By Rajan Philips –

Rajan Philips

Today is the day for the big Rajapaksa announcement. Let us wait to hear the full and formal announcement without rushing to rain on the long-awaited family parade. At least the Rajapaksas are ready to make a new announcement, even if it is going to be an old story. Unlike the UNP folks. Ranil Wickremesinghe and Sajith Premadasa have apparently announced to each other that each wants to be the Party’s presidential candidate. Their respective cheerleaders are left in a political pickle jar. The much-heralded Democratic National Front (DNF, an affront to honest politics) to harness the UNP elephant and minority mice is still unborn. Ranil’s alliance partners have told him to call them after his Working Committee picks the mahout for their next elephant ride. 

For Prime Minister Wickremesinghe, alliance politics is avant-garde politics, Sri Lanka style. And his too-clever-by-half constitution for the DNF has fared no better than the new constitution for the country that he handsomely disowned after getting others to produce with much effort. The Rajapksas carry their own alliance burdens, but made up of miniscule groups from the island’s majority. The Rajapaksas have deliberately cultivated mutual aversions with minority parties. What more can one intelligibly write on the gyrations of party politics and alliance machinations in presidential Sri Lanka?

One State cut into two Union Territories

So, this is as good a time as any to lift one’s gaze towards South Asia’s main elephant, Modi’s India. In two unrelated internal strikes last week, the Modi government and the Reserve Bank of India independently sent flutters across regional and global political and business circles. On Monday (August 5), the Modi government rescinded Article 370 of the Indian Constitution that had given the contested state of Jammu and Kashmir (asymmetric) autonomy on almost all matters except the subjects of defence, foreign affairs and communications. Along with the revocation of Article 370, Parliament passed the Jammu and Kashmir Reorganization Bill to divide the State of Jammu and Kashmir into two Union Territories: Jammu and Kashmir which will have its own legislature, and Ladakh which will be under direct Union control. 

Even though much of this autonomy had become compromised over seven decades after independence, and even though the revocation of Article 370 has been a long standing BJP position and was included in its manifesto in this year’s general election, the actual revocation on Monday, after placing Jammu & Kashmir under an emergency clampdown, came as a shock both internally and to the world outside. At the same time, the revocation is also proving to be quite popular among many sections of the Indian society, even as it has drawn strong condemnation from the government’s usual critics. 

Economic Glooms

Two days later, India joined New Zealand and Thailand to cut interest rates amidst growing global concern that the next economic downturn is around the corner. With Trump not letting up on his trade spat with China and plunging bond yields, the trio of central banks in the Asia-Pacific region joining 20 others who have already cut rates this year is being seen as confirmation of warning signs that the global economy is poised for a slow down or contraction after the last recession in 2008. 

Within India, much of the curiosity was about the Bank reducing the rate by 35 basis points (to 5.4%) instead of a customary multiple of 25 basis points (bps – 100 bps being one percent rate). As the Reserve Bank Governor Shaktikanta Das explained, a 25bps cut would have been “inadequate”, while a 50 bps cut would have been “excessive.” The Bank has cut 75 bps previously this year, and reduced the growth forecast for 2020 from 7% to 6.9%. Mr. Das went onto say that any slowdown will be cyclical and structural. In the Bank’s assessment, the Indian economy will bounce back. 

Two weeks earlier, the IMF has lowered global growth forecasts citing trade and Brexit uncertainties as reasons. Global trade volumes experienced the worst six-month decline in April since the 2008 recession. According to Gita Gopinath, the IMF chief economist, “escalation of trade and technology tensions (that) can significantly disrupt global supply chains.” Slowdown in China, problems in the EU, a no-deal Brexit and geopolitical tensions are among the other risks worrying the IMF. The IMF is not expecting a recession, but is warning about “significant downside risks.” They are also among the main causes for the weakening investment climate in general. 

And paradoxically so in the US, where the job market is overperforming and stocks are roaring, but the bond market and investment climate are showing caution. The caution stems from falling factory activity, construction slowdown and drop in home sales. The inflation is below target. It is consumer spending that is driving the job market, and after resisting Trump’s presidential badgering for several months the Federal Reserve was forced to lower interest rates. Others, including India, have been forced to follow suit.

The IMF was categorical in assessing that the global “recovery relies on recoveries in stressed emerging and developing economies, and so there is significant uncertainty around that.” Additional risks, according to the IMF, include tensions in the Persian Gulf and civil strife elsewhere that will create humanitarian costs, cause transborder migration, and trigger volatility in commodity markets. Now the Indian government has added Kashmir to these risks. Ironically, in scrapping Kashmir’s special status, Modi and the BJP might be encouraged by India’s growing economic strength and Pakistan’s unaffordability to incur the cost of a military response to India’s constitutional provocation. 

Jammu & Kashmir

At the time of independence there were 565 princely states in British India. Given the freedom to join either India or Pakistan, or remain independent, 552 states joined India and 13 joined Pakistan. Jammu and Kashmir was one of the 552 sates, but its “accession” to join India came about in controversial circumstances. It was a princely state with a Muslim majority population under a Hindu ruler, Maharaja Hari Singh. Given its border location, the Muslim majority in the north (Kashmir) and Hindu concentration in the south (Jammu), there was support for all three options – to join either India or Pakistan, or remain independent. In October 1947, the ruler came under attack by Muslim citizens of the State and Pushtoon tribesmen from Pakistan, and supported by Pakistan. Hari Singh sought India’s help and signed the “Instrument of Accession” in return for military support. The accession was negotiated by Lord Mountbatten, and it included the proviso that after normalcy was restored, the people of the State, and not the Maharaja, would decide their future – where they wanted to live. 

Following the “Accession”, war broke out between India and Pakistan and by the time ceasefire came after more than a year of skirmishing, the dispute was taken to the UN by India, and the State was divided into two with a Line of Control separating them. The northern and western districts of the former State are now, respectively, Azad Kashmir and Gilgit-Baltistan administered by Pakistan. The (now former) Indian State of Jammu & Kashmir includes the Kashmir Valley to the north, the Jammu Division to the south, and Ladakh to the west. To the east of Ladakh is the Aksai Chin region that China annexed in 1962. 

The UN resolution of August 1948 included a commitment by Pakistan to withdraw its troops and India’s commitment to hold a plebiscite among the people of Kashmir once law and order was restored. Neither Pakistan nor India have honoured their commitments. Both sides make claims and counterclaims in defence of their positions. India usually argues that the original intention to hold a plebiscite has been more than satisfied by the autonomous status given to the State, the periodical elections to the State Assembly, and the 1972 Simla Agreement between India and Pakistan which provides for bilateral resolution of disputes between the two countries.  

The now rescinded Article 370 of the Indian Constitution reflected the Instrument of Accession and was intended as a temporary provision until the State of J&K formulated its own constitution. That never happened and after the State’s Constituent Assembly dissolved itself in January 1957, Article 370 became a permanent feature of the Indian Constitution and has been confirmed so by the rulings of the Indian Supreme Court and the High Court of Jammu & Kashmir. Under Article 370, J&K has been able to somewhat modify the applicability of the division of legislative powers under the ‘Union List’, State List’ and Concurrent List’ as provided in the constitution and applied to other states. One aspect of this autonomy has been the restriction of individuals and businesses from outside the state to buy property or start businesses in the State. 

The BJP government’s claim is that with the revocation of Article 370, J&K is open for business and the people of the State can join the rest of India’s march to economic prosperity under Prime Minister Modi’s leadership. The fear, however, is that the BJP will use the new opportunity to alter the ethnic composition of Jammu & Kashmir. The population of the now bifurcated state is around 14 million, Kashmir – 7 million, Jammu – 6 million and Ladakh, the largest of the three divisions has under half a million population. Statewide, Muslims constitute 68% of the population and Hindus 28% of the population. The population is multilingual with Urdu (written in the Persian Script) being the state’s official language. The political narrative in India is that the Muslim population in J&K has been disproportionately increasing due to high birth rates and influx from Pakistan. There will now be internal pressure on the Indian government, if any pressure is needed, to restore the population balance.  

Three days after revoking Article 370, Prime Minister Modi addressed the nation for 37 minutes, even though the people in Jammu and Kashmir would not have been able to listen to the address given the news blackout in the State. The speech has been welcomed as a reassuring sequel to the underhanded manner in which government revoked Article 370. Mr. Modi promised to restore statehood to J&K, including elections and economic growth. But he reiterated his government’s stock argument that Articles 370 and 35A had given only “separatism, nepotism and corruption to the people of J&K.”  This is a rather simplistic assessment of the origins and growth of the Kashmiri insurgency since the disputed state election in 1987. The revocation of these articles is not going to address the root causes of the Kashmiri problem. Perhaps that is not the real intention behind the revocation. The government’s intention might be to rewrite India’s federalism in the Hindutva script, on the one hand, and assert India’s dominance in the region, on the other. 

Many commentators have read into the role that President Trump’s statement that he had been asked by India to intercede in the Kashmiri matter, may or not have played in the BJP government’s seemingly abrupt move to revoke Article 370. Others have noted the possibility of India acting pre-emptively in light of the situational changes in Afghanistan and the possibility of a new rapport between Pakistan and the US. Or, some exuberant patriot in the government might have imagined that India should emulate in the Kashmir valley, Israel’s Jewish settlement examples, or China’s handling of its Muslim question. But such imaginations are fraught with danger and fly in the face of the subcontinent’s checkered history of Hindu-Muslim co-existence. 

The Indian Constitution, including Article 370, provided a worthy framework for the peaceful coexistence of the country’s multilingual, multi-religious and multi-ethnic peoples. The pendulum of Indian federalism has swung between central dominance and state autonomy. 1989 was the dividing line when the pendulum started to move away from central dominance to state autonomy. Now the Modi government is trying to pull back the pendulum. But there is a vital difference between the pre-1989 era and the unfolding Modi era. Centralization in the earlier phase was tempered by Nehruvian secularism. In the current phase, secularism has become the government’s main enemy. And the Modi government can claim a national mandate to justify its regressive march.