THE HINDU – CURRENT NOTE 30 March
Supreme Court bans sale of BS-III vehicles from April 1
‘Public health more important than auto industry’s interests’.
•The health of the citizen is more important than the commercial interests of the automobile industry, the Supreme Court observed on Wednesday and ordered a freeze on the registration and sale of BS-III fuel compliant vehicles by “any manufacturer or dealer” on and from April 1, when the next level and environmentally friendly BS-IV fuel emission standards are scheduled to kick in.
•“On and from April 1, 2017, such vehicles that are not BS-IV compliant shall not be sold in India by any manufacturer or dealer, that is to say that such vehicles, whether two-wheeler, three- wheeler, four-wheeler or commercial vehicles will not be sold,” a Bench of Justices Madan B. Lokur and Deepak Gupta ordered.
•The court further prohibited registration of vehicles meeting BS-III standards on and from April 1. “All the vehicle registering authorities under the Motor Vehicles Act, 1988, are prohibited from registering such vehicles on and from April 1, 2017, that do not meet BS-IV emission standards, except on proof that such a vehicle has already been sold on or before March 31, 2017,” the court directed.
•The court said it would give detailed reasons for the ban in due course.
‘Answer is obvious’
•“The seminal issue is whether the sale and registration and therefore, the commercial interests of manufacturers and dealers of such vehicles that do not meet the Bharat Stage-IV emission standards as on April 1, 2017, takes primacy over the health hazard due to increased air pollution of millions of our countrymen and women. The answer is quite obvious,” it observed.
•Vehicle manufacturers argued that they were entitled to make BS-III vehicles till March 31. So, the sale and registration of these vehicles should not be prohibited after April 1 with the introduction of BS-IV norms. They should be given a reasonable time to dispose of their stock.
•The Society of Indian Automobile Manufacturers (SIAM) had submitted data on the manufacturing and sale of BS-III vehicles on a monthly basis from January 2016 and told the court that the companies were holding stock of 8.24 lakh vehicles.
•The Centre too had favoured the prospect of selling the existent stock of BS-III vehicles.
•Solicitor General Ranjit Kumar had submitted that it was done twice before when fuel emission norms were upgraded to BS-II and BS-III, respectively. However, the court agreed with the arguments of its amicus curiae, who said that allowing their sale after April 1 would be a cause for “potential health hazard” for millions of people.
New fuel ‘cleaner’
•The court had pointed out that the new fuel was “cleaner” and the oil refineries had spent about ₹30,000 crore since 2010 to produce it.
•The amicus argued that though the number of the existing stock was 8.24 lakh – miniscule compared to over 19 crore BS-III vehicles already plying on the roads – the “health of the people is far, far more important than the commercial interests of the manufacturers or the loss that they are likely to suffer in respect of the so-called small number of such vehicles.”
Poser to manufacturers
•The court asked why manufacturers decided to sit back and not take pro-active steps despite knowing way back in 2010 that BS-IV norms would kick in by April 2017.
•So, it was entirely at their own cost and peril that some manufacturers refused to switch over to BS-IV despite having the technology to do so.
•“Keeping the larger public interest in mind and the potential health hazard to millions of our country men and women due to increased air pollution, there is no justification for any of the manufacturers not shifting to the manufacture of BS-IV compliant vehicles well before April 1, 2017,” the court observed.
Lok Sabha passes GST Bills after marathon debate
Historic step towards a new indirect tax regime.
•In a historic step towards implementing a new, consolidated indirect tax regime from the proposed date of July 1, the Lok Sabha on Wednesday passed four Bills, relating to the implementation of the Goods and Services Tax (GST), following a marathon nine-hour debate.
•“Congratulations to all the countrymen over passage of the GST Bill. New Year, New Law, New Bharat,” Prime Minister Narendra Modi said in a tweet in Hindi soon after the Bills were passed.
Assemblies to act
•The Lower House passed the Central GST Bill, the Integrated GST Bill, the GST Compensation Bill, and the Union Territory GST Bills. The fifth legislation, the State GST Bill, will need to be passed by the Assemblies of each of the States and the Union Territories with legislature.
•The passage of the Bills followed a day-long debate, in which Opposition leaders raised several objections, such as the disempowerment of Parliament in setting tax rates, the reduction in the fiscal autonomy of the States, the need for several tax rates when the principle is to be of ‘one nation, one tax,’ and the levy of additional cess.
•“The States and the Centre have pooled their sovereignty in the Council,” Union Finance Minister Arun Jaitley said in reply to the objections.
•“The recommendation of the rates will come from the Council. But the Council has two-thirds voting by the States and one-third by the Centre. The GST Council has been given the power to only make a recommendation regarding the model law.
•“The Constitutional amendment gave that power in Article 279A. The plenary power to frame legislation can only be with Parliament or the state legislative assemblies as the case may be,” Mr. Jaitley said.
•However, the Finance Minister added, the states and the Centre mist be guided by the federal nature of the agreement between the Centre and the states.
•“The consequences of not acting on the GST Council’s recommendations is if everybody decided to set a different rate, then the implementation of GST become practically very difficult if not impossible,” Mr Jaitley said.
•Regarding the need for multiple rates, the Finance Minister explained that if there was only a single rate, then the GST regime would be a highly regressive one as luxury goods would then be taxed at the same rate as necessities.
•“If somebody uses a BMW car, then that cannot be taxed at the same rate as Hawaii chappals or baby food,” Mr Jaitley said. “A single rate is not possible. The easiest formula for this was that the GST rate for a good or service will be the closest slab to the current rate of tax.”
•Earlier in the day, opposition leader Veerappa Moily raised the objection that the GST Bills were being passed as money bills and hence were eliminating the Rajya Sabha from the decision making process.
SC directs Centre to prepare media guidelines for police briefings
‘Protect rights of accused and victims’
•The Supreme Court on Wednesday directed the Centre to prepare fresh guidelines for the police to brief the media, keeping in mind the protection of rights of both the accused and the victims of crime.
•A Bench headed by Chief Justice of India J.S. Khehar gave six weeks to the Centre to prepare the memorandum of the guidelines by examining the various suggestions submitted in the court.
‘Sensitive rights’
•“We, thereby, direct the Centre to prepare a fresh memorandum of police guidelines on media by taking into consideration the rights of the accused so that their rights are not prejudiced during trial and also the sensitive rights of victims,” the Bench ordered.
•The court was of the view that the last such office memorandum by the Centre was issued on April 1, 2010 and since then much deliberation had taken place. The subject had been examined from various angles, particularly keeping in mind the protection of rights of the accused as well as the protection of the rights of the sufferer.
•The issue of police briefing to the media has been dealt with by the Supreme Court and it has passed several directions on a petition filed by the NGO People’s Union for Civil Liberties (PUCL). The court on September 23, 2014 had passed a slew of directions for framing guidelines in encounter cases after it was alleged by the PUCL that 99 encounters took place in Mumbai, resulting in the death of about 135 persons, between 1995 and 1997.
How BS-IV engines cut emissions drastically
BS-III vehicles with mechanical fuel pumps use fuel less aptly
•Passenger vehicles compliant with Bharat Stage-III emission norms vary widely from their Bharat Stage-IV compliant engines, depending on the size of the car and whether they are petrol or diesel versions. On the outside, the differences are indistinguishable. However they differ in the electronics, sensor system, the engine’s ability to process low-sulphur fuel and their “after-exhaust” system that determines emissions.
•The Hindu spoke to experts from multiple car companies, who said that most passenger cars today were designed to comply with BS-IV emission standards. However, many heavy commercial vehicles, if they had BS-III built engines, employed a mechanical fuel pump and used fuel less efficiently. This in turn influenced subsequent emissions of nitrous oxide, carbon monoxide and particulate matter.
Sulphur content
•BS-IV engines also require that the sulphur content of the fuel they use be less than 50 part per million (ppm) whereas BS-III ones can run on 350 ppm fuel. “You cannot retrofit these engines as high sulphur can clog the injectors,” said an expert from a prominent car manufacturer on condition of anonymity. “The passenger cars are not a problem, it’s the heavy vehicles and two-wheelers,” he said.
•The Centre for Science and Environment said that the transition can lead to substantial reductions in particulate matter emissions. For instance, from new trucks, the emissions can dip by 80% and from cars by half.
•Dipankar Saha, who heads the Air Quality Division, Central Pollution Control Board, said that a major benefit in the city’s air was unlikely. “There may be more efficient cars around but the growth in cars continues to be high and that will not improve the air quality,” he said.
The modern way
The government should use the new mental health law to strengthen primary care
•The passage of the Mental Healthcare Bill in the Lok Sabha, putting it on course to become law and repealing the Mental Health Act of 1987, will potentially help India catch up with the advances made in the field by other countries. India urgently needs to make a transition from old-fashioned approaches to providing care for those suffering from mental illnesses, something that China, for example, has achieved through state-led policy reform. Even the sketchy studies on the nature of care available to Indians indicate that in terms of population coverage the new law faces a big challenge. The country’s grossly inadequate base of professional resources is evident from its ratio of 0.3 psychiatrists for 100,000 people (with marginally higher numbers taking independent private practitioners into account), compared to China’s 1.7. Then there are massive deficiencies in the availability of trained clinical psychologists and psychiatric social workers. Evidently, the National Mental Health Programme has not been sufficiently funded within the health budget; neither has capability been built in most States to absorb the meagre allocation. Delayed though it is, the new legislation can bring about change with its positive features. The important provisions relate to the recognition of the right to medical treatment, decriminalisation of attempted suicide, explicit acceptance of agency of people with mental illness and their freedom to choose treatments, prohibition of discrimination and regulation of establishments working in the field.
•Raising effective primary and district-level coverage of mental health services for the general population, without requiring people to travel long distances to see a specialist and get medicines, should be a priority. Since the base of psychiatrists is low in relation to the need, the use of trained general practitioners as the first line of contact assumes importance. Some studies show many of them are not confident enough with their training to detect, diagnose and manage mental illnesses. With a concerted effort, primary care physicians can be trained to help people with mild and severe problems, ranging from anxiety disorders to depression, psychoses and conditions arising from alcohol and substance abuse. Being able to get professional counselling will reduce the complications arising from extreme stress, often the trigger for suicide. Extending health insurance cover is also a step forward, since out-of-pocket expenditure has risen along with the expansion of the private sector in this sphere, just as for other ailments. The provision in the new legislation prohibiting seclusion of patients, something that is frequently resorted to in asylums, and the general use of electro-convulsive therapy must be welcomed. Modern treatment approaches rely more on family and community support. The new Central and State regulatory authorities should speedily weed out shady non-governmental rehabilitation organisations in this field.
The dragon at the NSG high table
India’s bid for NSG membership will continue to see hurdles, with China being vocal in its opposition
•At the Carnegie Endowment International Nuclear Policy Conference in 2015, a polling question asked to the hall full of global diplomats and foreign policy experts was: “Is there a likelihood of more than 50% that by March 24, 2017, India will become a participant in the Nuclear Suppliers Group?”
•Only one panellist and 37% of the audience responded positively. Three panellists and 67% of the audience were naysayers, and they were proved right.
•A similar question asked to some 800 delegates recently at a subsequent chapter of the Carnegie conference in Washington DC gave way to a fragmented response. An average of 25% were hopeful of a 50% chance of New Delhi making it through by 2019. As India continues to push for a seat at the nuclear high table, it seems an uphill task, and the view from the Hill isn’t rosy either.
•The former UN High Representative for Disarmament Affairs, Angela Kane, believes that India stands a good 55% chance to make it but is opposed to India’s push. “I do not believe India should be a member of NSG because of criterion. In a meeting that I attended, the Chinese representative, a high-ranking ambassador, was very vocal, opposing the U.S. position on this.”
•Speculation is rife if over the next two years, either India or India and Pakistan or none could make it through the NSG.
•In the NSG plenary session in Seoul in June 2016, New Delhi blamed Beijing for the “Consensus Minus One” hurdle to its bid even though close to a dozen countries including Mexico, Brazil, Norway, Ireland expressed serious reservations over India not being signatory to the Non Proliferation Treaty.
•It is now learnt from U.S. diplomatic sources that calls were generated from the White House as well as the State Department to some naysayers including New Zealand and Italy. Italy had wanted a way out on the diplomatic tangle around its two marines charged with the murder of Indian fishermen. They had sought trial in a third country as a possible option. New Delhi dismissed the proposals and Italy stuck to its opposition in the closed-door sessions.
•Since the Seoul summit, a committee under Rafael Mariano Grossi, Ambassador of the Argentine Republic and Permanent Representative to International Organizations in Vienna and Chair of the Nuclear Suppliers Group, was tasked with backdoor consultations for expansion of the elite club. According to him, “several formulations are on the table to deal with the central issue of relationship with the NPT”.
•“The jury is still out and we need to wait a little bit,” he says.
The India-China-U.S. tango
•Indian and Chinese interlocutors too have held rounds of discussions to resolve mutual issues. But with a public opposition unlike a quiet one in 2008, Beijing looks less relenting.
•Laura Kennedy, former U.S. Ambassador and Board Member at the World Affairs Council, says, “Even if India were to allow Pakistan to come in, some have suggested China might still be averse because they see this as elevating India to almost ranks of the P5 or Security Council membership.”
•A view from Capitol Hill is that China is positioned as a focal point of resistance for those who were persuaded or coerced earlier in 2008 by the Bush regime but remain resentful of a country-specific waiver for India. But if China were to shed its resistance, it would be easier to achieve consensus.
•Meanwhile, India would have to find ways to woo the dragon. With the Trump administration busy with domestic agendas ranging from health care to the economy and also North Korea, Iran and the Islamic State being the focus areas overseas, the U.S.-China dialogue will hardly hinge on Beijing’s position on the NSG tangle for now. The U.S. continues to advocate support for India’s membership. Dr. Christopher Ford, U.S. President Donald Trump’s adviser at the National Security Council, says that while the NSG stand-off requires a change in tactics or circumstances for resolution, there have been no indications of change in the U.S. administration’s approach to India’s membership so far.
•With the NSG plenary set to meet again in Bjern in June this year, despite technical preparations, a resolution will be difficult to reach without political will. A top diplomat privy to the negotiations stressed that a green light to India’s entry is a political decision that China will have to make.
•China may not shy away from advocating keeping out all-weather friend Pakistan in order to keep India out. Meanwhile, American diplomats advise patience as India already has the functionality it needed with the 2008 waiver for nuclear commerce. A seat at the high table will be required to influence decisions and nuclear export in future. So, any proposal to woo baiters would have to be window-dressed to look considerate of future bids from other non-NPT players including Israel, instead of appearing to be tailor-made only for India.
•For now, NSG will be an uphill task with China unwilling to play nice, and contentious issues of the H-1B visa, intellectual property rights and trade dominating the India-U.S. agenda when Prime Minister Narendra Modi goes to Capitol Hill.
SEBI eyes one registration for equity, commodities brokers
Regulator set to approve in April a plan for brokerages present in both segments
•The Securities and Exchange Board of India (SEBI) will soon approve a single registration mechanism for brokerages that are present in both commodity and equity segments.
•The capital markets regulator is expected to give its approval to the plan at its board meet scheduled next month.
•The move, once implemented, will benefit a large number of market intermediaries who currently have to block separate funds in the form of net worth and base minimum capital for their stock and commodity broking entities. With a common registration in place, separate allocation of funds can be done away with.
Benefit for investors
•For investors, it could mean a single registration form and one-time KYC — Know Your Client — process to allow them to buy shares as well as trade in commodity derivatives thereby making it easier for individuals and institutions looking to invest in both.
•“The memorandum has been submitted to the board for a common single registration for commodity and equity brokers. It will be on the agenda when the board meets next month,” said a person familiar with the matter.
•Incidentally, a single registration and complete fungibility between the two segments was always part of the long-term plan of SEBI ever since the erstwhile Forward Markets Commission (FMC) was merged with the capital market regulator in September 2015.
•Market participants, meanwhile, say that a single intermediary for commodity and equity trading will benefit investors more than the brokerage itself. Most of the large well-known brokerages have a presence in both the segments.
•“Apart from the benefits of a single net worth and capital requirement, it will lower the operational cost for an intermediary but the investor will be the real winner,” said Chintan Modi, Executive Vice President, India Infoline.
•“A single KYC will allow investors to trade in both commodity and equity. The collaterals and margins that an investor keeps with the broker can also be used against his position in either segments. Currently, clients have to keep separate balance and ledger for commodity and equity since the entities through whom they trade are separate. That practice can also be done away with,” Mr. Modi said.
Networth requirement
•A clearing member in the debt and equity derivatives segments of BSE requires a net worth of Rs. 3 crore while those in currency derivatives segment require Rs. 10 crore. Members in the currency and equity derivatives further require a deposit of Rs. 50 lakh.
•In the commodity markets, the base minimum capital is Rs. 50 lakh for members of Multi Commodity Exchange of India (MCX) with algo trading and Rs. 10 lakh for those without it. The initial security deposit is Rs. 1 crore for professional clearing member and institutional trading cum clearing member. The admission fee for the various categories of members ranges between Rs. 7.5 lakh to Rs. 25 lakh.
•The net worth requirement for commodity brokers is between Rs. 25 lakh and Rs. 5 crore depending on the type of membership. The reform will be just one more in the long list of reviews done by the regulator over the past year and a half.
•Since the SEBI-FMC merger, the regulator has reviewed and amended many regulations related to commodity trading, exchanges and intermediaries to bring it on par with the norms for the equity segment. For instance, trading and surveillance norms for commodity exchanges were tightened after the bourses came under the regulatory purview of SEBI.
‘Close loss-making branches’
Centre asks 10 PSU banks to also pare stakes in JVs, units
•The Centre has asked 10 public sector banks to consider selling stakes in joint ventures and subsidiaries and also to close down loss-making domestic and international branches to improve their financial health.
•In a communication to the 10 banks including IDBI Bank, Indian Overseas Bank, Central Bank of India and United Bank, the Finance Ministry has suggested initiatives that, when implemented, could help these banks put their house in order.
•While several public sector banks have joint ventures in areas like insurance and asset management, bankers said stake sales wouldn’t necessarily fetch reasonable valuations as some of these ventures were not faring well.
•Earlier this month, the Finance Ministry, while allocating capital to these 10 banks, had asked the lenders to submit a turnaround plan and said, “The release of capital is based on the premise that banks would significantly improve their performance with prudent financial management and going forward that they will be able to meet capital needs through their own earnings.”
•Active non-performing asset (NPA) management and strengthening of credit, arranging capital from the market, disposal of non-core assets, and divestment of subsidiary stake were among some of the initiatives that were highlighted.
•As of December 2016, commercial banks had 1,36,412 domestic branches of which more than 85,000 branches were located in semi-urban and rural areas. The growth rates of deposits and advances in rural and semi-urban areas have far exceed that of urban and metro areas.
•Rationalisation and reduction of administrative, operating expenses, including temporary restructuring of employees and benefits has also been recommended. The ministry said that these steps could be reversed once a bank managed to ensure a successful turnaround.
