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GS Paper: GS2

  • Election Freebies and Related Issues

    India could end up facing a Sri Lanka-type economic crisis if it doesn’t stop the “culture of freebies” and subsidies in sectors like agriculture, NITI Aayog member Ramesh Chand has warned.

    What is a Freebie?

    • The term Freebies is not new; rather it is a prevalent culture in Indian politics (in the name of socialism).
    • The political parties are always trying to outdo each other in luring the Indian voters with assorted freebies.
    • From free water to free smartphones the Indian politicians promise everything to attract prospective voters in favour.
    • This trend has gained more momentum in the recent times with the political parties being innovative in their offerings as the ‘traditional free water and electricity’ is no longer sufficient as election goodies.

    Examples of freebies

    1. Promise of Rs 15 lakh in our bank accounts
    2. Free TV, Laptops
    3. Free electricity
    4. Loan waivers
    5. Offering free public transport ride to all women in Delhi

    Why are such policies popular among the public?

    • Failure of economic policies: The answer lies in the utter failure of our economic policies to create decent livelihood for a vast majority of Indians.
    • Quest for decent livelihood: The already low income had to be reoriented towards spending a disproportionately higher amount on education and health, from which, the state increasingly withdrew.
    • Prevailing unemployment:  Employment surveys have shown that employment growth initially slowed down from the 1990s, and then has turned negative over the past few years.
    • Increased cost of living: Real income growth of the marginal sections has actually slowed down since 1991 reforms.
    • Increased consumerism: The poor today also spend on things which appear to be luxuries; cellphones and data-packs are two such examples which are shown as signs of India’s increased affluence.
    • Necessity: For migrant workers, the mobile phone helps them keep in touch with their families back home, or do a quick video-call to see how their infant is learning to sit up or crawl.

    Can Freebies be compared with Welfare Politics?

    • These freebies are not bad. It is a part of social welfare.
    • Using freebies to lure voters is not good.
    • Voter’s greediness may lead to a problem in choosing a good leader.
    • When we don’t have a good leader then democracy will be a mockery.

    Impact of such policies

    • Never ending trail: The continuity of freebies is another major disadvantage as parties keep on coming up with lucrative offers to lure more number of votes to minimize the risk of losing in the elections.
    • Burden on exchequer: People forget that such benefits are been given at the cost of exchequer and from the tax paid.
    • Ultimate loss of poors: The politicians and middlemen wipe away the benefits and the poor have to suffer as they are deprived from their share of benefits which was to be achieved out of the money.
    • Inflationary practice: Such distribution freebie commodity largely disrupts demand-supply dynamics.
    • Lethargy in population: Freebies actually have the tendency to turn the nation’s population into: Lethargy and devoid of entrepreneurship.
    • Money becomes only remedy: Everyone at the slightest sign of distress starts demanding some kind of freebies from the Govt.
    • Popular politics: This is psychology driving sections of the population expecting and the government promptly responds with immediate monetary relief or compensation.

    What cannot be accounted to a freebie?

    • MGNREGA scheme (rural employment guarantee scheme)
    • Right to Education (RTE)
    • Food Security through fair price shops ( under National Food Security Act)
    • Prime Minister Kisan Samman Yojana (PM-KISAN)

    Arguments in favour

    • Social investment: Aid to the poor is seen as a wasteful expenditure. But low interest rates for corporates to get cheap loans or the ‘sop’ of cutting corporate taxes are never criticized.
    • Socialistic policy: This attitude comes from decades of operating within the dominant discourse of market capitalism.
    • Election manifesto: Proponents of such policies would argue that poll promises are essential for voters to know what the party would do if it comes to power and have the chance to weigh options.
    • Welfare: Economists opine that as long as any State has the capacity and ability to finance freebies then its fine; if not then freebies are the burden on economy.
    • Other wasteful expenditure: When the Centre gives incentives like free land to big companies and announce multi-year tax holidays, questions are not asked as to where the money will come from.

    A rational analysis of freebies

    • Winning election and good governance are two different things. The role of freebies to avail good governance is definitely questionable.
    • The social, political and economic consequences of freebies are very short-lived in nature.
    • There are many freebies and subsidies schemes available in many States but we still find starvation deaths, lack of electricity, poor education and health service.
    • Hence the sorrow of the masses of India cannot be solved by freebies or by incentives.

    So are not freebies meant only to attract voters and swing voters by concentrating on a preferential group or community?

    Way forward

    • It can be agreed that a democracy requires popular support for its rule to continue. The sops and freebies to the poor buy it the requisite votes.
    • But the democratic process of election and election promises should be clear. It should not control voters thought.
    • What some people term as ‘populism’ actually constitutes what real economics should be.
    • If you deprive people of what they really need, you will have to throw allurements at them.
    • This can only be stopped if political masters try to follow what economist EA Schumacher had conveyed through his seminal work Small is beautiful – “Treat economics as if people matter.”

    Conclusion

    • There is nothing wrong in having a policy-led elaborate social security programme that seeks to help the poor get out of poverty.
    • But such a programme needs well thought out preparation and cannot be conjured up just before an election.

     

     

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  • What is Collegium System?

    What is Collegium System?

    • The Collegium of judges is the Indian Supreme Court’s invention.
    • It does not figure in the Constitution, which says judges of the Supreme Court and High Courts are appointed by the President and speaks of a process of consultation.
    • In effect, it is a system under which judges are appointed by an institution comprising judges.
    • After some judges were superseded in the appointment of the CJI in the 1970s, and attempts made subsequently to effect a mass transfer of High Court judges across the country.
    • Hence there was a perception that the independence of the judiciary was under threat. This resulted in a series of cases over the years.

    Evolution: The Judges Cases

    • First Judges Case (1981) ruled that the “consultation” with the CJI in the matter of appointments must be full and effective.
    • However, it rejected the idea that the CJI’s opinion, albeit carrying great weight, should have primacy.
    • Second Judges Case (1993) introduced the Collegium system, holding that “consultation” really meant “concurrence”.
    • It added that it was not the CJI’s individual opinion, but an institutional opinion formed in consultation with the two senior-most judges in the Supreme Court.
    • Third Judges Case (1998): On a Presidential Reference for its opinion, the Supreme Court, in the Third Judges Case (1998) expanded the Collegium to a five-member body, comprising the CJI and four of his senior-most colleagues.

    The procedure followed by the Collegium

    Appointment of CJI

    • The President of India appoints the CJI and the other SC judges.
    • As far as the CJI is concerned, the outgoing CJI recommends his successor.
    • In practice, it has been strictly by seniority ever since the supersession controversy of the 1970s.
    • The Union Law Minister forwards the recommendation to the PM who, in turn, advises the President.

    Other SC Judges

    • For other judges of the top court, the proposal is initiated by the CJI.
    • The CJI consults the rest of the Collegium members, as well as the senior-most judge of the court hailing from the High Court to which the recommended person belongs.
    • The consultees must record their opinions in writing and it should form part of the file.
    • The Collegium sends the recommendation to the Law Minister, who forwards it to the Prime Minister to advise the President.

    For High Courts

    • The CJs of High Courts are appointed as per the policy of having Chief Justices from outside the respective States. The Collegium takes the call on the elevation.
    • High Court judges are recommended by a Collegium comprising the CJI and two senior-most judges.
    • The proposal, however, is initiated by the Chief Justice of the High Court concerned in consultation with two senior-most colleagues.
    • The recommendation is sent to the Chief Minister, who advises the Governor to send the proposal to the Union Law Minister.

    Does the Collegium recommend transfers too?

    • Yes, the Collegium also recommends the transfer of Chief Justices and other judges.
    • Article 222 of the Constitution provides for the transfer of a judge from one High Court to another.
    • When a CJ is transferred, a replacement must also be simultaneously found for the High Court concerned. There can be an acting CJ in a High Court for not more than a month.
    • In matters of transfers, the opinion of the CJI “is determinative”, and the consent of the judge concerned is not required.
    • However, the CJI should take into account the views of the CJ of the High Court concerned and the views of one or more SC judges who are in a position to do so.
    • All transfers must be made in the public interest, that is, “for the betterment of the administration of justice”.

    Loopholes in the Collegium system

    • Lack of Transparency: Opaqueness and a lack of transparency, and the scope for nepotism are cited often.
    • Judges appointing Judge: The attempt made to replace it with a ‘National Judicial Appointments Commission’ was struck down by the court in 2015 on the ground that it posed a threat to the independence of the judiciary.
    • Criteria: Some do not believe in full disclosure of reasons for transfers, as it may make lawyers in the destination court chary of the transferred judge.

    Way ahead

    • In respect of appointments, there has been an acknowledgment that the “zone of consideration” must be expanded to avoid criticism that many appointees hail from families of retired judges.
    • The status of a proposed new memorandum of procedure, to infuse greater accountability, is also unclear.
    • Even the majority of opinions admitted the need for transparency, now Collegiums’ resolutions are now posted online, but reasons are not given.

     

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  • India’s role in a disordered world

    Context

    Western nations want to throw Russia out of the G-20. China has opposed them. India will be chair of the G-20 from December 1, 2022. The world is greatly disordered. What should India stand for?

    Challenges to the global order

    • The war in Ukraine in February 2022 has put the final nail in the coffin of the boundary-less global economy that seemed to be emerging with the fall of the Berlin Wall and the collapse of the Soviet Union in 1991.
    • Vaccines were hoarded by rich countries in the COVID-19 pandemic: poor countries starved.
    • The World Trade Organization (WTO) was already in a bad state before the novel coronavirus pandemic, with rich and poor countries unable to agree on equitable rules, when COVID-19 froze global supply chains.
    • Institutions of global governance have failed to unite the world.

    Global order and governance challenge

    • In the aftermath of the Second World war, new institutions for global governance were established — the United Nations and the General Agreement on Tariffs and Trade (GATT), and the World Bank and the International Monetary Fund (IMF) to provide finance to build the economies of all countries to eliminate poverty.
    • However, the victors retained their veto power within the United Nations Security Council to determine when force can be used to keep the world in order, and to prevent the proliferation of nuclear power.
    • The UN General Assembly meets every year — now 193 nations strong.
    • It passes many resolutions to address global problems — hunger, poverty, women’s rights, terrorism, climate change, etc.
    • However, “might is right”: members of the Security Council retain their right to deny the democratic will of the Assembly when it does not suit them.
    • Global governance is not democratic.

    G-7 and G-20

    • The United States, the United Kingdom, France, Italy, Japan, West Germany and Canada formed the G7 in 1976. ‘so that the noncommunist powers could come together to discuss economic concerns, which at the time included inflation and recession following the Organization of the Petroleum Exporting Countries (OPEC) oil embargo’.
    • The European Union was invited to attend in 1977.
    • Russia joined in 1998 — and ‘its inclusion was meant as a signal of cooperation between East and West after the collapse of the Soviet Union in 1991’.
    • However, Russia was removed from G-8 in 2014 when it invaded the Crimea. China was never a member.
    • After the Asian financial crisis, the G20 was formed in 1999 with the aim of discussing policies in order to achieve international financial stability.
    • Russia and China are members.
    • Now western nations want to throw Russia out of the G-20. China has opposed them.
    • India will be chair of the G-20 from December 2022.
    • Meanwhile, India is being hectored by officials from the U.S. and the U.K. to support their sanctions on Russia.
    • India has so far refused to be cowed down.

    Backlash against globalisation

    • The belief that unfettered flows of finance and trade across national borders will lift people in all poor countries out of poverty and make the world flatter in terms of inequality has failed.
    •  Strong leaders who put the interests of their own countries first are gaining power through elections — in Turkey, Hungary, Poland, Russia, and even India.
    • Free market capitalism is not ideologically compatible with a genuine democracy.
    • Capitalist institutions are governed by the fundamental principle of ‘property rights’.
    • Whereas, genuine democracies are founded on the principle of equal human rights.
    • The rules of governance of capitalist and democratic institutions have always been in tension within societies.
    • Capitalist institutions want to be unfettered by democratic regulations to make it easier to do business.
    • Democratic institutions want to rein in the competitive animal spirits of capitalism to create a more compassionate capitalism.

    Conclusion

    To prevent violence, it is essential that global governance becomes genuinely democratic. Countries must not attack each other. But they must be given the freedom to evolve their own democracies and economies and not be dictated to by others.

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  • Upholding the right to repair

    Context

    Apple recently announced that consumers will have the right to purchase spare components of their products, following an order of the Federal Trade Commission of the United States, which directs manufacturers to remedy unfair anti-competitive practice and asks them to make sure that consumers can make repairs, either themselves or by a third-party agency. The momentum is, however, not so strong in India.

    Challenges in repairing of electronic goods

    • Repairing is becoming unreasonably expensive or pretty much impossible because of technology becoming obsolete.
    • Incompatibility: Companies avoid the publication of manuals that can help users make repairs easily.
    • No repair manual: The absence of repair manuals means that manufacturers hold near-monopoly over repair workshops that charge consumers exorbitant prices.
    • Incompatibility: Manufacturers have proprietary control over spare parts and most firms refuse to make their products compatible with those of other firms.
    • Planned obsolescence results in products breaking down too soon and buying a replacement is often cheaper and easier than repairing them.
    • Big companies often deploy mechanisms that practically forbid other enterprises to repair their products.
    • Digital warranty cards, for instance, ensure that by getting a product from a “non-recognised” outfit, a customer loses the right to claim a warranty.

    Right to repair

    • The rationale behind the “right to repair” is that the individual who purchases a product must own it completely.
    • This implies that apart from being able to use the product, consumers must be able to repair and modify the product the way they want to.
    • Monopoly on repair processes infringes the customer’s’ “right to choose” recognised by the Consumer Protection Act, 2019. 
    •  In Shamsher Kataria v Honda Siel Cars India Ltd (2017), for instance, the Competition Commission of India ruled that restricting the access of independent automobile repair units to spare parts by way of an end-user license agreement was anti-competitive.

    International practices

    • Many countries have taken initiatives, adopted policies and even tried to enact legislation that recognise the “right to repair” to reduce electronic waste.
    • Some jurisdictions offer limited scope for exercising the right to repair.
    • For instance, under the Australian Consumer Law consumers have a right to request that certain goods be repaired if they break too easily or do not work properly.
    • The Massachusetts Motor Vehicle Owners’ Right to Repair Act, 2012 requires automobile manufacturers to provide spare parts and diagnostics to buyers and even independent third-party mechanics.
    • The UK also introduced the path-breaking “right to repair” in 2021 that makes it legally binding on manufacturers to provide spare parts.

    Way forward

    • Well-drafted legislation will not only uphold the right to repair but may aid in striking a much-needed balance between intellectual property and competitive laws in the country.

    Conclusion

    If people want to fix things in a timely, safe and cost-effective way, whether by doing it themselves or taking it
    to a service centre of their choice, providing access to spare parts and information is imperative.

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  • India-UK relations: A new shine to old ties

    Context

    As Prime Minister Narendra Modi hosts British premier Boris Johnson this week in India, the moment is ripe to turn the expansive new possibilities — in trade, investment, high technology, defence, and regional cooperation— into concrete outcomes.

    Background of the India-UK ties and  paradoxes

    • Legacies of colonialism: The bitter legacies of colonialism had made it impossible for the two sides to pursue a sensible relationship in the past.
    • India’s post-colonial engagement with Britain has been riddled with multiple paradoxes.
    • 1] India’s post-post colonial resentment and UK’s claim for special role: Delhi’s lingering post-colonial resentments and London’s unacceptable claim for a special role in the Subcontinent generated unending friction.
    • The consequences of Partition and the Cold War made it harder for Delhi and London to construct a sustainable partnership.
    • The important role played by the US: It was the US that first recognised India’s rapidly-growing relative weight in the international system.
    • At the turn of the millennium, Washington unveiled a policy of assisting India’s rise.
    • This was based on a bipartisan American consensus that a stronger India will serve US interests in Asia and the world.
    • Over the last two decades, it has led to a quick transformation of US relations with India.
    • 2] Washington is setting the pace for Delhi’s relationship with London:  At the dawn of Independence, India saw London as the natural interlocutor with an unfamiliar Washington.
    • Today it is Washington that is setting the pace for Delhi’s relationship with London.
    •  3] China’s role in shaping India’s relations with the West: For Washington, the strategic commitment to assist India’s rise was rooted in the recognition of the dangers of a China-dominated Asia.
    • London in the last two decades was moving in the other direction — a full embrace of Beijing.
    • Once the American deep state decided to confront Chinese power in the late 2010s, London had to extricate itself from the Chinese Communist Party’s powerful spell.
    • As the US unveiled a new Asian strategy, Britain followed with its own “Indo-Pacific tilt” that helped secure the region against China’s muscular policies.
    • 4] Historic tilt towards Pakistan: Unlike the US and France, which are committed to an “India first” strategy in South Asia, Britain remains torn between its new enthusiasm for India and the inertia of its historic tilt towards Pakistan.
    • But India is confident that Pakistan’s relative decline in the region is bound to make it a less weighty factor in India’s bilateral relations with Britain.
    • The question of Pakistan brings us to the fourth paradox—the domestic dynamics of Britain that have tended to sour ties with India.
    • Delhi has figured out that the interconnected politics of India and Britain — shaped by the large South Asian diaspora of nearly four million — can be cut both ways.
    • 5] Making best of historic ties:  If the Tories are romantic about the Raj, nationalists in India bristle at the British imperial connection.
    • Yet, together they are constructing a new relationship between India and Britain.

    Better outlook for bilateral ties

    • As the two sides make a determined effort to transcend the paradoxes, the regional and international circumstances provide a new basis for mutually beneficial engagement.
    • Over the last couple of years, Delhi and London have begun a promising and pragmatic engagement devoid of sentiment and resentment.
    • Having walked out of Europe, Britain needs all the partners it can find and a rising India is naturally among the top political and economic priorities.
    • Delhi meanwhile has become supremely self-assured in dealing with London.
    • With the Indian economy set to become larger than Britain’s in the next couple of years, Delhi is no longer defensive about engaging Britain.
    • Even more important, Delhi recognises the value of a deep strategic partnership with London.

    Conclusion

    The UK has a significant international military presence and wide-ranging political influence. Realists in Delhi are trying to leverage these British strengths for India’s strategic benefit.

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  • What is the UK-Rwanda Asylum Plan?

    The United Kingdom has signed a deal with Rwanda to send some asylum seekers to the East African nation — a move that PM Boris Johnson said will “save countless lives” from human trafficking.

    Immigrants crisis in UK

    • Since 2018, there has been a marked rise in the number of refugees and asylum seekers that undertake dangerous crossings between Calais in France and Dover in England.
    • Most such migrants and asylum seekers hail from war-torn countries like Sudan, Afghanistan, and Yemen, or developing countries like Iran and Iraq.
    • The Britain that has adopted a hardline stance on illegal immigration, these crossings constitute an immigration crisis.
    • The Nationality and Borders Bill, 2021, which is still under consideration in the UK, allows the British government to strip anyone’s citizenship without notice under “exceptional circumstances”.
    • The Rwanda deal is the operationalization of one objective in the Bill which is to deter illegal entry into the United Kingdom.

    What is the Rwanda Deal?

    • The UK and Rwanda Migration and Economic Development Partnership or the Rwanda Deal is a Memorandum of Understanding (MoU) signed between the two governments.
    • Under this deal, Rwanda will commit to taking in asylum seekers who arrive in the UK on or after January 1, 2022, using illegally facilitated and unlawful cross border migration.
    • Rwanda will function as the holding centre where asylum applicants will wait while the Rwandan government makes decisions about their asylum and resettlement petitions in Rwanda.
    • Rwanda will, on its part, accommodate anyone who is not a minor and does not have a criminal record.

    Rationale of the deal

    • The deal aims to combat “people smugglers”, who often charge exorbitant prices from vulnerable migrants to put them on unseaworthy boats from France to England that often lead to mass drownings.
    • The UK contends that this solution to the migrant issue is humane and meant to target the gangs that run these illegal crossings.

    What will the scheme cost the UK?

    • The UK will pay Rwanda £120 million as part of an “economic transformation and integration fund” and will also bear the operational costs along with an, as yet undetermined, amount for each migrant.
    • Currently, the UK pays £4.7 million per day to accommodate approximately 25,000 asylum seekers.
    • At the end of 2021, this amounted to £430 million annually with a projected increase of £100 million in 2022.
    • The Rwanda Deal is predicted to reduce these costs by outsourcing the hosting of such migrants to a third country.

    Will the Rwanda Deal solve the problem of illegal immigration?

    • This deal will be implemented in a matter of weeks unless it is challenged and stayed by British courts.
    • While Boris Johnson’s government is undoubtedly bracing for such legal challenges, it remains unclear if the Rwanda Deal will solve the problem of unlawful crossings.
    • Evidence from similar experiences indicates that such policies do not fully combat “people smuggling”.

    Criticisms of the deal

    • Several activists, refugee and human rights organizations have strongly opposed the new scheme.
    • There are dangers of transferring refugees and asylum seekers to third countries without sufficient safeguards.
    • The refugees are traded like commodities and transferred abroad for processing.
    • Such arrangements simply shift asylum responsibilities, evade international obligations, and are contrary to the letter and spirit of the Refugee Convention.
    • Rwanda also has a known track record of extrajudicial killings, suspicious deaths in custody, unlawful or arbitrary detention, torture, and abusive prosecutions, particularly targeting critics and dissidents.

    Do any other countries send asylum seekers overseas?

    • Yes, several other countries — including Australia, Israel and Denmark — have been sending asylum seekers overseas.
    • Australia has been making full use of offshore detention centres since 2001.
    • Israel, too, chose to deal with a growing influx of asylum seekers and illegal immigrants from places like Sudan and Eritrea by striking deals with third countries.
    • Those rejected for asylum were given the choice of returning to their home country or accepting $3,500 and a plane ticket to one of the third countries.
    • They faced the threat of arrest if they chose to remain in Israel.

     

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  • A fatal friendship with Beijing

    Context

    China’s intervention has proved disastrous for the economies of Myanmar, Sri Lanka and Pakistan.

    China-Myanmar relations and its implications

    • Myanmar, China’s closest neighbour with a long history of cross border trade, was the first country to voluntarily turn towards Beijing, from 1988, when the State Law and Order Restoration Council (SLORC) took over the reins of government.
    • World sanctions followed, but Beijing reassured the generals of its continued support and in 1989, signed a treaty of trade and cooperation that made China the sole supporter of the illegitimate military government.
    • The strong western sanctions after 2007, made China virtually its sole trading partner.
    • The link with China became essential for the regime’s survival but did little to increase economic prosperity.
    • Wood alone accounts for about 70 per cent of Myanmar’s exports to China.
    • It’s clear that China is stripping bare Myanmar’s centuries-old teak forests.

    Implications for Pakistan

    • In 2012,  Pakistan signed on to the China Pakistan Economic Corridor.
    • New Delhi and Washington imagined wrongly that the CPEC would lead to a major People’s Liberation Army-Navy (PLAN) expansion into the Indian Ocean through Gwadar, which even now is a largely disused port.
    •  As a conservative IMF estimate put it, Islamabad’s poor management of the economy and reckless borrowing has put its immediate financial needs (2022) at $51 billion.
    • Projects chosen are unviable like the Gwadar port and the Lahore Metro and attracted huge public criticism. The CPEC was put on hold and rebooted.
    • The IMF warned Islamabad of the CPEC repayment boosting the current account deficit, forcing Pakistan to cut Chinese interest payments for 10 years.
    • The CPEC has been a humbling experience for China and an economic disaster for Pakistan.

    Implications for Sri Lanka

    • Against all economic surveys and advice, the Hambantota port was built, it floundered and Sri Lanka transferred the land as equity to China for 99 years.
    • From 2012 to 2016, China accounted for 30 per cent of all FDI to Sri Lanka, becoming the top source of foreign investment
    • Today China is funding 50 projects in the country, involving more than $1 billion, including the Colombo Port and the Lakvijaya thermal power plant.
    • Today, the Sri Lankan economy is in complete meltdown, with China holding the largest amount of Sri Lankan debt.
    • Private banks have run out of funds to finance imports. Its main sources of revenue, tourism and remittances, have dried up, and the government is in a crisis.

    Conclusion

    The recourse to availing Chinese money by Myanmar, Pakistan and Sri Lanka has led to a feeling of hubris among the leaders, inducing them to take bad economic decisions in the perception that Beijing is footing the bills.

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  • The Functioning of the Enforcement Directorate (ED)

    The Enforcement Directorate (ED) is in the news now and often.

    About Enforcement Directorate (ED)

    • It goes back to May 1, 1956, when an ‘Enforcement Unit’ was formed in the Department of Economic Affairs.
    • It then aimed for handling Exchange Control Laws violations under the Foreign Exchange Regulation Act (FERA).
    • The ED today is a multi-dimensional organisation investigating economic offences under the Prevention of Money Laundering Act (PMLA), Fugitive Economic Offenders Act, Foreign Exchange Management Act and FERA.

    From where does the ED get its powers?

    • When proceeds of crime (property/money) are generated, the best way to save that money is by parking it somewhere, so one is not answerable to anyone in the country.
    • Therefore, there was a need to control and prevent the laundering of money.
    • The PMLA was brought in for this exact reason in 2002, but was enacted only in 2005.
    • The objective was to prevent parking of the money outside India and to trace out the layering and the trail of money.
    • So as per the Act, the ED got its power to investigate under Sections 48 (authorities under act) and 49 (appointment and powers of authorities and other officers).

    At what stage does the ED step in when a crime is committed?

    • Whenever any offence is registered by a local police station, which has generated proceeds of crime over and above ₹1 crore, the investigating police officer forwards the details to the ED.
    • Alternately, if the offence comes under the knowledge of the Central agency, they can then call for the First Information Report (FIR) or the chargesheet if it has been filed directly by police officials.
    • This will be done to find out if any laundering has taken place.

    What differentiates the probe between the local police and officers of the ED?

    Case study:

    • If a theft has been committed in a nationalised bank, the local police station will first investigate the crime.
    • If it is learnt that the founder of the bank took all the money and kept it in his house, without being spent or used, then the crime is only theft and the ED won’t interfere because the amount has already been seized.
    • But if the amount which has been stolen is used after four years to purchase some properties, then the ill-gotten money is brought back in the market.
    • Or if the money is given to someone else to buy properties in different parts of the country, then there is ‘laundering’ of money.
    • Hence the ED will need to step in and look into the layering and attachment of properties to recover the money.
    • If jewellery costing ₹1 crore is stolen, police officers will investigate the theft. The ED, however, will attach assets of the accused to recover the amount of ₹1 crore.

    What are the other roles and functions of the ED?

    • The ED carries out search (property) and seizure (money/documents) after it has decided that the money has been laundered, under Section 16 (power of survey) and Section 17 (search and seizure) of the PMLA.
    • On the basis of that, the authorities will decide if arrest is needed as per Section 19 (power of arrest).
    • Under Section 50, the ED can also directly carry out search and seizure without calling the person for questioning.
    • It is not necessary to summon the person first and then start with the search and seizure.
    • If the person is arrested, the ED gets 60 days to file the prosecution complaint (chargesheet) as the punishment under PMLA doesn’t go beyond seven years.
    • If no one is arrested and only the property is attached, then the prosecution complaint along with attachment order is to be submitted before the adjudicating authority within 60 days.

    Can the ED investigate cases of money laundering retrospectively?

    • If an ill-gotten property is acquired before the year 2005 (when the law was brought in) and disposed off, then there is no case under PMLA.
    • But if proceeds of the crime were possessed before 2005, kept in storage, and used after 2005 by buying properties, the colour of the money is still black and the person is liable to be prosecuted under PMLA.
    • Under Section 3 of PMLA, a person shall be guilty of money-laundering, if such person is found to have directly or indirectly attempted to indulge or knowingly assist a party involved in one or more of the following activities:
    • Concealment; possession; acquisition; use; or projecting as untainted property; or claiming as untainted property in any manner etc.

     

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  • Retirement spree in SC may affect efforts to scale down pendency

    The retirements in the topmost rung of the judiciary in 2022 will encompass changes in the powerful Supreme Court Collegium and see two new Chief Justices in a span of months.

    Why in news?

    • The retirements come at a time when the court is in the process of steadying itself after particularly brutal waves of the pandemic.

    Pendency in Supreme Court

    • The Supreme Court’s statistics show that 70,362 cases are pending with it as on April 1, 2022.
    • Over 19% of them are not ready to be placed before a Bench for judicial hearing as they have not completed the required preliminaries.
    • While 52,110 are admission matters, 18,522 are regular hearing cases.
    • The number of Constitution Bench cases (both main and connected matters) totals 422.

    General scenario: Pendency of Cases

    • India’s legal system has the largest backlog of pending cases in the world – as many as 30 million pending cases.
    • This number is continuously increasing and this itself shows the inadequacy of the legal system.
    • And also due to this backlog, most of the prisoners in India’s prisons are detainees awaiting trial.

    Factors leading to under-performance of Indian Judiciary

    • The issue of heavy arrears pending in the various courts of the country has been a matter of concern since the time of independence.
    • The primary factors contributing to docket explosion and arrears as highlighted by Justice Malimath Committee report are as follows:
    1. Population explosion
    2. Litigation explosion
    3. Hasty and imperfect drafting of legislation
    4. Plurality and accumulation of appeals (Multiple appeals for the same issue)
    5. Inadequacy of judge strength
    6. Failure to provide adequate forums of appeal against quasi-judicial orders
    7. Lack of priority for disposal of old cases (due to the improper constitution of benches)
    8. Issue of appointment in Quasi-Judicial Bodies

    Way ahead

    • For pendency, time limits should be prescribed for all cases based on priorities.
    • So setting time standards is essential and it will vary for different cases, and also for different courts depending on their disposal capacity.
    • Alternative disputes resolution (ADR) mechanisms should be promoted for out-of-court settlements.

     

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  • The war’s many victims

    Context

    Beyond Ukraine’s borders, far beyond the media spotlight, the war has launched a silent assault on the developing world. This crisis could throw up to 1.7 billion people — over one-fifth of humanity — into poverty, destitution and hunger on a scale not seen in decades.

    Impact of the war on the developing world

    • Ukraine and the Russian Federation provide 30 per cent of the world’s wheat and barley, one-fifth of its maize, and over half of its sunflower oil.
    • Together, their grain feeds the poorest and most vulnerable people, providing more than one-third of the wheat imported by 45 African and least-developed countries.
    • At the same time, Russia is the world’s top natural gas exporter, and second-largest oil exporter.
    • But the war is preventing farmers from tending their crops while closing ports, ending grain exports, disrupting supply chains and sending prices skyrocketing.
    • The World Food Programme has warned that it faces the impossible choice of taking from the hungry to feed the starving.
    • It urgently needs $8 billion to support its operations in Yemen, Chad and Niger.
    • But while much of the world has stepped up in solidarity with the people of Ukraine, there is no sign of the same support for the 1.7 billion other potential victims of this war.

    The Global Crisis Response Group on Food, Energy and Finance

    • The group aims to develop coordinated solutions to these interlinked crises, with governments, international financial institutions and other key partners.
    • 1] On food, the group is urging all countries to keep markets open, resist hoarding and unjustified and unnecessary export restrictions, and make reserves available to countries at the highest risk of hunger and famine.
    • 2] On energy, the use of strategic stockpiles and additional reserves could help to ease this energy crisis in the short term.
    • But the only medium- and long-term solution is to accelerate the deployment of renewable energy.
    • 3] And on finance, the G20 and international financial institutions must go into emergency mode.
    • They must find ways to increase liquidity and fiscal space, so that governments in developing countries can invest in the poorest and most vulnerable, and in the Sustainable Development Goals.
    •  Social protection, including cash transfers, will be essential to support desperate families through this crisis.
    • But many developing countries with large external debts do not have the liquidity to provide these safety nets.

    Conclusion

    The only lasting solution to the war in Ukraine and its assault on the poorest and most vulnerable people in the world is peace.

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