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Worrying distanomics: Has India factored CPEC into RCEP?

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As the 16 nations in Asia are marching towards closure on Regional Comprehensive Economic Partnership (RCEP) discussions in Bangkok, it will be a major step if India signs up to the deal. But there are questions, and a raging controversy back home in India about the pros and cons of the agreement in its present form.

One glaring factor that has been missing in all debates so far is any assessment of the “distanomics” in India China trade. Critical insights emerge when we study India China trade by using the lens of distanomics, defined by the authors, as the “impact of distances on the economics of production and transport, for exports”.

This article therefore seeks to evaluate the economic impact of the distances as enabled by the China Pakistan Economic Corridor (CPEC) on China’s exports to India, in a post-RCEP world.

It is well known that India has been at the receiving end of opening its markets in FTAs and has lost in the trade deficit battle with China and ASEAN countries. Its current trade deficit with China is about $55 billion while with total RCEP countries it is about $105 Bn. It is also well known that the relationship between India and China has both an economic angle as well as the strategic angle. India has a long-running border dispute with China, and recently China has increased its meddling into Indian Kashmir via CPEC and openly siding with Pakistan in the UN.

Therefore, as India readies to sign the RCEP, an important question arises? How will India deal with exports coming from Chinese hinterlands via CPEC? As part of the CPEC, China is building a cargo and rail line from Lanzhou, through Xinjiang to Gwadar port. A part of this service, which is the Gwadar port, has opened for commercial operations in October 2019.

China desperately wants to make its commercial investments into Gwardar successful and it can achieve these goals by exporting to West Asia, Africa, and to the Indian western hemisphere from Lanzhou/Xinjiang via Gwadar. The Belt Road Initiative (BRI) central corridor from Lanzhou will connect to the Southern CPEC corridor in Kashgar.

We believe that for China to make economical products, it will have to migrate more and more manufacturing inside, and utilize CPEC to export to India and other countries via Gwadar. Therefore, it is important to note that one cardinal reason for China to launch the BRI initiative is to shift its manufacturing base from port cities to more internal cities where the cost and availability of labour are still attractive. BRI will allow it to reduce the cost of transport to Europe, Africa, the Middle East, and India.e

The Chinese model of investments is driven by front-loading the infrastructure, and fixed costs and later to find markets to dump the products so that they can utilize labor and capital. As they simultaneously migrate the manufacturing to central and western China, open trade routes to India via CPEC, what is India doing to counter it? This conversion of interior areas as export hubs is an important part of Chinese strategy and CPEC demand will play a critical role in it.Given India’s opposition to RCEP, has India factored this question?

Currently, it takes about 12 to 25 days for shipping time (excluding port time)efrom China to India. The quickest being Shenzhen to Chennai about 12 days vs the longest being Dalian to Mumbai at about 25 days of travel in the sea. This number will reduce to less than 3 days for shipping between Gwadar to Mumbai.

The distance from Kashgar in China to Gwadar is shorter than travelling from Kashgar to Western sea-ports of China. Kashgar to Shenzhen is about 5500 Kms, while Kashgar to Gwadar is about 2500 KM. Given this changed shipping dynamics, India will be a major destination of exports from China via Gwadar as it will make a lot more economic sense.

It will combine a trifecta of strategic objectives for China – Cheaper labour, moving production to inland, economically fulfilling the CPEC objectives, and strengthening China’s Pakistan economic linkage at the cost of India.

The current export from China to India is about $85 Bn. If a part of this shifts to Gwadar, it will create an asymmetric challenge to India as the India exports to China may continue to remain expensive as most of the consumption market in China is on its Western Border which is Shanghai and sea cities, while China to India exports will become further cheaper, easily transportable.

This double whammy of production (lower production costs in the interiors) and geographic transport shift (lower transport and freight costs, quicker delivery) will mean that India will never become cost-competitive with China in exports. Also, Pakistan may take the reverse advantage of truck movements from its borders to export to China and thus further reducing the overall transport cost to them at the expense of India.

RCEP + CPEC is a potent combination for China where it can strategically continue to keep its export engine running, reduce travel time between India and China significantly, achieve economies of scale in Xinjiang and other provinces, with transportation hubs at Gwadar and Kashgar and make Gwadar economically viable for Pakistan. India will be significantly disadvantaged as it will continue to export, ship to Chinese consumption hubs in Shanghai etc.

Post RCEP and CPEC, India will not be competing with China but will compete directly with the hinterlands of China like Xinjiang province where the cost of labor is low. The asymmetric travel time advantage will solidify the Chinese hold on the Indian market.e Indian manufacturers will find it very difficult to beat the scale that China will bring in via Xinjiang.eee

So, what can India do to counter this googly of distanomics that is arising due to the CPEC?

India cannot take baby steps towards RCEP. If it signs RCEP, it needs to ensure a high level of border trade between India and China, and maximize the use of routes via Leh, Uttarakhand, Arunachal, and Nepal to ensure that we can gain from this. Else we will be significantly disadvantaged.

Thus, a counter to the distanomics of CPEC can only be achieved via the distanomics of border trade from India. To obtain this, we need peace on the India China border. Therefore, it may not be out of place to recommend that India should join the RCEP only after successful resolution of border disputes with China.

Before signing the RCEP, India should be ready to grow its border trade with China via trucks thus forcing a two-way trade equation.eDevoid of this opening of border trade with China, we are going to get further trapped into a challenge.

The question then becomes e can India hold out and not sign the RCEP till border resolution with China? And, are the advantages of RCEP so important to China that it would sit down with India and resolve the border issues? If so, then we have a game changer.

Otherwise the distanomics of the CPEC combined with RCEP will be devastating for India.

(Robinder Nath Sachdev is President, Imagindia Institute, and Dr. Vivek Gupta is an economic analyst (Fellow, IIMA), based in New York. The views expressed are personal)

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MP bypolls: Kamal Nath’s ‘item’ remark raises political heat

Political observers feel that issues which have nothing to do with the general masses are given a political colour to influence voters, in the absence of discussion on real issues affecting them.

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Kamal Nath

It comes in the wake of “coming from a hungry and ill-clad family” remarks used by another Congress leader Dinesh Gurjar for Chief Minister Shivraj Singh Chouhan.

While campaigning in Dabra segment in Gwalior district on Sunday, Kamal Nath had allegedly called Imarti Devi an ‘item’, making the BJP turn aggressive and trying to derive political mileage from the situation even as the Congress accused BJP of trying to misinterpret certain words.

The process of filing of nominations for the Assembly seats, which will go to polls on November 3, has since been completed and both parties are now in full campaigning mode.

Madhya Pradesh Chief Minister Shivraj Singh Chouhan said that Kamal Nath’s remark against the Minister was symptomatic of “petty mentality”.

“Imarti Devi is a daughter of a farmer who began doing labour in her village and has since emerged as a public representative in building the nation. First, the Congress called me ‘hungry and ill-clad’ and now she has been called an ‘item’. This shows the feudal mindset of Kamal Nath,” the Chief Minister said.

BJP MP and former Congress leader Jyotiraditya Scindia said that “calling a woman coming from a poor labourer family an item and ‘jalebi’ by another Congress leader Ajay Singh was both condemnable and objectionable.

“Kamal Nath’s comments reflect his thinking towards Dalits and women. Similarly, Digvijay Singh had used such remarks against party leader Meenakshi Natarajan.”

BJP state unit President Vishnudatt Sharma too flayed the remarks as “shameful”, particularly against a woman when the country was celebrating Navratras.

“Kamal Nath has insulted the womanhood by calling the Minister an item,” Sharma alleged.

In Lucknow, Bahujan Samaj Party supremo Mayawati too jumped into the controversy and demanded on Monday that the Congress leadership should issue a public apology for the remark against a Dalit woman.

She said the remark was “objectionable”. “The remarks made by a former Chief Minister against a Dalit woman candidate in Dabra (Reserve) Assembly segment is highly shameful and needs to be condemned. The Congress leadership should take note and issue a public apology,” the former Uttar Pradesh Chief Minister tweeted.

She appealed to the Dalit voters to teach a lesson to the Congress in the by-elections in Madhya Pradesh and vote for her BSP to ensure that such incidents don’t occur in future.

On the other hand, Kamal Nath said the BJP was indulging in a “false propaganda” regarding his remarks.

“I did use the word ‘item’, but it is not an insulting word. I am also an item, you are also an item. In this sense, we all are items. During legislative proceedings, we use words like ‘item numbers’. When the state’s people are in a pathetic condition, the BJP instead of wiping their tears is making an issue out of consumption of a beverage by me. Is it a public issue? Are the people’s lives connected with this?” the Congress leader and former Chief Minister remarked.

Political observers feel that issues which have nothing to do with the general masses are given a political colour to influence voters, in the absence of discussion on real issues affecting them.

The BJP will not let go of the chance to use the ‘hungry and ill-clad’ and ‘item’ remarks to its advantage by making these as ‘rich vs poor’ and ‘Dalit’ and ‘women’ issues ahead of the by-elections.

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Old hand, trusted by both Rahul, Ahmed Patel, is Congress choice for Bihar

Shaktisinh Gohil has his task cut out as party in-charge for state, but there are many reasons he may be the man for the job.

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Shaktisinh Gohil may seem an odd choice as the Congress in-charge of Bihar, particularly given the uphill battle the party faces in a state where it has been now out of power since 1990. However, there are two things that make the 60-year-old uniquely placed for the job: the fact that he is a veteran of many political battles against Narendra Modi-led BJP in native Gujarat; and that he is among the few Congress leaders considered close to both Ahmed Patel and Rahul Gandhi.

In his over three-decade political career, it is the first time Gohil will be overseeing a state election as an AICC pointsman. His hand is seen in the hard bargaining by the Congress to secure 70 seats in the Mahagathbandhan, a huge jump from the 41 the party had contested in Bihar in 2015.

A veteran in Gujarat politics, Gohil first entered the national stage in 2014, when he was made a Congress spokesperson. He was elevated as in-charge of Bihar in 2018, given additional charge of Delhi earlier this year, and made a Rajya Sabha MP in June this year.

Often described as Ahmed Patel’s “right-hand man”, Gohil was the Congress veteran’s poll agent in the closely fought 2017 Rajya Sabha election that Patel had won, outmanoeuvring the BJP.

Gohil started his political career in the early 1980s while still in college. In the mid-1980s, as Youth Congress office-bearer, he had been spotted by then prime minister Rajiv Gandhi at a national function.

He won the Bhavnagar South Assembly seat in Gujarat at the age of 30 in 1990, and became the minister of state for health at the age of 32 under Chief Minister Chimanbhai Patel. He was then the youngest minister in Gujarat’s history.

Two years later though, Gohil took everyone by surprise by resigning over the demand for a medical college for Bhavnagar. The medical college was allocated eventually and Gohil won the seat again in 1995.

Gohil did not contest the 1998 election and lost the one in 2002 that marked Modi’s first electoral win. In the next election in 2007, he returned to the Assembly from Bhavnagar and was made the Leader of the Opposition, emerging as one of the most vocal critics of Modi. However, Gohil lost the 2012 Assembly elections, and while he eventually returned to the Assembly in a by-election from the Abdasa constituency, in the 2017 polls too he couldn’t win. Since then, Gohil has been focusing on national politics.

The Congress veteran had wanted the Grand Alliance in Bihar to be broad-based, involving parties like Upendra Kushwaha’s Rashtriya Lok Samata Party (RLSP), Mukesh Sahani’s Vikassheel Insaan Party (VIP) and the Left, but could not convince RJD chief Tejashwi Yadav about the utility of the RLSP and VIP.

However, he managed to bring the CPI, CPM and CPI (M-L) into the fold.

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Meet the ‘Hero of Baramulla’ who conned Pakistan

While Sherwani had to pay with his life after his bluff was caught; he had refused to say, ‘Pakistan Zindabad’ till the very end.

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Maqbool Sherwani

New Delhi, Oct 18 : An event of patriotism from erstwhile Jammu and Kashmir in 1947 has been given a fresh lease of life. The Union Ministry of Culture has thrown its weight behind the story of October 22, 1947 in its pursuit to mainstream the events of that day that could have altered Kashmir, as we know today.

The Ministry has decided to hold a National Symposium and virtual exhibition on Maqbool Sherwani, a fellow Kashmiri who halted the marching Pakistan-backed tribal militia towards Srinagar.

While Sherwani might have given the Indian Army adequate time to send reinforcements, he had to pay with his own life.

Now, the Narendra Modi-led Central government wants to publicise and mainstream this tale of selfless sacrifice and utter heroism that is starkly opposite to the attempted narrative by Pakistan and certain elements within the valley that Kashmiris want freedom.

The ministry is hailing him as the ‘Hero of Baramulla’.

Prof Amitabh Mattoo will virtually join the symposium themed on “Martyr Maqbool Sherwani: Memory, myth and Imagination”. The Centre organised symposium is also scheduled to take place the same day, Sherwani flaunted his passion for the country- 22nd October. The event is likely to be beamed live on all social media handles of the ministry — Twitter, Youtube, Facebook and Instagram.

“The bravery and subsequent martyrdom of Maqbool Sherwani in 1947 and the story of his role during the Pakistan-backed invasion of Kashmir needs to be mainstreamed throughout India,” says Mattoo.

Sherwani, then a 19-year-old National Conference worker, has been credited with single-handedly stalling the advance of the tribal invaders to Srinagar.

“He managed the feat by telling the invaders that Indian Army was camping outside Baramulla and that a move towards Srinagar would be their undoing. The enemy froze in its tracks before the Indian reinforcement had reached Srinagar. Many say that the outcome of the war would have been different had invaders reached Srinagar before the Indian Army,” reads an e-poster by the Union Ministry of Culture created for the event that will be used to generate interest, in the coming few days over social media.

While Sherwani had to pay with his life after his bluff was caught; he had refused to say, ‘Pakistan Zindabad’ till the very end.

His body was nailed on a wooden plank and left. Now, this heroic story will be disseminated to today’s generation of India and more so to those in the valley, many of whom may not be aware of such an event that could have altered history.

The Culture Ministry has also prepared a 53 second long audio video clip that will be teased over social media to create a buzz and generate interest in him and the significance of the date.

(Anindya Banerjee can be contacted at [email protected])

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