern neighbours, eight of which landed in Colombia. But what turned a regular exercise into a controversy was the handling of the deportation by the Trump administration — the use of mostly military planes, which angered the Colombians. Mr. Petro also raised concerns about the way migrants were treated by the U.S. Earlier, Brazil had also raised complaints of “degrading treatment” of its deported citizens. They were handcuffed, and some of them were not given water or allowed to use the washroom during the flight, according to Brazilian officials. But Mr. Trump does not seem to care. He wanted to make an example of Colombia so that other neighbours will not challenge his handling of the mass deportation. He may have forced Colombia to backtrack for now, using America’s economic muscle, but this kind of coercion could backfire in the long run in a region where America has always tried to maintain its geopolitical hegemony. And the inhumane conditions in which hundreds of migrants are being deported everyday is a blot on America’s tall claims of protecting human rights. A better way of handling this crisis is through diplomacy. Instead of imposing his will on other countries through threats of tariffs and sanctions, Mr. Trump could use the diplomatic channel, seek consensus and then implement his policy in a much more cordial way. But for Mr. Trump, alas, coercion is the first resort.

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Title: ​ ​India with Indonesia: on ancient ties to a new phase

Indonesian President Prabowo Subianto’s visit to India, as chief guest at the Republic Day parade, was replete with the symbolism of historically important ties between the two countries, albeit short on concrete outcomes. India and Indonesia’s ancient ties, that rest on trade and travel to the spread of an adapted form of Javanese Hinduism, as well as the use of Vedic scriptures and Sanskrit works, have given the two countries a formidable engagement. In the previous century, it was their solidarity against imperialism, which led to independent India’s support to Indonesian leaders fighting Dutch colonialism, with Prime Minister Jawaharlal Nehru banning Dutch overflights and sending Indian planes to evacuate the Indonesian Prime Minister and Vice President — in an article in The Hindu on January 5, 1950, Indonesia’s first President, Sukarno, wrote about Indonesia’s gratitude. Next, India and Indonesia were united by their aversion to great power politics. They supported the creation of the non-aligned movement (NAM), beginning with the Bandung Conference. Ties were also forged by their innate similarities as two Asian nations that dominated South Asia and South-East Asia by size. Both were countries where large religious majorities practised tolerance towards sizable minorities, as well as economic powerhouses committed to an equitable development of their large populations. In the recent past, ties have been spurred by common concerns over western sanctions after the start of the Ukraine war, U.S.-China rivalry and China’s aggression in the Indo-Pacific, worries over “food, fertilizer and fuel” security and a weakening multilateral order. Their efforts to forge consensus at the G-20 summits in Bali (2022) and Delhi (2023), will now be put to further use as Indonesia has joined BRICS. In that sense, Mr. Subianto’s visit, in the 75th year of bilateral ties, is a full circle: from Bandung to an enlarged BRICS.

Given the historical, strategic and geopolitical importance of relations, the announcements were more modest than expected. There were five MoUs in health, traditional medicine, maritime security, digital development and cultural cooperation and the joint statement referred to strengthening defence cooperation. However, no specific progress was announced on the sale of India’s Brahmos missile, or on the Sabang port project and Aceh-Andamans connectivity initiatives. The joint statement was also pointedly non-committal on their world view, despite their similar positions on recent geopolitical conflicts, and initiatives to engage the Trump administration and China. India’s Republic Day invitation and Mr. Subianto’s visit, fresh in his presidential term, are, however, an important statement for both capitals to make. There is the impetus for the two Asian powers to forge the next phase in their ties.

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Title: ​ ​WHO is right: On the U.S. leaving the World Health Organization

President Donald Trump’s decision to withdraw the United States from the World Health Organization (WHO), based on charges of bias, is stunningly short sighted, and deeply concerning to the global health community. Pundits are predicting that this move, if not withdrawn, or reconsidered, may well unleash the butterfly effect — a cascading set of unpredictable consequences arising from even the smallest of changes in a system. Soon after his inauguration, Mr. Trump wasted no time in announcing the beginning of the process of ending the U.S.’s membership of WHO. In language that smacked of petulance, Mr. Trump, as he signed his first batch of executive orders, declared: “The World Health [Organization] ripped us off.” The U.S. will now leave the United Nations health agency in 12 months’ time and stop all financial contributions to its work. He accused the organisation of mishandling the COVID-19 pandemic, and of being partisan towards China, though the U.S. contributed more to its coffers. The move has not been entirely unexpected: during his previous term as U.S. President, he relentlessly criticised WHO for acting slow and being “owned and controlled by China”; in 2020 he initiated a move to halt funding to WHO, though it was scuppered as his term came to an end.

Why is the withdrawal of the U.S. significant? For starters, Mr. Trump is right — the U.S., which is a founding member of WHO, is also its biggest financial backer, contributing around 18% of its overall funding. Withdrawal of these funds will seriously impact health programmes being implemented across the world, including interventions for HIV/AIDS, tuberculosis and the eradication of certain infectious diseases. WHO is also involved in ensuring equity of access to life-saving drugs for people across the world, building stronger health systems, detecting and preventing disease outbreaks. If Mr. Trump could set his petulance aside, it would be clear that global health does not operate in silos, and neither a stern countenance nor physical boundaries can keep pathogens out of one’s own geography. If any lessons have been learned at all from the COVID-19 pandemic, it is that no one is safe until everyone is safe, and that collaboration among nations, and open sharing of data and technology are essential to tackle pandemics. WHO has reached out to the U.S., hoping that it will reconsider its decision and engage once again with it. As fantastic as it may sound, medicine is no stranger to miracles of science, and the health community hopes one more will restore the U.S. back to WHO’s fold.

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Title: ​ ​An exit of bluster: On the U.S. and the climate change fight

President Donald Trump has fired his howitzers at multilateralism by signing into decree the United States’ withdrawal from the 2015 Paris Agreement. This sets records that are in a class of their own. The U.S. is the only country to have withdrawn thrice from a climate agreement — beginning with George W. Bush’s withdrawal, in 2001, from the Kyoto Protocol. Mr. Trump, of course, sets a new low by being the only President to withdraw from a climate agreement twice. In the run-up to the decree, there is a pall of gloom in the climate world over what the U.S.’s latest exit might mean, particularly when the globe has finished its first full calendar year above the 1.5° Celsius mark.

The U.S. is the second largest emitterof greenhouse gases. By virtue of being the most powerful economy, it has arrogated to itself the mantle of ‘global leadership’ in addressing climate change. But now that the leader has had the spottiest track record of keeping to the terms of a significant agreement — one, whose rule book the U.S. played a major role in compiling — perhaps it is time for the rest of the world to reassess America’s role in addressing climate change. Under both Republican and Democratic governments, U.S. domestic policy on greenhouse gas emissions has been subservient to business interests. Oil and gas production increased under the Biden administration. The U.S. remains the world’s largest crude oil producer, achieving record production in 2023. The country is also the world’s largest producer of gas and, in 2022, became the world’s largest exporter for liquified natural gas (LNG). Mr. Trump has only committed to add on to this already substantial base. The U.S. is critically short of achieving its target of greenhouse gas emissions. As of 2022, the U.S. has achieved only about one-third of its 2030 emissions reduction target. In the last weeks of his Presidency, Mr. Biden increased the U.S.’s emission-reduction commitments to 61%-66% of 2005 levels by 2035. This too, calculations suggest, will be insufficient to meet a 1.5° C target. Private capital propping up renewable energy has grown exponentially since Mr. Bush, and is now too substantial for Mr. Trump and his financial backers to ignore. While it will take a year for the exit to be formalised, it is likely that the U.S.’s behind-the-scenes engagement — especially at the next climate meet (COP 30) in Brazil in November 2025 — will continue. The politics of Mr. Trump suggests that he is not averse to running with the hare and hunting with the hounds.

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Title: ​ ​The price of success: on Kerala’s demographic transition

There can be too much of a good thing, after all. The demographic transition that Kerala has heralded in the country has now delivered a sucker punch to the State, with its maternal mortality ratio climbing. Kerala led the shift to the phase of low fertility and low mortality in India, and got further, first. As the fertility level dropped, the number of births came down, thereby skewering the best maternal mortality rate (calculated as the number of deaths for every 1,00,000 live births) of the country, in Kerala. The State led the demographic transition by achieving the total replacement level fertility rate in 1987-88, and the other southern States followed in the mid-2000s. A TFR of 2.1 is considered the replacement level, indicating the number of children a woman must have in order for the society to maintain its size across generations. Below this level the population size falls. In fact, this has led to moments of anxiety, politically for the southern States that feel that with their sub-replacement level fertility rates, they will be at a disadvantage when it comes to the proposed delimitation exercise of Lok Sabha seats based on population figures. In theory, demographic transition occurs when a historical shift happens from high birth rates and high death rates to low birth and death rates, aided by advancements in education, economic development and technology. Such a transition is said to have occurred in most parts of the world, allowing the world to stabilise from the unprecedented growth forecast by Malthus, and then move on to reduce population growth, and birth rates. The theory posits four stages – moving from stable population to a rapid population growth, levelling out and finally, a decline.

Nations that have reached there, including South Korea, are struggling to revive population growth, and even incentivising childbearing does not seem to have the intended effect, as the fertility rate continues to drop. While it is impossible to stop a demographic transition in its tracks, governments must prepare for the trail of consequences that it will bring in its wake. There will be far-reaching economic and societal consequences as the proportion of the working-age population comes down and the aged population increases, placing an inordinate burden on the resources of nations. It is, therefore, important to strengthen public finances and social support systems in preparation for a growing elderly population. Health-care financing will have to be improved, and policies that support equal participation in household chores must be prioritised.

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Title: ​Capex quandary: on the economic data, policy 

Since the COVID-19 pandemic, the Centre has been using public capital expenditure on infrastructure to pump prime the economic recovery. The mantra has been that infrastructure building will stoke demand for products such as cement and steel, generate jobs in construction, and together trigger a strong multiplier effect on the economy, eventually creating conducive conditions for private investors to plan greenfield and brownfield projects. In Budget 2024-25, Finance Minister Nirmala Sitharaman said the government will endeavour to maintain strong fiscal support for infrastructure over the next five years, in conjunction with imperatives of other priorities and fiscal consolidation. She announced ₹11.11 lakh crore of capex spends this year, amounting to 3.4% of GDP. That goal is unlikely to be attained partly due to spending curbs in the poll-affected first quarter. While industry has urged the Centre to continue the capex push in 2025-26 as well, it has failed to respond to the government’s constant nudges and persuasions to ramp up their own operations.

Data show that two of this year’s first three quarters have recorded a notable sequential decline in private investment plans, particularly by domestic industry. In Q1, private capex plans dropped to multi-year lows, and though the July-September quarter recorded a recovery in investment intentions, that uptick has dissipated in Q3. Projects Today data suggest domestic investments’ value dropped 1.4% from Q2, while new projects’ value dropped over 22% from a year ago as per the Centre for Monitoring Indian Economy. There are many factors playing on corporate risk-taking capacity — weak Q2 results, global uncertainties, spiking costs and waning demand in more lucrative urban markets. Going by current indications, including the early bird Q3 results, demand has not really improved, nor is there ostensible pressure on factory capacities to warrant expansions. For a sustainable breakout from this slowdown, private capital should take the driving seat because there are limits to enhancing public capex while maintaining fiscal rectitude and providing for myriad welfare schemes. The government must accept that exhortations to industry are unlikely to spur fresh outlays, and incentives focused on themes such as import-substitution are insufficient. Not one new rupee will be deployed if a project is unviable and demand flaky. Policy focus should remain firmly on ensuring the ground is ripe to instigate investments and easing the realisation of such plans into billowing chimneys and new jobs. For that, boosting incomes and consumption is critical as is expediting macro- and micro-level reforms. That an economic policy framework outlining next generation reforms, promised in the Budget, has not been heard of since then, is not very comforting.

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