Note4Students
From UPSC perspective, the following things are important :
Prelims level: Maitri scholarships and fellowships
Mains level: Paper 2- India-Australia relations
Context
On March 21, Prime Ministers of India and Australia held their Virtual Summit and took stock of the pace of implementing the Australia-India Comprehensive Strategic Partnership.
India-Australia relations
- Since we elevated our relationship in 2020, we have advanced practical actions on cyber and critical technologies, maritime affairs, defence ties, economic and business links and Quadrilateral cooperation.
- The two Prime Ministers announced a range of tangible and practical initiatives spanning the breadth of our shared economic, strategic, and regional interests.
Areas of cooperation
- Energy partnership: Both countries are working on a new and renewable energy partnership, to support the development of technologies such as green hydrogen and ultra-low cost solar.
- We are also supporting research and investment to unlock Australian critical minerals for Indian advanced manufacturing.
- We will boost collaboration on innovation, science and entrepreneurship, to scale up ideas that address global challenges.
- Space sector: We are also increasing investments into our countries’ rapidly growing space sectors.
- We are establishing the Australia-India Centre of Excellence for Critical and Emerging Technology Policy — and a Consulate-General — in Bengaluru.
- Australians value highly the Indian diaspora and student contributions to its community — whether economic, social, or cultural.
- Australia and India are also working to ensure a peaceful and stable region.
- Both countries are committed to a free and open Indo-Pacific.
- In our defence relationship, there is an enhancement in information sharing and operational cooperation.
- Such arrangements also help continue delivering quality humanitarian support to the region, seen recently when India helped Australia’s Pacific family, Tonga and Kiribati.
Conclusion
These investments in strategic, economic, and community ties show what we can achieve when two multicultural democracies join in a spirit of trust and understanding.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Export to GDP ratio of India
Mains level: Paper 3- Issues in buying cheaper oil from Russia
Context
With oil above $100, the government now has to spend twice as much to import oil as it did earlier. Russia has offered to sell oil at lower prices to India. It is a hard temptation for India to resist. But one that comes with profound and long-lasting consequences.
Issues in buying oil from Russia
1] Impact on India’s export due to threat of the secondary sanction by the US
- The demise of the Soviet Union made it easier for India to abandon the Soviet-influenced ideology of a planned economy and veer towards the American version of a market economy.
- Now, in the reverse ideological direction, Russia’s offer of cheaper oil has hidden and direct costs that India will have to deliberate upon.
- Whenever global crude oil prices have risen above $100 in the past, India was able to cushion that shock primarily through growth in exports.
- When oil prices were similarly high, exports rose to nearly 25 per cent of nominal GDP, which helped India withstand the shock.
- However, exports now have fallen dramatically to 18 per cent of GDP, which must be revived.
- The US is India’s biggest export market.
- The US has already cautioned India about abetting Russia by buying Russian oil.
- It remains to be seen if the US will impose secondary sanctions against India for buying discounted Russian oil, but that threat looms large.
2] Cascading de-dollarisation
- With US sanctions against Russia, it will insist on payment in rubles.
- If India is forced to accept trading in rubles with Russia, then it is very likely that China, which is India’s second-largest trading partner, may also insist on payments in Chinese yuan.
- Saudi Arabia may also insist on trading in a currency other than the US dollar.
- This cascading “de-dollarisation” phenomenon will further irk and antagonise the US, since it weakens the dollar’s status as the world’s reserve currency.
- If India is forced to purchase Russian oil in rubles and potentially trade in yuan with China and others, it can catapult India into the centre of a geo-economic war that it can ill afford.
Opportunity for India
- The Russia-Ukraine conflict can be an opportunity for India to step up and capture global market share in goods and services.
- There is already talk of India capitalising on wheat exports, albeit a tiny share of India’s overall exports, as a fallout of global sanctions against Russian wheat.
Conclusion
Exports remain India’s biggest hope for a long-term sustainable economic recovery with ample job creation. India cannot risk being isolated in future global trade for near-term discounted oil deals with Russia.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: GSOMIA
Mains level: Paper 2- Role of the US in South Asia
Context
On the external front, Russia’s Ukraine war and the Sino-Russian alliance are setting the stage for a reordering of South Asia’s great power relations.
Opportunity for the US in South Asia
- If it looks beyond the region’s immediate response to the war in Ukraine, Washington can seize the current opportunity to elevate the US’s salience for the Subcontinent in partnership with India.
- The Indo-Pacific strategy offers new pathways for the US to limit the traditional economic and military weight of China and Russia in the Subcontinent.
Three regional trends in South Asia
1] Decline of Pakistan’s influence
- In the wake of the missile accident, Islamabad moved to seek international intervention, including from the UN Secretary-General.
- But there were few takers for this old South Asian formula, except in Beijing.
- Underlining the peremptory dismissal of Islamabad’s concerns is a deeper trend — the relative decline of Pakistan’s international standing.
- Since his election, US President Joe Biden has refused to call Imran Khan, who runs a “major non-NATO ally”; high-level visitors from Washington now skip Pakistan during South Asia visits.
- Chinese and Russian official visitors are among the few to combine trips to Delhi and Islamabad.
- Islamabad’s decline after the US withdrawal from Afghanistan is likely to accelerate amidst Pakistan’s deepening domestic political chaos.
- With an economy that is smaller than that of Bangladesh and limited prospects for rapid growth in the coming years, Pakistan will find it hard to match its traditional claim for “strategic parity” with India.
2] Declining interest in China’s Belt and Road Initiative in South Asia
- Just a couple of years ago, China’s commercial march into South Asia seemed unstoppable. Not any longer.
- Troubles in Pakistan and Sri Lanka: Pakistan and Sri Lanka, which embraced the BRI with great gusto, are South Asia’s two worst-performing economies.
- The deepening economic crises are compelling the elites of Pakistan and Sri Lanka to focus on non-Chinese financial sources to stabilise their economies.
- Sri Lanka, which ostentatiously refused to accept $480 million developmental assistance from the US in 2020, is now desperately looking for hard currency support for its sinking economic fortunes.
- In Nepal, the dominant communists had made political opposition to US infrastructure assistance of $500 million as a life and death issue for a decade.
- At the end of last month, Nepal’s parliament ratified the US loan that will facilitate Nepal’s infrastructure development and its economic integration with the Subcontinent.
3] The growing possibilities for US security cooperation with the Subcontinent
- During the Cold War, the US military engagement was limited to Pakistan.
- In the 21st century, there has been a steady expansion of US defence cooperation with India.
- The current focus on the Indo-Pacific is getting Washington to modernise the defence partnerships with the smaller countries of the region.
- The Trump Administration discarded the traditional obsession with Pakistan and began to recognise the strategic significance of the smaller South Asian states for its Indo-Pacific strategy.
- The visit of US Undersecretary of State to Bangladesh over the weekend saw progress towards signing the so-called GSOMIA (General Security of Military Information Agreement) that codifies the commitment to protect classified military information.
Conclusion
Reversing that must necessarily involve deeper security cooperation with the region and developing alternatives to military dependence on Beijing and Moscow. This is best done in partnership with Delhi.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: One rank one pension Scheme
Mains level: OROP Policy
The Supreme Court has upheld the Centre’s one rank, one pension (OROP) scheme for the armed forces.
What is the news?
- The Supreme Court has ruled that there was “no constitutional infirmity” in the way the government had introduced ‘one rank, one pension’ (OROP) among ex-service personnel.
- The scheme, notified by the Defence Ministry on November 7, 2015, was challenged by Indian Ex-Service Movement, an association of retired defence personnel.
What is OROP Scheme?
- OROP means that any two military personnel retiring at the same rank, with the same years of service, must get an equal pension.
- While this might appear almost obvious, there are several reasons why two military personnel who may have retired at the same rank with the same years of service, may get different pensions.
Need for the scheme
Military personnel across the three services fall under two categories, the officers and the other ranks.
- Early age of retirement: The other ranks, which are soldiers, usually retire at age 35.
- No benefits from pay commissions: Unlike government employees who retire close to 60, soldiers can thus miss out on the benefits from subsequent pay commissions.
- Salary based pension: And since pensions are based on the last drawn salary, pensions too are impacted adversely.
- Ranks based discrimination: The age when officers in the military retire depends upon their ranks. The lower the rank, the earlier they superannuate.
- Liability against the sacrifice: It was argued that early retirement should not become an adverse element for what a soldier earns as pension, compared with those who retire later.
Earlier pension mechanism
- From 1950 to 1973, there was a concept known as the Standard Rate of Pension, which was similar to OROP.
- In 1974, when the 3rd Pay Commission came into force, certain changes were effected in terms of weightage, additional years of notion service, etc., with regard to pensions.
- In 1986, the 4th Pay Commission’s report brought further changes.
- What ultimately happened was that the benefits of the successive pay commissions were not passed to servicemen who had retired earlier.
- Pensions differed for those who had retired at the same rank, with the same years of service, but years apart.
Demand for OROP
- Ex-servicemen demanded OROP to correct the discrepancy.
- Over the decades, several committees looked into it.
- The Brig K P Singh Deo committee in 1983 recommended a system similar to Standard Rate of Pension, as did Parliament’s standing committees on defence.
- The Narendra Modi government notified the current OROP scheme in November 2015, and it was made applicable from July 1, 2014.
Issues with OROP
- During the OROP protests of 2013-15, it was argued repeatedly that meeting the demand would be financially unsustainable.
- Because soldiers retire early and remain eligible for pension for much longer than other employees, the Defence Ministry’s pension budget is very large, impacting capital expenditure.
- The total defence pensioners are 32.9 lakh, but that includes 6.14 lakh defence civilian pensioners.
- The actual expenditure of the Defence Ministry on pensions was Rs 1.18 lakh crore in 2019-2020.
- The Defence Ministry’s pension-to-budget ratio is the highest among all ministries, and pensions are more than one-fifth of the total defence budget.
- When the late Manohar Parrikar was Defence Minister, it was estimated that a one-time payout of Rs 83,000 crore would be needed to clear all past issues.
Challenge to OROP
- The petitioners contended that the principle of OROP had been replaced by ‘one rank multiple pensions’ for persons with the same length of service.
- They submitted that the government had altered the initial definition of OROP and, instead of an automatic revision of the rates of pension.
- Under this, any future raising of pension rates would be passed on to past pensioners — the revision would now take place at periodic intervals.
- According to the petitioners, this was arbitrary and unconstitutional under Articles 14 and 21.
What has the SC ruled now?
- The court did not agree with the argument that the government’s 2015 policy communication contradicted the original decision to implement OROP.
- It said that “while a decision to implement OROP was taken in principle, the modalities for implementation were yet to be chalked out.
- The court also said that while the Koshyari Committee report furnishes the historical background of the demand, and its own view on it, it cannot be construed as embodying a statement of governmental policy.
- It held that the OROP policy “may only be challenged on the ground that it is manifestly arbitrary or capricious”.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Economic crisis in Sri Lanka
Sri Lanka’s economic crisis is aggravating rapidly, putting citizens through enormous hardship.
Reasons for the Crisis
The first wave of the pandemic in 2020 offered early and sure signs of distress.
- In-migration: Thousands of Sri Lankan labourers in West Asian countries were left stranded and returned jobless.
- Shut-down: Garment factories and tea estates could not function, as infections raged in clusters. Tourism sector to saw a big dip.
- Domestic job losses: Thousands of youth lost their jobs in cities as establishments abruptly sacked them or shut down.
- Forex decline: It meant that all key foreign exchange earning sectors, such as exports and remittances, along with tourism, were brutally hit.
Policy failures of Lankan govt
- No strategy: The lack of a comprehensive strategy to respond to the crisis then was coupled with certain policy decisions last year.
- Ill-advised policies: It included the government’s abrupt switch to organic farming —widely deemed “ill-advised”, further aggravated the problem.
- Food hoarding: The government declared emergency regulations for the distribution of essential food items. It put wide import restrictions to save dollars which in turn led to consequent market irregularities and reported hoarding.
- Continuous borrowing: Fears of a sovereign default rose by the end of 2021, with the country’s foreign reserves plummeting to $1.6 billion, and deadlines for repaying external loans looming.
What is happening on the ground?
- At the macro-economic level, all indicators are worrisome.
- The Sri Lankan rupee, which authorities floated this month, has fallen to nearly 265 against the U.S. dollar. Consumer Price inflation is at 16.8% and foreign reserves stood at $2.31 billion at the end of February.
- Sri Lanka must repay foreign debt totalling nearly $7 billion this year and continue importing essentials from its dwindling dollar account.
- Sri Lanka will incur an import bill of $22 billion this year, resulting in a trade deficit of $10 billion.
Implications on Public
- For citizens, this means long waits in queues for fuel, a shortage of cooking gas, contending with prolonged power cuts in many localities and struggles to find medicines for patients.
- In families of working people, the crisis is translating to cutting down on milk for children, eating fewer meals, or going to bed hungry.
How is India helping?
- Acting in the Neighbourhood’s first policy, India stands with Sri Lanka.
- $1 billion credit line signed for supply of essential commodities. Key element of the package of support extended by India.
- Beginning January 2022, India has extended assistance totalling $ 2.4 billion — including an $400 million RBI currency swap and a $500 million loan deferment.
Chinese lure of aid
- China is considering Sri Lanka’s recent request for further $2.5 billion assistance, in addition to the $2.8 billion Beijing has extended since the outbreak of the pandemic.
How is India’s assistance being viewed in Sri Lanka?
- Sacking key infra projects: The leadership has thanked India for the timely assistance, but there is growing scepticism in Sri Lankan media and some sections, over Indian assistance “being tied” to New Delhi inking key infrastructure projects.
- Deep incursion: They mainly include the strategic Trincomalee Oil Tank Farm project; the National Thermal Power Corporation’s recent agreement with Ceylon Electricity Board to set up a solar power plant in Sampur, with investment from India’s Adani Group.
- Diplomatic blackmail: SL media accuses New Delhi was resorting to “diplomatic blackmail”. The political opposition has accused the Adani Group of entering Sri Lanka through the “back door”, avoiding competitive bids and due process.
Options available for SL
- Sri Lanka is hoping for a Rapid Finance Instrument (RFI) facility as well as a larger Extended Fund Facility (EFF) from the IMF to deal with its foreign currency shortages.
- IMF had assured to help the country with an amount of $300 million to $600 million.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: World Happiness Report
Mains level: Not Much
India ranks 136th in the World Happiness Report 2022, while Finland becomes the happiest country for the fifth consecutive year.
One can definitely question the credibility of such reports whenever India is being grouped with some African countries that too below Pakistan.
World Happiness Report
- The WHR is an annual publication of the UN Sustainable Development Solutions Network.
- It measures three main well-being indicators: life evaluations, positive emotions, and negative emotions (described in the report as positive and negative affect).
- Since 2011, the World Happiness Report (WHR) is released every year around the time of International Day of Happiness on March 20.
- It was adopted by the UN General Assembly based on a resolution tabled by Bhutan.
How is the WHI derived?
- The ranking is done on a three-year average based on surveys of ‘Life Evaluation’ conducted by Gallup World Poll which surveys around 1000 people from each country to evaluate their current life on a scale of 0-10.
- On this scale, 10 marks the best possible and 0 as the worst possible life.
- Further, six key variables GDP per capita, social support, healthy life expectancy, freedom, generosity, and corruption contribute to explaining life evaluations.
Top performers this year
- The top five countries in the list are from Europe.
- While the United States held the 16th spot in the happiest countries list.
- Following Finland, Denmark bagged the second rank, while Iceland and Switzerland stood at third and fourth rank.
- The Netherlands was at the fifth rank in the list.
- Meanwhile, Luxembourg, Norway, Israel, and New Zealand were the remaining countries in the top 10.
Dismal performers
- Afghanistan held the last position of 146th in the list, with Lebanon (145th), Zimbabwe (144th), Rwanda (143rd), and Botswana (142nd) following.
- Bangladesh has improved its ranking by seven notches on the WHI from 101 last year to 94 in 2022 out of 146 countries included in the report.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Exercise LAMITIYE
Mains level: Not Much
The 9th Joint Military Exercise LAMITIYE-2022 between the Indian Army and Seychelles Defence Forces (SDF) is being conducted at Seychelles Defence Academy (SDA), Seychelles.
Exercise LAMITIYE
- Lamitiye, which in Creole means friendship, is a biennial training event being conducted in Seychelles since 2001.
- This year, it will feature a range of complex military drills, demonstrations and discussions, officials said.
- The objective of the joint training exercise is to build and promote bilateral military relations in addition to exchanging skills, experiences and good practices between both the armies.
- Both sides will jointly train, plan and execute a series of well-developed tactical drills for neutralization of likely threats that may be encountered in a semi-urban environment.
- The exercise will also witness showcasing of new-generation equipment and technology for conducting joint operations.
Significance of the exercise
- LAMITIYE is crucial and significant in terms of security challenges faced by both nations in the backdrop of the current global situation and growing security concerns in the Indian Ocean region.
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