Weekly Current Affairs (8th to 14th July 2022) - 1 - UPSC PDF Download

The Proposal For An India-Specific Norm For Assessing Vehicular Safety In Collision

Context:
The government approved a Draft GSR (general statutory rules) notifi cation seeking comments on a proposal to introduce the Bharat New Car Assessment Program (Bharat-NCAP).

Background

• The introduction of the Bharat NCAP would entail giving vehicles a star rating based on their performance in crash tests.
• The voluntary programme aligns existing test regulations at home with global crash testing protocols.

Analysis
What is Bharat NCAP?

• It is a new car safety assessment programme (NCAP).
• It proposes a mechanism of awarding ‘Star Ratings’ to automobiles based upon their performance in crash tests.
• The proposed assessment will allocate Star Ratings from 1 to 5 stars.

Why Car Safety Star Ratings is important?

• Car Safety Star Ratings were earlier made visible on cars. The ratings could be equated to effi  ciency ratings in AC, fridge, and other electronics used in car.
• It helped customers to decide, what they wanted in their budget.

• BNCAP standard is aligned with global benchmarks and it is beyond minimum regulatory requirements.
• Rollout: BNCAP will be rolled out from April 1, 2023.
• Applicability: It will be applicable on typeapproved motor vehicles of category M1 with gross vehicle weight less than 3.5 tonnes, manufactured or imported in the country.
  • M1 category motor vehicles are used for the carriage of passengers, comprising eight seats, in addition to driver’s seat.

Global new car assessment programs (NCAP)

• Global NCAP was established in 2011 and is a project of the U.K.-based Towards Zero Foundation.
• The United States National Highway Traffic Safety Administration was the first to come up with an NCAP in 1978.
• The Australasian NCAP was created in 1993 1978, Japan NCAP in 1995, Euro NCAP in 1997, Korean NCAP in 1999, China NCAP in 2006, Latin NCAP in 2010 and ASEAN NCAP in 2011.  

It is a standardized platform establishing cooperation and coordination among new car assessment programs (NCAPs) globally for universal adoption of the United Nations’ standards for vehicular safety.

• It provides reliable information about the crash safety of a vehicle based on certain common criteria and procedures.
• In turn, this helps the vehicle acquire a foothold in international markets.
  

How would the vehicles be evaluated?

Parameters: Bharat NCAP would assign vehicles between one and five stars on parameters such as

• Adult Occupant Protection (AOP)
• Child Occupant Protection (COP) 

Safety Assist Technologies (SAT)

• Off set collisions are those where one side of a vehicle’s front end and not the full width hits the barrier.
• It would study frontal impact, side impact and the possibility of a door opening up after a crash.
• The major change proposed with the Bharat NCAP is the speed for frontal off set crash testing – at 64 kmph in comparison to the existing tests conducted at 56 kmph. 

Criteria for star rating of vehicles: The protocol varies among NCAPs. According to draft notifi cation the voluntary Bharat NCAP would assign vehicles between one and fi ve stars, based on full vehicle crash test in three categories — 

• Adult occupant protection: After the test collision, the dummy would be checked for injuries on the head, neck, chest, knee, pelvis area, lower leg, foot and ankle. There must not be any rib compression or injury to the knee joint.
• Child occupant protection: For assessing child protection, the NCAP would evaluate the impact to a child restraint system (CRS) and airbag safety. The child must not be ejected from the CRS and his/her head must be contained within the shell of the CRS preventing any outside blow following a crash.

Child restraint system
CRS are portable seats designed to protect children during vehicle collisions.

• Safety assist technologies: Cars must have manual switches to disable airbags which should not be within the child’s reach.

Mechanism: The car is crashed into an aluminium deformable barrier impersonating an opposing force of the same magnitude of a crash-like situation, with a 40% overlap.

• Also, Bharat NCAP would conduct its frontal off set crash testing at 64 kmph instead of the prevailing 56 kmph norm.
• Off set collisions are those where one side of a vehicle’s front and not the full width hits the barrier.

Incentives: Vehicles that can accommodate a broad variety of child seats available in the domestic market would be rewarded.

• Higher ratings would be accorded to vehicles with a permanent warning label on frontal airbags

Why does India need to crash-test vehicles?

• Indian vehicles have historically not been crashtested in the country.
• Despite being home to only 1% of the world’s vehicles, India shoulders 11% of the global road crash fatality burden, according to the non-profit Save Life Foundation. 

NCRB Data

• India recorded 3, 54,796 cases of road accidents during 2020 in which 1, 33,201 people died and 3, 35,201 were injured.
• The government data showed that more than 60% of road accidents were caused due to over speeding, accounting for 75,333 deaths and 2, 09,736 were injured.

Why safety is not the priority?

• Structural issues: Vehicles sold in India are often sub-par in terms of safety features like the requisite number of airbags, and have unstable structures, unable to protect their occupants in the event of a road crash.
• More focus on price: Price sensitive market allows car makers to focus on price than safety because Indians prefer budget friendly vehicles.
•  Lack of regulation: India’s Central Motor Vehicle Rules (CMVR) mandate a safety and performance assessment. However, this does not involve a crash test rating.

Expected Benefits

• Export worthiness: It is intended to increase the export-worthiness of vehicles and competition on safety parameters among manufacturers, as well as instill consumer confidence in their safety.
• Reduction in road accidents: India aims to reduce road accidents and deaths by 50 percent by 2030.
• Passenger safety: It will ensure structural and passenger safety in cars.
• Help in making India atmanirbhar: This program will make automobile industry in India Atma Nirbhar and will make India the top automobile hub worldwide.

Summing Up

• The proposed move follows India’s focus on “zero tolerance for road accidents”. India is striving to reduce road accidents by 50% by the year 2025.
• Bharat NCAP rating criteria would emerge as a turning point in the domestic automotive sector in terms of product, technology and safety, since it would provide a platform that would test vehicular safety as per Indian conditions.

The Question Of ‘Legitimacy’ Of Supreme Court

Context:
Recently, US Supreme Court pronounced the verdict and overturned ROE vs. WADE case and made abortion illegal. This judgment questioned the legitimacy of Supreme Court.

• But this question of “declining legitimacy of a Supreme Court” is a concern of all democrats, even in India. So we can also use the litmus test of Legitimacy on Indian Supreme Court.

Background:

For decades, the Supreme Court has attracted disproportionate public attention and international admiration for its judicial interventions with its well-known innovations like

•  public interest litigation
•  basic structure doctrine
•  the concomitant judicialisation of politics in India

From last few instances, however, there has been a general sense of disappointment with the Supreme Court, with a widely shared lament that the court has failed to be a protector of democratic institutions. The brief aims to trace the departures in the Court’s behaviour, as well as discuss the continuities in its approaches to constitutional interpretation.

The concept of ‘Judicial Legitimacy’

• The power to declare invalid an expression of the will of a democratically elected legislature involves a responsibility of a special kind. Fidelity and not bravery or creativity is the quality that sustains judicial legitimacy.
• Courts need to display legitimacy and fairness constantly and must continue to respect the terms of the trust upon which they exercise their authority.
•  Legitimacy is a precious property. It must be carefully nurtured.
• The acceptance of judicial decisions requires their legitimacy. Judicial power rests on trust.

Aspects of legitimacy:

• Court’s role in enforcing the core principle of “limited government”.
• Court’s recognition, and endorsement of the fundamental distinction between “rule of law” and “rule by law” — prepositions matter.
• Court’s role as the promoter of “constitutional morality”.
• Judicial activism

What makes a court illegitimate?

• Accusations that the Supreme Court has gone “rogue” are often another way of saying that it has tacked too far to the right of public opinion.
• The Supreme Court — or any court, for that matter — would be less legitimate if it factored public opinion into its decision-making.

Why a judicial verdict carries legitimacy?

• A legal order or judicial verdict carries legitimacy. It can be more easily be defended, at least in the public narrative.
• An action – even if the objective is destructive – has to be validated by the law.
• In other words, it has to be accepted in the eyes of its recipients, otherwise it will lose its claim of legitimacy.
• Jacques Derrida (1992) says the law must not be just a law but it should be a ‘just’ law.

Why is legitimacy important?

• A larger impact: The judiciary not only decide matters of fundamental importance to individual citizens and to society at large but also affect with their judgments and rulings even the ordinary affairs of every individual who seeks the aid of the courts.
• On behalf of society: In order to do this, judges are given an authority and powers which are very far reaching. Such authority and powers are exercised on behalf of society as a whole.
• Accountability: The judiciary provides a public service. It is axiomatic that it should account to the society it serves.

Erosion of credibility in case of India:

• Government interference: In 2018, four senior sitting judges of the Supreme Court held a press conference and aired their grievances against the administration of the court by the then Chief Justice, hinting at government interference.
• Unexplained transfers: Transfers of judges without adequate reason is a common affair.
• Sealed cover: The increasing incidence of sealed-cover jurisprudence, where the government engages privately with the court, in a public hearing, without sharing information with the opposite party, has occasioned considerable protest.
• Erosion of constitutional morality: India also saw Erosion of constitutional morality most clearly in the case of Fr Stan Swamy who was denied a straw, denied decent healthcare, and denied bail all in the name of “rule of law”.
• High rate of case pendency: As of May 2022, over 4.7 crore cases are pending in courts across different levels of the judiciary. Of them, 87.4% are pending in subordinate courts, 12.4% in High Courts, while nearly 1, 82,000 cases have been pending for over 30 years.
• Under trials on the rise: As per the Prison Statistics-2020, released by the National Crime Records Bureau (NCRB), under trials accounted for 76% of the total inmates in around 1,300 prisons across the country.

The executive need to ensure that the strength of the judiciary is adequate to discharge its constitutional duty of rendering effective justice to all within a reasonable time.

Way Forward
Supreme courts need to be vigilant about these threats to their “legitimacy”. They need to stand not just some distance away from the dynamics of political power, to avoid being pulled under by its eddies, but also some distance above these dynamics so that they can reflect on their privileged position and their sacred responsibility. They should follow the constitution and adjudicate on the matters which questions the constitutionality of the law.

Mps’ Panel Opposes Mediation Bill

Context:
Parliamentary Standing Committee on Law and Justice, headed by Sushil Kumar Modi, has recommended substantial changes to the Mediation Bill, meant for the institutionalization of mediation and establishment of the Mediation Council of India.

Mediation in India:

• Mediation is a structured, interactive process where an impartial third party assists disputing parties in resolving conflict through the use of specialized communication and negotiation techniques.
• It is a voluntary process where the disputing people decide to mutually fi nd a solution to their legal problem by entering into a written contract and appointing a mediator.

Mediation India is divided into two categories which are commonly followed:

Famous Mediation Cases - landmark decision by Supreme Court of India:

• Perry Kansagra Vs Smriti Madan Kansagra on 15 February, 2019
  • Afcons Infra Ltd Vs M/S Cherian Varkey Constructions (2010)
  • B.S. Krishnamurthy v. B.S. Nagaraj (2013)
• Court referred Mediation: The court may refer a pending case for mediation in India under Section 89 of the Code of Civil Procedure, 1908.
  • This type of mediation is frequently used in Matrimonial disputes, particularly divorce cases.
• Private Mediation: In Private Mediation, qualified personnel works as mediators on a fi xed-fee basis. Anyone from courts, to the general public, to corporates as well as the government sector, can appoint mediators to resolve their dispute through mediation.

Why does India need the Mediation Act?

• Chief Justice of India (NV Ramana) addressed the inaugural Singapore-India Mediation Summit, 2021.
• He said the Indian judiciary is facing the pendency of cases crossing the 45-million mark, burdening the three-tier justice delivery system.
•  He also stated that mediation should be made mandatory as the fi rst step for dispute resolution and a law should be framed in this regard.

Key-highlights of the Mediation Bill, 2021
The Mediation Bill, 2021 seeks to promote mediation, particularly institutional mediation, and provide a mechanism for enforcing mediated settlement agreements.

• Pre-litigation mediation: Parties must attempt to settle civil or commercial disputes by mediation before approaching any court or certain tribunals.
  • Even if they fail to reach a settlement through pre-litigation mediation, the court or tribunal may at any stage refer the parties to mediation if they request the same.
•  Disputes are not fit for mediation: The Bill contains a list of disputes which are not fit for mediation. These include disputes:
  • Relating to claims against minors or persons of unsound mind.
  • Involve criminal prosecution.
  • Affects the rights of third parties.
• Applicability: The Bill will apply to mediations conducted in India:
  • Involving only domestic parties.
  • Involving at least one foreign party and relating to a commercial dispute (i.e., international mediation).
  • If the mediation agreement states that mediation will be as per this Bill.
  • If the central or state government is a party, the Bill will apply to:
  • Commercial disputes
  • Other disputes as notified.
• Mediation process: Mediation proceedings will be confidential, and must be completed within 180 days (may be extended by 180 days by the parties).
• Mediators: Mediators may be appointed by:
  • The parties by agreement
  • A mediation service provider (an institution administering mediation).
  • They must disclose any conflict of interest that may raise doubts about their independence.
  • Parties may then choose to replace the mediator.
• Mediation Council of India: The central government will establish the Mediation Council of India.
  • The Council will consist of a chairperson, two full-time members (with experience in mediation or ADR).
  • Three ex-officio members (including the Law Secretary, and the Expenditure Secretary), and a part-time member from an industry body.
• Functions of the Council include:
  • Registration of mediators
  • Recognizing mediation service providers
  • Mediation institutes (which train, educate, and certify mediators).
• Mediated settlement agreement: Agreements resulting from mediation (other than community mediation) will be final, binding, and enforceable in the same manner as court judgments. They may be challenged on grounds of:
  • Fraud
  • Corruption
  • Impersonation
  • Relating to disputes not fi t for mediation.
• Community mediation: Community mediation may be attempted to resolve disputes likely to affect the peace and harmony amongst residents of a locality.
  • It will be conducted by a panel of three mediators (may include persons of standing in the community, and representatives of resident welfare associations).

Important recommendation made by the Committee

• It recommended a singular controlling authority for all types of mediation service providers and mediation institutes, instead of multiple authorities proposed in a bill.
• The time limit provided for the completion of a mediation process should be capped at 90 days with an extended period of 60 days, instead of 180 days.
• The provisions should be made to authorize Mediation Council of India only as the single nodal authority to control mediation service providers and mediation institutes.

RBI Paves The Way For International Trade In Terms Of Rupee

Context:

In the backdrop of the western sanctions on Russia, the Reserve Bank of India (RBI) has put in place a mechanism to facilitate international trade in rupees. 

Background:

• Recent geopolitical dynamic is creating a significant impact on the economies of several nation, leading to decline in their forex reserve.
• Russian invasion on Ukraine has push the price of crude oil in the international market to its all-time high.
• Western sanctions on Russia and economic crises in several nations have impacted the international trade.
• In the backdrop of these situations India has launched a mechanism to settle payment system for imports and exports in terms of Indian domestic currency, i.e., Rupee.

Analysis:

Rupee settlement system for International trade:

• Banks acting as authorized dealers for such transactions would have to obtain prior approval from the regulator to facilitate this.
• Nostro and Vostro Accounts:
  • Nostro and vostro are terms used to describe the same bank account; these terms are used when one bank holds the money of another bank.
  • They are used to distinguish between the two sets of accounting records kept by each bank.
  • Nostro comes from the Latin word for “our”, as in “our money that is deposited in your bank”.
  • Vostro means “your” as in “your money that is deposited in our bank”.
• All exports and imports under the invoicing arrangement may be denominated and invoiced in rupees.
• The exchange rate between the currencies of two trading partner countries can be determined by the market.
• Exporters and importers can now use a special Vostro account linked to the correspondent bank of the partner country for receipts and payments denominated in rupees.
• These accounts can be used to make payments for projects and investments, manage the fl ow of advances on imports or exports, and invest in Treasury bills under the Foreign Exchange Management Act of 1999 (FEMA).
• Also bank guarantee, set-off  of export receivables, export advance, utilization of surplus, approval process, documentation etc. related aspects would be included in FEMA rules.

Essentiality of the move:

• The rupee is at an all-time low against the dollar.
• The mechanism is intended to facilitate trade with sanctioned countries.
• Payments became a pain point for exporters immediately after the outbreak of the Russia Ukraine war, especially after Russia was cut off from the SWIFT payment gateway.
• As a result of the Trade Facilitation Mechanism, we see an easing of payment problems with Russia.
• The move would also reduce the risk of forex volatility, especially with respect to the Euro-Rupee parity.
• We see this as the first step towards 100% convertibility of the rupee.
• It will also help stabilize the rupee.

What will be positive implications on Indian Economy?

• It will boost India’s exports and currency: This move would boost the growth of global trade with an emphasis on exports from India (eg tea exports) and support the growing interest of the global business community in the domestic currency.
• Speeding up transactions with sanctions-hit Russia: India’s trade with Russia in 2021-22 was $13.1 billion.
• Final Settlement in Indian Rupees: As per the existing provisions of the Foreign Exchange Management Act, the final settlement must be made in free currencies except for Nepal and Bhutan. Now, if RBI approves, final settlement for all countries can be in Indian Rupee.
• Save foreign exchange and reduce trade deficit: Because India imports more than it exports. It will boost forex flows and as a step to stabilize the rupee.
• It will help build better relations with Russia: The opening of the trade route shows the importance of Russia as India’s trading partner in the face of growing pressure from Western countries to sever ties.
• Can be used for other neighboring countries as well: Several countries including Iran, Sri Lanka and some in Africa and Latin America are facing shortage of   forex. As such, the new mechanism will help India promote its exports in these countries.

What does this means for exports?

• Several countries including Sri Lanka and some in Africa and Latin America are facing forex shortages.
• As such, the new mechanism will help India promote its exports.
• It will also help buy discounted oil from Russia, which now accounts for 10% of all imported oil.

How will this impact the trade deficit?

• The gap between India’s exports and imports widened to record highs.
• This puts pressure on the current account deficit, which some economists estimate would nearly double to more than 3% of GDP in FY23.
• The RBI’s decision may not benefit the foreign account immediately, but in the medium term demand for dollars may fall.
• This is partly because it can take time to open new vostro accounts between banks.

What are major issues associated with this system?

• A similar Vostro account set up to trade with Iran has dried up as India has been stopped from buying oil from Iran due to US sanctions.
  • Exporters said the payment problem in the Iranian market was limiting them from filling the gap left by Sri Lanka, which is in the midst of a severe financial crisis.
• Western countries could put pressure on India not to allow any such mechanism. 

Conclusion

• The new settlement system of payments in term of rupee, will pave the way for India to boost up the exports from India. This move will also be beneficial for world south diplomatic policy for India. 
• Along with elimination of the expected concerns India needs to focus on unprecedented emerging economical threat, internal security and money laundering challenges.

Shrinkflation, Playing Out in India?

Context

• Owing to global crises like COVID-19 and the war in Ukraine, many businesses are shrinking the size of their products to maintain or increase their profits in a process known as shrinkflation.

What is Shrinkflation

This term was first coined by British economist Pippa Malmgren in 2009.

• Shrinkflation, in economics, is the practice of cutting down the size or quantity of a product, while the rate of the item remains the same or slightly increases.
• The term, in some cases, may indicate lowering the quality of a product or its ingredients without hiking the product price.
• Shrinkflation is mostly common in the FMCG industry, especially in the food and beverages sector.

How does it work for companies?

• In the case of rising inflation, manufacturers usually opt for shrinkflation.
• Instead of hiking the price of any product, companies reduce the size of the item keeping the price of the product untouched.
• According to the companies, shrinkflation helps them to bear the brunt of higher input costs.
• The firms adopt this method as it will not immediately affect the buyer and they hope the consumers will not be able to notice the reduction in quantity at first glance.

Why is shrinkflation adopted?

• Mostly, the practice of shrinkflation is adopted when there is a surging inflation in the market.
• Rising costs of production, higher raw material cost, price rise in commodities such as oil, coal, and steel, and high labour cost may cause shrinkflation.
• Besides, stiff  competition in the marketplace can also cause shrinkflation.

Shrinkflation in the Indian market

• Several major FMCG companies have opted for shrinkflation. Firms such as Hindustan Unilever, Nestle, Dabur, P&G, Coca-Cola, and Pepsico have adopted this method.
  • Haldiram has cut down the size of its aloo bhujia packet to 42 gm from 55 gm.
  • Nestle has reduced the quantity of Maggi from 80 gm to 55 gm.
  • Soap brands like Vim have cut down the size of its soap to 135 gm from 155 gm.
  • Amid rising costs of edible oils, grains, and fuel, Britannia and Dabur have both chosen the path of shrinkflation.

Responsible reasons

• The sharp rise in inflation causing a drastic decline in consumption across the board.
• The ongoing Russia-Ukraine war that caused supply disruption and rising cost in energy basket. 

Impact on global market:

• Shrinkflation is not an Indian phenomenon alone. Restaurants and food joints in the US have implemented similar measures to save costs. According to the Bloomberg report quoted above, Domino’s Pizza and Subway have reduced sizes of their products to mitigate rising expenses. Burger King will also see the same reduction for their nugget meals.
• The US is battling higher inflation, which is at a 40-year high. Many manufacturers either have hiked prices of their products or adopted shrinkflation to tackle the rising input costs.
• Not only the restaurants and eateries, groceries and other FMCG companies in the US are also going for shrinkflation.
• Several news reports mentioned that from Gatorade to toilet papers, everything can see quantity reduction in the US market.