Privatisation of Public Sector Banks

Why in News?

In the Union Budget 2021-22, the government announced its decision to privatise two Public Sector Banks.

What are Public Sector and Private Sector Banks?

• Public Sector:
  • Public Sector Banks (PSBs) are those banks where the government holds more than 50% ownership.
  • Further, the government regulates the financial guidelines, because of government ownership, most depositors believe that their money is more secured in public sector banks.
    • As a result, most public sector banks have a large customer base.
  • For example, The State bank of India (SBI) is the largest public sector bank in India.
    • In this bank, the Indian government holds more than 63% share.
• Private Sector Banks:
  • Private sector banks are those banks where private individuals or private companies own a major part of the bank’s equity.
    • Even though these banks follow the nation’s central bank’s guidelines, they can formulate their independent financial strategy for the customers.

Why is there a Need to Privatise Public Sector Banks?

• Issues with Public Sector Banks:
  • NPA’s:
    • Non-Performing Assets (NPA) are loans that the borrower fails to pay back to the bank, further high levels of NPAs erode a bank’s profitability.
    • Most of PSBs are also unable to maintain a capital adequacy ratio.
    • In the case of many a PSBs, the RBI had to restrict the normal functioning of the banks — this is referred to as the banks being put under Prompt Corrective Action (or PCA) — and forced them to improve their financial performance metrics before being allowed to resume normal banking activities.
  • Losses in Rural Branches:
    • Most of the rural branches are running at a loss because of high overheads and the prevalence of the barter system in most parts of rural India.
  • Bureaucratisation:
    • The smooth functioning of banks has been hampered by red-tapism, long delays, lack of initiative, and failure to take quick deci­sions.
  • Financial Burden to Government:
    • Rather than wasting taxpayers’ money to recapitalise PSBs, the government should simply sell them off to the private sector.
    • This would reduce the financial burden on the government while also ensuring that PSBs become more efficient and profit-making entities under private ownership.
    • According to the Union Budget 2021-22, the government had announced its decision to start by privatising two PSBs.
• Efficient Performance of Private Sector Banks:
  • Efficient:
    • The Private sector Banks (PVBs) are far more efficient, far more productive, and far less corrupt than the PSBs.
  • Less Amount of NPA: 
    • Private sector banks have lower gross NPAs.
  • Enhanced Banking Facilities:
    • They provide a more significant contribution towards extending loans and a higher percentage of contribution to getting deposits from savers.
  • More Branches and More Jobs: 
    • They created more branches and new jobs while the public sector banks saw declines on both counts.
  • Fetches More Market Value:
    • When the Economic Survey reviewed bank nationalisation in 2020, it is found that every rupee of taxpayer money invested in PSBs fetches a market value of just 71 paise. This is called the market to book ratio.
    • In stark contrast, every rupee invested in new private sector banks fetches a market value of Rs 3.70. In other words, private banks give more than five times more value than PSBs.

Who is More Efficient?

• Financial Inclusion:
  • Pradhan Mantri Jan Dhan Yojana (PMJDY), envisages universal access to banking facilities with at least one basic banking account for every household.
  • Public Sector Banks provide 36.2 crore beneficiaries while Private sector banks accounted for just Rs 1.3 crores of the total of almost Rs 46 crore beneficiaries.
  • While the private banks dominate the metropolitan areas, it is the public sector banks that operate branches in rural India.
  • PSBs provide more ATMs in rural India.
• Efficiency:
  • PSBs are more efficient than PVB in Financial Inclusion, while when profit maximisation is the sole motive, efficiency of the PVBs has always surpassed that of their public sector counterparts.
    • However, when the objective function is changed to include financial inclusion—like total branches, agricultural advances and PSL advances— PSBs prove to be more efficient than PVBs (middle and bottom panel).
• Relevance in Economy:
  • The relevance of banking lies in knowing whether banks lend when borrowers need the money the most.
  • Thus, PSBs have a lion’s share in infrastructure finance lendings and their role has been especially crucial against the backdrop of the withering away of erstwhile development financial institutions.

Way Forward

• There is a need for a nuanced approach and further, members of RBI’s Banking Research Division have warned against the conventional perspective of viewing privatisation as a panacea for all ills.
• The big bang approach of privatization of the public sector banks may do more harm than good as the repercussions could lead to the vulnerable population losing their financial inclusion and further making it difficult for them to access banking and related facilities.
  • That’s why It is best to steer clear of an ideologically-driven stance and instead focus on achieving a mix of public and private banks that best serves the needs of a diverse economy such as India.

Source: IE

Sex Ratio at Birth

Why in News?

A recent study has reported that “son bias” is on a decline in India as Sex Ratio at Birth normalised from 111 boys per 100 girls in 2011 to 108 boys per 100 girls in 2019-21.

What are the Key Findings of the Report?

• National Figures:
  • The average annual number of baby girls “missing” in India fell from about 4.8 lakh in 2010 to 4.1 lakh in 2019.
    • The “missing” here refers to how many more female births would have occurred during this time if there were no female-selective abortions.
  • From 111 boys per 100 girls in India’s 2011 census, the sex ratio at birth have normalised slightly, narrowing to about 109 in the 2015-16 wave of the National Family Health Survey (NFHS) and to 108 boys in the NFHS 5 2019-21.
  • Between 2000-2019, nine crore female births went “missing” because of female-selective abortions.
• Religion Wise Sex Ratio:
  • The report has also analysed religion-wise sex selection, pointing out that the gap was the highest for Sikhs.
    • In the 2001 census, Sikhs had a sex ratio at birth of 130 males per 100 females, far exceeding that year’s national average of 110.
    • By the 2011 census, the Sikh ratio had narrowed to 121 boys per 100 girls.
    • It now hovers around 110, about the same as the ratio of males to females at birth among the country’s Hindu majority (109), according to the latest NFHS.
  • Both Chirstians (105 boys to 100 girls) and Muslims (106 boys to 100 girls) have sex ratios close to the natural norm.
• Religion Wise Share in Missing Girls:
  • Share in Indian Population:
    • Sikh: 2%
    • Hindu: 80%
    • Muslim: 14%
    • Christian: 2.3%
  • Share in Missing Girls due to Sex-Selective Abortion:
    • Sikh: 5%
    • Hindu: 87%
    • Muslim: 7%
    • Christian: 0.6%

What has been the History of Sex Ratio in India?

• Globally, boys modestly outnumber girls at birth, at a ratio of approximately 105 male babies for every 100 female babies.
  • This was the ratio in India in the 1950s and 1960s, before prenatal sex tests became available across the country.
• The problem began in the 1970s with the availability prenatal diagnostic technology allowing for sex selective abortions.
  • India legalised abortion in 1971 but the trend of sex selection started picking up in the 1980s due to the introduction of ultrasound technology.
• In the 1970s, India’s sex ratio was at par with the global average of 105-100, but this widened to 108 boys per 100 girls in the early 1980s, and reached 110 boys per 100 girls in the 1990s.

What are the Challenges in Ensuring Balanced Birth Sex Ratio?

• Regressive Mindset:
  • There is considerable son preference in all states, except possibly in Kerala and Chhattisgarh.
  • This son’s preference is derived from a regressive mindset. E.g.: People associate girls with dowry.
• Misuse of Technology:
  • Cheaper technology like ultrasound helps in sex selection.
• Failure in Implementation of Law:
  • The Prenatal Conception and Prenatal Determination Act (PC-PNDT), 1994 which punishes healthcare professionals for telling expectant parents the sex of a child with imprisonment and hefty fines, has failed to control the sex selection.
  • Reports found major gaps in the training of personnel implementing PC-PNDT.
    • Poor training meant that they were unable to prepare strong cases against violators to secure convictions.
• Illiteracy:
  • Illiterate women in the reproductive age group of 15-49 years have higher fertility than literate women.

Way Forward

• Bringing Behavioural Change:
  • Increasing female education and economic prosperity help to improve the ratio. In this pursuit, the government’s Beti-Bachao Beti Padhao Campaign has achieved remarkable success in bringing behavioural change in the society.
• Sensitizing Youth:
  • There is an urgent need to reach young people for reproductive health education and services as well as to cultivate gender equity norms.
  • For this, the services of Accredited Social Health Activist (ASHA) can be leveraged, especially in rural areas.
• Stringent Enforcement of Law:
  • India must implement the Pre-Conception and Pre-Natal Diagnostic Techniques (PCPNDT) Act, 1994 more stringently and dedicate more resources to fighting the preference for boys.
  • In this context, the Drugs Technical Advisory Board decision to include ultrasound machines in the Drugs and Cosmetics Act, 1940 is a step in the right direction.

Source: TH

India’s Battery Storage Potential: NITI Aayog

Why in News?

Recently, NITI Aayog has released a report titled “Advanced Chemistry Cell Battery Reuse and Recycling Market in India”, stating India’s Battery demand will increase significantly by 2030.

What are the Findings of the Report?

• Demand Projections:
  • The total cumulative potential for battery storage in India will be 600 GWh by 2030.
    • Between 2010 and 2020, the global demand for batteries grew at a compound annual growth rate (CAGR) of 25% to reach an annual demand of about 730 GWh.
  • By 2030, the demand for batteries is expected to grow four folds to reach an annual rate of 3,100 GWh.
• Current Deployment of Batteries:
  • The current deployment of Lithium-Ion Batteries (LIBs) in India is dominated by consumer electronics, which comprises smartphones, laptops, notebooks, tablets and is further expected to grow with the digitalisation of platforms and the integration of technology in day-to-day life with a cumulative market of 4.5 GWh.
• Drivers:
  • EVs (Electric Vehicles) and consumer electronics will be the major demand drivers for the adoption of battery storage in India.
    • EV sales accounted for around 10% of the LIB (0.92 GWh).
  • The electrification of transportation and battery energy storage in electricity grids are expected to be the key drivers in the growth of battery demand.
• Suggestions:
  • A coherent regulatory framework incentivising all stakeholders to participate in the recycling process can help in the development of a battery recycling ecosystem in the country.

Source: TOI

Gold Jewellery Exports to UAE up 42%

Why in News?

India’s gold jewellery exports to the United Arab Emirates (UAE) rose by a sharp 42% in two months of a Free Trade Pact coming into effect in May 2022.

• Overall exports to the UAE in May-June, 2022 touched USD 5.4 billion, a 17% growth from a year ago.

What benefited the Growth of Jewellery Export?

• Indian exporters were facing tough competition in gold jewellery from countries like Turkey, and Indian exports were showing a decline before the FTA.
• The free trade pact came into effect in May 2022 with its offer of duty-free access on jewellery to the Gulf nation. This removal of duties has benefited exports.
• India got zero duty access to the UAE market for jewellery exports, which attracted 5% duty earlier, potentially facilitating entry of Indian products in the North Africa, West Asia and Central Asia markets.
• India in turn allowed 1% duty concession on gold imports from the UAE for up to 200 tonnes of shipments under the Comprehensive Economic Partnership Agreement (CEPA).

What will be the Benefits of India-UAE CEPA?

• Trade-in Goods:
  • India will benefit from preferential market access provided by the UAE, especially for all labour-intensive sectors.
  • Such as Gems and Jewellery, Textiles, leather, footwear, sports goods, plastics, furniture, agricultural and wood products, engineering products, medical devices, and Automobiles.
• Trade-in Services:
  • Both India and UAE have offered each other market access to the broad service sectors.
  • Such as ‘business services’, ‘communication services’, ‘construction and related engineering services, ‘distribution services’, ‘educational services’, ‘environmental services’, ‘financial services, ‘health-related and social services, ‘tourism and travel-related services, ‘recreational cultural and sporting services’ and ‘transport services’.
• Trade-in Pharmaceuticals:
  • Both sides have also agreed to a separate Annex on Pharmaceuticals to facilitate access to Indian pharmaceuticals products, especially automatic registration and marketing authorisation in 90 days for products meeting specified criteria.

Source: MINT

Geothermal Power in Ladakh

Why in News?

State-run explorer Oil and Natural Gas Corporation (ONGC) will be participating to generate electricity through Geothermal Energy at Puga, a remote valley located in Ladakh, off the road to Chumar on the de-facto border with China.

What do we need to know about the Puga Project?

• About Puga Valley:
  • Puga Valley is situated in the Changthang Valley in the south-eastern part of Ladakh, about 22 km away from the Salt Lake Valley.
  • It is a region of great significance known for its natural beauty and geothermal activities.
  • Puga is also visited for its hot sulphur spring.
• About Geothermal Project:
  • It will be India’s first geothermal energy project and also the world’s highest at 14,000ft.
  • ONGC has started drilling its first well for the project and encountered high-pressure steam at 100 degrees Celsius with a discharge rate of 100 tonne geothermal energy per hour, considered as a good sign for the project.
• Phases:
  • In the first phase, the company will drill 1,000-metre-deep wells to run a one-megawatt power plant as a pilot.
  • The second phase envisages a deeper exploration of the geothermal reservoir and a higher capacity demonstration plant.
  • The third phase would involve commercial development of the geothermal plant.
• Benefits:
  • It will boost Ladakh’s potential to emerge as one of the country’s clean energy bowl by expanding the area’s horizon beyond solar or wind power.
  • The pilot plant provides power and heating needs of the nearby settlements of Tibetan pastoralist refugee settlements at Sumdo and nearby areas.
  • A bigger plant will provide 24X7 supply for the far-flung settlements and the large defence establishment in the eastern sector, reducing their dependence on diesel for running generators.
  • The plant can also play a vital role as a stabiliser for the 15-gigawatt solar/wind project being planned in the nearby Morey plains in the southwest.
• Status of Geothermal Energy:
  • National:
    • Geological Survey of India has identified about 340 geothermal hot springs in the country. Most of them are in the low surface temperature range from 370C to 900C, which is suitable for direct heat applications.
      • The potential for power generation at these sites is about 10,000 MW.
    • The hot springs in the country are grouped into seven geothermal provinces:
      • Himalayan, Sahara Valley, Cambay Basin, San-Narmada –Topi lineament belt, West Coast, Godavari Basin and Mahanadi Basin.
    • Some of the prominent places where a power plant can be established based on geothermal energy are:
      • Manikaran in Himachal Pradesh
      • Jalgaon in Maharashtra
      • Tapovan in Uttarakhand
      • Bakreshwar in West Bengal
      • Tuwa in Gujarat
  • Global:
    • Gigawatt-Size Geothermal Capacities:
      • The US:
        • The US leads the world in the amount of geothermal electricity generation.
      • Indonesia:
        • Indonesia was the second-largest geothermal electricity producer.
      • Philippines
      • Turkey
      • New Zealand
    • Mexico and Italy have 900 megawatt-plus capacity, while Kenya has over 800 mw, followed by Iceland, Japan and others.

What is Geothermal Energy?

• About:
  • Geothermal energy is the heat from the earth. This heat is used for bathing, to heat buildings, and to generate electricity.
  • The word geothermal comes from the Greek words geo (earth) and therme (heat), and geothermal energy is a renewable energy source because heat is continuously produced inside the earth.
• Sources:
  • Hot water or steam reservoirs deep in the earth are accessed by drilling.
  • Geothermal reservoirs located near the earth's surface, mostly located in the western U.S., Alaska, and Hawaii.
  • The shallow ground near the Earth's surface that maintains a relatively constant temperature of 50-60°F.
• Uses:
  • Hot water and steam from reservoirs can be used to drive generators and produce electricity for consumers.
  • Other applications apply the heat produced from geothermal directly to various uses in buildings, roads, agriculture, and industrial plants.
  • The heat can also be used directly from the ground to provide heating and cooling in homes and other buildings.
• Benefits:
  • Renewable Source:
    • Through proper reservoir management, the rate of energy extraction can be balanced with a reservoir's natural heat recharge rate.
  • Continuous Supply:
    • Geothermal power plants produce electricity consistently, running 24 hours per day/7 days per week, regardless of weather conditions.
  • Reduced Import Dependency:
    • Geothermal resources can be harnessed for power production without importing fuel.
  • Small Footprint:
    • Geothermal power plants are compact and use less land per GWh (404 m2) than coal (3642 m2) wind (1335 m2) or solar PV with center station (3237 m2). *
  • Clean Energy:
    • Modern closed-loop geothermal power plants emit no greenhouse gasses; life cycle GHG emissions (50 g CO2 eq/kWhe) are four times less than solar PV, and six to 20 times lower than natural gas.
    • Geothermal power plants consume less water on average over the lifetime energy output than the most conventional generation technologies.
• Disadvantage:
  • If harnessed incorrectly, it can sometimes produce pollutants.
  • Improper drilling into the earth can release hazardous minerals and gases deep inside the earth.

Source: TOI

Drought in Europe

Why in News?

After the record-breaking summer heat, 2022 may be the worst drought year in Europe in 500 years. Large rivers have been reduced to shallow streams, hitting power generation.

• China and the US too are facing drought situations.

How bad is the Drought Situation in Europe?

• Present Scenario:
  • The drought is considered the worst in 500 years. The European summer was this dry last in 1540, when a year-long drought killed tens of thousands of people.
    • However, earlier European droughts such as those in 2003, 2010, and 2018 too were compared to the 1540 event.
  • Some of Europe’s biggest rivers — Rhine, Po, Loire, Danube — which are usually formidable waterways, are unable to support even mid-sized boats.
  • As per an analytical report by the Global Drought Observatory (GDO), an agency of the European Commission, about 64% of the continent’s landmass was experiencing drought conditions.
    • Nearly 90% of the geographical area in Switzerland and France, about 83% in Germany, and close to 75% in Italy, was facing agricultural drought.
    • The situation is unlikely to improve substantially in the coming months.
• Causes:
  • Droughts are part of the natural climate system and are not uncommon in Europe. The extraordinary dry spell has been the result of a prolonged and significant deviation from normal weather patterns.
    • It is the record-breaking heat waves that have resulted in temperatures in many countries rising to historic highs.
    • Unusually high temperatures have led to increased evaporation of surface water and soil moisture.
  • The severity of the current drought can also be attributed, to an extent, to the fact that it occurred so soon after the 2018 drought.
    • Many areas in Europe were yet to recover from the last drought, soil moisture had also not been restored to normal.

• Impacts:
  • Transportation: Europe depends heavily on its rivers to move cargo in an economical manner, including coal to power plants. With water levels down to less than a metre in some stretches, most large ships have been rendered unusable.
  • Power: Power production has been hit, leading to electricity shortages and a further increase in energy prices which were already high due to the war between Russia and Ukraine.
    • Lack of adequate water has affected the operation of nuclear power plants, which use large amounts of water as coolant.
  • Food Security: Food has become sharply more expensive in many countries, and drinking water is being rationed in some regions. Agriculture has also been affected badly.

What about the Drought Situations in the US and China?

• Drought in China:
  • Many parts of China too are headed towards a serious drought, being described as the worst in 60 years.
  • The country’s longest river, Yangtze, which caters to about a third of the Chinese population, is seeing water levels drop to record lows.
  • Two of the country’s biggest freshwater lakes, Poyang and Dongting, have reached their lowest levels since 1951.
  • The water scarcity is leading to problems similar to those in Europe.
    • The drought has posed a “serious threat” to China’s autumn grain production which makes up about 75% of the country’s annual grain output.
    • Power shortages in some areas have begun to force factories to shut, adding to the strain on global supply chains.
• Drought in the US:
  • According to the US government, over 40% of the area in the United States too is under drought conditions currently, affecting about 130 million people.

Source: IE

Bhitarkanika National Park

Why in News?

Recently, the Bhitarkanika National Park have reached a saturation point in the population of crocodile which could lead to more human-Crocodile conflict.

What is Bhitarkanika National Park?

• About:
  • Bhitarkanika National Park is spread in a vast area of 672 Kms in Orissa.
  • It is the second largest Mangrove ecosystems of India.
  • The National Park is essentially a network of creeks and canals which are inundated with waters from rivers Brahmani, Baitarani, Dhamra and Patasala forming a unique ecosystem.
  • Its proximity to Bay of Bengal makes the soil of the area enriched with salts, the vegetation and the species of the sanctuary is comprised of those which are mainly found in the tropical and subtropical inter tidal regions.
  • It is the breeding place for the Salt Water Crocodiles.
  • The Gahirmatha Beach which forms the boundary of the sanctuary in the east is the largest colony of the Olive Ridley Sea Turtles.
  • The other unique phenomenon is the Bagagahana or the heronry near Surajpore creek.
    • Thousands of birds colonise the creek for nesting and the aerial acrobatics performed prior to mating make for an impressive sight.
  • Bhitarkanika is also home to eight varieties of Kingfisher birds which is also a rarity.

What are the Issues?

• Rising conflict:
  • Almost, 50 people have been killed by crocodiles since 2012 in and around the park, while 25 crocodiles died during the same time after entering human settlements or getting caught in fishing nets.
• Territorial Reptile:
  • Crocodile is a territorial aquatic reptile, that means too many crocodiles can’t live in a small area as there will be increased competition for food, mating partners, basking sites.
• Historical perspective:
  • The Union Ministry of Forest and Environment in 1991 had directed the state forest department to stop the crocodile rearing programme in Bhitarkanika due to the saturation point reached by crocodile population.
    • However, the government stopped funding for the crocodile breeding and rearing project in 1990.
    • Further, the forest department had stopped the crocodile breeding and release programme in 1995 in the park as the crocodile population had reached around 1,000, from 94 in 1975.

Way Forward

There is a need to take steps for the reduction in the crocodile population and also the Government needs to take measures for the redistribution of crocodiles into wetlands of entire mangrove forests of Bhitarakanika and Mahanadi River system.

Source: DTE

Nikshay Poshan Yojna

Why in News?

Only two-thirds of people living with tuberculosis benefitted from the Union government’s Nikshay Poshan Yojana (NPY), sole nutrition support scheme, in 2021, which raises major public health concern.

What is Nikshay Poshan Yojna?

• About
  • The NPY was launched in 2018 by the Ministry of Health and Family Welfare.
  • It aims to support every Tuberculosis (TB) Patient by providing a Direct Benefit Transfer (DBT) of Rs 500 per month for nutritional needs.
    • Since its inception around Rs 1,488 crore has been paid to 5.73 million notified beneficiaries.
• Performance:
  • As per India TB Report 2022, only 62.1 % of 2.1 million notified cases across the country received at least one payment in 2021.
  • In Delhi, which has the highest burden of all forms of TB at 747 cases per 100,000 people, only 30.2 % of patients have got at least one DBT.
    • Other poor performers are Punjab, Jharkhand, Maharashtra, Bihar, Rajasthan and Uttar Pradesh. In the North East, Manipur and Meghalaya fared the worst.
• Challenges:
  • Several hurdles were found in the DBT for both health providers and patients such as non-availability of bank accounts and unlinked bank accounts.
  • Lack of communication, stigma, illiteracy and the multi-step approval process as key hurdles.
  • States have their own nutritional support schemes, but caveats remain here too; for instance, some schemes are only for patients showing resistance to TB drugs.

What is the Status of TB in India?

• As per India TB Report 2022, during 2021, the total number of TB patients was more than 19 lakhs. In 2020 it was around 16 lakhs, increasing 19 %.
• In India, the mortality rate due to all kinds of tuberculosis increased by 11% between 2019 and 2020.
• The total number of estimated TB-related deaths for the year 2020 was 4.93 lakh, which is 13 % higher than the estimates of 2019.
• Malnutrition, HIV, diabetes, alcohol, and tobacco smoking are the comorbidities that impact a person suffering from TB.

What are the Initiatives to Combat TB?

• Global Efforts:
  • The WHO has launched a joint initiative “Find. Treat. All. #EndTB” with the Global Fund and Stop TB Partnership.
  • WHO also releases the Global Tuberculosis Report.
• India’s Efforts:
  • National Strategic Plan (NSP) for Tuberculosis Elimination (2017-2025), The Nikshay Ecosystem (National TB information system), Nikshay Poshan Yojana (NPY- financial support), TB Harega Desh Jeetega Campaign.
  • Currently, two vaccines VPM (Vaccine Projekt Management) 1002 and MIP (Mycobacterium Indicus Pranii) have been developed and identified for TB, and are under Phase-3 clinical trial.
  • The Saksham Project: It is a project of the Tata Institute of Social Sciences (TISS) that has been providing psycho-social counselling to DR-TB patients.

Way Forward

• India has set a target to eliminate TB by 2025. Experts believe that to reach this goal, the country must go beyond the medical aspects.
• The government needs to take stock of where the bottlenecks are. There is no point in pouring more money into a failing system.
• Any investment in diagnostic treatments is irrelevant if people fighting TB are living on an empty stomach. It affects the poorest populations and almost every family is in financial distress due to medical costs and lost wages.
• A broader approach is needed to prevent TB, there should be schemes to include food support for those in close contact with the patient as they are also at high risk of contracting the disease.

Source: DTE

Chief of Royal Malaysian Navy Visits India

Why in News?

Recently, the Chief of Royal Malaysian Navy visited India at the invitation of Chief of the Naval Staff, Indian Navy.

• Both Navies have recently concluded the Bilateral Exercise Samudra Laksamana in May 2022 and the Navy-to-Navy Staff Talks in June 2022.

How has India Malaysia Relations been?

• India established diplomatic relations with Malaysia in 1957.
• Economic Relation:
  • India and Malaysia have signed the Comprehensive Economic Cooperation Agreement (CECA).
    • CECA is a kind of Free Trade Agreement (FTA).
  • India has also signed the Free Trade Agreement (FTA) in services and investments with the 10-member Association of Southeast Asian Nations (ASEAN).
    • Malaysia is the third largest trading partner in ASEAN.
  • Bilateral trade between India and Malaysia is significantly biased in favour of Malaysia.
• Defence & Security Cooperation:
  • Joint military exercises “Harimau Shakti” are held annually between the two countries.
• Traditional medicine:
  • India and Malaysia signed a MoU on cooperation in the field of Traditional Medicine in October 2010.
  • The Government of Malaysia has been working to popularize AYUSH (Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy) systems in Malaysia.
    • AYUSH systems are practiced in Malaysia.
• Recent Developments:
  • In 2020, India resumed purchases of Malaysian palm oil after a gap of four-month following a diplomatic row between the two countries.
  • The former Prime Minister of Malaysia had criticised India's Citizenship Amendment Act (CAA) which was considered as an interference in the internal matters of India.

What is the Significance of Malaysia for India?

• As a country where 7.2% of the population is of Indian origin, Malaysia assumes an important place in India’s foreign policy.
• Surrounded by busy sea lines of communications such as the Strait of Malacca and the South China Sea, Malaysia is also a key pillar of India’s Act East policy and critical to India’s maritime connectivity strategies.

Source: PIB