📰 Threat to human rights is highest in police stations: CJI
Going by recent reports, even the privileged are not spared third-degree treatment, he says
•Chief Justice of India N.V. Ramana on Sunday said police stations pose the “highest threat” to human rights and dignity, which are ‘sacrosanct’.
•“The threat to human rights and bodily integrity is the highest in police stations... Going by recent reports, even the privileged are not spared third-degree treatment,” the Chief Justice said.
•Custodial torture and police atrocities still prevail despite constitutional guarantees, he said.
Legal representation
•Lack of effective legal representation at police stations is a huge detriment to arrested or detained persons. The first hours of arrest or detention often decide the fate of the case for the accused, the CJI said.
•The top judge was speaking at the release of National Legal Services Authority’s legal services app and vision statement at Vigyan Bhawan.
•The CJI had a word of advice for his fellow judges.
•Chief justice Ramana noted that if the judiciary wants to gain the trust of the poor and vulnerable, it has to assure the marginalised that it exists for them.
•For the longest time, he noted, the vulnerable sections have lived outside the system of justice.
•“If judiciary wants to garner the faith of the citizens, we have to make everyone feel assured that we exist for them. For the longest time, the vulnerable population has lived outside the system of justice,” the CJI said .
•Lengthy, expensive formal processes followed by courts dissuade the poor and the vulnerable. The judiciary’s toughest challenge today is to break these barriers, he said.
•“If we want to remain as a society governed by the rule of law, it is imperative for us to bridge the gap of accessibility to justice between the highly privileged and the most vulnerable. For all times to come, we must remember that the realities of socio-economic diversity which prevail in our nation cannot ever be a reason for denial of rights. Let our past not determine our future...”
Digital divide
•Chief Justice Ramana said the digital divide has not helped the cause of easy access to justice. Rural and remote areas suffer from lack of connectivity.
•“Accessing justice in India is not merely an aspirational goal. We need to work hand in hand with various wings of the government to make it a practical reality.”
•The Chief Justice said he has already written to the government about the urgent need to bridge the digital chasm “on a priority basis”.
•“Let us dream of a future based on legal mobility, a future where equality is a reality. That is why the project ‘Access to Justice’ is an unending mission,” CJI Ramana said.
📰 Revisit the idea of ‘aging out’ India’s coal plants
A more nuanced analysis considering the various characteristics of individual plants would be appropriate
•As part of the Union Budget address for 2020-21, the Finance Minister, Nirmala Sitharaman, said that the shutting down of old coal power plants, which are major contributors to emissions, will aid the achievement of India’s Nationally Determined Contributions, an idea which has been endorsed by the Power Minister, R.K. Singh.
Some studies cite advantages
•Some research studies have also argued in favour of it, citing the economic and the environmental benefits of shutting down coal plants older than, say, 25 years. It is argued that the availability of under-utilised newer (and presumably more efficient) coal-based capacity means that shutting down older inefficient plants would lead to improved efficiencies, reduced coal usage, and hence, cost savings.
•Further, it is argued that it would be uneconomical for old plants to install pollution control equipment required to meet the emission standards announced by the Environment Ministry, and hence it would be better to retire them. The recent order from the Central Electricity Regulatory Commission (CERC) allowing Delhi’s BSES distribution company to exit its concluded 25 year old power purchase agreement with the National Thermal Power Corporation Limited’s Dadri-I generating station, also lends some credence to this.
•Since plants older than 25 years make up around 20% of the total installed thermal capacity in the country and play a significant role in the country’s power supply, decisions regarding their retirement merit finer scrutiny to see if the claimed benefits really accrue.
The benefits
•How significant are the potential benefits?
•While there are some old plants tied up in expensive power purchase agreements, as in the case of the CERC order, there are also several old plants, which generate at lower costs. For instance, plants such as Rihand, Singrauli (both Uttar Pradesh), and Vidhyanchal (Madhya Pradesh), are all over 30 years old and have very low generation costs of around ₹1.7/kWh, which is lower than the national average. This may be due to locational advantage rather than efficiency, as older plants are likely to be located closer to the coal source, reducing coal transport costs. However, this just highlights the complexity of the issue, since efficiency does not naturally translate to savings.
A savings analysis
•Indeed, our analysis suggests that the total savings in generation cost from shutting down plants older than 25 years would be less than ₹5,000 crore annually, which is just 2% of the total power generation cost. These savings may not be sufficient to even pay for the fixed costs (such as debt repayment) that would have to be paid anyway, even if the plants are prematurely retired. Similarly, savings in coal consumption by replacing generation from plants older than 25 years with newer coal plants are also likely to be only in the 1%-2% range.
•The argument about older plants finding it uneconomical to install pollution control equipment to meet environmental norms is a stronger one, as all coal plants should indeed reduce emissions. However, even here, the argument is not black-and-white. There are some old plants that may continue to be economically viable even if they install pollution control equipment as their current fixed costs (which would increase with pollution control equipment installation) are very low. Indeed, about half the coal capacity older than 25 years has already issued tenders for pollution control equipment installation.
Risks with retirement
•The question then becomes whether these limited savings are worth the risks associated with early retirement of coal plants, especially given the current trends in the country’s power sector. To support the growing intermittent renewable generation in the sector, there is an increasing need for capacity that can provide flexibility, balancing, and ancillary services. Old thermal capacity, with lower fixed costs, is a prime candidate to play this role until other technologies (such as storage) can replace them at scale. Further, the capacity value of the old capacity is critical to meet instantaneous peak load, and to meet load when renewable energy is unavailable.
•There is also a political economy risk, as aggressive early retirement of coal-based capacity, without detailed analyses, could result in real or perceived electricity shortage in some States, leading to calls for investments in coal-based base-load capacity by State-owned entities. About 65 gigawatts (GW) of thermal capacity is already in the pipeline, of which about 35 GW is in various stages of construction. This is likely in excess of what the country needs, and further addition to it, driven by State political economy considerations, will lead to stranded assets and locked-in resources.
•This is not to say that no old plant should be retired. However, using age as the only lever to drive these decisions is too blunt an instrument, and can prove counter-productive. Instead, a more disaggregated and nuanced analysis, considering the various technical, economic and operating characteristics of individual plants and units, while also accounting for aspects such as intermittency of renewables, growing demand, and need to meet emission norms, would be appropriate to make retirement-related decisions. Hence, it may be prudent to let old capacity fade away in due course, while focusing on such detailed analysis and weeding out the needless capacity in the pipeline, to derive long-term economic and environmental benefits.
📰 The looking glass of history in Afghanistan
The reason for the U.S.’s failure is no different from that of the Soviets; India too can hardly impact the ground situation
•Mikhail Gorbachev became General Secretary of the Communist Party of the Soviet Union in March 1985. By then Soviet forces had been in Afghanistan for over five years. They had failed to successfully combat the mujahideen groups, most of whom were based in Pakistan. The mujahideen received crucial support from the United States but the critical factor was their Pakistan base. Secure with the U.S. fully behind it, Pakistan knew that the Soviet Union would not risk crossing the Durand Line to take armed action on Pakistani territory.
•In his insightful book, The Great Game in Afghanistan: Rajiv Gandhi, General Zia and the Unending War, Kallol Bhattacherjee records that immediately after becoming the Soviet Union’s supreme leader, Mr. Gorbachev had met the Pakistani dictator in Moscow. He had warned him that “Moscow would ensure that Pakistan faces the consequences of backing the mujahideen”. Zia was unfazed by the threat because he knew that the new Soviet leader was posturing.
From the USSR to the U.S.
•Thirty-two years later, the wheel of history had turned. It was the United States which was bogged down in Afghanistan. For 16 years it had, despite a military surge, failed to quell the Taliban insurgency even though the group merely had the support of Pakistan. The reason for the U.S.’s failure was no different from that of the Soviets. It could not carry the war into the territory of Pakistan, now armed with nuclear weapons; destabilising such a state would have incalculable consequences.
•Now, a new U.S. leader, President Donald Trump announcing his Afghanistan policy in August 2017, said, “We can no longer be silent about Pakistan’s safe havens for terrorist organizations, the Taliban, and other groups that pose a threat to the region and beyond. Pakistan has much to gain from partnering with our effort in Afghanistan. It has much to lose by continuing to harbo[u]r criminals and terrorists.” He followed this with a tweet on new year’s day 2018 accusing Pakistan of “lies and deceit”. For sometime, the Pakistani leadership was concerned by the mercurial Trump but then realised that his were empty threats, signs of the U.S.’s frustration. It continued with its Afghan policy as before.
A thread in these approaches
•Within a year of taking over, Mr. Gorbachev was convinced that the Soviet Union’s Afghan quest was futile. In February 1986 he told the Communist Party that Afghanistan had become a “bleeding wound”. He now decided to prepare for the retreat of the Soviet forces. His aim was to have an orderly withdrawal. He also abandoned the idea of leaving behind a “socialist” government and sought to have a broad-based one which would include the mujahideen.
•Fourteen months after warning Pakistan of serious consequences in his August 2017 policy announcement, Mr. Trump too caved in and authorised talks between U.S. diplomats and Taliban representatives in Doha. In these talks, the U.S.’s principal objective was to secure a Taliban guarantee that it would not harbour international terrorist groups in territories under its control. And, like the Soviet Union over three decades ago the U.S. too accepted the idea of an Afghan interim administration which included the Taliban. The February 2020 U.S.-Taliban agreement, which Mr. Trump’s successor President Joe Biden has honoured, marked the strategic defeat of the world’s pre-eminent global power. It was reminiscent of the Geneva Accords of 1988 which were a strategic defeat of a then superpower, the Soviet Union. They both paved the way for the safe withdrawal of foreign forces.
•From 1986 to 1988, the Soviets tried hard to put in place an inclusive government in Afghanistan. Najibullah, a forceful if brutal Afghan leader of Pashtun ethnicity, became President in 1986. He virtually abandoned communist ideology for Afghan nationalism and stressed the country’s Islamic heritage. He reached out to all sections of Afghan society. The U.S. and Pakistan seemed to go along with the idea of an inclusive government as long as the final assurance of Soviet withdrawal was not gained.
The Indian initiative
•Significantly, India too advocated a broad-based government and Prime Minister Rajiv Gandhi was in the forefront in advocating it. India took active measures, including contacting the former King Zahir Shah, living in exile in Rome, to lead it. This annoyed the U.S. and Pakistan. Both wanted India to assume a non-operational position on Afghan developments and restrict its role to pressing the Soviets to leave. Once it became clear that Pakistan wanted a mujahideen government without Najibullah’s participation or Zahir Shah’s leadership, India decided to fully support the Najibullah government. This even before the last Soviet soldier left Afghanistan in February 1989.
•As part of its outreach to all Afghan parties in 1987 and 1988, India was also in contact with the mujahideen. In February 1988, Rajiv Gandhi met Peter Galbraith, a staffer with the U.S. Senate Committee on Foreign Relations, and whom he had known from his youth. Mr. Bhattacherjee records, “To Galbraith’s surprise, Rajiv said that India had reached out to all sections, including the mujahideen inside Pakistan and Afghanistan and was now assessing the entire formula for a broad-based government in Kabul”. This shows that Rajiv Gandhi pursued the requirements of realpolitik: even while firmly supporting Najibullah he was not averse to acknowledge, at the highest political level, that if Indian interests demanded so, India would not hesitate to do business with any Afghan group howsoever regressive its ideology.
•India’s 2021 Afghan dilemma mirrors, to an extent, the one it faced post the Soviet withdrawal in 1989. There is a major difference though. In 1989, Kabul was led by a strong Afghan leader, Najibullah, who had the capacity to hold the situation together with Soviet assistance. That was forthcoming, for while the Geneva Accords provided that neither side would help their protégés, they continued to do so. Thus, for three years, Najibullah kept the mujahideen at bay. It was with the collapse of the Soviet Union in 1991 that the political unity of Kabul frayed. With that the army fragmented, paving the way for the mujahideen to take over in April 1992. Soon enough, intra-mujahideen conflict resulted in complete instability in the country. That set the stage for the rise of the Taliban with Pakistani assistance. The internecine mujahideen hostilities, fortunately, provided India strategic opportunities to influence the ground situation in Afghanistan along with Iran and Russia. But fortune does not smile at all times.
Afghanistan today
•Now, like Rajiv Gandhi in the 1986-1988 period, Indian foreign policy and security managers are advocating the formation of an inclusive government. So, ostensibly are the western powers including the U.S. The problem is that Afghanistan President Ashraf Ghani is no Najibullah. His capacity to hold Kabul together is questionable. Besides, the Kabul political elite is at odds with itself and if it frays, will the Afghan National Security Forces remain united? The extent to which the U.S. will be willing to support Kabul post August 31 (the date of complete withdrawal) remains to be seen. This situation of total flux could have been easily foreseen. Equally, the need for maintaining open and direct contacts with all Afghan political parties could also have been anticipated only if pragmatic and correct strategic attitudes had guided Indian policy.
•Notwithstanding all the appropriate diplomatic noises India may make, it has now no real capacity to impact the ground situation in Afghanistan. And, even if the best option for India comes to pass — the formation of an inclusive government — its absence of open contacts with the Taliban will place it at a great disadvantage.
📰 The sovereign right to tax is not absolute
BIT provisions to challenge taxation measures include expropriation and fair and equitable treatment
•An important bill introduced in Parliament last week aims to nullify the regressive 2012 amendment in the Income Tax Act. The 2012 amendment overturned the Supreme Court’s decision in Vodafone International Holdings v. Union of India and made the income tax law retroactively applicable on indirect transfer of Indian assets. The retroactive amendment resulted in Vodafone and Cairn Energy suing India before Investor-State Dispute Settlement (ISDS) tribunals of India-Netherlands and India-U.K. bilateral investment treaties (BITs). Both the tribunals held that India’s retroactive amendment of tax laws breached the fair and equitable treatment provision of the two BITs.
•The proposed amendment, long overdue, is a welcome development. However, it is being presented as a domestic legal reform undoing a past mistake. It appears that this amendment hasn’t been proposed to comply with the two adverse ISDS decisions rendered against India or to comply with India’s international law obligations contained in BITs. This is because there is an erroneous belief in the bureaucratic and political circles that since taxation matters are part of sovereign measures, they cannot be challenged before ISDS tribunals.
Sovereign right to tax
•Several ISDS tribunals have recognised the fundamental principle that taxation is an intrinsic element of the state’s sovereign power. For instance, in a case known as Eiser v. Spain, where foreign investors challenged a tax imposed by Spain on electrical producers under the Energy Charter Treaty, the tribunal held that the power to tax is a core sovereign power of the state that should not be questioned lightly. Likewise, in El Paso v. Argentina, where the investors challenged several facets of Argentinian tax measures as breaching the United States-Argentina BIT, the tribunal held that the tax policy of a country is a matter relating to the sovereign power of the state, and thus “the State has a sovereign right to enact the tax measures it deems appropriate at any particular time”. Not just this, the ISDS tribunals have also held that whenever a foreign investor challenges states’ taxation measures, there is a presumption that the taxation measures are valid and legal. For instance, an ISDS tribunal in Renta 4 v. Russia said that when it comes to examining taxation measures for BIT breaches, the starting point should be that the taxation measures are a bona fide exercise of the state’s public powers.
Limits on the right
•Notwithstanding the state’s sovereign right to impose taxes and the presumption about the validity of taxation measures, there are certain limits on the exercise of this public power. The two most used BIT provisions to challenge a state’s taxation measures are expropriation and the fair and equitable treatment provision. In the context of expropriation, one of the key ISDS cases that explained the limits on the state’s right to tax is Burlington v. Ecuador. In this dispute, investors challenged Ecuador’s windfall tax imposed on excess profits resulting from oil exploration under the United States-Ecuador BIT. The tribunal held that under customary international law, there are two limits on the state’s right to tax. First, the tax should not be discriminatory; second, it should not be confiscatory. In another ISDS case, EnCana v, Ecuador, a Canadian corporation sued Ecuador for value-added taxes under the Canada-Ecuador BIT. The tribunal held that a state’s tax measures would amount to an expropriation of foreign investment if the tax law is extraordinary, punitive in amount, or arbitrary in incidence.
•In the context of the fair and equitable treatment provision, foreign investors have often challenged taxation measures as breaching legal certainty, which is an element of the fair and equitable treatment provision. Although legal certainty does not mean immutability of legal framework, states are under an obligation to carry out legal changes such as amending their tax laws in a reasonable and proportionate manner.
•The tribunal in Cairn Energy v. India said that taxing indirect transfers is India’s sovereign power and the tribunal would not comment on it. However, such matters are not of “absolute, unquestioning deference and there are limits on it”. Thus, India’s right to tax in the public interest should be balanced with the investor’s interest of legal certainty. In the context of amending tax laws retroactively, such an action should be justified by a specific purpose that could not be accomplished by applying taxes prospectively. The tribunal held that the public purpose that justifies the application of law prospectively will usually be insufficient to justify the retroactive application of the law. There must be an additional public purpose to justify the retroactive application of the law. For example, India argued that the 2012 amendment was to ensure that foreign corporations who use tax havens for the indirect transfers of underlying Indian assets pay taxes. However, the tribunal held that this objective could be achieved by amending the income tax law prospectively, not retroactively. It is critical to bear in mind that the tribunal did not rule against retroactivity of tax laws per se but against the retroactive application that lacked public policy justification.
Carving out taxation measures
•India in its 2016 Model BIT carved out taxation measures completely from the scope of the investment treaty. Nonetheless, carving out taxation measures from the scope of the BIT does not mean that states are free to do as they please. As it was held in Yukos Universal v. Russia, if states act in bad faith towards foreign investors or abuse their right to tax or adopt mala fide taxation measures, they won’t be able to take the benefit of the carve-out provision.
•The biggest takeaway from this nine-year-long sordid episode of retrospective taxation is that India should exercise its right to regulate while being mindful of its international law obligations, acting in good faith and in a proportionate manner. ISDS tribunals do not interfere with such regulatory measures. In sum, the debate never was whether India has a sovereign right to tax, but whether this sovereign right is subject to certain limitations. The answer is an emphatic ‘yes’ because under international law the sovereign right to tax is not absolute.
📰 The many hurdles for students
Indian students studying overseas and those seeking to go abroad face many COVID-related challenges
•Students from China and India accounted for 47% of all active foreign students in the U.S. in 2020, as per the Student and Exchange Visitor Programme, part of U.S. Immigration and Customs Enforcement. Indian students comprised the second largest student community in the U.K. and Australia in 2019-2020. In recent years, Canada has emerged as a sought-after destination for Indian students. One of the biggest beneficiaries of the Donald Trump administration’s restrictive student visa policies was Canada. Indian students are now the largest group within the international student community in Canada.
•But in spite of their role in enhancing India’s soft power internationally, through their excellent academic performance as well as seamless integration into these countries, Indian students face several problems. These are often overlooked. However, in recent years Indian student associations have been trying to draw attention to these concerns.
Three major challenges
•Ever since the outbreak of the COVID-19 pandemic, Indian students already studying overseas as well as those seeking to go abroad have faced several challenges. First, most Indian students were forced to delay their plans in 2020 due to the imposition of lockdowns, disruption of flights, and embassies not issuing student visas. This led to a drop in the number of Indian students going abroad to study in 2020. According to the Ministry of External Affairs, while in 2019 nearly 5.9 lakh students went overseas for higher education, in 2020 only 2.6 lakh were able to go. While the first two months of 2021 saw 72,000 students going overseas, the devastating second wave impacted the career plans of students. This is not to say that the enthusiasm to go overseas has waned; embassies and high commissions are unable to deal with the backlog of applications.
•Furthermore, many countries have closed their borders and/or restricted flights from India. As a result, students have to look for circuitous routes and end up paying higher air fares. While students are able to make it to Canada through expensive and indirect routes right now, Australia is likely to keep its borders closed well into 2022 given the surge in cases there. The U.K. and the U.S. have tried to make exceptions to their rules for international students, but there remain a number of rules and regulations which have made it very cumbersome to enter these countries, if not impossible.
•The second problem is that of vaccination. As universities abroad open up for international students and begin allowing in-person classes from fall 2021, many require students to get vaccinated before they go. Covaxin and Sputnik V are yet to be recognised by the World Health Organization. Countries like the U.S. do not accept students who have been inoculated with these vaccines and have told them to get re-vaccinated. Many students who have been vaccinated with Covishield are waiting for the 12-week gap to pass in order to get their second dose. To help them, States which send a large number of students abroad have prioritised vaccines for international students.
•Third, due to the disruption caused by COVID-19, students overseas are finding it difficult to get jobs.
Addressing issues
•In a post-COVID-19 world, there are likely to be numerous disruptions, but it is important for officials and universities to work jointly to address the challenges which overseas Indian students face. It is impossible to predict when things will get back to normal and when logistical issues relating to Indian students seeking to study overseas will be addressed. While there are certain issues which specifically impact students, there are others such as policies pertaining to air travel and recognition of Covaxin which need to be addressed at the earliest to facilitate smooth travel for tourists seeking to go overseas.
