UPSC 2017: Comprehensive News Analysis - December 28

A. GS1 Related

B. GS2 Related

• China could include Afghanistan as a new member in CPEC.
• India opposes CPEC as it infringes on its sovereignty on account of its passage through Pakistan occupied Kashmir (PoK).
• Afghanistan is the common neighbor of China and Pakistan, and they have a strong desire for developing economy and improving people’s livelihood.
• China’s mediation to normalize ties between Pakistan and Afghanistan includes interactions with Afghan and Pakistani clerics belonging to the two Ulema Councils, in order to prevent the spread of religious extremism.

 US view on Indian Ocean

• In its National Security Strategy (NSS), the U.S. has called China a challenger and rival while welcoming India’s emergence as a leading global power and stronger strategic and defense partner, and declared that it seeks to increase ‘Quadrilateral’ cooperation with Japan, Australia, and India.
• The NSS also states that the U.S. would support India’s growing relationships throughout the region. While the broader emphasis on improving the partnership is welcome, policy-makers in New Delhi should be cautious on two counts.
• India should be wary of any attempts at being pitted as a front in the U.S.’s efforts to check China’s rise. India’s primary area of concern is the Indian Ocean Region (IOR). Securing its position here is vital before venturing elsewhere.
• India should hedge against the rapid expansion of Chinese presence in the IOR. For India, geographically the area of concern, and so the area of focus, should remain the IOR, stretching from the Gulf of Aden to the Strait of Malacca.
• While reiterating its commitment to upholding the established laws of the global commons, New Delhi should not go adrift in the larger Indo-Pacific.
• There are two ways of doing this — beefing up Indian capacity and securing interests and then expanding partnerships to fill voids. The tags of net security provider and leading global power would mean nothing if New Delhi cannot undertake capacity building in its own backyard, be it South Asia or the IOR.
• While the offer of help from various countries to help expand India’s network in the region looks tempting, it actually reflects India’s failure to establish its primacy in the region.
• Ideally, it should have been the other way round: India guiding outside powers in its backyard. In this context, it is imperative for policy-makers in New Delhi to conduct a reality check on relations with our neighbors.
• Over the last couple of months, there have been hectic parleys with various nations in various formats — quadrilateral, trilateral, etc. But it cannot be at the expense of the neighbours.
• While being part of various groupings is important, it is imperative that they are in line with our interests. That is where more clarity is required on the recently resurrected Quad. Except India, for the other three the primary focus is the Pacific Ocean, especially the South China Sea.

Key initiatives

• At the same time, some recent initiatives illustrate the way forward for India. Last month, India and Singapore concluded an overarching bilateral agreement for naval cooperation.
• Besides being only India’s second bilateral logistics arrangement, it gives it access to the Changi naval base at the mouth of the Strait of Malacca.
• With Singapore’s assistance, India is also working out modalities for joint multilateral exercises with the Association of Southeast Asian Nations (ASEAN). India is also negotiating similar logistics agreements with several other countries.
• These developments show the way forward for India to engage with like-minded countries in the region without getting entangled in groupings which are seen as being targeted or military in nature.

Goa Maritime Conclave

• Another initiative which fits the bill is the Goa Maritime Conclave hosted by the Indian navy last month where Navy Chiefs and maritime heads of 10 Indian Ocean littoral states brainstormed on ways to improve cooperation in the region.
• It is an India-led initiative where the navy has offered to share information of maritime movement in real-time.
• This is the template for India to take forward to build its primacy in the IOR before venturing into adjacent waters while also making sure that its interests are taken heed of while getting into various groupings and not end up doing someone else’s bidding.

C. GS3 Related

• The 2018 edition of the historic Indian Science Congress will be held at Manipur University, Imphal, in March.
• The 106-year-old ISC is the largest congregation of scientists in India.

• Centre plans to raise additional Rs. 50,000 cr. via bond sales in the fourth quarter, to trim collections via T-bills to Rs. 25,006 cr.
• The Centre has decided to borrow an additional Rs. 50,000 crore in the last three months of this financial year, a move that some economists said could result in the government missing its budgeted fiscal deficit target of 3.2% of GDP.
• The Finance Ministry said that the additional borrowing, which would be done through government bonds, would, however, be offset by trimming T-Bills (treasury bills) from Rs. 86,203 crore to Rs. 25,006 crore.
• In the Union Budget, the government had factored gross and net market borrowing at Rs. 5,80,000 crore and Rs. 4,23,226 crore respectively, with Rs. 3,48,226 crore proposed to be raised (net) from bonds and Rs. 2,002 crore from T-bills.
• Fiscal deficit for the current financial year could be 3.5%. Given the uncertainties on the external front, GST collection, revenue collection etc, 3.5% fiscal deficit looks imminent.
• Any slippage from the fiscal deficit target this year, could have a knock-on effect on the overall fiscal consolidation efforts.
• Most importantly, this should also alter the fiscal consolidation path. The Finance Ministry said borrowings had so far been in line, suggesting the government doesn’t apprehend significant fiscal slippage.

• India’s efforts to increase exports could face several external and domestic challenges in the coming year.
• (In 2018), global trade may not perform as strongly as in 2017. Asia, the region most open to trade, cannot count on the same degree of external support that it received in 2017.
• Among the many factors, the bank listed multiple political event risks — including in the Middle East and Europe (‘possible polls in Germany and the Brexit negotiation process’) — which could knock the markets, and global growth, off track in 2018.
• Earlier this month, the Centre announced incentives to the tune of Rs. 8,450 crore in its mid-term review of Foreign Trade Policy to help increase exports of goods and services, particularly from labour-intensive segments and small firms as well as to boost job creation and value-addition in the country.
• The announcement came in the backdrop of India’s shipments contracting in October — the first after 14 successive months of positive growth — in the impact of the Goods and Services Tax (GST).
• The Centre also informed Parliament recently that it has been actively engaging in regional and bilateral trade negotiations with a view to diversifying and expanding the markets for its exports as well as ensuring access to raw materials, intermediates and capital goods for stimulating value added domestic manufacturing.
• Citing the current protectionist environment, it said building a ‘brand India’ would be a key measure to push India’s export of goods and services.

Working capital issues

• Growth in labor-intensive exports (leather products, ready-made garments) remains weak, possibly because of working capital issues due to delayed GST refunds.
• While trade data reflected a solid export rebound, with imports remaining elevated, the current account deficit (CAD) could widen to 2-2.5% of GDP in Q4 from 1.2% in Q3. The CAD may widen to 2% of GDP in 2018 from 1.5% in 2017, mainly due to higher oil prices, it observed.
• India’s goods exports for 2017-18 is likely to be below $300 billion,much lower than the $314.4 billion in 2013-14 and $310.3 billion in 2014-15. In 2016-17, the country’s goods exports were $275.8 billion.
• Measures, including lower interest rates, incentives for small firms to take part in global exhibitions as well as reducing their tax burden would boost exports.
• These steps, along with expediting GST refunds and improvement in logistics, could further boost exports.

D. GS4 Related

E. Prelims Fact

F. Practice Questions for UPSC Prelims Exam

G. UPSC Mains Practice Questions