The Mexican peso crisis, also known as the tequila crisis, is a slang term that is used for financial fallout resulting from the Mexican economy. It was one of the first major currency crises in the South American continent. The value of the Mexican peso almost collapsed as a result of this crisis. The number of foreign reserves in the country rapidly decreased to extremely low levels and in the end, the Mexican government had no other option left so they required a bailout to save the country from this crisis. Foreign investors who had invested in Mexican bonds ended up losing 15% of the value of their investments in a single day and over 40% of the value in the long term. These rates look disastrous considering that bonds are fixed-income investments and losing money on bonds is considered to be a very rare possibility. So, what led the nation to this nightmarish disaster? Let’s delve into it.
Month: March 2021 Page 1 of 3
Let’s think of a typical day in our lives in this globalized world. We tune in to a news channel broadcasting from the United States on our television sets manufactured in China. We check our phones, most of which were assembled in China and Taiwan. We wear garments that are sewn in Bangladesh or Thailand. We then move to our workplaces in a car made up of parts that were manufactured in more than a dozen countries. All these exemplify global interconnectedness and our indispensable global economic interdependence. Trade is the major factor propelling the interconnectedness between nations. International trade has transformed the entire global economic landscape. Today approximately, one-fourth of global production is exported. Countries not only trade in finished products but also in intermediate inputs as well. According to a European Commission Report, trade may increase employment and can produce higher income in some sectors, thereby improving people’s standards of living. It provides consumers greater choices and lower prices, thanks to a wider supply of goods and services. Trade has grown in volumes, contributing significantly to the rise in the world’s GDP.
The Connectere Podcast is an initiative to bring forth innovative ideas and opinions of the youth forward via the digital medium. Tune in to this episode of the podcast where Sahib takes you through the politics behind the ongoing Antilia Bomb Case.
Here is the Spotify link for the podcast – https://open.spotify.com/show/4lBNc63mANGyz0iJ80WsOt
According to NASA, 2018 was the fourth hottest year on record with the global temperature being 0.8°C warmer than the mean during1951-1980. The top three? 2016, 2017, and 2015. The highest rise of 0.94°C (2016) may not seem like a lot but its implications of climate change on the earth are devastating, as can be seen. In fact, scientists say that if we were to cross the threshold of 1.5°C and touch even 2°C, it would lead to a spike in mass migrations from regions most affected, wildfires, deadly heat stress; and that is going to cost us millions of lives and trillions of dollars.
Rising temperatures bring along a number of costly natural disasters. A report by Intergovernmental Panel on Climate Change (IPCC) and the November 2018 Fourth National Climate Assessment report stated that changing climate is causing sea levels to rise and an increase in wildfires, severe storms, droughts, and other extreme weather events that threaten human life, healthy communities, and critical infrastructure.
There are two aspects to the news- knowing the headline and understanding the intricacies of it. We at The Connectere focus on both. While The First Forum edition gives a brief about the headlines, The Weekly Analysis Edition is meant to educate the reader on what do various news mean and what are their intricacies. This initiative is meant to educate the reader on how to understand the important news. In the Fifty First Edition we are covering the following news:
- NCT Bill revives power tussle in Delhi
- Development Finance Institute approved
- Democrats vow to vote on gun bills; Biden says ‘we have to act’
- Ready to discuss bringing petrol, diesel under GST at next Council meet
Recently, the central government introduced the Government of National Capital Territory of Delhi (Amendment) Bill, 2021 to amend the previous act of 1991, to better define the role of the Council of Ministers and the Lieutenant-Governor (LG) in Delhi. The Bill will most likely revive the tussle between the Centre and the Delhi government. The Constitution of India granted special status to Delhi among Union Territories (UTs) in the year 1991 through the 69th constitutional amendment which provided a governor and a council of ministers with appropriate powers. That’s when Delhi was named as the National Capital Territory (NCT) of Delhi.
But now the amendment in the bill will give discretionary powers to the LG of Delhi even in matters where the Legislative Assembly of Delhi is empowered to make laws. And the state government will require to obtain the opinion of the LG on their decisions before executive action is taken on those decisions. Thus, the elected government cannot take any action unless it obtains the LG opinion.
A government is often called upon to take urgent decisions and actions on issues concerning people’s welfare. The effect of this amendment will be that the government will not be able to act quickly on matters which it considers important. There can be no more effective way than this to hobble an elected government and make it ineffective. Moreover, the LG opinion is not time bounded which can lead to delay in executing the action. Specifically, this amendment nullifies the decision of the Supreme Court which has held that the elected government of Delhi can take all decisions within its jurisdiction and execute them without obtaining the concurrence of the LG. In case of a difference of opinion on a matter between the LG and the government, the former should make all efforts to resolve it and only in extreme cases should s/he refer the matter to the president for a decision. It is very surprising that after a constitution bench of the Supreme Court in 2018 settled the constitutional issues relating to the relationship between the Delhi government and the Union government in matters of governance, parliament has been called upon to amend the act to unsettle this relationship.
The AAP government has criticised the bill and has called it a move to curtail the powers of the state government because if amendments are passed, elections and the elected government in Delhi will become meaningless. Opposition parties have come in favour of the AAP government over the NCT Bill calling it to be ‘unconstitutional’. West Bengal Chief Minister extended support to the ‘struggle’ against the introduction of the Government of National Capital Territory of Delhi (Amendment) Bill, 2021 in Lok Sabha and called the move as “surgical strike on federal structure”.
Whenever the government has put a greater thrust on building infrastructure and promoting investment in the country, the idea of setting up a development bank has played a key role. India’s first development bank was probably set up in 1949 with the name Industrial Finance Corporation of India (IFCI). Its main aim was to finance industrial investments in the country. Then in 1995, the World Bank promoted the Industrial Credit and Investment Corporation of India (ICICI) to finance modern and relatively large private corporate enterprises. In 1964, IDBI was set up as an apex body of all development institutions. But these banks were ultimately disbanded due to mounting problems of NPAs and lack of efficiency.
Now, the Union cabinet has once again started working on this idea and has cleared the setting up of a Development Finance Institution (DFI) for financing long term infrastructure and development projects of the country. During Budget 2021, it was mentioned that a national bank will be set up to fund infrastructure and developmental activities. This is now being implemented on ground by the government. The FM stressed on the fact that past attempts to have such institutions have not been very successful and we have ended up with no bank which could take up long-term risk and fund development. This has led to steep fall in long-term credit from a tenure of 10-15 to just 5 years. Hence, in order to promote investments on a larger scale in the country, the government has come up with effective measures in the structure of DFI so that the problems faced by past banks can be confronted. Earlier banks had started piling up huge NPAs allegedly caused by politically motivated lending and inadequate professionalism. These banks were converted into commercial banks after Narasimham Committee reports in 1991. The proposed DFI will have a professional board with persons of eminence. Moreover, DFI will have 50% non-official directors. It will also have certain tax benefits for a period of about 10 years.
To finance this bank, the government will undertake a capital infusion of about Rs 20,000 crore this year and an initial grant of Rs 5000 crore. Additional increments of grant will be made within the limit of Rs 5000 crore. The central government is also planning to issue some securities to DFI through which cost of funds can be brought down. This can help DFI leverage initial capital and draw funds from various sources. DFI will start with 100% government ownership and it will be gradually brought down to 26%.
The DFI will focus on providing long-term credit for the industrial growth of the country at comparatively lower rates. It will provide financial assistance for both public and private sector industries. The main objectives will be promotion of industrial growth, development of backward areas, generation of employment opportunities, raising exports and substituting imports, modernisation and improvement in technology and reduction in regional imbalance.
Democrats said they are pushing toward a vote on expanded gun control measures as the nation reels from its second mass shooting in a week. President Joe Biden said “we have to act,” but prospects for any major changes were dim, for now, in the closely divided Congress. Senate Majority Leader Chuck Schumer vowed to bring to the Senate floor legislation passed by the House that would require background checks for most gun sales and transfers. He said the Senate “must confront a devastating truth” after a lack of congressional action on the issue for almost three decades.
The Senate Judiciary Committee held a hearing Tuesday on proposals for gun control. It is unclear whether any of the bills up for consideration, most of them involving more restrictive background checks would have made a difference in the Colorado case. A 21-year-old man charged with killing eight people in the Atlanta area last week had purchased a 9 mm handgun hours before the murders, prompting advocates to push for longer waiting periods for purchases. The gun debate also highlights a larger difficulty for Senate Democrats as they try to move forward on gun legislation and other policy priorities of the Biden White House. With the filibuster in place, forcing a 60-vote threshold for most legislation, House-passed bills on issues like gun control and voting rights are effectively nonstarters unless Democrats secure significant GOP support.
Democrats say they feel the environment around gun legislation has evolved, especially since that last major push in 2013. They point to troubles at the National Rifle Association, the long-powerful advocacy group that poured tens of millions of dollars into electing Donald Trump in 2016. The organization has been weakened by infighting as well as legal tangles over its finances. “This is the moment to make our stand. NOW,” tweeted Murphy as details of the Colorado shooting emerged Monday evening. “Today, our movement is stronger than the gun lobby. They are weak. We are potent. Finally, a President and a Congress that supports gun reform.” Democrats are hoping there is a gradual political shift among voters as well. A Pew Research Center poll in September 2019 showed a wide majority of Americans, 88%, supported making private gun sales and sales at gun shows subject to background checks, which is what the House-passed bill would do. Ninety-three percent of Democrats and 82% of Republicans were in favor of the policy.
Amidst outcry over high taxes on motor fuel, Finance Minister Nirmala Sitharaman said she would be “glad” to discuss the suggestion of bringing petrol and diesel under the ambit of the Goods and Services Tax at the next meeting of the GST Council. State levies and central excise duty account for more than half of the retail selling prices of petrol and diesel. For instance, taxes make up for 60 per cent of the present retail price of petrol of Rs 91.17 a litre in Delhi. Excise duty constitutes 36 per cent of the retail price. Over 53 per cent of the retail selling price of Rs 81.47 a litre for diesel in Delhi is made up of taxes. As much as 39 per cent of the retail price comprises central excise. Sitharaman said both the centre as well as state governments levy taxes on petrol and diesel.
However, the Centre shares its collection on the fuel with states. The GST Council, headed by Union Finance Minister and comprising state finance ministers, is the highest decision-making body regarding GST. Earlier in the day, members from the Opposition benches said high prices of diesel, petrol and LPG were hurting the common man across the country and asked the government to reduce their rates. Petrol and diesel prices are hovering at historic highs following a relentless increase in rates over the past nine months.
There have been calls by Opposition parties as well as sections of society to reduce excise duty to ease consumer pain. Supriya Sule (NCP) said the excise component in the prices of petrol is close to Rs 38 per litre while state value-added tax (VAT) is about Rs 19 per litre in Delhi. The government should consider slashing this high excise duty, she said. She urged the government to bring down prices of petrol, diesel and LPG cylinder. Ritesh Pandey (BSP) and Nama Nageswara Rao (TRS) too raised the issue of high prices of petrol and diesel. It is expected that this could reduce the price of petrol in the next GST meet but at the same time, it is a fall in government revenue and an increase in the deficit of the government so such a measure must only be taken after a thorough discussion and in no case should it be politicized to their advantage by any party to ensure a fair ruling in this matter.
The Connectere Podcast is an initiative to bring forth innovative ideas and opinions of the youth forward via the digital medium. Tune in to this episode of the podcast where Manav takes you through the origins and journey of Fascism!
Imagine living in an authoritarian ultra-nationalist country characterized by dictatorial power, forcible suppression of opposition, and strong regimentation of society, which promptly promotes gun violence and total control. Choking. But that’s exactly how Italy was, under Fascism.
What is fascism?
Fascism came to prominence in early 20th-century Italy. Opposed to liberalism, Marxism, and anarchism, fascism is placed on the far-right within the traditional left–right spectrum. It is a method of politics. It’s a rhetorical way of running for power – the fascist ideology centers on power and is a technique to gain power.
As an economic system, fascism is socialism with a capitalist veneer. Fascism was the happy medium between boom-and-bust-prone liberal capitalism, with its alleged class conflict, wasteful competition, profit-oriented egoism, with its violent and socially divisive persecution of the bourgeoisie.
The beliefs of fascism
Fascism believes in the superiority of the nation – a collection of people bound together by race, ethnicity, or culture. Germans and Italians are examples of people forming nations. The way to achieve national superiority is through the state. The ultimate goal of the major fascist regimes that have existed, like the regimes of the Italian Fascist Party and the German Nazi Party, was to pursue national greatness.
The type of state needed to fulfill this goal is anti-democratic and totalitarian. Such a state is anti-democratic because it eliminates democratic institutions, like the electoral, parliamentary, and multiparty systems, that frustrate this goal of national greatness.
- Democratic elections are problematic because the masses elect candidates who appeal to the masses’ self-interest. This does not guarantee that the candidates have the nation’s interests in mind. This weakens the state and, ultimately, the nation.
- Parliament is problematic because the parties in it spend more time arguing than implementing policies. Indeed, Hitler referred to Parliament as a “twaddling shop”.
- Other parties are problematic because, by competing with fascist parties to gain power, they prevent fascist parties from pursuing the ultranationalist goal.
Fascism, thus, is the ideology of nationalism upheld by an anti-democratic and totalitarian state.
It generally flourishes in countries with strong nationalism that attracts people to fascism’s ultranationalist goals and weak democracies that are incompetent and unresponsive. Consequently, citizens become disenchanted with it and were willing to abandon it for another regime type – fascism.
The rise of Fascism
From his birth in 1883, Benito Mussolini was a revolutionary. He founded his own newspaper and made it into the voice of all the elements—the veterans, the unemployed, the renegade socialists, the nationalists, and so forth—who were discontented and disillusioned with democracy. The goal was to make the citizens feel like victims, to make them feel like they’ve lost something and that the thing they’ve lost has been taken from them by a specific enemy – all the conditions that prevailed to the political and social situations in post- World War I Germany and Italy. Nationalism, in the form of national resentment, was potent. Italians and Germans believed that their national pride had been humiliated. While Italians felt this way because they believed their country had not been awarded the amount of territory it should have been awarded after War ended, the German government had accepted the Treaty of Versailles that required Germany to accept the blame for starting the War and imposed harsh reparations, on Germany. The Fascists and Nazis were appealing because they promised to restore the national greatness that citizens felt was lacking.
Around Mussolini’s banner there rapidly grew up an army of followers—from gangsters to sincere patriots. Some of them were organized into strong-arm squads, armed and uniformed as “Blackshirt Militia.”
The Fascists put up candidates in the parliamentary elections of 1921. Altogether they received only about 5 percent of the total popular vote, but they succeeded in planting the impression that they had the solution to all of Italy’s postwar ills. The existing government had none, and so the March on Rome—a Colossal bluff—turned out a colossal success.
As seeds of World War II began to germinate in the 1930s, Mussolini believed that Britain and France were doomed by low birth rates and the relatively high age of their populations, and he determined that Italy should ally itself with rapidly growing Germany. When the Germans under Hitler easily invaded Poland in 1939, Mussolini concluded that Germany would quickly prevail and entered the war on its side. Hitler planned to return the German nation to its position as the culture-founder of this earth. Thus, the Fascist and Nazi party together established totalitarian rule.
The fall of fascism
When the king had called on Mussolini to form a government in October 1922, very few people in the world had any idea of what was meant by a totalitarian form of government. Mussolini himself probably did not know what he was going to do—except stay in power. They thought Italy could later return to freedom, and in the meantime, fascism could take care of the crisis. Fascism taught the world and Hitler many of the tricks of totalitarian misrule. The final collapse of fascism, though set off when Mussolini’s frightened lieutenants threw him overboard, was brought about by allied military victories plus the open rebellion of the people.
The present state
Given that fascism was so clearly a response to the conditions of the 20s and 30s, it’s surprising that it has any purchase today. But bona fide fascism still exists in two forms. First, what you might call cultists – a religious sect generally extremist or false, with its followers living in an unconventional manner under the guidance of an authoritarian, charismatic leader. They can be traced among the people who marched in Charlottesville, Virginia on August 12, 2017, a march that ended in the death of a counter-protestor. The second kind of fascist is the neo-fascist -a type of one-party dictatorship that puts a nation and often race above the individual. It stands for a centralized government headed by a dictator.
Lessons from the past
Italian and German experiments with fascism offer urgent lessons for our own day.
First, the strongest protection against the one-man rule is deep and widespread respect for democracy. Mussolini undermined free speech and freedom of the press. He weakened the legislative and judicial branches of government and tried to control what people saw, heard, and read.
A second lesson from fascism is to prevent the manufacture of emergencies. By creating a widespread sense that times were desperate, Mussolini, like Hitler, was able to suppress democratic institutions and tyrannize the population.
Another lesson is the danger of racism. In arguing that whites are superior to Africans and Asians, Mussolini laid the groundwork for exploitation, oppression, and even extermination.
Ironically, it is quite possible that had Italy’s military and the economy prospered during the 1940s, Mussolini would not have fallen.
People all over the world need to remember that the price of liberty is eternal vigilance. Fascism and the hatred it breeds can undermine goodness and inflame evil. Democratic convictions that required centuries to build up can be demolished within months. This cautionary tale of Mussolini’s rise to power serves as an enduring reminder of the fragility of freedom.
In 2020, President Emmanuel Macron’s reaction to the terror attack outside Charlie Hebdo’s old office received sharp criticism from the Islamic world and the American-Anglo media. What his words and the French republic’s reaction did is open up a debate on liberal and radical secularism in western society. Since India’s independence in 1947, we have been grappling with the idea of secularism and its practices. Whether it’s the implementation of the Uniform Civil Code, the demand for states based on religious lines such as Kashmir or Khalistan, or the Babri Masjid demolition of 1992 – what we clearly know by now is that the Indian state does not know how to deal with religion and secularism. Let’s delve deeper to understand why.
Liberal secularism is the belief in separating religion from political discourse. It believes that religion is personal and as a cultural aspect, it must be accepted as an individual choice of how one wishes to follow it. In other words, it is democratic and free. In a democracy, it is very important for individuals to retain personal freedom in how they identify themselves and if that identity is based on religion, they should have the freedom to follow it. Radical secularism is the complete opposite – it is undemocratic and believes in removing religion completely from the public sphere. To many, especially in the case of France, radical secularism should not be practiced since it prevents minorities from having their separate identity in a multi-cultural society.