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RaghukulCS
May 25, 2021

Daily Mains Newsletter For UPSC
| RaghukulCS

25 May 2021

Index

Mains Value Addition
Mains Analysis
Topic No	Topic Name	Source
1	A September exit, Afghanistan at the crossroads	The Hindu
2	The second wave challenge	Indian Express

Mains Value Addition

Widespread resentment in Lakshadweep over a slew of bad law proposals

Syllabus–GS 3: Environment

Analysis: –

Discontent is simmering beneath the calm, verdant environs of the Lakshadweep group of islands over a slew of regulations introduced by the new administrator.
COVID hit Lakshadweep after the stipulation for mandatory quarantine of Dweep-bound travellers in Kochi was done away with under his stewardship.
The 10 inhabited islands of the Union Territory are under lockdown for two months now.
The Dweep administration is accused of exploiting the inability of the public to mobilise to push what’s widely seen by the islanders as ‘arbitrary legislations’ that are out of sync with the social, political and environmental realities of the archipelago.
The latest draft regulation for the creation of a Lakshadweep Development Authority (LDA) is widely resented as the people suspect that this might have been issued at the behest of ‘real estate interests’ seeking to usurp the small holdings of property owned by the islanders.
Hundreds of islanders have written to the administrator demanding that the proposed regulationmakes provision for the orderly and progressive development of land in both urban and rural areas.
Objectives: –
- To preserve and improve the amenities thereof; for the grant of permission to develop land and for other powers of control over the use of land;
- To confer additional powers in respect of the acquisition and development of land for planning; and for purposes connected with the matters aforesaid” be withdrawn.

The regulation empowers the government, identified as the administrator, to constitute Planning and Development Authorities under it to plan the development of any area identified as having “bad layout or obsolete development.
An authority thus created would be a body corporate with a government-appointed chairman, a town planning officer and three ‘expert’ government nominees besides two local authority representatives.
The draft regulation defines development as the “carrying out of building, engineering, mining, quarrying or other operations in, on, over or under land, the cutting of a hill or any portion thereof or the making of any material change in any building or land or in the use of any building or land.”
It provides for forcible eviction, puts the onus on the owner to develop his holding as per the plan prepared by the authority as also to heavily penalise them in the event of non-compliance.
The island community is a close-knit group with families living in close proximity. The regulation will destroy the way of life practised by them for generations.

Explained: The US central bank’s plan for cryptocurrencies, and why it is significant

Syllabus -GS 3: Economy & Science & Tech

Analysis: –

The US has taken a decisive step towards issuing its own central bank digital currency, with the Federal Reserve announcing it will release a research paper later this year that explores the move further.
The US central bank comes in the wake of China joining multiple countries that have ended the central bank digital currency (CBDC) space, stoking concerns that this could undermine the US dollar’s position as the reserve currency of the world.

What did the US Fed say?

Though the US Fed did not set any specific plans on the currency, Fed Chairman Jerome Powell presented the progress of payments technology and said the central bank has been “carefully monitoring and adapting” to those tech innovations.
The effective functioning of our economy requires that people have faith and confidence not only in the dollar, but also in the payment networks, banks, and other payment service providers that allow money to flow on a daily basis.
The focus is on ensuring a safe and efficient payment system that provides broad benefits to American households and businesses while also embracing innovation.
The US Federal Reserve is going to issue a paper shortly that will focus on the benefits and risks of a CBDC, seeking public comment on whether it should go ahead with the plan and flagging the risks etc.
China had issued such a ban in 2017 as well, but compared with the previous ban, the new rules have expanded the scope of prohibited services, and surmise that “virtual currencies are not supported by any real value”.
In India, the government has floated The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will prohibit all private cryptocurrencies and lay down the regulatory framework for the launch of an “official digital currency”.

Mains Analysis

A September exit, Afghanistan at the crossroads

Why in News?

While the U.S.’s withdrawal will end its ‘forever war’, peace depends on what future steps the country’s stakeholders take.

Syllabus–GS 3: Economy

Background: –

The Joe Biden administration has proposed a new peace plan to the Afghan government and the Taliban.
It aims at seeking to bring violence to a halt and form an interim government.
In conflict resolution diplomacy involving multiple stakeholders, sometimes the venue becomes as important as the agenda of peace talks.
The fragile Afghanistan peace process has been in disarray as the Washington-desired conference to be hosted by the United Nations in Istanbul, Turkey remains suspended due to the reluctance of Afghan’s Taliban.

What is the American proposal?

A UN-led conference of representatives of Russia, China, Pakistan, Iran, India and the U.S. “to discuss a unified approach to support peace in Afghanistan”.
Khalilzad will share written proposals with the Afghan leadership and the Taliban to accelerate talks. It urges both sides to reach a consensus on Afghanistan’s future constitutional and governing arrangements; find a road map to a new “inclusive government”; and agree on the terms of a “permanent and comprehensive ceasefire”.
It has also proposed a senior level meeting of the Afghan government and the Taliban in Turkey to discuss power sharing, reduction of violence and other specific goals.

Why the U.S. is making this peace push?

The Biden administration is currently reviewing its Afghan strategy.
The “accelerating the peace process” is the best way to advance the shared interests of the U.S. and the Afghan government.
According to the agreement the U.S. signed with the Taliban in February 2020, American troops – currently some 2,500 troops are in Afghanistan – are set to leave the country by May 1.
The Taliban have warned that if the U.S. troops are not out by the deadline, they will step up fighting.
The Taliban and the Afghan government started peace talks in Doha in September last year but reached no breakthrough.
The Biden administration is concerned about the slow pace of the talks.

An American calibration

United States President Joe Biden is insistent on withdrawing the troops on September 11, even without any power-sharing deal between the warring parties.
With rising level of violence, prospects of negotiating peace in Afghanistan seem bleak. Since the announcement of an exit date, Afghanistan continues to witness deadly attacks across its provinces.
Taliban have kept the space open for engagement with the Afghan government. After a long pause in peace talks, they met in Qatar.
By indulging in arbitrary acts of violence the Taliban are demonstrating that they are capable of seizing by military force what is not offered to them in peace talk negotiation.
There is a difference of views among Taliban commanders but this will only be visible after US withdrawal.

The real issue: –

Turkey had to announce the postponement of talks until the end of Ramzan.
Taliban have expressed an openness to attend the Istanbul summit.
The real issue regarding Afghan peace, however, should be: ‘what’ is to be done, and not ‘who’ does it or ‘how’ it is done.

Pakistan’s emergence

Pakistan is the most important player in the Afghan conflict.
US administration has not set timelines, upping the ante for many stakeholders.
S. military presence in Afghanistan had kept Washington reliant on Rawalpindi for operational and other support, Pakistan not only treated the U.S. as its geopolitical pawn but also smartly mobilised this factor against India.
Pakistan’s desire for “close economic cooperation, enhanced regional connectivity and common vision for a peaceful South Asia”.
To keep America invested in Pakistan on military, economic, and societal fronts, it needs to ensure a smooth transition of power in Kabul.
But Taliban-opposed Kabul government’s relations with Pakistan continue to be characterised by deep hostility and mistrust.
A Goodwill trip to Kabul by Pak Army Chief to Afganistan, to assure the Afghan leadership of Pakistan’s support for an “inclusive power-sharing arrangement”, Afghanistan President accused Pakistan of running “an organized system of support” for the Afghan Taliban.

Dealing with the President

US is trying to dissolve current government and set up a new governing system that would include the Taliban, which could finally decide the future distribution of power and changes to the Afghan Constitution.
But current leadership refuses to step down for an interim regime to take over, insisting that a new government should emerge through elections.
Current Afghan leader is seen as a figure who has deepened divisions among an already fractured Afghan political elite, besides failing miserably to wean the Pashtuns away from the Taliban.
The rival contenders for power are increasingly attacking leader’s legitimacy, challenging his motivations and grounds of support.
The Taliban now draw support from a wide variety of regional powers, including Russia, China and Iran. However, these countries too want the insurgent group to moderate its position.

China factor: –

The China have become more comfortable with America’s military presence in Afghanistan which has suppressed many terrorist groups which threaten China directly or Beijing-friendly regimes in Central Asia.
The US retrenchment has serious implications for China; it would leave it vulnerable to its spillover effects particularly in the restive Xinjiang province.
If all regional frameworks fail to achieve Afghan peace, Beijing will not hesitate in asking for a potential UN intervention, as revealed by Chinese authorities.

India’s stand: –

India has been the key regional backer of the Ghani government, supporting an “Afghan-led, Afghan-owned and Afghan-controlled” peace process.
India fears a Taliban-dominated regime in Kabul might allow Pakistan to dictate Afghanistan’s India policy.
Thus, India has underlined the need for “a genuine double peace” (within and around Afghanistan).

Finally, India and Pakistan

The strategic competition between Washington and Beijing, China’s growing rivalry with India, and New Delhi’s tense relationship with Islamabad are some of the factors which will affect the situation in Afghanistan.
Any reduction in tensions between India and Pakistan, will have an indirect stabilising effect on Afghanistan.
Pakistan has a direct stake in the success of peace talks because it is aware of the negative fallout of another cycle of violence in Afghanistan — unconstrained refugee flows and terror attacks inside its territory.
It remains to be seen how border fencing along the controversial Durand Line can minimise this negative fallout.

Way Forward: –

While the September 11 exit would bring the U.S.’s “forever war” to an end, it is unlikely to result in peace if Afghan stakeholders show their utter inability to take the process forward.
But If the path of negotiations is either abandoned or accepted half-heartedly, it will be impossible to stop Afghanistan’s descent into chaos and civil war.

Question: –

As opportunism and strategic boldness seem to have become the main structuring poles of Afghan conflict resolution diplomacy, India’s policy preference for courting Kabul’s traditional political elite has faced a distinctive drawback. Critically evaluatethe statement.

The second wave challenge

Why in News?

The second wave of the pandemic is receding although it continues to have a significant adverse impact on lives, livelihoods and the economy.

Syllabus–GS3:Issues related to resource mobilization & redistribution

The statistics: –

The overall GDP growth would be less than the earlier expectations — the GDP growth in 2021-22 is expected to be around 8 per cent.
The level of real GDP in 2019-20 was Rs 145.7 lakh crore. At the end of 2021-22, the level of GDP may be the same or lower than that in 2019-20.
In other words, India would have zero per cent or negative growth over the two-year period FY20 to FY22.
This is on top of the continuous slowdown of the economy during the eight quarters preceding the pandemic.
India may become a $5-trillion economy only in 2026-27 or beyond with the assumption of 12 per cent nominal growth in the next few years.
In other words, much more effort is required to compensate for the lost growth and put the economy on a higher growth path.

Lessons from COVID-19’s first wave

In the April 2021 issue of the Economy Watch, we have a detailed In-Focus section on ‘Reflecting on the COVID-19 year: losses and lessons.
In this write-up, we have developed an Index of Relative Shock with a view to providing a comparative profile of different countries and within a country, different sectors and segments.
We have argued that it may be relevant to measure the losses in the COVID-19 year not in absolute magnitudes but instead, in relative terms.

Impact & Issues:

The impact of 2nd wave will be lower than 1st but it is spreading to rural areas where health infra is very weak.
The overall GDP growth in 2021-22 would be less than the expected growth i.e. 8%, as per current data the GDP growth be the same or lesser than 2019-20.
This means India apart from having slow down for the past 8 quarters, would have zero growth for this financial year also.
India would take more years to become a $ 5 trillion economy, it requires much more effort to compensate for the lost growth & to put a higher growth path.
Similar to 1st wave, 2nd wave is widening the inequalities.
The State of Working in India 2021 report, revealed that both poverty & inequality increased during 1st wave which pushed 230 million people into poverty.
The CMIE data shows a decline in incomes & rising unemployment during the 2nd wave.
Currently, 56% of households reported income loss & Unemployment peaked at 14.5%, higher in rural areas.
Recent RBI bulletin says that the impact of the 2nd wave appears to be U- Shaped where the most vulnerable are blue-collar, unorganized & front-line workers.

A 3-Pronged Approach: Steps needed for Higher Growth & Inequality Reduction:

The need is to have a Aggressive vaccination programme & improving healthcare facilities both in rural & urban areas:

The crisis has to be used as an opportunity to revamp & create universal healthcare facilities, particularly for rural areas.
Govt needs to focus more on reducing Vaccine inequality between urban & rural areas.
Reducing the health crisis can lead to an economic revival.

Capital investment in infrastructure:

The Development Financial Institution for long-term infrastructure project funding is being established.
The infrastructure investment boost can lift the economy out of the slowdown, revive employment & reduce inequalities.

Need for Safety Nets:

During the last 1 year, MSMEs & informal workers have been experiencing loss of earnings due to COVID waves.
Therefore govt needs to provide safety nets in the form of food grains, expand work under MGNREGA in both urban & rural areas & undertake a cash transfer to provide a minimum basic income.
RBI on economic growth says that the biggest toll of the 2nd wave is in terms of a demand shock as aggregate supply is less impacted.

The two views on Consumption revival:

Once 2nd wave subsides & the majority vaccinated, consumption returns to normal levels.
The demand will be a constraint because of loss of income & employment.
From the present 30% of GDP, the investment has to be increased in the medium term to 35%-40% of GDP for higher growth & job creation.
As the global economy is reviving, India needs to come out from protectionist regime & reduce tariff rates because Export is the main engine of growth & employment creation.
Although Monetary policy is accommodative, the fiscal policy needs to play a vital role in achieving the growth objectives, jobs & equity by expanding the fiscal base.

Way Forward: –

On economic growth, the RBI Bulletin says that “the biggest toll of the second wave is in terms of a demand shock” as aggregate supply is less impacted.
There are two views on a consumption revival. One view is that once the second wave subsides and the majority are vaccinated, consumption will return to normal levels.
The second view is that demand will be a constraint because of loss of incomes and employment.
In the medium term, the investment rate has to be increased from the present 30 per cent of GDP to 35 per cent and 40 per cent of GDP for higher growth and job creation.
There is positive news on exports as the global economy is reviving. Export is one of the main engines of growth and employment creation.
However, in recent years India’s trade policy has become more protectionist and the country has to reduce import tariff rates.

Question: –

For a more equitable post-pandemic growth, the need of the hour is to include vaccination, rural healthcare expansion & cash transfers as a part of the strategy to boost demand & address inequalities. Discuss.