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05 Mar, 2020

14 Min Read

Amendments to Companies Act


Syllabus subtopic: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.

Prelims and Mains focus: about the amendments and their significance; about CSR

News: The Union Cabinet approved the proposal to amend 65 sections of the Companies Act.


The amendments are based on the recommendations of a high-level panel set up in September 2019. If passed by Parliament, these would be the second set of amendments to the Act over the last year, as the law was already amended last July 2019.

Objective of the amendment:

  • To decriminalise a number of offences: recategorise 23 offences so that they can be dealt with through an in-house adjudication framework, while five types of offences will be dealt with under different alternative frameworks. Another seven will be omitted altogether. Most of these are procedural or technical defaults that lack the element of fraud or do not affect larger public interest. For 11 kinds of offences, the provision of imprisonment will be removed, limiting punishment to fines only. Six offences that had already been decriminalised earlier will see a further reduction in the quantum of penalties.

  • Enable the listing of Indian companies on stock exchanges in foreign jurisdictions. This is expected to give Indian firms greater access to capital, a broader investor base and better valuations.

  • Ease corporate social responsibility (CSR) requirements, especially for smaller companies: ensure that companies which have an obligation to spend Rs.50 lakh per annum or less on Corporate Social Responsibility (CSR) are no longer required to have a CSR committee. Companies that spend more than the mandatory 2% on CSR in a particular year can carry it forward as credit for fulfilment of CSR obligations for the next few years as well.

Significance of the amendments

The changes are expected to significantly enhance the confidence of Indian corporates in the government’s resolve to provide greater ease of doing business and accord highest respect to honest wealth creators in the country and reduce the burden on the justice system.

What is Corporate Social Responsibility (CSR)?

  • Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable—to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.

  • To engage in CSR means that, in the ordinary course of business, a company is operating in ways that enhance society and the environment, instead of contributing negatively to them.

Corporate Social Responsibility in India

  • India is the first country in the world to make corporate social responsibility (CSR) mandatory, following an amendment to the Companies Act, 2013 in April 2014. Businesses can invest their profits in areas such as education, poverty, gender equality, and hunger as part of any CSR compliance.

  • The amendment notified in the Companies Act, 2013 requires companies with a net worth of INR 500 crore (US $70 million) or more, or an annual turnover of INR 1000 crore (US $140 million) or more, or net profit of INR 5 crore (US $699,125) or more, to spend 2 percent of their average net profits of three years on CSR.

  • Prior to that, the CSR clause was voluntary for companies, though it was mandatory to disclose their CSR spending to shareholders

The methodology of CSR

CSR is the procedure for assessing an organization’s impact on society and evaluating their responsibilities. It begins with an assessment of the following aspects of each business:

  1. Customers;
  2. Suppliers;
  3. Environment;
  4. Communities; and,
  5. Employees.

  • The most effective CSR plans ensure that while organizations comply with legislation, their investments also respect the growth and development of marginalized communities and the environment. CSR should also be sustainable – involving activities that an organization can uphold without negatively affecting their business goals.

  • Organizations in India have been quite sensible in taking up CSR initiatives and integrating them into their business processes.

  • It has become progressively projected in the Indian corporate setting because organizations have recognized that besides growing their businesses, it is also important to shape responsible and supportable relationships with the community at large.

  • Companies now have specific departments and teams that develop specific policies, strategies, and goals for their CSR programs and set separate budgets to support them.

  • Most of the time, these programs are based on well-defined social beliefs or are carefully aligned with the companies’ business domain.

Source: The Hindu

European Union’s Green Deal


Syllabus subtopic: Important International Institutions, agencies and fora - their Structure, Mandate.

Prelims and Mains focus: about the proposed law and its objective; about EU’s Green deal and its significance

News: Amid fierce criticism from environmental activists, the European Commission (EU’s executive arm) is unveiling plans for its first ever climate law — the basis of the European Union’s Green Deal aimed at making the 27-country bloc climate neutral by 2050.

Objective of the proposed law

With its proposals, the EU’s executive arm wants to make its ambition of cutting greenhouse gas emissions to zero by mid-century irreversible, and legally-binding for all member states.

About the draft law

According to a leaked draft of the proposals establishing the 2050 goal, the European Commission is proposing a mechanism for regularly raising the EU’s emissions reduction target over the next three decades.


  • However, there is no plan for an increase of the bloc’s overall emissions goal for 2030. This particular point has been harshly criticized by climate activists, who claim that delaying the upgraded 2030 target is detrimental to the bloc’s credibility in the fight against climate change.

  • In the draft, the European Commission only said it would review the EU’s current target of a 40% greenhouse gas reduction by September and “explore options for a new 2030 target of 50% to 55% emission reductions compared with 1990 levels.”

  • Environmental group Greenpeace said that because of the absence of a 2030 goal, EU governments will “find it extremely difficult to agree a new target” before the U.N climate talks that will be held in Glasgow in November.

  • In an open letter signed by 34 youth climate activists, the group stressed that instead of setting long-term goals, the EU should focus on the “CO2 budget which applies for today.”

  • Such C02 budgets are used to measure the additional emissions that can enter the atmosphere without global warming exceeding a certain level. World leaders agreed five years ago in Paris to keep global warming below 2 degrees Celsius (3.6 Fahrenheit), ideally no more than 1.5 C (2.7 F) by the end of the century. But scientists say countries will miss both of those goals by a wide margin unless drastic steps are taken to begin cutting greenhouse gas emissions this year.

  • Greenpeace also insists a 55% reduction target for 2030 wouldn’t be sufficient to limit global heating to 2 degrees Celsius.

About European Green Deal

  • The European Green Deal is a set of policy initiatives brought forward by the European Commission with the overarching aim of making Europe climate neutral in 2050.

  • An impact assessed plan will also be presented to increase the EU’s greenhouse gas emission reductions target for 2030 to at least 50% and towards 55% compared with 1990 levels.

  • The plan is to review each existing law on its climate merits, and also introduce new legislation on the circular economy, building renovation, biodiversity, farming and innovation.

  • The plan includes potential carbon tariffs for countries that don't curtail their greenhouse gas pollution at the same rate.

It also includes:

  1. a circular economy action plan,

  1. a review and possible revision (where needed) of the all relevant climate-related policy instruments, including the Emissions Trading System,

  1. a Farm to Fork strategy along with a focus shift from compliance to performance (which will reward farmers for managing and storing carbon in the soil, improved nutrient management, reducing emissions, ...),

  1. a revision of the Energy Taxation Directive which is looking closely at fossil fuel subsidies and tax exemptions (aviation, shipping),

  1. a sustainable and smart mobility strategy and an EU forest strategy. The latter will have as its key objectives effective afforestation, and forest preservation and restoration in Europe.

It also leans on Horizon Europe, to play a pivotal role in leveraging national public and private investments. Through partnerships with industry and member States, it will support research and innovation on transport technologies, including batteries, clean hydrogen, low-carbon steel making, circular bio-based sectors and the built environment.

About Horizon Europe

  • Horizon Europe is a planned 7-year European Union scientific research initiative meant to succeed the current Horizon 2020 program. The European Commission drafted and approved a plan for the Horizon Europe to raise EU science spending levels by 50% over the years 2021-2027.

  • The proposal calls for €100 billion in research and innovation spending for years 2021-2027. Of that sum €2.4 billion is earmarked for the Euratom nuclear research program and €3.6 billion is put away for an umbrella investment fund, called InvestEU. After accounting for 2% annual inflation, in 2018 euros the funding for Horizon Europe amounts to €86.6 billion

Source: Indian Express

SC lifts curbs on cryptocurrencies


Syllabus subtopic: Awareness in the fields of IT, Space, Computers, Robotics, Nano-technology, Bio-technology and issues relating to Intellectual Property Rights.

Prelims and Mains focus: about cryptocurrencies: merits and demerits

News: In April 2018, the Reserve Bank of India (RBI) had barred regulated entities such as banks from dealing in bitcoins and other virtual currencies. The Supreme Court has now lifted the restriction.

What exactly are cryptocurrencies?

  • Cryptocurrencies are internet-based mediums of exchange. They are digital currencies that can be exchanged between parties without the need of a third entity, like a bank.

  • Many of them use a decentralized blockchain—an encrypted ledger for storing information.

  • Over 3,000 crypto assets have entered the digital currency market since 2008. They are decentralized rather than being under the control of any nation or company. This can often lower transaction costs for global payments compared to financial messaging systems such as SWIFT (Society for Worldwide Interbank Financial Telecommunication), used for making transactions in different currencies.

Do cryptocurrencies carry a lot of risk?

  • Cryptocurrencies are vulnerable to cyber hacking and data privacy breaches and increase the risk of money laundering. They do not have any fundamental value as they are not legal tender, and are not backed by governments, central banks or a pool of assets. This reduces trust in them, which is necessary for a credible medium of exchange.

  • They are a poor medium of exchange also because their valuation tends to be excessively volatile and susceptible to manipulation. They are seen as instruments of speculation and transactions that are below the radar of regulators and law enforcement agencies.

Are state-backed digital coins a better option?

Yes, as state-backed digital coins can combine the positives of digital and sovereign currencies. RBI has no plans to introduce digital coins, but China is likely to launch the Digital Currency Electronic Payment and Central Bank Digital Currency. Russia has been working on a state-backed cryptoruble. Sweden has its e-krona project.

Why is RBI worried about cryptos?

  • Since 2013, RBI has been warning about the risks associated with virtual currencies. In the case of cryptocurrencies, it is not clear who is the lender of last resort, or who people should turn to if there is fraud or abuse of monopoly power.

  • If cash issued by central banks or fiat currencies and retail deposits held with banks get shifted on a large scale to digital currencies, the effectiveness of monetary policy can erode. It may also trigger rupee depreciation. If they lead to capital flight, financial stability could be at risk.

What is the future of such currencies?

  • Central banks may begin to strictly regulate virtual currencies. Dominance of the US dollar in the international trade and monetary system will weaken. Instead of accepting dollars as the settlement currency for trade, users may choose from a variety of currencies.

  • Sovereign currencies may coexist with cryptocurrencies, digital currencies issued by central banks and private dollar-centric digital ones launched by private parties such as Facebook’s Libra.

Source: Livemint

Internet Shutdowns in India

GS-III : Miscellaneous

Syllabus subtopic: Challenges to Internal Security through Communication Networks, Role of Media and Social Networking Sites in Internal Security Challenges,

Prelims and Mains focus: about the study and its key findings; trends in internet shutdowns in India

News: Data on internet shutdowns in India which is available in public domain and compiled by Software Freedom Law Centre (SFLC).

Key findings

  • The number of preventive internet shutdowns enforced by the central and the state governments in India saw a major spike between 2017 and 2019, and as many as 95 of these lasted for more than 24 hours.

  • There were at least 147 instances over these three years for which there is no data on the duration of the shutdowns as there is lack of any form of communication on these blockades.

  • In most of these instances, there was no formal order being issued to the telecom operators.

  • The Union Territory of Jammu and Kashmir, where the internet had remained suspended until March 4 for 213 days, has seen since 2012 at least 60 instances of connectivity being snapped for more than 24 hours without any official order.

Difference between Preventive and Reactive internet shutdown

  • Preventive shutdowns are defined as internet blockade by the state in anticipation of violence, unrest or disturbance, whereas reactive shutdowns are enforced to prevent further escalation of violence.

  • Despite a rising number of preventive internet shutdowns, the number of reactive shutdowns, however, remained low over the three years, according to the data.

What are the rules regarding internet shutdown?

  • Under the Indian Telegraph Act of 1885, only the Home Secretary of the central or the state government can pass orders to enforce an internet shutdown in any area.

  • The order must include the detailed reasons for the shutdown and must be sent to a review committee the next day.

  • The committee shall, within five days, submit its report and only if the shutdown is justified even after that will the communications blockade continue.

Are the Telegraph rules being followed?

  • The Telegraph rules lay down many checks and balances, but that does not happen. It is the first reaction. One good example is Rajasthan, where there has been a regime change, but number of shutdowns is on the rise. Rajasthan, however, is also the only state that provides a formal order for nearly all internet shutdowns it enforces.

  • In 2017, for instance, of the 79 instances of internet shutdown across the country, there were 51 where the authorities cut connectivity to mobile phone, while there were seven instances where connections to both mobiles and landlines were severed. Similarly, in 2018, authorities suspended mobile phone connectivity 126 times, and 100 times in 2019.

  • 93 of the 381 internet shutdowns between 2012 and January 2020 lasted less than 24 hours, 74 lasted between 24 and 72 hours, 41 lasted for over 72 hours, while no information was available on the respective duration of the remaining 208 internet shutdowns.

Misuse of Section 144 of CrPC

  • Another rising trend was to use Section 144 of the Code Of Criminal Procedure to justify the communications blockade and the continuance of it. That cannot be done. The use of 144 does not pass any muster under law. However, it is seldom challenged.

  • A colonial era law, Section 144 gives a magistrate the powers to enforce a general shutdown of the area, if he or she believes that there could be violence in the area, arising from a certain tension between two or more groups of people.

How is the internet shutdown executed?

  • Most of the internet shutdowns are done using the ‘kill switch’ individual tower-wise in respective areas. Following instructions from the authorities, the local unit of the telcos switches off power to the tower in that area, following which mobile phones in the area latch on to the next nearest tower.

  • What happens then is that one tower has too many calls and data volume being placed on it, due to which very few calls get through. So that also serves the purpose. Then that tower is also switched off and so on.

  • While reports estimate that India loses around Rs 6,000 crore per year due to internet shutdowns, the government had told the Rajya Sabha in February that it did not keep a track of how much losses were incurred by the states or the individuals owing to the internet shutdowns.

Source: Indian Express

NRIs permitted to own 100% stake in Air India

GS-III : Economic Issues Industry

Syllabus subtopic: Effects of Liberalization on the Economy, Changes in Industrial Policy and their Effects on Industrial Growth.

Prelims and Mains focus: about the move to privatize Air India and its significance; about Air India

News: The Union cabinet approved a proposal to let non-resident Indians (NRIs) own up to a 100% stake in Air India Ltd as the government attempts to make a success of its second attempt to completely privatize the debt-laden airline.


The government, which aims to divest its entire stake in Air India, in February began the stake sale process by inviting offers from potential investors after a costly turnaround plan and an earlier effort to sell a controlling stake in the flag carrier failed. To sweeten the deal, the Centre has also reduced Air India’s debt from about Rs.56,334 crore to about Rs.23,287 crore.

About the move

The cabinet, headed by Prime Minister, has approved an amendment to the foreign direct investment (FDI) policy to permit FDI in Air India by NRIs up to 100% under the automatic route.

Significance of the move

The cabinet decision will give the government more flexibility to receive bids for Air India.

Investment rules for NRIs

  • Under the existing policy, NRIs/ OCIs (Overseas Citizens of India) are permitted to invest under automatic route up to 100% in scheduled air transport services.

  • The investment limit including NRIs, in Air India was restricted to 49%, which has now been aligned with the existing policy for investment by NRI in the civil aviation sector.

About Air India

  • Air India is the flag carrier airline of India, headquartered at New Delhi.

  • The airline was founded by J. R. D. Tata as Tata Airlines in 1932; Tata himself flew its first single-engine de Havilland Puss Moth, carrying air mail from Karachi to Bombay's Juhu aerodrome and later continuing to Madras (currently Chennai).

  • After World War II, it became a public limited company and was renamed as Air India. On 21 February 1960, it took delivery of its first Boeing 707 named Gauri Shankar and became the first Asian airline to induct a jet aircraft in its fleet.

  • In 2000–01, attempts were made to privatise Air India and from 2006 onwards, it suffered losses after its merger with Indian Airlines.

  • Air India has 128 aircraft in its fleet, according to its website, while its subsidiaries Air India Express and Alliance Air have 25 and 19 planes, respectively.

  • The airline has 9,426 permanent workers, 4,201 contract employees, and 2,867 employees on deputation.

Source: Livemint

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