Introdution
India taking more than seven decades to host the leader of the most populous Arab country as the chief guest of the Republic Day celebrations signals the current state of bilateral relations.
However, this should not have been the case, especially given the bonhomie of the 1950s.
As Egyptian writer Mohamed Hassanein Heikal once reminded, between February 1953 and July 1955 alone, Prime Minister Jawaharlal Nehru and President Gamal Abdel Nasser met as many as eight times. Due to logistical and political reasons, Cairo was Nehru’s transit point for his visits to Europe and the Americas and this partly contributed to the frequency.
Decline of Egypt
The June War of 1967, which ended with the Arab defeat, marked Egypt’s decline in Middle Eastern politics and this was formalised following the oil crisis of 1973 that cemented the ascendance of Saudi influence.
The energy-driven approach to the region spurred by economic reforms of the 1990s further pushed Egypt out of India’s priorities.
Thus, as it was coming to terms with the post-Cold War international order, India shifted its attention to Israel, with whom it normalised relations in January 1992.
On the other hand, Egypt’s dwindling regional influence, the emergence of new players like Türkiye and Qatar, the power aspirations of Iran, and its reach beyond its immediate neighbourhood meant that India gave lesser importance to Egypt.
Moreover, the great power aspirations in the early 21st century pushed India to prioritise G20 over non-alignment. Thus, meeting Saudi leaders at G20 summits became common 2014.
Rekindling the Old flame
There were attempts to resurrect the old flames of Indo-Egyptian relations. Previous presidents Hosni Mubarak (November 2008) and Mohammed Morsi (March 2013) did visit India and not to be left behind, Abdel Fattah El-Sisi also came twice in October 2015 and September 2016.
But no Indian PM had visited Egypt since Manmohan Singh, who attended the Sharm el-Sheikh NAM summit in July 2009. Despite invites, PM Modi, who travelled to several Middle Eastern countries, has not visited Egypt. However, he met Sisi in multilateral forums such as the UN, BRICS and SCO.
China Angel
As has been the pattern in recent decades, India’s decision to host Sisi at this juncture has a China angle. China’s footprints in Sisi’s mega infrastructure projects are visible and growing.
Between 2013 and 2019 alone, China invested $28.5 billion in Egypt, with more than half of them going to industrial projects. In sync with its Belt and Road Initiative, China is active in the second Suez Canal project and the new Central Business District being developed in Cairo.
For Sisi, China offers an opportunity to lessen his dependence on the US, which is driven by human rights concerns under the Biden administration. Since assuming office in 2014, Sisi has visited China as many as seven times.
Egyptian Situation
The economic situation in Egypt is also challenging. The conditions that catapulted the masses to rise against Mubarak as well as Morsi have not fundamentally changed. The situation continues to be precarious.
More than a quarter of the 110 million population is below the poverty line. There is double-digit inflation, and unemployment is close to 10 per cent.
The national debt is expected to touch $500 billion by 2027.
In addition, the Russia-Ukraine War has accentuated the food security problems of Egypt. Nearly two-thirds of the population, or 60 million people, rely on food subsidies, and the growing import grain prices are widening Egypt’s trade deficit.
The second Suez Canal, developed at over $8 billion, is not without its problems. Due to open in July this year, it faces an unexpected challenge: Israel.
Plans are underway to build pipelines between the Israeli ports of Eilat on the Gulf of Aqaba and Ashkelon on the Mediterranean for exporting Gulf oil, especially from the UAE to Europe.
When materialised, this would considerably undermine the Suez Canal tanker traffic. However, due to its geostrategic location and strategic positioning, Egypt is trying to capitalise on its multiple identities.
Despite losing its erstwhile preponderance, Egypt is still an important Arab country, wielding considerable influence in the 22-member Arab League. With over 80 per cent of its population following Islam, Egypt adheres to moderation.
Pushing the country towards religious extremism was one reason that led to President Morsi’s downfall.
Since the 1950s, its leaders have viewed Muslim Brotherhood as a threat to Egyptian identity and social fabric, and in December 2013, the Brotherhood, the mother of several religious groups in the Middle East and beyond, was proscribed as a terrorist organisation.
The Constitution, adopted through a popular referendum in January 2014, is one of the most inclusive in the world. Despite declaring Islam as the state religion, it recognises and hails the historical legacy of Moses, Jesus Christ and Prophet Mohammed in making Egypt “the cradle of religions.”
In the socio-political realm, Egypt uses its identity as an African and Francophone country in its diplomatic outreach and is a major player in both groups.
Conclusion
Above all, Egypt is a pivot in several mediating efforts in the Middle East, especially in the Arab-Israeli conflict. The peace treaty with Israel and its diplomatic engagements enabled Egypt to lower periodic tensions and conflict.
For example, even the financial clout of Qatar could not match Cairo’s diplomatic acumen in ending the 50-day Gaza conflict in 2014.
The Abraham Accords offered an additional avenue for Egypt to leverage its advantages. Convergence of interests with the US on several regional issues and geographic proximity enabled Sisi to host several meetings between Israel and Arab countries.
Even on I2U2, where India is a key member, Sisi is an indirect player by actively courting Israel and the UAE.
Thus, Egypt’s multiple identities—Arab, Islamic, African, Francophone, peace mediator and inclusive country—could be shored up to expand India’s footprints in the Middle East.
The joint statement issued during Sisi’s visit speaks of upgrading the bilateral relations “to the level of ‘Strategic Partnership’ covering political, security, defence, energy and economic areas.” However, walking the talk will be easier said than done, especially in light of both countries’ prolonged neglect and indifference.
Credit : New Indian Express, P R Kumaraswamy
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.