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  • GI(Geographical Indicator) Tags

    [pib] Shahi Litchi from Bihar exported to the UK

    PIB | Agriculture | Mains Paper 3: Intellectual Property Rights

    In a major boost to the export of GI-certified products, the season’s first consignment of Shahi Litchi from Bihar was exported to the United Kingdom by the air route.

    Tap here to read about all GI-tagged products in news.

    Shahi Litchi

    • India is the second-largest producer of litchi (Litchi chin) in the world, after China.
    • The translucent, flavored aril or edible flesh of the litchi is popular as a table fruit in India, while in China and Japan it is preferred in dried or canned form.
    • Shahi litchi was the fourth agricultural product to get GI certification from Bihar in 2018, after Jardalu mango, Katarni rice, and Magahi paan.
    • GI registration for Shahi Litchi is held with the Muzaffarpur-based Litchi Growers Association of Bihar.
    • Muzzafarpur, Vaishali, Samastipur, Champaran, Begusarai districts and adjoining areas of Bihar have favorable climate for growing Shahi Litchi.

    Back2Basics: Geographical Indication (GI)

    • The World Intellectual Property Organisation defines a GI as “a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin”.
    • GIs are typically used for agricultural products, foodstuffs, handicrafts, industrial products, wines and spirit drinks.
    • Internationally, GIs are covered as an element of intellectual property rights under the Paris Convention for the Protection of Industrial Property.
    • They have also covered under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

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  • [pib] Competition Commission of India

    PIB | Governance | Mains Paper 2: Statutory, Regulatory & Various Quasi-Judicial Bodies

    Union Minister of Finance and Corporate Affairs recently commemorated the 12th Annual Day of the Competition Commission of India (CCI).

    Competition Commission of India

    • CCI is the competition regulator in India.
    • It is a statutory body responsible for enforcing The Competition Act, 2002 and promoting competition throughout India and preventing activities that have an appreciable adverse effect on competition in India.
    • It was established on 14 October 2003. It became fully functional in May 2009.

    Its establishment

    • The idea of CCI was conceived and introduced in the form of The Competition Act, 2002 by the Vajpayee government.
    • A need was felt to promote competition and private enterprise especially in the light of 1991 Indian economic liberalization.
    • The Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007, follows the philosophy of modern competition laws.
    • The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises, and regulates combinations (acquisition, acquiring of control, and Merger and acquisition), which causes or likely to cause an appreciable adverse effect on competition within India.

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  • Coronavirus – Economic Issues

    COVID & Economic Inequality

    op-ed snap | Economics | Mains Paper 3: Inclusive Growth & Issues,Indian Economy

    Pandemic hit hard the lives, livelihood and the economy. It has also worsened income inequality. The article deals with the issues of impacts of pandemic and suggests ways to revive growth the deal with income inequality.

    Need to address growth and inequality issue

    • The second wave of the pandemic is spreading to rural areas also.
    • It is known that rural areas have poor health infrastructure.
    • Similar to the first wave, inequalities are also increasing during the second wave.
    • The country has to address the issue of rising inequalities for achieving higher sustainable growth and the well-being of a larger population.
    • According to the State of Working in India 2021 report of the Azim Premji University, the pandemic would push 230 million people into poverty.
    • CMIE data shows a decline in incomes and rising unemployment during the second wave.
    • U-shaped impact: The recent RBI Bulletin says that the impact of the second wave appears to be U-shaped.
    • In the well of the U are the most vulnerable — blue collar groups who have to risk exposure for a living and for rest of society to survive.

    K-shaped recovery and rising inequality

    • The recovery seemed to be K-shaped during the first wave.
    • The share of wages declined as compared to that of profits.
    • A large part of the corporate sector managed the pandemic with many listed companies recording higher profits.
    • On the other hand, the informal workers including daily wage labourers, migrants, MSMEs etc. suffered a lot with loss of incomes and employment.
    • The recovery post the second wave is also likely to be K-shaped with rising inequalities.

    Policies needed for higher growth and reduction in inequality

    1) Vaccination and healthcare facilities

    • An aggressive vaccination programme and improving the healthcare facilities in both rural and urban areas is needed.
    • Reducing the health crisis can lead to an economic revival.
    • Vaccine inequality between urban and rural areas has to be reduced.
    • The crisis can be used as an opportunity to create universal healthcare facilities for all, particularly rural areas.
    • Other states can learn from Kerala on building health infrastructure.

    2) Investment in infrastructure

    • The budget offered some good announcements relating to capital investment in infrastructure.
    • The Development Financial Institution (DFI) for funding long-term infrastructure projects is being established.
    • This can revive employment and reduce inequalities.
    • The government has to fast track infra investment.

    3) Safety net for vulnerable

    • The informal workers and other vulnerable sections including MSMEs have been dealt back-to-back blows due to the first and second waves.
    • A majority of workers have experienced a loss of earnings.
    • Therefore, the government has to provide safety nets in the form of free food grains for six more months, expand work offered under MGNREGA in both rural and urban areas.
    • The government also need to undertake a cash transfer to provide minimum basic income.

    Policies for growth

    • Focus on demand: On economic growth, the RBI Bulletin says that the biggest toll of the second wave is in terms of a demand shock as aggregate supply is less impacted.
    • Investment: In the medium term, the investment rate has to be increased from the present 30 per cent of GDP to 35 per cent and 40 per cent of GDP for higher growth and job creation.
    • Export: It is one of the main engines of growth and employment creation.
    • There is positive news on exports as the global economy is reviving.
    • Protectionist trade policy: In recent years India’s trade policy has become more protectionist and the country has to reduce import tariff rates.
    • Role of fiscal policy: In the near term, fiscal policy has to play a more important role in achieving the objectives of growth, jobs and equity by expanding the fiscal space by restructuring expenditure, widening the tax base and increasing non-tax revenue.

    Consider the question “Two waves of the Covid pandemic have worsened the inequality. India has to address the issue of rising inequalities for achieving higher sustainable growth and the well-being of a larger population. Suggest the policies that India should follow for higher growth and reduction in inequality.”

    Conclusion

    Vaccination, expansion in rural healthcare and cash transfers should be part of the strategy to boost demand and address inequalities.

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  • Government Budgets

    challenges the second Covid wave poses to India’s path to fiscal consolidation.

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    The article highlights the challenges the second Covid wave poses to India’s path to fiscal consolidation.

    Recalibration to growth projection due to second Covid wave

    • The growth projections of different national and international agencies and the fiscal projections of Centre’s 2021-22 Budget require recalibration.
    • The International Monetary Fund (IMF) had forecast real GDP growth for 2021-22 at 12.5%.
    • The Reserve Bank of India (RBI) had forecast real GDP growth for 2021-22 at 10.5%.
    • The Ministry of Finance’s Economic Survey had forecast real GDP growth for 2021-22 at 11.0%.

    Growth rate of 8.7% to keep GDP at same level as in 2019-20

    • Moody’s has recently projected India’s GDP growth in 2021-22 at 9.3%.
    • Benchmark growth rate: 9.3% is close to the benchmark growth rate of 8.7% which would keep India’s GDP at 2011-12 prices at the same level as in 2019-20.
    • This level of growth may be achieved based on the assumption that the economy normalises in the second half of the fiscal year.
    • The 2019-20 real GDP was ₹145.7-lakh crore at 2011-12 prices.
    • It fell to ₹134.1-lakh crore in 2020-21, implying a contraction of minus 8.0%.
    •  At 8.7% real growth, the nominal GDP growth would be close to 13.5%, assuming an inflation rate of 4.5%.
    • This would be lower than the nominal growth of 14.4% assumed in the Union Budget.
    • At 13.5% growth, the estimated GDP for 2021-22 is ₹222.4-lakh crore at current prices.
    • Impact: This will lead to a lowering of tax and non-tax revenues and an increase in the fiscal deficit as compared to the budgeted magnitudes.

    How much the gross tax revenue would be impacted?

    • The budgeted gross and net tax revenues for 2021-22 were ₹22.2-lakh crore and ₹15.4-lakh crore, respectively.
    • The assumed buoyancy for the Centre’s gross tax revenues (GTR) was 1.2.
    • If, however, the buoyancy of 1.2 proves optimistic and instead a buoyancy of 0.9, which is the average buoyancy of the five years preceding the COVID-19 year, is applied, the nominal growth of GTR would be 12.2%.
    • This would lead to the Centre’s GTR of about ₹21.3-lakh crore.
    • The corresponding shortfall in the Centre’s net tax revenues is estimated to be about ₹0.6 lakh crore.
    • The budgeted magnitudes for non-tax revenues and non-debt capital receipts at ₹2.4-lakh crore and ₹1.9-lakh crore, respectively, may also prove to be optimistic.
    • In these cases, the budgeted growth rates were 15.4% and 304.3%, respectively.
    •  The excessively high growth for the non-debt capital receipts was premised on implementing an ambitious asset monetisation and disinvestment programme.
    • Together with the tax revenue shortfall of nearly 0.6 lakh crore, the total shortfall on the receipts side may be about ₹2.1-lakh crore.

    Impact on fiscal deficit estimates

    • Two factors will affect the fiscal deficit estimate of 6.76% of GDP in 2021-22.
    • First, there would be a change in the budgeted nominal GDP growth.
    • Second, there would be a shortfall in the receipts from tax, non-tax and non-debt sources.
    • Together, these two factors may lead to a slippage in fiscal deficit which may be close to 7.7% of GDP in 2021-22 if total expenditures are kept at the budgeted levels.
    • This would call for revising the fiscal road map again.
    • Protecting total expenditures at the budgeted level is, however, important given the need to support the economy in these challenging time.

    Vaccination policy and role of Central government

    • Positive externalities: COVID-19 vaccination is characterised by strong inter-State positive externalities, making it primarily the responsibility of the central government.
    • The entire vaccination bill should be borne by the central government.
    • If the central government is the single agency for vaccine procurement, the economies of scale and the Centre’s bargaining power would keep the average vaccine price low.
    • The central government may transfer the vaccines rather than the money that it has budgeted for transfer.
    • Some of the smaller States may find procuring vaccines through a global tender to be quite challenging.

    Conclusion

    Protecting total expenditures at the budgeted level and mass vaccination are important in India’s pandemic situation.

    Back2basics: Tax buoyancy

    • There is a strong connection between the government’s tax revenue earnings and economic growth.
    • Tax buoyancy explains this relationship between the changes in government’s tax revenue growth and the changes in GDP.
    • It refers to the responsiveness of tax revenue growth to changes in GDP.
    • When a tax is buoyant, its revenue increases without increasing the tax rate.
    •  In 2007-08, everything was fine for the economy, GDP growth rate was nearly 9 per cent.
    • Tax revenue of the government, especially, that of direct taxes registered a growth rate of 45 per cent in 2007-08.
    • We can say that the tax buoyancy was five (45/9).

    What is tax elasticity?

    • It refers to changes in tax revenue in response to changes in tax rate.
    • For example, how tax revenue changes if the government reduces corporate income tax from 30 per cent to 25 per cent indicate tax elasticity.

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  • Deep Sea Faunal Diversity in India

    Prelims Only | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    India is home to 4,371 species of deep-sea fauna, including 1,032 species under the kingdom Protista and 3,339 species under the kingdom Animalia, a recent publication by the Zoological Survey of India (ZSI) has revealed.

    Highlights of the Survey

    • India is surrounded by the Arabian Sea, the Bay of Bengal, the Andaman Sea, and the Laccadive Sea (Lakshadweep Sea).
    • Of the 4,371 species, a maximum of 2,766 species has been reported from deep-sea areas of the Arabian Sea, followed by 1,964 species from the Bay of Bengal, 1,396 species from the Andaman Sea, and only 253 species from the Laccadive Sea.

    RIMS ship investigator

    • India is one of the countries that made a pioneering exploration in the deep Indian Ocean region in 1874 by commissioning a RIMS (Royal Indian Marine Survey) ship investigator.
    • This conducted enormous studies in seas around India and continued to work till 1926.

    Components of the exploration

    • The deep-sea ecosystem was the most unexplored ecosystem across the world. It included hydrothermal vents, submarine canyons, deep-sea trenches, seamounts, cold seeps, and mud volcanoes.
    • This publication, the first of its kind, provides baseline information on all groups of fauna and biological organisms in the Indian deep seas.
    • Not only will this support our knowledge on conserving and managing deep-sea faunal resources, but it will also pave way for their sustainable utilization.

    Key findings

    (1) Mammals

    • There are 31 species of sea mammals that are found in the deep-sea ecosystem of Indian waters, including the Critically Endangered Irrawaddy Dolphin.
    • Two other species, the Indo-Pacific Finless Porpoise and the Sperm Whale are recorded as ‘Vulnerable’ in the IUCN classification.
    • The list of mammals includes Cuvier’s Beaked Whale and Short-beaked Common Dolphin, which dive as deep as 8,000 meters below the Earth’s surface.

    (2) Marine turtles

    • Out of the seven species of marine turtles found across the world, five species have been recorded from Indian waters.
    • India is known as one of the best and largest breeding grounds for sea turtles, especially for Olive Ridley and Leatherback Turtles, across the world.

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  • OBOR Initiative

    China’s 17+1 Cooperation Forum

    Prelims Only | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Lithuania has decided to quit China’s 17+1 cooperation forum with central and eastern European states that include other EU members, calling it “divisive”.

    About 17+ 1 Forum

    • The forum is an abbreviation for Cooperation between China and Central and Eastern European Countries.
    • It is an initiative by the Chinese Ministry of Foreign Affairs to promote business and investment relations between China and 16 countries of CEE (CEEC).
    • The countries are Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Greece, Hungary, Latvia, North Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia, and Slovenia.
    • The format was founded in 2012 in Warsaw to push for the cooperation of the “17+1” (the 17 CEE countries and China).
    • Its goals are to promote the Chinese Belt and Road Initiative and enhance cooperation in the fields of infrastructure, transportation, and logistics, trade and investment”.

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  • Zoonotic Diseases: Medical Sciences Involved & Preventive Measures

    Indian SARS-CoV-2 Genomic Consortia (INSACOG)

    Prelims Only | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    In early March, members of the Indian SARS-CoV-2 Genomic Consortia (INSACOG), an advisory group to the Central government, warned of a new and contagious form of the novel coronavirus.

    What is INSACOG?

    • INSACOG is a consortium of 10 labs across the country tasked with scanning COVID-19 samples from swathes of patients and flagging the presence of variants that were known to have spiked transmission internationally.
    • It has also been tasked with checking whether certain combinations of mutations were becoming more widespread in India.
    • Some of these labs had begun scanning for mutations in April 2020 itself, but it was not a pan-India effort.
    • The institutes involved were laboratories of the Department of Biotechnology, the CSIR, the ICMR, and the Ministry of Health & Family Welfare (MoHFW).
    • The National Centre for Disease Control (NCDC) under the MoHFW was tasked with coordinating the collection of samples from the States as well correlating disease with the mutations.
    • The work began in January by sequencing samples of people who had a history of travel from the United Kingdom and a proportion of positive samples in the community.

    What are the findings?

    • The “foreign” variants identified were primarily the B.1.1.7 (first identified in the United Kingdom) and the B.1.351 (first found in South Africa) and a small number of P2 variants (from Brazil).
    • However, some labs flagged the growing presence of variants identified in India that were clubbed into a family of inter-related variants called B.1.617, also known as the ‘double mutant’ variant.
    • It was primarily due to two mutations — E484Q and L452R — on the spike protein.
    • The B.1.617 family was marked as an international ‘variant of concern’ after it was linked to a recent spike in cases in the UK.
    • INSACOG labs also found that the B.1.1.7 variant, which is marked by increased infectivity, is distinctly more prevalent in several northern and central Indian States in comparison to southern States.

    Beyond identifying patterns, why is genome sequencing useful?

    • The purpose of genome sequencing is to understand the role of certain mutations in increasing the virus’s infectivity.
    • Some mutations have also been linked to immune escape, or the virus’s ability to evade antibodies, and this has consequences for vaccines.
    • Labs across the world, including many in India, have been studying if the vaccines developed so far are effective against such mutant strains of the virus.
    • They do this by extracting the virus from COVID-19-positive samples and growing enough of it. Then, blood serum from people who are vaccinated, and thereby have antibodies, is drawn.
    • Using different probes, scientists determine how much of the antibodies thus extracted are required to kill a portion of the cultured virus.
    • In general, the antibodies generated after vaccination — and this was true of Covaxin, Covishield, Pfizer and Moderna jabs — were able to neutralize variants.
    • Antibody levels are not the only markers of protection and there is a parallel network of cellular immunity that plays a critical role in how vaccines activate immunity.
    • The current evidence for most COVID-19 vaccines is that they have almost 75% to 90% efficacy in protecting against disease but less so in preventing re-infection and transmission.

    Challenges faced by INSACOG

    • Given that the novel coronavirus is spreading, mutating, and showing geographical variations, the aim of the group was to sequence at least 5% of the samples.
    • For many reasons, this has so far been only around 1%, primarily due to a shortage of funds and insufficient reagents and tools necessary to scale up the process.
    • While some of these issues, the INSACOG, in spite of being peopled by expert scientists, is ultimately an advisory group to the Central government and part of its communication structure.
    • Warnings about emerging variants were not made public with sufficient urgency and the sharing of datasets, even within constituent groups of the INSACOG, was less than ideal.

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  • Global Geological And Climatic Events

    Eruption of Mount Nyiragongo

    National Parks/WS | Enviro & Biodiversity | Mains Paper 1: Geographical Features & Their Location

    Thousands have fled a volcanic eruption in the Democratic Republic of Congo from Mount Nyiragongo on the outskirts of Goma City.

    These were some volcanoes in news this year:

    Mount Vesuvius, Taal Volcano, La Soufriere

    Mount Nyiragongo

    • Mount Nyiragongo is an active stratovolcano with an elevation of 3,470 m (11,385 ft) in the Virunga Mountains associated with the Albertine Rift.
    • The main crater is about 2km wide and usually contains a lava lake.
    • The crater presently has two distinct cooled lava benches within the crater walls.
    • It is one of the 16 Decade Volcanoes.
    • Nyiragongo’s lava lake has at times been the most voluminous known lava lake in recent history. The depth of the lava lake varies considerably.
    • Nyiragongo and nearby Nyamuragira are together responsible for 40 percent of Africa’s historical volcanic eruptions.

    Answer this PYQ in the comment box:

    Q.Which of the following adds/add carbon dioxide to the carbon cycle on the planet Earth?

    1. Volcanic action
    2. Respiration
    3. Photosynthesis
    4. Decay of organic matter

    Select the correct answer using the code given below:

    (a) 1 and 3 only

    (b) 2 only

    (c) 1, 2 and 4 only

    (d) 1, 2, 3 and 4

    What are Decade Volcanoes?

    • The Decade Volcanoes are 16 volcanoes identified by the International Association of Volcanology and Chemistry of the Earth’s Interior (IAVCEI).
    • They are considered worthy of particular study in light of their history of large, destructive eruptions and proximity to densely populated areas.
    • They are named Decade Volcanoes because the project was initiated in the 1990s as part of the United Nations-sponsored International Decade for Natural Disaster Reduction.

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  • Tax Reforms

    Benefits of environmental fiscal reforms

    op-ed snap | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    The article highlights the advantages of environmental fiscal reforms in India.

    Status of  out-of-pocket spending on health in India

    • As per WHO data, in 2011,  17.33% of the population in India made out-of-pocket payments on health that was more than 10% of their income.
    • The percentage was higher in rural areas compared to urban areas.
    • Globally, 12.67% of the population spent more than 10% of their income (out of their pocket) on health.
    • In Southeast Asia, 16% spent more than 10% of their household income on health.
    • Similarly, 3.9% of the population in India made more than 25% of out-of-pocket payments on health, with 4.34% of it in the rural areas.

    Alternate source of health financing: Eco tax

    • The Economic Survey of India 2019-20 has outlined that an increase in public spending from 1% to 2.5-3% of GDP, can decrease out-of-pocket expenditure from 65% to 30% of overall healthcare expenses.
    • The National Health Policy of 2017 also envisages increase in public spending from 1% to 2.5-3% of GDP.
    • This is where the importance of alternate sources of health financing in India needs to be stressed.
    • Fiscal reforms for managing the environment are important, and India has great potential for revenue generation in this aspect.

    Environmental tax reforms

    • Environmental tax reforms generally involve three complementary activities:
    • 1. Eliminating existing subsidies and taxes that have a harmful impact on the environment;
    • 2. Restructuring existing taxes in an environmentally supportive manner;
    • 3. Initiating new environmental taxes.
    • Taxes can be designed either as revenue neutral or revenue augmenting.
    • Revenue augmenting model: In case of revenue augmenting, the additional revenue can either be targeted towards the provision of environmental public goods or directed towards the overall revenue pool.
    • In developing countries like India, the revenue can be used to a greater extent for the provision of environmental public goods and addressing environmental health issues.

    Eco tax

    • The success of an eco tax (environment tax) in India would depend on its architecture, that is, how well it is planned and designed.
    • It should be credible, transparent and predictable.
    • Ideally, the eco tax rate ought to be equal to the marginal social cost arising from the negative externalities associated with the production, consumption or disposal of goods and services.
    • This would include the adverse impacts on the health of people, climate change, etc.
    • The eco tax rate may, thus, be fixed commensurate to the marginal social cost so evaluated.
    • There is also a need to integrate environmental taxes in the Goods and Service Tax framework.

    In India, eco taxes can target three main areas

    • One, differential taxation on vehicles in the transport sector purely oriented towards fuel efficiency and GPS-based congestion charges.
    • Two, in the energy sector by taxing fuels which feed into energy generation.
    • Three, waste generation and use of natural resources.

    Benefits of implementation of eco taxes

    • The implementation of an environmental tax in India will have three broad benefits: fiscal, environmental and poverty reduction.
    • Finance basic public services: Environmental tax reforms can mobilise revenues to finance basic public services when raising revenue through other sources proves to be difficult or burdensome.
    • Reduce distorting taxes: It can can also help to reduce other distorting taxes such as fiscal dividend.
    • Finance research: Environmental tax reforms help internalise the externalities, and the said revenue can finance research and the development of new technologies.

    Impact

    • Environmental regulations may lead to slow productivity growth and high cost of compliance in private sector.
    • This could result in the possible increase in the prices of goods and services.
    • However, the European experience shows that most of the taxes also generate substantial revenue and there is no evidence on green taxes with sustainable development goals leading to a ‘no growth’ economy.
    • Negligible impact on GDP: Most countries’ experiences suggest negligible impact on the GDP, though such revenues have not necessarily been used for environmental considerations.
    • The negligible impact on the GDP may be a temporary phenomenon.

    Conclusion

    This is the right time for India to adopt environmental fiscal reforms as they will reduce environmental pollution and also generate resources for financing the health sector.

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  • Insolvency and Bankruptcy Code

    Supreme Court says Personal Guarantors liable for Corporate Debt

    | Economics | Mains Paper 3: Indian Economy

    The Supreme Court has upheld a government moves to allow lenders to initiate insolvency proceedings against personal guarantors, who are usually promoters of big business houses, along with the stressed corporate entities for whom they gave a guarantee.

    What is the Judgement?

    • The judgment has allowed creditors, usually financial institutions and banks, to move against personal guarantors under the Indian Bankruptcy and Insolvency Code (IBC) was “legal and valid”.
    • The November 15, 2019 notification was challenged before several High Courts initially.
    • The apex court said there was an “intrinsic connection” between personal guarantors and their corporate debtors.

    What is a personal guarantee? How do promoters use this route to get funds?

    • A personal guarantee is most likely to be furnished by a promoter or promoter entity when the banks demand collateral which equals the risk they are taking by lending to the firm, which may not be doing so well.
    • It is different from the collateral that firms give to banks to take loans, as Indian corporate laws say that individuals such as promoters are different from businesses and the two are very separate entities.
    • A personal guarantee, therefore, is an assurance from the promoters or promoter group that if the lender allows them the fund, they will be able to turn around the loss-making unit and repay the said loan on time.

    Impact of the move

    • The apex court ruling will help banks go after those who have offered guarantees to recover dues in case the resolution amount is short of the claims filed by them in the National Company Law Tribunal.
    • Over the years, many companies have repeatedly defaulted in loan repayment and got banks to restructure the debt, often citing systemic issues.
    • But as part of the clean-up initiated five years ago, the IBC was enacted and banks were told to go after those who were not paying their dues.

    About the Insolvency and Bankruptcy Code, 2016

    • IBC is the bankruptcy law of India that seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy.
    • It is a one-stop solution for resolving insolvencies which previously was a long process that did not offer an economically viable arrangement.
    • The code aims to protect the interests of small investors and make the process of doing business less cumbersome.

    Key features of the code

    (1) Insolvency Resolution:

    • The Code outlines separate insolvency resolution processes for individuals, companies, and partnership firms. The process may be initiated by either the debtor or the creditors.
    • A maximum time limit, for completion of the insolvency resolution process, has been set for corporates and individuals.

    (2) Insolvency regulator:

    • The Code establishes the Insolvency and Bankruptcy Board of India, to oversee the insolvency proceedings in the country and regulate the entities registered under it.
    • The Board will have 10 members, including representatives from the Ministries of Finance and Law, and the Reserve Bank of India.

    (3) Insolvency professionals:

    • The insolvency process will be managed by licensed professionals.
    • These professionals will also control the assets of the debtor during the insolvency process.

    (4) Bankruptcy and Insolvency Adjudicator:

    The Code proposes two separate tribunals to oversee the process of insolvency resolution, for individuals and companies:

    1. the National Company Law Tribunal for Companies and Limited Liability Partnership firms; and
    2. the Debt Recovery Tribunal for individuals and partnerships

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