📰 The contrasting optics in the run-up to Chennai and Wuhan summits
The atmospherics have clearly been much worse before Chennai as compared to the Wuhan summit.
•During the run-up to the Wuhan summit, the first “informal” summit between Prime Minister Narendra Modi and Chinese President Xi Jinping in April 2018, several measures were taken by both governments to ensure the smoothest setting for talks. From the moment preparations began in February, both New Delhi and Beijing were careful to avoid language on issues that could become irritants — Kashmir, Tibet, terrorism, trade deficit, the Belt and Road Initiative and Indo-Pacific partnerships.
•The differences to the run-up to the Chennai summit should be studied closer in order to build more accurate expectations from the meet. In February 2018, according to a leaked memo, newly-appointed Foreign Secretary Vijay Gokhale had reminded senior government officials that according to policy, none should attend the series of functions planned to mark the day the Dalai Lama fled to India from Tibet in 1959, or grace public events hosted by Tibetan community leadership, seen as a precursor to building better ‘optics’ with Beijing.
•The government also cancelled a global parliamentarians conference due to be held in Delhi in April 2018. In February 2018, China too took a big step away from its traditional backing of Pakistan, by supporting the Financial Action Task Force decision to “greylist” Pakistan for its failure to check terror financing, and to initiate steps on reducing the whopping $60 billion trade deficit between the two countries.
•A series of carefully coordinated and choreographed visits followed, with New Delhi and Beijing exchanging high-level visitors including Chinese Commerce Minister Zhong Shan, then Defence Minister Nirmala Sitharaman leading up to a visit by then External Affairs Minister Sushma Swaraj who announced the Wuhan summit in a joint appearance with Chinese FM Wang Yi.
•The contrast to the preparations for the Chennai summit could not be more obvious. The official announcement came just two days before Mr. Xi’s arrival, which is unprecedented for a visit of this importance. It is curious that the two sides didn’t attempt a joint announcement in Delhi, while Chinese Vice-Minister Luo Zhaohui was in town last week.
•External Affairs Minister S. Jaishankar did make a preparatory visit to Beijing in August, but it was over-run by having to explain the government’s move on Article 370. Despite his reassurances, Beijing went ahead and pushed for an informal United Nations Security Council meet to discuss the move, a first in many decades.
•China followed that up with FM Wang’s criticism of the move in his speech at the UN General Assembly in September. Another key difference is the Trump-Modi equation, which was under considerable strain pre-Wuhan, especially over Harley Davidson motorbike tariffs, and has vastly improved post-Houston, and this is being factored in by Beijing as well.
•“I think, more than the optics, the situation for both countries is different this time around,” says former National Security Adviser and foremost China expert Shiv Shankar Menon. “When Wuhan happened, both China and India had other preoccupations — China was worried by the trade war with the U.S. and India was heading in to election season. Neither wanted to deal with another standoff [like Doklam]. This time, the desire for the talks isn’t as mutual.”
•As a result, China’s raising Kashmir is sharper than the past, and linked both to its support for Pakistan as well as implications for Chinese-occupied parts of PoK (Aksai Chin), and the statement by Mr. Xi and Pakistan Prime Minister Imran Khan on Wednesday prompted a protest from the MEA.
•Analysts and former diplomats point out that the invitation to Mr. Khan itself, in the same week as the Chennai summit, casts a doubt on Beijing’s intentions to “hyphenate” China’s ties with India and Pakistan.
Negative stories
•Adding to the bad optics were a flurry of negative stories that officials on both sides blamed each other for. The Chinese MoFA was forced to issue a clarification over its decision to deny the Indian Embassy in Beijing its chosen venue for Gandhi Jayanti celebrations because of a space conflict with China’s 70th anniversary celebrations.
•The government’s decision to hold major mountain combat exercises Him Vijay in Arunachal Pradesh was protested by China. India then reportedly protested comments by the Chinese Ambassador to Pakistan about Kashmir, and so on. Instead of Mr. Xi making a “stand-alone” visit to India, as Mr. Modi did with Wuhan, the Chinese President will fly to Nepal next where BRI projects, including a railway line between both countries, are sure to create new concerns for India.
•Analysts say that while none of these ‘hiccups’ denote any break from stated policies on both sides, they could have been avoided.
•“The atmospherics have clearly been much worse before Chennai [summit] compared to the Wuhan summit, and differences have resurfaced in a fairly serious manner between both sides recently. For the leaders, the challenge now is to impart and restore a sense of stability to the relationship,” advised former Ambassador to China Ashok Kantha.
•Some diplomats say the differences in preparations cropped up as early as May this year, when New Delhi had proposed Varanasi as the venue for the summit. Then Ambassador Mr. Luo had scoped possible locations there, including the boat ride on the Ganga and the ‘aarti’ along the Ghats that Mr. Modi had accompanied French President Emmanuel Macron and Japanese Prime Minister Shinzo Abe to in the past.
•However, the Chinese government said that Mr. Xi’s plane would be too large to fit the runway at the Lal Bahadur Shastri airport, and asked for alternatives, which led the government to Chennai and Mamallapuram. Officials are hoping that a similar spirit of accommodation will ensure the upcoming summit takes off successfully, despite the hitches in the run up to it.
Ankara must respect territorial integrity and sovereignty of Syria, says MEA
•India on Thursday described Turkey’s military action in Syria as unilateral and asked Ankara to respect the territorial integrity and sovereignty of Syria. The comment from the Ministry of External Affairs called upon Turkey to exercise restraint.
•“We are deeply concerned at the unilateral military offensive by Turkey in north-east Syria. Turkey’s actions can undermine stability in the region and the fight against terrorism. Its action also has the potential for causing humanitarian and civilian distress,” said the MEA in a press release.
•Turkey on Wednesday launched the military campaign on Partiya Karkeren Kurdistane rebels in northern Syria as it considers the outfit a terrorist organisation.
•Ankara claims that the groups being targeted in the operation are already designated as terrorists in the United States and the European Union. Turkey has accused the PKK/YPG of killing 40,000 civilians.
•Ankara maintains that the fight against YPG is not new but part of the 30-year long counter-terror operation against the Kurdish PKK.
•Tough diplomatic exchanges between Turkey and India have intensified in recent weeks following India’s decision to end the special status of Kashmir on August 5. India issued a strong statement expressing “deep regret” after President Recep Tayyip Erdogan took up the Kashmir issue in his speech at the UN General Assembly. India indicated on Thursday that it does not agree with the Turkish notion of terrorism.
•“We call upon Turkey to exercise restraint and respect the sovereignty and territorial integrity of Syria. We urge the peaceful settlement of all issues through dialogue and discussion,” said the Ministry of External Affairs.
📰 Trade, border dispute likely to dominate Narendra Modi-Xi Jinping talks
No joint statement, MoUs or agreements are expected after informal summit.
•Trade issues, boundary disputes and multilateral cooperation are expected to dominate the “informal summit” at Mamallapuram as the seaside resort on the outskirts of Chennai prepares to host Prime Minister Narendra Modi and Chinese President Xi Jinping on Friday and Saturday.
•Mr. Xi will land in Chennai past 2 p.m. — about two hours after Mr. Modi. He will head to the Mamallapuram temple complex for an evening with Mr. Modi, which will include a tour of the monuments and a dance performance at the Shore Temple at sunset, followed by dinner. On Saturday, the talks will be more structured and will include time for a “one-on-one” meeting, followed by delegation-level talks.
Beyond formalities
•“The objective is to ensure that the communication between the leaders is one which is routinised, easy going and indicates that President Xi Jinping and PM Modi are getting down to business in an informal way, not simply at a structured meeting of a [limited time] where prepared statements are read out in a much more practical way,” a senior official briefing the media about the expectations from the summit had said.
•Both leaders would be received by Tamil Nadu Governor Banwarilal Purohit, Tamil Nadu Chief Minister Edappadi K. Palaniswami, and MEA officials, including Indian Ambassador to China Vikram Misri.
•Security forces have been deployed along the entire East Coast Road leading to the coastal resort, while special coast guard patrols will monitor the beaches and coastline. Journalists covering the event will be sequestered at a media hotel nearby, according to the arrangements that Mr. Palaniswami personally inspected on Thursday afternoon.
•No joint statement is expected after the talks, nor have any MoUs or Agreements been prepared as outcomes of the summit, officials involved in the planning of the summit said. They suggested that the Indian side will hope to keep discussions over the issue of Kashmir at a minimum.
•Much will depend on the “personal chemistry” between the two leaders, say officials, who expect that the discussions over purely bilateral concerns and joint initiatives will be much smoother than those over contentious issues involving other countries, including ties with the U.S., India-Pakistan tensions, and Jammu and Kashmir.
•In terms of specifics, the talks on bilateral trade will focus on India’s continuing worry over the trade deficit. According to the latest figures, the trade deficit in China’s favour reduced last year to about $53 billion, but officials hope to bring it much lower by ensuring China provides market access to more Indian companies.
•Mr. Modi will also seek guarantees from Mr. Xi ahead of the RCEP free trade agreement signing on November 1, where India still has last-minute hesitations over the flooding of the Indian market by Chinese goods.
•In particular the two leaders will discuss Indian security concerns over including Chinese tech giant Huawei in its 5G trials due in the next few weeks, even as reports indicated that India had agreed to allow a Huawei ‘demo’ at a Mobile and telecom conference in Delhi next week.
•Apart from trade, officials hope the leaders will guide negotiations to be held by the special representatives on boundary talks as well as other high-level exchanges. in the near future. A series of defence, border management and counter-terrorism related exchanges are also expected to follow the Chennai summit.
•While India has opposed President Xi’s pet project, the Belt and Road Initiative over territorial concerns in Pakistan-Occupied Kashmir, the two leaders are expected to discuss speeding up road and communication infrastructure to the east, along the Bangladesh-China-India-Myanmar (BCIM) route.
•Finally, officials expect that the India-China “plus one” programme that saw Afghan diplomats being trained jointly in New Delhi and Beijing last year, will be extended to other capacity-building programmes in Afghanistan and other parts of the subcontinent as well.
📰 In Mamallapuram, seeking the true north in ties
The India-China informal summit is another opportunity for both leaders to reset relations in an era of geostrategic flux
•The second informal summit between India and China in Mamallapuram, off Chennai in Tamil Nadu, on October 11-12 provides an opportunity for China’s President Xi Jinping and Prime Minister Narendra Modi to continue discussions on overarching issues of bilateral, regional and global importance.
Some stress points
•Ties have experienced some turbulence of late. China’s position on issues such as Masood Azhar, India’s Nuclear Suppliers Group membership, the yawning trade gap and inroads into South Asia, have all played a role. Mr. Modi’s vision of an inclusive Indo-Pacific region, outlined at the Shangri La event in Singapore in June last year, has helped allay some concerns over America’s Free and Open Indo-Pacific strategy. China’s public support for Pakistan on Jammu and Kashmir has created a new stress point.
•The slowdown in the Chinese economy and the geo-strategic competition with the United States point to further uncertainty. The idea of a China-centric order in Asia has met with resistance. Even at the Minsk Dialogue Forum in Belarus this week, several speakers referred to cooperation between the EU-Eurasian Economic Union and China’s Belt and Road Initiative (BRI) with palpable unease, citing China’s lack of adherence to global standards and disregard for the environment and labour rules. During Pakistan Prime Minister Imran Khan’s visit to Beijing this week, Mr. Xi is reported to have stated that China is “paying close attention” to the situation in Kashmir and that China would support Pakistan on its core interests, inviting a quick riposte by the Indian Foreign Ministry that it is not for others to comment on the internal affairs of India.
On Kashmir
•China maintains that the question of Jammu and Kashmir should be settled on the basis of the UN Charter, UN Security Council resolutions and bilateral agreements. What is of note is that its boundary agreement with Pakistan of March 2, 1963 and the China-Pakistan Economic Corridor (CPEC) have de facto altered the status quo and violated the spirit of the very UN Security Council Resolutions that China cites in support of Pakistan. China holds approximately 38,000 sq km of land in Aksai Chin and a further 5,180 sq km illegally ceded by Pakistan to China under the 1963 agreement. The latter agreement recognises under Article 6 that the settlement is an interim arrangement under which China would reopen negotiations with the concerned sovereign authority once the question of Kashmir is settled.
•China’s endorsement of the CPEC has been rejected by India as it passes through Pakistan Occupied Kashmir. Straws in the wind suggest that China may have realised that the CPEC was a hasty decision, without proper consultations with India. However, considering its flagship status, it will be difficult for China to review it. Nor can China easily pull away from its strategic “iron brother” Pakistan.
•India-China relations have witnessed many peaks and troughs. The frequency is greater, but the cycles of disruption have become shorter. After the border war in 1962, it took 14 years to normalise relations at the ambassadorial level. In the wake of India’s nuclear tests in 1998, it took only two years to normalise ties. After the stand-off at Doklam (2017), the two leaders met within days at the BRICS Summit. Obviously, there is greater maturity in the ties. Both India and China are keen to deepen engagement and impart stability and predictability to their relations.
Significance of the setting
•The informal summit at Mamallapuram offers yet another opportunity to both the strong leaders to reset relations in an era of geostrategic flux. Their strategic guidance to the stake-holders on both sides would act as a compass in finding the true north in ties.
•Mamallapuram is not a place without significance. Wuhan, the site of the first informal summit, is the place where Mao Zedong had displayed his vitality by swimming in the currents of the Yangtse river. Today, it straddles the great rail connectivity route to Europe envisioned in the BRI. The coastal town of Mamallapuram is evocative of ancient maritime links between the Pallava empire and China 2,000 years ago. Bodhidharma, the founder of the Dhyan school of meditation at the Shaolin monastery in Henan province in China, hailed from this region. When the two leaders gaze out at the sea, they will be greeted by the same expanse of waters of the Indo-Pacific that once united, not divided, India and China. The choice of Mamallapuram as a venue also highlights the scope of the India-China economic partnership across India. There is much untapped potential for Chinese investments in India. Chinese FDI has seen a welcome spike since 2015. According to the Chinese side, cumulative FDI in India stands at $8 billion. Mutual investments provide the ballast for the ship of bilateral relations.
Global context
•The second informal summit comes within weeks of the so-called Quad meeting at the Foreign Ministers’ level. It also takes place at a time when tensions between the U.S. and China are mounting along a broad front, from trade to military, with the latest kindling being the blacklisting of 28 Chinese Artificial Intelligence firms for their involvement in the alleged human rights violations in Xinjiang. China’s 70th anniversary celebrations of communist party rule on October 1 were marred by continuing protests in Hong Kong, raising questions about the realisation of the “China Dream” by 2049 through the full reintegration of the Hong Kong Special Administrative Region. Further, the ‘One Country Two Systems’ applied to Hong Kong, meant to be a model for Taiwan’s return to the fold, could be viewed with scepticism.
•There is no gainsaying the fact that India and China must work together to forge stable relations in which competition does not lead to conflict nor differences to disputes. India and China will always have to co-exist cheek by jowl, as they have done for millennia. It is in the larger interests of the two peoples that there be greater trust and cooperation and that there be deeper friendship at all levels.
•At Mamallapuram, the cool sea breeze, the palm fronds and the ancient temples and monuments will provide a perfect setting to the two leaders to muse over our timeless ties and their future. Helpful steps that can contribute to better relations include firewalling the bilateral track from third-party considerations, fighting stereotypes through objective media coverage, encouraging high level and other exchanges, especially among the youth, enhancing confidence building measures between the armed forces, balancing India’s trade deficit of $58 billion and injecting greater transparency in China’s growing presence in South Asia.
•China expects the world to accommodate its rise and core concerns on Tibet, Xinjiang, Taiwan and Hong Kong. Likewise, China too needs to adjust to the rise of India and accommodate its concerns on sovereignty and territorial integrity. This could pave the way for furthering cooperation under the India-China Plus framework.
•Neither China nor India can contain the other. Both are destined to rise. Much will depend on the choices we make at Mamallapuram.
📰 A Chennai setting: On Modi-Xi second summit
The Modi-Xi summit might restore the bonhomie in ties that saw strains recently
•A unique relationship requires unique and imaginative ways to manage differences. It is for this reason that India and China, with a 3,380 km common boundary, thousands of years of a shared history, and half-a-century of boundary disputes and tensions has always needed unique mechanisms. The second “informal summit” between Prime Minister Narendra Modi and China’s President Xi Jinping that begins on Friday is one such way for the two countries to deal with the ebb and flow in ties. The leaders last held an informal summit in Wuhan, in the wake of the Doklam crisis, when the time they spent visibly improved the atmospherics around the relationship. In the months prior to and following the Wuhan summit, the two nations brought down tensions along the boundary, initiated a new dialogue on trade, which led to more market access and a small indent in the $53-billion trade deficit between them, and saw more international coordination including at the WTO, and on climate change and terrorism. Earlier this year, China joined UNSC members in a statement condemning the Pulwama attack and then in May reversed its decade-old position by allowing the UNSC listing of the Jaish e Mohammad chief, Masood Azhar. Since the August 5 decision by the government on Article 370 and the bifurcation of Jammu and Kashmir, and Ladakh, and the strong reaction from China, these positive steps seemed to have been stalled. If Beijing’s decision to raise the Indian government’s move at the UNSC was a clear break from the “Wuhan Spirit”, its subsequent statements including at the UN General Assembly have alienated New Delhi further. Optics closer to the summit have been more troublesome, and Mr. Xi’s invitation to the Pakistan Prime Minister Imran Khan to visit Beijing in the same week that Mr. Xi meets Mr. Modi is clearly a negative signal ahead of the Chennai summit. India’s decision to hold mountain combat exercises in Arunachal Pradesh just prior to the summit is another in the series of red flags raised, which had even cast a doubt over whether the summit would go ahead.
•As a result, Mr. Modi and Mr. Xi have their task cut out for them: in restoring some of the bonhomie from last year, while charting a course for ties ahead. In the immediate future, it is hoped that Mr. Xi will assuage India’s concerns on trade issues with a view to meeting the deadline for the ASEAN-led RCEP free trade agreement in November, and possibly direct special representatives on the boundary issue to speed up their talks. For the larger picture, it is important that they end the downslide in bilateral ties and set up more robust communication in order to address each other’s concerns in a timely manner. If the Wuhan summit focused on a reset between India and China, the Chennai summit will be successful if it ensures that there is no rollback in the relationship, a goal that will no doubt be aided by the Mamallapuram setting, which will remind the leaders of the ancient and traditional ties between the two countries based on trade, travel, and faith.
📰 Co-operative sector reforms on anvil: FM
‘May also review deposit insurance Bill’
•Finance Minister Nirmala Sitharaman promised legislative and regulatory reforms for the country’s co-operative sector in the winter session of Parliament to protect depositors in entities like Punjab and Maharashtra Co-operative Bank that have jeopardised the life savings of several lakh customers.
•Ms. Sitharaman has tasked an official committee that includes the Banking Secretary and Department of Economic Affairs Secretary in the Finance Ministry, as well as a Reserve Bank of India Deputy Governor, to review the legal framework governing co-operative banks and revert with recommendations to bolster their governance and supervision.
Framework for NBFCs
•The Finance Ministry is also in the midst of discussions to work out a resolution framework for financial institutions, including non-banking financial companies and banks, on the lines of the Insolvency and Bankruptcy Code for businesses.
•All options, including a fresh look at the Financial Resolution and Deposit Insurance (FRDI) Bill, are under consideration, the Minister said.
•Ms. Sitharaman, who was in Mumbai to endorse CM Devendra Fadnavis’s re-election campaign, was greeted by protesting PMC depositors at her arrival at the BJP’s State headquarters and agreed to meet them to understand their concerns.
•“Even as I came in, there were a few of the badly affected customers of the PMC Bank who were waiting to meet. So I did call them inside, sat with them... and heard their problems,” she said. She added she had assured them that she will have a fresh word with the RBI Governor to try to expedite the lifting of withdrawal restrictions of ₹25,000 currently applicable on customers. While the RBI regulates multi-State rural co-operative banks and urban co-operative banks, their registration is governed by the Rural Development and Urban Development Ministries, the Minister explained.
•“Therefore, in such instances, where there is some malpractice and the boards get bypassed, the Reserve Bank takes care of placing a resolution professional that takes care of the matter. I also told the affected PMC customers this doesn’t mean that the Government of India is doing nothing about it,” Ms. Sitharaman said, before detailing the new committee’s mandate.
•“From my side, I have asked the Secretaries in my Ministry’s departments for banking and economic affairs to work with the Ministries of Rural and Urban Development to study in detail what is happening in multi-State co-operatives that also run banks. The RBI will also be represented of course, to understand where there were shortcomings and, if necessary, look at the ways in which the respective Acts can be amended,” Ms. Sitharaman said.
•“If the amendments are going to help us curb malpractices, with better regulation and empowerment of the regulator, then we would like to do that. Necessary legislative steps will be taken to prevent such things from happening again in future and empower the regulator even better, if there are shortcomings,” the minister stressed, adding that the government will work to bring in necessary changes in the forthcoming Winter session of Parliament.
•The committee may also look at the ₹1 lakh insurance cover for bank depositors that has not been revised since 1993, she said.
•In response to a query from The Hindu on whether the FRDI Bill, shelved in 2017, could also be revived, Ms. Sitharaman said there is some discussion on the matter in the Ministry.
•“On this particular bill, that was in consideration some time ago and was for some reasons put on the backburner... We are conscious that for financial institutions, something similar to the IBC doesn’t exist. So we want to see what is the best way to resolve this,” she explained.
•“I have spoken to the RBI Governor a few times on this already in the last two weeks. And on my return to Delhi today, I will once again talk to the Governor and convey the sense of urgency and distress that the PMC’s clients have expressed before me. And I shall request him to expedite the permissions for withdrawal of their money. I can only emphasise this has to be done fairly quickly in view of the distress,” she said.
📰 Parliamentary panel headed by BJP’s Sinha agrees to review economy first
•In a unanimous decision the Parliamentary Committee on Finance, which has BJP members in majority and is chaired by the ruling party’s former Minister Jayant Sinha, has agreed to deliberate on the state of economy as the first subject to be taken up at its next meeting on October 17.
•At the beginning of the meeting, a list of 13 subjects for review for this year was circulated. None of the subjects listed delved on the state of economy. According to sources, who spoke on the condition of anonymity, Trinamool Congress MP Saugata Roy was the first to raise a red flag. He is reported to have said that given the current economic downturn, the committee could ill afford to discuss any other issues. Mr. Roy was backed by Congress MP Manish Tewari, the sources said, adding that none of the BJP members on the committee objected to either Mr. Roy or Mr. Tewari’s comments.
•“There was unanimity that the state of the economy is very worrying and has to be the first subject to be looked at,” a committee member, who did not wish to be identified, told The Hindu. “Finance Ministry officials and independent experts will be called in to depose. Subsequently, a questionnaire will be circulated based on those briefings and then we will look at demands for grants,” the member added.
•Many members also demanded that there needs to be a comprehensive review of the Reserve Bank of India (RBI). This would cover its structure, functioning, its mandate and its role. The review would also bring into focus the controversial move of the central bank to transfer ₹1.76 lakh crore of its reserve funds to the union government. “We have, for now, scheduled the meeting three weeks later,” another opposition member of the panel said. “The RBI governor who has deposed in front of the committee in the past will be called,” this member added.
•The list of 13 subjects circulated at the beginning of the meeting by Mr. Sinha had steered clear of any controversial issues. The topics included “efficacy of overall taxation framework”, “financing the innovation ecosystem”, and “performance and regulation of capital markets”.
•The BJP-led government decided to break with Parliamentary tradition and kept the post of the chair of the Finance Committee with the ruling party. In the last Lok Sabha, the committee headed by Congress leader Veerapa Moily had given the government some embarrassing moments including in its review of demonetisation.
•At the beginning of the meeting, a list of 13 subjects for review for this year was circulated. None of the subjects listed delved on the state of economy. According to sources, who spoke on the condition of anonymity, Trinamool Congress MP Saugata Roy was the first to raise a red flag. He is reported to have said that given the current economic downturn, the committee could ill afford to discuss any other issues. Mr. Roy was backed by Congress MP Manish Tewari, the sources said, adding that none of the BJP members on the committee objected to either Mr. Roy or Mr. Tewari’s comments.
•“There was unanimity that the state of the economy is very worrying and has to be the first subject to be looked at,” a committee member, who did not wish to be identified, told The Hindu. “Finance Ministry officials and independent experts will be called in to depose. Subsequently, a questionnaire will be circulated based on those briefings and then we will look at demands for grants,” the member added.
•Many members also demanded that there needs to be a comprehensive review of the Reserve Bank of India (RBI). This would cover its structure, functioning, its mandate and its role. The review would also bring into focus the controversial move of the central bank to transfer ₹1.76 lakh crore of its reserve funds to the union government. “We have, for now, scheduled the meeting three weeks later,” another opposition member of the panel said. “The RBI governor who has deposed in front of the committee in the past will be called,” this member added.
•The list of 13 subjects circulated at the beginning of the meeting by Mr. Sinha had steered clear of any controversial issues. The topics included “efficacy of overall taxation framework”, “financing the innovation ecosystem”, and “performance and regulation of capital markets”.
•The BJP-led government decided to break with Parliamentary tradition and kept the post of the chair of the Finance Committee with the ruling party. In the last Lok Sabha, the committee headed by Congress leader Veerapa Moily had given the government some embarrassing moments including in its review of demonetisation.
📰 It is still an amber light for road safety
In spite of the ambitious provisions in the amended Motor Vehicles law, safe road behaviour is still miles away
•The Motor Vehicles (Amendment) Bill, 2019 passed by the Lok Sabha on July 23 and by the Rajya Sabha on July 31 has 63 clauses with the aim of reducing road traffic fatalities and injuries in India. The amended MVA has several new provisions: increased compensation for road accident victims, a Motor Vehicle Accident fund to provide compulsory insurance cover to all road users, defining a good Samaritan, recall of a defective motor vehicle, development of a National Transportation Policy, a National Road Safety Board, recognising taxi aggregators and increased penalties for several offences. All these are intended to reduce traffic crashes by at least 50% by 2030 (a target set by the United Nations). Out of the many amendments proposed in the Act, the increased penalties have been implemented in many States from September 1, 2019; at the same time, many States have decided to “dilute” the suggested increase in penalties.
Penalties as deterrents
•New penalties have been introduced for ‘faulty registration details, the concessionaire or the contractor who is responsible for a faulty road design or has not followed standards, and for guardians of juvenile offenders to be penalised. While there have to be penalties for offenders, there does not seem to be any correlation between stricter and higher penalties and a reduction in road traffic crashes in countries where road traffic deaths have reduced over the years’, examples being West Europe, the United States, Japan and Australia.
•The idea of higher fines as a deterrent to traffic crashes is based on the assumption that a driver is careless and that the fear of a higher penalty will encourage “careful” behaviour while on the road. This goes against current scientific understanding in reducing traffic crashes that promotes the design of a system which can forgive mistakes made by road users. Road safety experts suggest that road designs such as lane width, shoulder presence, number of lanes and median design influence driving behaviour such as operating speeds, lane changing, etc.
•Therefore, one could expect that ‘roads themselves play an important role in road safety, and improved geometry design and infrastructure could in turn help to improve road safety. Drivers can modify their behaviour based on what they see on the road ahead of them. Drivers are more likely to fall asleep or experience boredom on straight, monotonous, dual carriageway roads with little traffic’. Stricter penalties and intensive driver training cannot reduce the risk of driver fatigue. However, road engineers can change the road design to reduce boredom and monotony.
•Given the understanding from traffic safety theories of the last 50 years, safety interventions have to be based on three important principles: recognition of human frailty, acceptance of human error, and creation of a forgiving environment and appropriate crash energy management. Experience from the U.S. and European countries shows that road standards alone cannot ensure safe roads for all unless safety performance is evaluated.
•There is another factor in India. The density of small towns and villages along highways and the presence of tractors, three-wheelers, cars, buses, trucks and truck trailers on these highways present a very different traffic mix as compared to North America and western Europe where most highway standards have been developed. Pedestrian and motorcyclist involvement in fatal crashes on highways is greater than those involving other road users. In the past two decades, there have been major investments in expanding the national highway system in India. Yet, fatalities have continued to grow. Can the amended MVA address these concerns?
•Despite the efforts of the last few decades, the number of road traffic fatalities has continued to increase in India.
•A Ministry of Road Transport and Highways (MoRTH) report of 2018 has listed 1,51,430 fatalities. However, for the same year, the World Health Organisation estimates nearly 300,000 deaths. In fact a government of India study by the Registrar General and Census Commissioner, India (‘The Million Death’ study) also reports at least a 50% under-reporting of traffic fatalities and a higher share of pedestrian and motorised two wheelers as Road Traffic Collision victims when compared to the MoRTH report. The MVA amendments do not address the reliability of crash estimates, which form the basis of designing preventive strategies.
Road safety data
•It has been a tradition in ‘road safety to analyse road safety data in order to understand why crashes occur, which factors influence risks, and what determines crash severity, and then, based on this understanding, to arrive at reliable conclusions on how to prevent them most effectively and efficiently. This is called a data-driven approach. In this approach, priorities are derived by using crash data, background data, exposure data and data on safety performance indicators’. This is what researchers call as a scientific method and evidence-based interventions. India has still not created a culture of producing scientific evidence for designing preventive strategies. A report from New South Wales, Australia in 2007 evaluated the effectiveness of stricter penalties which said: “It is suggested that substantial increases in fines and licence disqualifications would have limited potential in deterring recidivist offenders. The present analysis failed to find any evidence for a significant relationship between [the] fine amount and the likelihood that an offender will return to court for a new driving offence. Nor was there any evidence from our analyses to suggest that longer license disqualification periods reduced the likelihood of an offender reappearing before the courts.” Increased fines alone, as suggested in the amended MVA, will not have the intended effect of reducing traffic crashes. Current traffic safety science suggests that if road users do not have their share of responsibility, for example due to a lack of knowledge or competence, or if personal injuries occur, or for other reasons that lead to risks, the system designers (road designers) must take further measures to prevent people from being killed or seriously injured.
•Therefore, if there is to be a reduction in India in the growing health burden due to traffic crashes, it requires establishing a system or institutional structure which enables the generation of new knowledge-new road standards thereby ensuring safe highways and urban roads. Thus, we have a long way to go in ensuring “safe road behaviour”.
📰 Going down together: On IMF’s slowdown warning
The world must heed the IMF warning that everyone loses in a trade war
•The International Monetary Fund has some words of advice for global leaders on how to resuscitate the faltering global economy. On Tuesday, its new managing director Kristalina Georgieva singled out India, along with Brazil, as witnessing a “pronounced” growth slowdown as global growth experiences a “synchronised” downswing. The IMF expects growth to slow down in nearly 90% of the world this year, in contrast to two years ago when nearly 75% of the world witnessed accelerated growth. In fact, global growth is expected to hit its lowest rate since the beginning of the current decade. In July, the IMF cut its FY 2020 growth forecast for the Indian economy by 30 basis points to 7%. It would not be a surprise if, given the further deterioration in growth since then, the IMF cuts its India forecast once again. Ms. Georgieva’s maiden speech had the usual elements where slowing growth was blamed on various factors including the trade war between the United States and China, which is expected to shave off 0.8% from global GDP by 2020. She made the right noises about how “everyone loses” in a trade war and how synchronised global policy action can help everyone.
•What the IMF chief did not get into during her speech, however, was the failure of even the prolonged period of extremely loose monetary policy to sustain global growth. The global economy has been helped by a whole decade of historically low interest rates, yet the recovery that ensued after the global financial crisis was the slowest in history and seems to be in trouble already. Even worse, this time around, as the global economy slows, interest rates are near or below zero in much of the developed world and corporations and governments are burdened with unsustainable amounts of debt. While she did warn about the risks posed by the sudden reversal of capital flows and high global debt, she still did not refrain from calling for more monetary and fiscal policy actions. From an Indian point of view, what is worth noting is the IMF chief’s emphasis on the need for structural reforms to boost growth, particularly in the emerging market economies. She cited the forthcoming “World Economic Outlook” report which estimates that the right structural reforms can double the speed at which emerging market economies such as India can catch up with the living standards of people in advanced countries by raising their productivity. The government at the centre, which came to power on the promise of delivering big-bang structural economic reforms, will do well to heed such advice.
