3 August 2024 : The Hindu Editorial Analysis
1. The five guidelines to a Dragon-Elephant tango
(Source – The Hindu, International Edition – Page No. – 6)
| Topic: GS2 – International Relations – Bilateral Relations |
| Context |
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Introduction
- The relationship between China and India is pivotal for regional and global dynamics, highlighting shared goals and historical ties.
- As two of the largest developing nations, they focus on enhancing cooperation through principles like mutual respect, understanding, and trust.
- The “Five Mutuals” framework aims to overcome historical differences, promote peaceful coexistence, and pursue joint development opportunities, contributing to a harmonious and prosperous future for both countries and the world.
Five Guidelines of ‘Mutuals’
- China and India are close neighbours, having shared historical ties and common goals of rejuvenation.
- Bilateral relations between China and India are among the most significant globally.
- Leaders from both countries have emphasised that China and India should be partners in cooperation and development rather than rivals.
- Five guidelines, known as the “Five Mutuals,” have been proposed: mutual respect, mutual understanding, mutual trust, mutual accommodation, and mutual accomplishment.
- These guidelines are crucial for fostering stable and positive relations between the two countries.
Mutual Respect
- Mutual respect is fundamental for developing China-India relations.
- Both countries have unique cultures, traditions, and development paths, which should be respected and embraced.
- It is important to view each other with an open mind, respecting each other’s development path and global role.
- Joint efforts should be made to promote development and prosperity at national, regional, and global levels.
Mutual Understanding
- Mutual understanding forms the basis of China-India relations.
- Both nations have supported each other in their struggles for national independence and rejuvenation.
- China recognizes India’s aspirations for national development and supports its foreign policy of strategic autonomy.
- Despite being two of the largest developing countries, mutual exchanges and understanding remain insufficient.
- Dialogue and communication should be encouraged at all levels to promote mutual understanding and political trust.
Mutual Trust
- Mutual trust is crucial for the development of China-India relations.
- In a volatile and uncertain international environment, China and India should avoid suspicion and work together for mutual benefit.
- Viewing each other as partners and opportunities rather than threats is essential for peaceful coexistence.
- Political trust can strengthen friendly exchanges, while a lack of it can hinder cooperation.
Mutual Accommodation
- Mutual accommodation is necessary for the development of China-India relations.
- As neighbouring countries, differences and frictions are natural, but they should be managed with wisdom and dialogue.
- Both countries should accommodate each other’s core interests and major concerns while maintaining a holistic view of the relationship.
- Cooperation should not be disrupted by singular incidents or differences.
Mutual Accomplishment
- Mutual accomplishment is the goal of China-India relations.
- Both countries, as emerging economies, have broad common interests and opportunities for cooperation.
- Recent reforms and developments in both nations present new opportunities for mutual benefit.
- The shared vision of development and revitalization can lead to enhanced cooperation, particularly in the Global South.
- By working together, China and India can promote unity and cooperation, contributing to a shared future for humanity.
Five Principles of Peaceful Coexistence
- The “Five Mutuals” align with the Five Principles of Peaceful Coexistence and reflect mutual respect, sensitivity, and interests.
- These guidelines are intended to implement the consensus reached by leaders from both countries.
- Despite occasional challenges in China-India relations, both sides can focus on the long-term perspective to navigate bilateral relations positively.
- Historical and cultural ties, such as the ambassador’s visit to Nalanda University, highlight the potential for strong future relations.
- With strategic guidance from their leaders, China and India can work together to foster a harmonious coexistence and development path.
Conclusion
- Both the countries are confident that under strategic leadership, China and India can manage bilateral relations effectively.
- Both nations possess the wisdom and capability to forge a path of harmonious coexistence and shared development.
- Collaborative efforts, described as a “Dragon-Elephant Tango,” are viewed as the best approach for the two countries.
| PYQ: ‘China is using its economic relations and positive trade surplus as tools to develop potential military power status in Asia’, In the light of this statement, discuss its impact on India as her neighbour. (150 words/10m) (UPSC CSE (M) GS-2 2017) |
| Practice Question: Discuss the significance of the “Five Mutuals” in enhancing China-India relations, and analyse their potential impact on regional stability and economic cooperation in the context of current geopolitical challenges. (250 Words /15 marks) |
2. An unstated shift in Modi’s economic direction
(Source – The Hindu, International Edition – Page No. – 6)
| Topic: GS2 – Governance – Government policies |
| Context |
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Introduction: A Shift in Economic Policy
- The Indian government has announced a new Employment Linked Incentive (ELI) scheme aimed at encouraging companies to hire more employees by providing financial incentives for each new hire.
- This initiative marks a significant departure from previous economic policies, reflecting a shift from a reliance on GDP growth to a focus on job creation and addressing the capital-labour imbalance.
Previous Initiatives and Their Shortcomings
- Over the past decade, the government’s economic strategy largely followed the Washington Consensus model, which emphasised growth through efficient production, assuming that job creation would naturally follow.
- Programs like ‘Make in India,’ launched in 2014, aimed to boost manufacturing to create jobs but did not yield the expected results in terms of employment.
- Similarly, in 2019, corporate tax cuts were implemented with the hope of increasing investment and job creation, but many companies used the savings to invest in technology rather than hiring.
- The Production Linked Incentive (PLI) scheme introduced in 2020 offered significant financial incentives to companies meeting production targets but also failed to translate into substantial job growth.
Employment Linked Incentive (ELI): A New Direction in Economic Policy
- The ELI scheme is an acknowledgment of the shortcomings of previous strategies, offering direct incentives to corporations to increase employment rather than relying on indirect methods.
- By lowering marginal labour costs, ELI is expected to encourage companies to hire more people, paralleling the logic of production incentives in the PLI scheme.
- Unlike the Production Linked Incentive (PLI), which focuses on increasing production, Employment Linked Incentive (ELI) aims to ensure that the economic benefits reach the workforce, thereby addressing the broader goal of economic development and improved living standards.
Addressing the Disconnect Between GDP Growth and Employment
- ELI represents a shift in the government’s economic philosophy, recognizing that GDP growth alone has not led to increased employment or improved living conditions for the average citizen.
- This realisation prompts a move towards direct policy interventions to create jobs, transitioning from a focus on economic output to prioritising employment.
- The ELI scheme marks the beginning of this new approach, aiming to create a more inclusive economic environment where growth benefits are more evenly distributed.
Potential Impact and Criticisms
- While the ELI may not single-handedly transform the job market, it has the potential to influence business decisions at the margin, encouraging companies to favour labour over automation.
- If widely adopted across various industries, the ELI scheme could contribute significantly to job creation by promoting labour-intensive practices over capital-intensive ones.
- Critics, particularly from neoliberal economic circles, argue that ELI might reduce productivity and competitiveness by discouraging automation and technological advancement.
- However, the existing model that prioritises capital over labour and GDP over employment is increasingly seen as unsustainable in a democratic context.
The Broader Context of Job Deficit and Policy Innovation
- The scarcity of jobs in the economy has led to politically driven proposals, such as job reservations for locals, reflecting the urgent need for effective job creation strategies.
- Simply criticising such proposals without offering viable alternatives is counterproductive, highlighting the need for innovative ideas to address the employment deficit.
- While traditional economic reforms are often cited as solutions, the ELI scheme offers a novel approach, aiming to rectify the capital-labour imbalance and stimulate job growth in a tangible way.
Conclusion: A Step Towards Inclusive Economic Growth
- Whether or not ELI proves to be a panacea for joblessness, it represents a significant policy innovation that moves away from trickle-down economics towards more direct, bottom-up interventions.
- The scheme reflects a willingness to adopt ideas from across the political spectrum for the greater national interest, as evidenced by its inclusion in the national budget.
- Ultimately, the ELI scheme signifies a readiness to explore new avenues for economic development, prioritising job creation and equitable growth as key objectives for India’s future.
| PYQ: Besides the welfare schemes, India needs deft management of inflation and unemployment to serve the poor and the underprivileged sections of the society. Discuss. (250 Words /15 marks)(UPSC CSE (M) GS-2 2022) |
| Practice Question: Discuss the rationale behind India’s Employment Linked Incentive (ELI) scheme and evaluate its potential impact on job creation and economic growth. What challenges might the ELI scheme face in implementation? (250 Words /15 marks) |
