📰 Making sense of the Wuhan reset
The ‘informal summit’ must be seen in the context of Beijing preparing for a pole position in the global sweepstakes
•On the cards was a possible reset of ties between India and China in the wake of the ‘informal summit’ in Wuhan (April 27-28) between Prime Minister Narendra Modi and Chinese President Xi Jinping. The outcome is uncertain, however. The choice by China of Wuhan, a city situated in the middle reaches of the Yangtze, though was not accidental. Wuhan is symbolic of China’s resilience and economic might today. It was possibly chosen by Mr. Xi to showcase China’s progress since Mr. Modi (as Chief Minister of Gujarat) had last paid a visit to the region. As Mr. Xi proceeds towards his next goal, ‘Made in China 2025’, he may also have wanted to demonstrate the wide gulf that seems to separate his programme from Mr. Modi’s own struggles to make a success of India’s ‘Make in India’ programme. The visit to the museum and the boat ride on the lake, in turn, were possibly intended to demonstrate the extent of China’s soft power.
Trust-building exercise
•An ‘informal summit’ is different from a regular summit. India clearly viewed this ‘informal summit’ as a trust-building exercise, hoping to quietly sort out problems that existed between the two countries, including the vexed border issue. Absence of any formal joint communiqué that is sacrosanct for any summit also enables each side to spell out its own impressions of any outcomes. India has already used this to project that India and China are on the same page in dealing with global problems. It cannot be certain though that China sees the world through this same prism.
•Mr. Modi used the occasion to convey his ideas on what was needed to be achieved, viz. a shared vision, a shared thought process, a shared resolve, a strong relationship and better communication, between the two countries. He further emphasised the importance of a global leadership role for both nations — two major powers linked by history across more than two millennia. He provided his vision of the Five Principles defining the relationship: Soch(thought), Sampark (contact), Sahyog (cooperation), Sankalp (determination) and Sapne (dreams).
•Enumerating the main takeaways, in the absence of a joint communiqué, is not easy. One outcome was to have more such summits, alongside an agreement between the leaders for provision of greater ‘strategic communications’ at the highest level. Another was the opportunity it provided to give ‘strategic guidance’ to the respective militaries to build trust and understanding for ‘prudent management of differences with mutual sensitivity’. A third was the agreement between India and China to work together jointly on an economic project in Afghanistan, with details to be worked out through diplomatic channels.
•Both sides also reiterated the need to cooperate on counter-terrorism, and to strengthen the dialogue mechanism to deal with contentious issues and concerns. Both have agreed on the importance of maintaining peace and tranquillity in all areas of the India-China border. The claim by the Indian side that the two countries today have ‘wider and overlapping regional and global interests’ meriting sharper ‘strategic communications’ is, however, subject to interpretation.
•On the border issue, the summit appears to have reinforced the validity of the April 2005 Document on ‘Political Parameters and Guiding Principles for the Settlement of the Boundary Question’, which was signed in the presence of then Prime Minister Manmohan Singh and the then Chinese Premier Wen Jiabao. This document happens to be one of the very few that implicitly acknowledges India’s claims to certain ‘disputed’ areas in the Arunachal sector of the India-China border. Ever since signing on to the ‘Political Parameters and Guiding Principles’ in 2005, China has been trying to reinterpret the contents of the document. If the informal summit, as claimed by the Indian side, has endorsed adherence to the letter and spirit of the 2005 Agreement, it marks an important milestone in the settlement of the border issue.
•The wisdom of holding an informal summit when other, and possibly better, avenues of diplomacy are available is debatable. India’s preference for an informal summit so as to be able to discuss contentious issues with China away from media glare and publicity — and the many trappings of diplomacy — is understandable. China’s acquiescence in this form of diplomacy is less understood. At best, China could have hoped to extract some concessions from India as the price for agreeing to an informal summit, viz. putting curbs on the Dalai Lama’s activities in India or backing away from the U.S. policy of containment of China in Asia.
A pivotal moment
•China is today at a pivotal moment in its history, having embarked on preparations for a pole position in the global sweepstakes. The U.S. and the West are not ready to openly confront China, despite U.S. President Donald Trump’s rhetoric. China currently has a vital role to play in the maintenance of peace in the Korean Peninsula, and in ensuring that the forthcoming Trump-Kim Jong-un talks are not jeopardised. The China-Russia equation today is much stronger than previously. China may be feared in East and South Asia, but no country here has the capacity to challenge China. It has established new equations in West Asia, including with Iran. In the South Asian neighbourhood, China is positioning itself as an alternative to India.
•One must, hence, look for reasons elsewhere as to why China is adopting a less than belligerent attitude towards India. It appears that China is positioning itself for bigger things and to play bigger roles. This period is thus a defining one for China. Behind the rubric of a looming trade war between the U.S. and China — which is, without doubt, one of China’s major concerns — is China’s unstated struggle to redefine the rules governing economic and power relations worldwide. At a time when the U.S. is busy lining up the vast majority of Western democracies to checkmate China’s advance, the latter is equally anxious to build support in its favour in Asia and elsewhere to counter the U.S.
•The India-China reset talks must, therefore, be seen in this wider perspective and context. It cannot be seen in isolation. At about the same time, on the India-China reset talks, Chinese Prime Minister Li Keqiang was in Tokyo to meet his Japanese counterpart Shinzo Abe as part of a major two-stage initiative. The Li-Abe meeting has reportedly helped remove many of the cobwebs in China-Japan trade and strategic relations. Leaders of China, Japan and South Korea also met in Japan at about the same time to devise measures that were needed to move ahead with the Regional Comprehensive Economic Partnership (India is a part of the RCEP, but a reinvigorated RCEP, alongside a China-Japan reset does not augur well for India).
No concessions
•It should not, therefore, be surprising that in spite of China’s acquiescence in an informal summit, the report card from Wuhan does not add up to much in real terms. No manifest concessions appear to have been made by China. The Doklam issue (which was not discussed at the summit) remains unresolved, with China still in the driving seat. There are no indications that China has softened its attitude vis-à-vis India’s position in Arunachal Pradesh, or that it will refrain from accusing India of further transgressions here. China’s penetration of India’s neighbourhood is set to continue, with special emphasis on countries such as Nepal and the Maldives. China again has not conceded anything with reference to the China-Pakistan Economic Corridor. India may believe that it has demonstrated good faith by putting certain curbs on the Dalai Lama’s activities, but this is hardly likely to satisfy China’s concerns about his role.
•Meanwhile, India should be concerned about Beijing’s defence budget for 2018. This is being increased by 8.1% over that of the previous year, and is in keeping with the decision of the Chinese 19th Party Congress (October 2017) to build a world class military. Mr. Li is on record that China would now focus on building strong naval and air defences, bolstered by the infusion of high technology. This can only further encourage China to expand its activities in the Indian Ocean region.
📰 Steering reform in clogged courts
Management practices and technology can help transform court processes
•The spotlight was on the Bombay High Court in early May when one of its judges sat well past midnight hearing cases before the month-long summer break kicked in. While this was a rare occasion in the court’s 156-year history, the incident highlights the systemic issues common to courts in India. Ad hoc measures such as what the judge did, though laudable and well meaning, hardly resolve these issues. Instead, they can only be addressed through a transformation of court processes.
Two areas of concern
•While there is general acceptance that the Indian judicial system suffers from case delay and the use of antiquated methods, the discourse on judicial reform remains focussed on areas such as appointments and vacancies. It is time that organisational barriers and court processes that also contribute to case delay are studied. We focus on two areas that greatly affect court efficiency: case listing practices and court infrastructure.
•The need to scientifically determine how many cases should be listed per day cannot be stressed enough. It is not uncommon to see over 100 matters listed before a judge in a day. When a judge is pressed for time, not only does the quality of adjudication suffer but it also means that several cases will inevitably go unheard. Matters listed towards the end (usually cases near the final stage of hearing) tend to be left over at disproportionate rates and often end up getting stuck in the system.
•The consequences are manifold, affecting judges, lawyers, registry staff and, ultimately, case disposal. The uncertainty around which cases will come up for hearing means neither judges nor lawyers can plan their preparation. This situation compels lawyers to waste time waiting in court and enables them to cite the simultaneous listing of multiple cases as an excuse for adjournments. Registry staff must manage the massive task of re-listing leftover matters in an already bulging docket, instead of streamlining case flow.
•The second issue is infrastructure: from inadequate support staff for judges to the dearth of basic courtroom facilities. Without research and secretarial support, judges are unable to perform their functions in a timely manner. For instance, in a private interview, a judge said that even though he managed to hear close to 70 cases in a day, it took two days for the stenographers to finish typing the orders. A 2016 report published by the Supreme Court showed that existing infrastructure could accommodate only 15,540 judicial officers against the all-India sanctioned strength of 20,558. The lack of infrastructure also raises serious concerns about access to justice.
•A recent Vidhi study on district courts in the National Capital Region found that even basic needs such as drinking water, usable washrooms, seating and canteen facilities are often not available in court complexes.
•Solutions for such challenges will require a fundamental shift in how courts are administered.
Looking at modernisation
•Courts must become more open to applying management principles to optimise case movement and judicial time. In this, external support agencies competent in strategic thinking should be allowed to work with judicial officers to understand and help the institution function better. This is already a widely-adopted practice in executive departments across the country. Courts have partially realised this need and created dedicated posts for court managers (MBA graduates) to help improve court operations. But more often than not, court managers are not utilised to their full potential, with their duties restricted to organising court events and running errands.
•Judicial policymakers will also have to expand their reliance on empirical data and courtroom technology. On the former, there appears to be little quantitative evidence available to back judicial policies, from how long cases at various stages actually stay in the case pipeline to audits of judicial infrastructure. Recording and analysing appropriate court-related data is thus the first step in addressing any problem that plagues courts — from arriving at reasonable case listing limits to improving infrastructure. Second, court processes must be modernised, and the role of technology is critical. Courts have taken various initiatives over the years to digitise case records and filing; the case information system (CIS) 2.0 is currently being implemented across the country. But as a judge rightly pointed out, using technology in courts cannot remain limited to digitising records alone but must affect how cases actually move through the system. Initiatives such as CIS must be supplemented with file-tracking and knowledge management systems, to help courts achieve an optimal level of functioning.
•For courts in India to dispense speedy justice, there must be a change in leadership thought and the willingness to seek help where it is evidently required.
📰 Rise of Sadr: on Iraq's government formation
If Iran doesn’t play spoilsport, Iraq could get a more inclusive government soon
•Iraq’s parliamentary election results marked a remarkable comeback for Muqtada al-Sadr, the nationalist Shia cleric who for years had been sidelined both by the Iraqi establishment and its Iranian backers and was seen as an enemy by the Americans. The May 12 parliamentary vote was crucial for all the main blocs in Iraq. Prime Minister Haider al-Abadi, who led the Victory Alliance, bet on the gains the Iraqi army made under his leadership in the war against the Islamic State to win political points. For the Al-Fatih bloc, a coalition of parties and leaders that have close ties with Iran, capturing power was important at a time when Iran is facing new regional challenges, and they ran a largely pro-Shia campaign. Mr. Sadr, on the other side, shed his early sectarian image, focussed his campaign on social justice and government failure, attacked Iran’s deepening influence in Iraq from a nationalist perspective and stitched up alliances with liberals and communists to expand his base. This strategy paid off, with Mr. Sadr’s Sairoon bloc emerging as the largest coalition in the 329-member Iraqi parliament, with 54 seats. Mr. Abadi’s alliance came third with 42 seats while the pro-Iranian bloc secured 47. Mr. Sadr’s surprise success suggests that the cross-sectarian narrative he put forward in a divided Iraq, that is yet to recover from the wounds of the U.S. occupation and the war against the IS, is gaining popularity. While it is certainly a good sign for the future of Iraq, it may not be easy for Mr. Sadr to turn his electoral performance into a lasting political victory.
•Since no bloc has absolute majority, a new government will have to be formed through political negotiation. Mr. Sadr himself cannot become Prime Minister as he did not contest the election. But it is not clear whether his bloc could get the prime ministerial berth at all. Iran would be wary of Mr. Sadr’s rise, as he is critical of its interventions in Iraq. Mr. Sadr had visited Saudi Arabia last year in what was widely seen as an effort to strike a balance between the two regional powerhouses. He has demanded that the Iran-trained popular mobilisation militias, which were in the forefront of the fight against the IS, be merged with the Iraqi national army. Besides, his nationalist narrative runs counter to the cross-border Shia brotherhood that Tehran is trying to promote in order to gain regional influence. However, despite the bad blood between them, both sides could also find some common ground in rebuilding post-war Iraq. It is not in Iran’s interest to see Iraq become dysfunctional again, triggering further chaos and breeding more violent militant groups. Iraq is a complex multi-sect society that needs cross-sectarian politics in order to be stable. Mr. Sadr’s broad-based politics offers hope in this. Mr. Abadi has already offered support for a peaceful transition of power. If Iran doesn’t play spoilsport, Iraq could get a government soon.
📰 A just and equal code
Muslim Indians should accept a uniform civil code that promotes gender justice and social equality
•The argument for a uniform civil code (UCC) is irrefutable in a modern nation state as long as it is rational, non-discriminatory and promotes social equality and gender justice. Multiple legal codes flout the principle of equality before the law.
•Neither Hindu nor Muslim personal law is divinely ordained. Both are products of the Indian legal system as it evolved under the Raj. In 1955-56, Parliament passed a series of acts to reform legal practices governing Hindus during British rule. These collectively constitute Hindu Personal Law. Muslim Personal Law was codified by the Central Legislature in 1937 in order to impose uniformity throughout British India. Parliament could have revamped it in the 1950s as it did Hindu law but for Jawaharlal Nehru’s belief that the Muslim minority, who were traumatised post-Partition, should not be made subject to the decisions of a Hindu-majority legislature. Nehru wanted the demand for reform to come from Muslims. Unfortunately, in part because of the Congress’s co-option of the most conservative Muslim leaders, this never materialised. Even the reform of Hindu law was almost derailed thanks to powerful conservative Hindu opponents such as President Rajendra Prasad. Nehru had to make many concessions, including retaining tax benefits for the Hindu Undivided Family (HUF), to get it passed. The UCC must eliminate the HUF.
•The refusal of Muslims to adopt changes in their personal law was in large part the result of post-Partition insecurity, which was aggravated when Hindu communal forces became the foremost proponents of an UCC. Most Muslim Indians are ignorant of the fact that from the 18th century onwards, British judges decided cases involving Muslims based on their meagre understanding of Islamic legal texts. This corpus of legal precedents came to be termed as Anglo-Mohammedan Law, which forms the basis of Muslim Personal Law. Muslim leaders also refused to recognise that precedents from the classical age of Islam were products of their historical context and not necessarily valid across time and space. Prophet Muhammad was a social revolutionary. In order to understand his teachings, we must distinguish between essential Islamic principles and the historical circumstances in which they were applied. The implementation of Islamic precepts must be sensitive to changing times.
•One deciphers two principal socio-moral lessons in Islamic teachings: gender justice and social equality. At a time when girl children were buried alive at birth, the Prophet declared that women could inherit property and that a wife’s assets belonged solely to her. The Koran clearly states that all human beings are equal. Consequently, Muslim Indians should have no qualms about accepting a UCC that promotes gender justice and social equality and does not discriminate on the basis of religion or caste.
📰 Seven policemen killed as Maoists blow up their SUV
Their weapons are suspected to have been taken away by the rebels
•Seven policemen were killed in an improvised explosive device (IED) blast triggered by Maoists targeting a police vehicle in Dantewada district of south Chhattisgarh on Sunday.
•The incident took place near Cholnar village, around 10 km from Kirandul town, when the policemen were travelling in a white SUV.
•D.M. Awasthi, Special Director-General of Police, Anti-Naxal Operations (ANO) unit of the Chhattisgarh police, said the vehicle belonged to the police.
•“The incident took place around 12 p.m. It was a government vehicle attached to a police station there. The jawans had escorted a truck carrying construction material for the Kirandul-Aranpur road. The blast took place when they were returning to Kirandul. All the deceased were posted at the Kirandul station,” he told The Hindu.
AK-47 recovered
•The weapons of the deceased policemen were missing after the blast, and the police suspect that the Maoists might have taken them away.
•“Six weapons were missing, but one AK-47 has been recovered now. We expect to find some more weapons. Maoist cadres, possibly at the militia level, were present near the site of the blast. But there was no firing after the blast,” he added.
•The deceased were identified as head constable Ramkumar Yadav, constable Tikeshwar Dhruv and auxiliary constable Salik Ram Sinha of the Dantewada district police and head constable Vikram Yadav and constables Rajesh Kumar Singh, Ravinath Patel and Arjun Rajbhar of the 16th battalion of the Chhattisgarh Armed Force.
•Five out of the seven policemen died on the spot, while one died on the way to hospital.
•Arjun Rajbhar was evacuated to Raipur for treatment. However, he succumbed to his injuries in the evening.
Security lapse
•Asked if there was any lapse on the part of the policemen, Mr. Awasthi admitted that they should not have gone in the SUV.
•“It’s a catch-22 situation in the Maoist insurgency-hit areas. You have to take the forces’ protection to construct a road and our personnel do get complacent when they travel in the same area frequently. Seven people should not have gone for patrol. They should have used motorcycles and a minimum of 20 to 25 men should have gone, which would have prevented such an incident. Because there were not enough personnel, officials may have sent the available strength for the patrol,” Mr. Awasthi added.
📰 Nipah virus confirmed in State
Two more suspected deaths in Kozhikode district
•The Health Department has confirmed Nipah virus (NiV) infection for the first time in the State with the blood and body fluid samples of two persons who died of viral fever in the past fortnight in Kozhikode district indicating the presence of the zoonotic disease.
•At the same time, two more are suspected to have died in similar circumstances on Sunday.
•Director of Health Services R.L. Saritha told the media late Sunday night that laboratory results from National Virology Institute, Pune, had confirmed that the deceased were infected with the virus.
•Three members of a family from Sooppikkada village in the Changaroth grama panchayat limits in Kozhikode had died in the past two weeks due to viral encephalitis and myocarditis. Blood samples of two among them and one of their family members were sent to the virology institute for tests.
•Meanwhile, the names of those who died on Sunday were given as Ismail of Koottalida and Janaki Amma of Perambra. However, it was yet to be confirmed whether they were infected with NiV. Nine persons, including some of the family members of the deceased from Changaroth, and those who had interacted with them, are undergoing treatment at government and private hospitals in Kozhikode and Kochi.
•Infection can lead to acute respiratory syndrome and fatal encephalitis among humans. The virus is capable of causing diseases in domestic animals too. There is no vaccine for the disease and the only form of treatment is supportive medicines.
Fever clinics
•Fever clinics and special wards will be set up in private and government hospitals and a seven-member task force has been formed to monitor the overall activities. This was decided at a meeting chaired by the Collector at the civil station here on Sunday.
•Ms. Saritha said a single window system would be put in place to coordinate the works and a senior doctor in the department of emergency medicine at the Government Medical College Hospital would be in charge of it.
•A control room has been opened at the District Medical Officer’s office (Ph: 0495-2376063). A training programme would be held for doctors in both government and private hospitals in association with the Indian Medical Association.
•Apart from senior health officials and medical college staff, representatives of private hospitals, senior Ayurveda and homoeo doctors, and officials from the district management authority attended the meeting.
Central team coming
•Meanwhile in New Delhi, Union Health Minister J.P. Nadda directed the Director of National Centre for Disease Control (NCDC) to visit Kozhikode to assist the State government in the wake of death of two persons due to Nipah virus.
•A Central team will also be visiting the State to monitor the situation.
📰 A high-tech tiger census in Andhra Pradesh
New app to avoid human error in estimating big cats’ presence, tribal groups participate
•Amid signs of the proliferation of the big cats in Andhra Pradesh, the third phase of the fourth All-India Tiger Estimation (AITE) is being taken up in full swing in the vast tiger landscape spread over 3,728 sq. km. in the mighty Nallamala hills.
•Indications are there that the big cats have also spread to the region south of the Nagarjunasagar-Srisailam Tiger Reserve (NSTR) in the forest up to the Penna river, says Chief Conservator of Forests and Project Tiger Field Director S. Saravanan.
Maiden exercise
•This is the maiden tiger estimation in the new State.
•During the last estimation in the united State, the count was put at 68, four fewer than the figure arrived at during the second AITE in 2010 due to the biodiversity loss. It was 95 in the first AITE in 2006. “We expect the count to be at least 45 now,” Mr. Saravan told The Hindu after overseeing the installation of sophisticated cameras with infrared sensors.
•These remote cameras put in pairs at every two-sq. km. grid would help not only identify the individual big cats through stripe pattern and other physical features but also arrive at their count in a more accurate manner.
•“We have completed the AITE in two blocks and it will be continued in the third block from the second week of June. It will be done in the Papikonda region later to step up conservation efforts.”
•The authorities have for the first time used a new app Tigers – Intensive Protection and Ecological Status (M-StrIPES) to avoid human error in the traditional recording of the pugmarks and other signs during the carnivore sign survey.
•The department has engaged about 250 members of the Particularly Vulnerable Tribal Group (PVTG) of Chenchus as trackers for protecting and monitoring the tigers.
•They have been trained to handle the GPS-fitted equipment while moving in different directions from the base camp to capture evidence such as pug marks, droppings etc.
Vast data
•The vast data collected by them is maintained and analysed for better conservation, adds Markapur Divisional Forest Officer B. Jayachandra Reddy.
📰 ‘Census 2021 likely to have 2,231 new census towns’
More villages straddling the rural-urban divide: study
•There are 2,231 villages that are likely to be declared new census towns for the upcoming census, says a recent study by the Centre for Policy Research (CPR).
•Census towns are an anomaly that burst into the limelight during the last census in 2011. They are settlements which are larger (at least 5,000 people) and denser (at least 400 people per sq. km) than most villages, with at least three-fourths of their male population not working in agriculture. They are still governed like villages by rural panchayats, unlike statutory towns which are governed by urban local bodies (ULBs).
•The census has been tracking this phenomenon since 1961. But their growth was relatively low, touching 1,362 census towns by 2001. However, in the 2011 census, there were 2,600 new census towns, taking the total to almost 4,000. West Bengal has the most, with Kerala, Tamil Nadu, Maharashtra and Uttar Pradesh also having large numbers.
•In a working paper published by the CPR earlier this month, Shamindra Nath Roy and Kanhu Charan Pradhan have used the past census data to predict that this growth will continue, with 2,231 new census towns likely to be declared before the next census.
•“They [government] are likely to make an official determination of census towns by 2020,” said Kanhu Charan Pradhan, one of the authors of the paper published by CPR earlier this month.
•In May 2016, the Union Ministry of Urban Development had written to the States, recommending that they convert all identified census towns into statutory ULBs in order to promote planned urban develop- ment. However, the CPR researchers warn that across-the-board conversion into ULBs could hurt more than it helps. “Often, census towns are actually better governed than smaller statutory towns,” said Mr. Pradhan.
•Will census towns continue their growth trend in future decades, or will the phenomenon dwindle as India comes to terms with its blurring rural-urban divide? Hard to predict since, “There is no stability of employment,” he says, pointing out that rural jobs generation is not steady enough in many areas to permanently move populations away from agriculture.
📰 Foreign investors cold to Permanent Residency Status scheme
Centre had come up with the scheme for those investing ₹10 crore in 18 months.
•Two years after it was launched by the Union government, the Permanent Residency Status (PRS) scheme providing a host of facilities for foreigners who invest at least ₹10 crore under the Foreign Direct Investment (FDI) route is yet to find a single applicant.
•A senior Home Ministry official said no foreigner had applied, but cautioned that the lack of applicants should not be seen as “no foreign investment”. Except Pakistani citizens or third-country nationals of Pakistani origin, the scheme is open for citizens of every country.
Inflows dip
•From April to December 2017, the FDI inflow stood at ₹2,31,457 crore, a decrease from ₹2,40,385 crore for the corresponding period in 2016.
•Most European Union countries, the U.S., Canada and others offer permanent residency to foreign investors.
•The U.S. offers the EB-5 visa programme where foreigners could apply for permanent residency if they created employment opportunities for 10 people with a minimum investment of ₹6.5 crore.
•An official said this was not a “citizenship” that was being offered to foreigners and was subject to review every 10 years.
•The Union Cabinet had cleared the PRS in 2016 to boost its “Make in India” policy. The scheme is open for foreign investors who invest a minimum of ₹10 crore within 18 months or ₹25 crore in 36 months.
•“The foreign investment should result in generating employment to at least 20 resident Indians in every financial year … PRS will be granted for a period of 10 years with multiple entry and can be renewed for another 10 years. There will be no requirement of registration with the Foreigners Regional Registration Office (FRRO),” the Home Ministry document on the scheme said.
•The PRS card holders are also eligible to buy residential property in India.
•Among foreign countries, the maximum investment proposals in critical sectors such as telecom and defence that was cleared by Home Ministry in 2017, were from China, the U.K., the U.S. and Mauritius.
Security clearance
•Last year, the Ministry gave security clearance to more than 1,071 proposals in 11 critical sectors like defence, telecommunications, information and broadcasting.
•Over 90% of the FDI proposals have come through the automatic route, an official said. Among the foreign countries, the U.S., China (including Hong Kong), Mauritius and the U.K. have received the green signal for the most number of projects at 10 each, followed by Germany at six, Bangladesh at three and Italy, Israel, Netherlands and Switzerland at two each.
📰 PMO seeks change in UPSC allocation
Asks if rank holders can be allotted services only after completion of course
•The Centre is considering a major change in the allocation of services to successful candidates of the civil services examination.
•The Prime Minister’s Office (PMO) has asked the department concerned to examine if the services can be allocated after the completion of the foundation course, according to an official communiqué.
•The duration of the foundation course for officers of almost all the services is three months. At present, service allocation to the candidates selected on the basis of the civil services examination, conducted by the Union Public Service Commission (UPSC), is made well before the commencement of the foundation course. The PMO has desired to examine if service allocation/cadre allocation to probationers selected can be made after the foundation course, as per the communication sent by the Personnel Ministry to different cadre-controlling authorities.
Seeks feedback
•The departments have been asked to examine the feasibility of giving due weightage to the performance in the foundation course, and making service allocation as well as cadre allocation to all-India services officers based on the combined score obtained in the exam and the foundation course, it said.
•The Indian Administrative Service (IAS) and Indian Police Service (IPS) are all-India services.
•The departments have been asked to give their feedback on the proposal to allocate other Central services such as the Indian Revenue Service and Indian Telecommunications Services, a Ministry official said.
📰 India gears up for AI-driven wars
To prepare the Army, the Navy and the Air Force for next-generation warfare
•In an ambitious defence project, the government has started work on incorporating artificial intelligence (AI) to enhance the operational preparedness of the armed forces in a significant way, which would include equipping them with unmanned tanks, vessels, aerial vehicles and robotic weaponry.
•The move, part of a broader policy initiative to prepare the Army, Navy and the Air Force for next-generation warfare, comes amid rising Chinese investments in AI — an area of computer science devoted to creating intelligent machines — for its military.
Task force at work
•Ajay Kumar, Secretary, Defence Production, said the government had decided to introduce AI in all the three forces as it would be a “big area” considering the requirements of future warfare. He said a high-powered task force headed by Tata Sons chairman N. Chandrasekaran was finalising the specifics and framework of the project, which would be implemented in a “partnership model” between the armed forces and the private sector.
•“This [AI] is where the future is going to be. We need to prepare ourselves for the next-generation warfare which will be more and more technology-driven, more and more automated and robotised,” he said.
Boosting capabilities
•Like many other world powers, India had also started work on the application of AI to boost the capabilities of its armed forces, Mr. Kumar said, adding that unmanned aerial vehicles, naval vessels, tanks and automatic robotic rifles as weapon systems would have an extensive use in future wars.
•Military sources said the application of AI in border surveillance could significantly ease the pressure on armed forces personnel guarding the sensitive frontiers with China and Pakistan.
•China has been pouring billions of dollars into AI research and machine learning. The U.S., Britain, France and the European Union are also investing significantly in AI. The U.S. has been carrying out successful operations targeting terrorist hideouts in Afghanistan and Northwest Pakistan using drones which operate with the help of artificial intelligence.
•Mr. Kumar said the recommendations of the task force were likely to come in by June and then the government would take the project forward. The state-run Defence Research and Development Organisation (DRDO) would be a major player in the project, he said.
📰 What’s roiling the rupee
Current account, forex buffers are in better shape than in 2013, but the wild card may be foreign flows
•If you have dollar payments to make, you should beware of the Ides of May. The behaviour of the exchange rate in May 2018 has been eerily similar to that in May 2013, the month that marked the onset of the ‘ taper tantrum’.
•Sliding by more than 6% against the U.S. dollar since the beginning of 2018, the rupee now figures among the worst-performing Asian currencies. The slide has been accompanied by the cocktail of factors that always roil the exchange rate.
•In 2013, hints from the U.S. Federal Reserve that it was planning to taper its bond-buying programme saw the rupee slide by more than 20% against the dollar in a mere three months from May to August. This led India to the brink of a crisis and forced RBI to take drastic intervention measures such as raising interest rates and curbing gold imports.
•Should we now brace for a repeat of the episode? Comparing key exchange rate drivers between then and now shows risks to the rupee are rising, but the situation is not as dire as in 2013.
CAD under control
•The main reason why the rupee is always on a sticky wicket is that India runs a persistent Current Account Deficit (CAD). That is, the country’s dollar outflows towards import of goods and services (and other short-term payments), usually exceed its dollar earnings from exports.
•The wider this gap between the greenbacks flowing in and those flowing out, the more is the scramble for dollars in India, leading to a weaker rupee. This is why the absolute and relative levels of CAD are critical to judge whether the rupee is in hot waters. On both counts, India is better off today than it was in May 2013.
•When taper fears hit global markets in 2013, India was in the midst of an unbridled import binge. In FY13, India splurged roughly $41 billion a month importing oil, gold, capital goods and miscellaneous items. It earned only $25 billion a month from goods exports. After adjusting for services trade, it ran up a CAD of $87.8 billion for the full year. That translated into 4.8% of GDP, well above the comfort zone of 2.5%.
•Today, India’s imports are far lower, while its exports are much the same. In FY18, the import bill averaged $38 billion a month while exports brought in about $25 billion. At the end of the first nine months of FY18, therefore, India’s CAD stood at $36 billion, which is estimated to go up to $48-49 billion for the full year. Forecasters expect India to close FY18 with a CAD just short of 2% of GDP, well below the alarming levels of FY13.
•Given India’s perpetual dollar shortage, RBI stockpiles forex as a buffer against payment exigencies. It also draws from this war-chest to sell dollars, if the exchange rate turns unduly volatile.
•A rule of thumb measure used to gauge the adequacy of these forex reserves, is the number of months worth of imports they finance. RBI held foreign currency assets of $396 billion (excluding gold) last week, which covered India’s monthly import bill about 10 times. In May 2013, RBI’s foreign currency assets had covered its monthly import bill by a precarious 6.5 times. India’s record forex kitty also gives RBI enough ammunition to intervene if there is a speculative run on the rupee.
Simmering oil
•Oil imports, accounting for 25-30% of India’s import bill, is a key determinant of the size of the CAD. In 2013, global oil prices (WTI crude) were already on the boil ruling at $90-100 a barrel for two years before the taper tantrum hit. Between May and August 2013, they further shot up to $110 a barrel, worsening the deficit.
•In 2018, oil prices, after staying at $30-$60 a barrel from 2015 to 2017, have just begun to simmer. Fired up by a host of factors — the OPEC’s production cutbacks, tensions in West Asia, the crisis in Venezuela and renewed U.S. sanctions on Iran — crude prices have increased from $60 in January to over $71 in May.
•Various forecasters estimate that every $10 per barrel increase in crude oil prices can expand India’s CAD by 0.5% of GDP. Therefore, while soaring oil is bound to worsen the CAD, the extent of that deterioration is hard to predict, given that oil price moves are seldom orderly. For now, India is expected to end FY19 with CAD at about $70 billion or about 2.5% of GDP, a significant deterioration from 0.7% in FY17, but still only at half the levels seen in 2013. But oil prices will remain a to-watch factor to gauge the rupee’s direction.
Iffy foreign flows
•The above analysis shows that the fundamental factors driving the rupee aren’t flashing red yet. But foreign investment flows can turn out to be the make-or-break variable.
•When a country regularly spends more dollars than it earns by way of trade, the gap has to be made up by foreign investors pumping in dollars, either by way of Foreign Direct Investments (FDI) or Foreign Portfolio Investments (FPI).
•FDI has been flowing into India at a brisk pace in the last four years. Data from the DIPP tells us that India attracted about $36 billion in FDI flows in the first nine months of FY18. The year, therefore, will end with roughly twice the $22 billion FDI inflows seen in FY13.
•But then, FDI flows can be quite lumpy and political uncertainties, such as looming elections can certainly act as a dampener. Volatile FPI flows are even more of a wild card factor. FPIs invested in India in fits and starts in 2017. NSDL data tells us that the country received $31 billion in net FPI investments, of which just $8 billion came into equities, while $23 billion flooded into bonds.
•The first five months of 2018 have seen these flows reverse completely, with FPIs pulling out $3 billion. May alone has seen FPIs withdraw $2.6 billion from India’s stock and bond markets. This was probably a key factor precipitating the rupee’s recent slide.
•Looking ahead, only the most foolhardy soothsayers would try to predict whimsical FPI flows. But FPI equity investments are broadly influenced by the growth prospects of Indian companies and their valuations relative to emerging market peers. Here, the prognosis is not rosy as Indian equities trade at a stiff premium to other EMs after the four-year bull run.
•Bond purchases by foreigners depend on how interest rates in India compare with those in ‘safer’ developed markets, after accounting for currency risks. The rate differentials between Indian bonds and developed market ones were quite wide until the U.S. Fed began raising its rates.
•But market interest rates on the 10-year U.S. treasuries recently topped 3%, narrowing the differential with Indian gilts which trade at about 7.8%. A narrowing gap between the two rates can prompt FPIs to pull away from Indian bonds. The strengthening dollar also prompts pullouts.
