From UPSC perspective, the following things are important :
Prelims level: Treaty with Mauritius
Mains level: Paper 3- Tiger Global case
Through this story, we will explore how investment fund companies exploit the tax agreements between the two countries. This story involves the famous case of investment by Walmart in Flipkart. So, let’s see what was involved in the case and what argument was made by the investment fund involved in the case.
Tax avoidance
Tax avoidance is the use of legal methods to minimize the amount of income tax owed by an individual or a business. This is generally accomplished by claiming as many deductions and credits as is allowable. It may also be achieved by prioritizing investments that have tax advantages, such as buying municipal bonds.
First, let’s understand why Mauritius is favourite among investors?
Mauritius and India do have a tax treaty to start with.
Suppose an investment company based out of (why not based in?) Mauritius made a lot of money selling shares of an Indian company.
Now, Indian authorities won’t tax the gains you made via the transaction.
Instead, you’ll be taxed in Mauritius.
But since Mauritius does not tax capital gains, you get away without paying capital gain tax.
So you got the answer to why Mauritius.
Obviously, foreign corporations lapped up this opportunity until 2016 — when the government finally decided to plug the gaps.
They made amendments to the treaty.
The story of Tiger Global’s investment into Flipkart
Tiger Global was one of the earliest investors in Flipkart.
They held 22% of the company until 2018 when they sold about 17% to Walmart’s Luxembourg entity FIT Holdings.
This transaction was valued at over INR 14,500 Cr.
But Tiger Global had made its investments through funds based out of Mauritius.
Since Tiger Global had made most of its investments during the first half of the decade (obviously before 2016).
So the amendment to the treaty wasn’t really applicable to them.
So when they made all that money selling their stake in Flipkart, they figured they wouldn’t have to pay any tax.
And at first sight, this argument seems legit.
Let’s dig deeper into the case by going through 3 arguments
The funds were operating out of Mauritius.
The directors were discharging their duties in Mauritius.
All in all, everything was firmly placed in Mauritius.
But if you peel back the layers, you’ll see that these funds are ultimately owned by Tiger Global Management LLC, USA — albeit through a maze of holding companies.
So, the tax authorities argued that Tiger Global had in fact set up the Mauritius based entity for the sole purpose of avoiding taxes.
And therefore contested that they shouldn’t be exempt from paying tax on gains they made through the Flipkart Transaction.
Tiger Global, miffed with the taxmen, took the matter to a quasi-judicial body — The Authority for Advance Rulings (AAR).
And the case begins.
Let’s look into three arguments.
1. Focus on transaction, not on the entity that involved in the transaction
Tiger Global investment fund counsel had the following argument to make:
“It must be proven that the transaction [the final sale of shares] itself was designed to avoid taxes.”
And proving that the structure of the entity undertaking the transaction was designed for the avoidance of income-tax should not be necessary here.
So, the Revenue (the Income Tax Department) had failed to discharge its burden of proof. But AAR didn’t agree with this argument.
2. So, what’s AAR’s argument?
AAR said that you don’t just compute taxes by looking at the final transaction.
Instead, you look at the transaction as a whole —When were the shares bought? What was the purchase price? What happened in between? Who’s the primary executioner? What’s the appreciation in value? You look at everything.
More importantly, the “head and brains” executing the transaction resided elsewhere.
Tax authorities had shown rather conclusively that a certain Mr. Charles P. Coleman (operating out of a U.S based entity) was the beneficial owner of the fund.
And that “he” was primarily responsible for most management decisions.
So the AAR hit back with the following observation:
In our opinion, it is not the holding structure only that would be relevant. The holding structure coupled with prima facie management and control of the holding structure, including the management and control of the applicants, would be relevant factors for determining the design for avoidance of tax. The applicant companies were only a “see-through entity” to avail the benefits of India-Mauritius DTAA [Double Taxation Avoidance Agreements]
But wait… what about the past judgements?
Tiger Global had another weapon in its arsenal — Past judgements on the matter.
Specifically, a particular ruling in the case of Moody’s Analytics Inc.
AAR in this case conceded that capital gains accruing to a Mauritius based entity from the transfer of shares of an Indian company shouldn’t ideally be taxed.
3. Flipkart is a Singaporean company. So, pay the taxes!
The AAR said that “In this particular case, gains were made by transferring shares of a Singaporean company. Not an Indian company.”
That’s right. Flipkart is based out of Singapore.
Flipkart Singapore is the strategic shareholder of Flipkart India.
Flipkart India is the entity that owns most of the capital assets.
The shares that were sold to Walmart — that’s Flipkart Singapore, not Flipkart India.
But the India-Mauritius tax treaty agreement is only applicable to the transfer of shares of Indian companies.
Consider the question “Examine the basis used by the Authority for Advance Rulings (AAR) that led it to rule in favour of tax authorities.”
Conclusion
AAR concluded that there was no doubt that Tiger Global had set up the Mauritius based entity to avoid paying taxes and therefore should be liable to pay what the Income Tax authorities deem fit.
Back2Basics: Vodafone tax
Can India tax the gains made by selling the shares of Singaporean company?
According to Section 9(1)(i), (popularly known as the Vodafone tax), any income accruing or arising, whether directly or indirectly (through multiple layers), inter-alia, through the transfer of a capital asset situated in India, shall be deemed to accrue or arise in India.”
So Indian tax laws are pretty clear about where the gains ought to be taxed.
But the India-Mauritius treaty doesn’t say anything about this matter.
From UPSC perspective, the following things are important :
Prelims level: Drug patents
Mains level: Paper 3- Drug pricing issue
Pricing of the drugs in a contentious issue across the world. In some countries like the U.S. price of the drug at 100000% of the production cost is not atypical. In India, prices are much lower. This article suggests the novel of Health Impact Fund which could strike the balance between affordability and R&D.
Medicines: Humanities greatest achievements
They have helped attain dramatic improvements in health and longevity as well as huge cost savings through reduced sick days and hospitalizations.
The global market for pharmaceuticals is currently worth ₹110 lakh crore annually, 1.7% of the gross world product (IPFPA 2017, 5).
Roughly 55% of this global pharmaceutical spending, ₹60 lakh crore, is for brand-name products, which are typically under patent.
Issue of high drug prices
Commercial pharmaceutical research and development (R&D) efforts are encouraged and rewarded through the earnings that innovators derive from sales of their branded products.
These earnings largely depend on the 20-year product patents they are entitled to obtain in WTO member states.
Such patents give them a temporary monopoly, enabling them to sell their new products without competition at a price far above manufacture and distribution costs, while still maintaining a substantial sales volume.
In the United States, thousandfold (100000%) markups over production costs are not atypical.
In India, the profit-maximising monopoly price of a new medicine is much lower, but similarly unaffordable for most citizens.
Covering large R&D costs: before we think about a solution
To be sure, before such huge markups can yield any profits, commercial pharmaceutical innovators must first cover their large R&D costs.
Currently, this cost is ₹14 lakh crore a year (Mikulic 2020).
This includes the cost of clinical trials needed to demonstrate safety and efficacy, the cost of capital tied up during the long development process, and the cost of any research efforts that failed somewhere along the way.
Three concerns with R&D
1. Neglect of the diseases suffered by the poor
Innovators motivated by the prospect of large markups tend to neglect diseases suffered mainly by poor people, who cannot afford expensive medicines.
The 20 WHO-listed neglected tropical diseases together afflict over one billion people (WHO n.d.) but attract only 0.35% of the pharmaceutical industry’s R&D (IFPMA 2017, 15 and 21).
Merely 0.12% of this R&D spending is devoted to tuberculosis and malaria, which kill 1.7 million people each year.
2. High prices of new medicines
Thanks to a large number of affluent or well-insured patients, the profit-maximising price of a new medicine tends to be quite high.
Consequently, most people around the world cannot afford advanced medicines that are still under patent.
This is especially vexing because manufacturing costs are generally quite low.
3. Rewards are poorly correlated to the therapeutic value of drugs
Firms earn billions by developing duplicative drugs that add little to our pharmaceutical toolbox — and billions more by cleverly marketing their drugs for patients who won’t benefit.
These large R&D investments would be much better spent on developing new life-saving treatments for deadly diseases plaguing the world’s poor.
Health Impact Fund: Solution to the above problems
The Health Impact Fund as an alternative track on which pharmaceutical innovators may choose to be rewarded.
The basic idea behind it:
Any new medicine registered with the Health Impact Fund would have to be sold at or below the variable cost of manufacture and distribution.
But would earn ten annual reward payments based on the health gains achieved with it.
How health impact fund would work?
The Health Impact Fund could start with as little as ₹20000 crore per annum and might then attract some 10-12 medicines, with one entering and one exiting in a typical year.
Registered products would then earn some ₹17000-₹20000 crore, on average, during their first ten years.
Of course, some would earn more than others – by having greater therapeutic value or by benefiting more people.
Long-term funding for the Health Impact Fund might come from willing governments.
Those countries would contribute in proportion to their gross national incomes — or from an international tax, perhaps on greenhouse gas emissions or speculative financial transactions.
Non-contributing affluent countries would forgo the benefits: the pricing constraint on registered products would not apply to them.
This gives innovators more reason to register as they can still sell their product at high prices in some affluent countries and affluent countries reason to join.
The fund will have the following 5 major benefits
1. Help the Neglected areas of research
The Health Impact Fund would get pharmaceutical firms interested in certain R&D projects that are unprofitable under the current regime – especially ones expected to produce large health gains among mostly poor people.
With the Health Impact Fund in place, there can be more research on diseases like Tuberculosis or Malaria, even Covid.
We can develop rich arsenal of effective interventions and greater capacities for targeted responses quickly.
2. Rewarding health outcomes and not sales
The Health Impact Fund will focus on performance of drugs and not make it a marketing stunt.
Like in its model, firms would earn annual reward payments based on the health gains achieved with by the medicine.
Present scenario: firms seek to influence hospitals, insurers, doctors and patients to use their patented drug and to favour it over other more effective medicines.
3. Sustainable research and marketing system
A reward mechanism oriented towards health gains rather than high-markup sales would lead to a sustainable research-and-marketing system.
How? Simple for health gains, innovators will have to ensure:
They will have to think holistically about how their drug can work in the context of many other factors relevant to treatment outcomes.
They will need to think about therapies and diagnostics together, in order to identify and reach the patients who can benefit most.
They will need to monitor results in real time to recognize and address possible impediments to therapeutic success.
Finally, they will have need to ensure that patients have affordable access to the drug and are properly instructed and motivated to make optimal use of it with the drug still in prime condition.
Such a system would obviously make research more streamlined and sustainable.
4. No fear of compulsory licence clause
Participation of commercial pharmaceutical firms is crucial for tackling global pandemics.
At present such firms have issues with use of compulsory licences by governments as it divest them of their monopoly rewards.
Health Impact Fund registration would remove this risk as states would have no reason to interfere with innovators whose profit lies in giving real and rapid at-cost access to their new product to all who may need it.
5. Holistic approach
Multinational firms can collaborate with national health systems, international agencies and NGOs, to build a strong public-health strategy around its product.
The highest goal here would be complete eradication of many communicable diseases(Example: Malaria) which we are fighting right now.
Can we apply the above to Covid-19?
Applying it to a new disease like COVID-19 is complicated by the fact that we lack here a well-established baseline representing the harm the disease would have done in the absence of the new medicine to be assessed.
For malaria, such a baseline can be established on the basis of a stable disease trajectory observable over many years.
In the case of a new epidemic, one must rely on a modelling exercise that estimates the baseline trajectory on the basis of obtainable data about the spread of the disease and its impact on infected patients.
This surely is a challenging undertaking which cannot yield precise or uncontroversial results about what damage the epidemic would truly have done if the vaccine or medication in question had not appeared.
Consider the question “Drug pricing has always plagued the authorities and policymakers. Cap it and you tend to lose on innovation. Deregulate it, and high prices make it unaffordable. In light of this, examine the issues with the R&D in the pharmaceutical sector and suggest the ways to strike the balance between lives and innovation.”
Conclusion
The Health Impact Fund would give innovators the right incentives. It would guide them to ask not: how can we develop an effective product and then achieve high sales at high markups? But rather: how can we develop an effective product and then deploy it so as to help reduce the overall disease burden as effectively as possible?
op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India,Effect Of Policies & Politics Of World On India'S Interests
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Gulf countries
Mains level: Paper 2- Stability and security in the Persian gulf and impact on India
This article analyses the security environment in the Gulf countries. Their common characteristic as being the oil producers and similarity in their social and security problems are also explained in detail in this article. And all this has implications for India. So, what are the implications? Read to know…
Let’s look at the importance of countries surrounding Persian Gulf
The United Nations defines this body of water as the Persian Gulf.
The lands around it are shared by eight countries: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
All are the members of the UN.
There is a commonality of interest among them in being major producers of crude oil and natural gas.
And thereby contribute critically to the global economy and to their own prosperity.
This has added to their geopolitical significance.
At the same time, turbulence has often characterised their inter se political relations.
Arab Countries surrounding Persian Gulf
Power play and security of the region
For eight decades prior to 1970, this body of water was a closely guarded British lake, administered in good measure by imperial civil servants from India.
When that era ended, regional players sought to assert themselves.
Imperatives of rivalry and cooperation became evident and, as a United States State Department report put it in 1973, ‘The upshot of all these cross currents is that the logic of Saudi-Iranian cooperation is being undercut by psychological, nationalistic, and prestige factors, which are likely to persist for a long time.’
The Nixon and the Carter Doctrines were the logical outcomes to ensure American hegemony.
An early effort for collective security, attempted in a conference in Muscat in 1975, was thwarted by Baathist Iraq.
The Iranian Revolution put an end to the Twin Pillar approach and disturbed the strategic balance.
The Iraq-Iran War enhanced U.S. interests and role.
Many moons and much bloodshed later, it was left to the Security Council through Resolution 598 (1987) to explore ‘measures to enhance the security and stability in the region’.
Gulf regional security framework: Some questions
Any framework for stability and security thus needs to answer a set of questions:
Security for whom, by whom, against whom, for what purpose?
Is the requirement in local, regional or global terms?
Does it require an extra-regional agency?
Given the historical context, one recalls a Saudi scholar’s remark in the 1990s that ‘Gulf regional security was an external issue long before it was an issue among the Gulf States themselves.’
What should be the ingredients of a regional security framework?
The essential ingredients of such a framework would thus be to ensure: 1) conditions of peace and stability in individual littoral states; 2) freedom to all states of the Gulf littoral to exploit their hydrocarbon and other natural resources and export them; 3) freedom of commercial shipping in international waters of the Persian Gulf 4)freedom of access to, and outlet from, Gulf waters through the Strait of Hormuz; 5) prevention of conflict that may impinge on the freedom of trade and shipping and 6)prevention of emergence of conditions that may impinge on any of these considerations.
Could such a framework be self-sustaining or require external guarantees for its operational success?
If the latter, what should its parameters be?
Misunderstanding the role great powers can play
Statesmen often confuse great power with total power and great responsibility with total responsibility.
The war in Iraq and its aftermath testify to it.
The U.S. effort to ‘contain’ the Iranian revolutionary forces, supplemented by the effort of the Arab states of the littoral (except Iraq) GCC initially met with success in some functional fields and a lack of it in its wider objectives.
The turbulent nature of US-Iran relations
In the meantime, geopolitical factors and conflicts elsewhere in the West Asian region — Yemen, Syria, Libya — aggravated global and regional relationships.
And it hampered a modus vivendi in U.S.-Iran relations that was to be premised on the multilateral agreement on Iran’s nuclear programme agreed to by western powers and the Obama Administration.
But it was disowned by U.S. President Donald Trump whose strident policies have taken the region to the brink of armed conflict.
Perception of declining U.S. commitment to sub-regional security
Perceptions of declining U.S. commitment to sub-regional security have been articulated in recent months amid hints of changing priorities.
This is reported to have caused disquiet in some, perhaps all, members of the GCC, the hub of whose security concern remains pivoted on an Iranian threat (political and ideological rather than territorial).
And American insurance to deter it based on a convergence of interests in which oil, trade, arms purchases, etc have a role along with wider U.S. regional and global determinants.
It is evident that a common GCC threat perception has not evolved over time.
It has been hampered by the emergence of conflicting tactical and strategic interests and subjective considerations.
The current divisions within the organisation are therefore here to stay.
These have been aggravated by 1)the global economic crisis, 2) the immediate and longer term impact of COVID-19 on regional economies, 3) the problems in the Organization of the Petroleum Exporting Countries (OPEC), 4) and the decline in oil prices.
Let’s look at the emerging trends in the region
One credible assessment suggests that in the emerging shape of the region.
1) Saudi Arabia is a fading power.
2) UAE, Qatar and Iran are emerging as the new regional leaders.
3) Oman and Iraq will have to struggle to retain their sovereign identities.
4)The GCC is effectively ended, and OPEC is becoming irrelevant as oil policy moves to a tripartite global condominium.
None of this will necessarily happen overnight and external intervention could interfere in unexpected ways.
But it is fair to say that the Persian Gulf as we have known for at least three generations is in the midst of a fundamental transformation.
Improvement relations between Arab states and Iran
With the Arab League entombed and the GCC on life-support system, the Arab states of this sub-region are left to individual devices to explore working arrangements with Iraq and Iran.
The imperatives for these are different but movement on both is discernible.
With Iran in particular and notwithstanding the animosities of the past, pragmatic approaches of recent months seem to bear fruit.
Oman has always kept its lines of communication with Iran open.
Kuwait and Qatar had done likewise but in a quieter vein.
And now the UAE has initiated pragmatic arrangements.
These could set the stage for a wider dialogue.
Both Iran and the GCC states would benefit from a formal commitment to an arrangement incorporating the six points listed above.
So would every outside nation that has trading and economic interests in the Gulf. This could be sanctified by a global convention.
Record shows that the alternative of exclusive security arrangements promotes armament drives, enhances insecurity and aggravates regional tensions.
It unavoidably opens the door for Great Power interference.
Ties with India and impact on its strategic interests
Locating the Persian Gulf littoral with reference to India is an exercise in geography and history.
The distance from Mumbai to Basra is 1,526 nautical miles and Bander Abbas and Dubai are in a radius of 1,000 nautical miles.
The bilateral relationship, economic and political, with the GCC has blossomed in recent years.
The governments are India-friendly and Indian-friendly and appreciate the benefits of a wide-ranging relationship.
This is well reflected in the bilateral trade of around $121 billion and remittances of $49 billion from a workforce of over nine million.
GCC suppliers account for around 34% of our crude imports and national oil companies in Saudi Arabia and Abu Dhabi are partners in a $44 billion investment in the giant Ratnagiri oil refinery.
In addition, Saudi Aramco is reported to take a 20% stake in Reliance oil-to-chemicals business.
The current adverse impact of the pandemic on our economic relations with the GCC countries has now become a matter of concern.
India’s relationship with Iran
The relationship with Iran, the complex at all times and more so recently on account of overt American pressure, has economic potential and geopolitical relevance on account of its actual or alleged role in Pakistan and Afghanistan.
Iran also neighbours Turkey and some countries of Central Asia, the Caucasus and the Caspian Sea region.
Its size, politico-technological potential and economic resources, cannot be wished away, regionally and globally, but can be harnessed for wider good.
Consider the question “Stability and security of the Persian Gulf region has wider consequences for Indians strategic concerns. Comment.”
Conclusion
Indian interests would be best served if this stability is ensured through cooperative security since the alternative — of competitive security options — cannot ensure durable peace.
From UPSC perspective, the following things are important :
Prelims level: GDP, GNP, GVA etc.
Mains level: Not Much
The National Statistical Office (NSO) recently released its provisional estimates of national income for the financial year 2019-20. The release also detailed the estimates of the Gross Value Added (GVA).
Try this question from CSP 2011:
Q. In the context of Indian economy, consider the following statements
1. The growth rate of GDP has steadily increased in the last five years.
2. The growth rate in per capita income has steadily increased in the last five years.
Which of the statements given above is/are correct?
(a.) 1 only
(b.) 2 only
(c.) Both 1 and 2
(d.) Neither 1 nor 2
The GVA method
In 2015, in the wake of a comprehensive review of its approach to GDP measurement, India opted to make major changes to its compilation of national accounts.
It aims to bring the whole process into conformity with the UN System of National Accounts (SNA) of 2008.
What is GVA?
As per the SNA, GVA is defined as the value of output minus the value of intermediate consumption.
GVA is a measure of the contribution to GDP made by an individual producer, industry or sector.
At its simplest, it gives the rupee value of goods and services produced in the economy after deducting the cost of inputs and raw materials used.
It can be described as the main entry on the income side of the nation’s accounting balance sheet, and from economics, perspective represents the supply side.
How it has changed income calculation?
While India had been measuring GVA earlier, it had done so using ‘factor cost’.
GDP at ‘factor cost’ was the main parameter for measuring the country’s overall economic output until the new methodology was adopted.
GVA at basic prices became the primary measure of output across the economy’s various sectors and when added to net taxes on products amounts to the GDP.
In the new series, the base year was shifted to 2011-12 from the earlier 2004-05.
GVA estimates by NSO
As part of the data on GVA, the NSO provides both quarterly and annual estimates of output — measured by the gross value added — by economic activity.
The sectoral classification provides data on eight broad categories that span the gamut of goods produced and services provided in the economy.
These are: 1) Agriculture, Forestry and Fishing; 2) Mining and Quarrying; 3) Manufacturing; 4) Electricity, Gas, Water Supply and other Utility Services; 5) Construction; 6) Trade, Hotels, Transport, Communication and Services related to Broadcasting; 7) Financial, Real Estate and Professional Services; 8) Public Administration, Defence and other Services.
How relevant is the GVA data given that headline growth always refers to GDP?
The GVA data is crucial to understand how the various sectors of the real economy are performing.
The output or domestic product is essentially a measure of GVA combined with net taxes.
However, GDP can be and is also computed as the sum total of the various expenditures incurred in the economy.
It includes private consumption spending, government consumption spending and gross fixed capital formation or investment spending; these reflect essentially on the demand conditions in the economy.
Significance of GVA
From a policymaker’s perspective, it is vital to have the GVA data to be able to make policy interventions, where needed.
Also, from global data standards and uniformity perspective, GVA is an integral and necessary parameter in measuring a nation’s economic performance.
Issues with GVA
As with all economic statistics, the accuracy of GVA as a measure of overall national output is heavily dependent on the sourcing of data and the fidelity of the various data sources.
To that extent, GVA is as susceptible to vulnerabilities from the use of inappropriate or flawed methodologies as any other measure.
Economists argue that India’s switch of its base year to 2011-12 had led to a significant overestimation of growth.
They argued that the value-based approach instead of the earlier volume-based tack in GVA estimation had affected the measurement of the formal manufacturing sector and thus distorted the outcome.
From UPSC perspective, the following things are important :
Prelims level: IPAC
Mains level: Global move to curb Chinese overambitions
Senior lawmakers from eight democracies including the US have united to counter Communist China. They have launched the Inter-Parliamentary Alliance on China (IPAC).
Points to ponder:
The world is growing conscious against China after its coronavirus adventure. IPAC is the first step towards the institutionalization of the Anti-China consciousness!
What should be India’s stance here?
IPAC
IPAC is a new cross-parliamentary alliance to help counter what the threat posed by China’s growing influence on global trade, security and human rights.
The participating nations include the US, Germany, UK, Japan, Australia, Canada, Sweden, Norway, as well as members of the European parliament.
It is an international cross-party group of legislators working towards reform on how democratic countries approach China.
Comprised of legislators from eight democracies it will be led by a group of co-chairs who are senior politicians drawn from a representative cross-section of the world’s major political parties.
The group aims to “construct appropriate and coordinated responses, and to help craft a proactive and strategic approach on issues related to China.”
From UPSC perspective, the following things are important :
Prelims level: PM-KISAN
Mains level: Paper 3- Agri-marketing reforms
agriculture plays an important role in decreasing rural poverty in developing countries. Improved irrigation methods, seeds, and fertilizers have led to increased agricultural production in rural areas. The ECA is an act which was established to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or black-marketing would affect the normal life of the people. The ECA was enacted in 1955. This includes foodstuff, drugs, fuel (petroleum products) etc
From UPSC perspective, the following things are important :
Prelims level: EPI
Mains level: India's EPI and various loopholes in its climate action policy
India has secured 168 ranks in the 12th edition of the biennial Environment Performance Index (EPI Index 2020).
CSP 2019 has been a year with two questions based on rankings and indices viz. the EoDB index and Global Competitiveness Index. Note all such indices and their publishing agencies here at [Prelims Spotlight] Important reports and indexes
About EPI
The EPI measures the environmental performance of 180 countries.
It is biennially released by the Yale University.
It considers 32 indicators of environmental performance, giving a snapshot of the 10-year trends in environmental performance at the national and global levels.
The performance on climate change was assessed based on the following indicators —
Adjusted emission growth rates;
Composed of growth rates of four greenhouse gases and one pollutant;
Growth rate in carbon dioxide emissions from land cover;
Greenhouse gas intensity growth rate; and
Greenhouse gas emissions per capita.
Performance of the South Asian Region
The 11 countries lagging behind India were — Burundi, Haiti, Chad, Solomon Islands, Madagascar, Guinea, Côte d’Ivoire, Sierra Leone, Afghanistan, Myanmar and Liberia.
All South Asian countries, except Afghanistan, were ahead of India in the ranking.
India’s performance
A ten-year comparison progress report in the index showed that India slipped on climate-related parameters.
India scored below the regional average score on all five key parameters on environmental health, including air quality, sanitation and drinking water, heavy metals and waste management.
It has also scored below the regional average on parameters related to biodiversity and ecosystem services too.
Among South Asian countries, India was at the second position (rank 106) after Pakistan on ‘climate change’. Pakistan’s score (50.6) was the highest under the category.
Remarks for India
The report indicated that black carbon, carbon dioxide emissions and greenhouse emissions per capita increased in 10 years.
India needs to re-double national sustainability efforts on all fronts, according to the index.
It needs to focus on a wide spectrum of sustainability issues, with a high-priority to critical issues such as air and water quality, biodiversity and climate change.
From UPSC perspective, the following things are important :
Prelims level: Aerosols
Mains level: Assessing the potential of aerosols in global warming
Indian researchers have found that the effect of anthropogenic aerosols is much higher over the high altitudes of western trans-Himalayas.
Try this question from CSP 2019:
Q. In the context of which of the following do some scientists suggest the use of cirrus cloud thinning technique and the injection of sulphate aerosol into the stratosphere?
(a) Creating the artificial rains in some regions
(b) Reducing the frequency and intensity of tropical cyclones
(c) Reducing the adverse effects of solar wind on the Earth
(d) Reducing the global warming
What are Aerosols?
An aerosol is a suspension of fine solid particles or liquid droplets in air or another gas.
They can be natural or anthropogenic.
Examples of natural aerosols are fog, mist, dust, forest exudates and geyser steam. Examples of anthropogenic aerosols are particulate air pollutants and smoke.
The liquid or solid particles have diameters typically less than 1 μm; larger particles with a significant settling speed make the mixture a suspension, but the distinction is not clear-cut.
Technological applications of aerosols include dispersal of pesticides, medical treatment of respiratory illnesses, and combustion technology.
Heat pump over the Himalayas
The transport of light-absorbing carbonaceous aerosols and dust from the polluted Indo-Gangetic Plain and desert areas over the Himalayas constitutes a major climatic issue due to severe impacts on atmospheric warming and glacier retreat.
This heating over the Himalayas facilitates the “elevated-hat pump” that strengthens the temperature gradient between land and ocean and modifies the atmospheric circulation and the monsoon rainfall.
Findings of the research
The monthly-mean atmospheric radiative forcing of aerosols leads to heating rates of 0.04 to 0.13 C per day.
Further, the temperature over the Ladakh region is increasing 0.3 to 0.4 degrees Celsius per decades from the last 3 decades.
How are aerosols fuelling the heat?
The atmospheric aerosols play a key role in the regional/global climate system through scattering and absorption of incoming solar radiation and by modifying the cloud microphysics.
Assessing the Aerosol potential
Despite the large progress in quantifying the impact of different aerosols on radiative forcing, it still remains one of the major uncertainties in the climate change assessment.
Precise measurements of aerosol properties are required to reduce the uncertainties, especially over the oceans and high altitude remote location in the Himalayas where they are scarce.
Researchers have analysed the variability of aerosol optical, physical and radiative properties and the role of fine and coarse particles in aerosol radiative forcing (ARF) assessment.
ARF is the effect of anthropogenic aerosols on the radiative fluxes at the top of the atmosphere and at the surface and on the absorption of radiation within the atmosphere.
Significance of ARF study
A scientific study of aerosol generation, transport, and its properties has important implications in our understanding and mitigation of climate change via atmospheric warming.
Aerosols impact the snow and glacier dynamics over the trans-Himalayan region.
The results from the study can help better understanding of aerosol effects in view of aerosol-climate implications.
From UPSC perspective, the following things are important :
Prelims level: Magnetocaloric Effect
Mains level: Magnetocaloric Effect and its application in Cancer treatment
Indian scientists have developed a rare-earth-based magnetocaloric material that can be effectively used for cancer treatment.
Magnetocaloric Effect does have other applications like in the field of medical implants but for use in energy field, it is still in nascent stage.
From exam perspective, do understand what principles lies behind this effect.
What is Magnetocaloric Effect?
Magnetocaloric effect (MCE) is a phenomenon where the application and removal of a magnetic field cause certain materials to get warmer and cooler, respectively.
This effect normally occurs near its Curie temperature where the application of the field makes the material to warm up and cools up when the field is removed.
Issue of hyperthermia in cancer treatment
Advancements in magnetic materials led to the development of magnetic hyperthermia to try to address the issues of side effects of cancer treatment like chemotherapy.
In magnetic hyperthermia, magnetic nanoparticles are subjected to alternating magnetic fields of few Gauss, which produce heat due to magnetic relaxation losses.
Usually, the temperature required to kill the tumour cells is between 40 and 45°C.
However, the drawback in magnetic hyperthermia is the lack of control of temperature, which may damage the healthy cells in the body and also have side effects like increased BP, hair losses etc.
Here comes in, Magnetocaloric materials
This hypothermia can be avoided by using magnetocaloric materials, as it can provide controlled heating.
The advantage of magnetocaloric materials which heat up or cool down with the application and removal of the magnetic field, respectively is that as soon as the magnetic field is removed, the cooling effect is generated.
The team at ARCI chose rare-earth-based alloy for studies as some of the rare earth materials are human body compatible.
The heating capacity would increase with the increase in the magnetic field.
From UPSC perspective, the following things are important :
Prelims level: EESL, MAITREE
Mains level: Energy saving and its significance in carbon emissions reduction
The Energy Efficiency Services Limited (EESL) has launched the “Healthy and Energy Efficient Buildings” initiative that will pioneer ways to make workplaces healthier and greener.
Possible prelims question:
Q. The MAITREE programme recently seen in news is related to: Trade/Energy Efficiency/Climate Change/ Strategic Relations
About the Initiative
The initiative has been launched by EESL in partnership with the U.S. Agency for International Development’s (USAID) MAITREE program.
As part of this initiative, EESL has taken the leadership by being the first to implement this framework in its own offices.
This initiative addresses the challenges of retrofitting existing buildings and air conditioning systems so that they are both healthy and energy-efficient.
It will pave the way for other buildings to take appropriate steps to be healthy and energy-efficient.
What is the MAITREE program,?
The Market Integration and Transformation Program for Energy Efficiency (MAITREE) is a part of the US-India bilateral Partnership between the Ministry of Power and USAID.
It is aimed at accelerating the adoption of cost-effective energy efficiency as a standard practice within buildings and specifically focuses on cooling.
Significance of the initiative
Poor air quality has been a concern in India for quite some time and has become more important in light of the COVID pandemic.
As people return to their offices and public spaces, maintaining good indoor air quality is essential for occupant comfort, well-being, productivity and the overall public health.
Most buildings in India are not equipped to establish and maintain healthy indoor air quality and need to be upgraded.
The EESL office pilot will address this problem by developing specifications for future use in other buildings throughout the country.
It will aid in evaluating the effectiveness and cost benefits of various technologies and their short and long-term impacts on air quality, comfort, and energy use.
Back2Basics: EESL
Energy Efficiency Services Limited (EESL), under the administration of Ministry of Power, is working towards mainstreaming energy efficiency.
It is implementing the world’s largest energy efficiency portfolio in the country.
EESL aims to create market access for efficient and future-ready transformative solutions that create a win-win situation for every stakeholder.
About USAID: USAID is the world’s premier international development agency and a catalytic actor driving development results.
From UPSC perspective, the following things are important :
Prelims level: Serotonin
Mains level: Locusts invasion and its threats
Scientists have attempted to answer an important scientific question of how and why locusts collect together by the thousands in order to make a swarm.
When lone locusts happen to come near each other (looking for food) and happen to touch each other, this tactile stimulation, even just in a little area of the back limbs, causes their behaviour to change.
This mechanical stimulation affects a couple of nerves in the animal’s body, their behaviour changes, leading to their coming together.
The central nervous system of the locust, the most important among them being serotonin which regulates mood and social behaviour is the mystery behind swarms.
Their coming together triggers a mechanical (touch) and neurochemical (serotonin) stimulations to make crowding occur.
What is Serotonin?
It is a monoamine neurotransmitter.
It has a popular image as a contributor to feelings of well-being and happiness.
Its actual biological function is complex and multifaceted, modulating cognition, reward, learning, memory, and numerous physiological processes such as vomiting and vasoconstriction.
From UPSC perspective, the following things are important :
Prelims level: SAGAR Programme
Mains level: India's SAGAR policy of Indian Ocean Region
As part of Mission SAGAR, INS Kesari has entered Port Victoria, Seychelles to providing assistance in dealing with the COVID-19 pandemic.
Try this question from CSP 2017:
Q. Which of the following is geographically closest to Great Nicobar?
(a) Sumatra
(b) Borneo
(c) Java
(d) Sri Lanka
Mission SAGAR (Security and Growth for All in the Region)
SAGAR is a term coined by PM Modi in 2015 during his Mauritius visit with a focus on the blue economy.
It is a maritime initiative which gives priority to the Indian Ocean region for ensuring peace, stability and prosperity of India in the Indian Ocean region.
The goal is to seek a climate of trust and transparency; respect for international maritime rules and norms by all countries; sensitivity to each other`s interests; peaceful resolution of maritime issues; and increase in maritime cooperation.
It is in line with the principles of the Indian Ocean Rim Association.
Back2Basics: IORA (Indian Ocean Rim Association)
Established in 1997 in Ebene Cyber City, Mauritius.
First established as Indian Ocean Rim Initiative in Mauritius on March 1995 and formally launched in 1997 by the conclusion of a multilateral treaty known as the Charter of the IORA for Regional Cooperation.
It is based on the principles of Open Regionalism for strengthening Economic Cooperation particularly on Trade Facilitation and Investment, Promotion as well as Social Development of the region.
From UPSC perspective, the following things are important :
Prelims level: UNSC
Mains level: Significance of UNSC membership for India
India has launched its campaign brochure ahead of elections for five non-permanent members of UNSC.
Practice question for mains:
Q. By any calculus, India will qualify for UNSC permanent seat. Analyse.
India’s agenda for UNSC
The normal process of international governance has been under increasing strain as frictions have increased. Traditional and non-traditional security challenges continue to grow unchecked. India will highlight:
International terrorism
UN reforms and Security Council expansion, and
Streamlining the world body’s peacekeeping operations
Various technological initiatives
India and UNSC
India is guaranteed a place in the UNSC as it is the sole candidate for Asia-Pacific but needs two-thirds of the 193-member General Assembly to vote in its favour in a secret ballot scheduled this month in New York.
While India is expected to sail through with the 129 votes required for the seat, the government is setting its sights on much higher numbers than that ahead of the election.
In 2010, when India stood for the UNSC seat of 2011-2012, it won 187 of the 190 votes polled.
Streamlining new NORMS
This will be the eighth time India will occupy a non-permanent UNSC seat, with its last stint in 2011-2012.
India’s overall objective during this tenure in the UN Security Council will be the achievement of N.O.R.M.S: a New Orientation for a Reformed Multilateral System.
Non-permanent membership isn’t a cup of tea
The government launched its plan for the UNSC seat as far back as 2013, officials said, with a keen eye on 2021, and the year that will mark its 75th year of Independence.
To our good fortune, the Islamic Republic of Afghanistan agreed, in a gesture to our friendship, to step aside for the 2021-22 seats.
The next big challenge was to pursue the Asia-Pacific grouping nomination without any last-minute contenders being propped up against India.
While diplomacy between capitals certainly helps, the vote had to be tied down by negotiations on the ground.
India was able to win a unanimous endorsement from the 55-nation grouping that included both China and Pakistan, in June 2019.
Back2Basics: United Nations Security Council
The UNSC is one of the six principal organs of the United Nations and is charged with the maintenance of international peace and security.
Its powers include the establishment of peacekeeping operations, the establishment of international sanctions, and the authorization of military action through Security Council resolutions.
It is the only UN body with the authority to issue binding resolutions to member states.
The Security Council consists of fifteen members. Russia, the United Kingdom, France, China, and the United States—serve as the body’s five permanent members.
These permanent members can veto any substantive Security Council resolution, including those on the admission of new member states or candidates for Secretary-General.
The Security Council also has 10 non-permanent members, elected on a regional basis to serve two-year terms. The body’s presidency rotates monthly among its members.
From UPSC perspective, the following things are important :
Prelims level: NEOs
Mains level: Not Much
NASA announced that a giant asteroid is expected to pass Earth at a safe distance, today.
Do you remember Osiris-Rex spacecraft of NASA? It is the only spacecraft to touch an asteroid called ‘Bennu’. NASA has brought back comet dust and solar wind particles before, but never asteroid samples.
This makes it a landmark feat and thus a hotspot for UPSC prelims.
What are NEOs?
NASA defines NEOs as comets and asteroids nudged by the gravitational attraction of nearby planets into orbits which allows them to enter the Earth’s neighbourhood.
These objects are composed mostly of water ice with embedded dust particles.
NEOs occasionally approach close to the Earth as they orbit the Sun.
NASA’s Center for Near-Earth Object Study (CNEOS) determines the times and distances of these objects as and when their approach to the Earth is close.
Significances of NEOs
The scientific interest in comets and asteroids is largely due to their status as relatively unchanged remnant debris from the solar system formation process over 4.6 billion years ago.
Therefore, these NEOs offer scientists clues about the chemical mixture from the planets formed.
Significantly, among all the causes that will eventually cause the extinction of life on Earth, an asteroid hit is widely acknowledged as one of the likeliest.
Over the years, scientists have suggested different ways to ward off such a hit, such as blowing up the asteroid before it reaches Earth, or deflecting it off its Earth-bound course by hitting it with a spacecraft.
About 163348 (2002 NN4)
A Near-Earth Object (NEO), the asteroid is called 163348 (2002 NN4) and is classified as a Potentially Hazardous Asteroid (PHA).
Asteroids with a minimum orbit intersection distance (MOID) of about 0.05 (AU is the distance between the Earth and the Sun and is roughly 150 million km) or less are considered PHAs.
This distance is about 7,480,000 km or less and an absolute magnitude (H) of 22 (smaller than about 150 m or 500 feet in diameter).
From UPSC perspective, the following things are important :
Prelims level: ‘Race to Zero’ campaign, Carbon offset
Mains level: Not Much
The UN has launched the “Race to Zero” campaign ahead of delayed COP 26 Climate Talks.
Possible question for prelims:
The ‘Race to Zero’ campaign often seen in news is related to zeroing: Global Hunger/Carbon Emission/HR violations/None of these.
‘Race to Zero’ campaign
The campaign aims to codify commitments made via the Climate Ambition Alliance (CAA), which launched ahead of last year’s COP25 in Madrid.
It encourages countries, companies, and other entities to deliver structured net-zero greenhouse-gas emission pledges by the time the talks begin.
This messaging for the campaign — carried out under the aegis of the UNFCCC— seeks to emphasise the potential for non-state actors to raise climate ambition.
The campaign refers to these as ‘real economy actors’, noting they “cover just over half the gross domestic product, a quarter of global CO2 emissions and over 2.6 billion people”.
About the Climate Ambition Alliance
The CAA currently includes 120 nations and several other private players that have committed to achieving zero net greenhouse gas emissions by 2050.
Signatories are responsible for 23 per cent of current greenhouse-gas emissions worldwide and 53 per cent of global GDP.
What Are the Criteria?
The minimum criteria for establishing a recognized pledge were developed through dialogues coordinated by Oxford University.
The pledges must include a clear net-zero target date no later than 2050, they must also begin immediately and include interim targets.
Much like the Paris Agreement itself, the criteria are designed to strengthen over time, but they begin at a level that reflects current best practices.
Issue over offsetting
Offsets are emission-reductions generated outside a company’s own operations, and they are used in both compliance programs to meet mandated emission caps (“cap and trade”) and involuntary programs to reduce a company’s overall impact (voluntary carbon markets).
The Race to Zero criteria emphasizes that if offsets are ultimately recognized, they must only be used to neutralize residual emissions that can’t be eliminated internally – at least not immediately.
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.
From UPSC perspective, the following things are important :
Prelims level: Electrolytic splitting of Water
Mains level: Hydrogen as a clean fuel
Scientists from The Centre for Nano and Soft Matter Sciences (CeNS), an autonomous institute of the Department of Science and Technology (DST), have found out a low cost and efficient way to generate hydrogen from water using Molybdenum dioxide as a catalyst.
Practice question for mains:
Q. Hydrogen is the future of clean and sustainable energy. Discuss.
Electrolytic splitting of water
Electrolysis of water is the decomposition of water into oxygen and hydrogen gas due to the passage of an electric current.
This technique can be used to make hydrogen gas, the main component of hydrogen fuel, and breathable oxygen gas, or can mix the two into oxyhydrogen, which is also usable as fuel, though more volatile and dangerous.
It is a promising method to generate hydrogen but requires energy input that can be brought down in the presence of a catalyst.
Using Molybdenum Catalyst
The scientists have shown that Molybdenum dioxide (MoO2) nanomaterials annealed in hydrogen atmosphere can act as efficient catalysts to reduce the energy input to bring about water splitting into Hydrogen.
Molybdenum dioxide has the potential to replace the currently employed catalyst platinum, which is expensive and has limited resources.
MoO2 is a conducting metal oxide that is one of the low-cost catalysts with good efficiency and stability for hydrogen evolution.
The catalyst is highly stable for a longer duration of reaction with sustained hydrogen evolution from water.
About 80 % efficient conversion of electrical energy into hydrogen has been achieved using this catalyst.
Significance
Hydrogen is considered as the future of clean and sustainable energy as it can be generated from water and produces water on energy generation without any carbon footprint.
Hydrogen can be directly used as a fuel similar to natural gas or as input for fuel cells to generate electricity.
It is the future energy for a clean environment and an alternative to fossil fuels, underlining the necessity of low-cost catalysts for its production.
From UPSC perspective, the following things are important :
Prelims level: Urban Forest Scheme
Mains level: NA
On the occasion of World Environment Day (5th June), the union govt has announced the implementation of the Nagar Van Scheme to develop 200 Urban Forests across the country in the next five years.
Do you know?
India has 8 per cent of world’s biodiversity, despite having many constraints like only 2.5 % of the world’s landmass, has to carry 16% of human population and having only 4% of freshwater sources.
Urban Forest Scheme
The scheme will be implemented with people’s participation and collaboration between the Forest Department, Municipal bodies, NGOs and corporates.
These forests will work as lungs of the cities and will primarily be on the forest land or any other vacant land offered by local urban local bodies.
This urban area rejuvenation scheme is based on the Smriti Van in the Warje area of Pune City
This forest now hosts rich biodiversity with 23 plant species, 29 bird species, 15 butterfly species, 10 reptiles and 3 mammal species.
This Urban Forest project is now helping maintain ecological balance, serving both environmental and social needs.
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- U.S.-China tensions and impact on India
Even before the covid pandemic we could sense the rising tension between the U.S. and China. However, pandemic proved to be the tipping point. This article explains the role the U.S. played in China’s rise. And its recent acceptance under Donald Trump of not so peaceful rise of China.
Let’s look into recent announcements on China by the US President
On May 29, the Trump administration said it would revoke Hong Kong’s special trade status under U.S. law.
It passed an order limiting the entry of certain Chinese graduate students and researchers who may have ties to the People’s Liberation Army.
The U.S. President has also ordered financial regulators to closely examine Chinese firms listed in U.S. stock markets.
And warned those that do not comply with U.S. laws could be delisted.
So, what all these measures indicate?
These announcements are a clear indication that the competition between the U.S. and China is likely to sharpen in the post-COVID world.
U.S. is complicit in China’s rise, but how?
After the Chinese communists seized power, the Americans hoped to cohabit with Mao Zedong in a world under U.S. hegemony.
The Chinese allowed them to believe this and extracted their price.
U.S. President Richard Nixon gave China the international acceptability it craved in return for being admitted to Mao’s presence in 1972.
President Jimmy Carter terminated diplomatic relations with Taiwan in order to normalise relations with China in 1978.
President George H.W. Bush washed away the sins of Tiananmen in 1989 for ephemeral geopolitical gain.
And Bill Clinton, who as a presidential candidate had criticised Bush for indulging the Chinese, proceeded as President to usher the country into the World Trade Organization at the expense of American business.
All American administrations since the 1960s have been complicit in China’s rise in the unrealised hope that it will become a ‘responsible stakeholder’ under Pax Americana.
China is creating its own universe
The collapse of the Soviet Union reinforced the view that the U.S. wants to keep its order and change China’s system.
This strengthened China’s resolve to resist by creating its own parallel universe.
China is building an alternate trading system: the Belt and Road Initiative.
A multilateral banking system under its control-Asian Infrastructure Investment Bank, New Development Bank.
Its own global positioning system BeiDou.
Digital payment platforms like WeChat Pay and Alipay.
A world-class digital network-Huawei 5G.
Cutting-edge technological processes in sunrise industries.
And a modern military force.
It is doing this under the noses of the Americans and some of it with the financial and technological resources of the West.
U.S. accepting the uneasy fact that China’s rise has not been peaceful
It is only under Mr. Trump that the Americans are finally acknowledging the uneasy fact that the Chinese are not graven in their image.
He has called China out on trade practices.
He has called China out on 5G.
It was Mr. Trump’s 2017 National Security Strategy document that, perhaps for the first time, clubbed China along with Russia as a challenge to American power, influence and interests.
His recent China-specific restrictions on trade and legal migration are, possibly, only the beginning of a serious re-adjustment.
Decoupling of the economies and new cold war
A full-spectrum debate on China is now raging across the U.S.
Former White House Chief of Staff Steve Bannon declared that the U.S. is already at war with China.
Others like diplomat Richard Haass and former president of the World Bank, Robert Zoellick, warn that a new Cold War will be a mistake.
Scholar Julian Gewirtz, in his brilliant essay, ‘The Chinese Reassessment of Interdependence’, talks about a similar process underway in Beijing.
Both sides are acutely aware how closely their economies are tied together: from farm to factory, the U.S. is heavily dependent on supply chains in China and the Chinese have been unable to break free of the dollar.
If Mr. Trump’s wish is to disentangle China’s supply chains, Mr. Xi is equally determined to escape from the U.S. ‘chokehold’ on technology.
To what extent the de-coupling is possible is yet to be determined.
But one thing is inevitable, India will become part of the collateral damage.
Hong Kong: Sign of U.S. China rivalry entering in ideological domain
Will Hong Kong become a game-changer in the post-COVID world?
China’s decision to enact the new national security law for Hong Kong has been condemned in unison by the U.S. and its Western allies as an assault on human freedoms.
Why is this significant?
The points of divergence, even dispute, between them have so far been in the material realm.
With Hong Kong, the U.S.-China rivalry may, possibly, be entering the ideological domain.
For some time now there are reports about Chinese interference in the internal affairs of democracies.
Countries in the West have tackled this individually, always mindful of not jeopardising their trade with China.
Hong Kong may be different.
It is not only a bastion for Western capitalism in the East, but more importantly the torch-bearer of Western democratic ideals.
Think of it as a sort of Statue of Liberty; it holds aloft the torch of freedom and democracy for all those who pass through Hong Kong en route to China.
This is an assault on beliefs, so to speak.
Issue of China’s role in Covid-19 pandemic
These is growing demands that China should come clean on its errors of omission in the early days of COVID-19.
In the months ahead, more information may become public, from sources inside China itself, about the shortcomings of the regime.
That will further fuel a debate on the superiority of the Chinese Model as an alternative to democracy.
Will this form the ideological underpinning for the birth of a new Cold War?
That will depend on who wins in Washington in November.
It will also depend on whether profit will again trump politics in Europe.
Moreover, how skilfully the Wolf Warriors of China can manipulate global public opinion will also make the be an important factor.
Consider the question-“Various recent measures by the U.S. on China and the debate on the role of China in Covid-19 makes it clear that the next Cold War is all but imminent. And India has to be careful to avoid being collateral damage in that war. Comment.”
Conclusion
The lines are beginning to be drawn between the Americans on the one side and China on the other. A binary choice is likely to test to the limit India’s capacity to maintain strategic and decisional autonomy.
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.
