In this week’s edition of DRI Asia Review, we focus on India, zeroing in on recent developments and emerging trends. It highlights the plethora of security, economic and foreign policy risks in front of the Asian behemoth, which finds itself torn between old compulsions and new possibilities. We cover a recent drone strike on an Indian Air Force base in Jammu, upcoming elections in Uttar Pradesh, and the state of play of the Indian economy in the wake of the COVID-19 pandemic. And we leave you pondering the importance of radical uncertainty.
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DRI Asia Review
July 2,
India at Risk
Drone strike on an Indian Air Force base
Upcoming elections in Uttar Pradesh
India’s economy after the pandemic
Radical uncertainty

Welcome to the all-new newsletter of Diplomat Risk Intelligence, the consulting and research division of The Diplomat, your go-to outlet for definitive analyses from and about the Asia-Pacific.

Each week, DRI Asia Review will focus on a single country, subregion, or theme, based on in-house research, new DRI products, and regional media monitoring. It has four sections. The Big One offers DRI’s assessment of a major security, geopolitical, or economic issue. Babel is analysis based on translations of articles in regional newspapers and media outlets by a DRI team specializing in major Asian languages. In From Our Stable, you will find analysis based on new DRI products, short excerpts from them, or new multimedia features. And finally, each week Digestif will highlight a concept – from science, technology, economics and even philosophy – that will help you up your analytical game, irrespective of your professional interests.

In this week’s edition of DRI Asia Review, we focus on India, zeroing in on recent developments and emerging trends. It highlights the plethora of security, economic and foreign policy risks in front of the Asian behemoth, which finds itself torn between old compulsions and new possibilities. We cover a recent drone strike on an Indian Air Force base in Jammu, upcoming elections in Uttar Pradesh, and the state of play of the Indian economy in the wake of the COVID-19 pandemic. And we leave you pondering the importance of radical uncertainty.

The Big One

Two Drones Leave Behind a Nest of Questions
Indian paramilitary officials come out of the Jammu air force station after two suspected blasts were reported early morning in Jammu, India, Sunday, June 27, 2021.
AP Photo, Channi Anand

Just when India-Pakistan relations were inching towards a positive albeit modest equilibrium, a drone attack on an Indian Air Force (IAF) base has once again demonstrated how fraught that process is, as multiple actors and interests jockey to maintain their equities in the relationship. On June 27, two drones dropped improvised explosive devices on an IAF base in Jammu about 14 kilometers from the India-Pakistan international border, alarming the Indian security establishment.

While publicly available details about the attack are still sparse – and Indian media reports relying on anonymous government sources contradictory – it is clear that damage to the base from the attack was quite limited. No injuries from the attack have been reported. A day later, on June 28, two drones flying over the Kaluchak military station, also in Jammu, were spotted by Indian security forces who opened fired on them. (The drones escaped unscathed.) The two back-to-back incidents suggest that there may indeed be a deeper design behind them. However, what that is, and to what end, remain unknown.

These are not the first instances drones have been spotted by Indian forces in regions bordering Pakistan. In the past, terrorists operating in Jammu and Kashmir have used drones for arms drops. In January last year, police in the Indian state of Punjab arrested individuals for allegedly using drones to smuggle narcotics and small arms from Pakistan into India. But the attack on the Jammu IAF is base is qualitatively different since it marks the first time that drones have kinetically targeted an Indian military installation.

Theories abound in New Delhi’s strategic community about who may have been behind the attack, with analysts almost reflexively pointing the finger at Pakistan. Yet there is no conclusive evidence that the drones that attacked the Jammu IAF base took off from across the border. Others point to the distinct possibility that the small, commercial drones used may have been launched from the vicinity of the base itself, which suggests the involvement of a local terrorist group operating independently of Pakistan’s security establishment. To be sure, it is not clear what Islamabad – as it engages New Delhi through backchannel talks, and seeks to rebrand Pakistan as a benign “geoeconomic” power – stands to gain from the attack which was, symbolically at the very least, extremely provocative.

Last week, on June 23, a car bomb exploded outside Lashkar-e-Taiba (LeT) chief Hafiz Saeed’s residence in Pakistan’s Jauhar Town, killing three people and injuring 20 more, though leaving Saeed himself unharmed. Saeed is widely seen as the mastermind of the 2008 Mumbai terror attacks by Indian and Western security services and remains on the United Nations Security Council’s ISIL (Da'esh) and Al-Qaida Sanctions Committee list.

Indian journalist Praveen Swami, widely respected for his source-based reporting, has hypothesized that the Pakistani establishment, having concluded that India’s Research and Analysis Wing was behind the attempt on Saeed’s life, decided to retaliate through the Jammu IAF base attack. But again, it is not known why New Delhi, facing security headwinds from China as well as the evolving situation in Afghanistan – especially the impending return of the Taliban to Kabul in one form or the other – would decide to carry out an extremely sensitive covert operation inside Pakistan. This is also especially so when the Modi government is seeking to return a semblance of normalcy to the disputed region of Jammu and Kashmir, a task Pakistan could quite easily complicate. Simply put, India’s security environment is already quite messy. New Delhi stands to gain very little from making matters murkier.

Put differently, neither India nor Pakistan has any incentive right now to upset the delicate, nascent balance, whether in Kashmir or elsewhere in the bilateral relationship. Which begs the question: Who does?

One possibility is that LeT operatives inside Jammu and Kashmir are hitting back at India for the attempt on Saeed’s life, assuming that it was indeed New Delhi that was behind it, and without explicit clearance from the group’s handlers within the Pakistani security establishment.

The other key question that arises from the June 27 attack was whether it was a demonstration of capabilities or of intent, irrespective of the actor behind it. To wit, the former would mean that whoever carried out the attack wanted the Indian establishment to know that it could target military installations using drones, but did not intend to inflict major damage; the latter would imply that the actor in question wanted to signal India that it is willing to continue to put the Indian military in its crosshairs irrespective of signs of thaw between India and Pakistan.

Judging by the Narendra Modi government’s relatively muted response to the attack so far, it seems that for the moment, and for reasons only it understands best, India has decided to not escalate matters. For the time being, the fragile peace between India and Pakistan will continue to hold.


Upcoming Regional Election Litmus Test for Modi
Flickr, Narendra Modi

As a catastrophic second wave of COVID-19 brought India’s flailing medical infrastructure to its breaking point, many observers wondered what its impact will be on the electoral prospects of the ruling Bharatiya Janata Party (BJP) -- and what it portends for Modi’s mesmerizing grip on Indian politics. So far, it appears that Modi has once again dodged the bullet against all odds. His popularity numbers, while dented by the pandemic, appears to be stable, not to mention the fact that, compared to his peers across the world, the highest.

However, the extent to which the BJP has taken a hit from the Modi government’s colossal mismanagement of the pandemic will become completely clear when the Indian state of Uttar Pradesh goes to polls next year. The state is the largest in India, and therefore, has the largest share of seats in the lower house of the Indian parliament. State elections in Uttar Pradesh have typically had an “early-warning” function about what is likely to play out at the national level two years later.

Complicating matters further for the BJP – the incumbent in the 2022 state elections in Uttar Pradesh – was news that emerged last month of a growing rift between Chief Minister Yogi Adityanath, an ultra-right firebrand leader, and Modi. While it is too early to say whether such a rift would indeed persist till the elections next year (and if it exists to begin with), overall, the BJP looks to be on a strong foot. This is not the least because of a (controversial) decision by the Indian Supreme Court last year around a piece of land in Ayodhya – a town in Uttar Pradesh which has been subject of much acrimony and, in instances, bloodshed, between Hindus and Muslims.

In July 2020, the court ruled that the land on which a mosque from the Middle Ages stood, and that was allegedly razed by Hindu fundamentalists (including those affiliated with the BJP) in 1992, belonged to the Hindus It also ordered the central government to manage a trust for construction of a temple for Hindu deity Ram there. (Devout Hindus maintain that the site is the birthplace of Ram.) While the Modi government notionally had little to do with the judicial verdict, supporters of Modi and the BJP had portrayed it as a victory at the time. Modi himself attended a ceremony flagging off the construction of the Ram temple in Ayodhya in August last year, in a manner laden with high symbolism. On that occasion, Modi called the upcoming temple a “modern symbol of our traditions.”

On June 27, leading Hindi newspaper Dainik Jagran, headquartered in Uttar Pradesh, reported on the Modi government’s plans for Ayodhya following the construction of the Ram temple. The report notes that it includes developing the town into a “tourism hub” that will adhere to cultural traditions etched in every Indian, leading to their spiritual awakening, while using modern technology for its development. Modi had reviewed a “vision document” related to the development of Ayodhya on June 26 during a virtual meeting. According to the newspaper, Adityanath had also concurred on this point during the meeting, noting that Ayodhya will become a “global spiritual hub,” incorporating modern amenities leading to its all-around development. This, in many ways, is the BJP’s signature campaigning style: rhetoric of development and modernity amid what many see as furthering a deeply divisive – but electorally beneficial – agenda.

Meanwhile, opposition parties have their own plans, though the possibility of them fighting the elections in tandem strategically to defeat the BJP remains uncertain. Reporting on June 28, another Hindi newspaper, Amar Ujala, noted that All India Majlis-e-Ittehadul Muslimeen (AIMIM), a party that purports to represent minority interests, will field candidates in 100 seats across Uttar Pradesh in the elections next year, in some cases by teaming up with smaller regional parties. The smaller parties, according to AIMIM leader Asaduddin Owaisi, include Suheldev Bharatiya Samaj Party (SBSP), an understanding SBSP has refuted, according to other media reports that have since emerged. It is important to note Owasi’s claim that the AIMIM was teaming up Bahujan Samaj Party (BSP) – a regional heavy hitting party – was also refuted, by Mayawati, former chief minister of Uttar Pradesh and BSP leader.

Meanwhile, Amar Ujala predicted on June 27 that the BJP’s victory in ongoing district elections – which it described as a “semifinal” to the state elections next year – was a certainty in 17 out of 75 districts.


India’s Economy After the Pandemic – And the Interconnected Nature of Risks
Flickr, Ref54

A new DRI Monthly Report, based on consultations with eight prominent Indian economists – including leading scholars, former senior Indian government officials and economic journalists – concludes that the COVID-19 pandemic stands to seriously dent India’s economic prospects in the short and medium terms. To be sure, India was facing economic headwinds even before the pandemic, with slowing growth, rising unemployment, as well as significant policy uncertainty spooking businesses, investors, and households alike. With investments and trade performance weak, the Indian economy was firing mainly on consumption, which the first and second waves of the pandemic have hit badly.

In many ways, the extant situation with the Indian economy perfectly illustrates how risks are interactive: pandemic-induced lockdowns have simply deepened problems that were already plaguing the economy. Add to these geopolitics – and India’s growing distrust of China arising out of the continuing military standoff between the two countries in Ladakh, which has roughly coincided with the pandemic – and a significant reorientation of the Indian economy under Modi’s watch could be in the making.

Last June, Modi made a public pitch to make India “self-reliant,” driven by the need to reduce dependence on supply chains that critically pivot around China and were severely disrupted by the pandemic. But the self-reliance sloganeering goes beyond targeting any one country or risk. The growing consensus within the current dispensation in New Delhi is that significant components of the economic liberalization program initiated three decades ago, especially those related to foreign trade, are past their sell-by date. But if India does end up making a sharper turn away from globalization by, say, further raising barriers to market access and international trade, that, in turn, is bound to carry geopolitical costs for New Delhi.

You can access the new DRI report on the Indian economy here. An ungated excerpt of the report, which lists DRI assessment of the key short and medium term risks to the Indian economy, can be found here.


Radical Uncertainty
Flickr, Steve Johnson

The pandemic has also once again brought to relief the question whether all risks, including economic ones, can be sharply quantified in terms of probabilities – and the extent to which policy planners and businesses should keep in mind that some can never be. In other words, it has once again drawn us to seriously consider the distinction between risk and uncertainty. Uncertainty, as a notion in economics, celebrates its 100th anniversary this year; in 1921, American economist Frank H. Knight, in a pathbreaking book described risk as “measurable uncertainty.” He wrote: “If we are to understand the workings of the economic system we must examine the meaning and significance of uncertainty; and to this end some inquiry into the nature and function of knowledge itself is necessary.”

Last year, building on the work of Knight – and also that of John Maynard Keynes, who also emphasized the need to distinguish between risk and uncertainty – two British economists John Kay and Mervyn King, proposed the notion of radical uncertainty as a way to recognize that a large class of risks cannot be understood in terms of probability distributions. Equally on-point, Kay and King (who served as the Bank of England’s governor) railed against the fetish of assigning probabilities to events, even when such assignments are logically spurious and conceptually meaningless, among intelligence and economic analysts. Using examples ranging from the Global Financial Crisis to the United States’ decision to assassinate al-Qaeda leader Osama bin Laden in 2011, they drive home a central message that should become a key part of every risk analyst’s mental toolbox: that there is a “vast range of possibilities that lie between the world of unlikely events which can nevertheless be described with the aid of probability distributions, and the world of the unimaginable.”

Coming soon

Asia-Pacific Cyber Risks

Stay tuned for a new DRI Monthly Report that surveys the Asia-Pacific cyber risks landscape. The report, drawing on primary and secondary research as well as expert consultations, surveys the geopolitical and commercial forces shaping Asia’s approach towards cybersecurity and the role of the COVID-19 pandemic in consolidating emerging cyber trends. It also highlights areas of critical importance for governments and businesses allowing them to act on tomorrow’s challenges today.

Diplomat Risk Intelligence (DRI) is the consulting and analysis division of The Diplomat, the Asia-Pacific’s leading current affairs magazine.

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