IASbaba’s Daily Current Affairs – 18th January, 2016

IASbaba's Daily Current Affairs Analysis, IASbaba's Daily Current Affairs January 2016, National, UPSC

IASbaba’s Daily Current Affairs – 18th January, 2016

NATIONAL

TOPIC:

General studies 2:

Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Issues relating to development and management of Social Sector or Services relating to Health, Education, Human Resources.

General studies 3:

Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Inclusive growth and issues arising from it.

Start Up India Stand Up India Scheme

Recently the government came up with the much awaited ‘Start Up India, Stand Up India’ scheme to promote entrepreneurship and encourage start up’s among the Indian masses.

Why need this scheme?

The economy of any country depends on its countrymen.
Larger the number of employed or working people, better be the economy.
The Indian government realized that Indian people have the potential to work hardly, all they need is, a promising start up.
Many people dream of starting up their own business, but due to financial or other similar issues are unable to do so.
So, Indian government decided to offer a gift as a nation wise program“ Start Up India”.

Start Up India Scheme – From Job Seekers to Job Creators:

“Start Up India” is a revolutionary scheme that has been started to help the people who wish to start their own business.
These people have ideas and capability, so the government will give them support to make sure they can implement their ideas and grow.
Success of this scheme will eventually make India, a better economy and a strong nation.

Start Up India Stand Up India Scheme – Action Plan in Detail

E-registration will be done
A self certification system will be launched
A dedicated web portal and mobile app will be developed
Arrangement of self certificate based complaints
No inspection during the first 3 years
80 percent reduction in the application fee of start up patent
Easy exit policy
Inclusion of Credit Guarantee Fund
Relaxation in Income Tax for first three year
Special Arrangement for Female applicants
Introduction of Atal Innovation Mission. Innovation courses will be started for the students.

Criteria for start up’s to get government incentives under start up India action plan

The firm incorporated should be less than five years old
Annual Revenue of less than Rs 25 crore
Needs to get approval from inter-ministerial board to be eligible for tax benefits
Get recommendation from an Incubator recognised by government, domestic venture fund or have an Indian patent

Some criticisms the scheme faces:

Government’s restrictive definition of a start-up – “driven by technology or intellectual property”

Only those companies which satisfy the above definition will be termed as start up and access to enabling environment is made possible.
In addition, to be eligible for schemes, start-ups will have to show that their innovation has “significantly improved” existing processes.

Oddly, there is no self-certification as to whether the “improvement” is “significant” – allowing the bureaucrat to once again insert himself into the process.

It is thus possible that discretion to a start-up ecosystem – may have been built into the scheme from the outset.

It is unexplainable why benefits from any such scheme should not be extended to all start-ups depending on criteria that are transparently laid down and objective.
The government cannot target or identify innovation; only the market can.
The government should focus on creating conditions for innovation.

Innovation and investments go hand in hand, but not enough was done by the government for the latter.However not much was done for the latter as there was no encouragement for investors.
Some probing questions have also been asked about the use of tax incentives for start-ups. Exemption from income tax, of course, will only be available to those vetted by an inter-ministerial panel. This clause has been targeted by certain economists who argue that tax to GDP ratio will further reduce in India.

Way ahead:

Overall, while the intent is praiseworthy and there are many laudable ideas in the policy, much in the fine print needs attention if its goal is to be realised.
Hopefully, the government will be quick in making any needed changes and in overseeing Start-up India’s implementation.

Connecting the dots:

Critically examine the need for innovation in India along with the measures taken by government to promote innovation.
Innovation and investments go hand in hand, but not enough has been done by the government for the latter.Critically examine the above statement wrt the recently launched start up India scheme.

NATIONAL

TOPIC:

General studies 2:

Separation of powers between various organs dispute redressal mechanisms and institutions.

Statutory, regulatory and various quasi-judicial bodies.

Discords emanating from the “Principles of Natural Justice”

Between the Competition Commission of India (CCI) and the Competition Appellate Tribunal (Compat)—

Background Story:

CCI- Imposed an aggregate penalty of around Rs 6,300 crore on 11 cement companies for cartelisation

Cement companies-

Challenged this decision before Compat
Argued that their oral arguments haven’t been heard and is thus, wrong to sign the penalty order without hearing their side of the story

Compat- Post three years of deliberations and arguments has upheld the challenge on the ground of breach of “natural justice” and has thus, remanded the matter back to CCI

CCI-

Needs to re-hear the cartelisation complaint (originally filed in 2011)
Hints towards Compat’s wide interpretation of “natural justice” may not be under the prerogative of the regulator i.e., strict application of judicial rules to a regulatory setting may not always be suitable

Competition Act, 2002—

Devises a scheme where the decision-makers of CCI, its “members” meet in “meetings” rather than in “benches” while exercising their quasi-judicial function of enforcing the Act.
Section 22 of the Act: Provides that the business of CCI shall be conducted at “meetings”, with a quorum of three members, where a decision shall be taken by a majority vote of the members present and voting
When the chairperson is unable to attend such a meeting, the senior-most “member” shall preside over it

Consensus Model of decision-making at work “technically” blessed by the Supreme Court of India when it declined a constitutional challenge to the Act in Brahm Dutt vs Union of India (2005)

The absurdity of presumptions—Presumptions like that of common law concepts like “natural justice” being self-explanatory to bureaucratic enforcement agencies and regulators

(Qn— Is bureaucracy master of the trade or any one subject per se?)

Therefore, India’s routinely ill-drafted regulatory statutes (under which the economic regulators function) are to be blamed and concerns raised by the ex-chairman should be taken as a call for a larger review of the Competition Act from a regulatory governance perspective.

Why do we need better legislative drafting?

Let us explain with the help of an example from the Competition Act

Section 36(1) of the Act merely states— In the discharge of its functions, CCI shall be guided by the “principles of natural justice”

Forgotten/Ignored defining the term “natural justice”– Left for the CCI to interpret

Section 36(2)– Gives CCI powers of a civil court while trying a suit in matters like:

Summoning and enforcing attendance of any person,
Requiring discovery and production of documents,
Receiving evidence on affidavit etc.

However, no clear detailed procedure for imposition of penalty by CCI has been laid down in the Act or in its schedules.

Let us draw a comparison with the UK laws—

Section 112 of the UK Enterprise Act, 2002: Deals with the procedure to be followed by the UK’s Competition and Market Authority (CMA) while imposing penalties

Zero-usage of vague phrases like “natural justice” and concentrates instead upon laying down the exact procedure of imposing penalties in plain English

For example: CMA has to

Give notice as soon as possible; (ASAP)
The contents of the notice are clearly laid down in the legislation itself;
The procedure of serving the notice is also stated
Section 90 and Schedule 10 of the Enterprise Act provides the procedure for passing certain enforcement orders
Paragraph 2 of Schedule 10 requires CMA to give notice to a person and hear his representations before a ruling is made (with content of the notice and the process for serving such notice- remember!)

Take-away’s:

UK legislative drafting style is primarily principles-based drafting with their statutes often requiring enforcement agencies to comply with detailed procedures rather than vague common law notions like “natural justice”
The very concept of “natural justice” is hardwired into the procedures in the schedules with great clarity and simplicity implying that the bureaucratic agencies need to just follow the procedures and automatically adhere to the principles of natural justice, without having to know or interpret what “natural justice” may mean

IASbaba’s Views

India needs to adopt comprehensive content-oriented and properly drafted lists of laws and regulations containing within it the principles of “natural justice” as a foundation
The need adopts an urgent intervention within a liberal market economy as economic laws are meant to and should facilitate smoother transactions without having to always resort to courts and judges
Drafting Laws for the non-lawyers—
- Simplicity and clarity should be maintained while drafting laws for the non-lawyers (bureaucrats, regulators and entrepreneurs)
- Jargons; Latin maxims and legal phrases should be avoided completely
- Best practices need to be studied and carefully implemented in statutory drafting for all future laws
- Existing laws be reviewed to improve clarity to avoid unnecessary problems as the CCI-Compat discord has revealed

Some advances made which should be followed henceforth—

Indian Financial Code, 2015: Drafted by the Financial Sector Legislative Reforms Commission
Insolvency and Bankruptcy Bill, 2015: Drafted by the Bankruptcy Law Reforms Committee

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