From UPSC perspective, the following things are important :
Prelims level: WIPO, UNIDO
Mains level: Paper 2-Multilateralism in the post-Covid world
What is the future of multilateralism? This is the question we have come across many times recently. Given the chaos that we are witnessing in the global order, multilateral seems to be headed for either collapse or capture by China. But, the author of this article suggests that it would be a mistake to consider the choice as binary. Between the collapse and the capture, there are many stakeholders working for its sustenance. So, multilateralism will endure.
International institutions performing below par
The COVID-19 outbreak has placed all international institutions under a magnifying glass.
By any measure, most have performed below par.
Such is the caution espoused that multilateralism today seems to have reverted to its version 0.1.
The General Assembly now passes resolutions through no-objection procedure.
The Security Council has been found wanting in no small measure.
The 75th session’s ‘leaders week’ runs the risk of being reduced to a video playback session.
Pursuit of change by threatening to leave
It is true that functioning of multilateral institutions requires reform.
They need to adapt to new realities.
However, the pursuit of change by threatening to leave multilateral institutions is a phenomenon we witnessed only during the period of the League of Nations.
One state followed another in bidding goodbye, until the League’s final demise.
Why post Second World War institutions survived departures
The post Second World War multilateral institutions have survived such departures.
The United Nations Educational, Scientific and Cultural Organization (UNESCO) in Paris and the Human Rights Council in Geneva have survived the departure of the U.S.
The United Nations Industrial Development Organization (UNIDO) in Vienna continues despite the withdrawal of the U.S. and many others.
The World Health Organization (WHO), notwithstanding its visible shortcomings, will survive U.S. threats.
The reasons are simple.
Multilateral organisations serve desperately felt global needs of the vast membership.
The pandemic has reinforced the desire for greater global cooperation amongst most states.
So, will the current multi-lateral order survive China’s onslaught?
It is true that Chinese nationals head four multilateral organisations.
It is also true that Chinese nationals have failed in campaigns to head UNESCO and the World Intellectual Property Organization (WIPO).
Despite contributing nearly 10% of the UN’s budget, Chinese nationals are not exactly over-represented in terms of staff positions.
China has certainly risen up the multilateral pantheon and is able to better promote its interests.
It has warded off attacks against it in multilateral fora, at times with the aid of the heads of these organisations.
However, it is yet to display an ability to set the multilateral agenda and dominate the discourse on an array of issues, in the manner that the U.S. once indispensably did.
China’s flagship venture, the Belt and Road Initiative, remains only on the fringes of multilateral fora.
Neither in monetary terms nor in substantive inputs are there portents of a ‘Chinese takeover’.
Amidst this, multilateral bodies are populated by a plethora of small and middle states quietly working to restore equilibrium, when the balance tends to shift.
The capture of the existing multilateral order by a new hegemon is antithetical to the ethos of multilateralism.
Multilateralism thrives on the notion of the Lilliputians tying up Gulliver — old or new.
Evolving multilateralism is not a choice between collapse and capture
Between collapse and capture, there are other pathways.
Multilateral architecture places a premium on structures over functions,processes over substance.
It slows down the change of any sort.
The same processes that have stalled change in the past will militate against a takeover in the future.
Does that mean that multilateralism will meander meaninglessly?
It will meander, but perhaps not meaninglessly.
The ‘pluri-laterals’ and the emerging ‘mini-laterals’ each have their place in terms of international agenda-setting, but global norm-setting requires inclusivity that they lack.
Opportunity for India
Being able to shape the discourse at an incipient stage is a good perch to be on.
Issue-specific ‘coalitions of the willing’ are catalysts.
As a growing power, India needs to avail of such avenues.
However, by themselves, these will not do justice to the depth and variety of India’s interests and our stakes in global cooperation.
Also, they are not holistic solutions in ensuring global acceptance of norms.
Understanding the essence of multilateralism
Responses of states during the COVID-19 crisis point to more emphasis on sovereign decision making than before.
The imprimatur for acting on behalf of the global community is not going to be available easily.
On myriad issues, from sustainable development to the environment, from climate change to pandemics and cyberspace to outer space, the demands for ‘nothing about us without us’ are likely to increase.
Since stakeholders perceive that their stakes have risen, they will call for enhanced engagement.
Convening such stakeholders in pursuit of global goals is the essence of multilateralism.
Consider the question “In the world afflicted by Covid, multilateralism seems to be headed for collapse or capture by a hegemon. Critically examine.”
Conclusion
We need to patiently promote reforms while building partnerships to avail opportunities which may arise for more fundamental change. We need to bide our time without hiding our intent.
From UPSC perspective, the following things are important :
Prelims level: ECA, APMC Act
Mains level: Paper 3- Agri-marketing and issues with it
Following the announcement of reforms in the agri-sector, the government issued ordinances to make good on its promise. These ordinances deal with- ECA-1955, APMC Act and Contract farming. The author in this article examines whether these ordinances deliver on the promises made or not.
1) Ordinance for amendment of APMC Act
‘Farming Produce Trade and Commerce (Promotion & Facilitation) Ordinance 2020.’ seek to address the problems farmers face in selling their produce.
Due to the unionisation of middlemen (arhatias) and their financial clout, politicians in the states have been reluctant to amend agriculture marketing laws which are exploitative and don’t allow farmers to receive a fair price.
Rather than coax the states financially to correct the markets, an unregulated marketplace has been created where 15 crore farmers will be exposed to the skulduggery of traders.
Imagine the mayhem in stock markets if ROC and SEBI were similarly made redundant.
Issues and benefits
Rather than replicate Punjab’s successful agriculture mandi model, now states will lose vital revenue to even upgrade and repair rural infrastructure.
The ordinance may be challenged by the states for its constitutional overreach.
But, on the flip side, over time, the largest informal sector in the country will begin to get formalised and new business models will develop.
A different breed of aggregators will create the much-needed competition to the existing monopoly of local traders.
Additionally, henceforth, when farmers sell agricultural produce outside of APMC market yards, they cannot legally be charged commission on the sale of farm produce.
To survive, the APMCs across the nation will have to radically standardise and rationalise their mandi fee structure and limit the commission charged by traders on sale of farmers’ produce.
2) ECA 1955: Not enough has been done
Here, the amendment was supposed to allay the genuine fears of traders emitting from the bureaucracy’s draconian powers to arbitrarily evoke stockholding limits etc.
Rather than forego its own powers for the larger good, the amendment’s fine print makes it ambiguous and leaves space for whimsical interpretations as before.
The trader’s uncertainty is compounded by the arbitrary import-export policy decisions which dilute the purpose of the amendment itself.
3) Ordinance on Contract farming
“The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance 2020” tries to placate the fears of both the farmer and the contractor when they sign an agreement.
For the farmer, the legal recourse is never a practical choice as the persuasive powers of the aggregators’ deep pockets cast a dark shadow over the redressal process.
Likewise, the tediously stretched legal proceedings are dissuasion enough to either not seek redressal or settle for unfavourable terms.
That produce derived from contract farming operations will not be subject to any obstructionist laws is a very good step.
Farmer-producer organisations and new aggregators will get a boost with these laws, and become harbingers of prosperity in some small corners of the countryside.
There are green shoots in the ordinances, but the downside dwarfs the upside.
So, what are the implications of these 3 reforms?
The union of the three ordinances appears to be a precursor to implementing the Shanta Kumar Committee recommendations to dilute and dismantle FCI, MSP & PDS which will push farmers from the frying into the fire.
It may also be interpreted to mean that now the sugar industry needn’t pay farmers the central government FRP or the state government SAP price for sugarcane.
Consider the question ” There was a mention of reforms related to agri-sector in the recently announced stimulus package. Examine the issues with segments of agri-sector which necessitated these reforms.”
Conclusion
The reforms in these 3 areas if carried out earnestly could go a long way in helping the farmers get out of the misery and help achieve the goal of doubling of farmers income in the set time frame.
Back2Basics: Agriculture Produce Marketing Committee Regulation (APMC) Act.
All wholesale markets for agricultural produce in states that have adopted the Agricultural Produce Market Regulation Act (APMRA) are termed as “regulated markets”.
With the exception of Kerala, J & K, and Manipur, all other states have enacted the APMC Act.
It mandates that the sale/purchase of agricultural commodities notified under it are to be carried out in specified market areas, yards or sub-yards. These markets are required to have the proper infrastructure for the sale of farmers’ produce.
Prices in them are to be determined by open auction, conducted in a transparent manner in the presence of an official of the market committee.
Market charges for various agencies, such as commissions for commission agents (arhtiyas); statutory charges, such as market fees and taxes; and produce-handling charges, such as for cleaning of produce, and loading and unloading, are clearly defined, and no other deduction can be made from the sale proceeds of farmers.
Market charges, costs, and taxes vary across states and commodities.
Essential Commodities Act 1955
The ECA is an act which was established to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or black-marketing would affect the normal life of the people.
The ECA was enacted in 1955. This includes foodstuff, drugs, fuel (petroleum products) etc.
It has since been used by the Government to regulate the production, supply and distribution of a whole host of commodities it declares ‘essential’ in order to make them available to consumers at fair prices.
Additionally, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity”.
The list of items under the Act includes drugs, fertilizers, pulses and edible oils, and petroleum and petroleum products.
The Centre can include new commodities as and when the need arises, and takes them off the list once the situation improves.
How ECA works?
If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period.
The States act on this notification to specify limits and take steps to ensure that these are adhered to.
Anybody trading or dealing in the commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity.
A State can, however, choose not to impose any restrictions. But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity.
This improves supplies and brings down prices. As not all shopkeepers and traders comply, State agencies conduct raids to get everyone to toe the line and the errant are punished.
The excess stocks are auctioned or sold through fair price shops.
From UPSC perspective, the following things are important :
Prelims level: Indian states sharing border with Nepal
Mains level: Paper 2- India-Nepal ties and border issue
Of late, India’s bilateral relations with Nepal has been going south. The latest trigger has been the changes made by Nepal in the map. This article explores the transformation of Nepal and its impact on India-Nepal relations. Despite the efforts by Nepal to explore the options beyond India, ties are still robust between the two countries and this is reflected in more than one ways.
Let’s map the changes in Nepal with one constant factor: nationalism
1. Democracy
The obvious change in Nepal is that it is now a democratic republic after nearly 250 years of being a monarchy.
The Nepali Congress and Maoist leader, Prachanda, claim democracy (1990) and the abolition of monarchy (2008) as their legacies.
2. Societal change due to exposure to globalisation
More pervasive is the societal change from Nepal’s exposure to globalisation.
Geography, too, stands to change, with the Chinese now having the potential to bore through the Himalayas and exhibiting their presence in Kathmandu in economics and politics.
3. Nationalism
The constant in Nepal is nationalism which is really a mask for anti-India sentiment.
Politicians use it for personal gain, and it is deeply ingrained in the bureaucracy, academia and the media.
Today, Prime Minister K.P. Sharma Oli is cementing his legacy as a nationalist by extending Nepal’s map into Indian territory.
The cartographic aggression and the embedding of the new map in the country’s national emblem and Constitution are untenable and should have been avoided under all circumstances.
In 2015, the Nepali Congress government adopted the new Constitution, ignoring India’s concerns.
4. Identity politics
Identity politics with India is also visible within the country.
Nepali citizens from the Terai (Madhesis) feel discriminated as being “Indian”.
To Nepal, their attitudes reflect the angst of a small state. To India, Nepal appears incorrigible.
Let’s understand how globalisation changed Nepal
After democracy was restored in 1990, passports were more liberally issued, and Nepalis began looking for work opportunities globally, beyond just India.
West Asia and South-East Asia specifically became major destinations for labour migration.
Security uncertainties with the Maoist insurgency at home also propelled the trend of migration.
Students and skilled personnel began moving to Europe, the United States, Australia, Thailand and even to Japan and South Korea.
As of 2019, nearly a fifth of Nepal’s population, from all parts of the country, were reportedly overseas.
At an estimated $8 billion, global remittances account for nearly 30% of Nepal’s nominal GDP.
This makes Nepal one of the most remittance-dependent countries in the world.
Leftist ideology and the prominent presence of international non-governmental organisations — ostensibly there to resolve conflict and alleviate poverty — have added to Nepal’s exposure to the world.
Nepal’s 2011 Census shows that over 80% of its 28 million-strong population were Hindus, and since 1962, it had formally been a Hindu kingdom.
The new Constitution in 2015 makes Nepal a secular country.
The proliferation of communication technology has also spread a certain cosmopolitanism but without the accompanying metropolitanism.
Nepal exploring options beyond India
Kathmandu has continued its long-standing efforts to spread Nepal’s options beyond India.
Multilateral development banks are by far the biggest lenders and players in the country’s development efforts.
And in fact, one of Nepal’s largest aid donors is the European Union.
India and China are not the only players for big projects either.
A long-delayed project to pipe water into Kathmandu was with an Italian company.
Major investments in the telecom sector are coming from Malaysia, and the largest international carrier in Nepal is Qatar Airways.
Weakening of natural bond and responsible factors
The outward movement of students, along with with the growth of institutions of higher learning at home, has meant that most young people in Nepal, including emerging contemporary leaders in politics, business or academics, have not studied in India.
This lack of common collegiate roots removes a natural bond of previous generations that had provided for better understanding and even empathy.
While most Nepalis understand Hindi, because of the popularity of Bollywood, articulation is quite another matter.
Robust ties with India, despite diversification
Despite Nepal’s efforts to diversify its options globally, its linkages with India remain robust.
Nepal’s trade with India has grown in absolute terms and continues to account for more than two-thirds of Nepal’s external trade of around $12 billion annually.
This clearly reflects the advantages of geography, both physical and societal.
India continues to be the largest aggregate investor in Nepal.
The massive under-construction Arun-III 900 MW hydro-electric project is slated to singly produce as much power, when completed in five years, as Nepal produces today.
Moreover, the peg with the Indian Rupee provides unique stability to the Nepali Rupee.
Unique advantage to Nepal
Nepal’s per-capita income is just above $1,000.
While the huge remittance economy has brought a semblance of well-being, the country has a long way to go in reaching prosperity.
The relationship with India, with open borders and Nepalis being allowed to live and work freely, provides Nepal a unique advantage and an economic cushion.
The latter is particularly important today with COVID-19-caused global contraction positioned to pop the remittance bubble.
Neither the Chinese nor any others are likely to write blank cheques.
India for its part should also focus on developing its border areas with Nepal, with better roads and amenities of interest (such as shopping malls) to the burgeoning Nepali middle class.
This would have economic plusses for both sides and keep ties strong at the people’s level. It would also be an image makeover.
Consider the question “Despite intermittent disagreements over certain issues, India-Nepal ties remain robust. In light of this, elaborate on the ties between the two countries and suggest ways to find the solution to the latest border dispute between the two countries.”
Conclusion
It is important that we update the prism through which we view our relationship with our Himalayan neighbour. We must not forget the past nor turn away from it but, instead, must be mindful of the realities of a changing India and a changing Nepal.
From UPSC perspective, the following things are important :
Prelims level: Forex reserves and exchange rates
Mains level: Paper 3- India's Forex reserves touched ceiling of half-trillion
At first, it seems almost contradictory. And so it is. Our foreign exchange reserves touched new high of $500 billion for the first time, but the time in which this has happened makes it paradoxical. At the time when economies around the world are touching new lows, this rise in the Forex seems all but usual. In this article, you’ll learn about the 4 factors that made it happen.
1. Decreased oil imports
Usually, we import a lot of oil.
But the payment here is dollar-denominated since very few countries are going to accept our currency (Rupee) as is.
So, you have to expend dollars i.e. the foreign exchange reserves to keep the flow of crude oil intact.
However, with the nationwide lockdown in place, our import bill has reduced drastically.
We simply don’t need as much oil anymore.
And considering oil prices have also taken a beating simultaneously, our Forex Reserves have been piling up.
Less oil import. More Forex reserves.
2. Dollars coming with foreign investors
Contrary to popular opinion, foreign investors have been pouring money into India of late.
You could attribute a bulk of these inflows to Reliance Jio.
They’ve been enticing investors all over the world and they’ve been doing it at a pace that belies all rational expectations.
They’ve raised close to $15 Bn over the course of a few months and it doesn’t look like they’re stopping anytime soon.
So technically, dollar inflows have spiked and therefore, Forex reserves get a boost once again.
3. RBI preparing itself for a bad time
Another popular explanation is that the RBI is preparing a war chest to stave off future uncertainties.
At a time when the world economy is reeling from an unprecedented crisis, it’s perhaps prudent to build up reserves for a rainy day.
So the RBI buys gold and dollar-denominated assets using our national currency and builds up the foreign exchange reserves.
Inadvertently, this increases the money supply within the economy.
There will be more “Rupees” floating around.
As more Indian currency keeps entering the ecosystem, the value of the rupee depreciates.
And yes, the value of rupee has tumbled recently, but we are not in dire straits yet.
But if India’s economy takes a turn for the worse, it becomes incumbent on the RBI to ensure price stability.
Imagine the value of the rupee starts fluctuating wildly because of economic uncertainties.
The RBI has to intervene.
It has to exchange the foreign reserves for the Indian currency.
If they keep mopping up the excess Rupees floating in the system, they could ensure the value of the rupee remains stable.
So long as the value of the rupee remains stable, prices of commodities will follow the same cue, all things remaining equal that is.
Now, there’s still no clear consensus on what kind of reserves we might need if things do go south.
Although there have been recommendations made in the past about hoarding too much, it’s still the RBI’s call at the end of the day.
4. The RBI is doing it for the government
The RBI can turn a profit if it wants to.
And once it does turn a profit, it can transfer a part of the surplus to the government — as dividends.
Now if the RBI wanted to offer the government a higher dividend, it has to simply turn a higher profit.
One way to accomplish this is to simply let the value of the rupee depreciate. Do not intervene.
Do not forego the reserves. Let the rupee tumble.
And so long as you don’t intervene, all the dollar-denominated assets you own will be worth more in rupee terms.
Consider the hypothetical example-suppose the exchange rate was 1$= Rs. 71 in March 2020, then the rupee loses value and you see the same line item once again in June 2020 will be 1$=Rs. 76.
The extra ₹ 5 is treated as a profit. And this profit could be ploughed back to the government.
Consider the question “With the economy in the tailspin amid pandemic, the news of India’s Forex reserves touching the $500 billion mark for the first time provided the semblance of solace. Examine the factors that could explain this increase.”
Conclusion
Though there will always be the debate over the optimum value of the Forex reserves, the new level it reached in such an uncertain time for the economy is, nonetheless, a cause for celebration.
From UPSC perspective, the following things are important :
Prelims level: South China Sea
Mains level: Paper 2-South China Sea dispute and impact on India
What happens in the South China Sea has bearing on India. So far, the U.S. played a major role in the prosperity and security of the Indo-Pacific, but after the Covid, it may be forced to reconsider its stand over the region. So, what is at stake for India? And what are the options available with ASEAN countries and Indian in such a situation? Read to know…
Dilemma the Indo-Pacific countries faces
As the two most consequential powers of the world, the United States and China which are engaged in a fundamental transformation of their relationship rest of the countries in the region face a dilemma.
Almost nobody any longer thinks that China will conform to the US worldview, or that China’s rise from hereon will be unchallenged.
The Singapore Prime Minister Lee Hsien Loong’s essay in the latest issue of Foreign Affairs cogently spells out this dilemma.
How the U.S. contributed to the region’s prosperity
The Indo-Pacific has prospered under American hegemony for the previous 40 years not just because of their huge investments.
U.S. invested $328.8 billion in the Association of Southeast Asian Nations (ASEAN) alone and a further $107 billion in China.
However, it’s not the investment but also because of the security blanket that it provides.
China might have replaced the US as the primary engine of growth in the last decade, but it has come with a cost — the assertion of Chinese power.
The benign American military presence has afforded countries the opportunity to pursue economic prosperity without substantial increases in their own defence expenditures or having to look over their shoulders.
No group of nations has benefitted more from the presence of the US than the ASEAN.
How Chinese military posture is different from the U.S.
Chinese military postures, on the other hand, give cause for concern ever since they unilaterally put forward the Nine-Dash Line in 2009 to declare the South China Sea as territorial waters.
Their territorial claim itself is tenuous, neither treaty-based nor legally sound.
They act in ways that are neither benign nor helpful for long-term peace and stability.
In the first half of 2020 alone, Chinese naval or militia forces have rammed a Vietnamese fishing boat, “buzzed” a Philippines naval vessel and harassed a Malaysian oil drilling operation, all within their respective EEZs.
Since 2015, they have built a runway and underground storage facilities on the Subi Reef and Thitu Island as well as radar sites and missile shelters on Fiery Cross Reef and Mischief Reef.
They conducted ballistic missile tests in the South China Sea in June 2019 and continue to enhance naval patrols to enforce area denial for others.
Fundamental choices the region faces
Going forward, the US and China face fundamental choices.
But then, so do the rest of us living in the Indo-Pacific.
America’s role in the preservation of the region’s peace and security should not be taken for granted.
As COVID imposes crushing costs on all economies, the US may also be weighing its options.
Finding justification for Chinese actions in the South China Sea, even as countries in the region help themselves to Chinese economic opportunities while sheltering under the US security blanket, is also fraught with risk.
Accommodation may have worked thus far but regional prosperity has come at a mounting cost in geo-strategic terms.
The South China Sea is effectively militarised. In the post-COVID age, enjoying the best of both worlds may no longer be an option.
But, ASEAN won’t change the course suddenly
Nobody should expect that ASEAN will suddenly reverse course when faced with possibly heightened Sino-US competition.
China is a major power that will continue to receive the respect of ASEAN and, for that matter, many others in the Indo-Pacific, especially in a post-COVID world where they are struggling to revive their economies.
ASEAN overtook the European Union to become China’s largest trading partner in the first quarter of 2020, and China is the third-largest investor ($150 billion) in ASEAN.
The South East Asians are skilled at finding the wiggle room to accommodate competing hegemons while advancing their interests.
This does not, however, mean that they are not concerned over Chinese behaviour in the South China Sea.
They need others to help them in managing the situation.
Validation of the US military presence and collective efforts of stakeholders
A robust US military presence is one guarantee.
A stronger validation by the littoral states of the South China Sea helps the US Administration in justifying their presence to the American tax-payer.
Others who have stakes in the region also need to collectively encourage an increasingly powerful China to pursue strategic interests in a legitimate way, and on the basis of respect for international law, in the South China Sea.
The real choice is not between China and America — it is between keeping the global commons open for all or surrendering the right to choose one’s partners for the foreseeable future.
What is at stake for India?
How the South China Sea situation plays out will be critical for our security and well-being.
India must consider the following factors while calibrating its approach.
1) The South China Sea is not China’s sea but a global common.
2) It has been an important sea-lane of communication since the very beginning, and passage has been unimpeded over the centuries.
3) Indians have sailed these waters for well over 1,500 years — there is ample historical and archaeological proof of a continuous Indian trading presence from Kedah in Malaysia to Quanzhou in China.
4) Nearly $200 billion of our trade passes through the South China Sea and thousands of our citizens study, work and invest in ASEAN, China, Japan and the Republic of Korea.
5) We have stakes in the peace and security of this region in common with others who reside there, and freedom of navigation, as well as other normal activities with friendly countries, are essential for our economic well-being. In short, the South China Sea is our business.
We have historical rights established by practice and tradition to traverse the South China Sea without impediment.
We have mutually contributed to each other’s prosperity for two thousand years.
We continue to do so.
The proposition that nations that have plied these waters in the centuries past for trade and other peaceful purposes are somehow outsiders who should not be permitted to engage in legitimate activity in the South China Sea, or have a voice without China’s say, should be firmly resisted.
India needs to be responsive to ASEAN
India needs to be responsive to ASEAN’s expectations.
While strategic partnerships and high-level engagements are important, ASEAN expects longer-lasting buy-ins by India in their future.
They have taken the initiative time and again to involve India in Indo-Pacific affairs.
It is not as if our current level of trade or investment with ASEAN makes a compelling argument for them to automatically involve us.
They have deliberately taken a longer-term view.
A restructuring of global trade is unlikely to happen any time soon in the post-COVID context.
Regional arrangements will become even more important for our economic recovery and rejuvenation.
If we intend to heed the clarion call of “Think Global Act Local”, India has to be part of the global supply chains in the world’s leading growth region for the next half-century.
It is worth paying heed to the words from Singapore’s prime minister, who writes that something significant is lost in an RCEP without India.
And urges us to recognise that the value of such agreements goes beyond the economic gains they generate.
Singapore is playing the long game. Are we willing to do so, even if it imposes some costs in the short-term?
Consider the question “The South China Sea has been witnessing growing militarisation day by day. And how the South China Sea situation plays out will be critical for our security and well-being. In light of this, examine the basis on which India should contest China’s unilateral claims in the area and scope of engagement with the ASEAN countries in this regard.”
Conclusion
Indian is a stakeholder in the South China Sea. What happens there have implications for us. In such a scenario, India must form a partnership with other players in the region and should attempt to make China follow international laws and global order.
From UPSC perspective, the following things are important :
Prelims level: Biosimilars
Mains level: Paper 3- What are the bio-similar molecules and their applications in the pharma sector?
Recently an Indian pharma company has been granted a USFDA approval for Insulin Glargine, a biosimilar. This article briefly introduces us to this term, complexities involved in its manufacturing and also explains why the USFDA approval create hype.
The story of simple molecules and some difficult diseases
Ever since modern medicine started to emerge post the Industrial Revolution, simple molecules have been used to treat most diseases.
While these formulations are highly effective against some illnesses, they aren’t particularly effective against more complex diseases like cancer.
Our immune system has evolved over millions of years to specifically defend against outside intruders.
But cancer isn’t like most diseases.
It’s not caused by an invasion of a foreign pathogen.
Instead, it’s a byproduct of rogue cells that destroy our bodies from within.
To this end, using simple molecules to defend against a barrage of mutating versions of our own cells is an exercise in futility.
What is biologic?
A biologic is manufactured in a living system such as a microorganism, or plant or animal cells. Most biologics are very large, complex molecules or mixtures of molecules. Many biologics are produced using recombinant DNA technology.
What we probably need is a biologic or a complex protein isolated from natural sources that can mimic our immune cells.
Maybe this would help us in fighting cancer.
So, Biosimilars are..
A biosimilar is a biological product that is developed to be similar to an already FDA-approved biologic, known as the reference product. It can be tempting to think of a biosimilar as a “generic” version of the reference product.
But biosimilar is not an exact duplicate of another biologic. There is a degree of natural variability in all biological products; it is not possible to generate a precise copy of a product that comes from living cells. All biologics—including reference products—show some batch-to-batch variation.
Utility of patents in the pharmaceutical industry
Success in this market is deeply intertwined with the research and development process that characterizes the pharmaceutical industry.
It might take 5 years for you to develop a new drug and you might still need another 10 years to clinically test the product and get the necessary approvals from the regulatory agencies.
This is a capital intensive process and the only way to remunerate the pharma company’s contribution is to protect their investment through patent laws.
This way the companies can be incentivised to invest more in research and we can ensure a steady supply of new drugs that could cure the greatest maladies of modern time.
What happens when the patent expires?
Once the patent expires, other companies can market their own version of the drug (copycats) if they can figure out how to synthesize it.
Consider — Aspirin. It’s a simple molecule drug and it’s quite easy to replicate the manufacturing process.
Why biologics would be difficult to replicate after the patent expires
Biologics are harvested from living cells and are often produced using complicated manufacturing processes.
Most modern biologics are assembled inside vats — or bioreactors — that house genetically engineered microbes or cell cultures and can often take a whole decade of research to perfect.
So replicating the process isn’t exactly a cakewalk.
Meaning if you want to market your own version of a “biologic” once all the patents expire, you need some expertise and India’s Biocon is at the forefront of this revolution.
For the past few years, they’ve been building a “biosimilar pipeline” — copycats of famous biologics and they’ve been using it to fight cancer, diabetes, and arthritis.
And it’s not all that easy for most pharma companies to enter this market.
Why marketing a drug in the US gather headline?
Because the US provides an opportunity like no other.
Buying drugs here is expensive and pharmaceutical companies make a killing in the process.
It might not necessarily bode well for consumers.
But it does provide a lucrative market for potential Indian manufacturers who are looking to sell their products elsewhere.
Consider the question “What is biosimilar technology? How is it different from generic medicine? Discuss its application.”
Conclusion
Growing expertise of Indian pharmaceutical companies in the complex research area bodes well for the Indian pharma sector which is known otherwise for the manufacturing of generic medicines.
From UPSC perspective, the following things are important :
Prelims level: UGC Act of 1956, NAAC regulations
Mains level: Paper 3- Issues with employment and skill developement
This article highlights the utility of skill education in India. There are several benefits in its adoption. But it would require several regulatory changes. So, what are these changes?Read to know…
3 issues with our university education
The differential lockdown outcomes for skilled and unskilled workers highlight our university system’s pre-existing conditions. These are-
1) Broken employability promises.
2) Poor employer connectivity.
3) Poor return on private investment that frustrate parents and students.
4 ways in which skill university differs from traditional university
A skill university differs from a traditional university in four ways.
1) It prays to the one god of employers; for governance, faculty, curriculum, and pedagogy.
2) It has four classrooms; on-campus, on-line, on-site, and on-the-job.
3) It offers modularity between four qualifications; certificates, diplomas, advanced diplomas, and degrees.
4) And it has four sources of financing — employers, students, CSR, and loans though employers contribute more than 95 per cent of the costs.
Fro example, in the case of Gujrat government’s skill university, 97 per cent of the university’s budget comes from employers.
5 ways in which the universities are broken globally
First is broken promises.
The world produced more graduates in the last 35 years than 700 years before.
Second is broken financing.
More than 50 per cent of $1.5 trillion in student debt was expected to default even before the COVID pandemic.
Indian bank education loans have high NPAs.
The third is broken inclusiveness.
The system works for privileged urban males studying full-time, but today’s students are likely to be female, poor, older, rural, or studying part-time.
Fourth is broken flexibility.
Employed learners will cross traditional learners in three years, but they need on-demand, on-the-go, always-on, rolling admissions, continuous assessment, and qualification modularity.
And finally is broken openness.
Google knowing everything makes learning how to learn a key 21st-century skill.
Yet too many universities are stuck in knowing.
Let’s look into the regulatory changes needed for the Skill University
Skill universities are a scalable, sustainable, and affordable vehicle to massify higher education by innovations in finance.
But they need regulatory change.
Following are the 3 types of regulatory changes needed
1. Changes needed in the UGC Act of 1956
Clause 8.2.6 needs to be rewritten to equalise four classrooms -online, on-site, on-campus, and on-job-and section 22 (3) to recognise apprenticeship linked degree programmes.
The UGC Teacher Regulations of 2018 need rewriting: Clause 3.3.(I),(II) to redefine the qualifications, roles and numbers of teachers required, and clause 4 to recognise industry experience as a teaching qualification.
The UGC Online Regulations 2018 need to be rewritten: Clause 4(2) and 7(2)(3) to allow innovation, flexibility, credit frameworks, and relevance in online curriculums.
Clause 7(2)(2) to allow universities to work with any technology platforms.
2. Changes needed in NAAC IQAC regulations
Criteria 1 and 1.2.2 to include work-based learning and work integrated learning.
Criteria 1.1.3 to include life skills and proctored/evaluated internships.
Criteria 2 and 2.3.1 to integrate online learning with university programmes.
Criteria 2 and 2.4.1, 3 and 6 need to be modified to recognise teachers with industry experience, and include industry-based research.
Criteria 4 and 4.1.2 to include industry workplaces and online classrooms as campus extensions.
Criteria 5 and 5.2.1 needs to be rewritten to incorporate apprenticeships.
3. Changes needed in Apprenticeship Act of 1961
Clause 2, 8, 9, 21 and 23 of The Apprenticeship Act of 1961 also needs to be modified to allow and lift the licence raj for degree-linked apprentices and recognise skills universities.
Consider the question “Skill universities, which would go a long way in increasing the employability in India are need of the hour. In light of this, examine the issues that the skill education faces and suggest the changes our education system needs to impart the proper skill education.”
Conclusion
Covid crisis has amplified the problems with our education system. So, the adoption of skill universities will help us improve the skill of our youth and achieve more inclusive employment, employability and education.
From UPSC perspective, the following things are important :
Prelims level: Finance Commission and its role
Mains level: Paper 2- Fiscal decentralisation.
Covid pandemic has turned the fiscal health of states from bad to worse. This article highlights the role of the Finance Commission as a neutral arbiter in the Centre-state relation in achieving the delicate balance. It has highlighted certain issues that the commission has to consider when it submits its report. So, what are those issues? Read to know…
Disruption in fiscal consolidation and impact on Centre-state relations
Due to COVID, there is a collapse in general government revenues and the consequent rise in the deficit levels.
It has disrupted the glide path of fiscal consolidation.
But it has also deepened the faultlines in Centre-state fiscal relations.
The Centre is trying to claw back the fiscal space ceded to the states and assert its dominance over the country’s fiscal architecture.
This coupled with the fiscal constraints exposed by the pandemic have made it harder to maintain the delicate balance needed to manage the contesting claims of the Centre and the states
Why the 15th Finance Commission report is critical for decentralisation
It will be ironic if the ongoing health crisis that has ended up exposing the limitations of a centralised approach, ends up reversing the trend towards fiscal decentralisation.
The Commission’s report will be critical on two counts:
First, it will determine how India’s fiscal architecture is reshaped.
Second, how Centre-state relations are reset as the country attempts to recover from the COVID-19 shock.
1. Will the burden of reducing debt/gdp fall equally on Centre and state?
The glide path of fiscal consolidation laid out by the FRBM review committee had envisaged bringing down general government debt to 60 per cent of GDP by 2022.
This is unlikely to materialise now.
Factoring in the additional borrowings, the debt-to-GDP ratio may well be over 80 per cent this year.
Thus the fiscal consolidation roadmap will have to be reworked.
As per its terms of reference, the Finance Commission will lay out the new path to be followed by both Centre and states.
But the question is: Will the burden of debt reduction fall equally upon the Centre and states?
Or will the Commission allow the Centre to have greater leeway when it comes to fiscal consolidation?
2. Will the conditional extension of borrowing limit be formalised?
Recently, the Centre eased the states’ budget constraint, allowing them to borrow more this year.
But this extra borrowing was conditional upon states implementing reforms in line with the Centre’s priorities.
Despite protests, most states are likely to comply with the conditions, to varying degrees.
But the issue is: As the hit from the ongoing crisis spreads over multiple years, state governments may want to maintain their expansionary fiscal stance next year as well.
Then, will the Finance Commission, in line with its terms of reference, go along with the Centre’s stance and recommend imposing conditions on additional borrowing and formalise this arrangement?
It is difficult to see such an arrangement being rolled back once formalised.
3. GST compensation cess
The GST council, in which the Centre effectively has a veto, is yet to clearly spell out its views on the extension of the compensation cess to offset states losses beyond the five-year period.
The Commission will have to weigh in on this too.
At this time the Centre is struggling to fulfil its promise of assuring states their GST revenues.
In such situation, will the Commission argue in favour of extending the compensation period, as states desire, but, perhaps, lowering the assured 14 per cent growth in compensation and linking it to nominal GDP growth?
As GST revenue accounts for a significant share of states’ income, how this plays out will also have a bearing on their ability to bring down their debt levels.
4. Issue of tax devolution
In some sense, accepting the recommendations of the 14th Finance Commission was a fait accompli.
The terms of reference of the 15th Finance Commission points to the present government’s desire to claw back the fiscal space offered to the states.
But is clawing back fiscal space now a prudent approach?
A cash-strapped Centre will surely welcome greater say over the diminished resources.
And there a strong argument for the Centre to have far greater fiscal space than it currently enjoys.
This is partly because the fiscal multiplier of central government capital spending is greater than that by the states.
But also the nature of politics may well push in that direction.
Centralisation of political power may well lead to demands for centralisation of resources.
However, surely fiscal space can be created by a review of the Centre’s own spending programme.
Need to relook at the Centre’s expenditure priorities
Over the past decades, there has been a substantial increase in the Centre’s spending on items on the state and concurrent list.
This shift has occurred even as grants by the Centre to states exceed the former’s revenue deficit.
This, as some have pointed out, effectively means that the Centre is borrowing to transfer to states.
Surely, a relook at the Centre’s expenditure priorities would create greater fiscal space for it.
What the Finance Commission can do?
Any attempt to shift the uneasy balance in favour of the Centre will strengthen the argument that this government’s talk of cooperative federalism serves as a useful mask to hide its centralising tendencies.
As a neutral arbiter of Centre-state relations, the Finance Commission should seek to maintain the delicate balance in deciding on contesting claims.
This may well require giveaways especially if states are to be incentivised to push through legislation on items on the state and concurrent list.
The fiscal stress at various levels of the government necessitates a realistic assessment of the country’s macro-economic situation, the preparation of a medium-term roadmap, as well as careful calibration of the framework that governs Centre-state relations.
At this critical juncture, the Finance Commission should present the broad contours of the roadmap.
Though it could request for another year’s extension to present its full five-year report citing the prevailing uncertainty.
Consider the question “COVID pandemic has put the States in the dire fiscal position. What we need is more of the fiscal decentralisation now.” In light of this, along with other factors, elaborate on the role 15th Finance Commission could play in this regard.
Conclusion
Finance Commission has to play an important role in achieving the delicate balance in the conflicting domain of finance by addressing the concerns of both the players.
From UPSC perspective, the following things are important :
Prelims level: PCR Corona test
Mains level: Paper 2- Decentralisation of governance.
This article suggests the innovative indicators for the classification of areas. Also, the need for decentralisation of science and governance is stressed. So, how could decentralisation help? What should form the basis of indicators at the local level? Such questions are answered in this article.
States are better placed to deliver on public health
They are, of course, better placed to deliver on public health and welfare. They are also generally more accountable.
According to the recent ICMR serological sample study conducted in mid-May, barely 1 per cent of non-metropolitan India was infected.
Thus, as the infection spreads and eventually stabilises, there is a lot of heavy lifting that the states must do.
The measure of prevention and containment zone
After lockdown, the message of prevention and the device called containment zones are the only ways left to manage the epidemic.
This includes allied activities: The demarcation of the boundary, testing, treatment, tracing and quarantine.
Hidden inside this box of practices are the answers to questions such as: Why is Karnataka doing better than Maharashtra in terms of mortality?
What went wrong with colour-coded zones at district levels?
The older colour-coded zone label, introduced by the Centre on April 14, was at the district scale.
That quickly became a collective punishment with little measurable benefits.
One consequence was that districts were unhappy with the return of migrants simply because that could change their colour.
The second problem was that the red-ness of a region was equated with the need for lockdowns, since that was the only visible instrument.
Let’s explore the ward and community level base strategy
Well designed metrics at the ward and community scale will help the science develop.
They can guide the people and the administration and allow the states to compare practices and learn from each other.
Let us see what can be achieved within this framework: Focusing on measurement
1. Classified should include socio-economic and demographic factors
Any area classification must include key socio-economic and demographic determinants, for example, the density of the area, number of people in dwellings with one room or less, or the fraction of people using community toilets.
As we know, much of the infection is spreading within dense clusters.
Such metrics would indicate vulnerable areas and the limits to reduction in contact rate through policing.
Here, decongestion measures such as out-migration may be required.
This will also serve as a guide to the future of the locality or ward.
2. Designing indicator from data collected so far
An important document is the Specimen Referral Form (SRF) designed by the ICMR which must be filled to undertake the PCR Corona Test.
In that, the possible patient backgrounds for recommending the test, are recorded.
In that, symptomatic cases with no known contact are already a large fraction of those infected.
This and other fields in the SRF such as age, location and symptoms, would give us substantial insights into the dynamics and severity of the disease and the efficacy of our procedures.
This data should be made available immediately.
3. Measuring the risk from migrants
The recent inclusion of migrants in the SRF is indeed welcome.
This, coupled with other quarantine data in the SRF, gives us the risk from migrants to the community at large.
Also welcome is the setting up of a National Migrant Information System (NMIS) on the NDMA database.
Hopefully, we may now know the fraction of migrants who have safely reached home and the state-wise status of those who haven’t and the reasons for the same.
In any case, the number of infected migrants, if suitably quarantined, must be subtracted from the total number of positive cases for that area/district, for they did not arise there and they are outside the infective load in the area.
This will help reduce the stigma on migrants and instead put more focus on quarantine arrangements for them.
4. Measuring preparedness
Ensuring that our villages and towns are prepared to meet the disease is an important objective.
One metric to measure preparedness is the number of beds, doctors and ambulances per 1,000.
This may then be compared with the active cases in the region.
In fact, the adverse mortality in some areas is directly correlated with the local shortage of medical care.
For most districts in Maharashtra, shortages would start biting at about 200 cases per day.
An important addition would be village-level data on the running of the local quarantine, the functioning of the PDS and availability of drinking water.
5. Measuring the prevalence and social distance
Coming to prevention, the importance of masks, distance and open ventilation is still not appreciated.
A simple statistical metric is to measure the prevalence of masks in an area.
This can be done by installing cameras in suitable locations and counting people with masks.
Social distance measures are also amenable to indicators.
For example, the fraction of buses which have installed a sheet between the driver and the passengers, or recording innovative ways of ticket vending.
The popularity of the colour-coding based on such indicators may be effective in social mobilisation.
Social comprehension and local solution
Mitigation and adaptation require social comprehension and local solutions.
These need scientific studies by regional institutions and partnerships with civil society.
Creating and supporting good metrics and providing data is an important step in that direction.
This will not only save lives, it will reduce fear and help re-start normal life.
Decentralisation of science and governance
The epidemic has underlined that publicness and decentralisation of science and governance is the only way of creating knowledge and the professional ability to solve our own problems.
Without this, the post-corona Indian society would be an unhappy attempt at making the old arrangement work in a degraded reality of fearful and angry people.
Consider the question “Corona pandemic and subsequent measures to contain it has highlighted the need for decentralisation of governance. Elaborate.”
Conclusion
We must learn to live with the virus, but we must also find joy. Only through constant engagement and adaptation will we overcome fear and forge a new society that will sustain both life and happiness.
From UPSC perspective, the following things are important :
Prelims level: MOOC
Mains level: Paper 2- Adoption of MOOC and issues with it.
Massive open online courses (MOOC) could not be panacea for the problems education faces. It can’t be the replacement for the learning in the classrooms. This article highlights the issues with adoption of MOOC and why it can’t be the replacement for learning in the classrooms.
UGC circular to adopt MOOC
In the wake of the COVID-19 pandemic, the University Grants Commission had issued a circular to universities.
Through this circular, it encouraged them to adopt massive open online courses (MOOCs) offered on its SWAYAM platform for credit transfers in the coming semesters.
But the move poses a great danger.
But why it’s danger? Because it is also being seen as an instrument to achieve the country’s target Gross Enrolment Ratio (GER) in higher education.
GER in higher education is envisioned to be 30% by 2021; it was 25.8% in 2017–18.
Issues with MOOC and what classrooms offers
MOOC-based e-learning platforms tend to reinforce a top-down teacher-to-student directionality of learning.
This misses the point that teaching and learning are skills that are always in the making.
The teacher is after all “an intellectual midwife” who facilitates in the birth of students’ ideas and insights through engaging in critical dialogue.
In a conducive classroom environment, this role is often switched and the student plays intellectual midwife to the teacher’s ideas.
Moving to a MOOC-based degree system would rob young teachers and students of these essential lessons in teaching and learning from each other.
Policymakers behind the SWAYAM platform have left out courses in engineering, medicine, dental, pharmacy, nursing, architecture, agriculture, and physiotherapy on the grounds that they involve laboratory and practical work.
This move makes sense.
But it seems to suggest that the pure sciences, the arts, the social sciences, and humanities curricula are largely lecture- and theory-based, and, therefore, readily adaptable to the online platform.
Nothing can be farther from such a misconception.
Implicit in every curriculum is the tacit assumption that the classroom is a laboratory for hands-on testing of ideas, opinions, interpretations, and counterarguments.
A diverse and inclusive classroom is the best litmus test for any theory or insight.
Multidisciplinarity happens more through serendipity — when learners across disciplines bump into each other and engage in conversations.
Classroom and campus spaces offer the potential for solidarity in the face of discrimination, social anxiety, and stage fear, paving the way for a proliferation of voluntary associations that lie outside the realm of family, economy, and state.
In the absence of this physical space, teaching and learning would give way to mere content and its consumption.
Without a shared space to discuss and contest ideas, learning dilutes to just gathering more information.
This could also dilute norms of evaluation, whereby a “good lecture” might mean merely a lecture which “streams seamlessly, without buffering”.
Online mode: add more value to the classroom education
One could think of greater value-sensitive and socially just architectures and technologies that further foster classroom engagement.
It also makes it accessible for students of various disabilities and challenges, thereby adding more value to the existing meaning of education.
But public education modelled on social distancing is a functional reduction and dilution of the meaning of education.
It could add value only as an addendum to the classroom.
Consider the question “Examine the issues with wide adoption of the MOOC to address the problems education sector in India faces.”
Conclusion
Such platforms must be seen only as stop-gap variants that help us get by under lockdown situations and complement classroom lectures.
From UPSC perspective, the following things are important :
Prelims level: Data on migrants in India; Organizations which study migration and reports
Mains level: The issues faced by migrants in India and associated solutions
In this Article, we highlight some facts about migration in India, summarize key relief measures announced by the government and directives issued by the Supreme Court for the migrant population in relation to the lockdown.
Background
India has been in lock down since March 25, 2020.
During this time, the activities of production and supply of goods and services are on the lower side of growth.
Not surprisingly, the lock down has severely impacted migrants, several of whom lost their jobs due to shutting of industries and were stranded outside their native places wanting to get back.
Since then, the government has announced relief measures for migrants like in Atmanirbhar package, and made arrangements for migrants to return to their native place like Shramik trains.
On June 9, the Supreme Court directed central and state governments to complete transportation of remaining stranded migrants and expand focus of relief measures to facilitate employment for returning migrants.
The phenomenon of Migration
Migration is the movement of people away from their usual place of residence, across either internal (within country) or international (across countries) borders.
As per the Census 2011, India had 45.6 crore migrants in 2011 (38% of the population) compared to 31.5 crore migrants in 2001 (31% of the population).
Between 2001 and 2011, while population grew by 18%, the number of migrants increased by 45%.
In 2011, 99% of total migration was internal and immigrants (international migrants) comprised 1%.
Patterns of migration
Internal migrant flows can be classified on the basis of origin and destination.
One kind of classification is: i) rural-rural, ii) rural-urban, iii) urban-rural and iv) urban-urban.
As per the 2011 census, there were 21 crore rural-rural migrants which formed 54% of classifiable internal migration.
Rural-urban and urban-urban movement accounted for around 8 crore migrants each.
There were around 3 crore urban-rural migrants (7% of classifiable internal migration).
Another way to classify migration is: (i) intra-state, and (ii) inter-state.
In 2011, intra-state movement accounted for almost 88% of all internal migration (39.6 crore persons).
According to the 2011 Census, there were 5.4 crore inter-state migrants.
As of 2011, Uttar Pradesh and Bihar were the largest source of inter-state migrants while Maharashtra and Delhi were the largest receiver states.
Inter-state Migration (in lakh)
Note: A Net out-migrant state is one where more people migrate out of the state than those that migrate into the state. Net in-migration is the excess of incoming migrants over out-going migrants.
Reasons for internal migration and size of migrant labour force
As of 2011, majority (70%) of intra-state migration was due to reasons of marriage and family.
While 83% of females moved for marriage and family, the corresponding figure for males was 39%.
Overall, 8% of people moved within a state for work (21% of male migrants and 2% of female migrants).
Movement for work was higher among inter-state migrants– 50% of male and 5% of female inter-state migrants.
Reasons for intra-state migration
Reasons for inter-state migration
Scope for Higher numbers
According to the Economic survey, 2016-17, Census data underestimates temporary migrant labour movement.
In 2007-08, the NSSO estimated the size of India’s migrant labour at 7 crore (29% of the workforce).
The Economic Survey, 2016-17, estimated 6 crore inter-state labour migrants between 2001-2011.
The Economic Survey also estimated that in each year between 2011-2016, on average 90 lakh people travelled for work.
Issues faced by migrant labour
People migrating for work face key challenges including:
Poor implementation of protections under the Inter-State Migrant Workmen Act, 1979 (ISMW Act)
The ISMW Act provides certain protections for inter-state migrant workers.
Labour contractors recruiting migrants are required to: (i) be licensed, (ii) register migrant workers with the government authorities, and (iii) arrange for the worker to be issued a passbook recording their identity.
Guidelines regarding wages and protections (including accommodation, free medical facilities, protective clothing) to be provided by the contractor are also outlined in the law.
In December 2011, a report by the Standing Committee on Labour observed that registration of workers under the ISMW Act was low and implementation of protections outlined in the Act was poor.
The report concluded that the Central government had not made any concrete and fruitful efforts to ensure that contractors and employers mandatorily register the workers employed with them enabling access to benefits under the Act.
Lack of portability of benefits
Migrants registered to claim access to benefits at one location lose access upon migration to a different location.
This is especially true of access to entitlements under the PDS.
Ration card required to access benefits under the PDS is issued by state governments and is not portable across states.
This system excludes inter-state migrants from the PDS unless they surrender their card from the home state and get a new one from the host state.
Lack of affordable housing and basic amenities in urban areas
The proportion of migrants in urban population is 47%.
In 2015, the Ministry of Housing and Urban Affairs identified migrants in urban areas as the largest population needing housing in cities.
The Prime Minister Awaas Yojana (PMAY) is a central government scheme to help the economically weaker section and low-income group access housing.
Assistance under the scheme includes: i) slum rehabilitation, ii) subsidised credit for home loans, iii) subsidies up to Rs 1.5 lakh to either construct a new house or enhance existing houses on their own and iv) increasing availability of affordable housing units in partnership with the private sector.
Since housing is a state subject, there is variation in approach of States towards affordable housing.
Steps taken by the government with regard to migrant labour during the lockdown
Measures taken by the government to aid migrants include-
Transport:
On March 28, the central government authorised states to use the State Disaster Response Fund to provide accommodation to traveling migrants.
States were advised to set up relief camps along highways with medical facilities to ensure people stay in these camps while the lock down is in place.
On April 29, the Ministry of Home Affairs allowed states to co-ordinate individually to transport migrants using buses.
On May 1, the Indian Railways resumed passenger movement with Shramik Special trains to facilitate movement of migrants stranded outside their home state.
Between May 1 and June 3, Indian Railways operated 4,197 Shramik trains transporting more than 58 lakh migrants.
Food distribution:
On April 1, the Ministry of Health and Family Affairs directed state governments to operate relief camps for migrant workers with arrangements for food, sanitation and medical services.
On May 14, under the 2nd Tranche of Atma Nirbhar Bharat Abhiyaan, the Finance Minister announced that free food grains would be provided to migrant workers who do not have a ration card for two months.
The measure is expected to benefit 8 crore migrant workers and their families.
The Finance Minister also announced that One Nation One Ration card will be implemented by March 2021, to provide portable benefits under the PDS.
Housing:
The Aatma Nirbhar Bharat Abhiyaan also launched a scheme for Affordable Rental Housing Complexes for Migrant Workers and Urban Poor to provide affordable rental housing units under PMAY.
The scheme proposes to use existing housing stock under the Jawaharlal Nehru National Urban Housing Mission (JnNURM) as well as incentivise public and private agencies to construct new affordable units for rent.
Further, additional funds have been allocated for the credit linked subsidy scheme under PMAY for middle income group.
Financial aid:
Some state governments (like Bihar, Rajasthan and Madhya Pradesh) announced one-time cash transfers for returning migrant workers.
Example: UP government announced provision of maintenance allowance of Rs 1,000 for returning migrants.
Directions by the Supreme Court
On May 26, the Court issued an order to the central and state governments to submit a response detailing all measures taken by the respective governments for migrant labourers.
On May 28, the Court provided interim directions to the central and state/UT governments for ensuring relief to the migrant workers: i) no train or bus fare should be charged to migrant workers, ii) free food should be provided to stranded migrants by the concerned State/UT government and this information should be publicised, iii) States should simplify and speed-up the process of registration of migrants for transport and those registered should be provided transportation at the earliest and iv) the state receiving migrants should provide last-mile transport, health screening and other facilities free of cost.
Reiterating their earlier directions, on June 5 (full order issued on June 9), the Supreme Court further directed the governments to ensure: i) transportation of all stranded workers wanting to return to their native place is completed within 15 days, ii) identification of migrant workers is immediately completed and the process of migrant registration be decentralised to police stations and local authorities, iii) records of returning migrant labourers are kept including details about place of earlier employment and nature of their skills, and iv) counselling centres are set-up at the block level to provide information about central and state government schemes and other avenues of employment.
The Court also directed the state/UT governments to consider withdrawal of prosecution/complaints under Section 51 of Disaster Management Act filed against migrant labourers who allegedly violated lockdown orders.
Try to answer the question:
Explain the structure and pattern of migration in India. Highlight the issues faced by them along with discussing some solutions that can be provided by center and state governments.
There is no denying the fact that the troubles of migrants are far from over even after they reach their home states. The issues of employment and sustenance need a serious policy revision both from the center and state governments.
From UPSC perspective, the following things are important :
Prelims level: IBC
Mains level: Paper 3- Problems with IBC
Following the lockdown, the government announced the suspension of some provision of IBC to soften the blow of economic crisis. Section 10A was inserted to suspend the provision. But it giver rise to other questions. What are these questions? Read the article to know…
What changes were made?
In mid-May, the Finance Minister announced that the government was planning to bring in an ordinance to suspend provisions enabling filing of fresh insolvency cases for a period of one year..
Finally, on June 5, the government promulgated an ordinance which inserted Section 10A in the IBC.
The government said the ordinance was promulgated because the lockdown has caused business disruptions which may lead to default on debts pushing such companies into insolvency.
Therefore, it felt that suspending Sections 7, 9 and 10 of the IBC would be the right course of action.
What are the issues with section 10A?
Section 10A provides that “no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from this period, as may be notified in this behalf”.
This means that these provisions shall remain suspended from March 25 till September 25, unless extended for another six months, which would extend the suspension up till March 25, 2021.
However, the proviso to the section states that no application for insolvency resolution shall ever be filed against a corporate debtor for any default occurring during the suspension period.
While the main Section 10A suspends such applications for a limited period, the proviso enlarges the scope to provide complete amnesty under the IBC for any default occurring during such period.
The role of a proviso in a statute is to restrict the application of the main provision under exceptional circumstances.
However, the proviso here expands the substantive provision in the main section.
Further, if the main provision is unclear, a proviso may be given to explain its true meaning.
In this case the main provision appears clear, only to be obfuscated by the proviso.
The proviso therefore does not appear to be legally tenable.
As creditors can still approach courts, and as banks/FIs can still approach Debt Recovery Tribunals, the protection given by this proviso seems illusory.
But Section 10A also suspends provisions of Section 10 of the IBC which enables voluntary insolvency resolution.
This is difficult to understand as such voluntary insolvency resolution should have been made easier for companies facing distress.
Painting all defaults with the same brush
The ordinance appears to consider every default occurring during the suspension period to be a consequence of the pandemic.
There could be cases where defaults were imminent due to other reasons, but which will now still enjoy this protection.
The ordinance should have protected only such defaults which may occur as a direct consequence of the pandemic or the lockdown and should have left this determination to the National Company Law Tribunal.
Also, a company defaulting on its payment obligations on March 24 (a day before the lockdown started) would not be provided any relief under the IBC as compared to a company defaulting on or immediately after March 25 due to similar reasons.
This makes the suspension, in the absence of definition of a COVID-19 default, prima facie arbitrary.
Issue with increasing the default amount limit
Earlier, the government increased the minimum default amount to trigger corporate insolvency resolution from ₹1 lakh to ₹1 crore.
This was purportedly done to protect MSMEs from insolvency petitions.
However, this also operates against such MSMEs because they will now be forced to approach civil courts to recover undisputed debts below ₹1 crore.
The suspension of these provisions would now impact even claims above ₹1 crore for at least six months to a year.
Conclusion
The ordinance has opened itself up to a legal challenge on grounds of arbitrariness and untenability of the proviso due to the flaw in its drafting. It is unfathomable how these flaws arose despite the government having ample time to think this through.
B2BASICS:
Insolvency and Bankruptcy Code, 2015
The code contains a clear speedy mechanism for early identification of financial distress and initiates revival/re-organisation of the company if it is viable.
Timeline
The bill proposes a timeline of 180 days to deal with the applications for insolvency resolution with an option of extending it by 90 days for exceptional cases.
Insolvency Resolution Plan
The insolvency resolution plan has to be approved by 75% of the creditors. If the plan is approved, then the adjudicating authority will give its sanction. In case of rejection of insolvency resolution plan, the adjudicating authority will pass an order for liquidation.
Insolvency Professionals (IPs) & Insolvency Professional Agencies (IPAs)
The resolution processes will be conducted by licensed insolvency professionals (IPs). These IPs will be members of insolvency professional agencies (IPAs). IPAs will also furnish performance bonds equal to the assets of a company under insolvency resolution.
Information Utilities
Information utilities (IUs) will be established to collect, collate and disseminate financial information to facilitate insolvency resolution.
Bankruptcy and Insolvency Adjudicator
The National Company Law Tribunal (NCLT) will adjudicate insolvency resolution for companies. The Debt Recovery Tribunal (DRT) will adjudicate insolvency resolution for individuals.
The Debt Recovery Tribunal (DRT), which has jurisdiction over individuals and unlimited liability partnership firms. Appeals from the order of DRT shall lie to the Debt Recovery Appellate Tribunal (DRAT).
Insolvency regulators
The Insolvency and Bankruptcy Board of India will be set up to regulate functioning of IPs, IPAs and IUs.
From UPSC perspective, the following things are important :
Prelims level: G7 countries
Mains level: Paper 2- Should India join expanded G7 if invited to join as a member?
There has been a call for expansion of G7 by the U.S. President. Against this backdrop, this article examines the historical background in which the group emerged. But a lot has changed since. So, it would be appropriate for G7 to adjust to the new reality. But what would be the focus of a new mechanism? What are the areas in which India would be interested? All such questions are answered in this article.
Call for expansion of G7 and China’s objection
Recently, the U.S. President proposed the expansion of G7 to G10 or G11, with the inclusion of India, South Korea, Australia and possibly Russia.
Elaborating this logic, the White House Director of Strategic Communications said the U.S. President wanted to include other countries, including the Five Eyes countries.
Five Eye is an intelligence alliance comprising Australia, Canada, New Zealand, the United Kingdom and the United States.
The U.S. also stressed said the expanded group should talk about the future of China.
A Chinese Ministry of Foreign Affairs official immediately reacted, labelling it as “seeking a clique targeting China”.
Should India care about China’s objection if invited to join?
China’s objection to an expanded G7 is no reason for India to stay away from it, if invited to join.
India has attended several G7 summits earlier too, as a special invitee for its outreach sessions.
India’s Prime Minister was guest invited to Biarritz, France to the G7 summit last year, along with other heads of government.
The historical background of G7
The G7 emerged as a restricted club of the rich democracies in the early 1970s.
The quadrupling of oil prices just after the 1973 Arab-Israeli War, when OPEC imposed an embargo against Canada, Japan, the Netherlands, and the United States, shocked their economies.
Although the French were spared the embargo, the chill winds of the OPEC action reverberated around the world.
So, French President invited the Finance Ministers of five of the most developed members of the Organisation for Economic Cooperation and Development, the United States, Germany, Japan, Italy, and the United Kingdom, for an informal discussion on global issues.
This transformed into a G7 Summit of the heads of government from the following year with the inclusion of Canada in 1976.
And the European Commission/Community (later Union) joined as a non-enumerated member, a year later.
On the initiative of U.S. President Bill Clinton and British Prime Minister Tony Blair, the G7 became the G8, with the Russian Federation joining the club in 1998.
This ended with Russia’s expulsion following the annexation of Crimea in 2014.
Declining share G7 and rising of E7 in world GDP
When constituted, the G7 countries accounted for close to two-thirds of global GDP.
According to the 2017 report of the accountancy firm, PwC, “The World in 2050”, they now account for less than a third of global GDP on a purchasing power parity (PPP) basis.
And less than half on market exchange rates (MER) basis.
The seven largest emerging economies (E7, or “Emerging 7”), comprising Brazil, China, India, Indonesia, Mexico, Russia and Turkey, account for over a third of global GDP on purchasing power parity (PPP) terms.
And over a quarter on MER basis.
Predictions for India
India’s economy is already the third largest in the world in PPP terms, even if way behind that of the U.S. and China.
By 2050, the PwC Report predicts, six of the seven of the world’s best performing economies will be China, India, the United States, Indonesia, Brazil, and Russia.
Two other E7 countries, Mexico and Turkey, also improve their position.
It projects that India’s GDP will increase to $17 trillion in 2030 and $42 trillion in 2050 in PPP terms, in second place after China, just ahead of the United States.
This is predicated on India overcoming the challenge of COVID-19, sustaining its reform process and ensuring adequate investments in infrastructure, institutions, governance, education and health.
Limitations of G7
The success or otherwise of multilateral institutions are judged by the standard of whether or not they have successfully addressed the core global or regional challenges of the time.
The G7 failed to head off the economic downturn of 2007-08.
This failure led to the rise of the G20.
In the short span of its existence, the G20 has provided a degree of confidence, by promoting open markets, and stimulus, preventing a collapse of the global financial system.
The G7 also failed to address the contemporary issues, such as the COVID-19 pandemic, climate change, the challenge of the Daesh, and the crisis of state collapse in West Asia.
It had announced its members would phase out all fossil fuels and subsidies, but has not so far announced any plan of action to do so.
And their coal fired plants emit “twice more CO2 than those of the entire African continent”.
Turmoil in West Asia and failure of Europe to act
Three of the G7 countries, France, Germany, and the U.K., were among the top 10 countries contributing volunteers to the ISIS.
West Asia is in a greater state of turmoil than at any point of time since the fall of the Ottoman Empire.
This turmoil has led to a migrants crisis.
Migrant crisis persuaded many countries in Europe to renege on their western liberal values, making the Mediterranean Sea a death trap for people fleeing against fear of persecution and threat to their lives.
So, to deal with the unprecedented challenge, we need new institution
The global economy has stalled and COVID-19 will inevitably create widespread distress.
Nations need dexterity and resilience to cope with the current flux, as also a revival of multilateralism, for they have been seeking national solutions for problems that are unresolvable internally.
Existing international institutions have proven themselves unequal to these tasks.
A new mechanism might help in attenuating them.
It would be ideal to include in it the seven future leading economies, plus Germany, Japan, the U.K., France, Mexico, Turkey, South Korea, and Australia.
The 2005 ad hoc experiment by Prime Minister Tony Blair in bringing together the G7 and the BRICS countries was a one-off.
What should be the focus of this new institution?
A new international mechanism will have value only if it focuses on key global issues.
A related aspect is how to push for observing international law and preventing the retreat from liberal values on which public goods are predicated.
Global public health and the revival of growth and trade in a sustainable way -that also reduces the inequalities among and within nations- would pose a huge challenge.
What should be India’s priority in new institution?
India would be vitally interested in three: 1) international trade, 2) climate change, 3) the COVID-19 crisis.
Second order priorities for India would be cross-cutting issues such as counter-terrorism and counter-proliferation.
An immediate concern is to ensure effective implementation of the 1975 Biological Weapons Convention .
And the prevention of any possible cheating by its state parties by the possible creation of new microorganisms or viruses by using recombinant technologies.
On regional issues, establishing a modus vivendi with Iran would be important to ensure that it does not acquire nuclear weapons and is able to contribute to peace and stability in Afghanistan, the Gulf and West Asia.
The end state in Afghanistan would also be of interest to India.
And also the reduction of tensions in the Korean Peninsula and the South China Sea.
Consider the question “There has been a clamour for expanding G7 and India is being considered as one of the prospective candidates in the expanded group. In light of this examine the challenges and opportunities for India if it gets entry into the expanded group.”
Conclusion
The decaying influence in geopolitics and declining share in the world GDP calls for the formation of the new institution. IF and when that institution comes into being India should try to address its immediate concern with the help of new mechanism based on values.
From UPSC perspective, the following things are important :
Prelims level: Carbon Dioxide concentration in atmosphere
Mains level: Paper 3- Climate change
In the context of climate change, the rising concentration of carbon dioxide and rising global temperature are inextricably linked with each other. This article elaborates on two interlinked and rising curves-CO2 and temperature. The article is concluded on the positive note that leaders would act on climate change with same urgency as Covid.
The upward journey of two curves
Two interrelated curves began their upward trend two centuries ago with the advent of the industrial age.
The first curve was the atmospheric concentration of carbon dioxide or, more generally, all greenhouse gases, GHGs.
And the second was the average global temperature curve.
CO2 concentration at 407 ppm: But did we get here?
Actually, the CO2 curve began its upward march about 18,000 years ago when it was a little under 200 parts per million (ppm).
And earth was much colder back then.
By the time it reached 270 ppm about 11,500 years ago, the warmer conditions accompanying this curve made it possible for the emergence of agriculture.
Over the past million years, CO2 levels never exceeded 280-300 ppm.
They always went back to 200 ppm before rising again in a cyclical fashion.
They remained steady at close to 280 ppm for 10,000 years until, beginning in the mid-19th century.
They began to rise again as humans burnt coal and oil to fuel the industrial revolution, and burnt forests to expand agriculture and settlements.
From a mere 0.2 billion tonnes of CO2 emissions in 1850, annual emissions increased to 36 billion tonnes by 2018.
If all this CO2 had accumulated in the atmosphere, we can say that human life would have been altered beyond recognition.
Nature has been rather kind to us so far — about one-half of all CO2 emissions have been sanitised from the atmosphere, equally by growing vegetation on land and by absorption in the oceans.
Thus, the levels of CO2 in the atmosphere reached 407 ppm in 2018, a level last experienced by earth some three million years ago.
Global temperature up by 1 degree Celcius
From 1850 onwards, for over a century, the global temperature showed a slight warming trend.
But there was nothing suggestive of anything serious.
From 1975 onwards, the temperature graph has shown a distinct, upward trend.
By 2015, the globe had heated by a full degree Celsius relative to a hundred years previously.
Climate modellers unequivocally project that under the current trends of emissions the globe will heat up by 4˚C by the end of the century.
he 2003 European heat wave killed over 70,000 people.
The years 2015-19 have globally been the warmest years on record.
Leave aside the Amazon fire of 2019, the bush fires of 2019-20 in Australia were unprecedented in their scale and devastation.
March 2020 has been the second warmest March on record.
But climate change is not just about temperature rise
Climate change involves not just a change in temperature but every other component of weather, including rainfall, humidity and wind speed.
Indirect effects follow, such as a rise in sea levels from melting glaciers.
Globally there have been several extreme weather events such as hurricanes, heat waves or droughts.
While no single event can be directly attributed to climate change, the collective trends are consistent with climate change predictions.
Warning for India
The Climate Impact Lab at the University of Chicago put out a warning for India last year.
It says that if global CO2 emissions continue to gallop at the present rate, average summer temperatures would rise by 4˚C in most States.
Extremely hot days (days above 35˚C), which were only five days in 2010, would increase to 15 days by 2050 and to 42 days by 2100 on average across all districts.
A more moderate emissions scenario, as a result of countries largely fulfilling their commitments under the Paris Agreement, would keep average global temperature rise below 2˚C compared to pre-industrial levels.
Let’s look into the financial dimension of tackling climate change
The most common excuse is that the world cannot afford to curb GHG emissions for fear of wrecking the economy.
An article in Nature in 2019 highlighted the financial dimensions of tackling the looming climate crisis.
Apparently, the wealthy nations are spending over $500 billion each year internally on projects aimed at reducing emissions.
The Intergovernmental Panel on Climate Change, however, estimates that a sustained annual investment of $2.4 trillion in more efficient energy systems is needed until 2035 in order to keep warming below the more ambitious 1.5˚C relative to pre-industrial levels.
To put this in perspective, that is about 2.5% of the global GDP.
What happened to the $100 billion per year aid to poor countries?
Some of the wrangling over money relates to the amounts that the wealthy nations, agreed to pay other countries to cope with climate change.
Underlying idea was that these countries have caused most of the GHGs resulting in global warming,
At the UN Climate Conference in 2009, the richest nations had pledged to provide $100 billion in aid each year by 2020 to the poorer countries for climate change mitigation and adaptation.
In 2017, for which data are available, only $71 billion had been provided.
And most of the money was spent on mitigation and less than 20% towards climate adaptation.
Such numbers had been challenged prior to the 2015 Paris Summit by many countries, including India.
It was challenged because much of the so-called aid provided did not come out of dedicated climate funds but, rather, development funds or simply loans which had to be repaid.
It thus seems unlikely that the rich countries will deliver $100 billion in tangible climate finance during 2020.
Time to act
COVID-19 has unwittingly given humanity a brief respite from the climate change curve.
Commentators are already talking about a paradigm shift in the structure and functioning of societies once the pandemic subsides.
This is also a make-or-break moment for the climate trajectory which has to be flattened within a few years if we are to avoid dangerous climate change.
Nature’s kindness is not expected to last beyond a 2˚C rise in temperature as the carbon sequestered into vegetation will be thrown back into the atmosphere.
Also remember that earth has already warmed by 1˚C and we really have only another 1˚C as a safety margin or 0.5˚C if we are concerned about island nations.
Consider the mains question asked by the UPSC in 2017-‘Climate change’ is a global problem. How India will be affected by climate change? How Himalayan and coastal states of India will be affected by climate change?
Conclusion
There is no substitute to reducing GHG emissions. Technologists, economists and social scientists must plan for a sustainable planet based on the principles of equity and climate justice within and across nations. It is the responsibility of leaders to alter their mindset and act on the looming climate crisis with the same alacrity they have shown on COVID-19.
From UPSC perspective, the following things are important :
Prelims level: Article 370
Mains level: Paper 2- China-Pakistans overlapping interests in Kashmir and diverging objectives.
While their interests overlap, Pakistan and China diverge when it comes to their objective in Kashmir. Both want to keep the pressure on India to avoid it from changing the status quo. Extending this line of argument, the author in this article suggest that India should separate the policy response to China from Pakistan, as they differ in their objectives.
Coordinated efforts to corner India?
Latest news on the Ladakh front suggests that Chinese and Indian forces have begun to disengage in select areas.
But this does not detract from the reality that in the past few weeks Beijing and Islamabad are making coordinated efforts to challenge India’s presence in the Kashmir-Ladakh region.
There is stepped-up activity on Pakistan’s part to infiltrate terrorists into the Valley.
China has undertaken provocative measures on the Ladakh front to assert control over disputed areas around the Line of Actual Control (LAC).
Let’s see how Pakistan and China’s interests overlap
In Pakistan’s case the intensification in its terrorist activities is related in part to the dilution of Article 370.
Dilution of Article 370 helps India de-link Ladakh from the Kashmir problem.
For China, the division of Ladakh from Jammu and Kashmir allows India a freer hand in contesting China’s claims in the region.
Increasing road-building activity on India’s part close to the LAC augments this perception.
In addition, Ladakh borders China’s most restive provinces of Xinjiang and Tibet.
Ladakh is also contiguous to Pakistan-occupied Kashmir (PoK), Gilgit and Baltistan, where the Chinese have invested hugely under the China-Pakistan Economic Corridor (CPEC) project.
External Affairs Minister S. Jaishankar’s remark last year that India expects to have “physical jurisdiction over (POK) one day” has alarmed Beijing which sees any such Indian move as threatening the CPEC project.
These factors demonstrate the overlapping interests that Beijing and Islamabad have regarding India in this region.
The above factors explain why Pakistan and China would want India to be so preoccupied with taking defensive measures in Kashmir and Ladakh as to have little time and energy left to attempt to alter the status quo in POK or in Aksai Chin.
But there are major differences in Pakistani and Chinese objectives regarding India
These differences are related to their divergent perceptions of their disputes and their different force equations with India.
For China, Ladakh is primarily a territorial dispute with strategic ramifications.
China also believes it is superior to the Indian militarily and, therefore, can afford to push India around within limits as it has been attempting to do in the recent confrontation.
For Pakistan, its territorial claim on Kashmir is based on an immutable ideological conviction that it is the unfinished business of partition and as a Muslim-majority state is destined to become a part of Pakistan.
Islamabad also realises that it is the weaker power in conventional terms and therefore has to use unconventional means, primarily terrorist infiltration, to achieve its objective of changing the status quo in Kashmir.
China is a satiated power in Ladakh having occupied Aksai Chin and wants to keep up the pressure on New Delhi to prevent the latter from trying to change the situation on the ground.
Way forward-Pay attention to objectives while negotiating
China’s primary concern with regard to Kashmir is to prevent any Indian move from threatening the CPEC project.
It does not challenge the status quo in Kashmir.
Pakistan, on the other hand, is committed to changing the status quo in Kashmir at all cost.
It has been trying to do so since Partition not only through clandestine infiltration but also by engaging in conventional warfare.
Therefore, while it is possible to negotiate the territorial dispute with China on a give-and-take basis.
Doing the same is not possible in the case of Pakistan which considers Kashmir a zero-sum game.
India should, therefore, distinguish the different objectives on the part of Beijing and Islamabad and tailor its responses accordingly without conflating the two threats to its security.
Consider the question “Policy response of India in dealing with Pakistan and China should consider differences in their objectives in relation to Kashmir. And clubbing them together just because of their tactical overlap should be avoided. Elaborate.”
Conclusion
Lumping the twin threats posed by Pakistan and China together because of a tactical overlap between them makes it difficult to choose policy options rationally. So, the policy response must understand the difference in their objectives and avoid clubbing them together.
From UPSC perspective, the following things are important :
Prelims level: Local bodies.
Mains level: Paper 2- Issues with fiscal independence of the local bodies.
This article makes some suggestions to improve local finance and argues that the extant fiscal illusion is a great deterrent to mobilisation.
Advantageous position in handling disasters
In terms of information, monitoring and immediate action, local governments are at an advantage, and eminently, to meet any disaster such as COVID-19.
While increasing the borrowing limits of the state form 3.5% of GDP to 5%, there was a recognition that local governments should be fiscally empowered immediately.
This is a valid signal for the future of local governance.
4 challenges posed by Covid and addressing them collectively
COVID-19 has raised home four major challenges:1) economic, 2) health, 3) welfare/livelihood 4) resource mobilisation.
These challenges have to be addressed by all tiers of government in the federal polity, jointly and severally.
Local government empowerment: 5 critical areas
1)Own revenue is the critical lever of local government empowerment.
But the several lacunae that continue to bedevil local governance have to be simultaneously addressed.
2) The new normal demands a paradigm shift in the delivery of health care at the cutting edge level.
3) The parallel bodies that have come up after the 73rd/74th Constitutional Amendments have considerably distorted the functions-fund flow matrix at the lower level of governance.
4) There is yet no clarity in the assignment of functions, functionaries and financial responsibilities to local governments.
Functional mapping and responsibilities continue to be ambiguous in many States.
Instructively, Kerala attempted even responsibility mapping besides activity mapping.
5) The critical role of local governments will have to be recognised by all.
Let’s look into resource mobilisation issue: 3 Heads
A few suggestions for resource mobilisation are given under three heads: 1) local finance, 2) Members of Parliament Local Area Development Scheme-MPLADs, 3) the Fifteenth Finance Commission (FFC).
1. Local finance
Property tax collection with appropriate exemptions should be a compulsory levy and preferably must cover land.
The Economic Survey 2017-18 points out that urban local governments, or ULGs, generate about 44% of their revenue from own sources as against only 5% by rural local governments, or RLGs.
Per capita own revenue collected by ULGs is about 3% of urban per capita income while the corresponding figure is only 0.1% for RLGs.
There is a yawning gap between tax potential and actual collection, resulting in colossal underperformance.
When they are not taxed, people remain indifferent.
LGs, States and people seem to labour under a fiscal illusion.
In States such as Uttar Pradesh, Bihar and Jharkhand, local tax collection at the panchayat level is next to nil.
Property tax forms the major source of local revenue throughout the world.
All States should take steps to enhance and rationalise property tax regime.
A recent study by Professor O.P. Mathur shows that the share of property tax in GDP has been declining since 2002-03.
The share of property tax in India in 2017-18 is only 0.14% of GDP as against 2.1% in the Organisation for Economic Co-operation and Development (OECD) countries.
If property tax covers land, that will hugely enhance the yield from this source even without any increase in rates.
Other 2 options for raising finances
1) Land monetisation and betterment levy may be tried in the context of COVID-19 in India. To be sure, land values have to be unbundled for socially relevant purposes.
2) Municipalities and even suburban panchayats can issue a corona containment bond for a period of say 10 years.
We are appealing to the patriotic sentiments of non-resident Indians and rich citizens.
Needless to say, credit rating is not to be the weighing consideration.
That the Resurgent India Bond of 1998 could mobilise over $4 billion in a few days encourages us to try this option.
2) MPLADS
The suspension of MPLADS by the Union government for two years is a welcome measure. The annual budget was around ₹4,000 crore.
The Union government has appropriated the entire allocation along with the huge non-lapseable arrears.
MPLADs, which was avowedly earmarked for local area development, must be assigned to local governments, preferably to panchayats on the basis of well-defined criteria.
3) Fifteenth finance commission-FFC
A special COVID-19 containment grant to the LGs by the FFC to be distributed on the basis of SFC-laid criteria is the need of the hour.
The commission may do well to consider this.
The local government grant of ₹90,000 crore for 2020-2021 by the FFC is only 3% higher than that recommended by the Fourteenth Finance Commission.
Building health infrastructure and disease control strategies at the local level find no mention in the five tranches of the packages announced by the Union Finance Minister.
Suggestions related to grants
The ratio of basic (i.e. with no conditions) to tied (with condition)grant is fixed at 50:50 by the commission.
In the context of the crisis under way, all grants must be untied for freely evolving proper COVID-19 containment strategies locally.
The 13th Finance Commission’s recommendation to tie local grants to the union divisible pool of taxes to ensure a buoyant and predictable source of revenue to LGs (accepted by the then Union government) must be restored by the commission.
Consider the question “The stable source of revenue for the local government bodies whether from their own sources or in the form of grants should lie at the heart of efforts to empower them. Comment.”
Conclusion
COVID-19 has woken us up to the reality that local governments must be equipped and empowered. Relevant action is the critical need.
B2BASICS:
73rd and 74th Amendment Acts, 1993
It’s been 25 years since decentralized democratic governance was introduced in India by the 73rd and 74th Constitution Amendments, which came into force on April 24 and June 1, 1993, respectively.
The 73rd Amendment to the Constitution (Part IX) has given constitutional status to the Panchayats, and has provided it with a substantial framework. It envisions the Panchayats as the institutions of local self-governance and also the universal platforms for planning and implementing programmes for economic
development and social justice.
The creation of lakhs of “self-governing” village panchayats and gram sabhas, with over three million elected representatives mandated to manage local development, was a unique democratic experiment.
Article 243A gives constitutional recognition to the Gram Sabha as a body consisting of persons registered in the electoral rolls relating to a village comprised within the area of the Panchayat at the village level.
The 74th Amendment Act provided for the constitution (Part IXA) of three types of municipalities in urban areas depending upon the size and area.
The Constitution provides for a complete institutional mechanism including reservation for women and formation of State Finance Commissions (SFCs) for local democracy.
Rating agencies influence the decisions of investors. So, when any economy is downgraded by them, it’s certainly a cause for concern. But to restart the economic engines, governments need to spend more by borrowing. This article suggests the way to achieve both: avoiding downgrade and increasing spending. How? Read to know…
To worry or not to worry: Issue of downgrading by rating agencies
Some economists urged the government amid covid pandemic to go out and spend without worrying about the increase in public debt.
They said the rating agencies would understand that these are unusual times.
If they did not and chose to downgrade India, we should not worry too much about it.
Well, the decision of the rating agency, Moody’s, to downgrade India from Baa2 to Baa3 should come as a rude awakening.
The present rating is just one notch above the ‘junk’ category.
Moody’s has also retained its negative outlook on India, which suggests that a further downgrade is more likely than an upgrade.
The downgrade, Moody’s says, has not factored in the economic impact of the pandemic.
Any further deterioration in the fundamentals from now on will push India into ‘junk’ status.
Here is why we should be worried about a downgrade
Whatever the failings of the agencies, in the imperfect world of global finance that we live in, their ratings do carry weight.
Institutional investors are largely bound by covenants that require them to exit an economy that falls below investment grade.
If India is downgraded to junk status, foreign institutional investors, or FIIs, will flee in droves.
The stock and bond markets will take a severe beating.
The rupee will depreciate hugely and the central bank will have its hands full trying to stave off a foreign exchange crisis.
That is the last thing we need at the moment.
So, what is the way out? Try for an upgrade!
We have to put our best foot forward now to prevent a downgrade and bring about an upgrade instead.
To do so, we need to note the key concerns that Moody’s has cited in effecting the present downgrade to our rating: slowing growth, rising debt and financial sector weakness.
These concerns are legitimate.
Bleak prospects
Many economists as also the Reserve Bank of India (RBI) expect India’s economy to shrink in FY 2020-21.
The combined fiscal deficit of the Centre and the States is expected to be in the region of 12% of GDP.
Moody’s expects India’s public debt to GDP ratio to rise from 72% of GDP to 84% of GDP in 2020-21.
The banking sector had non-performing assets of over 9% of advances before the onset of the pandemic.
Weak growth and rising bankruptcies will increase stress in the banking sector.
Fiscal deficit and growth: two concerns of rating agencies
The government’s focus thus far has been on reassuring the financial markets that the fisc will not spin out of control.
It has kept the ‘discretionary fiscal stimulus’ down to 1% of GDP.
That 1% figure is most modest in relation to that of many other economies, especially developed economies.
‘Discretionary fiscal stimulus’ refers to an increase in the fiscal deficit caused by government policy as distinct from an increase caused by slowinggrowth, the latter being called an ‘automatic stabiliser’.
Keeping the fiscal deficit on a leash addresses the concerns of rating agencies about a rise in the public debt to GDP ratio.
But it does little to address their concerns about growth.
The debt to GDP ratio will worsen and financial stress will accentuate if growth fails to recover quickly enough.
The government’s stimulus package relies heavily on the banking system to shore up growth.
But there is only so much banks can do.
More government spending is required, especially for infrastructure.
So, government need to increase fiscal stimulus without increasing public debt
We need to increase the discretionary fiscal stimulus without increasing public debt.
The answer is monetisation of the deficit, that is, the central bank providing funds to the government.
These fears are based on misconceptions about monetisation of the deficit and its effects.
What monetisation of debt mean?
A common misconception is that it involves ‘printing notes’.
But that is not how central banks fund the government.
The central bank typically funds the government by buying Treasury bills.
As proponents of what is called Modern Monetary Theory point out, even that is not required.
The central bank could simply credit the Treasury’s account with itself through an electronic accounting entry.
What is base money? When the government spends the extra funds that have come into its account, there is an increase in ‘Base money’, that is, currency plus banks’ reserves.
So, yes, monetisation results in an expansion of money supply.
But that is not the same as printing currency notes.
But expansion of money supply leads to inflation, what about that?
It could be that the expansion is inflationary.
This objection has little substance in a situation where aggregate demand has fallen sharply and there is an increase in unemployment.
In such a situation, monetisation of the deficit is more likely to raise actual output closer to potential output without any great increase in inflation.
No difference in borrowing from banks or RBI directly:MMT
Exponents of the Modern Monetary Theory (MMT) make a more striking point.
They say there is nothing particularly virtuous about the government incurring expenditure and issuing bonds to banks instead of issuing these to the central bank.
The expansion in base money and hence in money supply is the same in either route.
The preference for private debt is voluntary.
MMT exponents say it has more to do with an ideological preference for limiting government expenditure.
Central banks worldwide have resorted to massive purchases of government bonds in the secondary market in recent years, with the RBI joining the party of late.
These are carried out under Open Market Operations (OMO).
The impact on money supply is the same whether the central bank acquires government bonds in the secondary market or directly from the Treasury.
So why the shrill clamour against monetisation of public debt?
OMO is said to be a lesser evil than direct monetisation because the former is a ‘temporary’ expansion in the central bank’s balance sheet whereas the latter is ‘permanent’.
But we know that even so-called ‘temporary’ expansions can last for long periods with identical effects on inflation.
What matters, therefore, is not whether the central bank’s balance sheet expansion is temporary or permanent but how it impacts inflation.
As long as inflation is kept under control, it is hard to argue against monetisation of the deficit in a situation such as the one we are now confronted with.
Way forward
We now have a way out of the constraints imposed by sovereign ratings.
The government must confine itself to the additional borrowing of ₹4.2 trillion which it has announced.
Further discretionary fiscal stimulus must happen through monetisation of the deficit.
That way, the debt to GDP ratio can be kept under control while also addressing concerns about growth.
Consider the question “Examine the issues involved in the direct monetisation of the debt by the government to fund the spending in the wake of covid pandemic.”
Conclusion
The rating agencies should be worrying not about monetisation per se but about its impact on inflation. As long as inflation is kept under control, they should not have concerns — and we need not lose sleep over a possible downgrade.
Back2Basics: Automatic stabiliser
Automatic stabilisers refer to how fiscal instruments will influence the rate of growth and help counter swings in the economic cycle.
Automatic stabilisers will influence the size of government borrowing.
Discretionary fiscal policy
Keynesian Perspective: Keynes noted that in a recession, confidence falls and the private sector cut back on spending and investment.
Therefore, we see a rise in private savings and a fall in aggregate demand. This can worsen the recession.
This is why Keynes advocated government borrowing – to make use of these surplus savings.
Keynes argued that automatic stabilisers may not be enough, and the government should specifically find public sector projects to inject money into the circular flow.
op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India,Effect Of Policies & Politics Of World On India'S Interests
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Gulf countries
Mains level: Paper 2- Stability and security in the Persian gulf and impact on India
This article analyses the security environment in the Gulf countries. Their common characteristic as being the oil producers and similarity in their social and security problems are also explained in detail in this article. And all this has implications for India. So, what are the implications? Read to know…
Let’s look at the importance of countries surrounding Persian Gulf
The United Nations defines this body of water as the Persian Gulf.
The lands around it are shared by eight countries: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
All are the members of the UN.
There is a commonality of interest among them in being major producers of crude oil and natural gas.
And thereby contribute critically to the global economy and to their own prosperity.
This has added to their geopolitical significance.
At the same time, turbulence has often characterised their inter se political relations.
Arab Countries surrounding Persian Gulf
Power play and security of the region
For eight decades prior to 1970, this body of water was a closely guarded British lake, administered in good measure by imperial civil servants from India.
When that era ended, regional players sought to assert themselves.
Imperatives of rivalry and cooperation became evident and, as a United States State Department report put it in 1973, ‘The upshot of all these cross currents is that the logic of Saudi-Iranian cooperation is being undercut by psychological, nationalistic, and prestige factors, which are likely to persist for a long time.’
The Nixon and the Carter Doctrines were the logical outcomes to ensure American hegemony.
An early effort for collective security, attempted in a conference in Muscat in 1975, was thwarted by Baathist Iraq.
The Iranian Revolution put an end to the Twin Pillar approach and disturbed the strategic balance.
The Iraq-Iran War enhanced U.S. interests and role.
Many moons and much bloodshed later, it was left to the Security Council through Resolution 598 (1987) to explore ‘measures to enhance the security and stability in the region’.
Gulf regional security framework: Some questions
Any framework for stability and security thus needs to answer a set of questions:
Security for whom, by whom, against whom, for what purpose?
Is the requirement in local, regional or global terms?
Does it require an extra-regional agency?
Given the historical context, one recalls a Saudi scholar’s remark in the 1990s that ‘Gulf regional security was an external issue long before it was an issue among the Gulf States themselves.’
What should be the ingredients of a regional security framework?
The essential ingredients of such a framework would thus be to ensure: 1) conditions of peace and stability in individual littoral states; 2) freedom to all states of the Gulf littoral to exploit their hydrocarbon and other natural resources and export them; 3) freedom of commercial shipping in international waters of the Persian Gulf 4)freedom of access to, and outlet from, Gulf waters through the Strait of Hormuz; 5) prevention of conflict that may impinge on the freedom of trade and shipping and 6)prevention of emergence of conditions that may impinge on any of these considerations.
Could such a framework be self-sustaining or require external guarantees for its operational success?
If the latter, what should its parameters be?
Misunderstanding the role great powers can play
Statesmen often confuse great power with total power and great responsibility with total responsibility.
The war in Iraq and its aftermath testify to it.
The U.S. effort to ‘contain’ the Iranian revolutionary forces, supplemented by the effort of the Arab states of the littoral (except Iraq) GCC initially met with success in some functional fields and a lack of it in its wider objectives.
The turbulent nature of US-Iran relations
In the meantime, geopolitical factors and conflicts elsewhere in the West Asian region — Yemen, Syria, Libya — aggravated global and regional relationships.
And it hampered a modus vivendi in U.S.-Iran relations that was to be premised on the multilateral agreement on Iran’s nuclear programme agreed to by western powers and the Obama Administration.
But it was disowned by U.S. President Donald Trump whose strident policies have taken the region to the brink of armed conflict.
Perception of declining U.S. commitment to sub-regional security
Perceptions of declining U.S. commitment to sub-regional security have been articulated in recent months amid hints of changing priorities.
This is reported to have caused disquiet in some, perhaps all, members of the GCC, the hub of whose security concern remains pivoted on an Iranian threat (political and ideological rather than territorial).
And American insurance to deter it based on a convergence of interests in which oil, trade, arms purchases, etc have a role along with wider U.S. regional and global determinants.
It is evident that a common GCC threat perception has not evolved over time.
It has been hampered by the emergence of conflicting tactical and strategic interests and subjective considerations.
The current divisions within the organisation are therefore here to stay.
These have been aggravated by 1)the global economic crisis, 2) the immediate and longer term impact of COVID-19 on regional economies, 3) the problems in the Organization of the Petroleum Exporting Countries (OPEC), 4) and the decline in oil prices.
Let’s look at the emerging trends in the region
One credible assessment suggests that in the emerging shape of the region.
1) Saudi Arabia is a fading power.
2) UAE, Qatar and Iran are emerging as the new regional leaders.
3) Oman and Iraq will have to struggle to retain their sovereign identities.
4)The GCC is effectively ended, and OPEC is becoming irrelevant as oil policy moves to a tripartite global condominium.
None of this will necessarily happen overnight and external intervention could interfere in unexpected ways.
But it is fair to say that the Persian Gulf as we have known for at least three generations is in the midst of a fundamental transformation.
Improvement relations between Arab states and Iran
With the Arab League entombed and the GCC on life-support system, the Arab states of this sub-region are left to individual devices to explore working arrangements with Iraq and Iran.
The imperatives for these are different but movement on both is discernible.
With Iran in particular and notwithstanding the animosities of the past, pragmatic approaches of recent months seem to bear fruit.
Oman has always kept its lines of communication with Iran open.
Kuwait and Qatar had done likewise but in a quieter vein.
And now the UAE has initiated pragmatic arrangements.
These could set the stage for a wider dialogue.
Both Iran and the GCC states would benefit from a formal commitment to an arrangement incorporating the six points listed above.
So would every outside nation that has trading and economic interests in the Gulf. This could be sanctified by a global convention.
Record shows that the alternative of exclusive security arrangements promotes armament drives, enhances insecurity and aggravates regional tensions.
It unavoidably opens the door for Great Power interference.
Ties with India and impact on its strategic interests
Locating the Persian Gulf littoral with reference to India is an exercise in geography and history.
The distance from Mumbai to Basra is 1,526 nautical miles and Bander Abbas and Dubai are in a radius of 1,000 nautical miles.
The bilateral relationship, economic and political, with the GCC has blossomed in recent years.
The governments are India-friendly and Indian-friendly and appreciate the benefits of a wide-ranging relationship.
This is well reflected in the bilateral trade of around $121 billion and remittances of $49 billion from a workforce of over nine million.
GCC suppliers account for around 34% of our crude imports and national oil companies in Saudi Arabia and Abu Dhabi are partners in a $44 billion investment in the giant Ratnagiri oil refinery.
In addition, Saudi Aramco is reported to take a 20% stake in Reliance oil-to-chemicals business.
The current adverse impact of the pandemic on our economic relations with the GCC countries has now become a matter of concern.
India’s relationship with Iran
The relationship with Iran, the complex at all times and more so recently on account of overt American pressure, has economic potential and geopolitical relevance on account of its actual or alleged role in Pakistan and Afghanistan.
Iran also neighbours Turkey and some countries of Central Asia, the Caucasus and the Caspian Sea region.
Its size, politico-technological potential and economic resources, cannot be wished away, regionally and globally, but can be harnessed for wider good.
Consider the question “Stability and security of the Persian Gulf region has wider consequences for Indians strategic concerns. Comment.”
Conclusion
Indian interests would be best served if this stability is ensured through cooperative security since the alternative — of competitive security options — cannot ensure durable peace.
From UPSC perspective, the following things are important :
Prelims level: PM-KISAN
Mains level: Paper 3- Agri-marketing reforms
agriculture plays an important role in decreasing rural poverty in developing countries. Improved irrigation methods, seeds, and fertilizers have led to increased agricultural production in rural areas. The ECA is an act which was established to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or black-marketing would affect the normal life of the people. The ECA was enacted in 1955. This includes foodstuff, drugs, fuel (petroleum products) etc
From UPSC perspective, the following things are important :
Prelims level: BPTA 1993
Mains level: Paper 2- India-China relations
India-China border issue and the latest standoff in Ladakh has forced India to consider the lasting solution to the problem. This article explains China’s anti-India strategy. And options available with India in the face of aggression are also considered.
LAC: the reason for frequent face-offs
The debate has persisted whether it was China’s National Highway 219 cutting across Aksai Chin or Nehru’s “forward policy” which constituted the actual reason for the Sino-Indian border-conflict of 1962.
After declaring a unilateral ceasefire on November 20, troops of the Peoples Liberation Army (PLA) withdrew 20 kms behind what China described as the “line of actual control” (LAC).
The LAC generally conformed to the British-negotiated McMahon Line.
In the west, the Chinese stuck to their 1959 claim-line in Ladakh, retaining physical control of the 14,700 sq km Aksai Chin.
The 1962 ceasefire line became the de facto Sino-Indian border.
But in a bizarre reality, both sides visualised their own version of the LAC, but neither marked it on the ground; nor were maps exchanged.
This has inevitably led to frequent face-offs.
So, what were the steps taken the resolve the border issue after 1962?
Post-conflict, it is customary for belligerents to undertake early negotiations, in order to establish stable peace and eliminate the casus belli.
Strangely, in the Sino-Indian context, it took 25 years and a serious military confrontation in 1987 to trigger a dialogue.
The dialogue led the two countries to sign the first-ever Sino-Indian Border Peace and Tranquility Agreement (BPTA) in 1993.
Indian diplomats claim that this has helped maintain “mutual and equal security”, while the bilateral relationship has progressed in other spheres.
And yet, the failure to negotiate a boundary settlement after 22 meetings of special representatives of the two countries cannot be seen as anything but a failure of statesmanship and diplomacy.
Now, let’s analyse China’s anti-India strategy and how LAC and Pakistan problem fits into it
China’s post-civil war leadership had conceived an early vision of the country’s future.
Ambitious and realist in scope, this strategy visualised China attaining, in the fullness of time, great-power status and acquiring a nuclear-arsenal.
Since the vision saw no room for an Asian rival, neutralising India became a priority.
It was for this specific purpose, that Pakistan was enlisted in 1963 as a partner.
In China’s anti-India strategy, Pakistan has played an invaluable role by sustaining a “hot” border and holding out the threat of a two-front war.
In China’s grand-strategy, an undefined LAC has become a vital instrumentality to embarrass and keep India off-balance through periodic transgressions.
These pre-meditated “land-grabs”, blunt messages of intimidation and dominance, also constitute a political “pressure-point” for New Delhi.
Possibility of escalation into shooting war
While Indian troops have, so far, shown courage and restraint in these ridiculous brawls with the PLA.
But there is no guarantee that in a future melee, a punch on the nose will not invite a bullet in response.
In such circumstances, rapid escalation into a “shooting-war” cannot be ruled out.
Thereafter, should either side face a major military set-back, resort to nuclear “first-use” would pose a serious temptation.
What are the options available with India?
For reasons of national security as well as self-respect, India cannot continue to remain in a “reactive mode” to Chinese provocations and it is time to respond in kind.
Since India’s choices vis-à-vis China are circumscribed by the asymmetry in comprehensive national power, resort must be sought in realpolitik.
According to theorist Kenneth Waltz, just as nature abhors a vacuum, international politics abhors an imbalance of power, and when faced with hegemonic threats, states must seek security in one of three options: 1) Increase their own strength, 2) ally with others to restore power-balance, 3) as a last resort, jump on the hegemon’s bandwagon.
India’s decision-makers can start by posing this question to the military: “For how long do you have the wherewithal to sustain a combat against two adversaries simultaneously?” Depending on the response, they can consider the following 2 options.
1. Alliance with the USA
Nehru, when faced with an aggressive China in 1962, asked support from the USA.
Indira Gandhi in the run-up to the 1971 war with Pakistan asked support from the USSR.
Both had no qualms of jettisoning the shibboleth of “non-alignment” and seeking support from the USA and USSR respectively.
Today, India has greater freedom of action and many options to restore the balance of power vis-à-vis China.
Xi Jinping has opened multiple fronts — apart from the COVID-19 controversy — across the South China Sea, South East Asia, Hong Kong,Taiwan and South Asia.
Donald Trump is burning his bridges with China.
In the world of realpolitik, self-interest trumps all and India must find friends where it can.
Given China’s vulnerabilities in the Indian Ocean and the real possibility of America losing its strategic foothold in Diego Garcia, India has a great deal to offer as a friend, partner or even an ally; with or without the Quad.
2. Accommodation with China
If ideological or other reasons preclude the building of a power-balancing alliance, coming to an honourable accommodation with China remains a pragmatic option.
Zhou Enlai’s proposal of 1960 — repeated by Deng Xiaoping in 1982 — is worth re-examining in the harsh light of reality.
The price of finding a modus vivendi [an arrangement or agreement allowing conflicting parties to coexist peacefully]for the Sino-Indian border dispute may be worth paying if it neutralises two adversaries at one stroke and buys lasting peace.
Consider the question “In the harsh light of reality and faced with aggression from its neighbour, India has to ally with other powers to restore the balance of power. Examine.”
Conclusion
Neither option will be easy to “sell”. However, India cannot afford to continue with the current situation for long and must choose one of the options to end the to find the solution.
