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  • Panchayati Raj Institutions: Issues and Challenges

    Taking care of finances of local governments

    op-ed snap | Polity | Mains Paper 2: Panchayats & Local Bodies

    Note4Students

    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.

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  • Coronavirus – Economic Issues

    Who is afraid of monetisation of deficit?

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Discretionary fiscal policy, automatic stabiliser

    Mains level: Paper 3- Monetisation of debt

    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 slowing growth, 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.
    • This is known as discretionary fiscal policy.

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  • Foreign Policy Watch: India-Middle East

    Cooperative security in Persian Gulf littoral and Implications for India

    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.

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  • Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

    Getting closer to doubling income of Farmers

    op-ed snap | Agriculture | Mains Paper 3: Issues Related To Farm Subsidies & Msp,Transport & Marketing Of Agricultural Produce

    Note4Students

    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

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  • Foreign Policy Watch: India-China

    The China conundrum

    op-ed snap | International Relations | Mains Paper 2: Important International Institutions

    Note4Students

    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.

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

    Defence reforms must ensure the alignment of its various domains

    op-ed snap | Security Issues | Mains Paper 3: Various Security Forces, Agencies & Their Mandates

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: CDS

    Mains level: Paper 3- Defence reforms.

    This article draws on the model used for accident investigation but in a reverse manner. For proper functioning of the defence system of a country, proper alignment of various domains is essential. This article divides the defence system of the country into three layers and visualises them as a slice of cheese in the model. Each component is analysed and the issues associated with it are looked into.

    What is the Swiss Cheese Model?

    • The Swiss cheese model is associated with accident investigation in an organisation or a system.
    • A system consists of multiple domains or layers, each having some shortcomings.
    • These layers are visualised in the model as slices of Swiss cheese, with the holes in them being the imperfections.
    • Normally, weaknesses get nullified, other than when, at some point, the holes in every slice align to let a hazard pass through and cause an accident.

    Applying the Swiss Cheese Model for nations defence preparedness

    • When applied to a nation’s defence preparedness, the Swiss cheese model, in its simplest form, works the reverse way.
    • The slices represent the major constituents in a nation’s war-making potential, while the holes are pathways through which the domains interact.
    • At the macro level, there are only three slices with holes in each.
    • These must align to ensure that a nation’s defence posture is in tune with its political objectives.
    • Any mismatch may turn out to be detrimental to the nation’s aatma samman (self-respect) when the balloon goes up.
    • In these days of the Aatmanirbhar Bharat Abhiyan, a clinical analysis is necessary to obviate any missteps that may prove costly a few years or decades down the line.

    Let’s analyse the Indian defence set-up from three slice perspective

    • In the Indian defence set-up, the three slices are as described below-
    • 1)The policymaking apparatus comprising the Department of Military Affairs (DMA) and Ministry of Defence (MoD).
    • 2) The defence research and development (R&D) establishment and domestic manufacturing industry.
    • 3) The three services.
    • When the MoD alone existed, a certain relationship between the three layers saw India prosecute four major wars since independence.
    • The holes in the three slices were aligned to different degrees and hence the results were varied in each conflict.
    • That the system required an overhaul would be an understatement.

    So, let’s look at the three-slices of Indian defence

    1) Policymaking: How changes in technology forced militaries to be joint?

    • With technology progressing exponentially, a single service prosecution of war was no longer tenable.
    • Because the advent of smart munitions, computer processing, networking capabilities and the skyrocketing cost of equipment brought in the concept of parallel warfare.
    • Synergised application of tools of national power became an imperative.
    • Thus, it became essential for militaries to be joint to apply violence in an economical way.
    • Economical in terms of time, casualties, costs incurred, and political gains achieved.
    • The setting up of the DMA and the creation of the post of Chief of Defence Staff (CDS) to achieve synergy are the most fundamental changes.
    • As further modifications and tweaking take place in the way the services prepare to go to war, it is imperative that the transformation be thought through with clinical analysis, without any external, emotional, political or rhetorical pressure.

    Hostile security environment

    • India’s security managers have to factor in the increasingly belligerent posture of the country’s two adversaries.
    • Terrorist activities have not reduced in Jammu and Kashmir.
    • Ongoing incidents along the northern border with China do not foretell a peaceful future.
    • And the China-Pakistan nexus can only be expected to get stronger and portentous.
    • Such a security environment demands that capability accretion of the three services proceed unhindered.

    2) Indigenous R&D and manufacturing is still some years away

    • To elaborate, the Indian Air Force at a minimum requires 300 fighters to bolster its squadron strength.
    • The Army needs guns of all types; and the Navy wants ships, helicopters, etc.
    • The requirements are worth billions of dollars but with COVID-19-induced cuts in defence spending.
    • Enter the well-meaning government diktat for buying indigenous only, but for that, in-house R&D and manufacturing entities have to play ball.
    • Hindustan Aeronautics Limited can, at best, produce just eight Tejas fighters per year presently.
    • The Army has had to import rifles due to the failure of the Defence Research and Development Organisation to produce them.
    • And the Navy has earnest hopes that the hull designs that its internal R&D makes get the vital innards for going to war.
    • So, the Swiss cheese slice representing indigenous R&D and a manufacturing supply chain that ensures quality war-fighting equipment, at the right time and in required quantities, is still some years away.

    3) The three services and creation of theatre commands

    • The forthcoming reform of creating theatre commands is the most talked about result of jointness expected from the Swiss cheese slice in which lie the DMA and a restructured MoD.
    • Doing so would be a shake-up of huge proportions as it strikes at the very foundation of the war-fighting structure of the services.
    • The three-year deadline spoken about by the CDS must take into account the not-so-comfortable state of assets of each service which would need to be carved up for each theatre.
    • The Chinese announced their ‘theaterisation’ concept in 2015; it is still work in progress.
    • The U.S. had a bruising debate for decades before the Goldwater-Nichols Act came into force in 1986.
    • New relationships take time to smooth out, and in the arena of defence policymaking, which is where the DMA and MoD lie, the element of time has a value of its own.
    • Any ramming through, just to meet a publicly declared timeline, could result in creating a not-so-optimal war-fighting organisation to our detriment.
    • So, the three services that constitute the third Swiss cheese slice have to contend with the other two slices being in a state of flux for some time to come.

    Consider the question “Any defence system reforms must ensure the alignment and coordination of the various component of it which involves policymaking apparatus,  defence R&D and manufacturing and the three services. Comment.”

    Conclusion

    The political, civil and military leadership must have their feet firmly on ground to ensure that the holes in their Swiss cheese continue to stay aligned; impractical timelines and pressures of public pronouncements must not be the drivers in such a fundamental overhaul of our defence apparatus.

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  • G20 : Economic Cooperation ahead

    Setting agenda for G-12

    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: G-7 Members, their combined gdp in the world

    Mains level: Paper 2- Expansion of G-7 membership

    Recently, there was a call for expansion of the membership of the G-7 by the U.S. President. But the expanded group should not be seen as an anti-China gang-up. Disciplining and not isolating China is what most of the members of the group would want. And to do so, this new group needs to have new agenda. This article discusses the items that must form the part of the new agenda.

    Evolution of the G-7

    • When it started in 1975—with six members, Canada joining a year later—it represented about 70% of the world economy.
    • And it was a cosy club for tackling issues such as the response to oil shocks.
    • Now it accounts for about 40% of global gdp.
    • Since the global financial crisis of 2007-09 it has sometimes been overshadowed by the broader g20.
    • The G-7 became the G-8 in 1997 when Russia was invited to join.
    • In 2014, Russia was debarred after it took over Crimea.

    Call for expansion of the membership

    • It was the French who first flew the kite of membership expansion.
    • France had invited heads of government of several “emerging economies” for a meeting of the group at Évian-les-Bains, France, in June 2003. 
    • After 2003, G-8 host countries began organising a meeting on the sidelines of their summits with a select group of five or six developing countries.
    • India and China were invited to all those summits.
    • Now, President Trump has, however, gone a step further.
    • Rather than invite “guests” to a G-7 summit, he has suggested expanding the G-7 to a G-10 or G-11.
    • Trump has come up with an interesting list of new members — Australia, India, South Korea and, possibly, Russia.
    • Inclusion of Russia: Trump’s pragmatism in including Russia should be welcomed.
    • The advantage of getting Russia in is that the group would not be viewed merely as an anti-China gang-up but, in fact, as a club of “free market democracies”.
    • The group could easily be made the G-12 with the inclusion of Indonesia — one of the few democratic nations in the Islamic world.

    Discipline China, not isolate it

    • Trump’s motivation in expanding the G-7 to include India and Russia while keeping China out is transparent.
    • If keeping China out was not the intention, the G-7 could easily have dissolved themselves and revitalised the presently inert G-20.
    • There are, of course, good reasons why Xi Jinping’s China requires to be put on notice for its various acts of omission and commission and disrespect for international law.
    • However, disciplining China is one thing, isolating it quite another.
    • If the new group is viewed as yet another arrow in the China containment quiver it would place India and most other members of the group in a spot.
    • Everyone wants China disciplined, few would like to be seen seeking its isolation.
    • Asia needs a law-abiding China, not a sullen China.
    • Japan and Australia, have serious concerns about China’s behaviour.
    • But they may not like the new group to be viewed purely as an anti-China gang-up.
    • That may well be the case with South Korea too.
    • Indeed, even India should tread cautiously.
    • India has more issues with China than most others in the group, spanning across economic and national security issues and yet it should seek a disciplined China, not an isolated one.

    So, what should be on the agenda of the new group?

    • The proposed new group should define its agenda in terms that would encourage China to return to the pre-Xi era of global good behaviour.
    • The G-7 came into being in the mid-1970s against the background of shocks to the global financial and energy markets.
    • The G-12 would come into being against the background of a global economic crisis and the disruption to global trade caused both by protectionism and a pandemic.
    • The two items on the next summit agenda would have to be the global response to the COVID-19 pandemic, the rising tide of protectionism and mercantilism and the global economic slowdown.
    • The summit will have to come forward with some international dos and don’ts to deal with the challenge posed by these disruptions.

    New rules should apply to both the US and China

    • These new rules of international conduct would have to apply to both China and the US.
    • The G-12— have a shared interest in ensuring that both China and the US respect international law and desist from unilateralism in dealing with neighbours and global challenges.

    Widening the agenda

    • To be able to alter China’s behaviour without isolating it, the G-12 will have to widen their agenda.
    • Widening involves going beyond the purely economic issues that the G-7 originally focused on, and include climate change, health care and human rights.

    What should the “free market democracies” mean

    • In identifying themselves as “free market democracies” the G-12 must issue a new charter of respect for human rights, adherence to international law and multilateralism in trade and security.
    • This is easier said than done.
    • President Trump will have to re-assure the group’s members that he has their combined interests at heart in proposing a new group.
    • And he also has to show that he has an imagination beyond just an “America First” policy.
    • Even as the world is increasingly wary of an assertive China and of Xi Jinping’s China Dream and his version of a “China First” policy, it is also wary of Trump’s unilateralism on many fronts.

    What should the invitee nations consider before joining the group?

    • Many countries share Trump’s displeasure with China for its manipulation of the World Health Organisation.
    • But many of them are equally unhappy with the manner in which the Trump administration has treated the World Trade Organisation.
    • A G-12 cannot ignore such partisan behaviour by either the US or China.
    • If Trump does issue an invitation to the three or four new members to join the new group, they should seek clarity on the terms of membership.
    • Russia’s experience, of being invited and then disinvited and now being considered for being re-invited should be a salutary message to all others invitees.

    Consider the question- “The expanded new G-12 with India as its member, should also needs new agenda with its focus beyond China. Comment.”

    Conclusion

    As the world’s largest free market democracy India deserves to be a member of not just a G-12 but of even a new G-7. India’s political and economic credentials are certainly stronger than those of Canada, Britain and Italy.

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  • Foreign Policy Watch: India-China

    Dilemma for Delhi in Ladakh standoff

    op-ed snap | International Relations | Mains Paper 2: India & Its Neighborhood – Relations

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: India-China trade

    Mains level: Paper 2- India-China border issue

    Though the rest of the world is preoccupied with Covid pandemic, China is busy in raising tension over border issues with its neighbour-India. What explains such actions by China? And timing selected by China has also puzzled many. India, on its part, faces a dilemma. This article dissects the various issues related to the standoff and explains the options available with India to deal with the Chinese intimidation.

    Why the latest transgression by PLA is unprecedented?

    • There are around 400 transgressions/faceoffs each year on an average along the LAC.
    • But the recent spate of territorial transgressions by the People’s Liberation Army (PLA) is unprecedented in its scope and manner.
    • Even as independent accounts point out that Chinese troops are yet to withdraw from the transgressed territories and restore status quo ante.
    • Those territories are traditionally considered by both sides to be on the Indian side of the LAC.
    • Chinese officials have gone ahead and stated that the “Situation in China-India border is overall stable & controllable”.

    What this move by China signals?

    • The Indian government is left with two basic choices: 1) accept territorial loss as a fait accompli or 2)  force or negotiate a reversal to status quo ante, unless of course the PLA unilaterally withdraws.
    • Either way, China’s growing territorial aggression on the LAC signals the end of Beijing’s peaceful rise and its traditional desire to maintain regional status quo with India.
    • China under its President, Xi Jinping, unequivocally seeks to demonstrate that it is the preponderant power in the region. 

    Let’s analyse the aggression

    • While the timing could be explained by the global political distraction caused by COVID-19.
    • And also the international pressure on China (including by India) to come clean on the origins of the novel coronavirus could have played the role.
    • But the proximate causes could be several. Consider the following-

    1. Statement by India on Aksai Chin

    • For one, New Delhi’s terse statements about Aksai Chin following the Jammu and Kashmir reorganisation in August last year had not gone down well with Beijing.
    • While not many in India believe that New Delhi was serious about getting back Aksai Chin from Chinese control, Beijing may have viewed it as India upping the ante.
    • More pertinently, in a clear departure from the past, New Delhi has been carrying out the construction of infrastructural projects along the LAC — a long overdue activity — which is something that seems to have made China uneasy.

    2. Broader context of long-term geopolitical world view

    • The Chinese angle to the J&K conundrum deserves more attention here.
    • The aggression must also be viewed in the broader context of a long-term geopolitical world view China has for the region. Consider the following in this regard-
    • 1) China’s China–Pakistan Economic Corridor (CPEC) connectivity to Pakistan through the Karakoram and New Delhi’s criticism of it.
    • 2) The reported presence of PLA troops in Pakistan Occupied Kashmir (PoK).
    • 3) India’s new-found activism on Aksai Chin.
    • 4) The PLA’s incursions into areas in eastern Ladakh.

    3. Strategic goals

    • It is equally important to appreciate the larger Chinese strategic calculations behind its recent spate of aggressions.
    • Having given up its traditional slogan of ‘peaceful rise’, China, under Mr. Xi, is beginning to assert itself as the next superpower.
    • Over the years, Beijing has perhaps realised that India is not keen on toeing the Chinese line in the region.
    • So this is Beijing sending a message to New Delhi to fall in line.
    • A message that will not go unnoticed in the smaller capitals around China — from Colombo to Kathmandu to Hanoi.

    4. Political message

    • Given that China is currently engaged in what many analysts are describing as a new cold war with the United States, in the middle of a crackdown in Hong Kong along with fighting COVID-19 at home, one would not have expected the Chinese leadership to open another front.
    • And yet, by opening a limited military front with India on the LAC, China is signalling the U.S. that it can handle pressure.
    •  And telling India that it has the political and military wherewithal to put pressure on New Delhi notwithstanding its other preoccupations.

    Why limited scope confrontation is cost-effective and preferred option by China?

    • China’s limited scope military expeditions on the long-contested border is cost effective for the PLA.
    • This is because the ever-growing conventional military superiority that it enjoys with India.
    • Moreover, because limited fights or smaller land grabs may not provoke an all-out confrontation or nuclear use.
    • The side with conventional superiority and more border infrastructure would likely carry the day.

    India’s China dilemma

    • Picking a direct fight with India which might lead to an undesirable military escalation with India does not suit Beijing’s interests.
    • But carrying out minor military expeditions with the objective of inflicting small-scale military defeats on India is precisely what would suit the Chinese political and military leadership.
    • They are cost effective, less escalatory, and the message gets conveyed.
    • More so, India’s military response would depend a great deal on how far the regime in New Delhi is willing to acknowledge such territorial losses due to domestic political constraints.
    • If New Delhi acknowledges loss of territory, it would have to regain it, but doing so vis-à-vis a conventionally superior power would not be easy.
    • Put differently, growing conventional imbalance and domestic political calculations could prompt New Delhi to overlook minor territorial losses on the LAC.
    • But let us be clear: the more New Delhi overlooks them, the more Beijing would be tempted to repeat them.
    • These considerations lie at the heart of India’s China dilemma.

    How India could respond?

    • Yet, there are limits to China’s LAC adventurism.
    • 1) There are several places along the several thousand kilometre long LAC where the PLA is militarily weak, the Indian Army has the upper hand.
    • And, therefore, a tit-for-tat military campaign could be undertaken by New Delhi.
    • 2)  While China enjoys continental superiority over India, maritime domain is China’s weak spot, in particular Beijing’s commercial and energy interest to which the maritime space is crucial.
    • 3) Finally, and most importantly, would Beijing want to seriously damage the close to $100 billion trade with India with its military adventurism on the LAC?

    Way forward

    • In any case, for India, the age of pussyfooting around Chinese intimidation strategies is over.
    • The time has come to checkmate Beijing’s military aggression even as we maintain a robust economic relationship with our eastern neighbour.
    • It is also a reminder for us to get more serious about finalising a border agreement with China.
    • The bigger the power differential between India and China, the more concessions Beijing would demand from New Delhi to settle the dispute.

    Consider the question-“There have been growing instances of PLA aggression on India-China border. Examine the multiple objectives China’s actions seek to achieve. What are the options available with India to deal with situation?

    Conclusion

    There is little doubt that China is our neighbour and that we have to live next to the larger and more powerful China. However, India should not accept Beijing’s attempts at land grabs, or military intimidation. That China is a rising superpower located next door to us is a reality, but how we deal with that reality is a choice we must make as a nation.

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  • Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

    Power Subsidies in Agriculture and Related issues

    op-ed snap | Agriculture | Mains Paper 3: Issues Related To Farm Subsidies & Msp

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: ATC losses.

    Mains level: Paper 3- Subsidy on electricity and problem with it

    tSometimes solutions that are meant to solve one problem results in the creation of another problem. Nowhere is this more evident than in the subsidies given on urea and electricity to the farmers. This article deals with the perils of the subsidy on electricity bills of farmers. However, there is an equally substantive argument in favour of the subsidies as well. So, what is the way out? Read to know…

    Replacing free power supply scheme with DBT

    • The Centre has prescribed that the free power supply scheme should be replaced with the direct benefits transfer (DBT) as a condition to allow States to increase their borrowing limit.
    • It is not the first time that the Union government has recommended DBT with regard to electricity.
    • But what is new is setting the time frame for implementing it.
    • By December this year, the DBT should be introduced at least in one district of a State and from the next financial year, a full roll-out should be made.

    Resistance from the states

    • Tamil Nadu, which was the first State to introduce free power in September 1984, is strongly resisting the Centre’s stipulation.
    • Tamil Nadu Chief Minister has taken a categorical stand against the proposal.
    • Though Chief Ministers of Andhra Pradesh, Telangana and Punjab, where free power scheme is in vogue, are yet to express their views.
    • But it is not difficult to predict their response.
    • After all, Punjab Chief Minister who had abolished the scheme during his first innings is now a strong votary of the scheme.

    Let’s get the overview of the power subsidy bill

    • In the last 15 years, Maharashtra has been the only State that scrapped the scheme within a year of introducing it.
    • Karnataka, which has been implementing it since 2008, may become the first southern State to have DBT in power supply if the hint dropped by Chief Minister in early March is any indication.
    • The power subsidy bills in the four southern States and Punjab are at least ₹33,000 crore, an amount the State governments will struggle to meet due to resource crunch in the light of the COVID-19 pandemic.

    But, why the Central government want to scrap the scheme?

    It is because of the following issues-

    1. Wastage of water and electricity

    • The financial stress apart, the universal application of the scheme has had deleterious consequences.
    • Primarily, the scheme has led to widespread wastage of water and electricity.
    • It is inherently against incentivising even a conscientious farmer to conserve the two precious resources.
    • It may be pertinent to point out that India is the largest user of groundwater at 251 billion cubic meters, exceeding the combined withdrawal by China and the U.S., as pointed out by Bharat Ramaswami of the Indian Statistical Institute last year.

    2. Worrying rate of the groundwater table depletion

    • Be it parts of the Cauvery delta in Tamil Nadu or Sangrur district of Punjab, the story about the groundwater table is the same — a worrying rate of depletion.
    • There is one more attendant problem.
    • To sustain their activity, farmers need to go for submersible or high-capacity pumpsets. [Consider the fact that to draw same quantity of water you have to use more power if your water table is low]

    3. It encourages the installation of more pump sets

    • Third, the extension of the scheme to different States over the years has only encouraged the installation of more pumpsets. Karnataka is a classic example, The number of irrigation pumpsets, which was around 17 lakh 12 years ago, is now around 30 lakh.

    4. Misuse of scheme

    • There is misuse of the scheme for which not just a section of farmers but also field officials have to be blamed.

    5. AT & C losses clubbed as consumption by farmers

    • In the absence of meters for these connections or segregation of feeders or metering of distribution transformers, accurate measurement of consumption becomes tricky.
    • Those in charge of power distribution companies find it convenient to reduce their aggregate technical and commercial (AT&C) losses by clubbing a portion of the losses with energy consumption by the farm sector.

    What is the argument of the supporter of the scheme?

    • Proponents of the free power scheme have a couple of valid points in their support.
    • Apart from ensuring food security, free power provides livelihood opportunities to landless workers.
    • When farmers dependent on supplies through canals get water almost free of cost, it is but fair that those not covered by canal irrigation should be given free electricity.
    • Though there is substance in the argument, it is not difficult to arrive at a fair pricing mechanism.
    • Small and marginal farmers and those who are outside the canal supply deserve free power, albeit with restrictions.
    • But there is no justification for continuing with the scheme perpetually to other farmers.
    • However, those enjoying free power need to be told about the need for judicious use of groundwater and how to conserve it.

    Consider the question-“Subsidies given to farmers on electricity has become an albatross around the States neck. However, such subsidies could also be termed as a necessary evil. Critically examine.”

    Conclusion

    Making use of the situation created by the COVID-19 pandemic, the Centre is trying to make lasting changes in areas where such measures are long overdue. At least in the area of power sector, its attempt can yield meaningful results only if there is a change in the mindset of agriculturists and political parties towards the concept of free power.

     

     

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  • Foreign Policy Watch: United Nations

    Multilateralism in the new cold war

    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: G7 countries

    Mains level: Paper 2- Challenges the current form of multilateralism faces and opportunity for India to shape the new multilateralism.

    The world is going through turmoil. The new world that will emerge will be different from what we have known. This provides India with some unique opportunities. This article explains the changes that are taking place and gives the outline of the changing order. So, how can India set and shape the global response? And what should be the principles on which the new multilateralism should be based? Read to know…

    Opportunity for India to set the global response

    • As chair of the Executive Board of the World Health Assembly – India can set the global response in terms of multilateralism, not just medical issues.
    • How can India set a global response in terms of multilateralism? Consider the following- a rare alignment of stars for agenda-setting.
    • 1) In September, the United Nations General Assembly will discuss the theme, “The Future We Want”.
    • 2) In 2021, India joins the UN Security Council (non-permanent seat).
    • 3) And chairs the BRICS Summit in 2021.
    • 4) Also hosts the G-20 in 2022.
    • New principles for international system: At the online summit of the Non-Aligned Movement, in May, Prime Minister Modi called for new principles for the international system.
    • His new globalisation model based on humanity, fairness and equality has wide support in a more equal world as, for the first time since 1950, everyone is experiencing the same (virus) threat.

    Changing global context

    • China is losing influence and the dynamics in its relations with the United States.
    • And Asia again is emerging as the centre of global prosperity.
    • The global governance, economy, scientific research and society are all in need of being re-invented.
    • India should use this opportunity to recover our global thought leadership.

    The US-China powerplay and its consequences for multilateralism

    • The clash between China and the U.S. at the just concluded World Health Assembly in May marks the end of the multilateralism of the past 70 years.
    • The donor-recipient relationship between developed and developing countries has ended with China’s pledge of $2-billion.
    • The agenda-setting role of the G7 over UN institutions and global rules has also been effectively challenged by WHO ignoring the reform diktat of the U.S. leading to its withdrawal, and characterisation of the G7 as “outdated”.
    • The U.S. has also implicitly rejected the G20 and UN Security Council, for an expanded G7 “to discuss the future of China”.
    • Important shift in the UN: After World War II, the newly independent states were not consulted when the U.S. imposed global institutions fostering trade, capital and technology dependence.
    • This was done ignoring the socio-economic development of these countries.
    • But social and economic rights have emerged to be as important as political and procedural rights.
    • Against this backdrop, China’s President Xi Jinping deftly endorsed the UN Resolution on equitable access to any new vaccine.

    Emergence of Asia and China: Challenges for the US and the West

    • The U.S. faces an uphill task in seeking to lead a new multidimensional institution in the face of China’s re-emergence.
    • The re-emergence of China is based on technology, innovation and trade balancing U.S. military superiority.
    • At the same time, there is a clear trend of declining global trust in free-market liberalism, central to western civilisation.
    • With the West experiencing a shock comparable to the one experienced by Asia, 200 years ago, the superiority of western civilisation is also under question.
    • The novel coronavirus pandemic has accelerated the shift of global wealth to Asia suggesting an inclusive global order based on principles drawn from ancient Asian civilisations.
    • Colonised Asia played no role in shaping the Industrial Revolution.
    • But, the Digital Revolution will be shaped by different values.
    • It is really this clash that multilateralism has now to resolve.

    World is questioning both U.S. and China’s exceptionalism

    • China has come out with alternative governance mechanisms to the U.S.-dominated International Monetary Fund, World Bank and World Trade Organization with its all-encompassing Belt and Road Initiative.
    • The U.S., European Union and Japan are re-evaluating globalisation as it pertains to China and the U.S. is unabashedly “America First”.
    • The world is questioning both U.S. and China’s exceptionalism.
    • For India, the strategic issue is neither adjustment to China’s power nor deference to U.S. leadership.

    Opportune moment for India to propose new multilateralism

    • The global vacuum, shift in relative power and its own potential, provides India the capacity to articulate a benign multilateralism.
    • It should include in its fold NAM-Plus that resonates with large parts of the world and brings both BRICS and the G7 into the tent.
    • This new multilateralism should rely on outcomes, not rules, ‘security’ downplayed for ‘comparable levels of wellbeing’ and a new P-5 that is not based on the G7.

    India in a important role

    • China, through an opinion piece by its Ambassador in India, has suggested writing “together a new chapter” with “a shared future for mankind”.
    • The U.S. wants a security partnership to contain China.
    • And the Association of Southeast Asian Nations trade bloc — with the U.S. walking out of the negotiations — is keen India joins to balance China.
    • With a new template. India does not have to choose.

    Three principles the new system should be based on-

    1. Peaceful coexistence

      • First, the Asian Century should be defined in terms of peaceful co-existence, freezing post-colonial sovereignty.
      • Non-interference in the internal affairs of others is a key lesson from the decline of the U.S. and the rise of China.
      • National security now relies on technological superiority in artificial intelligence (AI), cyber and space, and not expensive capital equipment, as India’s military has acknowledged.
      • Instead of massive arms imports, we should use the savings to enhance endogenous capacity.
      • And mould the global digital economy between state-centric (China), firm-centric (the U.S.) and public-centric (India) systems.

    2. New principles of trade

    • A global community at comparable levels of well-being requires new principles for trade, for example, rejecting the 25-year-old trade rule creating intellectual property monopolies.
    • Global public goods should include public health, crop research, renewable energy and batteries, even AI as its value comes from shared data.
    • We have the scientific capacity to support these platforms as part of foreign policy.

    3.  Civilisational values

    • Ancient civilisational values provide the conceptual underpinning, restructuring both the economic order and societal behaviour for equitable sustainable development.
    • Which is what a climate change impacted world, especially Africa, is seeking.

    Consider the question-“The global order is going through serious churn, and it provides India with an opportunity to shape the new multilateralism based on humanity, fairness and equality. Comment.”

    Conclusion

    In the new cold war, defined by technology and trade not territory, non-alignment is an uncertain option; India should craft a global triumvirate.

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