Context

• The Union Cabinet has approved a proposal to conduct Census 2021 and update the National Population Register (NPR).
• While the Census will be conducted in 2021, the NPR update will take place from April to September 2020 in all the States/UTs except Assam.

Focus shifts of Protestors: CAA TO NPR

• While the row over the CAA brought thousands of people to the streets — with protests turning violent at many places – a fresh controversy erupted over the updating of the National Population Register (NPR).
• The NPR is a register of residents of India where the enumerator collects demographic and biometric data of individuals living at the place of enumeration for six months or more.
• Now, this turn of events where non-NDA ruled states started to halt an ongoing enumeration of residents (NPR) process left many confused, with the time to begin counting for the Census approaching fast.
• Is the recently passed Citizenship Amendment Act related to NPR? The answer is both yes and no. There is no direct link.
• It depends on how the government decides to use data collected for NPR.

What is the National Population Register (NPR)?

• The NPR is a register of usual residents of the country. It is mandatory for every usual resident of India to register in the NPR.
• It includes both Indian citizens as well as a foreign citizen.
• The objective of the NPR is to create a comprehensive identity database of every usual resident in the country.
• The first NPR was prepared in 2010 and updating this data was done during 2015 by conducting door to door survey.
• The next update of the NPR will take place next year from April to September with the Houselisting phase of the Census 2021.
• It is being prepared at the local (Village/sub-Town), sub-District, District, State and National level under provisions of the Citizenship Act 1955 and the Citizenship (Registration of Citizens and Issue of National Identity Cards) Rules, 2003.

Who is the usual resident?

• According to the Citizenship (Registration of Citizens and Issue of National Identity Cards) Rules, 2003, a usual resident is a person who has resided in a local area for the past 6 months or more or a person who intends to reside in that area for the next 6 months or more.

The Census of India

• The Census is the enumeration of the population of the country.
• It is being conducted at an interval of 10 years.
• The Census 2021 will be 16th census in the country since the first census happened in 1872. However, it will be 8th census after the Independence.
• For the first time, the Census 2021 will use the Mobile App for data collection. It will also provide a facility to the public for self-enumeration.

What is the whole issue?

Issues with the states

• Citizenship, aliens and naturalization are subject matters listed in List 1 of the Seventh Schedule that fall exclusively under the domain of Parliament.
• Legally, the states have no say in implementing or ruling out NPR.
• However, given that the manpower is drawn from the states, the defiance could potentially result in a showdown.

Issues with NPR

• Census is an exercise carried out under the Census Act, 1948. Census data is based on self-declaration made by the persons without verification.
• NPR is carried out as per the 2003 Citizenship Rules. Under these Rules, it is compulsory for a person to share the demographic data for preparation of NPR.
• Therefore, these Rules have a coercive element, as they penalize non-cooperating persons with fines and penalties.
• Failure to comply with the NPR data collection can expose one to penal consequences under Rule 17.
• It may be noted that both these processes are carried under the supervision of a single office: the Office of Registrar General of India and Census Commissioner.

Privacy Concern

• Officials insist that NPR information is private and confidential, meaning it will not be shared with third parties. 
• There is no clarity on the mechanism for protection of the vast amount of data that will be collected through NPR.

Census vs. NPR

• The census is decadal headcount in India. It involves a detailed questionnaire aimed at gathering general data about the population of India.
• The NPR process collects demographic and biometric particulars of individuals.
• Both processes involve door-to-door enumeration but NPR differs from the Census in the sense that its objective is to have a comprehensive identity database of those residing in India.
• The Census does not identify individuals.
• However, in Census 2021, this distinction may no longer exist as the government is said to be planning to conduct it through a mobile phone application.
• Moreover, Census data are kept and maintained centrally under the Registrar General of India.
• But once the NPR data are recorded and ready, these details would be kept and maintained in a population register at levels of village or ward, tehsil or taluk (sub-district), district and state.
• Together, they will constitute the National Population Register with all data at the central level.

The link between NPR and NRC

• The Citizenship Act empowers the government to compulsorily register every citizen and maintain a National Register of Indian Citizens.
• A nationwide NRC — if undertaken — would flow out of NPR.
• This does not necessarily mean that an NRC must follow NPR — no such register was compiled after the previous NPR in 2010.
• After a list of residents is created, a nationwide NRC — if it happens — could go about verifying the citizens from that list.

What de-links NPR and NRC?

• The NPR is different from the NRC which excludes the foreign citizens.
• According to the Citizenship Rules 2003, a Population Register is ‘the register containing details of persons usually residing in a village or rural area or town or ward or demarcated area within a ward in a town or urban area.
• Whereas the NRC is a register containing details of Indian Citizens living in India and outside India.

Advantages of NPR

• NPR gives a comprehensive identity database of its residents with relevant demographic details. It will help the government formulate its policies better and also aid national security.
• It will ease the life of those residing in India by cutting red tape. Not only will it help target government beneficiaries in a better way, but also further cut down paperwork and red tape in a similar manner that Aadhaar has done.
• For instance, it is common to find a different date of birth of a person on different government documents. NPR will help eliminate that.
• With NPR data, residents will not have to furnish various proofs of age, address and other details in official work.
• It would also eliminate duplication in voter lists, the government insists.

Where Aadhaar does comes to the picture?

• There is a little back story about NPR and Aadhaar. The two were considered rival projects under the UPA government.
• When NPR process began in the government, P Chidambaram was the Union home minister, who pushed the population register project.
• Both the NPR and Aadhaar projects were concurrently underway collecting demographic and biometric data.
• Initially, both had better and targeted delivery of benefits and services to people as their objectives. The works of the UIDAI and the home ministry were viewed as duplication and wastage of resources.
• The conflict, however, ended in a compromise between the home ministry and the UIDAI where it was decided that NPR and Aadhaar databases will be used for different purposes.
• Aadhaar will deliver welfare services and NPR will be used for other purposes of governance.
• It was also decided that those already enrolled for Aadhaar need not give their biometric details during NPR exercise.
• The NPR data were to be matched with Aadhaar data for de-duplication. But the final formula gave NPR an upper hand.
• It was agreed that in case of discrepancy between Aadhaar and NPR data, NPR would prevail.
• Simply put, NPR conducted in accordance with the Citizenship Amendment Act 2003 will form the key data set for both Aadhaar and NRC.

 

 

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References

https://www.civilsdaily.com/news/national-population-register-npr/

https://www.livelaw.in/top-stories/what-is-the-caa-npr-nrc-linkexplainer-151105

https://www.indiatoday.in/news-analysis/story/caa-npr-nrc-confusion-connection-explained-india-1631534-2019-12-26

 

 

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Context

• Possibly one of the biggest stories in that broke in cyberspace recently has been WhatsApp’s reports that 1,400 of its users were hacked by Pegasus, a spyware tool from Israeli firm NSO Group.
• A significant number of these Indian users include journalists, academics, human rights and Dalit activists.
• Further, the timing of such surveillance — late April to mid-May — rakes up another set of worries about the motive behind the hack.

 

Pegasus

• All spyware do what the name suggests — they spy on people through their phones.
• Pegasus works by sending an exploit link, and if the target user clicks on the link, the malware or the code that allows the surveillance is installed on the user’s phone.
• A presumably newer version of the malware does not even require a target user to click a link.
• Once Pegasus is installed, the attacker has complete access to the target user’s phone.
• The first reports on Pegasus’s spyware operations emerged in 2016, when Ahmed Mansoor, a human rights activist in the UAE, was targeted with an SMS link on his iPhone 6.

Method of working

• A Pegasus operator must convince a target to click on a specially crafted ‘exploit link’ which allows the operator to penetrate security features on the phone.
• This automatically installs Pegasus without the user’s knowledge or permission.
• Once the phone is exploited and Pegasus installed, it begins contacting the operator’s command and control and send back the target’s private data, including passwords, contact lists, events, text messages, and live voice calls from popular mobile messaging apps.
• The operator can even turn on the phone’s camera and microphone to capture activity in the phone’s vicinity.

 

Why is Pegasus dangerous?

• What makes Pegasus really dangerous is that it spares no aspect of a person’s identity. It makes older techniques of spying seem relatively harmless.
• What can’t it do would be an easier question to answer. Once on a phone, the spyware has the run of the place.
• It can intercept every call and SMS, read every email and monitor each messaging app.
• Pegasus can also control the phone’s camera and microphone and has access to the device’s location data.
• The app advertises that it can carry out “file retrieval”, which means it could access any document that a target might have stored on their phone.

 

Concerns over Snooping

The pertinent questions are, who is behind this surveillance and hacking incident; and has this intrusion of privacy reached a level that has not been fathomed by the legal and technical communities?

Stretching this further, is this a vulnerability ignored by WhatsApp’s management?

Perpetrators behind the attack

• The other angle to this whole episode is the role of the perpetrators behind the hack.
• With access to technology increasing, networks can be intruded from any part of the world provided the encryption can be broken.
• The offering of products such as Pegasus and their misuse or proliferation has the same, if not more, ramifications as advanced nuclear technology falling into the wrong hands.
• The role of non-state actors with support from rogue nations or even criminal syndicates is also not out of question.

Security and privacy breach

• Clearly, the potential revelations are worrying a large section of social media users about the confidentiality and integrity of the networks, which is the basis of trust for most users.
• At the same time, the NSO Group’s claim about only working with specific security agencies across the world brings to the fore questions about the role of such agencies.

Government under question

• Some in India have been quick to jump the gun and blame the government and its ‘snooping’ networks.
• But, that is definitely not proven to be the situation yet, and both the MeitY and Ministry of Home Affairs have clearly said they played no role.

 

Snooping:  an offence in India

• Any form of online interception, monitoring and decryption are well defined as per the provisions of the Information Technology Act 2008 (IT Act) and the concomitant rules.
• These provisions clearly list the 10 agencies that can undertake such actions and the procedures for them, the competent authority who can order such an action being the Union Home Secretary.
• Even such authorised surveillance actions have to be reviewed by a committee, headed by the Cabinet Secretary, which meets at least once in two months.
• Likewise for States, the respective Home Secretary is the competent authority and the Chief Secretary heads the review committee.
• No such authorizations have been given by any of the competent authorities for the monitoring of the affected individuals in India for the period in reference.

 

Whom to blame, then?

• This is a clear case of willful hacking whose proportions entail it to be seen as a cyber terrorism attempt; it calls for application of Section 66 (F) of the IT Act to deal with the perpetrators.
• To date, there have been three denials, by the central government (the ministry of electronics and information technology, the ministry of home affairs, and CERT-IN, a technical body that probes cyber threats).
• The issue has brought to the fore the fear around the possibility of how emerging network access technology could also beat secured encryption, which remains the fundamental basis of user trust and hitherto privacy.

 

Clear implications

 

No national security without individual privacy!

We must all recognise that national security starts with securing the smartphones of every single Indian by embracing technologies such as encryption rather than deploying spyware. This is a core part of our fundamental right to privacy.

• This intrusion by the spyware is not merely an infringement of the rights of the citizens of the country but also a worrying development for India’s national security apparatus.
• The security of a device becomes one of the fundamental bedrocks of maintaining user trust as society becomes more and more digitized.
• Such an approach belies appreciating the injury and threats to individuals and the country.
• There is an urgent need to take up this issue seriously by constituting an independent high-level inquiry with credible members and experts that can restore confidence and conduct its proceedings transparently.

Alleged perpetrator

• The alleged spying on Opposition leaders and activists in India reminds one of the illegal espionage in the Watergate scandal.
• Given that NSO claims it only sells to governments and the fact that it is mostly critics of the ruling dispensation who have been targeted, some people have alleged that it is the Indian government that was behind the snooping.
• In response, the Union minister of IT Minister alleged that the former Indian government had spied on the then chief of the Indian Army as well as the Union Finance Minister.

A note of caution

• Social media providers must stop chest-thumping, start investing in attribution solutions and be honest with users about the risks involved in their products.
• Such software must be strictly controlled and legal provisions must be inked, so that providers of such technologies are deterred.
• Needless to say, a relook at laws, technology and ethics is needed, preferably sooner than later.
• In the digital age, companies will emerge and operate in the grey areas of the intersection between technology and security to make a profit.
• But national security must not be used as a shield by either governments or private players to justify the violation of fundamental rights.

 

Way Forward

 

• It is incumbent on Parliament, the judiciary and Facebook, the company that owns WhatsApp, to plug the breach of privacy and nail those responsible for it.
• Indian government must leverage its relationship with Israel to hold NSO to account.
• Since this attack involves users from a quite a few countries, there is a greater need for global cooperation to a concerted and coordinated investigation.
• The government has made it clear that it holds a sovereign right over the data of its citizens. The idea of data sovereignty must include a citizen’s right to privacy.
• It must punish anyone found guilty of unlawfully violating the privacy of Indian citizens.

 

 

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References:

https://www.civilsdaily.com/news/spyware-pegasus/

https://scroll.in/article/942300/explainer-how-whatsapp-was-hacked-to-spy-on-indian-dissidents-and-who-did-it

https://www.telegraphindia.com/opinion/whatsapp-snooping-is-a-grievous-offence/cid/1719010

https://www.hindustantimes.com/analysis/why-there-cannot-be-any-national-security-without-individual-privacy-analysis/story-JvDaOJLW85gXR9cILtwq7M.html

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Context

• India decided to drop out of the RCEP agreement, citing its negative effects on farmers, MSMEs and dairy sector.

 

What is RCEP?

 

Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between –

• The 10 members of ASEAN
• Additional members of ASEAN +3 = China, Japan, South Korea
• Members with which ASEAN countries have FTA = India, Australia, New Zealand

RCEP includes more than 3 billion people, has a combined GDP of about $17 trillion, and accounts for about 40 per cent of world trade. By any means, this is a huge community in making.

 

How significance was RCEP for India?

• From India’s point of view, the RCEP presented a decisive platform which could influence its strategic and economic status in the Asia-Pacific region and bring to fruition its “Act East Policy.”
• It is expected to be an ambitious agreement bringing the 5 biggest economies of the region – Australia, China, India, Japan and South Korea – into a regional trading arrangement.

There are three immediate benefits that its trade policymakers should note-

#1. The RCEP agreement would complement India’s existing free trade agreements with the ASEAN and some of its member countries.

This consolidation can address challenges emanating from implementation concerns vis-à-vis overlapping agreements, which is creating a “noodle bowl” situation obstructing effective utilization of these FTAs.

It will also help achieve its goal of greater economic integration with countries East and South East of India through better access to a vast regional market ranging from Japan to Australia.

NOTE:            India is not a party to two important regional economic blocs: the Asia-Pacific Economic Cooperation and the Trans-Pacific Partnership. The RCEP would enable India to strengthen its trade ties with Australia, China, Japan and South Korea, and should reduce the potential negative impacts of TPP and TTIP on the Indian economy.

#2. Getting India closer to ASEAN

• Clubbing with the ASEAN has been a principal policy priority for both China and India.
• At present, while China has clubbed with the ASEAN+1, ASEAN+3 and ASEAN+6,
• India is clubbed only under the ASEAN+6 framework

#3. India can leverage its capabilities in IT, Healthcare, Education and services

• The RCEP will create opportunities for Indian companies to access new markets
• India is well placed to contribute to other countries in RCEP through its expertise in services

#4. Balancing with China

• India’s allies in Southeast Asia, as well as Australia, want India to join it to balance China.
• On the other hand, many in India feel that RCEP will aggravate India’s burgeoning trade deficit with China.
• The Indian industry feels that China does not provide a level playing field for items that they could export, especially in fields like pharma, IT, films, indigenous medicines, wellness and yoga.
• Some of these are founded on opacity that surrounds the Chinese government’s decision making.

 

What compelled India to opt-out?

Chinese imports

• Key issues that have prevented India from coming on board include “inadequate” protection against surges in imports.
• This is a major concern for India, as its industry has voiced fears that cheaper products from China would “flood” the market.
• India had been seeking an auto-trigger mechanism that would allow it to raise tariffs on products in instances where imports cross a certain threshold.
• India has also not received any credible assurances on its demand for more market access, and its concerns over non-tariff barriers.

Rules of origin criteria

• Its concerns on a “possible circumvention” of rules of origin — the criteria used to determine the national source of a product — were also not addressed.
• Current provisions in the deal reportedly do not prevent countries from routing, through other countries, products on which India would maintain higher tariffs.
• This is anticipated to allow countries like China to pump in more products.

Trade deficit

• Despite India already having separate, bilateral FTAs with most RCEP nations, it has recorded trade deficits with these countries.
• China India has an over $50 billion trade deficit is one of the major reasons for New Delhi not joining in at this stage.
• During negotiations, it was also not able to get a favourable outcome on its demands on the base year that would be used to reduce the tariffs on the products that would be traded as part of the pact.

Protecting domestic industries

• Throughout the RCEP negotiations, several sections of the Indian industry have raised concerns over India signing the deal.
• They have argued that some domestic sectors may take a hit due to cheaper alternatives from other participant countries.
• For instance, the dairy industry was expected to face stiff competition from Australia and New Zealand.
• Similarly, steel and textiles sectors have also demanded protection.

 

RCEP minus India

It comprises half of the world population and accounts for nearly 40% of the global commerce and 35% of the GDP. RCEP would have become the world’s largest FTA after finalisation, with India being the third-biggest economy in it. Without India, the RCEP does not look as attractive as it had seemed during negotiations.

What it means?

• Divided ASEAN – ASEAN has been keen on a diversified portfolio so that member states can deal with major powers and maintain their strategic autonomy. ASEAN member states have tried to keep the U.S. engaged in the region.
• Indo-Pacific – Both geopolitically and geo-economically, China is set to dominate the Indo-Pacific. India’s entire Indo-Pacific strategy might be open to question if steps are not taken to restore India’s profile in the region.
• Rejected China’s dominance – India signalled that, despite the costs, China’s rise has to be tackled both politically and economically. Japan is now suggesting that it would work towards a deal that includes India.

Implications for India

 

Inherent lack of confidence?

• Our government’s decision to stay out of the RCEP has drawn near-unanimous support from political parties and organisations representing farmers, traders and industries.
• It is clear recognition that Indian producers will find it difficult to cope with increased import, especially of dairy products from Australia and New Zealand and manufactured goods from China.

Isolation from the global value chain

• India’s absence in integrating with global value chains will impact India’s internal and external ambitions.
• India’s own evidence shows that jobs linked to global value chains earn one-third more than those jobs focused on the domestic market.
• The inability to accede to the RCEP and ensure India’s integration into these emerging global value chains means India will lose out on a key opportunity to create such high-quality, high-paying jobs.
• Moreover, India’s absence in both of Asia’s two key economic architectures will take away from India’s goals as a regional and Indo-Pacific power, as well as a prospective global power.

Unclear on ‘national interest’

• India’s ambitions to become a global hub for manufacturing means that it is the country’s long-term national interest to be integrated into global value chains.
• Such growth matters for two reasons: within India, it will create millions of jobs and secure a stable future for India’s young population, and externally, to facilitate India’s rise as one of the poles in a multipolar 21st century.
• India cannot decide its future by remaining isolated and sitting alone in a corner.

The Indian protectionism

• It has been argued that the Indian industry has hidden behind a wall of protectionism for far too long, and must open itself to global competition.
• There is a tendency in Indian industry to seek protection, whenever any steps towards globalization are taken.
• However, it is an acknowledged fact that globalization did benefit the Indian economy, it brought in newer technology and made Indian industry far more competitive.
• RCEP does provide Indian industry a huge market to grow and expand, provided it transforms and the government frees it from bureaucratic controls that have been stifling growth.

Conclusion

• It does not seem a good idea for India to be out of the agreement from its inception, only to join it later.
• Economic isolation is not an option for India. However, there are reports that India will move towards bilateral trade pacts.
• Given India’s own ambitions to generate growth and jobs within India, and becoming a key player and rule-maker on the world stage, India’s decision to withdraw from the RCEP is not ideal.
• India must now translate this withdrawal into a commitment for domestic reforms to prepare itself for the next opportunity to integrate itself into the global value chains and unleash Indian manufacturing.
• However, having no deal is far more prudent than signing up for a bad one.
• It is easy to succumb to the rapturous sound of global applause, but far tougher to make a tactical retreat in the larger national interest.

 

 

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References

https://www.civilsdaily.com/what-is-the-significance-of-rcep-for-india/

https://www.civilsdaily.com/news/explained-rcep-trade-negotiations/

https://economictimes.indiatimes.com/markets/stocks/news/how-to-craft-an-rcep-to-indias-advantage/articleshow/72016572.cms

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Context

• The deadline set by the Centre for wrapping up the Naga peace talks, October 31 has ended up.
• While the Centre’s interlocutor and now Nagaland’s Governor, R N Ravi, has stressed that some key issues remain unresolved with the National Socialist Council of Nagalim (Isak-Muivah), or NSCN(I-M).

 

Rise of Naga nationalism

• The British had annexed Assam in 1826, in which they subsequently created the Naga Hills district and went on to extend its boundaries.
• The assertion of Naga nationalism, which began during British rule, has continued after Independence, and even after Nagaland became a state.
• Along the way, the unresolved issues gave rise to decades of insurgency that claimed thousands of lives, including civilians.

 

The Naga assertion through History

• The earliest sign of Naga resistance dates back to 1918, with the formation of the Naga Club.
• In 1929, the Club famously told the Simon Commission “to leave us alone to determine for ourselves as in ancient times”.
• In a memorandum to the Simon Commission in 1929, representatives of Naga tribes demanded that Nagas be left free after Independence and not be included in the Indian Union.
• Ahead of Independence, a nine-point agreement was signed between the Government of India and the Naga National Council.
• This included an experimental coexistence with India for 10 years to be reviewed at the end of that period.
• While the Nagas saw this provision as temporary, with a right to self-determination after 10 years, Naga historians say the Indian government has interpreted the “trial period’’ as accession to the Indian Union.
• In 1946, A Z Phizo formed the Naga National Council (NNC), declared Naga independence on August 14, 1947, and then, in 1951, claimed to have conducted a referendum.
• The referendum got an overwhelming majority in support of an independent Naga state.
• By the early 1950s, the NNC had taken up arms and gone underground.
• The NNC split in 1975, the breakaway group being the NSCN, which split further in later years, most prominently into the NSCN(I-M) and NSCN (Khaplang) in 1988.

 

What are the Naga peace talks?

• The talks seek to settle disputes that date back to colonial rule.
• The Nagas are not a single tribe, but an ethnic community that comprises several tribes who live in the state of Nagaland and its neighborhood
• One key demand of Naga groups has been a Greater Nagalim that would cover not only the state of Nagaland but parts of neighboring states, and even of Myanmar.

 

And how have the peace talks played out in recent years?

Before the ongoing talks, which followed a framework agreement in 2015, there were two other agreements between Naga groups and the Centre. 1975:

• A peace accord was signed in Shillong in which the NNC leadership agreed to give up arms.
• Several NNC leaders, including Isak Chishi Swu, Thuingaleng Muivah and S S Khaplang refused to accept the agreement and broke away to form the NSCN.
• In 1988 came another split, with Khaplang breaking away to form the NSCN(K) while Isak and Muivah headed the NSCN(I-M).

1997:

• The NSCN (I-M ) signed a ceasefire agreement with the government in 1997, preceded by rounds of talks since 1995.
• The key agreement was that there would be no counter-insurgency offensive against the NSCN(I-M), who in turn would not attack Indian forces.
• The NSCN (I-M) had then announced to “every citizen of Nagalim wherever they may be”, that a ceasefire agreement was entered into between India and the outfit to bring about a lasting political solution.

2015:

• In August that year, the Centre signed a framework agreement with the NSCN(I-M).
• PM Modi described it as a “historic agreement” towards settling the “oldest insurgency” in India. This set the stage for the ongoing peace talks.
• In 2017, six other Naga armed outfits under the banner of the Naga National Political Groups (NNPGs) joined the talks.
• Today, Muivah remains the senior-most Naga rebel leader. Isak died in 2016. In the NSCN(-K), its leader Khaplang died in 2018.

 

What was in the framework agreement?

• The government has not yet spelled out the details in public.
• Following the agreement, the government had said in a press statement: “The Government of India recognized the unique history, culture, and position of the Nagas and their sentiments and aspirations.
• The NSCN understood and appreciated the Indian political system and governance.
• On the other hand, the NSCN(I-M) issued a statement earlier this year which said that Nagaland State does and will not represent the national decision of the Naga people.
• The statement was in opposition to the proposal for a Register of Indigenous Inhabitants of Nagaland (RIIN) in the state of Nagaland.

 

Where does the territorial demand currently stand?

• The accord being finalized “does not change the boundary of states; it provides autonomous Naga territorial councils for Arunachal and Manipur; a common cultural body for Nagas across states.
• It provides for specific institutions for the state’s development, integration and rehabilitation of non-state Naga militia and the removal of the Armed Forces Special Powers Act.
• The map of Greater Nagalim in the NSCN(IM) vision, on the other hand, covers a 1,20,000 sq km sprawl across the Northeast and Myanmar — the area of Nagaland state itself is only 16,527 sq km, a fraction of this vision.
• Amid the anxiety this has caused among citizens in neighboring states, state governments have assured them that their respective states’ territorial integrity would not be compromised.

 

What are the other issues?

• The government and the NSCN(I-M) have failed to agree on issues relating to a separate Naga flag and a constitution.
• In its latest statement, the NSCN(I-M) has said it will not budge from the demand for the flag and the constitution — and that it is looking for a lasting solution.
• However, the NSCN(I-M) has adopted a procrastinating attitude to delay the settlement raising the contentious symbolic issues of separate Naga national flag and constitution.

I. Independence celebration

• The tallest leader of the Naga struggle, Dr A Z Phizo, met M K Gandhi in Delhi on July 19, 1947.
• According to Naga historians, Gandhi agreed that the Nagas would celebrate their independence a day ahead of India, on August 14, 1947.
• To this day, Nagas across Nagaland, Manipur, Assam and Arunachal Pradesh celebrate August 14 as Independence Day.

II. The Naga flag

• In the Naga narrative, passed down generations by word of mouth, the Naga flag was not designed by a mortal but is of divine origin.
• As Naga groups battled the Indian armed forces, the legend goes, Phizo and his closest colleagues had a vision — a rainbow, in a startlingly blue sky that had appeared after a storm.
• A woman of the Rengma tribe, one of the tribes under the Naga umbrella, was commissioned to weave the flag.
• It was hoisted for the first time in Parashen in Rengma on March 22, 1956.
• The flag has a blue background, representing the sky. A red, yellow and green rainbow arches across the centre.
• The Star of Bethlehem adorns the top left corner of the flag; Nagas are predominantly Christian.

 

Present status

• The flag remains a symbol of the Nagas’ struggle for over 60 years, of their religious faith, of the aspirations of the Naga people, and their identity.
• It helps bind all the different Naga tribes together.
• Outside Nagaland state, in particular, the flag continues to elucidate strong emotions of identity from Nagas.
• Inside the state, common citizens are today divided on it. Certain sections believe that with secession from the Indian Union no longer possible, the Naga flag has lost some of its relevance.

 

Status of secessionist tendencies

• The moderates have supported a complete inclusion in the Indian state, for access to the latter’s development project, infrastructure, and its education and health facilities.
• But a large section of the Nagas still holds dear the idea of the Naga identity and their tribal roots.

 

Impacts of disagreement

• The statement from the Governor’s office has given rise to speculation that the government is ready to sign a final peace agreement with other groups without the NSCN (I-M), the largest group.
• Civil society groups in Nagaland are divided in their opinion.
• Some have said the talks should be wrapped up with whatever is offered now and keep other issues open for later negotiations.
• Others believe all issues should be settled and the NSCN (I-M) should be on board, even if it takes longer than the deadline.

 

Conclusion

• The Naga struggle claimed thousands of lives over decades and devastated countless homes, all over the idea of a sovereign Naga nation.
• If the NSCN (I-M) accedes to economic and political packages alone, without a separate flag and constitution, it remains to be seen whether it will be seen as a solution, or as a defeat.

   

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References https://indianexpress.com/article/explained/explained-history-of-naga-flag-and-why-is-it-important-6098576/ https://indianexpress.com/article/explained/naga-talks-long-road-issues-6090652/

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Context

• After a delay of two years, the annual Crime in India Report 2017 was published by the National Crime Records Bureau (NCRB).
• The NCRB has introduced more than three dozen new categories and sub-categories of crimes under various heads.
• The report omits data on mob lynchings, khap killings, murder by influential people and killings for religious reasons.
• Data on farmer suicides after 2015 are yet to be published although, sources said, the fully compiled.

About NCRB

• The NCRB is an Indian government agency responsible for collecting and analyzing crime data as defined by the Indian Penal Code (IPC) and Special and Local Laws (SLL).
• NCRB is headquartered in New Delhi and is part of the Ministry of Home Affairs (MHA).
• NCRB was set-up in 1986 to function as a repository of information on crime and criminals so as to assist the investigators in linking crime to the perpetrators.
• It was set up based on the recommendation of the Task-force 1985 and National Police Commission 1977.

Highlights of the report

At least four categories where significant diversification of data can be seen are crimes against women and children, atrocities against Dalits, cases of corruption, and time taken by police and courts to take cases to their conclusion.

For the first time, the NCRB has introduced categories of cyber crimes against women and children.

I. Crime against women

• As per the report, 359849 cases of crime against women were reported in the country.
• Uttar Pradesh topped the list with 56,011 cases followed by Maharashtra with 31,979 cases and West Bengal 30,002.
• Majority of cases under crimes against women were registered under ‘Cruelty by Husband or his Relatives’ (27.9%) followed by ‘Assault on Women with Intent to Outrage her Modesty’ (21.7%), ‘Kidnapping & Abduction of Women’ (20.5%) and ‘Rape’ (7.0%),” the report said.
• In the category of cyber crimes against women, the NCRB has recorded 4,242 offenses where women were either stalked, blackmailed or their morphed pictures were uploaded on the internet.

II. Crime against children

• A total of 95,893 cases of kidnapping and abduction were registered during 2017, showing an increase of 9.0% over 2016 (88,008 cases).
• A total of 63,349 children (20,555 male, 42,691 female, and 103 transgender) were reported missing in 2017.
• During the year 2017, a total of 70,440 children were recovered/traced, the report said.

III. Riots

• As per the report, 58,880 incidents of rioting were reported, of which the maximum incidents were reported from Bihar – 11,698, followed by Uttar Pradesh – 8,990 and Maharashtra – 7,743.
• Of the total riots reported, communal and sectarian riots accounted for 723 and 183 incidents respectively.
• There were 805 riots due to caste conflict and 1909 riots occurred due to political reasons, the report said.

IV. Hate Crimes

• The incidents registered under the Scheduled Caste Prevention of Atrocities Act saw an increase from 5,082 incidents reported in 2016 to 5,775 in 2017.
• Incidents of crime related to Scheduled Tribes dipped from 844 in 2016 to 720 in 2017.

V. Pendency of cases

• While the NCRB has always collected data on pendency of cases with police and in courts, this was largely about the number of such cases. In the latest report, the NCRB has also recorded the period of pendency.
• The data show police delayed charge sheets in 40% of cases. For IPC crimes, police are supposed to file a charge sheet within 90 days.
• But data show that in certain cases such as rioting, which includes communal riots, police delayed filing of charge sheets in 60% of the cases.
• It says there are more than 3 lakh cases pending investigations for more than one year. In courts as a whole, 2,71,779 cases were pending trial at the end of 2017.

The New Categories

 

I. Fake news

• The NCRB for the first time collected data on the circulation of “false/fake news and rumors.”
• Under the category, maximum incidents were reported from Madhya Pradesh (138), Uttar Pradesh (32) and Kerala (18).

II. Anti-National activities

• A new category of offenses committed by various categories of “Anti-National Elements” was included.
• It showed that the maximum offenses were committed by Left Wing Extremist (LWE) operatives (652), followed by North-East insurgents (421) and Terrorists (Jihadi and other elements) (371).
• The maximum number of killings was carried out by LWE insurgents (82).
• As many as 72 of these killings took place in Chhattisgarh. This was followed by killings by terrorists (36) — 34 in J&K alone. North-East insurgents killed 10 people.

No data on lynching

• The data collected under the new sub-heads of death due to mob lynching, murder by influential people, killing ordered by khap panchayat and murder committed for religious reasons have not been published.
• This data was ready and fully compiled and analyzed.
• The decision to collect data on lynchings had been taken in the wake of a spate of lynching incidents across the country through 2015-16.
• The idea was that such data collection would help the government formulate its policies better in tackling these crimes.
• Lynchings happen for a variety of reasons which include suspicion of theft, child lifting, cattle smuggling or communal reasons.

Why need such data?

• NCRB’s annual crime reports give valuable information about the state of crime in the country.
• They give a picture of the law and order situation by tracking the levels of various crimes across states and helping in the assessment of criminal investigation and justice delivery systems.

Significance of the data

• The crime records data provide key inputs for policy-making and are needed by the police, other departments and by civil society.
• They are also social documents.
• Governments should base their policies, decisions, and actions on such data.
• It is vitally important that the data is correct and is not misrepresented, and the people have a right to know them.

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References

https://indianexpress.com/article/explained/explained-whats-new-in-crime-report-and-the-data-6082764/

https://www.civilsdaily.com/news/annual-crime-in-india-report-2017/

https://www.deccanherald.com/opinion/second-edit/is-govt-hiding-ncrb-report-too-768943.html

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.

 

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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/

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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.

 

 

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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/

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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.

 

 

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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

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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.

 

 

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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

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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.

 

 

 

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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

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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.

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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.

 

 

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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

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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.

 

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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/

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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.

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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.

 

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Also read:

 

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

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