Disengagement in progress: Jaishankar
NEWDELHI:EXTERNAL Affairs Minister Subrahmanyam Jaishankar on Saturday described as “work in progress” the “disengagement and de-escalation” process with China in East Ladakh.
Discussing the India-china face-off in Ladakh at India Global Week 2020, organised by India Inc, a Uk-based media house, Jaishankar said the process had been mutually agreed upon and just commenced. “What’s happened is that we have agreed on the need to disengage because the troops on both sides are deployed very close to each other.”
On-ground verification in East Ladakh has shown that Indian and Chinese troops have moved back from positions where they were in an eyeball-to-eyeball confrontation by at least 600 metres at the four stand-off points as well as all along the 1597 km Line of Actual Control in the western sector, top military and diplomatic officials said on condition of anonymity.
According to the officials, the two sides have decided to temporarily halt patrolling at the four friction points, Galwan, Gogra, Hot Springs and Pangong Tso — but without prejudice to their patrolling rights — so that temperatures are reduced on the border and any chance of an accident is avoided. This is not the first time that India and China have agreed to such measures, they pointed out; it was done at Finger 8 in Pangong Tso in 2008 and at Depsang Bulge in 2013 after similar stand-offs were resolved.
The officials denied that there was a buffer zone.
“There is no buffer zone. All we have done is that both sides have withdrawn to rear positions so that no accident or flare-up takes place. The Chinese People’s Liberation Army (PLA) is dismantling structures and moving vehicles back at the stand-off points in daylight to maintain transparency. It also wants Indian troops to move back the same distance as there is trust deficit between the two sides... it only requires a spark to catch fire and undo all the dialogue,” said a senior military commander.
During the third virtual meeting of the Working Mechanism for Consultation and Coordination (WMCC) on border affairs on Friday, India and China said they would push forward efforts aimed at complete disengagement and easing of tensions along the LAC even as differences remained over issues such as Beijing’s
insistence of claiming ownership of Galwan valley.
A date for the meeting of senior military commanders next week is being worked out, and the situation on ground reveals a complete disengagement at Galwan with neither of the forces sitting on or next to the LAC.
Jaishankar also emphasized that there is bipartisan consensus in the US to strengthen the relationship with India. “Think back of the last four US Presidents—donald Trump, Barack Obama, George Bush and Bill Clinton—and you would agree that you cant’ find four people in world less similar .... Yet one thing on which they agreed is importance of India .... Maybe some of it is our charm but I think a lot of it is also their thinking. We have a very strong political, strategic, security, technology, economic cooperation and defence cooperation with United States,” he said. speech on a cautiously optimistic note, saying the financial system was functioning well and the economy had started showing signs of getting back to normalcy after the easing of lockdown restrictions. “It is, however, still uncertain when supply chains will be restored fully; how long will it take for demand conditions to normalise; and what kind of durable effects the pandemic will leave behind on our potential growth.”
The need of the hour is to restore confidence, preserve financial stability, revive growth and recover stronger, he added.
Das said: “While the multipronged approach adopted by the Reserve Bank has provided a cushion from the immediate impact of the pandemic on banks, the medium-term outlook is uncertain and depends on the Covid-19 curve. Policy action for the medium-term would require a careful assessment of how the crisis unfolds. Building buffers and raising capital will be crucial not only to ensure credit flow but also to build resilience in the financial system.”
India’s economy, which was already in the grip of a slowdown when the outbreak began at the end of last year in the central Chinese city of Wuhan and spread rapidly around the world, grew 3.1% in the quarter ended March from a year ago and 4.2% in the full fiscal year.
India’s economy will likely shrink 5% in the year through next March, Goldman Sachs said in a report in the last week of May. The International Monetary Fund has slashed its 2020-21 growth projection for India to 1.9% from 5.8% estimated in January.
“We have recently [19th June and 1st July, 2020] advised all banks, non-deposit taking NBFCS [with an asset size of ₹5,000 crore] and all deposit-taking NBFCS to assess the impact of COVID-19 on their balance sheet, asset quality, liquidity, profitability and capital adequacy for the financial year 2020-21. Based on the outcome of such stress testing, banks and non-banking financial companies have been advised to work out possible mitigating measures including capital planning, capital raising, and contingency liquidity planning, among others. The idea is to ensure continued credit supply to different sectors of the economy and maintain financial stability,” Das said in his speech, a transcript of which was posted on the RBI website.
The growth woes began much before Covid-19 struck. In September 2018, Infrastructure Leasing and Financial Services Ltd, a major lender to all kinds of businesses, defaulted on its debt obligations, triggering a rippling liquidity crisis in the financial services market. Borrowing costs rose sharply.
Private demand began collapsing too.
“The outbreak of Covid-19 pandemic is unambiguously the worst health and economic crisis in the last 100 years during peace time with unprecedented negative consequences for output, jobs and well-being. It has dented the existing world order, global value chains, labour and capital movements across globe and needless to say, the socio-economic conditions of a large section of world population,” Das further added.
RBI has cut its key interest rate by 115 basis points (BPS) since the coronavirus crisis began, having pared it by 135 BPS between February 2019 and the onset of the pandemic. One basis point is one-hundredth of a percentage point.
The liquidity measures announced by RBI since February 2020, after the onset of Covid-19, aggregate to about ₹9.57 lakh crore, equivalent to about 4.7% of the 2019-20 nominal gross domestic product, according to Das, a former civil servant in the central government who was appointed the RBI governor in December 2018 to replace Urjit Patel, who resigned over differences with the government.
“Consistent with this [accommodative] policy stance, liquidity conditions were also kept in ample surplus all through since June 2019. The lagged impact of these measures was about to propel a cyclical turnaround in economic activity when Covid-19 brought with it calamitous misery, endangering both life and livelihood of people,” Das said.
Heading into the pandemic, the financial system was in a much improved position, owing mainly to various regulatory and supervisory initiatives of the Reserve Bank, he said.