IASbaba’s Daily Current Affairs – 5th June 2017

Archives

INTERNATIONAL

TOPIC:  General Studies 2:

• India and its International 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 diaspora.

Re-engaging with Europe

Prime Minister Narendra Modi’s recent visit to Germany, Spain, Russia and France brings into sharp focus the shared dilemma India and Europe face with America’s shifting policies, and the resultant flux on the world stage.

Europe’s disappointment with Mr. Trump:

German Chancellor Angela Merkel’s strong comments aimed at President Donald Trump, that Europe could no longer ‘depend’ on traditional partners. Europe’s disappointment with Mr. Trump at the G-7 and NATO summits was three-fold:

• His refusal to reaffirm NATO’s Article 5 on ‘collective defence’
• His warning on the trade deficit with Europe.
• His decision to pull America out of commitments in the Paris Agreement on climate change.

India’s disappointment with Mr. Trump:

• The U.S. in the past few months has forged closer ties with China, indicating what Mr. Modi called a loosening of the world order,
• The U.S. has targeted Indian professionals and businesses to protect American jobs.
• Trump’s comments on the Paris Accord when he blamed India and China for what he called an unfair deal.

Forging new alliances:

The time has come to explore new ways to cooperate on multilateral issues, including terror, trade and climate change.

• The suspended India-EU free trade talks for the Broadbased Trade and Investment Agreement must be resumed at the earliest.
• Coupled with Trump’s warmth towards China and Russia, the unfolding Western divide has begun to complicate the assumptions of India’s international calculus since the end of the Cold War.
• India by aligning with Europe on mitigating climate change amidst US pull out of the Paris Accord and navigating the current divisions between Russia on the one hand and Germany and France on the other has shown diplomatic finesse(skill).

Concerns:

While the EU and India have a clear convergence in many areas, a dependable alliance can only come from a concurrent worldview.

• The Chinese Premier Li Keqiang’s visit to Berlin and Brussels recently saw the EU repose much more faith in Beijing than New Delhi would be comfortable with, given the current Sino-Indian tensions. European leaders praised President Xi Jinping’s leadership on connectivity and climate change. Europe perceives its single largest threat to be from Moscow, not Beijing.
• Modi’s attendance at the St. Petersburg International Economic Forum to unveil a new India-Russia vision statement for the 21st century along with President Vladimir Putin could cause similar discomfort in European capitals.
• India is soon going to formalise India’s membership of the Shanghai Cooperation Organisation, seen as a counter-NATO coalition of Russia, China and Central Asian states.

Way ahead:

• India and Europe have to understand each other better, build a more pragmatic and
• At a time when India is juggling its relationships with the United States, Russia and China, India-EU dynamic could be an important element in the country’s multilateral approach to the world
• The government should also use this pause to reflect on how it would like to leverage this partnership on the world stage where the EU may not be present as an ubiquitous functional entity just yet but where some or all members are present.
• The world must re-engage in a way that important issues like the climate change are addressed and remains vital no matter how the U.S. views it.

Conclusion:

Standing at a crossroads few had expected at this stage, India will have to consider its options carefully as it decides which coalitions to forge as the U.S. overturns traditional ties in favor of transactionalism. But to play the long game in these tumultuous times, India must get his domestic, economic and security decision-making in sync with the new global imperatives.
With Mr. Trump’s uncalled for behavior India needs to revamp its alliances with the rest of the world.

Connecting the dots:

• Discuss how important it is for India and Europe re-engage themselves as the world moves towards a new order with dramatic changes in U.S.’s policies towards rest of the world.

NATIONAL

TOPIC: General Studies 2:

• Salient features of the Representation of People’s Act
• Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Political funding: Maintaining transparency

Why in news?

The Election Commission has raised concerns regarding the recent amendments to the Representation of the People Act and Companies Act, effected through the Finance Bill, with respect to political funding. The Bill has a provision that allows anonymous donations by companies to political parties through electoral bonds. It is believed that anonymity would protect a company from reprisal by rival parties. The Bill also removes the limit on donations.

Electoral bonds:

Finance Minister, Arun Jaitley had introduced the electoral bonds in his Budget speech this year. These bonds which will resemble a promissory note and not an interest-paying debt instrument will be sold by authorized banks and can be deposited in notified accounts of political parties within the duration of their validity.

Advantages of Electoral Bonds:

• Transparency– Although the donors using the bonds will be anonymous (their names will not be disclosed in the audit report to be filed by the party), their records will nonetheless be maintained by the banks. Issuance of electoral bonds would ensure that only legitimate, tax paid, accounted money comes into the political system.
• Secrecy– This is particularly important for the donors in the sense that disclosing their identity can result in them facing attacks from rival or opposition groups. Earlier, political parties had to disclose details of the donors who made contributions above Rs 20,000. The provision made it possible to track the identity and volume of contributions received by every political party.
• Promoting digitization– This is one of the steps forward in the Digital India Campaign. Earlier, the donors used to donate in cash in fear of losing anonymity. As this was not curbed, huge chunks of black money flew into the party funds. But through creation of electoral bonds, donors could make digital payments and yet keep their identity secret.

Amendments proposed in Finance bill:

• The RP Act amendment exempts political parties from declaring donations received through the electoral bonds route,.
• The Companies Act has been updated to remove the ceiling on corporate donations to political parties. The Section 182(3) of the Companies Act has been thinned to exempt companies from revealing party-wise details of their political donations in their profit and loss statement. The Commission wants the government to reinstate the obligation to disclose party-wise details.

Concerns raised by Election Commission:

EC asked the government to review the amendments on the grounds that they would undermine transparency in funding of political parties.

Argument:

• In a situation where the contribution received through electoral bonds are not reported, on perusal of the contribution report of political parties, it cannot be ascertained whether the political party has taken any donation in violation of provision under Section 29(b) of the RP Act which prohibits the political parties from taking donations from government companies and foreign sources.
• The Companies Act has been diluted to lift the cap on corporate donations to political parties. Earlier, a company could not contribute more than 7.5% of its net profit over the last three years to parties. The EC has warned that the change in the law “opens up the possibility of shell companies being set up for the sole purpose of making donations to political parties with no business of consequence”. The law in the previous form, the EC has argued, ensured that “only profitable companies with proven track record could provide donations to political parties”.

Conclusion:

The opacity of political finance has been a significant part of the story of political corruption in the country. In light of the EC’s note of caution, the government needs to revisit the changes it has made both in the RPA and the Companies Act.

Connecting the dots:
Maintaining transparency in political funding has become an important issue which remains unresolved. Discuss how recent amendments proposed to the RP Act and the Companies Act makes the objective of maintaining transparency in political funding elusive.

Also read: Political funding in India- towards more transparency?

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