Civilsdaily’s Faculty’s article published in Financial Express. A must-read for Civil Services Aspirants.

Economics is one of the primary Pillars of UPSC preparation. It has substantial weightage in Prelims and also in  GS 3rd paper of mains. To ensure that students build  a strong foundation and  a strong hold over the subject, we at Civilsdaily, have the best and most trusted faculty, Himanshu Arora Sir.

Credentials of Himanshu Sir-

  • MPhil Economics (JNU)
  • Works at Prime Minister Economic Advisory Council
  • Writes regularly in various famous Indian and international weeklies like Millenium post and Huffington Post.
  • Worked as Assistant Professor in Delhi University.

Here is the article by Himanshu Sir  that was published today in  Financial Express;

Strengthening India’s economic fundamental may be the best route to enhance its influence as a strong economy

In the wake of the horrific terrorist attack on Indian forces in Pulwama, France, United Kingdom and the US have moved a proposal to designate Jaish-e-Mohammed (JeM) chief Masood Azhar under 1267 Al-Qaeda Sanction Committee. However, in a geopolitical move to safeguard its interests in Pakistan, China has vetoed India’s bid to declare Azhar a global terrorist, for the fourth time. Back in 2009 as well, soon after the 26/11 Mumbai attacks, India had moved a similar proposal. In 2016, after the Pathankot attack, India had again moved the proposal at UN’s 1267 Sanctions Committee along with P3 (USA, UK, France) to designate Masood Azhar as a global terrorist. In 2017, P3 nations moved a similar proposal yet again. On all such occasions, China blocked the proposal from being passed by the Security Council. The proposal, if passed, would have designated Azhar a global terrorist with his assets frozen, travels banned and imposed an arms embargo.

Why has China adopted such a stand? China’s relationship with Pakistan can be understood within the context of its relationship with India. As China-India relations started to move southwards, its relations with Pakistan strengthened. China and Pakistan have long valued their alliance as a strategic hedge against India. Beijing’s move to save terrorist organisations operating from Pakistan is part of its larger geopolitical plan. It has invested heavily in Pakistan and any move by India to declare it as a hub of terrorist activities will have major economic and strategic consequences.

Historically, China has relied on its military to influence its relations with Pakistan. China has played a major role in building Pakistan’s defence capabilities, supplying missiles, aircrafts and radar equipment. However, as China’s economic prowess has grown, so has its temptation to use economic power to advance its geopolitical goals. China has been playing the geo-economics game at a maestro level by relying on economic instruments to expand its influence. Chinese leadership has reached a consensus that instead of supplying fighter jets to Pakistan, it makes more sense to initiate a currency swap agreement between central banks—a move less likely to provoke a security response from US or India.
China’s friendship with Pakistan is also influenced by the presence of a dominant third party— the US—making it a 3-player strategic triangle. China’s strategic choices in Pakistan draw significantly from the fact that the US has limited its military relationship with Pakistan since 2011. For China, having strong ties with Pakistan is a considerable source of leverage over US. As long as Pakistan acts contrary to the interests of US by encouraging militant activity, providing safe havens for terrorists, and preventing peace efforts in Afghanistan, Pakistan remains an important source of leverage for China.

China’s interest in Pakistan is also heightened by improving Indo-US ties. Since 2006, defence contracts worth more than $18 billion have been signed between the two. The US has backed India’s bid for a permanent seat on the United Nations Security Council and the two nations have signed an Agreement for Cooperation Concerning Peaceful Use of Nuclear Energy in 2008, thereby ending decades of India’s nuclear apartheid.

Chinese anxiousness at consistently improving Indo-US ties is reflected in its investments in Pakistan. For instance, the China Pakistan Economic Corridor (CPEC), with a total investment of $46 billion, is China’s most ambitious effort to keep Pakistan under its influence. Once completed, almost one-fourth of China’s foreign trade will pass through the CPEC. China has promised to build transport networks, highways, and Gwadar as a major international oil port, for enhancing trade. Gwadar and CPEC are the two most prominent examples of China’s geo-economics in Pakistan. India views these initiatives with suspicion and has repeatedly reiterated that China wants to expand its influence in South Asia. China will use Gwadar as a base for its navy to oversee and expand its influence in the Indian Ocean.

China remains Pakistan’s rescuer by responding to the infrequent crisis moments. The Chinese government had offered $500 million in assistance to Pakistan during its 1996 balance of payments crisis. In 2008, Pakistan once again found itself at the verge of an economic crisis. With its traditional allies US and Saudi Arabia in the grip of the global financial crisis and refusing to grant concessions, the then president approached Beijing for help and the latter obliged by granting $500 million. Another important variant of China’s geo-economics strategy was directly aimed at India when, in 2009, China blocked £2 billion of multilateral assistance to India at the Asian Development Bank amid tensions surrounding a border dispute in Arunachal Pradesh.
Today, China holds much more influence in Pakistan than any other country ever has in history. Pakistan and China share a symbiotic relationship. Pakistan is dependent on China for its economic, political, military and diplomatic support and China is dependent on Pakistan for its strategic and geopolitical objectives. If China does not want to lose a strategic ally and funds it has invested in CPEC and Gwadar, it must provide economic and diplomatic assistance to Pakistan like the one at the United Nations (UN).

Finally, to counter China and Pakistan, India on its part must become an equally active player in this geo-economic game. Strengthening its economic fundamentals may potentially be the best route to enhance influence. A strong economy is a major driver of foreign policy. India must strengthen its economic ties with neighbouring countries. The revival of SAARC can be a good starting point. India must fill the geopolitical vacuum in South-East Asia due to China’s masculine foreign policy. Most South-East Asian nations are aghast by China’s moves in the South China Sea and India can strengthen its ties with such nations by promoting trade and investments through regional trading agreements. This would act as a counter to China’s influence. We must prioritise our economic relations with the US and its allies amid the growing concern of a China-US trade war. The only feasible option we have in order to sideline China diplomatically at the UN is forming stronger economic ties with the US, UK, Russia and France.

Here is the link of the original Article

https://www.financialexpress.com/opinion/strengthening-indias-economic-fundamental-may-be-the-best-route-to-enhance-its-influence-as-a-strong-economy/1555087/

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manik basu
23 Apr, 2019

It doesn’t really delve that much into how India can strengthen it’s economic fundamentals.