Note4Students
From UPSC perspective, the following things are important :
Prelims level: SWIFT
Mains level: Paper 2- Sanctions and their implications
Context
A shift is taking place in the business of global dominance and hegemony, from the model of expressing force through troop presence to financial sanctions. It is led by the US and has become recently visible in the US and EU sanctions on Russia.
How sanctions works
- Sanctions are designed by the government and implemented by both profit-making and non-profit private enterprises, domestic and international NGOs (including the United Nations).
- From rule-bound globalism, there is a move to an understanding of the management of individual economies, bound together by multiple networks of investment and trade.
- This is a global economy of individual rivalries between countries and corporations, continually shifting alliances, and contingencies overtaking assumed structural certainties.
- A system of licencing: In Afghanistan, financial manipulations from afar in the form of sanctions may result in subjecting trading activities and investment ventures to the approval of the US Treasury through a system of licencing.
- This may give the US a say in who trades with whom, but already China has found ways of working with or around US sanctions in several countries, including Iran.
- Confiscation of foreign exchange reserves: Another way of exerting control from afar is through the confiscation of foreign exchange reserves in American banks.
- Following the withdrawal of the American troops on August 15, the US froze Afghanistan’s foreign exchange reserves of $7 billion deposited in the New York Federal Bank.
Issues with sanctions
- An economic lever to China: Sanctions offer economic lever to China in its dealings with the Taliban, to the Chinese state-owned enterprises and private corporations with an opportunity to invest in Afghanistan’s infrastructure, linking it to the Belt and Road project, and in its rich mineral resources of copper, cobalt, and lithium.
- Implications for India: China could also use this as an opportunity to unite investments in Afghanistan and Pakistan, isolating India.
- Evading the sanction: China and Russia, in concert, may provide a way out of the sanctions regime.
- Possibility for China in Middle Eurasia: Russian military and political escalation to re-institute control over former Soviet regions, including Ukraine, Belarus, and Kazakhstan, and the rapprochement between China and Russia against the West, may open up new possibilities for China in Middle Eurasia.
- Banning Russia from SWIFT is not effective: Banning Russia from the SWIFT system of international payments is a problem for the global financial system.
- The Russian economy is more isolated, protected and less reliant on international funding than was the Afghan economy.
- The impact of any disruption in Russian exports of oil, gas, palladium, wheat and fertiliser at a time when those prices are barely recovering from inflationary pressures caused by Covid-19 disruptions, is likely to offset any leverage the Western sanctions may hope to gain.
Conclusion
In the new game, the Western alliance led by the US seems lost in a maze of sanctions, largely ineffective in a global economy, the control of which is eluding its grip.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Intended Nationally Determined Contribution
Mains level: Paper 3- SilverLine project
Context
The SilverLine Project to be built by the government of Kerala will link Thiruvananthapuram in the south to Kasargode in the north.The project has received its share of criticism, much of it from political quarters, but also some academic sections.
Need for high-speed rail in Kerala
- Saturated road network: For Kerala, with its saturated road network, the building of a fast, environmentally-sustainable high-speed rail link must surely be seen as a sound governance response.
- Indeed, a study of INDC (Intended Nationally Determined Contribution) plans under the Paris Climate Agreement is instructive in this context.
- Low-cost emission option: The EU study on mobility notes that HSR is the least-cost emission option among all modes of long-distance transportation.
The arguments against the project
- Critics have put forward three principal lines of argument, namely, its alleged adverse environmental impact, financial unviability, and technical unsuitability.
- Environmental impact: The most compelling environmental issue before us is climate change.
- Building capacities now to achieve a carbon net-neutral world over the next three to four decades is a core aspect of the national strategy of all nations.
- In this context, the SilverLine project scores high with respect to India’s own climate objective of achieving net-zero emissions by 2070.
- Let us recall the driving forces behind Japan’s decision to develop the Shinkansen.
- In the context of the global oil crisis, energy-insecure Japan wanted to develop a public transportation system that was energy-efficient and would also address national concerns with respect to imbalanced regional growth.
- After the Kyoto Protocol was signed, more efforts were made to increase the speed of the various series of Shinkansen to meet the objectives of energy efficiency and CO2 reductions.
- Financial viability: Large-scale infrastructure projects are not based on short-term financial viability considerations alone.
- When the London Underground was conceived, it was not considered financially viable.
- Today, London’s economic activities are inconceivable without it.
- Green technologies that we consider cheaper than fossil fuel technologies were not initially financially viable, and were unable to survive without government subsidies.
Conclusion
There are abundant international examples of the role played by large capital-intensive infrastructure projects in the transformation of the town and country, regions, and nations.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: S-400 Triumf system
Mains level: Complications over India-Russia defence deals
With tensions escalating between Russia and the West over the Ukraine crisis, India, which has major defence cooperation with Moscow and Kyiv, faces uncertainty over timely deliveries of the S-400.
About S-400
- The S-400 is known as Russia’s most advanced long-range surface-to-air missile defence system, capable of destroying hostile strategic bombers, jets, missiles and drones at a range of 380-km.
US reservations against S-400 purchase
- The US has made it clear that the delivery of the five S-400 systems is considered a “significant transaction”.
- Such deals are considered under its Countering America’s Adversaries Through Sanctions Act (CAATSA) of 2017.
- It could trigger sanctions against Indian officials and the Government.
About CAATSA
- The CAATSA is designed to ensure that no country is able to increase military engagement with Iran, North Korea and Russia without facing deterrent punitive action from the US.
- The sanctions are unilateral, and not part of any United Nations decision, and therefore no country is bound to accept them.
- Section 231 says the President shall impose no fewer than five different sanctions on any Government that enters into a significant defence or intelligence deal with Russia.
- Section 235 lists 12 options, including stopping credit lines from US and international banks such as the IMF, blocking sales of licensed goods and technology, banning banks, manufacturers and suppliers, property transactions and even financial and visa sanctions on specific officials.
- However, the law also empowers the President to waiver sanctions or delay them if the waiver is in the US’s “vital national security interests”.
Has the US used CAATSA before for S-400 sales?
- The US has already placed sanctions on China and Turkey for purchase of the S-400.
- The sanctions included denial of export licences, ban on foreign exchange transactions, blocking of all property and interests in property within the US jurisdiction and a visa ban.
Types of sanctions laid
- In 2020, the US sanctioned its NATO partner Turkey, which it had warned about CAATSA sanctions for years, besides cancelling a deal to sell Ankara F-35 jets.
- The sanctions on Turkey’s main defence procurement agency, also included a ban on licences and loans, and blocking of credit and visas to related officials.
Likely impacts after India’s purchase
- The Biden administration has no firm indication on where it leans on India’s case.
- However, several senators (US parliamentarians) have called upon the Biden administration to consider a special waiver for India.
- This is on account of India’s importance as a defence partner, and as a strategic partner on US concerns over China and in the Quad.
- Other US leaders thinks that giving a waiver to India would be the wrong signal for others seeking to go ahead with similar deals.
India’s dependence on Russia
- While Russia has been a traditional military supplier sharing platforms and technologies that others would not, the cooperation has further deepened in recent years.
- The defence trade between the two countries has crossed $15 billion since 2018.
- Even today, over 60% of Indian military inventory is of Russian origin, especially with respect to fighter jets, tanks, helicopters and submarines among others, while several deals are in the pipeline.
Why is the S-400 deal so important to India?
- Security paradigm: S-400 is very important for India’s national security considerations due to the threats from China, Pakistan and now Afghanistan.
- Air defence capability: The system will also offset the air defence capability gaps due to the IAF’s dwindling fighter squadron strength.
- Russian legacy: Integrating the S-400 will be much easier as India has a large number of legacy Russian air defence systems.
- Strategic autonomy: For both political as well as operational reasons, the deal is at a point of no return.
Conclusion
- The deal is a way for the Government to assert its strategic autonomy.
- India had earlier agreed to stop buying Iranian oil over the threat of sanctions in 2019, a move that caused India both financial and reputational damage.
- Not giving in to the US’s unilateral sanctions would be one way to restore some of that.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: GST, Major sources of revenue
Mains level: Success of the GST regime
The Gross Goods and Services Tax (GST) revenue in February was 26% higher than the pre-pandemic levels at ₹1,33,026 crore.
What is GST?
- GST is an indirect tax that has replaced many indirect taxes in India such as excise duty, VAT, services tax, etc.
- The Goods and Service Tax Act was passed in Parliament on 29th March 2017 and came into effect on 1st July 2017. It is a single domestic indirect tax law for the entire country.
- It is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
- Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales, Central GST and State GST are charged. All the inter-state sales are chargeable to the Integrated GST.
Answer this PYQ in the comment box:
Q.All revenues received by the Union. Government by way of taxes and other receipts for the conduct of Government business are credited to the (CSP 2015):
(a) Contingency Fund of India
(b) Public Account
(c) Consolidated Fund of India
(d) Deposits and Advances Fund
Post your answers here.
What are the components of GST?
There are three taxes applicable under this system:
- CGST: It is the tax collected by the Central Government on an intra-state sale (e.g., a transaction happening within Maharashtra)
- SGST: It is the tax collected by the state government on an intra-state sale (e.g., a transaction happening within Maharashtra)
- IGST: It is a tax collected by the Central Government for an inter-state sale (e.g., Maharashtra to Tamil Nadu)
Advantages Of GST
- GST has mainly removed the cascading effect on the sale of goods and services.
- Removal of the cascading effect has impacted the cost of goods.
- Since the GST regime eliminates the tax on tax, the cost of goods decreases.
- Also, GST is mainly technologically driven.
- All the activities like registration, return filing, application for refund and response to notice needs to be done online on the GST portal, which accelerates the processes.
Issues with GST
- High operational cost
- GST has given rise to complexity for many business owners across the nation.
- GST has received criticism for being called a ‘Disability Tax’ as it now taxes articles such as braille paper, wheelchairs, hearing aid etc.
- Petrol is not under GST, which goes against the ideals of the unification of commodities.
Take a look at the share of GST in government earnings for the previous fiscal:
UPSC can ask about the majority component of the Revenue Receipts of the govt. See how Corporate tax is nearing the GST revenues.
Do you think it will surpass GST revenue when the economy is fully recovered?
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Bhakra Nangal Dam
Mains level: River water management issues
Political parties in Punjab are up in arms over the Centre’s decision to amend the rules regarding appointments to two key positions on the Bhakra Beas Management Board (BBMB).
What is BBMB?
(a) Origin
- The genesis of BBMB lies in the Indus Water Treaty signed between India and Pakistan in 1960.
- Under this, waters of three eastern rivers— Ravi, Beas and Sutlej — were allotted to India for exclusive use while Indus, Chenab and Jhelum rivers were allocated to Pakistan.
- In India, a master plan was drawn to harness the potential of these rivers for providing assured irrigation, power generation and flood control.
- Bhakra and Beas projects form a major part of this plan and were established as a joint venture of the then undivided Punjab and Rajasthan.
(b) Establishment
- Following the reorganization of Punjab on November 1, 1966, and the creation of the state of Haryana, the BBMB was constituted under Section 79 of the Punjab Reorganisation Act, 1966.
- The administration, maintenance and operation of Bhakra Nangal Dam project was handed over to Bhakra Management on October 1, 1967.
- On May 15, 1976, when the Beas Projects Works were completed and handed over, the Bhakra Management Board was renamed as Bhakra Beas Management Board (BBMB).
- Since then, BBMB regulates supply of water and power to Punjab, Haryana, Rajasthan, Himachal Pradesh, Delhi and Chandigarh.
What is the constitution of the BBMB management?
- The BBMB management includes a chairperson and two whole time members who are from the partner states of Punjab and Haryana.
- They are designated as Member (Power) and Member (Irrigation) from Punjab and Haryana, respectively.
- There is representation from each member state including Rajasthan and Himachal Pradesh as nominated by the respective state governments.
- The total strength of BBMB is about 12,000 employees and out of these 696 are Group A officers and are posted from the partner states.
What changes have been made to the BBMB rules?
- The GoI issued a notification on February 23, 2022 to amend the BBMB Rules 1974, thereby changing the criteria for the selection of whole-time members of the Board.
- New rules specify technical qualifications for the appointments and pave for the appointment of the members from across India and NOT ONLY from Punjab and Haryana.
What has been the objection to the new rules?
- The opposition to the new rules has come from within the engineers’ fraternity, farmers as well as the political parties of Punjab.
- It is being labeled as an attack on the federal structure of the country.
- The engineers have pointed out that hardly any engineer would qualify for appointment as per the new specifications.
Back2Basics: Indus Waters Treaty, 1960
- The Indus Waters Treaty is a water-distribution treaty between India and Pakistan, brokered by the World Bank signed in Karachi in 1960.
- According to this agreement, control over the water flowing in three “eastern” rivers of India — the Beas, the Ravi and the Sutlej was given to India.
- The control over the water flowing in three “western” rivers of India — the Indus, the Chenab and the Jhelum was given to Pakistan.
- The treaty allowed India to use western rivers water for limited irrigation use and unrestricted use for power generation, domestic, industrial and non-consumptive uses such as navigation, floating of property, fish culture, etc. while laying down precise regulations for India to build projects.
- India has also been given the right to generate hydroelectricity through the run of the river (RoR) projects on the Western Rivers which, subject to specific criteria for design and operation is unrestricted.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Kuki Tribals
Mains level: Insurgency in the NE
Just before the first of the two phases of the Assembly Elections went underway in Manipur, all insurgent groups associated with the Kuki tribes in Manipur said they will vote for a particular political party.
Who are the Kukis?
- The Kukis are an ethnic group including multiple tribes originally inhabiting the North-Eastern states of India such as Manipur, Mizoram and Assam; parts of Burma (now Myanmar), and Sylhet district and Chittagong hill tracts of Bangladesh.
- While Kuki is not a term coined by the ethnic group itself, the tribes associated with it came to be generically called Kuki under colonial rule.
- In Manipur, the various Kuki tribes, living mainly in the hills, currently make up 30% of the total 28.5 lakh population of the State.
- While Churachandpur is their main stronghold, they also have a sizable population in Chandel, Kangpokpi, Tengnoupal and Senapati districts.
Their ethnicity
- The rest of the population of Manipur is made up mainly of two other ethnic groups — the Meiteis or non-tribal, Vaishnavite Hindus who live in the valley region of Manipur, and the Naga tribes, historically at loggerheads with the Kukis, also living in the hilly areas of the State.
- Of the 60 seats in the Manipur Assembly, 40 are held by Meiteis and the rest 20 seats are held by Kukis and Nagas.
What led to the Kuki insurgencies in Manipur?
- The Kuki insurgent groups have been under Suspension of Operation (SoO) since 2005, when they signed an agreement for the same with the Indian Army.
- Later, in 2008, the groups entered a tripartite agreement with the State government and the UPA led Central government to temporarily suspend their operations and give political dialogue a chance.
- Manipur, formerly a princely state including parts of Burma, made the accession into India after Independence, but was only made a full-fledged State in 1972.
- The resentment over the “forceful” inclusion into India and delay in granting statehood led to the rise of various insurgent movements.
Roots of the insurgency
- The roots of Kuki militancy lie in conflicts of ethnic identity.
- First was the demand for self-determination solely for groups belonging to their ethnic fabric, meaning the dream to form a Kukiland.
- The second reason for insurgency lies in the inter-community conflicts between the Kukis and the Nagas in Manipur.
- The Kuki-Naga conflict was started over securing identity and land as some Kuki inhabited areas coincided with Naga inhabited areas.
- Wanting to dominate trade and cultural activities in those areas the two communities often engaged in violent standoffs, with villages being torched, civilians killed and so on.
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