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  • Coronavirus – Economic Issues

    Using COVID crisis to reorient India towards reforms

    1 June 2020 | op-ed snap | Economics
    Mains Paper 3: Indian Economy

    Following the announcement of relief and stimulus package, the debate began over its various aspects. This article assesses the various aspects of the package and draws comparison with the package announced by the other countries. So, how does India fare compared with other countries?

    Fiscal component of  stimulus package

    • According to the IMF-PT (policy tracker), the fiscal component of the Indian package is estimated to be at least 3.5 per cent of GDP as expenditure for poor households, migrant workers and agriculture.
    • There is an additional 0.5 per cent of GDP for states to spend unconditionally, bringing the fiscal package excluding loans to businesses to at least 4 per cent of GDP.
    • The support for businesses (MSMEs) is estimated to be 2.7 per cent of GDP.
    • Of this, at least 2 per cent of GDP is in the form of 100 per cent credit guarantees and equity infusion.

    Comparison with major emerging economies

    • Among major developing economies, only Brazil -8 per cent of GDP– and Peru -7 per cent of GDP– have a fiscal stimulus higher than the 5 per cent level for India.
    • The Brazil estimate includes about 3 per cent of GDP as working capital loans to businesses and households.
    • The fiscal support level for some important emerging economies is — China 2.5 per cent of GDP and Indonesia 3.5 per cent.

    Why it is difficult to segregate the stimulus package?

    • While comparing the fiscal stimulus packages across countries, it is important to understand that such packages are in the nature of additional spending and tax reliefs.
    • Which can work directly through aggregate demand or indirectly by mitigating risk and enhancing access to fund.
    • Access to fund is ensured in the nature of credit guarantees to financial institutions and non-financial enterprises
    • A large number of fiscal stimulus packages announced by different countries contain credit guarantees to financial institutions, SMEs, and agriculture.
    • Hence, it is difficult to segregate fiscal stimulus into its pure and impure components.
    • Most economists, and international organisations, recognise that fiscal stimulus consists of both the pure and impure.
    • And includes three broad items — a direct “above-the-line” component, a “below-the-line” component and guarantees of various forms primarily credit.
    • The choice of using only one component of the fiscal stimulus is selective and highly inappropriate.

    India as a positive fiscal stimulus outlier

    • To put the packages into perspective, the average of all fiscal measures in the G24 developing economies is equal to 3.6 per cent.
    • No matter how the calculation is done, India is a positive fiscal stimulus outlier; by IMF-PT calculations.
    • The stimulus is close to the largest among major emerging market economies.

    So, how much rich countries are spending?

    • The rich nations are spending more — they can afford to. Japan announced what may be the upper limit to the expansion — 21.1 per cent of GDP.
    • However, this does include large elements of loans and credit guarantees.
    • Through a combination of several fiscal measures (tax deferrals, credit guarantees, etc.) the US has pledged close to 13 per cent of GDP.
    • The European Union, on average, has pledged 4 per cent of GDP.
    • The average for advanced countries is around 6 per cent of GDP.

    Significance of monetary policy change made by RBI

    • The monetary policy change in India is quite significant.
    • The change paves the way for internationally competitive monetary policy.
    •  That is, real interest rates comparable to those prevalent in competitor economies.
    • The repo rate now stands at 4 per cent, with inflation well contained.
    • This is substantially a much different, and much-improved RBI response than that what occurred in 2008-09.
    • At that time, as a monetary counter to the financial crisis, the RBI reduced the repo rate by 425 basis points to 4.75 per cent.
    • This was done over seven months and the prevailing CPI inflation rate was 10 per cent.

    Economic reforms as a part of stimulus package

    • India has announced several economic reforms as a part of the stimulus package.
    • These are long-awaited — freeing up of the labour market, allowing farmers to sell their produce and land to who they choose, removal of archaic laws like the Essential Commodities Act, with the promise of more to come.
    • This is not an empty promise — the Centre will advance another 1.5 per cent of GDP to states to expand spending.
    • This advance will be conditional on them for undertaking long-pending reforms.
    • The Indian fiscal package is reformist, well-disciplined and provides focused support; and if needed, there is still room for additional measures.

    Conclusion

    The Indian fiscal package is reformist, well-disciplined and provides focused support; and if needed, there is still room for additional measures. We should use the crisis to re-orient India towards its long-awaited destiny.

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  • Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

    What is the National Numbering Plan?

    1 June 2020 | | Governance
    Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters, Statutory, Regulatory & Various Quasi-Judicial Bodies

    The Telecom Regulatory Authority of India (TRAI) has recommended that a new National Numbering Plan be issued at the earliest so that a uniquely identifiable number can be provided to every subscriber in India.

    The TRAI and Telecom Disputes Settlement and Appellate Tribunal are quite often seen in the news.  Most recent was the dispute risen due to AGR dues.

    TRAI has a wide range of jurisdiction over Telecoms. Keep a track on all such news.

    National Numbering Plan

    • The management of numbering resources is governed by the National Numbering Plan.
    • The Department of Telecom administers the numbers for fixed and the mobile networks based on the ITU’s Telecommunication Standardization Sector (ITU-T) recommendations.
    • TRAI has recommended automated allocation of numbering resources be done using number management system software to speed up the process

    Broadly, the TRAI has recommended:

    • switching to an 11-digit mobile number,
    • reallocation of mobile numbering resources surrendered by operators who have shut shop and
    • prefixing zero for all mobile calls made from fixed line

    Issues with 11 digit number

    • TRAI said that some serious problems are anticipated with a change in the mobile number from 10 to 11 digits.
    • Migrating to 11 digits would require widespread modifications in the configuration of switches involving cost.
    • This would also cause inconvenience to the customers in the form of dialling extra digits and updating phone memory.
    • This could lead to more dialling errors, traffic, and loss of revenue to telecom operators.

    Still, why need a plan as such?

    • The total number of telephone subscribers in India stands at 1,177.02 million with a teledensity of 87.45% at the end of January 2020.
    • This increasing digitization would pave the way towards the dream of digital India and mobile economy.
    • Thus, it has become necessary to review the utilization of numbering resources in the country.
    • Considering the above scenario the implementation of the TRAI’s recommendation with solutions to possible issues would help for sustainable growth of the telecommunication services.
    • Hence TRAI needs to review the utilization of the numbering resources and make some policy decisions to ensure that adequate resources are available for sustainable growth of the telecom services.

    Back2Basics: Telecom Regulatory Authority of India (TRAI)

    • The TRAI is a statutory body set up under section 3 of the Telecom Regulatory Authority of India Act, 1997.
    • It is the regulator of the telecommunications and its tariffs in India.
    • The TRAI Act was amended by an ordinance, effective from 24 January 2000, establishing a Telecom Disputes Settlement and Appellate Tribunal (TDSAT) to take over the adjudicatory and disputes functions from TRAI.
    • TRAI regularly issues orders and directions on various subjects such as tariffs, interconnections, quality of service, DTH services and mobile number portability.

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  • G20 : Economic Cooperation ahead

    G-7

    1 June 2020 | IOCR | International Relations
    Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Calling the existing Group of Seven (G-7) club a “very outdated group of countries”, US Prez. Trump said that he wanted to include India, Russia, South Korea, and Australia in the group.

    Note the members of G7 and G20. UPSC may puzzle you asking which G20 nation isn’t a member of G7.

    The Group of 7

    • The G-7 or ‘Group of Seven’ includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
    • It is an intergovernmental organisation that was formed in 1975 by the top economies of the time as an informal forum to discuss pressing world issues.
    • Initially, it was formed as an effort by the US and its allies to discuss economic issues.
    • The G-7 forum now discusses several challenges such as oil prices and many pressing issues such as financial crises, terrorism, arms control, and drug trafficking.
    • It does not have a formal constitution or a fixed headquarters. The decisions taken by leaders during annual summits are non-binding.
    • Canada joined the group in 1976, and the European Union began attending in 1977.

    Evolution of the G-7

    • When it started in 1975—with six members, Canada joining a year later—it represented about 70% of the world economy.
    • And it was a cosy club for tackling issues such as the response to oil shocks.
    • Now it accounts for about 40% of global gdp.
    • Since the global financial crisis of 2007-09 it has sometimes been overshadowed by the broader g20.
    • The G-7 became the G-8 in 1997 when Russia was invited to join.
    • In 2014, Russia was debarred after it took over Crimea.

    Expelling Russia

    • The G-7 was known as the ‘G-8’ for several years after the original seven were joined by Russia in 1997.
    • The Group returned to being called G-7 after Russia was expelled as a member in 2014 following the latter’s annexation of the Crimea region of Ukraine.
    • Since his election in 2016, President Trump has suggested on several occasions that Russia be added again, given what he described as Moscow’s global strategic importance.

    Why Trump wants to expand the G7 group?

    1.Joint  front against China

    •  The expanded G7 is seen as an attempt by the US to form a joint front against China.
    • The US President has stepped up his criticism of the Asian powerhouse over a range of issues, from initially holding back information on the coronavirus outbreak to its actions on Taiwan and changes in Hong Kong’s special status.

    2.Pressure  from G7 countries

    • Another reason is Trump has faced heat from other G7 members in the last two summits, for various controversial decisions taken by him such as pulling out from trade deals, the Iran nuclear deal as well as the Paris climate pact.
    • Trump’s “America First” policy and his attacks on key US allies over various trade and economic issues have created faultlines within the grouping.

    3.Add more weight to the grouping’s profile. 

    The participation and eventual inclusion of Australia, South Korea, Russia (not favoured by the UK) and India could certainly add more weight to the grouping’s profile.

    Why G7 needs a revival?

    • The rise of India, China, and Brazil over the past few decades has reduced the G-7’s relevance, whose share in global GDP has now fallen to around 40%.

    Relevance of G7 for India

    • India will get more voice, more influence and more power by entering the G7.
    • After UN Security Council (UNSC), this is the most influential grouping.
    • If the group is expanded it will collectively address the humongous issues created by the Wuhan virus,
    • Diplomatically, a seat at the high table could help New Delhi further its security and foreign policy interests, especially at the nuclear club and UN Security Council reform as well as protecting its interests in the Indian Ocean.

    Challenges in India’s entry

    1.Lack of consensus:

    • The decision to expand the grouping cannot be taken by the US alone.
    • Other members such as the UK, France, Germany, Italy, Japan and Canada, have to not only agree to Trump’s proposal to expand the grouping but also on the new members that he wants to add, said a diplomatic source of one of the G7 member countries.

    2.Upset China:

    • China is upset at the plans to expand the G7, stating that such actions will result in the creation of a “small circle” against Beijing and thus such a plan is “doomed to fail”.
    • China will put pressure on G-7 countries

    Discipline China, not isolate it

    • Trump’s motivation in expanding the G-7 to include India and Russia while keeping China out is transparent.
    • If keeping China out was not the intention, the G-7 could easily have dissolved themselves and revitalised the presently inert G-20.
    • There are, of course, good reasons why Xi Jinping’s China requires to be put on notice for its various acts of omission and commission and disrespect for international law.
    • However, disciplining China is one thing, isolating it quite another.
    • If the new group is viewed as yet another arrow in the China containment quiver, it would place India and most other members of the group in a spot.
    • Everyone wants China disciplined, few would like to be seen seeking its isolation.
    • Asia needs a law-abiding China, not a sullen China.
    • Japan and Australia, have serious concerns about China’s behaviour.
    • But they may not like the new group to be viewed purely as an anti-China gang-up.
    • That may well be the case with South Korea too.
    • Indeed, even India should tread cautiously.
    • India has more issues with China than most others in the group, spanning across economic and national security issues and yet it should seek a disciplined China, not an isolated one.

    So, what should be on the agenda of the new group?

    • The proposed expanded G7 group should define its agenda in terms that would encourage China to return to the pre-Xi era of global good behaviour.
    • The G-7 came into being in the mid-1970s against the background of shocks to the global financial and energy markets.
    • The G-12(proposed expanded group)  would come into being against the background of a global economic crisis and the disruption to global trade caused both by protectionism and a pandemic.
    • The two items on the next summit agenda would have to be the global response to the COVID-19 pandemic, the rising tide of protectionism and mercantilism and the global economic slowdown.
    • The summit will have to come forward with some international dos and don’ts to deal with the challenge posed by these disruptions.
    • New rules should apply to both the US and China: These new rules of international conduct would have to apply to both China and the US.
    • Widening the agenda: To be able to alter China’s behaviour without isolating it, the expanded group will have to widen their agenda.
    • Widening involves going beyond the purely economic issues that the G-7 originally focused on, and include climate change, health care and human rights.

    Back2Basics: The G-20

    • The G-20 is a larger group of countries, which also includes G7 members.
    • The G-20 was formed in 1999, in response to a felt need to bring more countries on board to address global economic concerns.
    • Apart from the G-7 countries, the G-20 comprises Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, and Turkey.
    • Together, the G-20 countries make up around 80% of the world’s economy.
    • As opposed to the G-7, which discusses a broad range of issues, deliberations at the G-20 are confined to those concerning the global economy and financial markets.
    • India is slated to host a G-20 summit in 2022.

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  • Foreign Policy Watch: India-China

    THAAD defence system

    1 June 2020 | | Science and Technology
    Mains Paper 3: Awareness in various sc and tech fields

    China has issued a statement reiterating its long-standing objections to the presence of the US THAAD missile defence system in South Korea.

    Try this question from CSP 2018:

    Q. What is “Terminal High Altitude Area Defense (THAAD)”, sometimes seen in the news?

    (a) An Israeli radar system

    (b) India’s indigenous anti-missile programme

    (c) An American anti-missile system

    (d) A defence collaboration between Japan and South Korea

    What is THAAD?

    • THAAD is an acronym for Terminal High Altitude Area Defense, a transportable, ground-based missile defence system.
    • It is coupled with space-based and ground-based surveillance stations, which transfer data about the incoming missile and informs the THAAD interceptor missile of the threat type classification.
    • THAAD is alarmed about incoming missiles by space-based satellites with infrared sensors.
    • This anti-ballistic missile defence system has been designed and manufactured by the US company Lockheed Martin. South Korea is not the only country with the THAAD missile defence system.
    • It has been previously deployed in the UAE, Guam, Israel and Romania.

    The South Korea-China controversy over THAAD

    • In South Korea, the THAAD missile defence system is operated by the US army stationed in the country.
    • The US had previously announced that the deployment of this missile defence system was a countermeasure against potential attacks by North Korea, particularly after the country had engaged in testing ballistic missiles.
    • In 2017, matters escalated in the Korean Peninsula after North Korea test-fired a few missiles in the direction of US bases in Japan.
    • Following this incident, the US amended its plans and moved the systems to its army base in Osan, South Korea while the final deployment site was being prepared.
    • These moves by the US and by extension, South Korea, particularly angered China.

    China’s reservations against THAAD

    • China’s opposition has little to do with the missiles itself and is more about the system’s inbuilt advanced radar systems that could track China’s actions.
    • The controversy also has much to do with the geopolitics and complex conflicts in East Asia, with the US having a presence in the region particularly through its many military bases in Japan and South Korea.
    • According to some observers of East Asia, China believes the US exerts influence over South Korea and Japan and may interfere with Beijing’s long-term military, diplomatic and economic interests in the region.
    • The US and South Korea have consistently maintained that these missiles are only to counter potential threats by North Korea.
    • South Korea also issued a statement saying the number of missiles had not increased but had only been replaced with newer versions.

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  • Foreign Policy Watch: India-United States

    The 5G Club ‘D10’

    1 June 2020 | Prelims Only | International Relations
    Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Britain said that it was pushing the U.S. to form a club of 10 nations that could develop its own 5G technology and reduce dependence on Huawei.

    We can expect prelims question asking the purpose of the D10 group like-

    Q. The D10 Club recently seen in news is a- Environment NGO/ Group of Democracies/ etc.

    The D10 Club

    • The Britain is proposing a ‘D10’ club of democratic partners that groups the G7 nations with Australia and the Asian technology leaders South Korea and India.
    • It would include G7 countries – UK, US, Italy, Germany, France, Japan and Canada – plus Australia, South Korea and India.
    • It is aimed for channelling investments into existing telecommunication companies within the 10 member states.
    • The group aim to create alternative suppliers of 5G equipment and other technologies to avoid relying on China.

    Ruling out Huawei

    • Britain has allowed the Chinese global leader in 5G technology to build up to 35% of the infrastructure necessary to roll out its new speedy data network.
    • But their PM Boris Johnson was reported to have instructed officials to draw up plans to cut Huawei out of the network by 2023 as relations with China sour.

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  • Wildlife Conservation Efforts

    In news: Dibru-Saikhowa National Park (DSNP)

    1 June 2020 | Prelims Only | Environment
    Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    The Oil India Ltd (OIL) leak in Assam has contaminated water bodies that flow into the Maguri Motapung Beel, a large wetland, and the Dibru-Saikhowa National Park (DSNP).

    Try this PYQ from CSP 2019:

    Q. Which of the following are in Agasthyamala Biosphere Reserve?

    (a) Neyyar, Peppara and Shendurney Wildlife Sanctuaries; and Kalakad Mundanthurai Tiger Reserve

    (b) Mudumalai, Sathyamangalam and Wayanad Wildlife Sanctuaries; and Silent Valley National Park

    (c) Kaundinya, Gundla Brahme-swaram and Papikonda Wildlife Sanctuaries; and Mukurthi National Park

    (d) Kawal and Sri Venkateswara Wildlife Sanctuaries; and Nagarjunasagar-Srisailam Tiger Reserve

    About Dibru-Saikhowa National Park

    • DSNP is a national park in Assam located in Dibrugarh and Tinsukia districts.
    • It was designated a Biosphere Reserve in July 1997 with an area of 765 sq.km.
    • The park is bounded by the Brahmaputra and Lohit Rivers in the north and Dibru river in the south.
    • It mainly consists of moist mixed semi-evergreen forests, moist mixed deciduous forests, canebrakes and grasslands.
    • It is the largest Salix swamp forest in north-eastern India, with a tropical monsoon climate with a hot and wet summer and cool and usually dry winter.

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  • New Species of Plants and Animals Discovered

    Species in news: Band-tail Scorpionfish

    1 June 2020 | Prelims Only | Environment
    Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    A rare band-tail scorpionfish was recently found in the Gulf of Mannar.

    A stand-alone species being mentioned in the news for the first time (and that too from Southern India) find their way into the prelims. Make special note here. Usually, note the species and its habitat location (IUCN status if available), in the purview of a generic prelims question.

    Band-tail scorpionfish

    • The band-tail scorpionfish (Scorpaenospsis neglecta) camouflages within the seagrass meadows.
    • It is well-known for its stinging venomous spines and ability to change colour.
    • The fish has the ability to change colour and blend with its surrounding environment to escape from predators and while preying.
    • The fish is called ‘scorpionfish’ because its spines contain neurotoxic venom.

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  • Foreign Policy Watch: India-Australia

    Anchoring the ties with Australia the virtual way

    30 May 2020 | | International Relations
    Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    India-Australia relations have been growing in depth and diversity. Though two countries have been collaborating in various areas there is still potential to be realised in many areas. This article discusses the India-Australia ties. The area in which the two countries are collaborating and scope to further it.

    Relations with much potential

    • Mr. Modi convened a virtual multilateral summit to bring South Asia together to face the pandemic, and he also spoke online with G-20 leaders on similar issues.
    • On June 4, India will have its first virtual bilateral summit with Australia.
    • The convergence of interests and values has been patently obvious.
    • But the time has also come to translate that potential into reality.

    So, let’s see how India and Australia are expanding the scope of cooperation

    • 1) The two countries have sought to reconstruct their increasingly turbulent regional geography in the Indo-Pacific and see the Quad (with Japan and the United States) as the most potent instrument to promote cooperation.
    • The Quad, not surprisingly has been causing apprehensions in Beijing.
    • 2) It is expected that the ‘Mutual Logistics Support Agreement’ will be signed during the summit.
    • That should enhance defence cooperation and ease the conduct of large-scale joint military exercises.
    • 3) Last April, Australia and India conducted AUSINDEX, their largest bilateral naval exercise.
    • And there are further developments on the anvil, including Australia’s permanent inclusion in the Malabar exercise with Japan.
    • 4) It may be prudent too for New Delhi and Canberra to elevate the ‘two plus two’ format for talks from the Secretary level to the level of Foreign and Defence Ministers.

    Now, let’s look at the cooperation in areas that matter to the lives of the people of the countries-

    1) Pandemic control through controlled adaptation:  Lesson from Australia

    • Australia is one of the few countries that has managed to combat COVID-19 so far through “controlled adaptation” by which the coronavirus has been suppressed to very low levels.
    • Two of the leaders of this great Australia-wide effort are Indian-born scientists.
    • There is much that the two Prime Ministers can share on this front.

    2) Collaboration in  health, safe food and supply chains

    • In terms of health and safe food as well the supply chains that facilitate their delivery, there are important lessons to be learnt.
    • One of Australia’s richest businessman and first patron of the Australia-India Leadership Dialogue recently described the promise of DTC-CPG (direct to consumer; consumer packaged goods) which could transform global supply chains.
    • Here too there is much room for collaboration and new thinking.

    3) Higher education

    • The recovery of Australia’s universities, most of which are publicly funded and many rank among the top in the world, is still in question.
    • But they are proving to be resilient and pioneers in distance and online learning.
    • Australian universities could well open earlier than most and emerge as a safer destination for quality education than their European or Ivy league counterparts.

    Consider the question “India’s relations with Australia have of late acquired a dept and diversity which is visible in their cooperation in diverse areas. Comment.”

    Conclusion

    As India and Australia with shared values try to bring about fresh order in a turbulent world, the virtual summit, in this sense, could not have been better timed.

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  • Foreign Policy Watch: India-China

    China and the Rhineland moment in Hong Kong

    30 May 2020 | op-ed snap | International Relations
    Mains Paper 2: Effect Of Policies & Politics Of World On India’S Interests

    While the world is busy battling pandemic, China has embarked upon completing its pet project: stripping Hong Kong off its special status. This article explains the significance of China’s actions. And the options the U.S. could explore as a response to China’s move.

    Tipping points in History

    • In 1911 Germany sparked an international crisis when it sent a gunboat into the Moroccan port of Agadir.
    • Winston Churchill wrote in his history of the First World War, “all the alarm bells throughout Europe began immediately to quiver.”
    • In 1936 Germany provoked another crisis when it marched troops into the Rhineland, in flagrant breach of its treaty obligations.
    • In 1946, the Soviet Union made it obvious it had no intention of honoring democratic principles in Central Europe, and Churchill was left to warn that “an iron curtain has descended across the Continent.”

    Analogies: Not perfect, but not inapt, either.

    • Analogies between these past episodes and China’s decision this week to draft a new national security law on Hong Kong aren’t perfect.
    • First, Hong Kong is a Chinese port, not a faraway foreign one.
    • Second, Hong Kong’s people have ferociously resisted Beijing’s efforts to impose control, unlike the Rhineland Germans who welcomed Berlin’s.
    • And lastly, the curtailment of freedom that awaits Hong Kong is nothing like the totalitarian tyranny that Joseph Stalin imposed on Warsaw, Budapest and other cities.
    • But the analogies aren’t inapt, either.
    • Beijing has spent the better part of 20 years subverting its promises to preserve Hong Kong’s democratic institutions.
    • Now it is moving to quash what remains of the city’s civic freedoms through a forthcoming law that allows the government to punish speech as subversion and protest as sedition.
    • The concept of “one country, two systems,” was supposed to last at least until 2047 under the terms of the 1984 Sino-British Joint Declaration.
    • Now China’s rulers have been openly violating that treaty, much as Germany openly violated the treaties of Locarno and Versailles.

    Rethink of the U.S. strategic approach to China

    • US administration has undertaken a sober rethink of it’s strategic approach to China.
    • The outlines of which are described in a new inter-agency document quietly released by the White House last week.
    • Gone from this new vision are the platitudes about encouraging China’s “peaceful rise” as a “responsible stakeholder” in a “rules-based order.”
    • Instead, Beijing is described, accurately, as a habitual and aggressive violator of that order.
    • It also describes China as a domestic tyrant, international bully and economic bandit that systematically robs companies of their intellectual property, countries of their sovereign authorities, and its own people of their natural rights.
    • A critic might note that this description of China’s behavior sounds a lot like Trump’s.
    • Sort of, except that the comparison trivializes the scale of China’s abuses and neglects the breadth and longevity of its challenge.

    Why Now and what is the US response?

    • Beijing almost certainly chose this moment to strike because it calculated that a world straining under the weight of a pandemic and a depression lacked the will and attention to react.
    • On Friday, Trump said he would strip Hong Kong of its privileged commercial and legal ties to the U.S.
    • Issue with the move: That punishes the people of Hong Kong at least as much as it does their rulers in Beijing.

    What’s a better course for the U.S.? A few ideas:

    • Sanction Chinese officials engaged in human-rights abuses in Hong Kong under the Global Magnitsky Act.
    • Upgrade relations with Taiwan and increase arms sales, including top-shelf weapons’ systems such as the F-35 and the Navy’s future frigate.
    • Re-enter the Trans-Pacific Partnership (TPP)agreement as a counter to China’s economic influence.
    • Publicly press all G-7 countries to stop doing business with telecom-giant Huawei as a meaningful response to the Hong Kong law.
    • Give every Hong Kong person an opportunity to easily obtain a U.S. residency card, even a passport.

    Conclusion

    If all this and more were announced now, it might persuade Beijing to pull back from the brink. In the meantime, think of this as  Rhineland moment with China — and remember what happened the last time the free world looked aggression in the eye, and blinked

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  • Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

    Three thresholds in Industrial Disputes Act that need revision

    30 May 2020 | op-ed snap | Governance
    Mains Paper 2: Laws, Institutions & Bodies Constituted For The Vulnerable Sections

    Sometimes the measures we come up with end up doing exactly the opposite of what they were supposed to do. This might be the case with some provisions in the Industrial Dispute Act. This article deals with 3 such provisions in the IDA. So, what are these provisions? How the issues caused by these provisions could be resolved? Read to know more…

    How provisions of IDA could be detrimental?

    • What made so many migrants suddenly long for their village after lockdown?
    • The answer lies in our Industrial Disputes Act (IDA), the motherboard of our labour laws.
    • IDA has encouraged short-term employment, low skills and zero security.
    • It did this by setting up thresholds which disincentivised long-term commitment of workers to entrepreneurs and vice versa.
    • It also kept firms informal and unwilling to invest in human capital.
    • This is why when the lockdown happened, it turned into a migrant crisis.

    Let’s look at  3 thresholds in IDA that are causing harm

    • 1) Hire more than 99 workers, and you will have to notify the government before you can fire any one of them.
    • 2) Hire more than 20 and you open yourself up to provident fund commitments and bonus payments.
    • 3) If you want to deny workers severance pay, never keep them continuously employed for more than 240 days.

    So, how IDA ends up discouraging formalisation?

    • Given these provisions in the IDA, entrepreneurs are reluctant to hire more than 99 workers for over 240 days.
    • The employers are naturally tempted to observe these thresholds and duck under the radar.
    • This is made easier by the fact that these thresholds mesh well with the fear that the middle-class — and upwards — have of a working-class takeover.
    • As a result, these thresholds have only encouraged the informal sector, where both unregistered labour and unregistered entrepreneurs dominate.
    • It has led to the proliferation of informal enterprises and low-skill workers.
    • In the first 15 years of this century itself, over half the increase in total employment has been that of contract workers.
    • This has also led to a phenomenal rise in MSMEs as the IDA has discouraged entrepreneurs from harbouring any ambitions to grow big and formal.
    • The MSMEs have, consequently, increased in number from 3.6 crore units in 2012 to about 6 crore today.
    • Since there are constraints on both the workforce size and duration of employment, upskilling and R&D naturally become early casualties.
    • India spends only 0.7 per cent of its GDP in R&D, one of the lowest in the world, while South Korea spends 4.2 per cent.

    Contribution of MSME in GDP is not increasing

    • Over 94 per cent of MSMEs are in the Micro sector and their contribution to GDP is just not measuring up.
    • In 2012, MSMEs produced 37.54 per cent of our GDP.
    • But this number fell to 30.7 per cent in 2015, and in 2019 it decreased further to 29.7 per cent, though they are still working full throttle.
    • Yet, the lure to stay on the good side of the IDA thresholds is so compelling that even formal units are today outsourcing from the informal ones.
    • Over time, the IDA has succeeded in converting a large number of organised sector companies into strange, hybrid economic creatures, both fishy and foul.

    But, how removal of the 3 thresholds will change the situation?

    • If the 3 mentioned thresholds are removed, every worker — regardless of factory size — is entitled to the same rights.
    • Likewise, every employer, regardless of factory size, can hire and fire workers.
    • There is greater freedom on both sides, but this freedom comes with a price that does not discourage either size or skills in an enterprise.
    • The worker can now be fired without notifying the government, but must be compensated with severance wages, regardless of the size of the firm.
    • Also, unlike the IDA, all the firms must have a formal dispute resolution board.
    • Now that the enterprises have been freed of the size threshold, entrepreneurs get no advantage in dwarfing their firms.
    • Other reforms can soon follow, such as allowing for workers’ representation in a firm’s supervisory board, as it happens in Germany.
    • Measures such as these create trust between employees and employers, and also remove the threatening spectre of a working-class strike.

    Consider the question “Various provision of the Industrial Disputes Act which were enacted but with a different purpose now seems to place both the workers and employers in a disadvantageous position. In light of this statement, examine the issues with the threshold limits of the number of employees and number of employment days in the Industrial Disputes Act.”

    Conclusion

    In the ultimate analysis, the IDA does not produce winners, only losers. The workers remain skill-stunted and insecure, and the entrepreneurs, too, pull back from releasing their much-vaunted “animal spirits”. So, the IDA thresholds must go and not be merely fiddled with, as some states have done.

    Back2Basics: Industrial Disputes Act 1947

    • The main purpose of the Industrial Disputes Act, 1947 is to ensure fair terms between employers and employees, workmen and workmen as well as workmen and employers.T
    • The objective of the Industrial Disputes Act is to secure industrial peace and harmony by providing machinery and procedure for the investigation and settlement of industrial disputes by negotiations.

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