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Insights Daily Current Events, 27 December 2014

Insights Daily Current Events, 27 December 2014

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President signs coal, insurance ordinances

President has signed two key ordinances to raise the cap on foreign direct investment in the insurance sector and facilitate e-auction of coal blocks, amid protest from the opposition parties.

  • The Coal Mines (Special Provisions) Bill, 2014, was passed by the Lok Sabha, but could not be taken up for discussion in the Rajya Sabha, pushing the government to recommend a re-promulgation of the coal ordinance.
  • In the Insurance Amendment Bill, the government recommended promulgation of a fresh ordinance, for an FDI hike from 26 per cent to 49 per cent in the sector.
  • The decision on taking the ordinance route was taken by the Union Cabinet, chaired by Prime Minister.

Ordinance:

Ordinances are temporary laws which can be issued by the President when Parliament is not in session.

  • Ordinances are issued by the President based on the advice of the Union Cabinet. The President has been empowered to promulgate Ordinances based on the advice of the central government under Article 123 of the Constitution. This legislative power is available to the President only when either of the two Houses of Parliament is not in session to enact laws. Additionally, the President cannot promulgate an Ordinance unless he ‘is satisfied’ that there are circumstances that require taking ‘immediate action’.
  • The purpose of Ordinances is to allow governments to take immediate legislative action if circumstances make it necessary to do so at a time when Parliament is not in session.

Approval by the Parliament:

Ordinances must be approved by Parliament within six weeks of reassembling or they shall cease to operate. They also cease to operate in case resolutions disapproving the Ordinance are passed by both Houses.

Why are they issued?

  • Often, ordinances are used by governments to pass legislation which is currently pending in Parliament.
  • Governments also take the Ordinance route to address matters of public concern as was the case with the Criminal Law (Amendment) Ordinance, 2013, which was issued in response to the protests surrounding the Delhi gang rape incident.

Repromulgation:

  • Repromulgation of Ordinances raises questions about the legislative authority of the Parliament as the highest law making body.

In the 1986 Supreme Court judgment of D.C. Wadhwa vs. State of Bihar, the SC observed:

“The power to promulgate an Ordinance is essentially a power to be used to meet an extraordinary situation and it cannot be allowed to be “perverted to serve political ends”. It is contrary to all democratic norms that the Executive should have the power to make a law, but in order to meet an emergent situation, this power is conferred on the Governor and an Ordinance issued by the Governor in exercise of this power must, therefore, of necessity be limited in point of time.”

History of Ordinances:

  • Ordinances were incorporated into the Constitution from Section 42 and 43 of the Government of India Act, 1935, which authorised the then Governor General to promulgate Ordinances ‘if circumstances exist which render it necessary for him to take immediate action’.
  • Most democracies including Britain, the United States of America, Australia and Canada do not have provisions similar to that of Ordinances in the Indian Constitution. The reason for an absence of such a provision is because legislatures in these countries meet year long.

Some Members of the Constituent Assembly emphasised that the Ordinance making power of the President was extraordinary and issuing of Ordinances could be interpreted as against constitutional morality.

Sources: The Hindu, prsindia.org, PIB.

Nationwide hydrology data soon

With flood damage in the country pegged in the range of Rs. 6,000 crore a year, according to official estimates, India is poised to adopt a World Bank-funded hydrology project.

  • Such a project has already made a difference in 13 States which opted for it in the earlier two phases.
  • Under the proposed expansion of the project, States will be able to generate and digitise their own data without waiting for central help.
  • The project for the whole country is estimated to cost Rs. 3,000 crore.
  • The project, the first phase of which began some 20 years back, has digitised real time data in 13 States.
  • The project, in partnership with the Union Water Resources Ministry and other agencies, was aimed at developing monitoring systems in the States.
  • The project has completed two phases and established the basis for a Hydrological Information System (HIS) for reliable records.

How this Data can be helpful?

  • Data can help release of water from reservoirs and prevent untimely floods.
  • Apart from flood prevention, the data and real time monitoring of water flows also helps in analysing and testing proposed projects.
  • The data also uses satellite to help figure the amount of snow melt, and make projections on the flows into the reservoir.
  • The use of such data on water storage and availability is unlimited and can be used in decision support system (DSS).

Hydrology Project:

The Project is to improve reliability and accuracy of Hydrology and Ground Water data throughout India and to improve access to this information.

  • The Project is funded by World Bank and implemented by the Government of India.
  • The mission is to establish an effective and sound hydrologic database and Hydrological Information System (HIS), together with the development of consistent and scientifically-based tools and design aids to assist in the effective water resources planning and management within each to the implementing agencies based on sound scientific driven hydrogeological information and models.

Objectives:

  • to extend and promote the sustained and effective use of the Hydrological Information System by all potential users concerned with water resources planning and management, both public and private, thereby contributing to improved productivity and cost-effectiveness of water-related investments.
  • strengthening the capabilities of implementing agencies at state/central level in using Hydrological Information System for efficient water resource planning and management;
  • Awareness building and outreach services about Hydrological Information System use.

Sources: The Hindu, http://hydrology-project.gov.in.

India gives $1 million to ESCAP Trust fund

Ten years after a massive tsunami triggered by an earthquake smashed the coastline of around 14 nations, India has announced a contribution of $1 million to a UN fund for strengthening early warning systems for natural disasters.

  • The contribution is expected to boost ESCAP’s efforts to strengthen early warning systems through regional and South–South cooperation.
  • The donation will also ensure that vulnerable communities receive timely warning information.

About ESCAP:

The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) is the regional development arm of the United Nations for the Asia-Pacific region.

Members: 53 Member States and 9 Associate Members

Geographical scope: stretches from Turkey in the west to the Pacific island nation of Kiribati in the east, and from the Russian Federation in the north to New Zealand in the south. This region is home to 4.1 billion people, or two thirds of the world’s population.

This makes ESCAP the most comprehensive of the United Nations five regional commissions, and the largest United Nations body serving the Asia-Pacific region with over 600 staff.

Established in 1947 with its headquarters in Bangkok, Thailand, ESCAP works to overcome some of the region’s greatest challenges by providing results oriented projects, technical assistance and capacity building to member States in the following areas:

  • Sustainable Development
  • Macroeconomic Policy and Development
  • Trade and Investment
  • Transport
  • Social Development
  • Environment and Development
  • Information and Communications Technology
  • Disaster Risk Reduction
  • Statistics
  • Sub-regional activities for development

ESCAP uses its convening power to bring countries together to address issues through regional cooperation, including:

  • Issues that all or a group of countries in the region face, for which it is necessary to learn from each other;
  • Issues that benefit from regional or multi-country involvement;
  • Issues that are transboundary in nature, or that would benefit from collaborative inter-country approaches;
  • Issues that are of a sensitive or emerging nature and require further advocacy and negotiation.

ESCAP provides a forum for its member States that promotes regional cooperation and collective action, assisting countries in building and sustaining shared economic growth and social equity. In addition, ESCAP gives stronger participation to the smaller and often left out voices of the region, the least developed countries, the small island States and landlocked States.

Sources: The Hindu, http://www.unescap.org/.

China challenges India’s position as world’s top diamond polisher

India’s long-held position as the world’s top diamond polisher is being challenged by soaring output from China, compelling India to seek help from ally and top rough diamond supplier Russia to defend its market share.

Details:

  • India has traditionally relied on the middlemen in trading hubs of Antwerp, Tel Aviv and Dubai for its supply of rough diamonds, which mainly come from Russia or Africa. Most of the world’s diamond output is sent to India for cutting and polishing before being retailed around the world.
  • But China has managed to break the established trade route by getting diamonds directly from African mines in which Chinese companies have a stake. This has boosted the value of China’s net exports of polished diamonds by 72% in the past five years to $8.9 billion.
  • China’s share of the global polished diamond market has tripled to 17% in the past decade, according to data from the United Nations. India’s share has fluctuated between 19 and 31%.
  • China’s active procurement of rough supply from African countries was reducing the supply available to Indian manufacturers.

So, what’s being done?

  • During Russian President Vladimir Putin’s visit to New Delhi this month, Russia’s state-run diamond monopoly Alrosa signed a dozen deals to increase direct rough diamond deliveries to India that would help reduce the cut taken by middlemen in the secretive precious gems trade.
  • The direct deals would also reduce risks linked to Western sanctions imposed over Russia’s annexation of Crimea, while our PM is additionally seeking arrangements that would allow Russian jewellery makers to send rough diamonds to India and re-import polished stones duty-free.
  • Experts feel that to compete effectively with China, India will also need to streamline its tax and import rules.
  • India is looking to build a special notified zone where companies can import rough diamonds on a consignment basis and re-export unsold ones, mirroring China’s investor-friendly trading zones that avoid complicated export and import taxes.

Problems in China:

  • Despite China’s upper hand in securing rough diamonds, its cutting and polishing industry is not as organised as India’s and rising labour costs are a problem.
  • The Chinese diamond polishing industry works on a contract-basis and through joint ventures. They are consistent at mass producing small stones, but lack the expertise required for bigger and finer stones.

Sources: The Hindu, TOI.

FEMA violations: ED officials meet foreigners

A meeting was held by ED officials recently to hear the grievances of foreign nationals, NRIs and PIOs who have purchased property in Goa in violation of the Foreign Exchange Management Act (FEMA).

  • The ED has been investigating more than 200 cases of violations of FEMA and others by foreigners. The purpose of the meeting was to educate them about various aspects and to work towards speedy disposal of cases.
  • In the last one year the ED has disposed of around 100 such cases, mostly of property purchased in the coastal belt of the State.
  • The issue of purchase of immovable property by foreigners violating FEMA provisions had raised much furore in the State years back and the government was compelled to submit over 300 cases to ED for detailed probe and action.

Foreign Exchange Management Act:

The Foreign Exchange Management Act, 1999 (FEMA) is an Act of the Parliament of India “to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India”.

  • It was passed by the Parliament in 1999, replacing the Foreign Exchange Regulation Act (FERA).
  • This act seeks to make offenses related to foreign exchange civil offenses. It extends to the whole of India replacing FERA, which had become incompatible with the pro-liberalisation policies of the Government of India.
  • It enabled a new foreign exchange management regime consistent with the emerging framework of the World Trade Organisation (WTO). It also paved way to Prevention of Money Laundering Act 2002, which was effected from 1 July 2005.

Features of the Act:

  • Activities such as payments made to any person outside India or receipts from them, along with the deals in foreign exchange and foreign security is restricted. It is FEMA that gives the central government the power to impose the restrictions.
  • Restrictions are imposed on residents of India who carry out transactions in foreign exchange, foreign security or who own or hold immovable property abroad.
  • Without general or specific permission of the MA restricts the transactions involving foreign exchange or foreign security and payments from outside the country to India – the transactions should be made only through an authorised person.
  • Deals in foreign exchange under the current account by an authorised person can be restricted by the Central Government, based on public interest generally.
  • Although selling or drawing of foreign exchange is done through an authorised person, the RBI is empowered by this Act to subject the capital account transactions to a number of restrictions.
  • Residents of India will be permitted to carry out transactions in foreign exchange, foreign security or to own or hold immovable property abroad if the currency, security or property was owned or acquired when he/she was living outside India, or when it was inherited by him/her from someone living outside India.
  • Exporters are needed to furnish their export details to RBI. To ensure that the transactions are carried out properly, RBI may ask the exporters to comply to its necessary requirements.

Sources: The Hindu, Wiki.