Category: Burning Issues

  • [Burning Issue] Modi-Xi Informal Summit at Mamallapuram


    Context

    • PM Modi and Chinese President Xi Jinping recently held an informal summit in the ancient coastal town of Mamallapuram or Mahabalipuram in Tamil Nadu.
    • The two countries convened their first Informal Summit in central China’s Wuhan in April 2018, where they exchanged views on issues of global and bilateral significance.
    • Irrespective of the rhetoric of a Wuhan spirit, the relationship is facing difficulties, reflected in a number of disputes between the two countries.

    Informal Summits

    • Informal Summits act as supplementary exchanges to annual Summits and other formal exchanges such as the G20 Summit, EU-India Summit and the BRICS Summit among others.
    • It allows for direct, free and candid exchange of views between countries, something that may not be possible to do through formal bilateral and multilateral meetings that are agenda driven.
    • Informal Summits may not take place on a fixed annual or biennial schedule; they are impromptu in the sense that they take place when a need for them is perceived by the concerned nations.

    Why do we need such summits?

    • Since Informal Summits allow discussion on wide-ranging issues, they are not particularly purpose-specific, and are sometimes considered to play bigger roles in diplomatic dialogue than formal exchanges.
    • This is the reason is that they tend to be more in-depth, and relatively flexible in intent and the scope of discussion.
    • The “institutionalization” of such Summits would help in strengthening the “strategic communication” between the countries, irrespective of the political party in power.

    Why Mamallapuram?

    • Mamallapuram was chosen for various reasons — historical, practical, as well as strategic. Mamallapuram was the epicenter of the relations of China with India since ancient times.
    • The 2004 Saluvankuppam excavations in Kancheepuram district make it clear that Mamallapuram was a port town even during the Sangam era about 2000 years ago.
    • The mighty Pallavas, whose flourishing sea port was Mamallapuram for a long time, had a relationship with China and had even sent envoys there during their rule.
    • Available literature shows that the Pallava Kings had a trade and defence relationship with China.
    • There was understanding that these kings would help China in keeping a check on the growth of Tibet as a powerful nation during those years.
    • Chinese monk Hiuen Tsang visited Kancheepuram in the seventh Century AD and he no doubt reached the ancient port town of Mamallapuram and then continued his journey to the temple town.

    Key takeaways of the summit

    1) Trade

    • China is one of India’s largest trading partners. the bilateral trade between the two nations reached $95.54 billion in 2018, but the trade deficit was at $53 billion in China’s favour.
    • During this summit, Modi and Xi reinforced their commitment to improve trade relations.
    • This was one of the key agreements of the Wuhan summit. The leaders agreed to a new set up new mechanisms to achieve this goal.

    2) Working together on international issues

    • India and China have many similar interests at the World Trade Organisation and at the UN.
    • Both nations have been under stress because of Trump’s trade war and due to the rising tensions in West Asia.
    • If they can come together and effect meaning change to resolve these issues, then other emerging economies will also stand to benefit.
    • They agreed that there must be reforms that reflects the new realities of the 21st century.
    • They also agreed that rules-based multilateral trading systems must be supported and strengthened.

    3) People to people contact

    • To celebrate the 70th year of diplomatic relations between the two nations, the year 2020 will be designated as Year of India-China Cultural and People to People Exchanges.
    • To celebrate the civilizational ties between the nations, the MEA said that the two leaders have decided to form a ‘Sister-state relationship’ between Tamil Nadu and Fujian Province.
    • There is also a proposal to set up an academy to study these links.
    • The focus on tourism and contact among the people of both nations will not only boost trade, but it will help in building trust between them.
    • Establishing such confidence-building measures can help integrating the people by removing stereotypes.

    4) Chennai connect

    • Xi said that he was happy with the welcome he received and said that invited Modi for another round of discussion China next year.
    • The two leaders also made a commitment to manage differences  in such a way that they would “not allow differences on any issue to become disputes”.
    • The ‘Chennai connect’ sets the tone for future discussions.
    • Here, the two leaders agreed to set up a new mechanism to have better cooperation in trade and defence.

    5) Kashmir issue

    • In August, India scrapped Article 370, which gave special status to the state.
    • This irked China, which has several interests in the state (they have invested in PoK, and claim a portion of the state).
    • They lent their support to their “all-weather friend” Pakistan as it is unlikely to give up on using Pakistan to balance India.
    • This issue happened right before the summit, and many believed that India should raise this matter with China.  But it was not even a part of the discussion.
    • The lack of Kashmir in the talks also shows that both nations are willing to look beyond, at least at the leadership level.

    Xi’s 100-year plan

    • Xi Jinping on Saturday declared that Beijing was pursuing an “unshakable policy” of developing close ties with India, and proposed a 100-year plan to cement ties between the two ancient civilizations.
    • Xi stressed that “military security exchanges and cooperation” between the two countries must be “earnestly” improved.
    • Xi also called for” fair and reasonable” solution to the “boundary problem” that is acceptable to both parties based on “Political Guiding Principles Agreement” agreed to by the two countries in 2005.

    Continuing the Wuhan Spirit

    • For instance, in Wuhan, both premiers discussed a range of subjects, including the India-China boundary question, bilateral trade and investment, terrorism, economic development and global peace.
    • They succeeded in reaching a “broad consensus”.
    • China is not the only country with which India has had an Informal Summit.
    • The two leaders discussed their countries’ responsibilities towards maintaining global peace and stability, military and nuclear energy cooperation, and the movement towards an equitable world order.

    Potential of such informal summits

    • At the first Informal Summit between India and China held in Wuhan on April 27-18, 2018, Modi and Xi met “to exchange views on overarching issues of bilateral and global importance.
    • It aimed to elaborate their respective visions and priorities for national development in the context of the current and future international situation.
    • The Wuhan Summit achieved a “re-set” of the Sino-Indian relationship after the two-month long border standoff at the India-China-Bhutan tri-junction in Doklam.
    • Significantly, at Wuhan, the two leaders decided to give “strategic guidance” to their military, so that issues did not escalate as in the case of the Doklam standoff.

    Way Forward

    • India succeeded in waking up the Chinese to the reality that this new faith-based global terror invoking Jehad, which was emanating from Pakistan, was dangerous for both India and China in the long run.
    • The two nations enjoy a ‘deeper strategic communication and effective practical cooperation’.
    • In a nutshell, the second informal summit is an advance over Wuhan and has established a bilateral grid that suits the security and economic strategy of India.

     

     

     

     



    References:

    https://www.civilsdaily.com/news/explained-modi-xi-informal-summit/

    https://www.civilsdaily.com/news/china-backs-wuhan-spirit-despite-differences-on-bri/

    https://www.indiatoday.in/news-analysis/story/is-there-hidden-chinese-message-narendra-modi-xi-jinping-meet-nepal-1609198-2019-10-14

    https://www.thehindubusinessline.com/news/modi-xi-informal-summit-key-takeaways/article29680297.ece

    https://timesofindia.indiatimes.com/blogs/toi-edit-page/modi-xi-summit-chinas-territorial-fetishism-and-why-the-road-from-wuhan-may-peter-out-at-mamallapuram/

    https://www.orfonline.org/expert-speak/modi-xi-summit-a-more-balanced-china-policy/

    https://www.thequint.com/videos/news-videos/modi-xi-jinping-informal-summit-mahabalipuram-explained

  • [Burning Issue] India-Bangladesh Relations in recent times


    Context

    • Bangladesh PM Sheikh Hasina was in Delhi for a four day visit to address the World Economic Forum India summit and has signed series of agreement on various matters.
    • However bilateral relations between the two have witnessed unprecedented tensions over the last few years owing to certain issues.

    An Overview

    • India’s links with Bangladesh are civilization, cultural, social and economic.
    • There is much that unites the two countries – a shared history and common heritage, linguistic and cultural ties, passion for music, literature and the arts.
    • The two nations were strong allies during the Bangladesh Liberation War in 1971.
    • However, they developed different Cold War alliances in the late 1970s and 80s.
    • With the onset of economic liberalization in South Asia, they forged greater bilateral engagement and trade.

    India’s relation with Bangladesh

     

    Connectivity

    • Perhaps on top of the list is connectivity between India’s mainland and the crucial northeast, which is part of India’s “Look East” Policy.
    • The only connection between India’s mainland and the northeast was the Chicken’s Neck – a narrow strip of land that has always been a huge security concern.
    • India and Bangladesh have signed several pacts, so India can actually send goods and passengers over land across Bangladesh, connecting Bengal to Tripura.
    • Chittagong port, too, is now open to Indian vessels and will ease supply of goods, meaning India is much more connected to the northeast than before.

    Security

    • The other part of ensuring the security of the northeast is by ensuring that Bangladesh does not become a shelter for its insurgents.
    • The other big security concern for India is that Bangladesh should not turn into the frontline of radical terror in the southeast.
    • Bangladesh could turn into a launchpad for religious radical terror activities in India.
    • India’s relationship with Bangladesh is also linked to its relationship with China.
    • India did not want Bangladesh to become a pearl in China’s “String of Pearls” strategy to hem in India by using its neighbours.

    Trade and Industry

    • Given Bangladesh’s GDP and economic growth, the Indian industry is taking a serious interest in investing in the country.
    • Bangladesh is India’s biggest trade partner in South Asia.
    • India’s exports to Bangladesh for financial year 2018-19 (April-March) stood at US $ 9.21 bn and imports from Bangladesh for the same period stood at US $ 1.22 bn.
    • India has ensured duty-free access of Bangladeshi goods to Indian market esp. the ready-made garments exports to India.

    Energy Cooperation

    • Energy cooperation between the two sides has also shown a lot of positivity with Indian state Tripura supplying a total of 160 MW of power to Bangladesh in addition to the 500 MW the country is receiving from West Bengal since 2013.

    Defence Cooperation

    • India and Bangladesh share the historical legacy of cooperation and support during the Liberation War of 1971.
    • Various Joint exercises of Army (Exercise Sampriti) and Navy (Exercise Milan) take place between the two countries.

    Issues in the Bilateral Relations

     

    Illegal migration

    • This has always been a primary problem for India since the partition of Bengal.
    • In view of this, recently, the Supreme Court asked the Centre complete the fencing of the India-Bangladesh border soon to check illegal immigration from Bangladesh into Assam.

    Cattle smuggling

    • It is considered to be one of the losses for India of losing its indigenous variety and trade.
    • Cattle haats along the India-Bangladesh border are becoming a source of cattle for smuggling

    Counterfeit currency smuggling

    • Dumping of Fake Indian Currency Notes, recently several duplicate notes have been found along the border, which cripple the Indian Economy severely.

    Joining Belt and Road initiative

    • In 2016 when Chinese President Xi Jinping visited Bangladesh, the smaller country agreed to join the OBOR.
    • China is already investing in a number of infrastructure projects in the country including the deep sea port at Chittagong.
    • It is likely that these projects will now be subsumed under the OBOR project.

    River Water Sharing

    • India and Bangladesh, as good neighbours, have moved forward on other sectors like power, investment and security but the Teesta waters issue remains a big problem due to continuous protest by the Mamata Banerjee led West Bengal government.
    • Bangladesh is unhappy about the lack of resolution on all the common rivers.

    Factors attributing to furtherance of tensions

     

    Repatriation of illegal migrants

    • The National Register of Citizens (NRC) has left out 1.9 million Assamese from the list with a group labelled as “illegal immigrants from Bangladesh” living in Assam post-1971.
    • India plans to seek their repatriation to Bangladesh.
    • Bangladesh remains firm in its stance that no migrants travelled to Assam illegally during the 1971 war of independence and that the controversial NRC risks hurting relations.

    Rohingya Issue

    • The Rohingya issue and India’s remarks in 2017 on the issue have been upsetting for Bangladesh which has been facing the challenge of providing shelter to more than a million refugees fleeing persecution.
    • The recent visit to Dhaka by India’s External Affairs Minister S. Jaishankar (August 19-21), saw a marked departure in India’s position.
    • He had said then: “We agreed that safe, speedy and sustainable return of displaced persons (Rohingyas) is in the national interest of all three countries – Bangladesh, Myanmar, and India.”
    • However, it is China that is mediating when, given its geographical proximity, it is India which is ideally positioned to play a positive role in regional leadership.

    Unresolved river disputes

    • India and Bangladesh have failed to conclude a framework agreement to optimise the use of waters from six rivers including the Manu, Muhuri, Khowai, Gumti, Dharla and Dudhkumar, which has been discussed for several months.
    • No progress was reported on the long pending Teesta water sharing agreement either after the recent visit.

    Indian faults

    • Bangladesh would seem to have comprehensively addressed Indian concerns with regard to support to militant elements in the North-east, for long an area of Indian concern.
    • On its part, India continues to be unable to deliver on Teesta.
    • The Ganga Barrage project in Bangladesh carries economic advantages as well as political overtones, but has not been addressed with suitable despatch by India to enable Bangladesh to obtain external funding.
    • Delay in implementation of the BBIN (Bangladesh, Bhutan, India, Nepal initiative) is inexplicable.
    • Even if India is not chiefly responsible, one may have expected greater attention.

    Still India needs Bangladesh

    South Asian geopolitics

    • Bangladesh has emerged as one of India’s closest partners and second to Bhutan in South Asia.The role of Bangladesh is critical for India’s Act East Policy.
    • India counts on Dhaka’s support in Bangladesh, Bhutan, India and Nepal (BBIN) and Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) initiatives.
    • These collectively complement New Delhi’s Southeast Asia outreach.

    Connectivity

    • Bangladesh’s location is a strategic wedge between mainland India and NE seven states. Each of these states is land-locked and has shorter route to the sea through Bangladesh.
    • Transit agreement with Bangladesh will spur the socio-economic development of North-East India.

    Countering China

    • Bangladesh uses China card to supplement its bargaining capacity against India.
    • A ‘neutral’ Bangladesh thus ensures containment of an assertive China in this region.

    Fight against terror

    • Bangladesh has emerged as a key element in sub-regional connectivity initiatives with Pakistan refusing to play ball rendering SAARC ineffective.
    • In 2016, when India decided to skip the SAARC Summit in Islamabad following spike in cross-border terror attacks, Bangladesh and Bhutan wasted no time in joining ranks in solidarity with India

    Outcomes of the recent visit by PM Sheikh Hasina

    India and Bangladesh signed seven agreements and also inaugurated three projects to deepen their partnership. The Seven Agreements include:

    1. The use of the Chattogram and Mongla ports in Bangladesh for movement of goods to and from India, particularly from Northeastern India.
    2. Use of Bangladesh’s Feni river for drinking water supply in Tripura.
    3. However, no progress was reported on the long pending Teesta water sharing agreement.
    4. Exchange of data and information to prepare a framework of interim sharing agreements for six rivers — Manu, Muhuri, Khowai and Gomati rivers of Tripura and Dharla river of Bangladesh and Dudhkumar river of West Bengal.
    5. Daudkanti (Bangladesh)-Sonamura (Tripura) inland water trade route to be included under Protocol of the Inland Water Transit and Trade.
    6. Consensus on lifting restrictions on entry and exit from land ports in India for Bangladeshi citizens travelling on valid documents.
    7. Implementation of the Lines of Credit (LoCs) committed by India to Bangladesh.

    New bilateral development projects

    • Import of bulk Liquefied Petroleum Gas (LPG) from Bangladesh
    • Inauguration of Vivekananda Bhaban (students hostel) at Ramakrishna Mission, Dhaka.
    • Inauguration of Bangladesh-India Professional Skill Development Institute (BIPSDI) at the Institution of Diploma Engineers Bangladesh (IDEB), Khulna, Bangladesh.

    Security engagement

    • Both sides noted the progress made in finalization of a MoU on Establishment of Coastal Surveillance Radar System in Bangladesh.

    Way Forward

    • In a neighbourhood where distrust and cynicism prevail over friendship and hope, the relationship between the two countries has given hope for optimism.
    • India-Bangladesh relations have matured in the last decade with development in many areas of cooperation.
    • The shared colonial legacy, history and socio-cultural bonds demand that the political leadership of the two countries inject momentum into India-Bangladesh relations.
    • Sheikh Hasina’s trip to India has helped relations graduate to the next level of strengthening the three Cs: cooperation, coordination, and consolidation.
    • In due course of time rest of the issues will be sorted. But the sooner existing challenges are resolved, the better it is.

     

     



    References

    https://www.civilsdaily.com/india-and-bangladesh-relations/

    https://www.civilsdaily.com/india-bangladesh-relations/

    https://www.drishtiias.com/daily-updates/daily-news-analysis/india-bangladesh

    https://indianexpress.com/article/opinion/columns/india-bangladesh-relations-shiekh-hasina-narendra-modi-6058161/

    https://www.firstpost.com/india/india-bangladesh-sign-seven-pacts-during-sheikh-hasinas-visit-coastal-surveillance-river-water-sharing-improving-connectivity-among-key-takeaways-7464291.html

    https://www.dw.com/en/bangladesh-pm-sheikh-hasina-in-india-to-bolster-trade-connectivity/a-50708175

    https://www.thehindu.com/opinion/op-ed/furthering-this-neighbourhood-friendship/article29577509.ece

  • [Burning Issue] Ban on Single Use Plastics


    Plastic ban delayed

    • A blanket ban though would not take place, contrary to expectations that were raised after the PM mentioned of single-use plastics in his August 15th
    • India would phase out single-use plastics by 2022, PM Modi announced at the 150th birth anniversary of Mahatma Gandhi in Ahmedabad on October 2, 2019.

    Single Use Plastics

    • As the name suggests, single-use plastics (SUPs) are those that are discarded after one-time use.
    • Besides the ubiquitous plastic bags, SUPs include water and flavoured/aerated drinks bottles, takeaway food containers, disposable cutlery, straws, and stirrers, processed food packets and wrappers, cotton bud sticks, etc.
    • Of these, foamed products such as cutlery, plates, and cups are considered the most lethal to the environment.

    Missed the date. Why?

     

    • With several crises on the economic front and fears in the plastic industry due to the proposed ban, the government is not too keen on taking any rushed decision on a blanket ban. This has been for various reasons:

    1) Fear of Job losses

    • Experts and people related to the plastic industry feared severe job losses in the industry due to the proposed ban.
    • There are over 50,000 plastic manufacturing industrial units functional in the country currently, providing employment opportunities to 4 to 5 million people.
    • A blanket ban on single-use plastic could lead to closure of about 10,000 industrial units and over half a million people would be out of jobs.

    2) No definition of single-use plastic yet

    • The major bone of contention remains the fact that there is no central definition of what comprises single-use plastics, which may adversely affect any sort of ban.
    • The PM defined them as plastics which are used only once and then discarded.
    • At times, it is misunderstood to mean only polythene bags. For any ban to be successful, we need a clear definition of single-use.

    3) Poor response from states

    • The 2019 CPCB report remarked that states/UTs were not furnishing information regarding Plastic Waste Management Rules, 2016 in their jurisdiction.
    • This included PW generation records, creating state level advisory body, framing bylaws, marking and labelling of MPLs, plastic manufacturing/recycling units etc.
    • States/UTs were not taking concrete steps to take preventive and regulatory measures envisaged under the rules.

    4) No clarity on policy move

    • Stakeholders in the plastic industry have been also holding meetings with the government seeking clarity in its policy on single-use plastic.
    • Various stakeholders demand that the government should promptly come up with a clear cut policy towards implementation of plastic ban and then it should be carried out in a phased manner.
    • This will also help the industry in understanding its impact and then they might be able to accept it.

    Why is ban needed?

     

    1) Pollution

    • India generated 26,000 tonnes per day (TPD) of plastic waste in 2017-18, the latest year for which data is available, according to the Central Pollution Control Board.
    • Of that, 15,600 TPD, or 60 per cent , was recycled.
    • The rest ended up as litter on roads, in landfills or in streams. Uncollected plastic waste poses a huge threat to species on land and in water.

     2) Non-renewable and non-biodegradable

    • Unlike scrap metal that’s recycled almost entirely, about 90% of the plastic the world has produced so far has been discarded as waste.
    • This is resulting in global environmental and social damage of more than $2.2 trillion every year.

     3) Energy intensive

    • Production of plastic material is very energy intensive.
    • They require a lot of water for their production. Thus using plastic bags is not advisable.

    4) Threat to aquatic life

    • Being non-recyclable, plastic bags end up in the oceans. While they reach, they break up into tiny little pieces and are consumed by wildlife.
    • Thereby leading to health issues or even death. Many animals also get entangled or trapped in plastic bags.

    5) Health hazard

    • Toxic chemicals from plastic bags can damage the blood and tissues.
    • Frequent exposures can lead to cancers, birth defects, impaired immunity, hormone changes, endocrine disruption and other serious ailments.

     

    Phasing out SUPs. How?

     

    1) Baseline and inventory analysis

    • There is a need for a thorough analysis of environmental, social and economic impacts of SUPs.
    • Inventorization studies in order to estimate how much fraction of single use plastics is there in our plastic waste, how much of this fraction comprises packaging waste, cutlery items, carry bags, PET bottles, etc., are to be done.
    • These numbers shall help assess the scale of such waste and look for a clear alternative.
    • There needs to be an initiative at state level to push cities to inventorize their dry waste. Since the composition of our waste has changed drastically with more plastics, it is important that this be done.
    • Only then we can assess the extent of their impact before imposing bans. Such a study has not been done so far and has now become the need of the hour.

    2) Clearly defining of SUPs

    • For this ban to be successful, we need a clear definition of SUPs. Currently, different definitions are used by governments.
    • Single use simply means products that are used once and then discarded. This includes a huge amount of packaging waste, including water bottles and so a clear definition is critical.
    • Any plastic that is made from polymers of HDPE, LDPE, PET, PS, PP, EPS is single use plastics, according to the United Nations.
    • The definition in Australia is that single-use plastic includes shopping bags, cups, straws and packaging.
    • The IEEP’s and European Commission’s definition says single-use plastics can include any disposable plastic item designed to be used only once.
    • Therefore, specific definitions pertaining to the composition, uses and categories of single-use plastics should be framed.

    3) Categorization of plastics

    • There are three elementary steps for successfully banning plastic products. The government first needs to prepare a list of items that cannot be recycled.
    • It must then ascertain what available alternatives can be provided for them.
    • Only if these items are readily available should the ban be implemented. Otherwise, the industry must be provided a “transition period”.

    4) National Action Plan for phasing out SUPs

    • There is a need for a National Action Plan or guidelines that should focus to implement plastic ban in a phase-wise manner in terms of urgency.
    • This means products that have alternatives available should be phased out earlier than those that don’t have alternatives, simultaneously reinforcing R&D funding for different alternatives and eco-friendly products.
    • The phase-wise banning should be developed based on materials, recyclability, availability of alternatives and livelihood security to the informal sector.
    • Keeping this and current post-consumption patterns in mind, a framework indicating range of SUP products needs to be devised to assist the policy makers in ideating, planning and executing the phase-wise SUP ban.

    5) Strengthening waste management systems

    • Imposing a ban on SUPs is only a part and not the whole solution. However, better waste management systems with focus on segregation incentive models can help achieve long-term impacts.
    • If cities segregate waste into three fractions — wet, dry, and domestic hazardous waste — and if municipalities create infrastructure in terms of material recovery facilities or sorting stations, dry waste can be sorted into different fractions.
    • This then has value and a market and will not end up as litter. We need to source segregate.

    6) Recycling

    • Establishing and monitoring domestic recycling units in every state and Union territory, incentivising the recyclers in the unorganised sectors should be promoted.
    • There should be training of low-skilled recyclers, setting up effective grievance redressal mechanisms, life cycle and cost analysis of plastic alternatives should be formulated and explored by the legislative bodies.
    • This is to increase the recycling efficiency in the country and implement effective and sustainable solutions at every stage of banning single-use plastics.

    7) Effective EPR implementation

    • Extended Producer Responsibility (EPR) policy tools and its implementation is still lax in the country.
    • An effective EPR framework, therefore, should be formulated keeping into context the applicability of EPR for certain items like PET, PP or dairy industry.
    • However, EPR implementation for multi-layered plastic (MLP) can still be a constraint considering the vast unorganised industry and present waste management systems.
    • The roadmap can, therefore, let producers implement their EPR obligations utilising the flexibility of brand and geography neutrality.

    8) Discourage small pack MLP sachets

    • Lighter, portable and cost-effective nature of single serve sachets/pouches makes them a major environmental menace as it is one of the major sources of plastic waste and litter, as their collection is economically non-viable.
    • Hence, the production of small packs such as single-use pouches and sachets should be discouraged and a regulation be enforced.
    • Instead Polypropylene packaged items can be brought into the stream to cater to low-income groups and also have a high recyclability.

    9) Reducing plastic content in MLP

    • Ideal packaging materials were tailored by combining different materials with customised functionality to sufficiently protect sensitive food products and thus obtain extended shelf life.
    • Latest feasible techniques and technologies may be employed to cut down the use of multiple polymers/plastics.
    • More research in this area must be done. Use of single polymer/layer recyclable packaging materials should be encouraged.

    Getting started

     

    Making it people’s movement

    • Presently, consumer awareness about negative impacts of littering single-use plastics and available reuse systems and waste management options for all these products are still limited.
    • There is a lack of widespread awareness among citizens about the magnitude of harm caused by single-use plastic as was in the case for Swachhata.
    • Focus must be laid on educating people to take personal responsibility for plastic pollution by choosing to reject, reduce, reuse and recycle plastics.

    Using alternatives

    • Devising feasible alternatives for single-use plastic items and targeting consumers and retailers for better marketing is needed.
    • However, their availability and affordability remain a challenge.
    • Solutions: providing robust infrastructures, strengthening market, innovation and entrepreneurship, subsidy or incentives to consumers at domestic level.
    • For instance, cotton bags sourced from virgin cotton, kulhad cups baked in kilns have a higher environmental footprint than plastics.
    • In the present context, jute and upcycled cloth bags, bamboo and wooden cutlery, leaf-based plates, glass and metal containers etc. are some of the immediate alternatives available.

     

    Way Forward

     

    • With no plastic ban in effect, raising awareness, promoting eco-friendly alternatives and strengthening the recycling mechanism can allow India to handle the plastic problem.
    • While it is clear that a ban is not entirely a solution, the government must move quickly on measures to phase out and finally impose a plastic ban on problematic SUP items.
    • It is clear that we cannot lose the momentum. Thus a phased ban on single-use plastic would help.
    • Government should educate the public and trade bodies to achieve the benefits of the ban.
    • Since long term benefits of plastic bag ban use will benefit the economy and also save taxpayer money can lead to plastic bag cleanup.

     

     



    References:

    https://www.nationalgeographic.com/magazine/2018/06/plastic-planet-waste-pollution-trash-crisis/

    https://theprint.in/india/why-single-use-plastic-ban-missed-gandhi-jayanti-date/300105/

    https://www.bloomberg.com/news/articles/2019-09-30/modi-wants-to-take-away-india-s-plastic-bags-and-spoons

    https://www.civilsdaily.com/news/explained-phasing-out-single-use-plastics-prospects-and-challenges/

  • [Burning Issue] Recent IPCC reports

    Distribution:

    About IPCC

    • IPCC  is a scientific government body under the UN established in 1988 by two UN organizations, the WMO and the UNEP and later endorsed by the United Nations General Assembly.
    • The IPCC produces reports that support the United Nations Framework Convention on Climate Change, which is the main international treaty on climate change.
    • IPCC reports cover the scientific, technical and socio-economic information relevant to understanding the scientific basis of risk of human-induced climate change, its potential impacts and options for adaptation and mitigation.
    • Membership of the IPCC is open to all members of the WMO and the UNEP.

    Context

    • With a series of reports, the Intergovernmental Panel on Climate Change (IPCC) has raised several flags related to climate change and calls for urgent action.
    • This is the first time that the IPCC, whose job it is to assess already-published scientific literature to update our knowledge of climate change science, has published such reports.
    • It is part of a series of special reports that IPCC is doing in the run-up to the sixth edition of its main report, blandly called the Assessment Reports that are due around 2022.

    First report: The 1.5℃ Goal

    • Global warming is likely to reach 1.5°C between 2030 and 2052 if it continues to increase at the current rate, said the IPCC report published in Seoul in Oct 2018.

     

     Looking beyond 2°C goal

    • In 2010, international negotiators adopted a goal of limiting warming to 2°C since pre-industrial times. It’s called the 2° goal.
    • In 2015, when the nations of the world agreed to the Paris climate agreement, they set dual goals — 2°C and a more demanding target of 1.5°C from pre-industrial times.
    • The 1.5° was at the urging of vulnerable countries that called 2°C a death sentence.
    • The world has already warmed 1°C since pre-industrial times, so the talk is really about the difference between another half-degree C from now.
    • There is no definitive way to limit global temperature rise to 1.5 above pre-industrial levels.

    What happens at 2°C that does not happen at 1.5°C?

    1. The IPCC report deals with this question in detail. But a number of scientific papers in recent times have projected what could be expected in the 1.5°C scenario.
    2. The studies have looked at the physical impact on the land and ocean, as well as at the socio-economic impact, like health, malnutrition, food security, and employment. Some examples:
    • 5°C could prevent around 3.3 million cases of dengue every year in Latin America and the Caribbean alone
    • an additional 150 million people could be at risk from malaria if the temperature was allowed to increase beyond 2°C
    • the world could have 25 million fewer undernourished people by the end of the century, if the 1.5°C goal was achieved
    • 350 million additional people could be exposed to deadly heatwaves if the warming increased to 2°C as compared to 1.5°C.
    • 5°C could prevent 153 million premature deaths due to air pollution by 2100, as compared to the 2°C scenario.
    • the world could be 3% wealthier by 2100 in a 1.5°C scenario compared to a 2°C scenario.
    • 5°C strategy could create double the number of jobs in the energy sector by 2050.
    • compared to the 1.5°C scenario, extreme weather events such as heavy rainfall and heatwaves are likely to become more severe and frequent, and freshwater supply could fall sharply, in a 2°C world.

    How to reach the 1.5 ℃ target?

    • As of now, the world is striving to prevent the temperature rise beyond 2 degrees Celsius, in accordance with the stated objective of the Paris Agreement of 2015.
    • To meet that target, the aim is to reduce greenhouse gases by only 20 percent, from 2010 levels, by the year 2030 and achieve a net-zero emission level by the year 2075.
    • Net-zero is achieved when the total emissions are balanced by the amount of absorption or removal of carbon dioxide through natural sinks or technological interventions.

    Only Pathway: Carbon Dioxide Removal (CDR)

    • IPCC has suggested four strategies or pathways to accomplish the 1.5 °C
    • The pathways account separately for contributions of fossil fuel and industry, Bioenergy with Carbon Capture and Storage (BECCS), and removals in the Agriculture, Forestry and Other Land Use (AFOLU).

    P1: Lower energy demand

    • A scenario in which social, business and technological innovations result in lower energy demand up to 2050 while living standards rise, especially in the global South.
    • A down-sized energy system enables the rapid decarbonization of energy supply.
    • Afforestation is the only CDR option considered; neither fossil fuels with CCS nor BECCS are used.

    P2: Sustainable development planning

    • A scenario with a broad focus on sustainability including energy intensity, human development, economic convergence, and international cooperation is needed.
    • It focuses on shifts towards sustainable and healthy consumption patterns, low-carbon technology innovation, and well-managed land systems with limited societal acceptability for BECCS.

    P3: Emission reduction through technological development

    • A middle-of-the-road scenario in which societal as well as technological development follows historical patterns.
    • Emissions reductions are mainly achieved by changing the way in which energy and products are produced, and to a lesser degree by reductions in demand.

    P4: Deployment of BECCS

    • A resource and energy-intensive scenario in which economic growth has led to widespread adoption of greenhouse-gas intensive lifestyles, including high demand for transportation fuels and livestock products.
    • Emissions reductions are mainly achieved through technological means, making strong use of CDR through the deployment of BECCS.

     

    Second report: Focus on the land-climate link

    • Land use and changes in land use have always been an integral part of the conversation on climate change. That is because land acts as both the source as well as a sink of carbon.
    • Activities like agriculture and cattle rearing, for example, are a major source of methane and nitrous oxide, both of which are hundreds of times more dangerous than carbon dioxide as a greenhouse gas.
    • At the same time, soil, trees, plantations, and forests absorb carbon dioxide for the natural process of photosynthesis, thus reducing the overall carbon dioxide content in the atmosphere.
    • This is the reason why large scale land use changes, like deforestation or urbanization, or even a change in cropping pattern, have a direct impact on the overall emissions of greenhouse gases.
    • The report talks about the contribution of land-related activities to global warming — how the different uses of land, like agriculture, industry, forestry, cattle-rearing, and urbanization, was affecting emissions of greenhouse gases.

    Food and its carbon footprint

    • The global food system currently accounts for the majority of emissions from the ‘agriculture, forestry and land use’ (AFOLU) sector.
    • If we include energy emissions from storage, transport, packaging, processing, retail, preparation, and waste, food accounts for 22-35 percent of all anthropogenic emissions.
    • The FAO estimates that food waste accounted for 4.4 gigatonnes and 8 percent of CO2 emissions in 2011, giving lie to the notion that carbon consumption is a driver of human welfare.

    Agricultural emissions

    • The IPCC is clear about the excesses of ‘modern’ agriculture.
    • This is most directly reflected in emissions of nitrous oxide, a greenhouse gas with nearly 300 times the warming potential of carbon dioxide.
    • Nitrous oxide emissions from land have more than doubled since 1961, with cropland soils emitting around three megatonnes each year.
    • The IPCC attributes this to “inefficient nitrogen application (over-application or poorly synchronized with crop demand timings) to soils”.
    • The solution lies in revolutionizing farm-level management, a challenge in developing countries with small land-holdings and limited capital to invest.

    Desertification

    • The United Nations has dedicated this decade to combating desertification, yet the climate benefits of this push are poorly understood.
    • By 2050, between 170 to 270 million people living in drylands will be vulnerable to water stress, drought intensity, and habitat degradation.
    • The report emphasizes, though that “preventing desertification is preferable to attempting to restore degraded land”. That involves preserving the topsoil and soil quality in currently cropped land.

     

    Third report: On Ocean and Cryosphere

    • The latest report, on Ocean and Cryosphere, is the last in a series of three that the IPCC had been asked to produce to assess the impacts of climate change on specific themes.
    • On May 11 this year, the global concentration of carbon dioxide in the atmosphere was measured to have crossed the 415 parts per million (ppm) marks for the first time ever.

    Why oceans?

    • The climate change impact mitigation and adaptation portfolio for the oceans and cryosphere include energy, carbon storage, pollution reduction, coastal vegetation, open ocean production, and ocean acidification, etc.
    • Over the 21st century, the ocean is projected to transition to unprecedented conditions with increased temperatures, further ocean acidification, marine heatwaves and more frequent extreme El Niño and La Niña events.
    • Land and ocean together absorb nearly 50 percent of greenhouse gases emitted every year through natural processes in the carbon cycle.
    • The importance of land, or ocean, as a carbon sink, thus cannot be overstated in the global fight against climate change.

    Highlights of the report

    • The new ocean report noted that the global mean sea level had risen by 16 cm between 1902 and 2015 and that the rate of increase had doubled in the last decade.
    • The sea levels were rising because of the thermal expansion of ocean waters due to rising temperatures as well as due to the melting of glaciers and polar ice.
    • It says that between 2006 and 2015, the Greenland ice sheet lost ice-mass at an average rate of 278 billion tonnes every year, while the Antarctic ice sheet lost a mass of 155 billion tonnes on an average every year.
    • Snow over areas outside of these two regions, like the glaciers in the Himalayas, together lost an average of 220 billion tonnes of ice every year.

    Why so many reports are being published?

    • It is not unusual to see the conversation around climate change picking up during this time of the year.
    • There are several reasons for the sudden rise in attention to the climate debate this year.

    “Now or never” is nearing

    • Last year’s IPCC report on 1.5°C mentioned that humanity had barely 12 years to keep alive the hopes of restricting global temperature rise to within 1.5°C from pre-industrial times.
    • This was contingent not just on immediate aggressive action from countries, but also on the development of technologies that could remove carbon dioxide from the atmosphere.
    • This report has instilled a new sense of urgency in climate conversations.

    Transition year ahead

    • Next year, 2020, happens to be the transition year for the international climate regime, from the Kyoto Protocol to the Paris Agreement.
    • The Kyoto regime has been a major underachiever in reducing greenhouse gas emissions.
    • The Paris Agreement, in so far as it makes it mandatory for every country to initiate actions and not just rich and developed nations as under the Kyoto Protocol, is expected to deliver much better results.

    NDC’s were insufficient

    • As required by the Paris Agreement, every country had already finalized and submitted a climate action plan, called NDCs, in 2015.
    • The assessment of several NDCs has concluded that these actions were not adequate to achieve the global goal of keeping temperature rise within 2°C from pre-industrial times.
    • But the NDCs have to be updated every five years, and the countries are scheduled to do it next year.

    Raising curiosities

    • Those concerned about climate change are hoping that in the light of these reports, and growing fresh evidence, countries will show greater ambition when they update their NDCs next year.
    • The Paris Agreement also provides for a review of all climate actions in 2023 to assess whether the individual actions of countries were adding up to what was required to achieve the goal.
    • Countries can then decide what more needed to be done.

    Way Forward

    • Limiting warming to the lower goal is not impossible but will require unprecedented changes.
    • However, it is being argued now that 2023 might be too late for such an exercise.
    • Therefore, momentum is being built to nudge the countries to announce more ambitious actions before that.
    • The move to get countries to commit to a net-zero target by 2050 is a part of these efforts.
    • It is up to governments to decide whether those unprecedented changes are acted upon.

     



    References

    https://www.downtoearth.org.in/blog/forests/planting-forests-no-panacea-for-the-climate-crisis-ipcc-66093

    https://indianexpress.com/article/opinion/editorials/the-1-5c-challenge-intergovernmental-panel-on-climate-change-report-5392710/

    https://indianexpress.com/article/explained/explained-snippets-for-limiting-global-warming-to-1-5c-the-four-projected-pathways-5392811/

    https://www.downtoearth.org.in/news/climate-change/poor-agri-dietary-practices-have-intensified-climate-change-ipcc-66086

    https://indianexpress.com/article/explained/why-latest-ipcc-report-matters-climate-change-report-6035008/

  • [Burning Issue] Indian Diaspora and the recent engagement

    Distribution:


    Context

    • Indian Diaspora is a generic term used for addressing people who have migrated from the territories that are currently within the borders of India.
    • From Google CEO to Nobel laureate scientist Har Gobind Khorana, the list of Indians abroad and their contribution to the world goes endlessly.
    • According to the UN, in 2019 Indians comprised the world’s largest migrant diaspora populations in the world with over 17.5 million Indians (6.4% of global migrants) out of total 272 million migrants worldwide
    • The recent gathering of the Indian-American community in Houston has proved to be a special moment in India’s diaspora diplomacy.

    Historical perspective

    • The incorporation of the British Empire in India can be linked to the existence of modern Indian Diaspora all over the world.
    • Dating back to the nineteenth century, Indian indentured labor was taken over to the British colonies in different parts of the world.
    • In the post World War II period, most of the Indian labor and professionals got scattered and it was a worldwide phenomenon.
    • The reconstruction of Europe after the war was provided by Indians and other South Asians, particularly in the United Kingdom and Netherlands.
    • Most recently, Indians have made their presence visibly felt in professions in countries like the United States, Canada, and Australia.

    Major sections of Indian Diaspora

     

    a. Indians in the Gulf

    • Around 8.5 million Indians live and work in the Gulf countries, one of the largest concentrations of migrants in the world.
    • The geographical and historical proximity of the Arabian Peninsula to India makes it a convenient destination for Indians.
    • Today migrants from across India are working and living in the Gulf countries (Saudi Arabia, UAE, Qatar, Bahrain, Oman, and Kuwait).

    b. Indians in USA

    • The US, the world’s fourth-largest country with four different time zones — saw a 7 percent increase in arrivals from India in July 2019, and that is bound to increase.
    • In recent decades the population has grown substantially, with 2.4 million Indian immigrants resident in the United States as of 2015.
    • This makes the foreign-born from India the second-largest immigrant group in the US after Mexicans.

    Categorizing Indian’s abroad

     

    • Overseas Indians, officially known as Non-resident Indians (NRIs) or Persons of Indian Origin (PIOs), are people of Indian birth, descent or origin who live outside the Republic of India.
    • Overseas Indians are various individuals or ethnic groups associated with India, usually through ancestry, ethnicity, nationality, citizenship or other affiliation and live abroad overseas.
    • According to a Ministry of External Affairs report, there were 30,995,729 NRIs and PIOs residing outside India as of December 2018.

    1. Non-Resident Indian (NRI)

    • Strictly asserting non-resident refers only to the tax status of a person who, as per section 6 of the Income-tax Act of 1961, has not resided in India for a specified period for the purposes of the Act.
    • The rates of income tax are different for persons who are “resident in India” and for NRIs.
    • For the purposes of the IT Act, “residence in India” requires stay in India of at least 182 days in a financial year or 365 days spread out over four consecutive years and at least 60 days in that year.
    • According to the act, any Indian citizen who does not meet the criteria as a “resident of India” is a non-resident of India and is treated as NRI for paying income tax.

    2. Person of Indian Origin (PIO)

    Person of Indian Origin (PIO) means a foreign citizen (except a national of Pakistan, Afghanistan, Bangladesh, China, Iran, Bhutan, Sri Lanka and/or Nepal), who:

    • at any time held an Indian passport OR
    • either of their parents/grandparents/great-grandparents were born and permanently resident in India as defined in GoI Act, 1935 and other territories that became part of India thereafter provided neither was at any time a citizen of any of the aforesaid countries OR
    • is a spouse of a citizen of India or a PIO.

    3. Overseas Citizenship of India (OCI)

    • After multiple efforts by leaders across the Indian political spectrum, a pseudo-citizenship scheme was established, the “Overseas Citizenship of India”, commonly referred to as the OCI card.
    • The Constitution of India does not permit full dual citizenship.
    • The OCI card is effectively a long-term visa, with restrictions on voting rights and government jobs.
    • An OCI is however entitled to some benefits such as a multiple-entry, multi-purpose life-long visa to visit India.
    • They are exempted from police reporting for any length of stay in the country.
    • They are also granted all rights in parity with NRIs except, the right to acquisition of agricultural or plantation properties.

    Significance of Indian diaspora

     

    I. Contribution in freedom struggle

    • Mahatma Gandhi’s struggle for ending institutionalized discrimination against Indians in South Africa became an inspiring legend for enduring sentimentalism about the diaspora in modern India.
    • The diaspora also became a vehicle for promoting the cause of Indian independence among the political elites of major countries.
    • As the independence movement gathered momentum at home, it began to influence many Indian communities abroad.

    II. Diaspora as Cultural extension

    • The act of migration is not just limited to geographical limits; rather it is a cultural extension.
    • Let us take the example of the Sikh community. The Sikhs are one of the largest migrants from India to the UK, Canada and many other countries.
    • They have very well maintained their culture and ethnic existence for decades.

    III. Remittances

    • A remittance is a transfer of money by a foreign worker to an individual in his or her home country.
    • Money sent home by migrants is one of the largest financial inflows to developing countries.
    • A/c to the World Bank, India retained its position as the world’s top recipient of remittances with its diaspora sending a whopping $79 billion back home in 2018.
    • Without these remittances, India’s balance of payment position would have looked worse.
    • India is followed by China (USD 67 billion), Mexico (USD 36 billion), the Philippines (USD 34 billion), and Egypt (USD 29 billion).

    IV. Diaspora as ‘Agents of change’

    • Diaspora acts as ‘agents of change’ facilitating and enhancing investment, accelerating industrial development, and boosting international trade and tourism.
    • Diaspora’s motives to invest in India are long-lasting as many of them wish to establish a long-term base in India.
    • Another tangible long-term advantage in nurturing ties with an active Diaspora is an accelerated technological sector.

    V. Technological development and entrepreneurship

    • Another tangible long-term advantage in nurturing ties with an active diaspora is an accelerated technological sector and increased socio-economic development.
    • Some examples to illustrate this phenomenon are Bengaluru, Gurugram and Hyderabad as thriving IT hubs that not only house multinational companies (MNCs) but also multiple Indian start-ups.
    • The government can further tap this transnational entrepreneurship, including support for entrepreneurs and small businesses in India in the form of knowledge transfers and finances from the diaspora.

    VI. Enhancing India’s global say

    • India’s permanent membership to the UNSC can become a reality with support from the diaspora.
    • According to Article 108 of the Charter, for a UN reform, an affirmative vote from two-thirds of its members and support from the five permanent members is required.
    • India has demonstrated its diplomatic influence with the reappointment of Justice Dalveer Bhandari to the International Court of Justice in November 2017, when it secured two-thirds of the votes at the UN.
    • Apart from political pressures and ministerial and diplomatic level lobbying, India can leverage its diaspora to influence states such as Canada and Mexico to support India’s membership

    Most Importantly,

    VII. Diaspora diplomacy

    • A less tangible but important advantage in having a large immigrant group is “diaspora diplomacy” .
    • Historically, India has benefitted from its diaspora.
    • Two instances stand out: lobbying for the US-India Civilian Nuclear Agreement Bill in 2008 and their remittance inflow.
    • The recent engagement of PM Modi in Houston is a continuation of his extraordinary political investment in engaging the Indian diaspora.
    • It is based on the recognition that a large and very successful diaspora has widened India’s footprint and can contribute to the achievement of India’s domestic and international goals.

    India’s engagement with Diaspora: A policy-wise perspective

    • Many of the themes of India’s contemporary diaspora policy had their origins in the approach of the Indian national movement before independence.
    • Concern for the treatment of Indian indentured labor around the world became an important part of the rise of the national movement in the early 20th century and the formation of its international consciousness.
    • The nationalist backlash against the Indian communities in Africa and Asia in the 1950s and 1960s saw Delhi consciously distance itself from the diasporic communities.
    • As India turned inwards, Delhi also took a dim view of the “brain drain” as many well-trained Indians began to look for opportunities elsewhere.
    • It was only in the late 1980s that Delhi began to rethink its approach to the diaspora.

    Change in recent years

    • PM Rajiv Gandhi was the first to appreciate the potential role diaspora could play in advancing national development and improving India’s ties with the US.
    • As he launched the reform era, P V Narasimha Rao sought investments from the diaspora.

    Vajpayee Era

    • The NDA government that ruled India between 1998 and 2004 had additional ideological and cultural reasons to emphasize the importance of the diaspora.
    • Atal Bihari Vajpayee saw the long-term strategic value of the engagement when he called for a ‘partnership among all children of Mother India so that our country can emerge as a major global player’.
    • He constituted a committee in 2000 under the leadership of L.M. Singhvi, an MP, to suggest a variety of policy initiatives to strengthen the bonds with the overseas Indian communities.
    • The committee’s recommendations led to the initiation of what we now know as Pravasi Bharatiya Divas and the formation of a separate Ministry for Overseas Indians.
    • Other suggestions covered important cultural, educational and social subjects forming the basis of some innovative initiatives like the Know India Programme (KIP) and Study India Programme (SIP) .
    • These have engaged the youth living abroad and the Tracing the Roots Scheme, through which some Indians have been able to trace their roots in India.

    The Modi era

    • With coming to power, PM Modi has discarded the old attitude of reproaching the diaspora, especially that in the West, for abandoning their responsibility to their motherland by leaving its shores.
    • Instead, he has affirmed that India is proud of the diaspora’s achievements around the world.
    • He exhorted them to actively contribute to the acceleration of India’s economic and social development.
    • Modi has also recognized that the connection with the diaspora could be leveraged to influence the political classes of the host nations.
    • Relaxing the visa norms for the overseas communities, improving physical connectivity and the ease of doing business in India have been the policy consequences of Modi’s more intensive outreach to the diaspora.

    Various policy initiatives  

     

    Education

    • NRI seats are reserved in all the medical, engineering and other professional colleges.
    • Other youth-centric outreach programs include scholarships to pursue undergraduate courses in recognized UGC universities in India, as well as Bharat Ko Jano online quizzes.

    Voting rights

    • The Representation of the People (Amendment) Bill 2017 the provision would help non-resident Indians (NRIs) to participate in the electoral process.
    • It extends the facility of ‘proxy voting’ to overseas Indians, on the lines of service voters.

    Know India Program (KIP)

    • It is a flagship initiative for Diaspora engagement which familiarizes Indian-origin youth (18-30 years) with their Indian roots and contemporary India has been refashioned.

    Minimum Referral Wages (MRW).

    • A number of policies were announced keeping in mind the protection of welfare and interest of Indians abroad; for example, the 2014 Minimum Referral Wages (MRW).

    Easing the passport facility

    • The last three years saw the launch of Head Post Offices as passport centers enabling thousands more to apply for a passport.

    Pravasi Bharatiya Divas

    • In the many Pravasi Bharatiya Divas (PBD) that have been organized since he became PM, Modi has been keen on wooing the diaspora.

     

    Engagement comes with responsibilities

     

    • Indian communities abroad are not merely ‘strategic assets’ that Delhi can leverage at will. They also bring significant responsibilities.
    • The diaspora expects that India will stand by them in their hour of need.
    • Indian citizens abroad, who have traveled at their own risk, demand greater protection and support from Delhi when they are caught in difficult situations.
    • On several occasions in recent years, Delhi has had to spend millions of dollars on the protection and evacuation of Indian citizens from crisis zones.
    • These crises have become recurrent thanks to the profound turbulence in the Middle East that is home to one of the largest concentrations of Indians abroad.

    Challenges faced by Diaspora

     

    I. Racial antagonism

    • Rising incidence of hate speech and crimes against Indians by the locals due to racism, communalism emboldened by coming of nationalist and ultra-nationalist governments to power in many countries.

    Protectionism

    • Increasing anti-globalization: Fear of losing jobs and educational opportunities to outsiders has resulted in stricter visa rules in many countries including the USA, Australia, etc.

    Terrorism

    • Sectarian crisis, increasing terrorist activities and war in the Middle East countries (Yemen, Oman, Libya, Syria etc) leave our diaspora vulnerable to attacks.

    Supporting Indians abroad

     

    • India needs both additional resources as well as better systems to deal with the recurring challenges of supporting citizens abroad.

    The resources front

    • There is no escaping the fact that India needs more officers and staff on the ground in its embassies abroad and at headquarters for dealing with the expanding consular work.
    • It makes sense, therefore, to set up a well-staffed permanent mechanism, say a center for consular protection, with representation of all stakeholders under the aegis of the MEA.
    • Three important functions present themselves to this new mechanism. The first relates to information collection and dissemination.
    • The government needs more comprehensive and reliable data on the movement of Indians across national borders.
    • Effective tracking is critical for understanding the broad patterns and changes within them over time, identifying potential problems and offering better services.
    • Delhi must ensure that Indian workers get mandatory briefings on local conditions and risks in their specific destinations as well as their rights vis-a-vis the Indian government.

    Ensuring security abroad

    • The second relates to the codification of India’s rich experience in evacuating Indian citizens abroad.
    • So far there have been 26 Indian evacuation operations between 1947 and 2003.
    • But there has been no real effort within the government to study this experience, draw appropriate lessons and build a more secure foundation for protecting Indian citizens abroad.
    • The new mechanism can draft and circulate to all key departments at the Centre and in relevant states, comprehensive reports on how each crisis was dealt with and the lessons learned.

    Are we overtly relying on our Diaspora?

     

    • PM Modi’s recent visit to the US has showcased some of the emerging problems with India’s diaspora diplomacy.

    I. India’s domestic political fault-lines

    • As in India, so in the US, many liberal sections of the diaspora have become sharply critical of the Modi government.
    • Together, they are having an impact on the leadership of the diaspora, including some US Congress members of Indian origin, as well as the general public discourse within the US on India.

    II. Lack of mainstreaming and consolidation

    • Support of the diaspora is neither automatic nor continuous, and their interests need not be India’s priorities.
    • For example, the Indian community in the US was not vocal enough in criticizing Trump’s proposal to restrict the H-1B visa program that has benefited many Indians.
    • Another challenge is that remittances may not always be used for beneficial purposes.
    • For instance, India faced problems due to foreign funding for extremist movements like the Khalistan movement.
    • Moreover, the diaspora is unfair in expecting India to stand by them at all times of need. This contradictory attitude of the diaspora and the Indian government will need to be worked out.

    III. Getting drawn too deep into the domestic politics of the US

    • The Houston event reflects the growing weight and prestige of the Indian community in the US as well as Trump’s own electoral calculus for the elections next year.
    • While the Indian-American community tends to lean towards the Democratic Party, Trump might be betting that the celebration of the India-US partnership with Modi might let him make a dent in the community.

    IV. Fear of Political Polarization

    • While addressing the diaspora, India should be careful about not crossing some red lines.
    • China, for example, is getting into trouble in many countries for turning its relationship with the diaspora into an active intervention in the domestic politics of the host nation.
    • Given the current polarization of US domestic politics and the profound hostility towards Trump among the Democrats, Delhi has to be careful not to be seen as tilting in favor of one side.

    V. Diaspora as a threat

    • It must be remembered that having a strong diaspora does not always translate to benefits for the home country.
    • India has had problems with negative campaigning and foreign funding, coming from abroad, for separatist movements like the Khalistan movement.
    • In the backdrop of Canadian PM Justin Trudeau’s visit to India in February 2018, multiple media outlets carried articles on the strongest support for the Khalistan movement.
    • The Indian government, while continuing to engage with the diaspora as a part of its foreign policy, will have to be cautious of these sensitive issues that may impact the security of the state.

    Way Forward

     

    • From being a largely inconsequential country after Independence, in part due to its active Non-Alignment Policy, India is today seen as a strong nation headed by a strong leader.
    • India has enjoyed being viewed more favorably by the world since 2014, and the diaspora can further these perceptions.
    • As much of India’s foreign policy aims to translate partnerships to benefits for key projects like Swachh Bharat, Clean Ganga, Make In India, Digital India, and Skill India, the diaspora has plenty of scope to contribute.
    • The diaspora can step up and act as Indian ‘ambassadors’, as it is insufficient and ineffective for a country or its missions abroad to rely only on press releases to change public opinion.
    • The diaspora can provide the requisite strategic impulse, which makes it all the more important to unlock their potential.
    • While they certainly do not determine policy, they can effectively shape it and act as “bridge-builders” between their home and adopted countries.
    • The present government is right in their focus on the diaspora as they are a strategic asset to India.

     

     



     

    References:

    https://www.orfonline.org/research/the-diaspora-and-indias-growth-story/

    https://archive.india.gov.in/overseas/diaspora/nri.php

    https://www.nriol.com/indiandiaspora/

    https://www.livemint.com/politics/news/the-rise-of-the-nri-the-influential-non-voter-1551311249773.html

    https://indianexpress.com/article/opinion/columns/the-howdy-moment-narendra-modi-donald-trump-india-us-6014808/

  • [Burning Issue] Corporate Tax Reduction

    Distribution:


    Context

    • Finance Ministry has recently announced a reduction in the base corporate tax rate to 22% from 30% as part of stimulus measures to reverse slowing economic growth.
    • The effective tax rate for domestic corporates, inclusive of surcharges, will fall from 34.94% to 25.17% if they stop availing any other tax sops.
    • For new manufacturing firms set up after October 1, 2019 and commencing operations by March 31, 2023, the effective tax rate will fall from 29.1% to 17%.

    Corporate Tax: Background

    • Indian taxation system is divided into two types: One is Direct Taxes and other is Indirect Taxes.
    • Talking about direct taxes, it is levied on the income that different types of business entities earn in a financial year.
    • There are different types of taxpayers registered with Income tax department and they pay taxes at different rates.
    • An individual and a company being a taxpayer are not taxed at the same rate. Therefore, Direct Taxes are again subdivided as:

    Income Tax

    • This tax is paid by the taxpayers other than companies registered under company law in India on the income earned by them.
    • They are taxed on the basis of slabs at different rates.

    Corporate Tax

    • This tax is paid by the companies registered under company law in India on the net profit that it makes from businesses.
    • It is taxed at a specific rate as prescribed by the income tax act subject to the changes in the rates every year by the IT department.

    Corporate Tax in India

    • Domestic as well as foreign companies are liable to pay corporate tax under the Income-tax Act.
    • While a domestic company is taxed on its universal income, a foreign company is only taxed on the income earned within India i.e. is being accrued or received in India.
    • For the purpose of calculation of taxes under Income tax act, the types of companies can be defined as under:
    1. Domestic Company is one which is registered under the Companies Act of India and also includes the company registered in the foreign countries having control and management wholly situated in India. A domestic company includes private as well as public companies.
    2. Foreign Company is one which is not registered under the companies act of India and has control & management located outside India.

    Why has the government slashed Corporate Tax?

    • The corporate tax cut is part of a series of steps taken by the government to tackle the slowdown in economic growth, which has dropped for five consecutive quarters to 5% in the June quarter.
    • The most immediate reason behind the tax cut may be the displeasure that various corporate houses have shown against the government’s policies.
    • Many investors, for instance, were spooked by the additional taxes on them that were announced by the government during the budget in July and began pulling money out of the country.
    • The government hopes that the new, lower tax rates will attract more investments into the country and help revive the domestic manufacturing sector which has seen lackluster growth.

    Why Corporate Tax?

    • The corporate tax rate is a major determinant of how investors allocate capital across various economies.
    • So there is constant pressure on governments across the world to offer the lowest tax rates in order to attract investors.
    • Tax cuts, by putting more money in the hands of the private sector, can offer people more incentive to produce and contribute to the economy.

    Impact of the rate cut

    • The present cut in taxes can make India more competitive on the global stage by making Indian corporate tax rates comparable to that of rates in East Asia.
    • The tax cut, however, is expected to cause a yearly revenue loss of ₹1.45 lakh crore to the government which is struggling to meet its fiscal deficit target.
    • At the same time, if it manages to sufficiently revive the economy, the present tax cut can help boost tax collections and compensate for the loss of revenue.

    I. Relief to big companies

    • Big companies got a relief of close to 10 percentage points in the effective tax rate including cess and surcharge.

    II. Enhanced competitiveness

    • India was earlier at disadvantage because of a couple of factors and on top of it was the high corporate tax rate.
    • After this cut, base corporate tax rate in India has become competitive and should help boost investment.
    • This reduction was a long-pending demand of Indian firms. India is likely to attract investors looking to move out of China.

    III. Enhanced EoDB

    • Singapore with 17 per cent tax rate, and Vietnam, Thailand, Cambodia and Taiwan with 20 per cent base tax rates are the only countries offering lower rates than India
    • India is now much better than China in terms of rate, transparency, and tax administration so companies can now look at India for setting up new units.

    Criticisms of the move

    • Some see the present tax cut simply as a concession to corporate houses rather than as a structural reform that could boost the wider economy.
    • They believe that the current economic slowdown is due to the problem of insufficient demand which cannot be addressed just through tax cuts and instead advocate greater government spending to boost the economy.
    • Others, however, argue that lackluster demand faced by sectors like automobiles is merely a symptom of supply-side shocks such as the GST that have affected various businesses and caused job losses.
    • If so, tax cuts and other supply-side reforms can indeed help the economy recover from its slump.
    • Towards deficit

    • The lower tax collection could affect the government’s fiscal glide path.
    • With a minor blip in 2016-17, combined fiscal deficit of Centre and states was nearing the 6 per cent of GDP target.
    • A hole of 0.7 per cent of GDP due to tax cuts could compel them to borrow more, and disturb the bond market.

    Way Ahead

    • Investor confidence in the past, it is worth noting, has been affected by retrospective changes to the law made by governments in the past.
    • The government will need to enact along with these tax cuts other structural reforms that reduce entry barriers in the economy and make the marketplace more competitive.
    • The government could, for instance, extend the tax cuts to smaller businesses.
    • The benefits of the present tax cut will also depend on whether the government sticks to its promises in the long run.

     

     



    References

    https://cleartax.in/s/corporate-tax

    https://economictimes.indiatimes.com/definition/corporation-tax

    https://www.thehindu.com/business/Economy/the-hindu-explains-what-corporate-tax-cut-means-for-the-indian-economy/article29470498.ece

    https://www.bloombergquint.com/business/corporate-tax-cuts-assessing-the-multiplier-impact-on-economic-growth

    https://timesofindia.indiatimes.com/business/india-business/corporate-tax-cut-makes-india-an-investment-destination-to-attract-foreign-firms-to-set-up-units-finance-minister/articleshow/71246730.cms

    https://www.livemint.com/opinion/columns/opinion-the-fm-should-extend-the-tax-nudge-to-personal-income-tax-too-1568982792517.html

  • [Burning Issue] India’s Space Programme


    Introduction

    • Modern space research in India is traced to the 1920s, when scientist S. K. Mitra conducted a series of experiments leading to the sounding of the ionosphere by applying ground-based radio methods in Kolkata.
    • Later, Indian scientists like C.V. Raman and Meghnad Saha contributed to scientific principles applicable in space sciences.
    • However, it was the period after 1945 that saw important developments being made in coordinated space research in India.
    • Organized space research in India was spearheaded by two scientists: Vikram Sarabhai—founder of the Physical Research Laboratory at Ahmedabad—and Homi Bhabha, who established the Tata Institute of Fundamental Research in 1945.

    Vision

    • The Indian space program is driven by the vision of Vikram Sarabhai, considered the father of the Indian space program.
    • Throughout the years, ISRO has upheld its mission of bringing space to the service of the common man, to the service of the Nation.
    • In the process, it has become one of the six largest space agencies in the world.

    Making of ISRO

    • India’s space program began with a vision to harness space technology for national development while pursuing space science research and planetary exploration
    • In this view, the Indian National Committee for Space Research (INCOSPAR) was established in the tenure of PM Nehru under the Department of Atomic Energy (DAE) in 1962.
    • INCOSPAR grew and became ISRO in 1969, also under the DAE. This was done keeping in view the urge of scientist Vikram Sarabhai recognizing the need in space research.
    • In 1972, GoI set up a Space Commission and the Department of Space (DOS) bringing ISRO under the DOS.
    • The establishment of ISRO thus institutionalized space research activities in India. It is managed by the DOS, which reports to the PM of India.

    Applications of India’s space asset

    India’s space mission can be broadly categorized into the following categories:

    1. Launch vehicle fleet like PSLV, GSLV etc,
    2. Satellite programs ex. INSAT,
    3. Satellite Navigation program ex. IRNSSS and NAVIC
    4. Extraterrestrial exploration like Chandrayaan, Mars Orbiter Mission
    5. Human Spaceflight Programme viz. Gaganyaan

    Telecommunication

    • India uses its satellite communication network – one of the largest in the world – for applications such as land management, water resources management, natural disaster forecasting, radio networking, weather forecasting, etc.
    • Business, administrative services, and schemes such as the National Informatics Centre (NIC) are direct beneficiaries of applied satellite technology

    Military

    • Integrated Space Cell, under the Integrated Defence Staff of the Ministry of Defence, has been set up to utilize more effectively the country’s space-based assets for military purposes and to look into threats to these assets.
    • This command leverages space technology including satellites.

    Telemedicine

    • ISRO has applied its technology for telemedicine, directly connecting patients in rural areas to medical professionals in urban locations via satellites.
    • Since high-quality healthcare is not universally available in some of the remote areas of India, the patients in remote areas are diagnosed and analyzed by doctors in urban centers in real-time via video conferencing.

    Biodiversity Information System

    • ISRO has also helped implement India’s Biodiversity Information System, completed in October 2002.
    • Based on intensive field sampling and mapping using satellite remote sensing and geospatial modeling tools, maps have been made of vegetation cover on a 1: 250,000 scale.

    Significant feats

    Disaster Management Support (DMS)

    • ISRO’s technologies and applications have always proved useful during natural calamities.
    • In 2016, ISRO’s support on this front was significant during the Uttarakhand Forest Fires and floods in the north-eastern states of Manipur and Assam.

    Reusable Launch Vehicle – Technology Demonstrator (RLV-TD)

    • RLV-TD was successfully flight-tested on May 23, 2016.
    • Critical technologies such as reusable thermal protection system, re-entry mission management, guidance & control along with autonomous navigation were tested during the flight.

    Launch of Cartosat series

    • On June 22, 2016, ISRO put into orbit, India’s Cartosat (Cartosat-2C) earth observation satellite along with 19 other satellites using Polar Satellite Launch Vehicle (PSLV-C34) in a single mission.
    • Cartosat series of satellites will be used for various strategic and civilian applications. It includes Geographical Information System (GIS), Land Information System (LIS), utility management and precision studies.
    • The satellite which has been called ‘India’s eyes in the sky’ by experts due to its high surveillance and monitoring capabilities will assist the other military satellites in the Cartosat series.

    104 satellites launch

    • India created history by successfully launching 104 satellites on a single mission, overtaking the previous record of 37 satellites launched by Russia in 2014.
    • PSLV-C37 successfully carried and deployed a record of 104 satellites in sun-synchronous orbits.

    Towards Scramjet Engine Technology

    • On August 28, 2016, ISRO successfully conducted its first experimental mission of the Scramjet Engine at SDSRC, Sriharikota.
    • The flight testing of the Scramjet Engine made India the fourth country to demonstrate such capabilities.
    • The technology is expected to radically change the future space transportation systems by ISRO.
    • A fully functional Scramjet Engine is expected to reduce the launch costs by half and minimize the chance of engine failure.

    Important missions

    I. Mars Orbiter Mission (MOM)

    • The Mars Orbiter Mission (MOM) – launched on November 05, 2013 and successfully inserted into Mars orbit on September 24, 2014, has various achievements to its credit.
    • It is the first interplanetary mission realized by India and the first Indian spacecraft to incorporate full-scale onboard autonomy to overcome the long distances and the communication gaps due to non-visibility periods.
    • Marking India’s first venture into the interplanetary space, MOM will explore and observe Mars surface features, morphology, mineralogy and the Martian atmosphere.
    • Further, a specific search for methane in the Martian atmosphere will provide information about the possibility or the past existence of life on the planet.

    II. Chandrayaan Mission

    • Chandrayaan Mission-I in 2008 – discovered the presence of water on the surface of the Moon and turned a new chapter in the world’s understanding of Moon.
    • Chandrayaan-2 which consisted of an Orbiter, Lander and Rover, was all equipped with scientific instruments to study the moon.
    • However, a part of the mission failed as the Vikram lander crash-landed on the lunar surface.

    III. Solar Mission

    • Aditya-L1 is India’s first dedicated scientific mission to study the sun.
    • It is meant to observe only the solar corona- the outer layers of the Sun, extending to thousands of km above the disc (photosphere).

    IV. Gaganyaan Mission

    • The human spaceflight program will provide a unique micro-gravity platform in space for conducting experiments and testbed for future technologies.
    • The program is expected to give impetus to economic activities within the country in terms of employment generation, human resource development, and enhanced industrial capabilities.
    • Human Spaceflight capability will enable India to participate as a collaborating partner in future Global space exploration initiatives with long term national benefits.

    Developments so far

    • ISRO has completed the development of launch vehicle GSLV Mk-III which has the necessary payload capability to launch a 3-member crew module in low earth orbit.
    • It has also tested the crew escape system which is an essential technology for human space flight.
    • Elements of the life support system and Space suit also have been realized and tested.
    • In addition, the orbital & re-entry mission and recovery operations have been flight demonstrated in Space Capsule Re-entry experiment (SRE) mission.

    VI. Building own Space station

    • India plans to build a space station as a follow-up programme of the Gaganyaan mission.
    • ISRO chairman K. Sivan has said that India will not join the International Space Station program and will instead build a 20-tonne space station on its own.

    Criticisms of Space Programmes

    • For long, India is known to be making investments in the space arena for social, scientific and security purposes. However many fundamentalists see investment in space as a waste of money.
    • All previous missions of ISRO are about race for planetary resources. Unfortunately, it has not planned for any missions to asteroids, an ideal bed for mineral mining.
    • After Chandrayaan 2 failure there is a danger that future ambitious missions could also end up only as a ‘feel-good program’ with Gaganyaan coming ahead.

    A wise investment

    • Ironically, one of India’s current challenges is the trickling down effect of investments in technology by the ISRO.
    • Many people myopic vision questioned the relevance of space activities in a newly independent nation which was finding it difficult to feed its population.
    • Any space exploration mission undertaken by a developing country like India is likely to prompt the argument that such investments need to be redirected in areas that need immediate intervention (ex. education, health).
    • One of the simplest ways of resolving this debate is to concretely showcase how technologies developed for space missions like Chandrayaan 2 find their way into the daily lives of citizens.
    • However former President APJ Abdul Kalam opined that if Indians were to play a meaningful role in the community of nations, they must be second to none in the application of advanced technologies to their real-life problems.

    Why we must explore?

    • Curiosity and exploration are vital to the human spirit and accepting the challenge of going deeper into space is the way ahead.
    • The intangible desire to explore and challenge the boundaries of what we know and where we have been has provided benefits to our society for centuries.
    • Human space exploration helps to address fundamental questions about our place in the Universe and the history of our solar system.
    • Through addressing the challenges related to human space exploration we expand technology, create new industries, and help to foster a peaceful connection with other nations.

    Way Forward

    • Future readiness is the key to maintaining an edge in technology and ISRO endeavors to optimize and enhance its technologies as the needs and ambitions of the country evolve.
    • Thus, ISRO is moving forward with the development of heavy lift launchers, human spaceflight projects, reusable launch vehicles, semi-cryogenic engines, single and two stage to orbit (SSTO and TSTO) vehicles, development and use of composite materials for space applications, etc.

     



    References

    https://en.wikipedia.org/wiki/Indian_Space_Research_Organisation#Applications

    http://www.arthapedia.in/index.php?title=Space_Programme_in_India

    https://www.thehindu.com/opinion/lead/expanding-indias-share-in-global-space-economy/article28286469.ece

    https://www.financialexpress.com/lifestyle/science/future-of-space-programme-why-india-needs-to-build-its-own-space-station/1590324/

    https://www.livemint.com/Opinion/jKaufXMBRvrTDZ9oSoH4NL/Isro-A-world-class-Make-in-India-example.html

    https://www.dailyo.in/politics/isro-space-research-chandrayaan-antrix/story/1/25922.html

    https://www.firstpost.com/tech/science/chandrayaan-2-what-isro-must-do-to-make-benefits-of-the-moon-mission-accessible-to-the-common-man-7053791.html

    https://hindustan360.in/the-name-isro-and-global-launch-pad-for-socio-economic-development-hindustan360/

    https://debatewise.org/debates/137-space-exploration-is-a-waste-of-money/#yes2

    https://www.extremetech.com/extreme/268062-5-reasons-space-exploration-is-more-important-than-ever

  • [Burning Issue] India-Russia Relations

    Context

    • Despite the Russia-India-China triangle reconciling on a shared vision and responsibility for the future of Eurasia, watchfulness resurfaces behind the curtains.
    • Unveiling the Russian edition of India’s ‘Look East, Act East’ policy, PM Modi pledged to extend a $1 billion Line of Credit to Russia’s Far East region (RFE).

    History of the duo

    • The relations between Russia and India are an important and privileged strategic partnership.
    • The relationship began with a visit by Indian PM Jawaharlal Nehru to the Soviet Union in June 1955.
    • During the Cold War, India and the Soviet Union (USSR) had a strong strategic, military, economic and diplomatic relationship.
    • After the collapse of the USSR, Russia inherited its close relationship with India resulted in the special relationship.

    The Partnership

    • Traditionally, the Indo-Russian strategic partnership has been built on five major components: politics, defence, civil nuclear energy, anti-terrorism co-operation and space.
    1. Strategic Relations
    • India is the second-largest market for the Russian defence industry.
      In 2017, approximately 68% of the Indian Military’s hardware import came from Russia, making Russia the chief supplier of defence equipment.
    • The co-operation is not limited to a buyer-seller relationship but includes joint research and development, training, service to service contacts, including joint exercises.
    • It has risen above a buyer-seller relationship with the joint ventures projects to develop and produce the
    • Fifth Generation Fighter Aircraft (FGFA) and the Multirole Transport Aircraft.
      In October 2018, India inked the historic agreement worth US$5.43 billion with Russia to procure four S-400 Triumf surface-to-air missile defence system, the most powerful missile defence system in the world ignoring America’s CAATSA act.

    2. Economic Relations

    • Bilateral trade between both countries is concentrated in key value-chain sectors.
    • These sectors include highly diversified segments such as machinery, electronics, aerospace, automobile, commercial shipping, chemicals, pharmaceuticals etc.
    • Both countries set a target of reaching US$30 billion in bilateral trade by 2025.

    3. North-South Transport Corridor

    • The North-South Transport Corridor is the ship, rail, and road route for moving freight between India, Russia, Iran, Europe and Central Asia.
    • The route primarily involves moving freight from India, Iran, Azerbaijan and Russia via ship, rail and road.
    • The objective of the corridor is to increase trade connectivity between major cities such as Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan, Bandar Anzali etc.

    4. Energy Sector

    • Energy sector is an important area in Indo-Russian bilateral relations.
    • In 2001, ONGC-Videsh acquired stakes in the Sakhalin-I oil and gas project in the Russian Federation and has invested about US $1.7 billion in the project.
    • Kudankulam Nuclear Power Project with two units of 1000 MW each is a good example of Indo-Russian nuclear energy co-operation.
    • Both sides are considering the possibilities of building a hydrocarbon pipeline system, connecting the Russian Federation with India.

    5. Space Sector

    • Historically, there has been a long history of cooperation between the Soviet Union and India in space. Ex. Aryabhatta, India’s first satellite.
    • In Nov 2007, the two countries have signed an agreement on joint lunar exploration.
    • Chandrayaan-2 was a joint lunar exploration mission proposed by the ISRO and the Russian Federal Space Agency (RKA).
    • Both are collaborating for the scheduled Gaganyaan Mission.

    Recent trends in bilateral ties

    • Despite the best efforts divergences are growing in this bilateral relationship as the underlying structural changes in the international environment are pulling the two nations apart.
    • Even in the past, the duo have tried to ground their bilateral relations in the wider realities of changing global balance of power.
    • Now with the US under Trump upending the rules of global governance, there is renewed concern in the three capitals that their foreign policies need greater coordination, if only to preserve their equities in the global order.
    • India, of course, has a long-standing relationship with Russia but that is undergoing a shift in light of rapidly evolving geopolitical realities.

    Bilateral divergence

    • While the top leadership of the two nations have continued to engage with each other, divergences have been cropping up with disturbing regularity.
    • For India, what should be concerning is Russia’s increasing tilt towards Pakistan as it seeks to curry favour with China.
    • Moscow had historically supported New Delhi at the United Nations Security Council by repeatedly vetoing resolutions on the Kashmir issue.
    1. Military-defense Complex
    • Russia is the dominant supplier of arms to India, with the historic military and defense ties between the two countries continuing to serve as one of the cornerstones of the India-Russia relationship.
    • Strains are becoming apparent as India moves further along the path of military indigenization and import diversification.
    • India’s procurement from the US and France has also been seen as a heated divergence between the two.
    • This was a result of the unreliability of Russian supplies, as manifested in late arrivals, defective parts, and perennial conflicts overpricing and warranties.

    2. Cultural Vacuum

    • On an everyday level, while India films and yoga are popular in Russia, no parallel exposure to any aspect of Russian popular culture exists among Indians.
    • This is the most woefully neglected aspect of their relationship, suffering on both sides from lack of funding and, no less important, a shortage of political will.
    • Another aspect of ties is tourism which could be much more vigorous between the two countries than present India’s US affinity

    3. India-US ties

    • India’s engagement with the US addresses its core concerns regarding regional security.
    • The signing of the long-awaited Communications Compatibility and Security Agreement (COMCASA) is set to elevate the bilateral defence partnership and give India access to advanced U.S. defence systems.
    • Another successful deliverable for India is Washington’s solidarity on the issue of terrorism expressed during the talks.
    • The two sides “called on Pakistan to ensure that the territory under its control is not used to launch terrorist attacks on other countries.
    • However, a closer engagement with the U.S. is a challenge for India, as this relationship is not likely to be a partnership of equals, for the foreseeable future.

    Russia needs India as:

    • A market for its goods to bypass Western sanctions imposed after its power push in Ukraine.
    • The forthcoming Transatlantic Trade and Investment partnership driven by the US will also force Russia to eye markets beyond Europe. India is a natural partner.
    • Despite its renewed friendship with China, Russia will soon find itself in competition with it as Beijing regards itself as the new G2 along with the US.
    • India can help provide the multi-polarity that Russia fiercely seeks.

    India needs Russia because

    • It can meet its abundant energy requirements at a cost-effective price.
    • Despite expanding its defence purchases from the US, Israel and Europe, India still needs to collaborate with Russia to master future technology including for space.
    • It improves India’s bargaining power when it negotiates arms sales with the West.
    • Russia can be a major market for Indian industry such as pharmaceuticals, manufactured goods, dairy
    • Products, bovine meat and frozen seafood.
    • Geopolitically, Russia continues to be a balancing force against any designs China and Pakistan may have in our region.
    • India is interested in expanding the level of trade between the two countries.
    • An area of special interest for India is the exploration of hydrocarbon reserves along the coast of Russia’s Far East where India has decided to extend a $1 billion Line of Credit.
    • This interest is seen as India’s attempts to not only keep a traditional friend close but to ensure some space in the current clinch between Russia and China.
    • This act will be a powerful catalyzer to boost more fruitful cooperation between the two nations on a number of areas.
    • New Delhi needs Moscow’s support in the former’s bid for a permanent seat on the UN Security Council

    Recent Development:

    • The Plenary Session of the 5th Eastern Economic Forum (EEF) was recently held in Vladivostok, Russia.

    Eastern Economic Forum (EEF)

    • The EEF was established by a decree of the President of the Russian Federation, Vladimir Putin, in 2015.
    • It aimed for supporting the economic development of Russia’s Far East, and to expand international cooperation in the Asia-Pacific region.
    • The recently held EEF Summit on September 2019 at the Far Eastern Federal University is the fifth in its history.
    • Among the participants in the Summit are India, Malaysia, Japan, Australia, and South Korea.
    • The Summits have roundtable conferences, panel sessions, business breakfasts, besides business dialogues and bilateral talks and agreements.

    Achievements of EEF

    • In the last five years, as many as 17 different countries have invested in the Far East, according to the EEF website.
    • These include regional and global heavyweights like China, Japan, South Korea, Australia, New Zealand, and Vietnam.
    • As a result, 20 advanced special economic zones and five free ports have been put in place.
    • A total of 1,780 new investment projects, worth over 3.8 trillion rubles, and 230 new enterprises have become functional, the EEF website says.

    India’s interest in the EEF

    • PM Modi has described the EEF as a “historic opportunity” to give new impetus to the cooperation between India and Russia.
    • He has said that the relationship between the two countries has “special chemistry, special ease”, even pointing out that Siberian cranes migrate to “my home state Gujarat”.

    Line Of Credit for Russia’s Far East

    • Speaking at the Eastern Economic Forum in Vladivostok, Prime Minister Mr Modi made the announcement of extending a $1 billion Line of Credit to Russia’s Far East region (RFE).
    • It expected to help finance Indian business projects in the region, will be the “take-off point for Act Far East”, and will further strengthen bilateral ties.

    Image result for a billion for russia

    How Far East is game-changer?

    • The Far East has the potential to become an anchor in deepening India-Russia cooperation; more so considering that New Delhi has expanded the scope of its ‘Act East policy’ to also include Moscow.
    • The area has the potential to strengthen India-Russia economic partnership in areas like energy, tourism, agriculture, diamond mining and alternative energy.

    Extending to Act Far East Policy

    • The PM recalled that India was the first country in the world to open a consulate in Vladivostok, and underlined the age and depth of the country’s relations with the Far East.
    • Engaging closely with East Asia was in line with India’s policy goal of “Act East”.
    • PM also unveiled the “Act Far East” policy to boost India’s engagement with Russia’s Far East region.
    • This will also give a new dimension to our economic diplomacy.

    Sea route from Chennai to Vladivostok

    • During PM’s visit to Vladivostok this week, an MoU was signed to open a full-fledged maritime route between Russia’s eastern port city and Chennai on India’s eastern seaboard.
    • Located on the Golden Horn Bay north of North Korea and a short distance from Russia’s border with China, Vladivostok is the largest port on Russia’s Pacific coast, and home to the Pacific Fleet of the Russian Navy.
    • It is the eastern railhead of the legendary Trans Siberian Railway, which connects the far east of Russia to the capital Moscow, and further west to the countries of Europe.
    • At Vladivostok’s massive port, shipping and commercial fishing are the main commercial activities.
    • Automobiles are a major item of import at the port, from where they are often transported further inland.

    To Chennai, by sea

    • An ocean liner travelling from Vladivostok to Chennai would sail southward on the Sea of Japan past the Korean peninsula, Taiwan and the Philippines in the South China Sea, past Singapore and through the Strait of Malacca.
    • It will emerge into the Bay of Bengal and then cut across through the Andaman and Nicobar archipelago to Chennai.
    • This sea route covers a distance of approximately 5,600 nautical miles or about 10,300 km.
    • A large container ship travelling at the normal cruising speed of 20-25 knots, or 37-46 km/hour, should be able to cover the distance in 10-12 days.
    • At suboptimal “slow steaming” speeds of 18-20 knots (33-37 km/hour), at which long-distance vessels sometimes travel to in order to save fuel, it might take slightly longer — 12-13 days.

    Image result for india russia relations civilsdaily

    Need for a reset

    • For India, the prism is different as it has to manage the negative externalities emerging from the rise of China in its vicinity.
    • China-Pakistan nexus is proving difficult to contain as India gets ready to face a two-front challenge.
    • China refuses to recognise Indian global power aspirations and has not yielded on key Indian security demands.
    • As a result, while Russia may find cooperation with China as a perfectly legitimate response to its problems with the West, India does not have that luxury.
    • Meanwhile India’s concerns are timely addressed by Russia its stated policy supports India receiving a permanent seat on the United Nations Security Council.

    What needs to be done?

    • First and foremost, judging from a track record of multiple agreements and MoUs that have not led to tangible results.
    • The recent comprehensive U.S.-India Strategic 2+2 Dialogue is a model to follow.
    • There should be more meetings at the highest state level, regular annual reports on the progress of the working groups, and reinvigorated interactions.
    • India’s cores strength is that it follows an independent foreign policy
    • On its long way to become a global power, it will likely have to follow a zigzag course, balancing between American demands, long-term friendship with Russia and its own strategic necessities.
    • It will sign defence pacts and conduct military drills with both the U.S. and Russia in an attempt to seize maximum opportunities from its relations with global powers.

    Just relying on sentimentalism of the past won’t work anymore as new challenges confront India and Russia and the global geostrategic environment undergoes a profound reordering. Otherwise, putting all eggs in one basket might create overdependence on one partner and ultimately not serve Indian interests well.

     

    References

    https://www.civilsdaily.com/india-russia-relations/https://www.orfonline.org/research/russia-and-india-difficult-times-ahead/
    https://www.thehindu.com/opinion/lead/looming-challenges-to-indias-standing/article28429662.ece
    http://www.jsia.edu.in/wp-content/uploads/2019/03/katherine-re-energizing_0.pdf
    https://www.thehindu.com/opinion/editorial/bear-hug-on-india-strengthening-relations-with-
    russia/article29355066.ece
    https://www.civilsdaily.com/news/eastern-economic-forum/

    https://idsa.in/idsacomments/the-arithmetic-of-india-u.s.-relations-azakharov-170918

  • [Burning Issue] Merger of Public Sector Bank


    Context

    • The Centre announced a mega amalgamation plan, the third in a row, that merged ten public sector banks into four larger entities.
    • With these series of mergers, the number of state-owned banks is down to 12 from 27.

    Bank Merger

    • A merger is simply the combining of two business entities to form a larger one but with no explicit change in ownership.
    • This is in contrast to an acquisition where one business entity takes ownership control over another by paying for the ownership privilege in cash, stock, or other means.
    • In the case of state-owned banks that are being merged now, where the government is the majority shareholder, there will be no change in ownership but merely a restructuring of how these banks are organised.
    • Mergers of banks began in India in the 1960s in order to bail out the weaker banks and protect the customer interests.

    Why merger?

    • There are various reasons cited by the government for its decision to merge state-owned banks.
    • One of them is that large banks will be able to lend more money and help revive the slowing economy.
    • The government also believes that increased credit growth is essential in order to achieve its target of growing India into a $5-trillion economy in the next few years.
    • It is also of the view that the merger will lead to increased operational efficiency that will help these banks lower their costs, thus enabling them to lower their lending rates.
    • State-owned banks have been reeling under a bad loan crisis for years now.
    • Although the government has not projected the present merger as a measure to tackle bad loans, bank mergers in the past have been carried out simply to bail out struggling banks.
    • However the government, after consultations, decided that amalgamation is the “best route” to achieve banking sector scale and to support the target of achieving a $5 trillion economic size for India in five years.

    Logic behind the move

    • For years, expert committees starting from the M Narasimham Committee have recommended that India should have fewer but bigger and better-managed banks to ensure optimal use of capital, efficiency, wider reach and greater profitability.
    • The logic is that rather than having several of its own banks competing for the same pie (in terms of deposits or loans) in the same narrow geographies, leading to each one incurring costs, it would make sense to have large-sized banks.
    • It has also been argued that such an entity will then be able to respond better to emerging market trends or shifts and compete more with private banks.
    • The proposed big banks would be able to compete globally and improve their operational efficiency once they lower their cost of lending and improve lending.
    • But none of India’s banks including the largest, SBI, figures in the list of the top 50 global banks. So that may be a long way away.

    Will the move help make banks stronger?

    • The banks that have been merged by the government exhibit varying financial strength.
    • It remains to be seen whether the operational benefits that the government believes will come about through the merger will compensate for the deterioration in the financials of the stronger banks.
    • Critics doubt whether the government has any similar incentive to look for synergies that can boost the profits of its banks.
    • Given this, it seems unlikely that state-owned banks will be able to become more efficient after the merger by getting rid of redundant labour.

    How does it help the government?

    • For over decades starting from 1992, the government as the biggest shareholder of over 25 banks had to provide capital for them.
    • To grow and lend more, the banks often need a higher amount of capital to set aside also for loans that could go bad.
    • With the government not willing to lower its equity holdings and with a large slice of the capital being set aside to cover for bad loans, the burden of infusing capital rests on the majority shareholder.
    • This means marking a large amount of money almost every year during the last few years in the Budget for capital infusion at many banks at a time when there is a huge demand for social sector.
    • By reducing the number of banks to a manageable count, the government hopes that the demands for such capital infusion will be lower progressively with increased efficiencies and with more well capitalised banks.
    • It will also help that the government can focus now on fewer banks than in the past.

    Pros of the merger

    Some of the pros of the mergers are:

    • a large capital base would equip the merged entities to disburse a larger number of loans and of higher magnitude,
    • operational efficiency will reduce costs,
    • the need for recapitalization from the government will reduce, and
    • better adoption of technology.

    Limitations

    The cons of the amalgamation are:

    • it would be tough to manage issues pertaining to human resources,
    • having only a few large, inter-linked banks can expose the broader economy to enhanced financial risks, and
    • the local identity of small banks will be lost, leading to ramifications in the social and cultural space that are often not recognised or understood.

    Implications of the merger

    Bad Loans

    • The merger of banks per se will not lead to a decrease in the absolute size of bad loans in their books.
    • The size of bad loans in bank books can drop only if banks manage to improve the recovery of these loans, or if these loans are written off their balance sheets.
    • The bad loan recovery process remains slow due to the inefficient judicial system in the country and banks have been unwilling to aggressively write off bad loans since that would require recognising greater losses.

    Structural problems

    • The present merger, many believe, also does not address the issue of political interference in the management of state-owned banks that is at the root of the bad loan crisis.
    • The stated purpose of the nationalization of banks in 1969 was to use bank credit to fund the various development goals of the government.
    • Towards this end, over the years, various state-owned banks have been forced to extend loans under political pressure even though such loans did not always make business sense.
    • This is in contrast to private banks that are allowed to operate simply as pure businesses seeking profits.

    Funding for growth

    • Finally, when it comes to funding the growth needs of the economy, large banks may be able to lend more money than smaller banks due to the size of their capital base.
    • However, some argue that large banks may not really be essential when it comes to funding big-ticket business projects.
    • In the past, several smaller banks have come together to extend large loans. Further, companies themselves might prefer to seek funds from multiple sources.

    Critical opinion on merger

    • The merging of healthy banks with weak banks may not really improve the health of the banking system as a whole.
    • In fact, many believe, by diluting the management of strong banks, forced mergers may lead to a significant deterioration in the overall health of the banking system.
    • Last but not least, if the managers of efficient banks are punished for their good performance by being asked to share the burden of weaker banks, many fear that there will be fewer incentives for managers to manage well.
    • This can further negatively affect the long-term performance of state-owned banks.

    More thrust is on RBI

    • The RBI keeps monitoring large institutions whose potential failure can impact other institutions or banks and the financial sector, and which could have a contagion effect and erode confidence in other banks.
    • A case in point is the recent instance of IL&FS Group, which defaulted on repayments hitting many lenders and investors.
    • The creation of more large-sized banks will mean the RBI will have to improve its supervisory and monitoring processes to address increased risks.

     

    Conclusion

    • The finance minister has quoted that the proposed big banks would be able to compete globally and improve their operational efficiency once they lower their cost of lending and improve lending.
    •  But none of India’s banks including the largest, SBI, figures in the list of the top 50 global banks. So that may be a long way away.
    • While the announced consolidation of PSU banks is a credit positive as it enables the consolidated entities to meaningfully improve scale of operations and help their competitive position.
    • At the same time, there will not be any immediate improvement in their credit metrics as all of them have relatively weak solvency profiles.

     

     



    References

    https://www.civilsdaily.com/news/explained-mergers-of-public-sector-banks/

    https://www.thehindu.com/business/Industry/how-will-mergers-affect-public-banks/article29363041.ece

    https://www.moneycontrol.com/news/business/mergers-acquisitions/digging-deeper-the-big-bank-merger-what-why-and-what-next-4411711.html

    https://www.deccanherald.com/specials/sunday-spotlight/the-big-bank-theory-759842.html

  • [Burning Issue] Slowdown of Indian Economy

    Distribution:


    Context

    • India’s real (or inflation-adjusted) GDP grew at 5 per cent in the June 2019 quarter of financial year 2019-20 (Q1FY20), the slowest growth in six years (25 quarters).

    • With GDP growth falling consecutively for the fifth time, India has slipped to fourth position globally in terms of real growth rates.
    • The Indian economy is now behind China, the Philippines and Indonesia as it recorded 5 per cent growth in the first quarter of FY20, the slowest in last 25 quarters.
    • This is only the second instance since December 1999 that the GDP growth rate has fallen for five straight quarters.

    Dissecting India’s slowdown

    • Growth is a function of consumption, investment, government demand, and net exports.
    • A slowdown in consumption demand, decline in manufacturing, inability of the Insolvency and Bankruptcy Code (IBC) to resolve cases in a time-bound manner, and rising global trade tension and its adverse impact on exports are some of the factors affecting India’s growth.
    • Two of the government’s most famed economic reforms–demonetization and GST implementation–have been identified as major factors behind the slump in growth in many reports and surveys.
    • Medium and Small Scale Enterprises (MSMEs), the backbone of multiple Indian sectors, are still suffering from the combined consequences of both the reforms.

    Key indicators signifying slowdown

    Agriculture sector

    • The agriculture sector is in distress; the rural economy is struggling from very low inflation resulting in stagnant income.
    • Urban wages are either stagnant or decreasing due to less demand but more supply of unskilled labour.
    • Price of agricultural products is stagnant, resulting in farm distress and fall in income and consequent fall in purchasing power—which is directly related to lack of demand.

    Domestic car sales

    • During April to June 2019, car sales fell by 23.3% in comparison to the same period in 2018.
    • This is the biggest contraction in quarterly sales since 2004.
    • A slowdown in car sales negatively impacts everyone from tyre manufacturers to steel manufacturers to steering manufacturers etc., when it comes to the backward linkages that car manufacturers have.
    • As far as forward linkages are concerned, many auto dealerships are shutting down or shrinking.

    Housing sales

    • As per a report, India’s top 30 cities had 1.28 million unsold housing units as of March 2019, a jump of 7% from March 2018, when the number was at 1.2 million.
    • This means that builders are building new houses at a faster pace than people are buying them.
    • The real estate sector has forward and backward linkages with 250 ancillary industries.
    • So, when the real estate sector does well, many other sectors, right from steel and cement to furnishings, paints, etc., do well too.
    • The fact that real estate prices haven’t gone up in years makes people feel less wealthy and as a result spend less.

    FMCG companies

    • The volume growth or the number packs sold, of fast-moving consumer goods (FMCG) companies has slowed down over the last one year.
    • If we look at Hindustan Unilever Ltd, the volume growth between April and June 2019 was at 5%. It was 12% during the same period last year. There are other examples as well.
    • Dabur India posted a volume growth of 6% during April and June 2019, against 21% last year. Britannia was down to 6% against 13% last year.
    • Indeed, this is worrying, given that people seem to be going slow on making everyday purchases.

    Final consumption of finished steel

    • Creation of any new physical infrastructure requires steel.
    • Hence, a faster increase in steel consumption than in the past shows increased investment activity than in the past.
    • The consumption of finished steel grew by 6.6% between April and June 2019, in comparison to the same period during the last year, when it had grown by 8.8%.
    • This was the slowest in two years.

    New investment projects

    • The value of new projects announced during April to June 2019 fell by 79.5% year on year. This is the highest fall since September 2004.
    • In absolute terms, the value of new investment projects announced during April to June 2019 stood at ₹71,337 crore, the lowest since September 2004.
    • This is a great indicator of the fact that businesses really do not have faith in the economic future of India, irrespective of what they say in the public domain.
    • The investment projects completed fell by 48% in comparison to the last year.

    Expenditure and net exports

    • Government expenditure tends to form around 10-11% of the Indian economy.
    • In the last two fiscal years, the growth in government expenditure was at 19.1% and 13.2%, the highest since the financial crisis years of 2008-09 and 2009-10.
    • Looking at 2019-20 fiscal to drive economic growth, the government needs to spend more and for that the tax growth is important.

    Net exports

    • This figure for April to June 2019 stood at ‘-$46 billion’. This was almost similar to the net exports for April to June 2018 at -$46.6 billion.
    • This is primarily because both exports and imports during the period were at almost similar levels as last year.
    • Given this, there hasn’t been any increased economic activity on the exports front either.

    Investors Confidence

    • Investment, unlike consumption, satisfies no immediate want.
    • The businessman putting his money today is basically taking a bet on the future, when it would start yielding returns. Such bets are a function of the “state of confidence” at the time of investment.
    • A good indicator of “state of confidence” is new investment proposals.
    • Their value fell from Rs 20 lakh crore in 2015-16, to Rs 16.2 lakh crore, Rs 11.4 lakh crore and Rs 10 lakh crore in the following three fiscals.

    Measures for reviving growth

    • Sectoral collapse has happened because of poor business decisions in banking, real estate, construction and lately in NBFCs/housing finance companies (HFCs).
    • Now all these sectors are looking for stimulus packages to bail them out from their mistakes.

    Consolidation of PSBs

    • The current initiatives are either short-term measures or long-term reforms. The consolidation of Public Sector Banks (PSBs) falls into the latter category.
    • It will not turnaround the banking sector, ease the credit flow or even improve the transmission of interest cuts — the three most important problems contributing to the slowdown.
    • It is a structural reform much needed, long overdue and may reduce the recapitalization requirements.
    • It will change the credit evaluation, disbursement and monitoring of loans, which is the core problem in PSBs.

    Easing tax slabs

    • To kick-start the consumption cycle money has to go into the common man’s pocket.
    • This can happen by reducing income tax for the lowest slab, as recommended by the Direct Tax Code report.
    • It can be done by making GST filing quarterly for MSMEs with less than Rs 10 crore turnovers to ensure they survive the slowdown.
    • The GST Council can look at reducing rate slabs and reduce the overall burden on corporates.

    Boosting lendings

    • In a first sign of government addressing the economic woes, Finance Minister announced the removal of the surcharge on capital gains on shares for both foreign and domestic investors.
    • It provided an upfront Rs 70,000-crore equity infusion into public sector banks to boost lending, and unveiled measures to push automobile sales.
    • The surcharge of 3 per cent and 7 per cent on those earning between Rs 2 crore and Rs 5 crore, and over Rs 5 crore respectively had been announced as part of the Budget proposals.

     

    These immediate steps can help revive the economic growth:

    • Give auto sector incentives to invest and shift to electric vehicles
    • Incentives to auto sector employees to upskill on electric vehicles
    • Reduce the GST slab rates
    • Adopt the Direct Tax Code, cut income tax for the bottom slab
    • Improve credit flow to both consumer and industry
    • Change the credit culture in public sector banks
    • Stimulus should drive investment, upskilling for displaced employees
    • Factor market reforms, including bringing the cost of land down.

     

    Way Forward

    • Battling the economic slowdown may require a slew of complex steps over the next few months, but the first and the most difficult step for the government is to acknowledge the slowdown.
    • It should consult economic experts, some of whom have been urging the government to focus on boosting investments, which could help in reviving consumer demand and increase the output of key sectors.
    • The government’s primary goal should be setting the basics right instead of going ahead with a “band-aid” patchwork.
    • So, the only immediate solution for India seems to be to boost consumption through a stimulus given directly to people, in the classical Keynesian mould.
    • Of course, such a stimulus should be combined with reforms to boost business morale and confidence.

     

     



    References:

    https://economictimes.indiatimes.com/news/economy/policy/quick-ways-out-of-slowdown-10-things-government-can-do/articleshow/70934072.cms

    https://www.livemint.com/news/india/15-ways-to-define-india-s-slowdown-1565715613762.html

    https://indianexpress.com/article/explained/explained-in-economic-slowdown-a-back-story-about-falling-investor-confidence-5936308/

    https://www.indiatoday.in/news-analysis/story/why-this-economic-slowdown-is-serious-1580824-2019-08-14

    https://www.hindustantimes.com/opinion/state-of-indian-economy-decoding-the-5-problem/story-UfwoflzpqXTrYmIaOpENGL.html

  • [Burning Issue] RBI Surplus Transfer

    Distribution:


    Context

    • On August 26, the central board of the Reserve Bank of India (RBI) had decided to transfer a surplus of Rs 1.76 lakh crore to the government-its highest transfer ever-sparking a fierce debate.
    • The government was acting on the recommendations of a committee chaired by former RBI governor Bimal Jalan, on capital transfer.

    RBI’s earnings

    • The RBI is a “full service” central bank— not only is it mandated to keep inflation or prices in check, it is also supposed to manage the borrowings of the GOI and of state governments; supervise or regulate banks and NBFCs; and manage the currency and payment systems.
    • While carrying out these functions or operations, it makes profits.
    • Typically, its income comes from the returns it earns on its foreign currency assets, which could be in the form of bonds and treasury bills of other central banks or top-rated securities, and deposits with other central banks.
    • It also earns interest on its holdings of local rupee-denominated government bonds or securities, and while lending to banks for very short tenures, such as overnight.
    • It claims a management commission on handling the borrowings of state governments and the central government.

    RBI’s reserves

    Besides above earning, the RBI maintains four different Reserves which comprise of assets and earnings. These reserves are:

    I. Asset Development Fund

    • It aims to meet internal capital expenditure and investments in its subsidiaries to build contingency reserves of 12% of its balance sheet.
    • It provides support to the RBI associates like National House of Banking.

    II. Currency and Gold Revaluation Account

    • The Currency & Gold Revaluation Account (CGRA) makes up the biggest share — it was Rs 6.9 lakh crore in 2017-18.
    • This represents the value of the gold and foreign currency that the RBI holds on behalf of India.

    III. Contingency Fund

    • The Contingency Fund (CF) is a specific provision meant for meeting unexpected contingencies that arise from RBI’s monetary policy and exchange rate operations.
    • In both cases, the RBI intervenes in the relevant markets to adjust liquidity or prevent large fluctuations in currency value.
    • The CGRA and CF put together constituted 26% of assets

    IV. Investment Revaluation Account

    • It is the fund available with the RBI to compensate losses and accommodate gains in foreign and domestic securities.

     

    It’s Expenditure

    • Its expenditure is mainly on the printing of currency notes and on staff.
    • Besides the commission it gives to banks for undertaking transactions on behalf of the government across the country, and to primary dealers, including banks, for underwriting some of these borrowings.

    RBI’s surplus

    • This represents the amount RBI transfers to the government.
    • The RBI isn’t a commercial organisation like the banks or other companies that are owned or controlled by the government – it does not, as such, pay a “dividend” to the owner out of the profits it generates.
    • Although RBI was promoted as a private shareholders’ bank in 1935 with a paid up capital of Rs 5 crore, the government nationalized it in January 1949, making the sovereign its “owner”.
    • There are two unique features about RBI’s financial statements. It is not required to pay income tax and has to transfer to the government the surplus left over after meeting its needs.
    • What the central bank does, therefore, is transfer the “surplus” – that is, the excess of income over expenditure – to the government, in accordance with Section 47 (Allocation of Surplus Profits) of the RBI Act, 1934.

    Total Transfer

    • The surplus from the central bank comprised two components-Rs 1.23 lakh crore of surpluses for the year 2018-19.
    • An additional Rs 52,637 crore of excess provisions that was made available as per the revised economic capital framework recommended by the Bimal Jalan committee.
    • Of the Rs 1.23 lakh crore, the RBI has already transferred Rs 28,000 crore to the government in the previous fiscal, which will reflect in RBI’s upcoming annual report.
    • The transfer is also almost double the Rs 90,000 crore that was targeted in the Union budget presented by finance minister Nirmala Sitharaman.

    The revised Economic Capital Framework

    • The RBI had formed a committee chaired by former Governor Bimal Jalan to review its economic capital framework and suggest the quantum of excess provision to be transferred to the government.
    • The panel recommended a clear distinction between the two components of the economic capital of RBI i.e. Realized equity and Revaluation balances.
    • Revaluation reserves comprise of periodic marked-to-market unrealized/notional gains/losses in values of foreign currencies and gold, foreign securities and rupee securities, and a contingency fund.
    • Realized equity, which is a form of a contingency fund for meeting all risks/losses primarily built up from retained earnings. It is also called the Contingent Risk Buffer (CBR).

     

    The revised Surplus Distribution Policy

    • It was finalized is in line with the recommendations of the Bimal Jalan committee. It states-
    1. Any surplus due to the government can be paid only from retained earnings and not by using the notional revaluation reserves.
    2. The contingent capital buffer has to remain at all times in a band of 5.5 per cent – 6.5 per cent of the RBI’s total balance sheet
    3. The total economic capital of the RBI needs to be in the range of 20 per cent – 24.5 per cent of the RBI’s total balance sheet
    • Adhering to the recommendations, the RBI has decided to set the CBR level at 5.5% of the balance sheet, while transferring the remaining excess reserves worth ₹52,637 crore to the government.
    • If CBR is below the lower bound of requirement, risk provisioning will be made to the extent necessary and only the residual net income (if any) transferred to the Government.
    • However keeping CBR at a lower range of 5.5%, will reduce RBI’s space to manoeuvre monetary policy.

     

    Issues with the surplus transfer

    • The government has long held the view that going by global benchmarks, the RBI’s reserves are far in excess of prudential requirements.
    • Former RBI governors Y.V. Reddy and D. Subbarao had publicly opposed such transfers, as did former deputy governor Viral Acharya, who argued such a move could be “catastrophic”.
    • Former Chief Economic Advisor Arvind Subramanian had suggested that these funds be utilized to provide capital to government-owned banks.
    • The central bank, on its part, has traditionally preferred to be more cautious and build its reserves – keeping in mind potential threats from financial shocks, and the need to ensure financial stability and provide confidence to the markets.
    • From the central bank’s perspective, bigger reserves on its balance sheet is crucial to maintaining its autonomy.
    • The Opposition criticised the government for “stealing from the RBI”, saying that the government was “clueless about how to solve their self-created economic disaster”.

    Govt stance

    • The transfer of money from RBI to Government has been going on for years. It is not the first time that the apex bank has transferred its surplus money to the GoI.
    • The RBI reserves the right over the surplus money made by it; however, the Government thinks the other way round.
    • As per the Government, RBI reserves are filled with way more money than it requires.
    • This dilemma has always been an issue of conflict between the Central Government and the RBI.
    • This friction was lately seen in December 2018, which forced the then RBI Governor Urjit Patel to resign.

    Arguments in favor

    • The supporters of the government have been stout in the defence of this move.
    • They say that after all a committee headed by a well-regarded former RBI governor has recommended it.
    • They also argue that there is no point in RBI accumulating excess surplus and then doing nothing with it when the government can use it to boost the economy.

    How will govt use this surplus?

    • A major question has to do with what the money will be used for.
    • The amount could either be used to provide a fiscal stimulus to the economy-which is in the grip of a slowdown-or to reduce off-balance sheet borrowings, or meet an expected shortfall in revenue collections.
    • In the Union budget, the government had presented an optimistic scenario of raising Rs 4.76 lakh crore in additional resources to meet budget expenses.
    • However, since there is a clear slowdown ahead, this revenue target may not be met, in which case the surplus from the RBI would be used to bridge the shortfall.
    • However, if the budgetary targets are met in the normal course of activity, the government will use the amount as a stimulus.

    Way Forward

    • The government cannot stop or slow down spending – the economy is already losing steam with exports, private consumption and private sector investment slowing down.
    • If the government spending also goes down, it will hit an already beleaguered economy.
    • With the economy slowing down and the Goods and Services Tax (GST) not kicking in the expected buoyancy, the shortfall may even be higher.
    • The infusion of additional funds, thus, will help the government to substantially overcome this shortfall and achieve the fiscal deficit target without having to axe allocations to social sector and poverty alleviation.
    • It needs the money and the RBI is living up to its role as the lender of last resort – except that this is not a loan, and the government is not a bank, which needs a lender of last resort.

     

     

     


    References:

    https://www.civilsdaily.com/news/rbi-surplus/

    https://www.indiatoday.in/india-today-insight/story/rbi-crore-surplus-transfer-sparked-debate-1592858-2019-08-29

    https://www.thehindu.com/business/Economy/rbi-board-approves-176-lakh-cr-transfer-to-government/article29261534.ece

    https://www.livemint.com/industry/banking/the-numbers-behind-rbi-s-rs-1-76-lakh-crore-payout-to-government-10-points-1566974579350.html

    https://www.indiatoday.in/business/story/explained-how-much-did-government-gain-from-rbi-surplus-reserve-transfer-1592607-2019-08-28

    https://economictimes.indiatimes.com/mf/analysis/how-rbis-surplus-to-govt-will-impact-fiscal-deficit-and-bond-markets/articleshow/70869425.cms

    https://timesofindia.indiatimes.com/business/india-business/what-are-rbis-surplus-funds-where-do-reserves-come-from/articleshow/70849771.cms

    https://www.businesstoday.in/opinion/prosaic-view/what-rbi-surplus-bonanza-tells-about-government-finances/story/376132.html

    https://www.thehindu.com/opinion/lead/govt-needs-to-be-prudent-in-using-rbis-transfer/article29291770.ece

    https://www.thehindu.com/business/how-the-rbi-ended-2018-19-with-an-over-123-lakh-crore-surplus/article29292127.ece?homepage=true

  • [Burning Issue] Appointing the Chief of Defence Staff (CDS)

    Distribution:


    Context

    • In his Independence Day address PM has announced the creation of the post of Chief of Defence Staff (CDS) to provide “effective leadership at the top level” to the three wings of the armed forces, and to help improve coordination among them.

    Background

    • India has had a feeble equivalent known as the Chairman, Chiefs of Staff Committee (CoSC); but this is a toothless office, given the manner in which it is structured.
    • The seniormost among the three Service Chiefs is appointed to head the CoSC, an office that lapses with the incumbent’s retirement.
    • The post did not further tri-service integration, resulting in inefficiency and an expensive duplication of assets.
    • This system is a leftover from the colonial era, with only minor changes being carried out over the years.

    The office of the Chief of Defence Staff (CDS)

    • The CDS is a high military office that oversees and coordinates the working of the three Services, and offers seamless tri-service views and single-point advice to the Executive (in India’s case, to the PM).
    • On long-term it provides for defence planning and management, including manpower, equipment and strategy, and above all, “jointsmanship” in operations.
    • In most democracies, the CDS is seen as being above inter-Service rivalries and the immediate operational preoccupations of the individual military chiefs.
    • The role of the CDS becomes critical in times of conflict.

    Why need such Office?

    • The creation of the CDS will eventually lead to the formation of tri-service theatre commands intended to create vertical integration of the three forces.
    • The CDS will be a single-point military adviser to the government and synergise long term planning, procurements, training and logistics of the three Services.
    • This is expected to save money by avoiding duplication between the Services, at a time of shrinking capital expenditure within the defence budget.
    • Military diplomacy is today supporting the conventional diplomacy. That can’t be done by different Services.

    Recent upheaval

    • The first proposal for a CDS came from the 2000 Kargil Review Committee (KRC) which called for a reorganization of the “entire gamut of national security management and apex decision-making and structure and interface between the Ministry of Defence and the Armed Forces Headquarters.
    • The Group of Ministers Task Force that studied the KRC Report and recommendations proposed to the Cabinet Committee on Security that a CDS, who would be five-star officer, be created.
    • In preparation for the post, the government created the Integrated Defence Staff (IDS) in late 2002, which was to eventually serve as the CDS’s Secretariat.
    • However, over the past 17 years, this has remained yet another nebulous department within the military establishment.

    What happened to the proposal?

    • Political misgivings, bureaucratic turf protection and inter-service mistrust, together, created so much friction that the CDS wagon could not start rolling.
    • No consensus emerged among the Services, with the IAF especially opposed to such a move.
    • Then opposition was against the idea of concentrating too much military power in the CDS’s post.
    • The Ministry of Defence (MoD) too, opposed it subtly for the same reasons, and because it could disrupt civil-military ties in the latter’s favour.
    • The smaller Air Force and Navy fear that the CDS would be from the Army, by far the largest Service.
    • The IAF has long argued that unlike the United States and other western militaries, the Indian Services are not an expeditionary force, for which a CDS is a necessity.
    • The appointment of a CDS would also lead to theatre commands, another aspect that the IAF opposes, fearing a diminution of its operational role.

    Naresh Chandra Committee recommendations

    • In 2011, more than a decade after the KRC Report, the UPA government which had opposed the CDS proposal when in opposition, set up the Naresh Chandra Committee on defence and security.
    • The Committee comprising retired Service Chiefs and other defence experts, suggested a watered-down version of the CDS proposal, in which the Chairman CoSC in the rank of a four-star officer would have a fixed tenure of two years.
    • He would have significantly more authority and powers than the Chairman CoSC, and would be a CDS in all but name.

    The case for having a CDS

    • Although the KRC did not directly recommend a CDS — that came from the GoM — it underlined the need for more coordination among the three Services, which was poor in the initial weeks of the Kargil conflict.
    • The KRC Report pointed out that India is the only major democracy where the Armed Forces Headquarters is outside the apex governmental structure.
    • It observed that Service Chiefs devote most of their time to their operational roles, “often resulting in negative results”.
    • Long-term defence planning suffers as day-to-day priorities dominate.

    Who serves the purpose as for now?

    • In effect it is the National Security Adviser.
    • This has been especially so after the Defence Planning Committee was created in 2018, with NSA as its chairman, and the foreign, defence, and expenditure secretaries, and the three Service Chiefs as members.

    Need for an integrated service

    • It is generally agreed that India badly needs a Combined Defence Staff to integrate defence planning and operations.
    • For a long time, it seemed that the IAF was marching to the beat of a different drummer.
    • The consequence of this reluctance to plan and work together showed up in Kargil.
    • The air force did not have the tactics and the appropriate weapons when called to assist the Indian Army.
    • Also, the PM and Defence Minister do not have the benefit of the views and expertise of military commanders, in order to ensure that higher level defence management decisions are more consensual and broad based.
    • The case for CDS aims to provide a single-point for giving military advice to the government, administer the Strategic Forces and to enhance the efficiency and effectiveness of the planning process through Intra and Inter- Service prioritization.

    The emerging theatres

    • Three theatres are straightforward: Northern, Western and Southern to address the threats from China, Pakistan and the Indian Ocean, respectively.
    • To these, we can add an eastern command for the Bay of Bengal littoral and an expeditionary command responsible for operations further afield.
    • In the years ahead, a combination of climate change, violent non-state actors and volatile politics will increase the demands on the government to deploy military forces beyond the subcontinent.
    • Despite a multitude of threats, India’s Armed Forces have very limited capacity to operate overseas. Hence, the need for an expeditionary command.
    • The major task of the new CDS will thus be to conceptualize and implement the transformation of the forces into theatre commands.

    With nuke at its hand

    • Administering the ‘Strategic Forces’ also denotes administration of India’s nuclear arsenal.
    • Presently, during a conflict that brings nuclear weapons into play, the chairman’s expected to be with the prime minister to provide advice and execute required actions.
    • This, though, is problematic as it would entail the chief being away from the important role of controlling and directing his own service forces.
    • The existing arrangement of seniority-based rotational appointment of the Chairman and the Chief of Staff Committee (COSC), has resulted in the side-lining the Chairman from this important role.
    • Short tenures of even a few months, combined with pressures of being the head of a Service, has been the primary reason.

    Neighbourhood examples

    • In 2016, China integrated its military and other police and paramilitaries into five theatres from the earlier seven area commands, each with its own inclusive headquarters, one of which has responsibility for the Indian border.
    • In contrast, India’s border with China is split between the Eastern, Western, and Northern Commands.

    The arguments against

    • Theoretically, the appointment of a CDS is long overdue, but there appears to be no clear blueprint for the office to ensure its effectiveness.
    • India’s political establishment is seen as being largely ignorant of, or at best indifferent towards, security matters, and hence incapable of ensuring that a CDS works.
    • Militaries by nature tend to resist transformation.
    • In the US, the 1986 Goldwater-Nichols Act elevated the Chairman from first among equals to the “principal military advisor” to the President and the Secretary of Defence.
    • In the Indian context, critics fear, the absence of foresight and understanding might end up making the CDS just another case of “jobs for the boys”.

    Way Forward

    • The last time India fought a major battle was the Kargil conflict in 1999 in which the Navy played a silent role while the Army and Air Force collaborated to evict intruders from Indian soil.
    • The lessons learnt then prompted the K. Subrahmanyam Committee to propose having a CDS for the first time.
    • Instrumentalism doesn’t always work; sometimes a giant leap is the need of the hour.
    • India has traditionally been a land power and, yes, the primary threats are still on land, from the northern and western borders.
    • But the threat matrix has changed since 1947 and the Indian Ocean region is fast metamorphosing into a major arena of friction, with increasing forays by the Chinese Navy and building up of regional navies with help from China.
    • Also, while the threat of war stills exists in the subcontinent under the nuclear overhang, the room for large conventional manoeuvres is over.
    • In a conflict situation, what would unfold are short and swift skirmishes which call for agility and swift action by the three services in unison.

    Recent developments

    • The Union defence ministry has set up a high-powered committee under National Security Advisor (NSA) Ajit Doval to implement the Cabinet Committee on Security (CCS) decision to create the much-awaited post.
    • The HPC is mandated to frame the terms of references for this post, according to top officials in the defence and national security establishment.

    Expected terms of references

    • While the government hasn’t disclosed about the powers of the CDS, it is learnt that he will be single-point military advisor to the defence minister.
    • He would be in an interface with the NSA in the Defence Planning Group and Defence Acquisition Council (DAC) as a member of the bodies.
    • The CDS will set budgetary priorities on the basis of available capital outlay for the three services and also define the acquisition priorities for hardware for the armed forces without any duplication.
    • The CDS will be the point person for military diplomacy for the country and be responsible for the overall preparedness of the forces.
    • The CDS, apart from assuming all the roles of COSC in the context of training, jointmanship, education in military academies, will be the head of tri-service Andamans and Nicobar Command (ANC) and will have substantive financial powers.
    • While all the three service chiefs will be answerable to him, the CDS or permanent COSC, will have the tri-services Strategic, Cyber, Space and Special Operations Command under him, with heads of these commands being held by the services in rotation.

     

     



    References:

    https://www.civilsdaily.com/news/explained-the-post-of-chief-of-defence-staff-cds/

    https://www.hindustantimes.com/india-news/committee-under-nsa-to-set-terms-for-cds-position/story-li74CKhSRIoBAT6zQlKxGI.html

    https://www.telegraphindia.com/opinion/the-chief-of-defence-staff-challenge/cid/1699997

    https://www.livemint.com/opinion/online-views/opinion-appointing-a-chief-of-defence-staff-would-just-be-the-first-step-1566137008619.html

    https://www.indiatoday.in/news-analysis/story/chief-of-defence-staff-cds-narendra-modi-1581393-2019-08-16

    https://scroll.in/article/934179/will-a-chief-of-defence-staff-put-an-end-to-the-inter-service-tussles-in-india

  • [Burning Issue] India’s Nuclear No First Use Policy

    Distribution:


    Context

    • The ruling government has offered several paradigm changing cases for the field of strategic studies and international relations this year, such as the Balakot airstrike and abrogation of Article 370.
    • Now, with Raksha Mantri’s statement about India’s ‘No First Use’ of nuclear arms pledge, many observers in and outside India are jumbled to consider the various implications of his statement.
    • However, Pakistan, by contrast, has openly threatened a nuclear triad like on multiple occasions.

    Nuclear No First Use

    • No first use (NFU) refers to a pledge or a policy by a nuclear power not to use nuclear weapons.
    • It is a means of warfare unless first attacked by an adversary using nuclear weapons.
    • Earlier, the concept had also been applied to chemical and biological warfare.
    • Pakistan, Russia, the UK, the US and France say they will use nuclear weapons defensively against either nuclear or non-nuclear states only in the case of invasion or other attack against their territory or against one of their allies.

    NFU in India’s context

    • India first adopted a “No first use” policy after its second nuclear tests Pokhran-II, in 1998.
    • In August 1999, the govt. released a draft of the doctrine which asserts that nuclear weapons are solely for deterrence and that India will pursue a policy of “retaliation only”.
    • India’s official nuclear doctrine is codified in a 2003 document, which takes cues from the 1999 draft doctrine.
    • Since then, there has been no official communiqué about India’s nuclear policy from the government, but being primarily discussed on the basis of one-off statements by ministers, retired bureaucrats and military officials.

    India’s NFU doctrine

    Since 2003, India’s nuclear doctrine has had three primary components:

    1) No First Use

    • India will only use nuclear weapons in response to a nuclear attack on Indian Territory, or Indian forces.
    • A caveat is made about their possible use in response to a chemical or biological attack.

    2) Massive Retaliation

    • India’s response to a first strike will be massive, to cause ‘unacceptable damage’.
    • While the doctrine doesn’t explicitly espouse a counter-value strategy (civilian targets), the wording implies the same.

    3) Minimum Credible Deterrence

    • The number and capabilities of India’s nuclear weapons and delivery systems should merely be sufficient to ensure intolerable retaliation, also keeping in mind first-strike survival of its relatively meagre arsenal.
    • It underlines NFU with an assured second strike capability, and falls under minimal deterrence as opposed to mutually assured destruction.

    4) Cognizance with Political Authority

    • Nuclear retaliatory attacks can only be authorised by the civilian political leadership through the Nuclear Command Authority.
    • The Nuclear Command Authority comprises a Political Council and an Executive Council. The Political Council is chaired by the PM.

    Earlier debates on India’s NFU

    • In a 2010 speech, then national security advisor Shivshankar Menon described India’s nuclear doctrine as “no first use against non-nuclear weapon states”.
    • This implied that a first use by India of a nuclear weapons was possible against another nuclear-armed competitor.
    • At the time, the shift was meant to be subtle but deliberate.
    • But the fact that this formulation was never repeated – and was, in fact, reversed in subsequent statements – suggests that it is no longer a guiding principle, but should be seen only as a momentary signal against India’s adversaries.

    Revoking the NFU

    • Raksha Mantri’s statement is a part of a pattern reflecting a need to critically evaluate India’s nuclear doctrine, as voiced by other defence ministers and retired bureaucrats and military officials.

    Arguments against –

    I. India’s image as a responsible nuclear power is central to its nuclear diplomacy.

    • Nuclear restraint has allowed New Delhi to get accepted in the global mainstream.
    • From being a nuclear pariah for most of the Cold War, within a decade of Pokhran 2, it has been accepted in the global nuclear order.
    • It is now a member of most of the technology denial regimes such as the Missile Technology Control regime and the Wassenaar Arrangement.
    • It is also actively pursuing full membership of the Nuclear Suppliers Group. Revoking the ‘no first use’ pledge would harm India’s nuclear image worldwide.
    • Parting away with NFU would also be costly otherwise.

    II. A purely retaliatory nuclear use is easier to operationalize

    • Nuclear preemption is a costly policy as it requires massive investment not only in weapons and delivery systems but also intelligence, surveillance and reconnaissance (ISR) infrastructure.
    • The latest estimates of India’s nuclear weapons by the Bulletin of Atomic Scientists point to a small arsenal of 130-150 nuclear warheads even though it has enough militarygrade plutonium to produce 200 warheads.
    • Similarly, first use of nuclear weapons would require a massive increase in India’s nuclear delivery capabilities.
    • There is yet no evidence suggesting that India’s missile production has increased dramatically in recent times.
    • India’s ISR capabilities would have to be augmented to such a level where India is confident of taking out most of its adversary’s arsenal and this is nearly an “impossible task”.

    III. India would have to alter its nuclear alerting routine

    • India’s operational plans for its nuclear forces involve a four-stage process.
    • Nuclear alerting would start at the first hints of a crisis where decision-makers foresee possible military escalation.
    • This would entail assembly of nuclear warheads and trigger mechanisms into nuclear weapons.
    • The second stage involves dispersal of weapons and delivery systems to pre-determined launch positions. The third stage would involve mating of weapons with delivery platforms.
    • The last and final stage devolves the control of nuclear weapons from the scientific enclave to the military for their eventual use.

    IV. Other Factors

    • If India has to switch from NFU, it will have to make substantial changes to existing nuclear structures, alert levels, deployment and command and control arrangements.
    • This will involve a sizeable increase in delivery systems and warheads.
    • The pressure on India’s resources would also impact the buildup of other kinetic and non-kinetic capabilities.

    Arguments for-

    Nuclear disarmament is still a myth

    • India has been serious about nuclear disarmament.
    • India’s nuclear weapons have been a result of compulsions arising out of a nuclearised and hostile neighbourhood.
    • In the long-term, a nuclear weapons-free world would best serve the Indian national security interests, keeping aside moral considerations.
    • A nuclear weapons-free region including China is close to impossible.

    Quest for a nuclear rethink

    • The case to revoke the NFU pledge has also been made keeping in mind India’s other nuclear adversary: China.
    • Given the increasing asymmetry of conventional military power between the two countries, some analysts believe that India should revoke its NFU policy.
    • Where India’s fails to deter China conventionally, it should leverage its nuclear capability.
    • The sanctity of ‘no first use’ has been also called into question not only by strategic analysts but also high-ranking government officials.
    • In 2016, then defence minister Manohar Parrikar raised doubts on India’s adherence to the policy of ‘no first use’ by saying that New Delhi cannot “bind itself” to ‘no first use’ for eternity.
    • Political leaders have tried to insert an element of ambivalence into India’s nuclear doctrine.

    Advantages provided by NFU

    • The main advantage of NFU is that it minimizes the probability of nuclear use.
    • This is so because it enhances the possibility of containing the crisis before the point of no return when miscommunications, misjudgment, misperception or the fog of war may force either power to go first.
    • Instead, if both are NFU powers, there is greater probability of political leaders stepping back from the brink – for they know that a nuclear war cannot be won.
    • NFU for India also presents an opportunity for cooperation with China to work jointly towards a Global No First Use (GNFU) order.
    • Notably, there is considerable convergence regarding the belief of nuclear weapons being restricted to the political realm.

    What if NFU is revoked?

    • The notions of revoking erroneously embrace the idea that a nuclear war can be fought and won. This is utterly false.
    • Pakistan does not pose a conventional threat that India cannot counter. Given that, they are likely to persist with terrorism, which is a low-cost option.
    • On the other hand, India’s conventional military power, shaped to fight a limited war, is challenged to impose its will under the nuclear shadow.
    • Our foregoing NFU cannot prevent Pakistan from using terrorism as a tool of its India policy.
    • On the contrary, it enables Pakistan and other adversaries to invite international intervention in what India maintains as a bilateral issues.

    Evaluating the doctrine

    • Our policy of No First Use has many upsides, not all of them related to nuclear conflict.
    • Unlike countries such as China and the US, India does not regularly release publications detailing its nuclear doctrine, or shifts therein.
    • This ambiguity has some advantages of its own, but some further clarity pertaining to this subject is desperately needed.
    • The official doctrine today exists merely as a press release summarizing few points, with all other statements made offhand, with no great depth to them.
    • Whether we have to turn to these different strategies, or simply make minor changes to our existing doctrine remains to be seen.
    • The recent statement prompted this debate is indicative of a larger effort of comprehensively evaluating India’s nuclear doctrine, and not only posturing.

    Way Forward

    • All doctrines need periodic reviews and India’s case is no exception.
    • Indian doctrine does not support first use of nuclear weapons as it gives ample warning to the adversary of India’s intentions.
    • There is certainly a need for a reappraisal of India’s nuclear doctrine. Given how rapidly India’s strategic environment is evolving, it is imperative to think clearly about all matters strategic.
    • But if Indian policymakers do indeed feel the need to review the nation’s nuclear doctrine, they should be cognizant of the costs involved in so doing.
    • A sound policy debate can only ensue if the costs and benefits of a purported policy shift are discussed and debated widely.

     


    References:

    https://www.civilsdaily.com/news/explained-indias-doctrine-of-nuclear-no-first-use/

    https://en.wikipedia.org/wiki/No_first_use

    https://www.orfonline.org/research/nuclear-rethink-a-change-in-indias-nuclear-doctrine-has-implications-on-cost-war-strategy-54557/

    https://www.thehindu.com/opinion/editorial/unclear-doctrine/article29127566.ece

    https://thewire.in/security/rajnath-singh-no-first-use-nuclear-policy

    https://thediplomat.com/2019/08/from-no-first-use-to-no-first-use/

    https://indianexpress.com/article/opinion/editorials/a-new-playbook-rajnath-singh-nuclear-weapons-5918267/

  • [Burning Issue] US-China Trade War and Its Impact on India

    Distribution:


    Context

    • China and the United States have been engaged in a trade war through increasing tariffs and other measures since 2018.
    • The US is non-surprisingly the first to impose tariffs on Chinese goods to press demands for an end to policies that Washington says hurt US companies competing with Chinese firms.

    • China too responded with its own tit-for-tat tariffs on US goods.
    • This exacerbates the uncertainty in the global trading environment, affects global sentiment negatively, and adds to risk aversion globally.

    Background

    • The dispute escalated after US demanded China to reduce its $375 billion trade deficit with the US, and introduce “verifiable measures” for protection of IPRs, technology transfer, and more access to American goods in Chinese markets.

    • Chinese devaluation of Yuan further fuelled the situation.
    • These tensions are now yielding in an increasingly fragmented global trading framework, weakening the rules-based system that has underpinned global growth, particularly in Asia.

    Differences being vented out through trade war

    • A major cause of these tensions is the growing battle between China and the U.S. for global economic and technological dominance.
    • US alleges China for the economic damage caused through alleged theft of intellectual property.
    • US has accused China of either stealing American intellectual property and military technology or adopting and enforcing policies.
    • This in turn puts U.S. patent holders at a disadvantage in Chinese markets by forcing foreign companies to engage in joint ventures with Chinese companies which in turn gives Chinese companies illicit access to their technologies
    • The Chinese government has denied forced transfer of IP is a mandatory practice, and acknowledged the impact of R&D performed in China.

    Trade war: A bluff for Protectionism?

    • Even with a trade war, US investment in China during January 2019 reportedly doubled, with foreign capital in China’s hitech industry increasing by 41%.
    • Trump has started dragging India to the ongoing situation by saying that the two were no longer “developing nations” and were “taking advantage” of the WTO tag.

    Getting ahead with Clouds of a global recession

    • Trade and geopolitical uncertainties have hit all major economies.
    • Earlier this month, researchers at Morgan Stanley, a leading investment bank, warned that if the US and China continue to raise tariff and non-tariff barriers over the next few months, the global economic growth rate will fall to a seven-year low of 2.8%.
    • The world economy could enter a recession within the next three quarters.
    • The last massive downward spiral in the global economy happened in the wake of the great financial crisis of 2008, and continued until 2010.

    What has triggered the alarm?

    • Earlier this month, the US declared China a “currency manipulator”.
    • In other words, it accused Beijing of deliberately weakening the yuan to make Chinese exports to the US more attractive and undercut the effect of increased US tariffs.
    • The intensifying trade war between the two has the potential to derail already weak global growth, and the signs are evident.

    • For instance, the global manufacturing Purchasing Managers’ Index (chart 2) and new orders sub-index have contracted for the second consecutive month in July; they are already at a seven-year low.
    • Further, the global capital expenditure cycle has “ground to a halt” (chart 3); since the start of 2018, there’s been a sharp fall-off in nominal capital goods imports growth.

    How can this lead to a global recession?

    • The German slowdown is a very good example. The absolute volume of global trade has stagnated and, in terms of percentage change, trade is contracting.
    • Higher tariffs are not only likely to douse demand but, crucially, hit business confidence.
    • The apprehension is global trade uncertainties could start a negative cycle, wherein businesses do not feel confident enough to invest more, given the lower demand for consumer goods.
    • Reduced capital investment would reflect in fewer jobs, which, in turn, will show up in reduced wages and, eventually, lower aggregate demand in the world.

    What about India?

    • As chart 4 shows, India’s trade is already suffering, and jobs are being lost.
    • For an economy that is struggling to find a domestic growth lever — government and businesses are overextended and household (that is, private family-level) consumption is down — exports could have provided a respite.

    Where does India stand in this trade war?

    • There is a lot of uncertainty with respect to how the ongoing retaliatory tariff impositions between the US and China.
    • There could be a short-term impact on the stock markets.
    • Several economists have indicated the possibility of India benefiting through increasing exports to the US and a shift of foreign direct investment (FDI) to India.
    • India is among a handful of economies that stand to benefit from the trade tensions between the world’s top two economies, a/c to the UN.
    • However, to substantively benefit from this situation, India requires a strategic approach to convert this opportunity into a major gain.
    • India needs to focus on becoming a new powerhouse as a global hub for exports, with a major positive impact on competitiveness and job creation.

    Impact on merchandise exports

    • China’s merchandise exports are almost the same as India’s GDP.
    • Even a 10% shift from Chinese exports to Indian exports would imply over 75% increase in Indian exports. India needs to develop a strategy and vision for itself and the world to make this a reality.
    • Its recent tepid export performance suggests that investment from large global companies is the transformative path for India, provided certain key points are kept in mind.

    India’s exports

    • India’s domestic market is large, but the focus of most large firms with major international brands and global presence is on exports and maintaining their global value chains (GVCs).
    • China’s 2018 exports to the US at $560 billion were nearly double of India’s total exports.

    India on global scenario

    • India’s aspirations to double its exports and create jobs depend on its success to link up effectively with GVCs.
    • As the seventh largest global economy and the 20th largest goods exporter, India is not yet a significant presence in GVCs.
    • To establish domestic capacity for export hubs and GVCs, strong presence of ‘lead firms’ that manage the GVCs becomes essential.

    Enhancing competence to reap benefits

    • For competing with other nations to attract major investments away from China, India needs to emphasise and improve implementation of support policies, with a new flagship programme, ‘India: Making for the World’.
    • Major global companies make investment decisions significantly based on ease of operational conditions and stable policy regimes.
    • All alternative countries under consideration focus on creating and effectively implementing investment-friendly regimes — that is, taking a step beyond policy announcement.

    Focusing on champion sectors

    • To give specific focus, certain selected sectors significant for employment, technology and exports should be identified for launching the programme.
    • These ‘champion’ sectors could be textiles and apparel, automotive products and electronics (with emphasis on mobiles), to be supplemented with a few other sectors later.
    • These three sectors in India are likely to contribute over $1 trillion by 2025.

    Way Forward

    • We should not forget that our exports plus imports of goods and services constitute around 42% of GDP.
    • Also, we have a current account deficit dependent on external capital inflows for financing.
    • There is no question that economic growth and asset markets will be badly hurt by a full-blown trade war.
    • The more important issue is the current global economic order is in danger of being dismantled, brick by brick.
    • The ramifications will go far beyond trade—the impact on geopolitics, for instance, could be far more serious.
    • In trade conflicts, there are no winners. Too much protectionism ultimately constricts global growth.
  • [Burning Issue] Assam NRC


    Context

    Migrations to Assam

    • Assam saw waves of migration, first as a colonial province and then as a border state in independent India.
    • The colonial Assam (1826–1947) witnessed migration from various provinces of British India for tea plantation.
    • The liberal attitude of the Colonial authorities further encouraged the continuous arrival of peasants from Bengal to Assam in search of fertile lands.
    • The Partition of the subcontinent and communal riots had just triggered vast population exchanges at the border.
    • And this unrelenting migration from East Pakistan, now known as Bangladesh led to a perceptible change in the demographic pattern in some districts of the Province.

    What exactly is the National Register of Citizens (NRC)?

    • The NRC is a register containing names of all genuine Indian citizens. The register was first prepared after the 1951 Census of India.
    • Since 2015, Assam has been in the process of updating the 1951 register.
    • The register is meant to be a list of Indian citizens living in Assam.
    • For decades, the presence of migrants, often called “bahiragat” or outsiders, has been a loaded issue here.

    Why is it being updated now?

    • One of the stated aims of the exercise is to identify so-called “illegal immigrants” in the state, many of whom are believed to have poured into Assam after the Bangladesh War of 1971.
    • In 1979, about eight years after the war, the state saw an anti-foreigners’ agitation.
    • Assamese ethnic nationalists claimed illegal immigrants had entered electoral rolls and were taking away the right of communities defined as indigenous to determine their political future.

    The Assam Accord

    • In 1985, the anti-foreigners’ agitation led by the All Assam Students’ Union came to an end with the signing of the Assam Accord.
    • Under this accord, those who entered the state between 1966 and 1971 would be deleted from the electoral rolls and lose their voting rights for 10 years, after which their names would be restored to the rolls.

    Who is a Foreigner in Assam?

    • The National Register of Citizens now takes its definition of illegal immigrants from the Assam Accord – anyone who cannot prove that they or their ancestors entered the country before the midnight of March 24, 1971, would be declared a foreigner and face deportation.
    • Those who entered on or after March 25, 1971, the eve of the Bangladesh War, would be declared foreigners and deported.
    • This means you could be born in India in 1971 to parents who crossed the border in that year, and still be termed an illegal immigrant at the age of 48.

    Why is the NRC being updated now?

    • The mechanism for detecting so-called foreigners had previously been delineated by the Illegal Migrants (Determination by Tribunals) Act of 1983.
    • This was struck down by the Supreme Court in 2005, on a petition which argued that the provisions of the law were so stringent, they made the “detection and deportation of illegal migrants almost impossible”.
    • The petitioner was Sarbananda Sonowal, now chief minister of Assam.
    • That same year, the decision to start updating the NRC was taken at a tripartite meeting attended by the Centre, the Assam government as well as the All Assam Students’ Union and chaired by then PM Manmohan Singh.

    The apex court intervention

    • The court came into the picture after a non-governmental organisation called Assam Public Works filed a petition asking that so-called illegal migrants be struck off the electoral rolls.
    • In 2013, the Supreme Court asked the Centre to finalise the modalities to update the new NRC.
    • The project was launched in earnest from 2015, monitored directly by the Supreme Court.

    How do the authorities establish citizenship?

    • The counting process went through several phases. First, there was data collection.
    • Most individuals applying for inclusion into the NRC had to prove not only that their ancestors had lived in Assam pre-1971 but also their relationship with the ancestor.
    • Then came the verification process. Documents were sent to the original issuing authorities while NRC officials conducted field verification.
    • Once the data was submitted, the applicant’s blood relations were plotted on a family tree.

    Why is the process so contentious?

    • Bengali Muslims, the community most often branded as illegal Bangladeshi immigrants, felt they were put under greater scrutiny than other groups.
    • These fears were deepened with the sudden appearance of an “original inhabitants” category in 2017.
    • The Assam state coordinator of the NRC, admitted that people internally classified as original inhabitants faced less scrutiny.
    • It was rumored that no Muslims had been included in this category.

    The “doubtful” D-Voters

    • The second draft was published on July 30, 2018. It excluded 2.48 lakh “D” voters and their descendants.
    • D voters or doubtful voters are people who had their voting rights suspended by the Election Commission because their citizenship was suddenly in doubt.
    • The letter “D” was placed next to their names in the electoral rolls.
    • It was reported that even “D” voters who had fought cases and got their names cleared in Foreigners’ Tribunals have not been able to shed the tag because the Election Commission’s software is not sophisticated enough.

    How many people have made it to the NRC so far?

    • Of the 3.29 crore people who applied, 2.89 crore people made it to the draft published on July 30, 2018.
    • But over 40.07 lakh were excluded, including army veterans, government employees, families of former presidents and Assam’s only woman chief minister.
    • There is no official community-wise or district-wise data. But anecdotal evidence suggests Bengali-origin communities were overwhelmingly affected.

    What about those excluded?

    • All those left out of the draft were told to make fresh claims to citizenship at the Foreigners Tribunals.
    • The MHA has amended the Foreigners (Tribunals) Order, 1964, and has empowered district magistrates in all States and UTs to set up tribunals to decide whether a person staying illegally in India is a foreigner or not.
    • Over the past year, the NRC officials also accepted objection forms which allowed people to flag the inclusion of “ineligible persons” in the register.
    • The law has since been struck down by the court but the tribunals persist, tasked with determining whether individuals being tried are foreigners and should be deported.

    Flaws in Foreigners Tribunals

    • Several flaws have been identified in this process, from the lack of legal aid to ex parte orders declaring people foreigners without even a trial.
    • Tribunal members are pressured to declare the maximum number of foreigners rather than clear people of the charge.
    • In anticipation of a fresh rush of cases after the final list, 1,000 more tribunals are being set up across the state.

    What happens to those who lose cases at the Foreigners Tribunals?

    • Neither the state nor the Centre has clarified what happens to those who lose their cases in the Foreigners’ Tribunals, whether they will be detained, deported or allowed to stay on without the rights and privileges of citizenship.
    • In the past, those deemed to be foreigners have been transferred to detention centres in the state. Till date, there are six across Assam, carved out of local prisons.
    • So-called foreigners have languished here for years in a legal limbo. While the Indian state has declared them foreigners, there is no repatriation treaty under which they can be deported to Bangladesh.
    • Last year, Assam also got sanction from the Centre to build the first standalone detention camp in the state, capable of housing 3,000 inmates.

    Bangladeshi un-acceptance

    • Over the years, Bangladeshi leaders have frequently been quoted in the media as denying the presence of its nationals in India.
    • Besides, there have been no visible recent efforts by India to push the matter with Bangladesh.
    • In fact, India is understood to have conveyed to Bangladesh, just before the final draft NRC was published, that there was no talk of deportation.
    • This was an effort directed at addressing a friendly neighbour’s concerns about the prospect, even if it was a theoretical one, of being flooded with a mass of deportees.

    Conclusion

    • Updating the national register of citizens is indeed a positive step but the actual success lies in its peaceful implementation.
    • It was essential to deal with the illegal immigration in Assam.
    • But a proper framework is need to be developed to deal with the post drafting issues in the region.
    • Moreover the state government should ensure that injustice should not be done to any of its citizens.

    Way Forward

    • India, as a country which follows the ideology of ‘Vasudhaiva Kutumbakam’, should not be hasty in taking decisions that can disenfranchise her citizens – contradicting its centuries-followed values.
    • The need of the hour is that Union Govt. should clearly chart out the course of action regarding the fate of excluded people from final NRC data.
    • The political parties should refrain from coloring the entire NRC process through electoral prospects that may snowball in to communal violence.
    • There is a need for a robust mechanism of legal support for the four million who have to prove their citizenship to India with their limited means.
  • [Burning Issue] Reorganization of Jammu and Kashmir


    Context

    • The Union Home Minister introduced two statutory resolutions, one, to recommend that the President issue a notification rendering Article 370 inoperative, and two, to accept the J&K Reorganization Bill.
    • The move was intended to fill the political vacuum in the valley.

    J&K Reorganization Process

    1. President issued a presidential order under Article 370 (1) of the Constitution
    • This clause enables the President to specify the matters which are applicable to J&K.
    • As it can be issued only with the J&K government’s concurrence, the notification uses the words “with the concurrence of the Government of the State of J&K”.
    • This presumably means the Governor, who is now administering the State under President’s Rule, has given his concurrence on behalf of the State government.
    1. The Order supersedes the 1954 Order
    • This effectively means that all the provisions that formed the basis of a separate “Constitution” for J&K stand abrogated.
    • The Order declares that all the provisions of the Constitution of India, shall apply to J&K too.
    1. Special measures for scrapping of Article 370
    • A few clauses were added to Article 367 of the Constitution. Article 367 contains “Interpretations”.
    • They contain guidance on how to read or interpret some provisions.
    • The new clauses say, when applicable to J&K, all references to the ‘Sadar-i-Riyasat’, acting on the aid and advice of the Council of Ministers, will be construed as references to the Governor of J&K.
    • All references to the State government shall mean “the Governor”.
    1. Abrogating Constituent Assembly
    • Most importantly, the reference to the “Constituent Assembly” in a provision to Article 370 (3) has been amended to read “Legislative Assembly of the State”.
    • This is the provision that says the President can declare that Article 370 is no more operative only on the recommendation of the Constituent Assembly.
    1. Reorganization
    • The Bill envisages converting J&K into a Union Territory with a legislature, and carve out Ladakh region as another Union Territory, but without a legislature.

    Background

    • J&K enjoyed special status under Article 370 of the Constitution of India.
    • This Article describes it as a temporary provision and that it will cease to be operative if the President issues a public notification to that effect.
    • However, prior to that, a recommendation is necessary from the Constituent Assembly of J&K.

    What is Article 370?

    • Included in the Constitution on October 17, 1949, Article 370 exempts J&K from the Indian Constitution (except Article 1 and Article 370 itself) and permits the state to draft its own Constitution.
    • It restricts Parliament’s legislative powers in respect of J&K. For extending a central law on subjects included in the Instrument of Accession (IoA) mere “consultation” with the state government is needed.
    • But for extending it to other matters, “concurrence” of the state government is mandatory.

    What changes did Art. 370 mandate?

    • As a result of Article 370, J&K had its own Constitution, and all laws passed by Parliament will not be applicable to the State, unless the State government gives its concurrence.
    • The Constitution (Application to J&K) Order, 1954, lists the Articles and provisions that apply to J&K.

    Another bone of contention: Article 35A

    • Further, the President also listed a set of exceptions under Article 35A of the Constitution.
    • Article 35A empowered the J&K state’s legislature to define “permanent residents” of the state and provide special rights and privileges to those permanent residents.
    • It protected the exclusive laws – such as the bar on outsiders buying property and women marrying non-Kashmiris losing their property rights – of the State.
    • It was added to the Constitution through a Presidential Order, i.e., The Constitution (Application to J&K) Order, 1954 – issued by the President of India on 14 May 1954.
    • This was an exercise of the powers conferred by the clause (1) of the Article 370 of the Indian Constitution, and with the concurrence of the Government of the State of J&K.

    Why Article 35A  was allowed to continue?

    • Since Article 35A predates basic structure theory of 1973, as per Waman Rao (1981), it cannot be tested on the touchstone of basic structure.
    • Certain types of restrictions on purchase of land are also in place in several other states, including some in the Northeast and Himachal Pradesh.
    • Domicile-based reservation in admissions and even jobs is followed in a number of states, including under Article 371D for undivided Andhra Pradesh.

    Outcome of the proposed reorganization

    I. Division of the state

    • Both Ladakh and Jammu and Kashmir will be Union territory.
    • J&K will have a state Legislative Assembly like Delhi and Puducherry while Ladakh would be a Union Territory without Legislature.

    II. Single national flag

    • The state would have just one National Flag that is our Tri-Colour of India.

    III. Status of Article 370

    • The Presidential Order has not scrapped Article 370.  All provisions of the article 370 are null and void except clause 1 .
    • Clause 1 of the article 370 envisages that Jammu and Kashmir is the integral part of India.
    • But invoking this very article special status of Jammu & Kashmir has been withdrawn.
    • Thus Article 370 is very much on the statute book.

    IV. Status of Article 35-A

    • Since Presidential Order of August 5 has extended all the provisions of the Constitution of India to Kashmir, Fundamental rights chapter has now been extended.
    • Hence discriminatory provisions of Article 35-A have now become unconstitutional. President also may withdraw Article 35-A.

    Analysing the reorganization-

     

    Why was Article 370 a bone of content?

    • Article 370 gave some special powers to the state of Jammu and Kashmir.
    • It allowed the state to have its own constitution, its own prime minister (which was later removed) and its own flag.
    • The article also restricted the Parliament’s jurisdiction to draft laws for the state except for three areas — defense, foreign affairs and communication.

    Why Article 35-A was discriminatory?

    • Article 35-A was inserted in the Constitution through a presidential proclamation in 1954.
    • It was surreptitiously inserted and it was neither a part of the original constitution nor did it come as a constitutional amendment.
    • This article empowered the state to decide permanent residents and their privileges with regards to land ownership and employment in Jammu and Kashmir.
    • And people who were deemed ‘non-residents’ were not allowed to buy property, settle down, seek government jobs, college admissions or scholarships.

    Was Article 370 a temporary provision?

    • It is the first article of Part XXI of the Constitution. The heading of this part is ‘Temporary, Transitional and Special Provisions’.
    • Article 370 could be interpreted as temporary in the sense that the J&K Constituent Assembly had a right to modify/delete/retain it; it decided to retain it.
    • Another interpretation was that accession was temporary until a plebiscite.
    • The Supreme Court in April 2018 said that despite the headnote using the word “temporary’, Article 370 is not temporary.
    • In Sampat Prakash (1969) the SC refused to accept Article 370 as temporary. A five-judge Bench said “Article 370 has never ceased to be operative”. Thus, it is a permanent provision.

    Was Article 370 useful to Centre?

    • The Centre has used Article 370 even to amend a number of provisions of J&K’s Constitution, though that power was not given originally.
    • Article 356 was extended though a similar provision that was already in Article 92 of the J&K Constitution, which required that President’s Rule could be ordered only with the concurrence of the President.
    • To change provisions for the Governor being elected by the Assembly, Article 370 was used to convert it into a nominee of the President.
    • Again, Article 249 (power of Parliament to make laws on State List entries) was extended to J&K without a resolution by the Assembly and just by a recommendation of the Governor.
    • In certain ways, Article 370 reduces J&K’s powers in comparison to other states. It is more useful for India today than J&K.

    Was it  un-constitutional?

    • Article 370 itself mentions Article 1, which includes J&K in the list of states.
    • It has been described as a tunnel through which the Constitution is applied to J&K.
    • India has used Article 370 at least 45 times to extend provisions of the Indian Constitution to J&K.
    • This is the only way through which, by mere Presidential Orders, India has almost nullified the effect of J&K’s special status.
    • By the 1954 order, almost the entire Constitution was extended to J&K including most Constitutional amendments.
    • Ninety-four of 97 entries in the Union List are applicable to J&K; 26 out of 47 items of the Concurrent List have been extended; 260 of 395 Articles have been extended to the state, besides 7 of 12 Schedules.

    Did it isolate J&K from India?

    • Article 3 of the J&K Constitution declares J&K to be an integral part of India.
    • In the Preamble to the J&K Constitution, there is no claim to sovereignty.
    • There is categorical acknowledgement about the object of the J&K Constitution being to further define the existing relationship of the state with the Union of India as its integral part thereof.
    • Moreover people of state are referred as ‘permanent residents’ not ‘citizens’.

    What it means for the Kashmiri Population?

    • Article 370 is not an issue of integration but of autonomy.
    • The recent Presidents Order is concerned with uniformity along with the integration.
    • Article 370 was not only part of the Constitution but also part of federalism, which is basic structure.
    • Kashmiris fear the move would lead to a demographic transformation of the region.

    Is the road clear for the reorganization?

    • Clause (3) of Article 370 gives the President power to end the special rights and privileges of the people of Jammu and Kashmir under the 1954 Order.
    • However, the clause carries a rider. President would have to first get the consent of the Constituent Assembly of J&K before issuing such a notification.
    • As there is no Constituent Assembly in existence now, there is nobody to recommend the scrapping of Article 370.
    • Ideally, any such amendment to the name of the ‘Constituent Assembly’ would require the assent of the Constituent Assembly itself.

     Way ahead

    • According to experts the order will face both legal and political challenges in the coming days.
    • The government can argue that the amendment made in August 5 notification only applies to Jammu and Kashmir and not the entire Dominion of India, and so, does not require a constitutional amendment.
    • This point of contention may reach the Supreme Court, where several petitions on the constitutionality of Article 35A, and in consequence Article 370, are pending for adjudication.
  • [Burning Issue] India US relations in the backdrop of recent hiccups

    Distribution:


    Context

    • While India and the US claim to be strategic partners, the bones of contention are now more numerous and more substantial than they’ve been before.
    • The relations between the two countries had been plateauing for months with Trump being preoccupied with domestic and international battles.
    • The whim of US Administration under Trump and recent events has put the India-US relations again under test of time.

    Let’s take a look a timeline of recent events:

    • Discontinuing India’s designation as a beneficiary of its Generalized System of Preferences (GSP) duty concession programme
    • Freedom of religion issue
    • US claim of credit for settling Balakot Air strikes and Pulwama attack
    • US offer for mediation on Kashmir

    At glance

    I. Trade Issues

    • Trade is a big source of friction between the two nations. US companies see India’s 1.3bn people as a potentially lucrative market.
    • But they have been frustrated with New Delhi’s protectionism and unpredictable regulations and policies, which make India a notoriously tough place to do business.
    • Specific points of irritation include India’s price caps on medical devices such as stents; restrictions on US dairy imports; restrictions on foreign companies operating in e-commerce and retail; and new data localisation rules.
    • Trump has repeatedly complained about India’s 50 per cent import duties on Harley-Davidson motorcycles.
    • US administration also terminated India’s designation as a beneficiary of the GSP citing unfair protectionist measures by India.
    • The withdrawal of duty-free access to Indian exporters is somehow bound to damage the Indian economy.

    II. Visa Issues

    • Indians are not as welcome in the US as they used to be as thousands of techies seen their demand for an H1B visa extension rejected.
    • Such a cap on the Indian H1B visas would be an additional blow as Indians get about 70 per cent of the 85,000 H1B visas granted every year by the US.
    • One may argue that such practices are unfair, but India’s attempts at regulating migration in the North-east reflect the same agenda — the kind of agenda on which national-populists are elected.

    III. Freedom of Religion issue

    • The annual report of the State Department on Freedom of Religion accuses India that for more than half a decade India of not treating its minorities in the right manner.
    • It alleged the role of vigilante and right wing groups involved in “mob lynchings” to alienate non-Hindus or lower-caste Hindus is a significant contributor to the rise of religious violence and persecution.

    IV. Autonomy issues

    • India has long valued its strategic autonomy and its freedom to maintain a complex web of warm foreign relationships.
    • In particular, Iran and Russia are both longstanding traditional friends which have historically provided India with oil and military hardware.
    • India is in the process of purchasing S400 surface-to-air missile systems from Russia which could mean more sanctions as per a US law called “Countering America’s Adversaries Through Sanctions Act” (CAATSA).

    V. Content over Iran

    • Similarly, to be a friend of Iran and the US at the same time is getting more and more difficult.
    • New Delhi has had to bow to Washington when the Trump administration ended waivers that allowed India (among others, including China) to continue their oil imports from Iran
    • After all, India needs Iran because of Chabahar and Afghanistan — where the American withdrawal is another bone of contention.

    Immediate cause of rift: Unwelcomed move over mediation on Kashmir

    • More recently, Trump threw a bombshell at India during his meeting with Pak PM Imran Khan by saying that PM Modi had asked him to mediate on Kashmir.
    • India’s insistence on bilateralism has historically stemmed from the distrust of outsiders meddling in its internal affairs.
    • India has sought outside help from the world, not for mediation, but to rein in Pakistan’s meddling of terror in Kashmir.

    Why is US frustrated with India these days?

    • An important question is arising for Washington is: How far can the US rely on India to contain China?
    • In the last SCO meeting at Bishkek, Modi did not rule out India joining hands with Russia and China in the emerging trade war with the US.
    • Huawei is another potential sore point. The Chinese tech giant has plans for expansion in India and hopes to play a role in building the country’s 5G network.
    • The US has been pressurizing India to ban the Chinese company from its 5G development and deployment on the back of security concerns of Chinese surveillance on these networks.

    U.S. deterrence is not unusual

    • The US president claimed to have defused the India-Pakistan standoff that arose from the Pulwama attack. The US is said to have played a part in release of Abhinandan.
    • The US also played a role in forcing China to agree to the designation of Jaish chief Masood Azhar.
    • And most recently, Trump took credit for the arrest of Hafiz Saeed. Perhaps Trump thinks he has already resolved much of the problem.

    U.S. is still important

    • The US move to take a listing request for Jaish-e-Mohammad founder Masood Azhar directly to the UN Security Council is an indicator of its undeterred support for India.
    • The recent passing of a bill titled Fairness for High-Skilled Immigrants Act (HR 1044) which would make shorter wait time for Indian applicants of Green Cards is one of the major sigh of relief for Indian migrants.
    • Passing of HR 2123 Bill to give India Nato-ally like status is a vital step to enhance strategic cooperations.
    • The isolation of Pakistan by US is another boon for India’s quest for peace in South Asia.

    Conclusion

    • The US president’s statement can be explained away as another instance of “Trump being Trump”.
    • As usual, India cheers the strong support by the U.S. on multiple fronts.
    • The US like always has been clear to seek greater market access and the removal of trade barriers in our economic relationship.
    • Unlike the US-China trade war, and the US-Mexico disputes the recent differences were never at the centre of India-US relations.
    • As correctly pointed by Mike Pompeo, Great friends are bound to have disagreements.

    Way ahead

    • The current state of play suggests that the two countries were now at a crossroads.
    • There is no easy way to sugarcoat the present state of the relationship, it is one in which the only common denominator is a fundamental misunderstanding of priority objectives on the other side.
    • A strong commitment to improve the bilateral trade relationship and build a sound foundation for future successes is necessary.

     


    Also read:

     

    For amazing timeline of India-US relations since 1947 , navigate to the page:

    https://www.cfr.org/timeline/us-india-relations

  • [Burning Issue] RTI amendment Bill

    RTI amendment Bill

    CONTEXT

    The Right to Information (Amendment) Bill, 2019 that amends the Right to Information Act, 2005 has been introduced in Lok Sabha.

    What does the RTI Act do?

    • Under the RTI Act, 2005, Public Authorities are required to make disclosures on various aspects of their structure and functioning.
    • This includes: (i) disclosure on their organisation, functions, and structure, (ii) powers and duties of its officers and employees, and (iii) financial information.

    Need:

    The intent of such suo moto disclosures is that the public should need minimum recourse through the Act to obtain such information. The intent behind the enactment of the Act is to promote transparency and accountability in the working of Public Authorities.

    Who is included in the ambit of ‘Public Authorities’?

    ‘Public Authorities’ include bodies of self-government established under the Constitution, or under any law or government notification. For instance, these include Ministries, public sector undertakings, and regulators. It also includes any entities owned, controlled or substantially financed and non-government organizations substantially financed directly or indirectly by funds provided by the government.

    How is the right to information enforced under the Act?

    • The Act has established a three tier structure for enforcing the right to information guaranteed under the Act.
    • Public Authorities designate some of their officers as Public Information Officers.
    • The first request for information goes to Central/State Assistant Public Information Officer and Central/State Public Information Officer, designated by the Public Authorities. These Officers are required to provide information to an RTI applicant within 30 days of the request.
    • Appeals from their decisions go to an Appellate Authority.

    Information Commissions:

    • Appeals against the order of the Appellate Authority go to the State Information Commission or the Central Information Commission.
    • These Information Commissions consists of a Chief Information Commissioner, and up to 10 Information Commissioners.

     

    What does the Right to Information (Amendment) Bill, 2019 propose?

    • The Bill changes the terms and conditions of service of the CIC and Information Commissioners at the centre and in states.
    • The Bill states that the central government will notify the term of office for the CIC and the ICs.
    • The Bill states that the salaries, allowances, and other terms and conditions of service of the central and state CIC and ICs will be determined by the central government.

    History of amendments

    • “Amendments” have haunted the Right to Information (RTI) community ever since the RTI Act came into effect almost 14 years ago.
    • Rarely has a law been so stoutly defended by activists. It is not possible to pass a perfect law.
    • But it was a popular opinion strongly held by most RTI activists that a demand for progressive amendments could be used as a smokescreen by the establishment to usher in regressive changes.

    Background of amendments

    • Nevertheless, the sword of Damocles of regressive amendments has hung over the RTI with successive governments.
    • Amendments have been proposed since 2006, just six months after the law was implemented and many times thereafter.
    • Peoples’ campaigns, through reasoned protest and popular appeal, have managed to have them withdrawn.

    The proposed amendments

    1.Challenging Autonomy

    In the form of the Right to Information (Amendment) Bill, 2019, they seek to amend Sections 13, 16, and 27 of the RTI Act which carefully links, and thereby equates, the status of the Central Information Commissioners (CICs) with the Election Commissioners and the State Information Commissioners with the Chief Secretary in the States, so that they can function in an independent and effective manner.

    2. Giving central overarching power – The deliberate dismantling of this architecture empowers the Central government to unilaterally decide the tenure, salary, allowances and other terms of service of Information Commissioners, both at the Centre and the States.

    Why is there a need of change?

    Some feel that it is because the RTI helped with the cross-verification of the affidavits of powerful electoral candidates with official documents and certain Information Commissioners having ruled in favour of disclosure.

    Challenge to the misuse of power – It is unlikely to be a set of instances but more the fact that the RTI is a constant challenge to the misuse of power.

    Empowering a citizen’s access to power and decision-making –

    • In a country where the rule of law hangs by a slender thread and corruption and the arbitrary use of power is a daily norm, the RTI has resulted in a fundamental shift — empowering a citizen’s access to power and decision-making.
    • It has been a lifeline for many of the 40 to 60 lakh ordinary users, many of them for survival.
    • It has also been a threat to arbitrariness, privilege, and corrupt governance.
    • More than 80 RTI users have been murdered because their courage and determination using the RTI was a challenge to unaccountable power.

    Impact of RTI

    • The RTI has been used brilliantly and persistently to ask a million questions across the spectrum — from the village ration shop, the Reserve Bank of India, the Finance Ministry, on demonetisation, non-performing assets, the Rafale fighter aircraft deal, electoral bonds, unemployment figures, the appointment of the Central Vigilance Commissioner (CVC), Election Commissioners, and the (non)-appointment of the Information Commissioners themselves.
    • The information related to decision-making at the highest level has in most cases eventually been accessed because of the independence and high status of the Information Commission.

    Significance of RTI

    • The RTI movement has struggled to access information and through it, a share of governance and democratic power.
    • The Indian RTI law has been a breakthrough in creating mechanisms and platforms for the practice of continual public vigilance that are fundamental to democratic citizenship.
    • The mostly unequal struggle to extract information from vested interests in government needed an institutional and legal mechanism which would not only be independent but also function with a transparency mandate and be empowered to over-ride the traditional structures of secrecy and exclusive control.
    • An independent Information Commission which is the highest authority on information along with the powers to penalise errant officials has been a cornerstone of India’s celebrated RTI legislation.

    Part of checks and balances

    • The task of the Information Commission is therefore different but no less important than that of the Election Commission of India.
    • Independent structures set up to regulate and monitor the government are vital to a democratic state committed to deliver justice and constitutional guarantees.
    • The separation of powers is a concept which underscores this independence and is vital to our democratic checks and balances.
    • When power is centralised and the freedom of expression threatened no matter what the context, democracy is definitely in peril.
    • Sections being amended – Apart from Section 13 which deals with the terms and conditions for the Central information Commission, in amending Section 16, the Central government will also control through rules, the terms and conditions of appointment of Commissioners in the States. This is an assault on the idea of federalism.

    Opaque moves

    Checks by committee –

    • All the provisions related to appointment were carefully examined by a parliamentary standing committee and the law was passed unanimously.
    • It has been acknowledged that one of the most important structural constituents of any independent oversight institution, i.e. the CVC, the Chief Election Commission (CEC), the Lokpal, and the CIC is a basic guarantee of tenure. In the case of the Information Commissioners they are appointed for five years subject to the age limit of 65 years.
    • It was on the recommendation of the parliamentary standing committee that the Information Commissioner and CIC were made on a par with the Election Commissioner and the CEC, respectively.

    Challenges in the manner of amendment being pursued

    1.Bypassing examination by the standing committee – The manner in which the amendments are being pushed through without any citizen consultation, bypassing examination by the standing committee demonstrates the desperation to pass the amendments without even proper parliamentary scrutiny.

    2.Pre-legislative consultative policy – The mandatory pre-legislative consultative policy of the government has been ignored.

    Previous governments eventually introduced a measure of public consultation before proceeding with the amendments.

    3.Violation of Constitutional Values –

    • If the amendments are discussed by citizens and RTI activists in the public domain, it would be apparent that these amendments fundamentally weaken an important part of the RTI architecture.
    • They violate the constitutional principles of federalism, undermine the independence of Information Commissions, and thereby significantly dilute the widely used framework for transparency in India.

    Conclusion

    The RTI has unshackled millions of users who will continue to use this democratic right creatively and to dismantle exclusive power. The RTI has been and will be used to withstand attacks on itself and strengthen the movement for transparency and accountability in India. Eventually, the Narendra Modi government will realise that while it might be able to amend a law, it cannot stop a movement.

     

  • [Burning Issue] The Protection of Children from Sexual Offences (Amendment) Bill, 2019

    The Protection of Children from Sexual Offences (Amendment) Bill, 2019

    Stringent punishments under POCSO Act

    • In a historic decision to protect the children from Sexual offences, the Union Cabinet chaired by PM Modi has approved the Amendments in the Protection of Children from Sexual Offences (POCSO) Act, 2012.
    • It will make punishment more stringent for committing sexual crimes against children including death penalty.
    • The amendments also provide for levy of fines and imprisonment to curb child pornography.

    Salient Features of the POCSO Act 2012

    • This act is applicable to the whole of India and provides protection to children under the age of 18 years against sexual offences.
    • Definition of sexual abuse – penetrative and non-penetrative assault, as well as sexual harassment and pornography, and deems a sexual assault to be “aggravated” under certain circumstances, such as when the abused child is mentally ill or when the abuse is committed by a person in a position of trust or authority vis-a-vis the child, like a family member, police officer, teacher, or doctor.
    • It has raised the age of consensual sex from 16 years as per Indian Penal Code, 1860 to 18 years. This means that –
      • Any person (including a child) can be prosecuted for engaging in a sexual act with a child irrespective of whether the latter consented.
      • A husband or wife can be prosecuted for engaging in a sexual act with his or her spouse under the age of eighteen years.
    • The burden of proof lies on the accused – punishment has been provided for false complaints or false information with malicious intent.
    • People who traffic children for sexual purposes are also punishable under the provisions relating to abetment in the Act.
    • In keeping with the best international child protection standards, the Act also casts a legal duty upon a person who has knowledge that a child has been sexually abused to report the offence; if he fails to do so, he may be punished with six months’ imprisonment and/ or a fine.
    • The Act also casts the police in the role of child protectors and are given the responsibility of making urgent arrangements for the care and protection of the child, such as obtaining emergency medical treatment for the child and placing the child in a shelter home, should the need arise.
    • The police are also required to bring the matter to the attention of the Child Welfare Committee (CWC) within 24 hours of receiving the report, so the CWC may then proceed where required to make further arrangements for the safety and security of the child.
    • The Act also makes provisions for the medical examination of the child designed to cause as little distress as possible. The examination is to be carried out in the presence of the parent or other person whom the child trusts, and in the case of a female child, by a female doctor.
    • The Act further makes provisions for avoiding the re-victimisation of the child at the hands of the judicial system. It provides for special courts that conduct the trial in-camera and without revealing the identity of the child, in a manner that is as child-friendly as possible.
    • The Special Court can determine the amount of compensation to be paid to a child who has been sexually abused for the child’s medical treatment and rehabilitation.
    • The Act stipulates that a case of child sexual abuse must be disposed of within one year from the date the offence is reported.

    Role of police: The Act casts the police in the role of child protectors during the investigative process. Thus, the police personnel receiving a report of sexual abuse of a child are given the responsibility of making urgent arrangements for the care and protection of the child, such as obtaining emergency medical treatment for the child and placing the child in a shelter home, and bringing the matter in front of the Child Welfare Committee (CWC), should the need arise.

    Safeguards: The Act further makes provisions for avoiding the re-victimisation of the child at the hands of the judicial system. It provides for special courts that conduct the trial in-camera and without revealing the identity of the child, in a manner that is as child-friendly as possible. Hence, the child may have a parent or other trusted person present at the time of testifying and can call for assistance from an interpreter, special educator, or other professional while giving evidence. Above all, the Act stipulates that a case of child sexual abuse must be disposed of within one year from the date the offence is reported.

    Mandatory reporting: The Act also provides for mandatory reporting of sexual offences. This casts a legal duty upon a person who has knowledge that a child has been sexually abused to report the offence; if he fails to do so, he may be punished with six months’ imprisonment and/ or a fine.

    Definitions: The Act defines a child as any person below eighteen years of age. It defines different forms of sexual abuse, including penetrative and non-penetrative assault, as well as sexual harassment and pornography. It deems a sexual assault to be “aggravated” under certain circumstances, such as when the abused child is mentally ill or when the abuse is committed by a person in a position of trust or authority like a family member, police officer, teacher, or doctor.

    What are the amendments proposed?

    • The act will be amended to introduce the death penalty as a punishment for offences of penetrative sexual assault and aggravated penetrative sexual assault.
    • Aggravated penetrative sexual assault: The Act defines certain actions as “aggravated penetrative sexual assault”. These include cases when a police officer, a member of the armed forces, or a public servant commits penetrative sexual assault on a child. It also covers cases where the offender is a relative of the child, or if the assault injures the sexual organs of the child or the child becomes pregnant, among others. The Bill adds two more grounds to the definition of aggravated penetrative sexual assault. These include: (i) assault resulting in the death of child, and (ii) assault committed during a natural calamity.
    • Penetrative sexual assault: Under the Act, a person commits “penetrative sexual assault” if he: (i) penetrates his penis into the vagina, mouth, urethra or anus of a child, or (ii) makes a child do the same, or (iii) inserts any other object into the child’s body, or (iv) applies his mouth to a child’s body parts. The punishment for such offence is imprisonment between seven years to life, and a fine. The Bill increases the minimum punishment from seven years to ten years. It further adds that if a person commits penetrative sexual assault on a child below the age of 16 years, he will be punishable with imprisonment between 20 years to life, along with a fine.
    • Aggravated sexual assault: Under the Act, “sexual assault” includes actions where a person touches the vagina, penis, anus or breast of a child with sexual intent without penetration. “Aggravated sexual assault” includes cases where the offender is a relative of the child, or if the assault injures the sexual organs of the child, among others. The Bill adds two more offences to the definition of aggravated sexual assault. These include: (i) assault committed during a natural calamity, and (ii) administering any hormone or any chemical substance, to a child for the purpose of attaining early sexual maturity.
    • Storage of pornographic material: The Act penalises storage of pornographic material for commercial purposes with a punishment of up to three years, or a fine, or both. The Bill amends this to provide that the punishment can be imprisonment between three to five years, or a fine, or both. In addition, the Bill adds two other offences for storage of pornographic material involving children. These include: (i) failing to destroy, or delete, or report pornographic material involving a child, and (ii) transmitting, propagating, or administering such material except for the purpose of reporting

    What is the rationale behind the legislation?

    • As per the last available data from the National Crime Records Bureau 2016 of child rape cases came up before the courts under the POCSO Act read with Indian Penal Code Section 376.
    • Less than three per cent cases ended in convictions, pointing to the need for better access to justice for all, and not just more stringent conviction in a small percentage of cases.
    • There is the belief that harsher punishments will deter people from committing child rape.
    • Also, justice for child survivors demands that the law provide for the death penalty.
    • Lastly, the disgust for the crime makes the perpetrator ‘deserving’ of death penalty.

    Why are the arguments flawed?

    1. Deterrence

    The deterrence argument puts forth that fear of harshest punishment will prevent individuals from committing child rape.

    • But social, economic, cultural, psychological and other factors in one’s life interact in far more complex ways.
    • Various studies have proved the uncertainty of death penalty in being an effective deterrent.
    • Moreover, in the context of child rape, many preventive measures and policies do have a definitive impact on preventing child rape.
    • These may include risk assessment and management, cognitive behavioural treatment and community protection measures.
    • Diverting resources to the death penalty, is more like taking away from developing these strategies that have greater preventive potential.

    2. Justice

    The argument of death penalty as justice to the child survivor seeks to cover-up the real reasons preventing justice.

    • Notably, the conviction rates are low under the Protection of Children from Sexual Offences Act, 2012.
    • There are some grave concerns over the manner of investigations and criminal prosecutions under the POCSO Act.There is lack of specialised investigators, prosecutors, judges, mental health professionals, doctors, forensic experts and social workers.
    • Inadequate child protection and rehabilitation services, lack of compliance with child-friendly legal procedures are some other concerns.
    • Furthermore no real system of positive measures to reduce vulnerabilities of children in this context has been developed.
    • Working on these shortfalls is the need of the hour to ensure justice for child survivors.

    3 Under-reporting

    A large proportion of perpetrators are family members or those close to or known to the family.

    • This results in massive underreporting of such crimes.
    • This concern will only intensify with death penalty, as the child’s family risks sending a family member or a known person to the gallows.

    4. Legal

    Under the Constitution, a legislation has to always give a sentencing judge the option to choose between life imprisonment and death penalty. Death penalty cannot be declared as the only punishment for any crime. The sentencing judges will have to make this choice in the context of child rape too.

    5. Vulnerability

    The arbitrariness of the death penalty in India also arises from the discriminatory impact of the choice of what constitutes ‘rarest of rare’.

    • The Death Penalty India Report of 2016 found that over 75% of death row prisoners were extremely poor.
    • They belong to marginalised groups with barely any meaningful access to legal representation.
    • Thus, in most cases, the weakest sections of the society bear the burden of the death penalty.
    • It is important to understand this implication, in the discussion on death penalty for child rape.

    Challenges

    • It is frightening to see a society which is getting more and more literate and educated, is not aware of the concerned laws and legislations, otherwise, the original POCSO Act was good enough to create fear in the minds of people. This is evident from the rising number of cases of sexual assault on child.
    • The resolution of such cases is not quick. It takes time to punish the criminals.
    • Regarding the death penalty, there is a controversy. In some cases, it creates a deterrence but there is also a view that if one knows that one is going to get a death penalty for committing one such crime, one would probably commit more such crimes as anyway one is going to get the death penalty.
    • The damage that is done to a child psychology by a person of trust cannot be compensated with anything.
    • People are not even aware of the fact that the POCSO law is a gender neutral law.
    • Implementation of the law remains a problem. The Kathua Rape case took 16 months for the main accused to be convicted whereas the POCSO Act clearly mentions that the entire trial and conviction process has to be done in one year.
    • The POCSO Act gives the judges in the designated POCSO courts a lot of power to announce interim medical compensations for relief to victims. The judges in many cases do not provide for the same. Also, there have been cases when the compensation has reached to the victims after their death.
    • The rate of conviction under the POCSO act is only about 32% if one takes the average of the past 5 years and the percentage of cases pending is 90%.
    • As per the POCSO Act, FIR must be registered under the 30 days but this hardly happens.
    • Politicization of rapes on communal angles is another challenge. The Unnao rape case and Kathua rape case are some of the examples.

    What is the way forward?

    • Measures that governments ought to take are different from steps meant to convey public abhorrence.
    • The social menace of child rape requires sustained planning, engagement, and investment of resources by the government.
    • Death penalty for child rape is a counterproductive diversion and an easy way out on the issue.
  • [Burning Issue] Application of Behavioural Economics in India

    Application of Behavioural Economics in India

    The Economic Survey 2019 has drawn on Nobel Laureate Richard Thaler’s Behavioural Economics Theory to lay out what it describes as an “ambitious agenda” for behaviour change that will bring in social change, which in turn, will help India transit to a $5 trillion economy by 2024-25. Programmes such as Swachh Bharat Mission, Jan Dhan Yojana and Beti Bachao Beti Padhao, provide testimony to the potential for behavioural change in India.

    Given India’s rich cultural and spiritual heritage, social norms(that play a very important role in shaping the behaviour), can be utilized to effect behavioural change. Behavioural economics is, however, not a panacea to policymaking.

    What is Behavioural Economics?

    • Behavioural economics is a method of economic analysis that applies psychological insights into human behaviour to explain economic decision-making
    • In reality, decisions made by people often deviate from the various theories of classical economics. Drawing on the psychology of human behaviour, behavioural economics provides insights to ‘nudge’ people towards desirable behaviour.
    • The US academic Richard Thaler has won the Nobel prize in economics in 2017 for his pioneering work in this field.

    What are nudges?

    If policy design is thought as the map and development outcomes as the destination, then nudges can be the road signs that gently guide you towards the best route.

    Formulating these road signs requires expertise at two levels:

    1. Understanding why consumers pick less optimum routes (cognitive biases)
    2. Designing signs that guide users to better routes (nudges/interventions).

    Background:

    ‘Nudge’ theory was proposed originally in US ‘behavioral economics’. But, it was popularized by the 2008 book, ‘Nudge: Improving Decisions About Health, Wealth, and Happiness‘, written by American academics Richard H Thaler and Cass R Sunstein. The book is based strongly on the Nobel prize-winning work of the Israeli-American psychologists Daniel Kahneman and Amos Tversky.

    Nudge theory is a flexible and modern concept for:

    1. Understanding of how people think, make decisions, and behave.
    2. Helping people improve their thinking and decisions.
    • Managing change of all sorts.
    1. Identifying and modifying existing unhelpful influences on people.

    Basis for such interventions:

    Behavioural economists have found that all sorts of psychological or neurological biases cause people to make choices that seem contrary to their best interests. The idea of nudging is based on research that shows it is possible to steer people towards better decisions by presenting choices in different ways.

    • Nudges and other behavioural change interventions primarily rely on design and messaging that address the effect of behavioural biases on human behaviour.
    • These biases are no unique phenomenon in government and public policy, neither do they affect only a small percentage of the population—cognitive biases are everywhere.
    • Take for example the IKEA effect (named after the do-it-yourself Swedish furniture retailer). This bias leads to us placing a disproportionately high value on ideas or products that we had a hand in creating. The bias can prevent us from recognising early on that our much-valued product isn’t working well, or make us closed to ideas from elsewhere since we’re attached to the home-grown idea.
    • Another common bias that we face on a daily basis comes from the psychological theory of framing—where the construction of a sentence or situation changes your perception or reaction of it (reactions in newspapers to the latest census results on religious groups are an excellent example of framing).

    Do such interventions work?

    Previous experiences suggest that, if planned carefully, and backed by accurate bias-targeting, then, such interventions do work.

    Success stories:

    • In Israel, the issuing or renewal of an ID, passport or driving license, became conditional upon answering the question of becoming a registered donor. The default option was an ‘opt-in’ provision, which greatly increased the list of registered donors by targeting the status quo bias.
    • Similarly, in Singapore—known for a number of innovations in governance—providing the average electricity usage of the locality on the back of bills has nudged households to think about their own energy consumption, driving them towards reducing it to the average levels, an example of the groupthink effect.
    • Copenhagen’s experiment of using green footsteps to lead to trash bins helped reduce littering by 46%.
    • In the field of tax collection, nudge has helped boost revenues for cash-strapped governments. For instance, in Singapore, printing tax bills on the pink paper typically used for debt collection led to an improvement in the prompt payment rate of between three to five percentage points.

    Applying behavioural science in India

    • Analysis of social norms
    1. Efforts in Bihar, to improve the quality of health-care service delivery by front-line workers takes into account popular ‘rituals’, like keeping a baby away from the ground in a cot (palna), or marking decorations around her hearth (chulah), for transmitting messages that are culturally acceptable
    • Behavioural science can be applied to large-scale programmes
    1. The very nature of the science being imbued in a social and cultural context enables it to generate effective and sustained results to public service programmes
    2. Research is going on in Tamil Nadu and Bihar to analyse core social motivators for open defecation and related behaviours with culturally appropriate social measures to convert toilet usage into a sustained habit
    • Interventions that are designed using this science can reduce the intent-to-action gap
    1. There are a plethora of tools like defaults, reminders, prompts, and incentives that can reduce poor adherence and increase compliance for sustained impact throughout the life of an intervention
    2. A good example of this is Kilkari, a mobile service by the government that delivers free, weekly and time-appropriate audio messages about pregnancy, childbirth and childcare directly to families’ mobile phones
    • Data collected and evaluated from a behavioural insights approach can be used for better management of programme performances
    1. Rigorous evaluation of behaviour is often missed while measuring programme performances, and often this missing data can help explain the limited impact of well-intended government programmes
    2. The impressive work done by the Ministry of Rural Development, on monitoring the implementation of national flagship schemes through DISHA dashboards, can be leveraged for evaluating behavioural change on the ground

    The learnings of the economic survey on Behavioral Economics

    • A key principle of behavioural economics is that while people’s behaviour is influenced significantly by social norms, understanding the drivers of these social norms can enable change. In India, where social and religious norms play such a dominant role in influencing behaviour; behavioural economics can, therefore, provide a valuable instrument for change.
    • Many Indian schemes that employ insights from behavioural economics have met with success. For example:
      • The Swachh Bharat Mission (SBM) and the Beti Bachao, Beti Padhao (BBBP) scheme, Give it up (LPG subsidy).
    • The Survey, therefore, lays out an ambitious agenda for behavioural change by applying the principles of behavioural economics to several issues, including gender equality, a healthy and beautiful India, savings, tax compliance and credit quality.

    Behavioural Economics’ application in the Indian context

    • Recently, behavioural economists have discovered the efficacy of a new class of policies called “nudge” policies. Nudge policies gently steer people towards desirable behaviour even while preserving their liberty to choose.
    • According to Nudge theory: People need reminders and positive reinforcement to sustain socially desirable behaviour.
    • According to the Organisation for Economic Cooperation and Development, there are more than 202 government institutions using behavioural insights around the world.
    • Examples of nudge policies:
      • For increasing tax compliance in India: Citizens can be sent variations of text messages on how their taxes make a difference to public services.
      • For reducing drop out rate in poor families: Parents can be informed about the average income gains from spending one more year in school for children.
      • To increase savings rate: People can be offered specially designed savings accounts that locked up funds until a self-specified target was met.
    • Behavioural economics is, however, not a panacea to policymaking.

    Limitations of Behavioural Economics

    • ‘Give It Up’ -LPG subsidy was a comparatively easy policy to be induced by behavioural economics as it requires only a one-time action of affluent households, whereas task is very difficult in case of Beti Bachao, Beti Padao and SBM, as it requires continuous effort to dislodge mind-sets that prevailed for decades.
    • Community-led sanitation schemes, part of the SBM, did include steps to change behaviour, but advertising campaigns such as the Beti Bachao Beti Padhao scheme did not target specific states where child sex ratios were already skewed (although it was effective in Haryana, which also has a very poor sex ratio)
    • The applications of behavioural insights appeared to be a result of confirmation bias (to the extent that past policies were viewed with a behavioural lens).
    • Survey held, reducing corruption, discouraging the conspicuous display of wealth and inculcating a sense of pride of being the highest taxpayer in a district (by naming buildings after them) would go a long way in ensuring behavioural change vis-à-vis tax compliance
      • But this could easily lead to a backlash among lower taxpayers, and hurt tax morale disproportionately.

    In this scenario, government regulation, taxes and free-market policies should be clubbed with a nudge effect to increase the efficacy of policymaking. If it is implemented diligently than Indian policymaking will be transformed:

    • From BBBP to BADLAV (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi)
    • From Swachh Bharat to Sundar Bharat
    • From “Give it up” for the LPG subsidy to “Think about the Subsidy”
    • From tax evasion to tax compliance

    And the dream of New India 2022 can be realised.