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United States House Speaker and veteran Democratic politician Nancy Pelosi arrived in Taipei, marking the most high-level political engagement from the U.S. to Taiwan in 25 years.
China condemned the visit as “a major political provocation” and said it would launch “targeted military operations” as countermeasures, even as Beijing scrambled Su-35 fighters across the median of the Taiwan Strait in a show of force, placed restrictions on several Taiwanese exporters, and announced live-fire drills to be held in six regions surrounding the island of Taiwan.
China’s Defence Ministry said it is “on high alert” while the PLA Eastern Theatre Command announced it will hold joint sea and air exercises in the sea and airspaces of northern, southwestern and southeastern Taiwan and also carry out missile tests.
China’s Foreign Ministry in a statement released shortly after Ms. Pelosi’s U.S. Air Force-operated Boeing C-40C plane touched down in Taipei, said “her visit to and activities in Taiwan, in whatever form and for whatever reason, is a major political provocation to upgrade U.S. official exchanges with Taiwan”.
Underlining the importance on the visit placed by Taiwan, which has seen the number of countries that maintain formal relations dwindle to only around a dozen, Foreign Minister Joseph Wu welcomed Ms. Pelosi at the airport. Talks with President Tsai Ing-wen are set for Wednesday.
Chinese Foreign Ministry spokesperson Hua Chunying, earlier on Tuesday, accused the U.S. of “hollowing out” its commitment to a “One China Policy”.
The U.S. and Taiwan have made provocations together first, whereas China has been compelled to act in self-defence. Any countermeasure to be taken by China would be a justified and necessary response to the U.S. oblivion to China’s repeated démarches and the U.S.’s unscrupulous behaviour.
Rupee not collapsing, says FM (Page no. 1)
(GS Paper 3, Indian Economy)
There is no collapse in the Rupee and the Reserve Bank of India is only intervening in the forex markets to rein in volatility.
The Finance Minister also emphasised that India, unlike many other countries, is not fixated on pegging the currency at a particular level, and said the government is working with the central bank to bolster foreign currency inflows.
Indian Rupee’s fluctuations are more versus the US dollar and even there, its performance is much better than its own peers. We have withstood the impact of the US Fed’s decisions much better than any other peer currencies, and the Rupee is appreciating in value compared to other currencies.
While India’s foreign exchange reserves had come down to $571.5 billion on July 2022 from about $600 billion recently, the minister pointed out this is ‘not a small amount’ and the country is still ‘comfortably placed’.
The Rupee, she noted, ‘is actually finding its natural course’ and the Reserve Bank of India (is continuously monitoring it and intervening only if there is volatility. “The RBI’s intention is not so much to fix the value of the Rupee,” she noted.
“I want the House to take cognizance of Indian rupee’s performance versus others such as the U.K. Pound and contextualise its performance versus the U.S. dollar particularly because of the various steps being taken by the US Fed,” she said.
Minister of State for Finance Pankaj Chaudhary said that the Rupee had fallen by 10% to 12% in some years during the UPA regime from 2004 to 2014, compared to a maximum fall of 7.8% in a single year under the current administration’s eight-year tenure since 2014.
In a written response, the junior finance minister also attributed global factors such as the Russia-Ukraine war, soaring crude oil prices and tightening of global financial conditions as the cause for the depreciation of the Rupee against the US Dollar.
States
Four States in south top in misuse of MGNREGS (Page no. 6)
(GS Paper 2, Governance)
Four southern States Andhra Pradesh, Tamil Nadu, Karnataka and Telangana have reported the highest number of cases of financial misappropriation in the implementation of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).
According to Minister of State for Rural Development of the total 4.92 lakh cases reported across the country, those reported from the four States accounted for 4.18 lakh. Andhra Pradesh and Tamil Nadu reported the highest number of 1.59 lakh cases of financial misappropriation each followed by Karnataka (59,290 cases) and Telangana (40,562 cases), the Minister informed Parliament in a written reply to a query raised.
The corresponding misappropriation of funds was to the tune of ₹337.43 crore in AP, ₹246.22 crore in Tamil Nadu, ₹184.17 crore in Karnataka and ₹85.38 crore in Telangana.
Of the total cases, total number of decided cases in the four States, AP accounted for 1.11 lakh, Tamil Nadu (1.23 lakh), Karnataka (38,809) and Telangana (40,505).
The Minister informed Parliament that the Ministry initiated various steps to strengthen the social audit system under the MGNREGS in the States and Union Territories.
Auditing standards had been issued and States/UTs were advised to establish independent social audit units (SAU), conduct social audit as per audit of scheme rules, 2011 and training of village resource persons for conducting social audit. States/UTs had been advised to recruit adequate manpower under SAU to ensure the quality of social audit.
For bringing significant improvement in the implementation of MGNREGS, it was decided to set a few pre-requisites for taking up annual action plan and labour budget of States/UTs for financial year 2022-23.
Architect of National Flag honoured in A.P. (Page no. 6)
(GS Paper 1, Art and Culture)
It was a poignant moment in the life of Ghantasala Seethamahalakshmi, the 99-year-old daughter of the architect of the national flag, Pingali Venkaiah.
The woman, with tears welling up in her eyes, kissed the hands of Chief Minister Y.S. Jagan Mohan Reddy and blessed him as he was leaving after spending close to 30 minutes at her home at Macherla, 150 km from Guntur.
“I was touched by the gesture of the Chief Minister, who came all the way to our home, and I wish he lives a hundred years,” said Ms. Seethamahalakshmi.
In her interaction with the Chief Minister, Ms. Seethamahalakshmi shared the experiences of her father presenting the national flag design to Mahatma Gandhi and introducing her to the Father of the Nation.
More than 20 of her family members gathered at the small house, and they included grandchildren and great grandchildren of Pingali Venkaiah.
The Chief Minister was presented with a book by Ms. Seethamahalakshmi. The Chief Minister too presented her a painting of Pingali Venkaiah marching with Mahatma Gandhi.
Later, the Chief Minister presented her a copy of the G.O. sanctioning ₹75 lakh under the aegis of Cultural Department.
The Chief Minister also launched the celebrations of ‘Azadi ka Amrut Mahostav’ to mark 75 years of Independence with the key theme being ‘Har Ghar Jhanda’.
“The Chief Minister has also invited us to take part in the celebrations marking 100 years of the national flag being handed over to Mahatma Gandhi, to be held at Bapu Museum in Vijayawada on March 31,” said G.V.N. Narasimham, son of Ms. Seethamahalakshmi.
Editorial
An avoidable crisis (Page no. 1)
(GS Paper 2, International Relation)
The visit to Taiwan by the U.S. House Speaker and veteran Democrat politician, Nancy Pelosi, has risked triggering a fourth Taiwan Strait crisis and a dangerous escalation amid already worsening relations between the world’s two biggest powers.
Ms. Pelosi is the highest-ranking U.S. official to visit Taiwan in 25 years — the first by a House Speaker since Newt Gingrich’s trip in 1997.
That visit took place in the aftermath of the third Taiwan Strait crisis, when China conducted missile tests in response to then Taiwan President Lee Teng-hui visiting the U.S. In a phone call on July 28, U.S. President Biden sought to assure his counterpart, Xi Jinping, that “the U.S. policy has not changed”.
But that does not seem to be the view in Beijing. As China’s Foreign Ministry put it on August 2, in its view, Washington, going back to the days of the Trump administration, has been gradually “hollowing out” its “One China Policy”.
In the call, Mr. Xi warned Mr. Biden that “those who play with fire will perish by it” and said he “hoped that the U.S will be clear-eyed” about the consequences. Beijing has responded by announcing military drills near Taiwan. More countermeasures could follow.
This latest crisis comes at a time when China-U.S. relations are already on edge. This explains why even officials in the Biden administration and the U.S. military had called on Ms. Pelosi to reconsider.
Ironically, that prospect was likely diminished by China’s stern public warnings, which all but ensured the trip would go ahead as a cancellation would have been politically costly for the Biden administration.
Domestic political considerations appear to be driving both sides into their respective corners in this entirely avoidable crisis.
Mr. Xi is three months away from a politically sensitive Party Congress that will mark the start of his third term. White House officials have made the point that Ms. Pelosi represents a different branch of government and members of Congress have travelled previously to Taiwan.
Death of a face (Page no. 8)
(GS Paper 2, International Relation)
The killing of al-Qaeda leader Ayman al-Zawahiri at a Kabul safe house by an American drone is a clear setback to the Sunni Islamist terror organisation. Zawahiri, the Egyptian doctor-turned-terrorist-in-chief, had been leading al-Qaeda since the 2011 killing of his predecessor, Osama bin Laden, in Pakistan’s Abbottabad in an American commando raid.
Zawahiri was an instrumental figure in most of al-Qaeda’s big attacks, from the American embassy bombings in east Africa in August 1998 to the September 11, 2001 attacks.
Inspired by the teachings of Egyptian Muslim Brotherhood cleric Sayyid Qutb, who was hanged by the administration of President Gamal Abdel Nasser, Zawahiri had formed an underground Islamist organisation as a teenager.
Later, he headed the dreaded Egyptian Islamic Jihad, which merged with al-Qaeda a few months before the 9/11 attacks. Since then, he had been number two in al-Qaeda, which he took over after bin Laden’s death.
Just like his former boss, he was believed to be hiding in Pakistan. But U.S. officials say Zawahiri moved back to Afghanistan earlier this year, perhaps hoping that he would be safer in a Taliban-controlled country. It turned out to be his last hiding place.
The killing is a rare battlefield victory for the Biden administration in counterterrorism. It lends credence to the administration’s claims that it can continue to carry out successful operations “over the horizon” without basing troops in countries such as Afghanistan.
U.S. intelligence officials worked for months to confirm Zawahiri’s identity and establish a pattern of life before carrying out the strike. But the attack also raises several questions.
The withdrawal of American troops from Afghanistan was based on the Doha agreement, reached between the Trump administration, which was later accepted by the Biden administration, and the Taliban.
Under the agreement, the Taliban promised to cut all ties with terrorist organisations such as the Islamic State and al-Qaeda in return for the U.S.’s pullout. The U.S. completed its withdrawal on August 31, 16 days after the Taliban captured Kabul.
Making sense of the ‘freebies’ issue (Page no. 8)
(GS Paper 2, Indian Polity)
Concern over ‘freebies’ in Indian politics has recently been expressed by those in the highest offices in the country. Speaking at the inaugural ceremony of the Bundelkhand Expressway (Uttar Pradesh) on July 16, Prime Minister Narendra Modi warned youth not to get carried away by the ‘revari culture’, where votes are sought by promising ‘freebies’.
He hit out at the Opposition parties for offering freebies and said that this was dangerous and harmful to the development of the country.
Days later, a Bench headed by the Chief Justice of India, N.V. Ramana, heard a public interest litigation in which the petitioner argued against the promise of ‘irrational freebies’ by claiming that these distort the electoral process.
It has been reported that during the hearing, the Chief Justice of India remarked that ‘freebies’ were a serious issue and asked the Central government to take a stand on the need to control the announcement of ‘freebies’ by political parties during election campaigns.
The Court also suggested that the Finance Commission could be involved to look into the matter and propose solutions.
The discussion on the demerits of ‘freebies’ distributed to the public as a result of election promises is not new in India. However, there is often confusion on what constitutes ‘freebies’, with a number of services that the Government provides to meet its constitutional obligations towards citizens also being clubbed in this category.
The basic argument is that these are a waste of resources and place a burden on already stressed fiscal resources.
In such discussions, ‘freebies’ not only include the free distribution of what may be considered ‘club goods’ such as televisions and gold chains but also welfare schemes such as free or subsidised rations under the Public Distribution System (PDS), cooked meals under the mid-day meal scheme, supplementary nutrition through anganwadis, and work provided through the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
A turning point in crypto regulation, led by Europe (Page no. 8)
(GS Paper 3, Indian Economy)
There has been a lot of noise over Finance Minister Nirmala Sitaraman’s answer to a question recently in Parliament about the Indian government’s stance on cryptocurrencies. Some headlines even went as far as to suggest that there was a fresh plan to ban crypto in India.
As per my reading, the only thing the Finance Minister’s answer reveals is that while India’s central bank wants a ban on cryptocurrencies, any legislation for the “regulation or for banning crypto” can be effective only after significant international collaboration.
This is true. Crypto is an Internet-native asset not limited by geographical boundaries. To transfer crypto, one does not need a pipeline or shipping container.
A steady Internet connection and some elemental knowledge of crypto services are what are needed that will allow anyone in the world to transfer crypto assets.
Further, crypto assets are not issued or controlled by any enterprise. There are a little over 19 million bitcoins in circulation at present, out of the total capped supply (hence, the scarcity) of 21 million bitcoins. Any of the estimated 75 million crypto wallet holders could be owning these bitcoins, or their fractions (called satoshis or sats).
How then can such a seamless financial asset be regulated? How can regulators monitor the flow of capital in and out of their jurisdiction? Answers to these questions will lead us to a framework to regulate the crypto industry. Fortunately, global consensus is emerging on this aspect.
This June, amid all the attention over inflation and the related capital market turmoil, the European Parliament and Council, the legislative arms of the European Union, came to a provisional agreement on long-awaited regulations on crypto, namely, the Regulation of Markets in Crypto-Assets, or MiCA.
It took two years of brainstorming and negotiations for Europe to get here. But before we parse through MiCA, it is important to understand why European regulations are noteworthy.
OPED
Recalling India’s Antarctica activities (Page no. 9)
(GS Paper 2, International Relation)
Parliament has just passed the Indian Antarctic Bill, 2022 albeit raucously in the Rajya Sabha. It is an important step forward in our engagement with the gigantic continent which began way back in February 1956.
It was then, at the instance of Jawaharlal Nehru and V.K. Krishna Menon, that India became the first country in the world to request for an item on the agenda of the eleventh United Nations General Assembly entitled “The Question of Antarctica” to ‘ensure that the vast areas and its resources were used entirely for peaceful purposes and for general welfare’.
But India did not press the point further because it got caught up later in the year with the almost simultaneous crises in the Suez and Hungary and also because of resistance from countries like Argentina and Chile.
But the Nehru-Menon initiative in which India’s Permanent Representative at the UN Arthur Lall also played an important part did have one very tangible impact.
Twelve countries who believed that they had a direct stake in Antarctica started discussions among themselves and on December 1, 1959 the Antarctica Treaty was signed in Washington DC.
Not surprisingly, since its moves at the UN had irked a number of countries including the USSR, India was neither involved nor invited.
But in May 1958, India’s Prime Minister had told Parliament: “We are not challenging anybody’s rights there. But it has become important more specifically because of the possible experimentation of atomic weapons and the line, that the matter should be considered by the UN…the fact that Antarctica contains many very important minerals—especially atomic energy minerals—is one of the reasons why this area is attractive to various countries. We thought it would be desirable to have a discussion about this at the UN.”
Subsequently, Antarctica faded from the Indian geopolitical gaze. The Treaty members worked on the development of the continent among themselves, inviting occasional criticism from other countries, including India, who were actually helpless to make any difference.
Explainer
The government package to revive BSNL fortunes (Page no. 10)
(GS Paper 3, Indian Economy)
The Bharat Sanchar Nigam Ltd. (BSNL) was incorporated in September 2000 as a company to take over the business of providing telephone connectivity from the central government’s Department of Telecom Services.
Its operations were meant to service the entire country except New Delhi and Mumbai where MTNL — or Mahanagar Telephone Nigam Ltd — would operate. Last week, the Union Cabinet approved a ₹1.64 lakh crore revival package for BSNL with a cash component of ₹43,964 crore.
The noncash component of ₹1.2 lakh crore, spread over four years, will include administrative allotment of 4G spectrum
worth ₹44,993 crore. Capex support of ₹22,471 crore over the next four years to “boost development and deployment of
Atmanirbhar 4G stack”, viability gap funding of ₹13,789 crore for commercially unviable rural wireline operations done during 2014-15 to 2019-20, debt structuring by raising of bonds with sovereign guarantee worth ₹40,399 crore and financial support for AGR (Adjusted Gross Revenue) dues worth ₹33,404 crore complete the package.
Previously, in 2019, the Cabinet had cleared a package worth close to ₹70,000 crore for the revival of BSNL and MTNL,
mainly to fund the Voluntary Retirement Scheme (VRS) package for the two firms.
BSNL had more than 1.5 lakh employees before the VRS was announced in 2019. About 78,000 had applied to exercise the option. Before the VRS, FY20 numbers showed the loss at ₹15,500 crore, and employee costs at a staggering ₹13,600
crore.
As of June 2021, the employee headcount was 64,000. Note that BSNL spent more than 50% of revenue on employees in FY16.
That came down in FY21 to 36%, but compares poorly with, for example, Bharti Airtel whose numbers showed employee
expense at about 4% for both FY21 and FY22.
The government, which said that the 2019 package helped BSNL stabilise and the latest bailout would help it become viable, expects BSNL to become profitable in three to four years from now.
Has bail under PMLA become near-impossible? (Page no. 10)
(GS Paper 2, Indian Polity)
Recently, the Supreme Court in the case of Vijay Madanlal Chaudhary vs Union of India gave the judicial stamp of approval to the twin conditions of bail under Section 45(1) of the Prevention of Money Laundering Act, 2002 (PMLA).
The conditions were contested as being arbitrary and draconian in as much as they reverse the presumption of innocence at the stage of bail.
The judgment is of immense importance given that delay or denial in grant of bail was recently identified by the Supreme Court in the case of Satender Kumar Antil vs CBI as being a leading factor in the perpetration of injustice in our criminal justice system.
The PMLA was enacted with the objective to prevent money laundering. The Act provides for a higher threshold for the grant of bail as compared to the standard procedure under the Code of Criminal Procedure (CrPC).
Section 45(1) of the PMLA requires that before a person is released on bail or bond, the public prosecutor must initially be given an opportunity to oppose the application and secondly, when the application is opposed, the court must be satisfied that there are reasonable grounds for believing that the accused is not guilty of the offence and is not likely to commit any crime while out on bail.
A similar provision is provided for in Section 43D(5) of the Unlawful Activities (Prevention) Act, 1967 which requires the court to provide an opportunity to the public prosecutor to oppose the bail application and to not release the accused on bail if there are reasonable grounds for believing that the accusation is prima facie true.
Section 37(1) of the Narcotic Drugs and Psychotropic Substances Act, 1985 too is in pari materia with Section 45(1) of the PMLA. Previously, Section 20(8) of the Terrorist and Disruptive Activities Act, 1987 (TADA) also carried similar conditions for grant of bail.
The validity of the twin requirements under Section 20(8) of the TADA Act had been upheld by the Supreme Court in the case of Kartar Singh vs State of Punjab (1994) on the grounds that the courts have to balance the interest of the victims and the community as well as the safety of the nation with the liberty of the accused.
News
Wildlife Protection Bill gets LS nod (Page no. 13)
(GS Paper 3, Environment)
The Lok Sabha, passed the Wildlife (Protection) Amendment Bill, with no significant modifications to the version of the Bill presented in the House for discussion.
A nearly five hour discussion saw parliamentarians across party lines discuss and suggest amendments to the Bill, but none of these made their way to the final version of the Bill, that was passed by the House.
The key thrust of the Bill is to make Indian law compatible with the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).
There were 50 amendments to the Act proposed in the Bill. CITES was signed in Washington D.C. on March 3, 1973, and later amended in 1979 to trade plant and animal specimens with other governments, without threatening the survival of the species.
The Wild Life (Protection) Bill, which was introduced in the Lok Sabha in the 2021 Winter session, was sent to a Standing Committee for discussion and amendments.
Following four months of deliberation, in April, the Committee submitted its report on the proposed Bill.
World
Nuclear arms control talks hinge on U.S. goodwill: Kremlin (Page no. 15)
(GS Paper 2, International Relation)
The Kremlin said that it's ready for talks with the United States on nuclear arms control even as Moscow and Washington have remained locked in a tense standoff over Russia's actions in Ukraine.
Commenting on U.S. President Joe Biden’s statement that Washington is open for talks on a new arms control deal to replace the New START treaty after it expires in 2026, Kremlin spokesman Dmitry Peskov said that such negotiations are long overdue.
Just days before the New START was due to expire in February 2021, Russia and the United States agreed to extend it for another five years.
The treaty, signed in 2010 by President Barack Obama and Russian President Dmitry Medvedev, limits each country to no more than 1,550 deployed nuclear warheads and 700 deployed missiles and bombers and envisages sweeping on-site inspections to verify compliance.
Moscow and Washington hadn't started discussions about the pact's possible replacement until the Kremlin sent troops into Ukraine on Feb. 24.
While voicing readiness to “expeditiously negotiate a new arms control framework to replace New START when it expires in 2026,” Biden emphasized statement that “Russia’s brutal and unprovoked aggression in Ukraine has shattered peace in Europe and constitutes an attack on fundamental tenets of international order.”
In this context, Russia should demonstrate that it is ready to resume work on nuclear arms control with the United States.
Asked about Mr. Biden's statement in a conference call with reporters, Mr. Peskov emphasized that “Moscow has repeatedly spoken about the necessity to start such talks as soon as possible as there is little time left."
If the treaty expires without being replaced with a solid deal, it will negatively impact global security and stability, primarily in the area of arms control. We have called for an early launch of talks, but until that moment it has been the U.S. that has shown no interest in substantive contacts on the issue.