The Explainer - The Citizenship Amendment Act

 The Citizenship Amendment Act will be implemented before the Lok Sabha elections take place in May this year.

 Ever since it was brought out in 2019, the CAA has become a become a rallying point for the BJP's detractors across the political and non-political spectrum. 

The liberal cabal, also called the ‘secular brigade’, has accused the Modi Government of seeking to disenfranchise the Indian Muslims through the CAA. 

 Is this accusation true?

Highlights of the CAA

I have compiled the most important provisions of the Citizenship Amendment Act, 2019, which is an act further to amend the Citizenship Act, 1955. 

• Persons belonging to the religious minorities of Hinduism (Hindu), Jainism (Jain), Sikhism (Sikh), Buddhism (Buddhist), Zoroastrianism (Parsi), and Christianity (Christian) in the Islamic nations of Afghanistan, Pakistan, and Bangladesh and who entered India on or before 31 December 2014 will not be treated as illegal migrants.
  
  
• Such persons shall be deemed to be citizens of India from the date of their entry into India.
   
• Under the Citizenship Act, 1955, the most important requirement for citizenship by naturalization is that the applicant must have resided in India during the last 12 months, and for 11 years of the previous 14 years. The CAA relaxes this 11-year requirement to six years for persons belonging to the above-mentioned religions and the three countries.

As you see, there is nothing anti-Muslim here. Also, it has nothing to do with Indian citizens.

A Muslim from any country, including from Afghanistan, Pakistan, and Bangladesh, can apply for Indian citizenship. However, she will have to come through the normal process, and not through the expedited process that will be available to non-Muslims from these countries.

The three countries of Afghanistan, Bangladesh, and Pakistan have been explicitly mentioned because they are avowedly Muslim, with Islam as the state religion. It is an open secret that the persons from the religious minorities (Hindu, Christian, Jain, Buddhist, and Parsi) are greatly discriminated against, persecuted in every way possible, and denied basic freedoms.

In these three Islamic nations, forced conversions to Islam are an ugly fact of life while blasphemy laws are routinely used to harass and intimidate religious minorities in these countries.

At the time the CAA was passed, the BJP has been greatly lacking in ‘communication’. The party has several effective public speakers, yet they failed miserably in communicating to the Indian public, especially Muslims, that the CAA has nothing to do with Indian citizens.

This time around, the BJP has mounted an aggressive campaign to drive home the precise point that Indian Muslims have nothing to fear from the CAA. 

The Yom Kippur War of 1973 - A Quick Note

The fourth and last Quick Note focuses on the Yom Kippur War of 1973 (the Fourth Arab-Israeli War). As mentioned earlier, the Quick Notes series reflects, for the sake of brevity, an 'overview' of this most significant West Asian conflict.

When: 6–25 October 1973

What happened: Coalition of Arab Muslim nations, led by Egypt & Syria launched attack on Israel on the Yom Kippur holy day (6 October); Israel beat back the invasion. Israel reached within 100 km of Egyptian capital, Cairo, and within 32 km of Syrian capital, Damascus.

Outcomes: 
(a) Israel, though victorious, chose to take the diplomacy route to build lasting peace with the Arab Muslim states in its neighbourhood.

(b) Israel and Egypt signed the Camp David Accords in 1978 and later the 1979 Egyptian–Israeli peace treaty, which led to significant outcomes: Egypt became the first Muslim nation to recognize the State of Israel while Israel relinquished its occupation of the Sinai Peninsula which it taken in the 1967 Six–Day War.

 

The Six-Day War (Third Arab–Israeli War) - A Quick Note

The third Quick Note  focuses on the Six-Day War, also called the Third Arab–Israeli War. As mentioned earlier, the Quick Notes series reflects, for the sake of brevity, an 'overview' of this most significant West Asian conflict.

When: 5–10 June 1967

What happened: Coalition of Arab Muslim nations, comprising Egypt, Jordan, Syria and Iraq attacked Israel; however, Israel trounced the Arab Muslim nations by occupying the following: Golan Heights (from Syria), West Bank & East Jerusalem (from Jordan), Gaza Strip and Sinai Peninsula (from Egypt).

Outcomes: 
(a) The myth of the Arab Muslim unity was forever broken.

(b) Around 21,000 Arab Muslims and 1,000 Israelis were killed in the war.

(c) Egypt closed the Suez Canal till 1975. This blockade led to a disruption in oil and gas supply, leading to the energy crisis, including the Oil Shock of 1973.

(Map from here)

The Second Arab–Israeli War (Suez Crisis) - A Quick Note

The second Quick Note focuses on the Second Arab–Israeli War (also called the Suez Crisis). As mentioned earlier, the Quick Notes series reflects, for the sake of brevity, an 'overview' of this most significant West Asian conflict.

(Strait is a narrow channel of water that separates two land bodies; example: Palk Strait separates India and Sri Lanka.)

When: 29 October 1956–7 November 1956

What happened: Egypt nationalized the Suez Canal in 1956; the United Kingdom and France encouraged Israel to attack Egypt to regain control of the important waterway. Israel’s main goal was to reopen the blocked Straits of Tiran, which was strategically important for it. Israel attacked and occupied the Gaza Strip and Sinai Peninsula, both belonging to Egypt.

Outcomes: 
(a) Under intense pressure from the United States, the Soviet Union, and the United Nations, the United Kingdom and France retreated from the war.

(b) Israel scored an important strategic victory as it lifted the blockade to the Straits of Tiran. 

(Map from here)

The First Arab–Israeli War of 1948 - A Quick Note

In a series of four Quick Notes, I will bring to you the major wars fought between Israel and the Arab Muslim World. It is always difficult to simplify very complex issues like the Israel–Palestine conflict. However, the Quick Notes series reflects, for the sake of brevity, an 'overview' of this most significant West Asian conflict. 

In 1947, the UN Partition Plan delineated the formation of two states: an independent Arab State and a separate Jewish State. 

When: 15 May 1948–10 March 1949

What happened:
Israel declared the formation of the world's first Jewish State on 14 May 1948.

The next day, a coalition of Arab Muslim nations, comprising Egypt, Palestinian Protectorate, Syria, Iraq, Lebanon, Transjordan, and Yemen invaded the newly formed Jewish State with the avowed aim of expelling the Jews and destroying the State of Israel.

Outcomes:
(a) Israel defeated the coalition of Arab Muslim nations, expanded its territory by 60% by capturing the territory given to Palestine under the 1947 UN Partition Plan.

(b) The 1949 Armistice Agreements, which established the armistice lines between Israel and its neighbours, also known as the Green Line, was signed (see the map).

(c) Egypt occupied the Gaza Strip while Jordan occupied the West Bank and East Jerusalem. 

The Arab Muslim nations failed utterly in achieving their goals. To their misery, they lost 60% of the land allotted to Palestine under the UN Partition Plan to Israel.

The reader should note that this massive defeat did help bring the Arab Muslim nations together under the banner of Pan-Arabism.  

Also, it was the Arab Muslim nations which occupied the three territories (Egypt, West Bank, and East Jerusalem) which make up today's Palestine.

(Map from here)

If Hamas Goes, Iran will be the 'Biggest Loser'

Israel's aerial blitzkrieg against Hamas is unrelenting even as it is getting ready to launch a full-scale ground assault in Gaza with a single goal: put Hamas out of existence by taking out its top leadership and destroying its massive arms and ammunition. 

If Hamas Goes, Iran will Lose Big Time
I believe that the biggest loser in the current West Asian situation is Iran. The daily threats and warnings emanating from Tehran mean nothing; the Clerics in Tehran may threaten Israel with doomsday rhetoric – but it is just that.

Tehran will not participate directly in the ongoing Israel–Hamas War. Tehran is beset by several handicaps: an economy in doldrums, widespread prevalence of unemployment, especially among the youth, rising domestic dissent for funding various actors in Syria (President Bashar Al-Assad), Iraq (a Shia dominant country and purportedly a playground for Iran’s strategic play), Lebanon (Hezbollah), Yemen (Houthi), and Palestine (Hamas).

Iran hates Israel more than it loves Hamas. For Tehran, Hamas is just a shoulder from which it fires at its archenemy Israel. However, if Israel takes down the top leadership of Hamas and destroys its sizeable weapons arsenal in the Gaza Strip, Iran may lose its political and military influence in Palestine and its voice in advocating the Palestinian cause in the wider Islamic world.

Tehran’s most powerful external militia arm is Hezbollah. Though militarily powerful, Hezbollah’s home country, Lebanon, is in political and economic ruin. If Hezbollah launches a full-scale attack against Israel, it may stretch the Israeli military on two fronts—along the Gaza Strip and the Lebanese border—but this will invite a heavy reprisal from Israel. There is a great deal of anger among the beleaguered Lebanese against any military action by Hezbollah against Israel. To me, two things confirm the idea that Hezbollah looks like it is paying attention to the ground situation in its home country: it has launched very few rockets against Israeli targets and the top leadership of Hezbollah, led by Hassan Nasrallah, has been eerily silent ever since the Israel–Hamas war broke out.

(To be concluded.)

Eco Basics: Dangerous Effects of High Fiscal Deficit

This post will focus on the negative consequences of a high Fiscal Deficit.

Before that, let me address a pertinent question: Where does the Government of India borrow from?

The three major sources of borrowing for the Government of India are (a) RBI, (b) foreign lenders (sovereign governments and international organizations like IMF and World Bank), and (c) from the general public of our country.

Contrary to popular perception, the Government of India borrows most from the general public, through the issue of bonds (pretty much like fixed deposits).

What are the adverse consequences of Fiscal Deficit?

A high Fiscal Deficit is bad for the general state of the economy, foreign trade balance, and currency exchange rate.

Rising Interest Rates

A high Fiscal Deficit means the Government of India’s (GOI, or just government) borrowings are high. When the government borrows money from the general public, it creates demand for money. 

Lending to government carries zero risk, as the government would not default on repayment (it has not defaulted till date!). However, greater government borrowing would mean less money is available for lending to industrial and other sectors of the economy. This would push up interest rates for the borrowers from the industry and other sectors of the economy.

Reduced Business & Economic Activity

Higher interest rates would add to overall cost of production, thereby increasing the cost of operations. This in turn would render business activity, like increased production and expanding operations, unviable. Hence, a lot of businesspersons would opt out of such economic activity as they no longer find it profitable.

Reduced Income & Employment Generation

If due to higher interest rates businesspersons opt out of economic activity (or close down plants), it would lead to reduction in employment generation. This would in turn mean that the retrenched (those thrown out of jobs) and the unemployed do not earn income, thus reducing their purchasing power.

If purchasing power goes down, then their aggregate demand for goods and services would also go down. This in turn would also reduce industrial activity, thereby depressing overall economic scenario.

Lowers Exchange Rate & Increases Trade Deficit

Sometimes the government of India would borrow from foreign sources. When the government is lent money, foreign exchange comes into the economy. This would increase the supply of the foreign currency, which in turn would be exchanged for the Indian rupee.

The rise in demand for the Indian currency would increase its value. Simply put, as foreign entities begin to exchange their currency for Indian rupee, the value of the Indian rupee will also increase.

For example, the exchange value of the Indian rupee for each U.S. dollar is ₹72. In this scenario, let’s say, when a foreign entity is exchanging its currency for Indian rupee in large volumes, the exchange value may fall to ₹70 per U.S. dollar.

This means that while earlier one U.S. dollar would have fetched ₹72, now it would fetch only ₹70. This would hurt exports and encourage imports. 

How?

As an importer, in the past, you were paying ₹72 per U.S dollar of import while now you are paying only ₹70. This means that your cost of operations would also fall.

However, if you are an exporter, then this would mean that you would earn less from your exports; like earlier you were earning ₹72 for every U.S. dollar of export, it is only ₹70!

If exports go down and imports go up, the country's trade deficit would rise. 

Also, high borrowings now would mean that the country's financial position becomes precarious as it piles higher debt and interest burden on future generations. 

In short, a high Fiscal Deficit is dangerous in every way possible: for general economic activity, employment generation, exchange rate, and trade balance.