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Admin 2020-02-05

05 Feb 2020: The Hindu Editorial Analysis

1) On the case of a maritime presence adrift


  • CONTEXT: India’s negligible presence and interventions in the International Maritime Organization is affecting its interests.
  • As the millennium dawned, the world feared that computers would crash because of the Y2K bug. Twenty years later, as 2020 kicked in, there were fears that merchant ships would sputter to a halt, disrupting world trade.
  • THE REASON? The International Maritime Organization (IMO), the United Nations agency tasked with regulating shipping, had mandated that merchant ships should not burn fuel with sulphur content greater than 0.5% beginning January 1.
  • Before the ban, fuel had a comfortable sulphur content limit of 3.5%, which was applicable to most parts of the world.

  • CONCERN OF INDUSTRIES: Despite the industry gradually gearing up to introduce the new fuel, many industry professionals feared that the new very-low-sulphur fuel would be incompatible with the engines and other vessel equipment.
  • Past mandates on sulphur limits in American waters had led to many technical problems. There have been instances of ships having been stranded after fine particles separated out from the fuel, damaging equipment and clogging up devices.
  • This has not happened so far. But the global sulphur cap is only one of the many environment-related regulations that have been shaking up the shipping industry; the industry is generally risk-averse and slow to accept changes. 
  • For instance, efforts are ongoing to reduce nitrogen oxides (NOx) and ozone-depleting gases. 
  • Further, the IMO has announced an ambitious project to decarbonise shipping in order to reduce carbon emissions. 
  • These regulations are triggering massive technological, operational and structural changes; they come at a price which will have to be borne to a large extent by developing countries such as India.
  • The IMO currently lists India as among the 10 states with the “largest interest in international seaborne trade”. 
  • But India’s participation in the IMO to advance its national interests has been desultory and woefully inadequate.
  • GLOBAL REGULATOR: Shipping, which accounts for over 90% by volume and about 80% by value of global trade, is a highly regulated industry with a range of legislation promulgated by the IMO.
  • The IMO currently has 174 member states and three associate members; there are also scores of non-governmental and inter-governmental organisations.
  • The IMO’s policies or conventions have a serious impact on every aspect of shipping including the cost of maritime trade. 
  • The sulphur cap, for instance, will reduce emissions and reduce the health impact on coastal populations but ship operational costs are going up since the new fuel product is more expensive. 
  • As refineries including those in India struggle to meet the demand, freight costs have started moving up, with a cascading effect on retail prices.
  • The IMO, like any other UN agency, is primarily a secretariat, which facilitates decision-making processes on all maritime matters through meetings of member states. 
  • The binding instruments are brought in through the conventions — to which member states sign on to for compliance — as well as amendments to the same and related codes.

  • STRUCTURE OF IMO: Structurally, maritime matters are dealt by the committees of the IMO - the Maritime Safety Committee (MSC), Marine Environment Protection Committee (MEPC), Technical Cooperation Committee, Legal Committee and the Facilitation Committee. 
  • Each committee is designated a separate aspect of shipping and supported by sub-committees. Working groups and correspondence groups support the subcommittees.
  • The subcommittees are the main working organs, where the proposals from a member state are parsed before they are forwarded to one of the main committees. 
  • The main committees, thereafter, with the nod of the Assembly, put the approved proposal for enactment through the Convention, amendments, and codes or circulars.
  • REPRESENTATION OF NATIONS: Prominent maritime nations have their permanent representatives at London and are supported by a large contingent (of domain experts from their maritime administration, seafarers and industry associations) during the meetings. 
  • They ensure that they have representation in every subcommittee, working group and even correspondence groups so that they are clued in. 
  • Lobbying is key while event sponsorship generates goodwill and support.
  • A FEEBLE VOICE: To ensure that their maritime interests are protected, the European countries move their proposals in unison and voting or support are given en bloc. 
  • China, Japan, Singapore, Korea and a few others represent their interests through their permanent representative as well as ensuring that a large delegation takes part and intervenes in the meetings.
  • INDIA'S APATHY: While these countries have fiercely protected their interests, India has not. 
  • For example, its permanent representative post at London has remained vacant for the last 25 years. 
  • Representation at meetings is often through a skeletal delegation, approved by the Ministry. 
  • Participation in IMO meetings is seen more as a junket. 
  • A review of IMO documents shows that the number of submissions made by India in the recent past has been measly and not in proportion to India’s stakes in global shipping.
  • There have also been obstacles in pushing issues which are of importance to India. A classic case was the promulgation of “High Risk Areas” when piracy was at its peak and dominated media headlines.
  • PIRACY ISSUE: The IMO’s demarcation resulted in half the Arabian Sea and virtually the entire south-west coast of India being seen as piracy-infested, despite the presence of the Indian Navy and Coast Guard. 
  • The “Enrica Lexie” shooting incident of 2012, off the coast of Kerala was a direct fallout of the demarcation.
  • The “High Risk Area” formulation led to a ballooning of insurance costs; it affected goods coming into or out of India. 
  • It took great efforts to revoke the promulgation and negate the financial burden. The episode highlighted India’s apathy and inadequate representation at the IMO. 
  • There was also great difficulty in introducing the indigenously designed NavIC (NAVigation with Indian Constellation) in the worldwide maritime navigation system.
  • In contrast, the European Union has a documented procedure on how to influence the IMO. New legislative mandates, fitment of new equipment and changes to ship structural designs being brought on have been driven by developed countries. 
  • CONCLUSION: They are not entirely pragmatic from the point of view of India’s interests. Further, it will not be mere speculation to see them as efforts to push products and companies based in the West.
  • So far, India’s presence and participation in the IMO has been at the individual level. India should now make its presence felt so that its national interests are served. It is time India regained its status as a major maritime power.

 

2) In defence of a shared vision


  • CONTEXT: Defence cooperation has been one of the fundamentals of the bilateral relationship between India and France, which enabled it to develop a close and ambitious strategic partnership for over 20 years.
  • DefExpo to be held at Lucknow will se an exhibition as old as France and India’s strategic partnership - which will again see a strong French representation in 2020.
  • France’s seven biggest defence companies (Airbus, Dassault, MBDA, Naval Group, Nexter, Safran and Thalès) will be present, and around 15 SMEs will showcase their know-how of naval, land and air defence technologies, either at the French stand or with their Indian partners.
  • FRANCE'S COMMITMENT TO INDIA'S MAKE IN INDIA: Apart from the expertise of the French arms industry, this presence also marks France’s full commitment to supporting the Indian government’s Make in India programme in the defence sector. 
  • This is not a new-found commitment nor one of convenience, but is part of our longstanding bilateral relations. 
  • It is also in line with a certain idea that India and France have of themselves and their way of carrying weight in global matters - that of building their strategic autonomy.
  • DEFENCE COOPERATION: The defence cooperation between our two countries can be traced back to the first few years following India’s Independence. 
  • As early as 1953, the Indian Air Force was equipped with a hundred Toofani fighter jets from Dassault, then the Mystère IV, which defended India in tough times. 
  • This marked the first page in the history of our cooperation in military aviation, which also recorded the supply of 60 Mirage 2000s in the 1980s - whose performance continues at superlative levels; 
  • And of course, the ongoing delivery of 36 Rafales on schedule. 
  • The first batch of aircraft, currently being used to train Indian pilots, will land at Air Force Station Ambala within a few months.
  • Defence cooperation has been one of the fundamentals of the bilateral relationship, which enabled us to develop a close and ambitious strategic partnership for over 20 years. 
  • Today, that partnership has been deployed in the maritime domain, in support of our joint strategic vision for the maintenance of stability and security in the Indo-Pacific. 
  • As far as naval equipment is concerned, the Indian Navy has already commissioned two of the six submarines built in Mumbai as part of an industrial partnership between Mazagon Dock Shipbuilders Limited (MDL) and Naval Group. 
  • French companies will, of course, continue to be there to contribute to meeting needs for additional capabilities for the Indian Navy or the Indian Coast Guard.

  • INDUSTRIAL COOPERATION: As for industrial cooperation, the French approach has always been, whenever possible, to offer partial indigenous production in India. 
  • France was largely a precursor with regard to Make in India, with HAL manufacturing the light helicopters Cheetah and Chetak, and BDL’s Milan anti-tank missile in India in the 1960s. 
  • It continues this policy today. The plant built under the Dassault Aviation and Reliance joint venture will enable, for example, the complete production of the Falcon 2000 business jet here in India by 2022. 
  • After the delivery of the first two Scorpene submarines, transfers of technology provided by the Naval Group enabled MDL to be solely in charge of building the next four submarines: 
  • The design of these submarines has thus become a largely Indian knowhow. Safran will soon inaugurate an aircraft wiring systems factory in Hyderabad and also build another major facility to manufacture LEAP turbofan engine components. 
  • Thales is investing massively in engineering works in Bengaluru, MBDA is building a plant in Coimbatore and French aeronautical equipment manufacturer Latécoère recently inaugurated a factory in Belgaum. 
  • Over 7,000 people, including 1,500 engineers, are currently employed in Airbus projects across the country. I could continue giving more such examples that show how Make in India has been and is a practice for French aeronautical and defence firms, both yesterday and today.
  • These concrete industrial partnerships benefiting both our countries are the future of the defence relations. So is the industry. 
  • The French aerospace industries association, GIFAS, and GICAN, the French Marine Industry Group, are organising a seminar focused on this subject during DefExpo. 
  • Along with the Society of Indian Defence Manufacturers (SIDM), they are exploring opportunities for developing Indo-French industrial partnerships at all stages of the production chain. 
  • This long-term bet by France is illustrated by the roots set down by our industries in India: GIFAS opened a permanent office in Delhi in 2018 and 60 of its members are in India through 75 organisations, 20 joint ventures and more than 25 production plants. 
  • Further, more than 15 French companies from the naval sector are present in India to work on ongoing projects.
  • CONCLUSION: India can count on France being by its side for its Make in India enterprise. We share the same vision for a new balanced multipolar world, which must be based on the rule of law. 
  • We also share the same vision on the main challenges of our times, be they security developments in Asia and the Indo-Pacific, or combating international terrorism. 
  • But it is by possessing the capability of ensuring our national security and making our strategic choices that we most efficiently defend our shared principles and visions.
  • It is first and foremost because we are convinced that our joint action must rest on a network of solid cooperation as well as the principle of autonomy that France and India are such strategic partners today.

 

3) On CAA protests: Need of the hour


  • As protests continue to ripple in many parts of the country against the Citizenship (Amendment) Act, 2019, or the CAA, the National Population Register (NPR) and allied issues, their nature, content and direction have drawn critical attention. 
  • The introduction of a religious test for Indian citizenship through the CAA evoked widespread public indignation. Right-thinking people from all walks of life mobilised in a manner befitting a vibrant democracy, and several State governments and Assemblies have expressed reservations. 
  • Students have been in the forefront of protests that marked an awakening from a defeatist slumber of the country in the face of creeping majoritarianism. As the protests linger on, however, they appear to be sliding into the control of vested interests that work for religious polarisation. 
  • The discriminatory CAA targets Muslims, but the protests were driven by the wider civil society at the beginning. Incendiary speeches and slogans at anti-CAA protests, and even support for Islamist politics, have put non-sectarian opponents of the law in a difficult spot. 
  • Muslims have equal rights as all other citizens of India to assemble and protest, but reducing the CAA debate into a question of their rights alone is dishonour of the pluralist, inclusive Constitution of secular India. 
  • After the success in kindling a national debate on the issue which is now before the Supreme Court that will litigate its constitutionality, anti-CAA protesters must now hold their fire.
  • The opportunity that the ruling Bharatiya Janata Party (BJP) sniffed in the protests is not to reach out and reconcile, but to confront and polarise, particularly in the campaign for the Delhi Assembly election. The chilling effect of the party’s brazen vilification and dehumanisation of the protesters is no longer an abstract fear. 
  • Three separate incidents of firing at protesters, two clearly inspired by Hindutva politics, have been reported in Delhi. Far from condemning these incidents in the strongest terms and ensuring swift and strict police action, the BJP leadership has continued with divisive rhetoric. 
  • A Union Minister led slogans calling for the “shooting of traitors”. The BJP must immediately adopt a path of reconciliation and resolution. One way is by making a further amendment to the CAA that will not prioritise religious persecution over other forms of persecution. 
  • No protester is against welcoming the persecuted from three neighbouring countries listed in the CAA. By amending the law to remove the arbitrary selection of countries and religious groups, the current turmoil can be easily calmed. A small step of reason and vision will serve India well.

 

4) On Continuity and fiscal follow-through


  • The appointment of the Fifteenth Finance Commission by the President of India under Article 280 of the Constitution was notified on November 27, 2017. It was required to submit the report by October 30, 2019 for five years for the period 2020-21 to 2024-25. 
  • However, due to various political and fiscal developments, notifications were issued first, on July 27 extending the tenure of the Commission up to November 30, 2019, and again on November 29 requiring it to submit two reports, one for 2020-21 and the second covering the period of five years beginning April 1, 2021 and further extending the tenure up to October 30, 2021. 
  • The first report submitted by the Commission was placed in Parliament by the Union Finance Minister before presenting the Union Budget on February 1, 2019.
  • Basis for extension: There were good reasons for extending the tenure of the Finance Commission as making medium-term projections in the current scenario would have entailed serious risks. First, the abolition of Statehood to Jammu and Kashmir required the Commission to make an estimation excluding the Union Territory. 
  • Second, the deceleration in growth and low inflation has substantially slowed down the nominal GDP growth which is the main tax base proxy; making projections of tax revenues and expenditures based on this for the medium term could have posed serious risks. 
  • Finally, poor revenue performance of tax collection and more particularly Goods and Services Tax combined with the fact that the compensation agreement to the loss of revenue to the States was effective only two years of the period covered by the Commission’s recommendations posed uncertainties.

  • On projections: The Commission has continued with the approach and methodology adopted by the previous Commissions for tax devolution and revenue-gap grants. 
  • It has made projections of revenues and revenue expenditures of the Union and individual States, applied selective norms to the latter, recommended devolution of taxes to the States from the divisible pool, and recommended revenue deficit grants for the States which had post-devolution gaps. 
  • Although there were apprehensions that it may deviate from past practice as the terms of reference of the Commission had indicated, “The Commission may also examine whether revenue deficit grants be provided at all”, it continued with the past practice.
  • By stating that, “…stability and predictability of resources is an essential component of good long-term budgeting for both Union and States”, the Fifteenth Finance Commission continued with the recommendation of the previous Commission relating to vertical division of taxes, and adjusted the States’ share to 41% to exclude the share of Jammu and Kashmir. 
  • There were media reports that the share would be reduced and by maintaining the share, the Commission has avoided controversy. However, for the period 2021-25, it has stated: “Our recommendation in the final report would undergo changes and adjustments as appropriate, in the light of subsequent data and analysis”. 
  • For the horizontal shares, however, the formula has been changed to consider “fiscal needs, equity and efficiency”.
  • Addressing States’ concerns: In addition to income distance, population and area and forest cover, it has used two additional factors - demographic performance and tax effort. It has assigned 15% weight to the 2011 population, reduced the weight of income distance to 45%, increased the weight to forest cover and ecology to 10% and 12.5% weight to demographic performance and 2.5% weight to tax effort. 
  • There was considerable controversy over the terms of reference of the Commission requiring it to use 2011 population in its formula by the States that had taken initiatives to arrest population growth.
  • By keeping the weight of 2011 population at 15% and giving an additional 12.5% to demographic performance which is the inverse of fertility rate, the Commission has shown sensitivity to the concerns of these States.
  • In terms of relative shares in tax devolution, among the major States the biggest loser is Karnataka followed by Uttar Pradesh, Kerala, Telangana and Andhra Pradesh. Kerala and Andhra Pradesh have post-devolution gaps and hence qualify for revenue gap grants. 
  • The major reason for Karnataka and Kerala losing on devolution is that their per capita income growth has been faster than most other States. The difference from the highest per capita income in both Karnataka and Kerala is just about 10% now as compared to 34% and 23%, respectively, for the two States when the Fourteenth Finance Commission made the recommendation. 
  • In the case of Karnataka and Telangana, as the projected transfer (devolution and revenue-gap grants) in 2020-21 were lower than 2019-20, the Commission recommended a special grant of ₹5,495 crore and ₹723 crore, respectively. However, the government has not accepted the recommendation and has asked the Commission to reconsider it.
  • Local body grants: The recommended grants for local bodies amount to ₹90,000 crore comprising ₹60,750 crore for panchayats and the remaining ₹29,250 crore for municipal bodies. All the three layers of panchayats will receive the grant and 50% of the grant is tied to improving sanitation and supply of drinking water; the remaining is untied. 
  • In the case of municipal bodies, ₹9,229 crore is allocated to cities with a million-plus population and the remaining ₹20,021 is allocated to other towns. In the case of disaster relief, the Commission has recommended the creation of disaster mitigation fund at the Central and State levels. 
  • For disaster management, a total of ₹28,183 crore has been determined of which the Central contribution will be ₹22,184 crore. Inter-State allocation is made based on past expenditures, area and population and disaster risk index.
  • The Commission has worked out a framework for giving some sectoral grants as well. For 2020-21, it has recommended ₹7,735 crore for improving nutrition based on the numbers of children in the 0-6 age group and lactating mothers. 
  • In the main report, it has proposed to give grants for police training, modernisation and housing, railway projects in States taken on a cost-sharing basis, maintenance of the Pradhan Mantri Gram Sadak Yojana roads, strengthening the judicial system, and improving the statistical system. 
  • The States are required to prepare the necessary grounds. It has also presented a broad framework for recommending monitorable performance grants for agricultural reform, development of aspirational districts and blocks, power sector reform, and incentives to enhance trade including exports and pre-primary education. 
  • The 15th Finance Commission, by and large, has gone with the approach and methodology of earlier Commissions. The challenge, however, will be to design and dovetail sectoral and performance grants with the existing plethora of central sector and centrally sponsored schemes.