AIR Discussions(July 3Rd Week)

AIR Discussions(July 3rd week)

15th July. Significant Developments on Kartarpur Corridor

● Context: India, Pakistan held second round of talks at Wagah, to discuss on issues including pilgrims' safety, draft agreement and operationalisation of the Kartarpur corridor and related technical issues. ● Highlights of the talk: ⮚ Pakistan said that they are hopeful to have productive discussion and settlement of issues. The 70 per cent work on the corridor has been completed and that Pakistan participated in the talks with a positive mindset. ⮚ Pakistan and India agreed 80 per cent and beyond on the draft agreement and operationalisation of the landmark Kartarpur corridor. ⮚ Key issues such as connectivity at Zero Point and the number of pilgrims to be allowed through the Kartarpur corridor were discussed during the meeting. ⮚ India flagged its concerns over the security aspect. ⮚ India had earlier conveyed its strong concerns to Pakistan over the presence of a leading Khalistani separatist in a committee appointed by Islamabad on the project. ⮚ Matters related to the modalities of the corridor, who can use the corridor and its facilities, were discussed during the meeting. ⮚ The first round of talks was held in Attari on March 14 in the shadow of escalating bilateral tensions following the Pulwama terror attack. ⮚ Both sides had jointly surveyed the coordinates of the Zero Point and discussed the technical details, including finished road level, high flood level etc. ● Background: ⮚ Government of India had decided to commemorate 550th Birth Anniversary of Shri Guru Nanak Dev by building Kartarpur Corridor. ⮚ The corridor will connect Darbar Sahib in Pakistan's Kartarpur with Dera Baba Nanak shrine in Gurdaspur district and facilitate visa-free movement of Indian Sikh pilgrims, who will have to obtain a permit to visit Kartarpur Sahib, which was established in 1522 by Sikh faith founder Guru Nanak Dev. ⮚ Pakistan will build the corridor from the Indian border to the Gurdwara Darbar Sahib at Kartarpur while the other part from Dera Baba Nanak in Punjab's Gurdaspur district up to the border will be constructed by India. ⮚ Kartarpur Sahib is located in Pakistan's Narowal district across the river Ravi, about four km from the Dera Baba Nanak shrine. ⮚ Vice President M Venkaiah Naidu and Punjab Chief Minister Amarinder Singh had on November 26 last year laid the foundation stone of the Kartarpur Corridor in Gurdaspur district. ⮚ Two days later, Pakistan's Prime Minister Imran Khan laid the foundation stone of the corridor in Narowal, 125-km from Lahore. Pakistan government has earmarked Rs 100 crore in the federal budget 2019-20 for the development of the corridor. ⮚ This is considered to be a corridor of peace. ● Further Developments: ⮚ A four-lane highway linking the Gurdaspur-Amritsar road to the international border for Kartarpur Sahib gurudwara in Pakistan will be ready by the month of September this year. ⮚ The 4.19 km-long four-lane highway is being built at a cost of Rs 120 crore. ● About Gurdwara: ⮚ It was ordered by Maharaja of Patiala between 1921 and 1929. ⮚ It is believed to be a place where Nanak ji spent about last 18 years of his life.

● About Guru Nanak Dev: ⮚ He was the founder of Sikhism and a Bhakti saint. ⮚ He was born in 1469 in Nanakana Sahib, Punjab, Pakistan and died in Kartarpur, Pakistan. ⮚ His ideas were influenced by the nirguni (formless God) tradition, worship of one God. ⮚ He insisted that caste, creed or gender was irrelevant for attaining liberation. ⮚ He insisted that his followers must be householders and should adopt productive and useful occupations. ⮚ They were also expected to contribute to the general funds of the community of followers.

16th July. Government action on Sovereign Bonds

● Context: Finance Minister Nirmala Sitharaman announced in the Budget speech that government plans to raise a portion of its gross borrowing from overseas markets. ● Why India opting for this route: ⮚ Finance Minister said that India’s sovereign external debt-to-GDP level is among the lowest globally at less than 5 per cent. India will raise a part of our borrowing abroad in foreign currency. It will leave some more domestic savings for the private sector. ⮚ India raises ₹ 7 lakh crore as borrowing. Currently, the government takes it all from the domestic market and so much less is left for the private sector. If about 10 percent of that is raised from elsewhere, additional ₹ 70,000 crore would be left for the private sector. ⮚ This will increase the supply of money in the domestic market. ⮚ Further, all of these measures are part of the larger story of opening of the Indian private sector and giving it more investible resources. ● Comments of the Finance Secretary on the issue: ⮚ He termed the proposed issuance of sovereign bonds in overseas markets as the “boldest announcement” of the Budget. ⮚ He indicated that about ₹ 70,000 crore could be mobilised through this route. ⮚ He said diversification of government resource mobilisation is the only way of leaving more funds for the private sector.

● What is an overseas bond issue? A government/ sovereign bond is a form of debt that the government undertakes wherein it issues bonds with the promise to pay periodic interest payments and also repay the entire face value of the bond on the maturity date.

● Benefits: ⮚ The government has been arguing that the quantum of its borrowing within India is ‘crowding out’ the private sector. ⮚ According to Finance Secretary, government borrowing accounts for about 80-85% of domestic savings. ⮚ He also said that the overseas borrowing programme allows the government to maintain its gradual reduction of the fiscal deficit.

⮚ Had the government listened to some commentators and relaxed its fiscal deficit to say 4.4%, then this would have allowed it to borrow an additional ₹2 lakh crore from the domestic market. However, this would have been ₹2 lakh crore that would not be available now to the private sector for borrowing purposes. ⮚ The appetite of the international market for Indian bonds and their price will also say a lot about how India is viewed globally on the risk factor. For example, if the rate at which India can borrow overseas is low, then this would mean the global market assigns a low risk to India defaulting. ● Risks involved: ⮚ India might follow the path of some Central and South American countries such as Mexico and Brazil. ⮚ In the 1970s, several of these countries borrowed heavily overseas when the global market was flush with liquidity. But then, when their currencies depreciated sharply a decade later, these countries were in big trouble as they could not repay their debt. ⮚ It would lead to a quicker increase to its foreign exchange reserves, which would lead to a stronger rupee which would encourage imports at a time when the government is trying to curb them, and discourage exports at a time when they are being encouraged. ⮚ Further, Indian government cannot print foreign currency to repay its debt unlike domestic debt. ● The shallowness of the domestic bond market is not a good thing, especially at a time when the government needs the bond market to finance several of its commitments. Ideally, the government should have enough revenue that it does not need to borrow as much. However, at a time when both direct and indirect tax collections have disappointed, the government is forced to borrow to finance its expenditure. In such a scenario, it is a welcome move for the private sector that the government is leaving it room to borrow in the domestic market.

18th July. Verdict of ICJ on Kulbushan Jadhav

● Context: After more than two years of battle at the global court, New Delhi won a legal and diplomatic victory over Islamabad after the International Court of Justice ruled that Pakistan must review the death sentence for Indian national. ● Major Highlights of the court ruling: ⮚ The court affirmed the former Indian Navy officer’s right to consular access and slammed Pakistan for denying this. ⮚ Court made it clear that Jadhav’s death sentence should remain suspended until Pakistan effectively reviews and reconsiders the conviction and sentence in the light of its breach of Article 36 — that is denial of consular access and notification. ⮚ The court, however, rejected India’s call to annul the military court decision and ensure his release and safe passage home. ⮚ Jadhav must get access to consular and legal assistance but Court does not rule that he can be tried under the civilian court of law. ⮚ The only thing, it says, is that the review and reconsideration should be “effective”. It has even suggested to Pakistan’s government that it can take legislative action to make the process of review and reconsideration “effective” — this is right now in the military court’s domain. ⮚ The verdict was decided with 15 judges, including China’s judge, in favour while only Pakistan’s ad-hoc judge Pakistani Judge was the lone dissenter. ⮚ While all these clauses were ruled 15-1, there was unanimity on the jurisdiction issue. It said that the court “unanimously, finds that it has jurisdiction, on the basis of Article I of the Optional Protocol concerning the Compulsory Settlement of Disputes to the Vienna Convention on Consular Relations of 24 April 1963, to entertain the Application filed by the Republic of India on 8 May 2017”. ● Response to judgment: ⮚ Welcoming the ICJ verdict, Prime Minister said that truth and justice have prevailed. ⮚ While India’s Ministry of External Affairs called it a landmark judgment and said that India expects Pakistan to implement the directive immediately. ⮚ Pakistan’s Foreign Ministry said that as a responsible member of the international community, it upheld its commitment from the very beginning of the case by appearing before the honourable court for the provisional measures hearing despite a very short notice. Having heard the judgment, Pakistan will now proceed as per law. ⮚ However, Islamabad maintained that Jadhav entered Pakistan without a visa on an authentic Indian passport with a fake alias, and alleged he is responsible for acts of sabotage, espionage and multiple terrorist incidents…this is a clear case of Indian state terrorism. ● What arguments has India made? ⮚ India said the sentence is based on an extracted confession. ⮚ India questioned military courts in Pakistan, saying they do not follow due process. ⮚ India argued that the Vienna Convention, which guarantees consular access, cannot be selectively given and the ICJ should make it a “human right”. ⮚ The sentence violates international law and provisions of the Vienna Convention; India is entitled to restitutio in integrum (restoration to original condition); © APTI PLUS ACADEMY FOR CIVIL SERVICES

⮚ The ICJ should annul the military court decision and restrain Pakistan from giving effect to the sentence or conviction; and Pakistan should be directed to release Jadhav immediately and facilitate his safe passage to India. ● What Pakistan argued? ⮚ Pakistan asked the ICJ to dismiss or declare inadmissible India’s claim. ⮚ It rejected India’s argument that the military courts don’t have officers with judicial expertise and experience, and said Pakistan’s courts are extremely independent. ● How binding are ICJ judgments? According to ICJ, judgments delivered by the court (or by one of its chambers) in disputes between states are binding upon the parties concerned. ● Timeline:

● Kulbhushan Jadhav: ⮚ He is a former Indian Navy officer, was arrested by Pakistani officials on March 3, 2016, on suspicion of espionage and sabotage activities against the country. ⮚ Claiming that Jadhav was an Indian spy, the Pakistani military court sentenced him to death. ⮚ The Indian side, however, maintains that Jadhav was kidnapped from Iran where he had business interests after retiring from the Navy and that he has no links with the government. The execution was stayed after India’s appeal at the International Court of Justice. ⮚ After multiple attempts from India to connect with Jadhav, Pakistan in December 2017 allowed his family to meet him, in the light of Islamic traditions and based on purely humanitarian grounds.

19th July. Energy Horizons 2019

● Context: Energy Horizons 2019 event was recently organized by the CEEW. ● Energy Horizons is a pre-eminent platform where the world's best minds discuss, debate, and find solutions to enable the global energy transition. It aims to better understand the power systems of the future, financing business model innovations, and next- generation technologies that will drive this transition. ● The Council on Energy, Environment and Water: ⮚ It is commonly known as CEEW and is a Delhi-based not-for-profit policy research institution. ⮚ Some of CEEW's research areas include resource efficiency and security; water resources; renewable energy; sustainability finance; energy trade- climate linkages; integrated energy, environment and water plans; and climate geoengineering governance. ⮚ The think-tank advises the Indian government. ⮚ The CEEW was founded in 2010. ● Petroleum and Natural Gas Minister Dharmendra Pradhan’s views at the event: ⮚ India has been able to convince oil suppliers about its justified stand for a responsible and reasonable pricing of oil. ⮚ India’s voice as a large, reliable energy consuming nation is heard with respect. ⮚ India has forged partnerships with major energy consumers like Japan and China to work together and synergize areas of our mutual interest in the oil and gas sector.

⮚ India and the US have established a Strategic Energy Partnership last year. With US, India also constituted a Joint Task Force on Natural Gas, which aims at increasing the share of gas in India’s primary energy mix. ⮚ India will have to deal with volatility in the energy market due to geopolitics and play a significant global role. ⮚ Transition in mobility is here, and India needs to chart out the road map. ⮚ There will be disruptive trends, which shall call for an out-of-the-box thinking, such as future refineries having to demonstrate flexibility to switch products and if needed have petrochemical as an output. ⮚ On the future of work and need to prepare workforce, organizations and the country should assess their talent readiness and take action to prepare them for the disruptions. ⮚ India, as one of the fastest growing large economies in the world and the third largest consumer of energy globally, is embracing the energy transition. ⮚ Secure, Efficient, Affordable and Sustainable Energy will have to be ensured to fuel the $5 trillion economy. ⮚ While India’s energy demand increased to 754 million tonnes of oil equivalent (Mtoe) in 2017, the per capita consumption of energy is still much lower than the world average. ⮚ India’s share of total global primary energy demand is set to roughly double to about 11 percent by 2040, driven by strong economic development. ⮚ India will depend on all sources of energy that are secure, efficient, affordable and sustainable. Coal, oil, gas, bio-fuels, nuclear, hydro, solar and wind will have to meaningfully contribute. ⮚ On the supply side, energy geopolitics and the impact of factors beyond the locus of control have emerged instrumental in shaping the trends. ⮚ Petroleum and Natural Gas Ministry continues to endeavour to ‘Reform, Perform and Transform’ the sector. ⮚ The Government has taken several reforms with far-reaching impacts in the sectors of Exploration and Production, Refinery, Marketing, Natural Gas and International Cooperation.

20th July. Banning of Unregulated deposits Bill

● Context: A legislation titled the ‘Banning of Unregulated Deposit Schemes Bill 2019’ was re-introduced in the Lok Sabha. ● The Union Cabinet had recently approved the banning of Unregulated Deposit Schemes Bill, 2019. It will replace the banning of Unregulated Deposit Schemes Ordinance, 2019. ● The Bill will help tackle the menace of illicit deposit taking activities in the country, which at present are exploiting regulatory gaps and lack of strict administrative measures to dupe poor and gullible people of their hard-earned savings. ● Background: The banning of Unregulated Deposit Scheme Bill, 2018 was considered by the Lok Sabha in its sitting held in February, 2019 and after discussion, the same was passed, as amended through the proposed official amendments, as the banning of Unregulated Deposit Scheme Bill, 2019. However, before the same could be considered and passed in the Rajya Sabha, the Rajya Sabha was adjourned sine die on the same day. ● Major Highlights of the Bill: ⮚ The Bill makes it clear that no deposit taker shall, directly or indirectly, promote, operate, issue any advertisement soliciting participation or enrolment in or accept deposits in pursuance of an unregulated deposit scheme. ⮚ It also says that no deposit taker, while accepting deposits pursuant to a regulated deposit scheme, will commit any fraudulent default in the repayment or return of deposit on maturity or in rendering any specified service promised against such deposit. ⮚ No person by whatever name called shall knowingly make any statement, promise or forecast which is false, deceptive or misleading in material facts or deliberately conceal any material facts, to induce another person to invest in, or become a member or participant of any unregulated deposit scheme. ⮚ The Bill also says that its provisions will not apply to deposits taken in the ordinary course of business. In other words, the Bill allows genuine businesses and individuals can borrow money from their relatives or friends to tide over a crisis or for personal reasons. ⮚ The Bill provides for deterrent punishment for promoting or operating an unregulated deposit-taking scheme. It also prescribes punishment for fraudulent default in repayment to depositors. Imprisonment could be up to 10 years or/and fine up to ₹10 lakh. ⮚ Some offences such as operating unregulated deposit will be cognizable and non-bailable. ⮚ There will be designated court to deal with such matters. ⮚ The Bill talks about priority of depositors’ claim. It means that any amount due to depositors from a deposit taker shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the appropriate Government or the local authority. ⮚ The Bill, once enacted, will empower the Central government to designate an authority which shall create, maintain and operate an online database for information on deposit takers operating in India. ⮚ Uniform regulatory framework:

▪ Non-banking entities are allowed to raise deposits from the public under the provisions of various statutes enacted by the Centre and States. ▪ However, the regulatory framework for deposit taking activity in the country is not seamless. The regulators operate in well-defined areas within the financial sector by regulating particular kinds of entities or activities. ▪ Similarly chit funds, money circulation including multi-level marketing schemes and schemes offered by co-operative societies are under the domain of the respective State Governments. ▪ In the same manner, the Collective Investment Schemes come under the purview of the Securities and Exchange Board of India. ▪ Despite such diverse regulatory framework, schemes and arrangements leading to unauthorised collection of money and deposits fraudulently, by inducing the public to invest in uncertain schemes promising high returns or other benefits, still operate in the society. The Bill has been brought to put in place a uniform mechanism to deal with such menace.