Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Unethical practices in pharma sector
Context
The judgment by a two-judge Bench of the Supreme Court dismissed the Special Leave Petition by Apex Laboratories to claim deduction on freebies given to doctors.
About the case
- In the said case, the company was giving out freebies to doctors in order for them to create awareness about a health supplement it was manufacturing called Zincovit.
- Prohibited by the law: Upholding a decision by the Madras High Court, the Bench said that the act of pharmaceutical companies giving freebies to doctors is clearly ‘prohibited by the law’.
- Further, it cannot be claimed as a deduction under Section 37(1) of the Income Tax Act, 1961.
- The judge said that in the process of interpretation of the law, it is the responsibility of the court to discern the social purpose which the specific provision subserves.
- Invoking the principle of implied condition, the Court relied on the precedents in the case of P.V. Narasimha Rao (1998) 4 SCC 626 under the Prevention of Corruption Act, and Jamal Uddin Ahmad (2003) 4 SCC 257 under the Representation of the People Act.
Immoral practice
- Breach of trust: Laying emphasis on the fiduciary relationship between doctor and patient, the Court noted that a doctor’s prescription is considered as the final word on medication by the patient even if the cost of such medication is unaffordable.
- In a situation where such trust is reposed in doctors, having prescriptions manipulated by the lure of freebies is immoral.
- Driving up the cost of medicine: The Court was conscious that the cost of such freebies is factored in the cost of medicines sold, in turn driving up their prices and perpetuating a publicly injurious cycle.
- This fact was taken note of by the Parliamentary Standing Committee on Health and Family Welfare in its 45th report, dated August 4, 2010.
- Report from the US: In its elaborate judgment, the Supreme Court bench also took note of a report issued by the United States Department of Health and Human Services Office called “Savings Available Under Full Generic Substitution of Multiple Source Brand Drugs in Medicare Part D”.
- Here, it was stated that the beneficiaries could have saved over $600 million in out-of-pocket payments had they been dispensed generic equivalent drugs.
- In the U.S., by the reason of the Physician Payments Sunshine Act 2010 also known as Section 6002 of the Affordable Care Act (ACA) of 2010, the law compels the manufacturers of drugs, devices, biologic and medical supplies to report to the Centers for Medicare and Medicaid Services, on three broad categories of payments or transfers of value.
Way forward
- Keeping the price under control: Even though the Drug Price Control Order and Drugs and Cosmetics Act are there on the statute book, there is hardly any action to keep the sale price of medicines under control with due and proper investigation into their so-called research and development costs and keeping their profit margins within a prescribed limit.
- The law should be amended to compel the manufacturer of drugs to sell at the verified genuine cost, that also factors in a reasonable profit margin for each product by bringing manufacturers, both foreign or domestic, under the control of the MCI or any other equivalent body.
- This must be at a uniform rate throughout the country; further, classified life saving drugs should be sold at cost only or even at subsidised rates.
Conclusion
This judgment can also go far. It should be debated and applied to other unethical practices and expenditure out of public funds.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Diversification of security partnerships
Context
For the first time, the prime ministers of Australia, Japan, and New Zealand as well as the president of South Korea participated in a NATO summit.
How Ukraine war revived NATO
- More than a decade ago — in 2010 — when NATO agreed on a strategic doctrine, it was discussing it with its Russian partners.
- There was no reference to China in the 2010 strategic concept.
- At that time, the West was trying to deepen ties with Russia and build expansive economic cooperation with China
- In unveiling a new strategic conception for the alliance in the wake of the war in Ukraine, NATO has declared Russia “the most significant and direct threat to Allies’ security and to peace and stability in the Euro-Atlantic area”.
- Not ignoring the threat from China: NATO has declared that China’s “stated ambitions and coercive policies challenge our interests, security and values.”
- The last few months have seen a closing of ranks in NATO that is now determined to cope with the Russian threat.
- Germany — which has long sought good political and commercial relations with Russia — has agreed to raise its defence spending and do more for European security.
- Sweden and Finland have ended their historic neutrality and decided to join NATO.
- The US is doubling down on its military commitments to Europe.
- The last few decades of peace and prosperity in Europe and Asia had enormously increased the influence of Russia and China in their neighbourhoods.
- But the imperial ambitions of both — rooted in a profound misreading of their leverage — have produced a massive geopolitical backlash.
- Consolidation of old alliances: Rather than sharpen the contradiction between the US and its regional allies, Russian and Chinese actions have helped consolidate old alliances and gave birth to new security coalitions.
Why small European countries seek alliances and how it applies to Asia as well
- Small countries seek alliances when their fears of more powerful neighbours become acute.
- Russia’s invasion has sent countries on Moscow’s western flank looking for NATO cover.
- Most Central European states don’t want to rely purely on a European response to the Russian challenge.
- They suspect France and Germany are more likely to accommodate Moscow at their expense than stand up to Russia.
- For the Central Europeans, it is the US that offers a real balance against Russia.
- It should not be too difficult for India to understand why some Asian countries are turning to NATO.
- After all, India’s own turn to the Quad was a direct consequence of Chinese actions on the disputed bilateral frontier.
How China’s expansionist policies are reshaping Asian security landscape
- Way back in 2007 — when India conducted a mere joint naval exercise with the US, Japan, Australia and Singapore — Beijing called it a precursor to an “Asian NATO”.
- Australia and New Zealand are a bit further away but are deeply tied to the Chinese economy.
- For those like Japan, who face a direct threat from China, “Ukraine could well be about the future of Asian security”.
- What has happened in case of Ukraine created fear in Asian, at a moment when China has become so much more powerful than its neighbours.
- Improving national capability: Creation of more sophisticated national military capabilities has been the first priority of some of Beijing’s neighbours.
- Resolution of differences: Resolving mutual differences and strengthening security cooperation — for example between Japan and South Korea — has been another.
- Alliance with US: Boosting bilateral alliances with the US is yet another.
- Diversification of security partnership: Even as nations in the region reboot ties with the US, Asia is also seeking to diversify its security partnerships.
- Engagement with Europe: This has led to greater Asian engagement with Europe as well as the creation of new Indo-Pacific regional institutions – including the Quad, and the AUKUS.
Conclusion
Thanks to the egregious expansionism of Russia and China, the strategic integration of the Asian and European geopolitical theatres has now begun. Whether they like it or not, all countries in Europe and Asia will have to deal with the consequences.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Partners in the blue pacific
Mains level: Paper 2- Need for balanced outlook to strategic policy
Context
Three back-to-back summits in the past fortnight have helped settle the dust on who stands where on the Russian invasion of Ukraine.
Background of the summits
- The BRICS summit took place on June 23-24, followed by the G-7 summit (June 26 and 27), and then the North Atlantic Treaty Organization (NATO) Summit in Madrid (June 29).
- In order to understand what they portend for the future global world order, it is necessary to study the messages sent out by each of these groupings against the backdrop of the situation in Ukraine.
- Most importantly, how can India, that has hitherto managed a careful balancing act between all the groupings, build a movement out of this moment of deep polarisation in the world?
Why outcomes of BRICS Summit throws some challenges for the West
- The fact that India agreed to join the summit showed India’s commitment to BRICS as an alternate grouping of economies spotlighted India’s refusal to shun Russia, and agreement to set aside the two-year stand-off with China in favour of multilateral meetings such as BRICS and the Shanghai Cooperation Organisation (SCO).
- The BRICS Beijing Declaration was a consensus document, as each member cited differing “National Positions” on the Ukraine issue.
- Economic initiatives: BRICS’s New Development Bank (NDB), has approved about 17 loans totalling $5 billion for Russian energy and infrastructure projects, the “Contingent Reserve Arrangement” (CRA).
- A BRICS Payments Task Force (BPTF) for coordination between their central banks for an alternative to the SWIFT payments system, was proposed.
- Mr. Putin also proposed building a global reserve currency based on a “basket of currencies” and trading in local currencies.
- Challenges to western sanctions: The BRICS economic initiatives contain several challenges to the western-led sanctions regime against Russia
- Russia also committed to providing more oil and coal supplies to BRICS countries, which will no doubt raise red flags in the West.
- The possible admission of countries such as Argentina and Iran that have applied to the BRICS mechanism will also sound alarm in the West.
G7 Summit and India’s flexibility
- A day after BRICS, Mr. Modi left for the G-7 Summit in Germany, proof of India’s flexibility in dealing with both sides of the conflict.
- In a number of statements, the G-7 targetted Russia’s war in Ukraine and China’s economic aggression.
- Its outreach documents — on “Resilient Democracies” and “Clean and Just Transitions towards Climate Neutrality” — the only ones that India and other invitees signed on to, were devoid of any mentions of either.
Key takeaways from NATO Summit
- Reference to China: NATO for the first time, made a reference to “systemic competition” from China as a challenge to NATO “interests, security and values”.
- Presence of US allies: The presence of the U.S.’s trans-Atlantic and trans-Pacific military allies at one conference sent out a clear message against a perceived Russia-China alliance.
- US’s growing focus: The launch of another Indo-Pacific coalition — of “Partners in the Blue Pacific” (PBP), i.e., the U.S., the U.K., Australia, New Zealand and Japan, in addition to last year’s Australia-U.K.-U.S. (AUKUS), is another signal of the U.S.’s growing focus on countries that it has military alliances with, against its adversaries.
- No consideration of Russian sensitivities: Apart from the Indo-Pacific partners at the summit, there were leaders of the five countries that have applied to join NATO.
- The direct message was that NATO would no longer consider Russian sensitivities on the subject of NATO expansion.
What is the strategy adopted by India?
- The outcome of all three summits points to a growing polarisation, even battle lines being drawn, between the Western Atlantic-Pacific axis and the Russia-China combine.
- Neutral stand on Ukraine crisis: India has adopted a singular strategy, albeit a defensive one, that does not condone Russia for its attacks on Ukraine, but one that does not criticise it either.
- India has joined China as global economies that have most increased their intake of Russian oil, and where India continues to source fertilizer, cement and other commodities from Russia.
- Strategic tilt towards the U.S. India is working to diversify its defence purchases from Russia, hostilities with China are high, and a strategic tilt towards the U.S. and Quad partners in the Indo-Pacific is growing.
- Balancing Act: On the multilateral stage, too, India remains a balancing voice in the room: along with Brazil and South Africa, India ensured that the BRICS Beijing declaration did not carry the Russian position on the Ukraine war or any criticism of the West.
- While making certain with other partners of the global South that the G-7 outreach documents carried no criticism of Russia and China.
Way forward for India
- It is time for New Delhi to seize the moment for leadership in a world that is becoming increasingly uncomfortable with the growing polarisation and the disruption due to the Ukraine war.
- India is not alone.
- At the United Nations General Assembly, for example, a majority of 141 countries voted to castigate Russia for its invasion of Ukraine, but much fewer, only 93, voted to oust Russia from the Human Rights Council.
- This represents a large pool of independently-minded countries that do not see it in their own national interest to blandly choose one side over another.
- India’s national interests would be better served by building a community of those like-minded countries (from South America to Africa, the Gulf to South Asia and to the Association of Southeast Asian Nations), who cannot afford the hostilities, and want to avoid the possibility of a global war at all costs.
- In 1955, it was in such a similar moment that India took leadership along with countries such as Indonesia and Egypt at the Asian-African Conference of 29 newly independent nations, at Bandung that eventually led to the Non-Aligned Movement (NAM).
Conclusion
This is the time to rethink India’s role in reducing the polarisation and bringing the objective and balanced outlook Nehru spoke of, to the forefront of India’s strategic policy.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: SEZ, DESH
Mains level: Success and limitations of the SEZs in India
The Centre plans to table the Development of Enterprise and Service Hubs (DESH) Bill in the monsoon session of the Parliament, which will overhaul the special economic zones (SEZ) legislation.
What are SEZs?
- A Special Economic Zone (SEZ) is an area in which the business and trade laws are different from the rest of the country.
- SEZs are located within a country’s national borders, and their aims include increasing trade balance, employment, increased investment, job creation, and effective administration.
- Additionally, companies may be offered tax holidays, where upon establishing themselves in a zone, they are granted a period of lower taxation.
SEZs in India
- The SEZ policy in India first came into inception on April 1, 2000.
- The prime objective was to enhance foreign investment and provide an internationally competitive and hassle-free environment for exports.
- The idea was to promote exports from the country and realize the need for a level playing field must be made available to the domestic enterprises and manufacturers to be competitive globally.
- Subsequently, the SEZ Act 2005, was enacted to provide the umbrella legal framework, covering all important legal and regulatory aspects of SEZ development as well as for units operating in SEZs.
- SEZ units used to enjoy 100% income tax exemption on export income for the first five years, 50% for the next five years, and 50% of the ploughed back export profit for another five years
Why replace the existing SEZ Act?
- The World Trade Organization’s dispute settlement panel has ruled that India’s export-related schemes, including the SEZ Scheme, were inconsistent with WTO rules.
- India has been accused of giving tax benefits to exports through SEZs.
- Countries aren’t allowed to directly subsidize exports as it can distort market prices.
- SEZs also started losing their allure after the introduction of minimum alternate tax and a sunset clause to remove tax sops.
How is the DESH legislation different?
- The DESH legislation goes beyond promoting exports.
- It has a much wider objective of boosting domestic manufacturing and job creation through ‘development hubs’.
- These hubs will no longer be required to be net foreign exchange positive cumulatively in five years (i.e, export more than they import) as mandated in the SEZ regime.
- They will be allowed to sell in the domestic area more easily. The hubs will, therefore, be WTO-compliant.
- DESH legislation also provides for an online single-window portal for the grant of time-bound approvals for establishing and operating the hubs.
Will there be any tax benefits at these hubs?
- It’s not clear yet.
- However, the draft Bill does state that states and the Centre will be allowed to give further incentives in the form of tax rebates, incentives, exemptions, and duty drawbacks.
- Subsidy schemes may be offered for goods and services at these hubs.
- States and the Centre may take fresh measures to speed up clearances and simplify compliance.
Will it be easier to sell in the domestic market?
- Companies can sell in the domestic market with duties only to be paid on the imported inputs and raw materials instead of the final product.
- In the current SEZ regime, duty is paid on the final product when a product is sold in the domestic market.
- Besides, there is no mandatory payment requirement in forex, unlike in the case of SEZs.
- However, the government may impose an equalization levy on goods or services supplied to the domestic market to bring taxes at par with those provided by units outside
What role will states play in DESH?
- DESH is expected to play a larger role, definitely.
- In the SEZ regime, most decisions were made by the commerce department at the Centre.
- Now, states will be able to participate and even directly send recommendations for development hubs to a central board for approval.
- Besides, state boards would be set up to oversee the functioning of the hubs.
- They would have the powers to approve imports or procurement of goods, and monitor the utilization of goods or services, warehousing, and trading in the development hub.
Way forward
- If indeed India needs the special hubs, the govt must address the critical gaps in existing SEZ law through the DESH bill and it must be thought through before bringing it to the Parliament.
- Effective implementation of the law could act as a lever to India’s growth.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Nominated members in Rajya Sabha
Mains level: Functioning of Rajya Sabha
Olympic sprinter PT Usha and music composer Ilaiyaraaja among others have been nominated to the Rajya Sabha in the category of eminent persons nominated by the President.
Nominated Members in RS
- Twelve members are nominated to the RS by the President of India for six-year term.
- This is for their contributions towards arts, literature, sciences, and social services.
- This right has been bestowed upon the President according to the Fourth Schedule under Articles 4(1) and 80(2) of the Constitution of India.
Normal composition
- The present strength is 245 members of whom 233 are representatives of the states and UTs and 12 are nominated by the President.
- The Rajya Sabha is not subject to dissolution; one-third of its members retire every second year.
Constitutional provisions for nominated members
- 80(1)(a) of Constitution of India makes provision for the nomination of 12 members to the Rajya Sabha by the President of India in accordance with provisions of Arts.80(3).
- 80(3) says that the persons to be nominated as members must be possessing special knowledge or practical experience in respect of such matters as the following namely: Literature, science, art and social service.
Powers and privileges of such members
- A nominated member enjoys all the powers and privileges and immunities available to an elected Member of Parliament.
- They take part in the proceedings of the House as any other member.
- Nominated members are however not entitled to vote in an election of the President of India.
- They however have rights to vote in the vice presidential election.
- As per Article 99 of the Constitution, a nominated member is allowed six months’ time should he join a political party.
Try this PYQ:
Consider the following statements:
- The Chairman and the Deputy Chairman of the Rajya Sabha are not the members of that House.
- While the nominated members of the two Houses of the Parliament have no voting right in the presidential election, they have the right to vote in the election of the Vice President.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Post your answers here.
Also read:
[Sansad TV] Perspective – Rajya Sabha: The Upper House
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: EU Taxonomy
Mains level: Not Much
Activists have been widely criticizing the EU’s sustainable finance taxonomy as a “greenwashing” exercise that puts the European Union’s climate change targets at risk.
What is the EU Taxonomy?
- The EU taxonomy is a complex system to classify which parts of the economy may be marketed as sustainable investments.
- It includes economic activities, as well as detailed environmental criteria that each economic activity must meet to earn a green label.
Why in news now?
- Rules for most sectors came into effect this year, covering investments including steel plants, electric cars and building renovations.
- The rules for gas and nuclear energy, however, have been long delayed amid intense lobbying from governments who disagree on whether the fuels help fight climate change.
What does it say about gas and nuclear energy?
- The European Parliament supported that proposal in a vote paving the way for it to become law and apply from 2023.
- Under the proposal, for a gas-fuelled power plant to be deemed green, it must emit no more than 270 grams of CO2 equivalent per kilowatt hour, or have average emissions of 550g CO2e/kW over 20 years.
- It must also commit to switch to low-carbon gases by 2035.
- Gas and nuclear power plants are classed as transitional activities.
What’s the taxonomy for?
- The taxonomy does not ban investments in activities not labelled “green”, but it limits which ones companies and investors can claim are climate-friendly.
- The EU’s goal to eliminate its net emissions by 2050 will require huge investments, much of it private funding.
- The rules also aim to stamp out green-washing, where organisations exaggerate their environmental credentials, among so-called eco-friendly investment products.
Who does it apply to?
- Providers of financial products – including pension providers – in the EU must disclose which investments comply with the taxonomy’s climate criteria.
- For each investment, fund or portfolio, they must disclose what share of underlying investments comply with the rules.
- Large companies and listed firms must also disclose what share of their turnover and capital expenditure complies.
- That means polluting companies can get recognition for making green investments.
- For example, if an oil company invested in a wind farm, it could label that expenditure as green.
What makes a “green” investment?
The rules classify three types of green investments.
- First, those that substantially contribute to green goals, for example, wind power farms.
- Second, those that enable other green activities, for example, facilities that can store renewable electricity or hydrogen.
- Third, transitional activities that cannot be made fully sustainable, but which have emissions below industry average and do not lock in polluting assets or crowd out greener alternatives.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Issues with misleading advertisement
The Central Consumer Protection Authority (CCPA) recently issued guidelines to prevent false or misleading advertisements.
Guidelines on Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022: Key takeaways
(1) Conditions for non-misleading and valid advertisement
An advertisement shall be considered to be valid and not misleading:
- If it contains truthful and honest representation;
- Does not mislead consumers by exaggerating the accuracy,
- Scientific validity or practical usefulness or capability or performance or service of the goods or product;
- Does not present rights conferred on consumers by any law as a distinctive feature of advertiser’s offer.
(2) Bait Advertisement
- A bait advertisement shall not seek to entice consumers to purchase goods, products or services without a reasonable prospect of selling such advertised goods, products or services at the price offered.
- The advertiser shall ensure that there is an adequate supply of goods, products or services to meet foreseeable demand generated by such advertisement.
(3) Prohibition of surrogate advertising
- No surrogate advertisement or indirect advertisement shall be made for goods or services whose advertising is otherwise prohibited or restricted by law.
- No circumventing of such prohibition or restriction and portraying it to be an advertisement for other goods or services shall be allowed.
(4) Free claims advertisements
- A free claims advertisement shall not describe any goods, product or service to be ‘free’, ‘without charge’ or use such other terms if the consumer has to pay anything other than the unavoidable costs.
- Seller must make clear the extent of commitment that a consumer shall make to take advantage of a free offer.
(5) Children targeted advertisements
- An advertisement that addresses or targets or uses children shall not condone, encourage, inspire or unreasonably emulate behaviour that could be dangerous for children or take advantage of children’s inexperience, credulity or sense of loyalty.
(6) Limitations on Celebrity Endorsers
- The government has tightened norms for endorsers, including celebrities and sportspersons.
- They are now required to make material connection disclosures and undertake due diligence while doing advertisements.
- Endorsements must reflect the honest opinions, belief or experience of the endorsers.
- The endorsers have to make material connection disclosures and failing to do so will attract penalty under the Consumer Protection Act (CPA).
- Material disclosures mean any relationship that materially affects the weight or credibility of any endorsement which a reasonable consumer would not expect.
- Violation of these guidelines will attract a penalty of ₹10 lakh for the first offence and ₹50 lakh for the subsequent offence, under the CPA.
(7) ASCI rules
- The latest guidelines will also apply to government advertisements.
- Moreover, the advertising guidelines for self-regulation issued by the Advertising Standards Council of India (ASCI) will also be in place in a parallel manner.
Back2Basics:
Explained: Central Consumer Protection Authority (CCPA)
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From UPSC perspective, the following things are important :
Prelims level: NFSA
Mains level: Food and nutrition security of India
Odisha has topped the list of 34 states and Union territories (UTs) in the first-ever NFSA State Ranking Index. Ladakh was ranked last on the index.
NFSA State Ranking Index
- The GoI has come up with a first-ever state ranking index to capture the implementation of the Targeted Public Distribution System (TPDS) under the National Food Security Act (NFSA).
- The states and UTs were ranked for 2022 on the basis of three parameters:
- NFSA coverage, rightful targeting and implementation of all provisions under the Act
- The delivery platform while considering the allocation of food grains, their movement and last-mile delivery to fair price shops
- Nutrition initiatives of the department
Why need such index?
- NFSA is a crucial policy instrument to ensure food security. It covers nearly 800 million people.
- However, NFSA’s implementation through TPDS has not been uniform in the country.
- While some states and Union territories lead, others are yet to pick up in terms of coverage, beneficiary satisfaction, digitisation and overall system efficiency.
- The index has been developed to create an environment of competition, cooperation and learning among states while addressing matters of food security and hunger.
Back2Basics: National Food Security (NFS) Act
- The NFS Act, 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
- It converts into legal entitlements for existing food security programs of the GoI.
- It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS).
- Further, the NFSA 2013 recognizes maternity entitlements.
- The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
- Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.
Key provisions of NFSA
- The NFSA provides a legal right to persons belonging to “eligible households” to receive foodgrains at a subsidised price.
- It includes rice at Rs 3/kg, wheat at Rs 2/kg and coarse grain at Rs 1/kg — under the Targeted Public Distribution System (TPDS). These are called central issue prices (CIPs).
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https://www.downtoearth.org.in/news/governance/odisha-tops-first-ever-nfsa-state-ranking-index-83549
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