Download Dragon strikes again

USI Library
News Information Service
Times of India14-8-2015
Dragon strikes again
Jug Suraiya
Will 2015 be a repeat of 1962? In 1962 a totally unprepared India was given a thorough
drubbing by China. It looks like history is going to be repeated this year.
The only difference is that in 1962 China mauled India with military might. In 2015 it threatens
to overwhelm an India paralysed by its parliamentary logjam with economic muscle.
The sudden devaluation of the Chinese yuan has rocked international bourses and markets. And
the Indian economy is likely to be badly battered in the currency wars that will almost inevitably
be triggered by the unexpected Chinese move.
Beijing has devalued its yuan, for the first time in two decades, to boost its export-driven
economy which has slowed perceptibly. The depreciation of the yuan will make Chinese exports
more competitive internationally, adversely affecting exports from other countries, including
India.
Moreover, the uncertainties caused by the aggressive depreciation of the yuan, and fears that
further such measures will be undertaken by Beijing, will raise the global demand for the US
dollar, on which all international trade is based and which is perceived to be the safest currency
in times of instability.
The value of the dollar will rise even more against other currencies including the rupee, making
Indian imports – such as oil – costlier.
Foreign investment in India – badly needed to revive the economy – will take a hit, as jittery
investors channel funds away from emerging markets like India in favour of US treasury bonds.
Reacting to this, the Bombay stock market dropped by over 350 points. And while all this is
happening, the people supposed to be responsible for the running of the country are caught up in
a public verbal brawl in Parliament, oblivious of everything else.
The monsoon session of Parliament which could have seen the passing of two bills which would
have significantly boosted economic revival – the land acquisition and the goods and services
(GST) bills – has been a total washout thanks to the deadlock between the NDA government and
the Congress-led opposition over the resignation demand of two BJP ministers for their alleged
wrongdoings.
Just the GST bill, when passed, is estimated to contribute a 2% growth to the economy. That
growth is today needed more than ever, thanks to the new threat emanating from China.
But the Indian Parliament has been too busy with its internal wrangling to worry about external
dangers.
Which is why, in hindsight, 2015 might well look like a replay of the debacle of 1962, the year
of the triumphant dragon.