📰 Heading the G20 and New Delhi’s choices
With geopolitical currents redefining geo-economics, India needs to be ready to emerge as the chief global diplomat
•The clock is ticking. In about three months, India will assume for the first time the Group of 20 (G20) year-long presidency from December 1, 2022 to November 30, 2023, culminating with the G20 Summit in India in 2023.The subsequent months will witness India hosting over 200 meetings with hundreds of ministers, officials, diplomats, businessmen, non-governmental organisations, working groups, and engagement groups of the G20 composed of 19 powerful economies and the European Union (EU).
•India has hosted large international conferences such as the Non-Aligned Movement (NAM) summit in 1983 and the Third India-Africa Forum summit in 2015. But nothing compares with hosting the G20. It is the world’s informal steering directorate on global economic issues; it entails the responsibility of shaping decision-making on key challenges facing the world today; and its summit is preceded by a large quantum of preparatory deliberations that feed into the final outcome.
Importance, complexities
•It is essential to neither overstress nor underestimate the significance of the G20’s work. The G20 membership represents nearly 90% of the world’s GDP, 80% of global trade, and 67% of the planet’s population. It is an advisory body, not a treaty-based forum and, therefore, its decisions are recommendations to its own members.
•The weight of this powerful membership carries enormous political and economic influence. The representation of the United Nations, the World Bank, the International Monetary Fund, the World Trade Organization, the World Health Organization, and other multilateral institutions in it makes the G20 an incomparable body.
•The G20 has played a vital role in addressing financial and economic challenges such as the global financial crisis of 2008-09 and the Eurozone crisis of 2010. The forum was elevated from the finance ministers to the heads of government/state in 2008. This was the era of the G8 (up to 2014 when Russia was suspended), of the major powers — the United States, the EU, Russia, and also China, but they needed to work together with the emerging economies in defining global challenges and crafting their solutions.
•However, in this second decade of the G20, the forum is faced with an existential crisis, where the major powers have fallen out. It makes the task of the presidency country much more complicated, as the current president ( Indonesia) is discovering.
•The disastrous impact of the novel coronavirus pandemic, the war in Ukraine, India-China border tensions, EU/U.S.-Russia hostility, and deteriorating U.S.-China relations are already visible in the run-up to the 2022 Bali summit (in November) where all G20 leaders may not be sitting physically in the same room. The outcome in Bali will affect the Delhi summit. Indian officials are thus carefully planning their strategy as the burden and the prestige of the presidency are bestowed on India. They know well that the currents of geopolitics are redefining the contours of geo-economics today. Their mission will be not only to save the G20 but also the future of multilateral cooperation in diverse domains of the grouping’s multi-dimensional agenda.
India’s choices
•Guided by the triple motivation of promoting India’s national interest, leaving its mark on the G20, and maintaining its primacy as an effective instrument of global governance, there are four different ideas have emerged in New Delhi.
•First, the G20 presidency offers a unique branding opportunity for India’s recent achievements, including the ability to combat COVID-19 effectively at home and abroad through vaccine aid and diplomacy. Other major achievements are India’s digital revolution, its steady progress in switching to renewables, meeting its targets to counter climate change, and its push for self-reliance in manufacturing and reshaping global value chains. New trends in entrepreneurship, business innovation, the rise of many start-ups as unicorns, and gender progress too need to be showcased. A single-year presidency does not empower the host to change the world, but India can provide evidence of its domestic successes, tested at the continental scale, for global adoption. It can also be utilised to transform India’s sub-optimal physical infrastructure to create an attractive investment and tourism destination, especially as several important G20 meetings will be hosted outside Delhi.
•Second, by a remarkable coincidence, four democracies on the path to becoming powerful economic players — Indonesia, India, Brazil, and South Africa — hold the presidency from December 2021 to November 2025. This offers a rare opportunity for synergy and solidarity to advance the interests of the developing world and to assert their combined leadership of the Global South.
•Third, another exceptional coincidence is that all three members of IBSA — India, Brazil, and South Africa — will hold the G20 presidency consecutively in 2023, 2024, and 2025. This forum, insulated from the geopolitical pressures constraining the BRICS (where these three countries are required to work with Russia and China), can develop a cohesive plan to project the priority concerns of the Global South. IBSA needs an urgent rejuvenation by convening an informal meeting of its top leaders, perhaps on the sidelines of the Bali summit.
•Four, India needs to get ready to emerge as the chief global diplomat. As the G20 president, India will be obliged to take a broader view of the G20 agenda to synthesise divergent interests of all constituents of the forum: five permanent members of the UN Security Council, the developed world united under the flag of the G7, five members of BRICS, and other G20 members such as Argentina and Mexico. More importantly, as the president and host, India should factor in the perspectives of countries not represented in the G20. India will advocate an inclusive approach, with pragmatic and human-centric solutions to global issues. An important aim should be to end Africa’s marginalisation by elevating the African Union (AU) from permanent observer to a full-fledged member of the G20, thus placing it on a par with the EU.
A parting thought
•These four choices are not mutually exclusive. It is possible to weld them together to create a holistic and comprehensive approach for the Indian presidency of the G20. The challenge is to combine an India-focused view, promote the vital interests of the Global South, and demonstrate diplomatic acumen to communicate with and reconcile the viewpoints of rival and adversarial power centres such as the West, Russia, and China. India today is in the enviable position to deliver this unique package. It must rise to the occasion.
After that year, fresh projects are likely to be wind-solar hybrids, says report
•Annual installation of new wind power projects in India will peak by 2024 and likely decline thereafter, according to a report released on Wednesday by the Global Wind Energy Council (GWEC) and MEC+, a consulting firm that specialises in renewable energy.
•As part of its transition away from fossil fuels, India has committed to sourcing half its electricity in 2030 from non-fossil fuel sources and installing 60 gigawatt (GW, or 1000 MW) of wind power by 2022.
•So far, only 40 GW of wind power capacity has been established.
•Wind industry installations have been slowing down in India since 2017. Only 1.45 GW of wind projects were installed in 2021 with many delayed due to the second wave of COVID-19 and supply chain-related disruptions.
•To compensate, the Ministry of New and Renewable Energy (MNRE) granted a blanket timeline extension for seven-and-a-half months after the scheduled commissioning date (SCD) for projects with power purchase agreements (PPAs) signed before June 2021, which pushed the SCD of 0.7 GW projects to 2022.
•The trigger for the slowdown, according to the report, was the advent of the auction regime in 2017 to award tenders. The new scheme led to large orders but highly competitive bids.
•Subsequently, the market has concentrated wind projects around a few substations of Gujarat and Tamil Nadu, which were home to the strongest resource potential and lowest cost of land. This created bottlenecks and slowed down project activity and made it costlier than solar power.
•After 2024, fresh projects are likely to be wind-solar hybrid projects (where both systems are installed on a piece of land to generate power through the day).
📰 Keep it simple
Any mandatory linking of Aadhaar to the voter ID is problematic
•One of the clear successes of Indian democracy has been the regular conduct of elections and the relatively high participation of electors in the voting process compared to other countries. Besides the fact that the process is relatively simple with the use of the electronic voting machine, high voter turnout has also been possible due to registration drives by the Election Commission of India (ECI). Periodically, the ECI does face the issue of a cleaning up of electoral rolls due to increases in migrant populations in urban sprawls, demographic changes due to the entry of more eligible voters, besides deaths of older people. But repeated cycles of elections have allowed for a cohesion in this process with voters allowed to register based on proofs of their age and current place of residence. With the increase in the school-educated population, and most Indian citizens living in houses whose addresses are to be mentioned in several identity documents, registering to vote is a relatively easy process. This begs the question as to why election authorities are coercing citizens to mandatorily link registration in voter rolls with their Aadhaar number, as recent reports have indicated. In December 2021, the Lok Sabha passed the Election Laws (Amendment) Bill seeking to link the voter identity card with the Aadhaar number in order to avoid errors such as voter duplication on the electoral roll. But the Government and later, ECI authorities, have insisted that this process would be voluntary.
•The Aadhaar number is not a proof of citizenship and is meant to be issued to residents, while only adult citizens who are resident in India are eligible to vote. Instrumentally speaking, matching the Aadhaar number to the electoral roll in order to perform verifications is not a foolproof process. The Internet Freedom Foundation has cited data to show that self-reported errors in the Aadhaar database are higher than those in the electoral database. There is also evidence that Aadhaar-linkage with voter identity cards, as in the Assembly elections in Telangana and Andhra Pradesh recently, for example, led to the arbitrary deletion of eligible voters on a large scale. Besides, with the Aadhaar number now being used to access a variety of services, linking to voter IDs, when aggregated from booth level data, can possibly lead to misuse by agencies that can access them to profile voters based on harvested information. The absence of a data protection law heightens the risk of this possibility as well. Scholars studying elections in various countries have averred that simplicity of design and effectiveness of constitutional institutions such as the ECI have gone a long way in easing voting and setting India apart as an electoral democracy. The insistence on linking Aadhaar with the voter ID militates against these principles. The ECI should limit itself to utilising existing proofs for voter authentication and Aadhaar declaration should remain voluntary.
📰 Making out a case for the other UBI in India
There are good reasons why Universal Basic Insurance is a better proposition than Universal Basic Income
•It took the COVID-19 pandemic to expose the precariousness of human society across the world. As the importance of social security came into focus after the major waves of the pandemic, the debate on universal basic income (UBI) began to resurface in policy circles across the globe. However, there is another UBI that needs to be examined in the Indian context, i.e., universal basic insurance. Before discussing the second UBI, or insurance, it is worthwhile looking at the design options for social security.
Types of security nets
•Income shocks result in a free fall of those living on the line of basic living wages (say line 1) down towards the critical survival line (say line 2). In any case, a fall that is further below line 2 needs to be prevented as it can be catastrophic — a household can end up facing a poverty trap. Social security systems are like a safety net placed at line 2. These social security nets can be of three types. The first is a passive safety net which catches those falling from line 1 and prevents a fall below line 2. The second is an active safety net which works like a trampoline so that those who fall on it are able to bounce back to line 1. The third is a proactive safety net which acts like a launchpad so that those who fall on it will not only bounce back but will also move up beyond line 1.
•The first type of safety net is basically a social assistance programme meant for the most income-deprived sections of society. The second type of safety net is a scheme with a higher outlay. The third type of social security net is the most desirable option but requires immense resources and institutional capacity. For social security, people on the south end of the income line need social assistance schemes. Those on the north end of the income line should have voluntary insurance.
•Social security mainly encompasses food security, health security and income security. India operates the widest spectrum of social security schemes which cater to the largest number of people than any other country. The sheer scale of Indian social security programmes delivered to millions of households spread over a vast geography is mind-boggling.
•The Indian food security programme, for example, has over 800 million beneficiaries being provided heavily subsidised food grain under the National Food Security Act (NFSA). The NFSA is the world’s largest food security programme. About 120 million children are provided free lunch under the Mid-Day Meal Scheme. In addition, some 50 million people benefit from the free meals programme run by a few State governments. Nevertheless, there are issues of financial sustainability and leakages in the food security programme.
For health and income
•On the health security front, for the unorganised sector, there is the Ayushman Bharat Scheme of the central government with over 490 million beneficiaries. In the organised sector, the Central government runs the Employees State Insurance Corporation (ESIC) and Central Government Health Scheme (CGHS) catering to 130 million and four million beneficiaries, respectively. Health insurance schemes run by various State governments cover about 200 million people. Only about 110 million people in India have private health insurance. Despite these large-scale provisions, about 400 million Indians are not covered under any kind of health insurance.
•Income security is the trickiest part to tackle in the social security basket. For the organised sector, there are three types of provident fund schemes: General Provident Fund (GPF) which is availed by about 20 million Central and State government employees in the country. The second is the Employees’ Provident Fund (EPF) which is availed by about 65 million workers in the other organised sector. The third is Public Provident Fund (PPF) that can be availed by any Indian citizen but has contributions from the organised sector mostly. There are about 53 million New Pension Scheme subscribers in the country (about 2.2 million in the Central government, 5.6 million in the State government and the rest in the private sector).
•In the unorganised sector, the Pradhan Mantri Kisan Maan-Dhan Yojana (PM-KMY) and the PM-KISAN scheme is availed by about 120 million farmers. Atal Pension Yojana (APY) benefits 40 million people. The Pradhan Mantri Shram Yogi Maandhan Yojana has about five million beneficiaries while there are about 50,000 beneficiaries under the National Pension Scheme for Traders and Self-Employed Persons (NPS-Traders) scheme. The largest unorganised sector income security programme is the scheme under the Mahatma Gandhi National Rural Employment Guarantee Act, which has about 60 million beneficiaries. Thus, out of 500 million workers in India, about 100 million have no income security (pension, gratuity or other income) coverage. Proponents of universal basic income cite the informality of the Indian economy as the hurdle in rolling out schemes such as unemployment insurance in the country. However, besides huge fiscal implications (around 4.5% of GDP), the proposal of universal basic income runs the risk of implementation failure due to large-scale beneficiary identification requirements.
Why UBI
•The other UBI, i.e. universal basic insurance, is a better proposition for two reasons. One, the insurance penetration (premium as a percentage of GDP) in India has been hovering around 4% for many years compared to 17%, 9% and 6% in Taiwan, Japan and China, respectively. Two, though the economy largely remains informal, data of that informal sector are now available both for businesses (through GSTIN, or Goods and Services Tax Identification Number) and for unorganised workers (through e-Shram, which is the centralised database of all unorganised workers). As a result of the recent initiatives by the Government, the Goods and Services Tax (GST) portal has 13.5 million registrations and the e-Shram portal has over 280 million registrations. As a prototype of a social security portal based on such data, the social registry portal, ‘Kutumba’, developed by Karnataka is available as a blueprint. Till the Indian economy grows to have adequate voluntary insurance, social security can be boosted through the scheme of universal basic insurance.
📰 The Competition (Amendment) Bill, 2022
Why is an amendment to the already existing Indian Competition Act necessary?
•As the dynamics of the market changes due to technological advancements, artificial intelligence, and the increasing importance of factors other than price, amendments became necessary to sustain and promote market competition. The long-awaited Bill to amend the Competition Act, 2002, was finally tabled in the Lok Sabha recently.
•Some of the major amendments include allowing the commission to give an additional waiver of penalties to an applicant who discloses the existence of another cartel in an unrelated market, giving the Commission authority to appoint the DG rather than the Central government etc.
•By implementing these amendments, the Commission should be better equipped to handle certain aspects of the new-age market and transform its functioning to be more robust.
•The story so far: The Indian Competition Act was passed in 2002, but it came into effect only seven years later. The Competition Commission primarily pursues three issues of anti-competitive practices in the market: anti-competitive agreements, abuse of dominance and combinations. As the dynamics of the market changes rapidly due to technological advancements, artificial intelligence, and the increasing importance of factors other than price, amendments became necessary to sustain and promote market competition. Therefore, a review committee was established in 2019 which proposed several major amendments. The long-awaited Bill to amend the Competition Act, 2002, was finally tabled in the Lok Sabha recently.
What is the major change in dealing with new-age market combinations?
•Any acquisition, merger or amalgamation may constitute a combination. Section 5 currently says parties indulging in merger, acquisition, or amalgamation need to notify the Commission of the combination only on the basis of ‘asset’ or ‘turnover’. The new Bill proposes to add a ‘deal value’ threshold. It will be mandatory to notify the Commission of any transaction with a deal value in excess of ₹2,000 crore and if either of the parties has ‘substantial business operations in India’. The Commission shall frame regulations to prescribe the requirements for assessing whether an enterprise has ‘substantial business operations in India’. This change will strengthen the Commission’s review mechanism, particularly in the digital and infrastructure space, a majority of which were not reported earlier, as the asset or turnover values did not meet the jurisdictional thresholds.
•When business entities are willing to execute a combination, they must inform the Commission. The Commission may approve or disapprove the combination, keeping in mind the appreciable adverse effect on competition that is likely to be caused. The Commission earlier had 210 days to approve the combination, after which it is automatically approved. The new Bill seeks to accelerate the timeline from 210 working days to only 150 working days with a conservatory period of 30 days for extensions. This will speed up the clearance of combinations and increase the importance of pre-filing consultations with the Commission.
What is gun-jumping?
•Parties should not go ahead with a combination prior to its approval. If the combining parties close a notified transaction before the approval, or have consummated a reportable transaction without bringing it to the Commission’s knowledge, it is seen as gun-jumping. The penalty for gun-jumping was a total of 1% of the asset or turnover. This is now proposed to be 1% of the deal value.
What challenge do combining parties face in open market purchases?
•There have been several gun-jumping cases owing to the combining parties’ inability to defer the consummation of open market purchases. Many of them argue that acquisitions involving open market purchase of target shares must be completed quickly, lest the stock value and total consideration undergo a change. If parties wait for the Commission’s clearance, the transaction may become unaffordable.
•Similar to the European Union merger regulations, the present amendment Bill also proposes to exempt open market purchases and stock market transactions from the requirement to notify them to the Commission in advance. This is subject to the condition that the acquirer does not exercise voting or ownership rights until the transaction is approved and the same is notified to the Commission subsequently.
Does the amendment Bill address the issue of Hub-and-Spoke Cartels?
•A Hub-and-Spoke arrangement is a kind of cartelisation in which vertically related players act as a hub and place horizontal restrictions on suppliers or retailers (spokes). Currently, the prohibition on anti-competitive agreements only covers entities with similar trades that engage in anti-competitive practices. This ignores hub-and-spoke cartels operated at different levels of the vertical chain by distributors and suppliers. To combat this, the amendment broadens the scope of ‘anti-competitive agreements’ to catch entities that facilitate cartelisation even if they are not engaged in identical trade practices.
What is the amendment to the 'settlements' and 'commitments' mechanisms?
•The new amendment proposes a framework for settlements and commitments for cases relating to vertical agreements and abuse of dominance. In the case of vertical agreements and abuse of dominance, the parties may apply for a ‘commitment’ before the Director General (DG) submits the report. ‘Settlement’ will be considered after the report is submitted and before the Commission decides. According to the amendment, the Commission's decision regarding commitment or settlement will not be appealable after hearing all stakeholders in the case. The Commission will come out with regulations regarding procedural aspects.
What are the other major amendments?
•In the amendment Bill, a provision called ‘Leniency Plus’ allows the commission to give an additional waiver of penalties to an applicant who discloses the existence of another cartel in an unrelated market, provided the information enables the Commission to form a prima facie opinion about the existence of the cartel. Other noteworthy amendments include the appointment of the DG by the Commission rather than the Central government, giving the Commission greater control. According to the Bill, the DG has the power to conduct investigations, including raids. The Commission will only consider information filed within three years of the occurrence of the cause of action. As part of the Bill, penalties and penalty guidelines are proposed to be amended. For any false information filed, a penalty of five crore will be imposed, and for failure to comply with the Commission directions, a penalty of ₹10 crore will be imposed. Additionally, the Commission will develop guidelines regarding the amount of penalties for various competition violations. For an appeal to be heard by the National Company Law Tribunal (NCLT) against the Commission’s order, the party will have to deposit 25% of the penalty amount.
What next?
•By implementing these amendments, the Commission should be better equipped to handle certain aspects of the new-age market and transform its functioning to be more robust. The proposed amendments are undoubtedly needed; however, these are heavily dependent on regulations that will be notified by the Commission later. These regulations will influence the proposals. Also, the government needs to recognise that market dynamics change constantly, so it is necessary to update laws regularly.
