20TH JANUARY CURRENT AFFAIRS

1.National Startup Advisory Council

News: The Central Government has now decided to nominate the non-official members on the National Startup Advisory Council representing various stakeholders such as founders of successful startups, veterans who have grown and scaled companies in India, persons capable of representing interest of investors into startups, persons capable of representing interests of incubators and accelerators, representatives of associations of stakeholders of startups and representatives of industry associations.

About National Startup Advisory Council:

  • Department for Promotion of Industry and Internal Trade (DPIIT) had constituted the ‘National Startup Advisory Council’ to advise the Government on measures needed to build a strong ecosystem for nurturing innovation and startups in the country to drive sustainable economic growth and generate large scale employment opportunities. The council shall, inter alia, suggest measures to:
  • Foster a culture of innovation amongst citizens and students in particular;
  • Promote innovation in all sectors of economy across the country, including semi-urban and rural areas;
  • Support creative and  innovative ideas through incubation and research and development to transform them into valuable products, processes or solutions to improve productivity and efficiency;
  • Create an environment of absorption of innovation in industry;
  • Facilitate public organizations to assimilate innovation with a view to improving public service delivery;
  • Promote creation, protection and commercialization of intellectual property rights;
  • Make it easier to start, operate, grow and exit businesses by reducing regulatory compliances and costs;
  • Promote ease of access to capital for startups;
  • Incentivize domestic capital for investments into startups;
  • Mobilize global capital for investments in Indian startups;
  • Keep control of startups with original promoters.
  • Provide access to global markets for Indian startups.

2.India-EU IPR dialogue

News: The 1st India-EU IPR dialogue was held on 14th January, 2021 between the EU Commission and Department for Promotion of Industry and Internal Trade (DPIIT) through a virtual platform.

Objective: The aim of the dialogue was to further strengthen the India-EU relation & facilitate enhanced cooperation in the field of Intellectual Property Rights.

Details:

  • The India Co-Chair provided an overview of various IPR developments, with an aim to meet the objectives set forth in the National IPR policy 2016. It reiterated importance of legislative reforms brought in by India to stimulate innovation and creativity among start-ups and MSMEs. Various initiatives taken up by the Indian government in this context were appreciated by EU representatives.
  • The EU Co-Chair provided brief overview of DG trade and the various activities being undertaken by them including IPRs in relation to Free Trade Agreements as well as effective enforcement of Intellectual Property Rights.
  • After the opening remarks, exchange of information concerning specific areas of IP regimes took place. Representative from EU provided an update on a recent directive on Copyright in the digital market keeping in pace with changing demands of industry. On Trademark, they presented the details about the dual system available in the region which provides flexibility to the owners.
  • Indian counterparts updated the functionaries on reduced pendency on trademarks and department’s continuous efforts to further improve the process. Further, there were discussions on plant protection and farmer’s right and their importance for Indian economy.
  • Representative from India also briefed on the various enforcement initiatives being taken by the government so as to ensure the right of the owners are respected.

What are Intellectual Property Rights?

  • Intellectual property rights (IPR) are the rights given to persons over the creations of their minds: inventions, literary and artistic works, and symbols, names and images used in commerce.
  • They usually give the creator an exclusive right over the use of his/her creation for a certain period of time.
  • These rights are outlined in Article 27 of the Universal Declaration of Human Rights,which provides for the right to benefit from the protection of moral and material interests resulting from authorship of scientific, literary or artistic productions.
  • The importance of intellectual property was first recognized in the Paris Convention for the Protection of Industrial Property (1883)and the Berne Convention for the Protection of Literary and Artistic Works (1886). Both treaties are administered by the World Intellectual Property Organization (WIPO).

Intellectual property rights are customarily divided into two main areas:

Copyright and rights related to copyright:

  • The rights of authors of literary and artistic works (such as books and other writings, musical compositions, paintings, sculpture, computer programs and films) are protected by copyright, for a minimum period of 50 years after the death of the author.

Industrial property:

  • Protection of distinctive signs,in particular trademarks and geographical indications.
  • Trademarksdistinguish the goods or services of one undertaking from those of other undertakings.
  • Geographical Indications (GIs)identify a good as originating in a place where a given characteristic of the good is essentially attributable to its geographical origin.
  • The protection of such distinctive signs aims to stimulate and ensure fair competition and to protect consumers,by enabling them to make informed choices between various goods and services.
  • The protection may last indefinitely,provided the sign in question continues to be distinctive.
  • Other types of industrial property are protected primarily to stimulate innovation, design and the creation of technology. In this category fall inventions (protected by patents), industrial designsand trade secrets.

 3.PARAKRAM DIWAS

 News: Government of India has decided to celebrate the 125th Birth Anniversary year of Netaji Subhas Chandra Bose in a befitting manner at national and international level, beginning from 23rd January 2021.

Details:

  • A High Level Committee, headed by the Prime Minister Shri Narendra Modi, has been constituted for deciding the programs, and to supervise and guide the commemoration.
  • In order to honour and remember Netaji’s indomitable spirit and selfless service to the nation, Government of India has decided to celebrate his birthday on the 23rdday of January every year as “PARAKRAM DIWAS” to inspire people of the country, especially the youth, to act with fortitude in the face of adversity as Netaji did, and to infuse in them a spirit of patriotic fervour.

Brief background of Subhash Chandra Bose:

  • Subhas Chandra Bose was one of the most eminent freedom fighters of India. Born in Cuttack, in the province of Bengal to an affluent family.
  • He was educated in Calcutta acquiring a degree in philosophy. Subhas Chandra Bose was Selected for the Indian Civil Services (ICS) but refused to take up service since he did not want to serve the British government. Bose joined the Indian National Congress (Formed on December 28,1885) in 1921. He also started a newspaper called ‘Swaraj’.
  • He was the President of the All India Youth Congress and also the Secretary of the Bengal State Congress. In 1924, he became the CEO of the Calcutta Municipal Corporation. In 1930, he became the Mayor of Calcutta.
  • Bose authored the book ‘The Indian Struggle’ which covers the Indian independence movement from 1920 to 1942. The book was banned by the British government.
  • He coined the term ‘Jai Hind’. His charisma and powerful personality inspired many people into the freedom struggle and continues to inspire Indians. He was called Netaji.

 4.Bad Bank

 News: The idea of setting up a bad bank to resolve the growing problem of non-performing assets (NPAs), or loans on which borrowers have defaulted, is back on the table.

Background:

  • Commercial banks are set to witness a spike in NPAs, or bad loans, in the wake of the contraction in the economy as a result of the pandemic. Hence the RBI recently agreed to look at the proposal for the creation of a bad bank. This is in the response to a six-month moratorium it has announced to tackle the economic slowdown.

Do we need such bank?

  • With the pandemichitting the banking sector, the RBI fears a spike in bad loans in the wake of a six-month moratorium it has announced to tackle the economic slowdown.
  • Professionally-run bad banks, funded by the private lenders and supported by the government, can be an effective mechanism to deal with Non-Performing Assets (NPA).
  • Thepresence of the government is seen as a means to speed up the clean-up process.
  • Financial Stability Report (FSR): The RBI noted in its recent FSRthat the gross NPAs of the banking sector are expected to shoot up to 13.5% of advances by September 2021, from 7.5% in September 2020.
  • K V Kamath Committee: Noted that corporate sector debt worth Rs 15.52 lakh crore has come under stress after Covid-19hit India, while another Rs 22.20 lakh crore was already under stress before the pandemic.
  • The committee noted that companies in sectors such as retail trade, wholesale trade, roads and textiles are facing stress. Sectors that have been under stress pre-Covid include Non-Banking Financial Company (NBFC), power, steel, real estate and construction.

Bad Bank:

  • A bad bank is a bank set up to buy the bad loans and other illiquid holdings of another financial institution.
  • The entity holding significant nonperforming assets will sell these holdings to the bad bank at market price.
  • By transferring such assets to the bad bank, the original institution may clear its balance sheet—although it will still be forced to take write-downs.

Is there any global example?

  • US-based BNY Mellon Bank created the first bad bank in 1988, after which the concept has been implemented in other countries including Sweden, Finland, France and Germany.
  • However, resolution agencies or ARCs set up as banks, which originate or guarantee to lend, have ended up turning into reckless lenders in some countries.

What does the govt. and RBI say?

  • While the RBI did not show much enthusiasm about a bad bank all these years, there are signs that it can look at the idea now. Experts, however, argue that it would be better to limit the objective of these asset management companies to the orderly resolution of stressed assets, followed by a graceful exit.
  • Former RBI Dy. Governor Acharya suggested two models to solve the problem of stressed assets.
  • The first is a private asset management company (PAMC), which is said to be suitable for stressed sectors where the assets are likely to have an economic value in the short run, with moderate levels of debt forgiveness.
  • The second model is the National Asset Management Company (NAMC), which would be necessary for sectors where the problem is not just one of excess capacity but possibly also of economically unviable assets in the short to medium terms.

Significance:

  • This helps banks or FIs clear-off their balance sheets by transferring the bad loans and focus on its core business lending activities. Large debtors have many creditors. Hence bad bank could solve the coordination problem, since debts would be centralised in one agency.
  • It can effect speedier settlements with borrowers by cutting out individual banks.
  • It can drive a better bargain with borrowers and take more stringent enforcement action against them.
  • It can raise money from institutional investors rather than looking only to the Government.

Way Forward

  • So long as Public sector banks managements remain beholden to politicians and bureaucrats, their deficit in professionalism will remain and subsequently, prudential norms in lending will continue to suffer. Therefore, the debate regarding setting up a bad bank must be preceded by proper implementation of holistic reforms in the banking sector,as envisaged under the Indra Dhanush plan launched in 2015.
  • It’s a challenge that requires a response on multiple fronts. A bad bank cannot be the sole response.The most efficient approach would be to design solutions tailor-made for different parts of India’s bad loan problem and use Bad Bank only as a last resort once all other methods fail.

 5.Nagaraj Case for Reservation

 News: The Supreme Court has asked Attorney General to compile the various issues being raised by States with regard to the 2006 M. Nagaraj case, which had upheld the application of creamy layer principle to members of the SC/ST communities in promotions.

Background:

  • The Centre’s plea came despite the Supreme Court, in September 2018, in Jarnail Singh case, reiterating the Nagaraj judgment of 2006. The 2006 judgment required the States to show quantifiable data to prove the ‘backwardness’ of a community to provide quota in promotion in public employment,
  • The 2018 judgment, which was authored by Justice Rohinton F. Nariman, had refused the government’s plea to refer the 2006 Nagaraj judgment to a seven-judge Bench.
  • It had while modifying the part of the Nagaraj verdict, rejected the Centre’s argument that Nagaraj misread the creamy layer concept by applying it to SC/ST.

Nagaraj Case:

  • On June 17, 1995, Parliament, acting in its constituent capacity, adopted the seventy-seventh amendment by which clause (4A)was inserted into Article 16 to enable reservation to be made in promotion for SCs and STs.
  • The validity of the seventy-seventh and eighty-fifth amendments to the Constitution and of the legislation enacted in pursuance of those amendments was challenged before the Supreme Court in the Nagaraj case.
  • Upholding the validity of Article 16 (4A),the court then said that it is an enabling provision. “The State is not bound to make reservation for the SCs and STs in promotions. But, if it seeks to do so, it must collect quantifiable data on three facets — the backwardness of the class; the inadequacy of the representation of that class in public employment; and the general efficiency of service as mandated by Article 335 would not be affected”. The court ruled that the constitutional amendments do not abrogate the fundamentals of equality.

Relevant Amendments:

  • 77th Amendment:It introduced Clause 4A to the Constitution, empowering the state to make provisions for reservation in matters of promotion to SC/ST employees if the state feels they are not adequately represented.
  • 81st Amendment:It introduced Clause 4B, which says unfilled SC/ST quota of a particular year, when carried forward to the next year, will be treated separately and not clubbed with the regular vacancies of that year to find out whether the total quota has breached the 50% limit set by the Supreme Court.
  • 82nd Amendment:It inserted a proviso at the end of Article 335 to enable the state to make any provision for SC/STs “for relaxation in qualifying marks in any examination or lowering the standards of evaluation, for reservation in matters of promotion to any class or classes of services or posts in connection with the affairs of the Union or of a State”.
  • 85th Amendment:It said reservation in the promotion can be applied with consequential seniority for the SC/ST employee.
Article 335: Article 335 of the Constitution relates to claims of SCs and STs to services and posts. It reads: “The claims of the members of the SC’s and ST’s shall be taken into consideration, consistently with the maintenance of efficiency of administration, in the making of appointments to services and posts in connection with the affairs of the Union or of a State.”