1. Ready to discuss GST on fuel if States want it: FM

Council takes all decisions on the tax, not FinMin, she says

The Centre is ready to consider bringing fuel under the Goods and Services Tax regime if the States bring up the issue at the GST Council, Finance Minister Nirmala Sitharaman said on Tuesday, arguing that all decisions related to the indirect tax are driven by the Council and not the Ministry of Finance.

The Minister introduced 127 amendments to the Finance Bill, 2021, which was passed by the Lok Sabha. These included an income tax break for the proposed development finance institution to fund infrastructure and a tweak in the proposed tax provisions for employees’ provident fund (EPF) contributions.

Defending the decision to impose an Agriculture Infrastructure Development Fund Cess on several items including fuel in the Budget, Ms. Sitharaman said that the proceeds from the collections would be shared with the States as they were the ones in charge of farm infrastructure such as APMCs and marketing yards.

“The cess may not get devolved to States, but eventually it will be used for improving infrastructure in agriculture and the farm yards and the marketing yards, which are with the State governments and so the funds will have to go the States only,” the FM said.

The Minister also sought to assuage States’ concerns about a possible reduction in fund allocations owing to the Finance Commission’s recommendation to set up a non-lapsable Defence and Internal Security Modernisation Fund. “In principle, we have agreed to it. [But] the fear that it will be imposed on States is not well-founded at all. We have not yet taken a decision on this,” she said.

“In the Finance Bill, a few new proposals are being added of a minor nature,” the minister said.

EPF Tax

The government has also introduced an amendment in the Budget proposal to tax income on employee contributions of more than ₹2.5 lakh a year into Provident Fund accounts.

“There is 1% of people who were going up to ₹5 crore contribution also. The ₹2.5 lakh [cap] covers 92%-93% of people,” the FM said. “Therefore, I don’t think this is going to affect most people for whom tax-free, assured income is provided under the scheme,” she added. “Through an amendment, I intend to raise this limit to ₹5 lakh in those cases, and only in those cases where there is no contribution by the employer in the EPF account,” Ms. Sitharaman said.

Taxing fuel

Responding to many MPs’ concerns about the high taxes on petrol and diesel and suggestions to bring them under the GST regime, Ms. Sitharaman said that both the Centre and States were taxing fuel and the Centre’s taxes had to be shared with the States.

“And if there is this concern, rightly, a concern about the fuel taxes. I would honestly think, many of the States would be watching this, and in the next GST Council, if that discussion comes up, I will be glad to have it on the agenda and discuss it. Let the States come and discuss it,” the minister said.

“Issues related to GST, being posed to Finance Minister, are not Finance Ministry matters,” she said. “They are GST Council matters in which all States are members. It’s a collective decision and without their clearance, things can’t happen,” Ms. Sitharaman pointed out.

Aadhaar intimation

Permanent Account Number (PAN) card holders failing to intimate their Aadhaar numbers to the Income Tax department on, or before a prescribed date, shall be liable to pay an Aadhaar intimation default fee of up to ₹1,000, as per amendments made to the Finance Bill.

Goods and Services Tax (GST)

The Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services.

Main Features of GST

• Applicable On supply side: GST is applicable on ‘supply’ of goods or services as against the old concept on the manufacture of goods or on sale of goods or on provision of services.
• Destination based Taxation: GST is based on the principle of destination-based consumption taxation as against the present principle of origin-based taxation.
• Dual GST: It is a dual GST with the Centre and the States simultaneously levying tax on a common base. GST to be levied by the Centre is called Central GST (CGST) and that to be levied by the States is called State GST (SGST).
  • Import of goods or services would be treated as inter-state supplies and would be subject to Integrated Goods & Services Tax (IGST) in addition to the applicable customs duties.
• GST rates to be mutually decided: CGST, SGST & IGST are levied at rates to be mutually agreed upon by the Centre and the States. The rates are notified on the recommendation of the GST Council.
• Multiple Rates: Initially GST was levied at four rates viz. 5%, 12%, 16% and 28%. The schedule or list of items that would fall under these multiple slabs are worked out by the GST council.

Legislative Basis of GST

• In India, GST Bill was first introduced in 2014 as The Constitution (122nd Amendment) Bill.
• This got an approval in 2016 and was renumbered in the statute by Rajya Sabha as The Constitution (101^st Amendment) Act, 2016. Its provisions:
  
  
  • Central GST to cover Excise duty, Service tax etc, State GST to cover VAT, luxury tax etc.
  • Integrated GST to cover inter-state trade. IGST per se is not a tax but a system to coordinate state and union taxes.
  • Article 246A – States have power to tax goods and services.
• GST Council
  • Article 279A – GST Council to be formed by the President to administer & govern GST. It’s Chairman is Union Finance Minister of India with ministers nominated by the state governments as its members.
  • The council is devised in such a way that the centre will have 1/3^rd voting power and the states have 2/3^rd.
  • The decisions are taken by 3/4^th majority.
• Reforms Brought About by GST
  • Creation of common national market: By amalgamating a large number of Central and State taxes into a single tax.
  • Mitigation of cascading effect: GST mitigated ill effects of cascading or double taxation in a major way and paved the way for a common national market.
  • Reduction in Tax burden: From the consumers’ point of view, the biggest advantage would be in terms of reduction in the overall tax burden on goods.
  • Making Indian products more competitive: Introduction of GST is making Indian products more competitive in the domestic and international markets owing to the full neutralization of input taxes across the value chain of production.
  • Easier to administer: Because of the transparent and self-policing character of GST, it would be easier to administer.

Advantages of GST

For the Government

• Create a unified common market: Will help to create a unified common national market for India. It will also give a boost to foreign investment and “Make in India” campaign.
• Streamline Taxation: Through harmonization of laws, procedures and rates of tax between Centre and States and across States.
• Increase tax Compliance: Improved environment for compliance as all returns are to be filed online, input credits to be verified online, encouraging more paper trail of transactions at each level of supply chain;
• Discourage Tax evasion: Uniform SGST and IGST rates will reduce the incentive for evasion by eliminating rate arbitrage between neighbouring States and that between intra and inter-state sales.

For Overall Economy

• Bring about certainty: Common procedures for registration of taxpayers, refund of taxes, uniform formats of tax return, common tax base, common system of classification of goods and services will lend greater certainty to taxation system;
• Reduce corruption: Greater use of IT will reduce human interface between the taxpayer and the tax administration, which will go a long way in reducing corruption;
• Boost secondary sector: It will boost export and manufacturing activity, generate more employment and thus increase GDP with gainful employment leading to substantive economic growth;
• Ultimately it will help in poverty eradication by generating more employment and more financial resources.

For the Trade and Industry

• Simpler tax regime with fewer exemptions.
• Increased ease of doing business.
• Reduction in multiplicity of taxes.
• Elimination of double taxation on certain sectors.
• More efficient neutralization of taxes especially for exports
• Making our products more competitive in the international market.
• Simplified and automated procedures for registration, returns, refunds and tax payments.
• Decrease in average tax burden on supply of goods or services.

For Consumers

• Transparent prices: Final price of goods is expected to be transparent due to seamless flow of input tax credit between the manufacturer, retailer and service supplier.
• Price reduction: Reduction in prices of commodities and goods in long run due to reduction in cascading impact of taxation;
• Poverty eradication: By generating more employment and more financial resources.

For the States

• Expansion of the tax base: As states will be able to tax the entire supply chain from manufacturing to retail.
• More economical empowerment: Power to tax services, which was hitherto with the Central Government only, will boost revenue and give States access to the fastest growing sector of the economy.
• Enhancing Investments: GST being destination based consumption tax will favour consuming States. Improve the overall investment climate in the country which will naturally benefit the development in the States.
• Increase Compliance: Largely uniform SGST and IGST rates will reduce the incentive for evasion by eliminating rate arbitrage between neighbouring States and that between intra and inter-state sales

Exemptions under GST

• Custom duty will be still collected along with the levy of IGST on imported goods.
• Petroleum and tobacco products are currently exempted.
• Excise duty on liquor, stamp duty and electricity taxes are also exempted.

Challenges of GST

• SCGT and CGST input credit cannot be cross utilized.
• Manufacturing states lose revenue on a bigger scale.
• High rate to tax to compensate the revenue collected now from multiple taxes i.e High Revenue Neutral Rate.
• The reduction in the fiscal autonomy of the States.
• Concerns raised by banks and insurance companies over the need for multiple registrations under GST.
• The levy of additional cess.
• The capacity of State tax authorities, so far used to taxing goods and not services, to deal with the latter is an unknown quantity.
• The success of GST depends on political consensus, technology and the capacity of tax officials to adapt to the new requirements.

2. Delhi should have a bigger role in peace process: Afghanistan

Haneef Atmar briefs Indian leadership on Ghani’s new plan

Afghanistan wants a larger role for India in the peace and reconciliation process, said visiting Foreign Minister Haneef Atmar, adding that he had discussed President Ghani’s new peace plan, the ongoing Intra-Afghan dialogue and “Extended Troika” talks in Moscow last week with the Indian leadership. Mr. Atmar met National Security Advisor Ajit Doval on Tuesday, after holding bilateral talks with External Affairs Minister S. Jaishankar on Monday.

“India has legitimate interests in the peace and security of Afghanistan and we are seeking a greater role for India,” Mr. Atmar told journalists at the Indian Women’s Press Corps after his official meetings in Delhi. “We are negotiating to make sure that Afghanistan does not become a safe haven for international terrorists who are keen to turn it not just in their battlefield but into a safe haven including, unfortunately, against India as well. So, India has a role not just in Afghanistan but with other regional and international partners,” he said.

After his meeting with Mr. Doval, the Afghanistan Ministry of Foreign Affairs (MFA) said Mr. Atmar had discussed the Ghani government peace plan, which is understood to include fresh elections within the year if the Taliban agrees to a ceasefire, and for Mr. Ghani to hand over power to the elected government. The plan runs counter to the U.S. proposal, revealed in a leaked letter from US Secretary of State Anthony Blinken, that suggests Afghan-Taliban negotiations for a power sharing arrangement, and for an interim government to take over from President Ghani’s government.

“[Mr. Atmar] said the plan would pave the way for a lasting peace based on the will of the Afghan people and strengthen Afghanistan’s role as a bridge for connectivity and cooperation between regional countries and the international community,” an MFA readout of the meeting said, adding that Mr. Doval had said “the unity among Afghans and consensus at regional and international levels were essential factors for achieving sustainable peace”.

India’s Voice in the Afghan’s Reconciliation Process

• In the past, due to terror activities of the Taliban, India has been very critical of the Taliban coming into power and shown resistance to publicly dealing with the Taliban.
• Under the US-Taliban peace deal, the Taliban will be in the centre of power in Afghanistan, as the US forces withdraw from Afghanistan.
• In the present scenario, India has never announced its support for the U.S.-Taliban peace deal. Rather, India supports the Ashraf Ghani government and backs the idea of an Afghan-led, Afghan-owned, and Afghan-controlled process.
  • Further, in order to provide legitimacy to recently held Afgan president elections, Ashraf Ghani entered into a power-sharing agreement with former chief executive Abdullah Abdullah.
  • This agreement will inevitably further weaken Ashraf Ghani and subsequently undermines Indian interest in the region.
• Due to these factors, India’s voice in the reconciliation process has been limited.

India’s Interest in Afghanistan

• Economic and Strategic Interest: Afghanistan is a gateway to the oil and mineral-rich Central Asian republics.
  • Afghanistan’s main advantage is its geography, as anyone who is in power in Afghanistan controls the land routes connecting India with Central Asia (via Afghanistan).
• Developmental Projects: The massive reconstruction plans for the country to offer a lot of opportunities for Indian companies.
  • Three major projects: the Afghan Parliament, the Zaranj-Delaram Highway, and the Afghanistan-India Friendship Dam (Salma Dam), along with India’s assistance of more than $3 billion in projects, hundreds of small development projects (of schools, hospitals and water projects) have cemented India’s position in Afghanistan.
• Security Interest: India has been the victim of state-sponsored terrorism emanating from Pakistan supported terrorist group operating in the region (e,g. Haqqani network). Thus, India has two priorities in Afghanistan:
  • To prevent Pakistan from setting up a friendly government in Afghanistan, and
  • To avoid the return of jihadi groups, like al Qaeda, which could strike in India.

Challenges Ahead

India’s Dilemma

Due to the Taliban’s coming to power, India faces a dilemma, between:

• Should India reconsider its current policy that a lasting political settlement in Afghanistan must come through an “Afghan-led, Afghan-owned and Afghan controlled process” (considering that the elected Afghan Government is hardly in control of the peace process).
• Should India, consider the option of entering into direct talks with the Taliban. But, If India does so; it would constitute a major departure from its consistent policy of dealing only with recognised governments.

Dent in India’s Goodwill

• The building blocks of India’s goodwill are assistance in infrastructure projects, health care, education, trade and food security, and also in the easy access to Afghani citizens to study, train and work in India.
• Above all, it is India’s example as a pluralistic, inclusive democracy, inspires many in Afghanistan.
• However, there has been a dent in India’s goodwill, due to recent events in India, especially the controversy over the Citizenship (Amendment) Act, 2019. 

Exclusion of India

• India has been excluded from the Afghanistan peace process many times including the recent meeting (6+2+1 grouping).
• This poses a challenge for India to secure its interest in deciding the fate of Afghanistan and its people.

Steps to Be Taken

• India must also pursue opportunities to fulfil its role in the peace efforts in Afghanistan, starting with efforts to bridge the Ghani-Abdullah divide, and bringing together other major leaders with whom India has built ties for decades.
• India should take the diplomatic route to press for its inclusion in “6+2+1” dialogue, to claim its legitimate role in the Afghan peace process.
• India should leverage the United Nations’s call for a pause in conflicts during the Covid-19 pandemic to restart dialogue with Pakistan, which in turn is necessary for lasting peace in Afghanistan.
• Also, India can learn from US-Taliban talks where two opposing parties came to the negotiating table for talks on Afghanistan’s future.
  • For India, given its abiding interest in Afghanistan’s success and traditional warmth for its people, making that leap should be a bit easier. Thus, India can consider the appointment of a special envoy and start Track II diplomacy with the Taliban.

3. Foreigners can apply under CAA after rules are notified: Centre

House panels have granted time to frame rules, says Minister

The Union Ministry of Home Affairs (MHA) on Tuesday told the Lok Sabha that “foreigners” covered under the Citizenship (Amendment) Act (CAA), 2019, “may submit applications for grant of Indian citizenship after appropriate rules are notified by the Central government”.

Union Minister of State for Home Nityanand Rai said in a written reply in the Lower House that the CAA was notified on December 12, 2019, and came into force from January 10, 2020.

“The foreigners covered under this Amendment Act may submit applications for grant of Indian citizenship after appropriate rules are notified by the Central government. The Committees on Subordinate Legislation, Lok Sabha and Rajya Sabha have granted time up to April 9, 2021, and July 9, 2021, respectively to frame these rules,” the reply said.

Without the rules being notified, the Act remains ineffective.

The CAA is one of the major issues in poll-bound West Bengal and Assam. Union Home Minister Amit Shah had earlier said the CAA rules would be framed after the COVID-19 vaccination drive was concluded.

The election manifesto of the BJP in West Bengal said it would be implemented in the first State Cabinet meeting if the party came to power.

The CAA provides citizenship on the basis of religion to six undocumented non-Muslim communities from Pakistan, Afghanistan and Bangladesh who entered India on or before December 31, 2014.

Foreigners Tribunal

In a separate reply, the Minister said the final National Register of Indian Citizens (NRC) in Assam had not been issued.

To a question by Congress member Abdul Khaleque in the Lok Sabha about the number of appeals made to the Foreigners Tribunal within the stipulated 120 days by those who were excluded from the final NRC list, the Minister said, “…the final National Register of Indian Citizens in Assam has not been issued. Consequently, a certified copy of the rejection order has not been issued to the persons excluded. Hence, the number of appeals made to the Foreigners Tribunal by those excluded from the final NRC list is ‘Nil’ as on date.”

Over 1.4 lakh cases

In another reply, the Minister said Foreigners Tribunals were functioning only in Assam at present.

“As per the information made available by the State government, the number of cases pending in these tribunals as on 31.12.2020 are 1,40,050.”

Citizenship in India

Citizenship is the status of a person recognized under law as being a legal member of a sovereign state or belonging to a nation. In India, Articles 5 – 11 of the Constitution deals with the concept of citizenship. The term citizenship entails the enjoyment of full membership of any State in which a citizen has civil and political rights.

Article 5: Citizenship at the commencement of the Constitution

This article talks about citizenship for people at the commencement of the Constitution, i.e., on November 26th, 1949. Under this, citizenship is conferred upon those persons who have their domicile in Indian Territory and –

1. Who was born in Indian territory; or
2. Whose either parent was born in Indian territory; or
3. Who has ordinarily been a resident of India for not less than 5 years immediately preceding the commencement of the Constitution.

Article 6: Citizenship of certain persons who have migrated from Pakistan

Any person who has migrated from Pakistan shall be a citizen of India at the time of the commencement of the Constitution if –

1. He or either of his parents or any of his grandparents was born in India as given in the Government of India Act of 1935; and
2. (a) in case such a person has migrated before July 19th, 1948 and has been ordinarily resident in India since his migration, or

(b) in case such as a person has migrated after July 19th, 1948 and he has been registered as a citizen of India by an officer appointed in that behalf by the government of the Dominion of India on an application made by him thereof to such an officer before the commencement of the Constitution, provided that no person shall be so registered unless he has been resident in India for at least 6 months immediately preceding the date of his application.

Article 7: Citizenship of certain migrants to Pakistan

This article deals with the rights of people who had migrated to Pakistan after March 1, 1947, but subsequently returned to India.

Article 8: Citizenship of certain persons of Indian origin residing outside India

This article deals with the rights of people of Indian origin residing outside India for purposes of employment, marriage, and education.

Article 9

People voluntarily acquiring citizenship of a foreign country will not be citizens of India.

Article 10

Any person who is considered a citizen of India under any of the provisions of this Part shall continue to be citizens and will also be subject to any law made by the Parliament.

Article 11: Parliament to regulate the right of citizenship by law

The Parliament has the right to make any provision concerning the acquisition and termination of citizenship and any other matter relating to citizenship.

Citizenship of India constitutional provisions

• Citizenship in India is governed by Articles 5 – 11 (Part II) of the Constitution.
• The Citizenship Act, 1955 is the legislation dealing with citizenship. This has been amended by the Citizenship (Amendment) Act 1986, the Citizenship (Amendment) Act 1992, the Citizenship (Amendment) Act 2003, and the Citizenship (Amendment) Act, 2005.
• Nationality in India mostly follows the jus sanguinis (citizenship by right of blood) and not just soli (citizenship by right of birth within the territory).

Citizenship Act, 1955

Citizenship of India can be acquired in the following ways:

1. Citizenship at the commencement of the Constitution
2. Citizenship by birth
3. Citizenship by descent
4. Citizenship by registration
5. Citizenship by naturalization
6. By incorporation of territory (by the Government of India)

• People who were domiciled in India as on 26th November 1949 automatically became citizens of India by virtue of citizenship at the commencement of the Constitution.
• Persons who were born in India on or after 26th January 1950 but before 1st July 1987 are Indian citizens.
• A person born after 1st July 1987 is an Indian citizen if either of the parents was a citizen of India at the time of birth.
• Persons born after 3rd December 2004 are Indian citizens if both parents are Indian citizens or if one parent is an Indian citizen and the other is not an illegal migrant at the time of birth.
• Citizenship by birth is not applicable for children of foreign diplomatic personnel and those of enemy aliens.

Termination of Indian Citizenship

Termination of citizenship is possible in three ways according to the Act:

1. Renunciation: If any citizen of India who is also a national of another country renounces his Indian citizenship through a declaration in the prescribed manner, he ceases to be an Indian citizen. When a male person ceases to be a citizen of India, every minor child of his also ceases to be a citizen of India. However, such a child may within one year after attaining full age become an Indian citizen by making a declaration of his intention to resume Indian citizen­ship.
2. Termination: Indian citizenship can be terminated if a citizen knowingly or voluntarily adopts the citizenship of any foreign country.
3. Deprivation: The government of India can deprive a person of his citizenship in some cases. But this is not applicable for all citizens. It is applicable only in the case of citizens who have acquired the citizenship by registration, naturalization, or only by Article 5 Clause (c) (which is citizenship at commencement for a domicile in India and who has ordinarily been a resident of India for not less than 5 years immediately preceding the commencement of the Constitution).

Persons of Indian Origin (PIO) Card

A person would be eligible for the PIO card if he:

1. Is a person of Indian origin and is a citizen of any country except Pakistan, Sri Lanka, Nepal, Bangladesh, Bhutan, China or Afghanistan, or
2. Has held an Indian passport at any other time or is the spouse of a citizen of India or a person of Indian origin.

PIO cardholders can enter India with the multiple entry feature for fifteen years. They do not need a separate visa.

Overseas Citizen of India (OCI) Card

• OCI Card is for foreign nationals who were eligible for Indian citizenship on 26th January 1950 or was an Indian citizen on or after that date.
• Citizens of Pakistan and Bangladesh are not eligible for OCI Card. An OCI cardholder does not have voting rights.
• OCI is not dual citizenship. OCI cardholders are not Indian citizens.
• The OCI Card is a multipurpose, multiple entry lifelong visa for visiting India.
• Persons with OCI Cards have equal rights as NRIs in terms of financial, educational, and economic matters. But they cannot acquire agricultural land in India.

Amendments

• The act has been amended four times — in 1986, 2003, 2005, and 2015.
• Through these amendments Parliament has narrowed down the wider and universal principles of citizenship based on the fact of birth.
• Moreover, the Foreigners Act places a heavy burden on the individual to prove that he/she is not a foreigner.
• 1986 amendment: Unlike the constitutional provision and the original Citizenship Act that gave citizenship on the principle of jus soli to everyone born in India, the 1986 amendment to Section 3 was less inclusive.
  • The amendment has added the condition that those who were born in India on or after January 26, 1950 but before July 1, 1987, shall be Indian citizen.
  • Those born after July 1, 1987 and before December 4, 2003, in addition to one’s own birth in India, can get citizenship only if either of his parents was an Indian citizen at the time of birth.
• 2003 amendment: The amendment made the above condition more stringent, keeping in view infiltration from Bangladesh.
  • Now the law requires that for those born on or after December 4, 2004, in addition to the fact of their own birth, both parents should be Indian citizens or one parent must be Indian citizen and other should not be an illegal migrant.
• With these restrictive amendments, India has almost moved towards the narrow principle of jus sanguinis or blood relationship.
• This lays down that an illegal migrant cannot claim citizenship by naturalisation or registration even if he has been a resident of India for seven years.
• Citizenship (Amendment) Bill 2019: The amendment proposes to permit members of six communities — Hindus, Sikhs, Buddhists, Jains, Parsis and Christians from Pakistan, Bangladesh and Afghanistan — to continue to live in India if they entered India before December 14, 2014.
  • It also reduces the requirement for citizenship from 11 years to just 6 years.
  • Two notifications also exempted these migrants from the Passport Act and Foreigners Act.
  • A large number of organisations in Assam protested against this Bill as it may grant citizenship to Bangladeshi Hindu illegal migrants.
  • The justification given for the bill is that Hindus and Buddhists are minorities in Bangladesh, and fled to India to avoid religious persecution, but Muslims are a majority in Bangladesh and so the same cannot be said about them.

Different Scenario in Assam

• Assam witnessed large-scale illegal migration from erstwhile East Pakistan and, after 1971, from present-day Bangladesh.
• This led to the six-year-long Assam movement from 1979 to 1985, for deporting illegal migrants.
• The All Assam Students’ Union (AASU) led the movement that demanded the updating of the NRC and the deportation of all illegal migrants who had entered Assam after 1951.
• The Assam Movement against illegal immigration eventually led to the historic Assam Accord of 1985, signed by the Movement leaders and the Rajiv Gandhi government.
• It set March 25, 1971, as the cut-off date for the deportation of illegal migrants.
• Since the cut-off date prescribed under articles 5 and 6 of the Constitution was July 19, 1949 – to give force to the new date, an amendment was made to the Citizenship Act, 1955, and a new section (6A) was introduced.

Section 6A The section was made applicable only to Assam.It laid down that all persons of Indian origin who entered Assam before January 1, 1966 and have been ordinary residents will be deemed Indian citizens.Those who came after 1 January, 1966 but before March 25, 1971, and have been ordinary residents, will get citizenship at the expiry of 10 years from their detection as a foreigner.During this interim period, they will not have the right to vote but can get an Indian passport.In Assam Sanmilita Mahasangha (2014) where the constitutionality of the 1986 amendment was challenged (the Mahasangha argues that the cutoff year for Assam should be 1951 instead of 1971), the court referred the matter to the Constitution Bench.To examine whether Section 6A is constitutional and valid though it prescribes a different cutoff date for Assam (1971) from the one prescribed in the Constitution for the rest of the country (1949).A five-judge Bench of the Supreme Court is yet to examine the constitutionality of Section 6A under which the current NRC has been prepared.

• Identification of foreigners as needed by Section 6A was to be done under the Illegal Migrants (Determination by Tribunal) Act, (IMDT Act), 1983, which was applicable only in Assam while the Foreigners Act, 1946 was applicable in the rest of the country.
  • The provisions of the IMDT Act made it difficult to deport illegal immigrants.
  • On the petition of Sarbananda Sonowal (now the Chief Minister of Assam), the Act was held unconstitutional and struck down by the Supreme Court in 2005.
  • This was eventually replaced with the Foreigners (Tribunals for Assam) Order, 2006, which again was struck down in 2007.
  • In the IMDT case, the court considered classification based on geographical considerations to be a violation of the right to equality under Article 14.

4. Editorial-1: The surge of geopolitics in South Asia’s power trade

India’s new trade rules are political and an irritant; instead, New Delhi should be planning a stable institutional model

India has released new rules governing the trade of electricity across its border. They define the contours of the South Asian electricity market, placing clear limits on who can buy from and sell into India. This has ramifications for the electricity markets of Bangladesh, Bhutan, and Nepal, which, to varying degrees, have aligned their energy futures with the Indian market. The new rules show that India’s approach is unmistakeably political. It attempts to balance China’s growing influence in the region with developmental aims, both its own and the region’s.

Rules on ownership

Of central importance is the ownership of power plants wishing to sell to India. In masterful legalese, the rules strongly discourage the participation of plants owned by a company situated in “a third country with whom India shares a land border” and “does not have a bilateral agreement on power sector cooperation with India”. Chinese companies hoping to establish plants in Nepal, Bhutan, or Bangladesh will presumably have a hard time making good on their investments with the Indian market cut off. The rules place the same security restrictions on tripartite trade, say from Bhutan to Bangladesh through Indian territory. To make things even more airtight, the rules establish elaborate surveillance procedures to detect changes in the ownership patterns of entities trading with India.

With this, it seems South Asia’s electricity politics has hit a holding pattern after several years of unpredictability. In the months after the Narendra Modi government came to power in 2014, India used the framework of the South Asian Association for Regional Cooperation (SAARC) to make historical moves towards liberalising electricity trade. China soon began to make its presence felt in the region, and India responded by walking back its free-market impulses.

It imposed stringent restrictions that dissuaded everyone other than Indian and government entities from participating. That threatened to undermine private sector participation and promising joint ventures across the region. Nepal and Bhutan protested for years, leading to new guidelines in 2018 that tried to find a middle ground; these rules formalise that balancing act. They allow private sector participation but exclude Chinese investments.

India-centricity no advantage

The institutional structure that has emerged through this churn over the last decade is India-centric. The Government of India, through ministries, regulators, planning bodies and utilities, determines the rules of the road. India’s geographic centrality combines with its economic heft to give it a natural advantage in determining the shape of the market; all electrons must pass through it and most electrons will be bought by it. The prospect of an independent regional body governing trade, championed by theorists, is thus unlikely to begin with. It is nearly impossible to fathom in the context of an ailing South Asian project characterised by low levels of trust. India will thus enjoy pre-eminent rule-setting powers, but continually attract the ire of its smaller neighbours who feel their economic growth is being stunted by decisions in Delhi.

Mega solar project

These rules provoke some larger questions that must be tackled soon. India’s ambition of anchoring a global super-grid called One Sun One World One Grid, or OSOWOG needs an institutional vision. It aims to begin with connections to West Asia and Southeast Asia and then spread to Africa and beyond. The South Asian lesson, contained in these latest rules, is that political realities will constantly collide with, and damage, expansive visions of borderless trade. Impartial institutions for planning, investments and conflict resolution are crucial to multi-country power pools.

Managing the needs of three relatively small neighbouring economies in South Asia has consumed large amounts of time and political capital for the better part of a decade. Papering over the cracks of a power pool of a dozen countries or more will be much harder. An ad hoc design also makes the Indian project less attractive to countries looking to sign up to a power trading project.

The logic underpinning OSOWOG is sound. Renewable energy transitions benefit from grids that cover vast areas and diverse geographic conditions. Multi-country grids allow for the unpredictable outputs from renewable energy plants to be balanced across countries, thus avoiding expensive country-specific balancing technologies such as hydropower and gas plants.

Countering China

It is quite likely, though, that India’s plans will be one among many in a soon-to-be competitive space. China, for example, has its own power pool ambitions. An attractive institutional model can lock countries into the pool by setting standards that investors and utilities plan towards and profit by. Once locked in, countries are thus unlikely to defect to other pools. The likely first battle will be in Southeast Asia, where China presently holds sway. A considered, stable institutional model will likely surpass anything China has to offer. It is worth considering releasing the vice-like grip on South Asia, aimed at countering China, by creating a rule-based regional institution that can counter Chinese offerings in other theatres.