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Subject: Bilateral Relations

1. Major World Events
2. India’s Interests in neighbourhood
3. Effects of our Policies

  • India extends duration of $400 mn Currency Swap to SL

    India has extended the duration of a $400 million currency swap facility with Sri Lanka which it had concluded with the island nation in January this year.

    What are Currency Swaps?

    • A currency swap, also known as a cross-currency swap, is an off-balance sheet transaction in which two parties exchange principal and interest in different currencies.
    • Currency swaps are used to obtain foreign currency loans at a better interest rate than could be got by borrowing directly in a foreign market.

    Practice question for mains:

    Q. What are Currency Swaps? Discuss the efficacy of Currency Swap Agreements for enhancing bilateral cooperation in Indian context.

    How does it work?

    • In a swap arrangement, RBI would provide dollars to a Lankan central bank, which, at the same time, provides the equivalent funds in its currency to the RBI, based on the market exchange rate at the time of the transaction.
    • The parties agree to swap back these quantities of their two currencies at a specified date in the future, which could be the next day or even three months later, using the same exchange rate as in the first transaction.
    • These swap operations carry no exchange rate or other market risks, as transaction terms are set in advance.

    Why does one need dollars?

    • FPIs investors look for safer investments but the current global uncertainty over COVID outbreak has led to a shortfall everywhere in the global markets.
    • This has pulled down foreign exchange reserves of many small and developing countries.
    • This means that the government and the RBI cannot lower their guard on the management of the economy and the external account.

    Benefits of currency swap

    • The absence of an exchange rate risk is the major benefit of such a facility.
    • This facility provides the flexibility to use these reserves at any time in order to maintain an appropriate level of balance of payments or short-term liquidity.
    • Swaps agreements between governments also have supplementary objectives like the promotion of bilateral trade, maintaining the value of foreign exchange reserves with the central bank and ensuring financial stability (protecting the health of the banking system).

     

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  • Maldives bans ‘India Out’ Campaign

    Maldivian President Ibrahim Mohamed Solih issued a decree banning the ‘India Out’ campaign, now led by former President Abdulla Yameen, terming it a “threat to national security”.

    The India-Out Campaign

    • Maldivian protesters recently demanded the Solih administration to ‘stop selling national assets to foreigners’, implying India.
    • ‘India Out’ campaign in Maldives had started sometime last year as on-ground protests in the Maldives and later widely spread across social media platforms under the same hashtag.
    • It is not related to people-to-people conflict (Indian diaspora) but is discontent on close relationship between Maldivian government & India.

    Causes for the anti-India sentiments

    • Political instability: The anti-India sentiment is nearly a decade old and can be traced back to when Abdulla Yameen Abdul Gayoom became president in 2013. He used anti-India sentiments for his political mobilization and started tilting China.
    • Controversy over helicopter gift: Two Dhruv Advanced Light Helicopters (ALF) that were given by India to the Maldives for ocean search-and-rescue operations. Opposition tried to portray this as military presence in the country.
    • Confidential agreements: Most agreements being signed between the Ibrahim Solih government and India are backdoor and has not been publicly discussed in the Maldives Parliament.
    • Alleged interference in domestic politics: India being a big neighbour, there are unsubstantiated perceptions & allegations on Indian Diplomats stationed in Maldives interfering in Domestic affairs.

    Restoration of ties

    • Ibrahim Mohamed Solih who became President in 2018 has restored Maldives close ties with India.

    India-Maldives Relations: A backgrounder

    • India and Maldives are neighbors sharing a maritime border.
    • Both nations established diplomatic relations after the independence of Maldives from British rule in 1966.
    • India was one of the first nations to recognize Maldives’ independence.
    • Since then, India and Maldives have developed close strategic, military, economic and cultural relations.
    • Maldivians generally regard Indians and India as a friend and trusted neighbor in the field economic, social and political.

    Major irritants in ties

    • Political Instability: India’s major concern has been the impact of political instability in the neighborhood on its security and development.
    • Increasing radicalization: In the past decade or so, the number of Maldivians drawn towards terrorist groups like the Islamic State (IS) and Pakistan-based jihadist groups has been increasing.
    • Inclination towards terror: Radicalism in the island nation has increased the possibility of Pakistan-based terror groups using remote Maldivian islands as a launch pad for terror attacks against India and Indian interests.
    • Chinese affinity: China’s strategic footprint in India’s neighborhood has increased. The Maldives has emerged as an important ‘pearl’ in China’s “String of Pearls” construct in South Asia.

    Recent gestures by India

    [1] 2014 Malé drinking-water crisis

    • In the wake of a drinking water crisis in Malé in December 2014, following collapse of the island’s only water treatment plant, Maldives urged India for immediate help.
    • India came to rescue by sending its heavy lift transporters like C-17 Globemaster III, Il-76 carrying bottled water.

    [2] 2020 Covid-19 crisis

    • During the COVID-19 crisis of 2020, India extended help to Maldives in the form of financial, material and logistical support.
    • Also, the IAF airlifted 6.2 tonnes of essential medicines and hospital consumables to Maldives, as part of ‘Operation Sanjeevani’.

    [3] Greater Male Connectivity Project

    • India has recently announced the signing of a $500-million infrastructure project for the construction of the Greater Malé Connectivity Project (GMCP).
    • This infrastructure project, the largest-ever by India in the Maldives, involves the construction of a 6.74-km-long bridge and causeway link.

    Why is Maldives significant for India?

    • Increasing maritime cooperation: As maritime economic activity in the Indian Ocean has risen dramatically in recent decades, the geopolitical competition too in the Indian Ocean has intensified.
    • Toll Gate in Indian Ocean: It is situated at the hub of commercial sea-lanes running through the Indian Ocean. More than 97% of India’s international trade by volume and 75% by value passes through the region.
    • Naval cooperation: Maldives is an important partner in India’s role as the net security provider in the Indian Ocean Region.
    • Important SAARC member: Besides, Maldives is a member of the South Asian Association for Regional Cooperation (SAARC) and the South Asia Subregional Economic Cooperation (SASEC).
    • People To People Contact: There is a significant population of Maldivian students in India. They are aided by a liberal visa-free regime extended by India. There is also medical tourism.
    • Major destination for Tourists: Tourism is the mainstay of the Maldivian economy. The country is now a major tourist destination for some Indians and a job destination for others.

    Conclusion

    • There is a significant Indian diaspora in the Maldives. Innumerable Indians work across the hospitality, education, and health-care sectors of the Maldives economy.
    • India must use its Diaspora more extensively for strengthening its relations.

     

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  • India-UK relations: A new shine to old ties

    Context

    As Prime Minister Narendra Modi hosts British premier Boris Johnson this week in India, the moment is ripe to turn the expansive new possibilities — in trade, investment, high technology, defence, and regional cooperation— into concrete outcomes.

    Background of the India-UK ties and  paradoxes

    • Legacies of colonialism: The bitter legacies of colonialism had made it impossible for the two sides to pursue a sensible relationship in the past.
    • India’s post-colonial engagement with Britain has been riddled with multiple paradoxes.
    • 1] India’s post-post colonial resentment and UK’s claim for special role: Delhi’s lingering post-colonial resentments and London’s unacceptable claim for a special role in the Subcontinent generated unending friction.
    • The consequences of Partition and the Cold War made it harder for Delhi and London to construct a sustainable partnership.
    • The important role played by the US: It was the US that first recognised India’s rapidly-growing relative weight in the international system.
    • At the turn of the millennium, Washington unveiled a policy of assisting India’s rise.
    • This was based on a bipartisan American consensus that a stronger India will serve US interests in Asia and the world.
    • Over the last two decades, it has led to a quick transformation of US relations with India.
    • 2] Washington is setting the pace for Delhi’s relationship with London:  At the dawn of Independence, India saw London as the natural interlocutor with an unfamiliar Washington.
    • Today it is Washington that is setting the pace for Delhi’s relationship with London.
    •  3] China’s role in shaping India’s relations with the West: For Washington, the strategic commitment to assist India’s rise was rooted in the recognition of the dangers of a China-dominated Asia.
    • London in the last two decades was moving in the other direction — a full embrace of Beijing.
    • Once the American deep state decided to confront Chinese power in the late 2010s, London had to extricate itself from the Chinese Communist Party’s powerful spell.
    • As the US unveiled a new Asian strategy, Britain followed with its own “Indo-Pacific tilt” that helped secure the region against China’s muscular policies.
    • 4] Historic tilt towards Pakistan: Unlike the US and France, which are committed to an “India first” strategy in South Asia, Britain remains torn between its new enthusiasm for India and the inertia of its historic tilt towards Pakistan.
    • But India is confident that Pakistan’s relative decline in the region is bound to make it a less weighty factor in India’s bilateral relations with Britain.
    • The question of Pakistan brings us to the fourth paradox—the domestic dynamics of Britain that have tended to sour ties with India.
    • Delhi has figured out that the interconnected politics of India and Britain — shaped by the large South Asian diaspora of nearly four million — can be cut both ways.
    • 5] Making best of historic ties:  If the Tories are romantic about the Raj, nationalists in India bristle at the British imperial connection.
    • Yet, together they are constructing a new relationship between India and Britain.

    Better outlook for bilateral ties

    • As the two sides make a determined effort to transcend the paradoxes, the regional and international circumstances provide a new basis for mutually beneficial engagement.
    • Over the last couple of years, Delhi and London have begun a promising and pragmatic engagement devoid of sentiment and resentment.
    • Having walked out of Europe, Britain needs all the partners it can find and a rising India is naturally among the top political and economic priorities.
    • Delhi meanwhile has become supremely self-assured in dealing with London.
    • With the Indian economy set to become larger than Britain’s in the next couple of years, Delhi is no longer defensive about engaging Britain.
    • Even more important, Delhi recognises the value of a deep strategic partnership with London.

    Conclusion

    The UK has a significant international military presence and wide-ranging political influence. Realists in Delhi are trying to leverage these British strengths for India’s strategic benefit.

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  • Nepal’s dwindling Forex Reserves

    In an unusual development, the Nepali PM sacked the head of its central bank accusing him of leaking sensitive information and for failing to perform his duties.

    What is the news?

    • Nepal’s forex reserves have plummeted by 18.5% to $9.58 billion in March from $11.75 billion in July 2021.
    • The current forex reserves are not enough to pay the government’s import bills beyond the next seven months or so.
    • Nepal’s central bank recently announced a ban on the import of vehicles and other luxury items, citing liquidity crunch and declining foreign exchange reserves.
    • It is rumoured that the Nepali economy will go into a crisis like Sri Lanka.

    Why have Nepal’s forex reserves fallen?

    • Nepal’s forex reserves situation appears healthy as of now as the country, unlike Sri Lanka, is not burdened by external debt.
    • There are, however, concerns that the lower middle-income economy is being battered repeatedly by external factors and that may precipitate a crisis sometime soon.
    • Nepal which is blessed with one of the finest tourism sectors in South Asia, because of the Himalayan mountain range, suffered during the COVID-19 pandemic as global tourist flow fell.
    • This is followed by the global energy crisis caused by Russia’s invasion of Ukraine.
    • This has put extraordinary inflationary pressure on the economy.

    How bad is the situation?

    • Nepal’s economy is highly dependent on imports as the country buys a range of merchandise goods apart from fuel.
    • The prevailing weak economic indicators mean that Nepal is spending from its forex reserves faster than it can save.
    • Economists contend that Nepal will soon have double-digit inflation. All economic indicators are declining.
    • The real shortfall in forex reserves is because of the decline in foreign remittances which suffered during the pandemic when the Nepalese workforce abroad suffered job losses.

    Can the energy scene in Nepal escalate economic woes?

    • Nepal’s history shows that any uncertainty regarding fuel can trigger serious internal problems as was visible during the 2015-16 blockade when disruption of fuel supply from India.
    • Nepal’s primary supplier of energy is Indian Oil Corporation (IOC).
    • Nepal Oil Corporation (NOC) pays IOC in two installments every month, on the 8th and the 23rd.
    • The NOC has been in crisis for months as high global prices depleted the company’s savings, prompting it to approach the government for a lifeline.
    • The Government of Nepal has agreed to provide NOC the necessary amount to continue supplies from IOC.
    • NOC’s financial status makes it unattractive for banks and as a result the public sector company does not enjoy confidence in the market.

    Paradoxical situation

    • The government is in a paradoxical situation: It has to control imports of products from which it earns the highest amount of tax revenue.
    • Luxury items are the country’s major source of revenue.
    • If revenue shrinks, an economic crisis could be imminent.

    Impact on elections

    • Nepal will hold local level polls next month which will be followed by general elections towards the end of the year.
    • The election process requires considerable financial allocation and Nepal has received support in the past for elections from international donors like the USAID.
    • These donors help in carrying out pre-election staff training and logistics that are part of any democratic process.
    • But there are uncertainties considering the bleak financial situation.
    • It will require at least 10 billion Nepali rupees for the election process and that will mean diversion of a large amount of resources for the democratic process.

    Quick recap: Sri Lankan Crisis

    • Like Nepal, Sri Lanka is a country with a small economy. The Sri Lankan economy is around 1.5 times bigger than Nepal’s.
    • Sri Lanka’s economic crisis was in the making since it suffered a terrorist attack in 2019 which hit its tourism industry, a major contributor to the GDP.
    • Then came the pandemic, which further wiped out tourism incomes. Then there were debt burdens in dollars.
    • The political leadership failed to act to address the looming crisis.
    • The Rajapaksha dynasty made some wrong moves—it cut taxes and started printing money, hugely devaluing the currency.
    • In what looked like a well-intentioned move towards organic farming, the county banned imports of chemical fertilisers. Paddy production failed. The country ran out of money to pay its bills.

    Is Nepal really going the way of Sri Lanka?

    • In Nepal, the situation is not as bleak.
    • Nepal’s current forex reserves are enough to pay for imports of goods and services for about seven and a half months.
    • Tourism, one of the major foreign currency earners, was hit hard by the pandemic, but its gradual revival has given a glimmer of hope.
    • Since Nepal’s currency is pegged to the Indian rupee, a massive devaluation shock is unlikely. Tourism is also rebounding, giving a fillip to foreign currency reserves.

    Back2Basics: Foreign Exchange Reserves

    • Foreign exchange reserves are important assets held by the central bank in foreign currencies as reserves.
    • They are commonly used to support the exchange rate and set monetary policy.
    • In India’s case, foreign reserves include Gold, Dollars, and the IMF’s quota for Special Drawing Rights.
    • Most of the reserves are usually held in US dollars, given the currency’s importance in the international financial and trading system.
    • Some central banks keep reserves in Euros, British pounds, Japanese yen, or Chinese yuan, in addition to their US dollar reserves.

     

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  • What is the ‘2+2’ format of dialogue between India and the US?

    The fourth ‘2+2’ dialogue between India and the United States is underway in Washington DC.

    2+2 talks between India and allies

    • The 2+2 dialogue is a format of meeting of the foreign and defence ministers of India and its allies on strategic and security issues.
    • A 2+2 ministerial dialogue enables the partners to better understand and appreciate each other’s strategic concerns and sensitivities taking into account political factors on both sides.
    • This helps to build a stronger, more integrated strategic relationship in a rapidly changing global environment.
    • India has 2+2 dialogues with four key strategic partners: US, Australia, Japan, and RUSSIA.

    Inception of the idea

    • The inaugural 2+2 dialogue with Australia was held in September 2021 when Jaishankar and Singh met with their counterparts Marise Payne and Peter Dutton in New Delhi.
    • India held its first 2+2 dialogue with Russia in December last year, when Russian Foreign Minister Sergey Lavrov and Defence Minister Sergei Shoigu visited India.
    • The first India-Japan talks in the 2+2 format were held on November 30, 2019 in New Delhi.

    Dialogue with the US

    • The US is India’s oldest and most important 2+2 talks partner.
    • The first 2+2 dialogue between the two countries was held during the Trump Administration.
    • It hosted then-Secretary of State Michael Pompeo and then-Secretary of Defence James Mattis and the late Sushma Swaraj and then Defence Minister Nirmala Sitharaman in New Delhi in September 2018.
    • The second and third editions of the 2+2 dialogues were held in Washington DC and New Delhi in 2019 and 2020 respectively.

    Defence and strategic agreements

    • Over the years, the strategic bilateral relationship with its partners, including the dialogues held in the 2+2 format, have produced tangible and far-reaching results for India.
    • India and the US have signed a troika of “foundational pacts” for deep military cooperation, beginning with the:
    1. Logistics Exchange Memorandum of Agreement (LEMOA) in 2016
    2. Communications Compatibility and Security Agreement (COMCASA) after the first 2+2 dialogue in 2018, and
    3. Basic Exchange and Cooperation Agreement (BECA) in 2020

    Deterrents in ties ahead of the meet

    • There is little doubt as to how beneficial this mechanism has been.
    • On one side, the ‘two plus dialogue’ is expected to abate, if not resolve, highly problematic issues such as Chinese aggression.
    • Even though there is a tonne of expectations from this mutual dialogue between the two countries, the dialogue is also the source of some worry.
    • This time, the US is sceptical of India’s mammoth oil import from Russia.
    • Another problematic pointer is India’s voluminous weaponry sanctions from Russia.

    Why a 2+2 with Russia?

    • Russia is one of those countries with which a 2+2 format talk “fits perfectly” in India’s foreign policy.
    • India and Russia have shared a strategic relationship since October 2000, which later got upgraded to ‘Special and Privileged Strategic Partnership’ in December 2010.
    • To be sure, the India-Russia 2+2 does have a particularly strong signalling component when seen against the backdrop of the S400 controversy.
    • Holding the 2+2 talks with Russia is much needed. This gives out a strong message to the world that India sees everyone to be on the same level.
    • This is visible messaging that India cannot be compelled to choose partners. India pursues an independent foreign policy serving its national and non-allied interests.
    • Having a 2+2 with Russia also means that India is “not in anyone’s camp” and that bilateral ties between Moscow and New Delhi are “traditional and comprehensive”.

    Way forward

    • India and the US don’t set ‘red lines’ and are pushing for “an honest dialogue”, the ongoing 2+2 dialogue is an opportunity for both India and the US.
    • The US also understands that India is one of the few countries that could leverage its relationship with Russia to bring the two warring parties to the negotiating table through a ceasefire and diplomatic resolution.
    • For Delhi, it is a season for careful and adroit diplomacy.

     

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  • The wider impact of Pakistan’s internal crisis

    Context

    As Pakistan goes through a major political convulsion, India must resist the temptation to see the changes across our western frontiers through the narrow prism of bilateral relations.

    Why Pakistan matters

    • Pakistan is an important regional piece in the power play between the US, China and Russia.
    • Given its location at the crossroads of the Subcontinent, Middle East, Eurasia, and China, Pakistan has always been a vital piece of real estate that was actively sought by contending geopolitical blocs.
    • The internal and external have always been tightly linked in Pakistan.
    • Today, Pakistan’s internal battles are tied to external geopolitical rivalry.

    Two important factors in the political trajectory of Pakistan

    • Any Indian strategy in dealing with the new government in Islamabad would depend on an assessment of Pakistan’s post-Imran political trajectory.
    • Two important factors stand out.
    • 1] First is the changing nature of civil military relations in Pakistan.
    • It is part of a serious intra-elite struggle that transcends the well-known military dominance over Pakistan’s polity.
    • One of the more interesting questions to come out of the current episode is whether the army’s famed internal coherence and unity of command might endure the crisis.
    • 2] Second is the growing fragility of Pakistan’s polity triggered by the deepening economic crisis and sharpening social contradictions.
    • There is no guarantee that the army’s ties with new civilian rulers will be smooth nor can we assume that the civilian coalition against Imran Khan will survive the many challenges ahead as it confronts difficult policy challenges on multiple fronts.

    Geopolitical challenges of Pakistan

    • Engaging India is unlikely to be a high priority for the new government in Islamabad.
    • Today, Pakistan has many other things to worry about — reviving its flagging economic fortunes, stabilising the Durand Line with Afghanistan, and rebalancing its ties with the major actors in the Middle East, including Iran, UAE, Saudi Arabia and Turkey.
    • Pakistan, which traditionally enjoyed good relations with the West as well as China, is finding it hard to maintain a balance in its great power relations.
    • While the army and the new government are eager to restore ties with the US, Imran Khan has made it hard for them.
    • Imran Khan’s repeated praise for India’s independent foreign policy was in essence a critique of the Pakistan army that has long steered Islamabad’s international relations.

    Way forward

    •  Delhi should focus on the potential shifts in Pakistan’s strategic orientation triggered by the current crisis.
    • The good news from Pakistan is that India is not part of the argument between the political classes or between Imran Khan and the “deep state” represented by the army.

    Conclusion

    An India that gets an accurate sense of Pakistan’s changing geopolitics will be able to better deal with Islamabad.

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  • What caused Sri Lanka’s worst economic crisis?

    Context

    Sri Lanka’s ruling Rajapaksa family is facing mounting public anger, calls for resignations and political defections amidst the island’s worst economic crisis in its post-independence history.

    Reasons for the crisis

    • 1] Overnight switch to organic farming and import ban on fertiliser: There was the decision to ban fertiliser imports and switch overnight to organic farming.
    • The decision was reversed after sustained farmer protests but not before damage had already been done to crop yields.
    • 2] Then, precious foreign exchange was wasted in propping up the rupee while imposing controls on key imports that led to shortages and price rise.
    • 3] For several months, as the crisis deepened with rolling power-cuts and shortages of essentials, the government refused to seek IMF assistance.
    • It has now relented on the IMF, but Sri Lanka’s economic distress has been prolonged and deepened by this indecision.

    Contradictions in the Sri Lanka’s politics

    • While the immediate causes of popular anger are explicable, the crisis also reveals a more enduring contradiction at the foundation of Sri Lanka’s politics.
    • Sinhala nationalist-inspired policies: What this crisis shows is that Sinhala nationalist-inspired policies are no longer financially or politically viable.
    • Hardline approach toward Tamils: The Rajapaksas first rode to power in September 2005 on the wave of Sinhala nationalist antipathy against the then-ongoing Norwegian-mediated peace process with the LTTE.
    • Upon his election as president, Mahinda expanded the military and launched a full-frontal military offensive that ended with the LTTE’s total defeat and destruction in May 2009.
    • After the war, instead of seeking a political settlement with the Tamils, Mahinda Rajapaksa unrolled a de-facto militarised siege of the Tamil-speaking areas and population.
    • Assertive foreign policy: The hardline approach to the Tamils and their demands was also linked to a new, more assertive foreign policy.
    •  The government turned away the long-established pattern of alignments with Western states and India.
    • Mistrust of India: There is a long-standing mistrust of India amongst Sinhala Buddhist nationalists who see it as the source of historic Tamil invasions.
    •  The Rajapaksas translated this sentiment into policy, pushing back against Indian attempts to forge closer economic ties and a constitutional settlement of the Tamil question.
    • Ties with China: In place of these ties, the Rajapaksas ostentatiously set out to forge new alliances, principally with China.
    • The Rajapaksas also bet on a new geo-political optimism.
    • They believed that with China’s rise, Sri Lanka’s location on east-west trade lanes would become a prized asset.
    • They were confident that in the global competition for power triggered by China’s rise, international actors would be compelled to seek Sri Lanka’s favour for fear of “losing” it to the other side.
    • With this geo-political calculus in mind, they assuredly rebuffed Western and Indian demands.
    • None of the great powers who were supposed to be competing for Sri Lanka’s favour have stepped up to offer a bailout, although the sums are quite small by global standards.
    • The bid for total sovereign autonomy has crash-landed and yet the alternatives are also politically difficult.

    More leverage to international actors

    • The irony of Sri Lanka’s push for total sovereign autonomy is that it has given international actors more leverage than they had before.
    • Going to the IMF will require concessions on human rights and good governance to secure preferential access to European markets.
    • At the same time, Indian bilateral assistance has conditionalities on clearing controversial investments.

    Way forward

    • Push non-reversible changes: International actors who really want to help Sri Lanka should use this leverage to push for tangible and non-reversible changes in the treatment of Tamils and Muslims whatever leadership emerges in Colombo.
    • Eemilitarisation and normalisation of relations with the Tamils and Muslims: The crisis can serve as a reality check for the Sinhala nationalist leadership and electorate. The model of economic and political governance they have pursued is unsustainable, and the alternatives must be faced.
    • The most pressing of these is the demilitarisation and normalisation of relations with the Tamils and Muslims.
    • Sinhala political attention can perhaps then be turned to the other pressing failures of governance that have brought Sri Lanka to this state.

    Conclusion

    The Rajapaksas may be the principal protagonists of this crisis but the underlying script they have followed is a Sinhala Buddhist one and until Sri Lanka finds a new script it cannot find peace or stability.

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  • Centre extends relief to Tibetan Committee by 5 years

    The Union government has extended the scheme to provide ₹40 crore grants-in-aid to the Dalai Lama’s Central Tibetan Relief Committee (CTRC) for another five years, up to fiscal year 2025-26.

    Do you think that India’s support for the Tibetan cause is the root cause of all irritants in India-China relations?

    What is CTRC?

    • The Dalai Lama’s Central Tibetan Relief Committee (CTRC) was formed and registered as Charitable Society under Indian Societies Registration Act XXI of 1860.
    • It effectively acts as the Relief and Development Wing of Home Department, Central Tibetan Administration.
    • All the CTRC activities are carried out with consent and support from Board of Directors and approval from TPiE (Tibetan Parliament in Exile).

    Tibetan Parliament-in-Exile (TPiE)

    • The Tibetan Parliament-in-Exile (TPiE) has its headquarters in Dharamsala, in the Kangra district of Himachal Pradesh.
    • According to the Green Book of the Tibetan government-in-exile, over 1 lakh Tibetans are settled across India.
    • The remaining are settled in United States, Australia, Brazil, Canada, Costa Rica, France, Mexico, Mongolia, Germany, United Kingdom, Switzerland and various other countries.

    Working of the TPiE

    • The Speaker and a Deputy Speaker head the Tibetan Parliament-in-exile.
    • It includes two members from each of the four schools of Tibetan Buddhism and the pre-Buddhist Bon religion.
    • Other representatives are from the Tibetan Communities in North America and Europe; and from Australasia and Asia (excluding India, Nepal and Bhutan).
    • Till 2006, it used to be called as Assembly of Tibetan People’s Deputies (ATPDs) with the chairman as its head and a vice-chairman.

    Tibetan Constitution

    • The Central Tibetan Administration exists and functions on the basis of the Constitution of the Tibetan government called the ‘The Charter of the Tibetans in Exile’.
    • In 1991, The Constitution Redrafting Committee instituted by the Dalai Lama prepared the Charter for Tibetans in exile. The Dalai Lama approved it on June 28, 1991.
    • In 2001, fundamental changes happened with the amendment of the Charter that facilitated the direct election of the Kalon Tripa by the Tibetans in exile.
    • The Kalon Tripa is called Sikyong or president of the Central Tibetan Administration.

    The Kashag (Cabinet)

    • The Kashag (Cabinet) is the Central Tibetan Administration’s highest executive office and comprise seven members.
    • It is headed by the Sikyong (political leader) who is directly elected by the exiled Tibetan population.
    • Sikyong subsequently nominates his seven Kalons (ministers) and seeks the parliament’s approval. The Kashag’s term is for five years.

    A backgrounder: Democracy for Tibet

    • The Dalai Lama began democratization soon after he came to India during the 1959 Tibetan National Uprising.
    • He reportedly asked Tibetans in exile to choose their representatives through universal adult suffrage, following which polls were held for electing Tibetan Parliamentarians in 1960.
    • Democracy for the Tibetans, thus, began in exile.
    • The Dalai Lama, however, continued to remain the supreme political leader. On March 14, 2011, he relinquished his political responsibilities, ending a 369-year-old practice.

    Is TPiE officially recognized by any country?

    • Not exactly, it is not recognised officially by any country, including India.
    • But, a number of countries including the USA and European nations deal directly with the Sikyong and other Tibetan leaders through various forums.
    • The TPiE claims its democratically-elected character helps it manage Tibetan affairs and raise the Tibetan issue across the world.
    • The incumbent Sikyong, Lobsang Sangay, was among the guests who attended the oath-taking ceremony of our PM in 2014, probably a first.

     

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  • India-Australia sign Economic Cooperation and Trade Agreement (ECTA)

    India and Australia signed an Economic Cooperation and Trade Agreement (ECTA) in the presence of PM Narendra Modi and his counterpart in Canberra Scott Morrison.

    India-Australia ECTA

    • It is the first trade agreement of India with a developed country after more than a decade.
    • The Agreement encompasses cooperation across the entire gamut of bilateral economic and commercial relations between the two friendly countries.
    • It covers areas like Trade in Goods, Rules of Origin, Trade in Services, Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) measures, Dispute Settlement, Movement of Natural Persons, Telecom, Customs Procedures, Pharmaceutical products, and Cooperation in other Areas.
    • Eight subject specific side letters covering various aspects of bilateral economic cooperation were also concluded as part of the Agreement.

    Background of the ECTA

    • The negotiations for India-Australia ECTA were formally re-launched on 30 September 2021 and concluded on a fast-track basis by the end of March 2022.
    • India and Australia enjoy excellent bilateral relations that have undergone transformative evolution in recent years, developing along a positive track, into a friendly partnership.
    • Growing India-Australia economic and commercial relations contribute to the stability and strength of a
    • Australia is the 17th largest trading partner of India and India is Australia’s 9th largest trading partner.

    Features of the agreement

    • The ECTA between India and Australia covers almost all the tariff lines dealt in by India and Australia respectively.
    • India will benefit from preferential market access provided by Australia on 100% of its tariff lines.
    • This includes all the labour-intensive sectors of export interest to India such as Gems and Jewellery, Textiles, leather, footwear, furniture, food, and agricultural products, engineering products, medical devices, and Automobiles.
    • India will be offering preferential access to Australia on over 70% of its tariff lines, including lines of export interest to Australia which are primarily raw materials and intermediaries such as coal, mineral ores and wines etc.
    • As regards trade in services, Australia has offered wide ranging commitments in around 135 sub sectors and Most Favoured Nation (MFN) in 120 sub sectors which cover key areas of India’s interest like IT, ITES, Business services, Health, Education, and Audio visual.
    • Both sides have also agreed to a separate Annex on Pharmaceutical products under this agreement, which will enable fast track approval for patented, generic and biosimilar medicines.

    Way ahead

    • The India-Australia ECTA will further cement the already deep, close and strategic relations between the two countries.
    • It will significantly enhance bilateral trade in goods and services, create new employment opportunities, raise living standards, and improve the general welfare of the peoples of the two countries.

     

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  • State of Emergency in Sri Lanka

    A day after angry mob converged in front of President Gotabaya Rajapaksa’s Colombo residence, demanding he step down immediately, he declared a state of Emergency in Sri Lanka.

    Sri Lankan Crisis: A backgrounder

    • Sri Lanka’s economic crisis can be traced to two key developments— the Easter Sunday bombings of 2019 that deterred tourists, and the pandemic since early 2020.
    • These events stalled recovery and further drained the economy.
    • As it grappled with an unprecedented challenge, the Rajapaksa regime made policy choices that are now proving to be costly.
    • It cut the government’s tax revenue substantially and rushed into an ‘organic only’ agricultural policy that will likely slash this year’s harvest by half.
    • The weak and debt-ridden economy with the lingering strain of the pandemic, and ill-advised policies accelerated the downward spiral.

    What were the economic indicators?

    • COVID-19 hit Sri Lanka’s key foreign revenue earning sectors hard.
    • Earnings from tourism, exports, and worker remittances fell sharply in the last two years.
    • But the country could not stop importing essentials, and its dollar account began dwindling.
    • Fast draining foreign reserves, a glaring trade deficit, and a related Balance of Payments problem came as crucial signals.
    • Colombo’s huge foreign loan obligations and the drop in domestic production compounded the economic strain.

    When did things begin to worsen?

    • The long-simmering crisis made its first big announcement during last August’s food emergency, when supplies were badly affected.
    • It was soon followed by fears of a sovereign default in late 2021, which Sri Lanka averted.
    • But without enough dollars to pay for the country’s high import bill, the island continued facing severe shortage of essentials — from fuel, cooking gas, and staple foodgrains to medicines.

    How did the crisis manifest itself on the ground?

    • Consumers could not find the most basic things such as petrol, LPG cylinders, kerosene, or milk in the market.
    • They spent hours waiting in long queues outside fuel stations or shops.
    • Supermarket shelves were either empty or had products with high price tags that most could not afford.
    • For instance, the price of one kg of milk powder, a staple item in dairy-deficient Sri Lanka, suddenly shot up to nearly LKR 2000 in March.
    • Be it cooking gas, oils, rice, pulses, vegetables, fish, meat, consumers found themselves paying substantially more, or simply had to forego the item.
    • The fuel shortage has led to long blackouts — up to 13 hours — across the island.

    What is the situation now?

    • The value of the Sri Lankan rupee has dropped to 300 against a U.S. dollar (and even more than 400 in the black market), putting importers in a difficult spot.
    • The government is unable to pay for its import shipments, forcing consignments to leave the Colombo port.
    • For the average citizen contending with COVID-induced salary cuts and job losses, the soaring living costs have brought more agony.

    How did India help mitigate the crisis?

    • India has extended $2.4 billion this year.
    • China, that is considering a fresh request from Colombo for $2.5 billion assistance, in addition to the $2.8 billion it has extended since the pandemic broke out.
    • The government has decided to negotiate an International Monetary Fund programme, while seeking support from other multilateral and bilateral sources.
    • But even with all this help, Sri Lanka can barely manage.

    How has it affected the people?

    • Sri Lankans are seething with anger, going by public demonstrations and protests.
    • They want the President to step down immediately and the ruling clan to leave the country’s helm.
    • They have been agitating in different parts of the country, including near the President’s home.
    • Former military man Gotabaya Rajapaksa, who came to power on a huge mandate in 2019, is Sri Lanka’s most unpopular leader today.
    • Following the protests near his home, Mr. Rajapaksa said “extremists” were plotting an ‘Arab Spring’ and hence he declared a state of Emergency.

    Back2Basics: Financial Emergency in India

    • The President of India can declare the Financial Emergency on the aid and advise of the Council of Ministers.
    • She/ He has to be satisfied that a situation has arisen due to which the financial stability or credit of India or any part of its territory is threatened.
    • Article 360 gives authority to the President of India to declare a financial emergency.
    • However, the 44th Constitutional Amendment Act of 1978 says that the President’s ‘satisfaction’ is not beyond judicial review.
    • It means the Supreme Court can review the declaration of a Financial Emergency.

    Parliamentary Approval and Duration

    • A proclamation of financial emergency must be approved by both the Houses of Parliament within two months from the date of its issue.
    • A resolution approving the proclamation of financial emergency can be passed by either House of Parliament (Lok Sabha or Rajya Sabha) only by a simple majority.
    • Once approved by both the Houses of Parliament, the Financial Emergency continues indefinitely till it is revoked.
    • It may be revoked by the President anytime without any Parliamentary approval (but with the usual aid and advice).

    Effects of Financial Emergency

    • During the financial emergency, the executive authority of the Center expands and it can give financial orders to any state according to its own.
    • All money bills or other financial bills, that come up for the President’s consideration after being passed by the state legislature, can be reserved.
    • Salaries and allowances of all or any class of persons serving in the state can be reduced.
    • The President may issue directions for the reduction of salaries and allowances of: (i) All or any class of persons serving the Union and the judges of the Supreme Court and the High Court.

    Try this PYQ:

    Q. With reference to the Constitution of India, prohibitions or limitations or provisions contained in ordinary laws cannot act as prohibitions or limitations on the constitutional powers under Article 142. It could mean which one of the following?

     

    (a) The decisions taken by the Election Commission of India while discharging its duties cannot be challenged in any court of law.

    (b) The Supreme Court of India is not constrained in the exercise of its powers by laws made by the Parliament.

    (c) In the event of grave financial crisis in the country, the President of India can declare Financial Emergency without the counsel from the Cabinet.

    (d) State Legislatures cannot make laws on certain matters without the concurrence of the Union Legislature.

     

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