Freedom of Speech – Defamation, Sedition, etc.

India @75 –Relooking our democracy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NA

Mains level : Read the attached story

Context

  • As we celebrate the nation @75 , we must also reflect on the mixed nature of our democracy

Definition of democracy

  • “Government of the people, by the people and for the people” were the words used by Abraham Lincoln in the year 1863 while talking about democracy.

Purpose of democracy

  • Cornerstones of democracy include freedom of assembly, association, property rights, freedom of religion and speech, inclusiveness and equality, citizenship, consent of the governed, voting rights, freedom from unwarranted governmental deprivation of the right to life and liberty, and minority rights.

Background

  • India is a parliamentary democratic secular republic in which the president of India is the head of state & first citizen of India and the prime minister of India is the head of government.
  • It is based on the federal structure of government, although the word is not used in the Constitution itself.

How it has performed

(1) Political front

  • India is the world’s the largest democracy proved success in accommodation of group and regional demands in a complex, quasi-federal, polity.
  • During the first general election in the 1951 India had 54 political parties and now it has grown up to 464 in the 2014 general election as an evident of deepening of the democratic process.
  • In the first General election 1951, 173 million citizens were given right to vote.
  • In the 16th general election in 2014, the size of the electorate had increased to 814 million.

(2) Social front

  • The democratic process has brought about a shift of political power from the middle and higher castes and classes of urban society to backward classes who are now the politically most influential ones in the country.
  • They have won reservations for themselves in legislatures and government services as were accorded to the Scheduled Castes and Scheduled Tribes after independence through Constitutional provisions.

(3) Economic Front

  • These include strategic affairs and security, politico-legal democratic governance as well as society and economy.
  • India has been able to emerge as a regional power in Asia and super power in south Asia backed by its economic, military and nuclear capabilities.

Contradictions in democracy

  • Performance of Bureaucracy: Dishonest officials to protect themselves from the consequences of their wrong-doings have largely exploited constitutional protection for the Services under Article 311.
  • Administration of Justice: Judicial system has not been able to meet even the modest expectations of the society. Its delays and costs are frustrating, its processes slow and uncertain. People are pushed to seek recourse to Extra-legal methods for relief. Trial system both on the civil and criminal side has utterly broken down.
  • Areas of Concern: There is a fundamental breach of the constitutional faith on the part of the Governments and their method of governance lies in the neglect of the people who are the ultimate source of all political authority.
  • Regionalism: Issues of national integrity and security have not received adequate and thoughtful attention. Mechanisms for the assessment of early warning symptoms of social unrest are absent.
  • Corruption: The increasing instability of elected governments is attributable to opportunistic politics and unprincipled defections.

Some positive suggestions to government

  • Feedback: The Government should hear criticism rather than rejecting it outrightly. Suggestions on eroding democratic values need a thoughtful, and respectful response.
  • Freedom of press: The press and the judiciary which are considered the pillars of India’s Democracy, require to be independent of any executive interference.
  • Opposition: strong democracy requires strong opposition. Without an alternative choice, the very objective of election to provide a check on arbitrary power gets defeated.

Way forward

  • The institutionalization of constitutional democracy has helped the people of India realize the importance of democracy and inculcate democratic sensibilities among them.
  • At the same time, it is important that all the government organs work in harmony to uphold the trust people of the country have held in them and ensure the objectives of true democracy.

Mains question

Q.We are celebrating Azadi ka amrit mahotsav India @75, trace the journey of democracy critically by providing some suggestions for robust democracy.

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Freedom of Speech – Defamation, Sedition, etc.

Role of media in fair trial

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Issue of media trials

Context

  • In an ongoing case, the Peoples’ Union for Civil Liberties asked the Supreme Court to issue guidelines to regulate media briefings by the police to ensure fair trial.
  • This has left the judiciary with no choice but to deliberate on binding directives to the police.

What is Media Trial?

  • Media Trial is when various newspapers, magazines, television channels, social media websites interpret facts of a particular case and present them in front of the general public.
  • In India, we have witnessed media trials in many cases where before the verdict of the Indian judiciary, the media channels frame an accused in such a manner that the general public believes him/her to be the person guilty of such offence.
  • Media Trial is not prohibited in India, but it influences the views and opinions of the general public as well as judges and lawyers.

Issue of media trial

[A] For Police

(1) Investigation fouling

  • In criminal cases that attract the most sensationalist media coverage, media attention is often drawn toward investigation and early trial stages.
  • This makes the police a crucial source for the media and communication between the two institutions is often a starting point of the troubles of media trials.

(2) Unregulated divulgence of case details

  • Leakage of information by police force and disproportionate reliance on this information by the media results in a public stripping of the rights that typically accompany a fair trial.

(3) Blow to procedural justice

  • Most police departments do not have dedicated media cells, making officials of all levels authoritative sources of information and blurring the boundaries between an official and informal police account of events.
  • As a result, the evidence-based narrative of criminal cases presented by the police to a court varies significantly from the account provided to the news media.
  • This is detrimental for the persons involved in the case, and the justice system as a whole.

[B] For Judiciary

(1) Violation of the rights of litigants

  • Reportage of this nature violates the presumption of innocence and the right to dignity and the privacy of suspects, the accused, victims, witnesses and persons closely related to them.
  • They often face social ostracization and difficulties in retaining employment, making them vulnerable to crime and exploitation.

(2) Disharmony

  • Police narratives are sometimes designed to achieve political goals, and the media’s ready acceptance of these narratives does little to prevent their insidious effects.
  • Given the media’s ability to shape political opinion, law enforcement agencies are sometimes under pressure to selectively reveal certain facets of the investigation or to mischaracterise incidents as communal or systemic.

What should be the role of Media?

  • Contextualization: Problematic news coverage of criminal cases arises when reporters absolve themselves of any duty to contextualise information revealed by the police.
  • Verification of the facts: Media ethics extend beyond verification of facts to check its Authencity.
  • Create public awareness: Apart from making sure that police narratives are accurate before making them public, reporters bear the burden of translating the significance of police versions in a criminal trial.
  • Prevent mistrust in institutions: It is meant to protect, and contributes considerably to the public apprehension and mistrust in the system.

Why is news media being hyperactive?

  • We should remember that the new media as an institution is NOT a not-for-profit organization.
  • The negligence can be attributed to the changing nature of the newsroom , responding to deadlines externally set by competing social media accounts that now qualify as news.

Court directives and legal provisions

Ans: The Romila Thapar vs Union of India, (2018) Case

  • Courts have repeatedly directed law enforcement authorities not to reveal details of their investigations, especially the personal details of the accused, before trial is complete.
  • It calls for states to enact their own laws based upon social construct.
  • The Ministry of Home Affairs issued office memorandum outlining a media policy over a decade ago, but this is of limited value given that ‘Police’ is an entry in the State List and thus falls primarily within the jurisdiction of State governments.

Way forward

  • Uniform regulation: Government regulation is not uniform for print and television media and enforcement of these regulations, where it occurs, is slow.
  • Prevent overt regulation: In any event, Government regulation of the media is problematic and likely to increase politicization of the press.
  • Strengthening self-regulation: Self-regulation set-ups such as the National Broadcasting Standards Authority and Indian Broadcasting Foundation are membership-based and easily avoided by simply withdrawing from the group.
  • Reconcile the public faith: It is now in the immediate interest of the media and the general interest of free press, that media institutions look inward to find an answer to what is essentially an ethical crisis.

Conclusion

  • The media’s immense power to shape narratives regarding public conceptions of justice makes it a close associate of the justice system, bringing with it a responsibility to uphold the basic principles of our justice system.
  • The media should feel subject to the obligation to do its part in aiding mechanisms that aim to preserve these principles.

 

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Renewable Energy – Wind, Tidal, Geothermal, etc.

A five-point plan to boost renewable energy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Transition to renewable

Context

As the fallout of Russia’s invasion of Ukraine ripples across the globe, the response of some nations to the growing energy crisis has been to double down on fossil fuels, pouring billions more dollars into the coal, oil and gas that are deepening the climate emergency.

Need for transition to renewable energy

  • Fossil fuels are the cause of the climate crisis.
  • Renewable energy can limit climate disruption and boost energy security. Renewables are the peace plan of the 21st century.
  • But the battle for a rapid and just energy transition is not being fought on a level field.
  • Investors are still backing fossil fuels, and governments still hand out billions in subsidies for coal, oil and gas — about $11 million every minute.
  • The only true path to energy security, stable power prices, prosperity and a livable planet lies in abandoning polluting fossil fuels and accelerating the renewables-based energy transition.
  • We must reduce emissions by 45 per cent by 2030 and reach net-zero emissions by mid-century.
  • But current national commitments will lead to an increase of almost 14 per cent this decade.
  • Reducing cost:  The cost of solar energy and batteries has plummeted 85 per cent over the past decade.
  • The cost of wind power fell by 55 per cent. And investment in renewables creates three times more jobs than fossil fuels.
  • Nature-based solutions: Of course, renewables are not the only answer to the climate crisis.
  • Nature-based solutions, such as reversing deforestation and land degradation, are essential.
  • So too are efforts to promote energy efficiency.
  • But a rapid renewable energy transition must be our ambition.

Five point plan to boost renewable

  • 1] Renewable energy technology as global good: We must make renewable energy technology a global public good, including removing intellectual property barriers to technology transfer.
  • 2] Improve global access: We must improve global access to supply chains for renewable energy technologies, components and raw materials.
  • In 2020, the world installed five gigawatts of battery storage.
  • We need 600 gigawatts of storage capacity by 2030.
  • Shipping bottlenecks and supply-chain constraints, as well as higher costs for lithium and other battery metals, are hurting the deployment of such technologies and materials.
  • 3] Fast-tracking : We must cut the red tape that holds up solar and wind projects.
  • We need fast-track approvals and more effort to modernise electricity grids.
  • 4] Shifting energy subsidies: The world must shift energy subsidies from fossil fuels to protect vulnerable people from energy shocks and invest in a just transition to a sustainable future.
  • Increase investment in renewables: We need to triple investments in renewables.
  • This includes multilateral development banks and development finance institutions, as well as commercial banks.

Conclusion

When energy prices rise, so do the costs of food and all the goods we rely on. So, let us all agree that a rapid renewables revolution is necessary and stop fiddling while our future burns.

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Anti Defection Law

Reasons for splits and switches in political parties

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Defections and effectiveness of anti-defection law

Context

In Maharashtra, recently, and in Madhya Pradesh, a while ago, splits in the ruling party and a subsequent realignment of legislators inaugurated new governments.

Challenges to the effectiveness of anti-defection law

  • Splits and switches are commonplace in legislatures across the globe, and India has witnessed at least three distinct waves.
  • The first wave occurred towards the latter half of the 1960s when challengers to the Congress attempted to displace it in the States.
  • An attempt to end defections: The next phase was inaugurated with an attempt to end the free movement and regulate the behaviour of legislators through the anti-defection law.
  • Law incentivise collective defection: While the law discouraged individual movement, it incentivised a collective movement of legislators since it laid down specific numbers to legitimise and validate party switches.
  • Defeating the purpose: When legislators switch in groups, the costs are shared, and the move also appears less opportunistic, which in many ways defeats the purpose of the legislation.
  • The third phase was inaugurated in 2014 when already-dominant parties began to use splits and switches to weaken and destroy their competitors.
  • Therefore, the current phase is bizarre when compared to the past because dominant parties appear to be actively cheering splits and shifts and having no respect for the basic rules of the game.
  • The anti-defection law and control of institutions are now weaponised by dominant parties to intervene in the internal working of Opposition parties, and sometimes make and break them.
  • Furthermore, legislators are switching support even if it does not count to the making or maintenance of governments.

Argument against the split

  • Violation of trust: Switchers violate the trust relationship with their constituents as voters get something other than what they bargained for.
  • Difficulty in ensuring accountability: Assuming voters vote for parties and not candidates, the argument is that uncohesive parties make it difficult for voters to draw definitive lines of responsibility.
  • Consequently, it is difficult for voters to hold party governments accountable for their actions during elections.

Why do legislators split and switch parties?

  • Changes and transformation in parties: While we keep track of party system change, we ignore the point that the component parts, parties which make up the system, too change and transform.
  • Parties constantly adapt new modes to sustain and find success for themselves.
  • Our popular image of a party is that of the classical mass party, which rises from societal movements and is essentially internally democratic.
  • This is what even the Election Commission of India imagines a party should be since many of its guidelines lay stress on the ‘democratic spirit’ and the need for transparency and participation in internal decision-making.
  • Centralised structure: Today’s parties are centralised vote-getting machines which primarily work to ensure the return of political leaders to office.
  • Focus on getting votes: Mass inputs and ideas do not matter, and it is the central leadership that counts. All party activities begin and end with elections.
  • Since parties are mainly concerned with electoral success, anyone who enjoys the confidence of the top leadership and can help increase the seat share is likely to get a ticket.
  • Dominance of financial power: Moreover, we now know that parties prefer candidates who bring in their own money, fund other candidates and raise resources for the party. All this puts the party on the ground in the shade.
  • Closeness of parties to state: the most significant change is that parties are more closely aligned with the state rather than civil society.
  • Parties as a source of services: Parties exchange material and psychological rewards, and goods and services the state provides for electoral advantage.
  • Voters also see parties as a supplier of services.
  • This connection pushes legislators and parties to be in government or at least close to the government.
  • On the supply side, the party on the ground no longer calls the shots; parties are election vehicles and a supplier of services. The party bond exists only as long as it ensures success for the legislator
  •  On the demand side, the voter does not appear to have any problem, as long as “services” are available.

Conclusion

Splits and switches are not seen as objectionable by legislators and are not punished by voters as well. Legislators will, therefore, be willing to do anything if the benefits exceed the costs.

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

The West has a chance to wean India off Russian weaponry

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Patriot Missile System

Mains level : Paper 3- Indigenisation in defence technology

Context

Perturbed by India’s reluctance to condemn the Russian invasion of Ukraine and keen to bind the country closer in confronting China, Western governments have launched a fresh push to wean India, the world’s biggest importer of arms, off its long dependence on Russian weaponry.

India’s concerns after Ukraine war

  • India has grown increasingly alarmed about China, following deadly border clashes in 2020.
  • Since the war in Ukraine began, it has also worried about Russia’s reliability as an arms supplier and about the quality of some of its weapons.
  • Diversification away from Russia: India, though insistent that it has every right to choose its own suppliers, is already diversifying away from Russia. 
  • The share of weapons it imports from Russia has fallen sharply, to around 50% between 2016 and 2021, down from 70% during the previous five-year period.
  • Western help for diversification: It has welcomed Western help in fulfilling its ambition to make more of its own weapons.

Joint arms production plan

  • As the West cannot compete with Russia on price and remain reluctant to share their most cutting-edge technology, they are counting on joint arms production.
  • Western leaders have been vocal about their willingness to help India arm itself.
  • At a ministerial meeting in Washington in April, American officials discussed helping India to make advanced weapons, including reconnaissance aircraft and a system for combating aerial drones.
  • On visits to Delhi that month, Boris Johnson, Britain’s prime minister, and Ursula von der Leyen, the European Commission’s president, also proposed joint arms ventures.
  • Despite avowed interest from both sides, such a shift faces many challenges.

Challenges

  • Dominance of PSUs: India’s arms industry, technically open to private investment since 2001, has long been hampered by the dominance of a small number of state-owned giants such as Hindustan Aeronautics Limited (HAL).
  • Inefficiencies: State-owned arms-makers remain notoriously inefficient.
  • They also retain long-running tie-ups with Russia, making Western governments wary of accepting India’s demands for the transfer of more advanced technology.
  • Low presence of private sector: The share of defence production in the hands of the private sector, which is a more natural partner for big Western defence manufacturers, is about a fifth—scarcely higher than it was five years ago.
  • Lack of industrial capacity and skill: Both the state and private sector still lack the industrial capacity and skilled workers to produce highly specialised defence technology at scale—especially military aircraft.
  • Trust issue: While Western companies worry about inadvertent technology transfers to Russia, India worries about the reliability of its Western partners.
  • Past record: Many see America, which in the past has imposed sanctions on India for its nuclear-weapons programme, as a fickle supplier.
  • More recently America refused to sell India its Patriot missile system, prompting India to fall back on a Russian alternative and thereby put itself at risk of American sanctions once more.

Way forward

  • Liberalisation of defence sector: As a step to liberalise the industry as part of his push towards self-reliance, in 2020 India raised the limit on foreign ownership of defence firms from 49% to 74%.
  • Ordinance Factory Board was dissolved into small units to corporatize the entity.
  • Lockheed Martin, a big American defence manufacturer, last year approved the manufacture of wings for the f-16 fighter jet by its joint venture with Tata.
  • The company has also pledged to produce a more advanced fighter, the f-21, in India, provided it wins a multi-billion-dollar contract to supply 114 fighter jets.
  • Big deals like those would provide incentives for foreign governments to approve more technology transfer and for Western manufacturers to make the investments needed to spur India’s indigenisation drive.

Conclusion

Russia’s war and China’s muscle-flexing have opened a door for India and the West to walk through, but crossing the threshold will require some resolve on both sides.

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Goods and Services Tax (GST)

Towards a single low tax regime

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Single slab structure in GST

Context

The introduction of a uniform GST was a watershed moment in India since the country’s earlier regime of taxes and cesses. However, GST is still a complicated tax regime with different slabs.

Unified single tax

  • Empirical data from across the world on the benefits of a unified single tax is incontrovertible
  • This needs bold and clear reformist thinking at the political level.
  • Imposing a high GST in some areas does not make sense.
  • ‘Sin’ taxes are at cross purposes with the government’s policy of generating growth and creating jobs under ‘Make in India’.
  • High taxes on air-conditioners, air conditioned restaurants, chocolates and luxury cars create an economic ripple effect downstream, in a complex web of businesses that have symbiotic relationships.
  • The effect finally reaches down to the bottom of the employment pyramid.
  • Distrust between State and centre: There is distrust between the States and the Centre on revenue sharing.
  • There is also anger at the Centre for riding roughshod over the States’ autonomy and disregarding the federal structure.

Multiple rates: A major shortcoming in the structure of GST

  • One of the most important shortcomings in the structure of GST is multiple rates.
  • The committee headed by the Chief Economic Adviser estimated the tax rate at 15-15.5 per cent.
  • It further recommended that in keeping with growing international practice, India should strive towards a single rate in the medium-term to facilitate administrative simplicity and compliance, but in the immediate context, it should have a three-tier structure (excluding zero).
  • The structure finally adopted was to have four rates of 5, 12, 18, and 28 per cent besides zero, though almost 75 per cent of the revenues accrue from the 12 and 18 per cent slabs.
  • Why single rate structure? The reasons for adopting a single rate structure in most countries are:
  • To have a simple tax system,
  • To prevent misclassifications and litigations arising therefrom,
  • To avoid an inverted duty structure of taxes on inputs exceeding those on outputs requiring detailed scrutiny and refunds.
  • Why multiple rates? The main reason for rate differentiation is equity.
  • But it is argued that this is an inefficient way of targeting benefits for the poor. 
  • Although the exempted and low-rated items are consumed relatively more by the poor, in absolute terms, the consumption may be more by the rich.

Way forward

  • Move people up the value chain: The plan must be to figure out how to rev up the economy by making the rich and upper middle class spend and move more people up the value chain instead of designing a tax system that keeps these products out of the new consumer class’s reach.
  • The same lack of logic applies to taxes on wine, rum and beer, which generate large-scale employment and are the backbone of grape and sugarcane farming and the cocoa industry.
  • In the automobile sector, the GST on electric cars, tractors, cycles, bikes, low-end and luxury cars ranges anywhere from 5% to 50%.
  • The sale of automobiles is the barometer of an economy.
  • Single tax slab: A directive to the bureaucracy is necessary to come up with just two categories: goods eligible for zero tax and goods that will fall under a single rate, say 10% or 12%.
  • Then there are items that are exempt from GST.
  • Bring fuels under GST:  Petrol, diesel, aviation turbine fuel are not under the purview of GST, but come under Central excise and State taxes.
  • A single low tax regime will ensure compliance, widen the tax net, improve ease of doing business, boost the economy, create jobs, increase tax collections and reduce corruption

Conclusion

The Finance Minister should take a cue from the Prime Minister, who hinted at major reforms in the aftermath of COVID-19, and do away with all the confusing tax slabs in one fell swoop.

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Anti Defection Law

Political crisis in Maharashtra underscores ineffectiveness of anti-defection law

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Tenth schedule

Mains level : Paper 2- Anti-defection law

Context

The political crisis in Maharashtra has brought focus back on the anti-defection law. By all accounts, the law has failed to shore up the stability of elected governments.

About Anti-defection law

  • The Anti-Defection Law under the Tenth Schedule of the Constitution punishes MPs/ MLAs for defecting from their party by taking away their membership of the legislature.
  • It gives the Speaker of the legislature the power to decide the outcome of defection proceedings.
  • It was added to the Constitution through the Fifty-Second (Amendment) Act, 1985 when Rajiv Gandhi was PM.
  • The law applies to both Parliament and state assemblies.

How provisions of the law are being thwarted?

  • There are many ways to thwart provisions of the law:
  • The Speaker can sit on the defection pleas for the term of the assembly;
  • The beneficiary party can facilitate accretion of defectors to hit the magic two-thirds threshold.
  • The voters don’t seem to care about punishing the defectors either.

Is an amendment to the law a solution?

  • Some have thus argued that the way forward is to amend the anti-defection law to fill these lacunae by mandating time-bound decisions by the Speaker and disqualifying defectors from standing for the next election as well.
  • These proposed amendments like the original law want to consolidate power without necessarily putting in the requisite politics.

Why amendment to the law will not solve the problem

  •  Politicians are adept at subverting institutional processes for their own ends and there are many possibilities for payoff for defectors outside of elected office alone.
  • Moreover, politics has a rich history of exercise of power by proxy and the disqualified representative may simply choose to have a family member stand in their stead.
  •  The anti-defection law and proposed amendments approach the issue of defections from the prism of denying power to the defector, a framing which repeatedly comes up short in the face of a bigger and/or more punitive power.

Way forward

  • Parties need to project power: Within this framework, if political parties want to resist defections, they must be able to project (imminent) power themselves.
  • Parties need to address organisational issues: At the same time, political parties must address organizational and ideological infirmities which have made them susceptible to mass defections in the first place.
  • Ideological clarity: Political parties need ideological clarity and the ability to attract individuals with a sense of purpose and not love for power alone.
  • This ideological depth if reflected in the party organization and its political programs will give members the ability to withstand lean periods of power.
  • Inner-party democracy: Political parties are failing to create intra-party forums where grievances can be expressed and resolved on an ongoing basis.
  • Internal mechanisms for inner-party democracy – from elections to deliberative forums – are ultimately at the discretion of the party leadership.
  • Scrap anti-defection law: Scrapping the anti-defection law would provide some institutional leverage to express intra-party dissidence and while it may be more chaotic in the short-term would lead to greater stability and political strength in the long-term.
  • Contributed to polarisation: The anti-defection law has undermined not just the very principle of representation but has also contributed to polarization in our country by making it impossible to construct a majority on any issue outside of party affiliation.
  • Avoid ceding political power to the judiciary: Political parties are repeatedly giving primacy to legal instead of political battles since these issues inevitably end up in court.
  • This repeated ceding of political power to the judiciary is a serious deviation from the democratic paradigm and must be checked.

Conclusion

Anti-defection law has failed to prevent the defections and subsequent toppings of the several state government. Scrapping it could provide leverage to express intra-party dissidence.

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Russian Invasion of Ukraine: Global Implications

The tricky restructuring of global supply chains

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- New phase of globalisation and challenges ahead

Context

After the go-go 1990s and 2000s the pace of economic integration stalled in the 2010s, as firms grappled with the aftershocks of a financial crisis, a populist revolt against open borders and President Donald Trump’s trade war.

Background of globalisation

  • After the Berlin Wall fell in 1989, main theme of globalisation was efficiency.
  • Companies located production where costs were lowest, while investors deployed capital where returns were highest.
  • Governments aspired to treat firms equally, regardless of their nationality, and to strike trade deals with democracies and autocracies alike.
  • Low prices: All this kept prices low for consumers and helped lift 1bn people out of extreme poverty as the emerging world, including China, industrialised.

 

Recent worries with globalisation

  • Volatile capital flows destabilised financial markets. Many blue-collar workers in rich countries lost out.
  • Recently, two other worries have loomed large.
  • Cost in case of disruption is high: First, some lean supply chains are not as good value as they appear: mostly they keep costs low, but when they break, the bill can be crippling.
  • Covid-19 was a shock, but wars, extreme weather or another virus could easily disrupt supply chains in the next decade.
  • Dependencies on autocracies have increased: The second problem is that the single-minded pursuit of cost advantage has led to a dependency on autocracies that abuse human rights and use trade as a means of coercion.
  • Hopes that economic integration would lead to reform—what the Germans call “change through trade”—have been dashed: autocracies account for a third of world gdp.

The fragile state of the international trade and beginning of new phase in globalisation

  • The pandemic and war in Ukraine have triggered a once-in-a-generation reimagining of global capitalism in boardrooms and governments.
  • Supply chain resilience: The supply chains are being transformed, from the $9trn in inventories, stockpiled as insurance against shortages and inflation, to the fight for workers as global firms shift from China into Vietnam.
  • Preferring security over efficiency: This new kind of globalisation is about security, not efficiency: it prioritises doing business with people you can rely on, in countries your government is friendly with.
  • One indication that companies are shifting from efficiency to resilience is the vast build-up in precautionary inventories: for the biggest 3,000 firms globally these have risen from 6% to 9% of world gdp since 2016.
  • Many firms are adopting dual sourcing and longer-term contracts.
  • Investment pattern is inverted: The pattern of multinational investment has been inverted: 69% is from local subsidiaries reinvesting locally, rather than parent firms sending capital across borders.
  • Strategic autonomy: The industries under most pressure are already reinventing their business models, encouraged by governments that from Europe to India are keen on “strategic autonomy”.
  • Moving towards vertical integration: The car industry is copying Elon Musk’s Tesla by moving towards vertical integration, in which you control everything from nickel mining to chip design.
  • Long-term supply deals: In energy, the West is seeking long-term supply deals from allies rather than relying on spot markets dominated by rivals.

Challenges

  • Protectionism: The danger is that a reasonable pursuit of security will morph into rampant protectionism, jobs schemes and hundreds of billions of dollars of industrial subsidies.
  • Long-run inefficiencies: The long-run inefficiency from indiscriminately replicating supply chains would be enormous.
  • Were you to duplicate a quarter of all multinational activity, the extra annual operating and financial costs involved could exceed 2% of world gdp.

Way forward

  • Restraint: Because of the above challenges, restraint is crucial.
  • Diversification: Governments and firms must remember that resilience comes from diversification, not concentration at home.
  • Diversify in the areas controlled by autocracies: The choke-points autocracies control amount to only about a tenth of global trade, based on their exports of goods in which they have a leading market share of over 10% and for which it is hard to find substitutes.
  • The answer is to require firms to diversify their suppliers in these areas, and let the market adapt. 

Conclusion

Will today’s governments be up to the task? Myopia and insularity abound. But if you are a consumer of global goods and ideas—that is to say, a citizen of the world—you should hope globalisation’s next phase involves the maximum possible degree of openness.

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Judicial Reforms

Judicial Reforms in India

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Article 124

Mains level : Paper 2- Judicial reforms

Context

Following are the reforms needed in the various aspects of the higher judiciary

Removing the disparity between retirement ages of HC and SC judges

  • High Court judges now retire at 62 and Supreme Court judges at 65.
  • It is high time that we did away with the disparity between the retirement ages of High Court and Supreme Court judges.
  • There is no good reason for this difference.
  • Intense pressure and competition: The obvious negative fallout of a differential retirement age simply is intense pressure and competition to make it to the top court and thus get three more years.
  • If this is done away with, several judges of mettle would prefer to be Chief Justices and senior judges in the High Courts exercising wide power of influence rather than being a junior judge on a Bench of the Supreme Court.
  • There is good work to be done in the High Courts, and we need good men there.

Create a cadre of public service for retired judges

  • SeveralSupreme Court judges focus on arbitrations after retirement.
  • A minority of judges devote themselves to public service; sadly, this is a very small minority.
  • Another lot are appointed to various constitutional posts and tribunals and commissions.
  • It would be worthwhile reform to create a cadre of public service for retired judges and from this pool make appointments to the constitutional and statutory posts and special assignments.
  • Such judges should receive the full pay and the facilities of a judge of the Supreme Court for life.
  • We should have a culture of public service for senior judges, and those who do not fit in such culture should not be a part of senior ranks.

Reform in the process of appointment of Chief Justice of India

  • No constitutional basis: It is generally assumed that the seniormost judge of the Supreme Court should be the Chief Justice of India.
  • The Constitution mandates no such thing.
  • Article 124 merely states that the President will appoint every judge of the Supreme Court, and this includes the Chief Justice, and each of these judges shall hold office until they attain the age of 65 years.
  • The requirement about appointing the seniormost judge to be the CJI was devised in the Second Judges case (1993) and the consequent Memorandum of Procedure which is an usurpation of the President’s power.
  • There is no good reason why any one particular person should have a vested interest in the top job, and we are better served by eliminating such expectation.
  • Let all serve equally under the constitutional throne for the entire length of their tenure.

But who then shall be the CJI?

  • As per the Constitution the judges of the High Court, senior advocates and distinguished jurists are eligible for the appointment as the judge of the Supreme Court.
  • Chief Justice of HC: When a serving CJI retires, his successor should be the best reputed Chief Justice of a High Court who has proved himself worthy both in judicial office as well as administrative leadership and has those qualities of heart and head which mark a good leader.
  • The same process is followed in the appointment of the Chief Justice of the United States Supreme Court.
  • Security of tenure: The appointee should have a clear three-year term.
  • He should not function as the primus super pares — calling the shots and having their unfettered way.
  • He should instead function in a true collegiate manner, especially in regard to the roster of allotment of cases, especially the sensitive ones, and appointments to the Supreme Court and High Courts and other important matters of judicial and administrative importance.

Conclusion

Though there are several issues that need reforms in the higher judiciary, the above reforms can serve as the precursor to the other reforms to come.

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

The job puzzle

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Employment challenge

Context

The government has assured the creation of one million jobs over the next one-and-a-half years. This may be optimistic, but if it does materialise, the employment landscape will change dramatically.

Background

  • What is the unemployment rate? Expressed in percentage, the unemployment rate is defined as the share of people who are without any job.
  • Joblessness in the country essentially relates to educated young adults seeking jobs in the formal economy.
  • The government recently announced it would recruit 10 lakh people in “mission mode” over the next one-and-a-half years.
  • The announcement came at a time when the unemployment rate for youth (aged 15-29 years) in urban areas has been hovering at over 20 per cent for the last several quarters.

What is the employment situation in India today?

  • If jobs are being created on a progressive basis, there will be an increase in income generation, which in turn, should spur consumption.
  • Therefore, if consumption picks up – this can be indicated by the growth in the consumer goods segments — then one can be confident of jobs being created.
  • What is the situation in India? Consumer durable goods have been registering negative or slightly positive growth for the last five years or so — this is a reflection of the purchasing power of the people that ultimately can be linked to job creation.
  • There have been talks of start-up economy in the country and their achievements.
  • Interestingly, it is a well-known fact that, globally, 80-85 per cent of start-ups fold up in the first couple of years mainly due to non-viable models that fail the scaling-up challenge.
  • Therefore, while start-ups sound exciting, job creation at scale cannot be part of these experiments, unless there is an assured flow of funds.

Challenge in recruiting 10 lakh people

  • It will be a really big task given that presently the central government offices house around 3.45 million personnel as per the budget for 2022-23.
  • Short time frame: The first challenge is in recruiting such a large number in this short period of time considering that there are fairly lengthy processes involved in hiring people to government departments.
  • Finding meaningful role: Hiring such a number is good for the country, but finding meaningful roles for them in various departments needs to be seriously examined.
  • Quite clearly, plans need to be in place to provide work to this set of new employees.
  • Increase in cost for the government: The third issue that would have to be kept in mind is the increase in cost for the government.
  • As per the budget for 2022-23, the average outgo per employee was around Rs 12.20 lakh.
  • Assuming the new set earns half of the existing average, the additional cost would be at least Rs 60,000 crore.
  • The salary outlay for the year was Rs 4.22 lakh crore.
  • These provisions would have to be made in subsequent budgets.

Conclusion

The overall unemployment picture looks complex today. While the government’s intent to add over a million jobs in the next 18 months is laudable, the task is audacious and challenging from both an administrative and financial point of view.

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Cyber Security – CERTs, Policy, etc

The Cyber factor in the Russia-Ukraine war

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Cyber warfare threats and challenges

Context

After 100 days of Ukraine crisis, Russia is yet to achieve what can be termed as a decisive victory in any sector of the current conflict.

Reasons for the lacklustre performance of Russia

  • Several reasons have been adduced by experts in the West for the lacklustre performance of the Russian army.
  • Lack of motivation: There is a lack of motivation and the poor morale of the Russian forces sent to Ukraine.
  • Outdated weaponry: Russian weaponry being outdated and ineffective to fight an informationalised war under modern conditions.
  • Leadership issue: Russian commanders have also proved inept in devising plans and taking appropriate decisions in battlefield conditions against a determined enemy.

Important role of cyber warfare

  • Given that cyber is often touted as the Fifth Dimension of warfare, it may be worthwhile to examine whether this indeed is the first major conflict in which ‘cyber’ is playing a crucial role, allowing a weaker nation with cyber capabilities to use it to its advantage.
  • A former Chief of the National Security Agency of the U.S., in his memoirs had said that although cyberspace is a man-made domain, it had become critical to military operations on land, sea, air and in space.
  • A former U.S. Secretary of Defence a few years ago,, even talked of a possible ‘cyber Pearl Harbour to paralyze nations and create a profound sense of vulnerability’.
  • The Russian military oligarchy is indeed among the world leaders in digital disruption and cyber-methodology.
  • One could have reasonably presumed that even before the conflict commenced, Russia would have swamped Ukraine with an avalanche of digital attacks.
  • Ukraine, for its part, has its own digital army, including a corps of digital weapons.

Limits of cyber warfare

  • There are several publicised instances earlier, of alleged Russian operatives waging a cyberwar against Ukraine.
  • Both sides now possess and use malware such as data-wipers which have proved highly effective.
  • On the day the Russian invasion of Ukraine began, Russian cyber units are believed to have successfully deployed destructive malware against several Ukrainian military targets.
  •  A series of distributed denial-of-service (DDoS) attacks against Ukrainian banking and defence websites occurred simultaneously.
  • As far as the conduct of the war is concerned, the string of small-scale cyberattacks cannot be said to have had any material impact on the conduct or outcome of the conflict.
  • Hence, the cardinal question is why given that Ukraine has put up such a heroic defence — and to a considerable extent stalled the Russian offensive — Russia has not embarked on a massive all-out cyber-offensive.
  • If that be the case, then much of the speculation that cyberattacks in the event of a war provide a perpetrator the capability to enact another ‘Pearl Harbour’ seems highly unrealistic.

Conclusion

It is very likely, and possibly a fact, that there are major difficulties in planning and executing massive cyberattacks on a short timeline to ensure higher efficacy of kinetic attacks.

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Poverty Eradication – Definition, Debates, etc.

The uneven toll of inflation

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Long term capital gain

Mains level : Paper 3- Rising inequality in India

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.

Upholding the right to repair

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Consumer Protection Act 2019

Mains level : Paper 2- Right to repair

Context

The U.S. state of New York recently passed the Fair Repair Act, which requires manufacturers to supply repair information, tools, and parts to independent repair shops and not just their own stores or partners.

What is the right to repair?

  • It refers to proposed government legislation that would allow consumers the ability to repair and modify their own consumer products (e.g. electronic, automotive devices).
  • The idea behind “right to repair” is in the name: If you own something, you should be able to repair it yourself or take it to a technician of your choice.
  • People are pretty used to this concept when it comes to older cars and appliances, but right-to-repair advocates argue that modern tech, especially anything with a computer chip inside, is rarely repairable.

Why is such right significant?

  • Lifespan enhancement: The goal of the movement is to increase the lifespan of products and to keep them from ending up in landfills.
  • Against planned obsolescence: The electronic manufacturers are encouraging such culture so that devices are designed specifically to last a limited amount of time and to be replaced.
  • Scarcity of natural resources: Obsolescence leads to immense pressure on the environment and wasted natural resources.
  • Mitigating climate change: Manufacturing an electronic device is a highly polluting process. It makes use of polluting sources of energy, such as fossil fuel.
  • Boost to repair economy: Right to repair advocates also argue that this will help boost business for small repair shops, which are an important part of local economies.

Why we need the right to repair?

  • Exorbitant repair price: Often, manufacturers reduce the durability of the product, compelling consumers to either repurchase the product or get it repaired at exorbitant prices affixed by the manufacturers.
  • Violation of rights: This tramples upon the right to obtain information about the quality of the product, the right to procure products at reasonable prices, and the right to seek redress against unscrupulous practices.
  • Implicit in Consumer Protection Act: The ‘right to repair’ can be said to be implicit in Section 2(9) of the Consumer Protection Act, 2019.
  • Right to repair provides consumers with the right to repair and refurbish their purchased goods.
  • Providing livelihood to repair technicians: An entire repair class is, in effect, denied its right to conduct business as it does not have the tools, parts, guidelines and technical know-how to repair these high-tech products.
  • In addition to protecting their right to livelihood, it may also prove beneficial as tech companies are required to share their repair manuals with certified technicians.

What are the concerns of the manufacturers?

  • IP rights, security and quality concers: While right to repair is a victory for consumer rights, privacy, security and quality concerns along with blatant intellectual property (IP) rights violations of the manufacturers cannot be sidelined.
  • Impact on quality and functioning: Manufacturers claim that the quality and functioning of the product might be adversely affected if they allow repairs by consumers and third parties.
  • The fear of manufacturers is so potent that they incorporate warranty clauses which lapse when the product is repaired by a third party.

Way forward

  • Avoiding blanket waiver: While necessary clauses to maintain the quality of the product can be included, a blanket waiver should be avoided.
  • For instance, the quality assurance clause can be incorporated for use of company-recommended spare parts and certified repair shops.
  • Making available the repair manual: Making repair manuals available to certified business owners could go a long way in balancing the rights of consumers and manufacturers.
  • Sign non-disclosure agreement to protect IP rights: Manufacturers can sign a non-disclosure agreement to protect the IP with the certified repairers/businesses.
  • Alloting certification/license: Further, the lack of certification/licensing of repair workers is seen as a reflection of their lack of skills.
  • But a repair certification/licence can be allotted to those who pass certain criteria and skill tests.
  • Insert right to repair in Consumer protection Act: The ‘right to repair’ can be said to be implicit in Section 2(9) of the Consumer Protection Act, 2019.
  • Its apparent disregard merits an explicit insertion of a ‘right to repair’ clause in the said provision.
  • This would make consumers more aware, provide tooth to an already implicit right, and aid in advancing repair-related liability on various stakeholders.
  • Reparability parameter: The product liability clause under Section 84 can be amended and expanded to impose product liability concerning various reparability parameters of the product.
  • France requires manufacturers to display a repairability index on their products which consists of five parameters.
  • Duration of product liability: The duration of imposing product liability may vary depending on the product and its longevity.
  • Here, we can rely on the EU’s guidelines on Ecodesign for Energy-Related Products and Energy Information Regulations, 2021, which mandate manufacturers to provide spare parts for up to 10 years to avoid premature obsolescence.

Conclusion

The New York legislation is a reminder that it is time to not only acknowledge the right to repair of consumers but also respond to the corresponding rights of the manufacturers.

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

India specific factors that have bearing on inflation trajectory

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Inflation triggering factors

Context

Inflation is turning into a global concern fueled by multiple global factors. However, in India there are a few other triggers that will have a bearing on the inflationary trajectory.

Global inflation concerns

  • All that could have possibly triggered higher inflation globally has already occurred — multiple waves of the pandemic, supply disruptions, an overdose of policy stimuli, war, sanctions, energy shocks, geopolitical adversity and weather disruptions.

1] Impact of MSP on inflation

  • The MSP that is fixed by the government for kharif and rabi crops has been one of the key policy instruments.
  • Policymakers in India have often acted with alacrity to protect the interests of farmers over the years.
  • In the last 20 years, the weighted average MSP for kharif crops saw double-digit growth four times — in 2007, 2008, 2012 and 2018.
  • Food inflation shot up to 12 per cent in 2007-08 as against 8 per cent in 2006-07 and 4 per cent in 2005-06.
  • The inflationary surge continued in 2009 as a monsoon failure hit agricultural output hard.
  • Global agricultural commodity prices started to rise in 2010 again and the FAO food price index reached an all-time high in July 2012.
  • One of the key reasons for the increase in food prices was the oil price surge and a rise in demand for biofuel production.
  • The global upside in food prices coincided with a 22 per cent increase in MSP for Kharif crops in India.
  • Following the rise in MSP, food inflation in 2012 increased by 14.6 per cent as against 3.6 per cent the preceding year.
  • In  2018, for the first time, the MSPs for all 23 kharif and rabi crops were fixed at a margin of at least 50 per cent higher than the cost of cultivation.
  • The cost of cultivation (A2 + FL) includes the paid-out cost and cost of imputed family labour.
  • Accordingly, the MSP of kharif crops in 2018 saw an annual increase of about 14 per cent.
  • However, despite the significant rise in MSP, food inflation in 2018-19 was muted at 0.3 per cent.
  • This was because farm input costs were under control and the terms of trade for farmers remained positive.

2] Impact of GST on inflation

  • Raising the revenue-neutral rate: In the upcoming meeting, there is talk of changes in GST slabs and rates with an eye on raising the revenue-neutral rate from around 11.5 per cent, which is far lower than the 15.5 per cent estimated at the time of the launch of GST.
  • Avoid the shock: However, a GST rate shock to the system is best avoided given the global inflationary backdrop and the fragility of consumer balance sheets.

3] Influence of weather

  • While the dependence of agricultural output on the quantum of rainfall has reduced, variance in the spatial and temporal distribution of rainfall is emerging as a key risk.
  • A look at 2021 — a normal monsoon year with rainfall at 99 per cent of its long period average — is instructive.
  • The late excess rains delayed the crop cycle and led to crop damage in several parts of the country.
  • Likewise, the spatial distribution of rainfall remained uneven in 2021.
  • Thus, even with normal rainfall in 2021, there were several disruptions to the crop cycle and farm cash flows.

Conclusion

The government has taken various steps lately to rein in inflation. However, the RBI will have little freedom in case the GST council decides to accord revenue protection to states via higher GST rates or if the monsoon is not in line with expectations. One hopes these events pan out right, like the MSP hike, when most other things have gone wrong.

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What India must do to protect its ties with the Islamic world

Note4Students

From UPSC perspective, the following things are important :

Prelims level : WANA region

Mains level : Paper 2- Engagement with Gulf countries

Context

A controversial remark by the ruling party spokesperson against the Prophet has snowballed into a diplomatic row. Against this backdrop, New Delhi should not stop engaging the Gulf countries and strive to move beyond damage control.

International reaction against the remarks

  • The United Arab Emirates, Oman, Indonesia, Iraq, the Maldives, Jordan, Libya and Bahrain have joined the growing list of countries in the Islamic world that have condemned the remarks.
  • Earlier, Kuwait, Iran and Qatar had called Indian ambassadors to register their protest, and Saudi Arabia had issued a strongly-worded statement.
  • Campaigners (including a few GCC regimes) demand that Prime Minister of India should tender an apology for all that happened.
  • But New Delhi’s stance is categorial and legitimate insofar as the Union government has nothing to do with such unsolicited comments.

Why WANA is important for India

  • Engagement with WANA: Countries in West Asia and North Africa (WANA) region do not have a fixed position vis-à-vis India.
  • Delhi has vibrant economic and strategic ties with almost all regimes in the region.
  • That’s precisely the reason these countries are unwilling to join the Islamabad-led chorus or go beyond passing resolutions.
  • India’s signing of a free trade agreement (FTA) with the UAE and the ongoing negotiations for a wider FTA with the GCC could be an eye-opener for the country’s detractors.
  • India’s energy needs: As much as 40 per cent of oil and an equal share of gas requirements are met through India’s strategic cooperation with the Gulf regimes.
  • Mutuality of interests: India and the WANA regimes know that there is a mutuality of interests in these transactions which cannot be substituted by any other segments of the world system.
  • Indian diaspora: Equally important is the role of the more than eight million-strong Indian diaspora in the WANA region.
  • The “Gulf remittance” is an important part of the Indian economy, as important as the Indian investment in the GCC and GCC investment in India.

Way forward

  • India’s foreign policy strategy — which includes strategic bargaining with regional and international actors — would fetch reasonable dividends.
  • The response to its Ukraine war strategy has convinced South Block that it has adequate manoeuvrability in global affairs.

Conclusion

New Delhi should not stop engaging the countries, especially the ones in the WANA region, as both have shared interests. Therefore, South Block must go beyond a mere damage-control exercise.

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Indian Ocean Power Competition

Challenges in dealing with Indo-Pacific

Note4Students

From UPSC perspective, the following things are important :

Prelims level : The Spratly Islands

Mains level : Paper 2- IPEF and challenges

Context

The Indo-Pacific region has been under pressure and East Asia, in particular, has had to weather repeated storms.

Background

  • Recently, U.S. President Joseph Biden was on his five-day visit to Asia.
  • During this visit, the new conservative South Korean government showed a willingness to expand the presence of a U.S. missile defence system in the country, which had earlier angered China.
  • In Japan, the administration promised him that it was ready to do away with its long-standing 1% GDP ceiling for annual defence spending.
  • Mr. Biden said at a press conference that the U.S. would intervene militarily to defend Taiwan if it came under attack from China.
  • The President and members of his delegation later clarified that there is no change in the substance of American foreign policy, which is still governed by the Taiwan Relations Act.
  • As per the 1979 Congressional law, the U.S. “shall provide Taiwan with arms of a defensive character” so that the region can defend itself.
  • The law says nothing about the U.S. being required to step in militarily to defend Taiwan in the event of an invasion by China.

China-challenge in Indo-Pacific

  • South Korea and Japan face regular nuclear and missile threats from North Korea.
  • Challenge to international maritime law: China not only challenges international maritime laws in the South China Sea, but also confronts Japan over the Senkaku Islands.
  • Spratly Islands dispute: Six nations, including China and Taiwan, are involved in the dispute over the Spratly Islands, which are supposedly sitting on vast reserves of oil and natural gas.
  • Militarisation of disputed isles: China has vigorously militarised some portions of the disputed isles, islets and coral reefs; and countries like Vietnam and the Philippines are anxious not to be left behind.

Will IPEF framework help in tackling challenges from China?

  • The US has sought to deal with China by establishing an Indo-Pacific Economic Framework (IPEF) with Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.
  • Four pillars of IPEF: The IPEF will work on fine-tuning four major pillars: standards and rules for digital trade; resilient supply chains; green energy commitments; and fair trade.
  • Issues of trade and tariffs: However, there is discontent that the framework does not address issues of trade and tariffs. 
  • Lack of trade component: Asian partners really want is trade, they want market access.
  • And the trade component of the IPEF is really lacking.

Two facets of Indo-Pacific

  • 1] Balance relations with US and China: One is that China’s neighbours would rather balance relations between Washington and Beijing.
  • 2] Extent of resistance: Second is the extent to which countries in the region will want to get on the anti-China bandwagon, economic or strategic.
  • Whether it is in East, Southeast or South Asia, every country has its own unique relationship with Beijing.
  • India may be a part of the Quad, but is quite mindful that it is the only country in the group that shares a land border with China.
  • South Korea and Japan are part of a strong American security/strategic partnership but will be keen on maintaining their economic status with China.
  • This is also true for the Association of South East Asian Nations.

Conclusion

Given the complex nature of the threats and the challenges the Indo-Pacific faces, drawing up any strategy remains to be an uphill task.

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

Challenges in global growth recovery

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Impact of capital outflwow

Mains level : Paper 3- Growth recovery challenges

Context

The global economy was well on its path to recovery until the invasion of Ukraine by Russia.

Uncertainties in global growth prospects

  • Divergent economic recoveries: Economic prospects have worsened since the Ukraine crisis, worsening the divergence between the economic recoveries of advanced economies and those of the developing ones.
  • The prevailing uncertainties in global growth prospects come in the aftermath of frequent disruptions to worldwide supply chains in the last two years.
  • Against this background, two key macroeconomic variables have a persistent effect on growth rebound.
  • 1] Price pressure: There is tenacious price pressure, leading to policy trade-offs especially in developing economies.
  • 2] Capital outflow: There have been capital outflows and a tightening of financial conditions, affecting investment and growth in the medium and long term.

1] Price pressure

  • Global concern: In some of the advanced economies, inflation has reached its highest level in the last 40 years.
  • The major contributors to high inflation are energy and food prices.
  • A spike in oil and gas prices due to a tight fossil fuel supply and geopolitical uncertainty have led to substantial increases in energy costs worldwide.
  • In developing economies, rising food prices have had cascading effects, culminating in higher overall inflation.
  • This gets intensified if poor weather hits harvests and rising oil prices drive up the cost of producing and transporting fertilizers.
  • In developing economies, higher prices for food impacts different sections of the population differently, depending on the types of food consumed and the share of food expenditure in a household’s consumption basket.
  • Persistent short supply and increases in food and fuel prices could significantly increase the risk of social unrest as the poorer sections are pushed to the edge of heightened deprivation.

2] Capital outflow

  • Emerging markets suffered their first portfolio outflows in a year in March 2022.
  • The Institute of International Finance (IIF) says “foreign net portfolio outflows for emerging markets came to $9.8 billion in March.
  • Investors have become more selective, as higher risk sensitivity mounts due to tighter monetary conditions and rising inflation.
  • Reasons for capital outflow: Interest rates tightening in the United States is associated with capital flow reversals from emerging markets.
  • Impact on developing economies: For developing economies, the result of sudden large capital outflows is currency depreciation and tighter external sector conditions, leading to growth fluctuations.

Way forward

  • Monitor the pass-through of international prices: Though the factors contributing to high inflation (global supply shocks) are beyond the control of central banks, they need to carefully monitor the pass-through of rising international prices to domestic inflation to calibrate their responses.
  • Calibrate the pace of policy tightening: The pace of policy tightening needs to be attuned to prevailing economic situations and activity levels.
  • Communicate the importance of inflation targeting: Central banks could also signal a readiness to shift the monetary stance to maintain the credibility of their inflation-targeting frameworks by clearly communicating the importance of inflation stabilisation in their objectives and backing it with policy actions.
  • Foreign exchange interventions: As sudden capital flow reversals can threaten financial stability, foreign exchange interventions could address market imbalances.
  • Fiscal consolidation: There exists an imperative to prune expenditure and get back to the road of fiscal consolidation.
  • However, a push for consolidation should not prevent governments from prioritising spending to protect and help vulnerable populations affected by price increases and the pandemic.
  • Income support policies: In the post-pandemic global economy, there will be a likely cross-sectoral labour reallocation.
  •  These transitions require labour market and income support policies that are designed to provide safety nets for workers without hindering employment growth.

Conclusion

The message from the current phase of global growth is clear. Policymakers in the developing economies have to prepare for tighter financial conditions and spillovers from geopolitical volatility.

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Foreign Policy Watch: India-SAARC Nations

BIMSTEC

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Indian Ocean Rim Association (IORA)

Mains level : Paper 2- Opportunities and challenges for BIMSTEC

Context

After 25 years, BIMSTEC can do much better as a grouping, addressing shortcomings in trade and connectivity.

About BIMSTEC

  • BIST-EC in 1997: The 1997 Bangkok Declaration led to creation of the grouping of Bangladesh, India, Sri Lanka and Thailand with the acronym, BIST-EC.
  • BIMSTEC: Three countries-Nepal, Bhutan and Myanmar joined BIST-EC later to make it the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).
  • At the grouping’s birth, the world was different; it was stamped by America’s ‘unipolar moment’.
  • India and Thailand joined hands to start an experiment of infusing a part of South Asia with the economic and institutional dynamism that defined the Association of Southeast Asian Nations (ASEAN).
  • But BIMSTEC found the burdens of South Asia too heavy to carry, and so it grew slowly.
  • The grouping has succeeded in rejuvenating itself.
  • Instrument of regional cooperation and integration: Since its Kathmandu summit in 2018, it is viewed as an instrument of regional cooperation and integration, not just of sub-regional cooperation.

New opportunities in the changed geopolitical context

  • In the third decade of the 21st century, the strategic contestation between the United States and China defines the region’s geopolitics and geo-economics, creating new tensions and opportunities.
  • Deepening linkage between South Asia and Southeast Asia: In this Indo-Pacific century, the Bay of Bengal Community (BOBC) has the potential to play a pivotal role, deepening linkages between South Asia and Southeast Asia.
  • Collaboration with IPEF: It should accelerate the region’s economic development by collaborating with the newly minted Indo-Pacific Economic Framework for Prosperity (IPEF).
  • New synergy should be created between BIMSTEC and the IPEF.
  • While all member-states are equal, three have a special responsibility: Bangladesh as the host of the BIMSTEC Secretariat; Thailand as the representative of Southeast Asia; and India as the largest state in South Asia.

Key achievements of BIMSTEC

  • Charter: It has crafted a new Charter for itself, spelling out the grouping’s vision, functions of its constituent parts, and has secured a legal personality.
  • Sectors of cooperation reduced to 7:  It has prioritised the sectors of cooperation, reducing them from the unwieldy 14 to the more manageable seven, with each member-state serving as the lead country for the assigned sector.
  • Strengthened Secretariat: It has, finally, taken measures to strengthen the Secretariat.
  • Combating terrorism: The grouping has also registered progress in combating terrorism, forging security cooperation, and creating mechanisms and practices for the better management of humanitarian assistance and disaster relief.
  • Held regular summits: Unlike the South Asian Association for Regional Cooperation, post-2014, BIMSTEC has continued to hold its summits and meetings of Foreign Ministers.
  • Unlike the Indian Ocean Rim Association (IORA) which held only one summit since its establishment in 1997, BIMSTEC has succeeded in holding five summits so far; it has now resolved to hold regular summits once in two years.
  • Sectoral cooperation: Institutions such as an Energy Centre and the Centre on Weather and Climate are in place to push sectoral cooperation forward.

Challenges

  • No progress on FTA yet: A major failure relates to the continuing inability to produce a comprehensive Free Trade Agreement (FTA) 18 years after the signing of the Framework Agreement.
  • Lack of connectivity: The other disappointment is connectivity — in infrastructure (roads, railways, air, river, and coastal shipping links), energy, the digital and financial domain, and institutions that bring people closer together for trade, tourism and cultural exchanges.
  • Only limited progress has been achieved so far, despite the adoption of the Master Plan for Connectivity supported by the Asian Development Bank (ADB).
  • Much of the connectivity established recently is the outcome of bilateral initiatives taken by India, Bangladesh, Nepal and Bhutan to strengthen transport links.
  • No progress on Blue Economy: The grouping has talked about the Blue Economy but is yet to begin any work on it.
  • Business chambers and corporate leaders are yet to be engaged fully with the activities of BIMSTEC.

Conclusion

If BIMSTEC is truly committed to its stated goals, it must recreate the spirit of working in unison.

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Foreign Policy Watch: India-Myanmar

Myanmar’s internal situation shouldn’t hobble India’s ‘Act East’ policy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Act East Policy

Context

The military takeover in Myanmar on February 1, 2021 and its aftermath have seen an adverse impact on India’s Act East policy.

Impact on Act East policy

  • With the present dispensation in Myanmar, the Act East policy is going nowhere.
  • Impact on outreach: This has not only stymied New Delhi’s initiatives in terms of land outreach towards the vibrant economies of South East Asia, but has retarded development in the Northeast.
  • Pragmatism demands that an ambitious policy that had fired the aspirations of the Northeast does not become a casualty to the inertia of policymakers.
  • There seems to be a full-bodied recalibration exercise among insurgent groups operating from the Sagaing Division and Chin State in Myanmar.
  • In the north, the ULFA which was until recently in a submissive mood and had declared three back-to-back unilateral ceasefires has suddenly turned belligerent.
  • Need for a relook at Act East policy: In this background, a fresh look needs to be taken at both the furtherance of the Act East policy and the security matrix that governs the Northeast.

Suggestions

1] Opening a new axis of land-sea connectivity

  • Promoting trade and commerce: Favourable bilateral relations with Bangladesh offer an opportunity for opening a new axis of land-sea connectivity for promoting trade and commerce with Southeast Asia.
  • Upgrade land routes: There is a need to upgrade the multitude of land routes to the seaports of Mongla and Chittagong in Bangladesh, from Assam, Meghalaya, Mizoram and Tripura.
  • The key land linkages from the Northeast are — Agartala via Akhaura, Dawki (Meghalaya) via Tamabil, Sutarkandi (Assam), and Srimantapur (Tripura) via Bibir Bazar.
  • Exploit shared river connectivity: In addition, there is a need to use inland water transport (IWT) to exploit the shared river connectivity of the Brahmaputra and Barak rivers.

2] Continued engagement with Myanmar

  • The land gateway to South East Asia does not seem likely in the near future.
  • But there should be no dilution in our initiatives to ensure that peace and stability return to Myanmar at the earliest.
  • For this, there is a need for continued engagement, both formal and informal, with the warring factions in Myanmar.

3] Develop appropriate infrastructure

  • Appropriate infrastructure such as container depots, cold storage facilities and seamless highways will have to be developed on a war footing.
  • Indian manufactured goods will have to be transported to the rail/roadheads in the Northeast like Guwahati for ready access to the seaports of Bangladesh.

4] Integrated defence zones

  • To make ineffective the strike capability of the insurgent groups there is a need to create “integrated defence zones”.
  •  These should be jointly manned by the Tatmadaw (Myanmar army) and the Indian Army/Assam Rifles
  • To enthuse dynamism and empower the Assam Rifles, there is a need to retain its current structure of being officered by the Indian Army, as it ensures systemic command and control.
  • This force needs to be mandated to undertake intelligence operations for greater transparency of the events within Myanmar and further the national strategy.

Conclusion

The Act East policy is intertwined with India’s Northeast policy. Let not the dismal scenario of Myanmar impede our vision for the actualisation of our ambitious Act East to go East, as alternates exist. To that end, there is a need to ensure the continued economic development of Northeastern states.

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Digital India Initiatives

The Digital India transformation

Note4Students

From UPSC perspective, the following things are important :

Prelims level : SVAMITVA Yojana

Mains level : Paper 2- Digital India transformation

Context

Recently, Prime Minister Narendra Modi made a telling observation about his idea of India: “… every Indian must have a smartphone in his hand and every field must be covered by a drone”.

Digital India program and its impact

  • Digital India solved some of the most difficult problems the country had been facing for decades.
  • The Jan-Dhan-Aadhaar-Mobile (JAM) trinity has ensured that the poorest receive every penny of their entitled benefits.
  • Financial benefits worth nearly Rs 23 lakh crore have been transferred using DBT technology in the last eight years.
  • This has led to savings of Rs 2.22 lakh crore of public money.
  • Leveraging the power of drones and GIS technologies, SVAMITVA Yojana is providing digital land records to the rightful owners
  • Digital inclusion: The inclusive character of Digital India not only makes it a unique initiative but also reflects our core philosophy of “Sabka Saath, Sabka Vishwas”.

Digital transformation in India

  • India today is home to more than 75 crore smartphones, 133 crore Aadhaar cards, more than 80 crore internet users, has 4G and is now accelerating towards 5G.
  • It has among the lowest data tariffs in the world.
  • Digital technology must be low-cost, developmental, inclusive, and substantially home-grown and it should bridge the digital divide and usher in digital inclusion.
  • The digital ecosystem was also useful in tackling the challenge of the pandemic.
  • To provide high-speed broadband to all the villages, optical fibre has been laid in 1.83 lakh gram panchayats under Bharat Net.
  • CSCs: There were only 80,000 Common Service Centers (CSCs) in 2014, which is an entity under the Ministry of Electronics and IT headed by Secretary IT, for providing assisted delivery of digital services to common citizens offering only a few services. Today, there are nearly four lakh CSCs.
  • Fintech innovation ecosystem: India has emerged as the fastest-growing ecosystem for fintech innovations. 
  • This was made possible due to innovative digital payment products like UPI and Aadhaar-Enabled Payment Systems (AEPS).
  • Startup ecosystem: India has more than 61,400 startups as of March 2022, making it the third-largest startup ecosystem after the US and China.
  • With nearly 14,000 startups getting recognized during 2021-22, 555 districts of India had at least one new startup as per the Economic Survey 2022.

Atmanirbharta in electronic manufacturing

  • With initiatives like Modified Special Incentive Scheme (MSIPS), Electronics Manufacturing Cluster, National Policy on Electronics 2019, Electronics Development Fund, Production Linked Incentive (PLI) and Scheme for Promotion of Electronics Components and Semiconductors (SPECS), India is moving towards self-reliance in the field of electronics manufacturing.
  • The value of electronics manufacturing in India has touched $75 billion in 2020-21 from $29 billion in 2014.
  • Indian companies have developed their own 4G and 5G technologies.

Conclusion

Digital India’s motto – “Power to Empower” — is truly living up to its goals and expectations. The success of Digital India only confirms that it has a robust future in India’s development.

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