💥Mains Ready By December. Smash Mains & Smash PYQ Admissions Open
Talk to Mentor

Civilsdaily

Login

Type: Op-ed

  • In an uncertain world a seat at the UNSC

    As a non-permanent member of the UNSC for the next two years, India will have to navigate through a tumultuous world. Anti-terrorism will be top priority for India.

    India at UNSC

    • India will be back in the United Nations Security Council for a two-year term beginning January 1, 2021.
    • Two-year term will be a critical time in the history of the UN.
    • It is hoped that by then COVID-19 will have subsided, a U.S. President will have been elected.
    • And the contours of a new world order may have emerged.

    How elections take place

    • The basic contest for the non-permanent seats takes place in the respective regional groups and their sub-groups.
    • Voting in the General Assembly is to fulfil the requirement of countries having to secure a two-thirds majority of the member states.
    • But regional endorsement is becoming difficult.
    • Last time, it was Kazakhstan which vacated the place for India.
    • This time, it was Afghanistan. India could not have got the endorsement without such gestures from friendly countries.

    What will be India’s priorities as a member of UNSC

    • India will continue to provide leadership and a new orientation for a reformed multilateral system.
    • How far the UN will be able to reform itself in the new situation remains uncertain.
    • The UN did not succeed in either defining terrorism or in adopting the Comprehensive Convention on International Terrorism.
    • Counter-terrorism will be one of the highest priorities for India at the UNSC.

    Permanent member of India issue

    • India’s election as a non-permanent member has understandably ignited the hope that its quest for permanent membership.
    • Nothing is farther from the truth.
    • Seeking to amend the Charter to add new permanent members is difficult task.
    • None of the proposals has the possibility of securing two-thirds majority of the General Assembly and the votes of the five permanent members.
    • A majority of the UN members are against the privileges of the permanent members, particularly the veto.
    • India’s performance in the Council will not lead to its elevation to permanent membership as the opposition to any expansion is not India-specific.

    Role of India as non-permanent member

    • The non-permanent members have a collective veto over every resolution in the Council.
    • As a part of collective veto, India will have a higher profile at the UN for the next two years
    • Permanent members can prevent the adoption of resolutions by themselves through veto.
    • But they need at least nine votes to get a resolution passed.
    • India will also have a rare peep into the consultations chamber of the UNSC, which is closed to non-members of the Council.
    • India will get involved in many issues in which it may not have any direct interest.
    • Since India does not have a veto, it shall have to proceed cautiously not to offend anyone.

    Consider the question “India has been chosen as the non-permanent member of the UNSC and will be there at the critical time in the history of the UNSC. What should be India’s priority and approach as a member of the UNSC?”

    Conclusion

    India’s mission in New York has earned a reputation that it is next only to the permanent members in influence. But whether it will be able to deal with traditional challenges in novel ways will depend on the turns and twists in an uncertain world.

  • Safety net of income post Covid

    Providing a minimum basic income post-Covid will require some novel approach. This article proposes an approach with the mix of direct cash transfer and changes in the employment guarantee scheme.

    Non-universal targeted programs

    •  It is true that a universal schemes are easy to implement.
    • Non-universal targeted programmes face the problem of identification.
    • Narrowly-targeted programmes will run into complex problems of identification.
    • And the problem of identification gives rise to exclusion and inclusion errors.

    How to solve identification problem

    • There are three proposals which meet the objective of providing a minimum basic income.
    • 1) Give cash transfers to all women above the age of 20 years.
    • 2) Expand the number of days provided under MGNREGA.
    • 3) Have a national employment guarantee scheme in urban areas.
    • In all the three proposals, there is no problem of identification.
    • A combination of cash transfers and an expanded employment guarantee scheme can provide a minimum basic income.

    1) Cash transfer to all women

    • One way of doing it will be to give it to all women say above the age of 20.
    • This is an easily identifiable criterion because the Aadhaar cards carry the age of the person.
    • The female population above the age of 20 is around 42.89 crore.
    • Making available a minimum of Rs 4,000 annually as a cash transfer to all of them will cost Rs 1.72 lakh crore.
    • Which is 0.84 per cent of GDP.
    • The cost of the scheme to the government will be less if the well-off women choose not to take the cash transfer.

    2) Expanding MGNREGA

    • The Act guarantees 100 days of employment.
    • At present, MGNREGA is availed of only for 50 days of employment.
    • One way to help the poor and informal workers is to strengthen it.
    • The government needs to increase the number of days under the scheme from 100 to 150 in rural areas.

    3) Employment guarantee scheme for urban areas

    •  Introducing Employment Guarantee Act in urban areas would help also provide income.
    • Providing employment for 150 days instead of 100 days will also prove beneficial.

    Some facts and figures

    • In 2019-20, the government spent Rs 67,873 crore for providing 48 days of employment to 5.48 crore of rural households.
    • Out of this, the wage expenditure was Rs 48,762 crore.
    • The government has increased the per day wage rate from Rs 182.1 in 2019-20 to Rs 202.5 in 2020-21.
    • So, the estimated expenditure for 150 days of employment to 5.48 crore households in rural areas and 2.66 crore households in urban areas — together they account for 33 per cent of total households in the country.
    •  The additional expenditure needed for the new proposal proposal is Rs 1.9 to 2.5 lakh crore.
    • This additional expenditure is around 1 to 1.22 per cent of GDP.
    •  The total cost of the three proposals would be Rs 4.9 lakh crore or 2.4 per cent of GDP.

    But the total cost could be lower

    •  As the Employment Guarantee Programme is a demand-based programme, the number of days availed could be lower.
    •  This is happening even now.
    • Second, on cash transfers, some women, particularly from richer classes, may voluntarily drop out of the scheme.
    • Alternatively, we can provide that everyone receiving cash transfer must declare that her total monthly income is less than Rs 6,000 per month.

    Where the additional money will come from

    • Removing all exemptions in our tax system would give enough money.
    • Tax experts advocate removing exemptions so that the basic tax rate can be reduced.
    • Perhaps, out of the Rs 4.2 lakh crore which is needed, Rs 1 lakh crore can come out of phasing out of some of the expenditures.
    • While another Rs 3 lakh crore must come out of raising additional revenue.
    • Some of the non-merit subsidies, another item of expenditure, can be eliminated.

    Consider the question “What are the issues non-universal schemes faces? Suggest the ways to do with the issue of identification which such schemes face.”

    Conclusion

    In the post-COVID-19 situation, we need to institute schemes to provide a minimum income for the poor and vulnerable groups and trying the mixed approach of cash transfer to women and modification of Employment Guarantee Acts could do that.

  • Crisis facing the global order

    The corona crisis has laid bare the fissures in the global order. This article examines the four issues that are principal global challenges. Pandemic has accentuated these challenges.

    Principal global challenges

    • 1) Geopolitical tensions 2) Climate crisis. 3) Global mistrust. 4) The dark side of the digital world —  are four issues which U.N. Secretary-General Guterres listed as primary threats.
    • The four challenges have, for now, been overshadowed by the corona pandemic crisis.

    1.Climate change challenge

    • The drop in emissions in 2020 is projected to be about 8 per cent down on last year.
    • This drop will just put us on track to where we should be if we are to reach the Paris agreement goal of limiting warming to 1.5 C.
    • The threat of climate change, although raising its head again, has been constrained.

    2.Digital space and its dark side

    • Cyberspace has been a digital saviour during the corona crisis.
    • Virtual communications enhanced through various services, new apps, expanded coverage has been key to enhanced virtual lives for millions by increase of the avenues for working from home, video chat connectivity and online delivery of goods.
    • Companies that have deftly used cyberspace have prospered the most: Amazons net capital gain has been over $400 billion in 2020.
    • However, a surge in cybercrime and cyber fraud is anticipated, if not there already.
    • The logic being that cyberspace use has expanded without commensurate growth in security features.
    • Thee are dire projections of an impending “cyber Pearl Harbour”.

    3.Geopolitical tensions

    • Accentuation of geopolitical tensions during the corona crisis is well-documented.
    • The US-China relationship was already deteriorating, the blame game over the virus has exacerbated it.
    • The brazen behaviour of China in matters relating to Taiwan, Hong Kong, Australia, South China Sea and the India-China border has added to the inflammable state of geopolitics.
    • Rarely has the world seen such paucity of international cooperation since World War II.
    • The unravelling of the international institutions and partnerships that have been built since World War II is stark.

    4.Trust deficit among states

    • Trust amongst states has plummeted to its worst since World War II.
    • When faced with corona crisis shortages, almost all EU states responded at the national level.
    • Globally, at one time, more than 70 per cent of the world’s ports of entry — air, sea and land — restricted travel.
    • According to a Global Trade Alert study, nearly 90 governments blocked the export of medical supplies while 29 restricted food exports.

    Efficiency to self-sufficiency

    • Lack of trust is also impacting diversified supply chains.
    • The corona crisis is driving a shift from efficiency to self-sufficiency.
    • Japan is paying companies to relocate factories from China.
    • President Emmanuel Macron has pledged “full independence” for France in crucial medical supplies by year-end.
    • Prime Minister Modi has called for self-reliance and being vocal for local in India.
    • In the US, support for “Buy American” benchmarks for government health spending has growing bipartisan support.

    India’s role

    •  Challenges that transcend borders are of cardinal importance to India’s well being.
    • It is, therefore, time to conceptualise, in concrete terms, pathways to address them.
    • This will need to include our envisaging the new order and India’s own role in it as well as who our partners in this venture are to be.
    • Others are already working on their game plans.

    Consider the question “The cracks in the global order were apparent but the pandemic has accentuated the challenges to the global order. In light of this, examine the challenges to global order is facing the role that India should play.”

    Conclusion

    If India wants to be “rule shapers” rather than being “rule takers”, then we need to start working in partnership at blueprints for change. It is never too early to plan for the future

  • Reforming Digital policy

    Pandemic has been ravaging the economies across the globe but digital services have escaped the onslaught and are thriving. For India, this could be an opportunity. This article highlights the importance of the sector and how some proposed measures could have an adverse impact on the sector.

    Emerging trends in economies

    • Economic growth has dropped, and the competition for foreign investment is intensifying.
    • There are national campaigns to shift supply chains and the urgent necessity to reverse recessionary trends.
    • The United Nations Conference on Trade and Development just released its latest World Investment Report.
    • The report projected that FDI to developing Asian economies could drop by as much as 45%.

    Why digital services would beat this trend

    • Digital services have become critical to every 21st century economy.
    • Digital services are filling gaps when national or global emergencies interrupt more traditional modes of commerce.
    • It enables access to and delivery of a wide array of products across multiple sectors.

    How it matters for India

    • India offers undeniable potential for innovative homegrown start-ups.
    • India has a huge and increasingly digitised population.
    • Indian government policies will be key determinants in how quickly and at what level the economy attracts new investment.
    • Fostering innovation, and expanding its exporting prowess will also matter.

    Three pending measure

    • Three pending reform measures under consideration are-
    • 1) Personal Data Protection Bill (PDPB).
    • 2) The e-commerce policy.
    • 3) The Information Technology Act Amendments.

    Issues with these measures

    • These regulatory reforms seem to emphasise a focus on protecting the domestic market for domestic companies.
    • It also prioritises government access to data.
    • It may be difficult to reconcile these approaches with India’s strong interest in i) promoting data privacy ii) protecting its democratic institutions iii) encouraging FDI and India’s position as a global leader in information technology.

    India-US trade relationship issue

    • The India-U.S. trade relationship is uncertain.
    • The bilateral relationship is an important factor for greater trade and investment in digital services.
    • India and the U.S. are yet to conclude negotiation on a bilateral trade agreement that could address some digital services issues.
    • The U.S. just initiated a “Section 301” review.
    • The review seeks whether digital services taxes in 10 countries constitute “unfair” trade measures, including India’s equalisation levy.

    Consider the question “Digital services have become critical to every 21st-century economy and more so for Indian economy. In light, highlight the salience of digital services for the Indian economy and what are the issues that could affect the growth trajectory of the sector in India?”

    Conclusion

    Post-COVID-19 international cooperation and approaches to good governance in the digital sphere will be top-priority initiatives. The steps India takes now could well establish itself as a true global leader.

  • Legal principles to reduce custodial deaths and torture

    This article enumerates the existing legal framework to avoid custodial torture and deaths. Judiciary played a major role in the evolution of these procedures. Yet, incidents of custodial deaths happen. This points to the lack of implementation of established guidelines and procedures.

    Understanding the background of problem

    • In wake of custodial deaths in Tamil Nadu, the debate on Roman dilemma: “Who will guard the guardians” rises again.
    • Torture is anathema to democracy and cannot be tolerated in a civilized society.
    • Answer to prevention of torture can be found in multiple sources like Royal Commissions in the UK, Law Commission report and Police Commission reports in India and also Supreme Court’s progressive case law, like Joginder Kumar (1994) and Nilabati Behera (1993).
    • However, the basic loophole which exists even today is that most torture is done before the arrest is recorded by the police.
    • Safeguards obviously kick in only after the arrest is shown. This is a perennial, insoluble dilemma and all devious police forces globally use it.

    Supreme Court judgement in DK Basu case

    • The DK Basu judgment since 1987 is crucial in dealing with issue of custodial deaths.
    • The judgement has origin from a letter complaint in 1986, which was converted into PIL.
    • 4 crucial and comprehensive judgments — in 1996, twice in 2001 and in 2015 — lay down over 20 commandments, forming the complete structure of this judgement.

    Details of judgment:

    First 11 commandments in 1996, focused on vital processual safeguards:

    • All officials must carry name tags and full identification, arrest memo must be prepared, containing all details regarding time and place of arrest, attested by one family member or respectable member of the locality.
    • The location of arrest must be intimated to one family or next friend, details notified to the nearest legal aid organisation and arrestee must be made known of DK Basu judgement.
    • All such compliances must be recorded in the police register, arrestee must get periodical medical examination, inspection memo must be signed by arrestee also and all such information must be centralised in a central police control room.
    • Breach to be culpable with severe departmental action and additionally contempt also, and this would all be in addition to, not substitution of, any existing remedy.
    • All of the above preventive and punitive measures could go with, and were not alternatives to, full civil monetary damage claims for constitutional tort.

    8 other intermediate orders till 2015:

    • Precise detailed compliance reports of above orders to be submitted by all states and UT and any delayed responses to be  looked into by special sub-committees appointed by state human rights body.
    • Also where no SHRC existed, the chief justice of the high courts to monitor it administratively.
    • It emphasised that existing powers for magisterial inquiries under the CrPC were lackadaisical and must be completed in four months, unless sessions court judges recorded reasons for extension.
    • It also directed SHRCs to be set up expeditiously in each part of India.

    The third and last phase of judgment ended in 2015:

    • Stern directions were given to set up SHRCs and also fill up large vacancies in existing bodies.
    • The power of setting up human rights courts under Section 30 of the NHRC Act was directed to be operationalised.
    • All prisons had to have CCTVs within one year.
    • Non-official visitors would do surprise checks on prisons and police stations.
    • Prosecutions and departmental action to be made unhesitatingly mandated.

    Where do we lack?

    • In operationalising the spirit of DK Basu judgment, in punitive measures, in last mile implementation, in breaking intra-departmental solidarity with errant policemen and in ensuring swift, efficacious departmental coercive action plus criminal prosecution.
    • A 1985 Law Commission report directing enactment of section 114-B into our Evidence Act, raising a rebuttable presumption of culpability against the police if anyone in their custody dies or is found with torture, has still not become law, despite a bill introduced as late as 2017.
    • We still have abysmally deplorable rates of even initiating prosecutions against accused police officers. Actual convictions are virtually non-existent.

    Consider the question “Custodial torture is an anathema to democracy. Examine the issues related to custodial torture and how is it against the basic fundamental rights? What steps should be taken to prevent such acts by the police functionaries?”

    Conclusion

    Monitoring and implementation of DK Basu by independent and balanced civil society individuals at each level, under court supervision, is sufficient to minimise this scourge. It is high time we take actions in this direction.

  • How much forex reserve is too much

    India’s foreign exchange reserves touched an unprecedented level. Being reserves, the reserves also represent the lost opportunity. This article examines the reasons for and utility of maintaining huge reserves.

    Reasons for surge in the forex reserves

    • The recent forex reserves surge was a result of two things:
    • 1) Foreign institutional investors reinvested in the Indian market in May-June after they exited their positions in panic in March.
    • 2) A global fall in fuel prices has reduced India’s oil import bill, allowing it to save up forex reserves.

    But why does India keeps huge forex reserves- 3 possibilities

    • Sufficiency of forex reserves is sometimes measured on how many months’ worth of imports a country can afford.
    • While six months is considered sufficient.
    • The RBI in December 2019 said it had enough to sustain for 10 months, the forex reserves were then $0.4 trillion.
    • Today, the cover is 12 months!
    • This is despite having a sufficient credit line from the IMF, should there be a credit shock.
    • So, there are 3 possibilities for why government maintains such huge reserves.
    • 1) Excess forex reserves are likely the government’s contingency fund, in case the economy suddenly topples.
    • The pandemic has increased the government’s insecurity.
    • 2) Another possibility is that the government is accumulating these reserves as “Plan-B” savings should its strategic disinvestment plans fail.
    • 3) Forex reserves are also likely a way for India now to maintain its global rating.
    • The fundamental use of India’s foreign exchange should be to ensure the Rupee (INR) stability.

    Stability of Rupee

    •  Despite steadily rising reserves, INR fluctuated between 77 and 75 against the US dollar in the last two months.
    • INR has become one of Asia’s worst currencies.
    • The RBI may allow it to devalue further to support its balance sheet,
    • Devaluation would enable it to transfer a big chunk of its realised profits as dividend to the starving government.

    Lost opportunity

    • It is understandable for oil-rich countries to maintain high forex reserves.
    • A single oil trade hiccup can derail their economy.
    • Economists have theorised that holding high forex reserves is unnecessary.
    • In fact, not using them to finance mega infrastructure projects are lost opportunities.
    • And yet the Indian government has held these reserves in liquid, possibly for its feared D-day.

    Perils of using forex reserves as emergency funds

    •  Over-reliance on these floating funds to stimulate the economy might be poorly informed.
    • The potential of these funds to switch direction [i.e. they could exit as fast] should not be underestimated.
    • In March alone, foreign institutional investments in India fell by Rs 65,000 crore.
    • India’s foreign exchange reserves registered this impact.
    • Reversing the dip, investments went up in May and now in June with some big corporate deals.
    • If the government intends to use forex reserves as an emergency fund, it should ensure that they do not shrink just when they are most needed.

    Consider the question “India’s foreign exchange reserves touched new height recently. This also giver rise to the argument of lost opportunity. In light of this discuss the utility of maintaining foreign exchange reserves and issue of optimum level of foreign exchange reserves.”

    Conclusion

    Maintaining high foreign exchange reserves definitely entails cost. The cost-benefit analysis and the lost opportunity must be the basis for deciding the level of the reserves.

  • Why spending on infrastructure matters

    Spending on infrastructure can help kickstart the economy. This article highlights the importance of spending on infrastructure and suggests ways to find resources.

    Gloomy prospects for Indian economy

    • The IMF estimates the global economy to contract by -4.9 per cent this year.
    • It could still contract should the virus not recede in the latter half of 2020.
    • As for the Indian economy, growth has been decelerating for the past eight quarters.
    • Indications by the RBI suggest that growth is contracting for the first time in four decades.
    •  We must address the elephant in the room — the need to further aid a demand recovery as the economy begins to reopen.

    Components of Indias growth

    • Growth in the Indian economy has been dominated by the following components respectively-
    • 1) Consumption.
    • 2) It is followed by investments.
    • 3) Government expenditure.
    • 4) Net exports.
    • However, consumption and investment demand have been subdued for the past few quarters, dragging down overall growth.
    • Keynesian theory suggests that for aggregate demand to increase, at least one of the components of GDP needs to expand.

    Declining consumption demand

    • These two components were perhaps casualties of a sharp deceleration in credit supply.
    •  The IL&FS debacle in September 2018 only made matters worse.
    • The NBFC sector, suffered from funding crunches leading to a further squeeze in credit supply.
    • Freeze in credit supply impacted consumption demand.
    • This deceleration is likely to exacerbate going forward.

    Declining rate of investment

    • Broad-based utilisation levels, as represented by the RBI, dropped to 68.6 per cent in Q3FY20.
    • This is well below the 75 per cent benchmark for new capacity addition, implying suboptimal levels of fresh investments.
    • A higher rate of investments is essential for sustainable economic growth.
    • The deteriorating economic scenario and increasing levels of debt with rating downgrades for industries are likely to aggravate existing problems.

    Importance of expenditure on spending on infrastructure

    • Government expenditure is the only exogenously determined element in a Keynesian framework.
    • The positive push required to aid a demand recovery has to come through the government.
    • However, with sparse resources that India has, we must deploy funds that yield a higher return.
    • One key area that can provide the necessary support is infrastructure investment.
    • A study by S&P Global estimates 1 per cent of GDP spend on infrastructure can boost real growth by 2 per cent while creating 1.3 million direct jobs.
    • Historically, countries have used infrastructure to provide counter-cyclical support to the economy.
    • Notably, infrastructure has strong links to growth and with both supply and demand-side features that help generate employment and long-term assets.
    • India already has an upper hand here.
    • Front-loading key projects with greater visibility from the recently announced National Infrastructure Pipeline (NIP) could aid in a quicker recovery.

    Special infrastructure bond

    •  India already has several institutions for infrastructure development purposes from the likes of IIFCL, IRFC to more recently NIIF.
    • Taking a cue from China, floating special infrastructure bonds through this organisation to accelerate the funding of the NIP could aid a speedier recovery.
    • Further, taking a page from the New Deal and its Reconstruction Finance Corporation, this institution’s ability for greater leverage can be used to make amends to our credit channels.
    • This ability could also be used for the development of state government and urban local body bond markets.
    • This could help businesses and bankers overcome risk aversion and bring back trust in the system while financing new paths for growth.

    Consider the question “Highlight the role of consumption and investment as the two largest contributors to India’s growth and explain how spending on the infrastructure could help revive the economy hit hard by the pandemic”

    Conclusion

    The exogenous component in the form of spending by the government could step-in in a greater way, perhaps because, it is the only one that can.

  • Resistance to China is going to be definitive moment for India

    How India overcomes the challenge posed by China would have far-reaching effects. Role of Russia and the U.S. is important for India. This article discusses these factors and the significance of the outcome of the conflict started at Galwan. 

    Two takes on India’s China policy

    • Following Galwan encounter, there are two views about the future of India’s China policy.
    • Some say that structural constraints would limit dramatic changes in policy once the heat of the moment dissipates.
    • While others say that the Galwan clash comes amidst the deepening crisis in bilateral relations over the last decade.
    • Stalled boundary talks, a widening trade deficit, the clash of national interests in the region, and Chinese opposition to India’s global aspirations have together strained Sino-Indian relations.
    • Galwan is the last straw, the argument goes, that broke the camel’s back.

    So, what will be the outcome

    •  The relationship is likely to depend on how the current military confrontation in Ladakh is resolved.
    • If it ends with a quick return to the status quo that prevailed in April, inertia is likely to limit radical policy departures.
    • If the Ladakh crisis ends in a setback for India, the pressure on Delhi to radically reorient its China policy will mount.

    What if the standoff continues?

    • In that case strengthening India’s military and political hand against China is the immediate objective of Delhi’s post-Galwan diplomacy.
    • The long term steps suggested include the construction of a military alliance with the US and other Western partner.
    • As as well as economic decoupling and diversification.
    • Short term steps are about being able to stare down the Chinese in the current military confrontation and hold its ground.

    Role of Russia

    • Three decades after the collapse of the Soviet Union, India’s dependence on Russian arms remains substantive.
    • Rajnath Singh’s visit to Moscow amidst the crisis with China underlines the weight of the past in India’s security policy.
    • India is also pressing other major defence suppliers, including France and Israel, to accelerate deliveries on contracted defence equipment.
    • There have been reports from Russia, that China is pressing Moscow not to sell the new fighter aircraft to India.
    • Russia and China are strong strategic partners today.
    • While the past suggests India has a special claim to Russian affections, there is a Sino-Russian strategic cohabitation today in opposition to America
    • How Russia responds to India’s request will have a major bearing on the future evolution of Delhi’s ties with Moscow.

    Role of the U.S.

    • Unlike Russia’s public stance of neutrality between India and China, Washington has come out in favour of Delhi.
    • There was vocal public support of the US defence and foreign policy establishment against Chinese aggression at Galwan.
    •  Media reports from Delhi say the US is already supplying valuable real-time military intelligence of value to the Indian armed forces.
    • Washington is apparently willing to do more but is letting Delhi decide the pace and intensity of that cooperation.

    Challenges in the U.S. cooperation

    • The uncertain political moment in the US amidst the general election scheduled for early November can’t be underestimated.
    • A change of guard in Washington will certainly slow things down as the new administration settles down and reviews its priorities.
    • America’s stakes in China are far higher than Russia’s.
    • Profound economic interdependence of the U.S. and China is a significant political constraint on the US’s options.
    • On deeper military cooperation with Washington, Delhi would want to move with care rather than rush into it as it did in 1962.

    How will outcomes of the crisis matter for India

    • If Delhi comes out of this crisis wounded, its troubles at home and the world will mount significantly.
    • A weakened India will find recasting its China policy even harder.
    • But victorious India will find its international political stock rising and its options on China expanding.
    •  Successful Indian resistance to China’s expansionism would be a definitive moment in the geopolitical evolution of Asia.
    • The stakes for India and the world, then, are far higher today than in 1962.

    Consider the question “Examine the issues that introduce friction in India-China relations. Also, elaborate on the scope of India’s alliance with the U.S to counter the challenges posed by China.”

    Conclusion

    Outcomes of the resistance will have a profound impact on India’s standing and India’s destiny.

  • Making sense of moves of China

    The role played by intelligence and emphasis on Summit diplomacy in relation with China are the two issues discussed in this article. So, what went wrong in Galwan incident from the intelligence point of view? And what are the perils of Summit diplomacy? Read to know...

    Galwan-New and fractious phase

    • What occurred in the Galwan heights on June 15, must not be viewed as an aberration.
    • It would be more judicious to view it as signifying a new and fractious phase in China-India relations.
    • Even if the situation reverts to what existed in mid-April India-China relations appear set to witness a “new and different normal”.
    • China’s reaction has been consistent — India must move out of Galwan.
    • This is something that India cannot ignore any longer.
    • Galwan incident cannot be viewed as a mere replay of what took place in Depsang (2013), Chumar (2014) and Doklam (2017).
    • This is a new and different situation and India must not shrink from addressing the core issue that relations between India and China are in a perilous state.

    Close and careful analysis of China’s claim is necessary

    • China’s assertion of its claim to the whole of the Galwan Valley needs close and careful analysis for following reasons-
    • 1) Point 14 gives China a virtual stranglehold over the newly completed, and strategically significant, Darbuk-Shyok-Daulat Beg Oldie Road, which leads on to the Karakoram Pass.
    • 2) The strategic implications for India of China’s insistence on keeping the whole of the Galwan Valley are serious as it fundamentally changes the status quo.
    • 3) By laying claim to the Galwan Valley, China has reopened some of the issues left over from the 1962 conflict.
    • And this demonstrates that it is willing to embark on a new confrontation.

    LAC and claim line of China

    • Ambiguity has existed regarding the Line of Actual Control (LAC) in this sector.
    • The Chinese “claim line” is that of November 1959.
    • For India the LAC is that of September 1962.
    • In recent years, both sides had refrained from reopening the issue, but China has never given up its claims.
    • By its unilateral declaration now, China is seeking to settle the matter in its favour. India needs to measure up to this challenge.

    Importance of Aksai Chin

    • The importance of Aksai Chin for China has greatly increased of late, as it provides direct connectivity between two of the most troubled regions of China, viz., Xinjiang and Tibet.
    • This does not seem to have been adequately factored in our calculations.
    • While Indian policymakers saw the reclassification of Ladakh as purely an internal matter.
    • They overlooked the fact that for China’s military planners it posited a threat to China’s peace and tranquillity.

    Intelligence capabilities

    • Admittedly, the timing and nature of China’s actions should have aroused keen interest in intelligence circles about China’s strategic calculations.
    • The Chinese build-up in the Galwan Valley, Pangong Tso and Hotsprings-Gogra did not require any great intelligence effort, since there was little attempt at concealment by the Chinese.
    • India also possesses high-quality imagery intelligence (IMINT) and signals intelligence (SIGINT) capabilities.
    • These capabilities are distributed between the National Technical Research Organisation, the Directorate of Signals Intelligence of the Ministry of Defence and other agencies.
    • Which made it possible to track Chinese movement.
    • Where intelligence can be faulted is with regard to inadequate appreciation of what the build-up meant, and what it portended for India.
    • This is indicative of a weakness in interpretation and analysis of the intelligence available.
    • And also of inability to provide a coherent assessment of China’s real intentions.
    • Intelligence assessment of China’s intentions, clearly fell short of what was required.
    • While India’s technological capabilities for intelligence collection have vastly increased in recent years, the capacity for interpretation and analysis has not kept pace with this.
    • Advances in technology, specially Artificial Intelligence have, across the world, greatly augmented efforts at intelligence analysis.

    Who has the responsibility of intelligence assessment and analysis

    • The principal responsibility for intelligence assessment and analysis concerning China, rests with the National Security Council Secretariat (NSCS) and India’s external intelligence agency, the Research and Analysis Wing (R&AW).
    • To a lesser extent, it remains with the Defence Intelligence Agency.
    • The decision of the NSCS to dismantle the Joint Intelligence Committee has contributed to a weakening of the intelligence assessment system.
    • In the case of the R&AW, lack of domain expertise, and an inadequacy of China specialists might also have been a contributory factor.

    Adverse impact of certain policy measures

    •  The preference given recently to Summit diplomacy over traditional foreign policy making structures proved to be a severe handicap.
    • Summit diplomacy cannot be a substitute for carefully structured foreign office policy making.
    • Currently, India’s Summit diplomacy has tended to marginalise the External Affairs Ministry with regard to policy making, and we are probably paying a price for it.
    • As it is, the Ministry of External Affairs’s (MEA) stock of China experts seems to be dwindling.
    • And MEA’s general tilt towards the U.S. in most matters, has resulted in an imbalance in the way the MEA perceives problems and situations.

    Conclusion

    Along with the other factors, India should also focus on intelligence analysis and interpretation and make sure there are enough China experts in the MEA.

  • Governance of the commercial banks

    This article discusses the nitty-gritty of the recently released discussion paper by the RBI on governance. Governance in the commercial bank has been in the news following the failures of some banks.

    Discussion paper by RBI

    • Recently RBI released a discussion paper on ‘Governance in Commercial Banks in India’.
    • Recently there have been high-profile instances involving governance failures in certain banks.
    • These instances have called into question the adequacy of the existing legal regime for ensuring good governance in commercial banks.
    • Internationally, the question of governance norms in banks is treated differently given the complex nature of functions performed by banks in comparison to other businesses.
    • Functions of the banks make them critical for allocation of resources in the economy, protection of consumer interests and maintenance of financial stability.

    Objectives of the discussion paper

    • The stated objective of the discussion paper is to align the current regulatory framework on bank governance with global best practices.
    • Best practices include the guidelines issued by the Basel Committee on Banking Supervision and the Financial Stability Board.

    Current regulatory framework

    • To this end, RBI adopts international standards for bank governance into the general corporate governance framework in India.
    • This general governance framework comprises the Companies Act, 2013, and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Requirements, 2015.
    • These governance norms focus on the responsibilities of the board of directors, board structure and practices.
    • And it also includes aspects of risk management, internal audit, compliance, whistle-blowing, vigilance, disclosure and transparency.

    Issue of connection between management and owner

    • RBI also constituted an internal working group to review the extant regulatory guidelines relating to ownership and control in private sector banks.
    • This group is expected to submit its report by September 30, 2020.
    • But the assumption that deeper connections between the management and the owners necessarily lead to mismanagement needs to evaluated carefully and recalibrated to ensure balanced reforms.
    • The governance risks attributable to such connections might be relevant for government-owned banks as well.

    Key recommendations in the paper

    • (1) The majority of a commercial bank’s board must comprise of independent directors.
    • This is a standard higher than that prescribed under the Companies Act and the SEBI Regulations.
    • (2) The chairperson of the board must be an independent director.
    • (3) Chairpersons of crucial board committees (the audit committee, the risk management committee and the nomination and remuneration committee) must be independent directors who are not chairpersons of any other board committee.
    • (4) The tenures of non-promoter CEOs and WTDs should be limited to 15 years.

    Way forward

    • In order to make the reform effective, the appointment process for independent directors also needs to be re-evaluated to limit the role of controlling-shareholders.
    • The liability regime for directors on the boards of banking companies should also be revisited to balance the rights and liabilities of the directors.
    • The efficacy of implementation of norms as prescribed will depend on adequate enforcement.
    • The findings of the report of the working group have to be considered to formulate a comprehensive and effective governance framework for commercial banking in India.

    Consider the question “Given the complex nature of functions performed by the banks in comparison to other businesses subjecting them to stricter norms of governance is necessary. In light of this examine the adequacy of existing governance norms and suggest ways to improve them.”

    Conclusion

    RBI must exercise caution to ensure that the reforms balance the interests of all the stakeholders and do not come at the cost of discouraging investments and entrepreneurship in the Indian banking industry.