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DAILY NEWS ANALYSIS

10 Apr, 2021

35 Min Read

China – Pakistan relations

GS-II : International Relations India and its neighborhood

China – Pakistan relations

  • In a joint statement, the two countries said they would “firmly safeguard multilateralism and support the central role of the United Nations in international affairs.”
  • China and Pakistan have pledged to back each other’s “core and major interests” in the United Nations after holding bilateral consultations on UN affairs.
  • Both countries, which describe their relationship officially as one of “all-weather partners” and “iron brothers”, have in recent months stepped in to provide crucial support to the other on issues they see as sensitive, with Beijing raising the Kashmir issue at the UN Security Council and Islamabad backing China on Hong Kong and Xinjiang.
  • This comes amid heightened Chinese criticism of what it calls United States-led “selective multilateralism”, aimed particularly at the India, U.S., Australia and Japan Quadrilateral framework, as well as the “rules-based order” advocated by the Quad.

  • China and Pakistan also agreed to “strengthen their cooperation on the United Nations and other multilateral platforms and to support each other on each side’s core and major interests, work toward the political and peaceful resolution of regional and international hotspot issues, and jointly safeguard peace and stability of the world, especially in Asia.”
  • The statement said they would “continue to strengthen cooperation on counter-terrorism and peacekeeping in the UN framework, by addressing the issue of terrorism in all its forms and manifestations”. China has in the past stepped in on many instances to block the listing of Pakistani terrorists at the UNSC sanctions committee..
  • The statement added they both would “consolidate strategic coordination in the field of human rights, jointly opposing double standards and the politicisation of human rights issues, and working for the promotion and protection of all human rights in a cooperative manner.”
  • China in 2019 and 2020 raised the Kashmir issue at the UNSC on at least three occasions, calling for discussions in the wake of India’s dilution of Article 370, reorganisation of Jammu and Kashmir and revocation of special status.
  • Pakistan, meanwhile, has lobbied for China’s support amid increasing criticism from western countries over Xinjiang. In October, Pakistan also made a joint statement on behalf of 55 countries at the UN “opposing interference in China’s internal affairs under the pretext of Hong Kong.”

China-Pakistan Economic Corridor (CPEC)

  • CPEC connecting China’s Xinjiang with Pakistan’s Gwadar port is regarded as the flagship project of the multi-billion dollar Belt and Road Initiative (BRI) which is aimed at furthering China’s global influence with infrastructure projects funded by Chinese investments all over the world.
  • China has committed to invest over USD 60 billion in Pakistan as part of the CPEC under which it planned to build a number of special economic zones.
  • CPEC's potential impact on Pakistan has been compared to that of the Marshall Plan undertaken by the United States in post-war Europe. Pakistani officials predict that CPEC will result in the creation of upwards of 2.3 million jobs between 2015–2030, and add 2 to 2.5 percentage points to the country's annual economic growth.

India’s objections to CPEC

  • Sovereignty claims: India objects to the CPEC project as upgrade works to the Karakoram Highway are taking place in Gilgit Baltistan in Pakistan-occupied Kashmir; territory that India claims as its own.
  • Encirclement fears: India has alleged that China and Pakistan intended to develop the corridor not just for its economic benefits, but also is motivated by the "strategic intent of besieging India.”

Source: TH

EU to Support Southeast Asia against Climate Change

GS-II : International Relations South East Asia

EUs Support to Southeast Asia against Climate Change

The European Union (EU) has earmarked millions of euros for supporting climate friendly development in Southeast Asia after the EU became a “strategic partner” of the Association of the Southeast Asian Nations (ASEAN) bloc in December 2020.

Other Talking Points

Multilateral Assistance:

  • The EU is the largest provider of development assistance to the ASEAN region, and has committed millions of euros to various environmental programs.
  • This includes 5 million Euros to the ASEAN Smart Green Cities initiative and another 5 million Euros towards a new means of preventing deforestation, called the Forest Law Enforcement, Governance and Trade in ASEAN.
  • Along with multilateral assistance, the EU also works with individual ASEAN member states on eco-friendly policies like Thailand’s Bio-Circular-Green Economic Model and Singapore’s Green Plan 2030.

Problems Faced by the EU in Southeast Asia:

  • Region’s environmental policy as Southeast Asia is going in the wrong direction in many areas on climate change.
  • Five ASEAN states were among the fifteen countries most affected by climate change between 1999–2018, according to the Climate Risk Index 2020.
  • Southeast Asia’s energy demand is projected to grow 60% by 2040.
  • Coal-fired energy will overtake natural gas as the main power source in the ASEAN region by 2030. And by 2040 it could account for almost 50% of the region’s projected CO2 emissions.
  • In 2019, the region consumed around 332 million tons of coal, nearly double the consumption from a decade earlier, according to the International Energy Agency (IEA).
  • This will contribute to a two-thirds rise in CO2 emissions to almost 2.4 gigatons, according to the Southeast Asia Energy Outlook 2019.

Risks for the EU in Southeast Asia:

  • If the EU takes a strong forceful stance on coal consumption in the region, it could spark anger from the main exporters of the commodity, China, India and Australia.The EU's climate change policy in the region has already been met with resistance.
  • Indonesia last year initiated proceedings at the World Trade Organization against the EU’s phased ban on palm-oil imports.
  • The EU contends the ban is to protect the environment, but Indonesia, the world’s largest palm oil producer, says it is mere protectionism.
  • Malaysia, the world’s second-largest palm oil producer, supports Indonesia in its battle against the EU.
  • The other problem for the EU is that it risks accusations of hypocrisy if it takes too forceful a stance on coal-fired energy production in Southeast Asia.
  • Poland and the Czech Republic of the EU remain dependent on coal-fired energy production.
  • Southeast Asia and Europe each accounted for around 11% of the world’s thermal coal imports in 2019.

India’s Coordination with Asean on Climate Change:

  • In 2012 Both adopted a 'New Delhi Declaration on ASEAN-India Cooperation in Renewable Energy'.
  • ASEAN-India Green Fund was established in 2007 with USD 5 million for funding pilot projects to promote adaptation and mitigation technologies in the field of climate change.
  • ASEAN and India are collaborating on several projection Climate Change and biodiversity through partnership with IISc, Bangalore.

Source: TH

Chilika Lake was a part of the Bay of Bengal- Study shows

GS-I : Physical Geography Changes in critical geographical features

Chilika Lake was a part of the Bay of Bengal: Study

According to a study by the National Institute of Oceanography(NIO), Chilika lake was once a part of the Bay of Bengal.

Evidences-

  • Archeological Studies: The marine archaeological studies clearly show that the Chilika once was a safe harbour for cargo ships going to Southeast Asia and other parts of the world.
  • Palur Port: Greek geographer Claudius Ptolemy(150 CE) described Palur as an important port of Kalinga and referred to it as ‘Paloura’. This port was situated close to Chilika lake from where ships used to sail directly to Southeast Asia.
  • Stone anchors and hero stones (memorial stones commemorating ancient heroes) from Manikapatna, Palur and the adjoining onshore regions of the Chilika lake also suggest the same.
  • Chinese pilgrim Xuanzang (7th century CE) recorded ‘Che-li-ta-lo-Ching’ as a flourishing port. This port was located at Chhatargarh on the banks of the Chilika.
  • The Brahmanda Purana (10th century CE approximately) says the Chilika was an important centre of trade and commerce with ships sailing to Java, Malaya and Ceylon.

Separation from the Bay of Bengal

  • The process of the formation of the Chilika began around 20,000 years ago.
  • India’s peninsular river Mahanadi carried a heavy load of silt and dumped part of it at its delta. As the sediment-laden river met the Bay of Bengal, sandbars were formed near its mouth.
  • It created a backflow of the seawater into the sluggish fresh water at the estuary. It resulted in the huge brackish water Chilika Lake.

About Chilika Lake

  • Chilika Lake is a brackish water lagoon, spread over the Puri, Khurda and Ganjam districts of Odisha state on the east coast of India, at the mouth of the Daya River, flowing into the Bay of Bengal.
  • It is the largest coastal lagoon in India and the second largest coastal lagoon in the world.
  • It is the largest wintering ground for migratory birds on the Indian sub-continent. The lake is home to a number of threatened species of plants and animals. Chilika Lake is an important habitat and breeding ground for both resident and migratory and aquatic birds, most notably flamingos.
  • The Nalaban Island within the lagoon is classified as a Bird Sanctuary under the wildlife protection act.
  • In 1981, Chilika Lake was designated the first Indian wetland of international importance under the Ramsar Convention.
  • The lagoon is also home to 14 types of raptors. Around 152 rare and endangered Irrawaddy dolphins have also been reported. Plus, the lagoon supports about 37 species of reptiles and amphibians.
  • Microalgae, marine seaweeds, sea grasses, fish and crab also flourish in the brackish water of the Chilika Lagoon.

Source: TH

Global Minimum Corporate Income Tax

GS-II : International Relations International issues

Global Minimum Corporate Income Tax

The US Treasury Secretary has urged the world’s 20 advanced nations to move in the direction of adopting a global minimum corporate income tax.

What is the Global Minimum Corporate Tax Rate?

  • It is a type of corporate tax.
  • Under this, If a company moves some of its operations to another country having low-tax jurisdiction, then the company have to pay the difference between that minimum rate and whatever the firm paid on its overseas earnings.
  • For example, assume Country A has a corporate tax rate of 20 percent and Country B has a corporate tax rate of 11 percent. If the global minimum tax rate is 15 percent. Consider a situation, where Company X is headquartered in Country A, but it reports income in Country B. Then Country A will increase the taxes paid by Company X. This is equal to the percentage-point difference between Country B’s rate and the global minimum rate(15 percent).
  • In short, Company X will have to pay an additional 4 percent of the tax to Country A

Why this appeal by US Treasury?

  • The goal of a global Corporate minimum tax is to end a 30-year race to the corporate tax rates.
  • Over the past decades, a number of countries have enacted tax policies specifically aimed at attracting multinational business. These countries attract investment by lowering corporate tax rates. This, in turn, has pushed other countries to lower their rates as well to remain competitive.
  • Responding to the incentives created by these laws, many multinational corporations have moved their assets to low tax countries. Particularly their ownership of the intellectual property to countries offering them low or even no-tax treatment for the assets they produce.
  • This has impacted countries around the world. As they lose out on an estimated $100 billion per year in tax revenue. India’s annual tax loss due to corporate tax abuse is estimated at over $10 billion.

US proposal

  • The US has proposed a 21% Global minimum corporate tax rate.
  • Further, the US also suggest cancelling exemptions on income from countries that do not legislate a minimum tax.
  • This is aimed to discourage the shifting of multinational operations and profits overseas.

India’s Stand on Global Minimum Corporate Tax Rate:

  • Indian Government has said that it is open to participate and engage in discussions about the Global Minimum corporate tax structure.
  • It said that the government will look into the pros and cons of the new proposal and take a view thereafter.

Source: TH

Meeting of Education Ministers of E9 Countries

GS-II : International Relations International issues

Meeting of Education Ministers of E9 Countries

Recently, a consultation meeting of Education Ministers of E9 countries was held on the theme ‘E9 initiative: Scaling up digital learning to accelerate progress towards SDG4’.

Major Highlights

  • The United Nations (UN) is spearheading a global initiative on digital learning and skills for all, targeting marginalized children and youth and aiming to close the digital divide and drive rapid change in education systems.
  • This initiative focuses on three of the five priorities of the 2020 Global Education Meeting (GEM) Declaration: supporting teachers; investing in skills; and narrowing the digital divide.
  • E9 countries offer a starting gate to accelerate progress on digital learning and skills in the immediate term and ultimately on the SDG4 agenda in the longer term.

2020 Global Education Meeting Declaration

  • As part of the Decade of Action to accelerate progress on SDG4 and in response to Covid-19, the 2020 GEM Declaration identified five priorities for urgent action:
    1. Education financing;
    2. Safe school reopening;
    3. Supporting teachers as frontline workers;
    4. Investment in skills; and
    5. Narrowing the digital divide.
  • The Covid-19 crisis revealed the weakness and unpreparedness of the current education systems worldwide, prompting the deployment of digital learning during mass school closures across almost all countries.

E9 Countries

  • E9 Partnership was first established in 1993, formed to achieve the goals of UNESCO's Education For All (EFA).
  • A group of E9 countries (Bangladesh, Brazil, China, Egypt, India, Indonesia, Mexico, Nigeria, and Pakistan) aims at strengthening political will and collective effort to ensure quality education and lifelong learning opportunities for all.
  • E9 Partnership is working for the achievement of SDG4 – Education 2030.

Education For All (EFA)

  • An international initiative, first launched at the World Conference on Education for All by UNESCO, UNDP, UNFPA, UNICEF and the World Bank in Thailand in 1990.
  • Participants endorsed an 'expanded vision of learning' and pledged to universalize primary education and massively reduce illiteracy by the end of the decade.
  • Ten years later, with many countries far from having reached this goal, a broad coalition of national governments, civil society groups, and development agencies met again in Dakar, Senegal, and affirmed the commitment to achieving EFA by the year 2015.
  • They identified six key education goals which aim to meet the learning needs of all children, youth and adults by 2015 (i.e. the Dakar Framework for Action).

Source: PIB

Navigating the Rupee depreciation

GS-III : Economic Issues Rupee Depreciating

Navigating the Rupee depreciation

The rupee has been falling and recently, the rupee fell sharply by 105 paise. It is considered as one of the biggest single-session falls in 20 months. Currently, the rupee stands at 74.47 against the US dollar.

Reasons for Rupee Depreciation

A combination of factors are responsible for rupee depreciation, such as

  • Concerns over Covid-19 has created uncertainty in the market. This affected the FDI(Foreign Direct Investment) and FII(Foreign Institutional Investment). So the rupee weakens further.
  • RBI’s Government Securities Acquisition Programme (G-SAP) that seeks to buy bonds worth Rs 1 lakh crore might be one of the reasons. It is a quantitative easing policy followed by RBI. The policy supported the government’s increased borrowing Programme through the infusion of liquidity.
  • The strengthening of the dollar against the euro also contributed to rupee depreciation.
  • RBI’s status-quo on policy rates is not helping to increase demand in the local economy. This will further impact the rupee.
  • The value of the rupee will also be impacted by the high bond yields in the US and the inflow of dollars into the US.

Impacts of Rupee Depreciation

It has both positive and negative impacts. For instance,

  • Depreciation has a positive impact for an NRI. As they are sending money back home they will get more rupees per dollar.
  • Similarly, Depreciation will have negative impacts on fuel costs and education cost in abroad. For example,
    1. One, A depreciating rupee increases the cost of crude import. A rise in cost of crude raises fuel prices and inflation. Crude import accounts for almost 20% of India’s imports.
    2. Two, higher education in the US might cost an annual fee of US$ 50,000. A 5% depreciation in the rupee (For example, from 72.5 to 76.125) will raise the cost for one year from Rs 36.26 lakh to Rs 38.06 lakh (Net loss Rs 1.8 lakh)

Recovering from the Rupee Depreciation

There are multiple options to cover the currency volatility risk. They are,

  • Investing in international funds that invest in global markets through fund of funds. While the Indian investors invest in rupees, in the fund of funds the money gets invested in dollars at the current exchange rate. In case of rupee depreciation, this fund will fully protect against the currency depreciation risk.
  • In this case, if a person planning for a quick investment (4-5 months) in foreign currency, there are two options to eliminate currency risk.
    1. Creating a deposit account in the US and transferring the fund abroad.
    2. Going for a currency hedge in the exchanges by investing in future contracts that will mature in 4-5 months.
  • For example,
    1. A future contract worth $50,000, maturing in July at the rate of 74.5, will pay Rs 37.25 lakh.
    2. If in December, the rupee depreciates to $77, Then the contract will yield a profit of Rs 1.25 lakh.

Source: IE

Online Dispute Resolution in India

GS-II : Governance Judiciary

Online Dispute Resolution in India

NITI Aayog recently released a handbook on Online Dispute Resolution mechanism. ODR has the potential to decentralize, diversify, democratize, and disentangle the justice delivery mechanism in India’s courts.

Present Scenario in India’s Courts & Associated Issues

  • The pendency of over 40 million cases in our judicial system remains a focal point for reform and reduction.
  • This pendency makes a strong case for online dispute resolution (ODR).
  • Nearly a third of these cases have been pending for 3 to 30 years.
  • They are pending due to resource-dwindling litigation, case adjudication and difficulty in consensus resolution.
  • There are barriers to conflict resolution for the common man, because of,
    1. Lack of access to courts and representation, or
    2. Entry-level barriers such as linguistic or technology challenges.
  • All of this is routinely brought up by those who are impacted by it.
  • With the pandemic disrupting basic services delivery, the discussion is only going to expand in scope and volume.

Online Dispute Resolution During COVID

  • Around 40 million cases are pending cases at the Supreme Court, High Courts and the district courts.
  • This seems more than significant, except that the courts are performing in an exemplary fashion to dispose of cases.
  • Around 25 lakh cases were heard virtually by courts across the country in the wake of the Covid-19 pandemic.
  • However, the key statistic is that the number of cases filed surpassed the disposal capacity.
  • The pandemic has, of course, accelerated this trend.
  • Given the escalating pendency, it is important that alternative methods for avoiding, containing and resolving disputes are adopted.
  • The access to justice isn’t just about having the means to resolve disputes but also ensuring that the means are efficacious and expeditious.
  • Keeping this context in mind, the growing focus on ODR in India is not without reason.

Significance of Online Dispute Resolution and Associated Benefits

  • Cost-Effective – ODR has the potential to reduce legal costs. First, by way of reduced time for resolution and second, by doing away with the need for legal advice in the select category of cases
  • Convenient and quick dispute resolution – ODR eliminates the need for travel and synchronisation of schedules
  • Increased access to justice – As part of India’s commitment and leadership to attain Sustainable Development Goals adopted by the UN General Assembly in 2015, India is committed to ensuring equal access to justice for all. Since ODR tools such as online negotiation and mediation are premised on mutually arriving at an agreement, they make the dispute resolution process less adversarial and complicated for the parties
  • Removes unconscious bias – ODR processes lessen the unconscious bias of the neutral while resolving disputes
  • Exploring the massive potential of Online Dispute Resolution (ODR) can enhance the Ease of Doing Business in India
  • ODR aligns with the current socio-economic setting.
  • It has a global precedent of being extremely successful, and above all, has principles of natural justice in its essence.
  • The foundational pillars of any successful ODR regime are trust, convenience and expertise.
  • India now has a long legacy of citizens trusting technology, whether in e-payments or in education and healthcare.
  • To augment dispute resolution mechanisms, Lok Adalats and Gram Nyalayas have been created as alternative options for affordable justice.
  • ODR has significantly large-scale potential for innovation.

Online Dispute Resolution in India

  • The origins of ODR can be traced to the evolution of the Internet in the 1990s, which increased online transactions, and thereby disputes related to such transactions.
  • The United Nations Commission on International Trade Law (UNCITRAL) adopted the UNCITRAL Model Law on International Commercial Arbitration in 1985 and the UNCITRAL Conciliation Rules in 1980. In the context of international commercial relations, this Model Law has been recommended by the United Nations General Assembly (UNGA).
  • India incorporated these uniform principles of ADR in the Arbitration and Conciliation Act, 1996.

Online Dispute Resolution in India Post COVID-19

  • During the ongoing Covid-19 pandemic, the target is to look into Covid-related disputes (most notably in lending, credit, property, commerce and retail) through ODR, which is an important part of the economic revival.
  • It will set into motion the use of technology towards efficient and affordable access to justice, especially in post-pandemic times.

Recent Initiatives

2020

  • The government of India launched the Vivaad se Vishwas Scheme for efficient resolution of tax disputes through ODR
  • Vidhi Centre for Legal Policy published a report on mainstreaming ODR in India
  • NITI Aayog established a committee under the Chairmanship of Justice (Retd.) A.K.Sikri to broad-base the use of ODR in India
  • Chhatisgarh conducted the first virtual Lok Adalat and provided conciliation services
  • Department related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice, in their report called for the introduction of technology in the arbitration and conciliation process

Challenges in ensuring Online Dispute Resolution

  • Digital literacy – ODR requires a basic level of digital literacy as a prerequisite. In India, digital literacy often varies across age, ethnicity and geography. This digital divide needs to be addressed to ensure that ODR is adopted by society at large and not remain limited to urban areas
  • Digital infrastructure – A broad base adoption of ODR will require essential technology infrastructure across the country
  • Lack of trust in ODR services – A lot of people in the country do not trust the emerging technology which is a major challenge for the people of India
  • Privacy and confidentiality concerns – Greater integration of technology and reduced face to face interactions create new challenges for privacy and confidentiality, especially in dispute resolution

Way Forward

  • ODR has the potential to raise equity, fairness, access in the dispute resolution ecosystem in India.
  • The convenience brought by ODR has been exhibited by e-Lok Adalats conducted in several states, where disputes were resolved simply over WhatsApp audio/video calls.
  • Supply-side capabilities could also be enhanced through a relatively large and competent services pool for adjudication and representation.
  • ODR has the potential to be an effective alternative that utilises technology to bridge barriers and access in resolution.
  • Through facilitating low cost, technology-augmented, linguistically- friendly and incentivised dispute avoidance, containment and resolution, ODR could enhance justice delivery to all.

Source: TH/PIB/Others

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