Editorial Analysis 25 June

INTERNATIONAL RELATIONS

From China tilt to a balancing with Beijing and Delhi

Source: The Hindu

Context

• Maldives President Mohamed Muizzu is recalibrating his foreign policy to balance ties between India and China amid economic difficulties and geopolitical dynamics, aiming to enhance national interests.

Background

• Mohamed Muizzu's "pro-Maldives" policy seeks to reduce reliance on India, strengthen relations with China, and diversify foreign partnerships.
• Economic challenges and limited support from China are prompting Muizzu to reconsider his strategy and engage more with India.

Details

Key Points

• Mohamed Muizzu's foreign policy aims to diversify Maldives' international relations, reducing dependence on India and increasing ties with China.
• Economic difficulties, including high debt and low foreign reserves, are compelling Muizzu to recalibrate his strategy.
• India's accommodative policy, including high-level engagements and increased development assistance, facilitates rapprochement.
• China’s reluctance to provide new loans due to Maldives' increasing debt burden impacts Muizzu’s strategy.
• India invited Muizzu to Narendra Modi’s swearing-in, signaling continued engagement regardless of Maldives' domestic politics.
• Muizzu seeks to balance relations with both India and China, leveraging competition between the two to further Maldives' interests.

India-Maldives Relations

Historical Background

• Colonial Period and Independence:
  • India and Maldives share a history of cultural, economic, and social exchanges.
  • Maldives gained independence from British protection in 1965, and India was one of the first countries to establish diplomatic relations.
• Early Bilateral Relations:
  • India and Maldives established formal diplomatic relations in November 1965.
  • Initial years marked by mutual support and understanding, with India playing a crucial role in Maldives' early development.

Political Relations

• Strategic Partnership:
  • India has consistently supported Maldives during political upheavals and crises.
  • India’s intervention in the 1988 coup attempt in Maldives, known as Operation Cactus, reaffirmed its commitment to Maldivian sovereignty.
• High-Level Visits and Dialogues:
  • Regular high-level exchanges and visits to bolster bilateral ties.
  • Recent visits by Indian Prime Minister Narendra Modi and Maldivian President Ibrahim Mohamed Solih highlight the strategic importance of the relationship.
• Recent Political Dynamics:
  • Mohamed Muizzu’s presidency has introduced shifts in Maldives' foreign policy, balancing relations with India and China.
  • India maintains a policy of engagement despite Maldives' fluctuating political rhetoric.

Economic Relations

• Trade and Investment:
  • Bilateral trade is relatively modest but growing, with potential for expansion.
  • India is one of Maldives' top trading partners, supplying essential commodities.
• Development Assistance:
  • India provides significant development assistance to Maldives in areas such as infrastructure, health, education, and capacity building.
  • Major projects include the Greater Male Connectivity Project (GMCP), funded by a $400 million line of credit from India.
• Tourism:
  • Indian tourists constitute a significant portion of Maldives' tourism industry.
  • Tourism remains a crucial aspect of economic ties, contributing to Maldives' GDP.

Strategic and Security Relations

• Geostrategic Importance:
  • Maldives' location in the Indian Ocean is strategically important for India's maritime security and regional stability.
  • India’s SAGAR (Security and Growth for All in the Region) doctrine underscores the importance of the Indian Ocean region, including Maldives.
• Defence Cooperation:
  • India and Maldives engage in regular Defence cooperation, joint military exercises (e.g., Exercise Ekuverin), and capacity-building initiatives.
  • India provides training and equipment to the Maldivian National Defence Force (MNDF).
• Counter-Terrorism and Maritime Security:
  • Collaboration on counter-terrorism, anti-piracy, and maritime security operations.
  • Shared concerns about radicalization and terrorism in the region.

Social and Cultural Relations

• People-to-People Ties:
  • Strong cultural and people-to-people ties, bolstered by historical linkages and geographical proximity.
  • Exchange programs, scholarships, and cultural events promote mutual understanding.
• Healthcare and Education:
  • India supports Maldives in healthcare through medical missions and supply of medicines.
  • Indian educational institutions attract Maldivian students, enhancing educational cooperation.

Challenges and Issues

• Political Instability:
  • Political instability and shifts in Maldives' foreign policy pose challenges to bilateral relations.
  • The rise of anti-India sentiment in certain political factions in Maldives requires careful diplomatic management.
• Economic Dependencies and Debt:
  • Maldives' economic dependency on China through loans and investments complicates its foreign policy.
  • India's efforts to balance Maldives' economic needs with strategic interests are crucial.
• Environmental Concerns:
  • Rising sea levels and climate change pose existential threats to Maldives.
  • India collaborates with Maldives on climate change mitigation and sustainable development initiatives.

Future Prospects

• Strengthening Strategic Partnership:
  • Continued high-level engagement and strategic dialogues to address mutual concerns and enhance cooperation.
  • Potential areas for collaboration include renewable energy, blue economy, and regional security.
• Economic Integration:
  • Enhancing trade relations, promoting investments, and supporting Maldives' economic diversification efforts.
  • Leveraging regional initiatives like SAARC and BIMSTEC for broader economic integration.
• People-Centric Development:
  • Focusing on human resource development, healthcare, education, and capacity-building initiatives.
  • Promoting cultural exchanges and tourism to strengthen people-to-people ties.
• Maritime Security and Regional Stability:
  • Deepening defence and security cooperation to ensure maritime security in the Indian Ocean region.
  • Collaborating on regional stability and counter-terrorism efforts.

Conclusion

• India-Maldives relations are characterized by historical ties, strategic partnership, and multifaceted cooperation. Despite challenges, the relationship continues to evolve with a focus on mutual interests, regional stability, and sustainable development. Balancing Maldives' geopolitical manoeuvres with India's strategic and economic interests remains key to fostering a robust and enduring partnership.

Sources:

The Hindu

ENVIRONMENT & GOVERNANCE

Nicobar triangle

Source: The Hindu

Context

• The Union Tribal Affairs Ministry is reviewing the forest clearance paperwork for the ₹72,000-crore Great Nicobar Island infrastructure project, highlighting the tension between development, biodiversity preservation, and tribal rights.

Details

Key Points

• Infrastructure Development vs. Environmental Conservation:
  • The Great Nicobar Project includes a trans-shipment port, an international airport, township development, and a 450 MVA gas and solar-based power plant.
  • The project spans over 130 sq. km. of pristine forest and has received stage-1 environmental clearance.
• Tribal Rights and Biodiversity:
  • The project could lead to the felling of 6 lakh trees, with compensatory afforestation planned in Haryana, a different ecological zone.
  • The National Commission for Scheduled Tribes is concerned about the lack of consent from local tribes, particularly the Shompen.
• Strategic Importance and Tourism:
  • The government aims to leverage the island’s strategic location near the Malacca Strait, a crucial shipping route.
  • Critics suggest tourism is a significant driver for the project.
• Lack of Transparency:
  • The Environment Ministry has kept details of the environmental clearance process confidential.
  • The National Green Tribunal has tasked a committee led by the Secretary of the Environment Ministry to report on forest clearance approvals, but this report is not public.
• Reports and Committees:
  • The project has been scrutinized by an expert committee for environmental clearance.
  • The National Green Tribunal and the National Commission for Scheduled Tribes are involved in reviewing the project's impact and procedural adherence.

Sources:

The Hindu

ECONOMY

A TAX LESS TAXING

Source: Indian Express

Context

• The GST Council, meeting for the first time under the new Union government, has revised tax rates on some items and introduced measures to reduce litigation and ease compliance for taxpayers.
• Key issues such as rate rationalisation, inclusion of petroleum products under GST, and the future of the compensation cess need urgent deliberation by the GST Council.

Details

Key Points

• The GST Council has recommended waiving interest and penalties on demand notices under Section 73 for three financial years if the tax is fully paid by March 2025, reducing the pre-deposit amounts required to file an appeal, and introducing monetary limits for the tax department to file appeals.
• The Council needs to balance merging tax slabs with maintaining revenue neutrality. The Chief Economic Advisor's report pegged the revenue-neutral rate at 15.3%, while the weighted average GST rate dropped from 4% in May 2017 to 11.6% by September 2019.
• The Council must deliberate on including items such as petroleum products under GST, which is challenging due to the significant revenue these products generate for both the Centre and the states.
• The compensation cess, originally set for a five-year period ending in June 2022, was extended to March 2026 to repay loans taken during the pandemic. The Council needs to decide whether to discontinue the cess after the loans are paid off, possibly by 2025-26.
• The Centre must ensure that state governments' revenue-related concerns are addressed during GST Council deliberations to evolve a consensus on necessary measures.
• The GST, introduced in July 2017, aimed to create a unified tax system in India, replacing multiple state and central taxes. The system's success and challenges, including rate rationalisation and compensation to states, have been continuously addressed by the GST Council.

Sources:

Indian Express