Current Affairs for UPSC IAS Exam – 9 January 2021

Contents

1. India skips China held South Asia multilateral meet
2. Centre turns to the SC to resolve farmer’s issue
3. Spectrum Auctions Explained

INDIA SKIPS CHINA HELD SOUTH ASIA MULTILATERAL MEET

Context:

China has held its third multilateral dialogue with countries from South Asia except India, Bhutan and Maldives.

Relevance:

GS-II: International Relations

Dimensions of the Article:

1. What are China’s Multilateral Dialogues all about?
2. Increasing Chinese Influence in South Asian Economies
3. China and Military Diplomacy
4. Background about CPEC and BRI

What are China’s Multilateral Dialogues all about?

• China is holding multilateral dialogues with countries from South Asia to take forward closer cooperation on fighting COVID-19 and coordinating their economic agendas.
• All three of their multilateral dialogues have been attended by Pakistan and Nepal which are emerging as key countries vital to China’s regional strategy.
• In this meeting, the representatives shared their experience on anti-epidemic and poverty relief and talking about dealing with the impact of the pandemic, resuming economic and trade cooperation, dealing with non-traditional security challenges and advancing sustainable development, and reached an initial consensus.
• These multilateral meetings reflect a new approach in Beijing’s outreach to the region – which China says is all about implementing Chinese consensus and for China to make greater contribution to building a regional community with shared future for health.
• In the previous two rounds, the countries also discussed how to work more closely together under China’s Belt and Road Initiative (BRI) to boost their post-COVID-19 economic recovery and agreed that countries linked by land ports should establish joint response mechanisms in border areas.
• The Countries also committed to greater information sharing and international cooperation.

CPEC extension

In one of the quadrilateral dialogues with Afghanistan, Nepal and Pakistan, China’s Foreign Minister Wang Yi proposed extending the China-Pakistan Economic Corridor (CPEC) to Afghanistan, as well as taking forward an economic corridor plan with Nepal, called the Trans-Himalayan Multi-dimensional Connectivity Network.

Increasing Chinese Influence in South Asian Economies

China taking Control over Trade

• Over the past decade, China has replaced India as the major trading partner of several South Asian countries.
• The share of India’s trade with Maldives was more than 3 times that of China’s in 2008. However, by 2018, China’s total trade with Maldives slightly exceeded that of India.
• China’s trade with Bangladesh is at present about twice that of India.
• China continues to lag India in its trade with Nepal and Sri Lanka, though the gap has shrunk.
• China is now the largest overseas investor in the Maldives, Pakistan, and Sri Lanka.

What does China invest in?

• Chinese investment is concentrated in hard infrastructure – power, roads, railways, bridges, ports and airports.
• Nearly 80% of Chinese investments in South Asia have been in the energy and transport sectors.
• China has also invested in the financial systems of these countries.

China and Debt Trapping

• China is accused of extending excessive credit with the intention of extracting economic or political concessions when countries cannot honour their debts.
• This raises fears that China’s credit to its South Asian partners, particularly via the Belt and Road Initiative (BRI), could be a strategic disadvantage for India.
• Sri Lanka had to lease out its Hambantota Port to China for 99 years, after being unable to service its debt.
• There is economic rationale for China in building alternative access to the Arabian sea to facilitate trade.

China and Military Diplomacy

• China is the biggest arms supplier to Pakistan and Bangladesh.
• Beijing is helping strengthen the navies of Pakistan, Bangladesh, and Sri Lanka to enhance their footprint in the Bay of Bengal and the Indian Ocean.
• Some experts see this as part of an encirclement or ‘string of pearls’ strategy to contain India by building a network of military and commercial facilities in the country’s neighbourhood.

Background about CPEC and BRI

Click Here to read more about CPEC, BRI, India’s Views on the 2 projects and Steps taken by India to counter the 2 projects

-Source: The Hindu

CENTRE TURNS TO THE SC TO RESOLVE FARMER’S ISSUE

Context:

• Talks between the Centre and farm unions have been ending without any resolution to the ongoing stalemate over the repeal of three farm reform laws.
• The Supreme Court is poised to hold a hearing on the farmers protest issue soon.
• The Central Government is of the view that the issue is best resolved by the Supreme Court, and it has asked the farmers to appear at the next hearing.

Relevance:

GS-II: Polity and Governance

Dimensions of the Article:

1. What are the 3 bills that were passed which the farmers are protesting against?
2. What are the Farmers objecting against in their protest?
3. What is MSP?

What are the 3 bills that were passed which the farmers are protesting against?

1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, allows farmers to sell their harvest outside the notified Agricultural Produce Market Committee (APMC) mandis without paying any State taxes or fees.
2. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, facilitates contract farming and direct marketing.
3. The Essential Commodities (Amendment) Bill, 2020, deregulates the production, storage, movement and sale of several major foodstuffs, including cereals, pulses, edible oils and onion, except in the case of extraordinary circumstances.

What are the Farmers objecting against in their protest?

The major objections and fears relating to the new Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act are that:

1. The Agricultural Produce Market Committees (APMC) will be eventually closed
2. The guarantee of Minimum Support Prices (MSP) will be stopped and Farmers will lose their safety net of MSP.
3. Corporates will take over agriculture trade, and farmers’ land will be taken over by powerful corporates.

The primary reason for this distrust is the non-statutory nature of MSP.

• Although, MSP is an important aspect for boosting farmers’ income, it finds no mention in any law even if it has been around for decades. As a result, it technically means is that the government, though it buys at MSP from farmers, is not obliged by law to do so.
• Farmers also feel that the new laws will be manipulated by vested corporate interests and the farmers will be left to the vagaries of market forces and this will result in the denial of an optimum price for agriculture produce, fruits and vegetables to farmers.
• The legislations are likely to impact influential commission agents in mandis, who do not want their grip over farmers to be weakened.

What is MSP?

• Minimum Support Price is the price at which government purchases crops from the farmers, whatever may be the price for the crops.
• Commission for Agricultural Costs & Prices (CACP) in the Ministry of Agriculture recommends MSPs for 23 crops.
• CACP consider various factors while recommending the MSP for a commodity like cost of cultivation, supply and demand situation for the commodity; market price trends (domestic and global) and parity vis-à-vis other crops etc.

Aims of MSP

1. To give guaranteed prices and assured market to the farmers and save them from the price fluctuations (National or International).
2. To improve productivity by encouraging higher investment and adoption of modern technologies in agricultural activities.
3. To safeguard the interests of consumers by making available supplies at reasonable prices.

-Source: The Hindu

SPECTRUM AUCTIONS EXPLAINED

Context:

The Department of Telecommunications (DoT) will begin fresh auctions for 4G spectrum.

Relevance:

GS-III: Science and Technology

Dimensions of the Article:

1. What are spectrum auctions?
2. Recently in news: Adjusted Gross Revenue (AGR)
3. Impact of the Current Definition

What are spectrum auctions?

• Devices such as cellphones and wireline telephones require signals to connect from one end to another. These signals are carried on airwaves (medium of radio waves), which must be sent at designated frequencies to avoid any kind of interference.
• Interference may prevent reception altogether, may cause only a temporary loss of a signal, or may affect the quality of the sound or picture produced by one’s equipment.
• The Union government owns all the publicly available assets within the geographical boundaries of the country, which also include airwaves.
• With the expansion in the number of cellphones, wireline telephone and internet users, the need to provide more space for the signals arises from time to time.
• To sell these assets to companies willing to set up the required infrastructure to transport these waves from one end to another, the central government through the Department of Telecom (Ministry of Communications) auctions these airwaves from time to time.

Recently in news: Adjusted Gross Revenue (AGR)

Telecom majors like Vodafone and Airtel were asked to pay Adjusted Gross Revenue (AGR) dues to the government – and the Supreme Court allowed telecom companies 10 years’ time to pay their adjusted gross revenue (AGR) dues to the government.

The AGR Issue – Timeline

• The telecom sector was liberalised under the National Telecom Policy, 1994 after which licenses were issued to companies in return for a fixed license fee.
• To provide relief from the steep fixed license fee, the government in 1999 gave an option to the licensees to migrate to the revenue sharing fee model.
• Under this, mobile telephone operators were required to share a percentage of their AGR with the government as annual license fee (LF) and spectrum usage charges (SUC).
• License agreements between the Department of Telecommunications (DoT) and the telecom companies define the gross revenues of the telecom companies.

The Contention on Definition of AGR – 14 years on

• In 2005, Cellular Operators Association of India (COAI) challenged the government’s definition for AGR calculation.
• However, DoT argued that AGR includes all revenues from both telecom and non-telecom services.
• The companies claimed that AGR should comprise just the revenue accrued from core services and not dividend, interest income or profit on the sale of any investment or fixed assets.
• In 2015, the TDSAT (Telecom Disputes Settlement and Appellate Tribunal) stayed the case in favour of telecom companies and held that AGR includes all receipts except capital receipts and revenue from non-core sources such as rent, profit on the sale of fixed assets, dividend, interest and miscellaneous income.
• However, setting aside the TDSAT’s order, in 2019, the Supreme Court of India upheld the Department of Telecom (DoT)’s interpretation of Adjusted Gross revenue (AGR), due to which telecom service providers had to pay more than Rs. 1 lakh crore to the government.

Impact of the Current Definition

Impact on Telecom Sector:

• 10 of the 15 telecos that existed in 2005 have either closed operations or are undergoing insolvency proceedings in the last 14 years.
• AGR due will seriously hurt financial stability of telecom companies that are doing business in the Indian market.
• Telecom equipment suppliers may also go down as their dues will not be paid.

Impact on Banking Sector and Economy:

• Banks will face the consequences of the dues as companies will be going bankrupt (non-performing assets will rise).
• The collapse of the telecom sector may increase unemployment, and reduce investment, adding to our economic and social problems.

Effect on consumers:

• The failure of a few large players could lead to one or two players emerging near-monopolies.
• This leaves the Indian consumer vulnerable to high pricing, sub-standard products and lack of options.

Government will be the only winner:

• If companies are ready to pay AGR dues, it will lead to a higher contribution to the public exchequer – Meaning the Government revenue will get a huge boost and help bridge gap in the fiscal deficit and help the government finance the recovery of the economy in the current pandemic affected situation. (Note: This scenario is only possible if the companies are ready to pay the dues).

-Source: Indian Express