9 PM Current Affairs Brief – January 27th, 2018

GS: 2

Doklam blown out of proportion

Doklam blown out of proportion


India’s Ambassador to China Gautam Bambawale has called for a new phase of dialogue between the countries to foster a stronger post-Doklam “partnership.” In an interview to the Global Times , ahead of the Republic Day, he said the stand-off last year should be viewed in a historical perspective.

A Single event

  • When you do so, it is just one event in a much longer-term history
  • The people of India and China and our leaders are experienced enough and wise enough to overcome such momentary hurdles in our relationship
  • Without making a specific reference to the Doklam standoff, which India says was rooted in China’s attempt to build a road in a disputed India-China-Bhutan border tri-junction area
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The ASEAN embrace 

The ASEAN embrace 


Prime Minister Narendra Modi used India’s Republic Day to host heads of state/government of the 10 members of the Association of Southeast Asian Nations (ASEAN). As India’s ‘Look East Policy’, matures into an ‘Act East Policy’, a strong relationship with ASEAN is no longer a policy option; rather it is an economic and strategic necessity

India can act as a vital bridge between South and East Asia

Economy, trade, investment: India needs to boost trade

China-ASEAN trade high: While India-ASEAN trade value stood at $76.53 billion in 2014-15, China-ASEAN trade value reached $452.2 billion in 2016, almost six times than that of India

Marginal Indian investments: Similarly, Indian investments continue to remain marginal in the ASEAN region — it was around $224 million in 2015-2016 while Chinese investment over the same period totalled over $3 billion

Situation is improving

  • However, Indian investments in ASEAN are likely to grow as there has been increased liberalisation and deregulation regarding outward foreign investments
  • The Tata Group already has a strong presence in Myanmar and is investing in the IT and agricultural sectors, which will create capacity and generate employment

Infrastructure a key area

Infrastructure is a key area where there is much potential.

Highway projects: The India-Myanmar-Thailand Trilateral Highway and the Kaladan Multimodal Transit Transport Project will significantly boost connectivity between India-Myanmar leading up to the rest of Southeast Asia

Intermediate beneficiaries: Enhanced connectivity between the two countries will not only serve India but also neighbouring Bangladesh. A railway or highway such as Bangkok-Yangon-Delhi has to pass through Bangladesh, making the country an intermediate beneficiary

Connecting South Asia with East Asia: India, which is vying to become a regional leader in South Asia, can score major points with its South Asian neighbours by connecting them to East Asia.

Strategic issues and security

Uncertain regional geopolitics coupled with the rise of economies in the region will require Asian governments to adapt to a newer political environment, economic realities, and a different regulatory ecosystem.

Fourth Industrial Revolution

Businesses and governments will have to confront disruptions to traditional employment structures and loss of jobs caused by digital technologies and the impending Fourth Industrial Revolution

Strategic cooperation gets trickier

India-ASEAN strategic cooperation gets trickier given China’s territorial claim on the resource-rich South China Sea

Maritime rivalry between India and China

The tug of war between China and India to dominate the Indian Ocean has given rise to maritime rivalry

South China Sea

  • When it comes to the South China Sea, it is in India’s interest to have freedom of navigation, unfettered access to common waters and respect for international maritime law
  • India and the Singapore Navy conducted SIMBEX-17, a week-long bilateral military exercise in the South China Sea in 2017
  • Given the prevailing regional power imbalance created by a declining U.S. and an assertive China, India and ASEAN are well poised to become strategic partners in ensuring regional peace and stability
  • Battling non-traditional risks such as terrorism, human trafficking, cybercrime and piracy also provide opportunities for greater cooperation

Socio-cultural ties

The presence of the Indian diaspora in almost all ASEAN nations has also helped strengthen ties. Almost 1.6 million Indians call Malaysia their second home.

Wide reach of the Indian film industry

The Indian film industry has a huge fan base in Malaysia and Singapore. For example, of the editions of the International Indian Film Academy Awards held so far, a few have been held in ASEAN countries

Southeast Asia is even overtaking Europe as a filming location for Indian films.

Nations looking for options

  • With an assertive China driving the Belt and Road Initiative and U.S. disengagement in the region, India has to navigate carefully especially when many nations, including those in ASEAN, are looking for options that promote economic interests and protect territorial sovereignty
  • At such a critical juncture in East and South Asian geopolitics, the significance of ASEAN from an Indian perspective can hardly be overemphasized
  • As Singapore’s elder-statesman, Lee Kuan Yew, argued many years ago, India must be “part of the Southeast Asia’s balance of forces” and “a counterweight to China” in the Indian Ocean


The “Act East” policy needs to be acted upon with a sense of purpose and priority before India can become a reliable and strategic partner of ASEAN.

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India ASEAN target swift deal on RCEP

India ASEAN target swift deal on RCEP


With an aim to further trade ties, India and ASEAN on Friday agreed to target a swift conclusion to the comprehensive and mutually beneficial Regional Comprehensive Economic Partnership (RCEP) in 2018.

Commit to use India’s $1-billion line of credit to enhance connectivity as per master plan for 2025

Both sides also reaffirmed their commitment to enhance physical and digital connectivity in line with the Master Plan on ASEAN Connectivity 2025 and the ASEAN ICT Masterplan (AIM) 2020 by availing the $1-billion line of credit announced by India.

Highway project

India and ASEAN will also work towards encouraging early completion of the India-Myanmar-Thailand Trilateral Highway Project and extend this trilateral highway to Cambodia, Lao PDR and Vietnam, according to the Delhi Declaration of the ASEAN-India Commemorative Summit.

Aviation sector cooperation

  • It also emphasised the need to deepen cooperation in the area of aviation under the ASEAN-India Aviation Cooperation Framework adopted at the 14th ASEAN Transport Ministers’ Meeting in Manila, on November 6, 2008, including through the convening of air services consultations by the ASEAN-India Working Group on Regional Air Services Arrangements and the establishment of air transport cooperation on technical, economic and regulatory matters between ASEAN and India
  • It was agreed to establish closer ASEAN-India air links to promote tourism, trade, and enhance greater connectivity between 10-nation grouping ASEAN and India
  • Both sides will work to “further strengthen ASEAN-India economic relations, including through the full utilisation and effective implementation of the ASEAN-India Free Trade Area, and intensify efforts in 2018 toward the swift conclusion of a modern, comprehensive, high quality, and mutually beneficial Regional Comprehensive Economic Partnership (RCEP)

Marine conservation

There were also agreements on cooperation for conservation and sustainable use of marine resources in the Indian and Pacific Oceans and address threats to these resources including illegal, unreported and unregulated fishing, loss of coastal ecosystems and the adverse impacts of pollution, ocean acidification, marine debris.

Maritime transport cooperation

It also emphasised the need to promote maritime transport cooperation between ASEAN and India, and encourage potential private sector participation in the development of seaports, maritime logistics network and maritime services in order to create greater efficient linkages and encourage ASEAN and India to continue discussions on these priority areas.

Promotion of MSMEs

According to the declaration, promotion of stable and sustainable growth for Micro, Small and Medium Enterprises (MSMEs), including through technology transfer, as well as enhancing capacity building, technical assistance, access to innovation and opportunities to integrate into the global and regional value chains were agreed upon.

Outer Space

India and ASEAN countries will continue to collaborate in peaceful exploitation of outer space, through the implementation of the ASEAN-India Space Cooperation Programme, including launching of satellites, for sustainable exploitation of ground, sea, atmospheric and digital resources for equitable development of the region

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Trump must walk the talk: Karzai

Trump must walk the talk: Karzai


Former Afghanistan President Hamid Karzai called upon U.S. President Donald Trump to “walk the talk” on curbing Pakistan’s support of extremist forces. Mr. Trump, in a tweet at the beginning of the year, had chastised Pakistan for giving “safe haven to terrorists we hunt in Afghanistan”


Jaipur Literature Festival

Ex-Afghan President hopes U.S. will help stop Pakistani support to terror forces

Peace, the former President said, will not come unless Pakistan agrees to the peace, and unless the U.S. and Pakistan work together to secure it.

Washington blamed

  • Criticising the U.S. for promoting the rise of extremism in Afghanistan in its bid to defeat the Soviet Union
  • He also said the impression that he was anti-America was incorrect, but he was certainly opposed to the fact that the U.S. had been ignoring the sanctuary being given to terrorists outside of Afghanistan
  • Mr Karzai spoke with affection of his student years in Shimla, and his love for Indian films, songs, writers and poets.
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Natural partners in the Asian century

Natural partners in the Asian century


There is a need for a fresh perspective in India’s China policy

Continental shift

Asia already accounts for almost half of the world’s population, half of the world’s container traffic, one-third of its bulk cargo and 40% of the world’s off-shore oil reserves. It is home to several fast-growing new economies with GDP growth rates above 7% per year, i.e. a doubling of the GDP every 10 years.

Asia’s Defence spending

Asian defence spending ($439 billion) is also much more than Europe’s ($386 billion)

In a few years half of the world’s naval fleet and combat aircraft with extended range missiles, supported by highly sophisticated communications networks, will soon be seen roaming in the Indo-Pacific region.

Two powerhubs

Also, since the late 1990s, China and India have been rapidly emerging as influential power hubs

  • Being two of the three most post populous and largest GDP nations, India and China, both culturally akin, are socially structured on family values and associated social attitudes.
  • Potentially both are poised to fill the role of global powers
  • To achieve that potential, both require hardware, software and the clear mindset for exercising this power
  • As of now, China is ahead of India in reaching that level. We are concerned here with the question whether India can reach it.

Restructuring of India’s china policy needed

The diminishing influence of Western powers in the region, and as of now the acknowledged rising power of China are the new global reality.

Looking beyond Pakistan

Since 1971, Pakistan has already broken into two, and there are still fissiparous internal pressures. India therefore needs a new mindset: to look beyond Pakistan. Moreover, it depends on whether India’s intellectual outlook matures enough to find acceptable accommodation with China for a partnership in Asian peace.

The US

  • The U.S. has become a much friendlier nation for India, especially because the Soviet Union unravelled, and India’s economy is growing fast to become an open, competitive market economy, the third largest in PPP terms
  • But the U.S. also is hesitant to put boots on the ground to fight terrorist establishments. Hence India can help the U.S. fill that growing void in return for the sophisticated military hardware that it lacks

India not exercising its power

  • The world already is dazzled by India’s prowess in information technology, the capability to produce pharmaceuticals at low cost, and the high quality of its trained manpower capable of innovation
  • But India does not exert this soft power advantage on the world scene commensurate with this potential or its size in Asia.

India should lead from the front

  • We are still on the international stage in a “petitioner” mode on vital national and international security issues — an unfortunate hangover from Nehru’s diplomacy of the 1950s
  • Unless we take ourselves seriously, stop craving foreign certificates and acquire commensurate military hardware by reaching spaces vacated by the U.S., others will not acknowledge our global status and comply accordingly

A strategic bond

The key for India today is to bond strategically with China. But this requires dealing bilaterally on huge pending issues. After my recent visit to China, I believe there is an unfortunate trust deficit that requires frank, hard-nosed bilateral discussion at a high political level and not between bureaucrats. China recognises India’s potential and respects the same.

Eastward Ethos

India has to completely reorient its strategic mindset. A change in strategic conceptualisation is needed, that is, from the colonial hangover of junior partnership for the sake of crumbs from the materialistic “Westward Ho” syndrome, to an Eastward ethos, concomitantly from the present land-focussed thinking to Ocean-centric articulation

Indian Ocean, the new epicenter of global power

The Indian Ocean has now emerged as the epicentre of global power play in the 21st century. Gone are the outdated phrases like Asia-Pacific.

We need to recognise this centrality and primacy of the Indian Ocean in India’s global economic and military activism: the Indian Ocean is the epicentre of global power play in the 21st century

With Indonesian partnership, India can monitor the Malacca Strait through which over 80% of the freight traffic of China and East Asia passes.

Develop deeper linkages with China

As an important part of its diplomacy, India has thus to develop deeper cultural and civilisational linkages with China and the rest of Asia

India has to realise that it can’t just be a spectator, or a mere visible participant, or even a ‘pole’ in the so-called multi-polar world

India reduced to a mere spectator

  • China has conceptualised and implemented the centrality of befriending all of India’s neighbours and has brought them on board in its Belt and Road Initiative (BRI).
  • In the Chinese Communist Party Congress in the early 2000s, Hu Jintao, then President of China, had adopted the goal of developing a “Harmonious Society”, of blending spiritual Confucianist and Taoist values with aspirations for material progress
  • This is similar to the Hindu values of placing on a pedestal intellect and sacrifice (gyana and tyaga)
  • Since then China has proceeded systematically to bring countries of Asia under its influence with imaginative proposals such as the BRI and the China-Pakistan Economic Corridor
  • India has been reduced to merely reacting to such proposals without any of her own to canvass as an alternative

New paradigm

India, therefore, has to strive imaginatively to become a stakeholder in this new global power paradigm: to give up its reticence and passive diplomacy and learn to exercise power without being seen as a bully by our neighbours

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ASEAN rising

ASEAN rising


As leaders of the 10 countries of the Association of Southeast Asian Nations gathered in New Delhi this week, India’s ties with ASEAN got a dose of both symbolism and substance. The ASEAN-India Commemorative Summit, followed by their attendance at the Republic Day parade as joint chief guests, underlined the new consensus on the need for Southeast Asia and India to boost cooperation

India and Southeast Asia need to move beyond summitry to deeper integration

Market growth within: First, as the demand for goods in Western economies comes down, the region needs to look deeper within to grow markets and increase trade

Unaligned countries coming together: Second, continuing tensions between the “great powers” — between the U.S. and Russia, or the U.S. and China — are forcing the unaligned countries of ASEAN and India to forge a common understanding.

Historical relations: Third, India’s cultural and trade ties with Southeast Asia go back 2,000 years — and with Southeast Asia having come out of the overhang of Cold War divisions, India and ASEAN have a unique opportunity to reap the potential of their geographic proximity.

Delhi Declaration

The Delhi Declaration they signed articulated their urgent concerns as ASEAN and India called for measures to deepen security, economic and socio-cultural cooperation, and connectivity. These include joint mechanisms for maritime transport, trade and a “code of conduct” for the South China Sea.

Similar attempts earlier also

But it must not be forgotten that when ASEAN-India leaders last gathered together in New Delhi in 2012 to mark the 20th anniversary of the dialogue partnership, they had made a similar commitment to trade and maritime security, and several promises are yet to be realised.

Poor trade

With trade with ASEAN at $76 billion, India ranks lower than not just the U.S. and China, but also South Korea, Japan and Australia.

RCEP stand off

The Regional Comprehensive Economic Partnership negotiations launched in 2012 have been held up, largely because of Indian concerns over unfettered access to Chinese goods and ASEAN resistance to movement of Indian services and labour.

Connectivity projects delay

The other big unfulfilled promise is on connectivity, between ASEAN countries and India, as well as India’s connectivity through its Northeast to Myanmar and beyond

Work on the extension of the India-Myanmar-Thailand Trilateral Highway, the Kaladan multimodal highway, and Tamu-Kalay rail link to Myanmar has lagged behind deadlines


India and the ASEAN countries have much to gain from each other — but heavy-lifting is required to integrate India into the ASEAN equation. Else, shared history and culture and political leaderships in sync may only yield rousing summitry.

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India should be proactive: ASEAN

India should be proactive: ASEAN


All leaders at the just concluded ASEAN-India Commemorative Summit had urged India to play a proactive role in the Asia-Pacific region, the Ministry of External Affairs (MEA) said here on Friday

The bloc sees New Delhi as key to Indo-Pacific region’s peace and prosperity, says MEA

The official statement complements Prime Minister Narendra Modi’s comments that the Indo-Pacific region will be “indispensable” India’s future

 Looking East

In an op-ed article, published on Friday in leading newspapers across ASEAN countries, including the The Straits Times (Singapore), Bangkok Post (Thailand) and Manila Bulletin (Philippines)Mr Modi said, “Indians have always looked East to see the nurturing sunrise and the light of opportunities. Now, as before, the East, or the Indo-Pacific region, will be indispensable to India’s future and our common destiny.”

Education initiatives

  • During the summit, India announced 1,000 PhD fellowships in the IITs for students from the ASEAN countries.
  • New Delhi also announced a dedicated training course in highway engineering, setting up of a virtual network of universities, and pilot projects to set up digital infrastructure at the ASEAN-India Commemorative Summit
  • Further, an ASEAN-India Startup festival will be held later this year.

Year of Tourism

The participating countries also agreed to celebrate 2019 as the year of tourism for ASEAN nations

Deradicalization attempts

Apart from countering ‘traditional and non-traditional’ threats to freedom of navigation, India plans to work closely with Malaysia and Indonesia on handling radicalization

A conference on de-radicalisation will be held soon, said the official.

The India-ASEAN bonhomie will be followed by further diplomacy on Sunday when Delhi will host Cambodian leader Hun Sen for a bilateral vist.

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Armed forces set to be reduced in Northeast

Armed forces set to be reduced in Northeast


The Home Ministry will conduct a “security audit” in the Northeast and chalk out a plan to reduce the number of Central armed police force personnel deployed there.

State police to get more responsibility

Insurgency related incidents in the Northeast had come down to 308 in 2017, the lowest since 1997.

“Since the incidents have come down by 85%, it was felt that the number of boots on the ground should be reduced too. More responsibility would be given to the State police,” said a senior government official.

AFSPA review

  • Another official said there was no final decision to repeal AFSPA as of now but the Jeevan Reddy Committee report that recommended it was discussed from time to time
  • The Central government appointed a five member committee headed by Justice B.P. Jeevan Reddy in November 2004 to review AFSPA.

Report submitted

  • The committee submitted its report in 2005.
  • It said that besides repealing the Act, recommended that the Unlawful Activities (Prevention) Act, 1967 should be modified to clearly specify the powers of the armed forces and the Central forces.
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The oil risk 

The oil risk 


India needs to expedite steps that can help minimize the impact of higher oil prices

Expensive energy

  • As international oil prices head higher, India will have to brace itself for the economic risks of expensive energy
  • The rise in international prices has been particularly sharp given that oil had been selling at below $45 in June
  • This is a rally of about 55% in a matter of just months

Respite for oil producers

  • Oil trading at $70 should offer some respite to traditional oil producers like the OPEC members, which have suffered the onslaught of U.S. shale producers
  • According to the IMF, last year, for instance, Saudi Arabia would break even on its budget with oil at $70

Due to weakening of dollar

The recent spurt in oil prices, however, seems to be more the result of a weakening of the U.S. dollar than anything else

The dollar has been gradually weakening against major global currencies since the beginning of last year.

Weaker dollar good for American trade

  • But the trend was given a new push following comments by U.S. Treasury Secretary Steven Mnuchin in favour of a weak-dollar policy
  • At Davos this week, Mr. Mnuchin noted that a weaker dollar would be good for American trade.
  • However, given that the U.S. is right in the middle of a monetary tightening cycle, it is unlikely that the dollar will continue to boost oil prices, unless the Federal Reserve slows the projected pace of interest rate increases.

Consumers in India feeling the effect

  • Consumers in India are already beginning to feel the pinch as petrol and diesel prices have hit multi-year highs
  • The retail selling price of both petrol and diesel in Delhi, for instance, has risen by close to ₹3 a litre since the beginning of 2018
  • The rise in domestic fuel prices is on expected lines given the policy of dynamic daily pricing of petrol and diesel adopted by the Centre

Rationalizing taxes

  • But as rising oil prices put pressure on domestic consumers, the government will have to desist from resorting to subsidies to ease the pain
  • It should work towards rationalising taxes on petrol and diesel to bring down retail prices
  • This will help consumers without imposing an undue burden on the oil marketing companies.

Risk to fiscal management

  • An even bigger risk posed by higher oil prices is to the government’s fiscal management
  • With the fiscal windfall from low oil prices likely to end for now, the government should think for the long term and make crucial tweaks to its hydrocarbon exploration and licensing policy to expedite oil discovery and production.


Simultaneously, it must take a leaf from China’s book and actively support Indian energy firms’ bids for overseas oilfields. Self-reliance is ultimately the best hedge.

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Bad loans shrink from record peak

Bad loans shrink from record peak


India’s stock of soured bank loans shrank slightly in the quarter to September last year, the first pullback since a drive to clean up record levels of bad debt began in 2015 and signalling that tighter rules and a new bankruptcy code may be starting to show results.

Regulator’s clean-up drive, tighter rules helping; overdue loans ease in Sept.

Stressed loans — which include non-performing as well as restructured or rolled-over loans — eased 0.4% from three months earlier to ₹9.46 trillion ($148.3 billion) at the end of September, according to unpublished central bank data reviewed by Reuters.

First decline since 2015

That would be the first decline in soured assets since at least 2015, according to quarterly data collected by Reuters.

Stressed assets increased steadily

  • On an annual basis, stressed assets have risen steadily since the year to March 2006
  • Banks have seen their soured loans nearly double in the past four years as a prolonged economic slowdown took its toll on the ability of companies to repay debt
  • Profligate lending and poor due diligence have also been blamed for the surge

Asset quality review

Steps taken

In late 2015, the Reserve Bank of India (RBI) began a major asset quality review amid allegations that banks were hiding the extent of the bad debts on their books.

Banks reform program: The central bank last year ordered banks to push some 40 of the country’s biggest corporate defaulters into bankruptcy proceedings through greater powers given to it as part of the government’s banking sector reforms programme

Recapitalisation program: The government has also announced a $33 billion recapitalisation of the state-run banks that account for the bulk for the soured loans.

First batch of capital

The government on Wednesday announced the first tranche of the capital injection programme, pledging to inject nearly $14 billion into 20 state banks by March.

Also eased

Loans that had been overdue for between 60 days and 90 days, and are at the highest risk of default, also eased to ₹1.53 trillion rupees as of end-September, from ₹1.63 trillion rupees at end-June, the data showed

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Govt relaxes Atal pension plan norms

Govt relaxes Atal pension plan norms


The Centre would now allow small finance banks and payment banks to offer the Atal Pension Yojana (APY), which is expected to significantly increase the coverage of the scheme.

Payment banks can offer the product

To strengthen the existing channels of APY distribution, it is felt that these new payments banks and small finance banks will provide a boost to the outreach of subscribers under APY

Pensioned society

Participation in APY not only builds a pensioned society but also adds sustainable fee income to banks by way of attractive incentive for mobilising APY at the rate of ₹120-150 for each account.

Orientation meeting held

So far, 11 payment banks and 10 small finance banks have received licences from the Reserve Bank of India to start banking operations in India.

In order to familiarise these small finance banks and payment banks with APY, the Pension Fund Regulatory and Development Authority (PFRDA) conducted an orientation meeting on January 15, 2018 in New Delhi

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