Indian Express EXPLAINED & The Hindu (Sunday)
- Important announcement
- Why China is looking at a larger role in Taliban-ruled Afghanistan (China's interest in Afghanistan)
- How to read the Q1 GDP data - (GDP data)
- Delhi High Courts observation on the "Right to be forgotten" (Right to be forgotten)
Current Affairs: Why China is looking at a larger role in Taliban-ruled Afghanistan | September Explained
UPSC Syllabus: Mains: GS-II: International Relation
Sub Theme: China’s interest in Afghanistan | UPSC
What is China’s economic interest in Afghanistan?
- Afghanistan has mineral deposits estimated to be worth up to $3 trillion.
- The country is probably home to what may be the world’s largest reserves of lithium – the key ingredient of the large-capacity lithium-ion batteries that are widely used in electric vehicles and the renewable energy industry. And since China dominates Lithium-Ion Battery Production worldwide, it may seek long-term a contract with the Taliban to develop Afghanistan’s massive untapped lithium reserves in return for mining rights and ownership arrangements.
- Afghanistan is also rich in several other resources such as gold, oil, bauxite, rare earths, chromium, copper, natural gas, uranium, coal, iron ore, lead, zinc, gemstones, talc, sulphur, travertine, gypsum and marble. Returning to power in Afghanistan after 20 years, the Taliban has recaptured these massive mineral deposits.
- With the U.S. withdrawal, Beijing can offer what Kabul needs most: political impartiality and economic investment. Afghanistan in turn has what China most prizes: opportunities in infrastructure and industry building — areas in which China’s capabilities are arguably unmatched — and access to $1 trillion in untapped mineral deposits.
- China’s Belt and Road Initiative: China’s strategic Belt-and-Road Initiative (BRI) could get more reach if it able to extend the initiative from Pakistan to Afghanistan, with a Peshawar-to-Kabul motorway. The road, which is already being discussed, would create a much shorter land route for faster and convenient access to markets in the Middle East for Chinese goods. A new route through Kabul would also render India’s reluctance to join BRI less consequential.
East Turkestan Islamic Movement (ETIM), is an Uyghur Islamic extremist organisation founded in Western China with the aim to establish an independent state called East Turkestan in the place of Xinjiang.
China shares a small border with Afghanistan called the Wakhan Corridor that is just 210 km long and between 20 km and 60 km wide. While the length of the border may appear insignificant, its location is what makes Wakhan crucial in geopolitics.
The Wakhan Corridor links China's restive Xinjiang province with Afghanistan's Badakshan province, with Tajikistan to the north and Pakistan's Khyber Pakthunkhwa and Kashmir to the south. The mountainous terrain in the region had made the Wakhan Corridor a difficult place for building road networks.
However, its location is crucial for the security and viability of the China-Pakistan Economic Corridor (CPEC), a key part of China's larger Belt Road Initiative (BRI). An article by Australia's Lowy Institute explained the significance of Wakhan as "The port of Gwadar in Pakistan marks the beginning of this corridor (CPEC), and the tip of the Wakhan marks entry point for CPEC into China."
The Wakhan Corridor has been a route used by Uighur militants who are opposed to Chinese rule in Xinjiang. China has previously expressed fears the Taliban-controlled territory could be used by Uighur groups such as the East Turkestan Islamic Movement (ETIM). In fact during his meeting with Baradar, Wang had said, "We hope the Afghan Taliban will make a clean break with all terrorist organisations including ETIM (East Turkestan Islamic Movement) and resolutely and effectively combat them to remove obstacles, play a positive role and create enabling conditions for security, stability, development and cooperation in the region."
Securing the Wakhan Corridor would help China control the activity of Uighur militants, while also ensuring the security of CPEC. Multiple projects linked to CPEC have been attacked in Pakistan in recent years. The CPEC, which is a network of road and rail links, is being built at an estimated cost of $62 billion. CPEC is intended to give China land access to the Arabian Sea, boosting trade prospects to the Middle East, Africa and Europe by cutting travel time.
- Stalled Project
China's economic profile in Afghanistan has been subdued, when compared with its image elsewhere. A report by the US Brookings Institute in 2020 noted, "China’s economic investments in Afghanistan remain small and well below their potential. In 2017, out of its $879 million worth of exports, Afghanistan exported a meagre $2.86 millions of goods to China, a number that has not grown substantially since and is well below Afghanistan’s $411 million exports to India. China, meanwhile, exported $532 million to Afghanistan that year."
After the fall of the Taliban in 2001, one of the key projects China was involved in was to develop a copper mine at Mes Aynak in Logar province. A Chinese company won a 30-year lease in 2008 worth $3.5 billion to develop the mine to extract copper. The mine is believed to have the world's second-largest copper deposit, valued at $50 billion. Progress on the project has been very slow, with the previous Afghan government even mulling legal action against the development consortium. However, the deal with the Chinese consortium remains in effect.
Another Chinese project in Afghanistan that has made little progress is a contract to develop three oilfields in Faryab and Sar-i-Pul. China National Petroleum Corporation (CNPC) won a $400 million bid to drill the oilfields for 25 years in 2011. The Brookings Institute report noted, "Chinese government officials and experts on Afghanistan have confessed that China sought those bids simply to pre-empt other countries from gaining the concessions, while expecting full well it would not start developing its concessions for years to come due to insecurity and the corruption of the Afghan government.
The return to power of the Taliban may well prove a catalyst to boost these projects. Then, there are prospects of future projects.
Current Affairs: How to read the Q1 GDP data | September Explained
UPSC Syllabus: Prelims: Indian Economy
Sub Theme: GDP and GVA data | UPSC
Recently the Ministry of Statistics and Programme Implementation (MoSPI) released the GDP data for the first quarter of the current financial year (2021-22).
Each year, the MoSPI releases four quarterly GDP data updates and these help observers assess the current health of the Indian economy.
What data do these updates contain?
Each such release provides data for two variables — one tracks the total demand in the economy and the other the total supply.
The first is GDP, which is the total monetary value of final goods and services — that is, those that are bought by the final user — produced in a country in a given period of time (in this case a quarter). In other words, it measures the value of total output in the economy by tracking the total demand.
The other is Gross Value Added or GVA. It looks at how much value was added (in money terms) in different productive sectors of the economy. As such, it tracks the total output in the economy by looking at the total supply.
On the face of it, the total output should be the same but every economy has a government, which imposes taxes and also provides subsidies.
As such, GDP is “derived” by taking the GVA data and adding the taxes on different products and then subtracting all the subsidies on products. In other words,
GDP = (GVA) + (Taxes earned by the government) — (Subsidies provided by the government)
As explained, the difference between these two absolute values will provide a sense of the role the government played. As a thumb rule, if the government earned more from taxes than what it spent on subsidies, GDP will be higher than GVA. If, on the other hand, the government provided subsidies in excess of its tax revenues, the absolute level of GVA would be higher than the absolute level of GDP.
And what do the latest data show?
The data showed that in Q1 of 2021-22, India’s GDP grew by 20.1% while the GVA grew by 18.8%. These are year-on-year comparisons; in other words, the total output (as measured by GDP) of the Indian economy in the first three months of the current financial year (April, May and June) was 20.1% more than the total output created by the economy in the same months last year. The total output, as measured by GVA, grew by 18.1% YoY.
It is important to remember that GDP and GVA had contracted by 24.4% and 22.4%, respectively, in Q1 of the last financial year.
Has India registered a V-shaped recovery?
No. There is a difference between an economy benefiting from a “low base effect” and one registering a V-shaped recovery. A V-shaped recovery requires the absolute GDP of an economy getting back to the level before the crisis.
The total GDP and the total GVA are shown in the tables. India’s total output in Q1, whether measured through GDP or GVA, is nowhere near what it was in Q1 of 2019-20 (the year before the pandemic struck). In fact, both variables suggest India’s output levels are closer to 2017-18 levels. In other words, India produced the same amount of goods and services in Q1 this year as it produced in Q1 four years ago.
The lofty increases in GDP and GVA are in percentage terms, and while they look good and should not be scoffed at, they are for the most part a statistical illusion created by the very low base set by the complete nationwide lockdown in Q1 of last year.
It is for this reason that Aditi Nayar, Chief Economist, ICRA (a rating agency), states, “the sharp YoY expansion in Q1 FY2022 is analytically misleading with a sequential slowdown of 16.9% over Q4 FY2021 and a shortfall of 9.2% relative to the pre-Covid level of Q1 FY2020”.
Here’s another way to understand what is happening. Imagine that the GDP in Q1 of 2019-20 was Rs 100. Then it fell by 24% in Q1 of 2020-21 to be Rs 76. Then in Q1 of current financial year the GDP rose by 20% to become Rs 91. As such, even though the GDP has risen 20% in percentage terms, the actual output is Rs 9 lower than it was two years ago. Add to that the loss of two full years of growth that would have happened were it not for the pandemic.
If we compare quarter-on-quarter growth — Q1 FY22 to Q4 FY21 — then the GDP contracted by almost 17%.
It is for these reasons that in times of massive crises, it is always better to look at the absolute levels of output to correcting assess the state of an economy’s health. Percentage changes work well in normal times.
What do the sub-components of GDP tell us about the state of the economy?
The GDP data show what is happening to the four engines of economic growth in any economy. In India’s context, the biggest engine is consumption (C) demand from private individuals. This demand typically accounts for 56% of all GDP; technically called “Private Final Consumption Expenditure” or PFCE. The second-biggest engine is the investment (I) demand generated by private sector businesses. This accounts for 32% of all GDP in India; technically called Gross Fixed Capital Formation or GFCF. The third engine is the demand for goods and services generated by the government (G). This demand accounts for 11% of India’s GDP, and is called “Government Final Consumption Expenditure (GFCE)”. The fourth engine is the demand created by “Net Exports” (NX). This is arrived at by subtracting the demand Indians have for foreign goods (that is, India’s imports) from the demand that foreigners have for Indian goods and services (that is, India’s exports). Since India typically imports more than it exports, it is the smallest engine of GDP growth; it is often negative.
So, GDP = C + I + G + NX
As the Table on GDP data shows, private demand, the biggest engine of growth, in Q1 of the current year was down to almost exactly the level where it was in 2017-18.
This is the most important variable and the most worrisome one as well. That’s because unless demand from private individuals increases, business will not be enthused to invest more. It is no surprise to find that the second biggest engine — investments or GFCF — is languishing at 2018-19 levels.
The government’s strategy has been to revive growth by stimulating private sector investments. To this end, the government has given tax breaks and other incentives to existing companies owners and new entrepreneurs. But unless private consumption demand rises, this strategy is unlikely to bear fruit.
It is also noteworthy that government expenditures (GFCE) have actually fallen below last year’s levels. This could be a drag on future growth. At a time when all other sectors are struggling to create demand, the government is expected to resort to what is called a “counter-cyclical” fiscal policy and spend more than usual.
What do the GVA data say about the economy?
They tell us which specific sectors are doing well and which are struggling to add value.
The first check is whether the GVA of a sector in Q1 was more than in 2019-20. As things stand, only two sectors — Agriculture etc. and Electricity and other utilities — have managed to grow more than they did in 2019-20.
But the most worrisome bit is that the GVA of ‘Trade, Hotels, Transport, Communication & Services related to Broadcasting’ and ‘Construction’ is less than what it was even in 2017-18. These are two sectors that created lots of jobs for both unskilled and skilled workers in the past, and their weakness implies weak higher unemployment levels. The former in particular is the sector that has most of the contact services. From a policy perspective, a recovery here requires fuller levels of vaccination and improved public confidence.
Current Affairs: Delhi High Courts observation on the “Right to be forgotten”| September Explained
UPSC Syllabus: Mains: GS-II: Polity & Governance
Sub Theme: Right to be forgotten | UPSC
Context: Delhi High Court while recognising the right to be forgotten has ordered removing one of its own judgments from a leading database platform and search engines as persons should not be perpetually stigmatized for past conduct. The Court has also ordered the database platform to block the judgment from being accessed by search engines. The High Court recognised that the petitioner may have a right to be forgotten, which must be balanced with the right of the public to access courts of record. Right to be forgotten was recognised as part of right to privacy in the Supreme Court Judgment of K.S. Puttaswamy v Union of India.
Important Terms Defined in the Personal Data Protection Bill, 2019
Case of Google in ECJ
- European Court of Justice (ECJ) has ruled that Google does not have to apply the right to be forgotten globally but only in European Union Countries. It means that Google has to remove links from its search results only in Europe after receiving an appropriate request. This ruling was a result of a dispute between Goggle and the French Privacy Regulator.
- The idea is to hide sensitive information (eg. committing criminal offence) if the details are found to be inadequate, irrelevant or no longer necessary.
- ECJ held that delistings must be accompanied by measures which effectively prevent or, at the very least, seriously discourage an internet user from being able to access the results from one of Google's non-EU sites.
Right to be Forgotten under EUGDPR
- It entitles the data subject to have the data controller erase their personal data, cease further dissemination of their data and have third parties halt processing of their data.
- The conditions for removal of data –
- Data is no longer relevant to original purposes for processing or
- Data subject withdrawing their consent.
- Right to be forgotten also requires data controllers to compare the subjects’ rights to “the public interest in the availability of the data” when considering such requests for data removal.
Right to be Forgotten under Personal Data Protection Bill, 2019 – Section 20
- The data principal shall have the right to restrict or prevent the continuing disclosure of his personal data by a data fiduciary where such disclosure –
- has served the purpose for which it was collected or is no longer necessary for the purpose;
- was made with the consent of the data principal and such consent has since been withdrawn;
- was made contrary to the provisions of this Act or any other law for the time being in force.
- Right to be forgotten under Bill can be enforced by an Adjudicating Officer when an application in that behalf is submitted by the data principal.
- Data Principal must show that disclosure of such personal information overrides the right to freedom of speech and expression and the right to information of any other citizen.
The Adjudicating Officer while making an order under “Right to be forgotten” must consider the following aspects:
- Sensitivity of the personal data,
- Scale of disclosure and the degree of accessibility sought to be restricted or prevented,
- Role of the data principal in public life,
- relevance of the personal data to the public,
- Nature of the disclosure and of the activities of the data fiduciary, particularly whether the data fiduciary systematically facilitates access to personal data and whether the activities shall be significantly impeded if disclosures of the relevant nature were to be restricted or prevented.
(The Order given by Adjudicating Officer can be reviewed if it is challenged)