Strengthening India-Australia Relations: A Dynamic Partnership

Despite the cancellation of the Quad Summit conference in Sydney, Prime Minister Narendra Modi’s impending trip to Australia demonstrates the importance India places on its bilateral relationship with Australia. The evolution of this partnership over the past ten years, along with the broad bipartisan support it has received in Australia, shows the beginning of a new era in relations between India and Australia.

Background on India-Australia Relations

The bilateral relationship between India and Australia has evolved recently, progressing favourably to become a cordial collaboration.

The two countries share a lot in common, which is supported by principles including increased economic cooperation, pluralistic, Westminster-style democracies, and Commonwealth traditions.

Several commonalities include strong, vibrant, secular and multicultural democracies, free press, independent judicial system and English language.

Historical Perspective

The historical ties between India and Australia started immediately following European settlement in Australia from 1788.

All trade, to and fro from the penal colony of New South Wales was controlled by the British East India Company through Kolkata.

India and Australia established diplomatic relations in the pre-Independence period, with the establishment of India Trade Office in Sydney in 1941.

The end of the Cold War and simultaneously, India’s decision to launch major economic reforms in 1991 provided the first positive move towards development of bilateral ties.

What is the Significance of this upcoming visit?

Strengthening Bilateral Relations: The visit reaffirms the commitment of both India and Australia to further strengthen their bilateral relationship. It provides an opportunity for high-level engagements, discussions, and collaborations on various issues of mutual interest.

Enhancing Economic Cooperation: The visit can pave the way for boosting economic cooperation between India and Australia. It provides a platform to explore new avenues for trade, investment, and technological collaboration, benefiting both economies and creating business opportunities.

Showcasing Commitment to the Indo-Pacific Region: Prime Minister’s visit to Australia will demonstrates the commitment of both countries to the Indo-Pacific region’s peace, stability, and development. It reinforces the role of India and Australia as significant stakeholders in the region.

Collaboration on Strategic and Security Issues: The visit presents an opportunity to discuss and collaborate on strategic and security issues, including maritime security, counterterrorism, cybersecurity, and defense cooperation. This will contribute to regional stability and address common security challenges.

Promoting People-to-People Connections: People-to-people interactions and cultural exchanges are crucial for fostering closer ties between nations. Prime Minister Modi’s visit will promote people-to-people connections, strengthen the Indian diaspora’s engagement, and enhance cultural understanding between India and Australia.

The growing partnership between India and Australia

Enhanced Bilateral Engagements: The frequency of high-level visits and interactions between the leaders of India and Australia has increased, showcasing the importance both countries place on their bilateral relationship.

Multilateral Collaboration: India and Australia collaborate closely in various multilateral forums such as the Quad, G7, East Asia Summit, G20, and the Indian Ocean Rim Association. They address important regional issues, including maritime domain awareness, supply chain resilience, climate change, and food and energy security.

Strategic Cooperation: Both nations recognize the need to build secure and resilient supply chains. They focus on strategic areas such as clean energy, electric vehicles, semiconductors, aerospace, and defense, fostering collaboration and joint initiatives.

Space Collaboration: Space cooperation has gained prominence in the India-Australia partnership. Australia participates in India’s Gaganyaan Space Programme, and the International Space Investment grants program encourages collaboration in the space sector.

Educational Ties: Australia is a preferred destination for Indian students, with a large number of Indian students studying there. Efforts are being made to address challenges related to student mobility, visa backlogs, and research collaboration, strengthening educational ties between the two countries.

People-to-People Linkages: Cultural exchanges, diaspora connectivity, and people-to-people contacts play a crucial role in strengthening the partnership. Initiatives like the opening of a new consulate in Bengaluru and the establishment of a center for Australia-India relations in Sydney contribute to fostering cultural linkages.

Economic Cooperation: The focus is on expanding economic ties and trade relations. Efforts are being made to increase the current trading partnership, setting clear targets to elevate it by 2030. Comprehensive Economic Cooperation Trade Agreement discussions are underway to deepen economic cooperation.

Regional Stability: India and Australia, along with other Quad members, work together to ensure peace, stability, and prosperity in the Indo-Pacific region. They address regional challenges and maintain a rules-based order.

Tax Collection at Source (TCS) on Foreign Credit Card Payments: Understanding the Intent and Impact is Vital

A variety of impassioned responses and broad statements have been made in response to the recent announcement regarding the application of tax collection at source (TCS) on overseas payments made through credit cards. To prevent undue alarm, it is essential to comprehend the idea and implications of this legislation.

What Does Tax Collection at Source (TCS) Mean for Payments Made by Credit Card?

TCS on credit card payments is the term used to describe the implementation of tax collection at source (TCS) on international credit card payments.

When people use their credit cards to make purchases outside of their country, the government deducts tax from the transaction amount at the time of payment.

This tax amount is then adjustable against the individual’s advance tax and final tax liabilities during the filing of their tax returns.

The purpose of TCS on credit card payments is to track foreign spending and ensure that individuals report their income accurately while encouraging tax compliance.

Applicability: TCS is applied when individuals use their credit cards for making payments in foreign currencies.

Tax Collection: A specific percentage of the payment amount is collected as tax by the government. This tax is collected directly by the credit card company or the payment processor.

Adjustable Tax: The tax amount collected through TCS is adjustable against the individual’s tax liabilities during the filing of their income tax returns. It is not an additional tax burden, but a prepayment of tax that can be adjusted against the final tax payable.

Purpose: TCS on credit card payments helps the government track foreign spending and ensure that individuals accurately report their income from foreign transactions.

Rates and Thresholds: The tax percentage and thresholds may vary based on government regulations. These rates and thresholds are subject to change from time to time.

Exclusions: Certain categories, such as education and medical expenses, may have lower tax rates or exemptions from TCS. Payments made using international debit or credit cards within a specified limit may also be excluded from TCS.

Bhopal’s Voluntary Local Review: A Step towards Localizing SDG’s in India

By being the first city in India to join the international movement on localising the Sustainable Development Goals (SDGs), Bhopal, the capital of Madhya Pradesh, has accomplished an important milestone. Recent publication of the city’s Voluntary Local Review (VLR) demonstrates Bhopal’s dedication to localising the SDGs. This action reflects India’s admirable efforts to adopt and localise the SDGs, with many states and union territories having already taken such action.

The Voluntary Local Review (VLR) in Bhopal is what.

The city of Bhopal, India, published a thorough report titled Bhopal’s Voluntary Local Review (VLR) to highlight its initiatives and success in achieving the Sustainable Development Goals (SDGs) at the local level.

It provides a detailed analysis of Bhopal’s development projects and their alignment with the SDGs across the three pillars of ‘people,’ ‘planet,’ and ‘prosperity.’

The report maps these projects to specific SDGs and presents an assessment of the city’s progress, achievements, and challenges in each area.

Features of Bhopal’s VLR

Collaboration: The VLR is a result of collaboration between the Bhopal Municipal Corporation, UN-Habitat, and a collective of over 23 local stakeholders. This collaborative approach ensures a comprehensive and inclusive representation of Bhopal’s sustainable development efforts.

Mapping of Developmental Projects: Bhopal’s VLR maps 56 developmental projects to the SDGs across the three pillars of ‘people,’ ‘planet,’ and ‘prosperity.’ This mapping provides a clear understanding of how the city’s initiatives align with the specific goals and targets of the SDGs.

Focus on Priority Areas: The VLR identifies priority areas for Bhopal, with a particular emphasis on building basic infrastructure and resilience. This highlights the city’s strategic approach in addressing crucial issues and directing efforts towards areas that require immediate attention.

Quantitative Assessment: Bhopal’s VLR includes an in-depth quantitative assessment of city-level indicators under SDG 11 (Sustainable cities and communities). This assessment evaluates the city’s performance in areas such as solid waste management practices, public transportation, and per capita availability of open spaces.

Identification of Challenges: The VLR acknowledges the challenges faced by Bhopal in achieving certain SDG targets. It highlights areas where the city needs to work harder, such as adequate shelter provision, air pollution control, city planning capacity, and equitable distribution and accessibility of open spaces. This identification of challenges allows for targeted efforts to address these specific issues.

Leadership and Stakeholder Engagement: The VLR emphasizes the leadership role of Mayor and efforts in engaging the city’s residents throughout the VLR process. This demonstrates the importance of stakeholder participation and inclusivity in driving sustainable development initiatives.

Localized Approach: Bhopal’s VLR recognizes the unique local context and capacity constraints faced by Indian cities. It acknowledges that a comprehensive VLR covering all SDGs may be challenging for cities with limited resources and data availability. Therefore, the VLR allows for flexibility, enabling cities to choose specific SDGs for a detailed review and adapt national indicators to reflect the city’s local realities.

The Importance of Localizing Sustainable Development Goals (SDGs)

Contextualization: Localizing the SDGs allows cities, regions, and communities to adapt the global goals to their specific local contexts. Each locality has unique challenges, priorities, and resources. By localizing the SDGs, governments, organizations, and stakeholders can tailor strategies and interventions to address the specific needs of their communities, making them more relevant and effective.

Proximity to the People: Local governments and communities are closest to the people they serve. They have a better understanding of the local needs, aspirations, and realities of their residents. By localizing the SDGs, decision-making processes become more participatory and inclusive, ensuring that the voices and perspectives of the local population are taken into account.

Holistic Approach: The SDGs address a broad range of interconnected social, economic, and environmental challenges. Localizing the goals allows for a holistic approach to sustainable development, considering the interdependencies and synergies between different sectors and issues. It encourages integrated and comprehensive strategies that tackle multiple challenges simultaneously, leading to more sustainable and equitable outcomes.

Collaboration and Partnership: Localizing the SDGs fosters collaboration and partnership among various stakeholders at the local level. Governments, civil society organizations, businesses, academia, and citizens can come together to work towards common goals, leveraging their respective strengths, expertise, and resources. This multi-stakeholder approach promotes collective action, knowledge-sharing, and innovation, leading to more effective and sustainable solutions.

Notable examples where cities and local governments have successfully localized the SDGs

New York City, United States: New York City developed an SDG framework called “OneNYC” to align its local goals and initiatives with the SDGs. The framework focuses on various areas, including reducing poverty, promoting sustainability, addressing climate change, and improving quality of life.

Bristol, United Kingdom: Bristol was one of the first cities to create a localized SDG plan known as the “Bristol One City Plan.” The plan integrates the SDGs into the city’s strategic priorities, such as reducing inequality, promoting sustainable economic growth, and addressing climate change.

Kitakyushu, Japan: Kitakyushu, a city in Japan, has implemented the “Kitakyushu SDGs City Vision” to align its local strategies with the SDGs. The vision focuses on areas such as resource efficiency, waste management, renewable energy, and sustainable urban development. Kitakyushu’s successful experience in environmental sustainability has made it a global leader in eco-industrial development.

Medellín, Colombia: Medellín has embraced the SDGs through its “Medellín Sustainable Development Goals 2030” strategy. The city has aligned its policies, programs, and projects with the SDGs, focusing on social inclusion, education, public transportation, urban development, and reducing violence. Medellín’s approach highlights the importance of social innovation and participatory governance in achieving sustainable development.

Barcelona, Spain: Barcelona has integrated the SDGs into its urban development strategy known as “Barcelona City Council 2030 Agenda.” The city’s approach emphasizes social justice, gender equality, environmental sustainability, and inclusive economic growth.

RBI Surplus Transfer to Govt.

The Central Board of Directors of the RBI approved the transfer of ₹87,416 crore as surplus to the Union government for the accounting year 2022-23.

This amount is almost three times the ₹30,307 crore transferred in the previous fiscal year.

Reserve funds of RBI

The RBI has two types of reserves: Currency & Gold Revaluation Account (CGRA) and Contingency Fund (CF).

CGRA: It represents the value of gold and foreign currency held by the RBI on behalf of India and fluctuates based on market movements.

Contingency Fund: It is a provision to meet unexpected contingencies arising from the RBI’s monetary policy and exchange rate operations.

Calculation of Surplus

RBI’s surplus is the amount transferred to the government after meeting its needs and provisions.

The surplus is determined by deducting expenses, including provisions made to the CF, from the RBI’s income, mainly generated through interest on securities.

How does RBI earn its INCOME?

The RBI earns profits through various functions and operations it carries out, including:

Managing the borrowings of the Government of India and State governments.

Supervising and regulating banks and non-banking finance companies.

Managing the currency and payment systems.

RBI generates income through the following sources:

Returns on its foreign currency assets, such as bonds and treasury bills of other central banks or top-rated securities.

Interest earned on holdings of local rupee-denominated government bonds or securities.

Interest earned from lending to banks for short tenures, such as overnight loans.

Management commission received for handling government and state government borrowings.

Expenditure by RBI

The RBI’s expenditures include-

Costs related to printing currency notes

Staff salaries

Commissions paid to banks for government transactions and

Payments to primary dealers for underwriting borrowings

How the transfer of surplus takes place?

The RBI, as a central bank, is not a commercial organization owned or controlled by the government.

The RBI was initially a private shareholders’ bank but was nationalized by the government in January 1949.

According to Section 47 (Allocation of Surplus Profits) of the Reserve Bank of India Act, 1934, the RBI transfers the excess of income over expenditure to the government.

This provision mandates the transfer of profits to the Central Government after accounting for necessary provisions and obligations.

Does the RBI pay tax on these earnings or profits?

No, the RBI is exempted from paying income tax or any other tax as per Section 48 (Exemption of Bank from income-tax and super-tax) of the RBI Act, 1934.

This exemption ensures that the RBI is not liable to pay income tax or super-tax on its income, profits, or gains.

RBI to pull out ₹2000 notes from active circulation

As part of its “Clean Note Policy,” the Reserve Bank of India (RBI) has decided to remove banknotes with a denomination of 2000 from circulation.

The pullout (and not demonetization) is comparable to a prior removal of notes in 2013–2014.

Legal Tender Status of ₹2,000 Banknotes

Banknotes from the year 2000 will continue to be accepted as legal money.

2000 yen bills can be used for transactions and accepted as payment.

By September 30, 2023, the RBI does, however, promote depositing or exchanging the notes.

About the ₹2000 Notes

In accordance with Section 24(1) of the RBI Act, 1934, the 2000-denomination banknote was released in November 2016.

It primarily aimed to meet the currency requirement of the economy in an expeditious manner after withdrawal of the legal tender status of all ₹500 and ₹1000 banknotes in circulation at that time.

Reasons for withdrawal

Demonetization purpose served: Printing of ₹2000 notes was stopped in 2018-19 as other denominations became available in adequate quantities.

Clean Note Policy: This aims to provide good-quality currency notes with enhanced security features and withdraw soiled notes from circulation.

Ending timespan: Majority of the ₹2000 notes were issued prior to March 2017 and have reached their estimated lifespan of 4-5 years.

Disappeared from circulation: This denomination is not commonly used for transactions, and there is sufficient stock of banknotes in other denominations to meet public requirements.

Withdrawal process

People can deposit ₹2,000 notes into their bank accounts or exchange them for banknotes of other denominations at any bank branch.

The usual deposit process without restrictions and subject to applicable statutory provisions applies.

Banks have been directed to provide deposit and exchange facilities for ₹2,000 notes until September 30, 2023.

The facility for exchange up to ₹20,000 at a time will be available at banks and RBI’s Regional Offices from May 23, 2023.

Banks are instructed to stop issuing ₹2,000 notes immediately.

Impact and financial analysis

Deposit accretion of banks may improve in the short term, similar to the demonetization period.

Improved deposit rates may reduce pressure on interest rate hikes and lead to moderation in short-term interest rates.