14 APRIL 2023

Topic 1: Foreign Exchange Management Act

Context: The Enforcement Directorate (ED) has registered a case against the British Broadcasting Corporation (BBC) India under the Foreign Exchange Management Act (FEMA) for alleged foreign exchange violation.
 

The FEMA (Foreign Exchange Management Act)

• FEMA came in 1999 as a successor to the Foreign Exchange Regulation Act or FERA of 1973, with changing economic conditions in a post-liberalisation India.
• FEMA was formulated to fill all the loopholes and drawback of FERA (Foreign Exchange Regulation Act.
• FEMA was basically introduced to de-regularize and have a liberal economy in India.

Objectives of FEMA

• The main objective for which FEMA was introduced in India was to facilitate external trade and payments.
• FEMA was also formulated to assist orderly development and maintenance of the Indian forex market.
• FEMA outlines the formalities and procedures for the dealings of all foreign exchange transactions in India.
• These foreign exchange transactions have been classified into two categories —
  • Capital Account Transactions:
    • Capital Account comprises all capital transactions.
    • Capital account recognises domestic investment in foreign assets and foreign investment in domestic.
  • Current Account Transactions:
    • Current Account comprises trade of merchandise.
    • Current Account transactions are those transactions that involve inflow and outflow of money to and from the country/countries during a year, due to the trading/rendering of commodity, service, and income.
    • The current account is an indicator of an economy’s status.
• Applicability of FEMA Act
  • FEMA is applicable to the whole of India and equally applicable to the agencies and offices located outside India (which are owned or managed by an Indian Citizen).
  • FEMA is applicable to:

• Foreign exchange.
• Foreign security.
• Exportation of any commodity and/or service from India to a country outside India.
• Importation of any commodity and/or services from outside India.
• Securities as defined under Public Debt Act 1994.
• Purchase, sale and exchange of any kind (i.e. Transfer).
• Banking, financial and insurance services.
• Any overseas company owned by an NRI (Non-Resident Indian) and the owner is 60% or more.
• Any citizen of India, residing in the country or outside (NRI).

Foreign Exchange Regulation Act (FERA)	Foreign Exchange Management Act (FEMA)
The Foreign Exchange Regulation Act was passed by the Indian Parliament in 1973.	The Foreign Exchange Management Act (FEMA), which replaced FERA, was passed by the Indian Parliament in 1999.
FERA was conceived with the notion that foreign exchange is a scarce resource.	The idea that foreign exchange is an asset was there when FEMA was created.
FERA’s main goal was to save foreign exchange.	FEMA’s main goal is to manage foreign exchange.
The term “authorized person” had a limited definition.	The phrase “authorized person” was defined more broadly.
Banking units were not considered “authorized persons” under the definition.	Under the meaning of “authorized person,” banking units fell.
FERA rules were to be followed at all times, and any violations were punishable by law.	A civil crime would be committed if FEMA regulations were broken.
A FERA violation suspect was not given legal representation.	Legal assistance will be given to anyone charged with breaking a FEMA rule.
The appeals were submitted to the High Courts because there was no provision for a Tribunal.	A Special Director (Appeals) and Special Tribunal are provided.
There was a direct punishment clause for individuals who broke the FERA guidelines.	Those found guilty of breaking FEMA regulations must pay a fine beginning on the day of their conviction. The offender will be put in jail if the fine is not paid within 90 days.
The Reserve Bank of India (RBI) must first give its clearance before any money can be transferred for overseas operations.	There is no requirement for prior Reserve Bank of India authorisation for international commerce and remittances. (RBI).
IT was not included in the budget.	There is provision for IT.

---

Topic 2: Vibrant Villages Programme

Context: Amit Shah launches Vibrant Villages Programme in Arunachal.

What is the ‘Vibrant Villages Programme’?

• This village development scheme was first announced in the 2022 Budget.
• The programme’s targets are to provide comprehensive development of villages on the border with China and improvement in the quality of life of people living in identified border villages.
• The development in these villages will help prevent migration, and thus also boost security.
• The Parliamentary Standing Committee in 2018 had pointed towards. The VVP aims to address backwardness, illiteracy, and lack of basic facilities and infrastructure in our border areas.

Which states come under VVP?

• Under this centrally sponsored scheme in the states of Arunachal Pradesh, Sikkim, Uttarakhand and Himachal Pradesh and the Union Territory of Ladakh.
• Out of the total outlay, Rs 2,500 crore will be spent exclusively on the creation of road infrastructure.
• There is a conscious effort to not overlap VVP with the Border Area Development Programme.

Objectives of the scheme

• The aims of the scheme are to identify and develop the economic drivers based on local, natural, human and other resources of the border villages.
• Development of growth centres on the “Hub and Spoke Model” through promotion of social entrepreneurship, empowerment of youth and women through skill development is also one of the objectives of VVP.
• The programme also intends to leverage tourism potential through promotion of local, cultural, traditional knowledge and heritage in the border areas.
• Development of sustainable eco-agribusinesses on the concept of “One village-One product” through community-based organisations, cooperatives, SHGs, NGOs etc is also aimed at.
• The district administration will prepare action plans with the help of Gram Panchayats for the identified villages to ensure 100 per cent saturation of Central and state schemes.

---

Topic 3: Maternity benefits to adoptive mothers

Context: The Supreme Court agreed to hear a petition challenging the constitutional validity of Section 5(4) of the Maternity Benefit Act, 1961.

Key details:

• It states that a woman who legally adopts a child below three months old will be entitled to 12 weeks of maternity leave.
• The original 1961 legislation did not have specific provisions for mothers who adopt, and these were inserted with the 2017 amendment to the Maternity Benefit Act.
• According to the amended Act – A woman who legally adopts a child below the age of three months or a commissioning mother shall be entitled to maternity benefit for a period of twelve weeks.
  • The term “commissioning mother” refers to a surrogate mother and has been defined as a biological mother who uses her egg to create an embryo implanted in any other woman.
• A woman adopting a child older than three months gets no benefits.
  • The PIL challenges this provision on grounds of being “discriminatory” and “arbitrary” towards adoptive mothers.
  • The absence of any provision for maternity leave for a mother adopting an orphaned, abandoned, or surrendered child above three months invariably prevents them from being able to utilise the statutory maternity benefits for adopted mothers.

What is the Maternity Benefit Act, 1961?

• The Maternity Benefit Act was originally passed to regulate the employment of women in “certain establishments” for the period before and after childbirth and to provide for maternity benefit and certain other benefits.
• Originally it applied to every establishment being a factory, mine or plantation.
• Later in 1973, it was extended to any such establishment belonging to Government and every establishment where persons are employed for the exhibition of equestrian, acrobatic and other performances.
  • It repealed the Mines Maternity Benefit Act, 1941 and Maternity Benefit Act, 1929.
• The right to paid maternity leaves was also given under the 1961 Act, although the period of such leave could not exceed twelve weeks.
• Additionally, no woman could be allowed to avail maternity benefits if she had not worked in the establishment for at least one hundred and sixty days in the twelve months immediately preceding the date of her expected delivery.
• These benefits would be allowed without dismissing the female worker from service or reduction of wages.
• Violating provisions of the Act could result in three months’ punishment, with or without a fine.

The 2017 amendment

• The Maternity Benefit (Amendment) Act, 2017 was amended to allow 26 weeks of paid leave after childbirth, although only to biological mothers.
• The amendment also inserted Section 5(4) which said that adoptive or surrogate mothers legally adopting a child below three months will be entitled to a maternity benefit period of 12 weeks from the date the child is handed over to the mother.
• Women in the unorganised sector cannot avail the benefits of the Maternity Benefit(Amendment) Act 2017.

---

Topic 4: Dabba trading

Context: The National Stock Exchange (NSE) issued a string of notices naming entities involved in ‘dabba trading’

What is ‘dabba trading’?

• Dabba (box) trading refers to informal trading that takes place outside the purview of the stock exchanges.
• Traders bet on stock price movements without incurring a real transaction to take physical ownership of a particular stock as is done in an exchange.
• It is gambling centred around stock price movements.
• ‘Dabba trading’ is recognised as an offence under Section 23(1) of the Securities Contracts (Regulation) Act (SCRA), 1956 and upon conviction, can invite imprisonment for a term extending up to 10 years or a fine up to ₹25 crore, or both.
• Aim and purpose:
  • The primary purpose of such trades is to stay outside the purview of the regulatory mechanism.
  • Transactions are facilitated using cash and the mechanism is operated using unrecognised software terminals.
  • It could also be facilitated using informal or kaccha (rough) records, sauda (transaction) books, challans, DD receipts, cash receipts alongside bills/contract notes as proof of trading.
• Challenges:
  • Tax evasion:
    • Since there are no proper records of income or gain, it helps dabba traders escape taxation.
    • They would not have to pay the Commodity Transaction Tax (CTT) or the Securities Transaction Tax (STT) on their transactions.
    • The use of cash also means that they are outside the purview of the formal banking system.
    • All of it combined results in a loss to the government exchequer.
  • Associated risks:
    • In ‘dabba trading’, the primary risk entails the possibility that the broker defaults in paying the investor or the entity becomes insolvent or bankrupt.
    • Being outside the regulatory purview implies that investors are without formal provisions for investor protection, dispute resolution mechanisms and grievance redressal mechanisms that are available within an exchange.
  • Menace of black money:
    • Since all activities are facilitated using cash, and without any auditable records, it could potentially encourage the growth of ‘black money’ alongside perpetuating a parallel economy.
    • This could potentially translate to risks entailing money laundering and criminal activities.
  • Harassment:
    • On entering the dabba ecosystem, the clients were harassed by the broker’s ‘recovery agents’ for default payments and refused payments upon profit.

---

Topic 5: Ambedkar, Gandhi and the issue of separate electorates

Context: On the occasion of Ambedkar Jayanti, we look at the issue of separate electorates, Dr Ambedkar’s position, the opposition to it from Gandhi, and how it was eventually rejected in favour of reservations.

Ambedkar’s views on caste

• Unlike Gandhi, who advocated for reforming the caste system by abolishing untouchability, Dr Ambedkar held a more radical view which rejected the institution of caste itself.
• According to him, any revolt against the caste system would only be possible after the oppressed themselves rejected their condition and oppression as being divinely ordained.
• Thus, Ambedkar’s political programme emphasised on lower castes obtaining political power.
• He suggested separate electorates as the form of affirmative action to empower lower castes.
  • In separate electorates, only the representative of a particular community contests the elections.
  • Only the people of a particular community can participate in the election.

Ambedkar’s arguments for separate electorates

• According to Ambedkar, the depressed classes form a group by themselves which is distinct and separate and they in no sense form an integral part of Hinduism.
• He suggested separate electorates with double vote –
  • one for SCs to vote for an SC candidate and
  • the other for SCs to vote for in the general electorate.
• While he had previously rejected communal electorates (i.e. separate electorates for Hindus and Muslims), his position changed over time.

Gandhi’s opposition

• Gandhi’s opposition stemmed from the fear that separate electorates would destroy Hinduism by driving a wedge within the community.
• This was especially important for two strategic reasons.
  • First, Gandhi rightly understood how the British had exploited internal divisions in Indian society for their own purposes.
    • Separate electorates would only help the British ‘divide and rule’.
  • Second, this was also a time when antagonism between Hindus and Muslims was rising.
    • If separate electorates for lower castes would be announced in addition to those for Muslims, this would significantly reduce the power that caste Hindu leadership enjoyed by breaking the consolidated Hindu fold.

The Yerawada fast and the Poona Pact

• On September 16, 1932, while imprisoned in the Yerawada Jail in Pune, Gandhi began a fast unto death against the British decision to create separate electorates based on caste.
• This put Ambedkar in a tricky situation.
  • On one hand, he disagreed with Gandhi’s political alternative (i.e. reservations) as he believed that even with reserved seats, upper castes would numerically dominate lower castes.
  • On the other, Gandhi was the nation’s most loved political leader, and if something were to happen to him, the Dalit movement might bear heavy consequences including the possibility of violence against Dalits by upper castes.
• Thus, Ambedkar succumbed to Gandhi’s pressure, inking what would be known as the Poona Pact.
  • The pact secured reservations for lower castes but put the question of separate electorates to bed.

---

Topic 6: New year celebrations

Context: Prime Minister of India greets everyone on the auspicious occasion of new year celebrations in different states.

Puthandu:

• Puthandu also known as Tamil New Year is traditionally celebrated as a festival by Tamils as the first day of the Tamil month Chittirai.

Maha Bishuba Pana Sankranti:

• Pana Sankranti is the traditional new year day festival of Odisha, India.

Bohag Bihu:

• Bohag Bihu or Rongali Bihu also called Xaat Bihu is a traditional ethnic festival celebrated in Assam and other parts of Northeastern India and marks the beginning of the Assamese New Year.

Baisakhi:

• Vaisakhi, also pronounced Baisakhi as well as Basoa is traditionally celebrated annually as a celebration of spring harvest primarily in Northern India.
• Vaisakhi is also the date for the Indian Solar New Year.

---

Topic 7: Indelible ink used in elections

Context: Every single election in India has a link with Mysuru, as Mysore Paints & Varnish Ltd. is the only company authorised to produce the indelible ink used in general elections in the country.

Key details:

• What is indelible ink?
  • This refers to the violet-coloured ink in India that is applied on a voter’s forefinger after she exercises her vote.
• Origin:
  • It was back in 1937 that the Maharaja of Mysore, Nalwadi Krishnaraja Wodeyar, established the factory, Mysore Lac & Paint Works Ltd., which manufactured lac used for manufacture of sealing waxes, and paints.
  • The unit was converted into a public limited company in 1947.
  • In 1962, it was selected to manufacture the indelible ink, which was first used in the country’s third general election.
  • From then till now, the company has supplied the ink for every Lok Sabha, Assembly and local body election across India.
  • It has also exported the ink to more than 30 countries.
• How is it made?
  • The ink is made of chemicals formulated in a laboratory and the entire process of its mixing, bottling, sealing, packing and transportation is carried out in a well-secured area.
  • It is known to contain silver nitrate and is manufactured in secrecy.
  • Indelible ink remains bright for about 10 days, after which it starts fading.
  • Each vial containing 10 ml of ink would suffice for the fingers of 700 voters.

---

Topic 7: Uttaramerur inscription

Context: Greeting Tamilians on the occasion of Puthandu, the Tamil New Year, Prime Minister of India mentions an over 1,100 year old inscription from Tamil Nadu.

About the inscription:

• The Uttaramerur inscription is dated around 920 A.D. in the reign of Parantaka Chola.
  • It testifies to the historical fact that nearly 1,100 years ago, a village had an elaborate and highly refined electoral system and even a written constitution prescribing the mode of elections.
  • The details of this system of elective village democracy are inscribed on the walls of the village assembly (grama sabha mandapa).
• What is inscribed?
  • On the walls of the mandapa a variety of secular transactions of the village, dealing with administrative, judicial, commercial, agricultural, transportation and irrigation regulations are inscribed.
  • The villagers even had the right to recall the elected representatives if they failed in their duty.
• About the Uttaramerur village:
  • Uttaramerur is situated in Kancheepuram district in Tamil Nadu.
  • The Pallava king Nandivarman II established it around 750 A.D.
  • The Pallavas, the Cholas, the Pandyas, the Sambuvarayars, the Vijayanagara Rayas, and the Nayaks successively ruled it.
  • The village has three important temples,
    • the Sundara Varadaraja Perumal temple,
    • the Subramanya temple, and
    • the Kailasanatha temple.
  • The three temples have a large number of inscriptions, notably those from the reigns of Raja Raja Chola (985-1014 A.D.), his son Rajendra Chola, and the Vijayanagar emperor Krishnadeva Raya.
  • Rajendra Chola as well as Krishnadeva Raya visited Uttaramerur.
  • Uttaramerur, built on the canons of the agama texts, has the village assembly mandapa at the centre.
  • All the temples are oriented with reference to the mandapa.
  • At Uttaramerur on the walls of the village assembly (mandapa) itself that we have the earliest inscriptions with complete information about how the elected village assembly functioned.
• The practice
  • The entire village, including infants, had to be present at the village assembly mandapa at Uttaramerur when elections were held.
  • Only the sick and those who had gone on a pilgrimage were exempt.
  • There were committees for the maintenance of irrigation tanks, roads, to provide relief during drought, to test gold, and so forth.
  • The village assembly drafted the constitution for the elections.
  • The salient features were as follows:
    • the village was divided into 30 wards, one representative elected for each.
    • Specific qualifications were prescribed for those who wanted to contest.
    • The essential criteria were age limit, possession of immovable property, and minimum educational qualification.
    • Those who wanted to be elected should be above 35 years of age and below 70.
    • Only those who owned land that attracted tax could contest elections.
    • A person serving in any of the committees could not contest again for the next three terms, each term lasting a year.
    • Elected members who accepted bribes, misappropriated others’ property, committed incest, or acted against the public interest suffered disqualification.