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29th May – Editorials/Opinions Analyses

Contents

  1. For a reset in India-Nepal relations
  2. Explained: RBI discontinuing 7.75% saving bonds
  3. The Great Decentralization that coronavirus has heralded

FOR A RESET IN INDIA-NEPAL RELATIONS

Focus: GS-II International Relations, Prelims

Introduction

The long-standing territorial issue surrounding Kalapani region close to the Lipulekh Pass on the India-China border, which is one of the approved points for border trade and the route for the Kailash-Mansarovar yatra in Tibet, is straining India-Nepal relations.

Background on Kalapani and the Maps

  • India inherited the boundary with Nepal, established between Nepal and the East India Company in the Treaty of Sugauli in 1816.
  • Kali river constituted the boundary, and the territory to its east was Nepal.
  • The dispute relates to the origin of Kali. Near Garbyang village in Dharchula Tehsil of the Pithoragarh district of Uttarakhand, there is a confluence of different streams coming from north-east from Kalapani and north-west from Limpiyadhura.
  • The early British survey maps identified the north-west stream, as the origin, but after 1857 changed the alignment to Lipu Gad, and in 1879 to Pankha Gad, the north-east streams, thus defining the origin as just below Kalapani.
  • Nepal accepted the change and India inherited this boundary in 1947.

Extended History of Border Development in the Lipulekh region

  • The Maoist revolution in China in 1949, followed by the takeover of Tibet, created deep misgivings in Nepal.
  • So, India was ‘invited’ by Nepal to set up 18 border posts along the Nepal-Tibet border.
  • The westernmost post was at Tinkar Pass, about 6 km further east of Lipulekh.
  • In 1953, India and China identified Lipulekh Pass for both pilgrims and border trade.
  • After the 1962 war, pilgrimage through Lipulekh resumed in 1981, and border trade, in 1991.
  • In 1961, King Mahendra visited Beijing to sign the China-Nepal Boundary Treaty that defines the zero point in the west, just north of Tinkar Pass.
  • By 1969, India had withdrawn its border posts from Nepali territory.
  • The base camp for Lipulekh remained at Kalapani, less than 10 km west of Lipulekh.
  • In their respective maps, both countries showed Kalapani as the origin of Kali river and as part of their territory.
  • After 1979, the Indo-Tibetan Border Police has manned the Lipulekh Pass.

The Beginning of Border Issues

  • The issue of the origin of Kali river was first raised in 1997, After the 1996 Treaty of Mahakali (Kali river is also called Mahakali and Sarada)
  • The matter was referred to the Joint Technical Level Boundary Committee that had been set up in 1981 to re-identify and replace the old and damaged boundary pillars along the India-Nepal border.
  • The Committee clarified 98% of the boundary, leaving behind the unresolved issues of Kalapani and Susta when it was dissolved in 2008.
  • It was subsequently agreed that the matter would be discussed at the Foreign Secretary level.
  • Meanwhile, the project to convert the 80-km track from Ghatibagar to Lipulekh into a hardtop road began in 2009 without any objections from Nepal.

India’s Latest Maps released and Nepal’s response

  • The Survey of India issued a new political map (eighth edition) on November 2, 2019 to which Nepal registered a protest (though the map in no way had changed the boundary between India and Nepal).
  • On November 8, the ninth edition was issued, in which the delineation remained identical but the name Kali river had been deleted.
  • This led to stronger protests, with Nepal invoking Foreign Secretary-level talks to resolve issues.

Nepal’s Latest Map released and India’s response

  • A new map of Nepal based on the older British survey reflecting Kali river originating from Limpiyadhura in the north-west of Garbyang was adopted by parliament and notified on May 20.
  • On May 22, a constitutional amendment proposal was tabled to include it in a relevant Schedule.
  • The new alignment adds 335 sq km to Nepali territory, territory that has never been reflected in a Nepali map for nearly 170 years.

Players and their Plays involved in India-Nepal relations

India and Nepal

  • India’s Neighbourhood First Policy in connection with Nepal started with a highly successful visit to Nepal in August 2014.
  • But the relationship turned sour in 2015 when India first got blamed for interfering in the Constitution-drafting in Nepal and then for an “unofficial blockade” that generated widespread resentment against the country.
  • India has ignored the changing political narrative in Nepal for far too long.
  • India remained content that its interests were safeguarded by quiet diplomacy even when Nepali leaders publicly adopted anti-Indian postures.
  • This has also led to distortions in Nepali history textbooks and led to long-term negative consequences.
  • The 1950 Treaty of Peace and Friendship which was sought by the Nepali authorities in 1949 is viewed as a sign of an unequal relationship, and an Indian imposition.
  • The purpose of the treaty was to continue the special links Nepal had with British India and it provides for an open border and right to work for Nepali nationals
  • Yet, Nepali authorities have studiously avoided taking it up bilaterally even though Nepali leaders thunder against it in their domestic rhetoric.

China and Nepal

  • In Nepali thinking, the China card has provided them the leverage to practise their version of non-alignment.
  • China maintained a link with the Palace and its concerns were primarily related to keeping tabs on the Tibetan refugee community.
  • With the abolition of the monarchy, China has shifted attention to the political parties as also to institutions like the Army and Armed Police Force.
  • Also, today’s China is pursuing a more assertive foreign policy and considers Nepal an important element in its growing South Asian footprint.

Way Forward

  • The complexity underlying India-Nepal issues cannot be solved by rhetoric or unilateral map-making exercises.
  • Political maturity is needed to find creative solutions that can be mutually acceptable.
  • The urgent need today is to pause the rhetoric on territorial nationalism and lay the groundwork for a quiet dialogue where both sides need to display sensitivity as they explore the terms of a reset of the “special relationship”.
  • A normal relationship where India can be a generous partner will be a better foundation for “neighbourhood first” in the 21st century.

Prelims Bit: Treaty of Saugali 1816

  • The Treaty of Sugauli established the boundary line of Nepal, was signed on 2 December 1815 and ratified by 4 March 1816 between the East India Company and Raj Guru Gajaraj Mishra with Chandra Shekhar Upadhaya for Nepal following the Anglo-Nepalese War of 1814-16.
  • The treaty represented a Nepali surrender to the British and contained the cession of Nepal’s western territory to the British East India Company.
  • Negotiations for a general settlement produced a draft which was initialled at Sagauli in Bihar in December 1815 and required Nepal to give up all territories west and east of its present-day borders, to surrender the entire Tarai and to accept a permanent British representative (or ‘resident’) in Kathmandu.
  • Among the border dispute of the Indo-Nepal boundary, the most significant are in the Susta and Kalapani regions.

-Source: The Hindu


EXPLAINED: RBI DISCONTINUING 7.75% SAVING BONDS

Focus: GS-III Indian Economy

Why in news?

  • The Reserve Bank of India on 27th May 2020 said the Government of India has discontinued 7.75 per cent savings (taxable) bonds, 2018 for subscription with effect from the close of banking business on 28th May.
  • The move will deprive investors of another saving instrument that yielded relatively higher post tax returns for investors.
  • This move comes amidst the cut in deposit rates by the banks and a cut in small savings rate by the government over the last couple of months of March and April 2020.

What are 7.75 per cent RBI bonds?

  • The 7.75 bonds 2018 were issued with effect from January 10, 2018 and were available for subscription to resident citizens/HUF to invest in a taxable bond.
  • The bonds had a 7-year lock-in period from the date of issue, but, it permitted premature encasement to individuals who were 60 years and above.

What has happened now?

  • The government has withdrawn these bonds and therefore it will not be available for investors to invest.
  • This means it is only ceasing fresh issuance and not redeeming those already invested.
  • Those whose cheques got submitted and cleared till yesterday will get 7.75 per cent.

Was it in high demand?

  • The demand for RBI bonds went up significantly over the past couple of months of March and April as investors turned risk averse.
  • Investors rushed for it as they saw it as the safest investment instrument available.
  • As the 7.75 per cent RBI bonds were taxable instruments, the interest income on it would be taxable at the marginal tax rate.

Why the cut in rates?

  • The interest rates have been on a decline since the global growth rate projections have been brought down following the spread of coronavirus Pandemic.
  • The Reserve Bank of India first announced a 75-basis point cut in repo rate on March 27, 2020 to 4.4 per cent and then again announced a cut in repo rate by 40 basis points to 4 per cent on May 22.
  • A cut in repo rates not only reduces the rate at which commercial banks borrow from RBI but also leads to a cut in deposit and lending rates for banks.
  • The RBIs move to cut in repo rate has been to push credit growth and demand in the economy in a bid to augur growth in the economy.

Click Here to read more about Bonds and Bond Yields

Click Here to read more about Government Securities

-Source: Indian Express


THE GREAT DECENTRALIZATION THAT CORONAVIRUS HAS HERALDED

Focus: GS-III Indian Economy

Introduction

  • Technology experts and administrators have always known that decentralized systems are far more resilient and resistant to disasters and disruptions as redundancy is an inbuilt feature in these systems.
  • In the context of organisations seeking to recover from the COVID-19 lockdown, organizations will need to borrow a leaf out of the IT playbook, and make themselves more decentralized.

Reverse Migration and Decentralisation

  • Big cities had attracted migrant labourers from far-flung villages with the economic opportunities they offered – This was the Big Centralization, as millions of people left their villages and congregated in a few large cities.
  • Covid has reversed the equation, and many of those trudging home and most of them might not come back to the cities. What this means for industries is – they will have to spread themselves out, or decentralize, so as to get the labour and talent needed for their operations.  
  • Decentralized models can help disparate and distraught sectors like hospitality, restaurants, events, education, healthcare and even manufacturing.

Other Observations of Decentralisation

  • Large and small firms have declared that they will continue a large element of work from home even after the current lockdowns are lifted. – it was Food-delivery and e-commerce companies that kept cities and homes running while every mall, restaurant and departmental store was closed in fear of contamination.
  • In Indian Context – with basic but functional technology like WhatsApp-ordering and UPI payments, the small condiment stores played saviours, even as big malls and e-commerce ground to a halt.

-Source: Livemint

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