Daily Current Affairs for UPSC IAS | 17th August 2021

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1. SC raises query on Tribunal Reforms Bill

UPSC Syllabus: Mains – GS Paper II – Polity and Governance
Sub Theme: Tribunals in India | UPSC

Highlights of the Bill

  • The Bill dissolves certain existing appellate bodies and transfers their functions to other existing judicial bodies.
  • The term of office for the Chairperson and members of a Tribunals will be four years, subject to an upper age limit of seventy years for the Chairperson, and sixty-seven years for other members.
  • The Bill specifies that a person should be at least 50 years of age to be eligible for appointment as a Chairperson or member.

Key Issues and Analysis

  • The term of office of four years is lower than the minimum of five years directed by the Supreme Court in various judgements.
  • The Supreme Court has also noted that the minimum age limit requirement of 50 years for appointment of members may discourage young talent.  It had earlier directed that advocates with 10 years of experience be made eligible to be appointed as a judicial member.
  • Abolishing Tribunals may increase the disposal time for new cases, as High Courts already have a large number of cases awaiting judgement.

 

Year Key developments
2017 In March 2017, the Finance Act, 2017 reorganised the tribunal system by merging tribunals based on functional similarity.  The total number of Tribunals was reduced from 26 to 19.  It delegated powers to the central government to make Rules to provide for the qualifications, appointments, term of office, salaries and allowances, removal, and other conditions of service for chairpersons and members of these tribunals.

 

In June 2017, the Ministry of Finance notified Rules which specified details including qualifications of the Tribunal members, their terms and conditions of service, and composition of the search-cum-selection committees.

2019 In November 2019, the Supreme Court struck down the 2017 Rules.  The Court stated that the Rules did not meet the requirements laid down in earlier judgements mandating judicial independence in terms of: (i) composition of the Tribunals, (ii) the security of tenure of the Tribunal members, and (ii) composition the search-cum-selection committees.
The Court directed the central government to reformulate the Rules.  Key concerns that the Court wanted addressed include: (i) short tenures which prevent enhancement of adjudicatory experience, and thus impact the efficacy of Tribunals, and (ii) lack of judicial dominance in selection committees which is in direct contravention of the doctrine of separation of powers.
2020 In February 2020, new Rules were notified, which were again challenged in the Supreme Court mainly over the lack of conformity with the principles laid out earlier by the Court.  For example: the 2020 Rules specified four-year term of office against five years as specified by the Supreme Court in 2019.

 

The Court suggested certain amendments to the 2020 Rules such as increasing the term of office to five-year along with eligibility for re-appointment (subjected to upper age limits), and allowing advocates with 10 years’ experience to be appointed as judicial members.

2021 The Tribunals Reforms (Rationalisation and Conditions of Service) Bill, 2021 was introduced in Lok Sabha in February.  As the Bill was pending at the end of the session, an Ordinance with similar provisions was promulgated in April.
Under the Finance Act, 2017, new Rules were notified on June 30, 2021.  The Rules allow advocates with 10 years’ relevant experience eligible for appointment as judicial members and provide details on house rent allowance for members.
The Ordinance and the Rules were challenged in the Supreme Court.  The Court struck down provisions related to the four-year tenure and the minimum age requirement of 50 years for members of tribunals.

PART A: HIGHLIGHTS OF THE BILL

Context

The Tribunals Reforms (Rationalisation and Conditions of Service) Bill, 2021 was introduced in Lok Sabha on February 13, 2021. It proposes to dissolve certain existing appellate bodies and transfer their functions to other existing judicial bodies.

Further, it proposes to include provisions related to the composition of selection committees and term of office in the Act itself.  An Ordinance with similar provisions was promulgated in April 2021. The Ordinance was challenged in the Supreme Court over its lack of compliance with past Supreme Court judgements on Tribunals.

Key Features

Abolishing of appellate bodies and transfer of functions: The Bill abolishes certain appellate bodies and transfer their functions to existing judicial bodies.

Search-cum-selection committees: The Finance Act, 2017 specifies that the Chairperson and Members of the Tribunals will be appointed by the central government on the recommendation of a Search-cum-Selection Committee.  The Bill amends the 2017 Act to specifies that these Committees will consist of: (i) the Chief Justice of India, or a Supreme Court Judge nominated by him, as the Chairperson (with a second casting vote in case of a tie), (ii) two Secretaries nominated by the central government, (iii) the sitting or outgoing Chairperson, or a retired Supreme Court Judge, or a retired Chief Justice of a High Court, and (iv) the Secretary of the Ministry under which the Tribunal is constituted (with no voting right).
Term of office: Under the Finance Act, 2017, the 2020 Rules specified a four-year term of office for members.  The Bill amends the 2017 Act to include provisions related to term of office in the Act itself.  The Bill retains the term of office at four years (subject to an upper age limit of 70 years for Chairperson and 67 years for other members) with provision for re-appointment.

PART B: KEY ISSUES AND ANALYSIS

Tribunals are quasi-judicial bodies that parallel to the court system.  In India, some tribunals are at the level of subordinate courts with appeals lying with the High Court, while some others are at the level of High Courts with appeals lying with the Supreme Court.  There are two main reasons for establishing tribunals: allowing for specialised subject knowledge for technical matters, and reducing the burden on the court system.

Appointment of presiding officers and other members of tribunals

Term of office for presiding officers and members violates principles laid down by the Supreme Court

The Bill and the Ordinance specify that the term of office for the Chairperson and members will be four years. On July 14, 2021, the Supreme Court struck down these provisions of the Ordinance. The Court stated that specifying four years of term of office violates the principles of separation of powers, independence of judiciary, rule of law, and equality before law.

Over the years, the Supreme Court had stated that short tenure of members of a tribunal along with provisions of re-appointment increases the influence and control of the Executive over the judiciary. It also discourages meritorious candidates from applying for such positions as they may not leave their well-established careers to serve as a member for a short period.  The Court has also noted that security of tenure and conditions of service (including adequate remuneration) are core components of independence of the judiciary.  The Supreme Court had stated that the term of office for the Chairperson and other members must be five years (subject to a maximum age limit of 70 years for the Chairperson and 67 years for other members).

Minimum age requirement of 50 years for appointment as a member

The Bill and the Ordinance specify that a person must be at least 50 years old to be appointed as a member of a tribunal. This violates past Supreme Court judgements and was also struck down by the Court in July 2021.

While reviewing the Ordinance in 2021, the Supreme Court reiterated earlier judgements which emphasised the recruitment of members at a young age.  In past judgements, the Supreme Court (2020) has stated that advocates with at least 10 years of relevant experience must be eligible to be appointed as judicial members, as that is the qualification required for a High Court judge. A minimum age requirement of 50 years may prevent such persons from being appointed as tribunal members.

Abolishing tribunals may increase disposal time for new cases

The Bill and Ordinance abolish certain existing appellate bodies and transfer their functions to High Courts. This may further increase the disposal time for cases.

The Statement of Objects and Reasons of the 2021 Bill states that data from the past three years shows that the presence of tribunals in certain sectors has not led to faster adjudication, and such tribunals add considerable cost to the exchequer. 6   It also states that these amendments would address the issue of shortage of support staff and infrastructure in such tribunals.  However, transferring functions of an appellate body to a High Court may lead to a further increase in the disposal time of cases as most High Courts already have high pendency.  Note that as of July 20, 2021, there are over 59 lakh cases pending in High Courts across India.

This defeats the purpose with which these tribunals were set up, which was to help reduce the burden on High Courts.  Further, if there is an issue of shortage of administrative capacity at such tribunals, it may be questioned whether the capacity should be increased, or their case load be shifted to other courts.

The Supreme Court (2019) considered the question whether amalgamation of tribunals could increase litigation, which in the absence of adequate infrastructure or budgetary grants, would overburden the judiciary.  It noted the absence of such judicial impact assessment, and directed the central government to undertake an exercise to assess requirements and make sufficient resources for each Tribunal. Neither the Finance Act, 2017 which reorganised several Tribunals nor this Bill provide a Financial Memorandum that estimates the resources required as a result of their provisions.

 

2. July WPI inflation

UPSC Syllabus: Prelims: Indian Economy
Sub Theme:  Headline Vs Core Inflation| UPSC

Measurement of Inflation in India

Criteria WPI CPI
Level Measures Inflation at Wholesale level Measures Inflation at Retail Level
Who Calculates? Office of Economic Advisor, Ministry of Commerce and Industry National Statistical Office, Ministry of Statistics and programme Implementation
Base year 2011-12 2012
Categories Primary Articles

Manufactured products

Fuel and Power

Food and beverages

Pan, Tobacco and Intoxicants

Clothing and Footwear

Housing

Fuel and Light

Miscellaneous- Education, Healthcare, Transportation etc.

Highest Weightage Manufactured products Food and Beverages
Impact of increase in Food items Less impact on WPI as compared to CPI since WPI provides higher weightage to manufactured products and lower weightage to Food items. Larger impact on CPI as compared to WPI since it gives more weightage to food products.
Services included No Yes
Indirect Taxes Included? No Yes
Targeted by RBI? No Yes. The RBI is required to maintain CPI rate of inflation of 4% with a deviation of 2%.

Headline and Core Inflation

The headline inflation simply refers to the inflation in the CPI (or WPI) covering all the categories of goods and services. On the other hand, the core inflation excludes the volatile categories such as food and fuel in order to measure the increase in the prices of goods and services. Hence, a drastic fall in the food and fuel prices can bring down the headline inflation by a to a large extent. However, the core inflation may remain unaffected.

Note: Presently, the RBI is targeting the CPI headline rate of inflation (and not Core Inflation)

Base Effect: To calculate the rate of Inflation, the prices of Goods and services in the current month are compared with the prices in the corresponding month of the previous year.

The rate of inflation in the current month is calculated as

(Prices of Goods in Current Month- Prices of Goods in Corresponding month of Previous year)/ Prices of Goods in Corresponding month of Previous year * 100

As can be seen in the above formula, the denominator (base) is the prices of Goods in the corresponding month of previous year.

So, the if the denominator (base) value is lower, the rate of inflation in the current year would be higher. Similarly, if the  denominator (base) value is higher, the rate of inflation in the current year would be lower. This can be understood as seen below:

Reasons for the rising Inflation in India

  • Imported Inflation: Increase in global commodity prices such as Crude oil, Edible oil etc.
  • Increase in certain food items such as Egg , Edible oils, Fruits, Pulses.
  • Increase in services such as Health, Transport and Communication etc.
  • Low Base effect as the prices of some of the Goods had declined last year due to the pandemic.

What to Target: Headline or Core Inflation?

Presently, the RBI targets CPI headline rate of inflation and not the Core Inflation. In this regard, the Economic Survey 2020-21 has highlighted that sole focus on CPI headline rate of Inflation may not be appropriate on account of number of reasons. Accordingly, it has recommended that a greater focus on core inflation is warranted.

Reasons:

Firstly, Headline inflation may take place due to volatility in prices of Crude oil and Food commodities, over which RBI has no control. For example, failure of monsoons, lack of cold chain infrastructure, supply side bottlenecks etc. usually lead to increase in Food prices.

Secondly, most of the time inflation in Food commodities is transitory and may not require any policy action by the RBI

Thirdly, if the RBI tries to control inflation due to volatility in prices of food commodities, it can prove to be counter productive. For example, to control inflation, rate of interest would increase–> Decline in Investment and Consumption Expenditure–> Economic Slowdown.

Fourthly, to measure inflation correctly, weightage must be assigned to different categories of commodities depending upon their share in the household expenditure. Higher the share, higher should be weightage. The share of food commodities in the household expenditure has declined since 2011-12, yet the CPI gives a weightage of almost 45% to the food commodities.

 

3. The message from the IPCC report

UPSC Syllabus: Mains – GS Paper III- Environment & Biodiversity
Sub Theme:  IPCC Report| UPSC

IPCC Report AR 6: Physical Science Basis

Intergovernmental Panel on Climate Change (IPCC) 

The IPCC provides regular assessments of the scientific basis of climate change, its impacts and future risks, and options for adaptation and mitigation.

IPCC reports are also a key input into international climate change negotiations.

Created in 1988 by the World Meteorological Organization (WMO) and the United Nations Environment Programme.

For preparing the reports, IPCC does not conduct its own research, neither does it finances climate research. It bases its climate reports on the review of already published scientific research by a panel of scientists.

Sixth Assessment Report of IPCC

This is the sixth cycle of global review of climate change being conducted by IPCC. This report is significant as its findings will compel countries to up their climate commitments in Glasgow climate summit of UNFCCC.

Salient Findings:

  1. Unequivocal that human influence has warmed the atmosphere, ocean and land. Widespread and rapid changes in the atmosphere, ocean, cryosphere and biosphere have occurred.
  2. Recent changes across the climate system are unprecedented over many thousands of years.
  3. Human-induced climate change is already affecting many weather and climate extremes in every region across the globe.
  4. Global surface temperatures is now higher by 1.07 degrees Celsius over the pre-industrial level.
  5. Global surface temperature will continue to increase until at least the mid-century under all emissions scenarios considered. Global warming of 1.5°C and 2°C will be exceeded during the 21st century unless deep reductions in carbon dioxide (CO2) and other greenhouse gas emissions occur in the coming decades.
  6. The report notes that the Carbon dioxide has been and will continue to be the dominant cause of global warming under all greenhouse gas emissions scenarios.
  7. GHG warming is assessed to be partially offset by aerosol cooling by almost 30%.
  8. From a physical science perspective, limiting human-induced global warming to a specific level requires limiting cumulative CO2 emissions, reaching at least net zero CO2 emissions, along with strong reductions in other greenhouse gas emissions. Strong, rapid and sustained reductions in CH4 emissions would also limit the warming effect resulting from declining aerosol pollution and would improve air quality.

Assessment for South Asian Region

  1. South and Southeast Asian monsoon has weakened in second half of 20th century. Dominant cause of this decreased precipitation is anthropogenic aerosol forcing.
  2. Both annual and summer monsoon precipitation will increase during the 21st century, with enhanced interannual variability. Thus, we need to be prepared for higher incidence of flooding going forward.
  3. Heatwaves and humid heat stress will be more intense and frequent during the 21st century.

Assessment for Mountain Regions

  1. Freezing level height in mountain areas is projected to rise and will alter snow and ice conditions.
  2. Warming has occurred in the Himalayas, Alps and Central Andes and has increased with altitude. Such elevation-dependent warming could lead to faster changes in the snowline, the glacier equilibrium-line altitude and the snow/rain transition height.
  3. With few exceptions, mountain glaciers have retreated since the second half of 19th century. This retreat has occurred at increased rates since the 1990s, with human influence being the main driver. Furthermore, glaciers will continue to lose mass at least for  several decades even if global temperature is stabilised.
  4. The global warming-induced earlier onset of spring snowmelt and increased melting of glaciers have contributed to seasonal changes in streamflow in low-elevation mountain catchments.
  1. Mountain glaciers will continue to shrink
  2. Snow cover will decline over most land regions in terms of water equivalent, extent and annual duration.
  3. Extreme precipitation will increase in major mountainous regions, with potential cascading consequences of floods, landslides and lake outbursts.
  4. Runoff from smaller glaciers will decrease due to glacier mass loss, while runoff from larger glaciers will generally increase with global warming levels until their mass becomes depleted.
  5. All the above-mentioned changes will pose challenges for water supply, energy production, ecosystems integrity, agricultural and forestry production, disaster preparedness, and ecotourism.

Impact on Himalayas:

  1. Snow cover has reduced since the early 21st century, and glaciers have thinned, retreated, and lost mass.
  2. Karakoram glaciers have either slightly gained mass or are in an approximately balanced state.
  3. Snow-covered areas and snow volumes will decrease during the 21st century, snowline elevations will rise.
  4. Glacier mass is likely to decline with greater mass loss in higher greenhouse gas emissions scenarios.
  5. Rising temperature and precipitation can increase the occurrence of glacial lake outburst floods and landslides over moraine-dammed lakes.

Assessment for Oceans

  1. Marine heatwaves will increase in frequency in 21st century.
  2. Anthropogenic warming will decrease ocean oxygen concentrations, and this deoxygenation will persist over the coming centuries.
  3. Global mean sea level is projected to rise over the 21st century due to continuing deep ocean heat uptake and mass loss from ice sheets.
  4. Majority of coastal locations have a regional sea level rise within +-20% of the projected global mean sea level change.
  5. Ocean acidification has increased globally in past decades.
  6. In the open ocean, acidification, changes in sea ice and deoxygenation are detectable in many areas.
  7. For Indian Ocean: The surface Indian Ocean has warmed faster than the global average.

Polar Regions

  1. Annual mean surface air temperatures and precipitation will continue to increase in both polar regions.
  2. Mean precipitation and precipitation intensity will increase in polar regions. In the Arctic region precipitation will be dominated by rainfall and in Antarctica rainfall will increase over coastal regions.
  3. Glaciers have lost mass in all polar regions and will continue to lose mass in coming decades, even is global temperature is stabilised.
  4. Both major ice-sheets – Greenland and Antarctica – have been losing mass since at least 1990, with pace accelerating during 2010-2019.

For Arctic Region:

  1. Arctic region has warmed at more than twice the global rate during last 50 years, surface warming in the Arctic will continue to be more pronounced that average global warming in 21st century.
  2. Extreme heat events have increased in Arctic. Minimum temperatures have increased at about three times the global rate.
  3. Fire weather season is projected to lengthen together with encroachment of fire regimes into tundra regions.
  4. Permafrost warming and thawing has increased in the Arctic region. Projections reveal that there will be future permafrost warming, decreasing permafrost extent with increased risk of hazardous impacts, including carbon release.
  5. Reductions in spring snow cover extent.
  6. Relative Sea level rise contributing to more frequent and severe coastal flooding and shoreline retreat along sandy coasts.
  7. Arctic sea ice cover is expected to reach practically ice free conditions at its summer minimum at least once before 2050.

For Antarctic region:

  1. Strong warming trend since the 1950s in the Antarctic region. The Antarctic region is projected to warm at a higher rate than average global warming.
  2. Antarctic snowfall and net snow accumulation have increased over the 20th century.
  3. However, mass losses from Antarctic outlet glaciers, mainly induced by ice shelf basal melt, outpace mass gain from increased snow accumulation on the continent.
  4. At sustained warming levels between 2°C and 3°C, the West Antarctic Ice Sheet will be lost almost completely and irreversibly over multiple millennia.

Urban Areas

  1. Urban centres and cities are warmer than surrounding rural areas due to urban heat island effect. This urban heat island effect results from several factors, including reduced ventilation and heat trapping due to the close proximity of tall buildings, heat generated directly from human activities, the heat-absorbing properties of concrete and other urban building materials, and the limited amount of vegetation.
  2. Urbanisation alters the water cycle, generating increased precipitation over and downwind of cities and increasing surface runoff intensity.
  3. Urbanisation can also induce phenomena such as the urban dryness island referring to conditions where lower humidity values are observed in cities relative to more rural locations, and to slower wind speed compared to adjacent suburbs and countryside.
  4. Despite having a negligible impact on global annual mean surface-air warming urbanization has exacerbated the effects of global warming in cities.
  5. Air Pollution:
  6. Warmer climate is expected to increase surface ozone over polluted regions.
  7. Climate change will be more pronounced in extreme air pollution episodes in heavily polluted environments.
  8. Coastal cities:
  9. Both sea levels and air temperatures will rise in coastal settlements.
  10. Combination of extreme sea level, increased by both sea level rise, storm surge and rainfall/riverflow events will increase the probability of flooding.
  1. Future Projections for Urban Areas:
  1. Future urbanisation will amplify projected air temperature change in cities.
  2. Increased frequency of extreme climate events such as heatwaves, with more heat days and warm nights adding to heat stress in cities.
  3. Impact assessments and adaptation plans in cities require high-spatial-resolution climate projections.
  4. Three main factors contributing to amplification of warming of urban areas:
  1. Urban geometry: Tall buildings close to each other absorb and store heat and also reduce natural ventilation.
  2. Heat from human activities: Due to heat released from domestic and industrial heating or cooling systems, running engines and other sources.
  3. Heat-retaining materials: These materials are used in building construction and road building. These are very good at absorbing and retaining heat and then re-emitting that heat at night.
  4. Urban heat island effect is further amplified in cities that lack vegetation and water bodies.

India’s stand on the report

  1. Developed countries have usurped more than their fair share of the global carbon budget. Reaching net zero alone is not enough, as it is the cumulative emissions up to net zero that determine the temperatures that is reached.
  2. India’s cumulative and per capita current emissions are significantly low and far less than its fair share of global carbon budget.
  3. Thus, this report vindicates India’s position that historical cumulative emissions are the source of the climate crisis today.
  4. The report is clarion call for the developed countries to undertake immediate, deep emission cuts and decarbonisation of their economies.

 

4. Case for third party funding

UPSC Syllabus: Mains – GS Paper II- Polity & Governance
Sub Theme: Arbitration in India| Access to Justice|UPSC

Third party funding in arbitration, or litigation funding, is a concept where an unrelated party to a dispute finances the legal cost of one of the parties. The speculative investor receives part of the damages owed or recovered by the financed party in exchange for the funding. This form of funding is widely used in commercial arbitration and various litigations around the world. It is believed that this form of financing improves access to justice by providing advance funding and support against a lengthy and expensive litigation process.

Historically, this form of funding was prohibited under the doctrines of maintenance and champerty. Maintenance deals with assistance to maintain litigation by an unconnected third party by providing finance. Champerty, a form of maintenance, refers to paying litigation costs by a third party for the objective of attaining a share of the proceeds of litigation. The need for such prohibition can be ascertained from its background. Feudal lords in medieval England would often trouble their enemies by financing frivolous lawsuits and thereby burdening courts.

Need of the hour

However, the current era seems to shrug off such concerns because the need of the hour is to increase our access to justice. Hence, rules against maintenance and champerty have been relaxed in various jurisdictions, including England, the U.S., Canada and Australia.

In the context of India, interestingly, there was no bar on maintenance or champerty. However, many such arrangements where an advocate is a party are categorically precluded in view of Supreme Court decisions and the Bar Council of India rules. These arrangements would include ones where there is a personal interest of the advocate in the outcome of the dispute or agreements of contingency fees. To sum it up, “non-lawyer third party funding” is lawfully admissible in India.

Even in the context of advocates, there was the controversial 2019 decision given by the Bombay High Court in the Jayaswal Ashoka Infrastructures Pvt. Ltd. v Pansare Lawad case, where the court decided that a contingent fee agreement entered by an advocate to represent his client before an “arbitrator” was not void. Therefore, what flows is a difference in how law deals with an arrangement of contingency fees between an advocate and client before a court where it renders it impermissible, and an advocate and client before an arbitral tribunal where such an arrangement is valid. The readers must, however, be informed that the above mentioned decision has been appealed against.

Litigation risks

The practice of third party funding must become prevalent in India. This is not only because third party funding plays an instrumental role in opening access to the court system but also helps businesses manage their litigation risks in a better manner. This risk can be managed because the third party may conduct an additional analysis of the case.

However, while advocating for the enhancement of access to justice, we must also ensure that there are amendments. One of the most heated debates about third party financing in international arbitration is the disclosure of this kind of funding. We can take inspiration from the Hong Kong International Arbitration Centre’s rules, the proposed changes in the International Bar Association rules and other such organisations, which stipulate that when a funding agreement is concluded, the funded party must notify the other party, the arbitral tribunal or emergency arbitrator in writing of the fact that a financing agreement has been concluded, along with the identity of the third party sponsor.

In order to streamline the process in India, we are seeing the advent of organisations such as the Indian Association for Litigation Finance.

Third party funding can definitely improve access to justice, but we must also ensure that scenarios like the ones that arose during the medieval period do not come up.

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