GLOBAL SOUTH
1. Context
As India assumed the presidency of the G20 group of countries for 2022 to 2023, Indian External Affairs Minister S Jaishankar said that the country would be the “voice of the Global South, which is otherwise under-represented in such forums.
The term has since been used multiple times, such as ongoing global conflicts, “polarisation may occur elsewhere, the people who suffer most are the Global South”.
‘Global North’ refers loosely to countries like the US, Canada, Europe, Russia, Australia and New Zealand, while ‘Global South’ includes countries in Asia, Africa and South America.
2. The need for the ‘Global North’ and the ‘Global South
- For a long time in the study of international political systems, the method of categorising countries into broad categories for easier analysis has existed.
- The concepts of ‘East’ and ‘West’ is one example of this, with the Western countries generally signifying greater levels of economic development and prosperity among their people and Eastern countries are considered as being in the process of that transition.
- Another similar categorisation is of First World, Second World and Third World countries, referring to countries associated with the Cold war-era alliances of the US, the USSR, and non-aligned countries, respectively.
- At the centre of these concepts is the World Systems approach introduced by sociologist Immanuel Wallerstein in 1974, emphasising an interconnected perspective of looking at world politics.
- He said there are three major zones of production: core, peripheral and semiperipheral.
- The core zones reap profits, being the owners of cutting-edge technologies in countries like the US or Japan.
- Peripheral zones, on the other hand, engage in less sophisticated production that is more labour-intensive. In the middle are countries like India and Brazil.
3. The need for new terms
- In the Post-Cold War world, the First World/Third World classification was no longer feasible, because when the Communist USSR disintegrated in 1991, most countries had no choice but to ally at some level with the capitalist US the only remaining global superpower.
- Other classifiers have also seen criticism. The East/West binary was seen as often
perpetuating stereotypical thinking about African and Asian countries. - Categorising incredibly diverse countries into a monolith was felt to be too simplistic.
Also, the idea that some countries were ‘developed’ while others were not was thought to be too wide a classification, inadequate for accurately discussing concerns.
| Writing in 2014 from the perspective of his organisation’s philanthropic activities, Bill Gates said of the ‘developing’ tag, “Any category that lumps China and the Democratic Republic of Congo together confuses more than it clarifies. Some so-called developing countries have come so far that it’s fair to say they have developed. A handful of failed states are hardly developing at all. Most countries are somewhere in the middle.” |
4. Importance of Global South
- What sets the terms Global North and South apart are that first, they are arguably more accurate in grouping like countries together, measuring similarly in terms of wealth, indicators of education and healthcare, etc.
- Another commonality between the South countries is that most have a history of colonisation, largely at the hands of European powers.
- Secondly, this classification trains more focus on the Global South. When leaders such as Jaishankar mentioned, they are also pointing to the region’s historical exclusion from prominent international organisations such as the permanent members of the United Nations Security Council.
- As bodies like the UN and the IMF are involved in major decision-making that affects the world in terms of politics, economy and society, the exclusion is seen by these countries as contributing to their slower growth.
- As a result, the idea that the South can together advocate for common causes has
come up, as underlined by the External Affairs Minister.
| Interestingly, when Jaishankar criticised the expectation of India to take a stance on the Ukraine war and rebuke Russia in June this year, China’s state-owned newspaper Global Times praised the comments. This is where the idea of ‘SouthSouth’ cooperation comes in. |
- Why the concept is being reiterated now partly because of the economic emergence of some of these South countries, such as India and China, in the last few decades.
- Many consider the world to now be multipolar rather than one where the US alone dominates international affairs.
- The progress achieved by many Asian countries is also seen as challenging the idea that the North is ideal.
- As Samuel P Huntington wrote in his 1996 book ‘The Class of Civilizations and the Remaking of Global Order, “East Asians attribute their dramatic economic development not to their import of Western culture but rather to their adherence to their own culture.”
5. Criticism of the classification
- Some of the earlier terms’ criticisms apply here, too, such as the argument that the term is too broad.
- In the ongoing debate about North countries paying for funding green energy, having historically contributed to higher carbon emissions, many in the Global North have objected to China and India’s exclusion from this, given their increasing industrialisation.
- There is also the question of whether the South simply aims to replace the North and the positions it occupies, again continuing a cycle in which a few countries accumulate crucial resources.
- Much controversy currently surrounds the question of whether elites of the global South and ‘rising powers’ genuinely have the intention to challenge the dominant structures of global capitalist development.
- In the rise of Asia, the continued neglect of Africa has been questioned as well.
- China is increasingly making inroads here through the Belt and Road Initiative for developing infrastructure.
- But whether that results in a win-win situation for both parties or focuses on profit for only China remains to be seen.
For Prelims & Mains
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For Prelims: G20, Global South, Global North, Cold war, Post-Cold War, UNSC, UN, IMF, Russia and Ukraine War, SouthSouth Cooperation
For Mains:
1. What is Global South? Discuss the significance and impact of Global South in India. (250 Words)
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Previous Year Questions
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For Prelims
1. In which one of the following groups are all the four countries members of G20? (UPSC 2020) (a) Argentina, Mexico, South Africa and Turkey 1. Ans: (a) For Mains
1. “The broader aims and objectives of WTO are to manage and promote international trade in the era of globalization. But the Doha round of negotiations seem doomed due to differences between the developed and the developing countries.” Discuss in the Indian perspective. ( UPSC 2016)
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Source: The Indian Express
ANTICIPATORY BAIL
1. Context
The Supreme Court agreed to hear a petition filed by the Karnataka Lokayukta, a state body empowered to deal with corruption complaints against public servants, challenging a Karnataka High Court order granting prearrest bail to the BJP MLA Madal Virupakshappa, who was also serving as the chairman of the Public Sector Undertaking Karnataka Soaps and Detergents
Limited (KSDL).
Limited (KSDL).
2. What is pre-arrest bail?
- Black’s Law Dictionary describes ‘bail’ as procuring “the release of a person from legal custody, by undertaking that he shall appear at the time and place designated and submit himself to the jurisdiction and judgment of the court.”
- Although “bail” has not been expressly defined in Indian statutes, the Code of Criminal Procedure (CrPC) differentiates between “bailable” and “non-bailable” offenses.
- It also defines three kinds of bail that can be granted regular bail under Sections 437 and 439; interim bail or short-term bail which is given when regular or anticipatory bail application is pending before the court; and anticipatory or prearrest bail.
- The provision for “anticipatory bail” was introduced under Section 438 of the CrPC after the 41st Law Commission Report in 1969 recommended the need for a measure that protects against arbitrary violation of one’s personal liberty, such as when politicians detain their opponents in false cases.
3. When can anticipatory bail be granted?
- Anticipatory bail can be granted under Section 438, when “any person has reason to believe that he may be arrested on an accusation of having committed a nonbailable offense”.
- It can be granted by the High Court or the Court of Session, under this section, for non-bailable offenses for which one anticipates arrest, even if the actual arrest has not happened or the FIR has not been registered.
- Non-bailable offenses are more serious offenses, punishable with at least three years imprisonment and above.
- Section 438 was amended in 2005, following which it laid down principles for consideration for the grant of anticipatory bail under subsection such as whether the accused is likely to flee, is a habitual offender, or is likely to tamper with evidence along with his antecedents, such as previously being arrested for a cognizable offense.
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However, since state legislatures are empowered to amend certain provisions of the CrPC, Maharashtra, Odisha and West Bengal follow their own, modified versions of Section 438.
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Uttar Pradesh and Uttarakhand did away with anticipatory bail through the CrPC (UP Amendment) Bill, 1976, during the Emergency.
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In 2019, however, this was reintroduced after then President Ram Nath Kovind approved the CrPC (Uttar Pradesh Amendment) Bill, 2018.
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Similarly, in 2019, the Uttarakhand Assembly passed an amendment Bill seeking to revive Section 438 of the CrPC.
4. What are the conditions for granting anticipatory bail?
While granting anticipatory bail, the Sessions Court or High Court can impose the conditions laid down in sub-section (2) like,
- The person shall make himself available for interrogation by a police officer as and when required.
- The person cannot make any inducement, threat, or promise, directly or indirectly, to any person acquainted with the facts of the case to dissuade him from disclosing them to the court or the police.
- The person shall not leave India without the previous permission of the court.
- Such other conditions may be imposed under sub-section (3) of section 437 “as if the bail were granted under that section”.
5. Types of Bails in India
- Regular Bail: It is a direction given by the Court (any Court within the country) to release a person who is already under arrest and kept in police custody. For such Bail, a person can file an application under Sections 437 and 439 of the CrPC.
- Interim Bail: Bail granted for a temporary and short period by the Court till the application seeking Anticipatory Bail or Regular Bail is pending before a Court.
- Anticipatory Bail: A direction issued to release a person on Bail even before the person is arrested. In this situation, there is an apprehension of arrest and the person is not arrested before the Bail is granted. For such Bail, a person can file an application under Sec. 438 of the Code of Criminal Procedure (CrPC). It is issued only by the Sessions Court and High Court.
6. Significance of Anticipatory Bail
- The reason for the enactment of section 438 in the code was the parliamentary acceptance of the crucial underpinning of personal liberty in a free and democratic country.
- Parliament wished to foster respect for personal liberty and accord primacy to a fundamental tenet of criminal jurisprudence, that everyone is presumed to be innocent till he or she is found guilty.
- Life and liberty are the cherished attributes of every individual. The urge for freedom is natural to each human being.
- In the 1980 Gurbaksh Singh Sibba vs State of Punjab case, a five-judge Supreme court bench led by then Chief Justice Y V Chandrachud ruled that section 438 (1) is to be interpreted in the light of Article 21 of the constitution (Protection of life and personal liberty).
Previous year Questions
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1. With reference to India, consider the following statements: (UPSC 2021)
1. When a prisoner makes out a sufficient case, parole cannot be denied to such prisoner because it becomes a matter of his/her right.
2. State Governments have their own Prisoners Release on Parole Rules.
which of the statements given above is/are correct?
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
Answer: B
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For Prelims & Mains
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For Prelims: Anticipatory bail, Regular Bial, Interim Bail, Code of Criminal Procedure (CrPC), Indian Penal Code (IPC), 41st Law Commission Report in 1969, Sections 437 and 439 of the CrPC, High court, Supreme Court, and Article 21.
For Mains: 1. What is Anticipatory Bail? Discuss the conditions for granting Anticipatory Bail.
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Source: The Indian Express
HOW THE APARTHEID OF SOUTH AFRICA ENDED
1.Context
On March 17, 1992, a referendum on ending apartheid was held in South Africa. While this referendum was restricted to only white voters, there was overwhelming support to end South Africa’s highly discriminatory policies towards its non-white population.
Out of the 2,804,947 valid votes counted, almost 69 per cent voted “Yes” to end the apartheid. Only one out of 15 regions recorded a majority ‘No’ vote Pietersburg in the strongly conservative northern Transvaal and even there it was by 49,820 votes to 37,612
2.Background
- Afrikaans word for “separateness” or “the state of being apart”, the apartheid officially began in 1948
- While in principle, it did not significantly differ from long-standing policies of segregation, it instituted this segregation as law and a “fundamental truth” of South Africa, at a time when progress was being made around the world to address racism
- Classifying citizens into one of four racial groups: black, Indian, coloured (mixed race) and white apartheid made it illegal for South Africans to pursue interracial relations
- It also introduced rigorous segregation according to race, establishing residential and business sections in urban areas for each race
- This led to millions of Black South Africans being forcefully displaced from their homes and confined to tribal homelands (Bantustans) according to ethnicity
- Effectively, over 80 per cent of South African land was owned by the white minority, which comprised around 20 per cent of the total population
- Furthermore, black South Africans were denied political and economic rights, essentially being reduced to cheap labour for the Whites
- These policies were justified within the white population not just with prevailing ideologies of white supremacy, but also by playing into the fears of the white minority
- PW Botha, South Africa’s last pro-apartheid prime minister: “If the principle of permanent residence for the Black man in the area of the white is accepted, then it is the beginning of the end of civilization as we know it in this country,”
3.History of Resistance
- Resistance to racism in South Africa pre-dates apartheid. As far back as the 1880s, the Imbumba ya Manyama (Union of Blacks) was formed, articulating an African identity that transcended tribalism
- However, perhaps the most famous political organisation resisting white domination was the African National Congress (ANC)
- Formed in 1912, it started as a movement led by the elite Blacks to oppose their disenfranchisement post the creation of the Union
- The ANC started off as an organisation which expressed demands through petitions and polite dialogue. But as the oppression got more brutal, their methods changed
- In 1949, the ANC introduced its Programme of Action, supporting strike action, protests and other forms of nonviolent resistance. . Nelson Mandela became an important figure at this time
- In 1952, the Defiance Campaign was started, calling people to break apartheid laws on purpose and offer themselves for arrest
- It was hoped such large-scale defiance would overwhelm government institutions and bring international censure
- In the late 1950s, a group within the ANC, including Mandela, also called upon more violent methods
- However, none of these was able to bring significant concessions for black South Africans Resistance was met with increasing repression
- In Sharpeville in 1960, during a large demonstration, the police opened fire and killed at least 69 black South Africans and wounded many more
- In the aftermath of the massacre, the government declared a state of emergency and arrested more than 18,000 people, including prominent black leaders
- Mandela was arrested in 1962 and sentenced to life imprisonment on charges of sabotage and conspiracy to violently overthrow the government. He had the next 27 years in prison.
- In 1976, students in Soweto took to the streets to protest against the imposition of Afrikaans as the only language of instruction
- Police opened fire on protestors. According to official reports, 23 people were killed, but the number of people who died is usually given as 176, with estimates of up to 700
- The Soweto Uprising was followed by a series of brutal crackdowns on resisting organisations
4. Movement for Multi-racial democracy
- By the 1980s, anti-apartheid forces were largely united around a nonviolent resistance that could achieve maximum participation among non-whites and bring international pressure on the government
- Given the sheer power imbalance military, economic and political between the whites and blacks, this was seen as the only way to bring meaningful change
- Leaders like Archbishop Desmond Tutu became very popular not just among blacks but also among white South Africans during this period
- The latter half of the 1980s saw some of the largest and most impactful protests yet, with mass non-cooperation and strikes organised
- In addition to this, resistors also created alternative community-based institutions – such as community clinics and legal resource centres – to replace discriminatory government institutions
- Through direct confrontation and effective community institution building, by the late 1980s, the South African government had lost significant authority and legitimacy
- This culminated in the 1989 Defiance Campaign with multiracial peace marches across the country, including in Cape Town, Johannesburg and Durban
- De Klerk came to power in 1989. A staunch conservative in his early days, people expected him to continue the apartheid, even as international pressure and internal resistance mounted
- However, in 1990, in a speech to the parliament, de Klerk announced that “the time to negotiate has arrived”
- He lifted bans on political parties such as the ANC, freed thousands of prisoners including Mandela, and lifted the state of emergency that had been imposed amidst rising protests in the 1980s
- On March 17, 1992, a referendum among the white South African population ushered in a new era in South Africa, once and for all
- While systemic disadvantages continue to impact black South Africans, an era of political freedom and legal equality was instituted in 1992
5.Conclusion
It is important to note that while de Klerk is remembered as the man who ushered in the Apartheid’s end, he did it for pragmatic rather than idealistic reasons
In fact, de Klerk has been accused of overseeing some of the most horrific police excesses against protesters during his regime
But years of internal protest, often violent, had ushered in deep divisions in white South Africa, weakening the white commitment to apartheid
Furthermore, international cultural and economic sanctions continued to have a major impact on the country which was also suffering economically
Source:indianexpress
SILICON VALLEY BANK FAILURE
1. Background
- India remained a haven during the global financial crisis triggered by the collapse of investment bank Lehman Brothers in 2008, with domestic banks, backed by sound regulatory practices, showing strength and resilience.
- A decade and a half on, Indian banks remained unaffected by the failure of Silicon Valley Bank (SVB) and Signature Bank in the US last week, despite the global interconnectedness in the financial sector.
- Indian banks, especially the domestic systemically important banks (D-SIBs) that have operations overseas, are in the ear of startups and digitalisation.
- They are truly "Too big to fail" as is often assumed especially as ratings major Moody's issues a fresh warning of more pain ahead for the US banking system after the collapse of SVB.
2. Confidence in the resilience of Indian Banks
- A reason why an SVB-like failure is unlikely in India is that domestic banks have a different balance sheet structure.
- In India, we do not have a system where deposits are withdrawn in bulk quantities.
- Household savings constitute a major part of bank deposits in India this is different from the US, where a large portion of the bank deposits is from corporates.
- A large chunk of Indian deposits is with public sector banks and most of the rest is with very strong private sectors lenders such as HDFC Bank, ICICI Bank and Axis Bank.
Customers need not worry about their savings and the government has always stepped in when banks have faced difficulties. - In banking, confidence is important. You don't need any capital if the trust is 100 per cent and no amount of capital will save you if the trust is lost.
- In India, the approach of the regulator has generally been that depositors' money should be protected at any cost.
- The best example is the rescue of Yes Bank where a lot of liquidity support was provided.
- However, the failure of SVB did trigger nervousness in the stock markets, with bank shares taking a hit and investors losing money in the process.
2.1. ICICI Bank Crisis
- On September 30, 2008, as the benchmark Sensex fell 3.5 per cent to its lowest level in two years and panicked ICICI Bank Customers queued up outside ATMs in certain cities to withdraw their deposits, then Finance Minister P Chidambaram and the regulators SEBI and the RBI stepped in to calm the financial markets.
- Their assurances helped and the market closed 2.1 per cent up.
- In a rate statement, the RBI said the country's largest Private bank (ICICI Bank) was safe and had enough liquidity in its current account with the central bank to meet depositors' requirements.
- The RBI has arranged to provide adequate cash to ICICI Bank to meet the demands of its customers at its branches and ATMs.
- ICICI Bank closed 8.4 per cent higher, rebounding from a two-year low.
3. Classification of D-SIBs
- RBI has classified SBI, ICICI Bank and HDFC Bank as D-SIBs.
- The additional Common Equity Tier 1 (CET 1) requirement for D-SIBs was phased in from April 1, 2016, and became fully effective from April 1, 2019.
- The additional CET 1 requirement was in addition to the capital conservation buffer.
- It means that these banks have to earmark additional capital and provisions to safeguard their operations.
- Under the D-SIB framework announced by RBI on July 22, 2014, the central bank was required, from 2015, to disclose the names of banks designated as D-SIBs and to place them in appropriate buckets depending on their Systemic Importance Scores (SISs).
- Depending on the bucket in which a D-SIB is placed, an additional common equity requirement applies to it.
- Based on data collected from banks as on March 31, 2017, HDFC Bank was classified as a D-SIB along with SBI and ICICI Bank.
The current update is based on data collected from banks as on March 31, 2022.
4. It's not the 2008 financial crisis again
- The Basel, Switzerland-based Financial Stability Board (FSB) an initiative of G20 nations has identified, in consultation with the Basel Committee on Banking Supervision (BCBS) and Swiss national authorities, a list of global systemically important banks (G-SIBs).
- There are 30 G-SIBs currently including JP Morgan, Citibank, HSBC, Bank of America, Bank of China, Barclays, BNP Paribas, Deutsche Bank and Goldman Sachs. No Indian Bank is on the list.
5. RBI's selection of D-SIBs
- The RBI follows a two-step process to assess the systemic importance of banks.
- First, a sample of banks to be assessed for their systemic importance is decided.
- All banks are not considered many smaller banks would be of lower systemic importance and burdening them with onerous data requirements regularly may not be prudent.
- Banks are selected for the computation of systemic importance based on an analysis of their size (based on Basel-III Leverage Ratio Exposure Measure) as a percentage of GDP.
- Banks having a size beyond 2 per cent of GDP will be selected in the sample.
- Once the sample of banks is selected a detailed study to compute their systemic importance is initiated.
- Based on a range of indicators, a composite score of systemic importance is computed for each bank.
- Banks that have systemic importance above a certain threshold are designated as D-SIBs.
- Next, the D-SIBs are segregated into buckets based on their systemic importance scores and subject to a graded loss absorbency capital surcharge, depending on the buckets in which they are placed.
- A D-SIB in the lower bucket will attract a lower capital charge and a D-SIB in the higher bucket will attract a higher capital charge.
6. Importance for the creation of SIBs
- During the 2008 crisis, problems faced by certain large and highly interconnected financial institutions hampered the orderly functioning of the global financial system, which negatively impacted the real economy.
- Government intervention was considered necessary to ensure financial stability in many jurisdictions.
- The cost of public sector intervention and the consequential increase in moral hazard required that future regulatory policies should aim at reducing the probability and the impact of the failure of SIBs.
- In October 2010, the FSB recommended that all member countries should put in place a framework to reduce risks attributable to Systemically Important Financial Institutions (SIFIs) in their jurisdictions.
- SIBs are perceived as banks that are "Too Big To Fail (TBTF) due to which these banks enjoy certain advantages in the funding markets.
- However, this perception creates an expectation of government support at times of distress, which encourages risk-taking, reduces market discipline, creates competitive distortions and increases the probability of distress in the future.
- It is therefore felt that SIBs should be subjected to additional policy measures to guard against systemic risks and moral hazard issues.
- While the Basel-III Norms prescribe a capital adequacy ratio (CAR) of the bank's ratio of capital to risk of 8 per cent, the RBI has been more cautious and mandated a CAR of 9 per cent for scheduled commercial banks and 12 per cent for public sector banks.
7. Need to take precautions
- The failure of a large bank anywhere can have a contagion effect around the world.
- The impairment or failure of a bank will likely cause greater damage to the domestic real economy if its activities constitute a significantly large share of domestic banking activities.
- The impairment or failure of a large bank is also likely to damage confidence in the banking system as a whole.
- As a measure of systemic importance, size is more important than any other indicator and size indicators are assigned greater weight.
- The impairment or failure of one bank could potentially increase the probability of impairment or failure of other banks if there is a high degree of interconnectedness (Contractual obligations) between them.
- This chain effect operates on both sides of the balance sheet there may be interconnections on the funding side as well as the asset side.
- The larger the number of linkages and the size of individual exposures, the greater the potential for the systemic risk to get magnified, which can lead to nervousness in the financial sector.
- The greater the role of a bank as a service provider in the underlying market infrastructure like payment systems, the larger the disruption it is likely to cause in terms of availability and range of services and infrastructure liquidity in case of failure.
- Also, the costs for customers of a failed bank for the same service at another bank would be much higher if the failed bank had a greater market share in providing that particular service.
For Prelims & Mains
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For Prelims: RBI, SEBI, D-SIBs, global financial crisis, Silicon Valley Bank, Too Big To Fail, Basel-III Norms, Systemically Important Financial Institutions,
For Mains:
1. What are ‘Too-Big-To-Fail’ banks? Discuss how Indian banks are safe compared to other country banks. (250 Words)
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Previous year questions
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1. In the context of the Indian economy, ‘Open Market Operations’ refers to (2013)(a) borrowing by scheduled banks from the RBI 1. Ans: (c) 2. In the context of the Indian economy, non-financial debt includes which of the following? (2020) 1. Housing loans owed by households 2. Amounts outstanding on credit cards 3. Treasury bills Select the correct answer using the code given below: (a) 1 only 2. Ans: (d) 3. Consider the following statements: (2018)
Which of the statements given above is/are correct? (a) 1 and 2 only 3. Ans: (c) |
Source: The Indian Express
