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22 April, 2020

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Paper Topics Subject
GS-I Child abuse and violence - Criminal law amendment bill - NCPCR (National commission for the protection of Child Rights) Social issues
GS-II Interstate Migrant Workmen Act 1979 Governance
Consumer Protection act Governance
Oil Crisis Past to Present International Relations
Fiscal Federalism Governance
SAGAR programme- Indian Ocean Rim association (IORA) International Relations
GS-III e-Commerce and recent Rules-FDI Economic Issues
PT Pointer TDB approves financial support to MyLab Discovery Solutions
TIFAC plans to come up with white paper
New Development Bank financial assistance
One more institute of CSIR started whole-genome sequencing of coronavirus
GS-I : Social issues
Child abuse and violence - Criminal law amendment bill - NCPCR (National commission for the protection of Child Rights)

Child abuse and violence - Criminal law amendment bill - NCPCR (National commission for the protection of Child Rights)

Part of: GS-I- Social issue  (PT-MAINS-PERSONALITY TEST)

336% increase in child rape cases from 2001 to 2011. Figures are under reported as majority of child rape cases are not reported to the police. 9/10 rapes and sexual assaults are carried out by people known to the victim. Insensitivity and unhelpful attitude of police, lawyers and untrained hospital staff makes prosecution and conviction difficult.

NOTE: 1 in 6 BOYS experience some form of sexual abuse/ 1 in 4 GIRLS experience some form of sexual abuse.

 

Why Child Rapes are Increasing? 

  • A rise in reporting due to lowering of the stigma attached + Rise of awareness mainly due to social media + celebrities opening up about being abused in their childhood also motivated parents to report
  • POCSO in 2012 & Criminal Law (Amendment) Act in 2013 led to higher reporting of rape against children
  • Definition of rape now includes many more sexual actions than were earlier classified as sexual assault
  • Age of consent for girls has been raised from 16 to 18 years. This means boys who have consensual sex can be charged with rape.

 

  • The Parliament recently passed the Criminal Law (Amendment) Bill 2018, which awards death penalty to convicts of child rapes in India. 
  • The Bill provides for death penalty as the maximum punishment in cases of rape of a child under 12.

What are the issues with Child Abuse in India?

  • According to a report by child rights NGO CRY, sexual offence is committed against a child in India every 15 minutes and there has been an increase of more than 500 per cent over the past 10 years in crime against minors. The rising cases is a disturbing scenario. 
  • As per NCRB statistics on rape of women and children, 94% of the rapists are known to the victim, and almost half are a close relative, and neighbours.
  • The conviction rate of these crimes is very low, only close to 3% of the total number of cases, according to the 2016 NCRB Report. One of the chief causes of low conviction rate is the lack of manpower and infrastructure in the criminal justice system.
  • Previous Acts’ failure: In spite of the POCSO Act being enacted in 2012, there has been no reduction in the number of crimes committed against children. The new law enacted did not act as a deterrent.
  • Justice Delay: Court cases typically last for years or even stretch to decades in many cases. One reason for this is the shortage of judges. Over six million cases are pending for more than ten years. Because of the pendency of cases and the lack of required facilities, investigations are hardly completed on time, and recording of evidence, etc. do not happen on time.
  • Attitude of the politicians – Senior political leader and Supremo of the Samajwadi Party commented on record in 2014 that rapes should not be punished with death since “boys are boys and they make mistakes”.
  • A 2017 report titled “Everyone Blames Me” cited that survivors, especially from marginalised communities, find it hard to register police complaints.
  • The survivors are often humiliated by the police personnel and at the hospital where they are subjected to degrading medical tests in the name of medical examination. They feel scared and intimidated when the case does reach the court. There are major obstacles to obtaining vital support services such as counseling, health care and legal aid.

Some incidents:

  • The brutal gang rape and murder of an eight-year old girl Asifa Bano, who belonged to a Muslim nomadic tribe on 17 January near Kathua, a town in Kashmir shook the collective conscience of the nation and sparked outrage and anger across India. 
  • In the Nagaon district of Assam, an 11-year-old girl was raped and then burnt alive, and then an entire village came together to help the police catch the accused.
  • It gets more disgusting. A four-month-old baby was raped and murdered in the historic Rajwada area of Indore. Hardened policemen were nearly moved to tears as they conducted a preliminary examination of the ravaged body.
  • Seventeen men have been charged in India with the gang-rape of an 11-year-old deaf girl in the city of Chennai in July 2018.

Salient features of the Criminal Law (Amendment) Bill 2018

  • The Bill seeks to replace the Criminal Law (Amendment) Ordinance promulgated on April 21, 2018 following an outcry over the rape and murder of a minor girl in Kathua in Jammu and Kashmir and the rape of another woman at Unnao in Uttar Pradesh.
  • The Criminal Law (Amendment) Bill 2018 will amend relevant Sections of the Indian Penal Code (IPC), the Code of Criminal Procedure (CrPC) and also the Protection of Children from Sexual Offences Act (POCSO Act) 2012. 
  • The Bill provides for a time-bound investigation in cases of rape of girl children. The investigation into the rape of a child must be completed within two months. 
  • The cases are to be tried in a fast track court. The Bill states that any appeal against a sentence by the trial court must be disposed of within six months. 
  • Under the new law, if the victim is under 12 years of age, the culprit faces a minimum sentence of 20 years. The maximum punishment is death. In the cases of gangrape of a child under 12, the minimum punishment is life sentence while the maximum is death penalty. 
  • In cases of children aged between 12 and 16, the offence of rape is punishable with the minimum sentence of 20 years. The maximum punishment in such cases is life imprisonment. If a girl aged between 12 and 16 is gangraped, the convicts face a minimum punishment of life sentence.
  • If the victim is aged between 16 and 18, the offence of rape is punishable with a minimum punishment of 10-year jail term and the maximum is life imprisonment. Repeat offenders will be punished with life imprisonment or death. 
  • However, the punishment for rape of boys has remained unchanged. This has resulted in greater difference in the quantum of punishment for rape of minor boys and girls.

Demerits of the Capital Punishment/ Arguments against the provisions:

Capital punishment is a debatable subject and criminologists, sociologists and the legal fraternity are always divided on this issue.

  • Justice P Bhagwati while delivering a dissenting opinion in the case of Bachan Singh vs State of Punjab (1982) case held capital punishment to be unconstitutional. 
  • The Law Commission of India in its report on death penalty said that after many years of research and debate a view has emerged that there is no evidence to suggest that the death penalty has a deterrent effect over and above its alternative – life imprisonment. 
  • The Justice JS Verma committee, which was formed after the December 2012 Delhi gang rape and murder case, in its report concluded that death penalty would be a regressive step in the field of sentencing and reformation. 
  • Human Rights Watch opposes the use of the death penalty in all cases. Capital punishment for rape is the easiest and most convenient demand to raise, yet the most harmful one for rape survivors. It is all about retribution, disregards the reformative aspect of the criminal justice system, and, most importantly, is said to have little deterrent effect. 
  • There are rapists who kill the victims, and there are rapists who don’t. Now, if the maximum punishment in either case is the same, the rapist would reason that by killing victim he/she may never be exposed. There are numerous instances of the perpetrators killing their victims, so stringent anti-rape laws are perceived not to be deterrents but measures that further instigate rapists to kill the victims. 
  • Rape is already underreported in India largely because of social stigma, victim-blaming, poor response by the criminal justice system, and lack of any national victim and witness protection law making them highly vulnerable to pressure from the accused as well as the police. Children are even more vulnerable due to pressure from family and society. Increase in punishment, including the death penalty may lead to a decrease in reporting of such crimes.

 

Other initiatives

POCSO Act Significance 

  • Gives exclusive definition to the crime of sexual offences against children
  • Deal with sexual assault & sexual harassment against children while safeguarding the interests of the child at every stage of judicial process

 

However, the provisions of POCSO are not properly applied by the police and other parties. Consequently, child offenders get away despite a stringent law. There is a need for greater awareness, training and familiarization of application of the law by police.

 

Child Pornography: SC Stand 

  • Centre to suggest ways and means to curb child pornography
  • One needs to draw a distinct line between art and obscenity and child pornography cannot be justified in the name of freedom of speech and expression
  • Parameters regarding pornography has to be decided as 19 (1)(a) of the Constitution is not “absolute” and is subject to reasonable restrictions
  • Asked the Centre to seek advice from the experts and suggestions from NCW on banning of websites dealing with adult and child pornography

 

Government Stand

  • Agencies like Interpol & CBI are taking necessary steps to block sites related to child pornography
  • It is possible to ban child pornography but it is not possible to ban pornographic websites as they are not under any country’s jurisdiction. Moreover most servers are located outside India
  • The method of blocking the URLs of such webites is usually ineffective as most such websites continue to operate by simply changing their URLs.

 

Aarambh Initiative – Country’s first ever hotline to curb sexual abuse of children through Internet & to remove child pornographic content online.

 

CBI

The Central Bureau of Investigation (CBI) has set up an Online Child Sexual Abuse and Exploitation (OCSAE) Prevention/Investigation Unit at its headquarter in New Delhi.

  • The unit will function under the CBI’s Special Crime Zone.
  • The unit's territorial jurisdiction would be throughout the country.

Functions of the Unit

  • It will probe offences covered under various provisions of the Indian Penal Code (IPC), the Protection of Children from Sexual Offences (POCSO) Act and the Information Technology (IT) Act, apart from other relevant laws.
  • It will collect and disseminate information on online child sexual abuse and exploitation.

 

NCPCR

The Ministry has enacted the Commissions for Protection of Child Rights Act (CPCR), 2005, extending pan-India except the State of Jammu and Kashmir, under which National Commission for Protection of Child Rights (NCPCR) is mandated to function for protection and promotion of child rights. The Commission may inquire into complaints and take suomotu notice of matters relating to-

  1. Deprivation and violation of child rights;
  2. Non-implementation of laws providing for protection and development of children;
  3. Non-compliance of policy decisions, guidelines or instructions aimed at mitigating hardships to and ensuring welfare of the children and to provide relief to such children;
  4. Or take up the issues arising out of such matters with appropriate authorities.

 

Functions and Powers

The Commission shall perform all or any of the following functions, namely:

  • Examine and review the safeguards provided by or under any law for the time being in force for the protection of child rights and recommend measures for their effective implementation.
  • Present to be central government, annually and at such other intervals, as the commission may deem fit, reports upon working of those safeguards;
  • Inquire into violation of child rights and recommend initiation of proceedings in such cases;
  • Examine all factors that inhibit the enjoyment of rights of children affected by terrorism, communal violence, riots, natural disaster, domestic violence, HIV/AIDS, trafficking, maltreatment, torture and exploitation, pornography and prostitution and recommend appropriate remedial measures;
  • Look into matters relating to children in need of special care and protection, including children in distress, marginalised and disadvantaged children, children in conflict with law, juveniles, children without family and children of prisoners and recommend appropriate remedial measures.
  • Study treaties and other international instruments and undertake periodic review of existing policies, programmes, and other activities on child rights and make recommendations for their effective implementation in the best interest of children.
  • Undertake and promote research in the field of child rights.
  • Spread child rights literacy among various sections of society and promote awareness of the safeguards available for protection of these rights through publications, media, seminars and other available means.
  • Inspect or cause to be inspected any juvenile custodial home or any other place of residence or institution meant for children, under the control of the Central Government or any State Government or any other authority including any institution run by a social organization, where children are detained or lodged for the purpose of treatment, reformation or protection and take up with these authorities for remedial action, if found necessary.
  • Inquire into complaints and take suo moto notice of matters related to:
    1. Deprivation and violation of child rights.
    2. Non implementation of laws providing for protection and development of children.
    3. Non compliance of policy decisions, guidelines or instructions aimed at mitigating hardships to and ensuring welfare of the children and to provide relief to such children or take up the issues arising out of such matters with appropriate authorities
  • Such other functions as it may consider necessary for the promotion of child rights and any other matter incidental to the above functions.
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GS-II : Governance
Interstate Migrant Workmen Act 1979

Interstate Migrant Workmen Act 1979

Part of: GS-II- Labour Act (PT-MAINS-PERSONALITY TEST)

The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 is an Act of the Parliament of India enacted to regulate the condition of service of inter-state labourers in Indian labour law. The Act's purpose is to protect workers whose services are requisitioned outside their native states in India. Whenever an employer faces shortage of skills among the locally available workers, the act creates provision to employ better skilled workers available outside the state.

 

Background

The employment system of interstate migrant labour was an exploitative system prevalent more or less in all over India. It was rampantly institutionalized in Orissa and in some other states. In Orissa the migrant labour (called dadan labour locally) through contractors or agents (called Sardars / Khatedars) are sent for work outside the state in large construction projects. This system lends itself to various abuses. Sardar promising at the time of recruitment that wages would be calculated on piece rate basis would not be settled every month as promised. Once the worker came under clutches of the contractor he took him to a far off place on payment of railways fare only. No working hours were fixed for interstate migrant workers and they had to work on all the days in a week under extremely bad working conditions.

Twenty eighth State Labour Ministers conference held on 21-10-1976 recommended for setting up of a small compact committee to examine all issues and suggest measures for eliminating the abuses prevalent in the interstate workers deployment. The compact committee which was constituted in February 1977, recommended the enactment of a separate central legislation to regulate the employment of interstate migrant workers.

 

Provisions

Rights of interstate workers

In addition to the general labour laws applicable to all workers, the interstate workers are entitled with

  • equal or better wages for the similar nature & duration of work applicable for the local workmen or stipulated minimum wages under the Minimum Wages Act, 1948 whichever is more,
  • displacement allowance (Section 14),
  • home journey allowance (Section 15) including payment of wages during the period of journey,
  • suitable residential accommodation and medical facilities free of charge on mandatory basis.
  • Termination of employment after the contract period without any liability.
  • Right to lodge compliant with the authorities within three months of any incident, accident, etc.

Role of contractors

Registration of all contractors who employs or employed five or more Interstate Migrant Workmen on any day of the preceding 12 months.

  • Furnish the details of workmen periodically in such forms as prescribed by state government.
  • Maintain the registers indicating the details of interstate workers and make available for scrutiny by the statutory authorities.
  • Issue of passbook affixed with a passport-sized photograph of the workman indicating the name and the place of the establishment where the worker is employed, the period of employment, rates of wages, etc. to every inter-state migrant workman.
  • Reporting by the contractor the incidence of fatal accident or serious injury of such workman to the specified authorities of both the States and also the next of kin of the workman.
  • Liable for the prescribed punishments for violations committed under this Act.

Role of principal employers

  • Registration of all principal employers who employs or employed directly or indirectly five or more Interstate Migrant Workmen on any day of the preceding 12 months.
  • Maintain the registers indicating the details of interstate workers and make available for scrutiny by the statutory authorities.
  • Every principal employer shall nominate a representative duly authorized by him to be present at the time of disbursement of wages by the contractor and it shall be the duty of such representative to certify the amounts paid as wages in such manner and may be prescribed.
  • Principal employer shall be liable to bear the wages and other benefits to interstate workers in case of failure by the contractor to effect the same.
  • Liable for the prescribed punishments for violations committed under this Act.

Role of state governments

  • Appointment of inspectors to oversee implementation of this act.
  • Appointment of registration officers to grant and revoke registration of contractors / principal employers / establishments.
  • Appointment of licensing officers to grant, suspend and revoke licenses to contractors / principal employers / establishments
  • Making rules for carrying out the purposes of this Act subject to the condition of previous publication
  • Entertaining appeals from the aggrieved parties and disposal of the same as per this Act

 

Proposed amendment

The Interstate Migrant Workers (Regulation of Employment and Conditions of Service) Amendment Bill, 2011 is proposed to make this Act gender neutral by amending its title and replacing the word ‘workman and workmen’ by the words ‘worker and workers’ respectively.[6] However, the lawmakers have not thought of bringing additional provisions to implement this Act strictly with more accountability and punishments for violations.

Possible improvements

  • All interstate workers should be registered in gram panchayat or municipality or corporation compulsory.
  • All interstate workers shall be provided with the benefits of Public Distribution System (PDS) Cards to avoid buying food grains and kerosene at higher prices. Adhar identity card shall be made compulsory for the interstate workers.
  • The remuneration to interstate workers shall be deposited in their bank accounts and not by cash by the contractors
  • Every state government shall mandatorily operate an internet portal indicating the registered principal employers, contractors, establishments and interstate workmen details including Adhar card data for general public information and verification. The details of interstate workmen shall be uploaded by the principal employers and contractors promptly. Non compliance by the principal employers or contractors is treated as violation of the Act and liable for punishment.
  • No contractor shall deploy the workers outside the state without getting registered in that state. All the details of the interstate workers deployment outside the state shall be made available to the state authorities promptly.
  • The state government authorities shall conduct mandatory yearly audit of all employers / contractors in a state regarding deployment of interstate workers and submit yearly compliance status or implementation report to the state assembly for their scrutiny.
  • The ongoing finance commission shall give weight age in devolution of central government funds to the states which are giving more employment to interstate workers as they are ahead in demographic transition. Demographic transition of a state is a real index & status of all round human and economical development.
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GS-II : Governance
Consumer Protection act

Consumer Protection act

Part of: GS-II- Rights/Consumer rights (PT-MAINS-PERSONALITY TEST)

The Lok Sabha passed the Consumer Protection Bill 2019 after due consideration and discussion. The Union Minister for Consumer Affairs, Food and Public Distribution said that the bill aims at protecting the interests of consumers by establishing authorities for timely and effective administration and settlement of consumers’ dispute, to simplify a number of rules, quick redressal of their complaints and consumers will be able to get speedy justice. He said the government aims to simplify the entire process of redressal of consumer grievances.

Under the Bill, there is provision for central government to set up a Central Consumer Protection Authority (CCPA) to promote, protect and enforce the rights of consumers and will be empowered to investigate, recall, refund and impose penalties. It will regulate matters related to violation of consumer rights, unfair trade practices, and misleading advertisements. There is also a provision for class action law suit for ensuring that rights of consumers are not infringed upon. The authority will have power to impose a penalty on a manufacturer or an endorser of up to 10 lakh rupees and imprisonment for up to two years for a false or misleading advertisement. 

Several countries like Canada, Estonia have devised advertisement regulations for unhealthy foods targeted at children. Countries such as the UK, Ireland and Belgium have specifically banned celebrity endorsement of unhealthy foods. The impact of such restrictions has been reported to be significant.

The present passed Bill seeks to replace the three-decade-old Consumer Protection Act, 1986.

Salient Features of the Bill

1.         Central Consumer Protection Authority (CCPA): Executive Agency to provide relief to a class of consumers. The CCPA will be empowered to-

  1. Conduct  investigations into violations of consumer rights and institute Complaints /Prosecution
  2. Order recall of unsafe goods and services
  3. Order discontinuance of Unfair Trade Practices and Misleading  Advertisements
  4. Impose penalties on Manufactures /Endorsers /Publishers of Misleading Advertisements

2.         Simplified Dispute Resolution process

i) Pecuniary Jurisdiction enhanced to-

  • District Commission –Up to Rs1 crore
  • State Commission- Between  Rs1 crore and Rs 10 crore
  • National Commission –Above Rs.10 crore

ii) Deemed admissibility after 21days of filing

iii) Empowerment of Consumer Commission to enforce their orders

iv) Appeals only on question of law after second stage

v) Ease of approaching consumer commission

  • Filing from place of residence
  • E-filing
  • Videoconferencing for hearing 

3.         Mediation

  • An Alternate Dispute Resolution (ADR) mechanism
  • Reference to Mediation by Consumer Forum wherever scope for early settlement exists and parties agree for it.
  • Mediation cells to be attached to Consumer Forum
  • No appeal against settlement through mediation

4.         Product Liability

A manufacturer or product service provider or product seller to be responsible to compensate for injury or damage caused by defective product or deficiency in services

The Basis for product liability action will be:

  • Manufacturing  defect
  • Design defect
  • Deviation from manufacturing specifications
  • Not conforming to express warranty
  • Failing to contain adequate instruction for correct use
  • Services provided arefaulty, imperfect or deficient

New Bill- Benefit to Consumers

Presently Consumer only have a single point of access to justice, which is time consuming. Additional swift executive remedies are proposed in the bill through Central Consumer Protection Authority (CCPA)

Deterrent punishment to check misleading advertisements and adulteration of products

Product liability provision to deter manufacturers and service providers from delivering defective products or deficient services

Ease of approaching Consumer Commission and Simplification of Adjudication process

Scope for early disposal of cases through mediation

Provision for rules for new age consumer issues: e-commerce & direct selling

 

Rights of consumers: Six consumer rights have been defined in the Bill, including the right to:

  1. be protected against marketing of goods and services which are hazardous to life and property;
  2. be informed of the quality, quantity, potency, purity, standard and price of goods or services;
  3. be assured of access to a variety of goods or services at competitive prices; and
  4. seek redressal against unfair or restrictive trade practices.

The bill proposes strict action against the advertiser in case of misleading advertisements but not against the media through which the advertisement is being publicised.

Celebrities can be fined up to ?10 lakh. For repeat offences, this may rise to ?50 lakh, with a jail term of up to five years.

 

Concerns

The principle of separation of powers:

  • The Bill does not specify that the Commissions will comprise a judicial member. If the Commissions were to have members only from the executive, then the principle of separation of powers may be violated. This is in contrast with the existing Consumer Protection Act, 1986, which states that the Commissions at various levels will be headed by a person qualified to be a judge.

Independence of these quasi-judicial bodies:

  • The Bill empowers the central government to appoint, remove and prescribe conditions of service for members of the District, State, and National Consumer Disputes Redressal Commissions. The Bill leaves the composition of the Commissions to the central government. This could affect the independence of these quasi-judicial bodies.

Qualification:

  • The Bill delegates the power of deciding the qualifications of the Commission’s President and members to the central government. It is in contrast to the 1986 Act which specifies the minimum qualification of the members.

Advisory function:

  • Consumer Protection Councils will be set up at the district, state, and national level, as advisory bodies. The State and National Councils are headed by Ministers in-charge of Consumer Affairs. The Bill does not specify whom the Councils will advise. If the Councils advise the government, it is unclear in what capacity such advice will be given.
    Within the Consumers Protection Act, there is a need for expansion of persons allowed to petition consumer courts. Due to the rigidity of the act, only a “consumer”—that is, someone who purchases goods and services, could approach the court to complain about harmful practices.

Unfair trade by rivals and penalizing misleading celebrity endorsement:

  • It does not include unfair trade practices by rival companies, which may negatively affect the sale of products.
  • The Act also hints at imposing penalties upon any celebrities who endorse misleading products and the extent of liability of advertisers or endorsers and celebrity rights and protection. The Act falls short on the extent of liability on stakeholders in such cases.

Standing Committee recommendations not addressed:

  • The right to terminate a contract on the grounds of quality of goods or services received.
  • In order to facilitate early disposal of cases, the involvement of advocates in complaints involving compensation value of up to Rs 20 lakh should be prohibited. It attributed the inordinate delay in disposal of cases to the deployment of advocates.
  • The Standing Committee noted that Consumer Commissions do not admit complaints in relation to services to which a special law applies. It recommended that a provision may be inserted to clarify that the proposed Bill will apply to any matter covered under a special law unless the special law excludes the application of the proposed Bill.
  • The advertising code presently being followed by the Advertising Standards Council of India (ASCI) should be given legal backing.

Suggestion for Improvement

  • Countries within the European Union provide consumers with a “distance contract,” wherein parties that conduct business (ONLINE, E-commerce) without being in each other’s presence can cancel the contract (sale) within 15 days from the date of purchase. Such a clause, that provides a “cooling off period” post-purchase, within which time a consumer can return an item and ask for a refund, will not only protect the consumer but also improve the quality of services offered.

 

Way Forward:

Misleading ads, tele-marketing, multi-level marketing, direct selling and e-commerce pose new challenges to consumer protection and will require appropriate and swift executive intervention to prevent consumer detriment.

However, certain issues such as the appointment of mediators to settle disputes are contentious as this would lead to arm-twisting of the weaker parties and may encourage corruption.

The Bill does not address the fundamental problem of protracted and complicated litigation, the bane of consumer forums constituted under the Consumer Protection Act of 1986. Instead, it provides an alternative to the consumer forums, in the form of mediation.

The setting up of a Consumer Authority and absence of provisions to streamline the conducting of cases in courts may only lead to greater regulations and complexities.

Addressing these issues is necessary to ensure that the new amendments bring about definitive improvements in the CPA.

 

Conclusion:

India is likely to cross China’s population by 2024 and consumerism is growing fast.

With the passage of the Consumer Protection Bill in Parliament, consumer rights are set to receive a massive boost. The new regulations put more responsibility on companies for misleading advertising and faulty products.

In a global first, it also lays out penalties for celebrities endorsing or promoting false advertising and adulterated goods.

The emergence of global supply chain, rise in global trade and rapid development of e-commerce have led to a new delivery system for goods and services and also provided new options and opportunities for consumers.

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GS-II : International Relations
Oil Crisis Past to Present

Oil crisis during 1973-74 :

  • Oil crisis, a sudden rise in the price of oil that is often accompanied by decreased supply. Since oil provides the main source of energy for advanced industrial economies, an oil crisis can endanger economic and political stability throughout the global economy.
  • In the post-World War II period there have been two major oil crises. The first occurred in 1973, when Arab members of OPEC (Organization of the Petroleum Exporting Countries) decided to quadruple the price of oil to almost $12 a barrel (see Arab oil embargo). Oil exports to the United States, Japan, and western Europe, which together consumed more than half the world’s energy, were also prohibited. OPEC’s decision was made in retaliation for Western support of Israel against Egypt and Syria during the Yom Kippur War (1973) and in response to a persistent decline in the value of the U.S. dollar (the denominated currency for oil sales), which had eroded the export earnings of OPEC states.
  • With the global capitalist economy already experiencing difficulties, these actions precipitated a steep recession accompanied by rising inflation. This forced capitalist countries to embark on a process of economic restructuring in order to reduce their dependency on oil and prompted fears that the United States might take military action in order to secure free access to its energy supplies. Although the oil embargo was lifted in 1974, oil prices remained high, and the capitalist world economy continued to stagnate throughout the 1970s.

 

Oil Crisis 1978-79:

  • Another major oil crisis occurred in 1979, a result of the Iranian Revolution (1978–79). High levels of social unrest severely damaged the Iranian oil industry, leading to a large loss of output and a corresponding rise in prices.
  • The situation worsened following the outbreak of the Iran-Iraq War (1980–88), which further added to the level of instability throughout the region. In 1981 the price of oil was stabilized at $32 per barrel.
  • By 1983, however, major capitalist economies had adopted more-efficient methods of production, and the problems of the 1970s had been transformed into a relative oversupply of oil rather than a shortage.

 

 

 

Reason for drop in oil prices by 2014

  • Oil prices have been one of the most watched trends in economics during the 21st century. From 1999 to 2008, the price of crude oil saw an unprecedented spike, going from under $25 per barrel to more than $160 per barrel.
  • Rapidly increasing demand in emerging economies such as China and India and production cuts by the Organization of Petroleum Exporting Countries (OPEC) in the Middle East drove the price of oil to its record heights.
  • Shortly thereafter, a deep global recession throttled demand for energy and sent oil and gas prices into a precipitous free fall. By the end of 2008, the price of oil had bottomed out at $53. The economic recovery that began the following year sent the price of oil back over $100; it hovered between $100 and $125 until 2014, when it experienced another steep drop.
  • Numerous factors contributed to the 2014 drop in oil prices. Economies such as China, whose rapid growth and expansion created an unquenchable thirst for oil in the first decade of the new millennium, began to slow after 2010. China is the world's largest country by population, so its lower oil demand had significant price ramifications.
  • Other large emerging economies such as Russia, India and Brazil experienced similar economic trajectories in the early 21st century – rapid growth during the first decade, followed by much slower growth after 2010.
  • The same countries that pushed up the price of oil in 2008 with their ravenous demand helped bring oil prices down in 2014 by demanding much less of it.
  • Spurred by the negative effect of high oil prices on their economies, countries such as the U.S. and Canada increased their efforts to produce oil. In the U.S., private companies began extracting oil from shale formations in North Dakota using a process known as fracking.
  • Saudi Arabia's decision between letting prices continue to drop or ceding market share by cutting production in an effort to send prices upward again, the Middle Eastern country kept its production stable, deciding that low oil prices offered more of a long-term benefit than giving up market share.

 

Why oil prices have come down to Rs.1/barell during COVID-19?

  • Pulling off all onerous feats since its inception, the Covid-19 crisis just added another victim to its list - oil.
  • In an unprecedented event, oil for the first time in history breached the $0 mark, forcing the mankind to readjust the axes – another impossibility coming true! The WTI (West Texas Intermediate) futures contract of May expiry fell by over 300% to trade at below ‘minus US$39 per barrel’ on the NYMEX on Monday, April 20th.
  • The Indian counterpart, MCX, accordingly had to settle the price at just INR 1 per barrel showing that it was unprepared for such an unusual volatility in the international markets.

What is Super Contango ?

  • A condition called ‘Super Contango’ has sent the oil markets into frenzy. A Contango market implies that oil traders believe crude prices will rally in the future. Thus, spot prices are being offered at super discounts to futures prices.

  • The primary reason behind this freefall is the lack of fuel demand across the world followed by a glut in global oil markets leading to an acute dearth of available storage capacities.
  • Thus, increasing the number of market participants who are unwilling to risk doing physical deliveries anymore.
  • Instead of obeying the future contracts at expiry, the idea of relentlessly selling the front month’s contract at the open market and rolling it over to the next month, appears more feasible.
  • Unlike Brent crude that is produced near the North Sea and settled in cash at expiry, West Texas Intermediate is produced in landlocked areas and has to be delivered physically, thus, making costs a burden for the latter from a transportation standpoint.
  • This leads to greater uncertainties revolving around WTI prices than Brent crude as can be seen from the fact that Brent crude prices declined less dramatically on Monday and were still trading at levels close to US$25/barrel.

What this means for the global economies?

  • With no recovery in sight in the foreseeable future, the key issue of oil storage is likely to stay. If the oil stays at pennies, the US shale companies would have to pay to dispose the excess stock off! As a result, they may have to further reduce the production by shutting down their rigs and oil wells to avoid plunging into deeper financial troubles.
  • Keeping aside the theoretical aspects, there are additional operational and strategic challenges in cutting production. Operationally, there is only up to an extent that a company can do so. To cut production further, they may have to seal their oil wells and thus, risk losing the asset permanently. Strategically, this would mean recurring capital and abandonment expenditures when the market revives and losing its market share to its competitors in the longer run.
  • If major oil producing nations like the OPEC countries choose to do this, their currency might devalue significantly.
  • However, cheaper fuel may appeal to consumers in the shorter run, but this would also mean lower or no dividend payments by the financially burdened oil companies to the pension funds in the longer run; indirectly affecting millions who are reliant solely on their pension incomes.

What does this mean for India?

  • The government earns a large chunk of its income from excise duties with roughly 90% of it coming from oil imports.
  • It is interesting to note that the prices for retailers have not been reduced since the government is using the buffer to fund its expenses. However, once the lockdown ends, the government can face increased pressure to reduce the fuel prices for consumers.
  • Indian oil companies, especially the E&P space (upstream) like ONGC and Oil India, may face tough times ahead because of increased pressure to sell their products at lower prices ahead.
  • The refiners and distributors (downstream) like HPCL, Reliance and IOCL are likely to see improved margins in the coming quarters, once the demand picks up again. As for the storage, if the Indian companies can manage their stockpile well, this is a good time to buy and reserve oil for future use.
  • As per the Reserve Bank of India, India’s current account deficit (CAD) stands at 0.2% of GDP, as of December quarter in FY20 as compared to 2.7% in same quarter in FY19. Since, India imports more than 80% of its oil consumption, lower oil prices are likely to reduce the CAD for the economy.
  • The current savings in CAD can, then, be used to continue financing the urgent relief measures against the domestic Covid-19 outbreak.

 

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GS-II : Governance
Fiscal Federalism

India’s Fiscal Federalism

In India, the Finance Commission and the Planning Commission promote fiscal federalism by carrying out systemic fiscal transfers in the nature of devolution or conditional ones but with the replacement of Planning Commission by NITI Aayog there is an urgent need for revisiting and redefining the fiscal architecture of India.

 

 

India’s Fiscal Federalism:

 

  • The Government of India Act 1919 and 1935 formalized the tenets of fiscal federalism and revenue sharing between the Centre and the states.
  • The 14th Finance Commission chaired by Dr. Y V Reddy, recommended 42% devolution of revenue to the states.
  • Goods and Services Tax was introduced in 2017 to streamline India’s indirect tax structure as a measure to promote cooperative federalism in India, giving the states an enhanced role in formulating and implementing the overhauled taxation system.
  • The NITI Aayog established in 2015 was expected to address new realities of macroeconomic management that were missed by the Planning Commission.

 

 

Need for Redefining India’s Fiscal Federalism

Horizontal imbalances and rising regional inequalities: Replacing the Planning Commission (which was mandated to give grants to the states as conditional transfers using the Gadgil-Mukherjee formula) with NITI Aayog (Government think tank with no resources to dispense) has reduced the policy outreach of government by relying only on single instrument of fiscal federalism i.e Finance commission. This approach if not reviewed can lead to a serious problem of increasing regional and sub-regional inequities.

Restructuring the Fiscal Federalism

India’s Fiscal Federalism needs to be restructured around the four pillars namely Finance Commission, NITI Aayog, GST and decentralization in order to eliminate the inadequacies of vertical and horizontal imbalances.

  1. Finance Commission must be relieved from the dual task of dealing with provision of basic public goods and services and capital deficits. It should be confined to focussing on removal of basic public goods imbalance (Type I).
  2. NITI Aayog can serve as the second pillar for dealing in the realm of infrastructure and capital deficits (Type II).
  • It should be engaged with the allocation of capital in a way different than that used by the Finance Commission with different parameters for allocation.
  • Regional Imbalances: NITI Aayog should receive significant resources (1% to 2% of the GDP) to remove regional and subregional disparities among states by reducing development imbalances in the areas of infrastructure deficit.
  • Independent Evaluation Office: NITI Aayog should be mandated to create an independent evaluation office which will monitor and evaluate the efficacy of the utilization of revenue and capital grants.
  • Decision-Making Body: It should also be an integral part of the decision making processes as it can effectively negotiate between the states for the transfer of resources.
  1. Decentralization can serve as the third pillar of the new fiscal federalism by strengthening local finances and state finance commission.The creation of an urban local body/Panchayati Raj institutions consolidated fund.
  • Centre and States should contribute an equal proportion of their Central GST (CGST) and State GST (SGST) collections and send the money to the consolidated fund of the third tier.
  • One-sixth sharing of the CGST and SGST with the third tier can generate more than 1% of the GDP every year for the financing of public goods by urban-level bodies.
  • State Finance Commissions should be accorded the same status as the Union Finance Commission and the 3Fs of democratic decentralization (funds, functions, and functionaries) should be implemented properly.
  1. Goods and Services Tax should be simplified in its structure and can serve as the fourth pillar of our fiscal federalism, by ensuring:
  • Single Rate GST: with suitable surcharges on “sin goods,” (goods that are harmful to society and individuals, for example, alcohol and tobacco, drugs, etc), zero ratings of exports and reforming the Integrated Goods and Services Tax (IGST) and the e-way bill.
  • Transparency: The GST Council should undertake reforms in an informed and transparent manner, by creating its own secretariat and independent experts (as its staff).

Challenges of  fiscal  federalism

  • Fiscal federalism is the economic counterpart to political federalism.
  • It assigns functions to different levels of government and also offers appropriate fiscal instruments for carrying out these functions.
  • Determination of these specific fiscal instruments is a challenging task.
  • Building the principles into an actual scheme of assignment of taxes to different levels of government in a Constitution is difficult.
  • In India, income tax is levied only by the Central government though shared with the States.
  • Given the possibility of imbalance between resources and responsibilities, many countries have a system of inter-governmental transfers.
  • There is huge economic and cultural diversity among the various States. It is a terrible mistake to presume that all of India can be governed from Delhi.
  • Elected State governments and leaders cannot be made dummies without any fiscal powers for long.
  • This fiscal federalism tension between the Centre and States can erupt into something more dangerous and spread wide.

 

 

 

 

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GS-II : International Relations
SAGAR programme- Indian Ocean Rim association (IORA)

SAGAR programme- Indian Ocean

Part of: GS-II- SAGAR Doctorine and Indian Ocean (PT-MAINS-PERSONALITY TEST)

India has for a long time had a “continental outlook,” with insufficient attention paid to maritime aspects of security. But this has begun to change over the last two decades, a reflection of India’s growing economy and the resultant need for secure trade routes and the growing security competition in the maritime space as a consequence of China’s naval expansion.

One aspect of this shift has been India’s efforts to build security partnerships in the Indian Ocean region. On this score, the record of India’s strategic shift is at best mixed. Indeed, while there are often headlines about India’s successes, with an example being India’s outreach to Indonesia with India gaining access to a strategically vital Sabang port earlier this month, in fact, India’s efforts to partner with other states have actually been less than successful, be it an agreement with Seychelles or the Maldives.

Significance of Indian Ocean

The geo-political significance of the Indian Ocean stems from the fact that it is a centre piece in the wider Indian Ocean Region (IOR). The combination of economic growth and slowdown, military expansion, increasing demand for natural resources, demographics combined with the geo-political situation, increased presence of nuclear capable actors and variances in regional structures of governance, highlights the geo-political significance of this area.

Major points that merit attention are: -

  • The Indian Ocean is third largest water body of the world that has vital sea lanes of communication crisscrossing it and which feeds Asia’s largest economies. Around 80 per cent of the world’s seaborne oil trade passes through the choke points of this ocean and therefore it literally connects the east to the west.
  • The varying system of governance in the area determines the outline of the regional security architecture. The relations between nations both intra and extra regional shapes the complex matrix that define the overall architecture. Changes in political thought processes and any alteration in relations could alter the security scenario of the region.
  • There has been a gradual to an accelerated expansion of maritime forces and their capabilities in the region. The growing presence of extra regional powers and nuclear capable nations has further altered the existing security framework. This is affecting the existing military balance and the impending imbalance could create a new architecture that could affect the prevailing security scenario.
  • The economic upsurge of some nations and stagnation/slowdown of others is throwing up challenges that could affect the regional and international markets. The lack of intra-regional trade as compared to the extra-regional trade has limited the relations between nations in the region. Added to it is the growing competition and race for exploiting available natural resources, which could bring in new challenges to the region in times to come.

 

SAGAR Programme (Security and Growth for All in the Region)

SAGAR Doctrine was unveiled by India in 2016 underlining the growing salience of the Indian Ocean and global maritime commons in India’s strategic calculus. It calls for intensifying cooperation among navies and maritime agencies of the world to engineer virtuous cycles of cooperation. It is a maritime initiative which gives priority to Indian Ocean region for ensuring peace, stability and prosperity of India in Indian Ocean region.

Importance:

  • SAGAR Doctrine approaches significant importance while India playing the role of a security provider for the entire Indian Region.
  • It calls for intensifying cooperation among navies and maritime agencies of the world to engineer virtuous cycles of cooperation.
  • The goal of it is to seek a climate of trust and transparency; respect for international maritime rules and norms by all countries; sensitivity to each other`s interests; peaceful resolution of maritime issues; and increase in maritime cooperation.

Key Points

  1. SAGAR is a term coined by PM Modi in 2015 during his Mauritius visit with a focus on blue economy.
  2. It is a maritime initiative which gives priority to Indian Ocean region for ensuring peace, stability and prosperity of India in Indian Ocean region.
  3. The goal is to seek a climate of trust and transparency; respect for international maritime rules and norms by all countries; sensitivity to each other`s interests; peaceful resolution of maritime issues; and increase in maritime cooperation.
  4. It is in line with the principles of Indian Ocean Rim Association.

 

Indian Ocean Rim Association (IORA)?

  • The Indian Ocean Rim Association (IORA) was previously named the Indian Ocean Rim Initiative.
  • It was also called the Indian Ocean Rim Association for Regional Cooperation or the IOR-ARC for short.
  • It is a regional tripartite forum that gathers government representatives, academia and business leaders for encouraging cooperation and greater interaction between them. 
  • The organisation is founded upon the values of open regionalism for boosting economic cooperation especially on the realms of trade facilitation, investment, the region’s social development and promotion.
  • Currently, it has 21 member states. 
  • The IORA was formed in March 1997. 
  • The idea for the IORA was formed by India and South Africa.

Member Countries of the Indian Ocean Rim Association

Australia

Madagascar

Seychelles

Bangladesh

Malaysia               

Singapore

Comoros

Maldives

South Africa

India

Mauritius

Sri Lanka

Indonesia

Somalia

Tanzania

Iran

Mozambique

Thailand

Kenya

Oman

Yemen

United Arab Emirates

Dialogue Partners of the Indian Ocean Rim Association

China

Germany

United States

Egypt

Japan

Turkey

France

United Kingdom

South Korea

Indian Ocean Rim Association (IORA) Objectives

  • Promoting balanced development and sustainable growth in the regions of the Member States.
  • Considering areas that provide maximum opportunities for development through economic cooperation.
  • Other objectives to help member countries achieve an enhanced flow of goods, services, investment, and technology include:
    • Promoting liberalisation
    • Removing impediments
    • Lowering barriers 

Indian Ocean Dialogue (IOD)

The Indian Ocean Dialogue (IOD) is a flagship initiative of the Indian Ocean Rim Association (IORA), with its origins in the 13th Council of Ministers meeting, held in November 2013 in Perth, Australia.

The IORA Sustainable Development Program (ISDP)

The ISDP is a project-based program intended to meet the needs of the Member States of the IORA. Project proposals are formulated by the Member countries in collaboration with IORA Secretariat. As an instrument of sustainable development, the ISDP Program is expected to strengthen regional cooperation and forge new partnerships within the IORA Member States and with Dialogue Partners.

ISDP Objectives:

  • Encouraging lesser developed member countries to participate in IORA.
  • Encouraging capacity building, peer-to-peer learning and sharing of information to IORA member countries.
  • Enhancing and strengthening bonds amongst member countries.
  • Extending opportunities to lesser developed member countries to share their experience and expertise in specific areas that would benefit their economies.
  • Encouraging less developed member countries to host various IORA events.

IORA Council of Members Meeting 2019

  • Held in Abu Dhabi under the theme ‘Promoting a Shared Destiny and Path to Prosperity in the Indian Ocean’.
  • The UAE was declared Chair and Bangladesh was declared Vice-Chair for the period 2019-2021.
  • India published guidelines for Disaster Risk Management. India also encouraged partners to join the Coalition for Disaster Resilient Infrastructure that was launched in the United Nations in 2019. 
  • The Indian navy launched the Information Fusion Centre in Gurugram to assist member countries of the Indian Ocean Region with real-time crisis information. With this, India is aiming at becoming a net provider of information. Countries that are part of this information support structure of India are:
    • Maldives
    • Mauritius
    • Seychelles
    • Sri Lanka
    • Bangladesh

Key Points

  • It is the only ministerial-level organization that focuses purely on the Indian Ocean region, bound together by growing economic and trade linkages and a shared interest in promoting prosperity, peace and stability.
  • In 2014, India hosted the first Indian Ocean Dialogue in Kochi, Kerala bringing together officials, academics and other strategic thinkers to discuss six broad themes – the geo-political contour of the Indian Ocean Region, maritime security challenges, strengthening regional institutions, information sharing, cooperation in disaster relief and management, and economic cooperation. The Kochi Consensus was adopted as its outcome document.
    • The Indian Ocean Dialogue (IOD) is a flagship initiative of IORA, with its origins in the 13th Council of Ministers meeting, held in November 2013 in Perth, Australia.
    • The sixth edition of IOD will be held on 13 December 2019 in New Delhi, India.

SAGAR MAITRI

  • Oceanographic research vessel of Defence Research and Development Organisation (DRDO)INS Sagardhwani, embarked on a two-month-long SAGAR MAITRI Mission-2.
  • SAGAR MAITRI is a unique initiative of DRDO with the broad objective of “Safety And Growth for All in the Region (SAGAR)” to promote closer co-operation in socio-economic aspects as well as greater scientific interaction especially in ocean research among Indian Ocean Rim (IOR) countries.
  • “MAITRI (Marine & Allied Interdisciplinary Training and Research Initiative)” is the specific scientific component of DRDO.

Objectives of SAGAR MAITRI

  • The prime objectives of the SAGAR MAITRI Mission are data collection from the entire North Indian Ocean, focussing on the Andaman Sea and adjoining seas and establishing a long-term collaboration with eight IOR countries in the field of ocean research and development.
  • The programme also aims at establishing long term scientific collaboration with these countries in the field of ‘Ocean Research & Development’ and data collection with a focus on the Andaman Sea.

The IOR countries, include Oman, Maldives, Sri Lanka, Thailand, Malaysia, Singapore, Indonesia and Myanmar.

 

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GS-III : Economic Issues
e-Commerce and recent Rules-FDI

e-Commerce and recent Rules-FDI

Part of: GS-III- Economy (PT-MAINS-PERSONALITY TEST)

Electronic commerce or e-commerce is a business model that lets firms and individuals buy and sell things over the Internet. Propelled by rising smartphone penetration, the launch of 4G networks and increasing consumer wealth, the Indian e-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion in 2017.

India’s e-commerce revenue is expected to jump from US$ 39 billion in 2017 to US$ 120 billion in 2020, growing at an annual rate of 51%, the highest in the world. The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second-largest e-commerce market in the world by 2034.

 

Types of e-Commerce in India

  • It is a type of business model, or segment of a larger business model, that enables a firm or individual to conduct business over an electronic network, typically the internet.
  • In India, there are three types of e-commerce business model:
    • Inventory base model of e-commerce
    • Marketplace base model of e-commerce
    • The hybrid model of inventory based and marketplace model.

Marketplace and Inventory-Based Model

  • Marketplace based model of e-commerce means providing an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between the buyer and seller.
  • In a marketplace model, the e-commerce firm is not allowed to directly or indirectly influence the sale price of goods or services and is required to offer a level playing field to all vendors.
  • Inventory based model of e-commerce means an e-commerce activity where the inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly.

 

Advantages of e-Commerce

  • The process of e-commerce enables sellers to come closer to customers that lead to increased productivity and perfect competition. The customer can also choose between different sellers and buy the most relevant products as per requirements, preferences, and budget. Moreover, customers now have access to virtual stores 24/7.
  • e-Commerce also leads to significant transaction cost reduction for consumers.
  • e-commerce has emerged as one of the fast-growing trade channels available for the cross-border trade of goods and services.
  • It provides a wider reach and reception across the global market, with minimum investments. It enables sellers to sell to a global audience and also customers to make a global choice. Geographical boundaries and challenges are eradicated/drastically reduced.
  • Through direct interaction with final customers, this e-commerce process cuts the product distribution chain to a significant extent. A direct and transparent channel between the producer or service provider and the final customer is made. This way products and services that are created to cater to the individual preferences of the target audience.
  • Customers can easily locate products since e-commerce can be one store set up for all the customers’ business needs
  • Ease of doing business: It makes starting, managing business easy and simple.
  • The growth in the e-commerce sector can boost employment, increase revenues from export, increase tax collection by ex-chequers, and provide better products and services to customers in the long-term.
    • The e-commerce industry has been directly impacting the micro, small & medium enterprises (MSME) in India by providing means of financing, technology and training and has a favourable cascading effect on other industries as well.

Disadvantages of e-Commerce

  • There is lesser accountability on part of e-commerce companies and the product quality may or may not meet the expectations of the customers.
  • It depends strongly on network connectivity and information technology. Mechanical failures can cause unpredictable effects on total processes.
  • Definite legislations both domestically and internationally to regulate e-commerce transactions are still to be framed leading to lack of regulation of the sector.
  • At times, there is a loss of privacy, culture or economic identity of the customer.
  • There is a chance of fraudulent financial transactions and loss of sensitive financial information.
  • The Internet is borderless with minimum regulation, and therefore protecting intellectual property rights (IPR) on the Internet is a growing concern. There are currently several significant IPR issues including misuse of trademark rights.

 

Government Initiatives Regarding e-Commerce in India

  • In February 2019, a draft National e-Commerce policy has been prepared and placed in the public domain, which addresses six broad issues of the e-commerce ecosystem viz. e-commerce marketplaces; regulatory issues; infrastructure development; data; stimulating domestic digital economy and export promotion through e-commerce.
  • The Department of Commerce initiated an exercise and established a Think Tank on ‘Framework for National Policy on e-Commerce’ and a Task Force under it to deliberate on the challenges confronting India in the arena of the digital economy and electronic commerce (e-commerce).
  • The Reserve Bank of India (RBI) has decided to allow "interoperability" among Prepaid Payment Instruments (PPIs) such as digital wallets, prepaid cash coupons and prepaid telephone top-up cards. RBI has also instructed banks and companies to make all know-your-customer (KYC)-compliant prepaid payment instruments (PPIs), like mobile wallets, interoperable amongst themselves via Unified Payments Interface (UPI).
  • FDI guidelines for e-commerce by DIPP: In order to increase the participation of foreign players in the e-commerce field, the Government has increased the limit of foreign direct investment (FDI) in the e-commerce marketplace model for up to 100% (in B2B models).
  • Government e-Marketplace (GeM) signed a Memorandum of Understanding (MoU) with Union Bank of India to facilitate a cashless, paperless and transparent payment system for an array of services in October 2019.
  • The heavy investment of Government of India in rolling out the fibre network for 5G will help boost e-commerce in India
  • In the Union Budget of 2018-19, the government has allocated Rs 8,000 crore (US$ 1.24 billion) to BharatNet Project, to provide broadband services to 150,000-gram panchayats.

DRAFT NATIONAL eCommerce POLICY

  • Data
    • Individual Right: An Individual owns the right to his data. Therefore, data of an individual is must be used with his/ her express consent.
    • Indian Control Over Data: There should be a restriction on cross-border data flow. The policy bats for data localization and states that the data generated within India must be stored within India.
    • If a business entity that collects or processes any sensitive data in India and stores it abroad, should not share data with business entities outside India, for any purpose, even with customer consent.
    • A request from Indian authorities to have access to all such data stored abroad shall be complied with immediately
    • All e-Commerce websites, apps available for download in India should have a registered business entity here. Non-compliant e-Commerce app/website to be denied access here.
  • Infrastructure development
    • It stressed on developing physical infrastructure for a robust digital economy and suggested steps for developing the capacity for data storage in India.
    • Incentives will be provided to companies for establishing data localization location facilities like data centers, server farms within India.
    • Firms to get 3 years to comply with local data storage requirements and data storage facilities should be given ‘infrastructure status’.
    • Domestic alternatives to foreign-based clouds and email facilities should be promoted through budgetary support.
  • e-Commerce marketplaces
    • The policy mentions that foreign direct investment (FDI) is allowed only in the marketplace model, not in inventory based model.
    • This is in line with the e-Commerce guidelines given by the government in December.
    • The policy also takes into account the interests of domestic manufacturers and Micro, Small and medium enterprises and seeks to create a level playing field for them in online retail.
    • To curbs on Chinese e-commerce exports the Gifting route (where goods are shipped as gifts), often used by Chinese apps, websites should be banned for all parcels except life-saving drugs.
    • To prevent fake products, Seller details should be made available on the website for all products and sellers must provide an undertaking to the platform about the genuineness of products.
  • Stimulating the domestic digital economy
    • There is a need to formulate domestic industrial standards for smart devices and IoT devices to meet the goals of the country like consumer protection.
    • Online custom clearance will eliminate the need for manual processes and will help in ease of doing business.
    • Continued focus on Digital India initiatives by the Government will help in the development of the e-Commerce sector.
  • Export promotion
    • e-Commerce startups may get ‘infant industry’ status raising the limit for courier shipments from Rs 25,000 to boost e-Commerce export.
    • To promote export it is necessary to lower the cost of transport, reducing paperwork, reducing delays at ports and airports etc.
    • Integrating Customs, RBI and India Post to improve tracking of imports through e-Commerce.

New Rules –FDI

The government has issued new rules regarding Foreign Direct Investment (FDI) in e-commerce.

  • The Department of Industrial Policy & Promotion (DIPP) issued a clarification to the existing rules pertaining to FDI in e-commerce companies.

New Rules by DIPP

  • The vendors that have any stake owned by an e-commerce company (equity stake) cannot sell their products on that e-commerce company’s portal.
  • Any vendor who purchases 25% or more of its inventory from an e-commerce group company will be considered to be controlled by that e-commerce company, and thereby barred from selling on its portal.
  • The policy mandates that no seller can sell its products exclusively on any marketplace platform and that all vendors on the e-commerce platform should be provided services in a “fair and non-discriminatory manner”. Services include fulfillment, logistics, warehousing, advertisement, payments, and financing among others.

Why New Rules?

  • Large e-commerce companies such as Amazon and Flipkart, while not owning inventory themselves, have been providing a platform for their group companies such as CloudTail and WS Retail respectively.
  • E-commerce companies with foreign investments can only operate under the marketplace model, and not under the inventory model, which has allowed them to sell products much cheaper than independent sellers.
  • Some see this as skewing the playing field, especially as these vendors enjoyed special incentives from the e-commerce firm, over others.

Impact of DIPP Norms

  • The DIPP policy is directed at protecting small vendors on e-commerce websites. It seeks to ensure small players selling on the portals are not discriminated against in favor of vendors in which e-commerce companies have a stake.
  • Smaller marketplaces that do not have a stake in any vendors will also be able to now compete with the big firms. It can also boost the Start-Up India initiative of the government.

FDI guidelines for e-Commerce

  • DIPP has issued guidelines for FDI in e-commerce:

In India 100% FDI is permitted in B2B e-commerce, however, No FDI is permitted in B2C e-commerce.  100% FDI under automatic route is permitted in the marketplace model of e-commerce, while FDI is not permitted in inventory based model of e-commerce.

 

Conclusion

e-Commerce has become an important part of many multilateral negotiations such as Regional Comprehensive Economic Partnership (RCEP), WTO, BRICS etc. e-Commerce still faces various issues like international trade, domestic trade, competition policy, consumer protection, information technology etc. As a growing sector with huge interest from both domestic and international players, it becomes pertinent to regulate it keeping in mind the interest of both entrepreneurs and consumers. A conducive environment and a level playing field should be encouraged.

JAI HIND JAI BHARAT yes

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GS-III :
TDB approves financial support to MyLab Discovery Solutions

TDB approves financial support to MyLab Discovery Solutions for ramping up production of COVID-19 diagnostic kits

The Technology Development Board (TDB) has approved financial support to MyLab Discovery Solutions, Pune, for ramping up production of COVID-19 diagnostic kits. Mylab Discovery Solutions is the first indigenous company to develop real-time PCR based molecular diagnostic kit which screens and detects COVID 19 from samples. The support from TDB will ensure ramp up in the production of the kits through automation of the facility. This aid is supposed to increase the capacity to one lakh tests per day from the current numbers of thirty thousand. The kit has been approved by ICMR and CDSCO and will be put to use in a short time, considering its urgent requirement. TDB is a statutory body under the Department of Science and Technology.

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GS-III :
TIFAC plans to come up with white paper

TIFAC plans to come up with white paper on strategising revival of Indian economy after COVID -19

The Technology Information, Forecasting and Assessment Council (TIFAC), an autonomous technology think tank under the Department of Science & Technology (DST), has planned to come up with a white paper on strategising revival of Indian economy after COVID-19.

The key focus  is reported to be on strengthening Make in India initiatives, commercialization of Indigenous technology, developing a technology-driven transparent Public Distribution System (PDS) among others. ,Navigating the way ahead with the COVID-19 virus required well thought out actions which could minimize adverse impact on human health and maximise economic well being. TIFAC’s team of scientists from a range of disciplines are exploring the best methods to revive the Indian economy and reduce the impact on it post COVD-19.

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GS-II :
New Development Bank financial assistance

New Development Bank financial assistance OF 5 billion dollars to BRICS countries
INDIA appreciated efforts of New Development Bank on fast tracking of financial assistance of about five billion dollars to BRICS countries including Emergency Assistance of one billion dollar to India to combat COVID-19 pandemic. Addressing the 5th Annual Meeting of Board of Governors through video conference yesterday, Ms. Sitharaman also suggested that, assistance under this facility to be enhanced to 10 billion dollars. She also mentioned about Prime Minister Narendra Modi’s initiative of creating a COVID-19 Emergency Fund and India’s efforts in supplying critical medicine to the needy countries to tackle the COVID-19. The Finance Minister of Brazil thanked India for the timely help it received from India in the form of critical drugs.

The NDB was established by the BRICS countries -Brazil, Russia, India, China and South Africa in 2014. NDB has so far approved 14 Indian projects for an amount of 4,183 million dollar. The purpose of the Bank is to mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries to complement the existing efforts of multilateral and regional financial institutions for global growth and development. 

 

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GS-III :
One more institute of CSIR started whole-genome sequencing of coronavirus

One more institute of CSIR started whole-genome sequencing of coronavirus

One more institute of the Council of Scientific and Industrial Research (CSIR) has started whole-genome sequencing of novel coronavirus. Chandigarh-based Institute of Microbial Technology (IMTech) has taken up the task of large-scale genome sequencing of the virus. Earlier, the Centre for Cellular and Molecular Biology and the Institute of Genomic and Integrated Biology had started working on it.
The complete genome sequence information will enable researchers to gain insights about the origins of the virus, the different types of strains circulating in India and how it has spread across the length and breadth of the country. He said, the genomic resource obtained from this sequencing will also allow identification of new targets for diagnosis and drugs for COVID-19.
The whole-genome sequencing is a method used to determine the complete DNA sequence of a specific organism’s genome. As the Institute is known for its specialization in microbial and genomic research, CSIR-IMTech will perform sequencing of the SARS-Cov-2 RNA genome isolated from clinical samples.
So far, 9000 samples have been sequenced internationally as per Global Initiative on Sharing All Influenza Data (GISAID) - a public platform started by the WHO in 2008 for countries to share genome sequences.

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