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29 05 20Notes

Title Working with China to resolve LAC issue – (Page number 1)

SL. NO. TOPICS

THE HINDUPAGE NO.

1 Working with China to resolve LAC issue 01

2 From a standoff to a stalemate 06

3 Beijing’s Ladakh Brinksmanship 07

4 For a reset in India Nepal relationship 06

5 Export Blocks (Editorial) 06

6 FDI rises 13% 15

7 Scrapping of RBI Bonds 11

Dated: 29. May. 2020DNS Notes - Revision

Syllabus GS II: International Relations GS III: Security Issues

Theme Ministry of External Affairs statement on India-China stand off

Highlights Context: Amidst India-China border dispute along Galwan Valley Region, Ministry of

External Affairs has said that both sides are engaged through military and diplomatic channels in Delhi and Beijing and at the Line of Actual Control (LAC) in order to resolve the situation along the boundaries in Ladakh and Sikkim.

Highlights by MEA Peaceful Engagement through Military and Diplomatic channels. India not to accept U.S. President Donald Trump’s offer to mediate between the

two countries as the issue is being discussed bilaterally. MEA did not give any detail of the nature or extent of standoff between the two

countries. MEA said that the border issue will be resolved according to five agreements on

border management signed by India and China between 1993 and 2013.

Statement of MEAIndia is committed to the objective of maintenance of peace and tranquility in the border areas with China and our armed forces scrupulously follow the consensus reached by our leaders and the guidance provided. At the same time, we remain firm in our resolve to ensuring India’s sovereignty and national security.

Confidence Building Measures (CBMs)The two countries are also engaged in Confidence Building Measures (CBMs) on the border with bilateral agreements signed in 1993, 1996, 2005, 2012 and 2013.

In 2003, the two sides agreed on the appointment of Special Representatives (SRs) for consultations aimed at arriving at a framework for a boundary settlement that would provide the basis for the delineation and demarcation of the border.

By the beginning of the 21st century, the two sides had agreed not to let the border dispute affect bilateral engagements. This was inked into the Agreement on Political Parameters and Guiding Principles for the Settlement of the India-China Boundary Question signed in 2005.

In 2012, India and China agreed on the establishment of a working mechanism for Consultation and Coordination on India China borders.

In November 2018, the Special Representatives of China and India held border talks at Chengdu in southwest China. The talks were aimed to achieve an early solution to the dispute and to maintain peace and tranquility at the borders


Personal Notes

Title From a standoff to a stalemate (Page Number 6)Syllabus GS II: International Relations


GS III: Security IssuesTheme Recent India-China Stand off and various related perspectives.

Highlights Context:

China is aware that pushing India into military conflict will further tilt India towards United States and this might go against the Chinese interest and power balance of dominance in the region. So, the stand-off in Ladakh is likely to be resolved peacefully.

However, the author highlights that China has a history of changing border lines resulting in border skirmishes and it is a part of their strategy to assert dominance specially when there is global trust deficit due to spread of COVID from Wuhan.

Stand-off –

a deadlock between two equally matched opponents in a dispute or conflict or a situation in which agreement in an argument does not seem possible

Stalemate –

a disagreement or a situation in a competition in which neither side is able to win or make any progress; a situation in which a player cannot successfully move any of their pieces and the game ends without a winner.

Construction of a road to Daulat Beg Oldie (DBO) in the Galwan Valley Now, according to China, India was attempting to unilaterally change the status

quo by because of construction of DBO in the Galwan Valley. However, India has been constructing the road for the last 15 years for ease of access to the border areas.

As per protocol, Local Commanders kept informing each other about the construction activities and China never raised any military objections earlier. In fact, construction work on China’s side of the LAC has been of a much higher scale.

So, according to the author, current activities by China are meant to put pressure on India to showcase its military strength back home amidst economic slowdown in China and are not based on any perceived transgression by Indian troops.


Daulat Beg Oldie (DBO)

Change of Boundary by China China has a history of changing lines. In the late 1950s, the lines kept moving

westward, and ultimately led to the 1962 war. In 2002, when maps were exchanged during the Expert Group meetings, China

showed a claim line in the western sector which was different from what existed on the ground since 1962.

Again in 2007, China’s perception of the border in Depsang in the Ladakh sector, in Sikkim, and in many other places appeared to change.

(Depsang in Ladakh)

In 2014, Chinese troops came close to Chumar near Ladakh. This occurred when President Xi had came to visit India on an official visit.

Chumar is the last village in Ladakh area of Jammu and Kashmir bordering Himachal Pradesh. Chumar has been a bone of contention between India and China with latter claiming it to be its own territory.

Chinese troops have been foraying into this border area with their helicopters almost every year. This time, their troops raised tents on the ground. This escalated the tension.

Chinese troops dismantled their tents on May 5 and then the Indian forces removed their tin sheds. Flag meetings were held on May 6 and the Chumar standoff was resolved in 21 days with China agreeing to patrolling by the Indian troops in the area as before.


In 2017, China wanted to unilaterally change the boundary and the tri-junction with Bhutan and India, which sparked the Doklam stand-off.


Sumdorong Chu incident in 1987 in Arunachal Pradesh is one such standoff between the Indian Army and Chinese People Liberation Army (PLA) where India-China came close to a war. But Indian diplomacy mixed with caution and aggression not only avoided war but also brought China to the negotiating table.

Problems with Hotlines Such disputes should be peacefully resolved, as was done at Sumdorong Chu

and Doklam. As a rule, cases of violation are resolved through a meeting of local commanders, which may be arranged through a conversation on hotlines established for that purpose.

However, there have been certain problems with these hotlines available to Local Commanders of China.

When a transgression is initiated by China, often the Chinese side does not answer the call on the hotline, as may have happened in this case.

During the 2013 stand-off at Depsang, and the 2014 incident at Chumar which took place when President Xi Jinping was visiting India, the local Chinese commander did not pick up the hotline.

Conclusion The stand-off in Ladakh is likely to be resolved peacefully given the conventional

strength of both armies. This current crisis may, however, have at least one


lasting impact. We may see increased permanent deployments by both sides along the LAC,

and a further erosion of trust in the agreements that both sides have built, with great effort, since 1993, which has for so long helped keep the peace.


Personal Notes


Title Beijing’s Ladakh Brinksmanship (Page Number 7)Syllabus GS II: International Relations

GS III: Security Issues Theme Analysis of Americans offers for mediation

HighlightsContext:

The current intensification of tension between China and India following the escalation of Chinese troop build-up in Ladakh is but one sign that Beijing is increasingly feeling beleaguered. In response, it has embarked on a strategy of brinkmanship with several goals in mind.

Definition: Brinkmanship – (Oxford) - The activity, especially in politics, of getting into a

situation that could be very dangerous in order to frighten people and make them do what you want

Brinkmanship – (Cambridge) - The activity, especially in politics, of trying to get what you want by saying that if you do not get it, you will do something dangerous.

Jingoism by China China is using brinkmanship as part of its policy to assert its authority as it will

help China to increases its nationalistic stance specially when its economic growth is about to falter.

President Xi Jinping’s recent speech to the PLA is an outstanding example of this strategy. He exhorted the Chinese armed forces to “prepare for war” in order to “resolutely safeguard national sovereignty” and “the overall strategic stability of the country”.

What does US agreeing to mediate India-China dispute shows?1. First and the most important aspect is that US has accepted that China is

disturbing the Balance within the Asia-Pacific Region and is asserting its hegemony by threatening its border states. Eg: Bordering areas in India, Hong Kong, Taiwan, and entire South China Sea has been claimed by China as its own territory based on historical claims not agreed by other member states.

2. India does not want any third party involvement to interfere in its Bilateral issues. This is important in the context of India-Pakistan ties as India has


always refused any third party mediation on the issue of Kashmir as well as in its bilateral relation with Pakistan.

3. India is going for Multi-alignment whereas United States is looking forward for a Strong Alignment with India. Eg: through QUAD. However, India does not see QUAD the way it is seen by US. Even Japan has a different view point on QUAD.

US agreeing to mediate India-China boundary dispute shows that relationship between US & China are further deteriorating. This has also been claimed by many scholars that for US, rising China is a much larger or greater threat than rising Russia.

For India, QUAD is an Economic Alliance as we do not want to antagonize China. Whereas for US, QUAD is a Strategic Alliance, an alliance of Democracies and against Aggression and for Japan QUAD is a Military alliance. So, India’s perception of QUAD as Economic Alliance is not only because India do not want to antagonize China but also India believes in Multi-Alignment and in the idea of Asian Century where it wants Asian Giants co-operating each other.

Bilateral Ties between US & China Communist Party of China (CPC) feels increasingly threatened both

domestically and externally. Washington has periodically imposed economic sanctions on China and

Beijing has retaliated in kind. Trade talks have faltered because of growing protectionist sentiments in the U.S. and Chinese inability to adequately respond to such measures.

Assertion of China’s claim on Hong Kong and Vietnam has been see by USA as an act of Aggression by Communist Country. US & China are also at logger head in the South China Sea. In the past decade, China has vigorously advanced its territorial claims in the South China Sea by militarising islands it controls, vociferously contesting claims by other regional states and impeding their attempts to access territories they claim.

South China Sea - Flashpoint However, so far, China has been careful that these moves do not trigger a

serious confrontation with the U.S. However, by adopting a more provocative strategy China runs the risk of antagonizing United States.

US has a strong interest in preventing China from asserting control over the South China Sea as maintaining free access to this waterway is important to it for economic reasons. It also has defence treaty obligations to the Philippines, which has vigorously contested Chinese territorial claims.

Further, China’s control of the South China Sea would be a major step toward replacing the U.S. as the foremost power in the Indo-Pacific region.

Increased Chinese adventurism could result in an escalation of U.S.-China confrontation in the South China Sea. If that happens, the India-China face-off in Ladakh could become part of a much larger “great game”, with the U.S. trying to preserve the status quo and China attempting to change it to further its objective of regional dominance at the U.S.’s expense.

The current India-China crisis should, therefore, be seen in its proper context


and not as an isolated event.


Personal Notes


Title For a reset in India Nepal relationship (Page Number 6)Syllabus GS II: International Relations

GS III: Security Issues Theme Recent issues in India-Nepal Relationships.

Highlights Context:

India - Nepal relations have taken a wrong turn because of the territorial dispute over Kalapani close to the Lipu Lekh pass on India-china border. Although it is a long standing dispute and it has a complex historical background, the issue has again resurfaced because of the Nepali Nationalism being exploited by the present PM of Nepal. Without getting into the details of the history of this dispute, let us understand the reasons for resurfacing of this issue and why there is a need for reset in India Nepal relations.

Nepali Nationalism has been gaining currency because of the local politics of Nepal.

Present PM oli's political situation is weakening. Under the Nepali Constitution, a new Prime Minister enjoys a guaranteed two-

year period during which a no confidence motion is not permitted. This ended in February leading

to resentment against Mr. Oli’s governance style and performance. His inept handling of the COVID19 pandemic added to the growing

disenchantment. Within the Nepal Communist Party (NCP) there was a

move to impose a ‘one man, one post’ rule that would force Mr. Oli to choose between being NCP cochair or Prime Minister.

In such a scenario the kalapani issue has provided him a political lifeline. Further Oli had won election on the agenda of Nepali nationalism (sometimes

seen as anti - Indianism) and has vowed to restore the Nepali territory.

So the author argues that relations between both the nations need to move away from political rhetoric towards political maturity.

Need for reset

PM Modi has often spoken of the “neighbourhood first” policy. However, India Nepal relations saw a downfall when India first got blamed for interfering in the Constitution drafting in Nepal and then for an “unofficial blockade” that generated widespread resentment.

With


the abolition of the monarchy, China has shifted attention to the political parties as also to institutions like the Army and Armed Police Force

Also, today’s China is pursuing a more assertive foreign policy and considers Nepal an important element in its growing South Asian footprint.

India has ignored the changing political narrative in Nepal The1950 Treaty of Peace and Friendship which was sought by the Nepali authori

ties in 1949 to continue the special links it had with British India and provides for an open border and right to work for Nepali nationals is viewed as a sign of an unequal relationship, and an Indian imposition.

Way forward

The urgent need today is to pause the rhetoric on territorial nationalism and lay the groundwork for a quiet dialogue where both sides need to display sensitivity as they explore the terms of a reset of the “special relationship”.

A normal relationship where India can be a generous partner will be a better foundation for “neighbourhood first” in the 21st century.


Personal Notes

Title Scrapping of RBI Bonds (Page 11)Syllabus GSIII: Economy Theme Government decision of cessation of RBI Savings Bonds

Highlights RBI BONDS

Context: Recently, the Government issued a notification stating that 7.75% Savings

(Taxable) Bonds, 2018, also known as RBI bonds or government bonds, shall cease for subscription from 28th May, 2020.

Features of 7.75% Savings (Taxable) Bonds

The Government of India had announced the launch of 7.75 percent Savings (Taxable) Bonds, 2018 to enable resident citizens to invest in a taxable bond, without any monetary ceiling. These Bonds were preferred mode of savings for the investors. Some of the features of these Bonds are as given below:

Eligibility for Investment:


The Bonds are open to investment by individuals (including Joint Holdings) and Hindu Undivided Families. NRIs are not eligible for making investments in these Bonds.

Issue Price: The Bonds are issued for a minimum amount of 1000/- (face value) and in₹

multiples thereof. Limit of investment:

There is no maximum limit for investment in the Bonds.Tax Treatment:

Interest on the Bonds is taxable under the Income-tax Act, 1961 as applicable according to the relevant tax status of the bond holder.

Maturity and rate of interest: The Bonds will have a maturity of 7 years carrying interest at 7.75% per annum.

Transferability: The Bonds are not transferable. The Bonds are not tradeable in the Secondary

market and are not eligible as collateral for loans from banking institutions, non-banking financial companies or financial institutions.

Why these Bonds are preferred?

These Bonds provided higher interest returns of 7.75% per annum as compared to other savings schemes. For example, the public provident fund offers 7.1 per cent and the senior citizen saving scheme offers 7.4 per cent rate of interest. Bank fixed deposits for senior citizens offer around 6.5 per cent. Hence, fall in the Interest rates made these bonds an attractive investment option.

Probable reason for cessation of RBI Savings BondsThese Savings Bonds were first issued in 2018. Since then, the RBI has consistently reduced the Repo Rate in order to increase the consumption and investment expenditure within the economy. Hence, the interest rate of these bonds is much higher than the prevailing interest rates within the economy. This in turn led to two problems:

1. Incentivised the people to save more money through investment in such bonds and hence disincentivised consumption expenditure.

2. Higher Interest Burden on the Government.

Going forward, according to the WTO, the International trade is set to decline further in May 2020. Hence, the Government should soon up with a plan to provide relief to the exporters and give fillip to International Trade.

Personal Notes


Title FDI rises 13% (Page Number 15)Syllabus GS III: Economy

Theme FDI statistics

Highlights FDI Statistics

Context:Recently, the Department for Promotion of Industry and Internal Trade (DPIIT) has come out with FDI Statistics for the financial year 2019-20. Highlights:

Increase in FDI Inflows: In the year 2019-20, India attracted total FDI inflows of $ 49.97 bn, which was 13% higher as compared to FDI inflows in 2018-19 ($ 44.36 bn).

Top Sources for FDI (2019-20): Singapore, Mauritius, Netherlands, USA, Japan Top FDI Source between 2000-2019 (Cumulative): Mauritius, Singapore Sectors attracting highest FDI (Both in terms of Cumulative value and in FY

2019-20): Services, Computer Software & Hardware, Telecommunications

Personal


Notes

Title Export Blocks - Editorial (Page Number 6)Syllabus GS III: Economy Theme Impact of Covid-19 on exports

Highlights Export Blocks- EditorialContext:The COVID-19 has led to large scale decline in global demand and investment. It has also disrupted the global supply chains and the shipping routes leading to decline in International Trade. Recently, the Ministry of Commerce and Industry has released the report which highlights the data related to International Trade for the month of April 2020. According to this report, the merchandise exports have plunged by 60% and merchandise imports have reduced by almost 58%, leading to trade deficit of $ 6.8 billion. Important HighlightsOf the 30 major exporting items, only iron ore (17.5%) and pharmaceuticals (0.25%) recorded positive growth in April.Among the major import items, all registered negative growth during the month.The increase in the petroleum exports from India did not have much positive impact due to decline in the oil prices. Poor Response of the Government The RBI has come up with some measures to provide some relief to the exporters:


1. Extension of line of Credit of Rs 15,000 crores to EXIM Bank2. For the benefit of exporters, the maximum permissible credit period (duration of

loans) for the exporters was increased from 12 months to 15 months.3. For the benefit of importers, the maximum permissible time limit for completion of

remittances (making the payments for imports) has been increased from 6 months to 12 months.

However, the Government has failed to provide any kind of direct relief and support in its economic stimulus package. Considering the fact that, some of the export-oriented Industries such as Textiles and garments are highly employment intensive, the Government should have come up with new and innovative ideas to support them.

Personal Notes

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