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Author: CD Staff

  • [Burning Issue] Problem of Undertrials in India


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    Context

    • In India, about 75 percent of the total number of prisoners are undertrial.  More than 3.5 lakh undertrial prisoners are lodged in jails across the country and awaiting trial.
    • Recently, PM also raised the issue of undertrial prisoners in jails in a conference of Chief Ministers and Chief Justices of High Courts.

    Undertrials in India: A backgrounder

    Who are the undertrials?

    • An undertrial is a person who is being held in custody by a court of law and is awaiting trial for a crime.
    • The 78th Report of Law Commission also includes a person who is in judicial custody on remand during investigation in the definition of an ‘undertrial’.

    Constitutional protection for Prisoners/Undertrials

    • ‘Prisons/persons detained therein’ is a State subject under Entry 4 of List II of the Seventh Schedule to the Constitution of India.
    • Article 39A of the Constitution directs the State to ensure that the operation of the legal system promotes justice on a basis of equal opportunity and shall, in particular, provide free legal etc.
    • Article 21 says, “No person shall be deprived of his life or personal liberty except according to procedure established by law”.

    Vital stats

    • Over three-fourths of all those in jail, the undertrials amount for the highest proportion of 75% in at least a decade.
    • These facts emerge from data given by NCRB and analysed by India Justice Report, 2020.
    • High rate in Sensitive Areas: Delhi and Jammu & Kashmir reported the highest share of undertrial inmates of the total prison inmates, followed by Bihar, Punjab and Odisha and Maharashtra.  
    • Majority belong to marginalized groups: Two in three prisoners under trial belong to SC, ST or OBC caste groups, data show. Two in five undertrial inmates were educated below grade X and more than a quarter were illiterate.
    • Longer spend in Jails: Nearly 2% of the undertrials in 2020 had spent over 5 years in confinement, up from 1.5% in 2019. Overall, 29% of all the undertrials had spent over a year in prison.
    • Young population behind bars: Among the undertrial inmates, 49% are between 18 and 30 years of age, but among convicts, only 29% fall in this age group. Further, 50% of the convicts are aged between 30 and 50 years.

    Plight of under-trials: Various challenges faced

    (1) Abuses faced in jail

    • Prison violence: Prisons are often dangerous places for those they hold. Group violence is also endemic and riots are common.
    • Physical mishandling: Physical mishandling by jail officials is no rare phenomena in India.
    • Extra-judicial torture: No conduct of the prison authority is criminalised and it grants them immunity and presumes their good faith in acts of extreme neglect that could and do result in the death of inmates.

    (2) Criminalizing impacts

    • Impact of inmates: Circumstantial and young offenders often turn into full-fledged criminals when subjected to prison conditions.
    • Criminalization by labelling: It is an often given quote, ‘prisons are Universities of crime where people go in as under-graduates and come out with PhDs. in crime.’ Ex. Drug abuse in Jails

    (3) Health problems

    • Prevalent un-hygiene: Most of the prisons face problems of overcrowding and shortage of adequate space to lodge prisoners in safe and healthy conditions.
    • Medical history gets ignored: People are cramped in with each other in unhealthy conditions, infectious and communicable diseases spread easily. Ex. Spread of TB

    (4) Human rights violation

    • Taboo over mental illness: Though miniscule, mentally ill prisoners constitute another percentage of population, which is largely ignored and forgotten by both the outside world and those inside.
    • Delayed family planning: Undertrials also faces physical separation with their spouses resulting into delayed family planning.

    (5) Suffering of the families  

    • Livelihood crisis: In the absence of the main bread winner, the family is many a time forced into destitution with children going astray.
    • Social stigma and boycott: This combined with the social stigmatization that they face, leads to circumstances propelling family towards delinquency and exploitation by others.
    • Exploitation: The dominant class often take advantage of this situation to exploit the remaining family members to the fullest possible extent. This can take the form of rape or forced prostitution.

    Social aspects of the issue

    • Hostility from the law: Criminal Law of India is a replica of colonial times. It is hostile to the poor and the weaker sections of society.
    • Caste prejudices and over-policing: This exists for certain communities due to important social factors behind the significant presence of marginalized caste groups in jails.
    • Rich vs. poor divide: This has resulted in rich people escaping law and the jail is more often full of the unprivileged class of society.
    • Justice delayed: Undertrial prisoners often get neglected in jail for many years, in many cases it exceeded the maximum sentence for the crime which they had committed.

    Specific problems faced by under-trial prisoners:

    • No Right to Speedy Trial : It is recognised by the Supreme Court in Hussainara Khatoon vs. Home Secretary, Bihar. This is violated due to protracted delays due to:
    • Systemic delays.
    • Grossly inadequate number of judges and prosecutors.
    • Absence or belated service of summons on witnesses.
    • Presiding judges proceeding on leave.
    • Remands being extended mechanically due to lack of time and patience with the presiding judge.
    • Inadequacy of police personnel and vehicles which prevents the production of all prisoners on their due dates.
    • Right to bail is denied even in genuine cases: Even in cases where the prisoner was charged with bailable offence, they are found to rot in prisons due to exorbitantly high bail amount.  
    • Non-compliance by the officials: Undertrials become prisoners of the whims and fancies of individuals’ official’s attitude.
    • Politicization of trial:  Prisoners right to effective Legal Aid is also violated due to politicisation of as many lawyers are hired on political consideration.

    Way forward

    • Separation prisons: Undertrial prisoners should be lodged in separate institutions away from convicted prisoners.
    • Non-branding as criminals: There should be proper and scientific classification even among undertrial prisoners to ensure that contamination of first time and petty offenders into full-fledged and hard-core criminals.
    • Separate courts for certain offences: Institutions meant for lodging undertrial prisoners should be as close to the courts as possible.
    • Limited extension of remands: This has to stop which are also given merely for the sake of the convenience of the authorities.  
    • Investigation reforms: Police functions should be separated into investigation and law and order duties and sufficient strength be provided to complete investigations on time and avoid delays.
    • Decriminalization of certain offences: There should be a progressive and massive decriminalization so that many of the wrongs, which are given the status of crimes. Ex. Sedition Law
    • Going digital: Computerise the handling of criminal cases and with the help of the National Informatics Centre, develop programmes that would help in managing pendency and delay of different types of cases.
    • Associated judicial reforms: There should be an immediate increase in the number of judges and magistrates in some reasonable proportion to the general population.  

    Conclusion

    • Justice Krishna Iyer in the Constitutional Bench judgment in Sunil Batra (I) v. Delhi Administration (1978), held the humane thread of jail jurisprudence.
    • This principle now seems long due in India’s case.

  • [Sansad TV] Perspective: Right to Repair

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    Context

    • Apple recently announced that consumers will have the right to purchase spare components of their products.
    • Google also announced plans to expand access to the parts and tools that consumers need to fix their own devices.
    • These announcements by big-tech companies follow widespread calls for Right To Repair reforms.

    In this article, we will analyze what is the Right to Repair, how it helps consumers like you and me and how will these reforms help in protecting the environment.

    Right to Repair Movement: A Backgrounder

    What is Right to Repair?

    • It refers to proposed government legislation that would allow consumers the ability to repair and modify their own consumer products (e.g. electronic, automotive devices).
    • The idea behind “right to repair” is in the name: If you own something, you should be able to repair it yourself or take it to a technician of your choice.
    • People are pretty used to this concept when it comes to older cars and appliances, but right-to-repair advocates argue that modern tech, especially anything with a computer chip inside, is rarely repairable.

    The Right to Repair movement aims for:

    1. Easy repair: The device should be constructed and designed in a manner that allows easy repairs
    2. Access to critical components: End users and independent repair providers should be able to access original spare parts and tools (software as well as physical tools) needed to repair the device at fair market conditions
    3. No technical barriers: Repairs should by design be possible and not hindered by software programming
    4. Proper communication: The repairability of a device should be clearly communicated by the manufacturer.

    How did it came to existence?

    • The average consumer purchases an electronic gadget, knowing that it will very quickly become obsolete as its manufacturer releases newer and more amped up version.
    • As your device grows older, issues start to crop up — your smartphone may slow down to a point where it is almost unusable, or your gaming console may require one too many hard resets.
    • When this happens, more often than not, you are left at the mercy of manufacturers who make repairs inaccessible and an inordinately expensive affair.

    Why is such right significant?

    • Lifespan enhancement: The goal of the movement is to increase the lifespan of products and to keep them from ending up in landfills.
    • Against planned obsolescence: The electronic manufacturers are encouraging such culture so that devices are designed specifically to last a limited amount of time and to be replaced.
    • Scarcity of natural resources: Obsolescence leads to immense pressure on the environment and wasted natural resources.
    • Mitigating climate change: Manufacturing an electronic device is a highly polluting process. It makes use of polluting sources of energy, such as fossil fuel.
    • Boost to repair economy: Right to repair advocates also argue that this will help boost business for small repair shops, which are an important part of local economies.

    Issues with obsolete devices

    • Unfair trade practice:  For manufacturers, either of these options is a win-win case, because high-priced repairs, as well as new sales, mean more profits.
    • High cost to consumers: This often led to higher consumer costs or drive consumers to replace devices instead of repairing them.
    • Generation of E-waste: The global community is concerned over the continuously growing size of the e-waste stream.
    • Recyclability: Up to 95% of raw materials used to produce electronic devices can be recycled, while the vast majority of newly produced devices use little to none recycled material due to the higher cost.

    Why do electronic manufacturers oppose this movement?

    Large tech companies, including Apple, Microsoft, Amazon and Tesla, have been lobbying against the right to repair.

    • IPR violations through reverse engineering: Their argument is that opening up their intellectual property to third party repair services.
    • Threats to device safety: Amateur repairers could lead to exploitation and impact the safety and security of their devices.
    • Personal data security: Tesla, for instance, has fought against right to repair advocacy, stating that such initiatives threaten data security and cyber security.
    • Sheer casualization: Tech giant has allowed repairs of its devices only by authorised technicians and not providing spare parts or DIY manuals on how to fix its products.

    Successful implementation of the Right to Repair

    (I) United States

    • In his executive order to promote economic competition, President Biden called to force tech companies to allow consumers to fix their own electronic devices — either themselves or using a technician of their choice.
    • He specifically called out cell phone and tractor manufacturers in the White House’s fact sheet.
    • With this, some believe manufacturers of electronic devices may even start making their products more durable and long lasting.

    (II) Europe

    • Earlier this month, the UK government introduced right-to-repair rules with the aim of extending the lifespan of products by up to 10 years.
    • Manufacturers of products like washing machines, TVs and refrigerators are required to make spare parts available to people purchasing electrical appliances.
    • The new legislation gives manufacturers a two-year window to make the necessary changes to abide by the new legislation.

    Right to Repair in India

    The ‘right to repair’ is not recognised as a statutory right in India, but certain pronouncements within the antitrust landscape have tacitly recognized the right.

    • Necessary consumer right: Monopoly on repair processes infringes the customer’s’ “right to choose” recognised by the Consumer Protection Act, 2019.
    • Acknowledgement by agencies: Consumer disputes jurisprudence in the country has also partially acknowledged the right to repair.
    • Upholding Competition: In Shamsher Kataria v Honda Siel Cars India Ltd (2017), for instance, the Competition Commission of India ruled that restricting the access of independent automobile repair units to spare parts as anti-competitive.
    • Part of consumer welfare: The CCI observed that the practice was detrimental to consumer welfare.
    • Laws for recycle: The e-waste (management and handling) rules addresses not only to handle the waste in an environmentally friendly manner, but also has laid down rules about its transportation, storage and recycling.

    These regulations have had little impact and a strict law is needed for proper implementation.

    Way forward

    • If people want to fix things in a timely, safe and cost-effective way, whether by doing it themselves or taking it to a service centre of their choice, providing access to spare parts and information is imperative.
    • Well-drafted legislation will not only uphold the right to repair but may aid in striking a much-needed balance between intellectual property and competition laws in the country.

    Conclusion

    • The Right to Repair is necessarily a battle between the customer and the manufacturer. The right to repair can apply to any industry.
    • It’s a win-win situation for consumers if the proposed laws help in ending monopoly and make the repair information available in the public domain.

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  • [Burning Issue] IPO of the Life Insurance Company (LIC)

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    Context

    • India’s biggest public issue, the Life Insurance Company initial public offering opened to primary markets on Wednesday.
    • The government has fixed the LIC IPO price band at Rs 902 to Rs 949 per equity share, announcing Rs 60 discount to the policyholders and Rs 45 discount to LIC employees.
    • The total value of LIC IPO is set at Rs 21,000 crore, making it India’s biggest public issue to date.

    Life Insurance Corporation of India (LIC): A Backgrounder

    • LIC is an Indian state-owned insurance group and investment corporation owned by the Government of India.
    • It was founded in 1956 when the Parliament of India passed the Life Insurance of India Act that nationalized the insurance industry in India.
    • Over 245 insurance companies and provident societies were merged to create the state-owned LIC.

    Beginning of Life Insurance in India

    • The Oriental Life Insurance Company, the first company in India offering life insurance coverage, was established in Kolkata in 1818.
    • Its primary target market was the Europeans based in India, and it charged Indians heftier premiums.
    • Surendranath Tagore had founded Hindusthan Insurance Society, which later became Life Insurance Corporation.
    • The Bombay Mutual Life Assurance Society, formed in 1870, was the first native insurance provider.

    Nationalization in 1956

    • In 1955, parliamentarian Feroze Gandhi raised the matter of insurance fraud by owners of private insurance agencies.
    • The Parliament passed the Life Insurance of India Act on 19 June 1956 creating the LIC which started operating in September of that year.
    • It consolidated the business of 245 private life insurers and other entities offering life insurance services; this consisted of 154 life insurance companies, 16 foreign companies and 75 provident companies.
    • The nationalization of the life insurance business in India was a result of the Industrial Policy Resolution of 1956, which had created a policy framework for extending state control over at least 17 sectors of the economy, including life insurance.

    Present capital base of LIC

    LIC is India’s largest financial institution, and if LIC shares are listed on stock exchanges, it could easily emerge as the country’s top listed company in terms of market valuation, overtaking current leaders Reliance and TCS.

    The corporation, which started its business with around 300 offices, 5.7 million policies and a corpus of INR 45.9 crores (US$92 million as per the 1959 exchange rate of roughly ₹5 for US$1), had grown to 25,000 servicing around 350 million policies and a corpus of over ₹800,000 crore by the end of the 20th century.

    • From its creation, LIC, which commanded a monopoly of soliciting and selling life insurance in India, created huge surpluses and by 2006 was contributing around 7% of India’s GDP.
    • As of 2019, LIC had toa tal life fund of ₹28.3 trillion.
    • The total value of sold policies in the year 2018-19 is ₹21.4 million.
    • LIC settled 26 million claims in 2018-19. It has 290 million policyholders.

    LIC: A milch cow for the government

    • India’s top insurer: Governments have long shied away from considering listing India’s top insurer.
    • Participation in Capital Market: It has played a role in supporting the markets by buying shares during major sell-offs and also shares of state-owned companies during divestment and when investor participation has been weak.
    • Heavy investments in G-Secs:  It is also the largest investor in government securities and stock markets every year.
    • Infrastructure funding: LIC also has huge investments in debentures and bonds besides providing funding for many infrastructure projects according to its Annual Report for 2017-18.

    What is an IPO?

    • IPO means Initial Public Offering. It is a process by which a privately held company becomes a publicly-traded company by offering its shares to the public for the first time.
    • Offering an IPO is a money-making exercise. Every company needs money, it may be to expand, to improve their business, to better the infrastructure, to repay loans, etc.
    • A private company, that has a handful of shareholders, shares the ownership by going public by trading its shares.
    • Through the IPO, the company gets its name listed on the stock exchange.

    Initial Public Offerings (IPO) of LIC :

    A big-bang announcement

    • The government could start by initially selling a small tranche of the government-controlled institution through an IPO, and subsequently dilute the government’s holdings.
    • The IPO is likely to fetch a huge premium as LIC currently has a small equity base.
    • In the Budget of July 2019, the government had announced a proposal to make minimum public holding of 35 per cent for listed companies.
    • The government had listed the shares of General Insurance Corporation and New India Assurance through IPOs three years ago.
    • Public listing of LIC will lead to more disclosures of investment and loan portfolios and better governance, with greater transparency and accountability.

    How will the IPO go?

    • The government will have to amend the LIC Act first before taking the Corporation public.
    • LIC is currently under the supervisory oversight of the Insurance Regulatory Development Authority of India (IRDAI), but it is governed by The LIC Act of 1956,
    • The act enables it to obtain a special dispensation in several areas including higher stakes in companies beyond the limit set by the IRDAI.
    • Under Section 37 of The LIC Act, the government has guaranteed the sum assured with bonus in all LIC policies to ensure the availability of financial security to the family of the deceased.

    Implications of LIC IPO

    • It seems like the government is trying to make the most of the brand value of LIC, given that it is one of the few remaining profit-making entities owned by the state.
    • Will the listing of LIC, which is the country’s largest financial institution with assets under management of close to ₹30 trillion, do any good to its policyholders?

    Let’s have a look:

    (1) Listing will boost LIC’s efficiency and thereby policy returns

    • As a 100% government-owned entity, LIC’s financial health is largely outside the scrutiny of the financial markets.
    • Unlike unit-linked insurance plan investors, who have a clear visibility on the daily performance of underlying funds, the endowment policyholders’ visibility is limited to annually declared bonuses.
    • Listing will allow analysts to monitor LIC’s governance. LIC will come under Sebi’s direct watch and will have to comply with the requirements meant for other listed firms.
    • Such compliance is likely to strengthen its overall corporate governance, financial and investment discipline.
    • Over time, this will increase its efficiency and it may deliver higher returns to policyholders.

    (2) Peers will be under pressure to improve pricing and features

    • Any company going public is good news for stakeholders since it ensures higher transparency, better governance, more disclosures and scrutiny from the investors.
    • However, LIC is not a typical company. LIC has in the past invested in the equity markets to stem its fall.
    • After being listed, LIC will be answerable to public shareholders and, hence, will be a prudent investment decision, which is good for policyholders.
    • LIC will also become more competitive. This will put pressure on its peers to innovate, benefitting policyholders in terms of pricing, product features and services.

    (3) Less govt interference will be a positive for LIC’s financial health

    • For LIC, it will be a significant task to enhance the quality of asset management given that the government sometimes is reliant on it to bail out PSUs, without delving deep into the fiscal prudence of these assets.
    • Being under scrutiny, the quality of asset management by LIC will be enhanced as the government’s influence on its asset management will reduce.
    • Further, LIC services a few state-sponsored schemes which have underwriting challenges on the commercial front.
    • In a nutshell, with less federal interference, LIC will be more accountable with strong governance protocols, which will be a positive for its financial health.

    (4) If the sovereign guarantee continues, policyholders won’t perceive risk

    • So far, LIC has operated almost like a mutual insurance company by passing on most of the earnings to the policyholders and keeping very little as profits, despite having a massive operation.
    • The listing of LIC is a positive move which will result in transparency of the corporation in public view, sparking renewed interest in the insurance industry in international markets.
    • Government-owned General Insurance Co. of India is already listed, so the process and transparency will not be any different.
    • As long as sovereign guarantee over the maturity proceeds and sum assured continue, policyholders won’t perceive any risk.
    • The return on policies may have to be moderated to boost profitability and technical reserves in the face of shareholder and analyst scrutiny.
    • It is not clear how much of the company will be diluted. So, the opportunity for the general public to pick up equity in LIC in the IPO may be limited.

    Challenges posed by this IPO

    (1) Structural challenges

    • LIC can even evolve into a bank like many of its global peers like Axa, Berkshire, and Munich Re.
    • But even after the listing, the LIC stock will still be controlled by the Indian government.
    • And, it will continue to exercise some amount of control.
    • So, investors in LIC might face what those of PSU banks do – be a part of poor governance, bad decisions — despite controlling 70% of the country’s banking system.

    (2) Market hurdles

    • LIC’s own issues are not the only challenge the company would face in going public. It also remains to be seen if the Indian share market is ready to absorb such a large public issue.
    • Whilst it will definitely help deepen the markets, given that SEBI regulations need a minimum dilution of 10 per cent to the public, it is unclear if there is enough liquidity for such a large sized IPO.
    • Additionally, LIC has been a port of call for various PSU fund raises in the past.
    • Once a behemoth the size of LIC goes for listing, it will be interesting to see if other private life insurance companies will still be able to attract funds at expected valuation.

    (3) Impact on growth

    • The size of the IPO will determine the extent of liquidity it will suck out, but Indian markets do not have depth to take the issue of a very size.
    • Critics argue that it’s too early for LIC to go public. LIC could see plenty of high growth despite the ongoing slowdown in the economy.

    (4) Fears of disclosure

    • The company’s books and operations have been opaque for far too long but it is trusted by 250 million policyholders.
    • It could have been the saviour for many more listed state-owned companies, but the government has decided to sell the golden goose itself.
    • LIC is also famous for investing millions whenever stock market tanks, just to prop it up.
    • But once it is listed in the market, these tricks will be impossible to execute. The disclosures will lead to a lot of discontents due to NPAs.

    (5) Investors trust

    • Being one of the biggest financial institutions of the country, the move to privatise LIC will shake the confidence of the common man and will be an affront to our financial sovereignty.
    • The very purpose of LIC to provide insurance coverage to socially and economically backward class at a reasonable cost will be defeated and motto will change from service to profit.
    • The sovereign guarantee element currently enjoyed by each LIC policyholder might cease to exit after the IPO. Some policyholders may then find it hard to trust LIC.

    Way Forward

    • LIC is all set to see significant disruption. The scale of that disruption would be unprecedented within the organization and outside.
    • Over the years, LIC has become ‘the lender of last resort’ to the Government of India.
    • Confronted with an unprecedented fiscal deficit and worried by an economy in crisis, the government has to find resources.
    • This disinvestment is also a preferred option for ideological and practical reasons.
    • The government could utilize the money gained by selling off its stakes to improve services in public goods like infrastructure, health and education.
    • However, listing LIC wouldn’t be an easy task and calls for a political will.
    • In the new avatar, LIC would have to benchmark itself against private insurers and global insurance giants.

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  • [Sansad TV] Perspective: Semiconductor Industry & India

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    Context

    • Semiconductors are essential to almost all sectors of the economy including aerospace, automobiles, communications, clean energy, information technology and medical devices etc.
    • Demand for these critical components has outstripped supply, creating a global chip shortage and resulting in lost growth and jobs in the economy.
    • The shortage has exposed vulnerabilities in the semiconductor supply chain and highlighted the need for increasing domestic manufacturing capacity.

    India is now aiming to become the global hub for Semiconductor Design, Manufacturing and Technology Development. In this article, we shall study all aspects of the issue and roadmap for India’s ambitious target.

    What are Semiconductors?

    • A semiconductor sits between a conductor and an insulator and is commonly used in the development of electronic chips, computing components, and devices.
    • It’s generally created using silicon, germanium, or other pure elements.
    • Semiconductors are created by adding impurities to the element.

    Why are they important?

    • Semiconductors such as memory, processors chips are a backbone and a prerequisite for any endeavours in emerging technologies.
    • From Artificial intelligence (AI) reliant smartphones to the adoption of the Internet of Things (IoT), 5G, or the automotive sector- nothing has been left untouched by the semiconductors.
    • Semiconductors or the chip is used to power technologies that enrich the lives of consumers and make businesses run smarter, faster, and more efficiently.
    • India’s own consumption of semiconductors is expected to cross $80 billion by 2026 and $110 billion by 2030.

    Various chips and their uses

    • Memory Chips: From the perspective of functionality, semiconductor memory chips store data and programs on computers and data storage devices. Ex. RAM, ROM
    • Microprocessors: They contain one or more central processing units (CPUs). Computer servers, personal computers (PCs), tablets, and smartphones may each have multiple CPUs.
    • Graphic Processing Units (GPUs): It is capable of rendering graphics for display on an electronic device.
    • Integrated circuits (ICs): An IC is a small chip of a semiconductor material that mounts an entire circuit on itself. It is very small when compared to the standard circuits, which are made of independent circuit components.

    Global semiconductors manufacturing: Understanding the value chain

    • The semiconductor industry is not evenly distributed and is dominated by a few countries, mainly U.S., Taiwan, South Korea, Japan, China, and Europe.
    • There is no single region with the entire production stack in its territory.
    • Companies across the semiconductor value chain operate in different processes and technologies (like design, fabrication, and assembly) in pursuit of economic efficiency.
    • However, no region has achieved strategic autonomy in the industry. The US companies rely on foundries in Taiwan to manufacture the chips.
    • Thus, the technological complexity and need for scale have led to the emergence of a large number of players with business models focused on a specific layer of the semiconductor value chain

    Disruptions in the semiconductor market

    Semiconductor manufacturing is a complex global intertwined ecosystem, which has led to a supply chain that is vulnerable to macroeconomics, geopolitics and natural disasters.

    • Demand hike: During COVID-19, with people stuck at home and with work from home becoming a norm, demand for consumer electronics such as laptops zoomed.
    • Global scramble: As the economies opened up, other industries, where chips are also used commonly, such as automobiles, began to scramble for the same raw material. 
    • Production bottlenecks: As demand soared and the supply of semiconductor chips could not catch up, what was unheard of during the pre-pandemic times – a shortage of consumer durables and vehicles – ensued.
    • Supply-chain constraints: Palladium and neon are two resources that are key to the production of semiconductor chips. Russia supplies over 40 per cent of world’s palladium and Ukraine produces 70 percent of neon.
    • Geopolitical tensions: Taiwan accounts for 92% of advanced semiconductors. The current trade tensions between the US and China has impacted chip production in Taiwan.

    Despite the current uncertainty, the semiconductor industry is poised for additional growth, as more and more products and services become increasingly digitized.

    Various challenges

    • Huge Investments involved: Semiconductor Fabrication facility requires many expensive devices to function.Complex tools and equipment are required to test quality and move silicon from location to location within the ultra-clean confines of the plant.
    • Economy of scale:   In semiconductor fabrication, a high volume production is required to be maintain so as to meet the increasing demand of the marketplace, at the same time, a strong financial backing as Indian market is very much uncertain about financial fluctuations. 
    • Requirement highly skilled labour:   Semiconductor fabrication is a multiple-step sequence of photolithographic and chemical processing steps during which electronic circuits are gradually created on a wafer made of pure semiconducting material. This actually requires high skills.
    • Scarcity of raw materials: From a value-chain perspective, it needs silicon, Germanium & Gallium arsenide and Silicon carbide which are not available in India and needs to be imported.
    • Uncertain Indian market: A semiconductor fabrication facility in India cannot independently rely on Indian customers for their entire sales structure. They have to maintain overseas customer base to balance inflections from Indian market due to market trends, government policies etc.
    • Disposal of hazardous waste: Many toxic materials are used in the fabrication process such as arsenic, antimony, and phosphorus. Hazardous impact on the environment by the industry may act as an impediment to India’s commitment to mitigate climate change.

    Policy initiatives in India

    • Make in India: This aims to transform India into a global hub for Electronic System Design and Manufacturing (ESDM).
    • PLI scheme: In December 2021 the Centre sanctioned ₹76,000 crore under the production-linked incentive (PLI) scheme to encourage the manufacturing of various semiconductor goods within India.
    • DLI scheme: It offers financial incentives, design infrastructure support across various stages of development and deployment of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design.
    • Digital RISC-V (DIR-V) program: It intends to enable the production of microprocessors in India in the upcoming days achieving industry-grade silicon and design wins by December 2023. 
    • India Semiconductor Mission (ISM): The vision is to build a vibrant semiconductor and display design and innovation ecosystem to enable India’s emergence as a global hub for electronics manufacturing and design

    Way forward

    To ensure greater resilience in a volatile world, India needs to undertake following measures to sustain the domestic and global semiconductor demand:

    • Policy framework: As foundry setup is highly Capital intensive, it must be supported with a solid long term plan and financial backing. This backing is required from the entrepreneur & the government both.
    • Fiscal sustenance: In text of Indian Government as tax holiday, subsidy, zero duty, financial investment etc. will play an important role in promoting the Fab along with the semiconductor industry in India; this will put further pressure on already large Fiscal Deficit.
    • Support Infrastructure: World class, sustainable infrastructure, as required by a modern Fab be provided, with swift transportation, large quantity of pure water, uninterrupted electricity, communication, pollutant free environment etc.

    Conclusion

    Overall, setting up semiconductor production units would be just the beginning.

    • Successfully running them would require good quality public institutions and a stable policy environment.
    • Setting up a thriving ecosystem takes time and by the time the incentives get translated into actual production and revenues, it may be difficult to withdraw the financial support after six years, as currently planned. 
    • In sum, as the policymakers are aware, a holistic approach to the development of the semiconductor industry would be required if we are to become a world-class hub that the latest policy envisages.

    The central and state governments’ co-operation on the policy priorities and execution would be central to achieve it. 

  • [Burning Issue] National Language Debate

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    Context

    • With over twenty regional languages, each with its own culture and history, language was always going to be a tricky issue for India.
    • Remarks by a notable Hindi actor to the effect that Hindi is the national language of India has sparked controversy recently over the status of the language under the Constitution.
    • The trigger for the argument was when Kannada film industry celebrated the nationwide success of a blockbuster movie.
    • The actor said in its response that Hindi was no more a pan-India language.

    “The wordplay between Rajbhasha and Rashtrabhasha often spark such debate out of sheer negligence over their meanings.”

    Hindi: A Backgrounder

    ‘Hindi Hai Hum, Watan Hai Hindustan Humara…’, for most of us, an everlasting childhood memory is standing in an assembly queue and singing the couplet (Sare Jahan se achha, Hindustan hamara) written by Muhammad Iqbal.

    • At that time we never thought of the real idea behind Hindustan.
    • In the post-Westphalian or rather European conception of the nation-state, language has been the driving factor for the formation of a separate country altogether.
    • This came as a major challenge in the constituent assembly, because, unlike in Europe, it was impossible to theorize India’s linguistic diversity which ultimately accumulated under a single national identity.

    Mahatma Gandhi’s view on Hindi

    • In 2019, Home minister Amit Shah had invoked Mahatma Gandhi while backing the government’s idea that Hindi should be the identifying language of India.
    • However, researchers believed that Gandhi kept changing his position.
    • After 1942, Gandhi seemed to stress the adoption of Hindustani, a fusion of Hindi and Urdu, not Hindi, as the unifying language of the masses.

    “We need also a common language not in suppression of the vernaculars, but in addition to them. It is generally agreed that that medium should be Hindustani – a resultant of Hindi and Urdu, neither highly Sanskritized, nor highly Persianized or Arabianized.” (Young India, 1925)

    Hindi, Hindustani or English? The Constituent Assembly Debates

    • At the time, most countries defined their nationhood through a common language and so during the Constituent Assembly debates, the question of a national language was tied closely with a desire for national unity.
    • Initially, Hindustani, with its hybrid of Hindi and Urdu, was a viable option.
    • Writing in an essay in 1937, Jawaharlal Nehru termed Hindustani a “golden mean.”
    • However, after Partition, the debate changed. Instead of Hindustani, Hindi (bereft of its Urdu influence) was being put forward as a potential national language.
    • But the opposition to Hindi as a national language from representatives from southern states was fierce too.

    TA Ramalingam Chettiar representing Madras in the Constituent Assembly in September 1949, said,

    “We have got languages which are better cultivated and which have greater literature than Hindi in our areas. If we are going to accept Hindi, it is not on account of the excellence of the language. It is merely on account of the existence of a large number of people speaking Hindi.”

    What is the status of Hindi?

    • Finally, the Constituent Assembly adopted what was known as “Munshi-Ayyangar Formula.”
    • According to this, Hindi in the Devnagari script would be the official language of the Union.

    Official, not national

    • English would continue to be used for all official purposes for the next 15 years, to enable a smooth transition for non-Hindi speaking states.
    • The deadline was 26 January 1965.
    • Under Article 343 of the Constitution, the official language of the Union shall be Hindi in Devanagari script.
    • The international form of Indian numerals will be used for official purposes.
    What is the Eighth Schedule?
    The Eighth Schedule contains a list of languages in the country. Initially, there were 14 languages in the schedule, but now there are 22 languages.There is no description of the sort of languages that are included or will be included in the Eighth Schedule.

    Evolution of the Language Debate

    • There have been some developments in the language debate since 1965.
    • In 1968, a National Policy on Education was adopted.
    • It presented a three-language formula, according to which, in non-Hindi-speaking states, Hindi should be studied optionally along with English and the regional language.
    • The 1968 NPE was ostensibly updated in the Draft New Education Policy 2019, where Hindi was proposed to be taught mandatorily in schools in non-Hindi-speaking states.
    • The proposal sparked outrage, especially in southern states like Tamil Nadu.

    What is the Three-language formula?

    • Since the 1960s, the Centre’s education policy documents speak of teaching three languages — Hindi, English and one regional language in Hindi-speaking States, and Hindi, English and the official regional language in other States.
    • In practice, however, only some States teach both their predominant language and Hindi, besides English.
    • In States where Hindi is the official language, a third language is rarely taught as a compulsory subject.

    Why has language become a sensitive issue?

    • Self-identification: A strong identification with one’s regional language and an underlying fear of homogenisation is at the heart of the national language question in India. An individual conceptualises and communicates his thoughts in a language, enabling him to be an active part of society.
    • Language defines primary group: People identify with one another based on language, thus giving them a primary group. A nation is the largest primary group that once can address.
    • Learning abilities at stake: The dangers of imposing a language are manifold. It can affect the learning ability of non-native speakers thereby affecting their self-confidence.
    • Threats to endangered languages: It can also endanger other languages and dialects and reduce diversity.
    • Threats to diversity: National integration cannot come at the cost of people’s linguistic identities. Language is integral to culture and therefore privileging Hindi over all other languages spoken in India takes away from its diversity.
    • Promises made by Constituent Assembly: Then PM Pt. Nehru had promised that Hindi would only serve as a linking language and it would not be imposed on non-Hindi speaking states as long as they were against it.

    Benefits of having a national language

    • Wide range of speakers: Hindi is still the most widely spoken language in the country with an estimated 258 million people declaring that Hindi is their native language and millions more comfortable with Hindi.
    • Language as a unifying language: A complete usage of Hindi language whilst respecting the various native languages would also ensure better coordination and cooperation among all the states and act as a strong unifying factor and eliminate all regional differences.
    • Reputation at international fora: When countries like Germany, Japan, France, Italy etc. use their respective language as a medium of communication even during International forums not only has the reputation of those countries have greatly enhanced but also those languages have gained a huge reputation worldwide.

    Issues with Hindi

    • Inherent opposition to Hindi: The Constituent Assembly was bitterly divided on the question, with members from States that did not speak Hindi initially opposing the declaration of Hindi as a national language.
    • Fear of imposition: Opponents were against English being done away with, fearing that it may lead to Hindi domination in regions that did not speak the language.
    • Symbol of identity politics: The approach towards linguistic policy seems to be driven more by the politics of identity than values of aspiration or accommodation.
    • Favour for majoritarianism: The primary argument in favour of Hindi has been reduced to assertions of slim majoritarianism.
    • Few speakers, still dominant: Even then, there are concerns about the claim based on mere numerical strength, as only 25 per cent of Indians seem to recognise Hindi as their mother tongue (Census 2011).
    • Demographic barriers: Today nearly 35% of people are migrating daily for work. In such a situation, we have to conceptualise a new form of language identity for our states.
    • Economic barriers: Any idea of one link language, whether Hindi or English, will be economically disastrous for India. It will slow down migration and reduce the ease of capital flow.
    • Multiple dialects: Only five states in India have Hindi as their’ native language’. However, in those states, too, the dialects of Hindi are associated with locals and their communities.

    Why Hindi cannot be the national language?

    • Multiple dialects: Hindi has largely been influenced by Persian — and then English, among other languages. Also, when the languages were enumerated, Hindi subsumed Bhojpuri, which is spoken by a little over five crore people.  
    • Inefficacy of Sanskrit: There were demands to make Sanskrit the official language, while some argued in favour of ‘Hindustani’.
    • Issue over Script: There were differences of opinion over the script too. When opinion veered towards accepting Hindi, proponents of the language wanted the ‘Devanagari’ script to be adopted both for words and numerals.

    Why this issue needs a rational consideration?

    • Linguistic chauvinism: Various policies on language have been framed both by the central and state governments that have been termed as forms of linguistic chauvinism.  Ex. Obsession for Marathi in Mumbai
    • Secular fabric under threat: The states’ fear of the central government’s ideology of monopolising faith, education, and language will adversely affect the Indian political system, which is based on pluralism and accommodation.
    • Monolingualism can prove disastrous: If there is a mechanical and monolithic idea of unity followed by any entity, such an entity generally generates great hostility beyond its immediate borders.  In neighbouring Bangladesh – then East Pakistan – the language movement against the imposition of Urdu on Bengali speakers was a key driver of Pakistan splitting into two nations.

    Way forward

    • Language as a skill: Language should be looked at as an important skill to operate in a world which is more connected today than at any other point in time.
    • Language not a cultural burden: A united nation has to have space for diversity. India is united in its diversity. Diversity is a great philosophical idea and should never be seen as a cultural burden.
    • Linguistic heritage needs priority: This is not to contend that our linguistic heritage should be neglected or trivialised. Our metropolises must be recognised as multilingual entities.

    Conclusion

    • National integration in a multilingual country does not require the imposition of one official language.
    • At the same time, the convenience, in fact the necessity, of having one or more languages as the official language for centre-state and inter-state communication for political, economic, legal and even social reasons cannot be disputed.
    • Politics over language would never end until India truly attains the ideal federal structure.

  • [Sansad TV] Perspective: 70 Years of India-Japan Relations

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    Context

    • India and Japan are celebrating 70th anniversary of the establishment of diplomatic relations between the two nations.
    • This seven decade long journey has witnessed significant milestones and shared visions for the future.

    The recent visit to India by Japanese PM Fumio Kishida for the annual summit laid out a roadmap for deepening the Special Strategic and Global Partnership between the two countries in a post-COVID world.

    Background of India-Japan Ties

    [I] Ancient times

    • The friendship between India and Japan has a long history rooted in spiritual affinity and strong cultural and civilization ties dating back to the visit of Indian monk Bodhisena in 752 AD.
    • The people of India and Japan have engaged in cultural exchanges, primarily as a result of Buddhism, which spread indirectly from India to Japan, via China and Korea.

    [II] India’s freedom movement

    • Independence movement: The leader of the Indian Independence Movement, Rash Behari Bose was instrumental in forging India–Japan relations during India’s independence movement.
    • During World War II, The British occupiers of India and Japan were enemies during World War II.  Subhas Chandra Bose used Japanese sponsorship to form the Azad Hind Fauj or Indian National Army (INA).

    [III] Present times

    • Pokhran nuclear test: In 1998, Japan imposed sanctions on India following the Pokhran-II, an Indian nuclear weapons test, which included the suspension of all political exchanges and the cutting off of economic assistance. These sanctions were lifted three years later.
    • Both nations share core values of democracy, peace, the rule of law, tolerance, and respect for the environment in realising pluralistic and inclusive growth of the region

    Post-cold war relations

    • The end of cold war and the collapse of the Soviet Union, and the inauguration of economic reforms in India seemed to mark the beginning of a new era in Indo-Japanese relationship.
    • India’s “Look East Policy” posited Japan as a key partner.
    • Japan being the only victim of nuclear holocaust, Pokhran –II tests of India in May 1998 brought bitterness in the bilateral relations where Japan asked India to sign NNPT.
    • Tokyo’s relation with India showed signs of an upswing when Prime Minister Yoshiro Mori came on an official 5 day visit to India in August 2000.

    Recent developments in India-Japan Relationship

     (1) 2+2 Ministerial Dialogue

    • The 2+2 ministerial dialogue is seen as an upgrade of the meeting between foreign and defense secretaries of the two countries, the first round of which took place in 2010.
    • The ministerial level meeting was held after a decision to institute a Foreign and Defense Ministerial Dialogue was taken during the 13th India-Japan Annual Summit held in Japan in 2018.
    • 2+2 meeting aimed to give further momentum to their special strategic partnership, particularly in the maritime domain.

    (2) Supply Chain Resilience Initiative

    • Recently India, Australia and Japan formally launched the Supply Chain Resilience Initiative. The initiative was launched to counter the dominance of China in the Global Supply Chain.
    • It aims to prevent disruptions in the supply chain as seen during COVID-19 pandemic.
    • The initiative will mainly focus on diversification of investment and digital technology adoption.

    (3) Other MEA led-bilateral dialogues

    • The Act East Forum, established in 2017, aims to provide a platform for India-Japan collaboration under the rubric of India’s “Act East Policy” and Japan’s “Free and Open Indo-Pacific Vision”.
    • At the Second meeting of the Act East forum, both sides agreed to focus on expanding of Japanese language in North East, training of caregivers under Technical Intern Training Program (TITP), capacity building in area of bamboo value chain development and Disaster Management.
    • The inaugural India-Japan Space Dialogue was held in Delhi for enhancing bilateral cooperation in outer space and information exchange on the respective space policies.

    (4) Currency Swap Agreement

    • Japan and India have entered into a $75-billion currency swap arrangement that will bolster the country’s firepower as it battles a steep drop in the rupee’s value.
    • A currency swap is an agreement between two parties to exchange a series of cash flows denominated in one currency for those denominated in another for a predetermined period of time.
    • The deal will help the two countries to swap their currencies for U.S. dollars to stabilise the rupee which has witnessed the steepest fall in recent years.

    Areas of Cooperation

    (1) Economic and Commercial relations

    • India’s bilateral trade with Japan stood at US$ 16.95 billion in FY 2019-20. India’s imports during this period were US$ 12.43 billion and exports were US$ 4.52 billion.
    • From 2000 until September 2020, the Japanese investments in India cumulatively stands at around US$ 34.152 billion (Japan ranks fifth among the largest source of investment).
    • The Mumbai-Ahmedabad High Speed Rail, Western Dedicated Freight Corridor (DFC), Delhi-Mumbai Industrial Corridor (DMIC) with twelve industrial townships, Chennai-Bengaluru Industrial Corridor (CBIC) are some mega project with Japanese cooperation on the anvil.

    (2) Security and Defence

    • QUAD: Formed in 2007 and revived in 2017 The Quadrilateral Security Dialogue (QSD, also known as the Quad) is an informal strategic dialogue between the United States, Japan, Australia and India.
    • Exercise Malabar: The dialogue was paralleled by joint military exercises of an unprecedented scale, titled Exercise Malabar.
    • In spite of the pandemic, complex exercises in all domains were conducted including Japan India maritime exercise (JIMEX 2020) and PASSEX, showcasing the trust and interoperability between the navies.

    (3) Strategic

    • 2+2 dialogue: It is taking place between the foreign and defence ministers of the two countries to deepen the global partnership.
    • Collaboration with the US: It is also agreed to establish the India–Japan–United States trilateral dialogue on regional and global issues of shared interest.
    • Global institutional reforms: Both countries also reiterated their determination to work together under the UNFCCC, WTO, etc. They are working together to realize the reform of UNSC Security Council at the earliest.
    • Indo-Pacific: There is a beginning of India-Japan-Australia trilateral dialogue to evolve an open, inclusive, stable and transparent economic, political and security architecture in the indo-pacific region.

    (4) Others

    • Disaster management: An Agreement on joint research in the field of Earthquake Disaster Prevention was signed between Fujita Corporation and Indian Institute of Technology, Roorkee (IIT-R).
    • Skilling and HRD: India-Japan MoC signed in 2016 to train 30,000 shop floor leaders over 10 years thereby also contributing to India’s flagship initiatives such as “Skill India” and “Make in India”.
    • Health-care: In view of the similarities and synergies between the goals and objectives of India’s AYUSHMAN Bharat Programme and Japan’s AHWIN, both sides consulted with each other to identify projects to build the narrative of AHWIN for AYUSHMAN Bharat.
    • Nuclear Energy: In 2015, India and Japan reached on substantive Agreement on Cooperation in the Peaceful Uses of Nuclear Energy. India becomes the first non NPT signed country to do so.

    What lies at the fulcrum of ties?

    • Japan is the most mature economy: In terms of maturity, sophistication, and experience in international economic engagements, Japan excels every other country of the Indo-Pacific region, excluding the US.
    • Technological development: Its technological marvels, business strategies, and management skills are second to none.
    • Political neutrality: Japan rarely hits the international headlines and it is actually Japan’s feebleness in the world of political advertisements.
    • Key player in Indo-Pacific: Japan sooner than later will be a leading player in the political economy as well as security fields of the Indo-Pacific region.

    Why Japan needs India?

    • Worrisome ageing population: Its aging population is a major concern and Japan very well acknowledges this fact. While increasing the domestic birth rate will always be important, it is a position to devise a new immigration policy that would largely benefit Indians.
    • Japan has never been an adversary of India: The current global as well as regional distribution of power and strategic scenario necessitate a deeper and expansive Indo-Japan strategic teamwork.
    • India as a net security provider: The US and Japan need India as a stabilising force. India has the potential as a security provider in Southeast Asia for geo-strategic reasons.
    • India’s naval assets: India possesses enough naval capability to be projected as a strong naval power in the future.  
    • Filling strategic vacuum: India can only fill the power vacuum created due to the declining US power. Japan and ASEAN alone do not have enough power to fill the power vacuum.

    Why India needs Japan?

    For India, developing a strategic relationship with other Asia-Pacific powers such as Japan might appear to be a no-brainer.

    • US needs Japan – India cooperation: The US needs an “ally” to maintain military balance in Asia because their naval power is declining and China’s naval power is rising.
    • Countering China: China has been expanding and intensifying its activities in its surrounding waters. This has caused a worry in Japan.
    • Uniting the Indo–Pacific: The Indo-pacific is not an integrated region. Most countries have been expanding while others are falling prey to China.
    • Infrastructure development: Japan has the distinction of being the only foreign power that has been allowed to undertake infrastructure and other projects in India’s sensitive northeast.

    Limitations to bilateral ties

    • Geographical limitations: The two countries are too far apart to be meaningful partners in any confrontation between one of them and China.
    • China is too big to defeat: No partnership have the military muscle or diplomatic heft to achieve its objectives in countering China.
    • Lesser say at UNSC: At the diplomatic level, neither pulls the kind of power that can counter Beijing and this is not just because they are not UNSC members, unlike China.
    • Japan lacks military technology: Japan obviously has a very advanced high-technology industrial sector, its military industry is insignificant. It’s better not to invoke the DRDO.

    Way forward

    • People to people contact: Although the Covid-19 situation remains challenging, people-to-people exchanges between two countries are also being advanced.
    • Cooperation in security: Cooperation has also taken great strides in the area of security, including joint exercises between the Japan Self-Defence Forces and the Indian Armed Forces.
    • Reaping the benefits of natural alliance: Taking advantage of its considerable assets — the world’s third-largest economy, substantial high-tech skills, Japan is largely perceived as a natural ally to India.
    • Looking East: If Japan and India continue to add concrete security content to their relationship, their strategic partnership could potentially be a game-changer in Asia.

  • [Yojana Archive] Fintech Beyond Boundaries

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    April 2022

    Context

    FinTech is rapidly changing the face of the banking industry, as several banks are now switching to digitization as well as paperless and cashless processes.

    Fintech in India: A backgrounder

    • With the establishment of two institutions in 2009, India’s fintech journey began.
    • The National Payments Corporation of India was the first to take over ATM networks in India in order to modernize retail payments and settlements.
    • The second step was the establishment of India’s Unique Identification Authority.

    What are fintechs?

    • Fintech, the word, is a combination of “financial technology”. 
    • Financial technology (Fintech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services. ​​​
    • At its core, fintech is utilized to help companies, business owners and consumers better manage their financial operations, processes, and lives by utilizing specialized software and algorithms.

    Key fintech products

    • Digital Public Infrastructure (DPI): DPI refers to digital solutions that enable basic functions such as collaboration, commerce, and governance, which are critical for public and private service delivery.
    • Digital Public Goods (DPGs): DPGs refer to open source software, open data, open AI models, open standards, and open content that adhere to privacy and other applicable best practices.  They’re an important tool for constructing infrastructure in ways that avoid some of the drawbacks of proprietary software-based solutions.

    Why in news?

    • India is one of the largest and fastest-growing markets in the world with more than 2100 fintechs.
    • It has the third largest fintech ecosystem in line after the US and China.
    • As of December 2021, India has over 17 fintech companies which have gained Unicorn status with a valuation of over USD 1 billion.

    FinTech industry in India: A closer look

    • Banks have conventionally served as the gateway to payment services in India.
    • However, with the rapid advancement of technology, this no longer appears to be the case, as the monopoly of banks in this area is gradually weakening.
    • In recent years, India’s payments infrastructure has seen substantial improvements, particularly with the introduction of new payment mechanisms and interfaces such as Immediate Payments Service (IMPS), Unified Payments Interface (UPI), Bharat Interface for Money (BHIM), and others.
    • The government’s “Make in India” and “Digital India” projects also played a significant role in accelerating the adoption of Fintech.
    • It is commendable that the Reserve Bank of India (RBI) has also pushed the growing use of electronic payments to establish a truly cashless society in recent years.

    Key initiatives: India Stack

    • The India Stack is a set of APIs that allow the government and private sector to deploy cashless and paperless technology.
    • Although the owners of these APIs are responsible for their upkeep, the India Stack encourages developers to use them by hosting events.

    Components of the India Stack

    • Unique Identification Number: The UIDAI makes up the India Stack, also known as the Aadhaar Stack. This is the individual’s unique identification number, which is linked to their biometric readings.
    • E-KYC: The e-KYC project allows businesses to obtain instant customer verification.
    • AEPS: AEPS expands financial inclusion by allowing government entitlements and bank-to-bank transfers to be disbursed at retail outlets that can go cashless.
    • UPI: A payment request and a customer can use the Unified Payment Interface to send funds to a beneficiary and collect payment requests from customers.
    • E-Sign: eSign is enabled through an API that facilitates an Aadhaar cardholder to electronically sign documents. This is authenticated through biometric readings and through an OTP.
    • DigiLocker: DigiLocker is used as a Government of India repository for documents.
    • Digital Signature: Digital Signature provides the capability that allows individuals to electronically sign contracts with any entity without a pen or paper.

    FSCA – The Governing Body

    • The IFSCA was established under the International Financial Services Centres Authority Act of 2019.
    • In India, the IFSCA is the single body in charge of the creation and regulation of financial goods, financial services, and financial institutions.
    • India’s first international financial services centre is the GIFT IFSC.
    • IFSC serves as a unified authority for the development and regulation of financial products, financial services, and financial institutions.

    Data and standards

    • People and small businesses can now retrieve and use their data thanks to digitised infrastructure.
    • To make this open-banking system work, a standard language will be needed, similar to how UPI created a payment protocol.
    • The National Payments Corporation of India (NPCI) is launching an Open Credit Enablement Network (OCEN) to connect lenders and marketplaces.

    Challenges to FinTech in India

    • Despite being a vastly diversified and populated country, a huge portion of India remains underbanked, underserved and subject to a constantly changing regulatory environment.
    • And for these very reasons, the nation’s financial landscape and unsolved challenges are no easy hurdles to overcome.
    • This is where Fintech enters the equation, with its ability and power to fundamentally alter and transform India’s financial and banking services sector.

    Conclusion

    • FinTech companies’ growing partnerships with traditional banking, insurance, and retail sectors, where they are actively catering to evolving customer needs, will further accelerate FinTech’s expansion in India.
    • All these factors indicate a positive shift towards FinTech and present a huge growth potential for the industry, with the country gearing towards massive adoption.

  • [Burning Issue] India-EU Relations

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    Context

    • President of the European Commission Ursula Von Der Leyen was on two–day official visit to India.
    • She has heaped all praises for the robustness of Indian democracy. She went on to say that ‘World Watches When Indians Cast Their Vote’.
    • Both sides are expected to review the progress on various aspects of the relationship and further intensify the multifaceted partnership with EU.

    About European Union (EU)

    • The EU is a political and economic union of 27 member states that are located primarily in Europe.
    • The union and EU citizenship were established when the Maastricht Treaty came into force in 1993.
    • The EU grew out of a desire to strengthen international economic and political co-operation on the European continent in the wake of World War II.
    • It has often been described as a sui generis political entity (without precedent or comparison) with the characteristics of either a federation or confederation.
    • The eurozone consists of all countries that use the euro as official currency. All EU members pledge to convert to the euro, but only 19 have done so as of 2022.

    Members of the EU

    • Through successive enlargements, the European Union has grown from the six founding states (Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands) to 27 members.
    • This entails a partial delegation of sovereignty to the institutions in return for representation within those institutions, a practice often referred to as “pooling of sovereignty“.
    • In the 2016 ‘Brexit’ referendum, the UK voted to leave the EU. The UK officially left the EU in 2020

    India-EU Relations: A Backgrounder

    • It’s been 60 years since India accredited its first ambassador to the European Economic Community (EEC), the organisation that served as embryo for the European Union.
    • Back then, India was a protectionist economy trying to move away from the British colonial era while the EEC consisted of just six European countries.
    • Today, the relations between the EU and India are defined by the 1994 EU–India Cooperation Agreement.
    • India and the EU became “Strategic Partners” in 2004.

    [A] Political Partnership

    • The Joint Political Statement signed in 1993, opened the way for annual ministerial meetings and a broad political dialogue.
    • The Cooperation Agreement signed in 1994 took the bilateral relationship beyond trade and economic cooperation.
    • A multi-tiered institutional architecture of cooperation has since been created, presided over by the India-EU Summit since 2000.
    • Today EU stands as a major reference for India’s legislative process in the field of Data security and privacy.

    [B] Economic Ties

    • Bilateral trade: The EU is India’s largest trading partner, while India is the EU’s 9th largest trading partner. It is the second-largest destination for Indian exports after the United States.
    • Investment: The EU’s share in foreign investment inflows to India has more than doubled from 8% to 18% in the last decade. This makes the EU an important foreign investor in India.
    • Preferential treatment: India is the benefactor of the unilateral preferential tariffs under the EU Generalised Scheme of Preferences (GSP).
    • Energy: Both sides have finalised civil nuclear cooperation agreement after 13 years of negotiations called as the European Atomic Energy Community (EURATOM). It involves collaboration in the civil nuclear energy sector.
    • Development cooperation: Over €150 million worth of projects by EU are currently ongoing in India. European Investment Bank (EIB) is providing loans for Lucknow, Bangalore, and Pune Metro Projects.

    [C] Defence & Security

    • EU and India have instituted several mechanisms for greater cooperation on pressing security challenges like counterterrorism, maritime security, and nuclear non-proliferation.
    • Information Fusion Centre – Indian Ocean Region in New Delhi (IFC-IOR) has recently been linked-up with the Maritime Security Centre – Horn of Africa (MSC-HOA) established by the EU Naval Force (NAVFOR).

     [D] Climate Change

    • EU and India also underline their highest political commitment to the effective implementation of the Paris Agreement and the UNFCCC despite US withdrawing from the same.
    • India-EU Clean Energy and Climate Partnership was agreed at the 2016 Summit – to promote access to and disseminate clean energy and climate friendly technologies and encourage R&D.
    • Energy cooperation is now ongoing on a broad range of energy issues, like smart grids, energy efficiency, offshore wind and solar infrastructure, and research and innovation.
    • EU and India also cooperate closely on the Clean Ganga initiative and deal with other water-related challenges in coordinated manner.

    [E] Research and Development

    • India-EU Science & Technology Steering Committee meets annually to review scientific cooperation.
    • Both have official mechanisms in fields such as Digital Communications, 5G technology, Biotechnology, artificial intelligence etc.
    • ISRO has a long-standing cooperation with the European Union, since 1970s. It has contributed towards the EU’s satellite navigation system Galileo.

    Major limitations to the ties

    • Deadlock over BTIA: The negotiations for a Broad-based Bilateral Trade and Investment Agreement (BTIA) were held between 2007 to 2013 but have remained dormant/suspended since then.
    • Export hurdles: Indian demands for ‘Data secure’ status (important for India’s IT sector) to ease norms on temporary movement of skilled workers, relaxation of Sanitary and Phytosanitary (SPS), etc. stands largely ignored.
    • Trade imbalance: This heavily leans towards China. India accounts for only 1.9% of EU total trade in goods in 2019, well behind China (13.8%).
    • Brexit altercations: In the longer term of balancing of global powers, a smaller Europe without the key military and economic force UK, is much weaker in the wake of an ambitious China and an increasingly protectionist US.
    • EU primarily remains a trade bloc: This has resulted in a lack of substantive agreements on matters such as regional security and connectivity.
    • Undue references to sovereign concerns: The European Parliament was critical of both the Indian government’s decision to scrap Jammu and Kashmir’s special status in 2019 and the Citizenship (Amendment) Act.
    • China’s influence: EU’s affinity lies with China. This is because of its high dependence on the Chinese market. It is a major partner in China’s Belt and Road Initiative (BRI).
    • Ukrainian war: EAM S. Jaishankar’s witty reply about EU’s oil import from Russia has not been welcomed across the EU. It still expects India to criticize Russia.

    EU’s interests in India

    • Reducing dependence on China: It is necessary for both sides as it is making them highly vulnerable to Chinese aggression.
    • Western lobby: EU acknowledges its supply chain’s vulnerability, the risk posed by overdependence on China, and the need to strengthen the global community of democracies.
    • Healthcare: The on-going pandemic has shown the need for cooperation in global health. India and the EU have called for a reform of the World Health Organisation (WHO).
    • Perception of India as a huge market: EU still largely perceives India as huge market rather than a partner.
    • Promotion of multilateralism: Both sides are facing issues related to US-China trade war and uncertainty of the US’ policies. They have common interest in avoiding a bipolarised world and developing a rules-based order.

    India’s stakes in EU

    • Global leadership vacuum: Retreat of the U.S. from global leadership has provided opportunities for EU- India cooperation and trilateral dialogues with countries in the Middle Fast, Central Asia, and Africa.
    • Chinese Aggression: China’s increasing presence in Eurasia and South Asia is creating similar security, political and economic concerns for Europe and India.
    • Fall of the conventional global order: Trade war, crumbling WTO and break down of TPP etc. has made EU understand the economic importance of India.
    • BREXIT: Brexit is pushing India to look for new ‘gateways’ to Europe, as its traditional partner leaves the union. A renewed trade and political cooperation are the need of the hour.
    • Conformity over Indo-Pacific: The Indo-Pacific is the main conduit for global trade and energy flows. Rule-based Indo-pacific is of everyone’s interest with EU no exception.

    Way forward

    • A close bilateral relation between India and the EU has far-reaching economic, political and strategic implications on the crisis-driven international order.
    • Both sides should realise this potential and must further the growth of the bilateral ties with a strong political will.
    • As highlighted by EU strategy on India 2018, India-EU should take their relations beyond “trade lens”, recognizing their important geopolitical, strategic convergences.
    • India can pursue EU countries to engage in Indo-pacific narrative, geo-economically if not from security prism.

  • [Sansad TV] Mudda Aapka: Sports as a Fundamental Right

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    Context

    • The Supreme Court has sought the opinion of the Centre and state governments on a suggestion that physical literacy or sports be recognised as a fundamental right.
    • It goes on to say that all education boards be asked to ensure at least 90 minutes of every school day to be dedicated to “free play and games”.

    Sports as a FR: A Backgrounder

    • India is a vibrant country that has always carried a fevered pitch and fervent excitement for sports.
    • The Supreme Court decision in the Bombay Dyeing case (2006) is emblematic of our vision for sport.
    • The Court, in August 2018, had asked for responses of the Centre and state governments in a public interest litigation filed by Kanishka Pandey, a sports researcher.
    • Subsequently, the court had appointed Sankarnarayanan as an amicus in April 2019 to assist it and suggest measures to deal with the issue.

    Key recommendations in recent plea

    • Sports as FR under Article 21A: As part of a plea before the Supreme Court seeking to declare playing sports as a fundamental right, a report has been submitted by amicus curiae. It suggested that the broad term “physical literacy” be adopted instead of sports.
    • 90 minutes of physical activity: Also, all education boards must be asked to ensure at least 90 minutes of every school day be dedicated to “free play and games”.
    • Sports be transferred to concurrent list: The petition also seeks to transfer sports to the concurrent list and to form an independent Ministry of Education, Sports and Youth Empowerment at union and state levels.
    • Sports as a part of education policy: The plea also asks for directions to governments to amend education policies to promote sports and make facilities available to enhance the opportunities to play sports.
    • National Physical Literacy Mission: The report makes a number of suggestions in this regard – from asking the government to establish a National Physical Literacy Mission.

    Another striking feature: National Physical Literacy Mission

    • The report also proposed for all registered and unregistered private and public education institutions to have, publish and disseminate to all parents/guardians a Physical Literacy Policy.
    • The Policy would acknowledge the institution’s legal commitment to integrate physical literacy in all aspects of its curriculum.
    • This is to ensure that physical literacy is a part of the overall curriculum and syllabus for national and state school boards, in particular the National Curricular Framework for School Education 2020-21.

    Why must we consider the fundamental right to physical literacy?

    • Physical activity is fundamental to human beings:  The report states that having a fundamental right to literacy would mean identifying the intrinsic value of physical activity to human living.
    • Part of elementary education: It would mean not seeing physical activity as an end in itself, and the establishment of physical activity/ physical education as a core component of the education curriculum.
    • Supportive to other FRs: A fundamental right to physical literacy would actualise and enhance the enjoyment of other fundamental rights. It would go a long way in enhancing the opportunities and freedom to express oneself.
    • Enhancing life quality: A physically literate individual would have a more fulfilling life of higher quality than one who is not.  Physical literacy, as a building block, would go a long way in the promotion and realisation of the right to health and the right to education.
    • Religion as a barriers: Some sports like swimming and athletics require attire that does not fully cover a woman’s body and are against the laws of some religions. They are often debated in light of modesty of the sportspersons beings violated.
    • Associated social reforms: Many women perceive sports as an opportunity to escape the confines of a highly regulated life. They use it as a tool to show their potential and tackle the patriarchal mindset. Further success of sportspersons like Mary Kom, Saina Nehwal, etc. have played a pivotal role in curbing the problems of child marriage and son meta preference.

    Why need such a policy?

    • Poor performance in competitions: India has the worst population to medals ratio at the Olympics. We find our medal tally at the Olympics to be hopelessly out of sync with our 1.3 billion population.
    • Regressive attitude towards sports: Our attitude towards sport and physical well-being is another debilitating factor. Traditionally, India has not been a sports nation where many deserving candidates are discouraged right at the starting level.
    • Economic divide: It hard reality which we consistently refuse to acknowledge. Athletes are not generated from the comfortable classes, they invariably come often from the middle and lower economic strata.
    • Incentivization: There is more focus on post-success incentivization rather than pre-success support in India. For instance, the Haryana Government announced a 6 crore reward after Neeraj Chopra won the gold medal in Tokyo Olympics 2020.

    Significance of physical education and sports

    • Physical development: Fitness, Health
    • Mental development: It improves decision making and collective action. It also acts as stress buster.
    • Character/ personality development: It instils confidence, team spirit, team coordination, group work)

    Benefits of augmenting sports career

    • Alternative career development: For those for whom opportunities are few, and jobs are scarce, sport becomes a powerful mobility device. A strong sports sector encourages an average/ poor academic student to make a career in sports.   
    • Reaping demographic dividend: India is having a very young population and is soon going to become the world’s youngest country. In such a scenario, a robust sports sector can help in reaping the potential demographic dividend. 
    • Revenue generation: Developing robust sports infrastructure in the country will allow India to host a greater number of international events. Such hosting boosts tourism in the country and results in enhancing the revenue and employment in the region. Ex. IPL
    • Promotes the spirit of Unity in Diversity: People cheer for the Indian athletes and Indian teams at international events. An improvement in sports automatically fosters the spirit of brotherhood amongst the people of diverse nations. For instance, the Pan India support enjoyed by Indian cricket team enhances belongingness between India’s north and south. 

    Reasons for India’s poor performance

    India’s below-par performance in sports can be attributed to the combination of all the factors discussed below:

    • Lack of facilities: We have thousands of education centres all over the country, but there are very few schools and colleges which have adequate facilities for any sport.
    • Regional discrepancies: The spending of money is concentrated in major cities where facilities do exist, but the broad-based structure to tap and develop talent is missing. The facilities wherever they are created are confined to a few popular games like cricket, hockey, football, tennis, etc.
    • Burden of ill-health: Mother and child health is an all-time contested issue in India. This may well be attributed to weather conditions, poor economic condition generally-due to which nutrition is not available to most of our children.
    • Narrow perception: The parents are keen that their kids should do well studies to get a degree and ultimately fetch a good job. Playing for long hours regularly is considered a waste of time.
    • Lesser academia for physical education: There are few Sports Colleges which are genuinely making efforts to produce national-level sportsmen, but their number is so small that no perceptible impact is seen due to their existence.
    • Lack of training: Another reason for our poor performance in sports is the lack of required number of trainers, coaches and psychotherapists. There is also a dearth of quality coaching or the qualified coaches.
    • Non-interest: The west often accuse that Indians lack the killer’s instinct. The zest and enthusiasm necessary to win over the opponent is naturally absent in the Indian psyche.
    • Obsession for few sports: There is no doubt that cricket and hockey plays a major unifying role in India. However, other sports and sportsperson are often discouraged due to such obsessions.
    • Performance anxiety: A high degree of pressure is inflicted upon a sportsperson to perform or else be prepared to live a vulnerable life. This sometimes creates excessive mental stress in them or induces them to resort to unethical means like doping.

    Various initiatives for sports promotion

    The Ministry of Youth Affairs & Sports has formulated the following schemes to promote sports in the country, including in rural, tribal and backward areas:

    1. Khelo India Scheme
    2. Assistance to National Sports Federations
    3. Special Awards to Winners in International sports events and their Coaches
    4. National Sports Awards, Pension to Meritorious Sports Persons
    5. Pandit Deendayal Upadhyay National Sports Welfare Fund
    6. National Sports Development Fund; and
    7. Running Sports Training Centres through Sports Authority of India

    Way forward

    • Sports is a state subject and therefore uniformity in sports specific activities of various states in India is extremely important for providing equal sporting opportunities to all the citizens of the country.
    • We have to take collective action to create a system and a proper environment whereby the young talent is spotted and developed in right earnest.
    • Integration of sports with education to introduce sports culture in India is the need of the hour.
    • The allocation of funds to sport, as a percentage of budget, can be increased for broad-basing sports in this country.
    • There is also a need to develop a culture in whole country by spreading awareness in society by telling benefit of sports in life.

  • [Burning Issue] China’s Debt Trap Diplomacy

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    Context

    • Sri Lanka continues to grapple with its worst-ever economic crisis as it has defaulted on all of its external debt of about $51 billion – after running out of foreign exchange for imports, calling it the last resort.
    • So while domestic policies are largely being seen as reasons for Sri Lanka’s economic collapse, many also blame China for the unprecedented crisis in the island nation.
    • Defaults over China’s infrastructure loans to Sri Lanka, especially the financing of the Hambantota port are being cited as factors leading to the crisis.

    In this article, we will try and understand China’s lending model and the reasons it is coming under increasing criticism from low & middle-income countries against unsustainable debt.

    American statesman John Adams, who served as president from 1797 to 1801, famously said, “There are two ways to conquer and enslave a country: One is by the sword; the other is by debt.” China, choosing the second path, has embraced colonial-era practices and rapidly emerged as the world’s biggest official creditor.

    What is Debt Trap Diplomacy?

    • Loans to repay loans: The debt trap is a situation where one is forced to over consume loans to repay your existing debts.
    • Political leverage is exploited: Debt-trap diplomacy is a term in IR which describes a creditor country or institution extending debt to a borrowing nation partially, or solely, to increase the lender’s political leverage. The term was coined by an Indian academic Brahma Chellaney.
    • IMF and Chinese tools of coercion: Although the term is most commonly associated with China, it has also been applied to the International Monetary Fund (IMF); both allegations, however, are disputed.

    Features of such diplomacy

    • Lending is initially very indiscriminate
    • Terms of the loans are often not publicized
    • More conditional loans are offered to repay and restructure old debts
    • Such loans benefit the lender by undue exploitation of the borrower
    • Interest rates are hefty and unrealistic
    • It seeks sovereign guarantee and sovereign leases
    • Default leads to geo-strategic overtakes ex. PLA Navy being deployed at Hambantota Port

    Roots of such policy

    • There are many cases of countries in the 19th and early 20th century, the high-water mark of European colonialism and imperialism, using debt-funded infrastructure projects to embark on rapid modernisation.
    • For instance, the French-led design and construction of the Suez Canal.
    • It involved the issuing of £3.3 million’s worth of Egyptian bonds in 1863 on behalf of the Egyptian Khedive.
    • In return Egypt, committed to provide labour and a 99-year operational lease to France (much similar to the terms of Hambantota Port).
    • One of the earliest successes of China’s debt-trap diplomacy was in securing 1,158 square kilometers of strategic Pamir Mountains territory from Tajikistan in 2011 in exchange for debt forgiveness.

    Sri Lankan Case

    • Using its own brand of “strategic investments” China is now forcing smaller states to abide by its dictates.
    • Sri Lanka’s case is a text-book example of the Chinese modus operandi in pursuing its strategic interests.
    • In July 2017, the Sri Lankan government and CMPort (China Merchants Port Holdings Company), a state- owned Chinese company, signed an agreement.
    • It granted China a 99-year lease of the Hambantota harbour and 15,000 acres of land in exchange for $1.2 billion.

    How does China seek to achieve this?

    • Belt and Road Initiative (BRI): The BRI is a trillion-dollar initiative, which makes large-scale loans available to countries seeking to build infrastructure projects.
    • Ignorance to creditworthiness: Instead of first evaluating a borrower country’s creditworthiness, including whether new loans could saddle it with an onerous debt crisis, China is happy to lend.
    • Secrecy of negotiations: The China allegedly keep negotiations very secret and non-competitive pricing of projects.
    • Bidding is closed-door: Contracts go to Chinese state-owned or state-linked companies which charge significantly above-market prices.
    • Bribing of the govt: China also shows up with bribes to senior leaders in countries, in exchange for infrastructure projects.

    Worst outcomes

    • Sri Lanka: It was forced to hand over control of the Hambantota port project to China for 99 years, after it found itself under massive debt owed to Beijing.
    • Pakistan: It is literally sold to into the hands of the China over the development of China Pakistan Economic Corridor (CPEC).
    • Gulf region: Similarly, in exchange for relief, China constructed its first military base in Djibouti.
    • India: SL allowed China control over a key port positioned at the doorstep of its regional rival India, and a strategic foothold along a key commercial and military waterway.

    Chinese prophecy of its policy

    • Anti-China sentiments: Communist Party of China calls it a “meme” which became popular due to “human negativity bias” based on anxiety about the rise of China as a global superpower.
    • Obsession for China over the West: Many nations, Pakistan being the best example finds China as an attractive partner for their development.
    • Success of such loans: Most of the debtor countries voluntarily agreed to the loans and had positive experiences working with China.
    • Already existing debt distress: CCP conforms that Chinese loans are not currently a major contributor to the already existing debt distress in Africa.
    • Debt-Restructure Policy: China restructured or waived loan payments for 51 debtor nations (most of the BRI’s participants) without seizing state assets.
    • Case par excellence: Hambantota is an exception for China’s since the project was proposed by former Sri Lankan president Mahinda Rajapaksa, not Beijing.
    • Its borrowers who seek loans: China’s leverage in debt renegotiation is often exaggerated, and was realistically limited in power.
    • Waivers are considered: Considering the particular case of Pakistan, asset seizures are a very rare occurrence, and debt write-off is the most common outcome.

    Why do countries go for Chinese offers?

    • Distressed under-developed /developing countries: In retrospect, China’s designs might seem obvious. But the decision by many developing countries to accept Chinese loans was, in many ways, understandable.
    • Negligence by World Bank and IMF: Most developed nations got neglected by institutional investors, since they had major unmet infrastructure needs. Countries that don’t want to go the IMF for a bailout when they’re in trouble, they went to China instead.
    • Former colonists turned blind eyes: Most African and Asian countries turned troubled after de-colonization. Their finances were literally sucked up by colonists in post WW2 recovery.
    • China empathized when nobody else did: So when China showed up, promising benevolent investment and easy credit, they were all in.
    • Blaming Beijing is the easier option:  It became clear only later that China’s real objectives were commercial penetration and strategic leverage; by then, it was too late, and countries were trapped in a vicious cycle.

    Do you know?

    The State Bank of Pakistan (SBP), the central bank is no more a sovereign bank unlike the RBI. It has now become a commercial bank!

    Has India taken any loans from China?

    Ans. No. It’s the AIIB Loan.

    • India has not entered into any loan agreement directly with China.
    • However, it has been the top borrower of Asian Infrastructure Investment Bank (AIIB), a multilateral bank wherein China is the largest shareholder (26.6% voting rights) and India is the second (7.6% voting rights). 
    • China’s vote share allows it veto power over decisions requiring super-majority.
    • Loans provided to India could also pave the way for Chinese firms to enter and gain experience in the promising Indian infra market.

    Impact of Chinese policy on India

    • Almost all neighbours got lured: Most of India’s neighbours have fallen prey to China’s debt trap, and ceded to China’s $8 tn project – One Belt One Road Initiative (OBOR).
    • India’s sovereignty concerns disregarded: CPEC requires India to accept that the Kashmir-controlled Pakistan region, is Pakistan, because that’s where some of the projects are.
    • Perception change against traditional partners: China through OBOR can hence increase India’s political cost of dealing with its neighbours. Ex. Bangladesh now cherishes Chinese affinity more than its liberator.

    A critical assessment

    • Of course, extending loans for infrastructure projects is not inherently bad: The projects that China is supporting are often intended not to support the local economy, but to facilitate Chinese access to natural resources, or to open the market for its low-cost exports.
    • Several projects are now bleeding money: In a sense, it is even better for China that the projects don’t do well. After all, the heavier the debt burden on smaller countries, the greater China’s own leverage becomes.
    • Chinese morale are now high enough to prey its small neighbours: China has used its clout to push Cambodia, Laos, Myanmar, and Thailand to block a united ASEAN stand against China’s aggressive pursuit of its territorial claims in the South China Sea.
    • China is establishing its monopoly: In financially risky countries, China now demands majority ownership up front. For example, China clinched a deal with Nepal this month to build another largely Chinese-owned dam there, with its state-run China Three Gorges Corporation taking a 75% stake.
    • Debt for a debt has become crème de la crème: In exchange for rescheduling repayment, China is requiring countries to award it contracts for additional projects, thereby making their debt crises interminable.
    • China is becoming increasingly opportunistic and seizing assets: Countries that are not yet ensnared in China’s debt trap should take note – and take whatever steps they can to avoid it.
    • Deadly obligations are pre-conditions: China does obligate the borrower to exclude the Chinese debt from any multilateral restructuring process, such as the Paris Club of official bilateral creditors, and from any “comparable debt treatment.”
    • China has taken over exclusive development rights:  In small island nations, China has converted big loans into acquisition of entire islets through exclusive development rights. It took over a couple of islets in the Indian Ocean archipelago of the Maldives and one island in the South Pacific nation of the Solomon Islands.
    • Some developing economies are regretting their decision: Protests have erupted over widespread joblessness, purportedly caused by Chinese dumping of goods, which is killing off local manufacturing, and exacerbated by China’s import of workers for its own projects.
    • Rise of neo-imperialism: By integrating its foreign, economic, and security policies, China is advancing its goal of fashioning a hegemonic sphere through security links. If states are burdened with high levels of debt as a result, their financial woes only aid China’s neocolonial designs.

    Do you know?

    Yuan is now the official currency of Zimbabwe!

    Way forward

    • India needs to loop in: Getting ready to challenge China’s profile by enhancing its own regional role as an economic and security actor is the need of the hour for India.
    • Ring-fencing of its neighbours: India also needs to maintain its influence in the region and counter the growing debt-trap initiatives via cooperative strategies and humanitarian aid, a move aimed to ring-fence its strategic interests.
    • Countering China in maritime sphere: At a time when China is strangling India in the north with its attempts to change facts on the ground, it is imperative for India to strategically think of using the maritime sphere to break Beijing’s growing dominance in its periphery.
    • Alternatives for finances: India needs to push these small countries to improve its ties with the US and the West. The so called ‘assistance’ should be as per international standards or as per the interest rate imposed by the World Bank, the Asian Development Bank and others.

    Conclusion

    • Thus it is very much clear that- China often begins as an economic partner of a small, financial weak country and then gradually enlarges its footprint in that state to become its economic and political master. 
    • Atmanirbharta (Self-reliance) is the key to all such miseries.