The Hindu Editorial Analysis | 4th Oct ’19 | PDF Download

Delhi’s tap water fails BIS test, deemed unsafe

• Centre announces plans to conduct tests, release rankings early next month
• Union Minister Ram Vilas Paswan on Thursday made a clarion call for beginning a ‘Swachh Pani Abhiyan’ or clean water mission in line with Prime Minister Narendra Modi’s ‘Swachh Bharat Abhiyan’. Paswan asserted that it is not a matter of consumer rights but of people’s lives and therefore must be given priority, read a statement. He stated that it is “Prime Minister Modi’s vision to provide piped drinking water to all households by 2024 and for furthering this vision and mission, he has started this Abhiyan which has begun from Delhi and will be taken across the nation, the statement added
• BIS stated in the meeting that it had collected samples from 11 places from Delhi region and tested them on 42 parameters such as PH levels, Odour, Metal content, Total Dissolved Solids (TDS) and all samples failed to meet the BIS standard on multiple parameters.
• Preliminary lab testing found that all the samples failed to meet the 42 parameters (including odour, PH levels, total dissolved solids and metal content) that make up the BIS standard. This shows that Delhi’s tap water is not safe to drink, said Mr. Paswan, adding that the final lab results would be made public soon. Global standards
• “The latest BIS standard was made in 2012, but it is not on par with international standards. I have asked BIS officials to see if we can match global quality,” said Mr. Paswan.
• He was speaking after a meeting with representatives from BIS, the Staterun Delhi Jal Board, which supplies and distributes most of the city’s water, the Centrally-controlled New Delhi Municipal Council, which distributes water in central Delhi, the Union Jal Shakti Ministry and the Food Safety and Standards Authority of India (FSSAI).

 Drone Innovators Network Summit-2019 is being held in New Delhi.

• Organized by the World Economic Forum under the aegis of the Ministry of Civil Aviation.

Drone Innovators Network (DIN)

• Started by the World Economic Forum to hasten and contribute to healthy drone policies in need of legislation.
• Established to help overcome common challenges regulators are facing in enabling drones and unmanned aviation, such as how to enable beyond visual line of sight (BVLOS) flights at scale, autonomous operations and flights over densely populated areas.
• Composition: Government aviation agencies, academics, and established drone entities.
• Inaugural Drone Innovators Network summit was held in Zurich in 2018.

 Drone Regulation in India

• India’s Directorate General of Civil Aviation issued Civil Aviation Requirements (CAR), effective 1 December, 2018 for drones.
• As per the regulations, manufacturers of drone are required to comply with the requirements of No Permission, No Take-off (NPNT) on the Remotely Piloted Aircraft System (RPAS).
• These regulations (CAR Version 1.0) only permit operations of drones during daytime Visual Line of Sight.
• DigiSky is a portal for registration and flying of civil drones in India. Foreign Direct Investment (FDI 1.0) has been welcome in India irrespective of whether or not its equity structure includes Indian public shareholding. However, the world has undergone a structural change with the emergence of Internet Multinational Companies (MNCs) such as Microsoft, Google, Facebook and Twitter that are based on ‘winnertakes-all’ platform business models. These firms are characterized essentially by inequitable dynamics, since they distribute most gains to themselves vis-à-vis their host countries. This situation demands a policy response.
• Perhaps this is one of the reasons why China banned Internet MNCs. This led to China creating nine out of the 20 global Internet leaders. China strategically deploys a quid pro quo policy. MNC firms are mandated to transfer technology, share patents and enter into 50:50 joint ventures with Chinese partners in return for market access. Given our political system, India will obviously need to follow a new FDI 2.0 policy to achieve more desirable outcomes.
• Rather than accepting the ‘winner MNC takes it all’ as fait accompli, FDI 2.0 should harmonize interests of all stakeholders including Indian consumers, the government and investors. FDI 2.0 could deploy ‘List or Trade in India’ as a strategic policy tool to enable Indian citizens become shareholders in MNCs such as Google, Facebook, Samsung, Huawei and others, thus capturing the ‘upside’ they create for their platforms and companies. This is equitable to all, since Indian consumers contribute to the market value of MNCs.
• In 1978, the Indian government adopted a policy that required equity dilution by 100% foreign-owned companies. This led to the ‘Listing of MNCs’, and many of which then provided handsome returns to both MNCs and Indian shareholders. It is estimated now that listing Indian subsidiaries of MNCs alone could add as much as ₹50 lakh crore to equity market capitalization. This could make capital markets deeper and valuations more reasonable.
• ‘List or Trade MNCs in India’ could become a potent extension to ‘Make in India’ to disseminate prosperity. In contrast to 1978, the proposals we present here are based on incentives, more capital market-friendly and in line with the practices followed by Mexico, China, Bangladesh and other countries.

A road map for India

• India could implement the following set of proposals: Proposal 1 (List in India): Majority (more than 51%) foreign-owned Indian-listed MNCs could be eligible to domestic company tax rate whereas unlisted MNC subsidiaries could be subjected to a higher tax rate. Many countries such as Bangladesh, Vietnam and Thailand have used tax incentives to attract listing by MNCs.
• Mexico is most successful in attracting cross listings. For example, AB InBev, Coca-Cola, Walmart and Citigroup are listed in Mexico. To ensure the success of this proposal, the government will need to reconsider the present policy of allowing 100% MNC-owned subsidiaries to compete with their listed Indian counterparts that erodes the value accruing to Indian shareholders.
• Proposal 1, by itself, will not achieve the objective of increasing Indian participation in the fair value of Internet MNCs. This is because of complex issues in revenue booking that result in low profits in Indian subsidiaries. Hence, there is a need for additional initiative by way of proposal 2 to enable Indian investor participation in the ownership of parent MNCs’ shares.
• Proposal 2 (‘Trade in India’ i.e. U.S. dollar-denominated parent MNC Shares to be ‘Admitted for Trading’ on Indian bourses]: In this proposal, Indian investors could buy shares of parent MNCs (where global profits and value get consolidated). This can be permitted within the $250,000 Liberalized Remittance Scheme (LRS) limit. Indian bourses could admit only S&P 500 stocks. The Mexican Stock Exchange allows trading of international shares listed in other stock exchanges. India could replicate such models.

What is the Liberalised Remittance Scheme (LRS) of USD 2,50,000 ?

• Ans. Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both. Further, resident individuals can avail of foreign exchange facility for the purposes mentioned in Para 1 of Schedule III of FEM (CAT) Amendment Rules 2015, dated May 26, 2015, within the limit of USD 2,50,000 only.
• The Scheme was introduced on February 4, 2004, with a limit of USD 25,000. The LRS limit has been revised in stages consistent with prevailing macro and micro economic conditions. In case of remitter being a minor, the LRS declaration form must be countersigned by the minor’s natural guardian. The Scheme is not available to corporates, partnership firms, HUF, Trusts etc

 Mirroring Mexico

• For successful implementation of Proposal 2, the Indian government may need to facilitate following measures:

1. Permit Indian bourses to implement international trading system on the lines of Mexico.
2. Parent MNCs in S&P 500 with business interests in India could be mandated to facilitate trading of their shares in India. MNCs would readily agree as it does not envisage listing in India.
3. For taxation purposes, no distinction should be made between transactions in comparable domestic and foreign securities.
4. LRS implementation for buying foreign stocks in GIFT City/NSE/BSE could be simplified and work as single click functionality.
5. Educate Indian investors about the value of diversification of their portfolio in international stocks for achieving better risk adjusted returns.
6. The government could facilitate access to ultra-low cost (<=0.04%) S&P 500 Index Funds such as Admiral Shares (VFIAX) and ETFs using Indian e-KYC. Indian MFs charge fees from 0.54% to 2%. They are at least 13 times more expensive.
7. For Proposal 2, one important issue that needs to be addressed pertains to U.S. Estate taxes. For Indian citizens, U.S. estate taxes @40% apply above portfolio value of $60,000.

• To mitigate this burden, the National Securities Depository Limited (NSDL) could design a sovereign trust for holding parent MNC stocks. The NSDL could then issue BharatShares to retail investors. Nominees of the government of India would get voting rights in parent MNCs. In addition, the government could make available a ‘Fully Disclosed Model’ for holding foreign stocks in line with our NSDL/Central Depository Services Ltd (CDSL) system. The prevalent ‘Omnibus model’ carries the risk of U.S broker default because investors’ shares are held in the U.S. broker’s name. For this reason, it could also lead to higher tax liabilities in India.
• Summing up, increasing Indian equity ownership of MNCs would offer diversification benefits and make Indians more prosperous.
• Wealth distribution through mutual funds would create a virtuous cycle of innovative ideas, entrepreneurship, employment, consumption, higher taxes, social and physical infrastructure for the benefit of Indian society.
• MNCs would earn the goodwill of Indian consumers while expanding their investor base. In other words, this is a win-win for all stakeholders.
• Recently, the Supreme Court in D.A.V. College Trust and Management Society Vs. Director of Public Instructions held that nongovernmental organizations which were substantially financed by the appropriate government fall within the ambit of ‘public authority’ under Section 2(h) of the Right to Information Act, 2005.
• Under this section of the RTI Act, ‘public authority’ means “any authority or body or institution of self-government established or constituted by or under the Constitution and included… any nongovernment organization substantially financed directly or indirectly by funds provided by the appropriate government.”

Wide ramifications

• Owing to the reasoning given by the court, the judgment can potentially have wide ramifications in the discourse pertaining to the ambit of the RTI regime on national political parties.
• In D.A.V., the top court held that ‘substantial’ means a large portion which can be both, direct or indirect. It need not be a major portion or more than 50% as no straitjacket formula can be resorted to in this regard. For instance, if land in a city is given free of cost or at a heavily subsidized rate to hospitals, educational institutions or other bodies, it can qualify as substantial financing. The court resorted to ‘purposive’ interpretation of the provisions by underscoring the need to focus on the larger objective of percolation of benefits of the statute to the masses.
• In 2010, the Association for Democratic Reforms (ADR) filed an application under the RTI to all national parties, seeking information about the “10 maximum voluntary contributions” received by them in the past five years. None of the national political parties volunteered to disclose the information. Consequently, ADR and RTI activist Subhash Agarwal filed a petition with the Central Information Commission (CIC).
• In 2013, a full bench of the CIC delivered a historic judgment by declaring that all national parties came under ‘public authorities’ and were within the purview of the RTI Act. Accordingly, they were directed to designate central public information officers (CPIOs) and the appellate authorities at their headquarters within six weeks.
• In 2013, The Right to Information (Amendment) Bill was introduced in Parliament to keep political parties explicitly outside the purview of RTI that lapsed after the dissolution of the 15th Lok Sabha. Notwithstanding the binding value of the CIC’s order under Section 19(7) of the Act, none of the six political parties complied with it. Quite interestingly, all the parties were absent from the hearing when the commission issued show-cause notices for non-compliance at the hearing.
• Finally, in 2019, a PIL was filed in the Supreme Court seeking a declaration of political parties as ‘public authority’ and the matter is subjudice. Irrespective of the ideological differences among these political parties on almost all the issues under the sun, non-compliance of the RTI mandate has been a great unifier.
• Drawing an analogy between the Supreme Court’s judgment on D.A.V. and the political parties’ issue which is subjudice, it can be argued that national parties are ‘substantially’ financed by the Central government.
• The various concessions, such as allocation of land, accommodation, bungalows in the national and State capitals, tax exemption against income under Section 13A of the Income Tax Act, free air time on television and radio, etc. can easily satisfy the prerequisite of Section 2(h) of the RTI. If an entity gets substantial finance from the government, there is no reason why any citizen cannot ask for information to find out whether his/her money which has been given to the entity is being used for the requisite purpose or not.
• On accountability
• Applying the purposive rule of interpretation which is discernible from the preamble of the RTI Act, Under the anti-defection law, political parties can recommend disqualification of the ultimate aim is the creation of an ‘informed’ citizenry, containment of corruption and holding of government and its instrumentalities accountable to the governed.Members of the House in certain eventualities under the Tenth Schedule of the Constitution.
• The Law Commission opines that political parties are the lifeblood of our entire constitutional system. Political parties act as a conduit through which interests and issues of the people get represented in Parliament. Since elections are predominantly contested on party lines in our parliamentary democratic polity, the agenda of the potential government is set by them.
• As noted by Dr. B.R. Ambedkar in his famous Constituent Assembly speech, “The working of a Constitution does not depend wholly upon the nature of the Constitution. The Constitution can provide only the organs of State…The factors on which the working of those organs of the State depend are the people and the political parties they will set up as their instruments to carry out their wishes and their politics.” It is hoped that the top court will further the positive advances made in this direction. Since sunlight acts as the best disinfectant and our political parties tirelessly claim themselves to be apostles of honesty and integrity, it is expected that they would walk the talk.

Killer fungus found in Australia

• One of the world’s deadliest fungi has been discovered in Australia’s far north for the first time — thousands of kilometres from its native habitat in the mountains of Japan and Korea.
• The Poison Fire Coral fungus was discovered in a suburb of Cairns by a local photographer and subsequently identified by scientists, James Cook University announced on Thursday. Several people have died in Japan and Korea after mistaking the bright red fungi for edible mushrooms.

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