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  • Benami Law can’t be applied retrospectively: SC

    The Supreme Court has declared as “unconstitutional and manifestly arbitrary” the amendments introduced to the Benami Property Transactions Act, 1988  in 2016, which apply retrospectively and can send a person to prison for three years even as it empowers the Centre to confiscate “any property” subject to a benami transaction.

    What is Benami Property?

    • Benami in Hindi means without name. So, a property bought by an individual not under his or her name is benami property.
    • It can include property held in the name of spouse or child for which the amount is paid out of known sources of income.
    • A joint property with brother, sister or other relatives for which the amount is paid out of known sources of income also falls under benami property.
    • The transaction involved in the same is called benami transaction.
    • The benami transactions include buying assets of any kind — movable, immovable, tangible, intangible, any right or interest, or legal documents.

    Why do people indulge in such transactions?

    • As a usual practice, to evade taxation, people invest their black money in buying benami property.
    • The real owner of these properties are hard to trace due to fake names and identities.

    What is the Benami Law?

    • The first act against benami properties was passed in 1988 as the Prohibition of Benami Property Transactions Act, 1988.
    • To block all loopholes, the government in July 2016 decided to amend the original act.
    • So after further amendment, Benami Transactions (Prohibition) Amendment Act, 2016 came into force on November 1, 2016.
    • The PBPT Act defines benami transactions, prohibits them and further provides that violation of the PBPT Act is punishable with imprisonment and fine.
    • The PBPT Act prohibits recovery of the property held benami from benamidar by the real owner.
    • Such, properties are liable for confiscation by the Government without payment of compensation.

    What amendment is this article talking about?

    • The 2016 law amended the original Benami Act of 1988, expanding it to 72 Sections from a mere nine.
    • Sections 3(2) and 5 were introduced through the Benami Transactions (Prohibition) Amendment Act, 2016.
    • A Bench, led by CJI N.V. Ramana, declared Sections 3(2) and 5 introduced through this amendment as unconstitutional.

    Which sections did the Supreme Court declare unconstitutional?

    (b) Section 3(2)

    • A/c to this, a person can be sent behind bars for a benami transaction entered into 28 years before the Section even came into existence.
    • CJI Ramana held that the provision violated Article 20(1) of the Constitution.
    • Article 20(1) mandates that no person should be convicted of an offence, which was not in force “at the time of the commission of the act charged as an offence”.

    (b) Section 5

    • It said that “any benami property shall be liable to be confiscated by the Central Government”.
    • The court held that this confiscation provision cannot be applied retrospectively.
    • The CJI dismissed the government’s version that forfeiture, acquisition and confiscation of property under the 2016 Act was not in the nature of prosecution and cannot be restricted under Article 20.

    What else did the apex court observe?

    • The court observed that the 2016 Act condemned not only transactions that were traditionally denominated as benami but also a “new class of fictitious and sham transactions”.
    • The court said the intention of Parliament was to condemn property acquired from ill-gotten wealth.
    • These proceedings cannot be equated as enforcing civil obligations, the CJI noted.

    Why curb benami transactions?

    • Inflationary implications: Rather than hoarding the black money in cash, the tax evader invest their accumulated illegal money in buying benami properties.
    • Loss of economic activity: The whole process affects the revenue generation of government hampering growth and development of the state.
    • Tax evasion: Since the percentage of tax payer in the country is a dismal low, the government fails to successfully implement its policies and schemes due to lack of resources.
    • Money laundering: Benami transactions also serves the illicit purpose of money laundering.

    Conclusion

    • A tough law against benami properties is the need of the hour to check corruption.
    • However, due process of law needs to be followed in true letter and spirit.

     

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  • Reinvigorating the Chabahar Port

     

    After months of what appeared to be a go-slow, the Union government has pushed up its interest in using Iran’s Chabahar port to connect to Afghanistan and Central Asia for trade, with the visit of the Union Minister of Ports, Shipping & Waterways to the port.

    Chabahar Port

    • In 2016, India signed a deal with Iran entailing $8 billion investment in Chabahar port and industries in Chabahar Special Economic Zone.
    • The port is being developed as a transit route to Afghanistan and Central Asia.
    • India has already built a 240-km road connecting Afghanistan with Iran.
    • All this were expected to bring cargo to Bandar Abbas port and Chabahar port, and free Kabul from its dependence on Pakistan to reach the outer world.
    • Completion of this project would give India access to Afghanistan and beyond to Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan, Kazakhstan, Russia and Europe via 7,200-km-long multi-modal North-South Transport Corridor (INSTC).

    Why is Chabahar back in the news?

    • The visit is a chance to strengthen ties and the maritime relationship between the two countries.
    • Due to pandemic, there were less number of visits from India to Iran and vice-versa and the pace of the project is also allegedly slower.
    • This visit will also highlight the importance of Chabahar as a gateway for Indian trade with Europe, Russia and CIS [Commonwealth of Independent States] countries.
    • India is keen in developing the Shahid Beheshti port as a “a transit hub” and link it to the International North South Trade Corridor (INSTC), that also connects to Russia and Europe.

    What is India’s strategic vision for Chabahar?

    When the first agreement for Chabahar was signed by then PM Atal Bihari Vajpayee in 2003, the plan had a three-fold objective:

    1. To build India’s first offshore port and to project Indian infrastructure prowess in the Gulf
    2. To circumvent trade through Pakistan, given the tense ties with India’s neighbour and build a long term, sustainable sea trade route and
    3. To find an alternative land route to Afghanistan, which India had rebuilt ties with after the defeat of the Taliban in 2001
    • Subsequently, PM Manmohan Singh’s government constructed the Zaranj -Delaram Highway in Afghanistan’s South.
    • It would help connect the trade route from the border of Iran to the main trade routes to Herat and Kabul, handing it over to the Karzai government in 2009.
    • In 2016, PM Modi travelled to Tehran and signed the agreement to develop Chabahar port, as well as the trilateral agreement for trade through Chabahar with Afghanistan’s President Ashraf Ghani.

    Commencement of operations

    • Since the India Ports Global Chabahar Free Zone (IPGCFZ) authority took over the operations of the port in 2018, it has handled 215 vessels, 16,000 TEUs (Twenty-foot Equivalent Units) and four million tons of bulk and general cargo.

    Why is it gaining importance?

    • In the last few years, a fourth strategic objective for the Chabahar route has appeared, with China’s Belt and Road Initiative making inroads in the region.
    • The government hopes to provide Central Asia with an alternate route to the China-Pakistan Economic Corridor (CPEC) through Iran for future trade.

    Why is the Chabahar dream taking so long to realise?

    • India’s quest for Chabahar has hit geopolitical road-block after road-block; the biggest issue has been over Iran’s relationship with western countries, especially the United States.
    • In years when western sanctions against Iran increased, the Chabahar project has been put on the back-burner.
    • However, the nuclear talks resulted in the Joint Comprehensive Plan of Action (JCPOA) in 2015 came into being, the Chabahar port has been easier to work on.
    • In 2018, the Trump administration put paid to India’s plans by walking out of the JCPOA and slapping new sanctions on dealing with Iran.
    • This led to the Modi government “zeroing out” all its oil imports from Iran, earlier a major supplier to India, causing a strain in ties.
    • India also snapped ties with Afghanistan after the Taliban takeover in August 2021, which put an end to the humanitarian aid of wheat and pulses that was being sent to Kabul via Chabahar.
    • When India restarted wheat aid this year, it negotiated with Pakistan to use the land route to Afghanistan instead.

     

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  • Iran drops some of its key demands for Nuclear Pact

    Iran has dropped some of its main demands on resurrecting a deal to rein in Tehran’s nuclear programme, including its insistence that international inspectors close some probes of its program, bringing the possibility of an Iran–US agreement closer.

    Which agreement is this article referring to?

    • It is an alternative name of the Joint Comprehensive Plan of Action (JCPOA).

    What demands of Iran are we talking about?

    • Iran had already largely relented on its demand that the US lift its designation of the Iran Revolutionary Guard Corps as a foreign terrorist organization (FTO) entity.
    • This designation was a more of symbolic move and insulting to Iranian authorities.
    • Iran also wanted a guarantee that the International Atomic Energy Agency (IAEA) would close investigations involving unexplained traces of uranium.
    • Iran wants guarantees that the IAEA would close all of them.

    What is JCPOA?

    • The Iran nuclear deal, formally known as the JCPOA is a landmark accord reached between Iran and several world powers, including the United States, in July 2015.
    • Under its terms, Iran agreed to dismantle much of its nuclear program and open its facilities to more extensive international inspections in exchange for billions of dollars’ worth of sanctions relief.

    Expected outcomes of the deal

    • Curb on the nuclear program: Proponents of the deal said that it would help prevent a revival of Iran’s nuclear weapons program.
    • Increasing regional engagement: It would thereby reduce the prospects for conflict between Iran and its regional rivals, including Israel and Saudi Arabia.

    Background of the JCPOA

    • Iran had previously agreed to forgo the development of nuclear weapons as a signatory to the Nuclear Non-proliferation Treaty, which has been in force since 1970.
    • However, after the overthrow of the Pahlavi dynasty in 1979, Iranian leaders secretly pursued this technology.
    • In 2007, U.S. intelligence analysts concluded that Iran halted its work on nuclear weapons in 2003 but continued to acquire nuclear technology and expertise.
    • Prior to the JCPOA, the P5+1 had been negotiating with Iran for years, offering its government various incentives to halt uranium enrichment.

    Issues with the deal

    (1) US withdrawal

    • The deal has been in jeopardy since President Donald Trump withdrew the US from it in 2018.
    • In retaliation for the US, Iran resumed some of its nuclear activities.

    (2) Iran’s insistence over sanctions removal

    • In 2021, President Joe Biden said the US will return to the deal if Iran comes back into compliance, though Iran’s leaders have insisted that Washington lift sanctions first.
    • Iran now has indicated that he will take a harder line than his predecessor in nuclear negotiations.

    Who are the participants?

    • The JCPOA, which went into effect in January 2016, imposes restrictions on Iran’s civilian nuclear enrichment program.
    • At the heart of negotiations with Iran were the five permanent members of the UN Security Council (China, France, Russia, the United Kingdom, and the United States) and Germany—collectively known as the P5+1.
    • The European Union also took part. Israel explicitly opposed the agreement, calling it too lenient.
    • Some Middle Eastern powers, such as Saudi Arabia, said they should have been consulted or included in the talks because they would be most affected by a nuclear-armed Iran.

    What did Iran agree to?

    • Nuclear restrictions: Iran agreed not to produce either the highly enriched uranium or the plutonium that could be used in a nuclear weapon.
    • Monitoring and verification:  Iran agreed to eventually implement a protocol that would allow inspectors from the International Atomic Energy Agency (IAEA), the United Nations’ nuclear watchdog.

    What did the other signatories agree to?

    • Sanctions relief: The EU, United Nations, and United States all committed to lifting their nuclear-related sanctions on Iran. However, many other U.S. sanctions on Iran, some dating back to the 1979 hostage crisis, remained in effect.
    • Weapons embargo: The parties agreed to lift an existing UN ban on Iran’s transfer of conventional weapons and ballistic missiles after five years if the IAEA certifies that Iran is only engaged in civilian nuclear activity.

    How has the deal affected Iran’s economy?

    • Prior to the JCPOA, Iran’s economy suffered years of recession, currency depreciation, and inflation, largely because of sanctions on its energy sector.
    • With the sanctions lifted, inflation slowed, exchange rates stabilized, and exports—especially of oil, agricultural goods, and luxury items­—skyrocketed as Iran regained trading partners, particularly in the EU.
    • After the JCPOA took effect, Iran began exporting more than 2.1 million barrels per day (approaching pre-2012 levels, when the oil sanctions were originally put in place).

    Try this question from CSP 2020:

    Q.In India, why are some nuclear reactors kept under “IAEA Safeguards” while others are not?

    (a) Some use Uranium and others use thorium.

    (b) Some use imported uranium and others use domestic supplies.

    (c) Some are operated by foreign enterprises and others are operated by domestic enterprises.

    (d) Some are State- owned and others are privately-owned.

     

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

    Back2Basics: International Atomic Energy Agency (IAEA)

    • IAEA is an international organization that seeks to promote the peaceful use of nuclear energy and to inhibit its use for any military purpose, including nuclear weapons.
    • As the preeminent nuclear watchdog under the UN, the IAEA is entrusted with the task of upholding the principles of the Nuclear Non-Proliferation Treaty of 1970.
    • It was established as an autonomous organization on July 29, 1957, at the height of the Cold War between the U.S. and the Soviet Union.
    • Though established independently of the UN through its own international treaty, the agency reports to both the UN General Assembly and the UNSC.

    What are its safeguards?

    • Safeguards are activities by which the IAEA can verify that a State is living up to its international commitments not to use nuclear programs for nuclear weapons purposes.
    • Safeguards are based on assessments of the correctness and completeness of a State’s declared nuclear material and nuclear-related activities.
    • Verification measures include on-site inspections, visits, and ongoing monitoring and evaluation.

    Basically, two sets of measures are carried out in accordance with the type of safeguards agreements in force with a State.

    1. One set relates to verifying State reports of declared nuclear material and activities.
    2. Another set enables the IAEA not only to verify the non-diversion of declared nuclear material but also to provide assurances as to the absence of undeclared nuclear material and activities in a State.

     

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  • With eye on defaulters, Centre tweaks Overseas Investment Rules

    The Finance Ministry has released the Rules for Foreign Exchange Management (Overseas Investment Rules), 2022 subsuming extant regulations for Overseas Investments and Acquisition and Transfer of Immovable Property outside India Regulations, 2015.

    What are the news Overseas Investment Rules?

    • With an eye on wilful defaulters, the new rules stipulate that:
    • Any Indian resident will have to seek an no objection certificate before making any overseas financial commitment:
    1. Who has an account appearing as a non-performing asset
    2. Or is classified as a wilful defaulter by any bank
    3. Or is under investigation by a financial service regulator or by investigative agencies in India

    What are the tweaks in overseas investment norms?

    • Any resident in India acquiring equity capital in a foreign entity or overseas direct investment (ODI), will have to submit an Annual Performance Report (APR) for each foreign entity, every year by December 31.
    • No such reporting shall be required where a person resident in India is holding less than 10% of the equity capital without control in the foreign entity.
    • There is no other financial commitment other than equity capital or a foreign entity is under liquidation.

    Ceiling on investment

    • Any resident individual can make ODI by way of investment in equity capital or overseas portfolio investment (OPI) subject to the overall ceiling under the Liberalised Remittance Scheme (LRS) of the Reserve Bank.
    • Currently, the LRS permits $2,50,000 outward investment by an individual in a year.
    • These norms make it easier for domestic corporates to invest abroad.

    What are the prohibitions?

    • Any Indian resident, who has been classified as a wilful defaulter or is under investigation by the CBI, the ED or the Serious Frauds Investigation Office (SFIO), will have to obtain a no-objection certificate (NOC).
    • NOC can be obtained from his or her bank, regulatory body or investigative agency before making any overseas “financial commitment” or disinvestment of overseas assets.
    • The rules also provide that if lenders, the concerned regulatory body or investigative agency fail to furnish the NOC within 60 days of receiving an application, it may be presumed that they have no objection to the proposed transaction.
    • Additionally, the new rules also prohibit Indian residents from making investments into foreign entities that are engaged in real estate activity, gambling in any form, and dealing with financial products linked to the Indian rupee without the specific approval of the RBI.

     

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  • Vertical Launch Short Range Surface-to-Air Missile (VL-SRSAM)

    The Defence Research and Development Organisation (DRDO) and the Indian Navy has successfully flight-tested the indigenously developed Vertical Launch Short Range Surface-to-Air Missile (VL-SRSAM) from the Integrated Test Range (ITR) at Chandipur off the coast of Odisha.

    What is Vertical Launch Short Range Surface-to-Air Missile (VLSRSAM) ?

    • VL-SRSAM has been designed and developed jointly by three facilities of the DRDO for deployment of Indian Naval warships.
    • The missile has the capability of neutralising various aerial threats at close ranges including sea-skimming targets.
    • The tactic of sea skimming is used by various anti-ship missiles and some fighter jets to avoid being detected by the radars onboard warships.
    • For this, these assets fly as close as possible to sea surface and thus are difficult to detect and neutralise.

    Features of VL-SRSAM

    • The missile has been designed to strike at the high-speed airborne targets at the range of 40 to 50 km and at an altitude of around 15 km.
    • Its design is based on Astra missile which is a Beyond Visual Range Air to Air missile.
    • Two key features of the VL-SRSAM are cruciform wings and thrust vectoring.
    • The cruciform wings are four small wings arranged like a cross on four sides and give the projective a stable aerodynamic posture.
    • The thrust vectoring is an ability to change the direction of the thrust from its engine control the angular velocity and the attitude of the missile.
    • VL-SRSAM is a canisterised system, which means it is stored and operated from specially designed compartments.
    • In the canister, the inside environment is controlled, thus making its transport and storage easier and improving the shelf life of weapons

    Strategic significance of the missile

    • The launch was conducted from a vertical launcher against an electronic target at a very low altitude.
    • The flight path of the vehicle along with health parameters was monitored using a number of tracking instruments deployed by ITR, Chandipur.
    • The successful testing of these systems was crucial for future launches of the missile from Indian Naval Ships.

     

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  • Equitable education and health care needed for better future

    Equitable health and educationContext

    • To create the foundation for the next century, we need to invest in equitable education and health care in the next 25 years not just for the elite, but for all.

    What is current status of education?

    • Expenditure on Education: The expenses on education as a percentage to GDP, India lags behind some developed/ developing nations.
    • Infrastructure deficit: Dilapidated structures, single-room schools, lack of drinking water facilities, separate toilets and other educational infrastructure is a grave problem.
    • Student-teacher ratio: Another challenge for improving the Indian education system is to improve the student teacher ratio.

    What is current status of healthcare?

    • Weak delivery: Current health infrastructure in India paints a dismal picture of the healthcare delivery system in the country.
    • Unpreparedness: Public health experts believe that India is ill-equipped to handle emergencies.
    • Technical glitches in urban areas: It is not prepared to tackle health epidemics, particularly given its urban congestion.

    A systemic approach to reforming education system in the country needs

    • Dynamic pedagogy: Academic interventions involve the adoption of grade competence framework instead of just syllabus completion.
    • Directional efforts: Effective delivery of remedial education for weaker students like after-school coaching, audio-video based education.
    • Administrative reforms: that enable and incentivize teachers to perform better through data-driven insights, training, and recognition. Example: Performance based increments in Salary.

    equitable education and healthA systemic approach to reforming healthcare system in the country needs

    • Universal health coverage: Access to healthcare in India is not equitable—the rich and the middle class would survive the COVID-19 or any other crisis but not the poor.
    • Increasing healthcare professionals in numbers: India has handled the COVID-19 pandemic exceptionally well. However, India is in dire need of more medical staff and amenities.
    • Revamping medical education: If the government wants to stay successful in fighting the COVID-19 pandemic, it needs to rapidly build medical institutions and increase the number of doctors.
    • Cross-subsidization of health-care: How the poor managed without, or even with, any government insurance scheme is a big question. They can make up for the loss by cross-subsidizing treatments of patients with premium insurance policies.

    Recent initiatives

    • PLI scheme: In view of these challenges, the government announced various policies like PLI scheme for domestic manufacturing of active pharmaceutical ingredients (APIs).
    • National Digital Health Mission: It also announced the National Digital Health Mission.

    Way forward

    • India’s healthcare system is too small for such a large population.
    • There seems to be a long battle ahead. The public healthcare system cannot be improved overnight.
    • The country needs all hands on deck during and after this crisis—both public and private sectors must work together and deliver universal health coverage for all citizens.

    Conclusion

    • Providing expanded access to high quality education and healthcare supports—particularly for those young people who today lack such access—will not only expand economic opportunity for those individuals, but will also likely do more to strengthen the overall state economy.

    Mains question

    Q. To create the foundation for the next century, we need to invest in education and health in the next 25 years not just for the elite, but for all. Critically examine

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  • Tomato Flu cases found in India

    With cases of tomato flu reported from at least four states — Kerala, Tamil Nadu, Haryana, and Odisha — the Union Health Ministry has issued a set of guidelines on prevention, testing, and treatment of the infection.

    Researchers believe that it is a different clinical presentation of hand-foot-and mouth disease (HFMD) caused by a group of enteroviruses (viruses transmitted through the intestine).

    What is Tomato Flu?

    • Tomato flu or tomato fever is characterized by fever, joint pain, and red, tomato-like rashes usually seen in children below the age of five years.
    • This is accompanied by other symptoms of viral fevers such as diarrhoea, dehydration, nausea and vomiting, and fatigue.
    • This was thought to be an aftereffect of dengue and chikungunya that is commonly seen in Kerala.
    • However, researchers now believe that it is HFMD caused by enteroviruses like Coxsackievirus A-6 and A-16.

    Is it very uncommon?

    • Tomato flu could be an after-effect of chikungunya or dengue fever in children rather than a viral infection.
    • It could also be a new variant of the viral hand, foot, and mouth disease, a common infectious disease targeting mostly children aged 1–5 years and immunocompromised adults.
    • HFMD is not a new infection, we have read about it in our textbooks. It is reported from time to time across the country, but it is not very common.

    Why is the infection spreading now?

    • There actually are more cases or because we are more vigilant about viral infections and testing after Covid-19.
    • Since the disease is self-limiting, doctors do not usually test for it.
    • There are so many viral infections in children, but we cannot — and there is no need to — test for each and every one of it.

    Which pathogen is causing it now? And how is the clinical presentation different?

    • The current HFMD cases are mainly caused by Coxsackievirus A-6 and A-16.
    • Another pathogen — Enterovirus71 — that also causes the disease is not very prevalent now, according to her.
    • This is good because the pathogen was known to lead to severe neurologic symptoms, including fatal encephalitis (brain inflammation).
    • In almost all cases, say 99.9% cases, the disease is self-limiting.
    • But, in a small number of cases it can lead to CNS (central nervous system) complications.

    Is there a treatment for the infection?

    • There is no specific treatment or vaccine available for the disease.
    • Those with the infection are treated symptomatically, such as prescription of paracetamol for fever.

    How can the infection be prevented?

    • As it happens mainly in children, the Centre’s advisory focuses on preventions in these age groups.
    • As per the advisory, anyone suspected to have the infection should remain in isolation for five to seven days after the onset of the symptoms.
    • It states that children must be educated about the infection and asked not to hug or touch other children with fever or rashes.
    • The children should be encouraged to maintain hygiene, stop thumb or finger sucking, and use a handkerchief for a running nose, the advisory states.

     

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  • Data diplomacy

    Context

    • The government has withdrawn the Personal Data Protection Bill from Parliament after several amendments were proposed by the Joint-Parliamentary Committee.

    Definition of data

    • Data is a collection of discrete values that convey information, describing quantity, quality, fact, statistics, other basic units of meaning, or simply sequences of symbols that may be further interpreted.

    What is Data Protection?

    • Data protection refers to policies and procedures seeking to minimise intrusion into the privacy of an individual caused by collection and usage of their personal data.

    What is data localisation?

    • Data localization or data residency law requires data about a nation’s citizens or residents to be collected, processed, and/or stored inside the country, often before being transferred internationally.

    What is Data Governance?

    • Data governance is a collection of processes, roles, policies, standards, and metrics that ensure the effective and efficient use of information in enabling an organization to achieve its goals. Data governance defines who can take what action, upon what data, in what situations, using what methods.

    Interesting facts

    • Over 90% of all the data in the world was created in the past 2 years;
    • The total amount of data being captured and stored by industry doubles every 1.2 years;
    • If you burned all of the data created in just one day onto DVDs, you could stack them on top of each other and reach the moon – twice.

    Data sovereignty of India

    • Definition: India has placed itself at the heart of the battle, its foreign policy vision fuelled by the principle of ‘data sovereignty’—a broad notion that supports the assertion of sovereign writ over data generated by citizens within a country’s physical boundaries.
    • Issues: The ideal of “data sovereignty”, and global attempts to leverage it, has come under heavy criticism from various stakeholders who are of the view that the concept violates the principle of “free and open internet”. They also argue that “data sovereignty” hampers innovation and economic growth, and is a ruse for authoritarian digital governance.

    India’s Data Diplomacy: Three Pillars

    • Pillar 1: India’s data for India’s development

    The flagship ‘Digital India’ programme clearly views data as the cornerstone of India’s socioeconomic future—one where the government leverages the Indian citizen’s data for the benefit of the people themselves, and not solely for profit-making.

    • Pillar 2: Cross-border data flows and digital trade

    In keeping with its foreign policy tradition of actively shaping debates on global trade rules, India has been an active participant in the ongoing contestation on regulating cross-border data flows.

    • Pillar 3: Securitising the economic

    The final pillar of India’s data diplomacy has been predicated ostensibly on safeguarding its citizens’ data from external threats.

    Why data is important?

    • Improve People’s Lives: Data will help you to improve quality of life for people you support: Improving quality is first and foremost among the reasons why organizations should be using data.
    • Make Informed Decisions: Data = Knowledge. Good data provides indisputable evidence, while anecdotal evidence, assumptions, or abstract observation might lead to wasted resources due to taking action based on an incorrect conclusion.
    • Stop Molehills from Turning into Mountains: Data allows you to monitor the health of important systems in your organization: By utilizing data for quality monitoring, organizations are able to respond to challenges before they become full-blown crisis.
    • Get The Results You Want: Data allows organizations to measure the effectiveness of a given strategy: When strategies are put into place to overcome a challenge, collecting data will allow you to determine how well your solution is performing, and whether or not your approach needs to be tweaked or changed over the long-term.

    Conclusion

    • The fulcrum of India’s data diplomacy should be predicated on the rule of law and the genuine protection of fundamental rights enshrined in the Constitution. A commitment to the rule of law and accountability for all actors sets India apart from present adversaries like China and offers an opportunity to burnish its reputation globally.

    Mains question

    Q.Data is considered as new gold across the globe in this context analyse data sovereignty along with status of data diplomacy of India.

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  • Constitution Bench to hear Delhi statehood plea

    A Constitution Bench led by Justice D.Y. Chandrachud will hear the legal battle between the Centre and the Government of Delhi for control over officials in the national capital.

    What is a Constitution Bench?

    • The constitution bench is the name given to the benches of the Supreme Court of India.
    • The Chief Justice of India has the power to constitute a Constitution Bench and refer cases to it.

    Constitution benches are set up when the following circumstances exist:

    1. Interpretation of the Constitution: Article 145(3) provides for the constitution of at least five judges of the court which sit to decide any case “involving a substantial question of law as to the interpretation” of the Constitution of India.
    2. President of India seeking SC’s opinion: When the President has sought the Supreme Court’s opinion on a question of fact or law under Article 143 of the Constitution. Article 143 of the Constitution provides for Advisory jurisdiction to the SC. As per the provision, the President has the power to address questions to the apex Court, which he deems important for public welfare.
    3. Conflicting Judgments: When two or more three-judge benches of the Supreme Court have delivered conflicting judgments on the same point of law, necessitating a definite understanding and interpretation of the law by a larger bench.
    • The Constitution benches are set up on ad hoc basis as and when the above-mentioned conditions exist.
    • Constitution benches have decided many of India’s best-known and most important Supreme Court cases, such as:
    1. K. Gopalan v. State of Madras (Preventive detention)
    2. Kesavananda Bharati v. State of Kerala (Basic structure doctrine) and
    3. Ashoka Kumar Thakur v. Union of India (OBC reservations) etc.

    Why in news now?

    • A 2018 Constitution bench decision interpreting Article 239AA had not dealt with an aspect having a bearing on the dispute over services, CJI agreed.
    • The proceedings have their genesis in the Delhi HC judgment of August 4, 2017, whereby it held that for the purposes of administration, the L-G was not bound by the aid and advice of the Council of Ministers in every matter.
    • On appeal, the SC on February 15, 2017, referred the matter to decide on the interpretation of Article 239AA.

    What is the 2018 Judgment all about?

    • By a majority decision in July, 2018, the Constitution bench upheld the respective powers of the state Assembly and the Parliament.
    • It said that while the CoM must communicate all decisions to the L-G, this does not mean that the L-G’s concurrence is required.
    • In case of a difference of opinion, the L-G can refer it to the President for a decision.
    • The L-G has no independent decision-making power but has to either act on the ‘aid and advice’ of the CoM or is bound to implement the decision of the President on a reference being made.
    • The bench, which limited itself to the interpretation of Article 239AA, left individual issues to be decided by regular benches.

    When power tussle began?

    • Subsequently in 2019, a two-judge bench of the SC dealt with some individual issues arising from the power tussle between the Centre and the NCT government.
    • It ruled that the Anti-Corruption Branch of the Delhi government cannot investigate corruption cases against central government officials.
    • The power to appoint commissions under the Commission of Inquiry Act, 1952, would be vested with the Centre and not the Delhi government, the judgment said.

    Issue over control of administrative services

    • The judges, however, differed on who should have control over administrative services.
    • This was challenged again in the SC where the Centre contended that the two judges could not take a decision on the question.
    • The 2018 Constitution bench judgment had not interpreted the expression “insofar as any such matter as applicable to Union Territories” appearing in Article 239AA.
    • The Centre has urged SC CJI Ramana to refer the matter to a five-judge Constitution bench so that the question of law can be settled before the dispute over who has control over services can be looked into.

    Article 239AA of the Indian Constitution

    • Article 239AA granted Special Status to Delhi among Union Territories (UTs) in the year 1991 through the 69th Constitutional Amendment.
    • It provided a Legislative Assembly and a Council of Ministers responsible to such Assembly with appropriate powers.
    • That’s when Delhi was named as the National Capital Region (NCT) of Delhi.
    • As per this article – Public Order, Police & Land in NCT of Delhi fall within the domain and control of Central Government which shall have the power to make laws on these matters.
    • For remaining matters of State List or Concurrent List, in so far as any such matter is applicable to UTs, the Legislative Assembly shall have the power to make laws for NCT of Delhi.

     

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  • Central Bank Digital Currency (CBDC): the Digital Rupee

    Reports have said the Reserve Bank of India’s (RBI) digital rupee — the Central Bank Digital Currency (CBDC) — may be introduced in phases beginning with wholesale businesses in the current financial year.

    What is Central Bank Digital Currency (CBDC)?

    • CBDC is a central bank issued digital currency which is backed by some kind of assets in the form of either gold, currency reserves, bonds and other assets, recognised by the central banks as a monetary asset.
    • The present concept of CBDCs was directly inspired by Bitcoin, but a CBDC is different from virtual currency and cryptocurrency.
    • Cryptocurrencies are not issued by a state and lack the legal tender status declared by the government.

    What is Currency chest?

    Currency in India is managed by Currency chest. Currency chest is a place where the Reserve Bank of India (RBI) stocks the money meant for banks and ATMs. These chests are usually situated on the premises of different banks but administrated by the RBI.

    Why India needs a digital rupee?

    • Online transactions: India is a leader in digital payments, but cash remains dominant for small-value transactions.
    • High currency in circulation: India has a fairly high currency-to-GDP ratio.
    • Cost of currency management: An official digital currency would reduce the cost of currency management while enabling real-time payments without any inter-bank settlement.

    Why is CBDC preferred over Cryptocurrency?

    • Sovereign guarantee: Cryptocurrencies pose risks to consumers.  They do not have any sovereign guarantee and hence are not legal tender.
    • Market volatility: Their speculative nature also makes them highly volatile.  For instance, the value of Bitcoin fell from USD 20,000 in December 2017 to USD 3,800 in November 2018.
    • Risk in security: A user loses access to their cryptocurrency if they lose their private key (unlike traditional digital banking accounts, this password cannot be reset).
    • Malware threats: In some cases, these private keys are stored by technical service providers (cryptocurrency exchanges or wallets), which are prone to malware or hacking.
    • Money laundering: Cryptocurrencies are more vulnerable to criminal activity and money laundering.  They provide greater anonymity than other payment methods since the public keys engaging in a transaction cannot be directly linked to an individual.
    • Regulatory bypass: A central bank cannot regulate the supply of cryptocurrencies in the economy.  This could pose a risk to the financial stability of the country if their use becomes widespread.
    • Power consumption: Since validating transactions is energy-intensive, it may have adverse consequences for the country’s energy security (the total electricity use of bitcoin mining, in 2018, was equivalent to that of mid-sized economies such as Switzerland).

    Features of CBDC

    • High-security instrument: CBDC is a high-security digital instrument; like paper banknotes, it is a means of payment, a unit of account, and a store of value.
    • Uniquely identifiable: And like paper currency, each unit is uniquely identifiable to prevent counterfeit.
    • Liability of central bank: It is a liability of the central bank just as physical currency is.
    • Transferability: It’s a digital bearer instrument that can be stored, transferred, and transmitted by all kinds of digital payment systems and services.

    Key benefits offered

    • Faster system: CBDC can definitely increase the transmission of money from central banks to commercial banks and end customers much faster than the present system.
    • Financial inclusion: Specific use cases, like financial inclusion, can also be covered by CBDC that can benefit millions of citizens who need money and are currently unbanked or banked with limited banking services
    • Monetary policy facilitation: The move to bring out a CBDC could significantly improve monetary policy development in India.
    • Making of a regional currency: In the cross border payments domain, India can take a lead by leveraging digital Rupee especially in countries such as Bhutan, Saudia Arabia and Singapore where NPCI has existing arrangements.

    Others:

    • It is efficient than printing notes (cost of printing, transporting, and storing paper currency)
    • It reduces the risk of transactions
    • It makes tax collection transparent
    • Prevents money laundering

    Issues involved with CBDC

    • Innovation with centralization: The approach of bringing a sovereign digital currency stands in stark contrast to the idea of decentralization.
    • Liability on RBI:  when bank customers wish to convert their deposits into digital rupee, the RBI will have to take these liabilities from the books of banks and onto its own balance sheet.
    • Inflationary risk: Central banks would indulge in issuing more digital currencies which could potentially trigger higher inflation.
    • User adoption: User adoption could also pose a major setback for the smooth roll out of the CBDC in India. The main challenges would always be user adoption and security.
    • Reduced savings: Many, including various central bankers, fear that people may begin withdrawing money from their bank accounts as digital currencies issued by Central banks become more popular.
    • Volatility: the risk is higher and there is more price volatility and lesser acceptance as a money instrument globally, unless the trust factor and investor protection factors change.

    Way forward

    • The launch of CBDCs may not be a smooth affair and still requires more clarity in India. There are still a lot of misconceptions about the concept of digital currency in the country.
    • The effectiveness of CBDCs will depend on aspects such as privacy design and programmability.
    • There is a huge opportunity for India to take a lead globally via a large-scale rollout and adoption of digital currencies.

     

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