1.Needed: an anti-trafficking law

Human trafficking is a crime in itself, but it is also the propeller of several other crimes

Sita was 13 years old when she was trafficked. Her parents worked in a tea garden in Assam for meagre wages. She was trafficked to a placement agency in New Delhi, and bought for about ₹20,000 as a domestic worker by a couple. Sita was not paid a single rupee. Instead, she was re-trafficked, raped, and exploited by employers and traffickers. Sita’s father and I found the young girl trapped in a house in Delhi three years later. But she did not step out when we found her. She hid behind a wall, crying. “I cannot show my face to my father. I am impure now. I want to kill myself,” she said.

This is the reality of thousands of women and children from the poorest sections of our society. No nation can call itself civilised if it tolerates the buying and selling of its daughters. Of what meaning is the wealth, power or progress of a nation if its children are traded as though in medieval slave trade, at a lower price than cattle?

A comprehensive Bill

Bachpan Bachao Andolan (BBA) and various civil society groups have campaigned for decades for a strong law to end this menace of human trafficking. In 2017, Sita and thousands of survivors like her marched in the Bharat Yatra alongside students, governments, the judiciary, multifaith leaders, businesses and civil society to demand for such a law. We covered 12,000 km with over 1.2 million people on foot with the single demand that India must pass a comprehensive anti-trafficking legislation. The passionate chants of these brave hearts who survived trafficking still reverberate in my ears, “Bikne ko taiyaar nahi hum, lutne ko taiyaar nahi hum (We are not ready to be sold, we are not ready to be stolen)”.

The Government of India has proposed the Trafficking in Persons (Prevention, Care and Rehabilitation) Bill, 2021. This Bill aims to tackle all aspects of trafficking including the social and economic causes of the crime, punishment to traffickers, and the protection and rehabilitation of survivors. This is achievable if the Bill has the necessary checks and balances against potential misuse of power by agencies, periodic reviews of the law, and adequate allocation of resources for effective implementation. The government must include these crucial provisions in the Bill and facilitate its smooth passage in the current session of Parliament.

A problem worsened by COVID

COVID-19 has further intensified the need for the law. Traffickers are taking advantage of prolonged school closures and loss of family livelihood. BBA with government agencies has rescued almost 9,000 children from trafficking since the first lockdown. In comparison, about half this number of children were rescued during the same time period of 14 months preceding the pandemic. The gravity of the situation cannot be undermined. We will not recover from the effects of the pandemic without the wherewithal to address its human impact, which comes with this law and its associated budgets.

Human trafficking is a crime in itself, but it is also the propeller of several other crimes. It creates a parallel black economy which fuels child labour, child marriage, prostitution, bonded labour, forced beggary, drug-related crimes, corruption, terrorism and other illicit businesses. The architects of our Constitution established the severity of the crime of trafficking by making it the only offence punishable under the Constitution of India itself, besides untouchability. A strong anti-trafficking law is the moral and constitutional responsibility of our elected leaders, and a necessary step towards nation-building and economic progress. It is non-negotiable for the realisation of an India that our Constitution-makers envisioned, our freedom fighters struggled for, our soldiers die for, and our children deserve. India is stepping into its 75th year of Independence. There can be no greater gift to India than the freedom of our children. I call on Parliament to urgently pass a strong anti-trafficking law.

Why in News

Recently, the Delhi High Court has sought responses from the Delhi government on a petition that said statements of child witnesses lodged at child welfare centres should be recorded through video conferencing and not physically in courts.

• The petition has been filed by Bachpan Bachao Andolan (BBA) in view of the outbreak of Covid-19.

Key Points

• Bachpan Bachao Andolan:
  • It is India’s largest movement campaigning for the rights of children.
  • It was started in 1980 by Nobel Laureate Kailash Satyarthi.
  • Mission: Identify, release, rehabilitate and educate children in servitude through prevention, direct intervention, mass mobilisation and legal action to create a child-friendly society.
  • Functions: As a Non Government Organisation (NGO), it has centred its focus on ending bonded labour, child labour and human trafficking, as well as demanding the right to education for all children.
    • It organises Baal Panchayat on the occasion of World Day against Child Labour i.e. 12th June.
  • It has so far freed more than 88,000 children from servitude, including bonded labourers.
• Nobel Prize: In 2014, Kailash Satyarthi was awarded the Nobel Peace Prize jointly with Malala Yousafzai for their contribution towards child education.

2.Opposition unrelenting in Parliament

Parties continue protest over Pegasus and farm laws, causing multiple adjournments in both Houses

Both Houses of Parliament saw multiple adjournments on Tuesday, the Lok Sabha as many as 10, before being adjourned for the day as the Opposition continued with its protests against the government on the Pegasus issue and the three controversial farm laws.

The Rajya Sabha, like the Lok Sabha on Monday, managed to pass the Marine Aids to Navigation Bill, 2021 with a voice vote amid sloganeering and protests by the Opposition. The Lok Sabha cleared the Factoring Regulation Bill, 2020 and the National Institutes of food Technology and Management Bill, 2021 in a similar manner on Monday.

Rajya Sabha chairperson M. Venkaiah Naidu, amid disruptions during Zero Hour, said he would not be forced “like this” through “undemocratic method” to give in to Opposition demands.

Lok Sabha Speaker Om Birla told Opposition members who kept up protests in the House through all its 10 adjournments, that MPs should not be “competing to raise slogans” and that they should raise issues pertaining to people.

While members of the Congress, CPI, CPI(M) and the Trinamool Congress were protesting over the snooping row, the Shiromani Akali Dal, Bahujan Samaj Party, and the Samajwadi Party raised slogans against the three farm laws. Despite assurances by Mr. Birla and subsequent Chairs Bhratruhari Mahtab and Rajendra Agarwal that members would be given ample opportunities to raise issues, the protests continued.

Long after the Lok Sabha had adjourned for the day, two Congress MPs from Punjab, Ravneet Bittu and Gurjeet Singh Aujla, continued to protest in the House for the scrapping of farm laws. “They were persuaded to leave a little before 9 p.m.,” a Lok Sabha official said.

The Factoring Regulation (Amendment) Bill, 2020

• The Factoring Regulation (Amendment) Bill, 2020 was introduced in Lok Sabha on September 14, 2020.  The Bill seeks to amend the Factoring Regulation Act, 2011 to widen the scope of entities which can engage in factoring business.
• Under the Factoring Regulation Act, 2011, factoring business is a business where an entity (referred as factor) acquires the receivables of another entity (referred as assignor) for an amount.   Receivables is the total amount that is owed or yet to be paid by the customers (referred as the debtors) to the assignor for the use of any goods, services or facility.   Factor can be a bank, a registered non-banking financial company or any company registered under the Companies Act.   Note that credit facilities provided by a bank against the security of receivables are not considered as factoring business.    
• Change in the definition of receivables: The Act defines receivables as (all or part of or undivided interest in) the monetary sum which is the right of a person under a contract.   This right may be existing, arise in the future, or contingent arising from use of any service, facility or otherwise.   The Bill amends the definition of receivables to mean any money owed by a debtor to the assignor for toll or for the use of any facility or services.    
• Change in the definition of assignment: The Act defines assignment to mean transfer (by agreement) of undivided interest of any assignor in any receivable due from the debtor, in favour of the factor.  The Bill amends the definition to add that such a transfer can be in whole or in part (of the undivided interest in the receivable dues).
• Change in the definition of factoring business: The Act defines a factoring business to mean the business of: (i) acquisition of receivables of an assignor by accepting assignment of such receivables, or (ii) financing against the security interests of any receivables through loans or advances.  The Bill amends this to define factoring business as acquisition of receivables of an assignor by assignment for a consideration.  The acquisition should be for the purpose of collection of the receivables or for financing against such assignment. 
• Registration of factors: Under the Act, no company can engage in factoring business without registering with the Reserve Bank of India (RBI).  For a non-banking financial company (NBFC) to engage in a factoring business, its: (i) financial assets in the factoring business, and (ii) income from the factoring business should both be more than 50% (of the gross assets/net income) or more than a threshold as notified by the RBI.  The Bill removes this threshold for NBFCs to engage in factoring business. 
• Registration of transactions: Under the Act, factors are required to register the details of every transaction of assignment of receivables in their favour.  These details should be recorded with the Central Registry setup under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 within a period of 30 days.  If they fail to do so, the company and each officer failing to comply may be punished with a fine of up to five thousand rupees per day till the default continues.  The Bill removes the 30 day time period.   It states that the time period, manner of registration, and payment fee for late registration may be specified by the regulations.   
• Further, the Bill states that where trade receivables are financed through Trade Receivables Discounting System (TReDS), the details regarding transactions should be filed with the Central Registry by the concerned TReDS, on behalf of the factor.   Note that TReDS is an electronic platform for facilitating financing of trade receivables of Micro, Small and Medium Enterprises.  
• RBI to make regulations: The Bill empowers RBI to make regulations for: (i) the manner of granting registration certificates to a factor, (ii) the manner of filing of transaction details with the Central Registry for transactions done through the TReDS, and (iii) any other matter as required. 

3.China’s sea claims have no basis, says U.S.

We don’t seek confrontation with China, but won’t flinch when our interests are threatened: Pentagon

Pentagon chief Lloyd Austin said on Tuesday that Beijing’s expansive claims in the South China Sea have “no basis in international law”, taking aim at China’s growing assertiveness in the hotly contested waters.

Mr. Austin’s broadside came at the start of his first trip to Southeast Asia as U.S. Defence Secretary, as he seeks to rally allies in the region as a bulwark to China.

President Joe Biden’s administration wants to reset relations with Asian countries and build alliances to face Beijing, after the turbulence and unpredictability of the Donald Trump era.

Speaking in Singapore, Mr. Austin criticised China’s actions in the disputed sea, where Beijing has overlapping territorial claims with several Southeast Asian states.

“Beijing’s claim to the vast majority of the South China Sea has no basis in international law,” he said in a speech hosted by the International Institute for Strategic Studies think tank.

“That assertion treads on the sovereignty of the states in the region,” he said, adding that the U.S. would support countries in defending their rights.

China claims almost all of the resource-rich sea, through which trillions of dollars in shipping trade passes annually, with competing claims from Brunei, Malaysia, the Philippines, Taiwan and Vietnam. Beijing has been accused of deploying a range of military hardware, including anti-ship missiles and surface-to-air missiles there, and ignored a 2016 international tribunal decision that declared its historical claim over most of the waters to be without basis.

Rising tensions

Tensions have escalated in recent months between Beijing and rival claimants.

Manila was angered after hundreds of Chinese boats were spotted inside the Philippines’ Exclusive Economic Zone, while Malaysia scrambled fighter jets to intercept Chinese military aircraft that appeared off its coast.

Mr. Austin said on Tuesday the U.S. “will not flinch when our interests are threatened” — but he insisted Washington does “not seek confrontation” with China.

“I am committed to pursuing a constructive, stable relationship with China, including stronger crisis communications with the People’s Liberation Army.”

The U.S.-China relationship has deteriorated over a range of issues from cybersecurity and tech supremacy to human rights in Hong Kong and Xinjiang.

Mr. Biden has largely kept the hawkish stance on China of Mr. Trump, describing the Asian power as the pre-eminent challenge to the United States, but has lowered the temperature and instead emphasised working with allies and working at home to compete better. After Singapore, Mr. Austin will visit Vietnam and the Philippines, and will seek to underline that the U.S. is a “stabilising force” in Southeast Asia, said a senior defence official.

Why in News

Recently, China warned off a USA warship sailing near contested Paracel islands in the South China Sea (SCS).

Key Points

About

• China’s Claim:
  • China lays claim to nearly all of the South China Sea, including the Paracel Islands.
    
    
    • However, Taiwan, Philippines, Brunei, Malaysia and Vietnam also claim parts of the region, believed to hold valuable oil and gas deposits.
  • It has alleged that the USA warship broke into China’s Xisha (Paracel) island’s territorial waters without the permission of the Chinese government and accused USA for “seriously violating China’s sovereignty” and “harming regional peace.”
• USA’s Stand:
  • The USA has argued that such exercises are in line with international law and help defend the right of passage through the region amid competing claims by China and other governments.
  • It is in sync with the USA’s continuous efforts to counter China’s assertion in SCS. Recently the USA Navy sent an aircraft carrier group into the South China Sea.
• South China Sea
  • Location: South China Sea is an arm of western Pacific Ocean in Southeast Asia. It is south of China, east & south of Vietnam, west of the Philippines and north of the island of Borneo.
    • It is connected by Taiwan Strait with the East China Sea and by Luzon Strait with the Philippine Sea.
  • Bordering states & territories (clockwise from north): the People’s Republic of China, the Republic of China (Taiwan), the Philippines, Malaysia, Brunei, Indonesia, Singapore and Vietnam.
  • Strategic Importance: This sea holds tremendous strategic importance for its location as it is the connecting link between the Indian Ocean and the Pacific Ocean (Strait of Malacca).
    • According to the United Nations Conference on Trade And Development (UNCTAD) one-third of the global shipping passes through it, carrying trillions of trade which makes it a significant geopolitical water body.

• Reasons For Dispute in the South China Sea:
  • Contesting Claims Over Islands:
    
    
    • The Paracel Islands are claimed by China, Taiwan and Vietnam.
    • The Spratly Islands are claimed by China, Taiwan, Vietnam, Brunei and Philippines.
    • The Scarborough Shoal is claimed by Philippines, China and Taiwan.
  • China’s Assertion:
    • Since 2010, China has been converting uninhabited islets into artificial islets to bring it under UNCLOS (examples would include Haven Reef, Johnson South Reef and Fiery Cross Reef).
    • China has been changing the size and structure of the reefs by modifying their physical land features. It has also established airstrips on Parcel and Spratly.
    • Chinese fishing fleets are engaged in paramilitary work on behalf of the state rather than the commercial enterprise of fishing.
    • The US is very critical of this building of artificial islands and terms these actions of China as building a ‘great wall of sand’.
  • Other Issues:
    • Undefined geographic scope of the South China Sea.
    • Disagreement over dispute settlement mechanisms.
    • Undefined legal status of the Code of Conduct (COC) add to it.
    • The different histories of distant, largely uninhabited archipelagos of the sea make the matter more complicated and multifaceted.

• India’s Stand:
  • India has maintained that it is not a party to the SCS dispute and its presence in the SCS is not to contain China but to secure its own economic interests, especially that of its energy security needs.
  • However, China’s increasing ability to decide and expand its role in the South China Sea has compelled India to reevaluate its approach on the issue.
  • As a key element of the Act East Policy, India has started internationalizing disputes in the Indo-Pacific region to oppose China’s threatening tactics in SCS.
  • Further, India is using its Buddhist legacy to make a strong bond with the Southeast Asian region.
  • India has also deployed its navy with Vietnam in the South China Sea for protection of sea lanes of communication (SLOC), denying China any space for assertion.
  • Also, India is part of Quad initiative (India, US, Japan, Australia) and lynchpin of Indo-Pacific narrative. These initiatives are viewed as a containment strategy by China.

4.Panel raps govt. over MSMEs, urges larger economic package

Parliamentary committee moots steps to boost cash flows for micro, small units

A Parliamentary panel has pulled up the government for offering inadequate relief measures for micro, small and medium enterprises (MSMEs) that were worst-affected by the COVID-19 pandemic. It mooted fresh measures to help them stay afloat, including a doubling of the 90-day limit for banks to classify their loan dues as problematic.

Offering loans and long-term measures — as the government had done over the past year — instead of improving the cash flow to generate demand as immediate relief, have put small enterprises in a grim situation, the panel said in its report tabled in Parliament on Tuesday.

The second COVID-19 wave this year ‘even more vigorously ripped the economy, particularly the MSME sector’ just as it was recovering from the initial lockdowns of 2020, the panel said. “The Committee, therefore, recommends that the Government should immediately come out with a larger economic package aimed at bolstering demand, investment, exports and employment generation to help the economy, including MSMEs to recover from the pandemic fallout,” said the report of the Department-related Parliamentary Standing Committee on Industry.

Chaired by TRS member of parliament K. Keshava Rao, the committee’s report sought a detailed study of the actual losses suffered by small enterprises since the onset of the pandemic, noting that no such intensive assessment had been done by the MSME Ministry.

Arguing that most policies were formulated keeping medium and large enterprises in mind, the panel said the position should be ‘contrary’ with a focus on micro and small enterprises.

Notes:

• Worldwide, MSMEs have been accepted as the engine of economic growth and for promoting equitable development.
• They constitute over 90% of total enterprises in most of the economies and are credited with generating the highest rates of employment growth.
• With low investment requirements, operational flexibility and the capacity to develop appropriate indigenous technology, SMEs have the power to propel India to new heights.
• Hence, it seems like there is a silent revolution happening in India powered by MSMEs.

Importance of MSMEs for Indian Economy

• Employment: It is the second largest employment generating sector after agriculture. It provides employment to around 120 million persons in India.
• Contribution to GDP: With around 36.1 million units throughout the geographical expanse of the country, MSMEs contribute around 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities.
  • MSME ministry has set a target to up its contribution to GDP to 50% by 2025 as India becomes a $5 trillion economy.
• Exports: It contributes around 45% of the overall exports from India.
• Inclusive growth: MSMEs promote inclusive growth by providing employment opportunities in rural areas especially to people belonging to weaker sections of the society.
  • For example: Khadi and Village industries require low per capita investment and employs a large number of women in rural areas.
• Financial inclusion: Small industries and retail businesses in tier-II and tier-III cities create opportunities for people to use banking services and products.
• Promote innovation: It provides opportunity for budding entrepreneurs to build creative products boosting business competition and fuels growth.

Thus, Indian MSME sector is the backbone of the national economic structure and acts as a bulwark for Indian economy, providing resilience to ward off global economic shocks and adversities.

MSME redefined

• The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2018 proposes to reclassify all MSMEs, whether they are manufacturing or service-providing enterprises, on the basis of their annual turnover.

• The bill was introduced in the Lok Sabha and further referred to the Standing Committee which tabled its report on 28 December 2018.

Benefits of proposed reclassification

• The new classification would eliminate the need for frequent inspections which was earlier required to check the investment in plant and machinery.
• It would be a non discriminatory, transparent and objective criterion.

Factors which led to growth of MSMEs

• Campaigns like Skill India, Startup India, Digital India and Make in India aim to provide MSME players with a level playing field and a definitive push towards enhanced productivity.
• Digitization: Increasing internet penetration, customer’s familiarization with digital payments fuelled by B2C ecommerce players facilitate MSME sector growth.
• Tie-ups with new-age non-banking finance (FinTech) companies allowed access to timely collateral free finance to MSMEs.
• Changing employment patterns: Younger generation shifting from agriculture towards entrepreneurial activities creating job prospects for others.

Government schemes to promote MSMEs

• Udyami Mitra Portal : launched by SIDBI to improve accessibility of credit and handholding services to MSMEs.
• MSME Sambandh : To monitor the implementation of the public procurement from MSMEs by Central Public Sector Enterprises.
• MSME Samadhaan -MSME Delayed Payment Portal –– will empower Micro and Small entrepreneurs across the country to directly register their cases relating to delayed payments by Central Ministries/Departments/CPSEs/State Governments.
• Digital MSME Scheme : It involves usage of Cloud Computing where MSMEs use the internet to access common as well as tailor-made IT infrastructure
• Prime Minister Employment Generation Programme : It is a credit linked subsidy program under Ministry of MSME.
• Revamped Scheme of Fund for Regeneration Of Traditional Industries (SFURTI) : organizes traditional industries and artisans into clusters and make them competitive by enhancing their marketability & equipping them with improved skills.
• A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE) : creates new jobs & reduce unemployment, promotes entrepreneurship culture, facilitates innovative business solution etc.
• National Manufacturing Competitiveness Programme (NMCP) : to develop global competitiveness among Indian MSMEs by improving their processes, designs, technology and market access.
• Micro & Small Enterprises Cluster Development Programme (MSE-CDP) – adopts cluster development approach for enhancing the productivity and competitiveness as well as capacity building of MSEs.
• Credit Linked Capital Subsidy Scheme (CLCSS) is operational for upgradation of technology for MSMEs.

Other recent initiatives to promote MSMEs

• In June 2019, RBI committee headed by former SEBI Chairman UK Sinha suggested a Rs 5,000 crore stressed asset fund for the MSME sector to provide relief to small businesses hurt by demonetisation, GST, and an ongoing liquidity crisis.
  • It has also recommended doubling the cap on collateral-free loans to Rs 20 lakh from the current Rs 10 lakh extended to borrowers falling under the Mudra scheme, self-help groups, and MSMEs.
• MSME Ministry announced in June 2019 to lift the ban on entry of corporates and private players in the MSME sector to pave way for the formation of 700 clusters to reduce dependence on imports as well as for job creation.
• MSME Ministry is also planning to set up enterprise facilitation centres across the country to make smaller businesses more competitive and help them integrate with big enterprises.

Therefore, the government should continue to put concerted efforts for holistic development of MSMEs in key areas like human capacity development, knowledge services, access to finance, technology, infrastructure, market access, and ease of doing business.

International Experiences

• According to World Bank, formal SMEs contribute up to 60% of total employment and up to 40% of national income (GDP) in emerging economies.
• 600 million jobs will be needed in the next 15 years to absorb the growing global workforce, mainly in Asia and Sub-Saharan Africa. In emerging markets, most formal jobs are generated by SMEs, which also create 4 out of 5 new positions.
• However, access to credit remains a major problem to the MSME sector globally.

In globalised world, it is imperative to enable MSMEs to adapt and thrive in a more open environment and participate more actively in the digital transformation, to boost economic growth and deliver a more inclusive globalisation.