CURRENT AFFAIRS – 23/09/2023

CURRENT AFFAIRS – 23/09/2023

A clear message to industry on dispute resolution

(General Studies- Paper III)

Source : TH

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ADR encompasses mechanisms to resolve disputes without court intervention.

• ADR is gaining importance in India due to delays and rising litigation costs.

Key Highlights

• Shift Toward Mediation
  • Arbitration and conciliation were the primary focus of ADR discussions until recently.
  • The Mediation Bill, 2023, passed during the monsoon session of Parliament and now referred to as the Mediation Act, 2023, highlights the growing importance of mediation.
  • The Act mandates pre-litigation mediation for parties before approaching an Indian court, even without a prior mediation agreement.
  • Courts and relevant institutions will be required to maintain a panel of mediators to facilitate pre-litigation mediation.
• Potential Benefits and Concerns
  • Pre-litigation mediation is expected to reduce frivolous court claims and maintain confidentiality in disputes.
  • Concerns about obligatory mediation impacting genuine claim resolution are raised.
  • The Act includes safeguards, requiring impartial empanelled mediators and a 180-day mediation completion timeline.
  • Parties can seek urgent interim reliefs from courts in exceptional circumstances during mediation.
  • The aim is to encourage parties to focus on their commercial dealings and minimize disputes.
• Positioning Mediation and Arbitration
  • The Act positions mediation similarly to commercial arbitration in India.
  • Both mediation and arbitration have supporting legislation imposing timelines, confidentiality, court referrals, default mechanisms for appointments, and procedures for mandate termination.
  • Both ensure the enforceability of mediated settlement agreements and arbitral awards.
  • The Act establishes a Mediation Council of India, aligning mediation and arbitration.
• Message to Indian Industry
  • Courts should no longer be the default venue for dispute resolution in commercial matters.
  • Parties are encouraged to resolve disputes through mediation or commercial arbitration.
  • Indian courts should be perceived as a last resort.
  • This approach fosters cooperation between mediation and arbitration, reducing the burden on Indian courts.
• Emphasis on Institutional Mediation
  • The Act emphasizes institutional mediation in India.
  • “Mediation service providers” are envisioned to offer mediator services and necessary facilities.
  • India’s experienced arbitration institutions are expected to play a significant role in mediation.
  • India can become a global hub for all aspects of commercial dispute resolution, not just arbitration.

About the Mediation Act, 2023

• The Mediation Act, 2023 was passed by both houses of Parliament and received presidential assent on September 15, 2023.
• It introduces key provisions for mediation agreements and pre-litigation mediation in India.
• Key features of the Act:
• Mediation Agreement
  • Every mediation agreement must be in writing, and parties agree to submit any dispute arising between them to mediation.
  • A mediation agreement can be part of an existing agreement or a separate document.
  • It is considered “in writing” if executed between parties, through electronic communications under the Information Technology Act, 2000, or included in pleadings with no denial by the other party.
• Pre-Litigation Mediation
  • Parties to a dispute can voluntarily and mutually refer their dispute to mediation before initiating court proceedings.
  • The Act changed the initial requirement from mandatory attendance at two mediation sessions to optional pre-litigation mediation based on the Standing Committee’s recommendations.
• Exceptions
  • The Act specifies disputes that cannot be referred to mediation, including criminal offenses, professional misconduct cases, and tax-related disputes.
• Appointment of a Mediator
  • Parties can select any nationality as a mediator, provided they meet the prescribed qualifications, experience, and accreditation.
  • Parties have the freedom to choose the mediator and the appointment procedure.
  • If parties cannot agree, the claiming party can apply to a mediation service provider to appoint a mediator from its panel.
• Mediation Council of India
  • The Act establishes the Mediation Council of India, responsible for overseeing and regulating the mediation process.
  • The council’s key roles include:
    • Registering mediators.
    • Recognizing mediation service providers.
    • Accrediting mediation institutes that train and certify mediators.
  • The council plays a crucial role in maintaining standards and ensuring the effectiveness of the mediation process in India.
• Jurisdiction
  • Mediation proceedings must occur within the territorial jurisdiction of the competent court or tribunal.
  • Parties may agree to conduct mediation elsewhere or online.
  • For enforcement, challenge, and registration purposes, the mediation is considered within the territorial jurisdiction of the respective court or tribunal.
• Time Period
  • Mediation proceedings should conclude within 120 days from the first appearance before the mediator, with a possible extension of up to 60 days.
  • Thus, the Mediation Act, 2023 imposes a timeline for the mediation process, requiring it to be completed within 180 days.
  • Parties can agree to extend this period for an additional 180 days if needed, allowing flexibility in resolving disputes.
• Mediated Settlement Agreement
  • Once mediation is successfully completed for all or some disputes, parties create a written agreement signed and authenticated by the mediator.
  • An unchallenged Mediated Settlement Agreement can be enforced like a court judgment or decree.
  • Challenges to the agreement are permitted only on grounds of fraud, corruption, impersonation, or when mediation was impermissible under the Act.

What is Arbitration and Conciliation?

• Arbitration and Conciliation are two alternative methods of dispute resolution that provide parties with alternatives to litigation in court.
• These processes are often used in commercial and civil disputes to reach a resolution without going through the formal court system.
• Arbitration:
  • Arbitration is a dispute resolution method in which parties present their case to a neutral third party called an arbitrator or a panel of arbitrators.
  • These arbitrators act similarly to judges in a court setting.
  • Arbitral awards are enforceable in court, making them legally binding on the parties involved.
• Conciliation:
  • Conciliation is a voluntary process in which a neutral third party, known as a conciliator, helps parties in dispute to communicate, understand each other’s perspectives, and find common ground to resolve their issues.
  • The process focuses on finding common ground and maintaining or repairing relationships between the parties.
  • Unlike arbitration, conciliation agreements are not typically legally binding.

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Supreme Court declines plea for independent audit of ‘source code’ of EVM system

(General Studies- Paper II)

Source : TH

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A writ petition was filed before the Supreme Court of India, seeking an independent audit of the source code governing the Electronic Voting Machine (EVM) system.

• The petitioner argued that the source code is essential as it serves as the “brain” of the electronic machine, and an independent audit by a public body would ensure transparency and confidence in the electoral process.
• The petitioner suggested that the audit should follow the IEEE 1028 standard, a recognized standard for software reviews and audits.

Key Highlights

• Concerns Over EVM Integrity
  • The petitioner expressed concerns about the integrity of the EVM system, emphasizing that the use of EVMs in elections is a matter of central concern for citizens.
  • Any doubt about the integrity of the system could potentially impact democratic rights and national security.
  • The petitioner argued that the audit conducted by the manufacturers of the EVM system was not transparent enough and that even the manufacturers should be subject to audits by an independent body.
• Supreme Court’s Response
  • The Supreme Court, however, declined to entertain the petition.
  • The court noted that the Election Commission of India (ECI) is constitutionally entrusted with the superintendence and control of elections in the country.
  • The court observed that the petitioner had not provided any material to demonstrate that the ECI had breached its constitutional mandate.
  • The court stated that it was not inclined to pass any directions on the petition, as it pertained to a “policy issue” concerning the integrity of the election process.

The voting process in India

• The voting process in India is a well-structured and organized procedure managed by various authorities at different levels, from the national level down to the booth level.
• Election Commission of India (ECI):
  • At the national level, the Election Commission of India (ECI) is the apex body responsible for overseeing the entire electoral process in the country.
  • The ECI is an autonomous constitutional authority that administers election-related activities, including conducting elections to the Lok Sabha (House of the People), Rajya Sabha (Council of States), and State Legislative Assemblies.
• State Election Commissions:
  • Each state and union territory in India has its own State Election Commission responsible for conducting elections to local bodies, such as Municipalities, Panchayats, and Municipal Corporations.
  • State Election Commissions are responsible for managing elections at the state and local levels.
• Electoral Rolls:
  • The preparation and maintenance of electoral rolls (voter lists) are done at the state level by the Chief Electoral Officer (CEO) of each state or union territory.
  • Electoral rolls are continuously updated to include eligible voters and remove ineligible ones.
• Booth Level Officers (BLOs):
  • At the grassroots level, the electoral process is managed by Booth Level Officers (BLOs).
  • BLOs are responsible for verifying voter information, issuing voter ID cards, updating voter rolls, and ensuring the smooth conduct of elections at the booth level.
• Constituencies:
  • India is divided into constituencies for various elections.
  • For example, Lok Sabha elections are conducted in parliamentary constituencies, and State Assembly elections are conducted in assembly constituencies.
  • Each constituency has a Returning Officer (RO) responsible for organizing elections within that constituency.
• Polling Booths:
  • Each constituency is further divided into polling booths or polling stations.
  • Polling booths are where voters cast their votes on Election Day.
• Election Commission Officials:
  • On Election Day, polling booths are manned by election commission officials, including the Presiding Officer and Polling Officers.
  • These officials ensure the proper conduct of the voting process, verify voter identities, and maintain order at the polling station.
• Voter Identification:
  • Voters are required to bring valid identification documents, such as voter ID cards, Aadhaar cards, or other government-issued IDs.
  • Their names are checked against the electoral roll to ensure eligibility.
• Electronic Voting Machines (EVMs):
  • India uses Electronic Voting Machines (EVMs) for voting.
  • Each polling booth is equipped with EVMs, which are used by voters to cast their votes electronically.
• Casting Votes:
  • Voters enter the polling booth, verify their identity, and cast their votes by pressing the button next to the candidate’s name and symbol on the EVM.
  • The EVM records the vote electronically, ensuring secrecy and accuracy.
• Counting and Declaration of Results:
  • After the polling is complete, EVMs are sealed and transported to a counting center.
  • The votes are counted electronically, and the results are declared based on the majority of votes received by candidates.
• Transparency and Observers:
  • Candidates and political parties have the right to appoint election observers who can monitor the entire election process for fairness and transparency.

Election Commission of India (ECI) and associated Constitutional Provisions

• The Election Commission of India (ECI) is an autonomous constitutional authority responsible for overseeing and administering elections in India
• Formation:
  • The Election Commission of India was established on January 25, 1950, under the provisions of the Constitution of India.
• Composition: The ECI consists of three members:
  • Chief Election Commissioner (CEC):
    • The CEC is the head of the Election Commission and is responsible for overall supervision and direction of elections.
    • The CEC is appointed by the President of India.
  • Election Commissioners:
    • There can be up to two Election Commissioners, depending on the need.
    • They are also appointed by the President of India.
  • Independence:
    • The ECI is designed to be an independent and impartial body.
    • The Chief Election Commissioner and Election Commissioners have a fixed term and cannot be easily removed from office, ensuring their autonomy.
  • Tenure:
    • The term of the Chief Election Commissioner and Election Commissioners is six years or until they reach the age of 65, whichever is earlier.
  • Functions and Powers:
    • Conducting Elections: The primary function of the ECI is to conduct elections for the Lok Sabha (House of the People), Rajya Sabha (Council of States), State Legislative Assemblies, and local bodies.
    • Voter Registration: The ECI oversees the preparation and maintenance of electoral rolls, ensuring eligible voters are registered.
    • Monitoring Election Process: It monitors all aspects of the election process, including candidate nominations, campaign expenditure, and the conduct of political parties.
    • Model Code of Conduct: The ECI enforces the Model Code of Conduct for political parties and candidates during election periods to maintain fairness.
    • EVMs: It manages the use of Electronic Voting Machines (EVMs) for voting in elections.
  • Constitutional Provisions:
    • Article 324:
      • This article empowers the President of India to appoint the Chief Election Commissioner and Election Commissioners.
      • It also provides for the superintendence, direction, and control of elections to be vested in the Election Commission.
    • Article 325:
      • This article guarantees that no person can be ineligible for inclusion in the electoral rolls or prevented from voting in elections on the grounds of religion, race, caste, sex, or residence.
    • Article 326:
      • Article 326 grants the right to vote to every citizen of India who is not disqualified under the laws related to elections.
      • It also allows Parliament to make laws regarding the delimitation of constituencies.
• Article 327:
  • This article provides that the power of Parliament to make laws relating to elections, including the preparation of electoral rolls, extends to both Lok Sabha and State Legislative Assemblies.
• Article 328:
  • Article 328 allows the President to consult the Election Commission for the delimitation of constituencies in states.

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Lok Sabha adjourned sine die

(General Studies- Paper II)

Source : TH

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The Thirteenth of the 17th Lok Sabha, spanned from September 18 to September 21, 2023, with a total of four sittings.

• Despite its brief duration, the session achieved an impressive productivity rate of 160%.
• The Special Session of the Lok Sabha was then later adjourned sine die.

Let us learn: Parliamentary Terminologies

• Adjourned Sine Die:
  • Adjourned:
    • When a legislative body, such as a parliament or congress, adjourns, it means that the session or meeting temporarily concludes, and members disperse.
    • The adjournment can be for a specified period or until the body reconvenes.
  • Sine Die:
    • This Latin phrase translates to “without day.”
    • When a legislative body adjourns sine die, it means that the session concludes indefinitely, without specifying a future date for reconvening.
    • Essentially, there is no set date for the next meeting or session.
  • Final Adjournment:
    • An adjournment sine die is often considered a final adjournment for a particular legislative session or meeting.
    • It signifies that the current session has concluded all its intended business, and the next session, if applicable, would need to be separately convened or scheduled.
  • Prorogation:
    • Prorogation refers to the formal end of a session of a legislative body.
    • While it temporarily ends the session, it allows for the same session to be reconvened later with the same agenda.
    • Prorogation differs from adjournment sine die in that it does not conclude the legislative term.
  • Dissolution:
    • Dissolution signifies the end of an entire legislative term or assembly.
    • It typically happens before elections, and a new legislative body is elected.
    • The term “dissolution” is often used in parliamentary systems where members of the legislative body are elected for a fixed term.
  • Recess:
    • A recess is a temporary break or pause in the proceedings of a legislative body, typically during a session.
    • Unlike adjournment, members are expected to return after the recess, and the session continues where it left off.
  • Session:
    • A session refers to the period during which a legislative body meets and conducts its business.
    • Sessions can vary in duration and may be regular (e.g., annual sessions) or special (e.g., convened for specific purposes).

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India to be part of JP Morgan global bond index

(General Studies- Paper III)

Source : The Indian Express

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P Morgan Chase & Co will include Indian government bonds in its emerging markets bond index from June 2024.

• This move is expected to attract significant foreign investment into India, estimated at around $25 billion.
• India will be included in the GBI-EM Global index suite, reaching a maximum weight of 10% in the GBI-EM Global Diversified Index.
• The inclusion will be staggered over 10 months through March 31, 2025.

Key Highlights

• Estimated Inflows and Impact
  • Analysts estimate that the inclusion could lead to around $26 billion of passive inflows as a one-off stock adjustment.
  • Active flows could bring in an additional $10 billion.
  • The total inflows into India’s fixed-income markets could exceed $40 billion over the next one and a half years.
  • This inclusion will widen the investor base and ease the financing of the current account deficit.
• Challenges and Considerations
  • A potential challenge is the appreciation of the Indian rupee as foreign investors buy Indian government bonds denominated in rupees.
  • This move could lead to increased sensitivity of domestic policy to external spillovers, requiring fiscal and monetary policies to be aware of global perceptions.
  • The Reserve Bank of India (RBI) has been engaging with other index providers, increasing the chances of India’s inclusion in Bloomberg Global Aggregate Index.
• Market Response and Investor Sentiment
  • Yields on the 10-year government bond eased in response to the news of inclusion.
  • The Indian rupee closed lower due to anticipation that the RBI might not purchase government bonds through open market operations (OMOs) because of the higher inflow of funds.
  • Foreign investors have increased their holdings of Indian government bonds in anticipation of inclusion, with significant net investment in the country’s debt market in 2023.
  • Investors view India as an attractive investment destination due to growth prospects, lower inflation compared to other economies, and a stable rupee.

What is JP Morgan Global Bond Index and how it can impact an economy?

• The JP Morgan Global Bond Index is a widely recognized and influential index that tracks the performance of government bonds issued by various countries.
• It is part of JP Morgan’s Emerging Market Bond Index (EMBI) family, which includes indices covering different segments of the bond market.
• The Global Bond Index typically includes bonds from both developed and emerging market economies.
• Inclusion in the JP Morgan Global Bond Index can have several significant impacts on a country’s economy:
  • Increased Investor Visibility:
    • Inclusion in a widely followed global bond index like JP Morgan’s can bring a country’s bonds to the attention of international investors who track and invest in index-linked assets.
    • This increased visibility can attract foreign investors to the country’s bond market.
  • Foreign Investment Inflows:
    • As global bond funds and investors seek to replicate the composition of the index, they may increase their holdings of the country’s bonds.
    • This can lead to substantial foreign investment inflows into the country’s bond market.
  • Lower Borrowing Costs:
    • Greater demand for a country’s bonds from foreign investors can result in lower yields (interest rates) on those bonds.
    • Lower yields mean that the government can borrow money at a lower cost, which can be beneficial for funding public expenditures and infrastructure projects.
  • Currency Impact:
    • Inclusion in a global bond index can lead to increased demand for the country’s currency as foreign investors buy its bonds.
    • This can put upward pressure on the country’s currency exchange rate, potentially leading to currency appreciation.
  • Improved Access to Capital Markets:
    • Inclusion in global bond indices can enhance a country’s reputation in international financial markets.
    • It may lead to improved access to global capital markets, making it easier for the government and corporations in that country to raise funds internationally.
  • Greater Liquidity:
    • Bonds included in major global indices tend to be more liquid, meaning they can be bought or sold more easily without significantly affecting their prices.
    • This increased liquidity can make it more attractive for foreign investors to participate in the country’s bond market.

What is a bond and what is government bond?

• A bond is a financial instrument that represents a loan made by an investor (bondholder) to a borrower, which is often a corporation or government.
• When an investor purchases a bond, they are essentially lending money to the issuer in exchange for periodic interest payments (coupon payments) and the return of the bond’s face value (principal) at maturity.
• Bonds are typically used by entities to raise capital for various purposes, such as funding projects, expansion, or government expenditures.
• A government bond, also known as a sovereign bond or treasury bond, is a type of bond issued by a national government or its agencies to raise funds for public projects, infrastructure development, or to finance government operations.
  • These bonds are considered one of the safest investments because they are typically backed by the full faith and credit of the issuing government.
  • Government bonds are often used as a benchmark for other interest rates and serve as a key instrument in financial markets.
• Some common types of government bonds include:
  • Treasury Bonds: Issued by the government’s treasury department, these bonds have longer maturities, often ranging from 10 to 30 years.
  • Treasury Notes: These bonds have intermediate-term maturities, typically ranging from 2 to 10 years.
  • Treasury Bills (T-Bills): T-Bills are short-term government securities with maturities of one year or less.
    • They do not pay periodic interest but are sold at a discount to their face value.
  • Government Savings Bonds: These bonds are often marketed to individual investors and may have specific tax advantages.

What is bond yield?

• Bond yield refers to the return on investment that an investor can expect to receive from holding a bond over its entire life.
• It is typically expressed as an annual percentage and represents the income generated by the bond in the form of interest payments (coupon payments) relative to its current market price.
• Impact of bond yields:
  • When a country offers higher bond yields, it tends to attract foreign capital looking for better returns.
    • As a result, the demand for that country’s currency increases, leading to an appreciation of the currency’s exchange rate.
    • Conversely, when a country’s bond yields are relatively low, it may experience capital outflows, causing its currency to depreciate.
  • Bond yields are closely related to prevailing interest rates in an economy.
    • Central banks use interest rates as a monetary policy tool to influence economic conditions.
    • When bond yields rise, it can be a sign that interest rates are increasing, which can impact borrowing costs for consumers and businesses.
  • Bond yields also reflect market expectations regarding future inflation.
    • Higher bond yields may indicate expectations of rising inflation, which can erode the purchasing power of a currency and impact consumer spending.

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Prachanda, the US, and China

(General Studies- Paper II)

Source : The Indian Express

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Nepal’s Prime Minister, Pushpa Kamal Dahal ‘Prachanda,’ addressed the United Nations General Assembly, discussing the country’s ongoing peace process and the issue of transitional justice.

• He emphasized that Nepal was closer to concluding its unique peace process and sought international support for its completion.
• Prachanda also highlighted that there would be no blanket amnesty for serious human rights violations.

Key Highlights

• Transitional Justice and Concerns
  • Nepal experienced a civil war from 1996 to 2006 in which an estimated 17,000 people were killed.
  • Many Maoist leaders, including Prachanda, face accusations of murder and grave human rights violations during this conflict.
  • The transitional justice bill introduced in Parliament in March has faced criticism for being inadequate in addressing these serious crimes.
• Balancing Relations with Neighbours
  • Prachanda is set to embark on an eight-day visit to China, following his visit to India three and a half months ago.
  • This visit is seen as an effort to balance Nepal’s relationships with its two major neighbors, India and China.
  • Nepal’s government has been facing issues of corruption and eroding credibility both domestically and internationally.
• Prachanda’s Role in Nepal-US Relations
  • Prachanda, once on US global watch lists due to his role in the Maoist insurgency, has become an important facilitator for American interests in Nepal.
  • He played a key role in endorsing the $500 million Millennium Challenge Corporation (MCC) Nepal compact grant in February 2022, despite China’s disapproval.
  • Nepal’s support for the MCC led to improved relations with the US. Prachanda aligned with the pro-India and pro-US Nepali Congress in the November 2022 election, contributing to the MCC’s endorsement.
• US-Nepal Relations and MCC
  • The US has played a significant role in Nepal’s health, education, and agriculture sectors through USAID over 75 years of bilateral relations.
  • However, the MCC concept had divided Nepal’s political class, with concerns that it could impact the country’s non-aligned foreign policy and provoke China.
  • Nevertheless, the MCC’s endorsement marked an upswing in Nepal-US relations.
• Nepal’s Stance on Global Issues
  • Nepal supported the US in the UN’s condemnation of Russia’s war against Ukraine.
  • However, the Deuba government withdrew support for the State Partnership Program (SPP) with the US in June 2022 amid fears that it might involve Nepal in an anti-China military pact.
• China’s Influence in Nepal After the 2015 Blockade
  • The economic blockade of Nepal by India that lasted nearly six months starting in September 2015 opened the door for China to exert a stronger influence in the country.
  • During this period, China aggressively intervened in Nepal’s politics and played a role in bringing together the two communist parties, led by Prachanda and K P Sharma Oli.
  • Under Oli’s leadership, Nepal witnessed significant shifts in its relationships with neighboring countries and the United States.
  • Oli’s government signed trade and transit agreements with China, providing Nepal with access to the sea in the north.
  • This marked a substantial change in Nepal’s relationship with India, leading to stronger sentiment against India within the country.
• Continued Chinese Efforts for Communist Unity
  • Even after Oli and Prachanda had disagreements, particularly regarding the ratification of the MCC Nepal compact, China continued its efforts to promote communist unity in Nepal.
  • During President Xi Jinping’s visit to Nepal in October 2019, China promised substantial investments in areas like tourism, energy (hydro and solar), and post-earthquake reconstruction.
  • China also encouraged Nepal to select projects under the Belt and Road Initiative (BRI).
• Impact of the COVID-19 Pandemic and MCC Compact
  • The COVID-19 pandemic temporarily put these projects on hold, and the endorsement of the MCC compact last year altered Nepal’s stance on development partnerships with China.
  • Prachanda and his coalition partners began taking into account Indian and US warnings regarding potential Chinese debt traps.
  • They expressed a preference for grants over the soft loans mentioned in the BRI agreement signed five years earlier.
  • Prime Minister Prachanda has requested that China provide project grants initially, emphasizing that the MCC is a developmental project with no strategic or security significance.
  • Convincing China of Nepal’s commitment to its neighbours and reassuring China about the MCC’s non-strategic nature is a key challenge.
• Chinese Interests and Outreach in Nepal
  • China aims to expand its presence, investments, and interests in Nepal to counter or neutralize the influence of the US and India in the region.
  • China has realized the limitations of relying solely on the major left parties and is likely to expand its political outreach to other Nepali parties.
• India’s Perspective and Concerns
  • India, while having had its share of challenges in Nepal, closely monitors the evolving dynamics.
  • The open border with India has posed security concerns in Nepal.
  • Gorkha recruitment, a historic practice, is no longer in effect.
  • Border disputes have arisen periodically.
  • India-US Cooperation to Counter Chinese InfluenceIndia and the US share concerns about the convergence of major communist parties in Nepal, which could strengthen China’s influence.
• Watching Prachanda’s Visit to China
  • India will closely observe Prachanda’s visit to China, particularly the reception he receives and the clarity with which he conveys Nepal’s viewpoint during meetings with Chinese leaders like President Xi and Premier Li Qiang.

India-Nepal Relations Overview

• India and Nepal share a unique and historically significant relationship due to their geographical proximity, cultural ties, and economic interdependence.
• However, this relationship has experienced both highs and lows over the years, influenced by various factors.
• Historical Ties:
  • India and Nepal share strong cultural and religious ties, with Hinduism being a dominant religion in both countries.
  • The open border facilitates people-to-people interactions.
  • Both nations have engaged in economic cooperation through trade, transit, and development assistance.
• Key Phases in India-Nepal Relations:
  • Treaty of Peace and Friendship (1950):
    • The treaty of 1950 established a close relationship, with provisions like open borders and equal rights for citizens of both countries in each other’s territories.
    • However, it has also been a source of contention at times, with Nepal seeking to renegotiate its terms.
  • 1960s and 1970s:
    • Bilateral relations were strained during this period due to disagreements over the Treaty of Peace and Friendship.
    • Nepal’s desire to assert its sovereignty led to tensions.
  • 1980s:
    • Relations improved in the 1980s, marked by the signing of the Mahakali Treaty in 1996, aimed at sharing the waters of the Mahakali River.
    • However, this treaty faced delays in implementation.
  • Maoist Insurgency (1996-2006):
    • Nepal’s decade-long Maoist insurgency had implications for India’s security and required diplomatic efforts to bring stability to Nepal.
  • 2008-Present:
    • Nepal declared itself a federal democratic republic in 2008 and abolished its monarchy.
    • India supported Nepal’s democratic transition.
    • The relationship has seen ups and downs in recent years, with issues like border disputes, economic blockades, and differing political alignments influencing ties.
  • Current Challenges:
    • Border Disputes: Disputes over border areas like Kalapani and Lipulekh have caused periodic tensions.
    • Influence of China: Nepal’s growing engagement with China has been a concern for India, as it seeks to balance its relationships with both neighbors.
    • Domestic Politics: Political instability and frequent changes in government leadership in Nepal have complicated diplomatic relations.
  • Economic and Cultural Ties:
    • India is Nepal’s largest trade partner, and the open border facilitates the movement of goods and people.
    • Cultural exchanges, including festivals and pilgrimages, continue to strengthen people-to-people ties.

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India’s imports of Saudi oil in September slump to a multi-year low

(General Studies- Paper III)

Source : The Indian Express

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India’s oil imports from Saudi Arabia have hit a multi-year low in September, according to data from commodity market analytics firm Kpler.

• This decline is attributed to maintenance shutdowns at Reliance Industries Ltd’s (RIL) Jamnagar refinery and Saudi Arabian crudes becoming relatively more expensive due to production cuts by Riyadh.

Key Highlights

• RIL’s Refinery Maintenance Impact
  • RIL, the largest Indian buyer of Saudi Arabian crude, accounts for around 35% of the oil imports from Saudi Arabia.
  • RIL announced maintenance and inspection shutdowns of several units for periods ranging from four to seven weeks, affecting its crude imports.
• Saudi Arabia’s Relative Crude Prices
  • Saudi Arabian crude prices, such as Arab Light and Arab Heavy, have risen compared to competing medium-sour grades like Oman, Dubai, and Basrah Medium from the region.

Note: Arab Light and Arab Heavy, etc. terms refer to different grades or types of crude oil. Crude oil can vary in its composition and characteristics, and these variations are often categorized into different grades based on factors such as their density (API gravity) and sulfur content.

• The scarcity of medium-sour crude supply in the markets due to Saudi Arabia’s OPEC+ production cuts and Russia’s export cuts has contributed to the increase in Saudi Arabian crude prices.

• Oil Price Volatility
  • Oil prices have been volatile, with Brent currently around $95 per barrel.
  • Concerns about a possible supply deficit during the high winter demand season and indications of major oil producers considering deeper production cuts have contributed to this volatility.
• Saudi Arabia and Russia’s Supply Cuts
  • Saudi Arabia and Russia extended voluntary supply cuts of 1.3 million bpd (barrels per day) until the end of 2023, surprising the world.
• Expectations for India’s Oil Imports
  • Despite the current decline, Kpler expects India’s imports of Saudi Arabian oil to recover over the next few months.
  • Stronger refining activity and robust domestic demand, especially during the festival season, are anticipated to drive increased oil imports.
  • Saudi Arabia may adjust its official prices to maintain competitiveness.

What is OPEC+?

• OPEC+ is an alliance of oil-producing countries that collaborate on managing oil production levels to stabilize global oil markets and influence oil prices.
• The alliance consists of two main groups:
  • the Organization of the Petroleum Exporting Countries (OPEC) and a group of non-OPEC oil-producing nations, with Russia being the most prominent member of the non-OPEC group.
• Organization of the Petroleum Exporting Countries (OPEC):
  • OPEC is an intergovernmental organization founded in 1960.
  • Its member countries are primarily located in the Middle East, Africa, and South America. As of my last knowledge update in September 2021, OPEC had 13 member countries, including Saudi Arabia, Iraq, Iran, Venezuela, and Nigeria, among others.
  • OPEC’s primary goal is to coordinate and manage the oil production policies of its member nations to stabilize oil markets and ensure a steady income for member countries.
• Non-OPEC Member Countries:
  • The non-OPEC members of the OPEC+ alliance, with Russia being the most significant, collaborate with OPEC to manage oil production levels.
  • Other non-OPEC members may include countries like Kazakhstan, Mexico, and Oman, among others.

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