Make the neighbourhood first again (The Hindu)

Against banking frauds (Live Mint)

India and Vietnam (PIB, The Economic times)

 

Make the neighbourhood first again

(The Hindu)

Synoptic line: It throws light on the issue of importance of South Asian neighbours.

(GS paper II)

Overview

 

  • Neighbourhood policy is an important aspect of a country’s foreign policy. Though India has close historical, religious, economic, ethnic and linguistic similarities with almost all South Asian countries, but New Delhi’s connect with its South Asian neighbours is weaker than it has been for a very long time.

 

South Asia

 

 

  • South Asia is a term used to represent the southern region of the Asian continent, which comprises the sub-Himalayan SAARC countries and, for some authorities, adjoining countries to the west and east.
  • Topographically, it is dominated by the Indian Plate, which rises above sea level as Nepal and northern parts of India situated south of the Himalayas and the Hindu Kush. South Asia is bounded on the south by the Indian Ocean and on land by West Asia, Central Asia, East Asia, and Southeast Asia.
  • The current territories of Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, India, Pakistan, and Sri Lanka form South Asia. The South Asian Association for Regional Cooperation (SAARC) is an economic cooperation organisation in the region which was established in 1985 and includes all eight nations comprising South Asia.

 

 

Issues

 

  • The first problem is that the other governments in the SAARC region are either not on ideal terms with New Delhi, or facing political headwinds. For example- Maldives’s President is challenging Indian government with his crackdown on the opposition, invitations to China, or even breaking with New Delhi’s effort to isolate Pakistan at SAARC. Also no matter which party is in power in Pakistan, it is difficult to see Delhi pushing for official dialogue, especially with the military on the ascendant once again.

 

  •  In other regions of the neighbourhood, where relations have been comparatively better for the past few years, upcoming elections could turn the tables on India. For example- in Sri Lanka, the recent local election results that have gone the way of the Mahinda Rajapaksa-backed party could be a portent of his future re-election. In Afghanistan, Bhutan and Bangladesh, elections this year and the next could pose challenges for India.

 

China factor

 

  • The other important problem is the impact of China’s unprecedented forays into each of these countries. For example- China opened up an array of alternative trade and connectivity options after the 2015 India-Nepal border block-ad, from the highway to Lhasa, cross-border railway lines to the development of dry ports. In Sri Lanka, Bangladesh, the Maldives and Pakistan, China holds strategic real estate, which could also be fortified militarily in the future. At present, it means China has a stake in the internal politics of those countries.

 

  • Also China is growing its presence in infrastructure and connectivity projects, its new interest in political mediation must be watched more carefully as a result. When China stepped in to negotiate a Rohingya refugee return agreement between Myanmar and Bangladesh, or host a meeting of Afghanistan and Pakistan’s foreign ministers to help calm tensions and bring both on board with the Belt and Road Initiative (BRI) connection between them, or offer to mediate between the Maldivian government and the opposition, it wasn’t just breaking with its past policy of ignoring political dynamics in countries it invests in.

 

  • Beijing is now taking on a role New Delhi should have been in a better position to play, and by refusing to play it Delhi is being shown up as unfeeling, partisan or, worse, ineffective in the bargain.

 

Hard power tactics

 

 

  • The Indian government’s decision to use hard power tactics in the neighbourhood also has a boomerang effect. Theoretically, given its central location in South Asia and being the largest geographically and economically, India should be expected to hold greater sway over each of its neighbours. However, the “surgical strikes” on Pakistan of 2016 have been followed by a greater number of ceasefire violations and cross-border infiltration on the Line of Control.

 

 

 

  • The 2015 Nepal blockade and a subsequent cut in Indian aid channelled through the government did not force the Nepali government to amend its constitution as intended, and the subsequent merger of Mr. Oli’s Communist Party of Nepal (UML) with Prachanda’s CPN(Maoist) is seen as a reversal of India’s influence there.

 

 

 

  • The Indian prime minister had abruptly cancelled his visit to Male in 2015 and the Maldives cancelled its participation in the Indian Navy’s “Milan” exercises. Even in Bangladesh, the Indian Army chief’s tough talking about immigration has drawn ire there, with Bangladesh’s Home Minister describing the remarks as untrue, unfounded and not helpful.

 

 

Way ahead

 

  • India’s most potent tool is its soft power, which can be seen through its successes in Bhutan and Afghanistan; for example, have much more to do with its development assistance than its defence assistance. It’s heartening, therefore, that after sharp drops in 2016 (of 36%) and 2017 (of 19%) year on year, the budget allocations for South Asia have seen an increase (of 6%) in 2018.

 

  • Also instead of opposing every project by China in the region, the government must attempt a three-pronged approach. Firstly, where possible, India should collaborate with China in the manner it has over the Bangladesh-China-India-Myanmar (BCIM) Economic corridor. Secondly, when it feels a project is a threat to its interests, India should make a counter-offer to the project, if necessary in collaboration with its Quadrilateral partners, Japan, the U.S. and Australia. And lastly, India should coexist with projects that do not necessitate intervention, while formulating a set of South Asian principles for sustainable development assistance that can be used across the region.

 

  • As India is repositioning itself on the global stage, there is need to outgrow its relationship with neighbourhood both economically and geo-strategically.

 

Learning from ASEAN

 

  • There is need to revive the SAARC process, it can learn from the success of ASEAN. The leaders of SAARC countries should meet more often informally; interference should be less in the internal workings of each other’s governments, and that there be more interaction at every level of government. As Indonesia, the biggest economy in the ASEAN, allowed smaller countries such as Singapore to take the lead, India too must take a back seat in decision-making, enabling others to build a more harmonious SAARC process.

 

Question- As the global scenario changing, discuss the importance of South Asian countries for India. Also explain how SAARC can learn from ASEAN?

 

Against banking frauds

(Live Mint)

Synoptic line: It throws light on the issue of need to reform the Indian banking system.

(GS paper III)

Overview

  • With recent case of bank frauds Indian banks’ vulnerabilities are being exposed, especially in the public sector. With the recent issuance of a new framework for the resolution of stressed assets by the Reserve Bank of India (RBI), the government is working on reducing the possibility of bank frauds. The cleansing of the Indian banking system now seems to have reached an advanced stage.

 

Recent cases

 

 

  • The Nirav Modi case has garnered public attention because of its sheer scale, but it is not the only instance which exposes banks vulnerabilities. Several other cases, such as those involving the promoter of Rotomac Pens and top executives of Simbhaoli Sugars, have also surfaced in recent weeks. RBI data, obtained by Reuters through the right to information, shows that public sector banks (PSBs) reported 8,670 cases of “loan fraud”.

 

 

Government’s steps

 

  • The government had asked PSBs to inspect all bad loan accounts above Rs50 crore. It has also given them 15 days to address technological and operational risks. It will be worth watching how banks that have neglected such risks so far put their house in order.

 

  • It has also directed PSBs to rationalize overseas operations and proposed a new law against fugitive economic offenders. This will give the government the power to confiscate the assets of a fugitive offender, both in India and abroad. It has also decided to set up a regulatory body for auditors. The RBI too has formed an expert committee to look into rising instances of fraud. 

 

Way forward

 

  • Firstly, there is need to avoid over-regulating or overburdening of the banking system. Inspecting all bad loan accounts in excess of Rs50 crore, for instance, could result in excessive fear among bankers, as at some point investigative agencies will also get involved. This could affect the flow of credit in the economy, the last thing India needs at this stage.

 

  • Action by investigative agencies in some of the cases related to non-performing accounts in recent years is said to have affected bank lending. This is also one of the reasons why bankers in the public sector are hesitant to take a haircut in non-performing accounts and have been forced by the regulator to go to the National Company Law Tribunal in a number of cases. Therefore, it is important that bankers are protected adequately and are able to take commercial decisions.

 

  • Secondly, the Indian experience has shown, laws by themselves don’t act as a deterrent. The government will need to build investigatory and judicial capabilities so that cases are decided in a reasonable time frame. Only time-bound closure of cases will deter fraudsters. India will also need to build institutional capabilities to be able to negotiate with foreign authorities in order to bring back fugitives and prosecute them under Indian laws.

 

  • Thirdly, PSBs need urgent governance reforms, the Punjab National Bank fraud can be seen as the consequence of a complete collapse of governance. Governance in PSBs needs an overhaul and government interference in appointments should be minimized.

 

  • P.J. Nayak committee (2014) rightly noted: “Government officers and regulators may not possess the skills to appoint the top management of commercial banks. Banking is much specialised activity, and top management needs to combine strategic foresight with a good commercial knowledge of sectors to lend to, prudent risk management and human resource skills.”

 

  • The outcome of establishing the Banks Board Bureau has also not been as desired. Therefore, the government needs to revisit the way appointments are made in PSBs, starting with the board. Only a professional board will be in a position to take the right decisions. It is important for banks to continuously improve operational efficiency by making the right investments in technology and human resources. This is a good time to initiate reforms as the government is in the process of recapitalizing PSBs.

 

Question The shock of frauds had affected the flow and cost of credit in the banking system, in the recent context suggest measures to reduce the chances of future frauds.

 

India and Vietnam

(PIB, The Economic times)

Synoptic line: It throws light on the Action Plan of the Comprehensive Strategic Partnership between India and Vietnam.

(GS paper II)

Overview

 

  • The President of the Socialist Republic of Vietnam had recently paid a State Visit to the Republic of India. The delegation level talks between Vietnam and India were held in a warm, cordial and friendly atmosphere, reflecting the significant deepening of bilateral relations and enhanced multidimensional engagement since the successful visit of Prime Minister to Vietnam in 2016 and elevation of the relationship to a Comprehensive Strategic Partnership between the two countries.

 

  • The visit witnessed the exchange of agreements on atomic energy, trade, agriculture and fishery, among others.

 

The recent visit

 

  • The foundation of this relationship was laid by the Fathers of the Nations, Mahatma Gandhi and President Ho Chi Minh and nurtured by successive generations of leaders and people of the two countries. Both sides expressed their satisfaction at the excellent state of Comprehensive Strategic Partnership between the two countries, and commended various commemorative activities held in both countries in the Year of Friendship 2017 to celebrate the forty-fifth anniversary of diplomatic relations and tenth anniversary of the Strategic Partnership.

 

  • President of Vietnam lauded the organising of the “Vietnam Days in India” on this occasion which concluded successfully the Year of Friendship. Based on the current excellent relations, the Leaders agreed to maintain regular exchange of visits at all levels of the political parties, Governments, legislative institutions and provinces and between the people of both countries.

 

 

  • They also agreed to hold the next Joint Committee Meeting led by the foreign ministers of the two countries in 2018 in order to review the areas of cooperation and the implementation of the Action Plan of the Comprehensive Strategic Partnership for the period of 2017-2020.

 

 

DEFENCE AND SECURITY-

 

  • The defence and security cooperation is an important and effective pillar of the Comprehensive Strategic Partnership. Both leaders welcomed ongoing exchange of senior level delegations, meetings of consultation mechanisms, stronger cooperation between their armed forces and enhanced cooperation in areas of cyber security, combating terrorism and violent extremism in all their forms and manifestations, transnational crimes, human and drug trafficking, maritime security, climate change and food security.

 

  • The two sides reaffirmed their commitment to an open, free, secure, stable, peaceful and accessible cyber space under the auspices of the United Nations and called for greater cooperation and effective implementation of the agreements signed between the two sides on cyber security.

 

  • The two sides further agreed that they would cooperate in building a strong consensus for early adoption of the Comprehensive Convention on International Terrorism (CCIT).

 

ECONOMIC RELATIONS

 

  • Both sides agreed that enhancing strong trade and economic engagement is a strategic objective, a core element of the Comprehensive Strategic Partnership and are essential for strengthening bilateral ties.

 

  •  In order to realize potential to both increase the volume of trade and diversify its composition, they requested the relevant ministries and agencies on both sides to explore substantive and practical measures to achieve the trade target of US$15 billion by 2020, including but not limited to utilising established mechanisms, strengthening exchanges of trade delegations, business-to-business contacts, regular organisation of trade fairs and events. Both sides agreed to hold the next Meeting of the Joint Sub-Commission on Trade in Hanoi in 2018 at the earliest.

 

DEVELOPMENT COOPERATION

 

  • Vietnam’s president appreciated India’s long standing and continued grants-in-aid and lines of credit, he thanks increasing scholarships to Vietnamese students, researchers, academic professionals and government officials, especially through the Indian Technical and Economic Cooperation (ITEC) programme, the Mekong – Ganga Cooperation (MGC) framework, as well as the projects under the fund of Quick Impact Projects (QIPs), etc.

 

  • President also appreciated Indian Prime Minister’s announcement at the ASEAN-India Commemorative Summit in January 2018 of undertaking a pilot project on rural connectivity in the CLMV countries which would create Digital Villages and for offering 1,000 fellowships to students and researchers from the ASEAN member states for studying integrated PhD programmes in Indian Institutes of Technology.

 

ENERGY COOPERATION

 

  • The two sides agreed that their cooperation in oil and gas exploration, thermal and hydroelectric power and renewable energy and energy conservation is registering remarkable progress. President also welcomed Indian businesses to expand their oil and gas exploration and exploitation activities on land and in the continental shelf and Exclusive Economic Zone (EEZ) of Viet Nam and to this effect suggested that relevant Indian companies file concrete proposals for the blocks offered by the Vietnamese side.

 

  • Both sides agreed to actively pursue the signing of a Memorandum of Understanding on collaboration in oil and gas exploration projects in third countries. The Vietnamese side also welcomed Indian oil and gas companies to avail of opportunities in the midstream and downstream sectors in Viet Nam.

 

  • The Vietnamese side took note of the request by the Indian side on actively considering signing the Framework Agreement of the International Solar Alliance with a view to strengthening the cooperation in the renewable energy space.

 

CULTURE, EDUCATION AND PEOPLE-TO-PEOPLE EXCHANGES

 

  • Both sides agreed to intensify cooperation in the fields of culture, tourism and people-to-people exchange, widen and deepen cultural and historical ties by cooperating further in the areas of archaeology, conservation and museums to revive and reconnect the civilizational and historic cultural heritage between the two countries. India highly appreciated Viet Nam’s proposal to establish a Viet Nam Cultural Centre in India.

 

CONNECTIVITY

 

  • Both sides agreed on the importance of stronger connectivity between Vietnam and India as well as between ASEAN and India. The progress made in regional connectivity endeavours such as the India-Myanmar-Thailand Trilateral Highway. The two sides agreed to explore the possibility of extending the India-Myanmar-Thailand Trilateral Highway further to Viet Nam through Cambodia and Lao PDR.

 

  • The two sides also stressed the importance of the early signing of an ASEAN-India Maritime Transport Cooperation Agreement. They sought acceleration of the establishment of direct shipping routes between the sea ports of India and Viet Nam. They also welcomed the commencement of direct flights between New Delhi and Ho Chi Minh City during the visit and urged the airlines of both countries to soon open more direct flights between major cities of the two countries.

 

REGIONAL COOPERATION

 

  • Both sides reiterated the importance of achieving a peaceful and prosperous Indo-Pacific region where sovereignty and international law, freedom of navigation and overflight, sustainable development and a free, fair and open trade and investment system are respected.

 

  • During successful conclusion of ASEAN-India Commemorative Summit 2018, with significant contribution of Viet Nam in its capacity as the Country Coordinator for the 2015-2018,period, the leaders decided to undertake necessary steps to implement the proposals made in the Delhi Declaration to further enhance the ASEAN-India Strategic Partnership.

 

  • Underscoring the significance of sub-regional frameworks in strengthening bilateral cooperation and complementing regional cooperation through ASEAN frameworks, they agreed to optimally develop and utilise existing sub-regional frameworks, especially the Mekong-Ganga Economic Corridor.

 

MULTILATERAL COOPERATION

 

  • Both sides reaffirmed their mutual support for each other’s candidatures as non-permanent members of the United Nations Security Council- Viet Nam for the term 2020-2021, and India for the term 2021-2022. The Vietnamese side reiterated its consistent support for permanent membership of India in a reformed Security Council.

 

  • The two sides re-affirmed their determination and efforts to further cooperate in maintaining peace, stability and development in the Indo – Pacific region as well as in the world at large. They also reiterated the importance of, and the need for complete compliance with international law, notably the United Nations Convention on the Law of the Sea 1982 (UNCLOS), including the implementation of international legal obligations in good faith, the maintenance of freedom of navigation and over-flight in the South China Sea, full respect for diplomatic and legal processes, peaceful settlement of disputes without resorting to the threat or use of force, and in accordance with international law.

 

 

  • Both leaders welcomed the adoption of the 2030 Agenda for Sustainable Development and reiterated their commitment to the realisation of the Sustainable Development Goals (SDGs). They agreed that the Global Partnership remains key to the achievement of the SDGs. In this regard, both leaders recalled the Addis Ababa Action Agenda and the importance of fulfillment of the Official Development Assistance committed by the developed countries.

 

 

Question Briefly explain the Action Plan of the Comprehensive Strategic Partnership 2017-2020 of India and Vietnam.