Australian PM Visits India | RSTV

Aiming to give new impetus to India – Australia ties, the Australian PM Malcolm Turnbull made his first-ever official visit to India. In addition to meeting the Indian dignitaries, and holding delegation-level talks with Prime Minister Narendra Modi, Turnbull visited Mumbai for interaction with captains of Indian industry.

Australian PM | Highlights of the visit

  • During the Australian PM visit, the two sides inked six Memoranda of Understanding on combating international terrorism and transnational organized crime; climate change and wildlife protection; health and medicine; civil aviation security; space technology, and sports. Hence, Turnbull’s visit demonstrated the growing convergence in national priorities of India and Australia, which are working closely in fighting multiple common challenges ranging from terrorism and piracy to climate change and pollution.
  • Both India and Australia have been victims of terrorism in their territories and elsewhere. Showing their firm resolve to fight the menace, the two sides inked MoU on cooperation in combating terrorism. Stressing on the need to take urgent steps to counter and cap the spread of radicalism and terrorism, they emphasised on the need for greater understanding and coordination among the intelligence, law enforcement, and security agencies.
  • India-Australia cooperation in civilian nuclear energy holds immense significance as it would help fight climate change in addition to helping India meet its energy demands. In that context, Prime Minister Modi appreciated the passage of the Civil Nuclear Transfers to India Act in the Australian Parliament. Commercial export of Australian uranium to India is likely to commence soon.
  • Appreciating India’s efforts to cap climate change and pollution through International Solar Alliance, Turnbull expressed Australia’s willingness to join the alliance.
  • MoU on health and medicine, and sports cooperation, signed during Turnbull’s visit, have the potential to add a strong dimension to India-Australia cooperation. India could learn a lot from Australian best practices in these fields.

Australian PM | Defence ties

With the 2014 India-Australia bilateral Framework for Security Cooperation functioning as the cornerstone of bilateral defence and security cooperation, India-Australia security ties are poised to graduate to the next level with the inaugural secretaries’ defence and foreign affairs dialogue in the “2+2” format, to be held in late-2017. Notably, India already has such a dialogue mechanism with Japan.

Australian PM | Maritime security cooperation

  • India and Australia are on the same page in comprehending the volatile strategic equilibrium in Indo-Pacific, and thus appreciate the need for a peaceful and rule-based order.
  • As responsible stakeholders in the region, Delhi and Canberra respect the maritime legal order based on the United Nations Convention on Law of the Sea, and stress upon the importance of freedom of navigation and overflight.
  • Promoting region-wide dialogue is critical, and India-Australia-Japan Trilateral dialogue aims to serve that purpose. It is aptly complemented by India-Japan-US trilateral dialogue.
  • The Indian Ocean Rim Association (IORA) and other multilateral security groupings such as ASEAN Regional Forum (ARF), ASEAN Defence Ministers Meeting (ADMM) Plus, and the East Asia Summit provide the two countries with avenues to tackle transnational traditional and non-traditional security threats.

Australian PM | Areas of cooperation

  • Australia supports India’s claim to the United Nations Security Council (UNSC), and APEC, in addition to supporting India’s entry into the Nuclear Suppliers Group (NSG), Australia Group, and the Wassenaar Arrangement.
  • People to people linkages are critical in strengthening bilateral relations. India is the third largest source of immigrants for Australia, which is also home to nearly 450,000 Indians, and around 46,000 Indian students studying in Australia.
  • Australia’s New Colombo Plan is an enabler for the young Australians to build knowledge base on India. Signing of the two implementing arrangements between ISRO and Geoscience Australia for space cooperation signals that robust linkages in the field of higher education and skills development have the potential to bring bilateral ties to new heights.

Australian PM | Taking forward economic ties

  • Prime Minister Turnbull has promised to constitute an ‘India Economic Strategy to define a pathway for the Australian business community to collaborate with India on its reform agenda’.
  • Australia-India CEO Forum would also help strengthen trade ties.

Australian PM | Conclusion

In summation, Prime Minister Turnbull’s India visit added a new milestone to India-Australia ties; a visit that will be remembered for India and Australia’s sincere attempts to bring their politico-diplomatic and strategic visions in sync with each other.

RSTV | The Big Picture: Takeaways from Turnbull’s India visit

 

UK Begins Brexit Process | RSTV

Brexit is a commonly used term for the United Kingdom‘s planned withdrawal from the European Union. British Prime Minister Theresa May formally began her country’s divorce from the European Union recently after reiterating that there was no turning back. As a result, PM May notified EU Council President in a hand-delivered letter that Britain would quit the block which it joined in 1973. Unlike last year’s unease during the referendum, the triggering of Article 50 of the Lisbon Treaty did not worry the India much this time. Although it is still early days to gauge its real effects, Indian companies and sectors such as automobile, metal, Information and Technology, tours and travels, and education that have a notable exposure to the region are likely to see the considerable impact in the days to come.

Brexit | Analysis

Companies are looking to hedge their bets because Britain was a centre for significant financial activities. Easy access to markets in Europe enabled London to emerge as a flourishing centre for trade and investment services. Following this trend, companies from India have heavily invested in the UK such as the Tata Group which invested both in steel and automobile sector.

It would be interesting to see the future trade relation among EU nations and the UK now. If there is a free flow of goods and services through the proposed Free Trade Agreement, then there might not be much problem for Indian exporters as they would not lose the access to European markets. But in the case of a hard Brexit, where UK is unable to export to EU countries on the similar terms, then the picture might get different. For instance – Currently, Bangladesh has a significant advantage over India in textiles sector because of the tariff preferences which it receives in the European Union because of tariff concessions by Britain. After Brexit, this will be an open question whether Britain would continue to grant Bangladesh those tariff concessions or not. If Britain reverses this policy, it would be advantageous for India as the exports from India would get on par with Bangladesh, at least on input cost (tariff) fronts.

Brexit | Implications for India

  • Due to high volatility surrounding the GBP (Pound), it is expected that Indian stock exchange might feel the punch and Indian businesses in Europe might be at risk. This volatility in currency might also have an adverse impact on investment and movement of professionals to the UK.
  • The uncertainty surrounding the Brexit process might affect India’s flagship IT sector. In the case of a hard Brexit, Indian IT companies will have to establish separate offices and hire different workforce for the Britain and the EU.
  • Currently, Indian firms have their base in Britain because they avail a border-free access to the rest of Europe. This was one of the main reasons for Indian companies to establish their business in Britain itself. With this lucrative option gone post-Brexit, the investment decisions of Indian companies in Britain might see some change.
  • Shunned from the Europe, British companies would look towards emerging markets which may also lead to greater investments by the British companies into India. This will increase the overall outflows of the domestic market of Britain, hence, disturbing the British economy further.
  • As one can see through the recent moves by the British Government, Britain is willing to woo investors from India in terms of tax breaks, lesser regulation and other financial incentives which might be beneficial for the existing as well as future investors from India.
  • India can explore significant opportunities in the pharma sector of British market due to rising health concerns In the case of larger government procurement of generic medicines from India, Indian pharma companies would find a big market for their exports.

Conclusion

The secession of Britain from the European Union does weaken the whole block at one level. It also reflects anti- immigrant or xenophobic sentiment sweeping across Europe and America in particular. Although it is premature to make assumptions about the course of Brexit negotiations, much will depend on the terms that are negotiated under Brexit. If the history is to be believed, the process of Brexit might not get complete within the next two years itself.

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Farm Loan Waivers | RSTV

Recently, the RBI Governor sounded alarm over the state governments policy of Farm Loan Waivers. He called for a consensus to do away such populist politics to avoid damaging the national economy. This statement was made in respect of Uttar Pradesh Chief Minister Yogi Adityanath’s announcement of waiver of 36,000 crore rupees of farm loan which could trigger similar policy actions by the Punjab and Maharashtra governments in the near future due to political pressure.

RBI Governor said that these Farm Loan Waivers entail ‘transfers from taxpayers to borrowers’.

Farm Loan Waivers | Issues of farmers

Due to various reasons, farmers have failed to manage their expenditure which calls for borrow money from moneylenders at extremely high rates because they are ineligible for bank credit due to their membership of informal sector. Although not the only one, indebtness is a major reason for farmer suicides in India.

Other reasons include

  • Fragmented land holding
  • Depletion of water table level
  • Deteriorating soil quality
  • Rising input costs and less output
  • Low productivity
  • Vagaries of monsoon

Farm Loan Waivers | Analysis

  • Many economists like RBI Governor calls this idea as both bad politics as well as bad economics because it may win public support for political parties in the short run but is not sustainable in the long run.
  • The immediate as well as long term effect of waiver of loan is sensed by hampering of credit climate which will be counterproductive not only for the state but for the entire credit market of the economy.
  • A pragmatic policy would have been the adoption of a set of measures suggested by the Swaminathan Committee Report.
  • The other point of view says that on an average, the income of farmers is so low that their daily survival has become difficult. Therefore, farm loan waivers are becoming a necessity because under the garb of deep rooted issues of agriculture, the sufferings of the farmers cannot be ignored.
  • As per the 59th NSSO survey, approximately 40% of farmers’ are averse to the idea of farming and would quit it at the earliest opportunity. Therefore, it could have a severe impact on nation’s food security.

Farm Loan Waivers | Word of caution

  • The proposed national agricultural markets are yet to be linked to provide seamless access to formal credit and ultimately fair market price for farmers’ produce.
  • Farm loan waivers may act as a temporary cushion and can prove to be a moral hazard in future because the both the beneficiary and non-beneficiary farmers who would actually be able to pay their loans on time might not pay it expecting a similar waiver.
  • Similarly, the banks may become wary in providing loans to the poor farmers who actually need the credit to meet even their routine expenses. If this happens, politicians may find it suitable to adopt the politics of freebies continuously. Ultimately, such waivers will add to the NPAs of the banks and it will cost taxpayers to inject capital to these banks in the form of recapitalisation by the Government.

How to make agriculture sustainable?

  • Reducing inefficiencies and increasing income
  • Providing protection through insurance schemes
  • Better risk management and more efficient agricultural markets
  • Subsidies should be directed towards the farmers not the companies.

Farm Loan Waivers | Conclusion

Farm loan waivers are only the temporary cushions that may help the farmers to survive in the short term, but the issues in agriculture need sustainable and creative engagement through which the surplus farm workers sector can be accommodated in more productive sectors through skill training and education, thereby making farming more profitable and sustainable for all the concerned stakeholders.

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Fertiliser Subsidy Reforms | RSTV

Government of India has decided to fast track the implementation of the Direct Benefit Transfer system for payment of fertiliser subsidy to farmers. From the upcoming Kharif season beginning from June, Rs 70,000 crore fertiliser subsidy (budgeted for 2017-18) will be distributed to companies based on the actual sales to farmers taken on point of sale machines installed at nearly 2 lakh retail points throughout India. This would be a substantial change from the present system in which the firms are paid subsidy on the fertiliser receipt at the terminus point or any approved godown of the district. Until October 2012, the companies were getting the subsidy on the dispatch of material from their respective factories. 

Fertiliser Subsidy | Why reform?

  • Currently, it has not been calculated that how much fertiliser subsidy each farmer will actually require due to which the it cannot be directly allocated to the farmers. Government is trying to control the leakage of the subsidy which occurs because the sale does not always happen to the farmer as it is done to washing powder, plywood manufacturers or other manufacturing units who use urea as a by-product.
  • During demonetisation, the government specifically asked the fertilizer companies to create ‘Point of Sales’ because they were arguing that fertilizers had to be disbursed which was a challenge at that point of time. Thus, the aim is to take the digital route to transactions between the farmer and the fertilizer company.
  • It will also allow them to possibly track where the consumption is happening. There were reports ofleakage to neighbouring countries like Bangladesh and Nepal as the sale happens in India but the product is transferred to these countries. If few farmers are buying the fertilizers in surplus, that can also be checked. It should be noted that the largest consumers of fertilizers in India are Punjab and Uttar Pradesh.

Fertiliser Subsidy | Issues

  • Government is not promoting ecological farming in a right manner as it is concerned with only three chemicals- NPK (nitrogen, phosphorus and potassium), despite the fact that plants require at least 17 elements for their growth.
  • Although Government proclaims to promote organic farming, subsidy is being given to chemical fertilizers where there is huge discrepancy in the usage. We all know that the ratio of NPK usage should be 4:2:1, but in Punjab, this ratio is 61:19:1. Urea is cheap (in terms of price) in market so the farmers use it more often which creates imbalance and affects the yield which either goes down or becomesTherefore, the whole system of subsidy should look into overall benefits to agriculture.
  • Over-usage of fertilizer is a bigger issue than the fertiliser subsidy itself. It should be noted that in 1950, with the use of less NPK, the yield was more as compared to today’s productivity. Today, with the use of more NPK, lesser yield is being produced. Hence, there is a need to improve the organic content of the soil through organic farming or compost techniques.
  • A serious issue at hand is that the Government is selling compost at the same rate as of urea which would not push the farmers towards organic farming. It is essential that farmers should produce fertilizers in their fields through organic techniques. A cropping pattern should be followed to promote organic farming.
  • Even by efficiently subsidising fertiliser usage, we are not handling the issue at hand which is a fact that these subsidies will only help fertilizer companies to sustain their business. In the long run, farmer’s business will be affected badly because the input costs will continuously increase with outputs inversely proportional to it. Moreover, the end product is also unsafe for consumption. We should remember that instead of giving subsidies on chemicals, it is essential to incentivise those farmers who are practicing organic farming. If the subsidy is linked to productivity, it will remove fertilizer companies from the game. It is doubtful, if the corporates who rely on agri-business would welcome it if the Government tries to make such a move.

Fertiliser Subsidy | Way forward

  • State Governments and Central Government should work in tandem to encourage farmers to adopt ecological farming techniques, the momentum of which should be created through robust policies.
  • In western UP and Punjab, the farmers should be moved away from wheat and rice because the ground water has depleted to an alarming level.
  • Farmers need to be educated and taught to alter their cropping pattern and move to multiple cropping methods so as to reduce both their input costs and optimum utilisation of resources.

Tribunal Reorganisation | RSTV

In what might be creating huge uproar in the Parliament, the Government has proposed a large scale Tribunal Reorganisation by seeking to reduce the number of these quasi-judicial bodies and bring uniformity in the service conditions of their officials.

The amendments proposed under the Finance Bill will alter several laws and allow the Government to set a criterion for the appointment and removal of the chairperson, the vice-chairperson and other members of the tribunals, and decide on their terms of service.

Details of reorganisation

  • The Competition Appellate Tribunal is proposed to be merged with the National Company Law Appellate Tribunal.
  • The Cyber Appellate Tribunal and Airports Economic Regulatory Authority Appellate Tribunal is proposed to be merged with the Telecom Disputes Settlement and Appellate Tribunal.
  • The Industrial Tribunal is also proposed to perform the functions of the Employees Provident Funds Appellate Tribunal and
  • The Copyright Board is proposed to be merged with the Intellectual Property Appellate Board.

Need and impact

  • India has a vast number of tribunals to look into appeals made by the orders of specific regulators. Hence, post-merger, the Government will have to ensure specialisation in tribunal functions, the absence of which will lead to overlapping of powers and confusion.
  • It might lead to overburdening the tribunals with more cases than it their capacity to handle.
  • It might expedite administrative purposes which will speed up dispute resolution and curb wasteful expenditure on the resolution of disputes.
  • It is argued that allowing the executive organ of the state to determine appointment, reappointment and removal of members might affect the independent functioning of Tribunals themselves. Currently, these administrative rules, such as appointment eligibility, remuneration, and the like, were governed by the respective statutory acts and provisions rolled out by the concerned ministry. Hence, it could also pose a conflict of interest in cases where the executive is a litigant.
  • Moreover, parity in administrative rules could help in streamlining the functioning of these quasi-judicial bodies (tribunals) and ensure that vacancies do not stymie the functioning of the tribunals.

Issues

  • There are concerns regarding the fact that Competition Appellate Tribunal (COMPAT) is unfit to merge with any other tribunal as it is carries too much specialisation under its arms and deals with complex issues. Either dissolving COMPAT or merging it with the NCLT could defeat the focus of competition law in the country.
  • Likewise, the Airport Economic Regulatory Authority Appellate Tribunal is proposed to be merged into the Telecom Dispute Settlements and Appellate Tribunal, which appears incongruous at the outset itself.
  • Increasing control of the executive over tribunals will be contrary to the spirit and values laid down by the Supreme Court to ensure fairness and jurisprudence. Section 179 of the Finance Bill transfers massive powers from the Parliament to the Centre.

Conclusion

Although, there is no harm in reorganizing the tribunals, it must be done after careful scrutiny to make them better streamlined. It should not be made another point of conflict between the executive and the judiciary, as the latter might feel that the former is exercising overreaching powers over the state functions.

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Madhesi Unrest | RSTV

Nepal’s Terai region “Madhes” is burning again. The residents of Terai region Madhes, known as ‘Madhesis’ are protesting against the plan to hold local body elections (Village Panchayats, sub-metropolitan areas and the Municipal Corporations of the Metropolitan areas) before their demand for amending the constitution are met. Prime Minister Pushpa Kamal Dahal had formed his government with the support of the Madhesi parties and the Nepali Congress. He came to power on the promise that he would amend the constitution to address the grievances of the country’s Madhesi population and the ‘Janjaatis’. He did introduce a constitutional amendment bill proposing the establishment of a second province in the Terai region of Nepal and to address three other key issues – citizenship, representation in the upper house and recognition of languages spoken in various parts of the country. However, he is in no position to ensure a safe passage for the bill as the proposed amendment does not have a two-thirds majority support in the Parliament. Meanwhile, the Government has announced that the local body elections would be held in the country on May 14th. This has seriously upset the Madhesis of the Terai region and they have given the Prime Minister Dahal, an ultimatum of seven days to postpone the local body elections and warned him that they could withdraw support from the Government.

Why is the ruling class unable to address the demands of the Madhesi population?

Nepal has been ruled by the Brahmin (upper-caste) elite and the Nevaris of the Kathmandu valley for decades and the Madhesis have been treated like the colonised people. After the abolition of the monarchy and the introduction of the new constitution, the Madhesis were expecting some power-sharing mechanism in the constitutional structure. This has been belied by the elite groups because they are unwilling to share power with them. Madhesis are looked upon very derisively.

Why did Prime Minister Dahal introduce the bill to recognise Madhesi rights?

PM Dahal introduced the bill as a part of his promise to the Madhesi population before forming his Government with their support. There are multiple issues with the clearing of the bill. First, there is a stiff opposition from the UML (Communist Party of Nepal) with respect to the reorganisation of the provinces in the Terai region. Secondly, there are elements within the Nepali Congress who are inspired by the ‘Hill nationalism’ i.e. upper-caste rule and non-accommodation of Terai demands. Therefore, the Prime Minister is sandwiched politically between the two compulsions of the constitutional amendment and constitutional implementation.

Prime Minister Dahal assumed the office on the understanding that he would run the Government for nine months and then he would hand over the charge to his counterpart in the Nepali Congress, Mr Sher Bahadur Deuba. During this period of nine months, PM Dahal has assumed the responsibility of conducting the local body elections; and the national elections which are to follow in the next nine-month period would be conducted under the Prime Ministership of Mr Sher Bahadur Deuba. The problem is that the elections to these local bodies (numbering nearly a thousand local bodies) lose credibility in the absence of the constitutional amendment which is necessary to demarcate the federal boundaries. Unless the federal boundaries are demarcated according to the demands of the Madhesi, the local body elections would pose a severe threat to their struggle as they would have a direct impact on the grassroots level politics of the provinces.

Why there is opposition to accommodating Madhesi demands by several parties in Nepal?

There are twenty districts which border India (collectively known as Terai region) and out of these twenty districts, eight districts have been put together to establish a ‘Madhes-dominated’ province in the eastern part. The constitutional amendment proposes further consolidation of few districts on the western side to establish a ‘Madhes-majority’ province. In this way, two provinces would be established through this constitutional amendment to accommodate Madhesi demands.

If there is any united Terai province under the Madhes domination, then it would give political power to the Madhesis, otherwise, they are splintered. As per the present constitutional arrangement, the various divisions of Nepal have been made to ensure that there is a Madhesi component in every province, to weaken the otherwise unified community. Therefore, geographical boundaries are made in order to ensure that the Madhesis are splintered and fragmented and their control over the natural resources stay weakened.

The emergence of xenophobia

The Communist Party of Nepal (Unified Marxist-Leninist) is provoking xenophobic fears among the people in the hill region and stoking ultra-nationalism under the guise of anti-India political rhetoric to consolidate upper-caste elite opinion. The UML is aware that they have already lost their limited constituency in the Terai region, so they are polarising the public opinion on xenophobic lines to assimilate elite opinion against the Madhesi community who is regarded as retrogressive by the ‘Hill elite’.

The ‘Hill elite’ should realise that the dark days of economic blockade initiated by the Madhesis from the India-Nepal border to block the flow of goods from India to Nepal created havoc in the whole country. If the same strategy is adopted again by the marginalised Madhesi community, it could possibly become very destructive for the people of Nepal as a whole because the essential supplies from India are the lifeline for the economy and society of Nepal.

Conclusion

Throughout the process of Constitution making in Nepal, India has supported a federal, democratic, republican and inclusive Constitution.  India has been urging Nepal that issues on which there are differences should be resolved through dialogue in an atmosphere free from violence and intimidation, and institutionalized in a manner that would enable broad-based ownership and acceptance. This would lay the foundation of harmony, progress and development in Nepal.

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Electoral Bonds | RSTV

An extraordinary announcement was made in the Union Budget this year to ensure transparency in political funding by introducing electoral bonds for which the Government is gearing up to amend the rules of Reserve Bank of India. The proposal has found favour generally but the plan is seen as yet another attempt by the Government to step on the turf of the RBI.

Electoral Bonds

  • Electoral Bond is a financial instrument for making donations to political parties. These are issued by Scheduled Commercial banks upon authorisation from the Central Government to intending donors, but only against cheque and digital payments (it cannot be purchased by paying cash). These bonds shall be redeemable in the designated account of a registered political party within the prescribed time limit from issuance of bond.
  • The electoral bonds which will be issued by notified banks can be redeemed by recognised political parties within a prescribed time limit.

Electoral Bonds | Highlights

  • Apart from accepting the demands of the Election Commission to reduce cash donations limit from Rs. 20,000/- to Rs. 2,000/-, the Government has moved towards a new innovative idea of electoral bonds. Hence, Electoral bonds are more to do with eliminating black money and less to do with electoral reforms.
  • These will be short duration bonds which means that they will have to be encashed within a period of 30 or 45 days as suggested by the Finance Minister.
  • The identity of the donor will not be disclosed if there is use of electoral bond which in case of cheque payment gets fully disclosed showing which companies and industrial houses are supporting a particular political party even if the funding is legitimate.
  • There is no limitation on giving cash to the political parties. At present also, the amount being paid as donation is shown less than the amount being actually given to the political parties. Since the money will come through banks, so to some extent black money will be reduced. But as far as corruption is concerned, it is still difficult to put a check with this step.
  • In order to bring electoral bonds, RBI Act will have to be amended because right now under the law only RBI can issue these bonds. After this the banks designated by RBI to issue these bonds will come into picture.

Electoral Bonds | Criticism

  • The scheme is left at the discretion of political parties or companies which means that it does not really addresses the issue of political funding. There is nothing in the scheme that will encourage the companies or industrial houses to buy these bonds by payment of cheques and political parties to take those bonds.
  • Few experts are questioning the proposal on the grounds that this step would further decrease the sanctity of an autonomous institution like the RBI as the issuance of bonds is the domain of the central bank.

Electoral Bonds | Suggestions for improvement

  • When the country is moving towards digitization, even the Rs.2000 which can be paid in cash to the political parties should be paid online.
  • If all the transactions and accounts being done and used by political parties are regulated under a piece of legislation, it might prove to be more effective and simple.
  • There are many political parties at present which do not file the return every year. The law can be amended to enforce strict actions against such political parties.
  • Setting aside the election of such candidates against whom there are evidences of spending black money or excluding them from future elections as penalty can be a strong measure.
  • Voters have to be made aware through awareness campaigns as often illiterate voters are bribed for votes before elections.
  • If the Government is aiming towards a transparent political funding system, it can explore the idea of Government funding which can be a better tool to curb corruption as followed in many countries of the world. However, in country like India, this might lead to further problems when already Government has expenditures on other serious issues like poverty, unemployment etc.