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Daily Current Affairs 22.05.2023 (Jaishankar, Blinken meet in Hiroshima, discuss plans for PM’s U.S. visit in June, Last-minute changes made to itinerary as G-20 meet begins in Kashmir today, Return of ₹2,000 currency notes to bolster bank coffers, money market liquidity: report, Stalemate over sharing of Krishna water to continue, India, U.S. to hike technology cooperation; co-production of jet engines on the table)

Daily Current Affairs 22.05.2023 (Jaishankar, Blinken meet in Hiroshima, discuss plans for PM’s U.S. visit in June, Last-minute changes made to itinerary as G-20 meet begins in Kashmir today, Return of ₹2,000 currency notes to bolster bank coffers, money market liquidity: report, Stalemate over sharing of Krishna water to continue, India, U.S. to hike technology cooperation; co-production of jet engines on the table)

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1. Jaishankar, Blinken meet in Hiroshima, discuss plans for PM’s U.S. visit in June

Retreat with President Biden outside Washington, diaspora events on the cards; Secretary of State says the U.S. is looking forward to hosting Prime Minister Modi, whose visit will celebrate the deep partnership between the two countries; it will be the first state visit for an Indian PM since 2009

As External Affairs Minister S. Jaishankar and U.S. Secretary of State Antony Blinken met in Hiroshima on Sunday, the two sides discussed plans for Prime Minister Narendra Modi’s visit to the U.S. in June, with sources saying a number of possible plans, including a “short retreat” outside Washington, were still being finalised.

“We look forward to hosting Indian Prime Minister Narendra Modi in June, whose visit will celebrate the deep partnership between the United States and India,” Mr. Blinken said in a tweet, which Mr. Jaishankar thanked him for.

At the Quad meeting held on the sidelines of the G-7 summit on Saturday, U.S. President Biden also reportedly referred to the upcoming visit.

According to the BJP’s National Information & Technology Department in-charge, Amit Malviya, who tweeted that Mr. Biden heaped “fawning praise” on Mr. Modi, the U.S. President said that there was a “huge demand from people across U.S. to attend the state dinner next month”, joking that he should seek Mr. Modi’s “autograph”.

Neither the External Affairs Ministry nor the U.S. Embassy in Delhi confirmed the remarks by the U.S. President in Hiroshima.

Ceremonial welcome

While the state visit, the first for an Indian Prime Minister since 2009, will include a ceremonial welcome at the White House and a state banquet, the visiting dignitaries are also often accorded a lunch at the State Department [to meet with the Vice-President and the Secretary of State].

Last month, India Caucus co-chair Ro Khanna confirmed he was writing to the U.S. Speaker to request that Mr. Modi also address the U.S. Congress. In addition, the Prime Minister, who will reach Washington on June 22, ahead of the official events on June 23, is expected to address a large gathering of U.S. CEOs and Chambers of Commerce, and attend a reception for the Indian diaspora organised by the Indian Embassy.

Earlier, the BJP’s overseas wing and diaspora groups were looking into possible diaspora events in Chicago or Atlanta, but sources said there was “no clarity” on whether a large diaspora event on the lines of the 2018 “Howdy Modi” address in Houston would be included.

Short trip

Sources also said that the two governments were discussing a short trip outside Washington by Mr. Biden and Mr. Modi. According to the sources, officials have discussed the possibility of the two leaders travelling to the U.S. presidential retreat for hosting foreign dignitaries at Camp David, or Mr. Biden’s private vacation home on Rehoboth beach.

“The programme is evolving, and details are not finalised yet,” said at least two officials involved in planning the visit.

In the past, Mr. Modi has shared such “retreat” sojourns with German Chancellor Angela Merkel at the Schloss Meseberg palace outside Berlin, U.K. Prime Minister David Cameron at Chequers, Russian President Vladimir Putin at his dacha in Sochi, and Chinese President Xi Jinping in Wuhan.

Mr. Modi will be the third state guest that Mr. Biden will host during his presidency, after French President Emmanuel Macron in December 2022 and South Korean President Yoon Suk-yeol.

Mr. Blinken’s meeting with Mr. Jaishankar also came a week after India sharply rejected a U.S. State Department report on international religious freedom that criticised the Modi government for the “continued targeting of minorities” in India.

External Affairs Ministry officials on Thursday sidestepped a question on whether the issue would be raised during the India-U.S. bilateral.

2. Last-minute changes made to itinerary as G-20 meet begins in Kashmir today

There has been a last-minute change in the itinerary of around 60 foreign and local delegates touring Kashmir from May 22 to 24 for a G-20 working group meeting on tourism. The alteration in the plan is on the advice of security agencies.

The scheduled sightseeing visits to the Dachigam National Park, Srinagar, and tourist hotspot Gulmarg in north Kashmir have been dropped, officials said.

The organisers, according to senior government officials, have decided to showcase Polo View market, the Valley’s first pedestrian-onlybazaar thrown open with multi-facilities recently, under the ongoing ₹980-crore Srinagar Smart City project, to the delegates.

Shopkeepers have been asked to report at their shops around 9 a.m. on all the three days, from May 22 till May 24. They have been advised against “observing any shutdown” on the call of separatists, several shopkeepers told The Hindu. “Special passes have been provided to us so that we are allowed to cross the security checkpoints,” they added.

Tourist spots

The delegates will also be taken to the famous Mughal gardens in Srinagar, which include Nishat, Cheshmashahi and Pari Mahal. All the locations are within the vicinity of eight kilometres from the main venue, Sher-i-Kashmir International Convention Centre (SKICC), located on the banks of the Dal lake.

A senior government official told The Hindu that the trip to the lush green Dachigam National Park was cancelled “because of space issues”.

He added that Gulmarg was cancelled “due to tight schedule of delegates in Srinagar”, including sightseeing of locations within the city.

A travel advisory has been issued for the local people for the next three days and they have been asked to avoid travelling on the route where the main venue is located, during restricted hours.

The elite NSG, and MARCOS, a special navy team, will maintain a vigil on the venue and the route being used by the delegates.

3. Return of 2,000 currency notes to bolster bank coffers, money market liquidity: report

The Reserve Bank of India’s (RBI) decision to withdraw ₹2,000 notes could boost banks’ deposit base and liquidity in the money markets by anywhere between ₹40,000 crore to ₹1.1 lakh crore, even if just about a third of these heavily hoarded high currency notes are flushed out by the exercise, according to a research report.

A part of those notes which are being hoarded to avoid taxes on unaccounted-for incomes could be funnelled into assets such as real estate and jewellery, the report reckoned. The central bank has said that the notes will remain legal tender, but has asked people holding such notes to deposit or exchange them by September 30.

With no clarity yet on what the status of these notes will be after that deadline, a flurry of exchanges is expected over next four months, which could “rekindle memories of demonetisation” from 2016, QuantEco Research said in a note. Estimating the stock of ₹2,000 denomination banknotes to be around ₹3.7 lakh crore or 1.3% of GDP — equivalent to 10.8% of the cash in circulation at the end of March — the note said that banks’ deposit base would be bolstered if all of those notes came back by the stipulated deadline.

“However, since ₹2,000 denomination notes were not commonly used for transactions, it implies that they were either hoarded for precautionary reasons or for bypassing the formal taxation channel. In either case, the increase in banks’ deposit base on account of its withdrawal from circulation could prove to be temporary as precautionary demand would eventually settle for lower denominations,” QuantEco’s team of economists, led by founder Shubhada Rao, pointed out.

“Unaccounted-for income might fuel demand for high value consumption items like real estate and precious metals, like the experience post the Demonetisation episode in 2016,” they added.

“However, if we assume a scenario where 10%-30% of erstwhile hoarded cash gets back to circulation, then this could have a durable impact on banks’ deposit base and money market liquidity to the extent of ₹400-1,100 billion,” they concluded.

Dividend income

Another decision taken last Friday by the central bank — to transfer a hefty ₹87,416 crore to the government as dividend, compared to around ₹30,300 crore in 2022-23 — would also boost liquidity, the report noted. The government had only provided for about ₹48,000 crore as dividend income from financial institutions, including the RBI, in its 2023-24 Budget.

The move provides a fiscal buffer of about 0.13%-0.15% of GDP to the Centre and will help mitigate some of the expenditure spillovers that could potentially take place through the year, it said.

“More importantly, this strong dividend transfer would provide a bonanza for core money market liquidity with the central government eventually using this for its expenditure in the coming months,” the report underlined.

4. Stalemate over sharing of Krishna water to continue

With no resolution in sight over sharing of the Krishna river water between Telangana and Andhra Pradesh after the bifurcation, the stalemate is set to continue in the next water year, beginning June 1.

Telangana has made its stand clear at the recent meeting of the Krishna River Management Board (KRMB) that it would, under no circumstances, agree for the 34:66 (Telangana :Andhra Pradesh) ratio ‘forced’ upon it since the bifurcation for one more year. It highlighted the fact that judicious sharing of river water was one of the main planks of the Statehood movement.

“Telangana is entitled for 70% share in 811 tmc ft allocated to combined Andhra Pradesh by the KWDT-I Award as per the basin parameters, but the erstwhile A.P. had apportioned it in 512:299 tmc ft (A.P.:Telangana) ratio without protecting the in-basin requirements in the fluoride and drought-affected areas of Telangana,” Special Chief Secretary (Irrigation) of Telangana Rajat Kumar said.

Another senior official in the Irrigation Department stated that Andhra Prasesh is diverting about 300 tmc ft water out of 512 tmc ft to the areas outside the Krishna Basin, treating it as its right, forgetting the fact it is gross violation of KWDT-I Award.

KWDT-I had made it clear that in-basin needs be given preference over the needs of areas outside the basin while taking up new projects too.

After Telangana made it clear that it would not be a party to the orders issued by the board,without its consent for continuation of the existing arrangement, the board chairman has said that the matter would now be referred to the Ministry of Jal Shakti.

5. India, U.S. to hike technology cooperation; co-production of jet engines on the table

Handshake with India and USA flags vector illustration eps 10.

India and the U.S. are discussing possibilities of co-producing jet engines, long-range artillery and infantry vehicles under the Initiative on Critical and Emerging Technologies (iCET) announced earlier this year, and officials said some high-technology initiatives are expected to be announced during Prime Minister Narendra Modi’s upcoming visit to the U.S. next month.

Ahead of the visit, the launch of INDUS-X under the iCET to promote partnerships between the two countries’ defence innovation ecosystems is scheduled in Washington.

In the run-up to the visit, these issues were discussed at the 17th meeting of India-U.S. Defence Policy Group (DPG), chaired by Defence Secretary Giridhar Aramane from India and Under Secretary of Defence for Policy Colin Kahl last week.

“The two sides reviewed the progress made in furthering defence industrial cooperation and operationalising the India-U.S. Major Defence Partnership. Important aspects such as military-to-military cooperation, and cooperative activities in the Indian Ocean Region were discussed,” the Defence Ministry said in a statement.

Enhancing cooperation

The Ministry further said that considerable focus was given on the ways and means to enhance defence industrial cooperation, including technology partnership, long-term research and development, and improving supply chain security.

Officials from both sides confirmed that the jet engine collaboration was discussed during DPG along with other collaboration mechanisms within co-production and co-development.

Among proposals being discussed is to jointly produce a jet engine for India’s future indigenous jets for which General Electric is competing with Safran of France and Rolls-Royce of U.K.

Commenting on this, Mukesh Aghi, president and CEO of the U.S.-India Strategic Partnership Forum (USISPF), said only four countries make jet engines for planes, and India will be the fifth one if the deal is announced.

“So the jet engine deal will take India’s capability in the aircraft industry to a new level. The deal also sends a message to the Chinese that the relationship between India and the U.S. is not just a surface relationship and is getting deeper,” he told The Hindu.

If the U.S. agrees to transfer jet engine [technology] to India, which China doesn’t at present have the capability for, it sends a very strong message, Mr. Aghi further said.

Earlier efforts at co-developing a jet engine has failed to take off owing to U.S. domestic legislation.

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