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Foreign Policy Watch: India-Russia

Why the Russia-West equation matters to India

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 2- Implications of Russia-West relations for India

Context

Thirty years ago this week, the Soviet Union collapsed — after seven decades of an expansive global role. Few countries have been as significant as Russia for modern India’s evolution.

Impact of Russian geopolitics on India’s worldviews

  • Russia’s relations with the West have always had consequences for India’s international relations.
  • India’s fear of a unipolar world dominated by the US: After the collapse of the USSR in December 1991, the loss of the long-standing Soviet ally left Delhi in fears of a unipolar world dominated by the US.
  • These anxieties were accentuated by post-Soviet Russia’s quick embrace of the US and the West.
  • However, by the turn of the millennium, relations between Russia and the West had begun to sour.
  • That drew India once again closer to Russia.
  • Russia’s growing closeness to China: Moscow also roped in Beijing to build a new coalition — the RIC — to promote a multipolar world that would limit the dangers of American hyperpower.
  • Improvement in India-US relations: India’s fears of the unipolar moment turned out to be overblown and Delhi’s ties with Washington began to see rapid improvement since 2000.
  • The upswing in India’s ties with America, however, coincided with a steady downturn in the relations between Russia and the US.

Tension between Russia and the West

  • The continuous escalation of tensions between Russia and the West culminated in the last few weeks in Ukraine — at the heart of Europe.
  • Moscow’s military mobilisation on the frontier with Ukraine — that was part of the Soviet Union until 1991 — raised alarm bells of a new war between the forces of Russia and the US-led European military alliance, North Atlantic Treaty Organisation (NATO).
  • Last week, Russia presented several proposals for a new European security architecture.
  • Moscow is calling for an end to NATO’s further eastward expansion.
  • Moscow also wants NATO to rescind its earlier promise to make Ukraine and Georgia — two former Soviet Republics — members of the military alliance.

Major compromises between US and Russia

  • The resolution of US-Russian differences, however, involves some major compromises.
  • Russia aware of the over reliance on China: While Russia has demonstrated that its interests can’t be simply ignored by the West, it also recognises the costs of a prolonged confrontation with the US and Europe and the dangers of relying solely on China to secure its geopolitical interests.
  • Russia seeking accommodation with US and Europe: While Moscow is unlikely to abandon the partnership with China, there is no doubt that an accommodation with America and Europe is a high priority for Russia.
  • US to focus on China challenge: The US, which is now focused on the China challenge, appears interested in easing the conflict with Russia.
  • Despite its extraordinary military resources, Washington can’t afford to fight in both Asia (with China) and Europe (with Russia).

Implications for India

  • Role of ideological sentiment: While coping with the complex dynamic of Russia’s relations with the West has been an enduring element of independent India’s foreign policy, Delhi’s thinking on Russia has too often been coloured by ideological sentiment.
  • In Delhi, the tendency is to over-determine Russia’s contradictions with the West.
  • It is not Russia’s national destiny to forever confront the West.
  • Russia’s current problems with the West are not about ideological principles.
  • It is about the terms of an honourable accommodation.
  • Prior to the 1917 revolution, Russia was a leading part of the European great power system.
  • Delhi can’t influence the new effort to build a mutually acceptable security order in Europe, but it can welcome and support it.
  • Role of Asian geopolitics: That the pressure for this attempted reset in Russia’s relations with the West is coming from Asian geopolitics is of some significance.
  • A reconciliation between Russia and the West will make it a lot easier for India to manage its own security challenges.

Conclusion

Delhi knows that stabilising the Asian balance of power will be difficult without a measure of US-Russian cooperation in Europe. If Moscow — at odds with the West in the last two decades — deepens its current close alignment with Beijing, it will be a lot harder to prevent Chinese dominance over Asia.

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Women empowerment issues – Jobs,Reservation and education

Raising marriage age won’t lead to women’s empowerment

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 2- Age marriage of women issue

Context

The announcement of a cabinet decision to raise the age at marriage for women from 18 to 21 years marks the fruition of a plan that was first revealed almost two years ago when a Task Force was set up for the purpose.

Why the age of marriage of women matters

  • Age of marriage has bearing on maternal mortality rates, fertility levels, nutrition of mother and child, sex ratios, and, on a different register, education and employment opportunities for women.
  • It is also argued that other factors — such as poverty and health services — were far more effective as levers for improving women’s and children’s health and nutritional status.

Issues with the decision

[1] Role of poverty neglected

  •  If women who marry at higher ages seem to have better health and nutrition indicators, this is not caused by their marrying later than others — it is because women from better-off groups tend to marry at higher ages.
  • Conversely, the health indicators of poorer women do not change just because they marry at a higher age.
  • An illustration of this truth is found in the National Family Health Survey (IV) data, which show that levels of anaemia — which is the highest cause of maternal mortality in India and one of our worst statistics — show no change even at ages of marriage up to 25 years, once we control for other factors.
  • World Bank study finds no impact on women: Population control was at the heart of the 1978 amendment to the Sarda Act of 1929.
  • Moreover, reducing fertility rates globally by banning marriage before the age of 18 years is very much on the agenda of international agencies to this very day.
  • A major multi-country study undertaken by the World Bank in 2017 estimated that “savings” of no less than $5 trillion would accrue if marriage before the age of 18 was eliminated.
  • But such savings would be mostly due to reductions in fertility and consequent reductions in public health investments due to fewer births.
  • The same study saw no significant gains from raised age of marriage for women’s decision making, for lowering the levels of violence they face, or helping them find employment.
  • Restriction on the right of an adult woman: Globally, the age of 18 is widely regarded as the age of adulthood.
  • It is also viewed as an upper limit in terms of the physical and reproductive maturity of women, as well as the age of majority by child rights conventions to which India is a signatory.
  • Thus, the proposed move will restrict the rights of already adult women, an issue for legal experts to debate.
  • Law is meant to set minimum age not the right age: Equally important is the crucial slippage in the arguments made on behalf of the government from the minimum age at marriage to the right age at marriage.
  • The minimum age is obviously a floor, not a standard or desirable norm.
  • Laws are meant to set minimum levels, a threshold for triggering legal or penal action, because of the harm that may be done.

Way forward: Address issues that drive empowerment

  • Going by the NFHS 4 data (2015-16), more than half — 56 per cent — of women in the age group 20-24 years marry before the age of 21 years.
  • The problem is that the real reasons that drive empowerment are not being addressed, at least not adequately.
  • Educational attainments have improved enormously in recent years.
  • But the shocking fact (evident in all major data sets) is that decline in early marriages has been accompanied by a fall in women’s employment rates, that persisted even during the 1990s boom.
  • Paradoxical outcomes: The proportion of women not in paid work increases at higher ages of marriage!
  • Complex paradoxes like these are the hallmark of our society.
  • They cannot be addressed by a legal fix, particularly one that will be very hard to implement.

Consider the question “How the age of marriage of women is connected with the issue of women empowerment? What are the concerns with increasing it to 21 years? Suggest the way forward.

Conclusion

Instead of criminalising our youth, the government must take concrete steps to really empower women. If they are truly in charge of their own lives — through affordable education, meaningful and decent employment opportunities — they will be able to make better decisions about whether, when and whom to marry.

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Foreign Policy Watch: India-Sri Lanka

India- Sri Lanka Fisherman Issue

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Trawling

Mains level: Fishermen issue in India-SL ties

The Sri Lankan Navy has seized eight Indian fishing vessels and arrested 55 fishermen on the charge of poaching.

What is the issue?

  • As in the past, fishermen from Rameswaram and nearby coasts continue to sail towards Talaimannar and Katchatheevu coasts, a region famous for rich maritime resources in Sri Lanka.
  • Indian boats have been fishing in the troubled waters for centuries and had a free run of the Bay of Bengal, the Palk Bay and the Gulf of Mannar until 1974 and 1976.
  • Treaties were later signed between the two countries to demarcate the maritime boundary — the ‘International Maritime Boundary Line'(IMBL).

Issues for Sri Lanka

  • Proliferation of Trawlers: The overuse of mechanized trawlers in Palk Bay is damaging the marine ecosystem in SL waters.
  • Breach of sovereignty: There were many favorable reasons too for Indian fishermen as their access to Sri Lankan waters was easier at the time of Sri Lankan civil war.
  • Porous borders: Maritime boundaries were never tightly guarded as a result, Indian trawlers continue to routinely enter Lankan waters for fishing.
  • End of Civil War: Everything changed in 2009 with the end of civil war. Arrests and attacks increased on Indian fishermen as they continued entering Lankan waters because of depletion of marine resources on the Indian side.

Fishermen’s concern:

(1) Depletion of fisheries

  • There is a depletion of fisheries on the Indian side, so Indian fishermen cross into Sri Lankan waters thus denying the livelihood of their counterparts.
  • They deliberately cross the territorial waters even at the risk of getting arrested or shot dead by the Sri Lankan Navy.
  • Sri Lankan fishermen across Palk Bay are concerned over similar depletion on their side (where there is a ban for trawlers) because of poaching by Indian fishermen.

 (2) Rights over Katchatheevu Island

  • Tamil fishermen have been entering Sri Lankan waters nearby Katchatheevu island, where they had been fishing for centuries.
  • In 1974, the island was ceded to Sri Lanka after an agreement was signed by Indira Gandhi between the two countries without consulting the Tamil Nadu government.
  • The agreement allows Indian fishermen “access to Katchatheevu for rest, for drying of nests and for the annual St Anthony’s festival” but it did not ensure the traditional fishing rights.

(3) Hefty fines

  • After some respite in the last couple of years, Sri Lanka introduced tougher laws banning bottom-trawling and put heavy fines for trespassing foreign vessels.
  • SL has increased the fine on Indian vessels found fishing in Sri Lankan waters to a minimum of LKR 6 million (about ₹25 lakh) and a maximum of LKR 175 million (about ₹17.5 Crore).
  • Quiet often, the fishermen are shot dead by SL marines.

Fishermen issue in TN politics

  • It has been often a sensitive political issue in Tamil Nadu in the past one decade.
  • In a defiant speech in 1991, late CM Jayalalitha had called on the people of Tamil Nadu to retrieve the Katchatheevu Island.

Way forward

  • Leasing: Two courses of action exist: (1) get back the island of Katchatheevu on “lease in perpetuity” or (2) permit licensed Indian fishermen to fish within a designated area of Sri Lankan waters and vice versa.
  • Licensing: The second course of action would persuade Colombo to permit licensed Indian fishermen to fish in Sri Lankan waters for five nautical miles from the IMBL.
  • Reconsidering old agreements: The 2003 proposal for licensed fishing can be revisited.
  • Looping in fishermen themselves: Arranging frequent meetings between fishing communities of both countries could be systematized so as to develop a friendlier atmosphere mid-seas during fishing.

Conclusion

  • The underlying issues of the fisheries dispute need to be addressed so that bilateral relations do not reach a crisis point.
  • Immediate actions should be taken to begin the phase-out of trawling and identify other fishing practices.

 

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Aadhaar Card Issues

Election Laws (Amendment) Bill, 2021

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Election Laws (Amendment) Bill, 2021

Mains level: Issue over Mandatory Aadhaar

The Election Laws (Amendment) Bill, 2021 that seeks to link electoral rolls to the Aadhaar number has been listed for introduction in the Lok Sabha.

Key Provisions of the Election Laws (Amendment) Bill 2021

(1) Aadhaar authentication:

  • The Bill seeks to empower electoral officers to seek Aadhaar number of people, who want to register as voters, for establishing their identity.
  • It also seeks to allow the electoral registration officers to ask for Aadhaar numbers from persons already included in the electoral roll for the purposes of authentication of entries in the electoral roll.
  • This would also aim to identify registration of the name of the same person in the electoral roll of more than one constituency or more than once in the same constituency.

(2) Aadhaar linking with Voter ID

  • Linking Aadhaar with voter ID will be voluntary.
  • The amendment makes it clear that no application shall be denied and no entries in the electoral roll shall be deleted for the inability to produce Aadhaar number.
  • Such people will be allowed to furnish other documents as may be prescribed.

(3) Amendments to the RP Act for new voter registration

  • Section 23 of the RP Act, 1950 will be amended to allow linking of electoral roll data with the Aadhaar ecosystem to curb the menace of multiple enrolments.
  • Amendment to section 14 of the RP Act, 1950 will allow having four qualifying dates for eligible people to register as voters, instead of one that is January 1 at present.
  • As of now, people who turn 18 on or before January 1 can register as voters but those turning 18 after January 1 wait for the whole year to get registered.
  • The Bill proposes to make the 1st day of January, 1st day of April, 1st day of July, and 1st day of October as the qualifying dates.

(4) Imbibing gender neutrality

  • An amendment to section 20 of the RP Act, 1950 and section 60 of the RP Act, 1951 seeks to make the elections gender-neutral for service voters.
  • The amendment will also replace the word ‘wife’ with ‘spouse’ to make the statutes gender-neutral.

 

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Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

Amendment to the Multi-State Cooperatives Act, 2002

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Multi-state cooperatives

Mains level: Multi-State Cooperatives Act, 2002

The Union Home and Cooperation Minister has announced the decision to amend the Multi-State Cooperative Societies (MSCS) Act, 2002 to plug the loopholes in the Act.

What is MSCS Act?

  • Cooperatives are a state subject, but there are many societies such as those for sugar and milk, banks, milk unions etc whose members and areas of operation are spread across more than one state.
  • The MSCS Act was passed to govern such cooperatives.
  • For example, most sugar mills along the districts on the Karnataka-Maharashtra border procure cane from both states.

What are Multi-State Cooperatives?

  • They draw their membership from two or more states, and they are thus registered under the MSCS Act.
  • Their board of directors has representation from all states they operate in.
  • Administrative and financial control of these societies is with the central registrar, with the law making it clear that no state government official can wield any control on them.

Why does the government plan to amend the Act?

(1) Issues with Central Registrar

  • The exclusive control of the central registrar, who is also the Central Cooperative Commissioner, was meant to allow smooth functioning of these societies.
  • The central Act cushions them from the interference of state authorities so that these societies are able to function in multiple states.
  • What was supposed to facilitate smooth functioning, however, has created obstacles.
  • For state-registered societies, financial and administrative control rests with state registrars who exercise it through district- and tehsil-level officers.

(2) Multiple checks and balances

  • Thus if a sugar mill wishes to buy new machinery or go for expansion, they would first have to take permission from the sugar commissioner for both.
  • Post this, the proposal would go to the state-level committee that would float tenders and carry out the process.
  • While the system for state-registered societies includes checks and balances at multiple layers to ensure transparency in the process, these layers do not exist in the case of multistate societies.
  • Instead, the board of directors has control of all finances and administration.

(3) Lack of govt control

  • There is an apparent lack of day-to-day government control on such societies.
  • Unlike state cooperatives, which have to submit multiple reports to the state registrar, multistate cooperatives need not.
  • The central registrar can only allow inspection of the societies under special conditions — a written request by one-third of the members of the board.
  • Inspections can happen only after prior intimation to societies.

(4) Lack of infrastructure

  • The on-ground infrastructure for central registrar is thin — there are no officers or offices at state level, with most work being carried out either online or through correspondence.
  • For members of the societies, the only office where they can seek justice is in Delhi, with state authorities expressing their inability to do anything.

(5) Ponzi schemes functioning as MCS

  • There have been instances across the country when credit societies have launched ponzi schemes taking advantage of these loopholes.
  • Such schemes mostly target small and medium holders with the lure of high returns.
  • Fly-by-night operators get people to invest and, after a few instalments, wind up their operations.

What kind of amendments can be expected?

  • The Centre is holding extensive consultations with experts from various fields: bankers, sugar commissioners, cooperative commissioners, housing societies federations etc.
  • The centre might increase their manpower, first in Delhi and then in the states, to ensure better governance of the societies.
  • Also, technology will be used to bring in transparency.

 

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Capital Markets: Challenges and Developments

SEBI suspends Futures Trading in key farm crops

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Derievatives, Commodity trading

Mains level: NA

Market regulator Securities & Exchange Board of India (SEBI) has issued an order suspending futures trading in paddy (non-basmati), wheat, Bengal gram (chana dal), mustard seeds and its derivatives, soyabean and its derivatives, crude palm oil and green gram (moong dal) for a year.

What are Derivatives?

  • A derivative is a contract between two parties which derives its value/price from an underlying asset.
  • The value of the underlying asset is bound to change as the value of the underlying assets keep changing continuously.
  • Generally, stocks, bonds, currency, commodities and interest rates form the underlying asset.

Types of Derivatives

The most common types of derivatives are futures, options, forwards and swaps:

(1) Futures

  • Futures are standardized contracts that allow the holder to buy/sell the asset at an agreed price at the specified date.
  • The parties to the futures contract are under an obligation to perform the contract. These contracts are traded on the stock exchange.
  • The value of future contracts is marked to market every day.
  • It means that the contract value is adjusted according to market movements till the expiration date.

 (2) Options

  • Options are derivative contracts that give the buyer a right to buy/sell the underlying asset at the specified price during a certain period of time.
  • The buyer is not under any obligation to exercise the option.
  • The option seller is known as the option writer. The specified price is known as the strike price.

(3) Forwards

  • Forwards are like futures contracts wherein the holder is under an obligation to perform the contract.
  • But forwards are unstandardized and not traded on stock exchanges.
  • These are available over-the-counter and are not marked-to-market.
  • These can be customized to suit the requirements of the parties to the contract.

(4) Swaps

  • Swaps are derivative contracts wherein two parties exchange their financial obligations.
  • The cash flows are based on a notional principal amount agreed between both parties without the exchange of principal.
  • The amount of cash flows is based on a rate of interest.
  • One cash flow is generally fixed and the other changes on the basis of a benchmark interest rate.
  • Swaps are not traded on stock exchanges and are over-the-counter contracts between businesses or financial institutions.

What are Agri-Futures?

Like equity, currency or interest rate futures, they allows to buy or sell an underlier at a preset price on a future date. All agri contracts end in compulsory delivery.

  • Agri products available for trade include wheat, sugar, chana, soyabean, castor, chilli , jeera futures, etc. Edible oil seeds and oils, spices and items like guar are among the more liquid contracts.
  • An objective of futures trading is gains reaching farmers, by establishing an efficient price-discovery platform.
  • This has been achieved to a large extent on NCDEX, in products such as castor, chana, soy complex, mustard, guar, cumin, etc.

National Commodity & Derivatives Exchange Limited (NCDEX) is an Indian online commodity and derivative exchange. It is under the ownership of Ministry of Finance.

What are the reasons for this ban?

(1) To cool off Food Inflation

  • India’s retail inflation rose to a three-month high of 4.91 % in November from 4.48 % in the previous month primarily because of a rise in food inflation to 1.87 % from 0.85 % over this period.

(2) Double Digits WPI

  • Wholesale Price Index-based inflation has remained in double digits for eight consecutive months beginning in April, mainly because of the surging prices of food items.
  • In November, the wholesale price-based inflation surged to a record high of 14.23 % amid the hardening of prices of mineral oils, basic metals, crude petroleum, and natural gas.

(3) To insulate future Price Shock

  • In view of Rabi Output that might be affected morbidly because of fertilizer shortage faced in many parts of the country.
  • By banning future’s trade, the government is trying to insulate any price shock the market might feel in the days to come in case the production is not up to par.

What will be the impact?

(1) The imports in such commodities, especially edible oils, would reduce in the short term as traders will not have a hedging platform.

  • Hedging, which is speculative in nature, has been made difficult.
  • This will lead to the release of blocked local produce supplies into the market, which should cool the prices.
  • Imports of commodities for speculative gains will be discouraged.

(2) It is believed that speculators have a role in jacking up prices and this needed to be discouraged to curb inflation and support growth as the economy is recovering from the COVID-19 impact.

(3) India is the world’s biggest importer of vegetable oil and this measure will make it difficult for edible oil importers and traders to transact business since they use Indian exchanges to hedge their risk.

(4) Agri-futures, driven mainly by NCDEX, have a checkered history with bans often pushing NCDEX back.

  • Such frequent bans are not a good development for the market as it affects confidence levels.
  • Often, a contract that is banned may not return to the table, which were very effective in price-discovery.
  • Even when the contracts are restored, traders hesitate because of the fear of bans.
  • As it involves losses for market participants with open positions as they must square off contracts before maturity.

What are the other steps taken?

  • Supply-side interventions by the Government had limited the fallout of continuing high international edible oil prices on domestic prices.
  • The Union Government substantially reduced taxes on imports of palm, soy and sunflower oil.
  • Union and State Governments had also recently reduced excise duty and VAT on petrol and diesel, aimed at bringing down inflation.
  • It has both direct effects as well as indirect effects operating through fuel and transportation costs.

Way Forward

  • The ban is expected to be lifted by March when the next mustard crop starts hitting the market and prices cool down.
    • If the weather remains benign in the coming weeks, India is on course to harvest a bumper 11 million tonnes of mustard in 2021-22, up from 8.5 million tonnes in 2020-21.
  • The way out is not to ban any contract, but make sure to correct any serious aberration through a combination of higher margins so that if at all the price is getting distorted due to market manipulation, the correction takes place immediately.
  • Further, talking to potential wrongdoers is another way out, provided trading patterns noticed by the exchange reveal such tendencies.
    • Position limits can be changed to ensure undue influence is not exerted by any set of traders.

 

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