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  • Parliament – Sessions, Procedures, Motions, Committees etc

    Explained: Inter-State Council

    | Polity | Mains Paper 2: Federalism

    Tamil Nadu CM M K Stalin wrote to PM asking that at least three meetings of the Inter-State Council should be held every year to “strengthen the spirit of cooperative federalism”.

    What is the news?

    • TN CM suggested that bills of national importance should be placed before the Council before being tabled in Parliament.
    • He said this was because there is no “effective and interactive communication” between the states and the Centre on issues of common interest.

    What is the Inter-State Council?

    • The Inter-State Council is a mechanism that was constituted “to support Centre-State and Inter-State coordination and cooperation in India”.
    • It was established under Article 263 of the Constitution, which states that the President may constitute such a body if a need is felt for it.
    • The Council is basically meant to serve as a forum for discussions among various state governments.

    Its establishment

    • In 1988, the Sarkaria Commission suggested the Council should exist as a permanent body, and in 1990 it came into existence through a Presidential Order.

    Functions of the Inter-State Council

    • The main functions of the Council are:
    1. Inquiring into and advising on disputes between states
    2. Investigating and discussing subjects in which two states or states and the Union have a common interest
    3. Making recommendations for the better coordination of policy and action

    Its composition

    • The Prime Minister is the chairman of the Council, whose members include the Chief Ministers of all states and UTs with legislative assemblies, and Administrators of other UTs.
    • Six Ministers of Cabinet rank in the Centre’s Council of Ministers, nominated by the Prime Minister, are also its members.
    • Its procedure states that the council should meet at least three times a year.

    What issues has TN CM raised?

    • The leader has flagged the lack of regular meetings.
    • The Council has met only once in the last six years — and that there has been no meeting since July 2016.
    • Since its constitution in 1990, the body has met only 11 times,

    Recent development: Reconstitution of the Council

    • The CM appreciated the reconstitution of the Council, carried out last month.
    • The body will now have 10 Union Ministers as permanent invitees, and the standing committee of the Council has been reconstituted with Home Minister Amit Shah as Chairman.
    • Finance Minister Nirmala Sitharaman and the Chief Ministers of Maharashtra, UP, and Gujarat are some of the other standing committee members.

    Why did TN raise this issue?

    • Many CM frequently disagreed with the central government’s policies on matters of taxation, on the medical examination NEET, and often talked about the rights of states.
    • What could be settled amicably among the executive branches is often taken to the doorsteps of the judicial branch.

    Role of TN in the Council’s formation

    Tamil Nadu has long advocated the need for a Council.

    • In 1969, late leader M Karunanidhi, spoke about setting up an expert committee to study Centre-state relations.
    • Months later, his government appointed a committee headed by P V Rajamannar, a former Madras High Court Chief Justice, which submitted a report in 1971.
    • It then recommended “the Inter-State Council should be constituted immediately”.

    What happened in the last meeting of the Inter State Council?

    • In 2016, the meeting included consideration of the Punchhi Commission’s recommendations on Centre-State Relations that were published in 2010.
    • At the time, M Karunanidhi had criticised then CM J Jayalalithaa for not personally attending the meeting.
    • The meeting saw detailed discussion on the recommendations.
    • States asked for maintaining the federal structure amid growing “centralisation”.
    • Imposition of Article 356 of the Constitution, which deals with the imposition of President’s Rule in states, was a matter of concern.
    • Bihar Chief Minister demanded that the post of Governor should be abolished!

     

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  • Terrorism and Challenges Related To It

    Pak. may get off FATF ‘grey list’ after on-site check

    | Security Issues | Mains Paper 3: Money-Laundering & Its Prevention

    Pakistan got a reprieve from the Financial Action Task Force (FATF) as it announced that the country could be removed from the “grey list” after a visit by a fact-finding team.

    What is the news?

    • FATF noted Pakistan’s constructive claims of actions to curb terror funding.
    • It would formally be taken off the “grey list” in October.
    • China is working relentlessly to get Pakistan off FATF ‘grey list’.

    India’s stance

    • New Delhi has been sceptical of Pakistan’s commitment to completely end terror safe havens in the country.
    • Infiltration in J&K continues and small arms and IEDs are being habitually pushed across the LoC.

    What is the FATF?

    • The FATF is an international watchdog for financial crimes such as money laundering and terror financing.
    • It was established at the G7 Summit of 1989 in Paris to address loopholes in the global financial system after member countries raised concerns about growing money laundering activities.
    • In the aftermath of the 9/11 terror attack on the US, FATF also added terror financing as a main focus area.
    • This was later broadened to include restricting the funding of weapons of mass destruction.
    • The FATF currently has 39 members.

    Working of FATF

    • The decision-making body of the FATF, known as its plenary, meets thrice a year.
    • Its meetings are attended by 206 countries of the global network.
    • It includes members, and observer organisations, such as the World Bank, some offices of the UN, and regional development banks.

    Functions of FATF

    • The FATF sets standards or recommendations for countries to achieve in order to plug the holes in their financial systems and make them less vulnerable to illegal financial activities.
    • It conducts regular peer-reviewed evaluations called Mutual Evaluations (ME) of countries to check their performance on standards prescribed by it.
    • The reviews are carried out by FATF and FATF-Style Regional Bodies (FSRBs), which then release Mutual Evaluation Reports (MERs).
    • For the countries that don’t perform well on certain standards, time-bound action plans are drawn up.
    • Recommendations for countries range from assessing risks of crimes to setting up legislative, investigative and judicial mechanisms to pursue cases of money laundering and terror funding.

    What are the Black List and the Grey List?

    • The words ‘grey’ and ‘black’ list do not exist in the official FATF lexicon.
    • They however designate countries that need to work on complying with FATF directives and those who are non-compliant.
    1. Black List: The blacklist, now called the “Call for action” was the common shorthand description for the FATF list of “Non-Cooperative Countries or Territories” (NCCTs).
    2. Grey List: Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.

    Consequences of being:

    (1) In the grey list:

    • Economic sanctions from IMF, World Bank, ADB
    • Problem in getting loans from IMF, World Bank, ADB and other countries
    • Reduction in international trade
    • International boycott

    (2) In the black list:

    • High-risk jurisdictions subject to call for action
    • Countries have considerable deficiencies in their AML/CFT (anti-money laundering and counter terrorist financing) regimens
    • Enhanced due diligence
    • Members are told to apply counter-measures such as sanctions on the listed countries

    Note: Currently, North Korea and Iran are on the black list.

    Pakistan and FATF

    • Pakistan, which continues to remain on the “grey list” of FATF, had earlier been given the deadline till the June to ensure compliance with the 27-point action plan against terror funding networks.
    • It has been under the FATF’s scanner since June 2018, when it was put on the Grey List for terror financing and money laundering risks.
    • FATF and its partners such as the Asia Pacific Group (APG) are reviewing Pakistan’s processes, systems, and weaknesses on the basis of a standard matrix for anti-money laundering (AML) and combating the financing of terrorism (CFT) regime.

    Why is Pakistan on the grey list?

    • Pakistan has found itself on the grey list frequently since 2008, for weaknesses in fighting terror financing and money laundering.
    • It never addressed concerns on the front of terror financing investigations and prosecutions targeting senior leaders and commanders of UN-designated terrorist groups.
    • However, now steps had been taken in this direction such as the sentencing of terror outfit chief Hafiz Saeed, prosecution of Masood Azhar and seizure of their properties.
    • India meanwhile, a member of FATF, suspects the efficacy and permanence of Pakistani actions.

    How FATF impacts Pakistan?

    • The FATF grey list made it more difficult for Pakistan to get financial aid from the International Monetary Fund (IMF), World Bank, Asian Development Bank (ADB) and the European Union (EU).
    • This will further create an economic crisis for Pakistan which is already struggling to control its financial position.
    • Bearing the cost of global politics the impact of FATF grey-listing on Pakistan’s economy has claimed that FATF’s decision has led to a loss of USD 38 billion for Pakistan so far.

    Steps taken by Pakistan

    • Pakistan is currently banking on its potential exclusion from the grey list to help improve the status of tough negotiations with the International Monetary Fund to get bailout money.
    • Pakistan is now making a high-level political commitment to the FATF and APG to address its strategic AML/CFT deficiencies.

     

     

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  • Agmark, Hallmark, ISI, BIS, BEE and Other Ratings

    [pib] BIS develops an Standard for ‘Non-electric Cooling Cabinet made of Clay’

    PIB | Economics | Mains Paper 3: Indigenization Of Technology

    Bureau of Indian Standards (BIS), the National Standards Body of India, has developed an Indian Standard, IS 17693: 2022 for ‘non-electric cooling cabinet made of clay’.

    IS 17693: 2022

    • BIS standard specifies the construction and performance requirements of a cooling cabinet made out of clay, which operates on the principle of evaporative cooling.
    • These cabinets may be used to store perishable foodstuff without the need of electricity.
    • This standard helps BIS in fulfilling 6 out of 17 UN Sustainable Development Goals (SDGs) like No poverty, Zero hunger, Gender equality, Affordable and clean energy, Industry, innovation, and infrastructure, and Responsible consumption and production.

    Why such move?

    • Named as ‘Mitticool refrigerator’, Mansukh Bhai Prajapati from Gujarat is the innovator behind the refrigerator which projects an eco-friendly technology.
    • It is a natural refrigerator made primarily from clay to store vegetables, fruits, milk, and also for cooling water.
    • It provides natural coolness to foodstuffs stored in it without requiring any electricity.
    • Fruits, vegetables, and milk can be stored reasonably fresh without deteriorating their quality.

    Back2Basics: Bureau of Indian Standards (BIS)

    • BIS is the National Standards Body of India working under the aegis of the Ministry of Consumer Affairs, Food & Public Distribution.
    • It is established by the Bureau of Indian Standards Act, 1986 which came into effect on 23 December 1986.
    • The organization was formerly the Indian Standards Institution (ISI), set up under the Resolution of the Department of Industries and Supplies in September 1946.
    • The ISI was registered under the Societies Registration Act, 1860.
    • A new Bureau of Indian standard (BIS) Act 2016 has been brought into force with effect from 12 October 2017.
    • The Act establishes the Bureau of Indian Standards (BIS) as the National Standards Body of India.

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  • Indian Army Updates

    Issues with Agnipath Scheme

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

    Massive protests are occurring against the Agnipath scheme all across the nation.

    What is the Agnipath Scheme?

    • This will be the only form of recruitment of soldiers into the three defence services from now.
    • The scheme aims at strengthening national security and for providing an opportunity to the youth to serve in the armed forces.
    • Recruits under the scheme will be known as ‘Agniveers’.
    • After completing the four-year service, they can apply for regular employment in the armed forces.
    • They may be given priority over others for various jobs in other government departments.
    • The move is expected to decrease the average age profile of armed forces personnel from the current 32 to 24-26 years over a period of time.

    Why are aspirants protesting?

    • Contractualisation of armed forces: The foundation of this scheme is a four-year contract.
    • Jobs for the majority: States such as Bihar, Jammu & Kashmir, Punjab, Himachal Pradesh, Haryana, Uttar Pradesh, Uttarakhand and Rajasthan, are where the bulk of the Army recruitment takes place.
    • Perks and benefits: Many of these people value job stability, which includes retirement benefits and pensions over competitive salaries.
    • Uncertainty after end of commission: Most of them will be forced to leave the job within four years, which doesn’t fit into their hopes and aspirations.
    • Casualization of Training: It reportedly takes two to three years to train a member of the army, but as a part of the Agnipath, soldiers will only be trained for six months.
    • Threats to national security: Defence analysts have allegedly pointed out that the Russian soldiers who were trained for a limited amount of time before they went to war have performed disastrously.
    • Conflicts of interest: Apprehensions have been voiced against how the new recruits will be adjusted in the existing system under which most of the Army units are region, caste or class based.

    Reasons behind aspirants’ frustration

    • Unemployment: Analysts always cite the crunch of gazetted officers in the Armed forces and there has been no recruitment for the last two years.
    • Pandemic impact: Many aspirants lost their chance to join the Armed forces as they are now overage.’
    • Unanticipated reforms: In guise of a push for “major defence policy reform”, the scheme is a fuss.

    What is the official explanation?

    • Once retired, aspirants will be free to pursue other careers, with several departments and governments.
    • Aspirants will get preference, educational credits, skill certificates, to help them rehabilitate in other fields.
    • Those wishing to be entrepreneurs will get a financial package and bank loans and those wishing to study further will be given 12 class equivalent certificate.
    • For job-seekers, the government has already said they will get priority in the Central Armed Police Forces.

    Way forward

    • The modalities of how this will happen are still being worked out.
    • But one thing is very clear, poorly crafted schemes are on the rise.
    • For making any scheme a success, pre-legislative consultation and discussion in the public domain is a must.

     

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

    India better placed to avoid Risks of Stagflation: RBI

    | Economics | Mains Paper 3: Indian Economy

    India’s economy is better placed than many other countries to avoid the risk of potential stagflation worldwide, said the Reserve Bank of India Deputy Governor.

    Why in news?

    • Stagflation remains a risk to the US economy, and there are similarities between the situation in the 1970s and today, a/c to World Bank.
    • Surging prices for oil and food are pushing up the cost of living, and business executives are voicing concerns about the outlook for the economy.

    What is Stagflation?

    • Stagflation is a stagnant growth and persistently high inflation. It, thus, describes a rather rare and curious condition of an economy.
    • Iain Macleod, a Conservative Party MP in the United Kingdom, is known to have coined the phrase during his speech on the UK economy in November 1965.

    What happens in Stagflation?

    • Typically, rising inflation happens when an economy is booming — people are earning lots of money, demanding lots of goods and services and as a result, prices keep going up.
    • When the demand is down and the economy is in the doldrums, by the reverse logic, prices tend to stagnate (or even fall).
    • But stagflation is a condition where an economy experiences the worst of both worlds — the growth rate is largely stagnant (along with rising unemployment) and inflation is not only high but persistently so.

    Possible reasons behind

    • Volatility due to war: Global economic conditions continued to deteriorate as commodity prices and financial market volatility have led to heightened uncertainty.
    • Monetary tightening: In advanced economies, the war against inflation would entail significant monetary tightening, complicating the growth-inflation outlook.
    • Global slowdown: Emerging market economies grapple with the global trade slowdown, capital outflows and imported inflation.

    Why is it so unpopular?

    • The combination of slow growth and inflation is unusual, because inflation typically rises and falls with the pace of growth.
    • The high inflation leaves less scope for policymakers to address growth shortfalls with lower interest rates and higher public spending.

    Back2Basics: Inflation and its impact

    • Depression: It is Economic depression is a sustained, long-term downturn in economic
    • Deflation: It is the general fall in the price level over a period of time.
    • Disinflation: It is the fall in the rate of inflation or a slower rate of inflation. Example: a fall in the inflation rate from 8% to 6%.
    • Reflation: It is the act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy back up to the long-term trend, following a dip in the business cycle. It is the opposite of disinflation.
    • Skewflation: It is the skewed rise in the price of some items while remaining item prices remain the same. E.g. Seasonal rise in the price of onions.
    • Stagflation: The situation of rising prices along with falling growth and employment, is called stagflation. Inflation is accompanied by an economic recession.

     

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  • Climate Change Impact on India and World – International Reports, Key Observations, etc.

    Theri Desert in Tamil Nadu

    Prelims Only | Enviro & Biodiversity | Mains Paper 1: Important Geophysical Phenomena

    Most of us may not know the small desert situated in the state of Tamil Nadu. It consists of red sand dunes and is confined to the Thoothukudi district.

    Theri Desert

    • The red dunes are called theri in Tamil.
    • They consist of sediments dating back to the Quaternary Period and are made of marine deposits.
    • They have very low water and nutrient retention capacity.
    • The dunes are susceptible to aerodynamic lift.
    • This is the push that lets something move up. It is the force that is the opposite of weight.

    Mineral composition of Theris

    • The analysis of the red sand dunes reveal the presence of heavy and light minerals.
    • These include Ilmenite, Magnetit, Rutile, Garnet, Zircon, Diopside, Tourmaline, Hematite, Goethite, Kyanite, Quartz, Feldspar, Biotite.
    • The iron-rich heavy minerals like ilmenite, magnetite, garnet, hypersthene and rutile present in the soil had undergone leaching by surface water.
    • They were then oxidised because of the favourable semi-arid climatic conditions.

    How did they form?

    • Theris appear as gentle, undulating terrain.
    • The lithology of the area shows that the area might have been a paleo (ancient) coast in the past.
    • The presence of limestone in many places indicates marine transgression.
    • The present-day theris might have been formed by the confinement of beach sand locally, after regression of the sea.
    • When high velocity winds from the Western Ghats blew east, they induced migration of sand grains and accumulation of dunes.

    Another story of their formation

    • Another view is that these are geological formations that appeared in a period of a few hundred years.
    • The red sand is brought from the surface of a broad belt of red loam in the plains of the Nanguneri region (about 57 kilometres) by south west monsoon winds during May-September.
    • The winds after draining the moisture behind the Mahendragiri hill and the Aralvaimozhi gap of the Western Ghats become dry and strike the plains in the foothills, where vegetation is sparse.
    • Deforestation and the absence of vegetative cover in the Aralvaimozhi gap and the Nanguneri plains are considered to be the major causes of wind erosion.

     

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  • Zoonotic Diseases: Medical Sciences Involved & Preventive Measures

    What is Black Death?

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

    In a study published in the Science journal, researchers have claimed that the bubonic plague was originated in modern day northern Kyrgyzstan around 1338-1339 – nearly 7-8 years before it ravaged large parts of the world.

    What is Black Death?

    • The term Black Death refers to the bubonic plague that spread across Western Asia, Northern Africa, Middle East and Europe in 1346-53.
    • Most scholars agree that the Black Death, which killed millions, was caused by bacterium Yersinia pestis and was spread by fleas that were carried by rodent hosts.
    • The microorganism Y. pestis spread to human populations, who at some point transmitted it to others either through the vector of a human flea or directly through the respiratory system.

    Why this plague was called the Black Death?

    • It is commonly believed that the term Black Death gets its name from the black marks that appeared on some of the plague victims’ bodies.
    • In the 14th century, the epidemic was referred to as the ‘great pestilence’ or ‘great death’, due to the demographic havoc that it caused.
    • The world black also carried a dark, gloomy emotional tone, due to the sheer amount of deaths generated by the plague.

    Why is the new discovery significant?

    • The geographical origin point of the plague has been debated for centuries.
    • Some historians have argued that the plague originated in China, and spread across Europe by Italian merchants who first entered the continent in trading caravans through Crimea.
    • Another story argues that Mongol army hurled plague-infested bodies into the city during the siege of Caffa (Crimea) and led to the spread of the disease.

     

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  • Death Penalty Abolition Debate

    Procedural gaps in death penalty sentencing

    op-ed snap | Polity | Mains Paper 2: Executive & Judiciary

    Context

    In a judgment delivered last month, the Supreme Court, in Manoj & others v. State of MP, embarked on a significant attempt to reform the administration of the death penalty.

    Background: Crisis in the death penalty sentencing

    • There has long been a judicial crisis in death penalty sentencing on account of unprincipled sentencing, arbitrariness and worrying levels of subjectivity.
    • The crisis has been acknowledged by the Supreme Court, the Law Commission of India, research scholars and civil society groups.
    • Crime-centric nature: Death penalty sentencing has been, by and large, crime-centric.
    • This approach goes against the requirements imposed on sentencing judges by the Supreme Court in Bachan Singh (1980).

    The framework laid down in the Bachan Singh case

    • Take into account factors relating to crime and the accused: This framework made it binding for the sentencing judges to take into account factors relating to both the crime and accused and assign them appropriate weight.
    • Judges couldn’t decide to impose the death penalty only on the basis of the crime.
    • The background of the accused, the personal circumstances, mental health and age were considerations a sentencing judge had to account for.
    • Judges were required to weigh “mitigating” and “aggravating” factors to ascertain if a case was fit for the death sentence and also determine if the option of life imprisonment was “unquestionably foreclosed”.

    Why there is a crisis in death penalty sentencing?

    • The four decades since Bachan Singh have shown us that this framework has been followed more in breach.
    • There is utter confusion across all levels of the judiciary on the requirements of the framework laid down in the Bachan Singh case and its implementation.
    • Nature of crime a dominant consideration: An important reason for the breakdown is that factors relating to the crime — the nature of the crime and its brutality — are often dominant considerations, and there is barely any consideration of mitigating factors.
    • Little discussion on mitigating factors: There has been very little discussion on bringing the socioeconomic profile of death row prisoners as a mitigating factor into the courtroom.

    Significance of the SC judgment in Manoj & others v. State of MP

    • Efforts to plug the gap: The judgement identifies the lacuna as an explicit concern, states the consequences that flow from such a vital gap, and suggests measures to plug it.
    • Recognising reformation: A striking part of the judgment is its commitment to recognising reformation as integral to the Indian criminal justice system, especially death penalty sentencing.
    • Procedural threshold: The judgment is clear that certain procedural thresholds must be met for sentencing to be fair and explicitly rejects (once again) the idea that death sentences can be determined solely on crime-based considerations.
    • The verdict recognises that aspects of the accused’s life, both pre-offence and post-offence in prison, are relevant.
    • As practical steps in this process, the judgment asks courts to call for reports from the probation officer as well as prison and independent mental health experts.
    • Right of the accused to present mitigating factors: The right of the accused to present mitigating factors and rebut the state, if necessary, is also recognised.
    • Psychological and philosophical aspect taken into account: There is now overwhelming evidence from psychology that criminality cannot just be reduced to terrible decisions by individuals in the exercise of their free will.
    • All our actions are a result of a complex web of biological, psychological, and social factors and that understanding has a very significant bearing on discussions on criminality and punishment.

    Challenges

    • Implementation issue: Apart from this issue of implementation, even if detailed and high-quality sentencing information is to come into our courtrooms, a bigger challenge awaits.
    • The judicial treatment of sentencing information is a Pandora’s box that will inevitably have to be opened.
    • Requirement for normative basis: The Supreme Court will have to provide a rigorous normative basis for consideration of these factors.
    • In the absence of such foundations, death penalty sentencing will continue to be unprincipled and sentencing judges are not going to understand the need for this wide range of sentencing information.

    Conclusion

    The significance of last month’s judgment, authored by Justice Ravindra Bhat, is that it takes this problem head-on. It identifies the lacuna as an explicit concern, states the consequences that flow from such a vital gap, and suggests measures to plug it.

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  • Foreign Policy Watch: India-Iran

    India-Iran Relations

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

    Context

    Iran’s Foreign Minister Hossein Amir-Abdollahian’s three-day visit to India, last week, was the first ministerial-level visit from Iran since Ebrahim Raisi assumed the Iranian presidency in August last year.

    Chabahar Port - A Rethink is Needed | Vivekananda International Foundation

    Background

    • Bilateral relations between India and Iran span millennia marked by meaningful interactions.
    • Both countries shared borders until 1947 and share several common features in their language, culture and traditions.
    • The diplomatic links were established on 15th March 1950, when both countries signed a Treaty of Friendship and Perpetual Peace.
    • However, Iran’s joining of Baghdad pact in 1954 and the Cold War politics prevented both countries from having closer relations until the 1990s.
    • Islamic Revolution of 1979, hostage of US diplomats, Iran-Iraq War and Tehran’s support for Hezbollah and Hamas among others resulted in a range of political and economic sanctions, leading to Iran being isolated at a global level
    • In the 1990s, both countries’ interests converged around energy, Central Asia and security, mostly around the Pakistan-Afghan region.
    • This resulted in the signing of ‘The Delhi Declaration’, which provided the vision of the countries’ defence and strategic partnership and “Tehran Declaration”, which set forth the areas of possible cooperation

    India-Iran relations: A shared vision for equitable, pluralistic and co-operative international order

    • The “Tehran Declaration” signed during former Prime Minister Atal Bihari Vajpayee’s visit to Iran affirmed the shared vision of the two countries for an “equitable, pluralistic and co-operative international order”.
    • It recognised then Iranian President Mohammad Khatami’s vision of a “dialogue among civilisations” as a paradigm of international relations based on principles of tolerance, pluralism and respect for diversity.
    • Advancing the standing in global order: Two decades later, as India strengthens new partnerships within its regional vision centred on the Indo-Pacific, both countries remain driven by the goals of advancing their standing at the regional and global level.
    • Both are keen to project themselves as independent strategic actors determined to play a role in shaping a new multipolar order in their shared Eurasian neighbourhood and also at the global level.

    Why does India need Iran?

    • Energy security: Conventionally, for energy security
    • Iran is amongst India’s top oil suppliers
    • Strategic importance: Since the 1990s, Iran’s importance has become ‘strategic’
    • Security reasons: Iran’s cooperation is critical for India’s security given that
    • Pak supports terrorism in India
    • Influence in Afghanistan: India’s influence in Afghanistan is marginal.
    • Countering Pakistan: India needs Iran to moderate Pak’s influence in West Asia
    • Iran is a leader in the Muslim world.
    • Access to Afghanistan and Central Asia

    Significance of Iran for India

    • Geopolitical logic in relations: The sanctions imposed by the US on Iran after it withdrew from the nuclear deal in 2018 may have virtually destroyed India-Iran trade, especially India’s energy imports from Iran, but the geopolitical logic underpinning relations between the two countries remains firm.
    • Land bridge to Central Asia and Eurasia: Iran has sought to leverage its crossroad geographical location straddling the Persian Gulf and the Caspian Sea, India has come to see it as its land bridge to Central Asia and Eurasia.
    • INSTC: Despite the difficulties posed by decades of American sanctions, Iran has, along with India, Russia and a few other countries in the Eurasian region, continued to work on the multi-modal International North-South Transport Corridor (INSTC).
    • During Raisi’s visit to Moscow, the two sides had pledged to redouble their efforts to build the railway line between Iran’s Caspian port of Rasht and Astara on the Iran-Azerbaijan border.
    • Alternative Caspian Sea Route: The activation of an alternative Caspian Sea route speaks volumes about the positive outlook of Iran, India and Russia on this corridor despite a variety of geopolitical challenges.
    • Iran’s Chabahar port, where India is developing two berths that it will lease for commercial operations for 10 years, is also a story of perseverance in the ties between the two countries.

    Irritants in Indo-Iran ties

    • India’s relations with Saudi Arabia, US and Israel:  Growing Saudi-India-US-Israel relations have irked Iran.
    • In retaliation, Iran, for the first time, has linked the plight of Muslims in Gaza, Yemen, and Bahrain, with those in Kashmir
    • Iran-Pak-China ties: Warming Iran-Pak-China ties have annoyed India.
    • Sluggish Chabahar port development: Slow Chabahar port development has annoyed Iran.
    • China-Iran strategic partnership:
      • An economic and security partnership deal between Iran and China was recently made public, creating a global alarm, especially for India and the US.
      • The foundation for this deal was laid during Chinese President Xi Jinping’s visit to Iran in 2016
      • The draft agreement involves Chinese investments worth $400 billion into the Iranian economy over 25 years.
      • Of this, $280 billion will be allocated for the oil and gas sector and the remaining funding will be for other core sectors like banking, telecommunications, ports and railways.
      • In return, China would get a steady supply of Iranian oil at a heavily discounted rate during the same period.
      • This deal creates a win-win situation for both countries.
      • It lifts Iran’s sanction-hit economy and helps China set a firm foothold in the Middle East.

    US sanctions:

    • Iran’s aim to develop nuclear weapons has come under strong criticism from Trump Administration since the beginning.
    • Thus, the US has withdrawn from the Iran nuclear deal in 2018 after it was signed in 2015 and imposed unilateral sanctions on Iran.
    • The US’ sanctions and aggressive policies have created a situation of economic and geostrategic uncertainty.
    • Indian investors are wary of having businesses in Iran for the fear of the US.
    • Also, India deviated from the policy of not abiding by unilateral sanctions by ceasing to purchase Iranian oil.
    • Due to this, Iran did not back India’s bid to mobilise international support against Beijing’s aggression in the Ladakh.

    Other issues:

    • Iran is against India’s decision to abrogate Article 370 and 35A.
    • It has called on India and Pakistan to show restraint and prevent the killing of innocent Kashmiris, revealing possible close ties between Pakistan and Iran.
    • Iran also voiced against “extremist Hindus and their parties” during the 2020 Delhi riots.
    • Apart from these issues, Iran also sidelined India’s ONGC from exploration rights at its Farzad B Gas field, stating that it will engage the company at a later date.

    Way forward

    • As India is treading a fine line in balancing relations with the US, China and Iran while striving to augment its political influence in West Asia, embracing one country over the other is not an option for India.
    • Therefore, a multilateral foreign policy is a way forward.
    • India must retain its involvement in the Chabahar port development because of the geostrategic significance.
    • In the immediate term, India should improve its multi-alignment credentials to absorb investments into the port projects from the public and private sector, boost maritime cooperation among littoral countries to enhance the transit of goods, and foster regional partnership for the Chabahar port development.
    • Based on the mutual geostrategic and energy interests, India could collaborate with Japan under the Asia-Africa Growth Corridor.
    • Japan’s participation would enhance the multilateral characteristics of the transit hub in the region, unlike the China-owned Gwadar port. This will further enhance multilateral investments to solidify regional economic partnerships that enable the sustainability of the port.
    • Also, India needs to evolve a better strategy on Iran beyond waiting to see how the US may react, beyond having to issue a clarification in response to Iran’s sudden provocations and beyond allowing voids of partnerships that China may fill.
    • In order to do so, India must create a new alliance of countries having similar geostrategic interests, which are also facing issues with US’ unrealistic and aggressive foreign policy strategy and China’s expansionistic policies.

    Conclusion

    While the revival of the nuclear deal could give a fillip to India’s economic ties with Iran, India’s interests in continental Asia will be served well by heeding to the calls for developing a long-term roadmap for bilateral relations.

     

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  • Poverty Eradication – Definition, Debates, etc.

    The uneven toll of inflation

    | Economics | Mains Paper 3: Indian Economy

    Context

    This upsurge of inflation is affecting the poor more than any other social group because some of the commodities whose prices are increasing the most (like petrol and certain food items) represent a larger fraction of the budget of the most vulnerable sections of society.

    Factors fueling inflation in India

    • The Wholesale Price Index (WPI) and the Consumer Price Index (CPI) show an upward rising trend, annually, at 13.11 per cent and 6.07 per cent respectively.
    • Falling rupee: Inflation is here to stay because it has much to do with the decline in value of the rupee that has fallen to its lowest, which makes imports of oil and gas more expensive.
    • Ukraine crisis: The war in Ukraine has the same effect and pushes the price of some food items upward.

    Rising inequality

    • Impact on the poor: This upsurge of inflation is affecting the poor more because some of the commodities whose prices are increasing the most represent a larger fraction of the budget of the most vulnerable sections of society.
    • Rising inequality: As a result, inequalities — which were already on the rise — are increasing further.
    • Recently, the State of Inequality in India report showed that an Indian making Rs 3 lakh a year belonged to the top 10 per cent of the country’s wage earners. 
    •  Inequalities are also increasing among salaried people, who are privileged compared to those of the informal sector: The bottom 50 per cent account for only 22 per cent of the total salary income.
    • The situation of the lower-middle class and poor is deteriorating.
    • The Reserve Bank of India shows slow farm wage growth in nominal terms: From an average of 6.6 per cent in fiscal 2021 to 5.7 per cent in fiscal 2022 (April-November average). This is below the inflation rate.

    Inequality in healthcare

    • India’s spending on healthcare is among the lowest in the world.
    • A decent level of healthcare is available only to the ones who can afford it because of increasing out-of-pocket expenditure — the payment made directly by individuals for the health service, not covered under any financial protection scheme.
    •  Overall, these out-of-pocket expenses on healthcare are 60 per cent of the total expenditure on public health in India, which is one of the highest in the world.

    How policies are contributing to the increasing inequality?

    • High indirect taxes: The share of indirect taxes in the state’s fiscal resources has increased from 2014 to 2019 to reach 50 per cent of the total taxes in 2019.
    • Higher indirect taxes are the most unfair as it affects everyone, irrespective of their income.
    • Taxes on alcohol and petroleum products are cases in point.
    • In contrast, the big companies are flourishing, again, partly because of certain fiscal policies. 
    • Low corporate taxes: The government’s budget in 2015 substantially lowered the corporate tax.
    • Withdrawal of enhanced surcharge: In addition to these tax cuts, the government withdrew the enhanced surcharge on long- and short-term capital gains for foreign portfolio investors (FPIs) as well as domestic portfolio investors.
    • These government policies are clearly promoting the supply side at the expense of demand.
    • The central bank has raised interest rates and CRR in an attempt to curb demand, but demand in the country is already choking.

    Way forward

    • Higher allocation for MGNREGA: A higher allocation of funds for MGNREGS in rural areas, as well as the introduction of similar employment generation schemes in urban areas, should, therefore, be a priority.
    • Municipal bonds at state level: At the state level, the development of municipal bond markets could be a plausible alternative.
    • Reduction on excise duty on fuel: A reduction in the excise duty on fuel prices and easing the fuel tax burden could also supplement the disposable income and reduce the input cost burden for producers.

    Conclusion

    Though the government is opting for market-based economics, currently, India needs a mixed solution that comprises price stability via government channels and subsidies.

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    Back2Basics: Long and short-term capital gain

    • When you buy and sell assets, the profit that you earn is called a Capital Gain.
    • Long Term Capital Gains are those that you earn when you sell an asset after 36 months (3 years) from the date on which you acquired the asset.
    • Short Term Capital Gains are those that you earn when you sell an asset in under 36 months (3 years) from the date on which you acquired the asset.

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