1. SC to review PMLA order on two aspects
Judgment had found no reason for ECIR to be shared with accused, shifts burden of proof on them
The Supreme Court on Thursday prima facie agreed to reconsider two aspects of the Prevention of Money Laundering Act (PMLA) upheld by its judgment on July 27, which deprives an accused a copy of the Enforcement Case Information Report (ECIR) and transfers the burden of proof of innocence onto shoulders of the accused instead of the prosecution.
A Review Bench led by Chief Justice of India N.V. Ramana clarified that its move to reconsider these two key points in the apex court judgment which upheld several core amendments made to the PMLA should not be construed to mean that the court was opposing the efforts of the government to prevent the circulation of black money or money laundering. It said the objective of the government was “noble”.
“We feel that only these two aspects need to be looked into. We are in principle completely in support of the efforts to prevent black money, its circulation and money laundering. We cannot afford such types of offences. The object is noble… But after reading the judgment, prima facie we feel that these two areas — non-provision of ECIR and reversal of presumption of innocence — may require re-consideration. We will issue notice. Let the Government of India respond,” Chief Justice Ramana observed orally.
Solicitor-General Tushar Mehta, appearing for the Centre, said entertaining a review of the July judgment would entail serious repercussions. The PMLA was not a standalone law, but part of a larger global structure against the offence of money laundering. India may lose its standing and may not even get financial assistance for its fight against the offence.
He said the review petition filed by Karti Chidambaram, represented by senior advocate Kapil Sibal, was “an appeal in the guise of a review”. To this, the court said it has already acknowledged the seriousness of the offence of money laundering.
“We are not opposing any of the actions taken by the government to stop money laundering or bringing back black money from abroad…” the Chief Justice began to explain.
“Yes, it is serious. We do not doubt the object or aim… We thought prima facie that these two issues are there and we will issue notice and see,” the Chief Justice completed his train of thought while issuing notice to the government and posting the review before an appropriate Bench after four weeks.
The court also ordered several writ petitions, one of them filed by Shivshankar Bhatt through advocate Vipin Nair, which have primarily challenged the introduction of the amendments to the PMLA via the Finance Act route, to be tagged along with the review petition. The July verdict had said the method of introduction of the amendments through a Money Bill would be separately examined by a larger Bench of the apex court.
Prevention of Money Laundering Act
The PMLA was enacted in 2002 and it came into force in 2005. The chief objective of this legislation is to fight money laundering, that is, the process of converting black money into white.
- The Act enables government authorities to confiscate property and/or assets earned from illegal sources and through money laundering.
- The PLMA has been amended three times, that is, in 2009, 2009 and 2012.
- Under the PMLA, the burden of proof lies with the accused, who has to prove that the suspect property/assets have not been obtained through proceeds of crime.
The basic objectives of the PMLA are:
- Preventing money laundering.
- Combating the channelising of money into illegal activities and economic crimes.
- Providing for the confiscation of property derived from or involved in money laundering.
- Providing for any other matters connected with or incidental to the act of money laundering.
What are the Offenses under PLMA?
Offences mentioned under Part A and C of the Schedule of this Act will attract its provisions.
- Part A includes offences under acts namely:
- Indian Penal Code, Prevention of Corruption Act, Narcotics Drugs and Psychotropic Substances Act, Antiquities and Art Treasures Act, Trademark Act, Wildlife Protection Act, Copyright Act and Information Technology Act.
- Part B includes offences that are mentioned in Part A, but are of a value of Rs 1 crore or more.
- Part C includes trans-border crimes.
Penalties under PMLA
Various actions can be initiated against persons found to be guilty of money laundering, such as:
- Freezing or seizing of property and records, and/or attachment of property obtained through crime proceeds.
- Money laundering is punishable with:
- Rigorous imprisonment for a minimum of 3 years and a maximum of 7 years.
- If the crime of money laundering is involved with the Narcotic Drugs and Psychotropic Substances Act, 1985, the punishment can go up to 10 years, along with fine.
Authorities that can Investigate under PMLA
The Enforcement Directorate (ED) is responsible for investigating offences under the PMLA. Also, the Financial Intelligence Unit – India (FIU-IND) is the national agency that receives, processes, analyses and disseminates information related to suspect financial transactions.
2. India, Bangladesh discuss river water sharing issues
‘Making utmost efforts for Teesta deal’
India and Bangladesh discussed a wide range of issues related to the major common rivers such as the Ganga, Teesta and several smaller rivers during the 38th meeting of the Joint River Commission (JRC) held here on Thursday. The Indian delegation led by Gajendra Singh Shekhawat, Minister for Jal Shakti, assured the Bangladesh delegation that India was making “utmost efforts” for agreement on the Teesta.
“The JRC meeting, held in a cordial and friendly atmosphere, discussed the whole gamut of the issues related to the common rivers between the two countries, especially the Ganga, Teesta, Manu, Muhuri, Khowai, Gumti, Dharla, Dudkhkumar and Kushiyara,” said an official statement issued by Dhaka after the talks.
The two sides also discussed exchange of flood-related data and information, river-bank protection works, common basin management, and also the River Interlinking Project of India.
“Bangladesh side requested for conclusion of the long-pending Teesta Waters Sharing Treaty at an early date. The Indian side assured of their utmost efforts in concluding the agreement,” the statement announced.
India–Bangladesh river issue
- Sharing the waters of the Teesta River, which originates in the Himalayas and flows through Sikkim and West Bengal to merge with the Brahmaputra in Assam and (Jamuna in Bangladesh), is perhaps the most contentious issue between two friendly neighbours, India and Bangladesh.
- The river covers nearly the entire floodplains of Sikkim, while draining 2,800 sq km of Bangladesh, governing the lives of hundreds of thousands of people.
- For West Bengal, Teesta is equally important, considered the lifeline of half-a-dozen districts in North Bengal.
- Bangladesh has sought an “equitable” distribution of Teesta waters from India, on the lines of the Ganga Water Treaty of 1996 (an agreement to share surface waters at the Farakka Barrage near their mutual border), but to no avail.
- In 2015, Prime Minister Narendra Modi’s visit to Dhaka has generated some expectations to take forward the previous issues on fair and equitable water sharing agreement.
- But Teesta remains an unfinished project, as in India individual states have significant influence over transboundary agreements. This arrangement sometimes impedes the policymaking process. For example, one of the key stakeholders of the Teesta agreement, West Bengal is yet to endorse the deal.
3. Editorial-1: ‘Freebies’, a judicial lead and a multi-layered issue
While it is useful to start with the definition of ‘subsidies’, the issue of ‘tax preferences’ also merits attention
The Prime Minister’s recent comment on “freebies” handed out by governments has reignited the debate on the economic rationale for granting subsidies. Market fundamentalists have seized the opportunity to press home the point yet again that subsidies are, per se, undesirable for they contribute to suboptimal outcomes for the economy. This unbridled affront on subsidies does not make a distinction between transfer payments that are made for running social welfare schemes (without which disenfranchised citizens of this country cannot hope to survive). When this debate began to go astray, it needed a strong reminder by the Supreme Court of India that in the on-going debate on subsidies and “freebies”, a distinction had to be made between expenditure made on social welfare schemes and “irrational freebies” offered to voters during elections.
A closer look at the Budget
The lead given by the Supreme Court to engage in a discussion on subsidies must be seen as the starting point to deal with an issue that is truly multi-layered. This becomes evident from a close reading of the Union Budget and the manner in which the various governments have presented data pertaining to subsidies and transfer payments. A more critical aspect is to understand why it is imperative for the Government to continue with agricultural subsidies and extend support to ensure that health and educational services are available to all. This issue needs to be raised as the narrative of market fundamentalists routinely harps on reducing government spending. But before delving into the intricacies of the way these payments have been presented for public consumption, it may be useful to start with the definition of what can be considered “subsidies”.
Although ‘subsidy’ is among the most discussed issues, a legally acceptable definition of this instrument is hard to come by. One exception is the Agreement on Subsidies and Countervailing Measures (ASCM) of the World Trade Organization. According to ASCM, a subsidy shall be deemed to exist if there is a financial contribution by a government or any public body where government practice involves a direct transfer of funds (e.g., grants, loans and equity infusion), and/or government revenue that is otherwise due is foregone or not collected, and/or a government provides goods or services.
‘Subsidy’ can also be any form of income or price support granted by the government. This is a comprehensive definition of what subsidies are, for it includes not only direct transfer payments by the governments but also taxes and charges that are not collected. This aspect has gone under the radar in the on-going discussion.
The Union Budget has provided data on direct subsidies and transfer payments from 2006-07 in a statement titled “Revenue Foregone under the Central Tax System” annexed to the Receipts Budget. Thus, the Union Budget includes all categories of subsidies that figure under the ASCM definition. However, from the Union Budget 2015-16 onwards, the title of the annexure was changed to “Statement of Revenue Impact of Tax Incentives under the Central Tax System”. So, replacing the term “revenue foregone” with “tax incentives” in the title of the Annexure was just a change in semantics.
Policy and measures
Tax policy includes a range of measures that include special tax rates, exemptions, deductions, rebates, deferrals, and credits, all of which affect the level and distribution of tax. These measures are often called “tax preferences”, which are built into both direct and indirect tax regimes for realising specific benefits serving the greater public good. For instance, the Income-tax Act includes “tax preferences” to promote savings by individuals and for enhancing exports, creation of infrastructure facilities and scientific research and development by corporates. On the other hand, customs duty concessions are intended to promote exports. The more substantive point here is that tax preferences are considered as implicit (indirect) subsidies to preferred tax payers; therefore, they merit attention in the current debate on justification of subsidies.
Data on revenue foregone was first provided along with the Receipts Budget of 2006-07 covering both direct and indirect taxes. As regards direct taxes, which we shall consider here, data on its major components are obtained from the returns filed electronically by corporate and non-corporate assessees. The significance of revenue foregone in the case of direct taxes was underlined in a 2016 Comptroller and Auditor General of India (CAG) report in 2016, which showed that revenue foregone in 2010-11 was 21% of direct tax revenue and had decreased to 15% in 2014-15 (https://bit.ly/3Kl2yVe). However, a subsequent report showed that the share had climbed again to reach 22% of tax revenue in 2019-20 (https://bit.ly/3cfRE6M).
There are several important facets of the “tax preferences” provided by the Government in respect of direct taxes that are germane to this debate on subsidies. First, as compared to individuals, corporates have been enjoying a larger share for all years except in 2019-20 when the share of individuals inexplicably increased. The figures of 2019-20 are significant also because “tax preferences” for corporates registered an increase, even as corporate taxes were reduced. And, finally, while the Finance Minister spoke about eliminating “tax preferences” available to income-tax payers in lieu of lower tax slabs, which is optional at present (https://bit.ly/3AOq222), the corporate sector enjoys “tax preferences” as well as lower tax rates.
A related issue that must be mentioned here is that handouts from the Government, whether they are in the form of “tax preferences”, tax-cuts and the plethora of incentives are given for realising specific objectives. If these objectives are not realised, as for instance, the corporate tax cuts effected in 2019-20 did not result in higher private investment as the Government had expected, should this tax cut not be considered “freebies”?
This brings us to a much larger issue of targeting agricultural subsidies and also support provided to public health and education for making these services available to all. Market fundamentalists have forever opposed these subsidies/support by arguing that they are a wasteful use of resources. But this argument has gained currency since every Central government in the past three decades has adopted policies to whittle down support to these sectors extended by the government. Public health and education have consistently been undermined to create space for private players. And, in agriculture, the Government had brought the controversial farm laws for dealing with the issue of increasing farm subsidies.
While adopting policies targeting these sectors, successive governments have paid little attention to the dismal reality of under-investment in these sectors. Public expenditure on health has struggled to cross 1.5% of GDP, which is significantly lower than those in other major economies. In education, the Kothari Commission’s target set in 1966, that public investment should be increased to “6 percent of the national income as early as possible” is but a distant dream.
That agriculture has remained the neglected sector hardly needs to be emphasised. The most galling fact is the astonishingly low share of the country’s investment that this sector receives. At the turn of the millennium its share was 10%; in recent years, it has almost halved. As the crisis in agriculture has deepened as a result of this chronic underinvestment, subsidies have been the palliatives extended by the Government for farmers to merely protect their livelihoods. Will the naysayers still call agricultural subsidies “freebies”?
4. Editorial-2: Rainbow of hope
The LGBTQIA+ community needs more than words to live with dignity
Struggling with gender identity, and fighting against stigma, prejudice and discrimination, the LGBTQIA+ community, in Tamil Nadu at least, will not be derided by slurs or mocking half-names anymore. The T.N. government, on the orders of the Madras High Court, has come out with a glossary of terms to address people who are lesbian, gay, bisexual, transgender, queer, intersex, asexual or of any other orientation. The Department of Social Welfare and Women Empowerment notified the terms — paal pudhumaiyar for queer; maruviya paalinam for a transgender; idaippaal for intersex; paalina adaiyaalangaludan oththupogaathavar for a gender non-conforming person and so forth. Not everyone is happy; some groups feel the word for transgender should be the one in use, thirunar; others hope the nomenclature will not rid those who fall outside the generalisation of the benefits. For this diverse community, the road from isolation to belonging has been fraught with bias and violence, it was a wrong Justice N. Anand Venkatesh of the Madras High Court sought to amend in his June 7, 2021 verdict. While hearing, in April, the ordeal of a same-sex couple who sought police protection from combative parents, Justice Venkatesh admitted that he had to shed his own misconceptions before ruling on the case. The High Court came out with a slew of guidelines for the police, and social welfare ministries, both State and Centre, to ensure the safety of the community.
In February, the High Court pulled up the Union Ministry of Social Justice and Empowerment for dragging its feet on listing names of NGOs working for the community. In a June 2021 order, the High Court had acknowledged that social sanction is of paramount importance to lead a life of choice. In 2018, a Bench of the Supreme Court had overturned a 2013 ruling and decriminalised homosexuality. But the landmark judgment was only a first step. An individual wanting to live with dignity, no matter how she wants to be identified, still has many mountains to climb before enjoying liberty, autonomy and privacy guaranteed by Article 21. The state and society often mobilise traditional values to combat all sorts of phobias, and the movement for equal rights in T.N. should ensure children are not forced to go in for conversion therapy or thrown out of their homes for being different. Rights activists hope the glossary is fluid because the conversation around gender and sexuality is evolving. By creating inclusiveness in language for a marginalised community, the State has worked on the principle of suyamariyadhai or self-respect, the cornerstone of the Dravidian movement. Tamil Nadu has shown the way, but there is a long way to go before people forced to be in the shadows see a rainbow of hope in all spheres of life.
5. Editorial-3: Should India change its policy on the Rohingya?
Its record on refugee protections is exemplary; the Rohingya should not fall victim to internal politics
The Central government reasserted last week that its policy on the Rohingya refugees in India, who it calls “illegal foreigners”, will not change. It did so while denying a tweet by Minister of Housing and Urban Affairs Hardeep Singh Puri which said the government will move the Rohingya refugees living in Delhi to flats meant for economically weaker sections. Denying this, the Home Ministry said the government would continue efforts for their “deportation” to Myanmar, from where more than a million Rohingya have fled in the past decade after targeted attacks by the Myanmar military that the United Nations has termed a “genocide”. This week marks five years since the last big migration of the Rohingya, who have sought shelter in a number of countries around the world. In a discussion moderated by Suhasini Haidar, Vivek Katju and Meenakshi Ganguly discuss India’s policy on the Rohingya and the need for a refugee law. Edited excerpts:
How would you describe India’s policy thus far towards the Rohingya? And does it need to change?
Meenakshi Ganguly: I think there are two issues here: policy and politics. India’s record on refugee protections is actually quite exemplary. We have often referred to India when we speak to other governments, because starting with the Tibetans, Sri Lankans, Afghans, Bhutanese and even people from Myanmar, India has hosted hundreds of thousands of refugees. Even though India will argue often that it has not signed the UN Refugee Convention, there has been a particularly humane approach.
Now, we come to the politics of this. India is right now led by a government that ideologically wants to promote Hindu rights. But that also reflects on how it treats other minorities, particularly Muslims. The Rohingya happen to be Muslim. And therefore, often when we hear political leaders speak, they don’t even seem to be able to distinguish between the Rohingya who have suffered some of the world’s worst atrocities visited upon any community, and irregular immigrants, economic immigrants, from Bangladesh. They can’t seem to even distinguish between the two. And therefore, often the rhetoric is that the Rohingya are taking jobs from Indians and they are a burden on India. Above all, what is most terrifying are these unsubstantiated allegations that thousands of Rohingya are, for some reason, a security threat or a terror threat. So, that is where it is really concerning to see how politics is impacting what has largely been a very humane policy that India has always adopted towards refugees.
Vivek Katju: I agree about India’s record of how it has dealt with people who have come to the country to seek refuge, even though it has not signed international instruments. The present UN Secretary-General [António Guterres], when he was the High Commissioner for Refugees, had told me much the same thing. We all know the history of the Rohingya issue. We know that India has only about 40,000 or so Rohingya, whereas there are Islamic countries such as Saudi Arabia, Pakistan and Malaysia which have lakhs and lakhs of refugees. In Saudi Arabia, in 1973, King Faisal himself had given assurances of full and equal treatment. And yet these countries have never made good on these promises. So, I think it’s unfair to accuse just India of mistreatment of the Rohingya refugees. There is politics on the refugee issue in all countries, including in Europe and the United States.
Should there be discriminatory treatment of any person who seeks refuge in India? My position is, which I think is the position of all Indians, that there should not. As Hardeep Singh Puri said in his tweet last week, India provides refuge to all regardless of their race, religion, or creed. And I do believe that the government should follow what Mr. Puri has placed on record.
Are the Rohingya being treated differently by the government, though?
VK: The fact is that India, like many other countries, has been impacted by international Islamist terror. And therefore, there is greater sensitivity in India, as there is in other countries, when people of a certain faith come to India. Should they be like that? I don’t think so. But these are facts of life. We recently had a case of someone, allegedly of Central Asian origin, who wanted to come to India via Russia [to carry out attacks]. So, I can understand the concern of security agencies. But should that mean that we do not provide any community of refugees with a basic degree of amenities so that they can lead a ‘civilised’ life? We need to ensure they can lead such lives, and after all, it is part of our tradition.
MG: Yes, the Rohingya are being treated differently. The entire idea of the Citizenship (Amendment) Act was to discriminate on the basis of religion. The Rohingya are ethnically South Asian. In fact, that is why the Burmese call them ‘Kalar’ because they look South Asian. The discrimination against the Rohingya in Myanmar is, to a large part, based on ethnicity and the idea that they belong to South Asia, to Bangladesh, which was part of the colonial Indian map. I agree that around the world, refugees face a challenge, but the Rohingya are among the saddest communities that we work with. They have been ill treated for so long. They fled Myanmar by boats trying to find refuge, tragically sometimes drowning in the Bay of Bengal. I would love to see India do something different to address the root problem for the Rohingya. Why is it that the Myanmar military that visited such horrors on the Rohingya has since occupied office in the country and is getting away with it? Why is it that India has not spoken up much more loudly on trying to get the Junta held to account?
How much are India’s diplomatic concerns and bilateral ties with Myanmar a part of the Rohingya policy? And could India play a bigger role in resolving the issue?
VK: I’ll put it very bluntly. India has a major security interest in Myanmar and it is not unnatural for a country like India, which shares such a long border, a history of trouble, to look at its security interest first and foremost. Second, it is absolutely right that within Myanmar, ethnicity is a very sensitive issue, and many communities are discriminated against. It’s not a good thing, or something India would like, but that is part of the xenophobia which the Burman community within Myanmar has traditionally shown. It isn’t easy for the Indian government to deal with the Myanmar military, as recent developments have shown. There was some hope in the previous decade that they would open up the country, but that hope hasn’t materialised. Should India take the lead? I should imagine that the lead on Rohingya rights should be taken by those countries that have hosted the Rohingya for decades. I can name country after country whose own record of treating the Rohingya is abysmal, and they host much larger numbers of them, and they claim to have solidarity with them. So, a leadership role must be played by them.
The Modi government has made it clear that it intends to keep trying to deport the Rohingya to Myanmar. How much should India worry about the principle of non-refoulement or the UN Human Rights Council Universal Periodic Review (UPR), expected later this year?
MG: Well, the UPR looks at many human rights issues including the treatment of refugees, and those are all going to be under scrutiny. On deportation, one of the cases that we are documenting was of a woman called Hasina, who was deported earlier this year. It was inexplicable that a mother of three who was detained in the middle of the pandemic was treated this way. They just forcibly sent her back accompanied all the way by security forces who ignored the Manipur Human Rights Commission findings that they should not deport a woman alone, unaccompanied by her family, into an area where she’s likely at risk. I don’t understand what the purpose of this policy is, because the solution lies only in persuading the Myanmar authorities concerned to allow refugees to return safely to where they want to be, which is home [in Myanmar].
VK: In principle, who can disagree with what is ideal? People should be safe. There should be no discrimination. Unfortunately, the world we inhabit is far from ideal. And governments, like the Myanmar government, have their own logic, their own historical baggage with conflict. My own sense is that the answer to these issues has to come from within societies themselves. After all, what are we seeing in the U.K., where there is an attempt to move refugees or migrants coming to the U.K. to Third World countries (like Rwanda)? The West speaks of our human rights record ad nauseam. In the context of the UPR, will these countries have any credibility if they want to criticise our human rights record?
Given this situation, does India need a formal refugee policy following UN conventions, or its own refugee law?
MG: Of course, there are international standards and policies that need to be followed by all states — this is something they commit to in the Universal Declaration of Human Rights. Many states that have signed the UN Refugee Convention also do not follow them. I agree there are different standards, and have seen, for instance, how public sympathy has been different for the people leaving Ukraine and the people leaving Afghanistan or Syria just a year prior to that. So, there are all these challenges, which is why a state has to be above these kinds of views or discriminatory approaches to people. To [Bangladesh Prime Minister] Sheikh Hasina’s credit, when the refugees first came to her country, she said, if we can feed 160 million people, we have enough food security to feed the 700,000 refugees. Of course, it is frustrating that the situation in Myanmar has worsened, and now of course the same Myanmar military that was committing all these atrocities has taken power. These are complicated issues. The principle has to always be a commitment to universal human dignity without discrimination. That is why we should be happy that Mr. Puri tweeted about India’s policy, and spoke about doing the right thing. Now is the time for India to do the right thing. I’m not sure why the policy was then denied or taken back.
VK: I don’t think India will ever sign these instruments because of the nature of their origin, and the fact that it is discriminatory. Do we need a refugee law? I think the politics within India today makes it very difficult to have such a law. In principle, I entirely agree that states should be non-discriminatory in all their approaches. Human history itself is the history of migration, and all migration through the millennia has been extremely challenging, extremely troubling, even extremely violent. Today, fortunately, states are trying their best to to reduce that aspect, but are not entirely successful. Those who mandate states must change their policies have to be conscious of the pressures on them.