📰 Changing the order of battle
Traditional diplomacy appears to be giving place to big power summitry as the way to get things done
•Increasingly, leaders in both democracies and authoritarian regimes are beginning to take a direct role in matters such as foreign policy, even as they preside over the destiny of their nations. Notable among those engaged in summit diplomacy are President Xi Jinping of China, President Vladimir Putin of Russia, and President Donald Trump of the U.S.
A recent phenomenon
•Diplomacy is one of the world’s oldest professions. Summit diplomacy is, however, a comparatively recent phenomenon. In previous centuries, world leaders met occasionally, and it was the advent of World War II that gave a fillip to summit diplomacy. The U.K., for instance, was aghast when Prime Minister Neville Chamberlain personally undertook a trip to meet Adolf Hitler in 1938, as war clouds enveloped Europe. Summit diplomacy, thereafter, picked up pace as the war progressed, and one of the most vivid pictures of the time (of the Yalta Conference) featured U.S. President Franklin D. Roosevelt, British Prime Minister Winston Churchill and Soviet Premier Joseph Stalin. In the immediate post-war years, however, traditional diplomacy seemed to make a comeback — but more recently, given the inability of traditional diplomacy to sort out intractable problems, summit diplomacy has come into its own.
•Summit styles are personal to each leader. One common feature, however, is that Foreign Office mandarins and ministers in charge of foreign affairs are being pushed into the background. Nuanced negotiating stances are no longer the flavour of diplomatic intercourse. Summit diplomacy again tends to disdain diplomatic rigmarole.
•Personal leadership tends to be highly contextual. At times what appears inappropriate could become the norm. Attitudes also change given different situations. While leadership styles may differ, what is apparent is that leaders engaged in summit diplomacy are not unduly constrained by the need to adhere to the Westphalian order.
Strong leaders
•Strong leadership and summit diplomacy do not necessarily translate into appropriate responses. Mr. Trump, hardly constrained by diplomatic etiquette, firmly believes in the aphorism, ‘what starts with him changes the world’. He hardly ever debates the question, ‘what will the world look like after you change it?’ He is clearly an advocate of the thesis that ‘a crisis by definition poses problems, but it also presents opportunities’. Most of this is, no doubt, anathema to traditional diplomats, but the U.S. President seems to be following in the wake of former French President Charles de Gaulle, ‘moving in the direction of history’.
•Mr. Putin is less mercurial than Mr. Trump. He is, nevertheless, unflinching in his belief that he has the answers to Russia’s problems, and how to take Russiafrom the low point of the Yelstin years to future glory. Having established an entente with China, he is now intent on raising Russia’s stakes in Europe by confronting the North Atlantic Treaty Organisation (NATO), and also hopes to establish itself as a key player in Eurasia. Relations between Russia and the West are possibly at their nadir today, but Mr. Putin believes that he can do business with Mr. Trump, even though there are few others in the U.S. today willing to deal with him or Russia.
•At the opposite end is Mr. Xi of China, who is in the process of establishing a new political orthodoxy? Mr. Xi’s ‘thought’ is being portrayed as the culmination of a century’s historical process and philosophical refinement, produced through an ongoing dialectic of theory and practice, and encapsulating ‘traditions’ of the Qing dynasty, Maoist socialism and Deng’s policies of reform. The chasm between the thought processes of Mr. Trump and Mr. Xi, hence, could not be wider. It would be interesting to see how Mr. Trump, who does not flinch from pursuing a zero-sum policy, ensures that there is no open confrontation with the ideologically oriented Mr. Xi.
•What the world is surprisingly discovering is that with many more countries sporting ‘maximum leaders’ at the helm, summitry can help cut through the Gordian knot of many existing and past shibboleths. It is uncertain at this time whether this is more make-believe than real. The meeting between Mr. Trump and North Korean leader Kim Jong-un, in Singapore in mid-June, is a classic example of ‘daredevilry’ at the highest level which could only be attempted by leaders cocooned in their own personal beliefs ignoring past history and current problems. The meeting, which the two principals claim to be a success, has certainly lowered the temperature in Northeast Asia, irrespective of what professional diplomats and others believe. It has kindled some hope that North Korea may desist, at least for now, from persisting with its nuclear shenanigans. Doomsday prophets claim that this is only a mirage, but in the topsy-turvy world that we live in, most people are willing to clutch at any straw that might provide a pathway to peace.
•The Trump-Putin meeting held in Helsinki last week, in July, has evoked a similarly negative response from the majority of western countries, especially among the diplomatic and policy-making fraternity. Much of the anger seems directed at the sheer gall of Mr. Trump in rejecting conventional wisdom in the West that Russia is Enemy No.1, and in challenging their beliefs by effecting a meeting with the Russian President. Aggravating their angst further, Mr. Trump has implicitly claimed that the Helsinki meeting was not only a success but in the long run could also prove to be of still greater real value than the association with NATO allies.
The Indian way?
•Indian Prime Ministers have also experimented on occasion with variants of summit diplomacy. Prime Minister Jawaharlal Nehru, who was in effect his own Minister for External Affairs, conducted policy discussions with a whole range of world leaders, achieving a mixed bag of results. He was successful as the architect of the Non-Aligned Movement, but met with setbacks in his China policy. In 1988, Prime Minister Rajiv Gandhi ended a 25-year India-Chinastalemate by personally taking the initiative to reopen talks with Deng Xiaoping and the Chinese leadership. Prime Minister A.B. Vajpayee achieved a temporary respite from cross-border attacks from Pakistan by engaging with General, later President, Pervez Musharraf. Likewise, Prime Minister Manmohan Singh established a fairly successful ‘back-channel’ with Pakistan, thanks to his brand of summit diplomacy with President Musharraf. In the case of Indian Prime Ministers, what is different is that they did not seek to ‘buck the trend’, but while going with the flow use their personal credibility to achieve results.
•Prime Minister Narendra Modi is, to all intents and purposes, a firm believer in summit diplomacy. In the past four years, he has circumambulated the globe on quite a few occasions, meeting and discussing foreign policy issues with leaders of several countries, sometimes on more than one occasion.
•Unlike Mr. Trump, Mr. Putin or Mr. Xi, he has, however, made no attempt to effect any systematic change in foreign policy, nor talked of establishing a qualitatively new order in the realm of foreign affairs so as to add gloss to Indian foreign policy. Also, unlike Mr. Vajpayee, who set up a National Security Council and established the post of National Security Adviser, he has not created any new institution to give impetus to his foreign policy imperatives. Yet, the informal summits held recently with Mr. Xi (in Wuhan) and Mr. Putin (in Sochi) have contributed to improving the ‘fraying’ relations with China and Russia.
•The issue discussed here is not whether claims of success are true or not, but that summit diplomacy is taking leaders into hitherto uncharted waters, and producing results that traditional diplomacy has struggled for years to achieve — whether they be long-lasting or short-lived. If diplomacy is generally viewed as ‘war by other means’, then summit diplomacy is changing the ‘Order of Battle’ in a bid to succeed where all else has failed.
•This may have been unthinkable before the turn of the century. The 21st century is, however, demonstrating in many fields that this is the Age of Disruption. There is no reason why disruption in the area of foreign affairs should not alter staid diplomatic practices that were more relevant to the 18th, 19th and 20th centuries.
📰 The art of writing a judgment
Judicial academies must focus on equipping trainee judges with skills to write accurate, simple, bias-free orders
•The fate of the governance of the National Capital Territory of Delhi was decided earlier this month by the Supreme Court. But one had to pore over 500 pages of widely awaited judgment in order to understand the demarcation of powers between the Lieutenant Governor and the elected government. It was yet another reminder about the need for crisp and on-message judgments for many reasons.
•First, erroneously drafted judgments that run into pages and which state the same point repeatedly have been called out several times by critics within and outside the judiciary.
•For example, the Chief Justice of India, Dipak Misra, received flak for his illegible sentence construction in a 2016 judgment — in Subramanian Swamy v. Union of India & Ors, the second sentence ran into 228 words separated by over six commas and 17 “ands”. Whether the crux of the decision can be understood is questionable.
Moral judgment
•Second, insensitive comments made in judgments can tarnish the quality of pronouncements. For example, unnecessary remarks have been made on the ‘promiscuous attitude’ and ‘voyeuristic mindset’ of a woman in a bail order of a rape case. The Supreme Court has even frowned on a trial court judgment that rationalised how “wife beating is a normal facet of married life”. Across the judiciary, there are numerous instances of judgments with similar gender-insensitive remarks. Thus, the need for new judges to master sensitive writing cannot be stressed enough. Third, several judgments do not record submissions or issues raised by both parties, which often results in a reader being unable to make out the link between the legal provisions used to arrive at a judgment and the facts to which they are applied. Lastly, in most judgments, a uniform structure (recording of facts, issues, submissions and then reaching the decision) is lacking. Judicial decisions are the law of the land and if the law is unclear, it becomes increasingly difficult to follow or enforce them.
Importance of training
•Judicial academies play a significant role in equipping trainee judges to deliver lean, to-the-point judgments. There are now at least four State judicial academies that conduct training. As judgment writing is one of the most requisite skills that a judge should possess, there has to be focussed training in this area. Simple, clear and crisp judgments are vital.
•To eliminate bias, training sessions could have diverse socio-economic scenarios which would also help trainee judges apply theories. There can be variations of the same case scenario and the facts that are likely to induce value judgments. Evaluation and a full class discussion must follow..
•Another useful exercise is in re-writing judgments, particularly those that are difficult to understand due to a seeming lack of structure. Trainee judges can be asked to identify structural lapses and rework them. For instance, judgments that do not elucidate upon recorded submissions of parties or legal provisions cannot be understood easily since there is no context as to why a decision was taken.
Judicial education
•The attempt towards improving judgment quality (in the form of training sessions on judgment writing conducted by judicial academies) appears to be ineffective as several judgments in lower and higher courts continue to remain verbose. Judicial training must lay emphasis on the need for concise and reasoned judgments.
•State academies conduct training (from three months to a year) for entry-level judges, hold refresher courses for subordinate and district level judges, and have special training for service in special courts such as family and Protection of Children from Sexual Offences courts. Right to Information responses show that there has been no change in their academic calendars in the past five years. Further, the various modes of training remain uncaptured. Finally, very few States conduct post-training evaluation of judges. Judges-in-training do not go to areas of law or management that they want to be trained in. A generic syllabus is thrust upon them.
•The pedagogical methodology of training is classroom-like, with little or no post-training evaluation. Judicial academies must focus on practical-based training. In the interim, higher courts and also the Supreme Court must consider summarising the crux of lengthy decisions into a separate official document. Such summary briefs can be uploaded by the Registry along with the judgment which would help the layperson in understanding the main ideas of the decision.
📰 Befriending the neighbour
How the Treaty of Friendship between India and Bhutan was signed
•Bhutan and India have a unique relationship matched by no two other countries. This is a relationship based on trust, built brick by brick from the Treaty of Friendship signed in Darjeeling in 1949. But not so much was known about how that treaty came about, and some of the difficulties that followed it, until last year, when the personal papers of Ashi Tashi Chodzom Dorji (daughter of Gongzim Sonam Topgye Dorji, who negotiated the treaty) were published by her sister Ashi Kesang Choden Wangchuck, Queen Mother of the the fourth Druk Gyalpo, Jigme Singye Wangchuck.
Reaching out
•After India gained independence, Bhutan was one of the first countries to reach out to the new India. Bhutan saw India as a natural ally and strong development partner which could help it emerge from its long self-imposed isolation. In April 1948, the second Druk Gyalpo, Jigme Wangchuck, deputed his most trusted and able deputy to negotiate a treaty with India. On April 15, Gongzim Sonam Topgye Dorji met senior officers of the Ministry of External Affairs in Delhi. The details of the visit are in the draft minutes of the meeting regarding the Bhutan government’s memorandum on territorial claims. As a member of the delegation, Ashi Tashi diligently maintained those minutes.
•According to the neatly handwritten account, published in the book Ashi Tashi Dorji, Her Life and Legacy, Bhutan’s delegation arrived just as a transition was taking place in South Block: K.P.S. Menon (senior) was about to take over as the first Foreign Secretary of India. At the time, Menon was India’s expert on China and the Himalayas, and knew Sikkim, Tibet and Bhutan like the back of his hand. On April 16, Menon was sworn in as the Foreign Secretary and the Bhutan delegation met him on April 19.
•The day after that, the Bhutanese delegation met Prime Minister Jawaharlal Nehru. The meeting lasted for an hour, and an official dinner that followed set the course for difficult negotiations. According to the minutes, Nehru said that he did not want to interfere in Bhutan’s internal affairs. But then he quickly contradicted that by offering two unexpected options. The first was for Bhutan to join the Indian Union but still remain an autonomous State within India. His second offer was for Bhutan to have an alliance with India and, if Bhutan wished, to hand over defence, communications and external relations issues to India to deal with.
•“The Bhutan delegation stood firm in safeguarding Bhutan’s security and protecting its sovereignty,” writes the Queen Mother in the book. In fact, the discussions were much more tense than anyone had anticipated. “We maintained that unless we received some sort of written favourable assurance on our [territorial] claims, we were not authorised to discuss future relations between India and Bhutan,” Ashi Tashi’s minutes record says, and the Bhutanese delegation nearly left without an agreement. Eventually the word “communications” was left out, a concession from Nehru who had argued that Bhutan would not be able to build its communications infrastructure on its own.
•Other heated moments followed. Bhutan had been granted only ₹1.5 lakh in consideration of vast areas ceded to the British, which it had hoped India would take a more empathetic view of. India offered another ₹50,000 for the “privilege of guiding Bhutan’s foreign relations”.
•“At this point, Nehru said, why should we even pay you this 50,000, as handling foreign relations was a liability to India,” records Ashi Tashi. She adds: “In that case, we said, why did India not forgo the handling of our foreign relations and relieve herself of such a liability?” Nehru laughed, she says, but did not reply.
Signing the treaty
•After a few months of tough negotiations on every point, on August 8, 1949, Bhutan and India signed the Treaty of Perpetual Peace and Friendship at the government house in Darjeeling, signed by Gongzim Sonam Tobgye Dorji and Political Officer in Sikkim, Harishwar Dayal. Subsequently, King Jigme Wangchuck and President C. Rajagopalachari ratified this treaty for Bhutan and India as two fully sovereign nations.
•Five years later, Nehru invited the third Druk Gyalpo, Jigme Dorji Wangchuck, and Queen (now ‘Royal grandmother’) Ashi Kesang Choden Wangchuck on a state visit. In 1950, India had started a tradition of inviting a head of state or government of a foreign country as the chief guest for the Republic Day celebrations. In 1954, in a remarkable gesture, Nehru invited the King as the chief guest for Republic Day. At that time, the King had been on the golden throne for two years and was only 25 years old.
•It wasn’t till 1958, nearly a decade after the treaty was signed, that Nehru and his daughter Indira Gandhi came to Bhutan. This visit sealed the friendship. The two visitors rode on mules and yaks, crossed several mountain passes and trekked several days through unforgiving terrain to reach Bhutan.
•The visit is summed up in a letter that Indira Gandhi wrote to ‘Royal grandmother’ Ashi Kesang Choden Wangchuck from Haa Dzong on September 27, 1958: “My father said at the public meeting that he was leaving a part of his heart at Paro. That is true of me also. We both love the mountains, their magnificent scenery and the sense of peace they give. Bhutan has these in full measures and it has something more, a special quality. It is fortunate for the Bhutanese that they have at the head two young people like yourself and His Highness who are not only popular but have the good of the people at heart and wisdom to guide them during these difficult times.”
•An account in another memoir said that Nehru was “the happiest and most relaxed mood that day. By his own admission, those ten days in Bhutan had soothed him more than a six-month holiday in the best tourist resorts in the world could have.” (Unpublished memoirs of Dasho Prithvi Raj Bakshi.)
•Like in all good relationships, Bhutan and India had their differences in the beginning. In a relatively short time, Nehru and King Jigme Dorji Wangchuck had reduced the differences. They were able to find common ground with one other, laying a solid foundation for the excellent relationship between a big country and a small but independent kingdom that continues to this day, each fully respecting the other’s interests.
📰 The Israeli turn
The new law is a departure from the territorial principle and is likely to erode Israel’s legitimacy as a nation state
•A few days ago, the Israeli daily Haaretz said about Israeli Prime Minister Benjamin Netanyahu: “Call it irony or call it inevitability, this man who has spent every waking minute of the last decade warning Israelis about the dangers of the Iran of the ayatollahs and the Revolutionary Guard, also spent that same time turning Israel into the Iran of the Rabbinate and the rogue settler.” Mr. Netanyahu recently got the Knesset to pass a law that defines Israel as the homeland of the Jews, not Israelis. While this may be consistent with the original Zionist idea propounded before the massive migration of European Jews to Palestine and the eventual creation of the Israeli state, it has grave implications now that Israel is established as a territorial nation state with a sizeable non-Jewish population.
Caught between two pulls
•Israel has always struggled to present itself as a typical nation state that belongs to all Israelis regardless of race or religion but also as the homeland of the Jewish people no matter where they live. State-sponsored Jewish immigration, the “law of return” applicable only to Jews, and the denial of the right to return to Palestinian refugees and their descendants were all products of this latter urge. The dilemma was exacerbated because of the continued occupation of Palestinian territories since 1967 that has led to official projections that soon there will be as many Arabs as Jews in the land between the Jordan River and the Mediterranean Sea.
•Nonetheless, for a time it appeared that the compulsions of acting like a responsible nation state built on the territorial principle had tamed Israel’s extra-territorial aspirations. The passage of the latest law has proved this assumption wrong. This law makes Israel the mirror image of the concept of the Islamic caliphate which was expected to embrace all Muslims and to which all Muslims, no matter where they lived, were expected to be loyal. Now, most of the Muslim world, except for outliers like the Islamic State and the Hizb-ut-Tahrir, have given up this goal and adjusted to the nation state system based on the territorial principle.
•It is ironic that Mr. Netanyahu and his allies have now come to assume the mantle of the “caliphate” that is expected to embrace all Jews and demand their unflinching loyalty. Such a blatant departure from the territorial principle is likely to not only make Israel an outlier in the international system but seriously erode its legitimacy as a nation state in the eyes of its peers.
•The passage of the latest law is bound to exacerbate the problem that Jews living outside Israel face — namely, how to reconcile their affinity with Israel with their loyalty to the states in which they reside. With the recent resurgence of anti-Semitism in Europe, the new law makes European Jews more vulnerable to attacks by right-wing and neo-Nazi elements in these countries.
•Ostensibly, the situation may not be as bad in the U.S. However, the ascendancy of the right under President Donald Trump makes one wonder how long the anti-Jewish feeling among this constituency will remain lurking and not become overt in the political arena and force American Jews into an unnecessarily defensive position. This will likely not merely impact their security as an ethnic group but also reduce the clout of the pro-Israel lobby in the American political system. Israel’s influence in the U.S. is largely based on the perceived legitimacy of this lobby and is essential for Washington’s unqualified support to Israeli policies even when they conflict with American interests in West Asia.
Regional implications
•The impact on Israel’s domestic situation is likely to be very severe as well. The law automatically excludes Israeli Arabs from the sphere of full citizenship. While this may have been the case in practice from 1948, this law makes discrimination against more than a fifth of the Israeli population legal. On the obverse side, it means that the Israeli state can no longer make a rightful claim on the loyalty of its Arab citizens.
•The Jewish homeland law can have major regional implications too. It is likely to make the prospect for peace with the Palestinians more remote. It will put states like Saudi Arabia that are interested in normalising relations with Israel in a very uncomfortable position and will strengthen hard-line Iranian leaders who argue that Israel is an alien construct in West Asia and has no right to exist in the region.
•Creating a “caliphate” by passing a law may appear easy. Sustaining it against multiple hazards is a much more difficult task.
📰 PM in Africa amid a fall in trade
While India’s investments have fallen, China has ramped up its presence on the continent
•Prime Minister Narendra Modi will encounter challenges of Chinese competition as well as declining Indian trade and investment figures on his three nation, five-day tour to Africa, part of what officials called an “unprecedented engagement” with the continent by his government.
High-level visits
•“Our engagement with Africa has clearly intensified over the last four years,” said Secretary (Economic Relations), External Affairs Ministry, T.S. Tirumurti, listing visits by more than 40 heads of state and governments from 54 African Union countries since 2014.
•“The visit of the Prime Minister to these three countries is a reflection of the intensity of our engagement and the priority we attach to our relations with African countries,” he said.
•Despite the ramping up of high-level visits, various studies and statistics show that Indian interest in the Africa growth story has not kept pace, and even declined through most of the period. The greatest slump appears to have been in investment figures.
•According to the “World Investment Report for 2018”, issued by the United Nations Conference on Trade and Development (UNCTAD), Indian FDI in Africa in 2016-17 at $14 billion was even lower than it was in 2011-12 at $16 billion. In fact, with the exception of the 2015 figures, which jumped due to a single investment of $2.6 billion by ONGC Videsh Ltd. for a stake in the Rovuma gas field of Mozambique in 2014, Indian investment in Africa has steadily decreased year-on-year since 2014.
•“On investment, apart from our traditional investors, few companies are looking at the African continent with any degree of seriousness. So while the government remains gung-ho, it has found it difficult to take the private sector along,” said Harsh Pant, Professor at King’s College in the U.K. and scholar at think-tank Observer Research Foundation.
•While one of the issues has been the investment climate in African countries itself, which has seen FDI flows drop 21% in 2016-17 according to UNCTAD, India is the only one of the big investors in Africa to have reduced its investment.
•China, for example, increased from 2011-12, when its investment levels were identical to India’s at $16 billion, to a massive $40 billion in 2016-17.
Narrow focus
•A similar slump both in actual and comparative terms has been seen in India-Africa trade figures from 2013 to 2017, when export and import figures fell from $67.84 billion to $51.96 billion. The China-Africa bilateral trade, in comparison, has hovered around the $170 billion mark. In 2017-18, where only April-October figures have been released, the figure was $34.65 billion, indicating this year may finally see an increase.
•One of India’s biggest problems has been its concentration on East African trade and investment opportunities, as well as a dependence on petroleum and LNG, say experts. India’s exports to African countries have also been dominated by petroleum products, and a diversification is needed to broaden economic engagement.
•When asked by The Hindu , however, the MEA denied the problems and rejected comparisons, invoking India’s historical ties with African countries, particularly South Africa.
•“I don’t think we see ourselves in competition with China at all. Our relations with African countries goes back a very long way... and now it is on very solid foundation of development cooperation and security and other cooperation which is enlarging,” said Mr. Tirumurti, adding that Mr. Modi’s visit to Rwanda is the first by an Indian PM.
📰 Stimulus mode: on GST rate cuts
GST cuts reflect buoyancy, but Centre-States cooperation must be maintained
•Unveiling a mini-Budget of sorts in the middle of the financial year, the Goods and Services Tax Council has announced a reduction in the tax rates for over 85 goods. The applicable indirect tax rates on consumer durables such as television sets, washing machines and refrigerators, along with a dozen other products, have been slashed from 28% to 18%. The tax rate on environmentally friendly fuel cell vehicles has been reduced from 28% to 12%, and the compensation cess levied on them dropped. This leaves just about 35 products, including tobacco, automobiles and cement, in the highest tax slab of the GST structure. Rakhis without semi-precious stones, as well as sanitary napkins that attracted 12% GST, have been exempted from the tax altogether. Several other products have been placed in lower tax slabs, including those from employment-intensive sectors such as carpets and handicrafts. On the services front, too, there are important tweaks and clarifications. Overall, industry and consumers may consider these rate cuts, largely on products and services of mass use, as a stimulus to drive consumption ahead of the festive season. It is also a sign that the government has begun the groundwork to woo voters ahead of State and parliamentary elections.
•Whichever way one looks at it, the GST Council’s 28th meeting has significantly altered the course of the nearly 13-month-old tax regime. Given that GST rates on more than 200 items were already tweaked in past meetings, the original rate structure has been upended to a great extent. The actual impact of these changes on product prices and consumption demand will be visible soon, but the government’s confidence in such a rate reduction gambit indicates it is now comfortable with revenue yields from the GST. Estimates of revenue losses from these rate cuts vary widely, but it’s too early to fret about the impact on macro fiscal numbers. If implemented well, the revenue lost could be offset by higher consumption that may lead to more investments over time. Moreover, improvements in compliance can be expected from the Council’s decision to further simplify paperwork for small and medium enterprises. But there are two major concerns. First, since the new rates are to kick in from July 27, companies may not have enough time to rework pricing strategies and replace existing market inventory, failing which they could face anti-profiteering action. Second, members of the Council have for the first time questioned its functioning and alleged that not all of the changes and rate cuts were placed on the agenda. For a tricky tax that is still a work in progress, distrust between the Centre and the States would make further rationalisation difficult. Such friction must be avoided in a system in which the States have so far worked in tandem with the Centre.
📰 Short spells of heavy showers
Mini-cloud bursts are increasing in India
•With an increase in heavy rainfall of short durations during the summer monsoon in many places in India, scientists at Pune’s Indian Institute of Tropical Meteorology (IITM) have coined a new term to define such events — mini-cloud bursts. A mini-cloud burst is defined as rainfall in excess of 50 mm in two consecutive hours.
•Based on hourly rainfall data from 126 stations between 1969 and 2015, the researchers found an average of 200 mini-cloud bursts occurring every year in India. Between 1988 and 2007, there were around 265 mini-cloud bursts.
•The India Meteorological Department already recognises cloud bursts — heavy rainfall, irrespective of the amount — in the mountainous regions of Himalayas with its steep slopes, which lead to flash floods, and rainfall over 100 mm per hour in other places. In contrast, mini-cloud bursts are indicative of torrential downpour but of lower intensity than cloud bursts.
•Currently, on a 24-hour basis, the IMD classifies rainfall as heavy (over 60.5 mm), very heavy (over 130 mm) and extremely heavy (over 200 mm). In a paper published in the International Journal of Climatology, Nayana Deshpande and others from IITM explain the rationale for classifying rainfall of over 50 mm in two hours as a mini-cloud burst. While extreme rainfall of over 200 mm translates to only 16 mm of rainfall per hour, the intensity of rainfall is far more in the case of mini-cloud bursts, they say. Also, compared with extreme rainfall, the rate of water accumulation exceeding absorption and the probability of flash floods are three times more in the case of mini-cloud bursts.
•Over most parts of India, the highest recorded rainfall in two hours is 100-150 mm, and the locations (other than the mountainous regions of Himalayas) that have recorded rainfall of over 150 mm in two hours are those that also experience cloud bursts. So in these locations, the mechanism responsible for heavy rainfall “persists for more than an hour”.
•The study found that mini-cloud bursts are “very common” in the foothills of the Himalayas. While the west coast records more than three mini-cloud bursts per season, the Indo-Gangetic plains and the Saurashtra region receive two per season. At just one per season, Rajasthan and States to the east of the Western Ghats experience the least number of mini-cloud bursts. For the rest of India, the amount of rainfall per mini-cloud burst is 50-70 mm.
📰 Banks agree to resolve stressed assets quickly
24 lenders sign an agreement, more are expected to follow
•Leading lenders of the country on Monday signed an agreement among themselves to grant power to the lead lender of the consortium to draw up a resolution plan for stressed assets. The plan would be implemented in a time-bound manner before bankruptcy proceedings kick in, as was the mandate of the Reserve Bank.
•The move comes after the banking regulator, in its February 12 circular, dismantled all the existing resolution mechanisms, such as the joint lenders’ forum, and asked lenders to start resolution for the asset even if the default was by one day. It had also mandated that if the resolution plan was not finalised within 180 days, the account had to be referred for bankruptcy proceedings.
SBI, BoI on board
•The agreement, known as Inter-Creditor Agreement (ICA) was framed under the aegis of the Indian Banks’ Association and follows the recommendations of the Sunil Mehta Committee on stressed asset resolution. Lenders including State Bank of India, Bank of India, and Corporation Bank have already signed the pact.
•“The ICA has been executed by 24 lenders, primarily those who have obtained their board approvals,” IBA chief executive V.G. Kannan said. “Other lenders are expected to execute the ICA shortly after getting approval from the respective Boards,” he added. Non-banking financial companies are also expected to sign the agreement.
•In a tweet, Finance Minister Piyush Goyal said, “A massive step taken to resolve NPAs. 24 public, private and foreign banks have signed inter-creditor agreements under Sashakt to resolve stressed assets. This resolution over dissolution approach will strengthen banks & businesses, protect jobs & help economy grow even faster.”
•The ICA is applicable to all corporate borrowers who have availed loans for an amount of ₹50 crore or more under consortium lending / multiple banking arrangements, IBA said in a statement. The lender with the highest exposure to a stressed borrower will be authorised to formulate the resolution plan which will be presented to all lenders for their approval.
•“The decision making shall be by way of approval of ‘majority lenders’ (i.e. the lenders with 66% share in the aggregate exposure). Once a resolution plan is approved by the majority..., it shall be binding on all the lenders that are a party to the ICA,” the statement said.
•Dissenting lenders can either sell their exposure to another lender at a 15% discount or buy the entire exposure of all the banks involved, at a 25% premium.
‘To aid resuscitation’
•“One of the major issues that we identified was a [lack of] consensus among the lending banks on what should have been a common resolution plan which would have benefited the banks, so that there is a resolution in getting the asset back into the resuscitation mode rather than allowing it to impair over a period of time,” said Sunil Mehta, chairman, Punjab National Bank, and the head of the panel that had recommended the ICA.
•“This is primarily focussed on the ₹50 crore-₹500 crore and the ₹500 crore-₹2,000 crore categories. If there are any specific assets of more than ₹2,000 crore, we will deal with that separately,” Mr. Mehta said.
•The Mehta committee had estimated ₹2.1 lakh crore of stressed assets in the ₹50 crore to ₹500 crore category. The total stress in public sector banks is estimated at ₹10.6 lakh crore, as on March 31, 2018.
📰 Iran becomes India’s No. 2 oil supplier
Refiners take advantage of steeper discounts taken by Tehran
•Iran was the second-biggest oil supplier to Indian state refiners between April and June, India’s Oil Minister said on Monday, replacing Saudi Arabia as companies took advantage of steeper discounts offered by Tehran.
•India, Iran’s top oil client after China, shipped in 5.67 million tonnes or about 4,57,000 barrels per day (bpd), of oil, from the country in the first three months of this fiscal year, Dharmendra Pradhan told lawmakers in a written reply.
•He did not provide comparable numbers from the year-ago period. Data compiled by Reuters shows that India imported about 3.46 million tonnes, or about 2,79,000 bpd, from Iran between April and June last year.
•State refiners, accounting for about 60% of India’s 5 million bpd refining capacity, had curbed imports from Iran last year in protest against Tehran’s move to grant development rights for the giant Farzad B gas field to other parties. The refiners — Indian Oil Corp, Chennai Petroleum Corp, Bharat Petroleum and its unit Bharat Oman Refineries Ltd., Hindustan Petroleum and Mangalore Refinery and Petrochemicals — shipped in 9.8 million tonnes of Iranian oil in 2017/18, about a quarter less than a year ago, Mr. Pradhan’s reply showed.
Doubling shipments
•For this fiscal year, the refiners had decided to almost double imports from Iran, which offered almost free shipping and extended credit period on oil sales.
•Iraq continued to be the top oil supplier to India in the April-June period.
•New Delhi shipped in 7.27 million tonnes of oil from Iraq, while shipments from Saudi Arabia totalled 5.22 million tonnes, making it the third largest supplier, Mr. Pradhan’s statement showed.
Pressure to cut imports
•India and other major buyers of Iranian oil are under pressure to cut imports from the country after Washington in May withdrew from a 2005 nuclear deal with Tehran and decided to reimpose sanctions on the OPEC member.
•The first set of sanctions will take effect on August 6 and the rest, notably in the petroleum sector, following a 180-day ”wind-down period” ending November 4.
