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GS 2

Changing the order of battle

Article

  1. K. Narayanan, former national security advisor, says that traditional diplomacy paved the way for summit diplomacy.

Important analysis

2. Diplomacy is one of the world’s oldest professions.

3. However, summit level diplomacy is comparatively a recent phenomenon which started during the 2nd world war

4. The first instance was when Chamberlain took a trip to visit Hitler in 1938

5. One of the most important event of summit level diplomacy is at Yalta conference which feature S. President Franklin D. Roosevelt, British Prime Minister Winston Churchill and Soviet Premier Joseph Stalin

6. However in post-war era traditional diplomacy was prevalent but in recent time summit level diplomacy has come into picture again

7. Salient feature of summit style diplomacy

  • Foreign Office and ministers in charge of foreign affairs are being pushed into the background
  • Leaders engaged in summit diplomacy are not unduly constrained by the need to adhere to the Westphalian order
  • In summit level diplomacy, leaders took diplomatic steps in their own personal beliefs only, ignoring past history and current problems

8. The meeting between Mr. Trump and North Korean leader Kim Jong-un, in Singapore in mid-June, is a classic example of ‘daredevilry’ at the highest level

9. The Trump-Putin meeting held in Helsinki last week, in July, was another example which negates the negative response from the majority of western countries, especially among the diplomatic and policy-making fraternity

10. Author also compare the summit level diplomacy of US president Trump, Russian president Putin, Chinese president Xi and Indian Prime ministerNarendraModi

11. About Trump author observes that he hardly constrained by diplomatic etiquette

12. He is clearly an advocate of the thesis that ‘a crisis by definition poses problems, but it also presents opportunities’.

13. About Mr. Putin Author observe that he want to take Russia from the low point of the Yelstin years to future glory.

14. About Mr. Xi Author observe that Xi is in the process of establishing a new political orthodoxy based on ‘traditions’ of the Qing dynasty, Maoist socialism and Deng’s policies of reform

15. Indian Prime Ministers have also experimented on occasion with variants of summit diplomacy.

  • Prime Minister Jawaharlal Nehru, who was in effect his own Minister for External Affairs, conducted policy discussions with a whole range of world leaders, achieving a mixed bag of results.
  • He was successful as the architect of the Non-Aligned Movement, but met with setbacks in his China policy.
  • In 1988, Prime Minister Rajiv Gandhi ended a 25-year India-China stalemate by personally taking the initiative to reopen talks with Deng Xiaoping and the Chinese leadership.
  • Prime Minister A.B. Vajpayee achieved a temporary respite from cross-border attacks from Pakistan by engaging with General, later President, Pervez Musharraf.
  • Prime Minister Modi in its informal summits held recently with Mr. Xi (in Wuhan) and Mr. Putin (in Sochi) have contributed to improving the ‘fraying’ relations with China and Russia.

16. Author observes that In the case of Indian prime ministers they did not made any attempt to effect systematic change in foreign policy, nor talked of establishing a qualitatively new order in the realm of foreign affairs but they only use their personal credibility to achieve results

17. In support of summit level diplomacy MK Narayanan says that

  • Summit diplomacy shows positive results in area where traditional diplomacy has struggled for years to achieve, whether they be long-lasting or short-lived.
  • If diplomacy is generally viewed as ‘war by other means’, then summit diplomacy is changing the ‘Order of Battle’ in a bid to succeed where all else has failed.

 

PM in Africa amid a fall in trade

News

  1.  PM to visit three African Nations to Boost India-Africa Bilateral Relation

Important facts

2. This visit is important as it is a reflection of Indian engagement and the priority of India with African nations.

3. Indian engagement with African nations has been increased over last 4 years.

4. However, recent studies show that Indian trade with African countries is declining.

5. According to “world investment report 2018” by UNCTAD (United Nation Conference on Trade and Development) Indian FDI in Africa in 2016-17 was $14 Billion which is lower than $16Billion at 2011-12.

6. Investment climate in African countries itself has seen drop in FDI flow by 21% according to UNCTAD.

7. Indian and Chinese Investment were same in 2011-12 at $16 Billion, but Chinese investment increased to $40 Billion in 2016-17

8. India-Africa trade figure from 2013 to 2017 has fallen, Import and Export figures fell from $67.84 billion to $51.96 Billion.

9. But in 2015 the investment figure jumped, as ONGC Vides Ltd got a stake in the ROVUMA gas field of Mozambique in 2014.

10. Issues with India

  • India trade remained concentrated to the east part of the Africa only.
  • Trade is majorly dominated by Petroleum products, which need diversifications.

 

GS 3

Stimulus mode

News

  1. Goods and Services Tax Council has announced a reduction in the tax rates for over 85 goods.

Important Analysis

2. Reduction in Tax slabs

  • On consumer durables such as television sets, washing machines and refrigerators, along with a dozen other products, have been slashed from 28% to 18%.
  • This rate cut leave leaves just about 35 products, including tobacco, automobiles and cement, in the highest tax slab of the GST structure.
  • The tax rate on environmentally friendly fuel cell vehicles has been reduced from 28% to 12%, and the compensation cess levied on them dropped.
  • Rakhis without semi-precious stones, as well as sanitary napkins that attracted 12% GST, have been exempted from the tax
  • Employment-intensive sectors such as carpets and handicrafts have been placed in lower tax slab

3. These rate cuts would be a stimulus to drive consumption ahead of the festive season.

4. It is also a sign that the government has begun the groundwork to woo voters ahead of State and parliamentary elections.

5. However these rate cuts raise two major concerns

  • Firstly, since the new rates are to kick in from July 27, companies may not have enough time to rework pricing strategies and replace existing market inventory, failing which they could face anti-profiteering action.
  • Secondly, members of the Council have for the first time questioned its functioning and alleged that not all of the changes and rate cuts were placed on the agenda.

6. For a rationalize tax structure Centre-States cooperation must be maintained

 

Banks agree to resolve stressed assets quickly

News

  1. 24 public, private and foreign banks have signed inter-creditor agreements (ICA) to resolve stressed assets.

Important facts

  1. The move comes after RBI dismantling of all the existing resolution mechanisms, such as the joint lenders’ forum in its 12 February circular
  2. RBI asked lenders (Banks, NBFC) to start resolution for the assets even if the default was by one day.
  3. It had also mandated that if the resolution plan was not finalised within 180 days, the account had to be referred for bankruptcy proceedings.
  4. About Inter-creditor agreements (ICA)
  • Inter-Creditor Agreement (ICA) was framed under the aegis of the Indian Banks’ Association
  • It follows the recommendations of the Sunil Mehta Committee on stressed asset resolution
  • Both Bank and NBFC could be part of ICA
  • ICA is primarily focused on the ₹50 crore-₹500 crore and the ₹500 crore-₹2,000 crore categories
  1. Functioning of ICA
  • The ICA is applicable to all corporate borrowers who have availed loans for an amount of ₹50 crore or more under consortium lending / multiple banking arrangements
  • The lender with the highest exposure to a stressed borrower will be authorised to formulate the resolution plan which will be presented to all lenders for their approval.
  • The decision making shall be by way of approval of ‘majority lenders’ (i.e. the lenders with 66% share in the aggregate exposure).
  • Once a resolution plan is approved by the majority, it shall be binding on all the lenders that are a party to the ICA
  • Dissenting lenders can either sell their exposure to another lender at a 15% discount or buy the entire exposure of all the banks involved, at a 25% premium
  1. One of the major concern with ICA is to achieve consensus among the lending banks on what should have been a common resolution plan which would have benefited the banks
  2. The Mehta committee had estimated ₹2.1 lakh crore of stressed assets in the ₹50 crore to ₹500 crore category. The total stress in public sector banks is estimated at ₹10.6 lakh crore, as on March 31, 2018.

 

Iran becomes India’s No. 2 oil supplier

News

  1. Iran was the second-biggest oil supplier to Indian state refiners between April and June, after Iraq

Important facts

  1. Iran replace Saudi Arabia as second largest supplier of oil
  2. India and other major buyers of Iranian oil are under pressure to cut imports from the country after Washington in May withdrew from a 2005 nuclear deal with Tehran and decided to reimpose sanctions on the OPEC member.
  3. India is Iran’s top oil client after China, shipped in 5.67 million tonnes or about 4,57,000 barrels per day (bpd), of oil
  4. Although India had curbed imports from Iran last year in protest against Tehran’s move to grant development rights for the giant Farzad B gas field to other parties.
  5. Reason for surge
  • Iran offered almost free shipping and extended credit period on oil sales

 

Short spells of heavy showers

News:

  1. Mini-cloud bursts are increasing in India

Important facts:

  1. A mini-cloud burst is defined as rainfall in excess of 50 mm in two consecutive hours.
  2. The term was coined by the scientists at Pune’s Indian Institute of Tropical Meteorology(IITM) due to an increase in heavy rainfall of short durations during the summer monsoon in India.
  3. Researcher’s finding:
  • The researchers found an average of 200 mini-cloud bursts occurring every year in India.
  • Between 1988 and 2007, there were around 265 mini-cloud bursts.
  • Over most parts of India, the highest recorded rainfall in two hours is 100-150 mm
  • The locations (other than the mountainous regions of Himalayas) that have recorded rainfall of over 150 mm in two hours are those that also experience cloud bursts.
  • The study found that mini-cloud bursts are “very common” in the foothills of the Himalayas.
  • The west coast records more than three mini-cloud bursts per season, the Indo-Gangetic plains and the Saurashtra region receive two per season.
  • Rajasthan and States to the east of the Western Ghats experience the least number of mini-cloud bursts.
  • For the rest of India, the amount of rainfall per mini-cloud burst is 50-70 mm.
  1. Comparison with Cloud burst:
  • The Indian Meteorological Department recognized cloud bursts-  heavy rainfall, in the mountainous regions of Himalayas .
  • In contrast, mini-cloud bursts are indicative of torrential downpour but of lower intensity than cloud bursts.
  1. Classification of rainfall:
  • Presently, the IMD classifies rainfall as heavy (over 60.5 mm), very heavy (over 130 mm) and extremely heavy (over 200 mm).
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