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Type: op-ed snap

  • Electoral Reforms In India

    The Election Commission of India cannot be a super government

    op-ed snap | Polity | Mains Paper 2: Representation Of People’s Act

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Article 324

    Mains level: Paper 2- Need for clarity on the powers of ECI

    The article highlights the issue of lack of clarity on the extent of the power of the Election Commission of India.

    Where ECI derives its power from

    • Supreme Court held in Mohinder Singh Gill vs Chief Election Commissioner that Article 324 contains plenary powers to ensure free and fair elections.
    • These plenary powers are vested in the ECI which can take all necessary steps to achieve this constitutional object.
    • Thus, the model code of conduct has been issued in exercise of its powers under Article 324.
    • Besides the code, the ECI issues from time to time directions, instructions and clarifications on a host of issues which crop up in the course of an election.

    The model code of conduct

    • The model code of conduct issued by the ECI is a set of guidelines meant for political parties, candidates and governments to adhere to during an election.
    • This code is based on consensus among political parties.
    • The model code is observed by all stakeholders for fear of action by the ECI.
    • However, there exists a considerable amount of confusion about the extent and nature of the powers which are available to the ECI in enforcing the code as well as its other decisions in relation to an election.

    Issues with model code of conduct

    1) Issue of enforceability

    • As the code of conduct is framed on the basis of a consensus among political parties, it has not been given any legal backing.
    • A committee of Parliament recommended that the code should be made a part of the Representation of the People Act 1951.
    • However, the ECI did not agree to it on the ground that once it becomes a part of the law, all matters connected with the enforcement of the code will be taken to court, which would delay elections.
    • But then the question about the enforceability of the code remains unresolved.
    • Paragraph 16A of the Election Symbols (Reservation and Allotment) Order, 1968 says that the commission may suspend or withdraw recognition of a recognised political party if it refuses to observe the model code of conduct.
    • But it is doubtful whether this provision is legally sustainable.
    • When the code is legally not enforceable, how can the ECI resort to a punitive action such as withdrawal of recognition?

    2) Transfer of officials

    • Observers of ECI report to it about the conduct of certain officials of the States where elections are to be held.
    • Transfer of an official is within the exclusive jurisdiction of the government.
    • It is actually not clear whether the ECI can transfer a State government official in exercise of the general powers under Article 324 or under the model code.
    • Transfer of an official is within the exclusive jurisdiction of the government.
    • It is actually not clear whether the ECI can transfer a State government official in exercise of the general powers under Article 324 or under the model code.
    • Further, to assume that a police officer or a civil servant will be able to swing the election in favour of the ruling party is extremely unrealistic and naive.

    3) ECI’s intervention in administrative decisions

    • According to the model code, Ministers cannot announce any financial grants in any form, make any promise of construction of roads, provision of drinking water facilities, etc or make any ad hoc appointments in the government. departments or public undertakings.
    • These are the core guidelines relating to the government.
    • But in reality, no government is allowed by the ECI to take any action, administrative or otherwise, if the ECI believes that such actions or decisions will affect free and fair elections.
    • A recent decision of the ECI to stop the Government of Kerala from continuing to supply kits containing rice, pulses, cooking oil, etc is a case in point.
    • The Supreme Court had in S. Subramaniam Balaji vs Govt. of T. Nadu & Ors (2013) held that the distribution of colour TVs, computers, cycles, goats, cows, etc, done or promised by the government is in the nature of welfare measures and is in accordance with the directive principles of state policy, and therefore it is permissible during an election.
    • So, how can the distribution of essential food articles which are used to stave off starvation be electoral malpractice?

    Consider the question “The model code of conduct issued by the Election Commission of India is in the forms of guidelines and lacks legal backing. In light of this, examine the issues that arise due to the lack of legal backing.”

    Conclusion

    There is no doubt that the ECI, through the conduct of free and fair elections in an extremely complex country, has restored the purity of the legislative bodies. However, no constitutional body is vested with unguided and absolute powers.

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  • Vaccine diplomacy that needs specific clarifications

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: GAVI

    Mains level: Paper 2- Issues with vaccine diplomacy

    Amid the second wave of covid pandemic, India’s decision to supply vaccine to foreign countries has been questioned from various quarters. The article deals with this issue.

    Issue of vaccine supply to foreign countries

    • While responding to a question  Minister of State in the Ministry of External Affairs noted that India was sending these vaccines abroad in the form of grant, commercial sales of manufacturers GAVI’s COVAX facility.
    • The supply to GAVI’s COVAX facility is an obligation since India is a member of this multilateral body and also a recipient of vaccines from this body.
    • By doing this, India wishes to signal that it is a responsible global power which does not self-obsessively think of itself alone.
    • This desire to be a good global citizen can be traced to the Objective Resolution moved by Jawaharlal Nehru in the Constituent Assembly on December 13, 1946.
    • The premise of the ideal ‘Vasudhaiva Kutumbakam’ is no different to that of the Objective Resolution.

    Factors to consider

    • The government made estimates of the vaccines that could be sent abroad on the interplay of three factors: domestic production, the demands of the national vaccine programme and requests for vaccines manufactured in India.
    • What is not known is how these factors were collectively addressed in the decision-making process.
    • It is also argued that it was obligatory to send vaccines contracted under GAVI’s COVAX facility.
    • However, sovereign states can always invoke supreme national interest to over-ride obligations.
    • Certainly, the vaccines sent as grants were voluntary and the commercial contracts of the company concerned could always be disregarded under existing laws.

    Conclusion

    The government needs to convince Indians that the vaccine exports have not been made at the cost of their health.

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  • The roots of a decentred international order

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Multipolar global

    With the declining American supremacy in the global order, the world is set for new global order led by the developing countries. The article deals with this rise of alternate global order.

    Factors that explains decentred and pluralistic global order

    • The international order is under threat of the rising economic power of the BRICS nations, with China dominating in its economic and military capacity.
    • It is apparent that the future of global politics requires a significant agenda in the hands of the rising powers that are aggressively building a parallel economic order envisaging new centres of hegemonic power.
    •  It forebodes the final decline of American ascendancy.
    • It was the Bandung Conference of 1955, a meeting of Asian and African states, most of which were newly independent, that set the schema for the rise of Asia, politically and economically.
    • The confrontational stance was therefore the expected corollary in third world struggles to create a parallel order.
    •  America will continue to play a prime role in international affairs though its image representing universal brotherhood has sharply declined under the Trump regime.
    • The rising tide of far-right ultra-nationalism and ethnic purity experienced in the Brexit phenomena, in Trumpism and in the promotion of the right-wing agenda in India, has set in motion the wearing down of liberal democracy.
    • Other threats such as terrorism, ethnic conflicts and the warning of annihilation owing to climate change necessarily demand joint international action where American “exceptionalism” becomes an incongruity and an aberration.
    • This indeed has chipped away at the American global supremacy.
    • The world is, as a result, witness to a more decentred and pluralistic global order.

    New world order led by developing countries

    • Though pandemic has ravaged economies such as Brazil, India, Turkey and South Africa into a downward spiral, in the post-pandemic period, these economies would rise to meet the American-led liberal hegemonic world order.
    •  With China spearheading Asian regionalism, a serious challenge is possible.
    • China must strengthen the opposition to the West through the promotion of regional multilateral institutions.
    •  More than having individual partners or allies, China must embrace and give a push to multilateral affiliations in order to not further exacerbate regional tensions.
    • Power rivalry in a multipolar world would remain a possibility with military conflict not ruled out.
    • However, the capabilities of the rising economies cannot be underestimated.
    • China and India clearly have the age-old potential to lead as, historically, they have been pioneers of some of the oldest civilisations in the world.
    • China is indisputably a serious rival to the U.S. in the South China Sea, a world leader in renewable energy, and a formidable actor on the global stage of investment and trade, penetrating India, Israel, Ethiopia and Latin America.
    • Thus, a kind of dualism persists in the world order with no clear hegemony that can be bestowed on one single nation.

    Conclusion

    It is feared that there could be a possibility of a multipolar world turning disordered and unstable, but it is up to the rising nations to attempt to overcome territorial aspirations and strike a forceful note of faith on cultural mediation, worldwide legitimacy, and the appeal of each society in terms of its democratic values.

     

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  • Cyber Security – CERTs, Policy, etc

    The march towards an equitable data economy

    op-ed snap | Science Tech | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: GDPR

    Mains level: Paper 3- Data governance

    The article explains the data governance norms we need to adopt to secure better societal outcomes.

    Whatsapp privacy issue

    • New terms of service circulated by WhatsApp, caused a stir among the user.
    • It informed users that data about chats with business accounts would be shared with Facebook.
    • These policies seemed unfair to India as they were not applicable to the European Union (EU), given their strong data protection policies.

    Acceptable levels of data exchange

    • Default norms provide power to the tech platforms to collect, analyse and monetize data with complete control.
    • This undergirds business models that seem undesirable for society—with harms to privacy and free speech.
    • Global discussions about alternatives to the “exchange of data for free services” are becoming nuanced.

    3 Norms in the data governance

    1) Recognition of individual and collective rights related to data

    • It was generally accepted that extraction of data to access free services was a fair exchange with individuals.
    • Emergence of existential threats related to privacy and democracy have highlighted the role of guaranteeing human and civil rights.
    • There has been significant global progress through regulations on individual data rights.
    • A United Nations Conference on Trade and Development (UNCTAD) report claims that 128 of 194 countries have put in place legislations for data protection and privacy.
    • However, this protection is insufficient as it is centered on individuals and does not account for safety of groups.
    • The next wave of data governance ideas will seek to protect collective harms and build on the foundation of individual agency and control.

    2) Data sovereignty

    • One-size-fits all global norms of data governance are changing and being replaced by region-specific ideas.
    • Greater acceptance for “data sovereignty” assertions across India and Europe is a welcome shift towards crafting governance that is respectful of local nuances and inclusive of civic participation.
    • The EU general data protection regulation (GDPR) had created an early lighthouse example.
    • On the other hand, the US has adopted a light regulation approach—there is no comprehensive country-wide data protection law.
    • Closer home, India is finalizing the contours of a country-wide and cross-sector personal data protection bill, which reflects local norms.

    3) Value creation for all stakeholders

    • So far, data economy has operated in a completely unregulated space, creating a “winner takes all” market, with concentrated profits and little contribution to local taxes.
    • A healthy economy requires value creation for all stakeholders.
    • As tech platforms take up the profitable role of acting as the gateway to all information and social connections, they have a greater accountability and responsibility to contribute to the economy.
    • India’s digital tax through the 2% “equalization levy” is an attempt to make the tech giants pay for revenues earned in India.

    Consider the question “What should be norms of data governance we must adopt for achieving better societal outcomes?”

    Conclusion

    Formal adoption of regulations and setting up of enforcement institutions will lead to meaningful progress in the right direction.

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  • A multipolarity, scripted by the middle powers

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Eurasian Economic Union

    Mains level: Paper 2- Multipolar world

    Four middle powers: India, Japan, China and Turkey anchor the world to multipolarity. The article deals with this issue.

    New cold war

    • In respect of three crucial relationships, namely China, Russia and Iran, Mr. Biden is following in the footsteps of his predecessor.
    • Mr. Biden has also extended his firm backing for the “Indo-Pacific” and the associated alignment — the Quadrilateral Security Dialogue, or Quad for short.
    • The U.S. continues to view China as its principal adversary on the world stage and that it will use the Quad to challenge China in the Indo-Pacific.
    • The U.S.’s hostility for Russia goes back to the latter’s war with Ukraine and the occupation of Crimea in 2014, followed by allegations of Russian cyber-interference in the U.S. presidential elections of 2016.
    • U.S. animosity has encouraged China and Russia to solidify their relations.
    • The two countries have agreed to harmonise their visions under the Eurasian Economic Union sponsored by Russia and China’s Belt and Road Initiative (BRI).
    • This idea has now been subsumed under the ‘Greater Eurasian Partnership’ to which both are committed.
    • Thus, the new Cold War is now being reflected in a new geopolitical binary — the Indo-Pacific versus Eurasia.

    How middle powers can play an important role

    • Four nations, Japan, Iran, Turkey and India, which, as “middle powers”, have the capacity to project power regionally, build alliances, and support (or disrupt) the strategies
    • But all four seems to be already aligned.
    • Japan and India are part of the Quad and have substantial security ties with the U.S.
    • Iran has found strategic comfort with the Sino-Russian alliance.
    • Turkey, a NATO member, has found its interests better-served by Russia and China rather than the U.S. and its European allies.
    • So, why the uncertainty? The main reason is that, despite the allure, the four nations are not yet prepared to join immutable alliances.

    Why the middle powers are reluctant to join alliances

    1) India’s China concerns

    • India has been expanding defence ties with the U.S. since 2016, by massive defence purchases and agreements on inter-operability and intelligence-sharing and frequent military exercises, as also the elevation of the Quad to ministerial level.
    • This might have signalled to China that India was now irreversibly in the U.S. camp.
    • But China has a point: while the Quad has made India a valuable partner for the U.S. in the west Pacific, neither the U.S. nor the Quad can address the challenges it faces at its 3,500-kilometre land border with China. 
    • Moreover, the U.S.’s intrusive approach on human rights issues ensures that India will need to manage its ties with China largely through its own efforts while retaining Russia as its defence partner.

    2) Sino-Japan relations

    • Japan has an ongoing territorial dispute with China relating to the Senkaku Islands in the East China Sea.
    • But there is more to Sino-Japanese relations: in 2019, 24% of Japanese imports came from China, while 19% of its exports went to China, affirming the adage.

    3) Why Iran is reluctant

    • The crippling sanctions on Iran and the frequent threats of regime change make it a natural ally of the Sino-Russian axis.
    • However, its strategic culture eschews long-term security alignments.

    4) Why Turkey is reluctant to join

    • Turkey is steady distancing from its western partners and increasing geopolitical, military and economic alignment with Russia and China.
    • But Turkey still wishes to keep its ties with the U.S. intact and retain the freedom to make choices.
    • Its “New Asia” initiative involves the strengthening of east-west logistical and economic connectivity backed by western powers and China.

    Consider the question “What are the factors India need to consider as it deepens its involvement in the Quad?” 

    Conclusion

    As the clouds of the new Cold War gathers over the world, these four nations could find salvation in “strategic autonomy” — defined by flexible partnerships, with freedom to shape alliances to suit specific interests at different times.

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  • Insolvency and Bankruptcy Code

    How IBC is moving away from promotor averse approach

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Pre-pack in IBC

    Mains level: Paper 3- Pre-packs for MSME in IBC

    The Insolvency and Bankruptcy Code was amended recently taking into account its creditor centric approach.

    Introducing pre-packs for MSMEs

    • IBC was amended last week, through an ordinance.
    • The amendment sought to address a structural weakness in India’s resolution architecture by introducing the concept of pre-packs for micro, small and medium enterprises (MSMEs).
    • The pre-packaged framework involves a privately negotiated contract between the promoters of a financially distressed firm and its financial creditors to restructure the company’s obligations.
    •  This contract is negotiated within the IBC architecture but before the commencement of insolvency proceedings.
    • Once accepted by creditors, the plan must be presented to the National Company Law Tribunal (NCLT) for approval.

    How this framework is different from the existing framework

    • A firm’s promoters could have submitted a resolution plan even after it enters the insolvency proceedings, subject to restrictions imposed under Section 29A which clarifies all those who are ineligible for submitting the resolution plan.
    • So, the difference in the new framework essentially boils down to the following.

    1) Control of the firm

    • Under the IBC, upon the initiation of insolvency proceedings, control of a firm is taken away from promoters, and a resolution professional is appointed.
    • Now, during the restructuring, the promoter, through the pre-pack, retains control over the firm.
    • So effectively, we have transitioned from a “creditor-in-control” model of resolution to a “debtor-in-control” model of restructuring.
    • This amendment, which creates a framework for restructuring, without the promoter losing control over the firm, addresses a lacuna in the IBC.

    2) Issue of price discovery

    • In this arrangement, the is an absence of an open bidding process, such as during the resolution phase.
    • This might raise questions over price discovery, especially if value maximisation for creditors is the yardstick to measure the efficacy of IBC.
    • This marks a fundamental change in the IBC framework.

    Why the changes were needed

    • The IBC, while it has strengthened the position of the creditors, had swung to an extreme.
    • The resolution architecture as it stood prior to this amendment was perceived as being too creditor-centric.
    • Wresting control from the “errant” promoter, comes with its own set of consequences.
    • The notion that all business failure is due to the connivance of promoters needs to be reconsidered.
    • Firms may be unable to pay their obligations simply because the economic cycle has turned.
    • Or projects have not materialised as expected.
    • Of the 2,422 cases closed since IBC came into being, 46.5 per cent of the firms have gone into liquidation, while a resolution plan has been accepted in only 13.1 per cent of the cases.
    • This indicates liquidation bias.
    • At a time when there aren’t enough buyers in the economy, the IBC process would lead to significant value destruction.

    How it will benefit both creditor and promotors

    • Promoters get to hold on to their firms, and exit the process with more manageable obligations, making this an attractive proposition.
    • For creditors, considering the liquidation bias in IBC, as long as the value of the restructured obligation is greater than the liquidation value it makes sense to choose this option.
    • Moreover, this entire process remains outside the restructuring framework of the central bank.
    • And, considering that the pre-packs encompass all financial creditors, as opposed to RBI’s restructuring schemes which deal only with banks.
    • This takes into account the concerns of other financial creditors as well.

    Consider the question “How far IBC has succeeded in improving the insolvency regime in India? How the concepts of pre-packs is different from the previous system?

    Conclusion

    This approach will help clarify issues, bring about greater certainty to the process. And, once the creases are ironed out, it will create a permanent mechanism for restructuring debts.

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  • Foreign Policy Watch: India-United States

    Navigation with permission

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: UNCLOS

    Mains level: Paper 2- Understanding the rights of the coastal state under UNCLOS

    The explains the issues involved in the recent incident in which US position on freedom of navigation under UNCLOS differed from India’s.

    Different positions

    • On April 7, the U.S.’s 7th Fleet Destroyer conducted a ‘Freedom of Navigation Operation’ inside India’s Exclusive Economic Zone (EEZ).
    • This exercise was conducted without requesting India’s consent.
    • Moreover, the U.S. 7th Fleet noted in its press release that India’s requirement of prior consent is “inconsistent with international law”.
    • However, India asserted that the UN Convention on the Law of the Sea (UNCLOS) “does not authorize other States to carry out in the Exclusive Economic Zone and on the continental shelf, military exercises or manoeuvres, in particular those involving the use of weapons or explosives, without the consent of the coastal state”. 
    • The question is, can countries carry out military exercises in another country’s EEZ and if yes, subject to what conditions?

    UNCLOS Provisions for EEZ

    • UN Convention on the Law of the Sea (UNCLOS) binds all its signatories and customary international law binds all states, subject to exceptions like the doctrine of persistent objector.
    • As per the UNCLOS, EEZ is an area adjacent to the territorial waters of a coastal state.
    • Under UNCLOS, a sovereign coastal state has rights and duties relating to management of natural resources; establishment and use of artificial islands, installations and structures; marine scientific research; and protection of the marine environment.
    • India is a party to the UNCLOS while the U.S. is not.
    • Article 87 provides for freedom of the high seas under which all states have the freedom of navigation. 
    • Apart from that, states enjoy the freedom of overflight and of the laying of submarine cables and pipelines as well as other internationally lawful uses of the sea.
    •  However, the freedom of navigation is subject to the conditions laid down under the UNCLOS and other rules of international law.
    • In addition to it, Article 58 (3) stipulates another qualification: “In exercising their rights and performing their duties under this Convention in the exclusive economic zone, States shall have due regard to the rights and duties of the coastal State and shall comply with the laws and regulations adopted by the coastal State…”.

    So, what laws and regulation are adopted by India under Article 58 (3) of UNCLOS

    • The relevant Indian law in this regard is the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones of India Act, 1976.
    • Section 7 sub-section 9 of this Act recognises the freedom of navigation of the ships of all States but makes them subject to the exercise of rights by India within the zone.
    • Article 310 of the UNCLOS does permit states to make declarations in order to explain the relationship between the Convention and their own laws.
    • The declaration by India in 1995 also states that India “understands that the provisions of the Convention do not authorize other States to carry out in the exclusive economic zone and on the continental shelf military exercises or manoeuvres.

    Way forward

    • Non-consensual military activities that hinder the lawful enjoyment of rights of coastal states need not be permissible.
    • Also, a coastal state is naturally concerned about military exercises and manoeuvres posing a risk to its coastal communities, its installations or artificial islands, as well as the marine environment.
    • Thus, any state which wishes to conduct such exercises must do so only in consultation with the coastal state since the coastal state is the best judge of its EEZ.
    • Both India and the U.S. should negotiate such concerns for the maintenance of international peace and security.

    Consider the question “What are the rights of coastal state on its Exclusive Economic Zone under UNCLOS? “

    Conclusion

    On a conjoint reading of Articles 58, 87 and 310, it can be argued that freedom of navigation cannot be read in an absolute and isolated manner.

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  • Coronavirus – Health and Governance Issues

    Tackling second Covid wave

    op-ed snap | Governance | Mains Paper 2: Health & Education

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Second wave of covid

    The article suggests ways to deal with the second wave of Covid in India.

    What explains the bigger second wave

    • The size of any epidemic is a function of three things:
    • 1) The size of the pool of the susceptible population.
    • 2) The pattern of contact between the members of the population (frequency, mix, closeness and duration).
    • 3) Probability of spread during that contact (infectiousness of the agent).

    Let us have a look at these 3 factors in the current context

    • As many people have already been infected in the first wave, the pool of susceptibles should be smaller.
    • Serosurveys also support this as they found that about 25 per cent of people had already been infected nationally.
    • However, this is an average and hides significant variations by state, age and place of residence.
    • Populations with lower seroprevalence become the potential pool for the second wave.
    • Given India’s large population base, the actual number of people are sufficiently large to enable multiple waves till we achieve a more even spread of protected people.
    • The persistence of protectiveness of antibodies of those already infected and their cross-protectiveness to newer strains is not well established.
    • Vaccination would reduce the pool of susceptibles.
    • However, the current level of vaccination coverage is not sufficient to make a significant difference to this wave, given the fact that we are already riding it.
    • It is a good strategy to prevent the next wave, if we can achieve substantial coverage with it.
    • Vaccination also prevents severe disease, and hence reduces the death toll.
    • With the removal of most restrictions, the probability of contact between individuals has risen sharply.

    Way forward

    • What can and should be avoided are super-spreader events like a crowded park, the Kumbh mela, election rallies, etc.
    • A much stronger community engagement with a robust communication strategy and lesser emphasis on “criminalising” inappropriate behaviour is required.
    • A nuanced communication campaign is the need of the hour and is conspicuous by its complete absence.
    • What is urgently needed is a robust evidence-based communication campaign.
    • Such a campaign would involve proactive serial assessment of the community perceptions and concerns, testing and refining messages through an evolving campaign.
    •  A district-specific strategy of “test, trace, treat” along with containment measures (isolation and quarantine) is still the best way to deal with the situation.
    • We also need to put a stop to political bickering; it erodes public trust and confidence.

    Conclusion

    Dealing with the second wave should be based on the experience drawn from dealing with the first wave and complemented by a better communication strategy.

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  • Foreign Policy Watch: India-SAARC Nations

    BIMSTEC

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Reviving BIMSTEC

    More than two decades after its formation, BIMSTEC still remains a work in progress. And it has many obstacles to overcome. The article highlights challenges and progress made so far.

    Background of BIMSTEC

    • The foreign ministers of BIMSTEC (the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) met virtually on April 1.
    • It was established as a grouping of four nations — India, Thailand, Bangladesh and Sri Lanka — through the Bangkok Declaration of 1997 to promote rapid economic development.
    • BIMSTEC was expanded later to include three more countries — Myanmar, Nepal and Bhutan.
    • It moved at a leisurely pace during its first 20 years with only three summits held and a record of modest achievements.

    Growing significance

    • BIMSTEC suddenly received special attention when India chose to treat it as a more practical instrument for regional cooperation over a faltering SAARC.
    • The BIMSTEC Leaders’ Retreat, followed by their Outreach Summit with the BRICS leaders in Goa in October 2016, drew considerable international limelight to the low-profile regional grouping.
    • At the fourth leaders’ summit in Kathmandu in 2018, a plan for institutional reform and renewal that would encompass economic and security cooperation was devised.
    • It took the important decision to craft a charter to provide BIMSTEC with a more formal and stronger foundation.
    • The shared goal now is to head towards “a Peaceful, Prosperous and Sustainable Bay of Bengal Region”.

    Why the recent summit is important

    • In the recent virtual summit, the foreign ministers cleared the draft for the BIMSTEC charter.
    • They endorsed the rationalisation of sectors and sub-sectors of activity, with each member-state serving as a lead for the assigned areas of special interest.
    • The ministers also conveyed their support for the Master Plan for Transport Connectivity.
    • Preparations have been completed for the signing of three agreements:
    • 1) Mutual legal assistance in criminal matters.
    • 2) Cooperation between diplomatic academies.
    • 3) The establishment of a technology transfer facility in Colombo.

    Lack of progress on trade

    • In the recent deliberation, there was no reference to the lack of progress on the trade and economic dossier.
    • A January 2018 study by the Federation of Indian Chambers of Commerce and Industry had suggested that BIMSTEC urgently needed a comprehensive Free Trade Agreement to be a real game-changer.
    • Ideally, it should cover trade in goods, services and investment; promote regulatory harmonisation; adopt policies that develop regional value chains, and eliminate non-tariff barriers.
    • Also lacking was an effort to enthuse and engage the vibrant business communities of these seven countries.
    • Over 20 rounds of negotiations to operationalise the BIMSTEC Free Trade Area Framework Agreement, signed in 2004, are yet to bear fruit.

    Achievements

    • Much has been achieved in Humanitarian Assistance and Disaster Relief and security, including counterterrorism, cybersecurity, and coastal security cooperation.
    • India has led through constant focus and follow-up.
    • While national business chambers are yet to be optimally engaged with the BIMSTEC project, the academic and strategic community has shown ample enthusiasm through the BIMSTEC Network of Policy Think Tanks and other fora.

    Challenges

    • A strong BIMSTEC presupposes cordial and tension-free bilateral relations among all its member-states.
    • However, there has been tensions in India-Nepal, India-Sri Lanka, and Bangladesh-Myanmar ties in recent years.
    • Second, uncertainties over SAARC hovers, complicating matters. Both Kathmandu and Colombo want the SAARC summit revived, even as they cooperate within BIMSTEC, with diluted zeal.
    • Third, China’s decisive intrusion in the South-Southeast Asian space has cast dark shadows.
    • Finally, the military coup in Myanmar and the continuation of popular resistance resulting in a protracted impasse have produced a new set of challenges.

    Consider the question “What are the challenges BIMSTEC faces in emerging as an alternative to the SAARC? What are its achievements?”

    Conclusion

    The grouping needs to reinvent itself, possibly even rename itself as ‘The Bay of Bengal Community’. It should consider holding regular annual summits. Only then will its leaders convince the region about their strong commitment to the new vision they have for this unique platform linking South Asia and Southeast Asia.

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  • Coronavirus – Economic Issues

    An aggressive vaccination drive holds the key to economic revival

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Economic recovery and challenges posed by second covid wave

    The article highlights the challenges posed by the second wave of covid and how aggressive vaccination could help dealing with the issue.

    Severe second covid wave in India

    • India’s daily new cases have surged past 1,50,000, much above the first peak.
    • In India’s first wave, the increase from 50,000 to about 1,00,000 cases took about 50 days; in the second wave, it’s taken just 13.
    • To start with, the second wave was more concentrated, with Maharashtra accounting for 60 per cent of cases.
    • While the top five states still account for about 65 per cent of cases, the reproduction (R) factor in almost 10 states is estimated to be two or higher, creating risks for a wider and more rapid spread, if unaddressed.

    Lessons from the first wave

    • Policymakers, businesses and households have all learnt from the first wave and with the private sector better adapted to “live with the virus”.
    • Therefore, the economic costs should hopefully not be comparable to the first wave. Yet, they may not be trivial either.
    • The five states that account for 65 per cent of new cases also account for almost 36 per cent of GDP.
    • As virus cases have grown and restrictions have been imposed, retail and recreational mobility across these five states, is down 10 per cent since mid-March.
    • Labour market surveys have also begun to show discernable impacts on both participation and unemployment rates.

    Implications of unequal recovery for developing countries

    • The IMF projects India’s FY22 growth at 12.5 per cent, this would still leave India about 8-9 per cent below the level of output that was projected pre-pandemic for the end of 2021-22.
    • The challenge for emerging markets is that, given the quantum of fiscal and monetary space expended in combating the first wave, space to respond to subsequent waves will be constrained.
    •  Owing to the fiscal support and pace of vaccinations the US will be the only large economy, apart from China, to surpass its pre-pandemic path.
    • This, resulted in increased US yields, tightened global financial conditions, induced dollar strength and triggered
    • All this makes it harder for emerging economies to respond expansively to domestic shocks.
    • In effect, the heterogeneity of the recovery across developed and emerging markets is imposing policy constraints on the latter which, ironically, will simply compound the economic divergence.

    Challenges for India

    • India’s fiscal space to respond to a second wave appears constrained due to the following two factors:
    • 1) In India’s case, consolidated public debt will approach 90 per cent of GDP.
    • 2) The consolidated public sector borrowing requirements are budgeted above 11 per cent of GDP in FY22.
    • The dependence on budgeted asset sales has only increased, both as a hedge to tax revenues that could be impacted from a second wave, and as a means of protecting expenditures.
    • It will be equally crucial to leaving enough space for higher MGNREGA demand and other safety nets on account of a second wave, even while protecting capital expenditures — which generate large multiplier effects on the economy.
    • Similarly, monetary policy is already very accommodative, and with core inflation sticky and elevated, global deflationary pressures entrenched, there are natural limits to the degree of more monetary accommodation.

    Aggressive vaccination is the key

    • Israel, the UK and the US have all demonstrated how aggressive vaccinations can bend the COVID-curve.
    • Therefore, the Indian government’s decision to approve a third vaccine and fast-track emergency approval for foreign-produced vaccines is unambiguously positive.
    • On the demand side, of an estimated 100-110 million population of seniors (60-plus) in India, only about 40 million have taken the vaccine over the last six weeks, suggesting a reluctance to get vaccinated.
    • But, in fact, it’s crucial to ensure the vulnerable — those whose probability of hospitalisation is the highest — are fully vaccinated to reduce pressure on the health infrastructure.

    Consider the question “What are the challenges posed to the developing countries by heterogeneity of recovery across the developed and developing countries?

    Conclusion

    Vaccinations should be construed as simultaneously delivering both a positive demand and supply shock (for the economy), and a negative demand shock (for health infrastructure), thereby providing the best chance to decisively break the trade-offs between lives and livelihoods that bedevilled emerging markets all of last year.

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