The HINDU Notes – 31st October 2019 - VISION

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Thursday, October 31, 2019

The HINDU Notes – 31st October 2019

📰 Visiting Kashmir: On MEP team visit

The Centre must change the situation in Kashmir, not just the global perception of it

•On the face of it, the government’s decision to allow the first foreign delegation to visit Srinagar, nearly three months after the decision to amend Article 370 of the Constitution and split the State of Jammu and Kashmir into two Union Territories, is a positive step. After a clampdown, arrests of political activists and mainstream leaders, communication blockades and a denial of access to politicians from the rest of India, the invitation to more than 20 Members of the European Parliament (MEPs) could pave the way for more openness in the State, more such delegations, which would help the government with its claims of “normalcy” there. Instead, the manner in which the visit was organised has eroded rather than enhanced its credibility. It is puzzling why the government honoured invitations by an unknown businessperson in Brussels linked to an equally obscure think tank in Delhi. That people of unclear standing and antecedents have such easy access to the Prime Minister’s office, so as to be issuing “VIP invitations” on his behalf, and to arrange meetings with the Vice-President of India, National Security Adviser and External Affairs Minister smacks of an unseemly backdoor arrangement not conducive to democratic transparency. The choice of this delegation has also raised eyebrows. A majority of those travelling to Srinagar belong to anti-immigration and far-right parties in the U.K., France, Italy, Poland and Germany. That they were taken to Srinagar, but given, by their own admission, very little access to locals, seems to defeat the visit’s purpose. In addition, the brutal killing of five migrant workers in the Valley by suspected Hizbul Mujahideen terrorists on Tuesday appears to reinforce security concerns over any sense of normalcy there. The government must take stock of whether such heavily scripted photo opportunities pass for real value in any image-building exercise.

•Having invited the delegation, however, the government must listen carefully to their impressions of the visit. While most endorsed India’s stand of Kashmir’s reorganisation being an “internal matter” and said they “stand by” India on the subject of terrorism, at least one of the MEPs asked why Indian MPs have not been allowed to visit. It is ironic that the government chose to take European MEPs to Srinagar and speak to the media there, but has successfully blocked Opposition leaders from visiting, and the few who have received Supreme Court permission to travel there have been barred from speaking or making political comments. It must also be remembered that while the MEPs toured Kashmir, one of India’s most senior parliamentarians, former Cabinet Minister and former Chief Minister Farooq Abdullah is detained. Thousands of other Kashmiris, many of whom have not even been charged in the past nearly three months, are in prisons within and outside Kashmir. More than 50,000 extra security personnel sent in August remain in place. And both communications and the movement of people are still severely restricted. Rather than focusing on image-building, the government would be better placed if it works on improving the situation in Jammu and Kashmir, which remains grim for ordinary civilians on a daily basis.

📰 Jammu and Kashmir ceases to be a State

Union Territories of Jammu and Kashmir and Ladakh come into existence; Girish Chandra Murmu and Radha Krishna Mathur will be sworn in as Lieutenant Governors of J&K and Ladakh respectively.

•The bifurcation of Jammu & Kashmir into two Union Territories came into effect at midnight on October 30. Girish Chandra Murmu and Radha Krishna Mathur will be sworn in as Lieutenant Governors of J&K and Ladakh respectively at two separate ceremonies on October 31.

•J&K Chief Justice Gita Mittal will administer the oath to Mr. Mathur at 7.15 a.m. in Leh district of Ladakh. Around 12.45 p.m., she will swear in Mr. Murmu in J&K’s summer capital Srinagar. A special plane has been kept ready in Leh to meet the deadlines of the two ceremonies. Multiple security layers have been finalised for both the UTs to ensure peaceful and smooth ceremonies.

•Ms. Mittal arrived in Leh on October 30, while the Lieutenant Governor-designates also reached their respective stations. 

•It is not clear who will administer the oath to Ms. Mittal

•Sources said no senior political dignitary will participate in these ceremonies, which will be a low key affair. As many as 298 invitations will be sent to local member parliaments, high court judges, heads of commissions and the head of departments of the administration and the police.

•Incarcerated National Conference leader Dr. Farooq Abdullah and MP from Srinagar is also in the list of the invitees as per the protocol. It remains to be seen if Dr. Abdullah or any of the two other NC MPs from Kashmir will be invited to attend the ceremony in Srinagar or not.

•Sources said the tenure of the five advisers to Governor Satya Pal Malik, including K. Vijay Kumar, Khursheed Ganai, K. Sikandan, K.K. Sharma and Farooq Khan, will come to an end. Sources said Mr. Khan is tipped to continue as adviser to the Lt. Governor, who is likely to constitute a political council to oversee the governance issues instead of a group of advisers.

•The status of J&K was reduce to UTs after the Centre passed the Reorganisation of J&K Bill in the Parliament in the first week of August, immediately after the state's special status was revoked. Since then a cumbersome process of the division of assets and human resource between the UTs was undertaken.

•Sources said the IAS and the IPS officers, working in J&K, will continue to work here. In the future, the new bureaucrats will be appointed from the AGMUT cadre.

•Sources said the J&K Bank will continue to act as an agent of Reserve Bank of India to conduct its agency banking business in both the UTs. The UTs will also get two separate animals as symbols on the lines of the State animals.

📰 Ahead of summit, Indian stand on RCEP unclear

Won’t sign just to meet deadline, says Goyal

•India will not sign a free trade agreement (FTA) just because there is a deadline, Union Commerce Minister Piyush Goyal said here on Wednesday. The comments come just days ahead of the Regional Comprehensive Economic Partnership (RCEP) summit meeting, which is expected to conclude the 16-nation FTA.

•Prime Minister Narendra Modi will attend the RCEP summit in Bangkok on November 4, and Mr. Goyal could also travel there on November 2 for the last RCEP ministerial round before the summit. But the government has kept all countries guessing on whether India will actually join the agreement.

Tough posture

•“In terms of the RCEP, I would like to clarify that there is a lot of wrong information all over the place. Let me assure each one of you that India will not sign FTAs in a rush. India doesn’t have a weak leadership that would enter an FTA because of a deadline,” Mr. Goyal said, striking a tough posture on the ASEAN-driven FTA, which includes India, China, Japan, South Korea, Australia and New Zealand.

•However, he also added that India could not afford to be “isolated” from the world on FTAs. “We have to engage with the rest of the world which is moving towards global integration. So India will have to finely balance between our imperative to protect domestic interests yet engage with the rest of the world,” the Minister said at the States Consultation Workshop for the government’s “Make in India” programme.

•The two conflicting statements from the Commerce Minister have enhanced the confusion over what India’s stand will be when Mr. Modi travels to Thailand on November 2 for a three-day visit, culminating in the RCEP summit on Monday. At the 2018 RCEP summit, Mr. Modi committed, along with other RCEP leaders, to conclude the agreement this year.

•According to diplomats from at least four RCEP countries, every country but India is now on board.

•“We fully expect that the leaders will make an announcement on the RCEP (FTA), declaring that most of the negotiations have been concluded, and setting a date for its adoption. The only question is whether India will also sign on to itor not,” a Delhi-based diplomat well versed with the negotiations, who asked not to be identified, told The Hindu on Wednesday.

•India has been hesitant to commit to RCEP over apprehensions among local industry and trade unions and agricultural bodies that signing the FTA would lead to lowering of subsidies, and giving market access to China that will overrun local manufacturing.

•The RCEP was first proposed in 2011 by the 10-member Association of South East Asian Countries (ASEAN), which has been driving 28 rounds of negotiations since then. Thailand, as the current Asean Chairperson has been particularly keen to close negotiations and has made several representations to India.

•In the past few months, countries such as Singapore, Australia, Indonesia and Japan were enlisted to push India on signing the agreement, while Chinese President Xi Jinping made a personal push for it when he met the Prime Minister in Mamallapuram this month.

•“We have tried to impress on the [Indian] government that it cannot hope to achieve its $5 trillion GDP target in the next few years unless it receives access to RCEP markets,” an ASEAN-country envoy said, adding that while India has been most worried about the impact of RCEP on steel, dairy and agricultural sectors, government negotiators have also taken a firm stand on including the free movement of labour for the services industry.

•India was also able to negotiate a dual tariff arrangement for goods from China, and the other countries, as well as a safeguards agreement on imports.

•Beyond this, however, most RCEP-nation diplomats say, no further concessions are possible if Mr. Modi decides not to sign the agreement on Monday. “We may then see all nations announcing their decision to implement the RCEP FTA in early 2020, and for India to join at a later date if it wishes to,” a diplomat said.

📰 Internationalising the Kashmir issue

After the visit by MPs of the European Union to the Valley, India’s rejection of mediation will seem contradictory

•Now that the visit of European Union (EU) parliamentarians to Kashmir has ended, it is time to assess what it achieved. Was it a clever gambit that could change the discourse in the European Parliament or was it a foolish risk that has left egg splattered on many Indian faces? Let’s attempt an answer by analysing its different but significant parts.

Minority voices

•First, only 23 EU MPs visited the Valley. Four chose not to. These 23 did so in their individual capacity as the European Union mission in Delhi has made clear. They were drawn from parties such as France’s National Rally, Germany’s Alternative for Germany (AfD), the U.K.’s Brexit, Italy’s Forza Italia and Poland’s Law and Justice Party. These are right-wing parties best known for their anti-immigrant stand, which often means they are anti-Muslim. Equally importantly, these parties do not represent the political mainstream in their countries. They’re minority voices.

•However one MP, Chris Davies, a Liberal Democrat from Britain, says he was disinvited when he said he wanted to meet ordinary people without police and army security. “I am not prepared to take part in a PR stunt for the Modi government and pretend that all is well,” he said. Another British EU MP, Theresa Griffin, tweeted along similar lines. Do these discordant voices suggest the others were willing to be co-opted as part of a thinly-disguised PR exercise?

•A second concern is the organisers. It was arranged by Madi Sharma, a Brussels-based British Person of Indian Origin, who runs a non-governmental organisation called Women’s Economic and Social Think Tank. She describes herself as an “international business broker”. In her invitation letter she offered a visit to Kashmir and a meeting with Prime Minister Narendra Modi who, she claimed, “would like to meet influential decision-makers from the European Union”. Does this suggest some form of prior contact with the Prime Minister, whether direct or indirect? Newspaper reports say the cost of the visit (flight and accommodation) was sponsored by the hitherto little-known Delhi-based International Institute for Non-Aligned Studies (IINS), whose gates are inexplicably locked. This raises the further question how has Madi Sharma become so influential and where does the IINS get its resources from?

•The EU MPs had access right to the very top which is, in fact, a third intriguing issue. They met the Prime Minister and the Vice-President of India, lunched with the National Security Adviser and dined with the External Affairs Minister. In Kashmir, they met the Governor, the GoC-in-C of 15 Corps and the Chief Secretary. Clearly the Indian establishment went out of its way. Does this suggest Madi Sharma and IINS are fronts for the government?

•A fourth issue is the Kashmiri people they met as well as those they were not permitted access to. Reports say they interacted with 15 delegations comprising traders, panchayat leaders, students, ex-servicemen, a women’s group and some civil society members. They did not, however, meet officials of the state’s Chamber of Commerce & Industry, houseboat owners or top politicians.

Sanitised visit

•At least one report claims their conversations were carefully monitored. The Economic Times says “a group of businessmen who raised (the) issue of abrogation of special status and business losses due to the ongoing clampdown were interrupted by local administration officials and cued to change the topic”.

•Equally telling is what happened in Srinagar and the Valley on the day the EU MPs visited. Militants shot dead five labourers in Kulgam, perhaps the worst terror incident since August 5. In Srinagar, according to The Times of India, “there were reports of massive stone pelting” and “intense clashes … where security forces fired tear gas”. The paper also reports “protestors targeted private vehicles set(ting) some on fire”. Finally, there was a complete shutdown of shops and business establishments. Would this look like normalcy to the visiting EU MPs? After all, that’s what the NSA had told them to expect.

•At least two of the MPs accepted they were given a sanitised view. Hermann Tertsch and James Heappey said they were “kept away from some people”. Another, Bernhard Zimniok of Germany, said the European community should be willing to mediate between India and Pakistan if asked by the two countries. Were these responses Mr. Modi anticipated?

•On their last morning at a carefully controlled press conference, where only select journalists were invited and the questions vetted, the EU MPs maintained a discreet silence over the controversy their visit has created. They said they had come to get facts and information. They claimed they are not interfering in India’s politics but terror is a common problem. If this suggests they are interpreting developments in Kashmir in terms of the impact on terror, that would be only part of the government’s justification for what it’s done. And we don’t know whether they accept the government’s line that the majority of Kashmiris are happy with the constitutional changes. However, some of them publicly advised the Modi government to talk to Pakistan. But is that what it wants to hear?

•On the key issue of human rights, which is a cause for concern in western chancelleries and media, we don’t know what impression the MPs took away. Their visit happened on a day when the UNHRC said “there have been several allegations of excessive use of force including … pellet-firing shot guns, tear gas and rubber bullets by security forces … unconfirmed reports of at least six civilian killings … (and) a number of allegations of torture and ill-treatment of people held in detention”. Will the EU MPs rebut this?

•Finally, there’s a question of paramount domestic interest. Whilst India as a democracy should welcome anyone who wants to visit Kashmir, has this visit internationalised the State to the country’s disadvantage? It happened at a time when Indian MPs, foreign journalists and Delhi-based diplomats are not permitted to visit the Valley. This is not unknown outside India. One of the MPs, Nicolaus Fest, said opposition MPs should be permitted. So, now, if European foreign offices ask is India inviting or, at least, welcoming the endorsement of their politicians, what would be our answer? After this visit won’t our traditional ‘no’ seem contradictory or, at least, overtaken by events?

📰 Farmers hit by sharp decline in pepper prices

Influx of imported pepper from Vietnam via Sri Lanka major cause of fall in prices

•A drastic fall in the price of black pepper and low production owing to climate vagaries, are the major concerns of farmers in Kerala and Karnataka, the two major pepper producing States in the country.

•Black pepper prices crashed from ₹760 a kg in 2017 to ₹490 a kg and then to ₹ 290 a kg.

•The spot price of pepper in Kerala’s Wayanad and Karnataka’s Coorg markets on Wednesday was ₹ 285 a kg as against ₹390 a kg during the corresponding period last year.

•“The influx of imported pepper from Vietnam via Sri Lanka is the major reason for the fall in prices in the Indian market,” said M.C. Abdu, a pepper dealer in Wayanad, told The Hindu.

•The cheaper pepper from Vietnam continues to flood the market through Sri Lanka, aided by a low-duty structure under the ASEAN (Association of South-East Nations) trade agreement, SAFTA (South Asian Free Trade Area) and ISFTA (Indo-Sri Lanka Free Trade Agreement). Under SAFTA, India could import 2,500 tonnes of pepper a year from Sri Lanka without duty, and above the quota, a duty of 8% would be imposed as per the ISFTA, Mr. Abdu said. But direct pepper import from Vietnam attracted a duty of 52% under the ASEAN trade agreement.

•Though the Union Ministry of Commerce and Industry had fixed the minimum import price (MIP) for pepper at ₹500 a kg in December 2017 to protect the pepper farmers in the country, it was being widely flouted by some pepper importers with the support of unscrupulous Sri Lankan pepper exporters violating RBI and FEMA regulations, said Kishore Shamji Kuruwa, the Cochin chapter head of the Indian Pepper and Spice Traders, Farmers, Producers and Planters Consortium (IPSTPC).

•While the pepper prices in Indian market were ruling around ₹290 a kg, why were the importers procuring the produce at ₹500 a kg MIP plus 8% import duty from other countries, Mr. Kuruva asked.

•As much as 1,600 tonnes of pepper was imported into India in August and September this fiscal for domestic use. Intervention by the Union government was needed to protect the interests of the pepper farmers in the country, he said.

•Apart from the declining price of pepper and increasing inputs, low production owing to various diseases affecting pepper vines and climate vagaries, also posed a serious threat to the pepper farmers, said Rajesh, a pepper planter in Wayanad.

📰 Free trade over fair trade

Fair trade is often an excuse to raise more protectionist barriers to serve domestic special interest groups

•Free trade, which enjoys almost unanimous support among economists, has come under severe attack from politicians across the world. According to the Managing Director of the International Monetary Fund, Kristalina Georgieva, the U.S.-China trade war has brought global trade “to a near standstill”. Yet it seems unlikely that politicians will listen to the advice of economists, which is to bring down barriers to international trade rather than raise them further. The protectionist politician’s argument is that increasing tariffs on foreign goods protects domestic industries from unfair trade practices adopted by foreign governments. For instance, U.S. President Donald Trump has accused China of ripping off the U.S. by, among other things, imposing high tariffs on American goods that are imported into China, artificially lowering the value of the yuan against the U.S. dollar in order to encourage Chinese exports, and adopting domestic policies that favour local Chinese companies over American ones. Retaliatory tariffs, it is believed, will help level the playing field and ensure “fair trade”.

Dropping trade barriers

•Yet the case for free trade does not depend simply on the condition that all countries must engage in “fair trade” practices. Trade does not have to be “fair” for countries to benefit from it. In fact, a country that drops all trade barriers on its side can benefit from such trade liberalisation even when other countries refuse to do the same. As the economist Paul Krugman wrote, “The economist’s case for free trade is essentially a unilateral case: A country serves its own interests by pursuing free trade regardless of what other countries may do”. This is because countries that remove trade barriers unilaterally, like Hong Kong and Singapore did, benefit their consumers, whose standard of living is improved greatly by access to foreign goods. By the same token, a country that raises trade barriers works against the interests of its own consumers. Of course, if all countries tore down their respective trade barriers, the world would be a richer place as goods can freely move around. But in the meantime, unilateral free trade can at least benefit consumers in countries that decide to fully adopt it.

•Despite this, tariffs and other trade barriers are extremely popular among politicians. This can be attributed to the misconception that trade policy must be judged based on what good it does to a country’s producers rather than consumers. But as the economist Claude-Frederic Bastiat noted, “All economic phenomena, whether their effects be good or bad, must be judged by the advantages and disadvantages they bring to the consumer.” Competition between producers is usually considered good because, even though it could cause some of them to lose out, it benefits consumers who can buy cheaper and better goods. Yet when such competition comes from producers in foreign countries, it is opposed for no valid economic reason. Some argue that retaliatory tariffs are warranted since foreign governments heavily subsidise domestic producers. Mr. Trump has criticised India and China for misusing their “developing country” status at the World Trade Organization to subsidise domestic producers, thus putting American producers at a terrible disadvantage. However, using retaliatory tariffs in a desperate attempt to protect domestic producers is misguided because it stops American consumers from enjoying the benefits of subsidies offered by foreign governments.

Trade deficit

•Another economic statistic that is misused to gather support for protectionist trade policies is the trade deficit. A trade deficit is seen as a bad thing since it indicates that the value of a country’s imports is greater than the value of its exports. But economists such as Milton Friedman have argued against the view that a country loses wealth when it experiences a trade deficit. A trade deficit or surplus merely shows that people in different countries prefer to buy different things from one another. Americans, for instance, may prefer Chinese goods over Chinese real estate assets while the Chinese may prefer American financial assets over American goods. This will cause the U.S. to experience a trade deficit with China as it buys more goods than it sells to China. And at the same time, it will enjoy a capital surplus as it receives more capital than it sends across to China. So a trade deficit in no way reflects which side loses or wins in a trade. In fact, voluntary trade both within and between countries happens only because both sides believe that they gain from it. Fair trade is often just an excuse to raise more protectionist barriers to serve domestic special interest groups. The world would be a richer place if leaders chose free trade over “fair trade”.

📰 ‘Nirvik scheme may give fillip to export credit’

Claims declined in last six months

•The Export Credit Guarantee Corporation of India (ECGC) is optimistic that the Nirvik scheme announced by the Union Government recently would give a fillip to export lending and insurance cover for export credit.

•Geetha Muralidhar, Chairman and Managing Director of ECGC, told The Hindu recently that the scheme announced by the Minister for Commerce and Industry was expected to get government approval soon. Currently, the average cover given to banks by the ECGC is 60%.

•In the last four to five years, the Corporation has paid nearly ₹1,000 crore a year towards claims to various banks and subsequently, it gradually decreased the cover.

•Under the Nirvik scheme, ECGC will provide 90% cover. The additional outgo, if any, due to the enhanced cover would be supported by the government and the scheme would be valid for five years.

•Though there has been a fall in claims in the last six months, the ECGC is optimistic that business and lending would pick up soon and the scheme would give a fillip to it.

•ECGC also provides various direct covers and has live data and credit profile information.

•It provides details of nearly 1.5 lakh overseas buyers and 20,000 exporters, she said.

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