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CURRENT AFFAIRS – 29/01/2024

CURRENT AFFAIRS - 29/01/2024

CURRENT AFFAIRS – 29/01/2024

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  1. CURRENT AFFAIRS – 29/01/2024

CURRENT AFFAIRS – 29/01/2024

India, France agree on surveillance ties

(General Studies- Paper II)

Source : TH

During French President Emmanuel Macron’s visit to India, both India and France reaffirmed their commitment to intensifying cooperation in the Southwest Indian Ocean region.

  • Building upon previous joint surveillance missions conducted from the French territory of La Reunion in 2020 and 2022, the two nations aimed to bolster their collaboration in maritime security.

Key Highlights

  • India and France acknowledged the success of their joint surveillance missions and expressed their intention to expand these efforts.
  • Indian Navy P-8I maritime patrol aircraft were deployed to La Reunion, marking significant collaboration between the two countries in safeguarding the region’s maritime interests.
  • Utilization of India as a Defense Equipment Base:
    • Both leaders recognized India’s potential as a base for manufacturing and exporting defense equipment to friendly countries in the region.
    • This initiative aims to enhance regional security and strengthen defense ties between India and other nations.
  • The possibility of conducting a distinct joint tri-services exercise to further enhance cooperation and coordination was also discussed.
  • Pillars of India-France Collaboration
    • The joint statement emphasized the defense and security partnership as a fundamental pillar of the overall collaboration between India and France.
    • This partnership extends across various dimensions, ranging from intelligence and information exchange to joint exercises and equipment, covering domains from the seabed to space.
    • India and France affirmed their commitment to triservice exercises, including joint exercises with the U.S. and Russia.
    • Additionally, the two nations expressed their dedication to revitalizing trilateral cooperation with Australia, deepening ties with the United Arab Emirates (UAE), and exploring new avenues for collaboration in the region.
    • Defense Industrial Cooperation:
      • Both leaders reiterated their commitment to deepening integration between the defense industrial sectors of India and France.
      • The focus is on co-design, co-development, and co-production to meet the defense needs of the Indian armed forces.
      • The statement acknowledged specific initiatives, such as the establishment of Maintenance, Repair and Overhaul (MRO) for LEAP engines in India by Safran and plans to expand MRO capabilities for Rafale engines.
      • Other collaborations include a comprehensive helicopter partnership and additional Scorpene submarines constructed in India with an emphasis on indigenization.
    • Research and Development Collaboration:
      • The joint statement highlighted ongoing discussions between India’s Defence Research and Development Organisation (DRDO) and the French Directorate General of Armament (DGA).
      • The intention is to conclude an Arrangement Memorandum of Understanding (MoU) in an early timeframe, with a specific reference to co-design and co-development of a jet engine for India’s fifth-generation fighter.
    • Deepening Space Cooperation:
      • In June 2023, India and France initiated the Strategic Space Dialogue, a collaborative effort aimed at providing strategic guidance and direction for comprehensive space cooperation.
      • The joint statement highlighted the conclusion of a Letter of Intent on Defense Space Cooperation between the two nations.
      • This signifies a commitment to strengthen their collaboration in defense-related space activities.
      • Memorandum of Understanding (MoU) for Satellite Launch Missions:
        • Notably, a significant milestone was achieved with the signing of a Memorandum of Understanding (MoU) between ISRO’s New Space India Limited (NSIL) and Arianespace of France.
        • This MoU establishes the groundwork for a long-term partnership focused on satellite launch missions.
        • The collaboration aims to leverage the strengths of both entities for efficient and successful satellite launches.
      • Expanding Space Cooperation Scope:
        • The joint statement underscored the rededication of both countries to further expand space cooperation.
        • This expansion includes various dimensions such as the co-development, manufacture, and launch of satellites and payloads.
        • Additionally, there is a focus on joint research in new launch vehicle technologies, reusable launch vehicles, and facilitating connections between startups and users in both India and France.

About French territory of La Reunion

  • La Réunion is situated in the Indian Ocean, approximately 700 kilometers (430 miles) east of Madagascar.
  • It covers an area of about 2,511 square kilometers (970 square miles).
  • La Réunion is one of the overseas departments of France.
    • This means it is fully integrated into the administrative structure of France, and its residents are French citizens.
  • The capital city of La Réunion is Saint-Denis.
  • French is the official language of La Réunion.
  • The population of La Réunion is diverse, with a mix of ethnicities and cultures, including European, African, Indian, and Chinese influences.
  • The economy of La Réunion is diverse, with agriculture, tourism, and fishing being significant contributors. Sugarcane cultivation and processing have historically played a crucial role in the island’s economy.
  • La Réunion is known for its stunning landscapes, including volcanic craters, lush forests, and coral reefs. It is a UNESCO World Heritage site.

Minimal radioactive discharges from Indian nuclear plants: study

(General Studies- Paper III)

Source : TH

Researchers at the Bhabha Atomic Research Centre (BARC), Mumbai, conducted a comprehensive 20-year analysis (2000-2020) of radiological data from six nuclear power plants in India.

  • The study aimed to assess the radioactive discharges and potential environmental impact, with noteworthy findings.

Key Highlights

  • Minimal Environmental Impact:
    • The research concluded that radioactive discharges from the studied nuclear power plants in India over the two-decade period were “minimal.”
    • The analysis focused on data from six nuclear power plants, including the Kudankulam Nuclear Power Station, Tarapur Atomic Power Station, Madras Atomic Power Station, Kaiga Generating Station, Rajasthan Atomic Power Station, Narora Atomic Power Station, and Kakrapar Atomic Power Station.
  • Safe Operation of Nuclear Power Plants:
    • The study’s results emphasized the safe operation of Indian nuclear power plants, with minimal public doses recorded.
    • The findings are considered significant in reinforcing India’s commitment to advancing its nuclear power program.
    • The researchers suggested that the study has the potential to dispel unfounded beliefs regarding the environmental impact of nuclear power plants.
    • This, in turn, could serve as a catalyst for reinforcing India’s commitment to its nuclear power program.
  • Scope of Study:
    • The study focused on concentrations of fission products and neutron-activated nuclides within a 5 km radius of each nuclear plant.
    • Samples were collected and measured within a maximum radius of 30 km of each nuclear plant, with concentrations beyond 5 km found to be below detectable levels.
  • Gaseous and Liquid Discharges:
    • Gaseous waste released into the atmosphere included fission product noble gases, Argon 41, radioiodine, and particulate radionuclides such as cobalt-60, strontium-90, caesium-137, and tritium.
    • Liquid discharge consisted of fission product radionuclides (radioiodine, tritium, strontium-90, caesium-137) and activation products like cobalt-60.
  • Adherence to Regulatory Regimes:
    • Radioactive discharges were carried out through dilution and dispersion, adhering to strict radiological and environmental regulatory regimes.
    • Researchers at the Bhabha Atomic Research Centre (BARC), Mumbai, conducted an in-depth study analyzing radiological data from seven nuclear power plants in India, examining air and water particulates.
    • The study focused on various radionuclides, emphasizing specific markers and concentrations.
  • Analysis of the report:
    • The study reported that the average gross alpha activity in air particulates at all seven nuclear plants remained below 0.1 megabecquerel (mBq) per cubic meter.
    • Narora Atomic Power Station (NAPS) exhibited slightly higher maximum values, attributed to a higher atmospheric dust load at NAPS compared to other sites.
    • Average concentrations of radionuclides (iodine-131, caesium-137, and strontium-90) in air particulates across all sites were below 1 mBq per cubic meter.
    • Concentrations of caesium-137 and strontium-90 were three orders of magnitude lower, staying below 10 microbecquerel per cubic meter.
    • Concentrations of caesium-137 and strontium-90 in rivers and lakes were reported to be below 5 mBq per liter.
    • Sea water near the nuclear plants recorded concentrations below 50 megabecquerel per liter.
    • In sediments, caesium-137 concentration was highest at the Rajasthan Atomic Power Station.
    • Strontium-90 concentration in sediments peaked at the Narora Atomic Power Station.
    • Notably, these values fell within the statistical variation observed in natural sediments, indicating no discernible trend of deposition or accumulation of activity in the environment.
    • The study suggested that higher levels of caesium-137 observed at the Rajasthan Atomic Power Station were likely due to the accumulation of caesium-137 discharged into water bodies through scavenging and sedimentation processes.
    • The high distribution coefficient of sediment at this site was also considered a contributing factor.
  • Tritium Levels and Total Radiation Doses at Indian Nuclear Power Plants: Study Insights
    • Researchers from the Bhabha Atomic Research Centre (BARC) in Mumbai conducted an analysis of tritium levels and total radiation doses at various nuclear power plants in India.
    • The study emphasized the presence of tritium, variations in total radiation doses, and ongoing efforts to enhance safety measures.
    • Tritium, a radioactive isotope of hydrogen, was found detectable above the minimum detectable activity in all nuclear power plants studied, except for the Kudankulam Nuclear Power Station.
    • Notably, tritium was not detected at any time during the study period at the Kudankulam Nuclear Power Station.
    • The concentration of tritium was noted to be “relatively higher” at the Rajasthan Atomic Power Station compared to other sites.
  • Total Radiation Doses:
    • Total radiation doses at all studied nuclear power plants were reported to be lower than regulatory limits, emphasizing the overall safety of these facilities.
    • The total doses at the Rajasthan Atomic Power Station, Madras Atomic Power Station, and Tarapur Atomic Power Station were relatively higher compared to other plants.
    • This elevation in doses was attributed to air-cooled reactor assemblies at the Rajasthan and Madras power stations, resulting in the activation of natural argon to radioactive argon-41 before release into the environment.
    • Despite total doses at Rajasthan, Madras, and Tarapur power plants being within regulatory limits, ongoing efforts are being undertaken at these sites to further limit the doses.
    • The objective is to maintain doses “as low as reasonably achievable” (ALARA), showcasing a commitment to continuous improvement in safety measures.

What are radioactive discharges?

  • Radioactive discharges refer to the release of radioactive materials into the environment, often as a result of human activities.
  • These discharges can occur from various sources, including nuclear power plants, industrial facilities, nuclear weapons testing, and accidents involving radioactive materials.
  • Radioactive discharges may involve the release of radioactive isotopes or particles that emit ionizing radiation.
  • In the context of nuclear power plants, radioactive discharges can occur during normal operations, maintenance activities, or in the event of accidents.
  • These discharges can include gaseous releases, liquid effluents, or solid waste containing radioactive materials.
  • Effluents from nuclear facilities typically undergo treatment to reduce the concentration of radioactive contaminants before being released into the environment, but some residual radioactivity may still be present.
  • The potential environmental and health impacts of radioactive discharges depend on factors such as the type and quantity of radioactive materials released, the pathways through which they enter the environment (air, water, soil), and the proximity of human populations to the discharge points.
  • Regulatory agencies typically establish limits and guidelines to ensure that radioactive discharges do not pose unacceptable risks to public health and the environment.
  • Efforts to minimize radioactive discharges include the use of advanced technologies for waste treatment, improved containment measures, and adherence to strict regulatory standards.
  • Monitoring and surveillance systems are also in place to track and assess the impact of radioactive releases on the environment and public health.

A closer look at Myanmar’s discontent

(General Studies- Paper II)

Source : TH

In February, Myanmar marked three years since a military coup overthrew the democratically elected government led by Aung San Suu Kyi.

  • This triggered a significant civil disobedience movement, leading to the formation of a National Unity Government and People’s Defence Forces (PDFs).

Key Highlights

  • Last October, an alliance of ethnic armed organizations, including the Arakan Army, Myanmar National Democratic Alliance Army, and Ta’ang National Liberation Army, launched coordinated attacks in Shan State, causing substantial losses to the military.
  • The Arakan Army now controls Paletwa town, crucial to India’s Kaladan project.
  • Discontent has grown, and major ethnic communities, especially the Bamar, demonstrated increased resistance in regions like Sagaing, Bago, and Magwe.
  • The military has lost significant territory to armed groups, reflecting a failure to achieve national unity.
  • Shift in Military Dynamics:
    • While the military has historically regained lost ground from ethnic armed groups, the current loss of territory is attributed more to widespread popular discontent.
    • The military struggles with recruitment, even from Bamar-dominated regions, constituting the majority of army personnel.
    • Reports indicate government officials, doctors, and police supporting the resistance.
    • Over 150 soldiers sought refuge in India a month ago, indicating internal stresses within the military.
    • Between 2010 and 2020, when sanctions were eased, the military strengthened its arsenal.
    • However, the coup leaders’ use of firepower on civilians has led to internal displacement and neighboring countries facing refugee crises.
    • Military cohesion is under strain, with reports of personnel surrendering to ethnic armed groups and PDFs.
    • Punishments for officers unable to prevent desertions highlight the increasing stress on military unity.
  • China’s Multi-Layered Strategy in Myanmar
    • China adopts a robust strategy on international platforms to defend Myanmar’s military, shielding it from global condemnation.
    • Ethnic armed groups along Myanmar’s northern border maintain close ties with China.
    • The uprising in Shan State is believed to have occurred with Chinese consent, possibly aimed at eliminating online scams and criminal syndicates affecting Chinese citizens.
    • After achieving its objectives, Beijing reportedly orchestrated a ceasefire between the rebels and Myanmar’s army.
    • However, uncertainties persist about the truce’s duration, as both ethnic armed organizations and coup leaders may be uneasy with China’s influence over their operations.
  • ASEAN’s Limited Impact:
    • The Association of Southeast Asian Nations (ASEAN) has outlined a five-point consensus and excluded the Myanmar military from its summits.
    • Despite efforts, the ASEAN special envoy faced obstacles in engaging with key stakeholders, limiting the regional body’s influence on Myanmar’s political trajectory.
    • While traditional reticence prevailed among some ASEAN members, there is a shift, with certain nations becoming increasingly critical of the Myanmar coup, indicating a departure from their customary stance.
    • With a shared border of 2,416 km, Thailand holds considerable sway in Myanmar.
    • Last year, Thailand’s Foreign Minister engaged with Myanmar’s military leadership and Aung San Suu Kyi.
    • Thailand also interacts with Myanmar’s exile organizations and has escalated humanitarian assistance efforts.
  • New Delhi’s Strategic Considerations on Myanmar
    • India is urged to adopt a more proactive humanitarian approach in Myanmar, aiming to provide relief to displaced communities and potentially curbing the influx of refugees into India.
    • Political Realities to Consider:
      • The discontent against the coup in Myanmar continues unabated.
      • The military’s hints at conducting elections under proportional representation have not materialized due to the challenge of ensuring stability.
      • Despite the absence of a charismatic leader and limited international support, the resistance to the coup has demonstrated significant resilience over the past few years.
      • Myanmar is politically fragmented, with varying degrees of control held by the military, ethnic armed organizations, and People’s Defence Forces (PDFs) in different regions.
      • The military appears to be losing ground overall.
    • Given these realities, the suggestion is made for India to re-evaluate and re-calibrate its Myanmar policy.
    • This should involve consultations with all relevant stakeholders, considering the ongoing political dynamics and the diminishing control of the military.

Myanmar’s turmoil: An Overview

  • Myanmar, also known as Burma, is a Southeast Asian nation bordered by Bangladesh, India, China, Laos, and Thailand.
  • The country has a rich cultural and historical background but has faced political challenges, particularly under military rule.
  • Political System:
    • Myanmar gained independence from British rule in 1948.
    • However, political instability persisted, marked by ethnic conflicts and tensions between the military and civilian governments.
    • The military, known as the Tatmadaw, has played a significant role in Myanmar’s politics.
    • It has frequently intervened in governance, either ruling directly or exercising substantial influence.
    • Myanmar experienced brief periods of civilian rule, notably with the election of Aung San Suu Kyi’s National League for Democracy (NLD) in 1990.
    • However, the military refused to recognize the results, leading to years of international isolation.
  • Aung San Suu Kyi and Transition to Democracy:
    • Aung San Suu Kyi, the daughter of Myanmar’s independence hero Aung San, emerged as a prominent figure advocating for democracy.
    • She spent years under house arrest and became a symbol of the pro-democracy movement.
    • In 2015, Myanmar witnessed a historic election, and the NLD won a landslide victory.
    • Aung San Suu Kyi assumed the position of State Counsellor, a role akin to a prime minister.
    • While the civilian government initiated some democratic reforms, it faced criticisms for its handling of the Rohingya crisis and issues related to ethnic minorities.
  • Military Coup (February 2021):
    • On February 1, 2021, the Tatmadaw staged a coup, detaining Aung San Suu Kyi and other NLD leaders.
    • The military declared a state of emergency, alleging voter fraud in the November 2020 elections, which the NLD had won decisively.
    • The coup marked a return to direct military rule, dissolving the civilian government and suspending the constitution.
    • The junta, led by Senior General Min Aung Hlaing, took control, triggering widespread domestic and international condemnation.
    • The coup prompted a massive civil disobedience movement, with protests and strikes across the country.
    • The People’s Defence Forces (PDFs) emerged as a resistance movement against the military junta.
    • Some ethnic armed groups, such as the Arakan Army, Myanmar National Democratic Alliance Army, and Ta’ang National Liberation Army, actively opposed the coup, leading to increased conflict in various regions.

Momentous ruling: On Israel and the International Court of Justice order

(General Studies- Paper II)

Source : TH

The ICJ issued a significant ruling that binds Israel to prevent acts of genocide in its ongoing military operations in Gaza.

  • Despite no explicit call for a ceasefire, the ruling finds Israel’s actions capable of falling within the provisions of the Genocide Convention.

Key Highlights

  • South Africa’s Role and Vindication:
    • South Africa, holding Israel accountable for violations of humanitarian law, played a crucial role in bringing the case to the ICJ.
    • The court accepted South Africa’s standing and found its preliminary submissions valid, vindicating its extraordinary responsibility.
  • Provisional Measures:
    • The ICJ directed Israel to take immediate and effective measures to ensure humanitarian assistance and basic services to Gaza.
    • While lacking an explicit order to stop military action, the focus is on preventing genocide, encompassing acts causing bodily harm, mental harm, and conditions leading to physical destruction of the Palestinian group.
    • The ruling serves as both a moral and legal indictment of Israel, particularly for bombing health facilities, designated safe areas, and densely populated regions in Gaza.
  • Consensus on Preventing Genocide:
    • Anoverwhelming majority supporting most provisional measures indicates a high degree of consensus on steps to prevent genocide.
    • Avoiding a blanket order for cessation of hostilities acknowledges the complexity of responding to terrorist attacks by non-state armed actors.
    • The order aims to make it challenging for Israel to choose deliberate non-compliance.
    • Global efforts should encourage Israel to comply with measures while conducting legitimate military operations.
    • The ruling emphasizes the importance of leaders refraining from statements that may incite genocide.
  • Call for Humanitarian Aid and Reporting:
    • The ruling calls for a report within a month on steps taken by Israel to implement measures, indicating a need for demonstrated progress in permitting humanitarian aid.
    • An unfortunate development is the suspension of global aid to the UNRWA following Israeli allegations, highlighting the urgency of maintaining humanitarian efforts in Gaza despite ongoing investigations.

About International Court of Justice

  • The International Court of Justice (ICJ) is the principal judicial organ of the United Nations (UN), established in 1945.
  • It is headquartered in The Hague, Netherlands, and operates under the Statute of the International Court of Justice.
  • The ICJ serves as the UN’s principal judicial body, settling legal disputes between states and providing advisory opinions on legal questions referred by UN organs and specialized agencies.
  • Composition:
    • The Court consists of 15 judges elected for nine-year terms by the UN General Assembly and the Security Council.
    • Judges are chosen to represent a broad geographical distribution, ensuring diverse perspectives.
  • Jurisdiction:
    • The ICJ has jurisdiction over contentious cases between states and issues advisory opinions on legal questions referred by the UN General Assembly, the Security Council, or specialized agencies.
  • Advisory Opinions:
    • States, international organizations, and specialized agencies may request advisory opinions on legal questions.
    • These opinions are non-binding but carry significant weight in international legal discourse.
  • Recent Cases and Notable Rulings:
    • Nicaragua vs. United States (1986): The ICJ ruled against the United States, finding it in violation of international law by supporting Contra rebels in Nicaragua.
    • Armed Activities on the Territory of the Congo (2005): The ICJ addressed the issue of armed conflicts in the Democratic Republic of the Congo, emphasizing the responsibility of states for actions within their jurisdiction.
    • KulbhushanJadhav Case (2019): India brought a case against Pakistan, alleging violations of the Vienna Convention on Consular Relations in the detention of KulbhushanJadhav. The ICJ ruled in favor of India.

Analysing China’s ties with Africa

(General Studies- Paper II)

Source : TH

Chinese Foreign Minister Wang Yi visited Egypt, Tunisia, Togo, and the Ivory Coast to implement outcomes from the China-Africa Leaders Dialogue held in August 2023.

  • The agenda included supporting Africa’s industrialization, agricultural modernization, and talent development.
  • The visit also paved the way for the upcoming Forum on China-Africa Cooperation (FOCAC) in 2024.

Key Highlights

  • Background:
    • Sino-African relations trace back to the 1950s, with China supporting African liberation movements.
    • African support was crucial in China gaining a seat in the UN Security Council in the 1970s.
    • While initially focused on ideological support, China shifted to encourage investment in Africa under the “Go Out Policy” in 1999.
  • FOCAC and Belt and Road Initiative (BRI):
    • The first Forum on China-Africa Cooperation (FOCAC) took place in 2000, emphasizing diplomacy, investment, and trade.
    • The relationship evolved, with mutual security assistance becoming a key aspect under Xi Jinping.
    • In 2013, China’s Belt and Road Initiative (BRI) significantly expanded engagement, with 52 African countries as signatories.
    • China has become Africa’s largest trading partner, with over one-fourth of its raw materials exported to China.
    • The Chinese Loans to Africa database reveals significant financial support, with $170.08 billion in loans granted to 49 African countries between 2000 and 2022.
  • Strategic Presence:
    • China’s involvement in Africa has transformed from being a mere investor to a strategic actor.
    • The People’s Liberation Army Navy established its first international base in Djibouti, signifying a deeper military engagement.
    • The FOCAC and Belt and Road Initiative have played pivotal roles in intensifying China’s engagement with Africa, facilitating economic growth, and building strategic ties.
    • China’s presence in Africa extends beyond economic interests, with strategic military bases showcasing its commitment to the region’s stability.
  • China’s Strategic Goals in Africa:
    • China seeks access to crucial resources in Africa, such as cobalt, platinum, and coltan, essential for its emerging tech industry.
    • Dominance in the mining sector makes the U.S. reliant on China for key minerals from Africa.
    • Building alliances with Africa, which holds significant sway in the UN General Assembly, where it can influence resolutions on global issues.
    • Africa’s vocal support for China on international platforms, including adherence to China’s “One China” policy.
    • Currency Strengthening (Yuan):
      • Encouraging Africa to trade in the Chinese currency (Yuan/RMB).
      • Offering cross-border yuan-based financial instruments like “panda bonds,” providing foreign governments with funds at lower interest rates.
      • China’s debt restructuring initiatives, like in Zambia, incentivize borrowers to consider the RMB as an alternative to the dollar.
    • Commercial Opportunities:
      • Leveraging Africa as a significant market for Chinese exports, especially finished goods.
      • Capitalizing on Africa’s young population and cost-effective labor force to support Chinese exports globally and within the continent.
    • Implications for Africa:
      • Africa receives investments, trade, and development aid from China in exchange for natural resources.
      • Chinese-built infrastructure and industrial parks contribute to employment opportunities, making the concept of “Made in Africa” a reality.
      • Chinese support in advancing hybrid crops contributes to the growth of Africa’s agricultural sector.
      • The China-Africa partnership is viewed as a ‘win-win’ situation with a high degree of mutual trust.
      • Chinese non-intervention policy in domestic affairs contrasts with Western practices, allowing African countries more autonomy.
    • Debt Concerns:
      • Western concerns about Chinese investments being predatory and leading to debt traps are acknowledged, especially with poorly managed debt situations in some African countries like Kenya and Zambia.
      • Chinese ‘non-interference’ rhetoric provides space for authoritarian regimes in Africa, allowing them to maintain power.

What are the RBI’s guidelines on State ‘guarantees’?

(General Studies- Paper III)

Source : TH

A working group, established by the Reserve Bank of India (RBI) in July 2022, made recommendations to address issues related to guarantees extended by State governments in India.

  • The group comprised members from the Ministry of Finance, Comptroller and Auditor General of India, and representatives from some State governments.

Key Highlights

  • Key Recommendations:
    • Prescribed a uniform reporting framework for guarantees extended by State governments.
    • Suggested a uniform guarantee ceiling to enhance fiscal management at the state level.
    • Expanded the definition of what constitutes a ‘guarantee.’
  • Objective:The implementation of these recommendations is expected to facilitate better fiscal management by State governments.
  • Understanding ‘Guarantee’ in the Context:
    • A ‘guarantee’ represents a legal obligation for a State to make payments, safeguarding an investor or lender from the risk of default by a borrower.
    • According to the Indian Contracts Act (1872), a guarantee is a contract to perform the promise or discharge the liability of a third person in case of default.
    • The contract involves three parties:
      • the principal debtor (B), the creditor (A), and the surety (C) providing the guarantee on behalf of the debtor.
    • Example:
      • If A provides goods or services to B and B defaults on the payment, C (the surety) steps in and promises to pay on behalf of B.
      • A agrees to forbear from suing B, and this constitutes a guarantee.
    • Distinction from Indemnity:
      • A guarantee is distinct from an ‘indemnity’ contract, which protects the lender from loss caused by the conduct of the promisor (or the principal debtor).
    • Significance and Implications:
      • The recommended uniform reporting framework and guarantee ceiling aim to standardize practices across State governments, enhancing fiscal management.
      • By defining and clarifying the concept of guarantees, the legal framework provides clarity and mitigates risks for investors and lenders in dealings with State governments.
      • The RBI’s emphasis on better fiscal management suggests a move towards strengthened financial governance at the state level.
    • Purpose of a ‘Guarantee’ at the State Level:
      • Sovereign guarantees act as prerequisites for concessional loans from bilateral or multilateral agencies, particularly for public sector enterprises.
      • Guarantees are employed to enhance the viability of projects or activities that hold significant social and economic benefits.
      • Public sector enterprises utilize guarantees to raise resources at lower interest charges or on more favorable terms, ultimately facilitating economic activities.
      • Guarantees are preferred as they typically do not require upfront cash payments, making them attractive in certain scenarios.
    • Fiscal Risk and Burden:
      • While guarantees are benign in favorable circumstances, they can pose substantial fiscal risks, burdening the state during challenging times, resulting in unanticipated cash outflows and increased debt.
      • The potential costs and cash outflows associated with guarantees are challenging to estimate due to triggering events and uncertainties.
    • Issuance by State Governments:
      • State governments issue guarantees on behalf of state-owned enterprises, cooperative institutions, urban local bodies, and other state-governed entities to lenders like commercial banks or financial institutions.
      • Entities paying a guarantee commission or fee to state governments in return for the issuance of guarantees.
    • Working Group’s Recommendations on Definition:
      • The term ‘guarantee’ should have a broad interpretation, encompassing all instruments that create an obligation on the guarantor (State) to make a payment on behalf of the borrower in the future.
      • Guarantees should be included regardless of the name used for the instrument, as long as they establish an obligation for future payments by the guarantor.
      • The definition should not differentiate between conditional or unconditional, financial or performance guarantees, emphasizing a comprehensive assessment of fiscal risks.
      • Guarantees represent contingent liabilities that may crystallize later, presenting potential risks in the future.
    • Significance of Recommendations:
      • The proposed definition aims to improve risk management by ensuring a comprehensive understanding of all types of guarantees and their fiscal implications.
      • Inclusion of various guarantees under a broad definition contributes to fiscal transparency and better assessment of the state’s financial commitments.
      • Avoiding distinctions between different types of guarantees enables a holistic evaluation of fiscal risks associated with these instruments.
    • Guidelines for According ‘Guarantees’:
      • Guarantees should not be used to obtain finance through State-owned entities that substitute budgetary resources of the State Government.
      • They should not create direct liability or de-facto liability on the State.
      • Adherence to Government of India guidelines specifying guarantees only for the principal amount and normal interest component.
      • Limitation to a maximum of 80% of the project loan (subject to lender conditions).
      • Restriction on providing guarantees to private sector companies and institutions.
      • Preconditions for Issuing Guarantees:
        • Specification of preconditions, including the period of guarantee, levy of guarantee fee to cover risk, government representation on the management board of the borrowing entity, and the right to audit.
      • Risk Determination, Fee, and Ceiling:
        • States should assign appropriate risk weights (high, medium, or low) to guarantees, considering the past record of defaults.
        • Disclosure of the methodology for assigning risk weights is recommended.
      • States should conservatively assign a 100% risk weight for the lowest risk category.
      • Ceiling on Guarantees:
        • Deemed “desirable” to impose a ceiling on the issuance of guarantees due to potential fiscal stress if guarantees need to be invoked.
        • For incremental guarantees issued during a year, a ceiling is suggested at 5% of Revenue Receipts or 0.5% of Gross State Domestic Product (GSDP), whichever is less.
      • Guarantee Fee Structure:
        • Guarantee fee must be reflective of the riskiness of the borrower’s project and activities.
        • Based on risk assessment, considering tenure, a base fee or minimum guarantee fee should be set at a minimum of 2.5% per annum.
        • Additional risk premium may be considered based on further risk assessment.
      • Rationale for Recommendations:
        • Guidelines aim to mitigate fiscal risks associated with guarantees by restricting their use and ensuring risk-appropriate fees.
        • Adherence to Government of India guidelines ensures consistency and alignment with broader fiscal practices.
        • Imposing a ceiling on guarantees prevents potential fiscal stress on state governments, ensuring responsible financial management.
        • The fee structure is designed to be risk-adjusted, aligning guarantee fees with the level of risk associated with the borrower’s projects.
      • Disclosures on State-Owned Entity Credit and Guarantees:
        • The Reserve Bank of India (RBI) may consider advising banks/NBFCs to disclose the credit extended to State-owned entities backed by State-government guarantees.
        • Enhanced disclosure can improve the credibility of reported data by both the issuer (State government) and the lender.
        • Availability of comprehensive data from both issuers and lenders contributes to transparency in financial reporting, especially regarding State-owned entities supported by guarantees.
      • Database Management for Guarantees:
        • Suggestion for setting up a dedicated unit at the State level responsible for tracking, compiling, and consolidating data on all extended guarantees.
        • This database management unit ensures centralized monitoring of guarantee-related information.
      • Reputational and Legal Risks:
        • Acknowledgment that delays in honoring guaranteed obligations may pose reputational and legal risks for the State government.
        • States should exercise caution before extending fresh finance to entities that have previously failed to honor commitments.
        • Recognition that fresh guarantees from the State may not be readily accepted by lenders/investors if there is a history of defaults.
        • Emphasis on the timely honoring of guarantees to maintain the sanctity of issued guarantees and avoid reputational and legal consequences.
        • States are advised to ensure that all guarantees, in the case of default, are honored without delay.

Burkina, Mali, Niger quit West African bloc ECOWAS

(General Studies- Paper II)

Source : TH

The military regimes in Burkina Faso, Mali, and Niger have jointly announced their immediate withdrawal from the Economic Community of West African States (ECOWAS).

  • The leaders of these Sahel nations stated that the decision to leave ECOWAS is a “sovereign decision” and is to be executed “without delay.”

Key Highlights

  • The military regimes, grappling with jihadist violence and poverty, have had strained relations with ECOWAS since coups occurred in Niger (July 2022), Burkina Faso (2022), and Mali (2020).
  • ECOWAS had suspended all three nations and imposed heavy sanctions, leading them to strengthen their positions and form an “Alliance of Sahel States.”
  • The withdrawal of French military forces from the Sahel region has raised worries about the potential southward spread of conflicts to Gulf of Guinea states like Ghana, Togo, Benin, and Ivory Coast.
  • The Prime Minister appointed by Niger’s military regime criticized ECOWAS for “bad faith” after the bloc largely avoided a planned meeting in Niamey, where Niger hoped to address differences and the sanctions imposed following the military coup.
  • Burkina Faso, Mali, and Niger have hardened their positions and formed an “Alliance of Sahel States” in recent months.

About Economic Community of West African States (ECOWAS)

  • The Economic Community of West African States (ECOWAS) is a regional intergovernmental organization comprising 15 West African countries.
  • The establishment of ECOWAS was formally agreed upon with the signing of the Treaty of Lagos on May 28, 1975, in Lagos, Nigeria.
  • The primary aim of ECOWAS is to promote economic integration and cooperation among its member states to foster social and economic development in the West African region.
  • Member Countries:
    • Benin
    • Burkina Faso
    • Cape Verde
    • Ivory Coast
    • Ghana
    • Guinea
    • Guinea-Bissau
    • Liberia
    • Mali
    • Niger
    • Nigeria
    • Senegal
    • Sierra Leone
    • Togo
    • The Gambia (suspended in 2017; readmitted in 2018)
  • Objectives and Functions of ECOWAS:
    • ECOWAS seeks to achieve economic integration among member states, promoting the free movement of goods, services, and people across national borders.
    • The organization aims to enhance political cooperation and stability in the West African region through dialogue, conflict resolution, and the promotion of democratic governance.
    • ECOWAS plays a crucial role in addressing regional conflicts and maintaining peace and security.
    • The organization has deployed peacekeeping missions in conflict zones, such as in Liberia and Sierra Leone.
    • ECOWAS supports infrastructure development projects, including transportation, energy, and telecommunications, to facilitate regional connectivity and development.
    • Member states work towards harmonizing their policies and regulations to create a conducive environment for regional trade and investment.
    • ECOWAS promotes social and cultural integration by fostering collaboration in areas such as education, health, and cultural exchange.