Daily Prelims Notes 9 November 2023
- November 9, 2023
- Posted by: OptimizeIAS Team
- Category: DPN
Daily Prelims Notes
9 November 2023
Table Of Contents
- India’s Energy Conservation Building Code, 2017
- EU invites Ukraine to begin membership
- UGC notifies regulations for foreign varsities to set up India campus
- SC refuse to vacate status quo on priest hiring in Tamil Nadu
- UP govt may give senior citizen right to legally evict children
- Maiden INDUS-X investor meet held ahead of 2+2 ministerial dialogue
- Kerala forms Organic Farming Mission to boost agriculture
- WHO hailed India’s success in managing TB: Ministry
- Move towards eFIR, but with caution
- Oil adulteration: Tamil Nadu govt. raises legal point
- SEZ Policy and issues in India
- RoDTEP Scheme
- IMF, IMF Quota System, and SDRs
- IMF warns Europe against prematurely declaring victory over inflation
- About National Coal Index (NCI)
- Tariff and Non-Tariff Barriers – Steel Sector – India
- Rising trend of bank financing for non-banking financial companies (NBFCs)
- How climate change is displacing animals
- Possible answer to farm fires: New rice variety can replace Pusa-44
- ‘Loss and damage’ fund talks leave developing nations at new disadvantage
- Connaught Place smog tower to restart today
- Electoral Trusts
Section: Climate Change
Context: The International Energy Agency (IEA) appreciated about India’s Energy Conservation Building Code (ECBC), 2017 in its World Energy Outlook 2023 report.
More about the news:
- The International Energy Agency has recognized India as a noteworthy example of an emerging market and developing economy with energy efficiency building codes.
- In its World Energy Outlook 2023 report, the IEA highlighted India’s Energy Conservation Building Code (ECBC) of 2017 for commercial buildings, distinguishing it from other developing economies where energy efficiency in buildings is less emphasized.
- The ECBC was originally introduced by the Ministry of Power’s Bureau of Energy Efficiency (BEE) in 2007 and was updated in 2017.
- Currently, 23 Indian states have implemented rules for enforcing ECBC compliance, while larger states like Maharashtra and Gujarat are in the process of drafting such regulations.
- Implementing energy efficiency building codes is crucial because buildings in India account for 30% of total electricity consumption, a figure expected to rise to 50% by 2042.
- Additionally, the BEE notes that 40% of the buildings to be constructed in the next two decades provide a unique opportunity for policymakers and builders to ensure their sustainability.
What is Energy Conservation Building Code (ECBC), 2017:
- The Energy Conservation Building Code (ECBC) was first introduced by the Bureau of Energy Efficiency (BEE), a part of the Ministry of Power, in 2007. It underwent a revision in 2017.
- While ECBC serves as a national standard, individual states in India have the flexibility to adapt and modify the code to address specific regional needs.
- To enforce ECBC, each state must draft and notify rules to establish it as a state law.
- Currently, 23 states in India have established regulations to enforce compliance with the ECBC. Some larger states like Maharashtra and Gujarat are in the process of formulating their rules for ECBC compliance.
- The primary objective of ECBC is to establish minimum energy standards for commercial buildings, with the aim of achieving energy savings between 25% and 50% in compliant buildings.
- ECBC is applicable to commercial structures such as hospitals, hotels, schools, shopping complexes, and multiplexes with a connected load of 100 kW or more or a contract demand of 120 kVA or more.
- ECBC is designed to be applied to both new building constructions and the retrofitting of existing structures.
- Compliant buildings receive one of three tags in ascending order of energy efficiency:
- ECBC Plus
- Super ECBC.
- The updated 2017 version of ECBC introduced several additional priorities, including renewable energy integration, simplified compliance procedures, inclusion of passive building design strategies, and greater flexibility for designers when compared to the 2007 version.
Where do states stand in ECBC implementation:
- State Implementation:
- While 23 out of 28 states in India have notified Energy Conservation Building Code (ECBC) rules, only 15 states have officially adopted the latest ECBC version from 2017. Notable among these are Uttar Pradesh, Punjab, Karnataka, Andhra Pradesh, Telangana, and Kerala.
- Five states, namely Gujarat, Maharashtra, Jammu and Kashmir, Ladakh, and Manipur, are yet to notify ECBC rules.
- State Energy Efficiency Index:
- The Bureau of Energy Efficiency released the State Energy Efficiency Index (SEEI) in 2022, which assessed states on various aspects of energy efficiency.
- In accordance with the SEEI, Karnataka secured the highest rank among states in terms of energy efficiency in buildings.
- The top five large states with the best scores in energy efficiency were Karnataka, Telangana, Haryana, Andhra Pradesh, and Punjab.
- Bihar received the lowest score of 0.5 points in the index.
What is Energy Conservation (Amendment) Act in 2022
- In 2022, India enacted the Energy Conservation (Amendment) Act, which brings significant changes to the country’s building codes.
- This amendment introduces the transformation of the Energy Conservation Building Code (ECBC) into the Energy Conservation and Sustainability Building Code.
- This transformation involves the inclusion of provisions related to embedded carbon, achieving net zero emissions, enhancing materials and resource efficiency, promoting clean energy deployment, and fostering circular practices.
- The amendment also mandates the adoption of ECO Niwas Samhita, the residential building energy code, which is pivotal since residential buildings account for 75 percent of the total electricity consumption in the building sector.
- In the near future, the government is anticipated to revise and modernize ECO Niwas Samhita, after which states will proceed to implement rules based on the updated code.
Context: EU invites Ukraine to begin membership
More about the news:
- The European Commission has recommended inviting Ukraine to begin membership talks with the European Union (EU), provided it meets certain conditions related to corruption, lobbying laws, and national minority safeguards.
- Ukrainian President Volodymyr Zelenskiy welcomed this recommendation as a “historic step” toward Western integration.
- The final decision on starting accession talks will be made by the 27 EU member states in mid-December, with Hungary being a potential obstacle.
- If approved, formal accession talks with Ukraine are expected to begin next year.
- Ukraine has faced significant challenges, including its ongoing conflict with Russia, but it has made progress in tackling corruption and is committed to post-war reconstruction efforts free from graft.
What is the requirement for joining the EU:
- According to Article 49 of the EU treaties,any European nation seeking to become an EU member must commit to upholding and promoting the EU’s fundamental values outlined in Article 2.
- These values encompass principles such as freedom, democracy, equality, and the rule of law, among others.
- Following the submission of an application, EU member states assess the nation’s suitability for membership based on these principles.
- Specific criteria:
- The Copenhagen European Council meeting in 1993 established more detailed conditions known as the Copenhagen Criteria.
- These criteria outline the fundamental requirements that all candidate countries must meet.
- For instance, they encompass having a well-functioning market economy, maintaining a stable democracy and rule of law, and adhering to all EU legislation, including that related to the Euro.
What is the process of joining the EU:
- The process for achieving European Union membership involves three distinct stages, outlined as follows:
- First stage: The country is granted the status of an official candidate. In this initial phase, the candidate nation responds to inquiries to demonstrate its alignment with the membership criteria.
- Second stage: The formal negotiations for membership commence with the candidate. This phase encompasses the integration of EU law into national legislation and the fulfillment of a wide range of requirements, referred to as the accession criteria, which pertain to the legal, administrative, economic, and other aspects.
- Third stage: Upon the successful completion of negotiations and the fulfillment of all accession criteria, the candidate becomes eligible for EU membership. The final decision regarding membership is subject to a unanimous vote by the existing EU member states, who must collectively endorse the new accession.
Section: National body
Context: UGC notifies regulations for foreign varsities to set up India campus
More about the news:
- The University Grant Commission (UGC) has issued regulations allowing foreign universities ranked among the world’s top 500 to establish branch campuses in India.
- These regulations, which come nearly ten months after the draft was published for feedback, outline key aspects of foreign universities’ operations in India.
- Each foreign university may set up multiple campuses in India and collaborate with other institutions to establish these campuses, provided they meet eligibility criteria individually.
- These institutions will have control over their admission processes, fee structures, and the ability to repatriate funds to their parent campuses.
- However, they must ensure international faculty members appointed to teach in India stay in the country for at least one semester.
- Furthermore, these institutions cannot offer online or distance learning programs and must seek approval from the UGC for any new programs in India.
- The regulations also stipulate that foreign universitiesmust not establish representative offices in India and are encouraged to provide merit-based or need-based scholarships to Indian students.
What is University Grants Commission:
- The University Grants Commission of India is a statutory body under the provisions of UGC Act, 1956.
- It is responsible for coordination, determination and maintenance of standards of higher education.
- It provides recognition to universities in India, and disburses funds to such recognized universities and colleges.
- The Department of Higher Education, Ministry of Education is the Nodal Ministry of UGC.
Context: SC refuses to vacate its order on maintaining existing condition on appointment of priests in Tamil Nadu temples
More about the news:
- The Supreme Court has rejected the Tamil Nadu government’s request to vacate its September 25 order, which mandated the maintenance of the existing criteria for appointing ‘archakas’ (priests) in temples following the ‘Agamic’ tradition.
- The state government argued that the appointment of ‘archakas’ was a secular function in which it had the right to participate.
- However, the court did not concur, noting that the state government was not adhering to the prescribed procedures of ‘agama’ traditions for ‘archaka’ appointments in temples of a specific denomination.
- The Supreme Court has now set a hearing for January 25, 2024, and has decided not to halt the ongoing proceedings in the Madras High Court on a similar issue.
- The state government has sought the Supreme Court’s order’s vacation, claiming that the agama does not specify qualifications, age, selection procedures, or retirement criteria.
- Therefore, it should follow the Tamil Nadu Hindu Religious Institutions Employees (Conditions of Service) Rules, 2020.
- The state government order being challenged relates to sending individuals who have completed ‘Archakas Training schools’ for practical training in temples under the guidance of senior ‘Archakas’ who work in those temples.
- If the status quo order issued on September 25 is enforced, the state government says that it would hinder the filling of 2,405 vacant ‘Archakaship’ positions in Agamic temples and delay the required training for those who have completed courses at Archakas Training Schools, thereby making it challenging to conduct worship in Agamic temples.
What are Agamas and Tantras:
- Agamas and Tantras constitute a vast body of spiritual knowledge and practices, transmitted through the oral tradition of Guru-Shishya, similar to the Vedas.
- They serve as the foundational texts for various aspects of Hinduism, both mainstream and specialized.
- The term “Agama” translates to “that which has come to us,” while “Tantra” means “that which protects with detail.”
- In the context of Sruti, the eternal word, two forms are recognized: Nigama (Veda) and Agama.
- Agama and Tantra are generally categorized under the same literary class but include distinct branches:
- Vaishnava Agamas
- Saiva Agamas
- Sakta Tantras
- Vaishnava and Saiva texts are typically referred to as Agamas, while the term “Tantra” usually pertains to Sakta texts.
- However, technically, Tantra is a subset of Agama, and these terms are often used interchangeably due to Tantra’s central importance.
- Agama Shastra serves as a manual for Hindu worship, rituals, and temple construction.
- “Agama” means “handed down by tradition” in Sanskrit, and “shastra” signifies a commentary or treatise.
- The Agama texts are highly authoritative and hold significance in the selection and training of temple priests.
- Agama Principles stress the importance of adhering to precise rituals and procedures to maintain the sanctity and spiritual efficacy of the temple.
- Agamas encompass a wide array of subjects, serving as comprehensive guides to various Hindu practices, including worship manuals, methods for salvation, Yoga, Devata, Yantra, Prayogas employing mantras, temple construction, town planning, iconometry, domestic practices, civil codes, social and public festivals, holy places, principles of the universe, creation and dissolution, spiritual philosophy, different realms, austerities, and numerous interconnected topics.
What are the Legal and Historical Aspects of Temple Priest Appointments:
- Legal Aspects:
- Article 15 of the Indian Constitution expressly forbids discrimination based on religion, race, caste, sex, or place of birth. It mandates that no citizen should face discrimination by the State concerning employment opportunities or access to public facilities.
- The Indian states possess the legal authority to regulate religious institutions and their internal matters, encompassing the appointment of temple priests.
- State legislation can stipulate qualifications, procedures, and eligibility prerequisites for such appointments.
- Historical Aspects:
- Within many Hindu temples, the tradition of hereditary appointments has been a long-standing practice. Under this tradition, the role of temple priest is typically inherited within specific families or castes.
- Temples frequently adhere to the guidance outlined in Agama scriptures, which offer instructions for temple rituals and customs.
- This hereditary practice is often rooted in the belief in the transmission of ancestral knowledge and the preservation of lineage purity.
- It’s important to note that in certain regions, there is a prevalence of open competitions or selection based on qualifications for the appointment of temple priests, in contrast to the hereditary system.
What are few SC Judgements regarding Temple Priest Appointments:
- InSeshammal& others vs. State of Tamil Nadu (1972):
- The Supreme Court established that the appointment of an Archaka constitutes a secular function, while the performance of religious services by these priests is an integral element of the religion.
- The court made a clear distinction between the secular and religious aspects and clarified that the guidelines provided in the Agamas are primarily relevant to the execution of religious services.
- It was determined that any individual, regardless of their caste or creed, could be appointed as an Archaka as long as they possessed the necessary knowledge and qualifications in the Agamas and the associated temple worship rituals.
- Following this Supreme Court verdict, the Madras High Court, in a related case, ruled that caste-based ancestry would not influence the appointment of an Archaka if the selected person met the required criteria.
- In N. Adithayan vs. Travancore Devaswom Board (2002):
- The Supreme Court rejected the customary assertion that only Brahmins (in this instance, Malayala Brahmins) were entitled to perform temple rituals.
- The court decreed that individuals who were adequately trained and qualified to conduct the puja rituals in an appropriate manner could undertake these religious practices.
- The Supreme Court underscored that the practice of restricting ritual performances to Brahmins in certain temples stemmed from historical factors, such as limited access to Vedic literature and sacred initiation.
Section: Legislation in news
Context: UP govt may give senior citizen right to legally evict children
More about the news:
- The government of Uttar Pradesh is considering amending state rules under the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 to provide legal rights to parents and senior citizens.
- This amendment would empower senior citizens to evict their children or relatives from their homes if they fail to provide financial support for their well-being.
- The proposal has been sent to the state Cabinet, with expected approval.
- Under these proposed changes, senior citizens could take action to forcibly evict individuals residing in their homes, including children and relatives, if they are not receiving the necessary financial support.
- This eviction process would be carried out by local tribunals for senior citizens, without requiring court intervention, and a 30-day notice would be given to the individuals to vacate the property.
- If they fail to comply, the local police force will be employed to assist with the eviction.
- These amendments aim to strengthen the rights of senior citizens to ensure their financial support and well-being.
What is Maintenance and Welfare of Parents and Senior Citizens Act, 2007:
- The Maintenance and Welfare of Parents and Senior Citizens Act, 2007 is a legislative initiative of the Ministry of Social Justice and Empowerment, Government of India.
- The primary objective of this legislation is to establish more effective provisions for the maintenance and welfare of senior citizens and parents.
- It legally mandates that children and heirs are responsible for providing monthly allowances as maintenance to senior citizens and parents.
- The Act also aims to create a straightforward, expeditious, and cost-effective mechanism for safeguarding the lives and property of older persons.
- Following approval by the Parliament of India, the Act received Presidential assent on December 29, 2007.
- The first case under this Act was filed in November 2011 by Siluvai (age 84) and his wife Arulammal (age 80) of Tuticorin. They filed the case against their son and daughter-in-law for neglect, in addition to allegations of taking away their two homes and gold jewelry.
- The Act establishes the Maintenance Tribunal to provide speedy and effective relief to elderly persons.
- Section 19 of the act also mandates the establishment of an old age home in every district and provides for the protection of life and property of the elderly.
- Parents can opt to claim maintenance either under Section 125 of the Criminal Procedure Code, 1973 or under this Act but they cannot opt for both.
- State governments shall set the maximum monthly maintenance allowance. The Act caps the maximum monthly allowance at Rs 10,000 per month.
- Punishment for not paying the required monthly allowance shall be Rs 5,000 or up to three months imprisonment or both.
- India is a signatory party of the Vienna International Plan of Action on Ageing, 1982, and the United Nations Principles for Older Persons, 1991, and All have advocated for legislative and policy measures to protect older individuals, including the Madrid International Plan of Action on Ageing, which was published in 2002 and enhance their well-being.
Section: Military exercises
Context: India’s Ministry of Defence and the US Department of Defence, organized the first ever INDUS-X investors’ meet
More about the news:
- Before the 2+2 Indo-US ministerial dialogue, an event called INDUS-X investors’ meet was organized by India’s Innovations for Defence Excellence (iDEX) and the US Department of Defense.
- During the event, the INDUS-X Educational Series (Gurukul) was launched.
- Additionally, two defense innovation challenges related to underwater communications and oil spill detection were launched under INDUS-X, with applications currently under review from startups of both nations.
- INDUS-X aims to enhance strategic technology partnerships and defense industrial cooperation between India and the US.
What is INDUS-X:
- It is a major upcoming initiative under the Initiative on Critical and Emerging Technologies (iCET), with the aim to promote partnerships and collaboration between the defence innovation ecosystems of both countries.
- INDUS-X is focused on advancing high-tech cooperation and exploring opportunities for joint research, development, and production in the defence sector.
- INDUS X event aimed to foster collaboration between Indian and US start-ups in deeptech innovations especially in the domains of Space and Artificial Intelligence.
What is iCET:
- The Initiative on Critical and Emerging Technologies (iCET) is a framework agreed upon by India and the U.S. for cooperation on critical and emerging technologies in areas including artificial intelligence, quantum computing, semiconductors and wireless telecommunication.
- It was first announced in May 2022, alongside the QUAD meeting in Tokyo, Japan.
- Under iCET, both countries have identified six areas of cooperation which would include co-development and co-production, that would gradually be expanded to QUAD, then to NATO, followed by Europe and the rest of the world.
- Focus Areas of the Initiative:
- AI research agency partnership.
- Defense industrial cooperation, defense technological cooperation, and defense startups.
- Innovation Ecosystems.
- Semiconductor ecosystem development.
- Cooperation on human spaceflight.
- Advancement in 5G and 6G technologies, and adoption of OpenRAN network technology in India.
What is Open RAN:
- Open Radio Access Network, or Open RAN, is a key part of a mobile network system that uses cellular radio connections to link individual devices to other parts of a network.
- It comprises antennae, which transmits and receives signals to and from our smartphones or other compatible devices. The signal is then digitised in the RAN-base station and connected to the network.
- O-RAN uses software to make hardware manufactured by different companies work together.
Subject : Environment
Section: Climate Change
- The Kerala government has created an Organic Farming Mission to encourage the adoption of sustainable organic and climate smart farming practices in the State.
- The mission aims at expanding organic farming to 5,000 hectares in the next five years through an annual target of 1,000 ha.
What is organic farming?
- It is a method of farming system which primarily aimed at cultivating the land and raising crops in such a way, as to keep the soil alive and in good health by use of organic wastes (crop, animal and farm wastes, aquatic wastes) and other biological materials along with beneficial microbes (biofertilizers) to release nutrients to crops for increased sustainable production in an eco friendly pollution free environment.
The key characteristics of organic farming include
- Protecting the long term fertility of soils by maintaining organic matter levels, encouraging soil biological activity, and careful mechanical intervention.
- Providing crop nutrients indirectly using relatively insoluble nutrient sources which are made available to the plant by the action of soil microorganisms.
- Nitrogen self-sufficiency through the use of legumes and biological nitrogen fixation, as well as effective recycling of organic materials including crop residues and livestock manures.
- Weed, disease and pest control relying primarily on crop rotations, natural predators, diversity, organic manuring, resistant varieties and limited (preferably minimal) thermal, biological and chemical intervention.
- The extensive management of livestock, paying full regard to their evolutionary adaptations, behavioral needs and animal welfare issues with respect to nutrition, housing, health, breeding and rearing.
- Careful attention to the impact of the farming system on the wider environment and the conservation of wildlife and natural habitats.
Steps taken by the Government to promote organic farming in India
- National Project on Organic Farming (NPOF)
- National Horticulture Mission (NHM)
- Horticulture Mission for North East and Himalayan States (HMNEH)
- Rashtriya Krishi Vikas Yojana (RKVY)
- Network Project on Organic Farming of Indian Council Agricultural Research (ICAR).
- In addition to this, Government is implementing a Cluster based programme to encourage the farmer for promoting organic farming called Paramparagat Krishi Vikas Yojana (PKVY).
Key features of PKVY
- Groups of farmers would be motivated to take up organic farming under Paramparagat Krishi Vikas Yojana (PKVY).Fifty or more farmers will form a cluster having 50 acre land to take up the organic farming under the scheme.
- In this way during three years 10,000 clusters will be formed covering 5.0 lakh acre area under organic farming.There will be no liability on the farmers for expenditure on certification.
- Every farmer will be provided Rs.20,000 per acre in three years for seed harvesting of crops and to transport produce to the market.
- Organic farming will be promoted by using traditional resources and the organic products will be linked with the market.
- It will increase domestic production and certification of organic produce by involving farmers.
India has made tremendous progress in improving case detection and reversed the impact of COVID19 on the tuberculosis(TB) programme, noted the World Health Organization’s (WHO)‘Global TB Report 2023’ released earlier this week, the Union Health Ministry said on Wednesday.
India’s Alarming TB Burden:
- India accounts for 27% of the world’s TB burden.
- Recorded 2.8 million TB cases with a 12% case fatality ratio, estimating 342,000 TB-related deaths.
- MDR-TB Crisis: India recorded 1.1 lakh cases of multidrug-resistant TB (MDR-TB) in 2022.
About Tuberculosis (TB):
- Causal Agent: Mycobacterium tuberculosis
- Bacille Calmette-Guérin (BCG) vaccine is given to babies or small children to prevent TB.
- Transmission: Airborne infection, spreads through close contact in poorly ventilated, crowded spaces.
- Symptoms of Active Lung TB: Cough with sputum, sometimes containing blood, Chest pains, Weakness, Weight loss, Fever, Night sweats.
India’s Initiatives to Eliminate TB:
- Under the Pradhan Mantri TB Mukt Bharat Abhiyan, India aims to eliminate TB from the country by 2025 (5 years earlier than the global target of 2030).
- The national strategic plan 2017-2025 sets the target of India reporting no more than 44 new TB cases or 65 total cases per lakh population by 2025.
- An online Ni-kshay portal has been set up to track the notified TB cases.
- In 2018 Nikshay Poshan Yojna was launched, which aimed to support every Tuberculosis (TB) Patient by providing a Direct Benefit Transfer (DBT) of Rs 500 per month for nutritional needs.
- TB is a treatable and curable disease. It is treated with a standard 6-month course of 4 antimicrobial drugs that are provided with information, supervision and support to the patient by a health worker or trained volunteer.
- Anti-TB medicines have been used for decades and strains that are resistant to 1 or more of the medicines have been documented in every country surveyed.
- Multidrug-resistant tuberculosis (MDR-TB) is a form of TB caused by bacteria that do not respond to isoniazid and rifampicin, the 2 most powerful, first-line anti-TB drugs.
- MDR-TB is treatable and curable by using second-line drugs such as Bedaquiline.
- Extensively drug-resistant TB (XDR-TB) is a more serious form of MDR-TB caused by bacteria that do not respond to the most effective second-line anti-TB drugs, often leaving patients without any further treatment options.
Global Efforts to Combat TB?
- 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.
About Global Tuberculosis Programme:
- The WHO Global Tuberculosis Programme works towards the goal of a world free of TB, with zero deaths, disease and suffering due to the disease. The team’s mission is to lead and guide the global effort to end the TB epidemic through universal access to people-centred prevention and care, multisectoral action and innovation.
- The Law Commission of India, in Report No. 282, recommended that “in cases where the accused is not known, registration of an eFIR should be allowed for all cognisable offences”.
- If the accused is known, as a preliminary step, registration of an eFIR may be allowed for cognisable offences wherein the punishment provided under the Indian Penal Code (IPC) and other laws is up to three years.
Recommendations from law commissions report
- e-FIR Recommendation: Proposal for e-FIR registration in all cognizable offenses with unknown accused. Verification through OTP and Aadhaar ID proof suggested by the Law Commission.
- Verification Process: Complainant verification through OTP for authenticity. Aadhaar ID proof mandated to confirm the complainant’s identity.
- Information Deletion: Automatic deletion of unverified information within two weeks. Complainant’s failure to sign the e-FIR within the prescribed time leads to deletion.
- Timeframe for Physical Signing: Complainants given three days to physically sign the e-FIR for formal registration. Failure to sign within the stipulated time results in non-registration.
- Human Intervention: The article emphasizes the importance of human interaction in certain cases, suggesting that electronic registration may be suitable only for offenses where immediate police interaction is not crucial.
- Definition: Digital system for reporting crimes to the police.
- Process: Information submitted online through a national portal. Complainant required to physically sign the report within a specified timeframe (usually three days).
- Objective: Streamline crime registration with initial electronic submission.
- Cognizable Offenses Definition: Offenses for which police can make an arrest without a warrant. Immediate police action is permissible upon receiving information or a complaint.
- Serious Nature: Generally involves more severe crimes. Examples include murder, robbery, kidnapping, and certain types of fraud.
- No Court Permission Needed: Law enforcement can initiate an investigation without court authorization. Immediate action can be taken by the police upon learning about the offense.
- Jurisdictional Variations: Classification as cognizable or non-cognizable may vary in different legal systems. The severity and nature of offenses determine their categorization.
- Limited Efficacy: The concept of e-FIR relies on obtaining information electronically but requires physical signatures within a prescribed time, limiting the effectiveness of the online process.
- Lack of Discussion: The article notes that the Law Commission did not discuss models adopted by states currently lodging e-FIRs, leading to potential gaps in understanding the practical implementation.
Section: Legislation in news
A Division Bench of the Supreme Court, has granted a special leave to the State of Tamil Nadu (petitioner) to appeal against a judgment and orders of Madras High Court holding that a sale of adulterated gingelly oil by a retail trader did not amount to an offence under the Prevention of Food Adulteration Act because there was a notice board put up in the shop that the oil was not fit for human consumption.
About Food Adulteration
- Adulterant means any material which is or could be employed for making the food unsafe or substandard or misbranded or containing extraneous matter. Adulterated food is dangerous because it may be toxic and can affect health and it could deprive nutrients essential for proper growth and development.
Risks of Adulterated Food
- Some companies adulterate food as a consequence of intentional actions, often designed to increase profitability or cut corners. Others end up adulterating food unintentionally because of lax standards and regulations. Either way, adulterated food costs the Indian economy around 1.17 lakh crore in 2017-18 and comes with some significant risks for human consumption:
- Food Impurity – First, food may end up being “impure” or may contain ingredients it wasn’t intended to contain. This could be anything from residue of pesticides to metal or glass, or even a completely different substance.
- Contamination – Adulterated food may have a higher likelihood of becoming contaminated at a later date, such as decomposing or becoming infected with bacteria.
- Allergens –Mislabeled or misrepresented products may contain allergens that consumers aren’t aware of. If the wrong person consumes one of these products, they may suffer a severe allergic reaction.
- Nutritional Needs – Adulterated food may also lead people to believe they’re getting nutritional needs when they aren’t. This is especially important for infants, children, and adolescents, who need adequate intake and sufficient vitamins and minerals for healthy growth.
Effects of Food Adulteration
- Increases the Impurity in Food: Food adulteration increases the impurity in the foods items thus making it imperfect to consume. Consumption of adulterated food for long will have both short term and long term impact on our health. Impure food is unsafe to consume so it is better to produce stuff as far as possible or to get stuff from organic centers or directly from the farmers.
- Lack of Nutritional Value: Adulterated food is of low quality and has no or very less nutritional values. Also, certain adulterated food has a different taste too. By purchasing and consuming adulterated food, we are compromising on our health and taste.
- Leads to Various Diseases: Due to the consumption of adulterated food, we can get various chronic diseases like liver disorder, diarrhoea, stomach disorder, lahyrism cancer, vomiting, dysentery, cancer, joint pain, heart diseases, food poisoning, etc. The minerals, chemicals, and poor quality substances added to the food are responsible for these health conditions which we might have to undergo in future. Some adulterated foods can even lead to abortion or a brain damage. Young children consuming adulterated food for long will have issues in conceiving.
- Currently, India not only has one of the highest rates of out-of-pocket expenditure for health expenses but also one of the highest levels of people susceptible to a debilitating health crisis.
Related Laws in India
- In India, the Ministry of Health and Family Welfare is completely responsible for providing safe food to the citizens. Further, along with ministry, other laws are also taking care of food adulteration in India. These are given below:
- The Prevention of Food Adulteration Act, 1954:
- It has laid down guidelines to provide pure and wholesome foods to consumers. The Act was last amended in 1986 to make punishments more stringent and to empower consumers further.
- Food Safety and Standards (FSS) Act:
- The Food Safety and Standard Act passed by the parliament in 2006 but the regulations were notified only in 2011. It repealed the previous law. Among the key amendments, the Food Safety and Standards Authority of India (FSSAI) has proposed to include a new section to crack down on food adulteration.
Section: External sector
- Government’s Focus on SEZs:
- Commerce Minister Piyush Goyal is exploring ways to relax certain restrictions for Special Economic Zone (SEZ) units to promote growth.
- There is a proposal to allow SEZ units to sell products in the domestic market without import duties.
- This proposal aims to align SEZ practices with those of India’s Free Trade Agreement (FTA) partner countries.
- WTO Compliance Considerations:
- Benefits of input duty remission schemes for exports to SEZs are subject to ensuring adherence to World Trade Organization (WTO) regulations.
- Emphasized the cautious examination needed to avoid potential violations of WTO rules.
- SEZs and Export Dynamics:
- SEZs are majorly engaged in exporting petroleum products and software, which are currently not covered under the Remission of Duties or Taxes on Export Products (RoDTEP) Scheme.
- The proposed liberalization for SEZs aims to bring them in line with industry practices in India’s FTA partner countries.
- Industry-Government Collaboration:
- Minister Goyal highlighted the collaborative approach between the government and the industry to elevate the national initiative for ease of doing business to the next level.
- Continuous feedback from businesses through the National Single Window System is encouraged to identify gaps and suggest measures for improvement.
- Special Economic Zones (SEZs):
- SEZs are delineated ‘enclaves’ with unique regulations and trade practices compared to the rest of the country, providing special privileges to the units operating within them.
- They serve as efficient zones to address infrastructural and business environment issues in a shorter timeframe.
- Special Economic Zones Act was passed in 2005. However, SEZs were operational in India from 2000 to 2006 (under the Foreign Trade Policy).
- Objectives of the SEZ Act:
- Creation of additional economic activity.
- Promotion of goods and services export.
- Generation of employment.
- Facilitation of domestic and foreign investments.
- Development of infrastructure facilities.
- Facilities and Incentives for SEZs:
- Duty-free import/domestic procurement of goods for SEZ unit development and operation.
- 100% Income tax exemption for the initial 5 years, 50% for the subsequent 5 years, and 50% of the ploughed back export profit for the following 5 years.
- Exemption from Minimum Alternate Tax (MAT).
- Exemption from Central Sales Tax, Service Tax, and State sales tax (subsumed into GST, supplies to SEZs are zero-rated under IGST Act, 2017).
- Single window clearance for central and state-level approvals.
- Concerns with Present SEZs:
- India’s SEZs have not been as successful as those in several other countries, such as China, Korea, Malaysia, and Singapore.
- Many SEZs in India were established to avoid taxes rather than for export purposes.
- Weak linkages with the rest of the economy have limited the performance of most manufacturing SEZs in India.
- Ineffective coordination between the central SEZ Act and state-level legislation has undermined the effectiveness of the single window system.
- Inadequate policy design, implementation, and monitoring have hindered India’s industrialization efforts through SEZs.
Revamp of SEZ Policy to Meet Export Challenges:
- Review the recommendations of the Baba Kalyani committee on the SEZ policy of India.
- Discussions focused on addressing global challenges faced by Indian exporters and facilitating the ease of doing business in the current global market scenario.
- Completed Recommendations:
- Review of specific exclusions proposed in NFE computation in light of the Make in India initiative.
- Sharing of duty-exempted assets/infrastructure between units allowed with specific approval.
- Formalization of the de-notification process for enclaves and delinking its present mandatory usage for SEZs purpose only.
- Other Implemented Recommendations:
- Support to servicification of manufacturing zone.
- Allowing manufacturing enabling services companies.
- Flexibility to enter into a long-term lease agreement with stakeholders in Zones in line with the State policies.
- Additional Changes and Initiatives for SEZs:
- Delegation of powers to Development Commissioner for shifting of SEZ unit from one zone to another.
- Supplies of services in DTA against foreign exchange or Indian Rupees to be counted towards NFE.
- Setting up cafeteria, gymnasium, creche, and other similar facilities/amenities.
- Objectives of the Committee:
- Evaluation of the SEZ policy and making it WTO compatible.
- Suggesting measures for maximizing utilization of vacant land in SEZs.
- Merging the SEZ policy with other Government schemes like coastal economic zones and national industrial manufacturing zones.
- India’s target of becoming a USD 5 trillion economy by 2025 necessitates a paradigm shift in manufacturing competitiveness and services, requiring policy evaluation and compliance with WTO regulations.
- The Centre has notified the rates and norms for the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme.
About the scheme:
- Announced in 2020 as a replacement for the Merchandise Export from India Scheme (MEIS), it ensures compliance with the rules of the World Trade Organisation.
- Aims to refund embedded central, state, and local duties or taxes, thus removing the disadvantage faced by Indian exports.
- Aims for zero rating of exports by refunding all domestic taxes, including those levied by States and local bodies.
- Refunds under RoDTEP, deemed WTO-compliant, range from 0.5% to 4.3% of the Free On Board value of outbound consignments.
- Certain sectors like steel, pharma, and chemicals excluded due to their strong export performance.
- Helps exporters meet international standards for exports with affordable testing and certification within the country.
- Aims to make tax assessment fully automatic, granting businesses access to GST refunds via an automatic route, thereby increasing the economy and working capital.
Free Trade Agreement (FTA):
An arrangement between two or more countries or trading blocs aimed at reducing or eliminating customs tariffs and non-tariff barriers on substantial trade between them.
Categories of FTAs:
- Preferential Trade Agreement (PTA)
- Comprehensive Economic Cooperation Agreement (CECA)
- Comprehensive Economic Partnership Agreement (CEPA)
Spaghetti Bowl Effect:
- The multiplication of free trade agreements (FTAs), supplanting multilateral World Trade Organization negotiations as an alternative path toward globalization.
- Coined by Jagdish Bhagwati in 1995.
- Criticized as counter-productive in promoting freer and more open global trades due to the proliferation of crisscrossing FTAs.
- According to Bhagwati, the proliferation of FTAs can lead to the adoption of discriminatory trade policies, reducing the economic benefits of trade.
Ease of Doing Business
- World Bank’s Ease of Doing Business Report assesses business regulation across 190 economies.
- India became the top-ranked country in South Asia for the first time and third among the BRICS.
- Ease of doing business index annually released by World Bank in its Ease of Doing Business Report since 2004.
- 10 indicators include starting a business, dealing with construction permits, paying taxes, and more.
Section: International Organisation
- The IMF Executive Board approved a 50% quota increase to provide critical resources to developing nations.
- The proposal emphasizes the need for fair representation, safeguarding the poorest members’ shares.
Quota Increase Proposal:
- The proposal advocates for a 50% quota increase to be distributed to members based on their current quotas.
- If approved by the Board of Governors, it will strengthen global financial stability and minimize reliance on borrowed resources.
- The proposed increase is aimed at preserving the IMF’s robust, quota-based, and adequately funded structure within the Global Financial Safety Net.
Boosting Financial Stability:
- Quotas serve as the IMF’s financial and governance foundation, determining lending capacity and voting power.
- The plan is to decrease borrowed resources like Bilateral Borrowing Agreements and New Arrangements to Borrow (NAB) to maintain the Fund’s current lending capacity.
Future Quota Realignment:
- The proposal acknowledges the importance of realigning quota shares to reflect members’ relative positions in the world economy.
- The Executive Board is called upon to work on possible approaches for further quota realignment by June 2025 under the 17th General Review of Quotas.
Expectations and Decision:
- The proposal seeks broad support from the membership and highlights the IMF’s ability to foster cooperative solutions amid global challenges.
- The Board of Governors is scheduled to vote on the proposal by December 15, 2023, requiring an 85% majority of the total voting power.
About International Monetary Fund (IMF) –
- Founded in 1944, the IMF fosters global monetary cooperation and financial stability.
- Works to facilitate international trade, promote employment, sustainable economic growth, and reduce global poverty.
- World Economic Outlook, published by IMF, accompanied by lengthy discussions on the effect of fiscal, monetary, and trade policies on growth prospects and financial stability
- Surveillance: Gathers extensive economic data, providing updated economic forecasts globally.
- Capacity Building: Offers technical assistance, training, and policy advice to member countries.
- Lending: Provides loans with specific conditions to nations facing financial challenges.
- Board of Governors: Oversees IMF operations, advising the Managing Director.
- Executive Board: Consists of 24 directors representing member countries, responsible for day-to-day operations.
- Managing Director: Leads the IMF’s staff and the Executive Board.
Voting Power and Quotas:
- Quotas determine financial commitments and voting power of member countries.
- The IMF has played a crucial role in managing various global financial crises, including the Suez Crisis, OPEC oil embargo, and the Asian financial crisis, among others.
India and IMF:
- India holds a significant SDR quota and votes in the IMF, benefiting from technical assistance and financial aid during crises.
- India currently holds 2.75% of SDR quota, and 2.63% of votes in the IMF
- The IMF has supported India during economic challenges, offering advice and financing assistance.
- SDR is one of the components of the Foreign Exchange Reserves (FER) of India.
Criticisms and Reforms:
- Criticisms include structural under-representation, undermining of democratic ownership, and weak learning from past mistakes.
- Calls for greater transparency, representation, and tailored policies for different countries have been made.
About Special Drawing Rights (SDR)
- Meaning: SDR is an international reserve asset created by the IMF in 1969 to supplement its member countries’ official reserves.
- Composition: It is based on a basket of five major currencies: U.S. dollar, euro, Chinese renminbi, Japanese yen, and British pound sterling.
- Allocation: SDRs are allocated to member countries by the IMF as per their quota shares.
- Review: The SDR basket is reviewed every five years to ensure its reflection of the relative importance of currencies in the global economy.
Significance of SDRs:
- Global Reserve Asset: SDRs provide an additional liquidity cushion to countries during times of financial stress and economic uncertainty.
- International Unit of Account: SDR serves as a common unit of accounting for the IMF and certain other international organizations, facilitating international financial transactions.
- Diversification of Reserves: Helps in diversifying countries’ reserves, reducing dependency on any single currency and promoting global financial stability.
- Emergency Response: Enables the IMF to provide liquidity to its members, assisting in managing balance of payments difficulties and supporting global economic stability.
The International Monetary Fund (IMF) operates on a quota system and uses Special Drawing Rights (SDRs) as its unit of account.
IMF Quota System:
IMF Quotas play a pivotal role in determining member countries’ financial contributions, voting power, access to financing, and SDR allocations.
IMF Quotas are the building blocks of the IMF’s financial and governance structure, denominated in Special Drawing Rights (SDRs), and determined by a formula considering a member country’s GDP, economic openness, economic variability, and international reserves.
- Quota Subscription: Each member contributes a sum known as a quota subscription upon joining the IMF.
- Quota Formula: It involves a weighted average of GDP (50%), openness (30%), economic variability (15%), and international reserves (5%).
- GDP Measurement: GDP is measured using market exchange rates (60%) and purchasing power parity (PPP) exchange rates (40%).
- Quotas in SDRs: Quotas are expressed in SDRs, representing member countries’ contributions to the IMF.
- Voting Power: Voting power is linked to quotas, with larger quotas leading to greater influence in decision-making within the IMF.
- Resource Contributions: Quotas determine the maximum financial resources a member is obliged to provide to the IMF.
- Voting Power: Quotas are crucial in determining the voting power in IMF decisions, with votes based on a combination of quota size and basic votes.
- Access to Financing: The maximum financing a member can obtain from the IMF is based on its quota.
- SDR Allocations: Quotas determine a member’s share in the general allocation of SDRs.
Quota Reviews: The IMF conducts general quota reviews at regular intervals, and any changes in quotas require approval by an 85% majority of the total voting power. A member’s quota cannot be changed without its consent.
Need for Reforms: Calls for reforms in the IMF governance structure have been made due to shifts in global economic and geopolitical power. The disparity in quota shares has led to frustrations among some IMF members, with concerns about the concentration of power among certain countries.
The recent decision to maintain IMF quotas without changes highlights the challenges in achieving governance reforms that reflect the evolving dynamics of the global economy.
Special Drawing Rights (SDRs): SDRs are not a currency but an IMF unit of account, representing claims to currency held by IMF members.
Value Determination: SDR value is calculated daily based on market exchange rates, and the valuation basket includes major currencies such as the U.S. dollar, Euro, Japanese yen, pound sterling, and Chinese renminbi.
Currency Exchange: SDRs are exchangeable among IMF member countries, providing liquidity and serving as a supplementary international reserve asset.
About New Arrangement to Borrow (NAB)
The New Arrangement to Borrow (NAB) is an agreement established by the International Monetary Fund (IMF) that allows member countries and institutions to lend additional funds to the IMF.
- Purpose: The NAB was created as a fund mobilization arrangement for the IMF to have access to additional resources through borrowing from member countries.
- Structure: The NAB is set up as a series of credit arrangements between the IMF and a select group of 38 member countries and institutions. The list of participating countries and institutions can be subject to change.
- Origins: The concept of the NAB was initially proposed at the 1995 G-7 Halifax Summit in response to the Mexican financial crisis. Subsequently, the IMF’s Executive Board adopted a decision to establish the NAB in January 1997, and it became effective in November 1998.
- Revival during the Global Financial Crisis: The NAB was reinvigorated amid the global financial crisis of 2009. Its purpose was to ensure that the IMF had sufficient lending resources to address the pressing financial challenges, particularly those arising from the Eurozone crisis.
- By allowing the IMF to access additional resources through borrowing from its member countries and institutions, the NAB serves as a critical mechanism to bolster the IMF’s lending capacity during periods of economic and financial turmoil.
- The European Central Bank and other policymakers across Europe need to keep interest rates at current elevated levels until they’re sure inflation is under control despite sluggish growth, the International Monetary Fund (IMF) said on Wednesday, warning against premature celebration as inflation declines from its peak.
- The Washington-based IMF said that the cost of underestimating inflation’s persistence could be painfully high and result in another painful round of rate hikes that could rob the economy of a large chunk of growth.
- The European Central Bank, the Bank of England and the other central banks that aren’t part of the 20-country eurozone are reaching the peak of their interest rate cycles, while some have started to reduce policy rates, the IMF said in its twice-yearly regional economic outlook for Europe. Nonetheless, a prolonged restrictive stance is still necessary to ensure that inflation moves back to target.
- Historically, it takes an average of three years to return inflation to lower levels, while some anti-inflation campaigns have taken even longer, the IMF said.
- While central banks appear to have ended their series of hikes, a failure to finish the job and the resulting return to rate hikes could cost as much as a full percentage point of annual economic output.
- Alfred Kammer, director of the IMF’s Europe department, warned against premature celebration as he spoke to journalists in connection with the outlook. It is less costly to be too tight than too loose with interest-rate policy, Kammer said. The ECB, which halted its rate increases at its October 26 for the first time in over a year, is in a good spot, he said.
- Inflation in the eurozone peaked at 10.6 per cent in October 2022, and has steadily fallen to 2.9 per cent in October.
- The European Central Bank has raised its benchmark deposit rate by fully 4.5 percentage points between July 2022 and September 2023, from minus 0.5 per cent to 4 per cent.
- Higher rates are the typical tool central banks use to control inflation, since higher rates mean higher borrowing costs for consumer purchases and financing new officials and factory equipment. That reduces demand for goods and eases pressure on prices, but can also hurt growth – a difficult tightrope act for the ECB.
- The Bank of England left its benchmark rate unchanged at 5.25 per cent at a policy meeting last week.
- The IMF said Europe was headed for a soft landing after the impact of the rate hikes and did not foresee a recession, while growth forecasts remained uncertain and could turn out better or worse than expected.
- It forecast growth for the region – including the UK and Switzerland as well as the 27-country European Union – of 1.3 per cent this year and 1.5 per cent next year. For the eurozone, the outlook is for 0.7 per cent growth for this year and 1.2 per cent next year.
- If inflation falls faster than expected, it will boost consumer real income and spending and growth might improve. But an escalation of Russia’s war against Ukraine and accompanying increased sanctions and disruptions to trade could mean weaker growth.
Inflation in India
Inflation: Inflation refers to the general increase in prices and the fall in the purchasing power of money. It occurs when the demand for goods and services surpasses their supply, leading to an increase in their prices. High inflation can erode the value of savings and income, leading to reduced consumer spending and economic instability.
Types of inflation include:
- Demand-pull inflation: Caused by increased consumer demand that outpaces supply.
- Cost-push inflation: Caused by an increase in production costs, such as wages or raw materials, leading to higher prices.
Deflation: Deflation is the opposite of inflation and refers to a sustained decrease in the general price level of goods and services. It occurs when the supply of goods exceeds demand, leading to reduced prices. Deflation can discourage spending, as consumers may delay purchases in anticipation of lower prices, which can further slow down economic growth and potentially lead to recession.
Hyperinflation: Hyperinflation is an extremely high and typically accelerating inflation. It occurs when the price levels rise rapidly, eroding the value of the currency. This phenomenon often results from a collapse in the currency and is detrimental to the economy, leading to a loss of confidence in the currency and undermining economic stability.
Stagflation: Stagflation is a situation characterized by a combination of stagnant economic growth, high unemployment, and high inflation. It presents a challenge for policymakers, as traditional measures to stimulate economic growth, such as increasing the money supply, may exacerbate inflation.
Reflation: Reflation is an attempt to stimulate an economy that is experiencing deflation. It involves the implementation of monetary or fiscal policies to increase the money supply and boost aggregate demand, with the aim of reversing deflation and stabilizing prices.
Disinflation refers to a slowdown in the rate of inflation. While prices may still be rising, they are doing so at a slower pace compared to the previous period. Disinflation does not imply a decrease in prices, as is the case with deflation, but rather a reduction in the rate of increase of the general price level in an economy. Disinflation can occur for various reasons, such as increased productivity, reduced consumer demand, or a drop in the prices of commodities.
Core inflation represents the long-term trend in the price level and factors out short-term volatility caused by external factors such as energy and food prices. It excludes highly volatile commodities like food and energy, which can undergo rapid price fluctuations due to seasonal and market conditions. By eliminating these volatile elements, core inflation provides a more accurate reflection of the underlying inflationary trends in the economy.
Central banks often use core inflation as a key indicator when formulating monetary policies and making adjustments to interest rates. It allows policymakers to focus on the persistent inflationary pressures in the economy, enabling them to make informed decisions that can maintain price stability and promote sustainable economic growth.
Headline Inflation refers to the complete inflation figure including all goods and services within the consumer price index basket. It encompasses all items, including those that are highly volatile, such as food and energy. Headline inflation is the most commonly reported measure of inflation and is what is typically referenced in the news and by the general public. While headline inflation provides a comprehensive view of the overall price levels, it can be influenced by temporary factors that do not reflect the underlying inflationary pressures.
Types of Inflation:
Demand-pull inflation occurs when aggregate demand surpasses aggregate supply, while cost-push inflation results from reduced aggregate supply due to factors like labor, land, and capital shortages or hoarding.
Factors Causing Inflation:
Demand-side inflation arises from increased consumption, high exports leading to a devalued currency, and excessive money circulation that reduces the purchasing power of money.
Cost-push inflation is influenced by shortages in factors of production and artificial scarcity due to hoarding.
Measurement of Inflation: In India, inflation is primarily measured through two indices: the Wholesale Price Index (WPI) and the Consumer Price Index (CPI), which track changes in wholesale and retail-level prices, respectively.
The National Coal Index (NCI) has observed a slight increase of 3.83 points, reaching 143.91 in September 2023, marking the first surge since April 2023. This upturn can be attributed to the temporary escalation of coal prices in the global markets.
The upward movement of the NCI signals a growing demand for coal, likely due to the approaching festive season and winter in the country. This development is expected to encourage coal producers to expand domestic coal production to meet the increasing energy requirements.
The National Coal Index (NCI) is a critical price index that serves to reflect the changes in the price level of coal during a specific month in comparison to the fixed base year, which is FY 2017-18. Rolled out on June 4, 2020, the NCI was conceptualized with the primary objective of providing an accurate representation of the market price of coal.
Launched by the Ministry of Coal on June 4, 2020, the NCI serves as a price index that reflects the fluctuations in the price of coal in a particular month compared to the fixed base year. It plays a crucial role in determining the Premium (per tonne) or Revenue Share (as a percentage) through a market-based mechanism.
Ministry of Coal has started Commercial Auction of coal mines on revenue share basis.
The NCI is designed to encompass all transactions of raw coal in the Indian market, covering various grades of coking and non-coking coal traded in both regulated (power and fertilizer) and non-regulated sectors. It includes transactions at the notified price, coal auctions, and coal imports.
The implementation of the NCI brings forth several benefits, including its role as a foundational indicator for taxation purposes.
The NCI encompasses prices from various sales channels, such as Notified Prices, Auction Prices, and Import Prices, and is updated on a monthly basis.
Components of NCI:
- Sub-indices: The NCI is composed of five sub-indices, including three for Non-Coking Coal and two for Coking Coal. The three sub-indices for Non-Coking Coal are combined to derive the Non-Coking Coal Index, while the two sub-indices for Coking Coal contribute to the Coking Coal Index. Each sub-index accounts for specific grades of coal.
Implementation of NCI:
- Revenue Share Calculation: The NCI is used to determine the revenue share per tonne of coal produced from auctioned blocks, calculated using a predefined formula. The index covers all transactions of raw coal in the Indian market, encompassing various grades of coking and non-coking coal in both regulated (power and fertilizer) and non-regulated sectors. Washed coal and coal products are excluded from the index.
Section: External Sector
India’s Vulnerability to Imports:
- According to Dilip Oommen, CEO of ArcelorMittal Nippon Steel India, India is highly vulnerable to imports, particularly in the steel sector.
- He emphasized the need for trade barriers as a safeguard against the rising influx of steel imports.
Quality Control Measures:
- Oommen suggested exploring various trade barriers to tackle the issue, emphasizing the need to assess whether the imported steel can be manufactured domestically.
- Strengthening quality control norms and enforcing stringent Bureau of Indian Standards (BIS) norms were highlighted as potential solutions.
- Oommen expressed concerns about dumping, particularly by certain countries offering steel at lower prices than the prevailing domestic rates.
- The steel industry in India has been adversely affected by increased imports, primarily from China, in recent months.
Threat from China:
- Oommen highlighted that the dumping of steel by China is not just a threat to India but to the world as a whole.
- Despite expectations of reduced production in China, steel exports from the country have risen significantly, creating concerns in the global steel market.
Brief on Steel Sector (India)
- India’s Steel Sector: The steel industry in India has a significant economic contribution, amounting to over 2% of the country’s GDP, and its growth is pivotal for the development of the nation’s infrastructure and construction sectors.
- Employment and Production: The sector directly employs 6 lakh individuals and indirectly supports 13 lakh jobs. India has emerged as the third-largest steel producer globally, surpassing the United States in 2015, with a total production of 89 million tonnes.
- Challenges Faced: Despite these achievements, the Indian steel sector faces significant challenges, including an increase in steel imports, global steel glut leading to predatory pricing, and a surge in cheap imports from countries like China, Korea, and Japan.
- Impact of Global Factors: The global slowdown in steel demand has adversely affected the domestic market, making it challenging for Indian producers to compete with countries like China, which are selling steel at discounted prices. Anti-dumping measures have been implemented but haven’t entirely mitigated the challenges.
- Raw Material Challenges: The closure of iron ore mines in Goa, production constraints in Karnataka and Odisha, and the poor quality of domestically produced metallurgical coke present challenges for the sector.
- Path to Competitiveness: Enhancing research and development, improving the quality of raw materials, setting up washeries for coal, and strategizing the use of iron ore and coke can significantly improve the competitiveness of the Indian steel industry.
- Tariff barriers involve the imposition of taxes or duties on imports and exports. These duties can be specific (based on the quantity of goods) or ad valorem (based on the value of goods).
- They are primarily used to control the flow of goods between countries, allowing governments to raise revenue, protect domestic industries, and regulate trade.
- Non-tariff barriers refer to various restrictions and obstacles to trade that do not involve the imposition of tariffs. These barriers are more diverse and include various policy measures and regulations.
- Non-tariff barriers can take the form of quotas, embargoes, sanctions, licensing requirements, product standards, subsidies, customs and administrative procedures, and other regulatory mechanisms.
- They are often implemented to protect domestic industries, ensure product quality and safety, and prevent the entry of foreign goods that may pose risks or unfair competition to domestic producers.
Both tariff and non-tariff barriers can significantly impact international trade by influencing the cost, availability, and competitiveness of goods and services in the global market. Governments often use a combination of both types of barriers to achieve various economic and policy objectives.
Summary of the Tariff and Non-Tariff Barriers: –
- Direct payments made by the government to domestic producers, which can take the form of cash, low-interest loans, tax incentives, etc.
- Helps lower the cost of production for domestic goods, making them more competitive in international markets.
- Export subsidies are considered unfair trade practices and can be countered by countervailing duties.
- Quantity Controls:
- Quotas: Direct restrictions on the quantity of goods that can be imported, often enforced through import licenses.
- Voluntary Export Restraints (VERs):Bilateral agreements limiting a country’s export of specific goods voluntarily.
- Local Content Requirements: Mandate that a portion of the product must be produced domestically, favoring local producers.
- Government purchases are exclusively from domestic producers, prohibiting the use of imported goods.
- Labelling and Testing Standards:
- Countries require imported goods to meet specific packaging, labeling, and testing standards before being sold in their markets.
- Sanitary and Phytosanitary (SPS) Measures:
- Measures to protect against risks associated with food safety, animal health, and plant protection.
- Specific Permission Requirements:
- Potential importers or exporters must obtain permission from governmental authorities through costly and time-consuming licensing procedures.
- Exchange of goods between countries due to currency constraints or other factors.
- Administrative Barriers to Trade:
- Delays and restrictions resulting from administrative regulations and procedures related to international trade.
- Anti-dumping & Countervailing Duty (CVD):
- Anti-dumping duties are imposed to counteract the practice of exporting goods at prices lower than the domestic market price or production cost.
- Countervailing duties nullify the adverse effects of subsidies on imported products and are imposed under the World Trade Organisation rules.
Sanitary and Phytosanitary (SPS) Measures:
Sanitary and Phytosanitary (SPS) measures are a set of regulations implemented by governments to protect human, animal, or plant life or health from various risks associated with the importation of certain products. These measures ensure that imported goods meet specific standards related to food safety, animal and plant health, and disease control.
SPS measures can include regulations on the use of additives, pesticides, maximum residue levels, and product testing procedures, among others. The aim is to prevent the spread of diseases, pests, or contaminants that could harm human, animal, or plant health within the importing country.
Technical Barriers to Trade (TBT) Measures:
Technical Barriers to Trade (TBT) measures refer to various standards, regulations, and conformity assessment procedures that are used to ensure the safety, quality, and technical compatibility of products in the market. These measures can include product specifications, labeling requirements, packaging standards, and testing and certification procedures.
TBT measures aim to protect consumer health and safety, preserve the environment, and meet other societal objectives. However, they can also be used as a form of trade protection by creating obstacles for foreign products to enter the market. To comply with TBT measures, exporters may need to invest in product adaptation, testing, and certification processes.
Inverted Duty structure
An inverted duty structure refers to a situation in which the import duty on finished goods is lower than the import duty on the inputs used for producing those finished goods. In other words, it occurs when the tax on raw materials or intermediate goods is higher than the tax on finished products.
This can create an anomaly where the import of finished goods becomes cheaper compared to the import of raw materials, leading to adverse impacts on domestic manufacturing and industries.
An inverted duty structure can distort the market and make it more favorable for imports rather than domestic production, potentially harming local manufacturers’ competitiveness.
It may also discourage the development of domestic industries and disincentivize local production, affecting the overall economic growth and industrial development. Resolving an inverted duty structure often involves a re-evaluation of the tax structure to ensure that the duties on inputs and finished products are appropriately aligned to encourage domestic production and industrial growth.
Duty Structure in India
The recent developments in the steel industry indicate growing concerns about cheaper imports, particularly from China, leading to an increased focus on trade remedies and measures to protect the domestic market.
- Antidumping Duty Consideration: The Steel Ministry has forwarded a request for imposing antidumping duty on specific steel products to the Finance Ministry, which is currently under consideration. The ministry is also prepared to intervene if necessary to safeguard the interests of the domestic industry.
- Increase in Chinese Imports: Investigations revealed a significant surge in Chinese steel imports, reaching 44 percent on an annualized basis following the suspension of countervailing duty (CVD) since February 2021. The DGTR recommended a 19 percent CVD on these imports to the Finance Ministry.
- Import-Export Imbalance: India has recently become a net importer of finished steel, including non-alloyed and alloyed products, and stainless steel, with imports surpassing exports by 0.28 million tonnes. This development has raised concerns within the industry and is being closely monitored by the authorities.
- Challenges in Raw Material Supply Chains: Securing coking coal, a vital raw material for steel production, has become challenging due to geopolitical factors. India is exploring alternate sources for coking coal, with a focus on countries such as Russia and Mongolia to ensure a stable supply.
- Impact of Scrap Trade Restrictions: The limitations on scrap trade, driven by countries securing their own supplies and promoting low-carbon steelmaking, have the potential to affect the Indian steel industry. While EU regulations might impact scrap imports, the overall impact is not expected to be significant.
These developments underscore the ongoing efforts to protect the Indian steel industry from unfair trade practices and maintain a stable supply of essential raw materials. The government remains committed to addressing challenges in the industry, including trade imbalances and supply chain disruptions.
About Directorate General of Trade Remedies (DGTR)
DGTR, or the Directorate General of Trade Remedies, is a key entity established by the Government of India to safeguard the interests of domestic industries and mitigate the impact of unfair trade practices. It is responsible for overseeing various trade remedial measures, including the imposition of anti-dumping duties and countervailing duties.
Functions and significance of the DGTR:
- Formation and Integration: Established in 1998 as the Directorate General of Anti-Dumping & Allied Duties, it was renamed as the Directorate General of Trade Remedies (DGTR) in 2018. The DGTR was formed by merging the functions of DGAD, DGS, and the Safeguards (QR) functions of DGFT, creating an integrated single-window national authority.
- Trade Remedial Measures: The primary responsibilities of the DGTR include administering various trade remedial measures such as Anti-Dumping Duties, Countervailing Duties, and other Safeguard Measures. These measures are crucial in ensuring fair competition in the Indian market and protecting domestic industries from unfair trade practices.
- Efficiency and Governance: The consolidation of these entities into the DGTR has led to significant improvements in terms of streamlined processes and quicker decision-making, resulting in reduced time frames for providing relief to the domestic industry. This move aligns with the government’s aim of “Minimum government and maximum governance.”
- Expertise and Support: The DGTR is composed of officers with diverse skill sets in fields such as Law, Costing, Economics, Finance, Customs, Revenue, and International Trade. This diversity enables the organization to provide comprehensive support to domestic industries and exporters in handling trade remedy investigations initiated by foreign countries.
- Transparency and Compliance: The DGTR operates within the framework provided by the World Trade Organization (WTO) and various international agreements related to trade remedial measures. It ensures transparency and timeliness in its operations, providing a level playing field for the Indian domestic industries in the global trade arena.
Who imposes the Anti-Dumping duty in India?
The Directorate General of Trade Remedies (DGTR) is responsible for the imposition of anti-dumping duties in India. It assesses the necessity and validity of imposing such duties to prevent the impact of dumping practices on domestic industries.
What is the Countervailing Duties (CVD) rate?
Countervailing duties (CVDs) are tariffs imposed on imports to counteract the negative effects of subsidies provided to foreign producers. The specific rate of countervailing duties can vary depending on the nature of the subsidy and the products involved. These duties are in accordance with the rules set by the World Trade Organization (WTO) and are also known as anti-subsidy duties.
- Dumping is the practice of exporting goods at a price lower than the price in the home market.
- It can negatively impact international trade and local manufacturers’ profits.
- Dumping is considered illegal under the World Trade Organization (WTO) rules if it adversely affects the domestic producers of the importing country.
- Countries often use tariffs and quotas to protect their domestic producers from the practice of dumping.
- Anti-dumping is a protective tariff imposed on foreign imports that are sold at prices significantly lower than their normal value in the home market.
- It is used as a remedy for the distortive trade caused by dumping and is permitted by the WTO.
- Anti-dumping duties can reduce international competition for domestic companies in the long term.
Countervailing Duty (CVD):
- Countervailing duty is imposed on goods that have received government subsidies in the originating or exporting country.
- It is designed to counter the adverse effects of subsidies and ensure fair trade practices.
Sunset Clause for Anti-Dumping Duty:
- The validity of anti-dumping duty is typically for five years from the date of imposition, unless revoked earlier.
- It can be extended for an additional period of five years through a sunset or expiry review investigation.
Authority Administering Trade Remedial Measures in India:
- The Directorate General of Trade Remedies (DGTR) under the Ministry of Commerce and Industry administers various trade remedial measures, including anti-dumping duties, countervailing duties, and safeguard measures.
- It provides trade defense support to the domestic industry and safeguards the interests of exporters in trade remedy investigations initiated by other countries.
Section: Monetary Policy
The rising trend of bank financing for non-banking financial companies (NBFCs) has raised concerns about the potential for systemic contagion, prompting the need for tighter preventive measures, as emphasized by the Centre for Advanced Financial Research and Learning (CAFRAL). This independent body, established by the Reserve Bank of India (RBI), has urged caution and the implementation of checks and balances to mitigate the possible systemic fallout.
The India Finance Report 2023, unveiled by RBI Governor Shaktikanta Das, underscored the dangers of inter-linkages within the financial sector. Notably, larger NBFCs have been borrowing from banks and subsequently lending to smaller NBFCs, leveraging regulatory arbitrage. This close integration has necessitated enhanced monitoring to avert potential systemic repercussions.
The report further cautioned that the growing reliance of NBFCs on scheduled commercial banks for funding, along with banks’ increased cross-lending within the sector, has heightened systemic risks. Additionally, it highlighted the consequences of a contractionary monetary policy, leading to increased risk in NBFCs’ portfolios, especially in terms of unsecured loans.
Observations revealed that bank borrowing constituted a significant portion of NBFCs’ total borrowings, with public sector banks emerging as the primary lenders, followed by private sector and foreign banks. The study emphasized the buildup of systemic risk during tranquil financial periods, emphasizing the potential negative spillovers during crises.
The researchers at CAFRAL stressed the positive correlation between the NBFC index and the bank NIFTY index, emphasizing the crucial role of banks as a vital funding source for NBFCs. They also warned that the increasing interconnectedness within the sector, coupled with reliance on regulatory arbitrage, may have significant systemic implications. Regulatory authorities were urged to exercise caution and establish effective checks and balances to mitigate potential risks in the medium term.
Monetary policies are tools used by central banks to manage and control the money supply in an economy, which in turn influences interest rates and inflation. They can be broadly categorized into two main types: contractionary and expansionary.
- Contractionary Monetary Policy:
- Aim: Aims to reduce the money supply, curb inflation, and slow down economic growth.
- Methods: Central banks implement this policy by increasing interest rates, selling government securities, and raising reserve requirements for banks.
- Impact: This policy can lead to reduced borrowing and spending, higher cost of borrowing, decreased business investments, and a slowdown in the overall economic activity.
- Expansionary Monetary Policy:
- Aim: Aims to stimulate economic growth and increase the money supply in the economy.
- Methods: Central banks implement this policy by decreasing interest rates, buying government securities, and lowering reserve requirements for banks.
- Impact: This policy encourages borrowing and spending, reduces the cost of borrowing, promotes business investments, and stimulates overall economic activity.
The choice between a contractionary or expansionary policy depends on the current state of the economy, the central bank’s goals, and the prevailing economic conditions, including the level of inflation, employment, and overall economic growth.
About CAFRAL –
CAFRAL stands for the Centre for Advanced Financial Research and Learning.
It is an independent body established by the Reserve Bank of India (RBI) to conduct research, training, and knowledge dissemination in the fields of banking and finance.
CAFRAL’s primary goal is to support the development and stability of the Indian financial sector through comprehensive research, policy analysis, and training programs for professionals in the industry. It operates as a think tank and a hub for generating insights and promoting understanding of various aspects of the financial system, contributing to informed policy decisions and effective regulation.
NBFC and Bank NIFTY Index
The NBFC index and the bank NIFTY index are two separate financial indicators that provide insights into different aspects of the financial sector, specifically related to non-banking financial companies (NBFCs) and banking institutions.
- NBFC Index:
- The NBFC index is a financial indicator that tracks the performance and trends of the non-banking financial companies in the market.
- It provides a snapshot of the overall performance of the NBFC sector, including factors such as growth, profitability, and risk exposure.
- The index helps investors and analysts assess the health and stability of the non-banking financial sector, enabling them to make informed investment decisions.
- Bank NIFTY Index:
- The Bank NIFTY index is a market index that represents the performance of the banking sector in India.
- It comprises the most liquid and large Indian banking stocks listed on the National Stock Exchange (NSE).
- The index is an important benchmark for investors, providing insights into the overall performance and trends of the banking industry, including both public and private sector banks.
Subject : Environment
Section: Climate Change
- A new analysis suggests that extreme weather linked to climate change might be much harder on native species than on non-native ones.
- As the planet warms, extreme weather events– heat waves, cold snaps, droughts and floods- are becoming more common and destructive.
- These sudden, violent changes in conditions could be helping to fundamentally reshape ecosystems.
Findings of the report:
- Non-native species are more adaptable to extreme weather than native species.
- While populations of non-native species may take a hit, the impact on native species species is far-reaching, who will lose geographic distribution and struggle to recover.
- The native terrestrial animals tended to be hit hard by heat waves, cold spells and droughts, while native freshwater animals were susceptible to most events apart from cold spells.
- Non-native terrestrial animals were only affected by heat waves, while non-native freshwater animals tended to suffer only from storms. Non-native marine animals were largely indifferent to most disturbances.
Why do non-native animals fare better?
- They are able to rapidly establish populations in alien environments, have more adaptable behaviour and physiology, and have a higher tolerance for disturbances.
- They are able to take advantage when extreme weather wipes out a chunk of native animals.
Need to protect native species:
- According to a report prepared by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services for the United Nations, thousands of invasive species introduced to new ecosystems around the world are causing more than $423 billion in estimated losses to the global economy every year by harming nature, damaging food systems and threatening human health.
- Monitoring areas recently hit by extreme weather events and focusing management efforts can help in the quick recovery of native species.
- Promoting recovery, avoiding disappearance or helping native species that are known to be vulnerable to extreme events could give native species enough time to evolve and adapt to novel weather patterns driven by climate change.
Source of this article: Indian Express
Subject : Geography
Section: Economic geography
- In its order directing the Punjab, Haryana, Uttar Pradesh and Rajasthan governments to ensure that the burning of crop stubble be “stopped forthwith”, the Supreme Court mentioned a “particular kind of paddy grown mostly in Punjab”.
Pusa-44 variety of paddy:
- This variety (possibly the Pusa-44) and “the time period in which it is grown” were seen as major causes of stubble burning and the resultant pollution problems in the National Capital Region.
- Bred by the New Delhi-based Indian Agricultural Research Institute (IARI).
- It is a long-duration variety that takes 155-160 days to mature, from the time of nursery sowing of seeds to harvesting of grain. Thus, farmers resort to burning the standing stubble and loose straw that remains after harvesting using combine machines.
- It is a high-yielding variety — 35-36 quintals an acre, with some farmers even harvesting 40 quintals an acre.
- It is the standing stubble from this variety that is largely being burnt since the start of November.
- The variety, PR-126, has been bred by the Punjab Agricultural University. Although it takes just 125 days to mature (from seed-to-grain), paddy yields from PR-126 are just 30-32 quintals per acre,lower than the 35-36 quintals from Pusa-44.
- It is a high-yielding and early maturing variety developed by IARI.
- It is a cross between PUSA-44 and CB-501.
- Pusa-2090 yields equal to Pusa-44 and matures in only 120-125 days.
- CB-501 was one of the 256-odd Japonica lines (extensively grown in East Asia) that IARI obtained from the International Rice Research Institute at Los Baños in the Philippines.
- CB-501 contributes to stronger culm (rice stem) and produces more number of grains per panicle (grain-bearing ear-heads).
Source of this article: Indian Express
Subject : Environment
Section: Climate Change
- As the climate crisis intensifies, two terms are in sharp focus: adaptation and ‘loss and damage’ (L&D).
- Adaptation is the proactive response to climate change, the art of survival using which communities and countries make deliberate choices to prepare for and cope with climate-related challenges.
- L&D represents the irreversible consequences of climate change: impacts that can’t be avoided or mitigated through adaptation efforts. They encompass the real losses that extend beyond monetary value and cut to the core of human rights and well-being. L&D includes economic losses, human casualties, and the degradation of ecosystems and cultural heritage.
Genesis of the L&D fund:
- Historic pollution from Developed Countries has elevated the world’s average surface temperature by more than 1 degree Celsius and is currently inflicting damage worldwide, but especially in the poorest nations.
- CoP19 of UNFCCC- 2013: held at Warsaw, Poland.
- Countries agreed to formally establish the L&D fund.
- It was being created to provide financial and technical assistance to economically developing nations that were incurring L&D due to climate change.
- CoP25 of UNFCCC: held at Madriad, Spain in 2019
- The Santiago Network for L&D was set up, but countries didn’t commit any funds.
- The vision of the Santiago Network is to catalyze the technical assistance of relevant organizations, bodies, networks and experts, for the implementation of relevant approaches for averting, minimize and addressing L&D at the local, national and regional level, in developing countries that are particularly vulnerable to the adverse effects of climate change.
- CoP26 of UNFCCC: held at Glasgow, U.K. in 2021
- The Glasgow Dialogue on finance for L&D was established to continue discussions over the next three years on the fund.
- CoP27 of UNFCCC: held at Sharm El- Sheikh, Egypt in 2022
- Members agreed to set up the L&D fund and a Transitional Committee (TC) to figure out how the new funding mechanisms under the fund would operate. The TC was also to prepare recommendations that countries would consider, deliberate on, and potentially adopt by COP 28.
- The L&D fund was conceived as a critical component of global climate action, recognising that some of the consequences of climate change are irreversible and beyond the capacity of vulnerable nations to handle.
Transitional Committee (TC) meetings:
- So far, four meetings of the TC have concluded with no clear recommendations.
- The principal bones of contention had to do with hosting the fund at the World Bank, the foundational principle of common but differentiated responsibilities (CBDR),climate reparations, and the eligibility of all developing nations for the funds.
- At the TC5 meeting, developing nations conceded to the fund being hosted by the World Bank Financial Intermediary Fund for an interim period of four years, serviced by a new dedicated and independent secretariat. While the World Bank is yet to confirm.
- Developed countries including the U.S., have remained non-committal about being primary donors to the fund.
- The unwillingness of wealthy nations to fulfil intended commitments undermines faith in global climate negotiations and hampers the cooperative spirit necessary to address climate change.
- It threatens climate justice and exacerbates the suffering of vulnerable communities in developing nations in the form of food shortage, people displacement, and conflict, and force communities to cope independently with a worsening climate and its consequences.
- The financial crises and economic downturns in one region can have extensive repercussions due to the interconnectedness of the global economy.
- Security implications as well as conflicts and tensions emerge in vulnerable nations and threaten to spill across borders.
Source of this article: The Hindu
Subject : Environment
- Delhi government has ordered the Delhi Pollution Control Committee (DPCC) to restart the Connaught Place smog tower at full capacity.
About Smog Tower:
- Setup in 2021 at the cost of 20crore
- Designed and developed by: IIT-Bombay, Minnesota University of the USA and Tata Project limited.
- The structure is 24 m high — an 18-metre concrete tower, topped by a 6-metre-high canopy. At its base are 40 fans,10 on each side.
- Each fan can discharge 25 cubic metres per second of air, adding up to 1,000 cubic metres per second for the tower as a whole.
- Inside the tower in two layers are 5,000 filters. The filters and fans have been imported from the United States.
How it works?
- The tower uses a ‘downdraft air cleaning system’ developed by the University of Minnesota.
- Polluted air is sucked in at a height of 24 m, and filtered air is released at the bottom of the tower, at a height of about 10 m from the ground. When the fans at the bottom of the tower operate, the negative pressure created sucks in air from the top. The ‘macro’ layer in the filter traps particles of 10 microns and larger, while the ‘micro’ layer filters smaller particles of around 0.3 microns.
- The downdraft method is different from the system used in China, where a 60-metre smog tower in Xian city uses an ‘updraft’ system — air is sucked in from near the ground, and is propelled upwards by heating and convection. Filtered air is released at the top of the tower.
- Efficiency of smog tower: It can reduce air pollution by 70%-80% within a 50-metre radius and by 15%-20% up to a radius of 300 metres.
Source of the article: The Hindu
Context: Recent SC hearing on Electoral bonds
Before the controversial Electoral Bonds (EB) Scheme was introduced in 2018, there was something called an Electoral Trusts (ET) Scheme, which was introduced by the UPA government in 2013.
What are electoral trusts?
These are trusts set up by companies with the objective to distribute the contributions received from other companies and individuals to the political parties. The companies which are registered under section 25 of the of the Companies Act, 1956 are only eligible to make an application for approval as an electoral trust
Who can and who cannot contribute to electoral trusts?
An individual who is a citizen of India A company registered in India an association of persons (Indian residents)
An individual who is not a citizen of India Other electrotrusts (approved under the Electoral Trusts Scheme) Contributors without PAN NRIs without a passport number
How are funds distributed by electoral trusts?
For administrative expenses, the electoral trusts are permitted to set aside a maximum of 5 per cent of the total funds collected during a financial year. The remaining 95 per cent of total income of the trusts including any surplus from the previous financial year is required to be distributed to eligible political parties.
What Laws/Rules govern the creation and functioning of electoral trusts?
- The Central Government amended the Income Tax Rules, 1962 on January 31, 2013, to insert Rule 17CA which lists the functions of electoral trusts approved by the Central Bureau of Direct Taxes (CBDT).
The Central Government, also launched ‘The Electoral Trusts Scheme, 2013 which specified the eligibility and procedure for registration as an electoral trust apart from laying down the format for their registration.
And how does the working of this scheme differ from that of the EB Scheme?
- The electoral trusts route is transparent on contributors and beneficiaries. Where there is only one contributor and one beneficiary of a particular trust, the public can know for sure who is funding whom.
- However, if there are multiple contributors and recipients of donations, it cannot be specified which company is funding which party. But it is difficult to pinpoint which donor gave to which party.
- Electoral bonds, on the other hand, are exempt from disclosure requirements. Parties inform the ECI of the aggregate donations received through EBs, but give no details of the donors, which they are required to do in case of donations in cash or by cheque or bank transactions over Rs.20,000 each.
- The government argues that this lack of transparency in donations through EBs is to maintain the privacy of donors.
How do donations through electoral trusts stack up against donations made through EBs?
- Data from nine financial years (2013-14 to 2021-22) show that political funding through the two government schemes shot up after the introduction of EBs, with the bulk of donations coming through the newer scheme.
- Over this entire nine-year period, a total Rs 2,269 crore was routed to parties though the ETs, from Rs 85.37 crore in 2013-14 to Rs 464.81 crore in 2021-22.
- During the period 2017-18 — the financial year in which EBs were first made available — to 2021-22, however, the money donated through EBs was more than five times the amount that came through the Electoral Trusts. Thus, between 2017-18 and 2021-22, political parties got a total Rs 1,631 crore through ETs, while Rs 9,208 crore was donated through EBs.