IASbaba's Daily Current Affairs Analysis

IASbaba’s Daily Current Affairs (Prelims + Mains Focus)- 7th December 2017

(PRELIMS+MAINS FOCUS)

India-Japan JWG on nuclear deal

Part of: Mains GS Paper II- International relations

Key pointers:

India and Japan will soon form a joint working group (JWG) that will identify the location, create joint ventures and establish a roadmap for building nuclear reactors in the country.
The JWG will comprise representatives from both private and public sectors of both countries.
The liability issue still remains a major concern with the Japanese. One of the main objectives of the JWG will be to find a way to address this issue by working jointly with the Indian government.

Indo-Japan nuclear deal:

The nuclear deal, which culminated six years of negotiation, was signed during Prime Minister Narendra Modi’s visit to Tokyo in November last year; it came into force in July 2017 after the Japanese Diet ratified it.
Under this deal, India will be the first country that is not a signatory to the nuclear non-proliferation treaty (NPT) to obtain Japanese nuclear technology.
Once implemented, the deal is expected to pave the way for smoother nuclear trade — not only in terms of nuclear technology but also nuclear material and nuclear equipment.
This will also enable both sides to expedite negotiations for concluding the Fissile Material Cut-off Treaty.

Article link: Click here

Rape of minors to attract death in M.P.

Part of: Mains GS Paper I- Social issues

Key pointers:

The Madhya Pradesh Assembly unanimously passed a Bill awarding death to those found guilty of raping girls aged 12 and below.
With this, Madhya Pradesh becomes the first State where those convicted of such rapes will face the gallows.
The Bill will now be sent to the President for his assent, after which it will become a law.
All parties supported the Bill in Assembly.

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Retreating Globalisation: U.S.

Part of: Mains GS Paper II- International relations

Key pointers:

The U.S. Supreme Court allowed the Trump administration to fully enforce its revised ban on people from eight nations from travelling to the country.
President Donald Trump’s decision has been challenged on questions such as his legal authority to issue such an order and whether it constitutes a religious test and a Muslim ban, as promised by Mr. Trump during the 2016 presidential campaign.
The Trump administration has argued before the courts that the travel ban is for national security.
Six of the eight countries barred by the order are majority-Muslim — Syria, Libya, Iran, Yemen, Chad and Somalia. North Korea and Venezuela are the other two.
Restrictions on travel by people from these eight countries vary in their details.
Recently, President had also withdrew U.S. from the UN’s Global Compact on Migration.

Article link: Click here

UAE and Saudi Arabia forms a different group

Part of: Mains GS Paper II- International relations

Key pointers:

The UAE on Tuesday and Saudi Arabia have formed a new economic and partnership group separate from the Gulf Cooperation Council (GCC).
The move that can undermine the regional bloc amid a diplomatic crisis with Qatar.
The new committee has been assigned to cooperate and coordinate between the UAE and Saudi Arabia in all military, political, economic, trade and cultural fields, as well as others, in the interest of the two countries.
The UAE and Saudi Arabia have cultivated even-closer ties in recent years.

Article link: Click here

(MAINS EXCLUSIVE)

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

Getting realistic about UNSC

Introduction:

Primarily at our initiative, the question of Security Council reform, its expansion, has been under consideration since 1970s. There is near unanimous support for increasing the number of non-permanent seats. There are issues unresolved and challenges when it comes to getting a permanent seat for India at UNSC.

Bodies of UN and their importance:

The two most prestigious organs of the United Nations are the Security Council and the International Court of Justice.

Security Council:

The Security Council has 15-member states.

Election to the UNSC is conducted only in the General Assembly and requires two-thirds majority to get elected.

The UNSC is by far more important from the national interest point of view. It deals with questions of peace and security as well as terrorism and has developed a tendency to widen its ambit into other fields, including human rights and eventually environment.
In addition to the Kashmir issue, which Pakistan forever tries to raise, there are other matters in which India would be interested such as the list of terrorists — Hafeez Saeed for example.

ICJ:

The ICJ has 15 judges.

Election to the ICJ is held concurrently in the UNGA and UNSC and requires absolute majority of the total membership in each organ. Veto does not apply for election to the ICJ.

The ICJ is required to represent the principal civilisations and legal systems of the world. The judges sitting on ICJ are expected to act impartially, not as representatives of the countries of their origin. That is why they are nominated, not by their governments but by their national groups in the Permanent Court of Arbitration based in The Hague.

To have an Indian judge at the ICJ, when we have an active case on its agenda regarding our national in illegal custody of Pakistan might be of some advantage.

Other bodies:

There are other bodies in the UN that are not as well known but are important enough to be represented on. Like:

The ACABQ (Advisory Committee on Administrative and Budgetary Questions) and the Committee on Contributions. The former consists of 16 members elected by the UNGA on the recommendation of the Fifth Committee of the UNGA dealing with the budget of the UN.
The Committee on Contributions recommends the scale of assessments to the budget and the share of each member. This is a very important function, since the share decided by the UNGA applies to all the specialised agencies, etc.
There is also the Human Rights Council; we have had almost continuous representation on it. The U.S. lost the election to it a few years ago; there is widespread resentment against the P-5’s presumption to a permanent seat on all bodies.

Unresolved issues:

The controversial question is about the increase in the category of permanent seats. The rationale for expansion has been accepted in-principle by nearly all, but the difficulty arises when the actual numbers and their rights are discussed.

India, along with Brazil, Germany and Japan, has proposed an increase of six additional permanent seats, the other two being for Africa.

The African group is demanding two permanent seats, recognised as reasonable by every member, but there are at least three and perhaps more claimants for the two seats.
Then there is the question of the rights of the additional members.
The G-4’s initial position was for the same rights as the present permanent members, essentially the veto right. Over the years, they have become more realistic and would be willing to forego the veto right. The firm position of the Africans is that the new members must have the same rights as the existing ones. This is a non-starter.

Getting realistic about UNSC:

The general membership of the UN wants to eliminate the existing veto; they will never agree to new veto-wielding powers. Variants of the veto provision have been suggested, such as the requirement of double veto, i.e. at least two permanent members must exercise veto for it to be valid. The P-5 are not willing to dilute their self-acquired right.
Many member-states have been pledging support for our aspiration for permanent membership.
Several P-5 countries have also announced support. The principal P-5 member opposing us is China.
The P-5 will never agree to give up their veto right, nor will they agree to accord this right to any other country. (France supports veto for additional permanent members.)
It has to be underscored that there is no way that India alone, by itself, can be elected as permanent member.
It will have to be a package deal in which the demands of all the geographical groups, including the Latin America and Caribbean group which, like Africa, does not have a single permanent member, will have to be accommodated.
Even if the America supports us, they will simply not lobby for India alone. They will try to get Japan also in. China will not support Japan’s candidature. The P-5 will play the game among themselves but will stand by one another, as was evident recently at the time of election to the ICJ.

Conclusion:

We should be realistic. If a permanent seat is not available, there are other proposals on the table.
One proposal is for the creation of ‘semi-permanent’ seats, according to which members would be elected for six-eight years and would be eligible for immediate reelection.
Given India’s growing prestige and respect, it should not be difficult for us to successfully bid for one of these seats; it might be a better alternative than to unrealistically hope for a permanent seat.

Connecting the dots:

India has been pursuing the UNSC reforms since 1970s. Off late New Delhi is eying a permanent seat at the UNSC. Though we have supporters to our claim, there are various challenges associated. In this light, India should get more realistic and try other options. Critically analyze.

ECONOMY

TOPIC:General Studies 3

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

Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

Investment models and Inclusive Growth.

Concept of Sovereign/Social wealth fund

What is Social wealth fund or Sovereign wealth fund?

A social wealth fund or sovereign wealth fund (SWF) is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds and whose dividends would be paid out directly to the citizenry.
The funding for a sovereign wealth fund (SWF) comes from central bank reserves that accumulate as a result of budget and trade surpluses, and from revenue generated from the exports of natural resources.
Unlike, the state-operated funds which are used in a discretionary manner that helps countries (for example Saudi Arabia) generate revenues and whose benefits end up flowing to the country’s richest. A social wealth fund would guarantee that the income from capital assets gets distributed widely—perhaps as a universal basic income.

Background/History:

The term “sovereign wealth fund” was first used in 2005 by Andrew Rozanov in an article entitled, “Who holds the wealth of nations?”
Sovereign wealth funds have existed for more than a century, but since 2000, the number of sovereign wealth funds has increased dramatically.

Establishment of SWF:

The motives for establishing a sovereign wealth fund vary by country.

For example, the United Arab Emirates generates a large portion of its revenue from exporting oil and needs a way to protect the surplus reserves from oil-based risk, thus it places a portion of that money in a sovereign wealth fund.
Japan faces the dilemma of a growing elderly population combined with a dwindling labor force and negative government bond yields. The nation’s public pension system is designed to have contributions from the working populace support its elderly citizens. Japan places these contributions as a SWF investing in global equities.

Many nations use sovereign wealth funds as a way to accrue profit for the benefit of the nation’s economy and its citizens.

Objectives of SWF:

The primary functions of a sovereign wealth fund are to stabilize the country’s economy through diversification and to generate wealth for future generations.

Every SWF has its own unique purpose and objective, but the general aim is to do something that will benefit the country as a whole. Some possible objectives include:

Fund social or economic projects to boost growth and employment.
Get political mileage and increase vote share.
Provide long-term capital growth opportunities for the domestic market.
Protect the economy from excess volatility due to revenues or exports.
Provide stability against oil price fluctuations.
Diversify portfolio with an aim to create savings for the future generation.

Benefits:

SWFs offer a variety of economic and financial benefits.

The SWFs of several nations enable governments to augment resources and achieve strategic objectives.
SWF’s earnings will diversify a country’s revenues and augment foreign exchange reserves or commodity revenues.
It helps to acquire strategic stakes in oil and gold companies.
They help avoid boom-bust cycles in their home countries, and facilitate the saving and transfer across generations of proceeds from fiscal surpluses related to commodity exports and privatizations.
Countries such as China and Singapore have used SWFs to meet their commodity import requirements, promote the expansion of domestic companies overseas, attract foreign direct investment and increase government revenues.
They help to combat inequality and provide macroeconomic stability.
SWFs would be socially owned and could be used to finance a range of public projects that benefit society as a whole. These might include investment in economic and social infrastructure and urban regeneration and strengthening mechanisms that encourage upward social mobility.

Conclusion:

SWFs can generate a sizeable fund over time, enough to fund a range of social programmes and possibly an annual citizen’s dividend, through a modest contribution from a very privileged social group.

Depending on how they are financed, these funds have the potential to be a powerful weapon in the anti-inequality armoury, they would boost social investment and greatly improve the overall balance sheet of the public finances in the process.

The emergence of sovereign wealth funds is an important development for international investing, and as regulation and transparency issues are resolved in the coming years, these funds are likely to take on a major role in shaping the global economy.

The Government of India (GoI) incorporating an SWF would facilitate achieving key political and economic goals.

Connecting the dots: