Insights Daily Current Affairs + PIB: 29 January 2019

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Insights Daily Current Affairs + PIB: 29 January 2019


Paper 2:

Topics Covered:

  1. Indian Constitution- historical underpinnings, evolution, features, amendments, significant provisions and basic structure.

 

Curative petition

 

What to study?

  • For Prelims: Meaning of curative petition, about methyl iso cyanide(MIC).
  • For Mains: The tragedy- how it took place, the fight for fair compensation and what needs to be done?

 

Context: The Supreme Court will hear in April a curative petition filed by the Centre seeking Rs 7,844 crore additional money from US-based Union Carbide Corporation (UCC), now owned by Dow Chemicals, to provide compensation to victims of the 1984 Bhopal gas tragedy.

 

The tragedy:

More than 3,500 people were killed instantly when poisonous gas leaked from the Union Carbide pesticide plant in Bhopal on the night of December 2-3, 1984. Thousands more have died over the years. Many more thousands have been maimed or suffer from serious health issues due to their exposure to the gas.

 

How did it happen?

There was a leakage in the water pipe and as result water entered into methyl isocyanate (MIC) tank. Also, refrigeration system was not working to cool MIC and prevent chemical reaction. Due to this, exothermic reaction took place releasing large amount of heat and the volume of gas increased and a cloud of gases phosgene, carbon monoxide and MIC started coming out. As it was very spontaneous and rapidly it spread and soon a very dense cloud was formed over the city of Bhopal exposing half a million people.

 

What is curative petition?

It is the last judicial resort available for redressal of grievances in court which is normally decided by judges in-chamber. It is only in rare cases that such petitions are given an open-court hearing.

The concept of curative petition was first evolved by the Supreme Court of India in the matter of Rupa Ashok Hurra vs. Ashok Hurra and Anr. (2002) where the question was whether an aggrieved person is entitled to any relief against the final judgement/order of the Supreme Court, after dismissal of a review petition.

The Supreme Court in the said case held that in order to prevent abuse of its process and to cure gross miscarriage of justice, it may reconsider its judgements in exercise of its inherent powers. For this purpose, the Court has devised what has been termed as a “curative” petition.

 

To entertain the curative petitions, the Supreme Court has laid down certain specific conditions:

  1. The petitioner will have to establish that there was a genuine violation of principles of natural justice and fear of the bias of the judge and judgement that adversely affected him.
  2. The petition shall state specifically that the grounds mentioned had been taken in the review petition and that it was dismissed by circulation.
  3. The petition is to be sent to the three senior most judges and judges of the bench who passed the judgement affecting the petition, if available.
  4. If the majority of the judges on the above bench agree that the matter needs hearing, then it would be sent to the same bench (as far as possible) and the court could impose “exemplary costs” to the petitioner if his plea lacks merit.

Article- 137 of the Constitution subjects to the provisions of the guidelines made under Article 145, by which it is clear that the Supreme Court has the ability to review any judgment declared by it.

 

Sources: the hindu.


Paper 2:

Topics Covered:

  1. Issues relating to development and management of Social Sector/Services relating to Education and Human Resources.

 

India to participate in PISA 2021

 

What to study?

  • For Prelims: PISA- Key facts.
  • For Mains: Why India stayed away from PISA for years and issues associated.

 

Context: The Union Human Resources Development Ministry has signed an agreement with Organisation for Economic Co-operation and Development (OECD) for India’s Participation in Programme for International Student Assessment- PISA 2021.

  • The students will be selected by PISA through random sampling. The schools run by Kendriya Vidyalaya Sangathan (KVS), Navodaya Vidyalaya Samiti (NVS) and schools in the UT of Chandigarh would be participating.

 

Significance:

India’s participation in PISA- 2021 would lead to recognition and acceptability of Indian students and prepare them for the global economy in the 21st century.

 

Background:

India had taken part in Programme for International Student Assessment (PISA) in 2009 and bagged the 72nd rank among 74 participating countries. Then UPA government had boycotted PISA, blaming “out of context” questions for India’s dismal performance.

Later, the HRD Ministry, under the NDA-II government, revisited this decision in 2016 and the Kendriya Vidyalaya Sangathan (KVS) had set up a committee to review the matter and submitted its report in December 2016. The report recommended for participation in test in 2018. However, India missed the application deadline for the 2018 cycle.

 

About the Program for International Student Assessment (PISA):

  • It is an international assessment that measures 15-year-old students’ reading, mathematics, and science literacy every three years.
  • First conducted in 2000, the major domain of study rotates between reading, mathematics, and science in each cycle. PISA also includes measures of general or cross-curricular competencies, such as collaborative problem solving.
  • By design, PISA emphasizes functional skills that students have acquired as they near the end of compulsory schooling.
  • PISA is coordinated by the Organization for Economic Cooperation and Development (OECD), an intergovernmental organization of industrialized countries, and is conducted in the United States by NCES. Data collection for the most recent assessment was completed in Fall 2015.
  • In 2012 PISA test, schools of Shanghai in China topped reading, mathematics and science test, followed closely by Singapore. In 2015, Singapore, Japan and Estonia were ranked as top three countries, in that order.

 

Sources: pib.


Paper 2:

Topics Covered:

  1. Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources, issues relating to poverty and hunger.
  2. Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes.

 

Non-communicable diseases

 

What to study?

  • For Prelims: What are NCDs?
  • For Mains: NCDs- concerns, challenges posed and need for international cooperation in fighting NCDs.

 

Context: Non-communicable diseases (NCDs) — mainly cardiovascular diseases, chronic respiratory diseases, diabetes and cancer — continue to be the top killers in the South-East Asia Region, claiming 8.5 million lives each year, according to the World Health Organisation (WHO).

 

Background:

Containing the NCDs has been listed by the WHO as its health goal for this year along with reducing mortality related to air pollution and climate change, global influenza pandemic etc.

 

Key observations:

  1. Non-communicable diseases such as diabetes, cancer and heart disease, are collectively responsible for over 70% of all deaths worldwide, or 41 million people. These include 15 million people dying prematurely, aged between 30 and 69.
  2. One third of these deaths are premature and occur before the age of 70, affecting economically productive individuals.
  3. The four ‘major’ NCDs are caused, to a large extent, by four modifiable behavioural risk factors: tobacco use, unhealthy diet, insufficient physical activity and harmful use of alcohol.
  4. The NCDs disproportionately affect the poor, impoverish families, and place a growing burden on health care systems.

 

What needs to be done?

  • Consuming fibre and whole grains can reduce health risks from non-communicable diseases such as heart disease. Eating fibre-rich foods reduces the incidence of coronary heart disease, stroke, type 2 diabetes and colorectal cancer by 16% to 24%.
  • A higher fibre intake is also associated with lower bodyweight, systolic blood pressure and total cholesterol when compared with lower intake.
  • Doctors also recommend — eat less and enjoy your food by eating slowly, fill half your plate with fruits and vegetables, avoid oversized portions which causes weight gain, at least half of your grains should be whole grains, limit consumption of food high in trans fats.

 

What are NCDs?

Noncommunicable diseases (NCDs), also known as chronic diseases, tend to be of long duration and are the result of a combination of genetic, physiological, environmental and behaviours factors.

The main types of NCDs are cardiovascular diseases (like heart attacks and stroke), cancers, chronic respiratory diseases (such as chronic obstructive pulmonary disease and asthma) and diabetes.

 

What are the socioeconomic impacts of NCDs?

NCDs threaten progress towards the 2030 Agenda for Sustainable Development, which includes a target of reducing premature deaths from NCDs by one-third by 2030.

Poverty is closely linked with NCDs. The rapid rise in NCDs is predicted to impede poverty reduction initiatives in low-income countries, particularly by increasing household costs associated with health care. Vulnerable and socially disadvantaged people get sicker and die sooner than people of higher social positions, especially because they are at greater risk of being exposed to harmful products, such as tobacco, or unhealthy dietary practices, and have limited access to health services.

In low-resource settings, health-care costs for NCDs quickly drain household resources. The exorbitant costs of NCDs, including often lengthy and expensive treatment and loss of breadwinners, force millions of people into poverty annually and stifle development.

 

Sources: the hindu.

 

Mains Question: India is in the midst of an epidemiological transition, whereby poverty-linked infectious, maternal and nutritional diseases exist in conjunction with non-communicable chronic illnesses. Analyse the causes and trends in spread of non-communicable diseases and their risk factors.


Paper 2 and 3:

Topics Covered:

  1. Issues related to health.
  2. Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

 

New Delhi superbug gene reaches the Arctic

 

What to study?

  • For Prelims: What are superbugs, brief overview of known superbugs.
  • For Mains: MDR- causes, concerns and solutions.

 

Context: In a significant find in the global spread of multi-drug resistant (MDR) bacteria, scientists have found a “superbug” gene — first detected in over a decade back — in one of the last “pristine” places on Earth that is some 12,870 km away.

Soil samples taken in Svalbard — a Norwegian archipelago between mainland Norway and the North Pole — have now confirmed the spread of blaNDM-1 (called New Delhi Metallo-beta-lactamase-1) into the High Arctic. Carried in the gut of animals and people, blaNDM-1 and other ARGs were found in Arctic soils that were likely spread through the faecal matter of birds, other wildlife and human visitors to the area.

 

What is a superbug?

A superbug, also called multi-resistant, is a bacterium that carries several resistance genes. These are resistant to multiple antibiotics and are able to survive even after exposure to one or more antibiotics.

 

What causes them to mutate like that?

Like any living organism, bacteria can mutate as they multiply. Also like any living organism, bacteria have a strong evolutionary drive to survive. So, over time, a select few will mutate in particular ways that make them resistant to antibiotics. Then, when antibiotics are introduced, only the bacteria that can resist that treatment can survive to multiply further, proliferating the line of drug-resistant bugs.

 

Why is Antibiotic Resistance a Big Deal?

The discovery of antibiotics less than a century ago was a turning point in public health that has saved countless lives. Although antibiotic resistance develops naturally with normal bacterial mutation, humans are speeding it up by using antibiotics improperly. According to a research, now, 2 million people a year in the US develop antibiotic-resistant infections, and 23,000 of them die of those infections.

 

Why is the medical community worried?

Basically, superbugs are becoming more powerful and widespread than ever. Medical experts are afraid that we’re one step away from deadly, untreatable infections, since the mcr-1 E.coli is resistant to that last-resort antibiotic Colistin. Antibiotic-resistance is passed relatively easily from one bacteria to the next, since it is transmitted by way of loose genetic material that most bacteria have in common.

The World Health Organization (WHO) is afraid of a post-antibiotic world, where loads of bacteria are superbugs. Already, infections like tuberculosis, gonorrhea, and pneumonia are becoming harder to treat with typical antibiotics.

 

What Can We Do?

First step would be to limit antibiotic use. If a patient has a virus, for instance, an antibiotic won’t work, so doctors shouldn’t prescribe antibiotics even if the patient insists. And when patients do need antibiotics, it’s important to make sure they take the full course to kill off every last infection-causing germ. Otherwise the strong survive, mutate, and spread. As a society, curbing antibiotic use in healthy animals used in human food production is another important step.

 

Sources: the hindu.

 

Mains Question: Antibiotic resistance is one of the biggest health challenges of 21st century. Examine why. Also discuss the threat posed in this regard by gut bacteria?


Paper 2 and 3:

Topics Covered:

  1. Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.
  2. Important International institutions, agencies and fora, their structure, mandate.
  3. Conservation, environmental pollution and degradation, environmental impact assessment.

 

Tackling climate change from a security perspective

 

What to study?

  • For Prelims: UNSC; key facts.
  • For Mains: Declaring Climate Change as a security issue- need, concerns associated and alternatives available.

 

Why in News? As climate change is increasingly recognized as a “threat multiplier” by scientists, political representatives, and civil society across the world, the United Nations Security Council recently held an open debate to discuss its concrete impact on peace and security, and focus on tangible ways to diminish the effects of global warming.

However, India has questioned the rush at the UN to declare climate change an international security issue.

 

India has pointed out the following pitfalls arising from viewing actions to tackle climate change from a security perspective:

  1. Declaring so potentially give the Security Council the right to take action on it. A “mere decision of the Council” to take over enforcement of climate change action will disrupt the Paris Agreement and multilateral efforts to find solutions.
  2. UNSC may not also be suitable to lead a global response to a problem that requires collaboration of all countries and stakeholders. A security approach to a critical challenge facing humanity may in fact hinder the global collective effort.
  3. A securitised approach could also end up pitting countries into a competition when the most productive approach is cooperation.
  4. Thinking in security terms usually engenders overly militarised solutions to problems, which inherently require non-military responses to resolve. It brings the wrong actors to the table.
  5. Also, climate-related disasters may not amenable to the processes and solutions used to tackle threats to international peace and security. Mitigation and adaptation strategies may not be fulfilled through enforcement action.

 

Positive sides:

  • Since international peace and security considerations lead to increased focus on issues, defining climate change as a security challenge could lead to an upgrade in attention and resources devoted to addressing it.
  • Securitising climate change may also help heighten public awareness and help surmounting opposition to addressing the issue.

 

Why regard climate change as a national security threat?

  1. Climate change has “a multitude of security impacts” with global warming records broken in 20 of the last 22 years.
  2. Few say that there is no bigger security threat than climate change because it endangers the very existence of countries like Maldives.
  3. Intergovernmental Panel on Climate Change’s report in October predicting more heat waves, heavier rain events, higher sea levels and severe damage to agriculture represents “a security risk for the entire world.”
  4. Also, the global average greenhouse gas concentrations of carbon dioxide – which causes global warming – continued rising to record levels in 2018-2019. The last time the Earth experienced similar concentration of carbon dioxide was 3-5 million years ago, when the temperature was 2-3 degrees Celsius warmer and sea level was 10-20 metres higher than now.

 

Way ahead:

Climate change is not a threat to international peace and security and should only be discussed in specific cases where it is a risk factor. However, enough attention needs to be given as World Economic Forum has ranked extreme weather, natural disasters, climate change and water crises as the top four existential threats in its new Global Risks Report 2019.

 

Key focus areas should be:

  1. Developing stronger analytical capacity with integrated risk assessment frameworks.
  2. Collecting stronger evidence base so good practices on climate risk prevention and management can be replicated in the field.
  3. Building and reinforcing partnerships to leverage existing capacities within and outside the UN system.

 

Sources: the hindu.

Mains Question: Declaring Climate Change as an international security issue is the best approach to handle the issue. Comment.


Paper 2:

Topics Covered:

  1. Issues related to subsidies.
  2. Govt policies and their performances.

 

Delhi To Introduce MSP based on Swaminathan Commission Report

 

What to study?

For Prelims and Mains: What is MSP, need for revision and MS Swaminathan Committee recommendations and their significance.

 

Context: The Delhi government has decided to introduce Minimum Support Price (MSP) for farmers based on the report of the MS Swaminathan Commission.

 

Background:

A three-member committee was formed in December to study the MS Swaminathan Commission’s report. The committee has submitted its report. The report will be put before experts for suggestions. Once the MSP is finalised, the government will hold meetings with farmers, seeking their views and thereafter it will be sent to the Cabinet.

 

The Swaminathan Commission- Inception:

The National Commission on Farmers (NCF), with MS Swaminathan as its chairman, was formed in 2004.

Aim: To come up with a system for sustainability in farming system and make it more profitable and cost competitive in farm commodities. To also recommend measures for credit and other marketing steps.

The commission submitted five reports between December 2004 and October 2006. The fifth and final report is considered the most crucial as it contains suggestions for the agriculture sector as a whole.

 

The Commission’s observations:

  • Farmers need an assured access to and control over basic resources of farming. These include land, water, fertilizers and pesticides, credit and crop insurance. Knowledge of farming technology and markets is also key.
  • Farmers’ concerns and other agriculture-related issues must be implemented in the concurrent list, to make it a high priority for both state and central governments.

 

Key recommendations of the Commission:

  • Distribute ceiling-surplus and wasteland among farmers, prevent the non-agricultural use of farmland, secure grazing rights and seasonal forest access to forest tribals.
  • Establish a National Land Use Advisory Service, which would link land use decisions with ecological and marketing factors of season and geography-specific basis.
  • Reform irrigation resources and its distribution among farmers. Use rainwater harvesting, water level recharging to increase water supply.
  • Spread outreach of institutional credit by reducing crop loan interest rates, provide a moratorium on debt recovery, agricultural risk fund and a separate Kisan Credit Card for women farmers.
  • To address the growing farmer suicides, provide affordable health insurance at primary health centres in rural areas. The recommendations included an extension of national rural health mission to suicide-prone areas. Restructuring of microfinance policies, covering all crops by insurance and social security net for support were also sought.
  • Give farmers a minimum support price at 50% profit above the cost of production classified as C2 by the Commission for Agricultural Costs and Prices (CACP).

 

WHAT IS C2?

The CACP defines production costs of crops under three categories — A2, A2+FL (standing for family labour) and C2.

  • A2 is the actual paid-out expenses incurred by farmers — in cash and kind — on seeds, fertilisers, pesticides, hired labour, fuel, irrigation and other inputs from outside.
  • A2+FL includes A2 cost plus an imputed value of unpaid family labour.
  • C2 is the most comprehensive definition of production cost of crops as it also accounts for the rentals or interest loans, owned land and fixed capital assets over and above A2+FL.

 

For further reading on MS Swaminathan report: http://www.prsindia.org/report-summaries/swaminathan-report-national-commission-farmers.

 

Sources: the hindu.

Mains Question: Examine the key findings, recommendations and relevance of the National Commission on Farmers.


Paper 3:

Topic covered:

  1. Conservation related issues.

 

‘India can’t handle more big cats’

 

What to study?

For Prelims and Mains: International Stock Taking Conference on Tiger Conservation, project tiger, global tiger initiative and Global Tiger Recovery Program (GTRP).

 

Context: With shrinking habitats, experts opine that India has almost neared its capacity to manage tigers. Therefore, India must also prepare for a new challenge — of reaching the limits of its management capacity.

 

Notable points:

  1. India’s current capacity to host tigers ranges from 2,500-3,000 tigers. Officially, India had 2,226 tigers as of 2014. An ongoing census is expected to reveal an update to these numbers.
  2. 25-35% of India’s tigers now lived outside protected reserves.
  3. Recent attempts at translocating tigers to unpopulated reserves, such as Satkosia in Orissa, have ended badly, with one of the tigers dying.

 

Main Challenges:

  • Dwindling core forest as well as the shrinking of tiger corridors.
  • Poaching and man-animal conflict.

 

Way ahead:

India has the maximum number of wild tigers in the world (70% of tigers in the world are in India). Therefore, it needs a fool-proof plan to manage the growing number of big cats.

Given the low availability of prey in some reserves, the country should now concentrate on developing vast tracts of potential tiger habitat that can be used to improve prey density, develop tiger corridors and therefore support a much larger population.

 

International Stock Taking Conference on Tiger Conservation:

The 3rd Stock Taking Conference on Tiger Conservation was recently inaugurated in New Delhi. Third in a series of Stock Taking Conferences, this is the second to be held in India after 2012 and is expected to have wide-ranging discussions on the status of the Global Tiger Recovery Program (GTRP) by the 13 tiger range countries besides deliberations on combating wildlife trafficking.

13 Tiger range States—Bangladesh, Bhutan, Cambodia, China, India, Indonesia, Lao PDR, Malaysia, Myanmar, Nepal, Russia, Thailand, and Vietnam.

The conference is being hosted by the National Tiger Conservation Authority, Ministry of Environment, Forest and Climate Change in close collaboration with the Global Tiger Forum which is an International, Intergovernmental Organization for conserving tigers in the world.

Additional facts: During the St. Petersburg declaration in 2010, tiger range countries had resolved to double tiger numbers across their range by 2022.

 

Sources: the hindu.

Mains Question: What conditions are necessary for tigers to live, breed and increase their population? Examine the role of the National Tiger Conservation Authority (NTCA) in conserving tiger population.


 

Facts for Prelims:

 

Malaysia not to host 2019 World Para Swimming Championships:

Context: Malaysia was stripped of the right to host the 2019 World Para Swimming Championships for threatening to refuse to allow Israeli athletes to take part in the event. International Paralympic Committee said.

 

India replaces Japan to be world’s second largest steel producer:

India has replaced Japan as the world’s second-largest steel producing country, only behind China, which is the largest producer of crude steel accounting for more than 51 per cent of production, as per the latest report by World Steel Association.

 

Environment, Social and Governance (ESG) Fund:

Context: Three former Tata Group executives in partnership with Quantum Advisors will launch a $1 billion Environment, Social and Governance (ESG) Fund.

About the Fund:

  • The Fund will invest in Indian companies that value the environment, society and corporate governance to the core.
  • The proposed equal joint venture(JV) would mobilise funds from long-term foreign investors such as pension funds, sovereign wealth funds and family offices of high networth individuals (HNIs) who value ESG.
  • The fund will aim to drive higher ESG performance in Indian corporates and it will adopt an engaged, private equity approach to public markets investing, with a focus on working with companies willing to recognize the long-term advantages of actively adopting ESG standards of excellence.

Significance: There is pressing need for such a fund in India as there are concerns on standards of corporate governance in the country and Indian companies will need to play a central role to help achieve global climate change targets.


Summary of Important Editorials:

 

Shot in the arm- SC upholds Insolvency and Bankruptcy Code:

Link: https://www.thehindu.com/opinion/editorial/shot-in-the-arm/article26114457.ece.

 

Context: Supreme Court has upheld the Insolvency & Bankruptcy Code’s constitutional validity in its ‘entirety’, and rejected petitions challenging the bankruptcy laws, in a major setback to defaulting promoters hoping for a chance to remain in control of their firms.

 

Know about the IBC:

The IBC was enacted in 2016, replacing a host of laws, with the aim to streamline and speed up the resolution process of failed businesses.

  • The code applies to companies and individuals. It provides for a time-bound process to resolve insolvency. When a default in repayment occurs, creditors gain control over debtor’s assets and must take decisions to resolve insolvency within a 180-day period.
  • The Code also consolidates provisions of the current legislative framework to form a common forum for debtors and creditors of all classes to resolve insolvency.

 

The Code creates various institutions to facilitate resolution of insolvency. These are as follows:

Insolvency Professionals: A specialised cadre of licensed professionals is proposed to be created. These professionals will administer the resolution process, manage the assets of the debtor, and provide information for creditors to assist them in decision making.

Insolvency Professional Agencies: The insolvency professionals will be registered with insolvency professional agencies. The agencies conduct examinations to certify the insolvency professionals and enforce a code of conduct for their performance.

Information Utilities: Creditors will report financial information of the debt owed to them by the debtor. Such information will include records of debt, liabilities and defaults.

Adjudicating authorities: The proceedings of the resolution process will be adjudicated by the National Companies Law Tribunal (NCLT), for companies; and the Debt Recovery Tribunal (DRT), for individuals. The duties of the authorities will include approval to initiate the resolution process, appoint the insolvency professional, and approve the final decision of creditors.

Insolvency and Bankruptcy Board: The Board will regulate insolvency professionals, insolvency professional agencies and information utilities set up under the Code.  The Board will consist of representatives of Reserve Bank of India, and the Ministries of Finance, Corporate Affairs and Law.

 

Salient features of the Insolvency and Bankruptcy Code- how it work?

  1. The Insolvency and Bankruptcy Code 2016 is a comprehensive law and covers all individuals, companies, Limited Liability Partnerships (LLPs) and partnership firms.
  2. The adjudicating authority is National Company Law Tribunal (NCLT) for companies and LLPs and Debt Recovery Tribunal (DRT) for individuals and partnership firms.
  3. The insolvency resolution process can be initiated by any of the stakeholders of the firm: firm/ debtors/ creditors/ employees.
  4. If the adjudicating authority accepts, an Insolvency resolution professional or IP is appointed.
  5. The power of the management and the board of the firm is transferred to the committee of creditors (CoC). They act through the IP.
  6. The IP has to decide whether to revive the company (insolvency resolution) or liquidate it (liquidation).
  7. If they decide to revive, they have to find someone willing to buy the firm.
  8. The creditors also have to accept a significant reduction in debt. The reduction is known as a haircut.
  9. They invite open bids from the interested parties to buy the firm.
  10. They choose the party with the best resolution plan, that is acceptable to the majority of the creditors (75 % in CoC), to take over the management of the firm.

 

Significance of the SC’s latest judgment:

The endorsement of the law and its provisions by the Supreme Court would come as a boost to the government which pushed for a modern bankruptcy law in the first half of its term and managed to get an exit mechanism which would help the reallocation of capital and ease the huge debt burden of banks in India.

In the working of the code, the flow of resources to the commercial sector in India has increased exponentially as a result of financial debts being repaid, the Supreme Court said.

Crucially, the judgement upheld Section 29A of the code. The section specifies a broad range of criteria that would disqualify potential bidders from bidding for assets undergoing the corporate insolvency resolution process and, among other things, bars promoters of a company facing insolvency proceedings from bidding to regain its control.

 

Performance of IBC:

It has been an effective tool for creditors, with a threat to refer a case under the insolvency law helping force many debtors to come to the negotiating table and reinforcing what former RBI Governor, Raghuram Rajan, had famously said about promoters having no divine right. A measure of the success of this law will be a rising graph of cases of corporate debtors being resolved.

 

Challenges present and measures to address them:

The major worry of the law now is the failure in many cases to stick to the prescribed timeline of 180 to 270 days to firm up a resolution plan with elaborate hearings at NCLT benches. Such delay goes against the very raison d’étre of the law which is to ensure a swift resolution or closure and thus lower the risk for banks and the government arising from a rising pile of bad debts and the subsequent need to recapitalise state-owned lenders.

It is important that these timelines are adhered to. Over time, the NCLT may be better tuned to these kind of summary proceedings with capacity building and training of professionals.

 

Way ahead:

With the Supreme Court now upholding the law barring promoters of defaulting companies from buying back the stressed assets, we can perhaps look to quicker resolutions of bad debts. This is no small matter given that Indian banks have among the world’s lost ratios when it comes to non-performing assets or bad loans, and the twin balance sheet problem— where there is stress on both the lenders’ and borrowers’ books—is one of the biggest elephants in the room.

The Supreme Court’s ruling, then, is a welcome one that should circumvent efforts by vested interests to try and stymie the revival of debt-laden companies, and will go a long way in enhancing India’s stature as a good place to do business in.