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  • Foreign Policy Watch: India-China

    Australia to buy US nuclear submarines under AUKUS

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

    aukus

    Australia will buy up to 5 US nuclear-powered submarines and build a new model with US and British technology under the AUKUS.

    AUKUS: A Backgrounder

    • This new partnership is known as AUKUS and the major highlight of this arrangement is the sharing of US nuclear submarine technology with Australia.
    • The first major initiative of AUKUS would be to deliver a nuclear-powered submarine fleet for Australia thereby giving it a nuclear heft in the Pacific where China has been particularly aggressive.
    • Apart from this AUKUS will also involve the sharing of cyber capabilities and other undersea technologies.
    • This alliance is considered to be most significant security arrangement between these three nations.

    Ripples created by AUKUS

    (A) US shift of focus

    • AUKUS is both an acknowledgment of and a concession to the loss of US strategic primacy.
    • It gives justification for the hasty withdrawal from Afghanistan — to be able to better focus on the strategic rivalry and trade competition with China.

    (B) Resentment in the EU and France

    • The deal has complicated the relations between France and Australia, and also France and the US. France is upset as it has been kept out of the loop.
    • France has even ordered the recall of its ambassadors to Washington and Canberra.

    (C) Chinese offensive reception

    • China, expectedly, has strongly criticised AUKUS and the submarine deal as promoting instability and stoking an arms race.

    (D) Confusion among the SE nations

    • The new great power contestation might actually generate much room for the Southeast Asian states to manoeuvre, as they are wooed simultaneously by China, AUKUS, and the Quad.
    • They realise that AUKUS is a challenge to the hallowed notion of “ASEAN centrality”, a totemic rhetorical device which seeks to have others acknowledge its relevance.

    Why such an alliance?

    (A) Deteriorating China-AU relations

    • Tensions have been high between Australia and an increasingly assertive China, its largest trade partner.
    • Australia banned Chinese telecom giant Huawei in 2108 and its PM called for an investigation into the origins of COVID-19 last year.
    • China retaliated by imposing tariffs on or capping Australian exports.

    (B) US act of counterbalancing

    • China has nuclear-powered submarines, as well as submarines that can launch nuclear missiles.
    • The three signatories to the AUKUS deal have made it clear though, that their aim is not to arm the new subs with nuclear weapons.

    (C) Bringing Australia at the centrestage of Indo-Pacific

    • In the context of the AUKUS agreement, nuclear-powered submarines will give the Royal Australian Navy the capability to go into the South China Sea.
    • This is primarily because a nuclear-powered submarine gives a navy the capability to reach far out into the ocean and launch attacks.
    • A nuclear-powered submarine offers long distances dives, at a higher speed, without being detected gives a nation the ability to protect its interests far from its shores.

    Exactly, How?

    • To go from a diesel-electric fleet to a nuclear fleet is thus a change of strategy, not just of propulsion.
    • It provides a way to project power from the shipping lanes which feed the all-important Malacca Strait to the waters off Taiwan.
    • Add on the capacity to launch much longer-range missiles—a submarine could deliver missiles to China’s mainland while sitting to the east of the Philippines—and the country has a greatly expanded offensive capacity.

    AU: Another US Base

    • If Australia’s strategic stance is changed by the deal, so is America’s.
    • Since the Second World War the US has projected power across the region called as an archipelago of empire.
    • There are the island bases from Hawaii in the east to Guam, Okinawa in Japan and, in the Indian Ocean, Diego Garcia, leased from Britain without the consent of its natives.
    • In Australia, America has now, in effect, a beefed-up continent-sized base for its own operations as well as a reinvigorated ally.

    Outcomes of AUKUS

    (A) Offensive front against China

    • There is no gainsaying the fact that rapid accretion in China’s economic and military capacities, but more particularly its belligerence, has led to a tectonic shift in regional security paradigms.
    • Several countries have been obliged to review their defence preparedness in response to China’s rising military power and its adverse impact on regional stability.

    (B) India as a bridge in Anglosphere

    • The transatlantic fissure has also pointed to something inconceivable—that India could emerge as a potential bridge between different parts of the West.
    • Our PM was on the phone with French President Emmanuel Macron reaffirming India’s strong commitment to the Indo-Pacific partnership with France.
    • India’s solidarity with France at a difficult moment is rooted in New Delhi’s conviction that preserving the West’s unity is critical in shaping the strategic future of the Indo-Pacific.

    (C) Exposed Chinese double standards

    • China has the world’s fastest-growing fleet of sub-surface combatants.
    • This includes the Type 093 Shang-class nuclear-powered attack submarine (SSN) and the Type 094 nuclear-powered Jin-class ballistic missile submarine (SSBN).
    • Its nuclear submarines are on the prowl in the Indo-Pacific.
    • Yet, China denies Australia and others the sovereign right to decide on their defence requirements.

    Implications on QUAD

    • Not superseding: This alliance does not and will not supersede or outrank existing arrangements in the Indo-Pacific region such as the Quad, which the US and Australia form with India and Japan, and ASEAN.
    • Complimentary to QUAD: AUKUS will complement these groups and others.

    Opportunities for India

    While the Quad and Washington’s Indo-Pacific pivot generate much interest and anxiety, it is easy to forget that the two ideas are, in essence, about India.

    • India’s role has enhanced: Balancing China is the challenge confronting the United States, and Washington has recognized that India is an indispensable part of the answer.
    • Just another alliance: New Delhi has no reason to complain if Australia, Britain, and the United States raise the military capabilities of their coalition. The submarine deal is an undiluted example of strategic defence collaboration.
    • Intimidating China: The introduction of nuclear-powered submarine through AUKUS has a complicating impact on the Chinese maritime calculus. Anything that maintains a balance of power in the region is desirable.
    • Focusing inside on land border: AUKUS also leaves India with a less of a headache in securing its maritime flank from Chinese aggression and New Delhi may focus more fully on the threat emanating from the land border with China.

     

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    NSO’s New Data: India’s GDP Growth

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

    GDP

    Central Idea

    • The National Statistical Office (NSO) has released a new set of data on India’s annual and quarterly national income, providing a final assessment of the COVID-19 pandemic’s impact on the country’s GDP growth. The latest numbers and sector-wise performance, highlighting areas of growth and contraction.

    Recovery since pre-COVID year

    • Advance estimates: NSO’s second advance estimate (SAE) shows a contraction of (-) 5.7% in 2020-21, lower than its first advance estimate (FAE) at (-) 7.7%.
    • Benefited sectors: Manufacturing, construction, and financial sectors benefited the most in the revised estimate.
    • GDP growth: Real GDP in the COVID-19 year amounted to ₹136.9 lakh crore, higher than the earlier assessment of ₹134.4 lakh crore. GDP grew by 9.1% in 2021-22 and 7% in 2022-23.
    • Negative growth in 2020: The compound annual average growth rate between 2019-20 and 2022-23 was 3.2%. Comparison with other countries, including China, Bangladesh, and Vietnam, shows India’s negative growth rate in 2020.

    Back to basics: Advanced estimates

    • Advance estimates refer to the preliminary projections made by the government regarding the likely economic growth, inflation, or other macroeconomic indicators of a country for a given period. These estimates are usually released a few months before the actual data for the period becomes available.
    • Advance estimates are based on various economic indicators such as industrial production, agricultural output, exports, and consumption expenditure, among others. These indicators are used to extrapolate the economic activity for the full period, based on which the government makes its initial projections.

    GDP

    Sector-wise Performance

    • Overall GVA in 2022-23 is higher by 11.3% compared to 2019-20.
    • Mining and quarrying sector still shows a contraction at (-) 0.3%.
    • Trade, hotels, transport, etc., show weak growth of 4.3%.
    • Construction sector shows higher-than-average growth at 18.6%.
    • Manufacturing sector also shows robust growth at 14.8%.
    • Financial, real estate, etc., grew at 14.3%.
    • Agriculture sector grew at 12%.
    • Government final consumption expenditure (GFCE) grew at 7.4%.
    • Gross fixed capital formation and private final consumption expenditure (PFCE) increased by 17.7% and 13.1%, respectively.

    Investment and Capacity Utilization

    • Gross fixed capital formation to GDP ratio in nominal terms increased to 29.2% in 2022-23 from 28.6% in 2019-20.
    • Real investment rates increased to 34% in 2022-23 from 31.8% in 2019-20.
    • Estimated incremental capital output ratio (ICOR) decreased to 4.9 in 2022-23 from 8.5 in 2019-20.
    • Capacity utilization ratio in the manufacturing sector was only 70.3% in 2019-20, but it increased to 73.5% in the first half of 2022-23.
    • Subdued growth implies lower capacity utilization and higher ICOR.

    Quarterly Growth and Projections

    • Q3 2022-23 saw a decline in real GDP growth to 4.4% from 6.3% in Q2 and 13.2% in Q1.
    • Growth rate in Q3 and expected growth rate in Q4 are quite low.
    • High frequency indicators point towards improved economic activity.
    • PMI manufacturing in January and February 2023 remained above its long-term average.
    • PMI services increased to a near 12-year

    GDP

    Conclusion

    • the NSO’s latest data on India’s GDP growth provides a final assessment of the COVID-19 pandemic’s impact on the country’s economy. The NSO’s data shows that India’s economy is recovering, albeit at a slower pace, from the COVID-19 pandemic.
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  • Historical and Archaeological Findings in News

    Antiquities abroad: What Indian, international laws say

    Prelims Only | | Mains Paper 1: Modern Indian History

    antiq

    Central idea: Indian authorities are pushing for restitution of stolen antiquities and ancient religious artefacts.

    What is an antiquity?

    • An antiquity is defined by the Antiquities and Art Treasures Act, 1972 as-
    1. Any coin, sculpture, painting, epigraph or other work of art or craftsmanship;
    2. Any article, object or thing detached from a building or cave;
    3. Any article, object or thing illustrative of science, art, crafts, literature, religion, customs, morals or politics in bygone ages;
    4. Any article, object or thing of historical interest that has been in existence for not less than one hundred years.
    • For manuscripts, records or other documents of scientific, historical, literary or aesthetic value, this duration is not less than seventy-five years.

    What do international conventions say?

    • The UNESCO 1970 Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property defined “cultural property” as the property designated by countries having “importance for archaeology, prehistory, history, literature, art or science.”
    • The Convention further stated that “the illicit import, export and transfer of ownership of cultural property is one of the main causes of the impoverishment of the cultural heritage of the countries of origin of such property and that international co-operation constitutes one of the most efficient means of protecting each country’s cultural property.”
    • The General Assembly of the UN and the UN Security Council in 2015 and 2016 also raised concerns about the illicit international traffic of cultural items and related offenses.
    • An INTERPOL report in 2019 indicated that almost 50 years after the UNESCO convention, the illicit international traffic of cultural items and related offenses is increasingly prolific.

    What do Indian laws say?

    • In India, Item-67 of the Union List, Item-12 of the State List, and Item-40 of the Concurrent List of the Constitution deal with the country’s heritage.
    • The Antiquities (Export Control) Act was passed in April 1947 to ensure that no antiquity could be exported without a license.
    • The Ancient Monuments and Archaeological Sites and Remains Act was enacted in 1958.
    • The Antiquities and Art Treasures Act, 1972 (AATA) was implemented on April 1, 1976, after an uproar in Parliament over the theft of a bronze idol from Chamba and some important sandstone idols from other places.
    • Under the AATA, it is not lawful for any person other than the Central Government or any authorized agency to export any antiquity or art treasure, and no person shall carry on the business of selling or offering to sell any antiquity except under and in accordance with the terms and conditions of a license granted by the Archaeological Survey of India (ASI).

    What is the provenance of an antiquity?

    • Provenance includes the list of all owners from the time the object left its maker’s possession to the time it was acquired by the current owner.

    How is ownership proved?

    • The requesting party needs to furnish, at its expense, the documentation and other evidence necessary to establish its claim for recovery and return, according to the UNESCO 1970 declaration.
    • In India, the first thing in order to prove ownership is the complaint (FIR) filed with the police. In many cases, there is no FIR for missing antiquities.
    • However, other proof such as details mentioned by reputed scholars in research papers can also be helpful.

    How to check for fake antiquities?

    • Every person who owns, controls or is in possession of any antiquity shall register such antiquity before the registering officer and obtain a certificate in token of such registration under section 14(3) of the AATA.
    • The National Mission on Monuments and Antiquities, launched in March 2007, has registered
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  • Russian Invasion of Ukraine: Global Implications

    What is the Moscow-dominated security pact ‘CSTO’?

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

    Central idea: Armenia’s PM accused the Moscow-dominated security alliance Collective Security Treaty Organisation (CSTO) of leaving Armenia in the cold amid renewed hostilities with Azerbaijan.

    What did Armenia say?

    • Armenia has repeatedly criticized the CSTO for its failure to protect itself.
    • Russia has maintained a delicate diplomatic balancing act between Armenia and Azerbaijan, avoiding any forceful action.

    What is CSTO?

    • The CSTO is a Russia-led military alliance of seven former Soviet states that was created in 2002.
    • Current CSTO members are Armenia, Belarus, Kazakhstan, Kyrgyzstan, the Russian Federation and Tajikistan. Afghanistan and Serbia hold observer status in the CSTO.
    • Its purpose is to ensure the collective defense of any member that faces external aggression.
    • It has been described by political scientists as the Eurasian counterpart of NATO, which has 29 member states, while the CSTO has just six.

    Outlined functions of CSTO

    • CSTO supports arms sales, manufacturing, and military training and exercises, making the CSTO the most important multilateral defense organization in the former Soviet Union.
    • Beyond mutual defense, the CSTO also coordinates efforts in fighting the illegal circulation of weapons among member states and has developed law enforcement training for its members in pursuit of these aims.

    What does CSTO membership provide?

    • While CSTO membership means that member states are barred from joining other military alliances, limiting, for example, their relationship with NATO.
    • Its members receive discounts, subsidies, and other incentives to buy Russian arms, facilitating military cooperation.
    • Most importantly, membership presumes certain key security assurances – the most significant of which is deterring military aggression by third countries.
    • In the CSTO, aggression against one signatory is perceived as aggression against all.
    • It however remains unclear whether this feature works in practice.

    Armenia’s Concerns and Threats

    • The PM emphasizes the threat of escalation along Armenia’s border and in Nagorno-Karabakh, citing increasingly aggressive rhetoric from Azerbaijan.
    • Tensions between Armenia and Azerbaijan increased in December when Azerbaijani protesters blocked the Lachin corridor, leaving Nagorno-Karabakh residents short of food and basic supplies.

    Nagorno-Karabakh Conflict

    csto

    • Nagorno-Karabakh lies within Azerbaijan but has been under the control of ethnic Armenian forces since a separatist war in 1994.
    • In 2020, Azerbaijani troops routed Armenian forces in six weeks of fighting.
    • They claimed a significant part of Nagorno-Karabakh and nearby areas which had been in Armenian hands for nearly two decades.

    Back2Basics: NATO (North Atlantic Treaty Organization)

    • NATO was established in the aftermath of the Second World War.
    • Its purpose was to secure peace in Europe, to promote cooperation among its members and to guard their freedom – all of this in the context of countering the threat posed at the time by the Soviet Union.
    • It is a military alliance established by the North Atlantic Treaty (also called the Washington Treaty) of April 4, 1949.
    • It sought to create a counterweight to Soviet armies stationed in Central and Eastern Europe after World War II.
    • Its original members were Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, the United Kingdom, and the United States.
    • NATO has spread a web of partners, namely Egypt, Israel, Sweden, Austria, Switzerland and Finland.
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  • Modern Indian History-Events and Personalities

    Who were Alluri Sitharama Raju and Komaram Bheem?

    Prelims Only | | Mains Paper 1: Modern Indian History

    raju

    A Telugu movie with its story and characters rooted in the lives of Indian freedom fighters Alluri Sitharama Raju and Komaram Bheem is garnering attention on the global stage.

    Who was Alluri Sitharama Raju?

    • Raju is believed to have been born in Andhra Pradesh in 1897 or 1898.
    • He is said to have become a sanyasi at the age of 18 and gained a mystical aura among the hill and tribal peoples with his austerity, knowledge of astrology and medicine, and his ability to tame wild animals.
    • At a very young age, Raju channelled the discontent of the hill people in Ganjam, Visakhapatnam, and Godavari into an effective guerrilla resistance against the British.

    Advent into revolutionary activities

    • Colonial rule threatened the tribals’ traditional podu (shifting) cultivation, as the government sought to secure forest lands.
    • The Forest Act of 1882 banned the collection of minor forest produce such as roots and leaves, and tribal people were forced into labour by the colonial government.
    • While the tribals were subjected to exploitation by muttadars, village headmen commissioned by the colonial government to extract rent, the new laws and systems threatened their way of life itself.
    • Strong anti-government sentiment, shared by the muttadars who were aggrieved by the curtailment of their powers by the British, exploded into armed resistance in August 1922.

    Contribution to freedom struggle

    • The Rampa or Manyam Rebellion continued in the form of a guerrilla war until May 1924, when Raju, the charismatic ‘Manyam Veerudu’ or Hero of Jungle, was finally captured and executed.
    • The Rampa Rebellion coincided with Mahatma Gandhi’s Non-Cooperation Movement.
    • Raju often talked of the greatness of Mahatma Gandhi, said he was inspired by the Non-Cooperation Movement, and persuaded people to wear khadi and give up drinking.
    • But at the same time, he asserted that India could be liberated only by the use of force, not non-violence.

    Who was Alluri Sitharama Raju?

    • Raju is believed to have been born in Andhra Pradesh in 1897 or 1898.
    • He is said to have become a sanyasi at the age of 18 and gained a mystical aura among the hill and tribal peoples with his austerity, knowledge of astrology and medicine, and his ability to tame wild animals.
    • At a very young age, Raju channelled the discontent of the hill people in Ganjam, Visakhapatnam, and Godavari into an effective guerrilla resistance against the British.

    Advent into revolutionary activities

    • Colonial rule threatened the tribals’ traditional podu (shifting) cultivation, as the government sought to secure forest lands.
    • The Forest Act of 1882 banned the collection of minor forest produce such as roots and leaves, and tribal people were forced into labour by the colonial government.
    • While the tribals were subjected to exploitation by muttadars, village headmen commissioned by the colonial government to extract rent, the new laws and systems threatened their way of life itself.
    • Strong anti-government sentiment, shared by the muttadars who were aggrieved by the curtailment of their powers by the British, exploded into armed resistance in August 1922.

    Contribution to freedom struggle

    • The Rampa or Manyam Rebellion continued in the form of a guerrilla war until May 1924, when Raju, the charismatic ‘Manyam Veerudu’ or Hero of Jungle, was finally captured and executed.
    • The Rampa Rebellion coincided with Mahatma Gandhi’s Non-Cooperation Movement.
    • Raju often talked of the greatness of Mahatma Gandhi, said he was inspired by the Non-Cooperation Movement, and persuaded people to wear khadi and give up drinking.
    • But at the same time, he asserted that India could be liberated only by the use of force, not non-violence.

    And who was Komaram Bheem?

    • Komram Bheem was born in the Gond tribal community at Sankepally village in Komarambheem District, which was renamed after him in 2016.
    • Bheem’s family’s land was occupied by a jagirdar who was an informer of the Nizam, which led to him killing the jagirdar in a fit of rage.
    • To avoid authorities, he went to Assam and worked as a labourer in coffee and tea plantations for five years.
    • Despite being illiterate, Bheem learned to read and write and became aware of movements like Birsa Munda’s.

    Resistance against the Nizam government

    • The Nizam government collected taxes in the name of “Bambram” and “Dupapetti” from people grazing cattle and collecting firewood for cooking.
    • Bheem spread the message of “Jal, Jangal, Zameen” among tribal people in opposition to this tax collection.
    • He trained tribal people to fight with weapons, and villages in Adilabad were ready with the help of a guerrilla army composed of Gond and Koya communities’ men.

    Death and legacy

    • Despite their efforts, Nizam’s army overwhelmed the tribal resistance.
    • Bheem died at their hands in the Jodeghat forest.
    • Bheem’s message of “Jal, Jangal, Zameen” has become a clarion call for indigenous people’s rights to natural resources, used in many parts of India to date.
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  • Iran’s Nuclear Program & Western Sanctions

    Explained: Understanding the Saudi-Iran Reconciliation

    | International Relations | Mains Paper 2: India & Its Neighborhood – Relations

    iran

    Central idea: Saudi Arabia and Iran, two of West Asia’s major powers that have been at odds with each other for decades, agreed to restore diplomatic relations last week in an agreement brokered by China.

    Saudi-Iran Ties: A timeline

    • Pre-1979: Saudi Arabia and Iran compete for regional dominance.
    • 1979: Iranian Revolution brings down the monarchy and turns Iran into a Shia theocratic republic.
    • 1980-1988: Iran-Iraq war sees Saudi Arabia support Iraq.
    • 1990-1991: Saudi Arabia supports Iraq against Iran in the Gulf War.
    • 1996: Iranian-backed Hezbollah bombs Saudi military housing complex in Khobar, killing 19 US soldiers.
    • 2011-2015: Saudi Arabia and Iran support opposing sides in the Syrian civil war.
    • 2015: Saudi Arabia launches military intervention in Yemen against Iranian-backed Houthi rebels.
    • January 2016: Saudi Arabia executes prominent Shia cleric Sheikh Nimr al-Nimr, leading to protests in Iran and the burning of the Saudi embassy in Tehran.
    • 2016: Saudi and several Arab allies cut diplomatic ties with Iran.
    • 2019: Saudi oil facilities are attacked, leading to increased tensions between Saudi Arabia and Iran.
    • 2021: Both begin direct talks, brokered by China.
    • March 2023: Both nations announce an agreement to restore diplomatic ties, brokered by China.

    Reasons for hostile relations

    The hostility between Saudi Arabia and Iran has its roots in a complex mix of historical, geopolitical, religious, and ideological factors.

    • Religious contradictions: Historically, the rivalry between the two countries dates back to the seventh century when the Prophet Muhammad died without a clear successor, leading to a dispute over the leadership of the Muslim community. This dispute ultimately resulted in the split between Sunni Islam (which dominates in Saudi Arabia) and Shia Islam (which dominates in Iran).
    • Geopolitical tensions: The two countries are located in a strategically important region, with both seeking to exert influence and maintain dominance in the Middle East. Iran’s Islamic revolution in 1979 posed a challenge to Saudi Arabia’s status as the leading Islamic power in the region, and the two countries have been competing for regional influence ever since.
    • Sectarian tensions: Saudi Arabia and Iran have long had competing visions for the role of Islam in society. Saudi Arabia promotes a strict interpretation of Sunni Islam known as Wahhabism, while Iran supports Shia Islam and the principle of the “Guardianship of the Jurist,” which asserts that a senior Shia cleric should have political power and authority over all Muslims.
    • Ties with west: The two countries have fundamentally different views on a range of issues, including democracy, human rights, and regional security. Saudi Arabia is a conservative monarchy with close ties to the United States, while Iran is an Islamic republic that has been at odds with the West since the 1979 revolution.

    All these factors have contributed to the ongoing hostility between Saudi Arabia and Iran, and the tensions between the two countries continue to have a destabilizing effect on the region.Top of Form

    What are the terms of the agreement?

    • The details of the agreement are yet to be unveiled.
    • Iran has reportedly agreed to prevent further attacks against Saudi Arabia from Houthi-controlled parts of Yemen while Saudi Arabia has agreed to rein in Iran International, a Farsi news channel critical of the Iranian regime.
    • Foreign Ministers of both countries will meet soon to thrash out the terms of the reconciliation before reopening embassies in each other’s capitals in two months.
    • China is planning to host a cross-Gulf conference of Iran and the six Gulf monarchies to further strengthen peace in the region.

    Why did Saudi Arabia reach out to Iran (defying the US)?

    Ans. Iran’s Rise, and Changing Alliances

    • Internal Security: When Saudi oil facilities were attacked in 2019, the US looked away, prompting the Saudis to look for alternative solutions for the Iran problem, such as reaching out to the Iranians.
    • Differences over Palestine: The US was trying to broker a normalization agreement between Saudi Arabia and Israel to bring the two pillars of its West Asia policy together against Iran.
    • US negligence of West Asia: The US deprioritized West Asia due to bigger foreign policy challenges, such as the Russian war in Ukraine and China’s rise in the Indo-Pacific.
    • Obsolesce of ties with US: Relations between Saudi Arabia and the US have been rocky in recent years, as the US is not as dependent on Gulf Arabs as it used to be during the Cold War.
    • Shared opinions over Israel: Saudi Arabia has been hesitant to reconcile with Israel, and its relations with the US have been rocky in recent years.

    What led Iran to accept the deal?

    • Isolation and Domestic pressure: Tehran is aware that getting relief from Western sanctions is not a near-term possibility. Despite crackdown, protests in Iran refuse to die down.
    • Crumbling economy: Iran’s economy is deteriorating and its currency, the rial, is struggling. A deal with Saudi Arabia, under China’s mediation, could open economic lifelines for Iran
    • China factor: Iran wanted Chinese investments and support for the rial. China allowed Iran to withdraw parts of the $20 billion funds frozen with Chinese banks due to US sanctions.
    • Fouling American efforts: Iran knows that such a deal could complicate American efforts to rally Arab countries and Israel against it. A reconciliation with Saudi is beneficial for Iran, at least in a tactical sense.

    Why is China brokering the deal?

    • Securing its oil supplies: China has an interest in promoting stability in the Middle East region, which is a major source of oil and natural gas for China.
    • Side-lining the US: By brokering a deal between Saudi Arabia and Iran, China can position itself as a mediator and gain goodwill from both sides.
    • Create alternative axis: China has longstanding relationships with both countries. The US since Trumps departure is distancing itself from the US, whereas China is also getting closer to Russia amid the war.
    • Image building as a leader: While the US is busy rallying the Western world to arm Ukraine to push back Russia and weaken Moscow through sanctions, China is quietly brokering peace in the Global South.

    US reception of this deal

    • Welcomed the move: The public narrative is that the peace deal would help stabilize the region and benefit the global energy market.

    Key implications for the US

    • Hegemony decline: The US would not like to lose its influence in West Asia even when it is deprioritizing the region.
    • Saudi drifts away: US sees an ally (Saudi Arabia) drifting further away, a rival it wanted to contain (Iran) making new friends, and China spreading and deepening its influence in a region the US has dominated historically.
    • Iran Sanctions going loose: The Iran nuclear deal is practically dead and the US wants Saudi Arabia to normalize ties with Israel and put up a joint front against Iran.

    What inferences can be drawn from all these?

    • Strategic realignments in West Asia: It can be inferred that West Asia is currently undergoing significant strategic realignments, with the UAE normalizing relations with Israel and other Arab countries deepening their partnerships.
    • Shifted US focus on Ukraine and Indo-Pacific: The US, which traditionally held significant power in the region, has deprioritized West Asia due to bigger foreign policy challenges such as Russia’s war in Ukraine and China’s rise in the Indo-Pacific.
    • China occupying power vacuum: This deprioritization has created a power vacuum that has allowed Iran to rise as a challenge, prompting the US to try to bring Israel and the Arab world together against Iran.

     

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  • Foreign Policy Watch: India-Iran

    Iran- Saudi rivalry: China’s role and India’s Concerns

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

    Saudi

    Central Idea

    • In an unexpected turn of events on March 10, the National Security Advisors of Iran and Saudi Arabia declared, in the presence of Chinese State Councillor Wang Yi in Beijing, that they have come to a mutual understanding to address their issues, and will reopen their embassies within a span of two months.

    Background: Iran- Saudi rivalry

    • Since January 2016, when the Saudi kingdom severed diplomatic ties with Iran after the attack on the former’s embassy in Tehran, the two countries have been engaged in a rivalry for regional geopolitical influence, prolonging conflicts in Yemen and Syria.
    • Only a few months ago, Iran’s top military officials were threatening Saudi Arabia with consequences unless it controlled its Persian-language media outlets zealously covering anti-government protests in Iran. Riyadh had raised alert levels citing a credible threat of attack from Iran.

    Iran’s Strategic Partnership with China

    • Iran considers China its most important strategic partner, and was alarmed when the joint statement issued at the first China-GCC Summit in Riyadh in December 2022 called on Iran to maintain the non-proliferation regime and respect the principles of non-interference in the internal affairs of states.
    • The China-brokered agreement coming a month after Raisi’s visit to Beijing shows how Beijing has successfully leveraged its ties with an Iran struggling with domestic pressure, sanctions, and deteriorating ties with Europe over its military support to Russia.

    The Dialogue Process

    • The Iran-Saudi Security Dialogue: This refers to the ongoing talks between Iran and Saudi Arabia aimed at improving security in the region, particularly in Yemen. These talks were facilitated by then-Iraqi Prime Minister Mustafa Al-Kadhimi in 2021, and have continued in fits and starts since then.
    • Biden Administration’s Conflict Management Measures: The Biden administration has taken steps to end American support for offensive operations in the war in Yemen, including relevant arm sales, as a conflict management measure. This move helped to make Riyadh see the logic of dialogue with Iran.
    • Chinese Role in Brokering the Final Agreement: China has played a key role in brokering the final agreement between Iran and Saudi Arabia. Beijing has adopted a balanced approach of strengthening ties with all players based on common interests and mutual respect rather than geopolitical alignments with specific countries.
    • China’s Growing Regional Engagement: China’s growing regional engagement in the Middle East is driven by its desire to distinguish itself from the US-led interventions in the region. Beijing has supported Gulf countries in setting up multilateral dialogue platforms and taking the initiative in regional issues, including those involving Iran.

    What are India’s concerns?

    • Impact on India’s Energy Security: Any improvement in relations between Iran and Saudi Arabia could impact India’s energy security. India is heavily dependent on oil imports from both countries, and any conflict or tension between them could lead to disruptions in oil supplies and increased prices.
    • Potential for regional destabilization: The rivalry between Iran and Saudi Arabia has fueled conflicts in the Middle East, including the ongoing war in Yemen. Any escalation of tensions between the two countries could lead to further destabilization in the region, which could have implications for India’s security interests.
    • China’s growing influence in the Middle East: China’s role in brokering the agreement between Iran and Saudi Arabia highlights its growing political capital in the region, which could have implications for India’s strategic interests. India has traditionally maintained good relations with both Iran and Saudi Arabia, and any shift in the regional balance of power could impact India’s interests.
    • Impact on India’s Chabahar port project: India has invested heavily in the development of the Chabahar port in Iran as a gateway to Afghanistan and Central Asia. Any improvement in relations between Iran and Saudi Arabia could impact India’s plans for the port, which could have implications for India’s strategic interests in the region.

    Conclusion

    • India will now have to deal with the new reality where China has been able to translate its economic influence in West Asia into diplomatic heft. The agreement between Iran and Saudi Arabia could have positive implications for the region’s stability, but India will need to carefully monitor the evolving dynamics and assess how it can leverage its own relations with Iran, Saudi Arabia, and other regional players to secure its strategic interest.

    Mains Question

    Q. Evaluate China’s growing influence in the Middle East and its impact on India’s traditional ties with Iran and Saudi Arabia.

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  • Defence Sector – DPP, Missions, Schemes, Security Forces, etc.

    India remains biggest Arms Importer during 2018-22: SIPRI

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

    arm

    Central idea

    • India is the world’s largest arms importer for the five-year period during 2018-22, according to Stockholm International Peace Research Institute (SIPRI).
    • However, India’s arms imports have dropped by 11% between 2013–17 and 2018–22.

    Top Arms Suppliers to India

    arm

    • Russia was the largest supplier of arms to India in both 2013–17 and 2018–22.
    • France emerged as the second largest supplier from 2018-22, and its share of total Indian arms imports increased significantly.
    • Among the top 10 arms exporters for the period 2018-22, India was the biggest arms export market to three countries — Russia, France and Israel and the second-largest export market to South Korea.
    • India was also the third largest market for South Africa, which was ranked 21 in the list of arms exporters.

    Arms import by Country

    • For the same period, India remained the largest arms importer followed by Saudi Arabia.
    • Russia accounted for 45% of India’s imports followed by France (29%) and the US (11%).
    • India was the third largest arms supplier to Myanmar after Russia and China, accounting for 14% of its imports.

    Reasons for India’s Arms Imports

    • Complexities with neighborhood: “India’s tensions with Pakistan and China largely drive its demand for arms imports. With an 11% share of total global arms imports, India was the world’s biggest importer of major arms in 2018–22,” says SIPRI.
    • Procurement bottlenecks: India’s slow and complex arms procurement process, efforts to diversify its arms suppliers, and attempts to replace imports with major arms that are designed and produced domestically have contributed to the decrease in arms imports.

    Russia’s position as India’s Main Arms Supplier

    • India diversifying its imports: Russia’s position as India’s main arms supplier is under pressure due to strong competition from other supplier states.
    • Self-arming for ongoing war: This is due to increased Indian arms production, and constraints on Russia’s arms exports related to its invasion of Ukraine.

    Global Arms Transfers

    • Arms imports by Pakistan increased by 14% between 2013–17 and 2018–22 and accounted for 3.7% of the global total with China supplying 77% of Pakistan’s arms imports in 2018–22.
    • While the global level of international arms transfers decreased by 5.1%, imports of major arms by European states increased by 47% between 2013–17 and 2018–22 in the backdrop of the war in Ukraine.
    • The U.S. share of global arms exports increased from 33% to 40% while Russia’s fell from 22% to 16%.

    What we can conclude from this?

    • Security concerns: India has long-standing tensions with neighboring countries such as Pakistan and China, which have led to security concerns and a perceived need for a strong military.
    • Slow and complex procurement process: India’s procurement process for arms is often slow and complex, leading to delays in acquiring weapons and equipment. This has resulted in India relying on imports to meet its defense needs.
    • Lack of domestic production: India’s domestic arms production capabilities are still limited, which makes it difficult for the country to produce high-tech weapons and equipment. This has forced India to rely on imports to meet its defense requirements.
    • Diversification of suppliers: While Russia has been the traditional supplier of arms to India, in recent years India has been diversifying its sources of weapons and equipment to countries such as France, Israel, and the United States.
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  • Corporate Social Responsibility: Issues & Development

    Rise of the Environmental, Social and Governance (ESG) Regulations

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

    esg

    Central idea: Regulators and corporations worldwide now measure businesses on ESG criteria. ESG criteria is crucial for investors to assess a company’s risk profile accurately. India is still in the nascent stage of ESG laws and regulations.

    What is ESG?

    • ESG Regulations are a set of standards used by investors to evaluate a company’s environmental and social impact, as well as its corporate governance practices.
    • They require companies to be transparent about their environmental and social performance, as well as their governance structure.
    • ESG factors are increasingly being used by investors to make investment decisions, and ESG ratings are becoming an important metric for companies seeking to attract investment.
    • The ESG regulations differ by country, but many require companies to disclose information on environmental and social issues, as well as on their governance practices.
    • ESG regulations are becoming increasingly important as investors and consumers demand greater transparency and accountability from companies.Top of FormBottom of Form

    Features of ESG Mechanism

    • Environmental factors: These include a company’s impact on climate change, greenhouse gas emissions, pollution, waste management, and natural resource conservation.
    • Social factors: These include a company’s impact on society, such as labor practices, human rights, community relations, customer satisfaction, and product safety.
    • Governance factors: These include a company’s management structure, board diversity, executive compensation, shareholder rights, and business ethics.
    • ESG ratings and metrics: Companies are evaluated based on ESG ratings and metrics, which can help investors assess a company’s overall sustainability and ethical impact.
    • ESG investing: ESG investing refers to investing in companies that meet certain ESG criteria, with the aim of generating financial returns while also having a positive impact on society and the environment.
    • ESG reporting: Many companies are now required to disclose their ESG performance and report on their sustainability practices, in order to meet regulatory requirements and respond to growing investor demand for transparency and accountability.Top of FormBottom of Form

    Corporate Social Responsibility: ESG-like mechanism in India

    • India has a robust corporate social responsibility (CSR) policy that mandates that corporations engage in initiatives that contribute to the welfare of society.
    • This mandate was codified into law with the passage of the 2014 and 2021 amendments to the Companies Act of 2013.

    How ESG differs from CSR?

    • ESG regulations differ from CSR regulations in their process and impact
    • For example, the U.K. Modern Slavery Act requires companies with business in the U.K. and with annual sales of more than £36 million to publish their efforts in identifying and analysing the risks of human trafficking, child labour and debt bondage in their supply chain.
    • It seeks to establish internal accountability procedures, evaluate supplier compliance, and train supply chain managers regarding these issues
    • The EU’s Sustainable Finance Disclosure Regulation requires financial market participants to disclose how they have integrated sustainability risks into their investment decision-making processes
    • There are scores of such regulations at the state, national and transnational level.

    Why is ESG relevant in India?

    Ans. Existing mechanisms serve ESG purpose

    • India has long had a number of laws and bodies regarding environmental, social and governance issues, including the Environment Protection Act of 1986.
    • It has quasi-judicial organisations such as the National Green Tribunal, a range of labour codes and laws governing employee engagement and corporate governance practices.
    • These initiatives established guidelines that emphasise monitoring, quantification and disclosure, akin to ESG requirements found in other parts of the world.

    ESG for Indian companies

    Here are some key considerations for Indian companies in relation to ESG:

    • Compliance with global ESG regulations: Compliance in the US, UK, EU and elsewhere is critical for Indian companies to take full advantage of the growing decoupling from China and play a more prominent role in global supply chains and the global marketplace overall.
    • Due diligence: This will play a key role in ESG risk management, which means going beyond questionnaires and conducting deeper assessments that may include looking at company records, interviewing former employees, and making discreet visits to observe operations to ensure that measures to comply with international ESG standards are in effect.
    • Revamp organizations: ESG due diligence should be supported within the company with detailed procedures for assessing risks and controls for assuring that no corners are cut. Companies that wish to maximise their opportunities in the global economy need to embrace these new requirements and adjust their organisations accordingly.

    Way forward

    • Encouraging and incentivizing companies: To adopt ESG practices voluntarily through education, training and awareness-raising programs.
    • Developing national guidelines and standards for ESG: To promote consistency and comparability of ESG performance data among Indian companies.
    • Tailor-made Policy catering to domestic needs: Implementing ESG regulations that are tailored to the specific needs and challenges of Indian companies, with a focus on promoting transparency, accountability and stakeholder engagement.
    • Facilitating access to capital for companies that demonstrate strong ESG performance: By establishing ESG-focused investment funds and credit facilities.
    • Promoting international collaboration and harmonization of ESG standards: To facilitate global trade and investment while ensuring that ESG risks are appropriately addressed.

    Conclusion

    • Overall, a comprehensive and collaborative approach is needed to ensure that Indian companies can effectively manage ESG risks and opportunities and contribute to sustainable development.

     

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    India bats for Sovereign Credit Rating upgrade

    | Economics | Mains Paper 3: Indian Economy

    credit

    Central idea: India is seeking an upgrade to its sovereign credit rating, currently at the lowest-possible investment grade, as it believes its economic metrics have improved considerably since the pandemic.

    What are Sovereign Credit Ratings?

    • A sovereign credit rating is a measure of a country’s creditworthiness, or its ability to meet its financial obligations.
    • It is an assessment of the credit risk associated with a country’s bonds or other debt securities.
    • The rating is assigned by credit rating agencies such as Standard & Poor’s, Moody’s, and Fitch Ratings.

    India’s current ratings

    • S&P and Fitch rate India ‘BBB-‘ and Moody’s ‘Baa3’, all indicative of the lowest-possible investment grade, but with a stable outlook.

    What does BBB mean?

    • A ‘BBB’ rating indicates that expectations of default risk are currently low.
    • The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.

    What is a Rating Agency?

    • Rating agencies assess the creditworthiness or potential of an equity, debt or country.
    • Their reports are read by investors to make an informed decision on whether or not to invest in a particular country or companies in that geography.
    • They assess if a country, equity or debt is financially stable and whether it at a low/high default risk.
    • In simpler terms, these reports help investors gauge if they would get a return on their investment.

    What do they do?

    • The agencies periodically re-evaluate previously assigned ratings after new developments geopolitical events or a significant economic announcement by the concerned entity.
    • Their reports are sold and published in financial and daily newspapers.

    What grading pattern do they follow?

    • The three prominent ratings agencies, viz., Standard & Poor’s, Moody’s and Fitch subscribe to largely similar grading patterns.
    • Standard & Poor’s accord their highest grade, that is, AAA, to countries, equity or debt with the exceedingly high capacity to meet their financial commitments.
    • Its grading slab includes letters A, B and C with an addition a single or double letter denoting a higher grade.
    • Moody’s separates ratings into short and long-term definitions. Its longer-term grading ranges from Aaa to C, with Aaa being the highest.
    • Fitch, too, rates from AAA to D, with D being the lowest. It follows the same succession scheme as Moody’s and Fitch.

    Significance of such ratings

    • Access to Capital: Higher credit ratings mean that a country can access capital at a lower cost, while lower ratings indicate that borrowing costs will be higher.
    • Investment Decisions: Investors use credit ratings as a tool to evaluate a country’s creditworthiness and assess the level of risk associated with investing in that country.
    • Economic Growth: Higher credit ratings typically lead to increased foreign investment, which can create jobs, boost productivity, and stimulate economic growth.
    • International Trade: Countries with higher credit ratings are viewed as more stable and trustworthy, making them more attractive trading partners for other countries.
    • Reputation: Countries with lower credit ratings may be seen as less reliable or stable, which can negatively impact diplomatic relationships and political influence.

    Criticism of the rating agencies

    • Credibility: Popular ratings agencies publicly reveal their methodology, which is based on macroeconomic data publicly made available by a country, to lend credibility to their inferences.
    • Bias: These agencies were subjected to severe criticism for allegedly spurring the financial crisis in the United States, which began in 2017.
    • Fouled metrics: The agencies underestimated the credit risk associated with structured credit products and failed to adjust their ratings quickly enough to deteriorating market conditions.
    • Erroneous: They were charged for methodological errors and conflict of interest on multiple counts.

    Why is India seeking upgrade in its credit ratings?

    • Improved creditworthiness: These ratings are used to judge a country’s creditworthiness, often impacting its borrowing costs.
    • Stable indicators: India has series of stable parameters such as economic growth rate, inflation, general government debt and short-term external debt as a percentage of GDP, and political stability, among others.

    Measures taken to improve ratings

    • India aims to cut its fiscal deficit to 5.9% of GDP next fiscal year, from the 6.4% target for the current year that ends March 31, and to further reduce that to 4.5% in the next three years.
    • India’s Economic Survey has forecast growth of 6% to 6.8% for 2023-24, which would make it one of the world’s fastest-growing major economies.
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