DAILY NEWS ANALYSIS

Monthly DNA

09 Jul, 2021

25 Min Read

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Paper	Topics	Subject
GS-II	Cairn issue explained	International Relations
GS-III	COVID-19 Package Phase II	Economic Issues

GS-II : International Relations International issues

Cairn issue explained

What is the issue about?

The dispute started in early 2014 when Indian tax authorities started questioning Cairn Energy requesting information on the group’s reorganization in the financial year 2006-07.
This escalated, and by 2015, the authorities had sent the company a draft assessment order, assessing in the process that there was a principal tax amount of $1.6 billion that was due.
The year in reference, 2006-07, was one in which big corporate changes and developments took place in Cairn Energy.
It was the year in which it not only undertook a corporate reorganization but also floated an Indian subsidiary, Cairn India, which in early 2007 got listed on the Indian Stock Market.
Through the corporate reorganization process, Cairn Energy had transferred all of its India assets, which were until then held by nine subsidiaries in various countries, to the newly-formed Cairn India.
But the tax authorities claimed that in the process of this reorganization, Cairn Energy had made capital gains worth ?24,500 crores.
This, the department asserted, was the basis of the tax demand.

What was the ruling of the Permanent Court of Arbitration?

The claimants, Cairn Energy and Cairn UK Holdings argued that till the amendment was made to tax retrospectively in 2012, there was no tax on indirect transfers.
Indirect transfers here meant transfer by a non-resident of shares in non-Indian companies which indirectly held assets in India.
The application of the 2012 amendments, they alleged, constituted “manifest breaches” of the U.K.-India bilateral investment treaty.
In December 2020, a three-member tribunal at the Permanent Court of Arbitration in the Netherlands ruled against India in its long-running tax dispute with the U.K.-based oil and gas company Cairn Energy.

Permanent Court of Arbitration

It is an intergovernmental organization located in The Hague, Netherlands.
It is not a court in the traditional sense but provides the services of an arbitral tribunal to resolve disputes that arise out of international agreements between member states, international organizations or private parties.
The cases span a range of legal issues involving territorial and maritime boundaries, sovereignty, human rights, international investment, and international and regional trade.
The PCA is constituted through two separate multilateral conventions with a combined membership of 122 states.
The organization is not a United Nations agency, but the PCA is an official United Nations Observer.

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.
The three¬member tribunal, which also comprised a nominee of the Indian government, unanimously ruled that India’s claim of 10,247 crore in past taxes over a 2006¬07 internal reorganisation of Cairn’s India business was not a valid demand.
India “failed to accord Cairn Energy’s investments fair and equitable treatment” under the bilateral investment protection pact it had with the U.K.
The tribunal ordered the government to desist from seeking such a tax and return the value of shares it had sold, dividends seized and tax refunds withheld to recover the tax demand.
The government was asked to compensate Cairn “for the total harm suffered,” together with interest and cost of arbitration.

Source: TH

GS-III : Economic Issues Economic reforms

COVID-19 Package Phase II

Cabinet chaired by Hon’ble Prime Minister Shri Narendra Modi today has approved a new scheme ‘India COVID-19 Emergency Response & Health System Preparedness Package: Phase-II’ amounting to Rs. 23,123 crores for FY 2021-22 from 01" July 2021 to 31" March 2022 with central and state share as under:
Central Share of the ECRP-II –Rs.15,000 crore
State Share of the ECRP-II –Rs.8,123 crore
This scheme aims to accelerate health system preparedness for immediate responsiveness for early prevention, detection and management, with the focus on health infrastructure development including for Paediatric Care and with measurable outcomes.
The Phase-II of the Package has Central Sector (CS) and Centrally Sponsored Schemes (CSS) components.

Under the Central Sector components,

Support would be provided to Central Hospitals, AIIMS, and other Institutions of National Importance under DoHFW (at VMMC & Safdarjung Hospital, Delhi, LHMC & SSKH, Delhi, RML, Delhi, RIMS, Imphal and NEIGRIMS, Shillong, PGIMER, Chandigarh, JIPMER, Puducherry and AIIMS Delhi (existing AIIMSs) and new AIIMSs under PMSSY) for repurposing 6,688 beds for COVID management.
National Centre for Disease Control (NCDC) would be strengthened by providing Genome Sequencing machines, besides sanctioning the Scientific Control room, Epidemic Intelligence Services (EIS) and INSACOG Secretariat support.
Support would be provided for the implementation of the Hospital Management Information System (HMIS) in all the District Hospitals of the Country (presently, it is implemented only in 310 DHs). All district –hospitals would implement HMIS through NIC-developed E-Hospital and CDAC-developed E-Shushrutsoftwares. This will be the biggest impetus for the implementation of the National Digital Health Mission (NDHM) at the DHs. This support includes the support provided to the District Hospitals towards augmentation of the hardware capacity.
Support would also be provided for expanding the National Architecture of eSanjeevani Tele-consultation platform to provide upto 5 lakhs tele-consultations per day from the present 50,000 Tele-consultations per day. This includes support to the States/UTs to enable teleconsultations with the COVID patients at the COVID Care Centres (CCCs) by strengthening Hubs for eSanjeevani Tele-consultation in all the districts of the country.
Support would also be provided for IT interventions, including strengthening the Central War room at DoHFW, strengthening the Country’s COVID-19 Portal, 1075 COVID helplines and COWIN platform.

Under the Centrally Sponsored Components

Under the CSS components, the efforts are aimed at strengthening district and sub-district capacity for an effective and rapid response to the pandemic. States/UTs would be supported to:

Create Paediatric units in all 736 districts and also, to establish a Paediatric Centre of Excellence (PaediatricCoE) in each State/UT, (either in Medical Colleges, State Govt. Hospitals or Central Hospitals such as AIIMS, INIs, etc) for providing Tele-ICU services, mentoring and technical hand-holding to the District Paediatric units.
Augment 20,000 ICU beds in public healthcare system out of which 20% will be Pediatric ICU beds.
Provide care closer to the community due to the ingress of COVID-19 in rural, peri-urban and tribal areas, by creating pre-fabricated structures for adding additional beds at the existing CHCs, PHCs and SHCs (6-20 bedded units) and support would also be provided to establish bigger field hospitals (50-100 bedded units) depending on the needs at tier-II or Tier-III cities and district HQs.
Install 1050 numbers of Liquid Medical Oxygen Storage Tanks with Medical Gas Pipeline System (MGPS), with an aim to support at least one such unit per district.
Augment the existing feet of ambulances - 8,800 ambulances will be added under the package.
Engage Undergraduate and postgraduate medical interns and final year MMBS, BSc, & GNM nursing students for effective COVID management.
As “Test, Isolate and Treat” and following up COVID Appropriate Behaviour at all times is the national strategy for effective COVID-19, support is provided to the States to maintain at least 21.5 lakhs per day.
Flexible support to the Districts for meeting the requirement of essential medicines for COVID-19 management, including the creation of buffer stock.

Source: PIB

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