📰 Nine parties oppose proposal for simultaneous elections
Four parties support move; BJP, Congress stay away from consultations
•Political parties were divided on the issue of holding simultaneous Lok Sabha and Assembly elections during consultations with the Law Commission of India.
•As many as nine parties expressed their reservations while four parties supported the move.
•The two major national parties — the BJP and the Congress — stayed away from the Law Commission’s deliberations. The BJP has, however, written to the Law Commission Chairman, Justice B.S. Chauhan, stating that Prime Minister Narendra Modi has always argued in favour of simultaneous polls and sought time to submit their detailed response later.
•Justice Chauhan is learnt to have asked that all representations be submitted by July 31.
•The Congress said it would firm up its stand on the issue only after talking to allies and other political parties.
•Among the parties that met the Commission on Sunday, the Dravida Munnetra Kazagham (DMK), Janata Dal (Secular), and Aam Admi party (AAP) were strongly opposed to simultaneous elections and argued that the move was against “basic tenets of the Constitution.”
Impractical, says TDP
•The Telugu Desam Party (TDP) said while the One Nation-One Poll may be a “good idea”, it was “incompatible with the Constitution and impracticable.”
•DMK Working President M.K. Stalin’s letter, submitted by party MP Tiruchi Siva, pointed out, “The Working Paper does not seem to have considered that the Lok Sabha is also capable of being dissolved before its five year tenure. If such a situation were to happen, it is unclear whether all Legislative Assemblies will also be dissolved to synchronise the electoral process again.”
•“In a federal democracy you cannot think of simultaneous elections. This is a futile exercise. First and foremost poll reform should be to put a ceiling on expenditure but no one's talking about it,” senior JD (S) leader Danish Ali told The Hindu and added that the proposal was aimed against smaller regional players.
•On the other hand, the Telangana Rashtra Samithi (TRS) and the Samajwadi Party (SP) supported the move though the latter qualified it’s stand by saying that move should be implemented from the 2019 Lok Sabha polls. BJP ally, Janata Dal (United), too expressed support for simultaneous polls and mentioned that the proposal was part of the political resolution adopted at the party’s national executive meet on Sunday.
Always in poll mode
•TRS chief and Telangana Chief Minister K. Chandrashekhar Rao’s letter to the Commission said: “We know that four to six months of time is spent in conducting elections each time to the Lok Sabha and the State Legislatures. The entire State and District level administrative and security machinery is very busy with the conduct of elections twice in a period five years as per the current practice. Likewise, imposition of model code of conduct for such a long time is hampering developmental and welfare activities undertaken by the State government.”
•During deliberations on Saturday, the Trinamool Congress and CPI strongly argued against the move while NDA member Shiromani Akali Dal and the AIADMK backed the move. The AIADMK, however, qualified its support saying that the move should be implemented from the 2024 LS polls.
📰 The democratic mandate in Delhi
India is fortunate that its courts have not had to resort to the doctrine of necessity
•“Nations fail when institutions of governance fail. The working of a democratic institution is impacted by the statesmanship (or the lack of it) shown by those in whom the electorate vests the trust to govern,” writes Justice D.Y. Chandrachud in his concurrence to the Supreme Court’s judgment in Government of NCT of Delhi v. Union of India. A story from across the border illustrates precisely what the judge means.
A cautionary tale
•The Indian company Mahindra & Mahindra is today well-known for its rugged vehicles. The enterprise began when two brothers with engineering backgrounds and bureaucratic careers quit to form a company to manufacture the American Willys jeep on license in India. That jeep has had several avatars and its descendants, the Scorpios and the XUVs, still rule Indian roads. The company however began as Mahindra and Mohammed.
•The Mohammed in question was Sir Malik Ghulam Muhammed. A chartered accountant who looked after the financial side of the enterprise, he was formerly a civil servant of the Indian Railway Accounts Service. After Partition he left the company for Pakistan and became its first Finance Minister under Liaquat Ali Khan. When Liaquat was assassinated, Pakistan’s Governor General, Khawaja Nazimuddin, became Prime Minister and Mohammed, Pakistan’s next Governor General.
•Unlike India, which had adopted its Constitution in 1950, Pakistan had not succeeded in framing a Constitution. The Government of India Act 1935 and the Indian Independence Act 1947 continued to operate. When language riots broke out in East Pakistan in the 1950s, Governor General Ghulam Mohammed dismissed Prime Minister Nazimuddin, resorting to reserve powers under the colonial scheme of the Government of India Act of 1935. When the Constituent Assembly of Pakistan sought to limit the Governor General’s powers, he dismissed the Assembly in 1954.
•The Assembly petitioned the Sindh High Court, which ruled in its favour, but the decision was overruled by a split decision in the Pakistan Supreme Court by a bench headed by Chief Justice Muhammad Munir. Justice Munir had held that it was necessary to go beyond the constitution to the common law, to general legal maxims, and to English historical precedent. He had relied on Bracton’s maxim, “that which is otherwise not lawful is made lawful by necessity”.
•An appointed Governor General thus effectively became the ruler of Pakistan. Ghulam Muhammed however fell ill, and appointed another former bureaucrat, Iskander Mirza, as acting Governor General. In 1955 Mirza dismissed Ghulam Muhammed, to become Governor General himself. Later when Pakistan’s Constitution was finally adopted in 1956, Mirza became President. In 1958 he was overthrown by his own hand-picked army commander, General Ayub Khan. When martial law was challenged in the Supreme Court in 1958, the doctrine of necessity was again used to repel the challenge. Judicial interpretation thus made necessity the mother of martial law.
•In recent times, Najeeb Jung and Anil Baijal, as Lieutenant Governors of Delhi,seemed to play Governor General. They overruled the elected government of Arvind Kejriwal (himself another former bureaucrat) on almost every issue of administration. They relied on a proviso to Article 239AA of the Constitution, which provides that “in the case of difference of opinion between the Lieutenant Governor and his Ministers on any matter, the Lieutenant Governor shall refer it to the President for decision and act according to the decision given thereon by the President and pending such decision it shall be competent for the Lieutenant Governor in any case where the matter, in his opinion, is so urgent that it is necessary for him to take immediate action, to take such action or to give such direction in the matter as he deems necessary.”
Sealed by the court
•Thus in almost all administrative matters of consequence, the Lieutenant Governor acted as though he was the final word and that it was not necessary for him to seek the aid and advice of the elected government. A government for 20 million residents of Delhi was told that it could not govern if the Lieutenant Governor chose to not let them govern. Last week’s Supreme Court judgment in the Government of the NCT of Delhi has finally put an end to such constitutional coups. Cutting to the heart of all the political and constitutional wrangling, the judgment unanimously affirms the principle of an elected representative being vested with the power to administer democratically. It negates the bureaucratic usurpation of power that sought to operate in constitutional interstices, at the instance of an inimical central government.
•The majority judgment of Chief Justice Dipak Misra says: “There is no room for absolutism. There is no space for anarchy… Ours is a parliamentary form of government guided by the principle of collective responsibility of the Cabinet. The Cabinet owes a duty towards the legislature for every action taken in any of the Ministries and every individual Minister is responsible for every act of the Ministry… This principle of collective responsibility is of immense significance in the context of ‘aid and advice’. If a well deliberated legitimate decision of the Council of Ministers is not given effect to due to an attitude to differ on the part of the Lieutenant Governor, then the concept of collective responsibility would stand negated.”
•Justice Chandrachud in his concurrence holds that, “In a cabinet form of government, the substantive power of decision making vests in the Council of Ministers with the Chief Minister as its head. The aid and advice provision contained in the substantive part of Article 239AA(4) recognises this principle. When the Lieutenant Governor acts on the basis of the aid and advise of the Council of Ministers, this recognises that real decision-making authority in a democratic form of government vests in the executive. Even when the Lieutenant Governor makes a reference to the President under the terms of the proviso, he has to abide by the decision which is arrived at by the President.”
•Justice Ashok Bhushan while broadly concurring with the other two judgments holds that the “LG has to be kept informed of all proposals, agendas of meeting and decisions taken. The purpose of communication of all decisions is to keep him posted with the administration of Delhi. The communication of all decisions is necessary to enable him to go through the proposals and decisions so as to enable him to exercise the powers as conceded to him under 1991 Act and Rules 1993… the purpose of communication is not to obtain his concurrence….”
•Three and a half years of a five-year term have been lost in a constitutional wrangle, caused as much by the bureaucracy as by the politicians. Apart from administration, what has suffered is the reputation of the bureaucracy for impartial, apolitical governance. Bureaucrats have picked sides in the political battle and have lost, in court and in public esteem. Administrative paralysis has been used for political chokeholds.
A telling pun
•I leave you with one last story of Pakistan. In 1958 the President responded to a state of political chaos by declaring martial law, and calling out the army. A section of the public punned on the term ‘martial law’, saying, “Pakistan mein ab toh mashallah ho gaya (by the grace of God, things in Pakistan are well now).” We in India are fortunate that our courts have not had to resort to the doctrine of necessity. Our politicians and bureaucrats may have in this instance failed, but the Supreme Court has, for the moment, delivered us from mischief. Amen to that, and may our quasi-federal Union long endure as a democratic polity.
📰 A tale of two economies: the US and the UK
With slow growth and Brexit problems, the U.S. and the U.K. have reason to regard India with some envy
•Former Prime Minister Manmohan Singh claims that India’s economy has been “systematically dismantled” by the BJP government. He should know that every nation’s economy is only a glass half full. Two of the world’s biggest economies, the U.S. and the U.K., are both facing uncertain economic times.
Economic woes
•By next summer, U.S. President Donald Trump could claim to have beaten the 10-year growth period of 1991 to 2001. Cutting interest rates, injecting billions of dollars into the economy, cleansing the financial system so that banks can resume lending, tax cuts by the Barack Obama administration, and spending increases helped the U.S. economy recover. But average growth is still only 2.2% without a single annual increase of over 3% over the past 10 years. Half the growth benefits during Mr. Obama’s tenure went to the top 1% of households, and the lack of real income growth for society’s lower levels led to the discontent that pushed Mr. Trump to the top position. Problems are likely to start with the financial sector, tightening policy by central banks, and overvalued asset prices. The U.S. Federal Reserve has the difficult task of raising interest rates without precipitating a downward slide when the impact of the fiscal boost is fading. If this happens, Mr. Trump will be seeking a second term when the U.S. economy is in the doldrums.
Brexit troubles
•In the U.K., the situation is worse. Leaving the European Union (EU) means getting into uncharted waters. Much of the acrimony is within the ruling Conservative Party over the exit plan, leaving Prime Minister Theresa May to negotiate both with the EU and her party simultaneously. Britain’s growth rate over the past year is half its average over the past 25 years, investment is stagnating, mortgage approvals are down by nearly a quarter, and almost half of EU businesses have cut back on their investment since Britain decided to leave the EU.
•In the first quarter of this calendar year, the growth rate was slowest for five years. An expected interest rate rise has been deferred amidst talk of possible recession. Over the past year, inward investment has dropped by $181 billion, outward investment has risen by $120 billion and real income has fallen by 10% as employers resort to low-paid, low-skilled casual work. The services sector has become dependent on low-end EU labour. If visas are required for these people after Brexit, the outcome will be devastating. The only bright sign is that high-tech companies that threatened to leave Britain with the prospect of leaving the EU have not yet shown signs of doing so.
•There is disagreement among the Conservatives over future links with the EU’s single market and customs union. To summarise, a country like Norway can be in the single market but not the EU: this involves eliminating tariffs, quotas and taxes on trade, and allowing free movement of goods, services, capital and people against payments towards the EU’s budget, and accepting the jurisdiction of the European Court of Justice. The EU is not only a single market, it is also a customs union. Thus a country like Turkey is in the customs union, which does not cover food, agriculture or services, but not in the single market or the EU. This option would solve the border problem between the Irish Republic and Northern Ireland, which would remain open, but the U.K. would not be able to strike free trade agreements with other countries, which remains the exclusive mandate of the EU. A Free Trade Area is one where there are no tariffs or taxes or quotas on specified goods and/or services from one country entering another. The negotiations to establish it can take years and there are normally exceptions, so agriculture and fisheries might be exempted, certain industries protected, and some goods not covered at all.
•The Theresa May government confronts the painful truth that leaving the single market and the customs union will introduce barriers to buying and selling with Europe. Ms. May attempts to solve this dilemma by promoting her plan for a hybrid arrangement called a customs partnership, wherein on behalf of the EU, Britain would collect tariffs set by the customs union on goods entering the U.K., and if those goods do not leave the U.K., and British tariffs on them are lower, companies could claim the difference. This project has been criticised by hard line members of her cabinet who prefer a clean break with the EU. They had put forward an alternative ‘maximum facilitation’ plan by which goods would be tracked electronically and pre-cleared with tax authorities. This procedure would work with an established ‘trusted trader’ scheme to remove the need for physical customs checks and enable companies to pay duties every few months rather than each time they crossed the border. Both schemes are complex and lack clarity. More importantly, there is no indication that the EU will agree to either option, which in any case would not be ready by 2020 when the transitional period expires.
•The EU wants the formalities completed by October this year while Ms. May is apparently counting on Brussels caving in at the eleventh hour rather than precipitating the mutual damage arising from the absence of any deal. But the EU can afford a waiting game while the U.K. cannot. With a succession of defeats in the Upper House, an uncertain majority in the commons and the deadline of March 2019 for the U.K.’s exit from the EU fast approaching, the public which voted to leave the EU might well ponder how prepared they are for a future outside Europe. Ms. May depends on the erratic tolerance of her own party to survive. Discussions and divisions have centred, with considerable ambiguity, on what constitutes a meaningful say for Parliament on any future Brexit deal. Ms. May argues that Parliament cannot tie her hands in the negotiations and should not act against the will of the majority that voted for Brexit.
Consequences of leaving the EU
•Leaving the EU will affect Britain in many ways. It will be excluded from the EU space project Galileo, and lose access to the EU global positioning system that will challenge the American GPS as a market leader. It will lose EU funding for scientific research. The U.S. is likely to drive a very hard bargain for rights for British airlines. Britain will also lose its place as a leading country in the EU’s customs union. This asset is to be replaced by new trading relationships that will have to be painfully negotiated by Britain one by one. The growth model of inward investment based on Britain’s technology and access to the world’s biggest free trade area will disappear, and what will remain is an overpriced housing market in danger of collapse. Both the U.S. and the U.K. have reason to regard India’s economic prospects and political stability with some envy.
📰 Discriminatory practice: on reservation for the disabled
There is a gap between the mandated reservation percentage for disabled persons and the actual numbers
•Reports suggest that Jawaharlal Nehru University in New Delhi may have been in violation of disability reservation provisions in student selection and faculty recruitment. The matter came to light when the aspirants who appeared for the M.Phil/PhD entrance examination did not get their final results, even though results for other degree courses were out around two months ago. In May, the JNU administration put up a notice on its website that stated, “This is for information of all that declaration of results of JNUEE 2018-19 for M.Phil/Ph.D. programme has been delayed, as the matter is sub judice.”
•The reason it is sub judice is that a writ petition was filed by the National Federation of the Blind (NFB) challenging the non-fulfilment of reservation requirements for the differently abled in admissions to M.Phil. and PhD courses. Similarly, in the latest advertisement for faculty recruitment by the university, not a single post was reserved for differently abled persons. This matter too went to the Delhi High Court after a plea was made by an NGO, Sambhavna.
•This is not just one case relating to a single institution; it is the proverbial tip of the iceberg. Pervasive violations of disability reservation in the last two decades show a lack of progressive intent on the part of the authorities. This flies in the face of Parliament passing the Rights of Persons with Disabilities (RPwD) Bill and enacting it as a law in 2016.
•On paper, the RPwD Act appears commendable as it has increased the quota of reservation for persons with benchmark disabilities from 3% to 4% in government jobs and from 3% to 5% in higher educational institutions. Since the Act came into force, there have been multiple instances of persons with disabilities having to fight their cases in courts to ensure that government and educational institutions comply with the disability reservation provisions.
•In government jobs and higher educational institutions, where the total seats offered are fewer, disability reservation takes a back seat. The argument often given by authorities is that due to the paucity of seats, the disability reservation cannot even be calculated. Many premier educational institutions and various State governments have been in violation of the prior Persons with Disabilities Act of 1995 and of the RPwD Act, 2016. The system is designed such that disability is seen as the inability of a person and therefore many differently abled candidates are not recruited, additionally contributing to the mounting huge backlog of vacancies.
•Many think that persons selected under reserved categories, especially under the differently abled category, are not meritorious candidates and their selection brings down the quality of institutions in which they are selected. If this mindset prevails, we must expect the systemic violation of disability reservation to continue.
📰 Fish samples in Chennai test positive for formalin
Minister promises action against those using carcinogen
•As many as 11 out of 30 samples of fish species purchased from Chinthadripet and Kasimedu, the two major fish markets in Chennai, on two different days, have tested positive for formalin, a cancer-inducing chemical used illegally to preserve fish.
•The fish were tested by scientists of the Tamil Nadu Dr. J. Jayalalithaa Fisheries University exclusively for The Hindu.
•A low-cost formalin detection kit developed by researchers of the State-run university was used to test the samples purchased by The Hindu for ascertaining if they contained the carcinogen that is used widely as a preservative and disinfectant.
•The tests were conducted on July 4 and July 8, the days when the fish were purchased.
•Only one of 13 samples of fish purchased last Wednesday from the Chinthadripet, Velachery and Neelankarai markets tested positive at the university’s referral laboratory in Madhavaram.
•However on Sunday as many as 10 of the 17 fish samples purchased from Chinthadripet and Kasimedu markets tested positive for the carcinogen, causing alarm.
•Formalin causes irritation in the eyes, throat, skin and stomach. In the long run continued exposure causes harm to the kidneys, liver and can even cause cancers.
•This is the first time samples of fish in Tamil Nadu have tested positive for formalin.
•Food Safety and Standards Authority of India (FSSAI) officials have been undertaking tests at fish markets and harbours across the State to test for formalin following a scare in neighbouring Kerala that fish sourced from here were chemically contaminated.
•Fisheries Minister D. Jayakumar said use of formalin as a preservative cannot be allowed at any cost. He said tests had been conducted in Thoothukudi and other places based on information received by the department but none of those samples had any formalin.
Samples to be lifted
•“Since The Hindu has brought the [Chennai] test results to our notice, we will lift samples [from fish markets] and conduct tests. We will not hesitate to take strict action against those indulging in such acts,” Mr Jayakumar said.
•Both big and small lizard fish or panna or kezhanga and paarai (Malabar trevally) were found to have formalin content of above 20 ppm (parts per million). Other varieties such as sura, octopus, eri vavvaal, ottu kanava, peikanava and kelithi had formalin of around 5 ppm.
•For the test, a two gram piece of meat from the fish was taken and put inside four ml of diluent and shaken so that the formalin will get into it. Then this diluent was poured into the bottle containing the reagent that turned yellow revealing that it had tested positive.
•“It is a very sensitive reagent and can detect up to 0.5 milligram per kilo. The actual test takes only 10 minutes,” explained Felix, Vice Chancellor of the University.
•Fish industry experts said that formalin or formaldehyde is sprayed on the fish or injected into the fish or the fish is dipped into the solution. This helps keep the fish fresh for a longer time. Usually people who buy fish check the gills for freshness, if it is red it denotes freshness, when formalin is used the gills remain red for longer periods. In some cases, fishermen also apply kumkum to retain redness.
📰 The tree as an urban coordinate
A mature tree creates a sense of civilisation in a way that a manicured green belt cannot
•The ongoing protests in some of India’s largest cities (these include Delhi and Mumbai) to save natural and not built entities — trees in urban spaces — are remarkable, even though we understand that cities are centres of construction; spaces curated and created mainly by the human hand.
•Hundreds of Delhi residents took to the streets in protest against a plan to have 14,000 trees cut for the “redevelopment” of government colonies in South Delhi. In Mumbai, citizens have been fighting for years to save over 2,000 trees in Aarey, slated to be felled for another kind of development — to make way for a metro line car shed.
•The idea of an urban tree, one that is outside of a lush forest, does not resonate ecologically as much as a forest or a ‘pristine’ national park. Yet for urban activists protesting for their trees to be saved, the fight is for the tree they can see near their front porch; not one that has been marked for transplantation in unreachable parts of the city. For them, it is the tree that situates a particular part of the city by becoming an immutable part of the integrity of the landscape.
Trees outside a forest
•It is well known that forests are invaluable as ecological entities. The UN’s REDD, or Reducing Emissions from Deforestation and Forest Degradation in Developing Countries, programme lays emphasis on planting and maintaining forests as a means to counter climate change. In India, forests are governed under the Forest (Conservation) Act, 1980, State laws, and the Indian Forest Act, 1927, which lay down elaborate rules for the conservation and diversion of forests. Despite this, forests are the first targets when it comes to projects such as mining, dams, highways, industrial projects and so on, to be offset by compensatory afforestation. Former Minister of Environment, Forests and Climate Change Prakash Javadekar once remarked that diversion of forest should be seen as ‘reforestation’. As far as the issue of trees outside forest areas is concerned — city trees — the situation is much worse.
•Trees in cities usually come under State Tree Acts; they can have variable descriptions. In Delhi, for example, these are usually avenue or colony trees. In the case of Aarey, it is a green belt or green patch. The monikers of ‘green belts’ or ‘green cover’ suggest a transferable quality in management — that the city would not be worse off if another tree or green belt comes up elsewhere, as long as it is green. Therefore, it is important that urban citizens are fighting to keep city trees where they are. They argue that the age and very place of the tree is an important fulcrum for their activism. In a sense then, a mature tree creates a sense of civilisation.
Shared habitat
•As India moves towards more urbanisation, can cities be looked at more as shared habitats between humans and biodiversity, rather than a jungle of buildings? The question, even if not consciously faced through planning strategies, will need to be tackled in one form or the other as cities become progressively more unliveable. With its year-round hazardous air quality and an increase in cars and inhabitants, Delhi is a tough city to live in. Trees in Delhi do not just purify the air; they are also visual relief.
•The fact that cities need open spaces and greenery is clear from the number of people crowding parks, be it Central Park in New York or Lodhi Gardens in New Delhi. The earlier wave of tree plantation in Delhi which included Sarojini Nagar, Nauroji Nagar, and Netaji Nagar, marked for redevelopment, have trees beneficial for biodiversity — native and naturalised trees such as neem, banyan, peepal, semal, arjuna, and siris. These large, old trees have become markers for Delhi. Yet, several new constructions in the cities belie these values even though they look green or have green belts. Buildings with basements are made in ways that allow only shallow beds which would not withstand deep-rooted, native trees. In sum, many new apartment complexes have green belts that do very little for biodiversity or the ecological idea of greenery.
•Thus the fight for Delhi’s trees is also a fight for the right kind of species to be allowed to grow to the right size; this flies in the face of quickly manicured or manufactured ‘green belts’. It outlines a struggle for cities which have a civilisation of shared meaning and relationships between people and nature. And clearly this relationship comes through size, age and the tree as an optic for a lived, native habitat for birds and wildlife. Urban biodiversity then can be its own form of civilisation — one that our air as well as our urban identity needs desperately.
📰 No one wins: on the US-China trade war
The U.S.-China trade war is on; unless saner counsel prevails, it will affect others too
•The trade wars have finally begun. After exchanging several threats over the last few months, both the United States and China implemented a tariff of 25% on imports worth $34 billion last Friday. This marks the official beginning of what China dubs as “the biggest trade war in economic history”. While this trade war is far from the biggest the world has seen, it has the potential to cause some significant damage to the world economy. U.S. President Donald Trump, who began the year by imposing tariffs on imported solar panels and washing machines, has vowed to possibly tax all Chinese imports into the U.S., which last year added up to a little over $500 billion. Mr. Trump’s tariffs against China will likely resonate with voters who believe in his “America First” campaign and perceive the trade deficit with China as a loss to the U.S. economy. China, not surprisingly, has responded by targeting American exports like soybean and automobiles, a move that could cause job losses in American states that accommodate Mr. Trump’s voter base. Other major U.S. trading partners such as the European Union, Mexico, and Canada have also slapped retaliatory tariffs on various U.S. goods.
•In a globalised world, no country can hope to impose tariffs without affecting its own economic interests. Apart from disadvantaging its consumers, who will have to pay higher prices for certain goods, tariffs will also disrupt the supply chain of producers who rely on foreign imports. So both the U.S. and China, which have blamed each other for the ongoing trade war, are doing no good to their own economic fortunes by engaging in this tit-for-tat tariff battle. The minutes of the U.S. Federal Reserve June policy meeting show that economic uncertainty due to the trade war is already affecting private investment in the U.S., with many investors deciding to scale back or delay their investment plans. China, which is fighting an economic slowdown, will be equally affected. The ongoing trade war also threatens the rules-based global trade order which has managed to amicably handle trade disputes between countries for decades. It could also isolate the U.S., which has refused to settle differences through serious negotiations, as other global economies strike trade deals on their own. In March, for instance, 11 Asia-Pacific countries went ahead to sign a trans-Pacific trade deal while leaving out the U.S., which had pulled out of the Trans-Pacific Partnership in early 2017. If global trade tensions continue to simmer, however, it may not be too long before countries resort to other destructive measures such as devaluing their currencies to support domestic exporters. The world economy, which is on a slow path to recovery, can do without such unnecessary shocks.
📰 Six bids to supply 110 fighters for IAF
F-16, Gripen, Boeing F-18, Rafale, Eurofighter Typhoon and MiG-35 enter the contest
•Six global aircraft manufacturers have responded to a Request for Information (RFI) from the Indian Air Force to supply 110 fighter aircraft. The deadline for the RFI was July 6. All six manufacturers have earlier bid for the Medium Multi-Role Combat Aircraft (MMRCA), which was cancelled in 2015.
•Officials confirmed that six bids have been received, of which Lockheed Martin F-16 and SAAB Gripen are single-engine fighters, while Boeing F-18, Dassault Rafale, Eurofighter Typhoon and United Aircraft Corporation MiG-35 are twin-engine ones.
•“The bids will be evaluated after which the IAF will issue the Request For Proposal (RFP) with the exact specifications of the aircraft to be procured. The RFP is expected by early next year,” an official source said.
•The RFI, issued on April 6, states that the government plans to buy 110 fighters jets, of which 85% will have to be built in India under the ‘Make in India’ programme in partnership with a “Strategic Partner/Indian Production Agency.”
•The procurement will be processed through the Strategic Partnership (SP) model under the Defence Procurement Procedure. However, the SP model itself needs some clarification which could delay the process.
•Air Force sources expressed confidence that the technical evaluation and trials can be completed very quickly, as all the aircraft have been extensively tested earlier.
•“Once the process starts, from the technical evaluation to the down select of one aircraft, can be completed in less than two years. After that, it depends on how fast the contract negotiations can be completed,” a source said.
•Earlier, the IAF was looking for a single-engine jet to replace the MiG-21s and MiG-27s being phased out of service, but the RFI did not specify it, opening up the contest to both single-and twin-engine jets. Officials said both configurations were equally competent and the final choice would depend on the price and extent of technology transfer.
•According to informal estimates, the entire cost could be worth over $15 billion. Single-engine aircraft will cost lower than the twin-engine jets, both in unit and operational costs.
•The move comes almost two decades after the IAF began the last major effort to acquire fighters in large numbers. The effort culminated in the global tender for 126 fighters under the MMRCA deal which was cancelled in 2015 after the Modi government decided to buy 36 Rafale fighters from France under a government-to- government deal.
📰 Centre plans stronger defences for key data
Information Security Policy and Guidelines to be updated.
•Worried about sensitive information making its way into the Internet, the Home Ministry is upgrading policy to secure government data and control access to it.
•A senior Ministry official said that earlier the files were locked in a cupboard and accountability could be fixed, but with the advent of Digital India, a number of issues were in a grey area.
•Home Minister Rajnath Singh, who recently presided over a meeting to review the evolving cyberthreats, directed that the National Information Security Policy and Guidelines (NISPG) be upgraded and updated for the government sector.
•In 2013, cybersecurity, which was the sole preserve of the Home Ministry, was moved to the National Security Council Secretariat (NSCS) under the Prime Minister’s Office. The critical infrastructure was moved to the National Technical Research Organisation and the non-critical part to the Ministry of Electronics and Information Technology.
•An official said the new policy would cover issues pertaining to the Official Secrets Act.
Hardware issues
•“There are issues relating to physical security of a computer. Like what happens if the device becomes obsolete? What about the hard disk, will it be destroyed before the computer is discarded? Then there are issues relating to the network as well. If information is riding on own cyber cable, then everything can be encrypted, but if it is riding on a commercially available one, then you will have to make sure that guidelines are complied with,” the official said. Home Ministry spokesperson Ashok Prasad said the consultation process to revise the guidelines was on.
•“Basically, the whole policing system in India that began in 1860 is now being replicated in cyberspace. It will evolve gradually. The new guidelines will also take care of that,” the official said.
•“If 50 people are accessing some data, it requires a wider security network. Audit trail has to be left, red flags should be raised,” the official said.
📰 Govt. taps RBI to track all financial transactions
Central bank asked to devise infotech framework to keep a tab on non-cash financial transactions
•In a move aimed at widening the crackdown on black money and following the money trail flowing in and out of thousands of shell companies, the Centre is planning to set up an information technology (IT)-based mechanism to keep a tab on all non-cash, financial transactions in the country.
•Highly-placed government sources involved in devising the initiative said the Reserve Bank of India (RBI) had been asked to develop the IT infrastructure for this purpose. There have been a series of interactions over the past one month to discuss the issue, with these parleys attended by top government officials from the Ministries of Finance and Corporate Affairs as well as RBI officials. Currently, the idea is to make the RBI the sole repository of such information, which will not be made available to other agencies such as the income tax department and the enforcement directorate as a default. Such agencies may be required to make specific requests to the central bank if they want information on a particular set of entities.
•An official aware of the development said that although the data will be captured for all transactions irrespective of the size of the transactions, the large ones would be relevant for enforcement purposes. Under the Prevention of Money Laundering Act, banks and financial institutions are already required to alert the Financial Intelligence Unit, under the Finance Ministry, to any suspicious transactions, cash or otherwise. Cash transactions of more than ₹10 lakh (including a series of transactions integrally connected to each other and exceeding ₹10 lakh in a month), need to be reported to the FIU.
7-day deadline
•All suspicious transactions need to reported to the unit within seven days after it is concluded that those are suspicious in nature.
•The move to track all financial transactions is the latest in a series to curb black money and identify shell companies, sources said. Following the 2016 demonetisation exercise that rendered more than 86% of the currency in circulation invalid, it was found there had been a significant spurt in the operations of shell firms that typically have no assets or active businesses.
•The Centre has shut down more than two lakh such entities. More than two lakh other firms that have not been carrying out operations have been sent notices. Depending on their responses, a decision would be taken on how many would be deregistered.
•In FY17, the FIU had received more than 15.9 million Cash Transaction Reports and 4.73 lakh Suspicious Transaction Reports.
📰 Get to know currency derivatives
Currency derivatives are considered to be one of the best options to manage any risk against foreign currency exchange rate volatility.
•Currency derivatives are considered to be one of the best options to manage any risk against foreign currency exchange rate volatility. Here is a low-down on this hedging instrument:
What are currency derivatives?
•Currency derivatives are exchange-based futures and options contracts that allow one to hedge against currency movements. Simply put, one can use a currency future contract to exchange one currency for an another at a future date at a price decided on the day of the purchase of the contract. In India, one can use such derivative contracts to hedge against currencies like dollar, euro, U.K. pound and yen. Corporates, especially those with a significant exposure to imports or exports, use these contracts to hedge against their exposure to a certain currency.
•While all such currency contracts are cash-settled in rupees, the Securities and Exchange Board of India (SEBI), early this year, gave a go-ahead to start cross currency contracts as well on euro-dollar, pound-dollar and dollar-yen.
How can one trade in currency derivatives?
•The two national-level stock exchanges, BSE and the National Stock Exchange (NSE), have currency derivatives segments. The Metropolitan Stock Exchange of India (MSEI) also has such a segment but the volumes are a fraction of that witnessed on the BSE or the NSE. One can trade in currency derivatives through brokers. Incidentally, all the leading stock brokers offer currency trading services too.
•It is just like trading in equity or equity derivatives segment and can be done through the trading app of the broker. While a dollar-rupee contract size is $1,000, one can trade by just providing the 2-3% margin.
Why were such derivatives introduced on exchange platforms?
•Prior to the introduction of currency derivatives on exchanges, there was only the OTC – over the counter – market to hedge currency risks and where forward contracts were negotiated and entered into. It was kind of an opaque and closed market where mostly banks and financial institutions traded. Exchange-based currency derivatives segment is a regulated and transparent market that can be used by small businesses and even individuals to hedge their currency risks.
Are the derivatives popular?
•The currency segment was unveiled in 2008 and since then, the volumes had registered a steady rise. In June, BSE reported an average daily turnover of ₹33,961 crore on its currency derivatives platform while NSE clocked ₹29,161 crore. MSEI reported a daily average turnover of only ₹239 crore in June. The growth in the segment can further be ascertained from the steady rise in the turnover over the years. For instance, the average daily turnover of the currency segment of NSE was ₹12,705 crore in 2014-15, which rose to ₹18,603 crore in 2015-16 and thereafter to ₹20,779 crore in 2017-18. In the current financial year till date, the average daily turnover is pegged at ₹29,008 crore.
