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 Thirty Sixth Edition we are covering the following news:
- SpaceX’s Dragon: First Private Spacecraft to Reach the Space Station and rise of private entities in space travel
- What are the economic implications of India opting out of RCEP?
- Atma Nirbhar Bharat 3.0 package worth Rs. 2.65 Lakh Crores
- 15th Finance Commission submits its report to the Prime Minister
- Jammu and Kashmir DDC elections
SpaceX’s Dragon: First Private Spacecraft to Reach the Space Station and rise of private entities in space travel
SpaceX has become the first private company to launch astronauts to the International Space Station, marking the culmination of years of work in partnership with NASA on developing human spaceflight capabilities. This weel NASA astronauts Shannon Walker, Victor Glover, and Michael Hopkins, and JAXA astronaut Soichi Noguchi left launch pad 39-A at Kennedy Space Center in Florida bound for the ISS.
SpaceX’s human launch program was developed under the Commercial Crew program, which saw NASA select two private companies to build astronaut launch systems for carrying astronauts to the ISS from U.S. soil. SpaceX was chosen alongside Boeing by NASA in 2014 to create their respective systems, and SpaceX’s Dragon capsule and Falcon 9 rocket became the first to achieve actual human flight certification from NASA earlier this year with the successful completion of its final, Demo-2 test mission, which flew to the ISS with two U.S. astronauts on board. To get to this point, SpaceX had to complete a number of milestones successfully, including a fully automated uncrewed ISS rendezvous mission, and a demonstration of both a launch pad abort and post-launch abort emergency safety system for the protection of the crew. During the Demo-1 mission, while all actual launch, docking and landing was handled by SpaceX’s fully autonomous software and navigation, astronauts also took over manual control briefly to demonstrate that this human-piloted backup would operate as intended.
This is the first time that astronauts have launched to space during a regular operational NASA mission since the end of the Shuttle program in 2011. It marks an official return of U.S. human spaceflight capabilities, and should hopefully become the first in many human flight missions undertaken by SpaceX and Dragon – across both NASA flights, and those organized by commercial customers.
The involvement of private industry in the space sector is the most devloping Industry. World over, more and more work of space agencies is being done in collaboration with private companies. There are lhundreds of private entities building commercial satellites for their clients. Launch services are still a somewhat restricted zone, considering that it requires elaborate facilities and deep pockets, but here too, there are several players apart from SpaceX and Boeing. Many, like Virgin Galatic of businessman Richard Branson, have been already made space flights and hope very soon to start offering passenger rides to space whoever can afford to pay. In fact, last year, a spacecraft built by Scaled Composites, a US company, even took a human being for a very short ride into space, becoming the first private spacecraft to do so.
Described as the “largest” regional trading agreement to this day, RCEP was originally being negotiated between 16 countries — ASEAN members and countries with which they have free trade agreements (FTAs), namely Australia, China, Korea, Japan, New Zealand and India. This week 15 countries solidified their participation in the Regional Comprehensive Economic Partnership (RCEP). Even as India opted to stay out after walking out of discussions last year, the new trading bloc has made it clear that the door will remain open for India to return to the negotiating table.
The purpose of RCEP was to make it easier for products and services of each of these countries to be available across this region. Negotiations to chart out this deal had been on since 2013, and India was expected to be a signatory until its decision last November.
On November 4, 2019, India decided to exit discussions over “significant outstanding issues”. According to the government of India, India had been “consistently” raising “fundamental issues” and concerns throughout the negotiations and was prompted to take this stand as they had not been resolved by the deadline to commit to signing the deal. Its decision was to safeguard the interests of industries like agriculture and dairy and to give an advantage to the country’s services sector. According to Indian governement the current structure of RCEP still does not address these issues and concerns.
There are concerns that India’s decision would impact its bilateral trade ties with RCEP member nations, as they may be more inclined to focus on bolstering economic ties within the bloc. The move could potentially leave India with less scope to tap the large market that RCEP presents —the size of the deal is mammoth, as the countries involved account for over 2 billion of the world’s population.
However, India’s stance on the deal also comes as a result of learnings from unfavourable trade balances that it has with several RCEP members, with some of which it even has FTAs. tensions with China are a major reason for India’s decision. While China’s participation in the deal had already been proving difficult for India due to various economic threats, the clash at Galwan Valley has soured relations between the two countries. The various measures India has taken to reduce its exposure to China would have sat uncomfortably with its commitments under RCEP.
India, as an original negotiating participant of RCEP, has the option of joining the agreement without having to wait 18 months as stipulated for new members in the terms of the pact. RCEP signatory states said they plan to commence negotiations with India once it submits a request of its intention to join the pact “in writing”, and it may participate in meetings as an observer prior to its accession.
However, the possible alternative that India may be exploring is reviews of its existing bilateral FTAs with some of these RCEP members as well as newer agreements with other markets with potential for Indian exports. Over 20 negotiations are underway.
Finance Minister Nirmala Sitharaman disclosed a new (third) set of stimulus measures worth Rs. 2.65 Lakh Crores under Atma Nirbhar Bharat Abhiyaan past week. Aimed for improvement in employment and better economic recovery from Covid caused lockdown and its challenges, this package combined with the earlier stimulus package, adds on to a total of 15% of India’s GDP i.e around 30 Lakh Crores (although not all of it is fiscal payment from the government). This package has multi-sectorial attention on employment, manufacturing, housing and liquidity to other stressed sectors.
The FM announced Atma Nirbhar Bharat Rozgar Yojana for new employment opportunities. Under this scheme, new employees with less than Rs. 15000 wages in EPFO registered establishment, and EPF members drawing less than Rs. 15000 (who exited during March-September but is employed post-October 1) will be allowed to avail benefits. Here, Central will provide benefit for two years in employers and employees contribution of 12% by bearing it to reduce the financial burden and boost employment. Rs. 1.46 Lakh Crore has been set aside for Production Linked Incentives for additional 10 Champion sectors to boost the competitiveness of domestic manufacturing in the medium term. Total PLI schemes have now reached Rs. 2 Lakh Crore as Rs. 51000 was earlier allotted for 3 sectors. This will provide 2-3 Lakh employment in coming 5 years. FM Sitharaman also emphasized that the PLI scheme is focused on manufacturers coming to India and at the same time link the global value chain.
Rs. 18000 Crore will be provided over the Budget Estimates of 2020-21 under PM Awaas Yojana- Urban, which will help 12 lakh houses to be grounded and 18 lakhs to be completed. Rs. 900 Crore has also been allotted to the Department of Biotechnology for R&D to develop a Covid-19 vaccine. Rs. 3 Lakh Crore existing Emergency Credit Line Guarantee Scheme (ECLGS) has been extended till 31st March 2020 as only Rs. 2.05 Lakh Crore has been sanctioned till now. Under ECLGS, 100% guaranteed and the collateral-free loan is provided. The FM also announced Rs. 6000 Crores equity infusion in NIIF Debt Platform. Rs. 65000 Crores has been allotted for subsidized fertilizers which will help 140 million farmers. Further, Rs. 10000 Crores will be provided for PM Garib Kalyan Rozgar Yojana this fiscal year. Besides, Rs. 3000 Crore will be released to EXIM Bank for better import-exports. Rs. 10200 Crore additional budget outlay will be provided towards capital and industrial expenditure. In a relief to contractors, performance security on contracts are now to be reduced to 3% till Dec 31, 2021on non-disputed projects.
Although the schemes might prove to be effective, stringent qualifying conditions might affect the economic outcome. Although the overall package is Rs. 2.7 Lakh Crore, but the cash outgo this year is less as some schemes have multi-year focus while some may face implementation delays.
The 15th Finance Commission which was tabled in the Parliamentary budget session of 1st February 2020, has submitted its first report to the Prime Minister. This report recommends the revenue-sharing decisions for the FY 2021 and the final report with recommendations for period 2021-26 will be submitted by October 30, 2020. The commission’s key recommendations include devolution of taxes to the states from 42% to 41% to accommodate the fall in revenue requirement of the state of Jammu and Kashmir as it was divided into two union territories at the time of revocation of Article 370 in J&K. The estimated revenue to be shared with states by the Centre nearly amounts to 8,55,176 crore and there has been significant change in the formula which is used to assign the resources to different states. For instance, parameters like forest and ecology, demographic performance, tax efficiency have been added while that of population size of 1971 has been deleted. Also, the weightage associated to income distance has been reduced and that of population size of 2011 has been increased. Overall, the top gainers, in terms of financial benefits, from the commission’s reports include Arunachal Pradesh, Meghalaya, Manipur, Nagaland and Punjab while those likely on losing end are Andhra Pradesh, Assam, Telangana, Kerala and Karnataka.
The commission has also recommends about various grants which centre may give to states which include revenue deficit grants, grants to rural and urban local bodies, disaster management relief funds etc. Additionally, the states of Karnataka, Mizoram and Telangana have been allocated special grants aggregating to Rs 67,64 crore rupees.
Besides this allocation, commission notes that recommending a credible fiscal and debt trajectory road map remains problematic due to uncertainty around economy. It also notes the stagnant tax capacity of India since 1990 and challenges presented by implementation of GST.
It advised that both central and state governments should focus on debt consolidation and comply with FRBM acts. They should make full disclosure of extra- budgetary borrowings as it observed that financial capital expenditure through off-budget borrowings detracts from compliance with FRBM Act. It also recommends forming an expert group to draft legislations to provide for statutory framework for sound public financial management system.
Finance Minister has given the assurance that most of the recommendations of 15th Finance Commission will be complied for in the FY 2020-21.
The upcoming elections of District Development Council (DDC) in Jammu and Kashmir have caught a nationwide attention due to fissures and controversies within parties and alliances. DDC elections are the first electoral exercise in J&K since the abrogation of special status of the erstwhile state of Jammu and Kashmir and its bifurcation into two UTs of J&K and Ladakh. Apparently, the People’s Alliance for Gupkar Declaration (PAGD), a coalition of regional and national political parties in Jammu and Kashmir formed to demand the restoration of Article 370, has decided to fight as a unit in these elections. The group was earlier skeptical about participating in elections as it would end up appearing to have normalised the Modi government’s August 5 decision and thus, could weaken their agenda of restoring Article 370. However, the group appears to have realised how their fight could become even more difficult if the ruling party gets the administrative control of the area. All the participants have filed the nominations of candidates but with this has come a lot of uncertainty about the unity of PAGD and Congress’s integrity in the alliance as well. Fissures had already emerged on 11 November, a day before the last day for filing of nominations for the first phase of elections, as there was no consensus on seat sharing in the Valley where the alliance is supposed to have more sway. Now, its reach and sphere of influence are also coming into question as the partners in the conglomerate are fighting against each other even in Jammu division. Moreover, the Congress party, despite being a signatory to the Gupkar Declaration, has made it clear that its involvement with the alliance is purely restricted to the DDC polls. The party has also fielded its candidates in opposition to those from the alliance in some seats of the Kashmir region.
These internal fissures have made the elections in J&K a mere fight of wordplay with parties demeaning each other one after the other. BJP has exploited on these developments by calling out the Gupkar Alliance as “unholy global gathbandhan” and “anti-national”. In turn, Congress leader Kapil Sibal has called on the opportunistic nature of BJP by asking them why did they form an alliance with PDP in earlier elections if there was no mutual consensus between ideology of PDP and BJP and if it was just for sake of winning elections.
On a bigger picture, it seems that Gupkar alliance, which was representative of bringing J&K’s special states back, has somewhat, failed the unity test in the very first test they appeared. However, how do they solve these internal issues and how well do they perform in these elections will shed some light on how does the future of J&K’s political environment looks like.