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THE INTERNATIONAL RELATIONS

1. INDIA EXPECTS WEST SANCTIONS ON RUSSIA COULD TAKE BIG HIT

THE CONTEXT: According to the Government sources, amid crisis between Russia and Ukraine are mounting that wide-ranging Western sanctions on Russia will have a harsh impact on strategically important sectors in India, especially defence and engineering.

THE EXPLANATION:

• In a joint statement the United States (US), the European Union (EU), the United Kingdom (UK), Italy, Germany, France, and Canada agreed on restrictive measures that will prevent the Russian central bank from using its foreign exchange reserves to undermine the impact of the sanctions.
• They also decided to cut off some Russian banks from the SWIFT inter-banking system, a move meant to isolate Russia from global trade.
• Society for Worldwide Interbank Financial Telecommunication or SWIFT is a messaging system that facilitates cross-border transactions in a timely manner and has become the backbone of international financial trade.
• According to sources, the government is still in the process of reviewing the sectors likely to be hit hardest by the sanctions and devising mechanisms to deal with the blow.
• The sanctions will not only “deeply impact” India’s defence trade with Russia, they will “adversely impact” New Delhi’s trade with Moscow when it comes to other commodities such as engineering goods, automobile components, pharmaceuticals, telecom equipment and agricultural products.

Value Addition:

Bilateral trade between India & Russia

• According to the commerce ministry, India’s bilateral trade with Russia during 2020-21 amounted to $8.1 billion. Indian exports totalled $2.6 billion, while imports from Russia amounted to $5.5 billion.
• While India exports electrical machinery, pharmaceuticals, organic chemicals, iron & steel, apparel, tea, coffee, and vehicle spare parts to Russia, it imports defence equipment, mineral resources, precious stones and metals, nuclear power equipment, fertilisers, electrical machinery, articles of steel and inorganic chemicals, from the country.

India-Russia payment mechanism 

• This is not the first time that economic sanctions have been imposed on Russia. In 2014, after Russia’s annexation of Crimea, the US and other western nations imposed economic sanctions, limiting the dollar trade between Russia and the rest of the world.
• In 2019, India selected Chennai-headquartered Indian Bank for transacting with Russian bank VTB for payments for their imports. The idea was that these banks would have the least exposure to the US currency. It is unclear whether Indian Bank will be used for transacting with Russia under the current sanctions.

THE ECONOMIC DEVELOPMENTS

2. INVESTMENTS THROUGH P-NOTES DECLINE IN JANUARY 2022

THE CONTEXT: According to Securities and Exchange Board of India (SEBI) data, the value of P-note investments in Indian markets — equity, debt and hybrid securities — was at ₹87,989 crore by the end of January compared to ₹95,501 crore at December-end.

THE EXPLANATION:

• Experts believe that foreign investors will continue with their negative stance amid the Ukraine crisis. Also, with Omicron fears largely behind, investors were hopeful of a rapid recovery in the global economy. However, with the US Federal Reserve taking a ‘faster and sooner’ stance on rate hikes investors have been cutting their holdings in risk assets across the board.
• P-notes are issued by registered Foreign Portfolio Investors (FPIs) to overseas investors who wish to be a part of the Indian stock market without registering themselves directly.

What is P-Notes?

• Participatory notes also referred to as P-Notes, or PNs, are financial instruments required by investors or hedge funds to invest in Indian securities without having to register with the Securities and Exchange Board of India (SEBI).
• P-Notes are among the group of investments considered to be Offshore Derivative Investments (ODIs). Citigroup (C) and Deutsche Bank (DB) are among the biggest issuers of these instruments.
• Any dividends or capital gains collected from the securities goes back to the investors. Indian regulators are generally not in support of participatory notes because they fear that hedge funds acting through participatory notes will cause economic volatility in India’s exchanges.

How Do Participatory Notes Work?

• Participatory notes are offshore derivative instruments with Indian shares as underlying assets. Brokers and foreign institutional investors registered with the Securities and Exchange Board of India (SEBI) issue the participatory notes and invest on behalf of the foreign investors. Brokers must report their participatory note issuance status to the regulatory board each quarter.
• The notes allow foreign investors with high net worth, hedge funds, and other investors, to participate in the Indian markets without registering with the SEBI. Investors save time, money and scrutiny associated with direct registration.

Pros and Cons of Participatory Notes

• Participatory notes are easily traded overseas through endorsement and delivery. They are popular because investors anonymously take positions in Indian markets, and hedge funds may anonymously carry out their operations. Some entities route their investments through participatory notes to take advantage of tax laws that are available in certain countries.
• However, because of the anonymity, Indian regulators face difficulty determining a participatory notes original owner and end owner. Therefore, substantial amounts of unaccounted for money enters the country through participatory notes. This flow of untracked funds has raised some red flags.

THE INTERNAL SECURITY AFFAIRS

3. THE EXTENSION OF AFSPA IN ASSAM

THE CONTEXT: The Assam government extended the controversial Armed Forces (Special Powers) Act, 1958 (AFSPA) in the entire state for six more months with effect from February 28.

THE EXPLANATION:

• According to the Assam government, “after reviewing the law and order situation in Assam in the past six months, the state government has declared the entire State of Assam as ‘Disturbed Area’ up to 6 (six) months with effect from 28/02/2022.
• The government had last extended the “Disturbed Area” status of the state for another six months with effect from August 28 in the year 2021, thereby continuing the application of the AFSPA.
• The AFSPA was imposed in Assam in November 1990 and has been extended every six months since then after a review by the state government.
• Civil society groups and rights activists have been demanding withdrawal of the “draconian law” from the North East claiming violation of human rights by the armed forces.

VALUE ADDITION:

How is a region declared ‘disturbed’?

• Section (3) of the AFSPA empowers the governor of the state or Union territoryto issue an official notification in The Gazette of India, following which the Centre has the authority to send in armed forces for civilian aid.
• Once declared ‘disturbed’, the region has to maintain the status quo for a minimum of three months, according to The Disturbed Areas (Special Courts) Act, 1976.

Criticism of AFSPA:

• Sec 4(a) in which army can shoot to kill, as it violates article 21 which gives the right to life.
• Section 4(b) search without warrants violates the right to liberty and article 22.
• Dispersion of civil assembly by armed forces under section 121 violates the right to assembly
• No judicial magistrate permission required while arresting –violate article 22
• Overrides CrPC.
• Violation of human rights.
• It alienates the people from the army and then from the rest of India. A feeling of other worldliness is generated in their mind.

4. EXPLAINED: THE HISTORY OF THE KUKI INSURGENCY IN MANIPUR

Who are the Kukis?

The Kukis are an ethnic group including multiple tribes originally inhabiting the North-Eastern states of India such as Manipur, Mizoram and Assam; parts of Burma (now Myanmar), and Sylhet district and Chittagong hill tracts of Bangladesh. While Kuki is not a term coined by the ethnic group itself, the tribes associated with it came to be generically called Kuki under colonial rule.

In Manipur, the various Kuki tribes, living mainly in the hills, currently make up 30% of the total 28.5 lakh population of the State. While Churachandpur is their main stronghold, they also have a sizable population in Chandel, Kangpokpi, Tengnoupal and Senapati districts.

The rest of the population of Manipur is made up mainly of two other ethnic groups — the Meiteis or non-tribal, Vaishnavite Hindus who live in the valley region of Manipur, and the Naga tribes, historically at loggerheads with the Kukis, also living in the hilly areas of the State.

What led to the Kuki insurgencies in Manipur?

• Manipur, formerly a princely state including parts of Burma, made the accession into India after Independence, but was only made a full-fledged State in 1972. The resentment over the “forceful” inclusion into India and delay in granting statehood led to the rise of various insurgent movements.
• The problem was intensified after Manipur was declared a ‘distubed area’ in 1980, under the Armed Forces Special Powers Act (AFSPA), which gives sweeping powers to the military and has led to excesses. Post-independence insurgent movements in Manipur, carried out by valley-based groups or Meiteis, can be traced back to around the 1960s, when various groups demanded self-determination and separate statehood for Manipur, inspired by left ideology.
• The roots of Kuki militancy lie in conflicts of ethnic identity. First was the demand for self-determination solely for groups belonging to their ethnic fabric, meaning the dream to form a Kukiland which includes Kuki inhabited regions of Myanmar, Manipur, Assam and Mizoram. The second reason for insurgency lies in the inter-community conflicts between the Kukis and the Nagas in Manipur.
• The Kuki-Naga conflict was started over securing identity and land as some Kuki inhabited areas coincided with Naga inhabited areas. Wanting to dominate trade and cultural activities in those areas the two communities often engaged in violent standoffs, with villages being torched, civilians killed and so on. Even though clashes have reduced in recent decades, tensions between the two ethnic groups still exist.

THE PT PERSPECTIVE

5. ZERO DISCRIMINATION DAY 2022

THE CONTEXT: To battle against the mentality that sparks issues, cases of violence, or general violence, Zero Discrimination Day is observed every year on March 1.

SIGNIFICANCE OF THE DAY:

• This year, the theme for Zero Discrimination Day is ‘Remove Laws That Harm, Create Laws That Empower.’ The theme signifies the ardent need to fight and take action against the myriad discriminatory laws in multiple countries that result in people being treated differently. While some laws harm the sanctity of human rights, some seem to cripple the fundamental freedom in society.
• The day was first launched by Michel Sidibe, director, UNAIDS, in December 2013. The next year on March 1, 2014, Zero Discrimination Day was observed for the very first time. UNAIDS led the way to cater to the people living with HIV/AIDS who face discrimination because of their ailment.
• The official symbol representing Zero Discrimination Day is a
• Discrimination has been prevalent in society as a glaring evil that highlights that underlying glitch in our understanding of humans. As humans, we have disintegrated ourselves into various categories based on gender identity, race, class, sexual orientation, sex, occupation, income, disability, etc.
• In India, this day backed the movement of the LGBTQIA+ community in India to repeal section 377 that criminalised homosexuality in the country. The law was finally repealed in September 2018.

THE PRELIMS PRACTICE QUESTIONS

QUESTIONS OF THE DAY 2^nd MARCH  2022

Q. Consider the following statements about P-notes:

1. These are Overseas Derivative Instruments that have Indian stocks as their underlying assets.
2. These investments are considered as Foreign Direct Investment (FDI).
3. SEBI has mandated that KYC norms and Anti-Money Laundering rules (AML) will be applicable to P-Note holders.

Which of the statements given above is/are correct?

a) 1 only

b) 2 and 3 only

c) 1 and 3 only

d) 1, 2 and 3

ANSWER FOR 1^ST MARCH 2022

Q1. Answer: C

Explanation:

• Statement 1 is incorrect: It was established in 1988 by WMO and UNEP.
• Statement 2 is correct: It headquarter is hosted at WMO headquarters in Geneva.
• Statement 3 is incorrect: It is scientific body which reviews data submitted by countries and
• does not conduct any research nor does it monitor climate related data or parameters.

Q2. Answer: C

Explanation:

1. Dardanelles Strait – The Aegean Sea and the Sea of Marmara.
2. Bosporus Strait – The Aegean Sea and the Black Sea.
3. Kerch Strait – The Black Sea and Sea of Azov.