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Emphasising the importance of strategic economic ties between India and Saudi Arabia, External Affairs Minister S Jaishankar said that the collaboration holds the “promise of shared growth, prosperity, stability, security and development”.
Jaishankar, who is on a three-day visit to Saudi Arabia – his first as External Affairs Minister.He addressed diplomats at the Prince Saud Al Faisal Institute of Diplomatic Studies in Riyadh, where he “underlined the importance of India-Saudi strategic relationship at a time when the world is at crossroads”.
Our collaboration holds promise of shared growth, prosperity, stability, security and development,” he said in a tweet.
At an interaction with the Indian community, Jaishankar hailed the ties between the two countries, and said Saudi Arabia was “very helpful” during the Covid-19 pandemic.
We saw our international friendships also deliver at that point of time. Saudi Arabia was very helpful and provided supplies of oxygen. Two years of Covid are when the country was tested but we came through.
Talking about the current geopolitical situation, he said the world is facing many challenges, like rising food, oil and shipping prices due to the Ukraine crisis. “But we are still very confident that India will be the fastest growing major economy in the world this year. We will get at least 7 per cent growth.
He said India’s economic recovery after Covid was worth studying. Stating that many countries spent a lot of money during the Covid period, he said, “I would say, like a knee-jerk…they were in a hurry to respond to the crisis situation. So they did not… necessarily use their funds and resources wisely.”
During his visit, Jaishankar co-chaired with his Saudi Arabian counterpart, Prince Faisal bin Farhan Al Saud, the first ministerial meeting of the Committee on Political, Security, Social and Cultural Cooperation (PSSC), established under the framework of the India-Saudi Arabia Strategic Partnership Council.
Saudi Arabia is India’s fourth-largest trading partner. More than 18 per cent of India’s crude oil imports are sourced from Saudi Arabia. During FY22 (April-December), bilateral trade was valued at $29.28 billion.
During this period, India’s imports from Saudi Arabia were valued at $22.65 billion and exports to Saudi Arabia were worth $6.63 billion.
The 2.2-million-strong Indian community is the largest expatriate community in Saudi Arabia, according to the Indian embassy.
New paradigm: FTAs, multilateral exposure limited to supply chains, governance (Page no. 3)
(GS Paper 2, International Relations)
India’s decision to stay away from the trade pillar of the United States-led Indo-Pacific Economic Framework (IPEF) ties in with an evolving consensus in New Delhi’s approach to global partnerships.
This new consensus has some deepening gridlines: staying off multilateral trade pacts, sticking to bilateral deals that progressively build on an early harvest scheme; actively integrating into specialised global supply chain arrangements such as for rare earths or pharmaceutical ingredients; and restricting multilateral exposure to focused agreements such as tackling black money or cryptocurrency rules.
The backtracking on multilateral engagement on commerce comes at a time when trade statistics are beginning to turn inclement after a short, buoyant phase: the adverse contribution of net exports to real GDP growth — at minus 6.2% in April-June 2022-23 — was a record of sorts (the highest for the current GDP base series 2011-12), even as the country’s trade deficit narrowed slightly to $28.7 billion in August from a record high of $30 billion in the previous month.
While the global slowdown is a key contributing factor, there are specific concerns too: India seems to be impacted more than others as the trade pie shrinks.
For instance, in the key US market for textiles and garments, India’s growth in the first six months of 2022, while nearly 30 per cent, is the slowest among the top five exporters excluding China.
Other key suppliers – Vietnam, Bangladesh, Indonesia – are all doing way better, with India marginally trailing the average growth that all suppliers of textiles and garments into the US clocked over this period.
Government officials rightly make a distinction between the IPEF and other multilateral trade deals that India has walked out of previously.
The IPEF is not exactly a trade pact and the provision of multiple pillars does entail an option to participants to choose what they want to be a part of. It’s not a take-it-or-leave-it arrangement, like most multilateral trade deals.
The IPEF, launched at the recent Quad summit in Tokyo and being seen as the Joe Biden administration’s pivot to somewhat compensate for Washington’s exclusion from the revamped Trans-Pacific Partnership (TPP) and a vehicle to re-establish American economic heft in the Indo-Pacific.
Since the IPEF is not a regular trade pact, the 14 members so far are not obligated by all the four pillars despite being signatories. So, while staying off the trade part of the arrangement, India has joined the other three pillars of the multilateral arrangement – supply chains, tax and anti-corruption and clean energy.
Also, the IPEF envisages some degree of synergies with Quad members’ strategic priorities. “The IPEF does not incorporate issues such as tariff reduction or reciprocal commitments. India’s participation in the agreement was ensured by giving it flexibility in terms of which pillar it would want to join.
How an IPS officer used soft policing to crack down on illegal hooch distilleries in Solapur (Page no. 3)
(GS Paper 2, Governance)
When TejaswiSatpute, a 2012-batch IPS officer was posted in Solapur (Rural) as Superintendent of Police in October 2020, she knew exactly where to start. Seven years earlier, as a young IPS probationer, she had spent over two weeks in the area, during which she had identified its darkest spot: illicit liquor.
By the time Satpute joined as SP Solapur, the region had acquired a reputation as the primary supplier of hooch to at least nine districts in the state, including Beed, Osmanabad, and others along the Maharashtra-Karnataka border.
While she spent the first few months of her posting figuring out the extent to which the illicit business had spread, in September 2021, Satpute launched ‘Operation Parivartan’, a four-point action plan that combined soft policing methods such as counselling with a concerted crackdown on the haathbhattis or the hand-operated illicit liquor distilleries in the police district.
A year later, nearly 80 per cent of the haath-bhattis in Solapur (Rural) have shut down and over 650 families involved in the trade have been rehabilitated.
On September 2, Satputewas awarded the FICCI (Federation of Indian Chambers of Commerce & Industry) Smart Policing Special Jury Award for Operation Parivartan.
Satpute, who has in the past been SP Satara and Pune DCP (Traffic), said that after taking over in Solapur, she zeroed in on 200 hooch black spots — 70 where hooch was manufactured and over 120 spots where it was sold.
She realised that the 70 spots had turned into no-go areas for police teams, who would often be attacked by local villagers involved in the manufacture of hooch, mostly members of the Banjara community.
“It would take a team of at least 150-200 officers to conduct a raid. Hence, these raids were carried out once every few months. That didn’t help much since a day’s loss in, say, 90 days did not impact the manufacturers and they went on with their business.
She knew frequent raids were the answer but these had to be done scientifically. A deep-dive into the production process of hooch revealed that it involved a 72-hour cycle.
Hence, we decided that there should be raids every three days to hit their production cycle. I knew it would be difficult to do so in the face of resistance from villagers.
But I told my staff that we would have to do it only for the next few months. It would be enough to bring them to the negotiation table.
Explained
Supreme Court to take up CAA challenge: where does the case stand? (Page no. 9)
(GS Paper 2, Polity and Governance)
A three-judge Bench of the Supreme Court led by Chief Justice of India (CJI) U ULalit will hear the challenge to the contentious Citizenship (Amendment) Act.
The Citizenship Amendment Act, 2019 seeks to grant citizenship to a class of migrants belonging to Hindu, Sikh, Buddhist, Jain, Parsi or Christian communities from Afghanistan, Bangladesh or Pakistan.
The Act was passed on December 12, 2019 and was notified on January 10, 2020.While the government claimed the amendment was sympathetic and inclusionary, critics said it was unconstitutional and anti-Muslim. The law provoked widespread protests in the country.
The law, an amendment to the Citizenship Act, 1955, was challenged before the Supreme Court under Article 32 of the Constitution. The lead petitioner is the Indian Union Muslim League (IUML); other petitioners include politicians such as AsaduddinOwaisi, Jairam Ramesh, Ramesh Chennithala, and MahuaMoitra, and political parties and groups such as the Assam Pradesh Congress Committee, the DravidaMunnetraKazhagam, and the AsomGanaParishad.
The challenge rests primarily on the grounds that the law violates Article 14 of the Constitution that guarantees that no person shall be denied the right to equality before law or the equal protection of law in the territory of India.
The Supreme Court has developed a two-pronged test to examine a law on the grounds of Article 14. First, any differentiation between groups of persons must be founded on “intelligible differentia”; and second, “that differentia must have a rational nexus to the object sought to be achieved by the Act”.
Simply put, for a law to satisfy the conditions under Article 14, it has to first create a “reasonable class” of subjects that it seeks to govern under the law. Even if the classification is reasonable, any person who falls in that category has to be treated alike.
Those challenging the law argue that if protecting persecuted minorities is ostensibly the objective of the law, then the exclusion of some countries and using religion as a yardstick may fall foul of the test.
Further, granting citizenship on the grounds of religion is seen to be against the secular nature of the Constitution which has been recognised as part of the basic structure that cannot be altered by Parliament.
In the CAA challenge, the petitioners have asked the Court to look into whether the special treatment given to so called “persecuted minorities” from three Muslim majority neighbouring countries only is a reasonable classification under Article 14 for granting citizenship, and whether the state is discriminating against Muslims by excluding them.
Curbs on India’ rice exports (Page no. 9)
(GS Paper 3, Economy)
The Narendra Modi government, barely four months ago, banned exports of wheat from the country, following an unexpected crop failure resulting in low procurement and depletion of public stocks.
Concerns over a similar situation arising have now led it to impose curbs, albeit not outright ban, on rice shipments as well.
There are four categories of rice exports. Out of these, exports in the case of two – basmati rice and parboiled non-basmati rice –are still freely allowed. The curbs are only for the other two: raw (white) and broken non-basmati rice.
On Thursday, the Department of Revenue in the Ministry of Finance notified the slapping of a 20% duty on exports of rice “other than parboiled and basmati rice” with effect from September 9.
This would have covered all raw non-basmati rice shipments, whether of full or broken grains. However, on the same night, another notification from the Directorate General of Foreign Trade in the Ministry of Commerce and Industry imposed a blanket ban on broken rice exports. Thus, even within raw non-basmati, only export of full grain consignments would be permitted on payment of 20% duty.
India, in 2021-22 (April-March), shipped out a record 21.21 million tonnes (mt) of rice valued at $9.66 billion. That included 3.95 mt of basmati rice worth $3.54 billion (on which there are no restrictions) and 17.26 mt of non-basmati shipments valued at $6.12 billion. Within the latter, 7.43 mt ($2.76 billion) comprised parboiled rice exports, which will also be allowed freely.
The restrictions apply only in respect of the balance 9.83 mt ($3.36 billion). This covers 3.89 mt ($1.13 billion) of broken rice, whose exports have been prohibited, and 5.94 mt ($2.23 billion) of non-parboiled non-basmati rice, whose shipments will henceforth attract 20% duty.
Simply put, the curbs announced will affect just under half of India’s rice exports in terms of quantity and over a third by value.
There are two basic reasons. The first is the possibility of India’s rice production declining significantly because of deficient monsoon rainfall in Uttar Pradesh, Bihar, Jharkhand and Gangetic West Bengal.
During the current kharif cropping season from June 1 to September 9, farmers have planted 2.1 million hectares (mh) less area under rice compared to the same period last year.
When ED seizes cash, attaches property-what happens after (Page no. 9)
(GS Paper 3, Money Laundering)
The Enforcement Directorate conducted searches at six locations in Kolkata and recovered Rs 17 crore in cash as part of its probe into a mobile application that allegedly cheated investors of their money.
The search locations included a house owned by Naser Khan, who runs a transport business. Amir Khan, the younger son of Naser Ahmed Khan, had launched a mobile gaming application called E-Nuggets, which initially rewarded investors with a commission and allowed hassle-free withdrawal of the balance in their wallets.
The ED had registered a case in this regard against Aamir Khan and others based on a complaint by Federal Bank authorities on February 15, 2021.
ED is mandated to conduct searches at premises of suspects in a case under the Prevention of Money Laundering Act (PMLA). ED generally approaches the suspect with a search warrant and conducts searches.
The recoveries made during the searches are seized in presence of independent witnesses who have to sign the seizure memo.
Earlier, the cash seized by the agency was deposited by the concerned administrative zone into fixed deposit accounts opened by them. The money remained in the account until the case was decided.
If the accused got convicted, the cash so attached (given that it was proved to be proceeds of crime), would be deposited in the government treasury. If the case ended in acquittal, the entire amount, along with interest, would be returned to the accused.
In 2018, however, the entire system was rationalized and now the money gets deposited directly in the treasury through personal deposit accounts. Concerned zones now open PD accounts in the name of Enforcement Directorate with the State Bank of India. These accounts do not generate any interest on deposits. The rest of the procedure for both cash and gold remains the same.
The purpose of attachment is to deprive an accused of the benefits of the attached asset. The law also provides for the property to remain out of bounds for the accused until the trial is complete.
After ED attaches or seizes any property, including cash, it has 180 days to get a confirmation on the said seizure from the Adjudicating Authority of the agency.
Once the attachment has been confirmed, the ED can take possession of the seized property. In case it is an immovable property, the ED can issue eviction notice to the property owner and take possession of it.
Editorial Page
Tokyo Delhi compact (Page no. 10)
(GS Paper 2, International Relations)
The second India-Japan 2+2 Ministerial Dialogue held in Tokyo on September 8 saw Defence Minister Rajnath Singh and External Affairs Minister S Jaishankar meet their Japanese counterparts Hamada Yasukazu and Hayashi Yoshimasa for an in-depth discussion on all critical challenges to a rules-based global order that increasingly binds the two countries, and provides renewed vigour to their special strategic and global partnership.
The meeting took place against the backdrop of heightened tensions across the Taiwan Strait during which China lobbed five missiles in Japan’s exclusive economic zone, prompting then Defence Minister Nobuo Kishi to describe it as “a serious problem that affects our national security and the safety of our citizens”.
The 2+2 dialogue also coincided with North Korea passing a new law declaring its irreversible status as a nuclear weapons state. This, together with growing Chinese belligerence and its expanding nuclear arsenal, erodes Japan’s security and provides the raison d’être for paragraph 5 of the India-Japan Joint Statement.
It is striking in terms of the resolve expressed by the Japanese side to fundamentally reinforce Japan’s defence capabilities within the next five years.
The development of so-called “counterstrike capabilities” and a substantial increase in the defence budget (reportedly to two per cent of the GDP) find specific mention.
Clearly, Japan is freeing itself from self-imposed shackles in order to develop robust capacities to tackle the emerging security threats from China and North Korea.
While the Joint Statement issued by the two sides at the end of the 2+2 dialogue reiterates their commitment to a free and open Indo-Pacific, a rules-based global order that respects the sovereignty and territorial integrity and the peaceful resolution of disputes among others, there are several indications pointing to a rapid deepening of the strategic and defence partnership in recent months.
In fact, the press release issued by the Japanese Ministry of Foreign Affairs describes the developments as a “dramatic expansion of cooperation between Japan and India in the fields of security and defence”.
The joint statement avers that the ministers had a “frank and fruitful” discussion on the Indo-Pacific and Ukraine, suggesting that strategic ties between India and Japan are resilient enough to accommodate differences in approach on the war in Europe.
Giving Wanderlust Its Due (Page no. 10)
(GS Paper 3, Economy)
A former chief minister of a state once commissioned an enormous statue of a revered historical figure to be erected in the middle of a lake.
A vast amount was written off for the “tourist attraction”. The work had been so shoddily executed that the towering effigy fell into the lake. No one was held accountable for this shocking misuse of the taxpayers money.
There are other more recent, and even more disgraceful examples of such ego-massage schemes being passed off as “tourist attractions.” This is why it is necessary to have tourism analysts — to hold tourism planners accountable for their follies.
Tourism is not a fad. It is a compulsion driven by the urge to discover new places. Because we have this compulsion to venture into the unknown, we need each other. When humans travel, meet and exchange ideas, civilisation flourishes.
People met and exchanged ideas at a shallow point in a river in England which they used as a crossing, a ford for their oxen. They also met at a bridge over the river Cam. Oxford and Cambridge became great centres of learning.
In India, places ending in haat or ghat indicate similar social origins. The ghat of the goddess Kali could have been the origin of the word Calcutta.
British colonials chose this river port to establish their trading empire and the new wave of travellers had a major impact on our land. They, however, were interested in maintaining the status quo as far as it met their trading interests.
When India got its freedom from these traders, it was time for our land to take a giant leap into the future. The erudite Jawaharlal Nehru, trained in the analytical methods of the Inns of Court (as were Sardar Patel and B R Ambedkar), realised that India suffered from the British cultivated image of a land of snake charmers. To correct this false perception, Nehru built VigyanBhavan and Delhi’s Ashoka Hotel.
He then invited UNESCO to hold its annual meeting in Delhi. The premier cultural body of the UN was impressed. This new and realistic idea of our nation was cemented in the western world’s mind by his grandson Rajiv Gandhi.
He took the festivals of India to influential world capitals. Suddenly, the outworn idea of India underwent a sea change. Our nation had shown its true multicultural, polyethnic, brilliantly radiant self.
Rajiv Gandhi had swooped down from the stuffy government office, confiscated typewriters and replaced them with computers. Sam Pitroda had worked a miracle with telecommunications.
The cumbersome method of booking trunk calls had given way to direct dialling. Indian tourism was now ready to take off, but state tourism organisations did not have the finances or the know-how to promote their myriad attractions. This was when we, by a happy coincidence, got our bbigreak.
On Sunday, August 6, 1977, our first travel column appeared on these pages. Tamil Nadu tourism was the first to invite us to join a coach tour. Our piece caught the attention of the other state tourism organisations and invitations for fam tours started to pour in.
Idea Page
Friends and Neighbour (Page no. 11)
(GS Paper 2, International Relations)
Bangladesh Prime Minister Sheikh Hasina’s four-day visit to India, which began on September 5, was highly awaited in both countries.
In Bangladesh especially, there was much speculation about the trip, as it was viewed as a means to take bilateral cooperation between the two neighbours to new heights — and also allow Bangladesh to navigate the economic challenges posed by the Russia-Ukraine war.
Bangladesh, so far, has calmly and conservatively navigated the macroeconomic uncertainties that stemmed from imploding import costs due to Covid-induced supply-chain disruptions and the rising energy costs after the Russia-Ukraine war started.
This has meant that the Bangladesh government has already introduced difficult economic adjustments in the form of import restrictions and a sharp increase in fuel prices to pre-emptively deal with any adverse economic waves heading towards its shores.
Of course, such pre-emptive prudent measures are very painful for ordinary citizens as they trigger high inflation and increase the cost of living.
Consequently, this trip was not only a means of taking stock of ongoing projects by inaugurating flagship initiatives like the 1320 MW Rampal power plant and the Rupsha railway bridge, which was inaugurated on September 6, but also find ways to navigate the rough economic waters that Bangladesh faces due to high energy costs in the global market.
This bilateral visit was also critical for taking forward existing discussions and cooperation on issues such as energy trade, connectivity and developing key trade infrastructures between the two countries, especially in the border areas — and investments in human capital through training arrangements for the judiciary and technological cooperation between BCSIR and CSIR.
As of 2017, India has opened a $7.86 billion line of credit (LoC) with Bangladesh — this is supporting the execution of around 30 projects.
However, so far, Delhi has disbursed only $1.5 billion of the standing commitment — accounting for less than 20 per cent of the pledged developmental credit. This underscores the need to revisit and renegotiate the LoC framework, so that both countries can expedite the economic investments under the arrangement.
Bangladesh and India are also expected to start negotiations on the bilateral Comprehensive Economic Partnership Agreement (CEPA), which is aimed at creating a supportive environment for preferential trade access and investment for both countries — especially after Bangladesh’s LDC graduation in 2026. An effective CEPA is likely to resolve issues and challenges associated with anti-dumping duties and rules of origin through multi-modal connectivity and deepening cooperation.
Perhaps the two key outcomes of interest that have surfaced are the Bangladesh and India interim water sharing agreement for the Kushiyara river, which is the first such pact between the two countries in over 25 years — after the Ganga water treaty in 1996.
This is a noteworthy achievement and shows that more open-minded engagement will bear fruitful results for the pending Teesta Treaty, which has remained an elusive agreement for governments for more than a decade.
Idea Exchange
‘RBI should intervene only to curb volatility, let rupee depreciate’ (Page no. 12)
(GS Paper 3, Economy)
Former RBI Governor D Subbarao on the need for structural reforms, investment, and why we should be looking at growth drivers instead of numbers. The session was moderated by National Business Editor Anil Sasi.
There are parallels, certainly, but only to some extent. I will not push that comparison too far because the situation today is quite different from what it was during the taper tantrum in 2013.
For example, there was a lot of pressure build-up in the rupee exchange in 2013; it was overvalued. Today, the rupee is more or less tracking fundamentals. We had a high current account deficit year on year, for several years.
The current account deficit today is estimated to be about three per cent. Hopefully, that will be a one-off, it will taper off.
Most importantly, the foreign exchange reserves are much more robust compared to 2013 by any metric, be it as a proportion of the GDP or external debt. So, the 2013 taper tantrum crisis was a classic case in deficits. I wouldn’t call today’s situation a crisis, but it is problematic.
The situation in advanced economies is quite different from that of emerging economies, particularly India, because the recovery there is almost complete. They have reached the pre-pandemic levels of output.
Of course, they’re caught up with inflation. They don’t have fiscal problems of the type we have. They don’t have the currency problems like us.
So comparing advanced economies to emerging economies, particularly India, is misleading. The Finance Secretary has said that we have caught up with the pre-pandemic level of output, 103 per cent of what it was in the April-June quarter of 2019.
We should be looking at what the output today is compared to what it would have been in the absence of the pandemic. If you do that, you will realise that our recovery is incomplete.
On the other hand, inflation is above the RBI’s target band. So, this is a constant tension for the RBI but particularly acute in a situation like this, where recovery is incomplete and inflation continues to be high.
The RBI is caught up in a classic impossible trinity. The impossible trinity is that no economy, no central bank can, at the same time, have an open capital account, fixed exchange rate and an independent monetary policy. So, RBI is now having to fight the balance between monetary policy and exchange rate management and what degrees of freedom it has.
Economy
SFIO arrests ‘mastermind’ who set up shell companies linked to China (Page no. 14)
(GS Paper 3, Economy)
The Serious Fraud Investigation Office (SFIO) has arrested a man who had masterminded the incorporation of a large number of shell companies linked to China and provided dummy directors on their boards to run the fraudulent businesses. The arrest was part of the crackdown on Chinese shell companies that are allegedly into serious financial crimes in India.
The agency said it had arrested a man named Dortse — who was on the board of Jillian India Ltd, a wholly-owned subsidiary of Jillian Hong Kong Ltd — and raided multiple places to unearth the scam.
This follows simultaneous search-and-seizure operations conducted by the Ministry of Corporate Affairs (MCA) on September 8 in the offices of Jillian Consultants India Pvt Ltd, a wholly-owned subsidiary of Jilian Hong Kong Ltd at Gurgaon, as well as Fininty Pvt Ltd at Bangalore and Husys Consulting Ltd at Hyderabad.
Dortse is on the Board of Jillian India Ltd and has emerged as the mastermind of the whole racket of incorporating a large number of shell companies with Chinese links in India and providing dummy directors on their boards.
The arrested person Dortse had shown himself to be a resident of Mandi in Himachal Pradesh as per the records filed with the Registrar of Companies (RoC).
As per the MCA, evidence procured during the enquiry by RoC Delhi and the simultaneous search operations pointed to dummy directors being paid by Jilian India Ltd to act as dummies in several shell companies.
Boxes filled with company seals and digital signatures of dummy directors have been recovered from the site. The Indian employees were in touch with their Chinese counterparts through a Chinese instant messaging app. Husys Ltd was also found to be acting on behalf of Jillian India Ltd.
Initial observations reveal that Husys had a pact with Jilian Hong Kong. Investigations so far have revealed the possible involvement of these shell companies in serious financial crimes detrimental to the financial security of the country.
SFIO was assigned by the government to investigate Jillian Consultants India Pvt Ltd and 32 other companies to SFIO on September 9, 2022.
Dortse and one Chinese national are the two directors of Jilian Consultants India Pvt Ltd. Based on inputs and the investigations carried out, it was gathered that Dortse had fled from Delhi-NCR to a remote place in Bihar and was attempting to escape the country through the road route. The SFIO arrested Dortse on September 10.