One of the most significant delinquencies many businesses face today is the incidences of fraudulent acts commissioned by employees. The growing number of reported occurrences of fraud and its detrimental impact on corporate subsistence continue to draw the attention of auditors and fraud examiners around the world. According to the Association of Certified Fraud Examiners (A.C.F.E.) report to the nations on occupational fraud and abuse 2020, organizations lose roughly 5% of their revenue to fraud each year. This is the worldwide data available. One thing pertinent to note is that this is what is reported. What is not reported, obviously, has not been counted. While the fraud can be perpetrated both externally and internally, recent studies show that internally perpetrated fraud by employees, management, and sometimes owners (occupational fraud) has been more prevalent in recent years than the former. The majority of these researches have primarily focused on financial statement fraud, with little attention paid to other types of occupational frauds. An employee commits occupational fraud during the course of their occupation. Sometimes, it is further referred to as employee fraud. According to A.C.F.E., there are three categories in which an employee may commit fraud on an employer or organization viz, Asset misappropriation, Corruption, and Financial Statement fraud. Briefly speaking, when an employee swindles with cash or other assets belonging to the organization for personal use without authorization, it is called Asset misappropriation. Corruption is wrongful acts by employees designed to cause unfair advantage to the perpetrator, including bribery, kickbacks, economic extortion, collusion, etc. Corruption is a vast term and includes the wrongful use of influence by a person to benefit the actor or any other person. On the other hand, financial statement frauds are usually perpetrated by management against potential users of financial statements. Hence, it is an intentional act whereby the perpetrators usually get little or no financial gain; instead, they are committed to showing the better standing of the company on paper.
Despite the importance of financial statement fraud in the fraud discussion, empirical studies have shown that the frequency with which employees engage in other types of fraud, particularly asset misappropriation, dramatically outnumbers the former. Asset misappropriation accounted for 86 percent of all reported fraud instances during 2020, according to A.C.F.E. Surprisingly, even after the incidences of asset misappropriation continue to rise, most studies have been concentrated only on financial statement fraud.
Why do employees commit fraud against the organization which provides the bread and butter? What induces them to do such an act? Ultimately, the loss of the organization is the loss of an employee. Few theories have been developed over time to understand why people commit fraud, especially occupational fraud. However, these theories have also undergone many developments, e.g., the fraud triangle with three elements to the S.C.O.R.E. model with five elements. Different sociologists have asserted different rudiments in their studies. However, according to these different models, Pressure, Rationalization, capability, opportunity, and ego are prime elements that motivate individuals to commit any fraudulent behavior. However, all these elements may not hold equal weightage in their relevance behind a fraud. In almost all the studies, the opportunity has been perceived as the most crucial factor behind the fraudulent behavior, which triggers the lack of internal controls within the organization.
As mentioned earlier, asset misappropriation is the most common type of occupational fraud. It occurs when an employee steals or misuses the organization’s resources such as cash, fraudulent billing, inventory, or inflated expenditure reports. In almost all such cases, the perpetrator uses techniques of deception or trickery to steal or misappropriate the organization’s assets. According to Dr. Steve Albrecht, “Asset theft, concealment, and conversion must all be present for asset misappropriation.” Asset misappropriation is the most common type of fraud because it is usually the easiest to commit, albeit it does not always result in significant direct losses.
On the other hand, it deprives businesses of resources that could have been used to improve their productivity and profitability. The A.C.F.E. further divides asset misappropriation schemes into cash misappropriation and misappropriation involving inventory and other assets. Aside from its domination, asset misappropriation is a significant phenomenon in the accounting discipline, particularly in auditing. International Standards on Auditing (I.S.A.) 240 inflates the auditor’s responsibilities for fraud detection to encompass asset misappropriation. Hence, asset misappropriation is an issue that deserves the immediate attention of major stakeholders, i.e., management, auditors, and shareholders.
SOME ELEMENTS OF OCCUPATIONAL FRAUDS ARE:
Pressure or stimulus is a non-shareable problem that motivates a person to engage in acts that would help alleviate such pressures. When individuals face financial and non-financial pressures, they may feel compelled to engage in fraudulent activity (Cressey, 1953).
Another significant aspect that motivates persons to commit fraud is the availability of opportunities to engage in fraudulent conduct. Fraudulent activities in the workplace are frequently the outcome of a lack of internal controls within the organization. Hence, the stronger the entity’s internal control system, the fewer individuals participating in fraudulent or other illegal activities. If firms fail to seal possibilities for fraud due to overtime, certain employees may see this as a sign of corporate culture and eventually take advantage of these opportunities.
Fraudsters frequently have an outlook that leads them to fabricate justifications to justify their acts. In the fraud literature, this mentality or attitude is known as Rationalization and is one of the tenets of the fraud models. Rationalization is defined as a person’s mentality that allows them to excuse immoral behavior as not being criminal. As a result, Rationalization allows fraud perpetrators to justify their acts to protect their belief and self-image as honest, innocent people who were unfortunate enough to be caught up in a critical circumstance rather than criminals.
Wolfe and Hermanson (2004) brought the notion of capability into the fraud theory, defining it as persons’ characteristics and abilities that significantly impact whether or not fraud occurs. For a fraudulent act to occur, an individual’s capacity to detect an opportunity to take advantage of it is critical. As a result, a fraud perpetrator should be in a position inside the organization that allows them to commit the fraudulent act or have the skills and abilities to execute it.
The ego determines what is moral and what is not. Because of their ego, people are concerned about what others think of their behavior. People work hard to establish a reputation, and they do everything they can to retain it. Some people engage in various actions, including deception, to maintain their egos. Vousinas (2019) demonstrates that some people enjoy the feeling of outsmarting the world when their initial crimes are successful and unnoticed, boosting their ego. As long as they are not caught, such individuals are encouraged to engage in such fraudulent actions repeatedly. Individual ego might thus determine whether or not a person will commit fraudulent acts such as wealth misappropriation.
The fraud model (S.C.O.R.E.) describes the effect of Pressure, Rationalization, capability, opportunity, and ego on asset misappropriation while controlling for the impact of ethical values on asset misappropriation from a theoretical perspective. Additionally, the effect of these elements on an individual’s propensity to misappropriate assets is highly dependent on how individuals perceive an organization’s internal control systems.
PRESSURE AND ASSET MISAPPROPRIATION
As a general tendency, when people are faced with financial or non-financial difficulties that they do not want to share, they misappropriate assets. Because these forms of Pressure are non-transferable, such people will go to any length to get rid of them, including committing fraud. Individuals may have high work expectations and targets, putting them under a lot of stress. Organizations may also encounter pressures that are passed on to personnel. Apart from this, conditions outside the workplace, e.g., at home or family, may cause some stress. Individuals who have family and friends who rely on them financially may feel under Pressure to meet their requirements. Some individuals may exploit the organization’s assets as a means of lessening or controlling such demands. According to Steve Albrecht, people typically participate in fraudulent activities when they are under duress. Every fraud perpetrator must have been under Pressure to perpetrate fraud. Pressure has been discovered to be a significant influencing factor in the occurrence of fraudulent behaviors. According to various fraud models, pressure is a factor that causes persons to engage in fraud. According to these studies, individuals misappropriate assets at work when under strain, whether personal or work-related, financial or non-financial, to alleviate such stresses. Hence Pressure has a substantial impact on asset misappropriation.
RATIONALIZATION AND ASSET MISAPPROPRIATION
Most people who engage in asset misappropriation excuse their actions by believing that such activities are necessary or do not damage others. Misappropriating assets at work is simple for certain people because they fabricate explanations to justify their acts and maintain the belief that they have done nothing wrong and are still trustworthy. Often, an organization’s internal culture is a fertile environment for some employees’ rationalizations for committing fraud. People defend their fraudulent behavior at work, for example, by claiming that “bribery is a prevalent culture here” and “everyone does it, so why not me?”
Several empirical research has concluded that rationalization has a significant impact on the prevalence of fraud and that people who cannot justify their wrongdoings are less likely to commit fraud. With first-time fraud offenders, rationalization is even more prominent. According to Donald Cressey (1953), most of those who engaged in some deceptive behavior for the first time justified their actions. As a result, the ability to rationalize wrong actions may be a key predictor of why some employees misappropriate funds at work. Hence Rationalization has a significant and positive effect on asset misappropriation.
CAPABILITY AND ASSET MISAPPROPRIATION
When the perpetrator is in a position where they have access to the firm’s resources, it is generally easier to commit fraudulent crimes like asset theft. Individuals must also possess specific personal characteristics and abilities that allow them to misappropriate assets at work without being discovered. As a result, simply recognizing the existence of an opportunity is insufficient to commit the fraud unless the individual is well-positioned to take advantage of it. As a result, a fraud perpetrator must possess the skills and abilities to conduct the deception. Individuals misappropriate assets when they can comprehend and exploit internal control mechanisms so that they are not found. If they are caught, they are sure that they will be able to handle any stress that follows. Existing fraud research has discovered a positive link between fraud and capability.
PERCEIVED STRENGTH OF INTERNAL CONTROL SYSTEMS
The strength of a company’s internal control systems can either create opportunities for fraud in the organization or close loopholes that could lead to fraud. Robust internal control systems are frequently capable of identifying wrongdoing, whereas poor internal control systems are not. As a result, how personnel within an organization view the internal control systems in their organizations is critical. This is because a person’s perception of internal control can lead to them engaging in fraudulent behavior. Individuals may, for example, misappropriate assets at work if they believe the workplace’s internal control systems are poor and so will not be noticed.
On the other hand, internal controls act as a deterrent to fraud when they are strong. Individuals do not have the opportunity to misappropriate money since they know that internal procedures will expose them. Hence, strong Internal Controls have a negative relationship with asset misappropriation.
EGO AND ASSET MISAPPROPRIATION
Because of their ego, an average person places some importance on what other people think of them. Individuals frequently wish to establish and maintain social standing. People may engage in particular actions solely to preserve their ego because they value and do not want to lose their status, especially if it is one of power. According to the findings of some existing studies, fraudsters are frequently egoistic, and ego appears to be a recurrent theme in some of the most recent striking frauds. People who have a strong attachment to their social standing are more prone to engage in wrongdoing such as misappropriation of their organization’s funds. This is because such persons may be willing to participate in potentially fraudulent conduct to maintain their social lifestyle. The ego and asset misappropriation have a favorable association.
Various industries and professional organizations have adopted codes of conduct that apply to all companies. As a result, most businesses adopt these codes of ethics to create ethical standards that will guide how their employees behave in the workplace. Some people’s activities are also influenced by their ethical lookout. What is right or wrong, good or bad, depends entirely on one’s moral perspective. According to the findings, people commit fraud because they lack ethical beliefs or do not follow the ethical rules in their jobs. Individuals with strong ethical convictions, on the other hand, rarely perpetrate fraud. Moral principles significantly influence asset misappropriation.
PERCEIVED STRENGTH OF INTERNAL CONTROLS SYSTEMS
Internal controls make or break a company’s ability to commit fraud. When internal controls are tight, all gaps that could allow fraudulent workplace actions are closed, lowering the rate of fraud in the workplace. People can take advantage of the opportunity presented by the loose systems to engage in fraudulent activities when internal controls are insufficient.
A thief also avoids breaking into a house that has a watchdog. Internal controls can also be perceived the same in an organization. Individuals would not misappropriate assets at work if adequate internal controls were in place. Individuals in senior positions in companies, on the other hand, may not be bothered by internal control measures because they can usually circumvent them to hide their transgressions. Understanding the push factors, i.e., Pressure, rationalization, capability, and ego, is crucial for management and policymakers in developing solutions targeted at eliminating workplace fraud. Having proper and robust internal control systems in place is one of the most effective approaches to reducing the occurrence of asset misappropriation.
The writer is a finance and forensic accounting professional and is currently associated with the education industry in the capacity of a finance officer. The views expressed are personal.
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Transforming slums via upgradation and delisting: Odisha’s approach
The model for slum upgradation by Government of Odisha, utilising public resources during the ongoing pandemic and ensuring better preparedness against similar health crises in the future, has the potential to be scaled up to other states within the country.
By Shubhagato Dasgupta, Anindita Mukherjee, Baisakhi Sarkar Dhar
Slums are not a new phenomenon. They have been concomitant to increasing urbanisation and industrialisation as populations boomed . These pockets of informal settlements are characterised by overcrowding, insanitary, unhealthy, and dehumanising living conditions, insecure land tenure, lack of access to basic civic services, education, and health care, among others. While the challenges faced at the slum level are not new, the ongoing pandemic has exacerbated their substandard living conditions while preventing them from practicing seemingly simple preventive measures such as frequent handwashing and maintaining social distancing, threatening more than one billion people worldwide in slums as well as in the non-slum urban areas at large. Those living in slums and informal settlements are also most vulnerable to the economic consequences of a widespread lockdown. The COVID-19 pandemic, through its various peaks, has further heightened the need for a more robust and immediate solution for improving living condition and access to service in slums. Integrating slums within city fabric by slum upgradation has the potential to be one of the crucial interventions that can foster inclusive and resilient cities as we ‘build back better’.
The approach to slum upgrading has changed considerably from the 1950s to the 2000s. Beginning in 1972, the World Bank launched urban upgrading projects to improve services, infrastructure, and housing in hopes of reducing poverty and meeting basic needs (Corburn & Sverdlik, 2017). In the 2000s, the slum upgradation programmes became more comprehensive, calling for an enabling approach combining good policies, community participation, engagement of the private sector and strategies to prevent future proliferation of slums. Through the years, slum upgrading initiatives in countries across the world like Bandung, Indonesia, and Vietnam, among others, have been considered relatively successful; however, upscaling projects from small neighbourhoods to the city and to the state scales remained a challenge.
Slum upgrading is a complex phenomenon as several interrelated components requires to be addressed to implement it successfully. It is not simply about providing basic infrastructures or housing but also about integrating the economic, social, institutional, and community activities that are needed to turn around downward trends in an area . The two most important factors for a slum upgrading programme to be successful are strong political will on behalf of the government and a strong buy-in from communities. However, in most cases, achieving some coherence in the community, finding solutions for a wide range of needs and sustaining political will across government terms remain primary challenges.
Odisha’s approach to the challenge
Although one of the least urbanised states in India, Odisha grew at a rate double that of its overall population during the 2001-2011 period. Moreover, one in every four urban dwellers in Odisha was living in slums (Census 2011) and lacked access to basic infrastructure while occupying only 2- 4% of the urban land . Against this background, Odisha embarked on its journey of providing land rights to slum dwellers and enacted the Odisha Land Rights to Slum Dwellers Act in September 2017, followed by launch of Jaga Mission or the Odisha Liveable Habitat Mission in 2018. By 2021, the GoO distributed more than 70,000 Land Rights Certificate (LRC) across 109 small and medium urban local bodies (ULBs) while according more than 99,000 Land Entitlement Certificate (LEC).
However, as mentioned above, mere according land rights do not improve the living quality in these urban informal settings. The continuum of land rights, from de-jure to de-facto presented a range of opportunities to incrementally transform urban slums and the lives of the people who live there. Accordingly, a ‘Standard Operating Procedure (SOP) for Slum Upgrading and Delisting in Odisha’ designed to integrate the urban poor settlements into the mainstream city fabric and transform the slums into liveable habitats called Biju Adarsh Colonies (BACs). It was launched on 28th September 2020 amidst the pandemic, and the work was initiated immediately. It intended to benefit the slum dwellers by jointly identifying with the communities the key infrastructure gaps and subsequently filling those gaps by process of upgradation. It focused on improving access to six civic infrastructures i.e. i) in-house water supply, ii) paver roads, iii) pucca stormwater drainage, iv) street lights, v) individual household toilets (IHHL), vi) in-house electricity, and common social infrastructures i.e. vii) Parichaya, signature community centres viii) Open space development including ix) development of childrens’ play areas. The state government’s effort through asset creation and improved service delivery aimed to address the demands of urbanisation and bridge the gap between developmental outcomes and the growing needs of people in the state. This, in turn, translated into increased infrastructure resilience and reduced vulnerability towards health risks like the ones posed by the ongoing pandemic.
Community engagement has been one of the key features of the programme. By stimulating and fostering the capacity of community-based organisations namely the Slum Dwellers’ Association (SDA) and Self-Help Groups (SHGs), the government ensured that not only they become the beneficiaries of the development but also becomes the partner in the process of development instilling a sense of ownership of the process. Moreover, the projects supported climate-sensitive infrastructure development by mandating paver blocks for new roads, LED bulbs for Street Lighting, construction of toilet with Septic Tank, and encouraging the use of solar-powered street lights. These technologies are expected to result in positive environmental impact by subsoil percolation & groundwater recharge, energy conservation, reduction in carbon footprint, groundwater contamination, waterbody contamination, and eventual decline in health hazards.
Complementarity of other infrastructure programmes
Convergence with other ongoing state and central government schemes has been another key constituent of the program. Various government schemes like Urban Wage Employment Initiative (UWEI)/ Mukhyamantri Karma Tatapara Abhiyan Yojana (MUKTA), Buxi Jagabandhu Assured Water Supply to Habitations (BASUDHA), Swachh Bharat Mission (SBM), and UNNATI funded the public works component of the slum upgradation under JAGA Mission, covering all parts of the project. While the water supply component is complemented by Mission BASUDHA, which seeks to provide piped drinking water supply to all households in Odisha, Swachh Bharat Mission was leveraged for individual toilets and CT/PTs. It also went ahead to integrate community participation and wage employment scheme with the slum upgradation process to reduce social, economic, and infrastructural vulnerability among the urban poor. The participation was further bolstered by the UWEI scheme launched initially for six months as a COVID-19 response to provide livelihood opportunities to around 450,000 urban poor families. The scheme was converged with JAGA Mission to provide employment to the urban poor by engaging them in creating urban infrastructure for slum upgradation. It not only provided gainful livelihood opportunities to urban poor families during the ongoing pandemic but also created community assets, strengthened community institutions, enhanced ecological resilience, and applied innovative technologies to enhance the sustainability of welfare schemes and measures.
While slum upgrading benefits a city by fostering inclusion, promoting economic development, addressing overall city issues, and improving the quality of life of the urban poor, there remain other challenges with mainstreaming. The upgraded slums, most often than not, remains unaccounted for in the city planning exercise and the upgradation wears off with time perpetuating the slum like situation. Odisha’s slum upgradation program is uniquely designed to tackle this challenge as well. The slums, once upgraded, are delisted and are integrated into the city fabric, thus bringing them within the purview of the statutory planning exercises. This is a step towards making the program sustainable in the long term. Another major challenge is the sustained flow of funds, which the Odisha government also addresses by amending its Odisha Municipal Act-1950 and Odisha Municipal Corporation Act-2003 to provide for internal earmarking of 25 percent fund for urban poor under the head of capital expenditure in all ULBs of the State. This allocation of sum for delivering basic services and infrastructure to slums in the ULB budgets aims at providing for the fiscal requirements and planning needs for the urban poor in the state. Internal resource earmarking aimed to channelize the municipal spending to become inclusive and pro-poor in their approach and functioning.
Informal settlements typically suffer from a lack of access to basic civic and social amenities and remain characterized by dilapidated built structures – increasing their vulnerability considerably. Hence, building forward better from this pandemic will necessitate integrating slums within the city fabric, further fostering inclusive and resilient cities envisioned in the Sustainable Development Goals (SDGs) and the New Urban Agenda (NUA). With access to all basic infrastructures backed by a strong local body, communities can be more cohesive, more resilient, and better placed to confront economic and social challenges. The model for slum upgradation by GoO utilising public resources during the ongoing pandemic and ensuring better preparedness against similar health crises in the future has the potential to be scaled up to other states within the country. Partnership between government and community along with a demand driven approach is the key to success of programs like JAGA Mission. The only key to this up scaling is to build continued complementarity with other state and national level urban development programmes and develop community partnerships.
Shubhagato Dasgupta is a Senior fellow, Anindita Mukherjee is an Associate Fellow and Baisakhi Sarkar Dhar is a Senior Research Associate at the Centre for Policy Research, New Delhi. Views are personal.
UKRAINE IS NOT AFGHANISTAN, BUT…
Ukraine-crisis is likely to be prolonged with a similar objective responsible for Afghanistan-war lasting for years. Geographically, culturally, histo rically and at numerous other levels, there is no comparison between Afghanistan-wars fought at different periods by United States as well as former Soviet Union and the ongoing Ukraine-war. Ukraine is not Afghanistan. The only similarity is that people have suffered and are suffering the most in both countries. But when superpower and/or major powers’ key interest is their own agenda, why should they be expected to be worry about grievances of common citizens in targeted countries?
Seriously, diplomatic promises, claims, assurances and so forth voiced by any power- which itself cannot claim to be above board in the same area- only sound hollow, including United States as well as Russia. Notwithstanding claims made by US and its allies about former’s aid to Ukraine, helping this country gain an upper edge against Russia, several key factors cannot be side-lined. It is astonishing, US waited for Russian strikes against Ukraine to begin and then started supplying weapons to latter. Weapons and not diplomatic cards have been (and are being) made use of. Secondly, this suggests a motive of Washington was and perhaps is continuance of Russian-Ukraine war. The limited or practically no importance being accorded to diplomatic negotiations for an end to this conflict indicates this. United States is apparently more concerned about continuance of Ukraine-crisis till Russia weakens more. It is equivalent to expecting history to repeat itself. Afghan-ploy was also responsible for collapse of Soviet Union.
Ukraine-crisis, it is feared, spells dangerous signals for other European countries. This refers to plans of Finland and Sweden to backtrack from their policies of military non-alignment and join NATO. Russian President Vladimir Putin has warned that such a move “would certainly provoke our response.” Notwithstanding diplomatic legitimacy and/or credibility of this stand, what needs greater attention is the havoc that even a minor military move from Russia against these countries can lead to. Chances of American soldiers stepping in to confront Russian soldiers to check such a move may be viewed as non-existent. Those talking of Ukraine-crisis leading to third World War had probably envisaged such a situation, that of American soldiers actually helping Ukraine.
Geographically, terrain of these countries, including Ukraine is different from that of Afghanistan. Besides, spill-over of Afghanistan-war’s negative impact into Pakistan cannot be forgotten. It is difficult to assume that rest of Europe would not be affected by continuance of Ukraine-crisis and if other countries are caught in similar situation. Geographical proximity of Finland and Sweden to Russia cannot be ignored.
Diplomatically, United States is close enough to issue periodic assurances and perhaps also help with weapons. But that’s it. It is high time that European countries judged the situation as per their standing and not as laid out by other powers. Rather than risk facing any war or war-like situation and/or waiting for any external power to decide their diplomatic strategy, it may be more practical of Finland as well as Sweden to have one-to-one talk with Moscow. Waiting for third world countries to help them out may take too long a time and perhaps only worsen the situation.
NATO-diplomacy, inclusion in NATO and other similar diplomatic vibes sound great. But their limitation in spelling peace and relief as well as not permitting conflicts to take place standout by continuation of Ukraine-crisis. Yes, claims have been made by Ukrainian soldiers about having “made it to border” with “enemy state.” Their counter-offensive operations have been described as a “success”. NATO countries are going all out to boost Ukraine’s confidence by appreciating its success against Russia. These are definitely great diplomatic moves but of limited relevance when war is showing no sign of coming to an end. Chances of it spreading further stand out too markedly to be ignored.
Once a war begins between neighbouring countries, prospects of it coming to a quick end may be viewed as remote unless they mutually agree to give greater importance to diplomacy. Ukraine is caught in this trap. United States probably wants this “war,” as suggested earlier, to further weaken Russia, which would according to speculations be viewed by Washington as a major victory. But at what cost?
– Nilofar Suhrawardy
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Why India-Japan relations matter in the 21st century
One should make good people their friends. One who keeps good friends, benefits, and lives in peace. – Rig Veda
Time, when in a span of 15 days (March –April 2022), 11 high-level delegations from foreign countries (including the Chinese foreign minister) visited India, and India is visiting Japan to strengthen the Quad, showing the rise of a new economic coalition or something more or something else?
There have been murmurs on the sidelines about Quad Plus. What about Supply Chain Resilience Initiative? What is this Quad, Quad Plus, and why have Japanese ties become so relevant in recent times under the recent geopolitical environment?
Starting from the historic perspective, relations between India and Japan have been strong for centuries on account of Buddhism which originated in India and spread through entire Japan.
In the last century, in Auust 1942, one of the greatest Indian leaders, Netaji Subhas Chandra Bose formed the Indian National Army (INA) with Japanese support and the Japanese-captured Indian prisoners of war.
The offensive from this army (INA) and their grit along with Satyagraha from within led by Mahatma Gandhi, severe losses (suffered by Britishers in WW II), the huge quantum of debt (raised by the UK to fight the war), and the massive cost of maintenance of a plundered nation forced Britishers to give India Independence in 1947.
Just before the Indian Independence in Feb 1946, the soldiers, officers, and personnel who were captured by the Japanese belonging to the Royal Indian Navy (one of the bravest contingents of Indian fighting for Allied forces posing a strong opposition to the Japanese invasion in the Indian Ocean during World War II) and were eventually freed by Japanese (post-WW II) raised a revolt and organized a mutiny to overthrow British.
Indian hearts and Indians’ minds by now were aligned to India and Indian Independence and eventually, Independence came in.
Fast-forward 75 years to the present day, the official reason why the Prime Minister of India visited Japan was to be part of the second physical meeting of Quad. A group of 4 countries, the US, Japan, Australia, and India.
Initiated in 2007 and finally taking shape in 2017, Quad or the Quadrilateral Security Dialogue came into existence. Today what is perceived as “Asian NATO” the Core thought process of Quad came into existence in 2004 on account of the Boxing Day Tsunami that killed 2.28 lac people in 14 countries.
From a humble humanitarian helping hand approach Quad has turned now out to be a formidable force to contain the influence of the reign of China in the Asia Pacific region.
Over the last 2 decades with the rise of China, there has been a steep fall in allies China. All 4 founding or Core members of Quad have or continue to have challenging relations with China.
AUSTRALIA, INDIA & CHINA
Starting with Australia. Australia’s largest trading partner is China, Australia is the largest exporter to China (37%) by a mile (the second largest being Japan with 11% exports) and now Australia wishes to reduce its export dependence on China.
Why this change in mind, change in alignment, change in future strategy?
In May 2020, Australia called for an independent probe into the origins of the coronavirus pandemic, which emerged in the Chinese city of Wuhan, infuriating China. In April 2021, Australian Foreign Minister Marise Payne cancels two MOUs (Memorandum of Understanding) signed by the state of Victoria in 2018 and 2019 with China’s National Development and Reform Commission on Chinese participation in infrastructure projects under China’s Belt and Road initiatives.
In April 2022, Australian Minister for Defence Peter Dutton accused China of paying bribes to win international deals. Why this distrust, mistrust, and unease between Australia and China, When Australia’s largest output is absorbed by China?
It’s a long story in itself and it all started with espionage by Huawei – the largest manufacturer of telecom, equipment, smart devices, and consumer electronic items. On the recommendation from the Australian Security Intelligence Organization (ASIO) concerned with cyber security & espionage, in 2010, Australia’s National Broadband Network quietly rejected Huawei’s bids for the creation of the national broadband network. In 2018 Huawei and ZTE (Chinese telecom equipment manufacturer) were banned from constructing Australia’s 5G network and the saga started.
Once a friend, now a foe, seeking more de-alignment. Somebody’s loss is always somebody’s gain. As Australia was looking to de-align itself from China, India emerged as a formidable, credible, ethical, all-weather partner to Australia.
Swiftly, in April 2022, India strengthened its ties & alliance with Australia by signing the Economic Cooperation and Trade Agreement (ECTA) that aims at doubling bilateral trade in the next five years to USD 45-50 billion from USD 27 billion as of FY 22.
Presently India is Australia’s seventh-largest trading partner, Australia wants India to be top three export markets by 2035. ECTA was historic in the way that tariffs were removed on more than 85% of Australian goods exported to India. In return, Australia agreed to Indian terms of 96% of Indian goods arriving in Australia to be duty-free.
On the Oil side, India is tying deeply with UAE giving UAE companies equivalent status as compared to Indian businesses for sourcing done by the Indian government on the other hand, with Australia India is finding an ally that shares common insecurity & challenges with another Asian giant China.
Australia on an ongoing basis has backed the US, stating that there is ‘no legal basis to several Chinese claims in the disputed South China sea.
THE UNITED STATES, INDIA & CHINA
The US (United States of America), the second formidable partner in Quad wishes to control its trading partner China’s might and influence in the Asia Pacific region by Quad. Also, the US is an ally of Taiwan and in case of aggression by China to annex Taiwan which China believes is part of the People’s Republic of China will need assistance from Quad allies.
To make the geo-political situation a little more chaotic, a latest news coverage by a reputed publication suggested that the Chinese President, aged 68, is suffering from a cerebral aneurysm, a condition when a bulge forms in one of the blood vessels in the brain with a 50% probability of mortality and Chinese President publicly vowed in 2019 that Taiwan must and will be reunited with China and that China reserves the right to use the force. In such a scenario, the US finds India’s largest military as a natural ally against the largest military in the world.
India welcomed its way into the Quad as it enabled India both in terms of economic ties as well as a forging formidable force in case of aggression. India had in the past and recently witnessed conflicts with China (in 2020) in the Galwan Valley, the Eastern region of Ladakh. For decades, India continues to fight and reclaim its rights and control over parts of Aksai Chin, Himachal Pradesh, Uttarakhand, Arunachal Pradesh, and Ladakh that are illegally controlled and occupied by China.
On the economic front, India had an import of 100 billion USD from China with India’s trade deficit with China clocking a whooping USD 69.38 billion in 2021. India surely wishes to replace this as quickly as it can. Quad surely can do wonders.
JAPAN, INDIA & CHINA
The next pillar of Quad, Japan has been India’s oldest ally in development, and both have deep social as well as historic links as covered in the earlier part of the note.
The Japanese investments in India touched USD 32 billion between 2000 and 2019, across all core sectors including automobile, electrical equipment, telecommunications, chemical, insurance, pharmaceutical, etc. What was done in 19 years, nearly one-third more (USD 42 billion) will be done in the next 5 years as investments by Japan in India (Intent & actions remain so)?
In 2014, India and Japan entered into a strategic global partnership, a unique and first of its kind in the world whereby it was agreed (other things as well) that in a specific period of the next 5 years Japan’s foreign direct investment and the number of Japanese companies operating in India to double and the target was met.
As India is important to Japan for its slow or DE growing economy with an aged population to rely on the huge market like India, India is dependent on Japan for its cheap capital to build infrastructure to grow its economy on a fast track and provide large scale employment to Indian Youth who need jobs to sustain the family and country.
China remains Japan’s largest trading partner but the conflict continues with China despite economic ties. The conflict started in 2012, when Japan nationalized the Senkaku islands (the Senkaku Islands are a group of uninhabited islands in the East), sparking widespread protests across China. Since then, China has affected a strategy of active non-acquiescence to Japan’s occupation of the islands.
Though Quad was largely formulated and constituted before Covid, Covid expedited the Vaccination diplomacy, Where Russia (not in the context of Quad) China, India, and the US-led the vaccine manufacturing largely.
In a couple of meetings virtually in 2020, South Korea, Vietnam, New Zealand, Brazil, and Israel, most of which are allies of the US took part and there have been murmurs of having these other nations, which share common anxiety against China can be brought in the group known as Quad Plus.
Covid was handled by all countries differently as per their capacity and wisdom and unique amongst it was and are China, where one witnessed zero-tolerance policy on something which is beyond human control.
Thus world which is largely dependent on China across most goods & services found India as a strong ally and thus came China + 1 policy for the world.
Witnessing the disruptions in the Supply chain caused by Covid and to handle any other equivalent situation better and reduce vulnerability and dependence on China, thus came the Supply Chain Resilience Initiative (SCRI) is a trilateral agreement that was led by Japan, Australia, and India. The core idea of this initiative was to create a “virtuous cycle” of strong, sustainable, balanced, and inclusive growth throughout the Indo-Pacific region by sharing best practices, investment promotion, and buyer-seller matching events for supply chain diversification.
Quad, Quad Plus, SCRI are some of the reasons why India visited Japan, but more importantly, to, strengthen ties to fast-track cheap capital flows into India from Japan so that India can continue to remain the Engine of growth for the World, clocking CAGR of 8% real GDP growth.
Interestingly Japan chose India from thousands of miles away as a partner for growth and a friend, and India relied upon a nation far away instead of its neighbours.
As one says, one cannot choose neighbours but surely can choose whom one remains friends with.
Siddhartha Rastogi, Managing Director & COO, Asset Management Vertical of a leading full-service Investment Bank. (The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official view or position of any company or sister concerns or Group company where the Author is presently employed.)
RED LINES IN THE AGE OF TECH
Last week the India Foundation held a conclave on the MetaVerse. Speaking at the event which had a robot as a co-compere, Jyotiraditya Scindia, the Minister of Civil Aviation quipped that soon they would not be needing him to come and address the gathering, as there will come a time when a robot could come and deliver his speech. Taking up this train of thought, RSS leader Ram Madhav commented that since we are heading towards a world of Artificial General Intelligence there is a cause for worry as there is one crucial difference between robots and humans and this is intelligence with a heart. He commented that already there are cases of AI outguessing human intelligence, citing the example of Alpha Zero a chess engine developed by Deep Mind & Google search engines, that claims to defeat any chess player that ever lived. Hence there is a need to put checks and balances in place and draw some red lines. Madhav is right otherwise we could well be living in a world where we are shaped by tech instead of the other way around. (In fact, some would say, we are already halfway there).
Also speaking at the India Foundation conclave K Ananth Krishnan (TCS) pointed out that there are more smartphone owners in India than toothbrush owners. We are already in a dependent and needy (toxic is a better word) relationship with technology. In their book, The Art of Bitfulness, Nandan Nilekani and Tanuj Bhojwani, quote a December 2020 survey of 2000 smartphone users revealed that on an average users spent 6.9 hours on their phones every day; and most (46 %) pick up their phones at least five times in an hour-long conversation with friends. 84 % say they check their phones within 15 minutes of waking up.
It would be fair to state that the digital world has our undivided attention. And beckoning from the horizon is the Metaverse, a collective virtual shared space that we can inhabit by creating avatars or our virtual counterparts. By inhabit, they mean everything, from socialising to attending business meetings to even shopping. You can even experience the physical intimacy of a virtual hug or a handshake. You can also buy land and space on this metaverse that is being cultivated by tech giants such as FaceBook and Microsoft (only the latter calls its metaverse Mesh).
All this is very well but where does that leave our human avatars? What kind of discourse will we have where all our conversation will be governed by algorithms. Already with twitter replacing the physical townhall as the preferred forum for debate, we are in the danger of living in an algorithm bubble where we are shown only those posts that match our ideological beliefs. Facebook and Twitter have us wrapped in a bubble where we are shown only those posts that the algorithm thinks are best suited for us. We have already outsourced our search engine to them. Any further dependence will only be detrimental to our capacity for independent and free-thinking.
Digital platforms can also be misused to propagate a certain kind of narrative. If Facebook doesn’t want you to read a particular article it will simply set its algorithm in a way that will make the article harder to find on its search engine. Ditto for YouTube. Twitter can simply ban your account. So for better or (meta) worse, one must approach technology with all the trepidation and enthusiasm of handling a two-edged sword.
Gyanvapi sets Indian politics on a new course
It may be the beginning of a new judicial process that unravels the murky medieval Indian history marked by many demolitions of temples, atrocities, and killings.
A chance test case for Shringar Gauri puja outside, the survey for it, and the surprise discovery of Shivalinga— supposedly the creator and destructor at the old temple of Lord Vishwanath or Gyanvapi— is changing the political scenario with a religious fervor possibly giving a boost to the preparation for 2024 Lok Sabha elections.
Would it make the Congress effort at Udaipur futile and boost up the votary of Hindutva for a new stretch of political success? It definitely would firm up the religious thrust of Indian politics.
Varanasi is the city of Shiv. Adages are there that Shiv used to visit this city from his Himalayan home every year. None possibly expected that he would be found in the ablution tank in all his manifestation to energise his devotees. Nobody yet knows whether it is the lingam or not, but it has charged up the political atmosphere.
It may be the beginning of a new judicial process that unravels the murky medieval Indian history marked by many demolitions of temples, atrocities, and killings. The Gyanvapi can have an impact on at least ten different places, where the medieval rulers had taken recourse to the extreme brutality of converting religious structures and killing thousands. These are: Kashi Vishvanath (Gyanvapi) in the oldest living city of Varanasi; Krishna Janmabhoomi (Shahi Idgah); Rudra Mahalay in Patan, Gujarat; Bhojshala Saraswati Mandir (Kamal Maula mosque) at Bhoshala in MP; Adinath Temple (Adina mosque) at Pandua, West Bengal; Bhadra Kali Temple (Jama Masjid) in Ahmedabad, Gujarat; Vijay Temple (Bijamandal mosque) at Vidisha, MP; 27 Hindu and Jain temples (Quawwatal- ul- Islam) Qutb Minar complex; and Somnath and Ramjanmabhoomi temples that are now restored.
The Gyanvapi re-ignites the issue of what was supposed to have been settled with the judgment of the Ramjanmabhoomi temple by the Supreme Court. The five Supreme Court judges took note of the Places of Worship (Special Provisions) Act of 1991 that laid down that all shrines will be preserved as inherited by independent India on 15 August 1947. The law made an exception for Ayodhya as it was already an ongoing dispute. Nothing else was deserving of an exception, nor was it legally or constitutionally possible, the judges wrote.
The quick scenario change in the Gyanvapi incident may raise the question of the validity of the enactment of the Places of Worship Act by the Narasimha Rao government. Sentiments are high not only in Varanasi but all over. Seeming non-partisan people like PK Roy, former executive director, Airports authority of India in Kolkata; Lalima Aneja Dang, a senior radio producer; Priyadarshi Dutt, author, commentator; former editor of Doordarshan Prabhat Dabral are all charged and advising that it is prudent to settle and not react on this emotive issue. Former Vice Chancellor of Nagpur University SN Pathan and another Vice Chancellor Firoz Bakht Ahmed have appealed to the minorities to correct the steps and maintain harmony. Left-leaning Dabral says minorities must rethink despots like Aurangjeb and instead have consideration for the nation and sort it out.
The one common question the non-political elite ask is how could someone treat the revered Shivlinga with such contempt that they established the wash-tank above that. It is difficult to say whether it would have the same manifestation and feelings till elections or not. The sentiments expressed speak volumes of the hurt feelings.
The nation may recall that since 1949, the Babri structure in all purposes was a Ram temple. Emotive issues are not forgotten. That led to the demolition of the structure in 1992. The way now the Gyanvapi is flaring up with a non-issue on the plea for the right to worship Shringar Gauri images sculpted on the outer wall of the Gyanvapi, to the appointment of commissioners to the survey of the premises, and discovery of Shivlinga indicates that the issue of demolition by Aurangzeb on Sept 2, 1669, can widely impact the course of Indian politics.
The Hindutva-oriented parties will have ease in accessing the voters. Those not would have to find out the new political peg to remain relevant and vibrant.
It may start with Hyderabad’s Bhagyalakshmi temple. The TRS Chief Minister K Chandrasekhar Rao may have to take a stand on the crucial Bhagyalakshmi temple in the Charminar complex. Rao facing a pincer attack by Congress leader Rahul Gandhi and Home Minister Amit Shah will have to steer with deftness. The others and even MIM may pitch in to make the Telangana assembly elections interesting.
Whether Gujarat would like to rake up the Bhadrakali and Rudra Mahalaya issues, Madhya Pradesh ignites Vidisha and Bhojshala or not the development of the ensuing days would reveal. Maybe in MP and Gujarat, BJP might try to keep it on low fire but the opposition, also keen on proving loyalty to Hindus, can try sailing on it as BJP may look for a chance in Bengal to peg on Adinath, Pandua.
Alok Kumar, president of VHP, an eminent lawyer, is categorical: “There has been no change in the status of the religious structure since 1947, and Hindus have always performed puja at the site” calling it Gyanvyapi Mandir. VHP national spokesperson Vinod Bansal said the faces of those who were trying to “hide the truth” have been “painted black” with the “finding”.
The Congress two days back at the Udaipur Chintan meet supported the 1947 law regarding Gyanvapi. So far it has not come out with a similar supportive statement.
In the BJP only, Sangeet Som has threatened a replay of the 1992 ‘Babri demolition’. But the BJP is happy with the Varanasi court developments giving it time, to extend the restrictions at the Gyan Vapi. They being the rulers in UP are acting with caution so that the gains take them to the logical conclusion. Chief Minister Yogi Aditynath is personally observing each of the developments.
J&K PDP leader Mehbooba Mufti slammed the BJP for stoking the fire. It is simple. MIM leader Owaisi says he is ‘pained’.
The Gyanvapi will decide the religious fervor of Indian politics. The parties not aligned with BJP’s views have the challenge to tailor new strategies. The minorities are in dilemma. They are not keen on sailing with it or giving up but the voices within are advising not to get into another confrontation and solve it prudently.
Howsoever it develops, it would keep the Indian politics warm and parties would have to stir cautiously to chart their way to 2024 Lok Sabha and many assembly elections before that.
The churning continues and the nation hopes that solution would emerge for a prosperous, peaceful country.
It may start with Hyderabad’s Bhagyalakshmi temple. The Telangana Chief Minister K Chandrasekhar Rao may have to take a stand on the crucial Bhagyalakshmi temple in the Charminar complex. Rao, facing a pincer attack by Congress leader Rahul Gandhi and Home Minister Amit Shah, will have to steer with deftness.
RAHUL’S IDEAS FOR INDIA ARE NOT WELL FORMED
Among the many comments that Rahul Gandhi made about India’s socio-political situation at a conclave called “Ideas for India” in England recently, a few shook up the political, media and social media space, particularly when he said that “India is not in a good place”, that it has been soaked in kerosene by the BJP and all it needs is a spark to ignite the whole country. Another gem was about how the Indian foreign policy establishment has become arrogant and does not listen to the Europeans—something apparently a European bureaucrat had complained to him. Then there was the reiteration of one of his pet theories, which he has voiced in India as well: that India is not a nation but a union of states; that “India didn’t develop top down but almost emerged bottom up”, with the model being developed by Mahatma Gandhi. “All these states—Maharashtra, Assam, Tamil Nadu—they got together and created a negotiated peace,” Mr Gandhi said. Apparently, the Constitution does not mention India as a nation. He also said that in India there was an attack on institutions, on the election system, and that states were no longer able to negotiate and talk. He used the term “negotiation” repeatedly in the speech. Then he talked about waging a “national ideological battle” where India has to be rescued from “the deep state” that is “chewing the Indian state, much like what happened in Pakistan”. Supporting the concern of a section in the US and the West about the apparent slide of democracy in India, Rahul Gandhi added that “Democracy in India is a global public good… If it collapses it will cause a problem for planet and that is what USA is realising.” His oft repeated charge that the BJP caters to only a handful of the rich was also mentioned. He also said his party will have to launch mass movements on unemployment and state level issues in coordination with “opposition friends”. He pitched his party as the first among equals, by saying that the fight is actually between “the national vision of the RSS and the national vision of the Congress”. When asked why the Congress was not winning elections when the country’s ruling party was so bad, Rahul’s answer was, it’s because of “polarization and the total control of the media”. Apparently, the media does not allow any Opposition voices to be heard. He also confidently predicted a massive level of social problem, and a mass upsurge, something like in Sri Lanka, unless the Opposition handled the situation. He also seemed suitably impressed by China’s “vision”, while saying that both India and the US lacked a vision.
It is not known which history book the former president of the Congress party has studied, but the books that the rest of the country has studied do not mention Maharashtra, Assam or Tamil Nadu negotiating peace with the Centre to form India. Last read, Maharashtra came into existence in 1960 and Tamil Nadu in 1969 and all these divisions were linguistic in nature and decided by the Centre. In fact, not only does the Preamble of the Indian Constitution mention the word nation, B.R. Ambedkar in 1948 was categorical about the drafting of the Constitution: “The Drafting Committee wanted to make it clear that though India was to be a federation, the Federation was not the result of an agreement by the States to join in a Federation and that the Federation not being the result of an agreement no State has the right to secede from it. The Federation is a Union because it is indestructible.” In other words, India’s nationhood is non-negotiable. So to suggest that there is some sort of a contract between the Centre and the states, which may get frayed over a period of time is dangerous. It is almost as if Rahul Gandhi has been schooled into India’s “non nationhood” by the ultra-left. And therein lies the problem. It is difficult to dismiss such statements as stemming from ignorance; instead it seems to have stemmed from a belief system that has spread a lot of anarchy globally through the decades. If the idea is to pander to some sort of sub-nationalism in the name of federalism, then it amounts to stoking a very divisive fire. This is already happening in states such as Bengal and Tamil Nadu, among others. “Federalism” is being used as an excuse by some state governments to run their own writ, sometimes in defiance of Central rules. As a result, every decision taken by the state government is being challenged in court and then overturned, West Bengal being a case in point.
Also, it is but natural that Opposition parties will criticise the ruling party. A strong Opposition is the hallmark of a strong democracy. But Opposition must be constructive too. Portraying India as a cauldron of hatred, where things are about to go up in flames, comes across as an obvious attempt to scare foreign investors away; and feeding into the confirmation bias of the West about India. Does Rahul Gandhi seriously not understand that such statements end up hurting his own country? Also, why blame the Indian media—which thrives on the cacophony of the Indian political space—and India’s institutions for your lack of electoral success, when your own party members, some of your closest colleagues, are deserting you accusing you of being non-serious about your party’s political future?
As for his views on Indian diplomacy, it is bizarre that a man who wants to be Prime Minister of a sovereign nation, thinks being subservient to Western interests is great foreign policy.
And now we hear that Rahul Gandhi is hobnobbing with leftist groups in Britain and holding closed door meetings in Cambridge to devise means and ways to dislodge the Central government. It is not known how Rahul Gandhi can devise a strategy to win India sitting in Britain, unless the grand plan emerging from such sessions is to ensure that India hurts as much as Sri Lanka has, so that the streets rise up in protest to get rid of the government.
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