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  • Process for Repealing a Law

    PM after repealing the farm laws has said that the process of repealing the laws — which are currently stayed by the Supreme Court — will take place in the upcoming Winter Session of Parliament.

    Repealing a Law

    • Repealing a law is one of the ways to nullify a law.
    • A law is reversed when Parliament thinks there is no longer a need for the law to exist.
    • Legislation can also have a “sunset” clause, a particular date after which they cease to exist.
    • For example, the anti-terror legislation Terrorist and Disruptive Activities (Prevention) Act 1987, commonly known as TADA, had a sunset clause, and was allowed to lapse in 1995.
    • For laws that do not have a sunset clause, Parliament has to pass another legislation to repeal the law.

    (Sunset Clause: A law shall cease to have effect after a specific date, unless further legislative action is taken to extend the law.)

    How can the government repeal a law?

    • Article 245 of the Constitution gives Parliament the power to make laws for the whole or any part of India, and state legislatures the power to make laws for the state.
    • Parliament draws its power to repeal a law from the same provision.
    • A law can be repealed either in its entirety, in part, or even just to the extent that it is in contravention of other laws.

    What is the process for repealing a law?

    • Laws can be repealed in two ways — either through an ordinance, or through legislation.
    • In case an ordinance is used, it would need to be replaced by a law passed by Parliament within six months.
    • If the ordinance lapses because it is not approved by Parliament, the repealed law can be revived.
    • The government can also bring legislation to repeal the farm laws.
    • It will have to be passed by both Houses of Parliament, and receive the President’s assent before it comes into effect.

    Legislations required

    • All three farm laws can be repealed through a single legislation.
    • Usually, Bills titled Repealing and Amendment are introduced for this purpose.

     

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  • HomoSEP: Robot for cleaning Septic Tanks

    IIT Madras has developed a robot that can, if deployed extensively, put an end to this practice of sending people into septic tanks.

    HomoSEP

    • HomoSEP stands for “homogenizer of septic tanks”.
    • It has a shaft attached to blades that can open like an inverted umbrella when introduced into a septic tank.
    • This is helpful as the openings of the septic tanks are small and the tank interiors are bigger.
    • The sludge inside a septic tank contains faecal matter that has thickened like hard clay and settled at the bottom.
    • This needs to be shredded and homogenized so that it can be sucked out and the septic tank cleaned. The whirring blades of the robot achieve precisely this.

    Manual scavenging deaths in India

    • A statement by the Social Justice and Empowerment Ministry conveyed that in the five years till December 31, 2020, there have been 340 deaths due to manual scavenging.
    • Uttar Pradesh (52), Tamil Nadu (43) and Delhi (36) leads in the list. Maharashtra had 34 and Gujarat and Haryana had 31 each.
    • This is despite bans and prohibitory orders.

    Various policy initiatives

    • Prohibition of Employment as Manual Scavengers and their Rehabilitation (Amendment) Bill, 2020: It proposes to completely mechanise sewer cleaning, introduce ways for ‘on-site’ protection and provide compensation to manual scavengers in case of sewer deaths.
    • Prohibition of Employment as Manual Scavengers and their Rehabilitation Act, 2013: Superseding the 1993 Act, the 2013 Act goes beyond prohibitions on dry latrines, and outlaws all manual excrement cleaning of insanitary latrines, open drains, or pits.
    • Rashtriya Garima Abhiyan: It started national wide march “Maila Mukti Yatra” for total eradication of manual scavenging from 30th November 2012 from Bhopal.
    • Prevention of Atrocities Act: In 1989, the Prevention of Atrocities Act became an integrated guard for sanitation workers since majority of the manual scavengers belonged to the Scheduled Caste.
    • Judicial intervention: In 2014, a Supreme Court order made it mandatory for the government to identify all those who died in sewage work since 1993 and provide Rs. 10 lakh each as compensation to their families.

     

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  • Health Care Equity in Urban India

    The report on ‘Health Care Equity in Urban India’ exploring health vulnerabilities and inequalities in cities in India was recently released.

    About the report

    • The report is released recently by Azim Premji University in collaboration with 17 regional NGOs across India.
    • It notes that a third of India’s people now live in urban areas, with this segment seeing rapid growth from about 18% (1960) to 28.53% (2001) to 34% (in 2019).
    • The study draws insights from data collected through detailed interactions with civil society organizations in major cities and towns.
    • This also included an analysis of the National Family and Health Surveys (NHFS), the Census of India, and inputs from State-level health officials on the provision of health care.
    • It also looks at the availability, accessibility, and cost of healthcare facilities, and possibilities in future-proofing services in the next decade.

    Key highlights of the report

    • Urban poverty on rise: Close to 30% of people living in urban areas are poor.
    • Declining life expectancy: Life expectancy among the poorest is lower by 9.1 years and 6.2 years among men and women, respectively, compared to the richest in urban areas.
    • Chaotic health governance: The report, besides finding disproportionate disease burden on the poor, also pointed to a chaotic urban health governance.
    • Multiplicity and non-coordination: The multiplicity of healthcare providers both within and outside the government without coordination challenges to urban health governance.
    • Lack of political attention: Urban healthcare has received relatively less research and policy attention.

    Major recommendations

    The report calls for:

    • Strengthening community participation and governance
    • Building a comprehensive and dynamic database on the health and nutrition status, including co-morbidities of the diverse, vulnerable populations
    • Strengthening healthcare provisioning through the National Urban Health Mission, especially for primary healthcare services
    • Putting in place policy measures to reduce the financial burden of the poor
    • A better mechanism for coordinated public healthcare services and better governed private healthcare institutions

    Conclusion

    • As urbanization is happening rapidly, the number of the urban poor is only expected to increase.
    • A well-functioning, better coordinated, and governed health care system is crucial at this point.
    • The pandemic has brought to attention the need for a robust and resourced healthcare system.
    • Addressing this will benefit the most vulnerable and offer critical services to city dwellers across income groups.

     

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  • Places in news: Majuli River Island

    Soil erosion, coupled with changing climatic conditions, has been writing a cruel destiny for the inhabitants of Majuli in Assam, the largest river island in the world.

    About Majuli Island

    • Majuli is a riverine island in the Brahmaputra River, Assam and in 2016 it became the first island to be made a district in India.
    • Majuli has shrunk as the river surrounding it has grown.
    • It had an area of 880 square kilometers (340 sq mi) at the beginning of the 20th century but having lost significantly to erosion it covers 553 square kilometers as at 2014.
    • It is the abode of the Assamese neo-Vaishnavite culture.

    Its formation

    • The island is formed by the Brahmaputra River in the south and the Kherkutia Xuti, an anabranch of the Brahmaputra, joined by the Subansiri River in the north.
    • It was formed due to course changes by the river Brahmaputra and its tributaries, mainly the Lohit.

     

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  • Why India’s pro-rich, anti-poor taxation policies must change

    Context

    To develop their renewable energy capacities poor countries may well have to help themselves to make the transition that society urgently needs. One source of funding could well be the well-off citizens of India, who are getting richer and richer.

    Growing inequality in India

    • A 2018 Oxfam report revealed that 10 per cent of the richest Indians garnered 77.4 per cent of the nation’s wealth.
    •  In fact, according to the report, 58 per cent of India’s wealth was in the hands of one per cent of the country’s population.
    • The combined income of this handful of people in 2017 was almost as much as India’s budget that year.
    • In 2017, the fortune of India’s 100 richest tycoons leaped by 26 per cent.
    •  According to Crédit Suisse, the number of dollar millionaires in India has jumped from 34,000 in 2000 to 7,59,000 in 2019 — in other words, the country has one of “the world’s fastest-growing population of millionaires”.
    • The average wealth of these millionaires has increased by 74 per cent over this period.

    Issues with taxation policies

    • The taxation policy of the government, instead of making the exchequer benefit from this trend, has actively strengthened the trend of growing millionaires.
    • Replacing wealth tax by increasing income tax: The government replaced the wealth tax by an income tax increase of two per cent for households that earned more than 10 million rupees annually.
    • Corporate tax was reduced: The corporate tax was lowered, for existing companies from 30 per cent to 22 per cent, and for manufacturing firms incorporated after October 1, 2019 that started operations before March 31, 2023, from 25 to 15 per cent — the biggest reduction in 28 years.
    • Increase in income tax exemptions: In the 2019-20 budget, the income tax exemption limit jumped from Rs 2,00,000 to 2,50,000 and the tax rate for incomes up to Rs 5 lakh was reduced from 10 to 5 per cent.

    Impact of pro-rich taxation policy

    • Deprives the state of resources: This taxation policy deprived the state of important resources.
    • Increase in indirect taxes: To (partly) compensate for the decline of direct taxes, the government has increased indirect taxes, unfairly so, because they affect all Indians irrespective of their income.
    • The share of indirect taxes in the state’s fiscal resources has increased to reach 50 per cent of total taxes in 2018.
    • Taxes on petroleum products are a case in point.

    High taxes on petroleum products

    • About two-thirds of the cost of a litre of petrol now goes towards taxes.
    • The tax collected on petrol and diesel has increased by 459 per cent in the past seven years — from Rs 52,537 crore in 2013 to Rs 2.13 lakh crore in 2019-2020.
    • Given that petrol is a less elastic good, people are bound to consume it even at higher prices.
    • This also explains why the government sees fuel sale in India as a safe “revenue collection” medium.
    • In 2018-19, excise duty on petroleum products alone accounted for roughly 24 per cent of the indirect tax revenue.

    Consider the question “India’s taxation policies are criticised for being pro-rich. In the context of this, discuss the issues with the taxation system and suggest the measure to deal with these issues.”

    Conclusion

    The government’s taxation policy will probably continue to prevail depriving the exchequer of some of the resources it needs for dealing with issues as important as climate change.

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  • 25 years of Panchayats (Extension to the Scheduled Areas) Act, 1996 (PESA)

    The Ministry of Tribal Affairs has celebrated the 25th year of the inauguration of the Panchayats (Extension to Scheduled Areas) Act 1996 (PESA)’ as a part of Azadi Ka Amrit Mahotsav.

    What is PESA?

    • The PESA is a law enacted by the govt. for ensuring self-governance through traditional Gram Sabhas for people living in the Scheduled Areas of India.
    • Scheduled Areas are areas identified by the Fifth Schedule of the Constitution of India.

    What are Scheduled Areas?

    • “Scheduled Areas” mean the Scheduled Areas as referred to in Clause (1) of Article 244 of the Constitution.
    • They are found in ten states of India which have predominant population of tribal communities.
    • At present, Scheduled Areas have been declared in the States of AP (including Telangana), Chhattisgarh, Gujarat, Himachal Pradesh, Jharkhand, MP, Maharashtra, Odisha and Rajasthan.

    Powers granted to Gram Sabha/Panchayats

    • Land acquisition: To be consulted on matters of land acquisition and resettlement.
    • Mining licencing: Grant prospecting license for mining lease for minor minerals and concessions for such activities.
    • Water Bodies: Planning and management of minor water bodies.
    • Regulation of Liquor: The power to enforce prohibition or to regulate or restrict the sale and consumption of any intoxicant.
    • Minor Forest Produces: The ownership of MFPs
    • Land reforms: The power to prevent alienation of land and to restore any unlawfully alienated land of a scheduled tribe.
    • Village Markets: The power to manage village markets.
    • Money Lending: The power to exercise control over money lending to scheduled tribes.

    Role of Governor in Implementation of PESA

    (1) Report as sought by the President:

    • As per para 3 of the Fifth Schedule, the Governor therein is required to make a report to the President regarding the administration of the Scheduled Areas.
    • The Attorney General had advised the Home Ministry that the role of the governor in sending this report is discretionary.

    (2) Applicability of certain laws:

    • An even more significant role of the Governor in scheduled areas arises out of the powers inherent in sub-para (1) of Para 5 of the Fifth Schedule.
    • Governor may direct that any particular Act of Parliament or of the Legislature of the State shall not apply to a Scheduled Area or any part thereof in the State or shall apply to a Scheduled Area.

    (3) Modification of laws:

    • The regulation-making powers of the Area is bound neither by the advice of the Tribes Advisory Council or the assent of the President.
    • The provision lays down the responsibility on the Governor to ensure that laws that are contrary to the interests of Scheduled Areas may be suitably modified.

    Why was PESA enacted?

    • Filling the constitutional vacuum: These Areas were not covered by the 73rd Constitutional Amendment or Panchayati Raj Act of the Indian Constitution as provided in Part IX of the Constitution.
    • Self-governance: PESA sought to enable the Panchayats at appropriate levels and Gram Sabhas to implement a system of self-governance.
    • Customary regulation: It includes a number of issues such as customary resources, minor forest produce, minor minerals, minor water bodies, selection of beneficiaries, sanction of projects, and control over local institutions.

    Significance of PESA

    • Tribal autonomy: PESA was seen as a panacea for many of these vulnerabilities where the tribal communities in such Scheduled Areas were to decide by themselves the pace and priorities of their development.
    • Tribal way of development: PESA was viewed as a positive development for tribal communities in Scheduled Areas that had earlier suffered tremendously from engagement with modern development processes.
    • Sustainable access to forests: The loss of access to forest, land, and other community resources had increased their vulnerability.
    • Easing of tribal distress: Rampant land acquisition and displacement due to development projects had led to large-scale distress in tribal communities living in Scheduled Areas.

    Issues with PESA

    • Dilution of the role of Tribal Advisory Councils: PESA mandates Tribal Advisory Councils to oversee tribal affairs and also gives extrajudicial, extra-constitutional powers to the Governors.
    • Politicization: The councils, with the CM as their chairperson, have evolved into a non-assertive institution amid the machinations of upper-class politics.
    • Non-involvement: The Governors, in order to have friendly relations with the Chief Ministers, have desisted from getting involved in tribal matters.
    • Lack of coordination at Centre: Two different ministries, the Ministry of Panchayati Raj and the Ministry of Tribal Affairs, have an overlapping influence and they function almost without any coordination.
    • Lack of operationalization: In most of the state the enabling rules are not in place more than eight years after the adoption of the Act suggests the reluctance to operationalize the PESA mandate.
    • Ignoring the spirit of PESA: The state legislations have omitted some of the fundamental principles without which the spirit of PESA can never be realised.
    • Ambiguous definitions: No legal definition of the terms like minor water bodies, minor minerals etc. exist in the statute books.

    Related question in CS Mains:

    Q. What are the two major legal initiatives by the State since Independence addressing discrimination against Scheduled Tribes (STs)? (2017, 150W)

    Also try answering this PYQ:

    In the areas covered under the Panchayat (Extension to the Scheduled Areas) Act, 1996, what is the role/power of Gram Sabha?

    1. Gram Sabha has the power to prevent alienation of land in the Scheduled Areas.
    2. Gram Sabha has the ownership of minor forest produce.
    3. Recommendation of Gram Sabha is required for granting prospecting license or mining lease for any mineral in the Scheduled Areas.

    Which of the statements given above is/are correct?

    (a) Only 1

    (b) 1 and 2 only

    (c) 2 and 3 only

    (d) 1, 2 and 3

     

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  • HC presses Centre on Uniform Civil Code

    Stating that the Uniform Civil Code “is a necessity and mandatorily required today,” the Allahabad High Court has called upon the Central Government to forthwith initiate the process for its implementation.

    What is a Uniform Civil Code?

    • A Uniform Civil Code is one that would provide for one law for the entire country, applicable to all religious communities in their personal matters such as marriage, divorce, inheritance, adoption etc.
    • Article 44, one of the directive principles of the Constitution lays down that the state shall endeavour to secure a Uniform Civil Code for the citizens throughout the territory of India.
    • These, as defined in Article 37, are not justiciable (not enforceable by any court) but the principles laid down therein are fundamental in governance.

    Why need UCC?

    • UCC would provide equal status to all citizens
    • It would promote gender parity in Indian society.
    • UCC would accommodate the aspirations of the young population who imbibe liberal ideology.
    • Its implementation would thus support the national integration.

    Issues with UCC

    • There are practical difficulties due to religious and cultural diversity in India.
    • The UCC is often perceived by the minorities as an encroachment on religious freedom.
    • It is often regarded as interference of the state in personal matters of the minorities.
    • Experts often argue that the time is not ripe for Indian society to embrace such UCC.

    Greater role for State

    • Fundamental rights are enforceable in a court of law.
    • While Article 44 uses the words “state shall endeavour”, other Articles in the ‘Directive Principles’ chapter use words such as “in particular strive”; “shall in particular direct its policy”; “shall be obligation of the state” etc.
    • Article 43 mentions “state shall endeavour by suitable legislation” while the phrase “by suitable legislation” is absent in Article 44.
    • All this implies that the duty of the state is greater in other directive principles than in Article 44.

    What are more important — fundamental rights or directive principles?

    • There is no doubt that fundamental rights are more important.
    • The Supreme Court held in Minerva Mills (1980): Indian Constitution is founded on the bed-rock of the balance between Parts III (Fundamental Rights) and IV (Directive Principles).
    • To give absolute primacy to one over the other is to disturb the harmony of the Constitution.
    • Article 31C inserted by the 42nd Amendment in 1976, however, lays down that if a law is made to implement any directive principle, it cannot be challenged on the ground of being violative of the FRs under Articles 14 and 19.

    Does India not already have a uniform code in civil matters?

    • Indian laws do follow a uniform code in most civil matters – Indian Contract Act, Civil Procedure Code, Sale of Goods Act, Transfer of Property Act, Partnership Act, Evidence Act etc.
    • States, however, have made hundreds of amendments and therefore in certain matters, there is diversity even under these secular civil laws.
    • Recently, several states refused to be governed by the uniform Motor Vehicles Act, 2019.

    What about personal laws?

    • If the framers of the Constitution had intended to have a Uniform Civil Code, they would have given exclusive jurisdiction to Parliament in respect of personal laws, by including this subject in the Union List.
    • But “personal laws” are mentioned in the Concurrent List.
    • Last year, the Law Commission concluded that a Uniform Civil Code is neither feasible nor desirable.

    Is there one common personal law for any religious community governing all its members?

    • All Hindus of the country are not governed by one law, nor are all Muslims or all Christians.
    • Not only British legal traditions, even those of the Portuguese and the French remain operative in some parts.
    • In Jammu and Kashmir until August 5, 2019, local Hindu law statutes differed from central enactments.
    • The Shariat Act of 1937 was extended to J&K a few years ago but has now been repealed.

    Various customary laws

    • Muslims of Kashmir were governed by a customary law, which in many ways was at variance with Muslim Personal Law in the rest of the country and was, in fact, closer to Hindu law.
    • Even on registration of marriage among Muslims, laws differ from place to place. It was compulsory in J&K (1981 Act), and is optional in Bengal, Bihar (both under 1876 Act), Assam (1935 Act) and Odisha (1949 Act).
    • In the Northeast, there are more than 200 tribes with their own varied customary laws.
    • The Constitution itself protects local customs in Nagaland. Similar protections are enjoyed by Meghalaya and Mizoram.
    • Even reformed Hindu law, in spite of codification, protects customary practices.

    How does the idea of a Uniform Civil Code relate to the fundamental right to religion?

    • Article 25 lays down an individual’s fundamental right to religion;
    • Article 26(b) upholds the right of each religious denomination or any section thereof to “manage its own affairs in matters of religion”;
    • Article 29 defines the right to conserve distinctive culture.
    • An individual’s freedom of religion under Article 25 is subject to “public order, health, morality” and other provisions relating to FRs, but a group’s freedom under Article 26 has not been subjected to other fundamental rights
    • In the Constituent Assembly, there was division on the issue of putting UCC in the fundamental rights chapter. The matter was settled by a vote.
    • By a 5:4 majority, the fundamental rights sub-committee headed by Sardar Patel held that the provision was outside the scope of FRs and therefore the UCC was made less important than freedom of religion.

    Minority opinion in the Constituent Assembly

    • Some members sought to immunize Muslim Personal Law from state regulation.
    • Mohammed Ismail, who thrice tried unsuccessfully to get Muslim Personal Law exempted from Article 44, said a secular state should not interfere with the personal law of people.
    • B Pocker Saheb said he had received representations against a common civil code from various organisations, including Hindu organisations.
    • Hussain Imam questioned whether there could ever be uniformity of personal laws in a diverse country like India.
    • B R Ambedkar said “no government can use its provisions in a way that would force the Muslims to revolt”.
    • Alladi Krishnaswami, who was in favour of a UCC, conceded that it would be unwise to enact UCC ignoring strong opposition from any community.
    • Gender justice was never discussed in these debates.

    How did the debate on a common code for Hindus play out?

    • In June 1948, Rajendra Prasad, President of the Constituent Assembly, warned Nehru that to introduce “basic changes” in personal law was to impose “progressive ideas” of a “microscopic minority” on the Hindu community as a whole.
    • Others opposed to reforms in Hindu law included Sardar Patel, Pattabhi Sitaramayya, M A Ayyangar, M M Malaviya and Kailash Nath Katju.
    • When the debate on the Hindu Code Bill took place in December 1949, 23 of 28 speakers opposed it.
    • On September 15, 1951, President Prasad threatened to use his powers of returning the Bill to Parliament or vetoing it. Ambedkar eventually had to resign.
    • Nehru agreed to the trifurcation of the Code into separate Acts and diluted several provisions.

     

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  • More a private sector primer than health-care pathway

    Context

    NITI Aayog recently published a road map document entitled “Health Insurance for India’s Missing Middle”.

    About missing middle and provision in the NITI Aayog report

    • The Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), aims to extend hospitalisation cover of up to ₹5 lakh per family per annum to a poor and vulnerable population of nearly 50 crore people.
    • Left out segment: Covering the left out segment of the population, commonly termed the ‘missing middle’ sandwiched between the poor and the affluent, has been discussed by the Government recently.
    • Towards this, NITI Aayog recently published a road map document entitled “Health Insurance for India’s Missing Middle”.
    • Primary role for private commercial health insurer: The report proposes voluntary, contributory health insurance dispensed mainly by private commercial health insurers as the prime instrument for extending health insurance to the ‘missing middle’.

    Issues with the provision in the NITI Aayog report

    • Narrow coverage: Government subsidies, if any at all, will be reserved for the very poor within the ‘missing middle’ and only at a later stage of development of voluntary contributory insurance.
    • This is a major swerve from the vision espoused by the high-level expert group on UHC a decade ago, which was sceptical about such a health insurance model.
    • No country has ever achieved UHC by relying predominantly on private sources of financing health care.
    • Contributory insurance not best way: Evidence shows that in developing countries such as India, with a gargantuan informal sector, contributory health insurance is not the best way forward and can be replete with problems.
    • Issues with low premium model: For hospitalisation insurance, the report proposes a model similar to the Arogya Sanjeevani scheme, albeit with lower projected premiums of around ₹4,000-₹6,000 per family per annum.
    • This model is a little different from commercial private insurance, except for somewhat lower premiums.
    • Low premiums are achieved by reducing administrative costs of insurers through an array of measures, including private use of government infrastructure.
    • This model is vulnerable to nearly every vice that characterises conventional private insurance.
    • Insufficient measures to deal with adverse selection: The report suggests enrolment in groups as a means to counter adverse selection.
    • The prevailing per capita expenditure on hospital care is used to reflect affordability of hospital insurance, and thereby, a possible willingness to pay for insurance.
    • Both these notions are likely to be far-fetched in practice, and the model is likely to be characterised by widespread adverse selection notwithstanding.
    • OPD insurance on a subscription basis: The report proposes an OPD insurance with an insured sum of ₹5,000 per family per annum, and again uses average per capita OPD spending to justify the ability to pay.
    • However, the OPD insurance is envisaged on a subscription basis, which means that insured families would need to pay nearly the entire insured sum in advance to obtain the benefits.
    • Clearly, this route is unlikely to result in any significant reduction of out-of-pocket expenditure on OPD care.
    • Role of government:The NITI report defies the universally accepted logic that UHC invariably entails a strong and overarching role for the Government in health care, particularly in developing countries.

    Consider the question “What are the challenges in achieving universal health coverage? What are the issues with private sources  financing health care to achieve UHC?”

    Conclusion

    The National Health Policy 2017 envisaged increasing public health spending to 2.5% of GDP by 2025. Let us not contradict ourselves so early and at this crucial juncture of an unprecedented pandemic.

  • Cryptocurrencies

    With cryptocurrencies such as Bitcoin gaining popularity among citizens, the Centre has been compelled to take a stance on the legal status of cryptocurrencies.

    Background

    • The Union Government is said to be considering a proposal to tax cryptocurrency transactions in the country.
    • The move would bring cryptocurrency trading, which has till date happened outside the ambit of the law, into the formal economy.

    Defying RBI ban

    • RBI has been vehemently opposed to the idea of legalizing cryptocurrencies.
    • It had banned financial institutions such as banks from facilitating transactions involving cryptocurrencies back in 2018.
    • The RBI’s order was overturned by the Supreme Court in 2020, and this led to a tremendous surge in cryptocurrency transactions through exchanges.

    Why did RBI propose a ban?

    • Financial stability: The RBI has characterized private cryptocurrencies as a threat to financial stability.
    • Threat to the sovereignty of Rupee: It perceives cryptocurrencies rise as a threat to the sovereignty of the rupee.
    • Beyond regulatory scope: The widespread acceptance of cryptocurrencies could interfere with the ability of the RBI to conduct monetary policy effectively.
    • Digital currency in the pipeline: It should be noted that RBI and other central banks are also looking to come up with digital versions of their own currencies.
    • Competition of currencies: The rupee or central bank digital currencies may not be able to outcompete cryptocurrencies just because they are digital.

    Legislative opinion on Cryptocurrencies

    • Not in favour of ban: This week, a Parliamentary Standing Committee recommended that cryptocurrencies be regulated rather than banned.
    • Making a legal framework: The Government is also expected to table a bill that clarifies its position on cryptocurrencies in Parliament next year.
    • Taxing cryptocurrencies: There is a proposal to classify cryptocurrency exchanges as e-commerce platforms and tax them under the GST framework comes.

    Why has the Government chosen to regulate rather than ban cryptocurrencies?

    • Popularity amongst Public: The growing popularity of cryptocurrencies among citizens may have played a role in the Government opting for regulation over an outright ban.
    • Lack of evident threat: There is no clear evidence of the misuse of cryptocurrencies and their risks.
    • Boosting with policy: The Union govt may also not want to kill the nascent cryptocurrency industry which many believe can be a hub for financial innovation.
    • Revenue generation: Fiscal revenues can be adversely impacted by the increased tax evasion opportunities that crypto-currencies can facilitate.
    • Capitalizing the market: The govt wants to capitalise on the recent surge in the usage of cryptocurrencies to tax them and shore up its revenues.
    • Financial innovation: Blockchain technology has multiple uses beyond just facilitating cryptocurrency transactions.

    Issues with the ban

    • Brain-Drain: Ban of cryptocurrencies is most likely to result in an exodus of both talent and business from India, similar to what happened after the RBI’s 2018 ban.
    • Capital inflows will be restricted: If cryptos begin to get mined onshore, they will induce capital inflows.
    • Killing financial innovation: A ban will deprive India, its entrepreneurs and citizens of a transformative technology that is being rapidly adopted across the world.

    Other generic concerns:

    • Safety (cyber-attacks and fraud)
    • Financial integrity (money laundering and evasion of capital controls)
    • Energy usage (outsized energy needs to mine cryptos)

    Way forward

    • Thus it can be inferred that cryptocurrency is better classified as an asset rather than as a currency, in order to gain acceptance and avoid a ban.

    Conclusion

    • There is no doubt that the acceptance of cryptocurrencies by the Government is likely to be limited.
    • While cryptocurrencies may be accepted as speculative assets, it is highly unlikely that they will be accepted as full-fledged currencies competing against the rupee.

     

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  • Shale and its potential in India

    Cairn Oil & Gas has announced that it is partnering US-based Halliburton to start shale exploration in the Lower Barmer Hill formation, Western Rajasthan.

    What is Shale oil?

    • Shale oil is an unconventional oil produced from oil shale rock fragments by pyrolysis, hydrogenation, or thermal dissolution.
    • These processes convert the organic matter within the rock (kerogen) into synthetic oil and gas.
    • The refined products can be used for the same purposes as those derived from crude oil.

     How does it differ from conventional crude oil?

    • The key difference between shale oil and conventional crude is that the former, also called ‘tight oil’, is found in smaller batches, and deeper than conventional crude deposits.
    • Its extraction requires creation of fractures in oil and gas rich shale to release hydrocarbons through a process called hydraulic fracking.

    What is fracking?

    • Fracking is the process of drilling down into the earth before a high-pressure water mixture is directed at the rock to release the gas inside.
    • Water, sand and chemicals are injected into the rock at high pressure which allows the gas to flow out to the head of the well.
    • The process can be carried out vertically or, more commonly, by drilling horizontally to the rock layer, which can create new pathways to release gas or used to extend existing channels.
    • The term fracking refers to how the rock is fractured apart by the high-pressure mixture.

    Shale production in the world

    • Russia and the US are among the largest shale oil producers in the world.
    • With a surge in shale oil production in the US, it has played a key role in turning the country from an importer of crude to a net exporter in 2019.

    Shale reserves in India

    • As per the US EIA 2015 report, India has got technically recoverable shale gas of 96 trillion cubic feet.
    • The recoverable reserves are identified in Cambay, Krishna – Godavari, Cauvery, Damodar Valley, Upper Assam, Pranahita – Godavari, Rajasthan and Vindhya Basins.
    • The ONGC has drilled the first exploratory shale gas well in Jambusar near Vadodara, Gujarat, in Cambay basin during October 2013.

    What are the prospects of shale oil exploration in India?

    • Currently, there is no large-scale commercial production of shale oil and gas in India.
    • Shale oil and gas exploration faces several challenges other than environmental concerns around massive water requirements for fracking and potential for ground water contamination.
    • State-owned ONGC had, in 2013, started exploration and, by the end of FY21, assessed shale oil and gas potential in 25 nomination blocks.
    • But it has reduced investments over the past few years after only getting limited success in shale exploration efforts.

     

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