Fear of forfeiture  (The Hindu)

Reducing the carbon footprint (The Hindu)

Mastering the seas  (The Indian Express)


Fear of forfeiture

(The Hindu)

Synoptic line: It throws light on the proposed law to seize the wealth of economic offenders.

(GS paper II)



  • The Union Cabinet on March 1, 2018, approved a stringent Fugitive Economic Offenders Bill that provides for confiscation of assets even without conviction in cases where economic offenders flee the country, and paying the lenders by selling off the fugitive’s properties. Such persons will be tried under the Prevention of Money Laundering Act.


  • The draft bill is aimed at deterring someone like jeweller Nirav Modi, who fled the country and has not returned to face trial in the Punjab National Bank fraud case. The proposed law to seize their wealth is undoubtedly a welcome measure.




  • According to sources, there will be a list of scheduled offences along with the Bill. If a person committed an offence on the list, and a competent court issued an arrest warrant, and the person left the country to avoid this, then the court could deem him or her a fugitive economic offender.


  • However, its success rides on the slim hope that the threat of confiscation of property will act as a serious deterrent to those seeking to flee or as a big incentive for fugitives to return. Legal provisions to confiscate the assets of offenders already exist, but these are regarded as somewhat inadequate.


  • The Fugitive Economic Offenders Bill aims to make up for the shortcomings and provide a fresh legal framework that would enable the confiscation of the property of those evading prosecution by fleeing the country or remaining abroad.


  • From the provision in the Code of Criminal Procedure for attachment of the property of ‘proclaimed offenders’, to sections in Acts targeting smugglers, foreign exchange offenders and traffickers in narcotics, proceedings for forfeiture of property have been marked by shortcomings and procedural delays.


  • But laws deemed draconian, such as the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, have not exactly been a success. Experience has shown that disposal of confiscated assets is not easy, especially at a price sufficient to recoup losses or pay off all creditors.


  • Under the Fugitive Economic Offenders Bill, confiscation is not limited to the proceeds of crime, and extends to any asset owned by an offender, including benami property. Such clauses are liable for legal challenge, especially if there are third party interests and doubts about real ownership.


  • The government has justified not linking the forfeiture clause to criminal conviction by citing the principle enshrined in the UN Convention against Corruption, which India ratified in 2011. The convention envisages domestic laws for confiscation of property without a criminal conviction in cases in which the offenders cannot be prosecuted for reasons of death, flight or absence.


National Financial Reporting Authority

  • The Cabinet also approved the creation of a National Financial Reporting Authority (NFRA). Section 132 of the Companies Act provides for its constitution. The authority will apply to only certain companies that will be notified in the rules. These will include all listed companies, and large unlisted companies. The size of these unlisted companies will be decided in the rules.
  • The Institute of Chartered Accountants of India will continue its audit procedures for smaller companies. According to finance minister, the NFRA will investigate matters of misconduct by chartered accountants.


Way ahead


  • The Bill is reasonable in that a fugitive offender will cease to be one if he or she appears before court. There is a 180-day window during which the property will remain attached, with a provision for appeal against an order of confiscation. While the utility and effectiveness of laws are best assessed in the implementation, it is important to ensure they are fair and reasonable. The shortcomings in previous laws must be avoided, and the new legal regime impartially enforced.


Question-Critically examine the recently approved a stringent Fugitive Economic Offenders Bill’s provisions.


Reducing the carbon footprint

(The Hindu)

Synoptic line: It throws light on the issue of emissions trading scheme (ETS).

(GS paper III)



  • Climate change is affecting our daily lives, we can see with hot summers, warm winters, increasing diseases, famines and droughts, and violent acts of nature. India, which aims to be a global superpower, seems to have approached the subject half-heartedly, hiding behind the veil of protecting its growing economy.

How to fight climate change


  • India needs to undertake a comprehensive approach, which can be done by establishing an emissions trading scheme (ETS).


Emissions Trading Scheme (ETS)


  • An ETS is a market-based mechanism where a cap is set on the amount of carbon dioxide or other greenhouse gases that can be emitted by covered entities. The emitters can either reduce their emissions to adhere to the cap or buy additional allowances from other entities to compensate for their deficiency.


  • One allowance gives the right to the holder to emit one tonne of carbon. Imagine that ‘X’ emits 120 tonnes of carbon per annum. The ETS sets a cap of 100 tonnes of carbon per annum (equivalent to 100 allowances) on it. ‘X’ would have the option to either reduce its emissions to 100 tonnes of carbon or buy 20 allowances to cover the difference.


  • A separate and independent regulatory authority must be set up to implement the ETS, which would ensure that the ETS is insulated from the political influence of climate sceptics. The authority must strive to educate emitters about ETS and inform them of cheap methods to reduce their carbon footprint. It must act as a ‘technical consultant’ when the emitters submit their ‘compliance plans’ (discussed below). It must also plan for contingencies and be ready to use the tools at hand to prevent market failure.


  • Strategic decisions need to be taken with respect to inclusion of industries under the ETS. Highly carbon-intensive industries (such as the coal sector) would have to be included under the ETS to maintain its effectiveness.


  • However, with respect to the other industries, State governments must be empowered to add to the list of covered entities after giving due weight to factors such as area-specific emission profiles, financial position of the entities, impact on the economy, and administrative costs.


  • The ETS need to obligate the emitters to design a ‘compliance plan’, setting out its own medium and long-term goals, with an explanation of how it would achieve them. The big emitters must be required to adhere to their compliance plans, and sanctions must be imposed in case of any non-compliance. It is imperative to maintain the price of the allowances within a certain desirable range. If the price of the allowances is too high, it may result in increased non-compliance and force the emitters to reduce output, thereby hurting the economy.


 Measures for controlling price volatility



  • There are three suggested measures for controlling price volatility- Safety Valve Trigger, Price-Based Market Stability Reserve (MSR), and Banking.



  1. A ‘safety valve trigger’- it is a mechanism whereby, if prices touch a predetermined level, actions are initiated to drive them down. This mechanism allows the emitters to average out their emissions. For instance, say emitter ‘X’ (with a cap of 100 tonnes of carbon per annum) emitted 110 tonnes of carbon in the first year (due to sudden increase in the demand in the economy) and 90 tonnes of carbon in the second year. If the safety valve is triggered in the first year, X’s average annual emissions would be 100 tonnes, and X would not be required to buy any additional allowances.


  1. Price-Based Market Stability Reserve (MSR)- in the MSR, a certain number of allowances are released in the market if the price of the allowance hits a predetermined level. Once the additional allowances are released in the carbon market, the supply would increase, leading to a reduction in the price of the allowances.


  1. BankingBanking offers respite to the emitters on an individual basis. An emitter, in anticipation of high prices, would be allowed to ‘bank’ his unused allowances for the next compliance period. However, such banking must be restricted to consecutive compliance periods and to a certain percentage of total emissions.


QuestionDiscuss emissions trading scheme (ETS) and state the reasons why India must establish an emissions trading scheme?


Mastering the seas

(The Indian Express)

Synoptic line: It throws light on the issue of maritime issues critical to India’s vital interests.

(GS paper II)




  • India’s main strategic challenge comes from its prosperous northern neighbour; China. The Kashmir and Sino-Indian border disputes, although far from the sea, could have maritime repercussions if India attempts to employ countervailing strategies in the Indian Ocean. 




  • The rapid growth of both economies has led to increasing reliance on energy and raw materials, and transported by sea. This has focused sharp attention on the criticality, for both economies, of uninterrupted use of the sea- lanes for trade and energy transportation






  • Seven decades ago, historian-diplomat, K M Panikkar presciently observed, “That China intends to embark on a policy of large scale naval expansion is clear enough, with her bases extending as far south as Hainan, China will be in an advantageous position”.




  • Panikkar’s prophecy came true in 2000, when China started construction of its southern-most naval base at Yulin, on Hainan Island. Built at colossal cost, Yulin’s tunnel-complexes house China’s submarine nuclear-deterrent, while its piers will accommodate aircraft-carrier strike-groups. This is a maritime hub created for the PLA Navy (PLAN) to exercise sea control and power projection across the Pacific and Indian Oceans, whose waters carry China’s vital trade and energy sea-lanes.




  • President Hu Jintao’s “Malacca dilemma” encapsulated the anxiety about China’s vulnerability to possible interdiction of its seaborne trade by the Indian Navy (IN). China, consequently, decided to become a major player in the Indian Ocean Region (IOR). Deftly playing its economic and diplomatic cards, China has established a chain of maritime footholds in Myanmar, Sri Lanka and Pakistan, and acquired its first overseas military base in Djibouti.




  • Strategically located archipelagic Republic of Maldives has traditionally maintained warm and friendly links with India. Alert diplomats should have picked up early signs of the Maldives slipping out of India’s ambit the appearance of radical Islam via Pakistan and Saudi Arabia, the warming of relations with China and the decline in India’s stock.



  • India’s recent agreement with Oman providing access, for “military use and logistical support” in the new Port of Duqm, has raised hopes that India is, belatedly, strengthening its maritime posture in the Indian Ocean Region (IOR).


  • There have been other significant developments too; like Indian President’s visit to Djibouti and its impending recognition by India; the conclusion of an Indo-Seychelles agreement for creation of air and naval facilities on Assumption Island; and the agreement with the UAE for joint naval exercises. Whether they herald a renewed impetus to India’s maritime outreach or, perhaps, the actualisation of Prime Minister’s 2015 “Sagar” vision, depends on whether they are random actions or part of a coherent Indian maritime grand strategy.


  • Beijing has built a powerful navy that will soon overtake the US navy in numbers, lagging behind only in capability. New Delhi, on the other hand, has shown no tangible signs of strategic thinking or long-term security planning, as evident from a total absence of defence white papers or security doctrines to date. The navy did spell out, in 2004-05, its own vision of India’s maritime interests and challenges through a maritime doctrine and a maritime strategy. But, in the absence of higher strategic guidance in the form of a national-level document, they are of limited utility.


Contributory factors

  • A lack of political resolve and diplomatic lassitude have been contributory factors, it is the absence of an over-arching vision which conceptualises the IOR in a 50-75 year perspective that has led to the neglect of maritime issues critical to India’s vital interests.



  • The Chabahar port project should have been completed long ago, notwithstanding US sanctions; the offer of Agalega Islands from Mauritius should have been taken up years ago; the Maldives imbroglio should have been pre-empted; and our disregard of distant Mozambique and Madagascar remains a huge maritime “missed opportunity”.


  • The IOR strategic agenda may be soon taken out of India’s hands as the chairmanship of two important bodies, the Indian Ocean Rim Association (IORA) and the Indian Ocean Naval Symposium (IONS) devolves on the UAE and Iran respectively.


Way ahead



  • There needs to be a semblance of harmony in the political domain. This will not happen as long as India’s deep internal divisions and instabilities continue to be exploited and its polity remains so bitterly divided that Parliament is rendered dysfunctional. Need to get our political and economic acts together.



Question Indian Ocean region in a long-term perspective has led to the neglect of maritime issues critical to India’s vital interests. Analyse.