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Daily Editorials for UPSC IAS Exam Preparation

GM Mustard debate

GS3 – Awareness in the fields of IT, Space, Computers, robotics, nano-technology, bio-technology and issues relating to intellectual property rights.

GS3 – Conservation, environmental pollution and degradation, environmental impact assessment

Context

  • The manner in which the Genetic Engineering Appraisal Committee (GEAC) recently cleared the proposal for genetically modified (GM) mustard is extraordinary to say the least.
  • It makes a mockery of the commitment in the Bharatiya Janata Party manifesto that “GM foods will not be allowed without full scientific evaluation on the long term effects on soil, production and biological impact on consumers”.
  • The Prime Minister had delighted consumers by lending his weight to the promotion of organic food.
  • On the other hand, GM and organic are completely incompatible.

What is GM Mustard?

  • Hybrid variety of a crop is obtained by crossing of two genetically diverse plants of same species and it can give higher yields than their parents.
  • But mustard cannot be naturally hybridised because it is a self-pollinating plant having both male and female reproductive parts in a single flower.
  • Hence there is no natural hybridization system in mustard, unlike in, say, cotton, maize or tomato.
  • The GM hybridised mustard, as it is claimed, gives up to 30% more yield than the best varieties such as ‘Varuna’ currently grown in the country.  Researchers have used “barnase / barstar” technology for genetic modification.
  • A barnase gene is isolated from a soil bacterium called Bacillus amyloliquefaciens. The gene can code for a protein that impairs the pollen production in a plant making it male-sterile.
  • This male-sterile variety is crossed with a parent variety having a gene called ‘barstar’ to block the action of barnase gene. The resulting variety, having both foreign genes, is a fertile plant and it can increase yield of the crop.
  • Scientists showed that this problem could be addressed by crossing Indian mustard cultivars with juncea lines of East European origin like ‘Early Heera’ and ‘Donskaja’. The combination of the 2 divergent gene pools enhanced the crossing options; the resultant F1 progeny were found to exhibit significant heterosis.

Why a hybridised mustard variety is required?

  • Researchers and promoters of GM Mustard argue that India imports Rs.60,000 crore worth of edible oils every year. There is an urgent need to reduce dependence on imports and raise domestic crop yields of mustard, which in turn raises production of edible oils domestically.
  • To improve yields, hybridisation is a potential technique as it is successfully demonstrated with many other crops.

Why there is an objection for its introduction?

  • The main reason for its objection is in use of GM technology for hybridisation involving use of alien genes.
  • Though GM technology is already commercialised in India through Bt cotton, it is argued that cotton is not a food crop whereas mustard is largest edible oil yielding crop of India. Its introduction may adversely affect human and animal health.
  • It is also argued that the reason for increased imports of edible oils is because of reduction in import duties and that in turn discouraged domestic production by companies. It resulted in reduction of cultivation of the crop by farmers.
  • There was similar opposition to introduction of Btbrinjal, another GM crop approved by the GEAC in 2009.
  • When sustainable farming and low-input agriculture are becoming the buzzwords, crop varieties that will end up doing more harm to the environment and crop fields is not understable. GM mustard will require almost double the quantity of fertiliser and water.
  • Other Health concerns of GM Hybrid Mazie include: allergenicity; gene transfer, especially of antibiotic-resistant genes, from GM foods to cells or bacteria in the gastrointestinal tract; and `out crossing’, or the movement of genes from GM plants to conventional crops, posing indirect threats to food safety and security.
  • GM mustard can affect honeybees directly and indirectly through effecting flowering and pollen production. Protease inhibitors have proved detrimental to the longevity and behaviour of bees.
  • Regulatory weakness-The Genetic Engineering Approval Committee, which is responsible for approving large-scale releases and commercialisation of GMOs, functions under the Ministry of Environment and Forests and is not entirely independent.
  • The case of the Review Committee on Genetic Manipulation that supervises and clears research activities and also small-scale field trials is even starker. It is part of the Department of Biotechnology, whose primary task is to promote biotechnology. DBT therefore is the promoter as well as the regulator. On several occasions, developers of transgenic crops have also been members of regulatory committees

Arguments in favour

  • The use of GM technology through Bt cotton has increased the country’s cotton production by more than 2½ times since it was first planted in 2002. There are no evidences to show the adverse impact on human and animal health.
  • Cotton-seed yields not just fibre but also oil and oilcake that are fed to animals. That makes it no less than a food crop.
  • And also India imports soyabean oil and rapeseed oil that are mainly GM varieties.

Arguments against

  • The alluring promises of higher yield and lower pesticide usage which induced many to welcome Bt cotton have now been belied.
  • Despite increased fertilisers and irrigation, the expectations of enhanced cotton yield have not been realised.
  • Most of the countries that have higher cotton yields than India do not grow GM cotton. The package of promises sold to us did not reveal all of this.
  • It would now be foolish in accepting the yield promises of the GM variety of mustard, a crop which is an integral part of every Indian’s food.
  • Ab initio the yield claims on which GM mustard has been cleared are not even remotely reliable — being based on comparisons with 30-year-old cultivars, and not on more recent high-yielding hybrids.
  • The highest yields in mustard are from the five countries which do not grow GM mustard — U.K., France, Poland, Germany and Czech Republic — and not from the GM-growing U.S. or Canada.
  • If India is desirous to increase its mustard yield rapidly and safely, this can be done by adopting the practice of System of Mustard Intensification, for which successful trials have been done in Bihar through a World Bank project.
  • Results showed higher yields and better income. All this without the spraying of any toxic herbicides, which is the undisclosed story of GM mustard.
  • GM mustard’s yield increase claims have been successfully challenged now, prompting the crop developers and regulators to retract on that front — it is another matter that many reports continue to claim that GM mustard will increase yields.

Problems at policy formulation level

  • There have been numerous severe deficiencies in the evaluation process of GM mustard.
  • The risks to health, environment and agriculture have not been evaluated even through those inadequate tests which were conducted at the time of Bt brinjal examination, though mustard is far more extensively grown and consumed than brinjal.
  • HT (herbicide tolerant) GM crops have been condemned by a number of medical professionals and other scientists for increasing chemical herbicide use, leading to serious health conditions — at all stages, but most worryingly at the foetal stage.
  • A scientific report from Argentina found a fourfold increase in birth defects and a threefold increase in childhood cancers in HT soya areas.
  • Shockingly, the GEAC has conveniently omitted to have any herbicide-related studies. A small committee was constituted to “examine” the safety dossier — the tests that were done and the deliberations of GEAC were shrouded in secrecy.
  • After a scathing order from the Central Information Commission, the GEAC made a sham of public consultations, through an opaque and perfunctory eyewash process.

 

Examples worldwide

  • The U.S. is a prime example of a country which has galloped into the GM mode of agriculture.
  • Studies have shown a strong correlation between growth of GM crops, the herbicides they promote, and diseases such as acute kidney injury, diabetes, autism, Alzheimer’s and cancers in the past 20 years in the U.S. Seventeen of the 20 most developed countries — including Japan, Russia, Israel and most of Europe — refuse to grow GM crops.
  • An unacceptable marketing trick, that of promotion of a “swadeshi” GM, is being used to break down resistance to GM crops in India’s vast market, ignoring that safety concerns are the same — swadeshi GM or not.

Health effects

  • The GEAC had itself rejected a HT GM mustard proposal by Bayer in 2002. The same reasons apply now.
  • A herbicide-tolerant crop promotes constant exposure to a single herbicide — which eventually results in weeds becoming resistant.
  • Over 20 species of weeds in the U.S. are now resistant to Monsanto’s glyphosate-based herbicide. As desperate farmers tried to control these “superweeds”, there was a tenfold increase in use of glyphosate in 16 years.
  • Glyphosate has been declared to be a “probable human carcinogen” by the World Health Organisation. The glufosinate-based herbicide to which the proposed GM mustard is tolerant will also have adverse impacts on health.
  • Every Indian who consumes mustard in any form, as s/he will also consume the herbicide residues on it; the millions of poor women who depend on weeding to support their family who will be displaced; the bee keepers whose honey will be contaminated; farmers whose yields will fall eventually as bees die out; and the Indian nation, which will find that it has lost its seed diversity and the international competitive advantage of its non-GM mustard and honey.
  • A recent report, not by activists but by the United Nation’s Special Rapporteur on the Right to Food, sums up the end game when it says: “Recent mergers have resulted in just three powerful corporations: Monsanto and Bayer, Dow and Dupont, and Syngenta and ChemChina. They control more than 65 per cent of global pesticide sales. Serious conflicts of interest issues arise, as they also control almost 61 per cent of commercial seed sales. The pesticide industry’s efforts to influence policymakers and regulators have obstructed reforms and paralysed global pesticide restrictions globally.” Their business model ensures that no matter who produces a GM seed, they profit.

 

Should India Ban GM Crops?

  • GM technology has already been commercialized in India through Bt cotton, which is also based on incorporation of foreign genes derived from a soil bacterium, Bacillus thuringiensis.country’s cotton production has gone up more than 2½ times since Bt hybrids were first planted in 2002. Nor has any evidence emerged really of Bt cotton causing any adverse human or animal health effects.
  • While the likes of Pakistan, Bangladesh, Myanmar, Philippines and Vietnam are adopting GM technology to improve crop yields and reduce input costs, we are still questioning its potential not on the basis of scientific evidence, but using emotional arguments.
  • Bangladesh was the 1st country to approve the commercial planting of Bt brinjal in late-2013, after being disallowed by India. Bt brinjal has been harvested over 2 seasons, with farmers deriving better marketable yields and incomes from its successful commercialization.
  • The main advantage trotted out in favour of GM mustard is increased yield — there is sufficient evidence that this claim is a myth.
  • As against this alleged advantage, there are formidable social, economic and environmental reasons which cry out against GM mustard — examination of these has been hardly done by the GEAC.
  • As the PR agencies work overtime to push for GM mustard, one can only hope that the Environment Minister, the Prime Minister and the Supreme Court will act in concert to protect Indian consumers, and farmers from the potentially irreversible destruction of an important Indian crop.

Way forward

  • In a current environment where climatic change would have negative effects on yield of many major crops which could seriously undermine food security, GM crops are the way forward.
  • However at the same time to convince the opponents of GM crops to allow commercialization of GM crops we need a strong regulatory framework.
  • What is therefore needed is an independent biotechnology regulatory authority, a single organization that will replace the multiple committees – at least six – that are part of the current regulatory structure. This authority would deal with the use of all GMOs in agriculture, pharmaceutical and biodiversity sector
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Daily Editorials for UPSC IAS Exam Preparation

Taxing Agricultural income



GS3 – Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment

GS3 – Inclusive growth and issues arising from it. 

GS3 – Money-laundering and its prevention

 Context

  • Niti Aayog member Bibek Debroy recently said that agricultural income should be taxed, an idea that the central government said is not under consideration at all.
  • In its three-year action plan, Niti Aayog had recommended taxing agricultural income.
  • Ramesh Chand, another member of the think tank, had defended the proposal saying recommendation was to plug loopholes to prevent non-agricultural entities evading tax using the agricultural exemptions.

 Three Year Action Plan

  • Apart from the action agenda, there would be a seven-year strategy and a 15-year long-term vision that will replace the erstwhile Five-Year Plans for the nation’s planning framework. The 12th Five-Year Plan ended on 31 March.
  • Prime Minister Narendra Modi said the action agenda was just a draft and that all suggestions by the chief ministers of various states would be taken into account before finalising it.
  • 15-year vision document pegs the Indian economy’s growth from Rs 137 lakh crore in 2015-16 to Rs 469 lakh crore by 2031-32 at 2015-16 prices.
  • The three-year agenda has been divided into seven parts, with each part having a number of specific action points.
  • Over 300 specific action points have been identified covering the whole gamut of sectors.
  • The NITI Vice-Chairman said subsequent parts deal with major sectors, growth enablers, governance, social sectors and sustainable development.
  • NITI Aayog CEO Amitabh Kant said the major take-away was that the think tank assured there was no vacuum after the 12th Five-Year plan that ended on March 31 as it quickly worked on the three-year plan.
  • During NITI Aayog Governing Council’s third meeting, Kant outlined the initiatives taken in areas like agriculture, poverty elimination, health, education, digital payments, disinvestment, coastal zone, and island development.
  • He said that NITI Aayog will work with states to improve basic services and infrastructure, especially in districts and regions which require specific attention.

How the issue of agriculture income tax propped up?

  • Due to its exempt nature, agriculture is seen as a loophole to evade taxes. While many experts, over the years, have demanded closing of this loophole, no step has been taken by any government.
  • In 2016, an RTI had surfaced indicating how rich people use agriculture tax exemptions to convert black money into white.
  • Agriculture exemptions are used to route black money by non-agricultural entities.
  • During 2010-11, agriculture income exceeded gross domestic product 20 times. During this period, agricultural production and area under cultivation remained almost constant.
  • In 2011, agricultural income of close to Rs 2000 lakh crore was registered for around 6.57 lakh assesses.
  • Between the period of 2011-12 to 2013-14, assesses reported agricultural income of more than Rs 1 crore.
  • Only 2 percent of tax assesses declare agricultural income.
  • There was a rise in agricultural income during the same time when the government had initiated black money probe in foreign accounts.
  • Between 2007-08 and 2015-16, around 2746 entities including individuals declared agricultural income of minimum Rs 1 crore.
  • According to records, more than 90 percent of the agricultural land is under marginal farmers who do not file returns.
  • Contrary to the above figures, agricultural growth in India usually hovers around 3-4 percent. Agriculture production, too, has remained stable at around 14-15 percent of the GDP. Consecutive droughts have also led to fall in yield and farmer suicides in the country.

 Money Laundering Via Agriculture

  • Section 2 (1A) of the Income Tax Act defines agricultural income as rent/revenue from land, income derived from this land through agriculture and income derived from buildings on that land.
  • Section 10 (1) of the Income Tax Act excludes agricultural income from a computation of total income.
  • Neither of these sections is dispute-free and chartered accountants and lawyers have been enriched via these.
  • The above data instigated a deeper look into how many people were using agricultural tax exemption for money laundering.
  • People who wish to launder money obtain land at cheaper rates and do rotations of crop on the land. On just this, people pass off unaccounted cash income as agriculture income.
  • In many cases, fictitious bills are shown as receipts of agricultural produce and evade tax on profits.

What has Niti Aayog proposed?

  • The government’s think tank in its three-year plan suggests that farm income could be assessed for tax as a three-year average. This will not help reduce evaders, but it will widen the tax-base for the government.
  • “On the personal income tax side also exemption should go. On expanding the base on the personal income tax side, other than elimination of exemptions, is to also tax the rural sector, including agriculture income above certain threshold.” Said Debroy
  • Excluding income from farming – which is nearly 15 percent of the GDP –forces the government to keep income tax rate high. Taxing farm income could add 0.6 percent to the GDP, according to National Institute of Public Finance & Policy.
  • The tax on farm income can be applied above a threshold just like it is done with personal income. At present, personal tax is levied on income above the threshold of Rs 2.5 lakh.
  • However, Niti Aayog, too, distances itself from Debroy and said the comments were his personal opinion and not any recommendation by the body.
  • In India, taxing farm income is the domain of states. Farm income is not taxed except on income from certain non-farm activities.

How the states respond to agri tax?

  • Conditions on the sale of agricultural land vary from state to state. In some states, there is a requirement that land can only be sold to “farmers”. But not every state requires this.
  • When there is a stipulation, there are no credible checks on “farmer’s certificates”, in addition to circumvention through the leasing route.
  • In the Seventh Schedule, Entry 82 in the Union List mentions taxes other than agricultural income, while Entry 46 in the State List mentions taxes on agricultural income. Therefore, arguing that this is in the State List is valid.
  • But, as is mentioned of an agricultural income tax, there can be only two conclusions: some states tax agricultural income, or that state legislatures has the right to tax agricultural income.
  • Long before the Income Tax Act of 1961, there was the Income Tax Act of 1860, now forgotten. This was the introduction of income tax in India (in a modern sense) and it was meant to be temporary. Wonder of wonders, it taxed agricultural income till 1886.
  • What changed in 1886, or between 1860 and 1886? The answer had more to do with general resentment against colonial rule, and less to do with agricultural income taxation directly.
  • In 1932, there was the Federal Finance Committee of the Round Table Conference and its report. The present constitutional structure owes to this report and the Government of India Act (1935).
  • We have had Agricultural Income Tax Acts in Bihar (1938), Assam (1939), Bengal (1944), Orissa (1948), Uttar Pradesh (1948), Hyderabad (1950), Travancore and Cochin (1951) and Madras and Old Mysore State (1955).
  • This isn’t entirely history — we still have the Assam Agricultural Income Tax Act (1939), the Bihar Agricultural Income Tax (1939), the Kerala Agricultural Income Tax Act (1991), the Tamil Nadu Agricultural Income Tax Act (1955), the Orissa Agricultural Income Tax Act (1947), the Maharashtra Agricultural Income Tax (1962) and the Bengal Agricultural Income Tax Act (1944).
  • Therefore, it isn’t true that states don’t tax agricultural income, though it’s true that they tax some kinds of agricultural income, such as plantations.

Historicity of the issue

  • The issue of taxing agricultural income (and wealth) goes back to the 1960s. There must be a unified system of taxation across states. Agricultural income taxation must be integrated with non-agricultural income taxation. Land revenue tax hasn’t quite worked and must be replaced.
  • The Fourth Five Year Plan (1969-74) document and the report of the Fifth Finance Commission (1969) also talked about agricultural tax.
  • Indeed, if one looks for strong arguments in favour of agricultural income taxation, one will find them in the report of the Taxation Enquiry Commission (1953-54).
  • In 2002, there was the report of the Vijay Kelkar Task Force on direct taxes. This made the point that not taxing agricultural income violates horizontal and vertical equity and it “encourages laundering of non-agricultural income as agricultural income, that is, it has become a conduit for tax evasion. Both the arguments are empirically verifiable.”
  • This empirical validation was done on the basis of tax returns in Mumbai. This report proposed, “A tax rental arrangement should be designed whereby states should pass a resolution under Article 252 of the Constitution authorising the Central government to impose income tax on agricultural income.
  • The taxes collected by the Centre would however be assigned to the states. Most agricultural farmers would continue to remain out of the tax net.” At that time, estimates were that 95 per cent of farmers would be below the threshold.
  • In 1925, the Indian taxation enquiry committee noted, “There is no historical or theoretical justification for the continued exemption from the income tax of income derived from agriculture.
  • There are, however, administrative and political objections to the removal of the exemption at the present time.” Almost a century later, both parts of that observation still hold true.

Final arguments in favour

  • The economic and governance necessity of such a tax has always been apparent.
  • Yoginder K. Alagh’s 1961 analysis of agricultural tax yields,Case For An Agricultural Income Tax, in The Economic Weekly—now The Economic And Political Weekly—is illuminating, showing a substantial rise in revenue over the previous decade, vital for a young nation state.
  • Concurrently, the Planning Commission’s sample study of cooperative farms showed the onset of tax avoidance as mechanized farms with hired labour took advantage of the exemptions provided to cooperative farms.
  • That evasion has grown over the decades into an administrative swamp. In assessment year 2014-15, for instance, nine of the top 10 claimants for tax exemption of agricultural income were corporations; the 10th was a state government department.
  • And an RTI (right to information) query by Vijay Sharma, former income-tax chief commissioner, turned up massive irregularities in agricultural income in 2011-12 and 2012-13.
  • This goes beyond foregone revenue. As the 2014 Tax Administration Reform Commission report points out, “Agricultural income of non-agriculturists is being increasingly used as a conduit to avoid tax and for laundering funds, resulting in leakage to the tune of crores in revenue annually.” Nor can this government or its predecessors hide behind the fig leaf of honest—if unwise—populism.
  • According to the National Sample Survey’s 70th round, over 86% of agricultural households have land holdings of less than 2 hectares. Low-income farmers—the constituency state legislatures are ostensibly protecting—would thus fall outside the ambit of any sensible tax regime.
  • The reality of political opposition is more sordid: pressure brought to bear by the rural elite that can deliver votes and funds and would fall under the tax net.
  • Little wonder there is a robust history of policy reform attempts. The 1972 Raj committee on taxation of agricultural wealth and income report is perhaps the most comprehensive. The Vijay Kelkar committee in 2002 had also addressed the issue, noting that states should be persuaded to pass a resolution authorizing the Centre to pass a tax on agricultural income that would then be assigned to the respective states.
  • The reform attempts stretch as far back as 1947—when the report of the expert committee on financial provisions to the Constituent Assembly suggested consulting with the states to address the issue swiftly—and are as recent as Prime Minister Narendra Modi’s conference with tax administrators in June last year when the latter brought up the issue of taxing agricultural income.
  • Given the extent of the informality that still exists in the agricultural sector, implementation of an agricultural tax would admittedly not be easy.
  • In a 2004 World Bank paper,Taxing Agriculture In A Developing Country: A Possible Approach, Indira Rajaraman has analysed data from 70 developing countries to show how the twin problems of payments in cash or kind and a lack of standard account-keeping throw up barriers. But there is, demonstrably, a wealth of work done in this area to draw upon.
  • For instance, Rajaraman herself suggests a crop-specific levy on land rather than on self-declared output, assessed and implemented at the panchayat level for accuracy and flexibility—with the added incentive of tax yields being ploughed back into agricultural sector infrastructure.

Conclusion

  • However, to engage with such policy debates, the political establishment must first move beyond a reflexive rejection of the very concept of agricultural tax.
  • Given the optics created by decades of grandstanding, this will perhaps be as difficult as actually implementing a tax.
  • But with the Modi government’s push for a less-cash economy and the proscription of cash transactions of over Rs2 lakh, both making money laundering via the agricultural sector more difficult, this is as good a time as any.
  • It would be a pity if the logic of the colonial administration continued to dictate tax administration in India nine decades later.

Way Forward

  • Agriculture employs the largest population of the country despite contributing very little to the GDP of the country. It warrants an agenda to improve its productivity so that ample utilization of resources can be done to realise inclusive growth.
  • The characteristic feature of the employment and thus income is the fact that the land is apparently concentrated in the few hands despite the clamour of land reforms.
  • And therefore an effective policy mechanism is required to tax the rich farmers and landlords while still keeping the small marginal ones immune from the tax net.

 Questions

  1. Do you support taxing of agriculture? Give concrete arguments in support of your opinion.

 

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Daily Editorials for UPSC IAS Exam Preparation

NITI Aayog “Planning Model”


GS2 – Structure, organization and functioning of the Executive and the Judiciary Ministries and Departments of the Government; pressure groups and formal/informal associations and their role in the Polity.

GS3 – Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment

Context

  • The draft “Three Year Action Agenda” of the NITI Aayog has been circulated recently to its governing council.
  • This will be finalised after reflecting on the comments and concerns of state governments.
  • After allowing for the 12th five-year plan to phase itself out, the transition is now complete.
  • Five-year plans are reminiscent of centrally planned economies; most such countries, like the Soviet Union, China and Romania, had similar planning horizons.

Background

  • There are two other documents in the pipeline, namely, the seven-year policy strategy and the 15-year long-term vision.
  • The NITI Aayog’s governing council, which is currently reviewing the “Three Year Action Agenda”, comprises all chief ministers, mirroring the erstwhile National Development Council.
  • The “Three Year Action Agenda” seeks to embark on “a path to achieve all-round development of India and its people” through concerted action, outlined in seven parts covering multiple facets of the Indian economy.
  • However, there are core issues which need to be addressed.

 What are the issues to contemplate?

Is the present shift better designed to suit our development challenges? What are the advantages of a three-year timeline?

  • Apart from outgrowing the legacy of central planning, there are other advantages.
  • Given India’s democratic cycle, accountability in a five-year timeline was opaque and diffused.
  • Electoral cycles do not synchronise with five-year plans; quite often, this entailed outcome accountability to rest with a successor government.
  • But a “Three Year Action Agenda” makes the government in office more directly accountable for the implementation of its plans.
  • It gives the government an improved prospect to make corrections and adaptations during its own term in office.
  • Also augmenting the “Three Year Action Agenda” with a seven-year implementable policy strategy and a 15-year vision allows adaptation to changing times and exogenous variables — it enables us to look into the future, particularly at evolving technology, demography and ecology, and accordingly align our policies.
  • The 15-year vision is also somewhat coterminous with the Sustainable Development Goals (SDGs) of the United Nations (UN). The new format thus combines domestic aspiration with global aims.

Are the forecasts of macro variables realistic?

  • The agenda projects three scenarios for nominal GVA (Gross Value Added), namely, low growth, baseline and high growth.
  • The nominal GVA is expected to increase by 11.6 per cent, 12.3 per cent and 13 per cent in the next three years under the baseline scenario, which implies that inflation would be range-bound and in consonance with parliamentary sanction.
  • This further signifies that real GVA growth per annum would be in the range of 7.6 per cent to 9 per cent.
  • Broadly speaking, these growth forecasts are aligned with recent trends and expectations of both national and international agencies.
  • Relying on the proposals forwarded by the Fiscal Responsibility and Budget Management (FRBM) Review Committee, the action agenda estimates a fall in the share of non-development revenue expenditure, both as a proportion of total budget expenditure and GDP.
  • It rightly emphasises the need for optimal utilisation of resources and regular monitoring of progress.
  • An obscurantist — and ill-advised — distinction between revenue and capital expenditures has spurred a misallocation of resources. A functional classification of public expenditure would indeed prove to be more meaningful.
  • The Gross Tax Revenue (GTR) forecasts under the “low growth” scenario closely resemble the rolling targets outlined in the Medium Term Fiscal Policy Statement of Budget 2017-18.
  • The direct tax to GDP ratio is expected to increase by 5.8 per cent, 6.0 per cent and 6.3 per cent in the next three years, as compared to 5.6 per cent in 2016-17 (BE).
  • Recent path-breaking reforms to curb black money, the amendments in the Direct Tax Avoidance Agreements and the signing of Advance Pricing Agreements would definitely augment personal income and corporate tax collections.

How likely are we to achieve these targets?

  • Given the healthy state of the Indian economy, downside risks to achieving growth targets largely emanate from exogenous factors: Unfavourable monsoons, global protectionist trends and spikes in oil prices could impinge our twin deficits.
  • The continued pursuit of an unconventional monetary policy approach by advanced economies could limit the manoeuvrability of our monetary authority.
  • More importantly, assuming a tax buoyancy rate of 1.42 is unduly optimistic. This is notwithstanding credible efforts at enhancing tax compliance and realisation, deeper penetration of the digital economy and medium-term gains from the GST.
  • Non-tax revenues, particularly from spectrum sale, necessitate structural changes in telecom policy.
  • Fortunately, a more robust approach on disinvestment and seeking strategic alliances is a positive factor.
  • The public listing of PSUs will enable improved price discovery.
  • If the expected level of tax buoyancy does not materialise, many other macro variables may need recalibration.
  • We, therefore, must hasten the formulation of the seven-year implementation strategy and the 15-year vision.
  • Forecasting key variables like ICOR (Incremental Capital Output Ratio), the trend of domestic savings and trade-related indicators, to name a few, would enhance the credibility of the macroeconomic assumptions embedded in the action agenda.
  • In essence, therefore, this is an endeavour well begun, but it is work still in progress.

How can we ensure effective implementation of the action agenda?

  • The proposed plan needs broader support. Parliamentary engagement with the erstwhile five-year plans was next to negligible. There was not a single occasion when Parliament devoted time and attention to the eleventh or twelfth five-year plans.
  • Part of the problem is the current design of parliamentary processes and the milieu in which standing committees of Parliament examine various ministries.
  • More specifically, the Standing Committee on Finance examines matters related to three separate ministries, namely, finance, corporate affairs and statistics and programme implementation, along with the erstwhile Planning Commission.
  • Experience suggests that given the Ministry of Finance’s significant legislative agenda, the standing committee is principally engaged in examining the ministry’s legislative proposals.
  • There was scant attention given to or time available for analysing the broader issues of the five-year plans.
  • We must prevent the NITI Aayog from meeting the same fate. It would be advantageous to constitute a separate parliamentary committee on planning, which could meaningfully engage with the NITI Aayog’s policy prescriptions.
  • Delinking planning from finance has distinct advantages as functions of the treasury are neither symmetric, nor co-terminus with broader development issues. Such separations would also be in line with best global practices.
  • The Niti Aayog’s Governing Council is designed to foster cooperative federalism. Earlier, each state government used to have state planning boards to assist state five-year plans and support the analytical content of state-level annual economic surveys.
  • It would be desirable to create state-level bodies, to be called Sub-National Institutes for Transforming India (SuNITI), in formulating and expediting state-specific policies; this should enable state assemblies to discuss state-level plans in sync with the “Three Year Action Agenda” articulated by the NITI Aayog.
  • In the notification constituting the NITI Aayog, there is a provision to form “Regional Councils to address specific issues impacting more than one state or a region”. This is the right time to implement this enabling mandate.

Way forward

  • India is on the cusp of robust macroeconomic fundamentals with the renewed political vigour to pursue difficult reforms.
  • The “Three Year Action Agenda” augurs well for a better India.
  • As an old saying goes, vision without action is a daydream; action without vision is a nightmare.
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Daily Editorials for UPSC IAS Exam Preparation

Climate Change Geopolitics



GS2 – Effect of policies and politics of developed and developing countries on India’s interests, Indian Diaspora

GS2 – Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

GS3 – Conservation, environmental pollution and degradation, environmental impact assessment

Context

  • S. President Donald Trump’s has made an accusation concerning the Paris Accord that “…the U.S. pays billions of dollars while China, Russia, and India have contributed (to pollution) and will contribute nothing”.
  • In fact, India has walked with the U.S. from Stockholm to Paris via Rio de Janeiro, Kyoto and Copenhagen.
  • New Delhi has fought for climate justice, equity and fairness all the way, demanding that developing countries should be entitled to maintain and increase their greenhouse gas emissions for survival and developed countries should mandatorily cut their luxury emissions.
  • At the same time, India has also been sensitive to the constraints of the U.S. and the other industrialised nations in reducing emissions.

Background

  • Indira Gandhi had exposed the Western efforts to impose environmental colonialism at the Stockholm Conference in 1972 and declared that “poverty is the worst polluter” and demanded that “the polluter must pay”.
  • But she had also conceded that development should be sustainable.
  • India’s Chandrashekhar Dasgupta and U.S.’s Al Gore worked together for the historic agreements in Rio de Janeiro, which led to the signing of the Framework Convention on Climate Change (FCCC) in 1992.

Grand Rio bargain

  • The concept of “common, but differentiated responsibilities” led to the identification of Annex I countries, which agreed to mandatory cuts.
  • The idea that developed countries should meet the “incremental costs” of developing countries using environment-friendly technologies was another element in the grand bargain at Rio.
  • Huge commitments were made not only for financial support, but also for technology transfer at concessional prices.
  • The fine balance struck by India and the U.S. culminated in the Agenda 21, raising hopes for a renaissance in the areas of both environment and development.

What happened afterwards?

  • When the U.S. and other developed countries — particularly Japan, Canada, Australia and New Zealand — began to renege on their commitments and began demanding mandatory cuts from China, India and Brazil during the Berlin negotiations (1995), India did not dismiss their demands out of hand.
  • It accommodated various mechanisms to reduce the burden of the developed world.
  • For this reason, the Kyoto Protocol had a reasonable chance of success, but it was the U.S. that refused to sign it and started to wriggle out of every understanding reached.
  • The whole approach was sought to be changed till the adoption of the Copenhagen Consensus, which was disowned by most of the developing countries.
  • In Copenhagen, former Prime Minister Manmohan Singh personally participated in the new understanding that all commitments would be voluntary and that the UN would only supervise and evaluate their implementation.
  • This incurred the wrath of many developing countries. What remained was only a myth that the Kyoto Protocol was still alive and well and that the Rio spirit was intact.

Paris Accord non-commitment

  • The much acclaimed Paris Accord was a requiem for Rio and all that the FCCC stood for.
  • The whole value of the accord has been challenged by those who had worked tirelessly for an international consensus to save the planet.
  • James Hansen, formerly the chief climatologist of National Aeronautics and Space Administration (NASA), was forthright in his assessment: “It is a fraud really, a fake,” he said. “It is just b******* for them to say, ‘we will have a 2° Celsius warming target and try to do a little better every five years’. It is just worthless words. There is no action, just promises. As long as fossil fuels appear to be the cheapest fuel out there, they will continue to be burned.”
  • By its very nature, the Paris Accord does not warrant the argument made by Mr. Trump.
  • It contains no financial commitment from the U.S. or any other country except a vague offer of $100 billion after 2020.
  • The Accord deals with the global commitments of countries regarding emissions, mitigation, adaptation and financing from 2020.
  • The allegation that China, Russia and India are only contributing to pollution and not to climate change fund has no basis whatsoever.
  • The essence of the Paris Accord is only a “strong agreement” to hold the increase in the global average temperature to well below 2° Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5° Celsius above pre-industrial levels.
  • But the “Nationally Determined Contributions” submitted so far make it clear that they will not be able to hold the increase to below 3° Celsius.

What is Paris Accord?

  • Paris Agreementis an agreement within the United Nations Framework Convention on Climate Change (UNFCCC) dealing with greenhouse gases emissions mitigation, adaptation and finance starting in the year 2020.
  • The language of the agreement was negotiated by representatives of 195 countries at the21st Conference of the Parties of the UNFCCC in Paris and adopted by consensus on 12 December 2015.
  • It was opened for signature on 22 April 2016 (Earth Day) at a ceremony in New York.
  • As of May 2017, 195 UNFCCC members have signed the treaty, 146 of which have ratified it.
  • The agreement went into effect on 4 November 2016.
  • The Paris Agreement has a ‘bottom up’ structure in contrast to most international environmental law treaties which are ‘top down’, characterised by standards and targets set internationally, for states to implement.
  • Unlike its predecessor, theKyoto Protocol, which sets commitment targets that have legal force, the Paris Agreement, with its emphasis on consensus-building, allows for voluntary and nationally determined targets.
  • The specific climate goals are thus politically encouraged, rather than legally bound. Only the processes governing the reporting and review of these goals are mandated under international law.
  • This structure is especially notable for the United States—because there are no legal mitigation or finance targets, the agreement is considered an “executive agreement rather than a treaty”.
  • Because the UNFCCC treaty of 1992 received the consent of the Senate, this new agreement does not require further legislation from Congress for it to take effect.
  • While the Kyoto Protocol differentiated between Annex-1 and non-Annex-1 countries, this bifurcation is blurred in the Paris Agreement, as all parties will be required to submit emissions reductions plans.
  • While the Paris Agreement still emphasizes the principle of “Common but Differentiated Responsibility and Respective Capabilities”—the acknowledgement that different nations have different capacities and duties to climate action—it does not provide a specific division between developed and developing nations.

Developed countires vis-a-vis Paris accord

  • The advantage that the U.S. and other developed countries have gained from the Paris Accord is that all economies, including China and India, are being made to take action on climate change without any commensurate guarantees from the former on funding and transfer of technology.
  • The financial commitment that the U.S. has undertaken is only to change to new energy sources.
  • Naturally, the cost of the switch will be more for the U.S. than for China or India and this cannot be considered as a payout.
  • As eleven State Governors have written to President Trump, if the U.S. abandons its investments in climate change, India and China will benefit from the low-carbon leadership they acquire over time.
  • By maintaining the momentum in global efforts, the U.S. will benefit through its own transition to clean energy.

India’s role

  • India had initially hesitated to ratify the Paris Accord out of fear that it might not be able to invest in clean energy like nuclear power, unless it gains entry into the Nuclear Suppliers Group.
  • Apparently, it ratified the accord on the basis of certain assurances in this regard from former U.S. President Barack Obama.
  • India was seen as an adversary at the beginning of the Paris Conference, because of its championship of the Kyoto Protocol.
  • It was only after it virtually abandoned Kyoto by saying that the world had to go beyond the failed agreements of the past that its status changed from that of a “challenge” to a “partner” in the eyes of the U.S.
  • The New York Times’s cartoon showing India as the elephant stopping the Paris train in its tracks was not an exaggeration of the Indian position at the time of the beginning of the Paris conference.

Way forward

  • India may have eventually embraced the lesser evil of voluntary cuts for everyone rather than mandatory cuts for the main emitters, among which New Delhi itself might have been counted.
  • The U.S. will gain little by turning India into an adversary once again at a time when a whole range of issues in India-U.S. relations are yet to be clarified and taken forward. Walking together on climate change will be beneficial to both.
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India’s independence in Nuclear Sector!



GS1 – Distribution of key natural resources across the world (including South Asia and the Indian subcontinent); factors responsible for the location of primary, secondary, and tertiary sector industries in various parts of the world (including India)

GS3 – Infrastructure: Energy, Ports, Roads, Airports, Railways, etc.

Context

  • Union cabinet today approved the setting up of 10 pressurised heavy water (PHW) reactors (PHWRs), giving a boost to indigenous nuclear power production.
  • These 10 atomic reactors, when completed, will add 7000MW of nuclear power capacity and generate manufacturing orders worth Rs 70,000 crore for the domestic industry while providing direct and indirect jobs to over 33,400 people.
  • The reactors will be part of India’s latest design of 700MW PHWR fleet with the state-of-the-art technology meeting the highest standards of safety.
  • The pressurised heavy water reactors will be developed by the department of atomic energy. A total of 7000MW capacity will be added. It will help produce clean energy.
  • At present, India has an installed nuclear power capacity of 6780MW from 22 operational plants.
  • Another 6700MW of nuclear power is expected to be added by 2021-22 when under-construction projects go on stream in Rajasthan, Gujarat and Tamil Nadu.
  • The 10 reactors will be built at Mahi Banswara (Rajasthan), Chutka (Madhya Pradesh), Kaiga (Karnataka) and Gorakhpur (Haryana).
  • The reactors will be fully home-grown and will be one of the flagship initiatives of the government under the “Make in India”campaign.

What is India’s current status of nuclear power?

  • India now has 22 nuclear power units.
  • The first pair, located in Tarapur, Maharashtra, uses enriched uranium and incorporates U.S. nuclear technology. These two reactors have operated safely and reliably for the past 47 years and supply the lowest cost non-hydro power.
  • The second pair, located in Rajasthan, uses natural uranium and is based on Canadian technology.
  • The first unit of this pair has been out of service for some years due to deficiencies in some key equipment; the second unit has been operating satisfactorily.
  • Commencing from 1983 and over a span of two and a half decades, India built 16 nuclear power units using its own technology, materials and equipment.
  • These reactors use natural uranium as fuel. Fourteen of them have a size of 220 MW and two are of 540 MW.

What is Pressurized heavy-water reactor?

  • Apressurized heavy-water reactor  is a nuclear reactor, commonly using unenriched natural uranium as its fuel, that uses heavy water (deuterium oxide D2O) as its coolant and neutron moderator.
  • The heavy water coolant is kept under pressure, allowing it to be heated to higher temperatures without boiling, much as in apressurized water reactor.
  • While heavy water is significantly more expensive than ordinary light water, it creates greatly enhancedneutron economy, allowing the reactor to operate without fuel-enrichment facilities (offsetting the additional expense of the heavy water) and enhancing the ability of the reactor to make use of alternate fuel cycles.

How India made nuclear energy forefront in 2000s?

  • During the period 2000-2010, India designed a nuclear power unit of 700 MW capacity, using natural uranium.
  • Construction work on two such units in Kakrapar (in Gujarat) and two in Rajasthan was taken up. These four units will go into operation in the next three years.
  • Work on two similar units has been taken up at Fatehabad in Haryana.
  • All equipment and materials for these larger units will come from Indian suppliers.
  • In recent years, two 1000 MW VVER power units have come up in Kudankulam, Tamil Nadu, using Russian technology. They use enriched uranium supplied by Russia.
  • In 2016, work on two more such units was commenced.
  • When all these units go into operation, India will have 30 reactors with a capacity of 13,000 MW.
  • By then some of the earlier units will be reaching their retirement age.

What are the challenges faced by nuclear industry?

  • In the period 2005-2008, the Indian nuclear establishment was focussed on concluding the civil nuclear cooperation agreement with the U.S. India then agreed to build about 10,000 MW of nuclear capacity using U.S. technology.
  • A similar assurance was given to France. Russia and India agreed to install additional units at Kudankulam.
  • The expectation in 2008 was that a rapid increase in Indian nuclear capacity would take place.
  • During 2010-2011, India passed the civil nuclear liability legislation which made a supplier liable for claims under certain circumstances. The U.S. nuclear industry was not prepared to consider any cooperation with India under this condition.
  • In 2016, India came up with the mechanism of an Indian insurance pool that could extend protection to the supplier.
  • The Fukushima accident of 2011 jolted the nuclear industry globally and the first priority was assessment of safety of nuclear plants in operation all over the world under what was termed as ‘Beyond Design Basis’ natural events.

 Is nuclear industry declining?

  • An unconnected development in the U.S. impacted a nuclear revival there: the availability of shale gas at low prices, in the range of $2.50 to $3 per million BTU.
  • In consequence, General Electric de-emphasised the prospects of nuclear energy.
  • Westinghouse designed a 1400 MW enriched uranium reactor (AP1000) complying with the current safety requirements. It managed to get Chinese utilities to build four such units at two sites and they are in an advanced stage of execution.
  • Westinghouse also secured orders to build four AP1000 reactors in the southern U.S., at two utilities. Unfortunately, these projects suffered great delays and huge cost overruns.
  • Toshiba of Japan, a major owner of Westinghouse, incurred $7-8 billion in losses due to the nuclear business in the U.S. and is considering selling its successful chip business to accommodate this loss.
  • Westinghouse has filed for bankruptcy and the future of the four nuclear power units under construction in the U.S. is highly uncertain.

What are the prospects in India?

  • Westinghouse representatives discussing their proposal with Nuclear Power Corporation of India Limited (NPCIL) for setting up six AP1000 reactors in Kovvada, Andhra Pradesh, have said that the new ownership would get sorted out, perhaps within a year or so, and they would continue to be seriously interested in the India project.
  • The U.S. government might facilitate a new owner acceptable to it, and the nuclear business may resume in some modified manner.
  • From an Indian perspective, delays in this project are inevitable and the outcome would be uncertain.

 Feasibility of other options available to India

  • India has been in discussions with Areva of France on building six EPR reactors of 1600 MW at Jaitapur, Maharashtra.
  • The first such reactor in Finland has been greatly delayed and may go into operation in 2018.
  • There is a pending arbitration case between Finland and France regarding who is to bear the resulting cost increases.
  • A second EPR is under construction in Flammanville, France and that has also suffered delays due to questions regarding the quality of important forgings.
  • Two EPRs in China were making good progress earlier but they also have to address the question of quality of some forgings made in France.
  • Quite independently of these problems, Areva suffered heavy losses post-Fukushima when the uranium market bottomed.
  • Japan, a big buyer of uranium, went out of the market as most of their reactors were shut down in 2011. Only a few have been allowed to restart.
  • The French government has restructured the nuclear business and asked the Electricite de France to take over the nuclear power plant business and let only the fuel and associated activities to be with Areva.

What is India’s policy on utilizing its Thorium reserves?

  • India’s three-stage nuclear power programmewas formulated by Homi Bhabha in the 1950s to secure the country’s long term energy independence, through the use of uranium and thorium reserves found in the monazite sands of coastal regions of South India.
  • The ultimate focus of the programme is on enabling the thorium reserves of India to be utilised in meeting the country’s energy requirements.
  • Thorium is particularly attractive for India, as it has only around 1–2% of the globaluranium reserves, but one of the largest shares of global thorium reserves at about 25% of the world’s known thorium reserves.
  • However, thorium is not economically viable because global uranium prices are much lower.
  • As of August 2014, India’s first Prototype Fast Breeder Reactor had been delayed – with first criticality expected in 2015- and India continued to import thousands of tonnes of uranium from Russia, Kazakhstan, France, and Uzbekistan.
  • The recentIndo-US Nuclear Deal and the NSG waiver, which ended more than three decades of international isolation of the Indian civil nuclear programme, have created many hitherto unexplored alternatives for the success of the three-stage nuclear power programme. Since then India has signed many civil nuclear deals with different countries.

 Way forward

  • Anticipating some of these difficulties, the nuclear community in India has been looking at other options to expand the nuclear capacity.
  • The fleet of pressurised heavy water reactors (PHWR), of our own design and construction, have performed well.
  • During the last five years, the cumulative capacity factor has been 78%. The reactors have operated continuously for periods exceeding 300 days quite regularly and one of our reactors was on line for 765 days, the second-longest run in the world. The cost of power has been less than from coal in the same region.
  • Given the context, the Union Cabinet’s nod on Wednesday for 10 700 MW PHWRs is timely. Indian industry is well placed to supply all the components and materials required for these reactors.
  • Russia is willing to supply two more 1000 MW VVER units for Kudankulam and continue the cooperation to build six 1200 MW VVERs at a second site, to be identified by India.
  • Our reactor designers at Bhabha Atomic Research Centre and NPCIL have completed the design of a 900 MW reactor using enriched uranium as fuel, designated as the Indian Pressurised Water Reactor (IPWR).
  • Our industry is keen to mobilise and build up the capacity to make components for this design.
  • Enriched uranium fuel can be sourced from international suppliers, as such reactors can be placed under International Atomic Energy Agency safeguards.
  • By about 2025 or so, India may itself supply enriched uranium from its own enrichment facilities.
  • The government’s push for 10 IPWRs will secure India a position of nuclear power plant supplier not only for application in India, but also as a potential exporter.
  • While our earlier plans on expanding nuclear power have not materialised, the alternative plan suggested now, which envisages building 28 units with a total capacity of about 25,000 MW in 15 years from now, can still ensure that nuclear power remains an important part of our strategy to minimise carbon emissions in the long run.

 

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Governance at decentralised levels


GS2 – Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.

Context

  • The 2001 Census had 593 districts, the 2011 Census had 640; the number has crossed 700 now.
  • But the governance structure at the lower levels remains in doldrums.

Why new districts are created?

  • More districts are presumably created for administrative convenience and delivering public goods and services better.
  • Take the Upper Dibang Valley in Arunachal Pradesh. In 2011, this had a population of 7,984 and a geographical area of 9,129 square kilometres.
  • This makes it India’s largest district, but one with the lowest population density. The district headquarter is Anini and you can imagine the distance of other parts of Upper Dibang from Anini.
  • When deciding on new districts, there are obvious criteria like population, geographical area and the distance from district headquarters.
  • Once revenue laws have determined districts, government development programmes work through DRDAs (District Rural Development Agency), at least on the rural side; there are also elected representatives, through zila panchayats or parishads (ZPs) or district councils, further down to blocks and villages.
  • The number of ZPs is 618, a little lower than the number of districts, because there are urban districts too. (All such numbers change, depending on the year.)

How new districts get formed?

  • The oldest existing statute is the Bengal Districts Act of 1836. It is a statute with a single sentence and says the following, “Power to create new zilas: It shall be lawful for the State Government, by notification in the Official Gazette, to create new zilas in any part of West Bengal”.
  • This is the text as it stands today, not as it was in 1836. There have been amendments in 1874, 1903, 1920, 1948 and 1950.
  • The parallel legislation still exists in Bangladesh.
  • Other states have sufficient powers under relevant land revenue legislation to create and define districts, sub-divisions of districts and even villages.
  • Since states can create and change districts, the number of districts varies and are increasing.
  • With that 2011 base, Uttar Pradesh had 71 districts and Lakshadweep had one.

What are the problems associated with new districts?

  • Once there is a new district, barring time-lags, there will also be a new ZP, through the relevant state election commission.
  • There are various entities involved in a district’s development — the district collector/district magistrate/district Commissioner, the DRDA, the MP, multiple MLAs and ZPs. Unless they work together, a lot of resources, not just financial, will be frittered away.
  • Because of the DRDA structure, it probably works at the district level.
  • For instance, making the ZP president the chairperson of the DRDA doesn’t necessarily mean the ZP works in tandem with the DRDA. Below the district level, it does not work.

The governance structure of the district

  • There are 6,603 intermediate-level panchayats and 2,49,016 gram panchayats. At the district level, the DRDA chairperson has oversight about the district’s development and MPs or MLAs are part of the DRDA.
  • In principle, it should be possible to work on district-level planning. That’s true even if the DRDAs are replaced by something like rural development cells in ZPs, to function as district planning committees.
  • In 1950s, government development programmes are through community development blocks (CD blocks), under the overall charge of a BDO (block development officer).
  • For example in Andhra Pradesh, the sub-unit of a district is a revenue division and the sub-unit of a revenue division is a mandal.
  • In different states, it is called a mandal, circle, tehsil, taluka, sub-division, CD block, but there is often a revenue division or circle above it.
  • Other than the BDO, there is the tehsildar/talukdar and the intermediate-level panchayat, variously referred to as the mandal, taluka or block panchayat or panchayat samiti.
  • The BDO, MP and MLAs are members of the panchayat samiti.
  • But there isn’t a sense that there is a coherent governance structure at the panchayat samiti level, straddling the elected, the executive and land and revenue administration, the last specifically mentioned because development typically requires land issues to be sorted out.
  • Stated differently — no single entity is clearly responsible for a block’s development.

Changes effected after constitutional amendments

  • With the 73rd and 74th amendments of theConstitution of India, decentralization of planning is emphasized and the methodology of district plan was changed.
  • The sequence in the preparation of district plan can be as follows
  • Preparation of district vision, block vision and gram panchayat level vision.
  • Preparation of participatory plan involving Gram Sabha from Gram Panchayats to Zilla Parishad.
  • Preparation of plans by Urban Local Bodies.
  • Consolidation of plans prepared by local bodies by District Planning Committees.
  • Planning starts with the preparation of vision documents by local bodies
  • A vision document is for 10 to 15 years is to be prepared by the district and for each local government based on a participatory assessment. The DPC may hold formal interactions with local governments and other key stakeholders on this and then finalise it.
  • The document should clearly identify the key reasons for backwardness / development shortcomings and address issues impeding development.
  1. District vision
  • District vision document will cover – Agriculture and allied sectors, Availability and development of water sources, Industries – especially traditional, small industries including food processing, Infrastructure including power, Drinking water and sanitation, Literacy, school education, Health and medical facilities, Poverty reduction and basic needs, Gender and children, Social justice – SC / ST, Persons with disability etc.
  • To assist the DPC in preparing the vision document (and subsequently to vet the draft plan proposals), a Technical Support Group may be constituted in each district. It may consist of departmental officers nominated for the purpose in addition to their duties or retired persons locally available or a local academic institution or established NGO with a proven record – similarly, technical support as appropriate, may be organized for the urban areas, intermediate panchayats and village
  • Further, if District is to be the economic unit for planning exercise, the scope of vision document could be expanded to include areas of comparative advantage of each district which would be the basis for attracting private investment.
  1. Block vision
  • After finalizing the vision document for the district at the district level, the document will be discussed at the block level and a vision document for the block will be prepared with some modifications based on the conditions of the block.
  • The vision document for each block need not be completely different because the agro-ecological conditions of some planning units at this level may be same, particularly when a district is divided into a large number of Inter Mediate Panchayats as in the case ofAndhra Pradesh.
  • Even though the same vision is adopted for some blocks / mandals, it is necessary to have the vision owned by the Intermediate Panchayat. This exercise will be done by a team of experts at block level. The same team will be responsible for plans at the GP level. However, the team will take some members like professionals or retired persons belonging to the area to assist the team in the preparation of the plan. The general formats for planning at the lowest unit level viz., GP or ULB will be prepared at the district level and they will be adopted with certain modifications at the block level.
  • Vision of theGram Panchayat will also be prepared accordingly. The vision of the GP will be based on the Socio-economic Profile of the GP and views of the GP.
  1. Plan for Gram Panchayat/municipality
  • This is the third stage, the plan at the GP or ULB will be prepared. This will be prepared by the team with the help of people’s participation.
  • The will first interact with the GP and prepare a vision on the lines of the district vision.
  • Once the Gram Panchayat vision is approved, the team will conduct several Group Discussions to find out the potentials, needs and constraints of the village economy in Gram Sabha. The felt needs of these communities and the support needed for improving their livelihood conditions will be elicited.
  • Once this exercise is completed, it will be discussed in the Gram Sabha. This approach will help to study the situation thoroughly and prepare the plan.
  • In particular, all the schemes CSS State sponsored schemes will be examined thoroughly with a view to understand their suitability to the area. This can be more easily ascertained from the beneficiaries/stake holders.
  • The plan should also take into account the long term development perspective of the GP and also natural resource management (NRM) aspects.
  1. Plan at block level
  • The above three steps followed the top down approach in the preparation of the district plan. After this GP Plan is prepared and no plan is ready at higher levels except the vision.
  • The Plans at the higher levels will be prepared in the next steps. In this step, the GP plans will be consolidated and put before the IP. In the GP plans, the benefits of some of the schemes will go beyond the GP and such schemes may figure in the other GP plans also.
  • Hence, they have to be separated and duplication has to be avoided. Similarly, some schemes which provide benefits beyond the GP level may not be identified in any GP.
  • The Block Plan has to identify those schemes / projects. This exercise will be done at the meetings of the Intermediate Panchayat level.
  1. District Plan
  • The final stage is the preparation of thedistrict  This will be finalized after the Block Plans are finalized in the same way as the Block Plan is finalized on the basis of the GP Plans in the Block.
  • The schemes that will not figure in the Block Plans, but are essential for thedevelopment of the district will be identified at this stage.
  • Further, an attempt will have to be made to achieve functional and spatial integration and use the norms for the provision of social infrastructure.
  • The above five steps will help in the preparation of the perspective plan.
  • To work out the annual plans, the financial resources available have to be taken into account.

 District Planning Committe

  • District Planning Committee(DPC) is the committee created as per article 243ZD of the Constitution of India at the district level for planning at the district and below.
  • The Committee in each district should consolidate the plans prepared by thePanchayats and the Municipalities in the district and prepare a draft development plan for the district.
  • In preparing the draft development plan, the DPC shall have regard to matters of common interest between thePanchayats and the Municipalities including spatial planning, sharing of water and other physical and natural resources, the integrated development of infrastructure and environmental conservation and the extent and type of available resources, both financial or otherwise.
  • The DPC in this endeavor, is also mandated to consult such institutions and organizations as may be specified.
  • In order that the plans at different levels are prepared, there is need to strengthen the system comprising the machinery ofplanning and the process of consolidation of plans at the district level.

What is the status of Gram Panchayats?

  • That argument extends lower down, to the gram panchayat, and these have got a substantial amount of resources, courtesy the Fourteenth Finance Commission.
  • There are obvious questions about capacity, a lack of devolution of functions, funds and functionaries, convergence and separate cadres. Perhaps those are prerequisites before one can answer my question.
  • Decentralised planning is meant to start from below and “below” doesn’t mean the district. Gram panchayats/gram sabhas are supposed to have several “planning” functions. The intention is to make planning participatory.
  • But unlike the district, and like the block, we don’t have a coherent governance and administrative structure. Unlike even the panchayat samiti, there is no direct link between the executive and the elected in the gram panchayat.

Conclusion

  • Thus, unlike the district, there is no proper structure which owns the planning and development functions in panchayat samitis and gram panchayats.
  • Hence, whenever we talk about decentralised planning, we tend to think of districts — and nothing below.
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India’s NPA conundrum


GS3 – Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Context

  • The government is amending  the Banking Regulation Act, 1949, which is expected to invest banks with some freedom in resolving bad loans without inviting the prosecutorial gaze of central investigative agencies.
  • Finance Minister Arun Jaitley’s budget proposed a measly ₹10,000 crore towards recapitalisation of public sector banks (PSBs). The budget thus steered clear of the biggest constraint to growth today: what the latest Economic Survey labels the “twin balance sheet (TBs) problem.”
  • Bank credit growth has slowed, affecting capacity creation and expansion—bank credit grew only 5.1% during year to March 2017, against 10.3% in the previous year.
  • The Reserve Bank of India’s (RBI’s) latest Financial Stability Report shows stressed assets (sum of gross NPAs and restructured assets) at 12.3% of assets by September-end 2016.

Background

  • India’s leading corporates have too much debt on their balance sheets; this keeps them from making fresh investment. Banks are weighed down by a mountain of bad loans; this comes in the way of credit growth. TBs impacts growth by affecting both the demand for credit and the supply of it.
  • One, the non-performing asset (NPA) problem at PSBS cannot be ascribed primarily to mismanagement or bad governance.
  • Two, India has not faced the sort of recession that results from TBs, thanks largely to government ownership of banks.
  • Three, resolution is impossible without significant debt write-offs.

(Mis)Management Not the Cause

  • The TBs problem has arisen primarily because of irrational exuberance on the part of investors, commensurate exuberance amongst banks flush with funds and factors that banks could not have bargained for when they made the loans.
  • As the world economy boomed in the mid-2000S and the Indian economy along with it, Indian firms embarked on an investment spree.
  • Much of the investment went into infrastructure and related areas such as telecom, power and steel. Banks vied with each other to finance these projects.
  • This resulted in a credit boom: non-food credit doubled in the period 2004–05 to 2008–09. Companies raised record levels of debt from the international markets as well.
  • As a result, the debt to equity ratio in Indian companies shot up above normal levels. Companies were taking on risk in anticipation of huge growth opportunities.
  • Alas, growth opportunities diminished considerably with the onset of the global financial crisis in 2007.
  • Projects that had been built around the assumption of double-digit growth were suddenly faced with growth rates half that level.
  • Indian companies faced delays in securing land and environmental clearances and this caused project costs to soar precisely when revenues were falling.
  • The Reserve Bank of India (RBI) increased interest rates to deal with double-digit inflation, so financing costs rose.
  • The combination of lower revenues, higher project costs and higher financing costs played havoc with companies’ cash flows and hence their ability to service debt.
  • Soon, other factors exacerbated the situation.
  • The collapse in world steel prices following China’s slowdown. There are Supreme Court judgments that impacted the mining and telecom sectors or the failure of Coal India to meet commitments to supply coal.
  • In the power sector, spot prices for electricity fell even as the break-even tariffs for power projects increased on the back of inflated project costs.
  • With the benefit of hindsight, one can say that banks should not have taken the exposures they did. But when a boom is on—whether in the credit market or the equity market—managers have to be extraordinarily brave not to want a piece of the action.

Why Private banks remain aloof from NPAs?

  • The leading private banks are exposed to the very sectors and projects to which PSBS are exposed.
  • It is not as if private banks demonstrated superior expertise in appraising projects.
  • The private banks did a better job of spreading risk between corporate and retail lending and hence are impacted to a lesser extent by the woes of corporates.
  • But, then, in the mid-2000S, infrastructure was the big opportunity and PSBS had the means to fund it.
  • The banking system was awash in liquidity and banks had to find avenues for their funds.
  • If PSBS had focused on retail loans as much as private banks did, there would have, perhaps, been ended up with a housing bubble (as in the United States) instead of an infrastructure bubble!
  • The bottom line should be clear enough. There may have been acts of corruption but, for the most part, the bad loan problem has arisen on account of the exuberance of investors and factors extraneous to banking.

Why is there no Banking or Economic Crises?

  • A TBS typically results in a recession. This has not happened in India despite the fact that the ratio of NPAS to gross loans in India today is higher than in South Korea at the peak of the East Asian crisis. Growth has slowed down to 7%, but if this is what TBS means, many advanced countries would love it.
  • The Economic Survey mentions three possible reasons.
  • Despite the high level of NPAS, there has been no banking crisis.
  • Elsewhere, there would a failure of public confidence in banks and several banks would fail. The contraction in credit would result in a recession.
  • There has been no banking crisis in India because the banks most affected are PSBS. Depositors have the confidence that the government will ensure safety of deposits.
  • Investors in PSB bonds know that the government will ensure that the minimum capital needed is made available.
  • High NPA levels have not translated into a loss of creditor confidence.
  • The additions to infrastructure that have happened—more roads, ports, power stations, airports, better telecommunications—may have created headaches for investors and banks.
  • At the macro-level, however, they have eased supply constraints and helped growth.
  • Indian banks did not respond to companies’ woes by forcing bankruptcy. This would have meant seizing assets and trying to liquidate them.
  • In India, this is a time-consuming process and results in poor recovery. So, wherever there is hope of a turnaround, banks prefer to keep the firm afloat. They reckon that, once growth accelerates, the firm’s cash flows and debt servicing will improve.
  • The Survey notes that this approach worked for banks in the early 2000s. They hoped the same would happen this time. So, they restructured existing loans and extended fresh funds to help them cope until demand recovered.
  • By 2014–15, restructured loans accounted for 6.4% of loans outstanding. Despite tighter checks by the RBI, banks continue to evergreen loans (market estimates of unrecognised bad loans are 4% of the total).
  • NPAs and restructured assets are 12.6% of all loans. Adding unrecognised loans, bad loans are 16.6% of total loans. At PSBs, the figure is around 20%.

 How the banks managed!

  • Such a “financing strategy,” the Survey notes, can help under one of two conditions.
  • One, companies’ cash flows improve and this enables them to eventually service debt.
  • Two, even if particular projects and companies do not recover, the Indian economy could, and NPAs as a proportion of gross domestic product (GDP) could fall.
  • This would render the problem manageable. Unfortunately, neither has happened.
  • From 2012 to 2015, the earnings before interest and tax (EBIT) of IC1 companies (that is, those with an interest coverage ratio of less than one) remained steady at ₹25,000 crore per quarter.
  • However, by the end of 2015 EBIT had fallen to ₹20,000 crore per quarter. By September 2016, earnings had fallen to ₹15,000 crore per quarter.
  • These companies have had to continue borrowing in order to continue their operations. Stress has spread from large corporates to micro, small and medium enterprises (MSMEs).
  • Hopes that the bad loan problem would be resolved by rapid economic growth have also not been borne out.
  • Private investment has contracted as companies with high debt are in no position to invest and public investment has not risen sufficiently to offset the contraction.
  • With bad loans eroding profitability, banks have chosen to increase their margins in order to offset some of the stress arising from their bad loan portfolio.
  • The spread between the average term deposit rate and the base rate increased from 1.6 percentage points in January 2015 to 2.7 percentage points in December 2016.
  • The increase in spread is causing the better borrowers to seek resources from outside the banking system.
  • At the same time, MSMEs, which do not have the same access to non-bank resources, are facing higher lending rates.

 What are the deficiencies in the amendment?

  • The crimp is PSBs’ lack of balance-sheet muscle to tackle the volume of NPAs. The International Monetary Fund’s (IMF) 2017 Article IV report on India shows that while aggressive NPA recognition by PSBs turned their return on assets negative in 2015-16, aggregate provisioning coverage ratio still remained low, indicating weak capital bases.
  • The IMF report also shows that PSBs are content writing off loans rather than recovering them—a commentary on the numerous, though deficient, stressed asset resolution mechanisms. The short point is this: banks are unlikely to get aggressive with NPA resolution unless there is capital within sight.
  • The government, on its part, has drawn up a three-pronged plan to meet its capital infusion responsibility: limited capital infusion depending on performance criteria, merging some of the larger banks, and asking banks to source balance capital from capital markets. All these measures are time-consuming and the pace of capital flow is likely to determine the speed of resolution.
  • The other problem lies in the wording of the amendment. The government has inserted Section 35AA in the Act, which states: “The Central Government may by order authorise the Reserve Bank to issue directions to any banking company or companies to initiate insolvency resolution in respect of a default, under the provisions of the Insolvency and Bankruptcy Code, 2016.” This is followed by a paragraph stating, “Without prejudice to the provisions of section 35A, the Reserve Bank may, from time to time, issue directions to the banking companies for resolution of stressed assets.” The RBI will also create committees of experts to advise banks.
  • It arose two issues
  • First, the amendment does not explicitly insulate bankers from future persecution, nor is there any implicit signal. The Prevention of Corruption (Amendment) Bill, 2013, which includes provisions for such a shield, is stuck in Rajya Sabha. Therefore, till there is clarity on where the buck stops—the Centre, the RBI, the committee of experts appointed by RBI or the bankers—progress is likely to be slow. Therefore there are risks of government being accused of cronyism.
  • Second, the amendment is unclear about how the Centre proposes to take the resolution forward: will the government monitor each individual asset resolution or provide an umbrella order enabling the RBI to calibrate its action depending on the merits of each case? The central bank (or its appointed committee) will be exposed to scrutiny from investigative agencies, which may be detrimental for any central bank.
  • Finally, if all the above do fall into place, there is still one snag: capacity constraint at the National Company Law Tribunals. Of the 700 cases filed with the tribunals, only 70 have been admitted. Moreover, the National Company Law Appellate Tribunal has ruled (as reported by this newspaper) that the 14-day deadline for admitting or rejecting a proposal is not binding, though once admitted, the case has to be resolved in the mandatory 270-day period.

 Is a ‘Bad Bank’ the Answer?

  • The “financing strategy” has run its course. What do we do now?
  • The Survey thinks that leaving it to individual banks to resolve the bad loan will not work.
  • Bank management is reluctant to write off debt for fear of facing the wrath of investigating and oversight agencies.
  • There are problems in getting banks to agree on the level of write-off in a given case. Banks do not have the capital to make the necessary write-offs.
  • The Survey, therefore, proposes the creation of a Public Sector Asset Rehabilitation Agency (PARA) to tackle bad loans.
  • The government will have a 49% stake in PARA.
  • This should help overcome the incentive problems that managers at PSBs face. Moving all bad loans to one agency should help overcome the coordination problems we now face.

What are the constraints?

  • Managers at PARA may not have to look over their shoulders while making write-offs.
  • But the government, as the dominant investor, cannot avoid scrutiny and the inevitable controversy where large corporates are involved.
  • Setting a sale price for the transfer of bad loans can pose problems of coordination amongst banks as formidable as the ones we face now.

 Way forward

  • A better course would be to create a mechanism that enables PSB management to resolve bad loans without fear of a witch-hunt.
  • The Banks Board Bureau has created an oversight mechanism for vetting loans but this is said to be meant only for “Scheme for Sustainable Structuring of Stressed Assets (S4A)” resolution.
  • The authority must be empowered to approve any type of resolution.
  • Second, the authority must be backed by an act of Parliament as otherwise the vetting authority itself could be exposed to investigation.
  • Third, the government must infuse capital into PSBs necessary to cover write-offs.
  • The government’s dithering on recapitalisation rests on the premise that the bad loan problem owes primarily to bad governance and mismanagement. This premise is erroneous as also the Economic Survey argues.
  • The government must move ahead swiftly on recapitalisation in the knowledge that India’s recapitalisation cost—at 0.5% of GDP—over two decades is among the lowest in the world.

 

Categories
Daily Editorials for UPSC IAS Exam Preparation

OBOR challenge


GS2 – Important International institutions, agencies and fora, their structure, mandate

GS2 – Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

GS2 – Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora

Context

  • China is organising ‘Belt and Road Forum for International Cooperation’ which will be held in Beijing on May 14 and 15.
  • It will mark the formal launch of China’s ambitious and potentially game-changing initiative to build a network of transport and economic corridors across Asia and Europe with China as the nodal point.
  • At last count, some 28 heads of state and government had confirmed attendance while another 50 countries will send official representatives.
  • India is unlikely to participate, except at a functional level, as it has objected to one major component of the One Belt One Road (OBOR) — the China-Pakistan Economic Corridor (CPEC) — as it runs through Pakistan-occupied Kashmir (PoK).
  • After all, China routinely blocks any international funding of projects in Arunachal Pradesh on the ground that it is disputed territory. Of late, it has even raised objections to the central government undertaking projects in that state.
  • China has suggested starting negotiations on a ‘China India Treaty of Good Neighbours and Friendly Cooperation’, restarting negotiations on the China-India Free Trade Agreement, striving for an early harvest on the border issue and actively exploring the feasibility of aligning China’s ‘One Belt One Road Initiative’ (OBOR) and India’s ‘Act East Policy’.
  • To repeat Nehru’s outright rejection in 1960 of Zhou Enlai’s proposal to settle the border dispute would be a historic mistake.

 What are long term benefits from China’s OBOR?

  • India’s response should be based on its long-term interest and not short-term concerns.
  1. (I) Treat the Belt and Road Initiative (BRI) — which already has contracts of over $1 trillion covering over 60 countries — as enlarging areas of cooperation

(II) Push for India as the southern node and a ‘Digital Asia’.

(III) India cannot be a $10 trillion economy by 2032 without integrating itself with the growing Asian market and its supply, manufacturing and market networks.

  1. Complementary to China’s Initiative, develop common standards with the fastest growing economies in Asia that are on the periphery of the B&R Initiative, such as Bangladesh, Vietnam and Indonesia, to facilitate trade, investment and business engagement.
  2. (I) Offer a new cooperation framework in South Asia around global challenges.

(II) For example, sharing meteorological reports, region specific climate research and the ‘Aadhaar’ digital experience, despite on-going security concerns.

  1. (I) Thought leadership provides an avenue to increasing global influence.

(II) Hinduism and Buddhism spread to East and South-East Asia with commerce and an urbanising Asia and world, and needs a new organising principle around shared prosperity — principles that dominated India till 1800 making it the world’s richest country for over two millennia.

What are objections of India?

  • Notwithstanding Chinese activities in PoK, India saw merit in joining the Asia Infrastructure Investment Bank (AIIB), the BRICS Development Bank and the Shanghai Cooperation Organisation (SCO), all initiatives led by China.
  • The difference is that India was actively involved in shaping the architecture of the AIIB and the Development Bank, their lending policies, and is represented at senior levels in these institutions.
  • The SCO, too, is a multilateral institution and members have an important say in its policies.
  • But the OBOR does not fit into this pattern. India had conveyed to China that a similar consultative process was even more important for such an ambitious undertaking.
  • The Chinese apparently want India to first sign on to the initiative before getting into the specifics of India’s role, the choice of projects and financing. If this, indeed, is the case, then India’s caution is well founded.
  • The OBOR appears to be more a series of bilateral projects among China and various partner countries rather than a truly multilateral cooperative venture.
  • If there are specific projects, such as port development or railway projects, that China is willing to offer for India-China cooperation, let these be posed so that they may be properly evaluated.
  • Projects under the OBOR, even in closely allied countries like Pakistan, are financed through loans that have to be paid back. The economic viability of projects has to be a prime consideration.
  • The experience of Hambantota Port in Sri Lanka, which is included in the OBOR, is not encouraging. The revenue from the port, financed by Chinese credit, is not even able to meet the interest costs and, being in hock, the Sri Lankan government is willing to convert the outstanding loan into equity to be held by a Chinese company.
  • But in return, China wants a 90-year lease on a vast acreage around the port to develop an industrial zone. There are other examples of such debt traps created by Chinese-funded projects, including the CPEC.
  • Cooperating with China where there are convergent interests and confronting it when India’s interests are threatened has been an effective time-tested policy. The same principle should be applied in evaluating the OBOR.

What are other issues?

  • China is making strong efforts to persuade India to join its ‘One Belt, One Road (OBOR) initiative. India has, however, not yet openly agreed to be a part of the project which aims to connect the Eurasian landmass and Indo-Pacific maritime routes through an overland ‘belt’ and a ‘maritime’ silk road.
  • The project envisages the construction of a maze of road, rail and port projects through a number of countries to connect mainland China to markets in Asia and Europe.
  • The OBOR initiative includes a number of projects including the “flagship” China-Pakistan Economic Corridor (CPEC), Bangladesh-China-India-Myanmar (BCIM), New Eurasian Land Bridge, China-Mongolia-Russia Economic Corridor, China-Indochina Peninsula Economic Corridor and 21st Century Maritime Silk Road.
  • Most of India’s neighbours, including Nepal and Bangladesh, have already agreed to participate in the project.
  • It has been widely projected that India’s reluctance to join OBOR is mainly because of the CPEC, which violates India’s sovereignty as the project covers the Pakistan-occupied Kashmir (PoK) region.
  • It has been suggested that India may shed its reluctance to join OBOR if CPEC is renamed, or China declares CPEC is not the part of Belt and Road initiative.
  • OBOR would massively strengthen China’s economic, political and security influence in India’s neighbourhood.
  • OBOR would involve the export of Chinese capital, labour, technology, industrial standards, commercial benchmarks, use of the Yuan, development of new ports, industrial hubs, special economic zones and military facilities, under Beijing’s auspices.
  • The scope of OBOR is bigger than the one undertaken by the British Empire in the 19th Century.
  • Not just India, even Japan has refused to join the project and started its own Belt and Road initiative named as “Partnership for Quality Infrastructure” which would cover Indo-Pacific and Eurasian regions. Japan has also invested around $150 billion for this project.
  • New Delhi aspires for a friendly neighbourhood but considering the constant security threat, it faces from Pakistan and often from China even now, India cannot afford to play second fiddle to Beijing. And even if it decides to join OBOR, it cannot afford to be a junior partner

Criticism of India’s policy towards OBOR

  • Countries are now gaining influence more through the strength of their economy than the might of the military. However, analysts in India have yet to recognise these global trends and continue to see the re-emergence of China through a security prism.
  • Calls for new alliances with Iran, Iraq, and Afghanistan “to create a two-front dilemma for our western neighbours, but also encirclement of our northern neighbour from the west” ignore the strategic impact of the BRI which all countries in Asia, except Japan, embrace and require new approaches to secure our own re-emergence.
  • As a continental power, China is knitting together the Asian market not only with roads, rail, ports and fibre optics but also through currency exchange, standards, shifting of industry and common approaches to intellectual property rights.
  • As the world economy is expected to triple by 2050, Asia will again have half of global wealth. China is seeking to fill the vacuum following the U.S.’s withdrawal from the Trans-Pacific Partnership, and India should add elements to it that serve its national interest as part of its vision of the ‘Asian Century’.
  • Change also raises the question whether existing approaches, institutions and rules are the best way of organising international relations.
  • Coordination between the major powers is emerging as the best way of global governance in a multi-polar world.
  • Despite their territorial dispute, strategic differences and military deployment in the South China Sea, China and Japan have just agreed to strengthen financial cooperation, and the Forum could provide an impetus to settling the border dispute between India and China.
  • BRI seeks “complementarities between a countries’ own development strategy and that of others”, though its goals have yet to be formalised, and India would lend a powerful voice to a strategy and structure that ensures common goals will not be neglected.

 Way forward

  • India needs to speed up its own infrastructure projects and find ways to strengthen its sphere of influence.
  • India should ramp internal connectivity. As China didn’t start OBOR as an external initiative but it was “built upon the top of the internal “Go West” strategy that focused, over the last two decades, on unifying China’s domestic market and connecting its developed east coast with the interior provinces.”
  • India should modernise connectivity across its land and maritime frontiers with neighbouring countries. China is certainly not responsible for India neglecting its inherited trans-border connectivities since Independence; nor has Beijing stopped India from building road and rail links to its borders.
  • India should work with countries like Japan and multilateral institutions to develop regional connectivity in the Indian Subcontinent and beyond.

 

 

Categories
Daily Editorials for UPSC IAS Exam Preparation

Israel Palestine developments


GS2 – History of the world will include events from 18th century such as industrial revolution, world wars, redrawal of national boundaries, colonization, decolonization, political philosophies like communism, capitalism, socialism etc. – their forms and effect on the society.

Context

  • On May 1, 2017, Hamas published a policy document approved by all the movement leaders.
  • The leaders clarified that the document was not replacing the Hamas Charter but was aimed at adapting the movement’s position to the current time.
  • The policy document is aimed at casting the movement in a pragmatic, democratic, tolerant, and non-extremist light, in order to burnish its image in the world and to present a political position that it shares with Fatah and the PLO.
  • However, it is full of internal contradictions that are irresolvable.
  • One of these is the contradiction between the political view that it sets out regarding a state in the 1967 borders as a “national, agreed-upon, and joint formula” by Hamas, Fatah and the PLO and other statements in the document setting out Hamas’s unwillingness to relinquish any part of Palestine, its demand for the refugees’ return to their homes, and its non-recognition of Israel.
  • The document also states that Hamas insists on continuing the armed struggle and jihad.
  • Hamas’founding charter, which was published in 1988, defines Hamas “as a universal Islamic movement and one of the branches of the Muslim Brotherhood in Palestine.” Consequently, Hamas has been tied to the Brotherhood for the past 29 years.
  • The newDocument of General Principles and Policies announced from Doha, Qatar, many articles that were included initially and that mentioned the Muslim Brotherhood were removed.

 Israel Palestine history

  • The region of present Israel has been battled over for millennia. The nations and people in charge of it keep shifting. If the question is “who was there first,” then the answer is the Jews.
  • Their faith is a few millennia older than Christianity and Islam, and was founded in the land of “Judea,” which is now in the West Bank.
  • In Jerusalem, Judaism’s holiest city, Jews have had an unbroken presence since the city was built. However, this presence was at time limited to one or two Jews. Christians and Muslims have controlled the region at times.
  • The Nation of Israel is an ancient term referring to the Jewish people, but an actual nation called Israel (specifically, a kingdom) was founded about 1000BCE.
  • Around 70AD, the first Jewish Revolt occurred (and failed), Jerusalem was sacked, and a large (but not 100%) Jewish exile occurred. A few more exiles and leadership changes and the land became predominantly Christian.
  • In 614 the land became Persian, briefly. By 640, Arabs conquered the region and Jerusalem fell (again), and the land was renamed “Filastin”. It’s also worth pointing out that the Jews and Arabs were allies at this point against the Persians.
  • Islam existed at this point, but it would be replaced as the dominant faith of the region in 1095 during the Crusades. The Moslem leadership shifted repeatedly, with the last Muslim governors being the Turks, as the land was part of the Ottoman Empire.
  • At no point in this timespan did “Palestinians,” be they Jews or Christians or Muslims, control their own land or have their own nation since the fall of the Kingdom of Israel. The term “Zionism” arose at this time, reflecting the desire for Jews to return to their ancestral homeland. The movement at this point was religious and small.
  • In 1917, when the British, French and Russians controlled much of the regions once belonging to the Ottomans, including what is now Iraq, Syria, and Lebanon, as well as what was then “Palestine.” Note that Jews existed in Palestine at this time along with the Arab Muslims, the various Christians, and a few other faiths like Samarian and Bahai’i. N.

Modern conflict

  • Social and political developments in Europe convinced Jews they needed their own country, and their ancestral homeland seemed like the right place to establish it. European Jews — 90 percent of all Jews at the time — arrived at Zionism partly because of rising anti-Semitic persecution and partly because the Enlightenment introduced Jews to secular nationalism.
  • Between 1896 and 1948, hundreds of thousands of Jews resettled from Europe to what was then British-controlled Palestine, including large numbers forced out of Europe during the Holocaust.
  • Many Arabs saw the influx of Jews as a European colonial movement, and the two peoples fought bitterly. The British couldn’t control the violence, and in 1947 the United Nations voted to split the land into two countries. Almost all of the roughly 650,000 Jews went to the blue territory in the map to the right, and a majority of the Arab population (roughly twice the size of the Jewish community) went to the orange.
  • The Palestinians, who saw the plan as an extension of a long-running Jewish attempt push them out of the land, fought it. The Arab states of Egypt, Jordan, Iraq, and Syria all later declared war on Israel, as well.
  • Israeli forces defeated the Palestinian militias and Arab armies in a vicious conflict that turned 700,000 Palestinian civilians into refugees. The UN partition promised 56 percent of British Palestine for the Jewish state; by the end of the war, Israel possessed 77 percent — everything except the West Bank and the eastern quarter of Jerusalem (controlled by Jordan), as well as the Gaza Strip (controlled by Egypt). It left Israelis with a state, but not Palestinians.
  • Today, there are more than 7 million Palestinian refugees, defined as people displaced in 1948 and their descendants. A core Palestinian demand in peace negotiations is some kind of justice for these refugees, most commonly in the form of the “right of return” to the homes their families abandoned in 1948.
  • Israel can’t accept the right of return without abandoning either its Jewish or democratic identity. Adding 7 million Arabs to Israel’s population would make Jews a minority — Israel’s total population is about 8 million, a number that includes the 1.5 million Arabs already there.
  • The West Bank is a chunk of land east of Israel. It’s home to 2.6 million Palestinians, and would make up the heart of any Palestinian state. Israel took control of it in 1967 and has allowed Jewish settlers to move in, but Palestinians (and most of the international community) consider it illegally occupied Palestinian land.
  • In 1967, Israel fought a war with Egypt, Syria, and Jordan. Israel fired the first shot, but claims it was preempting an imminent Egyptian attack; Arabs disagree, casting Israel as an aggressor. In six days, Israel routed the Arab powers, taking the West Bank and East Jerusalem from Jordan.
  • Israel has controlled the West Bank since the Six-Day War (as it’s called). For many Jews, this is wonderful news in theory: the West Bank was the heartland of the ancient Jewish state. It’s also home to many Jewish holy sites.

 What is Gaza issue?

  • Gaza is a densely populated strip of land that is mostly surrounded by Israel and peopled almost exclusively by Palestinians. Israel used to have a military presence, but withdrew unilaterally in 2005. It’s currently under Israeli blockade.
  • Egypt controlled Gaza until 1967, when Israel occupied it (along with the West Bank) in the Six-Day War. Until 2005, Israeli military authorities controlled Gaza in the same way they control the West Bank, and Jews were permitted to settle there.
  • Gaza is governed by the Islamist group Hamas, which formed in 1987 as a militant “resistance” group against Israel and won political power in a 2006 US-based election. Hamas’s takeover of Gaza prompted an Israeli blockade of the flow of commercial goods into Gaza, on the grounds that Hamas could use those goods to make weapons to be used against Israel.
  • Hamas’s chartercalls for the destruction of Israel. Though Hamas does not recognize Israel’s legitimacy, in 2011 it committed to a Palestinian state in Gaza and the West Bank. It’s not clear whether Hamas could reconcile itself to the existence of Israel.
  • Hamasled the charge in using suicide bombings against Israel in the 1990s and 2000s, though in recent years it has shifted to rockets and mortars as its weapons of choice. The organization also offers Palestinians a robust network of social services, which it developed as an alternative to deeply corrupt PA institutions.

Isreal-Palestine Peace process

  • Sometimes called “Oslo” after the 1993Oslo Accords that kicked it off, the peace process is an ongoing American-mediated effort to broker a peace treaty between Israelis and Palestinians. The goal is a “final status agreement,” which would establish a Palestinian state in Gaza and the West Bank in exchange for Palestinians agreeing to permanently end attacks on Israeli targets — a formula often called “land for peace.”
  • Secretary of State John Kerry’s fairly intense efforts to revive the peace process fell apart in April 2014. The immediate cause was the (now mostly defunct) Hamas-Fatah agreement to form an interim joint government, as Israel refused to negotiate with Hamas. But the talks really failed because the two sidessimply couldn’t come to terms on mutual concessions necessary to keep the talks afloat, reflecting a deep underlying mistrust between the Israeli and Palestinian leadership.
  • This is far from the first time the peace process looked dead; in fact, many people believed the peace process to be over in January 2001. Palestinian leader Yasser Arafat had just rejected his Israeli counterpart Ehud Barak’speace offer (there’s huge disagreement as to just what that offer entailed). Moreover, renewed talks failed to generate an agreement, and worsening violence during the second intifada violence made another round of talks seem impossible.
  • Despite the 2001 failure, the general Oslo “land for peace” framework remains the dominant American and international approach to resolving the conflict. The Bush administration pushed its own update on Oslo, called the“road map,” and the Obama administration has made the peace process a significant foreign policy priority. Any successful peace initiative would need to resolve the four core issues that have plagued the peace process: West Bank borders/settlements, Israeli security, Palestinian refugees, and Jerusalem.
  • So far there’s been little success, and there are three major hurdles to any agreement.
  • First, Israel continues to expand West Bank settlements, which Palestinians see as a de facto campaign to erase the Palestinian state outright. Second, the Palestinians remain politically divided between Fatah and Hamas after the shared government’s effective collapse, and thus are unable to negotiate jointly. And even if it worked, Israel still has shown zero indication that it would negotiate with a government that includes Hamas.
  • Third, and finally, it’s not actually clear how to get talks started. The current right-wing Israeli government is skeptical of concessions to the Palestinians. The Palestinians, having essentially decided that Israel isn’t serious about peace, have launched a campaign for statehood in international institutions aimed at pressuring Israel into peace — which might well backfire by convincing Israelis the Palestinians are done with the US-led peace process.
  • To restart talks, the US needs to somehow get the two sides to start taking each other’s commitment to peace a little more seriously. It’s not at all clear how it could do that.

 How has Hamas changed its policy towards Israel?

  • In its new policy document, Hamas has indicated that it is willing to make some concessions towards Israel.
  • The document states clearly that it is not waging a battle against the Jewish people but it is against the state of Israel and wants a “fully sovereign and independent Palestinian state with Jerusalem as its capital along the lines of 4th of June 1967”.
  • This aim of establishing a new Palestinian state along the lines of the pre-1967 border indicates a willingness to adjust to the new regional reality.

 Is Hamas distancing itself from the Muslim Brotherhood?

  • The new charter abandons past references of the movement’s association with the Muslim Brotherhood. Closely linked to the pan-Islamist movement when it was formed in the late 1980s, Hamas has moved away from the Brotherhood ever since the Mohamed Morsi regime was ousted in Egypt.
  • Hamas, which rules the Gaza strip that has been blockaded by Israel, is totally dependent on Egypt for access to the outside world. And Egypt is now ruled by a regime that has declared an open war on the Brotherhood. Besides, Saudi Arabia, a benefactor of Hamas, is ideologically opposed to the Brotherhood.
  • So keeping a distance from the Brotherhood could help Hamas cultivate better ties with both Cairo and Riyadh.

So what is the core agenda of Hamas?

  • At the core of Hamas’s agenda is liberation of the Palestinians, and a return of all displaced people to a sovereign Palestinian state.
  • However, it is obvious that Hamas does not want to give up on any of its core agenda items like religion, nationality and ethno-linguistic identity.

Does that mean a fundamental shift?

  • This is not yet clear as it demands fulfilment of all other conditions such as the return of all people who were displaced by the establishment of Israel in 1948.
  • What is particularly problematic is that Hamas has rejected all agreements, including the Oslo accords, that tried to normalise ties with Israel, without quite spelling out what sort of negotiations it would prefer. Its rejection of past peace efforts is also a sign that Hamas cannot attain change just by publishing a new agenda document.

So, is the issue of Jerusalem now secondary?

  • On the contrary, Hamas has maintained a tough position on Jerusalem and has in fact extended its claim not just to the Old Jerusalem but also to its “surroundings”.
  • A Palestinian state will have to be built around Old Jerusalem according to this new vision document.

What is issue on Jerusalem?

  • Jerusalem is a city that straddles the border between Israel and the West Bank. It’s home to some of the holiest sites in both Judaism and Islam, and so both Israel and Palestine want to make it their capital. How to split the city fairly remains one of the fundamental issues dividing Israelis and Palestinians.
  • For the first 20 years of Israel’s existence, Jerusalem was divided. Israel controlled the parts of Jerusalem and its suburbs while Jordan controlled the rest.
  • Jordan controlled the Temple Mount. The hill hosts the Western Wall,a retaining wall of an ancient Jewish temple and one of Judaism’s holiest sites, and two of Islam’s most important landmarks, the al-Aqsa Mosque and the Dome of the Rock. Israeli Jews weren’t allowed to pray in the area while Jordan controlled it. During the 1967 war, Israel took control of East Jerusalem.
  • Israel calls Jerusalem its undivided capital today, but almost no one (including the United States) recognizes it as such. UN Security Council Resolution 478condemns Israel’s decision to annex East Jerusalem as a violation of international law and calls for a compromise solution.
  • Jews have moved in and around Jerusalem in huge numbers. They now make up about two-thirds of the city.
Categories
Daily Editorials for UPSC IAS Exam Preparation

North-East consolidation efforts


GS1 -Post-independence consolidation and reorganization within the country.


Context

  • Politics in contemporary India is witnessing the construction of counter-narratives to the dominant narrative and the appropriation of public figures to make integration in the modern nation-state complete.
  • Such a process is visible not only at the national level, but also at the regional and local levels.
  • Like the mainland, India’s North East is also in the grip of the politics of appropriation and construction of counter-narratives.
  • In Assam, counter-narratives have been constructed to appropriate the Sankardev cult; in Meghalaya, the Sen Khasis, an aboriginal tribal group; and in Mizoram, the Brus, a displaced minority tribal community which settled in the six relief camps of Tripura, as parts of the larger mainstream fold.
  • However, the most glaring instances of appropriation and counter-narratives are found in Tripura and Nagaland.

In Tripura


  • In Tripura, the BJP is engaged in the process of appropriating Maharaja Bir Bikram Kishore Debbarma Manikya Bahadur into the mainstream fold.
  • Bir Bikram Kishore belonged to the Manikya dynasty, which ruled Tripura for more than 300 years. He was born on 19 August 1908 and died on 17 May 1947, the last king of Tripura.
  • The Kings of Tripura adopted the “manikya” title and shifted their capital to Udaipur (formerly Rangamati) on the banks of the River Gomti in South Tripura in the 14th century. This was their most glorious period and their power and fame was even acknowledged by the Mughals, who were their contemporaries in North India.
  • In 1871, the British Indian government appointed an agent to assist the Maharaja in the administration. During this period the capital of the kingdom was shifted to Agartala, in West Tripura, the present state capital in the early part of 19th century.
  • The charge of appropriation is strengthened by the recent decision of the union government to install a 184-foot bronze statue of the king. In fact, such appropriation comes in the light of the BJP’s indictment of both the Congress and the left in the state not having given due recognition to the king’s contribution to Tripura’s development.
  • It was Bir Bikram Kishore, king of Tripura between 1923 and 1947, who took the final decision of merging Tripura with independent India.
  • Commonly described as the architect of modern Tripura, the king initiated land reforms and reserved land for the indigenous Tripuris in the late 1930s, and set up schools, colleges and an airport.
  • The king also played a critical role in the formation of the present Tripura Tribal Areas Autonomous District Council (TTAADC). However, the premature death of Bir Bikram Kishore engulfed Tripura in political uncertainty.
  • As his son, Kirit Bikram Kishore was too young to become the king, Kanchan Prava Devi, his mother and Bir Bikram Kishore’s widow was forced to become the regent. In fact, it was she who signed the agreement of accession on 13 August 1947, and on 15 October 1949 Tripura merged with the Indian Union.
  • On 19 September 2013, on the occasion of the golden jubilee of the Tripura Legislative Assembly, speaking at a seminar in Agartala, Chief Minister Manik Sarkar revealed that the members of Tripura’s Manikya Royal family under Bir Bikram Kishore wanted to merge with East Pakistan (now Bangladesh).
  • However, sensing the public sentiments, before his death, he expressed his decision to merge Tripura with the Indian Union. He also revealed that Bir Bikram Kishore had planned its integration with Assam.
  • It has to be remembered that the States Reorganisation Commission constituted in 1953 proposed to merge Tripura with Assam. However, the proposal was finally dropped and Tripura became a union territory on 1 November 1956, achieving statehood in 1972.
  • The BJP’s appropriation of Bir Bikram Kishore can be seen in the larger context of the social composition of and politics in Tripura.
  • The tribal population constitutes around 33% of the state’s total population and has a history of recurrent clashes between indigenous tribals and the Bengalis.
  • The Indigenous People’s Front of Tripura (IPFT) has been demanding a separate state called Twipra for the tribal population by carving out the TTAADC from Tripura.

In Nagaland


  • The glorification of Naga spiritual leader and freedom fighter “Rani” Gaidinliu by constructing a memorial museum-cum-library in Kohima can be seen as a step in this direction.
  • Gaidinliu (1915–93) fought against the British rule and was imprisoned in various jails in the North East. She composed over 300 songs, including hymns, patriotic songs and poems. Gaidinliu, who was described by the British administration as the “terror of North East” was involved in an armed struggle against it.
  • In fact, Jawaharlal Nehru was fond of Gaidinliu and called her “Rani” because she took an anti-Naga stand in the Naga self-determination movement.
  • The Naga agitation was, in fact, the first movement that sprang up in India after independence and tested Nehru’s ability as a nation-builder.
  • Gaidinliu, who belonged to the Zeliangrong community, also resisted the conversion of Nagas to Christianity and defended traditional Naga animism called Heraka.
  • It is estimated that, today, there are around 20,000 Heraka followers scattered all over Nagaland, Manipur and Assam. It is said that the British administration divided them into three states—Manipur, Assam, Nagaland (then Naga Hills)—to weaken the protest of Zeliangrong community.
  • The Zeliangrong Heraka Association (ZHA) opposes the “Westernisation” of Naga culture, and it protects the indigenous religion, culture and language. It is also critical of Western hedonism and consumerism and strives to reassert communitarian values.
  • Gaidinliu campaigned to bring indigenous Naga groups such as Rongmei, Zemi and Liangmai tribes under the ZHA to save them from religious conversion to Christianity.
  • In December 2014, Prime Minister Narendra Modi visited Nagaland during the famous Hornbill festival, which coincided with the conclusion of Gaidinliu’s birth centenary celebrations (26 January 2014–26 January 2015). Modi addressed the people of Nagaland and emphasised Naga pride. He was wearing a Naga traditional dress at the public meeting. He ended his speech with “Kuknalim” (victory to the land) instead of “Jai Hind” (victory to India).
  • The ZHA submitted a memorandum to the Prime Minister demanding that their leader Gaidinliu must be honoured and recognised. Their other demands included the minting of new coins to commemorate the birth centenary of Gaidinliu; opening of a central university in Nagaland in her name and setting up of a department dedicated to the promulgation of the “eternal religion and eternal culture of Nagas;” renaming the airport as “Rani Gaidinliu Airport;” and installing her portraits in the Nagaland assembly, the offices of the chief minister, governor and other ministers. Subsequently, the centre released coins of ₹5 and ₹100 denominations with her image on them to commemorate her birth centenary.
  • Many Naga tribes however see Gaidinliu as anti-Naga and having betrayed the Naga national movement for a sovereign state.
  • Organisations such as the Angami Public Organisation opposed any move to glorify Gaidinliu.
  • The Nagas never recognised her as a spiritual leader and described Gaidinliu as an outsider anda cult leader who had opposed Naga nationalism and the advent of Christianity in the state.

Timeline of Naga history(Post WWI)

  • 1918: During WWI about 2000 Naga recruits fought for British along with rest of British Indian Soldiers. They felt alienated and feeling of Naga identity emerged. Naga Club was formed by 20 Naga members of French Labour Corps. This was the birth of Naga Nationalism. Their aim was to unite all the Naga tribes.
  • 1929: Submitted a memorandum to Simon Commission, stating that Naga areas has nothing to do with areas of mainland India.
  • 1946: All this time Nagas fought for their freedom against British separately. When it became clear that India will gain independence. Naga Nationalist Council(NNC)was formed by eight member including Angami Zapu Phizo(AZ Phizo). It was against the move to group Nagaland with Assam and Bengal.
  • Their voice was not heard by the sub-commissioner of the region initially. Later on, an agreement (Haidari Agreement) was reached between tribal leaders and governor of Assam.
  • But, the Naga people rejected it, because they considered that it did not had sufficient Legislative and Judicial powers. This was taken as ‘termination of the sovereignty’ by the NNC.
  • August 14, 1947: Under the leadership of hardline NNC leader AZ Phizo, Naga was declared as an independent region. Though Gandhiji assured the Naga leaders that he will be the first to be killed before any Naga is killed. But it didn’t worked.
  • 1947: India placed Nagaland in Assam administration as an autonomous region.
  • Feb 1950: NNC held a referendum and declared that Nagaland is independent. Later no accord could take place between Phizo and Nehru. [ In 1953, India’s Border treaty with Myanmar was declared as division of state by Phizo.]
  • 1955: Phizo declares armed insurgency. But, NNC breaks into factions and its influence declines, but rebel continued by many groups.
  • 1956: In January, Phizo got murdered another leader. Other Naga leaders asked for refuge form Indian Government. NNC collapsed completely as its support decreased drastically. Naga hills was declared as disturbed area by Indian government. In March Phizo formed “Naga Central Government”. Later he escaped to East Pakistan and then to London. He also accused Indian Army of human rights violations.
  • 1957: An agreement was reached between Naga leaders and the Indian government, creating a single separate region of the Naga Hills. The Tuensang frontier was united with this single political region, Naga Hills Tuensang Area (NHTA),and it became a Union territory directly administered by the Central government with a large degree of autonomy. But this was not satisfactory for the tribes and agitation and violence took place in the state. As a result AFSPA declared in 1958.
  • 1963:Nagaland was born as 16th state of India with Kohima as its capital. Elections held in 1964 and first democratically elected government lead the Nagaland legislative assembly. Naga peace mission was created and ceasefire was negotiated with various groups. It lasted till 1968.
  • 1975: Shillong peace accord. NNC decided to give up violence and accept Indian Constitution.
  • 1980: However, again, not all leaders were pleased with the accord and Nationalist Socialist Council of Nagalim(NSCN) was formed by Thuingaleng Muivah and Isak Chishi Swu.
  • 1988: It later broke into 2 factions NSCN(K) formed by SS Khaplangand NSCN(I-M) being the older format.
  • 1997: NSCN(I-M) signed a ceasefire agreement.
  • 2001: NSCN(K) signed a ceasefire agreement.
    [Ceasefire was to follow an accord for Naga solution]
  • 2015: NSCN(K)broke the ceasefire and attacked an Indian army convoy. In retaliation, Army conducted a cross border raid in Myanmar and targets insurgents camps.
  • This was done with due permission from Myanmar. This also created tension between Myanmar and Khaplang faction, as Khaplang faction had signed similar peace agreements with Thein Sein government in Myanmar.
  • August 2015: An accord is signed between Govt. of India and NSCN(I-M) via Naga interlocutor R.N. Ravi. The details of the accord are not yet out, but it is clear that this is done to send a clear message to the Naga people that the government is serious toward their issue.
  • Government sources said that they have two months time to fix the nuts and bolts of the Nagaland peace accord.
  • Naga tribes are spread in Nagaland, parts of Manipur, Arunachal Pradesh and Assam. The redrawing of the boundaries of these states might have been considered in the accord. But, CM of Manipur and Assam are against redrawing of boundaries or even giving autonomous region to Naga people in their respective states.

Border issue with Assam


  • Ever since Nagaland was carved out of Assam’s Naga Hills district in 1963, Nagaland has been demanding some portions that the hill state believes “historically” belongs to it.
  • The Nagaland government has been insisting that a 16-point agreement of 1960, which led to the creation of Nagaland, also included “restoration” of all Naga territories that had been transferred out of the Naga Hills after the British annexed Assam in 1826.
  • The Assam government’s stand is to maintain the boundary “constitutionally” as decided on December 1, 1963, when the hill state was created.

 How much land is under dispute, or has been encroached?

  • Assam and Nagaland share a 434-km boundary. Assam says Nagaland has been encroaching upon over 66,000 hectares in Sivasagar, Jorhat, Golaghat and Karbi Anglong districts. This includes over 42,000 hectares in Golaghat alone (the site of the recent trouble). The encroached area also includes over 80 per cent of reserved forests.
  • Assam says Nagaland has set up three civil subdivisions on Assam territory. Nagaland, on the other hand, insists that more tracts under Assam “occupation” belong to Nagaland.
  • The NSCN(IM), incidentally, wants the entire Assam tract south of the Guwahati-Dibrugarh railway track in these four districts in “Greater Nagalim”.

 How frequent is border friction?

  • There has been a series of violent incidents since Nagaland was created. Two major incidents took place in 1979 and 1985, leaving at least 100 persons dead between them.
  • On January 5, 1979, 54 Assam villagers were killed in a series of attacks by armed men from Nagaland in Chungajan, Uriamghat and Mikirbheta of Golaghat district, while over 23,500 persons fled to relief camps.
  • In June 1985, a major flare-up at Merapani, also in Golaghat, left 41 persons dead on the Assam side. These included 28 Assam Police personnel. In both incidents, Assam claimed that the attackers included Nagaland Police personnel.

 What efforts have been made to resolve this?

  • The two states have held a series of meetings at various levels, including that of the chief ministers.
  • The Centre, for its part, in August 1971 appointed K V K Sundaram, then chairman of the Law Commission, as adviser in the MHA for matters of Assam-Nagaland. Sundaram suggested a joint survey of the border, which Nagaland did not agree to.
  • The two states, however, signed four interim agreements in 1972 to maintain status quo. On January 25, 1979, the prime minister wrote to the Nagaland chief minister to take firm action against miscreants on the Nagaland side of the boundary.
  • In March 1981, the union home minister asked both chief ministers to resolve the issue through discussion while strictly adhering to basic constitutional aspects.
  • In 1988, the Assam government filed a title suit in the Supreme Court to determine and delineate the constitutional boundary of each state.
  • In September 2006, the apex court set up a three-member local commission headed by a retired SC judge to identify the boundary. The commission has submitted its report to the court, but a final decision has not yet been made.

Questions

  1. What are the faultlines which hindered the consolidation of India is still not complete, particularly in the north east, even after 70 years of independence?
  2. Discuss the internal security problem of Nagaland. What steps have been taken to address the issue?