29th May – Editorials/Opinions Analyses

Contents

1. For a reset in India-Nepal relations
2. Explained: RBI discontinuing 7.75% saving bonds
3. The Great Decentralization that coronavirus has heralded

FOR A RESET IN INDIA-NEPAL RELATIONS

Focus: GS-II International Relations, Prelims

Introduction

The long-standing territorial issue surrounding Kalapani region close to the Lipulekh Pass on the India-China border, which is one of the approved points for border trade and the route for the Kailash-Mansarovar yatra in Tibet, is straining India-Nepal relations.

Background on Kalapani and the Maps

• India inherited the boundary with Nepal, established between Nepal and the East India Company in the Treaty of Sugauli in 1816.
• Kali river constituted the boundary, and the territory to its east was Nepal.
• The dispute relates to the origin of Kali. Near Garbyang village in Dharchula Tehsil of the Pithoragarh district of Uttarakhand, there is a confluence of different streams coming from north-east from Kalapani and north-west from Limpiyadhura.
• The early British survey maps identified the north-west stream, as the origin, but after 1857 changed the alignment to Lipu Gad, and in 1879 to Pankha Gad, the north-east streams, thus defining the origin as just below Kalapani.
• Nepal accepted the change and India inherited this boundary in 1947.

Extended History of Border Development in the Lipulekh region

• The Maoist revolution in China in 1949, followed by the takeover of Tibet, created deep misgivings in Nepal.
• So, India was ‘invited’ by Nepal to set up 18 border posts along the Nepal-Tibet border.
• The westernmost post was at Tinkar Pass, about 6 km further east of Lipulekh.
• In 1953, India and China identified Lipulekh Pass for both pilgrims and border trade.
• After the 1962 war, pilgrimage through Lipulekh resumed in 1981, and border trade, in 1991.
• In 1961, King Mahendra visited Beijing to sign the China-Nepal Boundary Treaty that defines the zero point in the west, just north of Tinkar Pass.
• By 1969, India had withdrawn its border posts from Nepali territory.
• The base camp for Lipulekh remained at Kalapani, less than 10 km west of Lipulekh.
• In their respective maps, both countries showed Kalapani as the origin of Kali river and as part of their territory.
• After 1979, the Indo-Tibetan Border Police has manned the Lipulekh Pass.

The Beginning of Border Issues

• The issue of the origin of Kali river was first raised in 1997, After the 1996 Treaty of Mahakali (Kali river is also called Mahakali and Sarada)
• The matter was referred to the Joint Technical Level Boundary Committee that had been set up in 1981 to re-identify and replace the old and damaged boundary pillars along the India-Nepal border.
• The Committee clarified 98% of the boundary, leaving behind the unresolved issues of Kalapani and Susta when it was dissolved in 2008.
• It was subsequently agreed that the matter would be discussed at the Foreign Secretary level.
• Meanwhile, the project to convert the 80-km track from Ghatibagar to Lipulekh into a hardtop road began in 2009 without any objections from Nepal.

India’s Latest Maps released and Nepal’s response

• The Survey of India issued a new political map (eighth edition) on November 2, 2019 to which Nepal registered a protest (though the map in no way had changed the boundary between India and Nepal).
• On November 8, the ninth edition was issued, in which the delineation remained identical but the name Kali river had been deleted.
• This led to stronger protests, with Nepal invoking Foreign Secretary-level talks to resolve issues.

Nepal’s Latest Map released and India’s response

• A new map of Nepal based on the older British survey reflecting Kali river originating from Limpiyadhura in the north-west of Garbyang was adopted by parliament and notified on May 20.
• On May 22, a constitutional amendment proposal was tabled to include it in a relevant Schedule.
• The new alignment adds 335 sq km to Nepali territory, territory that has never been reflected in a Nepali map for nearly 170 years.

Players and their Plays involved in India-Nepal relations

India and Nepal

• India’s Neighbourhood First Policy in connection with Nepal started with a highly successful visit to Nepal in August 2014.
• But the relationship turned sour in 2015 when India first got blamed for interfering in the Constitution-drafting in Nepal and then for an “unofficial blockade” that generated widespread resentment against the country.
• India has ignored the changing political narrative in Nepal for far too long.
• India remained content that its interests were safeguarded by quiet diplomacy even when Nepali leaders publicly adopted anti-Indian postures.
• This has also led to distortions in Nepali history textbooks and led to long-term negative consequences.
• The 1950 Treaty of Peace and Friendship which was sought by the Nepali authorities in 1949 is viewed as a sign of an unequal relationship, and an Indian imposition.
• The purpose of the treaty was to continue the special links Nepal had with British India and it provides for an open border and right to work for Nepali nationals
• Yet, Nepali authorities have studiously avoided taking it up bilaterally even though Nepali leaders thunder against it in their domestic rhetoric.

China and Nepal

• In Nepali thinking, the China card has provided them the leverage to practise their version of non-alignment.
• China maintained a link with the Palace and its concerns were primarily related to keeping tabs on the Tibetan refugee community.
• 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.

Way Forward

• The complexity underlying India-Nepal issues cannot be solved by rhetoric or unilateral map-making exercises.
• Political maturity is needed to find creative solutions that can be mutually acceptable.
• 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.

Prelims Bit: Treaty of Saugali 1816

• The Treaty of Sugauli established the boundary line of Nepal, was signed on 2 December 1815 and ratified by 4 March 1816 between the East India Company and Raj Guru Gajaraj Mishra with Chandra Shekhar Upadhaya for Nepal following the Anglo-Nepalese War of 1814-16.
• The treaty represented a Nepali surrender to the British and contained the cession of Nepal’s western territory to the British East India Company.
• Negotiations for a general settlement produced a draft which was initialled at Sagauli in Bihar in December 1815 and required Nepal to give up all territories west and east of its present-day borders, to surrender the entire Tarai and to accept a permanent British representative (or ‘resident’) in Kathmandu.
• Among the border dispute of the Indo-Nepal boundary, the most significant are in the Susta and Kalapani regions.

-Source: The Hindu

EXPLAINED: RBI DISCONTINUING 7.75% SAVING BONDS

Focus: GS-III Indian Economy

Why in news?

• The Reserve Bank of India on 27^th May 2020 said the Government of India has discontinued 7.75 per cent savings (taxable) bonds, 2018 for subscription with effect from the close of banking business on 28^th May.
• The move will deprive investors of another saving instrument that yielded relatively higher post tax returns for investors.
• This move comes amidst the cut in deposit rates by the banks and a cut in small savings rate by the government over the last couple of months of March and April 2020.

What are 7.75 per cent RBI bonds?

• The 7.75 bonds 2018 were issued with effect from January 10, 2018 and were available for subscription to resident citizens/HUF to invest in a taxable bond.
• The bonds had a 7-year lock-in period from the date of issue, but, it permitted premature encasement to individuals who were 60 years and above.

What has happened now?

• The government has withdrawn these bonds and therefore it will not be available for investors to invest.
• This means it is only ceasing fresh issuance and not redeeming those already invested.
• Those whose cheques got submitted and cleared till yesterday will get 7.75 per cent.

Was it in high demand?

• The demand for RBI bonds went up significantly over the past couple of months of March and April as investors turned risk averse.
• Investors rushed for it as they saw it as the safest investment instrument available.
• As the 7.75 per cent RBI bonds were taxable instruments, the interest income on it would be taxable at the marginal tax rate.

Why the cut in rates?

• The interest rates have been on a decline since the global growth rate projections have been brought down following the spread of coronavirus Pandemic.
• The Reserve Bank of India first announced a 75-basis point cut in repo rate on March 27, 2020 to 4.4 per cent and then again announced a cut in repo rate by 40 basis points to 4 per cent on May 22.
• A cut in repo rates not only reduces the rate at which commercial banks borrow from RBI but also leads to a cut in deposit and lending rates for banks.
• The RBIs move to cut in repo rate has been to push credit growth and demand in the economy in a bid to augur growth in the economy.

Click Here to read more about Bonds and Bond Yields

Click Here to read more about Government Securities

-Source: Indian Express

THE GREAT DECENTRALIZATION THAT CORONAVIRUS HAS HERALDED

Focus: GS-III Indian Economy

Introduction

• Technology experts and administrators have always known that decentralized systems are far more resilient and resistant to disasters and disruptions as redundancy is an inbuilt feature in these systems.
• In the context of organisations seeking to recover from the COVID-19 lockdown, organizations will need to borrow a leaf out of the IT playbook, and make themselves more decentralized.

Reverse Migration and Decentralisation

• Big cities had attracted migrant labourers from far-flung villages with the economic opportunities they offered – This was the Big Centralization, as millions of people left their villages and congregated in a few large cities.
• Covid has reversed the equation, and many of those trudging home and most of them might not come back to the cities. What this means for industries is – they will have to spread themselves out, or decentralize, so as to get the labour and talent needed for their operations.  
• Decentralized models can help disparate and distraught sectors like hospitality, restaurants, events, education, healthcare and even manufacturing.

Other Observations of Decentralisation

• Large and small firms have declared that they will continue a large element of work from home even after the current lockdowns are lifted. – it was Food-delivery and e-commerce companies that kept cities and homes running while every mall, restaurant and departmental store was closed in fear of contamination.
• In Indian Context – with basic but functional technology like WhatsApp-ordering and UPI payments, the small condiment stores played saviours, even as big malls and e-commerce ground to a halt.

-Source: Livemint