Syllabus subtopic: Salient Features of the Representation of People’s Act.

Prelims and Mains focus: about the SC directions and its significance; about criminalization of politics

Context: Supreme Court in its judgement handed down a series of directions aimed at checking the criminalization of politics.

Why?

• The apex court noted that there has been an alarming increase in the number of candidates with criminal records entering politics.

• In 2004, 24% of members of Parliament (MPs) had criminal cases pending against them. In 2009, that went up to 30%, in 2014 to 34%, and in 2019 as many as 43% of MPs had criminal cases pending against them.

What was the case about?

The court was passing orders on a contempt petition that raised the issue of criminalization of politics claiming that directions given by the court in a 2018 order on disclosure of criminal antecedents by candidates are not being followed.

Details of the SC judgement

• The court ruled that it shall be mandatory for political parties during central and state elections to put out detailed information about candidates with criminal cases pending against them, including the nature of the offences.

• Parties must also list the reasons for selecting such candidates and state why others without criminal antecedents were not selected.

• The reasons as to selection shall be with reference to the qualifications, achievements, and merit of the candidate concerned, and not mere ‘winnability’ at the polls.

• The information should be published in one local vernacular newspaper, a national newspaper, and on the official social media platforms of the political party, including Facebook and Twitter.

• These details are to be published within 48 hours of the selection of the candidate.

• The political party concerned shall then submit a report of compliance with these directions with the Election Commission within 72 hours of the selection of the said candidate. If a political party fails to submit such compliance report with the Election Commission, the Election Commission shall bring such non-compliance by the political party concerned to the notice of the Supreme Court as being in contempt of this SC’s orders.

Likely implications of these directions

The directions are likely to have a key political fallout given that the two biggest and politically crucial states, Bihar and Uttar Pradesh, go to polls over the next two years.

Conclusion

• The order is a wake-up call for political parties as these decisions should have been taken by the parties on their own without waiting for the apex court to spell out the steps that political parties should be taking.

• It strengthens the electoral democratic process by enabling voters to make a choice keeping all factors in mind.

• Political parties have welcomed the step, but question if the Supreme Court order infringes on the powers of the elected representatives.

• The real problem is that Supreme Court has only ordered political parties to give information on their website, but does not say that the direction is binding. Political parties can still choose to nominate people with criminal cases against them.

USTR takes India off the developing country list

Syllabus subtopic: Effect of Policies and Politics of Developed and Developing Countries on India’s interests, Indian Diaspora.

Prelims and Mains focus: about the USTR move: criteria and its implications; about CVD and de minimis standard

News: The U.S. government has changed an administrative rule making it easier for it to impose countervailing duties (CVDs) on goods from India and certain other countries.

Background

• To harmonise U.S. law with the World Trade Organization’s (WTO) Subsidies and Countervailing Measures (SCM) Agreement, the USTR had, in 1998, come up with lists of countries classified as per their level of development. These lists were used to determine whether they were potentially subject to U.S. countervailing duties (CVD). The 1998 rule is now “obsolete” as per the USTR notice.

• U.S. President Donald Trump has repeatedly complained about the WTO’s classification of developing countries. On July 26, 2019, he issued a memorandum to the USTR titled, ‘Reforming Developing-Country Status in the World Trade Organization’. In it, Mr. Trump had asked the USTR to, among other things, “no longer treat as a developing country for the purposes of the WTO any WTO Member that in the USTR’s judgment is improperly declaring itself a developing country,” if the WTO had not changed its approach to flexibilities associated with developing country status within ninety days of the memorandum being issued.

What are countervailing duties (CVD)?

1. Duties that are imposed in order to counter the negative impact of import subsidies to protect domestic producers are called countervailing duties.

2. Description: In cases, foreign producers attempt to subsidize the goods being exported by them so that it causes domestic production to suffer because of a shift in domestic demand towards cheaper imported goods, the government makes mandatory the payment of a countervailing duty on the import of such goods to the domestic economy.

3. This raises the price of these goods leading to domestic goods again being equally competitive and attractive. Thus, domestic businesses are cushioned. These duties can be imposed under the specifications given by the WTO (World Trade Organization) after the investigation finds that exporters are engaged in dumping. These are also known as anti-dumping duties.

About the USTR move

The Office of the United States Trade Representative (USTR) has published a notice, amending lists of developing and least-developed countries that are eligible for preferential treatment with respect to CVD investigations.

What does that mean?

• Countries not given special consideration have lower levels of protection against a CVD investigation.

• A CVD investigation must be terminated if the offending subsidy is de minimis (too small to warrant concern) or if import volumes are negligible. The de minimis standard is usually a subsidy of 1% or less ad valorem and 2 per cent for special cases. The de minimis thresholds and import volume allowance are more relaxed for developing and least-developed countries.

(Ad valorem tax means levying of tax or customs duties proportionate to the estimated value of the goods or transaction concerned.)

• If a country’s goods constitute less than 3% of all imports of that good into the U.S., it meets the ‘negligible import volumes’ standard. For special cases, it is 4%. Imports do not meet the standard, if, individual volumes are less than 3% (special cases: 4%) but the aggregate volume of imports into the U.S. is 7% of all such goods.

• India was, until February 10, on the developing country list and therefore eligible for these more relaxed standards. It has now been taken off of that list.

• The new lists consist of 36 developing countries and 44 least developed countries.

Eligibility Criteria for the de minimis standard

The USTR used the following criteria to determine whether a country was eligible for the 2% de minimis standard:

1. Per capita Gross National Income or GNI
2. share of world trade
3. other factors such as Organisation for Economic Co-operation and Development (OECD) membership or application for membership, EU membership, and Group of Twenty (G20) membership.

Why was India taken off the list?

• India, along with Brazil, Indonesia, Malaysia, Thailand and Vietnam were taken off the list since they each have at least a 0.5% share of the global trade, despite having less than $12,375 GNI (the World Bank threshold separating high-income countries from others).

• India was taken off the list also because — like Argentina, Brazil, Indonesia and South Africa — it is part of the G20. “Given the global economic significance of the G20, and the collective economic weight of its membership (which accounts for large shares of global economic output and trade), G20 membership indicates that a country is developed,” the USTR notice said.

Implications

The move has cast a shadow on India being able to restore preferential benefits under the Generalised System of Preference (GSP) as part of its trade talks with the US, as only developing countries are eligible for it.

Way forward

Mr Trump is due to visit India on February 24 and 25 and the U.S. and India are trying to finalise a trade package before the U.S. President’s arrival. According to American officials, the timing of the USTR announcement is not linked to the visit, that is, the timing is mostly coincidental and mostly related to dynamics at the WTO on developing country treatment.

Syllabus subtopic: Appointment to various Constitutional Posts, Powers, Functions and Responsibilities of various Constitutional Bodies.

Prelims and Mains focus: about the new panel to be set up and their mandate; about FFC; CAG; FRBM act

News: The Fifteenth Finance Commission (FFC) will soon set up a panel to address issues related to fiscal policy for both the Centre and the States, and present a road map for the same.

About the new fiscal panel/committee

• It will be a broad-based panel which will address some of the issues on fiscal policy, particularly in relation to the debt and the deficit of the States as well as the Central government.

• The panel will be headed by FFC Chairman and have representation from the Comptroller and Auditor General of India, the Reserve Bank of India, the Ministry of Finance, the Fiscal Responsibility and Budget Management (FRBM) panel and some of the States.

• The principal terms of reference (ToR) of the fiscal commitee will enhance the ability of the Finance Commission to address its ToR relating to giving a consolidated fiscal debt road map for the general government.

Panel on Defence & Internal security

• The Commission had also constituted a group on defence and internal security, whose mandate will be ‘to examine whether a separate mechanism for funding of defence and internal security ought to be set up, and if so, how such a mechanism could be operationalised.’

• This group will be chaired by FFC Chairman with A.N. Jha, Member, Fifteenth Finance Commission as well as Secretary, Ministry of Home Affairs, Secretary, Ministry of Defence and Secretary (Expenditure), Ministry of Finance as members.

Does India require a new legal framework for fiscal consolidation?

According to the FFC, there wasn’t a need for a new legal framework as the FRBM already gives a robust legal framework, except for the fact the States need to align their own FRBM with the new FRBM enacted by the Union Government with the amendments to the earlier one in 2018. Also, there is a need to ensure there is strict compliance on the issues of off-Budget borrowing, contingent liabilities, etc