CURRENT AFFAIRS – 05/08/2023

CURRENT AFFAIRS - 05/08/2023

CURRENT AFFAIRS – 05/08/2023

Inter-Services Organisation (Command, Control & Discipline) Bill – 2023

(General Studies Paper- II and III)

The Lok Sabha has passed the Inter-Services Organisation (Command, Control & Discipline) Bill – 2023.

Key Highlights of the Bill

  • The bill aims to empower the Commander-in-Chief and Officer-in-Command of Inter-Services Organisations (ISOs) with disciplinary and administrative powers over personnel serving in or attached to such organisations.
  • Currently, Armed Forces personnel are governed by specific Service Acts – Army Act 1950, Navy Act 1957, and Air Force Act 1950.
  • The enactment of the Bill will lead to better discipline in inter-services establishments by the Heads of ISOs.
    • This will avoid reverting personnel under disciplinary proceedings to their parent Service units.
  • It will also expedite the disposal of cases of misdemeanour or indiscipline and save public money and time by avoiding multiple proceedings.
  • The Bill aims to promote greater integration among the three Services and improve the functioning of the Armed Forces.
  • The Commander-in-Chief, Officer-in-Command, or any other officer specially empowered by the Central Government will have disciplinary and administrative powers over personnel in Inter-Services Organisations, regardless of their service affiliation.
  • The officiating incumbent or the officer in command in the absence of a Commander-in-Chief or Officer-in-Command will also have the power to initiate disciplinary or administrative actions.
  • The ‘ISO Bill – 2023’ is an enabling act and does not propose any changes to the existing Service Acts/Rules/Regulations that have withstood judicial scrutiny over the last six decades or more.
  • Service personnel serving in or attached to an Inter-Services Organisation will continue to be governed by their respective Service Acts.

Key Features:

  • Inter-services Organisation:
  • Existing Inter-services Organisations will be deemed to have been constituted under the Bill.
  • These include the Andaman and Nicobar Command, the Defence Space Agency, and the National Defence Academy.
  • The central government may constitute an Inter-services Organisation which has personnel belonging to at least two of the three services: the army, the navy, and the air force.
  • These may be placed under the command of an Officer-in-Command.
  • These organisations may also include a Joint Services Command, which may be placed under the command of a Commander-in-Chief.

Control of Inter-services Organisations: 

    • Presently, the Commander-in-Chief or Officer-in-Command of Inter-services Organisations are not empowered to exercise disciplinary or administrative powers over the personnel belonging to other services.
    • The Bill empowers the Commander-in-Chief or the Officer-in-Command of an Inter-services Organisation to exercise command and control over the personnel serving in or attached to it.
    • He would be responsible for maintaining discipline and ensuring proper discharge of duties by the service personnel.
  • The superintendence of an Inter-services Organisation will be vested in the central government.
  • The government may also issue directions to such organisations on grounds of national security, general administration, or public interest.

Other forces under central government:

  • The central government may notify any force raised and maintained in India to which the Bill will apply.
  • This would be in addition to army, navy, and air force personnel.


  • The officers eligible to be appointed as the Commander-in-Chief or Officer-in-Command are:

(i) a General Officer of the regular Army (above the rank of Brigadier),

(ii) a Flag Officer of the Navy (rank of Admiral of the Fleet, Admiral, Vice-Admiral, or Rear-Admiral), or

(iii)   an Air Officer of the Air Force (above the rank of group captain).

  • He/she will be empowered to exercise all disciplinary and administrative powers

Commanding Officer:

  • The Bill provides for a Commanding Officer who will be in command of a unit, ship, or establishment. 
  • The officer will also perform duties assigned by the Commander-in-Chief or Officer-in-Command of the Inter-services Organisation.
  • The Commanding Officer will be empowered to initiate all disciplinary or administrative actions over the personnel appointed, deputed, posted, or attached to that Inter-services Organisation.

What is Joint Services Command or Joint Theatre Command?

  • The Theatre Command System aims to achieve synergistic coordination between the three branches of the armed forces (army, navy, air force).
  • It seeks to establish separate commands for each branch under a unified command, led by a single commander.
  • The integration process will unify military assets into a single command, with one operational head directing and controlling activities in a given situation.
  • The system is designed to enhance operational synergies and improve the effectiveness of the armed forces.
  • It is expected to streamline costs and create a leaner fighting force.
  • The Theatre Command System will bring greater focus in resource allocation and reduce redundancies among the armed forces.

Joint Theatre Commands of India:

  • There are two joint services commands in India:
    • Andaman and Nicobar Command (ANC)
    • Strategic Forces Command (SFC)
  • The principle of the theatre command system is applied in these joint services commands.
  • ANC is the only one of its kind in the country that amalgamates the army, navy, and air force.
  • SFC is not related to any specific theatre of war; it is responsible for managing India’s nuclear assets.
  • ANC was established in 2001 and is headquartered in Port Blair.
  • The command is led by officers from the three services on a rotation basis.
  • ANC’s primary focus is on safeguarding India’s strategic interests in Southeast Asia and the Malacca Strait.

Twenty-second Law Commission of India

(General Studies Paper- II)

The Union Cabinet chaired by Hon’ble Prime Minister, approved the extension of the term of the Twenty-second Law Commission of India upto 31st August, 2024.

  • The setup of commission and its tenure was recently discussed in parliament.Let us look at Law Commission:


  • Law reform in India has been a continuous process for over 300 years.
  • The Charter Act of 1833 vested legislative power in the Governor-General in Council, enabling the enactment of laws from 1834 to 1920.
  • The Charter Act established an All India legislature, the Legislative Council, with powers of legislation.
  • The Legislative Council could repeal, amend, or alter any law or regulation in force within British India.
  • The Act allowed the Governor-General in Council to appoint an Indian Law Commission to inquire into and advise on matters of law.
  • The institutionalization of law reform began with the establishment of the Law Commission by the Governor-General in Council.
  • The First Law Commission established in 1834, headed by Lord Thomas Babington Macaulay, produced drafts of the Penal Code, Limitation Law, and Scheme of Pleadings and Procedure.
  • Subsequent Law Commissions were constituted in 1853, 1861, and 1879, contributing to various legislations adapted to Indian conditions.
  • Significant laws like the Indian Code of Civil Procedure, the Indian Contract Act, the Indian Evidence Act, and the Transfer of Property Act were products of the labour of these early Law Commissions.

About Law Commission of India

  • The Law Commission of India is a non-statutory body.
  • It is constituted by a notification from the Government of India, Ministry of Law & Justice, Department of Legal Affairs.
  • The Commission is given specific terms of reference to conduct research in the field of law.
  • It makes recommendations to the Government through Reports based on its terms of reference.
  • The Law Commission receives references from the Department of Legal Affairs, Supreme Court, and High Courts.
  • So far, the Commission has submitted 277 reports on various subjects.
  • The Law Commission plays a crucial role in providing thought-provoking and essential reviews of laws in India.

Vision and Mission:

  • Review and repeal obsolete laws.
  • Examine laws affecting the poor and conduct post-audit for socio-economic legislations.
  • Ensure the judicial administration is responsive to the demands of the times.
  • Review existing laws in light of Directive Principles of State Policy and suggest improvements.
  • Suggest necessary legislations to implement the Directive Principles and achieve Constitution’s objectives.
  • Examine existing laws for promoting gender equality and propose relevant amendments.
  • Revise Central Acts to simplify and remove anomalies, ambiguities, and inequities.
  • Examine the impact of globalization on food security and unemployment.
  • Recommend measures to protect the interests of marginalized communities

Composition: The composition of 22ndLaw Commission of India is as follows:

  • a full-time Chairperson;
  • four full-time Members (including Member-Secretary);
  • Secretary, Department of Legal Affairs as ex officio Member;
  • Secretary, Legislative Department as ex officio Member; and
  • not more than five part-time Members.

Note: Former chief justice of the Karnataka High Court Ritu Raj Awasthi is the chairperson of the current commission.

DGFT suspends its laptop, PC import curbs till November 1

Officials acknowledge that Customs field officers have held up some in-transit hardware shipments due to the DGFT import restriction notification specifying ‘immediate effect’; imports will now be allowed without need for a licence till November

A day after it issued a notification restricting imports of laptops, PCs, tablets and servers to India ‘with immediate effect’, the Directorate General of Foreign Trade (DGFT) on Friday suspended implementation of the notification until November 1, after Customs officials stationed at ports of entry started holding up shipments of the specified electronics items.

Separately, government officials also sought to assure industry that most applicants seeking licenses for import of the restricted electronics products would receive them promptly upon filing the required application.

Two officials, who spoke on condition of anonymity, admitted that while it was not intended to have import licensing of these products impact shipments that were already on their way to India, Customs “field officers” had worked to implement the new rule immediately after it was notified by the DGFT on Thursday. The government would now work to clear these shipments, the officials added.


The officials said the move was an effort “to bring in self-sufficiency in electronics production,” even as they asserted the import curbs had nothing to do with the Production-Linked Incentive (PLI) scheme for IT hardware.

Asked about the economics of local manufacturing — most IT hardware in the now-restricted category is imported from China where most major PC suppliers have manufacturing facilities — one official admitted the response to the PLI scheme’s previous iteration had not been “as expected”.

The official asserted that ‘over time’ the cost of domestically produced hardware would come down.

Facts about the News

Government to delay implementation of laptop, PC import curbs

(General Studies Paper- III)

The DGFT (Directorate General of Foreign Trade) delayed the notification restricting imports of laptops, PCs, tablets, and servers to India from taking immediate effect until November 1.

 Key Highlights

  • Customs officials at ports of entry had held up electronics shipments, prompting the delay.
  • Import curbs will now be implemented from November 1, allowing IT hardware imports without licensing until October 31.
  • The government will work to clear shipments held up due to the immediate implementation of the new rule.
  • The notification aims to signal the government’s emphasis on having secure devices, but further details were not provided.
  • Import restrictions were clarified not to be a hurdle for importers going forward, with most license applications expected to be cleared within a short timeframe.
  • The criteria for rejecting license applications will remain confidential, decided within the DGFT.

Self Sufficiency:

  • The move aims to achieve self-sufficiency in electronics production and is unrelated to the Production-Linked Incentive (PLI) scheme for IT hardware.
  • The PLI scheme focuses on boosting domestic manufacturing.

No ban:

    • The Government also clarified that the import restrictions would not amount to a hurdle even for importers going forward.
    • Most import licence applications from now on would be cleared within “five to 10 minutes.
  • Although, the criteria for rejecting license applications will remain confidential, decided within the DGFT.

About Directorate General of Foreign Trade

  • DGFT is an attached office of the Ministry of Commerce and Industry in India.
  • The organization was primarily involved in regulating and promoting foreign trade until 1991.
  • In 1991, liberalization in economic policies led to a shift in DGFT’s role from regulation to facilitation of foreign trade.
  • The objective is to increase exports and imports, promoting the interests of the country.
  • DGFT now focuses on promoting and facilitating exports and imports, aligning with liberalization and globalization policies.
  • The Directorate, with headquarters at New Delhi, is headed by the Director General of Foreign Trade.
  • It is responsible for implementing the Foreign Trade Policy with the main objective of promoting India’s exports.
  • The DGFT also issues licenses to exporters and monitors their corresponding obligations through a network of 25 Regional Offices.

About Production Linked Incentive (PLI) Schemes

Production Linked Incentive (PLI) is a government initiative to boost domestic manufacturing in strategic sectors.

  • Finance Minister Smt. Nirmala Sitharaman announced an outlay of INR 1.97 Lakh Crores for the PLI Schemes across 14 key sectors.
  • The aim is to create national manufacturing champions, generate 60 lakh new jobs, and achieve an additional production of 30 lakh crore over the next 5 years.
  • In addition to the three schemes announced in March 2020, the Government of India introduced 10 new PLI schemes in November 2020.
  • The scheme offers incentives to manufacturers based on their incremental production over a specific base year.
  • The incentives are provided as a percentage of the value of incremental production, encouraging companies to increase their manufacturing output.
  • The scheme aims to enhance India’s manufacturing competitiveness, attract foreign investments, and reduce import dependence in critical sectors.
  • PLI is a performance-based incentive that rewards companies for their contribution to the economy and aligns with the government’s Make in India and Atmanirbhar Bharat initiatives.

The 14 key sectors covered under the PLI scheme include the following:

  • Key Starting Materials (KSMs)/Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs): Department of Pharmaceuticals
  • Large Scale Electronics Manufacturing: Ministry of Electronics and Information Technology
  • Manufacturing of Medical Devices: Department of Pharmaceuticals
  • Electronic/Technology Products: Ministry of Electronics and Information Technology
  • Pharmaceuticals drugs: Department of Pharmaceuticals
  • Telecom & Networking Products: Department of Telecommunications
  • Food Products: Ministry of Food Processing Industries
  • White Goods (ACs & LED): Department for Promotion of Industry and Internal Trade
  • High-Efficiency Solar PV Modules: Ministry of New and Renewable Energy
  • Automobiles & Auto Components: Department of Heavy Industry
  • Advance Chemistry Cell (ACC) Battery: Department of Heavy Industry
  • Textile Products: MMF segment and technical textiles: Ministry of Textiles
  • Specialty Steel: Ministry of Steel
  • Drones and Drone Components: Ministry of Civil Aviation

A tentative rethink

The GST Council’s retake on gaming bets does not provide enough certainty

Less than a month after the Goods and Services Tax (GST) Council appeared to have sealed a compact on the long-deliberated issue of the appropriate tax to be levied on casinos, horse racing and the booming online games industry, it was convened afresh this Wednesday to revisit the matter. The rethink on the Council’s move to impose a 28% GST on the face value of bets placed by participants was ostensibly triggered by an outcry from industry and a nudge from the Electronics and IT Ministry that is steering the e-gaming policy. Online gaming players had termed it a death knell for the sunrise sector with billions of dollars in investments and thousands of jobs at stake, and stressed the levy is not in sync with global norms that tax the gross gaming revenue (i.e., their platform fees). Sikkim and Goa’s pleas for the casino tax to be also levied in the same manner did not find favour with the Centre and most States, so the Council decided to stick to its stance with one minor, but not trivial concession. Simply put, if one enters the race course on Derby Day and bets ₹1,000 on a horse with moderate odds which ends up winning, and bets part of that bounty on another horse in the next race, the tax levy will remain confined to your initial thousand rupee wager. This formulation addresses the prospect of repeat taxation on reinvested earnings, drawing a muffled sigh from the nascent industry that still remains anxious on the implications of the tax likely to kick in from October 1.

It is no one’s case that the GST Council should only take unanimous decisions — as Finance Minister Nirmala Sitharaman pointed out, even the taxation of lotteries was firmed up by a majority vote. But the Council’s promise of a review of the tax six months after its implementation, even if it was just an attempt to placate the dissenting voices of small States such as Goa and Sikkim, belies a lack of conviction in the resolution. While users and industry now await the fine print of the legislative changes to GST laws and the rules to be subsequently notified by the Revenue Department, the room for a review, which could swing either way, creates a cloud of uncertainty on business operations and fresh investment plans. The Council has often clarified or tweaked tax treatment for items, when warranted. But announcing a review at the outset sets an awkward and potentially dangerous precedent that could thwart India’s aspirations of being a reliable investment destination with predictable policies. The Council should not give the impression that it can be swayed so easily by representations from the industry or demands of individual States.

Facts about the News

Goods and Services Tax Council’s move  

(General Studies Paper- III)

The Goods and Services Tax (GST) Council recently convened to reconsider the tax to be levied on casinos, horse racing, and the online gaming industry.

Key Highlights

  • Initially, the Council decided to impose a 28% GST on the face value of bets placed by participants, which drew criticism from the industry and the Electronics and IT Ministry.
  • Online gaming players argued that the 28% GST on the face value of bets would be detrimental to the industry, which has attracted significant investments and generated numerous jobs.
  • They advocated for a tax based on the global norm of taxing the gross gaming revenue (platform fees) instead.
  • The Council eventually decided to stick to its 28% GST rate but made a concession to prevent repeat taxation on reinvested earnings.
  • Under the new formulation, if a person bets ₹1,000 and wins, the tax will be limited to the initial ₹1,000 wager, even if they reinvest part of their winnings in subsequent bets.
  • The implementation of the revised tax is expected to begin on October 1, but the industry remains anxious about its implications.
  • The GST Council’s promise of a review of the tax after six months creates uncertainty and casts doubts on the reliability of investment destination policies in India.
  • The Council should not be seen as easily swayed by industry representations or individual State demands to maintain its credibility and predictability in policy decisions.

About Goods and Services Tax (GST) Council


  • The idea of a nationwide GST was proposed by the Kelkar Task Force on Indirect taxes in 2000.
  • The objective was to simplify compliance, reduce tax cascading, and promote economic integration by replacing the complex and fragmented tax structure.
  • The Constitution (122nd Amendment) Bill, 2014, was introduced in Parliament to amend the Constitution and enable the implementation of GST.
  • The Bill faced challenges regarding compensation to States and other issues.
  • After years of deliberation and negotiations, the Bill was passed in both houses of Parliament and received the President’s assent on 8th September, 2016, becoming the 101st Constitution Amendment Act, 2016.
  • On July 1, 2017, GST laws were implemented, replacing a complex web of Central and State taxes.
  • Goods and services are categorized into different tax slabs, including 5%, 12%, 18%, and 28%, with some essential commodities exempted.
  • Compensation cess is levied on demerit goods and certain luxury items.
  • GST Network (GSTN) was created to provide the IT backbone for the GST system.
  • Since implementation, GST has undergone amendments and refinements based on feedback from businesses and economic changes.

Salient Features of Goods and Services Tax (GST):

  • One Nation, One Tax: GST replaces multiple indirect taxes levied by the Central and State Governments, bringing uniformity in the tax structure across India and eliminating tax cascading.
  • Dual Structure: Operates under a dual structure with Central GST (CGST) and State GST (SGST), along with Integrated GST (IGST) for inter-state transactions.
  • Destination-based Tax: GST is a destination-based tax, levied at each stage of the supply chain, allowing for the seamless flow of credits and reducing the tax burden on the end consumer.
  • Input Tax Credit (ITC): Businesses can claim credit for tax paid on inputs used in production or services, avoiding double taxation and reducing overall tax liability.
  • Exemptions: GST applies to all goods and services except for specified.
    • Small businesses with a turnover below a specified threshold (currently, the threshold is 20 lakhs for supplier of services/both goods & services and 40 lakhs for supplier of goods (Intra–Sate) in India) are exempt from GST.
    • This threshold helps in reducing the compliance burden on small-scale businesses.
  • Any supplies made by a registered dealer as an export (both goods and services) or supply to an SEZ qualifies for zero rated supplies in GST. The rate of tax on such supplies is ‘zero’ or we can say the supplies are tax-free.
  • Exports are zero-rated supplies, meaning goods or services that are exported would not suffer input taxes or taxes on finished products.
  • Composition Scheme: Available for small taxpayers with simplified compliance requirements and a fixed percentage of turnover as GST payment.
  • Online Compliance: GSTN portal facilitates registration, return filing, and tax payment, streamlining processes and making compliance easier.
  • Anti-Profiteering Measures: National Anti-Profiteering Authority (NAA) ensures benefits of GST are passed on to consumers and discourages unfair pricing practices.
  • Increased Compliance and Transparency: GST aims to bring more businesses into the formal economy, curbing tax evasion and increasing transparency.
  • Sector-specific Exemptions: Certain sectors like healthcare, education, and basic necessities have reduced tax rates or exemptions.
  • Periodic Account Settlement: Accounts are settled between the Centre and States to transfer credit and funds based on return information filed by taxpayers.


  • Chairperson: The Union Finance Minister of India serves as the Chairperson of the GST Council.
  • Members: The Council consists of the following members:
    • Union Minister of State for Finance.
    • Members from States: Each State and Union Territory with a Legislative Assembly nominates its Finance Minister or any other Minister designated by the State Government.
    • Special Invitees: The GST Council may invite other Union Ministers or State Ministers as special invitees for specific meetings.

The Decision Making Process

  • The decisions of the GST Council are taken through a voting process.
  • For most matters, decisions require a three-fourths majority, with the Central Government and at least half of the States in agreement.
  • However, for certain specified matters, like those concerning compensation to States, a majority of three-fourths is required for the Central Government, and all the States must be in agreement.
  • This voting mechanism ensures a consensus-based approach to decision-making and allows for the harmonization of tax policies across the country.

Taxes Subsumed under GST

 Under the Goods and Services Tax (GST) regime in India, several indirect taxes levied by the Central and State Governments were subsumed into GST.

Central Taxes Subsumed:

  • Central Excise Duty
  • Additional Excise Duties
  • Service Tax
  • Additional Customs Duty (Countervailing Duty)
  • Special Additional Duty of Customs

State Taxes Subsumed:

  • Value Added Tax (VAT)
  • Entertainment Tax
  • Luxury Tax
  • Taxes on Lottery, Betting, and Gambling
  • Entry Tax
  • Octroi
  • Purchase Tax

America’s pursuit of Saudi-Israel rapprochement

The proverbial propensity of the ‘Middle East’ to spring surprises is on call again. This time it is about the chances of success of dogged, albeit quiet, United States diplomacy to reconcile two regional powerhouses, viz. Saudi Arabia and Israel.

Ironically, this quest by the Biden administration is taking place under challenging circumstances. The White House has had tepid relations with leaders of both countries, Israeli Prime Minister Benjamin Netanyahu and Saudi Crown Prince and Prime Minister Mohammed bin Salman. Mr. Netanyahu heads an extreme right-wing coalition determined to accelerate the Jewish settlements in the Occupied West Bank and curb the judiciary’s independence — the U.S. strongly opposes both. Under the Saudi Crown Prince, initially ostracised by the Biden Administration for his alleged involvement in the Jamal Khashoggi murder, the Kingdom has been nonchalant towards Washington.

Saudi initiatives

After nearly eight decades of the U.S.-Saudi “Energy for Security” compact of 1945, Riyadh has been assiduously diversifying its strategic options. It has reconciled, at least tactically, with its arch-enemy Iran through Chinese mediation, hosted the Chinese President for three summits in Riyadh (President Xi Jinping met separately with his counterparts in Saudi Arabia, the Gulf Cooperation Council and the Arab Countries), cooperated with Russia under the Organization of the Petroleum Exporting Countries-Plus (OPEC+) rubric for higher oil prices and facilitated the return of Syria to the Arab fold. All these in-your-face Saudi initiatives challenge the U.S. interests. They disserve President Joe Biden’s bid for re-election next year. Against this obstructive backdrop, the White House has waged a concerted campaign to persuade Saudi Arabia to normalise its relations with Israel. The proposal has been on the Saudi table since November 2020 when the Saudi Crown Prince and Mr. Netanyahu had an unpublicised meeting in Neom, Saudi Arabia, in the presence of the then-U.S. Secretary of State, Mike Pompeo. It has gained traction in recent months with the U.S. National Security Adviser Jake Sullivan and U.S. Secretary of State Antony J. Blinken visiting Saudi Arabia to be received by the Saudi Crown Prince. While the Saudis have not rejected the idea out of hand, they have reportedly put forth daunting pre-conditions said to include North Atlantic Treaty Organization-like U.S. security guarantees, access to advanced American weapons systems, approval for the acquisition of civilian nuclear technology, and an Israeli commitment to a process leading to a two-state solution with the Palestinians. The specifics are under negotiation among the three tight-lipped stakeholders.

A convergence, but with different motives

While the U.S., Saudi Arabia and Israel may converge at the proposed reconciliation, their respective motives differ. First, the Biden administration, deeply concerned with the growing ingress by China and Russia in the ‘Middle East’, wants to re-entrench the Pax Americana over the region by bringing two traditionally pro-west regional players together. It also feels that fostering such a reconciliation would ingratiate Mr. Biden with the two miffed leaders. Lastly, the powerful Jewish lobby’s gratitude would help Mr. Biden win the U.S. presidential election next year.

Saudi Arabia under the Saudi Crown Prince has adopted an assertive and ambitious foreign policy, commensurate with its oil wealth, to become primus inter pares for the region and emerge as an important global player. By reconciling with Israel, it takes away the first movers’ advantage that the United Arab Emirates has had for the past three years as a member of the “Abraham Accords”. Moreover, diplomatic ties with Israel would balance the Kingdom’s recent reconciliation with Iran and Syria and help it emerge as a more nationalist power than an Islamic one. Despite its moves, Riyadh needs a stronger U.S. security commitment and access to Israeli technology. The Saudi Crown Prince may, however, need to mitigate the scepticism about Israel at home and within Al-Saud.

For Israel, a Star of David flying in Riyadh would be a major geopolitical victory, symbolising its final acceptance as a legitimate Jewish state by the centre of Islam after 75 years as a regional outcast. Given the Kingdom’s trendsetting role as the custodian of Islam’s two holy shrines, the Riyadh-Tel Aviv détente would herald Israel’s integration with the Arab-Islamic world. It would provide direct air and land access to Asia, enabling better leveraging of the economic opportunities as the economic centre of gravity shifts eastwards.

The wider impact

The global fallout from such a development would be quite profound. The Islamic mainstream would likely follow the Saudi lead, with countries such as Pakistan and Indonesia in the first row. However, it would further marginalise the “Palestinians’ Cause” and may polarise and radicalise them and other opponents of Israel such as Iran and Syria, Hezbollah, Hamas and the Islamic State.

Having invested considerable diplomatic capital in this quest, the U.S. may eventually succeed despite the formidable odds, particularly as the Israeli government would have to moderate some of its hard-held policies.

Saudi-Israeli rapprochement would have a mildly positive impact on India. It would remove a contradiction in India’s regional policy and better align Saudi Arabia with us. It may open opportunities as the U.S. pushes back China from the region. But then, it may also give Israel reasons to hyphenate India with Islamic countries, including Pakistan.

Ironically, the Biden administration’s diplomacy is taking place under challenging circumstances, but its global fallout could be quite profound.

Facts about the News

Saudi-Israel Relations

(General Studies Paper- II)

The Biden administration is working to reconcile Saudi Arabia and Israel under challenging circumstances, as it has tepid relations with leaders from both countries.

Key Highlights

  • Saudi Arabia has been diversifying its strategic options, including reconciling with Iran, cooperating with Russia, and facilitating Syria’s return to the Arab fold, challenging US interests.
  • The US is pushing for Saudi Arabia to normalize its relations with Israel.
  • The motives for reconciliation differ for each party;
    • the US wants to re-entrench its influence in the Middle East,
    • Saudi Arabia aims to emerge as a more nationalist power, and
    • Israel seeks acceptance in the Arab-Islamic world.
  • The global impact of Saudi-Israeli reconciliation could be profound, with other Islamic countries potentially following Saudi Arabia’s lead, but it may further marginalize the Palestinian cause and polarize opponents of Israel.
  • For India, the reconciliation could have a mildly positive impact, aligning Saudi Arabia closer to India and providing opportunities as the US pushes back China from the region.
    • However, it may also lead to India being hyphenated with Islamic countries by Israel.

About Israel and the Middle East

  • Israel is a small, predominantly Jewish country located in the eastern Mediterranean region known as the Middle East.
  • The region, also called Southwest Asia or Western Asia, is a geopolitical crossroad connecting Europe, Africa, and Asia.
  • Israel’s presence in this region has been a source of both regional and international attention for decades.

Historical Background:

  • The modern state of Israel was established in 1948, following the end of British colonial rule over the region known as Palestine.
  • The establishment of Israel came in the aftermath of World War II and the Holocaust, during which millions of Jews were systematically exterminated by Nazi Germany.
  • The United Nations partition plan divided the land of Palestine into two states, one for Jews and one for Arabs, leading to the creation of Israel.

Israeli-Palestinian Conflict:

  • The creation of Israel led to a long-standing conflict with the Arab population, particularly the Palestinians, who saw it as a usurpation of their land.
  • The Israeli-Palestinian conflict has been characterized by territorial disputes, violence, and multiple attempts at peace negotiations.
  • The key issues include borders, the status of Jerusalem, the right of return for Palestinian refugees, and the establishment of an independent Palestinian state.
  • Various peace initiatives, such as the Oslo Accords and the Camp David Summit, have been attempted, but a lasting resolution remains elusive.

Arab-Israeli Conflicts:

  • Beyond the Israeli-Palestinian conflict, Israel has faced numerous wars and conflicts with its Arab neighbours.
  • In 1948, the surrounding Arab states waged a war against Israel, leading to the first Arab-Israeli war.
  • Subsequent conflicts include the Six-Day War in 1967, the Yom Kippur War in 1973, and the Lebanon Wars in the 1980s.
  • The Arab states have consistently opposed Israel’s existence, with some refusing to recognize the country diplomatically.

Peace Treaties and Regional Diplomacy:

  • Despite the historical animosity, Israel has managed to establish peace treaties with some of its Arab neighbours.
  • Notably, in 1979, Israel signed a peace treaty with Egypt, making it the first Arab country to officially recognize Israel.
  • In 1994, a similar treaty was signed with Jordan.
  • These agreements marked significant milestones in the pursuit of peace in the region.
  • However, some Arab states, like Saudi Arabia and the Gulf states, have maintained unofficial relations with Israel due to shared security concerns and geopolitical interests.

Iran-Israel Tensions:

  • Iran, a predominantly Shia Muslim country, has emerged as a significant regional rival to Israel, which is predominantly Jewish.
  • The Iranian government has consistently criticized Israel’s existence and expressed support for Palestinian causes.
  • Iran’s nuclear program has also been a matter of concern for Israel and the international community, as it poses potential security threats.
  • Israel has been vocal in opposing Iran’s nuclear ambitions and has been accused of carrying out covert operations to sabotage Iran’s nuclear facilities.

Regional Power Dynamics:

  • Israel is often seen as a military and technological powerhouse in the region.
  • It has a robust defence industry and a highly trained military.
  • The country’s intelligence capabilities are also well-regarded globally.
  • Economically, Israel has a thriving high-tech sector, often referred to as the “Start-up Nation,” which has contributed to its economic growth and global competitiveness.
  • However, Israel’s relations with its neighbours have also been a source of tension, leading to periodic escalations and conflicts.

The Israeli-Arab Peace Process:

  • Efforts to achieve a comprehensive and lasting peace between Israel and its Arab neighbours remain an ongoing challenge.
  • The peace process has been marked by intermittent periods of negotiations, setbacks, and violence.
  • The international community, including the United States and various European countries, has played an active role in facilitating peace talks and promoting dialogue.
  • However, achieving a comprehensive and acceptable solution that satisfies all parties involved remains complex.

Pakistan passes Bill to meet FATF demands

Pakistan’s Senate on Friday gave its nod to a Bill to establish a new authority to curb money laundering and terror financing, a legislation which is expected to help the country not to be on the grey list of the Financial Action Task Force (FATF) again.

On Thursday, the National Assembly passed the Bill, which seeks to form a central authority to curb money laundering and terror financing, bringing all institutions related to the Financial Action Task Force (FATF) under one command.

State Minister for Foreign Affairs Hina Rabbani Khar moved the “National Anti-Money Laundering and Counter Financing of Terrorism Authority Bill” in the Senate, a day after it was passed by the National Assembly.

According to the draft Bill, the authority will be headed by a chairman who will be appointed by the Prime Minister.

The authority can convene meetings on the requisition of the chairman or half of its members.

Pakistan was placed on the grey list of the FATF in 2018 and had to make a huge effort to get out of it in 2021.

Facts about the News

Pakistan and the Financial Action Task Force (FATF)

(General Studies Paper- II)

Pakistan’s Senate passed the “National Anti-Money Laundering and Counter Financing of Terrorism Authority Bill” to establish a new authority to combat money laundering and terror financing.

Key Highlights

  • The National Assembly had already passed the Bill, and it now awaits the President’s signature to become law.
  • The proposed authority will be headed by a chairman appointed by the Prime Minister and will include members from various institutions, including the State Bank of Pakistan, National Accountability Bureau, and Federal Board of Revenue.
  • The authority will convene meetings as needed and act as a focal institution to give a unified response to curb money laundering and terror financing.
  • The aim of the authority is to coordinate and supervise matters related to anti-money laundering, countering financing of terrorism, and targeted financial sanctions at the national level.
  • Pakistan was on the FATF grey list in 2018 and had to make significant efforts to be removed in 2021.
  • The new authority is expected to help Pakistan stay off the FATF grey list in the future and improve its response to money laundering and terror financing.

About the Financial Action Task Force (FATF)

  • The Financial Action Task Force (FATF) is an intergovernmental organization founded in 1989.
  • It is headquartered in Paris, France.
  • The primary objective of FATF is to combat money laundering, terrorist financing, and the proliferation of weapons of mass destruction.
  • FATF sets international standards and promotes effective implementation of measures to combat financial crimes.
  • It conducts mutual evaluations of member countries to assess their compliance with anti-money laundering and counter-terrorism financing measures.
  • The organization regularly updates its recommendations to address emerging risks and challenges in the global financial system.
  • FATF operates on a peer-review system, and countries found non-compliant may face sanctions or restrictions on financial dealings with other member countries.
  • The FATF grey list includes countries that have deficiencies in their anti-money laundering and counter-terrorism financing regimes.
  • Countries on the grey list are subject to increased scrutiny and are required to take corrective measures to address identified weaknesses.
  • The ultimate goal of FATF is to protect the integrity of the international financial system and promote transparency and accountability in financial transactions.

Morgan Stanley upgrades India to ‘Overweight’

(General Studies Paper- III)

Morgan Stanley upgraded India’s market rating to overweight, indicating better future performance and higher weightage in investments.

Key Highlights

  • The upgrade is based on various factors, including supply-side policy reforms, formalization of the economy via GST and IndiaStack, decline in corporate leverage, focus on FDI, and strong capex and profit outlook.
  • India’s growth prospects are boosted by a likely transition in its income pyramid, with millions exiting poverty and a rise in middle and rich households.
  • The country is considered to be at the start of a long wave boom, benefiting from positive demographic trends and lower household debt compared to China.
  • India’s ability to leverage multipolar world dynamics and its association with the Quad political framework with the US, Australia, and Japan are seen as advantages.
  • On the other hand, China’s rating was downgraded to ‘Equal weight,’ with concerns about trend GDP growth and a weakening exchange rate.
  • The beginning of a new era of Indian outperformance compared to China is observed, with India outperforming China by over 100% since early 2021.
  • Foreign portfolio inflows are expected to rise further following the upgrade by Morgan Stanley, as India’s long-term structural interest attracts investors.
  • India’s demographic dividend, macro stability, and vibrant democratic system are seen as drivers of sustained high growth and corporate earnings.
  • Despite high valuations in the short-term, India is likely to attract more FPI flows compared to other emerging markets for long-term investors.

Let us also learn about India Stack

  • IndiaStack is a technology-driven initiative launched by the Government of India to create a digital infrastructure that can support various services and applications.
  • It is built on open Application Programming Interfaces (APIs) that enable seamless integration between various systems and service providers.
  • The key components of IndiaStack include Aadhaar, e-KYC (Electronic Know Your Customer), Unified Payments Interface (UPI), Digital Locker, and e-Signature, among others.
  • IndiaStack aims to create a robust digital ecosystem, enabling financial inclusion, access to government services, and seamless transactions for individuals and businesses.
  • It has played a significant role in promoting digital payments, reducing corruption, and improving the efficiency of various government schemes and services.
  • IndiaStack APIs are available for use by businesses, fintech companies, and developers, encouraging innovation and the development of new digital solutions.
  • The initiative has received recognition globally and has been hailed as a model for digital infrastructure in other countries.