The recent decision of the Supreme Court of India in the case of A.G. Perarivalan has stirred up a hornet’s nest.
Use of Article 142 to grant pardon
The Court has treaded the extraordinary constitutional route under Article 142.
The Bench decided to exercise the power of grant of pardon, remission et al., exclusively conferred on the President of India and State Governors under Articles 72 and 161.
Against the separation of power: Against the background of separation of powers viz. Parliament/Legislature, Executive and Judiciary, whether the course adopted by the Bench to do expedient justice is constitutional calls for introspection.
Evaluating the constitutionality of decision
The power under Article 161 is exercisable in relation to matters to which the executive power of the state extends.
Discretionary power under Article 161: Article 161 consciously provides a ‘discretion’ to the Governor in taking a final call, even if it was not wide enough to overrule the advice, but it certainly provides latitude to send back any resolution for reconsideration, if, in his opinion, the resolution conflicted with constitutional ends.
In Sriharan’s case (2016 (7) SCC P.1), one of the references placed for consideration was whether the term ‘consultation’ stipulated in Section 435 Cr.P.C. implies ‘concurrence’.
It was held that the word ‘consultation’ means ‘concurrence’ of the Central government.
The Constitution Bench highlighted that there are situations where consideration of remission would have trans-border ramifications and wherever a central agency was involved, the opinion of the Central government must prevail.
Basing its conclusion on the legal position that the subject matter (Section 302 in the Indian Penal Code) murder, falls within Lists II and III (State and Concurrent lists) of the Seventh Schedule to the Constitution, the learned judges concluded that the State was fully empowered to take a call and recommend remission in this case.
If it is a simple case of being a Section 302 crime, the reason for finding fault with the Governor’s decision to forward the recommendation to the President may be constitutionally correct.
But the larger controversy as to whether the Governor in his exercise of power under Article 161 is competent at all, to grant pardon or remission in respect of the offences committed by the convicts under the Arms Act, 1959, the Explosive Substances Act, 1908, the Passports Act, 1967, the Foreigners Act, 1946, etc., besides Section 302, is not certain.
According to the decision, it is a simple murder attracting Section 302 of the IPC and therefore the Governor’s decision to forward the recommendation to the President is against the letter and spirit of Article 161 — meaning it is against the spirit of federalism envisaged in the Constitution.
Constitutionality use of Article 142: There are momentous issues that are flagged on the exercise of the power of remission under Article 142, by the Supreme Court in the present factual context.
The first is whether Article 142 could be invoked by the Court in the circumstances of the case when the Constitution conferred express power on the Governor alone, for grant of pardon, remission, etc., under Article 161.
Way forward
Deeper judicial examination: Whether what the State government could not achieve directly by invoking Sections 432 and 433 of Cr.P.C, without concurrence of Centre could be allowed to take a contrived route vide Article 161 and achieve its objectives is a pertinent issue.
This aspect requires deeper judicial examination for the sake of constitutional clarity.
Timeframe for the Governor: The Constitution does not lay down any timeframe for the Governor to act on the advice of the Council of Ministers.
In any event, even if the delay was constitutionally inexcusable or was vulnerable to challenge, the final arbiter of the Constitution (Article 245) could not have trumped Article 161 with Article 142, which is constitutionally jarring.
Conclusion
To portray the remission as to what it was not in the State is a sad fallout the lawlords on the pulpit may not have bargained for. And on the constitutional plane, this verdict deserves a relook, even a review, as it stands on wobbly foundations built with creaky credence.
The Supreme Court suspended pending criminal trials and court proceedings under Section 124A (sedition) of the Indian Penal Code, while allowing the Union of India to reconsider the British-era law.
What did the SC say?
All pending trials, appeals and proceedings with respect to the charge framed under Section 124A of the IPC be kept in temporary suspension.
The court also restrained centre and states from registering FIRs, continuing investigations or take coercive measures under Section 124A.
What is the Sedition Law?
Section 124A of the Indian Penal Code lays down the punishment for sedition. The IPC was enacted in 1860, under the British Raj.
The then British government in India feared that religious preachers on the Indian subcontinent would wage a war against the government.
Particularly after the successful suppression of the Wahabi/Waliullah Movement by the British, the need was felt for such law.
Throughout the Raj, this section was used to suppress activists in favor of national independence, including Tilak and Mahatma Gandhi, both of whom were found guilty and imprisoned.
Do you know?
Queen-Empress v. Bal Gangadhar Tilak (1897) was the first case in which Section 124A was defined and applied. Again in 1908, when Tilak was tried under same section, then young barrister and a staunch protagonist Mohammed Ali Jinnah defended Tilak.
What is Sedition?
The Section 124A defines sedition as:
An offence committed when “any person by words, either spoken or written, or by signs, or by visible representation, or otherwise, brings or attempts to bring into hatred or contempt, or excites or attempts to excite disaffection towards the government established by law in India”.
Disaffection includes disloyalty and all feelings of enmity.
However, comments without exciting or attempting to excite hatred, contempt or disaffection, will not constitute an offense.
Sedition is a non-bailable offense.
Punishment under Section 124A ranges from imprisonment up to three years to a life term with/without a fine.
Sedition as a cognizable offense
Sedition was made a cognizable offense for the first time in history in India during the tenure of Prime Minister Indira Gandhi in 1973, that is, arrest without a warrant was now permissible.
In 1962 the Supreme Court of India interpreted the section to apply only if there is, say, “incitement to violence” or “overthrowing a democratically elected government through violent means”.
Is it constitutionally valid?
Violative of FRs: Two high courts had found it unconstitutional after Independence, as it violated the freedom of speech and expression.
Reasonable restrictions: The Constitution was amended to include ‘public order’ as one of the ‘reasonable restrictions’ on which free speech could be abridged by law.
Kedar Nath Case: Thereafter, the Supreme Court, in Kedar Nath Singh v. State of Bihar (1962) upheld its validity.
Limited use: At the same time, it limited its application to acts that involve “intention or tendency to create disorder” or incitement to violence.
Strong criticism doesn’t amount to sedition: Thus, even strongly worded remarks, as long as they do not excite disloyalty and enmity, or incite violence, are not an offence under this section.
Why the controversy now?
Frequent use: In recent times, the resort to this section is seen as disturbingly frequent.
Curbing dissent: Activists, cartoonists and intellectuals have been arrested under this section, drawing criticism from liberals that it is being used to suppress dissent and silence critics.
Misuse for propaganda: Authorities and the police who invoke this section defend the measure as a necessary step to prevent public disorder and anti-national activities.
Irrelevance: Many of them have also been detained under the National Security Act and UAPA.
What is being debated about it?
Demand for its scrapping: Liberals and rights activists have been demanding the scrapping of Section 124A.
Provision is outdated: It is argued that the provision is “overbroad”, i.e., it defines the offence in wide terms threatening the liberty of citizens.
Various calls for its reconsideration: The Law Commission has also called for a reconsideration of the section.
Tyranny of the law: It has pointed that Britain abolished it more than a decade ago and raised the question of whether a provision introduced by the British to put down the freedom struggle should continue to be law in India.
Doctrine of severability: Some argue that a presumption of constitutionality does not apply to pre-constitutional laws as those laws have been made by foreign legislature or bodies.
Need for such law
There are some tendencies exist even today who wish to overthrow the state apparatus and constitutional scheme of India.
It falls on the judiciary to protect Articles 19 and Article 21 of the Constitution.
Undue exercise of free speech has led to overture of ordinary dissent into an anti-national insurrection or uprising.
There are areas in the country that face hostile activities and insurgencies created by rebel groups, like the Maoists.
There must be restrictions on expressing unnecessary contempt or ridiculing of the Government beyond certain limits.
Way forward
India is the largest democracy in the world and the right to free speech and expression is an essential ingredient of democracy.
The sedition law should not be abolished as some measures are needed to check communal violence & insurgency activities like Naxals.
The definition of sedition should be narrowed down, to include only the issues pertaining to the territorial integrity of India as well as the sovereignty of the country.
Section 124A should not be misused as a tool to curb free speech.
Two days after issuing an advisory asking people to refrain from sharing photocopies of their Aadhaar Card, the Unique Identification Development Authority of India (UIDAI) opted to withdraw the notification.
UIDAI Advisory
The withdrawn notice had suggested holders use amasked Aadhaar card instead of the conventional photocopy.
It added that the document must not be downloaded from a cybercafe or public computer and if done for some reason, must be permanently deleted from the system.
Private entities like hotels or film halls cannot collect or keep copies of the identification document.
What is Masked Aadhaar?
‘Masked Aadhaar’ veils the first eight digits of the twelve-digit ID with ‘XXXX’ characters.
The notice informed that only entities possessing a ‘User Licence’ are permitted to seek Aadhaar for authentication purposes.
Why in news now?
In July 2018, Telecom Regulatory of India’s Chairman tweeted his Aadhaar number challenging users to “cause him any harm”.
In response, users dug up his mobile number, PAN number, photographs, residential address and date of birth.
UIDAI dismissed assertions of any data leak, arguing that most of the data was publicly available.
It did however caution users from publicly sharing their Aadhaar numbers.
Security of Aadhaar: What does the law say?
The Aadhaar (Targeted Delivery of Financial and Other Subsidies Benefits and Services) Act, 2016 makes it clear.
Aadhaar authentication is necessary for availing subsidies, benefits and services that are financed from the Consolidated Fund of India.
In the absence of Aadhaar, the individual is to be offered an alternate and viable means of identification to ensure she/he is not deprived of the same.
Separately, Aadhaar has been described as a preferred KYC (Know Your Customer) document but not mandatory for opening bank accounts, acquiring a new SIM or school admissions.
The requesting entity would have to obtain the consent of the individual before collecting his/her identity.
The entity must ensure that the information is only used for authentication purposes on the Central Identities Data Repository (CIDR).
What is CIDR?
This centralised database contains all Aadhaar numbers and holder’s corresponding demographic and biometric information.
UIDAI responds to authentication queries with a ‘Yes’ or ‘No’.
In some cases, basic KYC details (as name, address, photograph etc.) accompany the verification answer ‘Yes’.
The regulator does not receive or collect the holder’s bank, investment or insurance details.
Protection of confidentiality
The Act makes it clear that confidentiality needs to be maintained and the authenticated information cannot be used for anything other than the specified purpose.
More importantly, no Aadhaar number (or enclosed personal information) collected from the holder can be published, displayed or posted publicly.
Identity information or authentication records would only be liable to be produced pursuant to an order of the High Court or Supreme Court, or by someone of the Secretary rank or above in the interest of national security.
Is identity theft via Aadhaar possible?
As per the National Payment Corporation of India’s (NCPI) data, ₹6.48 crore worth of financial frauds through 8,739 transactions involving 2,391 unique users took place in FY 2021-22.
Since the inception of the UID project, institutions and organisations have endowed greater focus on linking their databases with Aadhaar numbers.
This include bank accounts especially in light of the compulsory linkage for direct benefit transfer schemes.
Structural problems with UIDAI
The Aadhaar Data Vault is where all numbers collected by authentication agencies are centrally stored.
Comptroller and Auditor General of India’s (CAG) latest report stipulated that UIDAI has not specified any encryption algorithm (as of October 2020) to secure the same.
There is no mechanism to illustrate that the entities were adhering to appropriate procedures.
Further, UIDAI’s unstable record with biometric authentication has not helped it with de-duplication efforts, the process that ensures that each Aadhaar Number generated is unique.
The CAG’s reported stated that apart from the issue of multiple Aadhaars to the same resident, there have been instances of the same biometric data being accorded to multiple residents.
Conclusion
The CAG concluded it was “not effective enough” in detecting the leakages and plugging them.
Biometric authentications can be a cause of worry, especially for disabled and senior citizens with both the iris and fingerprints dilapidating.
Though the UIDAI has assured that no one would be deprived of any benefits due to biometric authentication failures.
The absence of an efficient technology could serve as poignant premise for frauds to make use of their ‘databases’.
Try this PYQ:
Q.Consider the following statements:
Aadhaar metadata cannot be stored for more than three months.
State cannot enter into any contract with private corporations for sharing of Aadhaar data.
Aadhaar is mandatory for obtaining insurance products.
Aadhaar is mandatory for getting benefits funded out of the Consolidated Fund of India.
Which of the statements given above is/are correct?
During his visit to Gujarat, Prime Minister inaugurated the country’s first liquid nano urea plant at Kalol.
Liquid Nano Urea (LNU)
Urea is chemical nitrogen fertiliser, white in colour, which artificially provides nitrogen, a major nutrient required by plants.
LNU is essentially urea in the form of a nanoparticle.
It is sprayed directly on the leaves and gets absorbed by the plant.
Fertilisers in nano form provide a targeted supply of nutrients to crops, as they are absorbed by the stomata, pores found on the epidermis of leaves.
According to IFFCO, liquid nano urea contains 4 per cent total nitrogen (w/v) evenly dispersed in water.
The size of a nano nitrogen particle varies from 20-50 nm. (A nanometre is equal to a billionth of a metre.)
Significance of LNU
This patented product is expected to not only substitute imported urea, but to also produce better results in farms.
Apart from reducing the country’s subsidy bill, it is aimed at reducing the unbalanced and indiscriminate use of conventional urea.
It will help increase crop productivity, and reduce soil, water, and air pollution.
Using LNU
The liquid nano urea produced by Indian Farmers Fertiliser Cooperative (IFFCO) Limited comes in a half-litre bottle priced at Rs 240, and carries no burden of subsidy currently.
By contrast, a farmer pays around Rs 300 for a 50-kg bag of heavily subsidised urea.
According to IFFCO, a bottle of the nano urea can effectively replace at least one bag of urea.
How efficient is LNU?
While conventional urea has an efficiency of about 25 per cent, the efficiency of liquid nano urea can be as high as 85-90 per cent.
Conventional urea fails to have the desired impact on crops as it is often applied incorrectly, and the nitrogen in it is vaporized or lost as a gas.
A lot of nitrogen is also washed away during irrigation.
Liquid nano urea has a shelf life of a year, and farmers need not be worried about “caking” when it comes in contact with moisture.
The Ministry of Defence has signed a contract with Bharat Dynamics Ltd (BDL) for the supply of the Astra Mark-1for deployment on fighter jets of the Indian Air Force and Indian Navy.
Astra Missile
The Astra Mk-1 is a beyond visual range (BVR), air-to-air missile (AAM).
The Astra project was officially launched in the early 2000s with defined parameters and proposed future variants.
The missile has been designed and developed by the Defence Research and Development Organisation (DRDO).
It will be deployed on fighter jets like Sukhoi-30 MKI and Tejas of the IAF and the Mig-29K of the Navy.
BVM missiles are capable of engaging beyond the range of 20 nautical miles or 37 kilometres.
Range and its Variants
While the range for Astra Mk-1 is around 110 km, the Mk-2 with a range over 150 km is under development and Mk-3 version with a longer range is being envisaged.
One more version of Astra, with a range smaller than Mk-1 is also under development.
Strategic significance
The missile has been designed based on requirements specified by the IAF for BVR as well as close-combat engagement, reducing the dependency on foreign sources.
AAMs with BVR capability provides large stand-off ranges to own fighter aircraft.
It can neutralise adversary airborne assets without exposing adversary air defence measures.
Stand-off range means the missile is launched at a distance sufficient to allow the attacking side to evade defensive fire from the target.
Astra is technologically and economically superior to many such imported missile
The missile can travel at speeds more than four times that of sound and can reach a maximum altitude of 20 km, making it extremely flexible for air combat.
Two years after they were stopped due to the onset of the pandemic, passenger train services between India and Bangladesh resumed with the Bandhan Express setting off from Kolkata for Khulna and the Maitree Express starting its run from Dhaka for Kolkata.
History of Rail Connectivity
The Bandhan Express was resumed by rebooting a long-forgotten rail link between Kolkata and the industrial hub of Khulna, the third-largest city of Bangladesh.
In 1965, this route was served by the Barisal Express, which was stopped due to the India-Pakistan war.
The Modi government along with the Sheikh Hasina regime restarted that with Bandhan in 2017.
The Bandhan Express was the second train to be flagged off after the introduction of Maitree Express between Kolkata and Dhaka Cantonment in April, 2008.
It covers the distance between Kolkata and Khulna via Petrapole and Benapole border route to cater to the demands of the people from both the countries.
The Bandhan Express was resumed in 2017 by rebooting a long-forgotten rail link between Kolkata and the industrial hub of Khulna.
Beyond passenger travel
The governments of both the countries have been working towards strengthening the rail link between them, and not just through passenger trains.
In August 2021, the two sides started regular movement of freight trains between the newly-restored link between Haldibari in India and Chilahati in Bangladesh.
The Haldibari-Chilahati rail link between India and the then East Pakistan was also operational till 1965 and stopped due to the war.
This was part of the broad gauge main route from Kolkata to Siliguri at the time of Partition.
The two sides envisage at least 20 freight trains to cross the border per month on this link.
Rail infrastructure
Once part of a single, seamless railway network under British rule, trains continued to pass between the two countries even after the Partition.
The infrastructure to connect the two sides through railways was, therefore, largely present.
Policymakers on both sides viewed this as an opportunity to deepen diplomatic ties using cross-border movements of goods and passengers.
Five rail links have so far been rebooted between India and Bangladesh:
Petrapole (India)-Benapole (Bangladesh), Gede (India)- Darshana (Bangladesh), Singhabad (India)-Rohanpur (Bangladesh), Radhikapur (India)-Birol (Bangladesh) and the Haldibari-Chilahati link
By order dated May 11, 2022, a Bench presided over by the Chief Justice of India, has directed that the petitions challenging the Section 124A be listed for final determination in the third week of July 2022; and that in the meantime suspend the use of Section 124A IPC.
Historical background of Section 124A
With effect from 1870, (as amended in 1955), Section 124A of the Penal Code read:
“Whoever by words, spoken or written, brings or attempts to bring into hatred or contempt, or excites or attempts to excite disaffection, towards the Government established by law in India shall be punished with imprisonment for life…”.
“Sedition” is the vaguest of all offences known to the criminal law.
In colonial times, it was defined expansively in order to uphold the majesty of British power in India.
Before 1950, there were several Court decisions in operation on Section 124A; amongst them was Bal Gangadhar Tilak’s case (1897).
Absence of affection: In Bal Gangadhar Tilak’s case the Privy Council declined to grant leave to appeal, affirming that “disaffection” only meant “absence of affection in any degree towards the British rule or its administration or representatives”, and that exciting of mutiny or rebellion or actual disturbance of any sort was “absolutely immaterial”.
With the establishment of a Federal Court by the Government of India Act, 1935, in Niharendu Dutt Majumdar And Ors. vs Emperor the Federal Court held that if the language of Section 124A were to be read literally “it would make a surprising number of persons in India guilty of sedition and that no one, however, supposes that it is to be read in this literal sense”
However, in 1947 it was precisely in this literal sense that the interpretation of Section 124A was reiterated by a Bench of five judges of the Privy Council (AIR 1947 P.C. 82) in which it was declared that: “If the Federal Court had given their attention to Tilak’s case (1897) they should have recognised it as an authority… by which they were bound”.
With the advent of the Constitution of India on January 26, 1950, this interpretation of Section 124A became “the law in force immediately before the commencement of the Constitution”.
Section 124A after 1950
Article 372: It stated that all laws in force in the territory of India immediately before the commencement of the Constitution shall continue in force therein until altered or repealed or amended by a competent legislature or other competent authority.
Protected due to Article 19(2): In 1962, in criminal appeals arising from the states of Bihar and Uttar Pradesh, a Constitution Bench of the Supreme Court held that though Section 124A “clearly violated” the fundamental right to freedom of speech and expression in Article 19(1)(a), it was not unconstitutional only because it was protected from challenge by the words “in the interests of public order” in Article 19(2).
Conclusion
This background has now become pertinent and relevant, because in a fresh batch of writ petitions filed in 2021, the constitutionality of Section 124A (IPC) has been once again challenged in the Supreme Court.
India rapidly emerges as a preferred investment destination with Foreign Direct Investment (FDI) inflows increasing 20-fold in the last 20 years.
Highest ever annual FDI inflow of 83.57 billion US Dollars were recorded in the Financial Year 2021-22.
This figure stood at 45.15 billion US Dollars.
Major feats achieved this year
In terms of investor countries of FDI Equity inflow, Singapore is at the top with 27%, followed by the US with 18% and Mauritius with 16% for the FY 2021-22.
‘Computer Software & Hardware’ has emerged as the top recipient sector of FDI Equity inflow during this period with around 25% share followed by Services Sector and Automobile Industry with 12% each.
With53 % Karnataka has received the majority share of FDI equity in the `Computer Software & Hardware’ sector.
Significance of rising FDI
This is a testament of India’s status among global investors.
It also signifies political, economic and social stability
What is Foreign Direct Investment (FDI)?
An FDI is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
It is thus distinguished from a foreign portfolio investment by a notion of direct control.
FDI may be made either “inorganically” by buying a company in the target country or “organically” by expanding the operations of an existing business in that country.
Broadly, FDI includes “mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans”.
In a narrow sense, it refers just to building a new facility, and lasting management interest.
Features of FDI
Any investment from an individual or firm that is located in a foreign country into a country is FDI.
Generally, FDI is when a foreign entity acquires ownership or controlling stake in the shares of a company in one country, or establishes businesses there.
It is different from foreign portfolio investment where the foreign entity merely buys equity shares of a company.
In FDI, the foreign entity has a say in the day-to-day operations of the company.
FDI is not just the inflow of money, but also the inflow of technology, knowledge, skills and expertise.
It is a major source of non-debt financial resources for the economic development of a country.
FDI in India
Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then FM Manmohan Singh.
Economic liberalisation started in India in the wake of the 1991 crisis and since then, FDI has steadily increased in the country.
India, today is a part of top 100-club on Ease of Doing Business (EoDB) and globally ranks number 1 in the Greenfield FDI ranking.
There are two routes by which India gets FDI.
1) Automatic route: By this route, FDI is allowed without prior approval by Government or RBI.
2) Government route: Prior approval by the government is needed via this route. The application needs to be made through Foreign Investment Facilitation Portal, which will facilitate the single-window clearance of FDI application under Approval Route.
India imposes a cap on equity holding by foreign investors in various sectors, current FDI in aviation and insurance sectors is limited to a maximum of 49%.
In 2015 India overtook China and the US as the top destination for the Foreign Direct Investment.
Sectors that come under the ‘ 100% Automatic Route’ category are
Agriculture & Animal Husbandry, Air-Transport Services (non-scheduled and other services under civil aviation sector)
Airports (Greenfield + Brownfield),
Asset Reconstruction Companies,
Auto-components, Automobiles,
Biotechnology (Greenfield),
Broadcast Content Services (Up-linking & down-linking of TV channels, Broadcasting Carriage Services,
Capital Goods, Cash & Carry Wholesale Trading (including sourcing from MSEs), Chemicals, Coal & Lignite, Construction Development,
Construction of Hospitals,
E-commerce Activities, Electronic Systems,
Food Processing, Gems & Jewellery, Healthcare, Industrial Parks, IT & BPM, Leather, Manufacturing, Mining & Exploration of metals & non-metal ores, Other Financial Services,
Sectors that come under up to 100% Automatic Route’ category are–
Infrastructure Company in the Securities Market: 49%
Insurance: up to 49%
Medical Devices:up to 100%
Pension: 49%
Petroleum Refining (By PSUs): 49%
Power Exchanges: 49%
Sectors that come under the ‘up to 100% Government Route’ category are–
Banking & Public sector: 20%
Broadcasting Content Services: 49%
Core Investment Company: 100%
Food Products Retail Trading: 100%
Mining & Minerals separations of titanium bearing minerals and ores: 100%
Multi-Brand Retail Trading: 51%
Print Media (publications/ printing of scientific and technical magazines/ specialty journals/ periodicals and facsimile edition of foreign newspapers): 100%
Print Media (publishing of newspaper, periodicals and Indian editions of foreign magazines dealing with news & current affairs): 26%
Satellite (Establishment and operations): 100%
FDI prohibition
There are a few industries where FDI is strictly prohibited under any route. These industries are
Atomic Energy Generation
Any Gambling or Betting businesses
Lotteries (online, private, government, etc.)
Investment in Chit Funds
Nidhi Company
Agricultural or Plantation Activities (although there are many exceptions like horticulture, fisheries, tea plantations, Pisciculture, animal husbandry, etc.)
Housing and Real Estate (except townships, commercial projects, etc.)
Trading in TDR’s
Cigars, Cigarettes, or any related tobacco industry
Benefits offered by FDI
Employment generation: FDI boosts the manufacturing and services sector which results in the creation of jobs and helps to reduce unemployment rates in the country.
Economic growth: Increased employment translates to higher incomes and equips the population with more buying powers, boosting the overall economy of a country.
Human capital development: Skills that employees gain through training and experience can boost the education and human capital of a specific country. Through a ripple effect, it can train human resources in other sectors and companies.
Technology boost: The introduction of newer and enhanced technologies results in company’s distribution into the local economy, resulting in enhanced efficiency and effectiveness of the industry.
Increase in exports: Many goods produced by FDI have global markets, not solely domestic consumption. The creation of 100% export oriented units help to assist FDI investors in boosting exports from other countries.
Exchange rate stability: The flow of FDI into a country translates into a continuous flow of foreign exchange, helping a country’s Central Bank maintain a prosperous reserve of foreign exchange which results in stable exchange rates.
Improved Capital Flow: Inflow of capital is particularly beneficial for countries with limited domestic resources, as well as for nations with restricted opportunities to raise funds in global capital markets.
Creation of a Competitive Market: By facilitating the entry of foreign organizations into the domestic marketplace, FDI helps create a competitive environment, as well as break domestic monopolies.
Climate mitigation: The United Nations has also promoted the use of FDI around the globe to help combat climate change
Limitations created by FDI
Hindrance of domestic investment: Sometimes FDI can hinder domestic investment. Because of FDI, countries’ local companies start losing interest to invest in their domestic products.
Risk from political changes: Other countries’ political movements can be changed constantly which could hamper the investors.
Negative exchange rates: FDI can sometimes affect exchange rates to the advantage of one country and the detriment of another.
Higher costs: When investors invest in foreign counties, they might notice that it is more expensive than when goods are exported. Oftentimes, more money is invested into machinery and intellectual property than in wages for local employees.
Economic non-viability: Considering that FDI may be capital-intensive from the point of view of the investor, it can sometimes be very risky or economically non-viable.
Expropriation: Constant political changes can lead to expropriation. In this case, those countries’ governments will have control over investors’ property and assets.
Modern-day economic colonialism: Many third-world countries, or at least those with a history of colonialism, worry that foreign direct investment would result in some kind of modern-day economic colonialism, which exposes host countries and leave them vulnerable to foreign companies’ exploitation.
Poor performance: Multinationals have been criticized for poor working conditions in foreign factories.
Recent amendments in 2020
The govt. has amended para 3.1.1 of extant FDI policy as contained in Consolidated FDI Policy, 2017.
In the event of the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership, such subsequent change in beneficial ownership will also require Government approval.
The present position and revised position in the matters will be as under:
Present Position
A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited.
However, a citizen of Bangladesh or an entity incorporated in Bangladesh can invest only under the Government route.
Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.
Revised Position
A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited.
[spot the difference]
However, an entity of a country, which shares a land border with India or where the beneficial owner of investment into India is situated in or is a citizen of any such country, can invest only under the Government route.
Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.
Various policy initiatives
The government has taken plenty of initiatives to attract FDI in India:
The government has amended rules of the Foreign Exchange Management Act (FEMA), allowing up to 20% FDI in the insurance company LIC through the automatic route.
The Government of India is considering easing scrutiny on certain FDI from countries that share a border with India.
The implementation of measures like PM Gati Shakti, single window clearance and GIS-mapped land bank are expected to push FDI inflows in 2022.
The government is likely to introduce at least three policies as part of the Space Activity Bill in 2022. This Bill is expected to clearly define the scope of foreign FDI in the Indian space sector.
In September 2021, the Union Cabinet announced that to boost the telecom sector, they’ll allow 100% FDI via the automatic route in, up from the previous 49%.
In August 2021, the government amended the Foreign Exchange Management (non-debt instruments) Rules, 2019, to allow the 74% increase in FDI limit in the insurance sector.
In many countries, both the authorities and security agencies are beginning to acknowledge the importance of resorting to statecraft as a vital adjunct to the role played by the security agencies.
The important role of statecraft in security
Statecraft involves fine-grained comprehension of inherent problems; also an ability to quickly respond to political challenges.
It further involves strengthening the ability to exploit opportunities as they arise, and display a degree of political nimbleness rather than leaving everything to the security agencies.
It entails a shift from reposing all faith in the security establishment to putting equal emphasis on implementation of policies and programmes.
Two prime examples which provide grist to the above proposition are the prevailing situation in Jammu and Kashmir and the continuing problem involving Maoists.
The need to use statecraft to deal with quite a few other internal security problems — some of which have lain dormant for years — is also becoming more manifest by the day.
Security issues in various regions
Jammu and Kashmir: While Jammu and Kashmir has been a troubled region ever since 1947, the situation has metamorphosed over the years.
No proper solution has emerged to a long-standing problem.
Irrespective of the reasons for the latest upsurge in violence, what is evident is that Jammu and Kashmir has again become the vortex of violence.
Evidently, the doctrine of containment pursued by the Jammu and Kashmir police and security agencies is not having the desired effect.
In Jammu and Kashmir today, as also elsewhere, there is no all-in-one grand strategy to deal with the situation.
The missing ingredient is statecraft which alone can walk in step with the changing contours of a long-standing problem.
Punjab: The recent discovery of ‘sleeper cells’ in the Punjab clearly indicates the potential for the revival of a pro-Khalistan movement — which once ravaged large parts of the Punjab.
While pro-Khalistani sentiment is present in pockets in the United Kingdom and in Europe, it has not been in evidence in India for some time.
Hence, the recent attack by pro-Khalistan elements on the headquarters of the Punjab Police Intelligence wing in Mohali was a rude shock to the security establishment.
The incident is a reminder that militancy in the Punjab has not been permanently extinguished, and will need deft statecraft to nip it in the bud.
North-east: In India’s North-east, more specifically in the States of Assam and Nagaland, there are again incipient signs of trouble which, for the present, may need use of statecraft rather than the security forces.
In Assam, the United Liberation Front of Asom–Independent (ULFA-I) is trying to revive its activities after a long spell of hibernation.
Likewise in Nagaland, where the National Socialist Council of Nagalim (I-M) has recently initiated a fresh push for a solution of the ‘Naga political issue’, the situation is pregnant with serious possibilities.
Both instances merit the use of statecraft so that the situation does not get out of hand.
South India: In the South, intelligence and police officials appear concerned about a likely revival of Liberation Tigers of Tamil Eelam (LTTE)-sponsored activities in Tamil Nadu.
This stems from a possible revival of LTTE-sponsored militancy in Sri Lanka following the recent economic crises and uncertainty there.
This situation again needs deft statecraft to prevent a resurgence of the past.
Conclusion
India faces several challenges today, but the answer to this is neither grand strategy nor grand simplifications nor resort to higher doses of security. A properly structured set of policies, having liberal doses of statecraft in addition to a proper set of security measures, is the best answer to India’s needs, now and in the future.
