1. RBI to pull out ₹2,000 notes from active circulation

The Reserve Bank of India (RBI) on Friday decided to withdraw ₹2,000 denomination banknotes from circulation in pursuance of its “Clean Note Policy”. However, the ₹2,000 notes will continue to be legal tender. A similar withdrawal of notes from circulation was undertaken in 2013-2014.

As in the days after demonetisation, the decision to withdraw ₹2,000 notes is also likely to strain the system besides creating anxiety and inconvenience to the public.

The central bank has advised the public to deposit ₹2,000 notes into their bank accounts and/or exchange them into banknotes of other denominations at any branch.

“Deposit into bank accounts can be made in the usual manner, that is, without restrictions and subject to extant instructions and other applicable statutory provisions,” the RBI said. For operational convenience and to avoid disruption of regular activities of banks, exchange of ₹2,000 notes into banknotes of other denominations can be made up to a limit of ₹20,000 at a time at any bank, starting from May 23. To complete the exercise in a time-bound manner and provide adequate time to the members of the public, all banks have been directed to provide deposit and/or exchange facility for ₹2,000 notes till September 30.

The RBI has issued separate guidelines to the banks. The facility for exchange of ₹2,000 notes up to the limit of ₹20,000 at a time will also be available at the 19 Regional Offices of the RBI having “Issue Departments” from May 23. Banks have been asked to stop issuing ₹2,000 notes with immediate effect.

“Members of the public are encouraged to utilise the time up to September 30, 2023 to deposit and/or exchange the ₹2,000 notes,” the RBI statement added. The printing of ₹2,000 notes was stopped in 2018-19.

2. Hindenburg-Adani case: expert panel ‘clears’ SEBI

SEBI had drawn a blank in its probe into the ownership and ‘opaque structures’ of 13 overseas entities, says SC-appointed panel; regulator has sought more time to complete its investigation

A six-member expert committee — constituted by the Supreme Court in the Hindenburg-Adani allegations case and headed by former Supreme Court judge, Justice A.M. Sapre — said that the Securities and Exchange Board of India has “drawn a blank” and is in a “chicken-and-egg situation” in its investigation into the “ownership” of 13 overseas entities, including 12 Foreign Portfolio Investors (FPIs).

In its 178-page report, the panel said, “SEBI has found 42 contributories to the assets under management of the 13 overseas entities. Various avenues have been pursued — including ED, CBDT and various market regulators in the seven jurisdictions where the contributories are situated. SEBI has drawn a blank”. The market regular has asked the court for more time to complete its investigation.

The foundation of SEBI’s suspicion that led to investigations into the overseas entities’ ownership is that they have “opaque structures”, because the chain of ownership of the 13 entities was not clear.

The committee said that SEBI was investigating the ownership of the 13 entities since October 2020, with regard to allegations in the Hindenburg report about minimum public shareholding. “The key issue is whether as the law stands, one could draw a conclusion that the FPIs are fronts for the promoters of the Adani Group… If such an outcome in the investigation would come about, it would mean that the promoters would not be compliant with the minimum public shareholding requirement,” it noted.

While it emphasised the need for a “coherent enforcement policy”, the panel concluded it would not be possible to return a finding of “regulatory failure” in compliance with stipulations governing minimum public shareholding.

 The Justice Sapre Committee said that the conundrum faced by the market regulator was due to a change in the legislative policy of SEBI under the FPI Regulations 2014 on the basis of a recommendation by a Working Group in 2018. As the law stands, FPIs need to only declare their “beneficial owner”, and not the “last natural person above every person owning economic interest in the FPI”, in conformation with the anti-money laundering law.

“In 2018, the very provision dealing with ‘opaque structure’ and requiring an FPI to be able to disclose every ultimate natural person at the end of the chain of every owner of economic interest in the FPI was done away with,” the report observed. It said that for the SEBI to put to rest its suspicions, its investigation would require information about the “ultimate economic ownership” — and not just the “beneficial owners” — of the 13 overseas entities under its lens.

No abusive trading pattern

On the issue of price manipulations, the report said that in the case of Adani stocks, 849 alerts were generated by the trading system. These alerts were considered by the stock exchanges in four reports to SEBI. Two of these reports were well before the Hindenburg report and two were after January 24, 2023. However, no pattern of “artificial trading or wash trades” were found..

The report agreed that there was “certainly high volatility in the Adani stocks after publication of the Hindenburg report”. “The market’s expectations from, and confidence in the Adani Group was shaken by the allegations in the Hindenbrug report, which was inferential,” the report said.

3. SC defers scientific survey on ‘Shivling’ at Gyanvapi mosque

Site of contention: The mosque’s caretakers had appealed against the High Court order. 

The Centre and the U.P. govt. agree to the plea for adjourning the survey of the disputed structure; Solicitor-General Tushar Mehta raises concern that the exercise may cause some damage to it

The Supreme Court on Friday deferred the implementation of a direction given by the Allahabad High Court on May 12 to conduct carbon dating and scientific survey of the ‘Shivling’ allegedly found on the Gyanvapi mosque premises in Varanasi.

A three-judge Bench headed by Chief Justice of India D.Y. Chandrachud said the “implications of the May 12 order would require closer scrutiny”. The carbon dating and scientific survey of the disputed structure was supposed to be held on May 22. The apex court ordered the exercise to be put on hold till the next date of hearing before it.

The Bench passed the order on a petition filed by the Anjuman Intazamia Masjid Varanasi, the mosque’s caretakers, represented by senior advocate Huzefa Ahmadi, against the High Court order.

Court’s suggestion

“Solicitor-General, would you like to take instructions on this… let us examine it a little carefully,” Chief Justice Chandrachud addressed Mr. Tushar Mehta, who was appearing for both the Centre and the State of Uttar Pradesh. The law officer agreed with the court’s suggestion, highlighting the implications that may follow if the carbon dating and scientific survey happened to inadvertently “damage” the structure in question.

“My concern as an officer of the court is if by doing the exercise, there is some damage caused to the structure, which one side says is a ‘Shivling’ and the other side says is a fountain, whatever it may be… we will have to see how it can be done. Your Lordships, we will await your adjudication on this issue,” Mr. Mehta said.

Advocate Vishnu Shankar Jain, appearing for the Hindu women who were the plaintiffs in the suit claiming right to worship the ‘Shivling’, said the High Court’s order was based on a 52-page report filed by the Archaeological Survey of India (ASI). He said the report had categorically stated that no damage would be caused to the ‘Shivling’ during the scientific survey. “That the structure will not be damaged has already been taken into consideration,” he submitted.

However, the Chief Justice told Mr. Jain, “Let the government consider the situation. They will obviously consult the ASI. Let the government also consider other options and the issues involved… These are matters the government has to tread a little carefully about.”

4. Even limited arsenic exposure can mar cognitive ability: study

A common strategy to prevent contamination is to encourage piped water access rather than groundwater extraction.

It caused a reduction in grey matter in the brain and affected concentration in children and young adults, say researchers who worked with 1,014 participants from five regions across India

Though it is well known that ingesting high levels of arsenic from contaminated groundwater in India has been linked to a range of ailments, a recent peer-reviewed study suggests that even low levels of arsenic consumption may impact cognitive function in children, adolescents, and young adults.

The research study, which is part of a bigger investigation into how a range of environmental and biological factors affect neurological and cognitive development in young people, also found that those exposed to arsenic had reduced grey matter (brain tissue that is vital to cognitive functions) and weaker connections within key regions of the brain that enable concentration, switching between tasks, and temporary storage of information.

“Chronic exposure to arsenic could be creating a ‘silent pandemic’ affecting large portions of the global population,” say the authors in the study published in the latest issue of the peer-reviewed journal, JAMA Network Open.

For their research, the scientists linked urine samples (to estimate arsenic exposure) performance in a battery of computerised tests (that evaluate cognitive function) and brain-images (that picturise various regions of the brain) of 1,014 participants from five regions across India.

Arsenic exposure, previous studies have shown, is particularly harmful to the poor.

However, a scientist associated with the study told The Hindu that the impact of arsenic in impairing cognition at an individual level was “limited”. The effect was more pronounced when individuals were considered as part of a collective, the scientist said.

Mapping brains

“We didn’t set out to investigate the link between arsenic exposure and brain function… it emerged from the C-Veda data. Going ahead, we’d like to more thoroughly investigate the degree to which arsenic affects the brain. We are also looking at the role of a host of other environmental factors, in separate studies, such as air pollution,” Nilakshi Vaidya, clinical psychologist and lead author of the study, told The Hindu in a phone conversation.

Since the 1990s, both the Central and State governments in Bihar and West Bengal have sought to address arsenic contamination. A common strategy employed is to encourage piped water access rather than groundwater extraction and install arsenic removal plants.

5. EU’s top official wants more scrutiny on Indian products derived from Russian oil

Dissimilar notes: (from left) Union Ministers Rajeev Chandrashekhar, Piyush Goyal and External Affairs Minister S. Jaishankar, meet with Josep Borrell in Brussels on Tuesday.

While saying EU rules cannot be forced on other nations, Josep Borrell said that ahead of Ukraine invasion, the share of Russian oil in India’s oil import stood at 0.2%; but last month, it rose to 36.4%

Days after saying the European Union (EU) had to curb the import of refined petroleum products from India, the EU’s top foreign affairs and security official, Josep Borrell, suggested that EU entities buying refined products from India were primarily accountable for the leakage of Russian oil-based products into the EU.

Mr. Borrell’s comments were published in his blog on Friday afternoon, titled, ‘Some Clarifications on the Circumvention of EU Sanctions Against Russia’. The diplomat, however, said there was a “remarkable increase” in the amount of oil India was buying from Russia since before Russia’s invasion of Ukraine.

‘Rules apply only to EU’

“As EU, we don’t want to buy Russia energy exports, because we don’t want to finance its war against Ukraine. We also don’t want to sell technological products and components that Russia needs for its war machine,” Mr. Borrell wrote.

He made clear, however, that the EU’s rules on trade with Russia were for EU entities but that other nations cannot be “forced“ to comply with them as the sanctions were not extraterritorial.

“This week we also had a discussion on the specific issue of India’s growing oil purchases from Russia and the growing exports to the EU of refined products that are most likely based on cheap Russian oil,” Mr. Borrell said, describing the issue as a dilemma.

“…before Russia’s invasion of Ukraine, the share of Russian oil in India’s overall oil import stood at 0.2%. Last month, that share had risen to 36.4%,” Mr. Borrell wrote, calling the increase “remarkable” but saying one cannot “blame nor question” India for this, as New Delhi is not subject to European laws.

The diplomat said that China was importing even higher volumes of Russian oil since a December 2023 oil price cap of $60 per barrel rolled out by the Group of Seven (G-7) advanced economies came into effect.

‘Normal’ reaction

Mr. Borrell emphasised a point he made earlier this week in a Financial Times interview, saying it is “normal” for India to make use of the opportunity to buy cheaper oil below the price cap.

However, he identified another issue: Indian refined petroleum products, made from Russian oil, entering the European market.

“Here again the facts are clear: the export of refined products like jet fuel or diesel from India to the EU has risen from 1.1 million barrels in January 2022 to 7.4 million barrels in April 2023,” he wrote.

External Affairs Minister S. Jaishankar and Mr. Borrell had held bilateral talks in Brussels on Tuesday.

At a briefing on Tuesday evening, Mr. Jaishankar told a journalist that as per European Council regulations, if Russian crude was “substantially transformed” in a third country, it was not treated as Russian anymore.

Moral issues

“We in the EU don’t buy Russian oil, but we buy the diesel obtained by refining this Russian oil somewhere else… All [ sic ] this does also raise moral issues,” Mr. Borrell wrote, quoting an economic adviser to Ukrainian President Volodymyr Zelensky as saying actions by European companies which buy refinery products made from Russian oil and sell them in Europe are “completely legal, but completely immoral.”

When he raised the issue of Indian exports of refined products based on Russian oil, it was not to criticise the Indian government, Mr. Borrell wrote, “ but to say that we cannot close our eyes to how EU companies themselves are circumventing the sanctions”.

He added that the EU first needs to look at its own economic operators and look for solutions on that basis .

”If Indian refiners are selling, that is because European companies are buying,” Mr. Borrell said.