A Framework to Understand Strategic and Critical Vulnerabilities
Dear Reader,
Welcome to Takshashila Dispatch. In this edition, we cover our work on a new framework to categorise and analyse economic dependencies and vulnerabilities, the state of finances of smaller states in the country, detailed examination of ex-gratia payments made by governments as compensation for accidents, prospects of India-France cooperation in the Indo-Pacific region, the potential of National Research Foundation proposal, and deciphering the closed Chinese information ecosystem.
A Framework to Understand Strategic and Critical Vulnerabilities
It has become commonplace to talk about countries' economic dependence leading to strategic or critical vulnerabilities. However, all dependencies are not vulnerabilities, and not all vulnerabilities are critical.
There is a need for a conceptual framework to evaluate the extent of these vulnerabilities and what policy choices they dictate. In the latest Takshashila Discussion Document, Amit Kumar proposes a new framework based on a series of tests to understand what types of economic interdependencies can be classified as vulnerabilities:
As the world becomes more economically integrated, a complex web of asymmetric interdependences has emerged, allowing some states to wield disproportionate economic power. Consequently, recourse to economic coercion as a tool for compellence, deterrence or co-optation has become much more frequent in current times. Debates around dependence-induced strategic and critical vulnerabilities have thus gained traction with an end objective to reduce or mitigate them. But a lack of conceptual framework underpinning the ideas of dependence, vulnerabilities, and strategic and critical vulnerabilities plagues the present decision-making apparatus which runs the risk of treating subjects under each of these categories as synonymous. To prevent a one-size-fits-all approach emanating from the lack of conceptual differentiation, this paper presents a framework through a series of tests to understand whether trade in a certain commodity between countries can be classified as a critical vulnerability.
How Dependent are Smaller States on the Union Government?
Given their small size and poor revenue mobilisation capacities, small states of India are heavily dependent on the Union Government’s transfers. In an Explained feature for The Hindu, Sarthak Pradhan argues that this creates fiscal stress upon governments at both levels:
The limited capacity of small States to generate their own revenues results in a heavy dependence on the Union government, exposing the States to various vulnerabilities. First, the States rely on the Union governments’ political goodwill. A sudden decline in Union transfers can adversely affect the States’ expenditures. In the last few years, there have been increasing disagreements concerning resource sharing (for example, GST compensation) between the Union and the States. Second, high dependence on the Union might imply less fiscal freedom for the States. A significant portion of the funds transferred by the Union is tied to specific purposes, limiting the States’ flexibility. In some instances, given their existing revenue situation, the States might be unable to match the transfers. Third, the lack of their own revenues can lead to weakened State capacity, affecting the delivery of social, economic, and general services. This situation becomes even more critical as many small States share international borders. The developmental concerns in these States can have implications for national security.
What’s the Basis for Ex-Gratia Payments?
Most of us would be familiar with announcements of ex-gratia payments by the government in the event of accidental deaths and injuries. In an article for The Wire, Mihir Mahajan, Adjunct Fellow, Takshashila Institution, and Megha Kajale, student, Gokhale Institute of Politics and Economics, analyse the amounts paid under ex-gratia in recent times, argue that neither the amounts are adequate nor there is a sound basis for fixing the compensation:
The Oxford dictionary defines ex gratia as “a payment made as a favour or from a sense of moral obligation rather than because of any legal requirement”. Read that again, slowly and carefully. Why would our governments be paying accident victims as a favour? What place does a sense of moral obligation have in a democracy where we are not ruled by kings, benevolent or otherwise, but elect our representatives and have processes that make our government answerable to us?
Is the sin of repeated and frequent failure of governments in ensuring safety washed away because it feels morally obliged to compensate the victims? And is the ex gratia fair and adequate?
When a tragic accident occurs and the government rushes in with immediate ex gratia relief, it can be tempting to interpret positively the urgent compensation to the aggrieved, that too from a State that usually imposes significant delays for money it owes citizens. This temptation must be resisted, because ex gratia is arbitrary, inadequate and seldom well-administered.
Franco-Indian Collaboration in Indian Ocean Region
During PM Narendra Modi’s recent visit to France, the two countries agreed on measures to increase cooperation in the Indo-Pacific region. In an article for Firstpost, Bharat Sharma proposes distinct concrete steps for realising the goals of the India-France Indo-Pacific roadmap:
An important institution in the IOR is the Indian Ocean Rim Association (IORA), the only forum connecting the littoral states of the IOR. The IORA suffers from institutional weakness – as researchers Frédéric Grare and Jean-Loup Samaan mention in their book, ‘Indian Ocean as a New Political and Security Region.’ Its capacity to drive change is limited. And as the authors mention, the IOR’s members’ diversity in geography, culture, and economic levels of development has led to an ineffectual political will. That affects its access to global institutions, where it can participate in conversations concerning the larger Indo-Pacific region. It also disables IORA’s ability to make demands for regional security.
In an effort to build regionalism, India and France – along with South Africa, an IORA co-founder – can collectively strengthen institutions like the IORA. They can help bolster its institutional presence by increasing its funding for organisational activities (excluding funding for specific projects aimed towards issues it works towards). The other leg of support can come from strengthening its diplomatic access to key Indo-Pacific partners, stakeholders, and other actors.
The Road Ahead for India & France
India and France have laid out a 25-year roadmap. What does the roadmap mean? How does it stack up against India's economic, regional, and global goals? Sachin Kalbag and Yusuf Unjhawala lay it bare in an episode of All Things Policy:
National Research Foundation is a Gamechanger but Needs Clarity
The Parliament is soon set to deliberate on the law for setting up a National Research Foundation (NRF) in India which will administer the largest research funding programme in the country. In an article for Hindustan Times, Shambhavi Naik and Saurabh Todi write that certain aspects of NRF need further clarity from the government:
But it will need more clarity on two counts. At the outset, the government should clarify whether NRF is meant exclusively for science research, or will encompass allied fields and even humanities. The department of science and technology (DST) is likely to administer NRF, reports suggest, indicating that science will get priority, even though the National Education Policy (NEP), 2020 envisages NRF as a mechanism to “fund outstanding peer-reviewed research and to actively seed research in universities and colleges” – with no mention of it catering exclusively to science.
And, reports suggest that NRF is likely to integrate R&D funds available with all ministries. In addition, the NRF Bill is likely to subsume the existing SERB Act, 2008. The subsuming of existing funding mechanisms implies that there might be limited availability of additional funds over and above the current commitments. If true, this could be a cause for concern.
Deciphering the Chinese Media Ecosystem
Manoj Kewalramani appeared on the Out of Consensus | Cassandra podcast to discuss approaches to the Chinese Chinese information ecosystem, the role Party-state media plays, and how the Chinese information ecosystem can be seen as a stained-glass window, casting an image that the Party wants to project, but also allowing some insight into what's happening inside the country.
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The GCPP is offered over 12 weeks and is the ideal introductory course to public policy and governance for working professionals. It will help you master the fundamentals of economics, policy evaluation, ethical reasoning, effective communication, and public persuasion.
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That’s all from this week. Take care!