1.Turning the clock back (The Hindu)
2.Halting the welfare state (The Indian Express)
3.Mental healthcare Bill: Suicide decriminalized
1.Turning the clock back (The Hindu)
Synoptic line: It throws light on the decision of the government to cancel the BIT(s) and its implications.(GS paper II)
- India’s existing Bilateral Investment Treaty (BIT) framework is bound to expire on 31st March 2017. India will renegotiate all the BIT(s) but the foreign sentiments with India’s regulatory regime are not convinced.
- It may have certain negative implications for the India’s status of being a free and forward looking economy.
BILATERAL INVESTMENT TREATIES
- Bilateral investment treaties are agreements between states that essentially give foreign investors rights against the host state in the event that a change in law or other measures essentially devalue or expropriate the investment made. India had signed more than 80 bilateral investment treaties, of which more than 70 were in force.
- Prior to LPG reforms India did not opted for BIT regime. However, post reform era, a spree of BIT signing was initiated.
Why India is cancelling BIT(s)?
- India was one of the top 15 most sued nation in 2015. According to UNCTAD, which keeps an account of the number of disputes, a total of 17 known investor-state dispute settlement (ISDS) cases were filed against India by the end of 2015.
- Recent reverses including the verdict in the Devas dispute, also strengthened the resolve of government to reconsider BIT(s). In the Devas dispute, the government cancelled an awarded contract, when irregularities were found. The investor sued the government and won.
- The Model BIT is intended to replace existing bilateral investment treaties. Government had published its finalized bilateral investment treaty in January 2016 which will replace existing framework.
Impact of BIT on foreign trade
- Various studies have examined the impact of BITs on FDI inflows. It has been demonstrated that BITs signed by India contributed to rising FDI inflows by providing protection and commitment to foreign investors. The significance of BITs in attracting investment was also emphasised by Canada’s Trade Minister during his recent visit to India.
- FDI inflows in India, rose from $393 million in 1992-93 to $4,029 million in 2000-01 mainly on account of BITs.
Implications of terminating BIT
- Termination of BITs by India will not impact existing foreign investment in India because most Indian BITs contain survival clauses ensuring availability of treaty protection for existing investment even after the expiration of the treaty for the next 10 to 15 years.
- Moreover, Termination of BITs will also not impact any of the 15-odd ongoing BIT disputes against India including Vodafone’s challenge of retrospective taxation under the India-Netherlands BIT.
- However, termination of BITs means that any new foreign investment in India shall not enjoy treaty protection.
- This shows India’s reluctance to be held accountable for its regulation under international law, thus forcing foreign investors to rely entirely on domestic laws and domestic courts to safeguard their interest. This may not be an attractive proposition for foreign investors for two reasons.
- First, if domestic laws are changed suddenly to the detriment of foreign investors, like it happened in the case of Vodafone where Parliament retrospectively amended the Income Tax Act to overrule the Supreme Court’s decision in favour of Vodafone, it would leave the foreign investor without any remedy.
- Second, the overstretched Indian judicial system does not inspire much confidence in foreign investors as a forum for speedy resolution of disputes.
Model BIT and concerns
- Government wants to sign new BITs with all these 58 countries based on the new Model BIT adopted in 2016.
- However, most developed countries have not shown much interest in the Model BIT because instead of striking a balance between investment protection and state’s right to regulate, it tilts towards the state regulation.
- There are fundamental differences between the Indian approach and the Canadian and European approach to protection of foreign investment, as reflected in the recently signed EU-Canada Comprehensive Economic and Trade Agreement (CETA) such as:
- The EU-Canada CETA contains a ‘most favoured nation’ (MFN) provision a cornerstone of non-discrimination in international economic relations which is missing in the Indian Model BIT.
- The Indian Model BIT, unlike the EU-Canada CETA, mandatorily requires foreign investors to litigate in domestic courts for five years before pursuing a claim under international law.
- The EU-Canada CETA provides protection to foreign investors in situations where the state goes back on the concrete representations it made to lure an investor, which the investor relied upon while investing. The Indian Model BIT is silent on this, thus exposing foreign investors to regulatory risks.
- The EU-Canada CETA talks of pursuing the establishment of a multilateral investment court to settle investment disputes. However, India’s situation is dubitable in this regard.
- Today, India is not just an importer but also an exporter of capital. India’s overseas FDI has increased from less than $1 billion in 2000-01 to more than $21 billion in 2015-16.
- Given the reciprocal nature of BITs, their termination followed by replacement with a protectionist treaty will also reduce the protection available to Indian companies abroad. Hence India should calculate its moves accordingly as not to infuriate any other host nation.
Question: Witnessing the gloomy economic prospects, the move to dismantle BIT regime may cost in terms of “ease of doing business” in India. How government should respond to such an issue?
2.Halting the welfare state (The Indian Express)
Synoptic line: It throws light on the issue of universal basic income (UBI) and its feasibility.(GS paper II)
- After demonetization, government is planning to introduce universal basic income (UBI) for its entire citizen with stating that UBI will be the most innovative, laudable idea, not only for India but for the whole world as it embodies the “essence” of human activity that is, earning one’s livelihood.
What is UBI
- A basic income is a form of social security in which all citizens or residents of a country regularly receive an unconditional sum of money, either from a government or some other public institution, in addition to any income received from elsewhere.
- Explaining UBI’s philosophy, government says that “a just society needs to guarantee to each individual a minimum income which they can count on, and which provides the necessary material foundation for a life with access to basic goods”.
- The Ministry of Finance’s annual survey of the economy, explores that country might replace its various welfare programs with a universal basic income, or a uniform stipend paid to every adult and child, poor or rich. Guaranteeing all citizens enough income to cover their basic needs would promote social justice and empower the poor to make their own economic choices.
UBI for India
- The idea of direct cash transfers replacing leaky and price-distorting subsidies is not new, it had been earlier proposed by the then chief economic advisor, Kaushik Basu in the economic survey of 2009-10.
- If implemented in India, it will replace all other centrally sponsored and central sector schemes such as Mid-Day Meal (MDM), Pradhan Mantri Gram Sadak Yojana, National Health Mission, Pradhan Mantri Awas Yojana, Sarva Shiksha Abhiyan, MGNREGA, PDS and so on. On the other hand, the idea is that it supplements, rather than substitutes, existing in-kind transfers such as free education or basic health insurance.
- When it comes to estimating the fiscal cost of a basic income, there are estimates of providing a universal income to 1.3 billion Indians will cost around 10% of GDP. The government on the other hand could decide to give it to the poorest households, as identified by the Tendulkar Committee-defined poverty line or individuals with Jan Dhan accounts.
Challenges with UBI
- One big challenge relates to the phasing out of food-related subsidies. Any plan to replace food related subsidies has to contend with the implications of such a move on food security of the country. Whether farmers will continue to produce enough food grains in the absence of price incentives remains a big question.
- The other big challenge relates to co-ordination between state and central governments. Any plan to phase out subsidies and tax exemptions (relating to the GST) will require an extraordinary degree of co-operation between the states and the Centre.
- UBI could generate fiscal stress during an economic downturn.
- The UBI is potentially attractive, if implemented according to its norm can reduce both poverty and inequality. There is need of equal investments in people and processes.
- The benefits of UBI are aplenty from giving people the freedom to spend their basic income as they wish, reduces the paternalistic nature of governments and gives them greater economic freedom and even go along with the political narrative of the government to combat corruption and ensure “minimum government, maximum governance”.
Question: Can UBI resolve the long pending issues of “development with equity”. Comment.
Mental healthcare Bill: Suicide decriminalized
- The Mental Health Care Bill is passed unanimously in the Lok Sabha (the bill was previously passed in the Rajya Sabha).
- One of the prime features of the bill is that it seeks to provide proper health-care, treatment and rehabilitation of mentally ill persons “in a manner that does not intrude on their rights and dignity.
- The Bill repeals the Mental Health Act, 1987. Government ratified the United Nations Convention on the Rights of Persons with Disabilities in 2007. The Convention requires the laws of the country to align with the Convention.
- Hence, the new Bill was introduced as the existing Act does not adequately protect the rights of persons with mental illness nor promote their access to mental health care.
- The Bill defines “mental illness” as a substantial disorder of thinking, mood, perception, orientation or memory that grossly impairs judgment, behaviour, capacity to recognise reality or ability to meet the ordinary demands of life, mental conditions associated with the abuse of alcohol and drugs, but does not include mental retardation which is a condition of arrested or incomplete development of mind of a person, specially characterised by subnormality of intelligence.
- Mental illness shall be determined in accordance with such nationally or internationally accepted medical standards.
- The bill said, “Notwithstanding anything contained in section 309 of the Indian Penal Code, any person who attempts to commit suicide shall be presumed, unless proved otherwise, to have severe stress and shall not be tried and punished under the said Code.”
Features of Bill
Rights of persons with mental illness
- The Bill ensures every person shall have a right to access mental health care and treatment from mental health services run or funded by the appropriate government. The Bill also assures free treatment for such persons if they are homeless or belong to Below Poverty Line, even if they do not possess a BPL card.
- Every person with mental illness shall have a right to live with dignity and there shall be no discrimination on any basis including gender, sex, sexual orientation, religion, culture, caste, social or political beliefs, class or disability.
Suicide is decriminalised
- A person who attempts suicide shall be presumed to be suffering from mental illness at that time and will not be punished under the Indian Penal Code. The government shall have a duty to provide care, treatment and rehabilitation to a person, having severe stress and who attempted to commit suicide, to reduce the risk of recurrence of attempt to commit suicide.
- This provision empowers a mentally-ill person to have the right to make an advance directive that explains how she/he wants to be treated for the requisite illness and who her/his nominated representative shall be. This directive has to be vetted by a medical practitioner.
Mental Health Authority
- The Bill empowers the government to set-up Central Mental Health Authority at national-level and State Mental Health Authority in every State. Every mental health institute and mental health practitioners including clinical psychologists, mental health nurses and psychiatric social workers will have to be registered with this Authority.
Mental Health treatment
- The Bill also specifies the process and procedure to be followed for admission, treatment and discharge of mentally-ill individuals. A medical practitioner or a mental health professional shall not be held liable for any unforeseen consequences on following a valid advance directive.
- A person with mental illness shall not be subjected to electro-convulsive therapy without the use of muscle relaxants and anaesthesia. Also, electro-convulsive therapy will not be performed for minors.
- A person with mental illness shall not be subjected to seclusion or solitary confinement. Physical restraint may only be used, if necessary.
Question: How far Mental Heath Care Bill address the goals of United Nations Convention on the Rights of Persons with Disabilities?