Note4Students
From UPSC perspective, the following things are important :
Prelims level: Role of CPCB and SPCBs
Mains level: Paper 3- Issues faced by SPCBs
The article deals with the issues faced by the State Pollution Control Boards.
Role of CPCB and State Pollution Control Boards
- The pollution crisis is a highly complex, multi-disciplinary issue with several contributory factors.
- To address this crisis, India has a plethora of rules, laws and specialised agencies which, at least on paper, seem very impressive.
- The footsoldiers of India’s battle against polluters are its officials at the state pollution control boards.
- The Central Pollution Control Board (CPCB) based in Delhi is generally well funded and resourced, unlike the state pollution control boards (SPCBs) that are in charge of implementation of the rules that CPCB writes.
5 issues faced by SPCBs
1) Shortage of Staff
- As an illustration, the Haryana State Pollution Control Board has been operating with a 70 per cent staff shortage.
- What this means practically is that a single officer is tasked to handle the demands of pollution control for an entire district without any subordinate technical staff.
- This comes at the cost of not being able to do inspections and other core pollution control work.
2) Lack of specialisation
- The officers at the SPCBs do not get to develop any specialisation.
- The CPCB has a decent workforce and robust laboratories, where scientists once recruited get to work and excel in a particular area.
- On the other hand, SPCBs don’t have such a stratified system, and the same officer is in charge of all these pollution categories, making it impossible to gain expertise and excel in any one area.
3) Lack of legal skills to take on pollutors
- SPCBs lack the necessary legal skills to take on polluters.
- While a legal cell may exist at the head office of a SPCB, they have few full-time public prosecutors there.
- As a result, engineering graduates in district SPCB offices — have to play the role of lawyers and develop legal paperwork that often falls short of holding polluters to account.
- Clerks and superintendents at courts often refuse to file cases, pointing at flaws that someone not trained in law would naturally make.
4) Lack of funds
- SPCBs are chronically underfunded.
- For instance, the funds of several SPCBs such as Haryana’s largely come from “No Objection Certificates” and “Consent to Operate” that the boards grant to industries and projects, rather than budgetary allocations by the government.
- Owing to this, SPCB officials are unable to spend on critical functions.
5) Additional duties
- SPCB officials are at times given additional responsibilities that are unrelated to pollution control.
- Haryana’s SPCB, for instance, has poultry farms under its ambit.
Consider the question “Dealing with the crisis of air pollution need coordination at various levels and the State Pollution Control Boards play an important role in it. In light of this, examine the challenges and suggest the steps needed to empower them.”
Conclusion
India must empower SPCBs to act by giving them the necessary funds, human resources, tools and technologies.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3-Challenges in judicial review of the central bank actions
Judicil review of central bank action could impact several stakeholders at the same time. This type of problems could be termed as polycentric problems. The article disusses the issues with judicial reviews in such cases.
Judicial review of central bank actions
- The Supreme Court is currently considering if the RBI should extend the COVID-19 induced loan moratorium and waive the accrued interest on interest.
- Earlier this year, the court struck down an RBI circular imposing a ban on virtual currencies.
- Last year, it quashed RBI circular that mandated banks and financial institutions to initiate insolvency proceedings against defaulting companies with significant loan exposures.
Unsuitable for adjudication
- Legal scholars have long recognised that certain disputes are inherently unsuitable for adjudicative disposition.
- The most influential arguments on this subject were advanced by the American legal philosopher Lon Luvois Fuller.
- Fuller compared polycentricity with a spider’s web — a pull on one strand distributes the tension throughout the web in a complicated pattern.
- Applied to adjudication, polycentric problems normally involve many affected parties and a somewhat fluid state of affairs.
- The range of those affected by the dispute cannot easily be foreseen and their participation in the decision-making process by reasoned arguments and proofs cannot possibly be organised.
- As a result, the adjudicator is inadequately informed and cannot determine the complex repercussions of a proposed solution.
Complexity of functioning of bank
- Disputes involving certain central bank functions are highly polycentric and are unsuitable for resolution through judicial review.
- For example, consider monetary policy function.
- This involves varying short-term interest rate to control supply and demand of money in the economy, which, in turn, influences economic activity and inflation.
- If judicial review supplants the central bank’s decision on this rate with the decision of the adjudicator, the repercussions would affect every single borrower and saver.
- Yet, the adjudicator can neither offer a meaningful hearing to all those affected parties, nor can he effectively process all the necessary information to determine an optimal solution.
- Evidently, disputes about monetary policy rate are highly polycentric and are better resolved outside the court.\
Which actions of banks should involve judicial review
- Not all disputes involving central bank functions are polycentric.
- For example, a dispute regarding imposition of a pecuniary penalty by a central bank could be resolved through judicial review.
- If the adjudicator finds the central bank to be correct, it need not interfere.
- If the adjudicator finds the central bank to be incorrect, it could modify or overturn the central bank’s decision.
- Clearly, judicial review could be effectively used to resolve bipolar disputes involving the central bank if they exhibit low polycentricity.
Need for striking the balance
- Monetary policy and pecuniary penalties are at two extreme ends of the polycentricity spectrum.
- There are, however, various central bank functions of intermediate polycentricity.
- Consider prudential regulations such as bank capital regulation.
- If judicial review supplants provisions of such regulations with the decision of the adjudicator, it may appear to directly impact only the banks and nobody else.
- But in reality, it could impact bank lending, which, in turn, would have complex repercussions on the entire credit market and risk-taking abilities across the economy.
- Effective hearing of all affected parties, directly or indirectly, would, therefore, be impossible.
- Consequently, some bipolar disputes involving the central bank may be too polycentric for meaningful resolution through judicial review.
- Judicial review could be purely procedural — the adjudicator could merely review whether the central bank’s action is within its legal mandate or not.
- The adjudicator could at most nullify a procedurally invalid central bank action, but may never supplant the decision of the central bank with his own.
Consider the question “Judicial review of the central bank actions could be different from the other judicial reviews. Examine the issues in such reviews by the judiciary.”
Conclusion
Adopting polycentricity test within constitutional jurisprudence would help sustain the legitimacy of judicial review while retaining the accountability of technocratic institutions such as the central bank.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: Loopholes in India's policymaking
This newscard is an excerpt of the original article published in the DownToEarth.
Central theme: India needs to work out problems in old policies and develop new ones that ensure a rapid tectonic shift in India’s technological future.
Past lessons:
(1) From Agriculture
- The Father of the Green Revolution, Norman E Borlaug, was credited with the development of semi-dwarf, disease-resistant and high-yield variety of wheat that he introduced in India, Pakistan and Mexico.
- Led by Mexico, and soon followed by India, many countries adopted what is now commonly known as the ‘Green Revolution’.
- Even after suffering two famines and recovering from the colonial catastrophe, India transformed itself into a self-sufficient nation in terms of rice and wheat over the next two decades.
Sustaining GR with farm mechanization
- Nearing the end of this decade, farm mechanization in India stands at 40-45 per cent, which is low compared to the USA (95 per cent), Brazil (75 per cent) and China (57 per cent).
- Renewal of focus on farm mechanization was afforded only in the 12th five-year plan through a sub-mission on agricultural mechanization.
- Regional disparities aside, India has broken the inertia in adopting farm machinery when compared to previous decades that is largely owed to the current push by the Union government.
Still stranded with Land reforms
- Yet, the response came late as compared to other countries with similar levels of development and was off by decades when compared to advanced economies.
- Indian policymakers are still catching-up when implementing agriculture reforms, including land record digitization that should have been done and dusted by now.
(2) Agriculture to Industries
- After adopting resistant-variety cotton, India became the largest producer and second-largest exporter of cotton.
- But it lags significantly behind in exporting cotton fabric at 5-6 per cent of the global share as China leads at 51 per cent.
- Even with technical textiles, India’s production share is at four per cent and we suffer from an overall trade deficit.
Why do we lag?
- The earlier policies have not been revamped to reorient them into improving the technologically laggard and decentralized small-scale industries.
- The overall direction is guided by budgetary announcements and segregated schemes that often leads to ambiguity in policy.
- The new textile policy that is expected to provide for the economy of scale through textile parks is yet to be rolled out and the dedicated National Technical Textile Mission has only been recently announced.
- Both policies should have been in place a decade ago.
(3) Automobile sector
- India’s automobile sector is yet another example of playing policy catch-up.
- None of the Indian companies has any substantial market share in electric vehicle (EV) production, and retail sale of EVs in India has not registered any significant growth.
- The biggest hurdle to the growth of EVs in India, among others, is policy ambiguity in relation to conventional internal combustion (IC) engine vehicles that hamper strategic business decisions.
Beyond lofty roadmaps
- In June 2019, NITI Aayog claimed that only EVs would be sold in India after 2030, replacing conventional IC engine vehicles, a claim that was later refuted by the Union Minister of Transport.
- Policy ambiguity and lack of clear-cut directives on such a revolutionary technology can create disarray within the industry and on the broader strategic direction of the manufacturing sector.
(4) Gaps in data and privacy lawmaking
- The world is fast changing with the advent of the fourth industrial revolution, artificial intelligence (AI) and quantum computing (QC).
- Every dimension of technology will start interacting with each other as the physical operations will all be controlled and operated by intelligent and adaptive virtual systems.
Here too, India lags
- Advanced economies have already put data regulation guidelines in place. China and the United States are already far too ahead in their R&D and policy research into AI and QC.
- India developed its national strategy for AI only in 2018 and still lacks a full-proof futuristic policy on quantum computing.
- Revolutionary and disruptive technologies require full-proof futuristic policies and strategies for development, and not vision documents and segregated schemes.
Dealing with data
- As of November 2019, the Internet and Mobile Association of India put India’s active Internet users at 504 million; in 2020, India would register nearly 700 million internet users.
- We generate a copious amount of data, which, when combined with personal data from individual users in India, demand a new legal and paradigm change.
- India’s data fiduciary laws are still in their nascent stage.
- Data Protection Bill based on the recommendation of the Justice BN Srikrishna Committee is still pending with Parliament.
Not treating the symptoms
- Every day millions of Indians share intricate personal details and data over the internet; a majority of active users are unaware of the threats posed by an open-access to data.
- Political battles are slowly gaining traction on the internet by harnessing the loopholes in social media.
- Threats of state surveillance loom over millions of Indians and even now, any legal framework to protect data or privacy is missing.
What we can deduce from the above discussion?
- The Indian State heavily influences the outcome of the country’s technological development, largely due to the significant presence of PSEs, the dominance of public expenditure in R&D and the type of mixed economy.
- Therefore timely policy intervention is essential to drive technological development in India.
- Policies also require time to materialise and bear fruit, and thus far, India’s track record in implementing policies does not inspire confidence.
India isn’t always laggard
- India has been able to harness the potential of technology in the past by timely policy intervention. India was an early bird to its environmental policies and space technology.
- The United States set up its Solar Energy Research Institute in 1977 and India set up its Commission of Alternate Sources of Energy (CASE) in 1981.
- Today, India leads by example in the share of renewable energy in its power generation matrix. India’s space technology is another success story that doesn’t miss the public eye.
- Time and again, through innovation and research, Indian academia and industries have exemplified its willingness and capacity to change, and all it requires is the desired policy push.
Conclusion
- With the rapid pace of technological development, the Union government and states cannot set to lose out time, as they have done in the previous decades.
- India must hunt for new technological innovations, fund research into prospective applications and build policies to facilitate the adoption of new technologies.
- Ministries and public-funded research bodies must be re-tasked to actively seek out new and emerging technologies all across the globe.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: SCO
Mains level: SCO and India
In an indirect reference to the Chinese infrastructure projects in PoK, our PM has urged members of the Shanghai Cooperation Organisation (SCO) to respect “territorial integrity” and “sovereignty”.
What is SCO?
- After the collapse of the Soviet Union in 1991, the then security and economic architecture in the Eurasian region dissolved and new structures had to come up.
- The original Shanghai Five were China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan.
- The SCO was formed in 2001, with Uzbekistan included. It expanded in 2017 to include India and Pakistan.
- Since its formation, the SCO has focused on regional non-traditional security, with counter-terrorism as a priority.
- The fight against the “three evils” of terrorism, separatism and extremism has become its mantra. Today, areas of cooperation include themes such as economics and culture.
Try this PYQ now:
Q. In the context of the affairs of which of the following is the phrase “Special Safeguard Mechanisms” mentioned in the news frequently?
(a) United Nations Environment Programme
(b) World Trade Organization
(c) ASEAN- India Free Trade Agreement
(d) G-20 Summits
India’s entry to the SCO
- India and Pakistan both were observer countries.
- While Central Asian countries and China were not in favour of expansion initially, the main supporter — of India’s entry in particular — was Russia.
- A widely held view is that Russia’s growing unease about an increasingly powerful China prompted it to push for its expansion.
- From 2009 onwards, Russia officially supported India’s ambition to join the SCO. China then asked for its all-weather friend Pakistan’s entry.
Tap to read more about SCO
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: OPEC + members
Mains level: Global oil price dynamics
Oil prices jumped by close to 10% for its biggest daily gain in almost six months after news of a highly effective vaccine against COVID-19 and Saudi Arabia’s assurance that an OPEC+ oil output deal could be adjusted to balance the market.
About OPEC
- OPEC stands for Organization of the Petroleum Exporting Countries.
- It is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
- It aims to manage the supply of oil in an effort to set the price of oil in the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
- It is headquartered in Vienna, Austria.
- OPEC membership is open to any country that is a substantial exporter of oil and which shares the ideals of the organization.
- Today OPEC is a cartel that includes 14 nations, predominantly from the middle east whose sole responsibility is to control prices and moderate supply.
What is OPEC+?
- The non-OPEC countries which export crude oil along with the 14 OPECs are termed as OPEC plus countries.
- OPEC plus countries include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
- Saudi and Russia, both have been at the heart of a three-year alliance of oil producers known as OPEC Plus — which now includes 11 OPEC members and 10 non-OPEC nations — that aims to shore up oil prices with production cuts.
Why OPEC plus came into existence?
- When Russia concluded the Vienna Agreement in 2016, the Russian leadership believed that it would help prepare the country for the Russian presidential elections in March 2018.
- Higher oil prices ensured the Kremlin’s financial capacity to lead a successful electoral campaign.
- This changed the regime’s priorities – from satisfying the needs of the general population to ensuring the sustainability of the Kremlin’s alliance with powerful tycoons, including that controlling oil production.
- For Saudi Arabia, turning what had been an ad hoc coalition into a formal group provides a hedge (protection) against future oil-market turbulence.
- For Russia, the formalization of the group helps expand Putin’s influence in the Middle East
- However, both reportedly aimed at causing a drop in oil prices in order to hit US shale producers, who have continued to benefit from OPEC production cuts by expanding their market share.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Nagorno-Karabakh region
Mains level: Usual crisis in the middle east and caucasus region
Armenia and Azerbaijan agreed on a deal with Russia to end fierce clashes over Nagorno-Karabakh after a string of Azerbaijani victories in its fight to retake the disputed region.
Ending up the bloodshed
- During the course of the conflict, over 1200 have lost their lives as per the Nagorno-Karabakh authorities, while thousands have been displaced.
- Since the conflict started in September, multiple ceasefire agreements have been signed between the two sides, but none so far have been successful.
- The deal is meant to end the conflict between the two nations.
- Russia’s role in the conflict has been somewhat opaque since it supplies arms to both countries and is in a military alliance with Armenia called the Collective Security Treaty Organisation.
What is the Nagorno-Karabakh region?
- Straddling western Asia and Eastern Europe, Nagorno-Karabakh is internationally recognised as part of Azerbaijan, but most of the region is controlled by Armenian separatists.
- It has been part of Azerbaijan territory since the Soviet era.
- When the Soviet Union began to collapse in the late 1980s, Armenia’s regional parliament voted for the region’s transfer to Armenia; the Soviet authorities turned down the demand.
- Years of clashes followed between Azerbaijan forces and Armenian separatists.
- The violence lasted into the 1990s, leaving tens and thousands dead and displacing hundreds of thousands.
- In 1994, Russia brokered a ceasefire, by which time ethnic Armenians had taken control of the region.
Consider this PYQ:
Q.The area is known as ‘Golan Heights’ sometimes appears in the news in the context of the events related to: (CSP 2015)
a) Central Asia
b) Middle East
c) South-East Asia
d) Central Africa
Who controls it?
- While the area remains in Azerbaijan, it is today governed by separatist Armenians who have declared it a republic called the “Nagorno-Karabakh Autonomous Oblast”.
- While the Armenian government does not recognise Nagorno-Karabakh as independent, it supports the region politically and militarily.
Ethnicity and the conflict
- Ethnic tensions from decades ago have a crucial role in the dispute.
- While the Azeris claim that the disputed region was under their control in known history, Armenians maintain that Karabakh was a part of the Armenian kingdom.
- At present, the disputed region consists of a majority Armenian Christian population, even though it is internationally recognised as a part of Muslim-majority Azerbaijan.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Thirty Metre Telescope
Mains level: Not Much
With regime change in the US, hopes have been raised for the Thirty Meter Telescope (TMT) in Hawaii. India is one of the partners in the ambitious next-generation observatory project along with the US, Canada, China and Japan.
Try this PYQ:
Q.“Event Horizon” is related to:
(a) Telescope
(b) Black hole
(c) Solar glares
(d) None of the above
Thirty Metre Telescope
- The TMT is a proposed astronomical observatory with an extremely large telescope (ELT) that has become the source of controversy over its planned location on Mauna Kea on the island of Hawaii.
- It is being built by an international collaboration of government organisations and educational institutions, at a cost of $1.4 billion.
- “Thirty Metre” refers to the 30-metre diameter of the mirror, with 492 segments of glass pieced together, which makes it three times as wide as the world’s largest existing visible-light telescope.
- The larger the mirror, the more light a telescope can collect, which means, in turn, that it can “see” farther, fainter objects.
- It would be more than 200 times more sensitive than current telescopes and would be able to resolve objects 12 times better than the Hubble Space Telescope.
Utility of the telescope
- One of its key uses will be the study of exoplanets, many of which have been detected in the last few years, and whether their atmospheres contain water vapour or methane — the signatures of possible life.
- For the first time in history, this telescope will be capable of detecting extraterrestrial life.
- The study of black holes is another objective.
- While these have been observed in detail within the Milky Way, the next galaxy is 100 times farther away; the Thirty Metre Telescope will help bring them closer.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Impact of the next U.S. President's policies on India's two major concerns
The article analyses two major concerns of India which would be influenced by the policies adopted by the next U.S. President.
Concern for India
- What policy President-elect Joe Biden will adopt in its foreign policy will has bearing on India.
- There are two foreign policy issues which are of great concern and interest — China and Iran in that order.
- For the world, the equation between the United States and China may be the relationship of the greatest consequence.
- For India, the most consequential relationship is not with the U.S. — as is sometimes claimed — but one with China.
- What happens in greater West Asia will always remain of concern, but those interests will not be affected one way or the other by who is the President of the U.S.
Quad dynamics and China
- In the Trump years, India signed all the ‘foundational’ agreements with America.
- India also bought billions of dollars worth of military hardware from them.
- India resisted converting the Quad into a primarily military or strategic grouping, and is in fact aimed solely at containing China.
- The Quad is an anti-China coalition.
- How far it can be successful in containing the Dragon remains to be seen.
- India’s External Affairs Minister has stated, India will not join any military alliance.
- However, given the fact that all the other three, and perhaps five or six in future, are already in strategic alliance with one another and with the U.S., it is highly likely that India too will be forced to agree to some form of military alliance at a future date.
- But no external power would want to get involved on our side in case of major hostilities with China.
- On the other hand, if there is a major skirmish or worse in the South China Sea, the other members of the Quad will expect us to join them in fighting China, in an area far removed from our shores.
Approach towards China
- If Mr. Biden adopts a more conciliatory approach towards China, India may find ourselves in a difficult situation.
- We do not want China to be permanently hostile to us; it will absorb huge resources, human and material.
- The strong rhetoric employed in relation to China will need to be tempered.
- Public opinion which has been worked up against China may make it difficult to do so immediately but the government is efficient in managing and moulding public opinion.
Approach toward Iran
- It may be difficult for Mr. Biden to quickly reverse Mr. Trump’s adventurist policy towards Iran.
- It may not be possible for him given the domestic compulsions, to readopt JCPOA in its original form.
- But he will surely, if slowly, engage Tehran in talks and negotiations through Oman or some other intermediary, to reduce tensions in the region.
- India may be able to buy Iranian oil, and sell our pharma and other goods to that country.
- The government may also feel less constrained in investing openly in oil and other infra projects in Iran, including the rail project in which Indian Railways Construction Ltd has been interested.
Conclusion
While India can’t expect the reversal of all Trump era policies, there will be certain changes in the stance adopted by the new U.S. President and India should be prepared to deal with it.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Funds allocated for containing air pollution and issue of its inadequacy
The article deals with the issue of allocation of funds to tackle air pollution and issues with it.
Allocation in the budget
- A ₹4,400 crore package was announced in last budget for 2020-21 to tackle air pollution in 102 of India’s most polluted cities.
- The funds would be used to reduce particulate matter by 20%-30% from 2017 levels by 2024 under the National Clean Air Programme (NCAP).
Issues with estimating the scale of the problem
- It is unclear if this amount is adequate because the scale of the problem is unknown.
- Delhi government spent money on the measurement of pollution for in Delhi that far exceeds s allocations that find mention in the Centre and State government’s budgeting books.
- The funds allocated don’t account for the trained manpower and the support system necessary to effectively maintain the systems and these costs are likely to be significant.
- Historically, cites have used manual machines to measure specified pollutants and their use has been inadequate.
- An analysis by research agencies Carbon Copy and Respirer Living Sciences recently found that only 59 out of 122 cities had PM 2.5 data available.
- Only three States, had all their installed monitors providing readings from 2016 to 2018.
- Prior to 2016, making comparisons of reduction strictly incomparable.
- Now manual machines are being replaced by automatic ones and India is still largely reliant on imported machines.
- In the case of the National Capital Region, at least ₹600 crore was spent by the Ministry of Agriculture over two years to provide subsidised equipment to farmers in Punjab and Haryana and dissuade them from burning paddy straw.
- Yet this year, there have been more farm fires than the previous year and their contribution to Delhi’s winter air woes remain unchanged.
- This indicates that money alone doesn’t work.
Conclusion
A clear day continues to remain largely at the mercy of favourable meteorology. While funds are critical, proper enforcement, adequate staff and stemming the sources of pollution on the ground are vital to the NCAP meeting its target.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Lessons from Bangladesh and Vietnam for Indian economy
The article examines the emergence of Bangladesh and Vietnam as the major export hubs in the world and explains the lessons India could draw from it.
Context
- Bangladesh has become the second-largest apparel exporter after China.
- Vietnam’s exports have grown by about 240% in the past eight years.
Analysing Vietnam’s success
- An open trade policy, a less inexpensive workforce, and generous incentives to foreign firms contributed to Vietnam’s success.
- Vietnam’s open trade policy through Free Trade Agreements (FTAs) means trading partners do not charge import duties on products made in Vietnam.
- Vietnam’s domestic market is open to the partners’ products.
- Vietnam has agreed to change its domestic laws to make the country attractive to investors.
- Over a decade or so, large brands such as Samsung, Canon, Foxconn, H&M, Nike, Adidas, and IKEA have flocked to Vietnam to manufacture their products.
What explains Bangladesh’s success?
- In Bangladesh, large export of apparels to the EU and the U.S. make the most of the country’s export story.
- The EU allows the import of apparel and other products from least developed countries (LDCs) like Bangladesh duty-free.
- India, as a good neighbour, accepts all Bangladesh products duty-free (except alcohol and tobacco).
- Bangladesh may not have this facility in four to seven years as its per capita income rises and it loses the LDC status.
- Bangladesh is working smartly to diversify its export basket.
Lessons for India
- The key learning from Bangladesh is the need to support large firms for a quick turnover.
- Yet, most of Vietnam’s exports happen in five sectors, in contrast, India’s exports are more diversified.
- The Economic Complexity Index (ECI), which ranks a country based on how diversified and complex its manufacturing export basket is, illustrates this point.
- The ECI rank for China is 32, India 43, Vietnam 79, and Bangladesh 127.
- India, unlike Vietnam, has a developed domestic and capital market.
- To further promote manufacturing and investment, India could set up sectoral industrial zones with pre-approved factory spaces.
- There should be no need to search for land or obtain many approvals.
India should pursue organic growth
- Most of Vietnam’s electronics exports are just the final assembly of goods produced elsewhere.
- In such cases, national exports look large, but the net dollar gain is small. China also faces this issue.
- Country’s Export to GDP ratio (EGR) indicates its export capacity.
- Vietnam’s EGR is 107%, such high dependence on exports brings dollars but also makes a country vulnerable to global economic uncertainty.
- The U.S.’s EGR is 11.7%, Japan’s is 18.5%, India’s is 18.7%. Even for China, with all its trade problems, the EGR is 18.4%.
- Most such countries, including India, follow an open trade policy, sign balanced FTAs, restrict unfair imports, and have a healthy mix of domestic champions and MNCs.
- While export remains a priority, it is not pursued at the expense of other sectors of the economy.
- The focus is on organic economic growth through innovation and competitiveness.
Consider the question “While export is essential for the growth of the country, over-dependence on it and its promotion at the expense of the other sectors could do more harm to the economy than good. Comment.”
Conclusion
With reforms promoting innovation and lowering the cost of doing business, India is poised to attract the best investments and integrate further with the global economy without increasing its dependence on export.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Finance Commission
Mains level: Mandate of the Finance Commission
The 15th Finance Commission, chaired by NK Singh, on Monday submitted its final report for 2021-22 to 2025-26 to the President.
Try this PYQ:
With reference to the Finance Commission of India, which of the following statements is correct?
(a) It encourages the inflow of foreign capital for infrastructure development
(b) It facilitates the proper distribution of finances among the Public Sector Undertakings
(c) It ensures transparency in financial administration
(d) None of the statements (a), (b) and (c) given above is correct in this context
Key recommendations that would feature in its final report:
- A separate defence and national security: The viability of creating a separate defence and national security fund as suggested by the Centre.
- States would keenly await these recommendations as it may translate into a lower share of funds for them.
- GST compensation dues to States: The panel is also expected to factor in unpaid GST compensation dues to States for this year, while working out State’s revenue flow calculations for the years beyond 2022.
Formula that decides a State’s share:
| Weight in 15th FC |
Parameters |
Weight in 14th FC |
| 15 (2011 Census) |
Population |
27.5 (17.5 – 1972, 10 – 2011 Census) |
| 15 |
Area |
15 |
| 10 |
Forest and Ecology |
7.5 |
| 45 |
Income Distance |
50 |
| 12.5 |
Demographic Performance |
– |
| 2.5 |
Tax Effort |
|
What is the Finance Commission?
- The Finance Commission (FC) was established by the President of India in 1951 under Article 280 of the Indian Constitution.
- It was formed to define the financial relations between the central government of India and the individual state governments.
- The Finance Commission (Miscellaneous Provisions) Act, 1951 additionally defines the terms of qualification, appointment and disqualification, the term, eligibility and powers of the Finance Commission.
- As per the Constitution, the FC is appointed every five years and consists of a chairman and four other members.
- Since the institution of the First FC, stark changes in the macroeconomic situation of the Indian economy have led to major changes in the FC’s recommendations over the years.
Constitutional Provisions
Several provisions to bridge the fiscal gap between the Centre and the States were already enshrined in the Constitution of India, including Article 268, which facilitates levy of duties by the Centre but equips the States to collect and retain the same.
Article 280 of the Indian Constitution defines the scope of the commission:
- The President will constitute a finance commission within two years from the commencement of the Constitution and thereafter at the end of every fifth year or earlier, as the deemed necessary by him/her, which shall include a chairman and four other members.
- Parliament may by law determine the requisite qualifications for appointment as members of the commission and the procedure of selection.
- The commission is constituted to make recommendations to the president about the distribution of the net proceeds of taxes between the Union and States and also the allocation of the same among the States themselves. It is also under the ambit of the finance commission to define the financial relations between the Union and the States. They also deal with the devolution of unplanned revenue resources.
Why need the Finance Commission?
- As a federal nation, India suffers from both vertical and horizontal fiscal imbalances.
- Vertical imbalances between the central and state governments result from states incurring expenditures disproportionate to their sources of revenue, in the process of fulfilling their responsibilities.
- However, states are better able to gauge the needs and concerns of their inhabitants and therefore more efficient at addressing them.
- Horizontal imbalances among state governments result from differing historical backgrounds or resource endowments and can widen over time.
- The first FC was established in 1951 by Dr B.R. Ambedkar, the then-incumbent law minister, to address these imbalances.
Important functions
- Distribution of net proceeds of taxes between Center and the States, to be divided as per their respective contributions to the taxes.
- Determine factors governing Grants-in-Aid to the states and the magnitude of the same.
- To make recommendations to the president as to the measures needed to augment the Fund of a State to supplement the resources of the panchayats and municipalities in the state on the basis of the recommendations made by the finance commission of the state.
- Any other matter related to it by the president in the interest of sound finance.
Members of the Finance Commission
- The Finance Commission (Miscellaneous Provisions) Act, 1951 was passed to give a structured format to the finance commission and to bring it to par with world standards.
- It laid down rules for the qualification and disqualification of members of the commission, and for their appointment, term, eligibility and powers.
- The Chairman of a finance commission is selected from people with experience of public affairs. The other four members are selected from people who:
- Are, or have been, or are qualified, as judges of a high court,
- Have knowledge of government finances or accounts, or
- Have had experience in administration and financial expertise; or
- Have special knowledge of economics
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: Impact of US regime change on India
Donald Trump’s rise to the White House as well as his exit has led to a wide reactionary response in India.
Also read:
[Burning Issue] India US relations in the backdrop of recent hiccups
(1) Economic Impact
Trade
- There are several ways in which the US economy, its health and the policy choices of its government affect India.
- For one, the US is one of those rare big countries with which India enjoys a trade surplus. In other words, we export more goods to the US than what we import from it.
- The trade surplus has widened from $5.2 billion in 2001-02 to $17.3 billion in 2019-20.
- Under a Biden administration, India’s trade with the US could recover from the dip since 2017-18.
FDI and FPI
- The US is the fifth-biggest source for Foreign Direct Investment (FDI) into India. Of the total $476 billion FDI that has come in since April 2000, the US accounted for $30.4 billion — roughly 6.5 per cent — directly.
- Only Mauritius, Singapore, Netherlands, and Japan have invested more FDI since 2000.
- Apart from FDI the US also accounts for one-third of all Foreign Portfolio Investments (that is, investment in financial assets) into India.
Ending protectionism
- A Biden presidency may also see a renewed push towards a rules-based trading system across the world.
- Instead of outright ad-hocism as was the case under Trump — as well as a move away from the protectionist approach that has been getting strong across the world.
(2) Visa
- For instance, how a US President looks at the H1-B visa issue, affects the prospects of Indian youth far more than the youth of any other country.
- Under Trump, who severely curtailed the visa regime, thanks to his policy of “America First”, India had suffered the most.
- That could change under Biden, who is unlikely to view immigrants and workers from India with Trump-like suspicion.
(3) Technology
- Other points of contention between India and the US are the tricky issue of data localisation or capping prices of medicines and medical devices.
- These have a better chance of getting towards a resolution as we move away from the radical approach of President Trump to the pragmatism of a Biden presidency.
(4) Diplomacy
- Further, under the Trump administration, the US sanctions on Iran severely limited India’s sourcing of cheap crude oil.
- For an economy such as India, which needs a regular supply of cheap oil to grow fast, a normalization of US-Iran relationship (and lifting of sanctions) would be more than useful.
- On China, too, while the US apprehensions are unlikely to be fewer. It is more likely that a Biden administration will help India against China, instead of clubbing the two together.
(5) Climate Action
- Biden has promised to rejoin the Paris Climate Accord, and this may help countries such as India in dealing with the massive challenges — both technical and financial — on this front.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: GRACE FO mission
Mains level: Impact of climate changes on Cryosphere
The GRACE-FO mission has mapped deviation in Earth’s surface mass and spatial variations in the rate of sea-level rise between 1993 and 2018 using altimetric and gravimetric analysis.
Try this MCQ:
Q.NASA’s VIPER mission sometimes seen in news is related to the study of-
a)Moon
b)Venus
c)Sun
d)None of these
GRACE-FO Mission
- The Gravity Recovery and Climate Experiment Follow-On (GRACE-FO) mission launched in 2018 is a partnership between NASA and the German Research Centre for Geosciences (GFZ).
- It is a successor to the original GRACE mission, which orbited Earth from 2002-2017.
- It carries on the extremely successful work of its predecessor while testing a new technology designed to dramatically improve the already remarkable precision of its measurement system.
How did NASA measure this?
(1) Altimetric Study
- Altimetry missions are used to know the ocean surface topography — the shape and height of the ocean’s peaks and valleys.
- Radar altimeters continually send out pulses of radio waves (microwaves) that bounce off the surface of the ocean and reflect back toward the satellite.
- The instrument calculates the time it takes for the signal to return, while also tracking the precise location of the satellite in space. From this, scientists can derive the height of the sea surface directly underneath the satellite.
(2) Gravimetric Study
- Gravimetry is a process of using ice’s gravitational pull on a pair of satellites. It helps estimate ice loss and its contribution to sea-level rise.
- The twin satellites in each mission detect subtle shifts in Earth’s gravity field.
- The strength of gravitational forces is determined by mass, so changes in Earth’s gravity field indicate a change or redistribution in mass.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Income Tax Appellate Tribunal
Mains level: Not Much
PM will inaugurate the office cum residential complex of Income Tax Appellate Tribunal (ITAT) at Cuttack in Odisha.
Income Tax Appellate Tribunal
- Income Tax Appellate Tribunal, also known as ITAT, is an important statutory body in the field of direct taxes and its orders are accepted as final, on findings of fact.
- ITAT was the first Tribunal to be created on 25th January, 1941 and is also known as ‘Mother Tribunal’.
- Starting with three benches, at Delhi, Bombay and Calcutta it has now grown to 63 Benches and two circuit benches spread across thirty cities of India.
- With a view to ensuring highest degree of independence of the ITAT, it functions under the Department of Legal Affairs in the Ministry of Law and Justice and is kept away from any kind of control by the Ministry of Finance.
Did you notice this?
ITAT was the very first tribunal constituted in India! And it functions under the Ministry of Law and Justice and not the obvious looking Ministry of Finance.
It’s Functioning
- It is the second appellate authority under the direct taxes and first independent forum in its appellate hierarchy.
- The orders passed by the ITAT can be subjected to appellate challenge, on substantial questions of law, before the respective High Court.
- Monetary limit for deciding an appeal by a single member Bench of ITAT enhanced from ₹15 lakh to ₹50 lakh in 2016 Union Budget.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- India-Maldives relation
The Soleh government’s ‘India First Policy’ provides respite to India when contrasted with the approach of the predecessors.
India-Maldives relations
- India and the Maldives have had bilateral relations for centuries.
- Maldivian students attend educational institutions in India.
- Patients from the Maldives come here for super speciality healthcare.
- A liberal visa-free regime extended by India has aided the patients.
- The Maldives is now a major tourist destination for some Indians and a job destination for others.
- Given the geographical limitations imposed on the Maldives, India has exempted the nation from export curbs on essential commodities.
Assistance to the Maldives
- In 1988, under Operation Cactus when a coup was attempted against President, India sent paratroopers and Navy vessels and restored the legitimate leadership.
- The 2004 tsunami and the drinking water crisis in Male a decade later were other occasions when India rushed assistance.
- In COVID-19 disruption, India rushed $250 million aid in quick time and also rushed medical supplies to the Maldives, started a new cargo ferry and also opened an air travel bubble, the first such in South Asia.
Strategic comfort to India
- Abdulla Yameen was President when the water crisis occurred.
- Now, the Yameen camp has launched an ‘India Out’ campaign against New Delhi’s massive developmental funding.
- Maldivian protesters recently demanded the Solih administration to ‘stop selling national assets to foreigners’, implying India.
- Mr. Yameen’s tilt towards China and bias against India when in power was evident.
- It is against this background that the Solih administration’s no-nonsense approach towards trilateral equations provide ‘strategic comfort’ to India.
Concerns for India
- India should be concerned about the protests as well as the occasional protest within the ruling Maldivian Democratic Party (MDP) of Mr. Solih.
- There are apparent strains between Mohamed Nasheed, who was the nation’s first President elected under a multiparty democracy and Mr. Yameen.
- This strain could affect the MDP during the run-up to the 2023 presidential polls.
- Also, Mr. Nasheed’s on-again-off-again call for a changeover to a ‘parliamentary form of government’ can polarise the overpoliticised nation even more.
Conclusion
Given this background and India’s increasing geostrategic concerns in the shared seas, taking forward the multifaceted cooperation to the next stage quickly could also be at the focus of relations of the two countries.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Power of the ECI
Mains level: Paper 2- Comparing the powers of the Election Commission of India to its counterpart in the U.S.
In the recently concluded presidential election in the U.S., the delay in announcing the result and issue of denial of the election results by the incumbent has brought into focus the role played by flaws in the Americal democratic system in the conduct of the election. This article compares the powers of the elections bodies in the U.S. and India.
Powers of ECI
- Indian Constitution has given the ECI enormous power to be exercised during the course of elections, and strictly on other election-related matters.
- By virtue of being the custodian of the electoral roll, all matters related to keeping the roll updated, fall under the ECI’s domain.
- Even the higher judiciary does not interfere during the course of the election process.
- Our Constitution’s fathers decided to limit the role of the judiciary in India to the post-election period, when election petitions may be filed.
- This was done to avoid the impeding of the election process and delay election results interminably.
Comparing the powers
- The U.S. Federal Election Commission has a much narrower mandate than its Indian equivalent-Election Commission of India.
- The Federal Election Commission was established comparatively recently — 1975, with the special mandate to regulate campaign finance issues.
- As a watchdog, it is meant to disclose campaign finance information, to enforce the law regarding campaign contributions, and oversee public funding of the presidential election.
- The Federal Election Commission is led by six Commissioners.
- These six posts are supposed to be equally shared by Democrats and Republicans, and too have to be confirmed by the Senate.
- This leads to decision making divided on partisan lines.
What India can learn From the election process in the U.S.
- In the 2016 U.S. election, almost a quarter of the votes counted arose from postal and early balloting.
- In India we have confined postal ballots to only a few categories, of largely government staff (for example those on election duty) as well as the police or armed forces.
- In these difficult times of the novel coronavirus pandemic, we need to widen this base to include all senior citizens and anyone else who may find it convenient to cast their vote early.
Consider the question “Powers of the Election Commission of India are wider when compared with its counterpart in the U.S. In light of this, compare the powers of the two bodies and how these wide powers have enabled smooth power transfers in India.”
Conclusion
In its functioning, Election Commission of India has broad powers as compared to its counterpart in the U.S. which has helped India see a smooth power transfer from the first election in India in 1951-52 and every single election since.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Special Marriages Act
Mains level: Interfaith marriage and associated issues in India
Forced religious conversions for interfaith marriages cases are widely seen in news these days. And many states are attempting to ban religious conversion for the sole purpose of marriage.
Try answering this:
Q. The recent withdrawal of a TV commercial advertisement showing an interfaith marriage has led to an astonishing blowback. In light of this, discuss the various ethical and rights issues involved in interfaith marriages.
Context
- Though the Special Marriage Act, 1954 (SMA) was enacted to facilitate the marriage of couples professing different faiths, and preferring a civil wedding.
- However, some practical problems arise in registering such marriages.
- The law’s features on prior public notice being given and objections for the safety and privacy of those intending to marry across religions.
- To overcome this, many settle for marriage under the personal law of one of them, with the other opting for religious conversion (accusingly termed as Love-Jihad).
What are the features of the SMA?
- Age: The marriage of any two persons may be solemnized under the SMA, subject to the man having completed 21 years of age and the woman 18.
- Consent: Neither should have a spouse living; both should be capable of giving valid consent, should not suffer from any mental disorder of a kind that renders them unfit for marriage and procreation.
- Liability: They should not be within the degrees of prohibited relationship — that is, they should not be related in such a way that their religion does not permit such marriages.
- Registration: Parties to an intended marriage should give notice to the ‘marriage officer’ of the district in which one of them had resided for at least 30 days.
- Objections: Any person can object to the marriage within 30 days of the publication of the notice on the ground that it contravenes one of the conditions for a valid marriage.
- Publication: The notice will have to be entered in a ‘Marriage Notice Book’ and a copy of it displayed at a conspicuous place in the office. The Notice Book is open for inspection at all reasonable times without a fee.
- Inquiry and approval: The marriage officer has to inquire into the objection and give a decision within 30 days. If he refuses permission for the marriage, an appeal can be made to the district court. The court’s decision will be final.
- Severance from family: Also, the Act says that when a member of a Hindu undivided family, gets married under SMA, it results in his or her “severance” from the family.
Threats after such marriages
- The provisions relating to notice, publication and objection have rendered it difficult for many people intending to solemnize inter-faith marriages.
- Publicity in the local registration office may mean that family members objecting to the union may seek to stop it by coercion.
- In many cases, there may be a threat to the lives of the applicants.
- There have been reports of right-wing groups opposed to inter-faith marriages for communal propaganda.
Issues with the publication of notices
- In July, the Kerala Registration department decided to discontinue the practice of uploading marriage notices on its websites following complaints that these were being misused.
- However, the notices will be displayed on the notice boards of the offices concerned.
- These provisions have been challenged in the Supreme Court recently on the grounds that they violate the privacy of the couples, their dignity and right to marry.
- In the case of Hindu and Muslim marriage laws, there is no requirement of prior notice and, therefore, such a requirement in the SMA violates the right to equality of those opting for marriage under it.
States against conversion for the sake of marriage
- Even though Uttar Pradesh (U.P.) and Karnataka have spoken about a separate enactment, at least two States have legal provisions to the effect.
- The Himachal Pradesh Freedom of Religion Act, 2019, and the Uttarakhand Freedom of Religion Act, 2018, both prohibit conversion by misrepresentation, force, fraud, undue influence, inducement, allurement and ‘by marriage’.
- There is a separate section in both laws under which, not conversion for the purpose of marriage, but marriage has done solely for the purpose of conversion, may be declared null and void by a family court based on a suit by either party.
- The U.P. State Law Commission has recommended a similar Freedom of Religion law in the State and favours a provision under which marriages solemnized solely for the conversion of one of the parties may be nullified by a family court.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: Freedom of Religion
Haryana government is considering a law against forced religious conversions and has sought information about such a law already in force in Himachal Pradesh.
Try this question
Q. How forced or misguided religious conversions pose a grave threat to the secular fabric of the Indian Society? Discuss.
The Himachal anti-conversion law
- The state had already enacted a law in 2007 which prohibited conversion from one religion to another by force or fraud. Last year it introduced a more stringent version of the legislation.
- There was a rise in conversions by fraudulent means and unless checked well in time.
- Such practice may erode the confidence and mutual trust between the different ethnic and religious groups in the state.
What does the law say?
- According to the Act, “no person shall convert or attempt to convert, either directly or otherwise, any other person from one religion to another by use of misrepresentation, force, undue influence, coercion, inducement or by any fraudulent means or by marriage; nor shall any person abet or conspire such conversion”.
- The Act does not cover a person re-converting to his “parent religion”.
- It further says that any marriage done for the sole purpose of religion conversion may be declared null and void by a court on a petition by either party.
What happens if anyone wants to convert to any other religion?
- As per the Act, anyone who wishes to convert to any other religion will give a declaration to the district authorities at least one month in advance, specifying that one is doing so as per his/her “own volition or free consent”.
- In fact, even the religious priest who performs the conversion ceremony has to inform the authorities at least one month in advance.
- The district magistrate will then conduct an inquiry regarding the “intention, purpose and cause of proposed conversion”.
- The conversion will be rendered illegal if the authorities are not informed in advance.
The burden of proof
- The Act says that the burden of proof as to whether a religious conversion was not effected through force or fraud lies on the person so converted, or the person who has facilitated the conversion.
Penal provisions
- All offences under the Act are cognizable and non-bailable. The violator can be punished with a prison term ranging from one to five years, along with a fine.
- In case the victim is a minor, woman or member of a Scheduled Caste or Tribe, the imprisonment may extend upto seven years.
- Failure to declare the conversion in advance can also result in imprisonment of upto two years.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Other Service Providers (OSP)
Mains level: Various sectors of the economy
The Department of Telecom (DoT) has eased the rules for registration, submission of bank guarantee and other norms for other service providers (OSP) in the business process outsourcing (BPO) and information technology-enabled services (ITes).
Recall your basics from NCERT books… Sectors of the Economy … More precisely, the Tertiary, Quaternary and Quinary Sectors.
What are Other Service Providers (OSP)?
- OSPs or other service providers are companies or firms which provide secondary or tertiary services such as telemarketing, telebanking or telemedicine for various companies, banks or hospital chains, respectively.
- As computers made their foray into the Indian information technology space, a number of such OSPs, which were either voice or non-voice based, came into the market.
- The sector required minimal investment but gave great returns in business, which prompted a large number of individuals and companies to float other service providing firms.
Registration of OSPs
- The new telecom policy of 1999 suggested that all OSPs register themselves so that the government could keep a check on the usage of its resources.
- Since most of these firms used leased telephone lines, this in turn used the telecom spectrum auctioned by the DoT, hence facing the regulation.
- Further, the registration was also made mandatory to ensure that firms did not establish fake OSPs which swindled customers under the garb of providing telebanking and other such sensitive services.
What were the various registration norms for OSPs?
- To start services in India, OSPs had to register themselves with the DoT and declare to the government as to how many employees were working in the firm as well as the area of service it was engaged in.
- For example, if a firm wished to provide telebanking services, it had to tell the government the number of people working with the BPO and the state that firms catered to.
- Further, the OSPs also have to declare whether they were providing services to domestic firms or international firms, and the nature of services being offered.
Significance of the new guidelines
- The guidelines will make it easier for BPOs and ITes firms in many ways, such as cutting down on the cost of location, rent for premises and other ancillary costs such as electricity and internet bills.
- The doing away of registration norms will also mean that there will be no renewal of such licenses and therefore will invite foreign companies to set up or expand their other service providing units in India.
- This change, in line with the norms of countries in the West can also allow employees to opt for freelancing for more than one company while working from home, thereby attracting more workers in the sector.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Ports along the strait of hormuz, Chabahar Port
Mains level: India-Iran relations soured in recent times
An Iranian diplomat in an interview has said that Tehran now hopes that New Delhi will help facilitate equipment for the Chabahar-Zahedan railway line under a line of credit promised to it in 2018.
Try this question
Q. Discuss the strategic and economic significance of Chabahar Port and Rail Project for India.
Recent controversy
- The Iranian government in July had decided to proceed with the construction of this project on its own, citing delays from the Indian side in funding and starting the project.
The Chabahar Rail Project
- It is a 628 km Chabahar-Zahedan line, which will be extended to Zaranj across the border in Afghanistan.
- The entire project would be completed by March 2022.
- It was meant to be part of India’s commitment to the trilateral agreement between India, Iran and Afghanistan to build an alternate trade route to Afghanistan and Central Asia.
Why did Iran omit India from the project?
- Despite several site visits by engineers, and preparations by Iranian railways, India never began the work, ostensibly due to worries that these could attract U.S. sanctions.
- The U.S. had provided a sanctions waiver for the Chabahar port and the rail line to Zahedan, but it has been difficult to find equipment suppliers and partners due to worries they could be targeted by the U.S.
- India has already “zeroed out” its oil imports from Iran due to U.S. sanctions.
India’s reluctance with Iran
- Looking at the whole aspects of relations, when it comes to politics, there has been a great common understanding and shared interests.
- But when it comes to economic and trade relations, it has been subject to some limits and restrictions, which are hampered by the various sanctions imposed.
- The US had put pressure directly or indirectly on the relations, although that has not been the will of both sides.
The contentious partnership with China
- Iran and China are close to finalising a 25-year Strategic Partnership which will include Chinese involvement in Chabahar’s duty-free zone, an oil refinery nearby, and possibly a larger role in Chabahar port as well.
- The cooperation will extend from investments in infrastructure, manufacturing and upgrading energy and transport facilities, to refurbishing ports, refineries and other installations.
- It is also rumoured that the Chabahar port will be leased to China surpassing India.
- Iran had proposed a tie-up between the port at Gwadar and Chabahar last year and has offered interests to China in the Bandar-e-Jask port 350km away from Chabahar, as well as in the Chabahar duty-free zone.
Back2Basics: India-Iran Partnership over Chabahar Port
- In 2016, India signed a deal with Iran entailing $8 billion investment in Chabahar port and industries in Chabahar Special Economic Zone.
- The port is being developed as a transit route to Afghanistan and Central Asia.
- India has already built a 240-km road connecting Afghanistan with Iran.
- All this were expected to bring cargo to Bandar Abbas port and Chabahar port, and free Kabul from its dependence on Pakistan to reach the outer world.
- Completion of this project would give India access to Afghanistan and beyond to Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan, Kazakhstan, Russia and Europe via 7,200-km-long multi-modal North-South Transport Corridor (INSTC).
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