25 MARCH 2016
GS III: NUCLEAR SECURITY
Be bold at the Nuclear Summit
Next week, Prime Minister Narendra Modi will be in Washington, DC for the Nuclear Security Summit (NSS), the fourth and the last in a series that was launched by U.S. President Barack Obama in Washington in 2010. Follow-on summits have been held in Seoul and The Hague in 2012 and 2014, respectively. India has played an active role in the process with Prime Minister Manmohan Singh attending the first two summits. A voluntary contribution of a million dollars to the Nuclear Security Fund has been made. More significant has been the initiative for establishment of a Global Centre of Excellence for Nuclear Energy Partnership, which has already conducted more than a dozen national and international courses in relevant fields.
A natural role
India’s profile in the NSS process is natural given our concerns about global terrorism and the growing threat posed by terrorists seeking to acquire weapons of mass destruction. Since 2002, India has been introducing a resolution on terrorism and weapons of mass destruction in the United Nations General Assembly, adopted by consensus every year. It laid the groundwork for the legally binding Security Council Resolution 1540 adopted in 2005. Therefore when President Obama highlighted this threat in his famous Prague speech in 2009 and called upon the international community to ensure the securing of all vulnerable nuclear materials within four years, a positive Indian response was natural.
There is another reason too. Nuclear power today constitutes a small part in India’s electricity generation, but this is due to change. Currently, the twenty nuclear power plants in operation have a capacity of 4.8 GW, out of a total installed power generation capacity of 240 GW. A quarter of India’s population does not have access to electricity and energy poverty has been identified as a major obstacle to economic growth. The Integrated Energy Policy visualises the installed capacity rising to 1200 GW by 2035, with nuclear power contributing 60 GW. This will be 5 per cent, but it is critical in terms of reducing fossil fuel dependence and mitigating the carbon footprint. Any breach in nuclear safety or security that could undermine public confidence in nuclear energy would have grave repercussions on India’s long-term energy planning. For India, therefore, nuclear security is not a new objective, but has always been a priority along with nuclear safety.
Threat of nuclear terrorism
With the emergence of global jihadi threats like al-Qaeda and the Islamic State, nuclear security has taken on additional urgency. Three potential nuclear terrorist threats have been identified. First is the threat of terrorists making or acquiring a nuclear bomb and exploding it; second is the possibility of sabotaging an existing nuclear facility to create an accident; and finally, third is the possibility of use of radioactive material to create a ‘dirty bomb’ or a radiological dispersal device.
The last is often considered the easiest for a suicide squad, given the fact that there are millions of medical devices and other equipment that contain small amounts of radioactive substances (cobalt-60, americium-241, caesium-137) which are widely distributed and do not have the kind of security normally associated with nuclear reactor facilities.Irrespective of the number of fatalities, a dirty bomb can create widespread panic and cost billions in cleaning-up operations. Insider support by a radicalised sympathiser could render a nuclear facility vulnerable to sabotage. It is well established that in the past al-Qaeda has not only considered and pursued all the three options, but also had access to nuclear expertise. Al-Qaeda may have been weakened today but the IS is also known to harbour similar ambitions.
Often there is some confusion in India about our role because nuclear security is neither nuclear disarmament nor non-proliferation, nor is it nuclear safety. This leads some to downplay its significance or suspect that it is a ploy to constrain India’s nuclear programme. Neither perception is correct; in fact, as a responsible nuclear weapon state, it is incumbent on India to ensure that all nuclear materials and facilities (both civilian and military) are subjected to the highest levels of security. Simply put, it would cover preventing unauthorised access to nuclear materials, facilities and technologies; timely detection, were a breach to take place; and finally, effective responses to such acts of terror and sabotage.
Barack Obama’s initiative
President Obama’s initiative relied heavily on his personal outreach to other leaders. Next week, leaders from over fifty countries will be in Washington. Two countries not invited are Iran and DPRK, and this time President Putin will also stay away though this has more to do with differences over Ukraine than over nuclear security. Rather than attempt to negotiate a new treaty, the NSS process has focussed on urging states to tighten national laws, rules and capabilities by using best practices and international cooperation. Establishing global centres of excellence (like the one in India), launching the Nuclear Security Fund, and expanding the activities of the International Atomic Energy Agency’s (IAEA’s) Nuclear Security Training and Support Centres are some of the outcomes.
In concrete terms, about 15 MT of highly enriched uranium (HEU) have been down- blended to low-enriched uranium, a number of reactors using HEU have either been shut down or switched their fuel, 12 countries have given up all HEU, and fuel repatriation to source countries has been accelerated. The biggest achievement has been that the somewhat technical subject of nuclear security has received sustained high-level political attention. However the major drawback of this process is that there is no legally binding outcome at the end of six years.
The big subject for discussion in Washington will be about sustaining the process and political engagement. Since there is no new organisation being set up, three existing institutions are expected to adopt specific action plans. The UN will sustain the political momentum and continue to monitor the implementation of UNSCR 1540; the IAEA will strengthen its database of cases of illicit trafficking of nuclear materials and a Contact Group will be set up in Vienna for follow-up which would include a ministerial-level conference, possibly every two years; and Interpol will act as the nodal agency to deter nuclear smuggling. In addition, the U.S. and Russia will continue to co-chair the Global Initiative to Combat Nuclear Terrorism (GICNT), which is a voluntary grouping of 86 states with working groups on nuclear detection, forensics and mitigation. A G-8 Global Partnership to combat the spread of weapons of mass destruction has been another initiative but clearly what G-8 or GICNT can achieve will depend on political ups and downs between major powers.
An innovative diplomatic practice was the use of ‘house gifts’; in 2010, leaders were encouraged to announce measures to address nuclear security threats at a national or wider level. The concept evolved further to ‘gift baskets’, or joint undertakings by a group of like-minded countries that others were invited to join. Some gifts involved new commitments but some were recycled pledges.
Prime Minister Modi has carried forward the nuclear diplomatic agenda that was begun in 1998: to establish India as a responsible weapon state and ensure its participation in civilian international nuclear trade and cooperation. Shortly after the NDA came to power in 2014, India completed its procedures for adherence to IAEA’s Amended Protocol, and last month announced ratification of the Convention on Supplementary Compensation for Nuclear Damage which had been part of the understanding reached on nuclear liability issues during President Obama’s visit in January 2015.
Mr. Modi’s ‘house gift’
Given that Prime Minister Modi will be attending the NSS for the first time, it is likely that he will carry a ‘house gift’ for his ‘good friend Barack’s farewell diplomatic banquet. There is merit in adhering to undertakings relating to the ‘Centres of Excellence’ and tightening measures to prevent nuclear smuggling. An additional financial contribution to the Fund to be disbursed over a period of time, subject to defined benchmarks being met, is worth considering. Since nuclear weapons and nuclear technology are here to stay, we should call for shifting the focus from insecure materials and facilities to research in proliferation- resistant technologies. The Indian Centre of Excellence could take the lead in this and encourage work on new reactor designs and use of the closed fuel cycle. Before 1998, when India would be seeking to safeguard its ‘nuclear option’, India’s nuclear diplomacy had to be more complicated and cautious; today, given the distance travelled, Prime Minister Modi is well placed to pursue his nuclear diplomacy with a far greater sense of confidence and purpose.
GS III: ECONOMY
New gen NBFCs to target smaller cities
New generation Non-Banking Finance Companies (NBFCs) are increasing their focus on tier-II and III cities to expand their businesses.
“For NBFCs, tier-I cities are comfort zones. But due to compression in interest rates and increasing competition in tier-I cities, NBFCs are looking at other cities like Pune, Jaipur, Indore, Coimbatore and Ahmedabad to tap the SME sector,” according to Ashish Kohli, Head— Small & Medium Enterprise Business at IndoStar Capital Finance Ltd.
The repayment capacity of professionals, such as doctors, in tier–II and -III cities is better, as there is less competition for their skill.
Besides, lending to them is more beneficial as they can recommend more borrowers/customers, he said.“We cater to traders, manufacturers and professionals like doctors and chartered accountants (CAs). Jodhpur has more CAs than Mumbai; they need capital with higher tenor which will reduce their EMI burden,” Mr. Kohli said. “We believe in the ‘Wells Fargo’ model where we can have a larger share of the customer’s wallet by doing more business with her leading to higher profitability,” he said. Another new generation NBFC, Capital First Limited, has spread its wings to many such cities.
As the government sets the agenda for initiatives like Make in India, Digital India, Start-up India, directed towards growing the entrepreneurial environment in the country, NBFCs are trying to expand their reach to smaller cities as they see business opportunities in the Micro, Small and Medium Enterprise (MSME) sector and plan to tap the needs of the self-employed professionals, manufacturers and traders to expand their business through secured loans i.e. loan against property (LAP).
NBFCs are also getting good response from borrowers as the latter face less documentation and at lower cost than the traditional, unsecured lending channels in the market. Industry sources say the mortgage market, including home loans, is estimated at approximately Rs.10 lakh crore in the country out of which LAP for MSMEs accounts for Rs 2.5 lakh crore and the rest consists of home loans. The LAP portion is expected to grow by Rs. 5 lakh crore by the end of FY 2019.
The profitability estimate indicates that NBFCs in tier-II and III cities can break-even in 12 months compared to a time span of 18 months in tier I cities. Tier-I cities generally have high quantum of loans and low numbers of customer.
e-traders attract NBFCs
Some businesses supported by NBFCs in the current environment are e-businesses that use platforms such as Amazon, Flipkart and Snapdeal to sell their wares.
GS III : ECONOMY
India-Bangladesh feeder service begins
The maiden coastal feeder service between India and Bangladesh commenced, after facing a minor hitch, at Chittagong Port in Bangladesh.
As per the schedule,. m.v. Harbour-1, the container vessel, was to arrive at Krishnapatnam Port in Andhra Pradesh. However, it failed to depart from Chittagong Port due to lack of adequate number of containers and a crane fault
In its maiden journey, the vessel was to carry 150 empty containers. Due to the crane fault, only 30 containers were loaded on to the vessel, trade sources said.
When contacted, Krishnapatnam Port officials said they had received confirmation that the vessel would reach the port by early next week.
India and Bangladesh signed a coastal shipping deal to promote coastal shipping, enhance bilateral trade between the two countries and bring down transportation costs for EXIM cargo. Bangladesh imports onion, rice, lentils, cotton, industrial raw materials and machinery.
As per the deal, the vessel would call at the ports of Kolkata, Haldia, Paradip, Visakhapatnam, Kakinada, Krishnapatnam and Chennai, while in Bangladesh it would be at Chittagong, Pangaon ICT, Narayanganj, Ashuganj, Payra, Khulna and Mongla. The vessel’s first call would be at Krishnapatnam Port.
Currently, container goods are moved from and to Bangladesh either through Colombo or Singapore as Chittagong Port does not have a deep draft and hence smaller feeder vessels are deployed. Besides, rapid growth in bilateral trade between India and Bangladesh led to congestion on the road at Indo-Bangladesh border. Hence, the importers and exporters urged introduction of feeder service between India and Bangladesh, said trade sources.
Out of a total of 1.8 million tonnes of cargo moved on Indo-Bangladesh protocol route during 2013-14, fly ash accounted for 98 per cent, which was transported from Kolkata to various river ports in Bangladesh. During the current year, India for the first time used the Indo-Bangladesh river protocol to transport food grains via Ashuganj to Tripura. However, the quantum of cargo has not picked up because of low draft in the upper reaches of Bangladesh rivers and also because of certain non-trade barriers, says a Shipping Ministry release.