1. August 2018

 What is the need for flat income tax?
 India’s current tax system is progressive in nature, with tax rates increases when the

income level goes up. To meet the changing economic needs of the country, and to fix
the more than 50-year-old Income Tax Act, 1961 which is not consistent with current
times, a flat tax rate system is essential.

What are the arguments in favour?

 While simplification and better administration of the law are major reforms that India
requires, some economists even suggest going for a flat tax system or lower tax system.

 A flat tax rate of 12% would be appealing even for the low-income people and the
compliance rate will increase by eight percentage points to 33%.

 Best examples of the flat tax system are of Hong Kong, Russia, and New Zealand.
o Hong Kong was one of the poorest country during the World War II. However,
it adopted a flat tax in 1947 which resulted in higher compliance rate and
drastic economic growth.
o Russia adopted a 13% flat tax rate in 2001 and its economy expanded by about
10 percent since then. Russia’s income tax revenue has grown by more than
50% since people found it fair and easier to pay.
o New Zealand is called BBLR (broader bases and lower rates) country. In New
Zealand, the tax law experts focus on taxing a lot of actions at a low rate, or flat
rate and most importantly at the simpler tax code. New Zealand in 1980 did
away with deductions and write-offs and instead applied the lowest rates on
average workers. With higher compliance, New Zealand is one of the countries
with the best income tax practices.
IAS
EXPRESS
What are the arguments against?

 India’s current tax system is progressive in nature, with tax rates going up when the
income level goes up. It is because India is a democratic country and is expected to
invest in social welfare and infrastructure. Hence progressive tax rate is essential.

 For a developing country like India, which is in lower middle income bracket, a flat tax
structure may not be an equitable one since Income inequality in India is one of the
highest, with 22 percent of the national income going to top 1 percent.

 Only with a progressive tax system, such wide income inequalities can be addressed.
Hence a flat tax system will be regressive, considering India’s current situation.

 A system prescribing a higher rate of income tax for a higher income group helps
garner revenue without being burdensome to low-income taxpayers.

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 The success of Russia is not just through the implementation of a flat tax rate but also
through several changes in both the structure and the taxation administration. The
reforms widened the tax base by eliminating many exemptions and deductions as well
as increasing taxes on several capital income.

Initiatives taken by India

 An attempt to redraft the Income Tax Act made by the ex-finance minister P.
Chidambaram in 2009 through the Direct Taxes Code (DTC). It proposed a simpler tax
code and did away with unnecessary exemptions and created space for lower tax rates.
But the bill lapsed due to the dissolution of the 15th Lok Sabha in 2014.

 The current government implemented general anti-avoidance rules (GAAR) since
coming to power in 2014.

 In 2016, Finance Minister promised to lower corporate tax rate to 25% in 5 years.
 Currently, income up to Rs 2.5 lakh per annum is exempted from tax for individuals.

Way forward

Many countries have reported success from the implementation of the flat income tax rate
system. It is high time that India also adopts it. But the government should implement it as a
pilot project for monitoring various impacts and come up with the effective solution to prevent
various challenges in the actual implementation. And the government should also ensure that
the poor are not affected from this reform.

5G Technology – Features, Pros, Cons and
Challenges
IAS
EXPRESS
Why in News?

 5G technology is expected to be launched globally by 2020. Telecom giants such as

AT&T Inc. and Verizon Communications Inc. are conducting trials of 5G fixed

broadband in homes and businesses.

 South Korea has finished auctioning off spectrum for 5G to telcos and is set to begin

its launch in December.

 The Indian government has been taking measures for earlier deployment. Recently, a

high-level forum was set up to develop a roadmap for adopting 5G in the country by

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 With 5G technology, the government aims to provide internet connections with speed
up to 10,000 Mbps in urban areas and 1000 Mbps in rural areas.

What is 5G technology?

 5G is a fifth generation wireless communication technology that has very high
reliability, spectrum bands and speed which is around 10 plus Gbps (20 times that of
4G).

 It is based on IEEE 802.11ac standard of broadband connectivity. But a formal
standard has not been set yet.

 The final standard for 5G will be established by the International Telecommunications
Union (ITU).
IAS
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Advantages/Applications of 5G technology

 With very high speed, 5G allows access to high-bandwidth multimedia such as HD
videos, movies and games which can be downloaded in seconds.

 It enables high-speed data services that have industrial applications.
 It supports critical applications like financial transactions and healthcare.
 It will help incorporate Artificial Intelligence (AI) in our daily lives. It will enable cloud

systems to stream software updates, music and navigation data to driverless cars

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seamlessly. It will also facilitate vehicle-vehicle communications in order to keep a safe
distance from each other = fewer car accidents + less traffic congestion.
 It will facilitate the ecosystem for the Internet of Things (IoT) by enabling smart
devices to exchange data seamlessly.
 With greater speed comes digital growth that will result in GDP rise and employment
generation in the country.
 In the field of telemedicine, 5G enables instantaneous transmission of video and data
= surgeons can operate remotely with a robotic scalpel.

IAS
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Disadvantages of 5G technology

 Technology is still in progress and research on its viability is going on.
 The speed on such scale (10,000 Mbps) is difficult to achieve considering the

incompetent technological support in most parts of the world.
 Many of the old devices would not support 5G. Therefore all of them need to be

replaced with new ones.
 Developing infrastructure for 5G is expensive.
 Security and privacy issue are yet to be resolved.

Challenges in adopting 5G in India

 India lacks strong backhaul for the transition to 5G. Backhaul is a network that links

cell sites to the central exchange. However, 80% of cell sites in India are connected

through microwave backhaul (high latency+limited capacity) and only 20% sites are

connected through fiber communication (low latency+unlimited capacity).

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IAS  Indian market is yet to adapt to 4G completely and has not completely evolved to
EXPRESSexperience an AI revolution.

 5G technology would require newer handsets with the latest hardware which would
mean the replacement of older phones with new and costlier phones (undesirable for
low-income people).

India’s Initiatives

 Bharatnet project was launched in 2017 for providing digital infrastructure on a non-
discriminatory basis by an affordable broadband connectivity for all households. The
objective is to facilitate the delivery of e-health, e-governance, e-banking, e-education,
Internet and other services to rural areas.

 National Optical Fibre Network (NOFN) aims at bringing a broadband revolution in
rural areas. Its objective is to connect all the Gram Panchayats in the country with 100
Mbps connectivity. As we have seen earlier, fibre provides strong backhaul, thus
facilitates the adoption of 5G.

 National Telecom Policy – from March 2018 onwards, the government has initiated
measures to introduce 5G technology in India through the National Telecom Policy
(NTP). It aims to reach 100% teledensity, high-speed internet highways and delivery
of citizen-centric services electronically.

 High-level forum to develop 5G roadmap – Recently, the Department of
Telecommunications set up a high-level forum to evaluate roadmaps and create a
strategy to adopt 5G in the country by 2020.

 Waivers for Private telecoms -The government also announced a subsidy of Rs 3,600
crore to private telecom players such as Bharti Airtel, Vodafone India, and Reliance Jio
to establish Wi-Fi in rural areas as part of the second phase of the BharatNet project.

 The government is working on creating a corpus of Rs 500 crore to fund 5G activity,
particularly on research and product development.

Way forward

Earlier deployment of 5G technology in India will help companies design and manufacture 5G
products and solutions in India, thus creating some essential Intellectual Property Rights
(IPR) in the 5G standard. It is high time that India strengthens the domestic
telecommunication manufacturing market to enable local industries to capture both domestic
as well as global market.

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Oxytocin Ban – Issues and Impacts

IAS
EXPRESS
Why in news?

 Recently, the Union Ministry of Health and Family Welfare has banned the
manufacture and sale of Oxytocin drug formulations for domestic use in the private
sector in order to prevent its misuse. Its imports are also banned.

 Retail or wholesale chemists are banned to stock this drug in any form or name in their
shops.

 Only Karnataka Antibiotics and Pharmaceuticals Ltd (KAPL), a public sector company,
allowed to produce oxytocin. It can only supply oxytocin to the registered public and
private sector hospitals.

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IAS
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What is Oxytocin?

 Oxytocin is also known as the love or cuddle or snuggle hormone as it is released
naturally during human bonding activities such as childbirth, breastfeeding, and sex.

 Oxytocin is made in the hypothalamus region of the brain and is transported to and
secreted by, the pituitary gland, which is located at the base of the brain.

 It acts both as a hormone and as a brain neurotransmitter.

What are the uses of oxytocin?

 Oxytocin is a uterine stimulant hormone, hence oxytocic drugs are prescribed for
uterine contractions, induction of labour and also stimulation of contractions during
labour in women.

 It is used to control postpartum bleeding (bleeding after childbirth).
 It can be used to help abort the fetus in cases of incomplete abortion or miscarriage.
 It helps mothers lactate after childbirth.

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 Due to these applications, oxytocin has largely been in use during delivery to prevent
maternal mortality.

 Oxytocin nasal sprays are commonly used in medical studies of psychiatric effects.

Why the ban?IAS
EXPRESS
 Oxytocin has been misused widely in the dairy industry, agriculture, and horticulture.
 Dairy farmers injecting the drug indiscriminately into milch animals such as cows to

make them release milk at a time convenient to farmers and at high quantity, thus
shortening their lives and also became sterile earlier.
 Oxytocin has also been connected to mastitis, a painful inflammation of the udder
(mammary gland) of cows.
 Another concern is the exposure of milk consumers to oxytocin drug through dairy
products.
 It is also used to increase the size of vegetables and fruits such as watermelons, brinjals,
pumpkins, gourds, and cucumbers.
 Oxytocin has been injected among trafficked girls in order to accelerate their puberty
prematurely.
 In overcrowded government hospitals, it is being misused to speed up deliveries for
pregnant women.
 The drug has been illegally imported from China also raises concern. It is subsequently
sold in India in a crude plastic bottle by unregistered companies.
 Even on the organized scale, only one company imports the raw material and made
into a finished drug and sold by both licensed and unlicensed companies.

What are the impacts of the ban?

 Nearly 45,000 Indian women die due to causes related to childbirth each year.
Oxytocin is a life saver for these women. The ban would cause a shortage of drugs, thus
causing problems in maternal health.

 KAPL has never made this drug before, but it has been given the monopoly to produce
the drug and the price of the drug would spike. Monopolising would remove the low
price variants of the drug in the market.

 The ill-effects of oxytocin has not been validated by the science yet. Even if the ill-
effects of oxytocin are real, a ban is not the right solution.

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What is the way forward?

 The government should reconsider the ban on private production in order to induce
the competition and help improve domestic supply of the drug.

 Its abuse needs to be curbed by means of restricting its sale for both human and
veterinary purposes.

 Multiple layers of documentation as with narcotic and psychotropic drugs or
antibiotics could be adopted.

 There is a need for massive surveillance and raids on illegal importers and unlicensed
producers rather than a blanket ban.

Recent developments

 Drug Technical Advisory Board (DTAB) has recommended to the Union Ministry of
Health and Family Welfare that the ban on the retail sale of the life-saving drug,
oxytocin, may be lifted.

 But DTAB hasn’t talked about the Ministry’s decision that only a single PSU( KAPL)
could manufacture and supply the drug across the country.
IAS
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Fall in Rupee Value – Causes, Impacts and
Measures

IAS
EXPRESS
Why in news?

For the first time in history, Indian rupee fallen into a record low of Rs. 70 against USD on 14
August 2018. This sudden depreciation was also seen in other currencies of emerging markets.

What are the reasons for the depreciation?

Considerable outflow of Foreign Institutional Investment (FII).
 US Federal Reserve notified that it will increase the policy rate at least two more times
in 2018, which means decrease in dollar supply = High demand for USD among
investors.
 Thus the increased demand for US dollar made FIIs pull out from Indian stock markets
and move towards destinations with better returns.

Crash in Turkish currency lira.
 Turkish currency has been in free fall due to political and economic problems in
Turkey.
 Turkish currency crisis has triggered fresh selling among emerging markets and
further down sliding rupee sharply.
 Rupee is one of the worst performing emerging market currencies and hardest hit in
Asia due to fall of lira.

Rising oil prices.

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 Crude oil prices jumped after the US pressured its allies to end all oil imports from Iran
by November. Rising crude oil price = worsen India’s Current Account Deficit + High
inflation = Rupee depreciation.

 The strict output controls by the OPEC (Organisation of the Petroleum Exporting
Countries) also caused increase in oil prices (Supply < Demand = Price rise).

What are the implications of fall in rupee value?

 On Imports: Fall in rupee value means the cost of importing goods or capital goods to
India will rise. Hence importers will have to pay more Indian rupees to buy an
equivalent amount of dollars.

 On Exports: Exporters will benefit since they can get more rupees while converting
their dollar earnings from their exports to rupees. Software exporters in India will
benefit more.

 On Economy: As India is world’s 3rd biggest oil importer and imports about 80% of
crude oil requirements, the fall in rupee value will increase oil prices further and exert
pressure on CAD and cause inflationary pressure in the economy. It may prompt RBI
to increase interest rates to check inflationary pressures and in consequence will
reduce FDI which is important for make in India initiative.
IAS
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What are the measures taken to suppress the fall?

 The RBI, which manages the rupee’s movement, says that it never fixes a value; rather,
it facilitates the orderly movement of the currency.

 The RBI buys dollars from the market when the rupee strengthens, and sells the US
currency when the rupee weakens.

 It tries to maintain a balance by taking into account all external and internal factors.
 With the markets witnessing foreign outflows in April and May, the RBI recently took

several measures to attract more capital flows.
 It enhanced investment limits, relaxed rules for foreign investors, and revised the

minimum residual maturity requirement and cap on aggregate FPI investments in
central government securities.

Way forward

 To solve the currency problem, Reserve Bank of India (RBI) can influence the value of

rupee through effective regulation of money supply through its monetary policy stance.

 Benchmark interest rate can be used effectively to attract the foreign capital into the

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 Direct intervention of RBI in the forex market can also help reduce the selling pressure
on the rupee.

The Data Protection Bill 2018 – Critical analysis

IAS
EXPRESS
Why in News?

The draft data protection bill was submitted by Justice BN Srikrishna committee in the
Ministry of Electronics and Information Technology (MeitY) to provide for a solid legal
framework on data protection in India. The bill recognizes privacy as a fundamental right with
provisions to protect personal data.

Where does it get the inspiration?

The draft bill borrows considerable provisions from General Data Protection Regulation
(GDPR) of the European Union which provides for a framework on data protection.

Why is there a need for a law?

 With a billion population, India has the second highest internet user base in the world.
Therefore, a strong data protection law is needed to protect their personal data.

 Large amounts of personal data have been collected by state agencies and private
companies and their flow across national boundaries has been a cause for concern.

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 There are many instances that the state and private agencies who are using the
personal data are not transparent on the purpose for which the data is being utilized.

 Until now, the only legal framework for the information technology in India is the
Information Technology Act, 2000. However, it doesn’t provide for guidelines or
norms for data collection, storage, and processing.

 The need for legislation also got attention particularly after the landmark judgement
of Supreme Court (SC) in Justice K.S Puttaswamy vs Union of India case, that
maintained the right to privacy as an inherent part of the fundamental right under
Article 21 of the constitution.

What are its objectives?

The bill seeks to safeguard privacy by organizing the relationship between citizens and
firms/state agencies based on data principals (whose data is collected) and data fiduciaries
(who collects the data). It mandates the fiduciaries to seek consent for the use and processing
of sensitive personal data. It also aims at balancing the growth of the digital economy and
utilization of data.
IAS
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What are the Key features of the bill?

Rights of the individual:
 The bill provides for four rights for every citizen over his or her personal data as
follows:
 Right to consent and access: by which citizen can ask fiduciaries about the purpose for
which their data has been utilized.
 Right to correction: to correct any misleading or inaccurate personal data.
 Right to data portability: by which every citizen can ask fiduciary agencies to share the
details of his or her personal data that has been created while using a service.
 Right to be forgotten: A citizen can prohibit a company from using the data that has
been shared before.

Grounds for processing personal data:
 Personal data is defined as data related to the identity of a person. The bill allows
processing of personal data if consent is obtained.
 In some cases, processing of data can be allowed without the permission of the
individual on grounds such as the necessity for any function of legislatures, providing

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state benefits, required under the law, compliance of court judgement, the threat to
public health or public order, fraud detection, debt recovery etc.
Grounds for processing sensitive personal data:
 Sensitive personal data includes any crucial information such as passwords, financial
data, genetic data, biometrics, beliefs, transgender status, caste status etc.
 Grounds for processing sensitive personal data include based on consent, the necessity
for any function of legislatures, necessity for providing state benefits, required under
law or for the compliance of court judgement.
Data Protection Authority
 The bill provides for setting up of Data Protection Authority that will have powers to
take measures for protecting the interests of the citizen, prevent misuse of personal
data and secure compliance with the bill.
 The authority will consist of a chairperson and six persons with expertise in data
protection and information technology.
 Orders from the authority can be appealed to the Appellate Tribunal and the tribunal’s
order can be appealed further to the Supreme Court.
 The authority has the power to levy penalties for various offences by the fiduciary.
Transfer of data outside India
 Personal data can be transferred outside on certain grounds such as when the central
government approves transfers to a particular country and when the data protection
authority approves the transfer in certain situations.
Exemptions
 Certain exemptions from compliance are provided on grounds such as state security,
prevention, investigation, or prosecution of any offence, and personal, domestic and
journalistic purposes.
IAS
EXPRESS
What are the challenges in the passage of the draft bill?

The draft bill has overriding provisions over more than 50 existing laws such as Aadhaar Act,
Right to Information Act etc which need to be amended and requires serious debate in the
parliament leading to the delay or non-passage of the bill.

What are the arguments against the bill?

 The government will have the power to access and process data without the consent of
a person, on the grounds of weak standards such as necessity and breakdown of public

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order. It is prone to misuse, defeats the very purpose of the bill and fails to make the
state accountable for the processing of personal data or sensitive personal data. Here
is the example.


 Corporates are worried about the categorization of financial data as sensitive personal

data since they are crucial for data analytics.
 The bill made it cognizable and non-bailable criminal offence in case of non-

compliance with the law. This is considered by industries as an arbitrary provision.
 The bill prohibits the cross-border transfer of critical or sensitive personal data by

companies and makes it mandatory to store at least one copy of all personal data to be
stored in India. This data localisation will prevent some companies from offering their
services in India. It will also increase cybersecurity risks since the cross-border flow of
data is critical to the better analysis of fraud.
 There is no provision regarding the issue of surveillance.
 It is unclear about the functions of different departments of the government in the data
processing and which of the functions are to be served by a processing activity.
 The bill does not explicitly deal with the data surveillance by non-state actors.
 When personal data is breached, it is not informed directly to the person. Instead to
the Data Protection Authority. The Authority decides whether to inform the person or
not.
 There is no strict right to be forgotten, unlike EU’s General Data Protection Regulation
(GDPR). It is not compulsory for a data collector to erase data.
IAS
EXPRESS

What are the arguments in favour of the bill?

 The bill provides individuals with greater control over their personal data and prevents
misuse of the data by companies for their benefit.

 It recognises privacy as a fundamental right in line with K.S. Puttaswamy judgement

of the Supreme Court which seeks to protect citizens from threats to their

informational privacy.

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 It will help keep the balance between the growth of the digital economy and the need
to protect personal data.

 Protection of personal data will encourage the free flow of information, resulting in
economic growth.

 The bill contains safeguards to prevent misuse with the explicit mention that the state
can only access sensitive personal data on grounds of national security and only in a
fair and reasonable manner with security safeguards such as encryption and de-
identification. It will prevent cyber security and terrorism incidents since the state can
find out the identity of perpetrators.

 What should be done to make the law perfect?
 There are several grey areas in the draft which needs both parliamentary and public

debate before it comes into fruition.
 There is also a need for industry-wide consultations before enacting the law.
 There is a need for a separate law to address the oversight in intelligence gathering,

rather than dealing it within the data protection law itself.
 A separate tribunal or authority can be established to give prior authorisation for data

surveillance and interception.

Conclusion

Even though the draft bill is ambiguous and far from being perfect, it is a step in the right
direction. Once it is fine-tuned, it will be an effective law in enforcing the rights of the people
over personal data.
IAS
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National Health Protection Scheme (NHPS) – All
that you need to know

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What is the National Health Protection Scheme (NHPS)?

 NHPS is a health insurance scheme which seeks to provide insurance coverage to
approximately 50 crore people (with focus on 10 crore poor and vulnerable families)
of up to 5 lakh rupees per family per year against hospitalization expenses in secondary
and tertiary care.

 It is a part of Ayushman Bharat Programme which consists of NHPS and wellness
centres programme. While NHPS serves secondary and tertiary health care needs,
wellness centres will serve primary healthcare needs which is the first line of contact
to people, particularly in rural India.

 It will subsume existing centrally sponsored insurance schemes such as Rashtriya
Swasthya Bima Yojana (RSBY) and the Senior Citizen Health Insurance Scheme
(SCHIS).

Why NHPS?

 According to the National Sample Survey Office report of 2014, India’s out of pocket
expenditure for healthcare services are extremely high of about 70% which pulls
approximately 7% of the population into the poverty.

 According to SECC data (2011), 21% of annual income was lost due to diseases
particularly among the poor and vulnerable population in rural and urban areas.

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IAS  The public health expenditure (total of centre and state governments) in India is only
EXPRESSabout 1.3% of GDP which is very low compared to other nations such as the USA which
spends 18% of GDP.

 With increased insurance coverage to nearly 40% of the population particularly the
poorest and the vulnerable in secondary and tertiary healthcare, the NHPS will result
in the reduction of poverty and improved access to quality health and medication.

Where will it be implemented?

NHPS will be launched across all States/UTs and in all districts with an aim to cover all the
targeted beneficiaries.

What are the entitlements under the scheme?

 NHPS will have a defined benefit cover of Rs. 5 lakh per family per year.
 Beneficiaries are entitled to cashless benefits from any public/private hospitals

throughout the country.

Who are the targeted beneficiaries and how will they be
identified?

 NHPS will target about 10 crores poor, deprived rural families and urban workers’
families under the occupational category.

 The identification will be based on the latest Socio-Economic Caste Census (SECC)
data covering both rural and urban areas.

 The scheme is dynamic in identification by taking into consideration any changes in
the future SECC data such as inclusions, exclusions, deprivations and occupational
criteria.

How will it be implemented?

 One of the main principles of NHPS is cooperative federalism as it provides flexibility
to states in the implementation of the scheme.

 At the national level, an Ayushman Bharat National Health Protection Mission Agency
(AB-NHPMA) will be established to manage and coordinate the mission.

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 At the state/UTs level, State Health Agency (SHA) would be established for the
implementation. SHAs can be an existing trust, society, non-profit company, state
nodal agency or a new entity set up for the purpose of the scheme.

 States/UTs have the option to choose whether they want to implement the scheme
through an insurance company or through SHA or an integrated model.

 The expenditure incurred in the payment of premium by beneficiaries will be shared
between Central and State governments in a pre-determined ratio.

 Funds will be transferred from AB-NHPMA to SHAs directly through an escrow
account.

How is NHPS different from Rashtriya Swasthya Bima Yojana
(RSBY)?

 Both NHPS and RSBY are health insurance schemes targeting poor and vulnerable
sections. But there are certain differences as follows

 RSBY was based on enrolment, but NHPS is based on entitlement. This means that in
NHPS, the identified population has to be merely informed about their entitlement to
health insurance benefits under the scheme, instead of paying the premium to
insurers, spreading awareness and sensitisation of target population like that of RSBY.
This will lead to automatic coverage of all the identified sub-groups in the populations
under NHPS once the scheme is operational.

 It doesn’t have limitations of RSBY. For instance, RSBY provides the cover of only Rs.
30,000 for a family of five and it did not include outpatient care.

 A study reveals that an increase in outpatient expenditure, hospitalisation and
medicines forced insurance companies under RSBY to remove several diseases out of
their policies and thus making it unaffordable for BPL families. Since NHPS is fully
subsidised by the Central and State government through their budgetary support
rather than through insurance companies, such instances might not occur in NHPS
implementation.
IAS
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What are the benefits of NHPS?

Reduces poverty: NHPS will resolve the problem of out of pocket expenditure, thus

reducing poverty and improving the health of poor and vulnerable households. Hence, NHPS

is an important move towards universal health coverage.

Improves health: It will lead to timely treatments, improved health outcomes, patient

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IASDemographic dividend: Since diseases cured are work days gained, NHPS will improve
EXPRESSthe productivity of workers and reduce wage losses.
Employment: As the scheme improves the affordability of healthcare, around 50 crore
population will have demand for insurance. This will serve as an opportunity for insurance
companies to expand even in tier 2 and 3 cities and will create additional employment and
revenue.
Education & Entrepreneurship: With the reduction in out of pocket expenditure for
healthcare needs, beneficiaries can invest their hard earned money in the education of their
children or in entrepreneurship activities which will further create employment opportunities
in India.
Corporate Social Responsibility (CSR): Government expects contribution from the
private sector through CSR and philanthropic institutions. Hence it serves as an opportunity
for companies which are mandated to spend at least 2% of the average net profit on CSR
activities under the companies act, 2013.
Reforms in the healthcare sector: NHPS will induce long-pending reforms in the
healthcare industry such as standardisation of treatment protocols and care, categorisation,
rationalisation of cost and creation of separate healthcare inflation index. It can be used to
increase transparency by providing data on quality of care from different hospitals or clinics
in India.
Healthcare research: NHPS will have access to health data of 50 crore people. This data
can be used effectively for research or understanding which treatments work better in the real
world rather than just through clinical trials. It can be used to generate personalized and
precision medicine for treatment based on individual genetic or other characteristics.

What are the disadvantages/challenges of NHPS?

 NHPS is seen as visionary, populist, ineffective solution for universal healthcare, pro-
private, scaled-up version of old schemes, pre-election move etc.

 Rural people find it difficult to travel to hospitals (public or private) which lies miles
away. So, it is not a matter of choice, but the difficulty in getting access to secondary
and tertiary care.

 The pursuit of health may trap the poor and deprived households in medium or long-
term treatments, which would exponentially increase their out of pocket expenditure
further. Hence they won’t seek the healthcare due to this threat.

 There are still people who don’t trust the quality of health care due to rising medical
failures and hence they believe that it doesn’t worth their expenditure.

 NHPS doesn’t cover outpatient services in the private healthcare sector. However, the
top diseases that add maximum burden on out of pocket expenditure are from diseases
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including bronchitis and asthma, tuberculosis, diarrhoea etc. which requires regular
outpatient consultations and are largely provided by private sector only.
 NHPS will require the government to increase its current spending of 1.4% of GDP to
at least 10% to cover all the intended beneficiaries and to provide quality infrastructure
for the services under the scheme. It is not clear how the government would raise such
money.
 There is a challenge in integrating the insured, insurers, the state and the healthcare
providers.
 The premiums to fund the NHPS are still not decided and there are varied perspectives
on premiums calculation among politicians, insurers and doctors.
 Private healthcare has been known to exploit people and will also try to exploit NHPS.
NHPS doesn’t provide any guidelines to regulate the private in NHPS implementation.
IAS
EXPRESS
What should be the government’s move?

 There is a need to streamline enrolment process by reducing the number of forms or
incorporation of Aadhaar for the enrolment purposes. For this, Aadhaar should cover
all the population who are yet to be covered.

 After the enrollment, access to health care should be provided to people where they
live. For this purpose, super speciality hospitals in cities can organise health camps in
rural areas and also initiate virtual healthcare services at primary health centres in
rural areas.

 In addition to targeting the poor and vulnerable populations, the scheme should also
target various health conditions where disease burden is high.

 To ensure the accountability of private hospitals in the implementation of NHPS, the
government should come up with detailed guidelines, quality standards and
monitoring mechanism. Also, there should be a prior authorization procedure for
expensive medical surgeries.

 Health data on the region, age, season-wise disease trends, inpatient and outpatient
attendance at primary to tertiary care must be collected and stored digitally. It is
because accurate data on health care will provide insurance companies to arrive at a
balanced formula for premiums calculations for basic treatment to complex surgeries.

 Preventive care should also be given due focus to reduce the disease burden in the
country.

 The utilisation of NHPS should be improved with effective education and financial
literacy campaign. Social media can be effectively used for this purpose.

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Conclusion

“Health Insurance is a right, not a privilege”. Hence NHPS is a step in the right direction to
provide universal healthcare. NHPS is not just a health insurance scheme that offers financial
protection but also has the potential to induce the much need reforms needed to strengthen
India’s health sector. If implemented effectively, it will be a game changer for India’s
healthcare sector and the economy as a whole.

IAS
EXPRESS

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IAS
EXPRESS
Bonus Articles

(Only in IE Magazine)

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SC Verdict on Delhi Government Vs Lieutenant
Governor

IAS
EXPRESS
Why in News?

 The Supreme Court recently held that the Lieutenant-Governor (L-G) is bound by the
aid and advice of the Delhi government.

 This judgement was given with respect to the appeals filed by the Delhi government
against a 2016 Delhi High Court verdict that declared the L-G has complete control
over all matters concerned with the government of Delhi.

What is the background of the issue?

 Although a Union Territory, Delhi is not administered by the President through the LG
under Article 239 but under Article 239 AA which was incorporated in 1992.

 Article 239 AA gave Delhi a special constitutional status as follows
o It has the elected assembly with powers to enact laws
o A council of ministers responsible to the assembly.
o It could legislate on matters under the state and concurrent lists with
exceptions such as public order, police and land which are reserved for LG.

 This special set up worked well for a long time mainly due to the same party held office
at the Centre as well as Delhi for much of the years.

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 However, things changed when different governments ruled the Delhi and the Centre.
It was further complicated when the Delhi HC verdict declared that the only decision-
making authority in Delhi would be LG.

 This prompted the Delhi government to file appeals against the HC verdict in SC and
demands statehood.

What are the key highlights of the verdict?

 Verdict on the relationship between Delhi and LG
o In case of conflict or dispute between LG and the state, the LG should
immediately refer the matter with the President.
o L-G has not been entrusted with any independent decision-making powers and
therefore should work harmoniously with the aid and advice of the Ministers
or implement the decisions taken by the President.
o However, L-G is restricted to take only important dispute to the President. It
could encompass issues such as finance and policy and should have impact on
the status of the national capital or the vital interests of the Centre.

 Verdict on the statehood issue
o SC followed the 1987 Balakrishnan Committee report to conclude that Delhi is
not a state. Key recommendations of the report as follows.
 Delhi as a national capital belong to the nation as a whole.
 Delhi could not have a situation where two governments run different
political parties as it may affect the national interest.
 Control of Union over Delhi was vital in the national interest.
IAS
EXPRESS
How is the verdict significant?

 The verdict would end the long standing tussle among LG and Delhi government. This
would curb the existing issues and obstacles in efficient functioning of the government
and would improve governance of Delhi.

 It provides a clarification that an elected government cannot be undermined by an
unelected administrator.

 It restores the primary role played by the representative government in Delhi.

 It upholds the provisions of Indian constitution with respect to executive and
administrative powers of ministers of Delhi.

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 It establishes constitutional morality and trust among high functionaries in the
government.

 It will set a precedent to hamper any authoritarian and reckless use of power by
constitutionally appointed authorities in the future.

Constitutional Validity of Article 35A – Critical
Analysis

IAS
EXPRESS
Why in News?

 The Supreme Court is hearing a PIL petition that challenges the constitutional validity
of Article 35A.

 Article 35A provisions need an understanding in the context of promises made under
the Indian federation.

Why Article 35A needs to be scrapped? 76

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IAS  Article 35A was inserted as part of amendments made through a 1954 presidential
EXPRESSorder imposed under Article 370 of the constitution.

 It gives powers to J&K to declare a class of persons as “permanent residents’ of the
State

 It also empowers the government to give such persons special rights and privileges in
matters of
o Public employment
o Acquisition of immovable property in the State
o Settlement in different parts of the State.
o Access to scholarships
o Voting rights
o Other such aids that the State government might provide.

 The legislations to confer special rights and privileges are exempt from being annulled
on the ground that they infringe on any of the fundamental rights provided under the
Indian Constitution.

 However, this immunity granted to J&K’s laws are considered as discriminatory due
to the following reasons
o Non-permanent residents are denied all the special rights.
o Discrimination based on gender because a male resident in J&K will not lose
the right of being a permanent resident even after marriage to a woman from
outside.
 But it is the opposite for woman and they will lose the right of being
permanent resident on marrying an outsider.
 It discriminates against women who marry outside the state from
applying for jobs or buying property.

 Thus Article 35A is considered to be violating the Article 14 of the constitution which
provides for equality before law and equal protection of the laws, thus affecting the
basic structure of the constitution.

 Therefore the petition challenges the constitutional validity of Article 35A.

Why Article 35A cannot be scrapped?

 The law on the subject is well settled as previous benches of the Supreme Court have
already approved the 1954 presidential order.

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 Article 35A is not amendable based on basic structure violation since Article 370 gave
J&K a set of special privileges. This includes an exemption from constitutional
provisions governing other states.

 As per the J&K Instrument of Accession (signed between erstwhile ruler of the Kashmir
and Government of India in 1947),
o Parliament’s powers to legislate over the State are restricted to 3 core subjects
viz- defence, foreign affairs and communications.
o Parliament could legislate on other areas only through a presidential order and
that too with the prior concurrence of the State government.

 However, Article 370 of the constitution empowers the President to declare the
provision inoperative. But his authority can only be exercised on the prior consent of
the State’s Constituent Assembly.

 Even amendments made to the Constitution under Article 368 will not be
automatically apply to J&K as it require specific order to be made under Article 370.
That too require J&K government’s prior assent and ratification by the State’s
Constituent Assembly.

 Therefore, as long as the Article 370 exists, we cannot justify the validity of Article 35A.
IAS
EXPRESS
Arguments against scrapping Article 35A

 Apart from the legal obstacle as mentioned before, there are various other arguments
opposing the scrapping of Article 35A as follows.

 Article 35A is more relevant for the Dogra people of Jammu as it protects them from
domination by elite and affluent outsiders mostly from neighbouring Punjab.
Repealing the Article would likely impact the cultural identity and economic
opportunities of those communities.

 Article 35A is required to promote industrial development of J&K since it imposes
restrictions on non-permanent residents to carry on business in the State.

 Also the repeal of the law would lead to loss of opportunities due to the increased
competition for recruitment, scholarships and other financial assistance. It will also
increase pressure on landholdings, farm activity etc. This may result in loss of
opportunities for the local skilled and unskilled labour, farmers, etc.

 Moreover, Article 35A safeguards the rights and the distinct identity of the J&K people.
Arguments for removing the law would only make it difficult for them to integrate with
the nation as a whole.

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Way forward

Article 35A has worked in favour of the J&K people to a large extent by preserving their social
and cultural identity. The government can undertake verification of the state subjects in order
to identify the persons who have become permanent residents through doubtful means. And
also the women should be given the same rights as men in J&K. Hence, addressing the flaws
in Article 35A rather than repealing it would go a long way in balancing the concerns and
opportunities of the people of J&K.

Insolvency and Bankruptcy Code – Recent
Issues
IAS
EXPRESS

Why in News?

Insolvency and bankruptcy code (IBC) was introduced in 2016 to address the mounting bad
loans (NPAs) problem. In this scenario, there are new performance and legal issues arising
from the implementation of IBC.

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What are the key features of Insolvency and Bankruptcy Code?

 IBC was enacted for the purpose of recovering bad debts build up in recent years by
making the resolution process easier and less time-consuming.

 Either Creditor or the Defaulter can initiate insolvency proceedings under the Code by
submitting a plea to the adjudicating authority, that is, National Companies Law
Tribunal (NCLT).

 The Debt Recovery Tribunal act as adjudicating authorities for individuals and
unlimited partnership firms and National Company Law Tribunal for companies and
limited liability entities.

 IBC mandates that the cases should be resolved within 14 days and the resolution
process should be completed in 180 days and can be extendable by 90 days.

 IBC provides for Insolvency Resolution Professionals (IRPs) who will take charge of a
company when it’s taken to the bankruptcy court.

 Insolvency and Bankruptcy Board of India will be the nodal regulator for the entire
process.
IAS
EXPRESS
What is the significance of Insolvency act?

 It creates a single insolvency and bankruptcy framework by replacing others.
 It reduces the time period for resolving insolvency.
 It develops investor confidence.
 It eliminates confusion caused by a complex judicial framework.
 It addresses the NPA situation decisively.
 It develops the credit and bond market.
 It provides a commercial solution to a commercial issue.
 It allows genuine business failures a second chance.
 It provides confidence to lenders of their rights and their enforcement.

How is the performance?

 Backlogs - The NCLT started off well but they are affected by mounting backlogs as

they’re taking much longer time than they did earlier. More than 9,000 cases are

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before the 11 NCLT tribunals that have been set up around the country and that
includes more than 2,500 insolvency cases.
 Regarding the time stipulation, in few cases the tribunal laid down that the 14-day
period is only directive and not mandatory.
 Also, the NCLT has held that the provisions of the Limitation Act, which sets out the
time-limits under which a complainant can approach the courts for redress, do not
apply to proceedings under the Insolvency Code.
 The reasons for the delay are as follows

o The entire matter of insolvency is inextricably tied to the non-performing
assets (NPA) issue.

o Many companies may be plagued by the non-payment of dues.
o Only after their assets are rationalised, through the NPA-linked initiatives

taken by the RBI, can they be wound up.
o The RBI will look at them on a case-by-case basis, which means that the entire

process will take time.
 Poor quality of Professionals - The IBC’s provision to throw the management

out and replacing them with IRPs is considered to be draconian.
 IRPs are a mix of chartered accountants, cost accountants, MBAs and retired public

sector executives but there are many concerns has raised over the quality of the IRPs.
 Loopholes in the Act - Inevitably, there are loopholes in the Insolvency Act and

some lawyers complain of poor drafting too.
 For instance, the act has no provision for an amicable settlement once a case has been

admitted.
 Furthermore, the private sector participation in the process is poor.
IAS
EXPRESS
What is the way forward?

 Set up more tribunals in different parts of the country to handle the greater-than-
expected volume of cases.

 Existing management should be allowed to run the company due to the knowledge,
information and expertise.

 Government is more concerned with the recovery of NPA, not with the running of
banks, thus the first step needed is to save the banking system.

 Therefore the banks must also press the policy makers towards this move because
they’re unlikely to get more if the case comes before the NCLT.

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All the Best!

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