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IASbaba’s Daily Current Affairs – 18th Aug 2017

INTERNATIONAL

TOPIC: General Studies 2

India and its neighbourhood- relations.

Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

Effect of policies and politics of developed and developing countries on India’s interests

Indian diplomacy in China

Background:
Prime Minister Narendra Modi’s schedule of foreign visits has been extremely impressive. Estimating outcomes from these visits is, however, more difficult.

Israel:

In the case of Israel, this being the first ever visit by an Indian Prime Minister to that country we saw de-hyphenation of Israel from Palestine.
It produced better dividends, including elevation of the India-Israel relationship to the level of a ‘strategic partnership’.
The main focus of the visit was on defence cooperation, joint development of defence products and transfer of technology.
Most of the agreements signed were related to transfer of technology and innovative technology-related items. India expects to benefit substantially, considering that Israeli export rules are far more flexible than those of the U.S.
Both countries expressed a strong commitment to combat terror. .

Challenges in Israel:

China’s presence- China is a far bigger investor and trading partner of Israel than India. The $40 million Innovation Fund, India and Israel decided to set up to allow Indian and Israeli enterprises to develop innovative technologies and products for commercial applications, is clearly dwarfed by the Israel-China comprehensive innovation partnership which has an outlay of $300 million.
India and Israel also have differences over China’s BRI: Israel is eager to participate in it, unlike India, and possibly views this as an opportunity to develop a project parallel to the Suez Canal.
When the two countries speak of terrorism, they speak of very different things. Iran and Hezbollah are the main targets for Israel, which has little interest in the Afghan Taliban or Pakistan’s Lashkar-e-Taiba. For India, it is the latter that matters.

Strategic imbalance in South Asian region:

Two countries where India’s diplomacy, despite the impetus given to it, is currently facing heavy odds are China and Pakistan.

India’s neighbors:

China in Asia is already exercising some of the political and economic leverages that the U.S. previously possessed.

China has a significant presence in East and Southeast Asia and is steadily enlarging its presence in South Asia, and is also beginning to expand into West Asia. For instance, China’s influence in Iran today appears to be at an all-time high, whereas India’s influence seems to be diminishing.
A divided ASEAN has provided China with an opportunity to demonstrate its economic and military muscle. Most countries in the region also demonstrate a desire to join China-based initiatives.
Even in South Asia, despite India’s commanding presence, China has been successful in winning quite a few friends among India’s neighbours such as Bangladesh, Nepal, Sri Lanka and the Maldives.

Pakistan:

In the case of Pakistan, the implosion of the state arising from its internal stresses and problems, together with the virtual standoff between India and Pakistan has enabled the Pakistani Deep State to further entrench itself. India has been left with few options.
As Pakistan becomes still more deeply mired in problems, its dependence on China is growing. This is contributing to a strategic imbalance in the South Asian region.

Russia:

Notwithstanding India’s efforts, the diplomatic scene vis-à-vis Russia also could be better.

Russia is undergoing a strategic resurgence of sorts, sustained in good measure by the close relations recently established with China.
Buoyed by developments in the Ukraine and Crimea, and the uncertainties surrounding U.S. commitment to NATO, the new Russia-China ‘strategic congruence’ is certain to impact Asia.
The problem for India and Indian diplomacy is that at this time India-Russia relations appear less robust than at any time in the past half century.

West Asia:

In West Asia, Indian diplomacy still lacks the agility (quickness) required to deal with fast-changing situations.
In West Asia, despite its long-time presence in the region, a 9-million strong diaspora, and the region being its principal source of oil, India is not a major player today.
Both Russia and China have overtaken India in the affairs of the region. This is particularly true of Iran where the Russia-China-Iran relationship has greatly blossomed, almost marginalising India’s influence.

Fadeout in West Asia:

India’s absence from, and its inability to play a role in, West Asia, even as the region confronts a split down the line between the Arab and the non-Arab world is unfortunate.
There is the possibility of a series of confrontations between an increasingly powerful Shiite Iran and a weakening Saudi Arabia. The most recent challenge is the one posed by Qatar to the existing order in the West Asian region.
The fallout of all this will impact India adversely and Indian diplomacy’s inability to make its presence felt will matter.
An additional concern for India would be that growing uncertainties in the region could further fuel radical Islamist terror in the region.

In Asia-Pacific:

In the Asia-Pacific, India has to contend with an increasingly assertive China.
There is little evidence to show that India’s diplomatic maneuvers individually, or with allies like Japan, have succeeded in keeping the Chinese juggernaut at bay — or for that matter provide an alternative to China in the Asia-Pacific.

The ‘Act East’ policy though has produced better results- Closer relations with countries in East and South-East Asia, especially Japan and Vietnam, are a positive development.

Conclusion:

Indian diplomacy needs to find a way to steer amid an assertive China, a hostile Pakistan, an uncertain South Asian and West Asian neighbourhood, and an unstable world. The strategic and security implications of these, individually and severally, need to be carefully validated and pursued. Indian diplomacy may possibly need to display still higher levels of sophistication to overcome the odds.

Connecting the dots:

Indian diplomacy needs to find a way to steer amid an assertive China, a hostile Pakistan, an uncertain South Asian and West Asian neighbourhood, and an unstable world. Elaborate.

NATIONAL

TOPIC: General Studies 3

Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Infrastructure: Energy, Ports, Roads, Airports, Railways etc

Indian Railways: Troubles and Way out

Indian Railways is facing the law of unintended consequences. It is up against multiple headwinds, such as faster awarding and implementation of national highway projects, decreasing dependency on coal compounded by increasing thrust on renewable energy, and airlines weaning away AC class passengers, and the regional connectivity scheme UDAAN.

Potential Troubles for Indian Railways

Freight transport losing to roadways:

Indian Railways sustains itself on two businesses — freight and AC class passengers. While freight contributes to two-thirds of revenue (coal transport alone contributes to half of that), nearly a third of passenger revenue comes from AC class passengers (who constitute just 1.3 per cent of the total number of passengers travelling in a year).

In the past four decades, as more highways got built, the share of roads in freight transport has rocketed from 30 per cent to 70 per cent also the pace of highway construction is only accelerating. That will have ramifications for the Railways.
Financially, as freight income is used to subsidise passenger tickets, so any shortfall in freight revenue will be detrimental to the operating ratio of railways, which is already wallowing at a decadal low of 96.9 per cent.

Coal losing steam:

As solar power generation is becoming cheaper than thermal, and wind tariffs are heading southwards it will curb growth in coal freight.
A new law says coal cannot be transported without beneficiation for distances of more than 500 km.
Demand for cement and steel, which, along with coal account for about 70 per cent of annual railway freight, has been subdued for a while now.

Challenge from airlines:

India became the third-largest aviation market in the world after China and the US, by overtaking Japan. Domestic passenger traffic has grown 17.7 per cent in the first four months of 2017 on a fairly large base.

As the trend continues India will also see a signal shift this fiscal where flyers will outnumber AC-class rail passengers, with more than a push coming from UDAAN.

Reason behind:

Clearly, the railways face multiple headwinds, and the irony is that many of these emanate from government’s actions and disproportionate influence.

The government is a part of all phases of customer engagement by the railways — be it providing core infrastructure and its operation and maintenance, providing vehicles and their operation and maintenance, and lastly, bearing the financial risk that have ultimately given only poor returns.
In road and air transport, private entities have a lot more skin in the game so the financing and risk-sharing is well spread out.

The way out:

Given this context Indian Railways needs to offer total customer solutions, both in freight and for passengers.

For freight:

Offer door-to-door service by tying up with logistics providers. That would require investment in technology to ensure service predictability and cargo control to the last mile.
Decrease the freight rate and increase investments in priority projects.
Execute route decongestion and laying of new tracks on mission mode.
Encourage private sector participation in operation and maintenance, and even running of trains and terminals.
Get stakeholders involved in the core functioning of the rail network to benefit from optimum utilisation of finance and better management of workforce — a significant contributor to expenses.
Operationalise the two Freight corridors and move fast track the implementation of the others.

For passengers:

Create more pay-per-use ecosystems. While passengers buying second class tickets are the most by number, about 28 per cent of passenger revenue comes from those that buy sleeper class tickets. The railways can attract them by offering more facilities, in-train entertainment, station refurbishment and a material leap in punctuality.
Better customer experience in all the interfaces starting from ticketing, Station touch points, on board travel engagement (cleanliness, food and beverage, in coach facilities, etc.).
Passengers need convenience, cost-effectiveness, and timeliness. Today’s consumer has many choices, so the Railways will have to offer differentiators by reinventing itself rather quickly.

Also read: Reforming Indian Railways