‘Rich get bail, poor remain in jails’
Law Commission advocates relaxation of bail provisions for undertrial prisoners
•It has become the norm for the the rich and powerful to get bail with ease while the commoner and the poor languish in jail, the Law Commission of India said in its latest report.
•“It has become a norm than an aberration in most jurisdictions including India that the powerful, rich and influential obtain bail promptly and with ease, whereas the masses/the common/the poor languish in jails,” the 268th report of the Law Commission led by former Supreme Court judge, Justice B.S. Chauhan, observed.
•The Commission recommended to the government amendments to the bail provisions in the Criminal Procedure Code with emphasis on the early release on bail of undertrials.
•It recommended that undertrials who have completed one-third of the maximum sentence for offences up to seven years be released on bail. Those who are awaiting trial for offences punishable with imprisonment of more than seven years, should be bailed out if they have completed one-half of their sentence. The Commission said new legal provisions for remission should be included to cover those undertrials who have already endured the full length of the maximum sentence. Prolonged periods in prison where undertrials and convicts were not segregated would only make hardened criminals of the former, it said.
•By sheer statistics, the report made a case for introducing urgent amendments to rescue undertrials. It said a majority of them (70.6 per cent) are illiterate or semiliterate and belong to socio-economically marginalised groups. Sixty-seven per cent of the prison population is awaiting trial.
‘Unnecessary’ arrests
•The Commission quoted an expert study which said that a majority of the arrests are for “very minor prosecutions.” “Over 60 per cent of arrests were unnecessary and such arrests accounted for 42.3 per cent of jail expenditure,” it said in the report released on May 23.
•The Commission said the “inconsistency in bail system may be one of the reasons for the overcrowding of prisons.” The report pointed out that 4,19,623 inmates, consisting of convicts, detenues and undertrials, are lodged in 1,401 jails. It said the imprisonment rate in India is 33 per 1,00,000 of the national population.
Pressure on prisons
•“This means that prisons are buckling under the weight of inmate population. According to the Prison Statistics of India, the prison occupancy stands at 114 per cent. The prisons have 53,009 officials to take care of 4,19,623 inmates which amounts to one official per eight inmates.”
•While noting that heinous crimes like murder had increased by 250 per cent, rape by 873 per cent and kidnapping and abduction by 749 per cent since 1953, the Commission added a word of caution that the government should not view bail system as a “panacea” to ensure a responsive criminal justice system, but instead it should be re-calibrated to fit the needs of modern society.
An Abe-Modi plan for Africa
Proposal for growth corridor presented to the Board of Governors of AfDB
•India and Japan on Wednesday unveiled a vision document for the Asia Africa Growth Corridor, proposed by the Prime Ministers of the two countries last November.
•More details are likely to be firmed up by September in time for Japanese Prime Minister Shinzo Abe’s visit to New Delhi.
•Unlike China’s One Belt One Road (OBOR) project, about which India has raised several concerns, the Asia Africa Growth Corridor is conceived as a more open and inclusive programme that will be based on more consultations and keep people as the centre piece rather than just trade and economic ties, said officials who worked on the vision document.
Four key elements
•The document presented to the board of the African Development Bank’s governors at their annual meeting here, proposes four key elements that leverage the strengths of India and Japan.
•They are enhancing capacity and skills; building quality infrastructure and connecting institutions; development and cooperation projects in health, farming, manufacturing and disaster management; and people-to-people partnerships.
Important partners
•“Today, the intermediate report of the Asia Africa Growth Corridor was announced … This will facilitate greater trilateral or triangular cooperation among Japan, India and Africa as a win-win-win,” said Japan’s ambassador to India Kenji Hiramatsu.
•“As African countries continue to grow against the background of their abundant resources and growing population, they are becoming important partners of Japan and India with deeper relationships, politically and economically. We expect greater synergy to emerge between Japan’s technology and capital and India’s strong network and experiences in Africa,” he said.
•The Ambassador also called for greater cooperation between Indian and Japanese firms in furthering Africa’s development and urged Indian investors to participate in the new economic zone coming up around Kenya’s Mombasa port with Japan’s assistance.
A flawed rescue act
The banking regulation ordinance puts its seal of approval on corporate subsidy at the cost of public banks
•The buck stops with the Reserve Bank of India (RBI)! This is the crux of the Banking Regulation (Amendment) Ordinance of May 4, 2017, which empowers the RBI to take decisions on the settlement of non-performing assets (NPAs) and a consequent cleaning up of bank balance sheets.
•With this direct intervention in the decision-making domain of banks, the RBI is now rewriting the script for the Indian banking system. Surprisingly, despite the severity of the NPAs crises, the business of banking is very much in demand. The RBI recently granted bank licences to 23 applicants which included Aditya Birla Nuvo, Reliance Industries, Tech Mahindra and Vodafone M-pesa and Airtel. These corporates need to invest Rs. 100 crore each to gain entry into the banking sector. Ironically, the RBI has assigned public sector banks the role of lambs awaiting sacrifice at the altar of development and financial sector reform.
•Banks in India are in possession of Rs. 6,11,607 crore worth of NPAs as of March 31, 2016. According to a recent Credit Suisse estimate, there could be a default on 16-17% of total bank loans by March 31, 2018. The current food and non-food credit stands at approximately Rs. 75,00,000 crore. This would translate to about Rs. 12 lakh crore of NPAs. This is equivalent to approximately 75% of the demonetised (Rs. 500 and Rs. 1,000 notes) currency in the entire Indian economy during November-December 2016. The ordinance correctly acknowledges the unacceptably high level of stressed assets in the banking system. Indeed, banks are sitting on a huge pile of scrap.
Corporate borrowers
•Most of these bad loans are the result of largesse by public sector banks to large corporate groups, given without any consideration to the principles of sound lending. Hence, the resultant inability of the banks to recover either interest or the principal sum lent.
•In India, corporates rely on banks as the main source for funds. The February 2017 International Monetary Fund (IMF) report states that 65.7% of Indian corporate debt as of March 31, 2016 is funded by banks. The December 2016 Financial Stability Report states that large borrowers account for 56% of bank debt and 88% of their NPAs. A recent Credit Suisse report highlights the inability of top Indian corporates to make timely interest payments by stating that about 40% of debt lies with companies with an interest coverage ratio of less than 1. The 2017 IMF report also states that about half of the over all debt is owed by firms who are already highly indebted (debt-equity ratio more than 150%). These borrowers are simply not earning enough to meet their interest commitments.
•The Reserve Bank cannot feign ignorance of or express surprise at the crises facing the banks. As stated in the August 2016 Financial Sector Assessment Program (FSAP) report: “The Reserve Bank is aware that group borrower limit in India is higher than international norms. However, it also needs to be recognized that some of the major corporate groups are key drivers of growth of the Indian economy. As the corporate bond market is not yet matured in India, bank financing is crucial for such corporate groups”.Thus, granting loans to corporates that lacked capital as well as expertise (in sectors that were once the sole preserve of the government) was obviously a decision made at the behest of the RBI and the government with little regard to the best interest of the bank. Being a corporate entity itself, the bank should have aimed at maximising the wealth of its equity shareholders and customer-depositors whose money the bank lends.
•Corporate borrowers are a privileged lot whose loans are not backed by sufficient value of security. A glance at the share prices of borrower companies is a useful exercise.
How much less?
•A resolution implies settling for less but the dilemma for the banker is ‘how much less’. “Haircut” is the seemingly benign term for a waiver of a part of the loan without inviting criticism of poor financial discipline! Herein lies the reason for the difficulty of closure on resolution. The ordinance puts its seal of approval on corporate subsidy at the cost of survival of public sector banks.
•If the writing off of Rs. 36,359 crore worth of agricultural loans in Uttar Pradesh was bad economics, then the resolution of corporate NPAs is much worse. The former can still find justification as a welfare measure that benefits 21 million small farmers but there can be no justification for rewarding the top 30 corporate groups for their poor business acumen.
•The 2017 Economic Survey rightly referred to NPAs as the festering twin balance sheet problem. It is eerie that while banks are being coerced into resolution and imminent insolvency, bailouts from State governments and public sector undertakings are being considered to fix corporate balance sheets. It appears to be designed to send public sector banks into autoimmune, self-destruct mode.
•It was for the sake of development that the RBI encouraged banks to lend to corporates. Now, for the same reason, resolution is being thrust on banks. Ostensibly, the RBI is ensuring financial stability in the banking sector. But who are these beneficiaries of financial stability? Is it the majority equity shareholder, the government (using taxpayer money) whose worth is going to be wiped out? Is it the customer whose money is lent by the bank? Is it the elite corporate borrower who passes his losses to the banking system? Or is it the new bank waiting for the collapse, ready to acquire a readymade set of customers and good assets? Will the ghost of Lady Macbeth come to haunt the RBI and the government?
Say no to GM mustard
There are formidable social, economic and environmental reasons why it should not be cultivated
•The manner in which the Genetic Engineering Appraisal Committee (GEAC) recently cleared the proposal for genetically modified (GM) mustard is extraordinary to say the least. It makes a mockery of the commitment in the Bharatiya Janata Party manifesto that “GM foods will not be allowed without full scientific evaluation on the long term effects on soil, production and biological impact on consumers”. The Prime Minister had delighted consumers by lending his weight to the promotion of organic food. On the other hand, GM and organic are completely incompatible.
•The alluring promises of higher yield and lower pesticide usage which induced many, including myself as Textile Secretary to the Government of India in the 1990s, to welcome Bt cotton have now been belied. Despite increased fertilisers and irrigation, the expectations of enhanced cotton yield have not been realised. Most of the countries that have higher cotton yields than India do not grow GM cotton. The package of promises sold to us did not reveal all of this. If I had an inkling of the future at that time, Bt cotton would not have been introduced in India.
Yields as a touchstone
•We would now be foolish in accepting the yield promises of the GM variety of mustard, a crop which is an integral part of every Indian’s food. Ab initio the yield claims on which GM mustard has been cleared are not even remotely reliable — being based on comparisons with 30-year-old cultivars, and not on more recent high-yielding hybrids. The highest yields in mustard are from the five countries which do not grow GM mustard — U.K., France, Poland, Germany and Czech Republic — and not from the GM-growing U.S. or Canada ( see graph based on FAO data ). If India is desirous to increase its mustard yield rapidly and safely, this can be done by adopting the practice of System of Mustard Intensification, for which successful trials have been done in Bihar through a World Bank project. Results showed higher yields and better income. All this without the spraying of any toxic herbicides, which is the undisclosed story of GM mustard.
•GM mustard’s yield increase claims have been successfully challenged now, prompting the crop developers and regulators to retract on that front — it is another matter that many reports continue to claim that GM mustard will increase yields.
Gaps in evaluation
•There have been numerous severe deficiencies in the evaluation process of GM mustard. The risks to health, environment and agriculture have not been evaluated even through those inadequate tests which were conducted at the time of Bt brinjal examination, though mustard is far more extensively grown and consumed than brinjal.
•HT (herbicide tolerant) GM crops have been condemned by a number of medical professionals and other scientists for increasing chemical herbicide use, leading to serious health conditions — at all stages, but most worryingly at the foetal stage. A scientific report from Argentina found a fourfold increase in birth defects and a threefold increase in childhood cancers in HT soya areas. Shockingly, the GEAC has conveniently omitted to have any herbicide-related studies. A small committee was constituted to “examine” the safety dossier — the tests that were done and the deliberations of GEAC were shrouded in secrecy. After a scathing order from the Central Information Commission, the GEAC made a sham of public consultations, through an opaque and perfunctory eyewash process.
•The U.S. is a prime example of a country which has galloped into the GM mode of agriculture. Studies have shown a strong correlation between growth of GM crops, the herbicides they promote, and diseases such as acute kidney injury, diabetes, autism, Alzheimer’s and cancers in the past 20 years in the U.S. Seventeen of the 20 most developed countries — including Japan, Russia, Israel and most of Europe — refuse to grow GM crops. An unacceptable marketing trick, that of promotion of a “swadeshi” GM, is being used to break down resistance to GM crops in India’s vast market, ignoring that safety concerns are the same — swadeshi GM or not.
Losses and pernicious effects
•The GEAC had itself rejected a similar HT GM mustard proposal by Bayer in 2002. The same reasons apply now. A herbicide-tolerant crop promotes constant exposure to a single herbicide — which eventually results in weeds becoming resistant. Over 20 species of weeds in the U.S. are now resistant to Monsanto’s glyphosate-based herbicide. As desperate farmers tried to control these “superweeds”, there was a tenfold increase in use of glyphosate in 16 years.
•Glyphosate has been declared to be a “probable human carcinogen” by the World Health Organisation. The glufosinate-based herbicide to which the proposed GM mustard is tolerant will also have adverse impacts on health.
•If GM mustard is now introduced, who will lose? Every Indian who consumes mustard in any form, as s/he will also consume the herbicide residues on it; the millions of poor women who depend on weeding to support their family who will be displaced; the bee keepers whose honey will be contaminated; farmers whose yields will fall eventually as bees die out; and the Indian nation, which will find that it has lost its seed diversity and the international competitive advantage of its non-GM mustard and honey.
•A recent report, not by activists but by the United Nation’s Special Rapporteur on the Right to Food, sums up the end game when it says: “Recent mergers have resulted in just three powerful corporations: Monsanto and Bayer, Dow and Dupont, and Syngenta and ChemChina. They control more than 65 per cent of global pesticide sales. Serious conflicts of interest issues arise, as they also control almost 61 per cent of commercial seed sales. The pesticide industry’s efforts to influence policymakers and regulators have obstructed reforms and paralysed global pesticide restrictions globally.” Their business model ensures that no matter who produces a GM seed, they profit.
•The main advantage trotted out in favour of GM mustard is increased yield — there is sufficient evidence that this claim is a myth. As against this alleged advantage, there are formidable social, economic and environmental reasons which cry out against GM mustard — examination of these has been hardly done by the GEAC. As the PR agencies work overtime to push for GM mustard, one can only hope that the Environment Minister, the Prime Minister and the Supreme Court will act in concert to protect Indian consumers, and farmers from the potentially irreversible destruction of an important Indian crop.
Access denied
The government needs to engage with Internet companies directly for encrypted data
•An iPhone used by Abu Dujana, said to be among the Lashkar-e-Taiba’s commanders in Kashmir, which fell into the hands of security forces, could be a valuable source of information for the National Investigation Agency (NIA). The odds that the agency is able to break into the device are, however, slim. For now, the government has sent the iPhone to the U.S., seeking assistance from its federal agencies. The government’s strategy of shipping it abroad to decipher its contents is unsustainable. But for some political agreements signed after the 26/11 attacks, there is no legal obligation on the U.S. to provide any assistance in this matter to India, even though the company that manufactured the device is American.
•Moreover, U.S. security agencies have themselves struggled to extract information from devices like the iPhone, in the face of resolute opposition from companies to decrypt their own products. If Apple could successfully resist a U.S. court order to help the Federal Bureau of Investigation (FBI) unlock an iPhone used by a terrorist involved in the 2015 San Bernardino attacks, what hope can the NIA have?
Walled by encryption
•In the eight years since its creation, the NIA has grown into a competent organisation, with interception abilities comparable to top law enforcement bodies in the world. But NIA officials themselves rue that the online chatter they intercept is increasingly encrypted. Thus far, Indian intelligence agencies have relied on ‘zero days’ — vulnerabilities that exist in the original design of a software — to break into encrypted devices, but Internet companies now promptly patch their flaws, diminishing the utility of such tools.
•Take the case of Abu Dujana’s iPhone 7. While dealing with secure devices, law enforcement agencies usually have two options to unlock them. The first is to “brute force” the user’s password or PIN into the phone repeatedly, until it finally cracks open. But iPhones limit the number of false entries, killing the phone altogether after several failed attempts. In the San Bernardino case, the FBI was probably able to trick the iPhone — an older version, the iPhone 5c — into believing the limit was never reached. With newer models from Apple, this has become altogether impossible, because an isolated processor within the phone keeps a running count of all consecutive false attempts. The second option is to modify the ‘Touch’ sensor in phones that use fingerprints-recognition technology, so that a third party is grafted in as the legitimate user. Last year, however, Apple issued a software update that disables all iPhones where the Touch button had been “unofficially” modified. The company later allowed users to restore dead devices, but only after confirming their identity on other Apple platforms like iTunes.
•The reality is that a lot of online content is today out of the reach of law enforcement officials. Platforms like WhatsApp and Telegram are ‘end-to-end’ encrypted, making it difficult for police at the State and local level — who don’t have access to zero days — to register cases based on information contained in them. The distinct trend towards greater adoption of encryption poses a dilemma for Indian policymakers. Strong encryption protocols increase consumer confidence in the digital economy, but the Indian government fears a scenario where criminals or terrorists can easily “go dark” behind secure channels.
•In this case, Apple could build firmware that allows agencies to clock any number of attempts to unlock an iPhone. Technical details aside, the lesson here is that Apple may tightly secure its devices, but it also guards the “keys to the kingdom”. Similarly, Telegram does not disclose to government officials if it has an office in that country, to “shelter” them from data requests. Emerging markets have struggled to deal with data giants — Brazil’s judiciary, for example, suspended WhatsApp on three occasions in 2016 for non-compliance with government requests — that operate on quasi-sovereign principles.
The need to deal directly
•Finally, legal solutions to electronic data access for law enforcement agencies are outdated. Governments are no longer the custodians of data, but every Indian request for electronic content is required to be vetted by the U.S. Department of Justice. In Abu Dujana’s case, if he has backed up his data on Apple’s iCloud service, an Indian request to share its content will take months to be processed, by which time the cloud data would have already been erased through another device. The current process of information-sharing through the India-U.S. Mutual Legal Assistance Treaty suffers from almost irreparable hurdles, ranging from bureaucratic delays on both sides to inconsistencies in domestic legal standards. Perhaps the solution lies in a bilateral data-sharing agreement to help the Indian government engage with Internet companies directly, rather than routing requests through the U.S. government. Both sides have begun negotiations on this issue, which Prime Minister Narendra Modi should also flag with U.S. President Donald Trump when he visits Washington D.C. next month.
Govt. orders to favour local suppliers
Aims to boost domestic manufacturing thus creating jobs and increasing income
•The Union Cabinet on Wednesday approved a policy that provides preference to local suppliers in Government procurement.
•The new policy — aimed at pushing the ‘Make in India’ initiative — is to boost domestic manufacturing and services, thereby creating employment and enhancing income.
•It will also stimulate the flow of capital and technology into domestic manufacturing and services, according to an official statement.
•It will also provide a further thrust towards the manufacture of parts, components and sub-components of these items, it added.
•Procurement by the Government is substantial in amount and can contribute toward this policy objective.
•The policy, approved by the cabinet will be implemented through an order pursuant to the General Financial Rules, 2017 to provide purchase preference (linked with local content) in Government procurement.
•The order also covers autonomous bodies, government companies/entities under the government’s control.
•Under the new policy, local suppliers are those whose goods or services meet prescribed minimum thresholds (ordinarily 50%) for local content.
Local content
•Local content is essentially domestic value-addition, according to the statement, which added that local content could be increased through partnerships, among others.
•A Standing Committee in the Department of Industrial Policy and Promotion will oversee the implementation of this order and issues arising out of them, and make recommendations to nodal ministries and procuring entities.
•In the procurement of goods for Rs. 50 lakh and less, and where the nodal ministry determines that there is sufficient local capacity and local competition, only local suppliers will be eligible.
•The new policy also requires that specifications in tenders must not be restrictive — that is, it should not require proof of supply in other countries or proof of exports in respect of previous experience.
GST rollout deadline will not be extended, says top official
60.5 lakh eligible tax payers have registered out of 83 lakh
•The government is not considering extending the rollout date for the Goods and Services Tax (GST) past July 1, and the GST Network is almost ready for that deadline, GST Network CEO Prakash Kumar said.
•Mr. Kumar also added that the GST Network, the company behind the IT backbone of the new tax regime, had received registrations from 60.5 lakh out of the 83 lakh tax payers eligible to be on the network.
•“The date for GST is firmed up, and there should not be any confusion anywhere about that,” Mr. Kumar said while speaking at a GST Readiness Session. “There is no chance of it being extended past July 1. Out of a scale of 10, I would say our readiness right now is 8-9,” he said.
•“The registration aspect of the portal was ready in November,” he added. “We started it in a phased manner and 60.5 lakh have been registered out of 83 lakh. If you don’t enrol, then the details of the authorised signatory will not be added to the Network, which means those companies will not be able to do any transactions on the portal.”
•Regarding concerns that the GST Network — of which the government owns 49% and private companies own 51% — would face the moral hazard of sensitive private data being used for private purposes, Mr. Kumar said that the structure of the board would prevent this.
•“The 49% government holding is divided along the lines of 24.5% Centre and 24.5% states and UTs,” he said. “The 51% is divided between five companies.
•“The 24.5% of the states and the Centre have three board members each, and the 51% private companies have three board members. And nothing can happen without the decision of the directors,” Mr. Kumar said.
•He also added that the IT infrastructure of the network for the unified tax regime was capable of handling even the peak traffic witnessed during the last couple of days before the filing deadline.
Centre may expand UDAN’s wingspan
Routes which don’t have flight services may become part of the scheme
•The Centre has proposed widening the scope of its UDAN scheme for regional connectivity by making more flight operations eligible for a host of concessions, including viability gap funding.
•All routes which do not have flight services at present may become part of the Scheme.
•“If there is no flight between two destinations even though both the airports have flight operations on separate routes, then it will be an unserved route falling under the regional connectivity scheme (RCS),” Civil Aviation Secretary R.N. Choubey said, while announcing proposals that may be incorporated in its UDAN scheme ahead of the second round of bidding that may take place in July.
Stakeholders’ comments
•The Centre has invited stakeholders’ comments on its proposal and will finalise the RCS by June 30.
•For instance, airlines operating on Lucknow-Varanasi route may be eligible for concessions under the UDAN scheme as there are no flights on the route at present although there are flights operating out of these airports to other destinations.
•However, to be eligible, airlines need to participate in the bidding process. At present, only airports that are either categorised as unserved or underserved fall under the Scheme.
•The Civil Aviation Ministry has further proposed decreasing the exclusivity on flight operations under the RCS from three years to one year. However, the subsidy to airlines will continue for three years. At present, no other airline, except the one which has won the bid, is allowed to operate on routes awarded under the Scheme.
•The Government may also allow flights between airports less than 150 kilometres of distance from each other, for instance, Bengaluru-Mysuru route, to be eligible to fall under the UDAN scheme.
