Editorial Notes

Editorial Notes 29th November 2016

UN resolution of 1947; Partition of Palestine; Establishment of Israel and the Inauguration of a never-ending conflict in West Asia; Can India Grow? Challenges, Opportunities and the Way Forward.
By IT's Editorial Notes Team
November 29, 2016


GS (M) Paper-3: “Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.”


Can India Grow? Challenges, Opportunities and the Way Forward

Of course, India can grow. Developing countries have tremendous potential and hence, the definition of an economic recession that applies to developed countries does not apply to developing countries. A period of sustained below-potential growth is a recession for developing countries.



  • Corporate India is still in the middle of a balance sheet crisis, especially acute in the infrastructure-related sectors.
  • Its impact on the banking sector has been paralysing, with non-performing assets (NPAs) rising to alarming proportions.
  • Even if the problem of NPAs has peaked, banks will take a long time to restore credit flow to the economy.
  • The share of private sector capital formation in the gross domestic product (GDP) has been on a continuous decline.
  • The concerns are not merely cyclical but structural.
  • India faces a big challenge to elevate the share of manufacturing and industry in its economy.
  • The forces of premature de-industrialization, limitations of a services-led growth model, plateauing of global trade, secular stagnation in developed economies, and the costs of climate change are formidable long-term headwinds.
  • The country’s savings rate is inadequate to facilitate infrastructure investment on a scale that a country of India’s size and population needs.
  • And there is deep human resource and state capacity weaknesses.

In short, India faces acute capital deficiencies on multiple fronts as well as much under-appreciated adverse global structural headwinds which pose serious constraints to the achievement of sustainable high growth rates. High growth can be achieved only as episodes of over-heating followed by years of pain and lower growth from cleaning up the excesses.


To start with, there has to be acceptance that achieving growth rates in excess of 8% on a sustained basis is difficult, given the aforementioned challenges. Acceptance of that reality will induce a realistic assessment of the country’s structural impediments and growth potential and help design policies that ensure stable and sustainable growth and development.

Further, the slowdown in China presents India with a great opportunity to stand up as the foreign direct investment destination of choice. That said, India should stop obsessing about China’s economic growth and achievements.

  • In the circumstances, the most prudent strategy may be to target a long period of moderate growth by focusing on steady economy-wide physical, human, and institutional capital accumulation and opportunistically riding on emergent global tailwinds.
  • As regards the latter, India should stand to benefit from the low commodity prices, especially oil price, which looks likely to remain low for quite some time.
  • Apart from improved terms of trade and lower current account deficits, it would also contribute to low inflation and macroeconomic stability.
  • The former includes reforms in school and higher education; urban governance; housing, land, credit, and labour markets; infrastructure contracting; delivery of social welfare services; and improving state capability and personnel management.
  • On its part, the government should hunker down, resist growth through bubbles and fads, and whole-heartedly embrace the principle of under-promise and over-delivery.
  • It should seek to break down silos within its own public systems.
  • The politically expedient and cosmetic should not displace the strategically important and substantive.

Way ahead & Conclusion:

  • For a country of India’s size, diversity, and political complexity, any fundamental reform has to emerge as a bottom-up effort, similar to the millions of marginal revolutions that characterized China’s growth over the past three decades.
  • These revolutions have to be facilitated by cooperative and competitive engagement of the Central government with the states and among the states. This has to be the cornerstone of India’s growth strategy in the coming decade.
  • If the country worked on doing the right things, economic growth shall be the logical consequence. As Scott Adams, creator of Dilbert Cartoons, put it, successful people do not pursue goals. Success accrues to those who make goals part of their system. It eludes the rest.
[Ref: Live Mint]


GS (M) Paper-2: “Effect of policies and politics of developed and developing countries on India’s interests


Forgetting old friends



  • November 29 marks the 69th anniversary of the UN resolution in 1947 that led to the partition of Palestine – Establishment of Israel and the inauguration of a never-ending conflict in West Asia.
  • India voted against the November 29 resolution partitioning Palestine and creating the new state of Israel on Palestinian soil.
  • India was the only non-Arab, non-Muslim country to do so. A grateful Palestine has stood rock-solid with us as we have with them.
  • Rationale as put forward by Nehru – He argued that India did not believe partition to be any solution and urged that Palestine be “jointly inhabited by Jews and Arabs, each community having its respective autonomous region within a common state, running the federation on a democratic basis.” This, he foretold, would facilitate a gradual dissolution of the communal divide between the Jewish and Arab inhabitants of Palestine, leading eventually to a common destiny for both.


India’s diplomatic ties with Israel:
  • Although V. Narasimha Rao (with Yasser Arafat’s consent) departed from the Indian stand of not according full diplomatic relations to Israel, India continued to be at the forefront of support to the Palestinian cause, even after establishing full ambassadorial-level relations with Tel Aviv.
  • Vajpayee as PM rejected the Israeli request that India declare Hamas and Hizbollah “terrorist” organisations.
Changing equations:
  • On two crucial resolutions, one in the UN Human Rights Commission dealing with Israeli violations of international humanitarian law in the Occupied Territories, particularly East Jerusalem and Gaza, and another in the UN General Assembly six weeks ago, India has abstained on resolutions exposing the barbarities of the Israeli establishment.
  • The UNHCR resolution specifically referred to Israel’s “extensive use of weapons with a wide kill and injury radius”. The world was so horrified by this barbarous assault on an entire people that many Western countries, hitherto unquestioning in their solidarity with Israel, began asking questions. India precisely abstained from voting in this juncture.
  • Israel relentlessly pursued the majoritarian path, privileging the Jewish majority, whatever the discrimination against the Arab minority within its boundaries and the continuing exclusion it is inflicting on Palestinians driven out of their millennial homeland.
  • The difference is that what Modi dreams of, the Israelis actually do. The example Israel sets inspires the sangh parivar. As the Israelis have translated Zionism’s philosophy into a Jewish state, in India, Modi and his ilk hope to translate Hindutva’s philosophy into a Hindu state.
Accusations against Modi:
  • Modi is fascinated with Israel. He loves its militaristic character. He identifies with its communal, anti-Muslim nature.
  • He brushes aside the atrocities the Israeli state has inflicted on hapless Palestinians for the best part of the last seven decades.
  • He enthusiastically approves of the idea of a “Jewish” homeland even as he espouses a “Hindu” homeland in India.
  • He has just demonstrated through the amendments moved by his government to the Citizenship Act, 1955, his cherished ideal of India as the “natural home” of Hindus (which, of course, implies that India is the “unnatural home” of Muslims and other minorities).
  • He had even compared India’s Surgical Strike with that of Israel’s strikes in Palestine.

Such extolling of brutal Israeli action has now been further endorsed by India abandoning its traditional positive vote for Palestine and taking to abject abstention. The cleavage between Nehru and Modi is clear. There is no space left now for morality in the formulation of foreign policy.

[Ref: Indian Express]