News: China has accused the U.S. of “stoking geopolitical rivalry” by “forming exclusive clubs”. By “strengthening the Five Eyes intelligence alliance and “peddling the Quad, piecing together AUKUS and tightening bilateral military alliances”, the U.S. was leading what the Chinese called a “five-four-three-two” formation in the region.
Five Eyes Intelligence Alliance
- The Five Eyes is an intelligence alliance consisting of the US, UK, Australia, Canada and New Zealand. The origins of the Five Eyes can be traced back to the informal meetings between the US and UK code-breakers during the Second World War.
- In 1941, British and American intelligence members began engaging in secret meetings before signing the Atlantic Charter that August, which listed global objectives for the two countries beyond the conclusion of the war.
- According to the UK’s Government Communications Headquarters (GCHQ), this Charter paved the way for the Britain-USA agreement, and later the UKUSA agreement, which was signed in 1946.
- Declassified UKUSA intelligence documents confirm that the agreement was expanded to include Canada in 1948, and Australia and New Zealand in 1956, thereby creating the Five Eyes alliance, partly due to past shared Commonwealth heritage.
Quad
- The Quadrilateral Security Dialogue, colloquially the Quad or QUAD, is a strategic security dialogue between the United States, India, Japan and Australia that is maintained by talks between member countries.
- Since its establishment in 2007, the representatives for the four-member nations have met periodically. Japanese Prime Minister Shinzo Abe was the first to pitch the idea for the formation of Quad in 2007.
- It was in 2017 when the first official talks under the Quad took place in the Philippines.
- The motive behind the Quad is to keep the strategic sea routes in the Indo-Pacific free of any military or political influence. It is basically seen as a strategic grouping to reduce Chinese domination. The core objective of the Quad is to secure a rules-based global order, freedom of navigation and a liberal trading system. The coalition also aims to offer alternative debt financing for nations in the Indo-Pacific region.
- In 2021, US President Joe Biden hosted the first-ever summit of the Quad leaders in a virtual format. It vowed to strive for an Indo-Pacific region that is free, open, inclusive, anchored by democratic values and unconstrained by coercion, sending an apparent message to China.
AUKUS
- AUKUS is a trilateral security pact between Australia, the United Kingdom, and the United States, announced on 15 September 2021 for the Indo-Pacific region. Under the pact, the US and the UK will help Australia to acquire nuclear-powered submarines.
- The pact also includes cooperation on “cyber capabilities, artificial intelligence, quantum technologies and additional undersea capabilities“. The pact will focus on military capability, separating it from the Five Eyes intelligence-sharing alliance that also includes New Zealand and Canada
India-USA
123 Agreement : The most famous agreement signed between India and USA is called India-USA civil nuclear agreement also famously known as 123 Agreement. Under this agreement, India agreed to separate its civil and nuclear facilities and to place all its civilian nuclear facilities under International Atomic Energy Agency (IAEA) safeguards and in exchange, the USA agreed for complete civil nuclear cooperation with India.
The USA has signed multiple important military agreements with India. These agreements are usually signed by the USA with its defense allies for smoother military cooperation.
- General Security of Military Information Agreement (GSOMIA) – It was signed in 2002, to facilitate sharing military intelligence between India and the USA.
- Logistics Exchange Memorandum of Agreement (LEMOA) – It was signed in 2016, as per this agreement. India and USA can use each other’s military bases to carry out repairs and for resupplying.
- Communications Compatibility and Security Agreement (COMCASA) – This agreement is to share and secure communications exchange between two nations during training exercises and operations.
- Basic Exchange and Cooperation Agreement (BECA) – BECA stands for Basic Exchange and Cooperation Agreement. It is a pact or communication agreement proposed for geo-spatial cooperation between the Ministry of Defense of the Government of India and the National Geospatial-Intelligence Agency of the US Department of Defense. It will enable the two countries to share military information and strengthen their defense partnership.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.