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India- France: Expanding strategic partnership
Context
- The celebration by India and France of 25 years of their strategic partnership (January 26) presents an important opportunity for both to introspect on their relations. Signed in 1998, the time-tested strategic partnership has continued to gain momentum over shared values and aspirations of peace, stability and, most importantly, their desire for strategic autonomy. There are no real substantive disagreements between the two nations.
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France a largest foreign investor in India
- France has emerged as a key trading partner of India with annual trade of $12.42 billion in 2021-22.
- It is the 11th largest foreign investor in India with a cumulative investment of $10.31 billion from April 2000 to June 2022, which represents 1.70% of the total foreign direct investment inflows into India.
France a key defence trading partner of India
- Second largest defence supplier in 2017-2021: France has emerged as a key defence partner for India, becoming the second largest defence supplier in 2017- 2021. France has emerged as a major strategic partner for India with crucial defence deals and increased military to military engagement.
- For example: A key example of this is the inducting of the French Scorpene conventional submarines, being built in India under technology transfer agreement of 2005, and the Indian Air Force having received 36 Rafale fighter jets.
- Joint venture for aircraft manufacturing: The Tata group has also tied up with Airbus to manufacture C-295 tactical transport aircraft in Vadodara, Gujarat. This line is expected to be expanded into other civilian and military aircraft manufacturing in a joint venture with France.
- Regular joint exercises: These relations are further fortified with the robust network of military dialogues and regularly held joint exercises Varuna (navy), Garuda (air force), and Shakti (army).
- France is a willing partner for India: The importance of the defence partnership was further underscored in the recent statement by the French Ambassador to India, Emmanuel Lenain that France is a willing partner for India as it builds its national industrial base for the defence industry and for critical strategic defence projects.
Maritime ties
- Joint Strategic Vision of India-France Cooperation in the Indian Ocean Region: India and France are resident powers of the Indian Ocean and in the Indo-Pacific. The importance of the Indian Ocean Region was visible during the visit of French President Emmanuel Macron’s visit to New Delhi in 2018 when the leadership of both countries welcomed the Joint Strategic Vision of India-France Cooperation in the Indian Ocean Region which presented a blueprint for a strengthening of ties.
- Like-minded partners: In operational terms, Franco-Indian joint patrolling in the Indian Ocean signals New Delhi’s intent to engage with like-minded partners in expanding its footprint in the Indian Ocean.
- Common vision for open Indo-Pacific: Maritime security has further gained momentum as both countries have articulated their common vision for a free, fair and open Indo-Pacific. Both countries seeks to provide comprehensive solutions for maritime security, regional cooperation, climate change adaptation.
- Common concerns over China’s aggressive behaviour: Both countries share concerns over the rise of China and its aggressive behaviour, regionally and globally, and have committed to working together to ensure that there is no imbalance in the Indo-Pacific
- Indo-Pacific Trilateral Development Cooperation Fund: India and France in September 2022 agreed to set up an Indo-Pacific Trilateral Development Cooperation Fund that will support sustainable innovative solutions for countries in the region. The two partners have formed a trilateral grouping with the United Arab Emirates to ensure maritime domain awareness and security from the east coast of Africa to the far Pacific.
Other areas of cooperation
- Nuclear cooperation: France was among the first countries with which India signed a civil nuclear deal. Paris also played a critical role in limiting India’s isolation in the non-proliferation order after the 1998 nuclear tests.
- Support for India’s bid for permanent membership of UNSC: In a sign of expanding cooperation, France supports India’s bid for permanent membership of the United Nations Security Council as well as its entry into the Nuclear Suppliers Group.
- India supported France in the Paris Agreement: An area of importance for both is climate change, where India has supported France in the Paris Agreement expressing its strong commitment towards mitigating climate change impact. New Delhi and Paris, as part of their joint efforts on climate change, launched the International Solar Alliance in 2015.
- Deepening cooperation in complex geological order: As the complexities in the international geopolitical order have emerged, both countries have worked towards a deepening and broadening of their cooperation.
Way ahead
- India’s partnership with France is built on common values and goals.
- Both have underlined the importance of maintaining strategic autonomy with a shared understanding of global risks in many domains.
- There is a high-level India-France political dialogue that is ongoing in defence, maritime, counterterrorism and the Indo-Pacific.
- They are now forging ahead with cooperation in issues such as digitisation, cyber, green energy, a blue economy, ocean sciences, and space.
Conclusion
- India and France understand each other’s interests and dependencies, be it in relation to China or Russia. In the marking of a long strategic partnership, a common interest in enhancing strategic autonomy and improving resilience, there is much ground ahead for further collaboration.
Mains question
Q. India’s partnership with France is built on common values and goals. In recent times, France has emerged as a key defence trading partner of India. Discuss.
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Sansad TV Perspective: Health of India’s Banking System
Context
- The Indian banking sector remains resilient and stable.
- Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy.
- That’s the statement from the RBI amid heightened concerns about the exposures of banks to a business conglomerate.
Why in news?
- The Budget 2023-24 has no provisions for capital infusion.
- This reflects the confidence of the government in the robust position of the Indian banking system.
Key indicators from Financial Stability Report (December 2022)
- High aggregate deposits: The Indian banking sector recorded a healthy growth in deposits and advances during FY 2022, with the aggregate deposits of the scheduled commercial banks rising by 11.7% and the aggregate advances increasing by 10.2%.
- Decline in NPAs: The gross non-performing assets (NPA) ratio of all scheduled commercial banks (SCBs) declined from 9.1% in March 2021 to 8.2% in September 2022, driven by a reduction in NPAs of public sector banks (PSBs).
- Adequate capital: The Indian banking sector is well capitalized, with the capital-to-risk-weighted assets ratio (CRAR) of SCBs at 13.3% as of September 2022, higher than the regulatory requirement of 11.5%.
- Credit growth increased: Credit growth of banks remained strong during FY 2022, with the credit growth of SCBs increasing from 8.4% in March 2021 to 10.1% in September 2022.
- Moderate liquidity: RBI liquidity management operations during FY 2022 provided significant liquidity support to the banking system and helped to maintain overall financial stability.
What led to improvements of banking prospects?
- Non-impacted by global recession: The financial system remained resilient to external shocks as the overall capitalization of the banking sector improved and credit growth remained strong.
- Stable Rupee: The Indian rupee (INR) remained largely stable during FY 2022, with the rupee depreciating by 0.8% against the US dollar (USD) during the year.
- Stable equity markets: The Indian equity markets performed well during FY 2022, with the BSE Sensex recording a gain of 24.2% during the year.
- High forex reserves: The foreign exchange reserves of India stood at US$ 574.2 billion as of December 2022, a rise of 13.5% over the level at end-March 2021.
- Healthy credit ratings: International rating agencies like Moody’s Investor Service and Standard & Poor’s global rating have upgraded their outlook for the Indian banking system based on its performance in the last couple of years.
What contributes to resilient and stability in Indian banking system?
- RBI’s prudency: The RBI as a regulator is excellent and it is well-recognized in the world. It handles the regulation and supervision of such a heterogeneous system involving cooperative banks, foreign banks, and even NBFCs with great efficiency.
- RBI’s global stature: The respect the RBI commands in the world is extremely high. For instance, the Federal Reserve, Washington invited officers of RBI in 2009 after the collapse of the Lehman Brothers.
- Timely assessment: RBI is extremely watchful at the macro, institutional, and individual levels and releases periodical reports like the Financial Stability Report.
- Checks and balances: The Asset Quality Review which RBI initiated in 2018 is crucial in identifying and plugging the loopholes. The banks have deployed a risk assessment department and risk assessment officers. RBI has made various provisions and starts flagging the risks ex. Special Mention Account.
Achievements of the Indian Banking Sector
- NPA crisis under control: The issues of NPA and Twin Balance Sheet problems were addressed through proactive measures of government and RBI like Recognition, Resolution, Recapitalization, and Reforms.
- Credit Growth: The credit growth in the banking sector has been very impressive in the past few years. The credit to GDP ratio has increased from 48.3% in 2008 to 74.3% in 2018. This has led to increased availability of credit to businesses and individuals.
- Expansion of banking services: The banking sector in India has seen tremendous growth in the past decade. The number of bank branches has grown from around 80,000 in 2000 to more than 1,50,000 in 2018. This has led to an increase in the access of banking services to the masses.
- Financial Inclusion: The banking sector has also played an important role in making financial services accessible to the unbanked population of India. The Pradhan Mantri Jan-Dhan Yojana (PMJDY) launched in 2014 has been a major success, with more than 32 crore accounts opened so far.
- Digitization: The banking sector has seen a rapid digitization, with banks providing various digital services such as mobile banking, internet banking, and cardless cash withdrawals. This has enabled customers to access banking services from anywhere, anytime.
- Financial Innovation: The banking sector has also seen a great deal of financial innovation. Banks have introduced various new products and services such as credit cards, debit cards, and mutual funds. These products have helped customers to access a wide range of financial services.
Systemic risks to Indian Banks
- Non-Performing Assets (NPAs): With the rise in NPAs, banks are exposed to the risk of defaults, write-offs and losses.
- Credit Risk: Banks are exposed to credit risk when borrowers are unable or unwilling to repay their loans.
- Interest Rate Risk: Banks are exposed to interest rate risk when their assets and liabilities have different maturities and/or interest rates.
- Regulatory Risk: Banks are subject to stringent regulations and changes in regulations can significantly impact their profitability.
- Operational Risk: Banks are exposed to operational risk from a variety of sources, including technical failures, fraud, and human error.
- Cybersecurity Risks: As banks become increasingly reliant on digital systems and processes, there is an increased risk of cyber-attacks and data breaches.
Way ahead
- Privatization in near future: After addressing key concerns like the NPAs and recapitalization, the government is moving towards the substantive reform of privatization. It was also announced in the Budget speech of 2022-23 that the idea is to have a few big banks.
- Increased monitoring and compliance: RBI is also constantly improving its ways and mechanism of monitoring and regulation to be risk-proof in the future. Banks are also in compliance with the Large Exposure Framework (LEF) guidelines issued by the RBI.
- Leveraging technology: In the mechanisms deployed by the RBI, there is a red alert in case of any discrepancy in the system. Technology can help to a great extent in increasing the frequency and time efficiency of addressing such red alerts. Thus, RBI should leverage technology.
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No Rationalization of GST structure for now: Revenue Secretary
The long-awaited rationalization of the multiple rate structure of the Goods and Services Tax (GST) regime is off the table for now and unlikely to materialize in the near future.
What is GST?
- GST launched in India on 1 July 2017 is a comprehensive indirect tax for the entire country.
- It is charged at the time of supply and depends on the destination of consumption.
- For instance, if a good is manufactured in state A but consumed in state B, then the revenue generated through GST collection is credited to the state of consumption (state B) and not to the state of production (state A).
- GST, being a consumption-based tax, resulted in loss of revenue for manufacturing-heavy states.
What are GST Slabs?
- In India, almost 500+ services and over 1300 products fall under the 4 major GST slabs.
- There are five broad tax rates of zero, 5%, 12%, 18% and 28%, plus a cess levied over and above the 28% on some ‘sin’ goods.
- The GST Council periodically revises the items under each slab rate to adjust them according to industry demands and market trends.
- The updated structure ensures that the essential items fall under lower tax brackets, while luxury products and services entail higher GST rates.
- The 28% rate is levied on demerit goods such as tobacco products, automobiles, and aerated drinks, along with an additional GST compensation cess.
Issues with GST structure
- Complexity of the GST Structure: The GST structure is quite complex and difficult to understand, which has led to confusion among businesses and consumers alike. This has also led to an increase in the cost of compliance and administration for businesses.
- Heterogeneity of Rates: One of the main issues with the GST structure is the heterogeneity of rates across different goods and services. This has led to an increase in the cost of compliance for businesses as they need to be aware of the applicable GST rate for each product and service.
- Dual GST System: India has a dual GST system, which has led to confusion and complexity for businesses that have to deal with both the central GST (CGST) and the state GST (SGST). This has also led to an increased cost of compliance for businesses.
- Cascading Taxation: The GST structure has led to the problem of cascading taxation, wherein taxes are levied at every stage of the supply chain, leading to an increase in the cost of goods and services.
- Lack of Transparency: The GST structure has led to a lack of transparency in the pricing of goods and services, as the applicable taxes are not clearly indicated in the invoice.
- Poor collection infrastructure: The GST system requires a strong infrastructure in order to function properly, which is not always present in India. This can lead to delays in filing and other issues.
Why rationalize GST slabs?
- Complex duty structure: From businesses’ viewpoint, there are just too many tax rate slabs, compounded by aberrations in the duty structure through their supply chains with some inputs taxed more than the final product.
- Multiple rate changes: This has been since the introduction of the GST regime in July 2017 have brought the effective GST rate to 11.6% from the original revenue-neutral rate of 15.5%.
- Stipulated revenue losses: Merging the 12% and 18% GST rates into any tax rate lower than 18% may result in revenue loss.
Benefits of GST rationalization
- Easier compliance: Rationalizing GST slabs helps simplify the tax structure and make it easier for businesses to comply with the law.
- Fairness of taxation: It also helps to ensure that the tax burden is shared fairly and that the revenue generated is used efficiently.
- Efficiency in tax collection: Finally, rationalizing GST slabs leads to more efficient collection of taxes, which helps to reduce the cost of compliance for businesses.
Conclusion
- Rate rationalization is probably the biggest ‘reform’ that is required to make the GST regime more efficient.
- As and when the exercise is complete, it is expected that the GST would be a less complex system that not only would make compliances easier but also boost revenue collection.
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What is Article 356 of Indian Constitution?
Sitting PM recalled that governments at the Centre had dismissed 90 elected state governments by “misusing” Article 356 of the Constitution.
What is Article 356?
- Article 356 of the Indian Constitution contains provisions for the imposition of “President’s Rule” in a state, removing an elected government.
- While the Constitution intended Article 356 to be used only under extraordinary circumstances, central governments repeatedly used the provision to settle political scores.
What does it say?
- Article 356 empowers the President to withdraw to the Union the executive and legislative powers of any state.
- She/he has to be satisfied that a situation has arisen in which the government of the state cannot be carried on in accordance with the provisions of the Constitution.
- Whether the constitutional machinery has broken down may be determined by the President at any time, either upon receipt of a report from the Governor, or suo motu.
Duration of Presidents Rule
- According to the provisions of Article 356, President’s Rule in a state can be imposed for six months at a time for a maximum duration of three years.
- Every six months, Parliamentary approval to impose President’s Rule will be required again.
- However, in the past, President’s Rule has been extended for significantly longer periods under specific circumstances.
- For instance, Punjab was under President’s Rule from 1987-1992 due to the growing militancy.
What are the origins of Article 356?
- Article 356 was inspired by Section 93 of the Government of India Act, 1935.
- This provided that if a Governor of a province was satisfied that a situation had arisen in which the government of the province cannot be carried on in accordance GOI Act, he could assume to himself all or any of the powers of the government and discharge those functions in his discretion.
- The Governor, however, could not encroach upon the powers of the high court.
- For the British, this provision allowed for a ‘controlled democracy’ – while providing some autonomy to provincial governments, Section 93 allowed the British authorities to exercise ultimate power when they deemed necessary.
How was the provision used as a political weapon in independent India?
- During the decades of Congress’s dominance at the Centre, Article 356 was used against governments of the Left and regional parties in the states.
- Until 1959, Jawaharlal Nehru’s government had used the article six times, including to dislodge the first-ever elected communist government in the world, in Kerala in 1959.
- In the 1960s, it was used 11 times. After Indira came to power in 1966, Article 356 was used seven times between 1967 and 1969 alone.
- The 1970s were more politically turbulent. Between 1970 and 1974, President’s Rule was imposed 19 times.
- Post-emergency, the Janata Party government used it in 1977 to summarily dismiss nine Congress state governments.
- When Indira returned to power in 1980, her government too imposed President’s Rule in nine states.
- In 1992-93, PM Narasimha Rao dismissed three governments in the wake of the demolition of Babri Masjid, besides Kalyan Singh’s government in UP.
How was this political misuse of Article 356 curbed?
Ans. S R Bommai Judgment, 1989
- In its judgment in the landmark R. Bommai v. Union of India case, the Supreme Court discussed the provisions of Article 356 at length.
- A nine-judge Bench in its decision in 1994 noted the specific instances when President’s Rule can be imposed and when it cannot.
- The court held that Article 356 can be invoked in situations of the physical breakdown of the government or when there is a ‘hung assembly’.
- But that it cannot be used without giving the state government a chance to either prove its majority in the House or without instances of a violent breakdown of the constitutional machinery.
- Since the judgment, the arbitrary use of Article 356 has been largely controlled.
Try this PYQ:
Which of the following are not necessarily the consequences of the proclamation of the President’s rule in a State?
- Dissolution of the State Legislative Assembly
- Removal of the Council of Ministers in the State
- Dissolution of the local bodies
Select the correct answer using the code given below:
(a) 1 and 2
(b) 1 and 3
(c) 2 and 3
(d) 1, 2 and 3
Post your answers here.
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US bombed Nord Stream Gas Pipeline
An American investigative journalist has claimed that the September 2022 bombing of the undersea Nord Stream gas pipelines was carried out by the US Central Intelligence Agency (CIA).
What is Nord Stream Pipeline?
(1) Nord Stream 1:
- Nord Stream 1 is the biggest pipeline transporting natural gas between Russia and Europe via Germany.
- It is a system of offshore natural gas pipelines running under the Baltic Sea from Russia to Germany.
- Nord Stream 1 is a 1,224 km underwater gas pipeline that runs from Vyborg in northwest Russia to Lubmin in northeastern Germany via the Baltic Sea.
(2) Nord Stream 2:
- Russian threats to choke this gas supply to Europe present an economic threat to Germany.
- To expand options and double the supply from Russia, Germany decided to build Nord Stream 2.
- The construction of the $11 billion-worth Nord Stream 2 was completed in 2021 but never began commercial operations.
Why the Nord Stream pipeline is so much in news?
- For Germany: Energy prices in Germany, Europe’s largest economy, are among the lowest in the continent because of the cheap gas supplies via Nord Stream 1. This also makes German manufactured goods more competitive in the international market.
- For European Union: In 2021, Russia supplied nearly 40 per cent of the EU’s natural gas needs through this pipeline. The flows through Nord Stream play a vital role in filling up the national storage tanks of EU. It is crucial to provide the required heating in the upcoming winter.
- For Russia: Russia is using the supplies via the crucial pipeline as a bargain to navigate its economy through sanctions from the western countries.
What is the current status of Nord Stream Pipeline?
- Nord stream pipeline is the largest single supply route for Russian gas to Europe. The Russian state owned gas company Gazprom has a majority ownership in the pipeline.
- While it was running at just 20% of its capacity since the Russia-Ukraine conflict began, the company, in early September fully cut gas flows from the pipeline on the pretext of maintenance.
- According to Bloomberg, while 40% of Europe’s pipeline gas came from Russia before Russia Ukraine the war, the number now stands at just 9%.
- Even though both pipelines were not running commercially, they had millions of cubic metres of gas stored in them.
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ISRO’s SSLV-D2 launched successfully
The Indian Space Research Organisation (ISRO) will undertake the second development flight of the Small Satellite Launch Vehicle (SSLV –D2).
Payload details
The SSLV-D2 is intended to inject ISRO’s EOS-07, U.S.-based firm Antaris’ Janus-1 and Chennai-based space start-up Space Kidz’s AzaadiSAT-2 satellites into a 450-km circular orbit in its 15 minutes flight.
- EOS-07: is a 156.3 kg satellite designed, developed and realized by the ISRO. Its mission objective is to design and develop payload instruments compatible with microsatellite buses and new technologies that are required for future operational satellites.
- Janus-1: Weighing around 10.2 kg, Janus-1 is a technology demonstrator, smart satellite mission based on Antaris software platform.
- AzaadiSAT-2: A 8.7-kg satellite, AzaadiSAT-2 is a combined effort of about 750 girl students across India guided by Space Kidz India, Chennai.
What is SSLV?
- The SSLV is a small-lift launch vehicle being developed by the ISRO with payload capacity to deliver:
- 600 kg to Low Earth Orbit (500 km) or
- 300 kg to Sun-synchronous Orbit (500 km)
- It would help launching small satellites, with the capability to support multiple orbital drop-offs.
- In future a dedicated launch pad in Sriharikota called Small Satellite Launch Complex (SSLC) will be set up.
- A new spaceport, under development, near Kulasekharapatnam in Tamil Nadu will handle SSLV launches when complete.
- After entering the operational phase, the vehicle’s production and launch operations will be done by a consortium of Indian firms along with NewSpace India Limited (NSIL).
Vehicle details
(A) Dimensions
- Height: 34 meters
- Diameter: 2 meters
- Mass: 120 tonnes
(B) Propulsion
- It will be a four stage launching vehicle.
- The first three stages will use Hydroxyl-terminated polybutadiene (HTPB) based solid propellant, with a fourth terminal stage being a Velocity-Trimming Module (VTM).
SSLV vs. PSLV: A comparison
- The SSLV was developed with the aim of launching small satellites commercially at drastically reduced price and higher launch rate as compared to Polar SLV (PSLV).
- The projected high launch rate relies on largely autonomous launch operation and on overall simple logistics.
- To compare, a PSLV launch involves 600 officials while SSLV launch operations would be managed by a small team of about six people.
- The launch readiness period of the SSLV is expected to be less than a week instead of months.
- The SSLV can carry satellites weighing up to 500 kg to a low earth orbit while the tried and tested PSLV can launch satellites weighing in the range of 1000 kg.
- The entire job will be done in a very short time and the cost will be only around Rs 30 crore for SSLV.
Significance of SSLV
- SSLV is perfectly suited for launching multiple microsatellites at a time and supports multiple orbital drop-offs.
- The development and manufacture of the SSLV are expected to create greater synergy between the space sector and private Indian industries – a key aim of the space ministry.
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India- Nordic can be the powerhouse of the green transition globally
Context
- Over the last decades, Nordic countries have been pioneering in green technologies. Over the last decades, Nordic have also been at the forefront of developing new green technologies and solutions such as hydrogen, offshore wind, batteries and carbon capture and storage solutions that are essential for the world to succeed in the green transition it desperately needs. Together, the Nordics and India can deliver key technologies and solutions to stop climate change and boost green growth.
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India- Nordic connect
- Nordic-India Summit: At the Nordic-India Summit held in Copenhagen in May 2022, the five Nordic Prime Ministers and India’s Prime Minister Narendra Modi agreed to intensify cooperation on digitalisation, renewable energy, maritime industries, and the circular economy.
- Joint Nordic solutions for green transition: Modi expressed an interest in joint Nordic solutions that can support India’s green transition.
- Knowledge exchange and cooperation: It is very much with this in mind that, the Trade Ministers of Norway and Finland, are currently visiting India together During their visit, they aim to showcase the added value to the partnership can bring to India and learn from the impressive innovations and digital solutions being developed in India.
- Ambition to increase collaboration: They have business delegations and companies that are leaders within sectors such as clean energy, circular economy, digitalisation, tourism, and the maritime sector. They have great ambitions for increased collaboration with India.
- Nordic business community in India is also growing: The most valued and renowned Nordic businesses are already operating in India and have made substantial investments. There are now 240 Norwegian and Finnish companies in India.
Trade links that can grow
- India a priority country for Finland: The past year has seen a significant rise in trade and investments between Finland and India, and India has grown to become a priority country for Finland.
- For instance: Finland opened a new consulate General in Mumbai. This further increases the number of Nordic representations in India’s commercial capital and will contribute to strengthening India-Finnish ties.
- Trade between Norway and India has doubled in the last three years: Finnish companies such as Nokia and Fortum see India as their largest growth market now and have some of their most significant investments in India. The Norwegian Sovereign Wealth Fund is likely to become one of India’s largest single foreign investors (around $17.6 billion).
- Number of investments is increasing rapidly: The Norwegian government has also recently established a new Climate Investment Fund for investments in renewables abroad, and India has been declined as a focus country. Almost ₹1,500 crore have been invested so far in India through the climate investment fund, and the number of investments is increasing rapidly.
Untapped potential for trade and further collaboration
- Finland, as a member of the European Union (EU), is a part of the EU-India FTA negotiations, and Norway is negotiating through the European Free Trade Association.
- Trade in services is an area of significant potential, especially with tourism, education, IT, energy, maritime and financial services.
- As India takes rapid strides into a green, digital, and innovative future, Nordic countries such as Finland and Norway stand ready to share experiences and be a part of India’s transition.
Conclusion
- Although Nordic countries are significantly smaller than India population-wise and a located on the other side of the globe, they have world-leading technologies and expertise to other. Technologies and innovations that are successful and are scaled-up in India can easily be transferred to other parts of the world. Together, the Nordics and India can be the powerhouse of the green transition globally.
Mains question
Q. Over the last decades, Nordic countries have been pioneering in green technologies. Together, the Nordics and India can power the green transition the world needs. Discuss.
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Indus Water Treaty: A Case of Hydropolitics
Context
- Indus Waters Treaty (IWT) made it the headlines recently. As India issued a notification to Pakistan for modification to the treaty, speculations are rife that the treaty is showing signs of inefficacy and that cracks are visible on the sole bridge between the two nuclear neighbours. On the other hand, for many in the hydro-diplomacy community, the IWT remain a stellar example for asserting that nations can cooperate for managing their shared rivers even with mutual mistrust and hostile political relations.
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What is Indus Water Treaty (IWT)?
- The Indus Waters Treaty is a water-distribution treaty between India and Pakistan, brokered by the World Bank signed in Karachi in 1960.
- According to this agreement, control over the water flowing in three eastern rivers of India the Beas, the Ravi and the Sutlej was given to India.
- The control over the water flowing in three western rivers of India the Indus, the Chenab and the Jhelum was given to Pakistan
The present developments
- Intergovernmental negotiations to rectify material breach of the treaty: India issued a notice to Pakistan on 25th January 2023 through its commissioner to the bilateral Permanent Indus Commission suggesting that Pakistan should enter intergovernmental negotiations within 90 days to rectify the material breach of the treaty under Article 12(3) of IWT.
- Government-to-government negotiation before accepting the involvement of a neutral expert: India defended its move by stating that it was adhering to the provision under the treaty for a graded mechanism for handling an issue of concern as it interpreted it. Therefore, it asked for a government-to-government negotiation before accepting the involvement of a neutral expert and finally taking it to a court of arbitration.
Why such move?
- Pakistan initially sought a neutral expert and then backtracked: In India, the perceived root cause for this present move is that Pakistan initially sought a neutral expert to examine the technical objections that it had raised on India’s Kishanganga and Ratle Hydropower projects but then backtracked and asked for adjudication through a court of arbitration.
- Despite India’s efforts Pakistan refused to negotiate: Despite repeated efforts by India to negotiate at consecutive meetings of the Permanent Indus Commission, Pakistan refused to budge.
- Pakistan has always preferred the route of arbitration: This is of consequence since Pakistan has always preferred the route of arbitration rather than a graded approach in the past with the involvement of a neutral expert before submitting to arbitration.
- Pakistan’s repeated stance of seeking arbitration is prejudicial and pernicious: Indian strategic experts have called Pakistan’s repeated stance of seeking arbitration as prejudicial and pernicious while accusing the World Bank that it has allowed Pakistan to run riot in the last few years.
The role of World Bank?
- Brokered by WB: The long-standing Indus Waters Treaty (IWT), a first-of-its-kind arrangement that was brokered by the World Bank between India and Pakistan for sharing the waters of the Indus system,
- Signatory to the treaty to maintain ambivalence: The World Bank, as a signatory to the treaty, has maintained ambivalence and has yielded to both demands by appointing a neutral expert and a chairman for the court of arbitration.
- Legal risk in duality of discussing and resolving: This has created a particularly confounding situation due to the initiation of two mutually-exclusive tracks for discussing and resolving the thorny issues. The Bank also recognised the practical and legal risks that this duality poses.
Mistrust and mismanagement
- IWT concerns linked with National security and sovereignty: In the last two decades, both governments have raked up their concerns with the IWT, often coupling the Indus waters with national security and sovereignty with concerns emerging from the highest levels of governments at times.
- Pakistan’s accusation: Pakistani officials and ministers on their part have issued statements accusing India of creating water woes in Pakistan by allowing sudden releases of water without prior notification as was the case in 2019.
- Pakistan has also been apprehensive about two projects by India: The Baglihar and Kishanganga Hydroelectric Project (HEP), accusing India of acquiring the power to affect the timing and flow of water into Pakistan on rivers that belong to it under the provisions of IWT.
- Misplaced developmental priorities of Pakistan: The politicisation of the IWT is systematic and has been occurring in a synchronised way, especially in Pakistan due to their misplaced developmental priorities.
- Lack of ecosystems approach
Conditions that underlie any successful transboundary water negotiation process
- Parties actively recognise their interdependencies;
- Parties agree to explore competing and often conflicting values and interests and invent creative options for mutual gains; and
- Parties agree to create mechanisms to monitor the implementation of the agreement and adapt the agreement to address new issues as they emerge.
Climate change is often neglected in politicization of the water issues
- The newer challenges of water governance are emerging. Water cannot be looked at as a stock of resource to be stored for human convenience, and released as per human will.
- Today, whether it is in the Ganges or in the Indus delta regions, there is hardly any acknowledgement that upstream constructions and climate change are wreaking havoc on delta livelihoods.
- Pakistan is so embroiled in the politics of water that they have become oblivious that they are losing a living heritage, the Palla fish The decline in catch is affecting the livelihoods of the fishing community.
- Moreover, higher glacial melt due to global warming around the headwaters in the Himalayas is slated to increase flow in the short run but will be a threat to water security in the long run due to scarcities.
- Therefore, all these bigger climatic threats and the threats created by the dam structures that can arrest the sediments and can cause upstream floods should be of bigger concern than mere politicisation of the water issues.
Conclusion
- On the whole, the lack of trust between nations has marred the hydropolitics of the Indus. The priority should have been settling disputes amicably by drawing strength and confidence from the past and preparing for an uncertain precipitation regime of the future due to climate change. The concerns of a much-needed integrated basin governance approach for the Indus must not be overshadowed by politics of mistrust and hatred.
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9th Feb 23 | Prelims Daily with Previous Year Questions
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