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  • RBI Notifications

    The idea of Central Bank Digital Currency in India

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    The article discusses the idea of digital currency supported by the RBI and its advantages.

    Purpose of NUE

    • RBI recently released the framework for the establishment of a new umbrella entity (NUE) for retail payments.
    • NUE would help reduce payments concentration risk with Unified Payments Interface (UPI) facilitating over 1.5 bn transactions a month.
    • Given the sticky adoption and only a few payments apps dominating the UPI market, RBI intends to create a parallel retail system.

    5 requirements payment systems should fulfil

    • 1) The payments system should reduce the cost and time for government support to reach unbanked and underbanked people.
    • 2) It should ensure ease of access to credit for small and medium businesses.
    • 3) Improve the effectiveness of the implementation of monetary policy.
    • 4) The new payment system should effectively counter risk from unregulated new digital currencies like Bitcoin.
    • 5) It should discourage money laundering and tax evasion.

    CBDC: Solution to the above 5 requirements

    • CBDC is the digital form of fiat money, a digital equivalent of banknotes and coins.
    • A Central Bank Digital Currency (CBDC) could potentially solve the above problems.
    • Retail CBDCs can be issued directly by the central bank to people without going through traditional banks.
    • Individuals would have CBDC accounts directly on the central bank core ledger.
    • CBDC can reduce the cost and time for government support to reach people during desperate times (like pandemic).
    • CBDC can also enable many financial entities to settle directly with RBI.
    • In the current set up only a few large banks can settle directly with RBI.
    • With a digital currency, the settlement can be instantaneous and, as a result, more payments services providers like NBFCs could connect with RBI, thereby, reducing credit and liquidity risk.
    • CBDC lending would build MSMEs history and make further lending easier.
    • For India to be a $5 tn economy, businesses need credit, and that can happen when we have more banks.
    • India had 97 banks in 1947; today we are still at 95!
    • Interest bearing CBDCs can also improve monetary policy effectiveness by enabling real-time pass-through of the policy rate to the lending markets.
    • CBDCs can also allow for direct deposits into accounts of low-income households, senior citizens dependent on pensions and help cushion their purchasing power from the low-level interest rates during the times of economic downturn.
    • CBDC can thwart some competition against privately issued foreign currency-denominated digital currencies.

    Roles and responsibility of RBI with respect to CBDC

    • In terms of managing roles and responsibilities, RBI would only hold the accounts and implement monetary policies as it does now.
    • Fintech companies can become the channel for retail CBDC transmission and manage client relationships.
    • Fintechs can complement the commercial banks and can draw small businesses/poor households into the formal economy.
    • These companies could leverage their data to estimate customers’ creditworthiness and share their findings to banks for more efficient allocation of credit.

    Consider the question “A digital currency backed by the central bank could transform the retail payment landscape in India. Discuss.”

    Conclusion

    India has been at the forefront of the fintech revolution, and other developed countries have been following its path. While the world watches the melee between the Greenback and the Renminbi, it is time India also lays the foundation for a strong currency. CBDC may just be one of the ways to do it.

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  • Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

    Boosting manufacturing

    op-ed snap | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth,Indian Economy

    The article analyses the issues of increasing manufacturing in India while dealing with the constraints faced by it. It also suggests the important role States can play.

    Why companies are expected to exit China

    • In the aftermath of the pandemic manufacturing companies are expected to exit China due to three primary reasons.
    • 1) Realisation that relying heavily on China for building capacities and sourcing manufacturing goods is not an ideal business strategy due to supply chain disruptions in the country caused by COVID-19.
    • 2) Fear of Chinese dominance over the supply of essential industrial goods.
    • 3) The growing risk and uncertainty involved in operating from or dealing with China in the light of geopolitical and trade conflicts between China and other countries, particularly the U.S.

    Where India stands in comparison with China

    • China ranks first in contribution to world manufacturing output, while India ranks sixth.
    • Against India’s target of share of manufacturing in Gross Domestic Product (GDP) to 25% by 2022, its share stood at 15% in 2018, only half of China’s figure.
    • Industry value added grew at an average annual rate of 10.68% since China opened up its economy in 1978, India’s grew at 7% after India opened up its economy.
    • Next to the European Union, China was the largest exporter of manufactured goods in 2018, with an 18% world share.
    • India is not part of the top 10 exporters who accounted for 83% of world manufacturing exports in 2018.

    Constraints faced by manufacturing sector in India

    India faces numerous constraints in promoting the manufacturing sector.

    • They chiefly include infrastructure constraints, a disadvantageous tax policy environment, restrictive trade policies, a non-conducive regulatory environment, rigid labour laws.
    • Constraints also include high cost of industrial credit, poor quality of the workforce, Low R&D expenditure, delays and constraints in land acquisition, and the inability to attract large-scale foreign direct investment into the manufacturing sector.

    What role States can play?

    • They  can  contribute land: Federal government system in India demands the participation of States for the lasting solution to the constraints on the sector.
    • An important requirement for the development of the manufacturing sector is the availability of land area.
    • This could be one of the reasons why manufacturing activity is mainly concentrated in Maharashtra, Gujarat, Tamil Nadu, Karnataka and Uttar Pradesh.
    • However, what is of concern is that some States that also have large land area contribute disproportionately little in manufacturing GSDP.
    • These states include Andhra Pradesh, Bihar, Chhattisgarh, Madhya Pradesh, Odisha, Rajasthan, Telangana, and West Bengal.

    Way forward

    • Identify reasons: The reasons for less manufacturing activity in these States have to be carefully examined.
    • State-specific industrialisation strategies: Based on such reasons, State-specific industrialisation strategies need to be devised and implemented in a mission mode with active hand-holding by the Central government.
    • State specific reforms: Policy actions on the part of individual States would improve India’s overall investment climate, thereby boosting investments, jobs, and economic growth.
    • Policy actions of the Centre and the States should  be well coordinated: Strategy Group consisting of representatives from the Central and State governments along with top industry executives to instil teamwork and leverage ideas through sharing the best practices of the Centre and States could be formed.

    Consider the question “What are the constraints faced by the manufacturing sector in India? Suggest the ways to deal with these constraints highlighting the important role States can play in boosting manufacturing.”

    Conclusion

    Both the States and the Central government needs to work in tandem to boost the manufacturing in India and transform the economic landscape of India.

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  • Finance Commission – Issues related to devolution of resources

    India needs a Fiscal Council

    | Polity | Mains Paper 2: Federalism

    The newscard highlights the need of bipartisan, independent Fiscal Council to report and analyse FRBM discrepancies by the Government.

    Try this question for mains:
    Q.Fiscal Council is an important institution needed to complement the rule-based fiscal policy. Discuss.

    What is a Fiscal Council?

    • A Fiscal Council is an independent fiscal institution (IFI) with a mandate to promote stable and sustainable public finances.
    • They aim to provide nonpartisan oversight of fiscal performance and/or advice and guidance — from either a positive or normative perspective — on key aspects of fiscal policy.
    • These institutions assist in calibrating sustainable fiscal policy by making an objective and scientific analysis.

    Voices for a Fiscal Council

    • The 13th Finance Commission recommended that a committee be appointed by the Ministry of Finance which should eventually transform itself into a Fiscal Council.
    • The FC expected it to conduct an annual independent public review of FRBM compliance, including a review of the fiscal impact of policy decisions.
    • The FRBM Review Committee too made a similar recommendation underlining the need for an independent review by the Finance Ministry appointing the Council.

    Why need a fiscal council?

    (1)Burgeoning deficits

    • For the current year, even without any additional fiscal stimulus, the deficit is estimated at about 7% of GDP as against 3.5% estimated in the Budget due to a sharp decline in revenues.
    • The consolidated deficit of the Union and States could be as high as 12% of GDP and the overall debt could go up to 85%.
    • Thus it is necessary that the government must return to a credible fiscal consolidation path once the crisis gets over.

    (2)Transparency issues

    • Besides large deficits and debt, there are questions of comprehensiveness, transparency and accountability in the Budgets.
    • The practice of repeated postponement of targets, timely non-settlement of bill payments and off Budget financing to show lower deficits has been common.
    • The report of the CAG of India in 2018 has highlighted various advances done to keep the liabilities hidden.

    Fiscal Council can be a game changer. How?

    • First, an unbiased report to Parliament helps to raise the level of debate and brings in greater transparency and accountability.
    • Secondly, costing of various policies and programmes can help to promote transparency over the political cycle to discourage populist shifts in fiscal policy and improve accountability.
    • Third, scientific estimates of the cost of programmes and assessment of forecasts could help in raising public awareness about their fiscal implications and make people understand the nature of budgetary constraint.
    • Finally, the Council will work as a conscience keeper in monitoring rule-based policies, and in raising awareness and the level of debate within and outside Parliament.

    Issues meddling between

    • The problem is that a Council created by the Finance Ministry and reporting to it can hardly be expected to be independent.

    Diverse role to play ahead

    • According to the IMF, there were 36 countries with IFIs in 2014 and more have been established since.
    • While most of the IFIs are in advanced countries, emerging economies too have also shown growing interest in them.
    • Although their common agenda has been to function as watchdogs, there is considerable diversity in their structure and functions.
    • Over the years, monitoring compliance with fiscal rules and costing policies and programmes have become major tasks of these councils.

    Way forward

    • When the markets fail, governments have to intervene.
    • Whenever governments seem obstructed, it is here that we need systems and institutions to ensure checks and balances.
    • In that respect, a Fiscal Council is an important institution needed to complement the rule-based fiscal policy.

    Conclusion

    • Of course, it is not a ‘silver bullet’; if there is no political will, the institution would be less effective, and if there is political will, there is no need for such an institution.
    • That is also true of the FRBM Act. While we cannot state that the FRBM Act has been an unqualified success, it has also not been an abject failure either.

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  • Modern Indian History-Events and Personalities

    [pib] Cultural heritage of Hyderabad

    PIB | History | Mains Paper 1: Arts & Culture

    Ministry of Tourism’s DekhoApnaDesh Webinar Series in its 50th session held a webinar on “Cultural heritage of Hyderabad”.

    Note various cultural sites mentioned in the newscard. The entire DekhoApnaDesh series is a potential hotspot for the coming Prelims.

    The story of Hyderabad City

    • Hyderabad is popularly known as the “City of Pearls” and the “City of Nizams”, and has been the centre of a vibrant historical legacy, ever since its inception by the Qutub Shahi dynasty.
    • The city was later conquered by Mughal Empire and finally falling in the hands of Asaf Jahi dynasty.
    • Muhammad Quli Qutb Shah established Hyderabad in 1591 to extend the capital beyond the fortified Golconda. In 1687, the city was annexed by the Mughals.
    • In 1724, Mughal governor Nizam Asaf Jah I declared his sovereignty and founded the Asaf Jahi dynasty, also known as the Nizams.
    • Hyderabad served as the imperial capital of the Asaf Jahis from 1769 to 1948.
    • As capital of the princely state of Hyderabad, the city housed the British Residency and cantonment until Indian independence in 1947.

    Cultural sites of Hyderabad:

    1) Golconda Fort, Hyderabad: A massive fortress whose ruins stand proudly even today displaying the glory of its rich past and some untold sagas of the city’s history. The place oozing charm is a must visit historical place in Hyderabad. Mohammed Quli understood the need of a new City and made Bhagnagar (after the name of his beloved Bhagmati) with Charminar in its centre.

    2) Chowmahalla Palace: Once the seat of the Asaf Jahi Dynasty, the Chowmahalla Palace was built in Hyderabad and is located near the famous monument, Charminar and Laad Bazar. The palace is designed very intricately and holds that Nawabi Charm in itself. Palace, the seat of power of Nizams, has bagged the UNESCO Asia-Pacific Heritage Merit Award for Culture Heritage Conservation.

    3) Charminar: The monument was erected when Quli Qutab Shah shifted his capital from Golconda to Hyderabad. The monument got its name from its structure as it consists of four minarets.

    4) Mecca Masjid: One of the oldest and the largest mosques of India is the grandest historical places in Hyderabad was completed by Aurangzeb in 1693.The bricks used here are believed to be from Mecca, and hence the name.

    5) Paigah tombs: Located in the suburbs of Pisal Banda in Hyderabad, Paigah Tombs are a group of tombs of the Paigah royal family. Although now in a derelict and dilapidated state, the tombs still boast of striking architecture and marvellously carved marble panels.

    6) Salar Jung Museum: Is an art museum established in the year 1951 and located at Dar-ul-Shifa, on the southern bank of the Musi River in the city of Hyderabad. The Salar Jung family is responsible for its collection of rare art objects from all over the world. The family is one of the most illustrious families in Deccan history, five of them having been prime-ministers in the erstwhile Nizam rule of Hyderabad-Deccan.

    7) Warangal Fort: This fort appears to have existed since at least the 12th century when it was the capital of the Kakatiya dynasty. The fort has four ornamental gates, known as Kakatiya Kala Thoranam, that originally formed the entrances to a now ruined great Shiva temple.

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  • Indian Navy Updates

    Dismantling INS Viraat

    Prelims Only | Security Issues | Mains Paper 3: Various Security Forces, Agencies & Their Mandates

    Decommissioned aircraft carrier INS Viraat is set to be scrapped at a ship breaking yard at Alang in Gujarat soon.

    In rarest case we would see a question based on this in CSP. However, we can expect a question based on INS Viraat in the CAPF exam very well.

    INS Viraat

    • Viraat, a Centaur class aircraft carrier weighing 27,800 tonnes, served in the British Navy as HMS Hermes for 25 years from November 1959 to April 1984.
    • It was commissioned into the Indian Navy in May 1987 after refurbishment and had operated Harrier fighter jets.
    • It was decommissioned from in March 2017, and the Navy had been incurring expenditure since then on its upkeep, such as the provision of electricity and water, and repairs.
    • In 2018, the Maharashtra Cabinet approved a proposal to convert the carrier into a museum and hospitality centre on a PPP basis and had invited bids. But there were no takers.

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  • Organic Farming – Paramparagat Krishi Vikas Yojna (PKVY), NPOF etc.

    What is Biochar?

    | Enviro & Biodiversity | Mains Paper 3: Major Crops & Cropping Patterns

    A new research has shown that Biochar application is more effective in promoting pulses growth and yield in Ghana.

    Try this PYQ:

     

    Q.In the context of which one of the following are the terms ‘pyrolysis and plasma gasification’ mentioned? (CSP 2019)

    (a) Extraction of rare earth elements

    (b) Natural gas extraction technologies

    (c) Hydrogen fuel-based automobiles

    (d) Waste-to-energy technologies

    What is Biochar?

    • Biochar is a high-carbon, fine-grained residue that is currently produced through modern pyrolysis processes (direct thermal decomposition of biomass in the absence of oxygen and preventing combustion).
    • It produces a mixture of solids (the biochar proper), liquid (bio-oil), and gas (syngas) products.
    • Biochar may increase soil fertility of acidic soils (low pH soils), increase agricultural productivity, and provide protection against some foliar and soil-borne diseases.

    Its benefits

    • Carbon Sink: The burning and natural decomposition of biomass releases large amounts of carbon dioxide and methane to the Earth’s atmosphere. The biochar production process also releases CO2 (up to 50% of the biomass); however the remaining carbon content is stable indefinitely.
    • Soil Amendment: Biochar is recognized as offering a number of soil health benefits. The extremely porous nature of biochar is found to be effective at retaining both water and water-soluble nutrients. Its presence in the earth can improve water quality, increase soil fertility, raise agricultural productivity, and reduce pressure on old-growth forests.
    • Water retention: Biochar is hygroscopic. Thus it is a desirable soil material in many locations due to its ability to attract and retain water.

    ————————-//———————-

    Back2Basics

    What is Pyrolysis?

    • Pyrolysis is the thermal decomposition of materials at elevated temperatures in an inert atmosphere.
    • It involves a change in chemical composition. The word is coined from the Greek-derived elements pyro “fire” and lysis “separating”.
    • It is most commonly used in the treatment of organic materials. It is one of the processes involved in charring wood.
    • It is considered as the first step in the processes of gasification or combustion.

    How does it work?

    • In general, pyrolysis of organic substances produces volatile products and leaves a solid residue enriched in carbon, char.
    • Extreme pyrolysis, which leaves mostly carbon as the residue, is called carbonization.
    • The process is used heavily in the chemical industry, for example, to produce ethylene, many forms of carbon, and other chemicals from petroleum, coal, and even wood, to produce coke from coal.

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  • ISRO Missions and Discoveries

    ASTROSAT Satellite

    Prelims Only | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    ASTROSAT, India’s first multi-wavelength satellite observatory, has detected an extreme ultraviolet (UV) light from a galaxy which is 9.3 billion light-years away from Earth.

    Try out:

     

    Consider the following statements regarding the AstroSat:

    1)AstroSat is India’s multi-wavelength space telescope.
    2)ASTROSAT mission is that enables the simultaneous multi-wavelength observations of various astronomical objects with a single satellite.
    3)ASTROSAT observes the universe in the optical and high energy X-ray regions of the electromagnetic spectrum.

    Which of the following above statements is true?

    a.1 and 2
    b.2 and 3
    c.1 and 3
    d.1, 2 and 3

    AUDFs01

    • AstroSat has detected extreme-UV light from a galaxy, called AUDFs01, 9.3 billion light-years away from Earth.
    • The galaxy is located in the Hubble Extreme Deep field, through AstroSat.
    • This is a very important clue to how the dark ages of the universe ended and there was light in the universe.

    About ASTROSAT

    • AstroSat is India’s first dedicated multi-wavelength space telescope. It was launched on a PSLV-XL on 28 September 2015.

    It is the first dedicated Indian astronomy mission aimed at studying celestial sources in X-ray, optical and UV spectral bands simultaneously.

    ————–//—————-

    Find some time to scroll through recent ISRO missions and discoveries.

    ISRO Missions and Discoveries

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  • Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

    Reversing health sector neglect with a reform agenda

    | Governance | Mains Paper 2: Health & Education

    The article analyses the issues India could face in implementing the universal health coverage.

    Context

    • Both India and the U.S. leads the Covid cases in the world and also lack effective universal health coverage (UHC).

    What explains the lack of UHC in both the countries

    • The lack of UHC is due to multiple long-standing factors and historical reasons that have put a damper on the UHC agenda.
    • This long legacy has two important and inter-related implications when it comes to health-care reform.
    • 1) Certain foundational aspects of these health systems that have been adopted over decades tend to dictate the terms of further evolution and lead to a number of compromises.
    • 2) The long legacy itself comprises a path-dependent trajectory that precludes far-reaching health-care reform.
    • This applies both to AB-PM-JAY and NDHM.

    India’s attempt at UHC: Ayushman Bharat–Pradhan Mantri Jan Arogya Yojana

    • The government has looked poised to employ Ayushman Bharat–Pradhan Mantri Jan Arogya Yojana (AB-PM-JAY) health insurance as the tool for achieving UHC.
    • Taking the health insurance route to UHC driven by private players, rather than strengthening the public provisioning of health care, is reflective of the non-negotiability of private health care in India.
    • Covering the remaining population under the AB-PM-JAY presents massive fiscal and design challenges.
    • Turning it into a contributory scheme based on premium collections would be a costly and daunting undertaking, given the huge informal sector and possible adverse selection problems.
    • Distributing benefits among various beneficiary groups, and a formalisation and consolidation of practices in a likely situation of covering outpatient care, are formidable additional challenges.
    • One possible advantage for India over the U.S. could be a relative ease of integrating fragmented schemes into a unified system. The AB-PM-JAY has this ability.

    Issues with AB-PM-JAY

    1) Universal insurance will not be universal access

    • In India, almost two-third corporate hospital are located in cities.
    • So, such maldistribution of health-care facilities and low budgetary appropriations for insurance could mean that universal insurance does not translate to universal access to services.
    • So far, insurance-based incentives to drive private players into the rural countryside have been largely unsuccessful.

    2) Lack of regulatory robustness

    • AB-PM-JAY is without enough regulatory robustness to handle everything from malpractices to monopolistic tendencies.
    • This could have major cost, equity, and quality implications.

    National Digital Health Mission (NDHM)

    • Integration and improved management of patient and health facility information are sought through NDHM.
    • But in the absence of robust ground-level documentation practices and its prerequisites, it would do little more than helping some private players and adding to administrative complexity and costs.

    Consider the question “What are the challenges India faces in the implementation of universal health coverage? Suggest the measures to achieve it.”

    Conclusion

    Upheavals offer a window for reforms. We cannot afford to be complacent and think that the pandemic will automatically change the Indian health-care landscape. It will require mobilising concerted action from all quarters.

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  • Foreign Policy Watch: India-China

    Seeking equilibrium with China

    op-ed snap | International Relations | Mains Paper 2: India & Its Neighborhood – Relations

    The article analyses the India’s efforts to establish strategic equilibrium with assertive China and how that idea clashes with China’s desire to form an Asian order with itself at the top.

    Strategic equilibrium

    •  External Affairs Minister S Jaishankar articulated that India is seeking strategic equilibrium with an increasingly aggressive China.
    • It is hoped that with China’s growing differences with the U.S. China would pay attention to India’s sensitivities.
    • In achieving equilibrium with China, India has bravely been confronting a face-off in the Himalayas for the past several months.
    • India has been building issue-based alliances with the US and Asian majors like Japan, Korea, Vietnam and Indonesia, and Australia.
    • It has taken initiatives in the direction of economic de-coupling with China in the name of “atmanirbharata”.

    Hierarchical Asian order with China at top

    • China is not interested in equilibrium with any of its Asian neighbours, least of all with India.
    • China’s efforts are clearly to build a hierarchical Asian order, with itself at the top.
    • It is acutely conscious of India’s economic strength, military modernisation and overall capabilities.
    • It knows that India is also far behind on these counts.
    • China is ruthlessly resisting India’s access to global governance bodies, such as the UNSC and NSG.
    • To keep India tied at that level, China is objecting to India’s growing strategic proximity to the US. I
    • It is encircling India strategically and economically through its strategic and economic corridors — BCIM (Bangladesh, China, India and Myanmar), CPEC and the Trans-Himalayan Connectivity Network.
    • It is raising issues like Kashmir at the UN and establishing footprints in the Indian Ocean.

    What should India do

    1. Adjust with China, at least tactically.

    • Such an adjustment could be based on mutual give and take.
    • For India, our first priority could be the resolution of the border dispute.
    • Secondly, since China has offered to mediate between India and Pakistan, it should be asked to prevail over Pakistan to resolve the Kashmir issue.
    • In return for these “takes” India could offer access to Chinese commercial cargos to sea, through the Nathula pass.
    • India could also join China’s BRI on mutually acceptable terms.
    • India may also show its willingness, at least tactically, to join CPEC as both Pakistan and China have asked for, provided, India is allowed to undertake projects in PoK and Balochistan.

    2.India should revisit its Tibet policy, which is a core irritant for China.

    Consider the question “China seeking to establish an Asian order with itself at the top comes in the way of India establishing strategic equilibrium with China. Comment.”

    Conclusion

    It is possible that this “give” and “take” may not be acceptable to China. Even if it does not work out as planned, India would have made a bold diplomatic initiative and a huge tactical move towards thinking through out-of-the-box solutions and displaying that it can undertake risks to pursue its long-term national interests.

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  • Foreign Policy Watch: India-United States

    India’s strategic autonomy and its evolution

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    The article analyses the evolution of India’s approach to strategic autonomy from the unipolar world dominated by the U.S. to now when the Chinese threat has been looming large.

    Context

    • Addressing a Southeast Asian forum last week, external affairs minister outlined India’s new quest for “strategic autonomy” in its global economic engagement.

    Connection with Atmanirbhar Bharat

    • This new quest for “strategic autonomy” is the natural external complement to new economic strategy, described as “Atmanirbharata” or “self-reliance”.
    • The concept carries so much ideological baggage, its revival by Government inevitably raised many questions
    • Senior ministers and officials of the NDA government sought to reassure India’s partners that Delhi was not marching backwards.
    • When applied to the foreign policy framework, “self-reliance” becomes “strategic autonomy”.

    Evolution of the idea of strategic autonomy

    • America towered over the world after the collapse of the Soviet Union in 1991.
    • India’s past emphasis on strategic autonomy was in the context of the “unipolar moment” [dominated by the U.S.] that emerged after the Cold War.
    • On the one hand, India needed Western capital as well as technology and better access to its markets.
    • On the other hand, Delhi had to protect some of its core national interests from the threats of US intervention.

    India-U.S. Relations: Evolution after the Cold war

    • In the early 1990s, the Clinton Administration strong desire to resolve the Kashmir dispute between India and Pakistan.
    • The Clinton Administration saw the nuclear and Kashmir disputes as one and the same thing.
    • Indian diplomacy for the next two decades tried to change the US policy on both Kashmir and nuclear issues.
    • Under President George W Bush, the US discarded the long-standing temptation to insert itself in the Kashmir dispute.
    • The US also went out of the way to resolve the nuclear dispute with India by changing its domestic laws and international norms on nuclear proliferation.
    • The Obama and Trump Administrations have stayed the course since then.

    China challenge for India

    • On the atomic front, as the US sought to lift the prolonged atomic blockade against India, China sought to block the process.
    • China turned an obstacle to India’s membership of the Nuclear Suppliers Group.
    • China takes up the Kashmir issue regularly in the United Nations Security Council.
    • Today, India’s strategic autonomy is about coping with China’s challenge to India’s territorial integrity and sovereignty.
    •  China today is viewed in Delhi as a major threat to India’s economic development.
    • The bilateral trade deficit reached nearly $55billion in 2019.
    • India pulled out of an Asia-wide free-trade arrangement called the Regional Comprehensive Economic Partnership late last year, sensing the threat posed by China-led economic order.
    • Ladakh aggression forced India to go from a passive commercial withdrawal to an active economic decoupling from China.

    Way forward

    • The logic of strategic autonomy from China nudges India to look for strong security partnerships with the US, Europe, Japan and Australia.
    • On the economic front, India is exploring various forms of collaboration with a broad group of nations that have a shared interest in developing trustworthy global supply chains.

    Consider the question “Delineate the evolution of India’s approach towards the idea of strategic autonomy. How it differs from the past?”

    Conclusion

    Threats to either territorial integrity or economic prosperity are powerful enough on their own to compel drastic changes in any nation’s policies. Coming together, they promise to make strategic autonomy from an assertive China an enduring theme of India’s economic and foreign policies in the years ahead.

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