Daily Current Affairs for UPSC CSE
Topics Covered
- Kuki Insurgency
- CAATSA
- Balance of Payment
- Participatory Notes
- Facts for Prelims
1 . Kuki Insurgency
Context : Just before the first of the two phases of the Assembly Elections went underway in Manipur on February 28, all insurgent groups associated with the Kuki tribes in Manipur said they will vote for the Bharatiya Janata Party (BJP).
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.
- 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. 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.
- However, this wasn’t the case with the Kuki insurgency. 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.
Armed Struggle
- While organisations like Kuki Inpi and Kuki National Assembly had already formed in the years following Independence, insurgent activity at the time was jointly carried out by Kuki outfits based in Myanmar and Mizoram for Kukiland. But the Kuki insurgency in Manipur grew in real terms in the 1980s and after the Kuki-Naga conflicts of the 1990s. This is when the Kuki National Organisation (KNO) and its armed wing Kuki National Army (KNA) were formed.
- The community could not shed internal differences between tribes and take a single line of action. While some militant Kuki outfits demanded Kukiland, including parts which are not in India, some demanded Kukiland within India. At present, the demand has come to the formulation of an independent district—Kukiland Territorial Council within the purview of the Indian constitution, modelling the Bodoland Territorial Council, which was formed under the sixth schedule of the Constitution, after insurgent groups in Assam signed an agreement with their State government.
- 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.
Current Status
- The Kuki insurgent groups have been under Suspension of Operation (SoO) since 2005, when they signed an agreement for the same with the Indian Army.
- Later, in 2008, the groups entered a tripartite agreement with the State government of Manipur and the UPA led Central government under former Prime Minister Manmohan Singh, to temporarily suspend their operations and give political dialogue a chance.
- The SoO has been extended by the Government almost every year since 2008, with Kuki outfits threatening to breach the agreement by taking up arms again and boycotting the Government. In 2012, the groups held a nearly eight month long blockade of highways around their area, costing the Government a couple of crores in losses each day. The SoO agreement was last extended by Prime Minister Narendra Modi’s government in September last year till February 28 this year.
2 . Countering America’s Adversaries Through Sanctions Act (CAATSA)
Context : With tensions escalating between Russia and the West over the Ukraine crisis, India, which has major defence cooperation with Moscow and Kyiv, faces uncertainty over timely deliveries in the near future in addition to the lingering threat of the U.S. sanctions under CAATSA (Countering America’s Adversaries Through Sanctions Act) over the S-400 deal.
Background
- In October 2018, India signed a USD 5 billion deal with Russia to buy five units of the S-400 air defence missile systems. The S-400 is known as Russia’s most advanced long-range surface-to-air missile defence system
- US has urged all its allies and partners including India to forgo transactions with Russia as that might trigger sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA).
About Countering America’s Adversaries Through Sanctions Act (CAATSA)
- The Countering America’s Adversaries Through Sanctions Act (CAATSA) is a U.S. federal law
- Ultimate goal of the act is to prevent revenue from flowing to the adversary countries.
- Countries included under the act are Iran, North Korea, and Russia hence the Act aims at taking punitive measures against Russia, Iran, and North Korea
Sanctions
- Section 235 of the CAATSA legislation stipulates 12 kinds of punitive sanctions that the U.S. could place on a country conducting significant transactions in defence, energy, oil pipelines and cybersecurity technology with any of the U.S.’s “adversaries”, and according to the Act, the U.S. President may impose “five or more of the sanctions described”.
- These measures include export sanctions, cancellation of loans from U.S. and international financial institutions, ban on investments and procurement, restrictions on foreign exchange and banking transactions, and a visa and travel ban on officials associated with any entity carrying out the sanctioned transactions.
Sanction Waiver / Exit clause
- There is also and exit clause in CAATSA, which states that “The [US] President may waive the application of [CAATSA] sanctions if the President determines that such a waiver is in the national security interest of the United States.”
- In August 2018, the U.S. Congress also modified the waiver clause to allow the President to certify that a country is “cooperating with the United States Government on other matters that are critical to United States’ strategic national security interests”.
CAATSA and India
- India and the U.S. have had a growing defence relationship — from “near zero” in U.S. arms sales to India in 2008 to $15 billion in 2019, as per the State Department.
- India was designated a “Major Defence Partner” of the U.S. in 2016 and it was granted Strategic Trade Authorization tier 1 status in 2018.
- These designations allowed India easier access to sensitive U.S. defence technology.
- With this context in mind, then Defense Secretary Jim Mattis, joined by lawmakers from both parties who favoured a close U.S.-India relationship, made a strong case on for a CAATSA waiver for countries like India (and also Vietnam and Indonesia), which had historically bought Russian arms but were now buying more U.S. arms.
Can India be considered for the waiver
- US may consider providing a waiver for India as a militarily stronger India is in the U.S.’s interests, and that India cannot completely drop its traditional dependence on Russian defence equipment without being weakened.
- The current crisis could also complicate the CAATSA waiver India is looking for from the U.S. administration
Military deals with Russia and Ukraine
- Russia has been a traditional military supplier sharing platforms and technologies that others would not, the cooperation has further deepened in recent years. The defence trade between the two countries has crossed $15 billion since 2018. Even today, over 60% of Indian military inventory is of Russian origin, especially with respect to fighter jets, tanks, helicopters and submarines among others,
- In December, India and Russia signed a ₹5,000-crore deal for 6.1 lakh AK-203 assault rifles to be manufactured jointly in Uttar Pradesh. Production was to begin within a few months and it is expected to reach full-scale production within two or three years, said Alexander Mikheev, Director-General of Rosoboronexport.
- Russia is manufacturing two stealth frigates for the Navy. They are to be delivered next year onwards, while another two are being manufactured by the Goa Shipyard Limited under technology transfer. The keel of the ships has been laid and the Navy has said that the first one will be delivered in 2026 and the second one six months later.
- India had signed a separate deal with Ukraine for eight Zorya-Mashproekt gas turbine engines for the frigates.
- As for Ukraine, it is upgrading over 100 An-32 transport aircraft of the IAF under a deal finalised in 2009. While the upgrade of 45 An-32s in Ukraine was completed in 2015, the remaining aircraft were to be upgraded by the IAF Base Repair Depot, Kanpur. Ukraine officials had stated that all contractual obligations for the local upgrade would be fulfilled by 2020, though the current status was not immediately known.
- At the Aero India in February 2021, Ukraine signed four agreements worth $70 million, which includes sale of new weapons as well as maintenance and upgrade of the existing ones in service with the military, as reported earlier.
3 . Balance of Payment
Context : ‘Ukraine war will lift import bill, widen current account deficit’
About BoP
- In a globalized world, no country is self-sufficient. Every country purchases and sells goods and services to another. This includes both public and private transactions. The balance of payments calculates the value of these transactions.
- The value of the outflows should be equal to the total inflow of money into the country. However, this is not so because payments are sometimes delayed or paid over a longer term. For this reason, countries can have a deficit or surplus of BoP in the short-term.
- A deficit is when you owe money to the world, while a surplus is when your cash inflows exceed your outflows.
Types of Accounts
- Balance of payments comprises of three kinds of accounts – current, capital and financial account.
- Current Account : The current account calculates the total value of imports and exports of goods and services. The latter is called ‘invisibles’.
- Capital and financial accounts: Money is also exchanged between countries through investments or other kinds of financial transactions. This is calculated in the capital and financial accounts. An increase in borrowings from outside the country has a negative impact on the capital account, while an increase in foreign investment inflows has a positive impact.
- The IMF accounting standards of the BOP statement divides international transactions into three accounts: the current account, the capital account, and the financial account, where the current account should be balanced by capital account and financial account transactions. But, in countries like India, the financial account is included in the capital account itself.
4 . Participatory Notes
Context : Investments via P-note drop to ₹87,989 cr
What are P-Notes?
- P-Notes or Participatory Notes are Overseas Derivative Instruments that have Indian stocks as their underlying assets. They allow foreign investors to buy stocks listed on Indian exchanges without being registered. The instrument gained popularity as FIIs, to avoid the formalities of registering and to remain anonymous, started betting on stocks through this route.
What are govt & regulator’s concerns?
- The primary reason why P-Notes are worrying is because of the anonymous nature of the instrument as these investors could be beyond the reach of Indian regulators. Further, there is a view that it is being used in money laundering with wealthy Indians, like the promoters of companies, using it to bring back unaccounted funds and to manipulate their stock prices
What has Sebi done to regulate P-Notes?
- Sebi has taken a number of steps to tighten rules on P-Notes. In 2007, P-Notes were banned for a while due to a surge in capital flows and excess liquidity. After this, markets crashed immediately, but recovered after the regulator said FIIs could not take any fresh exposure, and their existing investments would have to be wound up in 18 months. But a year later, all restrictions on P-Notes were removed during the financial crisis, only to tightened again later.
- From January 2011, FIIs have had to follow KYC norms and submit details of transactions. In 2014, new rules on foreign portfolio investors (FPIs) made it mandatory for those issuing P-Notes to submit a monthly report disclosing their portfolios. This led to a decline in the number of entities issuing P-Notes. More recently, Sebi mandated that in addition to KYC, the anti-money laundering rules (AML) will also be applicable to P-Note holders.
- Earlier, a P-Note holder had to adhere to KYC or AML norms of just their home jurisdiction. Sebi also issued norms on transferability of P-Notes between two foreign investors and increased the frequency of reporting by P-Note issuers.
5 . Facts for Prelims
Suez Canal
- The Suez Canal is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea to the Red Sea through the Isthmus of Suez and dividing Africa and Asia. The canal is part of the Silk Road that connects Europe with Asia.