Today's Headlines

Today's Headlines - 15 March 2023

Supreme Court dismissed curative petition

GS Paper - 2 (Judiciary)

The Supreme Court on 14 March 2023 dismissed a curative petition filed by the Centre, seeking additional funds from Union Carbide Corporations’ successor firms for extending higher compensation to victims of the 1984 Bhopal gas tragedy, which led to the deaths of 3,000 people and caused significant environmental damage.

What is Bhopal Gas Tragedy

  1. After a leak of toxic methyl isocyanate gas from Union Carbide’s factory in Bhopal on the intervening night of 2 and 3 December 1984, that led to the deaths of over 3,000 people and affected 1.02 lakh more.
  2. The Union Carbide Corporation, now owned by Dow Chemicals, gave a compensation of USD 470 million (Rs 715 crore in 1989).

What is the present case about?

  1. In the ‘Union of India And Others. v. M/s. Union Carbide Corporation And Others’, the Centre sought Rs. 7,844 crores from the US-based firms through a curative petition it filed in 2010, for additional compensation for the victims of the Bhopal Gas Tragedy.
  2. curative petition can be filed after a review plea against the final conviction is dismissed. It is meant to ensure there is no miscarriage of justice and to prevent abuse of the process.
  3. The Centre’s claim for a curative petition was based on a demand for additional compensation, in a reexamination of the Supreme Court’s 1989 order where compensation was decided as Rs. 750 crores.
  4. The plea also sought a relook at the Court’s orders relating to modes of payment and settlement, on grounds that the settlement was based on an incorrect estimate of the total number of deaths, injuries, and losses.
  5. The Centre also said that the environmental damage caused was never factored in, and thus sought to reopen the settlement on the basis of fresh documents.
  6. According to the plea, the previous figure for deaths stood at 3,000 and for injuries at 70,000. However, the Central government contended that the actual number of deaths was 5,295, whereas injuries reached 5,27,894.

Legal recognition of same-sex marriage

GS Paper - 2 (Social Issues)

In its affidavit opposing the pleas for legal recognition of same-sex marriages, the Centre told the Supreme Court on 13 March 2023 that the “legislative understanding of marriage in the Indian statutory and personal law regime” refers only to marriage between a biological man and biological woman — and any interference “would cause a complete havoc with the delicate balance of personal laws in the country and in accepted societal values”.

What did the govt. say?

  1. Urging the court to leave the issue to Parliament, the Centre said that any “recognised deviation…can occur only before the competent legislature”.
  2. It also said that “despite the decriminalisation of Section 377 of the Indian Penal Code (IPC), the Petitioners cannot claim a fundamental right for same-sex marriage to be recognised under the laws of the country”.
  3. However, out of the 32 countries in the world that recognize gay marriage, at least 10 countries have recognized same-sex marriages by court rulings, whereas the remaining 22 countries allowed it through legislation, Human Rights Campaign, a US-based LGBTQ advocacy group said.

Countries that allowed same-sex marriages through court rulings:

  1. UNITED STATES: On 26 June 2015, the US Supreme Court in a 5:4 ruling in “Obergefell v. Hodges” allowed marriage equality to become the law of the land and granted same-sex couples in all 50 states the right to full, equal recognition under the law.
  2. TAIWAN: In 2019, Taiwan became the first Asian country to recognize same-sex marriage. However, the legislation was introduced following a court ruling.
  3. COSTA RICA: On 26 May 2020, Costa Rica became the first country in Central America to legalize same-sex marriage following a ruling by the country’s top court in 2018 declaring the law banning same-sex marriage as “unconstitutional”.
  4. SOUTH AFRICA: One year after South Africa’s highest court ruled that its marriage laws violated the constitution’s guarantee of equal rights, the South African parliament legalized same-sex marriage on 30 November 2006.
  5. AUSTRIA: The Constitutional Court of Austria, in 2017 held the denial of marriage equality to be discriminatory and legalized same-sex marriages. From 1 January 2019, same-sex marriages were allowed.

Countries that allowed same-sex marriages through legislation:

  1. AUSTRALIA, IRELAND, SWITZERLAND: Following a nationwide referendum in 2017, Australia’s Parliament passed a law recognizing same-sex marriage. The referendum showed overwhelming support — 62% to 38% — in favour of the law. In Ireland and Switzerland too, a popular vote by the majority led to the formal recognition of LGBTQ marriages.
  2. ARGENTINA: On 15 July 2010, Argentina became the first Latin American country and the 10th country in the world to allow same-sex marriages nationwide.
  3. CANADA: Same-sex couples in Canada have enjoyed the legal benefits of marriage since 1999 when the federal and provincial governments extended marriages under the Common Law to LGBTQ couples.
  4. GERMANY: On 30 June 2017, Germany became the 15th European country to bring in legislation allowing same-sex couples to wed.

SVB failure and its impact on India

GS Paper - 3 (Economy)

Rated as the 16th largest bank in the United States until the crashSilicon Valley Bank (SVB) is a regional bank in the US, headquartered in Santa Clara, California. Incorporated in 1983, SVB was reckoned as quite trendsetting because it was among the early banks to set focus on start-ups and venture capitalists. In December 2022, 56 per cent of its loans were to VCs and PEs secured by their limited partners. SVB is held by SVB Financial Group, which has operations beyond the US across ten countries, including India.

How did it fail?

  1. The fall of SVB is rather unique because it’s a case of asset liability management (ALM) mismatch concerns, which manifested into solvency issues for the bank.
  2. From the end of 2019 to March 2022, the bank’s deposits more than tripled to $198 billion; growth outstripped the industry average of 37 per cent.
  3. But hit by Covid, the deployment opportunities for funds were quite limited. Hence, deposits were channelised towards investments where there are two types of instruments – shorter duration investments classified as available for sale (AFS) and longer duration instruments classified as held to maturity.
  4. Meanwhile, the cost of deposits for SVB rose to 1.19 per cent against the industry payout of 0.04 per cent by end of 2022.
  5. Hence, to manage the yields and mark-to-market (MTM) losses, the bank chose to have a higher proportion of HTM instruments vis-à-vis AFS, something which banks across the globe, including India, are opting for.
  6. What caused the debacle was that much of the HTM was deployed into mortgage-backed securities and when interest rates started increasing, it hurt the yield significantly, and the unrealised losses from the book shot to $16 billion (from 0) by September 2022.

Will it have a second order impact on India?

  1. SVB through its parent entity holds investments in Bluestone, Carwale, InMobi, and Loyalty Rewardz.
  2. Therefore, a direct impact on the Indian start-up and/or new economy cannot be ruled out.
  3. Further, YCombinator one of the key clients of SVB has in turn invested in over 19 start-ups in India. Therefore, we cannot rule out a second-order impact.

Rise of the ESG regulations

GS Paper -2 (Governance)

Regulators and corporations around the world have embraced the idea that businesses should be measured not just on traditional economic metrics such as shareholder return, but also by their environmental impact, commitment to social issues and the soundness of their corporate governance and protection of shareholder rights.

More about the news:

  • It is due to the belief that companies have a distinct responsibility as corporate citizens, the main driver is the realisation that environmental, social and governance (“ESG”) considerations need to be included by investors in a company’s risk profile in order to accurately assess the enterprise. 
  • The evolution of ESG laws and regulations is, however, still at a nascent stage in India, where the focus is often on providing protections regarding the environment or workplace conditions without also incorporating the controls and disclosure that are a hallmark of contemporary ESG regulation.

Difference between ESG and CSR:

  • India has a robust corporate social responsibility (CSR) policy that mandates that corporations engage in initiatives that contribute to the welfare of society.
  • This mandate was codified into law with the passage of the 2014 and 2021 amendments to the Companies Act of 2013.
  • The amendments require companies with a net worth of ₹500 crore (approximately $60 million) or a minimum turnover of ₹1,000 crore (approximately $120 million) or a net profit of ₹5 crore (approximately $6, 05,800) in any given financial year spend at least 2% of their net profit over the preceding three years on CSR activities.

ESG regulations, on the other hand, differ in process and impact:

v  The U.K. Modern Slavery Act, for example, requires companies with business in the U.K. and with annual sales of more than £36 million to publish the efforts they have taken to identify and analyse the risks of human trafficking, child labour and debt bondage in their supply chain.

v  To establish internal accountability procedures; evaluate supplier compliance and to train supply chain managers regarding these issues.

v  The EU’s Sustainable Finance Disclosure Regulation requires banks, pension funds, asset managers and other financial market participants to disclose how they have integrated sustainability risks into their investment decision-making processes.

ESG relevance in India:

ü  India has long had a number of laws and bodies regarding environmental, social and governance issuesincluding the Environment Protection Act of 1986, quasi-judicial organisations such as the National Green Tribunal, a range of labour codes and laws governing employee engagement and corporate governance practices.

ü  The penalty for violations can be substantial, for violating environmental laws and polluting its surroundings.

ü  These laws and bodies provide important environmental and social safeguards; new initiatives in India go further, establishing guidelines that emphasise monitoring, quantification and disclosure, akin to ESG requirements found in other parts of the world.

ü  The Securities and Exchange Board of India (SEBI), responding to the increase in ESG investing and the demand by investors for information on ESG risks, substantially revised the annual Business Responsibility and Sustainability Report (BRSR) required by the 1,000 largest listed companies in India.

ü  Legislations regarding ESG are likely, given the increased emphasis by the Indian government on ESG issues, which can be seen in India’s more active role in global climate forums.

Implications for Indian companies:

Ø  Compliance with ESG regulations,both originating in India and elsewhere around the world, poses a significantly different challenge than India’s CSR regulations.

Ø  In particular, compliance by Indian companies with the ESG regulations of the U.S., the U.K., the European Union and elsewhere will be critical if India is to take full advantage of the growing decoupling from China and play a more prominent role in global supply chains and the global marketplace overall. 

Ø  Companies that wish to maximise their opportunities in the global economy need to embrace these new requirements and adjust their organisations accordingly. 

India Remains World’s Largest Importer of Arms

GS Paper - 3 (Security)

India remained the world’s largest arms importer for the five-year period of 2018-22 even though its arms imports dropped by 11% between 2013–17 and 2018–22, according to the Swedish Think Tank Stockholm International Peace Research Institute (SIPRI). Russia was the largest supplier of arms to India in both 2013–17 and 2018–22, but its share of total Indian arms imports fell from 64% to 45% while France emerged as the second largest supplier between 2018-22.

As per SIPRI data

  • As per SIPRI data, among the top 10 arms exporters for the period 2018-22, India was the biggest arms export market to three countries — Russia, France and Israel and the second largest export market to South Korea.
  • India was also the third largest market for South Africa which was ranked 21 in the list of arms exporters.
  • For the same period, India remained the largest arms importer followed by Saudi Arabia.
  • India was the third largest arms supplier to Myanmar after Russia and China accounting for 14% of its imports.

Cause of High Imports

  • India’s tensions with Pakistan and China largely drive its demand for arms imports. With an 11% share of total global arms imports, India was the world’s biggest importer of major arms in 2018–22, a position it has held for the period 1993–2022.

Exporting Countries Share

  • Russia accounted for 45% of India's imports followed by France (29%) and the US (11%).
  • India’s arms imports from France, which included 62 combat aircraft and four submarines, increased by 489% between 2013–17 and 2018–22. France therefore displaced the USA to become the second largest supplier to India in 2018–22”.
  • Just under two thirds of Russian arms exports went to three states in 2018–22 India (31%), China (23%) and Egypt (9.3%).
  • India was also the largest recipient of Russian arms in 2013–17, but exports to India decreased by 37% between the two periods.
  • In contrast, exports to China (+39%) and Egypt (+44%) increased within the same time frame, the report said while noting that Russia made no deliveries to Egypt in 2021–22 and the volume of deliveries to China in 2020–22 was at a much lower level than in 2018–19.

Pakistan Imports of Arms

  • Arms imports by Pakistan increased by 14% between 2013–17 and 2018–22 and accounted for 3.7% of the global total with China supplying 77% of Pakistan’s arms imports in 2018–22.

Global Arms Trade Scenario

  • While the global level of international arms transfers decreased by 5.1%, imports of major arms by European states increased by 47% between 2013–17 and 2018–22 in the backdrop of the war in Ukraine.
  • Strategic competition also continues elsewhere: arms imports to East Asia have increased and those to the Middle East remain at a high level.
  • Overall, the U.S. share of global arms exports increased from 33% to 40% while Russia’s fell from 22% to 16%.