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  • FDI in Indian economy

    The deal raises several concerns for privacy, net-neutrality and consumer welfare

    op-ed snap | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    Facebook’s decision to acquire a 9.99 per cent stake in the parent company of Reliance Jio could have several implications. It could impact retail stores which we are trying hard to protect by restricting FDI in retail. Second, it could have implications for net neutrality. Third, it would have implications for data privacy.

    Implications for the country’s retail landscape

    • Recently, Reliance Industries and Facebook announced that the California-based social media giant will acquire a 9.99 per cent stake in Jio Platforms limited, the holding company of Reliance Jio, for $5.7 billion (Rs 43,574 crore).
    • At its core, the idea is to create an ecosystem around JioMart, enabling customers to access the local Kirana stores using WhatsApp, combining both offline and online retail.
    • This ability to connect millions of local businesses with end consumers, and provide them a seamless online transaction experience could radically alter the country’s retail landscape.
    • Both firms have stressed on the new opportunities for businesses of all sizes, and especially for the millions of small businesses across the country.
    • With the ongoing lockdown in the country only reaffirming the importance of the local Kirana store — major online delivery channels have struggled to reach consumers during this period — integration is bound to be an enticing proposition.

    Opportunities for cross-selling

    • A scaling up of this model will also provide opportunities for cross-selling — significantly increasing the upside for firms and increasing the valuation of its retail arms.
    • At present, though, the reach of WhatsApp Pay is limited — just over a million Indians are reported to currently have access to the pay feature.
    • But this sort of model is popular in other Asian economies such as China, Korea and Japan where apps like WeChat have a wide range of product offerings, which induces consumer stickiness.
    • This arrangement also allows Jio to greatly expand its product offering to its more than 370 million-odd subscriber base.
    • The deal may also open up the entire WhatsApp consumer base of around 400 million — to Reliance, including those on other telecom platforms such as Airtel and Vodafone.

    The following concern could arise from the deal and the UPSC can frame a question based on these concern, like ” Recently a global IT giant acquired a significant stake in an Indian telecom giant. Discuss the various issues which could arise from coming together of such dominant players.”

    What are the concerns in such deals?

    • Implications for consumer welfare: Given the dominant market position of the players, concerns over the market structure and its implications for consumer welfare are bound to arise.
    • Questions over net neutrality: The tie-up also raises questions on net neutrality with the possibility of preferential treatment being granted.
    • Data privacy issue: Third, given the data privacy issues highlighted in the past by the Cambridge Analytica episode, for instance, there are apprehensions over the enormous amounts of data that will be collected by these entities.
    • This concern gains significance especially when India still does not have a personal data protection law.

    Conclusion

    Whenever two dominant players of respective fields come together, it gives rise to concern. The government must keep watch on the implications and how such a deal plays out in the future. If the concerns raised turn out to come true, maybe India should come out with the antitrust law of its own.

     

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  • Oil and Gas Sector – HELP, Open Acreage Policy, etc.

    Don’t waste the oil crisis

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

    This article discusses the factors that contributed to oil prices falling below zero, and where the prices are headed in the near future. There are suggestions for India to make the most of this oil crisis. In the last week, we covered the same topic but its focus was on increasing the storage capacity. This article also covers the geopolitical implications of oil prices remaining low for long.

    What negative price of the benchmark US crude WTI mean?

    • The collapse in the price of WTI reflected a technical peculiarity of futures trading.
    • Paper traders would normally have had two options- 1) To let their contract expire and take physical delivery 2) To pass on the contract to someone else.
    • The US was running out of crude oil storage capacity and traders knew they could not “risk” taking delivery.
    • There was no physical space to hold the product.
    • So their only option was to sell the contract.
    • On the last day before the contracts expired, the traders in desperation “paid” to offload their risk.
    • There was no physical transaction of oil.
    • The current future price is back in positive territory.

    The world running out of oil storage capacity

    • The world and not just the US was fast running out of storage capacity.
    • Production in excess of demand: This was because oil production was way in excess of demand.
    • The latter had crashed by almost 30 million barrels a day or mbd (the equivalent of OPEC’s entire production) because of the COVID-induced lockdown of transportation and industry.
    • The price of the other crude benchmarks had also dropped but not the same extent — the North Sea Brent fell, for instance, to $15/bbl, a level not seen since 1999.
    • The reason was that unlike the WTI, which is traded in the US and therefore dependent on US inland storage capacity, the other crudes have access to seaborne storage (oil tankers).
    • This latter capacity is, however, fast filling up and the price of these crudes may also hit historic lows.

    So, where the oil prices are headed?

    • Oil prices will be volatile downwards until demand picks up and/or supply is further cut.
    • Demand will depend on the curve of post-COVID economic recovery.
    • Supply will rest on the outcome of further discussions amongst OPEC, Russia and, ironically, the US.
    • OPEC and Russia had earlier this month agreed to cut production by 10 mbd.
    • But clearly, this is not enough and further cutbacks have to be agreed on.
    • Whatever the scenario for economic recovery or supply constraints, there is a slim likelihood of crude oil prices reaching the average price levels of 2019 ($64) over the next 12 months or so.
    • More likely, they will be volatile downwards with $50 as the ceiling and with no floor.
    • This “low for longer” price outlook raises two issues for India’s policy-makers.

    As India depends on imports for over 80% of its oil requirements, oil prices have wide implications for the financial health of India. Safe oil supply lines are essential for its energy security. Both these points are important from the UPSC point of view. Following two points deal with these two factors.

    Two issues that India’s policy-makers need to consider-

    1. Disruption of oil supply lines and problems of diaspora

    • Every oil producer with no exception will face a budgetary crisis.
    • Some, like Saudi Arabia, the UAE and Kuwait will finance their social and economic commitments by cutting costs, increasing debt and drawing down on their sovereign reserves.
    • Others like Iran, Iraq, Nigeria and Venezuela, who have no such cushion and whose credit ratings are junk, will confront deepening political and social crises.
    • Economic plan: India should build into its economic plans the possibility that its traditional oil supply routes could get disrupted.
    • And that its diaspora, whose remittances are of significance, could face disproportionate hardship as these economies retrench.

    India has the largest diaspora in the world and sends as much as $80 billion back home as remittances. So, any impact on diaspora in oil economies has implication for India from this perspective as well.

    2. Empower the oil traders and remove bureaucratic control

    • On the day prices hit negative territory, it is unclear whether the trading experts in our oil PSUs had the flexibility to even contemplate “buying” the WTI futures contract for June, taking delivery, shipping it to India and storing it someplace.
    • It is also not clear whether they had the authority to lock in low prices through forward contracts.
    • Storage capacity and WTI quality mismatch: There is a shortage of storage capacity in India and a mismatch between the quality of WTI and the requirements of our refineries.
    • India cannot leverage the current market conditions of low and volatile oil prices to our national advantage unless we empower the traders and leave them unencumbered from bureaucratic control.
    • Most importantly, protect them from the three Cs ( CVC, CBI and CAG) in case their trade goes awry.

    Conclusion

    This oil market crisis could be made to work to our advantage. We must not waste this opportunity. There is a need to remove the bureaucratic hurdles in our PSUs, increasing storage capacity and sound financial planning by the government to make the most of this oil crisis.

    Back2Basics: What is WTI  and Brent crude benchmark?

    • West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing.
    • This grade is described as light crude oil because of its relatively low density, and sweet because of its low sulfur content.

    Brent Crude

    • Brent Crude is a trading classification of sweet light crude oil that serves as one of the two main benchmark prices for purchases of oil worldwide.
    • This grade is described as light because of its relatively low density, and sweet because of its low sulphur content.

    Futures contract

    • In finance, a futures contract is a standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future, between parties not known to each other.
    • The asset transacted is usually a commodity or financial instrument.

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  • Foreign Policy Watch: India-United States

    Why US’s offer of financial aid to Greenland has angered Denmark?

    | International Relations | Mains Paper 2: India & Its Neighborhood – Relations

    Context

    • The US had last year sent a proposal to “purchase” Greenland from the Nordic nation.
    • This proposal follows plans by the US government to open a consulate in Nuuk, Greenland’s capital.
    • This move is being considered to be “extremely provocative” interference by the US.

    Go for a detailed map reading of the Arctic region. It has been in news for several times this year.

    Why is the US opening a consulate in Greenland?

    • The US is opening a consulate in Greenland after nearly seven decades of closing its first consulate after the Second World War.
    • Russia has been steadily expanding its military presence in the Arctic and China has done its bit on the economic front.

    US’s interests in Greenland

    1) Domestic interest

    • The US claims that its aid is to ensure “sustainable growth” in the autonomous island.
    • It also cited Russia’s “aggressive behavior and increased militarisation in the Arctic” and China’s “predatory economic interests” as reasons for the decision.
    • The US acquiring new territory under Trump would appeal to the nationalistic and imperialistic views of Americans.
    • Acquiring Greenland would also secure Trump’s position in US history of having been the third president to add land to the country’s territory.

    2) Strategic interest

    • Due to climate change, the Arctic ice is melting at an accelerated rate, opening up water routes for military and maritime trade.
    • This is in addition to global superpowers and regional players vying for control over Greeland’s vast untapped natural resources.

    3) Economic interest

    • Greenland is also a resource-rich landmass, strategically located between the Arctic Sea and the Atlantic Ocean, with some of the largest deposits of rare-earth metals, including iron-ore, uranium, and by-products of zinc, neodymium, praseodymium, dysprosium and terbium.
    • These rare-earth metals are used in the production of electric cars, mobile phones and computers.
    • For the longest time, China has been the world’s largest supplier of these rare-earth metals and has expanded its acquisitory plans by excavating mines across the African continent.
    • An acquisition of Greenland would make the US less reliant on China for these rare-earth metals.
    • Greenland, as a part of the Arctic region, also has large deposits of undiscovered oil and gas, resources that the US always wants more of.

    The US obsession

    • Trump’s interest in Greenland is almost an extension of his world view and US foreign policy in his administration.
    • Purchasing another country or territory is unusual, but the US government has done this twice before.
    • Erstwhile President Thomas Jefferson acquired Louisiana from the French in 1803 and the second time when President Andrew Johnson purchased Alaska from Russia in 1867.

    Back2Basics: Greenland

    • Greenland is the world’s largest island located between the Arctic and Atlantic oceans, east of the Canadian Arctic Archipelago.
    • It is an autonomous territory within the Kingdom of Denmark.
    • Though physiographically a part of the continent of North America, Greenland has been politically and culturally associated with Europe
    • The majority of its residents are Inuit, whose ancestors migrated from Alaska through Northern Canada, gradually settling across the island by the 13th century.

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  • Capital Markets: Challenges and Developments

    What is Operation Twist?

    | Economics | Mains Paper 3: Indian Economy

    The Reserve Bank of India (RBI) has announced simultaneous purchase and sale of government bonds in a bid to soften long-term yields under its Operation Twist.

    Operation Twist

    • Operation Twist is a move taken by U.S. Federal Reserve in 2011-12 to make long-term borrowing cheaper.
    • It first appeared in 1961 as a way to strengthen the U.S. dollar and stimulate cash flow into the economy.
    • It is the name given to a Federal Reserve monetary policy operation that involves the purchase and sale of bonds.
    • The operation describes a form of monetary policy where the bank buys and sells short-term and long-term bonds depending on their objective.

    Its genesis

    • The name “Operation Twist” was given by the mainstream media due to the visual effect that the monetary policy action was expected to have on the shape of the yield curve.
    • If we visualize a linear upward sloping yield curve, this monetary action effectively “twists” the ends of the yield curve, hence, the name Operation Twist.
    • To put another way, the yield curve twists when short-term yields go up and long-term interest rates drop at the same time.

     Back2Basics: Open Market Operations

    • Open market operations are the sale and purchase of government securities and treasury bills by RBI or the central bank of the country.
    • The objective of OMO is to regulate the money supply in the economy.
    • When the RBI wants to increase the money supply in the economy, it purchases the government securities from the market and it sells government securities to suck out liquidity from the system.
    • OMO is one of the tools that RBI uses to smoothen the liquidity conditions through the year and minimise its impact on the interest rate and inflation rate levels.

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  • Zoonotic Diseases: Medical Sciences Involved & Preventive Measures

    Mobile Virology Research and Diagnostics Laboratory (MVRDL)

    Prelims Only | Science Tech | Mains Paper 3: Achievements Of Indians In S&T

    The Defence Research and Development Organisation (DRDO) has developed a mobile virology research lab.

    We can expect a  prelim question on BSL ratings as the term is widely appearing in news these days.

    About the MVRDL

    • The MVRDL is the combination of a bio-safety level (BSL)-3 lab and a BSL-2 lab and was set up in a record time of 15 days.
    • It can process 1,000-2,000 samples a day.
    • The mobile lab will be helpful in carrying out a diagnosis of COVID-19 and in virus-culturing for drug screening, convalescent plasma-derived therapy, comprehensive immune profiling of patients towards vaccine etc.

    What are Biosafety Level (BSL) Ratings?

    • A BSL is a set of biocontainment precautions required to isolate dangerous biological agents in an enclosed laboratory facility.
    • The levels of containment range from the lowest biosafety level 1 (BSL-1) to the highest at level 4 (BSL-4).
    • BSL-1 is suitable for work with well-characterized agents which do not cause disease in healthy humans.
    • BSL- 2 is suitable for work involving agents of the moderate potential hazard to personnel and the environment.
    • BSL-3 is appropriate for work involving microbes which can cause serious and potentially lethal disease via the inhalation route.
    • BSL-4 is the highest level of biosafety precautions and is appropriate for work with agents that could easily be aerosol-transmitted within the laboratory and cause severe to fatal disease in humans for which there are no available vaccines or treatments.

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  • ISRO Missions and Discoveries

    [pib] Super-luminous Supernova SN 2010kd

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

    Indian researchers have found that SN 2010kd, a super-luminous supernova stands out with the amount of mass as well as Nickel ejected during explosion.

    Space science-related terms these days are often focused on Gravitational waves, Black holes etc. But basic terminologies are very important and need to be taken care of. For example, a layman may hardly find any difference between Novae-Supernovae, Neutron star, Nebula etc. UPSC often tries to bust you with such basic differences.

    What are Supernovae?

    • Supernovae are kind of energetic explosions were the core of massive stars (a few times to that of the mass of our Sun) goes to a catastrophic phase of explosion liberating huge amounts of energy and mass.
    • These events are visible through very far away distances much beyond our own solar system.
    • Super-luminous supernovae are a special type of stellar explosions having energy output 10 or more times higher than that of standard supernovae.

    What is so distinct about SN 2010kd?

    • The mass ejection from SN 2010kd is metallic and is much more than seen in case of normal core-collapse supernovae.
    • The scientists found that SN 2010kd exploded with a larger velocity but decayed slower than other similar supernovae.
    • The observations show that parameters like rotation and metallicity play a crucial role in stellar explosions.

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  • Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

    [pib] ‘NanoBlitz 3D’ tool to map properties of nano-materials

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

    Indian scientists have developed an advanced tool for mapping nano-mechanical properties of materials like multi-phase alloys, composites, and multi-layered coatings.

    Nanotechnology is a pathbreaking technology which can create many new materials and devices with a wide range of applications, such as in nanomedicine, nanoelectronics etc.  NanoBlitz 3D is another distinct development. We can expect a prelims question asking what the NanoBlitz 3D is , with confusing options like 3d printing tool etc.

     NanoBlitz 3D

    • Scientists from Advanced Research Centre for Powder Metallurgy and New Materials (ARCI) an autonomous institute under the Dept. of S&T have developed this tool.
    • It is an advanced tool for mapping nano-mechanical properties of materials like multi-phase alloys, composites, and multi-layered coatings.
    • The tool has been useful to yield excellent results on a wide range of material systems, including glass-fibre-reinforced polymer composites, dual-phase steels, softwood and shale.
    • An important aspect of this technique is its high-throughput, with just a few hours of testing required for generating more than 10,000 data points that can be processed using machine learning (ML) algorithms.

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  • Festivals, Dances, Theatre, Literature, Art in News

    Festivals in news: Ambubachi Mela

    Prelims Only | History | Mains Paper 1: Arts & Culture

    The Ambubachi Mela at Guwahati’s Kamakhya Temple has been cancelled this year due to COVID-19.

    Many festivals this year have been cancelled for the first time in their recorded history. Few of them were – Thrisur Pooram Festival, Pandharpur Jatara and now, the Ambubachi Mela. Do read about the Medaram Jatara (held in February) as well. Take note of each of them and their speciality along with the respective state of celebration.

    Ambubachi Mela

    • Ambubachi Mela, a four-day fair to mark the annual menstruation of the goddess at Kamakhya temple in Guwahati has begun.
    • Legends say the temple atop the Nilachal Hills, whose northern face slopes down to the Brahmaputra River, was built by the demon king Narakasura.
    • But records are available only from 1565 when Koch king Naranarayana had the temple rebuilt.
    • Kamakhya is one of 51 shaktipeeths or holy sites for the followers of the Shakti cult, each representing a body part of the Sati, Lord Shiva’s companion.
    • The temple’s sanctum sanctorum houses the yoni – female genital – symbolised by a rock.

    Significance

    • Temple priests said the ritualistic fair celebrating the Goddess’ period is one of the reasons why taboo associated with menstruation is less in Assam compared to other parts of India.
    • The attainment of womanhood of girls in Assam is celebrated with a ritual called Tuloni Biya, meaning small wedding.

    Similar place

    • A similar custom is followed at the Devi Temple at Chengannur town in Alleppey district of Kerala.
    • The temple is shut for the days the Goddess there is believed to undergo her period.

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  • FDI in Indian economy

    Recent amendments to FDI policy – a boon or a bane?

    | Economics | Mains Paper 3: Indian Economy

    This article deals with the recent changes made by the government in the FDI policy. The major change was that the government approval route was made mandatory for investment coming from certain countries. There are certain ambiguities and issues with the latest changes.These are discussed here.

    What changes were made in the FDI policy?

    • Government approval route for investment: Investment is permitted through government route only in the following cases-
    • 1) An entity situated in a country which shares a land border with India.
    • 2) Where the owner of investment into India is situated in or is a citizen of any such country.
    • Further, any transfer of ownership of any existing or future foreign direct investment (FDI) in an entity in India (indirectly or indirectly) resulting in the beneficial ownership falling within the purview of the above restrictions, would require the government’s approval.

    Ambiguities arising due to press note

    • There appear to be certain ambiguities arising from the press note and the amendments to the Rules.
    • The usage of the term “FDI” in the press note and the relevant amendments to Rule 6(a) of the Rules, seem to suggest that the restrictions are on investments that are structured as FDI.
    • FDI is defined under the Rules to mean investment through equity instruments by a person resident outside India in an unlisted Indian company, or in 10% or more of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company
    • The restriction doesn’t seem to be on investments by an FPI registered with SEBI.
    • FPI is permitted to invest in listed or to be listed Indian companies’ securities, in the manner set out in Schedule II of the Rules.
    • Also not on investments under the FVCI route.
    • Investment through FVCI is an investment in the securities of Indian companies operating in certain specific sectors, in the manner set out in Schedule VII of the Rules.
    • It is also unclear if “foreign investments” in LLPs, not being FDI, would also be subject to these restrictions.
    • This ambiguity is further amplified by the subject line of the press note, which reads “curbing opportunistic takeovers/acquisitions of Indian companies”, without making any reference to LLPs.
    • And the amendments to Rule 6(a) of the Rules, which only pertain to investments in equity instruments of an Indian company under Schedule I of the Rules.

    The points mentioned here add to our understanding of FDI and issues with it. A question based on the issue can be asked, for ex-“What are the reasons for a steady decline in FDI in India? To what extent FDI poilcy is responsible for this?”

    Difficulties in seeking government approval

    • The requirement of seeking government approval may also pose operational difficulties for many entities.
    • For instance, the approval requirement seems to be applicable in all cases of further investments irrespective of the threshold.
    • It applies whether or not such investments are in the form of rights issue (where all or almost all existing shareholders also participate) or preferential allotments.
    • Which results in causing some amount of hardship for entities to raise further capital, especially where entities already have existing investments from investors situated in countries like China.
    • The amendments to the Rules also do not attempt to clarify the applicability of the approval requirements where there is no change in the shareholding percentage of the investor pursuant to a follow-on investment.
    • Another aspect which is important, is the usage of the terms “directly or indirectly” in the context of transfer/ divestment of beneficial ownership of existing FDI, to entities in/ citizens of a country which shares a land border with India.
    • This may require global acquisitions of entities in other jurisdictions which have subsidiaries/ investee companies in India, by a person in one of India’s neighbouring countries, to be subject to the approval requirements, thereby impacting timelines for closing.

    No restrictions on external commercial borrowings (ECB)

    • There are presently no such commensurate restrictions under the ECB regulations.
    • Therefore, an eligible borrower could avail ECB from a recognised lender.
    • That includes a foreign equity holder in one of India’s neighbouring countries which are FATF compliant for any immediate funding requirements.
    • Any conversion of the ECB or any part thereof, into shares of the Indian company, would be subject to the restrictions and approval requirements under the FDI policy and the Rules.

    Conclusion

    The government/RBI should provide necessary clarifications on these issues and ambiguities at the earliest. With there being no sunset clause presently contemplated on the applicability of these restrictions, only time will tell if the amendments to the Rules are a boon to the economy and a step in the right direction, or otherwise.

    Back2Basics: What is ‘Rights issue’

    • Cash-strapped companies can turn to rights issues to raise money when they really need it.
    • In these rights offerings, companies grant shareholders the right, but not the obligation, to buy new shares at a discount to the current trading price.
    • A rights issue is an invitation to existing shareholders to purchase additional new shares in the company.
    • This type of issue gives existing shareholders securities called rights.
    • With the rights, the shareholder can purchase new shares at a discount to the market price on a stated future date.
    • The company is giving shareholders a chance to increase their exposure to the stock at a discount price.
    • Until the date at which the new shares can be purchased, shareholders may trade the rights on the market the same way that they would trade ordinary shares.
    • The rights issued to a shareholder have value, thus compensating current shareholders for the future dilution of their existing shares’ value.
    • Dilution occurs because a rights offering spreads a company’s net profit over a larger number of shares.
    • Thus, the company’s earnings per share, or EPS, decreases as the allocated earnings result in share dilution.

    What is the Limited Liability Partnership (LLP)?

    • LLPs are a flexible legal and tax entity that allows partners to benefit from economies of scale by working together while also reducing their liability for the actions of other partners.
    • In a general partnership, all partners share liability for any issue that may arise.
    • The LLP is a formal structure that requires a written partnership agreement and usually comes with annual reporting requirements depending on your legal jurisdiction.

    What is the FVCI route of investment?

    • Foreign Venture Capital Investor’ (FVCI) means an investor incorporated and established outside India and registered with Securities and Exchange Board of India under Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000.
    • The amount of consideration for all investment by an FVCI has to be received/made through inward remittance from abroad through banking channels or out of funds held in a foreign currency account and/ or a Special Non-Resident Rupee (SNRR) account maintained by the FVCI with an AD bank in India.
    • The foreign currency account and SNRR account shall be used only and exclusively for transactions under the relevant Schedule.

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  • Judicial Reforms

    Issue of post-retirement appointments of the judges.

    op-ed snap | Polity | Mains Paper 2: Executive & Judiciary

    The article discusses the issue of retired judges accepting government post after retirement. Such appointments have several implications. It undermines confidence in the independence of the judiciary. It also influence pre-retirement judgements delivered by the judges. The article also offers some solutions to this problem.

    The provisions in the Constitution to secure the independence of the judiciary

    • The Constitution has been conceived to provide a pride of place to the judiciary.
    • Constitutional appointees to the Supreme Court have been guaranteed several rights in order to secure their independence.
    • Salary: The salaries of judges and their age of retirement are all guaranteed in order to secure their independence.
    • Removal: They cannot be easily removed except by way of impeachment under Articles 124(4) and 217(1)(b).
    • They have the power to review legislation and strike it down.
    • They can also question the acts of the executive.
    • All this makes it clear that the framers of the Constitution envisaged an unambitious judiciary for which the only guiding values were the provisions of the Constitution.

    Issue of judges accepting post-retirement jobs

    • It was thought that on retirement from high constitutional office, a judge would lead a retired life.
    • Nobody ever expected them to accept plum posts.
    • But the clear demarcation between the judiciary and executive got blurred as many judges over the years began to accept posts offered by the government.
    • A few years ago, a former Chief Justice of India (CJI) was made a Governor by the ruling party.
    • Now, we have the case of a former CJI, Ranjan Gogoi, being nominated by the President to the Rajya Sabha and taking oath as Member of Parliament.
    • Pre-retirement judgements under cloud: During his tenure as CJI, Justice Gogoi presided over important cases such as Ayodhya and Rafale where all the decisions went in favour of the government.
    • This gave rise to the impression that his nomination was a reward for these ‘favours’.
    • Thus his appointment — and that too within a few months of his retirement — not only raised eyebrows but came in for severe condemnation from varied quarters.
    • Loss of confidence: People are fast losing confidence in the so-called independent judiciary.
    • In 2013 Arun Jaitley, who was also a senior Advocate, ironically said that legislature was creating post-retirement avenues for Judges in every legislation.
    • He also said that post-retirement job influences pre-retirement judgements.
    • It is in this context that the appointment of Mr Gogoi has to be perceived.

    Did Constitution makers intend to nominate Judges?

    • Mr Gogoi’s view that membership of the Rajya Sabha was not a job but a service, and that once the President nominated him the call of duty required him to accept it, only created the impression that the judiciary is pliant.
    • A bare reading of Article 80(3) of the Constitution only envisages the President to nominate “persons having special knowledge in literature, science, art and social service” as members to the Rajya Sabha.
    • It is difficult to imagine that the Constitution-makers had in mind a retired CJI when framing this provision.

    A direct question based on the issue can be asked, like “What are the implications of post-retirement appointments of the judges? Give suggestions to deal with this problem”.  So, take note of the various issues and their solutions discussed here.

    Way forward

    • If post-retirement appointments are going to undermine confidence in the judiciary and in a constitutional democracy.
    • Enact law or amend Constitution: It is time to have a law in place either by way of a constitutional amendment or a parliamentary enactment barring such appointments.
    • This is the only way to secure the confidence of the people and prevent post-retirement appointments.
    • Increase pension: Judges can be compensated by being given their last drawn salary as a pension.
    • Retirement age can be increased: Also, the age of retirement for judges can be increased by a year or two.
    • This will undo the damage caused by post-retirement jobs.

    Conclusion

    The appointments of persons who have held constitutional office will undermine the very constitutional values of impartiality in the dispensation of justice. So, enacting a law to bar such appointments or amendment to the Constitution would be the step in the right direction.

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