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Distribution: weekly

  • Inflation in India

    Context

    Inflation for the last four months has been worryingly high. This is happening at a time when demand has been down, unemployment has been high, many have lost incomes and poverty has aggravated.

    Issues with the recent inflation data

    • The shock of lockdowns not only made data collection difficult but the consumption basket for calculating CPI should have been changed.
    • Issue with the base: In April and May 2020, data on production and prices could not be collected due to the strict lockdown.
    • As such, the official inflation figures for these months in 2021 do not reflect the true picture.
    • For calculating inflation, a single number is arrived at by assigning weights to different commodities and services.
    • Issue due to different consumption baskets: For WPI, the weights in production are used; for CPI, the consumption basket is used.
    • The consumption basket is vastly different for the poor, the middle classes, and the rich.
    • Hence, the CPI is different for each of these classes and a composite index requires averaging the baskets.
    • So, in a sense, it represents none of the categories.
    • Changed consumption pattern: During lockdown and unlock in 2020, people largely consumed essentials.
    •  RBI data show that consumer confidence fell drastically from 105 in January 2020 to 55.5 by January 2021.
    • While the consumption pattern of the well-off sections may have changed little, the poor and middle classes, especially those who lost jobs and incomes, would have had to cut back on their consumption.
    • Thus, the weights in the CPI would have changed and inflation required recalculation, but this has not been done.
    • Under-representation of services: Inflation data under-represents services in the consumption basket.
    • In production, services are about 55% of the GDP but have no representation in WPI and about 40% in CPI.
    • Increased health and education cost not captured: Health costs and education costs shot up during the pandemic, but this is not captured in inflation figures.
    • Many services were not used. Eating out and travel, for instance, should have been factored out.

    Impact of the inflation

    • If the income does not increase in proportion to inflation, for the middle classes, both consumption of less essential items and savings get reduced.
    • But the poor, who hardly save, have to curtail essential consumption.
    • Decline in demand: In India, 94% work in the unorganised sector and mostly earn low incomes and have little savings.
    • By definition, they cannot bargain for higher incomes as prices rise, further, due to lockdowns, the wages of many declined, both in the unorganised and organised sectors.
    • Consequently, demand has declined not only for non-essentials but even for essentials.
    • Impact on employment generation: In a vicious cycle, this is slowing down economic recovery and employment generation.
    •  Further, this impacts the government’s revenues and tends to increase the budgetary deficit.
    • This puts pressure on the government to cut back budgetary expenditures, especially on the social sector.
    • That aggravates poverty and reduces demand further.

    Factors leading to inflation

    • Tax on fuels: Increase in tax on fuel push up the prices of all goods and services.
    • This is an indirect tax, it is regressive and impacts the poor disproportionately more.
    • It also makes the RBI’s task of controlling inflation difficult.
    • Supply bottlenecks: The lockdowns disrupted supplies and that added to shortages and price rise.
    • Prices of medicines and medical equipment rose dramatically.
    • Prices of items of day-to-day consumption also rose.
    • International factors: Most major economies have recovered and demand for inputs has increased while supplies have remained disrupted (like chips for automobiles).

    Consider the question “What are the issues with measurement of inflation data in India? How inflation in times of low demand and reduced incomes leads to a vicious cycle?”

    Conclusion

    The current official inflation rate does not correctly measure price rise since the lockdown administered a shock to the economy. The method of calculating it needed modification.

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  • WHO tightens Global Air Quality norms

    The World Health Organisation (WHO) in its first-ever update since 2005 has tightened global air pollution standards.

    Global Air Quality Guidelines (AQGs) 2021

    • WHO announces limits for six pollutant categories —particulate matter (PM) 2.5 and 10, ozone (O3), nitrogen dioxide (NO2) sulphur dioxide (SO2) and carbon monoxide (CO).

    Air quality standards in India

    • India aligns with the WHO guidelines only in the case of ozone and carbon monoxide, as these have not changed. But both NO2 and SO2 guidelines are tighter than the current Indian standard.
    • The move doesn’t immediately impact India as the National Ambient Air Quality Standards (NAAQS) don’t meet the WHO’s existing standards.
    • The government has a dedicated National Clean Air Programme that aims for a 20% to 30% reduction in particulate matter concentrations by 2024 in 122 cities, keeping 2017 as the base year.

    Significance of WHO’s AQG

    Ans. It sets the stage for eventual shifts in policy

    • WHO move sets the stage for eventual shifts in policy in the government towards evolving newer stricter standards.
    • This will soon become part of policy discussions — much like climate targets to reduce greenhouse gas emissions keep getting stricter over time.
    • Once cities and States are set targets for meeting pollution emission standards, it could lead to overall changes in national standards.

    Challenges for India

    • The current challenge in India is to meet its national ambient air quality standards in all the regions.
    • The hard lockdown phases during the pandemic have demonstrated the dramatic reduction that is possible when local pollution and regional influences can be minimised.
    • This has shown that if local action is strengthened and scaled up at speed across the region, significant reduction to meet a much tighter target is possible.
    • The influence of geo-climatic attributes is quite pronounced in all regions of India, which further aggravates the local build-up of pollution.
    • This is further worsened due to the rapid proliferation of pollution sources and weak air quality management systems.
    • India may require a more nuanced regional approach to maximise benefits and sustain air quality gains.

    Conclusion

    • Air pollution is a threat to health in all countries, but it hits people in low- and middle-income countries the hardest.
    • WHO’s new Air Quality Guidelines are an evidence-based and practical tool for improving the quality of the air on which all life depends.

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  • Centre announces uniform norms for Fortified Rice

    Days after the Prime Minister’s announcement of a rice fortification plan, the Centre has issued “uniform” parameters for fortified rice kernels (FRK) for grade ‘A’ and common rice.

    Plan for fortified rice

    • The fortified rice is to be distributed under various government schemes, including the public distribution system (PDS) and midday meals in schools, by 2024.
    • The specifications for such rice have been issued by the Ministry of Consumer Affairs, Food and Public Distribution.
    • Department of Food and Public Distribution (DFPD) under Ministry of Consumer Affairs, Food and Public Distribution for the first time issued uniform specifications for Fortified Rice Kernels (FRK).

    What are the norms announced?

    • Common Rice have in case of procurement of Fortified Rice Stocks, of which 1% of FRK (w/w) should be blended with normal rice stock.
    • These specifications as per standard practice have been issued in respect of Paddy, Rice and other coarse grains namely Jowar, Bajra, Maize, Ragi.

    What is Fortification?

    • FSSAI defines fortification as “deliberately increasing the content of essential micronutrients in a food so as to improve the nutritional quality of food and to provide public health benefit with minimal risk to health”.

    What is Fortified Rice?

    • Rice can be fortified by adding a micronutrient powder to the rice that adheres to the grains or spraying the surface of ordinary rice grains with a vitamin and mineral mix to form a protective coating.
    • Rice can also be extruded and shaped into partially precooked grain-like structures resembling rice grains, which can then be blended with natural polished rice.
    • Rice kernels can be fortified with several micronutrients, such as iron, folic acid, and other B-complex vitamins, vitamin A and zinc.
    • These fortified kernels are then mixed with normal rice in a 1:100 ratio, and distributed for consumption.

    Note: Biofortification is the process by which the nutritional quality of food crops is improved through agronomic practices, conventional plant breeding, or modern biotechnology. It differs from conventional fortification in that Biofortification aims to increase nutrient levels in crops during plant growth rather than through manual means during the processing of the crops.

    What is the plan announced by the PM?

    • Malnutrition and lack of essential nutrients in poor women and poor children pose major obstacles in their development.
    • In view of this, it has been decided that the government will fortify the rice given to the poor under its various schemes.
    • Be it the rice available at ration shops or the rice provided to children in their mid-day meals, the rice available through every scheme will be fortified by the year 2024.

    Why such a move?

    • The announcement is significant as the country has high levels of malnutrition among women and children.
    • According to the Food Ministry, every second woman in the country is anemic and every third child is stunted.
    • India ranks 94 out of 107 countries and is in the ‘serious hunger’ category on the Global Hunger Index (GHI).
    • Fortification of rice is a cost-effective and complementary strategy to increase vitamin and mineral content in diets.
    • According to the Food Ministry, seven countries have mandated rice fortification – the USA, Panama, Costa Rica, Nicaragua, Papua New Guinea, Philippines, and the Solomon Islands.

    Advantages offered

    • Health: Fortified staple foods will contain natural or near-natural levels of micro-nutrients, which may not necessarily be the case with supplements.
    • Taste: It provides nutrition without any change in the characteristics of food or the course of our meals.
    • Nutrition: If consumed on a regular and frequent basis, fortified foods will maintain body stores of nutrients more efficiently and more effectively than will intermittently supplement.
    • Economy: The overall costs of fortification are extremely low; the price increase is approximately 1 to 2 percent of the total food value.
    • Society: It upholds everyone’s right to have access to safe and nutritious food, consistent with the right to adequate food and the fundamental right of everyone to be free from hunger

    Issues with fortified food

    • Against nature: Fortification and enrichment upset nature’s packaging. Our body does not absorb individual nutrients added to processed foods as efficiently compared to nutrients naturally occurring.
    • Bioavailability: Supplements added to foods are less bioavailable. Bioavailability refers to the proportion of a nutrient your body is able to absorb and use.
    • Immunity issues: They lack immune-boosting substances.
    • Over-nutrition: Fortified foods and supplements can pose specific risks for people who are taking prescription medications, including decreased absorption of other micro-nutrients, treatment failure, and increased mortality risk.

    Adhering to FSSAI standard

    The Food Safety and Standards Authority of India (FSSAI) sets standards for food items in the country.

    • According to FSSAI norms, 1 kg fortified rice will contain iron (28 mg-42.5 mg), folic acid (75-125 microgram), and Vitamin B-12 (0.75-1.25 microgram).
    • In addition, rice may also be fortified with micronutrients, singly or in combination, with zinc(10 mg-15 mg), Vitamin A (500-750 microgram RE), Vitamin B1 (1 mg-1.5 mg), Vitamin B2 (1.25 mg-1.75 mg), Vitamin B3 (12.5 mg-20 mg) and Vitamin B6 (1.5 mg-2.5 mg) per kg.

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  • Agri exports in India

    Context

    The Indian government has been encouraging agricultural exports to meet an ambitious target of $60bn by 2022.

    India’s agri-exports

    • The Ministry of Food Processing Industries shows that the contribution of agricultural and processed food products in India’s total exports is 11%.
    • Primary processed agricultural commodities form the majority share.
    • India’s export earnings will increase by focusing more on value-added processed food products rather than primary processed agricultural commodities (Siraj Hussain, 2021).
    • From 2015-16 to 2019-20, the value of agricultural and processed food increased significantly from $17.8bn to $20.65bn.
    • The Indian agricultural economy is shifting from primary to secondary agriculture where the focus is more on developing various processed foods.

    Changes in India’s agricultural export basket

    • Traditionally, Basmati rice is one of the top export commodities.
    • However, now there is an unusual spike in the export of non-basmati rice.
    • In 2020-21, India exported 13.09 million tonnes of non-basmati rice ($4.8bn), up from an average 6.9 million tonnes ($2.7bn) in the previous five years.
    • Indian buffalo meat is seeing a strong demand in international markets due to its lean character and near organic nature.
    • The export potential of buffalo meat is tremendous, especially in countries like Vietnam, Hong Kong and Indonesia.

    Challenges in Increasing agri-export

    • Lack of comparative advantage: The export of processed food products has not been growing fast enough because India lacks comparative advantage in many items.
    •  Domestic prices of processed food products are much higher compared to the world reference prices.
    • Non-tariff measures: The exporters of processed food confront difficulties and non-tariff measures imposed by other countries on Indian exports (Siraj Hussain, 2021).
    • Some of these include mandatory pre-shipment examination by the Export Inspection Agency being lengthy and costly.
    • Compulsory spice board certification being needed even for ready-to-eat products.
    • Lack of strategic planning of exports by most State governments.
    • Lack of a predictable and consistent agricultural policy discouraging investments by the private sector.
    • Prohibition of import of meat- and dairy based-products in most of the developed countries.
    • Withdrawal of the Generalised System of Preference by the U.S. for import of processed food from India.

    Consider the question “What are the challenges facing export of processed foods from India? Suggest the way forward.”

    Way forward

    • The main objective of the Agriculture Export Policy is to diversify and expand the export basket so that the export of higher value items, including perishables and processed food, be increased
    • Support to industry: The policy needs to nurture food processing companies, ensuring low cost of production and global food quality standards, and creating a supportive environment to promote export of processed food.
    • Focus on reputed brands: Reputed Indian brands should be encouraged to export processed foods globally as they can comply with the global standard of codex.
    • Indian companies should focus on cost competitiveness, global food quality standards, technology, and tap the global processed food export market.

    Conclusion

    India has competitive advantages in various agricultural commodities which can be passed onto processed foods. It has the potential to become a global leader in the food processing sector.

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  • Kasturirangan panel for National Curriculum Framework

    The Centre has started the process to revise school textbooks by appointing former Indian Space Research Organisation (ISRO) chairman K. Kasturirangan as the head of a 12-member steering committee responsible for developing a new National Curriculum Framework (NCF).

    National Curriculum Framework (NCF)

    • The new NCF is in line with the National Education Policy (NEP) 2020.
    • The committee will be headed by K Kasturirangan, who had also led the NEP 2020 drafting committee.
    • The national curriculum framework serves as a guideline for syllabus, textbooks, teaching and learning practices in the country.
    • India is currently following its fourth national curriculum framework that was published by the NCERT in 2005.

    What was the last NCF?

    • The last such framework was developed in 2005.
    • It is meant to be a guiding document for the development of textbooks, syllabi and teaching practices in schools across the country.

    Why revamp NCF?

    • The subsequent revision of textbooks by the National Council of Educational Research and Training will draw from the new NCF.
    • In fact, the steering committee will develop four such frameworks, one each to guide the curriculum of school education, teacher education, early childhood education, and adult education.

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  • Key Findings about the Religious Composition of India

    The religious composition of India’s population since Partition has remained largely stable according to a new study published by the Pew Research Centre, a non-profit based in Washington DC.

    About the report

    • The study, based on data sourced from India’s decennial census and the National Family Health Survey (NFHS), looked at the three main factors that are known to cause changes in the religious composition of populations — fertility rate, migration, and conversions.
    • Both Hindus and Muslims, the two largest religious groups, shown not only a marked decline but also a convergence in fertility rates.
    • In terms of absolute numbers, every major religion in India saw its numbers rise.

    Significance of the report

    • These findings, which come as a complement on religious tolerance and segregation in India.
    • It is significant in the context of two major issues that have occupied centre stage in recent times — the controversy over the Citizenship Amendment Act (CAA) and the National Register of Citizens (NRC).
    • This report also gives a strong message to those fundamentalists who perceive India as a living hell for minorities.

    Key findings

    (a) Fertility Rates are declining

    • With regard to fertility rates, the study found that Muslims, who had the highest fertility rate, also had the sharpest decline in fertility rates.
    • From 1992 to 2015, the total fertility rates of Muslims declined from 4.4 to 2.6, while that of Hindus declined from 3.3 to 2.1.
    • This indicates that the gaps in childbearing between India’s religious groups are much smaller than they used to be.
    • The average fertility rate in India today is 2.2, which is higher than the rates in economically advanced countries such as the U.S. (1.6), but much lower than what it was in 1992 (3.4) or 1951 (5.9).

    (b) Marked slowdown

    • Although growth rates have declined for all of India’s major religious groups, the slowdown has been more pronounced among religious minorities, who outpaced Hindus in earlier decades.
    • From 2001 to 2011, the difference in growth between Muslims (24.7%) and Indians overall (17.7%) was 7 percentage points.
    • India’s Christian population grew at the slowest pace of the three largest groups in the most recent census decade — gaining 15.7% between 2001 and 2011, a far lower growth rate than the one recorded in the decade following Partition (29.0%).

    (c) ‘No’ Religions group

    • Interestingly, out of India’s total population of 1,200 million, about 8 million did not belong to any of the six major religious groups.
    • Within this category, mostly comprising adivasi people, the largest grouping was of Sarnas (nearly 5 million adherents), followed by Gond (1 million) and Sari Dharma (5,10,000).

    (d) Migration

    • The study says that since the 1950s, migration has had only a modest impact on India’s religious composition.
    • More than 99% of people who live in India were also born in India, and migrants leaving India outnumber immigrants three-to-one, with “Muslims more likely than Hindus to leave India”, while “immigrants into India from Muslim-majority counties are disproportionately Hindu.”

    (e) Religious conversions

    • Religious conversion has also had a negligible impact on India’s overall composition, with 98% of Indian adults still identifying with the religion in which they were raised.

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  • What is Havana Syndrome?

    A US intelligence officer traveling with CIA director William Burns has reported symptoms of Havana Syndrome.

    What is Havana Syndrome?

    • Havana Syndrome refers to a set of mental health symptoms that are said to be experienced by US intelligence and embassy officials in various countries.
    • It typically involves symptoms such as hearing certain sounds without any outside noise being present, nausea, vertigo and headaches, memory loss and issues with balance.
    • As the name suggests, it traces its roots to Cuba.
    • In late 2016, US officials in embassy began experiencing sudden bursts of pressure in their brain followed by persistent headaches, feeling of disorientation and insomnia.

    How severe is it?

    • In 2018, at least three CIA officers working under diplomatic cover in Cuba had reported troubling sensations that seemed to leave serious injuries.
    • Some officers are being compulsorily retired for their inability to coherently discharge his duty and another needing a hearing aid.

    Has Havana Syndrome been reported anywhere else?

    • Since the Cuban incident, American intelligence and foreign affairs officials posted in various countries have reported symptoms of the syndrome.
    • In early 2018, similar accusations began to be made by US diplomats in China.
    • The US media has reported around 130 such attacks across the world including at Moscow in Russia, Poland, Georgia, Taiwan, Colombia, Kyrgyzstan, Uzbekistan, and Austria, among others.

    What are the causes of Havana Syndrome?

    • No one is entirely sure. But it is speculated to be a “sonic attack”.
    • Medical examination of the victims began to suggest that the victims may have been subjected to high-powered microwaves that either damaged or interfered with the nervous system.
    • It was said to have built a pressure inside the brain that generated the feeling of a sound being heard.
    • Greater exposure to high-powered microwaves is said not only to interfere with the body’s sense of balance but also impact memory and cause permanent brain damage.
    • It is suspected that beams of high-powered microwaves are sent through a special gadget that Americans have begun calling “microwave weapon”.

    Who is doing this in India?

    • Sources in the Indian security establishment say they are not aware of any such weapon being in the possession of an Indian agency.
    • Even if there was one, it is unlikely the government would admit to having acquired such counter-espionage technology given the sensitive nature of intelligence work.

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  • Rhino Horn Reverification Exercises

    Assam will mark World Rhino Day — September 22 — with a special ceremony by burning a stockpile of nearly 2,500 horns of the one-horned rhinoceros.

    Rhino Horn Reverification

    • The public ceremony — scheduled at Bokakhat in Kaziranga National Park (KNP) has been publicized as a “milestone towards rhino conservation” aimed at “busting myths about rhino horns”.
    • It’s a loud and clear message to the poachers and smugglers that such items have no value.
    • Thus the case for the destruction of horns — a process that is in compliance with Section 39(3)(c) of the Wildlife (Protection) Act of 1972.

    Why are Rhinos poached for horns?

    • Ground rhino horn is used in traditional Chinese medicine to cure a range of ailments, from cancer to hangovers, and also as an aphrodisiac.
    • In Vietnam, possessing a rhino horn is considered a status symbol.
    • Due to demand in these countries, poaching pressure on rhinos is ever persistent against which one cannot let the guard down.

    Try this PYQ:

    Consider the following statements:

    1. Asiatic lion is naturally found in India only.
    2. Double-humped camel is naturally found in India only.
    3. One-horned rhinoceros is naturally found in India only.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

     

    [wpdiscuz-feedback id=”smpw6l0h7x” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

    (Note: Comment feature is not available on the app.)

    Back2Basics: Indian Rhino

    • The Indian rhinoceros also called the greater one-horned rhinoceros and great Indian rhinoceros is a rhinoceros native to the Indian subcontinent.
    • It is listed as Vulnerable on the IUCN Red List and Schedule I animal in the Wildlife Protection Act, 1972.
    • It once ranged across the entire northern part of the Indian Subcontinent, along the Indus, Ganges and Brahmaputra River basins, from Pakistan to the Indian-Myanmar border.
    • Poaching for rhinoceros horn became the single most important reason for the decline of the Indian rhino.

  • [pib] Kovalam & Eden Beaches gets Blue Fag Certification

     

    The international eco-label “Blue Flag”, has accorded the Blue Flag Certification for 2 new beaches this year –Kovalam in Tamil Nadu and Eden in Puducherry beaches.

    With this India now has 10 International Blue Flag beaches.

    Which are the other 8 beaches?

    1. Shivrajpur (Dwarka-Gujarat)
    2. Ghoghla (Diu)
    3. Kasarkod (Karnataka) [NOT Kasargod which is in Kerala] and
    4. Padubidri (Karnataka)
    5. Kappad (Kerala)
    6. Rushikonda (AP)
    7. Golden Beach (Odisha) and
    8. Radhanagar (A&N Islands)

    Blue Flag Beaches

    • The ‘Blue Flag’ beach is an ‘eco-tourism model’ and marks out beaches as providing tourists and beachgoers clean and hygienic bathing water, facilities/amenities, a safe and healthy environment, and sustainable development of the area.
    • The certification is accorded by the Denmark-based Foundation for Environment Education.
    • It started in France in 1985 and has been implemented in Europe since 1987, and in areas outside Europe since 2001 when South Africa joined.
    • It has 33 stringent criteria under four major heads for the beaches, that is, (i) Environmental Education and Information (ii) Bathing Water Quality (iii) Environment Management and Conservation and (iv) Safety and Services.

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  • SEBI introduces T+1 Settlement System

    The Capital markets regulator Securities and Exchange Board of India (SEBI) has introduced T+1 settlement cycle for completion of share transactions on optional basis in a move to enhance market liquidity.

    What is T+1 Settlement System?

    • T+1 means that settlements will have to be cleared within one day of the actual transactions taking place.
    • Currently, trades on the Indian stock exchanges are settled in two working days after the transaction is done (T+2).
    • In April 2002, stock exchanges had introduced a T+3 rolling settlement cycle. This was shortened to T+2 from April 1, 2003.

    What has Sebi allowed?

    • SEBI has allowed stock exchanges to start the T+1 system as an option in place of T+2.
    • If it opts for the T+1 settlement cycle for a scrip, the stock exchange will have to mandatorily continue with it for a minimum 6 months.
    • Thereafter, if it intends to switch back to T+2, it will do so by giving one month’s advance notice to the market.
    • Any subsequent switch (from T+1 to T+2 or vice versa) will be subject to a minimum period.
    • A stock exchange may choose to offer the T+1 settlement cycle on any of the scrips, after giving at least one month’s advance notice to all stakeholders, including the public at large.

    Why T+1 settlement?

    • Reduced settlement time: A shortened cycle not only reduces settlement time but also reduces and frees up the capital required to collateralize that risk.
    • Quick settlement: T+1 also reduces the number of outstanding unsettled trades at any instant, and thus decreases the unsettled exposure to Clearing Corporation by 50%.
    • Speedy recovery of assets: The narrower the settlement cycle, the narrower the time window for a counterparty insolvency/bankruptcy to impact the settlement of a trade.
    • Risk reduction: Systemic risk depends on the number of outstanding trades and concentration of risk at critical institutions such as clearing corporations, and becomes critical when the magnitude of outstanding transactions increases.

    How does T+2 work?

    • If an investor sells shares, settlement of the trade takes place in two working days (T+2).
    • The broker who handles the trade will get the money, but will credit the amount in the investor’s account only.
    • In effect, the investor will get the money only after three days.
    • In T+1, settlement of the trade takes place in one working day and the investor will get the money on the following day.
    • The move to T+1 will not require large operational or technical changes by market participants, nor will it cause fragmentation and risk to the core clearance and settlement ecosystem.

    Why are foreign investors opposing it?

    • Foreign investors operating from different geographies would face time zones, information flow process, and foreign exchange problems.
    • Foreign investors will also find it difficult to hedge their net India exposure in dollar terms at the end of the day under the T+1 system.
    • In 2020, SEBI had deferred the plan to halve the trade settlement cycle to one day (T+1) following opposition from foreign investors.

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    Back2Basics: SEBI

    • The SEBI is the regulatory body for securities and commodity market in India under the jurisdiction of Ministry of Finance Government of India.
    • It was established on 12 April 1988 and given Statutory Powers on 30 January 1992 through the SEBI Act, 1992.

    Jurisdiction of SEBI

    • SEBI has to be responsive to the needs of three groups, which constitute the market:
    1. Issuers of securities
    2. Investors
    3. Market intermediaries

    SEBI has three powers rolled into one body: quasi-legislative, quasi-judicial and quasi-executive.

    • It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity.
    • Though this makes it very powerful, there is an appeal process to create accountability.
    • There is a Securities Appellate Tribunal which is a three-member tribunal and is currently headed by Justice Tarun Agarwala, former Chief Justice of the Meghalaya High Court.
    • A second appeal lies directly to the Supreme Court.

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