PM IAS UPSC CURRENT EVENTS JAN 24

Indonesian President Prabowo Subianto arrives to take part in Republic Day celebrations

Source: The Hindu

Syllabus: GS II International Relations
India and Indonesia: Strengthening Bilateral Relations

Historical and Cultural Bonds

India and Indonesia share a civilizational relationship spanning over two millennia, deeply rooted in shared historical and cultural ties. The transmission of Hinduism, Buddhism, and later Islam from India to Indonesia has profoundly shaped the latter’s religious and cultural landscape. The enduring influence of Indian epics like the Ramayana and Mahabharata on Indonesian art, folklore, and traditions highlights this unique cultural connection. Post-independence, both nations—guided by shared aspirations for sovereignty, economic self-reliance, and independent foreign policies—emerged as significant voices in the Non-Aligned Movement (NAM).

Strategic and Diplomatic Engagements

High-Level Visits and Agreements In recent years, India and Indonesia have prioritized high-level engagements to strengthen their strategic partnership:

• 2018: Prime Minister Narendra Modi’s visit to Jakarta resulted in the signing of the Comprehensive Strategic Partnership and a shared vision for Indo-Pacific maritime cooperation.
• 2024: Discussions between Prime Minister Modi and Indonesian President Prabowo Subianto on the sidelines of the G20 Summit emphasized economic collaboration and regional security.

These interactions underscore the mutual commitment to fostering regional stability and ensuring sustainable growth in the Indo-Pacific.

Defense and Security Cooperation India and Indonesia’s defense partnership dates back to 1951, with significant milestones in 2001 and 2018 that formalized agreements and enhanced collaboration. Key initiatives include:

• Joint Military Exercises: Exercises such as Garuda Shakti (Army), Samudra Shakti (Navy), and coordinated patrols (IND-INDO CORPAT) highlight operational synergy.
• Defense Industry Collaboration: The inaugural India-Indonesia Defense Industry Exhibition in 2024 showcased opportunities for joint ventures in defense technology and manufacturing.

These initiatives reflect the shared concerns over regional security, particularly in the Indo-Pacific, and a collective resolve to address emerging challenges.

Economic and Trade Relations

Bilateral Trade Indonesia is India’s second-largest trading partner in ASEAN, with bilateral trade reaching $29.4 billion in 2023-24. Key drivers of this trade include:

• Indian Imports: Coal, crude palm oil, and rubber.
• Indian Exports: Refined petroleum, telecommunication equipment, and agricultural products.

Investment and Connectivity

• Indian Investments: Indian businesses have invested over $1.56 billion in sectors such as mining, textiles, and infrastructure.
• Enhanced Connectivity: Direct flights between major cities like Mumbai-Jakarta and Delhi-Bali have bolstered tourism and people-to-people exchanges.

Cultural and Educational Collaboration

Cultural Engagement India’s cultural centers in Jakarta and Bali actively promote yoga, classical dance, and music. Joint celebrations, such as International Yoga Day and heritage conferences, strengthen cultural ties.

Educational Cooperation Indonesia is a key beneficiary of Indian scholarships under initiatives like the Indian Technical and Economic Cooperation (ITEC) program and the Indian Council for Cultural Relations (ICCR). Efforts to finalize higher education MoUs further deepen collaboration in knowledge sharing.

Multilateral Cooperation

India and Indonesia are active participants in multilateral forums such as the G20, ASEAN, and the Indian Ocean Rim Association (IORA). Their partnership spans crucial areas like maritime security, sustainable development, and regional stability.

Future Prospects

The 75th anniversary of diplomatic relations in 2024 was marked by numerous initiatives celebrating the shared history and vision of India and Indonesia. Strengthening economic, defense, and cultural ties remains central to their bilateral relationship, ensuring mutual prosperity and stability in the Indo-Pacific.

Conclusion

The India-Indonesia relationship exemplifies a harmonious blend of historical camaraderie and strategic collaboration. As vibrant democracies and emerging economies, their partnership holds immense potential to shape the regional and global order. With shared values, mutual respect, and a commitment to progress, India and Indonesia are poised to foster a prosperous and peaceful future together.

ExplainSpeaking: Making sense of Trump’s tariff threat

Source: The Indian Express

Syllabus: GS III Economy

Trump’s Tariff Strategy: An Analysis

Background

Policymakers and analysts worldwide are closely monitoring former US President Donald Trump’s tariff strategy. Trump has proposed tariffs of 10% on Chinese imports, 25% on goods from Mexico, Canada, and the European Union, and has even threatened a 100% tariff on BRICS nations, including India. While specific tariffs are yet to be announced, Trump has instructed his team to study China’s response to tariffs imposed during his first term before making further decisions.

Understanding Tariffs

A tariff is a tax levied by a government on imported goods. For instance, if domestic cars in the US cost $120 and imported Chinese cars cost $100, consumers might prefer the cheaper imports, impacting domestic manufacturers. Tariffs aim to alter this dynamic by increasing the price of imports.

Implications of Tariffs:

1. Impact on Domestic Manufacturers: Tariffs protect domestic industries by reducing competition from cheaper imports, but can lead to inefficiency.
2. Trade Deficit: High imports over exports lead to an outflow of wealth, expanding the trade deficit.
3. Consumer Perspective: While consumers benefit from lower prices without tariffs, the imposition of tariffs raises costs, impacting affordability.

Objectives of Tariffs

1. Protecting Domestic Industries: By imposing a 50% tariff, for example, on Chinese car imports, their price increases to $150, making US cars ($120) more competitive. This benefits domestic manufacturers and boosts industrial growth.
2. Increasing Government Revenue: Tariffs generate revenue by taxing well-selling imports. Moderate tariffs (e.g., 5-10%) balance revenue generation with sustaining trade.
3. Encouraging Foreign Direct Investment (FDI): Tariffs incentivize foreign companies to establish local manufacturing facilities. For instance, Chinese carmakers might set up factories in the US, creating jobs while maintaining affordability.

Counterstrategies to Tariffs

Countries targeted by tariffs often adopt various strategies to mitigate their impact:

1. Dumping: Exporting nations may absorb tariff costs to continue selling at competitive prices. For example, China could sell cars at $100 despite tariffs, aiming to outcompete US manufacturers and later recoup losses.
2. Passing Costs to Consumers: Exporters may add the tariff cost to the product price, e.g., raising car prices from $100 to $150. This increases inflation and may lead domestic manufacturers to raise prices without improving quality.
3. Setting Up Factories in Target Markets: Exporters may consider FDI to avoid tariffs, though higher labor and input costs in the target market could challenge profitability.
4. Trade Rerouting: Exporting countries might route goods through nations with favorable trade agreements, repackaging and re-exporting products as “local” goods.
5. Trade War and Retaliatory Measures: Targeted nations could impose reciprocal tariffs on key exports from the imposing country, escalating trade tensions. For instance, during Trump’s first term, the US-China trade war disrupted global supply chains. Additionally, currency devaluation (e.g., China’s Renminbi) is another tactic to offset tariff impacts.

Trump’s Tariff Strategy: Reality or Bluff?

Transactional Approach: Trump’s tariff strategy reflects a transactional approach, using tariffs as leverage for broader negotiations. For example:

• Tariff threats against Canada and Mexico were linked to addressing illegal migration and drug trafficking.
• Recent threats against the EU highlight an intent to negotiate better trade terms rather than implement tariffs immediately.

Unpredictability: Trump’s unpredictability adds to the global uncertainty surrounding his tariff threats. While many view tariffs as a negotiation tactic, Trump’s belief in their economic benefits complicates forecasts.

India’s Exposure to Trump Tariffs

Limited Direct Risk: Global experts agree that India is not a primary target of Trump’s tariff policies, which are primarily aimed at countries like China, Brazil, and Canada, where the US has significant trade deficits.

Bilateral Trade: India’s bilateral trade with the US is relatively modest compared to larger trading partners. This reduces India’s vulnerability to potential tariffs.

Conclusion

India’s exposure to Trump’s tariff strategy is limited due to the relatively small scale of bilateral trade. However, global trade disruptions arising from broader tariff policies may indirectly affect India’s economic interests. Strategic engagement in multilateral forums and diversified trade partnerships can help India mitigate these risks while leveraging opportunities in a shifting global trade landscape.

Is poverty being underestimated in India

Source: The Hindu

Syllabus: GS III Economy

Is Poverty Being Underestimated in India?

Background:

Last month, the government released the 2023-24 Household Consumption Expenditure Survey (HCES) factsheet, which indicated a decline in poverty in both urban and rural areas. This has reignited debates among policymakers and academics about data comparability, unavailability, and the adequacy of consumption baskets used to determine poverty lines.

In a discussion moderated by Samreen Wani, P.C. Mohanan and N.R. Bhanumurthy delve into whether poverty is being underestimated in India. Key excerpts from the conversation are summarized below:

Defining Poverty and the Challenges:

P.C. Mohanan:

• From the late 1970s to 2005, India used a stable poverty definition based on the expenditure needed for a minimum calorie diet, updated every five years using National Sample Survey Office (NSSO) data.
• Over time, discrepancies between NSSO’s household consumption expenditure data and National Accounts data emerged due to varying methodologies, especially recall periods. This raised concerns about data accuracy.
• The Tendulkar Committee’s poverty line used a Mixed Reference Period (MRP). Subsequent modifications, such as the Modified Mixed Reference Period (MMRP), improved recall accuracy but led to inconsistencies with older data.
• Post-2011-12, official poverty estimates ceased, prompting reliance on alternative measures, including the Multidimensional Poverty Index (MPI). Claims of drastic poverty reduction are questionable due to variations in data sets and poverty lines.

N.R. Bhanumurthy:

• Poverty in India has declined significantly over the past two decades, driven by high GDP growth, increased public expenditure, flagship welfare programs, and an improved public delivery system.
• The broadened definition of poverty now includes dimensions beyond calorie consumption. Estimates based on different poverty lines, such as Tendulkar and Rangarajan, reflect a consistent decline of around 17-18%.
• Preliminary data from 2022-23 suggests poverty may have dropped to single digits, aligning with broader economic and social development trends.

Concerns with HCES Data:

P.C. Mohanan:

• Divergence between NSSO data and National Accounts stems from varying recall periods for consumption expenditure surveys. For instance, food items had a 7-day recall period, while others had 30 or 365 days.
• Improved methodologies, such as visiting households thrice instead of once, enhance recall accuracy but complicate comparisons with older data.
• Few efforts have been made to establish a new poverty line based on updated methodologies, leaving a significant gap in accurate poverty estimation.

N.R. Bhanumurthy:

• The consumption basket now includes more non-food items, reflecting changing expenditure patterns. This necessitates revisiting older methodologies.
• Criticism regarding the 17% decline in poverty between 2011-12 and 2023-24 should be addressed by refining data collection and methodology.

Rural-Urban Dynamics:

P.C. Mohanan:

• The consumption gap between rural and urban areas has narrowed. Rural areas now exhibit diverse consumption patterns similar to urban regions, reflecting socioeconomic changes.
• However, rural-urban classifications are outdated, relying on the 2011 Census. Peri-urban areas, often classified as rural, distort poverty and consumption estimates.

N.R. Bhanumurthy:

• Proper classification of peri-urban areas as urban would likely show faster poverty reduction in urban regions. Aggregate data points to a significant decline in poverty, but consumption trends must align with public policy interventions.

Revising the Poverty Line:

P.C. Mohanan:

• The Foundation for Agrarian Studies estimated 25% poverty using the Rangarajan methodology on 2022-23 data. However, updating poverty lines without consensus on methodology leads to uncertain estimates.

N.R. Bhanumurthy:

• The United Nations Development Programme (UNDP) sets a global poverty line of $2.15/day, estimating India’s poverty at 12.9% in 2019. A consistent and clear methodology for poverty estimation is essential, with a single agreed-upon poverty line.

Critique of Multidimensional Poverty Indices:

N.R. Bhanumurthy:

• India’s MPI customizes the UNDP framework by adding relevant indicators such as bank accounts and maternal health. Broadening the basket aligns with national priorities.

P.C. Mohanan:

• MPI’s focus on deprivations lacks flexibility. Once households access indicators like electricity or bank accounts, they are no longer counted as deprived, causing MPI estimates to remain perpetually low. Income vulnerability, an essential dimension, is not adequately addressed.

Conclusion:

Poverty in India has declined significantly, but methodological gaps and evolving socioeconomic realities demand a re-evaluation of poverty estimation frameworks. Clear definitions, updated poverty lines, and robust data collection methods are critical to ensuring accurate and actionable insights for policymaking. Multidimensional measures must incorporate income vulnerabilities to present a holistic picture of deprivation.

Is France’s influence in West Africa over?

Source: The Hindu

Syllabus: GS II International Relations

Is France’s Influence in West Africa Diminishing?

Introduction
The geopolitical dynamics in West Africa have undergone significant changes in recent years, marked by the retreat of French influence and the rise of alternative global players like Russia and China. France’s decision to withdraw troops from Chad, Ivory Coast, and Senegal signals a shift in its longstanding colonial and post-colonial role in the region. This development raises questions about the future of European influence in Africa and the implications for regional security and global power competition.

Reasons Behind French Troop Withdrawals in Chad, Ivory Coast, and Senegal

1. Assertion of National Sovereignty:

1. Post-colonial agreements under ‘Françafrique’ enabled France to maintain a military presence in these nations. However, leaders in Chad, Ivory Coast, and Senegal argue that these agreements are incompatible with their sovereignty.
2. President Mahamat Déby of Chad, for example, highlighted that ending the defense agreements marked a reclamation of sovereignty.
3. Similar sentiments were echoed in Senegal and Ivory Coast, emphasizing the need for reciprocal relationships that respect independence.
4. Public Dissatisfaction and Anti-French Sentiments:

2. Despite French military efforts since 2014 under Operation Barkhane, insurgencies linked to Al Qaeda and the Islamic State have persisted and intensified across the Sahel region.
3. The perceived failure of French troops to stabilize the region has fueled widespread public dissatisfaction, leading to protests and calls for withdrawal.
4. Diversification of Partnerships:

3. West African nations are increasingly moving away from traditional colonial ties to explore new alliances.
4. Military regimes in Mali, Niger, and Burkina Faso have aligned with Russian mercenaries, citing their non-interference in domestic politics and perceived effectiveness in combating insurgencies.
5. Russia’s portrayal as a reliable security provider has further accelerated the shift away from France.

Implications of French Withdrawal

For African Nations:

1. Decline of French Influence:
   • The withdrawal of troops marks the end of decades-long French dominance in West Africa. This provides an opportunity for African nations to redefine their foreign relations and security frameworks.
2. Continued Security Challenges:
   • In Mali, Niger, and Burkina Faso, French withdrawal has coincided with the entry of Russian mercenaries, yet insurgencies remain rampant. According to the Global Terrorism Index 2024, these nations are among the most affected by terrorism.
   • Chad, Senegal, and Ivory Coast may explore regional counter-terrorism alliances, such as the Sahel Alliance, to enhance collective security efforts.

For France:

1. End of ‘Françafrique’:
2. French President Emmanuel Macron’s withdrawal policy signifies the end of France’s neo-colonial strategies, aiming to focus on economic and diplomatic ties instead of military presence.
3. Decline in Economic and Political Leverage:
4. France’s diminishing political influence may hinder its ability to maintain economic interests, especially in nations like Ivory Coast, where economic stability has historically relied on French support.
5. Erosion of Global Standing:
6. France’s military role in Africa has historically bolstered its international image as a defender of democracy and human rights. The retreat may undermine this narrative and impact its broader foreign policy goals.
7. Rise of Competitors:
8. With countries like Russia and China filling the void, France faces the challenge of countering their growing influence. For example, Russian mercenaries are supporting military regimes, while China asserts economic dominance through initiatives like the Belt and Road Initiative (BRI).

Declining European Influence in Africa

1. Shifting Geopolitical Landscape:

1. Europe’s traditional influence in Africa is waning due to internal challenges such as the war in Ukraine, economic constraints, and the rise of right-wing governments focused on domestic issues.
2. Germany, France, and the U.K. have scaled down development aid, leaving a vacuum for powers like Russia and China to exploit.
3. Rise of External Actors:

2. Russia: Through military support and mercenaries, Russia has positioned itself as a key security partner in Africa.
3. China: Leveraging economic initiatives like the BRI, China has strengthened its trade and investment footprint. Notably, while the European Union’s trade surplus with Africa declined by 15% between 2022 and 2023, China maintains a surplus of over €70 billion.
4. Challenges to Europe’s Foreign Policy:
5. Europe’s inward-looking policies, prioritizing border security and migration management, have left little room for proactive engagement with Africa. This has further weakened its standing in the region.

Conclusion

The withdrawal of French troops from West Africa signifies the end of a colonial-era relationship, highlighting the region’s quest for sovereignty and diversified partnerships. However, the power vacuum created by France’s retreat has not resolved security challenges, as evidenced by persistent insurgencies. The competition between global powers like Russia and China will shape the future trajectory of West Africa, while Europe must recalibrate its policies to remain relevant in the region. The shift underscores the importance of fostering equal partnerships, prioritizing regional stability, and addressing the root causes of insurgencies for a sustainable future.