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Type: Op-ed

  • ‘Open talks’ with the Taliban is India’s strategic necessity

    Context

    With over a third of Afghanistan’s more than 400 districts under Taliban control, the talk-to-the-Taliban option is indeed the best of the many less than perfect options available to India.

    India need a reset in its Afghanistan policy

    • India has ‘temporarily’ closed its consulate in Kandahar.
    • This follows the decision to suspend operations in the Indian consulates in Jalalabad and Herat.
    • India’s decision to partially “withdraw” from Afghanistan shows that betting only on the government in Kabul was a big mistake,
    • It also shows that India realises the threat the Taliban poses to Indian assets and presence in Afghanistan.
    • To safeguard its civilian assets there as well as to stay relevant in the unfolding ‘great game’ in and around Afghanistan, India must fundamentally reset its Afghanistan policy.
    • India must, in its own national interest, begin ‘open talks’ with the Taliban before it is too late.
    • Open dialogue with the Taliban should no longer be a taboo; it is a strategic necessity.

    Reason for avoiding open talks with Taliban

    • There are at least five possible reasons why India appears to want to keep the Taliban engagement slow and behind closed doors.
    • First, if India chooses to engage the Taliban directly, it could make Afghanistan President Ashraf Ghani, to look towards China and the Shanghai Cooperation Organisation (SCO) for national security and personal political survival.
    • Second, India is also faced with the dilemma of who to talk to within the Taliban given that it is hardly a monolith.
    • Third, given the global opprobrium that Taliban faced in its earlier avatar and the lack of evidence about whether the outfit is a changed lot today, New Delhi might not want to court the Taliban so soon.
    • Fourth, there is little clarity about what the Taliban’s real intentions are going forward and what they would do after ascending to power in Kabul.
    • Fifth, it would not be totally unreasonable to consider the possibility of Pakistan acting out against India in Kashmir if India were to establish deeper links with the Taliban.

    Reasons India should engage with the Taliban openly

    • Wide international recognition: Whether we like it or not, the Taliban, is going to be part of the political scheme of things in Afghanistan, and unlike in 1996, a large number of players in the international community are going to recognise/negotiate/do business with the Taliban.
    • Countering Pakistan: The Taliban today is looking for regional and global partners for recognition and legitimacy especially in the neighbourhood.
    • So the less proactive the Indian engagement with the Taliban, the stronger Pakistan-Taliban relations would become.
    • A worldly-wise and internationally-exposed Taliban 2.0 would develop its own agency and sovereign claims including perhaps calling into question the legitimacy of the Durand Line separating Pakistan and Afghanistan, something Pakistan was always concerned about. T
    • The Taliban would want to hedge their bets on how far to listen to Pakistan.
    • That is precisely when New Delhi should engage the Taliban.
    • Security of civilian assets: India needs to court all parties in Afghanistan, including the Taliban if it wants to ensure its security of its civilian assets there.
    • It makes neither strategic nor economic sense to withdraw from Afghanistan after spending over $3 billion, something the Government seems to be prepared to do
    • Being a part of Afghanistan’s future course: If India is not proactive in Afghanistan at least now, late as it is, Russia, Iran, Pakistan and China will emerge as the shapers of Afghanistan’s political and geopolitical destiny, which for sure will be detrimental to Indian interests there.
    • Continental grand strategy:  Backchannel talks with Pakistan and a consequent ceasefire on the Line of Control, political dialogue with the mainstream Kashmiri leadership, secret parleys with Taliban all indicate that India is opening up its congested north-western frontier.
    •  Except for the strategic foray into the Indo-Pacific, India today is strategically boxed in the region and it must break out of it. Afghanistan could provide, if not immediately, India with such a way out.

    Consider the question ” India’s Afghan policy is at a major crossroads; to safeguard its civilian assets there as well as to stay relevant in the unfolding ‘great game’ in and around Afghanistan, New Delhi must fundamentally reset its Afghanistan policy. Comment.” 

    Conclusion

    In the end, India’s engagement with the Taliban may or may not achieve much, but non-engagement will definitely hurt Indian interests.

    Back2Basics: Durand Line

    • Durand Line, boundary established in the Hindu Kush in 1893 running through the tribal lands between Afghanistan and British India, marking their respective spheres of influence.
    • In modern times it has marked the border between Afghanistan and Pakistan.
    • The acceptance of this line—which was named for Sir Mortimer Durand, who induced ʿAbdor Raḥmān Khān, amir of Afghanistan, to agree to a boundary—may be said to have settled the Indo-Afghan frontier problem for the rest of the British period.

  • For Cairns dispute, international arbitration is not the way forward

    Context

    The recent move by Cairn to seize India’s sovereign assets in order to enforce its arbitration award has brought into focus the dispute and the related issues.

    Utility of Bilateral Investment Treaties (BIT)

    • After the World Wars, as more countries gained sovereignty, they tended to look at foreign investments as a form of neo-colonialism.
    • Bilateral investment treaties became the primary tool to forge relationships between developed and developing countries.
    • The BITs help to adopt standards for prompt, adequate and effective compensation in case of expropriation.
    • With the advent of globalisation, BITs became the means for foreign investment in developing countries.
    • Although the impact of investment agreements on foreign investments remains highly contextualised and inconclusive, these came to govern international investment relations.
    • The BITs retained the old-world construct that allowed international arbitration.
    • However, many developing countries view arbitration of tax matters as a breach of their sovereign right to tax.

    The Cairn Energy case

    • In 2012, explanations were added to the Income Tax Act 1961 — these provisions were deemed as having a retrospective effect.
    • This was more in response to the Supreme Court’s decision in the Vodafone case which denied the income tax department’s assertion of tax claims arising from the offshore transfer of interest that substantially derived their value from India.
    • The 2012 explanations to the IT Act indeed sought to fix tax avoidance. 
    • Looking into the details of the Cairn case, one can see the series of reorganisations that tip-toed around tax laws of multiple jurisdictions, resulting in the non-payment of tax. 
    • Taxing offshore indirect transfers — a structuring device to gain tax advantage from the indirect sale of assets — is not unique to India (336 tax treaties contain such an article).
    • It is also possible to see that the underlying assets of the subsidiaries were immovable assets in India.
    • The UK-India tax treaty allowed for taxation of capital gains as per Indian law.
    • India challenged the admissibility of the case before the arbitration tribunal.
    • However, the case rests on a distinction between tax and tax-related investment.
    • Surely, all investments have tax implications and the acceptance of such a distinction could create problems even where tax is explicitly carved out from the bilateral investment treaties.
    • The option of arbitration upon an unsuccessful Mutual Agreement Procedure (MAP) resolution is not available in India.
    •  For this reason, over the years, there has been a rising trend in tax disputes involving BITs.
    • The Cairn case is one such instance where arbitration was invoked especially since MAP was not an option.

    Way forward

    • The case raises many questions that administrators must address through reform.
    • India’s model BIT introduced in 2016 rectifies the issue of the distinction between tax dispute and investment-related taxation dispute through the specific exclusion of taxation.
    •  The recognition of a tax-related investment dispute, distinct from a tax dispute, should not undermine such a carve-out.

    Conclusion

    It is also important to note even if the award is enforced, the matter of tax avoidance stands pending before the High Court. Given the complexity, the only reasonable solution would be a negotiated settlement. Even if there’s a resolution in the Cairns case, questions of law would remain.

  • India’s equity market bubble

    Context

    Even as the real economy returns to the doldrums after being hit by the second wave of COVID-19 infections, the continuing bull run in India’s equity market in the April-June quarter has baffled many observers.

    V-shaped recovery of equity market

    • The benchmark BSE Sensex had nosedived to below 28,000 in March-April 2020, following the nationwide lockdown.
    • The equity market posted a sharp V-shaped recovery in 2020-21.
    • The Sensex surged beyond 50,000 in February 2021 and is currently closing on the 53,000 level.

    Factors suggesting bubble in equity market

    • There was an 81%-plus growth in the Sensex between April 2020 and March 2021 in the backdrop of real GDP growth plummeting to -7.3% during the same period.
    • While output contraction had reversed from the third quarter of 2020-21, the inflation rate also rose and remained way ahead of the real GDP growth rate in the last two quarters (Chart 1).
    • It is difficult to find any rationality behind the skyrocketing BSE Sensex in the context of such stagflation in the real economy.
    • Just like the fall in the equity prices was driven by the exit of foreign portfolio investors (FPI), the return of massive FPI inflows has driven the Indian equity bubble since then (Chart 2).
    • Net FPI inflows clocked an unprecedented ₹2.74 lakh crore in 2020-21, the previous high being ₹1.4 lakh crore in 2012-13.
    • The Reserve Bank of India (RBI)’s annual report (2020-21) to state stated that: “This order of asset price inflation in the context of the estimated 8 per cent contraction in GDP in 2020-21 poses the risk of a bubble.”

    Global factors

    • The global liquidity glut, following the expansionary, easy money policies adopted by the fiscal and monetary authorities of the OECD and G20 countries, has led to equity price inflation in several markets driven by FPIs, especially in Asia.
    • Following cues from the U.S. and the U.K., Asian equity markets in Singapore, India, Thailand, Malaysia and Hong Kong are currently witnessing price-earnings (P/E) ratios significantly above their historic means.
    • The BSE Sensex’s P/E ratio of 32 in end-June 2021 is way above its historic mean of around 20.

    What could burst the bubble?

    • Change in monetary policy: With COVID-19 vaccination and economic recovery proceeding apace in the U.S., the U.K. and Europe, fiscal and monetary policy stances will change soon.
    • Exit of FPIs: Once the U.S. Federal Reserve and other central banks start raising interest rates, the direction of FPI flows will invariably change bringing about corrections in equity markets across Asia.
    • India remains particularly vulnerable to a major correction in the equity market because of two reasons.
    • Low pace of vaccination: The pace of COVID-19 vaccination in India, given the vast population, lags behind most large countries.
    • In the absence of a substantial increase in the vaccination budget and procurement, large segments of the Indian population will remain vulnerable to a potential third wave of COVID-19, with its attendant deleterious impact on the real economy.
    • Weak fiscal stimulus: India’s economic recovery from the recession will remain constrained by the weak fiscal stimulus that has been delivered by the Central government.
    • Data from the IMF clearly show that while the total global stimulus consisted of additional public spending or revenue foregone measures amounting to 7.4% of global GDP, India’s fiscal measures amounted to 3.3% of GDP only.

    Consider the question “What are the factors driving equity market boom globally? What are the factors that could threaten such boom with a major correction?” 

    Conclusion

    With all agencies, including the RBI, downsizing India’s growth projections for 2021-22, it remains to be seen how long India’s equity bubble lasts.

    Back2Basics: P/E ratio

    • The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings (EPS).
    • The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple.
    • To determine the P/E value, one simply must divide the current stock price by the earnings per share (EPS).

    P/E Ratio=Earnings per share / Market value per share

     

  • Surveillance reform is the need of the hour

    Context

    The ‘Pegasus Project’ report says that over “300 verified Indian mobile telephone numbers, including those used by ministers, opposition leaders, journalists, the legal community, businessmen, government officials, scientists, rights activists and others”, were targeted using spyware made by the Israeli firm, NSO Group.

    Threat to press freedom

    • Revelations highlight a disturbing trend with regard to the use of hacking software against dissidents and adversaries.
    • A significant number of Indians reportedly affected by Pegasus are journalists.
    • This is not surprising since the World Press Freedom Index produced by Reporters Without Borders has ranked India 142 out of 180 countries in 2021. 
    • The press requires (and in democracies is afforded) greater protections on speech and privacy.
    • Privacy and free speech are what enable good reporting.
    • This has been recognised in Supreme Court decisions.
    • In the absence of privacy, the safety of journalists, especially those whose work criticises the government, and the personal safety of their sources is jeopardised.
    • Such a lack of privacy, therefore, creates an aura of distrust around these journalists and effectively buries their credibility.

    Issues with the legal provision

    • Provisions of law under the Indian Telegraph Act of 1885 and the Information Technology (IT) Act of 2000 are used by the government for its interception and monitoring activities. 
    • While the provisions of the Telegraph Act relate to telephone conversations, the IT Act relates to all communications undertaken using a computer resource.
    • Both provisions are problematic and offer the government total opacity in respect of its interception and monitoring activities.
    • Section 69 of the IT Act and the Interception Rules of 2009 are even more opaque than the Telegraph Act, and offer even weaker protections to the surveilled.
    • No provision, however, allows the government to hack the phones of any individual since the hacking of computer resources, including mobile phones and apps, is a criminal offence under the IT Act.

    Issues with surveillance system

    • Surveillance itself, whether under a provision of law or without it, is a gross violation of the fundamental rights of citizens.
    • Violation of freedom of speech: The very existence of a surveillance system impacts the right to privacy and the exercise of freedom of speech and personal liberty under Articles 19 and 21 of the Constitution, respectively.
    • It prevents people from reading and exchanging unorthodox, controversial or provocative ideas.
    • No scope for judicial scrutiny: There is also no scope for an individual subjected to surveillance to approach a court of law prior to or during or subsequent to acts of surveillance since the system itself is covert.
    • No oversight: In the absence of parliamentary or judicial oversight, electronic surveillance gives the executive the power to influence both the subject of surveillance and all classes of individuals, resulting in a chilling effect on free speech.
    • Against separation of power: Constitutional functionaries such as a sitting judge of the Supreme Court have reportedly been surveilled under Pegasus.
    • Vesting such disproportionate power with one wing of the government threatens the separation of powers of the government.
    • The existing provisions are insufficient to protect against the spread of authoritarianism since they allow the executive to exercise a disproportionate amount of power.

    Way forward

    • There needs to be oversight from another branch of the government.
    • Judicial oversight: Only the judiciary can be competent to decide whether specific instances of surveillance are proportionate, whether less onerous alternatives are available, and to balance the necessity of the government’s objectives with the rights of the impacted individuals.
    • Surveillance reforms: Not only are existing protections weak but the proposed legislation related to the personal data protection of Indian citizens fails to consider surveillance while also providing wide exemptions to government authorities.
    • Surveillance reform is the need of the hour in India.

    Consider the question “Discuss the threats posed by the use of surveillance systems by the government. Suggest the measures to deal with these threats.”

    Conclusion

    The only solution to the problem of spyware is immediate and far-reaching surveillance reform.

  • China’s role in stabilising Afghanistan

    Context

    Amid the gloom that has enveloped Afghanistan, one hope for many countries has been China’s potential role in stabilising it.

    Factors that call for China to play role in Afghanistan

    • Scope for India-China cooperation: In the past, even India thought that Afghanistan would be a natural area for India and China to work together.
    • But little came out of the understanding after the Wuhan summit in 2018.
    • Northern neighbours: Afghanistan’s northern neighbours, Turkmenistan, Uzbekistan, and Tajikistan all have expanding political and economic ties with China but have traditionally relied on Russia for their security.
    • They might support a larger role for Beijing in Afghanistan in partnership with Russia.
    • Iran, Kabul’s western neighbour, also has deepening ties with China.
    • Bilateral cooperation with the U.S.: Washington, now locked in an escalating confrontation with Beijing, sees Afghanistan as a potential area of bilateral cooperation. 
    • Role of Pakistan: Beijing is indeed critical in Pakistan’s plans for Afghanistan.
    • Afghan leaders have also been eager to draw China’s BRI into their plans for economic modernisation.
    • China was also important for Kabul’s political calculus in limiting Pakistan’s quest for dominance.

    Two challenges in China playing role in stabilising Afghanistan

    1) Caution in Chinese policy

    • The first relates to the deep sources of caution in Chinese policy.
    • Neither the prospect of mining Afghanistan’s natural resources nor the vanity of being the newest superpower will compel China to rush into the Afghan vacuum.
    • China has deep concerns about Taliban’s ideology and its potential role in fomenting instability in its restive Muslim-majority province, Xinjiang. 
    • Beijing cannot depend on its special relationship with the Pakistan army to ensure the security of China’s frontiers as well as its investments in Afghanistan.
    •  The growing attacks on CPEC projects in Pakistan, underline the difficulty of pursuing economic development amid endemic violence.

    2) Priorities of Taliban

    • The second set of problems relate to the priorities of Taliban.
    • It remains to be seen whether the economic development of Afghanistan is a top priority for the Taliban or not.
    • Also, is it open to let in foreign capital and all the baggage that comes with it?
    • More fundamentally, there is no clarity on the role of economic modernisation in Taliban’s fierce insistence on the creation of an Islamic emirate in Afghanistan.

    Conclusion

    It is against this backdrop that the chances of China playing a major role in stabilising Afghanistan remain slim.

  • Issue of undertrials

    Context

    After the death of Stan Swamy, questions about the conditions of jails and treatment of the incarcerated have been raised anew.

    Issue of deaths of prisoners

    • The NCRB data reports the death of over 1,800 prisoners in the year 2018. An estimated 70 percent of prison inmates are undertrials.
    • Despite constitutional provisions like Article 21, which says, no person shall be denied life or liberty except by the due process of law, the number of undertrials is increasing.

    How prisoners are subjected to additional torture

    • Overcrowding, delayed medical attention, unhygienic conditions and malnutrition exist in all Indian prisons.
    • It is the responsibility of the State and the judiciary to ensure that they are only deprived of their liberty and are not exposed to any additional torture in the form of medical deprivation, unhygienic conditions, bad or inadequate food, etc.
    • Yet, thousands are dying every year and the prison authorities are not made accountable.

    Way forward

    • Acts of extreme neglect that could result in the death of inmates should be acknowledged as extrajudicial torture and made an offense.
    • The SC in Sunil Batra (I) v. Delhi Administration (1978), held that “the humane thread of jail jurisprudence that runs right through is that no prison authority enjoys amnesty for unconstitutionality”.
    • ARC Recommendations on Prison Reforms: The Union and State Governments should work out, fund and implement at the
      earliest, modernization and reforms of the Prison System as recommended by the All India Committee on Jail Reforms (1980-83).
      b. The attendant legislative measures should also be expedited.
      c. Rules regarding Parole and Remission need to be reviewed.
    • Infrastructure: Prisoner Information System, Biometric Identification, facilities for pregnant women, up-gradation of hospitals, etc is needed.
    • Strengthening the Open Prison System.

    Conclusion

    The government needs to take urgent measures to address the issue of additional torture in various forms and the death of prisoners.

  • What the new Ministry of Cooperation needs to achieve

    Context

    Two weeks ago, the government created a new Ministry for Cooperation. India is, perhaps, the first country to have such a ministry. The Ministry can play an important role in the transformation of cooperatives in the country.

    How 1991 economic reforms benefited agriculture

    • On July 24, 1991, India decided to unshackle the spirit of private sector entrepreneurship through the move to de-license industry and reduce tariffs on a host of commodities.
    • Trade policy changes improved the terms of trade for agriculture and benefitted millions of farmers.
    • Agri-exports increased, but this led to higher domestic prices.

    The success story of dairy sector in India

    • In 1991, Manmohan Singh, then finance minister wanted to delicense the dairy sector as well, but there was stiff opposition from Verghese Kurien.
    •  It was after 10 years in 2002 that the dairy sector was fully de-licensed.
    • The competition between cooperatives and corporate dairy players has benefitted millions of farmers around the country.
    • With the entry of the private sector, the growth of the dairy sector accelerated at double the speed.
    • Today, both procure roughly the same quantities and growth in the organised private sector is faster than in cooperatives.

    Performance of cooperative movement in India

    • India’s experience with the cooperative movement has produced mixed results — few successes and many failures.
    • There are cooperatives in the financial sector, be it rural or urban.
    • But the performance of these agencies when measured in terms of their share in overall credit, achievements in technology upgradation, keeping NPAs low or curbing fraudulent deals has been poor to average.
    • Sugar cooperatives of Maharashtra initially touted as exemplars of the movement, are in the doldrums now.
    • Many are being sold to the private sector.

    Performance of cooperatives in dairy sector

    1) Amul

    • The performance of the cooperative champion, Gujarat Cooperative Milk Marketing Federation (GCMMF) — with its poster brand, Amul — has been most successful.
    • During Operation Flood, it received a lot of capital at highly concessional terms.
    • But its success is also the result of professionalism, business and, therefore, keeping politics away.
    • But despite the grand success of Gujarat’s milk cooperatives in Gujarat, the model did not spread to other states as successfully.

    2) Karnataka Milk Federation

    • In its eagerness to please milk farmers, the Karnataka Milk Federation (KMF), which sells its products under the brand name of Nandini, gives them Rs 5 to Rs 6 extra per litre.
    • This subsidy, given by the state government, cost the exchequer Rs 1,260 crore till 2019-20.
    • KMF procures a lot of milk and then dumps it at lower prices in the market for consumers.
    • This depresses prices in adjoining states like Maharashtra, affecting the fortunes of Maharashtra milk farmers.
    • If Maharashtra and Karnataka were two different countries, Maharashtra would be challenging Karnataka at the WTO.

    Way forward

    • The new Ministry of Cooperation can work towards ironing out distortions in state price policies due to subsidization such as in Maharastra and Karnatak milk prices.
    • Cooperatives desperately need technological upgradation. 
    • The Ministry of Cooperation can give them soft loans for innovation and technology upgradation.
    • But such loans should also be extended to the private sector to ensure a level playing field.
    • The Ministry of Cooperation needs to ensure the least political interference in the operation of cooperatives.

    Conclusion

    The new Ministry of Cooperation can work towards bringing in professionalism in cooperatives and make them more competitive.

  • Need for social security to migrant and informal workers

    Context

    The migrants’ crisis after the two covid waves compelled policy-makers to make certain provisions for them in the schemes announced for the assistance of the poor.

    Supreme Court judgement on the issue

    • On June 29, the Supreme Court finally delivered its judgment on the plight of migrant labour.
    • The judgement was notable for two main reasons.
    • First, it recognised that there was the large-scale exclusion of migrant workers and other informal workers from existing schemes due to the lack of their registration and outdated eligibility lists.
    • It noted that no benefits will be denied to migrant workers for want of an Aadhaar card and that food assistance will be provided for migrants who were not covered by the National Food Security Act.
    • Second, it connected informal workers and migrant workers, both of whom experience exclusion, and mandated that the portal for registration of all informal/migrant workers should be fully operational before July 31.

    Advantages of providing social protection

    • Investment in social protection is not charity, it is an investment in workers’ productivity and in equitable growth.
    • Providing social protection is, as the UN mooted in 2009 when it spelt out the social protection floor (SPF) initiative after the global financial crisis, the surest way out of a crisis by boosting demand at the bottom of the pyramid.
    • The report of the Advisory Committee of the ILO, in which India was represented by its labour secretary, provides a strong rationale for instituting a universal SPF during economic crises.
    • As a result, all constituents of the ILO adopted Recommendation 202 on social protection floors at the International Labour Conference in 2012.

    Inadequate provisions by government

    • The Unorganised Workers’ Social Security Act, was approved by Parliament in December 2008.
    • But it lacks the mandatory elements of the NCEUS’s proposals and included neither a National Minimum Social Security Package, nor the provision for mandatory registration.
    • Estimates show that the central government’s expenditure on all major social protection programmes declined from 1.96 per cent of GDP in 2008-09 to 1.6 per cent in 2013-14 and to only 1.28 per cent in 2019-20.

    Way forward

    • The National Commission for Enterprises in the Unorganised Sector (NCEUS) had pointed out that the circular migrant workers were a disadvantaged segment among informal workers.
    • Comprehensive law: The NCEUS had advocated a comprehensive law for the protection of the rights of all informal workers, including migrants, home workers, and domestic workers.
    • Universal registration: NCEUS had also recommended a universal registration mechanism based on self-declaration, with the issuance of a smart social security card, and a National Minimum Social Security Package.
    • Guaranteed social security/social protection: We need the provision of a minimum level of guaranteed social security/social protection for all informal workers and their households within a definite time frame.
    • More public spending: Guaranteed social protection would involve a clear framework and a commitment to greater public resources being spent on social protection as a large class of workers in India do not have an identifiable employer and a contributory social insurance framework will not work for them.
    • Recommendation 202: Government should embrace ILO’s Recommendation 202 and work towards these in a time-bound manner.

    Conclusion

    To end the silent, painful, and enduring crisis for the workers, as well as the crisis for the economy, the government must urgently recognise the right to social security, embedded both in the Indian Constitution and international covenants.

  • Can India invoke state sovereignty in Cairn Energy case?

    Context

    Last year, an arbitration tribunal indicted India for breaching its obligations by imposing taxes retrospectively on Cairn. As a result, Cairn Energy has been attempting to seize Indian assets in several jurisdictions to recover $1.7 billion due from India.

    How asset seizure order affects India?

    • This episode projects India as an unfriendly country for investors at a time when it wishes to project itself as a prime destination for foreign investment.
    • This episode puts India in the league of countries like Pakistan, Congo, Venezuela, Russia and Argentina, who have been part of attachment proceedings overseas due to their failure to comply with international arbitral awards.
    • Fighting cases will consume an enormous amount of time, money, and resources, in addition to attracting bad press internationally.

    Understanding the doctrine of state immunity

    • State immunity is a well-recognised doctrine in international law.
    • It safeguards a state and its property against the jurisdiction of another country’s domestic courts.
    • Despite the universal acceptance of this doctrine, there is no international legal instrument in force administering its implementation.
    • Attempts are underway to create binding international law on the application of the rules of state immunity such as the United Nations Convention on Jurisdictional Immunities of States and Their Property (UNSCI).
    • However, this convention is yet to be ratified by 30 countries — the minimum number required to bring it in force, as per Article 30(1) of UNSCI.
    • India has signed the convention, but not ratified it.
    • The doctrine of state immunity has progressed from absolute immunity to restrictive immunity in which immunity is only for the sovereign functions of the state.

    Can India invoke state immunity?

    • Most prominent jurisdictions follow the concept of restrictive immunity.
    • State immunity can be invoked to resist the seizure of sovereign assets, but not commercial properties. 
    • In the context of the execution of the investment treaty arbitration awards, properties serving commercial functions are available for seizure.
    • In the case of India, the most popular commercial property that foreign investors would target for attachment are the global assets of India’s public sector undertakings such as Air India.

    Way forward

    • If India wishes to continue the case, it needs to carefully study the laws on state immunity in different jurisdictions where attachment proceedings are likely to come up.
    • A better option would be to admit that amending the tax law retrospectively was a mistake and comply with the international ruling.

    Conclusion

    At the time when India seeks to project itself as an attractive investment destination, such cases could be a setback. India needs to avoid such disputes in the future.

  • Interference an investigating officer can do without

    Context

    Instances of judiciary directing the investigating officer point to the need for restraint from the judiciary.

    Challenging the discretion of investigating officer

    • There have been growing instances of subordinate judicial officers, and even High Courts sometimes, directing the investigating officer to effect the arrest of a particular individual.
    • To deal with the issue, the Supreme Court of India recently made the observation that courts have no authority to direct an investigating officer to in turn direct the arrest of any particular individual connected with a crime
    • This points to the need for a slightly kindlier view of police conduct and more latitude to them in the standard operating procedures which they follow, especially when they investigate a complicated crime.
    • The Code of Criminal Procedure (CrPC) vests sufficient discretion in the investigating officer to take such decisions as arrests and searches.

    Issues with court’s directions

    • Court observations that smack of a lack of faith in police ability and integrity will make grass-root level policemen even more arbitrary than now and force them into carrying out questionable actions that will cast aspersions on an officer’s ability to think for himself.
    • Court interference in the day-to-day investigation is not only undesirable but is also not sanctioned by law.
    • Only the Supreme Court, has been vested with enormous authority and discretion by the Constitution, the lesser courts shall not give directions in the matter of arrests and searches.

    Safeguard against police misconduct

    • We need to educate the Executive and the common man that it is now well-established law that the police have to register an FIR.
    • It is mandatory that every police station in the land should register a complaint under the relevant sections of a statute the moment a cognisable offence is made out in the complaint
    • There is another safeguard against police misconduct.
    • The CrPC makes it obligatory for the investigating officer to write a diary that details the action taken every day following registration.
    • When in doubt, the competent court, which already has a copy of the first information report, can demand to see the case diary.
    • Courts should remember that the police are a well-established hierarchy that is obligated to ensure objectivity during a criminal investigation.
    • Every investigation is supervised by at least two immediate senior officers.

    Conclusion

    Judicial interference in an investigation is counterproductive to the idea of justice. Therefore, there is a need for allowing more freedom to the investigating officers in the standard operating procedure that they follow.