THE CONTEXT: The 26th Conference of parties of the UN Framework Convention on Climate Change (UNFCCC), or CoP 26 was held in Glasgow, Scotland. At the summit, Prime Minister announced that India will aim to attain a net-zero emission target. What exactly is net-zero and why is it important? What has been India’s stance on it so far, and what does the new announcement by Prime Minister mean? In this article, we discuss everything from scratch from what is COP and its background and its targets.

 THE COP 26 OUTCOMES

The Glasgow meeting was the 26th session of the Conference of Parties to the UN Framework Convention on Climate Change or COP26. These meetings are held every year to construct a global response to climate change. Each of these meetings produces a set of decisions that are given different names. In the current case, this has been called the Glasgow Climate Pact. The main task for COP26 was to finalize the rules and procedures for the implementation of the Paris Agreement. Most of these rules had been finalized by 2018, but a few provisions, like the one relating to the creation of new carbon markets, had remained unresolved. However, due to clear evidence of worsening of the climate crisis in the six years since the Paris Agreement was finalized, host country United Kingdom was keen to ensure that Glasgow, instead of becoming merely a “procedural” COP, was a turning point in enhancing climate actions. The effort was to push for an agreement that could put the world on a 1.5-degree Celsius pathway, instead of the 2 degree Celsius trajectory which is the main objective of the Paris Agreement.

To sum it up, COP 26 results in

• GLOBAL METHANE PLEDGE: Announced by US and EU to reduce the emissions of methane.
• The UK COP26 Presidency released the ‘Climate Delivery Plan’, outlining an agenda and a timetable for developed countries to deliver $100 billion worth of monetary help to low-income countries to manage the climate crisis.
• Initiative on Disaster Resilient infrastructure for small island countries.
• Many countries updated their NDC’s like India.

WHAT WAS ACHIEVED?

Mitigation: The Glasgow agreement has emphasised that stronger action in the current decade was most critical to achieving the 1.5-degree target.

Accordingly, it has:

• Asked countries to strengthen their 2030 climate action plans, or NDCs (nationally-determined contributions), by next year.
• Established a work program to urgently scale-up mitigation ambition and implementation.
• Decided to convene an annual meeting of ministers to raise the ambition of 2030 climate actions.
• Requested the UN Secretary-General to convene a meeting of world leaders in 2023 to scale up the ambition of climate action.
• Asked countries to make efforts to reduce the usage of coal as a source of fuel, and abolish “inefficient” subsidies on fossil fuels.
• Has called for a phase-down of coal, and phase-out of fossil fuels. This is the first time that coal has been explicitly mentioned in any COP decision. It also led to big fracas at the end, with a group of countries led by India and China forcing an amendment to the word “phase-out” in relation to coal changed to “phase-down”.
• But even this was not liking to the developing countries who then got it changed to “phase down unabated coal power and phase out inefficient fossil fuel subsidies while providing targeted support to the poorest and the most vulnerable in line with national circumstance”. Despite the dilution, the inclusion of language on the reduction of coal power is being seen as a significant move forward.

Adaptation: Most of the countries, especially the smaller and poorer ones, and the small island states, consider adaptation to be the most important component of climate action. These countries, due to their lower capacities, are already facing the worst impacts of climate change, and require immediate money, technology, and capacity building for their adaptation activities. As such, the Glasgow Climate Pact has:

• Asked the developed countries to at least double the money being provided for adaptation by 2025 from the 2019 levels. In 2019, about $15 billion was made available for adaptation that was less than 20 percent of the total climate finance flows. Developing countries have been demanding that at least half of all climate finance should be directed towards adaptation efforts.
• Created a two-year work program to define a global goal on adaptation. The Paris Agreement has a global goal on mitigation — reducing greenhouse gas emissions deep enough to keep the temperature rise within 2 degrees Celsius of pre-industrial times. A similar global goal on adaptation has been missing, primarily because of the difficulty in defining such a target. Unlike mitigation efforts that bring global benefits, the benefits from adaptation are local or regional.
• There are no uniform global criteria against which adaptation targets can be set and measured. However, this has been a long-pending demand of developing countries and the Paris Agreement also asks for defining such a goal.

Finance: Every climate action has financial implications. It is now estimated that trillions of dollars are required every year to fund all the actions necessary to achieve the climate targets. But money has been in short supply.

• Developed countries are under an obligation, due to their historical responsibility in emitting greenhouse gases, to provide finance and technology to the developing nations to help them deal with climate change. In 2009, developed countries had promised to mobilize at least $100 billion every year from 2020.
• This promise was reaffirmed during the Paris Agreement, which also asked the developed countries to scale up this amount from 2025. The 2020 deadline has long passed but the $100 billion promise has not been fulfilled. The developed nations have now said that they will arrange this amount by 2023.

WHAT DOES THE GLASGOW AGREEMENT SAY?

A deal aimed at staving off dangerous climate change has been struck at the COP26 summit in Glasgow. The pact has:

1. Expressed “deep regrets” over the failure of the developed countries to deliver on their $100 billion promise. It has asked them to arrange this money urgently and every year till 2025.
2. Initiated discussions on setting the new target for climate finance, beyond $100 billion for the post-2025 period.
3. Ask the developed countries to provide transparent information about the money they plan to provide.

INDIA’S NET ZERO PLEDGE

• India is the world’s fourth-biggest emitter of carbon dioxide after China, the US and the EU.
• But its huge population means its emissions per capita are much lower than other major world economies.
• India emitted 1.9 tonnes of CO2 per head of population in 2019, compared with 15.5 tonnes for the US and 12.5 tonnes for Russia that year.

Prime Minister adds the country constitutes 17 percent of the global population and its contribution to the emission has remained only five percent. Talking about climate finance, PM said, all climate finance promises have been empty ones so far and developed countries must ensure one trillion dollar climate finance at the earliest. The idea of One Sun, One World, One Grid was mooted by Prime Minister at the Glasgow Summit and followed by a launch thereof. The initiative calls for the setting up of a global grid that would be able to transmit solar power that is clean energy anywhere and anytime. It will reduce the storage needs, make solar projects viable and reduce carbon footprints and the energy cost.

WHAT DOES IT MEAN TO BE NET-ZERO?

• Net-zero is when a country’s carbon emissions are offset by taking out equivalent carbon from the atmosphere so that emissions in balance are zero.
• Think about it like a bath – turn on the taps and you add more water, pull out the plug and water flows out. The amount of water in the bath depends on both the input from the taps and the output via the plughole. To keep the amount of water in the bath at the same level, you need to make sure that the input and output are balanced.
• This state is also referred to as carbon neutral; although zero emissions and zero carbon are slightly different, as they usually mean that no emissions were produced in the first place.

WHY DO SOME ANALYSTS SEE NET-ZERO AS CONTROVERSIAL?

• China has announced plans for carbon neutrality by 2060, while the US and EU aim to hit net zero by 2050.
• Although a global coalition has coalesced around the concept, an increasingly vocal group views it as a distraction, helpful only to score political points.
• Carbon neutrality looks to nascent technology to suck out CO2 from the atmosphere.
• Youth movements and some scientists call this procrastination since it enables the fossil fuel industry to continue expanding. Many fossil fuel companies support net-zero goals.

ANALYSIS OF INDIA’S DECISION OF ‘NET ZERO BY 2070’

Pros: 

• Impact of Global Warming & climate change on India i.e India is more vulnerable to extreme weather events like changing rainfall pattern which results into cyclones, flash floods and disasters, impact on agricultural sector etc. Hence it is the interest of India to reduce the emission to contribute towards that direction.
• India always promotes soft power historically, despite of developing country India stated that we will contribute.
• Leader of underdeveloped and small island nations like Mauritius, hence the moral obligation to do so.
• The target of 2070 comes after the target given by other countries such as the US and other European countries by 2050, China by 2060. To some extent, the 2070 target is achievable and pragmatic.

Cons: 

• India is still a developing nation, where it requires huge energy.
• High Population
• Increased poverty
• CBDR principles
• Do not have clean technology
• Difficult to reduce the coal dependency immediately, as of now more than 50 percent of energy production is from coal.
• The major problem lies in the finance/resources to invest in renewable energy technology
• Overall emissions- very less when compared to developed nations.

 India’s Intended Nationally Determined Contribution (INDC) to UNFCCC:

1. To reduce the emissions intensity of GDP by 33%-35% by 2030 below 2005 levels.
2. To achieve about 40 percent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030, with the help of the transfer of technology and low-cost international finance, including from Green Climate Fund.

To create an additional carbon sink of 2.5 to 3 billion tonnes of CO₂ equivalent through other forest and tree cover by 2030.

HOW ARE OTHER BIG COUNTRIES PURSUING NET-ZERO?

As the largest emitter of GHGs, China told the U.N. in 2020 that it would move to net-zero by 2060. Its pledge to peak CO2 emissions before 2030 and achieve carbon neutrality three decades later is among the most high-profile commitments.

• As the second biggest emitter with large historical emissions returned to the Paris Agreement under President Joe Biden with an ambitious 2050 net-zero plan.
• The European Union (E.U.) member-states have committed themselves to reduce emissions by at least 55% by 2030 over 1990 levels.
• In July, the E.U. published a climate law that binds the bloc to its 2030 emissions target and carbon neutrality by 2050.

WHAT ARE INDIA’S CORE DEMANDS?

India has said it is “open to all options” provided it gets assurances that commitments in previous COPs such as developing countries getting compensated to the tune of $100 billion annually, the carbon-credit markets be reinvigorated and the countries historically responsible for the climate crisis be compensated by way of “Loss and Damages,” and clean development technologies be made available in ways that its industries can painlessly adapt to.

Loss and Damage: The frequency of climate disasters has been rising rapidly, and many of these cause largescale devastation. The worst affected are the poor and small countries and the island states. There is no institutional mechanism to compensate these nations for the losses or provide them help in the form of relief and rehabilitation. The loss and damage provision in the Paris Agreement seeks to address that.

What is Climate Justice?

Climate justice is a term used for framing global warming as an ethical and political issue, rather than one that is purely environmental or physical in nature.

1. Climate Litigations
2. Protests
3. Dedicated Judicial/Quasi-Judicial
4. Political Cooperation. (CBDR)

INDIA’S MEASURES

• India is working to reduce its emissions, aligned with the goal of less than two °C global temperature rise, seen in its headline pledge to cut the emissions intensity of GDP by 33%-35% by 2030 over the 2005 level. But it has not favored a binding commitment towards carbon neutrality.
• It is also not aligned with the more ambitious goal of a 1.5°C temperature rise. Among the contentious issues it faces is heavy reliance on coal. According to the International Energy Agency’s India Energy Outlook 2021, coal accounts for close to 70% of electricity generation.
• Cutting greenhouse gases that heat the atmosphere and contribute to climate change involves shifting power production away from coal, greater adoption of renewables, and transforming mobility through electric vehicles. Some praise India for its renewables target: scaling up power from renewables such as solar and wind to 450 GW by 2030.
• Some politicians support a net-zero target as it can put India on a green development trajectory, attracting investment in innovative technologies.
• The National Electric Mobility Mission Plan (NEMM) intends to allow hybrid and electric vehicles to become the first choice for the purchasers so that these vehicles can replace the conventional vehicles and thus reduce liquid fuel consumption in the country from the automobile sector.
• Pradhan Mantri JI-VAN Yojana, 2019: The objective of the scheme is to create an ecosystem for setting up commercial projects and to boost Research and Development in the 2G Ethanol sector. The 2018 Biofuel Policy has the objective of reaching 20% ethanol-blending and 5% biodiesel-blending by the year 2030.
• GOBAR (Galvanizing Organic Bio-Agro Resources) DHAN scheme, 2018: It focuses on managing and converting cattle dung and solid waste in farms to useful compost, biogas, and bio-CNG, thus keeping villages clean and increasing the income of rural households. It was launched under Swachh Bharat Mission (Gramin).

THE WAY FORWARD

What India must do to follow through on COP26 commitments

There must be transparent, credible action that would allow India to demonstrate genuine climate leadership for the rest of the developing world, and secure a better, greener future for its citizens. To meet the challenge at hand, we see three guiding principles that could help bring this week’s bold pledges to life.

• First, India must combine emissions reductions with climate adaptation, embedding environmental justice for people and nature. Justice will involve strengthening a suite of social protection programs, especially for those facing growing rural distress, and investing in disaster preparedness as extreme weather becomes more common. Inspired by civic movements of the 20th century, India can build climate vocabularies and actions for citizens so they can be agents of change and protect those who speak up for environmental justice.
• Second, corporate India has a vital role to play in complementing government policy. Much like how the independence movement galvanized home-grown industry around a shared vision, India Inc’s 21st-century objective must be to foster innovative, inclusive green development. Swadeshi practices weren’t limited to the big players alone — today, MSMEs must accelerate their decarbonization trajectories, too.
• Third, to deliver decarbonization and development, India will need data and democratic deliberation. Building state capacity can help the country move from reactive decision-making to proactive planning and execution. But India will also require the analytical horsepower to craft and implement evidence-based policies.

 A Low-Carbon Development Commission supported by the overarching framework of climate law, as proposed by the Centre for Policy Research, could play this role. Beyond stakeholder engagement, this would also foster coordinated climate governance across India’s institutional arrangement, which is currently scattered across a range of often siloed ministries, agencies, and bodies.

THE CONCLUSION: The COP26 represents a bold step, but the devil is in the details. Following through on these commitments with transparent, credible action would allow India to demonstrate genuine climate leadership for the rest of the developing world, and secure a better, greener future for its citizens. On balance, COP26 took many steps forward. But for the miracle of 1.5-degree C to come true, policies, research, and funding must drive rapid adoption of available climate technologies and make new technologies like clean hydrogen, flexible solar films, high-density storage batteries, and carbon capture and usage a reality. Every commitment, policy, and action in this direction is a ray of hope.

ADD TO YOUR KNOWLEDGE

THE WORLD SHOULD SHUT NEARLY 3,000 COAL PLANTS TO KEEP ON CLIMATE TRACK

According to research by climate think tank TransitionZero, the world will need to shut down nearly 3,000 coal-fired power plants before 2030 if it is to have a chance of keeping temperature rises within 1.5 Celsius.

• TransitionZero said there are currently more than 2,000 GW of coal-fired power in operation across the world, and that needs to be slashed by nearly half, requiring the closure of nearly one unit per day from now until the end of the decade.
• The need to close nearly 1,000 gigawatts of coal-fired capacity would put the onus on China – the world’s biggest source of climate-warming greenhouse gas and owner of around half of the world’s coal-fuelled plants – to accelerate its shift towards cleaner electricity.
• China has reduced the share of coal in its total energy mix from 72.4% in 2005 to 56.8% last year, but absolute consumption volume has continued to rise.

THE BACKGROUND

About the UNFCCC:

UNFCCC is an acronym for the United Nations Framework Convention on Climate Change, signed in 1992 in New York. It came into force on 21st March 1994 for the reduction of Greenhouse gases from the atmosphere to reduce Global warming.   It has been ratified by 197 countries and is called to have a near-universal membership and is the parent treaty of the 2015 Paris Climate Change Agreement. The countries that have ratified the convention are called the UNFCCC conference of parties (COP).

• The main aim of the Paris Agreement is to keep a global average temperature rise this century well below 2 Celsius and to drive efforts to limit the temperature increase even further to 1.5 degrees Celsius above pre-industrial levels.

The UNFCCC was established to work towards “stabilization of greenhouse gas concentrations in the atmosphere.”

It laid out a list of responsibilities for the member states which included:

• Formulating measures to mitigate climate change
• Cooperating in preparing for adaptation to the impact of climate change
• Promoting education, training, and public awareness related to climate change

What is the COP?

The Conference of Parties or COP is the supreme decision-making body of the Convention. All States that are Parties to the Convention are represented at the COP, at which they review the implementation of the Convention and any other legal instruments that the COP adopts and take decisions necessary to promote the effective implementation of the Convention, including institutional and administrative arrangements.

HISTORY OF IMPORTANT COP’S AND ITS OUTCOMES

COP 1, Berlin, 1995: At the first conference, the signatories agree to meet annually to maintain control over global warming and see the need to reduce emissions of polluting gases.

COP 3, Kyoto. 1997: The Kyoto Protocol is adopted with the commitment to reduce emissions of greenhouse gases in industrialized countries. Lays the foundation of the carbon market.

Quick Facts:

• India ratified Kyoto Protocol in 2002.
• The Kyoto Protocol came into force in February 2005.
• There are currently 192 Parties.
• The USA never ratified Kyoto Protocol.
• Canada withdrew in 2012.

• Goal: Fight global warming by reducing greenhouse gas concentrations in the atmosphere to “a level that would prevent dangerous anthropogenic interference with the climate system.”
• Kyoto protocol aimed to cut emissions of greenhouse gases across the developed world by about 5 per cent by 2012 compared with 1990 levels.
• The Protocol is based on the principle of common but differentiated responsibilities.

Kyoto Protocol is the only global treaty with binding limits on GHG emissions.

The Kyoto Protocol emission target gases include

• Carbon dioxide (CO₂),
• Methane (CH₄),
• Nitrous oxide (N₂O),
• Sulphur hexafluoride (SF₆),
• Groups of hydrofluorocarbons (HCFs) and
• Groups of Perfluorocarbons (PFCs).

Two commitments Periods:

1. 2008-2012
2. 2013-2020.

The Kyoto Flexible Market Protocol mechanisms include:

1. Clean Development Mechanism (CDM)
2. Emission Trading
3. Joint Implementation (JI)

COP 13, Bali, 2007: The Bali Roadmap sets a timetable for negotiations for a new international agreement to replace the Kyoto Protocol and include all countries, not only the developed ones.

COP 15, Copenhagen, 2009: The objective of keeping global warming below 2 ºC is validated and developed countries commit to financing developing countries in the long term.

COP16, Cancun, 2010: The Cancun Agreements, which formalizes the commitments set out in Copenhagen, is written and the Green Climate Fund is created mainly for climate actions in developing countries.

COP17, Durban, 2011: This time, all countries agree to start reducing emissions, including the US, and emerging countries (Brazil, China, India, and South Africa). It was decided to negotiate a global agreement that would come into force in 2020.

COP18, Doha, 2012: It is decided to extend the Kyoto Protocol until 2020. Countries like the US, China, Russia, and Canada did not support the extension.

COP20, Lima, 2014: For the first time, all countries agree to develop and share their commitment to reducing emissions of greenhouse gases. Apart from no agreements were reached.

COP21, Paris, 2015: Results in Paris Agreement came into force in 2016. The conference objective is to achieve a legally binding and universal agreement on climate to be signed in 2015 and implemented by 2020.

Signatories: 195 as of 2019; 180+ countries have ratified; India signed and ratified in 2016.

Outcomes:

• The expected key result was an agreement to set a goal of limiting global warming to “well below 2 °C” Celsius compared to pre-industrial levels.
• The agreement calls for zero net anthropogenic greenhouse gas emissions to be reached during the second half of the 21st century.
• In the adopted version of the Paris Agreement, the parties will also “pursue efforts to limit the temperature increase to 1.5 °C.”
• The 1.5 °C goals will require zero-emissions sometime between 2030 and 2050, according to some scientists.
• The developed countries reaffirmed the commitment to mobilize $100 billion a year in climate finance by 2020 and agreed to continue mobilizing finance at the level of $100 billion a year until 2025.
• In 2017, the United States announced that the U.S. would cease all participation in the 2015 Paris Agreement on climate change mitigation.
• In accordance with Article 28 of the Paris Agreement, the earliest possible effective withdrawal date by the United States cannot be before November 2020. Thus, The U.S. will remain a signatory till November 2020.

Kyoto Protocol VS Paris Agreement

Kyoto Protocol:

1. Categorization of Countries
2. Binding emission norms on developed countries.
3. Principle of CBDR implemented.

Paris Agreement:

1. No categorization
2. No binding emission rather Voluntary norms (NDC’s).
3. Diluted the CBDR.

NOTE: In Paris Agreement, India and France launched the “International Solar Alliance”.

COP22, Marrakesh, 2016: Against all expectations, the Paris Agreement came into force a few days before the Summit, after being ratified by most nations. The result of the negotiations at this meeting was encapsulated in three documents: the Marrakesh Action Proclamation, a strong political message supporting the Paris Agreement at a time when the change in the White House was generating uncertainty; the Marrakesh Partnership to strengthen climate collaboration for the period up to 2020, and the first meeting of the CMA, the decision-making body for the Paris Agreement.

COP23, Bonn, 2017: At this Climate Summit, progress was made on the Rulebook to detail how the Paris Agreement will work in practice (Paris Rulebook), with the aim of concluding it in 2018. Facilitative Dialogues, known as the Talanoa Dialogue, were also created, a process allowing countries to share experiences and good practices to achieve the Agreement objectives. The Talanoa Dialogue Platform was launched to promote the participation and dialogue of local and indigenous communities. A Gender Action Plan was adopted to ensure the role of women in decision-making related to climate change.

COP24, Katowice, 2018: Little over two months before the Summit began, the IPCC published its report analyzing the impacts of a 1.5°C global temperature increase, which focused debate on a need for greater urgency in reducing polluting emissions. Nevertheless, although this was mentioned, it was not considered to be a guide for action in the texts agreed. Meanwhile, the Talanoa Dialogue ended, the next step being to review the 2020 climate plans to align them with the set objective of limiting global warming. Finally, one of the most important articles of the negotiation was left unresolved: Article 6 permitting the development of carbon markets.

COP25, Madrid, Spain 2019: It is worrisome that COP25, which was meant to prepare the way for implementation of the Paris Agreement post-2020, did not make much progress. Nevertheless, states should take the period prior to COP26 as an opportunity to renew their commitments and appropriately plan for climate action. COP26 is expected to initiate the implementation of the Paris Agreement.

AAU (Assigned amount unit): A Kyoto Protocol unit equal to 1 metric ton of CO2 equivalent. Each Annex I Party issues AAUs up to the level of its assigned amount, established pursuant to the Kyoto Protocol. Assigned amount units may be exchanged through emissions trading.

Abatement: Abatement is the word that is used to denote the result of decreased Greenhouse Gases emissions. This can also be taken as an activity to lessen the effects of the Greenhouse Effect.

Adaptation Fund: The Adaptation Fund was established to finance concrete adaptation projects and programs in developing countries that are particularly vulnerable and are Parties to the Kyoto Protocol. The Fund is to be financed with a share of proceeds from clean development mechanism (CDM) project activities and receive funds from other sources. It is operated by the Adaptation Fund Board.

Albedo: A measure of the reflectivity of a surface ranging from 0 to 1; albedo is calculated by taking the ratio of reflected radiation to incoming radiation, such that a surface that reflects 100% of the light hitting it has an albedo of 1 and a surface that absorbs 100% of the light hitting it has an albedo of 0

Black carbon (BC): Operationally defined aerosol species based on measurement of light absorption and chemical reactivity and/or thermal stability. It is sometimes referred to as soot. BC is mostly formed by the incomplete combustion of fossil fuels, biofuels, and biomass but it also occurs naturally. It stays in the atmosphere only for days or weeks. It is the most strongly light-absorbing component of particulate matter (PM) and has a warming effect by absorbing heat into the atmosphere and reducing the albedo when deposited on snow or ice.

Blue carbon: It is the carbon captured by living organisms in coastal (e.g., mangroves, salt marshes, seagrasses) and marine ecosystems, and stored in biomass and sediments

Biocarbon: It is the carbon that trees, plants and healthy soils naturally absorb and store. Plants absorb carbon from the atmosphere through photosynthesis. This helps to reduce CO₂ pollution that is changing our climate

Bio-Carbon Fund: The Bio-Carbon Fund provides carbon finance for projects that sequester or conserve greenhouse gases in forests, agro- and other ecosystems. Through its focus on bio-carbon, or ‘sinks’, it delivers carbon finance to many developing countries that otherwise have few opportunities to participate in the Clean Development Mechanism (CDM), or to countries with economies in transition through Joint Implementation (JI). The Bio-Carbon Fund tests and demonstrates how Land use, Land-use Change, and Forestry (LULUCF) activities can generate high-quality Ecological Resilience (ERs) with environmental and livelihood benefits that can be measured, monitored, and certified and stand the test of time.

Carbon market: A popular (but misleading) term for a trading system through which countries may buy or sell units of greenhouse-gas emissions in an effort to meet their national limits on emissions, either under the Kyoto Protocol or under other agreements, such as that among member states of the European Union. The term comes from the fact that carbon dioxide is the predominant greenhouse gas, and other gases are measured in units called “carbon-dioxide equivalents.”

Carbon Finance: Carbon finance is a new branch of environmental finance. Carbon finance explores the financial implications of living in a carbon-constrained world, a world in which emissions of carbon dioxide and other greenhouse gases (GHGs) carry a price. The general term is applied to investments in GHG emission reduction projects and the creation (origination) of financial instruments that are tradable on the carbon market.

Carbon budget: This term refers to three concepts in the literature:

1. An assessment of carbon cycle sources and sinks on a global level, through the synthesis of evidence for fossil fuel and cement emissions, land-use change emissions, ocean and land CO2 sinks, and the resulting atmospheric CO2 growth rate. This is referred to as the global carbon budget;
2. The estimated cumulative amount of global carbon dioxide emissions that that is estimated to limit global surface temperature to a given level above a reference period, taking into account global surface temperature contributions of other GHGs and climate forcers;
3. The distribution of the carbon budget is defined under the regional, national, or sub-national level based on considerations of equity, costs, or efficiency.

Carbon dioxide removal (CDR): Anthropogenic activities remove CO2 from the atmosphere and durably store it in geological, terrestrial, or ocean reservoirs, or in products. It includes existing and potential anthropogenic enhancement of biological or geochemical sinks and direct air capture and storage but excludes natural CO2 uptake not directly caused by human activities.

Carbon Rights: A carbon right is a new and unique form of land interest that confers upon the holder a right to the intangible benefit of carbon sequestration on a piece of forested land.

Carbon Offset: (Also known as Carbon Credits) A mechanism for individuals and businesses to neutralize rather than actually reduce their greenhouse gas emissions by purchasing the right to claim someone else’s reductions as their own is known as a carbon offset.

Carbon Stock: The quantity of carbon held within a pool is known as carbon stock. It is measured in metric tons of CO2.

Carbon Pools: A reservoir of carbon that has the potential to accumulate (or lose) carbon over time is known as a carbon pool. In Agriculture Forestry and Other Land Use (AFOLU), this encompasses aboveground biomass, belowground biomass, litter, deadwood, and soil organic carbon.

Emission intensity: It is defined as the total amount of greenhouse gas emissions emitted for every unit of GDP. Importantly, it counts emissions beyond those related to energy (such as emissions from agriculture) and greenhouse gases beyond carbon dioxide (such as methane).

Carbon price:  The price for avoided or released carbon dioxide (CO2) or CO2-equivalent emissions. This may refer to the rate of a carbon tax, or the price of emission permits. In many models that are used to assess the economic costs of mitigation, carbon prices are used as a proxy to represent the level of effort in mitigation policies.

Carbon Trade: Carbon trading is an exchange of credits between nations designed to reduce emissions of carbon dioxide. Carbon trading is also referred to as carbon emissions trading. Carbon emissions trading accounts for most emissions trading.

Carbon leakage: A term used to refer to the problem whereby industry relocates to countries where emission regimes are weaker, or non-existent.

Carbon Sink: A carbon pool that is increasing in size is known as a carbon sink. A carbon pool can be a sink for atmospheric carbon if during a given time interval more carbon is flowing into it than out of it.

Carbon sequestration: It is the long-term storage of carbon in plants, soils, geologic formations, and the ocean. Carbon sequestration occurs both naturally and as a result of anthropogenic activities and typically refers to the storage of carbon

Carbon tax: It is a tax levied on firms that produce carbon dioxide (CO2) through their operations. It is used as an incentive to reduce the economy-wide usage of high-carbon fuels and to protect the environment from the harmful effects of excessive carbon dioxide emissions.

Carbon Footprint: A carbon footprint is the total amount of greenhouse gases (including carbon dioxide and methane) that are generated by our actions. … To have the best chance of avoiding a 2℃ rise in global temperatures, the average global carbon footprint per year needs to drop under 2 tons by 2050.

Carbon cycle:  The term used to describe the flow of carbon (in various forms, e.g., as carbon dioxide (CO2), carbon in biomass, and carbon dissolved in the ocean as carbonate and bicarbonate) through the atmosphere, hydrosphere, terrestrial and marine biosphere, and lithosphere. The reference unit for the global carbon cycle is GtCO2 or GtC (Gigatonne of carbon = 1 GtC = 1015 grams of carbon. Which corresponds to 3.667 GtCO2).

Cleantech: It is any technology that aims to reduce or limit environmental impacts. These technologies are developed by a broad array of companies, including new ‘start up’ businesses, that operate across different aspects of the economy. Examples of cleantech include electric vehicles and wave-power turbines, to materials that make buildings more energy-efficient.

Climate neutrality: Concept of a state in which human activities result in no net effect on the climate system. Achieving such a state would require a balancing of residual emissions with emission (carbon dioxide) removal as well as accounting for regional or local biogeophysical effects of human activities that, for example, affect surface albedo or local climate.

Climate target: A climate target refers to a temperature limit, concentration level, or emissions reduction goal used towards the aim of avoiding dangerous anthropogenic interference with the climate system. For example, national climate targets may aim to reduce greenhouse gas emissions by a certain amount over a given time horizon, for example, those under the Kyoto Protocol.

Climate sensitivity:  Climate sensitivity refers to the change in the annual global mean surface temperature in response to a change in the atmospheric CO2 concentration or another radiative forcing.

Climate variability: Climate variability refers to variations in the mean state and other statistics (such as standard deviations, the occurrence of extremes, etc.) of the climate on all spatial and temporal scales beyond that of individual weather events. Variability may be due to natural internal processes within the climate system (internal variability), or to variations in natural or anthropogenic external forcing (external variability).

Environmental democracy: It is based on the idea that land and natural resource decisions adequately and equitably address citizens’ interests. Rather than setting a standard for what determines a good outcome, environmental democracy sets a standard for how decisions should be made.

Enhanced weathering:  Enhancing the removal of carbon dioxide (CO2) from the atmosphere through the dissolution of silicate and carbonate rocks by grinding these minerals to small particles and actively applying them to soils, coasts, or oceans.

Carrying Capacity: The carrying capacity of a biological species in an environment is the population size of the species that the environment can sustain indefinitely, given the food, habitat, water, and other necessities available in the environment.

Certified emission reductions (CER): A Kyoto Protocol unit equal to 1 metric tonne of CO2 equivalent. CERs are issued for emission reductions from CDM project activities. Two special types of CERs called temporary certified emission reduction (tCERs) and long-term certified emission reductions (lCERs) are issued for emission removals from afforestation and reforestation CDM projects.

Climate Governance: It is the diplomacy, mechanisms, and response measures “aimed at steering social systems towards preventing, mitigating or adapting to the risks posed by climate change.”

Decarbonization: The process by which countries, individuals, or other entities aim to achieve zero fossil carbon existence. Typically refers to a reduction of the carbon emissions associated with electricity, industry, and transport.

Emissions trading: A market-based instrument aiming at meeting a mitigation objective in an efficient way. A cap on GHG emissions is divided into tradeable emission permits that are allocated by a combination of auctioning and handing out free allowances to entities within the jurisdiction of the trading scheme. Entities need to surrender emission permits equal to the number of their emissions (e.g., tonnes of CO2). An entity may sell excess permits to entities that can avoid the same amount of emissions in a cheaper way. Trading schemes may occur at the intra-company, domestic, or international level (e.g., the flexibility mechanisms under the Kyoto Protocol and the EU-ETS) and may apply to carbon dioxide (CO2), other greenhouse gases (GHGs), or other substances.

Emission Trading Scheme (ETS): A scheme set up to allow the trading of emissions permits between businesses and/or countries as part of a cap-and-trade approach to limiting greenhouse gas emissions. The best-developed example is the EU’s trading scheme, launched in 2005.

Forest Carbon Partnership Facility: The Forest Carbon Partnership Facility (FCPF) which became operational in June 2008, is a global partnership focused on reducing emissions from deforestation and forest degradation, forest carbon stock conservation, sustainable management of forests, and enhancement of forest carbon stocks (REDD+)

Fugitive fuel emissions: Greenhouse-gas emissions as by-products or waste or loss in the process of fuel production, storage, or transport, such as methane given off during oil and gas drilling and refining, or leakage of natural gas from pipelines.

Green bonds: Green bonds raise capital for projects that have environmental benefits. They require the borrower to report on how the funds raised have been used. They’re not to be confused with sustainability bonds, which fund a combination of green and social projects, such as affordable housing.

“Green Carbon“: Green carbon is carbon removed by photosynthesis and stored in the plants and soil of natural ecosystems and is a vital part of the global carbon cycle. Many plants and most crops, have short lives and release much of their carbon at the end of each season, but forest biomass accumulates carbon over decades and centuries. Furthermore, forests can accumulate large amounts of CO2 in relatively short periods, typically several decades. Afforestation and reforestation are measures that can be taken to enhance biological carbon sequestration.

Geological sequestration: The injection of carbon dioxide into underground geological formations. When CO2 is injected into declining oil fields it can help to recover more of the oil.

Global Environment Facility (GEF): The GEF is an independent financial organization that provides grants to developing countries for projects that benefit the global environment and promote sustainable livelihoods in local communities. The Parties to the Convention assigned operation of the financial mechanism to the GEF on an ongoing basis, subject to review every four years. The financial mechanism is accountable to the COP.

Global average temperature: The mean surface temperature of the Earth was measured from three main sources: satellites, monthly readings from a network of over 3,000 surface temperature observation stations and sea surface temperature measurements taken mainly from the fleet of merchant ships, naval ships, and data buoys.

 Global energy budget: The balance between the Earth’s incoming and outgoing energy. The current global climate system must adjust to rising greenhouse gas levels and, in the very long term, the Earth must get rid of energy at the same rate at which it receives energy from the sun.

 Global dimming: An observed widespread reduction in sunlight at the surface of the Earth, which varies significantly between regions. The most likely cause of global dimming is an interaction between sunlight and microscopic aerosol particles from human activities. In some regions, such as Europe, global dimming no longer occurs, thanks to clean air regulations.

Internal Climate Variability: Variability may result from natural internal processes within the climate system is known as internal climate variability.

Joint Liaison Group (JLG): Group of representatives of UNFCCC, CBD, and UNCCD Secretariats set up to explore common activities to confront problems related to climate change, biodiversity, and desertification.

JUSSCANNZ: An acronym representing non-EU industrialized countries that occasionally meet to discuss various issues related to climate change. The members are Japan, the United States, Switzerland, Canada, Australia, Norway, and New Zealand. Iceland, Mexico, and the Republic of Korea may also attend JUSSCANZ meetings.

Net negative emissions:  A situation of net negative emissions is achieved when, as a result of human activities, more greenhouse gases are removed from the atmosphere than are emitted into it. Where multiple greenhouse gases are involved, the quantification of negative emissions depends on the climate metric chosen to compare emissions of different gases (such as global warming potential, global temperature change potential, and others, as well as the chosen time horizon).

Ocean acidification (OA): Ocean acidification refers to a reduction in the pH of the ocean over an extended period, typically decades or longer, which is caused primarily by uptake of carbon dioxide (CO2) from the atmosphere, but can also be caused by other chemical additions or subtractions from the ocean. Anthropogenic ocean acidification refers to the component of pH reduction that is caused by human activity (IPCC, 2011, p. 37).

Ocean fertilization:  Deliberate increase of nutrient supply to the near-surface ocean in order to enhance biological production through which additional carbon dioxide (CO2) from the atmosphere is sequestered. This can be achieved by the addition of micro-nutrients or macro-nutrients. Ocean fertilization is regulated by the London Protocol.

Temperature overshoot The temporary exceedance of a specified level of global warmings, such as 1.5°C. Overshoot implies a peak followed by a decline in global warming, achieved through anthropogenic removal of CO2 exceeding remaining CO2 emissions globally.

“Spill-over effects” (also referred to as “rebound effects” or “take-back effects”): Reverberations in developing countries caused by actions taken by developed countries to cut greenhouse-gas emissions. For example, emissions reductions in developed countries could lower demand for oil and thus international oil prices, leading to more use of oil and greater emissions in developing nations, partially off-setting the original cuts. Current estimates are that full-scale implementation of the Kyoto Protocol may cause 5 to 20 percent of emissions reductions in industrialized countries to “leak” into developing countries.

THE CONTEXT: In November 2021, RBI issued a revised Prompt Corrective Action (PCA) Framework for Scheduled Commercial Banks (SCBs) excluding Small Finance Banks, Payment Banks, and Regional Rural Banks to enable intervention at the appropriate time and require the SCB to initiate and implement remedial measures in a timely manner. The provisions of the revised PCA framework will be effective from January 1, 2022. The detailed analysis of the development is as follows.

THE DEVELOPMENT

• The revised framework excludes return on assets as a parameter that may trigger action under the framework.
• Payments banks and small finance banks (SFBs) have also been removed from the list of lenders where prompt corrective action can be initiated. Capital, asset quality, and leverage will be the key areas for monitoring in the revised framework.
• Indicators to be tracked for capital, asset quality, and leverage would be CRAR/ common equity tier I ratio, net NPA ratio, and Tier I leverage ratio, respectively.
• In governance-related actions, the RBI can supersede the board under Section 36ACA of the BR Act, 1949.
• The framework will apply to all banks operating in India, including foreign banks operating through branches or subsidiaries based on breach of risk thresholds of identified indicators.

WHAT HAS CHANGED?

Key Monitoring areas:

• 2017 (Revised) Framework: Capital, asset quality, and profitability, while leverage would be monitored additionally.
• New Framework: Capital, Asset Quality and Leverage.

Indicators to be tracked: 

• 2017 (Revised) Framework: Capital, asset quality, and profitability would be CRAR/ Common Equity Tier I ratio, Net NPA ratio, and Return on Assets, respectively.
• New Framework: Capital, Asset Quality, and Leverage would be CRAR/ Common Equity Tier I Ratio, Net NPA Ratio, and Tier I Leverage Ratio, respectively.

Profitability – ROA:

• 2017 (Revised) Framework: Negative ROA for 2/3/4 consecutive years
• New Framework: Has been removed from the New Framework.

Capital – Risk Threshold 3: 

• New Framework: RBI has specifically included this level of 400 bps below CRAR as a monitorable.

Leverage:

• 2017 (Revised) Framework: Tier 1 Leverage ratio: Threshold 1: <=4.0% but > = 3.5% (leverage is over 25 times Tier 1 capital). Threshold 2: < 3.5% (leverage is over 28.6 times Tier 1 capital)
• New Framework: Monitoring of leverage has been made explicit and levels have been made explicit across thresholds Threshold 1: Up to 50 bps below the regulatory minimum Threshold 2: More than 50 bps but not exceeding 100 bps below the regulatory minimum Threshold 3: More than 100 bps below the regulatory minimum.

Expense monitoring: 

• 2017 (Revised) Framework: The following points were mandatory: Threshold 2: Higher provisions as part of the coverage regime. Threshold 3: Restriction on management compensation and directors’ fees, as applicable.
• New Framework: These actions have been included in discretionary activities and have been made applicable across all thresholds. They have been combined and made more stringent by restriction/ reduction on variable operating costs, outsourcing activities, and restriction/reduction of outsourcing activities. Further restrictions on capital expenditure, other than for technological up-gradation within board-approved limits, have been made mandatory in risk threshold 3.

Discretionary Corrective Actions – Special Supervisory Actions:

• 2017 (Revised) Framework: RBI could amalgamate/ reconstruct a bank under extant regulations.
• New Framework: The RBI has specifically included resolution of the bank by Amalgamation or Reconstruction (Ref. Section 45 of Banking Regulation Act 1949) under the revised framework.

Exit from PCA and Withdrawal of Restrictions under PCA: 

• 2017 (Revised) Framework: Exit of a bank from the PCA framework was based on RBI’s assessment on multiple parameters based on the financials of the bank.
• New Framework: The new framework has laid down an explicit framework for a bank to exit the PCA framework as follows: Once a bank is placed under PCA, taking the bank out of PCA Framework and/or withdrawal of restrictions imposed under the PCA Framework will be considered: a) if no breaches in risk thresholds in any of the parameters are observed as per four continuous quarterly financial statements, one of which should be Audited Annual Financial Statement (subject to assessment by RBI); and b) based on Supervisory comfort of the RBI, including an assessment on sustainability of profitability of the bank.

WHAT IS PCA FRAMEWORK?

• Prompt Corrective Action or PCA is a framework under which banks with weak financial metrics are put under watch by the RBI. The PCA framework deems banks as risky if they slip below certain norms on three parameters — capital ratios, asset quality, and profitability.
• Based on where a bank stands on these ratios, it has three risk threshold levels (1 being the lowest and 3 the highest). Banks with capital to risk-weighted assets ratio (CRAR) of less than 10.25 percent but more than 7.75 percent fall under threshold 1.
• Those with CRAR of more than 6.25 percent but less than 7.75 percent fall in the second threshold. In case a bank’s common equity Tier 1 (the bare minimum capital under CRAR) falls below 3.625 percent, it gets categorized under the third threshold level.
• Banks that have a net NPA of 6 percent or more but less than 9 percent fall under threshold 1, and those with 12 percent or more fall under the third threshold level.
• On profitability, banks with negative return on assets for two, three, and four years fall under threshold 1, threshold 2, and threshold 3, respectively.

WHAT IS THE PURPOSE OF THE PCA FRAMEWORK?

• The objective of the PCA framework is to enable supervisory intervention at the appropriate time and require the supervised entity to initiate and implement remedial measures in a timely manner to restore its financial health.
• Act as a tool for effective market discipline.
• It does not preclude the Reserve Bank of India from taking any other action as it deems fit at any time, in addition to the corrective actions prescribed in the framework”.
• In the last almost two decades — the PCA was first notified in December 2002 — several banks have been placed under the framework, with their operations restricted. In 2021, UCO Bank, IDBI Bank, and Indian Overseas Bank exited the framework on improved performance. Only the Central Bank of India remains under it now.

HOW DO BANKS BENEFIT FROM PCA?

• One of the objectives of PCA is to amend a bank’s mistakes before they lead to a crisis.
• RBI controls the loan disbursal of banks belonging to the PCA watchlist. That said, note that the regulator does not entirely prohibit PCA banks from disbursing loans.
• RBI’s PCA framework has been designed to improve a bank’s financial performance by tracking vital metrics. In other words, it involves the RBI taking remedial measures.
• PCA banks cannot enter a new line of business, which improves their core financials.
• In some rare cases, RBI might choose to close non-compliant banks or initiate amalgamation for them.

WHEN DOES RBI INVOKE PROMPT CORRECTIVE ACTION?

RBI considers four factors to determine whether it needs to put a bank under the PCA framework. These include profitability, asset quality, capital ratios, and debt level. The central bank grades each of these factors based on actions depending upon the grade/threshold level, categorized from one to three, where 1 is the lowest of the lot and 3 is the highest based on how banks stand with respective frameworks.

Following is a look at these factors and their grades:

CAPITAL ADEQUACY RATIO (CRAR): The CRAR is the capital needed for a bank measured in assets (mostly loans) disbursed by the banks. The higher the assets, the higher should be the capital retained by the bank. This measures how much debt and equity capital banks possess to cover their asset book risk. If CRAR is less than 10.25%, but above 7.75%, the bank falls in the first grade. Banks having a CRAR of over 6.25%, but below 7.75%, fall under grade 2. However, if a bank’s capital adequacy ratio is less than 3.625%, it is categorized under grade 3.

ASSET QUALITY: This parameter refers to the non-performing assets of a bank. If the net NPA of a bank is more than 6%, but less than 9%, it falls under the first threshold. If Net NPA crosses the 9% mark, it triggers the second grade. That said, if this metric is 12% or more, the bank will fall in the third grade of PCA.

PROFITABILITY: The regulator considers the bank’s return on assets (ROA) as the key measure for profitability. Note that if a bank’s ROA is negative for two, three, and four years in a row, it will be categorized as grade 1, grade 2, and grade 3, respectively.

DEBT LEVEL/LEVERAGE: The last factor that RBI considers to measure the financial risk of any bank is its overall debt level/leverage. The regulator triggers grade 1 if the overall leverage is more than 25 times its Tier 1 capital. However, when total leverage is over 28.5 times its core capital (including disclosed reserves), RBI acts according to grade 2 of PCA.

WHAT HAPPENS WHEN RBI PUTS A BANK UNDER PCA?

When RBI puts a bank on its PCA watchlist, it imposes two types of limitations on it – mandatory and discretionary. These include restrictions related to the expansion of a branch, dividend, and director’s remuneration, and so on.

Nevertheless, the Central Bank may choose to take these actions at their discretion, where the RBI can:

• Ask the bank’s board to reassess its business model and evaluate the profitability of the business line and operations.
• Advise banks to reassess their business plans and strategy to take remedial measures, including dismissing certain officials from employment.
• Ask a Bank’s board to implement a resolution plan after seeking approval from the supervisor.
• Advise banks to gauge their viability over the medium to long term besides evaluating balance sheet estimates.
• PCA banks might not be able to hire more employees or fill up vacant positions.
• Lastly, RBI may allow PCA banks to incur capital expenditure only to upgrade technology. However, the allocation of funds for the same has to be within pre-approved limits.

ANALYSIS OF NEW FRAMEWORK

The revised rules propose changes on three fronts:

1. The triggers to invoke PCA against a bank,
2. The mandatory actions RBI may take after it
3. Conditions for a bank to exit it.

• Rules currently allow RBI to invoke PCA if a bank’s capital-to-risk weighted assets ratio and Tier 1 capital ratio, Return on Assets (ROA), net Non-Performing Assets, and leverage fall well short of statutory thresholds.
• Under the new regime, a negative ROA will no longer trigger a bank to invite corrective action. This appears sensible because the accounting profit for a bank is the residual sum left over after provisioning for bad and doubtful loans.
• A bank that proactively provisions for possible NPAs and maintains high provision coverage may report losses but is better protecting the interests of its stakeholders than a bank that skimps provisioning to show a profit.
• Some of the corrective actions to be taken by RBI once a bank falls under PCA, have been left to its discretion instead of being mandated.
• PCA rules require RBI to enforce higher provisioning norms and cap management compensation. The new rules allow it to take a discretionary call, perhaps to avoid denting depositor confidence.
• The existing curbs placed by the RBI on PCA banks lending to lower-rated or unsecured borrowers have been diluted and replaced with more generic powers, which is a good step.

 THE CONCLUSION

While the new framework rightly affords RBI greater flexibility in resolving stressed banks on a case-to-case basis, the roadmap it offers for a bank’s exit from PCA appears to run counter to this. While such exit was earlier left to RBI’s discretion, the new regime requires a bank to stay above-mandated capital, NPA, and leverage thresholds for four consecutive quarters to apply for the exit. This may be a rather high bar. A troubled bank can mend its capital adequacy or leverage quickly with an infusion from its promoter. But resolving legacy NPAs often requires it to pursue business growth or margin-improving strategies that may not be possible while PCA ties its hands.

THE CONTEXT:  After the killing of 13 civilians in Nagaland, many activists and states government of the North-East is demanding the repealing of the Armed Forces Special Powers Act (AFSPA) from the state. There have been different views and opinions over it. This article discusses various issues around Armed Forces Special Protection Act (AFSPA).

WHAT HAPPENED IN NAGALAND?

• In Nagaland, the Indian Army’s 21 Para regiment responded to an insurgent group’s intel. The plan was to ambush the group, but Army shoot 6 civilians by mistake. When they were returning home in a vehicle from a coal mine, the incident took place.
• After killing these people, the local resident had gathered at the scene, and a clash erupted. Seven more civilians and one soldier were killed in the scuffle. In total, 15 people (14 civilians and 1 soldier) lost their lives (so far).
• The regiment is not often based in Nagaland and reports say they were brought in from Assam for the special op. The 21 paras are also an elite special forces unit, signifying that the operation was cleared at a high level.

WHY ARE PEOPLE DEMANDING FOR THE REPEALING AFSPA LAW?

• Armed Forces Special Powers Act (AFSPA) is often referred to as a draconian colonial-era law.
• In the North-East, it is in place in ‘disturbed’ parts of Assam, Nagaland, Manipur (except Imphal), Arunachal Pradesh and Meghalaya. It gives the Army sweeping powers to arrest, shoot or kill anyone based on suspicion. They don’t require a warrant to do so. And Army personnel involved are seldom charged with any crime in such cases.

ALL YOU NEED TO KNOW ABOUT AFSPA

THE ORIGIN:

• The British promulgated the Armed Forces Special Powers Ordinance of 1942 on 15 August 1942 to suppress the Quit India Movement. Modeled on these lines, four ordinances were invoked by the central government to deal with the internal security situation in the country in 1947 which emerged due to the Partition of India.
• Article 355 of the Constitution of India confers power to the Central Government to protect every state from internal disturbance.
• In 1954, the Naga began an uprising for independence. At this point, Nehru’s government passed the “Armed Forces Special Powers Act” (1958) in the parliament.

FEATURES OF AFSPA:

• Passed in 1958 for North East and in 1990 for Jammu and Kashmir, the law gives armed forces necessary powers to control disturbed areas that are designated by the government.
• As of now, this act is in force in Jammu and Kashmir, Assam, Nagaland, and parts of Arunachal Pradesh and Manipur.

DISTURBED AREA:

• A disturbed area is declared by notification under Section 3 of the AFSPA. An area can be disturbed due to differences or disputes between members of different religious, racial, language, or regional groups or castes or communities.
• The Central Government or the Governor of the State or administrator of the Union Territory can declare the whole or part of the State or Union Territory as a disturbed area. A suitable notification would have to be made in the Official Gazette.

WHAT ARE THE SPECIAL POWERS GIVEN TO ARMY OFFICIALS?:

• Under Section 4 of the AFSPA, an authorized officer in a disturbed area enjoys certain powers. The authorized officer has the power to open fire at any individual even if it results in death if the individual violates laws that prohibit (a) the assembly of five or more persons; or (b) the carrying of weapons. However, the officer has to give a warning before opening the fire.
• The authorized officer has also been given the power to (a) arrest without a warrant; and (b) seize and search without any warrant any premise to make an arrest or recovery of hostages, arms, and ammunition.
• Individuals who have been taken into custody have to be handed over to the nearest police station as soon as possible.
• The prosecution of an authorized officer requires prior permission of the Central government.

AFSPA IN DIFFERENT STATES

SUCCESS STORIES

In 2015 Tripura repealed AFSPA. Under chief minister Manik Sarkar, the Tripura administration did a remarkable job of getting on top of insurgency. It was a combination predominantly of political will and the use of security forces to bring peace. Mizoram is another example. There, the greatest success lay in the central leadership under Rajiv Gandhi offering to make Laldenga the chief minister. The involvement of insurgent leaders in electoral politics can be an effective way to deal with the insurgency.

• At present, it is in force in the States of Assam, Nagaland, Manipur {excluding Imphal Municipal Council Area}, Changlang, Longding, and Tirap districts of Arunachal Pradesh, and areas falling within the jurisdiction of the eight police stations of districts in Arunachal Pradesh bordering the State of Assam.
• Assam was the first state where AFSPA was enforced. The whole State except the Guwahati Municipal Area is under AFSPA.
• In 2018, The AFSPA has been removed completely from Meghalaya and partly in Arunachal Pradesh.
• Nagaland is under the purview of AFSPA even before its formation in 1961.
• The AFSPA is applicable in the whole state of Manipur except the Imphal Municipal Area.
• Punjab state was declared disturbed and subject to the Armed Forces (Punjab and Chandigarh) Special Powers Act from 1983 to 1997.
• The AFSPA is applicable in the whole state of Jammu and Kashmir. It was applied under the Armed Forces (Jammu and Kashmir) Special Powers Act, 1990.
• Mizoram was declared a disturbed area in January 1967. Following the signing of a peace accord in June 1986, the AFSPA is no longer applied in Mizoram.
• In 2015, the Tripura government had lifted AFSPA from the state after 18 years. The reason behind the removal of AFSPA in Tripura was that there has been a significant decline in militancy.

JUDICIAL PRONOUNCEMENTS ON AFSPA

NPMHR VS UOI:

• The Supreme Court has upheld the constitutionality of AFSPA in a 1998 judgement-Naga People’s Movement of Human Rights v. Union of India.
• In this judgment, the SC arrived at certain conclusions including

1. A suo-motto declaration can be made by the Central government, however, the state government should be consulted by the central government before making the declaration.
2. AFSPA does not confer arbitrary powers to declare an area as a ‘disturbed area’.
3. The declaration has to be for a limited duration and there should be a periodic review of the declaration 6 months have expired.
4. While exercising the powers conferred upon him by AFSPA, the authorized officer should use the minimal force necessary for effective action.

The authorized officer should strictly follow the army’s ‘Dos and Don’ts’ issues. Few ‘Dos and Don’ts’ are as follows :

DO’S

• Act only in the area declared ‘Disturbed Area’ under Section 3 of the Act.
• Arrest only those who have committed the cognizable offense.
• Hand over the arrested persons to the nearest police station with the least possible delay.
• Ensure medical relief to any person injured during the encounter.
• Answer questions of the court politely and with dignity.
• Maintain a detailed record of the entire operation correctly and explicitly.

DONT’S

• Do not keep a person under custody for any period longer than the bare necessity for handing over to the nearest police station.
• Do not use any force after having arrested a person except when he is trying to escape.
• Do not use third-degree methods to extract information or to extract a confession or other involvement in unlawful activities.
• After the arrest of a person by the member of the armed forces, he shall not be interrogated by the member of the armed force.
• Do not release the person directly after apprehending on your own. If any person is to be released, he must be released through civil authorities.
• Do not tamper with official records.

EEVFAM VS UOI:

In 2016, in a landmark ruling– Extra Judicial Execution Victim Families Association (EEVFAM) vs Union Of India, the Supreme Court of India ended the immunity of the armed forces from prosecution under AFSPA.

STAND TAKEN BY GOVERNMENT AND MILITARY

GOVERNMENT: In 2018, the government informed parliament that the government has taken no decision to repeal the controversial AFSPA as recommended by the Jeevan Reddy Committee Report.

MILITARY: The serving military establishment has fiercely stalled AFSPA’s repeal, as viciously as it would fight a war against an enemy. Senior officers even launched a Facebook campaign to “save AFSPA.” Without the AFSPA, the Army will not be able to stage counter-insurgency operations. AFSPA free enclaves will be magnets for insurgents.

REPEAL OR NOT?

REPEAL:

• It has been dubbed as a license to kill. Human Rights Activists object to sections 4 and 6 of the act.
• Critics say the act has failed to contain terrorism and restore normalcy in disturbed areas, as the number of armed groups has gone up after the act was established. Many even hold it responsible for the spiraling violence in areas it is in force.
• The decision of the government to declare a particular area ‘disturbed’ cannot be challenged in a court of law. Hence, several cases of human rights violations go unnoticed.
• AFSPA is inconsistent with the structure and spirit of our democracy and brings down India’s image at the global high table at a time when it is looking to be a permanent member of the U.N. Security Council.
• The primary focus of a counter-insurgency operation should be WHAM (winning hearts and minds), and not liquidation or elimination. AFSPA lets troops get away with murder. Its frequent use encourages a culture of impunity that is counterproductive to WHAM; it increases the disconnection between the forces and the local population.
• AFSPA leads to a sharp drop in professionalism and dehumanizes and corrupts the Army and paramilitary forces.
• According to a few retired senior police officers involved in the thick of counter-insurgency operations, AFSPA is like having a shield for security apparatus when it is no longer required. After a certain amount of time, there is no correlation to controlling violence with AFSPA.

NOT TO REPEAL: 

• Most of the arguments against AFSPA are idealistic i.e. the arguments do not include the concerns of the army. It selectively excludes the sensitivity of the issue.
• Removal of the act will lead to demoralizing the armed forces and see militants motivating locals to file lawsuits against the army.
• The absence of such a legal statute would adversely affect organizational flexibility and the utilization of the security capacity of the state. This would render the security forces incapable of fulfilling their assigned role.
• Extraordinary situations require special handling. As the army does not have any police powers under the Constitution, it is in the national interest to give it special powers for operational purposes when it is called upon to undertake counter-insurgency operations in disturbed areas.
• The first principle of security is to accept reality as it is and not what one wants it to be. Thus, Army has taken a pragmatic stand and advocated that AFSPA as the sine qua non for counter-insurgency operation in disturbed areas.
• Jammu & Kashmir and the North-East region converge both India’s internal and external security. Thus given the strategic importance of these regions and the huge international porous border, AFSPA becomes the necessary tool in the hands of the Army. It is an evil but necessary one.

PROTECTIVE MEASURES PROVIDED:

• Section 5 of the Act already mandates that arrested civilians must be handed over to the nearest police station, along with a report of ‘circumstances occasioning the arrest.’
• Army HQ has also laid down that all suspects who are arrested will be handed over to civilian authorities within 24 hours.
• Regarding firing on civilians, the army’s instructions are that fire may be opened in towns and villages only in self-defense and that too when the source of terrorist or militant fire can be identified.

RECOMMENDATIONS MADE BY EXPERTS

JEEVAN REDDY COMMITTEE: The committee found that the powers conferred under the Act are not absolute; it nevertheless concluded that the Act should be repealed. it recommended that essential provisions of the Act be inserted into the Unlawful Activities (Prevention) Act of 1967.

The key recommendations of the Reddy Committee were:

• If the situation warrants, the state government may request the Union government to deploy the army for not more than six months.
• The Union government may also deploy the armed forces without a request from the state. However, the situation should be reviewed after six months and Parliament’s approval should be sought for extending the deployment.
• Non-commissioned officers may continue to have the power to fire.
• The Union government should set up an independent grievances cell in each district where the Act is in force.

JUSTICE VERMA REPORT: Sexual violence against women by members of the armed forces or uniformed personnel must be brought under the purview of ordinary criminal law. There is an imminent need to review the continuance of AFSPA and AFSPA-like legal protocols in internal conflict areas as soon as possible.

THE SECOND ARC: It recommended that AFSPA should be repealed and its essential provisions should be incorporated in the UAPA.

SANTOSH HEGDE COMMISSION ON MANIPUR ENCOUNTER DEATHS: It suggested fixing a time frame of three months for the central government to decide whether to prosecute security personnel engaged in extrajudicial killings or unruly behavior in insurgency-hit regions. The commission noted that AFSPA was an impediment to achieving peace in regions such as Jammu and Kashmir and the North East. The commission also said the law needs to be reviewed every six months to see whether its implementation is necessary for states where it is being enforced. Section 6 of the act said that it is not that no action can be taken at all. Action can be taken but with prior sanction of the Central Government.

SARKARIA COMMISSION: It suggested the states develop their system of maintaining and dealing with public order.

THE NATIONAL POLICE COMMISSION: It recommends deploying the Central Reserve Police force for day-to-day policing instead of engaging the army and paramilitary forces.

UNITED NATIONS VIEW: In 2012, the UN asked India to revoke AFSPA saying it had no place in Indian democracy. Some UN treaty bodies have pronounced it to be in violation of International Law.

NON-GOVERNMENTAL ORGANIZATIONS’ ANALYSIS: Many human rights organizations such as Amnesty International and the Human Rights Watch (HRW) have condemned human rights abuses under AFPSA. According to Amnesty International India, AFPSA legitimizes impunity for sexual violence among women and opens up the floodgates to extrajudicial killings in the declared disturbed areas.

THE WAY FORWARD: HOW CAN COUNTER-INSURGENCY OPERATIONS BE IMPROVED IN INDIA?

BETTER WORKING OF THE AFSPA:

Some viable suggestions for better working of the AFSPA could be:

• Section 4(a) should be repealed or amended as it is against be the right to live. It also violates the principles upheld by criminal justice: the assumption of innocence until one is proven to be the offender. It is also inconsistent with Article 246 and the 7th Schedule that places ‘Law and order’ under the State’s list. Therefore, it is Ultra vires.
• Section 5 of the Act should be consistent with Article 22 of the constitution under which it is compulsory to present an arrested person in front of the Magistrate within 24 hours.
• The scope of Section 6 should be increased. The sanction of the Central Government shouldn’t be waited for; maybe a special committee could be formed to begin inquiries straight away without any delays or prejudices against anyone.

SMARTER APPROACH: Repeal of AFSPA should be seen as the first step to create a smarter and more effective counter-insurgency capability that draws more on information technology, psychological operations, political persuasion, and conflict resolution.

COUNTER-INSURGENCY DOCTRINE: The government will have to evolve a counter-insurgency doctrine which will not only seek to keep the Army out of the “internal security” matrix to the extent possible and deploy other specifically trained and highly skilled forces that observe the principle of “minimum force” and demonstrate a respect for human rights and accountability in keeping with the letter and spirit of the Constitution.

TRANSPARENCY: Innovative measures must overcome the practical problems encountered in ensuring transparency in counter-insurgency operations. The army must be completely transparent in investigating violations of human rights violations and bringing the violators to speedy justice. Exemplary punishment must be meted out where the charges are proved.

GENDER-SENSITIVE TRAINING: The National Crime Records Bureau (NCRB) has been reporting not only high rates of crimes against women but disturbingly low rates of conviction. A study by the Centre for Social Research, New Delhi, has asked for greater emphasis on gender awareness and sensitivity in police training. The National Police Academy was advised to formulate a gender policy for police training. But unfortunately, the document titled ‘Integrated Police Training’ (2012) prepared by NPA is silent on the vital issue of sensitizing IPS officers to domestic violence against women, violence against women in public places, and so on.

THE CONCLUSION: India’s Act East policy will gain traction only if there is a committed road map for withdrawing AFSPA. The task of the army is to combat external aggression, not policing and internal security within the country. It is high time that both the Centre and state governments actively worked towards the withdrawal of AFSPA without narrow political gains in mind.

THE CONTEXT: After killing civilians by the arm forces in Naga is a major setback for a peace talk between Naga and Government. Earlier, in October 2021, the interlocutor for the Naga peace talks, Tamil Nadu former Governor R N Ravi, resigned from its post. This article analyses the issues in the talk and suggests a way forward for them.

HOW WILL THE PRESENT DEVELOPMENT IMPACT THE PEACE TALK?

• The government is engaged in discussions with the Isak-Muivah faction of the National Socialist Council of Nagaland (NSCN-IM) and seven Naga National Political Groups (NNPGs) to find a solution to the Naga political issue.
• But the Isak-Muivah faction, the key player in the Naga peace talks, described the recent incident killing as a “black day” for Nagas.
• After that, they will strongly demand the formation of Greater Nagaland’.
• The NSCN-IM, one of the largest Naga groups, has been demanding ‘Greater Nagaland’ or Nagalim, an extension of Nagaland’s borders by including Naga-dominated areas in neighboring Assam Manipur and Arunachal Pradesh and uniting 1.2 million Nagas.
• The Centre has said there would be no disintegration of the States of Assam, Arunachal Pradesh, and Manipur to merge Naga-inhabited areas with the existing State of Nagaland.
• More than a hundred rounds of talks spanning over 24 years have taken place so far. The NSCN(I-M) first signed a ceasefire agreement in 1997. The group was formed in 1980 to oppose the Shillong Accord signed by the then Naga National Council (NNC) with the Central Government to bring peace in Nagaland.

TIMELINE OF NAGA CONFLICT AND PEACE TALKS

• 1826: The British had annexed Assam.
• 1881: The Naga Hills district was created.
• 1918: Various Naga Tribes united to form Naga Club.
• 1929: The Naga Club famously told the Simon Commission “to leave us alone to determine for ourselves as in ancient times”.
• 1946: The Club formed its political unit – the Naga National Council (NNC), thus beginning the fight for freedom from foreign rule.
• 1947: On August 14, 1947, the NNC, under the leadership of Angami ZapuPhizo (called the Father of the Nagas), declared Nagaland an independent state.
• 1951: NCC claimed to have conducted a referendum in which an overwhelming majority supported an independent Naga state. They even formed the Naga Federal Government (NFG) and the Naga Federal Army (NFA), which sparked the scuffle with the government.
• 1958: The Government of India sent in the Army to crush the insurgency and enacted the Armed Forces (Special Powers) Act.
• 1960: The A16-point agreement was arrived at whereby the Government of India recognized the formation of Nagaland as a full-fledged state within the Union of India.
• 1963: Nagaland was formed out of the Naga Hills district of Assam and the then North-East Frontier Agency (NEFA) province (now Arunachal Pradesh).
• 1975: A section of NNC leaders signed the Shillong Accord, under which this section of NNC and NFG agreed to give up arms. A group of about 140 members led by ThuingalengMuivah, who was at that time in China, refused to accept the Shillong Accord and formed the National Socialist Council of Nagaland (NSCN )in 1980.
• 1988: The NSCN split into NSCN (Isak-Muivah)/(IM) and NSCN (Khaplang)/(K). The former faction was led by Isak ChishiSwu, ThuingalengMuivah, demanding to establish a Greater Nagalim based on Chinese communist revolutionary Mao Zedong’s model. The Khaplang offshoot wished to establish Greater Nagalim based on ethnicity and merging of Naga-dominated areas.
• 1991: Phizo died, and the NSCN (IM) came to be seen as the “mother of all insurgencies” in the region.
• 1995: Peace talks started with NSCN(IM), as then Prime Minister P V Narasimha Rao met Muivah, Swu, and others in Paris.
• 1997: The NSCN (I-M) had signed a ceasefire agreement with the Centre. The group had assured that there would be no insurgent offensive against the Army, while the Centre agreed not to launch counter-insurgency operations against rebels.

2015 NAGA PEACE ACCORD

In 2014, the NDA government sought to fast-track the Naga political issue that had slackened since the NSCN-IM-declared truce in 1997.

ABOUT NAGAS

• The Nagas are not a single tribe but an ethnic community that lives across the Naga Hills spanning the present-day Indian state of Nagaland, certain areas of Manipur, Arunachal Pradesh and Assam, along with the Naga hill areas of Myanmar.
• Nagas belong to Indo-Mongoloid Family.
• There are nineteen major Naga tribes, namely, Aos, Angamis, Changs, Chakesang, Kabuis, Kacharis, Khain-Mangas, Konyaks, Kukis, Lothas (Lothas), Maos, Mikirs, Phoms, Rengmas, Sangtams, Semas, Tankhuls, Yamchumgar, and Zeeland.
• In August 2015, the Centre signed a framework agreement with the NSCN (I-M). The agreement paved the way for the ongoing peace talks by derecognizing the outfit as a militant organization. There was a broad understanding of a settlement within the Indian constitutional framework regarding the uniqueness of Naga history and tradition. However, both sides maintained secrecy about the contents of the accord.
• On agenda for discussion issue on AFSPA, demographic changes due to cross-border migrations, a separate Naga flag, and constitution, etc.
• In 2017, the Centre clubbed various divisions among the Nagas on tribal and geopolitical lines into the Naga National Political Groups (NNPGs) to smoothen the talks.
• The Khaplang faction died down in its political significance with the death of its leader SS Khaplang in 2017. Isak ChishiSwu from the NSCN (I-M) also passed away in 2016, making Muivah the most senior Naga rebel leader.
• The key demand of Naga groups has been a Greater Nagalim(sovereign statehood) i.e redrawing of boundaries to bring all Naga-inhabited areas in the Northeast under one administrative umbrella. It includes various parts of Arunachal Pradesh, Manipur, Assam, and Myanmar.
• The demand also includes the separate Naga Yezabo(Constitution) and Naga national flag.

WHY HAVE THE NAGA PEACE TALKS STUMBLED?

NATURE OF DEMAND: The movement itself had two major strands: Recognition of Naga sovereignty and the integration of all Naga-speaking areas (particularly of Manipur) into a Greater Nagaland. These were demands that no government in Delhi could meet. The first — sovereignty — would undercut India’s claim over the region and the second — integration — would create a backlash in Manipur.

CONCERNS OF OTHER STATES: Assam, Arunachal Pradesh and Manipur are sceptical about the demand for the creation of Greater Nagalim because it could lead to the redrawing of their boundaries. The final outcome may affect the states in terms of trade and commerce and cultural and ethnic unity. In Manipur, Meiteis(form a majority in the Imphal Valley) and the Nagas and Kukis, dominate the tribal districts of the hills. Protests organized by Meitei groups echoed a long-running fear: that a solution to the Naga problem would come at the cost of Manipur’s integrity. The governments and civil society organizations in Arunachal Pradesh, Assam and Manipur, have made it clear that they would not compromise on their territorial integrity.

EXISTENCE OF ARTICLE 371A: Article 371A states that no act of Parliament shall apply to the State of Nagaland in respect of the religious or social practices of the Nagas, its customary law and procedure, administration of civil and criminal justice involving decisions according to Naga customary law and ownership and transfer of land and its resources. An amendment to this Article is critical to the ongoing Naga peace process in order to resolve another substantive issue of settling the question of whether Nagas have the right over land and resources, both above and beneath it.

DIVISIONS AMONG NAGAS: The optimism among a section of the Nagas over the 2015 peace accord eroded a bit when the Central government brought other Naga armed groups on board. On November 17, 2017, an agreement on the political parameters of the settlement was worked out with the working committee of these groups, clubbed the Naga National Political Groups (NNPGs). This agreement ostensibly made the peace process inclusive, but it bred suspicion about Delhi exploiting divisions within the Nagas on tribal and geopolitical lines. While the NNPGs want a solution for Nagas within Nagaland, the NSCN-IM seeks integration of Naga-inhabited areas beyond the geographical boundary of Nagaland.

SIMILAR DEMAND FROM OTHER GROUPS: Political instability has undermined the role of democracy in the state and has fuelled apprehensions leading to separate agendas and demands by various factions and organizations. In talks with the government, Kuki groups fear the Naga solution would carve up their imagined homeland.

THE WAY FORWARD

• Providing autonomous Naga territorial councils for Arunachal and Manipur.
• Common cultural body for Nagas across states.
• Specific institutions for state’s development, integration, and rehabilitation of non-state Naga militia.
• Removal of the Armed Forces Special Powers Act.
• Special status on the lines of Article 371-A will be explored for Naga areas outside Nagaland.
• A constitutional body to investigate issues related to Nagas in their whole territorial spread.

THE CONCLUSION: With a clever mix of engagement, coercion, co-option, and inducements, the Central government has managed to neutralize the Naga extremists. A peace agreement will be most welcome. Nagas are culturally heterogeneous groups of different communities/tribes with different problems from mainstream populations. To achieve the long-lasting solution, their cultural, historical and territorial extent must be taken into consideration. Therefore, any arrangement to be worked out should lead to social and political harmony, economic prosperity and protection of the life and property of all tribes and citizens of the states.

THE CONTEXT: After the repealing of three farm laws in November 2021, farmers are now demanding the legalized Minimum Support Price for their crops.  Although, India is already providing MSP for some crops Farmers are demanding legal status for MSP for all crops. In this article, we will analyze the issue in detail.

HOW MANY CROPS DOES THE MINIMUM SUPPORT PRICE COVER?

• The Central Government sets a minimum support price (MSP) for 23 crops every year, based on a formula of one-and-a-half times production costs. This considers both paid-out costs (A2) such as seeds, fertilizers, pesticides, fuel, irrigation, hired workers, and leased-in land, as well as the imputed value of unpaid family labour (FL).
• Farm unions are demanding that a comprehensive cost calculation (C2) must also include capital assets and the rentals and interest forgone on owned land as recommended by the National Commission for Farmers.
• There is currently no statutory backing for these prices, nor any law mandating their enforcement.
• The government only procures about a third of wheat and rice crops at MSP rates (of which half is bought in Punjab and Haryana alone), and 10%-20% of select pulses and oilseeds.
• According to the Shanta Kumar Committee’s 2015 report, only 6% of the farm households sell wheat and rice to the government at MSP rates. However, such procurement has been growing in the last few years, which can also help boost the floor price for private transactions.

WHY DO FARMERS WANT A LAW ON MSP?

• Farmers are saying that MSP based on a C2+50% formula should be made a legal entitlement for all agricultural produce so that every farmer of the country can be guaranteed at least the MSP announced by the government for their entire crop.
• According to them, most of the cost should be borne by private traders, noting that both middlemen and corporate giants are buying commodities at low rates from farmers and slapping on a huge mark-up before selling to end consumers.
• Farmers want a law that simply stipulates that neither the government nor private players will be allowed to buy produce from the farmer at a rate lower than MSP.
• All farmers groups seeking legal backing for MSP also want it extended to fruit and vegetable farmers who have been excluded from benefits so far.

WHAT IS THE GOVERNMENT’S POSITION?

• The Prime Minister announced the formation of a committee to make MSP more transparent, as well as to change crop patterns, often determined by MSP and procurement, and to promote zero budget agriculture which would reduce the cost of production but may also hit yields.
• The panel will have representatives from farm groups as well as from the State and Central Governments, along with agricultural scientists and economists.
• The government has assured that the MSP regime is here to stay, even while dismissing any need for statutory backing.

SHOULD MSP BE LEGALIZED?

YES, MSP SHOULD BE LEGALISED?

TO DECIDE THE MINIMUM PRICE OF A CROP: The demand for a guaranteed remunerative Minimum Support Price is not about the government procuring products from every farmer in the country at the MSP. It is indeed preposterous to think so. It is about reinstating the MSP as the bottom price for all agriculture produce through an Act so that farmers are able to realise at least this minimum price, whoever buys the product.

FREEDOM TO SELL: A legalized MSP means even as the government agencies continue to remunerate the farmers at the MSP; the private sector would also have to do the same. Farmers will have a right to the MSP, even as they continue to enjoy the freedom to sell anywhere.

HIGHER-INCOME TO FARMERS: The corporate world has welcomed the three farm laws and reiterated that it would benefit the farmer by higher incomes. The government also claims the same. But it is not willing to legalize and institutionalize the only instrument that can guarantee this higher income, the MSP.

PRESENT MSP REGIME SHOWS BETTER RESULT: Farmers in States with MSP procurements and APMC controlled mandis realize better prices than in States like Bihar, which did away with the APMC. A free open market is a traders’ delight but can never be a farmers’ choice if it cannot guarantee remunerative prices.

A STANDARD MECHANISM: It will also have to set up standby mechanisms to intervene in the market when traders show reluctance to buy. Kerala, for instance, has announced base prices for 16 vegetables, fruits, and tuber crops, though it does not procure them. Still, it has allocated ₹35 crores as a market intervention fund, in case they have to procure or compensate to intervene in a price crash situation. Similarly, post the Indo-Asean agreement, the price of rubber fell drastically, and Kerala has now a budget head with an allocation to compensate the farmers for price loss.

MARKET ITSELF CAN’T GIVE AN APPROPRIATE PRICE TO FARMERS: According to the Shantha Kumar Committee on restructuring FCI, only 6 per cent of the farmers benefit from procurement. This figure is outdated after decentralized procurement that now covers 23 States for paddy and 10 States for wheat, out of which 10 States for paddy and five for wheat contribute significantly. Still, the number of farmers realizing MSP rates is between 15-25 per cent. This means most of India’s farmers have to sell their produce at much lesser prices, dictated by the markets.

TO MAKE INDIA A $5 TRILLION ECONOMY: India can’t be a five-trillion economy without improving its farm sector and for that, a good price policy for farmers cropping is a must. Seventy years’ experience shows that the government needs to intervene in cropping patterns in India to ensure a better price for farmers’ crops.

MSP should not be legalized because of the following reasons

THE ISSUE OF INFLATION: A law barring purchases of the other 21 crops below MSPs by any private trader will immediately fuel high inflation. Every one percentage point increase in MSPs leads to a 15-basis point increase in inflation. Higher MSPs could also upend the Reserve Bank of India’s inflation targets, hurting economic growth.

IMPACT ON PRIVATE TRADERS: If it is not profitable for traders to buy at MSPs, then the private sector will exit the markets. A mandatory MSP means that it will be illegal for anyone to buy any notified commodity below MSP anywhere in India. Traders might find it safer to stay away from the market and wait for the government to offload stocks in the market.

GOVERNMENT WILL BE THE SOLE TRADER: If private buyers will not purchase, the government then becomes the sole trader. It would be a disastrous situation as the government will purchase all the commodities.

FISCAL BURDEN ON THE GOVERNMENT: The value of the 23 crops presently covered under MSP works out to about Rs 7 lakh crore. But after a legalized MSP for all crops, it will cost the government only an additional Rs 47,764 crore (2017-18 data).

NOT IN FAVOUR OF COMPETITION: Mandatory MSPs will render India’s agri- exports non-competitive because the government’s assured prices are way higher than both domestic and international market prices.

WTO RULING: Surplus cereals can’t be exported without a subsidy, which invites the World Trade Organization (WTO)’s objections. WTO rules cap government procurement for subsidised food programmes by developing countries at 10% of the total value of agricultural production based on 1986-88 prices in dollar terms.

Bias in favour of surplus states: The MSPs benefited farmers in only a few states. Nearly all states in India grow rice, and approximately 20 states grow wheat. However, FCI procures approximately 95 per cent of wheat from three states: Punjab, Haryana and (Western) Uttar Pradesh. Approximately 85 to 90 per cent of rice is procured from 5 states: Punjab, Andhra Pradesh, Haryana, Uttar Pradesh and Tamil Nadu.

Adverse impact on Investment: Hike in procurement prices leads to an additional expenditure by the government. Given the overall resources constraint, the additional expenditure comes at the cost of a decline in fixed investments. While this additional expenditure on stocks favours only rice and wheat (as it is the procurement price of these two crops that has been raised considerably year after year), the decline in fixed investments adversely affects the demand for many non-agricultural sectors.

Distortions in cropping pattern: As pointed out in the Report on Currency and Finance, 2001-02, the agricultural price policy of the government has led to distortions in the cropping pattern. This is because the MSP of rice and wheat (particularly of wheat) has generally been higher than the cost of production. This has made the cultivation of rice and wheat more attractive than pulses and coarse cereals leading to a diversion of the area towards them.

Bias in favour of large farmers: Increases in MSP and procurement prices over the years have acted as an incentive to producers to increase their output. However, most of the benefits have been cornered by the large farmers who could implement the new agricultural strategy and easily obtain credit and other inputs.

Economically Unsustainable: The economic cost of procured rice comes to about Rs 37/kg and that of wheat is around Rs 27/kg. However, rice and wheat market prices are much lower than the economic cost incurred by the Food Corporation of India (FCI). Due to this, the FCI’s economic burden is touching Rs 3 lakh crore. This amount eventually will have to be borne by the Union government and may subsequently lead to divergence of funds from being invested in agriculture infrastructure.

HOW CAN INDIA ADDRESS THE ISSUE OF CROPS PROCUREMENT?

DEFICIENCY PAYMENT: Making MSP a legal entitlement makes it a justifiable right, and there are two ways of ensuring this. The first is through physical procurement by the government. The second is to allow farmers to sell in the private market and if they get a lower price than MSP, then to reimburse the difference between the two. Such a payment is called ‘deficiency payment (DP)’. Procurement is the best option for ensuring MSP. However, there are two major constraints to this physical storage capacity and administrative capability (governance), limiting the quantum of procurement. Thus, farmers also need to be supported through DPS.

DIRECT PAYMENTS: It is important to explore other options that may be fiscally prudent and administratively convenient. One such is direct payments to farmers. However, a different approach is needed for non-staple food commodities. For many non-staple commodities, MSPs are announced with little or no procurement. This is really ineffective. Thus, a gradual movement to an income-based support system is needed. PM-KISAN is currently attempting this, but the support under the programme is grossly inadequate.

GOVERNMENT SHOULD NOT COME OUT FROM THIS MECHANISM: However, it needs to be noted that during the Covid-19 crisis as well as earlier food crises in 1975 and 2008, India’s buffer stock system served the country exceedingly well. There is also a large PDS of 80 crore beneficiaries to cater to. Thus, the MSP procurement system needs to be continued for staple food grains and, if possible, be extended to pulses.

Apart from the above measures, the agriculture sector needs some more measures for a permanent solution

• Devise ways to address price- and production-related risks. In addition to insurance and immediate relief for crop loss, the government can make a “deficiency price payment” when prices crash. Under such a system, farmers get the difference between the market price and a pre-agreed price that will act as a form of price insurance. Restructure the marketing framework to allow free movement of farm products.
• Connect the lab to the field: agriculture cannot grow without modern scientific research.
• Pay attention to resource-use efficiency in water and fertilizers. Increase irrigation-related investments in rain-fed areas as the monsoon uncertainties are here to stay.
• Undertake long-term research on how the crop cycle can be aligned with the changing monsoon. Improve availability of early maturing, drought resistant and short duration crops that can handle weather uncertainties.
• Provide alternative jobs to farmers as it is difficult to earn a living from small pieces of land (average landholding is a little over one hectare in India). Liberalize land lease markets as small farms are not viable. Inject funds into rural India to kick-start demand. Announce a package that can revive wage employment by creating rural infrastructure.
• Bring extension services back on the agenda. Farmers need to know about better seeds, proper use of fertilizers, and access to better technologies. Information and communications technology-based services like Kisan call centres aren’t enough.
• Make crop insurance more effective. Increase penetration and subsidize premiums so that farmers can avail insurance; carry out damage assessment at the field level to settle claims.

THE CONCLUSION: Public procurement needs to continue for staple cereals, but farmers of non-staple food crops need to be provided with direct income transfers, these are fiscally prudent, obviate the need for physical procurement and storage by the government, do not distort current production, and provide a basic income to farmers. These will also address the main concern over the recent farm laws related to the vulnerability of small and marginal farmers and may help these farmers to avoid distress sales.

JUST ADD TO YOUR KNOWLEDGE

ALL ABOUT MSP

MSP: It is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. A guaranteed price for farmers produces from the government.

Objectives of MSP?: To protect the producer – farmers – against excessive fall in price during bumper production years. To support the farmers from distress sales and to procure food grains for public distribution. If the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, government agencies purchase the entire quantity offered by the farmers at the announced minimum price.

History of MSP: First time announced by the Government of India in 1966-67  for the wheat in the wake of the Green Revolution and extended harvest, to save the farmers from depleting profits.

How MSP is decided?: The government decides the support prices for various agricultural commodities after taking into account the following:

• Recommendations of Commission for Agricultural Costs and Prices
• Views of State Governments
• Views of Ministries
• Other relevant factors
• Fixing the MSP Policy

Current status: 26 commodities are currently covered. They are as follows:

• Cereals (7) – Paddy, Wheat, Barley, Jowar, Bajra, Maize And Ragi
• Pulses (5) – Gram, Arhar/Tur, Moong, Urad And Lentil
• Oilseeds (8) – Groundnut, Rapeseed/Mustard, Toria, Soyabean, Sunflower Seed, Sesamum, Safflower Seed AndNigerseed
• Copra
• De-Husked Coconut
• Raw Cotton
• Raw Jute
• Sugarcane (Fair And Remunerative Price)
• Virginia Flu Cured (VFC) Tobacco

Point to be noted

• Sugarcane is a Kharif crop.
• 60% of India’s foodgrain and oilseeds are grown in the Kharif Season.

WHAT IS THE PROCUREMENT PRICE

• At this price, FCI will purchase foodgrain for the PDS distribution system.
• Procurement prices are always higher than MSP.

OPEN-ENDED PROCUREMENT (CONDUCTED BY FCI)

For Wheat and Rice (Conducted): Government will buy AT MSP, from any farmer who comes forward to sell. (even if market prices are running higher than MSP).

Other crops (not conducted): Government will buy ONLY when their prices fall below MSP in an open market.

THE CONTEXT: The retail inflation in the Indian economy accelerated in Nov. 2021 towards the upper limit of the RBI’s target range as fruit and vegetable prices rose. There are chances that inflation may rise above 6 percent in early 2022. It is fear that the rising of inflation can impact the recovery of the Indian economy in post-pandemic times. Let us understand the issue of inflation that is impacting the Indian Economy.

TREND OF INFLATION IN INDIA

• In the latest bi-monthly meeting of MPC in December 2021, the committee projects 5.30% inflation rate for FY22 and a dovish forecast at around 5% thereafter.
• Retail inflation rose 4.48 percent in October 2021 from 4.35 percent in September. The data for November 2021 is yet to come. It will release on 13^th
• The food inflation: determined by the consumer food price index rose to 0.85 percent in October, compared to 0.68 percent in September. The inflation in the ‘fuel and light’ category remained elevated at 14.35 percent during the month, according to data released by the National Statistical Office (NSO).

 REASONS FOR THE RISING IN INFLATION IN INDIA

• The sharp rise in commodity prices across the world is a major reason behind the inflation spike in India. This is increasing the import cost for some of the crucial consumables, pushing inflation higher.
• High petrol, diesel, and cooking gas prices drove fuel inflation, while high prices of basic metals, textiles, plastics, and edible oils drove inflation of manufactured items.
• The price of vegetable oils, a major import item, shot up 57% to reach a decadal high in April 2021.
• Metals prices are near the highest in 10 years and international freight costs are escalating.
• The rise in inflation was mostly due to rising in prices of fuel, edible oil prices, and non-alcoholic beverages. Retail inflation edged higher last month despite the base effect as it stood at 7.61 percent in October 2020, while the food inflation was at 11 percent in the year-ago period.

 EFFECTS OF INFLATION ON VARIOUS ASPECTS OF THE ECONOMY AND ECONOMIC GROWTH

NEGATIVE EFFECT

• On Imports: They become costly due to high inflation as the currency depreciates and more foreign currency is lost for imports.

• On Lending: Lending institutions (like banks) feel the pressure of higher lending due to the high inflation rate in the economy. Therefore, they don’t revise the nominal interest rates as the real cost of borrowing falls by the same percentage with which the inflation rises.
• On Income: Increase in inflation increases the nominal value of income while the real value of income remains the same.

• On Expenditure: Increased prices make consumption levels fall as goods and services get costlier.

POSITIVE EFFECT

• On Exports: Inflation makes exportable goods competitive in the world market and thus exports increase.
• On Aggregate demand: High rate of inflation shows there is high demand
• On Savings: Money loses value due to inflation, that’s why people keep less money with them and keep more money in banks. It means that the savings rate increases in the short run. In long run, higher inflates deplete the savings rate in an economy.
• On Wages: Inflation increases the nominal value of wages but their real values fall.

WILL INFLATON DENT ECONOMIC RECOVERY?

• One of the key factors why inflation probably witnessed a rise in November is the sharp rise in the prices of various vegetables. The jump in vegetable prices, though temporary, could hit demand and disrupt economic recovery for a short period.
• While fuel prices have been cut by the government, it seems that fuel demand has fallen after the festive season. This indicates a lower demand for fuel. India’s fuel consumption in November was down 4 percent on a quarterly basis and over 11 percent lower year on year.
• However, the demand will rise again as Covid-19 fades further. This indicates that the present scenario of inflation is unlikely to impact economic recovery for a long period.

BUT RISING INPUT COST BIGGEST WORRY FOR ECONOMIC RECOVERY

• While vegetable prices and fuel demand may fade away over the next few months, India could face a period of persistently high inflation due to rising input costs.
• Many companies across the spectrum from automakers to electronic goods manufacturers have hiked prices of their products due to prolonged disruption in global supply chains and a severe shortage of semiconductors. Car manufacturers are already going for another round of price hikes in January 2022.
• Rising inflation in the non-food category, arising from global supply chain disruptions and fresh restrictions due to the new Omicron variant of coronavirus, seems to be the biggest hurdle in the path of swift economic recovery.

ROLE OF RBI IN CONTROLLING INFLATION

The RBI has adopted policies through which it decreases or increases certain rates to control inflation. Hence it is important to understand what these rates are and how they affect inflation.

1. Interest rate

• Repo Rate- Repo rate (Repurchase or Repossession) is the rate at which RBI buys government securities with an agreement of repossession, from the commercial banks. It is a short-term borrowing from the central bank, against securities, to inject money to meet the gap between the demand for money (loans) and deposits in the bank.
• Reverse Repo rate- It is the rate at which the RBI borrows money from commercial banks. Banks deposit money in RBI when there is no other profitable option to invest the short-term excess liquidity or when there is uncertainty in the market for a significant period of time.
• Bank Rate- Bank rate is the rate at which the RBI allows finance to the domestic banks. It is generally for a short period of time. Unlike, Repo rate, there are no securities to be kept against the finance. But, in policies designed to control inflation, Bank rates are seldom revised.

2. Reserve Ratios

• Cash Reserve Ratio- Banks are required to keep a fraction of deposit liabilities in the form of liquid cash, CRR, with the RBI to ensure the safety and liquidity of the deposits.
• Statutory Liquidity Ratio- Every bank in India has to maintain a minimum proportion of their net demand and time deposits as liquid assets in the form of cash, gold, precious and semiprecious stones. SLR has nearly remained constant for the last 14 years.

3. Open Market Operations

• The RBI can purchase or sell Government securities from or to the public. To control inflation, the RBI sells the securities in the money market which sucks out excess liquidity from the market. As the amount of liquid cash decreases, demand goes down. This part of monetary policy is called the open market operation.

4. Selective Credit Control

• The Banking Regulation Act empowers the RBI to control the level and pattern of advances given by banks, selectively.
• The RBI has been operating selective credit control to contain inflation of goods that are short in supply or sensitive goods like food grains, vegetables, pulses, oilseeds, cotton, sugar, gur, Khansari, etc which are of mass consumption.

BRIEF BACKGROUND TO UNDERSTAND THE TOPIC

1. Definition of Stagflation – It is a stage of persistently high inflation combined with high unemployment and stagnant demand in a country’s economy.
2. Constituents of WPI and CPI
   1. WPI
      1. The wholesale Price Index (WPI) is an indicator of price changes in the wholesale market.
      2. It constitutes primary articles (22.62), fuel and power(13.15), and manufactured goods (64.23) with their weights being in the brackets.
      3. It is released by the office of the Economic Advisor in the ministry of commerce and Industry.
   2. CPI
      1. Consumer Price Index (CPI) is a price index that represents the average price of a basket of goods over time. CPI calculates the average price paid by the consumer to the shopkeepers.
      2. It is calculated on the basis of 8 groups – Education, communication, transportation, recreation, apparel, foods and beverages, housing, and medical care.
      3. Published by CSO.
   3. Monetary Policy Committee
      1. It is statutorily created by amending the RBI Act 1934.
      2. It consists of six members with three being from RBI and 3 appointed by the government
      3. It seeks to maintain inflation in the range of 4 +/- 2% range i.e. 2 to 6% rate.

THE WAY FORWARD

The current Inflation spike is largely due to seasonal factors and thus will subside in a month or two. However, the major focus should lie in boosting growth so that the country doesn’t enter into a phase of stagflation. The following steps can be taken for boosting growth while controlling inflation.

FOR CONTROLLING INFLATION

Supply-side Reforms: Government needs to take steps to boost supply especially of food articles such as vegetables and pulses by bringing more area under cultivation through reclamation of fallow land and increasing productivity.

Prevention of Hoarding and Nexus: Hoarding and nexus between middlemen lead to an increase in inflation without any external factor and harm the interest of consumers. This needs to be prevented through proper monitoring of inflow and outflow of Mandis and through digitalisation of agricultural markets.

FOR BOOSTING GROWTH

Balancing Growth and Inflation: RBI has already cut the interest rates by 135 basis points but has not been passed on to the customer and market due to no change by the banks. Thus, the RBI cannot cut the interest rate anymore for improving growth but we need to focus on banks for better transmission of rates leading to boosting growth.

Boosting Private Sector Investment: Private sector investment can be improved through simplification of policy procedures and maintaining a sound economic environment. Constant protests and abrupt policy changes are going to stop investments and thus a proper environment is important for boosting private sector investment.

Structural Reforms: Land, Labour, Agriculture, and taxation need structural reforms so as to improve both the business and agriculture environment.

Regulation: Demonetisation, GST, Automobile policy, E-commerce policy, etc. have all been abrupt policies that impacted the market drastically. A business flourishes when provided with predictable environmental conditions and thus abrupt changes should be avoided. Instead of creating policy on a day-to-day basis, the government should provide the major regulations along with the budget at the start of the fiscal year and should only do minuscule adjustments around the year.

THE CONCLUSION: Indian Economy is suffering from huge challenges of suppressed growth, investment, production while inflation is increasing along with large unemployment figures. In short, all that can go wrong has been going wrong, and thus, there is a need for a predictable growth model for the Indian economy which the government has failed to provide. It is time, that instead of modifying older policies, the government needs to provide a clear model for boosting growth in all primary, secondary and tertiary sectors. Structural reforms need to be undertaken in the land, labour, and capital. Companies need to be provided with predictable regulatory regimes. The market needs to be given time to adjust to policy changes. Judiciary and the legal system need to be sensitized so as to handle economic cases so that the verdict doesn’t threaten the investors. Lastly, agriculture has the biggest multiplier effect on growth and thus agriculture needs to be boosted with long-term policies and not limited to superficial changes in MSP and loan waivers.

THE CONTEXT: Along with QUAD members, India, in December 2021, India conducted a 2+2 talk with one of its most strategically important partner nations, Russia. Russia will join the other countries where India holds a 2+2 ministerial dialogue. This first face-to-face bilateral meeting of the Russian President with any country since the onset of the pandemic signifies that the long-standing relations between the two are still as strong as ever.

OUTCOMES OF THE MEETING

The meeting saw the signing of 28 agreements across sectors from defense to energy to space exploration, science, and technology, heavy engineering, to trade and investment. However, the anticipated ‘Reciprocal Exchange of Logistical Support’ (RELOS) could not conclude in the meeting.

Major pacts: 

MILITARY PACTS: The two sides signed the ‘Agreement on Program of the Military-Technical Cooperation from 2021-2031’. This 10-year Defence Cooperation Program outlines the ongoing defense cooperation and possible future cooperation between the two countries. Such agreements are being signed since 1994. The long-awaited ‘A-203 assault rifles deal’ was inked at the end of bilateral talks between Defence Minister and his Russian counterpart Sergey Shoigu, paving the way to produce over six lakh rifles Amethi.

S-400 MISSILES DEAL ON AUKUS AND INDO-PACIFIC: Regarding the threats of US sanctions on procurement of S-400 missiles, the Indian foreign secretary said that India follows an independent foreign policy, and decisions are not taken in light of others. On the issue of AUKUS and the Indo-Pacific, the Russian minister debunked these new formats calling them “non-inclusive” and violative of international norms.

ON REGIONAL SECURITY: India confirmed that issues such as Chinese incursions in Ladakh and the situation in Ukraine did come up during the conversations between India and Russia. The leadership also discussed the evolving situation in Afghanistan, especially the security situation and its implications in the region, the current political situation, issues related to terrorism, radicalization and drug trafficking, etc.

ON TERRORISM: The joint statement mentioned India’s concerns of terror networks like Pak-based terror groups like the Lashkar-e-Taiba (LeT) finding space in Afghanistan. The leaders emphasized that Afghanistan’s territory should not be used for sheltering, training, planning, or financing any terrorist groups including ISIS, Al Qaeda, LeT, etc. The Russian side has invited the Indian side to Moscow for the next round of 2+2 dialogue to be held in 2022. India has accepted the invitation. The two sides also signed a protocol to allot land to set up the Indian Consulate General in the city of Vladivostok.

A SNAPSHOT OF INDO-RUSSIA RELATIONS

DIPLOMATIC TIES

• BRICS; Shanghai Cooperation Organisation (SCO)
• Indian Ocean Rim Association: India helped the induction of Russia
• UNSC conference on maritime: Russia displayed its proximity to India

INDIA-RUSSIA ANNUAL SUMMIT

• Highest institutionalized dialogue mechanism in the strategic partnership between India and Russia
• The latest summit is an institution of a new “two plus two” mechanism

RECENT COOPERATION IN DEFENCE

• 65% of Indian armed forces equipment is of Russian origin
• India procured the S-400 Triumf Missile from Russia

BACKGROUND OF NEW DEVELOPMENTS IN INDO-RUSSIA RELATIONS: THE CHANGING GEOPOLITICS

Asia Rising: The world has changed drastically in the last three decades. The Soviet Union collapsed, leaving Russia geopolitically weakened. China has risen dramatically as the effective number two global power and the US power has relatively declined, but it still retains its pre-eminence. The global political and economic center of gravity is shifting from the West to the Asian region.

Geopolitical realignments: Russia-US ties and US-China ties have deteriorated very sharply in recent times as the US sees both these powers as adversaries. Russia and China have forged an increasingly stronger strategic partnership (Russia’s “Pivot to the East”), especially after US sanctions on Russia from 2014 (Crimea Crisis). Russia’s relationship with Pakistan has also seen considerable change in the last five years. At the same time, India-US ties have been transformed, with the US becoming India’s leading partner in many ways, including a remarkable growth in defense ties.

Border tensions: No issue affected the Indo-Russian relationship as much as the border tensions between India and China. The Chinese aggression in eastern Ladakh brought India-China relations to an inflection point. It has driven New Delhi to shed past hesitations and actively pursue more hard-nosed policies to protect its national interests.

Covid-19 Pandemic: Changing geopolitical equations are greatly accelerated by the Covid-19 pandemic. The acceleration of the US-China rivalry due to the pandemic has made the bipolar dynamic the pivot around the new world order. India and Russia are both important players in their own right, but neither will occupy the top two positions in the world order. India and Russia remain supporters of multipolar world order. However, their foreign policy choices will inevitably be affected by the way their respective relations with the US and China have evolved.

Afghanistan issue: The exit of US security forces has posed a new challenge before India and Russia to fill the vacuum of a stable power center in the Taliban’s presence.

2+2 DIALOGUE:

• The 2+2 dialogue is held between the foreign and defense ministers of two countries and is generally seen to be aimed at creating a mechanism under which the bilateral relationship takes a decisive strategic turn with greater integration of defense, security and intelligence apparatus.
• On the lines of 2+2 dialogue with the United States, India and Russia have decided to establish dialogue on the same pattern, to add further momentum to the strategic partnership between the two countries. India held its first 2+2 dialogue with the US in September 2018.
• The foreign minister and defense ministers of both countries will meet to review the cooperation between the two countries and discuss the pending defense projects and matters of strategic interests, including the ongoing situation in Afghanistan.

REASONS FOR 2+2 TALKS WITH RUSSIA: IN THE PRIME INTERESTS OF INDIAN MAINLAND

While India and Russia have shared a strategic relationship since October 2000, which later got upgraded to ‘Special and Privileged Strategic Partnership’ in December 2010, it is only now that both countries are having their first 2+2 format dialogue even as the bilateral ties are facing a number of troubles.

The traditional build-up of Indo-Russia relations:

• Relations with Russia are a key pillar of India’s foreign policy, and Russia has been a long-standing time-tested partner of India. The historical character of the bilateral relationship binds both nations together.
• Both countries signed the “Declaration on the India-Russia Strategic Partnership” in October 2000.
• Traditionally, the Indo-Russian strategic partnership has been built on five major components: politics, defense, civil nuclear energy, anti-terrorism cooperation, and space.
• Russia also reaffirmed its “unwavering support” to India for a permanent seat in an expanded UN Security Council.
• Russia’s medical aid to India in the context of a new COVID-19 wave and Sputnik V supplies provided a positive background for the cooperation going forward.
• The deterioration of Afghanistan’s situation, particularly the Kabul takeover by the Taliban, also forced India and Russia to band together.
• The supply of the S-400 surface-to-air missile system, which signifies more than just advanced military cooperation between the two countries. Such impactful pacts definitely called for greater cooperation.
• 25% of Russia’s defense export to India and in 2018, India- Russia defense trade amounted to $ 15 billion.
• There is a pile-up of other deals in defense and energy that have been at a protracted stage and now await a handshake between both nations to move forward (for example, the Kudankulam nuclear power plant).
• The 2+2 format of talks is an effective way to promote security cooperation. Recently, because China is using many types of methods including military, diplomacy, and economy to expand its influence. Therefore, diplomacy, including economic policy and military, should be coordinated to deal with China. Therefore, 2+2 is a more effective way to deal with the problem of China.
• India and Russia have identified several new areas of cooperation. These range from deep-sea exploration to building knowledge-based economies based on science and technology, innovation, robotics, and artificial intelligence, focussing on infrastructure, skill development, agriculture, shipbuilding, railways, aviation, and greater connectivity, especially people-to-people contacts.

THE WAY FORWARD

• As India develops ties with other like-minded powers to deal with the rise of China, it must also strengthen its special, privileged strategic partnership with Russia. The former superpower is an important partner in its Act East policy and a more balanced Russia-China relationship is in its interests.
• High-level engagement is particularly important in the India-Russia relationship as it remains driven by top-level interaction. Efforts should be to intensify contacts and diversify areas of cooperation with Russia.
• Apart from traditional cooperation areas, new economic engagement sectors are likely to emerge, mining, agro-industrial, and high technology, including robotics, nanotech, and biotech. India’s footprint in the Russian Far East and in the Arctic is set to expand. Connectivity projects may get a boost too.
• India should pursue and facilitate Russia’s engagement in the Indo-Pacific. Russia may not use the term Indo-Pacific for some more time, but its active engagement, irrespective of motive, in the region would be beneficial to India and contribute to making the Indo-Pacific “free and inclusive”.
• New Delhi has been consistent in promoting links between the Indo-Pacific and the Russian Far East. The willingness of India and Russia to promote regional cooperation is also visible in proposals for joint economic projects in the Far East and the Chennai-Vladivostok maritime trade route.

THE CONCLUSION: India and Russia share deep-rooted ties dating back to the Soviet era. Cooperation in trade, defense, and space, and significant investments in each other’s economies, continued even after the fall of the Soviet Union. Holding the 2+2 talks with Russia was much needed. This gives out a strong message to the world that India sees everyone to be on the same level. Having a 2+2 with Russia also means that India is “not in anyone’s camp” and that bilateral ties between Moscow and New Delhi are “traditional and comprehensive”. This is visible messaging. And this will also show that the defense to defense relationship between both countries is robust.

THE CONTEXT: Three decades ago, India embarked on a new economic journey when Manmohan Singh, then Finance Minister, placed the reform Bill and echoed Victor Hugo, “No power on earth can stop an idea whose time has come,” in Parliament. Since then, the crisis-hit economy has come a long way and marked its firm presence in the global platform. In this article, we will analyze India’s Journey in these three decades.

AN INTRODUCTION OF THE ECONOMIC REFORMS

• Economic reforms in India refer to the structural adjustments initiated in 1991 to liberalize the economy and accelerate its economic growth rate. The Narsimha Rao Government, in 1991, introduced economic reforms to restore internal and external confidence in the Indian economy.
• The reforms aimed at bringing in greater participation of the private sector in the growth process of the Indian economy. Policy changes were introduced with respect to industrial licensing, technology up-gradation, removal of restrictions on the private sector, foreign investments, and foreign trade.
• The reforms aimed to attain a high rate of economic growth, reduce the rate of inflation, reduce the current account deficit, and overcome the balance of payments crisis. The important features of the economic reforms were Liberalisation, Privatisation, and Globalisation, popularly known as LPG.

NEED FOR ECONOMIC REFORMS

The need for the introduction of the reforms was because of the following factors:

POOR PERFORMANCE OF THE INDUSTRIAL SECTOR: Before the introduction of economic reforms, the industrial sector suffered due to bureaucratic controls. The industries had to obtain several licenses and permissions for any undertaking activity such as setting up a new firm, starting a new product line, expanding an existing business, foreign investments, etc. Many public sector enterprises were incurring huge losses due to poor productivity.

The main objectives of the industrial policy introduced in 1991 were:

1. To unshackle the Indian industrial sector from the cobwebs of unscrupulous bureaucratic controls.
2. To introduce liberalization to integrate the Indian economy with the world economy.
3. To remove restrictions on foreign investments and relieve the entrepreneurs from the restrictions of the MRTP Act.
4. To shed the load of public enterprises that were incurring heavy losses.

ADVERSE BALANCE OF PAYMENTS: India faced a severe economic crisis during the end of the 1980s. India was unable to meet its international debt obligations and was pushed to a situation of near bankruptcy. The foreign exchange reserves were insufficient to pay the import bills. The Balance of Payments deficit could not be financed beyond a certain point.

Some of the factors responsible for the crisis were: 

1. The rising level of expenditure over revenue.
2. Heavy government borrowing.
3. Inefficient utilization of resources.
4. Excessive protection to domestic industries.
5. Inefficient management of public sector enterprises.
6. Lack of technological development and innovation
7. Lack of investments in research and development.

RISE IN FISCAL DEFICIT: This was mainly due to the increase in the non-developmental expenditure of the government. The government had to borrow a huge sum of money to finance the deficit and meet these debts interest obligations. The government was in a debt trap. Thus, there was a need to bring in reforms to reduce the non-developmental expenditure and to bring about a fiscal discipline.

INFLATION: Due to continuous borrowing by the government to meet its mounting expenditure, there was a rapid increase in the money supply. The government resorted to deficit financing wherein the RBI financed the borrowings by the Government of India by printing currency notes. This leads to a rise in the money supply. When the money supply increased, the demand for goods and services also rose, increasing their prices and causing an inflationary situation.

THE GULF WAR: The Gulf war during 1990-91 had a significant impact on the supply of oil. As a result, the price of oil shot up, increasing India’s foreign currency outlays. The Gulf crisis also affected the flow of foreign currency into India. The NRI deposits were moving out of India and remittances from Indians employed abroad were also affected during the war.

THE ECONOMIC REFORMS

The main objective of liberalization was to unshackle the industrial sector from the cobwebs of unnecessary bureaucratic controls. The main features of liberalization policy were

ABOLITION OF INDUSTRIAL LICENSING: The new industrial policy of 1991 abolished the industrial licensing for all the industries except for a selected 18 industries due to security and strategic concerns.

REMOVAL OF RESTRICTIONS: Other than those 18, all industries could set up and sell shares without any restrictions; they could expand their business and start a new product line without obtaining any license.

RELAXATION OF MRTP RESTRICTIONS: The Monopolies and Restrictive Trade Practices (MRTP) Act aimed at controlling monopoly practices to prevent concentration of economic power. The MRTP Act has now been replaced by the Competition Act, 2002, which came into effect in 2009. The Competition Act checks all anti-competitive practices and prohibits abuse of dominance. To protect consumer interest at large, it aims at promoting and sustaining competition in the market.

FOREIGN INVESTMENT: The reforms reduced several procedural bottlenecks for foreign investments. Approval was given for foreign direct investment up to 51 percent of the equity in high-priority industries.

FOREIGN TECHNOLOGY: Automatic approval was provided to Indian industries with respect to foreign technology agreements, especially in the case of high-priority industries. Permissions were not required for hiring foreign technicians and experts and for foreign testing of indigenously developed technologies.

GLOBALISATION – MEANING AND FEATURES

Globalization may be defined as the integration of the domestic economy with the world economy to facilitate the free movement of goods, services, people, ideas, technology, etc. It refers to the opening of the economy to international competition.

The major features of globalisation measures as undertaken in 1991 were:

Reduction of Trade Barriers: With the introduction of globalisation measures, trade barriers restrictions were reduced. It provided immense opportunities to Indian industries to expand their markets abroad and offered Indian consumers a wide variety of quality goods at competitive prices. The export-import policy announced for the period 1992-97 removed all restrictions on external trade and enhanced the export capabilities of the Indian industries.

Promotion of Foreign Direct Investment: Many Indian industries were opened to foreign direct investment. India became a favorable investment destination for foreign investors due to the low cost of production and availability of cheap labor resources. The government of India further initiated a series of measures to promote foreign technical collaborations in the case of high-priority industries and for the import of foreign technology. Foreign Investment Promotion Board (FIPB) was set up to facilitate foreign direct investments in India.

To Encourage Efficiency: Globalisation encouraged domestic industries to become more competitive and efficient to face competition at the global level. The domestic industries had to produce quality goods at low cost to compete with the foreign producers’ cheaper and superior quality goods.

Diffusion of Technology: An opportunity for India to have access to global technology and India could utilize the technologies of developed countries without many investments in research and development.

PRIVATISATION-MEANING AND FEATURES

Privatisation refers to the introduction of private ownership in public sector enterprises. The government holding in public sector enterprises was sold to increase private participation. Many public-sector units were incurring losses due to inefficiencies in management and lack of innovation and investments in research and development. Privatisation measures enabled modern technology, improved the quality of service, and led to efficient utilisation of resources.

Various privatisation measures introduced in India included:

1. Transfer of ownership of public sector units, either fully or partly, to private hands through denationalisation.
2. Transfer of control to the private sector through disinvestment policies.
3. Opening of areas that were exclusively reserved for the public sector.
4. Transfer of management to the private sector through franchising, contracting, and leasing.
5. Limiting the scope of the public sector.

The privatisation wave in India, which was a part of the economic reforms of 1991, increased the role of the private sector and restricted the public sector to priority areas which included:

1. Physical and social infrastructure
2. Mining and oil exploration
3. Manufacture of products that were of strategic importance and where security concerns were involved like in the case of manufacture of defense equipment, and
4. Investments in technologies that required huge outlay and where private sector investment was inadequate.

Privatisation measures were introduced in India as part of the economic reforms in 1991 for the following reasons:

To Reduce the Burden of the Government: Many public sector units were only functioning to protect the interests of the laborers. Privatisation offloaded this burden from the government and reduced the strain on resources.

To Promote Efficiency: Many public sector companies were also struggling due to inefficient management, lack of transparency, and corruptive practices. Privatisation measures got rid of these problems and enabled the public sector units to achieve optimum productivity.

To Enhance Investment Opportunities: Privatisation helped in reducing the inconsistencies in management and improved the economic status of many public sector units. This brought in good returns and attracted investments.

To Facilitate Growth of Infrastructure: Privatisation of industries led to the growth of the industrial sector on modern lines. The private enterprises, to provide competitive products and services, initiated and facilitated the improvement of the infrastructure.

To Reduce Unnecessary Bureaucratic Interventions: Privatisation reduced unnecessary government intervention in the management, thereby giving the private enterprises more autonomy in management and operations. This enhanced their efficiency and profitability.

SUCCESS AND FAILURE OF REFORMS: AN ANALYSIS

THE SUCCESS:

SIZE OF GDP AND GROWTH: From a GDP of $512.92 billion in 1991, India had grown to $2.70 trillion by 2020. Besides, the average annual growth rates in GDP, post the 1990s, have been around 6.25 percent against 4.18 percent for the three decades prior to the reforms.

RATE OF INFLATION: The average annual inflation rates in the post-reform period were significantly lower at around 5 percent and the gross fiscal deficit was below 4.80 percent of GDP. While curbing automatic monetization of deficits and strong monetary measures contributed to lower inflation, disinvestment via privatization and fiscal restraint in the form of lower subsidies arrested the deficits.

IMPORT-EXPORT: On the external front, the reforms made a significant impact too. Firstly, India’s trade openness increased from a meager 13 percent in 1990-91 to 42 percent in 2020. The exports, driven by the devaluation of the rupee in 1991 and further depreciation in later years, have increased from $17.96 billion in 1990 to $324.43 billion in 2019.

FOREIGN INVESTMENT: Abolition of license-raj and curbing of excessive regulations saw rewards in terms of better foreign investment. From $236.69 million in 1991, the net FDI inflows stood at $50.61 billion in 2020. With more foreign companies entering India, domestic consumers benefited from healthy market competition. For Indian manufacturing, the foreign collaborations meant access to technology and, thereby, efficient production. Also, there has been a significant improvement in forex reserves, which are now sufficient to cover 15 months’ imports.

REDUCING POVERTY: The reforms had a telling impact on India’s socio-economic fabric. From about 45 percent of the population below the national poverty line in 1994, the rates fell to 21.9 percent in 2011. There have also been improvements in literacy rates, gross enrolments ratio, and life expectancy, among others.

AVERAGE MONTHLY PER CAPITA HOUSEHOLD CONSUMPTION EXPENDITURE: It was Rs 243.5 and Rs 370.3 in July-Dec 1991 and this stood at Rs 1,430 and Rs 2,629.7 from July 2011 to June-2012 for rural and urban areas.

FOREIGN EXCHANGE RESERVE: Increased $1.1 billion in 1991 to $642 billion in 2021.

PER CAPITA INCOME: Increased $300.10 to $2200.60 in 2020.

However, opening up the economy makes it susceptible to external shocks. Within a few years after the reforms, the first challenge for India came from its East Asian neighbors in 1997. In a span of three years, the world economy was hit by the dot-com bubble, and the third challenge came in the form of the global financial crisis in 2008. It was prudent economic policies and disciplined financial markets that helped the Indian economy to resist and recover quickly from all three crises.

THE FAILURES: 

INCONSISTENT PERFORMANCE: India’s growth rate and its progression as one of the leading developing economies of the world are inconsistent with the Human Development Index (131st rank in 2020), Global Hunger Index (94th position in 2020), Gender Inequality Index (122nd rank in 2018) and Environmental Performance Index (168th rank in 2020).

RICH-POOR DIVIDE: It has widened the gap between rich and poor. The World Bank estimates show that the Gini index, a measure of income inequality, had deteriorated marginally from 31.7 in 1993 to 35.7 in 2011. According to NSSO consumption surveys, while the bottom 20 percent of the population contributed to 9.20 percent of consumption expenditure in 1993-94, their contribution had declined to 8.10 percent in 2011-12. Further, the share of the top 20 percent of the population has fattened from 39.70 percent to 44.70 percent during the same time.

POVERTY RATE: As per the Tendulkar Committee estimations, India’s 21.92% of the population was living below the poverty line in 2011-12. However, as per the National Family Health Survey-4 (2015-16), the multi-dimensional poverty rate stood at 27.9%. The poverty rate, which was 45% in 1994, declined, especially during 2004-2011 when India implemented substantive anti-poverty measures and rights-based initiatives to uplift the poor. This has been affected by the pandemic due to loss of work and earnings and the people, especially informal and daily wage laborers, are pushed into the vicious cycle of poverty. A study conducted by the Azim Premji University (2021) finds that “230 million additional individuals slipped below the poverty line defined by the national floor minimum wage” and took away the anti-poverty efforts that were in place during the pandemic for the last 25 years.

UNEMPLOYMENT: The reduction in poverty rate during 2004-2012 was due to the employment shift from farm to non-farm, especially in the services sector. The construction sector absorbed many informal/unskilled labor resulting in the real wages enhancing the purchasing power of the people. On the other side, the number of jobs created during this period was very less, ie, 0.6% per year than the growth of the working-age population. According to the International Labour Organization’s ILOSTAT database, India’s unemployment rate in 2020 was the highest since 1991 with 7.11%.

MORTALITY RATE: Surely economic liberalisation should result in better care for our children, the country has made considerable progress on that front, with the under-five mortality rate coming down from 125.8 per thousand in 1990 to 47.7 per thousand in 2015. But neighbouring Bangladesh and Nepal, much poorer than India, have brought down their under-five mortality rates more than India.

SHARE OF MANUFACTURING IN GDP%: One would have expected that the New Industrial Policy would have been a pivotal moment for the manufacturing sector and India would soon take its place among the manufacturing powers of East Asia. Still, while, in 1989-90, the share of manufacturing in the gross domestic product was 16.4%, it reduced to 16.2% in 2015-16.

COMBINED FISCAL DEFICIT OF CENTRE AND STATES: One underlying reason for the crisis of 1991 was the indiscriminate rise in government borrowing in earlier years. It was only to be expected therefore that after the crisis, the government would do all it could to curb its fiscal deficit and that of the states. Unfortunately, that didn’t happen. By 2000-01, the combined fiscal deficit of the center plus the states, as a percentage of GDP, had risen beyond the 1991 level.

TAX TO GDP RATIO: One reason why government deficits remained high is that, despite robust economic growth, tax revenues weren’t buoyant. The central government’s gross tax revenues as a percentage of the gross domestic product have remained below the 1991-92 level.

DOES INDIA NEED ANOTHER REFORM?

Successive governments have built on LPG reforms, but a lot more needs to be done if India is to achieve its full potential. A look at the key areas that need urgent intervention to address long-standing issues to help the country achieve double-digit growth.

EDUCATION: Possibly the most pressing focus area given the urgency to leverage human resources. Total revamp from primary level to higher education with equal emphasis on skills. Outcome- and learning-based education so that only those eligible progress to the next level. Along with health, education should get much higher funding.

HEALTHCARE: Needs reorganization and more funding. Expensive out-of-pocket health spending major cause of poverty. Massive public healthcare supported by insurance for critical care is needed.

JUDICIAL REFORMS: Inadequate court capacity & judicial delays undermining the economy. More courts, better processes, and simpler laws to reduce caseload. (Vacancies of Judges- 38.70%) (Pending cases- 63,146 in SC, 56.43 lakh in High Courts and 3.71 Cr in Districts and Subordinate Courts)

TAX REFORMS: Direct tax reforms progressing as per template. GST needs a makeover; all items should be included.

POWER SECTOR: Unbridled populism has made power expensive, unreliable, and inadequate. State finances are in disarray in many cases due to power subsidies. Users must pay for power; DBT for those states want to support. Privatize discoms, enforce open access, continue focus on renewables.

INNOVATION: Unshackle the startup system totally. Provide funding missions for startups in innovation areas crucial to India. Encourage blockchain technology in payment systems.

UNIVERSAL BROADBAND: Reach broadband across the country, keep it affordable. Go for satellite broadband in remote areas.

EASE OF DOING BUSINESS: Much progress made, but the cost of doing business is still high. Multiple last-mile hurdles, particularly in the states. Massive review of policy, rules, and regulations to simplify business. Use technology for governance and nonintrusive oversight.

SOME OTHER TARGET AREAS: Comprehensive social security, which would also make labor reforms easier. Steps towards low carbon economy; continued emphasis on EVs and renewables. Further relaxation of foreign investment where possible. Massive privatisation to reduce state sector. Clear framework to bring back private investment in infrastructure. Framework for dispute resolution and enforceability of contracts.

THE WAY FORWARD: The journey of three decades of economic reforms has certainly transformed our economy from a slow and regulated to a fastened and liberalised path of growth. During this process, what was really missed out was the large workforce of the informal sector. This non-inclusive approach is one of the limitations of the trickle-down economic growth model and needs serious revision. The 1991 reforms have provided the required dynamism to the economy. However, it has fallen short in sustaining the pace of growth owing to structural and institutional deficits, including the model of development and centralised governance. 91% of the labor force participation working in the informal sector needs to be provided better avenues of employment by leveraging the inherent potentials of agriculture and allied sectors. In spite of the pandemic, the expenditure on the health sector is still low compared with our neighbors like Bangladesh and Sri Lanka, which are ahead of India in terms of human social and political (governance) reforms are imperative to achieve the goal of sustainable and equitable economic growth.

THE CONCLUSION: While Covid-19 has been a big blow, the economy was already showing signs of deteriorating growth even in periods preceding the pandemic. This would require immediate intervention to tackle the predicaments of unemployment, poverty, and other social issues. The pandemic has also raised concerns over existing health infrastructure and the future of education. The government must make higher investments in these sectors.

Just add to your knowledge

Disinvestment: This is one of the most important strategies adopted by the Government of India as a part of its privatisation measures. Disinvestment is an act by which the government sells its complete or a part of its holding in a public sector unit to the private sector. The disinvestment policies of the government also enable it to raise huge revenue to finance its fiscal deficit. About Us. 20,000 cores were raised through disinvestment in public sector units between the period of 1991-92 to 2001-02.

The funds raised through disinvestment are also used:

1. To shut down the industries declared sick by the Board of Industrial and Financial Reconstruction (BIFR) and settle their claims.
2. To restructure and modernize the public sector enterprises.
3. To settle the public debt. The disinvestment policies of the government, by bringing in private participation, improve the efficiency of public sector units by lowering their costs of production. It enables access to modern technology, thus, improving the quality of products and services. Disinvestment can be carried out through the public issue of equities to retail investors through Initial Public Offer (IPO). The Government of India, in its 2017 budget, has set a target of raising Rs. 72,500 core through disinvestment during the financial year 2017-18.

Questions:

1. Critically analyse India’s three-decade journey under the new economic policy. Do you think the reforms are failing at the social front? Analyse your view.
2. Analyse the success and failure of the Economic reforms of 1991. Do you think, in the wake of the Covid-19 pandemic, India needs a new economic policy?

THE CONTEXT: The dramatic developments in Afghanistan have catalysed new geostrategic and geoeconomics concerns for the Central Asia region. The evolving situation has also thrown up renewed challenges for India’s regional and bilateral ties with Central Asia and the Caucasus, prompting India to recalibrate its rules of engagement with the region.

INDIA- CENTRAL ASIAN RELATIONS: RECENT DEVELOPMENTS

• Over the years, India has been taking a renewed interest in enhancing its strategic presence in Central Asia.
• India’s full membership into the Shanghai Cooperation Organization(SCO) now opens up an opportunity for a closer engagement with the region.
• In 2019, India’s External Affairs Minister (EAM) participated in the first India-Central Asia Dialogue in Samarkand, Republic of Uzbekistan.
• The 2nd meeting of the India-Central Asia Dialogue was held in October 2020, under the chairmanship of the External Affairs Minister of India.
• Though, there is no specific Indian diaspora policy in Central Asia. As compared to Indians living in the Gulf, the United Kingdom (UK), the European Union (EU) and the United States (US), the number of Indians in Central Asian Republics (CARs) is quite less. But India has a strong forum, namely, SCO, to make its outreach to Central Asia.
• In the second week of November 2021, India held an NSA- level meeting in New Delhi to discuss the development in Afghanistan and in that, All Central Asian nations participated.
• The above developments show that the relations between India and Central Asian nations are going upward, but to make an effective presence in Central Asia, India needs to enhance these relations.

ROLE OF SCO IN THIS REGARD

• India’s full SCO membership is considered a forward movement in her engagement with Central Asia.
• This has enhanced India’s strategic ‘presence’ in the Eurasian region.
• While being a part of the SCO, India has put forward many concrete proposals for regional cooperation in different areas.
• However, India needs to be proactive while figuring out its priorities within the SCO.
• India has been able to enhance cooperation with SCO member-states to combat extremism and terrorism through the Regional Anti-Terrorist Structure (RATS) mechanism at Tashkent by sharing information. In the SCO, discussions are also under process to use the local currency in trade and economic transactions instead of dollars.

IMPORTANCE OF CENTRAL ASIA FOR INDIA

• India and Central Asian Republics (CARs) – Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Turkmenistan – share deep civilisational ties. However, the importance of Central Asia for India is not merely cultural and historical.
• Over the next decade, as India’s economy grew, so made its demand for energy and the need to diversify sources beyond the Gulf. During this period, Central Asia also looked toward supplying energy to fast-growing countries in Asia, such as India and China, to overcome its reliance on pipeline routes through Russia.
• India and the CARs also share common concerns on the issue of the rising threat from terrorism, extremism and drug trafficking.
• The re-emergence of threat from the Taliban-Haqqani network in Afghanistan, the proposed Western military pullout by 2014, and growing religious radicalisation and sectarian violence within Pakistan have raised serious questions about the region’s stability.
• India thus plans to further strengthen its cooperation with the CARs, especially on the counter-terrorism issue, within the framework of its “Connect Central Asia” policy.

At a more specific level, the five CARs are important to India due to some of the following factors:

Tajikistan: Tajikistan’s importance for India lies in its geostrategic location. While it shares borders with China, Afghanistan, Uzbekistan and Kyrgyzstan, it is also close to Pakistan-occupied Kashmir (PoK). Moreover, developments in Afghanistan and Pakistan have serious security implications for both India and Tajikistan. In addition to its strategic location, Tajikistan is rich in hydroelectric power and has the largest natural water resources in the region. Tajikistan also has rich mineral deposits. India and Tajikistan cooperate over a wide spectrum of political, economic, health, human resource development, defence, counter-terrorism, science and technology, culture, and tourism. Tajik military cadets and young officers have also been attending military training institutions in India.

Kazakhstan: Kazakhstan’s importance for India needs to be viewed in the context of developments in and around Central Asia, India’s growing energy needs, Kazakhstan’s increasing role in the region and its immense hydrocarbon reserves. The two countries cooperate in various hydrocarbon, civil nuclear energy, space, information technology and cyber security, pharmaceuticals, health care, agriculture, and cultural exchange programmes.

Turkmenistan: The importance of Turkmenistan for India lies in its enormous gas reserves, transit potential and geostrategic geo-strategic location. India’s rising energy demand and the fact that it imports 70 per cent of its oil requirements, which is likely to go up to 90 per cent by 2025, has made Turkmenistan an attractive destination for India. In this context, the TAPI gas pipeline is of great significance. Turkmenistan can also serve as a gateway to Central Asia through Iran. From India’s point of view, the North-South Corridor would help India reach out to Central Asia and enable it to transport goods at a cheaper cost to the European markets.

Uzbekistan: Uzbekistan has appreciated India’s reconstruction efforts in Afghanistan and supports India’s candidature for full membership in the SCO and UNSC. The two countries cooperate in diverse sectors, including coal gasification, oil and gas, banking, pharmaceuticals, textiles, science and technology, standardisation, small and medium enterprises, and tourism. More than sixty Indian companies are operating in the country. Economic reconstruction projects and cooperation on counter-terrorism, in the backdrop of the withdrawal of US troops from Afghanistan in 2014, have been given priority in India-Uzbekistan ties.

Kyrgyzstan: The visit of Indian Defence Minister A.K. Antony to Bishkek in July 2011 has given a new impetus to the India-Kyrgyzstan ties. India has offered assistance to Kyrgyzstan in various areas. This includes sending a team to train Kyrgyz armed forces in UN peacekeeping operations and imparting English language skills. India and Kyrgyzstan have also signed MoUs for cooperation in research and development in high altitude base agriculture, plantation, animal husbandry, poultry, education, sports, culture, IT, health, S&T and food processing.

WHY THE RELATIONS BETWEEN INDIA AND CENTRAL ASIA ARE LACKING BEHIND

• With any planned routes facing serious financial, political, and security constraints, the lack of connectivity between India and the region has frustrated oil and gas diplomacy.
• The long-delayed Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, backed by the Asian Development Bank (ADB), was first proposed in the mid-1990s. All four actors officially signed an intergovernmental agreement in 2010. Since then, progress has been stalled due to the instability in Afghanistan and the lack of trust between India and Pakistan.
• The only significant achievement in the energy sector has been civil nuclear cooperation. In 2008, Kazakhstan supported India in obtaining India-specific exemption to allow civil nuclear cooperation with the Nuclear Suppliers Group (NSG) countries.
• The following year, India and Kazakhstan signed an agreement to supply 2,100 tonnes of uranium to India until 2014. Two years later, during Prime Minister Manmohan Singh’s visit to Kazakhstan, they signed a deal for ‘Cooperation in the Field of Peaceful Uses of Atomic Energy.’
• The adverse geographic terrain and the complicated India-Pakistan border dynamic, significantly impede connectivity, thereby curbing greater economic cooperation between India and the region.
• In contrast, external powers such as Russia and China have benefitted from close cooperation and influence, courtesy of their porous borders with the region.
• Thus, apart from pipeline routes through the region, India has also been looking towards Iran for connectivity with Central Asia. As far back as April 1995, India, Iran and Turkmenistan signed an MOU to create transit corridors through the latter two states to facilitate trade among each other, and transit through territories crossing the latter two states. Nonetheless, the full potential of this route is yet to be realised.

THE RECENT DEVELOPMENTS IS A POSITIVE SIGNAL

• Engagement with the region in 2020 saw a clear focus on regional economic development, connectivity, and security — apart from the immediate need to deal with the ongoing pandemic.
• Among the highlights was the announcement of an additional 1 billion USD Line of Credit extended by India for priority development projects in energy, healthcare, connectivity, IT, agriculture, education, etc. India’s ‘Connect Central Asia Policy’ covers an entire gamut of a multi-model approach to strengthen politico-economic, security, and cultural ties between the two.
• To that endeavour, India proposed grant assistance to implement High Impact Community Development Projects that aim to boost socio-economic development in the region.
• This development came at a time when countries around the world were still struggling with the COVID-19 pandemic. India has provided humanitarian and medical assistance to the Central Asian partners in their fight against the pandemic.
• Although Central Asian countries are heading towards Russia-based vaccines, the rollout has been slow. India, which has already supplied 5.5 million doses of COVID-19 vaccine to its neighbours, is now looking to further expand its outreach. It would be worthwhile to consider including Central Asian countries in this effort.

POWER DYNAMICS IN THE REGION AND OPPORTUNITIES FOR INDIA: ANALYSIS

RUSSIA: While still a widely influential political and security player in the region, Russia has seen China take its place as the leading economic player in the post-Soviet period. As the latter’s influence has grown, Russia has promoted its own Eurasian Economic Union (EAEU) to pursue regional and economic integration. The EAEU, which has become an established actor in the region, has not coalesced into a political union due to member-states objections to accept Russian proposals to this effect. Since its inception in 2015, it has only attracted two Central Asian countries, Kazakhstan and Kyrgyzstan, as members and thus it is far from a happy union.

CHINA: China has been expanding its regional presence, as seen in the ‘5+1 format’ launched in 2020 to further its clout. However, its advances are already causing concerns of ‘debt-trap diplomacy’ given the economic situation of Central Asian countries. Turkmenistan owes at least US$ 8 billion in loans to China and the latter holds roughly 50 per cent of Tajikistan’s US$ 2.8 billion foreign debt. Kyrgyzstan has turned to China for debt relief to deal with the economic impact of the pandemic. The Export-Import Bank of China holds US$ 1.7 billion of the country’s US$ 4 billion foreign debt. As the BRI expands, China’s largest trading partner in the region, Kazakhstan, is also growing conscious of China’s manoeuvres

OPPORTUNITIES FOR INDIA: These developments create an opening for India, which benefits from possessing goodwill and a positive image among Central Asian states. As New Delhi cements its position as one of the fastest-growing major economies of the world, its increased engagement with the region can lead to mutually beneficial gains — both in economic and strategic terms. The presence of multiple strong powers in the region offers options to regional actors to balance external pressures. However, India has been a latecomer and has only turned its attention to the region in recent years. It has sought to deepen linkages through the regular exchange of high-level visits, cooperation in areas of mutual security concerns, and improving trade ties. PM Modi’s comprehensive visit in July 2015 to all 5 CARs was a step in the same direction. Yet, India has a long way to go before it can present itself as a key player in Central Asia. India’s trade with the region amounts to US$ 2 billion, owing to limited connectivity and low economic engagement with the region. This amount is less than 0.5 per cent of India’s total trade, whereas the region’s trade with China amounts to US$ 100 billion.

THE WAY AHEAD: Efforts are now being made to address the weak trade ties by encouraging cooperation among businesses on both sides, as is evident in the launch of the India-Central Asia Business Council in 2020. India needs to direct investment to the region to reap the economic benefits of the strategic location of Central Asia that puts it at the crossroads of key trade and commerce routes. Sectors like the construction industry, sericulture, pharmaceuticals, IT, and tourism offer potential for collaboration. Beyond strategic and economic cooperation, India must increase its developmental and humanitarian aid to the region and promote closer people-to-people ties through education, knowledge transfer, medicine and health, culture, cuisine, and tourism. Multilateral organisations like SCO, EAEU, and CICA can serve as platforms for sustained engagement and regular exchange of ideas. The SCO is a crucial grouping that provides India with a strategic convergence with Russia and China to address new security challenges, enhance infrastructural development projects, and create a network of regional oil and gas pipelines for the greater benefit of the Central and South Asian region. It bears the high potential to give India a stake in the Eurasian integration process. Although several challenges such as China’s aggressive posture in the region and the unholy nexus of Pakistan and China looms large over its success, a calibrated coordination with the stakeholders will enable New Delhi to accentuate its own role not only in the Eurasian region but also in South Asia.

THE CONCLUSION:In a region where Russia and China remain the key players, India has a long way to go before being recognised as a consequential actor in Central Asia. The proposals and ideas discussed in the 2020 virtual summits possess the potential to form the bedrock of a sustained, balanced, long-term strategy — which New Delhi will have to capitalise on to achieve its policy goals in the region.

Questions:

1. Discuss the importance of central Asia for India. How can multilateral organisations like SCO serve as platforms for sustained engagement and regular exchange of ideas between India and central Asia?
2. ‘To fulfil its energy requirement, India should look beyond gulf nations and Central Asia is an ideal for that’. Comment.

THE CONTEXT: In September 2021, a new security group namely AUKUS, has been formed in Indo-Pacific between three NATO members viz. Australia, the United Kingdom, and the United States. After the formation of this group, it is said that it can impact the efficiency and effectiveness of QUAD (a dialogue between India, Japan, Australia, and the United States for free and open Indo-Pacific). It is also a concern that the group is presenting a dilemma against India about its presence in the indo-pacific area. This article analyses the issue in detail.

WHAT IS AUKUS?

It stands for Australia, the UK, and the US and aims to help modernize the primary beneficiary Australia over the coming decades to take up security challenges in the Indo-Pacific. The plan is to give access to cutting-edge military technology to Australia by its two partners, including futuristic capabilities like artificial intelligence and quantum technologies.

What is the first big step?

• The US and the UK will share technology to construct nuclear-powered submarines with Australia. At least eight nuclear-powered but conventionally armed submarines will be operated by the Australian Navy.
• This could make Australia the first nation that does not have a nuclear weapons program but will operate nuclear-powered boats.
• After that, Australia will enter a select club of nations with such submarines. The others include India, Russia, France, and China, besides the UK and the US.

Where does India stand?

• Besides having a nuclear arms arsenal, India has an indigenous nuclear-powered submarine project, with two boats already functional. Besides, it has a long-term arrangement with Russia for leasing of the nuclear-powered submarine as well.

WHAT DOES THE QUAD DO?

Understanding the QUAD: Known as the ‘Quadrilateral Security Dialogue (QSD), the Quad is an informal strategic forum comprising four nations, namely the United States of America (USA), India, Australia, and Japan. One of the primary objectives of the Quad is to work for a free, open, prosperous, and inclusive Indo-Pacific region.

Formation of QUAD: Since its establishment in 2007, the representatives for the four-member nations have met periodically. Japanese Prime Minister Shinzo Abe was the first to pitch the idea for the formation of Quad in 2007. In fact, its origins can be traced back to the evolution of Exercise Malabar and the 2004 Tsunami when India conducted relief and rescue operations for itself and neighboring countries and was later joined by the US, Japan, and Australia. Therefore, China issued formal diplomatic protests to the members of the Quad.

Principles of Quad: The motive behind the Quad is to keep the strategic sea routes in the Indo-Pacific free of any military or political influence. It is basically seen as a strategic grouping to reduce Chinese domination. The core objective of the Quad is to secure a rules-based global order, freedom of navigation and a liberal trading system. The coalition also aims to offer alternative debt financing for nations in the Indo-Pacific region. The Quad leaders exchange views on contemporary global issues such as critical and emerging technologies, connectivity and infrastructure, cyber security, maritime security, humanitarian assistance, disaster relief, climate change, pandemic and education.

WHAT HAS CHANGED AFTER THE FORMATION OF AUKUS?

After the formation of the quad, there are many questions occurred about the future of the quad, some of them are as follows:

• Are these two groups conflicting in nature?
• Why USA formed a new group despite having QUAD?
• Will it hamper the effectiveness of QUAD?
• Will it impact India’s interest in Indo-pacific?
• When a similar alliance was already in existence in the form of QUAD, what is the need for a new alliance?
• Why are India and Japan excluded from this new formation?
• Why does the UK want to return to Indo-Pacific being an Atlantic nation?

The answer to these questions will be clear in the future but these can be made some predictions in present circumstances and these are as follows:

The vision of these two alliances is very clear:

• These two alliances QUAD and AUKUS- function is clearly demarcated fields non-military and military. The QUAD is an alliance of four democratic countries that is more focused on challenging China in fields that are non-military. The recent QUAD meeting of the four heads of state reinforces this idea.
• QUAD will produce one billion vaccine doses to be distributed among Southeast Asian nations, the countries that are so far solely dependent on the Chinese vaccine. QUAD countries will strive to reduce the dependency of some countries on China in infrastructure development.
• This four-nation alliance is going to focus on supply chain and technology up-gradation to compete with China in the international market especially in the 5G networking and manufacturing sector.
• The only thing that comes closest to military cooperation among these QUAD countries is the irregularly held Malabar Naval Exercise.
• Thus QUAD, in the strict sense of the term, is far from a military alliance; it is a partnership of cooperation in various fields among countries against a common economic giant China.
• In contrast, AUKUS is purely a military alliance where three of the militarily advanced countries come together to contain and counter China in the Indo-Pacific. Thus, AUKUS would neither supersede nor undermine QUAD rather it would complement it.

As to the exclusion of India and Japan from the AUKUS one requires to examine the different contexts of these two countries.

For Japan

Japan has a historical aversion to anything remotely associated with nuclear. So it is out of the question that the US would offer or Japan would accept nuclear technology.

For India

• One should not forget that India, from the very inception of QUAD, is a reluctant member of it. India always shows that once the border dispute with China is resolved amicably through diplomatic channels there is no need for it to join any anti-China defense conglomeration. But when the push came to a shove from China after the Doklam confrontation in 2017 and the tension at the LAC in May/June 2020, India has no other alternative but to embrace the QUAD.
• However, India never called QUAD countries a defense partnership and always termed it as a partnership for common good. This reluctance of India to be part of an anti-China security alliance has not escaped America’s notice.
• The non-inclusion of India in the AUKUS makes it clear that the USA does not trust India to be of much help in the eventuality of a China-USA military confrontation over Taiwan.
• The USA now judges India from its initial reluctance to be part of any defense alliance against China.
• The USA does not consider India to stand up to China as Australia would in case of a military conflict. America is very apprehensive of India’s capability to counter China as a major military power in Asia.
• India’s dealing with Russia especially in buying military hardware from that country puts America in a dilemma before considering any offer of transfer of modern technology to India. India’s decision to buy the Russian anti-aircraft missile system S-400 Triumph has made India an unreliable US partner.

AUKUS will not negatively impact India’s interest in Indo-Pacific

The formation of the group will not negatively impact India’s interest and it will protect India’s interest:

• The pros from India’s perspective include the signal AUKUS sends about its members’ perceptions, priorities, power, and presence in the Indo-Pacific. India has deep concerns about Chinese actions and intentions in the region.
• The ongoing border crisis and fatal military clash in 2020 brought Sino-Indian relations to their worst point in decades. Given these circumstances, India watches the U.S. and other countries’ stance on China very closely.

WHAT ARE THE PROS AND COMPLICATIONS OF AUKUS FOR INDIA?

• POSITIVES: It reflects continued and intensifying U.S. and Australian concerns about China. Moreover, it is designed to increase their capabilities in the region (which will also, consequently, increase the cumulative capabilities of the Quad). And this, in turn, will bolster both the Australian and the American ability to deter China or to respond in the event of a crisis. In this way, it supplements Quad’s efforts.
• In recent years, Indian policymakers have, on balance, gone from worrying about too much U.S. presence and interest in the Indian Ocean to worrying about Washington paying too little attention to this region. AUKUS could ease this concern, as will the enhanced American rotational deployments and other activities envisaged by the recent AUSMIN (the Australia–US Ministerial Consultations) discussions. Given increased Chinese forays into the region, the Indian government will likely see this as a positive outcome that matters more than lingering concerns among some officials or analysts about an increased U.S. presence.
• AUKUS conveys the U.K.’s seriousness about its tilt to the Indo-Pacific. Moreover, this involvement will be in ways that broadly complement India’s interests and efforts. It also signals that the British view of the China challenge has evolved. Given that London has had a more accommodating view of China—as have other European partners—than India would prefer, AUKUS could also be a platform that helps socialize the U.K. even further to the acuteness of the China challenge.
• AUKUS rollout gives India in both the diplomatic and defense trade realms, particularly with France. Paris will probably double down on its efforts to secure arms deals with India—for commercial and political-economic reasons and maybe even to get one over on the U.S. This goes beyond platforms like fighter aircraft. Specifically, India has an indigenous program to develop nuclear-powered submarines and is leasing a nuclear-powered submarine from Russia
• NEGATIVES: France’s unhappiness with AUKUS has complicated the situation a bit from India’s perspective. On the one hand, India recognizes that different coalitions will form-based, in part, on different tiers of threat perceptions of China. Its own multitude of trilateral reflects this understanding. Moreover, Delhi, too, has found European partners to be less concerned about China than it would like—and that has set limits to the depth of its own cooperation with them in certain sensitive realms.
• India will be chagrined by the family feud sparked by the lack of AUKUS consultation with France, which seems only to help Beijing. Paris’s discontent feeds China’s narrative about U.S. unreliability and supports China’s efforts to drive wedges between European and Indo-Pacific partners and forestall their collaborative efforts. Delhi will be less concerned about arguments that AUKUS angst will affect Paris’ commitment to the Indo-Pacific believes this is motivated by resident power France’s own interests in the region. Indian policymakers will be more concerned about any adverse impact on U.S.-Europe cooperation on issues like technology or developing resilient supply chains.
• Delhi might be concerned about any fallout related to U.S.-French collaboration in multilateral institutions. Recently, this has often benefited Indian interests, and, at the U.N. Security Council, even directly helped India when China has backed Pakistan. Delhi wants these partners to be proactively involved in helping shape international rules, norms, and standards, as well as the leadership of these organizations—and not have them hold back or have to pull them along.

THE WAY FORWARD FOR INDIA

• Indeed, as mentioned above, AUKUS could help the Quad. It could even take some of the pressure off the grouping, by attracting Chinese ire.
• It might make the four-country grouping relatively more palatable to ASEAN in comparison. And, as another non-Quad venue for security collaboration, AUKUS could also reduce the pressure on India and Japan to undertake commitments or activities on the defense and security front that they are unable or unwilling to sign on to. This potentially increases the freedom of action or strategic autonomy of these members and other like-minded countries in the region.
• India will also be hoping that the Macron-Biden call was a sign of things to come and AUKUS hasn’t done lasting damage to collaborative efforts in the Indo-Pacific and beyond.
• In last, India wants to see its various partners and like-minded coalitions pulling in the same direction. Thus, it will do what it can to soothe ruffled feathers. Finally, Indian officials will assess what opportunities have opened up for India particularly with France, which it considers relatively more reliable as a defense trade partner, and with the U.S. and Australia, which are in better alignment regarding China.

THE CONCLUSION: Form the above analysis, it is clear that AUKUS will impact the effectiveness of QUAD but a helpful forum for this group. It is also helpful for India to secure its relations in Indo-Pacific by being a partner for any security group. Now India’s official needs to play smartly to grab the opportunity provides by the newly formed group.

Questions

1. How far do you agree with the view that with the help of AUKUS, India can secure its interests Indo-Pacific without being a member of any security group? Analyze your view.
2. ‘AUKUS and Quad are not conflicting in nature but supporting’. Comment.

THE CONTEXT: Ministry of Home Affairs, in its unilateral decision, extended the power of Border Security Forces (BSF) by giving the authority to arrest, search, and seizure to the extent of 50km inside three new states of Assam, West Bengal and Punjab who are sharing international boundaries with Pakistan and Bangladesh. As per MHA, this will help curb illegal activities linked to national security in 10 states and 2 union territories. However, the Chief Ministers of these states have called it an attack on federalism. In this context, let us understand the debate.

RECENT STEPS OF MHA EXPLAINED

1. The Union home ministry has amended the BSF Act to authorize the Border Security Force to undertake search, seizure, and arrests within a 50 km width, instead of the existing 15 km, from the international border in Punjab, West Bengal, and Assam.
2. In Gujarat, the width of the BSF jurisdiction has been reduced from 80km to 50km.

CONSTITUTIONAL PERSPECTIVE

1. As per Article 355 of the Indian Constitution, the Centre can deploy its forces to protect a state against “external aggression and internal disturbance,” even against the state’s wishes.
2. If the state opposes the deployment of armed forces of the Union, the right course for the Centre is first to issue directives under Article 355 to the state concerned.
3. If the state doesn’t comply with the Central government’s directives, then the Centre can take action against the state under Article 356 and thus impose President’s rule.

OBJECTIVES OF BSF IN PEACETIME

• BSF Act, 1968 declares that the objective of BSF is ‘ensuring the security of the borders of India and for matters connected therewith.
• As per the BSF website, the force’s peacetime tasks include preventing trans-border crimes, unauthorized entry into or exit from India’s territory, and preventing smuggling and any other illegal activity.
• The new notification empowers an officer of the lowest rank of BSF to exercise and discharge the powers and duties without an order from a Magistrate and without a warrant.

EXAMPLES OF INSTANCES WHERE STATES SAW LAW AND ORDER SITUATION AS CENTRAL VENDETTA

1. Drug and Infiltration in Punjab: State government of Punjab showed it as a fight between BSF and State Police while ignoring the drug menace.
2. Aryan Khan Arrest case in Maharashtra: State government ignored the drug issue and started questioning NCB for attempting to unearth the drug syndicate.
3. Bihar vs. Maharashtra: During the Sushant Singh Rajput death probe, instead of focussing on the death of the actor, it was turned into an orchestra of Bihar police vs. Maharashtra police.
4. Chit Fund Scam, Bengal: Kolkata police ignored the scam and focussed its energy against CBI.

WHY THE CURRENT MOVE OVER BSF JURISDICTION IS CORRECT?

1. Uniformity: This will uniformize the BSF jurisdiction and thus provide operational clarity to the forces.
2. Operational Efficiency: The change can help BSF improve its operational efficiency and crack down on smuggling rackets, especially in the context of recent smuggling incidences through the use of Drones.
3. Not against Federalism: Since BSF can be involved only in cases of the NDPS Act or related to arms and ammunition, it is not an encroachment on the state’s rights. Also, it is the duty of the Centre to curb trans-border crime and thus shouldn’t be seen as against federalism.
4. Power of Investigation is still with the states: Although BSF can arrest someone for a crime, it has to hand over the person to the local Police for investigation, and thus, the power of state police is still effective. Thus, the move cannot be seen as an encroachment.
5. BSF has jurisdiction in other states too: While the current move extends the jurisdiction to a further 35km of these states, still it is not something new. Paramilitary forces already have jurisdiction of 50km in many other border states and in many states that are Naxal affected. So, the current uproar is more political than real.

WHY DO STATES CALL IT AN ATTACK ON FEDERALISM?

1. Section 139(2) of BSF Act, 1968: The Act categorically states that the Centre has to take the concurrence of the state government concerned. However, nowhere this has been done.
2. Unilateral Decision: The decision to change the jurisdiction was unilateral and no discussion took place between the Centre and the State on the issue. This clearly violates the principles of federalism.
3. Control of BSF: BSF is a central paramilitary force that reports to the Union Government. So, even though policing is a state subject under the seventh schedule of the Indian Constitution, now the policing of the state’s territory will be done by a central force.
4. BSF doesn’t require policing authority anymore: BSF was given policing authority in 1968 due to the thin presence of the police force and due to the lack of communication technology. However, at present Police has undergone a paradigm shift and are adequately equipped to handle law and order. Thus, BSF doesn’t need to do the police work anymore.
5. Lack of data to back the changes: The amendment fails to provide any data to explain the inadequacy of the earlier jurisdiction of BSF. So, the unexplained change shows an attack on federalism.
6. Gujarat case: Recently there was a record haul of 3000 kg of heroin from a port in Gujarat. Still, the jurisdiction of BSF is reduced in Gujarat while increasing in the three states. This has led to analysts calling it a political move.
7. Central Rule by Proxy: The amendment in a way leads to central rule in state’s territories and thus is being criticized as a central rule by proxy.

THE WAY FORWARD

1. Smart Border Management: Smart border management can ensure that infiltration and trafficking are reduced. This will stop the problem at its root rather than doing policing post infiltration of terrorists or goods.
2. Intelligence: Our intelligence forces are found unprepared time and again due to the excessive dependence on their sources without proper evaluation. Proper cultivation of sources and use of ICT can help develop proper intelligence which can help BSF cut down on the attempts at the border itself.
3. Police Reforms: Police forces need to be reformed and better equipped so as to handle law and order problems especially in the context of modern challenges to internal security. Mission Karmayogi and Crime and Criminal Tracking Network and Systems is a step in the right direction.
4. Consult with the State: A proper mechanism needs to be institutionalised under which the Centre should consult with the State before deploying central forces.
5. Interstate Council and Zonal Councils: These councils need to be revitalised so that any such unilateral action is avoided in future.

THE CONCLUSION: The current controversy over the increasing BSF jurisdiction is a mix of necessity and politics. While it was necessary to make the jurisdiction of BSF uniform and empower it in the context of the usage of drones for dropping of drugs and arms and ammunitions by the neighbouring countries into India, it was done in a manner where states were not consulted and thus Centre instead of having a collaborative federalism approach chose its heavy hand to show its authority. However, states too have failed to uphold collaborative federalism at various times and the current outburst is one of these moments. Thus, institutionalised solutions like the one’s mentioned above need to be established for ensuring that nation’s security and territorial integrity is upheld by both Centre and the States.

Question:

1. Do you think that the increase of the jurisdiction of BSF can be called a ‘central rule by proxy’? Justify your view.
2. India’s security problems are a result of intelligence failure. Critically analyse.

THE CONTEXT: The Central Civil Services (Pension Rules) 1972(CSP) have been amended and notified by the Union Government in May 2021. These rules which are part of the Code of Conduct(CoC) of the civil servants, prohibit the retired civil servants belonging to intelligence and security organisations from communicating to the media or publishing any letter, etc without prior clearance. This move is criticised as unreasonable restrictions on the freedom of speech of retired civil servants. The critics also point out that there are other vital areas where changes in CoC are necessary like a post-retirement appointment. Against this backdrop, this write-up examines this whole issue in detail.

WHAT ARE THE AMENDMENTS TO CSP 1972?

The CSP 1972 places conditions on the continuity of pensions of the civil servants.  For instance, Rule 8 of the CSP provides that the pension benefits will be withheld or withdrawn if the pensioner is convicted of a serious crime or is found guilty of grave misconduct. The 2021 amendment adds new conditionalities. Under amended Rule-8(3)(a), officials retired from certain intelligence and security establishments will not be allowed to write anything about their organisation without permission. It says: “no government servant worked in any intelligence or security-related organisation included in the Second Schedule of the RTI Act, shall, without prior clearance from the Head of the Organisation, make any publication after retirement. The new grounds are the domain of the organisation, experience or knowledge gained by virtue of working in that organisation; reference to personnel, etc. The existing rules prevent disclosure of sensitive information, the disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific, or economic interests of the state, or relation with a foreign state or which would lead to incitement of an offense.

ARGUMENTS FOR THE AMENDMENTS IN PENSION RULES?

GOVERNMENT’S POSITION: The government says that the amendment to the CSP 1972 is not a sudden development. Rather these are based on a Committee of Secretaries recommendations years back.

2008 PENSION RULES: The UPA government in April 2008 also amended the 1972 pension rules, imposing restrictions on intelligence, security, and paramilitary organisations. Violation of these restrictions by retired civil servants then also invited disciplinary actions including reduction/withdrawal of pension and prosecution.

INTERNATIONAL EXAMPLES: Such restrictions on retired personnel from intelligence agencies exist in other countries also. For instance, In the United States (US), the Central Intelligence Agency’s (CIA) Publications Review Board (PRB) undertakes such reviews. CIA rules require op-ed essays and books related to intelligence to be submitted for approval before publication.

NATIONAL SECURITY CONCERNS: The prevailing national security environment is quite challenging and there has been intelligence on the foreign government’s increased efforts to penetrate sensitive government agencies. Also, some high-profile retired officers had written books on their tenure, and some of these had revealed information.

PENSION IS SUBJECT TO GOOD CONDUCT: The pension of government servants is already subject to their conduct after retirement. Rule 8 of the CCS Pension Rules says: the appointing authority can withhold or withdraw a pension if the pensioner is convicted of a serious crime or is found guilty of grave misconduct. The expression ‘grave misconduct’ also includes the communication or disclosure of any secret official code or password or any sketch, plan, model, article, note, document, or information.

RESTRICTIONS ON SERVING PERSONNEL: TheIntelligence Organisations (Restriction of Rights) Act, 1985 already bar serving officers from publishing any material without permission from their department.

WHAT ARE THE CRITICISMS OF THE AMENDMENTS?

PREVENTING CRITICISM OF GOVERNMENT: Many retired civil servants have been speaking against the actions and inactions of the Central Government in recent times. Many senior serving officers in the Government to are upset at the manner in which the pursuit of a partisan political agenda is undermining the rule of law. By bringing these amendments the government is attempting to prevent present and future criticism. 

GO BEYOND THE GROUNDS MENTIONED IN 2008 RULES: Unlike the 2008 Rules that confined the grounds of prior permission to security and sovereignty of the state etc, the current rules expand grounds by including domain knowledge, reference to personnel, expertise, and knowledge gained These terms are highly vague and can be so interpreted to include anything the retiree writes. Secondly, many retirees   had done extensive studies post-retirement on subjects like intelligence and security which had nothing to do with “expertise or knowledge gained by virtue of working in that organisation.” Why, then, should they submit the articles for prior scrutiny?

DISCRIMINATORY RULES: Only security and intelligence officials are singled out and the Armed Forces, Ministers, and other Civil Servants belonging to All India Services, etc are kept out of the purview of the Rules which violate Article 14.

AGAINST INTERNATIONAL NORMS: This rule India would become possibly the only “major democratic country in the world today which effectively bars its employees from expressing their views after retirement.

UNDUE RESTRICTIONS ON FREEDOM OF SPEECH: This not only violates the freedom of speech of the retirees but also prevents enlightened opinion and critical commentaries on contemporary issues. The importance of wisdom that retired bureaucrats bring with their years of work and how their domain knowledge is not only appreciated but also used as guiding stones for the current practitioners. For instance, the new rule means former R&AW officials can no longer write articles in the media on any foreign or security-related subject such as Pakistan, Afghanistan, or China without prior clearance as the organization’s ‘domain’ covers them.

ALIGNING RTI AND PENSION RULES ILLOGICAL: Giving cross-reference of RTI list to determine pension eligibility is illogical and unfair for pensioners, especially to those who had retired long ago. The list undergoes changes as and when the courts decide on modification of subjects to be revealed like human rights even in secret organisations or arbitrariness in decisions. On the other hand, “security” and “sensitivity to the national interest” are constant factors in democratic countries that do not undergo changes irrespective of which political party is ruling.

PENSION NOT A BOUNTY BY GOVT: Pension is a long-term compensation for government servants for the service rendered by them. Pension and gratuity are not mere bounties or given out of generosity by the employer. An employee earns these benefits by virtue of his long, continuous, faithful, and unblemished service.

WHAT ARE THE KEY AREAS OF CONCERN LEFT OUT BY THE GOVERNMENT?

POST-RETIREMENT EMPLOYMENT(PUBLIC): There exists no cooling off period at all with respect to the retired civil servants taking up government employment as advisors, consultants, etc. For instance, a former Higher Education Secretary soon after his retirement was appointed advisor to the Prime Minister recently. Similarly, many retired higher civil servants have been appointed to statutory bodies like the Human Rights Commissions, Information Commission, Government Corporations, etc. Civil servants are meant to provide sound advice without fear or favor to the political bosses. But when such post-retirement loaves are thrown at them, their advice may become biased and politicized.

POST RETIREMENT EMPLOYMENT(PRIVATE): Rule 26, Death-cum-Retirement Benefits Rules, restricts a pensioner from any commercial employment for one year after retirement, except with the previous sanction of the central government. This period was 2 years till 2007 which was reduced to one year. Many civil servants join as Board of Directors or in such other capacity in the private sector soon after their retirement.

POST RETIREMENT POLITICS: There are no rules governing the entry of civil servants into politics after retirement or resignation. This is a major reason for the politicisation of administration which strikes at the root of the principle of political neutrality. Among many examples in the Centre and the states, former Union Home Secretary who retired on June 30, 2013, joined the ruling party at the Centre on December 14, 2013, has twice been elected Lok Sabha MP since then, and is a Union Minister of State. A former Joint Secretary in the Ministry of Rural Development took voluntary retirement on November 16, 2018, joined the ruling party at the Centre on November 27 that year, and is now a Lok Sabha MP. An IPS officer of the Karnataka Cadre has resigned and soon after made the President of a political party in Tamil Nadu.

WHAT SHOULD BE THE WAY FORWARD?

CLARIFICATION BY GOVERNMENT: Although the government has the authority to make rules governing the pension of retired employees, there has been no reason provided as to why the amendments became necessary. Clarification in this aspect along with removing the vagueness in terminology will be helpful in allaying the concerns of the retirees.

UPHOLDING THE FREEDOM OF SPEECH: Constitutional guarantees protecting the freedom of speech can be restricted through reasonable restrictions but as scholars point out that the amendments go beyond what is permissible under reasonable restrictions. Thus, the government must not be seen as stifling free speech and open criticism of its policies. The wisdom and expertise of retired servants need to be used productively.

ADDRESSING THE LACUNAE IN RTI AND PENSION RULES LINKAGE: The automatic application of RTI exempted organisations to the pension rules needs revision as RTI has different purposes altogether and the list keeps changing. A refined list of organizations whose central functions are related to security aspects needs to be distilled.

LEARNING FROM BEST GLOBAL PRACTICES: India can adopt best global practices to balance the need for freedom of speech and security. In Britain, a cooperative relationship exists between retired British intelligence officers and their original departments on publications. The objective is to stop “real” national secrets (not political) from getting exposed. Any intentional breach will attract the Official Secrets Act. They do not object to varying political opinions aired by retired intelligence employees. In fact, Richard Dearlove, a former MI-6 chief (1999–2004) who joined MI-6 in 1966 and is now chairperson of the board of trustees of the University of London, is often seen as an outspoken critic of some political figures in the UK.

COOLING OFF PERIOD FOR EMPLOYMENT: Whether it is public or private employment or joining politics, a mandatory cooling-off period must be there for the retired civil servants. No government sanction be given unless for compelling reasons in the public interest. The post-retirement appointment of civil servants must be regulated through rules or guidelines in consultations with Union Public Service Commission. (In 2013, the Election Commission had written to the DoPT and Law Ministry, suggesting a cooling-off period for bureaucrats joining politics after retirement, but it was rejected)

WIDE-RANGING CONSULTATIVE PROCESS: Any governmental actions having such a wide range of impacts must be introduced by exhaustive consultations with relevant stakeholders. The working philosophy of the government is held to be evidence-based policy making and for it consultations and deliberations are necessary.

A CIVIL SERVICE CODE: Almost all the countries that have reformed their civil services have done it through comprehensive legislation. Art 309 also mandates such a law dealing with civil services personnel management. Such a law will help provide clarity to many sensitive aspects and can also enable avoiding knee-jerk reactions.

CONCLUSION: The objective of ensuring that retirees do not divulge any sensitive material to the detriment of the nation’s security is best achieved by the reiteration of the Official Secrets Act and stern action thereunder in case of infraction. The recent amendment to the Pension Rules attempts to impose a silence that will seriously affect scholarship and be a permanent impediment to an understanding of the imperatives of our security concerns. Officers who have spent a lifetime in security-related matters are unlikely to be irresponsible and reveal sensitive secrets. At the same time, other crucial areas like post-retirement appointments need a course correction.

QUESTIONS:

1. Critically analyse the Central Civil Services Pension Rules 2020.
2. The right to pension cannot be taken away by a mere executive fiat or administrative instruction. Pension is not a mere bounty or given out of generosity by the employer. An employee earns these benefits by virtue of his long, continuous, faithful, and unblemished service. Examine in the light of the 2020 amendment to Central Civil Services Pension Rules 1972.
3. Regulation of post-retirement activities of civil servants requires going beyond the concerns of national security. Comment

THE CONTEXT: In August 2021, the Maharashtra government has filed a writ petition in the Supreme Court seeking directions to the Union of India to disclose the raw caste data of Other Backward Classes (OBCs) collected as part of Socio-Economic Caste Census-2011 (SECC). Also, there are demands by many political parties to conduct a caste census as part of the normal decennial census. But the response of the Central Government has not been positive. In this background, this article examines whether India needs a comprehensive caste census.

CLARIFYING CONCEPTS

What is a Census?: Census is the process of collecting the demographic, social, and economic data of the population of a country within a specific time period. In India, the Census is conducted, every 10 years by the Registrar General and the Census Commissioner, Ministry of Home Affairs, as per the provisions of The Census Act 1948. It is conducted in two phases: House Listing and Housing Census and Population Enumeration. The first synchronous census in India was carried out by the colonial administration in 1881.

Why Census?: The data collected through the census are used for administration, planning, and policymaking as well as management and evaluation of various programs by the government, NGOs, researchers, commercial and private enterprises, etc. Census data is also used for demarcation of constituencies and allocation of representation to Parliament, State Legislative Assemblies, and the local bodies. Researchers and demographers use census data to analyze growth and trends of population and make projections. The census data is also important for business houses and industries for strengthening and planning their business for penetration into areas, which had hitherto remained, uncovered.

What is an SECC?: SECC is a study of the socio-economic status of rural and urban households. It allows the ranking of households based on predefined parameters. It counts three aspects: social, economic, and caste. SECC 2011 was conducted by three separate authorities but under the overall coordination of the Department of Rural Development in the Government of India. Census in Rural Area has been conducted by the Department of Rural Development (DoRD). Census in Urban areas is under the administrative jurisdiction of the Ministry of Housing and Urban Poverty Alleviation, now Ministry of Urban Affairs and Poverty Alleviation. Caste census has been under the administrative control of the Ministry of Home Affairs: Registrar General of India (RGI) and Census Commissioner of India. The Government has not yet published the caste-wise break of the Indian population although the socio-economic factors are used for policy and planning purposes.

What is the difference between the Census 2011 and the Socio-Economic Census 2011?: Both were conducted at a different time frame. Census 2011 (population enumeration) was conducted during the period 9th to 28th February 2011. Socio-Economic Caste Census 2011 was largely carried out in 2011 and 2012 with a few states taking enumeration and verification in 2013 also. Personal data given in the population census is confidential. On the contrary, all the personal information given in the Socio-Economic Caste Census (SECC) is open for use by government departments to grant and/ or restrict benefits to households.

What is a Caste Census ?: A caste census means recording each caste and the number of people in each caste. In India, till 1931 all castes were counted. But since 1951, only the SCs and STs have been included in the decennial census. To this metric, when the social and economic factors are added, it becomes an SECC. For the purpose of this write-up, the caste census includes social and economic factors also.

WHY THE DEMAND FOR A CASTE CENSUS?

Evidence-Based Policy Making: The caste census will provide hard data to formulate affirmative action and the development of policies. The last time the castes were counted and published was in 1931. The knowledge of exact number of OBCs and other castes is a must to devise policies and programs for their welfare.

To understand disparity: According to a 2020 Oxfam report, the top 10 percent of India’s population owns 74.3 percent of the total wealth, while the middle 40 percent and the bottom 50 percent owns 22.9 percent and a mere 2.8 percent, respectively. However, this provides us with little insight into Indian society. We need to know who constitutes the top 10 percent and so on, to formulate meaningful policies. We need to know who is lagging behind and for what reasons.

The close link between caste and economic prosperity: According to a 2018 research study titled “Wealth Ownership and Inequality in India: A Socio-Religious Analysis” conducted by Savitribai Phule Pune University, Jawaharlal Nehru University, and Indian Institute of Dalit Studies, upper-caste Hindus own around 41 percent of the national assets; OBCs own 31 percent while Scheduled Castes and Scheduled Tribes own 7.6 percent and 3.7 percent, respectively. It is evident that distribution is based mainly on centuries of inequality, exploitation, privileges, and opportunities.

To fulfill the Constitutional mandate: Art 340 of the Constitution deals with setting up of a Commission to investigate the conditions of socially and educationally backward classes and to make recommendations thereof. Thus, a comprehensive database of OBCs is required.

To overcome the 50% barrier in reservation: The Indira Sawhney judgment 1992 although put a cap on reservation as 50%, it also provided for exceeding this limit in various circumstances. For instance, TN has provided reservation up to 69% after enumeration of castes although it is under judicial scrutiny.

Regional Politics: It might result in a situation of Mandal II, giving a new lease of life to many regional parties which otherwise are struggling to find a positive agenda to challenge the BJP that has dominated Indian electoral politics for the last one decade. The OBC data, if available, will help political parties to create a new vote bank among the socially and economically deprived sections in OBCs.

For a casteless society: Scholars point out that in order to abolish caste, it is essential to first abolish caste-derived privileges. To do that, the state must first map castes and their socio-economic status privileges/deprivations.

Census data: Since the census already documents huge amounts of data including religions, languages, socioeconomic status, and Dalits and Adivasis, why not count OBCs too.

Sub Categorizationwithin castes: Some castes within the OBCs, SCs and STs have been held to be cornering most of the benefits from the affirmative action policies. A caste census will be the first step to address this issue.

WHAT ARE THE ARGUMENTS AGAINST A CASTE CENSUS?

Administrative Challenges: There is a central list of OBCs and a state-specific list of OBCs. Some states do not have a list of OBCs; some states have a list of OBCs and a sub-set called Most Backward Classes. Names of some castes are found in both the list of Scheduled Castes and the list of OBCs. Scheduled Castes converted to Christianity or Islam are also treated differently in different states. The status of a migrant from one state to another and the status of children of inter-caste marriage, in terms of caste classification, are also vexed questions. Owing to these and other reasons, the Centre has filed an affidavit in the SC detailing the problems in conducting a caste census. (Read Ahead)

Reinforcing Caste Consciousness: Opponents of a caste census argue that such a headcount will harden caste identities, lead to social fragmentation and caste enmities and serve to weaken the religious identity.

Political Considerations: Political parties, especially the ruling party at the Centre fear that a caste headcount could disrupt their carefully crafted electoral strategy when states like UP is going to polls in early 2002. A caste census can stir up issues that may throw up unwelcome surprises to the political parties.

Historical Lessons: Following the conclusion of the 1931 Census, J H Hutton, a celebrated anthropologist, and the then census commissioner is reported to have recommended that all future census operations should desist from collecting data on castes. Many anomalies like confusing caste with religion, region etc., persisted through all the census operations that aimed at collecting data on caste. The caste was made optional in the 1941 census and whatever data was collected was not published. Even the 2011 SECC data is replete with many flaws and inconsistencies.

Multiple meanings of caste: Noted social scientist AM Shah says that there are five words for caste in Gujarati—jat, jaati, jnati, varna andkaum. Each of them has multiple connotations, depending on the context they are used in. As a result, while an endogamous group is referred to as a caste in some context, traditional association with an occupation also comes to represent a caste. Gotra too is seen as connoting caste. In certain contexts, surnames too can represent caste. There is no consensus on the working definition of caste, census enumerators in all past operations ended up also recording names of castes that were either vague or non-existent.

WHY IS THE CENTRE NOT IN FAVOUR OF A CASTE CENSUS

The Centre’s position is based on two major aspects. One, it says the decision not to conduct a caste census is a “conscious policy” and the Supreme Court must not enter the executive domain of policymaking. Second, the Government cites the administrative, operational and logistical challenges in conducting a caste census. It says that the population census is not the ideal instrument for the collection of caste details as it would compromise the integrity of the Census data and the population count will be distorted. Also, the issue with respect to Central List and State List of OBCs and orphans and destitute create further hurdles. In many states, the SC converted to Christianity is listed as OBC. In such a case, the enumerator has to check both the lists which is beyond his/her capacity as they are part-time and only trained for 6-7 days before commencing the exercise. The preparatory work for census 2021 has commenced three years back whose progress has been limited due to pandemics. The questions are also finalized and inclusion of any additional question are not feasible.   Thus, including the OBC count in upcoming census is not practical.

INTERNATIONAL EXPERIENCE-USA

The Census Bureau collects racial data in accordance with guidelines provided by the U.S. Office of Management and Budget (OMB), and these data are based on self-identification. The 1997 OMB standards permit the reporting of more than one race. An individual’s response to the race question is based upon self-identification. The data on race were derived from answers to the question on race that was asked of individuals in the United States. The racial categories included in the census questionnaire generally reflect a social definition of race recognized in this country and not an attempt to define race biologically, anthropologically, or genetically.  People may choose to report more than one race to indicate their racial mixture, such as “American Indian” and “White.” People who identify their origin as Hispanic, Latino, or Spanish may be of any race.OMB requires five minimum categories: White, Black or African American, American Indian or Alaska Native, Asian, and Native Hawaiian or Other Pacific Islander. Information on race is required for many federal programs and is critical in making policy decisions, particularly for civil rights.  Race data also are used to promote equal employment opportunities and to assess racial disparities in health and environmental risks. The Census Bureau has a long history of conducting research to improve questions and data on race and ethnicity.

WHAT SHOULD BE THE WAY FORWARD?

Demand of equity: Clubbing caste census with normal census can’t do justice to the cause of equity within OBCs. Any such exercise must also collect detailed information on economic status of various sub-castes, which is not possible in the census.

Counting castes later: Given the huge problems in coupling the caste census with the decennial census, it will be prudent to conduct it at a later date with effective preparation.

Consensus on Caste: An expert panel of sociologists and anthropologists be tasked to come up with a working definition of caste. The expert panel thus constituted, will have to go through all the names(as part of central and state list of OBCs), see the characteristics, and then arrive at a working definition of who are the other backward classes. Enumerators will then have to be trained accordingly.

Data integration from other sources: Various government surveys such as the ones conducted by the National Sample Survey Office (NSSO) and National Family and Health Survey (NFHS) collect data on a broad share of SCs, STs, and Other Backward Classes (OBCs) in the population.

Follow a bottom up approach: States need to prepare an updated caste registry through an exhaustive survey with the local bodies in the lead. The local bodies need to be provided funds, functionaries, and training for this purpose. The enumeration by local bodies and verification by the Gram Sabha can reduce errors. Further, re-verification and removal of errors be done at Block/District level.

Responsive policy making: Policy of government does not operate in vacuum and is directed to problem-solving. The problem of inequality, caste discrimination, misdirected affirmative action, etc. need to be addressed by the government. Taking shelter under a policy decision made before 70 years is not responsive policy making.

CONCLUSION: Although conducting a caste census whether along with census or as a stand-alone exercise has many challenges, but that must not prevent the government from not conducting it. The ideal way is to carry out the exercise after preparing the groundwork in a comprehensive manner by incorporating the lessons learned from the SECC 2011. India does have the intellectual, scientific, technical, and technological infrastructure to carry out such an exercise which is the need of the hour. Indeed, it requires “ sabka prayas and sabka viswas” to bring about  “ sabka vikas”.

QUESTIONS:

1. “To remove caste consciousness from Indian society, it is necessary to first identify them”. In this context critically analyse the need for a caste census in India.
2. Identify the constitutional, political, welfaristic and social motivations behind the demand for a caste census.

CONTEXT: Despite more than three decades after the Legal Services Authority Act 1987(LSA) came to effect, access to justice for millions of poor still remains a distant dream. This has been aptly described by Justice D Y Chandrachud in a recently concluded outreach and awareness program organised by National Legal Services Authority (NALSA). In this background, this write-up analyses the mandate of LSA, the problems in access to justice, and the way forward.

WHAT IS ACCESS TO JUSTICE MEAN?

Access to justice is more than improving an individual’s access to courts or guaranteeing legal representation. Access to justice is defined as the ability of people to seek and obtain a remedy through formal or informal institutions of justice for grievance in compliance with human rights standards. There is no access to justice where citizens (especially marginalized groups) fear the system, see it as alien, and do not access it; where the justice system is financially inaccessible; where individuals have no lawyers; where they do not have information or knowledge of rights; or where there is a weak justice system. Access to justice involves legal protection, legal awareness, legal aid and counsel, adjudication, enforcement, and civil society oversight. Access to justice supports sustainable peace by affording the population a more attractive alternative to violence in resolving personal and political disputes.

THE LEGAL SERVICES AUTHORITY ACT: MANDATE AND STRUCTURE

WHAT ARE THE OBJECTIVES?: To constitute legal services authorities. To provide free and competent legal services to the weaker sections of society. To ensure that citizens’ access to justice is not denied due to their deprivations. To organise and promote Lok Adalats as a means of ADR mechanism.

WHO ARE ELIGIBLE?: Women and Children. Members of Scheduled caste or Scheduled Tribes. Industrial Workmen. Persons with Disability. Persons in Custody. Victims of Human trafficking.Victims of Natural Disasters, Ethnic/caste violence, industrial disasters. Persons with an annual income of less than Rs 1,00,000/- Or as notified by the Central/State Governments.

WHERE TO GO FOR AVAILING LEGAL AID?: Civil, Criminal, and Revenue courts, Tribunals, any authority exercising judicial or quasi-judicial functions. Institutions that provide free legal services. Legal Services Authority at National/State/District/Tehsil. Taluka/Sub-divisional Legal Services Committee

WHAT IS NALSA?: NALSA is the Central Authority constituted under the LSA 1987 whose Patron-in-Chief is the Chief Justice of India(CJI). The executive chairman of NALSA is a sitting or retired SC judge and will have such other members determined by the Central government in consultation with the CJI. NALSA is the central implementing authority under the LSA 1987. It also implements various programs related to victim compensation, social action litigation, and conducts/coordinates Lok Adalats.

WHAT IS LOK ADALATS?: The LSA provides for a type of ADR known as Lok Adalat; the people’s court. It can be constituted by the authorities/committees provided under the Act. The Act provides for judicial and non-judicial members whose number and qualifications will be determined by appropriate authorities under the Act. Lok Adalat can be set up for dispute resolution in many areas like civil, family, commercial, utility services etc. But Lok Adalat shall have no jurisdiction in respect of any case relating to an offence not compoundable under any law. The manner of resolving the dispute of the Lok Adalat is through compromise or settlement between the parties. The Lok Adalat will have the power of a Civil Court. Every award made by a Lok Adalat shall be final and binding on all the parties to the dispute, and no appeal shall lie to any court against the award. If no award is made, then the case may be referred back to the Civil Court.

WHAT IS PERMANENT LOK ADALAT?: Under the Act, Permanent Lok Adalats can be established by the Central Authority(NALSA) or the State Authority(SALSA) to deal with disputes regarding “public utilities” (power, transport, post, insurance, hospital, banking, etc). The process of dispute resolution under them is either conciliation or a decision on merit. The Chairperson of Permanent Lok Adalat will be a judicial officer serving or retired in the rank of a District/Additional District Judge. The jurisdiction of the Permanent Lok Adalats is up to Rs. One Crore. Its award will be binding on all the parties and no appeal lies to any court. 

WHAT IS THE NATIONAL LOK ADALAT?: National Lok Adalat is conducted quarterly across all the courts from the SC to the Taluka Courts in a single day. It is organised under the aegis of NALSA. Sep 2021, National Lok Adalats, held in 33 states and union territories, settled over 15 lakh cases and awarded over Rs 2,281 crore to litigants in a day.

THE STATE OF ACCESS TO JUSTICE IN INDIA- AN APPRAISAL

DELAYED JUSTICE: As of Apr 15, 2021, in SC 67279 cases are pending while in High Courts the number is a whopping 57.53 lakh. (National Judicial Data Grid). The Subordinate judiciary (Districts courts and below) has a pendency of 3.81 crore cases as on the same date. (National Judicial Data Grid). These facts themselves reflect the state of justice delivery in India.

UNDERTRIAL PRISONERS: As per the National Crime Records Bureau(NCRB)” Prison Statistic Report 2019”, 69.05% of those behind the bar were under trial. This means neither the survivor/victim nor the accused gets justice in time. The tragic death of an octogenarianunder trial prisoner, Fr Stan Swamy is a case in point. The NCRB report also points out that the number of undertrials dying in the prison is going up.

QUALITY OF LEGAL AIDL: LSA 1987 provides for free and competent legal aid for eligible sections. But as J. Chandrachud observed, “Studies have indicated that advocates empaneled with the state and district legal authorities lack competence or initiative”. This poor quality of legal aid not only delay access to justice but also deter people from accessing justice.

WEALTH AND JUSTICE: It is said that wealth and justice go hand in hand. The legal landscape is structured in such a way that only those having the resources can knock the citadels of the justice system in India. This is empirically proved by the above mentioned NCRB report which mentions that Muslims, Dalits and Scheduled Tribes have disproportionate representation in prison inmates relative to their population.

LEGAL AWARENESS: The legal literacy in India is abysmally poor. One of the significant mandates of NALSA and other authorities is to spread legal awareness not only to the people but also to those in administration, especially in police and prisons. Recently, the SC had to step in to grant bail to 13 people who despite being juveniles had to spend more than two decades in Agra Jail, UP. J. Chandrachud observes that neither jail superintendents are conversant with the basic legal remedies available to the convicts and undertrials nor are they provided adequate legal assistance”.

POOR FUNDING AND REMUNERATION: A research project sponsored by the Indian Council of Social Science. Research (ICSSR) in 2017-19, spanning across 18 states and 36 districts of India, has shown that Legal Services Counsels (LACs) are performing under low honorarium with no recognition accorded. This honorarium is really very nominal indeed. It can be as little as 1,500 rupees in small towns, and at a maximum, it goes up to Rs. 7,500 in certain cities. Such an amount for services rendered doesn’t help attract the best talent with serious intent to work in this space. This, in turn, has a direct bearing on those citizens who depend upon these legal services as their only option and hope for justice. In reality, it defeats the purpose of free legal aid for the underprivileged.

DECREASING BUDGETARY ALLOCATION: In 2018, the NLSA was allocated 150 crores to discharge its functions, it came down to 140 crores the next year and then to just 100 crores in the next two years again. To discharge all these responsibilities and run these programs, the Centre allocates funds to the NLSA, which in turn distributes the money to state authorities and their various agencies

EXTRA JUDICIAL METHODS AND ENCOUNTERS: The abhorrent practice of custodial torture, forced disappearances, encounter killings, etc, does not seem to stop in India. One major reason for their prevalence is the lack of accountability of the police and other officials as the poor victims and their families cannot access the justice system.

WHAT ARE THE IMPLICATIONS OF POOR ACCESS TO JUSTICE?

VIOLATION OF CONSTITUTIONAL PROVISIONS: The Preamble of the Constitution promises socio-political and economic justice to the people of India. This has been given concrete shape under Art 39A of the DPSP. Poor access to justice violates these noble promises of the Constitution.

THREATENS RULE OF LAW: The common man’s faith in the justice system suffers due to a lack of timely justice delivery. This leads to people taking the law into their hands or approaching influential entities likeKhaps, for resolving their disputes often leading to miscarriage of justice. Many revenge killings or riots stem from the perception that delays injustice system will lead to culprits walking scot-free.

VIOLATION OF FUNDAMENTAL RIGHTS: As per SC, the right to a speedy trial is a fundamental right under Art 21. The consequence of delayed justice is injustice. Consider a few examples. In March this year, Vishnu Tiwari was held not guilty of rape by the Allahabad high court after he had spent 20 years in jail. In March, Dipak Jaishi a Nepali citizen was ordered to be released by the Calcutta high court from the Dum Dum Central Correctional Home after spending 40 years in judicial custody as an under-trial prisoner.

POOR ECONOMIC DEVELOPMENT: Without access to justice, the economic reforms and business-friendly initiatives of government remain only on paper and thus become ineffective in achieving their policy goals. Lack of speedy and effective dispute resolutions inhibits economic activities, reduces employment opportunities, and retard economic growth.

SOCIAL DIVISIONS AND INEQUALITY: Access to justice is a prerequisite for social equality. The widening gulf between the rich and the poor, male and female, and between regions, castes, religions, languages, etc, cannot be bridged unless there is equality of opportunity to access justice.

BREACH OF SOCIAL CONTRACT: The people in the “state of nature” entered into the “ social contract” to create a “ state “ for ensuring justice to all. When access to justice is delayed or denied, the social contract between the state and the citizens is breached.

DEHUMANIZING INDIVIDUALS: Justice is the most fundamental virtue of human society. The lack of justice robs individuals of their dignity, self-esteem, and creates such extreme negative emotions often leading to taking one’s own life.

WHAT SHOULD BE DONE TO REALISE THE OBJECTIVES OF THE LSA ACT REAL?

RESOURCE SUPPORT: The budgetary allocation for the NALSA and other authorities needs to be substantially increased to address the problems of resource constraints.

DEMAND GENERATION: The demand for justice delivery needs to be created by awareness and outreach programs like camps, seminars, legal clinics, etc. The Law colleges and universities can be roped in by NALSA for this purpose. The Lok Adalats need to be provided more visibility and public messaging.

PRO BONO LEGAL WORK: Pro bono legal work needs to be encouraged and recognized which will incentivize lawyers as well as improve access to justice to the people. The Bar Councils can take such steps as a mandatory period of pro bono work before renewing their license or persuading their accomplished members to lead by example.

ATTRACTING AND RETAINING TALENT: The lawyers and other functionaries associated with the implementation of the LSA need to be remunerated well. This helps bring fresh and qualified talent into this area thereby increasing willingness and improving the trust of people in “free and competent” legal aid.

CREATION OF SPECIALIST CADRES: NALSA and other agencies need to take steps to create themes-based legal service providers which will create expertise in the relevant area and people can readily tap these pools. An instance of this was seen in 2018 with the rise of the me-too movement where young women lawyers started offering their services free of cost to assist women who had been sexually harassed. This created databases of lawyers who could be approached for specific issues. This would be particularly helpful for sexual minorities, transgenders, survivors of communal riots, sexual assault survivors, etc.

TAPPING TO STRUCTURED ENTITIES: The NALSA can enter into contracts with law firms through the department of justice and the ministry of law, requiring them to spend a certain number of hours delivering pro bono legal aid services. This may be made mandatory similar to corporate social responsibility for companies or may be considered as one of the relevant factors when impaneling law firms for contractual work for the government of India or the PSUs”.

LEVERAGING TECHNOLOGY: Integration of technology with legal administration offers numerous opportunities to use creative means to enable access to justice. One such way would be an AI-based chat box to provide automatic legal advice. This has already been implemented in the USA by the ‘DoNotPay’ platform and other countries such as Russia, China, Mexico and is worth exploring in India.

EFFECTIVE IMPLEMENTATION OF GOVT INITIATIVES: The Tele Law Programme 2017 pre-litigation legal advice and consultation under which a panel of lawyers can be connected to persons in need of legal aid. Similarly, Nyaya Bandhu Programme, a pro bono legal services program where interested lawyers volunteer their services can be connected via a mobile application. One of the missions in the e-committee of the SC is to provide E-Seva Kendra in every one of the 17,000 institutions of the courts across the country. National Mission for Justice Delivery and Legal Reforms, a mission mode project started in 2011 aims at speedy and easier access to people by improving judicial physical and human infrastructure and other measures. All these initiatives need to be executed in greater urgency by taking a stakeholder approach.

CONCLUSION: Free legal aid is not a charity but the right of the people without which the constitutional guarantee of security and liberty cannot be realised. The role of authorities established under the LSA 1987 assumes immense significance in this context. When India is going to celebrate its 75^th year of independence, we must restructure and Indianite our legal system so that justice does not remain a luxury but a living reality for the poor. A timely, affordable, and qualitative justice delivery system is the sine qua non for a functioning and vibrant democracy.

Questions:

1. Despite three decades of the Legal Services Authority Act(LSA) 1987 being in force, access to justice for the poor and the marginalized still remains a distant possibility. Examine.
2. What do you mean by Lok Adalats? Identify the reasons for their sub-optimal utilisation for dispute resolution in India.
3. Equality of opportunity for accessing justice delivery institutions demands free and competitive legal aid to the weaker sections. In the light of the statement explain what measures the National Legal Service Authority should take to promote access to justice to the weaker sections.

ADD TO YOUR KNOWLEDGE

NATIONAL MISSION FOR JUSTICE DELIVERY AND LEGAL REFORMS

National Mission for Justice Delivery and Legal Reforms was set up in August 2011 with the twin objectives of increasing access by reducing delays and arrears in the system and enhancing accountability through structural changes and setting performance standards and capacities. The Mission has been pursuing a coordinated approach for phased liquidation of arrears and pendency in judicial administration, which, inter-alia, involves better infrastructure for courts including computerization, increase in strength of subordinate judiciary, policy and legislative measures in the areas prone to excessive litigation, re-engineering of court procedure for quick disposal of cases and emphasis on human resource development. To advise on the goals, objectives, and strategies of the National Mission and the Action Plan and its implementation, an Advisory Council has been set up under the Chairmanship of the Minister of Law and Justice with wide-ranging membership. An action plan of the National Mission was formulated under 5 strategic initiatives which are reviewed by the Advisory Council of the National Mission from time to time. On July 14, 2021, the Union Cabinet has approved the continuation of the Centrally Sponsored Scheme (CSS) for the development of infrastructure facilities for the Judiciary for a further five years from April 1, 2021, to March 30, 2026. A total of Rs.9000 crores has been sanctioned for the scheme. It was also announced that the Gram Nyayalayas Scheme will be implemented in a Mission Mode through National Mission for Justice Delivery and Legal Reforms.

THE CONTEXT: The enforcement directorate (ED)is the premier financial crimes investigative agency of the Union Government. Recently, its functioning has been under a cloud of suspicion as they are alleged to be used against the opposition leaders, the media, and the critics of the Central Government. The state governments also allege that the agency violates the federal principles enshrined in the Constitution. This write-up examines these issues in detail.

MANDATE OF THE ENFORCEMENT DIRECTORATE(ED): AN OVERVIEW

• ED is a Multi-Disciplinary Organization under the Department of Revenue, Min of Finance mandated with the task of enforcing the Foreign Exchange Management Act, 1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA)
• The ED headquartered in New Delhi is headed by the Director of Enforcement. There are five Regional offices and other such zonal and subzonal offices in various parts of the country.
• It was formed in 1956 in the Department of Economic Affairs, to investigate cases of foreign exchange-related violations, a civil provision. But in 2002, after the introduction of the PMLA, it started taking up cases of financial fraud and money laundering, which were of criminal nature.
• FEMA 1999 regulates the transactions in currency, import and export of commodities, securities, purchase and sale of any kind etc.
• The main objective of FEMA is to facilitate external trade and payments. In addition to this, FEMA was also formulated to assist the orderly development and maintenance of the Indian forex market.
• Contraventions of FEMA are dealt with by way of adjudication by designated authorities of ED and penalties up to three times the sum involved can be imposed.
• The PMLA provides authority to the ED to investigate offences of money laundering and to take actions of attachment and confiscation of property
• PMLA provides for the prosecution of the persons involved in the offence of money laundering. There are 156 offences under 28 statutes which are Scheduled Offences under PMLA.
• ED also processes cases of fugitive/s from India under the Fugitive Economic Offenders Act, 2018.
• The powers of a survey, search and seizure, a search of persons, retention of property or of records, to issue summons to enforce the attendance of any person and compel him to give evidence or produce records, discovery or inspection, and the power to arrest, etc are conferred by various provisions of PMLA. Render cooperation to foreign countries in matters relating to money laundering etc.

CRITICISM OF THE FUNCTIONING OF THE ENFORCEMENT DIRECTORATE

POLITICISATION: The EDisalleged to be targeting those political leaders who do not belong to the ruling party/parties at the Centre. Even the past cases of these leaders have been reopened in order to pressurize them either to change parties or to curb dissent.
This has happened with a former Home Minister of India, Former CMs of Uttar Pradesh, etc. Recently, the ED has been criticised for putting pressure on an accused in Kerala Gold Smuggling Case for implicating the CM in the case.
One sitting MP from the ruling party at the Centre

TARGETING DISSIDENTS: The PMLA has been misused for targeting dissident voices and thereby preventing free speech and expression. This has become a routine affair especially in the case of NGOs. For instance, all bank accounts of Amnesty International India were completely frozen by the Enforcement Directorate in September 2020 on the charge of an alleged violation of PMLA. The human rights advocacy group had to shut down all its offices and operations and is alleged the action is taken due to Amnesty’s reports on the deteriorating human rights record of India in recent times.

VIOLATING FEDERAL PRINCIPLES: The division of power under the Schedule 7 of the Constitution places the responsibility for police and public order in the State List. But the power of ED to investigate cases without states consent especially in ordinary crimes is against federal principles.

POLICING WITHOUT BEING A POLICE FORCE: ED has been given the power to take the custody/ remand of the offender considering the gravity of the offence in the garb of effective investigation, ignoring completely the fact that ED is not covered under the definition of ‘Police Officer’ under the Police Act, 1861. Thus, it exercises the function of police despite it is not covered under the definition of police.

SELECTIVE APPLICATION OF LAWS: The ED has been accused of selective application of the PMLA provisions and the major money laundering scams are either not investigated or not followed up by ED. For instance, The Rose Valley Chit Fund Scam in Odisha, the NARADA scam in West Bengal etc seem to have missed ED radar. One MP was seen in a video taking bribes, ED summoned him, but nothing was heard after he switched party. For example, Mukul Roy and HimantaBiswaSarma, both accused in the NARADA chit fund scam, are yet to be questioned.

NO, FOLLOW UP ON INVESTIGATION: The status of high-profile cases remains unknown, as neither the media nor the investigative agencies appear to have followed them up. Moreover, in none of these cases, the agencies have charge-sheeted the leaders of crimes. The fate of these cases hangs in limbo. Though the action against opposition leaders has garnered a lot of attention, one does not know whether the agencies have been able to gather enough evidence against the accused.

POOR PROFESSIONALISM: Until 2017, the ED had just managed two convictions, while as in 2019, the number of convictions stands at nine so far. The overall number is still bleak, with more than 2,400 cases pending trial. Also, the 2G scam case was dismissed by the courts owing to lack of evidence. All these show the poor professionalism of the ED.

VIOLATION OF RULE OF LAW: ED can carry out the pre-trial attachment of property and funds just on basis of reasons to believe of the investigative authority and not concrete facts. So even without an investigation being complete, a persona can be charged, and the property can be attached just because a complaint/investigation exists against him. It effectively means that though a citizen is presumed not guilty, he is deprived of control over his property, when the prosecution believes that it comes from tainted money, effectively destroying lives, families, and businesses, just on the basis of investigators’ reason to believe and not on evidence.

VIOLATES ORIGINAL INTENT: The Act gave expression to India’s commitment to the United Nations to enact domestic legislation to curb the laundering of money linked to drug trafficking. However, a series of subsequent amendments have sought to systematically dilute the cardinal intent of the Act, reducing it to an instrument of arbitrary power in the hands of the ED.

GREY AREAS IN PMLA: A RECIPE FOR ARBITRARINESS BY ED?

Absence of a procedure: Unlike the CrPC which provides for a proper procedure to commence an investigation, in the PMLA there is no procedure prescribed. For instance, Section 154 and 155 of CrPC deal with cognisable and non-cognisable offences but in PMLA no such procedures are prescribed and there is no registration of FIR under the Act. This violates Art 21 of the Constitution.

Enforcement Case Information Report (ECIR): The PMLA has an internal manual where the ED officers record an ECIR- Enforcement Case Information Report. That is something that is kept by the ED to themselves and is not revealed to anybody even to the magistrate. This means an individual can be prosecuted without knowing why he has been proceeded against.

Automatic registration of a case by ED: There are 156 Scheduled Offences and whenever a predicate offence is registered, the ED starts investigation under PMLA. This provides wide latitude and discretion to ED which is often misused. There must be something beyond the FIR under the predicate offence which needs to be established for the ED to commence the investigation.

Article 20(3): Section 50 of the PMLA vests the ED officers with the power of a Civil Court. But while exercising the power of summons to a person by ED, usually no reason is provided for such summons. Neither the person is informed whether s/he is summoned as a witness or an accused nor any information is given on what predicate offence s/he is charged under. Secondly, the person must compulsorily answer the questions put forward by the officers and must sign the disclosure statement which is used as evidence against him in the court.

Ordinary crimes included in scheduled offences: Section 120 B dealing with criminal conspiracy is part of PMLA. The section can be applied to any offence and requires only a mere allegation. There is no threshold for initiating a PMLA case based on 120B. Similarly, murder is also part of PMLA, and it is doubtful why such an isolated act can be a part of PMLA. It is another matter if there is an organised crime activity but on its own, these offences should not be part of PMLA.

2019 amendments: The 2019 amendments have increased the powers of the ED. The offences under the PMLA became standalone crimes, and the offences have been made cognisable and non-bailable. It has expanded the definition of proceeds of crime which means assets not directly related to the proceeds of crime can also be attached.

AN OPTIMISTIC ANALYSIS OF THE FUNCTIONING OF THE ED

Of late, the ED has not just taken up high-profile cases, but has also actively started investigating them, filed charge sheets in many long-pending cases, attached properties in a series of cases worth Rs 58,000 crore, moved applications, and even secured extraditions. In the last 10 years, the ED has attached assets worth Rs 58,333 crore. The highest number of attachments has been made in the Sterling Biotech case, amounting to Rs 14,000 crore. Between 2005 and March 2018, the agency attached assets worth Rs 27,000 crore, of which Rs 14,000 crore, a little over 50 per cent, pertained to cases of bank fraud. Since the PMLA was enacted, more than 2,500 ECIRs have been filed in the ED, and the investigation is pending in over 1,000 cases. The agency sends letters rogatory to different countries to obtain information about individuals and entities offshore. A letter rogatory is a formal communication from a competent court to a foreign court and is processed by the Ministry of External Affairs on behalf of investigative agencies. But most of these letters go unanswered, severely affecting the investigation. In some cases, this can lead to a court dismissing a case due to a lack of evidence. In 90 per cent of cases, the money is laundered and stashed in tax havens abroad, and when ED do not get information from there, the investigation suffers.”

WHAT SHOULD BE THE WAY FORWARD?

Checks and balances on ED’s power: As the guiding principle of our courts “Let a hundred guilty be acquitted, but one innocent should not be convicted” goes, the powers of ED if are not constrained, must at least not be used arbitrarily, else it can easily turn into harassment of innocent citizens. The parliament did not confer upon the ED any powers to attach or freeze assets on mere suspicion. The authorities cannot bypass the legislative intent using the tool of arbitrary discretion but should abide by the legal provisions.

Following Section 65 in letter and spirit: The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, insofar as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act.
Section 65[3] of PMLA has been under scrutiny for a long, it being one of the means of exploitation by the authorities. It gives them the opportunity to pick and choose the provisions they want to apply as convenient to them either under CrPC or PMLA. The ED must follow the CrPC in terms of arrest, search etc as no express provisions are provided in PMLA which are contrary to CrPC in these areas.

INTRA ORGANISATIONAL SUPERVISION: The 2019 PMLA Amendment Act empowers the ED to enter any property for purpose of conducting search and seizure. An arrest can be made for an offence under the PMLA even in the absence of a First Information Report (FIR). This calls for necessary supervision over the exploitation by the hands of the enforcement authority.

Transparency in Closing the case: A proviso was inserted to Section 44(1)(b) of the PMLA by the 2019 Amendment Act which talks about submitting a ‘Closure Report’ upon conclusion of investigation before the Special Court if no offence of money laundering can be determined after investigation. It is the duty of the legislature to ensure adequate transparency while submitting this closure report to restrict any kind of misuse of the powers of ED.

CLARIFYING THE INTERPLAY BETWEEN CrPC and PMLA: While section 41 of CrPC the ED can arrest a person on ‘mere suspicion’ however the arrest provisions u/s 14 of PMLA have preliminary requirements that need to be complied with. U/s 14 of the PMLA sufficient evidence to form a “reason to believe” that the person is guilty of the offence of money laundering is required. This requirement is not required to be fulfilled in case an arrest is made u/s 41 of the CrPC. The ED must stringently follow the provisions of PMLA and not selectively pick and choose provisions as per convenience.

PMLA APPELLATE TRIBUNALS: The PMLA Act provides for the establishment of a tribunal but the functioning of the tribunals has been handicapped due to the long-pending vacancies of chairman and members. Proper working of the Tribunal would put pressure on ED to follow rules of law which will increase the efficiency of the ED.

FOCUSING ON ORIGINAL MANDATE: Genesis of PMLA was to check illicit drug trafficking the proceeds of which funded terrorism. But now what has happened is that we have started applying it to ordinary crimes. Thus, necessary changes need to be made so that the ED can focus on the original mandate.

Judicial determination of Finance Act 2019: All these later amendments of 2019 were moved under the Finance Act.  The FA 2019 has been challenged and the SC needs to fast address the same. There are around 200 petitions challenging various provisions of the PMLA and the SC need to decide the same in priority. 
Clarity between Section 25 of the Evidence Act and Section 50: The statement made by the accused in Infront of the police is protected under section 25 of the evidence act. But under section 50 of PMLA, the statement is admissible evidence. This anomaly must be corrected.

Appointment of ED Director: The Central government should appoint a Director of ED in a transparent manner and strictly in accordance with the mandate of Section 25 of the Central Vigilance Commission (CVC) Act, 2003.
Extension of tenure of officers who have attained the age of superannuation should be done in rare and exceptional cases only after recording reasons by the committee constituted under section 25 of the Central Vigilance Commission Act.

Manpower and infrastructure: While the sanctioned staff strength of the ED is 2,300, it has only 1,000 personnel, including investigators, record-keepers and administrators. These human infra requirements must be addressed on priority.

Reformulating the entries in the Schedule: Under section 3 of the PMLA, it is money laundering which is an offence. Legitimizing of the proceeds of crime is the offence and not the proceeds of crime. There is no rationale as to when money laundering will apply and when it will not apply. That is the discretion of the officer. Entries in the Act need to be reformulated in a manner so that they cover the offences which were envisaged to be covered.

PUTTING THE ED MANUAL IN THE PUBLIC DOMAIN: Unlike the crime manual proudly unveiled by the Central Bureau of Investigation, ED’s manual remains an enigma. In the absence of any published manual, ED’s self-proclaimed procedural autonomy may become an alibi for arbitrariness and may threaten the fundamental right to fairness. The ED’s refusal to furnish a copy of the ECIR to the accused by touting it to be an internal document distinct from an FIR continues to jeopardize the legal recourse ordinarily available to an accused.

CONCLUSION:  The enforcement directorate has a significant role to perform in maintaining the economic security of the nation for which it had been given wide-ranging powers. But as the current controversies point out, the time has come to reform the functioning of the ED to bring necessary professionalism. In this regard, political,  legal, administrative and judicial interventions must be undertaken so as to protect the rights of citizens and also equip the ED to effectively counter money laundering.

Questions:

1. “The history of liberty is a history of the limitation of governmental power, not the increase of it”. Examine the statement in the light of the working of the Enforcement Directorate.
2. “Unless the legal ambiguities in the Prevention of Money Laundering Act is addressed, the functioning of the Enforcement Directorate will always remain sub-optimal and ineffective” Discuss.

The context: There is no comprehensive anti-discrimination law covering the entire country. The constitutional provisions generally view discrimination from a state-citizen perspective. But this approach does not take into account the discriminatory actions of private individuals. Also, the existing legal framework falls short of ensuring justice to the survivors of discrimination as seen during the Covid 19 pandemic. In mid-2021, many state governments brought draft anti-discriminatory bills to deal with the problems of discrimination faced by people. In this context, the write-up analyses the need for pan-Indian anti-discriminatory legislation.

                                                WHAT IS AN ANTI-DISCRIMINATION LAW?

Discrimination means unfair treatment due to a person’s race, caste, religion, gender, or other identity markers.  Thus, an anti-discrimination law or non-discrimination law or equality law (here and after “law”) means a legislation aimed at preventing discrimination against people based on their personal characteristics. The pith and substance of these laws are twofold. One is the vesting of the right against discrimination on the basis of protected characteristics such as race, religion, ethnicity, sexual orientation, and gender, among others. The second is the imposition of civil liabilities on persons for engaging in unlawful discrimination. Such laws concretises or give substance to the notion of equality mentioned in the Constitution without which the rights given therein will remain a myth. Thus, the philosophy of the law is to bring an egalitarian society in its widest sense and purpose of the term by establishing a comprehensive anti-discriminatory legal-institutional ecosystem.

WHAT IS THE NEED FOR AN ANTI-DISCRIMINATION LAW IN INDIA?

Structural discrimination: More than 70 years after Independence, our society remains rife with structural discrimination. These prejudices pervade every aspect of life, from access to basic goods, education, and employment, etc. Cases of discrimination continue to be witnessed. They are frequently directed against Dalits, Muslims, Women, Persons of different sexual orientations, ‘Hijras’, persons with disabilities, persons from the North-Eastern States, unmarried couples, and non-vegetarians, among others. Mob lynching, hate speech, communal polarisation, etc are the results of such discriminatory practices. Today there are multiple sources of discrimination that go beyond what is provided in the Constitution.

Discrimination by Private Parties: The Right to Equality under the Constitution prevents the state from discriminating against persons on various grounds. But it is silent on the discrimination practiced by private individuals and organization although Art 15(2) and 17 deal with this aspect but its enforceability and effectiveness has been poor (Art 15 (2) prohibits discrimination on religion, race, caste, etc from accessing shops, hotels, places of public entertainment, wells, tanks, etc.) There is no legal recourse in India if citizens have been discriminated against by private entities such as service providers, landlords, housing societies, employers, educational institutions, retailers, etc. The law would give birth to positive duties of every organisation to make such policies, which make diversification and anti-discrimination mandatory.

Global Examples: India is unique among democracies in that a constitutional right to equality is not supported by comprehensive legislation. In South Africa, for example, a constitutional guarantee is augmented by an all-encompassing law that prohibits unfair discrimination not only by the government but also by private organisations and individuals.

Growing public demand: Beginning from the Sachar committee recommendation for such a law, there have been a few efforts to this end in recent times. Shashi Tharoor introduced a private member’s bill in 2017, while the Centre for Law & Policy Research drafted and released an Equality Bill last year. These attempts recognize that our civil liberties are just as capable of being threatened by acts of private individuals as they are by the state.

Existing laws not enough: The existing laws cover only the major areas of discrimination, like untouchability, sexual harassment at the workplace, etc.(Read Ahead) The questions of many vulnerable groups remain unanswered. For example, why are some minorities or homosexuals not taken as workers by the private landowners? Why does a discriminatory mindset exist regarding someone’s marital status, disability, sexuality, or food habits?

Empirical Evidence: We encounter so many situations every day where someone is refused accommodation because he is a Dalit, or a Muslim, or a Homosexual. NGOs, clubs, schools, colleges, hospitals, no such institution is completely free from this evil. Even sports are not immune from this problem as a famous Indian cricketer pointed out how players from the south faced racial discrimination while playing in the north. During the Covid 19, Sex workers and healthcare workers have been facing stigma and harassment for being carriers of the virus. In Pune, 22 members of staff of a multi-specialty hospital were forced to vacate their accommodation as they had treated a Covid-19-positive and were thought to be infected. Nurses working at Victoria Hospital in Bengaluru were evicted from their paying guest accommodations based on the perception that they are infected with the coronavirus.

Human rights and SDGs: The UN Human Rights Council’s Universal Periodic Review of India in 2017 has commended that India needs to strengthen its national framework to reduce all kinds of discrimination and to promote and protect the human rights of all its citizens in an inclusive manner, to fulfill the Sustainable Development Goal 10 of reducing inequality and discrimination.

WHAT HAS BEEN THE RESPONSE OF THE GOVERNMENT OF INDIA?

The Sachar Committee Report, 2006 had recommended taking legislative measures to counter discrimination, especially by setting up an Equal Opportunity Commission.  The Central Government subsequently set up the Expert Group on Equal Opportunity Commission under the chairmanship of Prof.  N. R Madhava Menon to look into the question of framing legislation to implement the recommendations of the Sachar Committee. The Group drafted The Equal Opportunity Commission Bill, 2008 to meet this aim. While the draft Bill was criticized by scholars for having vague and ineffective provisions, it nevertheless provided a boost to the campaign for an equality law in India. The United Progressive Alliance Government did not expedite the legislative process in enacting an anti-discrimination law. The Union Cabinet belatedly approved setting up an Equal Opportunity Commission in February 2014. However, a few weeks later with the change in Government post the Lok Sabha elections, the Bill was more or less ignored. The Private Member Bill of Dr. Tharoor also lapsed after the dissolution of the 16^th Lok Sabha as the treasury benches displayed no interest in taking the bill forward.

INTERNATIONAL MODEL: THE U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION

The U.S. Equal Employment Opportunity Commission (EEOC) is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, sex (including pregnancy, transgender status, and sexual orientation), national origin, age. The U.S. Equal Employment Opportunity Commission (EEOC) is a bipartisan Commission comprised of five presidentially appointed members. It enforces the “Notification and Federal Employee Antidiscrimination and Retaliation Act (No FEAR) 2002” which aims to ensure that all Federal employees feel free to come forward with allegations of discrimination, wrongdoing, or misconduct, by making sure that Federal employees are aware of their rights. This law aims to increase the accountability of federal agencies for acts of discrimination and reprisal. This protection covers the full spectrum of employment decisions, including recruitment, selections, terminations, and other decisions concerning terms and conditions of employment. The EEOC also enforces the Civil Rights Act 1964, Equal Pay Act, The Age Discrimination in Employment Act of 1967, among others.

WAY FORWARD

Leadership by States: State legislations are contributing to the discourse on anti-discrimination law. In 2021, seven states like Kerala, Tamil Nadu, Rajasthan, West Bengal, etc have come out with draft bills on this subject. The Centre can take a leaf out of this and make a comprehensive law and establish an Equal Opportunity Commission. This is vital as the states cannot legislate in subjects in Union List.

Ensuring Effective Implementation of existing laws: There are few laws and IPC provisions dealing with anti-discrimination in India. For instance, Equal Remuneration Act, 1976 – Guarantees equal pay for equal work to men and women. Indian Penal Code, 1860 (Section 153 A)- Criminalises the use of language that promotes discrimination or violence against people on the basis of race, caste, sex, place of birth, religion, gender identity, sexual orientation, or any other category. Mental Healthcare Act, 2017 – Prohibits the denial or refusal to access mental healthcare facilities or services for people on the basis of race, caste, religion, place of birth, sex, gender identity, sexual orientation, disability, or any other category.

Conducting a Caste Census: A comprehensive socio-economic caste census needs to be conducted as it would provide an empirical basis for lawmaking as there exists a strong link between caste, discrimination, and privilege in Indian society.

Fundamental Changes in the socialization process: Discrimination is as much a social problem as it is legal. A law may not solve the discrimination unless the social mores changes which must discard discrimination.

Constitutional morality and Judicial intervention: The judiciary has employed the concept of constitutional morality to end many discriminatory practices in Indian society including those based on sex, gender, etc. The apex court needs to nudge or persuade the representative institutions through “judicial dialogue” to facilitate the process of ending discrimination either overt or covert.

CONCLUSION: Equality of opportunity given in the Constitution remains a myth despite 70 years of independence. This is the context of demand for an anti-discrimination law. There are committee and commission reports as also growing public demands for the same. The Parliament and the executive need to seriously consider enacting a comprehensive anti-discrimination law to further substantive equality and also to give concrete shape to its international commitments.

Questions:

1. For substantial equality in India, constitutional equality must be complemented by a comprehensive anti-discrimination law. Examine.
2. Anti-discrimination law is not a panacea for the problems of inequality and social prejudice that are deeply rooted in Indian society. Nevertheless, it is a necessary step — an idea whose time has come. Critically Analyse.

ADD TO YOUR KNOWLEDGE

KERALA ANTI-DISCRIMINATION AND EQUALITY BILL, 2021

The Bill prohibits employers, landlords, traders, service providers, private persons performing public functions, and public authorities, from discriminating on grounds of caste, race, ethnicity, descent, sex, gender identity, gender expression, pregnancy, sexual orientation, religious identity, tribe, disability, linguistic identity, HIV-status, nationality, marital status, dietary preference, skin tone, physical appearance, place of residence, place of birth, age or analogous characteristics which are beyond the control of an individual or those that constitute a fundamental choice. At the same time, the Bill balances the anti-discrimination mandate with other rights guaranteed by the Constitution. The anti-discrimination mandate can be restricted in pursuance of a legitimate objective: for instance, a drama company putting up a production of the Ramayana can insist on only male applicants for the role of Ram. That would not be discrimination in the terms covered by the law.

The Bill also introduces affirmative-action provisions whereby public authorities are obliged to progressively realise the diversification of their workforces by recruiting members of disadvantaged sections excluded from society, such as transgender persons or persons with disabilities. Given the backlogs in our judicial system, the Bill establishes a ‘Kerala Equality Commission’ to adjudicate complaints and to provide policy recommendations to the State government. Given that the proliferation of post-retirement public offices for judges does not augur well for judicial independence, the proposed commission does not follow the tried and tested model of former judges presiding over statutory bodies. Rather, appointments to the Commission are left to the political process, with substantial weightage given to the largest parties in the State, both in the Treasury and Opposition benches, to ensure bipartisan buy-in to the process.

The Bill has been forwarded both to the Law Minister of Kerala and the Leader of the Opposition with the suggestion that it should be subjected to a pre-legislative consultation process, so that democratic participation in enacting this historic law is encouraged If this Bill is enacted, it will be the largest expansion of civil rights in the State since the commencement of the Constitution, and it can be a model for other states to follow.

THE CONTEXT: Many state legislatures have passed resolutions requesting the Central Government to withdraw various laws enacted by it including the Citizenship Amendment Act 2019 and the Farm laws 2020. As the subject “citizenship” falls under the Union List, there is a view that the states cannot pass resolutions against a law enacted on this subject. This article examines this contention.

                                                WHAT ARE LEGISLATIVE RESOLUTIONS?

A resolution is the decision of the legislature. It reflects the opinion of the assembly about an issue. The legislative businesses are taken up in the form of motions which when voted upon becomes resolutions. In other words, a voted motion is a resolution. The legislature is the highest and the most inclusive representative institution of the country. Thus, it deals with various issues of public interest and hence is called upon to decide and act on them. The resolution in this context reveals the intention and objective of the assembly and its members. The resolution thereby is a device of legislative business to carry out the duties and responsibilities of the assembly.  There are various kinds of resolutions that may be legally binding or non-binding or in between.

                                           WHAT ARE THE EFFECTS OF LEGISLATIVE RESOLUTIONS?

• Resolution with a legal effect: The resolutions passed by the legislature and the Parliament carry legal consequences. For instance, the resolutions dealing with removal of Vice President, impeachment of President, removal Speaker, alteration of boundaries of the state, etc. It means the resolutions are binding in nature.
• Resolution with quasi-legal effect: These are resolutions regarding the control over the proceedings of the House itself. Although resolutions on procedure and conduct of the business of the House are not acts, they nevertheless have a binding effect only on the House, and the courts cannot enforce them.
• Resolutions having no legal effect: These are resolutions that do not have any legal effect but are sometimes capable of having a political effect.

THE CAA 2019 AND THE LEGISLATIVE RESOLUTIONS

When the CAA was passed, the country witnessed massive protests and also many petitions were filed in the High Courts and the Supreme Court. In addition, many states passed legislative resolutions, a few supporting the CAA and others against it. For instance, Gujrat and Goa passed resolutions congratulating the Centre while the latter included Kerala, West Bengal, Punjab, Rajasthan etc. The resolutions passed against the law was challenged in the Supreme Court in Samta Andolan Samiti Vs Union of India, 2020. The petitioner, an NGO claimed that the state legislatures do not have the authority to pass resolutions against a law passed by the Parliament. It contended that states lack legislative competence to pass resolutions on subjects in the Union List. In the instant case, the “citizenship” is covered under Entry 17 of List I and thus the NGO asked the SC to quash the resolutions and declare them null and void.

WHETHER THE STATE LEGISLATURES HAVE THE POWER TO PASS SUCH RESOLUTIONS?

• No legal effect: The resolutions passed by the states fall under the third category as mentioned above. Thus, the resolutions do not have any legal consequences and hence states can pass such resolutions.
• States’ Sovereignty: In Indian federal polity, the states are sovereign in their own defined spheres under normal circumstances. It means any unwarranted restrictions on the state’s power is against the constitutional scheme.
•  Union laws impact the states: In general, the states have a responsibility to enforce the Union laws. Thus, the states should also have the right to express the challenges through resolutions they might face while enforcing them.
• The SC observation: The SC while hearing the said petition prima facie commented that although the “Kerala Assembly has no jurisdiction to disobey the law by the Parliament, “they are only expressing an opinion here.” Moreover, the court observed that through these resolutions, the state legislatures “have not asked the people to disobey. They have only called upon the Parliament to abrogate the law.”
• Public Opinion: There has been growing public opinion against these laws across the country and especially in the above-mentioned states. As the legislature is the microcosm of the people, a responsible government in a modern democracy must reflect public opinion. Thus a resolution is a way of expressing the general public mood on the floor of the House.                                                                                                                                                                                                                    WAY FORWARD   

• Even though the Indian polity is described as quasi-federal due to the presence of a strong centre, states are not mere appendages of the Union. Thus, the states should have wide latitude in dealing with matters of general public interest.
• The Constitution itself provides for the power to the states to make laws contravening the provisions of Union laws under Art 254. Thus, to bar states from passing non-legal resolutions would be a retrograde step.
• The preliminary observations of the SC in the above-mentioned case indicate that the Court does not see any illegality in states passing such resolutions. So the matter is likely to be decided in the states’ favour. (as the case is still pending)

CONCLUSION:  Resolutions are as much a device of parliamentary business as they are expressions of the general public interest. The legislature being the most important deliberative and representative institution under the Constitution should have the freedom to decide its own procedure subject to explicit constitutional boundations.

QUESTIONS

1. The legislative distribution of power between the Union and the states under the Schedule VII of the Constitution extends also to the legislative resolutions passed by the states. Critically Examine.
2. Defining the concept of legislative resolutions, build a case for the power of states to pass them in subjects mentioned under the Union List.