💥Join UPSC 2027,2028 Mentorship (August Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

Subject: Economics

  • Service Exports from India Scheme (SEIS)

    The Directorate General of Foreign Trade has imposed a cap on the total entitlement under the Services Exports from India Scheme (SEIS) at Rs 5 crore per exporter for shipments done in 2019-20 (FY20). The move is expected to benefit small businesses in the services sector.

    About SEIS

    • Service Exports from India Scheme (SEIS) aims to promote export of services from India by providing duty scrip credit for eligible exports.
    • Under the scheme, service providers, located in India, would be rewarded under the SEIS scheme, for all eligible export of services from India.
    • SEIS was earlier termed as Served from India Scheme (SFIS).

    Eligibility

    • Service Providers of notified services, located in India are eligible for the Service Exports from India Scheme.
    • To be eligible, a service provider (Company / LLP / Partnership Firm) should have a minimum net free foreign exchange earnings of USD 15000 in the preceding financial year to be eligible for duty credit scrips.
    • For proprietorships or individual service providers, minimum net foreign exchange earnings of USD10,000 in the preceding financial year is required to be eligible for the scheme.
    • Also, in order to claim reward under the SEIS scheme, the service provider shall have to have an active Import Export Code (IE Code) at the time of rendering such services for which rewards are claimed.

    Back2Basics: Merchandise Exports from India Scheme (MEIS)

    • MEIS was launched with an objective to enhance the export of notified goods manufactured in a country.
    • This scheme came into effect on 1 April 2015 through the Foreign Trade Policy and was in existence till 2020.
    • It intended to incentivize exports of goods manufactured in India or produced in India.
    • The incentives were for goods widely exported from India, industries producing or manufacturing such goods with a view to making Indian exports competitive.
    • The MEIS covered almost 5000 goods notified for the purpose of the scheme.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • [pib] International Hydropower Association (IHA)

    NHPC’s 510 MW Teesta-V Power Station located in the Himalayan State of Sikkim has been conferred with the prestigious Blue Planet Prize by International Hydropower Association (IHA).

    Teesta-V Power Station

    • The power station has been built, owned and being operated by NHPC.
    • The award has been conferred for its sustainability assessment undertaken by Hydropower Sustainability Assessment Protocol (HSAP) of IHA.

    About IHA

    • IHA is a London based non-profit membership association operating in 120 countries.
    • The IHA membership includes leading hydropower owners and operators, developers, designers, suppliers and consultants.
    • The IHA Blue Planet Prize is awarded to hydropower projects that demonstrate excellence in sustainable development.
    • The Hydropower Sustainability Assessment Protocol (HSAP) is the leading international tool for measuring the sustainability of hydropower projects.
    • It offers a way to benchmark the performance of a hydropower project against a comprehensive range of environmental, social, technical and governance criteria.

    Back2Basics: Teesta River

    • Teesta River is a 414 km long river that rises in the Pauhunri Mountain of eastern Himalayas, flows through the Indian states of Sikkim and West Bengal through Bangladesh and enters the Bay of Bengal.
    • It drains an area of 12,540 sq km.
    • In India, it flows through North Sikkim, East Sikkim, Pakyong District, Kalimpong district, Darjeeling District, Jalpaiguri District, Cooch Behar districts and the cities of Rangpo, Jalpaiguri and Mekhliganj.
    • It joins River Brahmaputra at Fulchhari in Bangladesh. 315 km portion of the river lies in India and rest in Bangladesh.
    • Teesta is the largest river of Sikkim and the second largest river of West Bengal after Ganges.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Inflation in India

    Context

    Inflation for the last four months has been worryingly high. This is happening at a time when demand has been down, unemployment has been high, many have lost incomes and poverty has aggravated.

    Issues with the recent inflation data

    • The shock of lockdowns not only made data collection difficult but the consumption basket for calculating CPI should have been changed.
    • Issue with the base: In April and May 2020, data on production and prices could not be collected due to the strict lockdown.
    • As such, the official inflation figures for these months in 2021 do not reflect the true picture.
    • For calculating inflation, a single number is arrived at by assigning weights to different commodities and services.
    • Issue due to different consumption baskets: For WPI, the weights in production are used; for CPI, the consumption basket is used.
    • The consumption basket is vastly different for the poor, the middle classes, and the rich.
    • Hence, the CPI is different for each of these classes and a composite index requires averaging the baskets.
    • So, in a sense, it represents none of the categories.
    • Changed consumption pattern: During lockdown and unlock in 2020, people largely consumed essentials.
    •  RBI data show that consumer confidence fell drastically from 105 in January 2020 to 55.5 by January 2021.
    • While the consumption pattern of the well-off sections may have changed little, the poor and middle classes, especially those who lost jobs and incomes, would have had to cut back on their consumption.
    • Thus, the weights in the CPI would have changed and inflation required recalculation, but this has not been done.
    • Under-representation of services: Inflation data under-represents services in the consumption basket.
    • In production, services are about 55% of the GDP but have no representation in WPI and about 40% in CPI.
    • Increased health and education cost not captured: Health costs and education costs shot up during the pandemic, but this is not captured in inflation figures.
    • Many services were not used. Eating out and travel, for instance, should have been factored out.

    Impact of the inflation

    • If the income does not increase in proportion to inflation, for the middle classes, both consumption of less essential items and savings get reduced.
    • But the poor, who hardly save, have to curtail essential consumption.
    • Decline in demand: In India, 94% work in the unorganised sector and mostly earn low incomes and have little savings.
    • By definition, they cannot bargain for higher incomes as prices rise, further, due to lockdowns, the wages of many declined, both in the unorganised and organised sectors.
    • Consequently, demand has declined not only for non-essentials but even for essentials.
    • Impact on employment generation: In a vicious cycle, this is slowing down economic recovery and employment generation.
    •  Further, this impacts the government’s revenues and tends to increase the budgetary deficit.
    • This puts pressure on the government to cut back budgetary expenditures, especially on the social sector.
    • That aggravates poverty and reduces demand further.

    Factors leading to inflation

    • Tax on fuels: Increase in tax on fuel push up the prices of all goods and services.
    • This is an indirect tax, it is regressive and impacts the poor disproportionately more.
    • It also makes the RBI’s task of controlling inflation difficult.
    • Supply bottlenecks: The lockdowns disrupted supplies and that added to shortages and price rise.
    • Prices of medicines and medical equipment rose dramatically.
    • Prices of items of day-to-day consumption also rose.
    • International factors: Most major economies have recovered and demand for inputs has increased while supplies have remained disrupted (like chips for automobiles).

    Consider the question “What are the issues with measurement of inflation data in India? How inflation in times of low demand and reduced incomes leads to a vicious cycle?”

    Conclusion

    The current official inflation rate does not correctly measure price rise since the lockdown administered a shock to the economy. The method of calculating it needed modification.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Agri exports in India

    Context

    The Indian government has been encouraging agricultural exports to meet an ambitious target of $60bn by 2022.

    India’s agri-exports

    • The Ministry of Food Processing Industries shows that the contribution of agricultural and processed food products in India’s total exports is 11%.
    • Primary processed agricultural commodities form the majority share.
    • India’s export earnings will increase by focusing more on value-added processed food products rather than primary processed agricultural commodities (Siraj Hussain, 2021).
    • From 2015-16 to 2019-20, the value of agricultural and processed food increased significantly from $17.8bn to $20.65bn.
    • The Indian agricultural economy is shifting from primary to secondary agriculture where the focus is more on developing various processed foods.

    Changes in India’s agricultural export basket

    • Traditionally, Basmati rice is one of the top export commodities.
    • However, now there is an unusual spike in the export of non-basmati rice.
    • In 2020-21, India exported 13.09 million tonnes of non-basmati rice ($4.8bn), up from an average 6.9 million tonnes ($2.7bn) in the previous five years.
    • Indian buffalo meat is seeing a strong demand in international markets due to its lean character and near organic nature.
    • The export potential of buffalo meat is tremendous, especially in countries like Vietnam, Hong Kong and Indonesia.

    Challenges in Increasing agri-export

    • Lack of comparative advantage: The export of processed food products has not been growing fast enough because India lacks comparative advantage in many items.
    •  Domestic prices of processed food products are much higher compared to the world reference prices.
    • Non-tariff measures: The exporters of processed food confront difficulties and non-tariff measures imposed by other countries on Indian exports (Siraj Hussain, 2021).
    • Some of these include mandatory pre-shipment examination by the Export Inspection Agency being lengthy and costly.
    • Compulsory spice board certification being needed even for ready-to-eat products.
    • Lack of strategic planning of exports by most State governments.
    • Lack of a predictable and consistent agricultural policy discouraging investments by the private sector.
    • Prohibition of import of meat- and dairy based-products in most of the developed countries.
    • Withdrawal of the Generalised System of Preference by the U.S. for import of processed food from India.

    Consider the question “What are the challenges facing export of processed foods from India? Suggest the way forward.”

    Way forward

    • The main objective of the Agriculture Export Policy is to diversify and expand the export basket so that the export of higher value items, including perishables and processed food, be increased
    • Support to industry: The policy needs to nurture food processing companies, ensuring low cost of production and global food quality standards, and creating a supportive environment to promote export of processed food.
    • Focus on reputed brands: Reputed Indian brands should be encouraged to export processed foods globally as they can comply with the global standard of codex.
    • Indian companies should focus on cost competitiveness, global food quality standards, technology, and tap the global processed food export market.

    Conclusion

    India has competitive advantages in various agricultural commodities which can be passed onto processed foods. It has the potential to become a global leader in the food processing sector.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Rooftop Solar Scheme

    India has added 521 megawatts (MW) of rooftop solar capacity in the second quarter (Q2) of the calendar year (CY) 2021, a 53% increase than earlier quarter showing good signs of popularity.

    What is Solar Rooftop?

    • A solar photovoltaic (PV) system mounted on a rooftop of a building is a mini-power requirement or feed into the grid.
    • The size of the installation varies significantly depending on the availability of space, amount of electricity consumed by the property and the ability or willingness of the owner to invest the capital required.

    Why rooftop?

    • Rooftop solar with a storage system is a benefit for both, end consumers as well as discoms (power distribution companies).
    • A one-kilowatt (kW) rooftop system can produce three to five units of electricity a day.
    • The combination increasingly becomes cost-effective for electricity generation compared to the traditional grid supply and diesel generators.
    • In 2021, solar and storage will be cheaper than grid supply for most commercial and industrial (C&I) customers.
    • The increase in penetration of rooftop solar in the distribution grid will have a significant impact on the stability of the grid.

    A viable alternative

    • Most housing societies in urban India rely on diesel generators for power backup. However, as power availability improves in the country, diesel generators will become redundant.
    • The operational cost of diesel generators is quite high— R16-18 per unit against Rs 5-6 a unit for solar rooftop systems. So rooftop solar power makes financial sense.Solar rooftop is also a perfect solution for commercial and institutional buildings that operate mostly during the day.
    • Their rooftops can be utilized to generate electricity, and they can, partially or completely, replace diesel generators. This would also help them reduce their electricity bills.

    Question of energy storage

    • In order to integrate rooftop solar and electric vehicles, the grid needs to be flexible and smart.
    • Energy storage systems will play a key role in providing this flexibility by acting as a load when there is a surplus generation, as well as generating sources when there is a supply shortage.
    • There are two major methods of integrating battery storage into the electric grid:
    1. Front-of-the-meter (FTM): It is implemented at the utility scale, wherein the battery system is connected to the transmission or distribution network that ensures grid reliability. This happens on a considerably large scale (~MWh scale).
    2. Behind-the-meter (BTM): The other method is implemented at the residential and commercial/industrial level, mainly to provide backup during a power failure or to store excess locally generated energy from solar rooftop photovoltaic (PV) systems.

    India’s storage capacity

    • About 34 GW / 136 GWh of battery storage is expected to be installed by 2030, according to the Central Electricity Authority of India.
    • This capacity would be used for RE integration, demand-side and peak load management services.

    Storage challenges

    • The solar segment offers a huge market opportunity for advanced battery technologies.
    • However, manufacturers have some ground to cover in addressing technical limitations of batteries, such as charging characteristics, thermal performance and requirement of boost current to charge deep cycle batteries.
    • Since solar companies may directly procure batteries from manufacturers and require after-sale services and technical support, battery companies should have wider a presence to address these expectations.

    Other key challenges

    • Rooftop solar source doesn’t match the rise in renewable energy in India.
    • While industrial and commercial consumers account for 70% of total installed capacity residential consumers remain a big untapped potential to give the boost
    • Solar rooftops also face several challenges such as little consumer awareness, lack of innovative government policies or attention, bureaucratic hassles, and limited support from discoms.

    Way forward

    • Supportive policies and innovative technological approaches are needed for the sector to achieve its potential.
    • Indian policymakers need to plan for rooftop solar plus storage, rather than rooftop solar alone with the grid as storage (net / gross metering).
    • The declining cost of storage solutions, along with that of rooftop solar solutions, is likely to change the future of the Indian power sector.
    • Several countries such as Australia, the United States, Germany, among others have already endorsed solar power with battery storage.
    • Energy storage, therefore, represents a huge economic opportunity for India.
    • The creation of a conducive battery manufacturing ecosystem on a fast track could cement India’s opportunity for radical economic and industrial transformation in a critical and fast-growing global market.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • SEBI introduces T+1 Settlement System

    The Capital markets regulator Securities and Exchange Board of India (SEBI) has introduced T+1 settlement cycle for completion of share transactions on optional basis in a move to enhance market liquidity.

    What is T+1 Settlement System?

    • T+1 means that settlements will have to be cleared within one day of the actual transactions taking place.
    • Currently, trades on the Indian stock exchanges are settled in two working days after the transaction is done (T+2).
    • In April 2002, stock exchanges had introduced a T+3 rolling settlement cycle. This was shortened to T+2 from April 1, 2003.

    What has Sebi allowed?

    • SEBI has allowed stock exchanges to start the T+1 system as an option in place of T+2.
    • If it opts for the T+1 settlement cycle for a scrip, the stock exchange will have to mandatorily continue with it for a minimum 6 months.
    • Thereafter, if it intends to switch back to T+2, it will do so by giving one month’s advance notice to the market.
    • Any subsequent switch (from T+1 to T+2 or vice versa) will be subject to a minimum period.
    • A stock exchange may choose to offer the T+1 settlement cycle on any of the scrips, after giving at least one month’s advance notice to all stakeholders, including the public at large.

    Why T+1 settlement?

    • Reduced settlement time: A shortened cycle not only reduces settlement time but also reduces and frees up the capital required to collateralize that risk.
    • Quick settlement: T+1 also reduces the number of outstanding unsettled trades at any instant, and thus decreases the unsettled exposure to Clearing Corporation by 50%.
    • Speedy recovery of assets: The narrower the settlement cycle, the narrower the time window for a counterparty insolvency/bankruptcy to impact the settlement of a trade.
    • Risk reduction: Systemic risk depends on the number of outstanding trades and concentration of risk at critical institutions such as clearing corporations, and becomes critical when the magnitude of outstanding transactions increases.

    How does T+2 work?

    • If an investor sells shares, settlement of the trade takes place in two working days (T+2).
    • The broker who handles the trade will get the money, but will credit the amount in the investor’s account only.
    • In effect, the investor will get the money only after three days.
    • In T+1, settlement of the trade takes place in one working day and the investor will get the money on the following day.
    • The move to T+1 will not require large operational or technical changes by market participants, nor will it cause fragmentation and risk to the core clearance and settlement ecosystem.

    Why are foreign investors opposing it?

    • Foreign investors operating from different geographies would face time zones, information flow process, and foreign exchange problems.
    • Foreign investors will also find it difficult to hedge their net India exposure in dollar terms at the end of the day under the T+1 system.
    • In 2020, SEBI had deferred the plan to halve the trade settlement cycle to one day (T+1) following opposition from foreign investors.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

    Back2Basics: SEBI

    • The SEBI is the regulatory body for securities and commodity market in India under the jurisdiction of Ministry of Finance Government of India.
    • It was established on 12 April 1988 and given Statutory Powers on 30 January 1992 through the SEBI Act, 1992.

    Jurisdiction of SEBI

    • SEBI has to be responsive to the needs of three groups, which constitute the market:
    1. Issuers of securities
    2. Investors
    3. Market intermediaries

    SEBI has three powers rolled into one body: quasi-legislative, quasi-judicial and quasi-executive.

    • It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity.
    • Though this makes it very powerful, there is an appeal process to create accountability.
    • There is a Securities Appellate Tribunal which is a three-member tribunal and is currently headed by Justice Tarun Agarwala, former Chief Justice of the Meghalaya High Court.
    • A second appeal lies directly to the Supreme Court.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • The end of the doing business rankings

    The World Bank Group has scrapped its flagship publication, the ‘Doing Business’ report.

    Doing Business Report

    • This report publishes the influential annual ranking of countries on the Ease of Doing Business (EDB) index.
    • It ranks countries by the simplicity of rules framed for setting up and conducting businesses.

    Utility of the index

    The World Bank’s decision has wide ramifications, as the index serves varied purposes.

    • Many countries showcase improved ranking to signal market-friendly policies to attract foreign investments. National leaders often set EDB rank targets.
    • This helps them measure domestic policies against global “best practices” and browbeat domestic critics.
    • India, for instance, wanted its administration to ensure that India breaks into the top 50 ranks of the EDB index.
    • Some countries seem to use their political heft to improve their rank, polish their international image and sway public opinion (as appears to be China’s case).

    Issues with the credibility of the report

    • The Group acted on its commissioned study to examine the ethical issues flagged in preparing the 2018 and 2020 editions of the EDB index.
    • It is accused of having exerted pressure on the internal team working on the Doing Business report to falsely boost China’s rank by doctoring the underlying data.
    • Similarly, tensions were also reportedly brought to bear in the case of Saudi Arabia’s rank, among others.

    EDB index rank vs economic outcomes

    • There is a disconnect between the stellar rise in EDB index rank and economic outcomes.
    • The theory underlying the EDB index could be suspect, the measurement and data could be faulty, or both.
    • For example, China’s phenomenal economic success, especially its agricultural performance (after the reforms in 1978), is perhaps the most unmistakable evidence demonstrating that lack of clarity of property rights may not be the binding constraint in a market economy.
    • What matters is economic incentives.
    • Measuring regulatory functions underlying the index could be tricky and subjective and possibly politically motivated as well, as the controversies surrounding the index seem to suggest.

    EODB in India: At what cost

    Ans. Weakening labour regulations

    • Closer home, India has weaponised the mandate to improve the rank in the EDB index to whittle down labour laws and their enforcement and bring them close to the free-market ideal of ‘hire and fire’.
    • Most States have emulated Maharashtra’s lead of administrative fiat, which renders labour laws toothless by dismantling official labour inspection systems and allowing employers to file self-regulation reports.
    • The government has farmed out critical safety regulations such as annual inspection and certification of industrial boilers to ‘third party’ private agencies.
    • The Labour Department’s inspection is now not mandated; it is optional only by prior intimation to employers.

    Implications of such moves

    • Such abdication of the government’s responsibility towards workers has reportedly affected industrial relations.
    • The workers’ strike at Wistron’s iPhone assembly factory in Karnataka last year is an example.
    • Further, severe industrial accidents are rising, damaging life and productive industrial assets.

    Why did World Bank scrap the index?

    • Investigations into “data irregularities” in preparing the EDB index, as brought out by the independent agency, seems to confirm many shortcomings repeatedly brought to light for years now.
    • The index appears motivated to support the free-market ideal.
    • It is dressed up under scientific garb and is underpinned by seemingly objective methods and data collection.
    • Strong leaders (and motivated officials) seem to have used their position to manipulate the index to suit their political and ideological ends.

    Conclusion

    • India claimed the success of its Make in India initiative by relying on its ranking on the EDB index without tangible evidence.
    • Handing over law enforcement to employers by self-reporting compliance seems to have increased industrial unrest and accidents.
    • It perhaps calls for honest soul-searching as to what havoc a questionable benchmark can wreak.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Holding transnational corporations accountable

    Context

    Given the enormous power that transnational corporations (TNCs) wield, questions about their accountability have arisen often. There have been many instances where the misconduct of TNCs has come to light such as the corruption scandal involving Siemens in Germany.

    Holding TNCs accountable: Background

    • The effort was made at the UN to develop a multilateral code of conduct on TNCs.
    • However, due to differences between developed and developing countries, it was abandoned in 1992.
    • Role of BITs: Aim was to use international law to institutionalise the forces of economic globalisation, leading to the spread of BITs.
    • Asymmetry in BITs: These treaties promised protection to foreign investors under international law by bestowing rights on them and imposing obligations on states.
    • This structural asymmetry in BITs, which confer rights on foreign investors but impose no obligations, relegated the demand for investor accountability.
    • In 2014, the UN Human Rights Council established an open-ended working group with the mandate to elaborate on an international legally binding instrument on TNCs and other businesses concerning human rights.
    • Since then, efforts are being made towards developing a treaty and finding ways to make foreign corporations accountable.
    • The latest UN report is a step in that direction.

    UN report on human rights-compatible international investment agreements

    • The UN working group on ‘human rights, transnational corporations (TNCs) and other businesses’ has published a new report on human rights-compatible international investment agreements.
    • It urges states to ensure that their bilateral investment treaties (BITs) are compatible with international human rights obligations.
    • It emphasises investor obligations at the international level i.e., the accountability of TNCs in international law.

    Using BITs to hold TNCs accountable

    • BITs can be harnessed to hold TNCs accountable under international law.
    • The issue of fixing accountability of foreign investors came up in an international law case, Urbaser v. Argentina (2016).
    • Subjecting corporates to international law: In this case, the tribunal held that corporations can be subjects of international law and are under a duty not to engage in activities that harm or destroy human rights.
    • The case played an important role in bringing human rights norms to the fore in BIT disputes.
    • It also opened up the possibility of using BITs to hold TNCs accountable provided the treaty imposes positive obligations on foreign investors.
    • Recalibrating BITs: In the last few years, states have started recalibrating their BITs by inserting provisions on investor accountability.
    • Issues with BITs: However, these employ soft law language and are hortatory.
    • They do not impose positive and binding obligations on foreign investors.
    • They fall short of creating a framework to hold TNCs accountable under international law.

    Takeaways for India

    • The recent UN report has important takeaways for India’s ongoing reforms in BITs.
    • Best endeavour clauses not enough: India’s new Model BIT of 2016 contains provisions on investor obligations.
    • However, these exist as best endeavour clauses. They do not impose a binding obligation on the TNC.
    • Impose positive binding obligations: India should impose positive and binding obligations on foreign investors, not just for protecting human rights but also for imperative issues such as promoting public health.
    • The Nigeria-Morocco BIT, which imposes binding obligations on foreign investors such as conducting an environmental impact assessment of their investment, is a good example.

    Consider the question ” Ensuring that the bilateral investment treaties (BITs) are compatible with international human rights obligations in the need of the hour. In light of this, assess the progress made globally on this issue and suggest way forward for India in framing its BITs.”

    Conclusion

    Reforms would help in harnessing BITs to ensure the answerability of foreign investors and creating a binding international legal framework to hold TNCs to account.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • EoDB at risk if issue of appointments to tribunals is not resolved

    While hearing a challenge to the Tribunal Reforms Act, 2021, the Supreme Court came down heavily on the government of India for vacancies not being filled on time. This could severely impact the ease of doing business in India, said the court.

    Background

    • The government has lauded the role of the Insolvency and Bankruptcy Code, 2016 (IBC), for improving India’s ranking on the “Ease of Doing Business” index over the last couple of years.
    • However, the SC’s observation is spot-on as vacancies in the tribunals have slowed down insolvency resolution due to the huge pendency of cases.
    • When the SC made its observations, the NCLT had only 30 members against a total strength of 63.

    About NCLAT and NCLT

    • National Company Law Appellate Tribunal (NCLAT) was constituted under Section 410 of the Companies Act, 2013 for hearing appeals against the orders of National Company Law Tribunal(s) (NCLT) in 2016.
    • NCLAT is also the Appellate Tribunal to hear and dispose of appeals against any direction issued or decision made or order passed by the Competition Commission of India (CCI).
    • It is also the Appellate Tribunal to hear and dispose of appeals against the orders of the National Financial Reporting Authority.

    Difference between NCLT AND NCLAT

    NCLT

    NCLAT
    ·         NCLT is established as per Section 408 of companies act, 2013 ·         NCLAT is established as per Section 410 of companies act, 2013
    ·         It holds primary jurisdiction on cases of insolvency and bankruptcy ·         It holds appellate jurisdictions over the cases judged by NCLT
    ·         NCLT accepts and analyzes the evidence from creditors and debtors ·         NCLAT accepts and analyzes the decision made by NCLT
    ·         NCLT collects facts and evidences ·         NCLAT analyzes facts and evidences

    CJI’s reservations over Pendency

    • The NCLAT had a sanctioned strength of a chairperson plus 11 members but its functioning strength was of eight members.
    • Both the NCLT and NCLAT have been without chairpersons for several months respectively.
    • These vacancies are concerning because as of May 31, 13,170 insolvency petitions were pending before benches of the NCLT.
    • Of these, 2,785 petitions have been filed by financial creditors and 5,973 by operational creditors.

    Note: The IBC created an institution called an information utility to be the repository of information on debts and defaults in India.  The sole utility in India at present is the National E-Governance Services Ltd. (NeSL).

    Basis of these cases

    • The financial creditors are facing criticism for taking haircuts as high as 90 per cent against their claims.
    • A longer approval period would entail greater value erosion of a corporate debtor which would be an unattractive proposition for any prospective resolution applicant.
    • This uncertainty can be cured by a faster approval process by the NCLTs by the creation of more benches and filling up of current vacancies.

    Why is the Supreme Court fuming over vacancies?

    (a) Covid impact

    • The Indian economy is recovering from the adverse effects of the Covid-19 pandemic.
    • During the downturn, financial institutions and banks have suffered higher defaults than usual, impacting the robustness of the system.
    • Lending has decreased during this time and can only be encouraged now by shoring up the mechanism under the IBC to inspire confidence in creditors.

    (b) Non-compliance by the govt

    • The SC had granted time to the government till September 13 to take substantial steps in this regard, which was partially complied with by appointing 18 members.
    • The government, however, failed to avoid embarrassment as the CJI expressed his anger at the appointment process which had ignored candidates recommended by the selection committee.

    (c) Burden of pendency

    • There is a real risk of the court taking matters into its own hands by making appointments itself, or by taking harsher steps like transferring jurisdiction under the IBC to high courts.
    • One hopes that the situation is resolved quickly to make strict time-bound insolvency resolutions a reality.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Delhi-Mumbai Expressway: World’s longest

    The Minister for Road Transport and Highways Union Minister Nitin Gadkari concluded the review of the work progress on the Delhi-Mumbai Expressway.

    Delhi-Mumbai Expressway

    • The ambitious infra project started in the year 2018 is being constructed at a cost of Rs 98,000 crore and is scheduled for completion by March 2023.
    • States: Delhi, Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra
    • Once ready, the expressway will feature a spur to Noida International Airport and Jawaharlal Nehru Port to Mumbai through a spur in the financial capital.
    • It will reduce travel time between certain cities to 12-12.5 hours from 24 hours.
    • The project is expected to improve connectivity to economic hubs of India like Jaipur, Ajmer, Kishangarh, Chittorgarh, Kota, Udaipur, Ujjain, Bhopal, Indore, Vadodara, Ahmedabad, and Surat.

    Key features of the expressway

    • The expressway which is eight-lane access-controlled can be expanded to a 12-lane expressway depending on the traffic volume
    • It will boast wayside amenities such as resorts, food courts, restaurants, fuel stations, logistics parks, facilities for truckers
    • For accident victims, it will offer a helicopter ambulance service as well as a heliport, which will use drone services for business
    • Along the highway, over two million trees and shrubs are planned to be planted
    • The highway project is Asia’s first and the world’s second to include animal overpasses in order to facilitate unrestricted wildlife movement
    • Besides, it will also involve two iconic eight-lane tunnels
    • The project will result in annual savings of more than 320 million litres of fuel as well as reduce Carbon dioxide emissions by 850 million kg
    • Over 12 lakh tonnes of steel will be consumed in the project’s construction, which is equivalent to constructing 50 Howrah bridges
    • For the project, 80 lakh tonnes of cement will be consumed, which is around 2 percent of the country’s annual cement production capacity
    • The ambitious Delhi-Mumbai Expressway project has also created job opportunities for thousands of trained civil engineers apart from generating over 50 lakh man-days of work

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)