Polity & Governance
- Prez Rejects Petition Demanding Disqualification of 11 AAP MLAs in Office-of-Profit Case
- ‘National Integration Council meeting must be called to build consensus’
Issues related to Health & Education
- Why must India have a National Registry of Voluntary Organ Donors?
- RBI panel proposes stricter rules for core investment companies
- Centre approves Rs 25,000 crore bailout fund for stalled housing projects
- Rising NPAs: Banks’ exposure to unrated loans increased threefold in three years
Bilateral & International Relations
- Minister of State for Shipping inaugurates the first ever ‘BIMSTEC Ports’ Conclave’
- Cabinet approves protocol amending the Convention between India and Brazil
Art & Culture
- Thiruvalluvar: Why is an ancient Tamil saint at the centre of a BJP-DMK slugfest?
Science & Technology
- Agriculture Ministry relaxes fumigation condition on imported onion
Key Facts for Prelims
- Shala Darpan portal for Navodaya Vidyalaya Samiti launched
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Polity & Governance
Prez Rejects Petition Demanding Disqualification of 11 AAP MLAs in Office-of-Profit Case
In a relief for the Aam Aadmi Party, President of India has rejected a petition demanding disqualification of 11 party MLAs for allegedly holding office of profit President Ram of India
What is the issue?
- In March 2017, a petition was filed before the president of India seeking disqualification of 11 AAP (Aam Adami Party) lawmakers claiming that they were enjoying office of profit by being co-chairpersons of district disaster management authorities in 11 Delhi districts.
- The issue was referred to Election Commission which gave an opinion in August this year that holding the office of co-chairperson of a district disaster management authority does not attract disqualification as MLA since there is no remuneration by way of salary and allowances.
- As per law, the President accepts the opinion of the Election Commission in cases of office of profit.
What are the basic criteria to disqualify an MP or MLA?
Basic disqualification criteria for an MP are laid down in Article 102 of the Constitution, and for an MLA in Article 191.
They can be disqualified for
- Holding an office of profit under government of India or state government;
- Being of unsound mind;
- Being an undischarged insolvent
- Not being an Indian citizen or for acquiring citizenship of another country
What is ‘office of profit’?
The word ‘office’ has not been defined in the Constitution or the Representation of the People Act of 1951.
It can be done for holding:
- An office;
- An office of profit;
- An office under the union or state government;
- An office exempt by law from purview of disqualificatory provisions.
All four conditions have to be satisfied before an MP and MLA can be disqualified. A legislator cannot be disqualified from either the Parliament or state Assembly for holding any office.
Underlying principle for including ‘office of profit’ as criterion for disqualification:
- Makers of the Constitution wanted that legislators should not feel obligated to the Executive in any way, which could influence them while discharging legislative functions. In other words, an MP or MLA should be free to carry out her duties without any kind of governmental pressure. The intent is that there should be no conflict between the duties and interests of an elected member.
- The office of profit law simply seeks to enforce a basic feature of the Constitution- the principle of separation of power between the legislature and the executive.
How do courts or EC decide whether an MP or MLA has profited from an office?
- If the office carries, or entitles the holder to, any pecuniary gain other than reimbursement of out of pocket/actual expenses, then the office will be an office of profit for the purpose of Article 102 (1)(a).
- However, a person who acquires a contract or licence from a government to perform functions, which the government would have itself discharged, will not be held guilty of holding an office of profit.
Role of Judiciary in defining the ‘office of profit:
The Supreme Court in Pradyut Bordoloi vs Swapan Roy (2001) outlined the four broad principles for determining whether an office attracts the constitutional disqualification.
First, whether the government exercises control over appointment, removal and performance of the functions of the office.
Second, whether the office has any remuneration attached to it.
Third, whether the body in which the office is held has government powers (releasing money, allotment of land, granting licenses etc.).
Fourth, whether the office enables the holder to influence by way of patronage.
The Supreme Court, while upholding the disqualification of Jaya Bachchan from Rajya Sabha in 2006, had said that for deciding the question as to whether one is holding an office of profit or not, what is relevant is whether the office is capable of yielding a profit or pecuniary gain and not whether the person actually obtained a monetary gain.[Ref: The Hindu, Indian Express, India Today]
‘National Integration Council meeting must be called to build consensus’
The demolition of Babri Masjid signified a total breakdown of not just the rule of law, but of the Constitution itself and askes for the reconstituting of National Integration Council.
National Integration Council (NIC)
- It was constituted to combat the communalism, regionalism, linguism and narrow-mindedness as a follow up of National Integration Conference under the then Prime Minister Jawaharlal Nehru in 1961.
- NIC aims to examine the problem of national integration and make recommendations to deal with it.
- It is an extra-constitutional body.
- Chaired by: Prime Minister of India
- Till now,16 meetingsof NIC have been held with last meeting held in 2013 which passed resolution on maintaining communal harmony and ending discrimination by condemning atrocities on Scheduled Castes and Scheduled Tribes.
Issues related to Health & Education
Why must India have a National Registry of Voluntary Organ Donors?
Recently, the Punjab and Haryana High Court directed the Centre and the Punjab, Haryana and Chandigarh, to implement ‘The Transplant of Human Organs and Tissues Act, 1994’, and to also consider the recommendations of an Expert Committee set up to give suggestions for an effective implementation of the law.
What is The Transplant of Human Organs and Tissues Act, 1994?
- The 1994 Act governs the transplantation of human organs and tissues in India, including the donation of organs after death.
- In May 2019, the Post Graduate Institute of Medical Education & Research, Chandigarh (PGIMER) was asked to constitute a committee of doctors to submit a report containing measures to promote cadaver donations.
Recommendations of the committee
- Creation of a ‘National Registry of Voluntary Organ Donors’ based on a unique national ID number given by the National Organ & Tissue Transplant Organisation (NOTTO).
- Database of all surgeons and medical experts sanctioned for the transplantation should be maintained.
- Identity of the donor and the recipient should be verified through a biometric system to prevent fraud in the process.
- A donor card should be treated as a Living Directive for cadaver donations
- Mandatory informed consent should be taken in case of live donors after explaining to them the risks involved in donation surgery.
- A right should be given to the donor to withdraw consent any time before the surgery.
- A ‘wait period’ or cooling period should be allow for rethinking on the part of the live donor,
- A procedure for mandatory confidential psychological analysis of the donor in private before presenting them to the authorization committee.
- Monetary reimbursement to the donor for transplantation expenses
- Government hospitals and transplant centres should be given priority to improve the deceased organ donation. Measures should be taken to prevent the trend of employing visiting surgeons at private centres in violation of practice registration norms.
- There needs to be the involvement of certified NGOs and religious bodies to create positive awareness as the process of organ donation and consent involves religious beliefs, social taboos and certain apprehensions by the relatives.
RBI panel proposes stricter rules for core investment companies
Core investment companies (CICs) will have to form board level committees, appoint independent directors and conduct internal audits, if the Reserve Bank of India (RBI) decides to accept the recommendations of a working group formed to improve their corporate governance standards.
- The recommendations were made by the Working Group to ‘Review Regulatory and Supervisory Framework for Core Investment Companies’, headed by Tapan Ray.
Recommendations of RBI panel on CICs
Strengthening governance practices:
- Constitution of board level committees viz. audit committee, nomination and remuneration committee and group risk management committee to strengthen the governance practices.
- Employees or executive directors of group companies should be excluded from the CICs board.
- Employ independent directors, prepare consolidated financial statements and conduct internal audits
- The number of layers of CICs in a group should be restricted to two. Any CIC within a group shall not make investment through more than a total of two layers of CICs, including itself.
- Layers refers to the subsidiary/subsidiaries of the holding company.
Step – down CICs:
- A Step-down CIC refers to the subsidiary company of a company which is a subsidiary of another company.
- Step-down CICs may not be permitted to invest in any other CIC, while allowing them to invest freely in other group companies.
- Capital contribution by a CIC in a step-down CIC, over and above 10 per cent of its owned funds, should be deducted from its adjusted net worth, as applicable to other NBFCs.
Core Investment Companies (CIC)
- A Core Investment Company (CIC) is categorized as a Non-Banking Financial Company (NBFC) by the Reserve Bank of India (RBI).
- These companies predominately invest in shares of its own group companies for stake holding but cannot engage in trading of these instruments or carry out any other kind of financial activity.
- None of the Core Investment companies can accept deposits. This is one of the basic eligibility criteria of a Core Investment Company.
What do the term public funds include?
- Public funds are not the same as public deposits. Public funds include public deposits, inter-corporate deposits, bank finance and all funds received whether directly or indirectly from outside sources such as funds raised by issue of Commercial Papers, debentures etc.
- However, even though public funds include public deposits in the general course, it may be noted that CICs/CICs-ND-SI cannot accept public deposits.
What is Systemically Important Core Investment Company (CIC-ND-SI)?
- A CIC-ND-SI is a Non-Banking Financial Company with asset size of Rs 100 crore and above.
Carrying on the business of acquisition of shares and securities and which satisfies the following conditions as on the date of the last audited balance sheet:
- It holds not less than 90% of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies;
- Its investments in the equity shares in group companies constitutes not less than 60% of its net assets
- It does not trade in its investments in shares, bonds, debentures, debt or loans in group companies except through block sale for the purpose of dilution or disinvestment;
- It does not carry on any other financial activity as referred in RBI act, 1934 except investment in bank deposits, money market instruments, government securities, loans to and investments in debt issuances of group companies or guarantees issued on behalf of group companies.
- It accepts public funds.
Centre approves Rs 25,000 crore bailout fund for stalled housing projects
The Union Cabinet has approved the creation of an Alternative Investment Fund (AIF) of ₹25,000 crore to provide last-mile funding for stalled affordable and middle-income housing projects.
About the Alternative Investment Fund (AIF)
- The fund size will be 25,000 crores INR
- Government of India will provide 10,000 crore while SBI, LIC etc. will fulfil the balance amount.
- The fund will provide money in escrow accounts that can be used only for completion of the identified projects.
- The fund will be managed by SBICAP Ventures Limited (SVL) Capital, a wholly owned subsidiary of SBI Capital Markets Ltd.
- The fund will be set up as Category-II Alternative Investment Fund registeredwith the Securities and Exchange Board of India (SEBI).
All affordable and middle-income housing projects that,
- are registered with the Real Estate Regulatory Authority (RERA) with positive net worth.
- have been deemed not worthy for liquidation.
- Revive stalled housing projects (currently 1,600 in India).
- Revival of the housing sector will also lead to demand of cement, iron & steel industries giving further impetus to generate more employment.
- AIF will generate commercial return for its investors as AIF is expected to pool investments from other government-related and private investors, including public financial institutions, sovereign wealth funds etc.
About Alternative investment funds (AIFs)
- In India, alternative investment funds (AIFs) refers to any privately pooled investment fund, (whether from Indian or foreign sources), in the form of a trust or a company or a body corporate or a Limited Liability Partnership (LLP).
- AIFs are private funds which does not come under the jurisdiction of any regulatory agency in India.
- It is regulated by SEBI.
Categories of Alternative Investment Funds (AIFs)
- Category I: Mainly invests in start- ups, SME’s or any other sector which Govt. considers economically and socially viable.
- Category II: These include Alternative Investment Funds such as private equity funds or debt funds for which no specific incentives or concessions are given by the government or any other Regulator
- Category III: Funds such as hedge funds or funds which trade with a view to make short term returns or such funds with no specific incentives or concessions are given by the government or any other Regulator.
Rising NPAs: Banks’ exposure to unrated loans increased threefold in three years
Banks’ non-performing assets (NPAs) for unrated loans jumped to 24 % by the end of 2018 from about 6 % in 2015, data from the Reserve Bank of India (RBI) shows.
- This indicates the growing risks from loans that are not rated by credit rating agencies.
Highlight of a RBI report
- Unrated borrowers account for about 60 % of the total number and 40 % of the total exposure of large borrowers.
- The central bank requires banks to report individual exposure of more than Rs 5 crore with the Central Repository of Information on Large Credits (CRILC), to capture data on large borrowers.
Ways to reduce Unrated Loans and NPAs:
- In order to nudge banks to get credit ratings done for loan exposure, the Reserve Bank in 2016 raised risk weights on unrated exposures.
Reason: Higher weights on unrated exposures reduce capacity of banks to lend to such borrowers, encouraging them to switch towards ratings. Risk–weighted assets are used to determine the minimum amount of capital that must be held by banks and other financial institutions in order to reduce the risk of insolvency.
- Some of the private sector banks experienced significant stress in their exposures to BB and below rated loan accounts. Hence,Banks also need to consider rated exposures.
About Central Repository of Information on Large Credits
- The RBI set up the Central Repository of Information on Large Credits (CRILC) in 2014 to collect, store, and disseminate credit data to lenders.
- Hence, banks will have to provide credit information to CRILC on all their borrowers having aggregate fund-based and non-fund based exposure of Rs.5 crores and above.
- The CRILC data sharing framework collects data on non-performing assets from all Indian Financial Institution and then advises the rest of the sector about the state of impairment.
Bilateral & International Relations
Minister of State for Shipping inaugurates the first ever ‘BIMSTEC Ports’ Conclave’
The first ever ‘Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation’ (BIMSTEC) Conclave of Ports, held at Vishakhapatnam on 7-8 November, 2019 was inaugurated by Minister of State for Shipping(I/C).
Highlights of the BIMSTEC Conclave of Ports
- Memorandums of Understanding (MoUs) signed between Ranong Port (Port Authority of Thailand) and the Port Trusts of Chennai, Vishakhapatnam and Kolkata to enhance connectivity between Thailand’s West Coast and Ports on India’s East Coast.
The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is a regional organization comprising seven Member States lying in the littoral and adjacent areas of the Bay of Bengal constituting a contiguous regional unity.
- It came into being in 1997 through the Bangkok Declaration.
- It constitutes seven Member States: Five deriving from South Asia: [Bangladesh, Bhutan, India, Nepal and Sri Lanka] and Two from Southeast Asia: [Myanmar and Thailand].
- The main objective of BIMSTEC is technological and economic cooperation among South Asian and South East Asian countries along the coast of the Bay of Bengal.
- The headquarters of BIMSTEC is in Dhaka.
- Unlike many other regional groupings, BIMSTEC is a sector-driven cooperative organization. Starting with six sectors—including trade, technology, energy, transport, tourism and fisheries—for sectoral cooperation in the late 1997, it expanded to embrace nine more sectors—including agriculture, public health, poverty alleviation, counter-terrorism, environment, culture, people to people contact and climate change—in 2008.
- The whole region which constitutes the BIMSTEC is home to over 1.5 billion people. The population counts for around 22 percent of the total world population. These countries have a combined GDP of $2.7 trillion.
India’s shift from BRICS countries to BIMSTEC
- A series of cross-border terror (Pathankot, Uri and Pulwama) attacks was the reason for the shift. This shift can be seen in the last oath ceremony of India Prime Minister where leaders of BIMSTEC countries were present. In the 2014 oath ceremony, leaders of SAARC countries were present.
- At Brics (Brazil, Russia, India, China and South Africa) summit in Goa 2016, Indian Prime Minister also hosted an outreach summit with BIMSTEC leaders in October 2016. This was the first big push under the to India- BIMSTEC relationship.
- Moreover, when India refused to join November 2016 SAARC summit in Pakistan, almost all BIMSTEC countries supported India. The Summit was postponed resulting in India’s diplomatic victory on the issue of terrorism.
- In 2017 BIMSTEC summit, Indian PM announced that BIMSTEC is a natural platform to fulfill India’s key foreign policy priorities of Neighbourhood First and Act East.
Importance of Bay of Bengal region
- The Bay of Bengal is the largest bay in the world. Over one-fifth (22%) of the world’s population live in the seven countries around it.
- All these seven countries have been able to sustain average annual rates of economic growth
- The Bay also has vast untapped natural resources.
- One-fourth of the world’s traded goods cross the Bay every year.
- BIMSTEC connects not only South and Southeast Asia, but also the ecologies of the Great Himalayas and the Bay of Bengal.
- One-quarter of India’s population live in the four coastal states adjacent to the Bay of Bengal (Andhra Pradesh, Orissa, Tamil Nadu, and West Bengal).
- People of Northeastern states can connect via the Bay of Bengal to Bangladesh, Myanmar and Thailand for development.
- Bay of Bengal, which is a way to the Malacca straits, has emerged a key place against China in maintaining its access route to the Indian Ocean. Hence,through Bay of Bengal, it is in India’s interest to consolidate its internal engagement among the BIMSTEC countries.
Cabinet approves protocol amending the Convention between India and Brazil
The Union Cabinet approved the signing of the Protocol amending the Convention between the Government of t India and the Government of Brazil for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.
- The Amending Protocol implements minimum standards and other recommendations of G-20 OECD Base Erosion Profit Shifting (BEPS) Project.
- Facilitate elimination of double taxation.
- Clear allocation of taxing rights between Contracting States through Double Taxation Avoidance Convention (DTAC) will provide tax certainty to investors & businesses of both countries.
- Augment the flow of investment through lowering of tax rates
- To bring existing Double Taxation Avoidance Convention (DTAC) between India and Brazil in line with international developments and to implement the recommendations contained in the G20 OECD Base Erosion and Profit Shifting Project (BEPS).
- The existing DTAC between India and Brazil was signed in 1988
What is Double Taxation Avoidance Agreement (DTAA)?
- DTAA is a tax treaty signed between countries (or any two/multiple countries) so that taxpayers do not pay double taxes on their income earned from source country as well as their residence country.
- The need for DTAA arises out of imbalance in tax collection on global income of individuals. A person aims to do business in foreign country, may end up paying income taxes in both countries i.e. in the country where income is earned and country where individual holds his citizenship or residence. DTAA helps to taxpayers to do away issues of paying double taxes.
What is Base erosion and profit shifting (BEPS)?
- It refers to tax planning strategies used by multinational companies, that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate tax being paid.
- Although some of the tax planning strategies used are illegal, most are not. This undermines the fairness of tax systems because businesses that operate across borders can use BEPS to gain a competitive advantage over enterprises that operate at a domestic level. Moreover, when taxpayers see multinational corporations legally avoiding income tax, it also motivates them to avoid tax.
- BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises.
About the Multilateral Convention (MLI) to Implement Tax Treaty Related Measures to BEPS
OR ‘BEPS Project’:
- It is an outcome of the Organisation for Economic Co-operation and Development (OECD) / G20 to tackle Base Erosion and Profit Shifting (the BEPS Project).
- The BEPS Project identified 15 actions to address BEPS in a comprehensive manner.
- India was the founding member of this project. India signed this convention in 2016.
- There are over 125 members and 14 observer organisations of this project.
- The Convention enables all signatories to meet treaty-related minimum standards that were agreed as part of the Final BEPS package.
- The Convention operates to modify tax treaties between two or more Parties to the Convention. It does not function in the same way as an amending protocol to a single existing treaty, which would directly amend the text of the Tax Agreement. Instead, it is applied alongside existing tax treaties.
- The Convention provides flexibility to exclude a specific tax treaty and to opt out of provisions or parts of provisions through making of reservations.
- A list of Covered Tax Agreements as well as a list of reservations and options chosen by a country are required to be made at the time of signature or when depositing the instrument of ratification.
Location of Brazil:
- Brazil is the largest country in both South America and Latin America.
- Bounded by the Atlantic Ocean on the east, Brazil has a coastline of 7,491 kilometers.
- It borders all other countries in South America except Ecuador and Chile and covers 47.3% of the continent’s land area.
Art & Culture
Thiruvalluvar: Why is an ancient Tamil saint at the centre of a BJP-DMK slugfest?
Recently, a political party in Tamil Nadu started a controversy by tweeting a picture of the ancient Tamil saint Thiruvalluvar in a ‘Hindu’ style, replacing his usual white shawl with a saffron one, and adding Hindu symbols such as ‘vibhuti’ in the picture.
- Thiruvalluvar was a Tamil poet and philosopher.
- He is commonly known as Valluvar in Tamil.
- He is best known as the author of Thirukkuṛaḷ, a collection of couplets on ethics, political and economic matters, and love.
- He is thought to have lived sometime between the 4th century BC and the 1st century BC.
- The Tamil poet Mamulanar of the Sangam period mentioned that Thiruvalluvar was the greatest Tamil scholar.
Science & Technology
Agriculture Ministry relaxes fumigation condition on imported onion
In the light of public concern over high prices of onions in the market the Ministry of Agriculture has decided to allow relaxation from the condition of fumigation and endorsement on PSC as per the Plant Quarantine Order, 2003 for onion imports upto 30th November 2019
What is Fumigation?
- Fumigation is a method of pest control that completely fills an area with gaseous pesticides (known as fumigants) to suffocate or poison the pests within.
What is Plant quarantine?
- Plant quarantine is the restriction imposed by authorities on the production, movement and existence of plants or plant materials or animal products or any other article or normal activity of persons to control the introduction or spread of a pest.
Plant Quarantine Order, 2003
The Plant Quarantine (Regulation of Import into India) Order, 2003 aims
- to prevent the introduction and spread of exotic pests that are destructive, by regulating the import of plants and plant products through adequate policy and statutory measures
- to support India’s agricultural exports through credible export certification
- to facilitate safe global trade in agriculture by assisting producers, exporters and importers and by providing technically comprehensive and credible phytosanitary certification.
- It places a prohibition on the import of commodities contaminated with weeds and/or alien species. Import of packaging material of plant origin is restricted unless the material has been treated.
- Mandatory permit requirement on imports of seeds, including flower seeds, propagating material and mushroom spawn cultures.
It classifies Agricultural imports as:
- a) Prohibited plant species
- b) Restricted species where import is permitted only by authorized institutions
- c) Restricted species permitted only with additional declarations of freedom from quarantine pests and subject to specified treatment certifications
- d) Plant material imported for consumption or industrial processing permitted with normal phytosanitary certification
It includes provisions for regulating the import of:
- soil, peat and sphagnum moss
- germplasm, genetically modified organisms and transgenic material for research
- live insects, microbial cultures and biocontrol agents
- timber and wooden logs.
- Phytosanitary Certificate is a certificate that certifies plant and plant products are free from regulated pests, and conforms with other phytosanitary requirements as specified from the importing country.
- Phytosanitary certificate procedures are undertaken as per the guidelines of National Plant Protection Organization (NPPO) or equivalent authorities in a country, certifying to meet import phytosanitary requirements.
- Each country has designed certain parameters to meet with the phytosanitary requirements of foreign countries, as per the guidelines of WTO agreement.
Key Facts for Prelims
Shala Darpan portal for Navodaya Vidyalaya Samiti launched
Union Minister of State for Human Resources Development launched the Shala Darpan Portal of Navodaya Vidyalaya Samiti.
About Shala Darpan Portal
- This portal will integrate all Jawahar Navodaya Vidyalayas with a common standard.
- It will provide information relating to the service record, transfer/posting, disciplinary action, ACR tracking and the portal will improve mess management and hostel conditions.
- Apart from this, it will also strengthen budget and finance management system.
- The portal has been designed from ‘Open Source Technology’ and hence the cost incurred was very low.
Significance of the portal
- End to end info sharing, proper analytical details and better transparency in evaluation of teachers and students.
- The Navodaya Vidyalayas are co-educational residential schools established by the Navodaya Vidyalaya Samiti which is an autonomous organization under Ministry of Human Resource Development to provide quality modern education.