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  • Foreign Policy Watch: India-China

    Mounting counter challenge to China through Quad

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- India's nuanced approach to Quad

    The article discusses the outcomes of the recently concluded first Quad Summit in the context of India.

    Message to China after Quad summit

    • The first Learders’ Summit of the Quadrilateral Framework was held on March 12.
    • This Summit conveyed a three-pronged message to China:
    • 1) Under the new U.S. President, “America is back” in terms of its desire to play a leading role in other regions.
    • 2) It views China as its primary challenger for that leadership.
    • 3) The Quad partnership is ready to mount a counter-challenge, albeit in “soft-power” terms at present, in order to do so.
    • For both Japan and Australia the outcomes of the summit, both in terms of the “3C’s”working groups established on COVID-19 vaccines, Climate Change and Critical Technology and in terms of this messaging to the “4th C” (China) are very welcome.

    4 Outcomes of Quad Summit for India

    • For India the outcomes of the Quad Summit need more nuanced analysis.

    1) COVID-19 Vaccine

    • India is not only the world’s largest manufacturer of vaccines (by number of doses produced, it has already exported 58 million doses to nearly 71 countries.
    • It is also manufacturing a billion doses for South East Asia (under the Quad), over and above its current international commitments.
    • India has also planned to vaccinate 300 million people as originally planned by September.
    • All this comes down to total 1.8 billion doses which will require a major ramp up in capacity and funding, and will bear testimony to the power of Quad cooperation, if realised.
    • However, the effort could have been made much easier had India’s Quad partners also announced dropping their opposition to India’s plea at the World Trade Organization.
    • India had filed the plea along with South Africa in October 2020, seeking waiver from certain provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights for the prevention, containment and treatment of COVID-19.

    2) Climate change

    • On climate change, India has welcomed the return of the U.S. to the Paris accord.
    • Mr. Biden has promised to restart the U.S.’s funding of the global Green Climate Fund, which Mr. Trump ended.
    • India still awaits a large part of the $1.4 billion commitment by the U.S. to finance solar technology in 2016.
    • Mr. Biden might also consider joining the International Solar Alliance, which the other Quad members are a part of, but the U.S.

    3) Critical technology

    • India will welcome any assistance in reducing its dependence on Chinese telecommunication equipment and in finding new sources of rare-earth minerals.
    • India would oppose Quad partners weighing in on international rule-making on the digital economy, or data localisation.
    • Such a move had led New Delhi to walk out of the Japan-led “Osaka track declaration” at the G-20 in 2019.

    4) Dealing with China

    • On this issue, it is still unclear how India can go on the Quad’s intended outcomes.
    • While India shares the deep concerns and the tough messaging set out by the Quad on China, especially after the year-long stand-off at the Line of Actual Control (LAC) and the killings at Galwan that India has faced, it has demurred from any non-bilateral statement on it.
    • India is the only Quad member not a part of the military alliance that binds the other members.
    • India is also the only Quad country with a land boundary with China.
    • And it is the only Quad country which lives in a neighbourhood where China has made deep inroads.
    • Indian officials are still engaged in LAC disengagement talks and have a long way to go to de-escalation or status quo ante.

    3 long term impacts on strategic planning

    • The violence at the LAC has also left three long-term impacts on Indian strategic planning:
    • First, the government must now expend more resources, troops, infrastructure funds to the LAC and ensure no recurrence of the People’s Liberation Army April 2020 incursions.
    • Second, India’s most potent territorial threat will not be from either China or Pakistan, but from both i.e. “two-front situation”.
    • Third, that India’s continental threat perception will need to be prioritised against any maritime commitments the Quad may claim, especially further afield in the Pacific Ocean.

    Consider the question “The Quad’s ideology of a “diamond of democracies” can only succeed if it does not insist on exclusivity in India’s strategic calculations given that India shares a special place among the Quad members when it comes to its relationship with China. Comment”

    Conclusion

    Despite last week’s Quad Summit, India’s choices for its Quad strategy will continue to be guided as much by its location on land as it is by its close friendships with fellow democracies.

  • Monetary Policy Committee Notifications

    How did inflation targeting really impact India?

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: MPC

    Mains level: Paper 3- Analysing the performance of inflation targeting policies in India

    The article analyses the success of the inflation targeting mechanism in India and its impact on the growth of the economy.

    Background of the inflation targeting policy in India

    • It has been three decades since inflation targeting was first adopted in New Zealand and subsequently by 33 other countries.
    • India adopted it in 2016.
    • The primary goal of inflation targeting was to contain inflation at around 4 per cent, within the allowable range of 2 to 6 per cent.
    • The RBI has announced a formal review of the policy instrument now.
    • At the first meeting of the RBI Monetary Policy Committee in October 2016, it was also formally announced that the MPC considered a real repo rate of 1.25 per cent as the neutral real policy rate for the Indian economy.
    • By a neutral real policy rate, the RBI meant a policy rate consistent with growth at potential (i.e. growth at full employment).

    Has inflation targeting worked in India

    • The evaluation of IT must provide answers to the following two questions:
    • Did inflation decline post the adoption of inflation targeting and what was the role of IT in the decline in inflation?
    • Was the adoption of inflation targeting associated with the policy of the highest real repo rates in India — ever — for almost three years 2017-2019?
    • The answer is yes to the latter, but it also needs to be acknowledged that high real repo rates were the primary cause of the GDP growth decline in India from 8 per cent to 5 per cent.

    Need to take into account the global context of inflation

    • An interesting feature of the Indian defence of inflation targeting is that very few take into account the global context of inflation in which the decline in inflation has occurred in India.
    • A research paper by Balasubramanian, Bhalla, Bhasin and Loungani at ORF evaluates inflation targeting in a global context and separately for Advanced Economies (AEs) and Emerging Economies (EES).
    • Some facts from the paper are the following.
    • First, the annual median inflation in AEs has been consistently low, so low that many central banks have official campaigns to raise the inflation rate.
    • One conclusion might be that IT succeeded beyond anyone’s dreams in these economies.
    • But attributing this decline in inflation to IT would be erroneous.
    • Inflation is global and price-taking by millions of producers in the world means that no one producer or one country can influence the price of any item.
    • Oil has ceased to be a factor in global inflation, at least post the mid-1980s.
    • The lowest inflation in Indian history occurred during 1999-2005, averaged only 3.9 per cent.
    • The average median rate among EM targetters during 2000-04 was 4 per cent, and among the non-targeting countries was 3.8 per cent.

    Did fiscal deficit play role in inflation targeting

    • In 2003, India passed the FRBM act to control fiscal deficits and inflation.
    • There is precious little evidence, either domestically or internationally, about fiscal deficits affecting inflation.
    • For three consecutive years preceding the FRBM announcement, the consolidated Centre plus state deficits registered 10.9 per cent(in 2001), 10.4 and 10.9 per cent.
    • For the seven-year 1999-2005 period, consolidated fiscal deficits averaged 9.4 per cent of GDP.
    • Yet, that these years represented the golden period of Indian inflation — without FRBM and without IT.

    Cost of inflation targeting in India

    • There are also costs to inflation targeting in India.
    • It led to higher real policy rates, in the mistaken belief that high policy rates affect the price of food, oil, or anything else.
    • But high real rates affect economic growth, by affecting the cost of domestic capital in this ultra-competitive world.
    • It is very likely not a coincidence that potential GDP growth, as acknowledged by RBI, was reached just before the MPC took over decision making in September 2016. 
    •  Since then there was a steady increase in real policy rates, and a steady decline in GDP growth.

    Consider the question “How far has the inflation targeting mechanism been successful in India? Give reasons in support of your argument.” 

    Conclusion

    So, in the inflation targeting mechanism has not been successful in containing the inflation though there had a cost associated with it which we paid in the form of growth.

  • Financial Inclusion in India and Its Challenges

    Digital lending

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Digital lending and challenges

    Digital lending has been on the rise in India. However, there are several concerns about the model. The article discusses these concerns and suggests the policy approach.

    3 digital lending models

    • Presently, there are three digital-lending models, seen through the regulatory-approach lens:
    • 1) Bank/NBFC-owned digital platforms operating under the direct regulatory purview of RBI.
    • 2) Fintech companies’ proprietary digital platforms, working in partnership with banks/NBFCs.
    • Being mere intermediaries, these platforms are not required to seek any registration with RBI, and are only indirectly regulated through RBI’s outsourcing guidelines applicable to Banks/NBFCs.
    • 3) Peer-to-peer (P2P) lending platforms, which usually involve the otherwise unregulated retail lenders.
    • RBI has mandated such platforms to seek registration as NBFC-P2P; thus, they are directly regulated by RBI.

    Issues with digital lending

    • The specific issues are unauthorised lenders, exorbitant rates of interest, use of coercive repayment methods, and non-consensual collection or use of user data.
    • These issues entail serious adverse implications for borrowers and have systemic implications, hampering the rise of legitimate fintech players.

    Steps taken

    • With a view to curb such practices, RBI, in 2020, issued a notification to Banks/NBFCs mandating additional disclosures/compliances, and an advisory to borrowers warning them against such platforms.
    • Following the notification, Google removed several such loan apps from its PlayStore.
    • The Digital Lenders’ Association of India (DLAI) also issued guidelines to help borrowers identify such unscrupulous platforms.
    • In the regulatory pipeline on this front is the report of the working group on digital lending, constituted by RBI in January 2021.

    Framing effective policy solutions

    • Given the significant contribution of legitimate fintech players, it is important to ensure that any policy solutions to address such issues do not impede the growth of such players.
    • The key to this lies in adoption of light-touch regulation, along with the effective implementation of the already proposed regulatory initiatives.
    • For instance, the primary cause of the rising supply of unauthorised lending platforms is the existing credit information asymmetry that genuine lenders face in respect of small borrowers.
    • Here, operationalising and on-scale implementation of RBI’s proposed ‘Public Credit Registry’ and the ‘Open Credit Enablement Network’ (an infrastructure protocol enabling digital low cost lending to small borrowers through access of consented data) would lead to increased participation of legitimate players and curb proliferation of unauthorised lenders.
    • Another foundation for framing effective policy solutions lies in leveraging the interdependence and impact of each individual constituent of the digital lending ecosystem, on other constituents.
    • Apart from lenders/platforms/borrowers, these constituents also include the digital lending industry associations, consent managers and technology developers.
    • Regulators and industry associations working together can provide the necessary foundations for addressing these issues.
    • Other solutions spear-headed by industry associations could be to establish ‘certification system’ based maintenance of a repository of lending platforms for easy identification of genuine players.
    • Similarly, on the data protection aspect, a structural solution through coordinated efforts of various digital lending constituents is required.

    Consider the question “Examine the factors aiding the growth of digital lending in India. What are the challenges the sector face? Suggest the measures to deal with these challenges.”

    Conclusion

    For the continued development of the Indian digital lending economy, it is important to implement policy solutions that adequately protect the borrowers from malpractices, while, at the same time, do not dampen innovation in this fast-evolving sector.


    Source:-

    https://www.financialexpress.com/opinion/soft-touch-regulation-for-digital-lending/2215702/

  • Civil Services Reforms

    Changes needed in lateral entry requirements

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Making lateral entry a success

    It has been a while since the government introduced the provision of lateral entry into civil services. This article suggests the changes that need to be made in the system to attract the best talent and facilitating their success.

    Administrative reforms in India

    • The lack of administrative reform in India has frustrated many stakeholders for a long time.
    • One of the key focus areas of such reform is enabling lateral entry into an otherwise permanent system of administrators.
    • Eight professionals were recruited for joint secretary-level positions in various ministries.
    • Some other positions at the joint secretary and director-level have been advertised.

    Changes needed

    1) Entry requirements need to be relaxed

    • In the permanent system, IAS officers get promoted to joint secretary level after 17 years of service and remain at that level for ten years.
    • If similar experience requirements are used for lateral entry, it is unlikely that the best will join because in the private sector they rise to the top of their profession at that age.
    •  To attract the best talent from outside at the joint secretary level, entry requirements need to be relaxed so that persons of 35 years of age are eligible.

    2) Facilitating lateral entrants for success

    • There are many dimensions to this. For a start, there are several joint secretaries in each ministry who handle different portfolios.
    • If assigned to an unimportant portfolio, the chances of not making a mark are high.
    • A cursory look at the portfolios of the eight laterally-hired joint secretaries doesn’t suggest that they hold critical portfolios.
    • There must also be clarity in what precisely is the mandate for the lateral entrant.
    • To be disrupters, lateral entrants need to be able to stamp their authority on decision making.
    •  For this to happen, there need to be more lateral entrants at all levels in ministries.
    • In the functioning of government, there is a long chain in decision-making and a minority of one cannot override it.
    • Also, it requires an understanding of the system and an ability to work with the “permanent” establishment.
    • No training or orientation is provided for this.

    Consider the question “What are the advantages of lateral entry in the civil services? What are the challenges in the success of lateral entrants? Suggest the measures to improve it.”

    Conclusion

    Lateral entry, like competition in any sphere, is a good thing. But serious thinking is required on entry requirements, job assignments, number of personnel and training to make it a force for positive change. Some reform of the “permanent” system — particularly its seniority principle — may be a prerequisite.

  • e-Commerce: The New Boom

    How e-commerce marketplaces can drive MSME makeover

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- E-commerce to aid MSMEs

    Facilitating manufacturing through MSMEs

    • A significant major contributor to the India growth story is going to be manufacturing.
    • Manufacturing by small units, cottage units and MSMEs, if effectively facilitated, will be the game changer.
    • For MSMEs to be sustainable and effective, the need of the hour is not just better automation but also more channels for accessing greater markets and opportunities to become a part of the national and global supply chains.
    • E-commerce marketplaces are today the best possible enablers for this transformation at minimal cost, innovation and investment.

    Need to invest in digital transformation and technology

    • China captured the world market through the traditional method of having guilds and business centres.
    • Today, digital empowerment is the key differentiator.
    • Without that, our MSMEs will not be future ready.
    • E-commerce allows products even from hinterlands to get to the national market, thus, providing opportunities to artisans and small sellers from Tier-2/3 towns to sell online to customers beyond their local catchment.
    • By investing in supply chains, the e-commerce sector provides opportunities for MSMEs to partner them in supply and delivery networks.
    • Start-ups and young brands are also finding opportunities to build national brands and even going global.
    • This leads to additional income generation through multiple livelihood opportunities.
    • Many offline stores are also adopting e-commerce to leverage these opportunities and the traditional and modern retail models are moving towards more offline and online collaborations.

    Challenges in building robust e-commerce sector

    1) No GST threshold exemption

    • Sellers on e-commerce marketplaces do not get advantage of GST threshold exemption (of Rs 40 lakh) for intra–state supplies.
    • Online suppliers have to “compulsorily register” even though their turnover is low.
    • Offline sellers enjoy this exemption up to the turnover threshold of Rs. 40 lakh.

    2) Principal place of business issue

    • Today, the sellers, as in offline, are required to have a physical PPoB which, given the nature of e-commerce, is not practical.
    • The government would do well to simplify the “Principal Place of Business” (PPoB) requirement especially for online sellers by making it digital.
    • Replace physical PPoB with Place of Communication.
    • Eliminating the need for state specific physical PPoB requirement will facilitate sellers to get state-level GST with a single national place of business.

    3) Support MSMEs to understand e-commerce

    • MSMEs should be provided with handholding support to understand how e-commerce functions.
    • The government can collaborate with e-commerce entities to leverage their expertise and scale to create special on-boarding programmes.
    • These can be provided by state governments.
    • There is need to examine the existing schemes and benefits for MSMEs, which were formulated with an offline, physical market in mind.

    4) Build infrastructure

    • There is a need to build infrastructure — both physical and digital infrastructure is important for digital transformation.
    • The road and telecom network will facilitate access to the consumer and enable the seller from remote areas to enter the larger national market as well as the export market.
    • A robust logistic network and warehouse chains created by e-commerce platforms enable similar access and reach.
    • The National Logistics Policy should focus on e-commerce sector needs.

    5) Skilling policies for e-commerce sector

    • Dovetail the skilling policy and programmes with the requirements of the e-commerce sector to meet future demand of the sector.

    6) Steps to increase export via e-commerce

    • We need to take specific steps to increase exports via e-commerce.
    • There is a need to identify products that have potential for the export market, connect e-commerce with export-oriented manufacturing clusters, encourage tie-ups with sector-specific export promotion councils, leverage existing SEZs to create e-commerce export zones.
    • India Posts can play a significant role by creating e-commerce specific small parcel solutions at competitive rates, building a parcel tracking system, and partnering with foreign post offices to enable customs clearances.

    Way forward

    • There is an urgent need to create a consolidated policy framework for e-commerce exports.
    • Policies like the upcoming Foreign Trade Policy needs to be fully leveraged.
    • The Foreign Trade Policy should identify areas and include e-commerce export specific provisions in the revised policy that comes into effect in April this year.

    Consider the question “E-commerce marketplaces can help MSMEs in accessing greater markets and provide opportunities to become a part of the national and global supply chains. In light of this, examine the opportunities provided by e-commerce also mention the challenge the sector faces in India.” 

    Conclusion

    By facilitating and supporting e-commerce, we can leverage the potential of MSMEs in manufacturing which could help in the economic growth of the country by creating job opportunities.

  • Government Budgets

    State budgets belies the hopes of public-spending-led recovery

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Fiscal deficits

    Mains level: Paper 3- State budgets belies the hopes of public spending led recovery

    The article highlights the trends emerging from the State budgets which dashes the hopes of public-spending led economic recovery.

    State-level budget trends

    • Over the past few weeks, several state governments have presented their budgets for the financial year 2021-22.
    • The states, put together, account for a larger share of general government spending than the Centre.
    • States’ spending stance is pivotal to the hopes of a government spending-led economic recovery.

    5 Broad trends from the state budgets

    • The broad state-level budget trends are based on 11 states that account for a little over 60 per cent of India’s GDP.

    1) Offsetting the additional spending by Centre

    • There is a collapse in states’ revenues and transfers from the Centre.
    • Along with it, there is a “reluctance” among some states to borrow more to spend.
    • Thus, the aggregate level spending by these states in 2020-21 will end up being lower than what they had budgeted for before the onset of the pandemic.
    • The revised estimates peg their total expenditure to decline by around 6 per cent in 2020-21 from their budget estimates.
    • If these trends were to hold for the other states as well, then it would imply that the additional spending by the central government, over and above its budget estimate is likely to be offset by the decline in spending by states.

    2) From revenue surplus to revenue deficit

    • This year, states which typically run revenue surpluses will run revenue deficits.
    • The collapse in revenues meant that states that usually borrow to finance capital expenditure have had to borrow to finance their recurring expenditure (revenue expenditure) as well.
    • As a consequence, capital spending by states has been cut sharply.
    • States, though, expect the situation to reverse in the coming fiscal year, with most projecting a return to revenue surpluses even as the Centre will continue to run revenue deficits.
    • This anomaly is unlikely to be resolved unless the root cause of the situation — the nature of the fiscal compact between the Centre and the states — is addressed.

    3) Reluctance by states to borrow

    • The Centre had raised the ceiling on their market borrowings from 3 to 5 per cent of GSDP.
    • Of this 2 percentage point increase in the borrowing limit, part was unconditional while the remaining was subject to fulfilling Centre-mandated reforms.
    • As per ICRA’s estimate, 17 states qualified based on the One Nation One Ration Card reforms, 15 qualified based on the ease of doing business reforms, seven partially completed power sector reforms, while six had completed the urban local body reforms.
    • But, it is only the low-income states of Bihar, Rajasthan and Madhya Pradesh with already stretched finances that seem to have availed the additional borrowing space.
    • The high-income states of Gujarat, Maharashtra and Karnataka, all of whom had greater fiscal headroom going to the crisis, and were better placed to borrow more and spend, have not done so.

    4) Aggressive fiscal consolidation

    • As is the case with the Centre, states have, remarkably, budgeted for aggressive fiscal consolidation next year.
    • The average fiscal deficit across these states is expected to fall by more than 1 percentage point of GSDP, more than twice the decline recommended by the 15th finance commission.

    5) Ambitious revenue assumptions

    • The aggressive consolidation next year is expected to be achieved not by expenditure compression, as is the case with the Centre, but by significant revenue enhancement.
    • However, some revenue assumptions are quite ambitious, to say the least — some states have pegged their GST and VAT collections to grow far in excess of 30 per cent in 2021-22.
    • A deterioration in fiscal marksmanship will mean that expenditure in the coming fiscal year will also end up being lower than what has been budgeted for.

    Consider the question “The pandemic has upended the States’ fiscal space, which is evident in their budgets. In light of this, examine the trends emerging from the budgets of the States and their implications for the economy.”

    Conclusion

    Subdued general government spending during these tumultuous years heightens the risks to economic recovery. Considering the possibility of the economy exiting from this period with lower medium-term growth prospects, there is a strong case for greater government spending during these years.

  • Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

    Responsible and ethical AI

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- AI governance

    The article highlights the challenges and opportunities offered by the Artificial Intelligence and suggests the ways to deal with them.

    AI as a part of our life

    • AI is embedded in the recommendations we get on our favourite streaming or shopping site; in GPS mapping technology; in the predictive text that completes our sentences when we try to send an email or complete a web search.
    • And the more we use AI, the more data we generate, the smarter it gets.
    • In just the last decade, AI has evolved with unprecedented velocity.

    How AI could help us

    • AI has helped increase crop yields, raised business productivity, improved access to credit and made cancer detection faster and more precise.
    • It could contribute more than $15 trillion to the world economy by 2030, adding 14% to global GDP.
    • Google has identified over 2,600 use cases of “AI for good” worldwide.
    • A study published in Nature reviewing the impact of AI on the Sustainable Development Goals (SDGs) finds that AI may act as an enabler on 134 of all SDG targets.

    Concerns with AI

    • Yet, the study in Nature also finds that AI can actively hinder 59 — or 35% — of SDG targets.
    • AI requires massive computational capacity, which means more power-hungry data centres — and a big carbon footprint.
    • AI could compound digital exclusion.
    • Many desk jobs will be edged out by AI, such as accountants, financial traders and middle managers.
    • Without clear policies on reskilling workers, the promise of new opportunities will in fact create serious new inequalities.
    • Investment is likely to shift to countries where AI-related work is already established widening gaps among and within countries.
    • AI also presents serious data privacy concerns. 
    • We shape the algorithms and it is our data AI operate on.
    • In 2016, it took less than a day for Microsoft’s Twitter chatbot, “Tay”, to start spewing egregious racist content, based on the material it encountered.

    Way forward

    • Without ethical guard rails, AI will widen social and economic schisms, amplifying any innate biases.
    • Only a “whole of society” approach to AI governance will enable us to develop broad-based ethical principles, cultures and codes of conduct.
    • Given the global reach of AI, such a “whole of society” approach must rest on a “whole of world” approach.
    • The UN Secretary-General’s Roadmap on Digital Cooperation is a good starting point.
    • This approach lays out the need for multi-stakeholder efforts on global cooperation.
    • UNESCO has developed a global, comprehensive standard-setting draft Recommendation on the Ethics of Artificial Intelligence to Member States for deliberation and adoption.
    • Many countries, including India, are cognisant of the opportunities and the risks, and are striving to strike the right balance between AI promotion and AI governance.
    • NITI Aayog’s Responsible AI for All strategy, the culmination of a year-long consultative process, is a case in point.

    Consider the question “What are the ways in which Artificial Intelligence in helping humanity? What are the concerns with the promotion and the governance of AI?”

    Conclusion

    Chellenging part starts where principles meet reality that the ethical issues and conundrums arise in practice, and for which we must be prepared for deep, difficult, multi-stakeholder ethical reflection, analyses and resolve. Only then will AI provide humanity its full promise.

  • Foreign Policy Watch: India-China

    A giant leap forward for the Quad

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- First Quad summit and its significance

    The first-ever Quad summit is an important milestone in the geopolitics of the region. The article highlights its significance.

    Significance of the first Quad summit

    • The maiden Quadrilateral Security Dialogue summit of the leaders of Australia, India, Japan and the U.S. on March 12 was a defining moment in Asian geopolitics.
    • That it was a meeting at the highest political level, occasioned a productive dialogue, and concluded with a substantive joint statement is indicative of its immediate significance.
    • If it leads to tangible action and visible cooperation, it will impact the whole region.

    Brief background of the Quad

    • The Indian Ocean tsunami of 2004 triggered cooperation among the navies and governments of the Quad powers.
    • They sought to forge diplomatic cooperation on regional issues in 2006-08.
    • But gave up mainly because China objected to it and the hostility to China was not yet a potent enough glue.
    • This began to change in 2017 when Beijing’s behaviour turned hostile, climaxing in multiple challenges in 2020.
    • This time, U.S. President Joe Biden moved swiftly to host a virtual summit, drawing immediate response from the other three leaders.

    5 highlights of the summit

    • A more sophisticated approach is being invented, with enhanced emphasis by the U.S. on carrying its allies and strategic partners together.
    •  The summit’s outcome, therefore, merits close attention for at least five reasons.

    1) Compromise over vision of Indo-Pacific

    • Past debates over diverse, even differing, visions of the Indo-Pacific are over.
    • The joint statement struck a neat compromise:
    • To please the U.S. and Japan, it refers to a “free and open” Indo-Pacific, but in the very next sentence it offers an elaboration – “free, open, inclusive, healthy, anchored by democratic values, and unconstrained by coercion” – that amply satisfy India and Australia.

    2) Alignment of approach towards China

    • The summit leaders have secured an adequate alignment of their approaches towards China.
    • Senior officials gave sufficient hints on this score, reinforced by phrases such as “security challenges” and “the rules-based maritime order in the East and South China Seas” in the joint statement.
    • Instead of unidimensional antagonism, the Quad members have preferred a smart blend of competition, cooperation and confrontation.

    3) Quad’s commitment development and well being of the region

    • The Quad has placed a premium on winning the battle for the hearts and minds of people in the Indo-Pacific region.
    • This explains the special initiative to ensure equitable access to COVID-19 vaccines for every person in need in the region from the western Pacific to eastern Africa.

    4) Working groups

    • The establishment of three working groups on vaccine partnership; climate change; and critical and emerging technologies and their new standards, innovation and supply chains is a welcome step.
    • All this should get the four national establishments into serious policy coordination and action mode, creating new capacities.
    • The careful choice of themes reflects a deep understanding of the long-term challenge posed by China and has global implications.

    5) Quad working together in future

    • The March 12 summit will not be a one-off.
    • The leaders have agreed to meet in-person later this year, possibly at an international event within the region.
    • Foreign ministers will gather at least once a year; other relevant officials, more often.
    • Thus, will grow the habits of the Quad working together for a common vision and with agreed modalities for cooperation.

    How ASEAN and China will react

    • The summit has been watched closely by the ASEAN capitals. A few of them may express cautious welcome.
    • Beijing seems rattled but resigned to the Quad’s new momentum.
    • The Chinese see it in negative terms, targeting New Delhi in particular.

    Consider the question “With the first-ever summit, the Quad is moving towards a strong coalition. In light of this, examine the challenges India faces as it deepes its engagement in the grouping.” 

    Conclusion

    The summit and ‘The Spirit of the Quad’ – the inspired title of the joint statement – represented a giant leap forward. Now is the time to back political commitment with a strong mix of resolve, energy, stamina and the fresh ideas of stakeholders and experts outside of government to fulfil the promise of the Quad.

  • RBI Notifications

    What India needs for population stabilisation

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Replacement level of fertility

    Mains level: Paper 1- Population stabilisation

    Achieving replacement levels of fertility

    • The National Population Policy 2000 affirmed a commitment to achieve replacement levels of fertility (total fertility rate of 2.1) by 2010.
    • Ten states — Karnataka, Punjab, Gujarat, Assam, Telangana, Andhra Pradesh, West Bengal, Maharashtra, Tamil Nadu and Kerala — and Jammu and Kashmir, have achieved this goal.
    • This fertility decline over half of India has cut across all sections of society — the privileged and the poor, those educated or not, and the high and low caste.
    • The National Family Health Survey-4 has shown how TFR has reduced even among illiterate women from all religions in the southern states.

    Growing gap between North-South

    • The difference between the progressive South and the Central- North is becoming disproportionately skewed.
    • UP and Bihar are 23 per cent of India’s population and are projected to grow by over 12 per cent and 20 per cent in the next 15 years.
    • Their high TFR pervades all religious groups.
    • Action to prevent unwanted pregnancies particularly in these two Hindi belt states is urgently required.
    • For decades UP has had a dedicated agency — SIFPSA (State Innovations in Family Planning Services Agency). But its website gives dated information.
    • Women in rural UP are still giving birth to four or more children.
    • In some districts, the contraceptive prevalence rate is less than 10 per cent.
    • In many districts neither Hindus nor Muslims use modern family planning methods.
    • In such a scenario, demographics will eclipse economic growth and destroy the gains from a young populace.
    • UP’s over-reliance on traditional methods of contraception needs to be swiftly replaced with reliable and easy alternatives.
    • Bihar has the highest fertility rate in the country and also the highest outmigration.

    Which method  should be used

    • While national and state policies emphasise male vasectomy, politicians never champion its adoption.
    • No other country in the world uses female sterilisation as excessively as India.
    • Indonesia and Bangladesh introduced injectables right from the late 1980s but India only did so in 2016.
    • Executed properly, one jab renders protection from pregnancy for three months.
    • This method needs greater impetus given the helplessness of women who carry the burden of unwanted pregnancies.

    Way forward

    • Three things are needed:
    • 1) Incentivise later marriages and child births.
    • 2) Make contraception easy for women.
    • 3) Promote women’s labour force participation.
    •  Some other disturbing nationwide trends must also be counteracted without delay because stabilisation isn’t only about controlling population growth.
    • A balanced sex ratio is essential to secure social cohesion.
    • The inheritance law favouring women’s rights to ancestral property is far from being implemented.
    • And then there is ageing. Paradoxically, it is the Southern states that will face problems in future.
    • Having largely redeemed their demographic dividend, the cohort of the elderly will start outstripping the working age population.
    • The theoretical possibility that younger people from the Central-Northern states may fill the growing gap in services will need strong political support.
    • The freeze on the state-wise allocation of seats in Parliament until 2026 was extended through the Constitutional (84th Amendment) Act, 2002, to serve “as a motivational measure to pursue population stabilisation”.
    • This goal has not been achieved.
    • In the absence of further extension, it will be politically destabilising.

    Consider the question “India’s efforts at populations stabilisation still remains work in progress, as the Northern states fail to achieve the targets. Suggest the ways to deal with the issue.”

    Conclusion

    The population momentum, if managed properly in the Hindi belt, will remain India’s biggest asset until 2055. By 2040, India will be the undisputed king of human capital.

  • Foreign Policy Watch: India-United States

    The Quad’s importance to India’s strategic autonomy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: SCO

    Mains level: Paper 3- Changing context of India's strategic autonomy

    India is a member of both the Quad and the BRICS. Is not it the contradiction? The article answers this question and maps the transformation of India’s relation with the U.S. over the years.

    Is India’s participation in BRICS and Quad contradictory?

    • Global Times, the Chinese newspaper last week speculating on the implications of the historic Quad summit for the BRICS.
    • In calling the Quad a “negative asset” for the BRICS the Global Times was highlighting what it sees as a contradiction in India’s participation in both the forums.
    • The paper argues that India has worsened “India-China and India-Russia relations” and halted progress “in the development of BRICS and SCO”.
    • Global Times warns that if India continues to get closer to Washington, India “will eventually lose its strategic autonomy”.

    Understanding India’s strategic autonomy

    • “Strategic autonomy” is the framework that guided Delhi’s international relations since the Cold War.
    • In the early 1990s, strategic autonomy was about creating space for India against the overweening American power.
    • Why the space was needed? It was mainly because of the U.S. stance on two important aspects: Kashmir issue and nuclear program.
    • President Bill Clinton had questioned the legitimacy of Jammu and Kashmir’s accession to India and declared the US’s intent to resolve Delhi’s Kashmir dispute with Pakistan.
    • Washington insisted that rolling back India’s nuclear and missile programmes was a major objective of US foreign policy.
    • All that changed over the last three decades.

    8 elements of  transformation of India’s relations with the U.S and China

    • A rising China has emerged as the biggest challenge to India and the US is increasingly an important part of the answer.
    • A few elements stand out.
    • First, China has become more assertive on the contested boundary, therefore, the support from the US and its Asian allies has been valuable.
    • Second, on the Kashmir question, China raises the issue at the UNSC while the US is helping India to block China’s moves.
    • Third, on cross-border terrorism, the US puts pressure on Pakistan and China protects Rawalpindi.
    • Fourth, the US has facilitated India’s integration with the global nuclear order while Beijing blocks Delhi’s membership of the Nuclear Suppliers Group.
    • Fifth, the US backs India’s permanent membership of the UNSC, China does not.
    • Sixth, India now sees the trade with China hollowing out India’s manufacturing capability.
    • Its objective on diversifying its economy away from China is shared by the US and the Quad partners.
    • Seventh, India opposes China’s Belt and Road Initiative as a project that undermines India’s territorial sovereignty and regional primacy.
    • India is working with Quad partners to offer alternatives to the BRI.
    • Finally, India sees China’s rising military profile in the subcontinent and the Indian Ocean as a problem and is working with Washington to redress the unfolding imbalance in India’s neighbourhood.

    India’s approach to BRICS and SCO

    • The BRICS was part of India’s strategy in the unipolar moment that dawned at the end of the Cold War.
    • India’s current enthusiasm for the Quad is about limiting the dangers of a unipolar Asia dominated by China.
    • But India will continue to attach some value — diplomatic if not strategic — to a forum like the BRICS.
    • After all, the BRICS forum provides a useful channel of communication between Delhi and Beijing at a very difficult moment in the evolution of their bilateral relations.
    • The BRICS is also about India’s enduring partnerships with Russia, Brazil, and South Africa.
    • India also values its ties with the Central Asian states in the SCO.
    • The BRICS could certainly become a productive forum someday — when Delhi and Beijing mitigate their multiple contentions.

    Consider the question “A rising China has emerged as the biggest challenge to India and the US is increasingly an important part of the answer. Examine the elements that support this underlying transformation of India’s relationship with the two countries.”

    Conclusion

    No amount of words in a BRICS declaration can hide the sharpening contradictions between India and China today. The absence of joint statements did not mask the growing strategic congruence among the Quad nations in recent years.