GS Paper II: International Relations
Q. Organisation of Islamic Cooperation (OIC) is a toothless tiger when it comes to dealing with tensions among members especially between India and Pakistan over Kashmir issue, so discuss the role of OIC for India.
Pakistan has always used Organisation of Islamic Cooperation (OIC) as a platform to gather support on the Kashmir conflict against India. In light of this statement, what is the significance of OIC for India?
Organisation of Islamic Cooperation (OIC) is generally supportive of Pakistan’s stand on Kashmir. Discuss the importance for India to use the forum that could shore up New Delhi’s interests.
  • On August 5, 2019, the Government of India revoked the special status granted under Article 370 of the Indian Constitution to the erstwhile state of Jammu and Kashmir.
  • The 45th session of Organisation of Islamic Cooperation (OIC)   () had a very strong statement on this event which "condemned" India and supported third-party intervention and self-determination.  
  • India has hit out at the OIC for making factually incorrect and unwarranted references to Jammu and Kashmir.
  • It is the second largest organization after the United Nations with a membership of 57 states spread over four continents. The Organization is the collective voice of the Muslim world.
  • It endeavors to safeguard and protect the interests of the Muslim world in the spirit of promoting international peace and harmony among various people of the world.
OIC’s stand on Kashmir
  • OIC supports of Pakistan’s stand on Kashmir and has issued statements criticizing India.
  • Pakistan lobbied with the OIC for their condemnation regarding India revoked Article 370 in Kashmir. But Saudi Arabia and the UAE — both top leaders among the Muslim countries — issued nuanced statements, and were not as harshly critical of India as Pakistan had hoped. Since then, only a handful of Islamic countries — Turkey and Malaysia — publicly criticised India.
  • India has good relations with almost all member nations. Ties with the UAE and Saudi Arabia, especially, have looked up significantly in recent years.
India’s response
  • J&K is an integral part of India and is a matter strictly internal to India.
  • It has maintained its “consistent and well known” stand that the OIC had no locus standi.
  • India went a step ahead and said the grouping continues to allow itself to be used by a certain country “which has a record on religious tolerance, radicalism and persecution of minorities”.
Significance of OIC for India
  • India had more than 10% of the world’s Muslims. Bangladesh proposed that India be given the Observer status, but Pakistan opposed the proposal.
  • Hence, this shows that India has good foreign relations with almost all members of OIC except Pakistan and it is seen as a significant diplomatic advantage for New Delhi.
  • OIC also signals India's improved ties with both Saudi and the UAE, and the Gulf region as a whole. It indicates their desire to go beyond the bilateral ties and forge a true multifaceted partnership at the multilateral and international level.
Way Ahead
  • India now sees the duality of the OIC untenable, since many of these countries have good bilateral ties and convey to India to ignore OIC statements.
  • But these countries sign off on the joint statements which are largely drafted by Pakistan.
  • South Block feels it is important to challenge the double-speak since Pakistan’s campaign and currency on the Kashmir issue has hardly any takers in the international community.
  • OIC is a toothless tiger when it comes to dealing with tensions among member states. Since every member has veto power on its stand, nothing serious can be said, let alone done, about the many serious disputes between the member states that are now shaping the geo-politics.
  • Consensus-building for India’s entry in the grouping without Pakistan’s support is inconceivable. Thus, it remains in India’s interest to engage positively with Pakistan on this issue and collectively work for the ideals to which the OIC is committed.
GS Paper III: Indian Economy
Q1.  COVID-19 pandemic has to lead to economic disruption in the Indian economy so there is a high time to establish synergy between fiscal and monetary policy to bring holistic reforms. Discuss
In the wake of global anthropological shock COVID-19 pandemic, a sharp slowdown in economic growth and employment prospects is evident in the Indian economy. In light of this statement, what monetary and fiscal policy can be brought to ensure economic stability, growth and development?
  • With the onset of the COVID-19 pandemic, India’s macro parameters have been thrown out of gear. It is time to reconsider India’s macro policy frameworks, not just in the light of their experienced weaknesses but also in view of India’s future needs and compulsions.
  • High fiscal deficit leads to more market borrowing by the governments. This results in crowding out of the private investment.
  • Government-determined purchase prices of agri-commodities through MSP, government subsidy levels on fuels and imperfections in agricultural markets, hinders the functioning of monetary policy. This creates a problem of non-coherence between the two policies.
  • New challenges also emanate from the evolution of cryptocurrency.
Coordination between Fiscal Policy and Monetary Policy
  • Any of these alone policy cannot deliver on inflation and growth.
  • It would be far better served to focus on bringing down fiscal deficit, if the government of India truly wants to reduce lending rates in a meaningful and sustained manner.
  • Separating debt management from monetary management in order to make the central bank more independent would be a good move.
  • COVID-19 pandemic has to lead to economic disruption in the Indian economy. However, it also provides an opportunity to carry out much need economic reforms. Establishing synergy between Fiscal and monetary policy can be a right step in pursuit of bringing holistic reforms.
  • The economic impact of the COVID-19 pandemic and economic trends preceding it have highlighted certain infirmities and inconsistencies in India’s macro policy frameworks as consisting of fiscal and monetary policy frameworks.
  • These need to be recast and supplemented with an institutional framework such as the setting up of a Macro Policy Coordination Council which can coordinate between monetary and fiscal authorities. This become more relevant when we consider India’s contemporary economic challenges in the backdrop of the evolving global situation.
India’s unemployment challenge lies in its failure in not expanding formal and informal sector jobs. Comment.
Unemployment had grown tremendously is increasing so what measures should be taken to aid labour intensive industries?
  • The spectre of unemployment is stalking the country. After the pandemic broke out and the hasty lockdown followed, millions lost their jobs in industry, small businesses, service sector and, above all, in informal sector.
  • Even prior to the COVID-19 pandemic lockdown, unemployment had grown tremendously. Demonetisation and the implementation of the GST had affected petty producers and small enterprises leading to a steep rise in unemployment.
  • The Government has to play a very active role in creating jobs because India is faced with high unemployment rate of 7.3 percent. The results of 2200 companies reveal that there has been no increase in net sales or profits in Q3.
Steps to be taken
  • First and foremost, demand has to be revved up. There has to be an increase in government expenditure in labour intensive industries both in formal and informal sectors of Indian economy and it cannot just rely on monetary policy through interest rate cuts to stimulate demand.
  • Formalisation, urbanisation, industrialisation and improving human capital are the only ways to tackle our job problem.
  • According to popular Cambridge economist J.M. Keynes, at such times, it is better that people are employed to dig holes and fill them up than remain jobless.
  • Jobs will give money in the hands of people like daily wage labourers in construction work and their spending, though meagre, will increase. The construction industry is facing many problems like cost overruns which has slowed it down.
  • The Government has committed a huge amount for infrastructure projects and if they take off in a timely manner, jobs will be created.
  • Educational expansion affects the unemployment debate by decreasing the unemployment statistics and by creating greater competition for well-paid jobs among a rising population of educated youth.
  • Rising prosperity allows young graduates to wait for well-paying jobs, creating an army of educated unemployed, before being forced to accept any work, frequently returning to family farms or starting small shops.

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