Cairn Energy wins arbitration award
Paper:
Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management
Why in News?
India has been ordered to return up to $1.4 billion to Cairn Energy PLC of the U.K. after an international arbitration overturned tax demanded retrospectively — an award the government indicated it may challenge.
Key Details:
- The dispute between Cairn Energy PLC of U.K and the income tax authorities is over an internal transfer of share between the parent company and its subsidiary.
- The dispute over capital gains tax was the bone of contention between Cairn Energy and the tax authorities of India.
- The tribunal charged India of violating UK-India bilateral investment treaty and international laws.
The story so far
- The dispute between the Indian government and Cairn has its genesis in an issue arising over the transferred shares from ‘The Cairn UK’ to ‘Cairn India’ in 2006-07.
- The income tax authorities alleged that Cairn UK had made capital gains and served a tax notice under retrospective taxation provisions.
- The multiple interpretations of capital gains ensured that the company refused to pay the tax, which led to cases being filed at the Income Tax Appellate Tribunal (ITAT) and the High Court.
- Cairn lost the case at ITAT. A case on the valuation of capital gains is still unresolved in front of the Delhi High Court.
- In 2011, Cairn Energy sold the majority of its India business, Cairn India, to mining conglomerate Vedanta. Cairn UK was however not allowed to sell a minor stake of about 10 per cent by the income tax authorities. Authorities had also seized Cairn India shares as well as dividends that the company paid to its parent UK firm.
Way ahead:
- The ruling of the tribunal ordering India to pay $1.4 billion to Cairn Energy is worrisome, not just because of the amount that is owed but also because it hurts the image of India at the global level as an investment destination and cast aspersions over ease of doing business.
Cabinet nod for 100% FDI in DTH service
Paper:
Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management
Why in News?
The Union Cabinet approved revised guidelines for Direct-to-Home (DTH) broadcasting services, allowing 100 per cent foreign direct investment (FDI) as well as increasing the licence period to 20 years.
Key Details:
Apart from increasing the FDI to 100%, several other changes have been made such as the tenure of the license and the license fee.
The issuance of license
- The issue of tenure of licenses has been dealt with, the licenses will now be issued for a period of 20 years with a renewal provision after every 10 years. Currently, the DTH licenses are issued for a span of 10 years.
- The license fee has been revised from 10 per cent of gross revenue (GR) to 8 per cent of adjusted gross revenue (AGR).
DTH service providers welcomed the decision
- The provision of a 20-year license period in place of the current 10-year license tenure will lend stability and will be beneficial for players due to the large capital investments that they have made.
- It also gives DTH the recognition of being an infrastructure intensive sector.
Beware of illegal digital lending apps: RBI
Paper:
Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management
Why in News?
The Reserve Bank of India has advised public to be wary of unauthorised digital lending platforms and mobile apps.
Key Details:
- The digital lending platforms resort to excessive rates of interest and additional hidden charges are demanded from borrowers.
- There have been shreds of evidence of adoption of unacceptable and high-handed recovery methods, and misuse of agreements to access data on the mobile phones of the borrowers.
- RBI has pointed out how unauthorised digital lending platforms/mobile apps attracted borrowers with a promise of loans in a quick and hassle-free manner.
Guidelines for public lending
- Legitimate public lending activities can be undertaken by banks, non-banking financial companies (NBFCs) registered with RBI and other entities who are regulated by the State governments under statutory provisions, such as the money lending acts of the States concerned.
Peer to peer lending
- A peer to peer lending or P2P lending platform facilitates borrowing and lending money directly through an online platform like Lendbox, faircent, etc., making it affordable to get loans online compared to banks.
Way Ahead:
- The Reserve Bank of India has cautioned the public against falling into the trap set by unauthorized digital lending platforms.
- The people are advised to carry out verification of the antecedents of the company/firm offering loans online or through mobile apps.
Maiden test of MRSAM for Army successful
Paper:
Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management
Why in news:
- The inaugural test of the Medium Range Surface to Air Missile (MRSAM) for the Indian Army was carried out from the test range at Chandipur in Odisha.
Key Details:
- India successfully conducted the first Army version test of the state-of-the-art Medium-Range Surface-to-Air Missile (MRSAM).
- The missile has been developed by Defence Research and Development Organisation (DRDO) and Israel Aerospace Industries.
Missile characteristics
- Strike range is close to 100 km, the nuclear-capable ballistic missile weighs around 2.7 tonnes and has a length of 4.5 meters and can transport a payload weighing 60 kg.
- The missile can move with a speed of Mach 2 and has high degrees of manoeuvrability.
- Apart from the missile, the launching platform includes a Multi-Functional Surveillance and Threat Alert Radar (MFSTAR) for detection, tracking, and guidance of the missile.
Application
The new generation MRSAM has been developed to subdue airborne threats in the form of jets, missiles and rockets, including projectiles launched simultaneously.
Key lesson from farmers’ protest is that steamrolling Parliament backfires
Paper:
Mains: General Studies- II: Governance, Constitution, Polity, Social Justice and International relations.
Why in News?
The recent protests by farmers with regards to the farm acts passed has raised concerns over a lack of engagement between the ruling party and the opposition while passing the law.
Key Details:
- The farm acts were passed by the Union Government with very little deliberation in the parliament and without any consultation with the farmers.
- The farm protests that have followed and continued for close to three weeks now have caused immense hardship to the farming community.
Reforms objective
- It appears that the new legislation is needed and will usher in required market reforms in the overregulated farm sector.
- So far there is no concrete piece of evidence to show that the new proposals will negatively impact farmers in the long run.
- The Minimum Support Price has no economic justification regardless of demand and supply. Linking MSP to the manufacture of essential medicines will give a better picture, there are no mechanisms that guarantee a pharmaceutical company a minimum price for essential medicines that it produces, irrespective of whether the quantity produced far exceeds the demand.
Farm liberalization
- The benefits of liberalizing the non-agricultural sector of the economy in 1991 established that, in the end, market forces cannot be ignored and a tight state control can be counterproductive.
- The fallouts of the enforcement of the Essential Commodities Act.
- Initial experiences under the Essential Commodities Act, 1955, were not as desired.
Debate, discussion, deliberation
- The farm laws, however ennobling in its intentions, ought to have been passed after engaging with the relevant stakeholders.
- The farm laws would not have encountered as much opposition as they have if it was demonstrated through empirical data, objective analysis and impassionate reasoning, but passing it through a voice vote, was an injustice.
- As the farm bills marked a radical departure from the existing system of selling agricultural produce, the least that could have been done was to refer them to a Select Committee. The haste with which the new legislation was pushed through was not justifiable.
Parliamentary setup in India
- The core theme behind democracy is to give “voice to the voiceless”, where every individual matters as one and none more than one.
- India has adopted representative democracy, wherein the elected representatives represent the will of the people and the parliament stands for the institutionalisation of people’s will.
- Parliament is at the heart of the Indian democratic setup, it is supposed to be a chamber where policies, laws that are fundamental to the governance of the country are to be discussed, debated and deliberated.
- The demand by the Opposition for discussion was also turned down. The ruling party undoubtedly commands a majority and has the right to implement the promises it has made in its manifesto, but as it was once said, the opposition must have its say before the government has its way.
Parliament committees
- Many legal experts suggested that the government must have referred the bills before it became acts to the select committees, it is because of the following reasons listed below.
- The functions of the Parliament are varied, complex and voluminous. Time and expertise are required to make a detailed scrutiny of all legislative measures and other matters.
- Parliamentary committees assist in the discharge of duties of parliament.
- The Standing and Select committees help the lawmakers to source expertise, diverse opinions from outside of the parliament.
- It also provides a platform to overcome rigid party stance and adopt a more flexible, acceptable way going forward.
- Parliamentary committees work away from the public gaze, hence there are no incentives in ‘playing to the gallery’.
- It is a matter of concern that fewer and fewer bills are being referred to Select Committees or even deliberated upon.
- The recent data show that while 71 per cent of the bills were referred to a Select Committee in the 15th Lok Sabha (2009-14), only 25 per cent were so referred in the 16th Lok Sabha (2014-19).
- In 2019, 17 bills were referred and none in 2020, a statistic that does not bode well to our democracy. The standing committees will refine the policies and add value to the policies, it’s a platform that needs to be engaged more.