📰 Threefold rise in domestic budget for fight against tuberculosis
Domestic resources accounted for 74% of the $525 million that was spent in India last year
•India’s domestic budget for fighting tuberculosis showed a dramatic jump from about ₹700 crore in 2015 to ₹2,500 crore last year, according to a report from the World Health Organisation (WHO).
•Typically most of India’s budget to combat the bacterial infection —that claimed 4.2 lakh last year—used to be dominated by international funding.
•But, for the first time this has flipped. Domestic resources accounted for 74% of the $525 million spent in India last year, while it was only 38% in 2015.
•“The big difference is that nearly ₹1,000 crore of non plan expenditure got added… next year you will see an even bigger spend,” A.K. Jha, Economic Adviser of the Union Health Ministry, said. “The role of the private sector is critical in reducing TB numbers,” he added.
•In 2016, India recorded a 12% dip in the number of TB deaths from the previous year though the incidence dipped marginally by 1%.
•The number of notified cases of drug-resistant tuberculosis (MDR-TB) jumped from 79,000 to 84,000 in 2016, a government official said, pointing to the deployment of better diagnostics. “Since last year, we’ve scaled up the use of molecular diagnostic tests to detect the infection… even on detection of drug-resistant TB there’s been an improvement,” he told The Hindu on Monday.
•However, with 1.7 million new cases in 2016, India still continues to be the largest contributor to the global burden with up to a quarter of the 6.3 million new cases of TB (up from 6.1 million in 2015). Inspite of the dip, India accounts for about 32% of the number of people worldwide who succumbed to the disease.
•The government has committed to achieve a ‘90-90-90 target’ by 2035 (90% reductions in incidence, mortality and catastrophic health expenditures due to TB). This is premised on improved diagnostics, shorter treatment courses, a better vaccine and comprehensive preventive strategies. In 2016, the WHO said that India had many more deaths and incidence of the disease than had been estimated over the years.
•However, several activists say that inspite of the government commitments, TB is still stigmatized and under-reported — especially from the private sector — and top-line drugs are still inadequate to treat people who suffer from the drug-resistant forms of the disease.
📰 SC relief for self-employed, salaried road accident victims
Constitution Bench fixes guidelines for computing claims
•A five-judge Constitution Bench on Tuesday spelt relief to families who were given a raw deal by insurance companies just because their loved one was either self-employed or salaried at the time of death in a road accident.
•So far, the pre-liberalisation Motor Vehicles Act of 1988 had computed motor accident claims on the basis that self-employed persons and the salaried have no “future prospects”, and if alive, their income over the years would hardly have seen any drastic improvements.
•The courts would only take the actual income drawn by the victim at the time of death. A departure could be made only in “rare and exceptional cases involving special circumstances.”
New circumstances
•Changing the over two-decade long perception, the Constitution Bench led by Chief Justice of India Dipak Misra took into consideration the changed life circumstances of a globalised world of private entrepreneurs, high salaries in the private sector, rise in cost of living and even inflation.
•The Bench, in an authoritative and unanimous judgment, held that law should recognise and give credit to the competitive attitude of the modern Indian, his ability to garner his resources, live with dynamism and enterprise, move and change with time.
•The Bench also comprised Justices A.K. Sikri, A.M. Khanwilkar, D.Y. Chandrachud and Ashok Bhushan.
•“The purchasing capacity of a salaried person on permanent job increases because of grant of increments and pay revision or for some other change in service conditions, there is always a competing attitude in the private sector to enhance the salary to get better efficiency from the employees,” Chief Justice Misra, who wrote the judgment for the Bench, observed.
•“Similarly, a person who is self-employed is bound to garner his resources and raise his charges/fees so that he can live with the same facilities. To have the perception that he is likely to remain static and his income also will be stagnant is contrary to the fundamental concept of human attitude,” the verdict observed.
•The Constitution Bench fixed guidelines for computing motor accident claims for self-employed and salaried persons.
•If the road accident victim had a permanent job at the time of his or her death in a road accident, 50% of his actual salary will be added towards future prospects if his age is below 40 years, 30% if the age of the victim is between 40 to 50 years and 15% if the age is in the 50-60 bracket. Actual salary should be read as actual salary less tax.
•Similarly if thevictim was self-employed or on a fixed salary, 40% will be added to his established income if his or her age was below 40 years at the time of death; an addition of 25% if the victim was in the 40-50 age bracket and 10% if he or she was between 50 to 60 years. The established income means the income minus the tax component.
📰 India moves up 30 spots in WB’s ease of business ranking
Nation made big efforts in last 3 years and what is seen in this report is not last year’s reforms only: Rita Ramalho of WB
•India climbed 30 positions in the latest ease of doing business ranking by the World Bank, in its Doing Business 2018 report released on Tuesday. The report ranks India at 100 among 190 countries. Last year, India was ranked 130.
•Improving India’s ranking in the report has been a key component of PM Narendra Modi’s economic agenda.
•“..Indian government has been focussed on reforms and since the Modi government came into office, it began looking at this area, trying to understand what we measure, how we measure, what is the value of it and designed a reform programme that addresses some of the shortcomings that were measured by the indicators and this is the result of that..these things take some time to come into fruition,” Ms. Ramalho said. “India made big efforts in the last three years and what is seen in this report is not last year’s reforms only,” she said, adding that the methodology of the study captures the actual implementation of a particular reform once it is enacted, resulting in a time lag before it is reflected in the report.
•India’s upward jump in ranking is based on the underlying improvement in the distance to frontier (DTF) score — an absolute measure of progress towards the best practice - in the report. India recorded the fifth highest change in DTF score and found a place for the first time in the top ten economies improving the most in a given year, in the report which is into its 15th edition. The ease of doing business ranking compares economies with one another; the DTF score benchmarks economies with respect to regulatory best practice. Ms. Ramalho described India’s progress on both counts “high and rare.”
•Doing Business report measures aspects of regulation affecting 11 areas of the
life of a business, and India made eight reforms across these areas last year, the highest number for the country in a single year. India is one of the three countries last year that undertook reforms in as many as eight areas.
•Faster permits for construction, combining the application for the Permanent Account Number (PAN) and the Tax Account Number (TAN) into a single submission, reduction in the time needed to complete the applications for Employee’s Provident Fund Organization (EPFO) and the Employee’s State Insurance Corporation (ESIC), reduction in export and import border compliance costs and improved access to credit are among the reforms noted by the report. “…the establishment of debt recovery tribunals reduced non-performing loans by 28% and lowered interest rates on larger loans, suggesting that faster processing of debt recovery cases cut the cost of credit,” the report said.
•India is now in the middle of the list, moving up from the last quarter but still it is at a place where there is scope for improvement, the WB official said. “There are still significant changes possible, though the change this year is significant, both in relative and absolute terms,” she said.
•India used to be the last among the BRICS - Brazil, Russia, India, China, South Africa - countries in the ranking, but now it has overtaken Brazil in the list. China maintained the same ranking it had last year, at 78. New Zealand, Singapore and Denmark retained their first, second and third spots. Russia, at 35 is the best among BRICS countries; while Brazil is now the last.
•Bank officials said enforcement of contract is one area of concern in India. The time to enforce a contract has only become longer today, at 1445 days compared to 1420 days 15 years ago, placing India at 164th place in the ranking on Enforcing Contracts indicator. Property registration and property transition, land registry and administration remain complicated in India compared to many other countries. India has reduced the time to register a new business to 30 days now, from 127 days 15 years ago. Still, local entrepreneurs in Mumbai need to go through 12 procedures to start a business in Mumbai which is considerably more than in OECD countries where it takes five procedures on average. “This is a marathon and not a sprint; patience is a virtue here. What you see here is the result of years of work,” said Santiago Croci Acting Manager of Doing Business Unit at the WB.
📰 Crypto currencies, ICOs under SEBI lens
‘Regulator examining means to deal with coin offerings’
•SEBI examining whether regulation possible under current laws or fresh powers needed
•The rising popularity of crypto currencies and the increasing number of entities looking at raising funds through Initial Coin Offerings (ICO) has caught the attention of the capital market regulator, which is evaluating whether such instruments and offerings can be brought under its regulatory purview.
•According to persons familiar with the development, the Securities and Exchange Board of India (SEBI) is mulling whether an ICO can be regulated under the existing legal framework or certain amendments would be required in case the government wants the capital market watchdog to be the regulatory authority for such issuances. Incidentally, crypto currencies like bitcoin, ethereum and such offerings have been under government radar for long and discussions have been held between various bodies, including SEBI and the Reserve Bank of India (RBI), on the possible ways in which this segment can be regulated. The central bank is of the view that these instruments are securities and so SEBI should be the regulating body.
‘Concrete presentation’
•“While it is a bit early to say that SEBI wants to regulate crypto currencies and ICOs, it is true that work is being done in this subject so that it has something concrete and specific to present to the government,” said a person familiar with the development. The regulator is evaluating whether these instruments can be regulated under the current SEBI Act or if there is a need for the government to give additional powers or amend the existing law, he added.
•An ICO, like an equity initial public offer (IPO), is an issuance of digital tokens that can be converted into crypto currencies and are mostly used to raise funds by start-up firms dealing in blockchain technology and virtual currencies like bitcoins and ethereum.
•Unlike an IPO, which is governed by SEBI regulations, there is no regulatory body for ICOs in India.
•According to data from UK-based CoinDesk, nearly $2.7 billion has been raised globally through ICOs since 2014. Concerns related to ICOs can be gauged from the fact that China recently banned such offerings after its central bank said that ICOs are “illegal public finance” mechanism used for issue of securities and money laundering.
•According to a recent study, more than 2,500 Indians invest in bitcoin daily. Start-ups like Zebpay, Unocoin, Coinsecure, Searchtrade, Belfrics and Bitxoxo are some of the well-known players in the bitcoin and blockchain segment in India. Sumit Agrawal, partner, Suvan Law Advisors, and a former SEBI law officer, is of the view that while crypto currencies and ICOs have risks and involve pooling of money, it cannot be regulated by SEBI unless it is relatable to the securities market. “Bitcoins are neither ‘commodities derivatives’ nor ‘securities’ under Securities Contracts (Regulation) Act, 1956. Amending definition of ‘securities’ alone may not resolve the issue of bitcoin regulation as there are numerous issues revolving around,” said Mr. Agrawal. Bitcoin players, meanwhile, feel that instead of a regulator, the industry is in more urgent need of a self-regulatory organisation (SRO) that could formally lay down principles to take care of concerns like money laundering and other possible misuse. “The industry is at an initial stage and an SRO would not hinder innovation and, at the same time, allow the industry to scale in a responsible manner,” said Sandeep Goenka, co-founder, ZebPay. In the US, the Securities Exchange Commission (SEC) applies a so-called Howey Test to determine if an instrument is to be considered a security. SEBI has an extremely well regulated process in place and there is no need for a new regulator for ICOs,” added Mr GoenkaIncidentally, in February, bitcoin start-ups Zebpay, Unocoin, Coinsecure and Searchtrade came together to form the Digital Asset and Blockchain Foundation of India (DABFI) to lay down self-regulatory regimes for trading of bitcoins and other blockchain-based digital assets apart from standardising Know Your Customer (KYC), Anti Money Laundering (AML) and Suspicious Transaction Reports (STR) norms for the member companies
•An email query sent to SEBI on Monday remained unanswered till the time of going to press.
📰 Govt. plans to sell Air India, AI Express together
Separate bidders likely for regional airline Alliance Air; process to be concluded by June 2018
•The National Democratic Alliance (NDA) government is working to conclude the sale of national carrier Air India by June 2018 and is keen on selling its core airline operations, together with its low-cost international airline, Air India Express.
•As per a decision taken by the Air India-specific Alternative Mechanism — a group of Ministers led by Finance Minister Arun Jaitley to decide on the modalities of stake sale in the national carrier — the Centre will look to sell AI’s regional airline Alliance Air to a separate universe of bidders while Air India and Air India Express will likely go together.
•At a meeting of the ministerial group on September 21, the view was that a separate universe of bidders or prospective buyers be invited for Air India’s ground handling subsidiary — Air India Air Transport Service Limited (AIATSL) — and its maintenance, repair and overhaul (MRO) unit — Air India Engineering Services Limited (AIESL) — top government sources said.
Talks with buyers
•“The rationale is that we can find prospective buyers from international airlines if we call bids for Air India and Air India Express together. Since Alliance Air operates flights mainly on regional domestic routes, it makes more sense to sell it off separately,” a source added.
•The decision was taken after the government held several rounds of backchannel talks with prospective buyers of Air India and its subsidiaries.
•Sources said the government met companies involved in MRO, ground handling and airline operations to examine whether all the subsidiaries should be sold off together or calling for separate set of bidders would increase Air India’s valuation.
📰 Collegium and transparency
The initiative adds a veneer of respectability to a mechanism that has little constitutional basis
•On October 3, the Supreme Court’s collegium published a resolution promising to hereafter make public, on the court’s website, its various decisions, including its verdicts on persons nominated for elevation as judges to the high courts, its choices of candidates for elevation to the Supreme Court, and its decisions on transfer of judges between different high courts. These results, the resolution added, will be accompanied by the reasons underpinning the collegium’s choices.
•At first blush, the move strikes us as both necessary and important, as bringing transparency into a system that has been notorious for its opacity. But when probed deeper, on even a bare reading of the first set of publications released by the collegium, it becomes clear that the initiative adds, at best, a veneer of respectability to a mechanism that lacks any constitutional basis.
Perplexing reasons
•Consider some of the reasons professed thus far. In the cases of A. Zakir Hussain and Dr. K. Arul, candidates nominated for elevation to the Madras High Court, the collegium has verbatim published the following statement of rejection: “keeping in view the material on record, including the report of Intelligence Bureau [IB] he is not found suitable for elevation to the High Court Bench.” The details of what the IB’s reports might contain and the apparent materials on record remain concealed. Yet, threadbare as these reasons might sound, those offered for rebuffing the nomination of Vasudevan V.N., a judicial member of the Income Tax Appellate Tribunal, are particularly perplexing.
•“While one of the two consultee-colleagues has offered no views about his suitability, the other colleague has not found him suitable for elevation,” the report reads. “As per record, his name was also recommended by the Collegium of the Calcutta High Court on 28.11.2016 and the Government of West Bengal has expressed its disagreement. Record placed before us also shows that the proposal for his elevation initiated on a previous occasion by the Collegium of the Bombay High Court was rejected by the Supreme Court Collegium on 1st August 2013. A complaint pointing out this fact has also been received in the office of the Chief Justice of India. Keeping in view the views of the consultee judges and the material on record the Collegium is of the considered opinion that Shri Vasudevan V. Nadathur is not suitable for elevation to the High Court Bench.”
More questions
•The collegium, ever since its inception, following the Supreme Court’s judgment in what is known as the Second Judges Case (1993) has been enveloped by a sense of the hugger-mugger. The present revelations, much opposed to their perceived objective, scarcely make the system more transparent. In Mr. Vasudevan’s case, for example, we don’t know which of the “consultee-judges (presumably one of the two senior-most Supreme Court judges, in this case, who have previously served at the Madras High Court) objected to his elevation, and why the judge interviewed found him unsuitable. Also peculiar is the collegium’s express noting that Mr. Vasudevan had previously been recommended by two different high court collegia, which would mean that, in all, the chief justices of three high courts, at different points of time, found him worthy of selection. But, we’re now left wondering how the view of one “consultee judge” — whose reasons aren’t provided to us — can override the opinion of three chief justices of three diff
rent high courts.
•These issues concerning the system employed to appoint judges to the Supreme Court and the high courts — even if they often involve matters of inscrutable procedure — are of particular salience. The judiciary, after all, was regarded by the Constitution’s framers as central to the social revolution that the document was meant to herald. Indeed, as the historian Granville Austin recounted in his book, The Indian Constitution: Cornerstone of a Nation , the Constituent Assembly brought “to the framing of the Judicial provisions of the Constitution an idealism equalled only by that shown towards Fundamental Rights.” It saw the judiciary as critical to “upholding the equality that Indians had longed for during colonial days, but had not gained”.
Interpreting consultation
•To this end, to ensure that judges would be insulated from political influence, the assembly agreed on a consultative process of appointing judges, a “middle course,” as B.R. Ambedkar described it. The Constitution avoided the cumbersome process of legislative interference and the undemocratic provision of a veto to the Chief Justice, and vested in the President the power to both make appointments and transfer judges between high courts. The President, who would act on the advice of the council of ministers, was, however, required to compulsorily consult certain authorities, including the Chief Justice of India (CJI), and, when making appointments to a high court, the chief justice of that court.
•Originally, in 1977, in Sankalchand Sheth ’s case, when interpreting the word “consultation,” the Supreme Court ruled that the term can never mean “concurrence”. Hence, the CJI’s opinion, the court ruled, was not binding on the executive. But nonetheless the executive could depart from his opinion only in exceptional circumstances, and, in such cases, its decision could well be subject to the rigours of judicial review. This seemed like a perfectly sound balance.
•And indeed, in 1981, in the First Judges Case , the court once again endorsed this interpretation, albeit partly. But twelve years later, in the Second Judges Case , the court overruled its earlier decisions. It now held that “consultation” really meant “concurrence”, and that the CJI’s view enjoys primacy, since he is “best equipped to know and assess the worth” of candidates. But, the CJI, in turn, was to formulate his opinion through a body of senior judges that the court described as the collegium.
•In 1998, in the Third Judges Case , the court clarified its position further. The collegium, it said, will comprise, in the case of appointments to the Supreme Court, the CJI and his four senior-most colleagues — and, in the case of appointments to the high courts, the CJI and his two senior-most colleagues. Additionally, for appointments to the high courts, the collegium must consult such other senior judges serving in the Supreme Court who had previously served as judges of the high court concerned. (On whether these views of the consultee-judges are binding on the collegium or not, the judgments are silent.)
•What’s clear, though, is that these dizzying requirements maintain no fidelity whatsoever to the Constitution’s text. Yet the court has been keen to hold on to this power. Indeed, when the Constitution was altered, through the 99th constitutional amendment, and when the collegium was sought to be replaced by the National Judicial Appointments Commission — a body comprising members of the judiciary, the executive and the general public — the court swiftly struck it down. It ruled, in what we might now call the Fourth JudgesCase (2015), that the primacy of the collegium was a part of the Constitution’s basic structure, and this power could not, therefore, be removed even through a constitutional amendment.
•But perhaps mindful of some of the hostility that the system was facing, the judgment also promised to “consider introduction of appropriate measures”, to improve the “collegium system”. The new resolution, it might well seem, is an effort towards this end. Unfortunately, though, the publications only serve to further underscore the deficiencies in the appointment process, which remains, as Justice P.N. Bhagwati once described it, “a sacred ritual whose mystery is confined only to a handful of high priests”.
📰 A big bang bailout
Recapitalisation of banks raises concerns about moral hazard
•The recapitalisation of public sector banks, announced by Finance Minister Arun Jaitley, has been touted as yet another big bang reform by the Central government. It is hoped that this reform will push nationalised banks to lend more actively in the coming months and bring about a quicker recovery of the economy by boosting private investment. What has been swept under the carpet, however, is the fact that recapitalisation is just a euphemism to describe what is essentially a bailout of banks using taxpayer money. Also, amidst all the fanfare and excitement about the massive Rs. 2.11 lakh crore bailout, the fact that banks are in the current mess mainly because of their mismanagement for political reasons has been ignored.
Public sector versus private sector banks
•Many who have justified the throwing of good money after bad have done so, however, with an important caveat. They have argued that the bailout should be accompanied by governance reforms that will safeguard the balance sheets of public sector banks from the ill-effects of populism in the future. While this sounds good in theory, it does not work as well in reality. Nationalised banks, which are supposed to be run for the benefit of the public, are in effect managed by bureaucrats who are accountable only to the political party that is in power. So, it is no surprise that these banks often end money to fund populist and crony pet projects of politicians who care more about the next election than the long-run health of banks. Eventually, when the banks end up with huge bad loans on their books, more reasons are given to bail them out of trouble, and the cycle continues.
•This is in contrast to private banks where owners, who have invested their own money and stand to lose it all in case of mismanagement, have a strong economic incentive keep a tab on managers who run their business. Such oversight, of course, is never perfect but is still superior to the almost complete negligence and gross mismanagement of books in the case of public sector banks. It may be true that private banks have not been immune to the problem of bad loans, which is a part and parcel of lending aggressively under a fractional reserve banking system. Yet, in the case of public sector banks, the implicit guarantee of their books by the government only worsens this cyclical problem by adding to it the risk of moral hazard. As nationalised banks are allowed to tap into taxpayer money whenever they are in deep financial trouble, they have very little reason to be careful while lending and more reason to take huge risks with their balance sheets. Incidentally, the same happens whenever the government protects private sector banks from the negative consequences of their actions.
•The only way to build a healthy and competitive banking system is to reform bank ownership and force banks to take responsibility for their actions. India is nowhere close to enacting such real big bang reforms.
