The Week That Was:

From: Vartaa Editorial Team on Sep 25, 2016

Uri aftermath

The aftermath of the Uri attack dominated news coverage this week with both India and Pakistan trading charges and attempting to use diplomacy to strengthen their case. In a rally at Kozhikode, PM Modi called out the people of Pakistan to oppose the terror policies of their rulers. Pak PM Nawaz Sharif meanwhile hinted that the Uri attack could have been a retaliation for the clampdown of protests in Kashmir. Foreign Minister Sushma Swaraj reached New York over the weekend to address the UN General Assembly in response to Pakistan's remarks while the US stepped into express concern over the rising tensions and also assure Pakistan that the bill introduced in the US Congress to brand it a terror state would not get much support.

Rafale jets deal finally

The Indian Air Force will finally have 36 brand new Rafale jets after India and France signed the ink on a $8.9bn (Rs 59,000 crore) deal this past week. The new jets will help to bolster the Air Force's ageing fleet. Like all defence deals in the country, controversy did not stay far away from this one as well. The Congress party has demanded that the details of the deal be made public citing the lack of any technology transfer provision in the main announcement.

Climate Change Accord

India this week announced that it would ratify the Climate Change Accord signed by 195 nations in Paris in 2015 by next month. This announcement marks a significant progress for the accord since both India and China are seen as two countries whose implementation would be critical for the accord's success. In an unrelated but environmentally significant development, a new study has found that despite its level of pollution, the waters of the River Ganges still have therapeutic properties. The long overdue dip in the river might well be worth it after all.

Opinions you must read:

  • Ram Guha, one of the country's eminent historians, speaks on the decline of the Congress party.
  • The Mint examines a perpetual obsession of India's security establishment - to be more Israel like in its response to terrorism.
  • The Indian Express looks at how India can effectively respond to Pakistan in the light of the latest Uri attack.

Chart of the Week

With the recent Uri terrorist attack that killed 18 Indian soldiers, tensions between India and Pakistan are running particularly high. The Indian public is seething with rage, demanding reprisal attacks and the media is doing its part in stoking the fire. So far, apart from strongly denouncing Pakistan for sponsoring cross-border terrorism, the Indian government has not provided any substantial response. Which got us thinking, apart from military action could India take any other steps to send a message to Pakistan? Reconsidering the Indus river treaty is being discussed in some circles but could India make any trade-related moves?

Turns out, most likely, it cannot. India's trade with Pakistan is a paltry $2.4 Billion. That is less than 0.5% of India's total trade volume. India's exports to Pakistan amount to ~$2 Billion and most of them are made up of cotton and organic chemicals. An insignificant amount of unimportant commodities.

It is still interesting to look at growth in Imports from and Exports to Pakistan in the last 10 years. Imports and exports from Pakistan have increased at an annual rate of 5%. India's overall imports and exports to the rest of the world have increased at a faster annual rate of 8%. Small and growing steadily, trade between the two countries has surprisingly not dried up regardless of how bad relations have gotten between the neighbors. Even after the 26/11/2008 Mumbai attacks, trade dipped only slightly. Trade, however small, seems too important and mutually beneficial to let go off completely.