📰 Oil Ministry seeks review of windfall tax, wants certain fields exempted
Ministry writes to Finance Ministry noting contracts have built-in mechanism to capture windfall gains; says additional tax may result in firms paying more than the gain itself
•The Oil Ministry has sought a review of the two-and-a-half-month old windfall profit tax on domestically-produced crude oil saying it goes against the principle of fiscal stability provided in contracts for finding and producing oil.
•The Ministry in the August 12 letter, reviewed by PTI, sought exemption for fields or blocks — which were bid out to firms under the Production Sharing Contract (PSC) and the Revenue Sharing Contract (RSC) — from the new levy.
•It stated that since the 1990s, companies had been awarded blocks or areas for exploration and production of oil and natural gas under different contractual regimes, wherein a royalty and cess is levied and the government gets a pre-determined percentage of profits.
•The Ministry, according to the letter, was of the opinion that the contracts have an in-built mechanism to factor in high prices as incremental gains get transferred in the form of higher profit share for the government. E-mails sent to the Oil Ministry as well as the Finance Ministry for comments remained unanswered.
‘Super-normal profit’
•India first imposed the windfall profit tax on July 1, joining a growing number of nations that tax super-normal profits of energy companies. While duties were slapped on the export of petrol, diesel and jet fuel (ATF), a Special Additional Excise Duty (SAED) was levied on locally-produced crude oil.
•The SAED on domestic crude oil was initially ₹23,250 per tonne ($40 per barrel) and in fortnightly revisions brought down to ₹10,500 per tonne.
•The government levies a 10-20% royalty on the price of oil and gas as also an oil cess of 20% on production from areas given to state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd. (OIL) on a nomination basis.
RSC regime
•These levies apart, fields were awarded under the PSC regime where the government gets about 50-60% of the profit made after deducting costs. The RSC regime specifically has a clause to capture windfall gains for the government.
•According to Oil Ministry calculations, the new levy in the case of PSC and RSC results in a situation where the operator ends up paying much more than the windfall gain itself.
•Besides, the contracts specifically provide for fiscal stability for the contracting parties, it said, adding any change of law or rule or regulation that adversely changes expected economic benefits to parties can lead to seeking revision and adjustments to the terms of the contracts.
•It added that it had got representations from major crude oil producers, including ONGC and OIL and Vedanta Ltd., for a review of the new levy as it was adversely impacting their investment plans. Concerns raised by these firms include economic unviability and contract clause violation, it added.
•A two-judge Bench of the Supreme Court of India is presently hearing arguments on the correctness of a Karnataka High Court judgment that upheld the ban on the use of the hijab by students in Karnataka. Over the last few days, counsel for the petitioners has addressed a bundle of different issues, ranging from the rights of students to freedom of expression, conscience, and religion to the disparate impact that the ban has had on the right to education of Muslim women.
•In theory, the issues emanating out of these submissions ought to be capable of easy resolution, through an application of ordinary doctrines of constitutional law. But, as transcripts from the hearings have shown us, every time an argument over religious freedom in India is made, it invariably mires itself in the court-crafted doctrine of essential practice. This requires judges to engage not merely in legal analysis but also in theological study — something an education in the law scarcely equips one to perform.
Possible actions by the Bench
•The Karnataka High Court made three primary findings in its judgment. First, it held that the use of a hijab is not essential to the practice of Islam. Thus, the right to freedom of religion was not violated. Second, it ruled that there exists no substantive right to freedom of expression or privacy inside a classroom and, therefore, these rights were simply not at stake here. Third, it held that the ban did not stem directly out of the government’s order, which only called for a uniform dress code to be prescribed by the State or school management committees, and, hence, the law did not discriminate, either directly or indirectly, against Muslim students.
•To decide on the correctness of this verdict, the Supreme Court need not answer all the questions posed before it. A reversal of any of the three findings made by the High Court ought to result in a nullification of the ban. If the petitioners can establish that the law’s seemingly neutral language does not negate the ringfencing of most forms of expression against the singling out of the hijab, and for that reason if they can show that Muslim women have been discriminated against, the Bench must reverse the High Court’s judgment. Similarly, if the petitioners can establish that there is nothing to suggest that there exists no right to freedom of expression within the confines of an educational institution, then the onus shifts to the State to show that the ban is proportionate and legitimate. That analysis was never conducted by the High Court because in its belief, classrooms are “qualified public spaces” where individual rights must give way to the interests of “general discipline and decorum”.
•The Supreme Court should be able to decide these questions based on settled canons of constitutional law. And if the Bench were to find that the Karnataka High Court erred in deciding either of these issues against the petitioners — and there is substantial merit here to the petitioners’ arguments — perhaps it might be keen on ignoring altogether the question of whether the ban impinges on the right to freedom of religion. For that analysis, on the law as it stands today, requires it to engage in a study of scriptures and conventions, and to then determine how indispensable the practice is to faith.
As a kind of inquiry
•The essential practices doctrine owes its existence to a speech made by B.R. Ambedkar in the Constituent Assembly. “The religious conceptions in this country are so vast that they cover every aspect of life, from birth to death,” he said. “…I do not think it is possible to accept a position of that sort… we ought to strive hereafter to limit the definition of religion in such a manner that we shall not extend beyond beliefs and such rituals as may be connected with ceremonials which are essentially religious. It is not necessary that… laws relating to tenancy or laws relating to succession, should be governed by religion.”
•Ambedkar was striving to distinguish the religious from the secular, by arguing that the state should be allowed to intervene in matters that are connected to religion but are not intrinsically religious.
•Indeed, it was in this vein that the Supreme Court, in the case concerning the Shirur Mutt (1954), held that to determine what constituted an ‘essential’ aspect of religion, the Court ought to look towards the religion concerned, and to what its adherents believed was demanded by their faith. But since then, the Court has, with a view to determining the kinds of circumstances in which the state could legitimately intervene, transformed this doctrine into an altogether different form of inquiry.
•In a series of cases, the Court has assumed something akin to an ecclesiastical power and determined whether a practice which was religious in nature was also “essential” to that religion. The upshot is a conflation of tests through which the Court is now deciding not only when the state could lawfully interfere in the interests of social welfare and reform, but also which practices are deserving of constitutional protection in the first place.
The effects
•The embedding of this test in the Court’s jurisprudence has achieved at least two things, neither of which is particularly desirable. First, it has allowed the Court to narrow the extent of safeguards available to religious customs by directly impinging on the autonomy of groups to decide for themselves what they deem valuable, violating, in the process, their right to ethical independence.
•Second, it has also negated legislation that might otherwise enhance the cause of social justice by holding that such laws cannot under any circumstances encroach on matters integral to the practice of a religion. For example, in 1962, the Court struck down a Bombay law that prohibited excommunications made by the Dai of the Dawoodi Bohra community when it held that the power to excommunicate is an essential facet of faith and that any measure aimed at social welfare cannot reform a religion out of its existence.
•The essential practices test is not without alternatives. In his concurring opinion, in the case concerning the ban on entry of women into the Sabarimala temple, Justice D.Y. Chandrachud proposed one such doctrine: a principle of anti-exclusion. Its application would require the Court to presume that a practice asserted by a religious group is, in fact, essential to the proponents of its faith. But regardless of such grounding, the Constitution will not offer protection to the practice if it excludes people on grounds of caste, gender, or other discriminatory criteria. As Justice Chandrachud put it, “the anti-exclusion principle allows for due-deference to the ability of a religion to determine its own religious tenets and doctrines. At the same time, the anti-exclusion principle postulates that where a religious practice causes the exclusion of individuals in a manner which impairs their dignity or hampers their access to basic goods, the freedom of religion must give way to the over-arching values of a liberal constitution”.
•But until such time as the essential practices doctrine is overruled by a Bench of more than seven judges, the Court is bound to apply its tenets. Perhaps that reassessment will happen when a nine-judge Bench constituted in the review petitions filed against the judgment in the Sabarimala case passes judgment. For now, any Court hearing a matter touching upon a matter of faith has the unenviable task of acting not merely as an expert on law but also as an expert on religion.
📰 Knowing the killer
SC has done well to seek norms to present mitigating factors for death
•Sentencing after conviction is a knotty problem in cases relating to capital offences. Trial judges are called upon to make a decision on whether only a death sentence will meet the ends of justice, or a life term will be enough. As a salutary norm, the Supreme Court has laid down that the death penalty can be imposed only in the “rarest of rare” cases. Subsequent judgments have sought to buttress this principle by holding that the gruesome nature of the offence may not be the sole criterion to decide what brings it under the ‘rarest of rare’ category. The offender, his socio-economic background and his state of mind are also key factors in this regard. In practice, the sentencing part of the trial takes place after the court records a conviction. It is often done on the same day as the verdict, with only some limited arguments being heard on ‘mitigating circumstances’ from the convict’s side and on the ‘aggravating circumstances’ from the prosecution. The latest order of a three-judge Bench, referring to a Constitution Bench the issue of granting a meaningful opportunity to convicts on the question of sentence, is a big stride in humanising the sentencing process.
•Same-day sentencing has been upheld by several judgments, with the Supreme Court often saying where a meaningful opportunity has been given to the convict to present mitigating factors, the mere fact that death was awarded on the same day would not vitiate the sentence. Some High Courts have given a chance to convicts to present mitigating factors so that the inadequacy of the sentencing process in the trial court does not matter. Present thinking, however, is veering towards the view that courts must elicit reports from the jail authorities, probation officers and even trained psychologists to assess the mitigating factors in favour of not imposing the death penalty. In its referral order, the Bench has also raised the question as to the stage at which mitigating factors are to be presented. It has noted that the scales are tilted against the convicts now, as it is only after conviction that they are able to speak about mitigating circumstances. The prosecution, on the other hand, presents its case from the beginning on how heinous the crime was, and how much the accused deserved maximum punishment. The Constitution Bench may come up with new guidelines under which the trial courts themselves can hold a comprehensive investigation into factors related to the upbringing, education and socio-economic conditions of an offender before deciding the punishment. The legal and moral dilemma of sending someone to the gallows, of course, will subsist only as long as the death penalty remains on the statute book.
📰 Scandinavian social democracy
The Nordic model of social democracy offers lessons to the developing world, including countries like India despite the myriad complexities of diversities
•The rise of the Sweden Democrats (SD), a party with origins in the neo-Nazi movement in the country, to the mainstream of the Swedish polity has much to do with the centring of the discourse over immigration in the country.
•Scandinavian countries have these features in common— reliance on representative and participatory democratic institutions where separation of powers is ensured; a comprehensive social welfare schema with emphasis on publicly provided social services and investment in child care, education and research among others, that are funded by progressive taxation; presence of strong labour market institutions with active labour unions and employer associations which allow for significant collective bargaining etc
•The pole position for left of centre/ social democratic parties in these countries, because of thriving labour and environmentalist movements in civil society, has helped generate a political consensus on the welfarist model resulting in even right-wing/ right of centre parties keeping them more or less intact.
•In elections held in Sweden recently, while the Social Democrats returned as the single largest party according to preliminary results, a fractured mandate left it with only 107 of the 349-seat strong Riksdag (Swedish legislature) and 30.33% of the vote share. This meant that the coalition that the Social Democrats were part of, which included the Centre Party, the Left Party and the Green Party, were left with 173 seats, as opposed to the right-wing coalition led by the Moderate Party, which bagged 176 seats. The Moderate Party itself won only 68 seats, two lower than its previous tally in 2018, but the major gains among the Right was made by the far-right Sweden Democrats who won 73 seats and 20.54% of the votes, according to preliminary tallies.
•Incumbent Prime Minister Magdalena Andersson of the Social Democrats conceded defeat and resigned, even as Moderate leader Ulf Kristersson is expected to form the government with other right-wing parties offering support.
A threat to the Nordic model
•The rise of the Sweden Democrats (SD), a party with origins in the neo-Nazi movement in the country, to the mainstream of the Swedish polity has much to do with the centring of the discourse over immigration in the country. Several voters have expressed their concerns with rising immigrant violence and control of crime. The SD has taken a strident position against immigrants — Sweden played a major role in allowing refugees fleeing the Syrian, Iraq and Afghanistan wars to seek asylum in the 2010s — by promising to make it extremely difficult for asylum seekers to enter the country. But does the rise of the polarising presence of the SD — which is not expected to be part of the new right-wing government but could lend issue-based support to it — threaten the political and social consensus driven Nordic model as it is called in Sweden and other Scandinavian countries? To answer that question, we need to understand what is meant by the Nordic model, or if U.S. Senator Bernie Sanders’ version is accepted, “democratic socialism”.
Socialism and social democracy
•Terming the political-economic system in the Scandinavian countries, despite its strong welfarist basis and emphasis on collective bargaining as “socialist” would be a misnomer. For one, the term “socialism” is associated with the regimes of the erstwhile Communist bloc, which had a heavy preponderance of the state in not just the ownership of the major means of production but also in political life with a one-party system drawing its ideological basis for rule on behalf of the working class.
•Following the collapse of the Soviet Union, new socialist regimes in recent years have sought to distance themselves from the one-party model in the so-called “second world”, instead focusing on retaining the functioning of market economies, while emphasising redistribution of wealth and a greater preponderance for the state in this process. The regimes in Latin America led by ruling parties in Venezuela, Bolivia and recently in Chile, can be termed “democratic socialist” — seeking to achieve socialist goals of redistribution and restructuring of formal democratic and liberal institutions in vastly unequal and elite driven systems.
•In the Scandinavian countries, on the other hand, the systems are more akin to typical “social democracies” — reliance on representative and participatory democratic institutions where separation of powers is ensured; a comprehensive social welfare schema with emphasis on publicly provided social services and investment in child care, education and research among others, that are funded by progressive taxation; presence of strong labour market institutions with active labour unions and employer associations which allow for significant collective bargaining, wage negotiations and coordination besides an active role in governance and policy. All these countries also follow a capitalist model of development, allowing for entrepreneurism and funding of welfare policies through a large degree of wage taxation in relation to corporate taxes.
•The commonalities in the Scandinavian countries — Norway, Sweden, Denmark, Finland and Iceland — on many of these counts are measurable. For example, among countries in the Organisation for Economic Cooperation and Development (OECD) (featuring most high-income countries in the world), Iceland (90.7% of the workforce), Denmark (67%), Sweden (65.2%), Finland (58.8%) and Norway (50.4%) have the highest proportion of the workforce belonging to trade unions (data as of 2019). Education is free in all the Nordic States; health care is free in Denmark and Finland and partially free in Norway, Sweden and Iceland ; workers get several benefits — from unemployment insurance to old age pensions, besides effective child care. Therefore, labour participation rates in these countries are among the highest in the world (even among women). The five Nordic nations rank in the top 10 among OECD countries in government expenditure on health and education if calculated as percentage of GDP.
•The countries have undertaken a series of steps in deregulation of industry and privatisation of some public services since the heydays of the Keynesian era till the 1970s but they retain the emphasis on welfare, taxation and investment compared to the rest of the world and Europe in particular. This has helped these countries achieve significant outcomes — high levels of international trade and participation in globalisation, economic progress, low levels of inequality and high living standards. In the most recent UNDP report, Norway ranked second among countries in the Human DeveIopment Index (0.961), Iceland stands at fourth (0.959) Denmark at sixth (0.948), Sweden at seventh (0.947) and Finland at 11 (0.940). The Nordic countries ranked the highest in various indices on press freedom across the world and in indices measuring gender equality. They were placed among the top 20 countries in GDP per capita (PPP, $) according to the World Bank’s recent data.
Key features
•One key reason for the thriving social democratic model in the Nordic countries has been their relatively smaller and more homogenous populations enabling focused governance. The “corporatist” model of involving interests of both capital and labour, mediated by the government at many levels, has allowed these countries to transition from agrarian to industrial to post-industrial (in some cases) and knowledge/service economies relatively smoothly. The tripartite consensus approach has also emphasised social policies “that facilitate expansion of modern production, and thus more and better paid jobs”, as a book by Olle Tornquist and John Harriss lays out.
•The other commonality is the political presence of the Social Democratic Parties in these countries. Norway is ruled by the social democratic Labour Party in coalition with the agrarian Centre Party; Denmark is ruled by the Social Democrats who are supported by the Red-Green Alliance, the Socialist Peoples’ Party and the Social Liberal Party; Finland’s government is led by the Social Democratic Party in coalition with the Centre Party, the Green League, the Left Alliance and the Swedish People’s Party and Iceland is ruled by a coalition led by the Left-Green Movement, which overtook the opposition’s Social Democratic Alliance as the leading left force in the country. These social democratic parties consolidated support by mitigating the effect of the global economic crisis in the 1930s. In contrast to other social democratic parties in Europe who faltered against the Nazis in Germany for example, the Scandinavian social democrats “fortified democracy, entered into broad alliances with agrarian parties based on favourable agricultural prices and universal social security… gave less priority to issues of ownership [than to] economic expansion, more jobs and increasing tax incomes….[This lead to] equal citizenship rights and pragmatic class compromises”, say Tornquist et al.
•While social democratic parties today no longer enjoy the dominant presence in the political party systems of these countries, they are still the largest organised forces in most Nordic countries. The pole position for left of centre/ social democratic parties in these countries, because of thriving labour and environmentalist movements in civil society, has helped generate a political consensus on the welfarist model resulting in even right-wing/ right of centre parties keeping them more or less intact. The key differences between these parties have been on social and immigration related issues and some commentators believe that the rising influence of the SD in Sweden will not be a threat to its welfarist model despite the roots of the far-right party. In many ways, the Nordic model of social democracy offers lessons to the developing world, including countries like India despite the myriad complexities of diversities, differential internal development and histories.
📰 No negotiations at the cost of food security, says Tomar at agriculture conference
Food is an essential fundamental right; developing countries will be motivated by the need to ensure that the rights of farmers producing food are never compromised, says Minister
•No negotiation is possible at the cost of food security, Union Agriculture and Farmers Welfare Minister Narendra Singh Tomar said at the ninth session of the governing body of the International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA) on Monday.
•“All international forums must not forget that food is an essential fundamental right. Developing countries will be motivated by the need to ensure that the rights of farmers producing food are never compromised,” he said adding that the struggle for climate resilient agriculture and nutritional security depends heavily on the decisions and actions of the signatories.
•Mr. Tomar also talked about plant genetic resources being the source of solution to breeding challenges. “We must use all modern technologies as well as traditional knowledge to preserve and use them in a sustainable manner,” he said.
•Qu Dongou, Director General, FAO, said the meet is celebrating smallholder farmers as guardians of crop diversity. “They are food heroes and their contributions must be recognised. The world is heading for a population of nine billion. The impacts of the climate crisis and biodiversity loss are putting pressure on agriculture,” Dr. Dongou said.
•The ITPGRFA was signed during the 31st session of the United Nations Food and Agriculture Organisation (FAO) in Rome in November 2001. The treaty seeks to achieve food security through the conservation, exchange and sustainable use of the world’s Plant Genetic Resources for Food and Agriculture (PGRFA), equitable sharing of profits from its use, as well as playing an important role in the recognition of rights of farmers.
