Economy

The Department of International Studies, Political Science and History in association with the Consulate General of Republic of Korea in Chennai, Indo-Korea Science and Technology and Centre and Innovation Centre of CHRIST (Deemed to be University).

The webinar was attended by Fr Jose CC, Pro- Vice Chancellor of CHRIST (Deemed to be University), Dr Madhumati Deshpande, Dr Manoharan N, Dr Barnali Chanda along with the distinguished speakers- Dr. Young Seup Kwon, Consul General of the Republic of Korea, Chennai, Dr. Seung Cheol Lee (IKST), Mr. Tomoyuki Yamato, YAMATO LLC, Dr. Victor Teo, Hong Kong University and Dr. Jabin T Jacob, Shiv Nadar University.

Dr Manoharan welcomed the guests of honour and the panellists. Fr Jose CC gave the Presidential address where he focussed on the Black Swan Strategy which acts as a paradigm shift to Learn from East Asia. Strong identity, unity, financial prudence is strong connecting characteristic of India and welcomed each delegate whole heartedly.

The following is the lecture given by the eminent speakers:

1.Dr. Young Seup Kwon, Consul General of the Republic of Korea, Chennai

Dr Guydeuk Yeon welcomed the General Consulate of Korea, based in Chennai, Dr Yongseup Kuon who shed light on how Corona pandemic’s effect on India and Korea. The WHO preparation to deal with outbreak has been very vital in this case. Korea has been controlling COVID-19 based on previous experience-SARS&MARS and has hence been successful in curbing it to a very large extent which previously none could afford to do. Thematic and trans missionary trends are seen in the COVID-19 patterns. Everything is working in normalcy in Korea when the world is battling with COVID-19 and an example for the same can be where Online shopping is normal and the Internet infrastructure has increased here. Revamp for post corona is the need of the hour for all the nations who have to prove their medical capacity- Self-reliance, assuring, reassuring, offshoring and outsourcing.

Further the panellists highlighted on the Conflict between US and China where US is critique of China’s actions and inactions on the spread and containment in the initial stages. Protectionism and extreme nationalism are important. Enhancement of multilateral organisation and its rules is crucial in nature. It promotes international co-operation. This meant that bilateral relations and stability in Asia is crucial when these 2 warring nations which create a security dilemma and threat to its neighbouring countries, hence development of Asia relations- India and Korea, India and Japan are the need of the hour.

Investment by East Asian countries in ASEAN show their potentiality and vigour in economic parameters. On the other hand, countries like India see what best they can do to become manufacturing hub like China, never the less, India has a strong point-Young worker which it can tap on this resource as a key to economic development. ASEAN’s transformation to a Global manufacturing hub will be highly beneficial to China.

Also, Agriculture is a peak sector in China wherein it is highly competitive and constitutes to 44% with no compensatory mechanism. The relations between Korea and India can be deduced in 2 phases namely -before and after wherein before they were reduced over dependence and curtailed by China’s expansion which was coupled by Trade and Investment with China-lateral expansion. The relation currently has moved to a positive note wherein we can see that Tamil Nadu, Kerala, Andhra Pradesh-have 200plus companies-7000plus Koreans working in South India, Largest expatriate community in Chennai. Anantapur, Andhra Pradesh-Kia motors which itself shows the reliance of their bilateral relations and how conducive it is. India and Korea to include 50 billion $ investment, example- Mahindra is also investing in Korea with the motive that the Manufacturing sector has to be competitive and productive in nature.

Dr Manoharan N thanked Dr Yongseup Kuon for gracing the webinar and imbibing the students on how Korea is now the emerging power in East Asia and also cordially welcomed him to graciously visit Christ (Deemed to be University).

2. Dr. Seung Cheol Lee (IKST)

Dr Manoharan N introduced Seung Cheol Lec- Director of Indo-Korean Institute of Chinese Technology worked with Indian researchers closely. The panellist began his talk by stating that Physical meeting is not possible and the pandemic has reinstated Research, experiment-endless communication and after the pandemic, the importance of India would have increased subsequently due to its increased capabilities in diverse arenas. India requires sufficient experience, research and Korea can help us to achieve a desirable demand. Mutual compliment will change the world post the corona world spurred by invention of new things is necessary here- collaboration with India. Must not lose the manufacturing capacity as the West do not have test kits to be effective and here is why we see that Korea has few companies’ bio medical and essential kits and can prohibit from panic buying. Professor Jabin T Jacob appreciated the panellists for his insights.

3. Mr. Tomoyuki Yamato, YAMATO LLC

Dr Manoharan N welcomed Mr. Tomoyuki YAMATO,CEO,YAMATO LLC/ Founding Partner & Director, WORLD1 Group presented on the following points-

● Conducting projects in India since 2010. Relocated to Bengaluru with family from Singapore in 2016

● Experienced global M&A/ restricting projects at Bain & Company/Roland Berger.

Lead India & ASEAN market entry/ new business development for Japan cos, i.e. Fuji Xerox, Sony, Mitsubishi, NTT DATA before start WORLD1

● Promoting “ Innovation in India” program for new market entrants, facilitating collaboration with local industries & institutes to convert Japanese “WOW Value” into India

● Supporting METI/JETRO, MAFF, etc.

● WORLD1 Group is a Japan-India cross-border, cross cultural professional firm & international trading firm. Assigned Business support desk (India) of Osaka BDA

● The first-ever METI IDEAthon @ Bengaluru, January 2019

● Academia collaboration for 2W R&D since July 2019

● India is “Another Phase” for Japan Cos-

1. Phase 1- 1970: Extended “sales and marketing” to Western countries

2. Phase 2- 1990- Extended “manufacturing” point to East and SE Asia

3. Phase 2+ - 2010- Capturing coming up market through local establishments

4. Phase 3- 2020- “Innovation in India” to explore the globe further by leveraging the core- research and development.

● Certain localization required to enjoy “ Beauty of India” highlighting on the importance of Innovation

● Japanese “Art in Detail” meets “JUGAD” in India- “WOW value”

● How I see Post-Corona Paradigm Shift- Japan will continue working as balancer in between US vs China- Culture always keep things vague (like India). Off-balancing from China cannot happen such immediate pace- East Asians are siblings in industry, regardless contradiction/complication in politics. India & Japan can create another value centre under Post-Corona, i.e. digitization of analogue manufacturing, cyber world for “vague” human being, etc.- Dialogue in between India & Japan shouldn’t focus on ourselves only, but keep eyes open to the globe.

4. Dr. Victor Teo, Hong Kong University

Prof Jabin J Jacob welcomed Dr Victor Teo who is working at University of Hong Kong- Assistant Professor- Department of Japanese Studies, also a Visiting Prof at Pyeong Hong University of Chinese Studies.

Dr Teo thanked Dr Barnali C and Dr Manoharan N for inviting him and spoke on Implications of the pandemic of China and North Korea closes border for the pandemic due to lack of medical capacity. Closed for Ebola also which broke out in Africa-short of trade and hard currency but this want be the case for PRK.

Dr Victor Teo spoke on Post Pandemic & Global Paradigm Shift in the flowing terms-

● US-China Trade War: 2018-2019

● Leadup to Taiwan Presidential Elections in January 2020

● Hong Kong Unrest 2019

● Public Relations Nightmare

● Political Legitimacy

● Governance & Emergency Procedures- Good governance

● Medical Infrastructure

● Crisis Opportunity

● Absolute Control=Absolute Accountability

● China’s booming economic growth: 6.8% in Q1 in China but the Export rate is plunging

● China’s exports plunged following coronavirus outbreak

● Example Yiwu- Major Losses/ Under capacity Issues

● Economic Implications of China’s Rise

● Massive Unemployment- Coronavirus pandemic hit jobs- 8.6 million school leavers-14.6% employment among them

● Manufacturing in major economies

● Economic forecasts downgraded for 2020

● U-Turn: Street Vendor Economy

● Xi: “Bottom-line thinking” watch out for black swans & grey rhinos’ Unpredictable international environment”

5. Dr. Jabin T Jacob, Shiv Nadar University

Dr Jabin T Jacob questioned the panellists on the following aspects:

1. Is it right to shift many international manufacturing hubs away from China to other Asian countries post the pandemic?

1. Can India’s criticism on China be valid? (Owing to the fact that India is in a glass house and throwing stones on other can backfire on itself)

2. How successful is India in terms of binding with cooperative federalism?

They were answered by all the panellists.

Followed by this was a question and answer round wherein questions regarding Intellectual Property Rights, Research capabilities, supply chain of medical necessities combating increased costs, border issues between Indian and china, South China Sea posing a territorial dispute challenge which were answered.

The Vote of Thanks was given by Dr Madhumati Deshpande. The webinar concluded on a successful note and students are eagerly waiting for another opportunity to learn and develop their knowledge.

COVID-19 or Coronavirus pandemic has upended global economy, disrupted “normal” functioning of societies across 193 nations around the world and in turn has resulted in nature reeling due to prolonged absence of humans from the mainstream. This global and undoubtedly challenging pandemic has resulted in many questions being raised about the models of growth which enjoyed legitimacy ever since the fall of the Berlin wall. I would rather call it a growth model rather than development model due to the very reasons I would eventually mention below.

Ever since the fall of Soviet Union as the bulwark of Communism around the world against what Karl Polanyi called, “satanic mills of capitalism”, technocratic capitalist growth model or Neo liberalism has gained legitimacy across the world. The philosophy of Neo liberalism gained prominence in the earlier industrial west as a reaction to the upsurge of Communist East in the peak hours of cold war.

First, Neo Liberalism argued for the privatization of risk factor, as in, the transferring of responsibility over the risk to the private from the State as collective. This bearing of risk by the individual would, as it theorized, result in enhancement of prosperity for the collective. The effective and efficient maximization of wealth was possible through a minimal intervention from the State and maximum input from the private, which it assumed to be a rational.This maximization of prosperity was thus possible through exploitation of resources across the board which required restraint from the State. The State was not expected to impose regulations which would distort the “efficient” functioning of the market. The exploitation would in turn result in consistent regeneration of capital which would enhance the living conditions of the labor.

However, this orthodoxy has come under serious scrutiny following the spread of coronavirus across the countries. It has re-ignited the questions about legitimacy of the State as an institution through its defense of the public. It has exposed the inherent flaws in the current growth model. The legitimacy of the State has come under serious scrutiny following the upsurge in the casualties due to the pandemic especially when there is an acute shortage of medical facilities and weak health infrastructure. American president recently stated that government intervention is not government take over indicating that the State intervention has come to a necessity and an obligatory thing at this crucial juncture. The modicum of social justice was absent in the neo liberal philosophy, as in, the share between capital and labor being balanced. Now, the debate for welfare state or providing essential services to the general public there-by keeping social contract sacrosanct has been re-ignited. Next, the exploitative means of maximizing profits not only degraded environment but seriously weakened the very fundamental promise of better life

Washington Post reported that the federal government of the United States of America has so far spent more than 2.5 trillion dollars at a time when unemployment benefit claims has hit 4.4 million and economic growth rate is projected to be at -25.0% for the second quarter. In India, Narendra Modi took the helm of affairs promising a reduction in entitlement spending while now has phased in one lakh crore rupees of investment in to the economy.

Summing up, this pandemic has given us few features. They are the de legitimization of capital, need for de privatization of risk factor and the rise of the State as a benefactor. However, these features may also pose a serious set of challenges in itself. These vague alternative imaginations for the post pandemic scenario would possibly result in heightened suspicion, kicking in of fear psychosis, a potentially hegemonic and demagogic State and surge in isolationist tendencies among the nations.

Concluding, this pandemic is a serious wake up call for the public policy institutes, universities, parliaments and palaces to exhibit audacity to self-critique our long-held growth and living models and to work towards reforming the same.

Britain voted to leave the EU in 2016. Since then, it has embroiled the UK, leading to further divisions within the union. Taking into account the recent victory of the Tories in the Recent Elections, the Conservative government with its stronghold in England, plans to lead the country into Brexit on 31st January and the regional nationalist parties in Northern Ireland and Scotland (such as the Scottish Nationalist Party, Sinn Féin and the Social Democratic and Labour Party) have gained additional seats in the Parliament as compared to the previous elections. It is evident that Brexit was the main issue on the ballot. If one compares the results of the EU Referendum of 2016 and the UK Parliamentary elections of 2019, one observes how much they resemble each other. Also, one witnesses that voting was based on regional lines (Scotland and Ireland voted remain while England and Wales voted to leave). Generally, less developed areas in the field of employment, education, and income voted to remain. Thus, a major portion of the working class voted to leave, along with social and economic conservatives. This explains why Labour took a middle road in terms of Brexit to not lose its traditional power base. But that was to no avail as the Brexit issue dominated the elections compared to traditional differences on government spending and taxes. In a way, Brexit is a counter to liberal globalization’s goal of free market, integration, and cooperation. Capitalist stronghold, the Liberal Democrats, are one of the only few parties which have openly opposed Brexit. On the other hand, the vote differed not on the basis of class divisions like Marxists presume most actions to be. Why did the working-class vote against their own interests (the Conservative Party is not known for being pro-proletariat) and how does the vote reflect Nationalism(s): British, Scottish and Irish.

The EU and National Sovereignty

The European Union is not only an economically integrating force but also one that has certain political powers. Earlier, liberals dissuaded any imposition of the state on economics. But as the social fallouts became evident especially with counter theories such as Marxism gaining momentum, liberal theory of political economy itself went through changes. It adapted itself into the welfare state, a phenomenon that is common in Europe but which still has not penetrated the capitalist stronghold of America. The welfare state is generally seen by the public favorably. But when an extra-national authority has control over your taxes with no visible benefits, people become apprehensive. Especially important is the case of Factortame which proved to the UK that they did not have full control over their policies. Also, many British feel that the UK funds are being wasted on East Europe while the UK reaps no benefits from being a member of the EU.

Migration

Many developing countries oppose the free market on the basis that it might be made a dumping ground as developed countries exploit its resources. On the other hand, developed countries oppose full integration on the basis of another form of relocation itself- migration. As national borders are mellowed in the face of globalization, people become more immobile. Though migration boosts the economy, native population view it unfavorably. The economic insecurity perspective states that migration is seen as leeching on the finite jobs available in a country. One reasoning states that due to austerity reforms of the 2010s, many were economically left behind and wrongly blamed immigration for it. This brings into the picture why the working class in a developed country is not in favor of the open market. Their concerns differ from those in developing countries. The latter is concerned about exploitation by external powers, developed countries with good labour laws need not fear. Here the concern is about competition for jobs. The Brexit discussion around migration is not concerning the Syrian refugee crisis as many presume it to be but more to do with the migration from Eastern Europe. The refugee crisis just existed as a possibility while the latter shows the probability of a huge influx of people competing for lower-end jobs. On the other hand, migration in high skill jobs is seen as filling a vacuum.

One of the major and immediate consequences of Brexit will be the rupture of international trade, especially shortages of food and medicine. Foreign investment will dry up and optimal output will decrease. All this spells economic slowdown. Even though economic consequences are generally forecasted to be bad (I have found “evidence” for both harsh economic consequences and for smooth sail and this stage, I am unable to remove fact from propaganda). But still, the most vulnerable population, the very same mentioned above which lags behind, seems to have voted against its own economic interests. There is a possibility of having higher competition due to a large inflow of migration but equally that of high unemployment after Brexit. Which begets the question whether people voted primarily based on economic interests or was something else at play.

Nationalism and Cultural Backlash

The election of a Tory government with a majority only in England just confirms the fears of Scotland and Northern Ireland that England can singlehandedly decide the future of the nation without the need to listen to the others. In a way, the competition between the Tories and the Labour Party was confined within England, and to an extent, Wales. Yet these two are considered the major parties of the UK. Though Brexit might get over, another problem of secessionist movement will start in Scotland and Northern Ireland. They are tired of being ignored and don't want to pay for the immediate damage Brexit will bring about. For e.g. Brexit means European companies will shift basis from the UK, leading to unemployment. The government will have to invest in unemployment benefits which will mean a rise in taxes. And this will have to be paid by Scots and Irish citizens too. A hard Brexit will mean a hard border between Northern Ireland and the Republic of Ireland. It will make trade more regulated and costly. This has a great chance of hurting the long-fought peace that existed in Northern Ireland after the Belfast Agreement.

Nationalism can be divided into two categories: one such as the Scottish one where overlooked and oppressed groups want to take power into their own hands, another where once predominant group act against progressive forces which have taken power away from them (the cultural backlash thesis). The working class is a pre-dominant force but in the end, the working class in the UK voted against their own economic interests because they saw themselves as British first and the proletariat second. As stated before, developing countries have serious reasons for not embracing the free market. Not to say that the concern around migration in developed countries is not genuine but they sometimes get expressed with racist undertones.

The Regional Comprehensive Economic Partnership aims to be the biggest free trade agreement in the world as it will comprise almost half of the world population and 39% of the world’s GDP, according to the New Zealand Ministry of Foreign Affairs. RCEP aims to create an integrated market with 16 countries, making it easier for products and services of each of these countries to be available across this region. The negotiations are focused on the following: trade in goods and services, investment, intellectual property, dispute settlement, e-commerce, small and medium enterprises, and economic cooperation.

The RCEP is mostly concerned with the standardisation of tariff in the region. If signed in the present state, it will include the ten members of ASEAN along with China, New Zealand, Australia, South Korea and Japan. India had repeatedly endorsed this free trade agreement in its initial stages but has recently made the decision to not join it. This has led to a lot of speculation and discussion among economists, who are trying to measure the appropriateness of this decision.

According to news reports, the major guiding force behind India’s decision to not join the RCEP was the fear that allowing free trade with China would lead to cheap Chinese goods dominating the Indian as well as neighbouring markets. This would impose a very lopsided competition for domestic Indian goods, which will probably not be able to survive. This would also seriously hamper NDA government’s ‘Made In India’ initiative. China will be able to dump its goods in India and Indian industries will decline. India had expressed concerns about allowing the same level of tariff reduction for all countries, at the beginning of the negotiations too. This apprehension regarding the import surge from China has also been expressed by other parties to the agreement.

Another major concern has been the growing trade deficit of India with the ASEAN countries. According to the NITI Aayog, after India’s free trade agreements with Japan and South Korea too, its trade deficit with these countries almost doubled. Therefore, India is right to be apprehensive of the proposed free trade agreement. The current trade deficit of India is $105 million with the proposed signatories to the RCEP and this could further increase if India joined the RCEP. India would also lose out on the revenue generated from import tariffs.

Moreover, all countries protect certain sectors that are crucial to their economy by imposing high tariffs and the service sector is one of them. India, owing to its growing pool of human resources wanted entry for its tertiary sector workers and professionals into the ASEAN countries. However, these countries do not allow much liberalisation in this sector and protect it through ‘sensitive lists’, based on the details on the Indian Commerce Ministry’s website. India will be providing these countries much more market access than it would gain out of the deal.

The adverse effect of the agreement on Indian farmers also cannot be neglected. The then commerce minister Nirmala Sitharaman, in 2017, mentioned in the Rajya Sabha that India's agricultural exports have declined to $33.87 billion in 2016-17 from $43.23 billion in 2013-14 and import of agricultural commodities (including plantation and marine products) in 2016-17 rose to $25.09 billion from $15.03 billion in 2013-14. This is an indication of the fact that FTAs are not benefiting farmers, but instead the Indian agricultural produce is unable to find a market in other countries. This has lead to increasing farmer debts and consequent suicides, which could be exacerbated by the RCEP.

The dairy sector also has its apprehensions and believes that import of skimmed milk powder from New Zealand could price out around 100 million farmers and snatch their livelihood away from them, as addressed in The Economic Times. Without protecting the Indian agriculture sector, the deal will cause more harm than benefit. India has also negotiated that the freeze year for the tariff rates be 2019, instead of 2014, as suggested by other signatories. This demand of India has been deemed unreasonable, but the tariff rates were comparatively very low then, and this freezing of tariff rates makes the deal unfavorable for India.

Despite these looming concerns over RCEP, there is no doubt that India would accrue benefits from the deal, if it is passed in a revised form. A free trade agreement would allow a lot more foreign direct investment to flow to and from the Indian market, which will be a very welcome event, owing to the current economic slowdown in the country. It would allow India to improve its economic and strategic position in the Asia-Pacific region and would complement its Act East Policy. India would also get the chance to reduce trade costs by streamlining the rules and regulations through the free trade agreement. The RCEP is set to take over as the world’s largest free trade agreement, in the light of the failure of the Trans Pacific Partnership, and India should not stay out of such a historic trade agreement. It could help India cement its position as a major global economy and be of immense use in the future of the economy.

Since the year-end deadline for the RCEP is approaching, there is immense pressure on the Indian policymakers to make an informed decision. It does not seem to be wise to stay out of this trade agreement, but there need to be serious reforms in the existing terms. Moreover, this external stimulus needs to be balanced with improved and increased domestic production so that Indian goods are able to cope up in the global market that RCEP would create. In the absence of such reforms, the worst fears regarding the impact of the RCEP would come true. India needs to negotiate further and reach a favourable consensus to join the RCEP before it is too late.

Gandhiji, a social reformer, through his economic ideas wanted to build a credible India. Although his ideas were guided more by social and cultural values of decentralization, non-violent economy, self- sufficiency, curtailment of concentration of wealth and focus on agro-based economy, the economic importance of these ideals cannot be denied; especially considering the fact that he wasn’t a member of any formal committee but influenced all decisions taken by the Planning Commission (Koshal & Koshal, 1973). Questions have been raised over the relevance of Gandhi’s economic policy in today’s world of globalization, privatization and liberalization but more than anything ideals propagated by him have become relevant wherein the solutions to economic disparities can be found in the traditional framework based on Gandhiji’s idea of Trusteeship (Singh & Goit, 2009). Gandhian archetypal of economic working was largely ignored by the bureaucrats and now steadily they are incorporating Gandhi’s insistence on inclusive growth which is seen in discrete policies despite facing the criticism of being non-violable for decades. This is a testament that answers to modern economic problems can be found in traditional Gandhian framework which speaks about the viability of his ideas.

Even though time and again, Gandhiji’s ideologies have been criticized on the grounds that his teachings are very much in lieu of Marxian principles of class struggle and ultimate rule of the proletariat, this isn’t true and one cannot deny the fact that he was an ardent supporter of social capitalism. In his Theory of Trusteeship, Gandhiji denies being either a socialist or a communist. He professes that ‘everything belonged to god and was from god. Therefore, it was for His people as a whole, not for a particular individual. When an individual had more than his proportionate portion, he became a trustee of that portion for God’s people’ (Gandhi, 1960).

The underlying principle of Gandhism lies in the fact that man by nature is very good. That the notion of Hobbes in his State of Nature of Man which said that man is solitary, poor, nasty, brutish and short isn’t true. This is also similar to the modern-day notions of the Nobel Laureate Muhammad Yunus who in his book, ‘A World Of Three Zeroes’ states that the modern-day economic system is broken and also totally negates the neoclassical theory of economics which considers man as being indifferent and for ‘selfishness’ to be the highest virtue in what he termed as the ‘Capitalist Man’. He always believed that the ‘Real Man’ who is a part of the integrated society is always motivated to work for others beyond his own petty selfishness (Yunus, 2017). This ideology is the driving force behind Yunus’s concept of Grameen Bank which provides credit at zero percent collateral and interest rate but still has an impressive 96% payback rate. A variety of multinational corporations like Danone have supported the Grameen Bank and this model has also expanded to some of the biggest nations which traditionally championed capitalism like France and USA.This is a blot on all those who criticize the Gandhian way of life as being too altruistic and too utopian.

Thus, not only is the social capitalism model very relevant and implementable but it also self-sustaining. With our country having an exorbitantly high unemployment rate of 6.1% which is the highest in the last 45 years according to the latest Periodic Labor Force Survey (PLFS), a revamping of our entire economic framework needs to be done. But any great social change has always needed the backing of a powerful principle and ideology and this is where we must incorporate the ways of the Father of our Nation. In accordance to his principles of uplifting the rural economy which is the backbone of our country, policymakers should invest more into developing a self-sustaining model of credit creation as well as the promotion of Entrepreneurship, MSME’s and most importantly, traditional handicrafts which are essentially the job creating spheres of any economy.

While expounding Gandhian ideals in the contemporary world it becomes important to truly understand the economic augmentation according to a substructure of prevailing social conditions and time. He provides a chassis which ends exploitation, takes care of man’s need not greed, ends the eternal conflict between labor and capital and moves towards an apparatus which favors the worst-off. In retrospect of the prevailing economic conditions where unemployment statistics are towering, Gandhiji’s proposition of social capitalism should be the cardinal value which ushers the policymakers of today towards a buoyant economy.

In his essay Three Disciples, B R Nanda wrote, "It would have been difficult to think of a more unlikely candidate for the discipleship of Gandhi in 1929 than J.C. Kumarappa”(Nanda , 2002). Looking at the phase of his life before and after meeting Gandhi shows that this proposition is beyond question.

Joseph Chellandurai Kumarappa’s age was 37 when he met Gandhi for the first time in 1927. At that time, Kumarappa was a graduate in Business Administration at Syracuse University in New York, Fellow of the Society of Incorporated Accountants and Auditors, Chartered Accountant with 10 years of legal practice in Bombay. He had no interest in politics and never had a glimpse of Gandhi. In 1928, he presented a thesis Public Finance and India’s Poverty at Columbia University for his Master’s Degree in Economics. With his thesis, Kumarappa “added his own contribution to…lineage with many an illustrious predecessor like DadabhaiNaoroji and R. C. Dutt”(Govindu & Malghan, 2016) whose works Poverty and Un-British Rule in India and The Economic History of India Under Early British Rule respectively explored the economic exploitation in India under British Rule.

Kumarappa wanted to publish his work Public Finance and India’s Poverty in India and when he was in search of a publisher, on the advice of his friend, he sent the manuscript to Gandhi. Kumarappa got an appointment to meet Gandhi on 30th May 1929. His first meeting with Gandhi is better described in his own words:

On the way up, I saw an old man seated under a tree on a neatly cleaned cow-dunged floor, spinning. Having never seen a spinning wheel before, I leaned on my walking stick and standing akimbo was watching, as there were still ten minutes for the appointment. This old man after about five minutes opened his toothless lips, and with a smile on his face enquired if I was Kumarappa. It suddenly dawned on me that my questioner might be no other than Mahatma Gandhi. So I, in my turn, asked him if he was Gandhiji; and when he nodded I promptly sat down on the cow-dunged floor regardless of the well-kept crease of my silk trousers! Seeing me sitting without stretched legs, more or less in a reclining position, someone from the house came rushing down with a chair for me, and Gandhiji asked me to get up and sit in the chair more comfortably. I replied that since he was seated on the floor I did not propose to take the chair(Kumarappa J. C., 1949).

One of Gandhi’s greatest achievements was his ability to identify the potential in people and nurturing the potential in them for a fruitful cause and to make them leaders. In the meeting, Gandhi understood the potential of Kumarappa and asked him if he can do a Gujarat Rural Economy survey with assistance from Gujarat Vidyapith, National University in Ahmedabad. Refusing Gandhi’s request is beyond question. Gandhi gave one advice on methodology “that the ‘Indian Economy had to be built by a method of securing rock bottom facts and drawing from them, by the most rigid process of reasoning, scientific conclusions which no amount of juggling could controvert’”(Nanda , 2002, p. 185).

Kumarappa went on to do the survey and the results of the survey revealed the deprivation that is prevalent in the Indian Villages. This survey brought out an ‘On ground Economist’ in Kumarappa.

Later when Gandhi commenced the salt march, he sent Kumarappa to help Mahadev Desai and write articles in his journal Young India. This brought out Journalist in Kumarappa. His sedition writings in the journal made Britishers put him behind the bars.Kumarappa used his time in Jail to study and understand Gandhian ideas. In his jail days in 1944, Kumarappa wrote the Economy of Permanence, which is an exploration into Gandhian Economic thought. Gandhi presented a “vision of a utopia in which economic behavior had a far secondary role to the philosophical and political purposes of his idea”(Rosen, Jan 1982) and this idea is reflected in Kumarappa’s work.

Exploring various types of Economics in Nature, he advocated two forms of Economies for mankind: The Economy of Gregation and Economy of Service. The economy of Gregation is “an extension from self-interest to group-interest and from acting on the immediate urge of present needs to planning for future requirements”(Kumarappa J. , 1945) like Honeybees that work for benefit of many.

The Economy of Service is when a living being works "neither for its present need nor for its personal future requirement, but projects its activities into the next generation, or generations to come, without looking for any reward”(Kumarappa J. , 1945). These two forms reflect a modern-day notion of Sustainable Development, which is the need of the hour. Gandhian Economic thought is very close to the environment. Gandhi advocated in protection and maintaining the permanence of Nature.

In 1928, Gandhi warned:

God forbid that India should ever take to industrialism after the manner of the West. The economic imperialism of a single tiny island kingdom (England) is today keeping the world in chains. If an entire nation of 300 millions took to similar economic exploitation, it would strip the world bare like locusts. Unless the capitalists of India help to avert that tragedy by becoming trustees of the welfare of the masses and by devoting their talents not to amassing wealth for themselves but to the service of the masses in an altruistic spirit, they will end either by destroying the masses or being destroyed by them(Gandhi M. , 1928).

The above warning clearly shows Gandhi’s vision to link Environment and Economics and not going in ‘the manner of the West’.

Kumarappa set to implement Gandhi's thoughts when he was appointed as secretary of All India Village Industries Association (AIVIA) in 1934 by Gandhi. AIVIA aimed “at rebuilding the village economy on sustainable lines, by promoting water conservation, community forest management and chemical agriculture”(Guha, 2018). Even after Independence, Kumarappa remained a strong voice against Nehruvian Economic ideas, which completely renounced Gandhian ideals of Self Sufficient and Self-Reliant Village Economy Model.

Conclusion

Based on the correspondence between Gandhi and Kumarappa, we can see an Economist, Environmentalist and an Ideal teacher in Gandhi. In 1948, burying "an urn containing the Mahatma's ashes in a pit in Sevagram Ashram….he murmured: ‘Instead of burying Gandhi deep in our hearts, we are burying him deep into the earth’”(Nanda , 2002, p. 190). Kumarappa died on 30th January 1960, a sad man with anguish and pain in him as Gandhi was when he died (the same day Gandhi was shot in 1948).

According to a report by the International Monetary Fund, China has overtaken the United States as the world’s largest economy in terms of Purchasing Power Parity (PPP). The World Bank estimates that China is a 23.2 trillion dollar economy and has an ample amount of foreign exchange reserves which amounts to around 3 trillion dollars. Fortune 500, an annual list compiled and published by Fortune magazine, includes 30 Chinese companies. For at least a decade now, it can be seen that China is becoming friendly with the smaller and developing countries around the world and providing them with billions of dollars as loan for the construction of projects, most of which are commercially non-viable in nature. As a result of its non-viability, these countries cannot generate revenue in order to pay back to the Chinese companies and hence are forced to lease parts of their territories to the Chinese government for 99 years which later becomes the strategic base for the Chinese government to target its opponents like United States, India, Japan, Australia etc. This ‘practice’ or ‘pattern’ has the potential to repeat itself and in a report published by Harvard University’s Belfer Centre for Science and International Affairs, 16 developing countries from the Horn of Africa to the far flung Pacific Islands have been identified, which may become vulnerable to the Chinese intentions, which is often termed by geo-political experts as China’s Debt Trap Diplomacy or the Debt book Diplomacy. Now the obvious questions that can be raised are: Why is China providing loans to these smaller countries and why are these countries taking loans from China and not from the International Monetary Fund and the World Bank? Also, what are the intentions of China and what are the problems associated with it?

The answer to the first question is quite complex. China has taken loans from its Central Bank that amounts to three times more than its GDP. This is known as “Debt to GDP Ratio”. This Debt to GDP Ratio reached 257% in 2017 and the IMF anticipates that by 2020, China’s domestic credit to GDP Ratio will increase by 300%. In May, for the first time since 1998, Moody’s Investors Service downgraded China’s sovereign credit ranking. The money that China had taken as loan has been used for infrastructural development like building cities, towns etc. China has built cities under its program of ‘Go Cities’, even when it is not needed. As a result, in the present time, there are many cities in China which comprise residential complexes but nobody really lives there as those cities are costly to live in and most people lack money. Eventually, these cities have turned into ‘ghost cities’ which has become a matter of concern for the Chinese government, based on a report by Forbes. So, since they could not make profits in their own country, they started looking for prey outside China.

When the IMF and World Bank give loans, they take into consideration certain factors like the country’s condition, government stability, foreign exchange reserves and the country’s standing in the world community and also the loans from these institutions aim at short term viability but China on the other hand, does not consider these conditions for giving loan. The Chinese loans are opaque in nature, collateralized by strategically important natural assets with high long term value, even if they lack short term commercial viability.

One of the primary intentions of China is to reduce the importance of the World Bank and IMF which it essentially considers to be US dominated institutions and wants to promote the Chinese centric banks in the world. China is also trying to dominate the various banks so as to reduce the powers of the other players in the geopolitical arena. In the Asian Infrastructure Investment Bank, headquartered in Beijing, China has veto power in decision making. China has recently agreed to fund the African Development Bank with 2 billion dollars as a part of the African Growing Together Fund. The biggest shareholder of the European Bank for Reconstruction and Development is United States. This institution recently approved China’s application to join it and now China wants to replace United States as the biggest shareholder such that the bank completely becomes dependent on China. Similarly, with the aim of lessening shares of United States further in the Inter-American Development Bank (at present 30% share belongs to United States), China joined the bank as its 48th member contributing around 350 million dollars to fund development projects in the area. Another major intention is to get access to the untapped energy resources of the African, European and other Asian countries.

When new infrastructure projects are being undertaken with the help of Chinese loans, it mainly benefits China in all aspects due to the strict rules and regulations chalked out by the Chinese government to be followed by the ‘intended’ or ‘served’ state. The tender of carrying out any development project has to be given only to the Chinese companies and the Chinese labourers, based on a report by the New York Times. As a result, jobs are created only for the Chinese, soft loans are provided to the Chinese companies and on the other hand, the served country fails to pay back the loans and falls prey to the Chinese intentions. This is how China successfully acquires assets. The concept of ‘lease for 99 years’ has been devised by the Chinese, which acts as a befitting reply for its humiliation earlier by the Western powers which took away Chinese territories on lease for 99 years. In reality these acquisitions were believed to be permanent. China thus wants to hit back at the imperialism of the Western powers.

The ambitious One Belt One Road project of China is at the heart of this Debt Trap Diplomacy. More than the virtues of this project, experts all around the world are concerned about its vices. For now, it may not be a problem but in the near future, the threat of an economic crisis looms large. According to the Rhodium Group’s research, if the One Belt One Road project in most countries turns out to be non-profitable in nature, then the debt might turn into ‘Debt to Equity’ leading to further under development and thus, China might get an ‘economic shock’. This project has already started creating problems or is at least showing signs of economic crisis in many countries like Sri Lanka, Pakistan, Myanmar, Djibouti, Laos, Cambodia and many more.

The Hambantota port in Sri Lanka serves as the best example of the economic collapse. The Hambantota port until a decade ago was a small fishing town in southern Sri Lanka which has now become a geo-political flashpoint. In 2007, a Chinese state owned company came in to build a major port in this area financed by Chinese loans. However, this port flopped commercially and despite Sri Lankan President Maithripala Sirisena’s promises to reduce dependence on China, he had to hand over the strategically important territory to the Chinese for 99 years due to its mounting debt. This was a big blow to the United States, Japan and India. However, the Sri Lankan government has announced that it would not allow China to use the port for military purposes which might be at least a temporary setback for China. The conditions of other countries are as critical as Sri Lanka. Pakistan is facing a full blown debt crisis partly due to its corrupt leaders and partly because the loan provided by China for the China Pakistan Economic Corridor has ballooned to 62 billion dollars. Now Pakistan’s new government is considering asking the IMF for a ‘bail out’. Kenya’s crashing debt to China now threatens to turn its busy port of Mombasa (the gateway to East Africa) to another Hambantota. Chinese loans bumped Djibouti’s Debt to GDP Ratio from 50% to 85% between 2014 and 2016. Laos and Cambodia are so indebted to China that former Australian Foreign Minister Gareth Evans characterized them as “wholly owned subsidiaries of China”.

Taking lessons from the conditions of these countries, many other countries are trying hard to cut down the influence of China in their development projects. The Malaysian Prime Minister Mahathir Mohammad announced that his country was cancelling two multibillion dollar Chinese projects as Malaysia cannot repay the loans, according to a report by the reuters. Similarly, Myanmar is trying to renegotiate a $10 billion port project and Nepal wants to halt construction on two Chinese-built hydroelectric dams.

China’s policy may become successful and it might become a big economic power by the next century, but economic analysts also talk about greater chances of an economic crisis, stock market crash and conditions of severe unemployment due to the fact that China is ‘buying the whole world on the verge of a collapse’. The way China is acquiring assets is itself problematic and it is turning many countries against China. The Quad group has been formed mainly for the purpose of countering China as the members are feeling insecure about Chinese measures. From the Indian perspective, many argue that the opening of the coffers of Chinese foreign exchange reserves may be a blessing in disguise for India as India can find its much needed investments from China for the ‘Make In India’ and ‘Start Up India’ projects

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There are critics and defenders of the Chinese Belt and Road Initiative, however though both sides raise valid points, yet they miss out on the very significant political and economic realities in these countries. These smaller countries are hardly just vulnerable victims but in many cases they leverage their geo-political importance or natural resources to gain tremendous bargaining power. Like, the Philippines has warmed to Beijing under Rodrigo Duterte’s violent and dictatorial presidency, despite territorial disputes in the South China Sea as China has agreed to plan an energy cooperation pact with Duterte’s government and also sanctioned infrastructural loans. He is even willing to overlook maritime problems with China in exchange for China’s economic support and Duterte had very openly said that his government needs China. Thus, they are not always helpless victims of exploitation as these countries have learned to use China to serve their domestic political agendas and mitigate pressure from the western counterparts. China is not simply acting out of altruistic benevolence but has mainly enabled the illiberal regimes. Amid Western condemnation of the Rohingya crisis, Myanmar’s Aung San Suu Kyi has drawn China’s diplomatic and economic support and has visited China more than any other country as China represents both a political ally and a development partner. The same situation can be observed in case of Djibouti and Venezuela too. Pakistan had also sought China’s help to defend its territory against India and be more vocal regarding its claim of Pakistan Occupied Kashmir. So to oversimplify China’s commercial diplomacy in the name of ‘Debt trap’ might not be the right justification to the prevailing conditions, as it tends to overlook the motivation and the role of the different actors and ignores the agency of smaller countries involved in China’s commercial diplomacy. Hence, partner countries of China like Venezuela may find themselves overburdened by debt; but they are ‘hardly unwitting participants in some contemporary edition of the Great Game.’

The Department of International Studies and History, CHRIST (Deemed to be University), organized a guest lecture on ‘European Integration and International Economics’, on 27th August, 2019. The lecture was delivered by Prof. Jan Lanser, a senior professor of International economics, at the Arnhem Business School, Han University. Students as well as staff from the Department of International Studies, were present for the event.

The speaker commenced his lecture by acquainting the audience with certain key aspects of his very own country, Netherlands. He alluded to certain key elements that are peculiar to Netherlands. In the process of doing this, he talked about the Dutch language, culture, economy; and their position in the world - economically and geographically.

Mr. Jan Lanser then advanced into the principle subject matter of the lecture by providing a brief overview of the European Union.

At the very onset of the lecture, Mr. Lanser clarified that when he talks about European integration, he is, in essence, only referring to the European Union. However, he further emphasized that, the EU is only a part of Europe and not the whole of Europe. And hence, he reminded the audience to consider this, throughout his talk.

He further ventured into the topic by introducing the various economic and political organizations that play a pivotal role in developing and maintaining relations between the states of the European continent. The underlying aim of each of the organizations that were mentioned during the talk was: European integration. However, Prof. Lanser, points out, that due to the multiplicity of organisations, and their very often overlapping roles, it was confusing even for a European to figure out a relatively optimal method of advancing towards an increased European integration.

There have been several rounds of discussion on whether the EU should be a federal state or an intragovernmental body or adopt a supranational identity. The existence of numerous international organizations in the region only further deepens this dilemma that Europe faces.

The speaker then progressed into providing the gathering with statistical data about the European Union. He used this data to also indicate the disparity in the GDP per inhabitant, across the European countries. This disparity deteriorates the relations between the European states, as certain countries in the bargain of aiding economically less advantaged states, often receive less than what they contribute.

Having mentioned the discord that such a disparity brings forth, the speaker then highlighted the reasons for BREXIT to have occurred. He points out to 3 core reasons: Net Contribution, Immigration and Sentiments, that drove the UK into BREXIT. He also enumerated the ways in which UK can leave the European Union and further reflects on the impact of each of them. He finally discussed the BACKSTOP as it poses a significant threat to UK’s position of wanting to exit from the Union.

The speaker very meticulously introduced the audience to several economic concepts that are complex to understand, when studied or read about individually. He constantly drew parallels as well as differences between Netherlands and India or Europe and India. This facilitated the entire process of comprehending the dilemma that Europe faces when it comes to integration. The session was an interactive one, where Prof. Jan Lanser, constantly kept the audience engaged with his witty remarks and personal anecdotes. There was more than sufficient scope for discussion and debate throughout his lecture.

Poverty is the parent of revolution and crime,” said Aristotle in his famous book. Today, a global crisis is taking place where nations are going into debt. Not just particular classes of people but entire nations are going into debts. These nations are in no position to provide for the entire population that’s dependent on them. The demarcation between rich and poor from being restricted to people is breaking free from borders to an extent that nations themselves can be categorized under the two. There are rich nations that are getting richer and poor nations stuck so deep in the debt crisis that recovery seems like a distant dream to them. There did exist third world and underdeveloped countries even before but the difference today is that even developed countries like China which has a significantly stable economy are failing to withstand the crisis. The essay, therefore, aims to examine why the debt crisis is happening globally without even sparing the developed economies and propose a suitable solution for it.

The term debt crisis refers to the inability of a country to repay its debts. It is not as simple as the definition sounds because a sovereign debt crisis is influenced by a number of economic factors which lead the country into such a crisis. In other words, the crisis does not take place overnight, it is the outcome of certain policies and actions of a country that leads to it. The IMF analyzed the world markets of emerging economies to bring about vulnerability indicators of markets that are largely dependent on external financing. The volatility of prices, sensitivity to interest rates, maturity profiles, reimbursement capability are some of the vulnerability indicators that help economists to foresee the emergence of a crisis.

During the 1980s when the Latin America was going through severe debt crisis which was the first major debt crisis of that time had the names of forty countries including Mexico who declared themselves to be unable to pay the debts. This crisis bore a resemblance to the 1930s debt crisis in how both the times the debtors were not given immediate resolutions to recover their economies but the resolutions helped the creditors move forward. In the 1980s debt crisis, the debtors had to pay 3% of their GDP to the creditors which created hollow markets in the countries due to the losses they incurred. Various researchers through econometric analysis have concluded that the re-schedulers experienced a significant slowdown in their growth after the debt crisis. The imposed policies in addition to slowing down the growth also put the countries in the list of low-income countries which seemed to be getting longer. Low-income countries would be the low cost of labor which is taken advantage of by the other countries. This puts basically puts the economy on a hold where the low-income countries are at the bottom position and rest on the top. The direct investments of MNCs widened the gap between haves and have-nots in the third world countries than reduce it. This is a dangerous circle as due to the low-income, the country does not develop but at the same time, its resources are getting exhausted at a price much lower than its actual value. These are the countries that are predicted to not have a favorable growth in the future and thus are imposed with sanctions and conditions.

In the 21st century, the countries that have faced the debt crisis included two of the most developed countries in the world, USA and China. The other countries include Greece, Venezuela, Peurto Rico. The consistent presence of Latin American countries on the debtor's list is a growing cause for concern as it shows that the countries never really recovered from the aftermath. The crises in the 21st century are a contrast for the very reason that the first world countries were involved in the debt crisis more than the third world countries. It started with the European sovereign debt crisis which started with the failure of Iceland’s banking system that had a domino effect on the economies of Greece and Portugal. Greece was a perfect example of how the IMF’s loans would slow down the growth of an economy when defaulted. Greece not being able to pay back its loans fell prey to severe austerity measures by the IMF one of which included the maximum opening up of its market to foreign capital. This is bound to slow down the growth and Greece is predicted to take more time than rescheduled to pay off its debts. The recalling for the loans by the EU members was called as a measure to ensure that the Euro does not go down. The primary reason that can be attributed to the emergence European Sovereign Crisis would be the creation of monetary union itself when there was no union in banking and buffer mechanism systems that could prevent the domino effect from taking place in case a crisis starts in one nation. The only way out would be to slow the growth of the defaulter for the benefit of the other members. On the other hand, USA’s crisis arose due to the country’s shadow banking system which does not provide adequate risk analysis. China’s market suffered disappearance of $3 trillion over a period of one month this was followed by a sudden surge in the market exchange market. Such huge margin profits are bound to be succeeded by imbalances and instabilities in the economic order. These instabilities are mainly caused by economic booms which give the governments a false sense of security and when the crash happens, they run into deficit.

As seen from the above examples, the reasons leading up to the crises differ from one another although holding some basic similarities, these basic similarities prove that lessons from the economic debt crisis have not been paid much attention to. As the world is shifting towards Globalization and is halfway through the process, it becomes even more difficult to manage crises due to the growing interdependence of markets.

One way to control such overturn of events would be for IMF to place a borrowing limit with not more than one bailout that would help the economy to restructure itself. Imposing sanctions and trade-offs can lead to slowing down of the growth and thus minimum conditions must be placed before a country can reestablish itself. Initial reimbursement must be provided in order to stabilize the public sector which will, in turn, prevent the economy from free falling into the list of the low-income economy as soon as it is termed, debtor. The interdependence of economies seen in the 21st century leading to domino effects can be prevented when proper procedural actions are taken with the utmost consideration and consultation. In conclusion, an economic catastrophe can be predicted much in advance if paid attention to the market changes and growth, such an analysis report submitted by countries to International Organizations on a periodic basis will and might help see the risks better in the future.