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Daily Current Affairs 20.03.2022 (Geography gives India an advantage: Navy, Indianise education: Venkaiah, Study reveals major decline in golden langur habitat, Overlooking ‘reasonable accommodation’, Will the war in Ukraine rattle India’s banks?, Will the war in Ukraine rattle India’s banks?, What is the NPPA’s role in fixing drug prices?, How Russia’s bankruptcy law can punish foreign companies)

Daily Current Affairs 20.03.2022 (Geography gives India an advantage: Navy, Indianise education: Venkaiah, Study reveals major decline in golden langur habitat, Overlooking ‘reasonable accommodation’, Will the war in Ukraine rattle India’s banks?, Will the war in Ukraine rattle India’s banks?, What is the NPPA’s role in fixing drug prices?, How Russia’s bankruptcy law can punish foreign companies)

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1. Geography gives India an advantage: Navy

‘We are building capacity to counter whatever capacity China can bring,’ it says

The basic advantage is India’s geography in the Indian Ocean and “we are utilising that”, a Navy representative told the parliamentary Standing Committee on Defence recently. The Navy said it was building capacity to ensure that whatever capacity China could bring into the region, it had all those capabilities to counter that.

On the future road map to defend the Indian Ocean, the representative said China’s coastline was 18,000 km and had other adversaries also.

The representative said India was improving its “capacity to have anti-submarine warfare capability enhanced so that we can detect her [Chinese] submarines”.

“We have our air surveillance and surveillance aircraft which can carry out Anti-Submarine Warfare (ASW) and also carry out anti-underwater surveillance by dropping sonobuoys,” the committee was told. “So, we are building our capacity to ensure that whatever capacity she can bring into our region, we have all those capabilities to counter that.”

The Navy has inducted 12 P-8I long-range maritime patrol aircraft from the U.S. which are potent ASW platforms, while six more are under the process of procurement. It has also contracted 24 MH-60R multirole helicopters, the first batch of which will arrive in the next few months.

While information sharing and maritime domain awareness have emerged as major areas of regional cooperation with friendly navies, the Navy has significantly scaled up ASW training and cooperation, especially with the Quad navies.

To a question, the Navy representative said several countries in the region had the “affinity to bring in China to help them in their growth”. “I would like to submit that we are also engaging the same nations and building their capability by having a lot of training for their defence personnel and building our relationships in such a manner that when it comes to having a say in the matters of the country, all these initiatives that we are taking will help our cause.”

2. Indianise education: Venkaiah

Reject Macaulay’s system, take pride in Indian identity, says Vice-President

The government is accused of saffronising education but “what is wrong with saffron”, Vice-President M. Venkaiah Naidu asked on Saturday as he called for a total rejection of the Macaulay system of education from the country.

Indians must give up their “colonial mindset” and learn to take pride in their Indian identity, the Vice-President said in his address after inaugurating the South Asian Institute of Peace and Reconciliation at the Dev Sanskriti Vishwa Vidyalaya here.

Mr. Naidu also said Indianisation of the education system was central to India’s new education policy, which put great emphasis on the promotion of the mother tongue. “We are accused of saffronising education, but then what is wrong with saffron,” he asked.

Calling for rejection of the Macaulay system of education in the 75th year of Independence, Mr. Naidu said it imposed a foreign language as the medium of education in the country and confined education to the elite.

“Centuries of colonial rule taught us to look upon ourselves as an inferior race. We were taught to despise our own culture, traditional wisdom. This slowed our growth as a nation. The imposition of a foreign language as our medium of education confined education to a small section of society, depriving a vast population of the right to education,” the Vice-President said.

Thomas Babington Macaulay was a British historian who played a major role in the introduction of English as the medium of instruction for education in India.

“We should feel proud of our heritage, our culture, our forefathers. We must go back to our roots. We must give up our colonial mindset and teach our children to take pride in their Indian identity. We must learn as many Indian languages as possible. We must love our mother tongue,” he said.

Encouraging youngsters to propagate their mother tongue, Mr. Naidu said, “I am looking forward to the day when all gadget notifications are issued in the mother tongue of a respective State. Your mother tongue is like your eyesight, whereas your knowledge of a foreign language is like your spectacles.”

Foreign dignitaries coming to India speak in their mother tongue instead of English despite knowing it because they take pride in their own language, Mr. Naidu added.

3. Study reveals major decline in golden langur habitat

Impact of land-use change will be fatal to them, says officer

A recent study by scientists has suggested a significant decline in the habitat of the golden langur (Trachypithecus geei), an endangered primate species distributed in the trans-boundary region of Bhutan and India.

A recent paper titled “Future simulated landscape predicts habitat loss for the golden langur: a range-level analysis for an endangered primate” throws light on whether the habitat of the endangered primate is protected or not.

Suitable areas

Golden langurs are easily recognised by the colour of their fur, and are distributed in the forested habitats of Tsirang, Sarpang, Zhemgang and Trongsa districts of Bhutan. In India, fragmented and isolated populations of the species are distributed in Chirang, Kokrajhar, Dhubri and Bongaigaon districts of Assam.

“The results indicate that out of the total range extent (66,320 square km), only 12,265 square km (18.49%) is suitable for the species at present, which will further be reduced to 8,884 square km by the year 2031, indicating major range contraction. These suitable habitats are largely scattered and fragmented in southern range of the species,” the paper points out. The paper has been published by scientists of the Zoological Survey of India (ZSI), including Lalit Kumar Sharma, officer in-charge of its wildlife section.

While most of the suitable areas in the northern range distributed in Bhutan are connected, except for a few dispersed small patches in the northeast, the model depicts a scattered distribution with fragmented populations in the southern part of the range located in Assam. Only 14.39% of the future suitable areas fall inside the protected area (PA) network of both countries in the entire global distribution range. The possible new suitable area gain predicted inside the PAs will remain at 547 square km, which is less than the loss of (1,412 square km) suitable habitats from the PAs, the study says.

Conservation efforts

Scientists say most of the southern populations in Assam are currently distributed in reserve forests that are under higher levels of anthropogenic pressures. There are several forest fragments in lower Assam holding small and isolated populations of golden langur without any conservation initiatives except for efforts by a few local people and non-governmental agencies. In recent years, studies from these areas have reported human-langur conflict cases, and the intensity of these cases is increasing because of enhanced human footprint in the habitat of the species.

“We found that the impacts of land-use change will be more fatal to the existence of golden langur than human-induced climate change. Therefore, the identified forest patches with suitable habitats should be prioritised by forest managers for the implementation of habitat improvement activities,” Dr. Sharma says.

Recently, villagers near the Kakoijana Reserve Forest in Assam’s Bongaigaon district opposed the State government’s decision to earmark the area as a wildlife sanctuary. Earlier, in the 1990s, the extraction of timber by extremist groups in the region had resulted in the destruction of forest patches in southern Assam.

While recent community conservation programmes by the government yielded positive results for the golden langur population of Manas National Park, fragmented and isolated populations are still severely threatened.

4. Overlooking ‘reasonable accommodation’

In the Karnataka High Court ruling on the hijab, what principle used in disability rights was not considered?

The story so far: The Karnataka High Court has ruled in favour of the State’s circular that students in educational institutions should only wear prescribed uniforms, and where no code was prescribed, they should wear “such attire that would accord with equality and integrity and would not disrupt public order”. The decision effectively upheld the denial of entry to students wearing the hijab. The court rejected an argument in support of permitting Muslim girls wearing head-scarves that was based on the principle of ‘reasonable accommodation’. This meant that the court did not favour making any change or adjustment to the rule that could have enabled the students to maintain their belief or practice even while adhering to the uniform rule.

What is it?

‘Reasonable accommodation’ is a principle that promotes equality, enables the grant of positive rights and prevents discrimination based on disability, health condition or personal belief. Its use is primarily in the disability rights sector.

Article 2 of the UN Convention on the Rights of People with Disabilities (UNCRPD) defines reasonable accommodation as “necessary and appropriate modification and adjustments not imposing a disproportionate or undue burden, where needed in a particular case, to ensure to persons with disabilities the enjoyment or exercise on an equal basis with others of all human rights and fundamental freedoms”.

The International Labour Organization (ILO), in its recommendation on HIV/AIDS and the world of work, defines it as “any modification or adjustment to a job or to the workplace that is reasonably practicable and enables a person living with HIV or AIDS to have access to, or participate or advance in, employment”.

How does the principle work?

The general principle is that reasonable accommodation should be provided, unless some undue hardship is caused by such accommodation.

In 2016, the ILO came out with a practical guide on promoting diversity and inclusion through workplace adjustments. The need for workplace accommodation may arise in a variety of situations, but four categories of workers were chosen for the guide: workers with disabilities, workers living with HIV and AIDS, pregnant workers and those with family responsibilities, and workers who hold a particular religion or belief. These categories of workers come across different kinds of barriers at work. These may result in either loss of employment or lack of access to employment. “The provision of reasonable accommodation plays a major role in addressing these barriers and thus contributes to greater workplace equality, diversity and inclusion,” says the ILO guide.

A modified working environment, shortened or staggered working hours, additional support from supervisory staff and reduced work commitments are ways in which accommodation can be made. Suitable changes in recruitment processes — allowing scribes during written tests or sign language interpreters during interviews — will also be a form of accommodation.

What is the legal position on this in India?

In India, the Rights of People with Disabilities Act, 2016, defines ‘reasonable accommodation’ as “necessary and appropriate modification and adjustments, without imposing a disproportionate or undue burden in a particular case, to ensure to persons with disabilities the enjoyment or exercise of rights equally with others”.

The definition of ‘discrimination’ in Section 2(h) includes ‘denial of reasonable accommodation’. In Section 3, which deals with equality and non-discrimination, sub-section (5) says: “The appropriate Government shall take necessary steps to ensure reasonable accommodation for persons with disabilities.”

In Jeeja Ghosh and Another v. Union of India and Others (2016), the Supreme Court, while awarding a compensation of ₹10 lakh to a passenger with cerebral palsy who was evicted from a flight after boarding, said: “Equality not only implies preventing discrimination …, but goes beyond in remedying discrimination against groups suffering systematic discrimination in society. In concrete terms, it means embracing the notion of positive rights, affirmative action and reasonable accommodation.” The Supreme Court elaborated on the concept in Vikash Kumar v. UPSC (2021). This was a case in which the court allowed the use of a scribe in the Union Public Service Commission examination for a candidate with dysgraphia, or writer’s cramp. The court ruled that benchmark disability, that is a specified disability to the extent of 40%, is related only to special reservation for the disabled in employment, but it need not be a restriction for other kinds of accommodation. It also said failure to provide reasonable accommodation amounts to discrimination.

In the recent Karnataka verdict on wearing the hijab, the High Court did not accept the argument based on a South African decision that reasonable accommodation can be made for allowing minor variations to the uniform to accommodate personal religious belief. The appeal against the verdict in the Supreme Court provides an opportunity to see if the concept can be used in the realm of belief and conscience too.

5. Will the war in Ukraine rattle India’s banks?

Could a distant war have a domino effect on Indian lenders? What are some of the challenges?

The story so far: S&P Global earlier this week forecast that banks in India would face ‘headwinds’ as a fallout of the Russia-Ukraine conflict. The rating agency flagged rising inflation and borrower ‘stress’ that could affect companies’ ability to fully pay back loans.

How does a war in eastern Europe affect India?

The war has impacted the production and movement of a wide range of raw materials and commodities. Ukraine, for instance, is the main source of sunflower oil imported into India. Supplies have naturally been hit and are bound to further push up the retail prices of edible oils.

The conflict has also forced Ukraine to shut two neon factories that account for about 50% of the global supply needed in the manufacture of semiconductors. As semiconductors become scarcer, user industries bear the brunt. Already, the global chip shortage has led to the waiting period for delivery of new premium cars in India being extended to several months. And with major carmakers having reported declines in sales for January and February, the profit outlook for these companies and their component suppliers looks significantly clouded. The domino effect on the automobile and other industries’ supply chains could impair the ability of businesses, especially medium and small enterprises, to fully service their loans.

What are the other factors that may undermine a company’s ability to repay loans?

Oil has been on the boil ever since Russia invaded Ukraine on February 24. After zooming to $139 a barrel — near historical highs — Brent crude prices were at the $106 level as of Friday. With India’s state-run oil marketing firms certain to raise the retail prices of petrol and diesel sooner than later, the higher cost of transportation is bound to feed into prices of goods from agricultural produce to raw materials for factories and to finished products headed to store shelves, thus quickening inflation across the board.

Higher input costs for manufacturers and service providers would leave them in a tough spot as they would have to choose between passing on the price increases to consumers — thus risking the already tenuous demand — and hurting their profitability if they opt to absorb the impact. Here again smaller businesses, that are most dependent on bank credit, are bound to be hit the hardest. If the war in Europe is prolonged, Indian banks could end up facing delays in the repayment of loans or possibly even having to write them off as ‘bad’.

Separately, with the dollar benefitting from a global flight to less risky assets, as well as the start of the U.S. Federal Reserve’s calibrated monetary tightening to rein in inflation from a 40-year high in the world’s largest economy, the rupee is expected to weaken against the U.S. currency. With the exchange rate impacted, importers would have to shell out more rupees for the same dollar value of imports than before. Unless demand expands, allowing them to sell more, a weaker local currency eats into their profits, leaving them with lesser cash available to service loans.

Official data for February show that overall goods imports are growing faster than exports compared with a year earlier, widening the current account deficit (CAD). Widening CAD is likely to cause the rupee to weaken further to 77.5 to a dollar by March 2023, from 75, Crisil Ratings said on March 17.

Rising inflation, which is already just beyond the RBI’s 6% upper tolerance limit, may nudge the central bank into raising benchmark interest rates. This means more interest will have to be paid by companies that would likely face the prospect of lesser profit. Earlier this month, India Ratings said that the increase in commodity prices could result in a stretched working capital cycle for small and medium enterprises, weakening their debt servicing ability.

Why is the situation particularly worrying for Indian banks?

India’s lenders had already been struggling to cope with an overhang of non-performing assets or bad loans even before the pandemic severely hurt overall economic momentum.

In its Financial Stability report for December 2021, the RBI warned that from a Gross Non-Performing Asset Ratio of 6.9% in September 2021, commercial banks were likely to see the metric rise to 8.1% in a baseline scenario, and possibly soar to 9.5% under a ‘severe stress’ situation by September 2022.

6. What is the NPPA’s role in fixing drug prices?

Why is the pharma lobby seeking a 10% increase for scheduled drugs? How will it impact consumers?

The story so far: Consumers may have to pay more for medicines and medical devices if the National Pharmaceutical Pricing Authority (NPPA) allows a price hike of over 10% in the drugs and devices listed under the National List of Essential Medicines (NLEM), this coming month. The escalation which is expected to have an impact on nearly 800 drugs and devices is propelled by the rise in the Wholesale Price Index (WPI). Lobby groups that represent domestic pharmaceutical companies have been engaging with the Central Government to ask it to extend the 10% annual hike to scheduled formulations under price control.

How does the pricing mechanism work?

Prices of Scheduled Drugs are allowed an increase each year by the drug regulator in line with the WPI and the annual change is controlled and rarely crosses 5%. But the pharmaceutical players pointed out that over the past few years, input costs have flared up. “The hike has been a long-standing demand by the pharma industry lobby. All medicines under the NLEM are under price regulation. As per the Drugs (Prices) Control Order 2013, scheduled drugs, about 15% of the pharma market, are allowed an increase by the government as per the WPI while the rest 85% are allowed an automatic increase of 10% every year. The pharma lobby is now asking for at least a 10% increase for scheduled drugs too than going by the WPI,” said an industry expert.

Who regulates prices?

The NPPA was set up in 1997 to fix/revise prices of controlled bulk drugs and formulations and to enforce price and availability of the medicines in the country, under the Drugs (Prices Control) Order, 1995-2013. Its mandate is to implement and enforce the provisions of the Drugs (Prices Control) Order in accordance with the powers delegated to it, to deal with all legal matters arising out of the decisions of the NPPA and to monitor the availability of drugs, identify shortages and to take remedial steps.

The ceiling price of a scheduled drug is determined by first working out the simple average of price to retailer in respect of all branded and generic versions of that particular drug formulation having a market share of more than or equal to 1%, and then adding a notional retailer margin of 16% to it. The ceiling price fixed/revised by the NPPA is notified in the Gazette of India (Extraordinary) from time to time.

The NPPA is also mandated to collect/maintain data on production, exports and imports, market share of individual companies, profitability of companies etc., for bulk drugs and formulations and undertake and/ or sponsor relevant studies in respect of pricing of drugs/ pharmaceuticals.

Prices are revised when there is a rise in the price of bulk drugs, raw materials, cost of transport, freight rates, utilities like fuel, power, diesel, and changes in taxes and duties. The cost rises for imported medicines with escalation in insurance and freight prices, and depreciation of the rupee. The annual hike in the prices of drugs listed in the NLEM is based on the WPI. The NLEM lists drugs used to treat fever, infection, heart disease, hypertension, anaemia etc and includes commonly used medicines like paracetamol, azithromycin etc.

Why are inputs costs high?

Speaking about the proposed move Chinu Srinivasan, co-convener, All-India Drug Action Network (AIDAN), pointed out that one of the challenges is that 60%-70% of the country’s medicine needs are dependent on China. “Self-reliance for India also means self-reliance in bulk drugs (Active Pharmaceutical Ingredients/APIs) and chemicals/intermediates that go into making the drug.” Mr. Srinivasan also said the method to calculate the annual ceiling price increase should be revisited. “WPI is dependent on price rise in a basket of a range of goods that are not directly linked with the items that go into the cost of medicines. More importantly, the unrealistic simple average method of calculating ceiling prices should be replaced by a cost-plus mechanism that was prevalent under the earlier DPCO 1995,” he said.

7. How Russia’s bankruptcy law can punish foreign companies

Foreign firms fear creditors may abuse bankruptcy process

As foreign companies seek to exit Russia over the war in Ukraine, they face the prospect that Russian bankruptcy law could be used to seize assets and even lead to criminal penalties.

How Russia’s bankruptcy law differs from that of the United States

In the U.S., bankruptcy laws are meant to give indebted companies a fresh start. Distressed firms in the U.S. usually enter bankruptcy willingly; the law lets them retain existing management and control over assets.

Russia’s law, however, generally prioritises the needs of creditors who are owed money. This means creditors, including the Russian government, can force a company into involuntary bankruptcy and oust its management. Some legal experts said foreign companies fear Russian creditors could abuse that process to install leaders willing to sell their assets to business rivals or companies aligned with the Russian government.

“In the late ’90s and early aughts, this was often used as the device to raid companies” in post-Soviet Russia, said Paul Stephan, a professor at the University of Virginia School of Law and expert in the Soviet and post-Soviet legal systems.

Can a bankrupt firm face criminal penalties in Russia?

Yes. In the U.S., bankruptcy is primarily civil. But Russian courts have been more willing to pursue criminal penalties for some bankruptcy-related offences, such as hiding assets. Camel and Lucky Strike cigarette maker British American Tobacco Plc has expressed concern that its exit from Russia could be viewed as a criminal act that leads to bankruptcy-related charges for local management. It would not be the first time the Russian government has threatened criminal bankruptcy charges against foreign companies and investors.

Russia has repeatedly asked Interpol to arrest money manager Bill Browder, alleging charges against him, including deliberate bankruptcy and tax evasion.

Has Russian bankruptcy law been used in the past to punish firms for political reasons?

Yes. Tax debt has been used to drive companies into bankruptcy in Russia, in a way that penalises foreign investors, according to an international arbitration court. Yukos Oil was forced into bankruptcy in 2006 after its former chief, Mikhail Khodorkovsky, fell out with Russian leader Vladimir Putin and the government demanded billions in back taxes. Most of Yukos’s assets were absorbed by the Kremlin’s flagship oil producer Rosneft, but international shareholders argued that the Russian tax demands were illegitimate.

The Permanent Court of arbitration in The Hague agreed, finding in 2014 that the Kremlin had manipulated the legal system to bankrupt the company. Since the Russian government owns major energy firms, it could use energy bills as well as taxes to force a company into bankruptcy, experts said.

“If the government was using that power strategically, it may well have the ability to influence local courts, to influence local managers, and force a sale of the company that would oust foreign owners,” said Jason Kilborn, a law professor at University of Illinois, Chicago.

Is there a safe way for firms to leave Russia?

For companies that want to leave Russia, Russian officials have suggested a ‘fast-track’ bankruptcy procedure that would put local managers in charge of their assets and operations.

Some businesses are concerned that bankruptcy law will be used to retaliate against the firms that are leaving, experts said. Russia’s ruling party has recently proposed legislation that would allow the government to nationalise the assets of certain firms intending to leave Russia.

That proposal would build on the bankruptcy law’s procedure for installing court-appointed external management, but could be wielded against companies with no debt, experts said.

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