The HINDU Notes – 04th September 2019 - VISION

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Wednesday, September 04, 2019

The HINDU Notes – 04th September 2019






📰 Putting the skids under border trade

The India-Pakistan face-off is having more repercussions than intended, with border economies the worst hit

•In February 2019, in the wake of the Pulwama attack, India decided to withdraw the Most Favoured Nation (MFN) status to Pakistan; subsequently, it imposed 200% customs duty on all Pakistani goods coming into India. After the Balakot airstrikes, again in February, India and Pakistan closed their airspace,with Pakistan keeping the ban in place for nearly five months. In April, India suspended trade across the Line of Control in Jammu and Kashmir citing misuse of the trade route by Pakistan-based elements. And more recently, post the Jammu and Kashmir Reorganisation Bill, Pakistan cut off diplomatic and economic ties with India — expelling the Indian envoy, partially shutting airspace and suspending bilateral trade.

Plunging trade

•Escalating tensions between the two neighbours naturally led to the announcement of retaliatory unilateral decisions, one after the other. Like in the past, the impact has trickled down to trade relations between both the countries; this time it is much more severe.

•In 2018-19, bilateral trade between India and Pakistan was valued at $2.5 billion — India’s exports to Pakistan accounted for $2.06 billion and India’s imports from Pakistan were at $495 million. India’s decision vis-à-vis withdrawal of MFN status and imposition of 200% duty has hurt Pakistan’s exports to India, falling from an average of $45 million per month in 2018 to $2.5 million per month in the last four months.

Western border trade

•The quantum of loss that has been incurred by traders in both India and Pakistan has varied according to the nature of trade and the trade route. For example, through the Wagah-Attari land route, bilateral trade was heavily in favour of Pakistan; in the last two years, India’s imports from Pakistan accounted for 82% of the total trade through the land route. After February, most of this business has been badly affected with only a handful of items including rock salt, continuing to be imported.

•Unlike national economies, border economies owe their existence to cross-border economic opportunities. These economies generally experience a sudden boom-bust cycle on account of political changes, trade bans, price and exchange rate and tax fluctuations. As seen elsewhere in South Asia such as via the inception of India-Bangladesh border haats, the costs and benefits are mutual to the border economies on both sides; much more in cases such as Amritsar where major economic activity is largely dependent on border trade with Pakistan.

•Amritsar is land-locked, is not a metropolis and traditionally has no significant industry. Hence, any decision on India-Pakistan trade has a direct impact on the local economy and the people of Amritsar. Since February, according to estimates on ground, 5,000 families have been directly affected in Amritsar because of breadwinner dependence on bilateral trade. Traders and their staff members, customs house agents (CHAs), freight forwarders, labour force, truck operators, dhaba owners, fuel stations, and other service providers are closing shop and going out of business. Of the nearly ₹25-30 crore that was being added to the local economy of Amritsar every month, the estimate now is that three-quarters has been lost in the last six months.

•Many a time, upsetting the trade apple cart can have more repercussions than intended. For example, gypsum, imported from Pakistan, was being used in India as well as in Nepal for the cement plants there. To avoid empty backhauling on the return journey, trucks carrying these consignments brought back specific products such as yarn from mills in Uttar Pradesh to Punjab. In the absence of gypsum trade, the freight rate of trucks from Uttar Pradesh to Punjab, as per the ground reports, has increased from ₹3 to ₹7 per kg, with a single trip absorbing the cost of the entire journey. Earlier, prices of tradeable goods which were kept under check owing to the balancing out mechanisms of international trade, are experiencing fluctuations now because of the trade disruptions.

Pakistan takes a hit too

•There is gloom on the Pakistani side too. With Pakistan deciding to completely suspend bilateral trade, exports of cotton from India to Pakistan are expected to be affected the most, eventually hurting Pakistan’s textiles; the lawn industry which will now have to source pricier cotton from alternative markets in the United States, Australia, Egypt or Central Asia; or there is a high possibility that Indian cotton, along with other products, will be routed through third countries such as the United Arab Emirates and Singapore, thereby increasing the share of indirect trade which is estimated to be more than double the direct trade between India and Pakistan.

•Hence, while the overall economies of the two countries may very well manage to stay afloat despite the suspension of economic ties, it is the local economies that will suffer the most and are already perishing. In this connection, there has been a loss in business, rise in prices, lack of alternative sources of livelihood, as well as an expected increase in bank defaults. There are also individual cases, for example a CHA in Amritsar, who has no means to pay the equated monthly instalment for his home loan, highlighting the hardship of locals dependent on border economies.

•In the spirit of nationalism, the trade fraternity on both sides, by and large, has stood by their respective governments. But locals in border economies on both sides have mouths to feed, which calls for a solution. What are the alternative sources of livelihood that can be generated to keep border economies afloat? Is there a sword hanging over the future of other bilateral arrangements such as the transit of goods from Afghanistan through Pakistan into India?

•While it’s about damage containment for now, one can only hope that the appetite for trade engagement still remains.

📰 A life in the balance: On Kulbhushan Jadhav

India must use all available channels with Pakistan to negotiate a reprieve for Jadhav

•More than three and a half years after Pakistan announced it had arrested Kulbhushan Jadhav on charges of espionage and terrorism, India finally received consular access to him on Monday. The path to receiving the access, which should technically have been provided shortly after the arrest, had to be bitterly fought for by India. Despite being a signatory to the Vienna Convention of 1963, which mandates that arrested foreign nationals be allowed to meet consular officers, Pakistan refused the access until it was ordered to by the International Court of Justice at the Hague this July 17 in response to an Indian petition. Even after India won the case for consular access, Pakistan took weeks to respond, offering to allow the meeting only in the presence of video cameras, and Pakistani officials. India rejected this at first, and it is unclear why the government finally accepted those same terms, and nominated its Charge d’affaires to meet Mr. Jadhav despite the conversation being recorded, and Pakistani officials being present. According to the officials who met him, Mr. Jadhav’s responses during the meeting seemed to be tutored and coerced, much like his “confessional” statements that were released by Pakistan during his trial in a military court. The MEA concluded that he was under “extreme pressure to parrot a false narrative”. As a result, Pakistan’s consular access appears to be as much of a sham as the trial itself, which was held in complete secrecy. And Mr. Jadhav, who was not allowed to choose a competent lawyer, was pronounced guilty and handed a death penalty in a matter of months.

•Despite the disquiet over the process thus far, the consular access provided on Monday marks Pakistan’s initial compliance with the ICJ ruling, and it is hoped that Islamabad will follow through with the next part of the court’s verdict. This includes a review of the trial process and a reconsideration of the death sentence, pending which Mr. Jadhav’s execution must be stayed. This will clearly be complicated by the present breakdown in bilateral ties, including rising rhetoric over the government’s moves in Jammu and Kashmir, Pakistan’s daily efforts to raise the issue at global fora, and its leadership’s repeated reference to the threat of nuclear conflict. While it may be difficult to imagine such a scenario at present, the two sides must use their diplomatic channels to negotiate a possible reprieve for Mr. Jadhav, or discuss conditions under which Pakistan may be prevailed upon to release him to India. New Delhi has been able to secure access to Mr. Jadhav by appealing to international processes, but the road ahead must be negotiated bilaterally, with the understanding and empathy that a man’s life hangs in the balance.

📰 India, Japan to hold 2+2 dialogue on Indo-Pacific cooperation

The two countries have made steady progress in Maritime Domain Awareness

•India and Japan have decided to hold their first Foreign and Defence Ministerial Dialogue (2+2) ahead of the Japan-India annual summit this year for “advancing cooperation towards peace and prosperity of the Indo-Pacific region”. Accord on the meeting was reached by Defence Minister Rajnath Singh and his Japanese counterpart Takeshi Iwaya at the India-Japan annual defence ministerial dialogue, the Defence Ministry said on Tuesday.

•“The Ministers recognised that peace and stability of the Indian and Pacific Oceans are crucial for ensuring prosperity of the Indo-Pacific region and the entire world, and had a frank exchange of views on the current security situation in the Indo-Pacific region, including developments on the Korean Peninsula and in the South China Sea,” the Defence Ministry said in a statement. The Ministers shared their views on exploring cooperation with countries in the Indo-Pacific region through various initiatives that would further the shared vision of peace and stability, it added.

•The Prime Ministers of Japan and India, in their vision statement in October 2018, had reiterated their commitment to working together towards a free and open Indo-Pacific. Mr. Singh is on a two-day visit to Japan, during which he also met Japanese Prime Minister Shinzo Abe. He will proceed to South Korea from Japan.

•The Ministry said that the two Ministers “shared their intention that Japanese Maritime Self Defence Force (JMSDF) and Indian Navy will make efforts towards participating in multilateral exercises including participation as observers.”

•In this regard, the Ministers welcomed both the Japan-India-U.S. trilateral maritime exercise ‘Malabar 2019’, which would be held from late September to early October, and the second Japan-India-U.S. trilateral mine-countermeasures exercise (MINEX) that was held in July, and expressed their resolve “to continue the trilateral exercise in the same framework from next year onwards.”

•The Armies and Air Forces of India and Japan held their first bilateral exercises, ‘Dharma Guardian’ and ‘Shinyuu Maitri’, in 2018. Last year, Japan also joined the India-US Air Force exercise ‘Cope India’ as an observer for the first time.

•The two countries have made steady progress in Maritime Domain Awareness (MDA) based on implementing the arrangement for deeper cooperation between the two Navies, signed last year. The Ministers also noted the progress on the ongoing negotiations for the Acquisition and Cross-Servicing Agreement (ACSA), which commenced after the summit meeting in October last year.

📰 IAF inducts eight U.S.-made Apache attack helicopters

It is the most advanced multi-role heavy attack helicopter in the world

•The Indian Air Force (IAF) on Tuesday formally inducted eight AH-64E Apache attack helicopters into service at the Pathankot Air Force Station. Apache is the most advanced multi-role heavy attack helicopter in the world.

•“Apache attack helicopters are being purchased to replace the Mi-35 fleet. Alongside the capability to shoot fire and forget anti-tank guided missiles, air-to-air missiles, rockets and other ammunitions, it also has modern Electronic Warfare (EW) capabilities to provide versatility to helicopters in a network-centric aerial warfare,” said IAF Chief Air Chief Marshal B.S. Dhanoa at the induction ceremony.

•He stated that these helicopters had been modified specifically to suit the exacting standards demanded by the IAF and noted that the delivery schedule is on time.

•“Today with the induction of the Apache AH-64E the IAF has upgraded its inventory to the latest generation of attack helicopters,” ACM Dhanoa added. The Apaches will be part of the 125 Helicopter Unit at Pathankot.

•“The Apaches arrived at the Air Force Station, Hindan, in July this year, in batches of four, over two days, and were then transported to the Air Force Station, Pathankot in Punjab, to await their formal induction,” the helicopter manufacturer Boeing said in a statement. India is the 16th nation to select the Apache and the AH-64E is the most advanced variant, Boeing added.

•Selected aircrew and ground crew had already undergone training at the training facilities at U.S. Army base Fort Rucker in Alabama before the arrival of the helicopters in India and these personnel would lead the operationalisation of the Apache fleet, IAF had said earlier.

•India contracted 22 Apache helicopters from the U.S. government and Boeing in September 2015 and the entire fleet will be in service with the IAF by 2020. The government has also cleared the acquisition of six additional Apaches for the Indian Army which has been formally approved by the U.S.

•The helicopter is capable of delivering a variety of weapons which include air-to-ground Hellfire missiles, 70 mm Hydra rockets and air-to-air Stinger missiles, the IAF said in a statement. Apache also carries one 30 mm chain gun with 1,200 rounds as part of area weapon sub-system and to “add to the lethality of the helicopter” it carries fire control radar, which has a 360 degree coverage and nose mounted sensor suite for target acquisition and night vision systems, the IAF added.

•This procurement will enhance the capability of IAF in providing integrated combat aviation cover to the army strike corps, the IAF said adding that these helicopters “are day/night, all weather capable and have high agility and survivability against battle damage.”

📰 Maharashtra to develop eco-tourism circuit

State to connect 350 destinations to common grid in ₹351-cr programme

•Maharashtra is in the process of developing an eco-tourism circuit connecting nearly 350 locations to a common grid for providing better facilities and development of popular destinations in the State. Maharastra Minister of Finance, Planning, and Forests, Sudhir Mungantiwar, said 43 destinations under the grid will be taken up in the first phase and the remaining ones in the second and third. The government has set aside ₹351 crore for the development of the circuit.





•The Maharashtra Eco-tourism Board has already taken up the project, which will include Mumbai’s Sanjay Gandhi National Park. “Maharashtra is the best State for all types of tourism including forts, coastal tourism, forest safaris and spiritual tourism. Tourism is a plus point for the State to create employment opportunities for locals. The Eco-tourism Board implements various initiatives considering all these aspects, and this will be one of the major projects of the board,” said Mr. Mungantiwar.

•Senior officials said the circuit will include and connect 124 forest gardens, 43 historical forts, six tiger projects, 33 wildlife sanctuaries, 52 religious destinations, 55 eco-tourism destinations and five hill stations. The first phase will include development of 43 eco-tourism destinations, while the second phase will include another 139. Mr. Mungantiwar said draft plans for 189 out of 347 eco-tourism destinations in the State have been approved. The project will encourage employment opportunities for local people through home stays, being tourist guides, providing vehicles for tourists and doing odd jobs. Local people are also being provided with training and basic facilities. “It will be possible to provide better facilities to tourists if buffer and corridor areas of forests are developed from the perspective of tourism. Adventure sports will be encouraged in the forts of the State,” he said.

•The Maharashtra Eco-tourism Development Board was established in 2015 to provide tourists with better facilities. The board encourages eco-tourism considering economic, social, and environmental aspects of a destination. Under its initiatives, zilla parishad and ashram shala students are taken on a one-day jungle safari. They are given information about forests and wildlife, and are made to participate in conservation and growth of forests, officials said.

📰 Four more States join ration card portability

Centre is planning nationwide launch by June 2020

•Ration card holders in Kerala and Karnataka, as well as in Rajasthan and Haryana, will be able to buy subsidised food from ration shops in the neighbouring State from next month, Food Minister Ram Vilas Paswan said on Tuesday.

•With effect from October 1, these two new clusters will join the existing State pairs of Andhra Pradesh and Telengana, as well as Maharashtra and Gujarat as pioneers in inter-State portability of ration cards, he told a conference of Food Ministers and secretaries from across the country. Mr. Paswan was laying out the roadmap for the One Nation One Ration Card system of complete nationwide portability, which the Centre hopes to implement by June 2020.

•By January 1, 2020, the Centre hopes the eight States in these initial experimental clusters, as well as Jharkhand, Punjab and Tripura, can be clubbed into a single grid. This means that migrants from these 11 States can access their rations guaranteed under the National Food Security Act in any of the other State within the grid.

•These 11 States have already achieved the first step of implementing intra-State portability, where NFSA beneficiaries can use their ration cards in any ration shop within their own State, not just the shop where the card is registered. By March 2020, intra-State portability will be implemented in another 13 States and Union Territories: Tamil Nadu, Goa, Odisha, Chhattisgarh, Madhya Pradesh, Himachal Pradesh, Uttar Pradesh, Uttarakhand, West Bengal, Sikkim, Jammu and Kashmir, Daman and Diu, and Dadra and Nagar Haveli.

•These are mostly States where almost all ration shops have electronic point of sale machines. However, 10 States are lagging behind badly, said Mr. Paswan. “There is only 70% coverage of ePOS in West Bengal, 33% in Uttarakhand and 15% in Bihar. In the north-east, in Meghalaya, Manipur, Arunachal Pradesh, Nagaland, Mizoram and Assam, [as well as in Delhi], there is no coverage at all. This is where we must focus,” he said.

•Apart from ePOS coverage, Aadhaar authentication and online supply depot management are also critical for the implementation of the system. Asked why Tamil Nadu, unlike all other southern States, is not part of the early clusters for inter-State portability, Food Secretary Ravikant pointed out that Aadhaar authentication must be implemented widely in order for the State to join the scheme.

•Mr. Ravikant also said that measures were being taken to prevent misuse of the portability system. “We will allow partial lifting of rations, where a maximum of 50% of the ration can be picked up at one time,” he said. This would help prevent one member of a household lifting the entire ration at one location, depriving other members of the family who use the same ration card in a different location.

📰 Supreme Court to study plea for food for all

Petition says State-funded community kitchens is not a novel concept in the country.

•The Supreme Court has agreed to examine a plea that starvation deaths continue to eat into the right to life and dignity of social fabric and a “radical” new measure like community kitchens need to be set up across the country to feed the poor and the hungry.

•A Bench led by Justice N.V. Ramana issued notice on Monday to the government on the petition filed jointly by activists Anun Dhawan, Ishann Dhawan and Kunjana Singh, represented by advocates Ashima Mandla and Fuzail Ahmad Ayyubi.

•The petition said State-funded community kitchens was not a novel concept in the country. They pointed out how Tamil Nadu's Amma Unavagam had become a roaring success by involving peers in self-help groups, employing the poor to serve hygienic food to eradicate the gnawing problem of hunger on the streets.

•The petition also referred to how Rajasthan's Annapurna Rasoi, Indira Canteens in Karnataka, Delhi's Aam Aadmi Canteen, Anna Canteen in Andhra Pradesh, Jharkhand Mukhyamantri Dal Bhat and Odisha's Ahaar Centre were combating starvation and malnutrition crisis.

•“While there are statistics available for malnutrition deaths in children and adults in the country, there is no official data available for death of persons owing to starvation... Food and Agriculture Report, 2018 stated that India houses 195.9 million of the 821 million undernourished people in the world, accounting for approximately 24% of the world’s hungry. Prevalence of undernourishment in India is 14.8%, higher than both the global and Asian average,” it said.

•It urged the court to direct the Chief Secretaries across the country to formulate schemes for the implementation of community kitchens and to further ensure that “no person should sleep on an empty stomach”. It called for the creation of a national food grid by the Centre that would be beyond the scope of the Public Distribution Scheme (PDS).

•“Direct the National Legal Services Authority to formulate a scheme to further the provisions of Article 51A of the Constitution of India in order to mitigate deaths resulting from hunger, malnutrition and starvation,” it submitted.

Amma Unavagam

•Referring to the Anna Unavagam scheme as a model one, the plea said, “The scheme’s success is also largely due to the quality maintenance in terms of taste, hygiene and wholesome menu sold. This is instructive about how meeting targeted beneficiaries dietary and economic requirements could determine the success of a welfare policy intervention”.

•The petition said it has been “reported in 2017 by the National Health Survey (NHS) that approximately 19 crore people in the country were compelled to sleep on an empty stomach every night. Moreover, the most alarming figure revealed is that approximately 4500 children die every day under the age of five years in our country resulting from hunger and malnutrition, amounting to over three lakh deaths every year owing to hunger, of children alone”.

•The petition added, “lnspite of the existence of a plethora of schemes aimed at eradicating hunger, malnutrition, starvation deaths, and allied issues, the country is still grappling with the said problems on a large scale, leaving scope for newer radical solutions to combat the same.”

📰 On the edge: On economic slowdown

Far-reaching reforms may be inevitable to keep the economy from stalling

•India’s deepening slowdown has now left the economy on the verge of stalling. The latest estimates for GDP show year-on-year growth in the April-June period slid for a fifth straight quarter to 5%, the slowest pace in more than six years. Disconcertingly, the mainstay of demand — private consumption spending — slumped to an 18-quarter low, with the expansion decelerating sharply to 3.1%, from 7.2% in the preceding quarter and 7.3% a year earlier. Gross fixed capital formation (GFCF), a proxy for investment activity, grew a meagre 4%, less than a third of the 13.3% growth it posted 12 months earlier. The RBI had, in its annual report released on Thursday, noted that indicators of GFCF had shown either moderation or contraction in the fiscal first quarter and pointed specifically to gross value added (GVA) by the construction industry, which government data revealed had eased to a 5.7% pace, from 9.6% in the year-earlier period. With demand for manufactured products ranging from cars and consumer durables to even biscuits having sharply diminished, manufacturing GVA growth plunged to an eight-quarter low of 0.6%. In fact, save mining, electricity and other utility services and public administration and defence, all the five other contributors to overall GVA weakened from a year earlier. And as the RBI observed in its last monetary policy statement, consumer confidence gauged by its July survey has worsened appreciably, with 63.8% of respondents expecting discretionary spending to stay at the same level or shrink one year ahead. The comparable reading in June 2018 was 37.3%.

•That the government is cognisant of the gravity of the situation is evident from its recent slew of policy pronouncements including tweaks to investment norms to draw more Foreign Direct Investment, moves to relieve the debilitating sales slump in the auto sector and a sweeping consolidation of public banks. Any beneficial impact from these measures will, however, take time to feed into the economy and time is a luxury that the faltering economy can ill afford, especially given the global headwinds. With the farm sector still stuck in a low income trap and this year’s mercurial monsoon rains, leaving some parts flooded and others still facing deficits and engendering a shortfall in kharif sowing, rural demand is unlikely to return any time soon. Also, with the RBI’s four interest rate reductions since the start of 2019 having, so far, failed to incentivise credit-fuelled consumer spending and business investment to any significant degree and with limited fiscal headroom to try and prime the pump with increased expenditure, big, bold structural reforms may be the only way out. The government must lose no time in consulting with the widest possible spectrum, including the Opposition, and then implement the agreed-on reforms prescriptions to reinvigorate demand and investment.




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