Instructions Answer each question in your own words unless otherwise specified. If you must quote material, then do so judiciously and cite your sources. Your assignment must conform to the writing guidelines. Failure to comply with the writing guidelines will guarantee reduction in your grade. Answers to Questions 1 and 2 may be in the form of itemized lists or bullet statements. The answer to Question 3 must be in the form of no more than two paragraphs. Assignments must be submitted to Canvas in a standard file format such as .doc (Word document) or .pdf (Acrobat format) only. File naming conventions must be your last name first initial followed by an underscore with the class number and section followed by another underscore and an abbreviation of the assignment number (Ex: kelleym_g112s2_exer3.doc). Please answer all questions. Also, Correct use of English is a fundamental requirement for your papers to be graded. If errors in English make it difficult for a grader to understand your sentences, or excessively slow down the grader to mark your technical errors; then your assignment will be graded accordingly. A minimum of 20 detected errors will be identified and an overall 10% reduction of grade will be recorded. Questions: 1. After reading the article and watching the video, identify and describe two of the top domestic issues facing India at this time. Back up your reasoning by providing at least three examples for each item you selected. Also, please be aware that India’s Parliament passed a Citizenship Amendment Bill (December 2019) that provides a path to citizenship for religious minorities from surround countries. The bill is controversial because, according to this BBC News article, Muslims are excluded from this provision. (4 points) 2. After reading the article and watching the video, identify and describe two of the top foreign issues facing India at this time. Back up your reasoning by providing at least three examples for each item you selected. (4 points) 3. In your opinion, which analyst (p. 841) made the stronger case whether India should strengthen strategic ties with the United States? Briefly explain your reasoning. (2 points) Rubric Exercise 3: Israeli-Palestinian Conflic Exercise 3: Israeli-Palestinian Conflic Criteria Ratings Pts 1a: must be 2-state solution 2.5 pts 1b: never be a 2-state solution 2.5 pts 2: Peace in the Middle East 5.0 pts Total Points: 10.0 Sections ” # India Today !Sho ! October 5, 2018 – Volume 28, Issue 35 Can it maintain strong economic growth? By Jonathan Broder Introduction India’s Prime Minister, Narendra Modi, addresses a workers’ meeting in Bhopal on Sept. 25. Modi, who is running for another five-year term in next year’s elections, must grapple with growing income disparity, ethnic and religious tensions and strained relations with neighbors China and Pakistan. (Cover: Getty Images/Hindustan Times/Mujeeb Faruqui) India has the world’s fastest growing economy, a status experts believe will continue for at least the next three years and possibly longer. Since taking power in 2014, Prime Minister Narendra Modi has overhauled the country’s tax structure, modernized bankruptcy laws and cracked down on corruption. With globalization, India’s economy has produced more than 100 billionaires, and the middle class has expanded significantly. But major challenges confront Modi as he seeks another five-year term next year: The sprawling nation of 1.3 billion people remains riven by differences in income, education, religion, language and caste. Income disparity is rising, and one in five Indians lives in extreme poverty. In foreign affairs, India-Pakistan relations remain tense, and India worries that China, its economically and militarily stronger neighbor to the north, is undermining New Delhi’s influence in South Asia. How India performs economically in the future will help determine not only the fate of its impoverished masses but also the country’s place as a regional and global power. Overview Last July, Kaalu Ram, 26, was searching for a job in Bangalore — a city of 10 million people in southern India — just as false rumors about child abductions were spreading virally throughout the country on social media. Suddenly, the poor, uneducated residents of one Bangalore neighborhood convinced themselves that the stranger in their midst was a kidnapper. As Ram walked under an overpass, locals overpowered him, bound his hands and feet and dragged him through the street where a frenzied mob kicked and beat him, some with cricket bats. He died on the way to the hospital. Ram was one of nearly two dozen victims of such mob violence since May, triggered by false kidnapping rumors spread on the internet. 1 Such deaths underscore some of the major challenges confronting India’s Prime Minister Narendra Modi as he seeks another fiveyear term next year: There is the tendency toward mob violence in the sprawling nation of 1.3 billion people deeply riven by differences in income, education, religion, language and caste. And while India’s growing middle class may live in modern, brightly lit cities, 22 percent of the population still lives in extreme poverty. 2 Bangalore, known as India’s Silicon Valley, is a classic example of the economic split plaguing modern India. It is home to one of the world’s most educated workforces and the country’s high-tech industry, which is a major economic driver of the nation’s $2.6 trillion economy — the world’s sixth largest. 3 But every month an estimated 1 million young Indians like Ram enter the country’s official job market, which can absorb only a fraction of them, according to Shailesh Kumar, Asia director for the Eurasia Group, a global business consultancy. Millions more remain either unemployed or underemployed in the “informal” or off-the-books economy. And although the middle class has expanded significantly over the past 25 years, slums such as those surrounding Bangalore are a reminder that 260 million Indians still live on less than $1.90 a day. 4 A child sits in the remains of his house, one of 250 structures demolished in June during a slum clearance in Bangalore. The city is India’s technology hub and a primary economic driver, but it also exemplifies the nation’s income disparity problem. India is producing a growing number of billionaires, but one-fifth of the population lives in extreme poverty. (AFP/Getty Images/Manjunath Kiran) Modi led his right-wing, Hindu nationalist Bharatiya Janata Party (BJP) to a sweeping victory in 2014 by promising to reduce poverty and create jobs, in part by overhauling the over-regulated economy and by combating chronic corruption. But to achieve those goals he faces additional hurdles besides the growing income disparity exemplified by Bangalore. Rising crime is a major social concern, polls show, and farmers have been staging angry protests about the alarming rates at which they have been losing their land due to high bank interest rates and low crop prices. Internationally, meanwhile, fears that India is being eclipsed in the region by China, its economically and militarily stronger northern neighbor, have led Modi to strengthen India’s armed forces and strategic ties to the United States. 5 Most analysts agree Modi has largely delivered on economic growth. India’s gross domestic product (GDP), the value of goods and services produced by the country, has grown at an impressive annual rate of 7.3 percent, on average, under Modi’s watch. 6 His most notable economic achievements, analysts say, include a long-promised nationwide tax on goods and services that replaced a hodgepodge of state business taxes and the first comprehensive bankruptcy law, which is enabling banks to address a mountain of bad loans that have hampered lending and investment. And, in a radical assault on counterfeiting, bribery and tax evasion, Modi introduced a demonetization policy in 2016 that overnight banned the country’s largest currency bills and required people to exchange them at banks for new bills or old ones of smaller denominations. To make the exchange, people had to open a registered bank account and, most importantly, explain how they got their cash. Those who could not credibly account for their money face investigation. 7 Long Description “He’s done very well, given the rocky economic situation he inherited when he took office,” says Arvind Panagariya, a senior official in Modi’s government until last year and a former chief economist at the Asian Development Bank, a Manila, Philippinesbased multilateral institution that provides subsidized loans to developing Asian countries. For instance, under Modi’s watch India’s annual inflation rate has fallen from 10 percent to about 4 percent, he says. However, critics say Modi has failed to overhaul India’s restrictive land, labor and trade laws and failed to privatize failing state-run industries. Labor-rights advocates also say he has done little to prevent the exploitation of Indians working at clothing factories for major U.S. and multinational brands, such as Gap, Hugo Boss and H&M. 8 Modi is promising voters his policies will produce sustained double-digit economic growth, but economists such as Kumar say that will not happen without major reforms. “The most they can hope for is low- to mid-sevens or possibly 8 percent growth,” says Kumar. Modi’s critics also say he has used his fierce Hindu nationalism in the predominantly Hindu country to suppress India’s Muslim minority. For weeks, they charge, Modi ignored a recent wave of virulent intolerance by Hindus, including violent mob attacks against Muslims accused of eating beef or slaughtering cows, considered sacred by Hindus. He also failed to intervene when the state of Uttar Pradesh published a government tourism booklet last year deliberately dropping any mention of the Taj Mahal, the state’s storied mausoleum built by the 17th-century Muslim emperor Shah Jahan. 9 And Modi’s party recently appointed a Hindu priest who has referred to Muslims as “two-legged animals” as the state’s chief minister. Uttar Pradesh is India’s most populous state and a springboard to national office. 10 “They took one of the most extreme figures in the party and gave him one of the most important jobs in Indian politics,” says Sadanand Dhume, an India expert at the American Enterprise Institute, a conservative think tank in Washington. “It clearly sent a signal that extremism pays in the BJP.” The religious strife also plays out in perennial tensions between India and its predominantly Muslim archrival, Pakistan, creating the ever-present potential for armed conflict. The neighboring nuclear powers have fought three wars and countless skirmishes over the disputed region of Kashmir, and India accuses Pakistan of supporting decades of terrorist attacks in India by Kashmiri separatists. Meanwhile, Modi has carefully maintained a cordial, if strained, relationship with neighboring China, India’s major trading partner and principal geostrategic rival. The two countries have several unresolved border disputes, over which they fought a brief war in 1962. Also complicating New Delhi’s relations with Beijing: China maintains close ties with Pakistan and is adopting an increasingly assertive economic posture across South Asia, which India has dominated for decades. China recently has established major footholds in Sri Lanka, Bangladesh, Nepal and the Maldive islands as part of an ambitious $900 billion infrastructure project of roads, railways, ports and shipping routes designed to connect China to markets and raw materials across Asia, Europe, Africa and Latin America. Fearing that China’s so-called Belt and Road Initiative (BRI) will undermine India’s stature in the region, Modi so far has rejected Beijing’s invitation to participate in the project and instead has noted that a BRI spur is being built on disputed land in Pakistan. 11 Such concerns have prompted India to build up its military capabilities and draw closer to the United States, which also wants to restrain China’s regional aspirations. U.S. and Indian concerns also overlap regarding Pakistan, a longtime U.S. ally that American intelligence officials say is covertly supporting militant groups in Afghanistan, including the Taliban, a domestic insurgency that Washington and New Delhi have spent nearly two decades trying to help Afghanistan quash. 12 Other aspects of India-U.S. relations have been fraught. The Trump administration has not ruled out imposing economic sanctions on India if it proceeds with plans to buy an advanced S-400 Russian anti-aircraft missile system. And after President Trump imposed tariffs in May on imported steel and aluminum, some of which comes from India, New Delhi retaliated with levies on U.S.made motorcycles and several other U.S. imports. A much larger issue, however, is Washington’s renewed sanctions on Iran, aimed at choking off Iranian oil exports in an effort to force Tehran to permanently abandon what U.S. officials say are its nuclear weapons ambitions. Iran denies it has such ambitions. India, the second-largest consumer of Iranian oil, has told the United States it cannot afford to stop importing oil from Iran. Meanwhile, India, which used to abstain in international forums on many global issues, has increasingly been willing to use its soft power to try to shape world events. For example, in 2015 India stopped opposing carbon emission caps and announced at the Paris climate change conference that it would implement an ambitious solar energy program to radically reduce the country’s dependence on fossil fuels. A new multilateral organization called the International Solar Alliance, which raises money for the program, is now headquartered in India. 13 Yet, despite its economic and military clout and its status as the world’s second most populous country after China, India still does not have a permanent seat on the United Nations Security Council, something New Delhi — and many experts — strongly feel it deserves. Experts say politics and geopolitical rivalries have prevented India’s accession to a permanent seat. Amid these challenges, here are some key questions being asked about India’s economic and geopolitical future: Can India’s economic growth be sustained? India will remain the world’s fastest growing major emerging economy for the next few years, according to the World Bank’s latest three-year projection. As the country adjusts to Modi’s demonetization policy and his goods and services tax, the nation’s GDP is expected to grow by 7.3 percent in 2018 and 7.5 percent in 2019 and 2020, the bank says. 14 “India’s economy … is robust, resilient and has potential to deliver sustained growth,” said Ayhan Kose, director of the World Bank’s Development Prospects Group, which produces the global lender’s macroeconomic forecasts. 15 Long Description The favorable forecasts are consistent with an economic trajectory that has been rising, along with an expanding middle class, since 1991, when India abandoned its socialist model and embraced free-market principles. The extent of middle-class growth, however, varies wildly, depending on how that economic label is defined. A study by two Mumbai University economists found that between 2004 and 2012 the middle class — defined as people spending between $2 and $10 a day — doubled in size to 600 million, or nearly half of the nation’s population. 16 An analysis by Euromonitor International, a global business research firm based in London, said the number of Indian households with high disposable incomes — more than $10,000 a year — rose twentyfold over the 25 years from 1990 to 2015 — from 2.5 million to 50 million. 17 The country’s healthy economic growth rate, however, fails to reflect the poverty that continues to afflict one in five Indians and their growing anger about what they regard as Modi’s failure to provide them with jobs and better lives. Vikram Nehru, an economics professor at the Johns Hopkins School of Advanced International Studies in Washington, says the economic growth statistics reflect only workers in the country’s official economy — those with government or industry jobs. “The majority of Indians belong to the unofficial economy,” he says, toiling as subsistence farmers, street peddlers, unregistered factory workers or in other jobs that barely earn them a living. Nonetheless, economists generally agree that rising consumption by the growing middle class, government spending and increased foreign direct investment likely will keep India’s economy humming along at a growth rate of 7 percent to 8 percent for at least another five years and probably longer. But this will only happen, they caution, if oil prices do not rise significantly and if the government that emerges after next year’s elections does not create new economic hurdles. A technician sets up a display of surveillance equipment during a space technology expo in Bangalore on Sept. 6, 2018. India is considered a world leader in technology. (AFP/Getty Images/Manjunath Kiran) “India can continue to perform quite well, but there are some caveats,” says Rajiv Biswas, the Singapore-based chief economist for Asia at IHS Markit, a global business intelligence firm. “Inflation could grow if oil prices go significantly higher.” India is particularly vulnerable because it imports 70 percent of its oil, he says. Much also depends on how the government spends its $350 billion fiscal 2019 budget, says the Eurasia Group’s Kumar. Before Modi, most government spending went to subsidies and welfare, he says. “Now a third of the budget goes to infrastructure — roads, railways and ports — which makes getting goods to market faster and doing business easier,” he says. Large amounts of foreign direct investment, which totaled a record $60 billion last year, according to Kumar, also helps drive growth. Similar investments will continue for the next three or four years, he says. Many economists say Modi’s policies, such as the goods and services tax, the new bankruptcy law and demonetization, have improved some of the fundamental architecture of India’s hidebound economy. For example, the bankruptcy law will enable the speedy dissolution of failing enterprises, which used to take between 10 and 25 years, says Panagariya, the former Modi official who is currently an economics professor at Columbia University in New York. During that period, the failed companies would be in government receivership and were forced to continue paying employees. That discouraged new startups, says Panagariya, “unless you could be sure you were going to succeed, [because] if you failed, you wouldn’t be able to exit.” The new law also has enabled India’s largely government-run banks to start cleaning up $114 billion in debts from bad loans, he adds. “This was a very big reform with very substantial long-term implications,” Panagariya says. But he and other economists caution that the bankruptcy law will take years to contribute to India’s economic growth because it undoubtedly will be challenged in the nation’s notoriously backlogged courts. “It takes years to bring cases to court,” largely due to a shortage of judges, Panagariya says. “And lawyers are paid by the day, so they have an incentive to drag out cases.” It will also take time for the complicated new tax law to bolster economic growth, economists add. Instead of a single, flat tax, the law imposed four different tax rates for various classes of goods and services, allowed numerous exceptions and required businesses to file returns 37 times a year. Thus, the tax will raise costs and cause confusion initially, experts say, but once businesses get used to the new regime it could add a couple of percentage points to economic growth. Meanwhile, the demonetization policy already is adding to government coffers, they say. While Modi has promised he will help India attain 10 percent growth into the next decade, economists say restrictive trade policies and rigid land and labor laws must be overhauled before that can happen. In addition, India has some of the world’s most restrictive trade policies, says Nehru. “After the initial flurry of economic liberalization in 1992,” Nehru says, “things have been going backwards” in recent years, and “tariffs have increased under the Modi regime as the elections draw near.” Long Description Moreover, Nehru says, under India’s labor laws companies with 100 or more workers must obtain government permission to fire someone, which is rarely given. A new law allows companies to hire temporary contract workers but retains protections for existing workers. “Firms which aren’t doing well can’t shrink,” Nehru says, “and their inability to reallocate their resources reduces growth.” The lack of an eminent domain law, which would allow local governments to secure land rights for major infrastructure projects, also hampers development. A 2013 law required the government to study the long-term impact of such projects on local residents before a project can begin, Nehru says. The Modi government tried to soften those requirements in 2015 but abandoned the effort amid heavy opposition. Nevertheless, many economists agree, barring some unforeseen development, India will enjoy a long period of sustained growth at rates that more developed economies would welcome. “If future governments keep current policies in place and don’t create more obstacles,” says Panagariya, “we’ll have 7 to 8 percent growth for the next two to three decades.” Are India and China destined to be locked in conflict? On Aug. 15, 2017, a violent brawl erupted between Indian and Chinese troops high in the Himalaya Mountains after a Chinese patrol briefly crossed into Indian-held territory in Ladakh, a disputed area where the two countries had fought a border war more than 50 years ago. 18 This time, there was no shooting; the soldiers merely punched, kicked and threw rocks at each other before retreating behind their respective forward lines. Still, the clash heightened tensions between the two nuclear-armed countries at a time when they already were locked in another territorial standoff 2,400 miles away on India’s northeastern border with China and Bhutan, a tiny kingdom that relies on India for protection. 19 New Delhi and Beijing soon announced they had agreed to pull back their forces from both disputed areas. Indian Prime Minister Modi and Chinese President Xi Jinping then held follow-up talks in China and vowed to avoid further border standoffs and maintain peace between their two countries. 20 The situation illustrates that Indian and Chinese leaders aim to prevent their differences from escalating into armed conflict, despite the unresolved border disputes and other major irritants such as China’s close ties with Pakistan. Another is India’s support for the exiled Tibetan religious leader, the Dalai Lama, whom the Chinese accuse of agitating for Tibetan independence. “They both recognize that they have a clash of interests that must be managed,” says Arzan Tarapore, an expert on Indian national security of the National Bureau of Asian Research, a Seattle think tank that focuses on Asian economic, political and security issues. Border disputes aside, experts say the two Asian giants — each with more than a billion people — are locked in a strategic and ideological competition reflecting the ambitions of Modi and Xi. Both seek to proclaim their nation’s centrality on the world stage and offer their country as a model for others, says Daniel S. Markey, a former senior State Department official who coordinated South Asia policy during the George W. Bush administration. Yet Modi has carefully struck a balance between competition and cooperation with China. In June, he emphasized India’s strategic partnerships with the United States, Japan and other regional powers but dismissed the view that those relationships aim to contain China. 21 “India does not see the Indo-Pacific region as a strategy or as a club of limited members,” Modi said. 22 Still, much of New Delhi’s relationship with Washington has been defense-oriented. Over the past 10 years, India has bought nearly $20 billion worth of American-made weapons and regularly joined U.S.-led naval exercises in the Pacific. The two countries also agreed recently to deepen their strategic and operational cooperation, enabling multibillion-dollar Indian purchases of U.S. weapons. Nevertheless, experts say, India remains wary of appearing too close to the United States. “Nobody in India wants to pick a fight with China,” says the American Enterprise Institute’s Dhume. “And certainly nobody in India wants to become a pawn for an American confrontation with China.” Even so, India remains particularly concerned about the inroads China has made in the region via its BRI projects. According to Gateway House, a Mumbai think tank focusing on Indian foreign relations, China has invested or committed more than $150 billion in infrastructure projects and financial systems in Bangladesh, the Maldives, Myanmar, Pakistan, Nepal and Sri Lanka — countries India once considered within its orbit. 23 An Indian soldier guards a remote post on the India-Pakistan border in October 2016. The two countries have fought over the territory of Kashmir since independence from Britain in 1947. A disputed border with China adds to the tensions along India’s northern boundary. (AFP/Getty Images/Narinder Nanu) For example, according to Gateway House, China is spending $62 billion in Pakistan to build the China-Pakistan Economic Corridor, a network of roads, rail lines, fiber-optic cables and power stations that will link southwest China to Pakistan’s Arabian Sea port of Gwadar, which is being expanded to handle Chinese commercial and military ships. India worries the project could bring Chinese troops into Pakistan, analysts say, and that the broader BRI plan could block India’s access to important energy resources in Kazakhstan, Turkmenistan and the Persian Gulf. In response, India has partnered with Japan to provide development aid to countries in Southeast Asia and Africa, increased military exercises with Singapore and agreed to modernize the Indonesian port of Sabang, strategically located to control passage to the Indian Ocean via the Malacca Strait. 24 In Oman, a sultanate on the tip of the Arabian Peninsula, Indo-Chinese competition for strategic advantage is playing out in unusually close proximity. Less than a mile apart in the dusty Arabian Sea town of Duqm, Chinese and Indian workers are building separate port facilities to accommodate their respective commercial and military ships. Both China and India buy much of their oil from Gulf countries. “So now you have a competition of influence taking place, a competition for friends, a competition of economic partnership, and it’s only going to get worse,” says the Eurasia Group’s Kumar. “I don’t believe India and China will go to war over their border disputes. But everywhere else in the region, it’s going to be a constant battle for position.” Should India have a permanent seat on the U.N. Security Council? Prime Minister Modi used his first speech to the U.N. General Assembly in 2014 to renew his country’s call for a major overhaul of the Security Council, the United Nations’ premier body for maintaining global peace and security. 25 He called for a more “participative” Security Council that reflects today’s geopolitical realities. By warning that the United Nations risked irrelevance if it did not modernize, Modi was seen by many as calling for India to be granted permanent membership on the council. 26 Since then, India repeatedly has argued for a permanent seat in meetings with leaders of the council’s five permanent member countries: the United States, Russia, China, France and Britain. Each has veto power over council decisions, including whether to add new members. India argues that as the world’s second most populous country, the largest democracy and the sixth largest economy, it should have a permanent council seat. Militarily, India is a nuclear power with the world’s fourth largest conventional armed forces. 27 Moreover, as a charter member of the U.N., India has been a leading contributor of forces to U.N. peacekeeping missions for 60 years, Indian officials point out. Under the current rules, the Security Council has 15 members — the five veto-wielding permanent members, and 10 nonpermanent members who join the council on a rotating basis for two years each but who do not exercise veto power. When the United Nations was formed in 1945, the Security Council had six nonpermanent members. That was expanded to 10 in 1965 to provide greater geographic representation, the only time the council has been revamped. 28 Nevertheless, the council “does not reflect even the most basic realities of a world in which the population has grown from 2.3 billion … to over 7 billion” and the number of member countries nearly quadrupled, from 51 to 193, wrote former Indian ambassador to Denmark, Neelam Deo, and researcher Karan Pradhan in a commentary for Gateway House. 29 So far, the United States, Russia, France and Britain have given India verbal support for its Security Council bid but have taken no action. Markey, the former South Asia policy coordinator at the State Department, describes such support as a “friendly gesture” meant to convey backing for India’s rise as a world power. But the lack of any follow-through on the issue reflects the recognition that China’s refusal to support India’s bid means it is highly unlikely it will be approved, he says. China, a close ally of India’s longtime foe Pakistan, “has no interest in having India become a permanent member of the Security Council,” Markey says. “So you’ve got one veto-wielding member of the Security Council that opposes India.” China also opposed India’s membership in the Nuclear Supplier Group, a multilateral
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