Brief of newspaper articles for the day bearing
relevance to Civil Services preparation
- GS PAPER 2
- Justice Kohli takes over as CAT chief {Quasi Judicial Bodies}
- Imagining a neighbour’s turbulence {India – Pakistan}
- Last chance for a welfare state {Development
- GS PAPER 3
GS PAPER 2
[1] Justice Kohli takes over as CAT chief
What happened?
- Justice Permod Kohli has been appointed as the new chairman of the Central Administrative Tribunal (CAT) for five years.
Who was the previous CAT chairman?
- Justice Syed Rafat Alam was the previous CAT chairman.
Administrative Tribunals Act 1985
- Using the powers conferred by the Article 323A of the Constitution, Parliament passed a law to establish the Administrative tribunals in India
- The Administrative Tribunals Act 1985 provides for adjudication or trial of disputes and complaints with respect to recruitment and conditions of service of public servants.
- The act has made provisions for the Central Administrative Tribunal for the Centre and a State Administrative Tribunal for a particular State.
- In addition, the Act also provides for the establishment of Joint Administrative Tribunals to hear cases from more than one State.
Central Administrative Tribunal
- Its function is to adjudicate the disputes with respect to recruitment and conditions of service of persons appointed to public services and posts in connection with the affairs of the Union or state or other local authorities within the territory of India or under the control of Government of India.
- The CAT is headed by a chairman who must be either a sitting or a retired Judge of a High Court. Other than Chairman, there are 16 Vice-Chairmen and 49 Members.
- The principle bench is located at New Delhi .
- Central Administrative Tribunal enjoys the status and powers of a High Court.
The provisions of the Administrative Tribunals Act, 1985 do not apply to the following:
- Members of paramilitary forces
- Armed forces of the Union
- Officers or employees of the Supreme Court
- Persons appointed to the Secretariat Staff of either House of Parliament or the Secretariat staff of State/ Union Territory Legislatures.
[2] Imagining a neighbour’s turbulence
News
The regional geopolitics around Pakistan
- The regional situation also contributed to the deterioration in civil-military ties.
- The army was increasingly uncomfortable with PM Sharif’s efforts to improve relations with India.
- The army was unhappy with the cooperation in the investigations into the Pathankot terror attack which it felt was driven by Prime Minister Sharif’s ambition to host Prime Minister Modi at the SAARC summit.
- The army was suspicious that in the run-up to the summit, Prime Minister Sharif would even be tempted to seek some kind of forward movement on bilateral trade and regional connectivity which would earn him support with the business community.
About SAARC
- The South Asian Association for Regional Cooperation (SAARC) is an economic and geopolitical organisation of eight countries that are primarily located in South Asia or the Indian subcontinent
- The SAARC Secretariat is based in Kathmandu, Nepal
- Comprises of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka, Afghanistan.
- SAARC was founded by seven states in 1985, Afghanistan came later
- Pakistan will host the 19th summit of South Asian Association for Regional Cooperation (SAARC) in Islamabad in 2016
[3] Last chance for a welfare state
News
Unlike the money bill issue, a more genuine concern is around privacy of citizens and how the Aadhaar architecture affects it
What is UIDAI
- The Unique Identification Authority of India (UIDAI) is a central government agency of India. Its objective is to collect the biometric and demographic data of residents, store them in a centralised database, and issue a 12-digit unique identity number called Aadhaar to each resident
Current Status of Aadhar
- As of March 2016, the original legislation to back UIDAI was still pending in the Parliament of India. However, on 3 March 2016, a new money bill was introduced in the Parliament for the purpose.
- On 11 March 2016, the Aadhaar (Targeted Delivery of Financial and other Subsidies, benefits and services) Act, 2016, was passed in the Lok Sabha.
What are positives
- Aadhaar act creates a mechanism for unique identification of individuals in order to deliver subsidies, services and benefits from the Consolidated Fund of India alone
- Aadhaar is a random number which never starts with a 0 or 1, and is not loaded with profiling or intelligence into identity numbers that makes it insusceptible to fraud and theft
Privacy is a concern
- Some people still consider it having privacy drawbacks
- The data of every individual is seen as risk and data protection is a risk.
Why was it passed as money bill
- The fact that the act gives the state vast powers and has a potential impact on rights is no reason not to characterise it as a money bill.
- The archetypal money bills — taxation acts — not only affect fundamental freedoms of individuals, to do business, to eat out, or even more fundamentally to live as free citizens in India itself, but also form the basis for the modern state to perform its functions.
- The Rajya Sabha took time and disruptions took long time for debates.
GS PAPER 3
[1] Promoting equity with variable fees
What happened?
- Human Resource Development Ministry has decided to raise the annual undergraduate student fees at the Indian Institutes of Technology to Rs. 2 lakh.
Who has been exempted from this decision?
- Students from the Scheduled Castes and Scheduled Tribes
- Candidates with disability
- Candidates from families with a defined low income .
Why this move?
- So that these leading education institutions can realise their real costs.
- It is a policy of affirmative action as marginalised sections have been exempted.
- It is important that fees for higher education are structured in such a way that the opportunity for the brightest students to enrol in the best institutions is not linked to their socio-economic backgrounds.
- Education is a basic right and access to this must be widened by every possible means
How to retain talent?
- Many IIT graduates have left for good research and employment prospects abroad, raising the question whether India derived adequate social returns for the beneficial and relatively low-cost education that these institutions offered them.
- The imperative should therefore be to attract and retain talent, while protecting academic freedom and the principle of equity.
- This can be done through a funding system that does not close the door on a meritorious student who finds the fees unaffordable.
- An income-linked loan scheme open to everyone, tied to the ability of the graduate to repay (rather than the status of a student’s parents) would be an equitable option.
- The IITs should still offer generous assistantships flowing from social and charitable endowments.
- It is also important to ensure that the liberal education loan linkage for IIT students that the Devang Khakhar committee recommended, with no collateral requirements, is in place.
[2] Innovation needs no patent protection
Context
Objections to the new Computer Related Invention(CRI) guidelines issued by the patent office
Who and why the objections
- Legal fraternity which is terrified about the loss of business (no patents, no patent litigation)
- Multinational corporations (MNCs), with business models based on proprietary software, trying to stay relevant in the fast-changing world of collaborative engineering and open-source software.
What the guidelines say
- The guidelines merely seek to clarify the intent of the existing Patents Act
- The patent office took a balanced view of all petitioners before arriving at its opinion. The CRI guidelines are merely a recognition of what the world at large has concluded, that patents make no sense in the world of software.
Who is not interested in patent protection
- Indian startups, product companies and research organisations, which are at the forefront of innovation, have widely welcomed the guidelines, having never been interested in patent protection.
- Technologies we use in our day-to-day lives — Web browsers, Facebook, Twitter, Linux-based mobile phones and set-top boxes, online shopping — are all based on open source and do not rely on patent protection.
Open-source is the future
- Innovation is happening in India primarily because of the lack of distraction from patents.
- The government-funded SHAKTI processor programme at IIT-Madras is creating open-source mobile and server processors to replace proprietary processors.
- The LightStor storage system lab is creating brain-inspired processors, next-generation mobile phones, micro-kernel operating systems and secure networking standards.
- iSPIRT’s work in creating an open Indian stack for banking, unencumbered by patents, is an effort that can radically transform the banking and payment industry.
What is open source
- Open source software is software whose source code is available for modification or enhancement by anyone
- Open source doesn’t just mean something is free of charge
- Because open source code is publicly accessible, students can learn to make better software by studying what others have written.
Why open source
- Open source software is preferred because they have more control over that kind of software
- Some people prefer open source software because they consider it more secure and stable than proprietary software.
- The flexibility and sophistication of the Web we use today depends on freely available scripting languages, such as Perl and PHP, invented by developers who deliberately did not seek patent monopolies for them.
- Facebook runs on PHP. The current generation innovators — various open-source foundations like the Mozilla, Linux and Apache foundations, Facebook, eBay, LinkedIn, Tumblr and innumerable other start-ups — all share the same credo: royalty-free open source.
Who support the new CRI guidelines
- Academics
- Organisations like Society for Knowledge Commons
- Free Software Movement of India
- Software Freedom Law Centre (SFLC) and iSPIRT
- Software start-ups and product companies.
How new CRI guidelines will help India
- Given the lessons of history and considering the amount of litigation that software patents have created in the U.S., the new CRI guidelines will help India from going down this slippery slope.
- Free from external advice and legal crutches from foreign jurisdictions, India will find a way to innovate, both in software and patent law
[3] RBI’s premature change in stance
Issue
Critical analysis of the recent Monetary Policy Review by the RBI
Key Points
- The 25 basis point reduction in repo rate by the RBI is probably indicative of the choice RBI has made to remain accommodative, notwithstanding the fact that core consumer price index inflation has been rising recently.
- RBI has adopted an aggressive approach to address the enduring liquidity shortfall as it seems to have aligned itself with the government’s fiscal stance (revenue expenditure growth of 12%), which attempts to boost consumption.
- RBI plans extensive purchase of government securities to take the average liquidity deficit of Rs.1.6 trillion (Q4 FY16 average) to a neutral level over a period of 12-24 months.
- Hence, in absence of adequate external flows, RBI intends to aid transmission of lower policy rates through its interventions in the government securities or G-secs (through open market operations or OMOs) and money market.
- Adoption of aggressive stimulus ahead of sufficient structural adjustments, however, could shorten the longevity of demand recovery as repercussions of higher inflation and widening external deficit re-emerge.
Inflation
- According to RBI, full implementation of the pay commission and one-rank one-pension (OROP) will have an impact of 100-150 basis points on CPI inflation.
- RBI has taken a benign view on inflation than what might be realistic
- .According to author, there is indeed a case for retail inflation rate to move up by 100-150 basis points from the current 5-5.5%; the conviction has been reinforced by the collected countercyclical stance adopted by government fiscal and RBI’s monetary policy stance.
Growth
- RBI’s projection on growth for FY17 is kept unchanged at 7.6%, little better than 7.4% in FY16. This is pivoted on normal monsoon, consumption boost from the pay commission, OROP and accommodative monetary policy.
- These factors overweigh the downdraft arising from fading impact of lower commodity prices on gross value added (GVA), corporate sector stress, weak global growth and tight credit standards of banks.
Challenges Ahead
- Whether RBI is able to address the liquidity deficit meaningfully will depend on the movement in forex flows, transaction demand for money, strength in credit growth rising and sustenance of credit-deposit wedge.
- The sustainability of RBI’s current approach will be challenged if inflation turns out to be higher than 5% (say 6-6.5%), INR/USD relapses into depreciation and credit demand outpaces deposit growth, thereby sustaining the liquidity deficit.
[4] Ministry plans Rs. 10,000 minimum monthly wage for contract workers
Issue
The contract worker’s wage must be at par with the regular worker’s wage
What has happened
The Labour Ministry has proposed a minimum monthly income of Rs.10,000 for contract workers, evoking strong reactions from the industry.
How will this affect the contract workers
- The move will drastically increase the minimum wages of contract labourers from around Rs.6,000 per month that is paid to them in a few sectors at present.
- Employers will now pay Rs. 10,000 as minimum monthly income for all kinds of work, presently fixed minimum wage is given for 45 economic activities, mentioned in Minimum Wages Act, 1948
About Minimum Wages Act, 1948
The Act provides for fixing wage rate (time, piece, guaranteed time, overtime) for any industry that has at least 1000 workers.
1) While fixing hours for a normal working day as per the act should make sure of the following:
- The number of hours that are to be fixed for a normal working day should have one or more intervals/breaks included.
At least one day off from an entire week should be given to the employee for rest.
Payment for the day decided to be given for rest should be paid at a rate not less than the overtime rate.
2) If an employee is involved in work that categorises his service in two or more scheduled employments, the employee’s wage will include respective wage rate of all work for the number of hours dedicated at each task.
3) It is mandatory for the employer to maintain records of all employee’s work, wages and receipts .
4) Appropriate governments will define and assign the task of inspection and appoint inspectors for the same.
Some facts
- Estimated in a study there were 3.6 crore contract labourers in the country
- Out of them, only 60 lakh contract workers were covered under the Contract Labour (Regulation and Abolition) Act, 1970
- The study also said that 30 per cent of all workers in private sector and around 32 per cent in the public sector are employed through contractors.
Good signs
- The move is welcome as contract labourers are more poor than regular workers according to the National Sample Survey data but it may impact the small-scale industries which may not be able to pay such salary
- This will ensure a minimum salary of Rs.10,000 every month to contract workers employed in all sectors. The unskilled workers in many states are paid far less than this.
Why it the increase in minimum wage necessary
- The issue of wages to contract labour has led to increasing labour unrest in the past.
- In 2008, Graziano Trasmissioni CEO Lalit K Chaudhary was killed in mob violence incited by contract labours of the factory and one of their demands was higher wages.
- Even the Manesar plant of Maruti Suzuki had witnessed labour unrests due to various demands put forward by the contract labour including pay disparity.
[5] Legal position in India for investment overseas by Indian residents
Before 2004
RBI does not allow rupees convertibility into dollars and to take them outside India.
In 2004
For the first time in february 2004 RBI announced a scheme called Liberalised remittance scheme where an Individual can take $ 25000 a year abroad. They could use it for variety of purposes. They could use them for Medical treatment, Children education, Gifting money, Donation or anything.
RBI position at that time was like you can take this money and dump it to the valley, RBI does not have any issue.
In 2016
Limit of 25000$ today changed to 250,000$. Take this money legally outside India for whatever purpose.
The purposes which RBI specified in the beginning way back in 2004 also include buying of shares. Individuals also allowed to make Portfolio investment.
RBI did not specifically allow resident Indians to set up companies abroad.
In 2010
RBI clarifies the question on setting up companies abroad. RBI permits setting up of companies abroad.
Some Individuals interpreted LRS to mean that offshore entities can be set up. Took a technical view that acquiring companies is not the same as setting up companies.
Law firms like Mossack Fonseca works like a factory. They keep on registering company and anybody can acquire shares of them. They offering company off the shell to Individuals.
RBI was clear no. you can’t have a company abroad.
Finally after elaborate discussion
RBI allowed another window ODI.
Overseas Direct Investment Scheme where an Individual could go and set up 100% subsidiary or could also invest in a joint venture.
Many individuals have set up companies overseas prior to august 2013 would have violated the FEMA guidelines.
In The Panama Paper many individuals have set up companies abroad before 2013. It was a complete violation because if you can not take the money outside how could you setup company then.
Some finding are there where Individual bought companies from mossack fonseca between 2004 and 2010. It was also violation of FEMA
Tax Avoidance could violate:
- Foreign Exchange Management Act
- Prevention of money laundering Act
- Black money and Imposition of Tax Act
- Prevention of corruption Act
- Income Tax Act
Panama Paper actually breaks the ownership pattern in tax havens to evade tax.
What next?
- RBI, Income Tax department and Special Investigation Team to take it forward. To bring more clarity to this entire offshore entity business.
1. The lead article of the day is covered under Editorial Today. Click here to read.
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